SUNRACE - Interim / Quarterly Report 2021

Sun Race Sturmey-Archer Corporation And Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2021 and 2020 and Independent Auditors’ Review Report

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INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Sun Race Sturmey-Archer Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Sun Race Sturmey-Archer Corporation and its subsidiaries (collectively, the “Group”) as of September 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months and nine months periods ended September 30, 2021 and 2020, the consolidated statements of changes in equity and cash flows for the nine months periods ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies “(collectively referred to as the “consolidated financial statements”)”. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Note 12 to the consolidated financial statements, the financial statements of some non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of September 30, 2021 and 2020, the combined total assets of these non-significant subsidiaries were NT$358,061 thousand and NT$292,688 thousand, respectively, representing 14.43% and 17.16%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$75,542 thousand and NT$31,587 thousand, respectively, representing 5.98% and 5.24%, respectively, of the consolidated total liabilities; for the three month and nine month periods ended September 30, 2021 and 2020, the amounts of combined comprehensive income (loss) of these subsidiaries were NT$3,729 thousand, NT$5,745 thousand, NT$5,629 thousand and NT$(1,339) thousand, respectively, representing 5.90%, 10.91%, 2.93% and (0.90)%, respectively, of the consolidated total comprehensive income. The disclosure of information related to the aforementioned non-significant subsidiaries in Note 34 is based on these subsidiaries’ unreviewed financial statements for the same reporting periods as those of the Group.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true and fair view of the consolidated financial position of the Group as of September 30, 2021 and 2020, and its consolidated financial performance for the three months and nine months periods ended September 30, 2021 and 2020 and its consolidated cash flows for the nine months periods ended September 30, 2021 and 2020, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Shiann-Chang Lin and Hsin-Yuan Wang.

Benison Associated CPA’s Firm Taipei, Taiwan Republic of China November 5, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and consolidated financial statements shall prevail

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS	September 30, 2021 (Reviewed)	September 30, 2021 (Reviewed)	December 31, 2020 (Audited)	December 31, 2020 (Audited)	September 30, 2020 (Reviewed)	September 30, 2020 (Reviewed)
	Amount	%	Amount	%	Amount	%
CURRENT ASSETS Cash and cash equivalents (Note 6 ) Financial assets at fair value through profit or loss - current (Note 7 ) Notes receivable from unrelated parties (Note 8 ) Accounts receivable from unrelated parties (Note 8 ) Accounts receivable from related parties (Note 8 and 28) Other receivables Inventories (Note 9 ) Prepayments (Note 10 ) Other financial assets - current (Note 11) Other current assets Total current assets NON-CURRENT ASSETS Property, plant and equipment (Note 13 ) Right-of-use assets (Note 14 ) Intangible assets (Note 15 ) Deferred tax assets Prepayments for equipment Refundable deposits Total non-current assets TOTAL	527,425 - 24,731 110,039 187,573 17,468 906,216 34,702 55,590 -	21 - 1 4 8 1 37 1 2 -	439,657 110 38,725 87,512 279 7,953 612,194 38,088 - 15	24 - 2 5 - - 33 2 - -	355,386 247 27,107 100,163 30,129 5,837 548,098 24,480 - -	21 - 2 6 2 - 32 1 - -
	1,863,744	75	1,224,533	66	1,091,447	64
	527,015 34,045 1,878 40,370 9,101 4,409	21 2 - 2 - -	534,031 33,824 2,320 36,745 10,981 5,083	29 2 - 2 1 -	527,254 34,082 2,467 39,177 6,302 5,059	31 2 - 3 - -
	616,818	25	622,984	34	614,341	36
	2,480,562 $	100	1,847,517 $	100	1,705,788 $	100

(Continued)

LIABILITIES AND EQUITY	September 30, 2021 (Reviewed)	September 30, 2021 (Reviewed)	December 31, 2020 (Audited)	December 31, 2020 (Audited)	September 30, 2020 (Reviewed)	September 30, 2020 (Reviewed)
	Amount	%	Amount	%	Amount	%
CURRENT LIABILITIES Short-term borrowings (Note 16 ) Contract liabilities - current (Note 22 ) Notes payable to unrelated parties Accounts payable to unrelated parties Accounts payable to related parties (Note 28 ) Other payables Other payables to related parties (Note 28) Current tax liabilities Provisions for liabilities - current (Note 18 ) Current lease liabilities (Note 14 ) Current portion of long-term borrowings (Note 17 ) Other current liabilities (Note 19 ) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 17 ) Deferred tax liabilities Non-current lease liabilities (Note 14 ) Net defined benefit liability (Note 20 ) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital (Note 21 ) Ordinary shares Total share capital Capital surplus (Note 21 ) Capital surplus - issuance of ordinary shares Capital surplus - employee share options Total Capital surplus Retained earnings (Note 21 ) Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity (Note 21 ) Exchange differences on translating the financial statements of foreign operations Total other equity Total equity attributable to owners of the Company TOTAL	111,601 $ 144,930 194,135 215,951 15,079 169,342 929 54,142 4,094 2,878 - 104,297	4 6 8 9 1 7 - 2 - - - 4	60,783 $ 100,913 193,100 140,829 21,694 57,211 2,066 50,129 7,306 1,848 30,000 42	3 6 10 8 1 3 - 3 - - 2 -	67,368 $ 55,456 135,622 136,926 12,798 39,388 864 46,239 3,629 2,159 30,000 112	4 3 8 8 1 2 - 3 - - 2 -
	1,017,378	41	665,921	36	530,561	31
	235,000 - 923 10,685	10 - - -	30,000 22 1,054 17,827	2 - - 1	50,000 49 1,348 20,606	3 - - 1
	246,608	10	48,903	3	72,003	4
	1,263,986	51	714,824	39	602,564	35
	600,000	24	600,000	32	600,000	35
	600,000	24	600,000	32	600,000	35
	44,865 2,728	2 -	44,865 2,728	2 -	44,865 2,728	3 -
	47,593	2	47,593	2	47,593	3
	73,045 17,470 497,140	3 1 20	55,024 16,245 431,301	3 1 24	55,024 16,245 403,517	3 1 24
	587,655	24	502,570	28	474,786	28
	(18,672)	(1)	(17,470)	(1)	(19,155)	(1)
	(18,672)	(1)	(17,470)	(1)	(19,155)	(1)
	1,216,576	49	1,132,693	61	1,103,224	65
	2,480,562 $	100	1,847,517 $	100	1,705,788 $	100

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

(With Benison review report dated November 5, 2021) (Concluded)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

For the three-month period ended September 30, 2021	For the three-month period ended September 30, 2021	For the three-month period ended September 30, 2020	For the three-month period ended September 30, 2020	For the nine-month period ended September 30, 2021	For the nine-month period ended September 30, 2021	For the nine-month period ended September 30, 2020	For the nine-month period ended September 30, 2020
Amount	%	Amount	%	Amount	%	Amount	%
480,651 $ (347,922)	100 (72)	371,660 $ (277,547)	100 (75)	1,307,476 $ (929,604)	100 (71)	884,671 $ (692,591)	100 (78)
132,729	28	94,113	25	377,872	29	192,080	22
(19,513) (22,773) (6,460)	(4) (5) (1)	(8,820) (21,134) (5,322)	(2) (6) (1)	(45,705) (68,807) (17,359)	(4) (5) (1)	(24,200) (58,537) (15,564)	(3) (7) (2)
(48,746)	(10)	(35,276)	(9)	(131,871)	(10)	(98,301)	(12)
83,983	18	58,837	16	246,001	19	93,779	10
58 289 (829) (841)	- - - (1)	164 424 3,475 (561)	- - 1 -	207 1,929 (3,346) (1,637)	- - - -	303 89,086 9,371 (2,538)	- 10 1 -
(1,323)	(1)	3,502	1	(2,847)	-	96,222	11
82,660 (18,819)	17 (4)	62,339 (12,468)	17 (4)	243,154 (50,069)	19 (4)	190,001 (37,577)	21 (4)
63,841	13	49,871	13	193,085	15	152,424	17
(776) 155	- -	3,473 (695)	1 -	(1,502) 300	- -	(3,637) 727	- -
(621)	-	2,778	1	(1,202)	-	(2,910)	-
(621)	-	2,778	1	(1,202)	-	(2,910)	-
63,220 $	13	52,649 $	14	191,883 $	15	149,514 $	17
1.07 $		0.83 $		3.22 $		2.54 $
1.06 $		0.83 $		3.21 $		2.54 $

(The accompanying notes are an integral part of the consolidated financial statements.) (With Benison review report dated November 5, 2021)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

			EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company	EquityAttributable to Owners of the Company		Total Equity
	Share Capital	Capital Surplus		Retained Earnings		Other Equity Exchange Differences on Translating the Financial Statements of Foreign Operations (16,245) $ - - - - (2,910) (19,155) $ (17,470) $ - - - - (1,202) (18,672) $	Total
			Legal Reserve	Special Reserve	Unappropriated Earnings
BALANCE AT JANUARY 1, 2020 Appropriation of 2019 earnings Legal reserve Special reserve Cash dividends distributed by the Company Net income for the nine months ended September 30,2020 Other comprehensive income for the nine months ended September 30, 2020, net of income tax BALANCE AT SEPTEMBER 30, 2020 BALANCE AT JANUARY 1, 2021 Appropriation of 2020 earnings Legal reserve Special reserve Cash dividends distributed by the Company Net income for the nine months ended September 30,2021 Other comprehensive income for the nine months ended September 30, 2021, net of income tax BALANCE AT SEPTEMBER 30, 2021	600,000 $ - - - - -	47,593 $ - - - - -	47,012 $ 8,012 - - - -	11,535 $ - 4,710 - - -	311,815 $ (8,012) (4,710) (48,000) 152,424 -		1,001,710 $ - - (48,000) 152,424 (2,910)	1,001,710 $ - - (48,000) 152,424 (2,910)
	600,000 $	47,593 $	55,024 $	16,245 $	403,517 $		1,103,224 $	1,103,224 $
	600,000 $ - - - - -	47,593 $ - - - - -	55,024 $ 18,021 - - - -	16,245 $ - 1,225 - - -	431,301 $ (18,021) (1,225) (108,000) 193,085 -		1,132,693 $ - - (108,000) 193,085 (1,202)	1,132,693 $ - - (108,000) 193,085 (1,202)
	600,000 $	47,593 $	73,045 $	17,470 $	497,140 $		1,216,576 $	1,216,576 $

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

(With Benison review report dated November 5, 2021)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

For the nine-month period For the nine-month period ended September 30, 2021 ended September 30, 2020

	For the nine-month period ended September 30, 2021	For the nine-month period ended September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized/(reversed) on trade receivables Net (gain)/loss on fair value changes of financial [assets/liabilities] at fair value through profit or loss Finance costs Interest income (Gain)/loss on disposal of property, plant and equipment Impairment loss on non financial assets Unrealized foreign exchange loss (gain) Other adjustments to reconcile profit(loss) Changes in operating assets and liabilities (Increase)/decrease in notes receivable (Increase)/decrease in accounts receivable (Increase)/decrease in accounts receivable from related parties (Increase)/decrease in other receivables (Increase)/decrease in inventories (Increase)/decrease in prepayments (Increase)/decrease in other current assets (Increase)/decrease in other financial assets Increase/(decrease) in contract liabilities Increase/(decrease) in notes payable Increase/(decrease) in accounts payable Increase/(decrease) in accounts payable from related parties Increase/(decrease) in other payables Increase/(decrease) in other payables from related parties Increase/(decrease) in provisions Increase/(decrease) in other current liabilities Increase/(decrease) in net defined benefit liability Cash generated from/(used in) operations Interest received Interest paid Income taxes refund(paid) Net cash generated from/(used in) operating activities	243,154 43,341 442 - (2,453) 1,637 (207) (53) 7,912 6,576 (20) 13,994 (22,434) (192,018) (9,513) (301,885) 3,386 15 (55,590) 44,017 1,035 75,132 (6,615) 4,094 (1,137) (3,212) 104,255 (7,142)	190,001 30,887 395 298 (247) 2,538 (303) (100) 38,983 1,921 - 3,817 (21,209) 77,621 (826) (52,230) (2,970) 130 - (35,052) 31,100 75,616 4,424 (13,743) (584) (2,997) 70 (1,177)
	(53,289) 205 (1,596) (49,403)	326,363 303 (2,546) (11,160)
	(104,083)	312,960

(Continued)

For the nine-month period For the nine-month period ended September 30, 2021 ended September 30, 2020

	For the nine-month period ended September 30,2021	For the nine-month period ended September 30,2020
CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through profit or loss Acquisition for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Increase in prepayments for equipment Net cash generated from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Repayment of the principal portion of lease liabilities Cash Dividends Net cash generated from/(used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	(32,286) 34,849 (26,084) 245 (1,779) 2,449 - (6,453)	- - (20,547) 276 (774) 2,275 (294) (3,659)
	(29,059)	(22,723)
	1,956,966 (1,906,148) 455,000 (280,000) (2,086) -	2,333,393 (2,301,040) 325,000 (465,000) (2,245) (48,000)
	223,732	(157,892)
	(2,822)	(3,024)
	87,768 439,657	129,321 226,065
	527,425	355,386

(The accompanying notes are an integral part of the consolidated financial statements.) (With Benison review report dated November 5, 2021) (Concluded)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

1. GENERAL INFORMATION

Sun Race Sturmey-Archer Corporation (the “Company”) was incorporated in the Republic of China (ROC) on May 26, 1972. The company mainly engaged in manufacturing, processing and trading various bicycle parts and mechanical hardware.

The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since March 2000.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on November 5, 2021.

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

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

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies.

b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs `“`Annual Improvements to IFRS Standards 2018–2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts–Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

Note 1: The amendments to IFRS 9 are applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” are applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” are applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
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Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 3: 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 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

The Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced by IASB (Note 1)
	To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

New IFRSs
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between An Investor and Its Associate or Joint Venture”

IFRS 17 “Insurance Contracts”

Amendments to IFRS 17

Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”

Amendments to IAS 1 “Disclosure of Accounting Policies”

Amendments to IAS 8 “Definition of Accounting Estimates”

Amendments to IAS 12 “Deferred Tax related to Assets and
Liabilities arising from a Single Transaction”

Effective Date
Announced by IASB (Note 1)

To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 2)
January 1, 2023 (Note 3)
January 1, 2023 (Note 4)

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: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, or other regulations and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual consolidated financial statements.

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b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value, and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company.

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

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

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

See Note 12 、 Tables 3 and 4 for detailed information on subsidiaries (including percentages of ownership and main businesses).

d. Other significant accounting policies

Except for the following, please refer to the consolidated financial statements for the year ended December 31, 2020.

1) Retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events

2) Other long-term employee benefits

Other long-term employee benefits are accounted for in the same way as the accounting required for defined benefit plans except that remeasurement is recognized in profit or loss.

3) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings.

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Please refer to the consolidated financial statements for the year ended December 31, 2020.

6. CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS
Cash on hand Checking accounts and demand deposits Time deposits	September 30, 2021	December 31, 2020 $ 846 308,073 130,738 $ 439,657	September 30, 2020
	$ 746 402,919 123,760		$ 871 306,716 47,799
	$ 527,425		$ 355,386

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

September 30, 2021 December 31, 2020 September 30, 2020

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

Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts	$ - $ -	$ 110	$ 247
		$ 110	$ 247

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

December 31, 2020 Sell EUR/Buy NT$ September 30, 2020 Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$ Sell EUR/Buy NT$	Carrying Amount $ 110 $ 110 $ (37) (25) (39) (26) (14) (16) 12 10 179 203 $ 247	Maturity Date January 2021 November 2020 November 2020 December 2020 December 2020 November 2020 December 2020 November 2020 December 2020 December 2020 January 2021	Notional Amount (In Thousands)
			EUR 200 EUR 100 EUR 100 EUR 100 EUR 100 EUR 100 EUR 100 EUR 100 EUR 100 EUR 200 EUR 200

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The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. However, those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for using hedge accounting.

8.NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Notes receivable - operating Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Accounts receivable-related party (Note 28) At amortized cost Gross carrying amount Less: Allowance for impairment loss	September 30, 2021 $ 24,731 - $ 24,731 $ 24,731 $ 110,348 (309) $ 110,039 September 30, 2021 $ 187,573 - $ 187,573	December 31, 2020	September 30, 2020
		$ 38,725 -	$ 27,107 -
		$ 38,725	$ 27,107
		$ 38,725	$ 27,107
		$ 87,821 (309)	$ 100,472 (309)
		$ 87,512	$ 100,163
		December 31, 2020	September 30, 2020
		$ 279 -	$ 30,129 -
		$ 279	$ 30,129

a. Accounts receivable

At amortized cost

The average credit period of sales of goods was 30~150 days. No interest was charged. The police adopted by merger (merged company) is to trade with objects that crediting rating meets with the requirements of the company, and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit rating information is obtained from the financial information or its own trading records to rate its major customers. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

The Group measures the loss allowance for accounts receivable at an amount equal to lifetime ECLs. The expected credit losses on accounts receivable are estimated using a provision matrix by reference to the past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Group’s different customer base.

13 -

The Group writes off accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivable that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivable based on the Group’s provision matrix.

September 30, 2021 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost December 31, 2020 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost September 30, 2020 Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECLs) Amortized cost	Not Past Due -% $ 292,089 - $ 292,089 Not Past Due -% $ 77,304 - $ 77,304 Not Past Due -% $ 128,493 - $ 128,493	Less than 30 Days -% $ 5,520 - $ 5,520 Less than 30 Days -% $ 10,487 - $ 10,487 Less than 30 Days -% $ 1,796 - $ 1,796	31 to 60 Days -% $ - - $ - 31 to 60 Days -% $ - - $ - 31 to 60 Days -% $ - - $ -	61 to 90 Days -% $ - - $ - 61 to 90 Days -% $ - - $ - 61 to 90 Days -% $ - - $ -	Over 90 Days 99% $ 312 (309) $ 3 Over 90 Days 100% $ 309 (309) $ - Over 90 Days 99% $ 312 (309) $ 3	Total $ 297,921 (309) $ 297,612 Total $ 88,100 (309) $ 87,791 Total $ 130,601 (309) $ 130,292

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

Balance at January 1 Recognition (reversal) Balance at September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021	2020
	$ 309 -	$ - 309
	$ 309	$ 309

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9. INVENTORIES

Finished goods Semi-finished goods Work in process Raw materials	September 30, 2021	December 31, 2020	September 30, 2020
	$ 210,521 433,213 126,715 135,767	$ 119,762 323,432 113,198 55,802	$ 107,619 308,584 74,667 57,228
	$ 906,216	$ 612,194	$ 548,098

The nature of the cost of goods sold is as follows:

For the Three Months Ended September 30 2021 2020 $ 338,566 $ 275,097 9,356 2,450 347,922 277,547	For the Three Months Ended September 30 2021 2020 $ 338,566 $ 275,097 9,356 2,450 347,922 277,547	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 338,566 9,356 347,922		2021 $ 921,692 7,912 929,604	2020
	$ 275,097 2,450 277,547		$ 653,608 38,983
			692,591

10. PREPAYMETS

Prepaid expenses Prepaid rents - current Prepayments to suppliers Net input VAT Others	September 30, 2021	December 31, 2020	September 30, 2020
	$ 4,425 138 18,907 11,232 -	$ 5,306 180 13,018 19,584 -	$ 3,965 224 1,489 17,736 1,066
	$ 34,702	$ 38,088	$ 24,480

11. OTHER FINANCIAL ASSETS - CURRENT

Pledged time deposits	September 30, 2021	December 31, 2020	September 30, 2020
	$ 55,590	$ -	$ -

The other financial assets as collateral for bank borrowings are set out in Note 29.

12. SUBSIDIARIES

a. Subsidiaries included in the consolidated financial statements

Investor Investee Nature of Activities The company BUSINESS ALLIANCE LIMITED (BUSINESS ALLIANCE) Investment activities BUSINESS ALLIANCE BUSINESS FIRST LIMITED (BUSINESS FIRST) Investment activities BUSINESS FIRST SUN RACE STURMEY-ARCHER (NANTONG) CO., LTD. (SUN RACE NANTONG) Production and sales of precision plastic film and bicycle transmission system components	Proportion of Ownership (%) September 30, 2021 December 31, 2020 September 30, 2020 Remark 100% 100% 100% 1 100% 100% 100% 1 100% 100% 100% 1

Remarks:

1)The immaterial subsidiaries’ financial statements for the nine-month periods ended September 30, 2021 and 2020 have not been reviewed by independent auditors.

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13. PROPERTY, PLANT AND EQUIPMENT

September 30, 2021 December 31, 2020 Assets used by the Group $ 527,015 $ 534,031 Assets leased under operating leases - - $ 527,015 $ 534,031 a. Assets used by the Group Land Buildings Equipment Molding equipment Cost`：` Balance at January 1, 2021 $ 169,101 $ 347,712 $ 134,361 $ 235,269 Additions - - 18,539 6,162 Disposals - - (11,573) - Reclassifications - - 8,333 - Effects of foreign currency exchange differences - (334) (16) (15) Balance at September 30, 2021 $ 169,101 $ 347,378 $ 149,644 $ 241,416 Accumulated depreciation and impairment`：` Balance at January 1, 2021 $ - $ 106,646 $ 93,298 $ 189,309 Depreciation expenses - 6,076 12,874 15,439 Disposals - - (11,381) - Reclassifications - - - - Effects of foreign currency exchange differences - (6) (1) (7) Balance at September 30, 2021 $ - $ 112,716 $ 94,790 $ 204,741 Carrying amount at September 30,2021 $ 169,101 $ 234,662 $ 54,854 $ 36,675 Carrying amount at December 31, 2020 and January 1, 2021 $169,101$ 241,066 $ 41,063 $ 45,960	September 30, 2021 December 31, 2020 Assets used by the Group $ 527,015 $ 534,031 Assets leased under operating leases - - $ 527,015 $ 534,031 a. Assets used by the Group Land Buildings Equipment Molding equipment Cost`：` Balance at January 1, 2021 $ 169,101 $ 347,712 $ 134,361 $ 235,269 Additions - - 18,539 6,162 Disposals - - (11,573) - Reclassifications - - 8,333 - Effects of foreign currency exchange differences - (334) (16) (15) Balance at September 30, 2021 $ 169,101 $ 347,378 $ 149,644 $ 241,416 Accumulated depreciation and impairment`：` Balance at January 1, 2021 $ - $ 106,646 $ 93,298 $ 189,309 Depreciation expenses - 6,076 12,874 15,439 Disposals - - (11,381) - Reclassifications - - - - Effects of foreign currency exchange differences - (6) (1) (7) Balance at September 30, 2021 $ - $ 112,716 $ 94,790 $ 204,741 Carrying amount at September 30,2021 $ 169,101 $ 234,662 $ 54,854 $ 36,675 Carrying amount at December 31, 2020 and January 1, 2021 $169,101$ 241,066 $ 41,063 $ 45,960	September 30, 2021 December 31, 2020 Assets used by the Group $ 527,015 $ 534,031 Assets leased under operating leases - - $ 527,015 $ 534,031 a. Assets used by the Group Land Buildings Equipment Molding equipment Cost`：` Balance at January 1, 2021 $ 169,101 $ 347,712 $ 134,361 $ 235,269 Additions - - 18,539 6,162 Disposals - - (11,573) - Reclassifications - - 8,333 - Effects of foreign currency exchange differences - (334) (16) (15) Balance at September 30, 2021 $ 169,101 $ 347,378 $ 149,644 $ 241,416 Accumulated depreciation and impairment`：` Balance at January 1, 2021 $ - $ 106,646 $ 93,298 $ 189,309 Depreciation expenses - 6,076 12,874 15,439 Disposals - - (11,381) - Reclassifications - - - - Effects of foreign currency exchange differences - (6) (1) (7) Balance at September 30, 2021 $ - $ 112,716 $ 94,790 $ 204,741 Carrying amount at September 30,2021 $ 169,101 $ 234,662 $ 54,854 $ 36,675 Carrying amount at December 31, 2020 and January 1, 2021 $169,101$ 241,066 $ 41,063 $ 45,960	September 30, 2021 December 31, 2020 Assets used by the Group $ 527,015 $ 534,031 Assets leased under operating leases - - $ 527,015 $ 534,031 a. Assets used by the Group Land Buildings Equipment Molding equipment Cost`：` Balance at January 1, 2021 $ 169,101 $ 347,712 $ 134,361 $ 235,269 Additions - - 18,539 6,162 Disposals - - (11,573) - Reclassifications - - 8,333 - Effects of foreign currency exchange differences - (334) (16) (15) Balance at September 30, 2021 $ 169,101 $ 347,378 $ 149,644 $ 241,416 Accumulated depreciation and impairment`：` Balance at January 1, 2021 $ - $ 106,646 $ 93,298 $ 189,309 Depreciation expenses - 6,076 12,874 15,439 Disposals - - (11,381) - Reclassifications - - - - Effects of foreign currency exchange differences - (6) (1) (7) Balance at September 30, 2021 $ - $ 112,716 $ 94,790 $ 204,741 Carrying amount at September 30,2021 $ 169,101 $ 234,662 $ 54,854 $ 36,675 Carrying amount at December 31, 2020 and January 1, 2021 $169,101$ 241,066 $ 41,063 $ 45,960	September 30, 2021 December 31, 2020 Assets used by the Group $ 527,015 $ 534,031 Assets leased under operating leases - - $ 527,015 $ 534,031 a. Assets used by the Group Land Buildings Equipment Molding equipment Cost`：` Balance at January 1, 2021 $ 169,101 $ 347,712 $ 134,361 $ 235,269 Additions - - 18,539 6,162 Disposals - - (11,573) - Reclassifications - - 8,333 - Effects of foreign currency exchange differences - (334) (16) (15) Balance at September 30, 2021 $ 169,101 $ 347,378 $ 149,644 $ 241,416 Accumulated depreciation and impairment`：` Balance at January 1, 2021 $ - $ 106,646 $ 93,298 $ 189,309 Depreciation expenses - 6,076 12,874 15,439 Disposals - - (11,381) - Reclassifications - - - - Effects of foreign currency exchange differences - (6) (1) (7) Balance at September 30, 2021 $ - $ 112,716 $ 94,790 $ 204,741 Carrying amount at September 30,2021 $ 169,101 $ 234,662 $ 54,854 $ 36,675 Carrying amount at December 31, 2020 and January 1, 2021 $169,101$ 241,066 $ 41,063 $ 45,960	December 31, 2020	December 31, 2020	September $ $ Other equipment	30, 2020 525,613 1,641 527,254 Total
		$			$	534,031 -
		$			$	534,031
			Buildings			Molding equipment
	$ 169,101 - - - -		$ 347,712 - - - (334)	$ 134,361 18,539 (11,573) 8,333 (16)		$ 235,269 6,162 - - (15)	$ 58,499 1,383 - - (197)	$ 944,942 26,084 (11,573) 8,333 (562)
	$ 169,101		$ 347,378	$ 149,644		$ 241,416	$ 59,685	$ 967,224
			$ 106,646 6,076 - - (6)	$ 93,298 12,874 (11,381) - (1)		$ 189,309 15,439 - - (7)	$ 21,658 6,338 - - (34)	$ 410,911 40,727 (11,381) - (48)
impairment`：` Balance at January 1, 2021 Depreciation expenses Disposals Reclassifications Effects of foreign currency exchange differences Balance at September 30, 2021 Carrying amount at September 30,2021 Carrying amount at December 31, 2020 and January 1, 2021
	$ -		$ 112,716	$ 94,790		$ 204,741	$ 27,962	$ 440,209
	$ 169,101		$ 234,662	$ 54,854		$ 36,675	$ 31,723	$ 527,015
	$169,101		$ 241,066	$ 41,063		$ 45,960	$ 36,841	$ 534,031

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Land Cost`：` Balance at January 1, 2020 $ 169,101 Additions - Disposals - Transfers (to) from assets leased under operating leases - Reclassifications - Effects of foreign currency exchange differences - Balance at September 30, 2020 $ 169,101 Accumulated depreciation and impairment`：` Balance at January 1, 2020 $ - Depreciation expenses - Disposals - Transfers (to) from assets leased under operating leases - Effects of foreign currency exchange differences - Balance at September 30, 2020 $ - Carrying amount at September 30,2020 $169,101	Land	Buildings	Equipment	Molding equipment	Other equipment	Total
	$ 169,101 - - - - -	$ 287,427 - - - - -	$ 117,875 4,650 (875) (130) 502 (18)	$ 217,459 12,801 - - 415 (23)	$ 114,414 3,096 - - - (988)	$ 906,276 20,547 (875) (130) 917 (1,029)
	$ 169,101	$ 287,427	$ 122,004	$ 230,652	$ 116,522	$ 925,706
		$ 101,401 3,934 - - -	$ 84,083 7,089 (699) (19) (1)	$ 171,015 13,273 - - (6)	$ 16,477 3,559 - - (13)	$ 372,976 27,855 (699) (19) (20)
impairment`：` Balance at January 1, 2020 Depreciation expenses Disposals Transfers (to) from assets leased under operating leases Effects of foreign currency exchange differences Balance at September 30, 2020 Carrying amount at September 30,2020
	$ -	$ 105,335	$ 90,453	$ 184,282	$ 20,023	$ 400,093
	$169,101	$ 182,092	$ 31,551	$ 46,370	$ 96,499	$ 525,613

No impairment loss was recognized for the nine months ended September 30, 2021 and 2020.

The above items of property, plant and equipment used by the Group are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings	20-55 years
Equipment	3-10 years
Molding equipment	2-10 years
Other equipment	3-10 years

Property, plant and equipment used by the Group and pledged as collateral for bank borrowings are set out in Note 29.

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b. Assets leased under operating leases

Cost`：` Balance at January 1, 2020 Additions Disposals Reclassifications Balance at September 30, 2020 Accumulated depreciation and impairment`：` Balance at January 1, 2020 Depreciation expenses Disposals Reclassifications Balance at September 30, 2020 Carrying amount at September 30, 2020	Equipment
	$ 21,302 - - 130
	$ 21,432
	$ 19,496 276 - 19
	$ 19,791
	$ 1,641

Operating leases relate to leases of equipment lease terms is 1 year. The lessees do not have purchase options to acquire the assets at the expiry of the lease periods.

The maturity analysis of operating lease payments receivable for the buildings is as follows:

Year 1 Year 2 Year 3 Year 4 Year 5	September 30, 2021	December 31, 2020	September 30, 2020
	$ - - - - -	$ - - - - -	$ 150 - - - -
	$ -	$ -	$ 150

The above items of property, plant and equipment leased under operating leases are depreciated on a straight-line basis over their estimated useful lives as follows:

Equipment 3-10 years

14. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts Transportation equipment Land	September 30, 2021	December 31, 2020	September 30, 2020
	$ 3,772 30,273	$ 2,869 30,955	$ 3,474 30,608
	$ 34,045	$ 33,824	$ 34,082

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For the Three Months Ended September 30 2021 2020 $ 555 $ 719 $ 744 $ 667 169 173 $ 913 $ 840	For the Three Months Ended September 30 2021 2020 $ 555 $ 719 $ 744 $ 667 169 173 $ 913 $ 840	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 555 $ 744 169 $ 913		2021 $ 3,063 $ 2,103 511 $ 2,614	2020
	$ 719 $ 667 173 $ 840		$ 719
			$ 2,249 507
			$ 2,756

b. Lease liabilities

Carrying amounts Current Non-current	September 30, 2021 $ 2,878 $ 923	December 31, 2020	September 30, 2020
		$ 1,848	$ 2,159
		$ 1,054	$ 1,348

Range of discount rate for lease liabilities was as follows:

Transportation equipment	September 30, 2021 0.96%~2.04%	December 31, 2020 0.96%`～`2.07%	September 30, 2020
			0.96%~2.07%

c. Material lease-in activities and terms

The Group leases certain transportation equipment with lease terms of 1 to 3 years. These arrangements do not contain renewal or purchase options.

The Group also leases land with lease terms of 50 years in China. Payment is made at the time of signing the contract. The Group does not have bargain purchase options to acquire the leasehold land at the end of the lease terms.

d. Other lease information

For the Three Months Ended September 30 2021 2020 $ 271 $ 124 $ 996 $ 786	For the Three Months Ended September 30 2021 2020 $ 271 $ 124 $ 996 $ 786	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 271 $ 996		2021 $ 451 $ 2,616	2020
	$ 124 $ 786		$ 263
			$ 2,601

The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

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15. INTANGIBLE ASSETS

Cost`：` Balance at January 1, 2021 Additions Others Balance at September 30, 2021 Accumulated Amortization and Impairment`：` Balance at January 1, 2021 Amortization Effects of foreign currency exchange differences Balance at September 30, 2021 Carrying amount at September 30, 2021 Carrying amount at December 31, 2020 and January 1, 2021 Cost`：` Balance at January 1, 2020 Additions Others Balance at September 30, 2020 Accumulated Amortization and Impairment`：` Balance at January 1, 2020 Amortization Effects of foreign currency exchange differences Balance at September 30, 2020 Carrying amount at September 30, 2020	Computersoftware
	$ 8,876 - -
	$ 8,876
	$ 6,556 442 -
	$ 6,998
	$ 1,878
	$ 2,320
	Computersoftware
	$ 8,581 294 -
	$ 8,875
	$ 6,013 395 -
	$ 6,408
	$ 2,467

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

Computer software 3-10 years

16. SHORT-TERM BORROWINGS

Unsecured borrowings Bank loans (1) Secured borrowings (Note 29) Bank loans (1)	September 30, 2021	December 31, 2020	September 30, 2020
	$ 63,601 48,000	$ 60,783 -	$ 67,368 -
	$ 111,601	$ 60,783	$ 67,368

1) The range of weighted average effective interest rates on bank loans was 1.07%-1.45%, 0.36%-1.45% and 0.36%~1.45% per annum at September 30, 2021, December 31, 2020 and September 30, 2020, respectively.
20 -

17. LONG-TERM BORROWINGS

Secured borrowings (Note 29) Bank loans (1) Unsecured borrowings Bank loans (1) Less: Current portions	September 30, 2021	December 31, 2020	September 30, 2020
	$ 235,000 - -	$ 30,000 30,000 (30,000)	$ 80,000 - (30,000)
	$ 235,000	$ 30,000	$ 50,000

1) As of September 30, 2021, December 31, 2020 and September 30, 2020, the range of weighted average effective interest rates of the bank borrowings was 1.93%, 0.54%~1.93% and 0.54%~1.93% per annum, respectively. The borrowing rate is floating rate.

In January 2021, the borrowing of $30,000 thousand on December 31, 2020, was paid in advance. For the nine months ended September 30, 2021, the Group acquired new bank borrowings facilities in the amounts of $455,000 thousand, which was paid off advance $220,000 thousand, the borrowings balance as of September 30, 2021 is $235,000 thousand, and will be repayable on October 27, 2022. The borrowing rate is floating rate.

In January 2020, the borrowing of $190,000 thousand on December 31, 2019, was paid in advance. For the nine months ended September 30, 2020, the Group acquired new bank borrowings facilities in the amounts of $325,000 thousand, which was paid off advance $275,000 thousand, the borrowings balance as of September 30, 2020 is $50,000 thousand, and paid off in advance in October 2020. The borrowing rate is floating rate.

In June 2020, the application for short-term borrowings of $30,000 thousand was approved by the Ministry of Economic Affairs and reclassified to long-term borrowings, which paid off in April, 2021. The borrowing rate is floating rate.

18. PROVISIONS

Current Employee benefits (a)	September 30, 2021	December 31, 2020	September 30, 2020
	$ 4,094	$ 7,306	$ 3,629

a. An employee benefits liability reserve is estimates of employees’ vested long-term service leave rights.

19. OTHER CURRENT LIABILITIES

Current Deposits received (Note 28) Others	September 30, 2021	December 31, 2020	September 30, 2020
	$ 103,591 706	$ - 42	$ - 112
	$ 104,297	$ 42	$ 112

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20. RETIREMENT BENEFIT PLANS

For the three months ended and nine months ended September 30, 2021 and 2020, the pension expenses of defined benefit plans were $15 thousand, $64 thousand, $46 thousand and $192 thousand, respectively, and these were calculated based on the pension cost rate determined by the actuarial calculation on December 31, 2020 and 2019, respectively.

21. EQUITY

a. Share capital

1) Ordinary shares

September 30, 2021 December 31, 2020 September 30, 2020

Shares authorized (in thousands of shares) Shares authorized, par value $10 (in thousands of dollars) Shares issued and fully paid (in thousands of shares) Shares issued and fully paid (in thousands of dollars)	79,000 $ 790,000 60,000 $ 600,000	79,000 79,000 $ 790,000 $ 790,000 60,000 60,000 $ 600,000 $ 600,000

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of ordinary shares May not be used for any purpose Employee share options	September 30, 2021 $ 44,865 2,728 $ 47,593	December 31, 2020 $ 44,865 2,728 $ 47,593	September 30, 2020
			$ 44,865 2,728
			$ 47,593

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).
c. Retained earnings and dividends policy

Under the dividends policy as set forth in the Articles, which the Company adopts the residual dividend policy, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, however when the legal reserve amounts to the authorized capital, this shall not apply, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends to shareholders would not less than 3% of the current year's distributable surplus, cash dividends would not less than 1%. For the policies on the distribution of employees’ compensation and remuneration of directors after the amendment, refer to employees’ compensation and remuneration of directors in Note 23.

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An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1090150022 issued by the FSC on March 31, 2021. When distributing profits, the Company sets aside special reserves in the amount equivalent to the net amount of contra other equity items for the current period, using the balance of net income after tax plus the items included in undistributed retained earnings except those included in net income for the current period. If the balance is insufficient to meet the requirement of special reserves, the remainder shall be set aside using the undistributed retained earnings for the previous period.

The Company shall set aside special reserves that shall not be distributed in the net amount of contra other equity items, using either of the following two methods:

A. Set aside special reserves using the undistributed retained earnings for the previous period; or
B.Set aside special reserves using the undistributed retained earnings for the previous period and the balance of net income after tax plus the items included in undistributed retained earnings except those included in net income for the current period when the undistributed retained earnings for the previous period are insufficient, in which case the Company shall state the applied method clearly in the dividend policies of the Articles of in Company.

When the net amount of contra other equity items is subsequently reversed, the reversed amount can be used to reverse the special reserves, allowing the Company to distribute the profits.

The appropriations of earnings for 2020 and 2019 that were approved in the Board of shareholders’ meetings on July 23, 2021 and June 15, 2020, respectively, were as follows:

Legal reserve Special reserve Cash dividends Dividends Per Share (NT$)	Appropriation of Earnings	Appropriation of Earnings
	For the Year Ended December 31
	2020 $ 18,021 1,225 108,000 1.80	2019
		$ 8,012 4,710 48,000 0.80

d. Other equity items

Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Recognized for the period Exchange differences on translating the financial statements of foreign operations Effect of tax Balance at September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021	2020
	$ (17,470) (1,502) 300	$ (16,245) (3,637) 727
	$ (18,672)	$ (19,155)

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22. REVENUE

For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 480,651$ 371,660 $ 1,307,476 $ 884,671 September 30, 2021 December 31, 2020 September 30, 2020 $ 144,930 $ 100,913 $ 55,456	For the Three Months Ended September 30 For the Nine Months Ended September 30 2021 2020 2021 2020 $ 480,651$ 371,660 $ 1,307,476 $ 884,671 September 30, 2021 December 31, 2020 September 30, 2020 $ 144,930 $ 100,913 $ 55,456	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2020
			$ 884,671

$ 144,930	$ 100,913	$ 55,456

a. Contract balances

The contract liabilities from the beginning of the year were recognized as other income from January 1 to September 30, 2021 and 2020, with an amount of $0 thousand and $75,162 thousand. Please refer to

23. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

a. Other income

For the Three Months Ended September 30 2021 2020 $ 233 $ 382 56 42 $ 289 $ 424	For the Three Months Ended September 30 2021 2020 $ 233 $ 382 56 42 $ 289 $ 424	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 233 56 $ 289		2021 $ 696 1,233 $ 1,929	2020
	$ 382 42 $ 424		$ 1,140 87,946
			$ 89,086

b. Other gains and losses

For the Three Months Ended September 30 2021 2020 $ 1,916 $ (123) (2,797) 3,590 52 100 - (92) $ (829) $ 3,475	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 1,916 (2,797) 52 - $ (829)	2021 $ 2,453 (5,872) 53 20 $ (3,346)	2020
		$ 247 9,325 100 (301)
		$ 9,371

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c. Finance costs

Interest on bank loans Interest on lease liabilities	For the Three Months Ended September 30 2021 2020 $ 826 $ 543 15 18 $ 841$ 561	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 1,595 42 $ 1,637	2020
			$ 2,475 63
			$ 2,538

d. Depreciation and amortization

For the Three Months Ended September 30 2021 2020 $ 13,687$ 10,780 913 840 147 139 $ 14,747 $ 11,759 $ 11,504 $ 8,915 3,096 2,705 $ 14,600 $ 11,620 $ - $ - 147 139 $ 147$ 139	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 13,687 913 147 $ 14,747 $ 11,504 3,096 $ 14,600 $ - 147 $ 147	2021 $ 40,727 2,614 442 $ 43,783 $ 34,172 9,169 $ 43,341 $ - 442 $ 442	2020
		$ 28,131 2,756 395
		$ 31,282
		$ 25,235 5,652
		$ 30,887
		$ - 395
		$ 395

e. Employee benefits expense

Short-term benefits Post-employment benefits Defined contribution plan Defined benefit plans Termination benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Three Months Ended September 30 2021 2020 $ 40,441 $ 35,744 1,237 1,037 15 64 1,252 1,101 - - $ 41,693 $ 36,845 $ 22,456 $ 19,815 19,237 17,030 $ 41,693 $ 36,845	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 $ 119,593 3,663 46 3,709 - $ 123,302 $ 66,171 57,131 $ 123,302	2020
			$ 100,224 3,037 192
			3,229
			-
			$ 103,453
			$ 52,189 51,264
			$ 103,453

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f. Employees’ compensation and remuneration of directors and supervisors

According to the Company’s Articles, the Company accrued employees’ compensation and remuneration of directors at rates of 0.2~3% and no higher than 3%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. For the three months ended and nine months ended September 30, 2021 and 2020, the employees’ compensation and the remuneration of directors and supervisors are as follows (The Company established an audit committee to replace the supervisor after the Board of shareholders’ meetings on July 23, 2021.):

Accrual rate

Employees’ compensation Remuneration of directors and supervisors Amount	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 0.97% 0.97%	2020
		0.96% 0.96%

Employees’ compensation Remuneration of directors and supervisors	For the Three Months Ended September 30 2021 2020 $ 851 $ 607 851 607	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 851 851	2021 $ 2,405 2,405	2020
			$ 1,860 1,860

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

The appropriations of employees’ compensation and remuneration of directors and supervisors for 2020 and 2019 that were resolved by the board of directors on March 23, 2021 and March 17, 2020, respectively, are as shown below:

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31
	2020 Amount Accrual rate $ 2,200 0.97% 2,200 0.97%	2019
		Amount Accrual rate $ 1,000 0.96% 1,000 0.96%

There is no difference between the actual amounts of employees’ compensation and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2020 and 2019.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

26 -

24. INCOME TAXES RELATING TO CONTINUING OPERATIONS

a. Income tax recognized in profit or loss

Major components of income tax expense (benefit) are as follows:

For the Three Months Ended September 30 2021 2020 Current tax In respect of the current period $ 21,099 $ 12,828 Adjustments for prior year - - Deferred tax In respect of the current period (2,280) (360) Adjustments to deferred tax attributable to changes in tax rates and laws - - Income tax expense (benefit) recognized in profit or loss$ 18,819 $ 12,468 Income tax recognized in other comprehensive income For the Three Months Ended September 30 2021 2020 Deferred income tax expense (benefit) In respect of the current period Translation of foreign operations $ (155) $ 695 Remeasurement of defined benefit plans - - Total income tax expense (benefit) recognized in other comprehensive income $ (155) $ 695	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 2020 $ 54,142 $ 46,248 (726) (1,383) (3,347) (7,288) - - $ 50,069 $ 37,577 For the Nine Months Ended September 30	2020
		$ 46,248 (1,383) (7,288) -
		$ 37,577
	2021 $ (300) - $ (300)	2020
		$ (727) -
		$ (727)

b. Income tax recognized in other comprehensive income

c. Income tax assessments

The Company provided for the income tax assessed by the tax authorities until 2019.

27 -

25. EARNINGS PER SHARE

Net Profit for the period is as follows:

Net profit	For the Three Months Ended September 30 2021 2020 $ 63,841$ 49,871	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 63,841	2021 $ 193,085	2020
			$ 152,424

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

Weighted average number of ordinary shares used in the computation of basic earnings per share Effect of potentially dilutive ordinary shares Employees’ compensation or bonuses issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share		For the Three Months Ended September 30 2021 2020 60,000 60,000 17 12 60,017 60,012	For the Three Months Ended September 30 2021 2020 60,000 60,000 17 12 60,017 60,012		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2021 60,000 17 60,017			2021 60,000 62 60,062		2020
							60,000 55 60,055

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will 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.

26. CAPITAL MANAGEMENT

In order to ensure the company's sustainable operation, the merged company plans the future working capital needs (including research and development expenses and debt repayment, etc.) based on the factors such as characteristics of the current operating industry and the future development situation and changes in the external environment. It not only gives back to shareholders but also takes care of stakeholders’ interest. Also, it can maintain the optimal capital structure to enhance shareholder’s value.

28 -

27. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

September 30, 2021 Financial assets at FVTPL Derivative financial assets December 31, 2020 Financial assets at FVTPL Derivative financial assets September 30, 2020 Financial assets at FVTPL Derivative financial assets	Level 1 $ -	Level 2 $ -	Level 3 Total $ -$ - Level 3 Total $ -$ 110 Level 3 Total $ -$ 247
	Level 1 $ -	Level 2 $ 110
	Level 1 $ -	Level 2 $ 247

2) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instrument Valuation Technique and Inputs

Derivatives - foreign exchange	Discounted cash flow.
forward contracts	Future cash flows are estimated based on observable forward
	exchange rates at the end of the reporting period and contract
	forward rates, discounted at a rate that reflects the credit risk
	of various counterparties.

b. Categories of financial instruments

Financial assets Financial assets at amortized cost (1) Mandatorily classified as at FVTPL Financial liabilities Amortized cost (2)	September 30,2021	December 31, 2020	September 30, 2020
	$ 927,235 - 942,037	$ 579,209 110 535,683	$ 523,681 247 472,966

1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, notes receivable and accounts receivable, other receivables, refundable deposits and other financial assets.

29 -
2) The balances include financial liabilities at amortized cost, which comprise short-term and long-term loans, short-term bills payable, trade and other payables.
c. Financial risk management objectives and policies

The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group through internal risk reports that analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The use of financial activity is governed by the Group’s policies approved by the board of directors. During the implementation of financial plans, the Group must comply with the procedures for overall financial risk management and segregation of duties.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There has been no change to the Group’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

Several subsidiaries of the Company have foreign currency denominated sales and purchases, which expose the Group to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts, but it does not meet the requirements for accounting hedging.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) are set out in Note 33.

Sensitivity analysis

The Group is mainly exposed to the Currency USD and Currency EUR.

The following table details the Group’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (i.e., the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 1%. A positive number below indicates a decrease in pre-tax profit associated with the New Taiwan dollar strengthening 1% against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit, and the balances below would be negative.

Currency USD Impact For the Nine Months Ended September 30 2021 2020 $ 2,716 $ 578	Currency EUR Impact	Currency EUR Impact
	For the Nine Months Ended September 30
2021 $ 2,716	2021 $ 2,776	2020
		$ 535

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This was mainly attributable to the exposure on outstanding receivables and payables in foreign currency that were not hedged at the end of the reporting period.

b) Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates.

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	September 30, 2021	December 31, 2020	September 30, 2020
	$ 179,350 - 334,699 346,601	$ 130,738 - 247,151 120,783	$ 47,799 - 268,795 147,368

Sensitivity analysis

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

If interest rates had been 1% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the nine months ended September 30, 2021 and 2020 would increase/decrease by $89 thousand and $911 thousand, respectively, which was mainly a result of variable-rate bank deposits and borrowings.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in a financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of the counterparty to discharge its obligation and due to the financial guarantees provided by the Group, could be mainly from the carrying amount of the respective recognized financial assets as stated in the balance sheets.

The sales department manages customer credit risk in accordance with the company's customer credit risk policies, procedures and controls. The credit risk assessment of all customers is based on comprehensive consideration of such factors as the customer's financial status, ratings of credit rating agencies, past historical transaction experience, current economic environment, and internal rating standards of the Group, etc. In addition, the Group also uses certain credit enhancement tools (such as advances on sales, etc.) to reduce the credit risk of specific customers at appropriate times.

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The Group’s concentration of credit risk of 58%, 0% and 19% of total accounts receivable as of September 30, 2021, December 31, 2020 and September 30, 2020, respectively, was attributable to the Group’s largest customer STURMEY-ARCHER EUROPA B.V.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of September 30, 2021, December 31, 2020 and September 30, 2020, the Group had available unutilized bank loan facilities was $457,000 thousand, $935,000 thousand and $915,000 thousand.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following table details the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed upon repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed upon repayment dates.

September 30, 2021

On Demand or Less than 1 Year Non-interest bearing $595,349 Lease liabilities 2,913 Variable interest rate liabilities 116,403 $ 714,665 December 31, 2020 On Demand or Less than 1 Year Non-interest bearing $ 414,854 Lease liabilities 1,885 Variable interest rate liabilities 91,626 $ 508,365	1-3 Years $ - 926 235,373 $ 236,299 1-3 Years $ - 1,065 30,049 $ 31,114	3+ Years $ - - - $ - 3+ Years $ - - - $ -

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September 30, 2020

On Demand or Less than 1 Year Non-interest bearing $ 325,557 Lease liabilities 2,205 Variable interest rate liabilities 98,673 $ 426,435	1-3 Years $ - 1,364 50,079 $ 51,443	3+ Years $ - - - $ -

28. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in the other notes, details of transactions between the Group and other related parties are disclosed as follows.

a. Related party name and category

Related Party Name STURMEY-ARCHER EUROPA B.V.(STURMEY-ARCHER) HANDY-SHIFT COMPANY LIMITED(HANDY COMPANY)	Related Party Category
	Related party in substance The chairman of the company is a member of the company's key management personnel

b. Sales of goods

Line Item Related Party Name Sales STURMEY-ARCHER	For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021	2020 $ 72,867	2021	2020
	$ 129,022		$ 262,723	$ 205,248

The sale of goods to related parties were made at the Group’s usual list prices and the collection period was approximately 150 days.

c. Purchases of goods

Related Party Name HANDY COMPANY	For the Three Months Ended September 30 2021 2020 $ 7,019 $ 8,176	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2021 $ 7,019	2021 $ 37,995	2020
			$ 18,347

Purchases were made at market prices and the payment period was between 50~90 days.

33 -
d. Receivables from related parties

Line Item Related Party Name Accounts receivable STURMEY-ARCHER	September 30, 2021	December 31, 2020	September 30, 2020
	$ 187,573	$ 279	$ 30,129

For the nine months ended September 30, 2021 and 2020, no impairment losses were recognized for accounts receivable from related parties.

e. Payables to related parties

Line Item Related Party Name Accounts payables HANDY COMPANY Other payables HANDY COMPANY	September 30, 2021	December 31, 2020	September 30, 2020
	$ 15,079 929	$ 21,694 2,066	$ 12,798 864
	$ 16,008	$ 23,760	$ 13,662

f. Other current liabilities

Line Item Related Party Name Deposits received STURMEY-ARCHER	September 30, 2021	December 31, 2020	September 30, 2020
	$ 103,591	$ -	$ -

g. Others

For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021	2020	2021 $ 9,588 687 675 $ 10,950	2020
$ 4,430 - 225	$ 2,377 1,365 375		$ 6,999 3,947 1,125
$ 4,655	$ 4,117		$ 12,071

The service expense is the salary and management fees incurred by HANDY COMPANY dispatching workers to the company to provide labor services.

The cost of conversion between the company and HANDY COMPANY is contracted in accordance with general market conditions.

The rent income of the company and HANDY COMPANY is contracted in accordance with general market conditions.

34 -

h. Compensation of key management personnel

For the Three Months Ended September 30 2021 2020 $ 7,921 $ 5,981 - - $ 7,921 $ 5,981	For the Nine Months Ended September 30	For the Nine Months Ended September 30
2021 $ 7,921 - $ 7,921	2021 $ 21,913 - $ 21,913	2020
		$ 18,092 -
		$ 18,092

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings:

Pledged time deposits (Note 11) Property, plant and equipment Land Buildings	September 30, 2021 $ 55,590 169,101 176,846 $ 401,537	December 31, 2020 $ - 169,101 180,780 $ 349,881	September 30, 2020
			$ - 169,101 182,092
			$ 351,193

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

a. Significant unrecognized commitments
1) Unrecognized commitments were as follows:

Acquisition of property, plant and equipment	September 30, 2021	December 31, 2020	September 30, 2020 $ 14,785
	$ 15,319	$ 22,119

2) As of September 30, 2021, guarantee notes payable for operation and borrowings amounted to approximately $366,484 thousand.
3) As of September 30, 2021, unused letters of credit amounted to approximately $28,694 thousand.
b. Contingencies
1) In December 2016, The Company and the equipment supplier filed a lawsuit because the equipment function did not meet the delivery conditions, and won the lawsuit in the second instance. Therefore, the company transferred the originally estimated amount of $1,913 thousand payables to other income in the second quarter of 2019. However, the equipment supplier refused to accept the judgment of the second instance and appealed the third instance. The Supreme Court has ruled that the original judgment of the High Court was abandoned except for the provisional execution, referring the case back to Taiwan High Court for further trials. Up to the present, the case is still in the process of legal proceedings.

31. SIGNIFICANT LOSSES FROM DISASTERS : None

32. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD : None

35 -

33. OTHER ITEMS

a. Significant assets and liabilities denominated in foreign currencies

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

September 30, 2021

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	9,814	27.795(USD:NTD) $	272,772
USD		77	6.476(USD:RMB)	2,131
EUR		8,638	32.139(EUR:NTD)	277,624
RMB		27,201	4.278(RMB:NTD)	116,365
HKD		2	3.548(HKD:NTD)	8
Financial liabilities
Monetary items
USD		117	27.895(USD:NTD)	3,256
RMB		7,976	4.322(RMB:NTD)	34,474
December 31, 2020
		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	1,301	28.045(USD:NTD) $	36,497
USD		228	6.497(USD:RMB)	6,401
EUR		261	34.399(EUR:NTD)	8,986
RMB		14,055	4.302(RMB:NTD)	60,463
HKD		2	3.596(HKD:NTD)	8
Non-monetary items
USD(Note 1)		4	28.045(USD:NTD)	110
Financial liabilities
Monetary items
USD		54	28.145(USD:NTD)	1,536
RMB		4,411	4.346(RMB:NTD)	19,171
Note 1: Financial assets at fair value through profit or loss - forward foreign exchange

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September 30, 2020

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	1,837	28.925(USD:NTD) $	53,121
USD		164	6.814(USD:RMB)	4,747
EUR		1,579	33.857(EUR:NTD)	53,458
RMB		11,898	4.23(RMB:NTD)	50,330
HKD		2	3.711 (HKD:NTD)	8
Non-monetary items
USD(Note 1)		9	28.925(USD:NTD)	247
Financial liabilities
Monetary items
USD		2	29.025(USD:NTD)	73
RMB		2,711	4.274(RMB:NTD)	11,585
Note 1: Financial assets at fair value through profit or loss - forward foreign exchange

The significant unrealized foreign exchange gains (losses) were as follows:

Foreign Currency EUR RMB USD USD	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2021	For the Nine Months Ended September 30, 2020	For the Nine Months Ended September 30, 2020
	Exchange Rate 32.139(EUR:NTD) 4.278&4.322(RMB:NTD) 27.795&27.895 (USD:NTD) 6.4854(USD:RMB)	Net Foreign Exchange Gains (Losses) $ (6,700) (76) 195 5	Exchange Rate 33.857 (EUR:NTD) 4.23&4.274 (RMB:NTD) 28.925&29.025 (USD:NTD) 6.81 (USD:RMB)	Net Foreign Exchange Gains (Losses) $ (685) (407) (691) (138)
		$ (6,576)		$ (1,921)

b. Other items

As of the first three quarters of 2021, the COVID-19 spread all over the world, causing some areas to implement quarantine and travel restrictions. The Group assessed that the overall business and financial aspects were not significantly affected, and there is no continuation doubts about operational capabilities and financing risks. However, as uncertainties over the pandemic remains, the Group will continue its observation on development of the epidemic.

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34.SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:
1) Financing provided to others (None)
2) Endorsements/guarantees provided (None)
3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (None)
4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 1)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 2)
9) Trading in derivative instruments (None)
10) Intercompany relationships and significant intercompany transactions (Table 5)
11) Information on investees (Table 3)
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 4)
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period (Table 5)
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period (Table 5)
- c) The amount of property transactions and the amount of the resultant gains or losses (None)
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes (None)
38 -
e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to the financing of funds (None)
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services (None)
c. Information of major shareholder

List of all shareholders with ownership of 5 percent or greater showing the names and the number of shares and percentage of ownership held by each shareholder.(Table 6)

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were as follows:

Domestic department – Production of high-end bicycle parts.

Foreign department – Production of low-end bicycle parts.

a. Segment revenue and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segments:

For the nine months ended September 30, 2021 Revenue from external customers Inter-segment revenue Segment revenue Eliminations Consolidated revenue Segment income For the nine months ended September 30, 2020 Revenue from external customers Inter-segment revenue Segment revenue Eliminations Consolidated revenue Segment income	Domestic	Foreign $ 163,861 123,143 $ 287,004 $ 4,818 Foreign $ 104,338 14,048 $ 118,386 $ (5,837)	Total
	$ 1,143,615 209,706		$ 1,307,476 332,849
	$ 1,353,321		1,640,325 (332,849)
	$ 238,336
			$ 1,307,476
			$ 243,154
	Domestic		Total
	$ 780,333 81,374		$ 884,671 95,422
	$ 861,707		980,093 (95,422)
	$ 195,838
			$ 884,671
			$ 190,001

Inter-segment revenue was accounted for according to market prices.

Segment profit represents the profit before tax earned by each segment without income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

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TABLE 1

TABLE 2

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED September 30, 2021

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

Seller	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchases/ Sales	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
The company	STURMEY-ARCHER	Related party in substance	Sales	$ 262,723	20.09%	150 days	usual list prices	150 days	$ 187,573	58.19%	-

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL September 30, 2021

(In Thousands of New Taiwan Dollars/USD)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amount Received in Subsequent Period(Note)	Allowance for Impairment Loss
					Amount	Actions Taken
The company	STURMEY-ARCHER	Related party in substance	$ 187,573	3.73	$ -	-	$ 35,305	$ -

Note : The amount recovered as of November 5,2021.

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TABLE 3

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED September 30, 2021 (In Thousands of New Taiwan Dollars/USD)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of September 30, 2021	As of September 30, 2021	As of September 30, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				September 30, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
The company BUSINESS ALLIANCE	BUSINESS ALLIANCE BUSINESS FIRST	Samoa Samoa	Investment activities Investment activities	$ 283,488 (USD9,413) 242,097 (USD8,018)	$ 283,488 (USD9,413) 242,097 (USD8,018)	9,413,000 8,018,000	100 100	$ 230,129 207,032	$ 4,939 5,868	$ 4,817 5,868	Note 1.2 Note 1

Note 1 : Amount was recognized based on not reviewed financial statements.

Note 2 : Amount was included the adjustment of the unrealized profit of upstream transactions.

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TABLE 4

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED September 30, 2021 (In Thousands of New Taiwan Dollars/USD)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of September 30, 2021	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of September 30, 2021	Accumulated Repatriation of Investment Income as of September 30, 2021
							Outward	Inward
SUN RACE NANTONG	Production and sales of precision plastic film and bicycle transmission system components		241,531 (USD8,000)		Note 1	241,531 (USD8,000)	-	-	241,531 (USD8,000)	5,907	100	5,907 (Note2)	206,768	-

Accumulated Outward Remittance for Investments in Mainland China as of September 30, 2021		Investment Amount Authorized by the Investment Commission, MOEA		Upper Limit on the Amount of Investments Stipulated by the Investment Commission, MOEA
$241,531(USD 8,000)		$250,605(USD 9,000)(Note 3)		$ 729,946

Note 1 : Through investing the subsidiary in the third area, which then invested in the investee in Mainland China.

Note 2 : Amount was recognized based on not reviewed financial statements.

Note 3 : Amount are retranslated at the rates prevailing on September 30.

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TABLE 5

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED September 30, 2021 (Amounts in Thousands of New Taiwan Dollars)

	No. 0 0 0 0 0 0 0	Investee Company SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION SUN RACE STURMEY-ARCHER CORPORATION	Counterparty SUN RACE NANTONG BUSINESS ALLIANCE SUN RACE NANTONG SUN RACE NANTONG SUN RACE NANTONG SUN RACE NANTONG BUSINESS ALLIANCE	Relationship 1 1 1 1 1 1 1		Transaction Details	Transaction Details
					Financial Statement Accounts Net revenue from sale of goods Other revenue Purchases Manufacturing costs Accounts receivable Accounts payable Other receivables	Amount $ 208,753 953 123,062 81 71,303 19,989 953	Payment Terms Note 3 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4	% of Total Sales or Assets 15.97 0.07 9.41 0.01 2.87 0.81 0.04

Note 1: Business relationships between the parent and subsidiaries are numbered as follows:

a. Parent: 0

b. Subsidiaries are numbered from 1 in ascending order.

Note 2: Relationship between parties is numbered as follows:

No.1 Parent to subsidiary. No.2 Subsidiary to parent. No.3 Subsidiary to subsidiary.

Note 3: The transaction terms were made lower than market prices and the payment period was approximately 90 days.

Note 4: The transaction terms were made at the Group’s usual list prices.

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TABLE 6

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON MAJOR SHAREHOLDERS FOR THE NINE MONTHS ENDED September 30, 2021

Shareholders	Shares
	Total Shares Owned(In Thousands)	OwnershipPercentage
Rih-ChangInvestment Corporation	15,144	25.24	%

Note 1 : Information on the above table is based on the calculation provided by the Taiwan Depository & Clearing Corporation for stockholders holding greater than 5% of ordinary shares and special shares who have completed the process of registration and book-entry delivery issued in dematerialized form (including treasury shares) on the last business day of the current quarter. There may be a discrepancy between the number of shares recorded on the Company’s consolidated financial statements and its dematerialized securities due to the difference in basis of preparation and calculation.
Note 2 : According the above information, the delivery of shares to the trust by shareholders is disclosed by the individual trustee who opened the trust account. In accordance with the Securities Exchange Act, shareholders who acquire more than 10% of shareholding have to disclose their insider ownerships, including their own shares held, delivery to the trust and shares that have the right to make decisions on trust property, etc. Information on insider ownership declaration is available at the Market Observation Post System website of the Taiwan Stock Exchange.
44 -

AI assistant

SUNRACE — Interim / Quarterly Report 2021

51849_rns_2021-12-28_a891bb6e-e212-43ec-a871-500d5d11d616.pdf

Sun Race Sturmey-Archer Corporation And Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1) Retirement benefits

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

8.NOTES RECEIVABLE AND ACCOUNTS RECEIVABLE

At amortized cost

9. INVENTORIES

10. PREPAYMETS

11. OTHER FINANCIAL ASSETS - CURRENT

12. SUBSIDIARIES

13. PROPERTY, PLANT AND EQUIPMENT

14. LEASE ARRANGEMENTS

15. INTANGIBLE ASSETS

16. SHORT-TERM BORROWINGS

17. LONG-TERM BORROWINGS

18. PROVISIONS

19. OTHER CURRENT LIABILITIES

20. RETIREMENT BENEFIT PLANS

21. EQUITY

1) Ordinary shares

22. REVENUE

23. NET PROFIT (LOSS) FROM CONTINUING OPERATIONS

c. Finance costs

Accrual rate

24. INCOME TAXES RELATING TO CONTINUING OPERATIONS

25. EARNINGS PER SHARE

26. CAPITAL MANAGEMENT

27. FINANCIAL INSTRUMENTS

Financial Instrument Valuation Technique and Inputs

1) Market risk

Sensitivity analysis

Sensitivity analysis

2) Credit risk

3) Liquidity risk

September 30, 2021

September 30, 2020

28. TRANSACTIONS WITH RELATED PARTIES

h. Compensation of key management personnel

29. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

30. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

31. SIGNIFICANT LOSSES FROM DISASTERS : None

32. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD : None

33. OTHER ITEMS

September 30, 2021

September 30, 2020

b. Other items

34.SEPARATELY DISCLOSED ITEMS

35. SEGMENT INFORMATION

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE NINE MONTHS ENDED September 30, 2021

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

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

(In Thousands of New Taiwan Dollars/USD)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED September 30, 2021 (In Thousands of New Taiwan Dollars/USD)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED September 30, 2021 (In Thousands of New Taiwan Dollars/USD)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED September 30, 2021 (Amounts in Thousands of New Taiwan Dollars)

SUN RACE STURMEY-ARCHER CORPORATION AND SUBSIDIARIES

INFORMATION ON MAJOR SHAREHOLDERS FOR THE NINE MONTHS ENDED September 30, 2021

SUNRACE Interim / Quarterly Report 2021