TA YIH — Annual Report 2020

Nov 13, 2020

Ta Yih Industrial Co., Ltd.

Standalone Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Ta Yih Industrial Co., Ltd.

Opinion

We have audited the accompanying standalone financial statements of Ta Yih Industrial Co., Ltd. (the “Company”), which comprise the standalone balance sheets as of December 31, 2020 and 2019, and the standalone statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the standalone financial statements, including a summary of significant accounting policies.

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

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the standalone Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matter identified in the audit of the Company’s standalone financial statements for the year ended December 31, 2020 is as follows:

s

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Sales Revenue

The operating revenue of Ta Yih Industrial Co., Ltd. mainly comes from the sale of automobile and locomotive lamps. As revenue from a particular customer changed significantly from the previous year, and whether the revenue actually occurred is a predetermined risk in the Statement of Auditing Standards; therefore, the validity of revenue from the particular customer has been identified as a key audit matter. For the accounting policies related to operating revenue, refer to Table 4.

Our main audit procedures performed in respect of the above-mentioned key audit matter are as follows:

1. We understood the internal controls related to revenue recognition and tested the operating effectiveness of the controls.

2. We performed substantive tests on sales revenue, checked the customer's delivery records and other transaction vouchers and bank collection records, and checked whether the counterparty of the sales transactions is the same as the counterparty making payment, in order to determine that the sales transactions actually occurred.

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

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

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

Those charged with governance, including the supervisors, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Standalone Financial Statements

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

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

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

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures

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that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

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

• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Company to express an opinion on the standalone financial statements. We are responsible for the direction, supervision, and performance of the Company audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine a matter that was of most significance in the audit of the standalone financial statements for the year ended December 31, 2020 and is therefore the key audit matter. We describe this matter in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

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The engagement partners on the audits resulting in this independent auditors’ report are Chi-Chen Li and Chao-Chin Yang.

Deloitte & Touche Taipei, Taiwan Republic of China

March 24, 2021

Notice to Readers

The accompanying standalone financial statements are intended only to present the standalone 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 audit such standalone financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying standalone 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’ report and standalone financial statements shall prevail.

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Ta Yih Industrial Co., Ltd.

STANDALONE BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Notes 4 and 6) Notes receivable (Notes 4 and 7) Accounts receivable (Notes 4, 7 and 19) Accounts receivable from related parties (Notes 4, 7, 19 and 26) Other receivables (Notes 4 and 7) Other receivables from related parties (Notes 4, 7 and 26) Inventories (Notes 4 and 8) Prepayments (Notes 21 and 26) Other current assets (Notes 13 and 21) Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4 and 9) Property, plant and equipment (Notes 4, 10 and 26) Right-of-use assets (Notes 4 and 11) Intangible assets (Notes 4, 12 and 26) Deferred tax assets (Notes 4 and 21) Other non-current assets (Notes 4, 13 and 26) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Note 14) Contract liabilities - current (Notes 4, 19 and 26) Notes payable (Note 15) Notes payable to related parties (Notes 15 and 26) Accounts payable (Note 15) Accounts payable to related parties (Notes 15 and 26) Other payables (Note 16) Other payables to related parties (Notes 16 and 26) Current tax liabilities (Notes 4 and 21) Lease liabilities - current (Notes 4 and 11) Other current liabilities (Note 16) Total current liabilities NON-CURRENT LIABILITIES Deferred tax liabilities (Notes 4 and 21) Lease liabilities - non-current (Notes 4 and 11) Net defined benefit liabilities (Notes 4 and 17) Other non-current liabilities (Note 16) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Note 18) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company TOTAL		December 31, 2020 Amount % $ 107,304 3 2,116 - 763,064 21 239,878 6 2,320 - 19,804 - 943,021 26 105,994 3 28,952 1 2,212,453 60 333,146 9 1,017,826 28 8,334 - 18,924 1 43,000 1 36,093 1 1,457,323 40 $ 3,669,776 100 $ 342,400 9 158,868 4 95,488 3 - - 716,314 20 71,045 2 200,217 5 69,987 2 64,112 2 4,508 - 623 - 1,723,562 47 104,158 3 3,905 - 75,056 2 2,766 - 185,885 5 1,909,447 52 762,300 21 60,832 2 651,251 17 68,264 2 255,145 7 974,660 26 (37,463) (1) 1,760,329 48 $ 3,669,776 100		December 31, 2019
				Amount % $ 89,954 2 4,969 - 749,794 21 104,896 3 3,484 - 31,578 1 812,523 22 361,970 10 30,773 1 2,189,941 60 394,173 11 957,283 26 19,186 1 - - 36,337 1 40,136 1 1,447,115 40 $ 3,637,056 100 $ - - 313,094 9 236,059 6 1,005 - 530,730 15 56,230 2 230,588 6 66,526 2 49,383 1 13,042 - 430 - 1,497,087 41 117,403 4 6,333 - 111,888 3 2,728 - 238,352 7 1,735,439 48 762,300 21 60,736 1 615,205 17 68,264 2 436,472 12 1,119,941 31 (41,360) (1) 1,901,617 52 $ 3,637,056 100

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

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Ta Yih Industrial Co., Ltd.

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 19 and 26) OPERATING COSTS (Notes 8, 17, 20 and 26) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 7, 17, 20 and 26) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 20 and 26) Interest income Other income Other gains and losses Share of profit or loss of subsidiaries and associates Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 21) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 17)		2020 Amount % $ 4,797,165 100 4,125,419 86 671,746 14 (1,327) - 3,115 - 673,534 14 159,570 3 147,185 3 178,836 4 1,154 - 486,745 10 186,789 4 171 - 104,697 2 (45,347) (1) (67,681) (1) (8,160) - 178,629 4 18,879 1 159,750 3 (138) -		2019
				Amount % $ 5,390,196 100 4,423,289 82 966,907 18 (3,008) - 3,971 - 967,870 18 184,519 4 170,674 3 199,992 4 665 - 555,850 11 412,020 7 415 - 76,113 2 (41,676) (1) 1,479 - 36,331 1 448,351 8 87,894 1 360,457 7 (6,792) - (Continued)

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Ta Yih Industrial Co., Ltd.

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 21) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4 and 21) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (New Taiwan dollars, Note 22) Basic Diluted		2020 Amount % 27 - (111) - 4,866 - (969) - 3,897 - 3,786 - $ 163,536 3 $ 2.10 $ 2.09		2019
				Amount % 1,358 - (5,434) - (15,530) (1) 3,062 - (12,468) (1) (17,902) (1) $ 342,555 6 $ 4.73 $ 4.72
		$		$

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

(Concluded)

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Ta Yih Industrial Co., Ltd.

STANDALONE STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Dividends Per Share)

BALANCE AT JANUARY 1, 2019 Appropriation of the 2018 earnings (Note 18) Legal reserve Cash dividends distributed by the Company - NT$3.8 per share Unclaimed cash dividends overdue transferred to capital surplus Net profit for the year ended December 31, 2019 Other comprehensive loss for the year ended December 31, 2019, net of income tax Total comprehensive income for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019 Appropriation of the 2019 earnings (Note 18) Legal reserve Cash dividends distributed by the Company - NT$4 per share Unclaimed cash dividends overdue transferred to capital surplus Net profit for the year ended December 31, 2020 Other comprehensive income for the year ended December 31, 2020, net of income tax Total comprehensive income for the year ended December 31, 2020 BALANCE AT DECEMBER 31, 2020		Share Capital Number of Shares Amount Capital Surplus 76,230 $ 762,300 $ 60,605 - - - - - - - - 131 - - - - - - - - - 76,230 762,300 60,736 - - - - - - - - 96 - - - - - - - - - 76,230 $ 762,300 $ 60,832	Retained Earnings Legal Reserve Special Reserve Unappropriated Earnings $ 583,285 $ 68,264 $ 403,043 31,920 - (31,920) - - (289,674) - - - - - 360,457 - - (5,434) - - 355,023 615,205 68,264 436,472 36,046 - (36,046) - - (304,920) - - - - - 159,750 - - (111) - - 159,639 $ 651,251 $ 68,264 $ 255,145	Other Equity Exchange Differences on Translating Foreign Operations $ (28,892) - - - - (12,468) (12,468) (41,360) - - - - 3,897 3,897 $ (37,463)	Total Equity $ 1,848,605 - (289,674) 131 360,457 (17,902) 342,555 1,901,617 - (304,920) 96 159,750 3,786 163,536 $ 1,760,329
		Number of Shares 76,230 - - - - - - 76,230 - - - - - - 76,230

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

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Ta Yih Industrial Co., Ltd.

STANDALONE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Net gain on fair value changes of financial assets at fair value through profit or loss Finance costs Interest income Share of profits of subsidiaries and associates Loss on disposal of property, plant and equipment, net Provision for loss on inventories Unrealized gain on transactions with associates Realized gain on transactions with associates Net loss on foreign currency exchange Gain on disposal of right-of-use assets Changes in operating assets and liabilities: Notes receivable Accounts receivable Accounts receivable from related parties Other receivables Other receivables from related parties Inventories Prepayments Other current assets Contract liabilities Notes payable Notes payable to related parties Accounts payable Accounts payable to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Other non-current assets Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES	2020 $ 178,629 137,185 11,251 1,154 - 2,776 (171) 67,681 125 5,356 1,327 (3,115) 395 (2) 3,163 (15,551) (135,571) 1,164 12,004 (135,854) 240,905 (6,992) (154,226) (140,571) (1,005) 185,407 14,491 (30,448) 3,461 193 (36,970) 38 206,229 171 (2,699) (11,240) 192,461	2019 $ 448,351 131,369 - 665 (1) 1,617 (415) (1,479) 157 2,744 3,008 (3,971) 13,825 (11) 1,354 (188,336) 97,812 709 16,627 (29,298) (138,302) 9,843 (9,925) 50,246 (5,432) 46,893 14,608 7,024 (2,211) 194 (29,925) 81 437,821 415 (1,277) (47,688) 389,271

(Continued)

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Ta Yih Industrial Co., Ltd.

STANDALONE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Payments for property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from short-term bills payable Repayments of short-term bills payable Proceeds from guarantee deposits received Refunds of guarantee deposits received Repayment of the principal portion of lease liabilities Cash dividends Unclaimed cash dividends overdue transferred to capital surplus Net cash generated from (used in) financing activities NET INCREASE (DECREASE) IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2020 - - (181,939) (1,603) 3,303 (20,051) (200,290) 2,146,454 (1,802,772) 420,000 (420,000) - - (13,679) (304,920) 96 25,179 17,350 89,954 $ 107,304	2019 (10,000) 10,001 (111,101) (3,624) 4,502 - (110,222) 836,026 (836,026) - - 80 (30) (12,842) (289,674) 131 (302,335) (23,286) 113,240 $ 89,954

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

(Concluded)

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NOTES TO STANDALONE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Ta Yih Industrial Co., Ltd.

1. GENERAL INFORMATION

Ta Yih Industrial Co., Ltd. (the “Company”) was incorporated in 1964. It was formerly known as Ta Yih Industrial Corp. and changed to its present name in 1976. The Company mainly sells, manufactures and processes automobile parts, motorcycle parts, railway vehicle parts, transportation machineries, industrial plastic parts, as well as invests in related industries.

The Company’s shares have been trading on the Taiwan Stock Exchange since October 1997.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The standalone financial statements were approved by the Company’s board of directors and authorized for issue on March 24, 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)

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies:

Amendments to IAS 1 and IAS 8 “Definition of Material”

The Company adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence users has been changed to “could reasonably be expected to influence”. Accordingly, disclosures in the standalone financial statements do not include immaterial information that may obscure material information.

• b. The IFRSs endorsed by the FSC for application starting from 2021

Effective Date New IFRSs Announced by IASB

Amendments to IFRS 4 “Extension of the Temporary Exemption from Effective immediately upon Applying IFRS 9” promulgation by the IASB Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 January 1, 2021 “Interest Rate Benchmark Reform - Phase 2” Amendment to IFRS 16 “Covid-19-Related Rent Concessions” June 1, 2020

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

Effective Date New IFRSs Announced by IASB (Note 1)

“Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 6) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 7) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 4) before Intended Use”

Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 5) Contract”

• 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 to IFRS 9 will be 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” will be 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” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

• Note 3: 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 4: 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 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

• Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 7: 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.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The standalone financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The standalone 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 the 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 the asset or liability.

When preparing the standalone financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the standalone financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the standalone basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates and the related equity items, as appropriate, in the standalone financial statements.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within 12 months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period; and

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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d. Foreign currencies

In preparing the standalone financial statements of the Company, transactions in currencies other than the Company’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purposes of presenting the standalone financial statements, the investments of the Company’s foreign operations (including subsidiaries and associates in other countries that use currencies which are different from the Company) are translated into the New Taiwan dollar using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the standard cost on the balance sheet date. The difference between actual costs and normal standard costs is allocated in proportion to inventory and operational costs on fiscal year-end, in order to approach the amount of weighted-average cost.

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the share of other equity of subsidiaries.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years.

• g. Investments in associates

An associate is an entity over which the Company has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Company uses the equity method to account for its investments in associates.

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Under the equity method, investments in an associate is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates.

The entire carrying amount of an investment is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s standalone financial statements only to the extent of interests in the associate that are not related to the Company.

• h. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation.

Property, plant and equipment in the course of construction are measured at cost. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• i. Intangible assets

• 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

• 2) Derecognition of intangible assets

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

• j. Impairment of property, plant and equipment, right-of-use assets, intangible assets and assets related to contract costs

At the end of each reporting period, the Company reviews the carrying amounts of its plant and equipment, right-of-use assets and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

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The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

Before the Company recognizes an impairment loss from assets related to contract costs, any impairment loss on inventories related to the contract applicable under IFRS 15 shall be recognized in accordance with applicable standards. Then, impairment loss from the assets related to the contract costs is recognized to the extent that the carrying amount of the assets exceeds the remaining amount of consideration that the Company expects to receive in exchange for related goods or services less the costs which relate directly to providing those goods or services and which have not been recognized as expenses. The assets related to the contract costs are then included in the carrying amount of the cash-generating unit to which they belong for the purpose of evaluating impairment of that cash-generating unit.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset, cash-generating unit or assets related to contract costs is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset, cash-generating unit or assets related to contract costs in prior years. A reversal of an impairment loss is recognized in profit or loss.

k. Financial instruments

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

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

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

• a) Measurement categories

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

i. Financial assets at FVTPL

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

Financial assets at FVTPL are subsequently measured at fair value, and any dividends, interest earned and remeasurement gains or losses on such financial assets are recognized in other gains or losses.

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• ii. Financial assets at amortized cost

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

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash, accounts receivable at amortized cost (including related parties), notes receivable (including related parties), other receivables (including related parties), and refundable deposits (classified under other non-current assets), are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

• i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

• ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

• i) Significant financial difficulty of the issuer or the borrower;

• ii) Breach of contract, such as a default;

• iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv) The disappearance of an active market for that financial asset because of financial difficulties.

• b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Company always recognizes lifetime expected credit losses (ECLs) for accounts receivable. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

• i. Internal or external information show that the debtor is unlikely to pay its creditors.

• ii. When a financial asset is more than 365 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

• c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

• 2) Financial liabilities

• a) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• l. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Company transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Company does not adjust the promised amount of consideration for the effects of a significant financing component.

• 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of car lamps and molds. Sales of goods are recognized as revenue and accounts receivable when the goods are delivered to the customer’s specific location because it is the time when the customer has full discretion over the manner of

• 20 -

distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

2) Royalty revenue

Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreement and provided that it is probable that the economic benefits will flow to the Company and that the amount of revenue can be measured reliably. Royalty arrangements that are based on sales are recognized with reference to the underlying arrangement.

m. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

• n. Government grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Company recognizes as expenses the related costs that the grants are intended to compensate.

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Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss in the period in which they are received.

• o. Employee benefits

• 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

• 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost, past service cost, as well as gains and losses on settlements) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

• 3) 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.

• p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

• 1) Current tax

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

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Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company's accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

6. CASH

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2020 $ 756 106,548 $ 107,304	2019 $ 943 89,011 $ 89,954

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7. NOTES RECEIVABLE, ACCOUNTS RECEIVABLE (INCLUDING RELATED PARTIES), AND OTHER RECEIVABLES (INCLUDING RELATED PARTIES)

Notes receivable At amortized cost Gross carrying amount - operating Less: Allowance for impairment loss Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Accounts receivable from related parties At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Tariff refund receivables Others Other receivables from related party Royalty receivables Others		December 31	December 31
		2020 $ 2,207 91 $ 2,116 $ 768,841 5,777 $ 763,064 $ 240,122 244 $ 239,878 $ 241 2,079 $ 2,320 $ 19,803 1 $ 19,804	2019 $ 5,370 401 $ 4,969 $ 754,641 4,847 $ 749,794 $ 104,997 101 $ 104,896 $ 712 2,772 $ 3,484 $ 31,171 407 $ 31,578

The average credit period of sales of goods was 60 to 90 days. No interest was charged on accounts receivable.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime ECLs. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default records 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 forecast direction of economic conditions at the reporting date. As the Company’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 Company’s different customer base.

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The Company writes off trade receivables when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation. For trade receivables that have been written off, the Company 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 trade receivables based on the Company’s provision matrix:

December 31, 2020

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost			No indication of default of debtor	No indication of default of debtor	Individual identification 13% $ 34,048 (4,505 ) $ 29,543	Total $ 1,011,170 (6,112 ) $ 1,005,058
		Not Past Due 0%~0.08% $ 956,157 (1,590 ) $ 954,567	Up to 60 Days 0.08%~0.1% $ 20,923 (17 ) $ 20,906	61 to 90 Days 0.1%~0.91% $ 42 - $ 42

December 31, 2019

Expected credit loss rate Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost		No indicati	on of default of deb	tor	ver 365 Days T 50%~100% $ 3,652 (1,825) $ 1,827	he debtor has defaulted 100% $ 391 (391) $ -	Total $ 865,008 (5,349) $ 859,659
	N	ot Past Due Up to 60 Days 6 0%~0.97% 0.97%~1.1% $ 817,832 $ 41,511 (2,500) (454) $ 815,332 $ 41,057	1 to 90 Days 9 1.1%~7.47% $ 1,090 (81) $ 1,009	1 to 365 Days O 7.47%~50% $ 532 (98) $ 434

The movements of the loss allowance of trade receivables were as follows:

Balance at January 1 Add: Net remeasurement of loss allowance Less: Amounts written off Balance at December 31		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 5,349 1,154 (391) $ 6,112	2019 $ 4,684 665 - $ 5,349

8. INVENTORIES

Merchandise Finished goods Work in progress Raw materials		December 31	December 31
		2020 $ 161,926 405,847 105,649 269,599 $ 943,021	2019 $ 95,944 323,265 211,500 181,814 $ 812,523

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

Cost of inventories sold Inventory write-downs		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 4,120,063 5,356 $ 4,125,419	2019 $ 4,420,545 2,744 $ 4,423,289

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates a. Investments in subsidiaries Ta Yih International Investment Co., Ltd. (BVI)		December 31	December 31
		2020 2019 $ 860 $ 960 332,286 393,213 $ 333,146 $ 394,173 December 31
		2020 $ 860	2019 $ 960

As of December 31, 2020 and 2019, the Company’s percentage of ownership and voting rights in Ta Yih International Investment Co., Ltd. (BVI) were both 100%

• b. Investments in associates

Material associates Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd.		December 31	December 31
		2020 $ 332,286	2019 $ 393,213

As of December 31, 2020 and 2019, The Company’s percentage of ownership and voting rights in Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd. were both 49%

The summarized financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRSs adjusted by the Company for equity accounting purposes.

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Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd.

Current assets Non-current assets Current liabilities Equity Proportion of the Company’s ownership Equity attributable to the Company Unrealized gain or loss with associates Carrying amount Operating revenue Net profit for the year Total comprehensive income for the year		December 31	December 31
		2020 2019 $ 1,802,684 $ 2,203,533 1,192,665 1,201,867 (2,307,429) (2,589,490) $ 687,920 $ 815,910 49% 49% $ 337,080 $ 399,795 (4,794) (6,582) $ 332,286 $ 393,213 For the Year Ended December 31
		2020 $ 1,871,311 $ (138,013) $ (138,013)	2019 $ 2,708,164 $ 3,095 $ 3,095

Refer to Table 3 “Information on Investees” and Table 4 “Information on Investments in Mainland China” for the nature of activities, principal places of business and countries of incorporation of the associates.

The investments in subsidiaries and associates accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were based on the subsidiaries and associates’ financial statements which have been audited for the same years.

10. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2019 Additions Disposals Balance at December 31, 2019 Accumulated depreciation Balance at January 1, 2019 Depreciation expenses Disposals Balance at December 31, 2019 Carrying amount at December 31, 2019	Land $ 601,050 - - $ 601,050 $ - - - $ - $ 601,050	Buildings $ 256,501 4,150 (4,666) $ 255,985 $ 209,527 8,816 (4,663) $ 213,680 $ 42,305	Machinery Equipment $ 1,039,152 45,147 (33,255) $ 1,051,044 $ 810,384 57,617 (33,132) $ 834,869 $ 216,175	Molding Equipment Transportation Equipment $ 304,435 $ 22,097 27,244 949 (284,522) (5,743) $ 47,157 $ 17,303 $ 288,128 $ 14,869 17,650 2,338 (284,522) (5,743) $ 21,256 $ 11,464 $ 25,901 $ 5,839	Other Equipment Total $ 408,947 $ 2,632,182 31,802 109,292 (158,537) (486,723) $ 282,212 $ 2,254,751 $ 342,459 $ 1,665,367 32,246 118,667 (158,506) (486,566) $ 216,199 $ 1,297,468 $ 66,013 $ 957,283 (Continued)

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Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expenses Disposals Balance at December 31, 2020 Carrying amount at December 31, 2020	Land $ 601,050 - - $ 601,050 $ - - - $ - $ 601,050	Buildings $ 255,985 2,530 - $ 258,515 $ 213,680 8,803 - $ 222,483 $ 36,032	Machinery Equipment $ 1,051,044 51,577 (11,611) $ 1,091,010 $ 834,869 56,607 (11,487) $ 879,989 $ 211,021	Molding Equipment Transportation Equipment $ 47,157 $ 17,303 106,375 280 (22,,029) - $ 131,503 $ 17,583 $ 21,256 $ 11,464 26,780 2,129 (22,029) - $ 26,007 $ 13,593 $ 105,496 $ 3,990	Other Equipment Total $ 282,212 $ 2,254,751 23,520 184,282 (8,574) (42,214) $ 297,158 $ 2,396,819 $ 216,199 $ 1,297,468 29,295 123,614 (8,573) (42,089) $ 236,921 $ 1,378,993 $ 60,237 $ 1,017,826 (Concluded)

All property, plant and equipment are used by the Company.

Property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings Main buildings 40 - 60 years Factory and other buildings 5 - 40 years Machinery equipment 3 - 12 years Molding equipment 2 - 3 years Transportation equipment 5 years Other equipment 3 - 8 years

11. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amount Buildings Office equipment Transportation equipment		December 31	December 31
		2020 $ - 2,090 6,244 $ 8,334	2019 $ 5,745 2,612 10,829 $ 19,186

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Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Office equipment Transportation equipment		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,775 $ 5,745 522 7,304 $ 13,571	2019 $ 8,570 $ 5,745 523 6,434 $ 12,702

b. Lease liabilities

Carrying amount Current Non-current		December 31	December 31
		2020 $ 4,508 $ 3,905	2019 $ 13,042 $ 6,333

Range of discount rate for lease liabilities was as follows:

Buildings Office equipment Transportation equipment	December 31
	2020 2019 - 1.44% 1.45% 1.44% 1.25%-1.45% 1.44%-1.45%

c. Material leasing activities and terms

The Company leases company cars and office equipment with lease terms of 2 to 5 years. These arrangements do not contain renewal or purchase options.

The Company also leases land and buildings for the use of plants with lease terms of 2 years. The Company does not have bargain purchase options to acquire the leasehold land and buildings at the end of the lease terms. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

• d. Other lease information

Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,409 $ 148 $ (16,455)	2019 $ 5,186 $ 254 $ (18,396)

The Company’s leases of certain machinery qualify as short-term leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

• 29 -

12. INTANGIBLE ASSETS

Cost Balance at January 1, 2020 Additions Reclassification Balance at December 31, 2020 Accumulated amortization Balance at January 1, 2020 Amortization expense Balance at December 31, 2020 Carrying amount at December 31, 2020	Computer Software $ - 19,551 9,839 $ 29,390 $ - 10,866 $ 10,866 $ 18,524	Patents $ - 500 285 $ 785 $ - 385 $ 385 $ 400	Total $ - 20,051 10,124 $ 30,175 $ - 11,251 $ 11,251 $ 18,924

The above other intangible assets are amortized on a straight-line basis over their estimated useful lives as	The above other intangible assets are amortized on a straight-line basis over their estimated useful lives as
follows:
Computer software	2 - 3 years
Patents	5 - 7 years

13. OTHER ASSETS

Current Input tax Tax refund receivable Payment on behalf of others Non-current Refundable deposits Prepayments for property, plant, and equipment		December 31	December 31
		2020 $ 28,846 - 106 $ 28,952 $ 14,301 21,792 $ 36,093	2019 $ 21,604 8,813 356 $ 30,773 $ 16,001 24,135 $ 40,136

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14. SHORT-TERM BORROWINGS

Borrowings

Unsecured borrowings Bank unsecured loans		December 31	December 31
		2020 $ 342,400	2019 $ -

The range of interest rates on bank loans was 0.75%-1.11% per annum at December 31, 2020.

15. NOTES PAYABLE AND ACCOUNTS PAYABLE (INCLUDING RELATED PARTIES)

Both notes payable and accounts payable were generated from operating activities. The Company has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

16. OTHER LIABILITIES

Current Other payables Payables for salaries or bonuses Payables for molding equipment Payables for annual leave Payables for employees’ compensation Payables for utilities expense Others Other payables to related parties Payables for royalty Payables for inspection expense Payables for molds Payables for design expense Others Other current liabilities Receipts under custody		December 31 2020 2019 $ 134,988 $ 169,261 19,327 16,940 17,358 17,061 6,333 8,274 5,306 4,592 16,905 14,460 $ 200,217 $ 230,588 $ 60,603 $ 60,715 3,635 3,386 1,105 2,125 440 - 4,204 300 $ 69,987 $ 66,526 $ 623 $ 430 (Continued)
		2020 $ 134,988 19,327 17,358 6,333 5,306 16,905 $ 200,217 $ 60,603 3,635 1,105 440 4,204 $ 69,987 $ 623

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Non-current Other non-current liabilities Provision for employee benefits Guarantee deposits received		December 31	December 31
		2020 $ 2,526 240 $ 2,766	2019 $ 2,488 240 $ 2,728 (Concluded)

Provision for employee benefits is the estimate of long-term bonus for senior employees.

17. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Act is operated by the government of the Republic of China (ROC). Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 11% and 8% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee and a manager pension fund administered by the manager pension fund managing committee. Pension contributions are deposited respectively in the Bank of Taiwan and Taiwan Business Bank in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the standalone balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities	December 31
	2020 2019 $ 318,954 $ 341,705 (243,898) (229,817) $ 75,056 $ 111,888

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Movements in net defined benefit liabilities were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2019 $ 371,377 $ (236,357) Service cost Current service cost 4,003 - Net interest expense (income) 4,178 (2,696) Recognized in profit or loss 8,181 (2,696) Remeasurement Return on plan assets (excluding amounts included in net interest) - (7,030) Actuarial loss - changes in demographic assumptions 1,467 - Actuarial loss - changes in financial assumptions 13,369 - Actuarial profit - experience adjustments (1,014) - Recognized in other comprehensive income 13,822 (7,030) Contributions from the employer - (35,409) Benefits paid (51,675) 51,675 Balance at December 31, 2019 341,705 (229,817) Service cost Current service cost 3,111 - Net interest expense (income) 2,563 (1,764) Recognized in profit or loss 5,674 (1,764) Remeasurement Return on plan assets (excluding amounts included in net interest) - (7,492) Actuarial loss - changes in demographic assumptions 875 - Actuarial loss - changes in financial assumptions 8,088 - Actuarial profit - experience adjustments (1,333) - Recognized in other comprehensive income 7,630 (7,492) Contributions from the employer - (40,880) Benefits paid (36,055) 36,055 Balance at December 31, 2020 $ 318,954 $ (243,898)

Net Defined Benefit Liabilities (Assets) $ 135,020 4,003 1,482 5,485 (7,030) 1,467 13,369 (1,014) 6,792 (35,409) - 111,888 3,111 799 3,910 (7,492) 875 8,088 (1,333) 138 (40,880) - $ 75,056

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An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,811 39 651 409 $ 3,910	2019 $ 4,014 45 925 501 $ 5,485

Through the defined benefit plans under the Labor Standards Act, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate Expected rate of salary increase	December 31
	2020 2019 0.500% 0.750% 2.000% 2.000%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase/decrease 0.25% increase 0.25% decrease		December 31	December 31
		2020 $ (8,092) $ 8,398 $ 8,128 $ (7,874)	2019 $ (9,004) $ 9,353 $ 9,074 $ (8,782)

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

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Expected contributions to the plans for the next year Average duration of the defined benefit obligation		December 31	December 31
		2020 $ 4,896 10.3 years	2019 $ 10,771 10.7 years

18. EQUITY

a. Share capital

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Ordinary shares Shares issued Ordinary shares	76,230
	$ 762,300
	76,230
	$ 762,300

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

• b. Capital surplus

Issuance of ordinary shares Capital surplus from gain on disposal of assets Donations (dividends expired)		December 31	December 31
		2020 $ 56,330 4,142 360 $ 60,832	2019 $ 56,330 4,142 264 $ 60,736

Such capital surplus from issuance of ordinary shares and donations 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 once a year). Capital surplus from gain on disposal of assets may only be used to offset a deficit.

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the amended Articles, 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 a legal reserve 10% of the remaining profit, 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 and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, refer to Note 20(f) “ Employees’ compensation and remuneration of director and supervisors for 2020 and 2019”.

In order to take the future needs of funding and long-term financial plan into consideration, when the board of directors drafts the surplus distribution, more than 50% of accumulated unappropriated earnings will be allocated as shareholders’ dividends, and the cash dividends shall not be lower than the 50% of the shareholders’ dividends. The said proportion of allocation of dividends and cash dividends shall be resolved by the resolution of the shareholders in their meeting.

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Appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset a deficit. 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. 1010012865 and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2019 and 2018, which were approved in the shareholders’ meetings on June 12, 2020 and June 18, 2019, respectively, were as follows:

Legal reserve Cash dividends Cash dividends per share (NT$)		Appropriation of Earnings	Appropriation of Earnings
		For the Year Ended December 31
		2019 $ 36,046 $ 304,920 $ 4	2018 $ 31,920 $ 289,674 $ 3.8

The appropriations of earnings for 2020 were proposed by the Company’s board of directors on March 24, 2021. The appropriations were as follows:

		Appropriation of	Appropriation of
			Earnings
Legal	reserve	$	15,964
Cash	dividends	$	99,099
Cash	dividends per share (NT$)	$	1.3

The appropriations of earnings for 2020 are subject to the resolution of the shareholders in their meeting.

19. REVENUE

Revenue from contracts with customers Revenue from sale of goods a. Contract information Revenue from sale of goods		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 4,797,165	2019 $ 5,390,196

The Company’s primary products are car lamps and molds. Car lamps and molds are sold at their respective fixed amounts as agreed in the contracts.

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b. Contract balances

Accounts receivable (including related parties) (Note 7) Contract liabilities - current Deferred revenue	December 31, 2020 $ 1,002,942 $ 158,868	December 31, 2019 $ 854,690 $ 313,094	January 1, 2019 $ 780,046
			$ 323,019

The changes in the balance of contract liabilities primarily resulted from the timing differences between the Company’s satisfaction of performance obligations and the respective customer’s payment.

Revenue recognized in the current year from the contract liabilities at the beginning of the year is as follows:

c.	From the contract liabilities at the beginning of the year Sale of goods Disaggregation of revenue Type of goods Car lamps Molds Others		For the Year Ended December 31	For the Year Ended December 31
			2020 2019 $ 231,987 $ 276,527 For the Year Ended December 31
			2020 $ 3,525,336 734,172 537,657 $ 4,797,165	2019 $ 4,091,095 713,040 586,061 $ 5,390,196

20. PROFIT BEFORE INCOME TAX

a. Interest income

Bank deposits		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 171	2019 $ 415

• b. Other income

Royalty revenue Government grants revenue (Note 27) Others		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 46,031 42,506 16,160 $ 104,697	2019 $ 70,203 - 5,910 $ 76,113

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c. Other gains and losses

Fair value changes of financial assets and financial liabilities Financial assets classified as at FVTPL Interest on bank loans Interest on lease liabilities Net foreign exchange losses Royalty expense Loss on disposal of property, plant and equipment Others		For the Year Ended December 31	For the Year Ended December 31
		2020 $ - (2,557) (219) (10,193) (15,098) (125) (17,155) $ (45,347)	2019 $ 1 (1,277) (340) (3,376) (26,813) (157) (9,714) $ (41,676)

d. Depreciation and amortization

Property, plant and equipment Right-of-use assets Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating costs Operating expenses Employee benefits expense Short-term benefits Salaries Directors’ remuneration Labor and health insurance Others		For the Year Ended December 31 2020 2019 $ 123,614 $ 118,667 13,571 12,702 11,251 - $ 148,436 $ 131,369 $ 117,834 $ 113,919 19,351 17,450 $ 137,185 $ 131,369 $ 2,565 $ - 8,686 - $ 11,251 $ - For the Year Ended December 31 2020 2019 $ 506,998 $ 581,610 900 690 49,899 53,939 23,702 25,379 581,499 661,618 (Continued)
		2020 $ 506,998 900 49,899 23,702 581,499

e. Employee benefits expense

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Post-employment benefits Defined contribution plans Defined benefit plans (Note 17) Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses		For the Year Ended December 31 2020 2019 21,141 22,244 3,910 5,485 25,051 27,729 $ 606,550 $ 689,347 $ 386,252 $ 442,022 220,298 247,325 $ 606,550 $ 689,347 (Concluded)
		2020 21,141 3,910 25,051 $ 606,550 $ 386,252 220,298 $ 606,550

f. Employees’ compensation and remuneration of directors and supervisors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation at the rates of no less than 1% of net profit after offsetting previous fiscal deficits, and before income tax, and employees’ compensation. The employees’ compensation for the years ended December 31, 2020 and 2019, which were approved by the Company’s board of directors on March 24, 2021 and March 6, 2020, respectively, were as follows:

Accrual rate

Employees’ compensation Amount Employees’ compensation - cash	For the Year Ended December 31
	2020 2019 1% 1% For the Year Ended December 31
	2020 2019 $ 1,804 $ 4,529

Remuneration of directors and supervisors was not issued over the years.

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

There was no difference between the actual amounts of employees’ compensation paid and the amounts recognized in the standalone financial statements for the year ended December 31, 2019 and 2018.

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

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• g. Gains or losses on foreign currency exchange

Foreign exchange gains Foreign exchange losses		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 38,536 (48,729) $ (10,193)	2019 $ 40,031 (43,407) $ (3,376)

21. INCOME TAX

a. Income tax recognized in profit or loss

Major components of income tax expense are as follows:

Current tax In respect of the current year Income tax on unappropriated earnings Adjustment for prior years Deferred tax In respect of the current period Income tax expense recognized in profit or loss		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 48,371 703 (9,345) 39,729 (20,850) $ 18,879	2019 $ 86,437 - 60 86,497 1,397 $ 87,894

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax Income tax expense calculated at the statutory rate Tax-exempt income Unrecognized deductible temporary differences Income tax on unappropriated earnings Adjustments for prior years’ tax Income tax expense recognized in profit or loss		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 178,629 $ 35,726 (8,501) 296 703 (9,345) $ 18,879	2019 $ 448,351 $ 89,670 - (1,836) - 60 $ 87,894

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Company only deducts the amount of the unappropriated earnings that has been reinvested in capital expenditure.

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b. Income tax recognized in other comprehensive income

Deferred tax In respect of the current year Remeasurement of defined benefit plans Exchange differences on translating foreign operations		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 27 (969) $ (942)	2019 $ 1,358 3,062 $ 4,420

c. Current tax assets and liabilities

Current tax assets Tax refund receivable (classified under other current assets) Prepaid income tax (classified under prepayments) Current tax liabilities Income tax payable		December 31	December 31
		2020 $ - - $ - $ 64,112	2019 $ 8,813 4,947 $ 13,760 $ 49,383

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2020

Opening Balance Deferred Tax Assets Temporary differences Allowance for reduction of inventory to market $ 1,498 Unrealized gain or loss with associates 1,316 Long-term employee benefit liability 498 Deferred revenue - Defined benefit plans 22,377 Payables for annual leave 3,412 Unrealized exchange losses 1,863 Exchange differences on translating the financial statements of foreign operations 5,373 $ 36,337 Deferred Tax Liabilities Temporary differences Unappropriated earnings of associates $ 40,667 Land value tax 76,736 $ 117,403	Recognized in Profit or Loss $ 1,071 (357 ) 7 14,185 (7,393 ) 60 32 - $ 7,605 $ (13,245 ) - $ (13,245)	Recognized in Other Comprehensive Income $ - - - - 27 - - (969 ) $ (942) $ - - $ -	Closing Balance $ 2,569 959 505 14,185 15,011 3,472 1,895 4,404
			$ 43,000
			$ 27,422 76,736
			$ 104,158

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For the year ended December 31, 2019

Opening Balance Deferred Tax Assets Temporary differences Allowance for reduction of inventory to market $ 949 Unrealized gain or loss with associates 1,509 Long-term employee benefit liability 481 Defined benefit plans 27,004 Payables for annual leave 3,566 Unrealized exchange losses - Exchange differences on translating the financial statements of foreign operations 2,311 $ 35,820 Deferred Tax Liabilities Temporary differences Unappropriated earnings of associates $ 42,207 Unrealized exchange gains 966 Land value tax 76,736 $ 119,909	Recognized in Profit or Loss $ 549 (193 ) 17 (5,985 ) (154 ) 1,863 - $ (3,903) $ (1,540 ) (966 ) - $ (2,506)	Recognized in Other Comprehensive Income $ - - - 1,358 - - 3,062 $ 4,420 $ - - - $ -	Closing Balance $ 1,498 1,316 498 22,377 3,412 1,863 5,373
			$ 36,337
			$ 40,667 - 76,736
			$ 117,403

• e. Income tax assessments

The tax returns of the Company through 2018 have been assessed by the tax authorities.

22. EARNINGS PER SHARE

The net profit and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net profit for the year Shares Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share		For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 159,750 $ 360,457 Unit: In Thousands of Shares For the Year Ended December 31
		2020 76,230 45 76,275	2019 76,230 82 76,312

Since the Company offered to settle the compensation paid to employees in cash or shares, the Company assumed that the entire amount of the compensation 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

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the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

23. CASH FLOW INFORMATION

• a. Non-cash transactions

In addition to those disclosed in other notes, the Company entered into the following non-cash investing and financing activities that were not reflected in the consolidated statements of cash flows for the years ended December 31, 2020 and 2019:

Increase in property, plant and equipment Increase (decrease) in prepayments for equipment		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 184,282 (2,343) $ 181,939	2019 $ 109,292 1,809 $ 111,101

• b. Changes in liabilities arising from financing activities

For the year ended December 31, 2020

Balance at January 1, 2020 Net cash flows from financing activities Non-cash changes New leases Lease modifications Effect of foreign currency exchange differences Balance at December 31, 2020 For the year ended December 31, 2019 Balance at January 1, 2019 Adjustments on initial application of IFRS 16 Restated on January 1, 2019 Net cash flows from financing activities Non-cash changes New leases Lease modifications Balance at December 31, 2019	Short-term borrowings $ - 343,682 - - (1,282) $ 342,400	Lease liabilities $ 19,375 (13,679) 2,775 (58) - $ 8,413 Lease liabilities $ - 25,543 25,543 (12,842) 8,570 (1,896) $ 19,375

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24. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings offset by cash) and equity of the Company. The Company is not subject to any externally imposed capital requirements.

25. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments not measured at fair value

The carrying amounts of the Company’s financial instruments that are not measured at fair value, such as cash, accounts receivable (including related parties), refundable deposits (classified under other non-current assets), accounts payable (including related parties), and guarantee deposits received (classified under other non-current liabilities) approximate their fair values.

• b. Categories of financial instruments

Financial assets Financial assets at amortized cost (1) Financial liabilities Financial liabilities at amortized cost (2)	December 31
	2020 2019 $ 1,148,787 $ 1,000,676 1,495,691 1,121,378

• 1) The balances include financial assets at amortized cost, which comprise cash, notes and accounts receivable (including related parties), other receivables (including related parties), and refundable deposits (classified under other non-current assets).

• 2) The balances include financial liabilities at amortized cost, which comprise short-term borrowings, notes and accounts payable (including related parties), other payables (including related parties), and guarantee deposits received (classified under non-current liabilities).

• c. Financial risk management objectives and policies

The Company’s major financial instruments include equity investments, accounts receivable, accounts payable, borrowings and lease liabilities.

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

1) Market risk

The Company’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).

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a) Foreign currency risk

The Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 28.

Sensitivity analysis

The Company was mainly exposed to the USD.

The following table details the Company’s sensitivity to an increase and decrease of 1% in the functional currency against the relevant foreign currencies. The sensitivity analysis included only outstanding foreign currency denominated monetary items. A positive number below indicates an increase in pre-tax profit. For a 1% weakening of the functional currency against the relevant foreign currency, there would be an equal and opposite impact on pre-tax profit, and the balances below would be negative.

Profit or loss	USD Impact
	For the Year Ended December 31
	2020 2019 $ 1,508 $ 2,437

Exchange rate fluctuations are mainly attributable to the exposure on outstanding cash, accounts receivable, short-term borrowings and accounts payable in foreign currency which were not hedged at the end of the reporting period.

In management’s opinion, the sensitivity analysis was unrepresentative of the inherent foreign exchange risk because the exposure at the end of the reporting period did not reflect the exposure during the period. Sales quoted in USD may change with the fluctuation of client orders.

b) Interest rate risk

The carrying amounts of the Company’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 liabilities Cash flow interest rate risk Financial assets Financial liabilities	For the Year Ended December 31
	2020 2019 $ 3,905 $ 6,333 103,833 81,596 342,400 -

Sensitivity analysis

For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the year 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.

• 45 -

If interest rates had been 1% higher and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have decreased by $2,386 thousand and $0 thousand, respectively, which was mainly a result of variable-rate borrowings.

2) Credit risk

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

The Company’s credit risk primarily arose from sales of the top 3 clients, which contributed more than 10% of the operating revenue in the statements of comprehensive income. The total percentages of accounts receivable (include related parties) from the above clients for the years ended December 31, 2020 and 2019 were 64% and 70%, respectively.

3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash deemed adequate to finance the Company’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.

All of the financial liabilities of the Company had original maturities of less than one year, except the lease liabilities. Because equity was greater than liabilities in the Company’s capital structure, and the unused bank quotas and working capital were abundant, there was no material liquidity risk.

Additional information about the maturity analysis for lease liabilities:

December 31, 2020

Less than 1 Year Lease liabilities $ 4,593 December 31, 2019 Less than 1 Year Lease liabilities $ 13,235	1-5 Years $ 3,963
	1-5 Years $ 6,441

• 46 -

26. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and other related parties are disclosed below.

• a. Related party name and category

Related Party Name

Related Party Category

Koito Manufacturing Co., Ltd.

Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd Guangzhou Koito Automotive Lamp Co., Ltd.

India Japan Lighting Private Limited

PT. Indonesia Koito

Thai Koito Company Limited

Hubei Koito Automotive Lamp Co., Ltd.

Investors with significant influence over the Company Associates Subsidiary of Koito Manufacturing Co., Ltd. Subsidiary of Koito Manufacturing Co., Ltd.

Subsidiary of Koito Manufacturing Co., Ltd.

Subsidiary of Koito Manufacturing Co., Ltd. Subsidiary of Koito Manufacturing Co., Ltd.

North American Lighting Inc. Subsidiary of Koito Manufacturing Co., Ltd. NAL DO BRASIL INDUSTRIA E COMERCIO DE Subsidiary of Koito Manufacturing Co., COMPONENTES DE ILUMINACAO LTDA Ltd. TYC Brother Industrial Co., Ltd. Substantive related party DBM Reflex of Taiwan Co., Limited Substantive related party Mai Huang Enterprise Co., Ltd. Substantive related party Juoku Technology Co., Ltd. Substantive related party Ta Yih Investment Co., Ltd. Substantive related party Ta Yih International Hotel Co., Ltd. Substantive related party Nai Yi Entertainment Company Ltd. Substantive related party Wu Jinmao Culture and Education Foundation Substantive related party Ta Yih Kenmos Auto Parts Co., Ltd. Substantive related party Ta Mao Operating Consultant Co., Ltd. Substantive related party

b. Sales of goods

Related Party Category/Name Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd Subsidiary of Koito Manufacturing Co., Ltd. Substantive related party		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 951,920 186,517 63,976 194 $ 1,202,607	2019 $ 911,282 162,734 61,722 649 $ 1,136,387

The prices of sales of goods with related parties did not have substantive difference compared to non-related parties, except the prices of sales of goods with associates were added based on the costs. The collection term of domestic sales with related parties is 90 days, the collection term of export sales with related parties apart from associates, according to the term of individual transaction, is 120 to 180 days, and the collection term does not have substantive difference compared to non-related parties.

• 47 -

The unrealized gains on sales with associates for the years ended December 31, 2020 and 2019 were $4,794 thousand and $6,582 thousand, respectively, and had been recognized as a reduction of investments accounted for using the equity method.

c. Purchases of goods

Related Party Category/Name Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Subsidiary of Koito Manufacturing Co., Ltd. Substantive related party		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 403,969 20,807 678 26,880 $ 452,334	2019 $ 364,661 3,062 465 15,776 $ 383,964

The payment term and price of goods purchased do not have substantive difference between related and non-related parties. The payment term for related parties depends on individual transaction, which is normally 90 days, and does not have substantive difference from non-related parties.

d. Contract liabilities - 2019

Related Party Category/Name Investors with significant influence over the Company Associates Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd.	December 31, 2019 $ 3,652 46,117 $ 49,769

• e. Receivables from related parties (excluding loans to related parties)

Line Item Related Party Category/Name Accounts receivable Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd Subsidiary of Koito Manufacturing Co., Ltd. Substantive related party Less: Allowance for impairment loss		December 31	December 31
		2020 $ 186,041 29,408 24,673 - 240,122 244 $ 239,878	2019 $ 98,473 6,512 - 12 104,997 101 $ 104,896 (Continued)

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Line Item Related Party Category/Name Other receivables Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd Subsidiary of Koito Manufacturing Co., Ltd.		December 31	December 31
		2020 $ - 19,803 1 $ 19,804	2019 $ 76 31,502 - $ 31,578 (Concluded)

The outstanding trade receivables from related parties are unsecured.

f. Payables to related parties (excluding loans from related parties)

Line Item Related Party Category/Name Notes payable Substantive related party Accounts payable Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Substantive related party Other payable Investors with significant influence over the Company Koito Manufacturing Co., Ltd. Associates Subsidiary of Koito Manufacturing Co., Ltd. Substantive related party		December 31	December 31
		2020 $ - $ 61,540 2,273 7,232 $ 71,045 $ 67,190 454 1,239 1,104 $ 69,987	2019 $ 1,005 $ 46,751 417 9,062 $ 56,230 $ 64,392 9 - 2,125 $ 66,526

The outstanding payables to related parties are unsecured.

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g. Prepayments

Line Item Related Party Category/Name Prepayments to suppliers Subsidiary of Koito Manufacturing Co., Ltd. Prepaid expenses Investors with significant influence over the Company Prepayments for equipment (classified under other non-current assets) Substantive related party		December 31	December 31
		2020 $ 55 175 $ 230 $ 880	2019 $ - 1,419 $ 1,419 $ -

• h. Acquisition of property, plant and equipment

Related Party Category / Name Investors with significant influence over the Company Koito Manufacturing Co., Ltd.

	Purchase Price	Purchase Price
	For the Year Ended December 31
	2020 $ 8,910	2019 $ -

• i. Acquisition of other assets (classified under intangible assets)

Related Party Category/Name Investors with significant influence over the Company Koito Manufacturing Co., Ltd.		Purchase Price	Purchase Price
		For the Year Ended December 31
		2020 $ 554	2019 $ -

• j. Other transactions with related parties

• 1) Royalty expenses

The Company entered into a royalty expense contract with its investor with significant influence - Koito Manufacturing Co., Ltd. from April 23, 2016 to April 22, 2022. The royalty expenses were $86,342 thousand and $96,574 thousand for the years ended December 31, 2020 and 2019, respectively, and had been recognized as operating costs and operating expenses.

• 2) Examination expenses

The Company entrusted its investor with significant influence - Koito Manufacturing Co., Ltd. for assistance on the examination of the headlight products. The examination expenses were $15,199 thousand and $20,092 thousand the years ended December 31, 2020 and 2019, respectively, and had been recognized as selling and marketing expenses.

• 50 -

3) Royalty revenue

The Company entered into a royalty revenue contract with its associate - Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd. from April 1, 2019 to March 31, 2024. The royalty revenues were $39,762 thousand and $62,847 thousand for the years ended December 31, 2020 and 2019, respectively, and had been recognized as other income of non-operating income and expenses. According to the contract, 50% of the royalty revenue should be paid to its investor with significant influence - Koito Manufacturing Co., Ltd. which amounted to $15,098 thousand and $26,813 thousand for the years ended December 31, 2020 and 2019, respectively, and had been recognized as other losses, net of non-operating income and expenses.

The Company entered into a contract with subsidiary of Koito Manufacturing Co., Ltd - Hubei Koito Automotive Lamp Co., Ltd. from December 25, 2015 to December 24, 2020. The royalty revenue were $4,235 thousand and $7,193 thousand for the year ended December 31, 2020 and 2019, respectively, and had been recognized as other income of non-operating income and expenses.

The Company entered into a contract with subsidiary of Koito Manufacturing Co., Ltd - Guangzhou Koito Automotive Lamp Co., Ltd. from November 11, 2019 to December 31, 2020. The royalty revenues was $2,034 thousand and 163 thousand for the years ended December 31, 2020, and 2019, respectively, and had been recognized as other income of non-operating income and expenses.

• k. Donations (classified under general and administrative expenses)

Related Party Category/Name Substantive related party		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 53	2019 $ 1,000

l. Remuneration of key management personnel

Short-term employee benefits Post-employment benefits		For the Year Ended December 31	For the Year Ended December 31
		2020 $ 13,860 132 $ 13,992	2019 $ 18,806 165 $ 18,971

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

27. OTHER ITEMS

As a result of the COVID-19 pandemic, the Company’s major U.S. client suspended operations starting from the end of March 2020 to the end of May 2020, leading to delayed shipments and a reduction in order volume, resulting in a substantial decline of 36% in operating revenue from April 2020 to June 2020 compared to the same period of the previous year. In response, the Company has successively applied to the government for salary subsidies, and obtained up to $42,506 thousand in funding (refer to Note 20). Since the end of May 2020, the US client has gradually resumed operations. As of the date the consolidated financial statements were authorized for issue, the Company continues to evaluate the economic impact of the COVID-19 pandemic.

• 51 -

28. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

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

December 31, 2020

		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	10,147	28.100 $	285,120
CNY		17,963	4.316	77,529
JPY		816,722	0.2725	222,557
Non-monetary items
Investments accounted for using the equity
method
CNY		77,227	4.365	337,080
USD		30	28.480	860
Financial liabilities
Monetary items
USD		4,779	28.100	134,278
CNY		6,670	4.316	28,789
JPY		251,528	0.2725	68,541
December 31, 2019
		Foreign		Carrying
		Currency	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	8,769	30.005 $	263,105
CNY		20,089	4.299	86,363
JPY		390,852	0.2758	107,797
Non-monetary items
Investments accounted for using the equity
method
CNY		93,030	4.297	399,795
USD		32	29.9816	960
Financial liabilities
Monetary items
USD		647	30.005	19,412
CNY		4,285	4.299	18,420
JPY		202,742	0.2758	55,916

• 52 -

The carrying amount of investments accounted for using the equity method does not contain the reduction of unrealized gains.

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

Foreign Currency USD CNY JPY	For the Year Ended December 31	For the Year Ended December 31
	2020 Exchange Rate Net Foreign Exchange Gains (Losses) 29.408 (USD:NTD) $ (36,171) 4.26 (CNY:NTD) 696 0.2762 (JPY:NTD) 25,282 $ (10,193)	2019
		Exchange Rate Net Foreign Exchange Gains (Losses) 30.85 (USD:NTD) $ (5,279) 4.47 (CNY:NTD) (3,226) 0.2828 (JPY:NTD) 5,129 $ (3,376)

29. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions:

• 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)

• b. Information on investees (Table 3)

• c. 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)

• 53 -

• 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 (Table 5):

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period

  • c) The amount of property transactions and the amount of the resultant gains or losses

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds

  • f) Other transactions that have a material effect on the profit or loss for the year or on the financial position, such as the rendering or receipt of services

• d. Information of major shareholders: list all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 6)

• 54 -

TABLE 1

Ta Yih Industrial Co., Ltd.

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

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

Buyer	Related Party	Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
The Company	Koito Manufacturing Co., Ltd. Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd	Investors with significant influence over the Company Associates accounted for using the equity method	Sales Purchases Sales	$ (951,920) 403,969 (186,517)	(20) 11 (4)	90 days 90 days 120 to 180 days	No significant differences No significant differences Cost plus pricing	No significant differences No significant differences 120 to 180 days. Generally 90 days.	Accounts receivable $ 186,041 Accounts payable (61,540) Accounts receivable 29,408	19 (7) 3

• 55 -

TABLE 2

Ta Yih Industrial Co., Ltd.

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

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

Company Name	Related Party	Relationship	Ending Balance (Note 1)	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company	Koito Manufacturing Co., Ltd.	Investors with significant influence over the Company	$ 186,041	6.69	$ -	－	$ 186,041	$ 94

• 56 -

TABLE 3

Ta Yih Industrial Co., Ltd.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of	December 31, 2020	December 31, 2020	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2020	December 31, 2019	Number of Shares	%	Carrying Amount
The Company	Ta Yih International Investment Co., Ltd.	Omar Hodge Building, Wickhams Cay I P.O. Box 362, Road Town, Tortola, British Virgin Islands	Investment	$ 1,367	$ 1,367	50,000	100	$ 860	$ (53)	$ (53)

Note: Information on investments in mainland China, refer to Table 4.

• 57 -

TABLE 4

Ta Yih Industrial Co., Ltd.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Main Businesses and Products	Paid-in Capital	Method of Investment	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2019 (Note 5)	Remittance of Funds	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2020	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2020 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2020 (Note 4)
						Outward		Inward
Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd	Import, export and sale of automobile lamps in mainland China	US $9 million (Note 2) (NT $252,900 thousand) (Note 3)	Entrusting Ta Yih International Investment Co., Ltd. which was established in third region to invest in mainland China. Items referred to Rule No. 84022220 issued by the Investment Commission,MOEA.		$ 42,470	$	-	$ -	$ 42,470	$ (138,013)	49	$ (67,628)	$ 332,286	$ 238,605
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2020				Investment Amount Authorized by The Investment Commission, MOEA			Upper Limit on the Amount of Investment Stipulated by The Investment Commission, MOEA (Note 6)
$ 42,470				US$4.41 million (Note 2) (NT$123,921 thousand) (Note 3)			$1,760,329×60%＝$1,056,197

• Note 1 ： Amount was recognized based on the audited financial statements.

• Note 2 ： On January 18, 1996, the Investment Commission, MOEA approved the investment of US$2.5 million (including cash investment of US$1.76 million and machinery investment of US$740,000) through the approval of the Rule No. 84022220. On February 20, 2001, according to the Rule No. 90003791, approved by the Investment Commission, MOEA, the Company entrusted Ta Yih Investment Co., Ltd. which was established in the third region to invest US$500,000 on machinery equipment. However, there was still US$150,000 left unpaid. Therefore, the amount of capital owned by Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd was only US$2.85 million. However, at the end of November 2005, the Company transferred 51% of the investment to Koito Manufacturing Co., Ltd. In December 2007, Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd resolved to issue share dividends from capital surplus of US$2.45 million , of which the investment amount belonged to the Company was US$2.45 million × 49% = US$1.205 million, and had been approved by the Investment Commission, MOEA on March 24, 2008. In August 2008, the Company applied for issuing share dividends from capital surplus of US$1.5 million, of which the amount of investment belonged to the company was US$1.5 million × 49% = US$735,000, and had been approved by the Investment Commission, MOEA on August 6, 2008. In May 2010, the Company applied for issuing share dividends from capital surplus of US$2.2 million, of which the amount of investment belonged to the Company was US$2.2 million × 49% = US$1.078 million. As of December 31, 2020, the paid-in capital of Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd was US$9 million. The registration was completed in July 2010 and had been approved by the Investment Commission, MOEA on November 30, 2010.

Note 3 ： The amount in the table should be shown in NTD (exchange rate was 28.1 at reporting date).

Note 4 ： Inward cash dividends.

Note 5 ： The original amount of investment was NT$86,673 thousands. 51% equity of Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd was sold for NT$44,203 thousands.

Note 6 ： The upper limit according to “Principle of Investment or Technical Cooperation in Mainland China” issued by the Investment Commission, MOEA on August 29, 2008.

• 58 -

TABLE 5

Ta Yih Industrial Co., Ltd.

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

FOR THE YEAR ENDED DECEMBER 31, 2020

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

Investee Company	Transaction Type	Purchase/Sale	Price	Transaction Details	Transaction Details	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Unrealized Gain	Note
		Amount		Payment Terms	Comparison with Normal Transactions	Ending Balance	%
Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd	Sales Royalty revenue	$ 186,517 39,762	Cost plus pricing According to the contract	120 to 180 days Every 180 days.	90 days N/A	Accounts receivable $ 29,408 Other receivables 19,803	3 90	$ 1,327

• 59 -

TABLE 6

Ta Yih Industrial Co., Ltd.

INFORMATION OF MAJOR SHAREHOLDERS December 31, 2020

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Koito Manufacturing Co., Ltd. Ta Wei Investment Co., Ltd.	24,774,750 22,523,880	32.50 29.54

• Note 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

• Note 2: If a shareholder delivers their shareholdings to a trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Securities and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to the Market Observation Post System website of the Taiwan Stock Exchange.

• 60 -

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEM

STATEMENT INDEX

MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND EQUITY STATEMENT OF CASH 1 STATEMENT OF NOTES RECEIVABLE 2 STATEMENT OF ACCOUNTS RECEIVABLE 3 STATEMENT OF OTHER RECEIVABLES 4 STATEMENT OF INVENTORIES 5 STATEMENT OF PREPAYMENTS 6 STATEMENT OF OTHER CURRENT ASSETS Note 13 STATEMENT OF CHANGES IN INVESTMENTS 7 ACCOUNTED FOR USING THE EQUITY METHOD STATEMENT OF CHANGES IN PROPERTY, PLANT AND Note 10 EQUIPMENT STATEMENT OF CHANGES IN ACCUMULATED Note 10 DEPRECIATION AND ACCUMULATED IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS 8 STATEMENT OF CHANGES IN ACCUMULATED 9 DEPRECIATION FOR RIGHT-OF-USE ASSETS STATEMENT OF DEFERRED TAX ASSETS Note 21 STATEMENT OF OTHER NON-CURRENT ASSETS Note 13 STATEMENT OF SHORT-TERM BORROWINGS 10 STATEMENT OF NOTES PAYABLE 11 STATEMENT OF ACCOUNTS PAYABLE 12 STATEMENT OF OTHER PAYABLES Note 16 STATEMENT OF OTHER CURRENT LIABILITIES Note 16 STATEMENT OF LEASE LIABILITIES 13 STATEMENT OF DEFERRED INCOME TAX LIABILITIES Note 21 STATEMENT OF OTHER NON-CURRENT LIABILITIES Note 16 MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS STATEMENT OF OPERATING REVENUES 14 STATEMENT OF OPERATING COSTS 15 STATEMENT OF OPERATING EXPENSES 16 STATEMENT OF OTHER GAINS AND LOSSES Note 20 STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION 17 AND AMORTIZATION

• 61 -

STATEMENT 1

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF CASH DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Cash on hand and petty cash Cash in banks Checking accounts and demand deposits Foreign currency deposits (Note)	Amount $ 756 59,841 46,707 $ 107,304

Note: Including the USD 806,765.4, JPY 42,880,290, RMB 2,400,331.06, THB 2.27 and EUR 57,632.19(US$1=NT$28.1, JPY1=NT$0.2725, RMB1=NT$4.316, THB1=NT$0.94 and EUR1=NT$34.56)

• 62 -

STATEMENT 2

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF NOTES RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Customer Name Company A Company B Company C Others (Note) Less: Allowance for impairment loss	Amount $ 1,042 770 176 219 2,207 91 $ 2,116

Note: The amount of individual customer included in others does not exceed 5% of the account balance.

• 63 -

STATEMENT 3

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Customer Name Not from related third parties Company D Company E Company F Company G Company H Others (Note 1) Less: Allowance for impairment loss From related third parties Koito Manufacturing Co., Ltd. Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd PT. Indonesia Koito Less: Allowance for impairment loss	Amount $ 249,296 212,975 56,047 49,437 39,832 161,254 768,841 5,777 $ 763,064 $ 186,041 29,408 24,673 240,122 244 $ 239,878

Note1: The amount of individual customer included in others does not exceed 5% of the account balance.

Note2: The amount of accounts receivable of aging schedule more than one year was $34,048 thousand, of which $21,242 thousand was instalment sales.

• 64 -

STATEMENT 4

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF OTHER RECEIVABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Customer Type Tax refund receivables Others

Abstract Amount Custom duty refundable $ 241 Receivables from other 2,079 companies for defective products and advances $ 2,320

• 65 -

STATEMENT 5

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Raw materials Work in process Finished goods Merchandise		Amount	Amount
		Cost $ 269,599 105,649 405,847 161,926 $ 943,021	Net Realizable Value (Note) $ 274,843 109,717 473,262 172,897 $ 1,030,719

Note: Refer to Note 4 to the standalone financial statements.

• 66 -

STATEMENT 6

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF PREPAYMENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Customer Name Abstract Prepayments for inventories Prepayments for raw materials, merchandise, and molds. Prepayments for expenses Prepayments for insurance fees and software maintenance fees.	Amount $ 97,120 8,874 $ 105,994

• 67 -

STATEMENT 7

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Name Investments in subsidiaries Ta Yih International Investment Co., Ltd. Investments in associates Fuzhou Koito Ta Yih Co., Ltd.	Balance at January 1, 2020 Shares Amount 50,000 $ 960 - 393,213 $ 394,173	Increase (Note 2) Shares Amount Net - $ - - 1,788 $ 1,788	Income (Loss) of the Investee Exchange differences on translating foreign operations (Note 1) $ (53) $ (47) (67,628) 4,913 $ (67,681) $ 4,866	**Balance at December 31, **	2020 Amount $ 860 332,286 $ 333,146	Net Value Collateral $ 860 None 337,080 None $ 337,940
	Shares 50,000 -	Shares - -		Shares % of Ownership 50,000 100 - 49

Note1: The difference between exchange differences on translating foreign operations of $4,866 thousand and the standalone statements of changes in equity was due to adjustment of deferred tax liabilities recognized which amounted to $969 thousand.

Note2: Unrealized gain on downstream transactions with investments in associates was increased by $1,788 thousand.

• 68 -

STATEMENT 8

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Buildings Transportation equipment Office equipment	Balance at January 1, 2020 $ 11,489 17,263 2,743 $ 31,495	Increase $ - 2,775 - $ 2,775	Decrease Balance at December 31, 2020 $ 11,489 $ - 1,175 18,863 - 2,743 $ 12,664 $ 21,606

• 69 -

STATEMENT 9

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION FOR RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020

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

Item Balance at January 1, 2020 Buildings $ 5,744 Transportation equipment 6,434 Office equipment 131 $ 12,309	Increase $ 5,745 7,304 522 $ 13,571	Decrease $ 11,489 1,119 - $ 12,608	Balance at December 31, 2020 $ - 12,619 653 $ 13,272

• 70 -

STATEMENT 10

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Maturity Date Interest rate (%) Borrowings of unsecured loans Taishin Bank 2020.12 ~ 2021.03 0.82 Taipei Fubon Bank 2020.11 ~ 2021.05 1.11 Mizuho Bank 2020.10 ~ 2021.01 0.75 Cathay United Bank 2020.11 ~ 2021.01 0.86	Balance $ 128,100 28,100 110,000 76,200 $ 342,400	Credit Line Collateral $ 200,000 None 100,000 None 120,000 None 100,000 None $ 520,000

• 71 -

STATEMENT 11

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF NOTES PAYABLE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Customer Name/Type Not from related third parties Company I Others (Note)	Amount $ 81,506 13,982 $ 95,488

Note: The amount of individual vendor in others does not exceed 5% of the account balance

• 72 -

STATEMENT 12

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars)

Customer Name Not from related third parties Company J Company K Company L Others (Note) From related third parties Koito Manufacturing Co., Ltd. DBM Reflex of Taiwan Co., Limited Fuzhou Koito Ta Yih Automotive Lamp Co., Ltd Juoku Technology Co., Ltd. TYC Brother Industrial Co., Ltd. Ta Mao Operating Consultant Co., Ltd. Nai Yi Entertainment Company Ltd. Ta Yih Kenmos Auto Parts Co., Ltd.	Amount $ 86,732 62,955 49,891 516,736 $ 716,314 $ 61,540 4,809 2,273 2,104 116 105 81 17 $ 71,045

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

• 73 -

STATEMENT 13

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Lease Term Discount Rate (%) Transportation equipment 2019.01.01 ~ 2023.09.27 1.25 ~ 1.45 Office equipment 2019.01.01 ~ 2024.12.31 1.45	Balance, End of Year $ 6,304 2,109 $ 8,413

• 74 -

STATEMENT 14

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Unit Weight Car lamps Thousands of Pcs 13,994 Molds Pcs 334 Others (Note) Sales return and allowance	Amount $ 3,569,187 734,252 548,151 4,851,590 54,425 $ 4,797,165

Note: The amount of each item included in others does not exceed 10% of the account balance.

• 75 -

STATEMENT 15

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Raw materials, beginning of year Raw materials purchased Raw materials sold Transferred to manufacturing or operating expenses Scrapped Provision for loss on inventories Raw materials, end of year Raw materials used Direct labor Manufacturing expenses Manufacturing cost Work in process, beginning of year Work in process, end of year Cost of finished goods Finished goods, beginning of year Finished goods purchased Other adjustments Transferred to manufacturing or operating expenses Transferred to equipment Scrapped Provision for loss on inventories Finished goods, end of year Cost of production and marketing Merchandise, beginning of year Merchandise purchased Merchandise, end of year Transferred to manufacturing or operating expenses Other adjustments Cost of merchandise sold Cost of raw materials sold Scrapped Provision for loss on inventories Revenue from sale of scraps Total

Amount $ 181,814 2,176,862 321,241 37,339 2,335 2,890 269,599 1,725,272 192,617 556,906 2,474,795 211,500 105,649 2,580,646 323,265 787,607 54 3,089 61,836 5,192 2,466 405,847 3,213,034 95,944 728,953 161,926 6 79,161 583,804 321,241 7,527 5,356 5,543 $ 4,125,419

• 76 -

STATEMENT 16

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Payroll expense Export fee Freight expense Examination expense Insurance expenses Depreciation expenses Royalty expenses ECLs write-off Others	Selling Expenses General and Administrativ eExpenses Research and Development Expenses Expected Credit Gain $ 18,537 $ 64,732 $ 103,307 $ - 74,212 - - - 17,007 47 2,124 - - - 20,527 - 1,715 5,422 10,227 - - 18,476 875 - - 8,873 - - - - - 1,154 48,099 49,635 41,776 - $ 159,570 $ 147,185 $ 178,836 $ 1,154	Total $ 186,576 74,212 19,178 20,527 17,364 19,351 8,873 1,154 139,510 $ 486,745

• 77 -

STATEMENT 17

TA YIH INDUSTRIAL CO., LTD.

STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Employee benefits Salaries Labor and health insurance Post-employment benefits Remuneration of directors Others Depreciation Amortization	For the Year Ended December 31,2020	Total $ 506,998 49,899 25,051 900 23,702 $ 606,550 $ 137,185 $ 11,251	For the Year Ended December 31,2019
	Classified as Operating Costs Classified as Operating Expenses $ 320,422 $ 186,576 32,535 17,364 16,309 8,742 - 900 16,986 6,716 $ 386,252 $ 220,298 $ 117,834 $ 19,351 $ 2,565 $ 8,686		Classified as Operating Costs Classified as Operating Expenses $ 368,647 $ 212,963 36,080 17,859 18,558 9,171 - 690 18,737 6,642 $ 442,022 $ 247,325 $ 113,919 $ 17,450 $ - $ -	Total $ 581,610 53,939 27,729 690 25,379 $ 689,347 $ 131,369 $ -

Note:

1. As of December 31, 2020 and 2019, the Company had 829 and 892 employees, respectively, which included 7 and 6 non-employee directors for both years.

2. Additional disclosures are as follows:

3. (1) Average employee benefits for the year ended December 31, 2020 was NT$737 thousand (Total amount of employee benefits for the year ended December 31, 2020 less total amount of remuneration of directors for the year ended December 31, 2020/number of employees for the year ended December 31, 2020 less number of directors not serving concurrently as employees for the year ended December 31, 2020)

Average employee benefits for the year ended December 31, 2019 was NT$777 thousand (Total amount of employee benefits for the year ended December 31, 2019 less total amount of remuneration of directors for the year ended December 31, 2019/number of employees for the year ended December 31, 2019 less number of directors not serving concurrently as employees for the year ended December 31, 2019)

• (2) Average salary for the year ended December 31, 2020 was NT$617 thousand (Total amount of salaries for the year ended December 31, 2020/number of employees for the year ended December 31, 2020 less number of directors not serving concurrently as employees for the year ended December 31, 2020)

Average salary for the year ended December 31, 2019 was NT$656 thousand (Total amount of salaries for the year ended December 31, 2019/number of employees for the year ended December 31, 2019 less number of directors not serving concurrently as employees for the year ended December 31, 2019)

• (3) Change in average salary was (6)% (Average salaries for the year ended December 31, 2020 less average salaries for the year ended December 31, 2019/average salaries for the year ended December 31, 2019)

• The Company established an audit committee in June 2020 to replace supervisors. The remuneration of supervisors was $470 thousand and $840 thousand for the years ended December 31, 2020 and 2019, respectively.

• The compensation policy for the chairman, managers and employees of the Company is based on industry standards, taking into account individual performance, business performance and future risks.

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