SUNON - Annual Report 2020 | FinancialReports.eu

Stock Code ： 2421

Sunonwealth Electric Machine Industry Co., Ltd. 2020 Annual Report

Printed on April 11, 2021

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Company Website :

http://www.sunon.com

Taiwan Stock Exchange Market Observation Post System : http://mops.twse.com.tw

	Table of Contents	Table of Contents
A.	Letter to Shareholders--------------------------------------------------------------------------------------		1
B.	Company Profile --------------------------------------------------------------------------------------------		4
	I.	Date of establishment -----------------------------------------------------------------------------------	4
	II.	Company history ----------------------------------------------------------------------------------------	4
C.	Corporate Governance Report----------------------------------------------------------------------------		10
	I.	Organization system ------------------------------------------------------------------------------------	10
	II.	Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and
		Department Directors -----------------------------------------------------------------------------------	13
	III.	Remunerations to Directors, Supervisors, President, and Vice Presidents in recent years ----	22
	IV.	Implementation of corporate governance ------------------------------------------------------------	32
	V.	Information on fees to CPA ----------------------------------------------------------------------------	60
	VI.	Information on Replacement of CPAs ----------------------------------------------------------------	61
	VII.	The Chairman, President and Financial or Accounting Managerial Officer of the Company
		who had worked for the Independent CPA or the affiliate in the past year ----------------------	61
	VIII.	Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding
		more than 10% interests and changes to share pledging by them ---------------------------------	62
	IX.	Information on the relationship between any of the top ten shareholders (related party,
		spouse, or kinship within the second degree) --------------------------------------------------------	64
	X.	The shareholding of the Company, Director, Supervisor, Managerial Officers and an
		enterprise that is directly or indirectly controlled by the Company in the invested company
		and the calculation of the consolidated shareholding percentage ---------------------------------	66
D.	Funding Status------------------------------------------------------------------------------------------------		67
	I.	Source of Capital Shares -------------------------------------------------------------------------------	67
	II.	Shareholders ---------------------------------------------------------------------------------------------	69
	III.	Shareholding distribution status -----------------------------------------------------------------------	70
	IV.	List of major shareholders ------------------------------------------------------------------------------	70
	V.	Market price per share, net worth, earnings, dividends, and the related information for the
		last two years ---------------------------------------------------------------------------------------------	71
	VI.	Dividend policy and implementation status ---------------------------------------------------------	73
	VII.	The effects of the stock dividends proposed by the shareholders' meeting on the Company's
		business performances and earnings per share ------------------------------------------------------	73
	VIII.	Remuneration of employees, directors and supervisors --------------------------------------------	73
	IX.	Buyback of treasury stock ------------------------------------------------------------------------------	75
	X.	Corporate bond issuance status ------------------------------------------------------------------------	75
	XI.	Issuance of preferred stocks ----------------------------------------------------------------------------	75
	XII.	Issuance of global depositary receipts (GDR) -------------------------------------------------------	75
	XIII.	Exercise of employee stock option plan (ESOP) ----------------------------------------------------	75
	XIV.	Restricted stock awards ---------------------------------------------------------------------------------	75

	XV.	Mergers, acquisitions or issuance of new shares for acquisition of shares of other
		companies ------------------------------------------------------------------------------------------------	75
	XVI.	Implementation of capital allocation plan ------------------------------------------------------------	75
E.	Business Overview-------------------------------------------------------------------------------------------		76
	I.	Business activities -------------------------------------------------------------------------------------	76
	II.	Market, production and sales -------------------------------------------------------------------------	81
	III.	Employee information ----------------------------------------------------------------------------------	89
	IV.	Environmental protection expenditure information ------------------------------------------------	89
	V.	Employees-employer relations ------------------------------------------------------------------------	90
	VI.	Important contracts -------------------------------------------------------------------------------------	90
F.	Financial Overview-------------------------------------------------------------------------------------------		91
	I.	Condensed balance sheet and statement of income for the last five years -----------------------	91
	II.	Financial analysis for the last five year ---------------------------------------------------------------	98
	III.	Audit Committee's review report for the financial statements of the most recent year --------	104
	IV.	Financial statements of the most recent year --------------------------------------------------------	105
	V.	Parent company only financial statements of the most recent year audited by the CPA -------	199
	VI.	Financial turnover status encountered by the Company and affiliates that have material
		impact on the financial status of the Company ------------------------------------------------------	290
G.	Review, Analysis, and Risks of Financial Conditions and Performance--------------------------		291
	I.	Financial conditions -------------------------------------------------------------------------------------	291
	II.	Financial performance ----------------------------------------------------------------------------------	292
	III.	Cash flow -------------------------------------------------------------------------------------------------	293
	IV.	The effects that significant capital expenditures have on financial operations in the recent
		year --------------------------------------------------------------------------------------------------------	294
	V.	Investment policy in the past year, profit/loss analysis, improvement plan, and investment
		plan for the coming year --------------------------------------------------------------------------------	294
	VI.	Risk management and evaluation ---------------------------------------------------------------------	296
	VII.	Other important matters -------------------------------------------------------------------------------	302
H.	Special Disclosures-------------------------------------------------------------------------------------------		303
	I.	Profiles of affiliates and subsidiaries -----------------------------------------------------------------	303
	II.	Progress of private placement of securities ----------------------------------------------------------	308
	III.	Holding or disposal of stocks of the Company by subsidiaries -----------------------------------	308
	IV.	Other supplemental information -----------------------------------------------------------------------	308
Corporate events with material impact on shareholders' equity or stock prices set forth in Article
36,	Paragraph 3, Subparagraph 2 of Securities and Exchange Act---------------------------------------		309

A. Letter to Shareholders

Dear Shareholders,

It is summer and the day for our annual shareholders' meeting has arrived. As the COVID-19 epidemic continues its rampage across the globe, we wish to express our sincere gratitude for your attendance today. 2020 would be a year to remember in human history. The COVID-19 epidemic has taken more than 2.5 million lives and most people are still working and living under conditions different from the pre-pandemic world. It is difficult to predict when and how the pandemic would end. Compared to other countries, Taiwan has done an exceptional job in disease prevention and combating the epidemic. The regional economic growth was not affected by the impact of the epidemic and the economy has achieved growth. As an economy that dominates the electronics and IT industry, Taiwan benefited from the increase in working from home and the ICT application industry achieved substantial growth. The Company also achieved record highs in revenue and profitability. However, as countries across the world continued to advocate loose monetary policies to stimulate the economy and as most forecasts predict a rebound in economic growth after the epidemic, the costs of labor and materials have risen. These factors and the appreciation of the NTD and have significantly impacted our margins. We regard the rise in costs and reasonable responses to product prices to be the most severe challenges this year and we will also focus on these issues in our business activities. For more than forty years, Sunonwealth has always regarded every challenging crisis as an opportunity and the Company has prepared response measures to meet the challenges with the aim of maintaining continuous growth of revenue and profitability.

Results of Business Operations in the Previous Year

The Company's business plan achievement status in 2020 is as follows:

Comparison of the 2020 Business Plan and actual achievements

	Business Plan	Actual Results	Difference	Completion Rate	2019	Growth Rate
Quantity shipped	128.9 million units	139.2 million units	10.3 million units	108.00%	124.5 million units	11.81%
Consolidated total revenue	NT$12.243 billion	NT$12.781 billion	NT$538 million	104.39%	NT$11.660 billion	9.61%
Consolidated EPS beforetax	NT$3.87	NT$4.34	NT$0.47	112.14%	NT$3.63	19.56%
Consolidated EPSafter tax	NT$2.94	NT$3.39	NT$0.45	115.31%	NT$2.71	25.09%

Note: The 2020 Business Plan figure was not audited by the CPA.

In terms of the achievement rate of the Company's 2020 Business Plan, the increase in working from home due to the COVID-19 epidemic has led to an approximately 20% growth in cloud servers, communication products, and medical and industrial products. We had a 10% growth in laptop computers and channel products but a 10% to 20% decline in automobile and home appliances. Overall, the consolidated annual revenue grew by 9.61% from the previous year and the net profit increased significantly by 25.09%. We have achieved all targets in the Business Plan with 112.14% in profits before tax and 115.31% in profits after tax. In terms of income and expenditures, the net cash inflow in the fiscal year amounted to NT$25.58 million and the closing cash and cash equivalents amounted to NT$491 million. The cash flow on the consolidated financial statements showed a net cash inflow of NT$303 million and closing cash and cash equivalents of NT$1.575 billion. The Company's funding status remains healthy. The Company invested NT$482 million in research and development

expenditures in the fiscal year and invested NT$823 million in R&D based on the consolidated financial statements. Both figures have increased from the previous year. The Company has completed projects commissioned by customers in six major sectors (IT and office equipment, servers and communication, industrial and medical equipment, appliances, automobiles, and LED) as well as the development of the next-generation passive heat dissipation components, water-cooled heat dissipation modules, and important components sufficient for meeting the demand for the future evolution heat dissipation technologies.

2021 Business Plan Overview

In response to the unique environmental factors of 2021, the Company has formulated the following important business plans. 1. Grasp market opportunities to achieve record-high revenue: The economic stimuli taken by world governments will increase demand in all industries and they provide better opportunities for growth compared to the past. We expect higher growth in ICT, cloud servers, automobiles, industry, and the medical equipment industry compared to the previous year. 2. Reasonable adjustments of sales price: Our margins have been under pressure due to the appreciation of the NTD and the rise in the cost of labor and materials. We must implement reasonable adjustments of sales prices to increase gross profit margin. 3. Improve operation capabilities to reduce the risks of raw materials: In response to the rise in the cost of materials and the impact of material shortages, we must respond quickly, coordinate procurement, and increase the length of the material preparation cycle to reduce risks. We must also respond to customers' production and sales adjustments caused by shortages of materials for customers. 4. Adjust locations of production sites to meet customer needs: We continued to address customer demands for reducing the concentration of production sites due to the trade war between China and the United States and accelerated preparation for production in new factories in Taiwan and the Philippines. 5. Continue to increase smart manufacturing coverage rate: Compared with traditional manpower production lines, automated production lines offer significant production cost advantages. We introduced new products into the automated production line in response to customer changes to reduce production costs. 6. Flexible adjustments of the production layout to maximize cost advantages: Due to the different efficiency characteristics and costs between different production plants, we must implement flexible response, rapid adjustments, and continuous cost reduction based on the principle of overall operating cost optimization. After adjustments for production and sales and changes implemented in response to the market, products, customers, and sales strategy, the Company plans to ship 142 million units this year.

Future Development Strategy

The Company's future development strategy will be focused on technology and product development, global production development, and continuous cost reduction. Technology and product development: Due to technology development trends, CPUs will generate higher power consumption and operating temperature. The corresponding heat dissipation solutions must include a more diverse range of active and passive heat dissipation components. We have also developed liquid-cooled heat dissipation solutions. The Company has achieved preliminary results in its active investments in passive heat dissipation components and liquid-cooled heat dissipation solutions. They will invariably provide more comprehensive heat dissipation solutions for customers and create value for customers. Global production plan: Since the start of the trade war between China and the United States, the Company has transferred the production of products affected by high import tariffs back to Taiwan. However, customers continue to demand greater dispersion of production to different sites to mitigate concentrated production risks. The continuous labor shortages and rising wages in Mainland China were also important factors for the creation of this development strategy. The Company plans to set up a new production site in the Philippines to address the risks of concentrated production based on customer demand, and reduce production costs. We will continue to pay close attention to changes in the global economy for creating future production plans. Continue to lower costs: The Company must use simplified product architecture, reduce component specifications, and introduce automated

production to achieve streamline designs and production and reduce product production costs. In terms of R&D, we must implement the performance evaluation regulations for investments and output to increase the efficiency of R&D expenditures and maximize the output of R&D expenditures. In terms of system procedures, we will introduce big data analyses to streamline procedures and effectively reduce manpower requirements. We shall adopt a diverse range of development strategies and continue to improve our business development and profitability.

Impact of the Competitive Environment, Regulatory Environment, and Overall Business Environment

In terms of the competitive environment, the Company faces price competition from competitors in Greater China, as well as competition in products and technologies from major Japanese and European companies. With over 40 years of experience in technology development, the Company has obtained a leading position in IT and cloud server products in recent years. We will focus on new products in the automotive, industrial, and home appliance industries to enhance our competitive strength. Total solutions for heat dissipation have become key to competition. The Company must integrate active and passive cooling components and expand from air cooling to liquid cooling to maintain its competitive advantages. The biggest impact in the regulatory environment is the series of adjustments in the supply chain caused by the trade war between China and the United States. The Company will actively invest in the construction of a new factory in the Philippines to respond to customer demand for addressing the risks of concentration of production and reduce costs. The overall business environment this year was characterized by higher risks and more uncertainties than ever before. The continuous development of the epidemic, appreciation of the NTD, shortage of materials for semiconductor ICs, rising material prices, labor shortages and labor cost increases are all unfavorable factors in the overall environment. However, the Company has developed various countermeasures to meet the challenges to minimize the impact of these unfavorable factors.

With your support in the past 40 years, Sunonwealth has achieved stable growth in both revenue and profitability. In the future, we shall continue to dedicate our efforts to make the world a better place with Sunonwealth and fill it with endless hope. Finally, on behalf of all employees of the Company, I wish to thank the shareholders for your support. I also look forward to your continuous support and let us work together for another forty years.

I wish you all health and prosperity.

Chairman of the Board Yin-Su Hong President Ching-Shen Hong Chief Accounting Officer William Li

June 9, 2021

B. Company Profile

I. Date of establishment

Date of establishment and registration: October 25, 1980

II. Company history

1. 1980

The Company was established with a capital of NT$1,000,000. It focused on the R&D, product, and sales of small precision motors and cooling fans.

2. 1981

The Company obtained the SUNON trademark certificate issued by the Bureau of Standards, Metrology and Inspection and established the Taipei Factory.

3. 1983

Obtained UL certification in the United States, increased capital to NT$5,000,000, and reorganized into a company limited by shares.

1984

Established the Kaohsiung Factory.

1986

Increased capital to NT$10,000,000.

1987

Obtained the first patent certificate.

1988

Increased capital to NT$21,000,000.

1989

Purchased office building in Kaohsiung City. Increased capital to NT$149,530,000.

1990

Completed the construction of the Gangshan Factory.

1991

Successfully developed the DC brushless cooling fan and increased capital to NT$171,959,500.

11. 1993

Conducted capital increase by converting earnings to capital in September and increased the capital to NT$201,200,000.

1994

Purchased Kaohsiung Factory and increased capital to NT$300,000,000 in December.

13. 1995

Passed ISO 9002 certification in July. Established Hong Kong Office. Conducted capital increase by converting earnings to capital in August. The capital is increased to NT$360,000,000. Purchased office building in Taipei in November.

14. 1996

Officially established the Singapore Office in January and passed ISO 9001 certification in February. Established the Europe Office in the Netherlands in August. Conducted capital increase by converting earnings to capital in September and increased the capital to NT$470,300,000.

15. 1997

Successfully developed the spindle motor for the 12X and 16X-speed CD drive in March; Won the Taiwan Excellence Award in April; Conducted capital increase by converting earnings to capital in May and increased the paid-in capital to NT$565,559,000. Established the Tainan Factory in June; Established the US Office in November.

16. 1998

Conducted capital increase by converting earnings to capital in June and increased the paid-in capital to NT$ 699,700,000. Company stocks are listed on the OTC market in September; Company products won the 6th Taiwan Excellence Award and the Company passed ISO 14001 certification; Conducted capital increase in December and increased the paid-in capital to NT$ 800,000,000.

17. 1999

The new green motor series was launched in January; Kaohsiung Second Plant was completed in February and the R&D Building was officially launched; Established a subsidiary company in the United States in March; Invested in Sunon Motor Co., Ltd. which focused on the research, development, and production of DVD spindle motors; the Company received the Magnetism Prize for contribution to the industry and research results from Taiwan Association for Magnetic Technology; Conducted capital increase by converting earnings to capital in July and increased the paid-in capital to NT$ 964,000,000.

18. 2000

The Company was awarded the bronze prize in the corporate division in 9th National Invention and Creation Award and the Golden Award in the Outstanding Enterprise Category and Product Design Category; Established subsidiary companies in France and Japan; Company stocks became listed on TWSE in September; issuance of the first unsecured corporate bonds totaling NT$400 million. Increased capital to NT$ 1,209,820,000.

19. 2001

Awarded the bronze prize in the corporate division in 10th National Invention and Creation Award; launched the world's first brushless DC vibration motor. Increased capital to NT$ 1,611,187,190.

20. 2002

Began the expansion of the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; launched the Power Motor series; won the Silver Award and Industrial Technology Development Excellence Award in the 10th Taiwan Excellence Award. Increased capital to NT$ 1,809,005,170.

21. 2003

Completed the expansion of the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; Awarded the Enterprise Role Model Award for "Root in Taiwan for Global Development" in the first Golden Root Award; awarded Sony Certificate of SONY Green Partner; awarded "Contribution to the Magnetic Technology Industry" in the 16th Magnetism Prize for from Taiwan Association for Magnetic Technology; Awarded the fourth Industrial Sustainable Excellence Award (machinery and transportation industries) by the Ministry of Economic Affairs; Global Operation Head Office application approved by the Ministry of Economic Affairs; Invention and Innovation Center application approved by the Ministry of Economic Affairs; issuance of the first unsecured international convertible corporate bonds valued at US$10 million. Increased capital to NT$ 1,960,000,610 and elected the 10th-term Directors and Supervisors.

22. 2004

Inauguration ceremony of the Operation Head Office and the phase 2 plant of Sunon Electronic (Kunshan) Co., Ltd.; Chairman Yin-Su Hong received an honorary PhD degree for management from Sun Yat-sen University; Awarded the silver prize in the First National Invention and Creation Award of the Ministry of Economic Affairs; awarded the 2004 Technology Management Prize (enterprise and group category) from the Chinese Society for Management of Technology; Ranked 48th in the world and 4th in Taiwan in terms of technical strength by the MIT Technology Review ; launched the magnetic levitating motor AC fans. Capital was maintained at NT$ 1,960,000,610.

23. 2005

The Company passed OHSAS18001 certification and provides products that fully comply with the RoHS directive; completed the development of the PMD 4028 high air volume fans and magnetic levitating motor fans 7020 series; received the 13th Taiwan Excellence Award and the "2005 Taiwan Good Brands" from the Ministry of Economic Affairs; received awards including SAMSUNG Eco-Partner certification and Inventec's 2005 Diamond Supplier Award; Ranked 4th in the Top 100 Companies in Taiwan in the components category by Business Weekly in 2005. Increased capital to NT$ 1,998,600,620.

24. 2006

Passed ISO/TS 16949 quality assurance system certification; received the 14th Taiwan Excellence Award and the "2006 Taiwan Good Brands" from the Ministry of Economic Affairs; received the Best Innovation and Business Management Award in the third Taiwanese Enterprise Awards presented by China Times; received Canon Green Activity environmental protection certification; launched the Waturbo cooling module; issuance of the second unsecured corporate bonds totaling NT$400 million. Increased capital to NT$ 2,057,658,640 and elected the 11th-term Directors and Supervisors. Established "Sunon Electronic (Foshan) Co., Ltd." in China.

25. 2007

Launched the world's smallest/slimmest nano-tech fans and drum fans; received the Silver Award in the 15th Taiwan Excellence Award and Taiwan Excellence Award from the Ministry of Economic Affairs; "Ministry of Economic Affairs Pilot Information Application Development Program - Sunonwealth Smart Patented Value-Added System Project" passed the review by the Ministry of Economic Affairs and was recommended as an "outstanding pilot company"; Won recognition as the best supplier of Emerson in 2007; Ranked 1st in the Top 100 Companies in Taiwan in the power/transportation equipment category by Business Weekly in 2007. Completed the relocation and production line expansion of Sunon Electronic (Foshan) Co., Ltd.; Increased capital to NT$ 2,313,064,460. Merged the wholly owned "Chien Heng Precision Co., Ltd." and the Board of Directors resolved to liquidate the investee "Pingnan Sunonwealth Electrical Product Factory" in China.

26. 2008

The Company's innovative invention "Mighty Mini Fan", the smallest in the world, was exhibited at the "Taiwan Number One Special Exhibition" organized by the Taiwan Historica of Academia Historia; The innovative technology used in the Mighty Mini Fan was awarded the "Industrial Innovation Award" organized by the Industrial Development Bureau of the Ministry of Economic Affairs and it won the 17th Taiwan Excellence Award; launched the new product ultra-quiet fan, next-generation magnetic levitating motor fan ME series, and indoor LED light bulb cooling module; passed IECQ QC080000 certification; entered the new Netbook products supply chain; Increased

capital for the two plants in China; increased the registered capital of Sunon Electronic (Kunshan) Co., Ltd. to US$28,500,000 and increased the registered capital of Sunon Electronic (Foshan) Co., Ltd. to US$19,420,000; increased the Company's capital to NT$2,457,986,300.

27. 2009

The world's slimmest 1cm nano-tech fans and drum fans received the Silver Award in the 18th Taiwan Excellence Award and Taiwan Excellence Award from the Ministry of Economic Affairs; awarded the contribution prize in the 2009 National Invention and Creation Award; "Slim fan" invention patent awarded the Silver Prize for Invention in the 2009 National Invention and Creation; ranked 75th in the 2008 "Top 100 Domestic Institutions in Total Number of Patent Certificates" by the Intellectual Property Office and ranked 73rd in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of market share in the global AC/DC axial fans in the market research report published by Fuji Keizai. Election of the Company's 12th-term Directors and Supervisors; Sunon Electronic (Foshan) Co., Ltd. merged Nanhai Guangyuan Electronic (Foshan) Co., Ltd. and increased its capital to US$20,620,000; the Company merged its wholly-owned subsidiary "Sunon Motor Co., Ltd."; increased the Company's capital to NT$2,579,297,320.

28. 2010

Environmental-friendly Energy-saving Cooling Fans for LED MR16 and LED Street Lamp both received the 19th Taiwan Excellence Award; The Company was ranked 347th in the 2009 "Top 1000 manufacturing companies in Taiwan" in the 446th issue of Commonwealth Magazine . launched the smart forward and backward-rotating dusting fan and LED lighting cooling module series; ranked 67th in the 2009 "Top 100 Domestic Institutions in Total Number of Patent Certificates", 56th in the "Top 100 Domestic Institutions in Invention Patent Applications", and 89th in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of market share in the global AC/DC axial fans in 2010 in the market research report published by Fuji Keizai. Sunon Electronic (Kunshan) Co., Ltd. expanded the new factory and increased the registered capital to US$33,000,000.

29. 2011

Launched the IP-68 maximum protection products and LED projection light cooling modules; The Lightweight & Ultra-thin Cooling Fan received the 20th Taiwan Excellence Award from the Ministry of Economic Affairs; SUNON brand became one of the "Top 100 Brands in Taiwan"; The Company was ranked 361st in the 2010 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine . ranked 85th in the 2010 "Top 100 Domestic Institutions in Number of Patent Applications"; ranked 65th in the "Top 100 Domestic Institutions in Invention Patent Applications" and 75th in the "Top 100 Domestic Institutions in Number of Invention Patent Certificates"; SUNON ranked first in terms of global DC axial fans in the "Small Fan World Scale Market Research" published by Yano Research Institute in Japan in 2011. The Company established Sunon Electronic (Bei Hai) Co., Ltd. and the paid-in registered capital was US$6,000,000.

30. 2012

The Company was ranked 373rd in the 2011 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine ; Lightweight & Ultra-thin Cooling Fan won the Silver Award in the 20th Taiwan Excellence Award. "High-Lumen LED Spotlight active cooling module series" and "high performance cooling fan for hand-held micro projector" won the 21st Taiwan Excellence Award; the registered capital of Sunon

Electronic (Bei Hai) Co., Ltd. was increased to US$10,000,000. the Company established Sunon Electronic (He Fei) Co., Ltd. The Company reduced shares by buying back treasury stock and reduced the capital to NT$2,509,297,320.

31. 2013

The Company was ranked 361st in the 2012 Top 1000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The Company launched the Ultra Micro Cooling Device Series, High-Lumen LED MR16 lamp Active Cooling Modules Series, and the Dust proof, Water proof, IP68 Cooling Fan which won the 22nd Taiwan Excellence Award.

32. 2014

The Company launched 400W high-wattage LED lighting cooling solution and ECO DC variable frequency air fan, and other new products; The mobile phone cooling case and automobile fragrance system air fan received the 23rd Taiwan Excellence Award; LED Lighting Ventilation Fan received the iF Product Design Award in Germany in 2015; The Company was ranked 348th in the 2013 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine .

33. 2015

Launched the ultra-energy-efficient DC ventilation fan; The Company was ranked 313th in the 2014 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . LED Lighting Ventilation Fan received the 24th Taiwan Excellence Award; received the 2015 TTQS Gold Prize. The Mighty Mini Fan product line was adopted in computer sticks, drones, electronic breathing masks, and virtual reality wearable devices.

34. 2016

Launched the Flow2 One-AHR Ventilation Fan, IP68 high protection fans for LED lighting, Energy Saving EC Axial Fan, and ATEX explosion prevention fans; The Company was ranked 281st in the 2015 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . LED Lighting Ventilation Fan received the Silver Award in the 24th Taiwan Excellence Award; Obtained 6,934m[2] of land for the Kaohsiung Factory.

35. 2017

Launched the Type 25 side-suction ventilation fan and VF high-performance fans for commercial use; The Company was ranked 272nd in the 2016 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The Flow2 One AHR Ventilation Fan and Energy Saving EC Axial Fan received the Silver Award in the 26th Taiwan Excellence Award.

36. 2018

Launched DC Axial Fan VF dual fan; The Company was ranked 279th in the 2017 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . The sidesuction ventilation fan received the 2018 Taiwan Excellence Award. Merged the whollyowned subsidiary Sunon SMT Co., Ltd. Sold 100% of shares in Hefei Hua Zhun Electronics Co., Ltd.

37. 2019

Launched the Flow2 One-AHR Ventilation Fan Plus+ and Powerful Energy-Saving Ceiling Fan; ranked 260th in the 2018 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine ; Powerful HVLS FAN Series1 Energy-Saving Ceiling Fan won the 2019 Taiwan Excellence Award; received Gold Medal Certification in the Talent Quality-management System (TTQS); invested in the establishment of branch companies in India and the Philippines.

38. 2020

We launched the next-generation Flow2 One-AHR ventilation fan (intake), modern HVLS home ceiling fan, and AF car seat ventilation drum fan, and was ranked 261st in the 2019 Top 2000 Manufacturing Companies in Taiwan by Commonwealth Magazine . Sunonwealth received the Taiwan Excellence Achievement Award. The Modern HVLS home ceiling fan and the Flow2 One-AHR Ventilation Fan Plus won the 2020 Taiwan Excellence Award. Obtained 137,096m[2] of land for the construction of a plant in the Philippines.

C. Corporate Governance Report

I. Organization system

(I) Organization structure

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

Shareholders' Meeting
Board of Directors
Remuneration Committee Secretariat of the Board
Audit Committee Audit Office
President
President Office Quality Strategy Center
Operating Management Division GS Business Unit
Strategic Purchasing Department Global Production Unit
Global Human Resource Division Automated Intelligence Division
IT Division Finance Division
----- End of picture text -----

Note: The organization structure became effective on March 11, 2021.

(II) Major business units and their key businesses

Department Name	Main Businesses
President	The President is responsible for the execution of the Company's operations. The President establishes business strategic goals and directs and manages subordinates in business operations to achieve the Company's goals.
President Office	The President Office assists the President in business operations, plans for the Company's medium and long-term goals and strategies, and improves the performance of execution units.; the President Office is also responsible for the management, assistance, and audit of investee businesses for strengthening the comprehensive performance of affiliated enterprises; it also manages legal and intellectual property rights.
Quality Strategy Center	The Center is responsible for managing quality/hazardous substances/environmental health and safety systems; assignment of management representatives and definitions of duties; formulation, amendment, and review of plans for the quality/hazardous substance/environmental health and safety systems; formulation of annual management strategies and communication and advancement of targets; implement regular audits on the performance of various systems, improvements for discrepancies, and effectiveness of improvements; regularly implement reviews & improvements for discrepancies, and effectiveness of improvements for management items; monitor the effective supervision of customer complaints; provide assistance, risk prevention, and prevent recurrence through management.
GS Business Unit	The GS Business Unit is responsible for technical support and product development for strategic applications and strategic customers; it also follows up on customer demands in projects and provide customers with solutions. The GS Business Unit manages marketing channels across the globe and strategic customers. It formulates product and marketing strategies to expand the market, maintain customer relations, and improve customer satisfaction. It also manages overseas subsidiariesforsales.
Global Production Unit	It is responsible for the production of cooling fans and motors as well as comprehensive quality; it also provides customers with high-quality products and prompt delivery. The Unit oversees the Kunshan Factory, Foshan Factory,Beihai Factory,andKaohsiungFactory.
Automated Intelligence Division	It is responsible for the development of production processes for fans and motors as well as the R&D and design of various automated production equipment and tools to improve overall production efficiency.
Operating Management Division	It is responsible for formulating KPI for all departments of the Group as well as their evaluations and follow-up improvement; it is responsible for the coordination and improvement of system procedures as well as the development of the management system tools.

Strategic Purchasing Department	It is responsible for developing suppliers of materials and control of procurement prices; it also implements a qualified supplier system and priority suppliersystem.
Global Human Resource Division	It is responsible for the human resources development of all subsidiaries across the globe and the administrative affairs of the parent company;its goal istoimprove employee satisfaction.
IT Division	It is responsible for the establishment of a corporate information system and the maintenance of stability, timeliness, confidentiality, and security of the system andinformationcommunication.
Finance Division	It is responsible for maintaining records on the Company's business activities, formulating financial information and management reports, providing analytical data and suggestions for improvement in business decision-making,and controlling budgets.

II. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department Directors (I) Director information

Director information

									Director	Director	information	information
																	April			11,2021
Title (Note 1)	Nationality or place of registration	Name	Gender	Date elected (appointed)	Term	Date first elected (Note 2)	Shares held during election		Number of shares currently held		Current shares held by spouse and underage children		Shareholding by nominee arrangement		Education and work experience (Note 3)	Other current positions within the Company	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads			Remarks (Note 4)
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relationship
Yo Yuan Investment Corporation Representative	Republic of China			2018.5.30	3	2009.5.27	14,802,000	5.90%	14,825,000	5.91%	-	-	-	-	-	-	-	-	-	-
	Republic of China	Chairman Yin-Su Hong	Male	2018.5.30	3	2009.5.27	10,457,000	4.17%	10,457,000	4.17 %	14,670,000	5.85%	-	-	Honorary Doctorate in management, National Sun Yat-sen University	Chief Technology Officer, Sunonwealth Electric Machine Industry Co., Ltd Director, Sunon Electronic (Kunshan) Co., Ltd. Director, Sunon Electronic (Foshan) Co., Ltd. Director, Sunon Electronic (Bei Hai) Co., Ltd. Director, Sunon Inc. (United States) Director, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director,SUNON Electronics Philippines Corp.	Director Director Director	Fu-Ing Hong Chen Ching-Shen Hong Li-Ju Chen	Spouse Father-son Daughter- in-law	Business succession plan. Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Fu-Ing Hong Chen	Femal e	2018.5.30	3	2009.5.27	15,270,000	6.09%	14,670,000	5.85%	10,457,000	4.17 %	-	-	Graduated from Yanchao Elementary School	Senior Special Assistant, Sunonwealth Electric Machine Industry Co., Ltd. Director, Sunon Inc. (United States) Director, Sunon Electronic (Kunshan) Co., Ltd. Supervisor, Sunon Electronic (Foshan) Co., Ltd. Chairman, Guang Sheng Investment Corporation Chairman,Yo Yuan Investment Corporation	Chairman of the Board Director Director	Yin-Su Hong Ching-Shen Hong Li-Ju Chen	Spouse Mother-son Daughter- in-law	Business succession plan. Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Ching-Shen Hong	Male	2018.5.30	3	2009.5.27	3,000,000	1.20%	3,612,000	1.44%	267,000	0.11%	-	-	Department of Electrical Engineering, Kun Shan University Graduated from the Department of Business Import/Export Management, Vancouver Community College	President, Sunonwealth Electric Machine Industry Co., Ltd. Chairman, Sunon Electronic (Kunshan) Co., Ltd. Chairman, Sunon Electronic (Foshan) Co., Ltd. Chairman, Sunon Electronic (Bei Hai) Co., Ltd. Director, Sunon Inc. (United States) Chairman, Sunon SAS (France) Chairman, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp. Director, Suzhou Shengyixing Heat Transfer TechnologyCo.,Ltd.	Chairman of the Board Director Director	Yin-Su Hong Fu-Ing Hong Chen Li-Ju Chen	Father-son Mother-son Spouse	Business succession plan. Response measures: Processed in accordance with laws for compliance
	Republic of China	Director Li-Ju Chen	Femal e	2018.5.30	3	2009.5.27	267,000	0.11%	267,000	0.11%	3,612,000	1.44%	-	-	Graduated from the Department of Information Management, Queen's College (Canada)	Director of the Strategic Purchasing Department/IT Department, Sunonwealth Electric Machine Industry Co., Ltd. Supervisor, Sunon Electronic (Kunshan) Co., Ltd. Director, Sunon Electronic (Foshan) Co., Ltd. Director, Sunon Electronic (Bei Hai) Co., Ltd. Chairman, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director,SUNON Electronics Philippines Corp.	Chairman of the Board Director Director	Yin-Su Hong Fu-Ing Hong Chen Ching-Shen Hong	Daughter- in-law Daughter- in-law Spouse	Response measures: Processed in accordance with laws for compliance
Representative of Nice Enterprise Co.,	Republic of China			2018.5.30	3	1997.4.3	4,506,813	1.80 %	4,006,813	1.60 %	-	-	-	-	-	-	-	-	-	-

Title (Note 1) Ltd.	Nationality or place of registration	Name	Gender	Date elected (appointed)	Term	Date first elected (Note 2)	Shares held during election	Shares held during election	Number of shares currently held	Number of shares currently held	Current shares held by spouse and underage children	Current shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 3)	Other current positions within the Company	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Spouse or relatives of second degree or closer acting as Directors, Supervisors, or other department heads	Remarks (Note 4)
							Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio			Title	Name	Relationship
	Republic of China	Director Ching-Liang Chen	Male	2018.5.30	3	1997.4.3	-	-	-	-	-	-	-	-	Graduated from the Department of Public Affairs, National Chung Hsing University	President, Nice Enterprise Co., Ltd. Supervisor, Taiwan First Biotechnology Corp. Chairman, Taiwan Food Industry Co., Ltd. Chairman, Ho Ding International Development Co., Ltd.	-	-	-	-
Director	Republic of China	Tseng-Cheng Lin	Male	2018.5.30	3	2015.6.9	-	-	-	-	-	-	-	-	Graduated from the Department of Business Administration, International Business College	Chairman, Suman Corporation Chairman, Fu Fong International Co., Ltd. Director, Hemogen Bio-Tech Co., Ltd.	-	-	-	-
Independent Director	Republic of China	Chun-Hao Xin	Male	2018.5.30	3	2015.6.9	-	-	-	-	206,510	0.08%	-	-	Master's degree, Institute of Business Management, I-Shou University Director-General, Kaohsiung County Revenue Service Bureau	Independent Director and member of the Audit and Remuneration Committee of Chang Wah Electromaterials Inc.	-	-	-	-
Independent Director	Republic of China	Mei-Hsiang Pai	Femal e	2018.5.30	3	2015.6.9	24,128	0.01%	-	-	-	-	-	-	Master of Science, Graduate Institute of Medical Sciences, Chang Jung Christian University MBA, National Sun Yat- sen University	Director, Rich Fountain International Corp.	-	-	-	-
Independent Director	Republic of China	Chih-Ming Chen	Male	2018.5.30	3	2015.6.9	-	-	-	-	-	-	-	-	Graduated from the School of Law, Soochow University Master's degree, Institute of Mainland China Studies, National Sun Yat-sen University Judge, Kaohsiung District Court	Managing Partner, Chih-Ming Attorneys-at-Law	-	-	-	-

Note 1: The names and representatives of institutional shareholders shall be listed separately (those who represent institutional shareholders should indicate corporate names) and fill in Table 1 below. Note 2: Fill in the time when the individual first served as the Company's Director or Supervisor. Any interruptions should be indicated.

Note 3: Work experiences of anyone in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities.

Note 4: Where the Chairman, President, or individual with equivalent roles are the same individual, spouses, or relatives within the first degree of kinship, the Company shall specify related information regarding the reason, reasonableness, necessity, and response measures (e.g., appointment of additional Independent Directors and requiring the appointment of more than half of the Directors from individuals who are not employees or managers).

Table 1: Major shareholders of institutional shareholders

March 31, 2021

		March 31,202
Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Yo Yuan Investment Corporation	Fu-Ing Hong Chen Yin-Su Hong Ching-Shen Hong Sheng-Tai Hong Li-Ju Chen Chia-Chun Hong Chia-Wei Hong	61.50 1.00 16.00 5.00 3.50 6.50 6.50
Nice Enterprise Co., Ltd.	AGV Products Corp. Ho Yuan Investment Corporation Taiwan First Biotechnology Corp. Taiwan NJC Corporation Ho Ding International Development Co., Ltd. Leshan Investment Development Co., Ltd. Yu-Ying Hong Zhi-Hong Chen English International Consultancy Co., Ltd. Cunyuan Heye Co., Ltd.	28.24 20.45 10.83 6.41 4.21 3.09 3.06 2.70 2.38 2.45

Note 1: For directors and supervisors who are the representatives of institutional shareholders, the names of the institutional shareholders shall be disclosed.

Note 2: Fill in the names of main shareholders of the institutional shareholder (the top ten shareholders in terms of shareholding ratio) and their shareholding ratio. If the major shareholder is a juristic person, his/her name should be filled in Table 2 below.

Note 3: Where an institutional shareholder is not organized as a company, the name of the shareholders and shareholding ratio that must be disclosed in accordance with the above shall be the name of the funder or donor and the funding or donation ratio.

Table 2: Major shareholders in Table 1 who are institutional shareholders and their major shareholders

		March 31,2021
Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
AGV Products Corp.	Ho Yuan Investment Corporation Nice Enterprise Co., Ltd. Kuo Pao Pen Investment and Development Co., Ltd. Kuo Pen Investment and Development Co., Ltd. JPMorgan Chase in its capacity as Master Custodian for Vanguard Emerging Stock Market Index Fund Citibank Taiwan in its capacity as Master Custodian for Dimension Emerging Market Evaluation Fund Citibank Taiwan in its capacity as Master Custodian for DFA Emerging Markets Portfolio investment account JPMorgan Chase in its capacity as Master Custodian for Vanguard Total International Stock Index Fund Ho Ding International Development Co., Ltd. Zhe-Fang Chen	6.71 4.20 1.63 1.60 1.43 1.08 0.92 0.86 0.87 0.82

Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Ho Yuan Investment Corporation	Zhi-Hong Chen English International Consultancy Co., Ltd. Su-Mei Yuan Yu-Ying Hong Zhih-Zhan Chen Zhih-Lun Chen Chang-Jiao Hu Wen-Na Yang Jeam-Tan Chen Zhi-Yu Zhang	23.03 19.00 15.63 11.83 5.71 5.71 4.45 2.22 2.10 1.75
Taiwan First Biotechnology Corp.	AGV Products Corp. Paolyta Co., Ltd. BHL Taipei Limited Nice Enterprise Co., Ltd. Ta Tai Investment Corporation Ho Yuan Investment Corporation Yun Gu Nice Investment Corporation Lei Ying Security Co., Ltd. Teng-Fei Lin	41.28 8.00 8.00 6.10 4.00 3.62 1.57 1.69 1.47 1.28
Ho Ding International Development Co., Ltd.	Nice Enterprise Co., Ltd. AGV Products Corp. Ho Tien International Development Co., Ltd. Chang-Jiao Hu Zhi-Hong Chen Yu-Ying Hong Su-Mei Yuan Kuo Pen Investment and Development Co., Ltd.	49.07 48.98 0.53 0.29 0.29 0.29 0.29 0.26
Leshan Investment Development Co., Ltd.	Ya-Xin Zheng Xuan-Hui Chen Lan-Xin Ye Guan-Hao Chen Su-Mei Yuan Guan-Hua Chen Bai-Ye Chen Qi-Rui Chen Xin-He Li Xin-Jia Li	24.00 24.00 16.00 8.00 4.00 4.00 4.00 4.00 4.00 4.00
English International Consultancy Co., Ltd.	Yu-Ying Hong Guan-Ru Chen Guan-Han Chen Guan-Zhou Chen Yu-Nu Hong Qiu-Wen Li	31.60 24.00 24.00 19.60 0.40 0.40

Name of institutional shareholder (Note 1)	Major shareholders of institutional shareholders (Note 2)	Shareholding ratio (%)
Taiwan NJC Corporation	New Japan Chemical Co., Ltd. Taiwan First Biotechnology Corp. Nice Enterprise Co., Ltd. Tai Food Industry Co., Ltd. Yi-Yan Chen Chia Ho Hsing Co., Ltd. Ho Yuan Investment Corporation Leshan Investment Development Co., Ltd. Cunyuan Heye Co., Ltd. Jia-En Zhang	43.71 19.86 15.77 7.67 3.45 0.70 0.58 0.39 0.39 0.37
Cunyuan Heye Co., Ltd.	Zhi-Hong Chen Chang-Jiao Hu Zhih-Zhan Chen Zhih-Lun Chen Yuan-Hui Wang Xiao-Ci Chen Xiao-He Chen Xiao-Wei Chen	28.00 20.00 15.00 15.00 13.50 2.84 2.83 2.83

Note 1: If the major shareholders in the preceding Table1 are institutional shareholders, the name of the institutional shareholder shall be disclosed.

Note 2: Fill in the names of main shareholders of the institutional shareholder (the top ten shareholders in terms of shareholding ratio) and their shareholding ratio.
Note 3: Where an institutional shareholder is not organized as a company, the name of the shareholders and shareholding ratio that must be disclosed in accordance with the above shall be the name of the funder or donor and the funding or donation ratio.

Director information

	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021	April 11,2021
Criteria Name (Note 1)	Has at least 5 years of work experience and meet one of the following professionalqualifications			Meets the independence criteria (Note 2)												Number of other Taiwanese public companies concurrently serving as an independent Director
	A lecturer or higher position in a Department of Commerce, Law, Finance, Accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company.	Has work experience in the area of commerce, law, finance, or accounting , or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10	11	12
Yo Yuan Investment Corporation Representative: Yin-Su Hong			�									�	�	�	�	0
Yo Yuan Investment Corporation Representative: Fu- IngHong Chen			�									�	�	�	�	0
Yo Yuan Investment Corporation Representative: Ching-Shen Hong			�									�	�	�	�	0
Yo Yuan Investment Corporation Representative: Li- JuChen			�									�	�	�	�	0
Nice Enterprise Co., Ltd. Representative: Ching-Liang Chen			�	�	�	�	�	�	�	�	�	�	�	�	�	0
Tseng-ChengLin			�	�	�	�	�	�	�	�	�	�	�	�	�	0
Chun-Hao Xin	�		�	�	�	�	�	�	�	�	�	�	�	�	�	1
Mei-HsiangPai	�		�	�	�	�	�	�	�	�	�	�	�	�	�	0
Chih-Ming Chen	�	�	�	�	�	�	�	�	�	�	�	�	�	�	�	0

Note 1: Please add more rows to accommodate additional entries.

Note 2: If the director or supervisor meets any of the following criteria in the two years before being elected or during the term of office, please check "�" in the corresponding boxes:
(1) Not an employee of the Company or any of its affiliates.
(2) Not a Director or Supervisor of the Company of any of its affiliates (excluding Independent Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total

number of issued shares of the Company, or ranks among the ten largest natural-person shareholders.

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the managerial officers listed in subparagraph (1) or persons listed in subparagraphs (2) and (3).
(5) Not a Director, Supervisor or employee of a corporate shareholder who directly holds more than 5% of the total number of issued shares of the Company or is ranked top five in terms of the number of shares held or is designated as a Director or Supervisor of the Company pursuant to Paragraph 1 or 2, Article 27 of the Company Act (excluding Independent Directors in the Company, its parent company, subsidiaries, or subsidiaries of the same parent company who have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(6) Not a Director, Supervisor, or employee of a company with a majority of the company's director seats or voting shares and those of any other company are controlled by the same person (excluding Independent Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(7) Not a Director, Supervisor, or employee of a company or institution with the same chairperson of the board, president, or equivalent position, or a spouse thereof (excluding Independent Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(8) Not a Director (member of the governing board), Supervisor (member of the supervising board), managerial officer, or shareholder holding more than 5% of the shares of a specific company or institution that has a financial or business relationship with the Company (excluding specific companies or institutions if they hold more than 20% but less than 50% of the outstanding shares of the Company or independent directors in the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(9) Not a professional individual or owner, partner, director (member of the governing board), supervisor (member of the supervising board), or managerial officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting, or consultation services to the company or to any affiliate enterprise for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or spouse thereof. Provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other Director of the Company.
(11) Not been a person of any conditions defined in Article 30 of the Company Act.
(12) Not a governmental, juridical person or its representative as defined under Article 27 of the Company Act.

(II) Profile of the President, Vice Presidents, Assistant Vice Presidents, and Department Directors

April 11, 2021

Title (Note 1)	Nationality	Name	Gend er	Date elected (appointed)	Shares held	Shares held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 2)	Current job position in other companies	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Remarks (Note 3)
					Number of shares	Sharehol ding ratio	Number of shares	Sharehol ding ratio	Number of shares	Shareho lding ratio			Title	Name	Relation ship
President	Republic of China	Ching-Shen Hong	Male	2011.3.4	3,612,000	1.44%	267,000	0.11%	-	-	Department of Electrical Engineering, Kun Shan University Graduated from the Department of Business Import/Export Management, Vancouver Community College	Representative of Corporate Director, Sunonwealth Electric Machine Industry Co., Ltd. Chairman, Sunon Electronic (Kunshan) Co., Ltd. Chairman, Sunon Electronic (Foshan) Co., Ltd. Chairman, Sunon Electronic (Bei Hai) Co., Ltd. Chairman, Sunon Inc. (United States) Chairman, Sunon SAS (France) Chairman, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp. Director, Suzhou Shengyixing Heat Transfer TechnologyCo.,Ltd.	Chief Technology Officer	Yin-Su Hong	Father- son	Business succession plan. Response measures: Processed in accordance with laws for complianc e
Chief Technology Officer	Republic of China	Yin-Su Hong	Male	2011.3.4	10,457,000	4.17%	14,670,000	5.85%	-	-	Honorary Doctorate in management, National Sun Yat-sen University	Chairman, Sunonwealth Electric Machine Industry Co., Ltd. Representative of Corporate Director, Sunonwealth Electric Machine Industry Co., Ltd. Director, Sunon Electronic (Kunshan) Co., Ltd. Director, Sunon Electronic (Foshan) Co., Ltd. Director, Sunon Electronic (Bei Hai) Co., Ltd. Director, Sunon Inc. (United States) Director, Sunon Ltd. (India) Director, SUNON Properties Philippines Corp. Director, SUNON Electronics Philippines Corp.	President	Ching- Shen Hong	Father- son	Business succession plan. Response measures: Processed in accordance with laws for complianc e
Vice President and Director of the Finance Division	Republic of China	William Li	Male	2006.1.1	-	-	-	-	-	-	Master of Industrial Management, National Taiwan University of Science and Technology	Supervisor, Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	-	-	-	-
Vice President of Business Unit	Republic of China	Chen- Hsueh Li	Male	2014.7.25	12,299	0.00%	-	-	-	-	Department of Mechanical Engineering, National Taipei Institute of Technology	-	-	-	-	-
Vice President of Business Unit	Republic of China	Tsui-Wen Hsiao	Fema le	2016.2.1	-	-	-	-	-	-	Department of International Business Administration and Cultural Exchange, Wenzao Ursuline College of Languages	-	-	-	-	-

Title (Note 1)	Nationality	Name	Gend er	Date elected (appointed)	Shares held	Shares held	Shares held by spouse and underage children	Shares held by spouse and underage children	Shareholding by nominee arrangement	Shareholding by nominee arrangement	Education and work experience (Note 2)	Current job position in other companies	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Managerial officer who is a spouse or a relative within second degree	Remarks (Note 3)
					Number of shares	Sharehol ding ratio	Number of shares	Sharehol ding ratio	Number of shares	Shareho lding ratio			Title	Name	Relation ship
President of Business Unit	Republic of China	Chien-Yuan Tseng	Male	2018.4.24	-	-	-	-	-	-	Master, Department of Optics and Photonics, National Central University	-	-	-	-	-
President of Business Unit	Republic of China	Chin-Tzu Wu	Male	2021.2.1	-	-	-	-	-	-	EMBA, National University of Kaohsiung	-	-	-	-	-
Vice President of OEM Production Unit	Republic of China	Kuan-Hung Tseng	Male	2019.11.6	-	-	-	-	-	-	Master, Department of Business Administration, Southern Taiwan University of Science and Technology	-	-	-	-	-

Note: President of Business Unit Chien-Yuan Tseng resigned on February 24, 2021. President of Business Unit Chin-Tzu Wu took office on February 1, 2021.

Note 1: Information regarding the President, Vice Presidents, Assistant Vice Presidents, Heads of Departments and Branches should be included, whereas information regarding positions equivalent to President, Vice Presidents, Assistant Vice Presidents should be disclosed regardless of job title.

Note 2: Work experiences of anyone in the table above that are related to their current roles, such as previous employment at CPA firms or employment in affiliated companies, should be disclosed along with job titles and responsibilities. Note 3: Where the Chairman, President, or individual with equivalent roles are the same individual, spouses, or relatives within the first degree of kinship, the Company shall disclose related information regarding the reason, reasonableness, necessity, and response measures (e.g., appointment of additional Independent Directors and requiring the appointment of more than half of the Directors from individuals who are not employees or managers).

III. Remunerations to Directors (including Independent Directors), Supervisors, President, and Vice Presidents in recent years (I) Director's remuneration

Remuneration paid to Directors and Independent Directors (range of remuneration with name disclosure)

Ti	tle	Name	Director's	Director's	Director's	Director's	remuneration	remuneration			Ratio of total compensation (A+B+C+D) to net income (%) (Note 10)	Ratio of total compensation (A+B+C+D) to net income (%) (Note 10)			Pay received	Pay received	as an employee	as an employee	as an employee	as an employee	Percentage of the total sums of A, B, C, D, E, F, and G on the net profit (Note 10)	Percentage of the total sums of A, B, C, D, E, F, and G on the net profit (Note 10)	Compensation from investee companies other than subsidiaries or the parent company (Note 11)
			Remuneration (A) (Note 2)		Retirement pension (B)		Director's remuneration (C) (Note 3)		Fees for conducting business (D) (Note 4)				Salary, bonuses and allowances (E) (Note 5)		Retirement pension (F)		Employee's remuneration (G) (Note 6)
			The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company	All companies in the Financial Report (Note 7)	The Company		All companies in the Financial Report (Note 7)		The Company	All companies in the Financial Report
																	Cash amount	Stock amount	Cash amount	Stock amount
Director	Chairman of the Board	Yo Yuan Investment Corporation Representative: Yin-Su Hong	2,400	2,400	-	-	10,400	10,400	300	300	1.54%	1.54%	22,168	24,315	-	-	7,988	-	7,988	-	5.08%	5.33%	None
	President	Yo Yuan Investment Corporation Representative: Ching-Shen Hong
	-	Yo Yuan Investment Corporation Representative: Fu-Ing Hong Chen Li-Ju Chen
	-	Nice Enterprise Co., Ltd. Representative: Ching-LiangChen
	-	Tseng-Cheng Lin
Independent Director		Chun-Hao Xin	1,800	1,800	1,800	-	-	2,600	2,600	150	150	0.53%	0.53%	-	-	-	-	-	-	-	-	0.53%	0.53%
		Mei-HsiangPai
		Chih-MingChen

Please describe the policy, system, standards and structure of the remuneration packages of the Independent Directors and explain the relevance of the amount of remuneration paid to them based on factors such as responsibility, risk and time commitment: Independent Directors receive monthly remuneration and transportation allowances that are higher than general Directors and they receive slightly lower distribution of earnings than general Directors. Their remuneration is not closely associated with business performance and future risks. The Company established remuneration for Directors in the Articles of Incorporation to distribute no more than 5% of the profits of the current year as remuneration for Directors. However, a sum shall be set aside in advance to pay down any outstanding cumulative losses.
Except as disclosed above, remuneration received by directors in the latest year for on-balance sheet services (e.g. acting as a non-employee consultant) rendered to the Company: None.
Please list related information on Directors (general Directors who are not Independent Directors) and Independent Directors separately.

Range of remuneration table

	Range of remuneration table	Range of remuneration table
Remuneration scale applicable to the Company's Directors	Name of Director
	Total amount for the 4 preceding remunerations (A+B+C+D)		Total amount for the 7 preceding remunerations (A+B+C+D+E+F+G)
	The Company (Note 8)	All companies in the Financial Report (Note 9) H	The Company (Note 8)	All companies in the Financial Report (Note 9) I
Below NT$1,000,000
NT$1,000,000 (inclusive) to NT$2,000,000 (exclusive)	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Ching- Shen Hong Representative of Yo Yuan Investment Corporation Li-Ju Chen Representative of Nice Enterprise Co., Ltd. Ching-Liang Chen Tseng-Cheng Lin Independent Director: Chun-Hao Xin, Mei-Hsiang Pai Chih-MingChen	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Ching- Shen Hong Representative of Yo Yuan Investment Corporation Li-Ju Chen Representative of Nice Enterprise Co., Ltd. Ching-Liang Chen Tseng-Cheng Lin Independent Director: Chun-Hao Xin, Mei-Hsiang Pai Chih-MingChen	Representative of Nice Enterprise Co., Ltd. Ching-Liang Chen Tseng-Cheng Lin Independent Director: Chun-Hao Xin, Mei-Hsiang Pai Chih-Ming Chen	Representative of Nice Enterprise Co., Ltd. Ching- Liang Chen Tseng-Cheng Lin Independent Director: Chun- Hao Xin, Mei-Hsiang Pai Chih-Ming Chen
NT$2,000,000 (inclusive) to NT$3,500,000(exclusive)	Representative of Yo Yuan Investment Corporation Yin-Su Hong	Representative of Yo Yuan Investment Corporation Yin-Su Hong
NT$3,500,000 (inclusive) to NT$5,000,000(exclusive)
NT$5,000,000 (inclusive) to NT$10,000,000 (exclusive)			Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen	Representative of Yo Yuan Investment Corporation Fu-Ing Hong Chen Representative of Yo Yuan Investment Corporation Li-Ju Chen
NT$10,000,000 (inclusive) to NT$15,000,000 (exclusive)			Representative of Yo Yuan Investment Corporation Ching- Shen Hong Representative of Yo Yuan Investment Corporation Yin-Su Hong	Representative of Yo Yuan Investment Corporation Ching- Shen Hong
NT$15,000,000 (inclusive) to NT$30,000,000(exclusive)				Representative of Yo Yuan Investment Corporation Yin-Su Hong

NT$30,000,000 (inclusive) to NT$50,000,000(exclusive)
NT$50,000,000 (inclusive) to NT$100,000,000(exclusive)
Greater than NT$100,000,000
Total	9 persons	9 persons	9 persons	9 persons

Note 1: The names of the Directors must be listed separately (for institutional shareholders, the names of institutional shareholders and representatives should be listed respectively) and the various payment amounts using the summary disclosure method for general Directors and Independent Directors. If a Director concurrently serves as the President or Vice President, his/her name and the amount of remuneration paid to him/her should be listed in this Table and Table (3-1) below or Tables (3-2-1) and (3-2-2).
Note 2: Remuneration to Directors in the most recent year (include Director salary, additional duty payments, severance pay, various bonuses, or incentive payments). Note 3: The amount is the proposed remuneration to directors approved by the Board of Directors for the most recent fiscal year.
Note 4: Refers to the related business expenses of Directors in the past year (including transportation allowance, special allowance, stipends, dormitory, and car). If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note.
Note 5: All payments to Directors who are also employees of the Company (including the position of President, Vice President, other managerial officer and staff), including salary, additional pay, severance pay, bonuses, rewards, transportation allowance, special allowance, stipends, dormitory, and car. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.
Note 6: For directors concurrently serving as employees (including the president, vice presidents, other managers and employees) who receive employee rewards (including shares and cash), the amount of employee rewards that have been approved by the Board of Directors and are distributed to them in the most recent fiscal year shall be disclosed. If the amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3.

Note 7: Total pay to Directors from all companies in the consolidated statements (including the Company).

Note 8: The name of each Director shall be disclosed in the range of remuneration corresponding to the amount of all the remuneration paid to the Director by the Company. Note 9: The total amount of all the remuneration paid to each Director of the Company by all the companies (including the Company) listed in its consolidated financial

statements shall be disclosed. The name of each Director shall be disclosed in the range of remuneration corresponding to the total amount mentioned in the preceding sentence.

Note 10: The after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.
Note 11: a. The amount of remuneration received from subsidiaries other than investee companies or the parent company by the Company's Directors shall be stated clearly in this column (please specify "none" if there is no remuneration).
b. If a Director of the Company receives remuneration from investee companies other than subsidiaries or the parent company, the amount of remuneration received by the director from investee companies other than subsidiaries or the parent company shall be combined into Column I of the table for ranges of remuneration, and this column shall be renamed as "Parent Company and All Investee Companies".
c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by a Director of the Company serving as a director, supervisor or managerial officer of an investee of the Company other than subsidiaries or the parent company.
＊ The content of the remuneration disclosed in this Table is different in concept from the income in the Income Tax Act, therefore the purpose of the table is to disclose information and not for taxation.

(II) Remunerations to President and Vice President

Remunerations to President and Vice President (range of remuneration with name disclosure)

Unit: thousand NT$; %

Title	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Retirement pension (B)	Retirement pension (B)	Bonuses and allowances, etc. (C) (Note 3)	Bonuses and allowances, etc. (C) (Note 3)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Employee remuneration (D) (Note 4)	Ratio of total compensation (A+B+C+D) to net income (%) (%) (Note 8)	Ratio of total compensation (A+B+C+D) to net income (%) (%) (Note 8)	Compensati on from investee companies other than subsidiaries or the parent company (Note 9)
		The Company	All companies in the Financial Report (Note 5)	The Company	All companies in the Financial Report (Note 5)	The Company	All companies in the Financial Report (Note 5)	The Company		All companies in the Financial Report (Note 5)		The Company	All companies in the Financial Report (Note 5)
								Cash amount	Stock amount	Cash amount	Stock amount
President	Ching-Shen Hong	18,354	20,501	-	-	10,819	11,587	7,422	-	7,422	-	4.30%	4.64%	None
Chief Technology Officer	Yin-Su Hong
Vice President	William Li
President of Business Unit	Chien-Yuan Tseng
President of Business Unit	Chin-Tzu Wu

Note: President of Business Unit Chien-Yuan Tseng resigned on February 24, 2021. President of Business Unit Chin-Tzu Wu took office on February 1, 2021.

＊ Regardless of job titles, positions that are equivalent to the President or Vice President (such as General Manager, Chief Executive Officer, and Director) shall be disclosed.

Range of remuneration table

	Range of remuneration table	Range of remuneration table
Range of remuneration paid to Presidents and Vice Presidents	Name of President and Vice Presidents
	The Company (Note 6)	All companies in the Financial Report (Note 7)E
Below NT$1,000,000
NT$1,000,000(inclusive)to NT$2,000,000(exclusive)
NT$2,000,000(inclusive)to NT$3,500,000(exclusive)	Chien-Yuan Tseng
NT$3,500,000(inclusive)to NT$5,000,000(exclusive)		Chien-Yuan Tseng
NT$5,000,000(inclusive)to NT$10,000,000(exclusive)	William Li,Chin-Tzu Wu	William Li,Chin-Tzu Wu
NT$10,000,000 (inclusive)toNT$15,000,000 (exclusive)	Ching-Shen Hong,Yin-SuHong	Ching-Shen Hong,Yin-SuHong
NT$15,000,000(inclusive)to NT$30,000,000(exclusive)
NT$30,000,000 (inclusive)toNT$50,000,000 (exclusive)
NT$50,000,000(inclusive)to NT$100,000,000(exclusive)
Greater than NT$100,000,000
Total	5persons	5persons

Note 1: The names of President and Vice Presidents shall be listed separately and the amounts paid shall be disclosed in a summary. If a Director concurrently serves as the President or Vice President, his/her name and the amount of remuneration paid to him/her should be listed in this Table and Table (1-1) above or Tables (1-2-1) and (1-2-2).
Note 2: Salary, additional pay, and severance pay received by the President or Vice President in the past year.
Note 3: Bonus, reward, transportation allowance, special allowance, stipends, dormitory, car and other payments received by the President or Vice President in the past year. If housing, vehicle and other modes of transportation or personal expenses are provided, the nature and cost of the assets provided, the rental fees and fuel cost calculated based on the actual amount or fair market value, and other payments should be disclosed. If a driver is provided, please indicate the amount of compensation paid to the driver by the company, excluding remuneration, in a separate note. Furthermore, any compensation recognized in the IFRS 2 Share-Based Payment section, including issuance of employee stock options, new restricted employee shares and capital increase by stock subscription, should be included in the calculation of remuneration.
Note 4: Fill the amount of employee rewards (including shares and cash) that have been approved by the Board of Directors and are distributed to the general manager and vice president in the most recent fiscal year. If the amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year, and this amount shall also be filled in Table 1-3. The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.
Note 5: The total pay to the President or Vice President from all companies in the consolidated statements (including the Company).
Note 6: The names and remuneration of President and Vice Presidents paid by the Company shall be disclosed in their respective remuneration range.
Note 7: The names of the President and Vice Presidents paid by all companies in the consolidated statements (including the Company) shall be disclosed in their respective remuneration range.
Note 8: The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax

net profit in the parent company only or individual financial report in the most recent year.

Note 9: a. The amount of remuneration received from subsidiaries other than investee companies or the parent company by the Company's President or Vice Presidents shall be stated clearly in this column (please specify "none" if there is no remuneration).
b. If the President or Vice President of the Company received remuneration from investees other than subsidiaries of the Company or the parent company, the remuneration received by the President or Vice President of the Company from investees other than subsidiaries of the Company or the parent company shall be included in E column of the Remuneration Range Table and the name of the field shall be changed to "Parent Company and All Investee Companies".
c. Remuneration refers to pay, compensation (including compensation of employees, directors and supervisors) and remuneration for conducting business received by the President and Vice Presidents of the Company serving as a director, supervisor or managerial officer of an investee of the Company other than subsidiaries or the parent company.
＊ The content of the remuneration disclosed in this Table is different in concept from the income in the Income Tax Act, therefore the purpose of the table is to disclose information and not for taxation.

(III) Managerial officer's name and the distribution of employee bonus

						April 11, 2021 Unit:thousand NT$
	Title (Note 1)	Name (Note 1)	Stock amount	Cash amount	Total	Percentage of total bonuses to net profit after tax(%)
Managerial Officer	President	Ching-Shen Hong	-	8,318	8,318	0.98 %
	Chief Technology Officer	Yin-Su Hong
	Vice President and Director of the FinanceDivision	William Li
	President of Business Unit	Chien-Yuan Tseng
	President of Business Unit	Chin-Tzu Wu
	Vice President of Business Unit	Chen-Hsueh Li
	Vice President of Business Unit	Tsui-Wen Hsiao
	Vice President of OEM Production Unit	Kuan-Hung Tseng

Note: President of Business Unit Chien-Yuan Tseng resigned on February 24, 2021. President of Business Unit Chin-Tzu Wu took office on February 1, 2021.
Note 1: Names and positions should be listed individually, and the amount of profit distributed should be disclosed collectively.
Note 2: Fill the amount of employee rewards (including shares and cash) that have been approved by the Board of Directors and are distributed to the managerial officers in the most recent fiscal year. If this amount of rewards cannot be estimated, the amount of rewards in the current fiscal year shall be calculated based on the ratio of the amount of rewards distributed in the previous fiscal year. The after-tax net profit refers to the after-tax net profit in the most recent fiscal year; for companies that have adopted IFRSs, the after-tax net profit refers to the after-tax net profit in the parent company only or individual financial report in the most recent year.
Note 3: The scope of application for the term "managerial officer" shall be pursuant to the FSC's TaiCai-Zheng-3 No. 0920001301 Order dated March 27, 2003. Its scope of application shall be as follows:
(1) The President and those with equivalent powers
(2) Vice Presidents and those with equivalent powers
(3) Assistant Vice Presidents and those with equivalent powers
(4) Head of the Finance Department
(5) Head of the Accounting Department
(6) Other individuals with the authority of managing company affairs and signatory rights
Note 4: Directors, Presidents, and Vice Presidents who receive employee rewards (including shares and cash) should be listed not only in Table 1-2, but also in this table.

(IV) Comparison of compensation paid by the Company and all the consolidated entities in the last two years to the company's Directors, Supervisors, President and Vice Presidents as a percentage to the net income after tax. Explanation on remuneration policies, standards and combination of the procedures in determining remuneration, and association with business performance and future risks:

The analysis of remunerations to the Company's Directors, Supervisors, President and Vice Presidents as a percentage of net profit after tax in the most recent year is provided in the table below:

Year	Total remuneration paid to Directors, Supervisors, the President, and Vice Presidents (thousand NT$)	Total remuneration paid to Directors, Supervisors, the President, and Vice Presidents (thousand NT$)	Total remuneration as a percentage of profit after tax (%)	Total remuneration as a percentage of profit after tax (%)
	The Company	All Companies in the Consolidated Financial Report	The Company	All companies in the Consolidated Financial Report
2019	51,561	54,563	7.57%	8.01%
2020	54,246	57,160	6.37%	6.71%

The Company's regular remuneration for Directors, the President, and Vice Presidents are based on prevailing rates in the industry and do not incur future risks. The distribution of earnings and the sequence of distribution are specified in the Articles of Incorporation and the approval of the shareholders' meeting shall be required before distribution. The remuneration is tied to the business performance and the Company's long-term development factors have been considered for the payment of remuneration and included in the review of the Remuneration Committee. Therefore, they do not incur future risks.

IV. Implementation of corporate governance

(I) Board of Directors operating status

Board of Directors operating status

A total of 5 (A) meetings of the Board of Directors were held in the most recent year (2020).

The attendance of Directors was as follows:

Title	Name (Note 1)	Attendance (voting and non-voting) in person B	Attendance by proxy	Attendance (voting and non-voting) in person rate (%) [B/A] (Note 2)	Remarks
Chairman of the Board	Yo Yuan Investment Corporation Representative: Yin-Su Hong	5	0	100%	None
Director	Yo Yuan Investment Corporation Representative: Fu-IngHong Chen	5	0	100%	None
Director	Yo Yuan Investment Corporation Representative: Ching-Shen Hong	5	0	100%	None
Director	Yo Yuan Investment Corporation Representative: Li-Ju Chen	5	0	100%	None
Director	Nice Enterprise Co., Ltd. Representative: Ching-Liang Chen	5	0	100%	None
Director	Tseng-Cheng Lin	5	0	100%	None
Independent Director	Chun-Hao Xin	5	0	100%	None
Independent Director	Mei-Hsiang Pai	5	0	100%	None
Independent Director	Chih-Ming Chen	5	0	100%	None
Other matters required to be recorded: I. Should any of the following take place in a board meeting, the date and number of the meeting, the content of proposal, Independent Director's opinions and the Company's response to such opinions should be recorded: (I) Items specified in Article 14-3 of the Securities and Exchange Act: None. (II) Aside from the above matters, other resolutions adopted by the Board of Directors to which an Independent Director has a dissenting or qualified opinion that is on record or stated in a written statement: None. II. The Directors' avoidance of interest motion should indicate the names of the Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: 10th meeting of the 15th Board of Directors on January 20, 2020 Agenda item #3 Agenda: Discussion of the Company's budget for donations in 2020. Description: 1. TheCompany plans to donate NT$1 million toShehng-YuanChildren Development and Adult

Support Services Center in 2020.
2. The amendment is hereby filed for resolution.
Resolution: With the exception of the Chairman Yin-Su Hong, Director Fu-Ing Hong Chen, Director Ching-
Shen Hong, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other
Directors in attendance passed the proposal unanimously.
10th meeting of the 15th Board of Directors on January 20, 2020
Agenda item #6
Agenda: Discussion of the Company's 2019 year-end bonus for managerial officers. (Proposed by the
Remuneration Committee)
Description:
1. The Company's 2019 year-end bonus for managerial officers was reviewed by members of the
Remuneration Committee who found the proposal to be appropriate and passed it unanimously
(refer to Attachment for details).
2. The amendment is hereby filed for resolution.
Resolution: With the exception of the Director Yin-Su Hong, Director Fu-Ing Hong Chen, Director Ching-
Shen Hong, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other
Directors in attendance passed the proposal unanimously.
11th meeting of the 15th Board of Directors on March 11, 2020
Agenda item #7
Agenda: Discussion of the Company's 2019 employee remuneration for managerial officers. (Proposed by
the Remuneration Committee)
Description:
1. Please refer to the Attachment for the Company's 2019 employee remuneration for managerial
officers.
2. The proposal was reviewed by all members of the Remuneration Committee who found it to be
appropriate and passed it unanimously.
3. The amendment is hereby filed for resolution.
Resolution: With the exception of the Director Yin-Su Hong, Director Fu-Ing Hong Chen, Director Ching-
Shen Hong, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other
Directors in attendance passed the proposal unanimously.
15th meeting of the 15th Board of Directors on January 29, 2021
Agenda item #5
Agenda: Discussion of the Company's budget for donations in 2021.
Description:
1. The Company plans to donate NT$1 million to Shehng-Yuan Children Development and Adult
Support Services Center in 2021.
2. The amendment is hereby filed for resolution.
Resolution: With the exception of the Chairman Yin-Su Hong, Director Fu-Ing Hong Chen, Director
Ching-Shen Hong, Director Li-Ju Chen, and Director Tseng-Cheng Lin who recused
themselves due to conflicts of interest, other Directors in attendance passed the proposal
unanimously.
15th meeting of the 15th Board of Directors on January 29, 2021
Agenda item #7
Agenda: Discussion of the Company's 2020 year-end bonus for managerial officers. (Proposed by the
Remuneration Committee)
Description:
1. The Company's 2020 year-end bonus for managerial officers was reviewed by members of the
Remuneration Committee who found the proposal to be appropriate and passed it unanimously
(refer to Attachment for details).
2. The amendment is hereby filed for resolution.
Resolution: With the exception of the Chairman Yin-Su Hong, Director Fu-Ing Hong Chen, Director
Ching-Shen Hong, and Director Li-Ju Chen who recused themselves due to conflicts of
interest, other Directors in attendance passed the proposal unanimously.
16th meeting of the 15th Board of Directors on March 11, 2021
Agenda item #9
Agenda: Discussion of the Company's 2020 employee remuneration for managerial officers. (Proposed by
the Remuneration Committee)
Description:

     1.  Please refer to the Attachment for the Company's 2020 employee remuneration for managerial officers.

     2.  The proposal was reviewed by all members of the Remuneration Committee who found it to be appropriate and passed it unanimously.

     3.  The amendment is hereby filed for resolution.

Resolution: With the exception of the Chairman Yin-Su Hong, Director Fu-Ing Hong Chen, Director Ching-Shen Hong, and Director Li-Ju Chen who recused themselves due to conflicts of interest, other Directors in attendance passed the proposal unanimously.
III. The company listed on TWSE/TPEx shall disclose the evaluation cycle and duration, scope of evaluation, methodology, and evaluation contents of the evaluation of the Board of Directors. Refer to the Board of Directors evaluation status in Table 2(2). Board of Directors evaluation status: Refer to the Appendix.
IV. Programs this year and in the most recent year in strengthening the functionality of the Board (for example, set up an auditing committee, improve transparency, etc.) and execution evaluation. The Company converted the supervisor system to the Audit Committee system on June 9, 2015. The audit and finance managers report the operations of audits and financial status to the Audit Committee each quarter. They maintain smooth communication and operations.
In order to implement corporate governance and enhance the functions of the Company's Board of Directors as well as to establish performance targets so as to enhance the operational efficiency of the Board of Directors, the Company has established the Rules for Performance Evaluation of Board of Directors on May 7, 2020. The Company implements one internal performance evaluation each year and submits results to the Board of Directors before the end of the first quarter of the following year. The performance evaluation results are used as the basis for review and improvements as well as reference for remuneration, nomination, and continued appointment.
Note 1: For Directors and Supervisors who are institutions, the name of institutional shareholders and their representatives shall be disclosed.
Note 2: (1) Where a Director resigns before the end of the fiscal year, the "remark" column should be filled with the Director's resignation date, whereas his/her percentage of attendance in person (%) should be calculated based on the number of Board of Directors' meetings held and the actual attendance in person during the period during his/her term of office.
- (2) If Directors or Supervisors are re-elected before the end of the fiscal year, incoming and outgoing Directors or Supervisors shall be listed accordingly, and the Remark column shall indicate whether the status of a Director is "outgoing", "incoming" or "re-elected", and the date of re-election. The Director's percentage of attendance in person (%) should be calculated based on the number of Board of Directors' Meetings held and the actual attendance in person during his/her term of office.

Board of Directors evaluation status

Evaluation cycle (Note1)	Evaluation period (Note2)	Evaluation scope (Note 3)	Evaluation method (Note4)	Evaluation contents (Note 5)
Once every year	From January 1 to December 31, 2020	Board of Directors and members of the Board of Directors	Self- evaluation of the Board of Directors and self- evaluation of Directors	1. The performance evaluation items of the Board of Directors include the following five categories: A. Participation in the operation of the Company. B. Improvement of the quality of the Board of Directors' decision making. C. Composition and structure of the Board of Directors. D. Election and continuing education of the Directors. E. Internal control. 2. The performance evaluation items of the Board of Directors (self- evaluation or peer evaluation) include the following six categories: A. Familiarity with the goals and missions of the Company. B. Knowledge of the duties of Directors. C. Participation in the operation of the Company. D. Management of internal relationship and communication. E. The Director's professionalism and continuing education. F. Internal control.

Note 1: Fill out the evaluation cycle for the evaluation of the Board of Directors such as: Once every year. Note 2: Fill out the evaluated period for the evaluation of the Board of Directors such as: Evaluation of the performance of the Board of Directors from January 1, 2019 to December 31, 2019.

Note 3: The scope of evaluation covers the evaluation of the performance of the Board of Directors, individual directors, and functional committees.

Note 4: The performance evaluation methods include self-evaluation of the Board of Directors, selfevaluation of the Directors, peer evaluation, appointment of external professional institutions or experts, or other appropriate methods.
Note 5: The contents of the evaluation shall include at least the following items:
(1) Board performance evaluation: The evaluation shall include at least the "participation in the operations of the Company", "improvement of 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".
(2) Performance evaluation of individual Directors: The evaluation shall include at least the "familiarity with the goals and missions of the Company", "knowledge of the duties of Directors", "degree of participation in the Company's operations", "management of internal relations and communication", "professional and continuous education of Directors", and "internal control".
(3) Performance evaluation of functional committees: Degree of participation in the Company's operations, knowledge of the duties of the functional committee, improvement in the quality of functional committee decisions, functional committee composition and election of members, and internal control.

(II) Audit Committee operating status

Audit Committee operating status

The Audit Committee convened a total of 5 meetings (A) in the most recent year (2020). The attendance of Independent Directors was as follows:

Title	Name	Attendance in person(B)	Attendance by proxy	Attendance rate (%) (B/A) (Note)	Remarks
Independent Director	Chun-Hao Xin	5	0	100%	None
Independent Director	Mei-Hsiang Pai	5	0	100%	None
Independent Director	Chih-Ming Chen	5	0	100%	None
Other matters required to be recorded: I. The date of the Board meeting, the term, contents of the proposals, resolutions of the Audit Committee, and the Company's handling of the resolutions of the Audit Committee shall be recorded under the following circumstances in the operations of the Audit Committee meeting. (I) Items specified in Article 14-5 of the Securities and Exchange Act: None. (II) In addition to matters above, other resolutions that have not been approved by the Audit Committee but have been passed by a vote of two-thirds or more of the entire Board of Directors: None. II. The Independent Directors' avoidance of interest motion should indicate the names of the Independent Directors, content of the motion and reasons of avoidance of interest as well as the involvement in voting: None. III. Independent Directors' communication with internal auditors and CPAs (including communication over the Company's financial and business status and the methods and results, etc.) Communication between Independent Directors and internal auditors: 1. The Audit Plan for the following year shall be approved by the Audit Committee at the end of each fiscal year and filed to the Board of Directors for resolution. 2. The audit progress shall be reported to Audit Committee each quarter. 3. After the conclusion of an audit, the internal audit report shall be submitted to the Audit Committee (Independent Directors) for review before the end of the following month. 4. The Audit Office and internal units shall track and reevaluate items that require improvements as proposed in the audit opinions, discovered discrepancies, and Statement on Internal Control and submit a written report on the improvement status to the Audit Committee. 5. The evaluation of the effectiveness of the Company's internal control system and the Interna Control System Statement are submitted to the Audit Committee for review. Communication between Independent Directors and CPAs: The CPAs are invited to attend Independent Directors' review of the Annual Report in meetings of the Audit Committee to communicate and exchange opinions on the contents of the Financial Report.

The evaluation of the effectiveness of the Company's internal control system and the Interna Control System Statement are submitted to the Audit Committee for review. Communication between Independent Directors and CPAs: The CPAs are invited to attend Independent Directors' review of the Annual Report in meetings of the Audit Committee to communicate and exchange opinions on the contents of the Financial Report.

Note:

＊ Where an Independent Director resigns before the end of the fiscal year, the "remark" column should be filled with the Independent Director's resignation date, whereas his/her percentage of attendance in person (%) should be calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during his/her term of office.
＊ If Independent Directors are re-elected before the end of the fiscal year, incoming and outgoing Independent Directors should be listed accordingly, and the "remark" column should indicate whether the status of an independent director is "outgoing", "incoming" or "re-elected", and the date of re-election. The actual attendance rate (%) is calculated based on the number of meetings held by the Audit Committee and the actual number of meetings attended during his/her term of office.

(III) Corporate governance implementation status and deviation from Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and reasons

Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
I. Has the Company set and disclosed principles for practicing corporate governance according to the Corporate Governance Best Practice Principles for TWSE/TPEx ListedCompanies?	�		The Company has established the "Corporate Governance Best Practice Principles" and disclosed them on the Market Observation Post System and Company's website.	No deviation.
II. The Company's shareholding structure and shareholders' rights and interests (I) Has the Company set internal operations procedures for dealing with shareholder proposals, doubts, disputes, and litigation as well as implemented those procedures through the proper procedures? (II) Does the Company have a list of major shareholders of companies over which the Company has actual control and the list of ultimate owners of those major shareholders? (III) Has the Company established and implemented risk control/management and firewall mechanisms between it and affiliated companies? (IV) Does the Company have internal regulations in place to prevent its internal staff from trading securities based on information yet to be public on the market?	� � � �		(I) The Company has established a spokesperson and acting spokesperson system to effectively process shareholder suggestions or disputes. (II) The Company uses the shareholder register provided by the stock transfer agency as the source of information. The Company also pays attention to market information and changes in the shareholding status of insiders and regularly discloses information on major shareholders and the ultimate controllers of major shareholders. (III) The Company's internal controls include corporate-level risk management and operational-level business activities. We established the "Regulations for the Supervision and Management of Subsidiaries" to implement risk management mechanisms for subsidiary companies. In addition, the Company's Board of Directors established regulations for purchases and sales, acquisition or disposal of assets, endorsements and guarantees, and loans with affiliated enterprises. (IV) The Company established the Ethical Corporate Management Operating Procedures and Code of Conduct to require employees to avoid conflicts of interest that involve their duties and prevent them from taking advantage of undisclosed information or disclosing information to others to engage in insider trading.	No deviation.

Assessed areas	Implementation status(Note)	Implementation status(Note)	Implementation status(Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
III. Composition and responsibilities of the Board of Directors (I) Has the Board of Directors devised and implemented a plan for a more diverse composition of the Board? (II) In addition to establishing a Remuneration Committee and an Audit Committee, which are required by law, is the company willing to also voluntarily establish other types of functional committees? (III) Has the company established and implemented methods for assessing the performance of the Board of Directors and conducted performance evaluation annually? Does the Company submit results of assessments to the Board of directors and use results as the basis for the salary, remuneration, nomination and reappointment of individual Directors?	� �	�	(I) The Company has established a diversity policy for the composition of members of the Board of Directors in the "Corporate Governance Best Practice Principles". The Company selects individuals with the knowledge, skills, and qualities necessary for the performance of duties in accordance with theirprofessional background and work experience. The Company has three female Directors including Independent Director. Female Directors account for 33% of all Directors. (II) In addition to establishing three Independent Directors and the Remuneration Committee, the Company also established the Occupational Safety and Health Committee and the Employee Welfare Committee. The Company shall establish other functional committees in the future based on requirements. (III) The Company has established the Rules for Performance Evaluation of Board of Directors on May 7, 2020 and amended it on November 5, 2020 to specify the scope of evaluation including the evaluation of the performance of the Board of Directors, individual directors, and functional committees. The evaluation is conducted through a questionnaire. The 2020 evaluation results were compiled by the Secretary of the Board and reported to the Board of Directors on March 11, 2021 as the basis for review and improvements. The results of the performance evaluation ofthe Board of Directors shall be used as the basis for the selection or nomination of Directors. The performance evaluation results for individual directors shall be used as the basis for their individual salary and remuneration.	No material discrepancy.

Assessed areas	Implementationstatus (Note)	Implementationstatus (Note)	Implementationstatus (Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
(IV) Does the company periodically evaluate the level of independence of the CPA?		�	(IV) The Company appointed certifying CPAs who are not stakeholders of the Company. The CPA is required to recuse him/herself if his/her service or him/herself has a direct or material indirect relationship with or interest in the matter concerned. The replacement of CPAs is alsoincompliance with relatedregulations.
IV. Has the publicly-listed company appointed qualified and suitable number of corporate governance personnel and appointed a Corporate Governance Officer to handle governance related affairs (including but not limited to providing information necessary for Directors and Supervisors to perform their duties, aiding Directors and Supervisors in complying with the laws, organizing board meetings and annual general meetings as required by law, and compilingminutes of board meetings and annual general meetings)?		�	The Company has not yet established a unit or staff that specializes (or is involved) in corporate governance. Related corporate governance affairs are implemented jointly by functional units which appropriately organize related corporate governance affairs.	No material discrepancy.
V. Has the Company established channels for communicating with stakeholders (including but not limited to shareholders, employees, customers and suppliers), set up a dedicated stakeholder area on the company website, as well as appropriately responded to important corporate and social responsibility issues of concern to stakeholders?	�		The Company has assigned different departments to establish communication channels withdifferent entities (including stakeholders) and we have established a stakeholders' area on the Company's website (http://www.sunon.com/tw/stakeholder.php) and appropriately responded to important corporate and social responsibility issues of concern to stakeholders.	No deviation.
VI. Has the Company hired a professional agency to handle tasks and issues related to holding the shareholder's meeting?	�		The Company has appointed the Transfer Agency Department of Grand Fortune Securities to handle tasks and issues related to organizing shareholder's meetings.	No deviation.
VII. Information disclosure (I) Has the Company established a corporate website to disclose information regarding the Company's financial, business and corporate governance status? (II) Has the Company adopted other means of information disclosure (such as establishing a website in English, appointingspecificpersonnel to collect and disclose	� �		(I) The Company has set up a website (www.sunon.com) to disclose the Company's finance, business, and corporate governance information. Information is regularly maintained and updated. (II) The Company has assigned a unit to take charge of collecting the Company's information and disclosing related information on the corporate governance sectionof the"MarketObservation Post	No material discrepancy.

Assessed areas	Implementationstatus (Note)	Implementationstatus (Note)	Implementationstatus (Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
company information, implementing a spokesperson system, and disclosing the process of investor conferences on the Company's website)? (III) Does the Company publish and report its annual financial report within two months after the end of a fiscal year, and publish and report its financial reports for the first, second and third quarters as well as its operating status for each month ahead of schedule before the specified deadline?	�		System" Information on investor seminars has been established on the Company's website. The Company has established a spokesperson system and implemented the system in accordance with relevant regulations. (III) The financial report shall be passed by the Board of Directors or submitted to the Board of Directors 7 days before the prescribed deadline for publication and published within one day after the date of passage or submission. The Company has published the operation status before the prescribed deadline each month.
VIII. Does the Company have other information that is helpful for understanding its status of corporate governance (including but not limited to employee rights and interests, employee well-being, investor relations, supplier relations, rights of interested parties, further education sought by Directors and Supervisors, implementation of risk management policies and risk evaluation standards, implementation of customer policies, the taking out of liability insurance for Directors and Supervisors)?	�		(I) Employee rights, interests and well-being: The Company has always valued the protection of employee rights and benefits and we maintain communication with employees as well as smooth complaint channels. We respect and protect employees' interests. The Company established the Employee Welfare Committee and the Sexual Harassment Complaint Processing Committee. We implement a pension system and provide group insurance, employee travel subsidies, bonuses for birthdays, childbirth, marriage, funeral, and performance, year-end bonus, and organize outdoor activities. We provide diverse education and training for employees and we have established an online learning platform, internal education and training, and subsidies for external training programs to encourage employees to study on the job. (II) Employee relations: To protect employees' health, the Company selects a qualified hospital each year to provide employees with health examinations and organize physical and mental health seminars. The Company organizes family day events to relieve work pressure and let employees' family members learn more about the Company and build cohesiveness. (III) Investor relations: The Company provides full information disclosure on the Market Observation Post System and the "Investor Services" section on the Company's website. We also provide contact informationof the Company's spokesperson and	No deviation.

Assessed areas	Implementationstatus (Note)	Implementationstatus (Note)	Implementationstatus (Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
			investor mailbox to maintain harmonious relations with shareholders. (IV) Supplier relations: The Company has established the "Supplier Management Regulations" and established an online supplier platform to build solid partnerships with suppliers based on the principles of equality and reciprocity. (V) Stakeholder interests: The Company maintains smooth communication channels with employees, investors, Directors, customers, and suppliers and respect and protect their due interests. We also established a spokesperson system to respond to investors' questions with the aim of protecting the interests of stakeholders. (VI) Implementation of customer relations policies: The Company's business departmentsprovide customers with solutions for products and other issues and maintain smooth communication channels with customers. (VII) Continuing education of Directors and Supervisors: The Company's Directors and Independent Directors are required to attend continuingeducation courses and meet requirements for courses on corporate governance. The Company continue to arrange appropriate continuous training courses for Directors and Independent Directors. (Please refer to the following table for the status of continuing education) (VIII) Implementation of risk management policies and risk assessment standards: The Company has established the "Procedures for Acquisition or Disposal of Assets", "Procedures for Making Endorsements and Guarantees", and "Procedures for Loaning of Funds to Others" as the basis for risk management and assessment for the Company's operating units and auditing units in their execution of related businesses. (IX) Status of purchase of liability insurance by the Company for Directors and Supervisors: The Company has purchased liability insurance for Directors, Independent Directors, and key managerial officers.

Assessed areas	Implementationstatus (Note)	Implementationstatus (Note)	Implementationstatus (Note)	Deviations from Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and reasons
	Yes	No	Summary
IX. Please described improvements in terms of the results of the Corporate Governance Evaluation System in recent years and propose areas and measures to be given priority where improvement will be needed. (Leave this section blank if the company is not included in the evaluation process) The Company participated in the sixth Corporate Governance Evaluation in 2019 and received a total score of 62.59 points. Ranking among public listed companies: 51%~65% Industry: Public electronics companies with a market value of more than NT$10 billion: 61%~100%

Note: Regardless of whether "Yes" or "No" was selected, explanation shall be provided in the Summary column.

(1) Status of continuing education of the Company's Directors in 2020

Title	Name	Date of course	Organizer	Course name	Duration of the course
Independent Director	Chun- Hao Xin	2020/09/03	Securities & Futures Institute	2020 Insider Trading Prevention and Insider Equity Trading EducationSeminar	3 hours
		2020/11/13	Taiwan Stock Exchange Corporation	2020 Corporate Governance and Ethical Corporate Management Seminar for Directors and Supervisors	3 hours

(IV) If the company has set up a remuneration committee, its composition, responsibilities and operations should be disclosed

Information on members of the Remuneration Committee

Identification Type (Note 1)	Criteria Name	Has at least 5 years of work experience and meet one of the following professionalqualifications	Has at least 5 years of work experience and meet one of the following professionalqualifications	Has at least 5 years of work experience and meet one of the following professionalqualifications	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Meets the independence criteria (Note 2)	Number of other public companies in which the member also serves as a member of their compensation committee	Re mar ks
		An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university.	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company.	Has work experienc e in the area of commerc e, law, finance, or accountin g, or otherwise necessary for the business of the company.	1	2	3	4	5	6	7	8	9	10
Independent Director	Chun-Hao Xin	�		�	�	�	�	�	�	�	�	�	�	�	1	-
Independent Director	Mei-Hsiang Pai	�		�	�	�	�	�	�	�	�	�	�	�	0	-
Independent Director	Chih-Ming Chen	�	�	�	�	�	�	�	�	�	�	�	�	�	0	-

Note 1: Fill "Director", "Independent Director" or "Others" in the Title column.

Note 2: If the committee member meets any of the following criteria in the two years before being appointed or during the term of office, please check "�" in the corresponding boxes:
(1) Not an employee of the Company or any of its affiliates.
(2) Not a Director or Supervisor of the Company of any of its affiliates (excluding Independent Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the Company, or ranks among the ten largest natural-person shareholders.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the managerial officers listed in subparagraph (1) or persons listed in subparagraphs (2) and (3).
(5) Not a Director, Supervisor or employee of a corporate shareholder who directly holds more than 5% of the total number of issued shares of the Company or is ranked top five in terms of the number of shares held or is designated as a Director or Supervisor of the Company pursuant to Paragraph 1 or 2, Article 27 of the Company Act (excluding Independent Directors in the Company, its parent company, subsidiaries, or subsidiaries of the same parent company who have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(6) Not a Director, Supervisor, or employee of a company with a majority of the company's director seats or voting shares and those of any other company are controlled by the same person (excluding Independent

Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).

(7) Not a Director, Supervisor, or employee of a company or institution with the same chairperson of the board, president, or equivalent position, or a spouse thereof (excluding Independent Directors set up by the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(8) Not a Director (member of the governing board), Supervisor (member of the supervising board), managerial officer, or shareholder holding more than 5% of the shares of a specific company or institution that has a financial or business relationship with the Company (excluding specific companies or institutions if they hold more than 20% but less than 50% of the outstanding shares of the Company or independent directors in the Company, its parent company, subsidiaries, or subsidiaries of the same parent company which have been appointed in accordance with the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies or local regulations).
(9) Not a professional individual or owner, partner, director (member of the governing board), supervisor (member of the supervising board), or managerial officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting, or consultation services to the company or to any affiliate enterprise for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or spouse thereof. Provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Securities and Exchange Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not been a person of any conditions defined in Article 30 of the Company Act.

Operation of Remuneration Committee

I. The Company's Remuneration Committee is comprised of three members.
II. Current term for the members: May 30, 2018 – May 29, 2021; a total of 3 (A) meetings of the Remuneration Committee were held in the most recent year (2020). The members' qualifications and attendance were as follows:


Title	Name	Attendance in person (B)	Attendance by proxy	Attendance rate (%) (B/A) (Note)	Remarks
Convener	Mei-Hsiang Pai	3	0	100%	-
Committee member	Chun-Hao Xin	3	0	100%	-
Committee member	Chih-Ming Chen	3	0	100%	-
Other matters required to be recorded: I. In the event the Board of Directors does not adopt or wishes to amend the proposals of the Remuneration Committee, please state the date and number of the Board meeting,the content of the proposals, resolution from the Board of Directors, and the method the opinion from the Remuneration Committee was handled (e.g., if the salaries and compensations approved by the Board was higher than the suggested levels from the Remuneration Committee, please state the differences and reasons): None. II. If a member opposes a resolution the Committee has adopted or has reservations with a written record or a statement, the date and session of the meeting, the resolution, opinions of all the members, and the handling of their opinions shall be indicated: None. III. The Company's Remuneration Committee shall consist of no fewer than three members appointed by resolution of the Board of Directors. One shall serve as the convener. The term of the members of the Remuneration Committee shall be the same as that of the Board of Directors by whom they were appointed. If the size of the Remuneration Committee is reduced below three due to the dismissal of one of the members, the Board of Directors shall convene a meeting and appoint additional Committee members within three months after the shortfall occurs. IV. Roles and Responsibilities of the Remuneration Committee (I) Stipulate and review regularly the compensation policies, systems, standards and structures, and performance of directors and managers. (II) Regularlyreviewandadjustdirectors' andmanagers' remuneration.

Note:

(1) When a member of the Remuneration Committee resigns before the end of the year, the remark column shall be annotated with the date of resignation. Actual attendance rate (%) shall be calculated based on the number of meetings held by the Remuneration Committee and the number of actual attendances during the term of service.
(2) When an election is held for the Remuneration Committee before end of the year, members of both the incoming and outgoing committee members shall be listed in separate columns and noted as incoming, outgoing or reelected members, along with the elected date, in the "Remarks" column. Actual attendance percentage (%) is calculated based on the number of meetings held by the Remuneration Committee and the actual number of meetings attended during his/her term of office.

(V) Performance of Corporate Social Responsibility

Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx listed companies and reasons
	Yes	No	Summary (Note 2)
I. Does the Company perform assessments of risks in environmental, social, and corporate governance issues relevant to its business activities and devise risk management policies and strategies based on the principle of materiality?	�		The Company has established the "Corporate Social Responsibility Best Practice Principles" and disclosed them on the Company's website. The Company seeks to fulfill corporate social responsibility and pays attention to the rights and interests of stakeholders while pursuing sustainable development and profit. The Company pays close attention to topics pertaining to the environment, society, and corporate governance and incorporates them into its management approaches and business activities to achieve sustainability.	No material discrepancy.
II. Does the Company have a unit that specializes (or is involved) in CSR practices? Is the CSR unit run by senior managerial officers and reports its progress to the Board of Directors?	�		Functional units jointly promote CSR and dedicate full efforts to the performance of corporate social responsibilities. We also established the "Sunonwealth Charity Foundation" to actively provide support care and support.	No material discrepancy.
III. Environmental issues (I) Has the Company established a proper environmental management system based on the characteristics of the industry? (II) Is the Company committed to improving the efficiency of the various resources and using recycled materials which have a low impact on the environment? (III) Does the Companyevaluate thepotential risks and	� �	�	(I) The Company has established the "Environmental Health and Safety Policy" to effectively maintain safety in the environment and achieve energy conservation and carbon emissions reduction goals. We also abide by related regulations. Our plants in Taiwan and other countries have passed certification for ISO 14001, ISO 9001, OHSAS 18001, IATF 16949 and IECQ QC080000 environmental management system, quality system, and hazardous substance management systems. (II) "Energy conservation, carbon emissions reduction, environmental protection, and loving the earth" are the Company's goals for protecting the earth's environment. We formulate plans with the R&D, quality assurance, production, procurement, business, and management units and we encourage all employees to participate in the plans to achieve full implementation. We are committed to developing green environmentally friendly products with low-power consumption and zero toxicity to reduce the impact of the use of various resources on the environment. (III) The Company has not yet evaluated the potential risks and	No material discrepancy.

Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx listed companies and reasons
	Yes	No	Summary (Note 2)
opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues? (IV) Does the Company take inventory of its greenhouse gas emissions, water consumption, and the total weight of waste in the last two years, and draw up policies on energy efficiency and carbon reduction, greenhouse gas reduction, water reduction, or waste management?	�		opportunities in climate change with regard to the present and future of its business, or take appropriate action to counter climate change issues. We shall implement improvements in the future. (IV) The Company has established an environmental health and safety policy and obtained certification for the environmental management system, quality system, and hazardous substance management system. The Company rigorously monitors greenhouse gas emissions (https://www.sunon.com/cer2.aspx), water consumption, and total weight of waste management. We establish systematic internal documents and inspection procedures to implement more effective solutions for improvingthe environment.
IV. Social issues (I) Has the Company formulated appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (II) Has the Company established and implemented reasonable employee benefits (including remuneration, leave, and other benefits), and ensured business performance or results are reflected adequately in employee remuneration?	� �		(I) Has the Company formulated related management policies and procedures according to relevant labor laws and the International Bill of Human Rights to protect employee rights and interests? (II) Sunonwealth provides fair, reasonable, and competitive salary systems and regularly establishes employee performance evaluations to provide opportunities and channels for promotion and salary increase to employees with outstanding performance. At the end of each year, the Company distributes a diverse range of bonuses including the year-end bonus, performance bonus, and employee bonuses based on the results of Company's operations and the employees' performance in the current year. Sunonwealth complies with related labor regulations and provides employees with leave and comprehensive welfare system. We also value the importance of creating a healthy and friendly workplace. We have continuously advanced health promotion activities and regularly organize health examinations and health seminars, and set up medical service offices, aerobics classrooms, and bodybuilding equipment, and various health promotion facilities to provide employees with comprehensive care.	No deviation.

Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx listed companies and reasons
	Yes	No	Summary (Note 2)
(III) Does the Company provide a safe and healthy working environment and provide employees with regular safety and health training? (IV) Has the Company established an effective career development and capability training program for employees? (V) Does the Company comply with relevant laws and international standards in relation to customer health and safety, customer privacy, marketing, and labeling of products and services, and does it establish relevant consumer protection policies and grievance procedures? (VI) Does the Company establish supplier management policies, which require suppliers to observe relevant regulations on environmental protection, occupational safety and hygiene, or labor and human rights? If so, describe the implementation results.	� � � �		(III) The Company established an Environmental Safety Policy and Quality Policy and we organize labor safety education and training. We regularly conduct fire safety inspections, implement fire safety drills, and monitor CO2 concentration in the work environment. We provide employee health examination regularly each year and organize physical and mental health seminars. We encourage employees to participate in club activities and organize outdoor activities from time to time to provide employees with a safe and healthy work environment. (IV) The Company provides diverse on-the-job training and learning channels and we organize management competency training and professional competency training each year to improve employees' abilities and assist employees in their career development. (V) The Company has followed relevant laws, regulations, and international norms in terms of the marketing and labeling of products and services. The international norms include compliance with CE, UL, QC080000, ITAF16949, the EU's REACH and RoHS regulations, and ban on conflict minerals. The Company fully respects customers' privacy and abides by confidentiality agreements and the Personal Data Protection Act. We also established a stakeholder area and set up complaint channels. (VI) The Company has established comprehensive supply chain management regulations and measures including supplier management, Supplier Management Operating Procedures, new supplier evaluations, supplier audit, and supplier assistance to ensure that materials we purchase meet requirements for quality assurance and substances of concern to the environment. IN addition to compliance with environmental protection and safety and health regulations, we also comply with related operating regulations for labor safety. The Company's website (www.sunon.com /stakeholders/stakeholders' area/supply chain management portal) provide detailed explanation of our sustainable

Assessed areas	Implementationstatus (Note1)	Implementationstatus (Note1)	Implementationstatus (Note1)	Deviations from Corporate Social Responsibility Best Practice Principles for TWSE/TPEx listed companies and reasons
	Yes	No	Summary (Note 2)
			supplychain management and implementation status.
V. Does the Company prepare corporate social responsibility reports and other reports that disclose non-financial information by following international reporting standards or guidelines? Does the Company obtain third-party assurance or qualified opinion for the reports above?		�	The Company has not published the Corporate Social Responsibility Report and we shall compile related CSR information for disclosure on the Company's website and Market Observation Post System based on requirements in the future.	No material discrepancy.
VI. If the Company has established corporate social responsibility principles based on "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies", please describe any difference between the principles and their implementation: The Company abides by its Corporate Social Responsibility Best Practice Principles and there was no material deviation. The Company's subsidiaries implement the essence of the Company's Corporate Social ResponsibilityPrinciples in their internal control systems and related supervisoryregulations.
VII. Other key information useful for explaining status of corporate social responsibility practices: The Chairman of the Company founded the "Shehng-Yuan Children Development and Adult Support Services Center" to take care of children with severe disabilities and founded the "Sunonwealth Charity Foundation" to organize various charity events (donations to the disadvantaged, regular care for low-income households and children's welfare) to contribute to social welfare. He also promoted the_Liao-Fan's Four Lessons_to purify people's minds. Our employees are also dedicated to charityactivities.

Note 1: If "Yes" is selected in the operating status, please explain the important policies, strategies, and measures adopted, and the implementation status; if "No" is selected in the operating status, please specify the reason and explain related future policies and plans for strategies and measures.

Note 2: If the Company has produced a corporate social responsibility report, the Company may reference the CSR report or indicate the page number in the operating status. Note 3: The materiality principle refers to related environmental, social, and governance issues that may cause material impact on the Company's investors and other stakeholders.

(VI) Implementation of ethical corporate management, deviation from "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", and reasons for deviation

Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
I. Establishment of ethical corporate management policy and approaches (I) Has the Company established the ethical corporate management policies approved by the Board of Directors and stated its policies and practices in its Memorandum or external correspondence to maintain business integrity? Are the Board of Directors and the senior management committed to fulfilling this commitment? (II) Does the Company have mechanisms in place to assess the risk of unethical conduct and perform regular analysis and assessment of business activities with a higher risk of unethical conduct within the scope of business? Does the Company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Article 7, Paragraph 2 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? (III) Does the Company have any measures against dishonest conducts? Are these measures supported by proper procedures, behavioral guidelines,disciplinaryactions and complaint systems? Does the	� � �		(I) The Board of Directors of the Company has established the "Ethical Corporate Management Best Practice Principles" and "Ethical Corporate Management Operating Procedures and Code of Conduct" to specify the Company's ethical management policies and measures. The Board of Directors and management are committed to the effective implementation of ethical corporate management policies and enforcement during internal management activities and business activities. (II) The applicable scope of the "Ethical Corporate Management Operating Procedures and Code of Conduct" established by the Company includes the subsidiaries of the Company. It expressly prohibits bribery, provision of illegal political donations, inappropriate charity donations or sponsorship, providing or accepting unreasonable presents, hospitality or other improper benefits. The Company also regularly analyzes and evaluates business activities with greater risks of unethical conduct for amendments of the "Ethical Corporate Management Operating Procedures and Code of Conduct" and related internal control systems. The Company strictly follows the preventive measures specified in all subparagraphs under Article 7, Paragraph 2 of the "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies" to prevent unethical conduct. (III) The Company has established the "Ethical Corporate Management Operating Procedures and Code of Conduct" to require Directors,managerial officers,and employee	No material discrepancy.

Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
Company review the policies on a regular basis?			from engaging in unethical conduct and actively increases their awareness of such requirements. The Company and subsidiaries have established rigorous accounting systems, internal control systems, and audit systems to prevent unethical conduct. They encourage internal and external personnel to report illegal and unethical conduct. The Companyalso continues to review and amend the systems.
II. Full implementation of ethical management principles (I) Does the Company evaluate the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners? (II) Does the Company have a unit responsible for business integrity on a full-time basis under the Board of Directors, which will report the business integrity policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations? (III) Has the Company established policies to prevent conflicts of interests, implemented such policies, and provided adequate channels of communications?	� �	�	(I) The Company stipulates related ethical clauses in contracts signed with customers and suppliers to prevent the Company and its employees, customers, suppliers, and stakeholders from engaging in bribery, provision of illegal political donations, inappropriate charity donations or sponsorship, providing or accepting unreasonable presents, hospitality or other improper benefits. (II) Although the Company has not set up a unit that specializes (or is involved) in promoting ethical corporate management and reports to the Board of Directors, the Company's professional managerial officers perform their duties in accordance with the authorization and we have established Employee Work Rules and related regulations to meet ethical management requirements. (III) The Company's "Ethical Corporate Management Best Practice Principles" and the "Ethical Corporate Management Operating Procedures and Code of Conduct" specify regulations for avoidance of conflicts of interest including procedures to be implemented when there is a conflict of interest involving a Director, managerial officer, or other stakeholders attending a meeting of the Board of Directors on a voting or non-voting basis, or the legal entity they represent. The Company's "Code of Ethical Conduct" specifies that employees may not take advantage of their positions in the Company to obtain improper benefits for themselves, their spouses, parents,children,or anyother relative within the	No material discrepancy.

Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
(IV) Does the Company have effective accounting and internal control systems in place to implement business integrity? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or engage CPAs to perform the audits? (V) Did the Company periodically provide internal and external training programs on integrity management?	� �		second degree of kinship. (IV) The Company has established effective accounting and internal control systems to implement business integrity. Before formulating annual audit plans, the Company evaluates the risks of audit operations and assigns weights (risks of unethical conduct are evaluated and assigned weighted scores in accordance with the two risk indicators including the degree of internal control and the financial exposure). The Company compiles all weighted scores for risks and the Audit Office formulates the audit work items and audit frequencies based on the risks. It also submits audit plans (including risk assessments) to the Audit Committee and the Board of Directors for review in accordance with regulations. The Audit Office conducts audits after obtaining approval. (V) The Company has established related ethical clauses in the Work Rules and implemented comprehensive training for new recruits to internalize the ethical corporate management principles in the Company's culture and implement ethical corporate management. The Company signs related ethical provisions with customers and suppliers and promotes related regulations for ethical corporate management.
III. Implementation of the Company's whistleblowing system (I) Has the Company established concrete whistleblowing and reward system and have a convenient reporting channel in place, and assign an appropriate person to communicate with the accused? (II) Has the Company established standard operating procedures for investigating reported issues, follow-up measures to be adopted after the investigation, as well as relevant confidential mechanisms? (III) Has the Company adopted measures for protecting the whistleblower against improper treatment or retaliation?	� � �		(I) The Company has established the whistleblowing and reward system to actively prevent unethical conduct. We provide reporting channels on the Company's website assigned appropriate employees to process reports. (II) The Company has established comprehensive procedures and confidentiality mechanisms for case acceptance investigation processes, investigation results, and relevan documents. (III) The Company's protection measures for whistleblowers shall include maintaining the confidentiality of the identity of the whistleblowers and the contents of their reports. The	, t No deviation.

Assessed areas	Implementation status(Note 1)	Implementation status(Note 1)	Implementation status(Note 1)	Deviation with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies, and the reasons for the said deviation
	Yes	No	Summary
			Company must also protect whistleblowers from inappropriate disciplinary actions due to their whistleblowing.
IV. Enhancing information disclosure Has the Company disclosed its integrity principles and progress onto its website and Market Observation Post System?	�		The Company has established the "Ethical Corporate Management Best Practice Principles" and "Ethical Corporate Management Operating Procedures and Code of Conduct" and disclosed them on the Market Observation Post System and Company's website.	No material discrepancy.
V. If the Company has established Ethical Corporate Management Principles in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", describe difference with the principles and implementation status: None.
VI. Other important information to facilitate a better understanding of the Company's implementation of ethical corporate management: (Such as the status of the Company's efforts to review and correct its Principles for Honest Business Practices): None.

V. If the Company has established Ethical Corporate Management Principles in accordance with "Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies", describe difference with the principles and implementation status: None.
VI. Other important information to facilitate a better understanding of the Company's implementation of ethical corporate management: (Such as the status of the Company's efforts to review and correct its Principles for Honest Business Practices): None.

Note: Regardless of whether "Yes" or "No" was selected, explanation shall be provided in the Summary column.

(VII) If the Company has established corporate governance principles and related bylaws, their query methods shall be disclosed:
The Company has established the Corporate Governance Best Practice Principles and related regulations. Please refer to the Company's website under Investor Relations/Corporate Governance/Related Regulations (www.sunon.com).
(VIII) Critical information that can enhance the understanding of the Company's corporate governance practices shall also be disclosed: Please refer to page 32 of the Annual Report (IV. Implementation of corporate governance).

(IX) Status of implementation of internal control system
Internal Control System Statement

Sunonwealth Electric Machine Industry Co., Ltd. Internal Control System Statement

Date: March 11, 2021

The Company states the following with regard to its internal control system during fiscal year 2020, based on the findings of a self-evaluation:

I. The Company is fully aware that the establishment, implementation and maintenance of its internal control system is the responsibility of the Board of Directors and managerial officers. In this regard the Company has already established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability of reporting, and compliance with applicable laws and regulations.
II. There are inherent limitations to even the most well-designed internal control system. As such, an effective internal control system can only reasonably ensure the achievement of the aforementioned goals. Moreover, the operating environment and situation may change and impact the effectiveness of the internal control system. However, self-supervision measures were implemented within the Company's internal control policies to facilitate immediate rectification once procedural flaws have been identified.
III. The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations"). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. Control environment, 2. Risk assessment, 3. Control operation, 4. Information and communication, and 5. Monitoring. Each element further contains several items. For more information on the abovementioned items, please refer to the Regulations.
IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
V. Based on the findings of the evaluation mentioned in the preceding paragraph, the Company believes that as of December 31, 2020 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency objectives, reliability of reporting, and compliance with applicable laws and regulations, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives.
VI. This Statement will become a major part of the content of the Company's Annual Report and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

VII. This Statement has been passed by the Board of Directors Meeting of the Company held on China March 11, 2021, where 0 of the 9 attending Directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement.

Sunonwealth Electric Machine Industry Co., Ltd.

Chairman of the Board: Yin-Su Hong President: Ching-Shen Hong

If the Company engages an accountant to examine its internal control system, disclose the CPA audit report: None.
(X) Penalties imposed upon the Company or internal personnel by laws, or punishment imposed by the Company on internal personnel for violation of the Company's internal control system regulations, detailed information on the punishment if it may have significant impact on the shareholders' equity or securities prices, major defects and corrective action thereof in the most recent fiscal year and as of the date of this annual report: None.
(XI) Important resolutions adopted in shareholders' meeting and Board of Directors' meeting in the past year and up to the date of report
Resolutions of all shareholders in attendance in the general shareholders' meeting on June

17, 2020 and the status of implementation

Resolution	Implementation status
Passed the 2019 Business Report and Financial Statements.	2019 Business Report and Financial Statements.
Passed the Company's 2019 earnings distribution proposal.	Established July 14,2020 as the ex-dividend date and completed all earnings distribution on the issuance date on August 3, 2020. (Cash dividendper share was NT$2)

Important resolutions adopted by the Board of Directors in 2020 and up to the publication of the Annual Report on April 11, 2021

publication	of the Annual Report on April 11, 2021
Date of meeting	Resolution
January 20, 2020	I. Passed the Company's 2020 Business Plan. II. Passed the proposal for applying for a medium-term overseas investment financing loan from the Export-Import Bank of the Republic of China. III. Passed the Company's budget for donations in 2020. IV. Passed the amendment of the internal control system in the Company's "Financial Statements Formulation Procedures and Management". V. Passed the amendment of the Company's "Employee Remuneration Regulations". VI. Passed the Company's 2019 year-end bonus for managerial officers.
March 11, 2020	I. Passed this Company's 2019 Business Report, financial statements, and consolidated financial statements. II. Passed the Company's 2019 remuneration distribution proposal for Directors and employees. III. Passed the Company's 2019 earnings distribution proposal. IV. Passed theproposal for the time and location of the 2020general

Date of meeting	Resolution
	shareholders' meeting. V. Passed the Company's 2019 Internal Control System Statement. VI. Amended the Company's "Audit Committee Organizational Rules". VII. Passed the Company's 2019 employee remuneration for managerial officers.
May 7, 2020	I. Approved the establishment of the "Rules for Performance Evaluation of Board of Directors". II. Passed the amendments of the "Corporate Governance Best Practice Principles". III. Passed the amendments of the "Ethical Corporate Management Best Practice Principles". IV. Passed the amendments of the "Ethical Corporate Management OperatingProceduresand Code ofConduct".
August 6, 2020	I. Reported the 2020 Q2 consolidated financial statements. II. Passed the proposal for endorsement and guarantee for the loan of the subsidiary Sunon Electronic (Foshan) Co., Ltd. from HSBC Bank(Taiwan)Limited
November 5, 2020	I. Reported the 2020 Q3 consolidated financial statements. II. Passed the Company's 2021 Audit Plan. III. Passed the amendments of the "Regulation and Procedure for Board of Directors Meetings". IV. Passed the amendments of the "Rules for Performance Evaluation of Board of Directors". V. Passed the amendments to the "Remuneration Committee Charter". VI. Passed the amendments of the "Corporate Governance Best PracticePrinciples".
January 29, 2021	I. Passed the Company's 2021 Business Plan. II. Passed the proposal for endorsement and guarantee for the subsidiary Sunon Electronic (Bei Hai) Co., Ltd. III. Passed the proposal for endorsement and guarantee for the subsidiary Sunon Electronic (Bei Hai) Co., Ltd. IV. Passed the amendment of the "Articles of Incorporation". V. Passed the Company's budget for donations in 2021. VI. Passed the proposal for the promotions of the Company's managerial officers. VII. Passed the Company's 2020 year-end bonus for managerial officers.
March 11, 2021	I. Passed this Company's 2020 Business Report, financial statements, and consolidated financial statements. II. Passed the amendment of the "Articles of Incorporation". III. Passed the Company’s 2020 remuneration distribution proposal for board members and employees. IV. Passed the Company's 2020 earnings distribution proposal. V. Passed the proposal for the election of the Company's Directors. VI. Passed the list of Director candidates. VII. Passed the proposal for the time and location of the 2021 general shareholders' meeting. VIII. Passed the Company’s 2020 Internal Control System Statement. IX.Passedthe Company's2020 employeeremuneration for managerial

Date of meeting	Resolution
	officers.

(XII) Dissenting or qualified opinion of Directors or Supervisors against an important resolution passed by the Board of Directors that is on record or stated in a written statement in the past year and up to the date of report: None.
(XIII) Resignation and dismissal of professional managerial officers related to the financial report including Chairman, President, Chief Accounting Officer, Chief Financial Officer, Chief R&D Officer, Chief Internal Auditor, and Corporate Governance Officer, in the past year and up to the date of report: None.

V. Information on fees to CPA

(I) When the non-audit fees paid to the Certified Public Accountants, their firm, and its affiliated companies account for one quarter or more to the audit fees, the amount of audit fees and non-audit fees and the content of non-audit service must be disclosed:

Table on the range of fees of the CPA

Name of the CPA Firm	Name	ofCPAs	Durationof audit	Remarks
Crowe Horwath (TW)	Ching-Lin Li	Shu-Man Tsai	2020.1.1- 2020.12.31

			Unit:thousand NT$	Unit:thousand NT$
Professional fee Amount range		Audit fees	Non-audit fees	Total
1	Below NT$2,000,000		�
2	NT$2,000,000 (inclusive) - NT$4,000,000	�		�
3	NT$4,000,000 (inclusive) - NT$6,000,000
4	NT$6,000,000 (inclusive) - NT$8,000,000
5	NT$8,000,000 (inclusive) - NT$10,000,000
6	Over NT$10,000,000(inclusive)

Information on fees to CPA

Unit: thousand NT$

									Unit:thousand NT$
Name of the CPA Firm	Name of CPAs	Audit fees		Non-audit fees				CPA's duration of audit	Remarks
			System design	Business registratio	Human resources	Others (Note 2)	Subtotal
Crowe Horwath (TW)	Ching- Lin Li Shu- Man Tsai	3,250	0	0	0	98	98	2020.1.1- 2020.12.31	Non-audit fees included typing fees and seal certification fees for financial reports.

Note 1: If the Company has replaced the CPAs or accounting firm in the current fiscal year, the audit period should be listed separately, and the reason for replacement should be stated in the "remark" column. Information regarding the audit and non-audit fees paid should also be disclosed in order.

Note 2: Non-audit fees shall be listed by service item. If the Others column under Non-Audit Fees reaches 25% of the total non-audit fees, the service items associated with this column shall be listed in the Remarks column.
(II) If the Company changes accounting firm and the amount of audit fee paid in the year of change is less than that in the year before, information shall be disclosed: None.
(III) If the audit fee is more than 10% less than that paid in the previous year, information shall be disclosed: None.

VI. Information on Replacement of CPAs: None.

VII. The Chairman, President and Financial or Accounting Managerial Officer of the Company who had worked for the Independent CPA or the affiliate in the past year: None.

VIII.Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding more than 10% interests and changes to share pledging by them

(I) Change in the shares held by the Directors, Supervisors, managerial officers, and major shareholders

Title (Note 1)	Name	2020	2020	2021 up to April 11	2021 up to April 11
		Increase (decrease) in shares held	Increase (decrease) in pledged shares	Increase (decrease) in shares held	Increase (decrease) in pledged shares
Director	Yo Yuan Investment Corporation Institutional shareholder representative: Yin-Su Hong Fu-Ing Hong Chen Ching-Shen Hong Li-Ju Chen	-	-	-	-
Director	Nice Enterprise Co., Ltd. Institutional shareholder representative: Ching-LiangChen	-	-	-	-
Director	Tseng-Cheng Lin	-	-	-	-
Independent Director	Chun-Hao Xin	-	-	-	-
Independent Director	Mei-Hsiang Pai	(24,128)	-	-	-
Independent Director	Chih-Ming Chen	-	-	-	-
Chairman of the Board	Yin-Su Hong	-	-	-	-
President	Ching-Shen Hong	612,000	1,600,000	-	-
Vice President and Director of the Finance Division	William Li	(70,000)	-	-	-
Vice President of the Business Division	Chen-Hsueh Li	-	-	-	-
Vice President of the Business Division	Tsui-Wen Hsiao	-	-	-	-
Vice President of the Business Division	Chin-Tzu Wu	-	-	-	-
OEM Production Unit Vice President	Kuan-Hung Tseng	-	-	-	-

Note 1: Shareholders with over 10% of the Company's total share shall be classified as major shareholders and listed separately.

Note 2: Information regarding the transfer of shares or shares pledged to the counterparty being the related party shall be filled in the following Table.

(II) Share transfer information: None.

(III) Share pledge information:

Name (Note 1)	Reason for pledging of shares (Note 2)	Date of change	Transaction counterparty	Relationship between the counterparty and the Company, its Directors, Supervisors, managerial officers, and shareholders with shareholding percentage exceeding 10%	Number of shares	Share holdin g ratio	Stock pledge ratio	Pledge (redempti on) amount
Ching- Shen Hong	Pledge	2020.7.29	Dedicated account for pledged shares, CTBC East Kaohsiung Branch	-	1,600,000	0.64	0.64	-
Ching- Shen Hong	Redemption	2020.10.29	Dedicated account for pledged shares, CTBC East Kaohsiung Branch	-	1,600,000	0.64	-	-
Ching- Shen Hong	Pledge	2020.11.30	Dedicated account for pledged shares, CTBC East Kaohsiung Branch	-	1,600,000	0.64	0.64	-

Note 1: Fill the name of the Company's Directors, Supervisors, managerial officers and shareholders with shareholding percentage exceeding 10%.

Note 2:Fill either "Pledge" or "Redemption".

IX. Information on the relationship between any of the top ten shareholders

Date: April 11, 2021

Name (note 1)	Shares held by the person	Shares held by the person	Shares held by spouse and underage children	Shares held by spouse and underage children	Total shareholding by nominee arrangement	Total shareholding by nominee arrangement	Titles, names and relationships between top 10 shareholders (related party, spouse, or kinship within the second degree). (note 3)	Titles, names and relationships between top 10 shareholders (related party, spouse, or kinship within the second degree). (note 3)	Remarks
	Number of shares	Shareholdi ng ratio	Number of shares	Shareholdi ng ratio	Number of shares	Shareholding ratio	Title (or name)	Relatio nship
Guang Sheng Investment Corporation Chairman of the Board: Fu-Ing Hong Chen	19,150,000	7.63%	-	-	-	-	Yo Yuan Investment Corporation	Shareh older	-
							Yin-Su Hong	Spouse	-
							Ching-Shen Hong	Mother -son	-
Yo Yuan Investment Corporation Representative: Fu-Ing Hong Chen	14,825,000	5.91%	-	-	-	-	Representative of Guang Sheng Investment Corporation	Shareh older	-
							Yin-Su Hong	Spouse	-
							Ching-Shen Hong	Mother -son	-
Fu-Ing Hong Chen	14,670,000	5.85%	10,457,000	4.17%	-	-	Representative of Guang Sheng Investment Corporation	Shareh older	-
							Yo Yuan Investment Corporation	Shareh older	-
							Yin-Su Hong	Spouse	-
							Ching-Shen Hong	Mother -son	-
Yin-Su Hong	10,457,000	4.17%	14,670,000	5.85%	-	-	Representative of Guang Sheng Investment Corporation	Spouse	-
							Yo Yuan Investment Corporation	Spouse	-
							Fu-Ing Hong Chen	Spouse	-
							Ching-Shen Hong	Father- son	-
Chunghwa Post Co., Ltd.	5,736,000	2.29%	-	-	-	-	-	-	-
Aberdeen Standard SICAV I - Asian Smaller Companies Fund under the custodyof HSBC	5,172,000	2.06%	-	-	-	-	-	-	-
Nice Enterprise Co., Ltd.	4,006,813	1.60%	-	-	-	-	-	-	-
Ching-Shen Hong	3,612,000	1.44%	-	-	-	-	Representative of Guang Sheng Investment	Moth er-son	-

							Corporation
							Yo Yuan Investment Corporation	Moth er-son	-
							Fu-Ing Hong Chen	Moth er-son	-
							Yin-Su Hong	Fathe	-
Stichting Depositary APG Emerging Markets Equity under the custody of JP Morgan Chase Bank Taipei Branch	3,598,000	1.43%	-	-	-	-	-	-	-
Acadian Emerging Markets SME Equity Fund under the trust of HSBC(Taiwan)	3,550,000	1.42%	-	-	-	-	-	-	-

Note 1: All the top 10 shareholders should be listed. For institutional shareholders, their names and the name of their representatives should be listed separately.
Note 2: Shareholding percentage is calculated separately based on the number of shares held in the name of the person, his/her spouse and minors, and others.
Note 3:Relationships between the aforementioned shareholders, including institutional and natural person shareholders should be disclosed based on the financial reporting standards used by the issuer.

X. The shareholding of the Company, Director, Supervisor, Managerial Officers and an enterprise that is directly or indirectly controlled by the Company in the invested company and the calculation of the consolidated shareholding percentage

Consolidated shareholding percentage

	March 31,2021;Unit: share;%	March 31,2021;Unit: share;%	March 31,2021;Unit: share;%	March 31,2021;Unit: share;%	March 31,2021;Unit: share;%	March 31,2021;Unit: share;%
Investee (Note)	Investment by the Company		Investments by Directors, Supervisors, managerial officers and directly or indirectly controlled enterprises		Comprehensive investment
	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio	Number of shares	Shareholding ratio
Sunon INC.	150,000	100.00	-	-	150,000	100.00
Sunon SAS.	50,000	100.00	-	-	50,000	100.00
Sunon Deutschland GmbH	-	-	-	100.00	-	100.00
Sunon Corporation	4,400	100.00	-	-	4,400	100.00
Sunonwealth Electric Machine Ind.(H.K.)Ltd.	799,999	99.99	1	0.01	800,000	100.00
BVI Successful Century Co., Ltd.	33,880,000	100.00	-	-	33,880,000	100.00
Sunon Electronic (Kunshan) Co.,Ltd.	-	-	-	100.00	-	100.00
BVI Sunon International Ltd.	32,840,000	100.00	-	-	32,840,000	100.00
Sunon Electronic (Foshan) Co.,Ltd.	-	-	-	100.00	-	100.00
Sunon Electronic (Bei Hai) Co.,Ltd.	-	-	-	100.00	-	100.00
Sunon Electronics India Private Limited	1,099,999	99.99	1	0.01	1,100,000	100.00
Sunon Properties Philippines Corp.	-	99.99	-	0.01	-	100.00
Sunon Electronics Philippines Corp.	-	99.99	-	0.01	-	100.00
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	-	-	-	35.00	-	35.00

Note: Long-term investment calculated by equity method.

D. Funding Status

I. Source of Capital Shares

(I) Capital Formulation Process

Unit: Share, NTD

						Unit: Share,NTD	Unit: Share,NTD	Unit: Share,NTD
Year/ month	Issuance price	Authorized capital		Paid-up capital		Remarks
		Number of shares	Amount	Number of shares	Amount	Source of Capital Shares	Subscriptions paid with property other than cash	Others
2003.03	10	200,000,000	2,000,000,000	180,909,906	1,809,099,060	Converted from corporate bonds	None	Note 1
2003.08	10	240,000,000	2,400,000,000	197,443,061	1,974,430,610	Recapitalizati on of retained earnings	None	Note 2
2003.08	10	240,000,000	2,400,000,000	196,000,061	1,960,000,610	Treasury stock liquidation	None	Note 3
2005.10	10	240,000,000	2,400,000,000	199,860,062	1,998,600,620	Recapitalizati on of retained earnings	None	Note 4
2006.08	10	300,000,000	3,000,000,000	205,765,864	2,057,658,640	Recapitalizati on of retained earnings	None	Note 5
2007.04	10	300,000,000	3,000,000,000	206,990,989	2,069,909,890	Converted from corporate bonds	None	Note 6
2007.07	10	300,000,000	3,000,000,000	210,011,908	2,100,119,080	Converted from corporate bonds	None	Note 7
2007.09	10	300,000,000	3,000,000,000	223,006,342	2,230,063,420	Recapitalizati on of retained earnings	None	Note 8
2007.10	10	300,000,000	3,000,000,000	228,854,472	2,288,544,720	Converted from corporate bonds	None	Note 9
2008.01	10	300,000,000	3,000,000,000	231,306,446	2,313,064,460	Converted from corporate bonds	None	Note 10
2008.04	10	300,000,000	3,000,000,000	230,283,446	2,302,834,460	Treasury stock liquidation	None	Note 11
2008.09	10	300,000,000	3,000,000,000	245,123,935	2,451,239,350	Recapitalizati on of retained earnings	None	Note 12
2008.10	10	300,000,000	3,000,000,000	245,798,630	2,457,986,300	Converted from corporate bonds	None	Note 13

2009.02	10	300,000,000	3,000,000,000	241,265,630	2,412,656,300	Treasury stock liquidation	None	Note 14
2009.02	10	300,000,000	3,000,000,000	244,337,901	2,443,379,010	Converted from corporate bonds	None	Note 15
2009.03	10	300,000,000	3,000,000,000	245,006,573	2,450,065,730	Converted from corporate bonds	None	Note 16
2009.07	10	300,000,000	3,000,000,000	245,307,776	2,453,077,760	Converted from corporate bonds	None	Note 17
2009.08	10	300,000,000	3,000,000,000	257,524,671	2,575,246,710	Recapitalizati on of retained earnings	None	Note 18
2009.10	10	300,000,000	3,000,000,000	257,847,455	2,578,474,455	Converted from corporate bonds	None	Note 19
2010.01	10	300,000,000	3,000,000,000	257,929,732	2,579,297,320	Converted from corporate bonds	None	Note 20
2012.08	10	300,000,000	3,000,000,000	250,929,732	2,509,297,320	Treasury stock liquidation	None	Note 21

Note 1: Approved in the Jing-Shou-Shang No. 09201090890 Letter from the Ministry of Economic Affairs dated March 28, 2003.
Note 2: Approved in the Jing-Shou-Shang No. 09201259550 Letter from the Ministry of Economic Affairs dated August 29, 2003.
Note 3: Approved in the Jing-Shou-Shang No. 09201259550 Letter from the Ministry of Economic Affairs dated August 29, 2003.
Note 4: Approved in the Jing-Shou-Shang No. 09401206610 Letter from the Ministry of Economic Affairs dated October 26, 2005.
Note 5: Approved in the Jing-Shou-Shang No. 09501191390 Letter from the Ministry of Economic Affairs dated August 28, 2006.
Note 6: Approved in the Jing-Shou-Shang No. 09601086420 Letter from the Ministry of Economic Affairs dated April 24, 2007.
Note 7: Approved in the Jing-Shou-Shang No. 09601151490 Letter from the Ministry of Economic Affairs dated July 4, 2007.
Note 8: Approved in the Jing-Shou-Shang No. 09601230910 Letter from the Ministry of Economic Affairs dated September 19, 2007.
Note 9: Approved in the Jing-Shou-Shang No. 09601251720 Letter from the Ministry of Economic Affairs dated October 16, 2007.
Note 10: Approved in the Jing-Shou-Shang No. 09601321820 Letter from the Ministry of Economic Affairs dated January 4, 2008.
Note 11: Approved in the Jing-Shou-Shang No. 09701084940 Letter from the Ministry of Economic Affairs dated April 11, 2008.
Note 12: Approved in the Jing-Shou-Shang No. 09701226650 Letter from the Ministry of Economic Affairs dated September 5, 2008.
Note 13: Approved in the Jing-Shou-Shang No. 09701262270 Letter from the Ministry of Economic Affairs dated October 17, 2008.
Note 14: Approved in the Jing-Shou-Shang No. 09801016130 Letter from the Ministry of Economic Affairs dated February 4, 2009.
Note 15: Approved in the Jing-Shou-Shang No. 09801016130 Letter from the Ministry of Economic Affairs dated February 4, 2009.

Note 16: Approved in the Jing-Shou-Shang No. 09801052300 Letter from the Ministry of Economic Affairs dated March 18, 2009.
Note 17: Approved in the Jing-Shou-Shang No. 09801161450 Letter from the Ministry of Economic Affairs dated July 24, 2009.
Note 18: Approved in the Jing-Shou-Shang No. 09801183550 Letter from the Ministry of Economic Affairs dated August 13, 2009.
Note 19: Approved in the Jing-Shou-Shang No. 09801244400 Letter from the Ministry of Economic Affairs dated October 21, 2009.
Note 20: Approved in the Jing-Shou-Shang No. 09901001160 Letter from the Ministry of Economic Affairs dated January 8, 2010.
Note 21: Approved in the Jing-Shou-Shang No. 10101182680 Letter from the Ministry of Economic Affairs dated August 31, 2012.
Note 1: Information of the current year up to the publication date of the Annual Report shall be provided.
Note 2: For any capital increase, the effective (approval) date and the document number shall be added.
Note 3: Shares traded below par value shall be indicated in a clear manner.
Note 4: Capital increase by currency debts or technology shall be stated and the type and amount of assets involved in such capital increase shall be noted.

Note 5: Private fundraising shall be specified in a clear manner.

(II) Categories of outstanding shares

April 11, 2021

			April	11,2021
Category of shares		Authorized capital		Remarks
	Outstanding shares (listed)	Unissued shares	Total
Registered common shares	250,929,732	49,070,268	300,000,000	-

Note: Please indicate whether the shares are issued by a company listed on the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) (Shares with restrictions on trading on the TWSE or those traded on TPEx shall be noted).

(III) Information on shelf registration: Not applicable.

II. Shareholders

					April 11,2021	April 11,2021
Shareholders Quantity	Government institutions	Financial institutions	Other corporations	Foreign institutions and foreigners	Individuals	Total
Persons	2	8	143	192	35,498	35,843
Shares held (shares)	351,009	9,249,462	48,657,408	56,129,264	136,542,589	250,929,732
Shareholding ratio(%)	0.14	3.69	19.39	22.36	54.42	100.00

Note: Companies primarily listed on the TWSE or the TPEx shall disclose the proportion of their shares held by investors from Mainland China. Investors from Mainland China refer to natural persons, legal persons, organizations, institutions or companies in areas other than Taiwan and Mainland China that are invested by persons of such identity as defined in Article 3 of the Regulations Governing Investment of Mainland Chinese in Taiwan.

III. Shareholding distribution status

			April 11,2021
Shareholding classification	Number of shareholders	Shares held (shares)	Shareholding ratio
1 to 999	12,474	1,185,334	0.47 %
1,000 to 5,000	19,450	38,600,740	15.38 %
5,001 to 10,000	2,213	17,766,288	7.08 %
10,001 to 15,000	566	7,272,376	2.90 %
15,001 to 20,000	367	6,837,420	2.73 %
20,001 to 30,000	281	7,283,528	2.90 %
30,001 to 40,000	134	4,891,403	1.95 %
40,001 to 50,000	75	3,499,560	1.40 %
50,001 to 100,000	129	8,870,260	3.54 %
100,001 to 200,000	68	9,732,445	3.88 %
200,001 to 400,000	35	9,885,145	3.94 %
400,001 to 600,000	14	6,724,082	2.68 %
600,001 to 800,000	6	4,082,455	1.62 %
800,001 to 1,000,000	3	2,797,000	1.11 %
More than 1,000,001	28	121,501,696	48.42 %
Total	35,843	250,929,732	100.00%

Preferred shares: None.

IV. List of major shareholders

List of major shareholders	List of major shareholders
		April 19,2020
Shares Name of major shareholder	Shares held (shares)	Shareholding ratio
KuangShengInvestment Development Co.,Ltd.	19,150,000	7.63%
Yo Yuan Investment Corporation	14,825,000	5.91%
Fu-IngHongChen	14,670,000	5.85%
Yin-Su Hong	10,457,000	4.17%
Chunghwa Post Co.,Ltd.	5,736,000	2.29%
Aberdeen Standard SICAV I -Asian Smaller Companies Fund under the custodyof HSBC	5,172,000	2.06%
Nice Enterprise Co.,Ltd.	4,006,813	1.60%
Ching-Shen Hong	3,612,000	1.44%
Stichting Depositary APG Emerging Markets Equity under the custody of JP Morgan Chase Bank Taipei Branch	3,598,000	1.43%
Acadian Emerging Markets SME Equity Fund under the trust of HSBC(Taiwan)	3,550,000	1.42%

V. Market price per share, net worth, earnings, dividends, and the related information for the last two years

Item	Year	Year	2018	2020	As of March 31, 2021(Note 8)
Market price per share(Note 1)	Highest		48.70	68.50	57.40
	Lowest		29.00	27.60	48.80
	Average		39.92	52.68	53.62
Net value per share (Note 2)	Before distribution		16.85	18.31	-
	After distribution		-	-	-
Earnings per share	Weighted average number of shares(in thousands)		250,930	250,930	250,930
	Earnings per share(Note 3)		2.71	3.39	0.37
Dividends per share (NT$)	Cash dividends		2.00	(Note 9)2.40	-
	Stock dividen ds	-	-	-	-
		-	-	-	-
	Cumulative unpaid dividends(Note 4)		-	-	-
Return on investment analysis	PE ratio(Note 5)		13.86	14.88	-
	Price-dividend ratio(Note 6)		18.78	21.01	-
	Cash dividend yield(Note 7)		5.33%	4.76%	-

＊ If retained earnings or capital reserves were used for capital increase, the Company shall disclose market prices and cash dividends that were retroactively adjusted based on the number of shares after distribution.
Note 1: List the highest and lowest market price of common shares for each fiscal year and calculate the average market price for each fiscal year based on trading value and volume in each fiscal year.
Note 2: Please fill these rows based on the number of shares that have been issued at the end of the fiscal year and the distribution plan approved at the shareholders' meeting in the following fiscal year.
Note 3: If retroactive adjustments are required due to stock grants, the Company shall list the earnings per share before and after the adjustment.
Note 4: If there are any conditions in issuing equity securities that allow for unpaid out dividend for the year to be accumulated to subsequent years in which there is profit, the Company shall separately disclose the accumulated unpaid out dividend up to that year.
Note 5: P/E Ratio = Average closing price for each share for the year/earnings per share
Note 6: P/D Ratio = Average closing price for each share for the year/cash dividend per share
Note 7: Cash dividend yield = cash dividends / average closing price per share for the year.

Note 8: Data on net asset value per share and earnings per share from the latest quarter that has been verified by CPAs up to the date of publication of this annual report shall be filled. For all other columns, the Company shall fill information for the current fiscal year until the publication date of this annual report.
The earnings per share for the first quarter of 20210 are provided by the Company.
Note 9: The 2020 earning distribution case is to be approved by the shareholders' meeting.

VI. Dividend policy and implementation status

(I) Dividend policy established in the Articles of Incorporation
The Board of Directors shall, pursuant to Article 29 of the Articles of Incorporation,
determine the distribution of dividends and formulate appropriate ratios of cash and stock dividends based on requirements for operations and capital expenditures. It shall file a proposal to the shareholders' meeting for approval. However, cash dividends shall not be lower than 20% of the distributed amount in the year.
(II) Proposed dividend distribution in the shareholders' meeting this year
The Company's 2020 earnings distribution proposal was approved by the Board of
Directors on March 11, 2021. The Company shall issue cash dividends of NT$2.4 per share. The Board of Directors shall be authorized to establish an ex-dividend date.
(III) Any expected material changes to the dividend policy shall be explained. There are no material changes to the Company's dividend policy.

VII. The effects of the stock dividends proposed by the shareholders' meeting on the Company's business performances and earnings per share

The Company has no plans for granting stocks in this shareholders' meeting and it is not required to compile a financial forecast for 2021. Therefore, it does not have related estimates on the profit or loss, estimated earnings per share, or other mandatory items with which to evaluate the impact on the Company's business performance and earnings per share.

VIII. Remuneration of employees, directors and supervisors

(I) Quantity or scope of compensation for employees, Directors, And Supervisors as prescribed by the Articles of Incorporation
In the event the Company makes a profit during the fiscal year, it shall set aside no less than 2% of the profits as employee remuneration and no more than 5% as remuneration for Directors. However, a sum shall be set aside in advance to pay down any outstanding cumulative losses.
The employee, director and supervisor remuneration shall be distributed in the form of stock or cash. The distribution shall be approved with a majority vote at a meeting attended by more than two thirds of the Directors and shall be reported at the shareholders' meeting.
The distribution of employee remuneration in stocks or cash shall include employees of affiliated companies that meet the criteria specified in the Company Act.
(II) The basis for estimating the amount of employee, director, and supervisor remuneration, for calculating the number of shares to be distributed as employee remuneration, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:
The Company appropriates remuneration for employees and Directors proportionally

based on the profitability. As the remuneration for employees and Directors are distributed in cash, the calculation of the number of shares is not required. In addition, there is no difference between the actual number of distributed funds and the estimated amount.

(III) Information on the distribution of employees' remuneration passed by the Board of Directors
The distribution of remuneration for employees and Directors passed by the Board of Directors on March 11, 2021 is as follows: (no discrepancy with the estimated amount)

Remuneration for employees - cash NT$ 23,500,000 Remuneration for employees - stocks NT$ 0 Director's remuneration NT$13,000,000

The proposed employee stock remuneration allocation as a ratio of the net income for the period and the total employee remuneration: 0.

(IV) Actual appropriation of remuneration for employees, Directors and Supervisors in the previous year
The actual remuneration for employees - cash of NT$18,619,000 distributed in the previous year was the same as the estimated amount in the proposal passed by the Board of Directors. The actual remuneration for Directors in cash of NT$10,500,000 distributed in the previous year was the same as the estimated amount in the proposal passed by the Board of Directors.

IX. Buyback of treasury stock None.

X. Corporate bond issuance status: None.
XI. Issuance of preferred stocks: None.
XII. Issuance of global depositary receipts (GDR): None.

XIII. Exercise of employee stock option plan (ESOP): None.

XIV. Restricted stock awards: None.
XV. Mergers, acquisitions or issuance of new shares for acquisition of shares of other companies: None.
XVI. Implementation of capital allocation plan: None.

E. Business Overview

I. Business activities

(I) Business scope
Main businesses
- (1) Cooling fans, cooling modules, and drum fans
- (2) Related components for fans
- (3) Materials and components
Proportion of major business activities

Proportion of major business activities
Business category	Proportion of 2020
	revenue
DC cooling fans, cooling modules, and drum	82.9%
fans
AC cooling fans	7.6%
Materials and components	9.5%
Total	100.0%

The Company's current products
(1) Fans

DC cooling fans, drum fans

AC cooling fans, drum fans EC fans

Mighty Mini Fan High-grade IP protection fan Explosion prevention fans

  - (2) Motors

     - DC automotive brushless motor

     - EC high-efficiency motor

  - (3) Fan Tray products

  - (4) Cooling module

  - (5) Green building ventilation fan/Flow2 One-AHR ventilation fan

  - (6) High-volume low-speed (HVLS) large industrial ceiling fans

New products under development
- (1) Low-noise and low-vibration DC fan product development
- (2) Energy efficient high-volume low-speed (HVLS) large industrial ceiling fans
- (3) High-efficiency large EC fans
- (4) High-power energy-efficient power motor development
(II) Industry Overview
Current trends and outlook of the industry

As the computing and networking functions of electronic, communication, and portable products continue to increase, the temperature of these products during use also continues to increase. Under such trends, products have become increasingly compact and equipped with powerful display and processing capacity. The consumers' demand and product development trends have set the stage for the greatest opportunities in the heat dissipation application industry. In addition, the rise of social network websites, e- commerce, communication software, and virtual reality devices in recent years has brought forth strong demand for servers, communication, cloud computing, and cloud storage equipment and micro cooling fans and contributed to substantial growth in the cooling components market. The hardware components of cooling solutions mainly include cooling fans, cooling fins, heat pipes, and thermal pads. The diverse applications for various cooling components include computers, servers, communication, consumer electronics, automotive electronics, industrial equipment, and optoelectronic industry. The computer industry has the highest demand for heat dissipation solutions. Taiwanese companies have obtained most of the OEM purchase orders from the computer and electronic equipment industry. It therefore has advantages in the development of the heat dissipation industry and it has the largest demand and supply of cooling components.

The continuous updates of electronics products have fueled the growth of heat dissipation products as demand continued from computer, communication, servers, and consumer electronics as well as new applications such as automotive electronics, handheld electronics products, virtual reality, IoT, artificial intelligence, and highperformance computing. Heat dissipation component manufacturers therefore actively increase their production scale to expand their market share. In addition, the increase in the speed and performance of electronic products means increased demand for heat dissipation and also pushes companies to continue to enhance R&D capacity and launch high-level heat dissipation products to satisfy functional demands of new applications and products. They also work hard to develop niche products and increase profitability.

Relationships with suppliers in the industry's supply chain

Cooling fans and cooling modules are built with complicated components. Related upstream industries include plastic materials, axles, steel, copper materials, metal stamping, aluminum casting, molds (stamping, die casting, and plastic injection and forming), copper wires, semiconductors, IC, PCBs, and passive components. Downstream applications are also diverse. All spaces that require ventilation would require cooling fans and sectors include the IT industry, network communications equipment, optoelectronics, home video equipment, industrial and commercial equipment, and automotive electronics industries.

Cooling fans are widely used in upstream and downstream industries and there are no strong relations between cooling fans and any singular industry.

Product development trends and competition
(1) Product development trends

A. Ongoing expansion of applications

The heat dissipation market started with applications for personal computers (including desktop and notebook computers) and network communications equipment. As technology progresses and electronic products continue to improve, applications were expanded to consumer electronic products such as handheld projectors, tablet computers, and virtual reality devices. In automotive electronics applications, the requirements for heat dissipation expanded from the vehicle media entertainment system to the cockpit, power system, headlights, wireless charging board, ADAS, and autonomous driving control systems. As building laws are updated and the air quality issue in Mainland China and nearby areas became the focus of attention, applications in related products for green building and air cleaning began to rise.

B. Enhanced functions and high cooling efficiency

As each generation of CPUs are replaced at ever higher speed, cooling component manufacturers must use design improvements and R&D in materials to develop cooling solutions that can dissipate heat at high watts quickly and provide high efficiency, long durability, low noise, low vibration, low energy consumption, low starting voltage, high torque, high temperature resistance, and dust-proof capabilities to resolve product cooling issues.

C. Slim designs

The product design of cooling components continues pursue the goals of "light, slim, short, and small" and the thickness of mainstream specifications continues to become slimmer. For instance, the thickness of cooling fans for laptop computers has progressed from 10mm to 5.2mm. New models even require less than 3mm and we continue to develop even slimmer cooling components.

D. Environmental protection and energy conservation

Awareness of environmental protection issues has increased and it has become an important trend for product development. In addition to compliance with RoHS standards, certain customers have already stipulated requirements that products main not contain fluorine or halogens. Product power consumption and performance have also become key to future designs. To meet environmental protection requirements, products must meet high-performance, energy-efficient, and lowcarbon emissions standards. More rigorous environmental protection laws in the future will drive customers to adopt more energy efficient components and these trends will power new growth of the Company's products.

(2) Product competition

The competition of heat dissipation components in various application industries is divided into standard products and project products. Competition for standard products is governed by the highest guiding principles of "reliability", "price", and "channel penetration". Standards products have no material differences in terms of

performance and customer choose suitable products based on prices and requirements for reliability. The Company maintains a good brand image and product reliability and our products are usually those with the highest customer demand. In terms of channel operations, the Company has more than one thousand sales representatives and distributors across the world to achieve the highest market penetration rate. In terms of project products, "coordinated design capacity", "technical intensification level", and "customer satisfaction" are the highest guiding principles. The Company must design solutions with customers during the initial stages of product design. We usually face unprecedented specifications and technical demands for cooling and our design capabilities and technology intensification have become our best advantages. After products receive customer certification, the key to competition is determined by the Company's production and operation capacity, scale of mass production, and our ability to lower cost and serve customers.

(III) Overview of technology and R&D

Year Item	2020	January 1 to March 31, 2021
Research spending (thousand NT$)	823,314	219,183
Proportion of R&D expenses in business revenue (%)	6.4%	7.2%
Successfully developed technologies and products	1. IOT energy-efficient durable fans 2. High-protection durable energy-efficient fans 3. Safe weatherproof and intelligent control industrial ceiling fans 4. High air volume low-noise centrifugal fans 5. Ultra-thin high-performance ultra-quiet fans 6. Vehicle-mounted intelligent cooling fans 7. High-heat dissipation low- noise cooling fans for gaming 8. High-performance cold-water cold panel module design and development 9. Flow2 One-AHR Ventilation Fan intake product	1. Development of vehicle- mounted heat dissipation devices 2. Water-cooling system development for high- performance computing systems 3. Development of heat dissipation devices for 5G base stations 4. Development of fans with autonomous health diagnosis 5. Development of gravity- resistant low-heat resistant heat dissipation module

(IV) Long- and short-term business plans

1. Short-term business plan

The rise of new technologies such as cloud computing, blockchain, and big data has contributed to growth in the IoT, IoV, and AI industries in recent years. In response to the advancement of the CPU technologies and advancement of communication equipment from 4G to 5G, the Company's primary goal is to continue to expand operations in the server and communication equipment sector. We shall use the Company's technology advantages and market share in this sector for more active expansion. The next sector consists of automobile applications. Although the overall automobile market in Taiwan does not exhibit growth, the rapid digitalization of vehicle functions has led to rapid increases in the amount of cooling equipment used on each vehicle. Therefore, automobile applications are the second priority for the Company's investment. The Company has entered the automobile supply chain for years. The automobile supply chain has high technical entry barriers and long certification periods. We can use our advantages to expand our lead. In terms of operations in regional markets, the Company shall focus on the deployment of sales resources in India and Germany to expand sales

and improve sales performance.

Long-term business development plans
(1) The Company shall replenish human resources for sales in all channels and intensify the development of global channels. We shall also implement KPI management and project management for sales personnel and channel distributors to improve project success rates and sales performance.
(2) The Company shall strengthen the development of cooling module products and integrate active and passive cooling component technologies. We shall develop water cooling technologies and expand products on a greater level to improve overall competitiveness.
(3) The rapid growth in IoT, 5G communications equipment, cloud computing equipment, artificial intelligence, and high-performance computing has filled each sector with development opportunities for new products and new applications. The Company shall expand investment in R&D in these sectors to maintain lead in technologies and products and consolidate our leading position in the market.
(4) The Company shall pay attention to opportunities for other applications for core technologies such as market opportunities in green buildings and air cleaning and expand the applications for technologies and products.
(5) The Company shall respond to future environmental and energy conservation regulations to demonstrate the superior technologies and advantages of the efficiency of the Company's motors and develop new products and new markets.

II. Market, production and sales

(I) Market analysis
Sales regions of main products

Year Region	2020	2019
Asia	77.2%	75.6%
Europe	16.9%	19.0%
America	4.8%	4.6%
Others	1.1%	0.8%
Total	100.0%	100.0%

2. Market share and future supply, demand, and growth

(1) Market share

According to the latest "Comprehensive Precision Small Motor Market Survey" published by the Fuji Keizai, the Company ranks among the top three leading brands of all surveyed companies across the world in terms of shipment and market share. The Company is expected to maintain its leading position in the world in 2021. The COVID-19 epidemic in 2020 created lifestyles involving remote work, learning, and entertainment, and increased the demand for laptop computers and network

connections in the market. Sunonwealth has focused on the laptop computer market for years and provides the best heat dissipation solutions for all consumer, high-end business, and gaming laptop brands across the globe. We expect the revenue from related heat dissipation products in the industry to continue to grow by 20% in 2021.

Sunonwealth attained approximately 25% of global market share for products for server applications and we ranked among the top three manufacturers. The Company is also the main supplier for Google, the top three global cloud computing service providers (Amazon AWS, Microsoft Azure, and Facebook), and the BAT Alliance in Mainland China. In terms of 5G telecommunication equipment such as routers and switches, we are the top three suppliers of the largest network equipment manufacturer in the United States and the main provider of heat dissipation solutions for the top communication equipment manufacturer with the highest market share in the global 5G market. In response to the two future waves of 5G and WiFi 6 upgrades, Sunonwealth will also become a main heat dissipation solution supplier for WiFi 6 devices.

As the electric vehicles and autonomous vehicles rapidly penetrate global markets, Sunonwealth's fan products have been adopted in the air quality sensors, 5G network connection devices, and advanced driver assistance systems of cars made by major automobile manufacturers. As a result, shipments of automotive products continued to grow and they accounted for approximately 5% of the overall revenue in 2020. As vehicle products are supplied over a long period of time, they are expected to provide Sunonwealth with stable long-term revenue.

(2) Future market supply, demand, and future growth

Construction of data centers has increased with rapid development in cloud computing and e-commerce and demand for servers and communications equipment has grown rapidly in recent years. Artificial intelligence fueled growth in high-speed computing and new energy vehicles and ADAS and autonomous driving in various stages have increased the demand for cooling applications. These new applications require more complex and high-efficiency cooling solutions. As technical barriers remain high, there is currently no large-scale supply. In the more mature IT market, the growth in demand from low-end desktop computers and consumer laptop computers remains confined with oversupply. With low prices and low profitability, the Company has gradually shifted its focus from such markets. However, demand for more high-end cooling solutions continues to increase in high-end and ultra-thin business or gaming laptop computers and the demand has increased rapidly. For instance, metal fans that increase heat dissipation performance have contributed to a state of oligopoly supply due to high technology barriers.

Competitive niches
(1) Our own brand "SUNON" retains leading market positions and an excellent brand image.

(2) The Company retains the most patents and intellectual properties in the industry which increases the entry barriers of the industry.
(3) We have strong capacity for coordinated design with system manufacturers, rapid response speed, and strong customized manufacturing capabilities.
(4) Our diverse range of products satisfy different demands of different customers.
(5) Products have simple structures and are easy to assemble. We have large production scale with high production efficiency and low production costs.
(6) Highest level of vertical integration and comprehensive key components and technologies.
(7) Dense network of distribution channels to provide the broadest and fastest response to customer demands.

Favorable and unfavorable factors to long-term development and response measures

Favorable factors

CPU computing performance and energy consumption improvement increase the operating temperature and fuel the demand for high-density high-end cooling products.
Demand for computing and cooling continues to increase and market demand remains stable and strong.
Customers begin to demand slimmer and high-performance cooling products and the development favors those with leading technologies.
More rigorous environmental protection and energy conservation laws encourage customers to switch to more energy-efficient high-performance motors and fans.
Development in IoT, AI, 5G communication equipment, and high-performance computing generate more demand.
Update of server platforms to the Purley architecture requires more sophisticated cooling solutions.

Favorable and unfavorable factors to long-term development and response measures	Favorable and unfavorable factors to long-term development and response measures
Favorable factors
1. CPU computing performance and energy consumption improvement increase the operating temperature and fuel the demand for high-density high-end cooling products. 2. Demand for computing and cooling continues to increase and market demand remains stable and strong. 3. Customers begin to demand slimmer and high-performance cooling products and the development favors those with leading technologies. 4. More rigorous environmental protection and energy conservation laws encourage customers to switch to more energy-efficient high-performance motors and fans. 5. Development in IoT, AI, 5G communication equipment, and high-performance computing generate more demand. 6. Update of server platforms to the Purley architecture requires more sophisticated coolingsolutions.
Unfavorable factors	Response measures
1. The appreciation of the NTD affects revenue and margins	1-1. It increases the cost of material purchases and the amount of USD used for settlement of operating expenses and offsetting revenue 1-2. Pay close attention to exchange rate trends and make flexible use of exchange settlement time
2. Increase in labor costs in China and high labor turnover increase production costs	2-1. Speed up the introduction of automated production equipment and fixture tools and reduce demand for human labor 2-2. Streamline the production line organization and layout to reduce use of manpower 2-3. Initiate research on actions, time, and methodology to improve the balance, efficiency, and productivity on the production line
3. Increase in prices of raw materials	3-1. Reduce the number of suppliers and introduce prioritized supplier name list system to increase the transaction volume with suppliers and use quantity to control prices 3-2. Increase the materials delivery schedules for suppliers 3-3. Reduce the number of purchase orders and increase the volume inpurchase orders

(II) Application and production of main products

Important applications of main products

Applications	Applicationproducts
Computer and office equipment industry	Mining machines, gaming CPU coolers, DT/AIO CPU coolers, graphics card/IC coolers, notebook computer coolers, hard disk boxes, uninterruptible power supply systems, (micro) projectors, workstations, photocopiers,mini computers
Server and communication industry	Server system/power supply, workstation system/power supply, telecommunication equipment, network communication equipment,storage disc arrays
Industrial and medical equipment industry	Industrial equipment, freezing equipment, measurement equipment, vending machines, ATMs, public information stations, cash registers, security surveillance equipment, drones, medical equipment
Household electrical appliance industry	Game consoles, video streaming devices, STB video converters, digital video recorders, LCD/LED TVs, stereo equipment, kitchen equipment, air-conditioning, refrigerators, microwave ovens,induction cookers
Automotive electronics industry	LED lights, car chiller and air-conditioning systems, car air- conditioning sensors, car seat ventilation systems, car information, communication, and entertainment equipment, DC/DC converters in car battery boxes, camera systems, ADAS, ECU,HUD

2. Production process of main products

Production process chart of cooling fans and cooling modules

==> picture [512 x 536] intentionally omitted <==

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

Frame and cable- Assembly of frame and coils
winding sleeve
Rivet and cabling
Fan blade forming
Metal tube drilling
SMT and PCB
combination
Installation of the positioning ring Magnetization of fan blades
Electrical conductor
Assembly of fan blades and frame Fan blade balancing
Assembly of fan blade
finished products Installation of the bearing, clamping
ring, and centering lid
Cooling fan
finished
products
Heat pipes
Cooling fins
Thermal pads
Cooling module
finished
products
----- End of picture text -----

(III) Supply status of primary raw materials

Supplystatus ofprimary	raw materials
Main materials	Supplystatus
Plastic materials	Stable source with supply price fluctuations tied to crude oil prices
IC	Developed in collaboration with IC design companies; stable source with supply prices tied to the semiconductor industry
Passive components	Prices have stabilized and are nowgraduallydeclining
Bearings	Stable source with supply price fluctuations tied to steel prices
Enameled wire	Stable source with supply price fluctuations tied to copper prices
Stamping parts	Stable source with supply price fluctuations tied to steel prices
Machining equipment parts	Stable source with supply price fluctuations tied to steel prices
Heat pipes	Stable source with supply price fluctuations tied to copper prices
Aluminum casting boards	Stable source with supply price fluctuations tied to aluminumprices

(IV) Customers who accounted for more than 10% of the purchase (sales) in any of the last two year
Suppliers who accounted for more than 10% of the total purchases in any of the last two years: None
Customers who accounted for more than 10% of the total sales in any of the last two years: None
(V) Production volume and value for the last two years

Table of production volume and value for the last two years

Unit: thousand units/thousand NT$

				Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$
Year Production volume and value Main product (or department)	2019			2020
	Production capacity	Production volume	Production value	Production capacity	Production volume	Production value
AC fans	8,100	4,566	531,829	8,400	6,318	656,166
DC fans	205,690	123,004	7,230,049	207,600	141,953	8,159,114
Total	213,790	127,570	7,761,878	216,000	148,271	8,815,280

Note 1: Production capacity refers to the volume of product that can be produced by the Company using existing production equipment and under normal operation, after taking into consideration factors such as necessary downtime, holiday, etc. Note 2: Substitutable production capacity may be included in the production capacity and be stated in the note.

(VI) Sales volume and value for the last two years

Table of sales volume and value for the last two years

Unit: thousand units/thousand NT$

					Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$	Unit: thousand units/thousand NT$
Year Sales volume and value Mainproduct	2019				2020
	Domestic sales		Exports		Domestic sales		Exports
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
AC fans	419	49,862	4,295	646,905	316	39,676	5,967	780,184
DC fans	19,089	1,376,290	100,455	9,482,781	22,894	1,799,388	110,784	10,069,539
Sale of materials	-	1,489	-	102,588	-	776	-	91,718
Total	19,508	1,427,641	104,750	10,232,274	23,210	1,839,840	116,751	10,941,441

III. Employee information

Employee information for the last two years till the publication date of the Annual Report

Report
	Year	2019	2020	As of March 31, 2021(Note)
Number of employees	Directemployees	5,826	6,519	6,923
	Indirectemployees	2,234	2,422	2,384
	Other employees	21	14	17
	Total	8,081	8,955	9,324
Averageage (year)		29	30	31
Average	years ofservice	2.82	2.60	2.24
Academic qualifications	PhD	0.1%	0.1%	0.1%
	MA	2.1%	2.5%	0.1%
	University/College	10.9%	9.8%	2.3%
	Senior high school	10.8%	15.2%	10.1%
	Below high school	76.1%	72.4%	16.1%

Note: Information of the current year up to the publication date of the Annual Report shall be provided.

IV. Environmental protection expenditure information

The Company has not incurred losses, compensation, or penalties as a result of environmental pollution. The Company places great emphasis on environmental protection and energy conservation in product design and R&D and we adopt green designs that reduce consumption of components and save energy and electricity. The production process requires complete compliance of suppliers with the related substance control declaration standard for the environment in RoHS directive in terms of the production process and raw materials. We expressly specify regulations on prohibited substances and we the product R&D process must also meet environmental protection requirements.

The Company received ISO 14001, ISO 9001, OHSAS 18001, IECQ QC080000, IATF 16949, and EICC certification for environmental management system and quality systems. We also served as green environmental protection partners for major companies such as Sony, Canon, and Samsung. These records demonstrate the Company's commitment to environmental protection.

The results of environmental protection inspections and labor inspections did not show any violation of environmental protection laws and regulations or the Labor Standards Act.

V. Employees-employer relations

The Company's labor conditions are processed in accordance with the Labor Standards Act. We established the "Employee Welfare Committee" to organize employee welfare affairs. Certain welfare measures are superior to requirements set forth in the Labor Standards Act. We protect employee interests and there have been no losses as a result of disputes between employees and the employer.

(I) Employee welfare measures, continuing education, training, retirement system and their status of implementation, as well as agreements between the employer and employees and measures for protecting employee rights and interests
The Company has comprehensive employee welfare measures and salaries include bonuses for the three Chinese festivals, birthdays, weddings, funerals, childbirth, performance bonus, and year-end bonus. We also provide group insurance, regular health inspections, employee travel subsidies, family day events, and club activities.
With regard to continuing education and training implementation, the Company provides comprehensive training for new recruits to enhance their understanding of company products and related regulations and increase their approval of the corporate culture. We also arrange various professional training courses and management training in accordance with the Company's annual plans to encourage employees and increase their sense of cohesion so that they can grow with the Company and achieve goals together.
With regard to the retirement system and implementation status, the Company follows related regulations in the Labor Standards Act and established the Employee Retirement Regulations. For employees who opt for the old pension system, the Company appropriates pension reserves within 2% of the actual salary and deposit it into the dedicated account in the Central Trust of China. Pension is paid from this account and the Company provides supplementary payment for any shortfall when the pension is paid. For employees who opt for the new pension system, the Company sets aside 6% of the salary as pension. The parts proposed by employees are deposited in accordance with their wishes within the legal specified scope.
Status of agreements between employees and the employer: None.
(II) Losses arising as a result of labor disputes in the recent year up until the publication date of this annual report: None.

VI. Important contracts

Nature of the contract	Contracting parties	Commencement date/expiration date	Main contents	Restriction clauses
Land use rights assignment contract	Kunshan Economic and Technological Development Zone Agriculture, Industry, and Business Corporation	2000.10.27~ 2050.09.14	Land use rights to 48,688 square meters of land to the north of Nanbin Road in Kunshan Economic and Technological Development Zone	None
Land use rights assignment contract	Hermosa Ecozone Development Corporation	2020.06.30~ 2095.06.29	Land use rights for 137,096 square meters of land in Lot 1 Block 12, Hermosa Ecozone Industrial Park for construction of plants.	None

F. Financial Overview

I. Condensed balance sheet and statement of income for the last five years

(I) Condensed balance sheet and statements of income
Condensed balance sheet - International Financial Reporting Standards (consolidated financial report)

Unit: thousand NT$

							Unit: thousand NT$
Year Item		Financial information for the most recent five years (Note 1)					Current year up to March 31, 2021 Financial information (Note 3) (self-assessed)
		2016	2017	2018	2019	2020
Current assets		5,925,839	6,256,831	6,378,539	6,611,713	7,392,164	7,442,817
Property, plant and equipment (Note2)		2,182,209	2,293,868	2,377,611	2,277,290	2,105,535	2,179,694
Intangible assets		19,051	21,988	23,506	18,954	25,781	28,115
Other assets (Note 2)		4,691	2,211	2,968	2,433	11,902	17,106
Total assets		8,391,141	8,813,469	8,971,556	9,439,298	10,419,061	10,566,611
Current liabilities	Before distribution	4,199,784	4,199,784	4,477,209	4,632,633	4,933,346	4,937,823
	After distribution	4,776,922	4,776,922	4,979,068	5,134,492	Note 4	-
Non-current liabilities		460,232	439,636	354,976	577,887	891,586	958,743
Total liabilities	Before distribution	4,324,176	4,639,420	4,832,185	5,210,520	5,824,932	5,896,566
	After distribution	4,826,035	5,216,558	5,334,044	5,712,379	Note 4	-
Equity attributable to owners of parent company		4,032,486	4,140,211	4,139,371	4,228,778	4,594,129	4,670,045
Capital stock		2,509,297	2,509,297	2,509,297	2,509,297	2,509,297	2,509,297
Capital surplus		365,706	365,706	366,903	366,903	366,903	366,903
Retained earnings	Before distribution	1,240,340	1,392,319	1,427,880	1,612,853	1,960,024	2,052,743
	After distribution	738,481	815,181	926,021	1,110,994	Note 4	-
Other equity		-82,857	-127,111	-164,709	-260,275	-242,095	-258,898
Treasury stock		-	-	-	-	-	-
Non-controlling interests		34,479	33,838	-	-	-	-
Total equity	Before distribution	4,066,965	4,174,049	4,139,371	4,228,778	4,594,129	4,670,045
	After distribution	3,565,106	3,596,911	3,637,512	3,726,919	Note 4	-

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.

＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below. Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2016 to 2020 have been audited by CPAs. The financial information from the first quarter of 2021 is provided by the Company.
Note 2: The implementation date and reappraised value of assets that have been reappraised in the current year shall be disclosed.

Note 3: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.
Note 4: Please fill in the numbers after distribution based on the circumstances of the shareholders' meetings for the following year.
The 2020 earning distribution case is to be approved by the shareholders' meeting. Therefore, the amounts for after the distribution have not been established.
Note 5: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.

Condensed balance sheet - International Financial Reporting Standards (parent company only financial report)

Unit: thousand NT$

							Unit: thousand NT$
Year Item		Financial information for the most recent five years (Note 1)					Financial data in the current year up to March 31, 2021 (Note 3)
		2016	2017	2018	2019	2020
Current assets		2,939,676	3,295,852	3,512,269	3,520,758	3,504,269	Not applicable.
Property, plant and equipment (Note2)		1,004,916	1,027,463	1,062,632	1,062,832	1,039,525
Intangible assets		7,076	8,890	12,904	9,853	17,792
Other assets (Note 2)		-	-	-	-	-
Total	assets	6,907,908	7,097,901	7,385,451	7,630,039	8,103,396
Current liabilities	Before distribution	2,430,777	2,532,504	2,893,410	3,038,815	2,809,130
	After distribution	2,932,636	3,109,642	3,395,269	3,540,674	Note 4
Non-current liabilities		444,645	425,186	352,670	362,446	700,137
Total liabilities	Before distribution	2,875,422	2,957,690	3,246,080	3,401,261	3,509,267
	After distribution	3,377,281	3,534,828	3,747,939	3,903,120	Note 4
Equity attributable to owners of parent company		4,032,486	4,140,211	4,139,371	4,228,778	4,594,129
Capital stock		2,509,297	2,509,297	2,509,297	2,509,297	2,509,297
Capital surplus		365,706	365,706	366,903	366,903	366,903
Retained earnings	Before distribution	1,240,340	1,392,319	1,427,880	1,612,853	1,960,024
	After distribution	738,481	815,181	926,021	1,110,994	Note 4
Other	equity	-82,857	-127,111	-164,709	-260,275	-242,095
Treasury stock		-	-	-	-	-
Non-controlling interests		-	-	-	-	-
Total equity	Before distribution	4,032,486	4,140,211	4,139,371	4,228,778	4,594,129
	After distribution	3,530,627	3,563,073	3,637,512	3,726,919	Note 4

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.

The financial data from 2016 to 2020 have been audited by CPAs.

Note 2: The implementation date and reappraised value of assets that have been reappraised in the current year shall be disclosed. Note 3: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.

Note 4: Please fill in the numbers after distribution based on the circumstances of the shareholders' meetings for the following year.
The 2020 earning distribution case is to be approved by the shareholders' meeting. Therefore, the amounts for after the distribution have not been established.
Note 5: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.

3. Condensed consolidated income statement - International Financial Reporting Standards (Consolidated Financial Report)

Unit: thousand NT$

Year Item	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial data in the current year up to March 31, 2021 (Note 2)
	2016	2017	2018	2019	2020
Operating revenue	10,690,822	10,946,728	11,965,298	11,659,915	12,781,281	3,030,280
Gross profit	2,398,422	2,454,464	2,401,535	2,578,613	2,998,042	529,049
Operating income/loss	695,434	755,904	601,549	787,252	1,114,211	60,673
Non-operating income and expenses	137,175	86,181	182,276	122,472	-25,808	47,528
Net income before tax	832,609	842,085	783,825	909,724	1,088,403	108,201
Net income from continuing operations	578,812	663,416	607,683	680,801	851,650	92,719
Loss from discontinued operations	-	-	-	-	-	-
Net profit of the term (loss)	578,812	663,416	607,683	680,801	851,650	92,719
Other comprehensive income of the period (net incomeafter tax)	-196,218	-48,262	-32,557	-89,534	15,561	-16,803
Total comprehensive income of the period	382,594	615,154	575,126	591,267	867,211	75,916
Net income attributable to owners of the parent company	571,898	657,459	605,120	680,801	851,650	92,719
Net income (loss) attributable to non- controlling interests Equity	6,914	5,957	2,563	-	-	-
Total comprehensive income attributable to owners of the parent company	377,455	609,585	572,736	591,267	867,211	75,916
Total comprehensive income attributable to non-controllinginterests	5,139	5,569	2,390	-	-	-
Earnings per share	2.28	2.62	2.41	2.71	3.39	0.37

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.

Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2016 to 2020 have been audited by CPAs. The financial information from the first quarter of 2021 is provided by the Company.

Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.

Note 3: The losses of discontinued operations shall be represented by the net value after deducting income tax.

Note 4: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.

Condensed consolidated income statement - International Financial Reporting Standards (Parent Company Only Financial Report)

Unit: thousand NT$

Year Item	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial information for the most recent five years (Note 1)	Financial data in the current year up to March 31, 2021 (Note 2)
	2016	2017	2018	2019	2020
Operating revenue	7,309,691	7,688,919	8,186,530	7,831,346	8,611,750	Not applicable.
Gross profit	1,138,387	1,292,087	1,234,664	1,224,266	1,335,048
Operating income/loss	273,566	378,259	283,490	241,351	299,270
Non-operating income and expenses	402,809	424,484	453,147	581,173	736,645
Net income before tax	676,375	802,743	736,637	822,524	1,035,915
Net income from continuing operations	571,898	657,459	605,120	680,801	851,650
Loss from discontinued operations	-	-	-	-	-
Net profit of the term (loss)	571,898	657,459	605,120	680,801	851,650
Other comprehensive income of the period (net incomeafter tax)	-194,443	-47,874	-32,384	-89,534	15,561
Total comprehensive income of the period	377,455	609,585	572,736	591,267	867,211
Net income attributable to owners of the parent company	-	-	-	-	-
Net income (loss) attributable to non- controllinginterests	-	-	-	-	-
Total comprehensive income attributable to owners of the parent company	-	-	-	-	-
Total comprehensive income attributable to non-controllinginterests	-	-	-	-	-
Earnings per share	2.28	2.62	2.41	2.71	3.39

＊ If the Company has prepared a parent company only financial report, the Company shall prepare parent company only condensed balance sheet and statement of comprehensive income for the most recent five years.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.

Note 1: All years that have not been certified by a CPA shall be indicated.

The financial data from 2016 to 2020 have been audited by CPAs.

Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be disclosed.
Note 3: The losses of discontinued operations shall be represented by the net value after deducting income tax.
Note 4: Financial information that has been required by the competent authority to correct or recompile shall be provided with the corrected or recompiled figures and the status and reasons shall be indicated.

(II) Names of certifying CPAs of the most recent five years and their audit opinions:

Opinions of the CPAs Year	Certifying CPA	Audit opinion
2016	Crowe Horwath (TW) Ling-Wen Huang, CPA Shu-Man Tsai, CPA	Unqualified opinion
2017	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2018	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2019	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai, CPA	Unqualified opinion
2020	Crowe Horwath (TW) Ching-Lin Li, CPA Shu-Man Tsai,CPA	Unqualified opinion

Note: The changes of the Company's CPAs in 2017 were mainly caused by internal organizational adjustment of the certifying CPA firm.

II. Financial analysis for the last five year

(I) Financial analysis- International Financial Reporting Standards (Consolidated Financial Report)

Year (Note 1) Analysis item(Note 3)	Year (Note 1) Analysis item(Note 3)	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Financial analysis for the last five year	Current year up to March 31, 2021 (Note 2) (self-assessed)
		2016	2017	2018	2019	2020
Financial structure(%)	Debt-to-assets ratio	51.53	52.64	53.86	55.20	55.91	55.80
	Long-term capital to property, plant, and equipment ratio	207.46	201.13	189.03	211.07	260.54	258.24
Solvency %	Current ratio	153.36	148.98	142.47	142.72	149.84	150.73
	Quick ratio	116.30	106.07	101.32	109.10	112.65	107.05
	Times interest earned	46.12	62.10	44.10	32.54	46.80	19.76
Operating ability	Average collection turnover (times)	4.03	3.91	4.12	3.64	3.90	3.76
	Days sales outstanding	90.57	93.35	88.59	100.27	93.58	96.98
	Average inventory turnover (times)	5.81	5.44	5.40	5.48	5.98	5.26
	Average payment turnover (times)	3.64	3.38	3.66	3.38	3.54	3.54
	Average inventoryturnover days	62.82	67.09	67.59	66.61	61.03	69.35
	Property, plant and equipment turnover(times)	5.40	4.89	5.12	5.01	5.83	5.66
	Total assets turnover(times)	4.03	3.91	4.12	3.64	1.29	1.16
Profitability	Return on assets(%)	7.44	7.84	6.99	7.63	8.76	3.72
	Return on equity (%)	14.34	16.10	14.62	16.27	19.31	8.01
	Pre-tax income to paid-in capital ratio(%) (Note 7)	33.18	33.56	31.24	36.25	43.37	17.25
	Netprofit ratio(%)	5.41	6.06	5.08	5.84	6.66	3.06
	Earningsper share(NT$)	2.28	2.62	2.41	2.71	3.39	0.37
Cash flow	Cash flow ratio (%)	25.15	19.00	17.12	19.57	30.01	-
	Cash flow adequacy ratio (%)	80.85	77.30	77.46	86.30	90.09	-
	Cash reinvestment ratio (%)	9.64	4.61	2.94	6.23	15.98	-
Leverage	Operating leverage	4.43	4.16	5.14	4.13	3.58	-
	Financial leverage	1.03	1.02	1.03	1.04	1.02	1.11
Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1. Financial structure The increase in long-term capital to property, plant, and equipment ratio was caused by the increase in total equity. 2. Solvency The increase in times interest earned was caused by the increase in pre-tax profit and decrease in interest expenses. 3. Profitability The increase in the pre-tax income to paid-in capital ratio was caused by the increase in pre- tax income.

Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1. Financial structure The increase in long-term capital to property, plant, and equipment ratio was caused by the increase in total equity. 2. Solvency The increase in times interest earned was caused by the increase in pre-tax profit and decrease in interest expenses. 3. Profitability

The increase in earnings per share was caused by the increase in net profit in this period.
1. Cash flow

The increase in the cash flow ratio was caused by the increase in net cash inflow from operating activities in this period compared to the previous period.

The increase in cash reinvestment ratio was caused by the increase in net cash inflow from operating activities and increase in working capital in this period.

＊ If the Company has prepared a parent company only financial report, an analysis of the Company's individual financial ratios shall be prepared.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.

Financial analysis- International Financial Reporting Standards (Parent Company Only Financial

Report)

Report)	Report)
Year (Note 1) Analysis item(Note 3)		Financial analysis for the last fiveyear					Current year up to March 31, 2021 (Note 2)
		2016	2017	2018	2019	2020
Financial structure(%)	Debt-to-assets ratio	41.63	41.67	43.95	44.58	43.31	Not applicable.
	Long-term capital to property, plant, and equipment ratio	445.52	444.34	422.73	431.57	509.30
Solve ncy	Current ratio	120.94	130.14	121.39	115.86	124.75
	Quick ratio	94.35	99.75	90.82	90.02	102.69
	Times interest earned	180.08	117.53	94.56	106.79	137.00
Operating ability	Average collection turnover (times)	4.13	3.97	3.89	3.56	3.76
	Days sales outstanding	88.38	91.94	93.83	102.53	97.07
	Average inventory turnover (times)	8.97	9.13	8.53	8.04	10.53
	Average payment turnover (times)	3.39	3.56	3.67	3.24	3.63
	Average inventoryturnover days	40.69	39.98	42.79	45.40	34.66
	Property, plant and equipment turnover(times)	9.77	7.57	7.83	7.37	8.19
	Total assets turnover(times)	1.10	1.10	1.13	1.04	1.09
Profitability	Return on assets(%)	8.67	9.47	8.45	9.15	10.91
	Return on equity (%)	14.29	16.09	14.62	16.27	19.31
	Pre-tax income to paid-in capital ratio(%) (Note 7)	26.95	31.99	29.36	32.78	41.28
	Net margin(%)	7.82	8.55	7.39	8.69	9.89
	Earningsper share(NT$)	2.28	2.62	2. 41	2.71	3.39
Cash flow	Cash flow ratio(%)	24.52	16.86	19.51	16.45	36.32
	Cash flow adequacyratio(%)	69.50	70.59	72.69	74.26	77.76
	Cash reinvestment ratio	12.92	-3.78	-0.67	-0.11	26.17
Leverage	Operatingleverage	3.23	2.63	3.20	3.72	3.38
	Financial leverage	1.01	1.02	1.03	1.03	1.03
Please explain reasons for changes in financial ratios in the last two years. (Analysis can be omitted for the change is less than 20%) 1. Solvency The increase in times interest earned was caused by the increase in pre-tax profit and decrease in interest expenses. 2. Operating ability The increase in average inventory turnover and average days for sale was caused by the decrease in inventory. 3. Profitability The increase in the pre-tax income to paid-in capital ratio was caused by the increase in pre-tax income. The increase in earnings per share was caused by the increase in net profit in this period. 4. Cash flow The increase in the cash flow ratio was caused by the increase in net cash inflow from operating activities in this period compared to the previous period. The increase in cash reinvestment ratio was caused by the increase in net cash inflow from operating activities and increase in working capital in this period.

100

＊ If the Company has prepared a parent company only financial report, an analysis of the Company's individual financial ratios shall be prepared.
＊ Companies having adopted IFRS for financial reporting for less than five years should compile additional financial data based on the financial and accounting guidelines of the Republic of China. For details, refer to data of table (2) below.

101

Note 1: All years that have not been certified by a CPA shall be indicated.
The financial data from 2016 to 2020 have been audited by CPAs. The financial information from the first quarter of 2021 is provided by the Company.
Note 2: As of the publication date of this Annual Report, if financial information of companies whose stocks are traded on TWSE or TPEx was recently audited or reviewed by CPAs, such information shall be analyzed.
Note 3: The end of Annual Report shall include the following formulas:
Financial structure
(1) Debt-to-asset ratio = total liabilities / total assets.
(2) Long-term fund to property, plant and equipment ratio = (total equity + non-current liabilities) / net amount of real estate properties, plants and equipment.
Solvency
(1) Current ratio = current assets / current liabilities.
(2) Quick ratio = (current assets - inventory - prepaid expense) / current liabilities.
(3) Time interest earned = net income before income tax and interest expense / current interest expense.
Operating ability
(1) Receivables (including accounts receivable arising from operation notes receivable) turnover ratio = net sales
- / average receivables (including accounts receivable arising from operation notes receivable) balances.
(2) Average collection period = 365 / receivables turnover.
(3) Inventory turnover ratio = cost of goods sold / average amount of inventory.
(4) Payable (including accounts payable arising from operation notes payable) turnover ratio = cost of goods sold / average payables (including accounts payable arising from operation notes payable) balances.
(5) Average days of sales = 365 / inventory turnover.
(6) Real estate, plant, and equipment turnover ratio = net sales / average net for real estate, plant, and equipment.
(7) Fixed assets turnover = net sales / average gross assets.
Profitability
(1) Return on assets ＝ [net income + interest expense (1 – tax rate)] / average total assets.
(2) Return on equity = income after tax/net average equity.
(3) Net margin = net income / net sales.
(4) Earnings per share = (income belonging to owner of parent company - stock dividend of preferred stocks)/weighted average number of issued shares. (Note 4)
Cash flow
(1) Cash flow ratio = new cash flows from operating activities / current liabilities.
(2) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend) for the most recent five years.
(3) Cash reinvestment ratio = (net cash flows from operating activities –cash dividend) / (gross margin of property, plant and equipment + long-term investment + other non-current assets + working capital). (Note 5)
Leverage:
(1) Operating leverage = (net operating revenues - current operating cost and expense) / operating profit (Note 6).
(2) Financial leverage = operating profit / (operating profit - interest expenses).
Note 4: The following items should be noted for the calculation of earnings per share using the above-mentioned formula:
The calculations shall be based on the average number of the weighted common shares rather than shares issued at the end of the year.
The circulation period shall be considered for cash capital increase or treasury stock traders when calculating the weighted average number of shares.
When calculating annual or semi-annual earnings per share for those with capitalization of retained earnings or capital reserves, capital ratio shall be adjusted retrospectively and the replenishment period issues need not be considered.
If the preferred stock is non-convertible cumulative preferred stock, the dividend of the current year (whether it is distributed) should be deducted from net income or added to net loss. If the preferred shares are not cumulative in nature, the preferred stock dividends shall be deducted from the net income under after-tax net profit conditions. If it is a loss, no adjustment is needed.
Note 5: Special attention shall be paid to the following items during cash flow analysis measurements:
Net cash flow from operating activities shall refer to the net cash inflow from operating activities listed in the cash flow statement.
Capital expenditure shall refer to the annual capital investment cash outflow.
If the inventory increase during the closing is greater than that during the opening and the inventory decreased at the end of the year, it should be calculated as zero.
Cash dividends include common stock and preferred stock cash dividends.
Gross profit for real estate, plant, and equipment shall refer to the total amount for real estate, plant, and equipment before accumulated depreciation is deducted.

102

Note 6: The issuer shall divide the various operating costs and expenses as fixed or changeable based on their natures. If such costs are subject to estimates or subjective judgments, the issuer shall ensure that the methods of deriving those costs are rational and consistent.
Note 7: For companies whose stock has no par value or a par value other than NT$10, the calculation for paid-in capital as prescribed above shall be calculated instead as the equity ratio attributable to the asset balance sheet of the owners of the parent company.

103

III. Audit Committee's review report for the financial statements of the most recent year

Audit Committee's Audit Report

The Board of Directors has prepared and submitted the 2020 business report, financial statements, and earnings distribution proposal. The financial statements have been audited by Crowe Horwath (TW) CPAs and they have submitted an audit report. The Audit Committee has reviewed the business report, financial statements, and the earnings distribution proposal and did not find any instances of noncompliance. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, it is hereby submitted for your review and perusal.

Sunonwealth Electric Machine Industry Co., Ltd. Convener of the Audit Committee: Chun-Hao Xin

March 11, 2021

104

IV. Financial statements of the most recent year

105

106

107

108

109

110

111

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31,	December 31,	2019
Amount 1,574,919 412,365 16,321 3,209,268 131,252 4,420 1,752,309 82,580 208,730 7,392,164 11,276 2,105,535 710,874 80,889 25,781 57,837 22,803 - 11,902 3,026,897 $10,419,061 $670,663 105,491 2,822,736 1,098,919 101,312 45,064 88,835 326 4,933,346	Amount $1,271,420 387,731 12,714 3,310,527 60,754 1,214 1,518,566 38,935 9,852 6,611,713 - 2,277,290 316,279 81,306 18,954 53,250 24,372 53,701 2,433 2,827,585 $9,439,298 $926,878 77,337 2,705,054 726,912 78,003 41,030 76,959 460 4,632,633	%
		13.5 4.1 0.1 35.1 0.6 - 16.1 0.4 0.1
		70.0
		- 24.1 3.3 0.9 0.2 0.6 0.3 0.6 -
		30.0
		100.0
		9.9 0.8 28.7 7.7 0.8 0.4 0.8 -
		49.1

112

December 31,	December 31,	2019
Amount $520,000 90,397 217,704 59,391 4,094 891,586 5,824,932 2,509,297 366,903 758,081 260,275 941,668 (242,095) 4,594,129 - 4,594,129 $10,419,061	Amount $220,000 64,825 227,080 61,729 4,253 577,887 5,210,520 2,509,297 366,903 689,398 164,709 758,746 (260,275) 4,228,778 - 4,228,778 $9,439,298	%
		2.3 0.7 2.4 0.7 -
		6.1
		55.2
		26.6 3.9 7.3 1.7 8.1 (2.8)
		44.8 -
		44.8
		100.0

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

113

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Year Ended December 31	Year Ended December 31	Year Ended December 31
2020	% 100.0 (76.5) 23.5 (4.1) (4.3) (6.4) - (14.8) 8.7 0.1 1.1 (1.2) (0.2) - (0.2) 8.5 (1.8) 6.7 - - - 0.1 - 0.1 0.1 6.8 6.7 - 6.7 6.8 - 6.8	2019
Amount $12,781,281 (9,783,239) 2,998,042 (518,894) (542,993) (823,314) 1,370 (1,883,831) 1,114,211 15,329 136,976 (152,566) (23,763) (1,784) (25,808) 1,088,403 (236,753) 851,650 (3,274) 655 (2,619) 22,725 (4,545) 18,180 15,561 $867,211 $851,650 - $851,650 $867,211 - $867,211 $3.39 $3.39		Amount $11,659,915 (9,081,302) 2,578,613 (487,904) (561,805) (742,087) 435 (1,791,361) 787,252 16,791 131,442 3,084 (28,845) - 122,472 909,724 (228,923) 680,801 7,540 (1,508) 6,032 (119,458) 23,892 (95,566) (89,534) $591,267 $680,801 - $680,801 $591,267 - $591,267 $2.71 $2.71	%
			100.0 (77.9)
			22.1 (4.2) (4.8) (6.4) -
			(15.4)
			6.7
			0.1 1.2 - (0.2) -
			1.1
			7.8 (2.0)
			5.8
			0.1 -
			0.1
			(1.0) 0.2
			(0.8)
			(0.7)
			5.1
			5.8 -
			5.8
			5.1 -
			5.1

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

		EquityAttributable to Shareholders of the Parent	EquityAttributable to Shareholders of the Parent	Total Equity
OdinaryShares $2,509,297 - - - - - - - 2,509,297 - - - - - - - $2,509,297	Capital Surplus $366,903 - - - - - - - 366,903 - - - - - - - $366,903		Unappropriated Special Reserve Earnings $127,111 $671,883 - (60,512) 37,598 (37,598) - (501,860) - 680,801 - 6,032 - 686,833 - - 164,709 758,746 - (68,683) 95,566 (95,566) - (501,860) - 851,650 - (2,619) - 849,031 - - $260,275 $941,668 Retained Earnings
		Legal Reserve $628,886 60,512 - - - - - - 689,398 68,683 - - - - - - $758,081	Special Reserve $127,111 - 37,598 - - - - - 164,709 - 95,566 - - - - - $260,275
				$4,139,371 - - (501,860) 680,801 (89,534)
				591,267 -
				4,228,778 - - (501,860) 851,650 15,561
				867,211 -
				$4,594,129

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit gain Net loss (gain) on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Share of loss of associates and joint ventures accounted for using equity method Loss on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Gain on disposal of investments Gain on reversal of impairment loss on non-financial assets Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in financial assets mandatorily classified as at fair value through profit or loss Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivables Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other financial assets Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in other payables Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments	Year Ended December 31	Year Ended December 31
	2020 $1,088,403 394,803 55,152 (1,370) 967 23,763 (15,329) 1,784 91,340 2,414 (6,874) - 546,650 (12,297) (3,607) 102,576 (70,303) (216,602) (76,426) (186,565) (463,224) 28,154 117,682 375,788 3,593 (134) (5,612) 519,471 56,247 602,897	2019
		$909,724 399,490 38,178 (435) (1,114) 28,845 (16,791) - 2,121 15,001 (2,597) (6,745)
		455,953
		(292,599) 19,023 (250,577) (14,744) 276,598 (14,655) 211
		(276,743)
		5,252 34,027 (57,887) (386) 460 (6,391)
		(24,925)
		(301,668)
		154,285

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Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of investments accounted for using equity method Increase in prepayments for investments Decrease in prepayments for investments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in refundable deposits Acquisition of intangible assets Increase in other financial assets Decrease in other financial assets Increase in other noncurrent assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Proceeds from long-term loans Decrease in guarantee deposits Repayments of lease principal Cash dividends paid Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	Year Ended December 31	Year Ended December 31
	2020 $1,691,300 15,134 (26,310) (199,555) 1,480,569 (12,819) - 12,220 (300,721) 78,938 1,569 (22,685) (12,313) - (20,328) (276,139) - (256,215) 300,000 (159) (445,623) (501,860) (903,857) 2,926 303,499 1,271,420 $1,574,919	2019
		$1,064,009 16,476 (26,851) (147,187)
		906,447
		- (53,701) - (329,035) 27,382 4,950 (8,951) - 133,319 (2,066)
		(228,102)
		83,621 - - (892) (89,247) (501,860)
		(508,378)
		(43,520)
		126,447 1,144,973
		$1,271,420

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Stated Otherwise)

1. GENERAL INFORMATION

Sunonwealth Electric Machine Industry Co., Ltd. (collectively as the “Company”) was incorporated in October 1980. The Company engages mainly in the manufacturing and selling of AC/DC brushless fans, electric fans, motors and related components, and microcooling fans. The principal operating activities of the Company and its subsidiaries (collectively as the “Group”) are described in Note 4(3). In addition, the Company has no ultimate parent company.
The consolidated financial statements are presented in the Company’s functional currency, New Taiwan Dollars.

2. THE AUTHORIZATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved and authorized for issue by the Board of Directors on March 11, 2021.

3. APPLICATION OF NEW AND AMENDED STANDARDS AND INTERPRETATIONS

(1) Effect of adoption of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of SIC (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

by the Financial Supervisory Commission (FSC) New standards, interpretations and amendments endorsed by are as follows:	FSC effective from 202
New, Revised or Amended Standards and Interpretations Amendments to IFRS 3 “Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Material” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IFRS 16 “New Coronavirus Pneumonia Related Rent Concessions”	Effective date Announced byIASB
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

(Note) The FSC allows companies to apply the amendment in advance on January 1, 2020.

The Group has assessed the aforementioned standards and interpretations, and there’s no significant effect to the Group’s financial position and financial performance.

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

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

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB Amendments to IFRS 4 “Extention of the Temporary June 25, 2020 (Effective Exemption from Applying IFRS 9” from issue date) Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 “Interest Rate Benchmark Reform - Phase 2”

(Note) The amendments are applicable for the annual reporting period beginning on or after January 1, 2021.

The Group has evaluated the aforementioned standards and interpretations, and there’s no significant effect to the Group’s financial position and financial performance.

(3) Effect of IFRSs issued by IASB but not yet endorsed and issued into effect by FSC New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

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

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

Note2: Group should apply these amendments retrospectively. However, the amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 3: This amendment applies to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

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Note 4: This amendment applies to business combinations whose acquisition date starts in the annual reporting period after January 1, 2022.

Note 5: The amendments to IFRS 9 are applicable to swap or modification of terms of financial liabilities incurred during the annual reporting period beginning on January 1, 2022. The amendment to IAS 41 is applicable to fair value measurement during the annual reporting period beginning after January 1, 2022. The amendments to IFRS 1 are retrospectively applied to the annual reporting period beginning after January 1, 2022.
A. Amendments to IAS 1 “Classification of Liabilities as Current or Noncurrent”
The amendments clarifies that when the Group judges whether liability is classified as noncurrent, the Group should assess whether the Group has the right to defer liquidation period after the reporting period at least twelve months. If the Group has the entity’s right on the end of the reporting period, liability must be classified as non-current whatever the Group expects whether executing the right or not. If the Group must follow certain condition to obtain the right to defer settlement of liability, the Group must have completed certain condition on the end of reporting period even if lender tests the Group whether following certain condition later. The aforementioned liquidation means that transfering cash, other economic resources or the Group’s equity instruments to counterparty to let liability wipe out. If liability clause will follow counterparty’s choice to liquidate liability by the Group’s equity instruments, this option must follow the regulations of IAS 32 “Financial Instruments: Presentation” to be recognized in equity individually and doesn’t have affect on the classification of liability.
B. Amendment to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use” The amendment stipulates that the sales price of the project produced in order to make property, plant and equipment reach the necessary location and state that can meet the expected operation mode of the management is not suitable as a cost reduction of the asset. The aforementioned items should be measured in accordance with IAS 2 “Inventory”, and the sales price and cost should be recognized in profit and loss in accordance with the applicable standards.
This amendment is applicable to factories, property and equipment that reach the necessary locations and conditions for the management's expected operation mode after January 1, 2021 (the beginning of the earliest expression period). When the Company initially applies the amendments, it will recognize the cumulative effect of the amendments applied initially as an adjustment to the opening balance of the retained earnings (or other components of equity, as appropriate) at the beginning of the earliest expression period , and re-edit the information during the comparison period.
C. Amendment to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract” The amendment stipulates that when assessing whether the contract is onerous, “Cost of Fulfilling a Contract” should include the incremental cost of fulfilling a contract (for

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example, direct labor and raw materials) and the allocation of other costs directly related to fulfilling a contract (for example, the depreciation expenses of property, plant and equipment items used in fulfilling a contract are allocated).

The Group will recognize the cumulative effect on the retained earnings on the first application date when the amendment is first applied.

D. Amendment to IFRS 3“Reference to the Conceptual Framework”

The amendment is to update the index of the conceptual framework and add the requirement that the acquirer shall apply IFRIC 21“Levies”to determine whether there is an obligation to pay levies on the acquisition date.

E. Annual Improvements to IFRS Standards 2018-2020

The annual improvement in the IFRS 2018-2020 includes amendments to certain standards. Among them, the amendment of IFRS 9 “Expenses included in the “10%” test for the purpose of derecognise financial liabilities” is to assess whether there is a significant difference between the swap of financial liabilities or the modification of terms, When comparing cash flow projections of the new and old contract terms (including the net amount of fees charged for signing a new contract or modifying the contract), whether there is a 10% difference, the aforesaid fees collected should only include the payment between the borrower and the lender paid for.

F. Amendments to IAS 1 ‘’Disclosure of Accounting Policies’’

This amendment is to improve the disclosure of accounting policies and provide more useful information for major users of financial statements.

G. Amendments to IAS 8 ‘’Definition of Accounting Estimates’’

This amendment defines accounting estimates as the monetary amount of financial statements subject to measurement uncertainty, and provides further explanations and examples to help companies distinguish between changes in accounting policies and changes in accounting estimates.

As of the date the consolidated financial statements were issued, the Group continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations and related applicable period. The related impact will be disclosed when the Group completes the evaluation.

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The accompanying consolidated financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the IFRSs, IASs, interpretations as well as related guidance endorsed by the FSC

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with the effective dates.

(2) Basis of preparation

A.Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
- a. Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b. Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B.The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- a. All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- b. Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- c. Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
- d. Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
- e.When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition

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of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss or transferred directly to retained earnings as appropriate, on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

B. The consolidated entities were as follows:

B. The consolidated entities were as follows:
Investee / Subsidiary Main Businesses 1.Sunonwealth Electric Machine Industry Co., Ltd. Sunon INC. Manufacturing and selling of fans Sunon SAS. Manufacturing and selling of fans Sunon Corporation Manufacturing and selling of fans Sunonwealth Electric Manufacturing and Machine Ind.(H.K.)Ltd. selling of fans Successful Century Co., Ltd. Investments BVI Sunon International Limited Investments Sunon Electronics India Private Limited Manufacturing and selling of fans Sunon Electronics Philippines Corp. Manufacturing and selling of fans Sunon Properties Philippines Corp. Real estate development 2.BVI Sunon International Limited Sunon Electronic Manufacturing and (Foshan) Co., Ltd. selling of fans Sunon Electronic Manufacturing and (Bei Hai) Co., Ltd. selling of new type electronic parts	Percentage of Ownership
	December 31, 2020	December 31, 2019
	100.00% 100.00% 100.00% 99.99% 100.00% 100.00% 99.99% 99.99% (Refer to B.(b).II) 99.99% (Refer to B.(b).III) 100.00% 100.00%	100.00% 100.00% 100.00% 99.99% 100.00% 100.00% 99.99% (Refer to B.(b).I) - - 100.00% 100.00%

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Investee / Subsidiary Main Businesses 3.Successful Century Co., Ltd. Sunon Electronic Manufacturing and (Kunshan) Co., Ltd. selling of fans 4.Sunon SAS Sunon Deutschland GmbH Selling of fans	Percentage of Ownership	Percentage of Ownership
	December 31, 2020	December 31, 2019
	100.00% 100.00%	100.00% 100.00%

  - a. Some subsidiaries’ financial statements contained in the above consolidated financial statements were audited by the other auditors. These subsidiaries’ total assets amounted to $647,456 thousand and $526,307 thousand, representing 6.21% and 5.58% of the consolidated assets, and their total liabilities amounted to $468,086 thousand and $364,252 thousand, representing 8.04% and 6.99% of the consolidated liabilities as of December 31, 2020 and 2019, respectively; their total operating revenues amounted $1,083,865 thousand and $1,120,254 thousand, representing 8.48% and 9.61% and their total comprehensive income amounted to $17,314 thousand and $18,890 thousand, representing 2.00% and 3.19% of the total comprehensive income for the years ended December 31, 2020 and 2019, respectively.

  - b. Changes in subsidiaries:

     - I. The Group established Sunon Electronics India Private Limited, which was invested by Sunonwealth Electric Machine Industry Co., Ltd. in August 2019 with 99.99% shareholding.

     - II. The Group established Sunon Electronics Philippines Corp., which was invested by Sunonwealth Electric Machine Industry Co., Ltd. in January 2020 with 99.99% shareholding.

     - III.The Group established Sunon Properties Philippines Corp., which was invested by Sunonwealth Electric Machine Industry Co., Ltd. in January 2020 with 99.99% shareholding.

C. Subsidiaries not included in the consolidated financial reports: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Material restrictions: None.
F. Contents of of the parent company’s securities held by subsidiaries: None.
G. Subsidiaries that have non-controlling interest that are material to the Group: None.
(4) Foreign currency translation
A. Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in

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New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

B. In preparing the financial statements of each individual consolidated entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Such exchange differences are recognized in profit or loss in the year in which they arise. Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the year except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.
C. For the purposes of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into New Taiwan Dollars using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity (attributed to noncontrolling interests as appropriate).
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- a. Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
- b. Assets held mainly for trading purposes;
- c. Assets that are expected to be realised within twelve months from the balance sheet date;
- d. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- a. Liabilities that are expected to be paid off within the normal operating cycle;

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  - b. Liabilities held mainly for trading purposes;

  - c. Liabilities that are to be paid off within twelve months from the balance sheet date (Even if a long-term refinancing or re-arrangement of payment agreements is completed after the balance sheet date and before the issuance of the financial report is approved, it is classified as current liabilities).

  - d. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including the original maturity of the time deposits within three months.)
(7) Financial instruments

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

Financial assets and financial liabilities are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A. Financial assets

a. Category of financial assets

Financial assets are recognized on a trade date basis.

Financial assets are classified into the following categories: financial assets at FVTPL and financial assets at amortized cost.

(a) Financial asset at FVTPL

For certain financial assets are classified as at FVTPL when such a financial asset is mandatorily and designated classified. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

When the financial assets meet one of the following conditions, the Group designates them as measured at fair value through profit and loss at the time of initial recognition:

i. It is a mixed (combined) contract; or
ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or

126

iii. It is an investment that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.

Financial assets at FVTPL are subsequently measured at fair value. The dividends and interest recognized in other income and interest income; the net gain or loss recognized in other gains and losses earned on such a financial asset. Fair value is determined in the manner described in Note 12.

(b) Financial assets at amortized cost

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

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

Financial assets at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Expect for the following two cases, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset.

  - a. Purchased or originated credit-impaired financial assets: for those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

  - b. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets: for those financial assets, the Group shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

b. Impairment of financial assets
(a) At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable), investments in debt instruments that are measured at FVTOCI, lease receivable and contract assets.
(b) The Group always recognize lifetime Expected Credit Loss (i.e. ECL) for accounts receivables. For other financial assets, the Group recognize lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equaling to 12-month ECL.
(c) Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a

127

financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.

(d) The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.
c. Derecognition of financial assets
The Group derecognises a financial asset when one of the following conditions is meet:
(a) The contractual rights to receive cash flows from the financial asset expire.
(b) The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
(c) The Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

On derecognition of financial asset at amortized cost in its entirety, the difference between the financial asset’s carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of debt instrument measured at fair value through other comprehensive income, the difference between the financial asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. On derecognition of equity instruments at fair value through other comprehensive income in its entirety, the cumulative profit and loss will be transferred directly to retained earning without reclassified into profit and loss.

B. Equity instruments

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

C. Financial liabilities

a. Subsequent measurement

Except for the following conditions, all financial liabilities are measured at

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amortized cost in accordance with the effective interest method:

  - (a) Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or is designated as at fair value through profit or loss. Financial liabilities classified as held for trading are mainly for repurchasing in the short term when they occur, and derivatives other than financial guarantee contracts or designated and effective hedging instruments. Financial assets meet one of the following conditions, the Group designates them as measured at fair value through profit and loss at the time of initial recognition:

     - i.  It is a mixed (combined) contract; or

     - ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or

     - iii. It is an instrument that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.

b. Derecognition of financial liabilities
- The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.
(8) Inventories

Inventories are stated at the lower of cost and net realisable value, accounted for on a perpetual basis. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(9) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for under equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any

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other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

C. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
D. In the case where an associate issues new shares and the Group does not subscribe or proportionately acquire the new shares, which results in a change in the Group’s ownership percentage of the associate while maintains significant influence on the associate, then “Capital surplus” and “Investments accounted for using under the equity method” shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
E. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss.
F. When the Group disposes of its investment in an associate, if it loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
G. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it still retains significant influence over this associate, then the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(10)Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a

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separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.

The estimated useful lives as follows:

Buildings:

Main building, 20 to 57 years; Others, 2 to 39 years;

Machinery and equipment, 1 to 22 years; Other equipment, 1 to 24 years; Leasehold improvement, 1 to 22 years;

D. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
(11)Leases/The Group as a lessee

The Group assesses whether the contract is (or includes) a lease at the date of the contract. For a contract that includes a lease component and one or more additional lease or non-lease components, the Group will allocate the consideration to the lease component base on the individual price of each lease component and the aggregated individual price of the non-lease component.

Except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Group will recognize right-of-use assets and lease liabilities for all leases at the inception of lease.

Right-of-use asset

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accumulated depreciation and accumulated impairment loss, and adjusting the amount of re-measures of lease liabilities.

The right-of-use asset recognized depreciation is using the straight-line basis from the date of the lease until the expiration of the useful life or the expiration of the lease term, the depreciation is provided that the title of the underlying asset will be acquired at the end of the lease period or, if the cost of the right-of-use asset reflects the execution of the purchase option.

Lease liability

The lease liability is initially measured by the present value of the lease payment (including fixed payment, substantive fixed payment, change in lease payment depending on the index or rate, etc.). If the implied interest rate on the lease is easy to determine, the lease payment is discounted using that interest rate. If the interest rate is not easy to determine, the lessee's increase borrowing rate is used.

Subsequently , lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. If the lease period, the evaluation of the purchase choice, the amount of expected to be paid under the residual value guarantee or the change in the index or rate used to determine the lease payment result in a change in the future lease payment, the Group will measure the lease liability and adjust the right to use assets relatively. If the carrying amount has been reduced to zero, the remaining amount will recognize in the profit and loss. Lease liabilities are presented in a single-line project on the consolidated balance sheet.

(12)Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes), also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

Investment properties in the course of construction are stated at cost less accumulated impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Depreciation of these assets commences when the assets are ready for their intended use.

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

(13)Intangible assets

Intangible assets with finite useful lives that are acquired separately are measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis over the following estimated lives: computer

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software - 2 to 15 years; trademarks are the economic benefit or contract period. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets are derecognized when disposed of or expected to have no future economic benefits generated through usage or disposal. On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(14)Impairment of non-financial assets
The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognised in profit or loss.
(15)Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(16)Employee benefits
A.Short-term employee benefits

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

B.Pensions

a. Defined contribution plans

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

b. Defined benefit plans
(a) Net obligation under a defined benefit plan is defined as the present value of an

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amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior period. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present valueof the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

(b) Actuarial gains and losses arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
(c) Past service costs are recognised immediately in profit or loss.
C. Employees’ bonus and directors’ remuneration
Employees’ bonus and directors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ remuneration are different from the actual distributed amounts as resolved by the shareholders at their shareholders’ meeting subsequently, the differences should be recognised based on the accounting for changes in estimates.

D. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense when it can no longer withdraw an offer of termination benefits or it recognises related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

(17)Share capital and treasury shares
A.Share capital

Ordinary share is classified as equity. The classification of the preferred stock depends on the essence of the agreement. If the preferred stock matches the definition of the financial liability, it is classified as a liability. Otherwise, it is classified as equity. Incremental cost that can be attributed to the issuance of stocks or options is

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deducted from the capital issued.

B.Treasury Shares
- When the Group acquires its outstanding shares, the repurchase considerations (including all directly accountable costs) are recognized under treasury shares and shown as a deduction in equity. Gains on disposal of treasury shares should be recognized under “capital surplus - treasury stock transactions”; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there is insufficient capital surplus to offset the losses, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted-average method for the purpose of repurchased shares.
- When the Group’s treasury shares are retired, the treasury share account should be credited, and the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury shares in excess of the sum of its par value and premium on stock should first be offset against capital surplus from similar types of treasury share transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury shares in excess of its carrying value should be credited to capital surplus from similar types of treasury share transactions.
(18)Share-based payment transactions
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.
B.Cash-settle share-based payment arrangements are the fair value of liabilities undertaken recognized in remuneration costs and liabilities in the vesting period and measured by the fair value of equity instruments offered at each balance sheet date and the settlement date. Any changes are recognized in profit or loss.
(19)Income tax
A.The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

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B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C.Deferred income tax is recognised, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D.Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees’ training and equity investments is recorded using the income tax credits accounting.

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(20)Revenue Recognition

The Group recognizes revenues based on the following steps:

Identifying the contracts;
Identifying obligations in the contracts;
Determining prices;
Allocating prices into the obligations in the contracts;
Recognizing revenues while fulfilling the obligations.

The Group does not adjust the promised amount of consideration for the effects of a significant financing component if the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Goods sales

The Group sells fans and other relevant products. Sales revenues are recognized while the control of goods is transferred to the customers since the customers already have the rights to use, set price, take the major responsibility to resell the good and bear the risk of obsoleteness. The Group recognizes revenues and accounts receivable at the point and presents it in net term after deducting sales return, quantity discount and sales allowance.

The Group does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

Service revenue

Revenue from technical services is recognized when services are provided that in accordance with the relevant agreements.

(21)Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All borrowing costs other than those stated above are recognized in profit or loss in the period in which they are incurred.

(22)Government Subsidy

Government subsidies are recognized at fair value when it is reasonably certain that the Group will comply with the conditions attached to the government subsidies and will receive such subsidies.

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Government subsidies are recognized in profit and loss on a systematic basis during the period when the relevant costs that they intend to compensate are recognized as expenses by the company. If government subsidy is used to compensate for expenses or losses that have occurred, or for the purpose of providing the Company with immediate financial support and there is no future related cost, it is recognized in the profit and loss during the period when it can be received. Government subsidies related to property, plant and equipment are recognized as non-current liabilities, and recognized as profits and losses on a straight-line basis based on the estimated useful life of the relevant assets.

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

The preparation of the Group’s consolidated financial statements is adopting accounting policies based on the following significant judgements, significant accounting estimates and assumptions:

(1) Critical judgements in applying accounting policies
A. Judgment of financial asset classification

The Group assesses the business model of financial assets based on the hierarchy that reflects the Group of financial assets that are jointly managed for specific business purposes. This assessment requires consideration of all relevant evidence, including measures of asset performance, risks affecting performance, and the manner in which the relevant managers are determined, and judgments are required. The Group continues to assess the adequacy of its business model and monitors the financial assets measured by the amortized cost before the maturity date and the debt instrument investments measured at fair value through other comprehensive income. Evaluate whether the disciplinary action has the same goal of business model. If the business model has been changed, the Group delays the adjustment of the subsequent classification of financial assets. The Group reclassifies financial assets in accordance with IFRS 9, and the application will be postponed from the date of reclassification, if the business model has changed.

B. Revenue recognition

The Group follows IFRS 15 to determine if it controls the specified good or service before that good or service is transferred to the customer, and the Group is acting as a principal or an agent in that transaction. When the Group acts as an agent, revenue is recognized on a net basis.

The Group acts as a principal as that it meets one the of following situations:

a. The Group gains control over the goods from the other party before transferring goods to customers.
b. The Group controls the right of providing service by the other party in order to control the ability of the party to provide service to customers.

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c. The Group gain control over goods or service from the other party in order to combine with other goods or services to provide specific goods or services to customers.

The indicators (not limited to) which assist making judgment on whether the Group controls the goods or services before transferring goods or services to customers:

a. The Group has primary responsibilities for the goods or services it provides;
b. The Group bears inventory risk before transferring the specific goods or services to customer, or after transferring the control to customer.
c. The Group has the discretion to set prices.
C. Lease term

In determining the lease term, the Group considers all the facts and circumstances that create an economic incentive to exercise (or not exercise) the option, including all expected change in facts and circumstances from the commencement date until the exercise date of the option. Factors considered include the contractual terms and conditions for the optional period, the significant leasehold improvements made (or expected) during the contract period, and the importance of the underlying assets to the Group’s operations, etc. The lease term is reassessed if a significant change in circumstance that are within the control of the Group occurs.

(2) Critical accounting estimates and assumptions
A. Revenue Recognition

The Group recognizes records a refund for estimated future returns and other allowances in the same period the related revenue is recorded. Refund for estimated sales returns and other allowances is generally made and adjusted at a specific percentage based on historical experience and any known factors that would significantly affect the allowance, and our management periodically reviews the adequacy of the percentage used.

B. Estimated impairment of financial assets
The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Where the actual future cash inflows are less than expected, a material impairment loss may arise.
C. Process of fair value measurement and evaluation
When the assets and liabilities at fair value with no active market, the Group determines whether to use outside appraisal and using proper evaluation techniques based on related regulation or its own judgment. If the Level 1 input value is not available while evaluating, the Group refers to the analysis of the investee’s financial

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position and operating outcome, recent trading price, quotes on non-active market of same equity instrument, quotes on active market of similar equity instrument and evaluation multiples of comparable companies. If the future input value is different from expectation, the fair value might change. The Group updates input values quarterly according to the market status in order to monitor if the measurement of fair value is appropriate.

D. Impairment assessment of tangible and intangible assets

The Group assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Group strategy might cause material impairment on assets in the future.

E. Impairment assessment on investment using equity method
The Group assesses the impairment of investments accounted for using the equity method whenever triggering events or changes in circumstances indicate that an investment may be impaired and carrying value cannot be recoverable. The Group assesses the recoverable amount based on a projected future cash flow and receivable cash dividend of the investees, and disposal-generating future cash flow to ensure the reasonableness of such assumptions.
F. Realisability of deferred income tax assets
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, laws, and regulations might cause material adjustments to deferred income tax assets.
G. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Group evaluates the amounts of normal inventory comsumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value.

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H. Calculation of accrued pension obligations

When calculating the present value of defined pension obligations, the Group must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

I. Lessees’ incremental borrowing rates

At the time of the decision to increase the borrowing rate of the lessee used in the lease payment, the risk-free interest rate and the same currency is used as the reference rate, and the estimated lessee’s credit risk sticker and lease specific adjustments (such as asset-specific and secured factors) are taken into account.

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Item Cash on hand Cash in banks Total	December 31	December 31
	2020	2019
	$660 1,574,259	$816 1,270,604
	$1,574,919	$1,271,420

A. The Group have good credit quality in financial institutions, and the Group’s transactions with a number of financial institutions to diversify credit risk that are unlikely to be expected to default.
B. The Group had no cash and cash equivalents pledged to others.

(2) Financial assets at fair value through profit or loss - current

Item Non-derivative financial assets Beneficiary certificates Total	December 31	December 31
	2020	2019
	$412,365	$387,731
	$412,365	$387,731

A. The Group recognized net gain of financial assets at fair value through profit or loss of $5,907 thousand and $3,711 thousand for the years ended December 31, 2020 and 2019, respecively.
B. The Group had no financial assets at fair value through profit or loss pledged to others.

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(3) Notes receivable, net

Notes receivable, net
Item At amortized cost Notes receivable Less: Loss allowance Net	December 31
	2020	2019
	$16,345 (24)	$12,738 (24)
	$16,321	$12,714

A. The Group had no notes receivable pledged to others.
B. Please refer to Note 6(4) for the relevant disclosure of loss allowance for notes receivable.

(4) Accounts receivable, net

Accounts receivable, net
Item At amortized cost Accounts receivable Less: Loss allowance Net	December 31
	2020	2019
	$3,222,386 (13,118)	$3,324,962 (14,435)
	$3,209,268	$3,310,527

A. The accounts receivable that were neither past due nor impaired was following the Group’s credit policy determined by reference to the industry characteristics, operation scale and current financial position of the counterparties. The average credit period on sales of goods was 3-4 months.
B. The Group had no account receivable pledged to others.
C. To reduce major credit risk, the Group bought credit guarantee insurance.
D. The Group applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for trade receivables (including other receivables). The expected credit losses on trade receivables are estimated by reference to past account aging records of the debtor, an analysis of the debtor’s current financial position, and industrial trend. As the Group’s historical credit losses experience does not show significantly different loss patterns for different customer segments, the provision for losses based on past due status of notes receivables, accounts receivable and other receivable is not further distinguished between the Group’s different customer base.
E. The Group measures the loss allowance for notes receivable and accounts receivable (including other receivables) according to the preparation matrix:

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December31,2020 No past due Past due within 30 days Past due 31-90 days Past due over 91 days Total	Expected Credit Loss Rate	Gross Carrying Amount	Loss Allowance (LifetimeECL)	Amortized Cost $3,163,127 176,171 15,458 2,085 $3,356,841
	0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5%	$3,174,900 177,425 15,486 2,172	($11,773) (1,254) (28) (87)
		$3,369,983	($13,142)

December31,2019 No past due Past due within 30 days Past due 31-90 days Past due over 91 days Target of transaction has shown signs of default Total	Expected Credit Loss Rate	Gross Carrying Amount	Loss Allowance (LifetimeECL)	Amortized Cost $3,080,704 216,748 81,459 5,084 - $3,383,995
	0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5% 100%	$3,093,672 217,164 81,652 5,174 792	($12,968) (416) (193) (90) (792)
		$3,398,454	($14,459)

F. Movements of the loss allowance for notes and accounts receivable were as follows:

Beginning balance Add: Provision for impairment Less: Reversal of impairment Less: Write-offs Less: Foreign exchange differences Ending balance	Year Ended December 31	Year Ended December 31
	2020 $14,459 - (1,370) - 53 $13,142	2019
		$15,198 - (435) - (304)
		$14,459

The above provision has already taken into consideration of collateral or other credit enhancement. The other credit enhancement possessed by above receivables were $674,269 thousand, 962,461 thousand as of December 31, 2020 and 2019, respectively.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables which are due.

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Where recoveries are made, these are recognized in profit or loss. The Group’s trade receivables for offsetting the contract amount are both $0 thousand for the years ended December 31, 2020 and 2019.

G. Please refer to Note 12 for the relevant credit risk management and assessment method.

(5) Inventories and operating costs

Inventories and operating costs
Item Raw materials Supplies Work in process Finished goods Subtotal Less: Valuation allowance Net	December 31
	2020	2019
	$741,049 32,988 304,296 722,959	$471,186 23,786 213,227 859,357
	$1,801,292 (48,983)	$1,567,556 (48,990)
	$1,752,309	$1,518,566

A. The related inventory gain (loss) recoginzed as operating cost for the years ended December 31, 2020 and 2019 were as follows:

December 31, 2020 and 2019 were as	follows:	follows:
Item Cost of goods sold Unallocated overheads and labor cost Loss on inventory valuation Others Total	Year Ended December 31
	2020 $9,691,879 46,401 (349) 45,308 $9,783,239	2019
		$9,107,365 37,789 (113,982) 50,130
		$9,081,302

B. The Group recognized inventory valuation loss $349 thousand and $113,982 thousand for the years ended December 31, 2020 and 2019, respectively, as a result of raising some product prices and reducing some inventory.
C. The Group had no inventories pledged to others.

(6) Other financial assets - current

Other financial assets - current
Item Time deposits with maturity more than three months Project deposits Total	December 31
	2020	2019
	$196,417 12,313	$9,852 -
	$208,730	$9,852

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(7) Investments accounted for using equity method

Investments accounted for using equity method	method	method
December 31 Item 2020 2019 Associates: Associates without significance $11,276 $ - A. Associates: Shares of individually insigniticant associates of the Group are summarized as follows: Year Ended December 31 2020 2019 Share of: Net loss ($1,784) $ - Other comprehensive income (loss) (net after tax) - - Total comprehensive loss ($1,784) $ -	December 31
	2020	2019
	$11,276	$ -

A. Associates:

B. All the investments accounted for using equity method and the Group’s share of profit or loss and other comprehensive income in the investees are calculated based on the unaudited financial statements.

(8) Property, plant and equipment

Item Land Buildings Machinery and equipment Miscellaneous equipment Leasehold improvements Equipment to be inspected and construction in progress Total cost Less: Accumulated depreciation Accumulated impairment Carrying amount	December 31	December 31
	2020	2019
	$804,381 466,169 926,715 1,028,149 348,399 79,485	$804,381 464,120 1,566,764 1,266,689 333,367 72,945
	$3,653,298 (1,547,763) -	$4,508,266 (2,230,976) -
	$2,105,535	$2,277,290

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous equipment	Leasehold improvement	Equipment to be Inspected and Construction in Progress	Total
	$804,381 - - -	$464,120 - (1,986) -	$1,566,764 81,141 (787,920) 54,042	$1,266,689 61,656 (388,628) 68,174	333,367 4,097 - 6,158	72,945 152,997 - (128,374)	$4,508,266 299,891 (1,178,534) -
Balance at January 1, 2020 Additions Disposals Reclassification

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Transfer to expenses Transferred to inventories Transferred from right-of-use Effect of foreign currency exchange difference Balance at December 31, 2020 Accumulated depreciation and impairment	- - - -	- - - 4,035	- - - 12,688	- - 7,143 13,115	- - - 4,777	(2,414) (16,799) - 1,130	(2,414) (16,799) 7,143 35,745
	$804,381	$466,169	$926,715	$1,028,149	$348,399	$79,485	$3,653,298
	$ - - - - -	$231,125 14,684 (1,732) - 2,210	$879,055 127,879 (680,996) - 5,078	$844,588 137,040 (325,528) 3,389 8,367	$276,208 22,183 - - 4,213	$ - - - - -	$2,230,976 301,786 (1,008,256) 3,389 19,868
Balance at January 1, 2020 Depreciation expense Disposals Transferred from right-of-use Effect of foreign currency exchange difference Balance at December 31, 2020
	$ -	$246,287	$331,016	$667,856	$302,604	$ -	$1,547,763

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Leasehold Improvement	Equipment to be Inspected and Construction in Progress	Total
	$804,381 -	$477,598 -	$1,543,050 -	$1,258,688 (7,143)	$312,925 -	$134,045 -	$4,530,687 (7,143)
Balance at January 1, 2019 Effect of retrospective application of IFRS 16 Adjusted balance, at January 1, 2019 Additions Disposals Reclassification Transfer to expenses Transfer to intangible assets Effect of foreign currency exchange difference Balance at December 31, 2019 Accumulated Depreciation and Impairment
	$804,381 - - - - - -	$477,598 245 (2,966) - - - (10,757)	$1,543,050 78,963 (81,374) 95,165 - - (69,040)	$1,251,545 96,889 (82,434) 49,889 - (56) (49,144)	$312,925 13,468 (4,047) 23,177 - - (12,156)	$134,045 124,145 - (168,231) (15,001) - (2,013)	$4,523,544 313,710 (170,821) - (15,001) (56) (143,110)
	$804,381	$464,120	$1,566,764	$1,266,689	$333,367	$72,945	$4,508,266
	$ - -	$224,341 -	$850,423 -	$808,776 (1,079)	$269,536 -	$ - -	$2,153,076 (1,079)
	$ - - - - -	$224,341 15,209 (2,965) - (5,460)	$850,423 133,228 (60,755) 68 (43,909)	$807,697 143,723 (73,550) (68) (33,214)	$269,536 20,942 (4,048) - (10,222)	$ - - - - -	$2,151,997 313,102 (141,318) - (92,805)

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A. The details of interest capitalized: None.
B. The Group did not assess the impairment because there is no sigh of impairment for the year ended December 31, 2020.
C. Property, plant and equipment pledged for the borrowings: Please refer to Note 8.
D. Reconciliations of current additions and the acquisition of property, plant and equipment in statement of cash flows were as follows:

Item	Year Ended December 31	Year Ended December 31
	2020	2019 $313,710 15,325 $329,035
Acquisition of property, plant and equipment Decrease (increase) in equipment payable Cash paid for acquisition of property, plant and equipment	$299,891 830
	$300,721

(9) Lease agreement

A. Right-of-use assets

			December 31	December 31
	Item		2020		2019
Land use right			$424,796		$18,646
Land and building			368,669		298,051
Machinery and equipment			57,909		50,848
Other equipment			21,562		29,615
Total cost			$872,936		$397,160
Less: Accumulated depreciation			(162,062)		(80,881)
Accumulated impairment			-		-
Net			$710,874		$316,279
Cost	Land Use Right	Land and Buildings	Machinery and Equipment Other Equipment		Total
Balance at January 1, 2020	$18,646	$298,051	$50,848 $29,615		$397,160
Additions	407,295	84,278	12,030	757	504,360
Disposals	-	(9,036)	(5,609)	(20)	(14,665)
Derecognition	-	(7,574)	(276) (1,875)		(9,725)
Transter to property, plant and equipment	-	-	- (7,143)		(7,143)
Effect of foreign currency exchange difference	(1,145)	2,950	916	228	2,949
Balance at December 31, 2020	$424,796	$368,669	$57,909 $21,562		$872,936

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Accumulated Depreciation and Impairment Balance at January 1, 2020 Depreciation expense Derecognition Transter to property, plant and equipment Effect of foreign currency exchange difference Balance at December 31, 2020 Cost Balance at January 1, 2019 Adjustment on initial application of IFRS 16 Additions Disposals Derecognition Effect of foreign currency exchange difference Balance at December 31, 2019 Accumulated Depreciation and Impairment Balance at January 1, 2019 Adjustment on initial application of IFRS 16 Depreciation expense Derecognition Effect of foreign currency exchange difference Balance at December 31, 2019	$588 2,400 - - 14 $3,002 Land Use Right $- 19,417 - - - (771) $18,646 $ - - 613 - (25) $588	$69,031 76,125 (7,574) - 1,391 $138,973 Land and Buildings $ - 180,796 130,261 (489) (1,335) (11,182) $298,051 $ - - 72,865 (1,335) (2,499) $69,031	$4,463 6,210 (276) - 185 $10,582 Machinery and Equipment $ - 36,474 18,598 (2,100) - (2,124) $50,848 $ - - 4,653 - (190) $4,463	$6,799 7,865 (1,875) (3,389) 105 $9,505 Other Equipment $- 16,387 16,514 (829) (2,017) (440) $29,615 $ - 1,079 7,807 (2,017) (70) $6,799	$80,881 92,600 (9,725) (3,389) 1,695
					$162,062
					Total
					$- 253,074 165,373 (3,418) (3,352) (14,517)
					$397,160
					$ - 1,079 85,938 (3,352) (2,784)
					$80,881

B. Lease liabilities

. Lease liabilities
Item	December 31
	2020	2019
Carrying amount of lease liabilities - current - noncurrent	$88,835	$76,959
	$217,704	$227,080

Ranges of discount rates for lease liabilities are as follows:

Item	December 31	December 31
	2020	2019
Land and buildings Machinery and equipment Other equipment	0.63%-5.49% 3.13%-3.65% 0.66%-4.09%	0.80%-5.49% 3.65% 0.80%-4.09%

Please refer to Note 12(2) for lease liabilities with repayment periods.

C. Material lease-in activities and terms

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The Group leased some land and buildings, etc. as factory, with the lease terms of 1 to 75 years. There is no sign of impairment of right-of-use assets as of December 31, 2020. Therefore, the Group didn’t assess the impairment.

D. Sublet: None.

E. Other lease information:
a. Please refer to Note 6(10) for the agreement to lease investment properties under operating lease.
b. The current lease relevant expense information is as follows:

Item	Years Ended December 31	Years Ended December 31
	2020 $5,023 $291 $ - ($450,937)	2019
Short-term lease expense Low-value asset lease expense Variable lease payments that excluded in the measurement of lease liabilities Total cash outflow for leases (Note)		$2,869
		$282
		$ -
		($92,398)

(Note): Including principle paid for current lease liabilities.

(10) Investment properties, net

	December 31 2020 2019 $89,384 $89,384 26,070 26,070 $115,454 $115,454 (15,252) (14,835) (19,313) (19,313) $80,889 $81,306 Buildings Total $26,070 $115,454 - - $26,070 $115,454 $14,835 $34,148 417 417 - - $15,252 $34,565 Buildings Total	December 31 2020 2019 $89,384 $89,384 26,070 26,070 $115,454 $115,454 (15,252) (14,835) (19,313) (19,313) $80,889 $81,306 Buildings Total $26,070 $115,454 - - $26,070 $115,454 $14,835 $34,148 417 417 - - $15,252 $34,565 Buildings Total
	2020
	$89,384 26,070
	$115,454 (15,252) (19,313)
	$80,889
	Buildings
$89,384 -	$26,070 -	$115,454 -
$89,384	$26,070	$115,454
$19,313 - -	$14,835 417 -	$34,148 417 -
$19,313	$15,252	$34,565
Land	Buildings	Total

149

$89,384 -	$26,070 -	$115,454 -
$89,384	$26,070	$115,454
$26,058 - (6,745)	$14,385 450 -	$40,443 450 (6,745)
$19,313	$14,835	$34,148

A. Above mentioned investment properties were land and buildings located at No. 1609, Wu Kuai Cuo Section, Kaohsiung and No. 307, Zheng Chang Section, Kaohsiung.
B. Rental income and direct operating expenses of investment properties:

Item Rental income of investment properties Direct operating expense incurred for the investment properties with current rent income	Year Ended December 31	Year Ended December 31
	2020 $2,232 $866	2019
		$2,229
		$911

C. The maturity analysis of operating lease payments receivable for investment properties is as follows:

rties is as follows:
Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years Total	December 31
	2020	2019
	$632 171 171 171 171 -	$1,418 - - - - -
	$1,316	$1,418

D. Investment properties are depreciated on a straight-line basis over their estimated useful life of 10 to 57 years.
E. The fair values of investment properties held by the Group were both $112,494 thousand as of December 31, 2020 and 2019, respectively. The fair value determination was performed by independent qualified professional appraisers. The valuation was based on the comparison method, and the fair value was measured by using Level 3 inputs. Please refer to Note 12(3).

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F. The accumulated impairment of investment properties was both $19,313 thousand as of December 31, 2020 and 2019.
G. The Group had no investment properties pledged to others.

(11) Intangible assets

(11) Intangible assets
			December 31
Item			2020	2019
Trademark			$8,062	$8,322
Computer software			33,874	29,984
Total cost			$41,936	$38,306
Less: Accumulated amortization			(16,155)	(19,352)
Net			$25,781	$18,954
Cost	Trademark		Computer Software	Total
Balance on January 1, 2020	$8,322		$29,984	$38,306
Additions		-	22,281	22,281
Derecognition		-	(18,545)	(18,545)
Effect of foreign exchange	(260)		154	(106)
difference
Balance on December 31, 2020	$8,062		$33,874	$41,936
Accumulated amortization
and impairment
Balance on January 1, 2020	$	-	$19,352	$19,352
Amortization expense		-	15,239	15,239
Derecognition		-	(18,545)	(18,545)
Effect of foreign exchange		-	109	109
difference
Balance on December 31, 2020	$	-	$16,155	$16,155
Cost	Trademark		Computer Software	Total
Balance on January 1, 2019	$8,449		$30,105	$38,554
Additions		-	7,826	7,826
Derecognition		-	(7,474)	(7,474)
Transfer from property,		-	56	56
plant and equipment
Effect of foreign exchange	(127)		(529)	(656)
difference
Balance on December 31, 2019	$8,322		$29,984	$38,306

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Accumulated amortization

Accumulated amortization
and impairment Balance on January 1, 2019 Amortization expense Derecognition Effect of foreign exchange difference Balance on December 31, 2019	$ - - - - $ -	$15,048 12,148 (7,474) (370) $19,352	$15,048 12,148 (7,474) (370)
			$19,352

(12) Prepayments for investments

Investee Company Sunon Electronics Philippines Corp. Sunon Properties Philippines Corp. Total	December 31	December 31
	2020	2019
	$ - -	$6,110 47,591
	$ -	$53,701

(13)Short-term loans

Borrowings Nature Unsecured loan Borrowings Nature Unsecured loan	December 31, 2020	December 31, 2020
	Amout	Interest
	$670,663
	Amout	Interest
	$926,878	0.80%-3.44%

(14) Other payables

Item Accrued payroll Service fee payable R & D payable Bonus to employees and remuneration to directors Equipment payable Others Total	December 31	December 31
	2020 $464,742 17,221 51,398 36,586 47,179 481,793 $1,098,919	2019
		$302,710 18,331 30,628 29,204 48,009 298,030
		$726,912

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(15) Provisions - current

Item Employee benefits Item Beginning balance Additional provisions recognized Reversing balances Effect of foreign exchange difference Ending balance	December 31 2020 2019 $45,064 $41,030 Year Ended December 31	December 31 2020 2019 $45,064 $41,030 Year Ended December 31
	2020 $41,030 7,108 (3,515) 441 $45,064	2019
		$42,570 1,697 (2,083) (1,154)
		$41,030

Provision for employee benefits represents vested short-term service leave entitlements accrued.

(16) Long-term loans and current portion of long-term loans

Item Secured loans Unsecared loans Less: portion due within one year Long-term loans Interest rates	December 31 2020 2019 $220,000 $220,000 300,000 - - - $520,000 $220,000 0.81%-1.17% 1.34%
	2020 $220,000 300,000 - $520,000 0.81%-1.17%

A. Refer to Note 8 for assets pledged as collateral for long-term loans.
B. Under the loan agreement, the Group should maintain certain current ratio, debt ratio, interest coverage and net tangible value based on the Group’s audited semi-annual and annual consolidated financial statements. As of December 31, 2020, the Group had no irregularities.

(17)Pension

A. Defined contribution plans

a.The plan under the Labor Pension Act (the “Act”) is deemed a defined contribution plan. Pursuant to the Group has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts.
b.The employees of the Group’s subsidiaries are members of a state-managed retirement benefit plan operated by local government. The subsidiary is required to contribute amounts calculated at a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement benefit plan is to make the specified contributions to the fund.

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c.The total expenses recognized in the consolidated statement of comprehensive income were $95,728 thousand and $109,943 thousand, representing the contributions payable to these plans by the Group at the rates specified in the plans for the years ended December 31, 2020 and 2019, respectively.
B. Defined benefit plans
a.The Company have defined benefit plans under the Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The aforementioned companies contribute an amount equal to 2% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the companies are required to fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the government’s designated authorities; as such, the Group does not have any right to intervene in the investments of the Funds.
b.The amounts arising from the defined benefit obligation of the Group in the consolidated balance sheets were as follows:

Item Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31	December 31
	2020 $85,430 (26,039) $59,391	2019
		$82,159 (20,430)
		$61,729

C. Movements of the net defined benefit liabilities were as follows:

Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020
Present Value of Defined Benefit Obligation	Fair Value of Plan Assets	Net Defined Benefit Liabilities
$82,159 - 718 - -	($20,430) - (210) - -	$61,729 - 508 - -
$718	($210)	$508

154

$ - - 4,165 (258)	($633) - - -	($633) - 4,165 (258)
$3,907	($633)	$3,274
$ - (1,345)	($6,120) 1,354	$(6,120) -
$85,430	($26,039)	$59,391
Year Ended December 31, 2019
Present Value of Defined Benefit Obligation	Fair Value of Plan Assets	Net Defined Benefit Liabilities
$94,388 - 1,298 - -	($18,728) - (289) - -	$75,660 - 1,009 - -
$1,298	($289)	$1,009
$ - 781 5,532 (13,199)	($654) - - -	($654) 781 5,532 (13,199)
($6,886)	($654)	($7,540)
$ - (6,641)	($7,400) 6,641	($7,400) -
$82,159	($20,430)	($61,729)

D. Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

a. Investment risk

The pension funds are invested in equity and debt securities, bank deposits, etc.

The investment is conducted at the discretion of the government’s designated

155

authorities or under the mandated management. However, under the Labor Standards Law, the rate of return on assets shall not be less than the average interest rate on a two-year time deposit published by the local banks and the government is responsible for any shortfall in the event that the rate of return is less than the required rate of return.

b.Interest risk
- A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.
c. Salary risk
- The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
E. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

valuation were as follows:
Discount rate Future salary increase rate The weighted average duration of the defined benefit obligation	Measurement Date
	Decembe 31, 2020	Decembe 31, 2019
	0.500%	0.875%
	2%	2%
	13.3 years	14 years

(a) Assumptions regarding future mortality experience are set based on actuarial valuation inaccordance with the 5th version of Taiwan Standard Ordinary Experience Mortality Tables.
(b) If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

the defined benefit obligation would	increase (decrease) as follows:	increase (decrease) as follows:
Item Discount Rate 0.25% higher 0.25% lower Expected rates of salary increase 0.25% higher 0.25% lower	December 31
	2020	2019
	($2,807)	($2,832)
	$2,931	$2,962
	$2,838	$2,881
	($2,733)	($2,769)

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

F. The Group expects to make contributions of $6,000 thousand to the defined benefit plans for the year ended December 31, 2021.

(18) Share capital

A. Movements in the number of the Group’s ordinary shares outstanding were as follows:

Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31 Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31	Year Ended December 31, 2020	Year Ended December 31, 2020
	Shares (in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297 Year Ended December 31, 2019 Shares (in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297	Amount
		$2,509,297 - -
		$2,509,297
	Shares (in thousands) 250,930 - - 250,930

B. As of December 31, 2020, the authorized capital are $3,000,000 thousand, consisting of 300,000 thousand shares.

(19) Capital surplus

Item From merger From convertible bonds Treasury share transactions Reorganization Differences between considerations and carrying amounts of subsidiaries acquired or disposed Total	December 31	December 31
	2020 $18,227 326,015 21,464 1,050 147 $366,903	2019
		$18,227 326,015 21,464 1,050 147
		$366,903

Under the Company Act, the capital surplus generated from the excess of the issuance price over the par value of capital stock and donations can be used to offset deficit or

157

may be distributed as stock dividends or in cash. Under the regulations of the Security Exchange Law, the maximum amount transferred from the foregoing capital surplus to the Company’s capital per year shall not be over 10% of the Company’s paid-in capital. Capital surplus can’t be used to offset deficit unless legal reserve is insufficient. The capital surplus from long-term investments may not be used for any purpose.

(20)Retained earnings and dividend policy

(1) In accordance with the dividend policy as set forth in the Company’s Articles of Incorporation, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the regulations, and the remainder plus prior year’s unappropriated earnings will be recommended by the board of directors and approved through the shareholders’ meeting.
In consideration of its operation and capital expenditure demands, the Company stipulates appropriate dividend distribution ratio, and proposes for approval in the shareholders’ meeting. However, at least 20% of total dividends should be distributed in cash.
(2) Legal reserve may be used to offset a deficit, and be transferred to capital or distributed in cash. However, legal reserve can be transferred to capital or distributed in cash only when the legal reserve has exceeded 25% of the Company’s paid-in capital.

(3) Special reserve

paid-in capital. (3) Special reserve
Item Reserve for the debit balance of other equities Reserve for first-time adoption of IFRS Total	December 31, 2020 $181,120 79,155 $260,275	December 31, 2019
		$85,554 79,155
		$164,709

A. While earning distribution, the earnings can be distributed after appropriation of the equivalent amount of the debit balance of the other equities of the balance sheet.
B. Under Rule No.1010012865 issued by the FSC for first-time adoption of IFRS, the special reserve can be reversed while usage, disposal and reclassification of related assets.
(4) The appropriation of 2019 and 2018 earnings had been resolved at the shareholders’ meeting in June 2020 and 2019, respectively. Details were summarized below:

Item Legal reserve Special reserve Cash dividends Total	Amount 2019 2018 $68,683 $60,512 95,566 37,598 501,860 501,860 $666,109 $599,970	Dividends Per Share	Dividends Per Share
	2019 $68,683 95,566 501,860 $666,109	2019 2.0	2018
			2.0

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(5) The appropriation of 2020 earnings had been proposed by the board of directors on March 11, 2021. Details were summarized below:

Item Legal reserve Special reserve Cash dividends	Amount $84,903 (18,180) 602,231	Dividends Per Share
		2.4

A. The appropriations of earnings for 2020 are to be presented for approval in the shareholders' meeting to be held in June 2021.
B. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of treasury stocks, and exercise of employees’ stock options, leading to a change in the number of outstanding shares and a consequent change in dividend yield, it is proposed that the chairman is authorized by the Board of Directors to duly adjust stocks and cash payout rates.
(6) Information on the earnings appropriation proposed by the Company’s Board of Directors and approved by the Company’s shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(21)Others equity

Item Balance at January 1 Exchange dirrerences arising on translation of foreign operations Banance at December 31	Exchange Differences on Translating Foregin Operations	Exchange Differences on Translating Foregin Operations
	2020 ($206,275) 18,180 ($242,095)	2019
		($164,709) (95,566)
		($260,275)

(22)Operating revenues

(22)Operating revenues
Item Revenue from contracts with customers Total revenues Sales returns Sales discount Net	Year Ended December 31
	2020 $12,863,748 (44,070) (38,397) $12,781,281	2019
		$11,713,646 (28,323) (25,408)
		$11,659,915

A. Explain of contract revenue

Sales of fans and other related goods are mainly to system manufacturers and distributors. Please refer to Note 14 for the main sale areas.

B. The Group’s timing of sales recognition is goods transferred at a certain point of time.

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C. Contract balances

The Group recognizes the receivables, contract assets and contract liabilities related to contract revenue as follows:

to contract revenue as follows:
Item Receivables Contract assets Total Contract liabilities - current	Year Ended December 31
	2020 $3,225,589 - $3,225,589 $105,491	2019
		$3,323,241 -
		$3,323,241
		$77,337

a. Significant changes in contract assets and contract liabilities The changes in the contract assets and contract liabilities primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment, and there is no other significant change.
b. Amount from previous period’s satisfied performance obligations and beginning contract liabilities recognized in the current period as income were as follows:

Year Ended December 31

Revenue in the current period	2020	2019 $72,085 $ -
From beginning contract liabilities From previous period’s satisfied performance obligations	$77,337
	$ -

(23)Labor cost, depreciation and amortization

Item Labor cost Salaries Insurance Pension Others Depreciation Amortization Total	Year Ended December 31, 2020 Operating cost Operating expenses Total $1,399,781 $742,946 $2,142,727 55,662 60,197 115,859 63,145 33,091 96,236 647,817 64,680 712,497 253,166 141,637 394,803 19,230 35,922 55,152 $2,438,801 $1,078,473 $3,517,274	Year Ended December 31, 2020 Operating cost Operating expenses Total $1,399,781 $742,946 $2,142,727 55,662 60,197 115,859 63,145 33,091 96,236 647,817 64,680 712,497 253,166 141,637 394,803 19,230 35,922 55,152 $2,438,801 $1,078,473 $3,517,274
	Operating cost $1,399,781 55,662 63,145 647,817 253,166 19,230 $2,438,801	Operating expenses $742,946 60,197 33,091 64,680 141,637 35,922 $1,078,473

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Year Ended December 31, 2019

Item Labor cost Salaries Insurance Pension Others Depreciation Amortization Total	Operating cost $1,022,079 61,599 75,169 603,612 264,070 11,747 $2,038,276	Operating expenses $712,815 61,197 35,783 63,135 135,420 26,431 $1,034,781	Total $1,734,894 122,796 110,952 666,747 399,490 38,178 $3,073,057

The Company accrued employees’ compensation and remuneration to directors at the rates not less than 2% and not higher than 5% of net income before income tax, emoployees’ compensation and remuneration to directors during the period. If there is a change in the amounts after the annual consolidated financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.
The employees’ compensation and remuneration to directors for the years ended December 31, 2020 and 2019 had been approved by the Company’s Board of Directors meeting held on March 11, 2021 and March 11, 2020, respectively, and the relevant amounts recognized in the consolidated financial statements were as follows:

follows:
Resolution amount of allotment Recognized in financial statements Difference	Year ended December 31
	2020		2019
	Employees’ compensation $23,500 23,500 $ -	Remuneration to directors	Employees’ compensation $18,619 18,619 $ -	Remuneration to directors
		$13,000 13,000		$10,500 10,500
		$ -		$ -

The above mentioned employees’ compensation will be paid by cash.

Information about the appropriation of employees’ compensation and directors’ remuneration by the Company as proposed by the Board of Directors and resolved by the shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

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(24)Interest income

Item Interest on bank deposits Interest on early payment Others Total (25)Other income Item Rental income Others - sample sales, etc. Others - subsidy Others Total	Year ended December 31	Year ended December 31
	2020 2019 $7,981 $7,437 7,330 9,332 18 22 $15,329 $16,791 Year ended December 31	2019
		$7,437 9,332 22
		$16,791
	2020 $3,874 65,999 29,343 37,760 $136,976	2019
		$3,872 44,765 38,097 44,708
		$131,442

(26)Other gains and losses

Item Net gain on financial instruments at FVTPL Loss on disposal of property, plant and equipment Net currency exchange gain Gain on disposal of investments Gain on reversal of impairment loss of investment properties Others Total (27)Finance costs Item Interest on loans Interest on lease liabilities Others Less: capitalized amount for qualified assets Carrying amount	Year ended December 31	Year ended December 31
	2020 2019 ($967) $1,114 (91,340) (2,121) (48,396) 10,896 6,874 2,597 - 6,745 (18,737) (16,147) ($152,566) $3,084 Year ended December 31	2019
		$1,114 (2,121) 10,896 2,597 6,745 (16,147)
		$3,084
	2020 $11,385 10,715 1,663 - $23,763	2019 $16,537 10,285 2,023 - $28,845

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(28)Income tax expense

A. The major components of tax expense were as follows:

Current income tax Current tax expense Adjustments in tax of prior periods Total Deferred income tax The origination and reveral of temporary differences Total lncome tax expense	Year ended December 31	Year ended December 31
	2020 $279,879 (60,313) $219,566 $17,187 $17,187 $236,753	2019
		$189,706 (8,492)
		$181,214
		$47,709
		$47,709
		$228,923

B. Income tax expense recognized in other comprehensive income was as follows:

Item Exchange differences on translation of foreign operations Remeasurement of defined benefit plans Total	Year ended December 31	Year ended December 31
	2020 $4,545 (655) $3,890	2019
		($23,892) 1,508
		($22,384)

C. Reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

profit or loss was as follows:
Item Income before income tax Income tax expense at the statutory rate Tax effect of adjusting items: Expenses not deductible for tax purpose Adjustments for prior year’s tax adjustments Deferred income tax expense Temporary differences Income tax expense recognized in profit or loss	Year Ended December 31
	2020	2019
	$1,088,403	$909,724
	$332,127 (52,248) (60,313) 17,187	$275,164 (85,458) (8,492) 47,709
	$236,753	$228,923

The applicable tax rate used by the Group is 20%. In addition, the tax rate applicable to unappropriated earning is 5%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

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According to the amendments to the Statute for Industrial Innovation announced in July 2019, the amounts of unappropriated earnings in 2019 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Group has already deducted the amount of the unappropriated earnings that has been reinvested as capital expenditures.

The Group applied for and was approved the repatriation of offshore funds (including mainland China) within the time limit in accordance with the “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act”effective from August 15, 2019. The applicable tax rate exempt from taxation is 8% for the first year and 10% for the second year under the general income tax system. A profit-seeking enterprise may apply to the Ministry of Economic Affairs for engaging in substantive investment within one year from the date of repatriating funds and has a 50% tax refund preference when completing the investment within the time limit.

D. Amounts of deferred tax assets or liabilities as a result of temporary difference, loss carryfoward and investment tax credit were as follows:

	Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Effect of Exchange Rate Changes	Balance, End of Year
$12,346 8,110 2,655 25,327 4,812	($1,122) (366) 96 3,477 1,755	$655 - - - -	$ - 104 - (121) 109	$11,879 7,848 2,751 28,683 6,676
$53,250	$3,840	$655	$92	$57,837
$61,483 3,342	$15,106 5,921	$4,545 -	$ - -	$81,134 9,263
$64,825	$21,027	$4,545	$ -	$90,397
($11,575)	($17,187)	($3,890)	$92	($32,560)

164

	Year Ended December 31, 2019	Year Ended December 31, 2019	Year Ended December 31, 2019
Balance, Beginning of Year	Effect of Tax Rate Change	Recognized in Profit or Loss	Effect of Exchange RateChanges	Balance, End of Year
$385 15,132 22,502 2,624 22,232 - 2,919	(385) (1,278) (14,285) 31 3,113 5,017 (2,922)	$ - (1,508) - - - - -	$ - - (107) - (18) (205) 3	$ - 12,346 8,110 2,655 25,327 4,812 -
$65,794	($10,709)	($1,508)	($327)	$53,250
$51,001 376 338	$34,374 2,966 (340)	($23,892) - -	$ - - 2	$61,483 3,342 -
$51,715	$37,000	($23,892)	$2	$64,825

E. Items with no deferred tax assets recognized:

Item Deductible temporary differences	December 31	December 31
	2020 $8,290	2019
		$6,665

F. The tax authorities have ractified Company’s income tax returns through Year 2018.

(29)Other comprehensive income (loss)

Year Ended December 31,2020	Year Ended December 31,2020	Year Ended December 31,2020
Other Comprehensive Income (Loss), Before Tax ($3,274) ($3,274)	Income Tax Benefit (Expense) $655 $655	Other Comprehensive Income (Loss), Net of Tax
		($2,619)
		($2,619)

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Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Subtotal Recognized in other comprehensive income (loss) Item Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Subtotal Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Subtotal Recognized in other comprehensive income (loss) (30)Earnings per share Item	$22,725 ($4,545) $22,725 ($4,545) $19,451 ($3,890) Year Ended December 31,	$22,725 ($4,545) $22,725 ($4,545) $19,451 ($3,890) Year Ended December 31,	$22,725 ($4,545) $22,725 ($4,545) $19,451 ($3,890) Year Ended December 31,	$18,180 $18,180 $15,561 2019
			Income Tax Benefit (Expense) Other Comprehensive Income (Loss), Net of Tax ($1,508) $6,032 ($1,508) $6,032 $23,892 ($95,566) $23,892 ($95,566) $22,384 ($89,534) Year Ended December 31 2020 2019 $851,650 $680,801 250,930 250,930 $3.39 $2.71 $851,650 $680,801 - - $851,650 $680,801	Other Comprehensive Income (Loss), Net of Tax
				$6,032
				$6,032
				($95,566)
				($95,566)
				($89,534)
			2020 $851,650 250,930 $3.39 $851,650 - $851,650

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Weighted average shares outstanding (in thousands) Impact on employees’ compensation (Note) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earning per share (after tax)	$250,930 437 $251,367 $3.39	$250,930 393
		$251,323
		$2.71

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

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party:

The Group has no parent and ultimate controlling party.

(2) Related party name and category:

Related PartyName Guang Sheng Investment Corporation Shehng-Yuan Children Development and Adult Support Services Center Yo Yuan Investment Corporation Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Related PartyCategory
	Other related party Other related party Other related party Associates

(3) Significant transactions with related parties:

A. Sales: None.

B. Purchase:

A. Sales: None. B. Purchase:
Related PartyCategory Associates	Year Ended December 31
	2020 $233	2019 $ -

C. Contract assets: None.

D. Contract liabilities: None.

E. Balance of receivables (excluding lending to related parties): None.

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F. Balance of payables (excluding borrowing from related parties):

Item Account payable Other payables G. Prepayments: Item Prepayments	Related Party Category Associates Associates Related Party Category Associates	December 31	December 31
		2020 2019 $268 $ - $18 $ - December 31	2019
			$ -
			$ -
		2020 $13	2019
			$ -

H. Property transactions: None.
I. Lessee arrangements:

		Year	Ended December 31	Ended December 31
Item	Related Party Category	2020		2019
Acquisition of right-of-use asset	Other related parties		$310		$ 245
			December 31
Item	Related Party Category	2020		2019
Refundable deposits	Other related parties		$26		$26
Lease liabilities - current	Other related parties		$155		$91
Lease liabilities - noncurrent Other related parties			$91	$	-
		Year Ended December		31
Item	Related Party Category	2020	2019
Interest expense	Other related parties		$1		$2

Above lease terms are based on the contract, and rent is paid monthly.

J. Rent arrangements: None.
K. Financing activities - lending to related parties: None.
L. Financing activities - borrowing from related parties : None.
M. Guarantee for related parties: None.

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N. Others:

a. Guarantee deposits:

Related Party Category Other related parties b. Miscellaneous income: Related PartyCategory Other related parties	December 31	December 31
	2020 2019 $55 $55 Year Ended December 31	2019
		$55
	2020 $194	2019
		$194

Miscellaneous income is mainly rent income. Rent prices are according to the contract agreement and received monthly.

c. Miscellaneous expenses:

c. Miscellaneous expenses:
Related PartyCategory Associates	Year Ended December 31
	2020 $68	2019
		$ -

Miscellaneous expenses are R&D.

(4) Key management compensation

(4) Key management compensation
Related Party Category Salaries and other short-term employee benefits Post-employment benefits Other long-term employee benefits Termination benefits Share-based payments Total 8. PLEDGED ASSETS Item	Year Ended December 31 2020 2019 $73,719 $70,924 - - - - - - - - $73,719 $70,924 Year Ended December 31
	2020	2019
Property, plant and equipment (net)	$496,858	$496,858

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT COMMITMENTS

(1) As of December 31, 2020 and 2019, the Group issued guarantee notes for bank loans amounting to $3,231,400 thousand and $2,895,790 thousand, respectively.
(2) Commitments and contingency as of December 31, 2020 and 2019 consisted of the following:

ollowing:
Item L/C Amount	(In thousands) December 31
	2020	2019
	USD 1,273	USD 1,009 NTD 1,972

(3) As of December 31, 2020 and 2019, the note endorsement for material purchase were as follows:

As of December 31, 2020 and 2019, ollows:	the note endorsement for material purchase were a	the note endorsement for material purchase were a
Item USD NTD	(In thousands) December 31
	2020	2019
	1,345 -	1,885 1,403

(4) As of December 31, 2020 and 2019, the Group endorsed guarantees for others. Please refer to Note 13 for the information.
(5) Statement of lawsuit
SIAE Microelettronica S.P.A. filed a lawsuit against the company for the infringement on April 8, 2020. The Group has appointed the lawyer to proceed with the litigation, and it is under the jurisdiction of Kaohsiung District Court in Taiwan. The final outcome will depend on the future litigation procedures and will not have a significant impact on the Company’s operations.
(6) Significant contract
A. The Group entered into the land usage right transfer contract with Hermosa Ecozone Development Corporation in Year 2020. The main contents are as below:
- (A) Transfer object: land usage right of 137,096 square meters at Lot 1 Block 12 in Hermosa Ecozone Industrial Park for the constraction of the plant.
- (B) Land usage right period: 75 years.
- (C) Transfer price of land usage right: $410,992 thousand (PHP 685,480 thousand)
B. The Group entered into the land usage right transfer contract with Farms Agribusiness Corporation in Kunshan Economic and Technological Development Zone in Year 2000. The contents of the contract were as below:
- (A) Transfer object: land usage right of 48,688 square meters at Kunshan Economic and Technological Development Zone for the construction of the plant and dormitory.

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(B) Land usage right period: 50 years.
(C) Transfer price of land usage right: US$828 thousand (RMB 6,842 thousand).

10. SIGNIFICANT DISASTER LOSS: NONE.

11. SIGNIFICANT SUBSEQUENT EVENTS: NONE.

12. OTHERS

(1) Capital risk management

The Group should maintain an adequate capital structure to enable the expansion and enhancement of equipments. Therefore, the Group manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital asset purchases and debt service requirements associated with its existing operations over the next 12 months.

(2) Financial instruments
A. Financial risk of financial instruments

Financial risk management policies

The Group’s activities expose to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To lower down the related financial risk, the Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.

The plans for material treasury activities are reviewed by board of directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Group Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

Significant financial risks and degrees of financial risks

a. Market risk
(a) Foreign exchange rate risk

The Group’s functional currency is New Taiwan dollars. Many of the Group’s operating activities are denominated in foreign currencies. Consequently, the Group is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Group raises loans denominated in foreign currency and derivative financial instruments to hedge the currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements. The derivative financial instruments the Group held with maturities less than 3 months are not qualified for hedge accounting. The

171

net investment in foreign operation is strategic investment. Therefore, the Group does no hedge for it.

(b) Foreign currency risk and sensitivity analysis (including consolidated elimination items and incompletely write-off of exchange rate risk)

	December 31, 2020	December 31, 2020	December 31, 2020
Carrying Value(NTD) 2,282,762 267,563 2,451,433 104,239 1,983,226 8,567 1,392,680 92,464	Sensitivity Analysis
	Variation Profit and Loss Impact Increase 1% 22,828 Increase 1% 2,676 Increase 1% 24,514 Increase 1% 1,042 Increase 1% (19,832) Increase 1% (86) Increase 1% (13,927) Increase 1% (925) December 31, 2019		Equity Impact
			- - - - - - - -
Carrying Value(NTD) 2,082,481 279,921 2,378,566 50,375 2,006,518 8,475 1,230,610 85,176	Sensitivity Analysis
	Variation Increase 1% Increase 1% Increase 1% Increase 1% Increase 1% Increase 1% Increase 1% Increase 1%	Profit and Loss Impact 20,825 2,799 23,786 504 (20,065) (85) (12,306) (852)	Equity Impact
			- - - - - - - -

172

When New Taiwan dollar appreciates and other variation factors stay unchanged, there will be the same but opposite amount of influence as of December 31, 2020 and 2019.

The details of unrealized exchange gain (loss) for monetary items due to material exchange rate fluctuation were as follow:

Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2019	Year Ended December 31, 2019	Year Ended December 31, 2019
Foreign Exchange Gain (Loss)			Foreign Exchange Gain (Loss)
Foreign Currency (In thousands)	Exchange Rate	Carrying Value	Foreign Currency (In thousands)	Exchange Rate	Carrying Value
- - (14,104) (98) - - 10,421 101	29.5330 33.7400 6.8976 0.8753 29.5330 33.7400 6.8976 0.8753	(21,201) 6,499 (60,389) (3,296) 60,858 (40) 44,618 3,395	- - (4,999) (22) - - 1,612 46	30.9110 34.6000 6.8985 0.8934 30.9110 34.6000 6.8985 0.8934	(39,141) 124 (22,401) (761) 56,019 18 7,221 1,580

b. Price risk

The Group is exposed to equity instrument price risk because the investments held by the Group are classified on the consolidated balance sheet as at fair value through profit or loss.

The Group is exposed to beneficiary certificates. If the price of the Group’s equity investments rises (or falls) 1%, the net income resulting from equity instruments at fair value through profit and loss will increase (or decrease) $4,124 thousand and $3,877 thousand for the years ended December 31, 2020 and 2019, respectively.

c. Interest rate risk

The carrying amount of the financial assets and liabilities that exposed to interest rate risk as reporting date was as follow:

Item Fair value interest rate risk: Financial assets Financial liabilities Net	CarryingValue	CarryingValue
	December 31,2020	December 31,2019
	$196,417 (306,539)	$9,852 (304,039)
	($110,122)	($294,187)

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Cash flow interest rate risk: Financial assets Financial liabilities Net	$1,582,861 (1,190,663)	$1,261,357 (1,146,878) $114,479
	$392,198

(a) Sensitivity analysis of fair value interest rate risk instrument
The Group does not classify any fixed-rate instruments as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. In addition, the Group does not designate derivatives (interest rate swap) as hedge instruments under hedge accounting. Therefore, the change of interest rate at reporting date does not have influence on net income and other comprehensive income.
(b) Sensitivity analysis of cash flow interest rate risk instrument The Group’s financial assets (liabilities) with variable interest rate are those with floating-rate. If interest rate increases 1%, the net income will increase (decrease) $3,922 thousand and $1,145 thousand for the years ended December 31, 2020 and 2019, respectively.

B. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a contract leading to a financial loss to the Group. The Group is exposed to credit risk from operating activities, primarily accounts receivables, and from investing activities, primarily deposit and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

a. Business related credit risk
In order to maintain the credit quality of accounts receivables, the Group has established procedures to monitor and limit exposure to credit risk on trade receivables. Credit evaluation is performed in the consideration of the relevant factors which may affects the customer's paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions.
b. Financial credit risk

The Group’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Group Treasury function. The Group only deals with creditworthy counterparties, banks, and government so that no significant credit risk was identified. In addition, the Group has no financial assets at amortized and investments in debt instruments at fair value through other comprehensive income.

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(a) Credit concentration risk
- As of December 31, 2020 and 2019, the Group’s ten largest customers accounted for 29.23% and 36.97% of accounts receivable, respectively. The Group believes the concentration of credit risk is insignificant for the remaining accounts receivable.
- The Group continuously evaluated customers' financial situation. To reduce major credit risk, the Group bought credit guarantee insurance, and asked customers to make payment in advance.
(b) Expected credit loss measurement
- i. Account receivables adopts a simplified approach, please prefer to Note 6(4).
- ii. Identification basis for whether credit risk is significantly increased: None (the Group didn’t hold debt instruments at amortized cost or at FVTOCI).
c. Collaterals and other credit enhancement held to avoid credit risks from financial assets.

The following table shows the maximum exposure to credit risk regarding financial assets recognized in the consolidated balance sheets, pledged collateral, master netting arrangements and other credit enhancement held by the Group:

December 31, 2020 Financial instruments subject to IFRS 9 impairment requirements and derogated from credit Financial instruments not subject to IFRS 9 impairment requirements: Financial assets at fair value through profit or loss Total December 31, 2019	Decrease Amount of Credit Risk Maximum	Decrease Amount of Credit Risk Maximum	Decrease Amount of Credit Risk Maximum	Exposure
	Collateral Net Settlement Agreement Other Credit Strengthening $ - $ - $ - - - - $ - $ - $ - Decrease Amount of Credit Risk Maximum Collateral Net Settlement Agreement Other Credit Strengthening $ - $ - $ - - - - $ - $ - $ -			Total
				$ - -
				$ -
				Exposure
		Net Settlement Agreement $ - - $ -	Other Credit Strengthening $ - - $ -	Total $ - - $ -
Financial instruments subject to IFRS 9 impairment requirements and derogated from credit Financial instruments not subject to IFRS 9 impairment requirements: Financial assets at fair value through profit or loss Total

175

C. Liquidity risk

a. Liquidity risk management:

The objective of liquidity risk management is to ensure the Group has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

b. Financial liabilities with repayment periods:

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.

December 31, 2020

Non-derivative Financial liabilities Within 1 year Short-term loans $670,663 Accounts payable 2,822,496 Other payables 1,098,192 Long-term loans - (Inclusive of current portion) Lease liabilities 97,816 Guarantee deposits 4,094 Total $4,693,261	Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
		$ - 2 223 33,333 67,413 -	$ - 238 504 420,000 133,372 -	$ - - - 66,667 50,895 -	$670,663 2,822,736 1,098,919 520,000 349,496 4,094	$670,663 2,822,736 1,098,919 520,000 306,539 4,094
	$4,693,261	$100,971	$554,114	$117,562	$5,465,908	$5,422,951

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
	97,816	$200,785	$38,378	$3,733	$2,986	$5,798	$349,496

December 31, 2019

Non-derivative Financial liabilities Within 1 year Short-term loans $926,878 Accounts payable 2,704,803 Other payables 726,286 Long-term loans - (Inclusive of current portion) Lease liabilities 86,795 Guarantee deposits 4,253 Total $4,449,015	Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
		$ - 251 497 220,000 58,196 -	$ - - - - 136,440 -	$ - - 129 - 72,277 -	$926,878 2,705,054 726,912 220,000 353,708 4,253	$926,878 2,705,054 726,912 220,000 304,039 4,253
	$4,449,015	$278,944	$136,440	$72,406	$4,936,805	$4,887,136

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
	$86,795	$194,636	$58,398	$4,642	$2,940	$6,297	$353,708

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The Group does not expect a maturity analysis of which the cash flows timing would be significantly earlier, or the actual amount would be significantly different.

2. Categories of financial instruments

The carrying value of financial assets and liabilities of the Group as of December 31, 2020 and 2019 was as follow:

2020 and 2019 was as follow:
Financial assets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Other financial assets - current Refundable deposits Financial asset at fair value through profit or loss Financial liabilites Financial liabilites measured at amortized cost Short-term loans Notes and accounts payable (including related parties) Other payables (including related parties) Lease liabilities (including current and noncurrent) Long-term loans Guarantee deposits	December 31
	2020 $1,574,919 3,225,589 131,252 208,730 22,803 412,365 670,663 2,822,736 1,098,919 306,539 520,000 4,094	2019
		$1,271,420 3,323,241 60,754 9,852 24,372 387,731 926,878 2,705,054 726,912 304,039 220,000 4,253

(3) Fair value information
A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3)C. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(10).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices is included in Level 1.

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Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investments in government bonds, corporate bonds, financial debentures, convertible bonds, and most derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investments in some derivative instruments and equity instruments without active market is included in Level 3.
C. Financial instruments that are not measured at fair value The Group considers that the carrying amounts of financial instruments including cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables, long-term loans and gurantee deposits that are not measured at fair value approximate their fair values.
D. The related information of fair value by leve1
The related information of financial instruments measured at fair value on a recurring basis by level is as follows:

December 31, 2020 Item Level 1 Level 2 Level 3 Total Assets: Recurring fair value measurements Financial assets at fair value through profit or loss: - beneficiary certificates $412,365 $ - $ - $412,365 December 31, 2019 Item Level 1 Level 2 Level 3 Total Assets: Recurring fair value measurements Financial assets at fair value through profit or loss: - beneficiary certificates $387,731 $ - $ - $387,731

E. Valuation techniques of financial instruments valued at fair value
(a) The fair value of financial assets and liabilities traded in an active market is based on the quoted market prices. The quotation, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Center Bank, is included in the fair value of the listed securities

178

instruments and the debt instruments in active markets with open bid.

A financial instrument is regarded as the quoted price in an active market if the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency; and if those prices represent the actual and regularly occurring market transactions on an arm’s length basis. Otherwise, the market is deemed to be inactive. Normally, a market is considered to be inactive when the bid-ask spread is increasing; or the bid-ask spread varies significantly; or there has been a significant decline in trading volume.

(b) Except for the above-mentioned financial instruments traded in an active market, the fair value is based on the valuation techniques or the quotation from the counterparty. The fair value refers to the current fair value of the other financial instruments with similar conditions and characteristics, using a discounted cash flow analysis or other valuation techniques, such as calculations of using models (for example, applicable yield curve from Taipei Exchange, or average quoted price on interest rate of commercial paper from Reuters), based on the information acquired from the market at the balance sheet date.

When the financial instrument of the Group is not traded in an active market, the fair value is determined based on the ratio of the quoted market price of the comparative company, its book value per share and its operating situation. Also, the fair value is discounted for its lack of liquidity in the market.

F. There was no transfer between Level 1 and Level 2 for the years ended December 31, 2020 and 2019.
G. Changes in Level 3 instruments: None.
H. Valuation process for Level 3 fair value measurement:
- Valuation process regarding fair value Level 3 is conducted by the Group’s finance department, by which the independence of fair value of financial instruments is verified though use of independent data source in order to make the valuation results close to market conditions. Such valuation results are regularly reviewed so as to ensure their reasonableness.
(5) Transfer of financial assets: None.
(6) Offset of financial assets and liabilities: None.

179

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Financings provided: Table 1.
B. Endorsement/guarantee provided: Table 2.
C. Marketable securities held: Table 3.
D. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4.
E. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: Table 5.
F. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None.
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 6.
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7.
I. Information about the derivative financial instruments transaction: None.
J. The business relationship between the parent and the subsidiaries and significant transactions between them: Table 8.
(2) Information on investees (before consolidated elimination): Table 9.
(3) Information on investments in Mainland China (before consolidated elimination): Table 10.
(4) Information on major shareholders (including name of the shareholders with shareholding above 5%, shares held and shareholding ratio): Table 11.

180

Table 1

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

LOANS PROVIDED TO OTHER PARTIES

DECEMBER 31, 2020

										(Amounts in Thousands	(Amounts in Thousands	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)
No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 3)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sunon Electronic (kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co.,Ltd.	Other receivables - related parties	Yes	13,094 (RMB3,000)	13,094 (RMB3,000)	`－`	4.35%	2	`－`	Operating capital	`－`	`－`	`－`	146,016	292,032

Note 1: Financing limits for each borrowing company:

(1) For trading partner:

Shall not be higher than the purchase or sales amount of the most recent year.

(2) For short-term financing:

Shall not exceed 10% of the Company’s net worth.

Note 2: The maximum balance of financing activitives:

(1) For trading partner :

Shall not exceed 20% of the Company’s net worth

(2) For short-term financing:

Shall not exceed 20% of the Company’s net worth

(3) The policy for loans granted mutually between overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows:

。 The maximum amount for total loan for individual enterprise shall not exceed 50% of its net worth.

Note 3: The code represents the nature of financing activities as follows:
(1) Related to trading partner is “1”.
(2) Short-term financing is “2”.

Note 4: The maximum amount was approved by the Board of Directors’ meeting.

181

Table 2

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED

DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

No. (Note 1)	Endorsers	Endorsees	Endorsees	Endorsement Limit for a Single Entity (Note 3)	Highest Balance During the Period	Ending Balance	Actual Amount Drawn	Balance Secured by Collaterals	Ratio of Accumulated Amount to net Worth of the Company	Maximum Amount of Endorsement (Note 4)	Provision of Endorsements by Parent Company to Subsidiary	Provision of Endorsements by Subsidiary to Parent Company	Provision of Endorsements to the Party in Mainland China
		Name of endorsees	Relationship (Note 2)
`０`	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd	2	1,378,239	NTD 256,320 (USD 9,000)	NTD 170,880 (USD 6,000)	`－`	`－`	3.72%	2,297,065	Y	N	Y
`０`	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Foshan) Co., Ltd	2	1,378,239	NTD 170,880 (USD 6,000)	NTD 170,880 (USD 6,000)	`－`	`－`	3.72%	2,297,065	Y	N	Y
`０`	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai) Co., Ltd	2	1,378,239	NTD 227,840 (USD 8,000)	NTD 227,840 (USD 8,000)	NTD227,840 (USD 8,000)	`－`	4.96%	2,297,065	Y	N	Y

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.

(2) The investee company is numbered sequentially from Arabic numeral 1.

182

Note 2: The following code represents the relationship with the Company :

Trading partner.
Majority owned subsidiary
The Company direct and indirect owns over 50% ownership of the investee company.
A subsidiary jointly owned over 90% by the Company.
Guaranteed by the Company according to the construction contract.
An investee company. The guarantees were provided based on the Company's proportionate share in the investee company.
Joint and several guaranteed by the Company according to the pre-construction contract under Consumer protection Act.

Note 3: Endorsements/guarantees provided by the Company to a single enterprise and a single foreign affiliate shall not exceed 20% and 30% of the Company’s net worth, respectively.

Note 4: The maximum amount of the endorsements/guarantees provided by the Company shall not exceed 50% of the Company’s net worth.

183

Table 3

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

DECEMBER 31, 2020

					(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)	(Amounts in Thousands of New Taiwan Dollars)
Investor	Type and Name of Securities	Relationship with the Issuer	General Ledger Account		Endingbalance			Remarks
				Number of Shares (in thousands)	Carrying Value	Percentage of Ownership	Fair Value
Sunon Electronic (Foshan) Co., Ltd.	Fund - China Resources Yuanda Fund	None	Financial assets at fair value through profit or loss	`－`	263,010	`－`	263,010
Sunon Electronic (Bei Hai) Co., Ltd.	Fund - China Resources Yuanda Fund	None	Financial assets at fair value through profit or loss	`－`	149,355	`－`	149,355

184

Table 4

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST

NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

					DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
					(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Relationship with the Investor	BeginningBalance		Addition(Note)			Disposal			EndingBalance
					Shares	Amount	Shares	Amount	Shares	Selling Price	Carrying Value	Gain (loss) on Disposal	Shares	Amount
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Properties Philippines Corp.	Investments accounted for using equity method	Cash Capital Increase	Subsidiary	`－`	`－`	`－`	414,623 (PHP699,314) (Note 1)	`－`	`－`	`－`	`－`	`－`	414,623 (PHP699,314)
Sunon Electronic (Foshan) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	`－`	64,910 (RMB 15,104)	`－`	325,989 (RMB 75,022) (Note 2)	`－`	129,904 (RMB 30,340)	127,889 (RMB 29,869)	2,015 (RMB 471)	`－`	263,010 (RMB 60,257)
Sunon Electronic (Bei Hai) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	`－`	63,881 (RMB 14,865)	`－`	529,273 (RMB123,006) (Note 2)	`－`	445,021 (RMB103,938)	443,799 (RMB103,653)	1,222 (RMB 285)	`－`	149,355 (RMB 34,218)

(Note 1): Including cash capital increase $430,000 thousand, investment loss accounted for using equity method of ($4,448) thousand, and the exchange rate impact of ($10,929) thousand.

(Note2): Including current purchase of $847,757 thousand, net profit of financial assets at fair value through profit or loss of $121 thousand and the exchange rate impact of $7,384 thousand.

(Note 3): The above-mentioned parent-subsidiary transactions have been eliminated.

185

Table 5

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

Acquisition of individual Real Estate Properties at Costs of At Least NT$300 Million or 20% of the Paid-in Capital YEAR ENDED DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Company Name	Real Estate	Transaction Date	Transaction Amount	Payment Term	Counterparty	Relationship with the Seller	Prior transaction of related counterparty	Prior transaction of related counterparty	Prior transaction of related counterparty	Prior transaction of related counterparty	Price Reference	Purpose of Acquisition	Other Terms
							Owner	Relationship	Transfer Date	Amount
Sunon Properties Philippines Corp.	Lot 1 Block 12, Hermosa Ecozone Industrial Park	September 2, 2020	NTD 410,992 (PHP 685,480)	NTD 410,992 (PHP 685,480)	Hermosa Ecozone Development Corporation	None	－	－	－	－	Determined at prices agreedon by both parties upon negotiation or through price comparison with reference to appraisal reports issued by professional appraisal institutions.	Constraction of the plant	－

186

Table 6

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST

NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

Company Name Related Party	Company Name Related Party	Nature of Relationships		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	(Notes/Accounts Payable) Or Receivable	(Notes/Accounts Payable) Or Receivable
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co.,Ltd.	Sub-subsidiary	Sales	3,292	0.04%	3 to 4 months	`－`	`－`	1,194	0.05%
			Purchases	1,876,694	31.44%	2 to 3 months	`－`	`－`	(536,800)	27.07%
	Sunon Electronic (Foshan) Co., Ltd.	Sub-subsidiary	Sales	45,997	0.53%	3 to 4 months	`－`	`－`	21,723	0.93%
			Purchases	36,844	0.62%	2 to 3 months	`－`	`－`	(140,843)	7.10%
			Outsourcing processingfee	867,983	80.31%	2 to 3 months
	Sunon Electronic (Bei Hai) Co.,Ltd.	Sub-subsidiary	Sales	316,106	3.67%	3 to 4 months	`－`	`－`	240,671	10.30%
			Purchases	1,809,172	30.31%	2 to 3 months	(Note 1)	(Note 1)	(532,309)	26.84%
	Sunon INC	Subsidiary	Sales	397,738	4.62%	2 to 3 months	`－`	`－`	78,412	3.36%
	Sunon SAS	Subsidiary	Sales	432,822	5.03%	2 to 3 months	`－`	`－`	188,555	8.07%
			Purchases	303	0.01%	2 to 3 months	`－`	`－`	(11)	`－`

Note 1: It is the transaction that undertakes the transfer of the Company, so it is based on the order price of the Company, and the payment period is 2-3 months.

Note 2: The above-mentioned parent-subsidiary transactions have been eliminated.

187

Table 7

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

				(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)
Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover	Overdue		Amounts Received in Subsequent Period (Note1)	Allowance for Bad Debts
					Amount	Action Taken
Sunonwealth Electric Machine Industry Co., Ltd.	SUNON SAS	Subsidiary	188,555	2.49	`－`	`－`	NTD 135,704	`－`
	Sunson Electronic (Bei Hai) Co., Ltd.	Subsidiary	240,671	4.24	`－`	`－`	NTD 110,833	`－`
Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 538,034 (RMB 123,266)	3.91	`－`	`－`	NTD 323,542 (RMB 74,125)	`－`
Sunon Electronic (Foshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 140,843 (RMB 32,268)	4.05	`－`	`－`	NTD 89,367 (RMB 20,475)	`－`
Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 532,307 (RMB 121,955)	4.70	`－`	`－`	NTD 513,106 (RMB 117,555)	`－`

Note 1: Amounts collected as of March 11, 2021.

Note 2: The above-mentioned parent-subsidiary transactions have been eliminated.

188

Table 8

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Company Name	Counterparty	Nature of Relationship (Note 2)		Intercompany Transactions	Intercompany Transactions
				Account	Amount	Terms (Note 4)	Percentage of Consolidated Net Revenue or Total Assets (Note3)
0	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon SAS	1	Sales revenues Accounts receivable	432,822 188,555	(Note 4)	3.39% 1.81%
		Sunon INC	1	Sales revenues Accounts receivable	397,738 78,412	(Note 4)	3.11% 0.75%
		Sunon Electronic (Bei Hai) Co., Ltd.	1	Sales revenues Accounts receivable	316,106 240,671	(Note 4)	2.47% 2.31%
1	Sunon Electronic (Kunshan) Co.,Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	2	Sales revenues Accounts receivable	1,886,768 538,034	(Note 4)	14.76% 5.16%
2	Sunon Electronic (Foshan) Co.,Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	2	Sales revenues Accounts receivable	838,620 140,843	(Note 4)	6.56% 1.35%
3	Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	2	Sales revenues Accounts receivable	2,249,873 532,307	(Note 4)	17.60% 5.11%

189

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.
。
(2) The investee company is numbered sequentially from Arabic numeral 1.

Note 2: There are three types of relationships with traders. The type of mark is as follows:

(1) No. 1 represents the transactions from parent company to subsidiary.
(2) No. 2 represents the transactions from subsidiary to parent company.
(3) No. 3 represents the transactions between subsidiaries.

Note 3: The ratio of transaction amount to consolidated revenues or total assets is calculated as follows:

(1) asset/liability items: ending balance to total assets;
(2) profit and loss items: accumulated amount to consolidated revenues.

Note 4: (1) The sales terms between the parent and the subsidiary are equivalent to those of other clients. The collection period is 3-4 months.

(2) The trading terms of the parent-subsidiary processing fee are equivalent to those of other processing companies. The payment period is 2-3 months.
(3) The purchase price between the Company and Beihai Jianzhun is based on the order price of the Company due to the nature of transference trading. The rest transactions are equivalent to other suppliers. The payment term is average 2-4 months for ordinary suppliers and 2-3 months for related parites..
(4) The remaining transactions between the parent and subsidiaries are with no similar transactions. The trading conditions are negotiated by engaging parties.
(5) The terms between subsidiaries are equivalent to those of the parent company.

Note 5: The above-mentioned parent-subsidiary transactions have been eliminated.

190

Table 9

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

NAMES, LOCATIONS AND OTHER INFORMATION OF INVESTEE COMPANIES (EXCLUDING INVESTEE IN MAINLAND)

DECEMBER 31, 2020

				DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
				(Amounts in Thousands of New Taiwan Dollars						and Foreign Currencies)
Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		Balance a	s of December 31,2020		Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2020	As of December 31, 2019	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Sunonwealth Electric Machine Industry Co., Ltd.	Successful Century Co., Ltd.	British Virgin Islands	Investments	1,136,933	1,136,933	33,880	100.00%	1,433,968	321,764	312,544	`－`
	BVI Sunon International Limited	British Virgin Islands	Investments	1,035,677	1,035,677	`－`	100.00%	1,378,591	152,673	163,163	`－`
	Sunon INC	USA	Manufacturing and sales of fans	49,140	49,140	150	100.00%	91,086	20,529	21,210	`－`
	Sunon SAS	France	Manufacturing and sales of fans	16,127	16,127	50	100.00%	69,955	(1,577)	(2,191)	`－`
	Sunonwealth Electric Machine Ind.(H.K.) Ltd.	Hong Kong	Manufacturing and sales of fans	3,428	3,428	800	99.99%	1,852	(49)	(49)	`－`
	Sunon Corporation	Japan	Manufacturing and sales of fans	4,470	4,470	4	100.00%	2,353	(72)	(72)	`－`
	Sunon Electronics India Private Limited	India	Manufacturing and sales of fans	4,880	4,880	1,100	99.99%	2,157	(1,605)	(1,605)	`－`
	Sunon Electoronics Philippines Corp.	Philippines	Manufacturing and sales of fans	6,110	`－`	102	99.99%	5,614	(443)	(443)	`－`
	Sunon Properties Philippines Corp.	Philippines	Real estate development and investment	430,000	`－`	7,068	99.99%	414,623	(4,448)	(4,448)	`－`
			Total					3,400,199	486,772	488,109

191

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2020	As of December 31, 2019	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Successful Centurty Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	China	Manufacturing and selling of fans	NTD1,136,276 (USD 34,000)	NTD1,136,276 (USD 34,000)	`－`	100.00%	NTD1,460,170 (USD 51,270)	NTD 321,770 (USD 10,895)	NTD 321,770 (USD 10,895)	`－`
Sunon Electronic (Kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	China	Manufacturing and selling of cooling equipment	NTD 12,819 (RMB 3,000)	`－`	`－`	35.00%	NTD 11,276 (RMB 2,583)	NTD -6,040 (RMB -1,411)	NTD -1,784 (RMB -417)
BVI Sunon International Limited	Sunon Electronic (Foshan)Co.,Ltd.	China	Manufacturing and selling of fans	NTD 765,207 (RMB166,171)	NTD 765,207 (RMB166,171)	`－`	100.00%	NTD 962,675 (RMB220,554)	NTD 114,795 (RMB 26,811)	NTD 114,795 (RMB 26,811)	`－`
	Sunon Electronic (Bei Hai) Co., Ltd.	China	Manufacturing and selling of new type electronic parts	NTD 293,115 (RMB63,732)	NTD 293,115 (RMB63,732)	`－`	100.00%	NTD 455,690 (RMB104,401)	NTD 38,024 (RMB 8,881)	NTD 38,024 (RMB 8,881)	`－`
Sunon SAS	Sunon Deutschland GmbH	Germany	Sales of fans	NTD 1,027 (EUR 25)	NTD 1,027 (EUR 25)	`－`	100.00%	NTD 5,093 (EUR 145)	NTD -769 (EUR -23)	NTD -769 (EUR -23)	`－`

Note: The above-mentioned parent-subsidiary transactions have been eliminated.

192

Table 10

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA

DECEMBER 31, 2020

`(1)` Mainland Investment Information:

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee Company	Percentage of Ownership	Share of Profit/Loss (Note 2)	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
Sunon Electronic (Kunshan) Co., Ltd.	Manufacturing and selling of fans	NTD1,136,276 (USD 34,000)	(2)	NTD1,136,673 (USD33,880)	`－`	`－`	NTD1,136,673 (USD 33,880)	NTD 321,770 (USD 10,895)	100%	NTD 321,770 (USD 10,895) (2).B	NTD 1,460,170 (USD 51,270)	NTD 384,603 (USD 12,894)
Sunon Electronic (Foshan) Co., Ltd.	Manufacturing and selling of fans	NTD 765,207 (USD 23,660)	(2)	NTD 743,663 (USD22,840)	`－`	`－`	NTD 743,663 (USD 22,840)	NTD 114,795 (RMB 26,811)	100%	NTD 114,795 (RMB 26,811) (2).B	NTD 962,675 (RMB 220,554)	NTD 622,508 (USD 20,474)
Sunon Electronic (Bei Hai) Co., Ltd.	Manufacturing and selling of new type electronic parts	NTD 293,115 (USD 10,000)	(2)	NTD 293,115 (USD10,000)	`－`	`－`	NTD 293,115 (USD 10,000)	NTD 38,024 (RMB 8,881)	100%	NTD 38,024 (RMB 8,881) (2).B	NTD 455,690 (RMB 104,401)	NTD 549,672 (USD 17,836)
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Manufacturing and selling of cooling equipment	NTD 32,870 (RMB 7,692)	(3)	`－` (Note 5)	`－`	`－`	`－` (Note 5)	NTD -6,040 (RMB -1,411)	35%	NTD -1,784 (RMB -417) (2).A	NTD 11,276 (RMB 2,583)	`－`

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
NTD 1,136,673 (USD 33,880) NTD 743,663 (USD 22,840) NTD 293,115 (USD 10,000)	USD 34,000 USD 23,660 USD 10,000	(Note 4)

193

Note : Gain and loss on investment are translated using average exchange rates for the year ended December 31, 2020 (USD:NTD 1:29.533; CYN:NTD

1:4.2816). Additions and ending balance are translated using the exchange rates as at December 31, 2020 (USD:NTD 1:28.48; CYN:NTD 1:4.3648)
Note 1: The investment methods are divided into the following three types:
(1) Investing directly to the Mainland China;
(2) Reinvesting in the Mainland China through third-region companies (please refer to Table 9);
(3) Others.
Note 2: In the current period, the investment profit and loss column is recognized:
(1) If during incorporation with no investment income or loss, it should be indicated;
(2) The basis for recognition of investment gains and losses divided into the following three types, which should be indicated:
A. Audited financial statements by international accounting firms with cooperation relationship with accounting firms in the Republic of China.
B. Audited financial statements by parent company’s auditors.
C. Others.

Note 3: The relevant figures in this form should be listed in New Taiwan Dollars.

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(2)The Company’s major transactions during year 2020 directly or indirectly through the third place and the mainland invested company are listed as follows:

Investee Company	Sales/ Purchases	Sales/ Purchases	Sales/ Purchases		Transaction Terms	Transaction Terms	(Notes/Accounts Payable) Or Receivables	(Notes/Accounts Payable) Or Receivables
		Amount	%	Price	Payment Terms	Comparison with general transactions	Ending Balance	% to Total
Sunon Electronic (Kunshan) Co., Ltd.	Sales	3,292	0.04%	Cost based	3-4 months	Equivalent to sales price with ordinaryclients	1,194	0.05%
	Purchases	1,876,694	31.44%	Cost based	2-3 months	Equivalent to purchase price with ordinarysuppliers	(536,800)	27.07%
Sunon Electronic (Foshan) Co., Ltd.	Sales	45,997	0.53%	Cost based	3-4 months	Equivalent to sales price with ordinaryclients	21,723	0.93%
	Purchases	36,844	0.62%	Cost based	2-3 months	Equivalent to purchase price with ordinarysuppliers	(140,843)	7.10%
	Outsourcing processingfee	867,983	80.31%	Add a certain margin based on cost	2-3 months	Equivalent to pricing of other processors
Sunon Electronic (Bei Hai) Co., Ltd.	Sales	316,106	3.67%	Cost based	3-4 months	Equivalent to sales price with ordinaryclients	240,671	10.30%
	Purchases	1,809,172	30.31%	According to the company's order price as the basis ofpricing	2-3 months	According to the Company's order price as the basis of pricing	(532,309)	26.84%

Note 4: Enterprises approved by the Ministry of Economic Affairs as the operational headquarters are not subject to the amount or proportion. Note 5: It is invested by Sunon Electronic (Kunshan) Co., Ltd.

Note 6: The above-mentioned parent-subsidiary transactions have been eliminated.

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Table 11

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. AND SUBSIDIARIES

INFORMATION ON MAJOR SHAREHOLDERS

DECEMBER 31, 2020

	DECEMBER 31, 2020	DECEMBER 31, 2020
	(Unit: share)
Shares Name of Major Shareholder	Number of Shares	Percentage of Ownership (%)
Guang Sheng Investment Corporation	19,150,000	7.63%
Yo Yuan Investment Corporation	14,825,000	5.90%
Fu-Ing Hong Chen	14,670,000	5.84%

Note: The information of major shareholders is based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (included treasury shares) by the Company as of December 31, 2020. The share capital in consolidated financial report may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

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14.SEGMENT INFORMATION

(1) General information

For management purpose, the Group’s reportable segments are listed as follows:

A. Great China: Mainly engaging business in Taiwan and China.
B. Europe and North America: Mainly engaging business in America and Europe.
C. Other: Other areas.

(2) Measurement basis

The Group uses profit before income tax as the measurement for segment profit and the basis of performance assessment. There was no material inconsistency between the accounting policies of the operating segment and the accounting policies described in Note 4.

(3) Segment financial information

(In thousands)

Year 2020 Sales from external customers Sales among inter-segment Total sales Operating profit (loss) Segment assets Segment liabilities	GreatChina $11,697,704 6,230,588 $17,928,292 $1,566,952 $ - $ -	Europe and North America $1,083,577 288 $1,083,865 $29,015 $ - $ -	Other Areas $ - - $ - ($6,576) $ - $ -	Elimination $ - (6,230,876) ($6,230,876) ($500,988) $ - $ -	Total
					$12,781,281 -
					$12,781,281
					$1,088,403
					$10,419,061
					$5,824,932

a. Total reporting segment sales should eliminate inter-segment sales of $6,230,876 thousand.
b. Income tax expense of $236,753 thousand is not included in segment profit (loss).

(In thousands)

Year 2019 Sales from external customers Sales among inter-segment Total sales Operating profit (loss) Segment assets Segment liabilities	GreatChina $11,450,744 4,555,172 $16,005,916 $1,326,559 $ - $ -	Europe and North America $209,171 911,083 $1,120,254 $34,309 $ - $ -	Other Areas $ - - $ - ($737) $ - $ -	Elimination $ - (5,466,255) ($5,466,255) ($450,407) $ - $ -	Total
					$11,659,915 -
					$11,659,915
					$909,724
					$9,439,298
					$5,210,520

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a. Total reporting segment sales should eliminate inter-segment sales of $5,466,255 thousand.
b. Income tax expense of $228,923 thousand is excluded in segment profit (loss).
(4) Production and service information: No disclosure required for only single industry in the Group.
(5) Geographic information:

Geographic information:
Asia Europe America Others Total	Year ended December 31
	2020	2019
	$9,863,379 2,163,164 616,700 138,038	$8,809,619 2,220,201 539,394 90,701
	$12,781,281	$11,659,915

(6) Major customers: No revenue from any individual customer exceeds 10% of the Group’s total revenues. Therefore, the disclosure is not required.

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V. Parent company only financial statements of the most recent year audited by the CPA

199

200

201

202

203

204

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31,	December 31,	2019
Amount $491,384 16,320 1,796,090 530,555 18,752 19,386 608,008 11,461 12,313 3,504,269 3,400,199 1,039,525 41,844 80,889 17,792 16,430 2,448 - 4,599,127 $8,103,396 $350,000 37,776 773,102 1,209,963 312,007 14,907 84,991 13,759 12,299 326 2,809,130	Amount $465,806 12,713 1,863,678 361,188 13,959 18,228 773,926 11,260 - 3,520,758 2,848,292 1,063,832 29,335 81,306 9,853 20,280 2,682 53,701 4,109,281 $7,630,039 $685,000 19,240 903,644 1,125,993 245,196 11,921 21,895 13,276 12,190 460 3,038,815	%
		6.1 0.2 24.5 4.7 0.2 0.2 10.1 0.1 -
		46.1
		37.4 13.9 0.4 1.1 0.1 0.3 - 0.7
		53.9
		100.0
		9.0 0.2 11.8 14.8 3.2 0.2 0.3 0.2 0.2 -
		39.9

205

December 31,	December 31,	2019
Amount $520,000 90,397 29,900 59,391 449 700,137 3,509,267 2,509,297 366,903 758,081 260,275 941,668 (242,095) 4,594,129 $8,103,396	Amount $220,000 64,825 15,136 61,729 756 362,446 3,401,261 2,509,297 366,903 689,398 164,709 758,746 (260,275) 4,228,778 $7,630,039	%
		2.9 0.8 0.2 0.8 -
		4.7
		44.6
		32.9 4.8 9.0 2.2 9.9 (3.4)
		55.4
		100.0

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PANENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Year Ended December 31	Year Ended December 31	Year Ended December 31
2020	% 100.0 (84.5) 15.5 (0.5) 0.4 (3.1) (3.2) (5.7) - (12.0) 3.4 - 1.4 1.5 (0.1) 5.8 8.6 12.0 (2.1) 9.9 - - - 0.3 (0.1) 0.2 0.2 10.1	2019
Amount $8,611,750 (7,276,702) 1,335,048 (38,932) 33,951 (268,557) (279,417) (482,361) (462) (1,030,797) 299,270 3,887 120,487 131,779 (7,617) 488,109 736,645 1,035,915 (184,265) 851,650 (3,274) 655 (2,619) 22,725 (4,545) 18,180 15,561 867,211 $3.39 $3.39		Amount $7,831,346 (6,607,080) 1,224,266 (33,951) 32,687 (252,946) (273,061) (455,280) (364) (981,651) 241,351 7,540 108,395 42,317 (7,775) 430,696 581,173 822,524 (141,723) 680,801 7,540 (1,508) 6,032 (119,458) 23,892 (95,566) (89,534) $591,267 $2.71 $2.71	%
			100.0 (84.4)
			15.6 (0.4) 0.4 (3.2) (3.5) (5.8) -
			(12.5)
			3.1
			0.1 1.4 0.5 (0.1) 5.5
			7.4
			10.5 (1.8)
			8.7
			0.1 -
			0.1
			(1.5) 0.3
			(1.2)
			(1.1)
			7.6

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

	Unappropriated Special Reserve Earnings 127,111 $ 671,883 $ - (60,512) 37,598 (37,598) - (501,860) - 680,801 - 6,032 - 686,833 164,709 758,746 - (68,683) 95,566 (95,566) - (501,860) - 851,650 - (2,619) - 849,031 260,275 $ 941,668 $ Retained Earnings	Other	Total Equity
		Exchange Differences on Translating Foreign Operations $ (164,709) - - - - (95,566) (95,566) (260,275) - - - - 18,180 18,180 $ (242,095)
Legal Reserve 628,886 $ 60,512 - - - - - 689,398 68,683 - - - - - 758,081 $	Special Reserve 127,111 $ - 37,598 - - - - 164,709 - 95,566 - - - - 260,275 $
			4,139,371 $ - - (501,860) 680,801 (89,534)
			591,267
			4,228,778 - - (501,860) 851,650 15,561
			867,211
			4,594,129 $

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments : Adjustments to reconcile profit (loss) Depreciation Amortization Expected credit loss Interest expense Interest income Share of profits of subsidiaries, associates and joint ventures Gain on disposal and retirement of property, plant and equipment Transfer of property, plant and equipment to expenses Gain on reversal of impairment loss on non-financial assets Unrealized gross profit on sales to subsidiaries and associates Realized gross profit on sales to subsidiaries and associates Total adjustments to reconcile profit (loss) Net changes in operating assets and liabilities Decerase (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in accounts receivable - related parties Decrease (increase) in other receivables Decrease (increase) in other receivables - related parties Decrease (increase) in inventories Decrease (increase) in prepayments Total changes in operating assets Net changes in operating liabilities Increase (decrease) in contract liabilities Increase (decrease) in accounts payable Increase (decrease) in accounts payable - related parties Increase (decrease) in other payables Increase (decrease) in other payables - related parties Increase (decrease) in provisions Increase (decrease) in advance receipts Increase (decrease) in net defined benefit liabilities Total changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments 209	Year Ended December 31	Year Ended December 31
	2020 1,035,915 $ 69,511 12,620 462 7,617 (3,887) (488,109) (65) 77 - 38,932 (33,951) (396,793) (3,607) 67,126 (169,367) (4,793) (1,158) 165,918 (267) 53,852 18,536 (130,542) 83,970 66,960 2,986 483 (134) (5,612) 36,647 90,499 (306,294)	2019
		822,524 $ 62,537 9,585 364 7,775 (7,540) (430,696) (216) 2,343 (6,745) 33,951 (32,687)
		(361,329)
		19,024 (83,271) (14,149) (4,130) (6,986) 95,908 2,901
		9,297
		8,495 (117,525) 99,389 (3,233) 162 156 460 (6,391)
		(18,487)
		(9,190)
		(370,519)

Cash generated from operations Interest received Dividends received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of investments accounted for using equity method Increase in prepayments for investments Decrease in prepayments for investments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Acquisition of intangible assets Increase in other financial assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Proceeds from long-term loans Decrase in guarantee deposits Repayments of lease principal Cash dividends paid Net cash used in financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR CASH AND CASH EQUIVALENTS - END OF YEAR	Year Ended December 31	Year Ended December 31
	2020 729,621 $ 3,887 390,056 (7,672) (95,637) 1,020,255 (436,110) - 53,701 (27,438) 666 - 234 (20,897) (12,313) (442,157) - (335,000) 300,000 (307) (15,353) (501,860) (552,520) 25,578 465,806 491,384 $	2019
		452,005 $ 7,549 157,806 (7,788) (109,647)
		499,925
		(4,880) (53,701) - (75,007) 2,257 (197) - (7,163) -
		(138,691)
		175,000 - - (2,421) (13,364) (501,860)
		(342,645)
		18,589 447,217
		465,806 $

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

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SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD. NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. GENERAL INFORMATION

Sunonwealth Electric Machine Industry Co., Ltd. (collectively as the “Company”) was incorporated in October 1980. The Company engages mainly in the manufacturing and selling of AC/DC brushless fans, electric fans, motors and related components, and microcooling fans.

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

2. THE AUTHORIZATION OF THE PARENT COMPANY ONLY FINANCIAL

STATEMENTS

The parent company only financial statements were approved and authorized for issue by the Board of Directors on March 11, 2021.

3. APPLICATION OF NEW AND AMENDED STANDARDS AND

INTERPRETATIONS

(1) Effect of adoption of the amendments to the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of SIC (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

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

New, Revised or Amended Standards and Interpretations Amendments to IFRS 3 “Definition of a Business” Amendments to IAS 1 and IAS 8 “Definition of Material” Amendments to IFRS 9, IAS 39 and IFRS 7 “Interest Rate Benchmark Reform” Amendments to IFRS 16“New Coronavirus Pneumonia Related Rent Concessions”	Effective date Announced byIASB
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

(Note) The FSC allows companies to apply the amendment in advance on January 1, 2020.

The Company has assessed the aforementioned standards and interpretations, and there’s no significant effect to the Company’s financial position and financial performance.

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

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

Effective Date
New, Revised or Amended Standards and Interpretations Announced by IASB
Amendments to IFRS 4 “Extention of the Temporary June 25, 2020 (Effective Exemption from Applying IFRS 9” from issue date)
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 (Note) “Interest Rate Benchmark Reform - Phase 2”
(Note) The amendments are applicable for the annual reporting period beginning on or after January 1, 2021.

The Company has evaluated the aforementioned standards and interpretations, and there’s no significant effect to the Company’s financial position and financial performance.

(3) Effect of IFRSs issued by IASB but not yet endorsed and issued into effect by FSC

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

IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as January 1, 2023 Current or Non-current” Amendments to IAS 16 “Property, Plant and EquipmentJanuary 1, 2022 (Note 2) Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contract - Cost of January 1, 2022 (Note 3) Fulfilling a Contract” Amendments to IFRS 3 “Reference to the Conceptual January 1, 2022 (Note 4) Framework” Annual Improvements to IFRS Standars 2018-2020 January 1, 2022 (Note 5) Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 Amendments to IAS 8 “Definition of Accounting January 1, 2023 Estimates”

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

Note 2: Companies should apply these amendments retrospectively. However, the amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner

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intended by management on or after January 1, 2021.

Note 3: This amendment applies to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 4: This amendment applies to business combinations whose acquisition date starts in the annual reporting period after January 1, 2022.
Note 5: The amendments to IFRS 9 are applicable to swap or modification of terms of financial liabilities incurred during the annual reporting period beginning on January 1, 2022. The amendment to IAS 41 is applicable to fair value measurement during the annual reporting period beginning after January 1, 2022. The amendments to IFRS 1 are retrospectively applied to the annual reporting period beginning after January 1, 2022.
A. Amendments to IAS 1 “Classification of Liabilities as Current or Noncurrent” The amendments clarifies that when the Company judges whether liability is classified as noncurrent, the Company should assess whether the Company has the right to defer liquidation period after the reporting period at least twelve months. If the Company has the entity’s right on the end of the reporting period, liability must be classified as non-current whatever the Company expects whether executing the right or not. If the Company must follow certain condition to obtain the right to defer settlement of liability, the Company must have completed certain condition on the end of reporting period even if lender tests the Company whether following certain condition later. The aforementioned liquidation means that transfering cash, other economic resources or the Company’s equity instruments to counterparty to let liability wipe out. If liability clause will follow counterparty’s choice to liquidate liability by the Company’s equity instruments, this option must follow the regulations of IAS 32 “Financial Instruments: Presentation” to be recognized in equity individually and doesn’t have affect on the classification of liability.
B. Amendment to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use” The amendment stipulates that the sales price of the project produced in order to make property, plant and equipment reach the necessary location and state that can meet the expected operation mode of the management is not suitable as a cost reduction of the asset. The aforementioned items should be measured in accordance with IAS 2 “Inventory”, and the sales price and cost should be recognized in profit and loss in accordance with the applicable standards.
This amendment is applicable to factories, property and equipment that reach the necessary locations and conditions for the management's expected operation mode after January 1, 2021 (the beginning of the earliest expression period). When the Company initially applies the amendments, it will recognize the cumulative effect of the amendments applied initially as an adjustment to the opening balance of the retained

213

earnings (or other components of equity, as appropriate) at the beginning of the earliest expression period , and re-edit the information during the comparison period.

C. Amendment to IAS 37 “Onerous Contract - Cost of Fulfilling a Contract”
The amendment stipulates that when assessing whether the contract is onerous, “Cost of Fulfilling a Contract” should include the incremental cost of fulfilling a contract (for example, direct labor and raw materials) and the allocation of other costs directly related to fulfilling a contract (for example, the depreciation expenses of property, plant and equipment items used in fulfilling a contract are allocated).
The Company will recognize the cumulative effect on the retained earnings on the first application date when the amendment is first applied.
D. Amendment to IFRS 3“Reference to the Conceptual Framework”

E. Annual Improvements to IFRS Standards 2018-2020
The annual improvement in the IFRS 2018-2020 includes amendments to certain standards. Among them, the amendment of IFRS 9 “Expenses included in the “10%” test for the purpose of derecognise financial liabilities” is to assess whether there is a significant difference between the swap of financial liabilities or the modification of terms, When comparing cash flow projections of the new and old contract terms (including the net amount of fees charged for signing a new contract or modifying the contract), whether there is a 10% difference, the aforesaid fees collected should only include the payment between the borrower and the lender paid for.

F. Amendments to IAS 1 ‘’Disclosure of Accounting Policies’’ This amendment is to improve the disclosure of accounting policies and provide more useful information for major users of financial statements.

G. Amendments to IAS 8 ‘’Definition of Accounting Estimates’’
This amendment defines accounting estimates as the monetary amount of financial statements subject to measurement uncertainty, and provides further explanations and examples to help companies distinguish between changes in accounting policies and changes in accounting estimates.

As of the date the parent company only financial statements were issued, the Company continues in evaluating the impact on its financial position and financial performance as a result of the initial adoption of the aforementioned standards or interpretations and related applicable period. The related impact will be disclosed when the Company completes the evaluation.

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

214

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

(1) Compliance statement

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

(2) Basis of preparation
A.Except for the following items, the accompany parent company only financial statements have been prepared under the historical cost convention:
- a. Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b. Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B.The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.
C.When preparing the parent company only financial statements, the Company accounts for subsidiaries and associates by using the equity method. In order to agree with the amount of net income, other comprehensive income and equity attributable to shareholders of the parent in the consolidated financial statements, the differences of the accounting treatment between the parent company only basis and the consolidated basis are adjusted under the heading of investments accounted for using equity method, share of profits of subsidiaries and associates and share of other comprehensive income of subsidiaries and associates in the parent company only financial statements.
(3) Foreign currency translation
A. Foreign currency transactions and balance
- a.Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
- b.Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in

215

profit or loss.

  - c.Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising on the retranslation of non-monetary items are included in profit or loss for the year except for exchange differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.

B. Translation of foreign operations
- a.The operating results and financial position of all the Company’s subsidiaries, associates and joint ventures that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- (a) Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- (b) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
- (c) All resulting exchange differences are recognized in other comprehensive income.
- b.When the foreign operation partially disposed of or sold is an associate or a joint venture, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company retains partial interest in the former foreign associate or joint venture after losing significant influence over the former foreign associate or joint venture, such transactions should be accounted for as disposal of all interest in these foreign operations.
- c.When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
(4) Classification of current and non-current items
A.Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- a. Assets arising from operating activities that are expected to be realized, or intended to be sold or consumed within the normal operating cycle;
- b. Assets held mainly for trading purposes;
- c. Assets that are expected to be realized within twelve months from the balance sheet

216

date;

  - d. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

B.Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- a. Liabilities that are expected to be paid off within the normal operating cycle;
- b. Liabilities held mainly for trading purposes;
- c. Liabilities that are to be paid off within twelve months from the balance sheet date (Even if a long-term refinancing or re-arrangement of payment agreements is completed after the balance sheet date and before the issuance of the financial report is approved, it is classified as current liabilities).
- d. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(5) Cash and cash equivalents
Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value (including the original maturity of the time deposits within three months.)
(6) Financial instruments

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

Financial assets and financial liabilities are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

A. Financial assets

a. Category of financial assets

Financial assets are recognized on a trade date basis.

Financial assets are classified into the following categories: financial assets at FVTPL and financial assets at amortized cost.

(a) Financial asset at FVTPL

217

cost criteria or the FVTOCI criteria.

When the financial assets meet one of the following conditions, the Company designates them as measured at fair value through profit and loss at the time of initial recognition:

i. It is a mixed (combined) contract; or
ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
iii. It is an investment that manages and evaluates its performance on a fair
value basis based on written risk management or investment strategies.

(b) Financial assets at amortized cost

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

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

Financial assets at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Expect for the following two cases, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset:

  - i. Purchased or originated credit-impaired financial assets: for those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

  - ii. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets: for those financial assets, the Company shall apply the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

b. Impairment of financial assets
(a) At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial assets at amortized cost (including accounts receivable), investments in debt instruments that are measured at FVTOCI, lease receivable and contract assets.

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(b) The Company always recognize lifetime Expected Credit Loss (i.e. ECL) for accounts receivables. For other financial assets, the Company recognize lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equaling to 12-month ECL.
(c) Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.
(d) The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the financial asset.
c. Derecognition of financial assets
The Company derecognizes a financial asset when one of the following conditions is meet:
(a) The contractual rights to receive cash flows from the financial asset expire.
(b) The contractual rights to receive cash flows from the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
(c) The Company neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.

On derecognition of financial assets at amortized cost in its entirety, the difference between the financial asset’s carrying amount and the sum of the consideration received is recognized in profit or loss. On derecognition of debt instrument measured at fair value through other comprehensive income, the difference between the financial asset’s carrying amount and the sum of the consideration received and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in profit or loss. On derecognition of equity instruments at fair value through other comprehensive

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income in its entirety, the cumulative profit and loss will be transferred directly to retained earning without reclassified into profit and loss.

B. Equity instruments
The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.
C. Financial liabilities
a. Subsequent measurement
- Except for the following conditions, all financial liabilities are measured at amortized cost in accordance with the effective interest method:
- (a) Financial liabilities are classified as at fair value through profit or loss when the financial liability is either held for trading or is designated as at fair value through profit or loss. Financial liabilities classified as held for trading are mainly for repurchasing in the short term when they occur, and derivatives other than financial guarantee contracts or designated and effective hedging instruments. Financial assets meet one of the following conditions, the Company designates them as measured at fair value through profit and loss at the time of initial recognition:
  - i. It is a mixed (combined) contract; or
  - ii. It can eliminate or significantly reduce measurement or recognition inconsistencies; or
  - iii. It is an instrument that manages and evaluates its performance on a fair value basis based on written risk management or investment strategies.
b. Derecognition of financial liabilities

The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

(7) Inventories

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cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(8) Investments accounted for using equity method / subsidiaries
A.Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
B.Unrealized gains or losses resulting from inter-company transactions with subsidiaries are eliminated. Necessary adjustments are made to the accounting policies of subsidiaries, to be consistent with the accounting policies of the Company.
C.After acquisition of subsidiaries, the Company recognizes proportionately the share of profit and loss and other comprehensive income in the income statement as part of the Company’s profit and loss and other comprehensive income, respectively. When the share of loss from a subsidiary exceeds the carrying amount of Company’s interest in that subsidiary, the Company continues to recognize its share in the subsidiary’s loss proportionately.
D.As long as the change in shareholding in the subsidiaries does not lead to loss of control, it is to be treated as equity transaction that is to be treated as transactions between the owners. The difference between non-controlling equity adjustment amount and the fair value of payment and receipt is to be recognized as equity
E.When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities. It should reclassify the amount previously recognized in other comprehensive income to profit or loss. When the Company loses control of a subsidiary, gain or loss previously recognized in equity should be reclassified to profit or loss.
F. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

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(9) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and Errors”, from the date of the change.

Service lives estimated as follows:

Buildings:

Main building, 39 to 57 years; Others, 2 to 39 years;

Machinery and equipment, 2 to 22 years; Other equipment, 2 to 24 years; Leasehold improvement, 2 to 22 years;

D. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.
(10)Leases/The Company as a lessee

The Company assesses whether the contract is (or includes) a lease at the date of the contract. For a contract that includes a lease component and one or more additional lease or non-lease components, the Company will allocate the consideration to the lease component base on the individual price of each lease component and the aggregated individual price of the non-lease component.

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Except for payments for low-value asset and short-term leases which will be recognized as expenses on a straight-line basis, the Company will recognize right-of-use assets and lease liabilities for all leases at the inception of lease.

Right-of-use asset

The right-of-use asset is initially measured at cost (including the initial measurement amount of the lease liability, the payments less incentives, initial direct costs and the estimated recover cost), the subsequent measurement is based on the cost less accumulated depreciation and accumulated impairment loss, and adjusting the amount of re-measures of lease liabilities.

Lease liability

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. If the lease period, the evaluation of the purchase choice, the amount of expected to be paid under the residual value guarantee or the change in the index or rate used to determine the lease payment result in a change in the future lease payment, the Company will measure the lease liability and adjust the right to use assets relatively. If the carrying amount has been reduced to Zero, the remaining amount will recognize in the profit and loss. Lease liabilities are presented in a single-line project on the parent company only balance sheet.

(11)Investment properties

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

(12)Intangible assets

Intangible assets with finite useful lives that are acquired separately are measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis over the following estimated lives: computer software - 2 to 15 years; trademarks are the economic benefit or contract period. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Intangible assets are derecognized when disposed of or expected to have no future economic benefits generated through usage or disposal. On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

(13)Impairment of non-financial assets
The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be reversed to the extent of the loss previously recognized in profit or loss.

(14)Provisions

Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

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(15)Employee benefits

A.Short-term employee benefits

B.Pensions

a. Defined contribution plans

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

b. Defined benefit plans
(a) Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior period. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Company uses interest rates of government bonds (at the balance sheet date) instead.
(b) Actuarial gains and losses arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
(c) Past service costs are recognized immediately in profit or loss.
C. Employees’ bonus and directors’ remuneration
Employees’ bonus and directors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. However, if the accrued amounts for employees’ bonus and directors’ remuneration are different from the actual distributed amounts as resolved by the shareholders at their shareholders’ meeting subsequently, the differences should be recognized based on the accounting for changes in estimates.

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D. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognizes expense when it can no longer withdraw an offer of termination benefits or it recognizes related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

(16)Share capital and treasury shares
A.Share capital
- Ordinary share is classified as equity. The classification of the preferred stock depends on the essence of the agreement. If the preferred stock matches the definition of the financial liability, it is classified as a liability. Otherwise, it is classified as equity. Incremental cost that can be attributed to the issuance of stocks or options is deducted from the capital issued.
B.Treasury Shares
- When the Company acquires its outstanding shares, the repurchase considerations (including all directly accountable costs) are recognized under treasury shares and shown as a deduction in equity. Gains on disposal of treasury shares should be recognized under “capital surplus - treasury stock transactions”; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there is insufficient capital surplus to offset the losses, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted-average method for the purpose of repurchased shares.

When the Company’s treasury shares are retired, the treasury share account should be credited, and the capital surplus - premium on stock account and capital stock account should be debited proportionately according to the share ratio. The carrying value of treasury shares in excess of the sum of its par value and premium on stock should first be offset against capital surplus from similar types of treasury share transactions, and the remainder, if any, debited to retained earnings. The sum of the par value and premium on treasury shares in excess of its carrying value should be credited to capital surplus from similar types of treasury share transactions.

(17)Share-based payment transactions
A.For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted

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shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. And ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

B.Cash-settle share-based payment arrangements are the fair value of liabilities undertaken recognized in remuneration costs and liabilities in the vesting period and measured by the fair value of equity instruments offered at each balance sheet date and the settlement date. Any changes are recognized in profit or loss.

(18)Income tax

A.The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B.The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C.Deferred income tax is recognized, using the balance sheet method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

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D.Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E.Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F.Tax preference given for expenditures incurred on acquisitions of equipment or technology, research and development, employees’ training and equity investments is recorded using the income tax credits accounting.

(19)Revenue Recognition

The Company recognizes revenues based on the following steps:

A. Identifying the contracts;
B. Identifying obligations in the contracts;
C. Determining prices;
D. Allocating prices into the obligations in the contracts;
E. Recognizing revenues while fulfilling the obligations.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

A.Goods sales

The Company sells fans and other relevant products. Sales revenues are recognized while the control of goods is transferred to the customers since the customers already have the rights to use, set price, take the major responsibility to resell the good and bear the risk of obsoleteness. The Company recognizes revenues and accounts receivable at the point and presents it in net term after deducting sales return, quantity discount and sales allowance.

The Company does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

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B. Service revenue

Revenue from technical services is recognized when services are provided that in accordance with the relevant agreements.

(20)Borrowing costs

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All borrowing costs other than those stated above are recognized in profit or loss in the period in which they are incurred.

(21)Government subsidy

Government subsidies are recognized at fair value when it is reasonably certain that the Company will comply with the conditions attached to the government subsidies and will receive such subsidies.

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

The preparation of the Company’s parent company only financial statements is adopting accounting policies based on the following significant judgements, significant accounting estimates and assumptions:

(1) Critical judgements in applying accounting policies
A. Judgment of financial asset classification

The Company assesses the business model of financial assets based on the hierarchy that reflects the Company of financial assets that are jointly managed for specific business purposes. This assessment requires consideration of all relevant evidence, including measures of asset performance, risks affecting performance, and the manner in which the relevant managers are determined, and judgments are required.

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The Company continues to assess the adequacy of its business model and monitors the financial assets measured by the amortized cost before the maturity date and the debt instrument investments measured at fair value through other comprehensive income. Evaluate whether the disciplinary action has the same goal of business model. If the business model has been changed, the Company delays the adjustment of the subsequent classification of financial assets. The Company reclassifies financial assets in accordance with IFRS 9, and the application will be postponed from the date of reclassification, if the business model has changed.

B. Revenue recognition

The Company follows IFRS 15 to determine if it controls the specified good or service before that good or service is transferred to the customer, and the Company is acting as a principal or an agent in that transaction. When the Company acts as an agent, revenue is recognized on a net basis.

The Company acts as a principal as that it meets one the of following situations:

a. The Company gains control over the goods from the other party before transferring goods to customers.
b. The Company controls the right of providing service by the other party in order to control the ability of the party to provide service to customers.
c. The Company gain control over goods or service from the other party in order to combine with other goods or services to provide specific goods or services to customers.

The indicators (not limited to) which assist making judgment on whether the Company controls the goods or services before transferring goods or services to customers:

a. The Company has primary responsibilities for the goods or services it provides;
b. The Company bears inventory risk before transferring the specific goods or services to customer, or after transferring the control to customer.
c. The Company has the discretion to set prices.
C. Lease term

In determining the lease term, the Company considers all the facts and circumstances that create an economic incentive to exercise (or not exercise) the option, including all expected change in facts and circumstances from the commencement date until the exercise date of the option. Factors considered include the contractual terms and conditions for the optional period, the significant leasehold improvements made (or expected) during the contract period, and the importance of the underlying assets to the Company's operations, etc. The lease term is reassessed if a significant change in circumstance that are within the control of the Company occurs.

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(2) Critical accounting estimates and assumptions
A. Revenue Recognition

The Company recognizes records a refund for estimated future returns and other allowances in the same period the related revenue is recorded. Refund for estimated sales returns and other allowances is generally made and adjusted at a specific percentage based on historical experience and any known factors that would significantly affect the allowance, and our management periodically reviews the adequacy of the percentage used.

B. Estimated impairment of financial assets

The provision for impairment of trade receivables is based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

C. Process of fair value measurement and evaluation

When the assets and liabilities at fair value with no active market, the Company determines whether to use outside appraisal and using proper evaluation techniques based on related regulation or its own judgment. If the Level 1 input value is not available while evaluating, the Company refers to the analysis of the investee’s financial position and operating outcome, recent trading price, quotes on non-active market of same equity instrument, quotes on active market of similar equity instrument and evaluation multiples of comparable companies. If the future input value is different from expectation, the fair value might change. The Company updates input values quarterly according to the market status in order to monitor if the measurement of fair value is appropriate.

D. Impairment assessment of tangible and intangible assets

The Company assesses impairment based on its subjective judgement and determines the separate cash flows of a specific group of assets, useful lives of assets and the future possible income and expenses arising from the assets depending on how assets are utilised and industrial characteristics. Any changes of economic circumstances or estimates due to the change of Company strategy might cause material impairment on assets in the future.

E. Impairment assessment on investment using equity method

The Company assesses the impairment of investments accounted for using the equity method whenever triggering events or changes in circumstances indicate that an investment may be impaired and carrying value cannot be recoverable. The Company assesses the recoverable amount based on a projected future cash flow and receivable cash dividend of the investees, and disposal-generating future cash flow to ensure the

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reasonableness of such assumptions.

F. Realisability of deferred income tax assets

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Assessment of the realisability of deferred income tax assets involves critical accounting judgements and estimates of the management, including the assumptions of expected future sales revenue growth rate and profit rate, tax exempt duration, available tax credits, tax planning, etc. Any variations in global economic environment, industrial environment, laws, and regulations might cause material adjustments to deferred income tax assets.

G. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Company must determine the net realisable value of inventories on balance sheet date using judgements and estimates. The Company evaluates the amounts of normal inventory comsumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realisable value.

H. Calculation of accrued pension obligations

When calculating the present value of defined pension obligations, the Company must apply judgments and estimates to determine the actuarial assumptions on balance sheet date, including discount rates and future salary growth rate. Any changes in these assumptions could significantly impact the carrying amount of defined pension obligations.

I. Lessees’ incremental borrowing rates
At the time of the decision to increase the borrowing rate of the lessee used in the lease payment, the risk-free interest rate and the same currency is used as the reference rate, and the estimated lessee's credit risk sticker and lease specific adjustments (such as asset-specific and secured factors) are taken into account.

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Item	December 31
	2020	2019
Cash on hand Cash in banks Total	$320 491,064	$355 465,451
	$491,384	$465,806

A.The Company have good credit quality in financial institutions, and the Company has transactions with a number of financial institutions to diversify credit risk that are

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unlikely to be expected to default.

B. The Company had no cash and cash equivalents pledged to others.

(2) Notes receivable, net

Notes receivable, net
Item	December 31
	2020	2019
At amortized cost Notes receivable Less: Loss allowance Net	$16,344 (24)	$12,737 (24)
	$16,320	$12,713

A. The Company had no notes receivable pledged to others.
B. Please refer to Note 6(3) for the relevant disclosure of loss allowance for notes receivable.

(3) Accounts receivable, net

Accounts receivable, net
Item	December 31
	2020	2019
At amortized cost Accounts receivable Less: Loss allowance Net	$2,335,486 (8,841)	$2,233,245 (8,379)
	$2,326,645	$2,224,866

A. The accounts receivable that were neither past due nor impaired was following the Company’s credit policy determined by reference to the industry characteristics, operation scale and current financial position of the counterparties. The average credit period on sales of goods was 3-4 months.
B. The Company had no account receivable pledged to others.
C. To reduce major credit risk, the Company bought credit guarantee insurance.
D. Please refer to Note 7 for accounts receivable with related parties
E. The Company applies the simplified approach to provisions for expected credit losses, which permits the use of a lifetime expected credit losses provision for trade receivables (including other receivables). The expected credit losses on trade receivables are estimated by reference to past account aging records of the debtor, an analysis of the debtor’s current financial position, and industrial trend. As the Company’s historical credit losses experience does not show significantly different loss patterns for different customer segments, the provision for losses based on past due status of notes receivable and accounts receivable (including other receivables) is not further distinguished between the Company’s different customer base.

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F. The Company measures the loss allowance for notes receivable, accounts receivable and other receivables according to the preparation matrix (including related parties):

Expected Credit Loss Rate	Gross Carrying Amount	Loss Allowance (Lifetime ECL)	Amortized Cost
0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5% Expected Credit Loss Rate	$2,230,316 146,899 10,639 2,114	($7,656) (1,180) (28) (1)	$ 2,222,660 145,719 10,611 2,113
	$2,389,968	($8,865)	$ 2,381,103
	Gross Carrying Amount	Loss Allowance (LifetimeECL)	Amortized Cost
0.05%-5% 0.05%-5% 0.05%-5% 0.05%-5%	$2,127,158 115,577 28,414 7,020	($7,987) (339) (77) -	$2,119,171 115,238 28,337 7,020
	$2,278,169	($8,403)	$2,269,766

G. Movements of the loss allowance for notes and accounts receivable (include related parites) were as follows:

G. Movements of the loss allowance for parites) were as follows:	notes and accounts receivable (include related	notes and accounts receivable (include related
Item	Year Ended December 31
	2020 $8,403 462 - - - - $8,865	2019
Beginning balance Add: Provision for impairment Less: Reversal of impairment Less: Derecognition Less: Write-offs Other Ending balance		$8,039 364 - - - -
		$8,403

The above provision has already taken into consideration of collateral or other credit enhancement. The other credit enhancement possessed by above receivables were $460,071 thousand and $560,479 thousand as of December 31, 2020 and 2019, respectively.

The Company writes off a trade receivable when there is information indicating that

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the debtor is in severe financial difficulty and there is no realistic prospect of recovery of the receivable. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables which are due. Where recoveries are made, these are recognized in profit or loss. The Company’s trade receivables for offsetting the contract amount are both $0 thousand for the years ended December 31, 2020 and 2019.

H. Please refer to Note 12 for the relevant credit risk management and assessment method.

(4) Inventories and operating costs

) Inventories and operating costs
Item Raw materials Supplies Work in process Finished goods Subtotal Less: Valuation allowance Net	December 31
	2020 $187,995 3,647 62,535 362,830 $617,007 (8,999) $608,008	2019
		$219,290 6,516 103,725 470,791
		$800,322 (26,396)
		$773,926

A. The related inventory (gain) loss recoginzed as operating cost for the years ended December 31, 2020 and 2019 were as follows:

Item Cost of goods sold Unallocated overheads and labor cost Loss on inventory valuation Others Total	Year Ended December 31	Year Ended December 31
	2020 $7,203,642 46,400 (17,397) 44,057 $7,276,702	2019
		$6,554,158 37,789 (27,103) 42,236
		$6,607,080

B. The Company recognized inventory valuation loss of $17,397 thousand and $27,103 thousand for the years ended December 31, 2020 and 2019, respectively, as a result of raising some product prices and reducing some inventory.
C. The Company had no inventories pledged to others.

(5) Other financial assets - current

Other financial assets - current
Item Project deposits	December 31 2020 2019 $12,313 $ -
	2020 $12,313

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(6) Investments accounted for using equity method

Item	December 31	December 31
	2020	2019
Subsidiaries: Successful Century Co., Ltd. BVI Sunon International Limited Sunon INC Sunon SAS Sunonwealth Electric Machine Ind. (H.K.) Ltd. Sunon Corporation Sunon Electronics India Private Limited Sunon Electronics Philippines Corp. Sunon Properties Philippines Corp. Total	$1,433,968 1,378,591 91,086 69,955 1,852 2,353 2,157 5,614 414,623	$1,283,200 1,412,560 77,075 67,024 1,990 2,423 4,020 - -
	$3,400,199	$2,848,292

A. For more information regarding the subsidiaries of the Company, please refer to Note 4(3) to the Company’s consolidated financial statements of 2020.
B. The investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were based on the subsidiaries’ financial statements audited by auditors for the same years, except for Sunonwealth Electric Machine Ind.(H.K.) Ltd., Sunon Corporation and Sunon Electronics India Private Limited. The Company considered no material adjustments had these subsidiaries’ financial statements been audited.
C. The Company had no investments accounted for using equity method pledged to others as of December 31, 2020 and 2019.

(7) Property, plant and equipment

7) Property, plant and equipment
Item Land Buildings Machinery and equipment Miscellaneous equipment Leasehold improvements Equipment to be inspected and construction in progress Total cost Less: Accumulated depreciation Accumulated impairment Net	December 31
	2020 $804,381 204,195 143,771 78,796 40,467 14,460 $1,286,070 (246,545) - $1,039,525	2019
		$804,381 204,195 131,415 81,659 40,467 22,824
		$1,284,941 (221,109) -
		$1,063,832

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Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Total
$804,381 - - - - -	$204,195 - - - - -	$131,415 2,357 (10,095) 20,094 - -	$81,659 11,456 (23,590) 2,128 - 7,143	$1,284,941 27,748 (33,685) - (77) 7,143
$804,381	$204,195	$143,771	$78,796	$1,286,070
$ - - - -	$99,489 5,395 - -	$48,014 22,507 (9,494) -	$44,021 23,593 (23,590) 3,389	$221,109 55,131 (33,084) 3,389
$ -	$104,884	$61,027	$47,413	$246,545

Cost	Land	Buildings	Machinery and Equipment	Miscellaneous Equipment	Leasehold Improvement	Equipment to be Inspected and Construction in Progress
	$804,381 -	$206,916 -	$100,093 -	$80,494 (7,143)	$41,212 -	$31,797 -
Balance at January 1, 2019 Effect of retrospective application of IFRS 16 Adjusted balance at January 1, 2019 Additions Disposals Reclassification Transfer to expenses Balance at December 31, 2019 Accumulated Depreciation and Impairment
	$804,381 - - - -	$206,916 245 (2,966) - -	$100,093 4,627 (8,903) 35,598 -	$73,351 15,799 (15,682) 8,191 -	$41,212 309 (4,048) 2,994 -	$31,797 40,153 - (46,783) (2,343)
	$804,381	$204,195	$131,415	$81,659	$40,467	$22,824
	$ - -	$96,998 -	$38,656 -	$36,551 (1,079)	$30,056 -	$ - -
Balance at January 1, 2019 Effect of retrospective application of IFRS 16 Adjusted balance at January 1, 2019 Depreciation expense Disposals Balance at December 31, 2019
	$ - - -	$96,998 5,457 (2,966)	$38,656 16,220 (6,862)	$35,472 24,232 (15,683)	$30,056 3,576 (4,047)	$ - - -
	$ -	$99,489	$48,014	$44,021	$29,585	$ -

A. The details of interest capitalized: None.
B. The Company does not assess the impairment because there is no sign of impairment for the year ended December 31, 2020.

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C. Property, plant and equipment pledged for the borrowings: Please refer to Note 8.
D. Reconciliations of current additions and the acquisition of property, plant and equipment in statement of cash flows were as follows:

Year Ended December 31

Item Acquisition of property, plant and equipment Decrease (increase) in equipment payable Cash paid for acquisition of property, plant and equipment	2020 $27,748 (310) $27,438	2019
		$61,133 13,874
		$75,007

(8) Lease agreement

A. Right-of-use assets

(8) Lease agreement A. Right-of-use assets
			December 31
Item		2020		2019
Land and building			$52,446	$23,156
Other equipment			11,020	18,999
Total cost			$63,466	$42,155
Less: Accumulated depreciation			(21,622)	(12,820)
Accumulated impairment			-	-
Net			$41,844	$29,335
Cost	LandandBuildings		Other Equipment	Total
Balance at January 1, 2020		$23,156	$18,999	$42,155
Additions		29,696	757	30,453
Disposals		(227)	-	(227)
Derecognition		(179)	(1,593)	(1,772)
Transfer to property, plant and equipment		-	(7,143)	(7,143)
Balance at December 31, 2020		$52,446	$11,020	$63,466
Accumulated Depreciation and Impairment
Balance at January 1, 2020		$7,837	$4,983	$12,820
Depreciation expense		8,900	5,063	13,963
Derecognition		(179)	(1,593)	(1,772)
Transfer to property, plant and equipment		-	(3,389)	(3,389)
Balance at December 31, 2020		$16,558	$5,064	$21,622

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Cost Balance at January 1, 2019 Adjustment on initial application of IFRS 16 Additions Disposals Derecognition Balance at December 31, 2019 Accumulated Depreciation and Impairment Balance at January 1, 2019 Adjustment on initial application of IFRS 16 Depreciation expense Derecognition Balance at December 31, 2019	Land and Buildings $ - 19,528 4,189 (158) (403) $23,156 $ - - 8,240 (403) $7,837	Other Equipment $ - 9,878 9,579 - (458) $18,999 $ - 1,079 4,362 (458) $4,983	Total $ - 29,406 13,768 (158) (861) $42,155 $ - 1,079 12,602 (861) $12,820

B. Lease liabilities

. Lease liabilities
Item Carrying amount of lease liabilities - current - noncurrent	December 31
	2020 $12,299 $29,900	2019
		$12,190
		$15,136

Ranges of discount rates for lease liabilities were as follows:

Item Land and buildings Other equipment	December 31	December 31
	2020 0.63%-0.96% 0.66%-0.96%	2019
		0.91%-0.96% 0.91%-3.99%

Please refer to Note 12(2) for lease liabilities with repayment periods.

C. Material lease-in activities and terms

The Company leased some land and buildings, etc. as factory, with the lease terms of 1 to 5 years. There is no sign of impairment of right-of-use assets as of December 31, 2020. Therefore, the Company didn’t assess the impairment.

D. Sublet: None.

E. Other lease information:

(1) Please refer to Note 6(9) for the agreements to lease investment properties under operating lease.

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(2) The current lease relevant expense information was as follows:

Item Short-term lease expense Low-value asset lease expense Variable lease payments that excluded in the measurement of lease liabilities Total cash outflow for leases (Note)	Year Ended December 31	Year Ended December 31
	2020 $133 $1 $ - ($15,487)	2019
		$1,145
		$ -
		$ -
		($14,509)

(Note): Including principle paid for current lease liabilities.

(9) Investment properties, net

				December 31
Item			2020		2019
Land				$89,384		$89,384
Buildings				26,070		26,070
Total cost			$115,454		$115,454
Less: Accumulated depreciation				(15,252)		(14,835)
Accumulated impairment				(19,313)		(19,313)
Net				$80,889		$81,306
Cost		Land	Buildings		Total
Balance at January 1, 2020		$89,384		$26,070	$115,454
Additions		-		-		-
Balance at December 31, 2020		$89,384		$26,070	$115,454
Accumulated depreciation
and impairment		Land	Buildings		Total
Balance at January 1, 2020		$19,313	$	14,835	$	34,148
Depreciation expense		-		417		417
Provision for (reversal of )		-		-		-
impairment loss
Balance at December 31, 2020	$	19,313	$	15,252	$	34,565

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Cost Balance at January 1, 2019 Additions Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Depreciation expense Provision for (reversal of ) impairment loss Balance at December 31, 2019	Land $89,384 - $89,384 Land $26,058 - (6,745) $19,313	Buildings $26,070 - $26,070 Buildings $14,385 450 - $14,835	Total
			$115,454 -
			$115,454
			Total
			$40,443 450 (6,745)
			$34,148

A. Above mentioned investment properties were land and buildings located at No. 1609, Wu Kuai Cuo Section, Kaohsiung and No. 307, Zheng Chang Section, Kaohsiung.
B. Rent income and direct operating expense of investment properties:

Item Rental income of investment properties Direct operating expense incurred for the investment properties with current rental income	Year Ended December 31 2020 2019 $2,232 $2,229 $866 $911	Year Ended December 31 2020 2019 $2,232 $2,229 $866 $911
		2019
		$2,229
		$911

C. The maturity analysis of operating lease payments receivable for investment properties was as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 years Total	December 31	December 31
	2020 $632 171 171 171 171 - $1,316	2019
		$1,418 - - - - -
		$1,418

D. Investment properties are depreciated on a straight-line basis over their estimated useful life of 10 to 57 years.

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E. The fair values of investment properties held by the Company were both $112,494 thousand as of December 31, 2020 and 2019. The fair value determination was performed by independent qualified professional appraisers. The valuation was based on the comparison method, and the fair value was measured by using Level 3 inputs. Please refer to Note 12(3).
F. The accumulated impairment of investment properties were both $19,313 thousand as of December 31, 2020 and 2019.
G. The Company had no investment properties pledged to others.

(10)Intangible assets

(10)Intangible assets
			December 31
Item			2020	2019
Trademark			$3,126	$3,126
Computer software			23,509	17,029
Total cost			$26,635	$20,155
Less: Accumulated amortization			(8,843)	(10,302)
Net			$17,792	$9,853
	Trademark		Computer Software	Total
Cost
Balance on January 1, 2020	$3,126		$17,029	$20,155
Additions		-	20,493	20,493
Derecognition		-	(14,013)	(14,013)
Balance on December 31, 2020	$3,126		$23,509	$26,635
Accumulated amortization
and impairment
Balance on January 1, 2020	$	-	$10,302	$10,302
Amortization expense		-	12,554	12,554
Derecognition		-	(14,013)	(14,013)
Balance on December 31, 2020	$	-	$8,843	$8,843
	Trademark		Computer Software	Total
Cost
Balance on January 1, 2019	$3,126		$15,727	$18,853
Additions		-	6,038	6,038
Derecognition		-	(4,736)	(4,736)
Balance on December 31, 2019	$3,126		$17,029	$20,155

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Accumulated amortization

Accumulated amortization
and impairment Balance on January 1, 2019 Amortization expense Derecognition Balance on December 31, 2019	$ - - - $ -	$5,949 9,089 (4,736) $10,302	$5,949 9,089 (4,736)
			$10,302

(11)Prepayments for investments

1)Prepayments for investments
Investee Company Sunon Electronics Philippines Corp. Sunon Properties Philippines Corp. Total	December 31
	2020 $ - - $ -	2019
		$6,110 47,591
		$53,701

(12)Short-term loans

December	December	31, 2020
Amount $350,000 December		Interest
		0.55%-0.80% 31,2019
		Interest
	2020 $ 161,045 14,717 12,004 21,388 36,500 10,328 70,932 $ 326,914	2019
		$131,464 15,089 12,740 19,278 29,119 10,018 39,409
		$257,117

(13)Other payables (including other payables - related parties)

Please refer to Note 7 for other payables with related parties.

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(14) Provisions - current

Item Employee benefits Item Beginning balance Additional provisions recognized Provisions used Ending balance	December 31	December 31
	2020 2019 $13,759 $13,276 Year Ended December 31	2019
		$13,276
	2020 $13,276 483 - $13,759	2019
		$13,120 156 -
		$13,276

Provision for employee benefits represents vested short-term service leave entitlements accrued.

(15)Long-term loans and current portion of long-term loans

Item Mortgage loans Unsecured loan Less: portion due within one year Long-term loans Interest rate range	December 31	December 31
	2020 $220,000 300,000 - $520,000 0.81%-1.17%	2019
		$220,000 - -
		$220,000
		1.34%

A. Refer to Note 8 for assets pledged as collateral for long-term loans.
B. Under the loan agreement, the Company should maintain certain current ratio, debt ratio, interest coverage and net tangible value based on the Company’s audited semi-annual and annual consolidated financial statements. As of December 31, 2020, the Company had no irregularities.

(16)Pension

A. Defined contribution plans
a. The plan under the Labor Pension Act (the “Act”) is deemed a defined contribution plan. Pursuant to the Company has made monthly contributions equal to 6% of each employee’s monthly salary to employees’ pension accounts.

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b. The total expenses recognized in the statements of comprehensive income were $22,257 thousand and $21,956 thousand, representing the contributions payable to these plans by the Company at the rates specified in the plans for the years ended December 31, 2020 and 2019, respectively.
B. Defined benefit plans
a. The Company has defined benefit plans under the Labor Standards Law that provide benefits based on an employee’s length of service and average monthly salary for the six-month period prior to retirement. The aforementioned companies contribute an amount equal to 6% of salaries paid each month to their respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the Committee) and deposited in the Committee’s name in the Bank of Taiwan. Before the end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The Funds are operated and managed by the government’s designated authorities; as such, the Company does not have any right to intervene in the investments of the Funds.
b. The amounts arising from the defined benefit obligation of the Company in the balance sheets were as follows:

balance sheets were as follows:
Item Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31
	2020 $85,430 (26,039) $59,391	2019
		$82,159 (20,430)
		$61,729

c. Movements of the net defined benefit liabilities were as follows:

Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020
Present Value of Defined Benefit Obligation $82,159 - 718 - - $718	Fair Value of Plan Assets ($20,430) - (210) - - ($210)	Net Defined Benefit Liabilities
		$61,729 - 508 - -
		$508

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$ - ($633) ($633) - - - 4,165 - 4,165 (258) - (258) $3,907 ($633) $3,274 $ - ($6,120) ($6,120) (1,354) 1,354 - $85,430 ($26,039) $59,391 Year Ended December 31, 2019	$ - ($633) ($633) - - - 4,165 - 4,165 (258) - (258) $3,907 ($633) $3,274 $ - ($6,120) ($6,120) (1,354) 1,354 - $85,430 ($26,039) $59,391 Year Ended December 31, 2019	($633) - 4,165 (258)
		$3,274
		($6,120) -
		$59,391
Present Value of Defined Benefit Obligation $94,388 - 1,298 - - $1,298 $ - 781 5,532 (13,199) ($6,886) $ - (6,641) $82,159	Fair Value of Plan Assets ($18,728) - (289) - - ($289) ($654) - - - ($654) ($7,400) 6,641 ($20,430)	Net Defined Benefit Liabilities
		$75,660 - 1,009 - -
		$1,009
		($654) 781 5,532 (13,199)
		($7,540)
		($7,400) -
		$61,729

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d. Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:
(a) Investment risk
- The pension funds are invested in equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the government’s designated authorities or under the mandated management. However, under the Labor Standards Law, the rate of return on assets shall not be less than the average interest rate on a two-year time deposit published by the local banks and the government is responsible for any shortfall in the event that the rate of return is less than the required rate of return.
(b) Interest risk
- A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the debt investments of the plan assets.
(c) Salary risk
- The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
e. The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

valuation were as follows:
Discount rate Future salary increase rate The weighted average duration of the defined benefit obligation	Measurement Date
	Decembe 31,2020 0.500% 2.00% 13.3 years	Decembe 31,2019
		0.875%
		2.00%
		14 years

(a) Assumptions regarding future mortality experience are set based on actuarial valuation inaccordance with the 5th version of Taiwan Standard Ordinary Experience Mortality Tables.
(b) If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

December 31

Item Discount Rate 0.25% higher 0.25% lower	2020 ($2,807) $2,931	2019
		($2,832)
		$2,962

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Expected rates of salary increase 0.25% higher 0.25% lower	$2,838 ($2,733)	$2,881
		($2,769)

E. The Company expects to make contributions of $6,000 thousand to the defined benefit plans for the year ended December 31, 2021.

(17)Share capital

A. Movements in the number of the Company’s ordinary shares outstanding were as follows:

(17)Share capital A. Movements in the number of follows:	the Company’s ordinary shares outstanding were as	the Company’s ordinary shares outstanding were as
Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31 Item Balance at January 1 Capital increase in cash Capitalization of retained earnings Balance at December 31	Year Ended December 31, 2020
	Shares(in thousands) Amount 250,930 $2,509,297 - - - - 250,930 $2,509,297 Year Ended December 31, 2019	Amount
		$2,509,297 - -
		$2,509,297
	Shares(in thousands) 250,930 - - 250,930	Amount
		$2,509,297 - -
		$2,509,297

B. As of December 31, 2020, the authorized capital is $3,000,000 thousand, consisting of 300,000 thousand shares.

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(18)Capital surplus

(18)Capital surplus
		December 31
Item	2020		2019
From merger	$18,227		$18,227
From convertible bonds	326,015		326,015
Treasury share transactions		21,464	21,464
Reorganization		1,050	1,050
Differences between considerations and carrying		147	147
amounts of subsidiaries acquired or disposed
Total	$366,903		$366,903

Under the Company Act, the capital surplus generated from the excess of the issuance price over the par value of capital stock and donations can be used to offset deficit or may be distributed as stock dividends or in cash. Under the regulations of the Security Exchange Law, the maximum amount transferred from the foregoing capital surplus to the Company’s capital per year shall not be over 10% of the Company’s paid-in capital. Capital surplus can’t be used to offset deficit unless legal reserve is insufficient. The capital surplus from long-term investments may not be used for any purpose.

(19)Retained earnings and dividend policy

(1) In accordance with the dividend policy as set forth in the Company’s Articles of Incorporation, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside a special reserve in accordance with the laws and regulations, and the remainder plus prior year’s unappropriated earnings will be recommended by the board of directors and approved through the shareholders’ meeting.
In consideration of its operation and capital expenditure demands, the Company stipulates appropriate dividend distribution ratio, and proposes for approval in the shareholders’ meeting. However, at least 20% of total dividends should be distributed in cash.
(2) Legal reserve may be used to offset a deficit, and be transferred to capital or distributed in cash. However, legal reserve can be transferred to capital or distributed in cash only when the legal reserve has exceeded 25% of the Company’s paid-in capital.

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(3) Special reserve

(3) Special reserve
Item Reserve for the dedit balance of other equities Reserve for first-time adoption of IFRS Total	December 31
	2020 $181,120 79,155 $260,275	2019
		$85,554 79,155
		$164,709

A. While earning distribution, the earnings can be distributed after appropriation of the equivalent amount of the debit balance of the other equities of the balance sheet.
B. Under Rule No.1010012865 issued by the FSC for first-time adoption of IFRS, the special reserve can be reversed while usage, disposal and reclassification of related assets.
(4) The appropriation of 2019 and 2018 earnings had been resolved at the shareholders’ meeting in June 2020 and June 2019, respectively. Details were summarized below:

Item Legal reserve Special reserve Cash dividends Total	Amount 2019 2018 $68,683 $60,512 95,566 37,598 501,860 501,860 $666,109 $599,970	Dividends Per Share	Dividends Per Share
	2019 $68,683 95,566 501,860 $666,109	2019 2.0	2018
			2.0

(5) The appropriation of 2020 earnings had been proposed by the Board of Directors on March 11, 2021. Details were summarized below:

Item Legal reserve Special reserve Cash dividends	Amount $84,903 (18,180) 602,231	Dividends Per Share
		2.4

A. The appropriations of earnings for 2020 are to be presented for approval in the shareholders’ meeting to be held in June 2021.
B. In the event of repurchase of the Company’s shares, transfer, conversion or annulment of treasury stocks, and exercise of employees’ stock options, leading to a change in the number of outstanding shares and a consequent change in dividend yield, it is proposed that the chairman is authorized by the Board of Directors to duly adjust stocks and cash payout rates.
(6) Information on the earnings appropriation proposed by the Company’s Board of Directors and approved by the Company’s shareholders is available on the Market Observation Post System website of the Taiwan Stock Exchange.

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(20)Other equity

Other equity
Item	Exchange Differences on Translation of ForeignOperations
	Year Ended December 31
	2020	2019 ($164,709) (95,566) ($260,275)
Beginning balance Exchange differences arising on translation of foreign operations Ending balance	($260,275) 18,180
	($242,095)

(21)Operating revenues

(21)Operating revenues
	Year Ended	December 31
Item	2020	2019
Revenue from contracts with customer
Total revenues	$8,684,836	$7,885,563
Sales returns	(29,897)	(10,244)
Sales discount	(43,189)	(43,973)
Net	$8,611,750	$7,831,346

A. Explain of contract revenue

Sales of fans and other related goods are mainly to system manufacturers and distributors. Please refer to Note 14 for the main sale areas.

B. The Company’s timing of recognition is transferred the goods at a certain point of time.

C. Contract balances

The Company recognizes the receivable, contract assets and contract liabilities related to contract revenue as follows:

Item Receivable Contract assets Total Contract liabilities - current	December 31	December 31
	2020 $2,342,965 - $2,342,965 $37,776	2019
		$2,237,579 -
		$2,237,579
		$19,240

a. Significant changes in contract assets and contract liabilities

The changes in the contract assets and contract liabilities primarily result from the timing difference between the satisfaction of performance obligation and the customer’s payment, and there is no other significant changes.

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b. Amount from previous period’s satisfied performance obligations and beginning contract liabilities recognized in the current period as income were as follows:

Revenue in the currentperiod From beginning contract liabilities From previous period’s satisfied performance obligations	Year Ended December 31	Year Ended December 31
	2020 $19,240 $ -	2019
		$10,745
		$ -

(22)Labor cost, depreciation and amortization

Year ended December 31, 2020

	Year	ended December 31, 2020
Item	Operatingcost	Operatingexpenses	Total
Labor cost
Salaries	$31,998	$492,594	$524,592
Insurance	3,214	38,361	41,575
Pension	1,651	21,114	22,765
Remuneration to	-	13,000	13,000
directors
Others	3,770	40,861	44,631
Depreciation	12,881	56,630	69,511
Amortization	262	12,358	12,620
Total	$53,776	$674,918	$728,694

Year ended December 31, 2019	Year ended December 31, 2019
Operatingcost	Operatingexpenses
$25,807 2,832 1,405 - 3,223 10,747 579	$460,632 38,149 21,560 10,500 38,209 51,790 9,006

Additional information of the number of employees and employee benefits expenses for the years ended December 31, 2020 and 2019 were as follows:

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December 31

Item The number of employees The number of directors who were not adjunct employees Average employee benefits expenses Average employee salary Changes in adjusting average employee salary Remuneration of supervisors	2020 550 5 $1,163 $963 7.36% -	2019
		547
		5
		$1,092
		$897
		8.07%
		-

The Company’s salary and remuneration policy, including that for directors, managers and employees, is as follows:
(1) Directors’ remuneration:
- A. The Company’s Articles of Incorporation clearly stipulate that not higher than 5% of the annual profit shall be allocated as the director’s remuneration.
- B. The remuneration to the directors shall be determined by the Board of Directors according to their degree of participation in the operation of the Company, the value of their contribution, and the usual standards of the industry.
(2) Managers’ remuneration:
- The remuneration to the managers is based on their duties, contributions, the Company’s annual operation performance and in consideration of the Company’s future risks, and is reviewed by the remuneration committee and submitted to the Board of Directors for resolution.
(3) Employees’ compensation:
- The employees’ compensation includes monthly salary and various bonuses, annual year-end and performance bonuses, as well as remuneration issued by the Company based on annual profitability.
- A. The Company’s various salary awards are issued in accordance with the Company’s various salary and bonus systems.
- B. The Company’s Articles of Incorporation clearly stipulate that not less than 2% of the annual profit is used as employees’ compensation. The distribution method is proposed by the remuneration committee to the Board of Directors and issued after the Board of Directors’ approval.
The Company accrued employees’ compensation and remuneration to directors at the rates not less than 2% and not higher than 5% of net income before income tax, employees’ compensation and remuneration to directors during the period. If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

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The employees’ compensation and remuneration to directors for the years ended December 31, 2020 and 2019 had been approved by the Company’s Board of Directors meeting held on March 11, 2021 and March 11, 2020, respectively, and the relevant amounts recognized in the parent company only financial statement were as follows:

Year ended December 31	Year ended December 31	Year ended December 31	Year ended December 31
2020		2019
Employees’ compensation	Remuneration to directors	Employees’ compensation $18,619 18,619 $ -	Remuneration to directors
$23,500 23,500	$13,000 13,000		$10,500 10,500
$ -	$ -		$ -

The above mentioned employees’ compensation will be paid by cash.

Information about the appropriation of employees’ compensation and directors’ remuneration by the Company as proposed by the Board of Directors and resolved by the shareholders will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(23)Interest income

Interest income
Item Interest on bank deposits Interest on early payment Others Total	Year Ended December 31 2020 2019 $1,798 $3,431 2,071 4,087 18 22 $3,887 $7,540
		2019
		$3,431 4,087 22
		$7,540

(24)Other income

Other income
Item Rental income Others - patent income Others – sample sales, etc. Others Total	Year Ended December 31
	2020 $3,874 11,681 63,127 41,805 $120,487	2019
		$3,872 12,222 44,909 47,392
		$108,395

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(25)Other gains and losses

Other gains and losses
Item Gain on disposal of property, plant and equipment Net currency exchange gain Gain on reversal of impairment loss of investment properties Others Total	Year Ended December 31
	2020	2019
	$65 136,510 - (4,796)	$216 41,217 6,745 (5,861)
	$131,779	$42,317

(26)Finance costs

(26)Finance costs
Item Interest on loans Interest on lease liabilities Less: capitalized amount for qualified assets Finance costs	Year Ended December 31
	2020	2019
	$7,245 372 -	$7,433 342 -
	$7,617	$7,775

(27)Income tax expense

A. The major components of tax expense were as follows:

Current income tax Current tax expense Adjustments in tax of prior periods Total Deferred income tax The origination and reversal of temporary differences Total lncome tax expense	Year Ended December 31	Year Ended December 31
	2020	2019
	$177,351 (18,618)	$99,348 (2,017)
	$158,733	$97,331
	$25,532	$44,392
	$25,532	$44,392
	$184,265	$141,723

B. Income tax expense recognized in other comprehensive income was as follows:

Item Share of other comprehensive loss of subsidiaries, associates and joint ventures Remeasurement of defined benefit plans Total	Year Ended December 31	Year Ended December 31
	2020	2019
	$4,545 (655)	($23,892) 1,508
	$3,890	($22,384)

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C. Reconciliation of income before income tax and income tax expense recognized in profit or loss was as follows:

profit or loss was as follows:
Item Income before income tax Income tax expense at the statutory rate Tax effect of adjusting items: Loss on investment under equity method Expenses not deductible for tax purpose Adjustments for prior year’s tax adjustments Deferred income tax expense Temporary differences Income tax expense recognized in profit or loss	Year Ended December 31
	2020	2019
	$1,035,915	$822,524
	$207,183 (97,622) 67,790 (18,618) 25,532	$164,504 (86,139) 20,983 (2,017) 44,392
	$184,265	$141,723

The applicable tax rate used by the Company is 20%. In addition, the tax rate applicable to unappropriated earning is 5%.

According to the amendments to the Statute for Industrial Innovation announced in July 2019, the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Company has already deducted the amount of the unappropriated earnings that has been reinvested as capital expenditures.

The Company applied for and was approved the repatriation of offshore funds (including mainland China) within the time limit in accordance with the “The Management, Utilization, and Taxation of Repatriated Offshore Funds Act”effective from August 15, 2019. The applicable tax rate exempt from taxation is 8% for the first year and 10% for the second year under the general income tax system. A profit-seeking enterprise may apply to the Ministry of Economic Affairs for engaging in substantive investment within one year from the date of repatriating funds and has a 50% tax refund preference when completing the investment within the time limit.

256

D. Deferred tax assets and liabilities from temporary differences

	Year Ended December 31,	Year Ended December 31,	2020
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Effect of Exchange Rate Changes	Balance, End of Year
$12,346 5,279 2,655	($1,122) (3,479) 96	$655 - -	$ - - -	$11,879 1,800 2,751
$20,280	($4,505)	$655	$ -	$16,430
$61,483 3,342	$15,106 5,921	$4,545 -	$ - -	$81,134 9,263
$64,825	$21,027	$4,545	$ -	$90,397
($44,545)	($25,532)	($3,890)	$ -	($73,967)
	Year Ended December 31,		2019
Balance, Beginning of Year	Recognized in Profit or Loss	Recognized in Other Comprehensive Income	Effect of Exchange Rate Changes	Balance, End of Year
$384 15,132 10,700 2,624	($384) (1,278) (5,421) 31	$ - (1,508) - -	$ - - - -	$ - 12,346 5,279 2,655
$28,840	($7,052)	($1,508)	$ -	$20,280
$51,001 376	$34,374 2,966	($23,892) -	$ - -	$61,483 3,342
$51,377	$37,340	($23,892)	$ -	$64,825
($22,537)	($44,392)	$22,384	$ -	($44,545)

E. Items with no deferred tax assets recognized:

Item Loss on investment under the equity method	December 31	December 31
	2020 $2,437	2019
		$1,113

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F. The tax authorities have ratified Company’s income tax returns through Year 2018.

(28)Other comprehensive income (loss)

Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020
Other Comprehensive Income Tax Other Comprehensive Income (Loss), Before Tax Benefit (Expense) Income (Loss), Net of Tax ($3,274) $655 ($2,619) ($3,274) $655 ($2,619) $22,725 ($4,545) $18,180 $22,725 ($4,545) $18,180 $19,451 ($3,890) $15,561 Year Ended December 31, 2019		Other Comprehensive Income (Loss), Net of Tax
		($2,619)
		($2,619)
		$18,180
		$18,180
		$15,561
Other Comprehensive Income (Loss), Before Tax $7,540 $7,540 ($119,458) ($119,458) ($111,918)	Income Tax Benefit (Expense) ($1,508) ($1,508) $23,892 $23,892 $22,384	Other Comprehensive Income (Loss), Net of Tax
		$6,032
		$6,032
		($95,566)
		($95,566)
		($89,534)

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(29)Earnings per share

Item Net income Weighted average shares outstanding (in thousands) Basic earnings per share (after tax) Net income Effect of potential dilutive ordinary shares Net income used in computation of diluted earning per share Weighted average shares outstanding (in thousands) Impact on employees’ compensation (Note) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earning per share (after tax)	Year Ended December 31	Year Ended December 31
	2020 $851,650 250,930 $3.39 $851,650 - $851,650 $250,930 437 251,367 $3.39	2019
		$680,801 250,930
		$2.71
		$680,801 -
		$680,801
		$250,930 393
		$251,323
		$2.71

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

7. RELATED PARTY TRANSACTIONS

(1) Parent and ultimate controlling party:

The Company is the ultimate controlling party.

(2) Related party name and category:

Related Party Name

Related Party Category

Sunon SAS Subsidiary Sunon INC Subsidiary Sunon Electronic (Kunshan) Co., Ltd. Subsidiary Sunon Electronic (Foshan) Co., Ltd. Subsidiary Sunon Electronic (Bei Hai) Co., Ltd. Subsidiary Sunon Electronics India Private Limited Subsidiary

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Sunon Electronics Philippines Corp. Subsidiary Sunon Properties Philippines Corp. Subsidiary Guang Sheng Investment Corporation Other related parties Shehng-Yuan Children Development and Other related parties Adult Support Services Center Yo Yuan Investment Corporation Other related parties

(3) Significant transactions with related parties:

A. Sales:

Significant transactions with related parties: A. Sales:
Related PartyCategory Subsidiaries	Year Ended December 31
	2020 $1,195,955	2019
		$1,123,846

Selling prices with the related parties are set by the Company and are equivalent to those with ordinary customers. Collection period was 2 to 4 months. Collection can be delayed when agreed on by both parties.

B. Purchase:

B. Purchase:
Related Party Category Subsidiaries: Sunon Electronic (Kunshan) Co., Ltd. Sunon Electronic (Bei Hai) Co., Ltd. Others Total	Year Ended December 31
	2020 $1,876,694 1,809,172 37,147 $3,723,013	2019
		$1,667,171 1,397,958 21,795
		$3,086,924

Except for the purchase price from Sunon Electric (Bei Hai) Co., Ltd., which undertakes the transfer of the Company that the pricing is based on the Company’s order taking prices, the purchase prices with the related parties are equivalent to those with ordinary suppliers. Payment terms were 2 to 4 months for other suppliers and 2 to 3 months for related parties. In addition, both parties can agree to advance the payment.

C. Contract assets: None.

D. Contract liabilities: None.

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E. Balance of receivables (excluding lending to related parties and contract assets):

E. Balance of receivables (excluding lending to related parties and contract assets):	E. Balance of receivables (excluding lending to related parties and contract assets):	E. Balance of receivables (excluding lending to related parties and contract assets):
December 31 Related PartyCategory 2020 2019 Accounts receivable: Subsidiairies Sunon Electronics (Bei Hai) Co., Ltd. $240,671 $122,345 Others 289,884 238,843 Total $530,555 $361,188 Other receivables: Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. $16,033 $7,787 Sunon Electronic (Foshan) Co., Ltd. - 5,614 Others 3,353 4,827 Total $19,386 $18,228 F. Balance of payables (excluding borrowing from related parties): December 31 Related Party Category 2020 2019 Accounts payables: Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. $536,800 $427,540 Sunon Electronic (Foshan) Co., Ltd. 140,843 273,344 Sunon Electronic (Bei Hai) Co., Ltd. 532,309 425,109 Others 11 - Total $1,209,963 $1,125,993 Other payables: Subsidiaries $14,907 $11,921
	2020 $536,800 140,843 532,309 11 $1,209,963 $14,907	2019
		$427,540 273,344 425,109 -
		$1,125,993
		$11,921

G. Prepayments: None.

H. Property transactions:

a. Purchase of property, plant and equipment

Related Party Category Subsidiaries	Acquisition Price	Acquisition Price
	Year Ended December 31
	2020 $ -	2019
		$918

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Above mentioned transaction prices were negotiated by both parties, and paid in full as of December 31, 2019.

b. Disposal of property, plant and equipment

Related PartyCategory Subsidiaries Related PartyCategory Subsidiaries	Disposal Price	Disposal Price
	Year Ended December 31
	2020 2019 $600 $2,257 Disposal Gain	2019
		$2,257
	Year Ended December 31
	2020 $10	2019
		$216

Above mentioned transaction prices were negotiated by both parties, and totally received as of December 31, 2020 and 2019.

I. Lessee arrangements:

		Year Ended December 31	Year Ended December 31	Year Ended December 31
Item	Related Party Category	2020		2019
Acquisition of right-of-use	Other related parties	$310			$245
asset
			December 31
Item	Related Party Category	2020		2019
Refundable deposits	Other related parties		$26		$26
Lease liabilities - current	Other related parties		$155		$91
Lease liabilities - noncurrent			$91	$	-
		Year Ended December 31
Item	Related Party Category	2020		2019
Interest expense	Other related parties		$1		$2

Above lease terms are based on the contract, and rent is paid monthly.

J. Rent arrangements: None.

K.Financing activities - lending to related parties: None.

L. Financing activities - borrowing from related parties: None.

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M. Guarantee for related parties:

M. Guarantee for related parties:
Related Party Category Subsidiaries N. Others: a.Processing fee Related PartyCategory Subsidiaries Sunon Electronic (Foshan) Co., Ltd. Others Total	December 31
	2020 2019 USD 20,000 USD 20,000 December 31	2019
		USD 20,000
	2020 $867,983 - $867,983	2019
		$959,162 88,222
		$1,047,384

Above mentioned pricing of the related parties are equivalent to those of other processors. Payment term was 2 to 3 months. However, both parties can agree to advance the payment.

b. Guarantee deposits:

b. Guarantee deposits:
Related PartyCategory Shehng-Yuan Children Development and Audit Support Services Centry Other related parties Total c. Miscellaneous income: Related PartyCategory Subsidiaries Sunon Electronic (Kunshan) Co., Ltd. Sunon SAS Others Other related parties Total	December 31
	2020 2019 $45 $45 10 10 $55 $55 Year Ended December 31	2019
		$45 10
		$55
	2020 $22,202 13,487 10,239 194 $46,122	2019
		$14,595 10,433 11,899 194
		$37,121

Miscellaneous income is mainly samples, rent and patent income. Rent prices are according to the contract agreement and received monthly.

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d. Miscellaneous expenses:

Related PartyCategory Subsidiaries Sunon SAS Sunon INC Others Total	Year Ended December 31	Year Ended December 31
	2020 $41,631 31,298 6,461 $79,390	2019
		$48,472 26,216 247
		$74,935

Miscellaneous expenses are mainly commission fees.

e. Subscription of related parties’ capital increase Year ended December 31, 2020:

RelatedParty Subsidiaries Sunon Electronics Philippines Corp. Sunon Properties Philippines Corp.	Investment Increase Number of shares (thousand shares) Amount 102 $6,110 7,068 430,000	Investment Increase Number of shares (thousand shares) Amount 102 $6,110 7,068 430,000	Investment Increase Number of shares (thousand shares) Amount 102 $6,110 7,068 430,000
	Number of shares (thousand shares) 102 7,068		Before capital increase - -
		$6,110 430,000

Year ended December 31, 2019:

Year ended	December 31, 2019:	December 31, 2019:
Related Party Subsidiaries	Investment Increase Number of shares (thousand shares) Amount - $53,701		ShareholdingRatio
	Number of shares (thousand shares) -		Before capital increase -	After capital increase -
		$53,701

(4) Key management compensation

Key management compensation
Related PartyCategory Salaries and other short-term employee benefits Post-employment benefits Other long-term employee benefits Termination benefits Share-based payments Total	Year Ended December 31
	2020 $63,376 - - - - $63,376	2019
		$62,564 - - - -
		$62,564

8. PLEDGED ASSETS

PLEDGED ASSETS
Related PartyCategory Property, plant and equipment (net)	December 31
	2020 $496,858	2019 $496,858

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) As of December 31, 2020 and 2019, the Company issued guarantee notes for bank loans amounting to $3,231,400 thousand and $2,895,790 thousand, respectively.
(2) Commitments and contingency as of December 31, 2020 and 2019 consisted of the following:

Item L/C Amount	(In thousands) December 31	(In thousands) December 31
	2020 USD 1,273	2019
		USD 1,009 NTD 1,972

(3) As of December 31, 2020 and 2019, the note endorsement for material purchase were as follows:

ollows:
Item USD NTD	(In thousands) December 31
	2020 1,345 -	2019
		1,885 1,403

(4) As of December 31, 2020 and 2019, the Company endorsed guarantees for others. Please refer to Note 13 for the information.
(5) Statement of lawsuit
SIAE Microelettronica S.P.A. filed a lawsuit against the Company for the infringement on April 8, 2020. The Company has appointed the lawyer to proceed with the litigation, and it is under the jurisdiction of Kaohsiung District Court in Taiwan. The final outcome will depend on the future litigation procedures and will not have a significant impact on the Company’s operations.

10. SIGNIFICANT DISASTER LOSS: NONE.

11. SIGNIFICANT SUBSEQUENT EVENTS: NONE.

12. OTHERS

(1) Capital risk management

The Company should maintain an adequate capital structure to enable the expansion and enhancement of equipment. Therefore, the Company manages its capital in a manner to ensure that it has sufficient and necessary financial resources to fund its working capital needs, capital asset purchases and debt service requirements associated with its existing operations over the next 12 months.

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(2) Financial instruments
A. Financial risk of financial instruments

Financial risk management policies

The Company’s activities expose to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. To lower down the related financial risk, the Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial position and financial performance.

The plans for material treasury activities are reviewed by board of directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, the Company Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.

Significant financial risks and degrees of financial risks

a. Market risk
(a) Foreign exchange rate risk
- The Company’s functional currency is New Taiwan dollars. Many of the Company’s operating activities are denominated in foreign currencies. Consequently, the Company is exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company raises loans denominated in foreign currency and derivative financial instruments to hedge the currency exposure. These instruments help to reduce, but do not eliminate, the impact of foreign currency exchange rate movements. The derivative financial instruments the Company held with maturities less than 3 months are not qualified for hedge accounting. The net investment in foreign operation is strategic investment. Therefore, the Company does no hedge for it.
(b) Foreign currency risk and sensitivity analysis

December 31, 2020

				December 31, 2020	December 31, 2020
Financial assets Monetaryitem USD:NTD EUR:NTD JPY:NTD RMB:NTD	Foreign Currency	Exchange Rate 28.4800 35.0200 0.2763 4.3648	Carrying Value(NTD)	SensitivityAnalysis
				Profit and Variation Loss Impact	Equity Impact
	80,153 7,640 31,976 729		2,282,762 267,563 8,835 3,183	increase 1% 22,828 increase 1% 2,676 increase 1% 88 increase 1% 32	- - - -

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Investments accounted

Investments accounted
for usingequitymethod USD:NTD EUR:NTD RMB:NTD PHP:NTD Financial liabilities Monetaryitem USD:NTD EUR:NTD JPY:NTD Financial assets Monetaryitem USD:NTD EUR:NTD JPY:NTD RMB:NTD Investments accounted for usingequitymethod USD:NTD EUR:NTD RMB:NTD Financial liabilities Monetaryitem USD:NTD EUR:NTD JPY:NTD	53,548 1,998 315,843 708,782 69,636 245 482 Foreign Currency	28.4800 35.0200 4.3648 0.5929 28.4800 35.0200 0.2763 Exchange Rate 29.9800 33.5900 0.2760 4.2975 29.9800 33.5900 4.2975 29.9800 33.5900 0.2760	1,525,054 69,955 1,378,591 420,237 1,983,226 8,567 133	increase 1% - 15,251 increase 1% - 700 increase 1% - 13,786 increase 1% - 4,202 increase 1% (19,832) - increase 1% (86) - increase 1% (1) - December 31, 2019
			Carrying Value(NTD)	SensitivityAnalysis
				Profit and Variation Loss Impact	Equity Impact
	69,462 8,333 27,139 504 45,373 1,995 328,693 66,929 252 1,447		2,082,481 279,921 7,490 2,167 1,360,275 67,024 1,412,560 2,006,518 8,475 399	increase 1% 20,825 increase 1% 2,799 increase 1% 75 increase 1% 22 increase 1% - increase 1% - increase 1% - increase 1% (20,065) increase 1% (85) increase 1% (4)	- - - - 13,603 670 14,126 - - -

When New Taiwan dollar appreciates and other variation factors stay unchanged, there will be the same but opposite amount of influence as of December 31, 2020 and 2019.

267

The details of unrealized exchange gain (loss) for montary items due to material exchange rate fluctuation were as follow:

Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2020	Year Ended December 31, 2019	Year Ended December 31, 2019	Year Ended December 31, 2019
Foreign Exchange Gain		(Loss)	Foreign Exchange Gain (Loss)
Foreign Currency (In thousands)	Exchange Rate	Carrying Value	Foreign Currency (In thousands)	Exchange Rate	Carrying Value
- - - - -	29.5330 33.7400 4.2816 29.5330 33.7400	(21,201) 6,499 142 60,859 (40)	- - - - -	30.9110 34.6000 4.4808 30.9110 34.6000	(39,141) 124 (165) 56,019 18

b. Price risk

The Company does not hold financial instrument which measured by fair value.

c. Interest rate risk

The carrying amount of the financial assets and liabilities that exposed to interest rate risk as reporting date was as follow:

Item Fair value interest rate risk: Financial assets Financial liabilities Net Cash flow interest rate risk: Financial assets Financial liabilities Net	CarryingValue	CarryingValue
	December 31,2020	December 31,2019
	$ - (42,199)	$ - (27,326)
	($42,199)	($27,326)
	$503,289 (870,000)	$465,320 (905,000)
	($366,711)	($439,680)

(a) Sensitivity analysis of fair value interest rate risk tools

The Company does not classify any fixed-rate instruments as financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. In addition, the Company does not designate derivatives (interest rate swap) as hedge instruments under hedge accounting. Therefore, the change of interest rate at reporting date does not have influence on net income and other comprehensive income.

268

(b) Sensitivity analysis of cash flow interest rate risk tools
- The Company’s financial instruments with variable interest rate are those with floating-rate. If interest rate increases 1%, the net income will decrease $3,667 thousand and $4,397 thousand for the years ended December 31, 2020 and 2019, respectively.
B. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a contract leading to a financial loss to the Company. The Company is exposed to credit risk from operating activities, primarily accounts receivables, and from investing activities, primarily deposit and other financial instruments. Credit risk is managed separately for business related and financial related exposures.

a. Business related credit risk
In order to maintain the credit quality of accounts receivables, the Company has established procedures to monitor and limit exposure to credit risk on trade receivables. Credit evaluation is performed in the consideration of the relevant factors which may affects the customer's paying ability such as financial condition, external and internal credit scoring, historical experience, and economic conditions.
b. Financial credit risk
The Company’s exposure to financial credit risk which pertained to bank deposits and other financial instruments were evaluated and monitored by Company Treasury function. The Company only deals with creditworthy counterparties, banks, and government so that no significant credit risk was identified. In addition, the Company has no financial assets at amortized and investments in debt instruments at fair value through other comprehensive income.
(a) Credit concentration risk
- As of December 31, 2020 and 2019, the Company’s ten largest customers accounted for 49.29% and 51.63% of accounts receivable, respectively. The Company believes the concentration of credit risk is insignificant for the remaining accounts receivable.
- The Company continuously evaluated customers’ financial situation. To reduce major credit risk, the Company bought credit guarantee insurance, and asked customers to make payment in advance.
(b) Expected credit loss measurement
- i. Account receivables adopts a simplified approach, please prefer to Note 6(3).
- ii. Identification basis for whether credit risk is significantly increased: None (the Company didn’t hold debt instruments at amortized cost or at FVTOCI).

269

c. Collaterals and other credit enhancement held to avoid credit risks from financial assets:

Related information of the maximum exposure to credit risk regarding financial assets recognized in the parent company only balance sheets, pledged collateral, master netting arrangements and other credit enhancement held by the Company as of December 31, 2020 and 2019: None.

C. Liquidity risk

a. Liquidity risk management:

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business requirements of cash and cash equivalents and the unused of financing facilities associated with existing operations.

b. Financial liabilities with repayment periods:

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods.

		December 31, 2020	December 31, 2020	December 31, 2020
Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
	$ - - - - - 33,333 11,210 -	$ - - - - - 420,000 17,847 -	$ - - - - - 66,667 1,219 -	$350,000 773,102 1,209,963 312,007 14,907 520,000 42,869 449	$350,000 773,102 1,209,963 312,007 14,907 520,000 42,199 449
$2,673,021	$44,543	$437,847	$67,886	$3,223,297	$3,222,627

Further information for lease liabilities with repayment periods was as follows:

Item	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
Lease liabilities	$12,593	$29,057	$1,219	$ -	$ -	$ -	$42,869

270

		December 31, 2019	December 31, 2019	December 31, 2019
Within 1 year	1-2 years	2-5 years	Over 5 years	Contract Cash Flow	Carrying Value
	$ - - - - - 220,000 7,543 -	$ - - - - - - 7,763 -	$ - - - - - - - -	$685,000 903,644 1,125,993 245,196 11,921 220,000 27,724 756	$685,000 903,644 1,125,993 245,196 11,921 220,000 27,326 756
$2,984,928	$227,543	$7,763	$ -	$3,220,234	$3,219,836

Further information for lease liabilities with repayment periods was as follows:

Item Lease liabilities	Within 1 year	1-5 years	5-10 years	10-15 years	15-20 years	Over 20 years	Undiscounted payments
	$12,418	$15,306	$ -	$ -	$ -	$ -	$27,724

The Company does not expect a maturity analysis of which the cash flows timing would be significantly earlier, or the actual amount would be significantly different.

2. Categories of financial instruments

The carrying values of financial assets and liabilities of the Company as of December 31, 2020 and 2019 were as follow:

Financial assets Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable (including related parties) Other receivables (including related parties) Other financial assets - current Refundable deposits	December 31	December 31
	2020 $491,384 2,342,965 38,138 12,313 2,448	2019
		$465,806 2,237,579 32,187 - 2,682

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Financial liabilities

Financial liabilities
Financial liabilities measured at amortized cost
Short-term loans	350,000	685,000
Notes and accounts payable	1,983,065	2,029,637
(including related parties)
Other payables (including related parties)	326,914	257,117
Lease liabilities (including current and	42,199	27,326
noncurrent)
Long-term loans	520,000	220,000
Guarantee deposits	449	756

(3) Fair value information
A. Details of the fair value of the Company’s financial assets and financial liabilities not measured at fair value are provided in Note 12(3)C. Details of the fair value of the Company's investment property measured at cost are provided in Note 6(9).
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows: Level 1: Quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Company’s investment in listed stocks, beneficiary certificates, on-the-run Taiwan central government bonds and derivative instruments with quoted market prices is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investments in government bonds, corporate bonds, financial debentures, convertible bonds, and most derivative instruments is included in Level 2.
- Level 3: Unobservable inputs for the asset or liability. The fair value of the Company’s investments in some derivative instruments and equity instruments without active market is included in Level 3.
C. Financial instruments that are not measured at fair value
- The Company considers that the carrying amounts of financial instruments including cash and cash equivalents, receivables, other financial assets, refundable deposits, short-term loans, payables, long-term loans and guarantee deposits that are not measured at fair value approximate their fair values.
D. The related information of financial and non-financial instruments measured at fair value by level: None.

272

E. Valuation techniques of financial instruments valued at fair value
(a) The fair value of financial assets and liabilities traded in an active market is based on the quoted market prices. The quotation, which is published by the main exchange center or that which was deemed to be a public bond by the Treasury Bureau of Center Bank, is included in the fair value of the listed securities instruments and the debt instruments in active markets with open bid.
- A financial instrument is regarded as the quoted price in an active market if the quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency; and if those prices represent the actual and regularly occurring market transactions on an arm’s length basis. Otherwise, the market is deemed to be inactive. Normally, a market is considered to be inactive when the bid-ask spread is increasing; or the bid-ask spread varies significantly; or there has been a significant decline in trading volume.
(b) Except for the above-mentioned financial instruments traded in an active market, the fair value is based on the valuation techniques or the quotation from the counterparty. The fair value refers to the current fair value of the other financial instruments with similar conditions and characteristics, using a discounted cash flow analysis or other valuation techniques, such as calculations of using models (for example, applicable yield curve from Taipei Exchange, or average quoted price on interest rate of commercial paper from Reuters), based on the information acquired from the market at the balance sheet date.

When the financial instrument of the Company is not traded in an active market, the fair value is determined based on the ratio of the quoted market price of the comparative company, its book value per share and its operating situation. Also, the fair value is discounted for its lack of liquidity in the market.

F. Transfer between Level 1 and Level 2: None.
G. Changes in Level 3 instruments: None.
H. Valuation process for Level 3 fair value measurement:
- Valuation process regarding fair value Level 3 is conducted by the Group’s finance department, by which the independence of fair value of financial instruments is verified though use of independent data source in order to make the valuation results close to market conditions. Such valuation results are regularly reviewed so as to ensure their reasonableness.
(4) Transfer of financial assets: None.
(5) Offset of financial assets and liabilities: None.

273

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Financings provided: Table 1
B. Endorsement/guarantee provided: Table 2
C. Marketable securities held: Table 3
D. Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: Table 4
E. Acquisition of individual real estate properties at costs of at least NT$300 million or 20% of the paid-in capital: Table 5
F. Disposal of individual real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: Table 6
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7
I. Information about the derivative financial instruments transaction: None.
(2) Information on investees: Table 8
(3) Information on investments in Mainland China: Table 9
(4) Information on major shareholders (including name of the shareholders with shareholding ablve 5%, shares held and shareholding ratio): Table 10

274

Table 1

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

LOANS PROVIDED TO OTHER PARTIES

DECEMBER 31, 2020

										(Amounts in Thousands	(Amounts in Thousands	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)	of New Taiwan Dollars and Foreign Currencies)
No.	Financing Company	Counter-party	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance (Note 4)	Amount Actually Drawn	Interest Rate	Nature for Financing (Note 3)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral		Financing Limits for Each Borrowing Company (Note 1)	Financing Company’s Total Financing Amount Limits (Note 2)
													Item	Value
1	Sunon Electronic (kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co.,Ltd.	Other receivables - related parties	Yes	13,094 (RMB3,000)	13,094 (RMB3,000)	－	4.35%	2	－	Operating capital	－	－	－	146,016	292,032

Note 1: Financing limits for each borrowing company:

(1) For trading partner:

Shall not be higher than the purchase or sales amount of the most recent year.

(2) For short-term financing:

Shall not exceed 10% of the Company’s net worth.

Note 2: The maximum balance of financing activitives:

(1) For trading partner :

Shall not exceed 20% of the Company’s net worth

(2) For short-term financing:

Shall not exceed 20% of the Company’s net worth

(3) The policy for loans granted mutually between overseas subsidiaries of which the Company directly or indirectly holds 100% of their voting shares is as follows:

。 The maximum amount for total loan for individual enterprise shall not exceed 50% of its net worth.

Note 3: The code represents the nature of financing activities as follows:
(1) Related to trading partner is “1”.
(2) Short-term financing is “2”.

Note 4: The maximum amount was approved by the Board of Directors’ meeting.

275

Table 2

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

ENDORSEMENTS/GUARANTEES PROVIDED

DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

No. (Note 1)	Endorsers	Endorsees	Endorsees	Endorsement Limit for a Single Entity (Note 3)	Highest Balance During the Period	Ending Balance	Actual Amount Drawn	Balance Secured by Collaterals	Ratio of Accumulated Amount to net Worth of the Company	Maximum Amount of Endorsement (Note 4)	Provision of Endorsements by Parent Company to Subsidiary	Provision of Endorsements by Subsidiary to Parent Company	Provision of Endorsements to the Party in Mainland China
		Name of endorsees	Relationship (Note 2)
０	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd	2	1,378,239	NTD 256,320 (USD 9,000)	NTD 170,880 (USD 6,000)	－	－	3.72%	2,297,065	Y	N	Y
０	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Foshan) Co., Ltd	2	1,378,239	NTD 170,880 (USD 6,000)	NTD 170,880 (USD 6,000)	－	－	3.72%	2,297,065	Y	N	Y
０	Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Bei Hai) Co., Ltd	2	1,378,239	NTD 227,840 (USD 8,000)	NTD 227,840 (USD 8,000)	NTD227,840 (USD 8,000)	－	4.96%	2,297,065	Y	N	Y

Note 1: The description of the number column is as follows:

(1) The issuer is represented in 0.

(2) The investee company is numbered sequentially from Arabic numeral 1.

276

Note 2: The following code represents the relationship with the Company :

Trading partner.
Majority owned subsidiary
The Company direct and indirect owns over 50% ownership of the investee company.
A subsidiary jointly owned over 90% by the Company.
Guaranteed by the Company according to the construction contract.
An investee company. The guarantees were provided based on the Company's proportionate share in the investee company.
Joint and several guaranteed by the Company according to the pre-construction contract under Consumer protection Act.
Note 3: Endorsements/guarantees provided by the Company to a single enterprise and a single foreign affiliate shall not exceed 20% and 30% of the Company’s net worth, respectively.
Note 4: The maximum amount of the endorsements/guarantees provided by the Company shall not exceed 50% of the Company’s net worth.

277

Table 3

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

MARKETABLE SECURITIES HELD

DECEMBER 31, 2020

		DEC	EMBER 31, 2020
					(Amounts in Thousands of New Taiwan Dollars)
Investor	Type and Name of Securities	Relationship with the Issuer	General Ledger Account		Endingbalance			Remarks
				Number of Shares (in thousands)	Carrying Value	Percentage of Ownership	Fair Value
Sunon Electronic (Foshan) Co., Ltd.	Fund - China Resources Yuanda Fund	None	Financial assets at fair value through profit or loss	－	263,010	－	263,010
Sunon Electronic (Bei Hai) Co., Ltd.	Fund - China Resources Yuanda Fund	None	Financial assets at fair value through profit or loss	－	149,355	－	149,355

278

Table 4

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST

NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Company Name	Marketable Securities Type and Name	Financial Statement Account	Counter-party	Relationship with the Investor	BeginningBalance	BeginningBalance	Addition(Note)	Addition(Note)		Disposal	Disposal	Disposal	EndingBalance	EndingBalance
					Shares	Amount	Shares	Amount	Shares	Selling Price	Carrying Value	Gain (loss) on Disposal	Shares	Amount
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Properties Philippines Corp.	Investments accounted for using equity method	Cash Capital Increase	Subsidiary	－	－	－	414,623 (PHP699,314) (Note 1)	－	－	－	－	－	414,623 (PHP699,314)
Sunon Electronic (Foshan) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	－	64,910 (RMB 15,104)	－	325,989 (RMB 75,022) (Note 2)	－	129,904 (RMB 30,340)	127,889 (RMB 29,869)	2,015 (RMB 471)	－	263,010 (RMB 60,257)
Sunon Electronic (Bei Hai) Co., Ltd.	China Resources Yuanda Fund	Financial assets at fair value through profit or loss	China Resources Yuanda Fund Management Co.,Ltd.	None	－	63,881 (RMB 14,865)	－	529,273 (RMB123,006) (Note 2)	－	445,021 (RMB103,938)	443,799 (RMB103,653)	1,222 (RMB 285)	－	149,355 (RMB 34,218)

(Note 1): Including cash capital increase $430,000 thousand, investment loss accounted for using equity method of ($4,448) thousand, and the exchange rate impact of ($10,929) thousand.

(Note2): Including current purchase of $847,757 thousand, net profit of financial assets at fair value through profit or loss of $121 thousand and the exchange rate impact of $7,384 thousand.

279

Table 5

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

Acquisition of individual Real Estate Properties at Costs of At Least NT$300 Million or 20% of the Paid-in Capital YEAR ENDED DECEMBER 31, 2020

	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
	Prior transaction of related counterparty Price Reference Purpose of Acquisition Other Terms Owner Relationship Transfer Date Amount

							(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)
Company Name	Real Estate	Transaction Date	Transaction Amount	Payment Term	Counterparty	Relationship with the Seller	Prior transaction of related counterparty				Price Reference	Purpose of Acquisition	Other Terms
							Owner	Relationship	Transfer Date	Amount
Sunon Properties Philippines Corp.	Lot 1 Block 12, Hermosa Ecozone Industrial Park	September 2, 2020	NTD 410,992 (PHP 685,480)	NTD 410,992 (PHP 685,480)	Hermosa Ecozone Development Corporation	None	－	－	－	－	Determined at prices agreedon by both parties upon negotiation or through price comparison with reference to appraisal reports issued by professional appraisal institutions.	Constraction of the plant	－

280

Table 6

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST

NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

				DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
							(Amounts in Thousands of New Taiwan Dollars)
Company Name Related Party		Nature of Relationships		Transaction Details			Abnormal Transaction		(Notes/Accounts Payable) Or Receivable		Remarks
			Purchases/ Sales	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
Sunonwealth Electric Machine Industry Co., Ltd.	Sunon Electronic (Kunshan) Co.,Ltd.	Sub-subsidiary	Sales	3,292	0.04%	3 to 4 months	－	－	1,194	0.05%
			Purchases	1,876,694	31.44%	2 to 3 months	－	－	(536,800)	27.07%
	Sunon Electronic (Foshan) Co., Ltd.	Sub-subsidiary	Sales	45,997	0.53%	3 to 4 months	－	－	21,723	0.93%
			Purchases	36,844	0.62%	2 to 3 months	－	－	(140,843)	7.10%
			Outsourcing processingfee	867,983	80.31%	2 to 3 months
	Sunon Electronic (Bei Hai) Co.,Ltd.	Sub-subsidiary	Sales	316,106	3.67%	3 to 4 months	－	－	240,671	10.30%
			Purchases	1,809,172	30.31%	2 to 3 months	(Note)	(Note)	(532,309)	26.84%
	Sunon INC	Subsidiary	Sales	397,738	4.62%	2 to 3 months	－	－	78,412	3.36%
	Sunon SAS	Subsidiary	Sales	432,822	5.03%	2 to 3 months	－	－	188,555	8.07%
			Purchases	303	0.01%	2 to 3 months	－	－	(11)	－

Note : It is the transaction that undertakes the transfer of the Company, so it is based on the order price of the Company, and the payment period is 2-3 months.

281

Table 7

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL

DECEMBER 31, 2020

				(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)	(Amounts in Thousands of New Taiwan Dollar and Foreign Currencies)
Company Name	Related Party	Nature of Relationships	Ending Balance	Turnover	Overdue		Amounts Received in Subsequent Period(Note1)	Allowance for Bad Debts
					Amount	Action Taken
Sunonwealth Electric Machine Industry Co.,Ltd.	SUNON SAS	Subsidiary	188,555	2.49	－	－	NTD 135,704	－
Sunonwealth Electric Machine Industry Co.,Ltd.	Sunson Electronic (Bei Hai) Co., Ltd.	Subsidiary	240,671	4.24	－	－	NTD 110,833	－
Sunon Electronic (Kunshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 538,034 (RMB 123,266)	3.91	－	－	NTD 323,542 (RMB 74,125)	－
Sunon Electronic (Foshan) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 140,843 (RMB 32,268)	4.05	－	－	NTD 89,367 (RMB 20,475)	－
Sunon Electronic (Bei Hai) Co., Ltd.	Sunonwealth Electric Machine Industry Co., Ltd.	The ultimate parent company	NTD 532,307 (RMB 121,955)	4.70	－	－	NTD 513,106 (RMB 117,555)	－

Note: Amounts collected as of March 11, 2021.

282

Table 8

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

NAMES, LOCATIONS AND OTHER INFORMATION OF INVESTEE COMPANIES (EXCLUDING INVESTEE IN MAINLAND)

DECEMBER 31, 2020

				DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020	DECEMBER 31, 2020
				(Amounts in Thousands of New					Taiwan Dollars	and Foreign Currencies)
Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount		Balance a	s of December 31,2020		Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2020	As of December 31, 2019	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Sunonwealth Electric Machine Industry Co., Ltd.	Successful Century Co., Ltd.	British Virgin Islands	Investments	1,136,933	1,136,933	33,880	100.00%	1,433,968	321,764	312,544	－
	BVI Sunon International Limited	British Virgin Islands	Investments	1,035,677	1,035,677	－	100.00%	1,378,591	152,673	163,163	－
	Sunon INC	USA	Manufacturing and sales of fans	49,140	49,140	150	100.00%	91,086	20,529	21,210	－
	Sunon SAS	France	Manufacturing and sales of fans	16,127	16,127	50	100.00%	69,955	(1,577)	(2,191)	－
	Sunonwealth Electric Machine Ind.(H.K.) Ltd.	Hong Kong	Manufacturing and sales of fans	3,428	3,428	800	99.99%	1,852	(49)	(49)	－
	Sunon Corporation	Japan	Manufacturing and sales of fans	4,470	4,470	4	100.00%	2,353	(72)	(72)	－
	Sunon Electronics India Private Limited	India	Manufacturing and sales of fans	4,880	4,880	1,100	99.99%	2,157	(1,605)	(1,605)	－
	Sunon Electoronics PhilippinesCorp.	Philippine	Manufacturing and sales of fans	6,110	－	102	99.99%	5,614	(443)	(443)	－
	Sunon Properties Philippines Corp.	Philippine	Real estate development and investment	430,000	－	7,068	99.99%	414,623	(4,448)	(4,448)	－
			Total					3,400,199	486,772	488,109

283

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee	Remark
				As of December 31, 2020	As of December 31, 2019	Shares (In Thousands)	Percentage of Ownership	Carrying Value
Successful Centurty Co., Ltd.	Sunon Electronic (Kunshan) Co., Ltd.	China	Manufacturing and selling of fans	NTD1,136,276 (USD 34,000)	NTD1,136,276 (USD 34,000)	－	100.00%	NTD1,460,170 (USD 51,270)	NTD 321,770 (USD 10,895)	NTD 321,770 (USD 10,895)	－
Sunon Electronic (Kunshan) Co., Ltd.	Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	China	Manufacturing and selling of cooling equipment	NTD 12,819 (RMB 3,000)	－	－	35.00%	NTD 11,276 (RMB 2,583)	NTD -6,040 (RMB -1,411)	NTD -1,784 (RMB -417)
BVI Sunon International Limited	Sunon Electronic (Foshan) Co.,Ltd.	China	Manufacturing and selling of fans	NTD 765,207 (RMB166,171)	NTD 765,207 (RMB166,171)	－	100.00%	NTD 962,675 (RMB220,554)	NTD 114,795 (RMB 26,811)	NTD 114,795 (RMB 26,811)	－
	Sunon Electronic (Bei Hai) Co., Ltd.	China	Manufacturing and selling of new type electronic parts	NTD 293,115 (RMB63,732)	NTD 293,115 (RMB63,732)	－	100.00%	NTD 455,690 (RMB104,401)	NTD 38,024 (RMB 8,881)	NTD 38,024 (RMB 8,881)	－
Sunon SAS	Sunon Deutschland GmbH	Germany	Sales of fans	NTD 1,027 (EUR 25)	NTD 1,027 (EUR 25)	－	100.00%	NTD 5,093 (EUR 145)	NTD -769 (EUR -23)	NTD -769 (EUR -23)	－

284

Table 9

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

INFORMATION ON INVESTMENT IN MAINLAND CHINA

DECEMBER 31, 2020

(1) Mainland Investment Information:

(Amounts in Thousands of New Taiwan Dollars and Foreign Currencies)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2020	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee Company	Percentage of Ownership	Share of Profit/Loss (Note 2)	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
Sunon Electronic (Kunshan) Co., Ltd.	Manufacturing and selling of fans	NTD1,136,276 (USD 34,000)	(2)	NTD1,136,673 (USD33,880)	－	－	NTD1,136,673 (USD 33,880)	NTD 321,770 (USD 10,895)	100%	NTD 321,770 (USD 10,895) (2).B	NTD 1,460,170 (USD 51,270)	NTD 384,603 (USD 12,894)
Sunon Electronic (Foshan) Co., Ltd.	Manufacturing and selling of fans	NTD 765,207 (USD 23,660)	(2)	NTD 743,663 (USD22,840)	－	－	NTD 743,663 (USD 22,840)	NTD 114,795 (RMB 26,811)	100%	NTD 114,795 (RMB 26,811) (2).B	NTD 962,675 (RMB 220,554)	NTD 622,508 (USD 20,474)
Sunon Electronic (Bei Hai) Co., Ltd.	Manufacturing and selling of new type electronic parts	NTD 293,115 (USD 10,000)	(2)	NTD 293,115 (USD10,000)	－	－	NTD 293,115 (USD 10,000)	NTD 38,024 (RMB 8,881)	100%	NTD 38,024 (RMB 8,881) (2).B	NTD 455,690 (RMB 104,401)	NTD 549,672 (USD 17,836)
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Manufacturing and selling of cooling equipment	NTD 32,870 (RMB 7,692)	(3)	－ (Note 5)	－	－	－ (Note 5)	NTD -6,040 (RMB -1,411)	35%	NTD -1,784 (RMB -417) (2).A	NTD 11,276 (RMB 2,583)	－

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by Investment Commission, MOEA	Upper Limit on Investment
NTD 1,136,673 (USD 33,880) NTD 743,663 (USD 22,840) NTD 293,115 (USD 10,000)	USD 34,000 USD 23,660 USD 10,000	(Note 4)

285

Note : Gain and loss on investment are translated using average exchange rates for the year ended December 31, 2020 (USD:NTD 1:29.533; CYN:NTD

1:4.2816). Additions and ending balance are translated using the exchange rates as at December 31, 2020 (USD:NTD 1:28.48; CYN:NTD 1:4.3648)
Note 1: The investment methods are divided into the following three types:
(1) Investing directly to the Mainland China;
(2) Reinvesting in the Mainland China through third-region companies (please refer to Table 8);
(3) Others.

Note 2: In the current period, the investment profit and loss column is recognized:

(1) If during incorporation with no investment income or loss, it should be indicated;
(2) The basis for recognition of investment gains and losses divided into the following three types, which should be indicated:
A. Audited financial statements by international accounting firms with cooperation relationship with accounting firms in the Republic of China.
B. Audited financial statements by parent company’s auditors.
C. Others.
Note 3: The relevant figures in this form should be listed in New Taiwan Dollars.

286

(2)The Company’s major transactions during year 2020 directly or indirectly through the third place and the mainland invested company are listed as follows:

Investee Company	Sales/ Purchases	Sales/ Purchases	Sales/ Purchases		Transaction Terms	Transaction Terms	(Notes/Accounts Payable) Or Receivables	(Notes/Accounts Payable) Or Receivables
		Amount	%	Price	Payment Terms	Comparison with general transactions	Ending Balance	% to Total
Sunon Electronic (Kunshan) Co., Ltd.	Sales	3,292	0.04%	Cost based	3-4 months	Equivalent to sales price with ordinary clients	1,194	0.05%
	Purchases	1,876,694	31.44%	Cost based	2-3 months	Equivalent to purchase price withordinary suppliers	(536,800)	27.07%
Sunon Electronic (Foshan) Co., Ltd.	Sales	45,997	0.53%	Cost based	3-4 months	Equivalent to sales price with ordinary clients	21,723	0.93%
	Purchases	36,844	0.62%	Cost based	2-3 months	Equivalent to purchase price withordinary suppliers	(140,843)	7.10%
	Outsourcing processingfee	867,983	80.31%	Add a certain margin based oncost	2-3 months	Equivalent to pricing of other processors
Sunon Electronic (Bei Hai) Co., Ltd.	Sales	316,106	3.67%	Cost based	3-4 months	Equivalent to sales price with ordinary clients	240,671	10.30%
	Purchases	1,809,172	30.31%	According to the company’s order price asthe basis ofpricing	2-3 months	According to the Company’s order price as the basis of pricing	(532,309)	26.84%

287

Table 10

SUNONWEALTH ELECTRIC MACHINE INDUSTRY CO., LTD.

INFORMATION ON MAJOR SHAREHOLDERS

DECEMBER 31, 2020

	DECEMBER 31, 2020	DECEMBER 31, 2020
	(Unit: share)
Shares Name of MajorShareholder	Number of Shares	Percentage of Ownership (%)
Guang Sheng Investment Corporation	19,150,000	7.63%
Yo Yuan Investment Corporation	14,825,000	5.90%
Fu-Ing Hong Chen	14,670,000	5.84%

288

14. SEGMENT INFORMATION

The Company has provided the operating segments disclosure in the consolidated financial statements.

289

IV. Impact on the Company's financial status due to financial difficulties experienced by the company and its affiliated companies in the most recent year and as of the publication date of the Annual Report None.

290

G. Review, Analysis, and Risks of Financial Conditions and Performance

I. Financial conditions

Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans

Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans	Financial conditions Main reasons and impact of any material change in the Company's assets, liabilities, or shareholders' equity during the past two years; in the case of material impact, describe future response plans
Unit:thousand NT$; %
Year Item	December 31, 2019	December 31, 2020	Change (amount)	Percentage of change %
Current assets	6,611,713	7,392,164	780,451	11.80
Property, plant and equipment	2,277,290	2,105,535	-171,755	-7.54
Intangible assets	18,954	25,781	6,827	36.02
Non-current assets	2,827,585	3,026,897	199,312	7.05
Total assets	9,439,298	10,419,061	979,763	10.38
Current liabilities	4,632,633	4,933,346	300,713	6.49
Non-current liabilities	577,887	891,586	313,699	54.29
Total liabilities	5,210,520	5,824,932	614,412	11.79
Share capital	2,509,297	2,509,297	0	0
Capital surplus	366,903	366,903	0	0
Retained earnings (Note)	1,612,853	1,960,024	347,171	21.53
Other equity	-260,275	-242,095	-18,180	-6.98
Total equity	4,228,778	4,594,129	365,351	8.64
Where the change is 20%, the reasons shall be analyzed as follows: 1.The increase in intangible assets was caused by the increase in the cost of computer software. 2. The increase in non-current liabilities was caused by the increase in long-term borrowing.

The increase in intangible assets was caused by the increase in the cost of computer software.
The increase in non-current liabilities was caused by the increase in long-term borrowing.

Note: Retained earnings include statutory surplus reserves, special reserve, and undistributed earnings.

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II. Financial performance

Indicate the main reasons for any material changes to the operating income, net profit, and net profit before tax as well as the expected sales and its basis, and the possible impact on the Company's future financial operations and response plans

(I) Main reasons and impact of any material change in the company's operating income, net profit, and net profit before tax in the last two years

net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years	net profit, and net profit before tax in the last two years
Unit: thousand NT$; %
Year Item	2019	2020	Change (amount)	Percentage of change%
Net revenue Operating costs Gross profit Operating expenses Operating net profit Non-operating income and expenses Net income before tax Income tax expenses Current period net profit Other comprehensive income Total comprehensive income of the period Comprehensive income attributable to net profit of owners of parent company	11,659,915 9,081,302 2,578,613 1,791,361 787,252 122,472 909,724 228,923 680,801 -89,534 591,267 591,267	12,781,281 9,783,239 2,998,042 1,883,831 1,114,211 -25,808 1,088,403 236,753 851,650 15,561 867,211 867,211	1,121,366 701,937 419,429 92,470 326,959 -148,280 178,679 7,830 170,849 105,095 275,944 275,944	9.62 7.73 16.27 5.16 41.53 -121.07 19.64 3.42 25.10 117.38 46.67 46.67
Analysis and description for items with changes of over 20% are as follows: 1. The increase in net operating profit was caused by the decrease in operating costs and operating expenses. 2. The decrease in net non-operating income and expenses was caused by the increase in other interest and losses. 3. The increase in net profit before tax and net profit for this period was caused by the increase in operating revenue. 4. The increase in other comprehensive income was caused by the increase in the foreign exchange differences in the conversion of financial statements of foreign operations. 5. The increase in total comprehensive income for this period and total comprehensive income attributable to owners of the parent company was caused by the increase in operating revenue.

(II) Expected sales and its basis, and the possible impact on the Company's future financial operations

For more information on expected sales and its basis, please refer to the Letter to Shareholders on page 1 for an overview of the Business Plan of this year. If the expected sales volume is reached, it would generate positive effects on the Company's finance and business.

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III. Cash flow

(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity

(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity	(I) Analysis and explanation on the change in cash flow in the most recent year and improvement plans for insufficient liquidity
Unit: %
Year Item	2019	2020	Change (%)
Cash flowratio	19.57	30.01	53.35
Cash flowadequacyratio	86.30	90.09	3.79
Cash reinvestment ratio	6.23	15.98	156.50
The analyses for items with changes of over 20% are as follows: The increase in the cash flow ratio was caused by the increase in net cash inflow from operating activities in this period compared to the previous period. The increase in cash reinvestment ratio was caused by the increase in net cash inflow from operating activities and increase in working capital in this period.

(II) Cash flow analysis for the coming year

Unit: thousand NT$

					Unit:thousand NT$	Unit:thousand NT$
Cash balance, beginning	Cash flow from operating activities	Cash flow from investing activities	Cash flow from financing activities	Estimated cash surplus (deficit)	Estimated remedial measures for cash inadequacy
					Investment plans	Financing plans
1,574,919	1,300,000	-1,000,000	-302,231	1,572,688	`－`	`－`
1. The estimated cash flow changes in 2021 are analyzed as follows: (1) Operating activities: The Company expects operating revenue for products and net income after tax to grow and net changes in operating assets and liabilities related to business activities to generate cash inflow. We expect net cash inflow of approximately NT$1,300,000 thousand. (2) Investing activities: The Company plans to purchase plants and production facilities for the subsidiary in the Philippines. We shall also continue to invest in automation equipment and update and maintain certain production facilities. We therefore expect to have a cash outflow of approximately NT$1,000,000 thousand. (3) Financing activities: The Company expects to pay cash dividends and remuneration for Directors and Supervisors totaling NT$602,231 thousand, and obtain a loan of NT$300,000 thousand which will lead to a cash outflow of approximately NT$302,231 thousand. 2. The expected cash balance is NT$1,572,688 thousand and there are no instances of cash inadequacy.

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IV. The effects that significant capital expenditures have on financial operations in the recent year

In response to long-term production and sales development, the Company acquired two properties on No. 793 and NO. 794, Ren'ai Section, Qianzhen District, Kaohsiung City based on the resolution of the meeting of the Board of Directors on April 12, 2016. The area totals 6,934 square meters and it shall be used for expanding the R&D laboratory and production. The acquisition price totaled NT$486,626,960. To facilitate adequate use of financial leverage, we planned to use medium to long-term loans as the source of funding. The Company's financial structure remains robust after obtaining the loan. After the completion of the expanded new plants, the Company shall use the automatic production line for the production of high-end products and micro cooling products which will have positive effects on businesses.

To disperse the risks of concentrated production and reduce operating cost, the Company's Board of Directors resolved in the meeting on November 1, 2019 to invest US$20,000,000 in the establishment of SUNON Properties Philippines Corp. and invest US$5,000,000 in the establishment of SUNON Electronics Philippines Corp. The Company shall reduce the dividends distribution ratio and obtain medium to long-term loans for the investment. The Company's financial structure remains robust after the loans are obtained. The completion of the new plant in the Philippines will effectively reduce production and operating costs and generate positive effects on the Company's finance and business.

V. Investment policy in the past year, profit/loss analysis, improvement plan, and investment plan for the coming year

	Cumulative investment amount (thousand NT$)	Investment policy	Main reason for profits or losses	Improvement plans
Sunon Electronic (Kunshan) Co., Ltd.	USD 34,000	Development of cooling module products and cooperation with laptop market customers	Recognized NT$321,770 thousand in profits from investment in 2020 as customer demand increased and improved revenue.	Continue to develop niche new products, intensify vertical integration, and cooperate with customers in passive cooling components.

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Sunon Electronic (Foshan) Co., Ltd.	USD 23,660	Provide services to customers in the Pearl Delta region and build a production base for direct exports to customers.	Recognized NT$114, 795 thousand in profits from investment in 2020 as productivity increased and profitability improved.	Continue to increase production efficiency and use automation in process to improve product design and reduce demand for human labor. We shall change the source and structure of human labor to lower costs and maintainproductionquality.
Sunon Electronic (Bei Hai) Co., Ltd.	USD 10,000	Disperse investment risks and serve as the backup or alternate base for the production base in the Pearl Delta area.	Recognized NT$38,024 thousand in profits from investment in 2020 due to the success of the economy of scale and increase in production efficiency.	Expand production scale and increase cost advantages.
SUNON PROPERTIES PHILIPPINES CORP.	USD 14,800	Disperse risks by setting up production sites outside Greater China	Recognized NT$4,448 thousand in losses from investment in 2020 Losses are attributed to the recognition of expenses for setting upoperations.	Profitability can be improved after the start of production.

Note: Cumulative investment amount that exceed 5% of paid-up capital.

The Company's investment plans in Mainland China that have been approved by the Investment Commission have been implemented and we have completed the production and sales plans in Mainland China. The material investment plans in the next year include the investment of a new plant in the Philippines. Please refer to the explanation above.

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VI. Risk management and evaluation

(I) Impact of interest rate and exchange rate changes and inflation on Company's profit and response measures
Changes in interest rates and response measures

In response to the COVID-19 epidemic, countries have greatly reduced interest rates and adopted monetary easing policies to stimulate the economy in the first quarter of 2020. The measures have lowered interest rates to low points and would help the Company reduce the cost of obtaining loans. The Company alternates between loans in NTD, USD, and EUR to reduce interest rates. When long-term changes are expected on the interest rate market, we use interest rate exchange contracts to lock in long-term interest rates and avoid material impact caused by interest rate fluctuations.

Impact of interest rates changes and response measures

The appreciation of NTD causes reduces revenue and margins. The appreciation of RMB increases operating costs and decreases margins. The Company prioritizes natural hedging policies to reduce the risks of exchange rate fluctuations. We create USD liability positions for purchases denominated in USD to automatically offset USD foreigncurrency asset positions generated from sales. The natural hedging policy minimizes losses from exchange rates in the event of material foreign exchange rate fluctuations. However, we remain affected by customers' payment customs on the income end for currencies that can be used. We are affected by the place of occurrence of the costs and expenditures and we thus remain exposed to USD net assets and RMB net liabilities positions and we must continue to reduce our exposure to risks associated with these two currencies. In addition, the Company's policies also permit operations in foreign exchange derivatives to reduce risks. Where necessary, the Company can respond accordingly.

Impact of inflation and response measures

The loose monetary policies of world governments and measures taken to stimulate economic recovery have increased market concern for inflation. Although they have not yet caused inflation, we must pay closer attention to the timing and the impact of inflation.

(II) Policies, main causes of gain or loss and future response measures with respect to high-risk, high-leveraged investments, lending or endorsement guarantees, and derivatives transactions:

The Company strictly prohibits high-risk investment and high-risk operations in derivatives. Based on the transactions conducted in recent years, the investment products consisted only of investments in repurchase bills with low risks. Transactions were in compliance with the Company's policies and resulted in profits. The Company's derivatives only involved foreign exchange DF and NDF investments with low risks. Transactions were in compliance with the Company's policies and resulted in profits. The Company only organizes in loans between affiliates of the Group and completely follows related regulations in all procedures to meet corporate governance requirements. In

296

addition, the Company assisted the sub-subsidiaries companies in China, Sunon Electronic (Kunshan) Co., Ltd., Sunon Electronic (Foshan) Co., Ltd., and Sunon Electronic (Bei Hai) Co., Ltd. in obtaining bank loan credits by providing endorsement and guarantee. As the three sub-subsidiaries are wholly-controlled companies, there are no uncontrollable risks. The Company shall maintain a low-risk operation policy to respond to future risks.

Loans provided for others, endorsements and guarantees, and transactions in derivatives are processed in accordance with the Company's "Procedures for Loaning of Funds to Others", "Procedures for Making Endorsements and Guarantees", and "Procedures for Acquisition or Disposal of Assets".

297

(III) Future R&D programs and expected R&D investment

Term	R&D Program Content	Expected R&D Expenditures
Short-term plans	1. Development of servers/network equipment with higher performance/higher energy efficiency/lower noise/better audio quality/lower vibration fan products 2. Development of high-grade IP protection fan for industrial and energy equipment 3. Development of low-temperature/low-noise/high- quality audio fan products for white appliances 4. Vehicle high performance/low noise/high audio quality/low temperature/ AECQ-compliant/EMC- compliant fans 5. HVACR high performance/energy efficient/low- noise/low-vibration EC fans 6. Development of large-scale ventilation equipment and products for plants/warehouses 7.Development of heat dissipation devices for 5G base stations 8. Development of HPC water-cooled heat dissipation devices 9. Development of vehicle-mounted heat dissipation devices	Annual R&D expenses will be 5%- 8% of business revenue
Term	R&D Program Content	Expected R&D Expenditures
Medium and long- term plans	1. Fans with autonomous health diagnosis 2. Development of servers/network equipment with higher performance/higher energy efficiency/lower noise/better audio quality/lower vibration fan products 3. Higher performance/lower noise/better audio quality for second-generation automobile products 4. Second-generation HVACR high performance/energy efficient/low-noise/low- vibration EC fans 5. Development of Indoor air quality visualization technology 6. Automotive pump development 7. Continuous R&D for high-performance heat- dissipation module solutions	Annual R&D expenses will be 5%- 8% of business revenue

298

(IV) Major changes in government policies and laws at home and broad, the impact on Company finance and business, and response measures

In the recent trade war between China and the United States, the United States increased import tariffs on products directly produced and sold by China to the United States. As most of the Company's products are produced in Mainland China, a very low percentage (less than 3%) of products are included in the scope of increased tariffs. The Company takes measures to transfer the costs and transferred the cost of increased tariffs to customers. Other products were sold to other customers in Mainland China who assemble our products into other products for sales in the United States. This accounts for a larger portion of sales but as the Company's products account for a low percentage of materials used in the customers' products, the place of production of the Company's products will not affect the designation of the place of production of the customers' products and we therefore do not need to relocate our production site. However, if these customers transfer production back to Taiwan or to Mexico or directly to the United States, the changes would affect the Company's logistics and warehouse storage methods and increase costs marginally. Overall, the tariffs would have little impact on the Company's finance and business and the Company has prepared response measures for all possibilities.

In addition, the Company's related units collect information on important changes to domestic and foreign policies and laws to ensure that all our finance and business activities meet local regulatory requirements and quickly adapt to changes in policies and laws.

(V) Impact of recent technological and market changes on the Company's finance and business, and response measures

The Company has set up dedicated units to conduct research on changes in upstream and downstream sectors of the electronics industry in Taiwan and abroad. We also participate in domestic and foreign exhibitions and seminars to obtain the latest information on industry development and provide related information to R&D, sales, and management to use as reference for technology development and business strategies. The latest technology development trends are mostly favorable to the Company's development. The new Purley server platforms will increase demand for more sophisticated cooling solutions. The rise of AI, IoT, and Industry 4.0 applications will bring forth greater and more high-end cooling demand. 5G communication devices will also increase demand for cooling products. The automobile industry's demand for cooling has progressed from luxury and optional devices to standard equipment and devices for computing heat dissipation. These technological advances have increased the sophistication of cooling products and will continue to expand the market which will help power the Company's medium and long-term development. The Company shall make full use of our advantages in these technologies and our lead in the market to accelerate market expansion and widen the gap between the Company and competitors.

(V-1) Impact of damage to the information system on the Company's business operations and the response measures

299

We created a system with high-availability cluster infrastructure and remote backup for the IT system to ensure uninterrupted system services. Remote backup can use high-speed Internet to backup system information to a remote server at reasonable costs. The DR faulttolerant transfer uses virtualization technology and server hardware for mutual backup. In the event of hardware damage or software system collapse, we can painlessly switch to a different server to continue operations and keep system services uninterrupted.

The Company executes various server room disaster response drills and conducts drills for disaster recovery. We restore backup data to verify the feasibility of backups and reduce the risks of system service interruptions due to unforeseen natural disasters or human errors. We also ensure that the required recovery time for system interruptions is within the set goals.

(V-2) Risks and countermeasures for cyberattacks

As cyberattacks continue to grow in terms of the sophistication of the methodology, there are no permanent fixes in the industry. As such, the Company has established the Information Security Policy as the guiding principle for information security protection and established related information security management regulations and operating procedures. The management organize quarterly information security meetings to review the Company's current information security measures and formulate improvement plans. We provide explanation and propose response measures for the following risks that we may encounter in business operations.

1. Virus threats

The sources of computer viruses may be malicious websites, illegitimate attachments, or portable storage media. The Company has therefore established multiple layers of defenses and inspections and installed a reputable anti-virus system in all terminals. We adopt centralized controls for surveillance and protection to reduce the risks of infections and attacks from malicious programs.

2. Cyberattacks

Internet hacker attacks cause the most direct impact on the Company's operations. In addition to establishing necessary protection measures including segmentation of major networks and access authorization control, firewalls, intrusion detection, and mechanisms for blocking attacks, we will also fix the security vulnerabilities based on information security vulnerability reports to minimize loopholes and the possibilities of attacks.

Although we detected numerous external attacks in 2020, all attacks were automatically intercepted or blocked by the internal defense system. There were therefore no material information security incidents that affected the Company's operations in 2020.

(VI) Impact of corporate image change on risk management and response measures

The Company has always maintained a good reputation for high quality and advanced technologies. There were no crisis involving the change of corporate image in the most recent year up to the publication date of the Annual Report.

300

(VII) Expected benefits and possible risks of mergers and acquisitions as well as the responding measures

The Company resolved to implement a short-form merger of the Company and the wholly-owned subsidiary company Sunon SMT Co., Ltd. (hereinafter referred to as Sunon SMT) in a resolution of the meeting of the Board of Directors on August 8, 2018. The Company was the surviving company and Sunon SMT was the dissolved company. Sunon SMT's investee in China, Limao Electronic (Foshan) Co., Ltd. (hereinafter referred to as Limao) was merged into the Company's investee in China, Sunon Electronic (Foshan) Co., Ltd. Sunon SMT's investee in China, Guangying Electronic (Kunshan) Co., Ltd. (hereinafter referred to as Guangying) was merged into the Company's investee in China, Sunon Electronic (Kunshan) Co., Ltd. Sunon SMT, Limao, and Guangying were responsible for the Company's outsourced SMT operations. The SMT process is an important process for fan motor activation and control. The merger of Sunon SMT streamlined the Group's investment structure, reduced human resources management costs, reduced production lead time, and reduced inventory. The parent company also organizes production resources and increased the scale and efficiency of production.

(VIII) Expected benefits and possible risks of factory expansions as well as the response measures

The Company resolved in the board meeting on April 12, 2016 to purchase land near the headquarters for future expansion of R&D facilities and production plants. The Board of Directors also resolved to construct a new plant in the Philippines in the meeting on November 1, 2019. Based on the debts incurred by the cost of the acquisition, the overall liability ratio remains within the risk requirements and did not negatively impact the financial structure. After the expansion, the new plant in Taiwan will be used to produce high-end products and the new plant in the Philippines will effectively reduce production costs. They are expected to contribute to the Company's development.

(IX) Risks associated with over-concentration in purchase or sale and response measures

The Company's suppliers and customers are dispersed and we maintain solid long-term relationships with suppliers and customers. There are no cases of over-concentration of purchases or sales.

(X) Impact of mass transfer of equity by or change of directors, supervisors, or shareholders holding more than 10% interest on the Company, associated risks and response measures There has been no significant transfer of company shares by Directors, Supervisors, or
major shareholders with more than 10% of shares in the most recent year and up to the publication date of this Annual Report.
(XI) Effects that changes in management have on the Company as well as risk and response measures

The Company completed the election of a new term of the Directors on May 30, 2018. The Chairman and the President were both reelected without changes and there are no risks of a change of management.

301

(XII) Litigation or non-litigation events
SIAM Microelettronica S.P.A. filed a suit against the Company to claim damages for
infringement of rights on April 8, 2020. The Company has appointed an attorney to represent the Company in the litigation and the case is currently being reviewed by Taiwan Kaohsiung District Court. The final results of the case will be determined by future legal proceedings and are not expected to have material impact on the Company's operations.
(XIII) Other significant risks and response measures: None.

VII. Other important matters: None.

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H. Special Disclosures

I. Profiles of affiliates and subsidiaries

(I) Consolidated Business Report of Affiliates
Overview of affiliates

==> picture [430 x 400] intentionally omitted <==

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

Sunonwealth
100% BVI SUCCESSFUL 100% BVI SUNON INT’L HK 99.99% SUNONWEALTH SUNON SAS 100% SUNON INC 100% CORPORATION 100% SUNON INDIA 99.99% SUNON ELECTRONICS Philippines 99.99% SUNON Properties Philippines 99.99% SUNON Electronics
(KUNSHAN) 100% SUNON ELECTRONIC (FOSHAN) 100% SUNON ELECTRONIC (BEI HAI) 100% SUNON ELECTRONIC SUNON GmbH 100%
SHENGYIXING 35% SUZHOU
----- End of picture text -----

(1) Affiliate organization chart

303

(2) Basic information of affiliated enterprises

March 31, 2021; Unit: thousand NT$

Enterprise name	Date of establishment	Address	Paid-in capital	Main business or core products
Sunon INC.	1998.12.24	1075 W. Lambert Rd. Suite A, BREA,CA 92821	US1,500	Manufacturing and assembly of electronic components and import and wholesale of various electronic and electrical components
Sunon SAS.	1999.12.30	66, avenue des Pepinieres, 94832 FRESNES CEDEX – FRANCE	EUR500	Import and wholesale of various electronic and electrical components
Sunon Deutschland GmbH	2000.09.01	Lebacher Strabe 4 , 66113 Saarbrucken.	EUR25	Import and wholesale of various electronic and electrical components
SUNON株式會社	2000.07.07	202, Itou Bld., 1-1-20, Tsujido, Fujisawa Shi, Kanagawa Ken, 251-0047, Japan	JPY15,000	Production and sales of fans
Sunonwealth Electric Machine Ind. (H.K.) Ltd.	1992.07.30	Room 14-1402, Hong Kong and Macau Building, 156-157 Connaught Road Central,SheungWan,HongKong	HKD800	Import and wholesale of various electronic and electrical components
BVI Successful Century Co., Ltd.	2000.07.07	Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,British Virgin Islands.	US33,880	General investment and trade
Sunon Electronic (Kunshan)Co.,Ltd.	2000.09.19	No. 168 Nanbin Road, Kunshan, Jiangsu Province,China	US34,000	Production and sales of brushless DC motors and fans
BVI Sunon International Ltd.	1997.01.15	Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110,British Virgin Islands.	US32,840	General investment and trade
Sunon Electronic (Foshan) Co., Ltd.	2006.03.20	No. 5 Xianan 2 Avenue, Guicheng, Nanhai District, Foshan, Guangdong Province, China	US23,660	Production and sales of AC/DC motors and fans
Sunon Electronic (Bei Hai) Co., Ltd.	2011.04.07	B6, Beihai Comprehensive Bonded Zone, Beihai Avenue West, Beihai City, Guangxi Province,China	US10,000	Production and sales of AC/DC motors and fans
Sunon Electronics India Private Limited	2019.06.12	Spaze IT Park, Tower B, 5th Floor Unit 530. Sohana Road. Sector 49 Gurgaon. Haryana. India. Pincode: 122018	INR11,000	Import and wholesale of various electronic and electrical components
Sunon Properties Philippines Corp.	2020.01.14	Lot 1, Block 12, Hermosa Ecozone Industrial Park, Brgy. Palihan, Hermosa, Bataan, Philippines.	PHP706,790	Real estate development and investment
Sunon Electronics Philippines Corp.	2020.01.10	Lot 1, Block 12, Hermosa Ecozone Industrial Park, Brgy. Palihan, Hermosa, Bataan, Philippines.	PHP10,214	Production and sales of AC/DC motors and fans
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	2014.11.11	No. 169, Liaobang Road, Jiangling Neighborhood, Wujiang District, Suzhou, Jiangsu Province,China	CNY7,692	Production and sales of heat dissipation equipment

Note: The exchange rates for various foreign currencies in the 2020 Balance Sheet are: USD: NTD = 1: 28.48; JPY: NTD = 1: 0.2763; EUR: NTD = 1: 35.02; RMB: NTD = 1: 4.3648; HKD: NTD = 1: 3.673; INR: NTD =1:0.3899; PHP: NTD =1:0.5929.

304

(3) Information of common shareholders who are presumed to have a relationship of control and subordination: None.
(4) Businesses covered by the affiliated enterprises' overall operations
A. Design, production, and sales of various fans, cooling modules, and motors
B. Design, production, and sales of spindle motors
C. Production of precision hardware components for fans and motors
D. SMT processing
E. Molds design and production
F. General investment and management consulting

305

(5) Directors, Supervisors, and Presidents of each affiliated enterprise and the number of shares they hold or the amount of capital they contributed to each enterprise

			March 31,2021	March 31,2021
Enterprise name	Title	Name or representative	Shares held
			Number of shares	Shareholding ratio (%)
Sunon INC.	Director ActingPresident	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Yin-Su Hong, Fu-Ing Hong Chen, Ching-Shen Hong Chin-TzuWu	150,000 -	100.00% -
Sunon SAS.	Director President	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong Hao-Sheng Chu	50,000 -	100.00% -
Sunon Deutschland GmbH	Director	SUNON SAS Representative: Hao-Sheng Chu	-	100.00%
SUNON株式會社	Director Supervisor	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Yin-Su Hong, Ching-Shen Hong Sunonwealth Electric Machine Industry Co., Ltd. Representative: Fu-Ing Hong Chen	4,400	100.00%
Sunonwealth Electric Machine Ind.(H.K.)Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Yin-Su Hong, Ching-Shen Hong	799,999	99.99%
BVI Successful Century Co.,Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative:Ching-Shen Hong	33,880,000	100.00%
Sunon Electronic (Kunshan) Co., Ltd.	Director Supervisor President	SUCCESSFUL CENTURY CO., LTD Representative: Yin-Su Hong, Fu-Ing Hong Chen, Ching-Shen Hong Li-Ju Chen Kuo-ChingLi	- - -	100.00% - -
BVI Sunon International Ltd.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative:Ching-Shen Hong	32,840,000	100.00%
Sunon Electronic (Foshan) Co., Ltd.	Director Supervisor President	SUNON INTERNATIONAL LTD. Representative: Ching-Shen Hong, Yin-Su Hong, Li-Ju Chen SUNON INTERNATIONAL LTD. Representative: Fu-Ing Hong Chen Kuan-HungTseng	- -	100.00% -
Sunon Electronic (Bei Hai) Co., Ltd.	Director Supervisor President	SUNON INTERNATIONAL LTD. Representative: Ching-Shen Hong, Yin-Su Hong, Li-Ju Chen SUNON INTERNATIONAL LTD. Representative: Fu-Ing Hong Chen Chao-Wang Chiu	- -	100.00% -
Sunon Electronics India Private Limited	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Yin-Su Hong	1,099,999	99.99%
Sunon Properties Philippines Corp.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Yin-Su Hong, Li-JuChen	-	99.99%
Sunon Electronics Philippines Corp.	Director	Sunonwealth Electric Machine Industry Co., Ltd. Representative: Ching-Shen Hong, Yin-Su Hong, Li-JuChen	-	99.99%
Suzhou Shengyixing Heat Transfer Technology Co., Ltd.	Director Supervisor	Sunon Electronic (Kunshan) Co., Ltd. Representative: Ching-Shen Hong Sunon Electronic (Kunshan) Co., Ltd. Representative: William Li		35.00%

306

2. Overview of business operations of affiliates

2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates	2. Overview of business operations of affiliates
December 31,2020; Unit: thousand NT$
Enterprise name	Capital	Total value of assets	Total liabilities	Net worth	Operating revenue	Operating profits	Profit or loss for the current period (after tax)	Earnings per share (NT$) (after tax)
Sunon INC.	49,140	218,473	117,297	101,176	545,148	-5,801	20,529	130.85
Sunon SAS.	16,127	383,231	303,114	80,117	538,716	-554	-1,577	-31.54
Sunon Deutschland GmbH	1,027	5,200	107	5,093	13,036	-955	-769	-
Sunon Corporation	4,470	2,430	77	2,353	0	-31	-72	-16.36
Sunonwealth Electric Machine Ind. (H.K.)Ltd.	3,428	1,852	0	1,852	0	-50	-49	-0.06
BVI Successful Century Co., Ltd.	1,136,933	1,460,225	0	1,460,225	0	-10	321,764	9.50
Sunon Electronic (Kunshan) Co., Ltd.	1,136,276	3,361,089	1,900,925	1,460,164	4,550,761	503,968	321,770	-
Suzhou Shengyixing Heat Transfer Technology Co.,Ltd.	32,870	91,249	57,907	33,342	84,370	-6,061	-6,040	-
BVI Sunon International Ltd.	1,035,677	1,418,775	20	1,418,755	0	-119	152,673	4.65
Sunon Electronic(Foshan)Co., Ltd.	765,207	1,594,422	631,747	962,675	2,517,392	143,890	114,795	-
Sunon Electronic (Bei Hai) Co., Ltd.	293,115	1,601,372	1,145,682	455,690	2,259,519	44,907	38,024	-
Sunon Electronics India Private Limited	4,880	2,499	341	2,158	1,771	-1,557	-1,605	-1.45
Sunon Properties Philippines Corp.	430,000	414,623	0	414,623	0	-5,621	-4,448	-0.63
Sunon Electronics Philippines Corp.	6,110	5,614	0	5,614	0	-94	-443	-4.34

307

(II) Consolidated financial statement of affiliates
For the 2020 fiscal year (from January 1 to December 31, 2020), companies that should be included in the consolidated financial statement of affiliates as provided by the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises" are the same as what should be included in the consolidated financial statements of parent and subsidiary companies as provided in IFRS No. 10 which was approved by the Financial Supervisory Commission, and the relevant information that should be disclosed in the consolidated financial statements of affiliates has been disclosed in the consolidated financial statements of the parent and its subsidiaries. The Company shall not be required to prepare separate consolidated financial statements of affiliates (please refer to the 2020 Financial Report on page 105 of the Annual Report).
(III) Affiliation Report
The Company is the controlling company of other affiliate companies and is thus not applicable to regulations regarding the disclosure of an affiliation report.

II. Progress of private placement of securities during the latest year and up to the date of annual report publication: None.

III. Holding or disposal of stocks of the Company by subsidiaries in the past year and up to the date of report: None.
IV. Other supplemental information: None.

308

Corporate events with material impact on shareholders' equity or stock prices set forth in Article 36, Paragraph 3, Subparagraph 2 of Securities and Exchange Act in the past year and up to the date of report shall be specified separately below: None.

309

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Sunonwealth Electric Machine Industry Co., Ltd. TEL[: ] 886-7-8135888 FAX[ : ] 886-7-8122929 Http : //www.sunon.com E-mail : [email protected]

AI assistant

SUNON — Annual Report 2020

52070_rns_2021-07-09_b544111c-2810-469c-aed9-bb4f8fc37ca7.pdf

Sunonwealth Electric Machine Industry Co., Ltd. 2020 Annual Report

Table of Contents

A. Letter to Shareholders

Dear Shareholders,

Results of Business Operations in the Previous Year

2021 Business Plan Overview

Future Development Strategy

Impact of the Competitive Environment, Regulatory Environment, and Overall Business Environment

B. Company Profile

I. Date of establishment

II. Company history

1. 1980

2. 1981

3. 1983

11. 1993

13. 1995

14. 1996

15. 1997

16. 1998

17. 1999

18. 2000

19. 2001

20. 2002

21. 2003

22. 2004

23. 2005

24. 2006

25. 2007

26. 2008

27. 2009

28. 2010

29. 2011

30. 2012

31. 2013

32. 2014

33. 2015

34. 2016

35. 2017

36. 2018

37. 2019

38. 2020

C. Corporate Governance Report

I. Organization system

(I) Organization structure

(II) Major business units and their key businesses

II. Profile of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department Directors (I) Director information

Director information

Table 2: Major shareholders in Table 1 who are institutional shareholders and their major shareholders

Director information

(II) Profile of the President, Vice Presidents, Assistant Vice Presidents, and Department Directors

III. Remunerations to Directors (including Independent Directors), Supervisors, President, and Vice Presidents in recent years (I) Director's remuneration

Range of remuneration table

(II) Remunerations to President and Vice President

Remunerations to President and Vice President (range of remuneration with name disclosure)

(III) Managerial officer's name and the distribution of employee bonus

IV. Implementation of corporate governance

(I) Board of Directors operating status

Board of Directors evaluation status

(II) Audit Committee operating status

Audit Committee operating status

Note:

(V) Performance of Corporate Social Responsibility

Sunonwealth Electric Machine Industry Co., Ltd. Internal Control System Statement

V. Information on fees to CPA

Information on fees to CPA

VI. Information on Replacement of CPAs: None.

VIII.Share transfer by Directors, Supervisors, Managerial Officers, and shareholders holding more than 10% interests and changes to share pledging by them

IX. Information on the relationship between any of the top ten shareholders

D. Funding Status

I. Source of Capital Shares

(II) Categories of outstanding shares

II. Shareholders

III. Shareholding distribution status

Preferred shares: None.

IV. List of major shareholders

V. Market price per share, net worth, earnings, dividends, and the related information for the last two years

VI. Dividend policy and implementation status

SUNON Annual Report 2020