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Scientech Annual Report 2022

Jun 16, 2023

52347_rns_2023-06-16_6fd7c9be-6189-49a1-8cfb-568418970de0.pdf

Annual Report

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Stock Code: 3583

==> picture [100 x 55] intentionally omitted <==

SCIENTECH CORPORATION

2022 Annual Report

Website to access the annual report: mops.twse.com.tw The Company’s website: www.scientech.com.tw

Published on May 14, 2023

I. The name, title, contact number, and email address of the Company's spokesperson and acting spokesperson:

Spokesperson Actingspokesperson Actingspokesperson
Name Hung-Yu Chen Shu-Chen Shen Wei-Lin Hsieh
Tel: (02)87512323 (03)598-6199 (02)8751-2323
Title Special Assistant to the
Chairman's Office		 Special Assistant to the
Chairman's Office		 Manager of Finance
Department
E-Mail [email protected] [email protected] [email protected]

  • II. Address and phone number of headquarters, branch offices and plants

  • Headquarters address:

11th Floor, No. 208, Ruiguang Road, Neihu District, Taipei City 11491

Tel: (02)8751-2323

  • Hsinchu Office address:

No. 182, Bade Road, Hsinchu City, 30069

Tel: (03)516-5177

  • Hukou Factory address:

1F, No. 16, Zhonghua Road, Hsinchu Industrial Park, Hukou Township, Hsinchu County, 30352

Tel: (03)598-6199

  • Tainan Office address:

No. 142, Sanshe, Xinshi District, Tainan City, 74444

Tel: (06)599-5149

  • Kaohsiung Office address:

9F-1, No. 290, Ersheng 1st Road, Qianzhen District, Kaohsiung City, 80654 Tel: (07)713-2000

III. Shareholder services

Name: Agency Department, CTBC Bank

Address: 5F, No. 83, Section 1, Chongqing South Road, Zhongzheng District, Taipei City 10008

Website: https://www.ctbcbank.com Tel: (02)6636-5566

IV. Names of the certified public accountant who duly audited the annual financial report for the most recent fiscal year, and the name, address, and telephone number of said person’s accounting firm:

Name of CPAs: Hui-Min Huang; Ming-Hsin Cho

Name of accounting firm: Deloitte & Touche Address: 20th Floor, No. 100, Songren Road, Xinyi District, Taipei City 11073 Website: http：//www.deloitte.com.tw

Tel: (02)2725-9988

  • V. Name of any exchanges where the Company’s securities are traded offshore, and the method by which to access information on said offshore securities: N/A.

  • VI. The Company’s website: http://www.scientech.com.tw

Table of Contents

Table of Contents Table of Contents
Description Page
One. Letter to Shareholders 1
Two. Company Profile
I. Company Profile 3
Three. Corporate Governance Report
I. Organization 6
II. Background information on directors, supervisors, presidents, vice presidents, 8
associate vice presidents, and heads of various departments and branches
III. Remuneration paid during the most recent fiscal year to directors, the president, 19
and vice presidents
IV. Corporate governance implementation 26
V. Audit fee of independent auditors 74
VI. Information on replacement of CPAs 74
VII. Circumstances in which the Chairman, president, or officers in charge of financial 74
or accounting matters of the Company has worked in the firm of the CPA or its
affiliated companies within the last year
VIII. Any equity transfer or change in equity pledged by a director, managerial officer, 75
or shareholder with a 10% stake or more during the most recent year or during the
current year up to the date of publication of the annual report
IX. Information on top ten shareholders who have mutual relationship as related parties 77
as specified in International Accounting Standard 24.
X. The total number of shares and the consolidated equity stake percentage held in any 79
single investee enterprise by the Company, its directors, managerial officers, or any
companies controlled either directly or indirectly by the Company
Four. Fund Raising Status
I. Capital and shares 80
II. Corporate bonds 86
III. Preferred shares 86
IV. Global deposit receipts 86
V. Employee stock options 86
VI. New Restricted Employee Shares 86
VII. Merger and acquisition activities (including mergers, acquisitions, and 86
demergers)
VIII. Status of implementation of capital allocation plans 86
Five. Operational Highlights
I. Scope of business 87
II. An analysis of the market as well as the production and marketing situation 100
III. Employees 112
IV. Environmental protection expenditure 112
V. Labor relations 112
VI. Cyber-security management 119
VII. Important contracts 120
Six. Finance overview Six. Finance overview
I. Condensed balance sheet and comprehensive income statement for the most 121
recent 5 years
II. Financial analysis for the most recent 5 years 126
III. Audit committee review of the most recent annual financial statements 132
IV. Most recent annual financial report 132
V. Consolidated financial statements for the most recent fiscal year audited and 132
certified by certified public accountants
VI. Whether or not the company or its affiliates have experienced financial 132
difficulties
Seven. Review and Analysis of the Financial Position and Results of
Operations and Risk Management
I. Financial position 133
II. Financial performance 134
III. Cash flow 135
IV. Effect of major capital expenditures on finance and business matters in the most 135
recent year
V. Investment policy for the most recent year, the main reasons for profit or loss, 136
improvement plan, and investment plan for the coming year
VI. Risk management, analysis, and assessment 137
VII. Other important matters 142
Eight. Special Items
I. Information on affiliates 143
II. Private placement of marketable securities in the most recent year and the current 148
year up till the publication date of this annual report
III. Holding or disposal of the Company’s shares by its subsidiaries in the most 148
recent year and the current year up to the publication date of this annual report
IV. Other matters that require additional explanation 148
IX. Matters with significant impact 148
If any of the situations listed in Subparagraph 2, Paragraph 2, Article 36 of the
Securities and Exchange Act, which might materially affect shareholders' equity
or the price of the company's securities, have occurred during the most recent
fiscal year or during the current fiscal year up to the date of publication of the
annual report.

3

One. Letter to Shareholders

Dear Scientech Shareholders:

2022 operating results:

In 2022, the Company has seen a consolidated operating revenue of NT$5,649,986thousand, an increase of NT$966,199 thousand from last year; operating profit of NT$710,298 thousand , an increase of NT$155,053 thousand from last year; an income before tax of NT$735,886 thousand, an increase of NT$211,941 thousand from last year; a net income of NT$568,583 thousand (net of the income tax of NT$167,303 thousand), an increase of NT$148,678 thousand from last year; and an EPS of NT$7.08 dollars.

Item 2022 2021 Amount
increased or
decreased		 Growth rate
Operatingrevenue 5,649,986 4,683,787 966,199 21%
Operating grossprofit 2,084,286 1,667,017 417,269 25%
Operating profit 710,298 555,245 155,053 28%
Netprofit before tax 735,886 523,945 211,941 40%
Netprofit after tax 568,583 419,905 148,678 35%
Earnings per share (NT$)
(after taxes)		 7.08 5.23 1.85 35%

II. Outline of the 2023 Business Plan:

  • (I) Business policy and important production and marketing policies

  • Having mastered the key R&D technologies requisite for independently making semiconductor wet process equipment (both single-wafer processing and batch-wafer processing), the Company has demonstrated considerable competitive advantages at both the front-end and the back-end of semiconductor process. After all the years of R&D, all models of the Temporary Bonding/Debonding System (TBDB) series have all been successfully developed and put to business use; such models have become an important revenue source for the Company. Going forward this year, we will continue to enhance our R&D strength and production capacity and develop new applications, so as to meet customer needs and thus create long-term favorable development conditions for our Equipment Manufacturing business.

  • In terms of wafer reclaim, to satisfy the customers’ needs for the advanced semiconductor process, the Company has been actively engaged in developing new process and improving existing process. On the 300mm wafer reclaim front, the Company is competent at the 16nm process, and will improve the mass production efficiency of the 16nm process and move forward to attain more advanced process capability this year. At present, Scientech has completed the development of the surface processing technology of aluminum nitride (AlN) wafers and constructed production lines for reclaim of silicon carbide (SiC) wafers and gallium nitride (GaN) wafers, generating new sources of revenue and profits in addition to those from Si wafer reclaim.

1 

  - 3.Upholding the R&D spirit as always, the Company actively develops semiconductor/FPD/LED machinery and more advanced wafer processing technologies while competing for new products for our agent business; in 2023, the Company will diversify operating risks and generate revenues and profits from more diversified sources.

  • (II) Expected sales and its bases 

     - Revenue is expected to grow in 2023, judging from current market conditions, prospects of development for the semiconductor/compound semiconductor/FPD/OLED industries, and the scaled-up operations with respect to Equipment Manufacturing.

  • III. Future development strategies

To catch up with industrial development, the Company will strive to boost the agent business in different fields while grasping the development of technologies requisite for equipment manufacturing, broadening the applications of wafer reclaim, and consolidating markets and R&D capability, thereby boosting our competitiveness.

  • IV. Impact of external competition, regulatory environment, and macroeconomic environment The semiconductor industry scales up due to demands from the various industries such as human-machine interface, digital media, artificial intelligence, and the Internet of Things. With clients successively launching their 10/7/5/3 nm advanced process, capital expenditure on semiconductor equipment will be driven up, which is a favorable factor for the Company’s development.

Once again, we would like to say thank you to all shareholders, directors, clients, and suppliers for their offering long-term support and encouragement to the Company. In a new year going forward, we will uphold the idea of sustainable operations and keep improving ourselves so that we meet your expectations for Scientech.

We wish you all good health and good luck!

Chairman of the Board: Manager: Accounting Manager: HUNG-LIANG HSIEH MING-CHI HSU SHAO-CHE CHUANG

2

Two. Company Profile

I. Company Profile

(I) Date of incorporation: October 17, 1979

(II) Company profile – Milestones

  • 1979 ● SCIENTECH Inc. was incorporated in Taipei City, with a paid-in capital in the amount of NT$2,000 thousand.

  • ● Sold electronic products and instruments in the capacity of an agent

  • 1990 ● Set up Hsinchu Office to serve customers in Hsinchu Science Park nearby. 1996 ● Changed the company structure and renamed itself SCIENTECH CORPORATION, with an authorized/paid-in capital in the amount of NT$20,000 thousand.

  • Sold electronic products, semiconductor equipment, and instruments.

  • Set up Tainan Office and Taichung to serve customers in Tainan and Taichung nearby.

  • 1999 With a paid-in capital in the amount of NT$25,000 thousand.

  • 2000 ● Set up Taoyuan Office in Linkou to serve customers in Linkou, Taoyuan nearby. ● Set up the Zhonghua Road Factory in Hsinchu to provide semiconductor component cleaning services, to meet customer needs.

  • 2001 ● With a paid-in capital in the amount of NT$100,000 thousand. 2002 ● With a paid-in capital in the amount of NT$150,000 thousand. ● Bought the Neihu Office in Taipei.

  • 2003 ● Launched the Hsinchu Factory-Office Complex. ● With a paid-in capital in the amount of NT$200,000 thousand.

  • 2004 ● With a paid-in capital in the amount of NT$400,000 thousand.

  • Set up the Zhonghua Road Factory in Hsinchu to provide semiconductor component cleaning services, to meet customer needs.

  • Set up the Hukou Factory in Hsinchu to branch out into the R&D, manufacturing, and sale of semiconductor and optoelectronic process equipment.

  • Zhonghua Road Factory in Hsinchu passed ISO9000 certification.

  • 2005 ● With a paid-in capital in the amount of NT$500,000 thousand.

  • Invested in SCIENTECH ENGINEERING CORP.(SHANGHAI) and SCIENTECH ENGINEERING USA CORP.

  • 2006 ● With a paid-in capital in the amount of NT$575,000 thousand. ● Invested in SCIENTECH Jingji Co., Ltd., thus branching out into the wafer reclaim industry.

  • 2007 ● With a paid-in-capital in the amount of NT$600,000 thousand. ● IPO approved on September 13, 2007 ● Moved the Hukou Factory in Hsinchu to Zhonghua Road, Hukou Township, Hsinchu

  • 2008 County, expanded the new factory, and equipped it with clean rooms.

  • ● Managed to win orders from domestic semiconductor customers, thus beginning

  • 2009 independently manufacturing equipment for 12inch wafers.

  • ● SBIR plan application approved by the Ministry of Economic Affairs

  • 2010 ● Invested in NATGEM INC. ● Invested in ACROMASS TECHNOLOGIES, INC.

  • 2011 ● Resolved to merge SCIENTECH Jingji Co., Ltd. at the Board of Directors meeting dated April 22, 2011.

  • Resolved to merge SCIENTECH Jingji Co., Ltd. at the Board of shareholders meeting dated June 24, 2011.

  • Delisted the company on July 4, 2011.

  • Set September 1, 2011 as the merger base date.

  • Merger-related capital increase in the amount of NT$149,009,970 was approved on October 31, 2011.

  • 2012 ● Became a public company on March 21, 2012. ● Became listed on the emerging stock market on April 23, 2012.

3

  • 2013 ● Obtained the URS(United Registrar of Systems)ISO9001：2008 certificate on August 27, 2012.

  • Nominated for the “Taiwan Mittelstand Award” in January 2013 that was organized by the Industrial Development Bureau, MOEA.

  • Became listed on the TWSE on March 12, 2013.

  • Increased the capital to NT$811,390,000 on March 15, 2013.

  • The Agent Business Department obtained the ISO 9001:2008 certificate on June 23, 2013.

  • 27, 2013.

  • 2014 ● Succeeded in developing the 8” &12” single-wafer wet etching and cleaning equipment in January 2014.

  • Succeed in developing the 300mm glass-wafer reclaim process in February 2014.

  • Wafer reclaim capacity reached 130K/month in May 2014.

  • Acromass Technologies, Inc. a wholly owned subsidiary, won the Taipei

    • Biotech Awards - Technology Transfer Award - Silver on September 19, 2014 that was organized by Taipei City Government

  • The subsidiary in China obtained the ISO9001:2008 certificate in September 2014.

  • The subsidiary in China purchased office buildings for own use in September 2014.

  • Chairman Hung-Liang Hsieh was awarded the 2014 Hsinchu-Area “Outstanding Manager Award” on December 5, 2014.

  • Participated in the “2014 Healthy Workplace Autonomous Accreditation” assessment, and awarded the “Badge of Accredited Healthy Workplace” by the Health Promotion Administration on December 26.

  • Participated in the “2014 Exceptionally Healthy Workplace Selection”, and awarded the “Vitality Award” on December 26 that was organized by the Health Promotion Administration.

  • 2015 ● Succeed in developing the SiC wafer reclaim process technology in July 2015.

  • The 12” glass coater passed the SEMI S2 accreditation in December 2015.

  • 2016 ● Completed construction of the class 10K Laboratory in Hukou Factory No.2 in February 2016.

  • Succeed in developing the 300mm glass-wafer debonding process equipment in June 2016.

  • 26, 2016.

  • Passed the Taiwan Intellectual Property Management System (TIPS) 2007 certification on December 5, 2016.

  • 2017 ● Awarded grants for the workplace learning and readjustment programs and corporate human resource improvement programs.

  • Launched the PDM system to protect intellectual property and strengthen information security.

  • Passed the Taiwan Intellectual Property Management System (TIPS) 2016 certification in November 2017.

  • 2018 ● Participated in the healthy workplace accreditation and awarded the “Badge of Accredited Healthy Workplace” in January 2018.

  • The application for establishment of a research and development center was approved in January 2018.

  • Taipei/Hsinchu/Hukou factory passed the ISO 9001:2015 certification in April 2018.

4

  • Hukou Factory passed the ISO 14001:2015 certification in April 2018.

  • Awarded the Talent Quality-management System (for Enterprises and Institutions) - Silver by the Workforce Development Agency in November 2018.

  • Passed the Taiwan Intellectual Property Management System (TIPS) 2016 Grade A certification in November 2018.

  • 2019 ● Hukou Factory passed the ISO 45001:2018 certification in April 2019.

  • Hsinchu/Hukou Factory passed the ISO 27001:2013 certification in October 2019.

  • Passed the Taiwan Intellectual Property Management System (TIPS) 2016 Grade AA certification in November 2019.

  • 2020 ● Hukou Factory passed the ISO 14001:2015 / ISO 45001:2018 certification in April 2020.

  • Hsinchu/Hukou Factory passed the ISO 27001:2013 certification in October 2020.

  • Passed the Taiwan Intellectual Property Management System (TIPS) 2016 Grade AA certification in October 2020.

  • The application of the R&D stimulus programs was approved in November 2020.

  • Invested in Xtek Semiconductor (Huangshi) Co., Ltd. via Transcend Capital Corp in 2020 to branch out into the wafer reclaim market in China.

  • 2021 ● Participated in the healthy workplace accreditation and awarded the “Badge of Accredited Healthy Workplace” in January 2021.

  • Passed the D-U-N-S® Registered™ in April 2021.

  • Taipei/Hsinchu/Hukou factory passed ISO 9001:2015 random inspection in April 2021.

  • Hukou Factory passed the ISO 14001:2015 / ISO 45001:2018 random inspection in April 2021.

  • Hsinchu/Hukou Factory passed the ISO 22301:2019 certification in September 2021.

  • Passed the TIPS - 2016 Grade AA in October 2021 simply through a document review.

  • Hsinchu/Hukou Factory passed the ISO 27001:2013 random inspection in November 2021.

2022

  • Passed the D-U-N-S® Registered™ in April 2022.

  • Taipei/Hsinchu/Hukou factory passed the ISO 9001:2015 random inspection in April 2022.

  • Hukou Factory passed the ISO 14001:2015 / ISO 45001:2018 certification in April 2022.

  • Passed the TIPS - 2016 Grade AA random inspection in October 2022.

  • Hsinchu/Hukou Factory passed the ISO 22301:2019 random inspection in August 2022.

  • Hsinchu/Hukou Factory passed the ISO 27001:2013 verification in October 2022.

  • 2023 ● Passed the D-U-N-S® Registered™ in April 2023.

  • Taipei/Hsinchu/Hukou factory passed the ISO 9001:2015 certification in April 2023.

  • [Hukou Factory passed the ISO 14001:2015 / ISO 45001:2018 random inspection in ] April 2023.

5

Three. Corporate Governance Report

I. Organization

(I) Organizational System Diagram (2022.12.31)

(II) Division of Duties Among Major Departments
The Company values division of labor among departments, as well as collaboration between
them. Below is a summary of the functions and duties of the Company’s major departments:
Shareholders’
meeting
Audit Committee
Remuneration
Committee
Board of
Directors
Chairman
CEO’s Office
Audit Office
Chairman Office
R & D Center
Responsible unit for sustainable
development
Mainland China Business
Division
Wafer Technology Division
Equipment Manufacturing
Division
Semiconductor/Optoelectron
ics Division
Accounting Division
Occupational Safety Office
Administrative Division
Investment managerment		 (II) Division of Duties Among Major Departments
The Company values division of labor among departments, as well as collaboration between
them. Below is a summary of the functions and duties of the Company’s major departments:
Shareholders’
meeting
Audit Committee
Remuneration
Committee
Board of
Directors
Chairman
CEO’s Office
Audit Office
Chairman Office
R & D Center
Responsible unit for sustainable
development
Mainland China Business
Division
Wafer Technology Division
Equipment Manufacturing
Division
Semiconductor/Optoelectron
ics Division
Accounting Division
Occupational Safety Office
Administrative Division
Investment managerment		 (II) Division of Duties Among Major Departments
The Company values division of labor among departments, as well as collaboration between
them. Below is a summary of the functions and duties of the Company’s major departments:
Shareholders’
meeting
Audit Committee
Remuneration
Committee
Board of
Directors
Chairman
CEO’s Office
Audit Office
Chairman Office
R & D Center
Responsible unit for sustainable
development
Mainland China Business
Division
Wafer Technology Division
Equipment Manufacturing
Division
Semiconductor/Optoelectron
ics Division
Accounting Division
Occupational Safety Office
Administrative Division
Investment managerment
Major department
Duties
Chairman Office Formulate the Company's operational strategies and goals; plan matters relating
toM&A andthe Company's business strategy; beincharge ofstock affairs.
CEO’s Office Plan strategy; formulate policies; take charge of the Company’s operational and
management matters; direct and supervise the various departments to ensure
achievementofbusiness goals.
Occupational
Safety Office		 Formulate, plan, supervise, and promote factory safety and health management
matters,andinstruct relevantdepartmentsin implementation.
Semiconductor/
Optoelectronics
Division		 Business
Department		 Sell, promote, develop the market for, and conduct a market
analysis of, the Company's products respecting semiconductor,
LED, solarenergy,LCD and other industrialproducts.
Customer
Service
Department		 Provide customers with the best after-sale installation and
maintenance services.
Equipment
Manufacturing
Division		 Production
Department		 Be responsible for the production, assembly, installation, trial run
of
the
Company's
self-developed
products
respecting
semiconductor, LED, solar energy, LCD, and other industrial
products,and forprocess analysis and improvement.

(II) Division of Duties Among Major Departments

6

Major department
Duties
Duties
Research and
Development
Department		 Actively develop new process, and plan and execute machine
R&D.
Wafer
Technology
Division		 Research and develop wafer reclaim and wafer-related technologies and
processes, and take charge of the manufacturing and sale thereof.
Mainland China
BusinessDivision
Responsible for the sale of semiconductors, LEDs, solar energy, LCDs, and other
industrialproducts,andfor theafter-sale servicethereof.
Accounting
Division		 Take charge of all affairs relating to accounting treatment; compile, analyze, and
interpret accounting reports.
Develop, execute, and control the Company’s budget; plan, schedule, raise, and
allocatethefunds.
Administrative
Division		 Human
Resources and
Administration
Department
Select, employ, cultivate, retain, formulate and execute the
remuneration for, talent; manage fixed assets and administrative
and general affairs.
Materials
Department		 Purchase the raw materials required by the Company; take charge
of the import and export affairs; and plan and execute logistics
management.
IT Department Formulate, establish, maintain, control, and integrate the
Company's information system and network; integrate the ERP
system.
Technical
Information
Department		 Take charge of matters relating to ISO certification; integrate
technical documents; manage intellectual properties such as
patentsandtrademarks.
Legal and
Intellectual
Property
Department		 Take charge of matters relating to TIPS certification; maintain
the intellectual property rights (IPRs) and deal with IPR disputes;
assess IPR and apply for patents; offer legal consultation.
Audit Office Take charge of the Company’s and subsidiaries’ audit matters, e.g., planning and
execution of an annual audit, and recommendation for, and follow-up of, the
improvement in internal control deficiencies to ensure the effectiveness of the
execution of the Company’s internal control system.

7

II. Background information on directors, supervisors, president, vice presidents, directors of departments, managers of departments and

branches

(I) Directors and Supervisors

1. Directors and Supervisors

April 15, 2023

April 15, April 15, April 15, 2023
Title Nationality or
Place of
Registration
Name		 Gender
and
age
Date first
elected
(appointed)		 Tenure Date elected
(appointed)
Shareholding
when elected		 Current
shareholding		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons

Main career (academic)
achievements
 Concurrent duties in the Company
or other companies		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Remarks
(Note)
Shares % Shares % Shares % Shares % Title Name Relationship
Chairman of the Company
Graduate of the
 Director, Natgen Inc.
Chairman ROC Hung-Liang Male 1979.10.17 3 2021.07.28 7,943,455
9.79%
7,943,455
9.79%
6,095,072		 7.51% 0 0 Department of Physics, Director, Welltend Technology Director
Wei-Lin		 Father- None
Hsieh 71~75 National Tsing Hua Corp.
Hsieh		 Daughter
University Director, Yoho Beach Resort Co.,
Ltd.
MS, Graduate Institute of
Physics, National Tsing
Hua University
Institute of Electronics,
ITRI
Independent
Male		 Industrial Technology
 Responsible person, Tongfang

director		 ROC Jyan-Bang Chen

66~70		 2015.06.09 3 2021.07.28 0 0 0 0 0 0 0 0 Research Institute Investment Co., Ltd. None None None None
Chairman, VISERA Director, Garsen Scientech Corp.
Technologies Company
Ltd.
Independent director,
Material Analysis
TechnologyInc.
Chairman, King Core Electronics
Inc.
Director,Yi Bao Shoe Material
Corp.
Director,Zheng Bao Investment
Corp.
Director,Sheng Bao Investment
Corp.
EMBA, National
Director Zheng Bao Investment
Chengchi University
,
Corp
MBA, Tulane University,
.
Director NCCU Academic
Independent Male USA
 ,
Development Foundation

director		 ROC Cheng-Li Yang
61~65		 2016.06.07 3 2021.07.28 0 0 0 0 0 0 0 0 Chairman, King Core
Representative of a corporate		 None None None None
Electronics Inc
.
Independent director		 director, King Core(B.V.I)
,
Giga-Byte Technology		 Electronics Co. Ltd.

Co., Ltd.		 Chairman, Allied Biotech Corp.
Representative of a corporate
director, King Core Electronics
(Suzhou) Co., Ltd
Director, Yang Bao Investment
Corp.
Director, Ultimate Beyond Limited
Representative of a corporate
director,Innofund Ii Ltd.

8

Title Nationality or
Place of
Registration
Name		 Gender
and
age
Date first
elected
(appointed)		 Tenure Date elected
(appointed)
Shareholding
when elected
Shareholding
when elected		 Current
shareholding		 Current
shareholding		 Shareholding of
spouse and
underage children		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Shares held
in the name
of other
persons

Main career (academic)
achievements
 Concurrent duties in the Company
or other companies		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Remarks
(Note)
Shares % Shares % Shares % Shares % Title Name Relationship
Independent director, Giga-Byte
TechnologyCo.,Ltd.
Chairman, Quantek, Inc.
Chairman, Darwin System
Technology Corporation
Representative of a corporate
director, Multilite International Co.,
Ltd.
Chairman, Darwin Venture
Management Corporation
Chairman, Dahan Investment
Corporation
Ph.D., Applied Materials
Chairman Dalong Holding Corp
Science and Engineering,
 , .
Chairman Darzhen Venture
Stanford University ,
Corporation
Chairman Darwin
,
System Technology		 Director, Culture-Ing Co., Ltd.
Independent Male
Corporation		 Chairman, Darjun Venture

director		 ROC Sung-Jen Fang
56~60		 2018.06.11 3 2021.07.28 0 0 0 0 0 0 0 0
Independent director		 Corporation
 None None None None
,
Hycon Technology		 Director, Gtm Holdings

Corporation		 Corporation

Independent director,
 Chairman, Darhe Ii Venture
Corporation
Asolid Technology Co.,
Director Dajun Asset Management
Ltd ,
Co., Ltd.

Director, Jefutai Holdings Corp.
Chairman, Affluent Asset
Management Co., Ltd
Director, Teco Electric &
Machinery Co., Ltd.
Chairman, Darhe Venture
Corporation
Director, Teco Image Systems
Co.,Ltd.
The Company’s CEO
President, Natgem Inc.
Director, Scientech Engineering
Corp.(Shanghai)
Director, Scientech Engineering
（Hong Kong) Limited
Director, Scientech Investment
Corp
Director, Simple Investment Corp
Directors ROC Ming-Chi Hsu Male 2004.08.25 3 2021.07.28 263,215 0.32%
235,552		 0.29%
438,821		 0.54% 0 0 MS, Institute of Physics, Director, Scientech Engineering None None None None
56~60 Tamkang University
USA Corp
Director, Forward Science Pte Ltd
Director, Forward Science
Corporation
Chairman, Transcend Capital Corp.
Chairman, Mingyuan Investment
Co.,Ltd.
Representative of a corporate
director,Renorigin Innovation

Institute Co.,Ltd.

9

Title Nationality or
Place of
Registration
Name		 Gender
and
age
Date first
elected
(appointed)		 Tenure Date elected
(appointed)
Shareholding
when elected
Shareholding
when elected		 Current
shareholding		 Current
shareholding		 Shareholding of
spouse and
underage children		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Shares held
in the name
of other
persons

Main career (academic)
achievements
 Concurrent duties in the Company
or other companies		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Spouse or relatives of the
second degree or closer acting
as manager or director		 Remarks
(Note)
Shares % Shares % Shares % Shares % Title Name Relationship
Fullway
0		 0 0 0 Not applicable - None None None None
ROC Investment - 2006.06.28 3 2021.07.28 1,341,262
1.65%
1,341,262
1.65%
Corporation
ROC Representative
of a legal
person:
Su-Chi Tien		 Female
51~55		 2006.06.28 3 2021.07.28 0 0 0 0 0 0 0 0 Department of
International Business,
Minghsin University Of
Science And Technology		 Associate vice president, Fu Tai
Construction Co., Ltd.
Chairman, Fullway Investment
Corporation
Chairman, Fujing Investment
Corporation		 None None None None
Directors
ROC Chung-Ho
Shaw		 Male
66~70		 2015.06.09 3 2021.07.28 216,000 0.27% 241,000 0.30%
56,000		 0.07% 0 0 MBA, Institute of
Business Administration,
National Chengchi
University		 Director, Systex Corporation
Director, Ali Corporation
Chairman,Liang Xin Finance
Co.,Ltd.		 None None None None
Directors
ROC Han-Liang Hu Male
56-60		 2012.06.27 3 2021.07.28 0 0 0 0 0 0 0 0 MA, Accounting and
Management Decision-
making Section, National
Taiwan University
Passed the national senior
exam for CPAs
Independent director,
HMI Hermes
Microvision
Director, United Way of
Taiwan
Supervisor, World Vision
International

Partner CPA, Cordiality Justice
Service CPAS &CO.
Director, Kye Systems Corp.
Director, Godex International Co.,
Ltd.
Supervisor, Orient Pharma Co.,
Ltd.
Chairman, Algoltek, Inc.
Director, Jianrui Venture Capital
Co., Ltd.
Director, Basecom
Telecommunication Co., Ltd.
Director, Accomp Technologies
Co., Ltd.
Independent director, Promate
Solutions Corporation
Independent director, Episil-
Precision Inc.		 None None None None
Directors
ROC Wei-Lin Hsieh Female
36~40		 2020.06.11 3 2021.07.28 1,596,934 1.97% 1,583,934 1.95%
0		 0 0 0 Graduate of the
Department of Finance,
Yuan Ze University
MA, University of La
Verne Concentrate in
Finance & Marketing		 Manager of the Finance
Department, Scientech Corporation		 Chairman Hung-
Liang
Hsieh		 Father-
Daughter		 None
Directors

Note: In the event that the Company's chairman and president or a position of the same level (top-level manager) are the same person, or a spouse or a first-degree relative thereof, relevant information such as the reasons, rationality, necessity, and future improvement measures must be disclosed: None

10

April 30, 2023

2. Major shareholders of corporate shareholders

Name of corporate Major shareholders of corporate shareholders shareholder Su-Chi Tien (13.34%), Chia-Wei Liang (20%), Ming-Fu Hsieh (20%), SuFullway Investment Chen Chung (21.33%), Hsin-Hsiao Liang (10%), Jui-Chu Liao (9.33%), Corporation Yen-Tang Chang (6%)

Note: The information disclosed by the Company above was provided by each corporate shareholder.

3. Disclosure of professional qualifications of directors and independence of independent directors:

Criteria
Name
Professional qualifications and
experience (Note)		 Independence Number of
concurrent
duties as an
independent
director at a
public
company
Chairman of
the Board:
Hung-Liang
Hsieh		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Chairman of Scientech
Corporation		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
CompanyAct.		 0
Independent
director:
Jyan-Bang
Chen		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Independent director, Materials
Analysis Technology Inc.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
Company Act.
3. Does not fit any of the
circumstances set out in the
various subparagraphs of
Paragraph 1, Article 3 of the
Regulations Governing
Appointment of Independent
Directors and Compliance
Matters for Public Companies,
and thus qualifies for the
independence criteria.		 0

11

Independent
director :
Cheng-Li
Yang		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Chairman, King Core Electronics
Inc.;
Independent director, Giga-Byte
Technology Co., Ltd.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
Company Act.
3. Does not fit any of the
circumstances set out in the
various subparagraphs of
Paragraph 1, Article 3 of the
Regulations Governing
Appointment of Independent
Directors and Compliance
Matters for Public Companies,
and thus qualifies for the
independence criteria.		 1
Independent
director:
Sung-Jen Fang		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Chairman, Darwin System
Technology Corporation;
Independent director, Hycon
Technology Corporation;
Independent director, Asolid
Technology Co., Ltd.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
Company Act.
3. Does not fit any of the
circumstances set out in the
various subparagraphs of
Paragraph 1, Article 3 of the
Regulations Governing
Appointment of Independent
Directors and Compliance
Matters for Public Companies,
and thus qualifies for the
independence criteria.		 0
Director:
Ming-Chi Hsu		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
CEO, Scientech Corporation;
Director, Forward Science
Corporation.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
CompanyAct.		 0

12

Representative
of the
corporate
director :
Fullway
Investment
Corporation:
Su-Chi Tien		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Associate vice president of the
Investment Department, Fu Tai
Construction Co., Ltd.;
Chairman, Fullway Investment
Corporation; Chairman, Fujing
InvestmentCorporation		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.		 0
Director:
Chung-Ho
Shaw		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Director, Systex Corporation;
Director, Ali Corporation.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
CompanyAct.		 0
Director:
Han-Liang Hu		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Partner CPA, Cordiality Justice
Service CPAS & CO.;
Independent director, HMI
Hermes Microvision;
Independent director, Episil-
Precision Inc.; Independent
director, Promate Electronic Co.,
Ltd.		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
Company Act.		 2
Director:
Wei-Lin Hsieh		 Has no less than 5 years of work
experience in the area of
commerce, law, finance, or
accounting
Career qualification:
Manager of the Finance
Department of Scientech
Corporation		 1. Circumstances specified in the
various subparagraphs of
Article 30 of the Company Act
do not exist.
2. Not elected in the capacity of a
government agency, legal
person, or their representative,
as specified in Article 27 of the
CompanyAct.		 0

Note 1: For the academic qualifications of the various directors, refer to p.8~p.10.

  1. Board diversity and independence:

(1) Board diversity: Give a description of the policy and goals regarding board diversity, and the achievement thereof. Diversity policy shall include, but are not limited to, the policy on director selection criteria, professional qualifications required of the Board of Directors, the composition or percentage of experience, gender, age, nationality, and culture that are required of the Board of Directors; a company shall also disclose the concrete goals therefor, and the achievement of such goals.

13

The membership composition of the Board of Directors is determined by giving consideration to the diversity of Board member in various perspectives in accordance with the “Corporate Governance Best Practice Principles” and the “Procedures for Election of Directors”. The Company has 9 directors, of whom 3 are independent directors and 2 are female directors. Board members are experts in management, science and engineering, or financial analysis; have involved in the management of the technology industry; have the literacy that the Company needs such as industrial knowledge about semiconductors, operational judgment capability, a cosmopolitan market view, leadership, and decision-making capability; and can offer professional advice from different aspects, thus helping improve the Company’s operating performance and management benefits. The Board membership diversity policy attaches importance to the diversification of Board membership and gender equality. The incumbent directors always pay attention to, and are seeking, whether there is any talent with a cosmopolitan market view or experience in crisis management and law.

Items of
diversity
Director
name		 Basic composition Basic composition Basic composition Basic composition Capability possessed Capability possessed Capability possessed

Nationality		 Gender Age Term and seniority
of independent
director		 Operational
judgment
capability		 Accounting and
financial analysis
capability		 Business
administration
capability		 Crisis
management
capability		 Industry
knowledge		 Cosmopolitan
market view		 Leadership Decision-making
capability		 Investment
management
Hung-
Liang
Hsieh		 ROC Male 71~75 v v v v v v v
Jyan-
Bang
Chen		 ROC Male 66~70 7 years
and 11
months		 v v v v v v
Cheng-Li
Yang
ROC		 Male 61~65 6 years
and 11
months		 v v v v v v v v v
Sung-Jen
Fang		 ROC Male 56~60 4 years
and 11
months		 v v v v v v v v v
Ming-
Chi Hsu		 ROC Male 56~60 v v v v v v v
Represen
tative of
Fullway
Investme
nt
Corporati
on: Su-
Chi Tien		 ROC Female 51~55 v v v v v v v v
Chung-
Ho Shaw		 ROC Male 66~70 v v v v v v v v v
Han-
Liang Hu		 ROC Male 56~60 v v v v v v v v
Wei-Lin
Hsieh		 ROC Female 36~40 v v v v v v v v

(2) Independence of the board:

A. Of the Company’s 9 directors, 3 are independent directors, accounting for 33.3% of total seats. A total of 7 seats of the directors plus independent directors are neither a spouse nor a relative of within the 2nd degree of kinship of one another. In this way, the Company complies with the rules specified in Paragraphs 3 and 4 of Article 26-3 of the Securities and Exchange Act.

14

  • B. No independent director shall serve for more than 3 terms; the number of public companies in which they concurrently serve as an independent director shall not exceed 3. The 2 independent directors have a seniority of less than 7 years; one independent director has a seniority of 7~8 years.

  • C. Directors are highly self-disciplined. If any director is an interested party with respect to any agenda item, the director shall state the important aspects of the interested party relationship at the respective meeting. When the relationship is likely to prejudice the interests of the company, the director may not participate in discussion or voting on that agenda item, and further, shall enter recusal during discussion and voting on that item and may not act as another director's proxy to exercise voting rights on that matter (refer to p.28: Recusal of directors from interest-conflicting proposals).

15

(II) Background information on directors, the President, vice presidents, associate vice presidents, and heads of various departments and branches

branches branches branches branches branches branches branches
April 15,2023
Title Nationality Name Gender
age		 Date elected
Shareholding		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Main career (academic) achievements Concurrent duties in the Company
and other companies
Managers who are
spouse or blood relatives
within the second degree

Remarks
(Note)
Shares % Shares % Shares % Title Name Relatio
nship
The Company’s CEO

President, Natgem Inc.
Director, Scientech Engineering

Corp.(Shanghai)

Director, Scientech Engineering

（Hong Kong) Limited

Director, Scientech Investment
Corp

Director, Simple Investment Corp

Director, Scientech Engineering
Ming-Chi Male MS Institute of Physics Tamkang
CEO ROC
Hsu
56~60		 1990.07.16 263,215 0.32% 438,821 0.54% 0 0 , ,
Uiit		 USA Corp None None None None
nversy Director Forward Science Pte Ltd
,
Director, Forward Science
Corporation

Chairman, Transcend Capital

Corp.

Chairman, Mingyuan Investment

Co., Ltd.
Representative of a corporate

director,Renorigin Innovation

Institute Co., Ltd.
Hong-Jey Male MS, Institute of Physics, National Director, Acromass Technologies,

Chung Cheng University

Manager, United Microelectronics
President of
 Corporation
UMC Si M
the Business
Group		 ROC
Lee		 51~55 2009.03.31 111,625 0.14% 18,000 0.02% 0 0 ngapore anager
APIAA Certified Industrial Analyst
Inc.		 None None None None

the members of ISES Advisory Board
the members of SEMI Taiwan
Advanced Packaging Committee
MS, Institute of Materials Engineering,

University Of Dayton, USA

Deputy Division Chief, Nanya

Technology Corporation

Division chief, Technology
President of Kaan Lu

the Business		 ROC
Tzou		 Male
5155		 2020.09.07 0 0 0 0 0 0 Department of Micron Taiwan Factory
N1 Diii hif Diii f		 None None None None None
Group ~ o.; vson ce, vson o
Production and Packaging Micron
,
Taiwan
Senior associate vice president of the

Operations Center, Applied

Optoelectonics, Inc.
Vi id
ROC		 20100222 30000 004 0 0 0 0 MS, Institute of Applied Chemistry,
 N N N N N
Hwang- Male National Chiao Tung University
Si l di Sid
ce present
Kuen Lin 56~60 .. , .% enor pant rector, emconuctor
Manufacturing International (Beijing)		 one one one one one

Corporation

16

Title Nationality Name Gender
age		 Date elected
Shareholding
Shareholding		 Shareholding of
spouse and
underage children		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Shares held
in the name
of other
persons		 Main career (academic) achievements Concurrent duties in the Company
and other companies
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree

Remarks
(Note)
Shares % Shares % Shares % Title Name Relatio
nship
BA, Department of Physics, FU Jen

Catholic University;

EMBA, National Tsing Hua University

Research fellow, Industrial Technology

Research Institute.
Vice president
ROC		 Chih-Huei Female 2001.07.01 28,000 0.03% 0 0 0 0 Process engineer, Texas President, Scientech Gmbh None None None None
Chu 56~60
Semiconductors

Manger of the Business Department,

Lingdia Enterprise

Manager of the wedding gown section,

TAIPEI LOVE FOREVER BRIDAL
STUDIO
MS, Institute of Physics, National

Tsing Hua University

Deputy manager of the R&D

Department, Pristine Optoelectronics

Associate engineer, Optoelectronics
Vice president

of the R&D
ROC		 Kou-Hwa
Ch		 Male
616		 2020.03.01 0 0 10 0 0 0 Laboratory, Industrial Technology
Rh Ii		 None None None None None
Department ang ~5 esearc nsttute
Manager of the Quality Assurance

Department, Merck Balzers

Vice president, Scientech Corporation

Vice president, Acromass

Technologies, Inc.
MS, Institute of Material Science and
Engineering, National Central

University
Vice president
ROC		 Ming- Male 2011.09.01 187,984
0.23%		 40,000 0.05% 0 0 Engineer, Vertex Precision Electronics None None None None None
Hsun Lee 46~50
Inc.

Engineer, Kinik Precision Grinding

Corporation

Manager, Kinik Company
Associate vice
ROC		 Male 20090331 6691 008 0 0 0 0 Graduate of the Department of N N N N N

Electronic Engineering, Ta Hwa
Chuan-
Ch		 University of Science and Technology
Section Chief, APack Technologies
president ang
Feng		 51~55 .. 7, .%
Inc.
Engineer, Vanguard International		 one one one one one

Semiconductor Corporation

Engineer, Coretronic Corporation
MS, Institute of Chemical Engineering,
National Cheng Kung University
R&D engineer, Sinonar Corporation
Associate vice Chien- Male

ROC		 2005.11.19 3,000 0.00% 0 0 0 0 Process integration engineer, United None None None None None
president Chung Lin 51~55
Microelectronics Corporation
Deputy manager, Hejian Technology
(Suzhou)Co.,Ltd.
PhD., Institute of Science and
Associate vice
ROC		 Pei-Han Male 2022.6.21 0 0 0 0 0 0
Technology Management, National		 None None None None None
president Chung 46~50
Chiao TungUniversity

17

Title Nationality Name Gender
age		 Date elected
Shareholding
Shareholding		 Shareholding of
spouse and
underage children		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Shares held
in the name
of other
persons		 Main career (academic) achievements Concurrent duties in the Company
and other companies
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree

Remarks
(Note)
Shares % Shares % Shares % Title Name Relatio
nship
MS, Institute of Electrical Engineering,
National Cheng Kung University
Sales Director, Picosun Taiwan
Corporation Technical
Industrialization Manager, Electronics
and Optoelectronic Lab, Industrial
TechnologyResearch Institute

ROC		 2021922 0 0 0 0 0 0 MS, Institute of Materials Science and None None None None None
Engineering, National Sun Yat-Sen
University
Tsun-
Hsiun		 Process engineer, Taiwan
Sidt Mfti C
Associate vice
 Male
president g
Peng		 46~50 .. emconucor anuacurng o.,
Ltd.
Component engineer, United
Microelectronics Corp.
Department manager,Xintec Inc.
University of South Australia -
Associate vice Chih Male

ROC		 2022.4.1 0 0 0 0 0 0 Bachelor Degree of Management None None None None None
president Chang Lin 46~50
Information System
MS, Institute of Chemistry, National
Taiwan University
Associate vice
ROC		 Yuan- Male 2022.08.01 0 0 0 0 0 0
Macronix International Co., Ltd		 None None None None None
president Chieh Hou
46~50

Hitekcorps
Changxin MemoryTechnologies,Inc.
MS, Forestry, National Chung Hsing
Associate vice
 Chuan-Jen Male
 University

ROC		 20230213 None None None None None
president Fang 46-50 .. Diffusion Process Department
Manager,Micron Technolog

Hsiao-Pei
Associate vice Female

president
ROC		 Kuo
41-45		 2023.04.01 MBA, Fontbonne University None None None None None
Associate vice I-Feng, Male BA, Department of Electrical

ROC		 2023.04.01 None None None None None
president
Chang		 46-50 Engineering, Far East University/
PhD., Institute of Information
Management, National Chiao Tung
Associate vice
ROC		 Yi-Lin Li Male 2018.04.01 0 0 0 0 0 0 University None None None None None
president 51~55
Deputy division chief of the

Information Division, Gallant
Precision Machining Co., Ltd.
Shao-Che Ml Department of Accounting, Tamkang Si Sith Eii
Associate vice
idt

University
presen,
Accounting		 ROC
Chuang		 ae
56~60		 2006.05.22 0 0 0 0 0 0 Manager of the Accounting
 upervsor, cenec ngneerng
Corp.(Shanghai)		 None None None None

Division		 Department, Golden Orange
Electronics Co.,Ltd.

18

Title Nationality Name Gender
age		 Date elected
Shareholding
Shareholding		 Shareholding of
spouse and
underage children		 Shareholding of
spouse and
underage children		 Shares held
in the name
of other
persons		 Shares held
in the name
of other
persons		 Main career (academic) achievements Concurrent duties in the Company
and other companies
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree
Managers who are
spouse or blood relatives
within the second degree

Remarks
(Note)
Shares % Shares %
 Shares % Title Name Relatio
nship
Manager, Priver Corp.
Head of
Corporate
Governance		 MS, Finance, Fu Jen Catholic Director Renorigin Innovation
Shu-Chen Female University ,
Institute Co Ltd
ROC ,
Shen
51-55		 2023.04.01 18 0.00% Associate vice president of
 . .
President, Zhenjia Investment Co.		 None None None None
Underwriting Department, Capital
Securities Corp.
Ltd.
Manager of
the Audit
Office		 BA, Department of Statistics, Fu Jen
Male
 Catholic University
ROC Chi Wu 2007.04.16 0 0 0 0 0 0
Manager Qmi Industrial Co. Ltd		 None None None None None
51-55 , ,
Manager, Pricewaterhousecoopers

Taiwan

Note: In the event that the chairman and president or a position of the same level (top-level manager) are the same person, or a spouse or a first-degree relative thereof, relevant information such as the reasons, rationality, necessity, and future improvement measures must be disclosed: None

III. Remuneration paid during the most recent fiscal year to directors, the president, and vice presidents

  1. Remuneration paid to directors and independent directors 2022

Unit: NT$1,000

Title Name Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Total
Remuneration
(A+B+C+D) as a
% of the Net
Income		 Total
Remuneration
(A+B+C+D) as a
% of the Net
Income		 Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Total
Remuneration
(A+B+C+D+E+F+
G) as a % of the
Net Income		 Total
Remuneration
(A+B+C+D+E+F+
G) as a % of the
Net Income		 Remunerati
on received
from an
investee
other than a
subsidiary,
or from the
parent
company
Compensation
(A)		 Disability
retirement benefits
(B)
Directors’
compensation (C)		 Fees for
professional
practice (D)		 Salary, bonus, and
special
reimbursement (E)
Disability
retirement benefits
(F)
Employee compensation (G)
The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y
 All
companie
s within
the
financial
statement
s

The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The Company All companies
within the
financial
statements		 The
Compan
y		 All
companie
s within
the
financial
statement
s
Amou
nt in
cash		 Amou
nt in
shares		 Amou
nt in
cash		 Shares
Amou
nt
Chairman Hung-Liang
Hsieh		 0 0 0 0 5,600 5,600 175 175 1.02% 1.02% 15,893 16,424 284 284 215 0 215 0 3.90% 3.99% None
Director Ming-Chi
Hsu
Director Representati
ve of
Fullway
Investment
Corporation:
Su-Chi Tien
Director Chung-Ho
Shaw
Director Han-Liang
Hu
Director Wei-Lin
Hsieh

19

Title Name Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Directors’ remuneration Total
Remuneration
(A+B+C+D) as a
% of the Net
Income		 Total
Remuneration
(A+B+C+D) as a
% of the Net
Income		 Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Remuneration for concurrent duty as an employee Total
Remuneration
(A+B+C+D+E+F+
G) as a % of the
Net Income		 Total
Remuneration
(A+B+C+D+E+F+
G) as a % of the
Net Income		 Remunerati
on received
from an
investee
other than a
subsidiary,
or from the
parent
company
Compensation
(A)		 Disability
retirement benefits
(B)
Directors’
compensation (C)		 Fees for
professional
practice (D)		 Salary, bonus, and
special
reimbursement (E)
Disability
retirement benefits
(F)
Employee compensation (G)
The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The
Compan
y		 All
companie
s within
the
financial
statement
s		 The Company All companies
within the
financial
statements		 The
Compan
y		 All
companie
s within
the
financial
statement
s
Amou
nt in
cash		 Amou
nt in
shares		 Amou
nt in
cash		 Shares
Amou
nt
Independe
nt director		 Jyan-Bang
Chen		 720 720 0 0 2,400 2,400 195 195 0.58% 0.58% 0 0 0 0 0 0 0 0 0.58% 0.58% None
Independe
nt director		 Cheng-Li
Yang
Independe
nt director		 Sung-Jen
Fang
1. Please describe the remuneration policy, system, criteria, and structure for independent directors, and the relevance of remuneration to factors such as the duty and risk they assume and the time they invest: The Company’s
independent directors are entitled to the director remuneration plus a fixed amount of monthly salary. Remuneration for directors and independent directors alike is determined based on their contribution during their term of
office and the weight specified in the director remuneration policy passed by the Remuneration Committee.
2. In addition to as disclosed in the above table, the remuneration received by the directors for their services provided (such as serving as a non-employee consultant for the parent company/any of the consolidated companies/
investees) in the most recent fiscal year: None.

Note: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration for 2022 in the amount of NT$8,000 thousand at the Board of Directors meeting dated March 10, 2023.

20

Table of Remuneration Ranges

Table of Remuneration Ranges Table of Remuneration Ranges Table of Remuneration Ranges Table of Remuneration Ranges
Directors’ remuneration range Name of Director
Remunerationequal tothe sumof A,B, C,andD Remunerationequal tothe sumof A,B, C,D,E,F,and G
The Company All companies within the
financialstatements		 The Company All companies within the
financialstatements
Under NT$1,000,000 Ming-Chi Hsu; Han-Liang
Hu; Chung-Ho Shaw;
Fullway Investment
Corporation: Su-Chi Tien ;
Wei-Lin Hsieh		 Ming-Chi Hsu; Han-Liang
Hu; Chung-Ho Shaw;
Fullway Investment
Corporation: Su-Chi Tien;
Wei-Lin Hsieh		 Han-Liang Hu; Chung-Ho
Shaw; Fullway Investment
Corporation: Su-Chi Tien		 Han-Liang Hu; Chung-Ho
Shaw; Fullway Investment
Corporation:Su-Chi Tien
NT$1,000,000 (inclusive)～
NT$2,000,000 (exclusive)		 Jyan-Bang Chen; Sung-Jen
Fang ; Cheng-Li Yang;
Hung-LiangHsieh		 Jyan-Bang Chen; Sung-Jen
Fang; Cheng-Li Yang;
Hung-LiangHsieh		 Jyan-Bang Chen; Sung-Jen
Fang; Cheng-Li Yang		 Jyan-Bang Chen; Sung-Jen
Fang; Cheng-Li Yang
NT$2,000,000 (inclusive)～
NT$3,500,000 (exclusive)		 - - Wei-Lin Hsieh Wei-Lin Hsieh
NT$3,500,000 (inclusive)～
NT$5,000,000 (exclusive)		 - - - -
NT$5,000,000 (inclusive)～
NT$10,000,000 (exclusive)		 - - Hung-Liang Hsieh Hung-Liang Hsieh
NT$10,000,000 (inclusive)～
NT$15,000,000 (exclusive)		 - - Ming-Chi Hsu Ming-Chi Hsu
Total 10 10 10 10

Note 1: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration in the amount of NT$8,000 thousand at the Board of Directors meeting dated March 10, 2023.

21

  1. Supervisors’ remuneration: Not applicable because the Company adopts an audit committee system.

  2. Remuneration to the president and vice presidents

2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000 2022Unit:NT$1,000
Title Name Salary (A) Disability
retirement benefits
(B)		 Bonus and special
reimbursement
(C)		 Employee compensation
(D)		 Total Remuneration
(A+B+C+D) as a %
of the Net Income

Remunerat
ion
received
from an
investee
other than
a
subsidiary,
or from the
parent
company
The
Company
All
companie
s within
the
financial
statement
s		 The
Company
All
companie
s within
the
financial
statement
s		 The
Company
All
companie
s within
the
financial
statement
s		 The Company All companies
within the
financial
statements		 The
Company
All
companie
s within
the
financial
statement
s
Amount
in cash
Amount
in
shares
Amount
in cash
Amount
in
shares
CEO Ming-Chi
Hsu
15,780




 16,311 814 814 16,250 16,250 7,813 0 7,813 0 7.15% 7.24% None
President of
the Business
Group

Hong-Jey
Lee
President of
the Business
Group

Kaan Lu
Tzou
Vice
president		 Hwang-
Kuen Lin
Vice
president		 Chih-
Huei Chu
Vice
president		 Kou-Hwa
Chang
Vice
president		 Ming-
Hsun Lee

Note: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration for 2022 in the amount of NT$8,000 thousand at the Board of Directors meeting dated March 10, 2023.

22

Table of Remuneration Ranges

Table of Remuneration Ranges Table of Remuneration Ranges
Range of remuneration paid to the Company’s
president and vice presidents		 Name of President and vice president
The Company All companies within the financial statements
Under NT$1,000,000 - -
NT$1,000,000 (inclusive)～NT$2,000,000
(exclusive)		 - -
NT$2,000,000 (inclusive)～NT$3,500,000
(exclusive)		 Kou-Hwa Chang Kou-Hwa Chang
NT$3,500,000 (inclusive)～NT$5,000,000
(exclusive)		 Hwang-Kuen Lin; Hong-Jey Lee Hwang-Kuen Lin; Hong-Jey Lee
NT$5,000,000 (inclusive)～NT$10,000,000
(exclusive)		 Chih-Huei Chu; Kaan Lu Tzou; Ming-Hsun
Lee		 Chih-Huei Chu; Kaan Lu Tzou; Ming-Hsun Lee
NT$10,000,000 (inclusive)～NT$15,000,000
(exclusive)		 Ming-Chi Hsu Ming-Chi Hsu
Total 7 7

Note 1: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration in the amount of NT$8,000 thousand at the Board of Directors meeting dated March 10, 2023.

23

  1. Names of managerial officers who are assigned employee remuneration and the status of assignment
2022
Unit: NT$1,000		 2022
Unit: NT$1,000		 2022
Unit: NT$1,000		 2022
Unit: NT$1,000		 2022
Unit: NT$1,000		 2022
Unit: NT$1,000
Title Name Amount
paid in
shares		 Amount
paid in
cash		 Total Total as % of the Net
Income
Manager CEO Ming-Chi Hsu 11,385.4
2.00%
President of the
Business Group		 Hong-Jey Lee
President of the
Business Group		 Kaan Lu Tzou
Vice president Hwang-Kuen
Lin
Vicepresident Chih-Huei Chu
Vice president Kou-Hwa
Chang
Vicepresident Ming-Hsun Lee
Associate vice
president		 Chuan-Chang
Feng

Associate vice
president		 Chien-Chung
Lin		 0 11,385.4
Associate vice
president		 Pei-Han Chung
Associate vice
president		 Chun-Hsiung
Peng
Associate vice
president		 Yi-Lin Lee
Associate vice
president,
Accounting
Division		 Shao-Che
Chuang
Manager of the
Audit Office		 Chi Wu

Note 1: The Company resolved to distribute the employee remuneration for 2022 in the amount of NT$58,000 thousand at a Board of Directors meeting on March 10, 2023; such amount was calculated based on the ratio of the actually distributed amount for 2021 to the employee remuneration for 2021.

  • (IV) Separately compare and describe total remuneration, as a percentage of net income stated in the consolidated financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, presidents, and vice presidents, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure.

  • (1) Below is the analysis of the total remuneration, as a percentage of net income stated in the consolidated financial reports or individual financial reports, as paid by the Company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, presidents, and vice presidents:

24

Item Ratio of total remuneration to net income Ratio of total remuneration to net income Ratio of total remuneration to net income Ratio of total remuneration to net income
The Company’s individual financial
statements		 Consolidated financial statements
2021 2022 2021 2022
Director NT$25,563
thousand
6.09%		 NT$25,482
thousand
4.48%		 NT$26,084
thousand
6.21%		 NT$26,013
thousand
4.58%
President and vice
president		 NT$41,001
thousand
9.76%		 NT$40,657
thousand
7.15%		 NT$41,522
thousand
9.89%		 NT$41,188
thousand
7.24%

  • Note: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration for 2022 in the amount of NT$8,000 thousand at the Board of Directors meeting dated March 10, 2023.

  • (2) The remuneration policies, standards and packages, the procedures for determining remuneration and their relationship to the Company's operating performance and future risks:

  • A. The Company’s independent directors are entitled to a fixed amount of remuneration. Other directors are entitled to no compensation other than the reimbursement of transportation expenses required for attending a Board meeting. In addition, according to Article 20 of the Company’s Articles of Incorporation, no less than 2% of the annual earnings may be allocated as directors’ remuneration. Such remuneration is firstly proposed to the Remuneration Committee in accordance with the Company’s remuneration distribution principles; if the committee gives the approval, such remuneration proposal is then summited to the Board of Directors and, if approved, implemented.

  • B. The appointment of the president and vice presidents is carried out according to the Company’s regulations; the compensation for the president and vice presidents is based on the Company’s regulations and the payment standards in the industry. Salary structure mainly comprises base salary, job pay differentials, bonus, and monetary perks.

  • C. The salary adjustment, year-end bonus, and bonus distribution therefor are determined based on the Company’s “Employee Promotion Regulations” and “Employee Performance Assessment Regulations”. Performance evaluation includes criteria such as managers’ KPI performance, professional skills, core occupational competencies, extent of contribution to the Company, personal performance, and personal potential and prospect. The distribution proposal is firstly drafted by the management executives with consideration given to personal performance and the Company’s operational performance, then approved by the executives with the authority, then submitted to the Remuneration Committee for consideration, and, if approved, implemented. The remuneration system is reviewed, where appropriate, based on applicable laws and the status of operations, so as to strike a balance between the Company’s sustainable operations and risk control.

25

IV. Corporate governance implementation

(I) Operation of the board of directors

The Board of Directors held 6 meetings and 2 meetings during 2022 and 2023, and during the period until the publication date of this annual report with a total of 8 meetings, respectively; The attendance and presence of directors are stated as follows:

Title Title Name Name Number of
attendance
(presence)inperson
Number of
attendance by
proxy		 Attendance
(presence) rate
(%)		 Remarks Remarks
Chairman Hung-Liang Hsieh 8 0 100％
Independent
director		 Jyan-Bang Chen 7 1 88％
Independent
director		 Sung-Jen Fang 8 0 100％
Independent
director		 Cheng-Li Yang 8 0 100％
Director Ming-Chi Hsu 7 1 88％
Director Chung-Ho Shaw 8 0 100％
Director Representative of
Fullway Investment
Corporation:
Su-Chi Tien		 7 1 88％
Director Han-LiangHu 8 0 100％
Director Wei-Lin Hsieh 7 1 88％
Note: Each Board of Directors meeting is attended by at least two independent directors in person.
Other matters to be recorded:
I. In the event of any of the following in a Board of Directors meeting, the dates of meeting, session, contents of
motions, the opinions of independent directors, and the Company’s response to the opinions should be specified:
(I) Matters specified in Article 14-3 of the Securities and Exchange Act:
Board of
Directors
meeting
Proposal Content and Follow-up Implementation
Whether an
independent
director objects
or has a qualified
opinion
6th meeting of
the 10th session
2022.01.07
1. Proposal to invest in theplants and land in Tainan.
None
Opinion of an independent director: None.
The Company’s response to the independent director’s opinion: None.
Resolution: Unanimously approved by all directors attending the board
meeting.
7th meeting of
the 10th session
2022.03.03
1. Proposal to loan funds to others.
None
2. Proposal to allow the sub-subsidiary Scientech Engineering (Hong
Kong) Limited to make a one-year endorsement and guarantee for
Scientech Engineering Corp.(Shanghai).
None
3. Proposal to determine whether disguised loaning of funds should be
presented as a case of loaning of funds to others; this proposal is based on
item 37 in the Q&A regarding the Regulations Governing Loaning of
Funds and Making of Endorsements/Guarantees by Public Companies.
None
Board of
Directors
meeting		 Proposal Content and Follow-up Implementation Whether an
independent
director objects
or has a qualified
opinion
6th meeting of
the 10th session
2022.01.07		 1. Proposal to invest in theplants and land in Tainan. None
Opinion of an independent director: None.
The Company’s response to the independent director’s opinion: None.
Resolution: Unanimously approved by all directors attending the board
meeting.
7th meeting of
the 10th session
2022.03.03		 1. Proposal to loan funds to others. None
2. Proposal to allow the sub-subsidiary Scientech Engineering (Hong
Kong) Limited to make a one-year endorsement and guarantee for
Scientech Engineering Corp.(Shanghai).		 None
3. Proposal to determine whether disguised loaning of funds should be
presented as a case of loaning of funds to others; this proposal is based on
item 37 in the Q&A regarding the Regulations Governing Loaning of
Funds and Making of Endorsements/Guarantees by Public Companies.		 None

26

4. Proposal to appoint the attesting CPAs for the Company’s 2022
financial statements.		 None
5. Proposal to issue the Company’s 2021 Internal Control System
Statement.		 None
Opinion of an independent director: None.
The Company’s response to the independent director’s opinion: None.
Resolution: Unanimously approved by all directors attending the board
meeting.
10th meeting of
the 10th session
2022.11.04		 1. Proposal on the 2023 annual auditplan. None
Opinion of an independent director: None.
The Company’s response to the independent director’s opinion: None.
Resolution: Unanimously approved by all directors attending the board
meeting.
12th meeting of
the 10th session
2023.03.10		 1. Proposal to loan funds to others. None
2. Proposal to allow the sub-subsidiary Scientech Engineering (Hong
Kong) Limited to make a one-year endorsement and guarantee for
Scientech Engineering Corp.(Shanghai).		 None
3. Proposal to appoint the attesting CPAs for the Company’s 2023
financial statements.		 None
4. Proposal to determine whether disguised loaning of funds should be
presented as a case of loaning of funds to others; this proposal is based
on item 37 in the Q&A regarding the Regulations Governing Loaning of
Funds and Makingof Endorsements/Guarantees byPublicCompanies.		 None
5. Proposal to issue the Company’s 2022 Internal Control System
Statement.		 None
Opinion of an independent director: None.
The Company’s response to the independent director’s opinion: None.
Resolution: Unanimously approved by all directors attending the board
meeting.
(II) Any other documented objections or qualified opinions raised by an independent director against a board
resolution: None

27

  • II. Disclosure regarding avoidance of interest-conflicting motions, including the names of directors concerned, the motions, the nature of conflicting interests, and the voting process:

On March 10, 2022, the Board of Directors submitted the proposal to distribute employee remuneration and director remuneration for 2021. Since the proposal involves the interest of Chairman Hung-Liang Hsieh, Director Ming-Chi Hsu, and Director Wei-Lin Hsieh who are also managers of the Company, the Company’s Regulations Governing Procedure for Board of Directors Meetings requires that they recuse themselves from the discussion and voting of the proposal. Therefore, Chairman Hung-Liang Hsieh designated Director Chung-Ho Shaw to chair the discussion and voting of the proposal on his behalf. Except the said directors who recused themselves to avoid conflict of interest, other directors approved the proposal in whole and reported it to the Shareholders' Meeting.

On March 10, 2023, the Board of Directors submitted the proposal to distribute employee remuneration and director remuneration for 2022. Since the proposal involves the interest of Chairman Hung-Liang Hsieh, Director Ming-Chi Hsu, and Director Wei-Lin Hsieh who are also managers of the Company, the Company’s Regulations Governing Procedure for Board of Directors Meetings requires that they recuse themselves from the discussion and voting of the proposal. Therefore, Chairman Hung-Liang Hsieh designated Director Chung-Ho Shaw to chair the discussion and voting of the proposal on his behalf. Except the said directors who recused themselves to avoid conflict of interest, other directors approved the proposal in whole and reported it to the Shareholders' Meeting.

III. A TSWE- or TPEx-listed company shall disclose information on the director’s self-evaluation (or peer evaluation) in terms of frequency, period, scope, method, and content, and shall fill in Table 2 Status of Directors Performance Evaluation Implementation.

Evaluation
periodicity		 Evaluation period Evaluation
scope		 Evaluation method Evaluation
content
Annually 2022.01~2022.12 Note1 Through a form designed by the
Companyitself		 Note2

Note 1: The evaluation scope covers 1. self-evaluation of the performance of the Board of Directors as a whole; 2. self-evaluation of the performance of the board members; 3. self-evaluation of the performance of the Remuneration Committee; and 4. self-evaluation of the performance of the Audit Committee.

Note 2: Evaluation content: A. The content of the self-evaluation of the performance of the Board of Directors as a whole contains the extent of participation in the operations of the Company; improvement in the quality of the board of directors' decision making; composition and structure of the board of directors; election and continuing education of the directors; and internal control. B. The content of the self-evaluation of the performance of the board members covers the alignment of the goals and missions of the Company; awareness of the duties of a director; participation in the operations of the Company; management of internal relationship and communication; the director's professionalism and continuing education; and internal control. C. The content of the self-evaluation of the performance of the functional committees covers the participation in the operations of the Company; awareness of the duties of the functional committees; improvement in quality of decisions made by the committees; composition of the committees and election of their members; and internal control.

28

IV. An evaluation of targets for strengthening of the functions of the board during the current and immediately preceding fiscal years.

The Company has three elected independent directors, who assemble the Audit Committee, thus enhancing corporate governance.

The Company has formulated the Rules for Performance Evaluation of Board of Directors; it distributes selfperformance evaluation questionnaire in Decembers to all board members. The questionnaire evaluates not only the operation of the Board of Directors as a whole, but also the performance of individual board members. In terms of improvement in information transparency, the Company’s financial information and material motions are all resolved at a Board of Directors as required by the Regulations Governing Procedure for Board of Directors Meetings of Public Companies. Material resolutions are also disclosed on the Market Observation Post System (MOPS) in accordance with the public information disclosure principles.

The self-evaluation of the performance of the board members includes evaluation items such as the participation in the operations of the Company, improvement in the quality of the board of directors' decision making, composition and structure of the board of directors, election and continuing education of the directors, and internal control. To enhance the continuing education of directors and improve the enterprise risk management function, the Company plans to recruit dedicated instructors to give lessons to directors within the Company. As of March 3, 2022, the training course “The Only Way to Enterprise Sustainable Operations_External Innovation” was completed, taken by all 9 incumbent directors. In addition, the directors also participated in the following courses respectively: ”Group Corporate Governance”; ”Create new corporate value with ESG ： Business operation, correspondence and layout” ;”Industry theme publicity Conference for sustainable development road map” ; “Outlook for the overall global economic situation in the second half of 2022”; “New cross-border and cross-border information security threats and information security governance”; “2022 Annual Meeting of Taiwan Institute of Directors ： Exploring the core competitiveness of the next generation in the age of drastic changes”; “2022 Prevention of Insider Trading Forum” ; “ Corporate Governance Forum” 。

(II) Operation of the audit committee:

The Company adopts an audit committee system. The Audit Committee is composed of 3 independent directors. The Audit Committee mainly serves the function of helping the Board of Directors improve the performance of corporate governance, mainly by formulating the Company’s internal control system and performance evaluation system, reviewing the Company’s financial statements to ensure its fair presentation, supervising the procedures pertaining to the Company’s major business and financial conduct, ensuring that the Company complies with applicable laws and regulations, and appointing (discharging) the attesting CPAs. The professional qualifications and experience of the members of the Audit Committee are stated as follows:

Member’s Professional qualifications and experience Independent director Cheng-Li Yang is an MBA from Tulane University of the USA; used to be an independent director of Giga-Byte Technology Co., Ltd., independent director of Ace Pillar Co., Ltd., supervisor of Tekcore Co., Convener Ltd., and supervisor of Trade-Van Information Services Co.; and currently Cheng-Li Yang serve as Chairman of King Core Electronics Inc., Chairman of Allied Biotech Corp., and independent director of Giga-Byte Technology Co., Ltd. With his rich academic and pragmatic qualifications, he can advise the Company on company management, industrial development, and technologies.

29

Committee
member
Jyan-Bang Chen		 Independent director Jyan-Bang Chen is an MS from the Institute of Physics
of National Tsing Hua University; used to work in the Electronics Lab of
Industrial Technology Research Institute, and be the president of Texas
Semiconductor, Chairman of Visera Technologies Company Ltd., and
independent director of Materials Analysis Technology Inc.; and currently is
the responsible person of Tongfang Investment Co., Ltd. With his rich
academic and pragmatic qualifications, he can advise the Company on
companymanagement,industrialdevelopment, and technologies.
Committee
member
Sung-Jen Fang		 Independent director Sung-Jen Fang is a Ph.D. in Applied Materials Science
and Engineering from Stanford University. He used to participate in the R&D
of semiconductor advanced process in Texas Instruments and the R&D
Department of United Microelectronics; be an adjunct assistant professor in
the Department of Industrial Engineering of Yuan Ze University teaching
semiconductor factory practicals; and be an independent director of Hycon
Technology Corporation and Asolid Technology Co., Ltd. Currently, He is
Chairman of Darwin Venture Management Corporation; director of GTM
Holdings Corporation; director of Teco Electric & Machinery Co., Ltd.; and
director of Teco Image Systems Co.,Ltd. He specializes in the semiconductor
industryandtheinnovativemanagementof technology companies.

Duties of the Company’s Audit Committee include:

  1. Business report

  2. Review the annual financial statements and the financial report of the second quarter audited by the attesting CPA.

  3. Formulate and amend the internal control system and assess the effectiveness thereof; and formulate and amend the procedures for financial or operational actions of material significance such as acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, and endorsements or guarantees for others.

  4. Matters involving the personal interest of directors or supervisors.

  5. Transaction of material assets or derivatives; material loaning of funds; provision of endorsement or guarantee.

  6. The offering, issuance, or private placement of equity-type securities.

  7. Appointment and discharge of, and compensation for, attesting CPAs; appointment and discharge of financial/accounting/internal audit officers.

  8. A donation to a related party, or a major donation to a non-related party. However, public welfare donations for the emergency relief of major natural disasters may be ratified in the next board meeting.

  9. Other material matters required by the competent authority by law.

The major content of the Audit Committee’s achievements in 2022 include:

  1. Convening of the Audit Committee meetings: The Audit Committee mainly helped the Board of Directors execute and supervise the Company’s conduct in terms of accounting, audit, financial reporting procedures, and control of financial quality and financial ethnics. The main content, in addition to the 8 major tasks listed above, included the self-evaluation of the performance of the Audit Committee.

  2. Evaluation of the effectiveness of the internal control system: After evaluating the policy and procedures pertaining to the Company’s internal control system, the Audit Committee believed

30

  • the Company’s risk management system and internal control system effective on the basis that the Company had adopted necessary control mechanisms to monitor and correct any misconduct.

  • Review of the financial statements: After reviewing the 2022 Business Report, Earnings Distribution Proposal, Individual and Consolidated Financial Statements (including the balance sheet, statement of comprehensive income, statement of changes in equity, and statement of cash flows) that were prepared by the Company’s Board of Directors, the Audit Committee did not find any non-conformities, and thus prepared this Audit Committee Review Report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

  • Appointment of attesting CPA: By reviewing the independence and suitability of the appointed CPAs on March 3, 2022 and March 10, 2023, the Audit Committee completed the appointment of attesting CPAs for 2022 and 2023, respectively.

  • The Audit Committee reviews the audit report, which is prepared by the chief audit officer, against the content of the annual audit plan.

During 2022, and during 2023 until the publication date of this annual report, the Audit Committee held 5 meetings and 2 meetings, respectively, totaling 7 meeting (A), with the attendance and presence of directors which is stated as follows:

Title Name Number of
attendance in
person(B)		 Number of
attendance by
proxy		 Attendance rate
(%)
(B/A)		 Remarks
Independent
director		 Jyan-Bang Chen 6 1 86% In office from June 9, 2015
till now
Independent
director		 Cheng-Li Yang 7 0 100% In office from June 7, 2016
till now
Independent
director		 Sung-Jen Fang 7 0 100% In office from June 11, 2018
till now
Note: Each meeting is attended by at least two independent directors in person.
Other matters to be recorded:
I. In the event of any of the following circumstances in the audit committee, the dates of the Board of
Directors meeting, session, content of motions, resolutions of the audit committee meetings, and the Company’s
response to audit committee members’ opinion should be specified:
(I) Matters specified in Article 14-5 of the Securities and Exchange Act:

31

Resolution not adopted by
the Audit Committee but
adopted by two thirds or
more of all directors of the
Board of Directors
None
None
None
None
None
None
None
None
None
None
None
None
Audit Committee Proposal Content and Follow-up Implementation Resolution not adopted by
the Audit Committee but
adopted by two thirds or
more of all directors of the
Board of Directors
4th meeting of
the 4th session
2022.01.07		 1. Proposal to invest in theplants and land in Tainan. None
Audit Committee members’ opinion: None.
The Company’s response to the audit committee member’s
opinion: None.
Resolution: Unanimously approved by all Audit Committee
members attendingthe board meeting.
5th meeting of
the 4th session
2022.03.03		 1. Proposal to loan funds to others. None
2. Proposal to allow the sub-subsidiary Scientech Engineering
(Hong Kong) Limited to make a one-year endorsement and
guarantee for Scientech EngineeringCorp.(Shanghai).		 None
3. Proposal to determine whether disguised loaning of funds
should be presented as a case of loaning of funds to others; this
proposal is based on item 37 in the Q&A regarding the
Regulations Governing Loaning of Funds and Making of
Endorsements/Guarantees byPublic Companies.		 None
4. Proposal to appoint the attesting CPAs for the Company’s
2022 financial statements.		 None
5. Proposal to issue the Company’s 2021 Internal Control System
Statement.		 None
Audit Committee members’ opinion: None.
The Company’s response to the audit committee member’s
opinion: None.
Resolution: Unanimously approved by all Audit Committee
members attendingthe board meeting.
8th meeting of
the 4th session
2022.11.04		 1. Proposal to determine whether disguised loaning of funds
should be presented as a case of loaning of funds to others; this
proposal is based on item 37 in the Q&A regarding the
Regulations Governing Loaning of Funds and Making of
Endorsements/Guarantees byPublic Companies.		 None
2. Proposal on the 2023 annual auditplan. None
Audit Committee members’ opinion: None.
The Company’s response to the audit committee member’s
opinion: None.
Resolution: Unanimously approved by all Audit Committee
members attendingthe board meeting.
9th meeting of
the 4th session
2023.03.10		 1. Proposal to loan funds to others. None
2. Proposal to allow the sub-subsidiary Scientech Engineering
(Hong Kong) Limited to make a one-year endorsement and
guarantee for Scientech EngineeringCorp.(Shanghai).		 None
3. Proposal to appoint the attesting CPAs for the Company’s
2023 financial statements.		 None
4.Proposal to determine whether disguised loaning of funds
should be presented as a case of loaning of funds to others; this
proposal is based on item 37 in the Q&A regarding the
Regulations Governing Loaning of Funds and Making of
Endorsements/Guarantees byPublic Companies.		 None

32

  1. Proposal to issue the Company’s 2022 Internal Control System None Statement. Audit Committee members’ opinion: None. The Company’s response to the audit committee member’s opinion: None. Resolution: Unanimously approved by all Audit Committee members attending the board meeting.

  2. (II)Any other resolutions that were approved by two thirds of Board members but not approved by the Audit Committee other than those described above: None

  3. II. When there is avoidance of conflict of interest by an independent director, state the name of that independent director, the involved proposal(s), the cause(s) of the avoidance of conflict of interest, and the participation in voting of that independent director: None

  4. III. Communication between the Independent Directors and internal audit officer and CPAs (e.g., matters, methods, and results of communication regarding the Company's financial and business status):

    • (I) Communication between the internal audit officer and the Audit Committee:

      1. Periodically, the Company’s audit officer reports at an Audit Committee meeting at least quarterly, and will immediately report to the Audit Committee upon detection of any anomaly. The officer also answers any questions raised by the independent directors, and enhances the audit content as instructed by the independent director to ensure the effectiveness of the internal control system. For details, refer to the Company’s website: http://www.scientech.com.tw

      2. In normal business days and at irregular intervals, the audit content will be communicated by phone or email, or face to face; any material violation is immediately reported to the independent directors.

    • (II)Communication between CPAs and the Audit Committee:

      1. Periodically, at least four times a year, CPAs communicates with the Audit Committee about the implementation and results of the review or audit of the quarterly or annual financial statements around the time when such statements are being reviewed or audited. For details, refer to the Company’s website: http://www.scientech.com.tw

      2. At irregular intervals, if it is necessary to have immediate communication or discussion about operations or individual internal control cases, a meeting will be arranged where appropriate.

33

(III) The Company's implementation of corporate governance and the differences from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the reasons therefor.

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
I. Has the Company formulated and
disclosed its corporate governance
best practice principles in
accordance with the “Corporate
Governance Best Practice
Principles for TWSE/TPEx Listed
Companies”?		 V The Company has formulated its own “Corporate Governance Best Practice
Principles”, by which all work is carried out. Up until now there is no major difference.		 None
II. The Company's equity structure and shareholder equity
(I) Has the Company established
internal operating procedures to
handle shareholder
recommendations, doubts, disputes
and litigations, and implemented
them in accordance with the
procedures?		 V (I) The Company handles shareholder recommendations, doubts, disputes and
litigations by law.
In addition to having a spokesperson system, the Company also commissioned a
stock agency to set up a post dedicated to handling the Company’s stock affairs.
Furthermore, the Company’s website also has an investor’s zone in which they can
raise any questions and through which the Company can handle shareholder
recommendation or disputes.		 None
(II) Does the Company have a list of
the major shareholders who actually
control the Company and those who
ultimately have control over the
major shareholders?

V		 (II) As required by law, the Company periodically discloses a list of major shareholders
and their ultimate controllers, and files any changes therein, if any. Meanwhile,
through interaction with major shareholders, the Company is able to always get a
good grasp of the major shareholders who actually control the Company, as well as
their ultimate controllers.		 None
(III) Has the Company established
and implemented risk control and
firewall mechanisms between
affiliated companies?		 V (III) The Company operates independently from associates, and has them establish
their own internal control system and internal audit system. There are also the
“Regulations Governing the Transactions between Group Entities, Specific
Companies, and Related Parties” and the “Regulations Governing the Monitoring of
Subsidiaries” in place, which are implemented to effectively control the operating
risks of associates.
None

34

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
(IV) Has the Company formulated
internal regulations to prevent
insiders from trading securities
using undisclosed information on
the market?		 V (IV) The Company has formulated internal regulations governing the management
approaches for insider-trading prevention, as well as the Regulations for Dealing
with Reporting of Illegal, Unethical, or Dishonest Conduct, prohibiting insiders
from trading marketable securities using information not disclosed to the market.		 None
III. Composition and responsibilities of the Board of Directors
(I) Has the Board of Directors
formulated policy regarding the
diversity of membership and
implemented the same accordingly?
V		 (I) The membership composition of the Board of Directors is based on the “Corporate
Governance Best Practice Principles” and “Procedures for Election of Directors”,
specifically by considering the board membership diversity from different aspects,
including, but are not limited to, gender, age, nationality, culture, professionalism
(e.g., law, accounting, industry, finance, marketing, or technology), professional
skills, and industrial experience. For the embodiment of board membership
diversity, refer to Note 1. The Company’s Board of Directors is composed of nine
directors, of whom three are independent directors and two are female independent
directors. Board members are experts in management, science and engineering, or
financial analysis; have involved in the management of the technology industry;
have the literacy that the Company needs such as industrial knowledge about
semiconductors, operational judgment capability, a cosmopolitan market view,
leadership, and decision-making capability; and can offer professional advice from
different aspects, thus helping improve the Company’s operating performance and
management benefits. As for the Company’s board membership diversity policy, it
attaches importance to gender equality, in that it stipulates that female directors
account for no less than 20% of total board seats. On female director was elected at
the Shareholders' Meeting for 2020; as of the end of 2022, female directors already
accounted for 22% of the board seats, which meets the minimum requirement of
20%. For details on P.43, refer to Note 1: Status of implementation of board
membership diversity.		 None

35

Item The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
(II) In addition to the Remuneration
Committee and the Audit
Committee established in
accordance with law, has the
company voluntarily set up other
functional committees?		 V (II) The Company has established the Remuneration Committee and the Audit
Committee by law. The Company does not set up any other functional committee
for the time being, but will do so if required.		 The Company will set up other
functional committees if
circumstances require so.
(III) Has the Company established its
Rules for Performance Evaluation
of Board of Directors and the
evaluation methods, conducted the
performance appraisal regularly
every year and provided the results
to the board as the reference for
directors' remuneration and
nomination and renewal?		 V (III) On April 28, 2015, the board approved the Rules for Performance Evaluation of
Board of Directors, by which the board performance is evaluated annually. The
Company distributes self-performance evaluation questionnaire in Decembers to
all board members. The questionnaire evaluates not only the operation of the Board
of Directors as a whole, but also the performance of individual board members.
The content of the self-evaluation of the performance of the Board of Directors as
a whole contains the extent of participation in the operations of the Company;
improvement in the quality of the board of directors' decision making;
composition and structure of the board of directors; election and continuing
education of the directors; and internal control. In addition, the content of the self-
evaluation of the performance of the board members covers the alignment of the
goals and missions of the Company; awareness of the duties of a director;
participation in the operations of the Company; management of internal
relationship and communication; the director's professionalism and continuing
education; and internal control.
The content of the self-evaluation of the performance of the Audit Committee
covers the participation in the operations of the Company; awareness of the duties
of the Audit Committee; improvement in quality of decisions made by the Audit
Committee; composition of the Audit Committee and election of its members; and
internal control.
The content of the self-evaluation of the performance of the Remuneration
Committee covers the participation in the operations of the Company; awareness
of the duties of the Remuneration Committee;improvement inqualityof decisions
None

36

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
made by the Remuneration Committee; composition of the Remuneration
Committee and election of its members; and internal control.
The latest evaluation of the performance of the Board of Directors as a whole and
the performance of individual board members was completed in December 2022.
The evaluation results had been presented to the Board of Directors on March 10,
2023. The results indicate a score of 91 points for the evaluation of the Board of
Directors as a whole, 98 points for the self-evaluation of individual board
members, and 96 points for the evaluation of functional committees, all of which
will be referenced when determining the remuneration for directors and the
nominees for the director election.
The 2022 Board of Directors evaluation set out recommendations and
improvements that emphasize an analysis of the post-pandemic industry risks and
investment strategies. Therefore, during 2020 and 2023, the Company organized a
series of training courses, including “How Do Directors and Supervisors
Supervise Risk Management, Prevent Fraud, and Establish a Whistleblower
Mechanism to Strengthen Corporate Governance”, “Negotiation Know-hows for a
Successful M&A - from a Perspective of Directors and Supervisors “, “Corporate
Governance and Enterprise Operations and Management”, “Corporate Social
Responsibility and Sustainable Management; Introduction to Insider Trading and
Anti-Corruption” and “The Only Way to Sustainable Operations_External
Innovation”,so as to implement continuous improvement.
(IV) Does the company regularly
evaluate the independence of
attesting CPAs?		 V (IV) The Company evaluates the independence and suitability of appointed CPAs
annually in accordance with the Company’s “Corporate Governance Best
Practice Principles” and with reference to the AQI’s report. The evaluation for
2022 and 2023 was completed at the Board of Directors meeting dated March 3,
2022 and March 10, 2023, respectively. The evaluation criteria were based on the
statement, which was prepared by CPAs according to the “Bulletin of the Norm
of Professional Ethics for Certified Public Accountant of the Republic of China
No. 10. Integrity,Objectivityand Independence” issued bythe CPA		 None

37

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
ASSOCIATIONS R.O.C.(TAIWAN), stating therein that the CPAs did not
violate any independence or rules governing conflict on interest. Based on the
statement, the Company evaluated whether the CPAs are the Company’s
directors or shareholders, or whether they receive salary from the Company. In
doing so, the Company concluded that the CPAs are not a stakeholder of the
Company. The Company also obtained information on the CPAs’ academic and
work experience as well as their customers so as to evaluate their suitability (for
details,refer to p.44 Note 2: CPAs Independence Evaluation Criteria.)
IV. Has the Company allocated
qualified and sufficient number
of personnel and appointed
managers in charge of corporate
governance affairs (including but
not limited to furnishing
information required for business
execution by directors and
supervisors, assisting directors
and supervisors to comply with
laws, handling matters relating to
board meetings and shareholder
meetings according to laws,
handling matters relating to
business registration and
registration modification,
recording minutes of board
meetings and shareholder
meetings, etc.)?

V		 The company's chairman's office is the unit to promote corporate governance. On May
5, 2023, the board of directors appointed Shu-Chen, Shen, Associate vice president,
who has more than three years of experience in the management of legal affairs in the
public offering company, as the full-time corporate governance supervisor to be
responsible for handling the affairs of the board of directors and shareholders'
meetings, and responsible for the provision of materials required for the directors to
perform their duties; convening of the Board of Directors meetings and Shareholders'
Meetings by law and handling of matters thereof; conducting of business registration
and registration modification within the timeframe; taking and distribution of minutes
of the Board of Directors meetings and Shareholders' Meetings on time; convening of
investors’ conference; participation in investment forum at irregular intervals;
establishment of a spokesperson system; and establishment of diverse communication
channels for communication with investors, so as to protect shareholders’ equity and
enhance the board functions.
The major achievements of the corporate governance unit in 2022 are as follows: 1.
Conducting Board of Directors meeting and shareholder meeting related matters in
accordance with law; 2. preparing minutes of Board of Directors meetings and
shareholder meetings; 3. assisting directors and supervisors in continuing education; 4.
providing information necessary for directors and supervisors to perform their duties;
5. assisting directors and supervisors to comply with laws and regulations; 6.
organizingcharitable events;7. irregularlyassistingin the communication between		 None

38

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
independent directors, audit officers, CPAs, and the management - the communication
is good so far; 8. uploading the results of the said communication to the Company’s
website for investors’ reference; and 9. informing the Board of Directors members of
the competent authority’s directions or regulations on corporate governance.
The company plans that the supervisor of corporate governance will take 18 hours of
relevant course training within one year at his post.
V. Has the company established
communication channels with
stakeholders (including but not
limited to shareholders,
employees, customers and
suppliers, etc.) and a special
section for stakeholders on the
company's website, and
responded appropriately to
important corporate social
responsibility issues that are of
concernto stakeholders?		 V The Company has a spokesperson system, which is a communication channel with
stakeholders, and has set up a special section for stakeholders on its website.
Stakeholders can also communicate with the company by telephone, mail, and email.
The Company has set up a “Company Mailbox”, through which internal and external
personnel can submit suggestions or file complaints to the Company. The Company
summarizes communication matters with stakeholders every year, starting from 2019,
and reports the same to Board of Directors annually. For details, please refer to the
Company's websitehttps://www.scientech.com.tw.The latest report to the board of
directors on communication with stakeholders was on May 5, 2023		 None
VI. Has the company appointed a
professional stock affairs agency
to handle matters for shareholder
meetings?
V		 The Company has appointed CTBC Bank, a professional stock agency, to handle the
Shareholders' Meetings and stock affairs.		 None
VII. Public disclosure of information
(I) Has the Company set up a website
to disclose finance and business
matters and corporate governance
information?		 V (I) The Company has set up a website, and discloses information on its financials,
business, and corporate governance affairs on the Company’s website and the
Market Observation Post System (MOPS) as required by law.		 None

39

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
(II) Has the Company adopted other
means of information disclosure
(such as setting up an English
website, appointing dedicated
personnel responsible for the
collection and disclosure of
Company information,
implementing a spokesperson
system, posting the Company's
earnings calls on its website,etc.)?		 V (II) The Company has set up a company website, where a special zone is reserved for
investors and the information on the Company’s financials, business, and corporate
governance are regularly updated for investors' reference. The Company has
designated a person dedicated to collecting and disclosing the Company’s
information, and has implemented a spokesperson system as required by law.
Information on the Company’s investor’ conference is announced simultaneously
on the Market Observation Post System (MOPS) as required by law, and on the
investor zone on the Company's website.		 None
(III) Does the Company publish and
make official filing of annual
financial report within two months
after the end of an accounting
period, and publish/file Q1, Q2 and
Q3 financial reports along with the
monthly business performance
statements before the required due
dates?		 V (I) In 2022, the Company failed to publish and make official filing of annual financial
report within two months after the end of an accounting period, and publish/file
Q1, Q2 and Q3 financial reports along with the monthly business performance
statements before the required due.		 Continuous improvement
VIII. Does the company have other
important information that is
helpful to understand its
implementation of corporate
governance (including but not
limited to employee rights,
employee care, investor relations,
supplier relations, stakeholder
rights, continuing education of
directors and supervisors,		 V (I) Employee rights and employee care
1. The Company always pursues harmony and a win-win situation when it
comes to employees’ rights, and carries out the various management systems
in accordance with applicable labor laws and regulations.
2. Upholding the ideal that all men are equal, the Company’s management
policy and measures respecting recruitment, employment, promotion, etc. do
not discriminate based on sex, age, race, religion, or political affiliation. In
addition, the Company has made available several smooth complaint-filing
and communication channels, in that employees may reflect their opinions at
the annual meeting,through the complaint-filinghotline or employee		 None

40

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
implementation of risk
management policies and risk
measurement standards,
implementation of customer
policies, the company’s purchase
of liability insurance for directors
and supervisors, and so on)?		 mailbox, or at a labor-management meeting. Since establishment, the
Company has not had any material labor dispute.
3. Employee welfare: The Company organizes group tours and employee
activities from time to time every year to enhance the interaction between
colleagues and their families, and the affection and recognition of colleagues
towards the Company.
4. For details, refer to Five - Operational Highlights - Labor relations on
p.114~120 of this annual report, which describes the Company’s care for
employees and employees’ rights.
(II) Investor relations
1. The Company has a spokesperson system and a stock affairs unit, which deal
with shareholder suggestions or disputes.
2. The Company has set up a post dedicated to disclosing real-time information
on any changes in the Company’s financials, business, or shareholding of
insiders on the Market Observation Post System (MOPS), and always keeps
good communication with shareholders.
(III) Supplier relations and stakeholder rights
The Company always sticks to the principle of integrity and mutual benefits
when it comes to transactions with suppliers in order to maximize the benefits
there between, thereby forging a stable partnership. The Company regularly
evaluates suppliers and thus fully communicating with them. Therefore, the
business relation between the Company and suppliers has been good. In
addition, being a public company, the Company discloses information on its
operations as required by law, so as to provide timely information for
stakeholders.
(IV) Continuing education of directors: The Company periodically urges directors to
attend relevant courses. For details, refer to p.45~p.46 of the Appendix below.
(V) Implementation of risk management policies and risk measurement standards:
The Companyhas established and implemented its internal control and internal

41

Item The State of Operation The State of Operation The State of Operation The differences from the Corporate
Governance Best Practice Principles
for TWSE/TPEx Listed Companies
for TWSE/GTSM Listed Companies
and the reasons therefor.
Yes No Summary description
audit systems to reduce its operational risks. Please refer to Seven. Review and
Analysis of the Financial Position and Results of Operations and Risk
Management on p.133~p.142 of this annual report.
(VI) Implementation of customer policies: The Company keeps promoting the
quality management policy to ensure service quality and customer satisfaction.
(VII) The Company’s purchase of liability insurance for directors and supervisors:
The Company assesses the insured amount of the liability insurance policy for
directors every year. This year, the Company purchased a liability policy of
US$3 million for each director and major manager, and reported critical
insurance content such as insured amount, insurance coverage, and insurance
premium to the Board of Directors meeting dated November 4, 2022.
(VIII)The Company has formulated the “Regulations for Prevention of Insider
Trading”. In addition, the Company has a person dedicate to have the
information on the Company’s operations approved by the competent authority
within the timeframe and in the manner specified by the competent authority;
any material information treatment or disclosure thereafter will be carried out
on the same basis. Meanwhile, the Company from time to time informs
insiders of anymaterial internal information.
IX. Please explain improvements that have been made as well as priorities to improve the results of the Corporate Governance Evaluation issued by the Taiwan Stock Exchange
Corporate Governance Center:
The Company performed exceptionally in the Corporate Governance Evaluation. The Company assessed the parts that it failed to score for improvement measures, and
prioritized such improvement measures as follows:
(I) Improvement that has been made: 1. All directors are elected under the nomination system to implement corporate governance. 2. Ballots are cast electronically. 3. An
investors’ conference is held every year. 4. Cyber security management policy is introduced. 5. The Company’s operation and implementation corporate social
responsibilities has been disclosed in the annual report and on the company website.
(II) Prioritized items to be improved in the future: 1. To advocate directors taking more hours of training courses. 2. To advocate Remuneration Committee members attending
a meeting in person. 3. To hold the General Shareholders’ Meeting at the end of May. 4. To disclose the annual financial report within two months after the end of a fiscal
year.

42

Note 1: Status of implementation of board membership diversity:

Director Nationality Gender Concurrently
serving as an
employee		 Age Age Term and seniority of
independent director		 Term and seniority of
independent director		 Term and seniority of
independent director		 Term and seniority of
independent director		 Term and seniority of
independent director		 Business
administration		 Leadership
and
decision-
making		 Industry
knowledge		 Financial
accounting		 Investment
management
under
50		 51~60 61~70 70~80 under 3
years		 4~9
years		 More
than 9
years
Hung-LiangHsieh ROC Male V V V V V
Jyan-Bang Chen ROC Male V V V V
Sung-Jen Fang ROC Male V V V V V V
Cheng-Li Yang ROC Male V V V V V V V
Ming-Chi Hsu ROC Male V V V V V
Representative of
Fullway
Investment
Corporation: Su-
Chi Tien		 ROC Female V V V V
Chung-HoShaw ROC Male V V V V V V
Han-LiangHu ROC Male V V V V V
Wei-Lin Hsieh ROC Female V V V V

43

Note 2: CPAs Independence Evaluation Criteria

Evaluation Item Circumstances affecting to independence Circumstances affecting to independence Evaluation
result		 CPA, Hui-Min Huang CPA, Hui-Min Huang CPA, Chih-Ming Shao CPA, Chih-Ming Shao
Period:112/1/1-112/12/31 Period:112/1/1-112/12/31
Violation of Independence Violation of Independence
Yes No Yes No
A. Evaluation of
beneficial
interest between
the CPA and the
Company.		 1 Does the CPA have direct or significant indirect financial interest
relationships with theCompany?		 N/A V V
2 Does the CPA conduct financing or guarantee activities with the
Companyor the Directors of theCompany?		 N/A V V
3 Does the CPA have intimate business relationship with the Company
or the Directors, Managers?		 N/A V V
4 Does the member of the audit team has potential employment
relationships with theCompany?		 N/A V V
5 Is there contingent fee related to the audit work? N/A V V
B. Evaluation of
whether the CPA
has dual identity.
1
Did the member of the audit team use to be a director or manager of
the Company, or take any post within the Company that has great
influence over the audit work,in the last twoyears?		 N/A V V


2
Does the CPA provide the Company with non-audit service which
could directly influence the audit work?		 N/A V V
C. Does the CPA
act as a defender
of the
Company's
position?		 1
Does the member of the audit team act as a defender for the
Company or mediate a dispute with another third party on the behalf
of the Company?		 N/A V V
D. Evaluation of
familiarity with
the CPA and
Company
personnel.		 1
Does the member of the audit team has a family relationship with
company’s directors, managers or personnel who has significant
impact on audit work?		 N/A V V
2
Does the CPA who has retired within one year serve as company’s
director, manager or personnel with significant impact on the audit
work?		 N/A V V
3
Does the member of the audit team receive significant gifts or special
offers from the Company or the directors, managers, or major
stockholders?
N/A		 V V

44

E. Evaluation of
whether the CPA
has been
intimidated by
the Company.
1
Does the Company put pressure on the member of the audit team to
make them improperly reduce the inspection work that should be
performed,in order to reduce audit fee?		 N/A V V
2
Does the company require the member of the audit team to accept the
management's improper choice of accounting policies or improper
disclosure of financial statements?
N/A		 V V
F. Evaluation of the
attesting CPA’s
practice period
1		 Does the attesting CPA is subject to disciplinary action? N/A V V

2		 Did the same CPA engaged in the attestation has served for the
Company more than seven years (including the current year)?		 N/A V V
Evaluation result: Regarding the assessment, the CPAs, Hui-Min Huang and Chih-Ming Shao, have passed the Company’s independent evaluation criteria in 2023, and there is
nothing occurred with the effect on independence.

45

Note 3: Continuing education of directors: The Company periodically urges directors to attend relevant courses.

Title Date Name Organizer Course name Number of hours
Chairman 2022.03.05 Hung-Liang Hsieh Taiwan Corporate Governance
Association,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Chairman 2022.12.22 Hung-Liang Hsieh Taiwan Corporate Governance
Association ,TCGA		 Group Corporate Governance 3
Independent
director
2022.03.03		 Jyan-Bang Chen Taiwan Corporate Governance
Association ,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Independent
director
2022.12.22		 Jyan-Bang Chen Taiwan Corporate Governance
Association ,TCGA		 Group Corporate Governance 3
Independent
director
2022.03.03		 Cheng-Li Yang Taiwan Corporate Governance
Association ,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Independent
director
2022.04.18		 Cheng-Li Yang Accounting Research and
Development Foundation		 Create new corporate value with ESG：Business
operation,correspondence and layout		 3
Independent
director
2022.03.03		 Sung-Jen Fang Taiwan Corporate Governance
Association ,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Independent
director
2022.07.27		 Sung-Jen Fang Taiwan Stock Exchange,TWSE;
Taipei Exchange，TPEx		 Industry theme publicity Conference for
sustainable development road map		 2
Independent
director
2022.08.15		 Sung-Jen Fang Taiwan Investor Relations
Institute		 Outlook for the overall global economic situation
in the second half of 2022		 3
Director 2022.03.03 Chung-Ho Shaw Taiwan Corporate Governance
Association,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Director 2022.11.02 Chung-Ho Shaw Taiwan Corporate Governance
Association, TCGA		 New cross-border and cross-border information
security threats and information security
governance		 3
Director 2022.12.22 Chung-Ho Shaw Taiwan Corporate Governance
Association ,TCGA		 Group Corporate Governance 3
Director 2022.03.03 Han-Liang Hu Taiwan Corporate Governance
Association,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Director 2022.06.28 Han-Liang Hu Taiwan Institute of Directors 2022 Annual Meeting of Taiwan Institute of
Directors：Exploring the core competitiveness of
the nextgeneration in the age of drastic changes		 3

46

Title Date Name Organizer Course name Number of hours
Director 2022.03.03 Su-Chi Tien Taiwan Corporate Governance
Association,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Director 2022.10.28 Su-Chi Tien Taiwan Stock Exchange,TWSE 2022 Prevention of Insider Trading Forum 3
Director 2022.12.22 Su-Chi Tien Taiwan Corporate Governance
Association,TCGA		 Group Corporate Governance 3
Director 2022.03.03 Ming-Chi Hsu Taiwan Corporate Governance
Association ,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Director 2022.12.22 Ming-Chi Hsu Taiwan Corporate Governance
Association ,TCGA		 Group Corporate Governance 3
Director 2022.03.03 Wei-Lin Hsieh Taiwan Corporate Governance
Association ,TCGA		 The Only Way to Enterprise Sustainable
Operations_External Innovation		 3
Director 2022.10.14 Wei-Lin Hsieh Taiwan Academy of Banking and
Finance		 Corporate Governance Forum 3
Director 2022.12.22 Wei-Lin Hsieh Taiwan Corporate Governance
Association,TCGA		 Group Corporate Governance 3

47

(IV) Composition, duties, and operation of the Remuneration Committee

1. Information on members of the Remuneration Committee April 30, 2023

Position Criteria
Name
Professional qualifications and experience
(Note)		 Independence Number of concurrent duty as a
Remuneration Committee
member at apublic company
Convener
Independent director		 Jyan-Bang Chen Have work experience in the area of commerce
necessary for the business of the company		 1. The person, his spouse, or his second-degree
relatives do not serve as directors, supervisors or
employees of the Company.
2. The person, his spouse, or his second-degree
relatives do not hold any of the company’s shares
under their number or under another person’s
name. If any of them do, disclose the
shareholding percentage.
3. Not a director, supervisor, or employee of a
company which has a specific relationship with
the Company.
4. Not providing business, legal, financial,
accounting and other services to the Company or
other associates.
5. Circumstances specified in the various
subparagraphs of Article 30 of the Company Act
do not exist.
6. Complying with Article 6 of the Regulations
Governing the Appointment and Exercise of
Powers by the Remuneration Committee of a
Company Whose Stock is Listed on the Taiwan
Stock Exchange or the Taipei Exchange.
0
Remuneration
Committee member
Independent director		 Cheng-Li Yang Have work experience in the area of commerce,
finance, or accounting necessary for the business
of the company.
Used to a member of the remuneration committee
of Ace Pillar Co., Ltd.; currently serving as a
member of the remuneration committee of Giga-
Byte Technology Co., Ltd.		 1
Remuneration
Committee member
Independent director		 Sung-Jen Fang Have work experience in the area of commerce
necessary for the business of the company		 0

Note: For the experience of members of the Remuneration Committee, refer to Directors Academic and Career Qualifications on p.8~p.10.

48

  1. Duties of the Remuneration Committee.

Duties of the Remuneration Committee include implementing corporate governance and bettering the remuneration system for directors and managers. The committee mainly formulates and regularly reviews the policy, system, standard, and structure of the remuneration and performance evaluation of directors and managers.

  1. Information on the operation of the Remuneration Committee

The Company’s Remuneration Committee has 3 members. Members of the current. Remuneration Committee will be in office from August 6, 2021 through July 27, 2024. During 2022 and during 2023 up to the annual report publication date, the Remuneration Committee held a total of 3 meetings (A), with the qualifications and attendant of member as follows:

Title Name Number of attendance
inperson(B)		 Number of attendance
by proxy		 Attendance rate (%) (B/A) Remarks
Convener Jyan-Bang Chen 3 0 100% In office from June 17,
2015 till now
Committee
member		 Sung-Jen Fang 3 0 100% In office from March 19,
2018 till now
Committee
member		 Cheng-Li Yang 3 0 100% In office from August 4,
2015 till now
Other matters to be recorded:
I.
If the board of directors does not adopt or amend the recommendations from the Remuneration Committee, it shall clarify the date, session,
proposal content and resolution of the board and how the Company handles the recommendations of the Committee (such as that the
remuneration approved by the board is better than what the Committee recommended, and the differences and reasons should be clarified):
None
II.
If the Remuneration Committee members have objections or reservations and there are records or written statements from the meetings, the
date, term, proposal content, opinions of all members and the handling of their opinions shall be clear: None

49

  1. The discussions and resolutions of the Remuneration Committee in the most recent year are as follows:
Date Proposal Content and Follow-up
Implementation		 Resolution Company's handling of the
remuneration committee's opinions
2nd meeting of the
5th session
2022.03.03		 Proposal on employee remuneration and
director remuneration for 2022.		 All committee member present
approved the proposal as proposed.		 Submitted to the Board of Directors and
approved by all of the directors present
as proposed.
Proposal on employee salary adjustment for
2022.		 All committee member present
approved the proposal as proposed.		 The Company carried out employee
salary adjustment as approved.
3rd meeting of the
5th session
2022.12.16		 Proposal on employee salary adjustment for
2023.		 All committee member present
approved the proposal as proposed.		 The Company carried out employee
salary adjustment as approved.
4th meeting of the
5th session
2023.03.10		 Proposal on employee remuneration and
director remuneration for 2022.		 All committee member present
approved the proposal as proposed.		 Submitted to the Board of Directors and
approved by all of the directors present
as proposed.

50

  • (V) Fulfillment of Sustainable Development; Differences from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies; and Causes for Such Differences.

For the structure of organizations responsible for promoting the Company’s sustainable development, refer to p.6 Company Organizational Structure. The Chairman’s Office is an adjunct unit which cooperates with other departments on the promotion of sustainable development.

Evaluation Items The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
I. Has the Company established a governance
framework for promoting sustainable
development, and established an exclusively (or
concurrently) dedicated unit to be in charge of
promoting sustainable development? Has the
board of directors authorized senior management
to handle related matters under the supervision of
the board?
V		 (I.) Being a dedicated unit for promotion of sustainable development, the
Company’s chairman's office designated the CEO to take charge of
formulating sustainable development policy and system. Based on the
principle of materiality, the Company conduct risk evaluation on
environmental, social and corporate governance issues related to the
company’s operation and implementation status on to the board of
directors every year that the latest report was made on Nov. 4, 2022
(details in Note 2 p.60), For detail, refer to the Company’s website at
http://www.scientech.com.tw.
(II.) Upholding the ideal of “taking from society, giving back to society”,
the Company has established a charity platform, through which the
Company fulfils its corporate social responsibilities by means of
donation, charity sale, and volunteer services. Instances in this regard
include the group-buy platform that aims to help farmers, food
donation, uniform invoice donation, used things donation, volunteer
services, and blood donation; in doing so, we have contributed our
humble efforts to the environment and society where we grew up. In
2016, the Company selected a charity ambassador to commend the
ambassador’s enthusiastic participation in charity events; in 2021, the
Company held a selection event for a goodwill ambassador. The
Company participates in various activities every year to fulfill its
corporate social responsibilities, and reports to the Board of Directors
on Mar. 10, 2023 on the results of its efforts invested in
environmental protection, community engagement, social
contribution, social service, charity events, consumer rights, human
rights, and safety and health (details in Note 1 p. 58-60).
(III.) The company's board of directors listens to the report of the
management team every year. The board of directors judges the
possibilityof success of these strategies,and urges the CEO to review		 None

51

Evaluation Items The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
the progress of the strategy, and urges the management team to make
adjustments.
I. Has the Company conducted risk assessments
on environmental, social and corporate
governance issues related to the Company's
operations in accordance with the materiality
principle, and formulated relevant risk
management policies and strategies?		 V II. The Company conducts risk assessments on the environmental, social,
and corporate governance issues related to its operations in accordance
with the principle of materiality, and formulates the motto “Comply
with government laws and customer requirements; implement pollution
prevention, energy conservation, and carbon reduction; improve work
safety and health awareness; and conduct a review and make
continuous improvement to reduce risks,” which is announced across
the Group, aiming to implement environmental protection, safety and
health,and reduce related operational risks(Note 2 onp.60).		 None
III. Environmental Issues
(I) Has the Company set up an appropriate
environmental management system based on
the characteristics of its industry?		 V (I) Having a factory in Hsinchu Industrial Park, the Company acted by the
environmental law and commissioned a licensed waste management
company to handle the factory’s waste. As required by the Regulations
Governing the Implementation of Labor Work Environment
Monitoring, the Company commissions a qualified work environment
monitoring agency to conduct testing for carbon dioxide, organic
solvents, specific chemical substances, noise, etc. every six months.
The Company has formulated its environmental, social, and health
(ESH) policy and energy policy, the main content of which includes: 1.
Comply with government laws and customer requirements; 2.
implement pollution prevention, energy conservation, and carbon
reduction; 3. improve work safety and health awareness; and 4. conduct
a review and make continuous improvement to reduce risks. The
Company has obtained the “Environmental Management System”
(ISO14001: 2015) and “Occupational Safety and Health Management
System”(ISO 45001:2018)certification.		 None

52

Evaluation Items The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
(II) Is the Company committed to improving
energy efficiency and to the use of renewable
materials with low environmental impact?		 V (II) The Company values the recovery of waste water, waste gas, poisonous
substances, and solvents; is committed to improving the utilization
efficiency of various resources; heavily invests in environmental
protection equipment; cooperates with the Environmental Protection
Agency's garbage sorting and recycling policy to reduce the amount of
waste in the factory, in order to achieve the goal of recycling and reuse;
and formulates and adds the Regulations Governing the Monitoring of
Hazardous Substances and Pollution to the ISO management system
documentation system, so as to comply with regulations, fulfill the
commitments of the Company's ESH policy, and lower the
environmental impact.		 None
(III) Does the Company evaluate the potential risks
and opportunities of climate change to the
Company now and in the future, and take
corresponding measures to respond to climate
related issues?		 V (III) The Company has an Occupational Safety Office directly under the
President which is in charge of ESH management. In addition, the
Company has a factory in Hsinchu Industrial Park; the factory has
dedicated and licensed occupational safety and environmental officers,
who work with colleagues therein to implement environmental tasks as
required by laws and regulations. To cope with the effect of climate
change on the Company’s operations, the Company has formulated
internal regulations for energy conservation, carbon reduction, and
GHG emissions reduction.		 None
(IV) Does the Company make statistics on
greenhouse gas emissions, water
consumption, and total weight of waste for the
past two years, and formulate policies for
greenhouse gas emissions reduction, water
consumption reduction, or other waste
management?		 V (IV) The Company compiles statistics on GHG emissions, water
consumption, and total weight of waste for 2021 and 2022 (please
refer to the Company's website athttp://www.scientech.com.tw), and
has passed the ISO14001 Certification carried out by SGS. The
Company has formulated the motto “Comply with government laws
and customer requirements; implement pollution prevention, energy
conservation, and carbon reduction; improve work safety and health
awareness; and conduct a review and make continuous improvement
to reduce risks” as its ESHpolicyon energyconservation,carbon		 None

53

Evaluation Items The State of Operation The State of Operation The State of Operation The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
reduction, GHG emissions reduction, water consumption reduction,
and management of other waste. The Company has an Occupational
Safety Office directly under the CEO which is in charge of ESH
management. In addition, the Company has a factory in Hsinchu
Industrial Park; the factory has dedicated and licensed occupational
safety and environmental officers, who work with colleagues therein
to implement environmental tasks as required by laws and regulations.
To cope with the effect of climate change on the Company’s
operations, the Company has formulated internal regulations for
energyconservation,carbon reduction,andGHGemissions reduction.
Year
(tonCO2e)
GHG
Emissions
Category I
Emissions
Category II
Emissions
2021
10,597.4120
811.4235
9,785.9880
2022
10699.3259
718.0395
9981.2864
Note: The current data in 2022 are self-inquiry data, and it is expected
to conduct third-party verification in July 2023
Water consumption in 2021 and 2022 is 320,765 metric tons and
351,530 metric tons. The disclosure of hazardous & non-hazardous
waste in the past two years is as follows. In the past two years, the
waste recyclingrate was 82.1%and 80.9%.
Year
(ton)
total weight of
waste
General waste
Hazardous
waste
2021
319.47
303.46
16.01
2022
314.45
298.37
16.08
Year
(ton)		 total weight of
waste		 General waste Hazardous
waste
2021 319.47 303.46 16.01
2022 314.45 298.37 16.08
IV. Social Issues
(I) Has the company formulated relevant
management policies and procedures in
accordance with relevant laws and regulations		 V (I) To protect the basic human rights of employees, customers, and
stakeholders, the Company disseminates information internally and
formulates relevant regulations to ensure that everyemployee is treated		 None

54

Evaluation Items The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
as well as the International Bill of Human
Rights?		 fairly, humanely, and with dignity. Such regulations include the “Work
Rules”, “Corporate Social Responsibility Best Practice Principles”, and
“Regulations for Prevention, Correction, Complaint and Punishment of
Sexual Harassment at Workplace”. In addition, the Company also
makes available a complaint channel, so as to protect the rights and
interests of employees, customers, and stakeholders. The Company has
never employed any child labor. In addition, the Company has
formulated the Work Rules according to the Act of Gender Equality in
Employment and Employment Service Act, held regular labor-
management meetings, and required suppliers to comply with the
relevant provisions of RBA (please refer to the Company's website at
http://www.scientech.com.tw). By complying with relevant labor laws
and regulations, the Company ensures the legitimate rights and interests
of employees. The personnel rules formulated by the Company are in
line with the Labor Standards Act. The Company protects employee
rights by abiding by the “work rules” and the Labor Standards Act. All
matters related to employees are handled to a dedicatedperson.
(II) Has the Company established and implemented
reasonable employee welfare measures
(including remuneration, vacation, and other
benefits) and appropriately reflected the
business performance or results in the
employee remuneration?		 V (II) The Company has formulated and implemented reasonable employee
welfare measures (see p.112~p.113 for details). Employee regeneration
includes base salary, rewards, and employee bonus. On the systematic
level, the management reflects the Company's operating performance
and employee personal performance in employees’ remuneration.		 None
(III) Does the Company provide employees with a
safe and healthy working environment, and
related education?		 V (III) The Company has an Occupational Safety Office, a dedicated unit
responsible for offering employees with a safe and healthy working
environment. In addition, as required by the Regulations Governing
the Implementation of Labor Work Environment Monitoring, the
office commissions a qualified work environment monitoring agency
to monitor the work environment bytestingfor carbon dioxide,		 None

55

Evaluation Items The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
organic solvents, specific chemical substances, noise, etc. every six
months. Any anomaly, if indicated by the testing results, is
immediately corrected and improved to ensure the health of operators.
The Company also announces and disseminate information on safety
and health to employees.
(IV) Has the Company established an effective
career development training program for
employees?		 V (IV) The Company provides relevant internal and external professional
education and training to hone employees' career skills. The Company
also encourages employees to assess their own interests, skills, values,
and goals, and to communicate their career intentions with managers
to developtheir careerplan.		 None
(V) Does the company comply with the relevant
laws and international standards with regards
to customer health and safety, customer
privacy, and marketing and labeling of
products and services, and implement
consumerprotection andgrievancepolicies?		 V (V) The Company’s products are labeled in the manner prescribed by
applicable laws and regulations as well as international standards. To
protect consumers’ rights and provide a channel for effective
communication with stakeholders, the Company designates its
spokesperson to be the sole communication channel, through which
complaints are filed and communication is carried out.		 None
(VI) Has the company formulated supplier
management policies requiring suppliers to
comply with relevant regulations on issues
such as environmental protection,
occupational safety and health, or labor rights,
and what is the status of their
implementation?		 V (VI) The Company has formulated its “Supplier Management Procedures”
and “Procurement Management Procedures”, which are the principles
for supplier management. In addition to providing a safe working
environment for employees, the Company, along with suppliers, is
also committed to improving environmental, safety, and health
standards and fulfilling corporate social responsibilities. The
Company has formulated the motto “Comply with government laws
and customer requirements; implement pollution prevention, energy
conservation, and carbon reduction; improve work safety and health
awareness; and conduct a review and make continuous improvement
to reduce risks” as its ESH policy, which is announced across the
Group,aimingto implement environmentalprotection and ensure		 None

56

Evaluation Items The State of Operation The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
safety and health. The Company actively communicates with
suppliers to encourage them to broaden and deepen their ESH
management. Meanwhile, suppliers are required to comply with the
relevant provisions of RBA (please refer to the Company's website at
http://www.scientech.com.tw)
V. Has the Company referred to international
reporting standards or guidelines in its
preparation of corporate social responsibility
reports and other reports which disclose the
Company's non-financial information? Does
the company obtain third party assurance or
certification for the reports above?		 V V. The Company has yet to refer to international reporting standards or
guidelines in its preparation of corporate social responsibility reports
and other reports which disclose its non-financial information.		 The Company has yet to implement
this evaluation item, but will start
planning and implementing it in
2023.
VI. If the Company has adopted its own sustainable development best practice principles based on the Sustainable Development Best Practice Principles for TWSE/TPEx Listed
Companies, please describe any deviation from the principles in the Company’s operations:
Having formulated the “Sustainable Development Best Practice Principles” and continuing fulfilling its sustainable development responsibilities, the Company does not find the
implementation thereof significantly deviated from the “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies”. For details, refer to Three -
Corporate Governance Report - Status of Implementation of the Company’s Sustainable Development onp.48~p.60 of this annual report.
VII. Other important information to facilitate better understanding of the company’s promotion of sustainable development:
(I) Environmental protection: The Company deals with all matters related to environmental protection in accordance with relevant environmental laws and regulations. On the
environmental protection front, in addition to contracting a licensed waste management company to periodically remove waste, as required by the environmental laws and
regulations, the Company also promotes policy on conservation of consumption of water, electricity, paper, etc. inside the Company. in doing so, the Company expects itself to
minimize environmental pollution and resource consumption for the Earth. The Company spares no efforts in the development of, and has launched, energy-efficient and
environmentally-friendly products.
(II) Social engagement, community engagement, social contribution, social service, charity events To care for the society, the Company is committed to R&D and sale of
products that meet the customers’ needs while paying attention to align the production environment with environmental protection requirements. In addition, the Company
spares no efforts in business administration to give back to shareholders and employees, hoping to create a win-win situation for shareholder, employees, customers, and
suppliers. On the charity front, if there is a major natural disaster, the Company will be helpful by organizing monetary donation among employees, hoping to contribute its
humble efforts for charitable cause. Over the past years, the Company had donated equipment to National Chung Hsing University and Academia Sinica; donated and
sponsored the Merit Scholarship of National Tsing Hua University and Feng Chia University; sponsored religious organizations such as Shandao Temple; sponsored artists
such as Fang-Yi Hsu, a dancer, and cultural and arts organizations such as the Kaohsiung Cultural Foundation; sponsored academic institutions such as Taiwan Proteomics

57

Evaluation Items The State of Operation The State of Operation The State of Operation Differences between the fulfillment
of corporate social responsibility and
the Corporate Social Responsibility
Best Practice Principles for
TWSE/GTSM Listed Companies
and the reasons therefor:
Yes No Summary description
Society, Taiwan Society for Mass Spectrometry, The Polymer Society, Taipei, Chinese Chemical Society, Providence University, Taiwan Ceramic Society, National Chung
Cheng University, symposium on analytical technologies, The Physical Society of the Republic of China, PSROC, and National Taichung University of Education; and
donated to Child Welfare League Foundation R.O.C., Hsiangyuan Memorial Nursery Home, and Taiwan Fund for Children and Families - Changhua. The Company also
organizes blood donation events every year, and other charitable events such as charity fair and street sweeping activities within communities and factories. The Company has
established a charity platform, through which the Company fulfils its corporate social responsibilities by means of donation, charity sale, and volunteer services. Instances in
this regard include the group-buy platform that aims to help farmers, food donation, uniform invoice donation, used things donation, volunteer services, and blood donation; in
doing so, we have contributed our humble efforts to the environment and society where we grew up.
(III) For the status of implementation of employee rights and employee care, refer to Five. Operational Highlights - V. Labor relations (p.112~p.118).
(IV) Human rights: To protect the basic human rights of employees, customers, and stakeholders, the Company disseminates information internally and formulates relevant
regulations to ensure that every employee is treated fairly, humanely, and with dignity. Such regulations include the “Work Rules”, “Corporate Social Responsibility Best
Practice Principles”, and “Regulations for Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace”. In addition, the Company also makes
available a complaint channel, so as to protect the rights and interests of employees, customers, and stakeholders. The Company has never employed any child labor. In
addition, the Company has formulated the Work Rules according to the Act of Gender Equality in Employment and Employment Service Act, held regular labor-management
meetings, and required suppliers to comply with the relevant provisions of RBA (please refer to the Company's website at http://www. scientech.com.tw).
(V) Work-life balance: As required by law, the Company implements the unpaid parental leave system and offers various welfare measures such as family care leave, paternity
leave, period leave, and breast-feeding room; encourages employees to take a leave, provides a medical care center, arranges for a doctor to give diagnosis within the factory,
and offers regular health check; and advocates club activities and encourages employees to exercise, and regularly holds family sports days.
(VI) The Company has purchased related liability insurance for directors and managers.

Note 1: Below are the Company’s charitable achievements:

Upholding the ideal of “taking from society, giving back to society”, the Company has established a charity platform, through which the Company fulfils its corporate social responsibilities by means of donation, charity sale, and volunteer services. Instances in this regard include the group-buy platform that aims to help farmers, food donation, in-kind donation, uniform invoice donation, used things donation, volunteer services, and blood donation; in doing so, we have contributed our humble efforts to the environment and society where we grew up. Below are the operation of charitable events and the achievements therein up to December 31, 2022.

Donated item Beneficiary Achievement
Donation of inventories
National Chung Hsing University; Academia Sinica; National Taichung University of Education; University of Taipei;
Pingtung Christian Bethany Home; St. Francis Xavier Home for Girls; ZenLight Orphanage; Zenan Homeless Social
Welfare Foundation - Wanhua Station;Yunlin Xinyi Orphanage;House of the Little Angels Kaohsiung;Taiwan Catholic


NT$43,584,479

58

Donated item Beneficiary Achievement
Church Blue-sky Home; Hualien County Private Aboriginal Children; Christian Mountain Children's Home;
GALILEEFAMILY Foundation;National Sun Yat-sen University;National ChengKungUniversity
Blood donation events Blood donation center 675people;1037 bags of blood.
Donation of cash Chia Nan University of Pharmacy and Science; National Chung Hsing University; Taiwan Proteomics Society; Taiwan
Society for Mass Spectrometry; The Polymer Society, Taipei; Chinese Chemical Society; Providence University; Taiwan
Ceramic Society; National Chung Cheng University; symposium on analytical technologies; Feng Chia University;
National Sun Yat-sen University; Shandao Temple; Fang-Yi Hsu; Kaohsiung Cultural Foundation; The Physical Society
of the Republic of China, PSROC; Child Welfare League Foundation R.O.C.; TADD; molecular design research club;
Gosh Foundation; Hsinchu County Fire Friends Association; New Taipei City Bethel Whole Person Care Association;
Chung Yi Social Welfare Foundation; Harmony Home Association, Taiwan.; Austrian Commercial Office; Chunghwa
Social Welfare Association; Nantou Renai Children's Home; Silver Grass Cultural and Creative Association; National
Taiwan University Hospital; Federation For World Peace-Taiwan;The Pearls Buck Foundation: National Yilan Senior








NT$5,299,048
High School-OutstandingTalent Scholarship;MackeyMemorial Hospital’s medical service in the rural area.
Donation of food Zenan Homeless Social Welfare Foundation - Wanhua Station; Andrew Charity Association; Moning Light Christian
Association; Hualien County Private Aboriginal Children; VUVU Org.; Pingtung Wandan Houchun Village Community
Development Association; St. Francis Xavier Girls Home - Miaoli; ZenLight Orphanage; Pingtung Christian Bethany
Home; Yunlin Xinyi Orphanage; Harmony Home Association, Taiwan; Christian Salvation Service; House of the Little
Angels Kaohsiung; Taiwan His Hands Christian Home; Yunlin Xinyi Orphanage; Genesis Social Welfare Foundation;
JHF Foundation; Chunghwa Social Welfare Association; Nantou Renai Children's Home;Huashan Social Welfare
Foundation.





Handmade noodles, drinks, fruits,
milk powder, medical equipment,
etc.
in-kind donation Taiwan Fund for Children and Families - Changhua; Free the girls; Taiwan Root Medical Peace Corps; Hong-hua
Foundation; Reindeer Children Home; Taipei City Mental Rehabilitation Family Association; Onesiphorus Children’s
Home; Yude Orphanage; Eden Social Welfare Foundation; ZenLight Orphanage; Yunlin Xinyi Orphanage; Shunde
Cultural Foundation - Shengdao Children's Home; The Garden of Hope Foundation - New Taipei Office & Material Center;
Step 30; White Kite Orphanage; Harmony Home Foundation - Wenshan Women's and Children's Home; Good Shepherd
Social Welfare Foundation; Christian Salvation Service; Ming-te Education and Nursing Institute; The Garden of Hope
Foundation; Nantou County Renai Children's Home; ZenLight Orphanage; LOHAS Preschool; House of the Little Angels
Kaohsiung; Sunshine Social Welfare Foundation; Hsinchu Aiheng Foundation; Zenan Homeless Social Welfare
Foundation; St. Theresa Opportunity Center; Federation For World Peace-Taiwan; The Garden of Hope Foundation -
Tainan Material Center; Huashan Social Welfare Foundation; Huashan Social Welfare Foundation - Xinfeng Love Angel
Station; Catholic Mercy Hospital; Taipei Parents Association of Autism; i-Goods; Hualien County Private Aboriginal
Children; Catholic Mercy Medical Foundation;New Taipei City Toy Bank; Legal Charitable institution Hsin Miao the











Christmas gifts, annual calendars,
monthly calendars, baby supplies,
stationery, used school bags,
second-hand shoes, second-hand
clothes, second-hand bags, used
bras, used books, handmade
soaps, electrical appliances, meals
for the elderly, breakfast
ingredients, COVID-19 Antigen
self-test kit, expiring food, music
CDs and DVDs, food, garbage
bags, laundry detergent,
dishwashing detergent, drying
racks,etc.
Disabled Home; Taoyuan City Mentally Disabled Parents Association.
Charitable/health lecture Colleagues 60 sessions;4,234participants
Communityvisit Minghsin UniversityOf Science And Technologyand CPMAH 2 sessions
Uniform invoice donation Sunshine Social Welfare Foundation Donated monthly

59

Donated item Donated item Beneficiary Beneficiary Achievement
Helping local small
farmers		 Hot Fruit; Wen-Min Organic Agriculture Ecopedagogyfarm; Bai Sian Agricultural Products Co., Ltd.; Laofuzi Farm;
Laoheji Farm; Xiangying Organic Farm; Guanren Woyao Farm; Dingjia Bee Farm; Guaranteed Liability Pingtung County
Calamondin Production Cooperative; Chenying Farm; Yuanxiang Natural Ecological Farm; Lvyuan Organic Farm;
Yuanzhiguo Farm; SHUI LING Organic farm; Tainan-Dafeng Farm- Guiren Farm; Earth Friend Organic Farm; Changhua
ALUMI farm.



17 Taiwan local small farmers;71
times of group buying
Charity events “Discovering the beauty of Taiwan” photo contest; “Power conservation expert” power-saving campaign; “Greening the
Earth” - let's plant trees together! Scientech Charity Day - “Home delivery of warmth to community elders; call for
materials”; Scientech 2020 “Deliver warmth to remote village - call for Christmas gift in a shoe box”; Huashan “Love the
elderly, love reunion” Caring New Year dishes; World Peace Council - Rescue children in crisis; Warmth delivery to
remote villages in 2021;Call for Christmasgift in a shoe box.



14 sessions
Occupational Safety
and healthpropaganda		 All employees 12 times
Traffic Safety
propaganda		 All employees 12 times
Home environmental
protection		 All employees 12 times
Health Tips All employees 12 times
Note 2: The Company has conducted risk assessments on environmental, social, and corporate governance issues related to the Company's operations
in accordance with the materiality principle, formulated relevant risk management policies and strategies, and reported to the Board of
Directors on November 4, 2022.
Material issue Risk evaluation Item Risk management strategy
Environment Environmental protection The Company is committed to environmental protection. In order to reduce environmental impact, it has obtained the ISO 14001
environmental management system, by which it evaluates major environmental concerns, formulates target management plans,
continues to control environmental impact, and regularly tracks and reviews progress to ensure achieving the set goals.
Water shortage and electricity shortage as a result of climate change has become a normal in recent years. Therefore, Measures for
energy conservation and carbon reduction are something requisite for business operations. Accordingly, the Company will continue to
invest resources to lower the environmental impact.
Social Occupational safety and
health (OSH)		 Having passed the ISO 45001 occupational safety and health management system certification, the Company manages to grasp the
needs and expectations of stakeholders every year, and regularly identifies hazards and assesses opportunity and risk. Aside from
demanding set targets for major risks for follow-up purpose, the Company also looks for opportunities for improvement, continues to
mitigate and control risks.
In order to deepen the safety culture and provide a friendly workplace continually, the Company keeps to promote occupational safety,
health activities and health promotion activities, so that colleagues can work safely with peace of mind.

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(VI) Ethical Corporate Management – Implementation Status and Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the Reasons

Evaluation Items The State of Operation Differences from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the reasons
for the differences
Yes No Summary description
I.Formulate ethical corporate management policy and plan
(I) Does the company have an ethical corporate
management policy approved by its Board of
Directors, and bylaws and publicly available
documents addressing its corporate conduct and
ethics policy and measures, and commitment
regarding implementation of such policy from
the Board of Directors and the top management
team?		 V (I) The Company has formulated its “Codes of Ethical Conduct for Directors and
Managers”, “Regulations for Prevention of Insider Trading”, “Ethical Corporate
Management Best Practice Principles”, and “Regulations for Dealing with
Reporting of Illegal, Unethical, or Dishonest Conduct”. Upholding the ideal of
integrity, transparency, and accountability, the Company has also formulated its
ethical corporate management policy, which prohibits directors, managers, and
employees from engaging in unethical conduct and demands that all employees,
when performing their duties, be honest, capable, and fair-minded and comply
with government laws and regulations. The Board of Directors and the top
management also fully understand, and strictly abide by, the said regulations
andpolicy.		 None
(II) Has the Company established a risk assessment
mechanism against unethical conduct, analyzed
and assessed on a regular basis business
activities within their business scope which are
at a higher risk of being involved in unethical
conduct, and established prevention programs
accordingly which at least cover the prevention
measures against the conducts listed in
Paragraph 2, Article 7 of the Ethical Corporate
Management Best Practice Principles for
TWSE/GTSM Listed Companies?		 V (II) The Company has formulated the “Codes of Ethical Conduct for Directors and
Managers”, “Regulations for Prevention of Insider Trading”, “Ethical
Corporate Management Best Practice Principles”, and “Regulations for Dealing
with Reporting of Illegal, Unethical, or Dishonest Conduct”, by which the
Company formulates its ethical corporate management policy and publicize
such policy to employees. The Company will have the Audit Office regularly
analyze the operating activities within the Company’s business scope that have
higher unethical risk.		 None

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Evaluation Items The State of Operation Differences from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the reasons
for the differences
Yes No Summary description
(III) Does the company clearly set out the operating
procedures, behavior guidelines, and
punishment and appeal system for violations in
the unethical conduct prevention program,
implement it, and regularly review and revise
the plan?		 V (III) To implement the Company’s Ethical Corporate Management Best Practice
Principles, the Company has established an effective accounting system and
internal control system, which are regularly reviewed and modified to ensure
the effectiveness of their design and implementation. In addition, the Company
has also formulated the “Ethical Corporate Management Best Practice
Principles” and “Codes of Ethical Conduct for Directors and Managers”,
which state that directors or managers in violation of the code of ethical
conduct will be subject to the disciplinary measures set out therein.
Meanwhile, “ethics and pragmatism” are promoted as the foundation of the
Company's business philosophy in its annual meeting and executive meeting.
The “Regulations for Prevention of Insider Trading” and “Regulations for
Dealing with Reporting of Illegal, Unethical, or Dishonest Conduct” set out a
disciplinarysystem and agrievance filingsystem,and are fullyimplemented.		 None
II. The implementation of ethical corporate management
(I) Does the company assess the ethics records of
whom it has business relationship with and
include business conduct and ethics related
clauses in the business contracts?		 V (I) Before trading with major customers, the Company assesses their legitimacy
and reviews their credit record to avoid trading with an unethical counterparty.
Article 11: Ethical Obligation of the Work Rules also stipulates that employee
be honest and not take bribery or tolerate illegal lobbying. According to
applicable internal regulations, if a transaction counterparty or a partner is found
to engage in unethical conduct, the Company shall immediately cease the
business relationship with them and put them on the blacklist, so as to
implement the Company’s ethical corporate managementpolicy.		 None
(II) Has the company set up a dedicated unit to
promote ethical corporate management under
the board of directors, and does it regularly (at
least once a year) report to the board of directors
on its ethical corporate management policy and
V		 (II) The Company’s Chairman's Office regularly reports to the audit committee and
the board of directors every year to promote the implementation of corporate
integrity management, which the latest report was made on March 10, 2023.
The Company has formulated the “Ethical Corporate Management Best
Practice Principles”, “Regulations for Prevention of Insider Trading”, and
“Regulations for Dealingwith Reportingof Illegal, Unethical, or Dishonest		 None

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Evaluation Items The State of Operation Differences from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the reasons
for the differences
Yes No Summary description
program to prevent unethical conduct and
monitor their implementation?		 Conduct”, and established a reporting system, disciplinary system, and
complaint filing system, so as to implement the ethical corporate management
policy. The implementation of ethical corporate management in 2022 includes
(1) Education and training (including trainings for new employees that total
876 participants and 2,026.5 hours per month; such training courses include
ethical corporate management; business secret protection; information security
policy; intellectual property management policy; prevention of workplace
violence/sexual harassment; labor safety education and training; and ESH
policies. (2) The training courses for directors include Group Corporate
Governance; Industry theme publicity Conference for sustainable development
road map; New cross-border and cross-border information security threats and
information security governance; Prevention of Insider Trading Forum;
Corporate Governance Forum; One of the directors participated in a 3-hour
course on the “Prevention of Insider Trading Forum”. (3) As for the forums of
“Corporate Governance” and “Industry theme publicity Conference for
sustainable development road map” , these courses were taken with a total of 8
participants, of whom 7 are directors and a total of 23 training hours. The
company established a reporting system and complaint filing channels, etc.
(for details, visit the Company’s website athttp://www.scientech.com.tw.
There was no unethical conduct found in 2022. (4.) In 2022, the course
“Ethical Corporate Management Best Practice Principles and Illegal
Infringement at Workplace” was given online to ensure that all employees are
aware of the Company’s ethical corporate management policy and philosophy.
Internal training courses include anti-corruption at workplace, Ethical
Corporate Management Best Practice Principles at workplace (including
prevention of insider trading), and illegal infringement at workplace, totaling
1,019.5 hours,participated by502people.

63

Evaluation Items The State of Operation The State of Operation The State of Operation Differences from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the reasons
for the differences
Yes No Summary description
(II) Does the Company establish policies to
prevent conflict of interests, provide
appropriate communication and complaint
channels and implement such policies
properly?		 V (III) Employees aware of any conflict of interest may report to either their
immediate supervisor, or to the top management by phone or email.		 None
(IV) Does the company have effective accounting
and internal control systems in place to enforce
ethical corporate management? Does the
internal audit unit follow the results of
unethical conduct risk assessments and devise
audit plans to audit compliance with the
systems to prevent unethical conduct or hire
outside accountants toperform the audits?
V		 (IV) The Company’s Regulations Governing Procedure for Board of Directors
Meetings stipulate interest recusal. As a result, the Company’s directors recuse
themselves from voting of a motion if they are an interest party to the motion.
The employee complaint filing channels of the Company are fairly smooth.
Employees may directly lodge their complaints, or may do so via their
immediate supervisor.		 None
(V) Does the Company provide internal and
external ethical conduct training programs on a
regular basis?
V		 (V) The Company has set up an effective accounting system and internal control
system, and regularly reviews and revises them. In addition, the Company also
has dedicated audit personnel, who are responsible for regularly auditing the
accounting systems and the internal control system and proposing suggestions
for improvement to ensure the continuous effectiveness of the design and
implementation of the systems, and for preparing an audit report and
submitting it to the Audit Committee members and the Board of Directors. For
details of internal and external education and trainings, refer to
p.43+p.67+p.126；p.25~26+p.36~37+p.75		 None
III. The operation of the Company's whistleblower reporting system
(I) Does the Company establish specific
whistleblowing and reward procedures, set up
conveniently accessible whistleblowing		 V (I) The Company has set up the “Regulations for Dealing with Reporting of Illegal,
Unethical, or Dishonest Conduct” and “Employee Opinion Mailbox
Management Procedures”, as well as an employee mailbox. Employees may
report any misconduct or file their complaints, either directly or via their		 None

64

Evaluation Items The State of Operation The State of Operation The State of Operation Differences from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed
Companies and the reasons
for the differences
Yes No Summary description
channels and designate responsible individuals
to handle the complaints received?		 immediate supervisor. Misconduct reported and complaints lodged will be dealt
with by the various responsible units.
(II) Does the Company establish standard operating
procedures for investigating the complaints
received, follow-up measures to be adopted, and
the related confidentiality measures after
investigation?		 V (II) The Company has formulated the “Regulations for Dealing with Reporting of
Illegal, Unethical, or Dishonest Conduct”, which specifies a reporting system
and a confidentiality mechanism. The relevant documents and materials are
regarded as confidential, and all personnel involved in the handling are
responsible for the keepingtheprocess confidential in whole.		 None
(III) Does the Company adopt proper measures to
shield a whistleblower from retaliation for
filing grievances?		 V (III) The Company’s reporting procedures stipulate that the identity of whistle-
blowers be kept confidential. As a result, the whistle-blower won’t be retaliated
for turning anyone in.		 None
IV. Enhance Information Disclosure
(I) Does the Company disclose the content and
implementation results of its Ethical Corporate
Management Best Practice Principles on its
website and the Market Observation Post
System?		 V (I) The Company has a company website, and has disclosed the content and
implementation results of its Ethical Corporate Management Best Practice
Principles on its website and the Market Observation Post System.		 None
V. If the company has adopted its own ethical corporate management best practice principles based on the Ethical Corporate Management Best Practice Principles for TWSE/TPEx
Listed Companies, please describe any deviations between the principles and their implementation: The Company has formulated its “Ethical Corporate Management Best
Practice Principles”, the operation of which is not significantlydifferent from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”.
VI. Other important information to facilitate a better understanding of the status of operation of the company’s ethical corporate management policies (e.g., the company’s
reviewing and amending of its ethical corporate management best practice principles): The Company has formulated its “Ethical Corporate Management Best Practice
Principles”, the operation of which is not significantlydifferent from the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies”.

(VII) If the Company has formulated the Corporate Governance Best Practice Principles and related rules, it shall disclose the query methods:

65

The Company has established the “Corporate Governance Best Practice Principles” and “Ethical Corporate Management Best Practice Principles” to provide a basis for the establishment of the Company's corporate governance system. For relevant rules and regulations, visit the Company’s website or the Market Observation Post System (MOPS).

  • (VIII) Other important information conducive to understanding the operations of corporate governance may be disclosed:

  • The Company has formulated the “Regulations for Prevention of Insider Trading” and the “Regulations for Dealing with Reporting of Illegal, Unethical, or Dishonest Conduct”. In addition, the Company has a person dedicate to have the information on the Company’s operations approved by the competent authority within the timeframe and in the manner specified by the competent authority; any material information treatment or disclosure thereafter will be carried out on the same basis. Meanwhile, the Company from time to time informs insiders of any material internal information.

  • The Company encourages senior executives, and arranges for them, to participate in corporate governance courses. Below is the participation by the Company’s managers in corporate governance courses in 2023 and in the current year up to the publication date of the annual report:

66

Title Date Name Organizer Course name Number
of hours
Head of
Corporate
Governance		 2022.03.03 Shu-Chen,
Shen		 Taiwan Corporate Governance
Association,TCGA		 The Only Way to Enterprise Sustainable Operations_External
Innovation		 3
Head of
Corporate
Governance		 2022.11.03 Shu-Chen,
Shen		 Accounting Research and Development
Foundation		 Three Lines of Defense for Internal Control 6
Head of
Corporate
Governance		 2022.12.06 Shu-Chen,
Shen		 Securities & Futures Institute Audit practice of audit committee operation 6
Head of
Corporate
Governance		 2022.12.22 Shu-Chen,
Shen		 Taiwan Corporate Governance
Association,TCGA		 Group Corporate Governance 6
Manager of the
Audit Office		 2022.12.07 Chi Wu Accounting Research and Development
Foundation		 The "corporate governance" quality that internal auditors should
have,and Financial ReportingRisk Assessment Practice		 6
Manager of the
Audit Office		 2022.12.21 Chi Wu Accounting Research and Development
Foundation		 Common lack of internal control management and practical case
analysis in enterprises		 6
Associate vice
president,
Accounting
Division		 2022/09/15-
2022/09/16		 Shao-Che,
Chuang		 Accounting Research and Development
Foundation		 Accounting Supervisor Continuing Education Course 12
Manager 2022/11/28-
2022/11/29		 Cheng-Nan,
Chen		 Accounting Research and Development
Foundation		 Accounting Supervisor Continuing Education Course 12

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  • (IX) The section on the state of implementation of the company's internal control system shall furnish the following:

  • Statement of internal control

SCIENTECH CORPORATION Statement of internal control system

Date: March 10, 2023

The Company states the following for its 2022 internal control system based on the results of selfevaluation:

  • I. The Company’s board and management are responsible for establishing, implementing and maintaining a proper internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability of our financial reporting and compliance with applicable 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 stated objectives. 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 we take immediate remedial actions in response to any identified deficiencies.

  • III. The Company evaluates the design and execution of its internal control system based on the criteria specified in “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as “The Governing Principles”) to determine whether or not the existing policies continue to be effective. The criteria adopted by the Governing Principles identify five key components of managerial internal control: 1. Control environment. 2. Risk assessment. 3. Control activities. 4. Information and communication. 5. Monitoring. Each component consists of a number of items. Please see the Governing Principles for details.

  • IV. We have evaluated the design and operating effectiveness of our internal control system according to the aforementioned Regulations.

  • V. Based on the evaluation results of the preceding paragraph, the Company believed that the design and implementation of its internal control system was effective as of December 31, 2022 (including the supervision and management of subsidiaries), with a understanding of the extent to which the objectives of effectiveness and efficiency of operations were achieved,

68

whether the reporting was reliable, timely, transparent, and if the compliance with relevant rulings, laws and regulations is met, and a reasonable assurance of the achievement of these objectives.

  • VI. This Statement will be an integral part of the Company’s annual report and prospectus and will be made public. If the above-mentioned disclosures have falsehood or concealment, legal liability under Articles 20, 32, 171 and 174 of the Securities and Exchange Act will be incurred.

  • VII. This statement was approved by the Company’s Board of Directors on March 10, 2023. Of the 9 directors present, 0 had objections, and the rest all agreed with the content of this statement and hereby declare the same.

SCIENTECH CORPORATION

Chairman Of The Board: Hung-Liang Hsieh Signature Or Seal CEO : Ming-Chi Hsu Signature Or Seal

  1. Where a CPA has been hired to carry out a special audit of the internal control system, furnish the CPA audit report: None.

69

  • (X) If there has been any legal penalty against the company or its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder equity or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement.: None.

  • (XI) Material resolutions of a shareholders meeting and a board of directors meeting during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report.

In 2022 and in 2023 up to the publication date of this annual report, the Company has held 1 General Shareholders’ Meeting and 8 Board of Directors meetings, the major resolutions of which are as follows:

follows:
Meeting Date Motion content
Shareholders’
meeting		 2022.06.16 I. Acceptance
1. Subject Matter: The Company’s 2021 Business Report and Financial Statements
(includingtheConsolidated FinancialStatements), proposed for acceptance.
Resolution: Accepted asproposed through a resolution.
2. Subject Matter: The Company’s Earnings Distribution Proposal for 2021, submitted
for acceptance.
Resolution: The proposal was accepted as proposed through a resolution. The
Company set the ex-dividend date for June 30, 2022, and distributed a cash dividend
of NT$2.5per share onJuly21,2022.
II. Discussions and election
1. Subject Matter: Amendment of provisions of the Articles of Incorporation, proposed
for discussion.
Resolution: The proposal was accepted as proposed through a resolution. As required
by law, the Company registered the change in its Articles of Incorporation with the
Department of Commerce,whichgranted its approval on July11,2022.
2. Subject Matter: Amendment of the Company’s “Rules of Procedure for Shareholders
Meetings”, proposed for discussion.
Resolution: The proposal was accepted as proposed through a resolution. The
Company uploaded it to the Market Observation Post System (MOPS) and
implemented it accordingly.
Report item 2: Report on the Company’s risk managementpolicyandprocedures.
1. Proposal to draft the Company’s financial forecast for 2023; hereby proposed for
discussion.
2. Proposal to cancel the first earnings distribution proposal of Scientech Engineering
(HongKong)Limited for 2019;hereby proposed for discussion.
Board of
Directors
meeting		 6th meeting of
the 10th session
2022.01.07
Proposal to invest in the plants and land in Tainan.
Board of
Directors
meeting		 7th meeting of
the 10th session
2022.03.03		 Report item 1: Report on results of the ethical corporate management and social
responsibilityendeavor in 2021.

Report item 2: Report on the performance evaluation of the Board of Directors for
2021.
Report item 3: Report on the communication between CPAs and thegovernance body.
1. Proposal to draft the Company’s financial forecast for 2022.

70

2. Proposal on employee remuneration and director remuneration for 2022.
3. Proposal on the Company’s Business Report for 2022.
4. Proposal on the Company’s 2022 final accounting books (including the
consolidated financial statements).
5. Proposal on the Company’s Earnings Distribution Proposal for 2022.
6. Proposal to set the base date and distribution date for the earnings distribution in
cash for 2022.
7. Amendment of the Company’s Articles of Incorporation.
8. Amendment of the Company’s Corporate Governance Best Practice Principles.
9. Amendment of the Company’s Corporate Social Responsibility Best Practice
Principles.
10. Proposal on loaningof funds to others.
11. Proposal to allow the sub-subsidiary Scientech Engineering（Hong Kong)
Limited to make a one-year endorsement and guarantee for Scientech Engineering
Corp.(Shanghai).
12. Proposal to determine whether disguised loaning of funds should be presented as
a case of loaning of funds to others; this proposal is based on item 37 in the Q&A
regarding the Regulations Governing Loaning of Funds and Making of
Endorsements/Guarantees byPublic Companies.
13. Proposal to appoint the attesting CPAs for the Company’s 2023 financial
statements.
14. Proposal to issue the Company’s 2021 Internal Control System Statement.
15. Proposal on matters related to convening of the 2023 General Shareholders’
Meeting.
Board of
Directors
meeting		 8th meeting of
the 10th session
2022.05.06		 Report item 1: The ownership of the plants and land in which the investment was
approved bythe Board of Directors meetingdated January7,2022 was transferred.
Report item 2: Directors are encouraged to attend Scientech Shareholders' Meeting to
be held on June 16,2022.
Report item 3: Report on the communication with the stakeholders in 2021.
Report item 4: Report on the results of the 8th Corporate Governance Evaluation.
Report item 5: Report on the communication between CPAs and the governance
body.
1. Amendment of the Company’s “Rules of Procedure for Shareholders Meetings”.
2. Proposal on matters related to convening of the 2022 General Shareholders’
Meeting.
3. Proposal to change and modify the bank loans about to mature in order to expand
the room for negotiation for a more favorable interest rate for bank loans and
financingfacilities,thus meetingthe Company’s operatingneeds.
Board of
Directors		 9th meeting of
the 10th session		 Report item 1: Report on the communication between CPAs and the governance
body.

Report item 2: Report on the Company’s timeline for GHG inventory and verification
in support of the FSC’s “Sustainable Development Roadmap”.
meeting 2022.8.5 1. To meet the Company’s operating needs and enhance its financial structure, the
Company intended to negotiate with the lending bank to modify and renew the bank
loans that are about due.

71

2. The Company intended to extend the endorsement and guarantee provided by the
Company for a short-term, unsecured, general credit bank financing facility of
Scientech Engineering (HongKong)Limited for another oneyear.
3. To meet the Company’s operating needs and enhance its financial structure, the
Company intended to negotiate with the lending bank to modify and renew the bank
loans that are about due.
Board of
Directors
meeting		 10th meeting of
the 10th session
2022.11.4		 Report item 1: Report on the Company’s assessment of the risks pertaining to the
Company’s material operating issues that were identified by referencing the
materiality principles for corporate social responsibilities.
Report item 2: Report on the status of implementation of the Company’s IPR
managementplan.
Report item 3: Report on the Company’s timeline for GHG inventory and verification
in support of the FSC’s “Sustainable Development Roadmap”.
Report item 4: Report on the communication between CPAs and the governance
body.
Report item 5: Report on the liabilityinsurance for the directors and managers.
1. Establishment of the Company’s Procedures for Handling Material Inside
Information.
2. Establishment of the Company’s Risk Management Best Practice Principles.
3. Amendment to the Company’s Regulations Governing Procedure for Board of
Directors Meetings.
4. Submission of the 2023 annual auditplan.
Board of
Directors
meeting		 11th meeting of
the 10th session
2022.12.22		 Report item 1: Report on the Company’s information security.
Report item 2: Report on the Company’s risk managementpolicyandprocedures.
1. Revise the company's "Internal Material Information Handling and Insider Trading
Prevention Management Measures"
2. Proposal to draft the Company’s financial forecast for 2023.
Board of
Directors
meeting		 12th meeting of
the 10th session
2023.03.10		 Report item 1: Report on results of the ethical corporate management and social
responsibilityendeavor in 2022.
Report item 2: Report on the performance evaluation of the Board of Directors for
2022.
Report item 3: Report on the communication between CPAs and the governance
body.
Report item 4:Report on the Company’s timeline for GHG inventory and verification
in support of the FSC’s “Sustainable Development Roadmap”
Report item 5: Report the Investment in European Subsidiary Case
1. Proposal on employee remuneration and director remuneration for 2022; hereby
proposed for discussion..
2.Proposal on the Company’s Business Report for 2022;
3.Proposal on the Company’s 2022 final accounting books (including the
consolidated financial statements);
4.Proposal on the Company’s Earnings Distribution Proposal for 2022;
5.Proposal to set the base date and distribution date for the earnings distribution in
cash for 2022;
6.Revise the company's "Internal Material Information Handling and Insider Trading
Prevention Management Measures";
7. Company Spokesperson Change
8. Establishment of the Company’s Procedures for Pre-approval policy for non-
trusted services.
9. Proposal on loaning of funds to others;

72

10.Proposal to allow the sub-subsidiary Scientech Engineering（HONG KONG)
LIMITED to make a one-year endorsement and guarantee for Scientech Engineering
Corp.(SHANGHAI);
11. Proposal to appoint the attesting CPAs for the Company’s 2023 financial
statements;
12.Proposal to determine whether disguised loaning of funds should be presented as a
case of loaning of funds to others; this proposal is based on item 37 in the Q&A
regarding the Regulations Governing Loaning of Funds and Making of
Endorsements/Guarantees byPublic Companies;
13.Proposal to issue the Company’s 2022Internal Control System Statement;
14.Proposal on matters related to convening of the 2023 General Shareholders’
Meeting;
Board of
Directors
meeting		 13th meeting of
the 10th session
2023.05.05		 Report item 1: Directors are encouraged to attend SCIENTECH Shareholders'
Meetingto be held on June 13,2023.
Report item 2: Report on the communication with the stakeholders in 2022.
Report item 3: Report on the results of the 9th Corporate Governance Evaluation.
Report item 4:Report on the Company’s timeline for GHG inventory and verification
in support of the FSC’s “Sustainable Development Roadmap”
Report item 5: Report on the communication between CPAs and the governance
body.
1.Revise the company's " Corporate Governance Best Practice Principles
2.Hiring a Head of Corporate Governance
3.Establishment of the Company’s Rules Governing Financial and Business Matters
Between this Corporation and its Affiliated Enterprises
4.To meet the Company’s operating needs and enhance its financial structure, the
Company intended to negotiate with the lending bank to modify and renew the bank
loans that are about due.

  • (XII) Where, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, a director or supervisor has expressed a dissenting opinion with respect to a material resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, disclose the principal content thereof: None.

  • (XIII) A summary of resignations and dismissals, during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, of the company's Chairman, president, chief accounting officer, chief financial officer, chief internal auditor, chief corporate governance officer, and chief research and development officer: None

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V. Audit fee of independent auditors

  • (I) Amounts of the audit fees and non-audit fees paid to the attesting certified public accountants and to the accounting firm to which they belong and to any affiliated enterprises as well as the details of non-audit services.

Unit: NT$ thousand

CPA
Firm		 CPA Name CPA audit period Audit fee
(Note 1)		 Non-audit
fee
(Note2)		 Total Remarks
Deloitte &
Touche
Taiwan
Ming-Hsin Cho
Hui-Min Huang		 2022.01.01~2022.12.31
3,580		 687 4,267

  • Note 1: Audit fee means the fee paid by the Company to the attesting CPAs for audit, review, and cross validation of the financial statements.

  • Note 2: None-audit fee means the fee for education and training, other review services, and tax attestation services.

  • When the company changes its accounting firm and the audit fees paid for the fiscal year in which such change took place are lower than those for the previous fiscal year, the amounts of the audit fees before and after the change and the reasons shall be disclosed: None.

  • When the audit fees paid for the current fiscal year are lower than those for the previous fiscal year by 10 percent or more, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: None.

VI. Information on replacement of CPAs:

If the company has replaced its certified public accountant within the last 2 fiscal years or any subsequent interim period, it shall disclose the following information: None.

VII. Where the company's Chairman, president, 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 certified public accountant 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.

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VIII. Any equity transfer or change in equity pledged by a director, managerial officer, or shareholder with a 10% stake or more during the most recent year or during the current year up to the date of publication of the annual report

1. Changes in shares transferred and pledged by shareholder

Unit: Share Unit: Share Unit: Share Unit: Share
Title Name 2022 Year-to-date through
April 15,2023
Increase
(decrease) in
the number of
shares held		 Increase
(decrease) in
the number of
shares
pledged
Increase
(decrease) in
the number of
shares held		 Increase
(decrease) in
the number of
shares
pledged
Chairman and a
shareholder with a stake
of more than 10%		 Hung-Liang Hsieh 0 0 0 0
Director and CEO Ming-Chi Hsu 0 0 0 0
Director Fullway Investment Corporation
0		 0 0 0
Director Han-Liang Hu 0 0 0 0
Director Chung-Ho Shaw 0 0 0 0
Independent director Jyan-Bang Chen 0 0 0 0
Independent director Cheng-Li Yang 0 0 0 0
Independent director Sung-Jen Fang 0 0 0 0
Director Wei-Lin Hsieh (3,000) 0 0 0
President of the Business
Group		 Hong-Jey Lee 9,000 0 0 0
President of the Business
Group		 Kaan Lu Tzou 0 0 0 0
Vice president Hwang-Kuen Lin (5,000) 0 0 0
Vice president Chih-Huei Chu 0 0 0 0
Vice president Ming-Hsun Lee 0 0 0 0
Vice president Kou-Hwa Chang 0 0 0 0
Associate vice president Chuan-Chang Feng (9,000) 0 0 0
Associate vice president Chien-Chung Lin 0 0 0 0
Associate vice president Pei-Han Chung 0 0 0 0
Associate vice president Tsun-Hsiung Peng 0 0 0 0
Associate vice president Chih Chang Lin
(inaugurated on April 1,2022)		 0 0 0 0
Associate vice president Yuan-Chieh Hou
(inaugurated on August 1, 2022)
(discharged on Nov. 2,2022)
0		 0 0 0
Associate vice president Chuan-Jen Fang 0 0 0 0
(inaugurated on Feb. 13,2023)
Associate vice president Hsiao-Pei Kuo 0 0 0 0
(inaugurated on Apr. 1,2023)
Associate vice president I-Feng, Chang 0 0 0 0
(inaugurated on Apr. 1,2023)
Associate vice president Yi-Lin Lee 0 0 0 0
Associate vice president,
Finance Division		 Shao-Che Chuang 0 0 0 0
Head of Corporate Governance Shu-Chen Shen 0 0 0 0

75

Title
Name		 Title
Name		 Unit: Share Unit: Share Unit: Share Unit: Share
Name 2022 Year-to-date through
April 15,2023
Increase
(decrease) in
the number of
shares held		 Increase
(decrease) in
the number of
shares
pledged
Increase
(decrease) in
the number of
shares held		 Increase
(decrease) in
the number of
shares
pledged
(inaugurated on Apr. 1, 2023)
Manager of the Audit
Office		 Chi Wu 0 0 0 0
  1. Information on the counterparty to a stock transfer who is also a related party : None
Name Reason
for
transfer		 Date of
transaction		 Counterparty Relationship between the
counterparty and the Company’s
directors, supervisors, managerial
officers, and major shareholders
with a stake of more than 10%		 Shares Transaction
price
  1. Information on the counterparty to a stock transfer who is also a related party: None

76

IX. Information on top ten shareholders who have mutual relationship as related parties as specified in International Accounting Standard 24.

April 15,2023 April 15,2023 April 15,2023 April 15,2023 April 15,2023 April 15,2023 April 15,2023
Name Shareholding Shareholding of spouse
and minor children		 Total shares held in the
name of others		 The name of the entity or person and their relationship to
any of the other top 10 shareholders with which the
person is a related party or has a relationship of spouse or
relative within the 2nd degree.		 Remarks
Shares Ownership Number of
shares		 Ownership Number of
shares		 Ownership Name Relationship
Hung-Liang Hsieh 7,943,455 9.79% 6,095,072 7.51% 0 0 Fen-Ching Hsieh-Chiu
Wei-Lun Hsieh
Wei Lin Hsieh
Wei-Wen Hsieh		 Spouse
1st degree of kinship
1st degree of kinship
1st degree of kinship		 -
Fen-Ching Hsieh-Chiu 6,095,072 7.51% 7,943,455 9.79% 0 0 Hung-Liang Hsieh
Wei-Lun Hsieh
Wei Lin Hsieh
Wei-Wen Hsieh		 Spouse
1st degree of kinship
1st degree of kinship
1st degree of kinship		 -
Nextgem Inc.
(Representative: Ying-Yin
Chiu)		 5,600,292 6.90% 0 0 0 0 Paradigm Investment Corp.
Hong Lun Investment Corp.
Huan ZhongInvestment Corp.		 The Chairmen are the
same person		 -
Paradigm Investment Corp.
(Representative:
Ying-Yin Chiu)		 4,892,721 6.03% 0 0 0 0 Nextgem Inc.
Hong Lun Investment Corp.
Huan ZhongInvestment Corp.		 The Chairmen are the
same person		 -
Hong Lun Investment Corp.
(Representative:
Ying-Yin Chiu)		 3,949,277 4.87% 0 0 0 0 Nextgem Inc.
Paradigm Investment Corp.
Huan ZhongInvestment Corp.		 The Chairmen are the
same person		 -
Wei-Lun Hsieh 2,764,213 3.41% 0 0 0 0 Hung-Liang Hsieh
Fen-Ching Hsieh-Chiu
Wei-Lin Hsieh
Wei-Wen Hsieh		 1st degree of kinship
1st degree of kinship
A relative within the 2nd
degree of kinship
A relative within the 2nd
degree of kinship		 -
Huan Zhong Investment
Corp.
(Representative:
Ying-Yin Chiu)		 2,442,909 3.01% 0 0 0 0 Nextgem Inc.
Paradigm Investment Corp.
Hong Lun Investment Corp.		 The Chairmen are the
same person		 -
Wei-Lin Hsieh 1,583,934 1.95% 0 0 0 0 Hung-Liang Hsieh
Fen-Ching Hsieh-Chiu
Wei-Lun Hsieh		 1st degree of kinship
1st degree of kinship		 -

77

Name Shareholding Shareholding Shareholding of spouse
and minor children		 Shareholding of spouse
and minor children		 Total shares held in the
name of others		 Total shares held in the
name of others		 The name of the entity or person and their relationship to
any of the other top 10 shareholders with which the
person is a related party or has a relationship of spouse or
relative within the 2nd degree.		 The name of the entity or person and their relationship to
any of the other top 10 shareholders with which the
person is a related party or has a relationship of spouse or
relative within the 2nd degree.		 Remarks
Shares Ownership Number of
shares		 Ownership Number of
shares		 Ownership Name Relationship
Wei-Wen Hsieh A relative within the 2nd
degree of kinship
A relative within the 2nd
degree of kinship
Wei-Wen Hsieh 1,513,527 1.87% 0 0 0 0 Hung-Liang Hsieh
Fen-Ching Hsieh-Chiu
Wei-Lun Hsieh
Wei Lin Hsieh		 1st degree of kinship
1st degree of kinship
A relative within the 2nd
degree of kinship
A relative within the 2nd
degree of kinship		 -
Fullway Investment
Corporation
(Representative: Su-Chi
Tien)		 1,341,262 1.65% 0 0 0 0 - - -

78

X. The total number of shares and the consolidated equity stake percentage held in any single investee enterprise by the Company, its directors, managerial officers, or any companies controlled either directly or indirectly by the Company

Investor 2022.12.31;Unit: Thousand shares;% 2022.12.31;Unit: Thousand shares;% 2022.12.31;Unit: Thousand shares;% 2022.12.31;Unit: Thousand shares;% 2022.12.31;Unit: Thousand shares;% 2022.12.31;Unit: Thousand shares;%
Ownership by the
Company		 Ownership by Directors,
Managers and
Directly/Indirectly
OwnedSubsidiaries		 Total Ownership
Number of
shares		 Ownership Number of
shares		 Ownership Number of
shares		 Ownership
Scientech Investment Corp. 5,540 100 0 0 5,540 100
Scientech Materials Corporation 1,400 100 0 0 1,400 100
Acromass Technologies,Inc. 27,000 100 0 0 27,000 100
Natgem Inc. 800 100 0 0 800 100
Scientech GMBH Note1 100 0 0 Note1 100
Transcend Capital Corp. 14,275 100 0 0 14,275 100
Simple InvestmentCorp. 0 0 4,906 100 4,906 100
Scientech Engineering USACorp. 0 0 300 100 300 100
Scientech Engineering Corp.(Shanghai) 0 0 Note1 100 Note1 100
Scientech Engineering (Hong Kong)
Limited		 0 0 Note1 100 Note1 100

Note 1: Unlimited shares of a limited company.

79

Four. Fund Raising Status

I. Capital and shares

(I) Source of share capital

April 30,2023 April 30,2023 April 30,2023 April 30,2023 April 30,2023 April 30,2023 April 30,2023
Date Issuance
price
(NT$)		 Authorized capital
stock		 Paid-in capital Remarks

Shares (in
thousand
shares)		 Amount
(NT$thousa
nd)		 Shares (in
thousand
shares)		 Amount
(NT$thousa
nd)		 Source of share capital Capital paid
in by assets
other than
cash		 Capital increase
effective (approval)
date and the
number of official
letter
2013.03 10 100,000 1,000,000 81,139 811,390 Capital increase by
cash NT$70,160,000		 None Jing-Shou-Shang-
Zi #10201058740
dated March 29,
2013
2012.02 10 100,000 1,000,000 74,123 741,230 Capital reduction
through retirement of
treasury shares in the
amount of
NT$7,779,970		 None Jing-Shou-Shang-
Zi #10101026750
dated February 15,
2012
2011.10 10 100,000 1,000,000 74,901 749,010 Capital increase
through M&A in the
amount of
NT$149,009,970		 None Jing-Shou-Shang-
Zi #10001244240
dated October 31,
2011
2007.08 10 75,000 750,000 60,000 600,000 Recapitalization of
earnings in the amount
of NT$25,000,000		 None Jing-Shou-Shang-
Zi #09601204390
dated August 22,
2007
April 30, 2023 April 30, 2023 April 30, 2023 April 30, 2023 April 30, 2023
Type of equity Authorized capital stock Remarks
Shares
outstanding		 Unissued shares Treasure shares Total
Registered common
shares		 80,328 thousand
shares		 18,861 thousand
shares		 811 thousand
shares		 100,000 shares Listed shares

(II) Shareholder structure

(II) Shareholder structure (II) Shareholder structure
April 15, 2023
Shareholder
structure
Quantity

Government
agencies		 Financial
institutions		 Other legal
persons		 Foreign
institutions
and
foreigners		 Individuals Treasury
shares		 Total
Number ofpeople 0 0 31 58 10,222 1 10,312
No. of Shares Held 0 0 18,712,467 8,777,807 52,837,726 811,000 81,139,000
Ownership 0.00% 0.00% 23.06% 10.82% 65.12% 1.00% 100.00%

80

(III) Diffusion of ownership

At a par value of NT$10 per share; April 15, 2023

Shareholding tier Number of Shareholders
Number of shares held		 Shareholding
percentage
1-999 1,419 211,247 0.26%
1,000-5,000 7,949 13,625,130 16.79%
5,001-10,000 515 4,176,640 5.15%
10,001-15,000 131 1,706,595 2.10%
15,001-20,000 97 1,829,324 2.25%
20,001-30,000 53 1,377,607 1.70%
30,001-40,000 23 833,609 1.03%
40,001-50,000 21 968,014 1.19%
50,001-100,000 51 3,626,323 4.47%
100,001-200,000 19 2,843,252 3.50%
200,001-400,000 16 4,237,256 5.22%
400,001-600,000 1 547,833 0.68%
600,001-800,000 2 1,492,437 1.84%
800,001-1,000,000 1 811,000 1.00%
More than 1,000,001 shares 14 42,852,733 52.82%
Total 10,312 81,139,000 100.00%

Preferred shares

Preferred shares
April 30,2023
Shareholdingtier Number of Shareholders No. of Shares Held Ownership
To be determined based on
actual needs		 - - -
Total - - -

(III) Name of major shareholder

Name of major shareholder
Name No. of Shares Held Shareholding
percentage
Hung-Liang Hsieh 7,943,455 9.79%
Fen-Ching Hsieh-Chiu 6,095,072 7.51%
Nextgem Inc. 5,600,292 6.90%
Paradigm Investment Corp. 4,892,721 6.03%
Hong Lun Investment Corp. 3,949,277 4.87%
Wei-Lun Hsieh 2,764,213 3.41%
Huan Zhong Investment Corp. 2,442,909 3.01%
Wei-Lin Hsieh 1,583,934 1.95%
Wei-Wen Hsieh 1,513,527 1.87%
Fullway Investment Corporation 1,341,262 1.65%

81

  • (V) Market price, net worth, earnings and dividends per share and the related information for the most recent two years:
most recent two years: two years: two years:
Unit: NT$1,000;1,000 shares

Item		 Year 2021 2022 Year-to-date through
March 31, 2023
(Note 8)
Market price per
share
(Note 1)		 Highest 108.00 115.00 85.50
Lowest 51.80 61.00 71.50
Average 75.82 97.00 79.26
Net worth per share
(Note 2)		 Before distribution 38.95 44.60 46.79
After distribution 36.45 41.00(Note 9) 43.19(Note 9)
Earnings per share Weighted average shares
(Note 10)		 80,328 80,328 80,328
Earningsper share(Note 3) 5.23 7.08 1.81
Dividends per
share		 Cash dividends 2.50(Note 9) 3.6(Note 9) Not applicable
Stock
dividends		 Stock dividends
from earnings		 0 0 Not applicable
Capital surplus
distributed as
dividends		 0 0 Not applicable
Accumulated undistributed
dividends(Note 4)		 200,820 289,180 289,180
Investment return
analysis		 Price/earnings ratio(Note 5) 12.94 11.30 Not applicable
Price/dividend ratio(Note 6) 27.08 22.23 Not applicable
Cash dividendyield(Note 7) 3.69% 4.50% Not applicable

  • If shares are distributed in connection with a capital increase out of earnings or capital reserves, further disclose information on market prices and cash dividends retroactively adjusted based on the number of shares after distribution.

  • Note 1: List the highest and lowest market price of common shares in each fiscal year and calculate the average market price by weighing transacted prices against transacted volumes in each respective fiscal year.

  • Note 2: Calculate the net worth per share based on the number of outstanding shares at yearend. Calculate the amount of distribution based on the amount resolved by the board of directors or resolved in next year's shareholders meeting.

  • Note 3: If retrospective adjustments are required because of issuance of bonus shares, the earnings per share should be disclosed in the amounts before and after the retrospective adjustments.

  • Note 4: If equity securities are issued with terms that allow undistributed dividends to be accrued and accumulated until the year the Company makes profit, the amount of cumulative undistributed dividends up until the current year should be disclosed separately.

  • Note 5: Price/earnings ratio = average closing price per share for the year / earnings per share.

  • Note 6: Price / dividend ratio = average closing price per share for the year / cash dividends per share.

  • Note 7: Cash dividend yield = cash dividend per share / average closing price per share for the year.

  • Note 8: Net worth per share and earnings per share are based on audited (auditor-reviewed) data as at the latest quarter before the publication date of the annual report. For all other fields, calculations are based on the data for the current year as of the date of publication of the annual report.

  • Note 9: The Company’s Earnings Distribution Proposal for 2022, which was approved at the Board of Directors meeting dated March 10, 2023 through a supermajority vote, stipulated a cash dividend distribution to shareholders in the amount of NT$289,180 thousand, that’s NT$3.6 per share.

  • Note 10: The Company held 811 thousand treasury shares on both December 31, 2021 and March 31, 2022.

82

(VI) Company's dividend policy and implementation thereof

  1. Dividend policy adopted in the company's articles of incorporation

If the Company has earnings at the end of year, it shall allocate 5%~15% of such earnings as employee remuneration; the Board of Directors shall allocate no more than 2% of such earnings as director remuneration. The employee remuneration proposal and director remuneration proposal shall be submitted and reported to the shareholders' meeting.

Employee remuneration may be distributed in cash or shares; those eligible for employee remuneration shall also include the employees of a subsidiary or affiliate who meet certain criteria. Such criteria shall be formulated by the Board of Directors. Director remuneration shall be distributed in cash. However, if the Company still has accumulated losses, an amount equal to such losses shall be reserved in advance, and the remainder may then be distributed as employee remuneration and director remuneration according to the percentage mentioned in the preceding paragraph.

In the event of surplus earnings after closing of annual accounts, due taxes shall be paid in accordance with the law, and losses incurred in previous years shall be compensated. Upon completion of the preceding actions, 10% of the remainder surplus shall be allocated as legal reserve. However, in the event that the accumulated legal reserve is equivalent to or exceeds the Company's total paid-in capital, such allocation may be exempted. The remainder may be set aside or reversed as special reserve in accordance with laws and regulations. If there is remainder surplus, the Board of Directors shall draft a surplus distribution proposal regarding the remainder of the surplus as well as accumulated undistributed surplus, shall decide whether to distribute the distributable dividends and bonus in cash or in shares, in whole or in part, by a majority vote at a Board of Directors meeting attended by two thirds or more of all directors, and shall report its decision to the Shareholders' Meeting. However, distribution of in the form of new shares shall be subject to a resolution of the Shareholders' Meeting.

The Company hereby authorizes the Board of Directors to distribute legal reserves and a part or all of the capital reserves stipulated in Article 21 of the Company in cash by a resolution achieved by a majority vote at a Board of Directors meeting attended by two thirds or more of all directors; however, the Board of Directors shall report its resolution to the Shareholders' Meeting. However, distribution of in the form of new shares shall be subject to a resolution of the Shareholders' Meeting.

The Company’s dividend policy considers the environment it is in and the growth stage it is at. To cope with future capital requirements and long-term financial planning while maintaining shareholder interests and a balanced dividend policy, shareholder dividends will be distributed in shares or in cash, as appropriate, based on future capital expenditure requirements and the extent of dilution effect on earnings per share. Of the shareholder dividends distributed, no less than 10% shall be in cash. The actual distribution percentage shall be determined by the Board of Directors by considering the Company’s business planning, investment plan, capital planning, and the changes in internal and external environment.

According to the Company’s dividend distribution policy, the amount of shareholders’ dividend, in principle, should be 40%~60% of the annual net income, and may be adjusted according to whether there is a material investment item in the following year and how the financial forecasting for the following year is. However, such amount, in rare circumstances, shall be determined by the Board of Directors through deliberation.

  1. Dividend distributions proposed at the most recent year

On March 10, 2023, the Company’s Board of Directors reached a supermajority resolution to distribute a cash dividend distribution to shareholders in the amount of NT$289,180 thousand,

83

that’s NT$3.6 per share. Such resolution will be proposed and reported to the Shareholders' Meeting.

  • (VII) Effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting

  • This is not applicable because so far the Company did not intend to distribute any stock dividends.

(VIII) Remuneration to employees and directors:

  1. Percentage or scope of remuneration of employees and directors stipulated in the Company’s Articles of Incorporation: Refer to (VI).

  2. The basis for estimating the amount of employee, director, and supervisor compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period.

At the Board of Directors meeting dated March 10, 2023, the Company resolved to distribute the remuneration of NT$58,000 thousand to employees of 2022 and the remuneration of NT$8,000 thousand to directors of 2022, both amounts were the possible distribution amount estimated based on past experience and by referencing the Company’s Articles of Incorporation.

Any material change in the distribution amount after the end of a fiscal year is charged to the expenses in the year in which it occurred. Any change in the distribution amount on the Shareholders' Meeting date is accounted for as changes in accounting estimates and should be recognized in the year in which the Shareholders' Meeting is held. If the Shareholders' Meeting resolves to distribute employee remuneration in the form of shares, the number of share dividends shall be calculated by taking the resolved amount and dividing it by the fair value of shares; the fair value of shares is determined at the closing price on the date immediately preceding the Board of Directors meeting date.

  1. Distribution of remuneration approved by the board:

  2. (1) Amount of remuneration for employees and directors payable in cash or shares. If there is any discrepancy between that amount and the estimated figure for the fiscal year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed: The Company resolved to distribute employee remuneration for 2022 in the amount of NT$58,000 thousand and director remuneration for 2022 in the amount of NT$8,000 thousand at the Board of Directors meeting dated March10, 2023.

  3. (2) The amount of any employee compensation distributed in stocks, and the size of that amount as a percentage of the sum of the after-tax net income stated in the parent company only financial reports or individual financial reports for the current period and total employee compensation: N/A.

  4. The actual distribution of employee and director compensation 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 employee or director compensation, additionally the discrepancy, cause, and how it is treated.

84

The amount of employee remuneration and director remuneration for 2022 actually distributed is as follows:

follows:
Actually distributed
amount resolved by the
Shareholders' Meeting		 Originally estimated
amount
Differentials		 Difference
Reason
Status of distribution:
Employee remuneration in cash NT$58,000 thousand NT$58,000thousand
0		 Not applicable
Employee remuneration in shares NT$0 thousand NT$0 thousand 0 Not applicable
A. Number of shares 0 thousand shares 0 thousand shares 0 Not applicable
B. Amount NT$0 thousand NT$0 thousand 0 Not applicable
C. As a percentage of the number of shares
outstandingat the end ofyear(%)
0		 0 0 Not applicable
Directors' remuneration NT$8,000 thousand NT$8,000 thousand 0 Not applicable
Information on earningsper share
Original earningsper share(after taxes) NT$7.08 NT$7.08 0 Not applicable
Imputed earningsper share(after taxes) NT$7.08 NT$7.08 0 Not applicable

Note: If the actual distributed amount is different from the estimated amount, after the shareholders’ meeting approves, the differences are accounted for as changes in accounting estimates and recognized in profit or loss in the current year.

(IX) Buyback of shares by the Company

A.Share Buyback by the Company (Already completed)

A.Share Buyback by the Company (Already completed) A.Share Buyback by the Company (Already completed) A.Share Buyback by the Company (Already completed) A.Share Buyback by the Company (Already completed)
May 14, 2023
Buyback trench 1st trench 2nd trench 3rd trench
Purpose of buyback To transfer the shares
to employees		 To transfer the shares
to employees		 To transfer the shares
to employees
Buyback period January 1 to June 30,
2009		 June 9 to August 8,
2015		 May 15 to July 11,
2017
Buyback price range NT$10~18 NT$52~75 NT$50~66
Types and numbers of shares bought back 1,466,997
common shares		 811,000
common shares		 811,000
common shares
Amount of shares bought back NT$19,021,576 NT$47,742,077 NT$45,650,289
Ratio of the number of shares already bought
back to the number of shares intended to be
bought back(%)		 100% 100% 100%
The number of shares bought back that have
been cancelled or transferred		 1,466,997
common shares		 811,000
common shares		 811,000
common shares
Accumulated number of the Company’s
shares held bythe Company		 0 0 0
Ratio of the accumulated number of the
Company’s shares held by the Company to
the total number of issued shares(%)		 0 0 0

85

B. Share Buyback by the Company (under Way)

B. Share Buyback by the Company (under Way) B. Share Buyback by the Company (under Way)
May14,2023
Buyback trench
4th trench
4th trench
Purpose of buyback To transfer the shares to employees
Type of shares bought back Common shares
Ceilingon buyback amount NT$61,636 thousand
Scheduled buy-backperiod September 19,2018 to November 18,2018
Number of shares intended to be bought back 811,000 shares
Buybackprice range NT$57~76(Note)
Types and numbers of shares bought back 811,000 common shares
Amount of shares bought back NT$50,659,340
Ratio of the number of shares already bought back to the
number of shares intended to be bought back(%)		 100%

Note: Share buyback will continue if the share price falls below the price range set by the Company during the buyback period.

II. Corporate bonds: None

III. Preferred shares: None

IV. Global deposit receipts: None

V. Employee stock options: None

VI. New restricted employee shares: None

VII. Merger and acquisition activities (including mergers, acquisitions, and demergers): None

VIII. Status of implementation of capital allocation plans: The Company did not do any followon offerings.

86

Five. Operational Highlights

I. Scope of business

1. Business Scope

  • (1) Major lines of business

  • A. CB01010 Machinery Equipment Manufacturing

  • B. CC01080 Electronics Components Manufacturing

  • C. E603050 Automatic Control Equipment Engineering

  • D. F113010 Wholesale of Machinery

  • E. F119010 Wholesale of Electronic Materials

  • F. F113030 Wholesale of Precision Instruments

  • G. F401010 International Trade

  • H. F401021 Restrained Telecom Radio Frequency Equipment and Materials Import

  • I. C901010 Pottery and Ceramics Products Manufacturing J. C901020 Glass and Glass Products Manufacturing

  • K. IG01010 Biotechnology Services L. IC01010 Medicine Inspection

  • M. C199990 Manufacture of Other Food Products Not Elsewhere Classified

  • N. C802100 Cosmetics Manufacturing

  • O. C105010 Edible Oil and Fat Manufacturing

  • P. C110010 Beverages Manufacturing

  • Q. F102020 Wholesale of Edible Fat and Oil R. F102170 Wholesale of Other Food Products and Groceries S. F203010 Retail Sale of Food, Grocery and Beverage T. F213040 Retail Sale of Precision Instruments

  • U. F213080 Retail Sale of Other Machinery and Equipment

  • V. F218010 Retail Sale of Computer Software

  • W. F219010 Retail Sale of Electronic Materials

  • X. IZ99990 Other Industry and Commerce Services Not Elsewhere Classified

  • Y. Z999999 All business activities that are not prohibited or restricted by law, except those that are subject to special approval

(2) Operating ratio

Unit: NT$ thousand; %

(2) Operating ratio Unit: NT$ thousand; % Unit: NT$ thousand; %
Year
Main item		 2021 2022
Amount Percentage Amount Percentage
Goods sales revenue 4,450,223 95.01 5,405,974 95.68
Services revenue 218,757 4.67 194,596 3.45
Other operatingrevenue 14,807 0.32 49,416 0.87
Net revenue 4,683,787 100.00 5,649,986 100.00

Data source: Data of 2021 and 2022 are based on the financial statements audited by CPAs.

(3) Current lines of products

  • A. Equipment Manufacturing:

  • (1.) Batch Type Wet-Process Tools, which are mainly used in:

    1. Advanced Packaging Process

    2. Semiconductor Front-End Process

    3. Compound Semiconductor

    4. Microelectromechanical Systems (MEMS)

87

  1. Mini LED/Micro LED Process

  2. (2.) Single-wafer Type Wet-Process Tools, which are mainly used in:

  3. Advanced Packaging Process

  4. Semiconductor Front-End Process

  5. Compound Semiconductor

  6. Microelectromechanical Systems (MEMS)

  7. Mini-LED/Micro LED Process

  8. (3.) Temporary Bonding Debonding System (TBDB), which is mainly used in: IGBT power devices and advanced packaging process, including:

  9. Temporary Bonding System

  10. Temporary Debonding System

  11. Release Layer Coating System

  12. Carrier (Glass) Recycling System

B. Wafer reclaim

The wafer reclaim service denotes the process of restoring the cleanness and flatness of a Test Wafer and Dummy/Control Wafer used in semiconductor manufacturing process to the level of cleanness and flatness characteristic of a brand new Test Wafer and Dummy/Control Wafer, typically by means of sorting, cleaning, lapping, polishing, and drying, so that they can be used as a Dummy/Control Wafer again. Wafer reclaim mainly aims to reduce the overall by removing the necessity to use a brand-new Test Wafer and Dummy/Control Wafer every single time.

(A) 12” Si-wafer reclaim

  • (B) SiC wafer reclaim and full process after the crystal-growth process

measurement equipment, process equipment, chemical analysis equipment and materials needed by the various industries such as the semiconductor industry, optoelectronic industry, LCD/LED/solar energy industries, and other industries.

(4) New products to be developed

The Company's equipment manufacturing division has been developing mainly semiconductor and LED wet process equipment for many years. In the early stage, the Company mainly focused on providing the technologies for batch type equipment and single-wafer type wet process in terms of etching, cleaning, and photoresist removal; to date, the Company is a master in such technologies. In addition, the Company has begun to develop high-capacity single-wafer and batch type wet process equipment, in the hope that it can be applied to customers’ new process. Aside from that, the Company also continues the past development plan, focuses on 8”/12” high-end process batch cleaning equipment, and intensifies the investment in equipment for advanced packaging in terms of wafer bonding and debonding, making the Company's production process equipment more competitive in the market.

The company's equipment manufacturing division plans to develop products and technologies this year, which are stated as follows:

Industry
category		 Plan name
Semiconductor 1. 12-inch advancedprocess batch type cleaningequipment

88

Industry
category		 Plan name
2. Development of the new-generation single-wafer wet process cleaning equipment
3. High-clean single-wafer wet process equipment for advanced packaging
4.Next-generation wafer and glass temporary bonding/debonding process equipment
5.Square wafer hanger type electroplating process equipment

In terms of the R&D of wafer reclaim, the Company has made heavy investment to improve process and develop relevant system tools in order to meet customers’ requirements of advanced process. Doing so aims to improve the process efficiency and satisfy customers’ needs for advanced process applications.

The Company will leverage existing core technologies to aggressively develop the technologies for processing non-silicon materials to lead the market.

Industry
category		 Plan name R&D content
Wafer reclaim To develop the technology of
silicon wafer reclaim process		 1. To develop advanced process
2. To develop the wafer-polishing technology
3. To developthe wafer-cleaningtechnology
To develop process technology
for processing non-silicon
materials		 1. To develop the SiC process technology.
2. To develop the large size Semi-insulating wafer
process technology

2. Industry Overview

  • (1). Status and development of the industry

The supply and demand status and future growth potential of the wafer reclaim market and semiconductor/LED/TFT-LCD equipment suppliers are closely related to the development of the semiconductor industry and the scale of the TFT-LCD and LED markets. The following is a description of the semiconductor, TFT-LCD, and LED markets:

  • A. Semiconductor

According to a report by International Data Corporation (IDC), global semiconductor revenue to bottom out in the first half of 2023, and revenue is expected to turn positive in the 4th quarter. Total revenue in 2023 will still decrease by 5.3% to US$561 billion.

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By market segmentation, the markets that performed better were automotive and communications, with growth of 2.1% and 1.3%. The worse performing market was the storage market, which declined by 23.8%.

==> picture [325 x 237] intentionally omitted <==

  • B. Advanced packaging According to a report by Yole group , the advanced packaging market represented 44% of the total Integrated Circuit (IC) packaging market by 2021, and it will reach more than 50% of the market by 2027. The highest AP market share belongs to Flip-Chip (FC) platform, which includes FC Ball Grid Array (FCBGA), FC Chip Scale Packaging (FCCSP) and FC Systems-in-Packages (FC-SiPs) with 70% of the market in 2021. The highest revenue Compound Annual Growth Rate from 2021-2027 (CAGR2021-2027) is expected from Embedded Die (ED) in laminate substrates, 2.5D/3D, and fan-out at 24%, 14% and 11%, respectively, as high-volume products further penetrate the market.

==> picture [327 x 186] intentionally omitted <==

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  • C. Compound semiconductor

According to a research report published by IMARC, the global compound semiconductor market size reached US$ 112.2 billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 150.4 billion by 2028, exhibiting a growth rate (CAGR) of 4.9% during 2023-2028. Among them, GaN and SiC will be the next wave of market entry.

D. LED industry

According to a research report published by TrendForce, the Led market value shrunk to US$ 14.21 billion in 2022, and looking for the future, the Led market value will achieve single-digit growth in 2023. TrendForce expects the market to reach US$ 21.01 billion by 2027, exhibiting a growth rate (CAGR) of 8% during 2022-2027.

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  • (2). Relations between upstream, midstream, and downstream of the industry:

The Company is an equipment supplier for the high-tech industry such as the semiconductor industry and TFT-LCD industry. Below is the relationship between the upstream, midstream, and downstream of the industry in which the Company is mainly engaged in:

==> picture [459 x 286] intentionally omitted <==

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

Upstream Midstream Downstream
Electrical and electronics
industry
Transmission parts industry
Research and development, Semiconductor industry
innovative design, Flat panel display
electromechanical integration industry
Optoelectronic parts industry Back-end packaging
industry
Ga As industry
LED manufacturing
Automatic control components industry
industry Solar energy industry
Biotech industry
Equipment assembly, test, and Wafer reclaim industry
maintenance
Machining Industry
Hardware industry
----- End of picture text -----

Below is the diagram of relationship between the upstream, midstream, and downstream of the wafer reclaim industry in which the Company operates: Post-process used monitoring wafers

==> picture [433 x 88] intentionally omitted <==

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

OEM of wafer
IC foundry
reclaim
Reclaimed products
----- End of picture text -----

  • (3) Various product development trends

  • A. The process equipment of the semiconductor industry, front-end and back-end alike, is trending towards the new-generation precision process technology, from the current 28nm to 20nm, 14nm, 10nm, 7nm, 5nm, and to 3nm.

  • B. As the advanced packaging process, a back-end process of the semiconductor industry, rapid advances, so do the various new technologies such as SIP, Fan-out, 3D-IC, to name but three.

  • C. TFT-LCD industry is trending towards large size and LED backlight modules.

  • D. Developing custom equipment tailored to customers’ needs requires joint efforts from them. Consequently, a good understanding of the process will facilitate equipment development, and investment in enormous manpower and funds is required for advancing the equipment industry.

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(4) Competition and market share

A. SWOT analysis of the agent industry

A. SWOT analysis of the agent industry
Strength Weakness
A.The product line is of good quality and
performance, and its functions meet
customers’ development needs at present and
in the future.
B.The Company’s rich experience in, and
mature technology for, process and
equipment is helpful in fully leveraging the
technologies for which the Company is an
agent to satisfy customers’ process
development needs.
C.Since foreign principals are well ahead of
domestic manufacturers in terms of process
technology, in the near future, domestically-
made machines are not likely to outstrip the
product lines for which the Company is an
agent.		 A.Being an oligopoly market, the process
equipment industry has an entry barrier.
B.Existing agents have been working well with
their principals for a long time, so winning
the agentship for other agents’ existing
product lines could be quite challenging.
Opportunities Threats
A.Having a stable customer base and a good
understanding of the process technology and
equipment gives the Company a comparative
advantage of winning the agentship for
different products.
B.Acting as an agent for various lines of
products makes it easier to provide
customers with total solutions.
C.Having a customer base and experience in
original equipment and process equipment
facilitates the development of other business,
e.g., used machines, plant-wide machine
relocation, or maintenance of old equipment.
D.As foreign principals are trending towards
the development of new technologies, they
need to cultivate their local agents to serve
their customers nearby. In this respect, an
agent with a customer base and technology
capacity is more likely to win an opportunity
for strategic partnership.
E.12-inch fabs are being constructed at home
and abroad, which opens up the opportunity
for domestic sale and exports.		 A.Some foreign principals have developed
similar process equipment, risking a price
war.
B.Once the agency business reaches a certain
scale, there is a risk that the principals might
want to sell directly to customers.

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B. SWOT analysis of equipment manufacturing

B. SWOT analysis of equipment manufacturing
Strength Weakness
A.Domestically-made equipment costs less
than those made in the United States,
Europe, or Japan
B.Being well experienced in process
technologies enables the development of
equipment which can satisfy customers
process requirements.
C.With mature precision technology, domestic
equipment manufacturers can quickly come
in on the semiconductor and optoelectronic
product lines.
D.Domestic market has scaled up.		 A.There is a lack of capability for verifying the
process involving high-precision
semiconductor equipment; therefore, the
opportunity for winning an order in this
regard is nimble.
B.The high-tech semiconductor process
equipment is an oligopoly market
comprising foreign original manufacturers,
which creates an entry barrie.
C.R&D fund is less sufficient relative to that of
foreign original manufacturers.
Opportunities Threats
A.Possession of a stable customer base and a
good understanding of the process
technology and equipment makes it easier to
win business.
B.Domestic equipment industry is trending
towards large size, localization, and
customization, which is conducive to
domestic manufacturers’ developing
business.
C.The technology and experience derived from
acting as an agent for the various lines of
products makes it easier to provide
customers with total solutions.
D.Having a customer base and experience in
original equipment and process equipment
facilitates the development of other business,
e.g., used machines, plant-wide machine
relocation, or maintenance of old equipment.
E.12-inch fabs are being constructed at home
and abroad, which opens up the opportunity
for domestic sale and exports.		 A.The rise of Korean and Chinese equipment
manufacturers poses a risk of price war.
B.Technologies in the equipment industry are
transitioning to another generation, posing a
great challenge to research and development.

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C. A SWOT analysis of wafer reclaim

C. A SWOT analysis of wafer reclaim
Strength Weakness
A.Domestic transportation is less costly than
that in Europe or Japan.
B. Being local is being advantageous, in that
the Company can help customers improve
the turnover efficiency of reclaimed wafers
and lower the inventory cost thereof.
C.Possession of a good advanced process
capacity makes it easier for the Company to
win orders of advanced process.		 A.Equipment is being depreciated and
amortized.
Opportunities Threats
A.The world’s largest wafer reclaim customer
is in Taiwan.
B.The constant growth in the capacity of
advanced process constantly drives up the
demand for wafer reclaim.
C.The Company’s long-term engagement in the
agency business is conducive to developing
overseas markets.		 A.The excessive capacity of wafer reclaim
plants in Europe and Japan might pose a risk
of price war.
B.Competitors keep expanding their capacity.

(5) Market shares

A.Major competitors

Being a supplier of professional process equipment for the semiconductor/LED/solar energy/FPD industries, the Company has some major competitors, which are mainly foreign manufacturers, domestic agents, and domestic equipment manufacturers. Of them, some are TWSE- or TPEx-listed companies such as MARKETECH, Hansol IONES, CONTREL, GRAND PROCESS, Manz, AMPOC, TOPCO, KINIK, UTECHZONE, Hermes Microvision, and HERMES-EPITEK. However, since the semiconductor/LED/solar energy/FPD industries involve a wide range of expertise, each of the said companies focuses on different industry and provides different equipment and services. Given so, the Company differs from the said companies in terms of capital and operational scale.

B. Competitors’ market share

Each of the semiconductor/LED/solar energy/TFT-LCD industries involves extensive areas of expertise, comprises domestic manufacturers and the giant counterparts in Europe, US, and Japan, and has an enormous market size. Currently, no creditable statistics about them are available. However, the Company believes that its own market share for the time being is relatively small.

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C. Technology and R&D Overview

In 2022, SCIENTECH proposed 32 patents at home and abroad and obtained 26 patent certificates. At the end of 2022, it still held 152 valid patents.

  • (1) A listing of research and development expenditures as well as technologies and/or products successfully developed during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report.

  • A. A listing of research and development expenditures during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report

A. A listing of research and development expenditures during the most recent fiscal year or during
the current fiscal year up to the date of publication of the annual report		 A. A listing of research and development expenditures during the most recent fiscal year or during
the current fiscal year up to the date of publication of the annual report		 A. A listing of research and development expenditures during the most recent fiscal year or during
the current fiscal year up to the date of publication of the annual report
Unit: NT$thousand;%
Item 2022 2023/01-2023/03
Research and development
expenses		 320,616 71,372
Ratio to net operatingincome(%) 5.67% 4.41%

  • Note: The data for 2022 were audited by CPAs; the data covering January 2023 through March 2023 were reviewed by CPAs.

  • B. A listing of technologies and/or products successfully developed during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report

Since 2004 the Company has been investing R&D expenditures and developing and innovating technologies to intensify the marketing of existing lines of products and create products under its private brand. Below is a summary of the R&D results in the most recent year achieved by the equipment manufacturing division:

Year Industrycategory Product Name R&D Content
2022 Semiconductor
equipment		 12" Single wafer frame type cleaning
equipment		 Frame type holder spin control system and
integrated transfer equipment
Batch type etching and cleaning
equipment for 8”/12” wafer and
210*212 mm square wafers		 1.Multi-size & batch type transfer system
2.Multi-size & batch type process control system
Single-wafer flux cleaning equipment
for12" wafer and 210*212 mm square
wafer		 1.Square and circular holder spin control system
and integrated transfer equipment
2.Square and circular spinprocess control system
6” SiC Laser Deboning equipment 1. 6” SiC transfer system
2. Laser deboningcontrol technology
2021 Semiconductor
equipment		 High-cleanness photoresist striping
and cleaning equipment for low-
particleprocess.		 Low particle and high-efficiency flow field
control technology
Automated high temperature baking
oven and transfer system.		 Integrated vertical and horizontal automatic
transfer system for batch type oven
Single-wafer low-temperature wet
process equipment.		 Thermoelectric cooling module for control
system
Low-particle single type 6” & 7” mask
wet process cleaning equipment.		 1.Low particle and high-efficiency flow field
control technology
2.Single type transfer and 6&7 inch combine
process system
Single-wafer horizontal immersion-
etchingwetprocess equipment.		 12-inch single-wafer immersion and spin
process control module
Etching and cleaning equipment for 6
inch quartz oscillator batch type.		 1.Batch type etching system for uniformity
control
2.Multi-wafer size transfer system

96

Year Industrycategory Product Name R&D Content
2020 Semiconductor
equipment		 Single glass wafer wet process
equipment.		 510*515mm square glass wafer chamber
development
4-inch & 6-inch LED process
equipment development.		 Single-wafer etching and cleaning automatic
equipment for low-speed spinprocess
12-inch single wafer final cleaning
equipment.		 Automation equipment for particle-free process
within mega-sonic cleaning
8 inch/12 inch wafer photoresist
stripingand cleaningequipment.		 Automation equipment for organic solvent
cleaning process
Wafer recycling process equipment for
12” batch type.		 Automated particle-free process and transfer
equipment
2019 Semiconductor
equipment		 Compound wet process equipment
development.		 1.High-temperature and batch type vertical
immersion technology by single wafer
loading and unloading
2.High-temperature high-pressure and residual-
free technology for vertical spray striping
process
Single glass wafer wet process
equipment.		 1.300300 mm square glass wafer chamber
development
2.600600 mm square glass wafer chamber
development
8-inch glass wafer bonding equipment
for nextgeneration		 8-inch glass wafer bonding equipment by full
automated
12-inch single wafer bonding
equipment		 12-inch single wafer and glass bonding
equipment
2018 Semiconductor
equipment		 8-inch advanced process batch type
wetprocess equipment		 Batch type automatic equipment for 8-inch
front-end wetprocess
Frame-type single-wafer wet process
equipment		 Frame-type 12-inch single-wafer wet etching
and cleaningequipment
12-inch glass wafer debonding
equipment for nextgeneration		 12-inch glass wafer debonding equipment by
full automated
Single GaAs wafer wet etch equipment 6-inch new process single-wafer etching and
cleaningequipment byfull automated

In addition, below is the Company’s R&D achievements in wafer reclaim:

Year Industrycategory Product Name R&D Content Product Applications
2022 Semiconductor/LED/Power
Components/RF
Components		 1.Si wafer reclaim and
test wafer
2. SiC wafer		 1. Development of
wafer polishing and
cleaning technology
2. Development of SiC
wafer process
technology (in
progress); application
and development of
SiC wafer defect
detection technology;
development of SI.-
SiC wafer process
technology.		 1. Advanced
semiconductor
process monitoring
2. Power semiconductor
3. Communication
components
2021 Semiconductor/LED/Power
Components/RF
Components/Automotive
Electronics		 1.Si wafer reclaim and
test wafer
2. SiC wafer
3. Development of
process technology
for ceramic materials
dedicate to		 1. Development of
wafer polishing and
cleaning technology
2. Development of SiC
wafer process
technology (in
progress);application		 1. Advanced
semiconductor
process monitoring
2. Power semiconductor
3. Communication
components

97

Year Industrycategory Product Name R&D Content Product Applications
semiconductor
process		 and development of
SiC wafer defect
detection technology;
development of SI.-
SiC wafer process
technology.
3. Ceramic wafer
process technology,
and quality
improvement therein,
for semiconductor
process		 4. Automotive
electronics
2020 Semiconductor/LED/Power
Components/RF
Components/ Automotive
Electronics		 1.Si wafer reclaim
2.SiC/GaN on SiC
wafer reclaim
3. Development of
process technology
for ceramic materials
dedicate to
semiconductor
process		 1. Development of
wafer polishing and
cleaning technology
2. Development of SiC
wafer process
technology (in
progress); application
and development of
SiC wafer defect
detection technology.
3. Ceramic wafer
process technology,
and quality
improvement therein,
for semiconductor
process		 1. Advanced
semiconductor
process monitoring
2. Power semiconductor
3. Communication
components
4. Automotive
electronics
2019 Semiconductor/LED/Power
Components/RF
Components/ Automotive
Electronics		 1. Si wafer reclaim
2. SiC/ GaN on SiC
wafer reclaim
3. Development of
process technology
for ceramic materials
dedicate to
semiconductor
process		 1. Development of
wafer cleaning
technology
2. Development of SiC
wafer process
technology (in
progress); application
and development of
SiC wafer defect
detection technology.
3. Ceramic wafer
process technology
for semiconductor
process		 1. Semiconductor
process and chip
2. LED & Motor power
control components
3. Power semiconductor
components
4. RF components
5. 5G communication
components
6. Automotive
electronics
2018 Semiconductor/LED
/power components
/RF components		 1. Si wafer reclaim
2. SiC/ GaN on SiC
wafer reclaim
3. Development of
other non-Si/SiC
wafer (ceramic
material) process
technology		 1. Development of
wafer cleaning
technology
2. Development of
defect inspection
system and
technology		 1. Semiconductor
process and chip
2. LED & Motor power
control components
3. Power semiconductor
components
4. RF components

98

Year Industrycategory Product Name R&D Content Product Applications
3. Development of SiC
wafer process
technology (in
progress)
4. Application and
development of SiC
wafer defect
detection technology
5. Development of
ceramic wafer
process technology
for semiconductor
process		 5. 5G communication
components

  1. Long-term and short-term business development planning

  2. (1) Short-term business development plan

Summary of the Company's short-term plans is as follows:

  • A. Marketing strategy

  • (A) Provide a Total Solution (including equipment and process technology) for the process needs of various industries.

  • (B) Continuously improve customer satisfaction (CS), including machine capability, service quality and process technology.

B. Product strategy

  - (A) Semiconductor/LED/LCD/solar energy: actively participate in customers' early-stage research and development plan in order to jointly develop related machine equipment.

  - (B) Develop related materials and equipment for potential green energy industries in the future.

  - (C) Develop distribution of new product lines and introduce higher-level manufacturing processes and measurement equipment.

  • C. Operations management strategy

    • (A) Reinforce ERP, internal audit and internal control and other related systems to improve management performance.

    • (B) Improve the quality of personnel through continuous education and training programs.

    • (C) Introduce KPI and PBC management to improve personnel capabilities.

    • (D) Departments of distributorship and manufacturing incorporate the use of and implement ISO systems.

  • D. Financial strategy

    • (A) Effective management of A/R and inventory.

    • (B) Establish a long-term cooperative relationship with banks.

  • (2) long-term business development plan

  • A. Marketing strategy

    • (A) Elaborate on the use of the existing human resources, expand business growth, establish a remote ERP system gateway and strengthen the network connection of regional service offices to facilitate the provision of on-time customer services.

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  • (B) Provide customers with complete and professional services, establish technical support personnel for application equipment and technology and add products and services to expand the scale of operations.

  • (C) Accumulate customer bases in different industries and establish long-term cooperative relationships.

  • (D) Seize opportunities for collaboration and development with customers and continuously improve quality and service with high efficiency and reasonable price to establish longterm cooperative relationships.

  • (E) Expand to other high-tech industries with the advantages in the current semiconductor industry. Based on the strong foothold in the field of semiconductor production equipment distribution, we extend the breadth and depth of the product line we distribute and professional services we provide and introduce new products needed in response to the changing market trends.

  • B. Product strategy

  • (A) From the current mid-tier wet process equipment to high-end wet process equipment developed in-house.

  • (B) Work with domestic clients to improve R&D capabilities and co-develop high-end process equipment as an alternative to similar products from Japan and the US.

  • (C) Expand to the non-silicon wafer market based on the developed silicon wafer reclaim technology.

  • (D) Establish strategic alliances with foreign manufacturers through distributorship and import advanced equipment and technology.

  • (E) Reinforce the research and development of green energy materials and equipment.

  • (F) Develop more applications for the products distributed and effectively integrate system resources.

  • C. Operations management strategy

  • (A) Regular training program for employees to enrich the Company's human resources.

  • (B) Provide a friendly work environment, employee benefit and management system and corporate culture to improve the cohesion.

  • D. Financial strategy

  • (A)Improve the Company's overall financial planning to reduce operational risks and enhance competitiveness.

  • (B)In addition to creating profits through operating activities, adopt bank borrowings, cash capital increase and issue of bonds to meet the working capital needs for future operations.

II. An analysis of the market as well as the production and marketing situation

  1. Market analysis

  2. (1) Geographic areas where the main products (services) of the company are provided (supplied):

The Group’s main lines of products mainly include the manufacturing and agency sale of semiconductor/LED/packaging and testing/TFT-LCD equipment. The geographic areas to which the Group sold products in the most recent three years are as follows:

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Unit: NT$ thousand; %

Year
Regions		 2020 2020 2021 2021 2022 2022
Amount Percentage
(%)		 Amount Percentage
(%)		 Amount Percentage
(%)
Domestic sale 1,660,729 46.39 1,810,565 38.66 2,343,617 41.48
Export 1,919,274 53.61 2,873,222 61.34 3,306,369 58.52
Net operating
income		 3,580,003 100.00 4,683,787 100.00 5,649,986 100.00

Note: The said export destination includes Asia, Americas, and other regions.

  • (2) Market shares

  • A. Major competitors

    • Being a supplier of professional process equipment for the semiconductor/LED/solar energy/TFT-LCD industries, the Company has some major competitors, which are mainly foreign manufacturers, domestic agents, and domestic equipment manufacturers. Of them, some are TWSE- or TPEx-listed companies such as MARKETECH, Hansol IONES, CONTREL, GRAND PROCESS, Manz, AMPOC, TOPCO, Hermes Microvision, and HERMES-EPITEK. However, since the semiconductor/LED/solar energy/FPD industries involve a wide range of expertise, each of the said companies focuses on different industry and provides different equipment and services. Given so, there are few TWSE- or TPEx-listed companies which compete with the Company for the same industry and provide the same process equipment (services); there are only a few overlap products.

  • B. Competitors’ market share

Each of the semiconductor/LED/solar energy/TFT-LCD industries involves extensive areas of expertise, comprises domestic manufacturers and the giant counterparts in Europe, US, and Japan, and has an enormous market size. Currently, no creditable statistics about them are available. However, the Company believes that its own market share for the time being is relatively small. One thing worth mention is that the Company currently has a market share of about 25% in the wafer reclaim market.

  • (3) Demand and supply conditions for the market in the future, and the market's growth potential

The supply and demand status and future growth potential of the wafer reclaim market and semiconductor/LED/TFT-LCD equipment suppliers are closely related to the development of the semiconductor industry and the scale of the TFT-LCD and LED markets. In addition, the wafer reclaim market is also closely related to the wafer reclaim OEM market. The following is a description of the supply and demand and potential of the semiconductor/TFT-LCD/ LED markets in the future:

A. Semiconductor

According to a report by International Data Corporation (IDC), global semiconductor revenue to bottom out in the first half of 2023, and revenue is expected to turn positive in the 4th quarter. Total revenue in 2023 will still decrease by 5.3% to US$561 billion.

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==> picture [326 x 232] intentionally omitted <==

By market segmentation, the markets that performed better were automotive and communications, with growth of 2.1% and 1.3%. The worse performing market was the storage market, which declined by 23.8%.

==> picture [325 x 237] intentionally omitted <==

B. Advanced packaging

According to a report by Yole group , the advanced packaging market represented 44% of the total Integrated Circuit (IC) packaging market by 2021, and it will reach more than 50% of the market by 2027. The highest AP market share belongs to Flip-Chip (FC) platform, which includes FC Ball Grid Array (FCBGA), FC Chip Scale Packaging (FCCSP) and FC Systems-in-Packages (FC-SiPs) with 70% of the market in 2021. The highest revenue Compound Annual Growth Rate from 2021-2027 (CAGR2021-2027) is expected from Embedded Die (ED) in laminate substrates, 2.5D/3D, and fan-out at 24%, 14% and 11%, respectively, as high-volume products further penetrate the market.

102

==> picture [327 x 186] intentionally omitted <==

  • C. Compound semiconductor

According to a research report published by IMARC, the global compound semiconductor market size reached US$ 112.2 billion in 2022. Looking forward, IMARC Group expects the market to reach US$ 150.4 billion by 2028, exhibiting a growth rate (CAGR) of 4.9% during 2023-2028. Among them, GaN and SiC will be the next wave of market entry.

D. LED industry

According to a research report published by TrendForce, the Led market value shrunk to US$ 14.21 billion in 2022, and looking for the future, the Led market value will achieve single-digit growth in 2023. TrendForce expects the market to reach US$ 21.01 billion by 2027, exhibiting a growth rate (CAGR) of 8% during 2022-2027.

==> picture [328 x 208] intentionally omitted <==

103

(4) Competitive niche

  • A. Having been engaged in the semiconductor and optoelectronic industries for nearly 40 years, SCIENTECH has accumulated not only a wide range of equipment functions and experience and a pool of technicians, but also customers’ connections in the industry and information on customers’ equipment requirements. We have a good grasp of the most up-to-date key technologies and equipment, as well as customers’ requirements, which facilitates the development and promotion of business. Meanwhile, an existing customer base and a connection with the principals are also helpful for startups to develop their business.

  • B. SCIENTECH acts as an agent for more than 50 product lines, which are mainly used in industries such as the semiconductor, optoelectronics, testing, packaging, and chemical analysis instruments. Such dispersion of customers across multiple industries helps mitigate the risk of economic fluctuation in a single industry.

  • C. Domestically, SCIENTECH has set up a customer service center in northern, central, and southern Taiwan, which operates 24/7 on call and is always ready to serve customers. Abroad, SCIENTECH has also made hefty investment, seeking to serve customers nearby.

  • D. Having been engaged in the semiconductor industry for more than 30 years, SCIENTECH has accumulated more than 25 years of experience in providing total solutions in areas such as the wet process, wafer defect detection, and chemical analysis, and thereby is internationally competitive in terms of “Equipment Manufacturing” and “Wafer Reclaim Service”.

  • E. With rich resources and experience in the industry, SCIENTECH is more likely to attract principals who are seeking an agent for their products. This is helpful for SCIENTECH to win the agentship for new product lines.

  • F. SCIENTECH acts as both an agent and an equipment manufacturer, capable of tailoring to customers’ needs.

  • (5) Favorable and unfavorable factors in the long term

  • A. Favorable factors

    • (A)Involvement in multiple strategic tech industries in Taiwan

      • The Company’s products, either self-made or sold under an agentship, are used in multiple industries such as the semiconductor, optoelectronics, testing, packaging, solar energy, and chemical analysis instruments, all of which are strategic industries that feature a steady growth, which is conducive to sales.

    • (B)Exceptional sales team and R&D team

      • Having worked in this field for long, the Company’s sales team, customer service team, and the R&D team are well experienced in the manufacturing of equipment and machinery. They also accumulated a considerable customer base and connections in the industry as well as information on customers’ equipment requirements. This is conducive to the R&D of machinery and equipment and enables the Company to satisfy customers’ custom requirements.

    • (C)Quick, real-time, efficient services

Domestically, the Company has set up customer service center in northern, central, and southern Taiwan, which operates 24/7 on call and is always ready to serve customers.

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Abroad, SCIENTECH has also made hefty investment, seeking to serve customers nearby and provide quick, real-time services.

  • B. Unfavorable factors and response measures

  • (A)Constant, heavy expenditure of funds is required for being competitive.

The Company operates in the high tech industry, a technology-intensive industry. To keep pace with the technological growth and innovation in the market requires the Company to constantly pour R&D funds and cultivate own R&D team.

Concrete response measures:

Aside from analyzing market conditions and thereafter reviewing the analysis, the Company will also always attend to the product and technological trend as well as any specifications update in the market, so as to correctly forecast the market demands. Aside from entitling employees to common share subscription and treasury shares, which is already in place, the Company also plans to offer further incentives such as employee stock options in order to attract professional talent, besides, to strengthen the company's ability to raise funds in the capital market to maintain the high competitiveness.

Bundles of thriving agents and suppliers intensify market competition.

An agent’s profitability depends on the quality of the principals for which they act as an agent, and on the competition among peers. In recent years, a plenty of semiconductor companies and agents has sprouted; the products under agentship, though of different brands, are quite homogeneous and therefore substitutable, leading to a price war, thus shrinking the profit margin.

Concrete response measures:

The Company adopts a dual-track policy, that is, acting as an agent and a manufacturer at the same time. On the agency business front, the Company will continue to look for the agentship for products with great potential, diversify product lines, as well as the industries wherein it operates, and refrain from focusing on few products or a single industry; doing so can increase the operating revenue and lower operating risks. Furthermore, the Company will enhance customer relations and provide premium services so as to win the trust from suppliers and customers. This way, it is helpful for the Company to win orders.

  1. Main use of major products and their manufacturing processes

  2. (1) Main use of major products

  3. A. Equipment Manufacturing: Equipment includes batch type and single-wafer wet process equipment for the following fields, and is mainly used for cleaning, etching, and photoresist stripping.

    • (A)Semiconductor Front-End Process

    • (B)III-V semiconductor front-end process and process update (as a substitute for imported machines from the United States and Japan)

    • (C)12” and 8” Advanced Package: Bumping/WLP/Fan-out/SiP/TSV/2.5DIC/3DIC

    • (D)Micro Electro Mechanical Systems (MEMS)

    • (E) Fully automated HB LED front-end process for backlight and lighting

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  • B. 12” wafer reclaim: The wafer reclaim service denotes the process of restoring the cleanness and flatness of a Test Wafer and Dummy/Control Wafer used in semiconductor manufacturing process to the level of cleanness and flatness characteristic of a brand new Test Wafer and Dummy/Control Wafer, typically by means of sorting, cleaning, lapping, polishing, and drying, so that they can be used as a Dummy/Control Wafer again. Wafer reclaim mainly aims to reduce the overall cost in comparison to using brand-new Test Wafer and Dummy/Control Wafer every single time.

  • C. Equipment under agentship: The Company provides process equipment for the following fields.

  • (A)Process equipment and measurement equipment for the semiconductor/panel/LED industries

  • (B)Biotech and chemical analysis instruments

  • (C)3D Printing equipment

  • (D)Battery industry

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  • (2) Manufacturing processes of major products

  • A. Equipment and machinery

==> picture [470 x 574] intentionally omitted <==

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

Customer requirements
Confirm requirements
Experimental test
Set engineering specifications Apply for patents
Machine design
Machine outsourcing
Test by customers
Machine assembly
Machine test
Delivered and accepted
----- End of picture text -----

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B. Wafer reclaim

==> picture [222 x 661] intentionally omitted <==

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

Sorting
Stripping
Lapping
Acid Etch
Polishing
Pre - Clean
Inspection
Final - Clean
Surface Evaluation
Packaging
----- End of picture text -----

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  1. Supply status of main raw materials

  2. Raw materials for products under agentship are provided by foreign principals; raw materials for self-made equipment are provided by suppliers at home and abroad. So far, there is no short supply of raw materials.

  3. A list of any customers accounting for 10 percent or more of the company's total procurement (sales) amount in either of the 2 most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each, and an explanation of the reason for increases or decreases in the above figures.

  4. (1)A list of any customers accounting for 10 percent or more of the company's total sales amount in either of the 2 most recent fiscal years, the amounts sold to each, the percentage of total sales accounted for by each.

Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; % Unit: NT$ thousand; %
2021 2022 Year-to-date through March 31, 2023
Item Name Amount Ratio to annual
net sales (%)		 Relationship
with the issuer		 Name Amount Ratio to annual
net sales (%)		 Relationship
with the issuer		 Name Amount Ratio to net sales
for the three-
month period
ended March 31,
2023		 Relationship
with the issuer
1 TSMC 745,710 15.92 None TSMC 967,799 17.13 None TSMC 199,569 12.33 None
2 Others 3,938,077
84.08		 - Others 4,682,187 82.87 Others 1,419,392 87.67
Total net
sales		 4,683,787 100.00
-		 Total
net sales		 5,649,986 100.00 Total net
sales		 100.00
An explanation of the reason for increases or decreases in the above figures:
TSMC: TSMC is the Group’s long-time customer. Transactions with TSMC mainly gives the Group
machine sales revenue, equipment and parts sales revenue, and wafer reclaim service revenue. Since
the machine sales revenue and wafer reclaim service revenue both increased in 2022, Sales revenue
in 2022 was NT$967,799 thousand, an increase of NT$222,089 thousand from NT$745,710 thousand
in 2021.
(1)A list of any suppliers accounting for 10 percent or more of the company's total
procurement amount in either of the 2 most recent fiscal years, the amounts bought from
each, the percentage of total procurement accounted for by each
Unit: NT$ thousand; %
2021 2022 Year-to-date through March 31,2023
Item Name Amount Ratio to annual net
purchase (%)		 Relationship with the
issuer		 Name Amount Ratio to annual net
purchase (%)		 Relationship with the
issuer		 Name Amount Ratio to net purchase for
the three-month period
ended
March 31, 2023		 Relationship with the
issuer
1 PLASMA
683,148		 16.38 None K-T 1,014,474 16.65 None K-T 513,269
28.26		 None
2 K-T 657,820 15.77 None PLASMA
987,646		 16.20 None PLASMA 353,300 19.45 None
3 NOVA 637,534 15.29 None NOVA 724,888 11.89 None NOVA 293,174 16.14 None

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4 Others 2,191,519 52.56
-		 Others 3,368,369 55.26
-		 Others 656,416 36.15
Total net
purchase		 4,170,021 100.00 Total net
purchase		 6,095,377 100.00 Total net
purchase

1,816,159		 100.00

An explanation of the reason for increases or decreases in the above figures:

PLASMA: The Group is an agent for PLASMA semiconductor equipment. Manufacturing equipment and machinery is expensive. Such equipment is mainly used by semiconductor fabs as production equipment. Due to the recovery in the semiconductor industry, customers continue to purchase equipment of PLASMA specifications. Therefore, the purchase amount for 2021 and 2022 was NT$683,148 thousand and NT$987,646 thousand, respectively.

K-T: The Group is an agent for K-T semiconductor equipment. Manufacturing equipment and machinery is expensive. Such equipment is mainly used by semiconductor fabs as production equipment. Due to the recovery in the semiconductor industry, customers continue to purchase equipment of K-T specifications. Therefore, the purchase amount for 2021 and 2022 was NT$657,820 thousand and NT$1,014,474 thousand, respectively.

Nova: The Group is an agent for Nova semiconductor equipment. Manufacturing equipment and machinery is expensive. Such equipment is mainly used by semiconductor fabs as production equipment. Due to the recovery in the semiconductor industry, customers continue to purchase equipment of K-T specifications. Therefore, the purchase amount for 2021 and 2022 was NT$637,534 thousand and NT$724,888 thousand, respectively.

5. Production volume and value for the most recent two years:

Unit: Pieces/PCs/Sets/NT$ thousand

Year of production
Volume and value
Major Products		 2021 2022 2022
Production
Capacity		 Production
Volume		 Value Production
capacity		 Production
Volume		 Value
Semiconductor and
optoelectronics products;
material manufacturing; and
wafer reclaim		 - 1,395,975 2,437,366 - 1,606,783 2,215,860

Note 1: This table denotes only the volume and value of the Group’s self-made products, excluding the volume and value of the products under agentship.

Change analysis:

As for the Group’s business of semiconductor and optoelectronic products, materials, and wafer reclaim, they yield an output value of NT$2,437,366 thousand and NT$2,215,860 thousand for 2021 and 2022, respectively, mainly due to an increase in customers wafer reclaim demands and capital expenditure as a result of boom demands in the semiconductor industry in 2022.

110

6. Sales volume and value for the most recent two years

Unit: Pieces/PCs/Sets/NT$ thousand

Unit: Pieces/PCs/Sets/NT$thousand Unit: Pieces/PCs/Sets/NT$thousand Unit: Pieces/PCs/Sets/NT$thousand Unit: Pieces/PCs/Sets/NT$thousand
Year of sale
Volume
and value
Major Products
2021		 2022
Domestic sale Overseas Domestic Overseas
Volume Value Volume Value Volume Value Volume Value
Manufacturing of
semiconductor
and optoelectronic
products and
materials
1,400,125		 1,727,399 389,637 2,872,846 2,081,493 2,248,295 213,294 3,305,670
Others 2,838 83,166 18 376 4,873 95,322 22 699
Total 1,402,963 1,810,565 389,655 2,873,222 2,086,366 2,343,617 213,316 3,306,369

Change analysis:

  • (1) Domestic sales of the Group’s manufacturing semiconductor and optoelectronic equipment and materials totaled NT$1,727,399 thousand and NT$2,248,295 thousand for 2021 and 2022, respectively. The reason that the domestic sales in 2022 increased from the 2021 level is mainly due to the increase in customers’ wafer reclaim demands and capital expenditure as a result of booming demands in the semiconductor industry in 2022. On the exports front, the exports amount in 2022 increased from the 2021 level, mainly due to an increase in foreignbased customers’ demands for equipment as a result of the continuous boom in the semiconductor industry in 2022.

  • (2) Other sales mainly come from the agency business of chemical analysis instruments, of which the domestic sales and exports combined reached NT$83,542 thousand and NT$96,021 thousand in 2021 and 2022, respectively; the sales amount for 2022 in this regard didn’t change much from the 2021 level.

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III. Employees

The number of employees employed for the 2 most recent fiscal years, and during the current fiscal year up to the date of publication of the annual report, their average years of service, average age, and education levels

April 30,2023
Year 2021 2022 As of April 30, 2023
Number of
employees		 R&D personnel 114 126 121
Sales personnel 253 286 289
Administrative personnel 88 90 92
Manufacturing personnel 253 280 267
Total 708 782 769
Average age 37.46 37.25 37.69
Average service tenure (year) 6.80 6.58 6.90
Education
distribution
percentage
(%)		 PhD 0.56 0.64 0.78
Master degree 12.01 12.15 12.35
College diploma 76.41 77.24 76.85
Senior high school 10.17 9.08 9.10
Below senior high school 0.85 0.90 0.91

IV. Environmental protection expenditure

Any 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), the amount of penalties, and disclosing response measures to be taken (including improvement measures) and an estimate of possible expenses that could be incurred (including the would-be loss had no response measured were taken, an estimate of the amount of penalties and compensation; if a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided): None.

V. Labor relations

  1. List any employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests

(1) Employee benefit measures

The Company purchases group medical insurance for each employee, and has set up an employee welfare committee to carry out various employee welfare measures, e.g., share dividends, treasury shares, festival gifts, wedding and funeral subsidies, annual employee tour, and health checks, etc. Having formulated internal regulations for management of employee clubs, the Company encourages their participating in club activities, organizes family days, and other ball-based sports events, so as to enhance their cohesion let them relax. The Company has also set up a medical center, arranges for doctors to give diagnosis within the factory, hires licensed nurses, holds weight-loss activities and health seminars, and provides trainings on emergency medical assistance such as CPR. The Company also offers services that come in handy for female workers, e.g., a breastfeeding room, parking spaces reserved for female workers and pregnant workers. None of the Company’s personnel policies

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discriminates on the basis of race, color, age, gender, sexual orientation, ethics, disability, pregnancy, religion, political affiliation, membership in a society, marital status, and so on. In addition, as required by law, the Company offers maternity leave, paternity leave, and parental leave.

  • (2) Continuing education and training

  • To achieve the Company’s goals means to cultivate employees at different level in a way that can fully develops their occupational competencies and improves their work efficiency. To do so, the Company has formulated the “Regulations Governing Employee Education and Training” to provide a basis for all work related to employee training and education. Below are the internal education and training courses that the Company held in 2022, which costed the Company NT$ 887 thousand:

Below is the information on the Company’s external training courses in terms of cost, hours, and number of trainees in 2022:

number of trainees in 2022:
Item Number of trainees - total
Number of trainees		 Traininghours
Training held by an institution contracted by
the Company		 203 148 2,193.5
Internal training 5,992 604 10,934.5
Trainingfor directors 22 9 65
Trainings on the regulations for accounting,
audit,and securities		 8 4 33

A.The training courses for directors include Group Corporate Governance; Industry theme publicity Conference for sustainable development road map; New cross-border and cross-border information security threats and information security governance; Prevention of Insider Trading Forum; 。 Corporate Governance Forum One of the directors participated in a 3-hour course on the “Prevention of Insider Trading Forum”. As for the forums of “Corporate Governance” and “Industry theme publicity Conference for sustainable development road map” , these courses were taken with a total of 8 participants, of whom 7 are directors and a total of 23 training hours.

  • B.Internal training includes the monthly orientation training courses for employees, which were participated by 876 people for a total of 2,026.5 hours; such training courses cover various subjects as to integrity management, business secret protection, information security policy, intellectual property management policy, workplace violence/sexual harassment, labor safety education and training, and ESH policies, etc.

  • C.The internal training includes a course that provide the knowledge about the Ethical Corporate Management Best Practice Principles at workplace (including prevention of insider training) and illegal infringement, which was participated by 502 people for a total of 1,019.5 hours.

  • (3) Retirement systems, and the status of their implementation

As required by the Labor Standards Act, the Company has established retirement plans for fulltime employees. The Company makes a monthly pension contribution in the amount equal to 3% of an employee’s salary to a dedicated account with the Bank of Taiwan. Starting from July 1, 2005, the date on which the Labor Pension Act became effective, the Company simultaneously implemented the new pension scheme under the act and thereby started making a monthly contribution in the amount equal to 6% of an employee’s monthly salary to the employee’s personal pension account. For employees having elected to contribute an additional share of their salary to their pension account, the Company will debit such an additional share of their salary to their pension account on their behalf. According to the Company’s internal regulations, pension

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payment depends on the employees’ years of service and the average amount of their monthly salary for the six months preceding their retirement date.

  1. According to the Labor Standards Act and the Company’s internal regulations that offer a retirement plan that is more appealing than the one required by law, Employees qualified for either of the following criteria may apply for voluntary retirement:

  2. A. Those who have worked for 15 years or more and attained the age of 55 or more; or those who have worked for 10 years or more and attained the age of 60 or more.

  3. B. Those who have worked for 25 years.

  4. C. Those who have been with the Company for 15 years or more and attained the age of 50 or more.

  5. D. Those whose years of service with the Company plus his/her age reaches or exceeds 60.

  6. Criteria for pension payment are as follows:

The criteria for pension payment are based on Article 55 of the Labor Standards Act, which specifies the criterial for pension payment; Article 84-2 of the Labor Standards Act, which stipulates that employees’ years of service be counted starting from the date of employment; and Article 67, Paragraph 1, Subparagraph 2 of these Regulations, which stipulates an additional 20% pension payment to employees who are forced to retire due to their mental or physical disability that is caused by their performing their duties. The standards of severance and retirement benefit for the seniority accumulated before the application of the Labor Standards Act shall be calculated in accordance with the applicable acts and administrative regulations effective during that time. In cases there were no applicable Acts and administrative regulations, these standards shall be calculated in accordance with the rules promulgated by the Company or the agreements reached by employees and the Company.

  • A. Retirement bases: Two bases are given for each full year of service rendered. But for the rest of the years over 15 years, one base is given for each full year of service rendered. One base is given for each full year of service rendered before the application of the Labor Standards Act on March 1, 1998. However, the total number of bases shall be no more than 45. The length of service is calculated as half year when it is less than six months and as one year when it is more than six months.

  • B. Payment due date: The Company shall pay employees the pension payables within 30 days from the day of retirement.

  • C. 6% of the insured monthly salary of employees to which the Labor Pension Act applies is allocated to their personal pension account.

  • (4) Labor-management agreements and measures for preserving employees' rights and interests:

The Company’s labor-management relations have been harmonious, and the Company has been attaching importance to bilateral labor-management communication and thereby forging good labor-management relations, so there has been no major labor dispute so far.

  • A. The Company has established an employee complaint filing channel to improve labormanagement relations

  • B. The Company has formulated the Work Rules and other personnel regulations, which specify the rights and obligations of employees and employers as well as any management approaches therefor, so that employee can fully understand, and thus be able to maintain, their own rights.

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  • C. As required by the Occupational Safety and Health Act, the Company regularly arranges for employees to have a health check. In addition, the Company has assigned labor safety and health personnel and formulated the various labor safety and health regulations to prevent incidents from happening, thereby ensuring employees’ safety.

  • D. Incentive for innovation: Aside from formulating the rewards and disciplinary regulations, the Company also offers incentives for employees to propose improvement plans. In this way, employees are encouraged to spot any anomaly at work and come up with an improvement plan. They will be given monetary rewards depending on the effectiveness of the improvement plan being implemented.

  • List any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to labor disputes, and disclose 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.

  • Employees having obtained the license issued by the competent authorities:

Title Name Name of license
Executive Associate Yi-Lin Lee Class A Occupational Safety and Health Affair Manager
Deputymanager Tsun-Pin Liu Class A Occupational Safety and Health Affair Manager
Senior Manager Ta-Chen Lin Class A Dedicated Air Pollution Control Specialist
Senior engineer Yi-Fu Hsu Occupational Safety Management Specialist
Chief engineer Chia-Yun Su Occupational Safety and health management personnel
Deputy manager Chun Chia Huang Class B Dedicated Wastewater And Sewage Treatment
Specialists
Senior engineer Kang-Wei Tsou Class A Waste Disposal Technician
Deputymanager Chun Chia Huang Class A Dedicated Air Pollution Control Specialist
Engineer in charge Chao-TengLiu Fire Prevention Manager
Deputy manager Tzu-Ling Lin ISO 9001:2008 Lead Auditor/ IRCA ISO 9001:2015
Lead Auditor

115

4. The Company’s protection measures for work environment and employees' personal safety

Item Description
Implement automatic
inspection		 1. By referencing the Occupational Safety and Health Act, the Company has formulated the
E3-011 Automatic Inspection Guide, by which an inspection is carried out every two years,
annually, or monthly, to check the aerial work platforms, stackers, stationary cranes, lifts,
high-voltage electrical equipment, low-voltage electrical equipment, specific chemical
equipment or its accessories, chemical equipment and its accessories, local exhaust
devices, industrial robots, Type 2 pressure vessels, power-driven centrifugal machinery.
The inspection record is retained for 3 years to prevent occupational incidents and ensure
labor safetyand health.
2. As required by the Fire Services Act, the Company has a licensed fire prevention
equipment inspection institution inspect the fire prevention system of the factory annually;
the Companythen files the inspection results accordingly.
3. As required by the Regulations for the Certification and Filing of Building Public Safety
Inspection,the Companycarries out a buildingsafetyinspection once everytwoyears.
Accident prevention and
response measures		 1. The Company has formulated the internal regulations for accident prevention, emergency
response, and accident reporting, namely Emergency Response Procedures, Occupational
Safety and Health Work Rules for Workers, Accident and Incident Investigation Operation
Guide, and Occupational Safety and Health Management Plan, which specify the duties
and tasks for the Company’s emergency response team upon occurrence of an emergency.
The Companycarries out an emergencydrill at a fixed time every year as required.
2. Two sessions of training on fire prevention are held periodically every year; the training
results are then reported to the fire-prevention competent authorityas required.

3. As required by the Occupational Safety and Health Act, the Company has set up the
Occupational Safety Office, which takes charge of all matters relating to occupational
safety and health and comprises one Class A Occupational safety and health affair
manager, one Occupational Safety Management Specialist, and one Occupational Safety
and Hygiene Officer. Such a personnel composition has been filed in writing to the
Northern Occupational Safety and Health Center, Occupational Safety and Health
Administration,Ministryof Labor.
4. The Company has recruited a nurse, who is responsible for the planning and
implementation of matters related to employees in terms of health education, health
promotion,and health instructions.
Health care and
management		 1. The Company offers employees an ordinary health check and a special-purpose health
check, which exceeds the legal requirements as set out by the Regulations for Labor Health
Protection. Furthermore, the health check items are also a cut above the legal requirements.
The health check results are then analyzed, assessed, managed, and preserved and
thereafter a health management will ensue.
2. The Company commissions an occupational medicine doctor, who is contracted to provide
labor health check services,togive diagnosis within the factoryonce in a month.
3. The Company was recognized as an excellent healthy work place by the Health Promotion
Administration and received the Badge of Accredited Healthy Workplace therefrom,
evidencingthe Company’s efforts in creatinga healthyworkplace and work environment.
4. The Company was given the 2015 National Excellent Healthy Workplace - Vitality Award
by the Health Promotion Administration. This helps evoke a healthy and good corporate
image.

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Item Description
5. The Company has done more than what the law requires, in that it has installed an AED
facility; it also arranges education and training on AED every year, so as to give employee
an assuringwork environment.
6. The Company sets up parking spaces specially reserved for expectant mothers; this makes
it convenient for those expectant mothers close to their estimated due date to go to and
from work.
7. Having offered a cozy breastfeeding room for postpartum employees’ use, the Company is
awarded the FriendlyWorkplace BreastfeedingRoom certificate.
8. The company regularly organizes health-promotion seminars, CPR first aid training, blood
donation events, weight-loss activities, and other related health promotion activities, and
provides health education and care for employees.
9. The Company provides printed literature and information on health trends from time to
time,so that employees can fullyunderstand the latest health trends.
Work environment
monitoring		 As required by the Regulations Governing the Implementation of Labor Work Environment
Monitoring, the Company commissions a qualified work environment monitoring agency to
monitor the work environment by testing for chemical factor, physical factor etc. every six
months. Any anomaly, if indicated by the testing results, is immediately corrected and
improved to ensure the health of operators.
Maintain the
effectiveness of the ESH
management system		 1. The Company has formulated ESH policies, and continuously improve its ESH
performance through the PDCAprocess.

2. The Company has obtained the “Environmental Management System” (ISO14001: 2015)
and “Occupational Safety and Health Management System” (ISO 45001:2018)
certification.
3. The Company is committed to achieving workplace safety and health and continuously
reducing its environmental impacts. It also sets goals every year, and continue to conduct
review and improvement to reduce risks.
Contractors’ working in
the Company’s factory		 1. According to the Contractors Safety and Health Management Manual, contractors, before
entering the factory to work, must take a safety and health training arranged by the
Company, and must pass an exam. When high-risk operation is involved, the purchase of
an employer's liabilityinsurance in the amount of 2 million or more is required.
2. Before entering the factory to work, contractors are required to fill out the “Safety Hazards
Notice for Contractors to Perform Work in the Factory” and “Contractors Coordination
Organization and Regulations”.
3. According to the Hazardous Work Permit Instructions, all hot work, elevated work,
hanging work, and confined space work must be applied for in advance, and may be
carried out onlyafter beingapproved.
4. The Company values the opinions of contractors or suppliers, in that their feedback and
suggestions are put forward for discussion at the Occupational Safety and Health
Committee meeting held quarterly, hoping to create a win-win situation for the contractors
or suppliers and the Company.
5. The Company enhanced the communication channels by setting up a bulletin board and an
SMS system, through which factory regulations and laws and bylaws are disseminated
periodicallyor irregularly.
Use and management of
protective equipment		 In order to prevent occupational diseases and chemicals contact accidents, the Company has
formulated the Protective Equipment Use Instructions, which stipulate that employees wear
appropriate protective equipment during work and regularly check the serviceability of
protective equipment to avoid accidents.

117

Item Description
Education and training 1. The Company holds educational training from time to time.
2. The Company provides employees at each level with education and training courses
tailored to specific training requirements and the Company’s goals. Such courses include
the liberal courses on business management and other professional training courses.
3. The Company provides the e-Learning platform.
4. The Company makes available classrooms for professional training, offering employees a
cozyspace.
Sexual harassment
prevention		 1. The Company has set up a sexual harassment prevention committee and a sexual
harassment prevention and correction hotline. The committee is exclusively responsible for
sexual harassment complaints and the mediation thereof.
2. The Company has formulated internal regulations for prevention and punishment of sexual
harassment,in which concrete measures for sexual harassmentprevention are specified.
Labor-management
meeting		 1. The Company has formulated the regulations for the implementation of a labor-
management meeting. In doing so, a labor-management meeting is held quarterly.
2. The labor-management meeting is an open platform where the application for, and
discussion about,all measures in relation to the work environment maybe made.
Employee engagement The company values two-way communication and ensures that all employees can freely
communicate with management about their ideas and concerns about working conditions and
management approaches without fear of discrimination,retaliation,threats,or harassment.
The Company makes available a variety of channels for employees to reflect their opinions.
In addition, at the quarterly Occupational Safety and Health Committee meeting, labor
representatives are also consulted. Doing so enhances labor-management harmony and
creates a win-win situation for both the Companyand employees.
Submission of
improvement proposals		 1. The Company has put in place an internal mechanism which offers incentives for
employees to submit any proposal pertaining to issues in relation to employees’ personal
safety protection, e.g., improvement in work environment, design of operating procedures,
and so on.
2. The Company launches factory safety and health events, in which employees are
encouraged to voluntarily submit proposals whose aim is to improve work environment
safety and reduce risks. Departments with exceptional performance are recommended at
thequarterlyOccupational Safetyand Health meeting.
Insurance/Medical
consolation money		 1. As required by law, the Company has purchased labor insurance (including employment
injury insurance) and health insurance for employees; additionally, the Company has also
paid an insurance company to provide other insurance for employees, e.g., life insurance,
casualty insurance, accident medical insurance, hospitalization insurance, and cancer
insurance.
2. Meanwhile, employees' dependents are allowed to purchase a casualty insurance, accident
medical insurance,hospitalization insurance,and cancer insurance atpreferential rates.

118

VI. Cyber-security management

  1. Describe the cyber-security risk management framework, the cyber-security policy, the specific management plan, and the resources committed to the cyber-security management, etc.

  2. (1) Cyber-security risk management structure

==> picture [462 x 244] intentionally omitted <==

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

Information
Security
Assumed by the CEO
Organization
Coordinate the implementation
of information security
measures and work with the
Emergency Response Team to Management Audit Team Evaluate the implementation of
carry out information security Representative the information security
tasks management system
Plan and execute Information
all information Security Emergency
Implementation Response Team Take charge of responding to, and
security tasks
Team dealing with, any emergencies
occurred in the business premises,
and restoring the business premises
to the original conditions.
----- End of picture text -----

  • (2) Cyber-security policy

    • A. Enhance cyber-security awareness

    • B. Prevent data leak

    • C. Ensure business continuity

  • (3) Specific management plan, and the resources committed to the cyber-security management: The Company has introduced the Information Security Management System (ISMS), through which the Company converted each ISO 27001 control into internal, feasible management systems based on the ISO documentation hierarchy. In September 2019, the Company passed the ISO 27001 certification. Furthermore, the Company regularly reports to the Board of Directors on the status of implementation of information security management every year.

  • List any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to significant cyber-security incidents, the possible impacts therefrom, 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

119

VII. Important contracts

VII. Important contracts VII. Important contracts VII. Important contracts VII. Important contracts VII. Important contracts VII. Important contracts
April30,2023
Item
No.		 Type of
contract		 Party Contract start date and
end date		 Main content Restrictive clauses
1 Loan
contract		 Bank SinoPac 2022/06/02~2024/06/30 Mid-term
borrowings		 Mid-term credit loans
2 Loan
contract		 CTBC Bank 2022/08/31~2023/08/31 Short-term
borrowings		 General credit for a short-term
credit loan and a mid-term
unsecured contract performance
guarantee
3 Loan
contract		 DBS Bank
Limited		 2022/10/03~2023/10/02 Short-term
borrowings		 Short-term credit loans

120

Six. Finance overview

I. Condensed balance sheet and comprehensive income statement:

Unit: NT$1,000

Unit: NT$1,000
Year
Item		 Financial information for the most recent 5years(Note 1) Financial
information for
the current year
up to March 31,
2023(Note 3)

2018		 2019 2020 2021 2022
Current assets 2,440,433 2,129,556 2,783,761 6,246,380 12,212,738 12,762,543
Property, plant and equipment
1,160,091		 1,289,668 1,293,046 1,211,220 1,542,982 1,576,670
Intangible assets 2,251 1,991 1,731 1,471 1,212 1,147
Other assets 303,940 206,983 714,072 868,746 862,937 868,860
Total Assets 3,906,715 3,628,198 4,792,610 8,327,817 14,619,869 15,209,220
Current
liabilities		 Before
distribution		 1,360,973 875,916 1,795,722 5,073,305 10,897,604 11,317,071
After
distribution		 1,561,793 1,036,572 1,944,328 5,274,125 11,186,785
(Note 2)		 11,606,252
(Note 2)
Non-current liabilities 43,361 133,057 150,718 125,556 139,779 133,895
Total
Liabilities		 Before
distribution		 1,404,334 1,008,973 1,946,440 5,198,861 11,037,383 11,450,966
After
distribution		 1,605,154 1,169,629 2,095,046 5,399,681 11,326,564
(Note 2)		 11,740,147
(Note 2)
Equity attributable to owners
ofparent company		 2,502,381 2,619,225 2,846,710 3,128,956 3,582,486 3,469,073
Capital stock 811,390 811,390 811,390 811,390 811,390 811,390
Capital surplus 530,045 532,269 611,983 625,640 728,964 728,964
Retained
earnings		 Before
distribution		 1,485,231 1,756,891 1,485,231 1,756,891 2,126,171 2,271,657
After
distribution		 1,336,625 1,556,071 1,336,625 1,556,071 1,836,990
(Note 2)		 1,982,476
(Note 2)
Other equity (4,871) (13,083) (11,775) (14,306) (33,380) (3,098)
Treasurystock (50,659) (50,659) (50,659) (50,659) (50,659) (50,659)
Non-controllinginterests 0 0 0 0 0 0
Total equity Before
distribution		 2,502,381 2,619,225 2,846,170 3,128,956 3,582,486 3,758,254

After
distribution		 2,301,561 2,458,569 2,697,564 2,928,136 3,293,305
(Note 2)		 3,469,073
(Note 2)

Note1: The data for 2018 through 2022 were audited by CPAs.

Note2: The amount after distribution as referred to above denotes the cash dividends stipulated in the Company’s 2022 Earnings Distribution Proposal that was approved by the Board of Directors through a supermajority vote on March 10, 2023, and will be reported to the 2023 Shareholders' Meeting.

Note3: The financial data for the three-month period ended March 31, 2023 were reviewed by CPAs.

121

2. Condensed balance sheet - IFRS

Unit: NT$1,000

Unit: NT$1,000
Year
Item		 Financial information for the most recent 5years(Note 1) Financial
information for
the current year
up to
March 31,2023

2018		 2019 2020 2021 2022
Current assets 1,919,791 1,651,996 1,994,963 4,310,196 8,049,039
Property, plant and
equipment		 1,090,849 1,230,448 1,240,961 1,161,372 1,495,749
Intangible assets 2,251 1,991 1,731 1,471 2,374
Other assets 654,713 593,164 1,149,435 1,278,937 1,412,622
Total Assets 3,667,604 3,477,599 4,387,090 6,751,976 10,959,784
Current
liabilities		 Before
distribution		 1,121,828 725,283 1,392,789 3,499,343 7,238,219
After
distribution		 1,322,648 885,939 1,541,395 3,700,163 7,527,400
(Note 2)
Non-current liabilities 43,395 133,091 148,131 123,677 139,079
Total
Liabilities		 Before
distribution		 1,165,223 858,374 1,540,920 3,623,020 7,377,298
After
distribution		 1,366,043 1,019,030 1,689,526 3,823,840 7,666,479
(Note 2)		 Not applicable
Equity attributable to
owners ofparent company		 2,502,381 2,619,225 2,846,170 3,128,956 3,582,486
Capital stock 811,390 811,390 811,390 811,390 811,390
Capital surplus 530,045 532,269 611,983 625,640 728,964
Retained
earnings		 Before
distribution		 1,216,476 1,339,308 1,485,231 1,756,891 2,126,171
After
distribution		 1,015,656 1,178,652 1,336,625 1,556,071 1,836,990
(Note 2)
Other equity (4,871) (13,083) (11,775) (14,306) (33,380)
Treasurystock (50,659) (50,659) (50,659) (50,659) (50,659)
Non-controllinginterests 0 0 0 0 0
Total equity Before
distribution		 2,502,381 2,619,225 2,846,170 3,128,956 3,582,486
After
distribution		 2,301,561 2,458,569 2,697,564 2,928,136 3,293,305
(Note 2)

Note 1: The data for 2018 through 2022 were audited by CPAs. Note 2: The amount after distribution as referred to above denotes the cash dividends stipulated in the Company’s 2022 Earnings Distribution Proposal that was approved by the Board of Directors through a supermajority vote on March 10, 2023, and will be reported to the 2023 Shareholders' Meeting.

  1. Condensed consolidated balance sheet - Enterprise Accounting Standard of Taiwan (not applicable)

  2. Condensed balance sheet - Enterprise Accounting Standard of Taiwan (not applicable)

122

(II)1. Condensed consolidated statement of comprehensive income - IFRS

Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand Unit: NT$thousand
Year
Item		 Financial information for the most recent 5 years (Note 1) Financial
information for
the current year
up to March 31,
2023(Note 2)

2018		 2019 2020 2021 2022
Operating revenue 3,988,033 3,949,351 3,580,003 4,683,787 5,649,986 1,618,961
Operating gross profit 1,448,368 1,384,125 1,455,913 1,707,204 2,090,251 519,998
Operating profits or losses 513,615 387,557 464,939 555,245 710,298 186,289
Non-operating income and
expenses		 26,250 15,897 (76,111) (31,300) 25,588 (8,491)
Net profits before tax 539,865 403,454 388,828 523,945 735,886 177,798
Net profits for the period
from continuingoperations		 417,770 322,699 305,463 419,905 568,583 145,486
Losses from discontinued
operations		 0 0 0 0 0 0
Net profits (losses) for the
period		 417,770 322,699 305,463 419,905 568,583 145,486
Other comprehensive
income (net after tax) for
theperiod		 2,512 (7,259) 2,602 (2,170) (17,557) 30,282
Total comprehensive
income for theperiod		 420,282 315,440 308,065 417,735 551,026 175,768
Net profits attributable to
shareholders of parent
company		 417,770 322,699 305,463 419,905 568,583 145,486
Net profits attributable to
non-controllinginterests		 0 0 0 0 0 0
Total comprehensive
income attributable to
shareholders of parent
company		 420,282 315,440 308,065 417,735 551,026 175,768
Total comprehensive
income attributable to non-
controllinginterests		 0 0 0 0 0 0
Earnings per share (NT$) 5.16 4.02 3.80 5.23 7.08 1.81

Note 1: The data for 2018 through 2022 were audited by CPAs.

Note 2: The financial data for the three-month period ended March 31, 2023 were reviewed by

CPAs.

123

2. Condensed statement of comprehensive income - IFRS

Unit: NT$ thousand

Unit: NT$thousand
Year
Item		 Financial information for the most recent 5 years (Note) Financial
information for the
current year up to
March 31,2023
2018 2019 2020 2021 2022
Operating revenue 3,167,011 2,867,635 2,738,928 3,547,352 4,130,571 Not applicable
Operating gross profit 1,175,944 1,027,644 1,101,384 1,367,012 1,568,080
Operating profits or
losses		 514,759 337,217 400,871 550,221 592,959
Non-operating income
and expenses		 15,346 48,355 (21,807) (38,373) 102,423
Net profits before tax 530,105 385,572 379,064 511,848 695,382
Net profits for the
period from continuing
operations		 417,770 322,699 305,463 419,905 568,583
Losses from
discontinued operations
0		 0 0 0 0
Net profits (losses) for
theperiod		 417,770 322,699 305,463 419,905 568,583
Other comprehensive
income (net after tax)
for theperiod		 2,512 (7,259) 2,602 (2,170) (17,557)
Total comprehensive
income for theperiod		 420,282 315,440 308,065 417,735 551,026
Net profits attributable
to shareholders of
parent company		 417,770 322,699 305,463 419,905 568,583
Net profits attributable
to non-controlling
interests		 0 0 0 0 0
Total comprehensive
income attributable to
shareholders of parent
company		 420,282 315,440 308,065 417,735 551,026
Total comprehensive
income attributable to
non-controlling
interests		 0 0 0 0 0
Earnings per share
(NT$)		 5.16 4.02 3.80 5.23 7.08

Note: The data for 2018 through 2022 were audited by CPAs.

  1. Condensed consolidated statement of comprehensive income - Financial Accounting Standard of Taiwan (not applicable)

  2. Condensed statement of comprehensive income - Financial Accounting Standard of Taiwan (not applicable)

124

(III) Names and opinions of attesting CPAs for the past five years

1. Names and opinions of attesting CPAs for the past five years:

Year CPA firm Name of attesting CPAs Opinion
2018 Deloitte & Touche Taiwan Ya-Ling Weng;
Ting-Sheng Chang		 Unqualified opinion
2019 Deloitte & Touche Taiwan Ya-Ling Weng;
Hui-Min Huang		 Unqualified opinion
2020 Deloitte & Touche Taiwan Ming-Hsin Cho;
Hui-Min Huang		 Unqualified opinion
2021 Deloitte & Touche Taiwan Ming-Hsin Cho;
Hui-Min Huang		 Unqualified opinion
2022 Deloitte & Touche Taiwan Hui-Min Huang;
Ming-Hsin Cho		 Unqualified opinion

125

II. Financial analysis for the most recent 5 years

(I) Financial analysis for the most recent 5 years: IFRSs-based consolidated financial statements

Year
Analysis item		 Year
Analysis item		 Financial analysis for the most recent 5 years (Note 1) Financial analysis for the most recent 5 years (Note 1) Financial analysis for the most recent 5 years (Note 1) Financial analysis for the most recent 5 years (Note 1) Financial analysis for the most recent 5 years (Note 1) Year-to-date
through March
31,2023(Note 2)
2018 2019 2020 2021 2022
Financial
structure (%)		 Debt to assets ratio 35.95 27.81 40.61 62.43 75.50 77.19

Ratio of long-term
capital to property,
plant,and equipment		 219.44 213.41 231.77 268.70 241.24 228.52
Solvency
(%)		 Current ratio 179.32 243.12 155.02 123.12 112.07 109.96
Quick ratio 121.78 153.81 102.01 65.95 47.28 43.52
Interests coverage
multiplier		 351.79 256.51 100.65 169.31 217.18 166.70
Operating
performance		 Accounts receivable
turnover rate(times)		 4.42 4.80 4.56 4.82 5.60 7.98
Average collection
days		 83 76 80 76 65 46
Inventory turnover
rate(times)		 4.55 3.62 2.69 1.84 0.93 0.78
Accounts payable
turnover rate(times)		 5.19 5.70 4.60 3.66 2.18 2.30
Average sales days 80 101 136 198 392 468
Property, plant and
equipment turnover
rate(times)		 3.29 3.22 2.77 3.74 4.10 1.04
Total assets turnover
rate(times)		 1.07 1.05 0.85 0.71 0.49 0.11
Profitability Return on assets (%) 11.21 8.60 7.33 6.44 4.98 0.98
Return on equity (%) 17.42 12.60 11.18 14.06 16.94 4.13
Pre-tax income to
paid-in capital (%)
(Note 8)		 66.54 49.72 47.92 64.57 90.69 21.91
Net profit margin (%) 10.48 8.17 8.53 8.97 10.06 8.99
Earnings per share
(NT$)		 5.16 4.02 3.80 5.23 7.08 1.81
Cash flow Cash flow ratio (%) 52.62 23.18 40.21 31.02 21.28 (0.17)
Cash flow adequacy
ratio(%)		 113.97 121.34 156.27 106.82 81.44 66.17
Cash reinvestment
ratio(%)		 17.11 0.07 15.53 37.40 48.84 (7.30)
Leverage Operating leverage 2.57 3.13 2.79 2.70 2.54 2.59
Financial leverage 1.00 1.00 1.01 1.01 1.00 1.01

(I) Financial analysis for the most recent 5 years: IFRSs-based consolidated financial statements Please indicate the reasons for the changes in the financial ratios in the past two years (This section need not be filled in if the change is within 20%)

(1) Debt-to-asset ratio: The debt-to-asset ratio in this period increased from that in the same period last year, mainly due to an increase in contract liabilities and trade payable at the end of this period as a result of the increase in the orders for machines, thanks to the economic boom in the semiconductor industry in 2022.

126

  • (2) Quick ratio: The quick ratio decreased, mainly due to the increase in the orders for machines and the amount of contract liabilities has increased significantly compared with the previous period.

  • (3) Interest coverage multiplier: The interest coverage multiplier increased, mainly due to the increase in profits this year

  • (4) Accounts payable turnover (times): The accounts payable turnover in this year decreased from that in the same period last year, mainly due to the rate of increase in accounts payable outstripping that in the cost of goods sold as a result of the increase in the orders for machines in this year.

  • (5) Inventory turnover (times) and average days in sales: The inventory turnover decreased, mainly due to the increase in the average days in sales of machines in stock as a result of the increase in orders for machines in this period.

  • (6) Average days in sales: The average days in sales increased, mainly due to the increase in the average days in sales of machines in stock as a result of the increase in orders for machines in this period.

  • (7) Total assets turnover rate (times): The total assets turnover rate decreased, mainly due to the increase in the average days in sales of machines in stock and the increase in the ending inventory.

  • (8) Return on assets (%): Return on assets decreased, mainly due to the increase in the average days in sales of machines in stock and the increase in the ending inventory.

  • (9) Return on equity (%): Return on equity increased, mainly due to the increase in revenue and thus profits in this period.

  • (10) Pre-tax income to paid-in capital (%): Pre-tax income to paid-in capital increased, mainly due to the increase in revenue and thus profits in this period.

  • (11) Earnings per share (NT$): Earnings per share increased, mainly due to the increase in revenue and thus profits in this period.

  • (12) Cash flow ratio (%): Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused contract labilities to increase substantially from last year, leading to a decrease in the cash flow ratio.

  • (13) Cash flow adequacy ratio (%): Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused the increase in inventories to outstrip the increase in cash inflows, leading to a decrease in the cash flow adequacy ratio.

  • (14) Cash reinvestment ratio: Mainly due to the increase in the cash from operating activities in this year over last year, which led to an increase in cash reinvestment ratio.

  • Note 1: The data for 2018 through 2022 were audited by CPAs.

  • Note 2: The financial data for the three-month period ended March 31, 2023 were reviewed by CPAs.

  • Note 3: A company whose shares are listed on TWSE or TPEx shall additionally analyze the financial information for the quarter immediately preceding the annual report publication date.

  • Note 4: The following formulas for the calculation of the financial ratios shall be listed below this table in the annual report:

127

  1. Financial structure

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

    • (2) Long-term fund to property, plant and equipment ratio = (Shareholders’ equity + noncurrent liabilities) / Net property, plant and equipment

  2. Solvency

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

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

    • (3) Interests coverage multiplier = net profits before tax and interest expense/interest expense for the period

  3. Operating performance

    • (1) Receivables (including accounts receivable and notes receivable due to business operation) turnover = Net sales / the balance of average receivables of different periods (including accounts receivable and notes receivable due to business operation)

    • (2) Average collection days = 365 / Receivable turnover ratio

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

    • (4) Payables (including accounts payables and notes payable due to business operation) turnover = Cost of goods sold / the balance of average payables of different periods (including accounts payables and notes payable due to business operation)

    • (5) Average sales days = 365/inventory turnover rate

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

    • (7) Total assets turnover rate = net sales/average total assets

  4. Profitability analysis

    • (1) Return on total assets = [Net income + Interest expenses x (1 – tax rate)] / Average total assets

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

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

    • (4) Earnings per share = (net profits attributable to shareholders of the parent - preferred stock dividend)/weighted average number of shares outstanding (Note 5)

  5. Cash flow

    • (1) Cash flow ratio = Net cash provided by operating activities / Current Liabilities

    • (2) Cash flow adequacy ratio = sum of net cash flow from operating activities for the most recent 5 years / sum of capital expenditures, inventory additions, and cash dividend for the most recent 5 years.

    • (3) Cash reinvestment ratio = (net cash flow from operating activities - cash dividend) / (gross property, plant, and equipment + long-term investment + other non-current assets + working capitals). (Note 6)

  6. Leverage:

    • (1) Operating leverage = (Net operating income - Variable operating costs and expenses) / Operating profit (Note 7)

    • (2) Financial leverage = operating profits / (operating profits - interest expense).

  7. Note 5: Special attention should be paid to the following when calculating earnings per share by the above equation:

128

  1. The weighted average quantity of outstanding common shares shall be taken as the standard, not the quantity of outstanding shares at the end of the year.

  2. If there is any cash capital increase or treasury stock transaction, take the circulation periods into account when calculating the weighted average quantity of outstanding shares.

  3. If there is any capitalization of retained earnings or capital surplus, the annual and semi annual earnings per share of past years shall be retrospectively adjusted pro rata to the size of the capital increase, without considering the issuance period of the capital increase.

  4. If the preferred shares are non-convertible cumulative preferred shares, the dividend for the fiscal year (whether it has been distributed or not) shall be deducted from the net income after tax or added to the net loss after tax. If the preferred shares are non-cumulative, the dividend shall be deducted from the net income after tax if there is net income after tax and no adjustment is required in case there is loss.

  5. Note 6: Special attention shall be paid to the following when making the calculations for cash flow analysis:

  6. Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

  7. Capital expenditures refers to the annual cash outflow used in capital investment.

  8. Increase in inventory is counted only when the balance at the end of the period is greater than the balance at the beginning of the period. If the inventory has decreased at the end of the year, it is counted as zero.

  9. Cash dividends include the cash dividends of common stock and preferred stock.

  10. Gross property, plant and equipment refers to the total property, plant and equipment without deduction of accumulated depreciation.

  11. Note 7: The issuer shall categorize the operating costs and operating expenses into fixed ones and variable ones in accordance with their properties. If the categorization is subject to estimation or subjective judgment, attention shall be paid to ensure that it is done rationally and consistently.

  12. Note 8: If the Company’s shares have no par value or the par value per share is not NT$10, the paidin capital involved in the calculation of the above ratio shall be replaced by the equity attributable to owners of the parent company on the balance sheet.

129

(II) Financial analysis for the most recent 5 years: IFRSs-based individual financial statements

Analysis item Year
Financial analysis for the most recent 5years(Note 1)
Financial analysis for the most recent 5years(Note 1)
Financial analysis for the most recent 5years(Note 1)
Financial analysis for the most recent 5years(Note 1)
Financial analysis for the most recent 5years(Note 1)		 As at the current
year up to March
31,2023
2018 2019 2020 2021 2022
Financial
structure (%)		 Debt to assets ratio 31.77 24.68 35.12 53.66 67.31
Ratio of long-term
capital to property,
plant,and equipment
233.38		 223.68 241.29 280.07 248.81
Solvency (%) Current ratio 171.13 227.77 143.24 123.17 111.20

Quick ratio		 110.59 131.03 85.24 60.45 39.63

Interests coverage
multiplier		 345.45 245.19 99.84 169.98 214.11
Operating
performance		 Accounts receivable
turnover rate(times)		 4.31 4.51 4.81 5.13 5.64
Average collection
days		 85 81 76 71 65
Inventory turnover
rate(times)		 4.02 2.90 2.37 1.73 0.93
Accounts payable
turnover rate(times)		 5.09 5.11 5.12 3.59 1.92
Average sales days 91 126 154 211 392
Property, plant and
equipment turnover
rate(times)		 2.78 2.47 2.22 2.95 3.11
Not applicable
Total assets turnover
rate(times)
0.90		 0.80 0.70 0.64 0.47
Profitability Return on assets(%) 11.88 9.07 7.85 7.58 6.45
Return on equity
(%)		 17.42 12.60 11.18 14.06 16.94
Pre-tax income to
paid-in capital (%)
(Note 7)		 65.33 47.52 46.72 63.08 85.70
Net margin(%) 13.19 11.25 11.15 11.84 13.77
Earnings per share
(NT$)		 5.16 4.02 3.80 5.23 7.08
Cash flow Cash flow ratio(%) 62.47 28.63 42.27 30.26 18.43
Cash flow adequacy
ratio(%)		 139.42 141.02 166.52 107.41 74.02
Cash reinvestment
ratio(%)		 16.86 0.21 11.96 24.09 26.32
Leverage Operatingleverage 2.29 2.98 2.70 2.39 2.45
Financial leverage 1.00 1.00 1.01 1.01 1.01
Please indicate the reasons for the changes in the financial ratios in the past two years (This section need not be filled
in if the change is within 20%)

(I) Financial analysis for the most recent 5 years: IFRSs-based consolidated financial statements Please indicate the reasons for the changes in the financial ratios in the past two years (This section need not be filled in if the change is within 20%)

(1) Debt-to-asset ratio: The debt-to-asset ratio in this period increased from that in the same period last year, mainly due to an increase in contract liabilities and trade payable at the end of this period as a result of the increase in the orders for machines, thanks to the economic boom in the semiconductor industry in 2022.

130

  • (2) Quick ratio: The quick ratio decreased, mainly due to the increase in the orders for machines and the amount of contract liabilities has increased significantly compared with the previous period.

  • (3) Interest coverage multiplier: The interest coverage multiplier increased, mainly due to the increase in profits this year

  • (4) Accounts payable turnover (times): The accounts payable turnover in this year decreased from that in the same period last year, mainly due to the rate of increase in accounts payable outstripping that in the cost of goods sold as a result of the increase in the orders for machines in this year.

  • (5) Inventory turnover (times) and average days in sales: The inventory turnover decreased, mainly due to the increase in the average days in sales of machines in stock as a result of the increase in orders for machines in this period.

  • (6) Average days in sales: The average days in sales increased, mainly due to the increase in the average days in sales of machines in stock as a result of the increase in orders for machines in this period.

  • (7) Total assets turnover rate (times): The total assets turnover rate decreased, mainly due to the increase in the average days in sales of machines in stock and the increase in the ending inventory.

  • (8) Return on equity (%): Return on equity increased, mainly due to the increase in revenue and thus profits in this period.

  • (9) Pre-tax income to paid-in capital (%): Pre-tax income to paid-in capital increased, mainly due to the increase in revenue and thus profits in this period.

  • (10) Earnings per share (NT$): Earnings per share increased, mainly due to the increase in revenue and thus profits in this period.

  • (11) Cash flow ratio (%): Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused contract labilities to increase substantially from last year, leading to a decrease in the cash flow ratio.

  • (12) Cash flow adequacy ratio (%): Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused the increase in inventories to outstrip the increase in cash inflows, leading to a decrease in the cash flow adequacy ratio.

  • (III) Financial analysis for the most recent 5 years: Financial Accounting Standards of Taiwan - Consolidated (not applicable)

  • (IV) Financial analysis for the most recent 5 years:

Financial Accounting Standards of Taiwan - Individual (not applicable)

131

III. Audit committee review of the most recent annual financial statements

SCIENTECH CORPORATION

After reviewing the 2022 Business Report, Earnings Distribution Proposal, Individual and Consolidated Financial Statements (including the balance sheet, statement of comprehensive income, statement of changes in equity, and statement of cash flows) that were prepared by the Company’s Board of Directors, the Audit Committee did not find any non-conformities, and thus prepared this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

Very Truly

Yours,

SCIENTECH CORPORATION Board of Directors

Audit Committee Convener: CHENG-LI YANG

March 10, 2023

IV. Most recent annual financial report

For the financial statements for 2022 that have been audited by CPAs, refer to p.220~p.296.

V. Consolidated financial statements for the most recent fiscal year audited and certified by certified public accountants

For the consolidated financial statements for 2022 that have been audited by CPAs, refer to p.149~p.219.

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

132

Seven. Review and Analysis of the Financial Position and Results of

Operations and Risk Management

I. Financial position

Unit: In NT$ thousand

Unit: In NT$thousand
Year
Item		 2021 2022 Difference Description
Amount Amount Amount %
Cash and cash equivalents 2,153,373 4,081,951 1,928,578 90 Mainly due to the increase in contract
liabilities at the end of theperiod
Notes receivable and
accounts receivable		 1,060,385 859,698 (200,687) (19) Note
Inventories 2,357,234 5,274,300 2,917,066 124 Mainly due to the increase in orders for
machines at the period end because of
economic revival
Prepayments 582,388 1,807,348 1,224,960 210 Mainly due to the increase in orders for
machines at the period end because of
economic revival
Other assets 93,000 189,441 96,441 104 Mainly due to the increase in the amount
of pledge certificates of deposit related to
purchases
Financial assets at fair
value through other
comprehensive income		 166,250 138,562 (27,688) (17) Note
Investments accounted for
usingequitymethod		 456,410 494,738 38,328 8 Note
Property, plant and
equipment		 1,211,220 1,542,982 331,762 27 Due to purchase Tainan land and plant
for operation
Deferred income tax
assets		 92,314 110,147 17,833 19 Note
Other non-current assets 155,243 120,702 (34,541) (22) Mainly due to the decrease in equipment
prepaid
Short-term borrowings 244,642 430,661 186,019 76 Mainly due to the increase in the amount
of letters of credit related topurchases
Contract liabilities 3,168,045 7,718,760 4,550,715 144 Mainly due to the increase in orders for
machines as a result of the economic
revival at the end ofperiod
Notes receivable and
accounts receivable		 1,102,500 2,156,868 1,054,368 96 Mainly due to the increase in orders for
machines as a result of the economic
revival at the end ofperiod
Other accounts payable 356,389 348,394 (7,995) (2) Note
Short-term warranty
provision		 37,457 41,158 3,701 10 Note
Other current liabilities 164,272 201,763 37,491 23 Mainly due to the increase in current tax
liabilities as a result of the increase in the
operatingrevenue andprofit
Long-term bank
borrowings		 0 0 0 0 Note
Deferred income tax
liabilities		 56,418 76,185 19,767 35 Mainly due to recognition of foreign
investment interests
Lease liabilities 68,984 63,594 (5,390) (8) Note
Net defined benefit
liabilities		 154 0 (154) (100) Mainly due to the Company’s settling the
employee pension under the pension
scheme stipulated in the Labor Standards
Act in the currentperiod
Capital stock 811,390 811,390 0 0 Note

133

Unit: In NT$ thousand

Unit: In NT$thousand
Year
Item		 2021 2022 Difference Description
Amount Amount Amount %
Capital surplus 625,640 728,964 103,324 17 Note
Retained earnings 1,756,891 2,126,171 369,280 21 Mainly due to the increase in the revenue
and thus theprofits
Shareholders’ equity -
others		 (14,306) (33,380) (19,074) 133 Mainly due to the increase in financial
asset evaluation losses
Treasury stock (50,659) (50,659) 0 0 Note

Note: Analysis is required only for the changes in the most recent two years that reach or exceed 20% or NT$10 million.

II. Financial performance

II. Financial performance
Unit: In NT$1,000
Year
Changes
Item 2021 2022 Amount %
Operatingrevenue 4,683,787 5,649,986 966,199 21
Operatingcost 2,976,583 3,559,735 583,152 20
Operating grossprofit 1,707,204 2,090,251 383,047 22
Realized operating grossprofit 1,667,017 2,084,286 417,269 25
Operatingexpenses 1,111,772 1,373,988 262,216 24
Operating profit 555,245 710,298 155,053 28
Non-operating income and
(31,300) 25,588 56,888 182
expenses
Netprofits before tax 523,945 735,886 211,941 40
Income tax expense 104,040 167,303 63,263 61
Netprofit in the currentyear 419,905 568,583 148,678 35
Note: Below is an explanation for the changes in the most recent two years that reach or exceed 20% or NT$10 million:
1. Operating revenue and cost: Mainly due to the increase in the demands for machines and equipment as a result of the
economic revival in the semiconductor industry.
2. Operating gross profit and operating profit: Mainly due to the increase in revenue and thus profits.
3. Pre-tax profit and net profit: The pre-tax profit and net profit both increased mainly due to the increase in operating
revenue and proper control of operating cost.
4. Income tax expenses: Mainlydue to the increase inprofits thisyear.

134

III. Cash flow

Analysis of cash flow changes during the most recent fiscal year, corrective measures to be taken in response to illiquidity, and a liquidity analysis for the coming year:

Unit: % Unit: %
Year

2021		 2022 Increase (decrease) ratio
Item
Cash flow ratio 31.02 21.28 (31)
Cash flow adequacyratio 106.82 81.44 (24)
Cash flow reinvestment ratio 37.40 48.84 31

Analysis of percentage increase / decrease:

  1. Cash flow ratio: Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused contract labilities to increase substantially from last year, leading to a decrease in the cash flow ratio.

  2. Cash flow adequacy ratio: Mainly due to the increase in the weight of sale of machines in this period, which lengthened the average days in sales of machines in stock, which in turn caused the increase in inventories to outstrip the increase in cash inflows, leading to a decrease in the cash flow adequacy ratio.

  3. Cash reinvestment ratio: Mainly due to the increase in the cash from operating activities in this year over last year, which led to an increase in cash reinvestment ratio.

Unit: In NT$1,000 Unit: In NT$1,000
Opening Balance Estimated cash
flow from
operatingactivities		 Estimated cash
outflow for the
year		 Estimated cash
surplus		 Remedy for estimated
cash shortfalls
Investmentplan Financing plan
2,192,602 1,200,000 400,000 2,592,602 - -
Analysis of the estimated cash flows for 2023
1. Operating activities: The net cash inflow is estimated to be NT$1,200,000 thousand as a result of a net cash inflow
from operating activities, which is mainly due to the expectation that operating revenue will continue to grow, that
collection of accounts receivable will accelerate, and that expenses will be controlled properly.
2. Investing activities: The net cash outflow is estimated to be NT$200,000 thousand, mainly due to the increase in
investment in long-term equities and capital expenditure.
3. Financing activities: The net cash outflow is estimated to be NT$600,000 thousand, mainly due to the net cash
outflow that is used to repay bank loans and pay cash dividends.
Measures to be taken to cope with a cash shortfall and liquidityanalysis: N/A.

IV. Effect of major capital expenditures on finance and business matters in the most recent

year

The fund for the Company’s purchase of the land and plants in Tainan mainly comes from its working capital, so there is no material effect on its financials or business.

135

V. Investment policy for the most recent year, the main reasons for profit or loss, improvement plan, and investment plan for the coming year 1. Investment policy for the most recent year

For the purposes of managing and controlling investees, the Company has formulated the “Regulations Governing the Acquisition and Disposal of Assets”; doing so enables the Company to grasp the financials and business conditions of investees. In addition, the Company has also formulated the “Regulations Governing the Monitoring of Subsidiaries” under its internal control system, so as to urge subsidiaries to formulate relevant operating procedures for their material financial and business matters; furthermore, the Company also supervises subsidiaries’ carrying out work by laws and their internal regulations, and establishes a risk management mechanism for subsidiaries, so as to maximize the operating performance.

  1. Main reasons for profit or loss in the most recent year, improvement plan, and investment plan for the coming year
2. Main reasons for profit or loss in the most recent year, improvement 2. Main reasons for profit or loss in the most recent year, improvement 2. Main reasons for profit or loss in the most recent year, improvement plan, and investment plan for the coming year plan, and investment plan for the coming year plan, and investment plan for the coming year
Unit: NT$1,000
Description of item Investment
amount(Note)		 Policy Reasons for profit or loss Improvement plan Investment plan for
the following year
Natgem Inc. 33,000 None Transition to a group which provides
charitable services		 None None
Acromass Technologies, Inc. 270,000 None The integration and R&D of hardware
and software failed to keep up with the
market demand trends.		 Dissolved through a resolution. None
Scientech Engineering
Corp.(Shanghai)		 USD 4,870 Increase the penetration rate in
the semiconductor industry in
China		 Semiconductor customers gradually
recognize the products for which the
Company is an agent as well as the
services and installation technology
provided bythe Company.		 Improve the understanding of
products and installation
solutions and technologies.		 None
Scientech Materials Corporation
205,000		 None Products do not yield economic
benefits in the future.		 Dissolved through a resolution. None
Scientech Gmbh 1,163 Increase the penetration rate in
the semiconductor industry in
Europe.		 New to the European market Increase product visibility None
Transcend Capital Corp. 416,829 Offshore holding company profit or loss of investees accounted for
usingthe equitymethod		 None None
Xtek Semiconductor (Huangshi)
Co., Ltd.
438,182		 Increase the penetration rate in
the semiconductor industry in
China		 New to the Chinese market Accelerate the trial production
and have the products pass
customers’ certification and
shipped		 None

Note: Original investment cost.

  1. Investment plan in the following year: The Company does not have any material investment plan in the following year.

136

VI. Risk management, analysis, and assessment

  1. Below is the description of the following matters occurred in the most recent year or in the current year up to the publication date of this annual report:

  2. (1) The effects of interest rate change on the Group’s operating revenue and profit, and the Company’s concrete response measures therefor

  3. A. The effects of interest rate change on the Group’s operating revenue and profit In 2022, the Group had an interest income of NT$10,217 thousand and an interest expense of NT$3,404 thousand, accounting for 0.18% and 0.06 %, respectively, of the Group’s net operating income. Given such a minor percentage, interest rate changes won’t materially impact the Group’s profit or loss.

  4. B. The Group’s response measures for interest rate changes

    • The Group should enhance the management of accounts receivable, gradually reduce the amount of liabilities, and improve the financial structure, so as to minimize the interest rate risk.

  5. (2) The effects of exchange rate change on the Group’s operating revenue and profit, and the Company’s concrete response measures therefor

  6. A. The effects of exchange rate change on the Group’s operating revenue and profit

Unit: NT$1,000
Item 2021 2022
Exchange rate - appreciation/depreciation 1% 1%
Pre-tax profit decrease/increase 14,562 16,329
Net profits before tax 523,945 735,886
Percentage impacted 2.78% 2.22%

The Group is affected mainly by the changes in the exchange rate of US dollars. Such effects were mitigated mainly by offsetting trade payable against trade receivable. As a result, the effects of exchange rate changes on the Group’s profit were about 2.78% and 2.22% in 2021 and 2022, respectively.

  • B. The Group’s concrete response measures for exchange rate changes

    • To cope with the risks associated with exchange rate changes, the Group adopts the nature hedge strategy, that is, offsetting the trade receivable denominated in foreign currency against the purchase payable denominated in foreign currency. In addition, the Company’s finance department works closely with the Bank during the normal course of operations, and always collects the exchange rate trends, so that an agile response measure can be taken in a timely manner.

  • (3) The effects of inflation on the Group’s operating revenue and profit, and the Company’s concrete response measures therefor

  • A. The effects of inflation on the Group’s operating revenue and profit

    • In 2022 and in the current year up to the publication date of this annual report, the Group did not see its profit or loss materially affected by inflation.

  • B. The Group’s concrete response measures for inflation

The Group will continue to monitor the price change of commonalities in the upstream, so as

137

to reduce the effect of cost variation on the Group’s profit or loss.

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

  2. (1) The Group did not engage in any high risk or highly leveraged investment in 2022 or in the current year up to the publication date of this annual report.

  3. (2) The parties for which the Group made endorsement or guarantee in 2022 or in the current year up to the publication date of this annual report are the Company’s subsidiaries. Such endorsement and guarantee were made in accordance with the Company’s Regulations for Making Endorsement and Guarantee. For transaction details, refer to p.279 of the financial statements for 2022 that were attested by CPAs and p.212 of the consolidated financial statements for 2021 that were attested by CPAs.

  4. (3) The parties to which the Group loaned funds in 2022 or in the current year up to the publication date of this annual report are the Company’s subsidiaries. Such loaning of funds was made in accordance with the Company’s Regulations for Loaning of Funds to Others. For transaction details, refer to p.278 of the financial statements for 2022 that were attested by CPAs and p.211 of the consolidated financial statements for 2022 that were attested by CPAs.

  5. (4) The Group did not engage in derivatives trading in 2022 or in the current year up to the publication date of this annual report.

138

  1. Research and development work to be carried out in the future, and further expenditures expected for research and development work: The Company plans to invest about NT$320,000 thousand in the R&D in the fields of equipment manufacturing and wafer reclaim in 2023; such amount may be adjusted where appropriate depending on the actual operating and R&D status.
Plan Name Description Of Plan Current Progress Estimated time
for mass
production
(Note)
Main factors for success
Semiconductor
Equipment		 12-inch advanced process batch
type cleaning equipment		 Under development 2024 The advanced process equipment was developed by referencing the past
experience in which the 8”/12’ advanced process batch type cleaning
equipment that had passed the certification at the clients’ end, and by hiring
experiencedprofessional talent as design advisers.
Development of the new-generation
single-wafer wet process cleaning
equipment		 Under development 2023 The equipment was developed, tailored to customers’ process requirements by
referencing the user experience with the 12” single-wafer process equipment in
thepast,and byincorporatingthe technologies newlydeveloped bysuppliers.
High-clean single-wafer wet
process equipment for advanced
packaging		 Under development 2023 The design was optimized by referencing the user experience with the single-
wafer process equipment in the past, and by considering customers’ process
requirements; this will enable the Company to satisfy customers requirements
of 3D advancedpackagingin the future.
Next-generation wafer and glass
temporary bonding/debonding
process equipment		 Under development 2024 The equipment was developed by taking into account the requirements of
advanced packaging customers, by leveraging the priority right to enhance prior
art,and byconsideringtheproperties of the materials employed.
Square wafer hanger type
electroplating process equipment		 Under development 2023 The design was optimized by referencing the user experience with the single-
wafer and batch type process equipment in the past, and by considering
customers’ process requirements; this will enable the Company to satisfy
advanced packaging customers requirements for the various sizes of square
wafer.
To improve the
technology of silicon
wafer reclaim process		 To improve the wafer-polishing
technology		 Under development 2023 1. Being experienced in process optimization, the Company is able to design
the most effective inspection tools tailored to customers’ requirements.
2. Possessing the capability to independently develop cleaning equipment, the
Company is able to design the cleaning equipment fit for the characteristics
of current process, thus achieving the optimal results.
To improve the wafer-cleaning
technology

139

Plan Name Description Of Plan Current Progress Estimated time
for mass
production
(Note)
Main factors for success
3. With its process technology and the quality thereof highly regarded by
customers, SCIENTECH was entrusted by customers to develop the most
advanced products.
To develop process
technology for non-
silicon materials		 To improve large-size (150mm) SiC
substrate processing efficiency
Under development		 2024 1. The Company early develops the technologies for processing relevant
materials in a way that can achieve the requirement for energy saving and
efficiency, which will be the trend in the industry.
2. The capability of applying existing core wafer process technologies to the
process and application of other non-silicon materials gives the Company a
natural advantage.
3. SCIENTECH’s complete range of manufacturing equipment wins
customers’ trust and thus orders for developing the most advanced
products.
To develop process technology for
SI.-SiC substrates (100-150mm)

Note: The said estimated time for mass production is exclusively for the R&D plan. The actual product mass production time is subject to the demands of the market and customers.

140

  1. Effect of changes in important laws and policies at home and abroad on the Group's financials and business affairs, and measures to be taken in response:

  2. In the most recent year and in the current year up to the publication of this annual report, there was no change in important laws or policies at home and abroad which is able to significantly impact the Group’s financials or business affairs.

  3. Effect of technological changes (including cyber-security risks) and industrial changes on the Group’s financials and business affairs, and measures to be taken in response.

  4. The Company has been attaching importance to the improvement in R&D capability in order to embrace the challenges accompanied by technological changes. In the most recent year and in the current year up to the publication of this annual report, there was no technological change or industrial change which is able to significantly impact the Group’s financials or business affairs. The Company values the management of cyber-security risks, in that it passed the ISO 27001 certification in September 2019. In addition, the Company reports to the Board of Directors on the implementation of information security management every year, hoping to mitigate cyber-security risks and thereby ensure the security of Company’s operations.

  5. Effect of changes in corporate image on corporate crisis management, and measures to be taken in response:

  6. In the most recent year and in the current year up to the publication date of this annual report, there was no occurrence of events that are significant enough to effect a change in the Group’s corporate image.

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

  8. Expected benefits and possible risks associated with any plant expansion, and mitigation measures being or to be taken:

  9. In the most recent year and in the current year up to the publication date of this annual report, the Group purchased land and plants in Tainan, mainly to set up the Tainan Office to serve customers in southern Taiwan, and to prepare for potential expansion of the southern factory.

  10. Risks associated with any consolidation of sales or purchasing operations, and mitigation measures being or to be taken:

  11. In 2022 and in 2023Q1, the Group’s sales to TSMC accounted for 17.13% and 12.33%, respectively, of total sales; judging from the percentage, sales were relatively concentrated. This is mainly because TSMC is a leading semiconductor giant whose demands for semiconductor equipment and wafer reclaim service have always been immense. In this respect, the Group’s concentration of sales to TSMC is a normal supply and demand phenomena in the industry. The Group has managed to develop products for the various industries, e.g., semiconductor, optoelectronics, solar energy, so as to reduce its sales concentration. In the most recent year and in the current year up to the publication date of this annual report, the Group’s purchase exhibited no sign of concentration.

141

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

In the most recent year and in the current year up to the publication date of this annual report, the Group did not see any of its directors or major shareholders whose shareholding in the Group is more than 10% have a substantial amount of the Group’s shares transferred or change hands.

  1. Effect upon and risk to Company associated with any change in management rights

In the most recent year and in the current year up to the publication date of this annual report, the Group did not see its management rights changed.

  1. Litigious and non-litigious matters

In the most recent two years and in the current year up to the publication date of this annual report, the Group did not encounter any major litigious, non-litigious, or administrative disputes which have been concluded by means of a final and unappeasable judgment, or are still under litigation; and might lead to a consequence that would significantly impact the Group’s financials and business affairs.

  1. Other important risks, and mitigation measures being or to be taken.

In terms of information security assessment, the Company has formulated the Information Security Management Policy to govern matters relating to information security within the Company. In addition, the Company also introduced the ISO27001 Information Security Management System in 2019 and obtained the ISO 27001:2013 in October 2019 in order to ensure the effectiveness and compliance of each management system. So far the Company does not have any material operating risks.

VII. Other important matters: None.

142

Eight. Special Items

I. Information on affiliates

(I) Consolidated business report of associates

1. Organizational chart of associates (2022. 12. 31)

==> picture [480 x 256] intentionally omitted <==

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

Scientech Corporation
100%
100% 100% 100%
100%
Scientech Investment Corp.
100% 100%
Scientech Engineering Transcend Capital
Simple Investment Corp.
USA Corp. Corp.
100%
100%
Scientech Engineering Scientech Engineering
Corp.(Shanghai) (Hong Kong) Limited
Natgem Inc.
Scientech Gmbh
Acromass Technologies, Inc.
Scientech Materials Corporation
----- End of picture text -----

143

2. Relationship with associates and status of cross shareholding

December 31,2022 December 31,2022 December 31,2022
Company Name Relationship with
the Company		 The Company’s holding of associates’ shares Associates’ holding of the Company’s shares
Shares
(in thousand
shares)		 Ownership Investment amount (Note 1)
(NT$ thousand)
Shares
(in thousand
shares)		 Ownership
Investment amount
(NT$ thousand)
Scientech Investment Corp. Subsidiary 5,540 100% NTD 171,775 0 0 0
Scientech Engineering USA Corp. Sub-subsidiary 300 100％ USD 300 0 0 0
Scientech Engineering Corp.(Shanghai) Sub-subsidiary Note2 100％ USD 4,870 0 0 0
Scientech Engineering (Hong Kong) Limited Sub-subsidiary Note2 100％ USD 200 0 0 0
Simple Investment Corp. Sub-subsidiary 4,906 100％ USD 4,906 0 0 0
Natgem Inc. Subsidiary 800 100％ NTD 33,000 0 0 0
Acromass Technologies, Inc. Subsidiary 27,000 100％ NTD 270,000 0 0 0
Scientech Materials Corporation Subsidiary 1,400 100％ NTD 205,000 0 0 0
Scientech GMBH Subsidiary Note2 100％ NTD 1,163 0 0 0
Transcend Capital Corp. Subsidiary 14,275 100％ NTD 416,829 0 0 0

Note 1: Original investment cost.

Note 2: Being a limited company, the investee does not issue shares.

144

3. Basic information on associates

December 31,2022
Company Name Establishment
Date		 Address Paid-in capital Paid-in capital
Scientech Investment Corp. 2005.01.19 2nd floor, Felix House,24 Dr. Joseph Riviere Street, Port
Louis,Republic of Mauritius.		 US$5.54 million Holding company
Scientech Engineering USA Corp. 2005.03.14 2966 Scott Blvd. Santa Clara, CA 95054 US$300 thousand Trading of semiconductor
equipment
Scientech Engineering
Corp.(Shanghai)		 2001.01.24 Room 22A, Suntime International Building, No. 450, Fushan
Road,PudongNew Area,Shanghai,China
US$4.87 million		 Trading of semiconductor
equipment
Scientech Engineering
(HongKong)Limited		 2010.01.08 Room 2702-03, Integrated Centre, 302-8 Hennessy Road,
Wanchai,HongKong		 US$200 thousand Trading of semiconductor
equipment
Simple Investment Corp. 2005.01.19 2nd floor, Felix House,24 Dr. Joseph Riviere Street, Port
Louis,Republic of Mauritius.		 US$4,906 thousand Holding company
Natgem Inc. 2010.06.29 11th Floor, No. 208, Ruiguang Road, Neihu District, Taipei
City		 NT$8 million Research and sale of food and
supplies
Acromass Technologies, Inc. 2010.12.08 11th Floor, No. 208, Ruiguang Road, Neihu District, Taipei
City		 NT$270 million R&D and sale of mass
spectrometer
Scientech Materials Corporation 2013.10.21 11th Floor, No. 208, Ruiguang Road, Neihu District, Taipei
City		 NT$14 million R&D and sale of cloud-based
application systems and energy-
efficientproducts
Scientech GMBH 2020.02.04 Weidenweg 27, 9500 Villach, Austria. EUR35 thousand International trade
Transcend Capital Corp. 2020.02.18 Wickham’s Cay II, P. O. Box 2221, Road Town, Tortola,
British Virgin Islands.		 US$14,275 thousand Holding company

3. Information on the same shareholder of associates presumed to have a relationship of control or subordination: None.

4. Business sectors covered by associates

For the business sectors covered by associates, refer to “2. Basic information on associates”.

145

5. Information on directors, supervisors, and presidents of associates

December 31, 2022

December 31,2022
Company Name Name Or Representative Shareholding
Shares Ownership
Scientech Investment Corp. Ming-Chi Hsu 5,540 thousand shares 100%
Scientech Engineering USA Corp. Ming-Chi Hsu 300 thousand shares 100%
Scientech Engineering Corp.(Shanghai) Ming-Chi Hsu - 100%
Scientech Engineering (Hong Kong) Limited Ming-Chi Hsu - 100%
Simple Investment Corp. Ming-Chi Hsu 4,906 thousand shares 100%
Natgem Inc. Ming-Chi Hsu 800 thousand shares 100%
Acromass Technologies, Inc. Hung-Liang Hsieh 27,000 thousand shares 100%
Scientech Materials Corporation Hung-Liang Hsieh 1,400 thousand shares 100%
Scientech GMBH Chih-Huei Chu - 100%
Transcend Capital Corp. Ming-Chi Hsu 14,275 thousand shares 100%

146

6. Overview of the business operations of each associate

December 31,2022; Unit: NT$thousand December 31,2022; Unit: NT$thousand
Company Name Currency Amount of
Capital		 Total Assets Total
liabilities		 Net Value Operating
revenue		 Operating profit
(loss)
Profit (loss) for
this period (after
tax)		 Earnings (loss) per
share (NT$) (after
tax) (Note 1)
Scientech InvestmentCorp. TWD 171,775 536,864 0 536,864 0 (12) 86,774 0.53
Scientech Engineering USA Corp.
TWD		 9,213 49,795 20,869 28,926 192,417 14,802 7,901 0.88
Simple InvestmentCorp. TWD 150,648 505,994 614 505,380 0 (12) 78,881 0.54
Scientech Engineering
Corp.(Shanghai)		 TWD 149,558 3,286,430 2,780,482 505,948 1,350,646 49,004 78,893 Note 2
Scientech Engineering
(HongKong)Limited		 TWD 5,968 1,179,171 876,753 302,418 159,641 42,871 37,928 Note 2
Natgem Inc. TWD 8,000 822 239 583 714 (212) 210 (0.26)
Acromass Technologies,Inc. TWD 270,000 4,479 40 4,439 5,187 (2,004) 630 (0.02)
Scientech MaterialsCorporation TWD 14,000 3,167 0 3,167 0 0 1 (0.0002)
ScientechGMBH TWD 1,145 15,053 4,794 10,259 26,580 12,923 9,840 Note 2
TranscendCapitalCorp. TWD 438,385 504,130 18 504,112 0 (57) (55,528) (0.13)

Note 1: Scientech Investment Corp., Scientech Engineering USA Corp., Simple Investment Corp. and Transcend Capital Corp. are measured in USD; others are measured in TWD.

Note 2: This is not applicable because Scientech Engineering Corp. (Shanghai) and Scientech Engineering (Hong Kong) Limited are a limited company and Scientech GMBH does not issue shares.

(II) Consolidated Financial Statements of Associates

Please refer to Finance Overview - Consolidated Financial Statements on p.149~p.219 of this annual report.

(III) Business report of associates: None.

147

II. Private placement of marketable securities in the most recent year and the current year up till the publication date of this annual report

The Company did not conduct any private placement of marketable securities in the most recent year and the current year up till the publication date of this annual report.

III. Holding or disposal of the Company’s shares by its subsidiaries in the most recent year and the current year up to the publication date of this annual report

There was no holding or disposal of the Company’s shares by its subsidiaries in the most recent year and the current year up to the publication date of this annual report.

IV. Other matters that require additional explanation: None.

IX. Matters Wielding Material Impacts

If any of the situations listed in Subparagraph 2, Paragraph 2, Article 36 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, have occurred during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report: None.

148

Independent Auditors’ Report

To SCIENTECH CORPORATION:

Audit opinion

We have audited the consolidated balance sheet of SCIENTECH CORPORATION and its subsidiaries (collectively referred to as the “Group” hereinafter) as of December 31, 2022 and 2021, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flow for the period from January 1 through December 31, 2022 and 2021, and the notes to the consolidated financial statements (including the summary of significant accounting policies).

In our opinion, the said consolidated financial statements were prepared 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 that were approved and promulgated by the Financial Supervisory Commission (FSC), and thus presented fairly, in all material aspects, the consolidated financial position of The Group as of December 31, 2022 and 2021, and the consolidated financial performance and cash flows for the period from January 1 through December 31, 2022 and 2021.

Basis of Audit Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Consolidated Financial Statements section of our report. We were independent of The Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and fulfilled all other responsibilities thereunder. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters refer to, based on our professional judgment, the most important matters for auditing the Group’s consolidated financial statements of 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these issues.

Key audit matters for the Group's consolidated financial statements for the year ended December 31, 2022 are stated as follows:

149

Revenue recognition

The Group’s 2022 operating revenue from manufacturing of machinery and from sale of machinery in the capacity of an agent is material to the overall presentation of the consolidated financial statements. Revenue from machinery should be recognized upon the fulfillment of obligations. Since the company might recognize product sale revenue when such revenue does not qualify for the recognition criteria, revenue recognition is thus listed as the key audit matter.

Our main audit procedures to address the said matter included testing the effectiveness of the design and implementation of the internal control system pertaining to the recognition of machinery sale and discussing with the management about whether the accounting policy for revenue recognition is appropriate and consistently adopted; we also sampled customer sales documents to verify the transaction terms on the order or sale contract and check the acceptance certificate signed off by customers, so as to assess the correctness of the recognized revenue.

Other Matters

SCIENTECH CORPORATION has prepared the parent company only financial statements for the years ended December 31, 2022 and 2021, for which we have issued an audit report containing an unqualified opinion for reference.

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

The management was responsible for fairly presenting these 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 that were approved and promulgated by the Financial Supervisory Commission, and for maintaining the necessary internal control related to the preparation of these consolidated financial statements to ensure that these consolidated financial statements were free of material misstatements, whether due to fraud or errors.

During preparation of these consolidated financial statements, the management was also responsible for evaluating The Group’s ability to continue as a going concern, disclosing going concern matters, and applying the going concern basis of accounting, unless the management intended either to liquidate The Group or to terminate its operations, or had no feasible alternatives but to do so.

The Group’s governance body (including the Audit Committee) was responsible for supervising the financial reporting procedures.

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

150

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also conduct the following tasks:

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

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

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

  4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditor’s 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

151

  1. 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.

  2. Obtain sufficient and 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 audit for the Group. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Group's consolidated financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Deloitte & Touche Taiwan

CPA: HUI-MIN HUANG CPA: MING-HSIN CHO Approval No. from the Financial Approval No. from the Securities and Futures Supervisory Commission Commission Jin-Guan-Zheng-Shen-Zi No.1070323246 Tai-Tsai-Cheng-Liu-Zi No. 0920123784

March 10, 2023

152

SCIENTECH CORPORATION and Subsidiaries

Consolidated Balance Sheets

As of December 31, 2022 and 2021

Unit: NT$ thousand

Code

1100
1170
1180
130X
1410
1470
11XX

1517
1550
1600
1755
1785
1840
1915
1975
1990
15XX
1XXX
Code

2100
2130
2170
2219
2230
2252
2280
2399
21XX

2570
2580
2640
25XX
2XXX

3110
3200
3310
3320
3350
3300
3410
3420
3400
3500
3XXX
Assets
Current Assets
Cash and cash equivalents (Notes 4 and 6)
Notes receivable and accounts receivable (Notes 4, 8, and 19)
Accounts receivable - related parties (Notes 4, 8, 19, and 26)
Inventories (Notes 4, 9, 23, and 26)
Prepayments
Other current assets (Notes 14 and 27)
Total current assets
Non-current assets
Financial assets at fair value through other comprehensive income
(Notes 4 and 7)
Investments accounted for using equity method (Notes 4 and 11)
Property, plant, and equipment (Notes 4, 12, and 23)
Right-of-use assets (Notes 4 and 13)
Patent right (Note 4)
Deferred income tax assets (Notes 4 and 21)
Prepayments for equipment (Note 12)
Net defined benefit asset, non-current(Notes 4 and 17)
Other non-current assets (Note 14)
Total non-current assets
Total Assets
Liabilitiesand Stockholders’ Equity
Current liabilities
Short-term borrowings (Note 15)
Contract liability (Notes 19 and 26)
Notes payable and accounts payable
Other payables (Notes 12 , 16, and 26)
Current income tax liabilities (Notes 4 and 21)
Short-term warranty provision (Note 4)
Lease liability (Notes 4, 13, and 26)
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred income tax liabilities (Notes 4 and 21)
Lease liability (Notes 4, 13, and 26)
Net defined benefit liability (Notes 4 and 17)
Total non-current liabilities
Total liabilities
Equity (Notes 4 and 18)
Capital stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Exchange differences arising in the translation of foreign
operations
Unrealized valuation gains or losses on financial assets at fair
value through other comprehensive income
Total other equity interests
Treasury stock
Total stockholders’ equity
Total Liabilities and Equity		 December31,2022
Amount
%
$ 4,081,951
28
854,546
6
5,152
-
5,274,300
36
1,807,348
13
189,441

1
12,212,738

84
138,562
1
494,738
3
1,542,982
11
68,436
-
1,212
-
110,147
1
14,492
-
1,842
-
34,720

-
2,407,131

16
$ 14,619,869
100
$ 430,661
3
7,718,760
53
2,156,868
15
348,394
3
177,324
1
41,158
-
7,323
-
17,116

-
10,897,604

75
76,185
1
63,594
-
-

-
139,779

1
11,037,383

76
811,390

5
728,964

5
318,368
2
14,306
-
1,793,497

12
2,126,171

14
2,415
-
35,795)

-
33,380)

-
50,659)

-
3,582,486

24
$ 14,619,869
100		 December31,2022
Amount
%
$ 4,081,951
28
854,546
6
5,152
-
5,274,300
36
1,807,348
13
189,441

1
12,212,738

84
138,562
1
494,738
3
1,542,982
11
68,436
-
1,212
-
110,147
1
14,492
-
1,842
-
34,720

-
2,407,131

16
$ 14,619,869
100
$ 430,661
3
7,718,760
53
2,156,868
15
348,394
3
177,324
1
41,158
-
7,323
-
17,116

-
10,897,604

75
76,185
1
63,594
-
-

-
139,779

1
11,037,383

76
811,390

5
728,964

5
318,368
2
14,306
-
1,793,497

12
2,126,171

14
2,415
-
35,795)

-
33,380)

-
50,659)

-
3,582,486

24
$ 14,619,869
100		 December31,2021 December31,2021 December31,2021
Amount
$ 4,081,951
854,546
5,152
5,274,300
1,807,348
189,441

12,212,738

138,562
494,738
1,542,982
68,436
1,212
110,147
14,492
1,842
34,720

2,407,131

$ 14,619,869

$ 430,661
7,718,760
2,156,868
348,394
177,324
41,158
7,323
17,116

10,897,604

76,185
63,594
-

139,779

11,037,383

811,390

728,964

318,368
14,306
1,793,497

2,126,171

2,415
35,795)

33,380)

50,659)

3,582,486

$ 14,619,869
 %
















(
(
(

































(

 26
12
1
28
7
1
75
2
5
15
1
-
1
1
-
-
25
100
3
38
13
4
2
1
-
-
61
-
1
-
1
62
10
8
3
-
18
21
-
-
-
1)
38
100

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

Chairman of the Board: HUNG-LIANG HSIEH

Manager: MING-CHI HSU

Accounting Manager: SHAO-CHE CHUANG

153

SCIENTECH CORPORATION and Subsidiaries

Consolidated Statement of Comprehensive Income

January 1 to December 31, 2022 and 2021

Unit: NT$ thousand; except earnings per share

Code
Operating revenue (Notes 4,
19, and 26)
4100
Goods sales revenue

4600
Services revenue
4800
Other operating revenue
4000
Total operating
revenue
5000
Operating cost (Notes 9, 20,
and 26)
5900
Operating gross profit
5910
Unrealized gains on
transactions with associates
(Note 4 and 11)
5950
Realized operating gross
profit
Operating expenses (Notes 8 ,
20, and 26)
6100
Marketing expenses
6200
General and
administrative
expenses
6300
R&D expenses
6450
Loss (Gain) on expected
credit impairment
6000
Total operating
expenses
6900
Operating Income

Non-operating income and
expenses
7190
Other income (Notes 4,
7, and 26)		 2022 %
96

3
1

100
63

37
-

37

15

3

6
-

24

13


-		 2021
Amount
$ 5,405,974
194,596
49,416

5,649,986
3,559,735

2,090,251

5,965)

2,084,286

847,837
192,938
320,616
12,597

1,373,988

710,298

2,818		 Amount
$ 4,450,223

218,757
14,807


4,683,787
2,976,583


1,707,204

40,187)

1,667,017


691,852

165,765

280,112

25,957)

1,111,772

555,245


27,295		 %



(



















(




(





(




(


 95

5
-
100
63
37

1)
36
15

4

6

1)
24
12

1

(Continued)

154

(Continued)

(Continued)
Code
7050
Financial cost (Notes 4,
20, and 26)
7060
Share of profit or loss of
associates accounted
for using equity
method (Notes 4 and
11)
7100
Income from interests
7020
Other gains and losses
(Notes 4 and 20)
7270
Gains on reversal of
impairment
7630
Exchange gains or losses
(Notes 4 and 29)
7000
Total non-operating
income and
expenses

7900
Net profits before tax

7950
Income tax expenses (Notes 4
and 21)

8200
Net profit in the current year

Other comprehensive (Note 4)
Items that will not be
reclassified to profit or
loss
8311
Re-measurements of
defined benefit
plans (Note 17)
8316
Unrealized
valuation gains or
losses on
investment in
equity
instruments at fair
value through
other
comprehensive
income
8349
Income tax related
to items that will
not be reclassified
(Note 21)
8310

(Continued)		 2022
Amount
( $ 3,404 )
(
65,674 )
10,217
3,752
-

77,879


25,588

735,886

167,303


568,583

1,896
(
46,319 )
(
379)

(
44,802)

155

(Continued)

Code
Items that will be
reclassified to profit or
loss
8361
Exchange
differences
arising in the
translation of
foreign
operations
8370
Share of other
comprehensive
income of
associates
accounted for
using the equity
method (Note 11)
8399
Income tax related
to items that
might be
reclassified (Note
21)
8360

8300
Other
comprehensive
income (net after
tax)
8500
Total comprehensive income
for the year
Earnings per share (Note 22)
9710
Basic

9810
Diluted
 2022 %

1

-
-

1

-

10


 2021
Amount
$ 26,840
7,228

6,823)

27,245


17,557)

$ 551,026

$ 7.08
$ 7.00		 Amount
( $ 12,509 )
(
3,812 )

3,266

(
13,055)

(
2,170)

$ 417,735

$ 5.23
$ 5.19		 %

(

(










-

-
-
-
-
9

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

Chairman of the Board: Manager: Accounting Manager: HUNG-LIANG HSIEH MING-CHI HSU SHAO-CHE CHUANG

156

SCIENTECH CORPORATION and Subsidiaries Consolidated Statement of Changes in Equity January 1 to December 31, 2022 and 2021

Unit: NT$ thousand

Code
A1
Balance January 1, 2021
M7 Changes in ownership interests in
associates
Earnings distribution for 2020
B1
Legal reserve
B5
Cash dividends
B17
Reversal of special reserves
D1
2021 net income
D3
Other comprehensive income (loss)
after tax for 2021

Z1
Balance December 31, 2021
M7 Changes in ownership interests in
associates
Earnings distribution for 2021
B1
Legal reserve
B3
Special reserve
B5
Cash dividends
D1
2022 net income
D3
Other comprehensive income (loss)
after tax for 2022

Z1
Balance as of December 31, 2022
 Capital stock
Thousand
shares
Amount

81,139
811,390
-
-
-
-
-
-
-
-
-
-
-

-

81,139
811,390
-
-
-
-
-
-
-
-
-
-
-

-

81,139
$ 811,390
 Capital stock
Thousand
shares
Amount

81,139
811,390
-
-
-
-
-
-
-
-
-
-
-

-

81,139
811,390
-
-
-
-
-
-
-
-
-
-
-

-

81,139
$ 811,390
 Capital surplus

611,983

13,657

-

-

-

-

-


625,640

103,324

-

-

-

-

-

$ 728,964
 Retained earnings Retained earnings
Unappropriate
d earnings
1,226,465

-
(
30,658 )
(
148,606 )

1,308

419,905

361

1486,775

-
(
42,027 )
(
2,531 )
(
200,820 )

568,583

1,517

$ 1,793,497
 Other equity
Exchange
differences
arising in the
translation of
foreign
operations
Unrealized
valuation gains
or losses on
investment in
equity
instruments at
fair value
through other
comprehensive
income

(
11,775 )
-

-
-

-
-

-
-

-
-

-
-
(
13,055)

10,524

(
24,830 )
10,524

-
-

-
-

-
-

-
-

-
-

27,245
(
46,319)

$ 2,415
($ 35,795)
 Other equity
Exchange
differences
arising in the
translation of
foreign
operations
Unrealized
valuation gains
or losses on
investment in
equity
instruments at
fair value
through other
comprehensive
income

(
11,775 )
-

-
-

-
-

-
-

-
-

-
-
(
13,055)

10,524

(
24,830 )
10,524

-
-

-
-

-
-

-
-

-
-

27,245
(
46,319)

$ 2,415
($ 35,795)
 Treasury stock
(
50,659 )

-

-

-

-

-

-

(
50,659 )

-

-

-

-

-

-

($ 50,659)
Total
stockholders’
equity
Exchange
differences
arising in the
translation of
foreign
operations
(
11,775 )

-

-

-

-

-
(
13,055)

(
24,830 )

-

-

-

-

-

27,245

$ 2,415
Thousand
shares
81,139
-
-
-
-
-
-

81,139
-
-
-
-
-
-

81,139
 Legal reserve

245,683

-

30,658

-

-

-

-


276,341

-

42,027

-

-

-

-

$ 318,368
 Special reserve

13,083

-

-

-
(
1,308 )

-

-


11,775

-

-

2,531

-

-

-

$ 14,306

























































(
(		 2,846,170

13,657

-

-
(
148,606 )

419,905
(
2,170)
3,128,956

103,324

-

-
(
200,820 )

568,583
(
17,557)
$ 3,582,486

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

Chairman of the Board: HUNG-LIANG HSIEH

Manager: MING-CHI HSU

Accounting Manager: SHAO-CHE CHUANG

157

SCIENTECH CORPORATION and Subsidiaries Consolidated Statement of Cash Flows January 1 to December 31, 2022 and 2021

Unit: NT$ thousand

Code
Cash flow from operating activities
A10000
Net profits before tax

A20010
Income expenses
A20100
Depreciation
A20200
Amortization expense
A20300
Loss (Gain) on expected credit
impairment
A20900
Financial cost
A21200
Income from interests

A21300
Dividend Income

A22300
Share of profit or loss of
associates accounted for using
equity method
A22500
(Gain) loss on disposal and
retirement of property, plant,
and equipment

A23100
Gain on disposal of investments
A23700
Impairment loss on non-financial
assets
A23900
Unrealized gains on transactions
with associates
A24100
Unrealized exchange loss (gain)
A29900
Defined benefit cost
A30000
Net changes in operating assets and
liabilities
A31150
Notes receivable and accounts
receivable
A31160
Accounts receivable - related
parties
A31200
Inventories

A31230
Prepayments

A31240
Other current assets

A32125
Contract liabilities

A32150
Notes receivable and accounts
receivable

A32180
Other accounts payable

A32200
Short-term warranty provision
A32230
Other current liabilities
A32240
Net defined benefit liabilities

A33000
Cash flow from operating activities

A33100
Interest received
A33300
Interest paid

A33500
Income taxes paid

AAAA
Net cash generated by operating
activities
 2022
$ 735,886

113,603
259
12,597

3,404
(
10,217 )

(
800 )
65,674
(
90 )
(
6,710 )

50,784
5,965

27,596

-

152,356

52,501

( 2,951,720 )

( 1,218,427 )

(
95,175 )

4,495,207

1,009,163
(
2,398 )
3,482
3,324
(
100)

2,446,164

10,217
(
3,368 )

(
133,726)

2,319,287
 2021
$ 523,945
109,199
260
(
25,957 )
3,113
(
950 )
-
35,924
103
(
909 )
38,340
40,187
(
6,299 )
(
8,371 )
(
202,022 )
(
57,873 )
( 1,498,411 )
(
482,082 )
(
14,246 )
2,498,067
582,383
103,406
6,993
4,495
(
5,454)
1,643,841
950
(
3,165 )
(
67,911)
1,573,715

(Continued)

158

(Continued)

Code
Cash Flow from Investing Activities
B00010
Acquisition of financial assets at fair
value through other comprehensive
income

B01800
Acquisition
of
long-term
equity
investments under equity method
B02700
Acquisition of property, plant and
equipment

B02800
Proceeds from disposal or property,
plant and equipment
B06700
Increase in other non-current assets

B07600
Dividends received

BBBB
Net cash used in investing
activities

Cash Flow from Financing Activities
C00100
Increase in short-term borrowings
C00200
Decrease in short-term borrowings

C01600
Increase in long-term borrowings
C01700
Repayment of long-term borrowings

C04020
Repayment of principal of lease
liabilities

C04500
Cash dividends paid

CCCC
Net cash outflow from financing
activities

DDDD Effects of exchange rate changes on cash
and cash equivalents

EEEE
Increase in cash and cash equivalents

E00100 Cash and cash equivalents - beginning of
year

E00200 Cash and cash equivalents - end of year
 2022
( $ 18,631 )

1,868
(
410,082 )

1,058
(
5,646 )


800

(
421,633)

248,044
(
59,170 )

200,000
(
200,000 )
(
12,714 )

(
200,820)

(
24,660)


55,584

1,928,578

2,153,373

$ 4,081,951
 2021
( $ 155,726 )
-
(
70,025 )
122
(
2,502 )

-
(
228,131)
272,537
(
249,933 )
-
-
(
12,248 )
(
148,606)
(
138,250)
(
11,810)
1,195,524

957,849
$ 2,153,373

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

Chairman of the Board: Manager: Accounting Manager: HUNG-LIANG HSIEH MING-CHI HSU SHAO-CHE CHUANG

159

SCIENTECH CORPORATION and Subsidiaries

Notes to the Consolidated Financial Statements

January 1 to December 31, 2022 and 2021

(All amounts are in NT$ thousand unless otherwise specified)

1. Company History

SCIENTECH CORPORATION (the “Company” hereinafter) was incorporated in October 1979. Mainly engaged in the research and development, production, sales, and maintenance of process equipment for semiconductors, liquid crystal displays (LCDs), light-emitting diodes (LEDs), and solar power generation; wafer reclaim; and general import and export, the Company was listed on the Taiwan Stock Exchange (TWSE) in March 2013.

The consolidated financial statements are stated in the functional currency of the Company, which is New Taiwan Dollars.

  1. Date and procedures of approval of the financial statements

The consolidated financial statements were approved at the Board meeting on March 10, 2023.

3. Application of New Standards, Amendments, and Interpretations

  • (I) First-time application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC interpretations (IFRIC), and SIC interpretations (SIC) (hereinafter collectively referred to as “IFRSs”) approved and promulgated by the Financial Supervisory Commission (hereinafter referred to as “FSC”) won’t cause any material changes to the Group’s accounting policies.

  • (II) Application of the FSC-endorsed IFRSs in 2023

  • Application of New Standards, Amendments, and Effective Date Announced Interpretations by IASB

  • Amendments to IAS 1, “Disclosure of January 1, 2023 (Note 1) Accounting Policies”

  • Amendments to IAS 8, “Definition of Accounting January 1, 2023 (Note 2) Estimates”

  • Amendments to IAS 12, “Deferred Tax Related to January 1, 2023 (Note 3) Assets and Liabilities Arising from a Single Transaction”

  • Note 1: The amendments shall apply to the annual reporting period beginning on or after January 1, 2023.

160

  • Note 2: The amendments shall apply to the changes to the accounting estimates or policies occurring during the annual reporting period beginning on or after January 1, 2023.

  • Note 3: This amendment requires entities to recognize a deferred tax liability for the temporary difference associated with lease and decommissioning obligations that arise on January 1, 2022 and is applicable to all transactions occurred after such date.

  • As of the date when the consolidated financial statements were approved and

  • issued, the Group assessed the said amended standards and interpretations and found them to have no significant effects on the Group’s financial position and financial performance.

  • (III) IFRSs issued by the IASB but not yet approved and promulgated by the FSC

Application of New Standards, Amendments, and Effective Date Announced Interpretations by IASB (Note 1) Amendments to IFRS 10 and IAS 28, “Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 16, Lease Liability in a Sale and January 1, 2024 (Note 2) Leaseback IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendment to IFRS 17, “Initial Application of IFRS January 1, 2023 17 and IFRS 9—Comparative Information” Amendments to IAS 1, “Classification of Liabilities as January 1, 2024 Current or Non-current” Amendments to IAS 1, Non-current Liabilities with January 1, 2024 Covenants

  • Note 1: Unless otherwise specified, the above-mentioned new/ amended/ revised standards or interpretation shall become effective in the annual reporting periods beginning on or after each effective date.

  • Note 2: A seller-lessee is required to apply the amendments to IFRS 16 to any leaseback transactions arsing after the date of initial application of IFRS 16.

Up to the release date of the consolidated financial statements, the Group assessed the effects of the said amendments to the standards and interpretations on the financial position and performance on a continuous basis. The relevant effects will be disclosed after the assessment.

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4. Summary of significant accounting policies

  • (I) Compliance statement

The consolidated financial statements are prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs approved and promulgated by the FSC.

  • (II) Basis of preparation

Except for the financial instruments measured at fair value and the net defined benefit liabilities recognized at the present value of defined benefit obligations less the fair value of the plan assets, the consolidated financial statements were prepared on the basis of historical cost.

Fair value measurements are classified into Level 1, 2, and 3 based on the degree to which an input is observable and the significance of the input:

  1. Level 1 inputs: The quoted price in an active market for identical assets or liabilities that is accessible on the measurement date (before adjustment).

  2. Level 2 inputs: Other than quoted prices included in Level 1, the inputs that are observable for assets or liabilities directly (i.e. the price) or indirectly (i.e. inferred from the price).

  3. Level 3 inputs: The inputs that are not observable for assets or liabilities.

  4. (III) Criteria for classification of assets and liabilities as current or non-current Current assets include:

  5. Assets that are held mainly for trading purposes;

  6. assets expected to be realized within 12 months after the balance sheet date; and

  7. cash or cash equivalents (excluding those that are restricted for being used for exchange or settlement of liabilities within 12 months after the balance sheet date).

Current liabilities include:

  1. Liabilities that are held mainly for trading purposes;

  2. liabilities that will be settled within 12 months after the balance sheet date; and

  3. liabilities whose due date cannot be unconditionally extended to more than 12 months after the balance sheet date.

  4. Assets or liabilities that are not the above-mentioned current assets or current

  5. liabilities are classified as non-current assets or non-current liabilities.

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(IV) Basis of consolidation

Entities covered by the consolidated financial statements include the Company and the entities controlled by the Company (i.e., subsidiaries). The financial statements of the subsidiaries are adjusted to have their accounting policies be consistent with those of Group. All the transactions, account balances, profits, and expenses/losses between entities are eliminated during preparation of the consolidated financial statements.

For details of subsidiaries, shareholding percentage in them, and their business activities, refer to Note 10 and Appendix Tables 5 and 6.

(V)

Foreign currency

Entities preparing their own financial statements translated the transactions denominated in currencies other than their functional currency (i.e., foreign currencies) into their functional currency by applying the exchange rate prevailing on the transaction date.

Monetary items in foreign currencies are translated at the closing exchange rate on each balance sheet date. Exchange differences arising from settlement or translation of the monetary items are recognized in the profit or loss of the period.

Non-monetary items in foreign currencies measured at fair value are translated at the exchange rate prevailing on the date the fair value was determined. The exchange differences resulting therefrom are recognized in profit or loss of the period, or in other comprehensive income when changes in fair value of such items were designated to be recognized in other comprehensive income.

Non-monetary items in foreign currencies measured at historical cost are translated at the exchange rate on the date of transaction and are not retranslated.

During preparation of the consolidated financial statements, the assets and liabilities of the Company’s foreign operations (including the subsidiaries, associates, or branch companies of which the countries they operate or the currencies they use are different from those of the Group) are translated into NTD at the exchange rate prevailing on each balance sheet date. The income and expense items are translated at the average exchange rate of the period, and the exchange differences resulting therefrom are recognized in other comprehensive income.

(VI) Inventories

Inventories include raw materials, work-in-progress, finished goods, and products. Inventories are measured at the lower of cost and net realizable value. Cost and net

163

realizable values are compared on an item by item basis, except inventories of the same category. Net realizable value refers to the estimated selling price in a normal situation less the estimated cost needed to complete the work and the estimated cost needed to complete the sale. The weighted average method is used to calculate the inventory cost. (VII) Investment in associates

An associate refers to a company over which the Group has a significant influence, but it is not a subsidiary or joint venture.

The Group accounts for its equity in an associate using the equity method. Under the equity method, the investment in associates is initially recognized at its costs and the amount of increase or decrease in the carrying amount of such investment after the date of acquisition depends on the Group’s shares of profit/loss and other comprehensive income in the associates and joint ventures and the distributed profits. In addition, changes to the Group’s equity in the associates are recognized based on our shareholding ratio.

When the Group does not subscribe to new shares issued by associates based on its shareholding ratio, resulting in changes in the shareholding ratio and consequently to the net equity value of investment, the Group accounts for such changes by adjusting capital reserve - changes in the net equity of associates recognized under the equity method and investments under equity method. However, if subscription or acquisition of the shares is not based on the shareholding ratio, leading to a decrease in the Group’s ownership equity in the associates, the amounts related to the associate in other comprehensive income are reclassified according to the percentage of such decrease and treated with the same accounting treatment basis as the one which the associates' direct disposal of relevant assets or liabilities shall be in accordance with. If the said adjustment shall be debited to capital reserves, and the balance of capital reserves arising from investment under equity method is insufficient to be offset, the difference is debited to retained earnings.

When the Group’s shares of losses in the associates are equal to or exceeded our equity in the associates (including the carrying amount of investment in the associate under the equity method and other long-term equities that in nature are part of the net investment portfolio made by the consolidated company in the associate concerned), the Group does not recognize further losses. The Group recognizes additional losses and liabilities only when any legal obligation or constructive obligation is incurred or the Group made payment on behalf of the associates.

164

For impairment evaluation, the Group tests the entire investment book value for impairment as a single asset by comparing the recoverable amount and book value of the investment. Any recognized impairment loss is also part of the investment book value. Any reversal of the impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increased.

The profit or loss generated from the upstream, downstream, and side stream transactions between the Group and the associates is recognized in the consolidated financial statements only when such profit or loss is irrelevant to the Group’s equity in the associates.

  • (VIII) Property, plant and equipment

Property, plant, and equipment are initially recognized at cost and subsequently at cost net of accumulated depreciation and accumulated impairment.

Each significant part of the property, plants, and equipment is separately depreciated on the straight-line basis over their useful life. The Group reviews the estimated useful life, residual value, and method of depreciation at least once before the end of each year and prospectively recognizes the effect from changes in accounting estimates.

When property, plant, and equipment is disposed of, the difference between the net disposal proceeds and the asset book value is recognized in profit or loss.

  • (IX) Patent right

Patent rights acquired separately are initially measured in accordance with the cost and subsequently based on the cost net of accumulated amortization and impairment losses. Patent rights are amortized on the straight-line basis over their useful life. The Group reviews the estimated useful life, residual value, and method of amortization at least once before the end of each year and prospectively recognizes the effects of changes in accounting estimates.

  • (X) Impairments of property, plant, and equipment, right-of-use assets, and intangible assets

The Group assesses whether there are any signs indicating that any property, plant, and equipment, right-of-use assets, or intangible assets might be impaired on each balance sheet date. If any such indication exists, then the asset’s recoverable amount is estimated. When the recoverable amount of individual assets cannot be estimated, the Group estimates the recoverable amount of the cash-generating unit to which the assets belong. Corporate assets are allocated on a reasonable and consistent basis to the smallest group of cash-generating units

165

The recoverable amount is the higher of the fair value less costs of sale and the value in use. When the recoverable amount of any individual assets or cash-generating units is less than the book value, the book value of the individual assets or cashgenerating units is adjusted down to the recoverable amount, and the impairment loss is recognized in profit or loss.

(XI)

When the impairment loss is reversed subsequently, the book value of the asset or cash-generating unit is adjusted up to the revised recoverable amount. However, the increased book value shall not exceed the book value that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in prior years. The reversal of the impairment loss is recognized in profit or loss. Financial instruments

Financial assets and financial liabilities are initially recognized in the balance sheet when the Group becomes a party to the financial instrument contract.

Financial assets or financial liabilities other than those measured at fair value through profit or loss are initially recognized at the fair value plus the transaction costs that can be directly attributed to acquisition or issuance of such financial assets or liabilities. Any transaction cost directly attributable to the acquisition or issuance of the financial assets or financial liabilities measured at fair value through profit or loss is immediately recognized in profit or loss.

  1. Financial assets

The arms-length transactions of financial assets are recognized and derecognized using the transaction date accounting method.

  • (1) Type of measurement

The Group’s financial assets include financial assets measured at fair value through profit or loss, financial assets measured at amortized cost, and investment in equity instrument measured at fair value through other comprehensive income.

  • A. Financial assets at fair value through profit or loss

Financial assets measured at fair value through profit or loss refer to those designated to be measured at fair value through profit and loss. Financial assets are designated to be measured at fair value through profit or loss upon initially recognition if such designation could eliminate or materially reduce inconsistency in measurement or recognition.

166

Financial assets measured at fair value through profit or loss are measured at fair value; the dividends and interest derived therefrom are recognized in other income and interest income, respectively. Gains or losses from re-measurement are recognized in other gains and losses.

B. Financial assets at amortized cost

When the Group's invested financial assets meet both of the following two conditions, they are classified as financial assets measured at amortized cost:

  • a. The financial assets are held within a business model whose objective is collecting contractual cash flows; and

  • b. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After the initial recognition, the financial assets measured at amortized cost (including cash and cash equivalents and receivables [including those due from related party]) are measured at the amortized cost equal to the total book value determined under the effective interest method less any impairment losses, and any gain or loss from foreign currency translation is recognized in profit or loss.

Interest income is calculated as the effective interest rate times the total book value of financial assets, except under the following two circumstances:

  • a. For purchased or originated credit-impaired financial assets, the interest income is calculated as the credit-adjusted effective interest rate times the amortized cost of the financial assets.

  • b. For financial assets that are not purchased or originated creditimpaired but subsequently become credit-impaired, the interest income is calculated as the effective interest rate times the amortized cost of the financial assets, in all subsequent periods following the period in which the impairment occurred.

  • Financial assets are deemed to be credit-impaired upon the

  • occurrence of significant financial difficulties confronting the issuer or debtor; default; or the circumstance that the debtor is likely to file for bankruptcy or other financial reorganization.

167

Cash equivalents include time deposits that are highly liquid, readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value, and that mature within three months after the acquisition date; cash equivalents are used to meet short-term cash commitments.

  • C. Investment in equity instruments at fair value through other comprehensive income

At initial recognition, the Group may make an irrevocable election to measure the investment in equity instruments that are held not for trading, that are not recognized by the acquirer in a business merger, and that have no consideration, at fair value through other comprehensive income.

Investment in equity instruments measured at fair value through other comprehensive income is measured at fair value. Subsequent changes in the fair value are recognized in other comprehensive income and accumulated in other equity.

The dividends derived investment in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Group’s right to receive dividends is determined, except under the circumstance that such dividends apparently represent a partial return of the investment cost.

(2) Impairment of financial assets

The Group assesses impairment losses on the financial assets (including accounts receivable [including those due from related parties]) measured at amortized cost based on the expected credit losses on each balance sheet date.

Loss allowance for accounts receivable is recognized based on the lifetime expected credit losses. The Group first assess whether the credit risk on other financial assets significantly has increased after the initial recognition. When the increase is not significant, the loss allowance for the financial assets is recognized at the 12-month expected credit losses; when the increase is significant, the loss allowance is recognized at the lifetime expected credit losses.

168

Expected credit losses are the weighted average credit losses with the probability of default ('PD') as the weight. 12-month expected credit losses represent the expected credit losses on financial instruments from any potential default within 12 months after the reporting date. Lifetime expected credit losses represent the expected credit losses on financial instruments from any potential default during the expected lifetime.

For the purpose of internal credit risk management, financial assets are deemed to be defaulted when any of the following circumstance occurs, without consideration of the collaterals held:

A. Any internal or external information indicates that a debtor is impossible to pay off the debts.

B. Any contractual payment is overdue, unless any reasonable and supportable information demonstrates that a more lagging default criterion is more appropriate.

The impairment loss on all financial assets is deducted from the book value of the financial assets through their allowance account.

  • (3) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred to other entities.

For derecognition of the entire financial assets measured at amortized cost, the differences between the book value and the received consideration are recognized in profit or loss. For derecognition of the entire investments in equity instruments measured at fair value through other comprehensive income, the cumulative gain or loss is directly transferred to retained earnings and not reclassified as profit or loss.

  1. Equity instruments

Equity instruments issued by the Group are recognized as the amount of consideration received, less the direct cost of issuance.

When a reacquired equity instrument is originally owned by the Company, the re-acquisition is recognized as a deduction to equity. Purchase, sale, issuance,

169

or cancellation of the equity instruments owned by the Company are not recognized in profit or loss.

  1. Financial liabilities

  2. (1) Subsequent measurement

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

  • (2) Derecognition of financial liabilities

For derecognition of financial liabilities, the differences between the book value and the consideration paid are recognized in profit or loss.

  • (XII) Short-term warranty provision

The warranty obligation that ensures agreement between products and agreed specifications is management’s best estimate of the expenditure to settle the Group’s obligations, and is recognized at the time when revenue is recognized for underlying products.

  • (XIII) Revenue recognition

After identifying the performance obligations under a contract with customers, the Group allocates the transaction price to each performance obligation and recognizes the allocated amount as revenue after each performance obligation is fulfilled. The Group’s revenue comes from equipment trading and wafer reclamation, and is recognized when products are accepted by customers; or when they are shipped or delivered to the place designated by customers, depending on the contractual terms. Before being recognized as revenue, advance receipts are recognized as contract liability.

  • (XIV) Lease

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

When the Group is a lessee, the lease payment from the leases of low-value underlying assets to which the exemption of recognition is applied and short-term lease is recognized in expenses on the straight-line basis over the lease term, while right-ofuse assets and lease liabilities with respect to other leases are recognized on the lease commencement date.

The right-of-use assets are initially measured at cost(including the initial recognized amount of lease liabilities), and subsequently measured at the cost net of accumulated depreciation and accumulated impairment losses, adjusted for

170

remeasurements of lease liabilities. Right-of-use assets are separately presented in the consolidated balance sheet.

Right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-ofuse assets or the end of the lease term.

Lease liabilities is initially measured at the present value of lease payment (fixed payments). If the interest rate implicit in a lease can be readily determined, the lease payments are discounted at the interest rate. When such interest rate cannot be readily determined, the lessee's incremental borrowing rate of interest is used.

Subsequently, the lease liabilities are measured at amortized cost under the effective interest method, and the interest expenses are amortized over the lease term. When future lease payments change as a result of a change in the lease term, the Group re-measures the lease liabilities and adjust the right-of-use assets accordingly. However, the residual remeasurements are recognized in profit or loss when the book value of right-of-use assets is reduced to zero. Lease liabilities are separately presented in the consolidated balance sheet.

(XV) Government grants

Government grants may be recognized only when it is reasonable to ensure that the Group will comply with the conditions incidental to the government grants and the subsidies may be received affirmatively.

Government grants related to any gains are recognized in other income on a systematic basis within the period when the costs to be subsidized by the government are recognized in expenses by the Group. Government grants with a condition by which the Group is required to acquire non-current assets through acquisition, construction, or by other means are initially recognized as deferred revenue and subsequently transferred to profit or loss on a reasonable and systematic basis over the useful live of the underlying assets.

If the government grants are intended to make up the expenses or losses that have occurred, or immediately finance the Group without incurring any future cost, such subsidies are recognized in profit or loss during the period when they can be received. (XVI) Employee benefits

  1. Short-term employee benefits

Short-term employee benefits are measured at non-discounted amount expected to be paid in exchange for the services to be provided by the employees.

171

2. Post-employment benefit

The pension contributed under the Defined Contribution Pension Plan is recognized in expenses during the period when employees provide services.

Defined benefit cost under the Defined Benefit Pension Plan is calculated actuarially using the projected unit credit method. Service costs and net interest on net defined benefit liabilities are recognized as employee benefit expenses when they are incurred. Remeasurements are recognized in other comprehensive income and presented in retained earnings when they occurred, and are not reclassified to profit or loss in subsequent periods.

(XVII) Income tax

Tax expenses are the total of current income tax and deferred income tax.

  1. Current income tax

The Group determines the income (loss) for the current period in accordance with the laws and regulations prevailing in each taxation jurisdiction and, based this, calculates the income tax payable (recoverable).

The additional income tax on undistributed earnings that is calculated according to the Income Tax Act of the Republic of China is recognized in the year when the related resolution is made at the shareholders’ meeting.

The adjustments to the income tax payable in the previous year are recognized in the current income tax.

  1. Deferred income tax

Deferred income tax is calculated based on the temporary difference between the book value of assets and liabilities and the tax basis for calculation of taxable income.

Deferred income tax liabilities are generally recognized based on all taxable temporary differences; deferred income tax assets are recognized when taxable income sufficiently enough to offset the deductible temporary differences and loss carryforwards is highly likely in the future.

Taxable temporary differences related to investment in subsidiaries and associates are recognized in deferred income tax liabilities except that the Group can control the timing of reversal of the taxable temporary differences and that such differences are not likely to be reversed in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that

172

it is probable that taxable profit will be available against which the deductible temporary difference can be utilized in the foreseeable future.

The book value of deferred income tax assets is reviewed at each balance sheet date. When any of the deferred income tax assets is not likely to have adequate taxable income necessary for the recovery of all or part of the assets anymore, the book value thereof is reduced. Those that are not originally recognized in deferred income tax assets are reviewed at each balance sheet date. When any of those is likely to generate taxable income necessary for the recovery of all or part of the assets in the future, the book value thereof is increased.

Deferred income tax assets and liabilities are measured at the tax rate of the period in which the liabilities or assets are expected to be settled or realized. The tax rate is subject to the tax rate and tax law legislated or substantively legislated on the balance sheet date. The deferred income tax liabilities and assets are measured to reflect the tax consequence on the balance sheet date arising from the method that the Group expects to use to recover or settle the book value of the liabilities and assets.

  1. Current and deferred income taxes

Current and deferred income taxes are recognized in profit or loss, or in other comprehensive income if they are related to the current and deferred income taxes designated to be recognized in other comprehensive income.

  1. Significant Accounting Judgments, Assumptions, and Major Sources of Estimation Uncertainty

For adoption of the accounting policies, the management, based on historical experience and other relevant factors, must make judgments, estimates and assumptions related to the information that cannot be readily acquired from other sources. The actual results may differ from those estimates.

The Group takes into account the development of the COVID-19 pandemic and its effect on the Taiwan economy when making significant accounting estimates for cash flows, growth rate, discount rate, and profitability. The management will continue to review the estimates and basic assumptions. When the changes in the estimates only affect the current period, they are recognized in the period in which they are made; when the changes in the estimates affect the current and future periods at the same time, they are recognized in the period in which they are made and in future periods.

173

Through an assessment, the management of the Group does not think an uncertainty exists in material accounting judgments, estimates, or assumptions.

6. Cash and cash equivalents

Cash and cash equivalents
Cash on hand and working capital
Bank check and demand deposit
Cash equivalents
Time deposit whose initial
maturity date will be due
within 3 months		 December31,2022
$ 570
3,638,016

443,365
$ 4,081,951		 December31,2021






$ 468
2,140,979
11,926
$ 2,153,373

The annual interest rate for bank time deposits was 3.55% ~ 4.80% and 0.17% on December 31, 2022 and 2021, respectively.

  1. Financial assets at fair value through other comprehensive income

December 31, 2022 December 31, 2021

Investment in equity instruments measured at fair value through other comprehensive income Domestic investments Shares of TWSE-listed companies through private placement SPIROX CORP. $ 89,205 $ 112,237 Overseas investments December 31, 2022 December 31, 2021 Shares not traded on an exchange or OTC INFINITESIMA LIMITED 49,357 54,013 $ 138,562 $ 166,250

The Group invested in the common shares of the aforementioned companies according to its medium-term and long-term strategies, and expected to gain profits through long-term investment. Since the Group's management deemed that the recognition of short-term changes in the investment’s fair value in profit or loss was not consistent with the said long-term investment plan, they opted to have the investment measured at fair value through other comprehensive income.

174

The dividend income of NT$800 thousand (recognized under other income) by the Group in 2022 had to do with the shares held as of December 31, 2022.

8. Notes receivable and accounts receivable (including those due from related parties)

Notes receivable
Accounts receivable (including
those due from related parties)
Less: Allowance for doubtful
accounts		 December31,2022
$ 1,904

912,410
914,314

54,616
$ 859,698		 December31,2021 December31,2021







$ 5,296
1,096,919
1,102,215
41,830
$ 1,060,385

The Group’s average credit period for sales of goods is 120 days on average. Accounts receivable paid within 60 days after the invoice date or the sale date won’t be charged any interest. If accounts receivable are not paid within 60 days, the Group will assess the credit status of each individual transaction party on a business month to measure possible gains or losses and reduce possible losses.

The Group recognizes the loss allowance for notes receivable and accounts receivable (including those due from related parties) based on the lifetime expected credit losses. The lifetime expected credit losses are calculated by considering the customer’s default record and current financial position, and the industrial and economic conditions. When there is any evidence showing that the trading counterparty is facing serious financial difficulties and the Group cannot estimate a reasonable recoverable amount, the Group directly writes off related notes receivable and accounts receivable, but will continue recourse activities. Any recovered amount through the recourse activities is recognized in profit or loss.

The Group recognizes the loss allowance for notes receivable and accounts receivable (including those due from related parties) as follows: December 31, 2022

ECL rate
Total book value

Loss allowance (lifetime
ECL)
Amortized cost
 0–180 days 1 81–273 days 2 74–365 days 3 66–540 days 5 41–730 days
 More than 731
days		 Total


-
$ 755,004

-
$ 755,004
(
 5%
$ 31,767


1,588)
$ 30,179
(
 10%
$ 39,241


3,924)
$ 35,317
(
 45%
$ 66,726


30,027)
$ 36,699
(
 70%
$ 8,330


5,831)
$ 2,499
(
 100%
$ 13,246


13,246)
$ -
(
 $ 914,314

54,616)
$ 859,698

December 31, 2021

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ECL rate
Total book value

Loss allowance (lifetime
ECL)
Amortized cost
 0–180 days 1 81–273 days 2 74–365 days 3 66–540 days 5 41–730 days
 More than 731
days		 Total


-
$ 951,494

-
$ 951,494
(
 5%
$ 55,007


2,750)
$ 52,257
(
 10%
$ 43,332


4,333)
$ 38,999
(
 45%
$ 28,645


12,891)
$ 15,754
(
 70%
$ 6,270


4,389)
$ 1,881
(
 100%
$ 17,467


17,467)
$ -
(
 $1,102,215

41,830)
$1,060,385

Changes in the loss allowance for notes receivable and accounts receivable (including those due from related parties) are as follows:

Balance - beginning of period
Less: Impairment loss (reversed) in
the year
Less: Actual amount written off in
the year
Differences from translation of
foreign currencies
Balance - end of year		 2022
$ 41,830
12,597
(
110 )

299
$ 54,616		 2021
$ 67,955
(
25,957 )
(
29 )
(
139)
$ 41,830

The Group did not hold any collateral against the balance of notes receivables and accounts receivables (including those due from related parties).

Customers who individually account for 10% of the Group’s total accounts receivable (including those due from related parties) are as follows:

December31,2022
Company A
-		 December31,2021
Company C
Company A

9. Inventories

ntories
Products
Finished-goods
Work-in-process
Raw materials
Cost of sales related to inventories
Loss on inventory devaluation		 December31,2022
$ 4,199,165
162,397
305,647

607,091
$ 5,274,300
2022
$ 3,559,735
$ 50,784		 December31,2021




$ 1,786,536
100,902
254,892
214,904
$ 2,357,234
2021


$ 2,976,583
$ 64,140

10. Subsidiary

Entities in the consolidated financial statements are as follows:

176

(SCIENTECH MATERIALS) Name of investor

SCIENTECH
CORPORATION

SCIENTECH
CORPORATION

SCIENTECH
CORPORATION

SCIENTECH
CORPORATION

SCIENTECH
CORPORATION

SCIENTECH
CORPORATION

SCI

SCI

SII

SCIENTECH
ENGINEERING
SHANGHAI

SCIENTECH MATERIALS CORPORATION
NATGEM INC. (NATGEM)
ACROMASS TECHNOLOGIES, INC.
(ACROMASS)		 Shareholdingratio
Name of subsidiary
Main business activities
December
31,2022
December
31,2021
Descri
ption
SCI
Investment
100
100
ACROMASS
General instrument and precision
instrument manufacturing
100
100
NATGEM
Sale of food and supplies
100
100
SCIENTECH
MATERIALS
Manufacturing and sale of energy-
efficient products
100
100
(Notes
1 and
2)
SC GMBH
International trade
100
100
TRANSCEND
CAPITAL
CORP.
Investment
100
100
SII
Investment
100
100
SCU
Trading of semiconductor equipment
and peripherals
100
100
SCIENTECH
ENGINEERING
SHANGHAI
Trading and maintenance of
semiconductor equipment and
peripherals
100
100
SCIENTECH
ENGINEERING
HONG KONG
International trade
100
100
SCIENTECH INVESTMENT
CORP. (SCI)
SIMPLE INVESTMENT
CORP. (SII)
SCIENTECH ENGINEERING CORP.
(SHANGHAI)
SCIENTECH ENGINEERING USA
CORP. (SCU)
SCIENTECH ENGINEERING (HONG
KONG) LIMITED
TRANSCEND
CAPITAL CORP.
SCIENTECH CORPORATION
SCIENTECH GMBH
(SC GMBH)

Note 1: SCIENTECH MATERIALS was dissolved through a resolution reached at the Board of Directors meeting dated August 30, 2021. As of December 31, 2022, the liquidation process was not yet completed.

Note 2: The profit or loss of SCIENTECH MATERIALS for 2022 and 2021 was computed based on the financial statements for the same period that were not

177

audited by CPAs. The management of the Group didn’t think that not having SCIENTECH MATERIALS’ financial statements audited by CPAs would cause any material impact.

11. Investments accounted for using equity method

December 31, 2022 December 31, 2021 Significant associate XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. $ 457,968 $ 414,436 Individually insignificant associate 36,770 41,974 $ 494,738 $ 456,410

(I) Significant associate

Proportion of Shareholding and Voting Right Main business December 31, December 31, Company name Main business activities premises 2022 2021 XTEK Manufacturing and sale China 17.21% 22.36% SEMICONDUCT of semiconductor OR (HUANGSHI) equipment and CO., LTD. peripherals

The Group’s share of profits/ losses and other comprehensive income in associates under the equity method were recognized based on the financial statements for the same period that were audited by CPAs.

The following financial information summary is prepared based on the associates’ IFRS-based individual financial statements, and has reflected the adjustments required for adoption of the equity method.

XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD.

Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
The Group’s shareholding ratio
The Group’s equity
Unrealized
gains
on
downstream transactions
Others
Investment book value		 December31,2022
$ 1,630,138
2,800,076
(
265,517 )
(1,218,321)
$ 2,916,376
17.21%
$ 502,039
(
46,152 )

2,081
$ 457,968		 December31,2021
$ 845,158
2,019,303
(
211,200 )
(
628,454)
$ 2,024,807
22.36%
$ 452,747
(
40,187 )

1,876
$ 414,436

178

Net loss in the current year
Other comprehensive income
Total comprehensive income		 2022
( $ 318,577 )

-
($ 318,577)		 2021
( $ 167,680 )

-
($ 167,680)

Although the Group’s shareholding in the significant associate did not reach 50%, the Group was individually the largest shareholder. After considering the number and dispersion of voting shares held by other shareholders, the Group found the shareholdings are not diffuse. As a result, the Group is not yet able to direct the company’s relevant activities and thus does not have control over it. The Group thinks that it has only significant influence over the company and thus regards the company as an associate accounted for using the equity method.

XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. launched a series follow-on offerings during March and June 2022. Failing to subscribe to the follow-on offering in proportion to its shareholding percentage, the Group saw its consolidated shareholding in XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. dropped from 22.36% to 17.21%. Therefore, the Group reclassified the amount already recognized in other comprehensive income proportionally, and recognized gains on disposal of investments in the amount of NT$5,426 thousand. In addition, since the net equity value of the investee increased, capital reserves - associates accounted for using equity method were adjusted by NT$103,324 thousand. Hence, although the Group held less than 20% stake in XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. the Group still wielded significant influence over it because the Group had a representative on its board of directors. Therefor, XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. was accounted for using the equity method.

For the main business activities, main business premises, and company registration information of the said associates, refer to Appendix Table 6 Investment in Mainland China.

  • (II) Summary information on individually insignificant associates

2022

2021

179

The Group’s share Net profit (loss) for the year ( $ 4,574 ) $ 1,530 Other comprehensive income ( 46 ) 9 Total comprehensive income ( $ 4,620 ) $ 1,539

Although holding less than 20% of the shares of some individually insignificant associates, the Group has a representative in their board of directors and thus has significant influence over them.

The said investees accounted for using equity method, and the Group’s share of profit or loss and other comprehensive income in them were computed based on the financial statements not audited by CPAs. However, the management of the Group did not think that not having the financial statements audited by CPAs would cause any material impact.

12. Property, plant and equipment

Cost

Balance as of
January 1, 2022
Increase

Decrease

Reclassification

Net exchange
differences
Balance as of
December 31, 2022
Accumulated
depreciation
Balance as of
January 1, 2022
Depreciation

Decrease

Reclassification
 L
a
n
d


$ 280,062


302,200

-


-

-

$ 582,262





 B u il di n gs
a
n
d
structures

$ 997,978

39,719
(
21,918 )
-

932

$ 1,016,711

$ 374,026

33,345
(
21,918 )
-
 Machinery
a
n
d
equipment
$ 442,300

46,972
(
12,520 )
6,337

-

$ 483,089

$ 163,350

57,610
(
12,517 )
(
1,741 )		 O t h e r
f a c i l i t i e s
$ 47,212

15,315
(
6,146 )
250

223

$ 56,854

$ 18,956

9,459
(
5,181 )
(
28 )		 Unfinished
construction
$ -

19,736

-

-

-

$ 19,736

$ -

-

-


-
 T o t a l















$ 1,767,552
423,942
(
40,584 )
6,587

1,115
$ 2,158,652
$ 556,332
100,414
(
39,616 )
(
1,769 )

180

Net exchange
differences
Balance as of
December 31, 2022
Net amount on
December 31, 2022
Cost

Balance January 1,
2021
Increase

Decrease

Reclassification

Net exchange
differences
Balance December
31, 2021
Accumulated
depreciation and
impairment
Balance as of
January 1, 2021
Impairment loss
reversed
Depreciation

Decrease

Reclassification

Net exchange
differences
Balance as of
December 31, 2021
Net amonut on
December 31, 2021

$ 582,262

L
a
n
d


$ 280,062


-

-


-

-

$ 280,062









$ 280,062
298

$ 385,751

$ 630,960

B u il di n gs
a
n
d
structures

$ 999,690

9,983
(
11,215 )
-

(
480)

$ 997,978



$ 355,158

-

30,218
(
11,215 )
-

(
135)

$ 374,026

$ 623,952
-

$ 206,702

$ 276,387

Machinery
a
n
d
equipment
$ 598,969

17,007
(
106,854 )
(
66,822 )

-

$ 442,300



$ 249,797

(
25,800 )
58,810
(
106,733 )
(
12,724 )

-

$ 163,350

$ 278,950
11

$ 23,217

$ 33,637

O t h e r
f a c i l i t i e s
$ 34,762

16,592
(
3,880 )

-
(
262)

$ 47,212


$ 15,482


-
7,327
(
3,776 )

-
(
77)

$ 18,956

$ 28,256

$ -

$ 19,736

Unfinished
construction
$ -

-

-

-



$ -


$ -

-

-

-

-



$ -

$ -
309
$ 615,670
$ 1,542,982
T o t a l

















$ 1,913,483
43,582
(
121,949 )
(
66,822 )
(
742)
$ 1,767,552

$ 620,437
(
25,800 )
96,355
(
121,724 )
(
12,724 )
(
212)
$ 556,332
$ 1,211,220

Since the Group sold the machinery and equipment for which an impairment loss had been recognized, the Group recognized an impairment loss reversal gain of 25,800 thousand in 2021.

The Group’s property, plant, and equipment is solely for own use.

Depreciation is provided on a straight line basis over the following useful lives:

Buildings and structures
Plant and main structures 20–50 years
Electrical, plumbing & air
conditioning equipment 3–10 years
Machinery and equipment 5–10 years
Other facilities 3–5 years

The Group assessed the useful life of each significant component of property, plant , and equipment, and depreciated them individually.

181

Proceeds for acquisition of property, plant, and equipment include prepayments for

equipment and equipment payables; Below is the reconciliation:

Increase in property, plant and
equipment
Increase (decrease) in
prepayments for equipment
Decrease (increase) in equipment
payables (presented under other
payables)		 2022
$ 423,942
(
31,292 )

8,432
$ 401,082		 2021

(
 $ 43,582
45,056

18,613)
$ 70,025

13. Lease agreement

  • (I) Right-of-use assets
Right-of-use assets
Right-of-use assets, net
Land
Buildings and structures
Other facilities
Increase in right-of-use assets
Depreciation expenses - Right-
of-use assets
Land
Buildings and structures
Other facilities
Lease liabilities
Book value of lease liabilities
Current
Non-current		 December31,2022
$ 64,584
2,951

901
$ 68,436
2022
$ 2,291
$ 3,942
7,208

2,039
$ 13,189
December31,2022
$ 7,323
$ 63,594		 December31,2021


$ 66,831
9,269
2,940
$ 79,040
2021
$ 1,166
$ 3,730
7,075

2,039
$ 12,844
December31,2021


$ 12,059
$ 68,984
  • (II) Lease liabilities

The range of discount rates for lease liabilities is as follows:

Land
Buildings and structures
Other facilities		 December31,2022
2.00%-3.00%
0.78%–3.00%
0.92%		 December31,2021
2.00%
0.88%–3.00%
0.92%–1.04%

(III) Material lease activities and terms

The Group leased land from Chairman HUNG-LIANG HSIEH to construct buildings as offices under a lease contract that has a lease term of 5 years, will

182

automatically renew upon expiration of a lease term, and gives the Group the option right to rent and buy the buildings. The Group may not sublease or consign the underlying assets of the lease, in whole or in part, unless otherwise agreed by the Lessor.

(IV) Other lease information

Other lease information
Short-term lease expense
Total cash outflow from leases		 2022
$ 11,576
$ 25,828		 2021


$ 9,647
$ 23,476

For property, plant, and equipment leases which qualify as a short-term lease, the Group elected to apply the recognition exemption to them and thus did not recognize right-of-use assets and lease liabilities for them.

14. Other assets

Other assets
Restricted assets
Long-term prepayments
Guarantee deposits paid
Other receivables
Others
Current
Non-current
Short-term borrowings
Unsecured loans
Loans against letter of credits
Credit loans
Annual interest rate		 December31,2022
$ 171,926
28,208
4,659
7,835

11,533
$ 224,161
$ 189,441

34,720
$ 224,161
December31,2022
$ 230,661
200,000
$ 430,661
0.50%–1.40%		 December31,2021
$ 81,243
20,943
6,095
3,886

9,781
$ 121,948
$ 93,000

28,948
$ 121,948
December31,2021
$ 44,642
200,000
$ 244,642
0.70%–0.75%

15. Short-term borrowings

The terms pertaining to the credit limits of some of the Group’s bank borrowings mentioned above stipulate financial restrictions, with which the Group fully complied.

16. Other accounts payable

December 31, 2022 December 31, 2021 Salary and bonus payable $ 123,321 $ 132,970

183

Remuneration payable to
employees and directors
Equipment payable
Others		 December31,2022
66,000
16,056
143,017
$ 348,934		 December31,2021 December31,2021


55,000
24,488
143,931
$ 356,389

17. Post-employment benefit plan

(I) Defined contribution plan

The retirement scheme under the “Labor Pension Act” to which the Company and all subsidiaries in the territory of the Republic of China apply are the defined contribution pension plan managed by the government. A pension equal to 6% of employee’s monthly wage shall be contributed to the personal labor pension account with the Bureau of Labor Insurance.

Employees of subsidiaries in China are members of the retirement benefit plan managed by the Chinese local government. Such subsidiaries are required to fund the retirement benefit plan by contributing a certain percentage of salary cost to the plan. The Group’s obligation under such a government-run retirement benefit plan is limited to contributing a certain monetary amount.

(II) Defined benefit plan

The pension system adopted by the Company according to the “Labor Standards Act” is the defined benefit pension plan managed by the government. The years of service rendered and the average wage of six months prior to the approved retirement date shall be the reference for calculation of the pension to be paid to the employee. The Company appropriates 3% of the total monthly wage of an employee as the pension and remits the amount to the Labor Pension Fund Supervisory Committee, which will deposit the amount in a dedicated account under its name with the Bank of Taiwan. Before the end of each year, if the assessed balance in the account is inadequate to make a full payment of pensions to the employees who may meet the retirement conditions in the next year, the Company will make up the difference in one appropriation before the end of March in the following year. The account is managed by the Bureau of Labor Funds, Ministry of Labor, so the Company does not have the right to influence the investment management strategies.

The amounts of the defined benefit plan included in the consolidated balance sheet are listed as follows:

184

Present value of defined benefit
obligations
Fair value of plan assets
Net defined benefit liabilities
(assets)		 December31,2022
$ 5,103
(
6,945)
($ 1,842)		 December31,2021 December31,2021

(
(
(
 $ 5,333

5,179)
$ 154
Changes in net defined benefit liabilities (assets) are as follows:
Present value
of defined
benefit
obligations
Fair value of
plan assets
Balance January 1, 2022
$ 5,333
($ 5,179)

Financial cost
Recognized in profit or loss
- interest expense
(income)

31
(
31)

Remeasurements
Return on plan assets
(excluding the amount
included in net interest)
- (
1,635 )
Actuarial gain - change in
financial assumption
(
141 )
-
Actuarial loss - experience
adjustment
(
120)

-

Recognized in other
comprehensive income
(
261)
(
1,635)

Contribution by employer

-
(
100)

Balance December 31, 2022
$ 5,103
($ 6,945)

Balance January 1, 2021
$ 42,967
($ 28,537)

Previous service cost and
settlement gains
(
8,426 )
-
Recognized in profit or loss
- interest expense
(income)

170
(
115)

Remeasurements
(
8,256)
(
115)

Return on plan assets
(excluding the amount
included in net interest)
- (
357 )
Actuarial loss - change in
financial assumption
(
1,002 )
-
Actuarial gain - change in
demographic assumption
140
-
Actuarial gain - experience
adjustment

768

-

Recognized in other
comprehensive income
(
94)
(
357)

Contribution by employer
- (
928 )		 Net defined
benefit
liabilities(asset
s)
$ 154

-
(
1,635 )
(
141 )
(
120)
(
1,896)
(
100)
($ 1,842)
$ 14,430
(
8,426 )

55
(
8371)
(
357 )
(
1,002 )

140

768
(
451)
(
928 )

185

Settlement

Balance December 31, 2021
 Present value
of defined
benefit
obligations
(
29,284)

$ 5,333
 Fair value of
plan assets

24,758

($ 5,179)
 Net defined
benefit
liabilities(asset
s)		 Net defined
benefit
liabilities(asset
s)
(
(		 (
 4,526)
$ 154

The Company is exposed to the following risks due to the pension system under the “Labor Standards Act”:

  1. Investment risk: The Bureau of Labor Funds, Ministry of Labor separately has invested the labor pension fund in domestic (foreign) equity and debt securities, and bank deposits. The investment is conducted at the discretion of the Bureau or under the mandated management. However, the profit generated from the Group’s plan assets shall be calculated with an interest rate not below the interest rate for a 2-year time deposit with local banks.

  2. Interest rate risk: A decrease in the interest rates of government bonds leads to an increase in the present value of the defined benefit obligation, and the return on debt investment of the plan assets will be increased accordingly. The net defined benefit liabilities may be partially offset by both increases.

  3. Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salary of the plan participants. Therefore, the present value of the defined benefit obligation would be increased by an increase in the plan participants’ salary.

The Company’s present value of the defined benefit obligation was calculated actuarially by a qualified actuary. The major assumptions on the date of measurement are as follows:

are as follows:
Discount rate
Rate of expected salary increase		 December31,2022
1.15%
3.00%		 December31,2021
0.60%
3.00%

If there was any reasonably possible change to the major actuarial assumptions separately, the resulting increase (decrease) in the present value of the defined benefit obligation in the situation where all the other assumptions remained the same is as follows:

follows:
Discount rate
Increase by 0.25%
Decrease by 0.25%		 December31,2022
($ 62)
$ 63		 December31,2021
(
 (
 $ 76)
$ 78

186

Rate of expected salary increase
Increase by 0.25%
Decrease by 0.25%		 December31,2022
$ 56
($ 55)		 December31,2021 December31,2021

(
(		 $ 69
$ 68)

Since the actuarial assumptions might be correlated to each other and it is unlikely that a single assumption changes alone, the aforesaid sensitivity analysis might not reflect the actual changes in the present value of the defined benefit obligation.

Expected contribution within
1 year
Average maturity of defined
benefit obligations		 December31,2022
$ 101
4 years		 December31,2021 December31,2021
$ 101
5 years
  1. Equity (I) Common shares
Common shares
Number of authorized shares
(thousand shares)
Authorized capital
Number of issued shares fully
paid (thousand shares)
Issued capital		 December31,2022

100,000
$ 1,000,000

81,139
$ 811,390		 December31,2021






100,000
$ 1,000,000
81,139
$ 811,390

A share of issued common stock had a par value of NTD 10 and was entitled to one voting right and dividends.

  • (II) Capital surplus
1.
2.		 Available for makeup of
loss, distribution of cash
dividends, or transfer into
capital
Additional paid-in capital
Consolidation excess
Treasury stock transactions
Only available for makeup
of loss
Changes in equity of
associates recognized
under equity method		 December31,2022
$ 468,714
29,831

25,617
524,162
204,802		 December31,2021 December31,2021






$ 468,714
29,831

25,617
524,162
101,478

187

December 31, 2022 December 31, 2021 $ 728,964 $ 625,640

  1. These capital reserves may be used to make up losses, to distribute cash dividends, or to be transferred into the capital if the Company is not in the red. However, the amount of the transfer into the capital shall be limited to a certain percentage of the paid-in capital in every year.

  2. Such capital reserves are either the effects of equity transactions recognized for changes in ownership interest in associates as a result of the Company’s falling to subscribe to or dispose of associates’ shares, or the adjustments of capital reserves of associates accounted for under the equity method.

(III) Retained earnings and dividend policy

According to the dividend policy prescribed in the Company’s Articles of Incorporation, in the event of surplus earnings after closing of annual accounts, due taxes shall be paid in accordance with the law, and losses incurred in previous years shall be compensated for. Upon completion of the preceding actions, 10% of the remainder surplus shall be allocated as legal reserves. However, in the event that the accumulated legal reserves are equivalent to or exceed the Company's total paid-in capital, such allocation may be exempted. The remainder may be set aside as special reserves, or the previous recognized special reserves may be reversed, in accordance with laws and regulations. If there is remainder surplus, the Board of Directors shall draft a surplus distribution proposal regarding the remainder of the surplus as well as accumulated undistributed surplus, shall decide whether to distribute the distributable dividends and bonus in cash or in shares, in whole or in part, by a supermajority resolution at a Board of Directors, and shall report its decision to the Shareholders' Meeting. However, dividend distribution in the form of new shares shall be subject to a resolution of the Shareholders' Meeting.

For the distribution policy governing employee and director remuneration that is prescribed in the Company's Articles of Incorporation, please refer to Note 20(5).

  • (V) Remuneration to employees and directors

The Company’s dividend policy considers the environment it is in and the growth stage it is at. To cope with future capital requirements and long-term financial planning while maintaining shareholder interests and a balanced dividend policy, shareholder

188

dividends will be distributed in shares or in cash, as appropriate, based on future capital expenditure requirements and the extent of dilution effect on earnings per share. Of the shareholder dividends distributed, no less than 10% shall be in cash. The actual distribution percentage shall be determined by the Board of Directors by considering the Company’s business planning, investment plan, capital planning, and the changes in internal and external environment.

Legal reserves may be used to make up for losses. Where the Company does not sustain loss, the part of the legal reserves that exceeds the total paid-in capital by no greater than 25% may be appropriated as capital or distributed in cash.

The Company provided or reversed special reserves by FSC ’s official letter titled Jin-Guan-Zheng-Fa-Zi No.1010012865, and by JinGuan-Zheng-Fa-Zi No.1090150022 on or after the distribution of earnings for 2021.

The earnings distribution proposals for 2021 and 2020 are as follows:

Legal reserve
Special reserves provided
(reversed)
Cash dividends
Cash dividends per share (NT$)		 2021
$ 42,027
$ 2,531
$ 200,820
$ 2.5		 2020




(

 $ 30,658
$ 1,308)
$ 148,606
$ 1.85

Proposals on the said cash dividends had been approved for distribution through a resolution at the Board of Directors meetings in March 2022 and February 2021. Other earnings distribution items had been approved through a resolution at the Board of Directors meetings in June 2022 and July 2021.

The earnings distribution proposal for 2022 drafted at the Board of Directors meeting dated March 10, 2023 is as follows:

meeting dated March 10, 2023 is as follows:
Legal reserve
Special reserve provision
Cash dividends
Cash dividends per share (NT$)		 2022



$ 57,010
$ 19,074
$ 289,181
$ 3.60

The said cash dividends had been approved through a resolution at a Board of Directors meeting. Other distribution items are still pending a resolution at the Shareholders’ Meeting to be held in June 2023.

189

(IV) Treasury stock

Through a resolution at the Board of Directors meeting in September 2018, the Company decided to buy back 811 thousand treasury shares to transfer them to employees. The buyback was completed in October 2018, with an average buyback price of 62.47 dollars. As of December 31, 2022, such shares had yet to be transferred to employees.

According to the Securities and Exchange Act, the treasury shares held by the Company may not be pledged; nor may they be entitled to dividend distribution or voting rights.

19.

Revenue

Revenue Revenue Revenue
2022
Goods sales revenue
Sale in the capacity of an agent
$ 3,392,333
Manufacturing
2,013,641
5,405,974
Services revenue
Commission
100,006
Maintenance
80,701
Others

13,889

194,596
Other operating revenue

49,416
$ 5,649,986
Contract balance
December 31,
2022
December 31,
2021
otes receivable and accounts
receivable (including those
due from related parties)
(Notes 8 and 26)
$ 859,698
$ 1,060,385
Contract liabilities
$ 7,718,760
$ 3,168,045		 2021








$ 2,615,945
1,834,278
4,450,223
162,196
52,401
4,160
218,757
14,807
$ 4,683,787
January 1,
2021

$ 1,060,385
$ 3,168,045
$ 774,527
$ 674,235

Changes in contract liabilities mainly come from the difference between the points in time when the Company fulfills obligations and when customers make payments.

The amount that comes from the contract liabilities at the beginning of the year and the amount that comes from the revenue recognized in the year in which performance obligations were fulfilled are as follows:

Goods sales 2022
$1,377,075		 2021
$ 480,425

190

20. Net profit

  • (I) Other gains and losses
(I)
Other gains and losses
Gain on disposal of
investments
Dividend income
Gain (Loss) on disposal and
retirement of property, plant,
and equipment
Service fee expense
Others
(II)
Financial cost
Interest on bank borrowings
Interest on lease liabilities
(III) Depreciation and amortization
Property, plant and equipment
Right-of-use assets
Summary of depreciation
expenses by function
Operating cost
Operating expenses
Summary of amortization by
function
General and
administrative expenses
(IV) Employee benefit expenses
Short-term employee benefits
Post-employment benefit
Defined contribution plan
Defined benefit plan		 2022
$ 6,710
800
90
(
4,036 )

188
$ 3,752
2022
$ 1,866

1,538
$ 3,404
2022
$ 100,414

13,189
$ 113,603
$ 30,800

82,803
$ 113,603
$ 259
2022
$ 935,829
38,897

-

38,897
$ 974,726		 2021
$ 909
-
(
103 )
(
2,537 )
(
1,744)
($ 3,475)
2021
$ 1,532

1,581
$ 3,113
2021
$ 96,355

12,844
$ 109,199
$ 29,651

79,548
$ 109,199
$ 260
2021
$ 769,544
33,746
(
8,371)

25,375
$ 794,919




















(

191

Summary by function
Operating cost
Operating expenses		 2022
$ 227,859
746,867
$ 974,726		 2021




$ 200,112
594,807
$ 794,919

(V) Remuneration to employees and directors

According to its Articles of Incorporations, the Company shall take the pre-tax profits inclusive of employee remuneration and director remuneration and allocate 5% – 15% of such profits as employee remuneration and another 2% or less as director remuneration. The Board of Directors meetings in March 2023 and 2022 resolved on the employee remuneration and director remuneration estimated for 2022 and 2021, respectively - shown as follows:

Amount

Amount
Employee remuneration
Directors' remuneration		 2022
$ 58,000
8,000		 2021
$ 49,000
6,000

Any amount that changes after the approval and publication date of the annual consolidated financial statements is accounted for as changes in accounting estimates, and will be adjusted and recognized in the following year.

The actually distributed amount of employee remuneration and director remuneration for 2021 tallied with the amount recognized in the consolidated financial statements for 2021.

The actually distributed amount of employee remuneration and director remuneration for 2020 does not agree with the amount recognized in the parent company only financial statements for 2020 ; the resulting differences are recognized in the profit of loss of 2021.

2020

in the profit of loss of 2021. 2020
Amount actually distributed
Amount recognized on the
annual financial statements		 E m p l o y e e
remuner a t ion
$ 41,500
$ 41,500		 D i r e c t o r s '
remuner a t ion


$ 4,873
$ 5,000

192

The information about remuneration to employees and directors determined by the Board of Directors may be viewed at TWSE’s Market Observation Post System (MOPS).

21. Income tax

  • (I) Income tax recognized in profit or loss

Major components of income tax expenses:

2022 2021
Current income tax
Tax incurred in the year $ 193,890 $ 140,011
Adjustments for the
previous year ( 21,567) ( 20,405)
172,323 119,606
Deferred income tax
Tax incurred in the year (
7,370 )		 (
15,579 )
Adjustments for the
previous year 2,350 13
( 5,020) ( 15,566)
Income tax expenses recognized
in profit or loss $ 167,303 $ 104,040

Reconciliation of accounting income and income tax expenses is as follows:

2022 2021
Net profits before tax $ 735,886 $ 523,945
Income tax expense derived from
applying the pre-tax profit to
the statutory tax rate $ 172,938 $ 101,476
Expense and loss not deductible
from tax 866 1,385
Tax exempt income 792 8,843
Additional levy on undistributed
earnings 8,745 6,431
Unrecognized deductible
temporary difference and loss
carryforwards 3,179 6,274
Adjustments for the previous
year (
19,217 )		 (
20,392 )
Others - 23
Income tax expenses recognized
in profit or loss $ 167,303 $ 104,040

(II) Income tax benefits (expenses) recognized in other comprehensive income

2022

2021

Deferred income tax

193

Tax incurred in the year － Translation from foreign operations ( $ 6,823 ) $ 3,266 － Re-measurements of defined benefit plans ( 379 ) ( 90 ) ( $ 7,202 ) $ 3,176

(III) Current income tax liabilities

December 31, 2022 December 31, 2021

Current income tax liabilities Income tax payable $ 177,324 $ 138,421

(IV) Deferred income tax assets and liabilities

Deferred income tax assets
Temporary differences
Allowance for
inventory write-
down
Undistributed
earnings of
subsidiaries
Unrealized gains on
transactions with
associates
Provisions
Unrealized exchange
losses
Allowance for
doubtful accounts
Others

Loss carryforwards


Deferred income tax
liabilities
Temporary differences
Undistributed
earnings of
subsidiaries		 2022
Balance -
beginning of
period

$ 45,697
15,952
8,037
6,329
3,959
2,875

6,364

89,213

3,101

$ 92,314

$ 56,418		 Recognized in
profit or loss

$ 9,644
10,860
1,193
183
4,304
1,284
(
32)

27,436

(
3,339)

$ 24,097

$ 19,077		 Recognized in
other
comprehensive
income
$ -
(
6,133 )
-
-
-
-
(
379)

(
6,512 )

-

($ 6,512)

$ 690		 Exchange
differences
$ -
-
-
-
-
-
10


10
238

$ 248

$ -		 Balance - end
ofyear






(
(
(
(
(

(









$ 55,341
20,679
9,230
6,512
8,263
4,159
5,963

110,147
-
$ 110,147
$ 76,185
Deferred income tax
assets
Temporary differences
Allowance for
inventory write-
down
Undistributed
earnings of
subsidiaries		 2021
Balance -
beginning of
period
$ 33,710
6,785		 Recognized
in profit or
loss

$ 11,987
6,836		 Recognized
in other
comprehensiv
e income
$ -
2,331		 Exchange
differences
$ -
-		 Balance - end
ofyear
$ 45,697
15,592

194

Unrealized gains on
transactions with
associates
Provisions
Unrealized exchange
losses
Allowance for
doubtful accounts
Impairment loss
Others

Loss carryforwards


Deferred income tax
liabilities
Temporary differences
Undistributed
earnings of
subsidiaries		 2021
Balance -
beginning of
period
-
5,106
1,021
8,955
5,063

9,145

69,785

3,281

$ 73,066

$ 55,819		 Recognized
in profit or
loss

8,037
1,223
2,938
(
6,080 )
(
5,063 )
(
2,690)

17,188
(
88)

$ 17,100

$ 1,534		 Recognized
in other
comprehensiv
e income
-

-
-
-

-
(
90)


2,241

-

$ 2,241

($ 935)		 Exchange
differences
-

-
-
-

-
(
1)

(
1 )
(
92)

($ 93)

$ -		 Balance - end
ofyear



(
(
(
(

(



(

(
(
(
(





8,037

6,329
3,959
2,875

-
6,364

89,213
3,101
$ 92,314
$ 56,418
  • (V) Amount of deductible temporary difference and loss carryforwards of deferred income tax assets unrecognized in the consolidated balance sheet
Loss carryforwards
Expire in 2022
Expire in 2023
Expire in 2024
Expire in 2025
Expire in 2026
Expire in 2027
Expire in 2028
Expire in 2029
Expire in 2030
Expire in 2031
Expire in 2032
Deductible temporary
differences		 December31,2022
-
33,046
74,222
94,847
49,417
42,286
30,687
30,093
24,190
21,778

33,450
$ 434,016
$ 90,082		 December31,2021 December31,2021




25,449
33,046
74,222
94,847
49,417
42,286
30,687
30,093
24,190
21,778
-
$ 426,015
$ 77,567

(VI) Information on unused loss carryforwards

195

The information on the loss carryforwards of the Group , up to December 31, 2022 is as follows:

is as follows:
Unused balance
$ 33,046
74,222
94,847
49,417
42,286
30,687
30,093
24,190
21,778
33,450
$ 434,016		 Expirationyear










2023
2024
2025
2026
2027
2028
2029
2030
2031
2032

(VII) Authorization of income tax

The Company's and subsidiaries’ profit-seeking business income tax filings have been approved by the tax authority through the year specified as follows:

been approved by the tax authority through the year specified as follows:
Companyname
The Company
ACROMASS
NATGEM
SCIENTECH MATERIALS		 Latest year of
approval
2020
2020
2020
2020

22. Earnings per share

Earnings per share
Basic earnings per share
Diluted earnings per share
Net profit in the current year
Net profit of the Company
Shares
Weighted average number of
common shares used for
calculating basic earnings per
share		 Unit: NT$ 2022
2021
$ 7.08
$ 5.23
$ 7.00
$ 5.19
2022
2021
$ 568,583
$ 419,905
Unit: Thousand shares
2022
2021
80,328
80,328		 Unit: NT$ 2021


$ 5.23
$ 5.19
2021
80,328

196

Effect of potential diluted
common shares:
Employee remuneration

Weighted average number of
common shares used for
calculating diluted earnings per
share
 895

81,223
 570
80,898

Where the Group may elect to distribute employee remuneration in shares or in cash, when calculating the diluted EPS, the Group assumes that all employee remuneration is distributed in shares and counts the potentially dilutive common shares - when deemed dilutive - in the weighted average number of shares outstanding. The Group continues to consider the dilutive effect of such potentially delusive common shares when calculating the dilutive EPS before the number of share dividends is to be resolved on in the following year.

23. Non-cash transactions

In 2022 and 2021, the Group transferred property, plant, and equipment in the amount of 2,868 thousand and 79,420 thousand, respectively, to inventory costs, with an accumulated depreciation of 1,769 thousand and 12,724 thousand, respectively. In 2022 and 2021, the Group transferred 9,455 thousand and 12,598 thousand, respectively, from inventories to own-use property, plant, and equipment (refer to Note 12).

24. Capital risk management

The Group conducts capital management to ensure the Group can continue as a going concern while maximizing shareholders’ return by optimizing the liability and equity balances.

The Group’s capital structure is composed of its net debt and its equity.

The key management of the Group reviews its capital structure every year in terms of the cost and risks of each capital category. Based on the recommendation of the key management, the Group will balance its capital structure by paying dividends and issuing new debts or paying existing debts.

25. Financial instruments

－ (I) Fair value information financial instruments not measured at fair value

Management of the Group thinks that financial assets and financial liabilities not measured at fair value have a book value approximate to their fair value.

197

－ (II) Fair value information financial instruments measured at fair value on a recurring basis

  1. Fair value hierarchy

December 31, 2022

Level 1 Level 2 Level 3 Total Financial assets at fair value through other comprehensive income Investment in equity instruments Shares of TWSE-listed companies through private placement $ - $ 89,205 $ - $ 89,205 Foreign shares not traded on an exchange or OTC - - 49,357 49,357 $ - $ 89,205 $ 49,357 $ 138,562

December 31, 2021

Level 1 Level 2 Level 3 Total Financial assets at fair value through other comprehensive income Investment in equity instruments Shares of TWSE-listed companies through private placement $ - $ 112,237 $ - $ 112,237 Foreign shares not traded on an exchange or OTC - - 54,013 54,013 $ - $ 112,237 $ 54,013 $ 166,250

There was no transfer of fair value measurements between Level 1 and Level 2 in 2022.

198

  1. Reconciliation of the financial instruments measured at Level 3 fair value 2022
2022
Financial assets
Balance - beginning of period
Purchase
Recognized in other comprehensive income
Balance - end of year		 Financial assets at
fair value through
other
comprehensive
income
Equityinstruments

(
 $ 54,013
18,631

23,287)
$ 49,357

2021

2021
Financial assets
Balance - beginning of period
Purchase
Recognized in other comprehensive income
Balance - end of year		 Financial assets at
fair value through
other
comprehensive
income
Equityinstruments

(
 $ -
59,726

5,713)
$ 54,013
  1. Level 2 fair value valuation techniques and inputs

If there is no quoted price for the common shares issued by domestic TWSE-listed companies through a private placement, such common shares are evaluated by using valuation techniques. The assumptions and estimates used by the Group for the valuation techniques are the same as the assumptions and estimates accessible to the Company that are used by market participants for quoting a price for financial products.

The valuation technique the Group used for measuring the fair value is the Black-Scholes pricing model.

  2. Level 3 fair value valuation techniques and inputs

When valuing the foreign shares not traded on an exchange or OTC, the Group used the income approach by which the present value of benefits expected to be derived from such investment is calculated by discounting the cash flows.

199

Significant unobservable inputs are as follows. When liquidity discount decreases, the fair value of such investment will increase.

decreases, the fair value of such investment will increase.
Liquidity discount December31,2022
32.24%		 December31,2021
32.28%

If the following inputs are changed to reflect reasonably possible alternative assumptions while other inputs are held constant, the amount of the fair value of equity investment will increase (decrease) by:

Liquidity discount
Increase by 1%
Decrease by 1%
Type of financial instruments
Financial assets
Financial assets at amortized
cost (Note 1)
Financial assets at fair value
through other comprehensive
income
Financial liabilities
Financial liabilities at amortized
cost (Note 2)		 December31,2022
($ 728)
$ 728
December31,2022
$ 5,126,069
138,562
2,935,923		 December31,2021
($ 798)
$ 798
December31,2021
$ 3,304,982
166,250
1,703,531
  • (III) Type of financial instruments

Note 1: The balance included financial assets measured at amortized cost such as cash and cash equivalents, notes receivable and accounts receivable (including those due from related parties), other receivables (presented under other current assets), restricted assets (presented under other current assets), other financial assets (presented under other current assets), and guarantee deposits paid (presented under other non-current assets).

Note 2: The balance included the financial liabilities measured at amortized cost such as short-term borrowings, notes payable and accounts payable, and other payables.

(III) Financial risk management purpose and policy

The Group’s financial instruments mainly comprise equity investment, receivables, payables, borrowings, and lease liabilities. The financial management

200

department of the Group provides services for each type of business and supervises and manages the financial risks incidental to the Group’s operations by referencing the internal risk report in which risk exposure is analyzed based on the extent and extensiveness of risks. Such risks include market risk, credit risk, and liquidity risk.

The financial management department provides a report to the key management quarterly to reduce risk exposure.

The Group did not adopt hedge accounting.

  1. Market risk

  2. (1) Exchange rate risk

Some subsidiaries of Group are engaged in sales and purchase denominated in foreign currency, thus exposing the Group to the exchange rate fluctuation risk.

For the book value of the Group’s monetary assets and monetary liabilities denominated in a currency other than the functional currency on the balance sheet date, refer to Note 29.

Sensitivity analysis

The Group is affected primarily by fluctuation in the exchange rate of USD.

The sensitivity analysis includes only the foreign currency monetary items outstanding, which are translated at the end of year by using an exchange rate that could be adjusted by a maximum of 1%. When the functional currency appreciates/depreciates by 1% against the USD, the effects on the pre-tax net profit stated in the consolidated financial statements for 2022 and 2021 will be NT$16,329 thousand and NT$14,562 thousand, respectively.

The exchange rate fluctuation mainly affects the Group’s bank deposits, as well as the payables and receivables denominated in USD that were still outstanding and were not hedged with a cash flow hedge on the balance sheet date.

  • (2) Interest rate risk

The interest rate risk facing the Group mainly comes from the Group’s floating-rate bank deposits.

201

The book value of the financial assets and liabilities of the Group that were exposed to the interest rate risk on the balance sheet date is as follows:

follows:
With cash flow interest
rate risk
- Financial assets
- Financial liabilities
With fair value interest
rate risk
- Financial assets
- Financial liabilities
- Lease liabilities		 December31,2022
$ 3,638,016
200,000
443,365
230,661
70,917		 December31,2021
$ 2,140,979
200,000
11,926
44,642
81,043

Sensitivity analysis

The following sensitivity analysis is based on the interest risk exposure of non-derivatives on the balance sheet date. Floating-rate liabilities are analyzed based on the assumption that the liability amount outstanding on the balance sheet date remains outstanding throughout the reporting period.

If interest rate increases/decreases by 1%, held other variables constant, the Group’s pre-tax profit in the consolidated financial statements for 2022 and 2021 will change by NT$34,380 thousand and NT$19,410 thousand, respectively.

2. Credit risk

The credit risk means the risk of causing financial loss to the Group because the trading counterparty defaults on contractual obligations. As of the balance sheet date, the Group’s maximum credit exposure to the financial loss caused by a trading counterparty’s defaulting on his/her performance obligations mainly lies in the book value of the financial assets recognized on the consolidated balance sheet.

According to its policy, the Group only trades with reputational counterparties and requires provision of collateral where necessary to reduce the risk of financial loss due to default.

202

The Group exposes to the credit risk, which mainly comes from the customers who individually account for 10% or more of the Group’s total accounts receivables. Refer to Note 8 for details.

3. Liquidity risk

The Group manages and maintains sufficient cash to support business operations and reduce the effect of the fluctuating cash flow. The management of the Group monitors the use of bank financing facilities and ensures compliance with the terms of the loan contract.

Bank loans are one of the Group’s important sources of liquidity. For the bank financing facility that the Group has not used, refer to relevant descriptions in (2) below.

  • (1) Liquidity and interest rate risks of non-derivative financial liabilities

The maturity analysis of other non-derivative financial liabilities is compiled based on the agreed repayment date.

December 31, 2022

December 31, 2022
Non-derivative
financial
liabilities
Non-interest bearing
debt
Instruments with a
floating rate
Lease liabilities

 1–3months

$ 2,716,006
200,396

2,790

$ 2,919,192
 4 months – 1
year

$ 19,917
-

5,856

$ 25,773
 More than 1
year






$ -
-

73,936
$ 73,936

More information on the maturity analysis of lease liabilities:


Lease
liabilities		 Less than 1
year		 Less than 1
year		 2–5years 6–10years 11–15years 11–15years 16–20years 16–20years
$ 8,646 $ 19,596 $ 22,800 $ 22,800 $ 8,740

December 31, 2021

203

Non-derivative
financial
liabilities
Non-interest bearing
debt
Instruments with a
floating rate
Lease liabilities

 1–3months

$ 1,495,354
200,341

3,462

$ 1,699,157
 4 months – 1
year

$ 8,177
-

10,181

$ 18,358
 More than 1
year






$ -
-

80,771
$ 80,771

More information on the maturity analysis of lease liabilities:


Lease
liabilities		 Less than 1
year		 Less than 1
year		 2–5years 6–10years 11–15years 11–15years 16–20years 16–20years
$ 13,643 $ 21,871 $ 22,800 $ 22,800 $ 13,300
  • (2) Credit limit of financing facilities

December 31, 2022 December 31, 2021

Unsecured bank loan
limit (extendable upon
mutual agreement)
- Employed capital

- Unemployed
capital

 $ 426,461

853,539

$ 1,280,000
 $ 246,872
1,233,128
$ 1,480,000

26. Related Party Transactions

All the transactions between the Company and subsidiaries, account balances, profits, and expenses/losses are eliminated during consolidation and thus not disclosed in this note. In addition to those disclosed in other notes, transactions between the Group and other related parties are described as follows.

  • (I) Name and relationship of related party

Name of related party Relationship with the Company HUNG-LIANG HSIEH Chairperson FORWARD SCIENCE CORPORATION Associate XTEK SEMICONDUCTOR Associate (HUANGSHI) CO., LTD. (XTEK SEMICONDUCTOR)

HONG LUN CULTURAL CREATIVITY FOUNDATION

Same key management

  • (II) Operating revenue

204

General ledger
account

Goods sales
revenue

Other operating
revenue
 Name and type of related
party
Associate

Associate
 2022
$ 68,826

$ 22,824
 2021


$ 303,493
$ 810

The price and payment terms for a sale transaction between the Group and related parties are determined based on the terms mutually agreed upon.

(III) Purchase

Nameandtype of related party
2022
2021
Associate
$ -
$ 2,780
The price and payment terms for a purchase transaction between the Group and
related parties are determined based on the terms mutually agreed upon.		 2021

(IV) Contract liabilities

Name and type of related party December 31, 2022 December 31, 2021 Associate XTEK SEMICONDUCTOR $ 54,246 $ 51,570

(V) Receivables

Receivables
General ledger
account
Accounts
receivable
-
related parties

 Name and type of related
party
Associate
XTEK
SEMICONDUCTOR
 December 31,
2022
$ 5,152
 December 31,
2021
$ 55,711

No guarantee was requested for the outstanding receivables due from related parties. The balance of the allowance for receivables due from related parties as of December 31, 2022 and 2021 were NT$377 thousand and NT$1,485 thousand, respectively. The allowance for receivables due from related parties that was provided (reversed) in 2022 and 2021 amounted to NT$(1,108) thousand and NT$1,485 thousand, respectively.

(VI) Payables

205

General ledger
account

Other payables
 Name and type of related
party

Associate		 December 31,
2022

$ 230		 December 31,
2021		 December 31,
2021
$ -

The outstanding balance of the payables due to related parties was not secured against collateral.

(VII) Lease agreements

Lease agreements Lease agreements
General ledger
account
Name and type of related
party
December 31,
2022

Lease liabilities
Chairperson
$ 65,509

Nameandtype of related party
2022
Interest expenses (presented
under financial cost)
Chairperson
$ 1,338		 December 31,
2021
$ 68,731
2021
$ 1,401

The rent charged for lease contracts signed between the Group and related parties was negotiated upon by referencing the market price; the payment term was the same as a general payment term.

(VIII) Others

Others
Nameandtype of related party
Maintenance and repair
(presented under operating
cost)
Associate
Rental income (presented under
other income)
Associate		 2022
$ -
$ 24		 2021


$ 1,512
$ -

(IX) Remuneration to key management

Remuneration to key management
Short-term employee benefits
Post-employment benefit		 2022
$ 75,486
933
$ 76,419		 2021




$ 60,601
1,322
$ 61,923

The remuneration to directors and other key management was decided by the Remuneration Committee according to personal performance and market trends.

206

27. Pledged and Mortgaged Assets

The following assets were provided to the Custom Office as collateral against the bonded goods and the payments and performance obligation of manufacturers.

December 31, 2022 December 31, 2021 Pledged certificates of deposits (presented under other current assets) $ 171,926 $ 81,243

28. Significant Commitments

The Group’s letter of credits issued but not used that were intended for purchase of goods and machinery and equipment, and for performance guarantee were NT$169,725 thousand and NT$79,789 thousand as of December 31, 2022 and 2021, respectively.

29. Information on foreign currency assets and liabilities with significant effects

The following information is summarized and stated based on the foreign currencies other than the functional currency of the Group's parent company only entities. The disclosed exchange rate represents the exchange rate of such foreign currency against the functional currency. Foreign currency assets and liabilities with significant effects are as follows:

December 31, 2022

Foreign currency
assets
Monetary items
USD

USD
USD
EUR
EUR
JPY		 Foreign
currency
$ 58,744
35,286
22,182
11,278
1,869
103,157		 Exchangerate

30.71 (USD:TWD)


6.967 (USD:CNY)

7.798 (USD: HKD)

32.72 (EUR:TWD)

7.423 (EUR:CNY)

0.232 (JPY:TWD)		 Bookvalue
$ 1,804,032
1,083,642
681,200
369,011
61,167
24,057

Non-monetary

Non-monetary
items
Associates
accounted for
using equity
method
CNY 113,893 4.408 (CNY:TWD) 502,039

207

Foreign currency Exchange rate

Book value

Foreign currency
liabilities
Monetary items
USD 52,090
30.71 (USD:TWD)		 1,599,684
USD 9,233
6.967 (USD:CNY)		 283,543
JPY 258,135
0.232 (JPY:TWD)		 59,991
USD 1,722
7.798 (USD:HKD)		 52,885
EUR 723
8.309 (EUR:HKD)		 23,658
EUR 698
32.72 (EUR:TWD)		 22,845

208

December 31, 2021

Foreign currency
assets
Monetary items
USD

USD
USD
EUR
JPY
JPY
JPY
Non-monetary
items
Associates
accounted for
using equity
method
CNY
Foreign currency
liabilities
Monetary items
USD
USD
USD
JPY
EUR		 Foreign
currency
$ 46,087
21,980
12,951
7,231
68,391
52,810
44,542
104,224
20,246
7,594
1,835
98,227
571		 Exchangerate

27.68 (USD:TWD)


6.372 (USD:CNY)

7.799 (USD: HKD)

31.32 (EUR:TWD)

0.241 (JPY:TWD)

0.055 (JPY:CNY)

0.068 (JPY: HKD)
4.344 (CNY:TWD)

27.68 (USD:TWD)

6,372 (USD:CNY)

31.32 (EUR:TWD)

0.241 (JPY:TWD)

7.799 (USD:HKD)		 Bookvalue
$ 1,275,694
608,404
358,484
226,476
16,448
12,701
10,712
452,747
560,397
210,206
57,466
23,624
15,814

The realized and unrealized foreign currency exchange gains (losses) of the Group

in 2022 and 2021 were NT$77,879 thousand and NT$(42,833) thousand, respectively.

However, it was not feasible to disclose the exchange loss and gain of each significant

foreign currency because the number of foreign currencies involved in foreign currency transactions as well as the number of functional currencies of entities within the Group varied.

30. Supplementary Disclosures

Except those disclosed in Appendix Table 1 through 9, there were no required disclosures.

209

31. Segment Information

Information provided for the operating decision makers to allocate resources and evaluate segment performance focuses on the type of products or services delivered or provided. The reportable segments of the Group are as follows:

  • (I) Segment revenue and operating outcome

The revenue and operation outcome of the Group are analyzed by reportable segment as follows:

segment as follows:
Sale in the capacity of an
agent
Manufacturing

Reportable segments -
total
Headquarters
Administrative costs and
non-operating income
and expenses
Subtotal
Inter-segment sales revenue
Net sales revenue

Net profits before tax		 Segment r evenue
2021
$ 2,942,368

1,855,724

4,798,092

-

4,798,092

114,305)
$ 4,683,787
 Segmentprofit or loss
2022
$ 3,786,913

2,078,843

5,865,756

-
5,865,756

215,770)

$ 5,649,986
 2022
$ 443,388

429,994

873,382

137,496)
$ 735,886
 2021



(



(

(

(
 $ 360,647

322,542
683,189

159,244)
$ 523,945

Segment profits mean the profits earned by each segment, excluding the following items that should be allocated among them: administrative cost of the headquarters, director remuneration, non-operating income and expenses, and income tax expenses. Such measurements serve as a basis for main operational decision makers to allocate resources to segments and evaluate their performance.

  • (II)

Segment assets and liabilities

The Group disclosed the measurements of total assets and liabilities of reportable segments as a whole instead of individually because the measurements of assets and liabilities had yet to be provided to the operational decision makers.

  • (III) Geographic information

The Group mainly operates in the two regions: Taiwan and China.

  • (IV) Information on major customers

Of the operating revenue in 2022 and 2021, NT$967,799 thousand and NT$745,710 thousand, respectively, came from customers who individually account for 10% or more of the Group’s consolidated revenue; except for such customers, there were no other customers who individually account for 10% or more of the Group’s consolidated revenue.

210

SCIENTECH CORPORATION and Subsidiaries

Loans to others

2022

Appendix Table 1

Unit: NT$ thousand unless otherwise specified

No. Lending company Borrowing company Financial
account		 Whether
a related
party or
not		 Highest amount in
the year (Note 3)		 Balance - end of
year (Note 3)		 Drawdown (Note
3)		 Interest
rate range
(%)		 Nature of
loaning of
funds		 Business
transaction
amount		 Reasons for the
need of short-
term financing		 Appropriated
allowance for bad
debt		 Collateral Collateral Limit of loans to a
single borrower
(Notes 1 and 3)		 Limit of total loaning
of funds (Notes 2 and
3)
Name Value
0
1		 The Company
SCIENTECH
ENGINEERING
(HONG KONG)
LIMITED		 SCIENTECH
MATERIALS
CORPORATION
NATGEM INC.
ACROMASS
TECHNOLOGIES,I
NC.
SCIENTECH
ENGINEERING
CORP.(SHANGHAI)
SCIENTECH
ENGINEERING
USA CORP.
SCIENTECH GMBH		 Other
receivables
－Related
party
Other
receivables
－Related
party
Other
receivables
－Related
party

Other
receivables
－Related
party
Other
receivables
－Related
party
Other
receivables
－Related
party		 Yes
Yes
Yes
Yes
Yes
Yes		 $ 7,000
2,000
15,000
24,568
(
US$800
thousand
)
30,710
(
US$1,000
thousand
)
30,710
(
US$1,000
thousand
)		 $ -

2,000

8,000
24,568
(
US$800
thousand
)
30,710
(
US$1,000
thousand
)
30,710
(
US$1,000
thousand
)		 $ -

-
-
-
6,142
(
US$200
thousand
)
-
1.7

1.2
1.2
1.7
1.2
1.2		 Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing		 $ -
-
-
-
-
-		 Working capital
Working capital
Working capital
Working capital
Working capital
Working capital		 $ -

-

-

-

-

-
－

－

－

－

－

－		 $ -
-
-
-
-
-		 $ 358,249

358,249

358,249

24,568
(
US$800
thousand
)

30,710
(
US$1,000
thousand
)

30,710
(
US$1,000
thousand
)		 $ 1,432,994

1,432,994

1,432,994

241,934
(
HKD61,436
thousand
)
241,934
(
HKD61,436
thousand
)
241,934
(
HKD61,436
thousand
)

Note 1: The limit of loans to a single borrower is as follows:

  1. The limit of loaning of funds to a single party with business relationship with Company should not exceed the total transactions amount between it and the Company. The said “Transaction amount” means the higher of purchase or sales therebetween.

  2. Limit of loaning of funds to a company in need of short-term financing should not exceed 10% of the Company’s net worth.

  3. Limit of loaning of funds to a foreign operation whose voting shares are fully held by the Company, either directly or indirectly, should exceed neither the amount approved by the Board of Directors nor the amount equal to 80% of the lending company’s net worth.

Note 2: The limit of total funds loaned to others is as follows:

1. Should not exceed 40% of the Company’s net worth.

  1. The limit of total funds loaned by a foreign operation of which all the voting shares are directly or indirectly held by the Company should not exceed 80% of the foreign operation’s net worth.

Note 3: Converted at the exchange rate of US$1 against NT$30.71 and HKD$1 against NT$3.938 on December 31, 2022.

Note 4: The said transactions had been eliminated during the preparation of the consolidated financial statements.

211

SCIENTECH CORPORATION and Subsidiaries

Making endorsements/guarantees for others

2022

Appendix Table 2

Unit: NT$ thousand unless otherwise specified

No. Endorser/
guarantor		 Partybeingendorsed/guaranteed Partybeingendorsed/guaranteed
Limit on
endorsement/
guarantees provided
for a single party
(Notes 1 and 2)
Maximum balance
for the period (Note
2)
Ending balance
(Note 2)		 Drawdown (Note 2)
Amount of
endorsement/
guarantees
collateralized by
properties (Note 2)		 Ratio of
accumulated
endorsement/
guarantee to
net equity per
latest financial
statement(%)		 Limit of
endorsement/
guarantees
collateralized by
properties (Notes 2
and 3)		 Guarantee
provided
by parent
company
to
subsidiary

Guarantee
provided
by
subsidiary
to a
parent
company

Guarantee
provided
to entities
in
Mainland
China
Company name Relationship
0
1		 The Company
SCIENTECH
ENGINEER
ING
(HONG
KONG)
LIMITED		 SCIENTECH
ENGINEERING
(HONG KONG)
LIMITED
SCIENTECH
ENGINEERING
CORP.(SHANGH
AI)		 Subsidiary
Parent
company		 $ 1,791,243
151,209
(
HKD38,397
thousand
)		 $ 30,710
(
US$1,000
thousand
)
3,071
( US$100 thousand)		 $ 30,710
(
US$1,000
thousand
)

3,071
( US$100 thousand)		 $ -

3,071
( US$100 thousand)		 $ -

3,071
( US$100 thousand)		 0.9%

1.0%		 $ 3,582,486
302,418
(
HKD76,795
thousand
)		 Y
N		 N
Y		 N
Y

Note 1: The limit of endorsement and guarantee made by the Company or subsidiaries to a single entity should not exceed 50% of the entity’s net worth.

Note 2: Converted at the exchange rate of US$1 against NT$30.71 and HKD$1 against NT$3.938 on December 31, 2021. Note 3: Should not exceed 100% of the Company’s or a subsidiary’s net worth stated on the financial statements.

212

Unit: NT$ thousand

SCIENTECH CORPORATION and Subsidiaries

Marketable Securities Held at the End of Period

December 31, 2022

Appendix Table 3

Investor Type and name of marketable securities Relationship with the
securities issuer		 General ledger account End of year End of year
Shares Book value Shareholding
Percentage
(%)		 Fair value Remarks
SCIENTECH CORPORATION
SCIENTECH INVESTMENT
CORP.		 Shares
HITEKCORPS CO., LTD.
AUENTER TECHNOLOGY CORP.
AMCHAEL-GRAPHICS CORP.
PROMOS TECHNOLOGIES INC.
INFINITESIMA LIMITED
SPIROX CORP.
Shares
SIGLAZ		 －
－
－
－
－
－
－		 Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through
other
comprehensive income -
non-current
Financial assets at fair value
through
other
comprehensive income -
non-current
Financial assets at fair value
through profit or loss		 225,000
600,000
700,000
4,662



6,111,111



4,000,000
1,100,000		 $ -
-
-
-
49,357
89,205
-		 3.19
13
33
-
9.30
3.40
15.80		 $ -
-
-
-
49,357
89,205
-		 －
－
－
－
－
－
－

Note: For information on investment in subsidiaries and associates, refer to Appendix Tables 7 and 8.

213

SCIENTECH CORPORATION and Subsidiaries

Acquisition of real property reaching NT$300 million or 20% of paid-in capital or more

2022

Unit: NT$1,000

2022
Appendix Table 4 Unit: NT$1,000
Real property
buyer		 Property name Fact
occurrence
date		 Transaction
amount		 Proceeds
payment progress		 Counter-party Relationship Information on the previous transfer of property
wherethe counter-partyisa related party		 Pricing reference Acquisition
purpose and
state of use		 Other
covenants
Owner Relationship
with theissuer
Transfer
date		 Amount
SCIENTECH
CORPORATI
ON		 Land
and
structures
2022/1/7		 $ 313,255 Progressing in
line with
contractual terms		 ThAI CHENG
TANNERY
CO., LTD.		 Non - related
party		 － － － $ - HONG BANG
REAL
ESTATE
APPRAISER		 For use as a
factory to
satisfy
operating
needs		 None

Note: The Company’s Board of Directors meeting dated January 7, 2022 resolved to purchase the factory and the land in Anding District of Tainan City; e arnest money was paid upon execution of the contract on January 11, 2022, and the rest of the payment was fully made in March 2022 , in which ownership was also transferred.

214

SCIENTECH CORPORATION and Subsidiaries

Purchase or sale of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

2022

Appendix Table 5

Unit: NT$ thousand

Purchase from
(sale to)		 Transaction
counterparty		 Relationship Transaction details Transaction details Occurrence of transaction terms other
than those for an arms-length
transaction andreasonstherefor		 Occurrence of transaction terms other
than those for an arms-length
transaction andreasonstherefor		 Notes/Accounts receivable
(payable)		 Notes/Accounts receivable
(payable)		 Remarks
Purchase
(sales)		 Amount Ratio to total
purchase
(sales) (%)
(Note)		 Credit period Unit price Credit period Balance Ratio to total
notes and
accounts
receivable
(payable) (%)
SCIENTECH
CORPORATION
SCIENTECH
ENGINEERING
USACORP.		 SCIENTECH
ENGINEERING
USA CORP.
SCIENTECH
CORPORATIO
N		 Subsidiary
Parent company		 Purchase
Sales		 $ 167,145
( $ 167,145 )
4.1
(
86.9 )		 Net30
Net30		 $ -
$ -		 －
－		 ( $ 3,858 )
$ 3,858		 (
0.2 )
67.1

Note 1: Refers to the ratio to total purchase (sales), or to total receivables or payables, of an individual company. Note 2: The said transactions had been eliminated during the preparation of the consolidated financial statements.

215

SCIENTECH CORPORATION and Subsidiaries

The Business Relationship and Major Transactions between the Parent Company and Its Subsidiaries and among Subsidiaries and the Amounts thereof

2022

Appendix Table 6 Appendix Table 6 Unit: NT$ thousand
No. Company name Counterparty Relationship with the
company		 Transactiondetails
General ledger account Amount Transaction terms Ratio to
consolidated total
operating revenues
or total assets (%)
0 SCIENTECH CORPORATION SCIENTECH ENGINEERING USA
CORP.		 1 Sales cost $ 167,145 Same as that of an arms-length
transaction		 2.96

Note 1: The said transactions had been eliminated during the preparation of the consolidated financial statements. Note 2: Relationship between transaction company and counterparty is classified into the following three categories: 1. Parent company to subsidiary.

Note 3: This table presents only the significant transactions whose value accounts for 1% or more of the total consolidated revenue or total assets.

216

SCIENTECH CORPORATION and Subsidiaries

Name and Territory of Investees and Other Relevant Information

2022

2022 2022
Appendix Table 7 Unit: NT$ thousand unless otherwise specified
Name of investor Investee Region Main business line Original investment amount Shares held at the period-end Profit or loss of
investee in the
period		 Investment gains of
losses recognized in
theperiod
Remarks
December 31, 2022 January 1, 2022 Shares Percentag
e		 Book value
SCIENTECH
CORPORATION
SCIENTECH
INVESTMENT
CORP.
SCIENTECH
ENGINEERING
CORP.(SHANGHAI)		 SCIENTECH INVESTMENT
CORP.
ACROMASS
TECHNOLOGIES,INC.
SCIENTECH MATERIALS
CORPORATION
NATGEM INC.
SCIENTECH GMBH
TRANSCEND CAPITAL
CORP.
FORWARD SCIENCE
CORPORATION
RENORIGIN INNOVATION
INSTITUTE CO., LTD.
FORWARD SCIENCE PTE.
LTD.
SIMPLE INVESTMENT CORP.
SCIENTECH ENGINEERING
USA CORP.
SCIENTECH ENGINEERING
(HONG KONG) LIMITED		 Mauritius
Taipei
City
Taipei
City
Taipei
City
Austria
British
Virgin
Islands
Miaoli
County
Taipei
City
Singapore
Mauritius
California
, US
Hong
Kong		 Investment
General instrument and
precision instrument
manufacturing
Manufacturing and sale
of energy-efficient
products
Sale of food and
supplies
International trade
Investment

Maintenance service
Sale of biotech products
Trading and
maintenance of
semiconductor
equipment and
peripherals
Investment
Trading of
semiconductor
equipment and
peripherals
International trade		 $ 171,775
270,000
205,000
33,000
1,163
416,829
19,600

14,030
11,944
150,663
( US$4,906 thousand )
9,213
( US$300 thousand )
5,968
(
CNY$1,354
thousand
)		 $ 171,775

270,000

205,000

33,000

1,163

416,829

20,000

14,030

11,944
150,663
( US$4,906 thousand )
9,213
( US$300 thousand )
5,968
(
CNY$1,354
thousand
)
5,540,000
27,000,000

1,400,000

800,000

-
14,275,006

1,960,000

1,121,000

500,000
4,905,500
300,000
-
100

100

100
100
100
100

6

20
21

100
100

100		 $ 536,864

3,277

3,167

583

10,259

457,959

28,561

8,209

-
505,380
(
US$16,457
thousand
)
28,926
(
US$942
thousand
)
302,418
(
CNY$68,608
thousand
)		 $ 86,774
(
1,792)

1
(
210)

9,840
(
55,528)
(
52,350)
(
8,100)

-
78,881
( US$2,647 thousand )
7,901
( US$265 thousand )
37,928
(
CNY$8,577
thousand
)		 $ 86,774
(
1,792)

1
(
210)

9,840
(
55,528)
(
2,813)
(
1,761)

-
78,881
( US$2,647 thousand )
7,901
( US$265 thousand )
37,928
(
CNY$8,577
thousand
)		 (Note 4)
(Note 4)
(Notes
1,
2, and 4)
(Note 4)
(Note 4)
(Note 4)
(Note 2)
(Note 2)
(Note 2)
(Note 3
and 4)
(Note 3
and 4)
(Note 3
and 4)

Note 1: SCIENTECH MATERIALS was dissolved through a resolution reached at the Board of Directors meeting dated August 31, 2021. As of December 31, 2022, the liquidation process was not yet completed. Note 2: It was calculated based on financial statements in the same period that were not audited by CPAs.

＝ ＝ Note 3:The amount was converted using the exchange rate of US$1 $30.71 and RMB$1 $4.408 on December 31, 2022. Investment gains or losses were converted using the average exchange rate of US$1=29.805 and RMB$1=4.422 during January 1, 2022 and December 31, 2022.

Note 4: It is a subsidiary. The said transactions between it and the Company had been eliminated during the preparation of the consolidated financial statements.

217

2022

SCIENTECH CORPORATION and Subsidiaries

Information on Investments in Mainland China

Appendix Table 8

Unit: NT$ thousand unless otherwise specified

Investee in Mainland
China
Main business line		 Paid-in Capital
(Note 1)		 Paid-in Capital
(Note 1)		 Method of investment Accumulated
amount of
investments from
Taiwan at the
beginning of
current year
(Note 1)		 Accumulated
amount of
investments from
Taiwan at the
beginning of
current year
(Note 1)		 Amount of investments remitted or
recovered in currentyear		 Amount of investments remitted or
recovered in currentyear		 Accumulated
amount of
investments from
Taiwan at the end
of current year
(Note 1)		 Profit or loss of
investee in the
period
(Note 2)		 The
Company’s
shareholding
of direct or
indirect
investment (%)
Investment gains
of losses
recognized in the
year		 Investment book
value at the end
of the year
(Note 2)		 Profit received
from investments
as of the end of
current year
Remitted Recovered
SCIENTECH
ENGINEERING
CORP.
(SHANGHAI)
XTEK
SEMICONDUCT
OR (HUANGSHI)
CO., LTD.		 Trading and
maintenance of
semiconductor
equipment and
peripherals

Trading of
semiconductor
equipment and
peripherals		 $ 149,558
(
US$4,870
thousand
)
2,545,431
(
US$82,886
thousand
)		 Invested in a China
investee through
another investee in a
third region (Note 3)
Invested in a China
investee through
another investee in a
third region (Note 4)
$ 149,558
(
US$4,870
thousand
)

438,182
(
US$14,268
thousand
)		 $ -
-		 $ -

-		 $ 149,558
(
US$4,870
thousand
)

438,182
(
US$14,268
thousand
)		 $ 78,893
(Notes 6)
(
318,577 )		 100
17.21		 $ 78,893
(Notes 6)
(
61,100 )		 $ 505,948
(Notes 6)

457,968		 $ -

-
Accumulated amount of investments from
Taiwan to Mainland China at the end of current
period(Note 1)		 Investment amount approved by the Investment
Commission, MOEA (Note 1)		 Limit on the amount of investments in Mainland
China specified by the Investment Commission,
MOEA
$587,740(US$19,138 thousand) $587,740(US$19,138 thousand) $2,149,492

Note 1: Converted at the exchange rate of US$1 against NT$30.71 on December 31, 2022.

Note 2: It was calculated based on financial statements in the same period that were audited by CPAs.

Note 3: Investment in SCIENTECH ENGINEERING CORP. (SHANGHAI) via SIMPLE INVESTMENT CORP.

Note 4: Investment in XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. via TRANSCEND CAPITAL CORP.

Note 5: The balance of unrealized gains as of December 31, 2022 in the amount of NT$46,152 thousand was arising from sale of machiner y and equipment and provision of services to XTEK S EMICONDUCTOR (HUANGSHI) CO., LTD. Realized gross profit during January 1, 2022 and December 31, 2022 was NT$3,590 thousand.

Note 6: The said transactions had been eliminated during the preparation of the consolidated financial statements.

218

SCIENTECH CORPORATION

Information on Major Shareholders

December 31, 2022

Appendix Table 9

Name of major shareholder Shares Shares
Number of shares
held (shares)		 Ownership
HUNG-LIANG HSIEH
FEN-CHING HSIEH-CHIU
FULLWAY INVESTMENT CORPORATION
PARADIGM INVESTMENTCORP.		 7,943,455
6,095,072
5,600,292
4,892,721		 9.79%
7.51%
6.90%
6.03%

Note: The information on major shareholders are acquired from the data of the Taiwan Depository & Clearing Corporation with respect to the shareholders holding aggregately 5% or more of the common and preferred stocks of the Company that have been registered and delivered in dematerialized form on the last business day at the end of the current quarter. The share capital stated in the consolidated financial statements of the Company may be different from the number of shares that have been actually registered and delivered in dematerialized form due to different bases of compilation and calculation.

219

Independent Auditors’ Report

To SCIENTECH CORPORATION:

Audit opinion

We have audited the parent company only balance sheet of SCIENTECH CORPORATION as of December 31, 2022 and 2021, and the parent company only statement of comprehensive income, parent company only statement of changes in equity and parent company only statement of cash flows for the period from January 1 through December 31, 2022 and 2021, and the notes to the parent company only financial statements (including the summary of significant accounting policies).

In our opinion, the parent company only financial statements were prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and thus presented fairly, in all material aspects, the financial position of SCIENTECH CORPORATION as of December 31, 2022 and 2021, and its parent company only financial performance and cash flows for the period from January 1 through December 31, 2022 and 2021.

Basis for Opinions

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Parent Company Only Financial Statements section of our report. We were independent of SCIENTECH CORPORATION in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China and fulfilled all other responsibilities thereunder. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those that, in our professional judgment, were of utmost significance in our audit of the parent company only financial statements of SCIENTECH CORPORATION for the year ended December 31, 2022. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these issues.

Key audit matters for SCIENTECH CORPORATION’s parent company only financial statements for the year ended December 31, 2022 are stated as follows: Revenue recognition

220

SCIENTECH CORPORATION’s 2022 operating revenue from manufacturing of machinery and from sale of machinery in the capacity of an agent is material to the overall presentation of the parent company only financial statements. Revenue from machinery should be recognized upon the fulfillment of obligations. Since the company might recognize product sale revenue when such revenue does not qualify for the recognition criteria, revenue recognition is thus listed as the key audit matter.

Our main audit procedures to address the said matter included testing the effectiveness of the design and implementation of the internal control system pertaining to the recognition of machinery sale and discussing with the management about whether the accounting policy for revenue recognition is appropriate and consistently adopted; we also sampled customer sales documents to verify the transaction terms on the order or sale contract and check the acceptance certificate signed off by customers, so as to assess the correctness of the recognized revenue.

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

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

In preparing the parent company only financial statements, management is responsible for assessing the SCIENTECH CORPORATION's ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless management either intends to liquidate the SCIENTECH CORPORATION 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 SCIENTECH CORPORATION's financial reporting process.

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

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

221

influence the economic decisions of users taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also conduct the following tasks:

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

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

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

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

  5. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures and whether or not the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within SCIENTECH CORPORATION to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision, and performance of the audit for SCIENTECH CORPORATION. We remain solely responsible for our audit opinion.

222

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of SCIENTECH CORPORATION for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Deloitte & Touche Taiwan CPA: MING-HSIN CHO

CPA: HUI-MIN HUANG

Approval No. from the Securities and Futures Commission Tai-Tsai-Cheng-Liu-Zi No. 0920123784

Approval No. from the Financial Supervisory Commission Jin-Guan-Zheng-Shen-Zi No. 1070323246

March 10, 2023

223

SCIENTECH CORPORATION

Parent Company Only Balance Sheet

As of December 31, 2022 and 2021

Unit: NT$ thousand

Code

1100
1170
1180
130X
1410
1470
11XX

1517
1550
1600
1755
1785
1840
1915
1975
1990
15XX
1XXX

Code

2100
2130
2170
2219
2230
2252
2280
2399
21XX

2570
2580
2640
2670
25XX
2XXX

3110
3200
3310
3320
3350
3300
3410
3420
3400
3500
3XXX
 Assets
Current Assets
Cash (Notes 4 and 6)
Notes receivable and accounts receivable (Notes 4, 8, and 18)
Accounts receivable - related parties (Notes 4, 8, 18, and 25)
Inventories (Notes 4, 9, 22, and 25)
Prepayments (Notes 25)
Other current assets (Notes 13, 25, and 26)
Total current assets
Non-current assets
Financial assets at fair value through other comprehensive income
(Notes 4 and 7)
Investments accounted for using equity method (Notes 4 and 10)
Property, plant, and equipment (Notes 4, 11, and 22)
Right-of-use assets (Notes 4 and 12)
Patent right (Note 4)
Deferred income tax assets (Notes 4 and 20)
Prepayments for equipment (Note 11)
Net defined benefit assets, non-current (Note 4 and 16)
Other non-current assets (Note 13)
Total non-current assets
Total Assets
Liabilitiesand Stockholders’ Equity
Current liabilities
Short-term borrowings (Note 14)
Lease liability (Notes 4, 18, and 25)
Notes payable and accounts payable (Note 25)
Other payables (Note 11, 15, and 25)
Current income tax liabilities (Notes 4 and 20)
Short-term warranty provision (Note 4)
Lease liability (Notes 4, 12, and 25)
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred income tax liabilities (Notes 4 and 20)
Lease liability (Notes 4, 12, and 25)
Net defined benefit liability (Notes 4 and 16)
Other non-current liabilities (Notes 4 and 10)
Total non-current liabilities
Total liabilities
Equity (Notes 4 and 17)
Capital stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity
Exchange differences arising in the translation of foreign
operations
Unrealized valuation gains or losses on financial assets at fair
value through other comprehensive income
Total other equity interests
Treasury stock
Total stockholders’ equity
Total Liabilities and Equity		 December 31,2022
Amount
％
$ 2,192,602
20
648,697
6
5,152
-
3,710,856
34
1,480,388
13
11,344

-
8,049,039
73
138,562
1
1,048,879
10
1,495,749
14
66,472
1
2,374
-
110,047
1
14,492
-
1,842
-
32,328

-
2,910,745
27
$ 10,959,784
100
$ 424,979
4
4,469,292
41
1,784,239
16
347,532
3
156,497
2
32,560
-
6,015
-
17,105

-
7,238,219
66
76,185
1
62,894
-
-
-
-

-
139,079

1
7,377,298
67
811,390

7
728,964

7
318,368
3
14,306
-
1,793,497
16
2,126,171
19
2,415
-

35,795)

-

33,380)

-

50,659)

-
3,582,486
33
$ 10,959,784
100		 December 31,2021 December 31,2021
Amount
$ 2,192,602

648,697
5,152
3,710,856

1,480,388

11,344

8,049,039

138,562
1,048,879

1,495,749

66,472
2,374
110,047
14,492
1,842
32,328

2,910,745

$ 10,959,784

$ 424,979
4,469,292

1,784,239

347,532
156,497
32,560
6,015
17,105

7,238,219

76,185
62,894
-
-

139,079

7,377,298

811,390

728,964

318,368
14,306
1,793,497

2,126,171

2,415

35,795)


33,380)


50,659)

3,582,486

$ 10,959,784
 ％
















(
(
(

 19
11
1
26
7

-
64
3
13
17
1
-
1
1

-
36
100
4
28
13
5
2
-
-

-
52
1
1
-

-

2
54
12

9
4
-
22
26
-

-

-
(
1)
46
100

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

Chairman of the Board: HUNG-LIANG HSIEH Manager: MING-CHI HSU Accounting Manager: SHAO-CHE CHUANG

224

SCIENTECH CORPORATION

Parent Company Only Statement of Comprehensive Income

January 1 to December 31, 2022 and 2021

Code
Operating revenue (Notes 4,
18, and 25)
4100
Goods sales revenue

4600
Services revenue
4800
Other operating revenue
4000
Total operating
revenue

5000
Operating cost (Notes 9, 19,
and 25)

5900
Operating gross profit

5910
Unrealized gains on
transactions with associates
5950
Realized operating gross
profit

Operating expenses (Notes 4,
8, 19, and 25)
6100
Marketing expenses
6200
General and
administrative
expenses
6300
R&D expenses
6450
Loss (Gain) on expected
credit impairment

6000
Total operating
expenses

6900
Operating Income

Non-operating income and
expenses
7010
Other income (Note 4, 7,
and 25)
7020
Other gains and losses
(Note 4)

(Continued)		 2022 Unit: NT$ thousand; except
earnings per share
2021
％
Amount
％
96
$ 3,385,344
96
3
147,070
4

1

14,938

-
100
3,547,352
100
62
2,180,340
61
38
1,367,012
39

-
(
40,187)
(
1)
38
1,326,825
38
13
433,376
12
4
111,582
3
7
260,201
8

-
(
28,555)
(
1)
24

776,604
22
14

550,221
16
-
27,667
1

-
(
1,177 )
-		 Unit: NT$ thousand; except
earnings per share
2021
％
Amount
％
96
$ 3,385,344
96
3
147,070
4

1

14,938

-
100
3,547,352
100
62
2,180,340
61
38
1,367,012
39

-
(
40,187)
(
1)
38
1,326,825
38
13
433,376
12
4
111,582
3
7
260,201
8

-
(
28,555)
(
1)
24

776,604
22
14

550,221
16
-
27,667
1

-
(
1,177 )
-
％











96
4

-
100
61
39
(
1)
38
12
3
8
(
1)
22
16
1

-

225

(Continued)

Code
7050
Financial cost (Notes 4,
19, and 25)

7070
Share of profit or loss of
associates and
subsidiaries accounted
for using equity
method (Notes 4 and
10)
7100
Interest income (Notes 4
and 25)
7630
Exchange gains or losses
(Notes 4 and 28)
7670
Gains (losses) on
reversal of impairment
(Notes 4 and 11)

7000
Total non-operating
income and
expenses


7900
Net profits before tax

7950
Income tax expenses (Notes 4
and 20)


8200
Net profit in the current year

Other comprehensive (Note 4)
Items that will not be
reclassified to profit or
loss
8311
Re-measurements of
defined benefit
plans (Note 16)
8316
Unrealized
valuation gains or
losses on
investment in
equity
instruments at fair
value through
other
comprehensive
income

8349
Income tax related
to items that will
not be reclassified
(Note 20)

8310

(Continued)		 2022 ％

-

1

-
2


-


3

17

3

14

-
( 1)

-

(1)
 2021
Amount
( $ 3,263 )
34,511
8,783
60,680


102,423

695,382


126,799


568,583

1,896
( 46,319)

(
379)

(44,802)
 Amount
( $ 3,029 )
(
50,326 )
794
(
37,615 )

25,313

(
38,373)

511,848


91,943


419,905

451
10,524
(
90)


10,885
 ％








-
(
2 )
-
(
1 )

1
(
1)
15

3
12
-
-

-

-

226

(Continued)

Code
Items that will be
reclassified to profit or
loss
8380
Share of other
comprehensive
income of
associates and
subsidiaries
accounted for
using equity
method (Note 10)
8399
Income tax related
to items that
might be
reclassified (Note
20)
8360

8300
Other
comprehensive
income (net after
tax)

8500
Total comprehensive income
for the year

Earnings per share (Note 21)
9710
Basic

9810
Diluted
 2022 ％

-


-


-

(1)

13


 2021
Amount
$ 34,068
6,823)

27,245


17,557)

$ 551,026

$ 7.08
$ 7.00		 Amount
( $ 16,321 )

3,266

(
13,055)

(
2,170)

$ 417,735

$ 5.23
$ 5.19		 ％

(

(
-

-

-

-
12

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

Chairman of the Board: Manager: Accounting Manager: HUNG-LIANG HSIEH MING-CHI HSU SHAO-CHE CHUANG

227

SCIENTECH CORPORATION

Parent Company Only Statement of Changes in Equity

January 1 to December 31, 2022 and 2021

Unit: NT$ thousand

Code
A1
Balance January 1, 2021
M7
Changes in ownership interests in
associates
Earnings distribution for 2020
B1
Legal reserve
B5
Cash dividends
B17
Reversal of special reserves
D1
2021 net income
D3
Other comprehensive income (loss)
after tax for 2021

Z1
Balance December 31, 2021
M7
Changes in ownership interests in
associates
Earnings distribution for 2021
B1
Legal reserve
B3
Special reserves
B5
Cash dividends
D1
2022 net income
D3
Other comprehensive income (loss)
after tax for 2022

Z1
Balance as of December 31, 2022
 Capital stock
Thousand shares
Amount

81,139 $ 811,390
-
-
-
-
-
-
-
-
-
-

-

-

81,139
811,390
-
-
-
-
-
-
-
-
-
-

-

-


81,139
$ 811,390
 Capital stock
Thousand shares
Amount

81,139 $ 811,390
-
-
-
-
-
-
-
-
-
-

-

-

81,139
811,390
-
-
-
-
-
-
-
-
-
-

-

-


81,139
$ 811,390
 Capital reserves
$ 611,983

13,657

-

-

-

-

-


625,640

103,324

-

-

-

-

-

$ 728,964
 Retained earnings
Undistributed
earnings
$ 1,226,465

-
(
30,658 )
(
148,606 )

1,308

419,905

361


1,468,775

-
(
42,027 )
(
2,531 )
(
200,820 )

568,583

1,517

$ 1,793,497
 Other equity
Exchange
differences
arising in the
translation of
foreign
operations
Unrealized
valuation gains
or losses on
investment in
equity
instruments at
fair value
through other
comprehensive
income

( $ 11,775 ) $ -

-
-

-
-

-
-

-
-

-
-
(
13,055)

10,524

(
24,830 )
10,524

-
-

-
-

-
-

-
-

-
-

27,245
(
46,319)

$ 2,415
($ 35,795)
 Other equity
Exchange
differences
arising in the
translation of
foreign
operations
Unrealized
valuation gains
or losses on
investment in
equity
instruments at
fair value
through other
comprehensive
income

( $ 11,775 ) $ -

-
-

-
-

-
-

-
-

-
-
(
13,055)

10,524

(
24,830 )
10,524

-
-

-
-

-
-

-
-

-
-

27,245
(
46,319)

$ 2,415
($ 35,795)
 Treasury stock
( $ 50,659 )

-

-

-

-

-

-

(
50,659 )

-

-

-

-

-

-

($ 50,659)
 Total
stockholders’
equity
Exchange
differences
arising in the
translation of
foreign
operations
( $ 11,775 )

-

-

-

-

-
(
13,055)

(
24,830 )

-

-

-

-

-

27,245

$ 2,415
Thousand shares
81,139
-
-
-
-
-

-

81,139
-
-
-
-
-

-


81,139
 Legal reserves
$ 245,683

-

30,658

-

-

-

-


276,341

-

42,027

-

-

-

-

$ 318,368
 Special reserves
$ 13,083

-

-

-
(
1,308)

-

-


11,775

-

-

2,531

-

-

-

$ 14,306

























































(
(		 $ 2,846,170

13,657

-
(
148,606 )
-

419,905
(
2,170)

3,128,956

103,324

-

-
(
200,820 )

568,583
(
17,557)
$ 3,582,486

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

Chairman of the Board: HUNG-LIANG HSIEH

Accounting Manager: SHAO-CHE CHUANG

Manager: MING-CHI HSU

228

SCIENTECH CORPORATION

Parent Company Only Statement of Cash Flows

January 1 to December 31, 2022 and 2021

Unit: NT$ thousand

Code
Cash flow from operating activities
A10000
Net profits before tax

A20010
Income expenses
A20100
Depreciation
A20200
Amortization expenses
A20300
Loss (Gain) on expected credit
impairment
A20900
Financial cost
A21200
Income from interests

A21300
Dividend Income

A22300
Share of profit or loss of
associates
and
subsidiaries
accounted for using equity
method

A23100
Gain on disposal of investments
A23700
Impairment loss on non-financial
assets
A23900
Unrealized gains on transactions
with associates
A24100
Unrealized exchange loss (gain)
A29900
Defined benefit cost
A30000
Net changes in operating assets and
liabilities
A31150
Notes receivable and accounts
receivable
A31160
Accounts receivable - related
parties
A31200
Inventories

A31230
Prepayments

A31240
Other current assets

A32125
Contract liabilities

A32150
Notes receivable and accounts
receivable
A32180
Other accounts payable
A32200
Short-term warranty provision
A32230
Other current liabilities
A32240
Net defined benefit liabilities

A33000
Cash flow from operating activities

A33100
Interest received
A33300
Interest paid

A33500
Income taxes paid

AAAA
Net cash generated by operating
activities

(Continued)		 2022
$ 695,382

105,767
324
5,503

3,263
(
8,783 )

(
800 )
(
34,511 )
(
1,284 )
48,223
5,965

34,680

-

52,675

52,501

( 1,989,646 )

( 1,034,494 )

(
986 )
2,603,239

858,105
36,688
914
3,326
(
100)

1,435,951

8,793
(
3,227 )

(
107,783)

1,333,734
 2021
$ 511,848
101,131
260
(
28,555 )
3,029
(
794 )


50,326
34,624
40,187
(
7,350 )
(
8,371 )
(
123,646 )
(
57,873 )
( 1,038,548 )
(
372,191 )
732
1,354,946
563,226
93,628
6,113
4,695
(
5,454)
1,121,963
846
(
3,081 )
(
60,767)
1,058,961

229

(Continued)

Code
Cash Flow from Investing Activities
B00010
Acquisition of financial assets at fair
value through other comprehensive
income

B01900
Proceeds from disposal of investments
accounted for using equity method
B02700
Acquisition of property, plant and
equipment

B04100
Decrease in other accounts receivable -
related parties
B04500
Acquisition ofpatent right
B06700 Increase in other non-current assets
B07600
Dividends received

BBBB
Net cash used in investing
activities

Cash Flow from Financing Activities
C00100
Increase in short-term borrowings
C00200
Decrease in short-term borrowings

C04020
Repayment of principal of lease
liabilities

C04400
Decrease
in
other
non-current
liabilities
C04500
Cash dividends paid

CCCC
Net cash outflow from financing
activities

EEEE
Net increase in cash
E00100 Opening Balance

E00200 Ending Balance
 2022
( $ 18,631 )


1,868
(
398,356 )

5,000
( 1,227)
( 12,348)
(
800)
)
(
422,894)

242,328
(
59,170 )

(
9,621 )

-

(
200,820)

(
27,283)

883,557
1,309,045

$ 2,192,602
 2021
( $ 155,726 )
-
(
66,915 )
13,872
( 3,285)

-
(
212,054)
272,537
(
249,933 )
(
9,275 )
(
34 )
(
148,606)
(
135,311)
711,596

597,449
$ 1,309,045

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

Chairman of the Board: Manager: Accounting Manager: HUNG-LIANG HSIEH MING-CHI HSU SHAO-CHE CHUANG

230

SCIENTECH CORPORATION

Notes to the Parent Company Only Financial Statements

January 1 to December 31, 2022 and 2021

(All amounts are in NT$ thousand unless otherwise specified)

1. Company History

The Company was incorporated in October 1979. Mainly engaged in the research and development, production, sales, and maintenance of process equipment for semiconductors, liquid crystal displays (LCDs), light-emitting diodes (LEDs), and solar power generation; wafer reclaim; and general import and export, the Company was listed on the Taiwan Stock Exchange (TWSE) in March 2013.

The parent company only financial statements are stated in the functional currency of the Company, which is New Taiwan Dollars.

2. Date and procedures of approval of the financial statements

The parent company only financial statements were approved at the Board meeting on March 10, 2023.

3. Application of New Standards, Amendments, and Interpretations

  • (I) First-time application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC interpretations (IFRIC), and SIC interpretations (SIC) (hereinafter collectively referred to as “IFRSs”) approved and promulgated by the Financial Supervisory Commission (hereinafter referred to as “FSC”) won’t cause any material changes to the Company’s accounting policies.

  • (II) Application of the FSC-endorsed IFRSs in 2023

  • Application of New Standards, Amendments, and Effective Date Announced Interpretations by IASB

  • Amendments to IAS 1, “Disclosure of January 1, 2023 (Note 1) Accounting Policies”

  • Amendments to IAS 8, “Definition of Accounting January 1, 2023 (Note 2) Estimates”

  • Amendments to IAS 12, “Deferred Tax Related to January 1, 2023 (Note 3) Assets and Liabilities Arising from a Single Transaction”

  • Note 1: The amendments shall apply to the annual reporting period beginning on or after January 1, 2023.

231

  • Note 2: The amendments shall apply to the changes to the accounting estimates or policies occurring during the annual reporting period beginning on or after January 1, 2023.

  • Note 3: This amendment requires entities to recognize a deferred tax liability for the temporary difference associated with lease and decommissioning obligations that arise on January 1, 2022 and is applicable to all transactions occurred after such date.

As of the date when the parent company only financial statements were approved and issued, the Company assessed the said amended standards and interpretations and found them to have no significant effects on the Company’s financial position and financial performance.

  • (III) IFRSs issued by the IASB but not yet approved and promulgated by the FSC

Application of New Standards, Amendments, and Effective Date Announced Interpretations by IASB (Note 1) Amendments to IFRS 10 and IAS 28, “Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture” Amendments to IFRS 16, Lease Liability in a Sale and January 1, 2024 (Note 2) Leaseback IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendment to IFRS 17, “Initial Application of IFRS January 1, 2023 17 and IFRS 9—Comparative Information” Amendments to IAS 1, “Classification of Liabilities as January 1, 2024 Current or Non-current” Amendments to IAS 1, Non-current Liabilities with January 1, 2024 Covenants

  • Note 1: Unless otherwise specified, the above-mentioned new/ amended/ revised standards or interpretation shall become effective in the annual reporting periods beginning on or after each effective date.

  • Note 2: A seller-lessee is required to apply the amendments to IFRS 16 to any leaseback transactions arsing after the date of initial application of IFRS 16.

Up to the release date of the parent company only financial statements, the Company assessed the effects of the said amendments to the standards and interpretations on the financial position and performance on a continuous basis. The relevant effects will be disclosed after the assessment.

232

4. Summary of significant accounting policies

(I) Compliance statement

  • The parent company only financial statements were prepared in accordance with

  • the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

  • (II) Basis of preparation

Except for the financial instruments measured at fair value and the net defined benefit liabilities recognized at the present value of defined benefit obligations less the fair value of the plan assets, the parent company only financial statements were prepared on the basis of historical cost.

Fair value measurements are classified into Level 1, 2, and 3 based on the degree to which an input is observable and the significance of the input:

  1. Level 1 inputs: The quoted price in an active market for identical assets or liabilities that is accessible on the measurement date (before adjustment).

  2. Level 2 inputs: Other than quoted prices included in Level 1, the inputs that are observable for assets or liabilities directly (i.e. the price) or indirectly (i.e. inferred from the price).

  3. Level 3 inputs: The inputs that are not observable for assets or liabilities. When preparing the parent company only financial statements, the Group accounted for subsidiaries and associates using the equity method. To align the profit or loss, other comprehensive income, and equity in the parent company only financial statements with those attributable to owners of the Company stated in the consolidated financial statements, any differences resulting from the difference between parent company only basis and consolidated basis are adjusted through “Investment accounted for using equity method”, “Share of profit or loss of associates and subsidiaries”, “Share of other comprehensive income of subsidiaries and associates accounted for using equity method”, and other related equity items.

(III) Criteria for classification of assets and liabilities as current or non-current Current assets include:

  1. Assets that are held mainly for trading purposes;

  2. assets expected to be realized within 12 months after the balance sheet date; and

  3. Cash (excluding those that are restricted for being used for exchange or settlement of liabilities within 12 months after the balance sheet date).

  4. Current liabilities include:

  5. Liabilities that are held mainly for trading purposes;

233

  1. liabilities that will be settled within 12 moths after the balance sheet date; and

  2. liabilities whose due date cannot be unconditionally extended to more than 12 months after the balance sheet date.

  3. Assets or liabilities that are not the above-mentioned current assets or current

liabilities are classified as non-current assets or non-current liabilities.

  • (IV) Foreign currency

When preparing the financial statements, the Company translated the transactions denominated in currencies other than its functional currency (i.e., foreign currencies) into its functional currency by applying the exchange rate prevailing on the transaction date.

Monetary items in foreign currencies are translated at the closing exchange rate on each balance sheet date. Exchange differences arising from settlement or translation of the monetary items are recognized in the profit or loss of the period.

Non-monetary items in foreign currencies measured at fair value are translated at the exchange rate prevailing on the date the fair value was determined. The exchange differences resulting therefrom are recognized in profit or loss of the period, or in other comprehensive income when changes in fair value of such items were designated to be recognized in other comprehensive income.

Non-monetary items in foreign currencies measured at historical cost are translated at the exchange rate on the date of transaction and are not retranslated.

During preparation of the parent company only financial statements, the assets and liabilities of the Company’s foreign operations (including the subsidiaries, associates, or branch companies of which the countries they operate or the currencies they use are different from those of the Company) are translated into NTD at the exchange rate prevailing on each balance sheet date. The income and expense items are translated at the average exchange rate of the period, and the exchange differences resulting therefrom are recognized in other comprehensive income.

(V) Inventories

Inventories include raw materials, work-in-progress, finished goods, and products. Inventories are measured at the lower of cost and net realizable value. Cost and net realizable values are compared on an item by item basis, except inventories of the same category. Net realizable value refers to the estimated selling price in a normal situation less the estimated cost needed to complete the work and the estimated cost needed to complete the sale. The weighted average method is used to calculate the inventory cost.

234

(VI) Investment in subsidiary

The Company accounted for investment in subsidiaries using the equity method. Subsidiaries are parent company only entities controlled by the Company.

Under the equity method, the investment is initially recognized at its costs and the amount of increase or decrease in the carrying amount of such investment after the date of acquisition depends on profits distributed and the Company’s shares of profit/loss and other comprehensive income in the subsidiaries. In addition, changes in subsidiaries’ other equity attributable to the Company are recognized according to the shareholding percentage.

(VII) Investment in associates

An associate refers to a company over which the Company has a significant influence and which is not a subsidiary or joint venture.

The Company accounts for its equity in an associate using the equity method.

Under the equity method, the investment in associates is initially recognized at its costs and the amount of increase or decrease in the carrying amount of such investment after the date of acquisition depends on the profits distributed and the Company’s shares of profit/loss and other comprehensive income in the associates and joint ventures. In addition, changes to the Group’s equity in the associates are recognized based on our shareholding ratio.

When the Company does not subscribe to new shares issued by associates based on its shareholding ratio, resulting in changes in the shareholding ratio and consequently to the net equity value of investment, the Company accounts for such changes by adjusting capital reserves - changes in the net equity of associates recognized under the equity method and investments under equity method. However, if subscription or acquisition of the shares is not based on the shareholding ratio, leading to a decrease in the Group’s ownership equity in the associates, the amounts related to the associate in other comprehensive income are reclassified according to the percentage of such decrease and treated with the same accounting treatment basis as the one which the associates' direct disposal of relevant assets or liabilities shall be in accordance with. If the said adjustment shall be debited to capital reserves, and the balance of capital reserves arising from investment under equity method is insufficient to be offset, the difference is debited to retained earnings.

When the Company’s shares of losses in the associates are equal to or exceed its equity in the associates (including the carrying amount of investment in the associate

235

under the equity method and other long-term equities that in nature are part of the net investment portfolio made by the Company in the associate concerned) , the Company does not recognize further losses. The Company recognizes additional losses and liabilities only when any legal obligation or constructive obligation is incurred or the Company made payment on behalf of the associates.

For impairment evaluation, the Company tests the entire investment book value for impairment as a single asset by comparing the recoverable amount and book value of the investment. Any recognized impairment loss is also part of the investment book value. Any reversal of the impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increased.

The profit or loss generated from the upstream, downstream, and side stream transactions between the Company and the associates is recognized in the parent company only financial statements only when such profit or loss is irrelevant to the Company’s equity in the associates.

(VIII) Property, plant and equipment

Property, plant, and equipment are initially recognized at cost and subsequently at cost net of accumulated depreciation and accumulated impairment.

Each significant part of the property, plants, and equipment is separately depreciated on the straight-line basis over their useful life. The Company reviews the estimated useful life, residual value, and method of depreciation at least once before the end of each year and prospectively recognizes the effect from changes in accounting estimates.

When property, plant, and equipment is disposed of, the difference between the net disposal proceeds and the asset book value is recognized in profit or loss.

  • (IX) Patent right

Patent rights acquired separately are initially measured in accordance with the cost and subsequently based on the cost net of accumulated amortization and impairment losses. Patent rights are amortized on the straight-line basis over their useful life. The Company reviews the estimated useful life, residual value, and method of amortization at least once before the end of each year and prospectively recognizes the effects of changes in accounting estimates.

  • (X) Impairments of property, plant, and equipment, right-of-use assets, and intangible assets

236

The Company assesses whether there are any signs indicating that any property, plant, and equipment, right-of-use assets, or intangible assets might be impaired on each balance sheet date. If any such indication exists, then the asset’s recoverable amount is estimated. When the recoverable amount of individual assets cannot be estimated, the Company estimates the recoverable amount of the cash-generating unit to which the assets belong. Corporate assets are allocated on a reasonable and consistent basis to the smallest group of cash-generating units

The recoverable amount is the higher of the fair value less costs of sale and the value in use. When the recoverable amount of any individual assets or cash-generating units is less than the book value, the book value of the individual assets or cashgenerating units is adjusted down to the recoverable amount, and the impairment loss is recognized in profit or loss.

(XI)

When the impairment loss is reversed subsequently, the book value of the asset or cash-generating unit is adjusted up to the revised recoverable amount. However, the increased book value shall not exceed the book value that would have been determined (net of amortization or depreciation) had no impairment loss been recognized in prior years. The reversal of the impairment loss is recognized in profit or loss. Financial instruments

Financial assets and financial liabilities are initially recognized in the parent company only balance sheet when the Company becomes a party to the instrument contract.

Financial assets or financial liabilities other than those measured at fair value through profit or loss are initially recognized at the fair value plus the transaction costs that can be directly attributed to acquisition or issuance of such financial assets or liabilities. Any transaction cost directly attributable to the acquisition or issuance of the financial assets or financial liabilities measured at fair value through profit or loss is immediately recognized in profit or loss.

  1. Financial assets

The arms-length transactions of financial assets are recognized and derecognized using the transaction date accounting method.

  • (1) Type of measurement

The Company’s financial assets include financial assets measured at fair value through profit or loss, financial assets measured at amortized

237

cost, and investment in equity instrument measured at fair value through other comprehensive income.

  • A. Financial assets at fair value through profit or loss

Financial assets measured at fair value through profit or loss refer to those designated to be measured at fair value through profit and loss. Financial assets are designated to be measured at fair value through profit or loss upon initially recognition if such designation could eliminate or materially reduce inconsistency in measurement or recognition.

Financial assets measured at fair value through profit or loss are measured at fair value; the dividends and interest derived therefrom are recognized in other income and interest income, respectively. Gains or losses from re-measurement are recognized in other gains and losses.

  • B. Financial assets at amortized cost

When the Company's invested financial assets meet both of the following two conditions, they are classified as financial assets measured at amortized cost:

  • a. The financial assets are held within a business model whose objective is collecting contractual cash flows; and

  • b. The contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

After the initial recognition, the financial assets measured at amortized cost (including cash and cash equivalents and receivables [including those due from related party]) are measured at the amortized cost equal to the total book value determined under the effective interest method less any impairment losses, and any gain or loss from foreign currency translation is recognized in profit or loss.

Interest income is calculated as the effective interest rate times the total book value of financial assets, except under the following two circumstances:

  • a. For purchased or originated credit-impaired financial assets, the interest income is calculated as the credit-adjusted effective interest rate times the amortized cost of the financial assets.

238

  • b. For financial assets that are not purchased or originated creditimpaired but subsequently become credit-impaired, the interest income is calculated as the effective interest rate times the amortized cost of the financial assets, in all subsequent periods following the period in which the impairment occurred.

Financial assets are deemed to be credit-impaired upon the occurrence of significant financial difficulties confronting the issuer or debtor; default; or the circumstance that the debtor is likely to file for bankruptcy or other financial reorganization.

Cash equivalents include time deposits that are highly liquid, readily convertible to known amounts of cash, and subject to an insignificant risk of changes in value, and that mature within three months after the acquisition date; cash equivalents are used to meet short-term cash commitments.

  • C. Investment in equity instruments at fair value through other comprehensive income

At initial recognition, the Company may make an irrevocable election to measure the investment in equity instruments that are held not for trading, that are not recognized by the acquirer in a business merger, and that have no consideration, at fair value through other comprehensive income.

Investment in equity instruments measured at fair value through other comprehensive income is measured at fair value. Subsequent changes in the fair value are recognized in other comprehensive income and accumulated in other equity.

The dividends derived investment in equity instruments measured at fair value through other comprehensive income are recognized in profit or loss when the Company’s right to receive dividends is determined, except under the circumstance that such dividends apparently represent a partial return of the investment cost.

(2) Impairment of financial assets

The Company assesses impairment losses on the financial assets (including accounts receivable [including those due from related parties])

239

measured at amortized cost based on the expected credit losses on each balance sheet date.

Loss allowance for accounts receivable is recognized based on the lifetime expected credit losses. The Group first assess whether the credit risk on other financial assets significantly has increased after the initial recognition. When the increase is not significant, the loss allowance for the financial assets is recognized at the 12-month expected credit losses; when the increase is significant, the loss allowance is recognized at the lifetime expected credit losses.

Expected credit losses are the weighted average credit losses with the probability of default ('PD') as the weight. 12-month expected credit losses represent the expected credit losses on financial instruments from any potential default within 12 months after the reporting date. Lifetime expected credit losses represent the expected credit losses on financial instruments from any potential default during the expected lifetime.

For the purpose of internal credit risk management, financial assets are deemed to be defaulted when any of the following circumstance occurs, without consideration of the collaterals held:

  • A. Any internal or external information indicates that a debtor is impossible to pay off the debts.

  • B. Any contractual payment is overdue, unless any reasonable and supportable information demonstrates that a more lagging default criterion is more appropriate.

The impairment loss on all financial assets is deducted from the book value of the financial assets through their allowance account.

  • (3) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred to other entities.

For derecognition of the entire financial assets measured at amortized cost, the differences between the book value and the received consideration are recognized in profit or loss. For derecognition of the

240

entire investments in equity instruments measured at fair value through other comprehensive income, the cumulative gain or loss is directly transferred to retained earnings and not reclassified as profit or loss.

  1. Equity instruments

Equity instruments issued by the Company are recognized as the amount of consideration received, less the direct cost of issuance.

When a reacquired equity instrument is originally owned by the Company, the re-acquisition is recognized as a deduction to equity. Purchase, sale, issuance, or cancellation of the equity instruments owned by the Company are not recognized in profit or loss.

  1. Financial liabilities

  2. (1) Subsequent measurement

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

  • (2) Derecognition of financial liabilities

For derecognition of financial liabilities, the differences between the book value and the consideration paid are recognized in profit or loss.

  • (XII) Short-term warranty provision

The warranty obligation that ensures agreement between products and agreed specifications is management’s best estimate of the expenditure to settle the Company’s obligations, and is recognized at the time when revenue is recognized for underlying products.

  • (XIII) Revenue recognition

After identifying the performance obligations under a contract with customers, the Company allocates the transaction price to each performance obligation and recognizes the allocated amount as revenue after each performance obligation is fulfilled. The Company’s revenue comes from equipment trading and wafer reclamation, and is recognized when products are accepted by customers; or when they are shipped or delivered to the place designated by customers, depending on the contractual terms. Before being recognized as revenue, advance receipts are recognized as contract liability.

  • (XIV) Lease

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

241

  1. The Company is a lessor.

All leases are operating leases.

Lease payments from an operating lease are recognized as revenue on a straight line basis over the lease term.

  1. The Company is a lessee

When the Company is a lessee, the lease payment from the leases of lowvalue underlying assets to which the exemption of recognition is applied and short-term lease is recognized in expenses on the straight-line basis over the lease term, while right-of-use assets and lease liabilities with respect to other leases are recognized on the lease commencement date.

The right-of-use assets are initially measured at cost (including the initial recognized amount of lease liabilities), and subsequently measured at the cost net of accumulated depreciation and accumulated impairment losses, adjusted for remeasurements of lease liabilities. Right-of-use assets are separately presented in the parent company only balance sheet.

Right-of-use assets are subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use assets or the end of the lease term.

Lease liabilities is initially measured at the present value of lease payment (fixed payments). If the interest rate implicit in a lease can be readily determined, the lease payments are discounted at the interest rate. When such interest rate cannot be readily determined, the lessee's incremental borrowing rate of interest is used.

Subsequently, the lease liabilities are measured at amortized cost under the effective interest method, and the interest expenses are amortized over the lease term. When future lease payments change as a result of a change in the lease term, the Company re-measures the lease liabilities and adjusts the right-of-use assets accordingly. However, the residual remeasurements are recognized in profit or loss when the book value of right-of-use assets is reduced to zero. Lease liabilities are separately presented in the parent company only balance sheet.

(XV)

Government grants

Government grants may be recognized only when it is reasonable to ensure that the Company will comply with the conditions incidental to the government grants and the subsidies may be received affirmatively.

242

If the government grants are intended to make up for the expenses or losses that have occurred, or immediately finance the Company without incurring any future cost, such grants are recognized in profit or loss during the period when they can be received. (XVI) Employee benefits

  1. Short-term employee benefits

  2. Short-term employee benefits are measured at non-discounted amount

  3. expected to be paid in exchange for the services to be provided by the employees.

    1. Post-employment benefit

The pension contributed under the Defined Contribution Pension Plan is recognized in expenses during the period when employees provide services.

Defined benefit cost under the Defined Benefit Pension Plan is calculated actuarially using the projected unit credit method. Service costs and net interest on net defined benefit liabilities are recognized as employee benefit expenses when they are incurred. Remeasurements are recognized in other comprehensive income and presented in retained earnings when they occurred, and are not reclassified to profit or loss in subsequent periods.

(XVII) Income tax

Tax expenses are the total of current income tax and deferred income tax.

  1. Current income tax

The additional income tax on undistributed earnings that is calculated according to the Income Tax Act of the Republic of China is recognized in the year when the related resolution is made at the shareholders’ meeting.

The adjustments to the income tax payable in the previous year are recognized in the current income tax.

  1. Deferred income tax

Deferred income tax is calculated based on the temporary difference between the book value of assets and liabilities and the tax basis for calculation of taxable income.

Deferred income tax liabilities are generally recognized based on all taxable temporary differences; deferred income tax assets are recognized when taxable income sufficiently enough to offset the deductible temporary differences and loss carryforwards is highly likely in the future.

Taxable temporary differences related to investment in subsidiaries and associates are recognized in deferred income tax liabilities except that the

243

Company can control the timing of reversal of the taxable temporary differences and that such differences are not likely to be reversed in the foreseeable future. A deferred tax asset is recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized in the foreseeable future.

The book value of deferred income tax assets is reviewed at each balance sheet date. When any of the deferred income tax assets is not likely to have adequate taxable income necessary for the recovery of all or part of the assets anymore, the book value thereof is reduced. Those that are not originally recognized in deferred income tax assets are reviewed at each balance sheet date. When any of those is likely to generate taxable income necessary for the recovery of all or part of the assets in the future, the book value thereof is increased.

Deferred income tax assets and liabilities are measured at the tax rate of the period in which the liabilities or assets are expected to be settled or realized. The tax rate is subject to the tax rate and tax law legislated or substantively legislated on the balance sheet date. The deferred income tax liabilities and assets are measured to reflect the tax consequences on the balance sheet date arising from the method that the Company expects to use to recover or settle the book value of the liabilities and assets.

  1. Current and deferred income taxes

Current and deferred income taxes are recognized in profit or loss, or in other comprehensive income if they are related to the current and deferred income taxes designated to be recognized in other comprehensive income.

  1. Significant Accounting Judgments, Assumptions, and Major Sources of Estimation Uncertainty

For adoption of the accounting policies, the management, based on historical experience and other relevant factors, must make judgments, estimates, and assumptions related to the information that cannot be readily acquired from other sources. The actual results may differ from those estimates.

The Company takes into account the development of the COVID-19 pandemic and its effect on the Taiwan economy when making significant accounting estimates for cash flows, growth rate, discount rate, and profitability. The management will continue to review the estimates and basic assumptions. When the changes in the estimates only affect

244

the current period, they are recognized in the period in which they are made; when the changes in the estimates affect the current and future periods at the same time, they are recognized in the period in which they are made and in future periods.

Through an assessment, the management of the Company does not think an uncertainty exists in material accounting judgments, estimates, or assumptions.

6. Cash and cash equivalents

Cash and cash equivalents
Cash on hand and working capital
Bank check and demand deposit
Cash equivalents
Time deposit		 December31,2022
$ 505
1,762,003

430,094
$ 2,192,602		 December31,2021






$ 405
1,308,640
-
$ 1,309,045

The annual interest rate for bank time deposits was 4.0% ~ 4.8% on December 31, 2022.

245

7. Financial assets at fair value through other comprehensive income

December 31, 2022 December 31, 2021 Investment in equity instruments measured at fair value through other comprehensive income Domestic investments Shares of TWSE-listed companies through private placement SPIROX CORP. $ 89,205 $ 112,237 Overseas investments Shares not traded on an exchange or OTC INFINITESIMA LIMITED 49,357 54,013 $ 138,562 $ 166,250

The Company invested in the common shares of the aforementioned companies according to its medium-term and long-term strategies, and expected to gain profits through long-term investment. Since the Company's management deemed that the recognition of short-term changes in the investment’s fair value in profit or loss was not consistent with the said long-term investment plan, they opted to have the investment measured at fair value through other comprehensive income.

The dividend income of NT$800 thousand (recognized under other income) by the Company in 2022 had to do with the shares held as of December 31, 2022.

8. Notes receivable and accounts receivable (including those due from related parties)

Notes receivable
Accounts receivable (including
those due from related parties)
Less: loss allowance		 December31,2022
$ 1,904

679,467
681,371

27,522
$ 653,849		 December31,2021 December31,2021






$ 4,079
779,674
783,753
22,129
$ 761,624

The Company’s average credit period for sales of goods is 120 days on average. Accounts receivable paid within 60 days after the invoice date or the sale date won’t be charged any interest. If accounts receivable are not paid within 60 days, the Group will assess the credit status of each individual transaction party on a business month to measure possible gains or losses and reduce possible losses.

246

The Company recognizes the loss allowance for notes receivable and accounts receivable (including those due from related parties) based on the lifetime expected credit losses. The lifetime expected credit losses are calculated by considering the customer’s default record and current financial position, and the industrial and economic conditions. When there is any evidence showing that the trading counterparty is facing serious financial difficulties and the Company cannot estimate a reasonable recoverable amount, the Company directly writes off related notes receivable and accounts receivable, but will continue recourse activities. Any recovered amount through the recourse activities is recognized in profit or loss.

The Company recognizes the loss allowance for notes receivable and accounts receivable (including those due from related parties) as follows: December 31, 2022

0–180 days

ECL rate
-
Total book value
$ 588,197

Loss allowance
(lifetime ECL)

-
Amortized cost
$ 588,197

December 31, 2021
0–180 days

ECL rate
-
Total book value
$ 670,624

Loss allowance
(lifetime ECL)

-
Amortized cost
$ 670,624
 0–180 days
 181–273 days 274–365 days

(



(
 366–540 days 541–730 days More than 731
days		 Total

(

 5%
$ 24,088


1,204)
$ 22,884

181–273 days
(

 10%
$ 28,947

2,895)
$ 26,052
274–365 days		 45%
$ 27,860


12,537)
$ 15,323

366–540 days
(

 70%
$ 4,644


3,251)
$ 1,393

541–730 days
(

 100%
$ 7,635


7,635)
$ -

More than 731
days
(
 $ 681,371

27,522)
$ 653,849
Total

ECL rate
Total book value

Loss allowance
(lifetime ECL)
Amortized cost


-
$ 670,624

-
$ 670,624
(
 5%
$ 51,279


2,564)
$ 48,715
(
 10%
$ 34,263

3,426)
$ 30,837		 45%
$ 20,731


9,329)
$ 11,402
(
 70%
$ 154


108)
$ 46
(
 100%
$ 6,702


6,702)
$ -
(
 $ 783,753

22,129)
$ 761,624

December 31, 2021

Changes in the loss allowance for notes receivable and accounts receivable (including those due from related parties) are as follows:

Balance - beginning of period
Less: Impairment loss (reversed)
in the year
Balance - end of year		 2022
$ 22,129
5,503
110)
$ 27,522		 2021

(
 $ 50,684
(
28,555 )
-
$ 22,129

The Company did not hold any collateral against the balance of notes receivables and accounts receivables (including those due from related parties).

Customers who individually account for 10% of the Company’s total accounts receivable (including those due from related parties) are as follows:

247

9. Inventories
Products
Finished-goods
Work-in-process
Raw materials
Cost of sales related to inventories
Loss on inventory devaluation		 December31,2022
Company A
-
December31,2022
$ 2,635,721
162,397
305,647

607,091
$ 3,710,856
2022
$ 2,562,491
$ 48,223		 December31,2021 December31,2021
Company A
Company B
December31,2021




$ 1,207,567
100,902
254,892
214,904
$ 1,778,265
2021


$ 2,180,340
$ 59,937

10. Investments accounted for using equity method

Investment in subsidiary
Investment in associates
(I)
Investment in subsidiary
Companies not listed on TWSE
and TPEx
SCIENTECH
INVESTMENT CORP.
TRANSCEND CAPITAL
CORP.
SCIENTECH GMBH
ACROMASS
TECHNOLOGIES, INC.
SCIENTECH
MATERIALS
CORPORATION
NATGEM INC.		 December31,2022
$ 1,012,109

36,770
$ 1,048,879
December31,2022
$ 536,864
457,959
10,259
3,277
3,167

583
$ 1,012,109		 December31,2021 December31,2021
$ 841,560

41,974
$ 883,534
December31,2021




$ 418,051
414,481
5,069
3,166
793
$ 841,560

The profit or loss of SCIENTECH MATERIALS for 2022 and 2021 was computed based on the financial statements for the same period that were not audited by CPAs. The profit or loss of subsidiaries accounted for using the equity method for 2022 and 2021 was computed based on their financial statements for the same periods that were audited by CPAs. The management of the Company didn’t think that not

248

having SCIENTECH MATERIALS’s financial statements audited by CPAs would cause any material impact.

Below are the Company’s ownership interests in subsidiaries and holding of voting shares in percentage terms on the balance sheet date:

SCIENTECH INVESTMENT
CORP.
TRANSCEND CAPITAL
CORP.
SCIENTECH GMBH(Note 1)
ACROMASS
TECHNOLOGIES, INC.
SCIENTECH MATERIALS
CORPORATION (Note 2)
NATGEM INC.		 December31,2022
100%
100%
100%
100%
100%
100%		 December31,2021
100%
100%
100%
100%
100%
100%

Note 1: As of December 31, 2021, the Company recognized a loss on investment in SCIENTECH GMBH, resulting in a credit balance of NT$9 thousand on investment accounted for using the equity method; such credit balance was recognized under other non-current liabilities.

Note 2: SCIENTECH MATERIALS was dissolved through a resolution reached at the Board of Directors meeting dated August 31, 2021. As of December 31, 2022, the liquidation process was not yet completed.

(II) Investment in associates

December 31, 2022 December 31, 2021 Individually insignificant associate $ 36,770 $ 41,974

Although holding less than 20% of the shares of some individually insignificant associates, the Company has a representative in their board of directors and thus has significant influence over them.

The said investment accounted for using equity method, and the Company’s share of profit or loss and other comprehensive income in them were computed based on the financial statements not audited by CPAs. However, the management of the Company did not think that not having the financial statements audited by CPAs would cause any material impact.

249

Summary information on individually insignificant associates

The Company’s share
Net profit (loss) for the
year
Other comprehensive
income
Total comprehensive
income		 2022
$ 4574)
46)
$ 4,620)		 2021
(

(

(

$ 1,530
9
$ 1,539

11. Property, plant and equipment

Cost
Balance as of January 1,
2022

Increase
Decrease
Reclassification

Balance as of December
31, 2022

Accumulated
depreciation and
impairment
Balance as of January 1,
2022
Depreciation
Decrease
Reclassification
Balance as of December
31, 2022
Net amount on
December 31, 2022

Cost
Balance January 1, 2021
Increase
Decrease
Reclassification

Balance December 31,
2021

Accumulated
depreciation and
impairment
Balance January 1, 2021
Impairment loss
recognized
Depreciation
Decrease
Reclassification
Balance December 31,
2021
Net amount on
December 31, 2021
 Land
$ 280,062
302,200
-

-

$ 582,262





$ 582,262

$ 280,062
-
-

-

$ 280,062





$ 280,062
 Buildings and
structures
$ 934,710

39,719
(
21,918 )

-

$ 952,511

$ 353,147
30,446
(
21,918 )
-

$ 361,675

$ 590,836

$ 935,942

9,983
(
11,215 )

-

$ 934,710

$ 336,989
-
27,373
(
11,215 )

-

$ 353,147

$ 581,563
 Machinery
and equipment
$ 441,281

46,972
(
12,485 )

7,320

$ 483,088

$ 162,832

57,582
(
12,485 )
(
1,227)

$ 206,702

$ 276,386

$ 589,971

17,007
(
98,875 )
(
66,822)

$ 441,281

$ 241,535
(
25,313 )

58,209
(
98,875 )
(
12,724)

$ 162,832

$ 278,449
Other
facilities
$ 32,281

12,588
(
4,285 )

285

$ 40,869
$ 10,983

7,642
(
4,285 )

-

$ 14,340

$ 26,529
$ 21,636

13,482
(
2,837 )

-

$ 32,281

$ 8,126

-

5,694
(
2,837 )

-

$ 10,983

$ 21,298
 U n f i n i s h e d
c o n s t r u c t i o n		 Total








$ -


19,736

-


-

$ 19,736
$ -

-

-


-

$ -
$ 19,736
$ -


-

-


-

$ -
$ -


-

-

-


-

$ -
$ -		 $ 1,688,334
421,215
(
38,688 )

7,605
$ 2,078,466
$ 526,962
95,670
(
38,688 )
(
1,227)
$ 582,717
$ 1,495,749
$ 1,827,611
40,472
(
112,927 )
(
66,822)
$ 1,688,334
$ 586,650
(
25,313 )
91,276
(
112,927 )
(
12,724)
$ 526,962
$ 1,161,372











250

Since the Company sold the machinery and equipment for which an impairment loss had been recognized, the Company recognized an impairment loss reversal gain of 25,313 thousand in 2021.

The Company’s property, plant, and equipment is solely for own use.

Depreciation is provided on a straight line basis over the following useful lives:

Buildings and structures
Plant and main structures 50 years
Electrical, plumbing & air
conditioning equipment 3–10 years
Machinery and equipment 5–10 years
Other facilities 3–5 years

The Company assessed the useful life of each significant component of property, plant, and equipment, and depreciated them individually.

Proceeds for acquisition of property, plant, and equipment include prepayments for equipment and equipment payables; Below is the reconciliation:

12.
(I)		 Increase in property, plant and
equipment
Increase (decrease) in
prepayments for equipment
Decrease (Increase) in equipment
payables (presented under other
payables)
Lease agreement

Right-of-use assets
Right-of-use assets, net
Land
Buildings and structures
Other facilities
Increase in right-of-use assets
Depreciation expenses - Right-
of-use assets
Land
Buildings and structures
Other facilities		 2022
$ 421,215
(
31,292 )

8,433
$ 398,356
December31,2022
$ 64,584
987

901
$ 66,472
2022
$ 2,291
$ 3,942
4,116

2,039
$ 10,097		 2021
$ 40,472
45,056
(
18,613)
$ 66,915
December31,2021




$ 66,831
4,507
2,940
$ 74,278
2021






$ 1,166
$ 3,730
4,086
2,039
$ 9,855

251

(II) Lease liabilities

Lease liabilities
Book value of lease liabilities
Current
Non-current		 December31,2022
$ 6,015
$ 62,894		 December31,2021


$ 9,143
$ 67,096
The range of discount rates for lease liabilities is as follows: The range of discount rates for lease liabilities is as follows:
December31,2022 December31,2021
Land 2.00%~3.00% 2.00%
Buildings and structures 0.78%–0.98% 0.88%–1.03%
Other facilities 0.92% 0.92%–1.04%
  • (III) Material lease activities and terms

The Company leased land from Chairman HUNG-LIANG HSIEH to construct buildings as offices under a lease contract that has a lease term of 5 years, will automatically renew upon expiration of a lease term, and gives the Company the option right to rent and buy the buildings. The Company may not sublease or consign the underlying assets of the lease, in whole or in part, unless otherwise agreed by the Lessor.

  • (IV) Other lease information
Other lease information
Short-term lease expense
Total cash outflow from leases		 2022
$ 4,838
$ 15,853		 2021


$ 3,594
$ 14,366

For property, plant, and equipment leases which qualify as a short-term lease, the Company elected to apply the recognition exemption to them and thus did not recognize right-of-use assets and lease liabilities for them.

13. Other assets

Other assets
Long-term prepayments
Restricted assets
Guarantee deposits paid
Other receivables
Others
Current
Non-current		 December31,2022
$ 27,128
3,683
3,367
-

9,494
$ 43,672
$ 11,344

32,328
$ 43,672		 December31,2021










$ 13,210
3,683
4,936
5,282
8,237
$ 35,348
$ 15,368
19,980
$ 35,348

252

14. Short-term borrowings

hort-term borrowings
Unsecured loans
Loans against letter of credits
Credit loans
Annual interest rate		 December31,2022
$ 224,979
200,000
$ 424,979
0.50%–1.40%		 December31,2021
$ 44,642
200,000
$ 244,642
0.70%–0.75%

The terms pertaining to the credit limits of some of the Company’s bank borrowings mentioned above stipulate financial restrictions, with which the Company fully complied.

15. Other accounts payable

Other accounts payable
Salary and bonus payable
Remuneration payable to
employees and directors
Equipment payable
Others		 December31,2022
$ 122,825
66,000
16,055
142,652
$ 347,532		 December31,2021




$ 109,407
55,000
24,488
129,075
$ 317,970

16. Post-employment benefit plan

  • (I) Defined contribution plan

The pension system that is specified in the “Labor Pension Act” and adopted by the Company is the defined contribution pension plan managed by the government. A pension equal to 6% of employee’s monthly wage shall be contributed to the personal labor pension account with the Bureau of Labor Insurance.

  • (II) Defined benefit plan

The pension system adopted by the Company according to the “Labor Standards Act” is the defined benefit pension plan managed by the government. The years of service rendered and the average wage of six months prior to the approved retirement date shall be the reference for calculation of the pension to be paid to the employee. The Company appropriates 3% of the total monthly wage of an employee as the pension and remits the amount to the Labor Pension Fund Supervisory Committee, which will deposit the amount in a dedicated account under its name with the Bank of Taiwan. Before the end of each year, if the assessed balance in the account is inadequate to make a full payment of pensions to the employees who may meet the retirement conditions in the next year, the Company will make up the difference in one

253

appropriation before the end of March in the following year. The account is managed by the Bureau of Labor Funds, Ministry of Labor, so the Company does not have the right to influence the investment management strategies.

The amounts of the defined benefit plan included in the parent company only balance sheet are listed as follows:

balance sheet are listed as follows:
Present value of defined benefit
obligations
Fair value of plan assets
Net defined benefit liabilities
(assets)		 December31,2022
$ 5,103
(
6,945)
($ 1,842)		 December31,2021

(
(
(
 $ 5,333

5,179)
$ 154

Changes in net defined benefit liabilities (assets) are as follows:

Balance as of January 2022

Financial cost
Recognized in profit or loss
- interest expense
(income)

Remeasurements
Return on plan assets
(excluding the amount
included in net interest)
Actuarial gain - change in
financial assumption

Actuarial gain - experience
adjustment

Recognized in other
comprehensive income

Contribution by employer

Balance as of December 31,
2022

Balance January 1, 2021

Service cost
Previous service cost and
settlement gains

Recognized in profit or loss
- interest expense
(income)

Recognized in profit or loss
 Present value
of defined
benefit
obligations
$ 5,333


31


-

(
141 )
(
120)

(
261)


-

$ 5,103

$ 42,967

(
8,426 )

170

(
8,256)
 Fair value of
plan assets
($ 5,179)

(
31)

(
1,635 )

-


-

(
1,635)

(
100)

($ 6,945)

($ 28,537)


-

(
115)

(
115)
 Net defined
benefit
liabilities
$ 154

-
(
1,635 )
(
141 )
(
120)
(
1,896)
(
100)
($ 1,842)
$ 14,430
(
8,426 )

55
(
8,371)

254

Remeasurements
Return on plan assets
(excluding the amount
included in net interest)
Actuarial gain - change in
financial assumption

Actuarial loss - change in
demographic assumption
Actuarial loss - experience
adjustment

Recognized in other
comprehensive income

Contribution by employer
Payment of benefits

Balance December 31, 2021
 Present value
of defined
benefit
obligations

-

(
1,002 )

140

768

(
94)

-

(
29,284)

$ 5,333
 Fair value of
plan assets
(
357 )

-

-

-

(
357)

(
928 )

24,758

($ 5,179)
 Net defined
benefit
liabilities
(
357 )
(
1,002 )
140

768
(
451)
(
928 )
(
4,526)
$ 154

The Company is exposed to the following risks due to the pension system under

the “Labor Standards Act”:

  1. Investment risk: The Bureau of Labor Funds, Ministry of Labor separately has invested the labor pension fund in domestic (foreign) equity and debt securities, and bank deposits. The investment is conducted at the discretion of the Bureau or under the mandated management. However, the profit generated from the Company’s plan assets shall be calculated with an interest rate not below the interest rate for a 2-year time deposit with local banks.

  2. Interest rate risk: A decrease in the interest rates of government bonds leads to an increase in the present value of the defined benefit obligation, and the return on debt investment of the plan assets will be increased accordingly. The net defined benefit liabilities may be partially offset by both increases.

  3. Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salary of the plan participants. Therefore, the present value of the defined benefit obligation would be increased by an increase in the plan participants’ salary.

The Company’s present value of the defined benefit obligation was calculated actuarially by a qualified actuary. The major assumptions on the date of measurement are as follows:

255

Discount rate
Rate of expected salary
increase		 December31,2022
1.15%
3.00%		 December31,2021
0.60%
3.00%

If there was any reasonably possible change to the major actuarial assumptions separately, the resulting increase (decrease) in the present value of the defined benefit obligation in the situation where all the other assumptions remained the same is as follows:

follows:
Discount rate
Increase by 0.25%
Decrease by 0.25%
Rate of expected salary
increase
Increase by 0.25%
Decrease by 0.25%		 December31,2022
($ 62)
$ 63
$ 56
($ 55)		 December31,2021
(


(		 (


(		 $ 76)
$ 78
$ 69
$ 68)

Since the actuarial assumptions might be correlated to each other and it is unlikely that a single assumption changes alone, the aforesaid sensitivity analysis might not reflect the actual changes in the present value of the defined benefit obligation.

7
(I)		 Expected contribution within 1
year
Average maturity of defined
benefit obligations
Equity

Common Stock
Number of authorized shares
(thousand shares)
Authorized capital
Number of issued shares fully
paid (thousand shares)
Issued capital		 December 31, 2022
$ 101
4 years
December31,2022

100,000
$ 1,000,000

81,139
$ 811,390		 December 31, 2021 December 31, 2021
$ 101
5 years
December31,2021






100,000
$ 1,000,000
81,139
$ 811,390

17

A share of issued common stock had a par value of NTD10 and was entitled to one voting right and dividends.

(II) Capital surplus

256

December 31, 2021

1.
2.		 Available for makeup of
loss, distribution of cash
dividends, or transfer into
capital
Additional paid-in capital
Consolidation excess
Treasury stock transactions
Only available for makeup
of loss
Changes in equity of
associates recognized
under equity method		 December31,2022
$ 468,714
29,831

25,617
524,162
204,802
$ 728,964		 December31,2 December31,2








$ 468,714
29,831
25,617
524,162
101,478
$ 625,640

  1. These capital reserves may be used to make up losses, to distribute cash dividends, or to be transferred into the capital if the Company is not in the red. However, the amount of the transfer into the capital shall be limited to a certain percentage of the paid-in capital in every year.

  2. Such capital reserves are either the effects of equity transactions recognized for changes in ownership interest in investees as a result of the Company’s falling to subscribe to or dispose of investees’ shares, or the adjustments of capital reserves of investees accounted for under the equity method.

  3. (III) Retained earnings and dividend policy

According to the dividend policy prescribed in the Company’s Articles of Incorporation, in the event of surplus earnings after closing of annual accounts, due taxes shall be paid in accordance with the law, and losses incurred in previous years shall be compensated for. Upon completion of the preceding actions, 10% of the remainder surplus shall be allocated as legal reserves. However, in the event that the accumulated legal reserves are equivalent to or exceed the Company's total paid-in capital, such allocation may be exempted. The remainder may be set aside as special reserves, or the previous recognized special reserves may be reversed, in accordance with laws and regulations. If there is remainder surplus, the Board of Directors shall draft a surplus distribution proposal regarding the remainder of the surplus as well as accumulated undistributed surplus, shall decide whether to distribute the distributable dividends and bonus in cash or in shares, in whole or in part, by a supermajority resolution at a Board of Directors, and shall report its decision to the Shareholders' Meeting. However, dividend distribution in the form of new shares shall be subject to

257

a resolution of the Shareholders' Meeting. For the distribution policy governing employee and director remuneration that is prescribed in the Company's Articles of Incorporation, please refer to Note 19(4) Remuneration to employees and directors.

The Company’s dividend policy considers the environment it is in and the growth stage it is at. To cope with future capital requirements and long-term financial planning while maintaining shareholder interests and a balanced dividend policy, shareholder dividends will be distributed in shares or in cash, as appropriate, based on future capital expenditure requirements and the extent of dilution effect on earnings per share. Of the shareholder dividends distributed, no less than 10% shall be in cash. The actual distribution percentage shall be determined by the Board of Directors by considering the Company’s business planning, investment plan, capital planning, and the changes in internal and external environment.

Legal reserves may be used to make up for losses. Where the Company does not sustain loss, the part of the legal reserves that exceeds 25% of the total paid-in capital may be appropriated as capital or distributed in cash.

The Company provided or reversed special reserves by FSC ’s official letter titled Jin-Guan-Zheng-Fa-Zi No.1010012865, and by JinGuan-Zheng-Fa-Zi No.1090150022 on or after the distribution of earnings for 2021.

The earnings distribution proposals for 2021 and 2020 are as follows:

Legal reserve
Special reserves provided
(reversed)
Cash dividends
Cash dividends per share (NT$)		 2021
$ 42,027
$ 2,531
$ 200,820
$ 2.50		 2020




(

 $ 30,658
$ 1,308)
$ 148,606
$ 1.85

Proposals on the said cash dividends had been approved for distribution through a resolution at the Board of Directors meetings in March 2022 and March 2021. Other earnings distribution items had been approved through a resolution at the Board of Directors meetings in June 2022 and July 2021.

The earnings distribution proposal for 2022 drafted at the Board of Directors meeting dated March 10, 2023 is as follows:

2022

258

Legal reserve

Special reserve provision

Cash dividends

Cash dividends per share (NT$)
 $ 57,010
$ 19,074
$ 289,181
$ 3.60

The said cash dividends had been approved through a resolution at a Board of Directors meeting. Other distribution items are still pending a resolution at the Shareholders’ Meeting to be held in June 2023.

(IV) Treasury stock

Through a resolution at the Board of Directors meeting in September 2018, the Company decided to buy back 811 thousand treasury shares to transfer them to employees. The buyback was completed in October 2018, with an average buyback price of 62.47 dollars. As of December 31, 2022, such shares had yet to be transferred to employees.

According to the Securities and Exchange Act, the treasury shares held by the Company may not be pledged; nor may they be entitled to dividend distribution or voting rights.

18. Revenue

evenue
Goods sales revenue
Manufacturing
Sale in the capacity of an agent
Services revenue
Commission
Maintenance
Others
Other operating revenue		 2022
$ 2,014,840
1,932,929
3,947,769
91,094
34,256
7,776
133,126
49,676
$ 4,130,571		 2021












$ 1,834,077
1,551,267
3,385,344
124,695
18,215
4,160
147,070
14,938
$ 3,547,352

Contract balance

Contract balance
Notes receivable and accounts
receivable (including those
due from related parties)
(Notes 8 and 25)

Contract liabilities
 December 31,
2022
$ 653,849

$ 4,469,292
 December 31,
2021
$ 761,624

$ 1,866,053
January 1,
2021


$ 549,045
$ 511,107

259

Changes in contract liabilities mainly come from the difference between the points in time when the Company fulfills obligations and when customers make payments.

The amount that comes from the contract liabilities at the beginning of the year and the amount that comes from the revenue recognized in the year in which performance obligations were fulfilled are as follows:

Goods sales
19.
Net profit
(I)
Financial cost
Interest on bank borrowings
Interest on lease liabilities
(II)
Depreciation and amortization
Property, plant and equipment
Right-of-use assets
Summary of depreciation
expenses by function
Operating cost
Operating expenses
Summary of amortization by
function
General and
administrative expenses
(III) Employee benefit expenses
Short-term employee benefits
Post-employment benefit
Defined contribution plan
Defined benefit plan
Summary by function
Operating cost
Operating expenses		 2022
$ 981,414
2022
$ 1,869

1,394
$ 3,263
2022
$ 95,670

10,097
$ 105,767
$ 30,800

74,967
$ 105,767
$ 324
2022
$ 724,168
25,462

-

25,462
$ 749,630
$ 227,859
521,771
$ 749,630		 2021
$ 326,463
2021




$ 1,532
1,497
$ 3,029
2021












$ 91,276
9,855
$ 101,131
$ 29,651
71,480
$ 101,131
$ 260
2021







(




 $ 610,499
21,475

8,371)
13,104
$ 623,603
$ 199,318
424,285
$ 623,603

260

(IV) Remuneration to employees and directors

According to its Articles of Incorporations, the Company shall take the pre-tax profits inclusive of employee remuneration and director remuneration and allocate 5% – 15% of such profits as employee remuneration and another 2% or less as director remuneration. The Board of Directors meetings in March 2023 and 2022 resolved on the employee remuneration and director remuneration estimated for 2022 and 2021, respectively - shown as follows:

Amount

Amount
Employee remuneration
Directors' remuneration		 2022
$ 58,000
8,000		 2021
$ 49,000
6,000

Any amount that changes after the approval and publication date of the annual parent company only financial statements is accounted for as changes in accounting estimates, and will be adjusted and recognized in the following year.

The actually distributed amount of employee remuneration and director remuneration for 2021 tallied with the amount recognized in the consolidated financial statements for 2021.

The actually distributed amount of employee remuneration and director remuneration for 2020 does not agree with the amount recognized in the parent company only financial statements for 2020 ; the resulting differences are recognized in the profit of loss of 2021.

in the profit of loss of 2021.
Amount actually distributed
Amount recognized on the
annual financial statements		 2020年度
E m p l o y e e
remuner a t ion
$ 41,500
$ 41,500		 D i r e c t o r s '
remuner a t ion


$ 4,873
$ 5,000

The information about remuneration to employees and directors determined by the Board of Directors may be viewed at TWSE’s Market Observation Post System (MOPS).

261

20. Income tax

(I) Income tax recognized in profit or loss

Major components of income tax expenses:

Major components of income tax expenses:
(II)
(III)		 2022
2021
Current income tax
Tax incurred in the year
$ 157,275
$ 129,144
Adjustments for the
previous year
(
22,105)
(
21,622)
135,170
107,522
Deferred income tax
Tax incurred in the year
(
8,371 )
(
15,579 )
Adjustments for the
previous year

-

-
(
8,371)
(
15,579)
Income tax expenses
recognized in profit or loss
$ 126,799
$ 91,943
Reconciliation of accounting income and income tax is as follows:
2022
2021
Net profits before tax
$ 695,382
$ 511,848
Income tax expense derived
from applying the pre-tax
profit to the statutory tax rate
$ 139,076
$ 102,370
Expense and loss not
deductible from tax
25
-
Tax exempt income
1,058
4,764
Additional levy on
undistributed earnings
8,745
6,431
Adjustments for the previous
year
(
22,105)
(
21,622)
Income tax expenses
recognized in profit or loss
$ 126,799
$ 91,943
Income tax recognized in other comprehensive income
2022
2021
Deferred income tax
Tax incurred in the year
－Translation from foreign
operations
( $ 6,823 )
$ 3,266
－Re-measurements of
defined benefit plans
(
379)
(
90)
(
7,202)
$ 3,176
Current income tax liabilities
December31,2022
December31,2021
Current income tax liabilities
Income tax payable
$ 159,497
$ 129,110		 2021


(
 $ 511,848
$ 102,370
-
4,764
6,431

21,622)
$ 91,943
2021
$ 3,266
(
90)
$ 3,176
December31,2021
$ 129,110

262

(IV) Deferred income tax assets and liabilities

Changes in deferred income tax assets and liabilities are as follows:

Deferred income tax assets
Temporary differences
Allowance for inventory
write-down

Undistributed earnings of
subsidiaries
Unrealized gains on
transactions with
associates
Provisions
Unrealized exchange losses
Allowance for doubtful
accounts
Others


Deferred income tax liabilities
Temporary differences
Undistributed earnings of
subsidiaries
 2022 2022
Balance -
beginning of
period
$ 45,697
15,952
8,037
6,329

3,959
2,875

6,262

$ 89,111

$ 56,418
 Recognized in
profit or loss
$ 9,644

10,860

1,193

183

4,304

1,284
(
20)

$ 27,448

$ 19,077
Recognized in
other
comprehensiv
e income
$ -
(
6,133 )

-

-

-

-
(
379)

($ 6,512)

$ 690
 Balance - end
ofyear










(
(




(
(







$ 55,341

20,679

9,230

6,512

8,263

4,159

5,863
$ 110,047
$ 76,185
Deferred income tax assets
Temporary differences
Allowance for inventory
write-down

Undistributed earnings of
subsidiaries
Unrealized gains on
transactions with
associates
Provisions
Unrealized exchange losses
Allowance for doubtful
accounts
Impairment loss
Others


Deferred income tax liabilities
Temporary differences
Undistributed earnings of
subsidiaries
 2021 2021
Balance -
beginning of
period
$ 33,710
6,785
-
5,106

1,021
8,955
5,063

9,117

$ 69,757

$ 55,819
 Recognized in
profit or loss
$ 11,987

6,836

8,037

1,223

2,938
(
6,080 )
(
5,063 )
(
2,765)

$ 17,113

$ 1,534
Recognized in
other
comprehensiv
e income
$ -

2,331

-

-

-

-

-
(
90)

$ 2,241

($ 935)
 Balance - end
ofyear









(
(
(








$ 45,697

15,952

8,037

6,329

3,959

2,875

-

6,262
$ 89,111
$ 56,418

263

  • (V) Amount of deductible temporary difference and loss carryforwards of deferred income

tax assets unrecognized in the parent company only balance sheet

December 31, 2022 December 31, 2021 Deductible temporary differences $ 7,000 $ 7,000

  • (VI) Authorization of income tax

The Company's profit-seeking business income tax filings have been approved by the tax authority through 2018.

21. Earnings per share

Earnings per share
Basic earnings per share
Diluted earnings per share
Net profit in the current year
Net profit of the Company
Thousand shares
Weighted average number of
common shares used for
calculating basic earnings per
share
Effect of potential diluted
common shares:
Employee remuneration
Weighted average number of
common shares used for
calculating diluted earnings per
share		 2022
$ 7.08
$ 7.00
2022
$ 568,583
2022
80,328
895
81,223		 Unit: NT$ 2021
$ 5.23
$ 5.19
2021
$ 419,905
2021
80,328
570
80,898




Where the Company may elect to distribute employee remuneration in shares or in cash, when calculating the diluted EPS, the Company assumes that all employee remuneration is distributed in shares and counts the potentially dilutive common shares -

when deemed dilutive - in the weighted average number of shares outstanding. The Group

continues to consider the dilutive effect of such potentially delusive common shares when

264

calculating the dilutive EPS before the number of share dividends is to be resolved on in the following year.

22. Non-cash transactions

In 2022 and 2021, the Company transferred property, plant, and equipment in the amount of 1,850 thousand and 79,420 thousand, respectively, to inventory costs, with an accumulated depreciation of 1,227 thousand and 12,724 thousand, respectively. In 2022 and 2021, the Company transferred 9,455 thousand and 12,598 thousand, respectively, from inventories to own-use property, plant, and equipment (refer to Note 11).

23. Capital risk management

The Company conducts capital management to ensure the Company can continue as a going concern while maximizing shareholders’ return by optimizing the liability and equity balances.

The Company’s capital structure is composed of its net debt and its equity.

The key management of the Company reviews its capital structure every year in terms of the cost and risks of each capital category. Based on the recommendation of the key management, the Company will balance its capital structure by paying dividends and issuing new debts or paying existing debts.

24. Financial instruments

  • －

  • (I) Fair value information financial instruments not measured at fair value

Management of the Company thinks that financial assets and financial liabilities not measured at fair value have a book value approximate to their fair value.

－ (II) Fair value information financial instruments measured at fair value on a recurring basis

265

1. Fair value hierarchy

December 31, 2022

Level 1 Level 2 Level 3 Total

Financial assets at fair value through other comprehensive income Investment in equity instruments Shares of TWSElisted companies through private placement $ - $ 89,205 $ - $ 89,205 Foreign shares not traded on an exchange or OTC - - 49,357 49,357 $ - $ 89,205 $ 49,357 $ 138,562

December 31, 2021

Level 1 Level 2 Level 3 Total

Financial assets at fair value through other comprehensive income Investment in equity instruments Shares of TWSE-listed companies through private placement $ - $ 112,237 $ - $ 112,237 Foreign shares not traded on an exchange or OTC - - 54,013 54,013 $ - $ 112,237 $ 54,013 $ 166,250

There was no transfer of fair value measurements between Level 1 and Level 2 in 2022 and 2021.

  1. Reconciliation of the financial instruments measured at Level 3 fair value

2022

Financial assets Balance - beginning of period Purchase Recognized in other comprehensive income Balance - end of year

Financial assets at fair value through other comprehensive income Equity instruments $ 54,013 18,631 ( 23,287 ) $ 49,357

266

2021

2021
Financial assets
Balance - beginning of period
Purchase
Recognized in other comprehensive income
Balance - end of year		 Financial assets at
fair value through
other
comprehensive
income
Equityinstruments

(
 $ -
59,726

5,713)
$ 54,013
  1. Level 2 fair value valuation techniques and inputs

If there is no quoted price for the common shares issued by domestic TWSE-listed companies through a private placement, such common shares are evaluated by using valuation techniques. The assumptions and estimates used by

the Group for the valuation techniques are the same as the assumptions and estimates accessible to the Company that are used by market participants for quoting a price for financial products.

The valuation technique the Group used for measuring the fair value is the Black-Scholes pricing model.

  1. Level 3 fair value valuation techniques and inputs

When valuing the foreign shares not traded on an exchange or OTC, the Group used the income approach by which the present value of benefits expected to be derived from such investment is calculated by discounting the cash flows. Significant unobservable inputs are as follows. When liquidity discount decreases, the fair value of such investment will increase.

==> picture [383 x 26] intentionally omitted <==

If the following inputs are changed to reflect reasonably possible alternative assumptions while other inputs are held constant, the amount of the fair value of equity investment will increase (decrease) by:

Liquidity discount
Increase by 1%
Decrease by 1%		 December31,2022
($ 728)
$ 728		 December31,2021 December31,2021
(
 (
$ 798)
$ 798

267

(III) Type of financial instruments

Type of financial instruments
Financial assets
Financial assets at amortized
cost (Note 1)
Financial assets at fair value
through other
comprehensive income
Financial liabilities
Financial liabilities at
amortized cost (Note 2)		 December31,2022
$ 2,853,501
138,562
2,556,750		 December31,2021
$ 2,084,570
166,250
1,449,612

  • Note 1: The balance included financial assets measured at amortized cost such as cash and cash equivalents, notes receivable and accounts receivable (including those due from related parties), other receivables (presented under other current assets), restricted assets (presented under other current assets), and guarantee deposits paid (presented under other non-current assets).

  • Note 2: The balance included the financial liabilities measured at amortized cost such as short-term borrowings, notes payable and accounts payable, other payables, and guarantee deposits received (presented under other non-current liability).

  • (IV) Financial risk management purpose and policy

The Company’s financial instruments mainly comprise equity investment, receivables, payables, borrowings, and lease liabilities. The financial management department of the Company provides services for each type of business and supervises and manages the financial risks incidental to the Company’s operations by referencing the internal risk report in which risk exposure is analyzed based on the extent and extensiveness of risks. Such risks include market risk, credit risk, and liquidity risk.

The financial management department provides a report to the key management of the Company quarterly to reduce risk exposure.

The Company did not adopt hedge accounting.

  1. Market risk

  2. (1) Exchange rate risk

The Company is engaged in sales and purchase denominated in foreign currency, and thus is exposed to the exchange rate fluctuation risk.

268

For the book value of the Company’s monetary assets and monetary liabilities denominated in a currency other than the functional currency on the balance sheet date, refer to Note 28.

Sensitivity analysis

The Company is affected primarily by fluctuation in the exchange rate of USD.

The sensitivity analysis includes only the foreign currency monetary items outstanding, which are translated at the end of year by using an exchange rate that could be adjusted by a maximum of 1%. When TWD appreciates/depreciates by 1% against the USD, the effects on the pre-tax net profit stated in the parent company only financial statements for 2022 and 2021 will be NT$2,043 thousand and NT$7,153 thousand, respectively.

The exchange rate fluctuation mainly affects the Company’s bank deposits, as well as the payables and receivables denominated in USD that were still outstanding and were not hedged with a cash flow hedge on the balance sheet date.

(2) Interest rate risk

The interest rate risk facing the Company mainly comes from the Company’s floating-rate bank deposits.

The book value of the financial assets and liabilities of the Company that were exposed to the interest rate risk on the balance sheet date is as follows:

follows:
With cash flow interest
rate risk
- Financial assets
- Financial liabilities
With fair value interest
rate risk
- Financial assets
- Financial liabilities
-Lease liabilities
Sensitivity analysis		 December31,2022
$ 1,762,003
200,000
430,094
224,979
68,909		 December31,2021
$ 1,308,640
200,000
-
44,642
76,239

The following sensitivity analysis is based on the interest risk exposure of non-derivatives on the balance sheet date. Floating-rate

269

liabilities are analyzed based on the assumption that the liability amount outstanding on the balance sheet date remains outstanding throughout the reporting period.

If interest rate increases/decreases by 1%, held other variables constant, the Company’s pre-tax profit in the parent company only financial statements for 2022 and 2021 will change by NT$15,620 thousand and NT$11,086 thousand, respectively.

  1. Credit risk

The credit risk means the risk of causing financial loss to the Company because the trading counterparty defaults on contractual obligations. As of the balance sheet date, the Company’s maximum credit exposure to the financial loss caused by a trading counterparty’s defaulting on his/her performance obligations mainly lies in the book value of the financial assets recognized in the parent company only balance sheet.

According to its policy, the Company only trades with reputational counterparties and requires provision of collateral where necessary to reduce the risk of financial loss due to default.

The Company exposes to the credit risk, which mainly comes from the customers who individually account for 10% or more of the Company’s total accounts receivables. Refer to Note 8 for details.

3.

  • Liquidity risk

The Company manages and maintains sufficient cash to support business operations and reduce the effect of the fluctuating cash flow. The management of the Company monitors the use of bank financing facilities and ensures compliance with the terms of the loan contract.

Bank loans are one of the Company’s important sources of liquidity. For the bank financing facility that the Company has not used, refer to relevant descriptions in (2) below.

(1) Liquidity and interest rate risks of non-derivative financial liabilities The maturity analysis of other non-derivative financial liabilities is compiled based on the agreed repayment date.

December 31, 2022

4 months – 1 More than 1 1–3 months year year

270

Non-derivative
financial liabilities
Non-interest bearing
debt

Floating rate
Lease liabilities

 $ 2,336,833

200,396
1,977

$ 2,539,206
 $ 19,917


-
5,348

$ 25,265
 $ -

-
73,260
$ 73,260

More information on the maturity analysis of lease liabilities:

Lease
liabilities
 Less than 1
year		 Less than 1
year		 2–5years
$ 18,920
 2–5years
$ 18,920
 6–10years 6–10years 11–15years 11–15years 16–20years 16–20years
$ 7,325 $ 18,920
 $ 22,800
 $ 22,800
 $ 8,740

December 31, 2021

December 31, 2021
Non-derivative
financial liabilities
Non-interest bearing
debt
Floating rate
Lease liabilities

 1–3months 4 months – 1
year
$ 8,177

-

7,829

$ 16,006



More than 1
year


$ 1,241,435
200,341
2,693

$ 1,444,469
 $ 8,177

-
7,829

$ 16,006
 $ -

-
78,734
$ 78,734

More information on the maturity analysis of lease liabilities:

Lease
liabilities
 Less than 1
year		 Less than 1
year		 2–5years
$ 19,834
 2–5years
$ 19,834
 6–10years 6–10years 11–15years 11–15years 16–20years 16–20years
$ 10,522 $ 19,834
 $ 22,800
 $ 22,800
 $ 13,300

(2) Credit limit of financing facilities

Unsecured bank loan
limit (extendable upon
mutual agreement)
- Employed capital
- Unemployed
capital		 December31,2022
$ 426,461

853,539
$ 1,280,000		 December31,2021 December31,2021




$ 246,872
1,233,128
$ 1,480,000
  1. Related Party Transactions

271

In addition to those disclosed in other notes, transactions between the Company and related parties are described as follows.

  • (I) Name and relationship of related party

Relationship with the Name of related party Company SCIENTECH MATERIALS CORPORATION (SCIENTECH MATERIALS) Subsidiary ACROMASS TECHNOLOGIES, INC. (ACROMASS) Subsidiary NATGEM INC. Subsidiary SCIENTECH GMBH (SC GMBH) Subsidiary SCIENTECH ENGINEERING USA CORP. (SCU) Subsidiary TRANSCEND CAPTTAL CORP. Subsidiary SCIENTECH ENGINEERING CORP. (SHANGHAI) Subsidiary SCIENTECH ENGINEERING (HONG KONG) LIMITED Subsidiary HUNG-LIANG HSIEH Chairperson FORWARD SCIENCE CORPORATION Associate XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. (XTEK SEMICONDUCTOR) Associate FORWARD SCIENCE PTE.LTD. Associate HONG LUN CULTRUAL CREATIVITY Same key management FUNDATION

  • (II) Operating revenue
Operating revenue
General ledger
account

Goods sales
revenue



Other operating
revenue


 Name and type of related
party
Subsidiary
Others

Associate


Subsidiary
Others

Associate

 2022
$ 17,085

68,826

$ 85,911

$ 259

22,824

$ 23,083
 2021










$ 242
303,493
$ 303,735
$ 137
810
$ 947

The price and payment terms for a sale transaction between the Company and related parties are determined based on the terms mutually agreed upon.

(III) Purchase

272

Nameandtype of related party
Subsidiary
SCU
Others
Associate		 2022
$ 167,145

5,437
172,582

$ 172,582		 2021








$ 95,887

4,392
100,279

2,780
$ 103,059

The price and payment terms for a purchase transaction between the Company and related parties are determined based on the terms mutually agreed upon.

(IV) Contract liabilities

Contract liabilities
Nameandtype of related party
Associate
XTEK
SEMICONDUCTOR		 December31,2022
$ 54,246		 December31,2021
$ 51,570
  • (V) Receivables due from related parties (excluding funds loaned to related parties)
General ledger
account

Accounts
receivable

Other receivable
(presented under
other current
assets)
 Name and type of related
party
Associate
XTEK
SEMICONDUCTOR
Subsidiary
ACROMASS
Others

 December 31,
2022
$ 5,152
$ -

18

$ 18
 December 31,
2021		 December 31,
2021






$ 55,711
$ 256
-
$ 256

No guarantee was requested for the outstanding receivables due from related parties. The balance of the allowance for receivables due from related parties as of December 31, 2022 and 2021 were NT$377 thousand and NT$1,485 thousand, respectively. The allowance for receivables due from related parties that was provided (reversed) in 2022 and 2021 amounted to NT$(1,108) thousand and NT$1,485 thousand, respectively.

(VI) Payables due to related parties

273

General ledger
account

Payables due to
related parties
(presented under
notes payable
and
accounts
payable)
Other accounts
payable

 Name and type of related
party

Subsidiary
SCU
Others

Subsidiary
Others

Associate

 December 31,
2022

$ 3,858

176
$ 4,034

$ 5,002


230

$ 5,232
 December 31,
2021		 December 31,
2021










$ 22,137

-
$ 22,137
$ 3,336

-
$ 3,336

The outstanding balance of the payables due to related parties was not secured against collateral.

(VII) Prepayments

Prepayments
Nameandtype of related party
December31,2022
December31,2021
Subsidiary
Others
$ -
$ 1,429
Lease agreements
General ledger
account
Name and type of related
party
December 31,
2022
December 31,
2021
Lease liabilities
Chairperson
$ 65,509
$ 68,731
General ledger
account
Name and type of related
party
2022
2021
Interest expenses
(presented under
financial cost)
Chairperson
$ 1,338
$ 1,401		 December31,2021
Subsidiary
Others
Lease agreements
General ledger
account

Lease liabilities

General ledger
account

Interest expenses
(presented under
financial cost)
$ 1,429
December 31,
2021
$ 68,731
2021
$ 1,401

(VIII) Lease agreements

The rent charged for lease contracts signed between the Company and related parties was negotiated upon by referencing the market price; the payment term was the same as a general payment term.

(IX) Funds loaned to related parties

274

General ledger
account
Name and type of related
party
December 31,
2022

Other receivable
(presented under
Subsidiary
other current
assets)
ACROMASS
$ -
Income from interests
Nameandtype of related party
2022
Subsidiary
$ 18		 General ledger
account
Name and type of related
party
December 31,
2022

Other receivable
(presented under
Subsidiary
other current
assets)
ACROMASS
$ -
Income from interests
Nameandtype of related party
2022
Subsidiary
$ 18		 December 31,
2021
$ 5,000
2021
$ 164

Loans between the Company and subsidiaries are unsecured loans with an interest rate close to the market interest rate. Such loans are expected to be repaid in full within one year. Through an assessment, there are not expected credit losses.

(X) Others

Others
General ledger
account
Rental income
(presented under
other income)




Maintenance and
repair (presented
under operating
cost)

Operating expenses		 Type of related party
Subsidiary
ACROMASS

SCIENTECH
MATERIALS
Others
Same key management


Subsidiary
Others
Associate


Subsidiary
 2022
$ -

-
36
24

$ 60

$ -
-

$ -

$ 21,190
 2021












$ 702
183
36
-
$ 921
$ 148
1,512
$ 1,660
$ 8,930

(XI) Remuneration to key management

Remuneration to key management
Short-term employee benefits
Post-employment benefit		 2022
$ 55,086

889
$ 55,975		 2021




$ 52,908

1,322
$ 54,230

The remuneration to directors and other key management was decided by the Remuneration Committee according to personal performance and market trends.

275

26. Pledged and Mortgaged Assets

The following assets were provided to the Custom Office as collateral against the bonded goods and the payments and performance obligation of manufacturers.

December 31, 2022 December 31, 2021 Pledged certificates of deposits (presented under other current assets) $ 3,683 $ 3,683

27. Significant Commitments

The Company’s letter of credits issued but not used that were intended for purchase of goods and machinery and equipment, and for performance guarantee were NT$1,482 thousand and NT$2,230 thousand as of December 31, 2022 and 2021, respectively.

28. Significant Assets and Liabilities Denominated in foreign currencies

The Groups’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies, and the related exchange rates between foreign currencies and respective functional currencies, are as follows:

December 31, 2022

December 31, 2022
Foreign currency
assets
Monetary items
USD

EUR
JPY
Non-monetary
items
Subsidiaries
accounted for
using the equity
method
USD		 Foreign
currency
$ 58,744
11,278
103,517
33,897
Foreign
currency		 Exchangerate

30.71 (USD:TWD)


32.72 (EUR:TWD)

0.232 (JPY:TWD)

30.71 (USD:TWD)

Exchangerate		 Bookvalue
$ 1,804,032
369,011
24,057
1,040,975
Bookvalue

276

Foreign currency
liabilities
Monetary items
USD
JPY
EUR
December 31, 2021
Foreign currency
assets
Monetary items
USD

EUR
JPY
Non-monetary
items
Subsidiaries
accounted for
using the equity
method
USD
Foreign currency
liabilities
Monetary items
USD
EUR
JPY		 52,090
258,135
698
Foreign
currency
$ 46,087
7,231
68,391
31,529
20,246
1,835
98,227
30.71 (USD:TWD)


0.232 (JPY:TWD)

32.72 (EUR:TWD)
Exchangerate

27.68 (USD:TWD)


31.32 (EUR:TWD)

0.241 (JPY:TWD)

27.68 (USD:TWD)

27.68 (USD:TWD)

31.32 (EUR:TWD)

0.241 (JPY:TWD)		 1,599,684
59,991
22,845
Bookvalue
$ 1,275,694
226,476
16,448
872,719
560,397
57,466
23,624

The realized and unrealized foreign currency exchange losses of the Company in 2022 and 2021 were NT$60,680 thousand and NT$(37,165) thousand, respectively. However, it was not feasible to disclose the exchange loss and gain of each significant foreign currency because the number of foreign currencies involved in foreign currency transactions varied.

29. Supplementary Disclosures

Except those disclosed in Appendix Table 1 through 8, there were no required disclosures.

277

SCIENTECH CORPORATION and Subsidiaries

Loans to others

2022

Appendix Table 1

Unit: NT$ thousand unless otherwise specified

No. Lending company Borrowing company Financial
account		 Whether
a related
party or
not		 Highest amount
in the year (Note
3)
Balance - end of
year (Note 3)
Drawdown
(Note 3)		 Interest
rate range
(%)		 Nature of
loaning of
funds		 Business
transaction
amount		 Reasons for the
need of short-
term financing		 Appropriated
allowance for
bad debt		 Collateral Collateral Limit of loans to
a single
borrower (Notes
1 and 3)

Limit of total
loaning of funds
(Notes 2 and 3)
Name Value
0
1		 The Company
SCIENTECH
ENGINEERIN
G (HONG
KONG)
LIMITED		 SCIENTECH
MATERIALS
CORPORATION
NATGEM INC
ACROMASS
TECHNOLOGIES,
INC.
SCIENTECH
ENGINEERING
CORP.(SHANGH
AI)
SCIENTECH
ENGINEERING
USA CORP.
SCIENTECH GMBH		 Other
receivables
－Related
party
Other
receivables
－Related
party

Other
receivables
－Related
party
Other
receivables
－Related
party
Other
receivables
－Related
party
Other
receivables
－Related
party		 Yes
Yes
Yes
Yes
Yes
Yes		 $ 7,000
2,000
15,000
24,568
(
US$800
thousand
)
30,710
(
US$1,000
thousand
)
30,710
(
US$1,000
thousand
)		 $ -

2,000
8,000-
24,568
(
US$800
thousand
)
30,710
(
US$1,000
thousand
)
30,710
(
US$1,000
thousand
)		 $ -

-

-
-
6,142
(
US$200
thousand
)
-
1.7

1.2
1.2
1.7
1.2
1.2		 Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
Short-term
financing
$ -

-

-

-

-

-		 Working
capital
Working
capital
Working
capital
Working
capital
Working
capital
Working
capital		 $ -
-
-
-
-
-		 －
－
－
－
－
－		 $ -
-
-
-
-
-		 $ 358,249

358,249

358,249

24,568
(
US$800
thousand
)

30,710
(
US$1,000
thousand
)

30,710
(
US$1,000
thousand
)		 $ 1,432,994

1,432,994

1,432,994

241,934
(
HKD61,436
thousand
)
241,934
(
HKD61,436
thousand
)
241,934
(
HKD61,436
thousand
)

Note 1: The limit of loans to a single borrower is as follows:

  1. The limit of loaning of funds to a single party with business relationship with Company should not exceed the total transactions amount between it and the Company. The said “Transaction amount” means the higher of purchase or sales therebetween.

  2. Limit of loaning of funds to a company in need of short-term financing should not exceed 10% of the Company’s net worth.

  3. Limit of loaning of funds to a foreign operation whose voting shares are fully held by the Company, either directly or indirectly, should exceed neither the amount approved by the Board of Directors nor the amount equal to 80% of the lending company’s net worth.

Note 2: The limit of total funds loaned to others is as follows:

1. Should not exceed 40% of the Company’s net worth.

  1. The limit of total funds loaned by a foreign operation of which all the voting shares are directly or indirectly held by the Company should not exceed 80% of the foreign operation’s net worth.

Note 3: Converted at the exchange rate of US$1 against NT$30.71 and HKD$1 against NT$3.938 on December 31, 2022.

278

SCIENTECH CORPORATION and Subsidiaries

Making endorsements/guarantees for others

Appendix Table 2 Appendix Table 2 2022 Unit: NT$ thousand unless otherwise specified Unit: NT$ thousand unless otherwise specified Unit: NT$ thousand unless otherwise specified Unit: NT$ thousand unless otherwise specified
No. Endorser/guara
ntor		 Partybeingendorsed/guaranteed
Limit on
endorsement/
guarantees provided
for a single party
(Notes 1 and 2)
Maximum balance
for the period (Note
2)
Ending balance
(Note 2)		 Drawdown (Note 2)
Amount of
endorsement/
guarantees
collateralized by
properties (Note 2)		 Ratio of
accumulated
endorsement/
guarantee to
net equity per
latest financial
statement(%)		 Limit of
endorsement/
guarantees
collateralized by
properties (Notes 2
and 3)		 Guarantee
provided
by parent
company
to
subsidiary

Guarantee
provided
by
subsidiary
to a
parent
company

Guarantee
provided
to entities
in
Mainland
China
Company name Relationship
0
1		 The Company
SCIENTECH
ENGINEER
ING
(HONG
KONG)
LIMITED		 SCIENTECH
ENGINEERING
(HONG KONG)
LIMITED
SCIENTECH
ENGINEERING
CORP.
(SHANGHAI)		 Subsidiary
Parent
company		 $ 1,791,243
151,209
(
HKD38,397
thousand
)		 $ 30,710
(
US$1,000
thousand
)
3,071
( US$100 thousand)		 $ 30,710
(
US$1,000
thousand
)

3,071
( US$100 thousand)		 $ -

3,071
( US$100 thousand)		 $ -

3,071
( US$100 thousand)		 0.9%

1.0%		 $ 3,582,486
302,418
(
HKD76,795
thousand
)		 Y
N		 N
Y		 N
Y

Note 1: The limit of endorsement and guarantee made by the Company or subsidiaries to a single entity should not exceed 50% of the entity’s net worth.

Note 2: Converted at the exchange rate of US$1 against NT$30.71 and HKD$1 against NT$3.938 on December 31, 2022.

Note 3: Should not exceed 100% of the Company’s or a subsidiary’s net worth stated on the financial statements.

279

Unit: NT$ thousand

SCIENTECH CORPORATION and Subsidiaries

Marketable Securities Held at the End of Period

December 31, 2022

Appendix Table 3

Investor Type and name of marketable securities Relationship with the
securities issuer		 General ledger account End of year End of year
Shares Book value Shareholding
Percentage
(%)
Fair value		 Remar
ks
SCIENTECH CORPORATION
SCIENTECH INVESTMENT
CORP.		 Shares
HITEKCORPS CO., LTD.
AUENTER TECHNOLOGY CORP.
AMCHAEL-GRAPHICS CORP.
PROMOS TECHNOLOGIES INC.
INFINITESIMA LIMITED
SPIROX CORP.
Shares
SIGLAZ		 －
－
－
－
－
－
－		 Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through profit or loss
Financial assets at fair value
through
other
comprehensive income -
non-current
Financial assets at fair value
through
other
comprehensive income -
non-current
Financial assets at fair value
through profit or loss		 225,000
600,000
700,000
4,662



6,111,111



4,000,000
1,100,000		 $ -
-
-
-
49,357
89,205
-		 3.19
13
33
-
9.30
3.40
15.80		 $ -
-
-
-
49,357
89,205
-		 －
－
－
－
－
－
－

Note: For information on investment in subsidiaries and associates, refer to Appendix Tables 6 and 7.

280

SCIENTECH CORPORATION and Subsidiaries

Acquisition of real property reaching NT$300 million or 20% of paid -in capital or more

2022

Appendix Table 4

Unit: NT$1,000

Real property
buyer		 Property name Fact
occurrence
date		 Transaction
amount		 Proceeds
payment progress		 Counter-party Relationship Information on the previous transfer of property
wherethe counter-partyisa related party		 Information on the previous transfer of property
wherethe counter-partyisa related party		 Information on the previous transfer of property
wherethe counter-partyisa related party		 Information on the previous transfer of property
wherethe counter-partyisa related party		 Pricing reference
Acquisition
purpose and
state of use		 Other
covenants
Owner Relationship
with theissuer
Transfer
date		 Amount
SCIENTECH
CORPORATI
ON		 Land
and
structures
2022/1/7		 $ 313,255 Progressing in
line with
contractual terms		 ThAI CHENG
TANNERY
CO., LTD.		 Non - related
party		 － － － $ - HONG BANG
REAL
ESTATE
APPRAISER		 For use as a
factory to
satisfy
operating
needs		 None

Note: The Company’s Board of Directors meeting dated January 7, 2022 resolved to purchase the factory and the land in Anding District of Tainan City; earnest money was paid upon execution of the contract on January 11, 2022, and the rest of the payment was fully made in March 2022, in which ownership was also transferred.

281

SCIENTECH CORPORATION and Subsidiaries

Purchase or sale of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

2022

Appendix Table 5

Unit: NT$ thousand

Purchase from (sale
to)		 Transaction
counterparty		 Relationship Transaction details Transaction details Occurrence of transaction terms other
than those for an arms-length
transaction andreasonstherefor		 Occurrence of transaction terms other
than those for an arms-length
transaction andreasonstherefor		 Notes/Accounts receivable
(payable)		 Notes/Accounts receivable
(payable)		 Remarks
Purchase
(sales)		 Amount Ratio to total
purchase
(sales) (%)
(Note)		 Credit period Unit price Credit period Balance Ratio to total
notes and
accounts
receivable
(payable) (%)
SCIENTECH
CORPORATION
SCIENTECH
ENGINEERING
USACORP.		 SCIENTECH
ENGINEERING
USA CORP.
SCIENTECH
CORPORATIO
N		 Subsidiaries
parent company		 Purchase
Sales
$ 167,145
( $ 167,145 )		 4.1
(
86.9 )		 Net30
Net30		 $ -
-		 －
－		 ( $ 3,858 )
3,858		 ( $ 0.2 )
67.1

Note: Refers to the ratio to total purchase (sales), or to total receivables or payables, of an individual company.

282

SCIENTECH CORPORATION and Subsidiaries

Name and Territory of Investees and Other Relevant Information

2022

Appendix Table 6

Unit: NT$ thousand unless otherwise specified

Name of investor Investee Region Main business line Original investment amount Original investment amount Shares held at theperiod-end held at theperiod-end Profit or loss of
investee in the
period		 Investment gains of
losses recognized in
the period
Remarks
December 31, 2022 January 1, 2021 Shares Percentage
Book value
SCIENTECH
CORPORATION
SCIENTECH
INVESTMENT
CORP.
SCIENTECH
ENGINEERING
CORP.(SHANGHAI)		 SCIENTECH INVESTMENT
CORP.
ACROMASS
TECHNOLOGIES, INC.
SCIENTECH MATERIALS
CORPORATION
NATGEM INC.
SCIENTECH GMBH
TRANSCEND CAPITAL
CORP.
FORWARD SCIENCE
CORPORATION
RENORIGIN INNOVATION
INSTITUTE CO., LTD.
FORWARD SCIENCE PTE.
LTD.
SIMPLE INVESTMENT CORP.
SCIENTECH ENGINEERING
USA CORP.
SCIENTECH ENGINEERING
(HONG KONG) LIMITED		 Mauritius
Taipei
City
Taipei
City
Taipei
City
Austria
British
Virgin
Islands
Miaoli
County
Taipei
City
Singapore
Mauritius
California
, US
Hong
Kong		 Investment
General instrument and
precision instrument
manufacturing
Manufacturing and sale
of energy-efficient
products
Sale of food and
supplies
International trade
Investment
Maintenance service
Sale of biotech products
Trading and
maintenance of
semiconductor
equipment and
peripherals
Investment
Trading of
semiconductor
equipment and
peripherals
International trade		 $ 171,775
270,000
205,000
33,000
1,163
416,829
19,600

14,030
11,944
150,663
(US$4,906
thousand)
9,213
(US$300
thousand)
5,968
(CNY1,354
thousand)		 $ 171,775

270,000

205,000

33,000

1,163

416,829

20,000

14,030

11,944
150,663
(US$4,906
thousand)
9,213
(US$300
thousand)
5,968
(CNY1,354
thousand)
5,540,000
27,000,000

1,400,000

800,000

-
14,275,006

1,960,000

1,121,000

500,000
4,905,500
300,000
-
100

100

100
100
100
100

6

20
21

100
100

100		 $ 536,864

3,277

3,167

583

10,259

457,959

28,561

8,209

-

505,380
(US$16,457
thousand)
28,926
(US$942
thousand)

302,418
(CNY68,608
thousand)		 $ 86,774
(
1,792)

1
(
210)

9,840
(
55,528)
(
52,350)
(
8,100)

-
78,881
(US$2,647
thousand)

7,901
(US$265
thousand)

37,928
(CNY8,577
thousand)		 $ 86,774
(
1,792)
1
(
210)

9,840
(
55,528)
(
2,813)
(
1,761)

-
78,881
(US$2,647
thousand)
7,901
(US$265
thousand)
37,928
(CNY8,577
thousand)
－
－
(Notes 1
and 2)
－
－
－
(Note 2)
(Note 2)
(Note 2)
－
－
－

Note 1: SCIENTECH MATERIALS was dissolved through a resolution reached at the Board of Directors meeting dated August 31, 2021. As of December 31, 2022, the liquidation process was not yet completed. Note 2: It was calculated based on financial statements in the same period that were not audited by CPAs.

＝ ＝ Note 3:The amount was converted using the exchange rate of US$1 $30.71 and RMB$1 $4.408 on December 31, 2022. Investment gains or losses were converted using the average exchange rate of US$1=29.805 and RMB$1=4.422 during January 1, 2022 and December 31, 2022.

283

SCIENTECH CORPORATION and Subsidiaries

Information on Investments in Mainland China

2022

Appendix Table 7

Unit: NT$ thousand unless otherwise specified

Investee in Mainland
China
Main business line		 Paid-in Capital
(Note 1)		 Paid-in Capital
(Note 1)		 Method of investment Accumulated
amount of
investments from
Taiwan at the
beginning of
current year (Note
1)		 Accumulated
amount of
investments from
Taiwan at the
beginning of
current year (Note
1)		 Amount of investments remitted or
recovered in currentyear		 Amount of investments remitted or
recovered in currentyear		 Accumulated
amount of
investments from
Taiwan at the end
of current year
(Note 1)		 Profit or loss of
investee in the
year (Note 2)		 The
Company’s
shareholding
of direct or
indirect
investment (%)
Investment gains
of losses
recognized in the
year (Note 2)		 Investment book
value at the end
of the year (Note
2)		 Profit received
from investments
as of the end of
current year

Remitted		 Recovered
SCIENTECH
ENGINEERING
CORP.(SHANG
HAI)
XTEK
SEMICONDUCT
OR
(HUANGSHI)
CO., LTD.		 Trading and
maintenance of
semiconductor
equipment and
peripherals
Trading of
semiconductor
equipment and
peripherals		 $ 149,558
(
US$4,870
thousand
)
2,545,431
(
US$82,886
thousand
)		 Invested in a China
investee through
another investee in
a third region (Note
3)
Invested in a China
investee through
another investee in
a third region (Note
4)		 $ 149,558
(
US$4,870
thousand
)
438,182
(
US$14,268
thousand
)		 $ -
-		 $ -
-		 $ 149,558
(
US$4,870
thousand
)

438,182
(
US$14,268
thousand
)		 $ 78,893
(
318,577 )		 100
17.21		 $ 78,893
(
61,100 )		 $ 505,948

457,968		 $ -

-
Limit on the amount of investments in Mainland
China specified by the Investment Commission,
MOEA
$2,149,492
Accumulated amount of investments from
Taiwan to Mainland China at the end of current
period(Note 1)		 Investment amount approved by the Investment
Commission, MOEA (Note 1)		 Limit on the amount of investments in Mainland
China specified by the Investment Commission,
MOEA
$587,740（US$19,138 thousand） $587,740（US$19,138 thousand） $2,149,492

Note 1: Converted at the exchange rate of US$1 against NT$30.71 on December 31, 2022.

Note 2: It was calculated based on financial statements in the same period that were audited by CPAs.

Note 3: Investment in SCIENTECH ENGINEERING CORP. (SHANGHAI) via SIMPLE INVESTMENT CORP.

Note 4: Investment in XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. via TRANSCEND CAPITAL CORP.

Note 5: The balance of unrealized gains as of December 31, 2022 in the amount of NT$46,152 thousand was arising from sale of machinery and equipment and provis ion of services to XTEK SEMICONDUCTOR (HUANGSHI) CO., LTD. Realized gross profit during January 1, 2022 and December 31, 2022 was NT$3,590 thousand.

284

SCIENTECH CORPORATION

Information on Major Shareholders

December 31, 2022

Appendix Table 8

Name of major shareholder Shares Shares
Number of shares
held (shares)		 Ownership
HUNG-LIANG HSIEH
FEN-CHING HSIEH-CHIU
FULLWAY INVESTMENT CORPORATION
PARADIGM INVESTMENTCORP.		 7,943,455
6,095,072
5,600,292
4,892,721		 9.79%
7.51%
6.90%
6.03%

Note: The information on major shareholders are acquired from the data of the Taiwan Depository & Clearing Corporation with respect to the shareholders holding aggregately 5% or more of the common and preferred stocks of the Company that have been registered and delivered in dematerialized form on the last business day at the end of the current quarter. The share capital stated in the parent company only financial statements of the Company may be different from the number of shares that have been actually registered and delivered in dematerialized form due to different bases of compilation and calculation.

285

§ Schedule of Major Accounts §

Item
Schedule of Assets, Liabilities, and Equity Items
Schedule of Cash
Schedule of Notes Receivables and Accounts Receivables
Schedule of Inventories
Schedule of Investments Accounted for Using Equity
Method
Schedule of Changes in Property, Plant, and Equipment
Schedule of Notes Receivables and Accounts Receivables
Schedule of Short-term Borrowings
Schedule of Other Payables
Schedule of Profit or Loss Items
Schedule of Net Operating Income
Schedule of Operating Costs
Schedule of Operating Expenses
Schedule of Financial Costs
Summary Table by Function of Employee Benefits,
Depreciation, and Amortization Incurred in the Year		 No./Index.
Table 1
Table 2
Table 3
Table 4
Note 11
Table 5
Table 6
Note 15
Table 7
Table 8
Table 9
Note 19
Table 10

286

SCIENTECH CORPORATION

Schedule of Cash and Cash Equivalents

December 31, 2022

Table 1 Unit: NT$ thousand unless otherwise specified

Item
Cash
Cash on hand and working
capital
Bank check and demand
deposit(Note 1)
Cash Equivalents
Bank time deposit whose
initial maturity date will
be due within 3 months
(Note 2)		 MaturityDate

112.1.26-112.3.21		 Annual Interest Rate
4.0%-4.8%		 Amount




$ 505
1,762,003
1,762,508
430,094
$ 2,192,602

Note 1:Including JPY100,577 thousand, USD30,370 thousand, and EUR10,995 thousand, ＝ ＝ which were converted at the exchange rates of JPY$1 $0.232, US$1 $30.71, and ＝ EUR$1 $32.72, respectively.

Note 2: Including USD14,005 thousand, which were converted at the exchange rates of ＝ US$1 $30.71.

287

SCIENTECH CORPORATION

Schedule of Notes Receivables and Accounts Receivables

December 31, 2022

Table 2 Unit: NT$ thousand

Customer name
Notes receivable (Note)
Accounts receivable
Company A
Company C
Company D
Company E
Others (Note)
Receivables due from related parties
Less: Allowance for doubtful accounts		 Amount






$ 1,904
142,654
43,406
42,752
39,102
406,024
673,938
5,529
27,522
$ 653,849

Note: The balance of each individual customer did not exceed 5% of this account.

288

SCIENTECH CORPORATION

Schedule of Inventories

December 31, 2022

Table 3

Unit: NT$ thousand

Item
Products
Finished-goods
Work-in-process
Raw materials
Less: Allowance for devaluation loss
(Note)		 Amount Amount
Cost
$ 2,724,793
197,052
398,073
667,648
3,987,566
276,710
$ 3,710,856		 Net realizable value






$ 3,352,013
262,060
478,349
1,002,213
$ 5,094,635

Note: The allowance for devaluation loss cover the allowance for products in the amount of NT$89,072 thousand, for finished-goods in the amount of NT$34,655 thousand, for work-in-process in the amount of NT$92,426 thousand, and for raw materials in the amount of NT$60,557 thousand.

289

SCIENTECH CORPORATION

Schedule of Investments Accounted for Using Equity Method

2022

Table 4

Unit: NT$ thousand; unless, otherwise stated


Investee
Investment in subsidiary
SCIENTECH
INVESTMENT
CORP.

TRANSCEND
CAPITAL CORP.

SCIENTECH GMBH
ACROMASS
TECHNOLOGIES,
INC.

SCIENTECH
MATERIALS
CORPORATION

NATGEM INC.
Investment in associates
FORWARD SCIENCE
CORPORATION

RENORIGIN
INNOVATION
INSTITUTE CO.,
LTD.

FORWARD SCIENCE
PTE. LTD.
Investments accounted for
using equity method
Balance-beginning ofperiod
Shares
Amount
Dispose of investment
5,540,000 $ 418,051 $ -

14,275,006
414,481
-

- (
9 )
-
27,000,000
5,069
-

1,400,000
3,166 $ -
800,000
793

-


841,551

-

2,000,000
32,004 (
584 )

1,121,000
9,970
-

500,000
-

-


41,974
(
584)

$ 883,525
($ 584)
 Share of profit or
loss of associates
and subsidiaries
accounted for
using equity
method
$ 86,774

(
55,528 )
9,840
(
1,792 )
1
(
210)


39,085

(
2,813 )
(
1,761 )

-

(
4,574)

$ 34,511
 Capitalsurplus
$ -
103,324
-
-
-

-


103,324

-
-

-


-

$ 103,324
 Exchange
differences
arising from
the translation
of financial
statements
$ 32,039

1,647

428

-

-

-


34,114

(
46 )

-

-

(
46)

$ 34,068
 Others
$ -
(
5,965 )

-

-

-

-
(
5,965)

-

-

-

-
($ 5,965)		 Balance-end ofyear
Shares
Shareholding
%
Amount
5,540,000
100
$ 536,864
14,275,006
100
457,959
-
100
10,259
27,000,000
100
3,277
1,400,000
100
3,167
800,000
100

583
1,012,109
1,960,000
6
28,561
1,121,000
22
8,209
500,000
21

-

36,770
$ 1,048,879		 Balance-end ofyear
Shares
Shareholding
%
Amount
5,540,000
100
$ 536,864
14,275,006
100
457,959
-
100
10,259
27,000,000
100
3,277
1,400,000
100
3,167
800,000
100

583
1,012,109
1,960,000
6
28,561
1,121,000
22
8,209
500,000
21

-

36,770
$ 1,048,879		 Balance-end ofyear
Shares
Shareholding
%
Amount
5,540,000
100
$ 536,864
14,275,006
100
457,959
-
100
10,259
27,000,000
100
3,277
1,400,000
100
3,167
800,000
100

583
1,012,109
1,960,000
6
28,561
1,121,000
22
8,209
500,000
21

-

36,770
$ 1,048,879		 Remarks
Shares
5,540,000
14,275,006
-
27,000,000
1,400,000
800,000

2,000,000
1,121,000
500,000

 Shares
5,540,000
14,275,006
-
27,000,000
1,400,000
800,000
1,960,000
1,121,000
500,000		 Shareholding
%
100

100
100
100
100
100


6
22
21










(Note 2)
(Note 1)
(Note 1)
(Note 1)
(Note 1)

Note 1: It was calculated based on financial statements in the same period that were not audited by CPAs. Note 2: The increase in capital surplus was the adjustment for the effects arising from failure to subscribe to an associate’s follow-on offering; others were the unrealized gains from downstream transactions in the year.

290

SCIENTECH CORPORATION

Schedule of Notes Receivables and Accounts Receivables December 31, 2022

December 31, 2022
Table 5
Name of manufacturer
Accounts payable
Company A
Company B
Others (Note)
Payables due to related
parties (Note)
Total		 Unit: NT$ thousand
Amount
$ 1,001,496
173,679

605,030
1,780,205

4,034
$ 1,784,239




Note: The balance of each individual customer did not exceed 5% of this account.

291

SCIENTECH CORPORATION

Schedule of Short-term Borrowings

December 31, 2022

Table 6

Unit: NT$ thousand

Name
Bank loans against a letter
of credit
Bank SinoPac
CTBC Bank
Bank credit loans
DBS Bank Limited		 Borrowing period
2022.06.02-2024.06.30
2022.08.22-2023.08.31

2022.10.03-2023.10.02		 Balance
$ 216,383
8,596

$ 224,979

$ 200,000
 Credit limit of
financing
facilities
$ 300,000

680,000
$ 980,000
$ 300,000		 Pledged or
collateralized
None
None

None		 Remarks






Note 2

Note 1: The interest rate range is between 0.50 and 1.40%.

  • Note 2: The credit limit of CTBC Bank credit loans and CTBC Bank loans against a letter of credit is accumulative, and amounted to NT$680,000 thousand.

292

SCIENTECH CORPORATION

Schedule of Net Operating Income

2022

Unit: NT$ thousand

Table 7
Name
Manufacturing
Sale in the capacity of an agent
Commission
Maintenance
Others		 Quantity
2,243,526
33,011		 Unit: NT$ thousand
Amount



$ 2,014,840
1,932,929
91,094
34,256
57,452
$ 4,130,571

293

SCIENTECH CORPORATION

Schedule of Operating Costs

2022

Table 8

Unit: NT$ thousand

Name
Cost to manufacture and cost of goods sold
Raw materials - beginning balance
Plus: material purchase
Work-in-process transferred in
Finished-goods transferred in
Others
Less: raw materials - ending balance
Transferred to products
Pick-up for R&D use
Direct raw material consumption
Direct labor
Manufacturing overheads
Manufacturing expenses
Add: work-in-process - beginning
balance
Less: work-in-process - ending
balance
Transferred to raw materials
Cost of finished-goods
Add: finished-goods - beginning
balance
Others
Less: finished-goods - ending balance
Transferred to raw materials
Others
Cost of goods sold
Products - beginning balance
Add: products purchased in the year
Raw materials transferred to
products
Less: products - ending balance
Others
Add: Allowance for inventory devaluation
loss
Add: Retirement of inventories
Add: Inventory shortage		 Amount
















$ 273,023
1,182,527
676,750
389,260
57,508
667,648
35,975
146,461
1,728,984
175,343
389,493
2,293,820
342,187
398,073
676,750
1,561,184
134,997
4,699
197,052
389,260
30,153
1,084,415
1,256,545
2,918,934
35,975
2,724,793
60,404
1,426,257
48,223
3,467
129
$ 2,562,491

294

SCIENTECH CORPORATION

Schedule of Operating Expenses

January 1 through December 31, 2022

Table 9

Unit: NT$ thousand

Item
Salary expenses

Commission
Depreciation
Freight charges
Material cost
Insurance premium
Service expenses
Travel expenses
Others (Note)

 Marketing
expenses
General and
administrative
expenses

$ 220,562 $ 92,928
77,552
-
19,318
6,151
62,882
442
22,955
-

19,217
6,566
12,312
5,353
11,365
171
90,341

31,680

$ 536,504
$ 143,291
 R&D expenses
Gains on
expected credit
impairment
$ 142,288 $ -

-
-

49,498
-

163
-

23,952
-

11,264
-

7,112
-

2,302
-

47,279

5,503

$ 283,858
$ 5,503
 Total





















$ 455,778

77,552

74,967

63,487

46,907

37,047

24,777

13,838
174,803
$ 969,156

Note: No amount individually exceeds 5% of this account.

295

SCIENTECH CORPORATION

Summary Table by Function of Employee Benefits, Depreciation, and Amortization Incurred in the Year

2022 and 2021

Table 10
Employee benefit expenses
Salary expenses
Labor insurance and health
insurance expenses
Pension expenses
Directors’ remuneration
Other employee benefit
expenses
Depreciation
Amortization expenses		 2022 Total
$ 634,344
51,221
25,462
9,090
29,513
$ 749,630
$ 105,767
$ 324		 2021 Unit: NT$ thousand
Total
$ 530,493
45,020
13,104
7,048

27,938
$ 623,603
$ 101,131
$ 260
Attributable to
operating costs
$ 187,656
18,936
5,878
-

15,389
$ 227,859
$ 30,800
$ -		 Attributable to
operating expenses
$ 446,688
32,285
19,584
9,090

14,124
$ 521,771
$ 74,967
$ 324		 Attributable to
operating costs
$ 163,688
16,710
5,500
-

13,420
$ 199,318
$ 29,651
$ -		 Attributable to
operating expenses
$ 366,805
28,310
7,604
7,048

14,518
$ 424,285
$ 71,480
$ 260
























Note 1: The number of the Company’s employees in 2022 and 2021 is 634 and 583, respectively, of whom the number of directors not concurrently serving as an employee is both 6. Note 2: (1) The average employee benefit expenses in 2022 and 2021 were NT$1,179 thousand and NT$1,069 thousand, respectively.

  • (2) The average employee salary expenses in 2022 and 2021 were NT$1,010 thousand and NT$919 thousand, respectively.

  • (3) The extent of average employee salary adjustment was 9.9%.

Note 3: There were no supervisor remuneration because the Company did not have supervisors in 2022 and 2021.

  • Note 4: The Company’s independent directors are entitled to a fixed amount of remuneration. Other directors are entitled to no compensation other than the reimbursement of transportation expenses required for attending a Board meeting. In addition, according to Article 20 of the Company’s Articles of Incorporation, no less than 2% of the annual earnings may be allocated as directors’ remuneration. Such remuneration is firstly proposed to the Remuneration Committee in accordance with the Company’s remuneration distribution principles; if the committee gives the approval, such remuneration proposal is then summited to the Board of Directors and, if approved, implemented.

  • Note 5: The salary structure of the Company’s employees and managers mainly comprises base salary, job pay differentials, bonus, and monetary perks. The salary adjustment, year-end bonus, and bonus distribution therefor are determined based on the “Employee Promotion Regulations” and “Employee Bonus Distribution Principles”, and are firstly proposed by the management executives with consideration given to personal performance and the Company’s operational performance, then approved by the executives with the authority, then submitted to the Remuneration Committee for consideration, and, if approved, implemented.

296

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