TASC - Annual Report 2020 | FinancialReports.eu

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I. The name, title, telephone number and e-mail of the spokesperson and Deputy spokesperson
Spokesperson

Name: Jeffery Tai Title: Assistant Vice President

Tel: 886-3-5638951 E-mail: Jeffery Tai @opto.com.tw

Deputy Spokesperson

Name: Jeffery Tai Title: Assistant Vice President

Tel: 886-3-5638951 E-mail: Jeffery Tai @opto.com.tw

II. The Address and telephone number of the company and manufactories

The company

Address: No. 8, Innovation Rd. 1, Hsinchu Science Park, Hsinchu, 300092 Taiwan R.O.C. Tel: 886-3-5777481

Chuangxin Manufactory

Address: No. 8, Innovation Rd. 1, Hsinchu Science Park, Hsinchu, 300092, Taiwan R.O.C. Tel: 886-3-5777481

Li-hsin Manufactory

Address: No. 1, Li-hsin Rd. V, Hsinchu Science Park, Hsinchu 300094, Taiwan. R.O.C. Tel: 886-3-5638951

Guangfu Manufactory

Address: No.6, Guangfu N. Rd., Hukou Township, Hsinchu County 303036, Taiwan. R.O.C. Tel: 886-3-5638951

III.Stock Transfer Agent

Taishin International Bank Stock Affairs Department

Address: B1, No.96, Sec. 1, Jianguo N. Rd., Taipei, Taiwan

Website: http://www.taishinbank.com.tw

Tel: 886-2- 25048125

IV. The name of the certified public accountant who duly audited the annual reports for the most recent fiscal year and telephone number of said person’s accounting firm
Accountants: Lin, Yu-Kuan & Lai, Chung-Hsi
Accounting firm: PricewaterhouseCoopers, Taiwan

Address:27F, 333 Keelung Rd,, Sec. 1,Taipei, Taiwan Website: http://www.pwc.com Tel: 886-2-27296666

V. Overseas Securities Exchange

Not applicable

VI. Corporate Website

http://www.opto.com.tw

I.Letter to Shareholders ........................................................................................................................ 1 II.Company Profile 1.Date of Incorporation ............................................................................................................................... 4 2.Company History ..................................................................................................................................... 4 III.Corporate Governance Report 1.Organization ........................................................................................................................................... 5 2.Directors, Supervisors and Management Team ...................................................................................... 8 3.Remuneration of Directors, Independent Directors, President, and Vice President ............................. 13 4.Implementation of Corporate Governance ............................................................................................. 17 5.Information Regarding the Company’s Audit Fee ............................................................................... 42 6.Replacement Of CPA ............................................................................................................................. 43 7.The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates in the most recent two years ............................................... 43 8.Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders ...................... 44 9.Relationship among the Top Ten Shareholders .................................................................................... 45 10.Ownership of Shares in Affiliated Enterprises ................................................................................... 45 IV.Capital Overview 1.Capital and Shares .................................................................................................................................. 46 2.Bonds ...................................................................................................................................................... 50 3.Preferred Stock ...................................................................................................................................... .50 4.Global Depository Receipts .................................................................................................................... 50 5.Employee Stock Options ........................................................................................................................ 50 6.Status of New Shares Issuance in Connection with Mergers and Acquisitions ..................................... 50 7.Financing Plans and Implementation ..................................................................................................... 50 V. Operational Highlights 1.Business Activities ................................................................................................................................. 51 2.Market and Sales Overview.................................................................................................................... 57 3.Human Resources ................................................................................................................................... 63 4.Environmental Protection Expenditure .................................................................................................. 64 5.Labor Relations ...................................................................................................................................... 64 6.Important Contracts ................................................................................................................................ 68 VI.Financial Information 1.Five-Year Financial Summary ............................................................................................................... 69 2.Five-Year Financial Analysis ................................................................................................................. 72 3.Audit Committee’s Review Report for the Most Recent Year ............................................................... 75 4.Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018, and Independent Auditors’ Report ................................................................................................................ 76

VII.Review of Financial Conditions, Operating Results, and Risk Management

1.Analysis of Financial Status ................................................................................................................. 142 2.Analysis of Financial Performance ...................................................................................................... 142 3.Analysis of Cash Flow ......................................................................................................................... 143 4.Major Capital Expenditure Items and Source of Capital ...................................................................... 143 5.Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year .............................................................................................. 143 6.Analysis of Risk Management.............................................................................................................. 143 7.Other Major Events .............................................................................................................................. 147 VIII.Special Disclosure 1.Summary of Affiliated Companies ..................................................................................................... 147 2.Private Placement Securities in the Most Recent Years ....................................................................... 151 3.The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ............. 152 4.Others Supplementary Events .............................................................................................................. 152 5.Matters Significantly Influenced on Shareholders’ Equity or Securities Price .................................... 152

、 I Letter to shareholders

1. Operating Performance in 2020:

(1) Outcome of business plan of 2020:
A.Increase investment in the sensing element application market, using proximity sensor and time-of-flight (ToF) to extend the scope of applications including environmental detection, smart wearable devices, smart home appliances, automotive sensors, etc. Collaborate with major international companies to develop new sensing applications and demand. Complete sample submission for certification.
B. Complete the development of new infrared products, and use red light as well as new infrared products to increase gross margin and market share, which not only consolidates the existing markets, but also acquires new markets, maintaining a fair market share. Currently, the new infrared products have been shipped steadily.
C. In system products, complete various large-scale display projects to meet the engineering and product needs of high-end customers.
D.Overall, operating revenue in 2020 reaches NT$5.6 billion, net profit after tax reaches NT$575.129 million, with an EPS of NT$1.52.
(2) Budget implementation of 2020:

Unit: Million pieces

Major Divisions	Sales of 2020	Sales of 2020
	Expected	Actual
Light emittingdevices	18,373	15,916
Sensor devices	24,254	25,640
Total	42,627	41,556

(3) Profitability analysis:

rofitability analysis:
	Unit: NT$thousands
Item	2020
Operatingrevenues	5,590,046
Operatingincome	689,147
Profit beforeincome tax	619,756
Interest expense	26,492
Ratio of interest expense to operatingincome (%)	3.84%

Unit: NT$ thousands ； %

	Year/Item	2020
Basic information	Total liabilities	2,948,101
Financial structure	Ratio of capital owned	72.30%
	Ratio of liabilities to assets	27.70%
	Ratio of long-term capital to Property, plant and equipment	329.29%
Solvency	Current ratio	363.79%
	Quick ratio	295.73%
	Times interest earned ratio	24.39

(4) Research and development status
A. Being optimistic about the future application market of VCSEL devices, the next generation of VCSEL technology is expected to be developed. Provide technology platforms and innovative application products.

B. Improve the luminous efficiency of UVC epitaxy and flip-chip products, strengthen product reliability, and reduce costs to achieve good cost-performance ratio.
C. In response to the COVID-19 pandemic, products are applied to applications such as surface sterilization, water sterilization and solid hardening.

2. Business plan for 2021:

(1) Business objectives:

A. Use cutting-edge technologies to develop products that that are environmentally friendly and promote them to the world, especially in futuristic applications such as infrared sensing, biometrics, wearable devices, automotive solutions, AR, VR, 5G sensing, etc.
B. Establish a technology platform to allow customers to clearly define product specifications, quality acceptance standards, and mass production process specifications. Through strategic alliance, serve as the supply chain to provide the required sensing elements for major international companies’ smart products.
C. Adopt automation for production management. Introduce advanced AI production automation processes to improve the production management of photoelectric sensing elements. Enhance smart production and automation capabilities to maintain product quality and control operation cost, aiming to create the best product in the world.
(2) Forecast of sales volume and its basis:

According to the research conducted by the TrendForce, the COVID-19 pandemic has caused a substantial impact on the global economy. The demand that has been long-term suppressed will eventually bottom out following the introduction of the vaccination. It is estimated that the global LED output value will reach US$ 15.7 billion in 2021, an annual increase of 3.8%. The projected business goals for OPTOTECH in 2021 are as follows:

goals for OPTOTECH in 2021 are as follows:
	Unit: Millionpieces
Major Divisions	Expected sales of 2021
Light emittingdevices	10,222
Sensor devices	29,675
Total	39,897

(3) Sales forecast and sales policy:
A. Through internal vertical integration, improve product reliability and reduce costs to achieve good cost-performance ratio.
B. Take the initiative to expand the market of infrared products and increase the existing market share. Actively develop new infrared products to win more customers and orders.
C. In system products, use advanced processing technology to develop differentiated products, and adopt cross-industry collaboration to create new applications and demand.

3.Impact of the company’s future development strategy, external competitive environment,

legal environment and Macroeconomic environment on the company:

(1) The company’s future development strategy:

In recent years, the support and subsidies provided by the Chinese government to the LED industry in China have caused serious threats to the companies in Taiwan, making the traditional LED industry no longer competitive. Therefore, in 2020, the development strategy of OPTOTECH underwent major changes as compared to that in the past. OPTOTECH will no longer focus solely on traditional LED, but rather on the extended markets of the sensing element applications and the demand for VCSEL applications. Through 3D sensing, we will continue to expand the application of VCSEL in smartphones and wearable devices. In response to the coming of the 5G era, we will also boost the development of VCSEL, gradually transforming our role as the provider of traditional LED for the lighting and display industries to the provider of sensing elements for the optoelectronic and semiconductor industries. For

this reason, in 2021, OPTOTECH will mainly focus on 3D sensing, VCSEL element wearable devices, smart medical care related business opportunities, and commercial application technology platforms. The target application markets include automotive sensing, mobile phones, smart wearable devices, smart home appliances, environmental detection, AR, VR, etc., aiming towards the goal of automated production.

(2) External competitive environment:

According to the research report released by the TrendForce, the development of the infrared sensing market in 2021 will gradually grow along with 3D sensing, automotive sensing, and the LiDAR market. It is estimated that the infrared sensing market will reach US$ 3.862 billion in 2025. On the other hand, the total output value of VCSEL for 3D sensing is estimated to reach up to US$ 1.842 billion in 2021, with an annual growth rate of 53%. The market for the wearable devices is expected to have a compound annual growth rate of 16% by 2024. The above indicates that the future of the LED industry is promising. However, due to such huge business opportunities, many players have joined the game; how to maintain the Corporation’s competitiveness while receiving benefits from such business opportunities and avoiding falling into the red sea market are the challenges that every player has to face.

(3) Impact of the legal environment ：

In the past, the government treated electrocardiogram, heart rhythm measurement, and blood oxygen detection as medical equipment or practices. As a result, the function of smart wearable device for measuring body data is often limited. However, in compliance with international trends, many countries have excluded the medical software or applications that manage the daily health of people from the scope of medical equipment. For this reason, the government of Taiwan no longer recognizes the use of software or applications of such smart wearable devices as medical equipment.

Due to the increase of public awareness in health management, the demand for the health detection performance of smart wearable devices will continue to rise. In the future, in addition to heart rate; blood oxygen; and blood pressure measurement, analysis of blood glucose and sweat will also be included. In response to the increased detection items and accuracy requirement, the number of sensing elements used will gradually increase.

(4) Macroeconomic environment ：

The COVID-19 pandemic in 2020 has caused significant impact on the industries around the world. According to the research conducted by the TrendForce, the LED industry has been affected by the COVID-19 pandemic in 2020, showing a substantial decline in market demand. The estimated output value only reached US$15.127 billion, an annual drop of 10%, which is rarely seen in the past. However, with the development of the epidemic and the increase of demand in telecommute; online teaching; sterilization products; and medicinal plants, the demand for products such as optical-coupler sensing; UVC LED; and plant lighting, has been boosted. Furthermore. With the introduction of the COVID-19 vaccination in the beginning of 2021, it is projected that 2021 will be the year for the LED industry to bottom out.

In the past year, OPTOTECH had been not only affected by the global economy, but also experienced business transformation within the organization. Although facing various tests and challenges, OPTOTECH has been supported and encouraged by its employees, customers, suppliers and shareholders, who grow together with the Corporation, allowing OPTOTECH to stand firm continuously and maintain its excellent performance. In the coming year, OPTOTECH will continue to uphold the long-term goal of social responsibility and sustainable operation, and bring great benefits to all stakeholders.

Chairman: President: Head of Accounting:

H.T. Wang David Hwang Yin-Rui Chen

、 II Company Profile

1.Date of Incorporation: December 21[st] , 1983

2.Company History:

12/1983	Company was founded
01/1984	Bank of Communications invested our company, and we began factory construction and equipment installation.
06/1984	Test run began.
07/1984	The production and sales of LED chips began
02/1986	Operation broke even
09/1987	The development of high brightness LED chip was completed and mass production began
12/1991	The production of LED large-size display began
08/1992	Securities and Exchange Commission of Ministry of Finance approved the re-submission of IPO of our company
03/1993	Our LED large-size display was granted US patent for 17 years
12/1993	The civil construction of the first factory of OPTOTECH was completed
05/1995	Our stock was listed on Taiwan Stock Exchange
08/1996	Received RWTUV ISO-9001 certificate
12/1999	Signed development project of “organic LED material and device technologies” with Material Laboratoryof ITRI
09/2000	The civil construction of the Li-hsin factory of OPTOTECH was completed. All departments weregraduallymoved to the Li-hsin factoryon Li Hsin Road.
12/2001	Developed new generation high brightness algainp LED chip
01/2002	Our company signed with Advanced TEK International Corporation to begin “ERP+MES implementation”project
05/2002	Authorized by ISO 14001 and OHSAS 18001
08/2004	Semiconductor Sales & Marketing Division authorized by ISO/TS16949
07/2005	Successfully introduced Japanese investment from Nichia during company capital increase andpromoted mutual collaboration and exchange.
06/2006	Taiwan Nichia was elected to be our board members
08/2006	Received SGS IECQ HSPM (QC080000) certificate
01/2008	Officially launched all new corporate identity system (CIS) to create new corporate brand image and strengthen international competitiveness.
12/2008	Involving in the cash capital increase plan of an international LED manufactory, Nichia Japan
09/2012	LED products passed carbon footprint check
02/2013	Launched a new product image
08/2013	Secured energy saving label certification from the Bureau of Energy, Ministry of Economic Affairs(street lightinglamps)
09/2013	Authorized by CNS15506 (taiwan occupational safety & health) certificate
01/2015	Achieved taf (taiwan accreditation foundation) iso/iec 17025 (photovoltaic test laboratory) certification
01/2018	Kuangfu Plant of Optotech joined the operation
09/2018	Qualified by IATF 16949 Management System Certificate
07/2019	obtained ISO 45001 management system certification
08/2019	obtained CNS 45001 (Taiwan Occupational Safety and Health) Management System Certification

、 III Corporate Governance Report

1.Organization:

(1) Organizational Chart

OPTOTECH CORPORATION

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(2) Major Corporate Functions

A. Chairman’s Office
Assist the Chairman of the Board of Directors in fulfilling the powers and responsibilities given by the Company Act. Assist in organizing the Board of Directors meetings to discuss the Corporation's major proposals and strategies in order to implement the decisions made by the Board of Directors, and to ensure that all the Corporation's actions are in line with the corresponding laws and the interests of shareholders. Promote and carry out the planning and execution of all reinvestment businesses; brand strategy planning as well as the promotion and management of brand-related businesses; corporate social responsibility strategies, management guidelines as well as the promotion and execution of related plans.
Intellectual Property & Legal Affairs Department ： Corporation contract review and management as well as the planning and management of legal affairs and patent rights, copyright, trademark rights, franchise and other intellectual property rights.
Stock Affairs Office ： Stock affairs related operations, and preparation of the Board of Directors meetings, shareholder meetings and functional committees’ meetings.
B. President Office
Act in accordance with the resolutions of the Board of Directors as well as the Chairman, and supervise the businesses of its subordinating departments.
Formulation and planning of the Corporation's revenue targets, operation analysis, and goal management and implementation.
Responsible for the management of the Corporation's management system, policy formulation and other related planning operations.
C. Management Center
Manage the Corporation's human resources, financial, and information system related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the management center.
D. Sales & Marketing Center
Manage the Corporation's market plan, business-related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the sales & marketing center.
E. Production Planning Center
Manage the Corporation's production plans, materials, and quality management related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the production planning center.
F. Optoelectronics Operations Center
Manage the Corporation's optoelectronic production and technology related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the optoelectronics operations center.

G. Silicon Operations Center

Manage the Corporation's silicon-electronic production and technology related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the silicon operations center.
H. Systems Operations Center
Manage the Corporation's system production and technology related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the systems operations center.
I. Research Center
Manage the Corporation's optoelectronic R&D, silicon-electronic R&D, system R&D, and R&D integration related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the research center.
J. Safety Facility Divison
Manage the Corporation's factory affairs and industrial safety related planning and implementation.
Supervise the businesses of its subordinating units.
Affairs related to the scope of the safety facility divison.

K. Auditing Office

Reviewing the design and implementation of internal control systems, providing suggestions for improvement, and submitting periodic follow-up reports.
Other matters as instructed by senior management.

2.Directors, Supervisors and Management Team ：

(1) Directors and Supervisors

(1) Directors and Supervisors	(1) Directors and Supervisors	(1) Directors and Supervisors	(1) Directors and Supervisors	(1) Directors and Supervisors	(1) Directors and Supervisors	(1) Directors and Supervisors
							Apr. 26,2021
																	Executives, Directors or

	Nationality/						Shhldi		C		S & Mi		Shareholding				Supervisors Who are ihi
				Date	Term	Date First	areong h l		urrent hhli		pouse nor hhli		by Nominee							Remark(s)
Title	Country of Origin	Name	Gender	Elected	(Years)	Elected	wen Eected		Sareodng		Sareodng		Arrangement		Experience（Education）	Other Position	Spouses or wtn Two Degrees of Kinship			(Note)
							Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Chairman	R.O.C.	H.T. Wang	Male	2020.06.16	3	2002.05.29	1,937,625	0.51	1,937,625	0.51	9,396	0.00	0	0.00	Dept. of Chemistry, National Changhua University of Education. Chairman of OptoTech.	Chairman of Ho Chung Investment Co.,Ltd. Chairman ofTung Chun Asset Management Co., Ltd. Chief Executive Officer of OPTOTECH.	None	None	None	None
Vice Chairman	R.O.C.	Tsun-Chia Tai	Male	2020.06.16	3	2020.06.16	0	0.00	0	0.00	0	0.00	0	0.00	Academician of the International Academy of Science and Technology of the Department of Production Science / Bachelor’s degree in Ishikawa Prefectural University, Japan	Director of the Third Business Division of Nichia Corporation. Chairman of Nichia HongKong Corp. Chairman of Nichia ShenZhen Corp. Chairman / President of Nichia ShangHai Corp. Director / President of Nichia Taiwan Corp. Chief StrategyOfficer of OPTOTECH.	Director	Su-Chi n Tai	Second Degree of Kinship	None
Managing Director & Independent Director	R.O.C.	Kuo-Kuang Li	Male	2020.06.16	3	2020.06.16	0	0.00	0	0.00	2,000	0.00	0	0.00	Gradute Institute of Medical,Taipei Medical University Master's Degree PhD degree in International Law, China University of Political Science and Law, Beijing	Chairman of Chen Min Investment Co.,Ltd.	None	None	None	None
Director	R.O.C.	Tzu-Chun Lin	Female	2020.06.16	3	2008.03.21	374,805	0.01	374,805	0.10	0	0.00	0	0.00	National HsinChu Commercial Vocational High School	Supervisor of Ho Chung Investment Co.,Ltd. Director ofTung Chun Asset Management Co., Ltd. Director of Opto Plus Technology Co., Ltd. Chief of Staff of OPTOTECH. Senior Vice President of OPTOTECH.	None	None	None	None
Director	R.O.C.	Su-Chin Tai	Female	2020.06.16	3	2017.06.21	34,071	0.01	54,071	0.01	0	0.00	0	0.00	Dept. of Comprehensive Commerce, Taoyuan Municipal Zhong Li Commercial High School	-	Director	Tsun-C hia Tai	Second Degree of Kinship	None
Director	R.O.C.	Nichia Taiwan Corp.	-	2020.06.16	3	2006.06.14	21,639,822	5.72	26,448,822	6.99	0	0.00	0	0.00	-	-	None	None	None	None
	Japan	Rep. of legal person: Ishigami Koji	Male	2020.06.16	3	2015.09.09	0	0.00	0	0.00	0	0.00	0	0.00	Dept. of Business and Economics, Div. of Kindai University. Vice President of Nichia Taiwan Corp.	Vice President of Nichia Taiwan Corp. President of Nichia ShenZhen Corp. Director of Nichia ShangHai Corp. President of Nichia Hongkong Corp. Director of Nanoplus (Cayman) LTD.	None	None	None	None

																	Executives, Directors or	Executives, Directors or	Executives, Directors or

	Nationality/						Shhldi		C		S & Mi		Shareholding				Supervisors Who are
				Date	Term	Date First	areong		urrent		pouse nor		by Nominee							Remark(s)
Title	Country of Origin	Name	Gender	Elected	(Years)	Elected	when Elected		Shareholding		Shareholding		Arrangement		Experience（Education）	Other Position	Spouses or within Two Degrees of Kinship			(Note)
							Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Director	Japan	Rep. of legal person: Sakamoto Takashi	Male	2020.06.16	3	2017.06.21	0	0.00	0	0.00	0	0.00	0	0.00	Doctor of Faculty of Engineering material, of Tokushima University. Executive Manager of Nichia Japan Corp.	Director of Nichia ShangHai Corp. Director of Nichia Taiwan Corp. Supervisor of Nichia ShenZhen Corp. Director of Nanoplus (Cayman) LTD.	None	None	None	None
Director	R.O.C.	Inwood Information System Co.,Ltd.	-	2020.06.16	3	2020.06.16	8,000	0.00	200,000	0.05	0	0.00	0	0.00	-	-	None	None	None	None
	R.O.C.	Rep of legal person: Pin-Lun Wang	Male	2020.09.30	3	2020.09.30	0	0.00	0	0.00	0	0.00	0	0.00	Soochow University Department of Economics	President of Inwood Information System Co.,Ltd.	None	None	None	None
Independent Director	R.O.C.	Kao-Ming Tsai	Male	2020.06.16	3	2017.06.21	0	0.00	0	0.00	0	0.00	0	0.00	Dept of Accountancy and Statistics,National Cheng Kung University President of China Bills Finance Corporation	Chairman of Eastern Real Estate Management., Ltd Chairman of Eastern Enterprise Development Co., Ltd Chairman of Eastern International Lease-Finance Co., Ltd Chairman of Tung Kai Lease-Finance Co., Ltd Director of Eastern Media International Co., Ltd Chairman of Viking Tech Co., Ltd Independent Director of United Radiant TechnologyCo.,Ltd	None	None	None	None
Independent Director	R.O.C.	Pei-Chang Wang	Male	2020.06.16	3	2017.06.21	0	0.00	0	0.00	0	0.00	0	0.00	Dept of Physics,Tamkang University Director of U.R.T. President of U.R.T.	-	None	None	None	None

Note1：Jung-Huan Lee, Tsang-Der Ni, Shin-Etso Opto Electronic Co.,Ltd and Shih-Tung Ho were expiration of the term of office of the current director and Independent director Jun.on 16[th] ,2020.

Note2 ：Tsun-Chia Tai, Tzu-Chun Lin, Inwood Information System Co.,Ltd.and Kuo-Kuang Li elected as director and Independent Director on Jun.16[th] ,2020.

Note3 ：Inwood Information System Co.,Ltd. designate Pin-Lun Wang as representative of legal person director on Sep.30[th] ,2020.

Note4 ：Shun-Chih Chen resigned as director on Feb.20[th] ,2021.

A. Major shareholders of the institutional shareholders

Dec. 31, 2020

Name of Institutional Shareholders	Major shareholders of the institutional shareholders	Ratio of shareholding (%)
Nichia Taiwan Corp.	Nichia Corp.	99.74
	Kan-Lin Yen	0.13
	Jo-Li Chang	0.13
Inwood Information System Co.,Ltd.	Chiao-Chieh Huang	91.00
	Chiao-Chun Huang	3.00
	Chiao-Chiang Huang	3.00
	Shu-Hua Yu	3.00

B. Major shareholders of the Company’s major institutional shareholders

		Dec.31,2020

		Ratio of
Name of Institutional
	Major Shareholders	shareholding
Shareholders
		(%)


Nichia Corp.	日亜持株組合	13.0
	株式会社協同医薬研究所	5.9
	Tokushima Taisho Bank,Ltd.	4.7
	The Awa Bank, Ltd	4.7
	Shikoku Bank, Ltd.	4.7
	Citizen Watch Co., Ltd.	4.0
	Mizuho Bank, Ltd.	3.4
	Otsuka Holdings Co., Ltd	3.0
	The Iyo Bank, Ltd.	3.0
	The Bank of Mitsubishi UFJ	2.8

C. Professional qualifications and independence analysis of directors and supervisors

	Meet One of the Following Professional Qualification Requirements, Together with at Least Five	Meet One of the Following Professional Qualification Requirements, Together with at Least Five	Meet One of the Following Professional Qualification Requirements, Together with at Least Five
				Independence Criteria(Note)
		Years Work Experience

	An Instructor or Higher Position	A Judge, Public Prosecutor,	Have Work Experience in
																Number of Other Public
	in a Department of Commerce,	Attorney, Certified Public	the Areas of Commerce,
																Companies in Which the
Criteria	Law, Finance, Accounting, or	Accountant, or Other Professional or	Law, Finance, or
																Individual is Concurrently
Name	Other Academic Department	Technical Specialist Who has Passed	Accounting, or Otherwise
				1	2	3	4	5	6	7	8	9	10	11	12	Serving as an Independent
	Related to the Business Needs of	a National Examination and been	Necessary for the Business
																Director
	the Company in a Public or	Awarded a Certificate in a	of the Company

	Private Junior College, College or	Profession Necessary for the
	University	Business of the Company
H.T.Wang																0
Tsun-Chia Tai																0
Kuo-KuangLi																0
Tzu-Chun Lin																0
Su-Chin Tai																0
Ishigami Koji (Nichia Taiwan Corp.)																0
Sakamoto Takashi (Nichia Taiwan Corp.)																0
Pin-Lun Wang (Inwood Information System Co.,Ltd.)																0
Kao-MingTsai																1
Pei-ChangWang																0

Note1: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office.

(1). Not an employee of the company or any of its affiliates.
(2).Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
(3).Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
(4).Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
(5).Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
(6).If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
(7).If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
(8).Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.
(9).Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10).Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11).Not been a person of any conditions defined in Article 30 of the Company Law.
(12).Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.
Note2:Shun-Chih Chen resigned as director on Feb.20[th] ,2021.

(2) Management Team

Apr.26, 2021

Title													Managers who are	Managers who are	Managers who are
									hhldi
	Nationality/ Country of Oriin	Name	Gender				Spouse &		Sareong		Experience（Education）	Other Position	Spouses or Within Two Degrees of Kinship
				Date Effective	Shareholding		Minor Shareholding		by Nominee Arrangement							Remark(s) (Note)
	g				Shares	％	Shares	％	Shares	％			Title	Name	Relation
Chief Executive Officer	R.O.C.	H.T.Wang	Male	2020.07.01	1,937,625	0.51	9,396	0.00	0	0.00	Dept. of Chemistry, National Changhua University of Education. Chairman of OPTOTECH.	Chairman of Ho Chung Investment Co., Ltd. Chairman ofTung Chun Asset Management Co., Ltd. Chairman ofOPTOTECH.	None	None	None	None
Chief Strategy Officer	R.O.C.	Tsun-Chia Tai	Male	2020.07.01	0	0.00	0	0.00	0	0.00	Academician of the International Academy of Science and Technology of the Department of Production Science / Bachelor’s degree in Ishikawa Prefectural University, Japan Vice Chairman of OPTOTECH.	Chairman of Nichia HongKong Corp. Chairman of Nichia ShenZhen Corp. Chairman / President of Nichia ShangHai Corp. Director of the Third Business Division of Nichia Corporation. Director / President of Nichia Taiwan Corp. Vice Chairman of OPTOTECH.	None	None	None	None
President	R.O.C.	David Hwang	Male	2020.10.01	52,000	0.01	0	0.00	0	0.00	Master of Michigan State University. Vice President of Egis Technology Inc. President of OPTOTECH.	Chief of Operation of OPTOTECH.	None	None	None	None
Senior Vice President	R.O.C.	Tzu-Chun Lin	Female	2021.01.01	374,805	0.10	0	0.00	0	0.00	National HsinChu Commercial Vocational High School Management Center Senior Vice President of OPTOTECH.	Supervisor of Ho Chung Investment Co.,Ltd. Director of Tung Chun Asset Management Co., Ltd. Director of Opto Plus Technology Co., Ltd. Chief of Staff of OPTOTECH.	None	None	None	None
Vice President	R.O.C.	Chang-Da Tsai	Male	2017.07.01	109,040	0.03	3,406	0.00	0	0.00	Doctor of Photonics,National Central University. Optoelectronics Operations Center Vice President of OPTOTECH.	None	None	None	None	None
Vice President	R.O.C.	Wen-Tsung Lai	Male	2020.07.01	73,220	0.02	3,974	0.00	0	0.00	Master of Photonics National Sun Yat-sen University Silicon Operations Center Vice President of OPTOTECH.	None	None	None	None	None
Assistant Vice President	R.O.C.	Jeffery Tai	Male	2021.01.01	0	0.00	0	0.00	0	0.00	PhD of epartment of Electrical Engineering, National Central University. Sales & Marketing Center Assistant Vice President of OPTOTECH.	None	None	None	None	None

Note1:Shun-Chih Chen retired Vice President on Feb.20th,2021.

Note2:Wen-Tsung Lai transfer to President Office Special Assistant on May.6th,2021.

Note3:Where the President or person of an equivalent post (the highest level manager) and Chairman of the Board of Directors are the same person, spouses, or relatives within the first degree of kinship, the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto must be disclosed. (1) Reason: On August 6, 2020, the Board of Directors passed a resolution to appoint Chairman H.T.Wang , as the Corporation’s CEO and became effective on July 1, 2020. (2) Rationality and necessity: To coordinate with the Corporation's operations and future development plans. (3) Corresponding measures: The adding of Independent Director will be completed before the deadline prescribed by the law.

3.Remuneration of Directors, Independent Directors, President, and Vice President

A.Remuneration of Directors and Independent Directors Unit: NT$ thousands / Thousand shares

										Ratio of total Remuneration (A+B+C+D) to Net	Ratio of total Remuneration (A+B+C+D) to Net
		Remuneration										Relevant Remuneration Received by Directors Who are Also Employees								Ratio of Total Compensation (A+B+C+D+E+F+G)
Titl	N	Base Compensation (A)		Severance Pay (B)		Directors Compensation( C)		Allowances(D)		Income(%)		Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Profit Sharing- Employee Bonus (G)				to Net Income(%)		Remuneration from ventures other than
e	ame	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH		Companies in the consolidated financial		OPTOTECH	Companies in the consolidated financial statements	subsidiaries or from the parent company
																		statements

																Cash	Stock	Cash	Stock

Chairman	H.T.Wang	7,380	7,380	0	0	27,913	27,913	1,561	1,571	6.41%	6.41%	20,415	20,415	219	219	5,400	0	5,400	0	10.93%	10.94%	14,919
Vice Chairman	Tsun-Chia Tai
Director	Tzu-Chun Lin
Director	Su-Chin Tai
Director	Nichia Taiwan Corp. Rep. of legal person: Ishigami Koji
Director	Nichia Taiwan Corp. Rep. of legal person: Sakamoto Takashi
Director	Inwood Information System Co.,Ltd. Rep. of legal person: Pin-Lun Wang
Director	Shun-Chih Chen
Director	Jung-Huan Lee
Director	Tsang-Der Ni
Director	Shin-Etso Opto Electronic Co.,Ltd Rep. of legal person: Yamada Masato
Managing Director & Independent Director	Kuo-Kuang Li	3,120	3,120	0	0	10,479	10,479	550	550	2.46%	2.46%	0	0	0	0	0	0	0	0	2.46%	2.46%	30
Independent Director	Kao-Ming Tsai
Independent Director	Pei-Chang Wang
Independent Director	Shih-Tung Ho
1. Please describe the policy, system, standard, and structure of remuneration to independent directors, and the correlation between duties, risk, and time input with the amount of remuneration：The Company's Independent Director Compensation Policy is formulated in accordance with the Company’s “Regulations for Performance Evaluation and Compensation of Board of Directors”. Performance evaluation is conducted annually based on the participation degree and contribution of each independent director to the company. Individual compensation and remuneration will be determined according to the evaluation results, then submitted to the Compensation Committee for review, and submitted to the board for discussion and final decision. 2. In addition to the above remuneration, director remuneration shall be disclosed as follows when received from companies included in the consolidated financial statements in the most recent year to compensate directors for their services,such as being independent contractors： None.

Note1 ： Jung-Huan Lee, Tsang-Der Ni, Shin-Etso Opto Electronic Co.,Ltd and Shih-Tung Ho were expiration of the term of office of the current director and Independent director Jun.16th,2020. Note2 ： Tsun-Chia Tai, Tzu-Chun Lin, Inwood Information System Co.,Ltd.and Kuo-Kuang Li elected as director and Independent Director on Jun.16th,2020. Note3 ： Inwood Information System Co.,Ltd. designate Pin-Lun Wang as representative of legal person director on Sep.30th,2020. Note4 ： Shun-Chih Chen resigned as director on Feb.20th,2021.

	Name of Director	Name of Director	Name of Director	Name of Director
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
Range of Remuneration		Companies in the consolidated financial		Companies in the consolidated
	OPTOTECH		OPTOTECH
		statements		financial statements

Less than NT$ 1,000,000	Inwood Information System Co.,Ltd.、 Ishigami Koji、Sakamoto Takashi、 Pin-Lun Wang、Yamada Masato	Inwood Information System Co.,Ltd.、 Ishigami Koji、Sakamoto Takashi、 Pin-Lun Wang、Yamada Masato	Inwood Information System Co.,Ltd.、 Ishigami Koji、Sakamoto Takashi、 Pin-Lun Wang、Yamada Masato	Inwood Information System Co.,Ltd.、 Ishigami Koji、Sakamoto Takashi、 Pin-Lun Wang、Yamada Masato
NT$1,000,000 ~ NT$2,000,000	Tzu-Chun Lin、Jung-Huan Lee、 Tsang-Der Ni、Shin-Etso Opto Electronic Co.,Ltd、Shih-TungHo	Tzu-Chun Lin、Jung-Huan Lee、 Tsang-Der Ni、Shin-Etso Opto Electronic Co.,Ltd、 Shih-TungHo	Tsang-Der Ni、Shin-Etso Opto Electronic Co.,Ltd、Shih-Tung Ho	Tsang-Der Ni、Shin-Etso Opto Electronic Co.,Ltd、Shih-Tung Ho
NT$ 2,000,000 ~ NT$3,500,000	Shun-Chih Chen、Su-Chin Tai、 Kao-MingTsai、Pei-ChangWang	Shun-Chih Chen、Su-Chin Tai、 Kao-MingTsai、Pei-ChangWang	Su-Chin Tai、Kao-Ming Tsai、 Pei-ChangWang	Su-Chin Tai、Kao-Ming Tsai、 Pei-ChangWang
NT$3,500,000 ~ NT$5,000,000	-	-	Jung-Huan Lee	Jung-Huan Lee
NT$5,000,000 ~ NT$10,000,000	Tsun-Chia Tai、Nichia Taiwan Corp.、 Kuo-Kuang Li	Tsun-Chia Tai、Nichia Taiwan Corp.、 Kuo-Kuang Li	Tzu-Chun Lin、Shun-Chih Chen、Nichia Taiwan Corp.、 Kuo-KuangLi	Tzu-Chun Lin、Shun-Chih Chen、Nichia Taiwan Corp.、 Kuo-KuangLi
NT$10,000,000 ~ NT$15,000,000	H.T.Wang	H.T.Wang	Tsun-Chia Tai、	Tsun-Chia Tai、
NT$15,000,000 ~ NT$30,000,000	-	-	H.T.Wang	H.T.Wang
NT$30,000,000 ~ NT$50,000,000	-	-	-	-
NT$50,000,000 ~ NT$100,000,000	-	-	-	-
Greater than or equal to NT$100,000,000	-	-	-	-
Total	18	18	18	18

B. Remuneration of the President and Vice Presidents

Unit: NT$ thousands / Thousand shares

													Ratio of total	Ratio of total	Remuneration from ventures other than subsidiaries or from the parent company
						Bonuses and
		Salary(A)		Severance Pay (B)				Employee Compensation (D)					compensation (A+B+C+D)
						Allowances (C)
													to net income(%)

		OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements	OPTOTECH	Companies in the consolidated financial statements			OPTOTECH	Companies in the consolidated financial statements		OPTOTECH	Companies in the consolidated financial statements
Title	Name

								Cash		Stock	Cash	Stock
Chief Executive Officer	H.T.Wang	17,319	17,319	385	385	10,779	10,779	11,200		0	11,200	0	6.90％	6.90％	8,670
Chief Strategy Officer	Tsun-Chia Tai
President	David Hwang
Senior Vice President	Tzu-Chun Lin
Vice President	Shun-Chih Chen
Vice President	Chang-Da Tsai
Vice President	Wen-TsungLai

							Name of President and VicePresidents
Range of Remuneration									Companies i				n the consolidated
					OPTOTECH
									financialstatements

Less than NT$1,000,000					-				-
NT$1,000,000 ~ NT$2,000,000					-				-
NT$2,000,000 ~ NT$3,500,000				Shun-Chih Chen、Wen-TsungLai					Shun-Chih Chen、Wen-TsungLai
NT$3,500,000 ~ NT$5,000,000				Tsun-Chia Tai					Tsun-Chia Tai
NT$5,000,000 ~ NT$10,000,000			H.T.Wang、David Hwang、Tzu-Chun Lin、Chang-Da Tsai						H.T.Wang、David Hwang、Tzu-Chun Lin、Chang-Da Tsai
NT$10,000,000 ~ NT$15,000,000			-						-
NT$15,000,000 ~ NT$30,000,000			-						-
NT$30,000,000 ~ NT$50,000,000			-						-
NT$50,000,000 ~ NT$100,000,000			-						-
Greater than or equal to NT$100,000,000			-						-
Total			7						7

Note1:Shun-Chih Chen retired Vice President on February 20th,2021. Note2:David Hwang acted as President on October 1st,2020.

Note3:Wen-Tsung Lai acted as Vice President on July 1st,2020 and transfer to President Office Special Assistant on May.6th,2021.

C. Employee Bonus to Executive Officers

					Unit: NT$ thousands	Unit: NT$ thousands
			Employee
				Employee		Ratio of Total
			Compensation
	Title	Name		Compensation	Total	Amount to Net
			- in Stock
				- in Cash		Income (%)
			(Fair Market Value)

Executive Officers	Chairman & Chief Executive Officer	H.T.Wang	0	13,500	13,500	2.35％
	Vice Chairman & Chief StrategyOfficer	Tsun-Chia Tai
	President & Chief of Operation	David Hwang
	Senior Vice President & Chief of Staff	Tzu-Chun Lin
	Vice President	Chang-Da Tsai
	Vice President	Wen-TsungLai
	Assistant Vice President	JefferyTai
	Head of Financing & Accounting & Chief Financial Officer	Yin-Rui Chen

D. Comparison of Remuneration for Directors, Supervisors, Presidents and Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents
A. The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to directors, supervisors, presidents and vice presidents of the Company, to the net income.

Item	Ratio of total remuneration to net income	Ratio of total remuneration to net income	Ratio of total remuneration to net income	Ratio of total remuneration to net income
	2020		2019
Title	OPTOTECH	Companies in the consolidated financial statements		Companies in the consolidated financial statements
			OPTOTECH

Director	8.87％	8.87％	6.35％	6.35％
President & Vice President	6.90％	6.90％	6.37％	6.37％

B. The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and the correlation with risk business performance.
a.The total remuneration of the Directors and Employees of OPTOTECH is handled in accordance with the related provisions of the Corporation’s Articles of Association. If profit is made, 10% to 15% of the current year’s profit will be allocated as the remuneration for employees, and no more than 5% of the profit will be allocated as the remuneration for the Directors. However, if the Corporation still has accumulated losses, the profit shall be used to make up for the losses. The above shall be passed through the resolution of the Board of Directors, and reported to the shareholders meeting.
b.The remuneration of the Directors of OPTOTECH is handled in accordance with the "Regulations for Board Performance Evaluation and Remuneration." Performance evaluation of each Director is conducted every year. The results of the performance evaluation, the involvement of each Director in the Corporation’s operations and the value of Directors’ contribution to the Corporation are used as the basis for determining the remuneration for the Directors. The remuneration shall be reviewed and approved by the Remuneration Committee and submitted to the Board of Directors for discussion.
c.The remuneration of the Managers of OPTOTECH is handled in accordance with the "Regulations for Manager Performance Evaluation and Remuneration." Evaluation on Managers’ operating performance, contribution and job value will be conducted. The evaluation results together with the performance of the Corporation and the market-based pay level will be used to determine the appropriate remuneration. The remuneration shall be reviewed and approved by the Remuneration Committee and submitted to the Board of Directors for approval prior to implementation.
d.The remuneration of employees includes basic salary, bonus and employee compensation, benefits, etc. The basic salary is determined based on the job value of each individual, with reference to the "Average Per Capita Monthly Expenditure/Household Disposable Income" announced by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan and the pay level of the industry in Taiwan. Bonuses and employee compensation are provided based on employee performance and contribution to the Corporation.

4.Implementation of Corporate Governance

(1) Board of Directors:

Our company re-elected 13th of board directors in the regular meeting of shareholders on June 16, 2020. The new directors will assume their posts on the day of re-election. (The term is from June 16, 2020 to June 15, 2023)

A total of 3 meetings of 12th board of directors were held in 2020. The attendance of director were as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate(%)
Chairman	H.T.Wang	3	0	100％
Director	Jung-Huan Lee	3	0	100％
Director	Shun-Chih Chen	3	0	100％
Director	Tsang-Der Ni	3	0	100％
Director	Su-Chin Tai	3	0	100％
Director	Nichia Taiwan Corp. Rep. of legalperson: Ishigami Koji	3	0	100％
Director	Nichia Taiwan Corp. Rep. of legalperson:Sakamoto Takashi	3	0	100％
Director	Shin-Etso Opto Electronic Co.,Ltd Rep. of legalperson:Yamada Masato	0	2	0.00％
Independent Director	Kao-Ming Tsai	3	0	100％
Independent Director	Pei-Chang Wang	3	0	100％
Independent Director	Shih-Tung Ho	3	0	100％
Other mentionable items: 1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: None. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: (1) The 19th meeting of the twelve term Board of Directors on March 19, 2020: It was proposed to apply for credit line from Taiwan Cooperative Bank. The director - Mrs. Su-Chin Tai did not attend the discussion in accordance with the law due to the conflict of interest. (2) The 21th meeting of the twelve term Board of Directors on May 5, 2020: It was proposed to dispose of the shares of Optics Innovation Vision Tech. Co., Ltd. The director - MR. Shih-Tung Ho did not attend the discussion in accordance with the law due to the conflict of interest. 3. TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, scope of evaluation, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors: Implementation Status of Board Evaluations Evaluation cycle Evaluation Period Scope of evaluation Evaluation method Evaluation items Once a year January 1 – June 15, 2020 Board of Directors Self-assessment of the Board (1) Participation in the operation of the company. (2) Improvement of the quality of the board of directors’ decision making. (3) Composition and structure of the board of directors. (4) Election and continuing education of the directors. (5) Internal control. Individual board members Self-assessment of the Board members (1) Familiarity with the goals and missions of the company. (2) Awareness of the duties of a director. (3) Participation in the operation of the company. (4) Management of internal relationships and communication. (5) The director’s professionalism and continuing education. (6) Internal control.

4.Measures taken to strengthen the functionality of the board:
(1) To strengthen corporate governance, OPTOTECH has laid down the “Rules of Procedure for Board of Directors Meeting” and “Method for Performance Evaluation and Remuneration of Board of Directors”, and post the status of directors’ attendance of board meetings on the Market Observation Post System.
(2) To help directors enhance their corporate governance related abilities, OPTOTECH from time to time to provide the course information compliance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors” for directors and supervisors.
(3) OPTOTECH has valued its shareholders’ equity and enhanced its corporate information transparency. The important resolutions made in each board meeting have all been posted on OPTOTECH’s coporate website.
(4) OPTOTECH has instituted the “Procedures for Handling Material Inside Information”, and informed its directors, supervisors, managers and employees across the board of the procedure. At the same time, the procedure has also been posted on OPTOTECH’s coporate website at http://www.opto.com.tw for reference.
(5) Our company set up the “Audit Committee” and “Remuneration Committee” to help board of directors to fulfill its responsibility of supervision. These two committees are completely formed by three independent directors.

A total of 6 meetings of 13th board of directors were held in 2020. The attendance of director were as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate(%)
Chairman	H.T.Wang	6	0	100％
Vice Chairman	Tsun-Chia Tai	6	0	100％
Director	Shun-Chih Chen	6	0	100％
Director	Tzu-Chun Lin	6	0	100％
Director	Su-Chin Tai	6	0	100％
Director	Nichia Taiwan Corp. Rep. of legalperson: Ishigami Koji	6	0	100％
Director	Nichia Taiwan Corp. Rep. of legalperson:Sakamoto Takashi	5	1	83.33％
Director	Inwood Information System Co.,Ltd. Rep. of legalperson:Pin-Lun Wang	0	0	0.00％
Managing Directo & Independent Director	Kao-Ming Tsai	6	0	100％
Independent Director	Kuo-Kuang Li	6	0	100％
Independent Director	Pei-Chang Wang	6	0	100％
Other mentionable items: 1. If any of the following circumstances occur,, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: None. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: (1) The 1st meeting of the thirteenth term Board of Directors on July 1, 2020: For the proposal to appoint members of the Remuneration Committee of OPTOTECH. Independent Director Kao-Ming Tsai and Independent Director Pei-Chang Wang recused themselves to avoid conflicts of interest, while the remaining Directors attended the meeting agreed to pass the proposal after be consulted by the Chairman. (2) The 2nd meeting of the thirteenth term Board of Directors on August 6, 2020: For the proposal of the President position of OPTOTECH, Chairman H.T.Wang recused himself to avoid conflicts of interest, making Vice Chairman Tsun-Chia Tai as the acting Chairman. The proposal was voted by a show of hands by the remaining Directors attended the meeting and they agreed to pass the proposal after being consulted by the acting Chairman. (3) The 2nd meeting of the thirteenth term Board of Directors on August 6, 2020: For the remuneration proposal of the Managing Directors of OPTOTECH, Chairman H.T.Wang, Vice Chairman Tsun-Chia Tai and Independent Director Kuo-Kuang Li recused themselves to avoid conflicts of interest. Since Director Su-Chin Tai is the second-degree relative of Vice Chairman Tsun-Chia Tai,she also recused herself to avoid conflicts of interest.

(a) Remuneration of Managing Director H.T.Wang: Chairman H.T.Wang recused himself to avoid conflicts of interest, making Vice Chairman Tsun-Chia Tai as the acting Chairman. The proposal was voted by a show of hands by the remaining Directors attended the meeting, and they agreed to pass the proposal after being consulted by the acting Chairman.
(b) Remuneration of Managing Director Tsun-Chia Tai: Vice Chairman Tsun-Chia Tai and Director Su-Chin Tai recused themselves to avoid conflicts of interest. The proposal was voted by a show of hands by the remaining Directors attended the meeting and they agreed to pass the proposal after being consulted by the Chairman.
(c) Remuneration of Managing Director Kuo-Kuang Li: Independent Director Kuo-Kuang Li recused himself to avoid conflicts of interest.
(4) The 2nd meeting of the thirteenth term Board of Directors on August 6, 2020: For the proposal regarding the remuneration and position of the CEO (Chief Executive Officer) and CSO (Chief Strategy Officer) of OPTOTECH, Chairman H.T.Wang and Vice Chairman Tsun-Chia Tai recused themselves to avoid conflicts of interest. Since Director Su-Chin Tai is the second-degree relative of Vice Chairman Tsun-Chia Tai, she also recused herself to avoid conflicts of interest.
(a) Position and remuneration of CEO: Chairman H.T.Wang recused himself to avoid conflicts of interest, making Vice Chairman Tsun-Chia Tai as the acting Chairman. The proposal was voted by a show of hands by the remaining Directors attended the meeting and they agreed to pass the proposal after being consulted by the acting Chairman.
(b) Position and remuneration of CSO: Vice Chairman Tsun-Chia Tai and Director Su-Chin Tai recused themselves to avoid conflicts of interest. The proposal was voted by a show of hands by the remaining Directors attended the meeting and they agreed to pass the proposal after being consulted by the Chairman.
(5) The 2nd meeting of the thirteenth term Board of Directors on August 6, 2020: For the remuneration proposal of the Managers of OPTOTECH, Director and Manager Tzu-Chun Lin recused herself to avoid conflicts of interest. The proposal was voted by a show of hands by the remaining Directors attended the meeting and they agreed to pass the proposal after being consulted by the Chairman.
(6) The 3rd meeting of the thirteenth term Board of Directors on September 10, 2020: For the investment structure adjustment proposal of OPTOTECH, Director Shun-Chih Chen recused herself to avoid conflicts of interest. The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.
(7) The 4th meeting of the thirteenth term Board of Directors on November 6, 2020: It was proposed to add the "Regulations for the Employee Welfare Trust Plan and Stockholding Committee of OPTOTECH", the "Regulations for the Implementation of Employee Stock Ownership Trust of OPTOTECH", and the amount of incentive allocated for trust company shares held by Managers. Chairman H.T.Wang, Vice Chairman Tsun-Chia Tai, Director Tzu-Chun Lin, Director and Manager Shun-Chih Chen recused themselves to avoid conflicts of interest, making Independent Director Kuo-Kuang Li as the acting Chairman. The proposal was passed by the remaining Directors attended the meeting after the acting Chairman consulted the attending Directors.
(8) The 6th meeting of the thirteenth term Board of Directors on December 18, 2020: 2019 Remuneration Allocation for Directors of OPTOTECH: (This proposal is about the allocation of remuneration for each individual Director of OPTOTECH. Chairman H.T.Wang, Director Shun-Chih Chen, Director Ishigami Koji, Director Sakamoto Takashi, Director Su-Chin Tai, Independent Director Kao-Ming Tsai and Independent Director Pei-Chang Wang have a stake in this proposal. When reviewing and discussing the remuneration of individual Directors, Directors who have a stake in the discussion are requested to leave the meeting.)
(a) Remuneration of Chairman H.T.Wang: Chairman H.T.Wang recused himself to avoid conflicts of interest, making Managing Director Kuo-Kuang Li as the acting Chairman. The proposal was passed by the remaining Directors attended the meeting after the acting Chairman consulted the attending Directors.
(b) Remuneration of Director Jung-Huan Lee: The proposal was passed by all the Directors attended the meeting after the Chairman consulted the attending Directors.
(c) Remuneration of Director Shun-Chih Chen: Director Shun-Chih Chen recused himself to avoid conflicts of interest. The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.
(d) Remuneration of Director Tsang-Der Ni: The proposal was passed by all the Directors attended the meeting after the Chairman consulted the attending Directors.
(e) Remuneration of Director Su-Chin Tai: Director Su-Chin Tai recused herself to avoid conflicts of interest. The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.
(f) Remuneration of Director Ishigami Koji and Director Sakamoto Takashi: Director Ishigami Koji and Director Sakamoto Takashi recused themselves to avoid conflicts of interest. The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.
(g) Remuneration of Director Shin-Etso Opto Electronic Co.,Ltd: The proposal was passed by all the Directors attended the meeting after the Chairman consulted the attending Directors.
(h) Remuneration of Director Kao-Ming Tsai: Director Kao-Ming Tsai recused himself to avoid conflicts of interest.

  - The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.

(i) Remuneration of Director Shih-Tung Ho: The proposal was passed by all the Directors attended the meeting after the Chairman consulted the attending Directors.
(j) Remuneration of Director Pei-Chang Wang: Director Pei-Chang Wang recused himself to avoid conflicts of interest. The proposal was passed by the remaining Directors attended the meeting after the Chairman consulted the attending Directors.
(9) The 6th meeting of the thirteenth term Board of Directors on December 18, 2020: For the remuneration allocation of the Managers of OPTOTECH, Chairman H.T.Wang, Director Tzu-Chun Lin, Director and Manager Shun-Chih Chen recused themselves to avoid conflicts of interest, making Managing Director Kuo-Kuang Li as the acting Chairman. The proposal was passed by the remaining Directors attended the meeting after the acting Chairman consulted the attending Directors.
3.TWSE/TPEx-listed companies are required to disclose the evaluation cycle and period, scope of evaluation, evaluation method, and evaluation items of the self (or peer) evaluations conducted by the Board of Directors:

		Implementation Status of Board Evaluations	Implementation Status of Board Evaluations	Implementation Status of Board Evaluations
Evaluation cycle	Evaluation Period	Scope of evaluation	Evaluation method	Evaluation items
Once a year	June 16 – December 31, 2020	Board of Directors	Self-assessment of the Board	(1) Participation in the operation of the company. (2) Improvement of the quality of the board of directors’ decision making. (3) Composition and structure of the board of directors. (4) Election and continuing education of the directors. (5) Internal control.
		Individual board members	Self-assessment of the Board members	(1) Familiarity with the goals and missions of the company. (2) Awareness of the duties of a director. (3) Participation in the operation of the company. (4) Management of internal relationships and communication. (5) The director’s professionalism and continuing education. (6) Internal control.
		Remuneratio n Committee	Self-assessment of the Remuneration Committee members	(1) Participation in the operation of the company. (2) Awareness of the duties of the functional committee. (3) Improvement of quality of decisions made by the functional committee. (4) Makeup of the functional committee and election of its members.

4.Measures taken to strengthen the functionality of the board:
(1) To strengthen corporate governance, OPTOTECH has laid down the “Rules of Procedure for Board of Directors Meeting” and “Method for Performance Evaluation and Remuneration of Board of Directors”, and post the status of directors’ attendance of board meetings on the Market Observation Post System.
(2) To help directors enhance their corporate governance related abilities, OPTOTECH from time to time to provide the course information compliance with the “Directions for the Implementation of Continuing Education for Directors and Supervisors” for directors and supervisors.
(3) OPTOTECH has valued its shareholders’ equity and enhanced its corporate information transparency. The important resolutions made in each board meeting have all been posted on OPTOTECH’s coporate website.
(4) OPTOTECH has instituted the “Procedures for Handling Material Inside Information”, and informed its directors, supervisors, managers and employees across the board of the procedure. At the same time, the procedure has also been posted on OPTOTECH’s coporate website at http://www.opto.com.tw for reference.
(5) Our company set up the “Audit Committee” and “Remuneration Committee” to help board of directors to fulfill its responsibility of supervision. These two committees are completely formed by three independent directors.

(2) Audit Committee:

Former term of members: From June 21, 2017 to June 16, 2020. Our company re-elected the board directors in the regular meeting of shareholders on June 16, 2020.

A total of 3 meetings of 1st Audit Committee were held in 2020. The attendance of director were as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate (%)
Independent Director	Kao-Ming Tsai	3	0	100％
Independent Director	Pei-Chang Wang	3	0	100％
Independent Director	Shih-Tung Ho	3	0	100％
Other mentionable items: 1. Where the Audit Committee’s operation meets any of the following circumstances, please clearly state the directors’ meeting date, term, contents of motions and resolution of the Audit Committee, and the Company’s handling of the Audit Committee’s opinions. (1) Matters referred to in Article 14-5 of the Securities and Exchange Act: Date/Meeting Resolution the Company’s (the board of directors’) handling of Audit Committee’s opinion 2020/03/19 The 18thmeeting of the first term Preparation of financial report and operation report of our company in 2019. None. Preparation of the distribution of 2019 retained earnings. Preparation of“Internal Control System”in 2019. Resolved to revise the“Internal Control System”. CS Bright Corporation, a subsidiary company of OPTOTECH, applied to E.Sun Commercial Bank for the endorsement guarantee of the credit line Applying for credit line from Taiwan Cooperative Bank The derivative financial product trading business. 2020/04/28 The 19thmeeting of the first term Preparation of 2020 Q1 Financial Report. The derivative financialproduct tradingbusiness. 2020/05/05 The 20thmeeting of the first term Issuance of common stock/preferred stock for cash Disposal of the shares of Optics Innovation Vision Tech. Co., Ltd. (2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None. 2. If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: (1) The 20th meeting of the first term Audit Committee on May 5, 2020: It was proposed to dispose of the shares of Optics Innovation Vision Tech. Co., Ltd. The director - MR. Shih-Tung Ho did not attend the discussion in accordance with the law due to the conflict of interest. 3. Communications between the independent directors, the Company's Chief Internal Auditor and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.):Our company set up the Audit Committee on June 21, 2017. The Company’s internal audit officer would report the audit affairs to independent directors at the Audit Committee meeting periodically, and communicate with the committee members about the audit results and status of his follow-up report.

Current term of members: Our company re-elected the board directors in the regular meeting of shareholders on June 16,2020.The term is from June 16, 2020 to June 15, 2023.

A total of 6 meetings of 2nd Audit Committee were held in 2020. The attendance of director were as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate (%)
Independent Director	Kao-Ming Tsai	6	0	100％
Independent Director	Kuo-Kuang Li	6	0	100％
Independent Director	Pei-Chang Wang	6	0	100％
Other mentionable items: 1. Where the Audit Committee’s operation meets any of the following circumstances, please clearly state the directors’ meeting date, term, contents of motions and resolution of the Audit Committee, and the Company’s handling of the Audit Committee’s opinions.

(1) Matters referred to in	Article 14-5 of the Securities and Exchange Act:
Date/Meeting	Resolution	the Company’s (the board of directors’) handling of Audit Committee’s opinion
2020/08/06 The 1stmeeting of the second term	Evaluation on the transfer of funds to loans after a certain period based on the amendment of the "Questions and Answers on the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies" issued by the Financial Supervisory Commission on May 27, 2020	None.
	The derivative financial product trading business.
	Appointment of OPTOTECH’s audit supervisors
2020/09/10 The 2ndmeeting of the second term	OPTOTECH's establishment of investment company
	Adjustment of OPTOTECH's investment structure
	Formulating OPTOTECH's "Guidelines on Charity Donation and Appropriation"(donation to public interest groups)
2020/11/06 The 3rdmeeting of the second term	Revising OPTOTECH’s " Guidelines on Charity Donation and Appropriation"(donation to public interest groups)
	OPTOTECH's acquisition of real estate
	Buying back OPTOTECH’s common stock and transferring it to employees.
	Evaluation on the transfer of funds to loans after a certain period based on the "Questions and Answers on the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies"
	The derivative financial product trading business.
2020/12/18 The 5thmeeting of the second term	Amending OPTOTECH’s 2019 surplus appropriation based on the resolutions made during the shareholders'meeting
	2020 audit plan of our company.
	Changing certified public accountant
	Opto plus Technology Co.Ltd., a subsidiary company of OPTOTECH, applied to “Fubon Bank (China) Co., Ltd.” for the endorsement guarantee of the credit line
	The derivative financial product trading business.

(2) Other matters which were not approved by the Audit Committee but were approved by two-thirds or more of all directors: None.
2.If there are independent directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified:
3.Communications between the independent directors, the Company's Chief Internal Auditor and CPAs (e.g. the material items, methods and results of audits of corporate finance or operations, etc.):Our company set up the Audit Committee on June 21, 2017. The Company’s internal audit officer would report the audit affairs to independent directors at the Audit Committee meeting periodically, and communicate with the committee members about the audit results and status of his follow-up report.

(3) Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

				Deviations from “the
	Implementation Status
				Corporate Governance
Evaluation Item	Yes	No		Best-Practice Principles for
			Abstract Illustration	TWSE/TPEx Listed
				Companies” and Reasons
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	V		The company has formulated the "Corporate Governance Best Practice Principles", which provides relevant regulations on protecting the rights and interests of shareholders, strengthening the functions of the board of directors, respecting the rights and interests of stakeholders, and improving information transparency, etc. It is available on the company’s website for check and download.	None
2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders trading with undisclosed information?	V V V V		(1) In addition to commissioning a shareholder services agent to handle relevant services, the Company has also put in place spokesman and deputy spokesman to deal with issues related to shareholders, and when necessary commissions legal counsel to provide assistance. (2) The Company regularly reports the changes in directors and managers of equity transaction based on the list of major shareholders and ultimate controllers of the Company complied by the register of shareholders. (3) OPTOTCH has instituted regulations to control and manage the trading, endorsement guarantee and capital loans (to others) between OPTOTECH and the related parties of our affiliated enterprises. In addition, according to the “Regulations Governing Establishment of Internal Control Systems by Public Companies” stipulated by Financial Supervisory Committee, our has laid down the “Rules Governing for Subsidiary” to carry out the subsidiary risk control and management mechanism. (4) The Company has established “Rules of Procedure for the Handling of Major Internal Information" to ensure that the consistency and accuracy of company-published information, to avoid undue leakage of information, and to prevent the use of undisclosed insider information to trade securities on the market.	None
3. Composition and Responsibilities of the Board of Directors (1) Does the Board develop and implement a diversified policy for the composition of its members? (2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? (3) Does the company establish a standard to measure the performance of the Board and implement it annually, and are performance evaluation results submitted to the Board of Directors and referenced when determining the remuneration of individual directors and nominations for reelection?	V V	V	(1) The Board of Directors of the Company is formed with members from different professional backgrounds and includes foreign national members, providing objective and professional assessments of the decisions of the board. There are two female director and two Japanese directors among the members of the 13th of the board of directors. (2) Our company has formed a salary remuneration committee and an audit committee by law in 2017. Other committees with various functions are expected to be formed in coordination with the actual company operation. (3) Our company formulated the “Board of Directors Performance Review and Remuneration Payment Method” to carry out annual performance review in 2020. The result of the performance review will serve as the reference for remuneration payment and selection of directors. In 2020 the Stock Affairs Office served as the unit for implementation of review, and every director was reviewed by questionnaire. The result of review of the board of directors in 2020 indicated good operational performance. Self-assessment of the Board will be evaluated from the five major aspects of (1) Participation in the operation of the company, (2) Improvement of the quality of the board of directors’ decision making, (3) Composition and structure of the board of directors, (4) Election and continuing education of the directors, and (5) internal control. Self-assessment of the Board members will be evaluated from the six major aspects of (1) Familiarity with the goals and missions of the company, (2) Awareness of the duties of a director, (3) Participation in the operation of the company, (4) Management of internal relationships and communication, (5) The director’s professionalism and continuing education and (6) Internal control. Performance evaluation of the functional committees will be evaluated from the four major	None

				Deviations from “the
	Implementation Status
				Corporate Governance
Evaluation Item	Yes	No		Best-Practice Principles for
			Abstract Illustration	TWSE/TPEx Listed
				Companies” and Reasons
(4) Does the company regularly evaluate the independence of CPAs?	V		aspects of (1) Participation in the operation of the company,(2) Awareness of the duties of the functional committee,(3) Improvement of quality of decisions made by the functional committee and (4) Makeup of the functional committee and election of its members. The 2020 evaluation results: (1) Board of Directors internal self-evaluation: The self-evaluation results of all Directors are good. The Directors attend to their own duties. (2) Self-evaluation of Directors: The overall Board of Directors is operating well. (3) Performance evaluation of the functional committees: In 2020, the Remuneration Committee was selected to carry out the evaluation. The Committee strictly and carefully reviewed various proposals and provided opinions to the Board of Directors when required. The Committee is operating well. The self-evaluation results of all directors are good. On the whole, the Board is actively participating in the company’s operations. The board members enhance their professional competencies through regular training and offer appropriate opinions on the company's operations, and thus the overall operation of the Board is considered to be good. The company will determine the directors' 2020 remuneration by reference to the results of this evaluation. (4) Each year, the Company's Accounting Department review the independence of the certified public accountant to obtain the Statement of Accountant Independence. Checks for any joint ventures or other shared interests between the accountants and the Company or its affiliated businesses, and examines whether the accountants hold posts in the Company and its affiliated enterprises, as well as if the accountants have violated The "Code of Ethics Gazette No. 10”.CPA has also provided the governance unit of our company with independent statement and communication of relevant matters in accordance with regulations. The result of the above assessment is reported to the Company's Board of Directors.
4. Does the company appoint a suitable number of competent personnel and a supervisor responsible for corporate governance matters (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with compliance, handling work related to meetings of the board of directors and the shareholders' meetings, and producing minutes of board meetings and shareholders'meetings)?	V		The Company has been set up corporate governance officer on May 6,2021.It is mainly responsible for shareholder meeting, board meeting, providing documents required by board directors, company registrations, and laws and regulations of securities control.	None
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?	V		The Company has an external website for stakeholders with correspondence windows and communication channels for the various types of stakeholders to promptly and appropriately address stakeholder concerns.	None
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?	V		The Company has appointed Taishin International Bank as its Shareholder Service Agency, specializingin handlingmatters related to shareholders' meetings.	None
7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a	V V		(1) As regulated, OPTOTECH has periodically or non-periodically reported a variety of its financial and business information on the website of the Market Observation Post System. At the same time, it has also posted the above mentioned information on its own website at http://www.opto.com.tw for its shareholders and the public to refer to. (2) Our has designated exclusive personnel to collect and disclose its information, and followed statutory regulations to fulfill the spokesperson system. Also, by going to the website of the Market Observation Post System, investors can obtain the information regarding our finance,	None

				Deviations from “the
	Implementation Status
				Corporate Governance
Evaluation Item	Yes	No		Best-Practice Principles for
			Abstract Illustration	TWSE/TPEx Listed
				Companies” and Reasons
spokesman system, webcasting investor conferences)? (3) Does the company announce and report annual financial statements within two months after the end of each fiscal year, and announce and report Q1, Q2, and Q3 financial statements, as well as monthly operation results, before the prescribed time limit?	V		business and corporate governance. (3) Although the company has not published and filed the annual financial reports within two months after the year-end, it has finished publishing and filing all the monthly and the first, second and third quarterly reports by the regulatory deadlines. The company shall publish and file the annual financial reports as soon as possible in the future based on the available human resource and operationalplanning.
8. Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?	V		(1) Status of employee rights and employee wellness: OPTOTECH has been based on the spirit of faith, innovation and pragmatism to give sustainable operation, take good care of its employees and clients and take up its social responsibility. At the same time, it has adopted the following measures to protect its employees’ rights and interests and care for its employees. A. Based on the Gender Equality Act, our employees are eligible to request for the baby nursing leave, baby feeding time, maternity leave and childbirth leave. B. OPTOTECH has taken out labor and health insurance as well as medical insurance and provided regular physical examinations at no charge for its employees. C. OPTOTECH has established the employee welfare committee to arrange employee friendship and take care of a variety of employee welfare related matters. D. OPTOTECH has contributed employee pensions by law. E. OPTOTECH has provided on-the-job training for its employees. F. OPTOTECH has taken sex harassment,Rules Governing the Appeal and Punishment of Preventive Measures for Workplace Unlawful Infringement and Unreasonable Management. G. Stipulate personal information protection and management regulations. (2) Investor relations, supplier relations and rights of stakeholders: OPTOTECH has designated exclusive personnel to handle investor’s recommendations or problems, and has good financial and business relationships with its suppliers and rights of stakeholders, for which it hopes to generate a win-win benefit based on the equal and reciprocal principle. (3) Execution of customer policy: Our company has maintained smooth communication channels with our customers, thus the execution is in good shape. (4) Directors’and supervisors’training records: Title Name Course Trainin ghours Chairman H.T.Wang - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Disposal of China’s real estate equity transaction risks and case sharing (Part 1) - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 Director Tsun-Chia Tai - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - 2020 Presentation on theprevention of insider trading 3 3 3	None

				Deviations from “the
			Implementation Status
				Corporate Governance
Evaluation Item	Yes	No		Best-Practice Principles for
			Abstract Illustration	TWSE/TPEx Listed
				Companies” and Reasons
			and insider equity trading. - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 Director Shun-Chih Chen - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 Director Tzu-Chun Lin - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 Director Su-Chin Tai - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 Director Ishigami Koji - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - 2020 Presentation on the prevention of insider trading and insider equity trading. - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 3 Director Sakamoto Takashi - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3

					Deviations from “the
				Implementation Status
					Corporate Governance
Evaluation Item	Yes	No			Best-Practice Principles for
				Abstract Illustration	TWSE/TPEx Listed
					Companies” and Reasons
			Independent Director Kao-Ming Tsai - Finance and taxation key issues in 2020. - The essentials of the Securities and Exchange Act that Directors should understand and the analysis of recent cases. - Corporate operation and public opinion & news crisis management strategies. - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - Case analysis of enterprise crisis and image management. - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 3 3 3 3 Independent Director Kuo-Kuang Li - Employee welfare trust for stabilizing enterprise management policy (Part 1). - Employee welfare trust for stabilizing enterprise management policy (Part 2). - 2020 Presentation on the prevention of insider trading and insider equity trading. - Disposal of China’s real estate equity transaction risks and case sharing (Part 1). - Disposal of China’s real estate equity transaction risks and case sharing (Part 2). 3 3 3 3 3 Independent Director Pei-Chang Wang - Employee welfare trust for stabilizing enterprise management policy (Part 1) - Employee welfare trust for stabilizing enterprise management policy (Part 2) - Disposal of China’s real estate equity transaction risks and case sharing (Part 1) - Disposal of China’s real estate equity transaction risks and case sharing (Part 2) 3 3 3 3 (5) The situation of liability insurance purchased by our company for board directors and supervisors: Our company purchases liability insurance for our directors of the board every year. The total amount of insurance in 2020 reached USD 13,000,000.
9. Please specify the improvement based on the result of company governance evaluation of the latest announced year by The TWSE's Corporate Governance Center, and the measures of prioritized enhancement for those which have yet to be improved. (1) Whether the Corporation submits the English version of the proceedings and supplementary materials 30 days before the shareholders’ meeting: OPTOTECH will submit the English version of the proceedings and supplementary materials in accordance with the applicable laws and regulations starting from 2021. (2) Whether the Corporation submits the English version of the annual report 7 days before the shareholders’ meeting: OPTOTECH will submit the English version of the annual report in accordance with the applicable laws and regulations starting from 2021. (3) Whether the Corporation has assigned a corporate governance supervisor to be responsible for corporate governance-related matters, and explained his/her duties and training status on the Corporation's website and in the annual report: OPTOTECH will assign a corporate governance supervisor in 2021.

(4) Composition, Responsibilities and Operations of the Remuneration Committee:

A.Information of the remuneration committee member

	Criteria	Meets One of the Following Professional	Meets One of the Following Professional	Meets One of the Following Professional
		Qualification Requirements, Together with at			Independence Criteria (Note)
		Least Five Years’ Work Experience
		An instructor or	A judge, public	Has work
		higher position	prosecutor,	experience in
															Number of
		in a department	attorney,	the areas of
															Other Public
		of commerce,	Certified Public	commerce,
															Companies in
		law, finance,	Accountant, or	law, finance,
															Which the
		accounting, or	other professional	or accounting,
															Individual is
Title		other academic	or technical	or otherwise
															Concurrently
		department	specialist who has	necessary for
					1	2	3	4	5	6	7	8	9	10	Serving as an
		related to the	passed a national	the business of
															Remuneration
		business needs	examination and	the Company
															Committee
		of the Company	been awarded a
															Member
		in a public or	certificate in a

	Name	private junior	profession
		college, college	necessary for the
		or university	business of the
			Company
Independe nt Director	Kao-Ming Tsai														1
Independe nt Director	Pei-Chang Wang														0
Committee Member	Kun-Chien Huang														0

Note: Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the company or any of its affiliates. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of a managerial officer under subparagraph 1 or any of the persons in the preceding two subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds five percent or more of the total number of issued shares of the company, or that ranks among the top five in shareholdings, or that designates its representative to serve as a director or supervisor of the company under Article 27, paragraph 1 or 2 of the Company Act. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
If a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: not a director, supervisor, or employee of that other company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
If the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: not a director (or governor), supervisor, or employee of that other company or institution. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.
Not a director, supervisor, officer, or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business relationship with the company. Not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent, if the specified company or institution holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
Not been a person of any conditions defined in Article 30 of the Company Law.

B. Attendance of Members at Remuneration Committee Meetings
(a) There are 3 members in the Remuneration Committee.
(b) Current term of members: Our company re-elected the board directors in the regular meeting of shareholders on June 16,2020 .The term is from June 21, 2017 to June 16, 2020. A total of 1 Remuneration Committee meetings were held in 2020. The Remuneration Committee is formed by three independent directors. The attendance record of the Remuneration Committee members was as follows:

Title			By Proxy	Attendance Rate (%)
	Name	Attendance in P
		erson
Convener	Kao-Ming Tsai	1	0	100%
Committee Member	Pei-Chang Wang	1	0	100%
Committee Member	Shih-Tung Ho	1	0	100%
Other mentionable items: 1. If the Board of Directors shall not accept or revise the suggestions proposed by the remuneration committee, the dates of meetings, sessions, contents of motions, all independents’ opinion and the Company’s response to the remuneration committee’ opinion should be specified(i.e., the remuneration passed by the Board of Directors is better than the remuneration suggested by the remuneration committee, reasoning for the deviation shall be stated.): None. 2. If the committee member is in opposition or reservation the suggestions proposed by the remuneration committee and he/she has record or written statement, information such as remuneration committee date, committee number, meeting content, suggestions of all members and how these suggestions were handled shall be clearly stated: None. 3. 2020 Mainpoints of discussion bythe Remuneration Committee: Date /Meeting Resolution the Company’s (the board of directors’) handling of Remunneration Committee’s opinion 2020/03/19 The 11nd meeting of the third term Preparation of remuneration for board directors and supervisors of our company in 2019. None.

(c) Current term of members: Our company re-elected the board directors in the regular meeting of shareholders on June 16,2020 .The term is from July 1, 2020 to June 15, 2023. A total of 4 Remuneration Committee meetings were held in 2020. The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate (%)
Convener	Kao-Ming Tsai	4	0	100%
Committee Member	Pei-Chang Wang	4	0	100%
Committee Member	Kun-Chien Huang	3	1	75%
Other mentionable items: 1. If the Board of Directors shall not accept or revise the suggestions proposed by the remuneration committee, the dates of meetings, sessions, contents of motions, all independents’ opinion and the Company’s response to the remuneration committee’ opinion should be specified(i.e., the remuneration passed by the Board of Directors is better than the remuneration suggested by the remuneration committee, reasoning for the deviation shall be stated.): None. 2. If the committee member is in opposition or reservation the suggestions proposed by the remuneration committee and he/she has record or written statement, information such as remuneration committee date, committee number, meeting content, suggestions of all members and how these suggestions were handled shall be clearly stated: None.

3. 2020 Mainpoints of discussion bythe Remuneration Committee: Date /Meeting Resolution 2020/08/06 The 1st meeting of the fourth term Resolved to revise the “Method for Performance Evaluation and Remuneration of Board of Directors”. Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”. The remuneration proposal for the Managing Directors of OPTOTECH. The position and remuneration proposal for the CEO and CSO of OPTOTECH. The remuneration proposal for the Managers of OPTOTECH. 2020/09/10 The 2nd meeting of the fourth term Formulating OPTOTECH's "Regulations for Employee Remuneration, Compensation and Incentive Allocation (employee stock ownership trust, employee subscription vouchers issuance and stock purchase plan)". Carrying out OPTOTECH's employee welfare trust business. The position and salary of the President of the Corporation. 2020/11/06 The 3rd meeting of the fourth term Adding the "Regulations for the Employee Welfare Trust Plan and Stockholding Committee of OPTOTECH", the "Regulations for the Implementation of Employee Stock Ownership Trust of OPTOTECH", and the amount of incentive allocated for trust company shares held by Managers. 2020/12/18 The 4th meeting of the fourth term Resolved the allocation plans forboard directors and supervisorsofourcompanyin 2018. Resolved the allocation plans for Managers bonuses and remuneration foremployees ofourcompany. Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”. The remuneration proposal for the Managers of OPTOTECH. Promotionand changes ofOPTOTECH’sManagers.	3. 2020 Mainpoints of discussion bythe Remuneration Committee: Date /Meeting Resolution 2020/08/06 The 1st meeting of the fourth term Resolved to revise the “Method for Performance Evaluation and Remuneration of Board of Directors”. Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”. The remuneration proposal for the Managing Directors of OPTOTECH. The position and remuneration proposal for the CEO and CSO of OPTOTECH. The remuneration proposal for the Managers of OPTOTECH. 2020/09/10 The 2nd meeting of the fourth term Formulating OPTOTECH's "Regulations for Employee Remuneration, Compensation and Incentive Allocation (employee stock ownership trust, employee subscription vouchers issuance and stock purchase plan)". Carrying out OPTOTECH's employee welfare trust business. The position and salary of the President of the Corporation. 2020/11/06 The 3rd meeting of the fourth term Adding the "Regulations for the Employee Welfare Trust Plan and Stockholding Committee of OPTOTECH", the "Regulations for the Implementation of Employee Stock Ownership Trust of OPTOTECH", and the amount of incentive allocated for trust company shares held by Managers. 2020/12/18 The 4th meeting of the fourth term Resolved the allocation plans forboard directors and supervisorsofourcompanyin 2018. Resolved the allocation plans for Managers bonuses and remuneration foremployees ofourcompany. Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”. The remuneration proposal for the Managers of OPTOTECH. Promotionand changes ofOPTOTECH’sManagers.	the Company’s (the board of directors’) handling of Remunneration Committee’s opinion None.
Date /Meeting	Resolution	the Company’s (the board of directors’) handling of Remunneration Committee’s opinion
2020/08/06 The 1st meeting of the fourth term	Resolved to revise the “Method for Performance Evaluation and Remuneration of Board of Directors”.	None.
	Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”.
	The remuneration proposal for the Managing Directors of OPTOTECH.
	The position and remuneration proposal for the CEO and CSO of OPTOTECH.
	The remuneration proposal for the Managers of OPTOTECH.
2020/09/10 The 2nd meeting of the fourth term	Formulating OPTOTECH's "Regulations for Employee Remuneration, Compensation and Incentive Allocation (employee stock ownership trust, employee subscription vouchers issuance and stock purchase plan)".
	Carrying out OPTOTECH's employee welfare trust business.
	The position and salary of the President of the Corporation.
2020/11/06 The 3rd meeting of the fourth term	Adding the "Regulations for the Employee Welfare Trust Plan and Stockholding Committee of OPTOTECH", the "Regulations for the Implementation of Employee Stock Ownership Trust of OPTOTECH", and the amount of incentive allocated for trust company shares held by Managers.
2020/12/18 The 4th meeting of the fourth term	Resolved the allocation plans forboard directors and supervisorsofourcompanyin 2018.
	Resolved the allocation plans for Managers bonuses and remuneration foremployees ofourcompany.
	Resolved to revise the “Method for Performance Evaluation and Remuneration of Manager”.
	The remuneration proposal for the Managers of OPTOTECH.
	Promotionand changes ofOPTOTECH’sManagers.

(5) Fulfillment of CSR and Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies:

				Deviations from “the Corporate
	Implementation Status			Social Responsibility
Evaluation Item				Best-Practice Principles for
	Yes	No
			Abstract Explanation	TWSE/TPEx Listed Companies”
				and Reasons
1. Does the company assess ESG risks associated with its operations based on the principle of materiality, and establish related risk management policies or strategies?	V		By following the Materiality Principle, the company conducts assessment of risks from environmental, social and corporate governance issues related to corporate operations, and draws up related risk management policies or strategies to carry out its corporate social responsibilities while seeking corporate profits so as to achieve the goal of sustainable operations.	None
2. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?	V		The company has set up the "Corporate Sustainability Committee", with the Chairman of the company serving as the committee minister, and leaders of relevant departments and offices serving as committee members. The Committee formulates the directions and goals for the company’s corporate social responsibility and sustainable development, draws up policies, systems, management guidelines and specific promotional plans, reviews relevant issues and supervises the implementation effects, and regularly reports to the board of directors on the results of corporate social responsibility implementation.	None
3. Environmental issues (1) Does the company establish proper environmental management systems based on the characteristics of their industries? (2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment? (3) Does the company evaluate the potential risks and opportunities in climate change with regard to the present and future of its business, and take appropriate action to counter climate change issues?	V V V		(1) We have implemented the ISO 14001 management system so we can regularly identify the environmental considerations of company activities, products, and services which can be controlled and affected through internal and external analysis of the organization as well as stakeholders’ expectations. We have also evaluated their impacts on stakeholders, use of hazardous substances, workplace, and environment from the perspective of a life cycle such that it can serve as the basis for formulating environmental impact control measures such as environmental objectives, operational control, or educational training. Every review will take into consideration the environmental impact, requirements of laws and international regulations, technical feasibility, economic feasibility, and opinions of stakeholders in order to fulfill the promise of environmental protection, which includes pollution prevention and continuous improvement for enhancing environmental performance. (2) OPTOTECH has implemented water recycling, for which the volume of water usage and water recycling rate are monthly monitored. Using induction lamps for indoor and outdoor lightings, evaluation and installation of hand-pulled lights for office areas, replacement of air-conditioning related facilities, and power efficiency improvement of factory facilities. As for the waste, it has been disposed for re-utilization under the circumstance where it can be re-used. At the same time, the use of materials is in line with the Company’s policy to ban and cut environmentally hazardous materials, in order to reduce impacts on the environment. (3) The company pays attention to climate change issues. It holds regular energy management meetings convened by the Senior executives of the plant equipment department, recruits advisors for consultation and incorporates the assistance of various plant and equipment departments to jointly take the responsibility for facilitating the energy-saving management. Response measures for droughts when water supply is insufficient have also been established. In addition, with the aim of effectively improving water use efficiency in daily activities, water-saving indicators have been set to monitor the efficiency of water use and recycling in the factory. Greenhousegas inventories are continuouslyimplemented andprojects are set up	None

				Deviations from “the Corporate
			Implementation Status	Social Responsibility
Evaluation Item				Best-Practice Principles for
	Yes	No
			Abstract Explanation	TWSE/TPEx Listed Companies”
				and Reasons
(4) Does the company take inventory of its greenhouse gas emissions, water consumption, and total weight of waste in the last two years, and implement policies on energy efficiency and carbon dioxide reduction, greenhouse gas reduction, water reduction, or waste management?	V		annually to improve the stability of factory facilities. (4) The company has completed the Greenhouse Gas Emission Inventory, which has been verified by an international verification services company, and obtained the ISO 14064-1 Greenhouse Gas Inventory Declaration Statement. The company is now calculating its consumption of energy/resources and the recycling rate of waste, etc. and has set up indicators such as water recovery rate of the whole plant, production process water recovery rate and energy saving rates to improve the company's environmental performance and reduce the environmental impact.
4. Social issues (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (2) Does the company have reasonable employee benefit measures (including salaries, leave, and other benefits), and do business performance or results reflect on employee salaries? (3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?	V V V		(1) The company complies with all relevant and applicable labor laws and regulations to establish management guidelines and systems to meet the requirements of the SA8000 Management System. Moreover, the company keeps employees fully informed of related information through open communication channels to protect employees’ rights and interests, respects the international Fundamental Principles and Rights at Work and shall never harm employees’ basic rights at work. (2) OPTOTECH has periodically provided management courses every year for its management executives and other employees. In addition, it has also instituted the employee performance management regulations, while specifically included the reward and punishment system in employees’ work rules, so the employees may fully understand the rules. (3) OPTOTECH attaches great importance to the management of safety and health in the workplace, and continues to promote CNS45001 Taiwan Occupational Safety and Health Management System (TOSHMS) and ISO 45001 Occupational Safety and Health Management System to continuously provide a safe and healthy working environment. For the implementation of safety and health related businesses, in addition to implementing in accordance with the applicable laws and regulations, OPTOTECH also promotes the safety management of high-risk facilities to enhance the employees' safety and health awareness and ensure the safety of the factory. In the execution portion of safety and health related operations, OPTOTECH in addition to carrying out requirements based on legal regulations also continued to handle hazard warning activities and promoted machine safety standard mechanism , high-risk machines infrared thermal image detection, chemical splash emergency response procedures and personal protective equipment wearing standard settings, etc.,so as to escalate employee safety and health awareness and maintain factory safety. In the health management portion, we also continued to plan and promote all kinds of health improvement activities such as Maternity protection , Prevention of human-caused hazards, Health Forum, Women Health Activities, and Bone Mineral Intensity Checks, etc. and reduce safety and health risks in company operations. In August of 2020, an occupational accident occurred in the Lixing Factory in which equipment personnel did not wear protective gear while working. After being audited by the Hsinchu Science Park Bureau, the Factory was fined NT$ 60,000 for the violation of the Occupational Safetyand Health Act. In response to this incident, OPTOTECH requested the	None

				Deviations from “the Corporate
	Implementation Status			Social Responsibility
Evaluation Item				Best-Practice Principles for
	Yes	No
			Abstract Explanation	TWSE/TPEx Listed Companies”
				and Reasons
(4) Does the company provide its employees with career development and training sessions? (5) Do the company's products and services comply with relevant laws and international standards in relation to customer health and safety, customer privacy, and marketing and labeling of products and services, and are relevant consumer protection and grievance procedure policies implemented? (6) Does the company implement supplier management policies, requiring suppliers to observe relevant regulations on environmental protection, occupational health and safety, or labor and human rights? If so,describe the results.	V V V		responsible unit to review the standard operating procedures for high-risk operations, establish the standards for wearing personal protective equipment, and apply them to other units. (4) OPTOTECH has periodically training survey every year,and implementation of the annual training plan. Then according to the results after training to estimate , in order to strengthen staff functions, improve business performance and competitiveness. (5) The company is committed to carrying out the regulations of SA8000 and has formulated ‘The Ethical Corporate Management Best Practice Principles’ and ‘Ethical Procedures and Code of Conduct’ to protect consumers’ related rights. (6) The company requires suppliers to comply with OPTOTECH’s corporate social responsibility policies and requirements for suppliers, and to follow regulations on issues such as environmental protection, occupational safety and health or labor rights.
5. Does the company reference internationally accepted reporting standards or guidelines, and prepare reports that disclose non-financial information of the company, such as corporate social responsibility reports? Do the reports above obtain assurance from a third party verification unit?	V		The company follows the GRI Standards issued by the Global Reporting Initiatives (GRI) in 2016 in its information disclosure and adopts the GRI Standards: Core option/disclosure principles to understand the issues that the stakeholders are concerned about through substantive analysis, based on which the sustainability information of the company's Corporate Social Responsibility Report is disclosed. The company’s report has not been verified by an impartial external third-party agency. The disclosed statistics of the report were obtained from the company’s own statistics and surveys, which had been validated by the company’s internal control and review mechanisms as well as some related management systems to ensure the accuracy of the information/data disclosed in this report.	None
6. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies”, please describe any discrepancy between the Principles and their implementation: The company has established "Corporate Social Responsibility Best Practice Principles" and will continuously carry out and implement the regulations in that spirit with all colleagues. There is no major discrepancy between the actual operation and the established best practice principles.
7. Other important information to facilitate better understanding of the company’s corporate social responsibility practices: A. Environmental protection: a. In 2020, version update operation for ISO 14064-1 was planned. The updated certificate will be acquired. b. According to the management policy of 2021, OPTOTECH will continue to develop products that are environmentally friendly and promote them to the world. c. OPTOTECH has reinforced its waste management and minimization, classified garbage, promoted office dematerialization in order to reduce the use of paper. It will apply for waste recycling projects to turn waste into resource. d. OPTOTECH has aggressively developed and promoted the use of green raw materials, in an attempt to continuously cut down the impact of its products on the environment. In the end, our hopes to develop the products which can be harmoniously blended with nature and friendly to the earth. B. Contribution to society:

The company has established "Corporate Social Responsibility Best Practice Principles" and will continuously carry out and implement the regulations in that spirit with all colleagues. There is no major discrepancy between the actual operation and the established best practice principles.

c. OPTOTECH has reinforced its waste management and minimization, classified garbage, promoted office dematerialization in order to reduce the use of paper. It will apply for waste recycling projects to turn waste into resource.
d. OPTOTECH has aggressively developed and promoted the use of green raw materials, in an attempt to continuously cut down the impact of its products on the environment. In the end, our hopes to develop the products which can be harmoniously blended with nature and friendly to the earth.

				Deviations from “the Corporate
	Implementation Status			Social Responsibility
Evaluation Item				Best-Practice Principles for
	Yes	No
			Abstract Explanation	TWSE/TPEx Listed Companies”
				and Reasons
a. OPTOTECH has been devoted to R&D for enhancement of LED product effect and reduction of resource waste. b. Continued to promote the ISO-14001 Environmental Management System to prevent making pollution to or harm the surrounding environment. c. Installed automatic external cardiac defibrillators (AED) in the factory and provided training for first-aiders and general staff. With the use of first-aid equipment and first-aid common sense training, it is hoped that a healthy and safe living environment can be created for the people. C. Service to society, social and public interests: a. We actively participated in blood donation activities by organizing a blood donation in our factory as a response to the concept of “Donate a bag of blood to save a life”. Our employees actively participated in this event and showed their support through their actions to warmly give back to society. b. In 2020, OPTOTECH colleagues donated NT$4,700 in change to the Yu An Retarded Children's Home Miaoli R.O.C. c. Donated office equipment and gifts to Hsinchu Renai Children's Home and Catholic Huakuang Social Welfare Foundation for more units in need to use. d. In response to the public welfare activities called by the Taiwan Optoelectronic Semiconductor Industry Association (TOSIA), OPTOTECH participated in the "COVID-19 Prevention Work and Donation", and worked together with member organizations to provide care for the prevention of COVID-19 epidemic, giving back to the society. D. Consumer rights and interests: Our clients are not the end-users, but we have devoted our efforts to fulfilling the rules of IECQ-QC-080000, so as to reduce hazardous substances of our products and protect consumers’ safe use of our products. E. Human rights: OPTOTECH has good labor relations, and provides the following fringe benefits for its employees: a. Medical insurance and casualty insurance for its employees b. Various Bonuses, employee bonuses and Stock ownership trust plan . c. Establishment of the employee welfare committee and Organize various social activities every year. d. Integrated study and training measures e. Integrated retirement system. F. Safety and health: a. According to the management policy of 2021, OPTOTECH will continue to pay attention to the physical and mental health of employees, and implement programs such as workplace maternal protection, prevention of human hazards, prevention of overwork, and illegal infringements in the workplace, so as to build a comfortable, energetic, and vibrant workplace. b. In response to the COVID-19 epidemic, OPTOTECH has established an Infectious Disease Prevention and Control Response Team and contingency plans, and adjusted countermeasures in a rolling manner based on the information released by the CDC (Centers for Disease Control) to ensure the health of employees and the continuous operation of the Corporation. c. We will continue to promote the safety management of high-risk facilities (such as chemical pipeline inspection plan, safety management for chemical storage tank, and safety management for special chemical/chemical supply system) and establish sound safety management to prevent occupational hazard from happening. d. OPTOTECH will continue to promote on-site safety and health education training and continues to strengthen the emergency response mechanisms for factory safety. Besides installing AEDs and organizing training programs by groups for employees, for high-risk operations involving the use of hazardous chemicals, specific emergency response procedures for personal injuries are formulated and first aid equipment is provided. All of these are included in the Standard Operation Procedure of each work station. Education and training is also provided for operators to enhance their work safetyawareness.

a. We actively participated in blood donation activities by organizing a blood donation in our factory as a response to the concept of “Donate a bag of blood to save a life”. Our employees actively participated in this event and showed their support through their actions to warmly give back to society.
d. In response to the public welfare activities called by the Taiwan Optoelectronic Semiconductor Industry Association (TOSIA), OPTOTECH participated in the "COVID-19 Prevention Work and Donation", and worked together with member organizations to provide care for the prevention of COVID-19 epidemic, giving back to the society.
a. According to the management policy of 2021, OPTOTECH will continue to pay attention to the physical and mental health of employees, and implement programs such as workplace maternal protection, prevention of human hazards, prevention of overwork, and illegal infringements in the workplace, so as to build a comfortable, energetic, and vibrant workplace.
b. In response to the COVID-19 epidemic, OPTOTECH has established an Infectious Disease Prevention and Control Response Team and contingency plans, and adjusted countermeasures in a rolling manner based on the information released by the CDC (Centers for Disease Control) to ensure the health of employees and the continuous operation of the Corporation.
c. We will continue to promote the safety management of high-risk facilities (such as chemical pipeline inspection plan, safety management for chemical storage tank, and safety management for special chemical/chemical supply system) and establish sound safety management to prevent occupational hazard from happening.
d. OPTOTECH will continue to promote on-site safety and health education training and continues to strengthen the emergency response mechanisms for factory safety. Besides installing AEDs and organizing training programs by groups for employees, for high-risk operations involving the use of hazardous chemicals, specific emergency response procedures for personal injuries are formulated and first aid equipment is provided. All of these are included in the Standard Operation Procedure of each work station. Education and training is also provided for operators to enhance their work safety awareness.

(6) Fulfillment of Ethical Corporate Management and Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies

				Deviations from “the
	Implementation Status			Ethical Corporate
				Management
Eli I
vauaton tem	Yes			Best-Practice Principles
		No	Abstract Illustration
				for TWSE/TPEx Listed
				Companies” and Reasons

1. Establishment of ethical corporate management policies and programs (1) Does the company have a Board-approved ethical corporate management policy and stated in its regulations and external correspondence the ethical corporate management policy and practices, as well as the active commitment of the Board of Directors and management towards enforcement of such policy? (2) Does the company have mechanisms in place to assess the risk of unethical conduct, and perform regular analysis and assessment of business activities with higher risk of unethical conduct within the scope of business? Does the company implement programs to prevent unethical conduct based on the above and ensure the programs cover at least the matters described in Paragraph 2, Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies? (3) Does the company provide clearly the operating procedures, code of conduct, disciplinary actions, and appeal procedures in the programs against unethical conduct? Does the company enforce the programs above effectively and perform regular reviews and amendments?	V V V		(1) The board of directors of our company has formulated “Ethical Corporate Management Best Practice Principles ”, “Procedures for Ethical Management and Guidelines for Conduct”, and “Directors and Management Ethical Conduct Principles” to demonstrate the policies and measures of business integrity. (2) The company has established effective internal control systems for business activities involving high-risk unethical behavior such as purchases and sales, etc. to regularly check and evaluate the implementation of internal control, thereby ensuring the continuous and effective implementation of the internal control system. Moreover, the company also sets up a complaint mailbox for ethics violations reporting on the website for internal and external users to prevent high-risk unethical behavior in business activities. (3) Our company has stipulated the reporting and appeal system in the “Procedures for Ethical Management and Guidelines for Conduct” and also announced internal independent reporting mailbox on our company website to encourage internal and external staff to report the unethical or improper conducts. The reports will be granted proper rewards according to the severity of reported violation.	None
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts? (2) Does the company have a unit responsible for ethical corporate management on a full-time basis under the Board of Directors which reports the ethical corporate management policy and programs against unethical conduct regularly (at least once a year) to the Board of Directors while overseeing such operations?	V V		(1) When our company is signing a contract with another party, we should fully understand its business integrity. The contract signed with its agent, supplier, customer, or any other business transaction party should include the terms of compliance with business integrity policy and the right to terminate the contract whenever the transaction counterpart involves in any unethical behavior. (2) The company designates the Corporate Sustainability Committee as a dedicated unit subordinated to the board of directors with the Chairman of the company serving as the committee minister. The Committee is assisted by the functional groups under it in the promotion and implementation of related matters, and reports to the board of directors at least once a year. The following implementation of the operation integrity management in the currentyear had been reported to the board of directors on December 18,2020:	None

				Deviations from “the
	Implementation Status			Ethical Corporate
				Management
Evaluation Item
	Yes			Best-Practice Principles
		No	Abstract Illustration
				for TWSE/TPEx Listed
				Companies” and Reasons

(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4) Does the company have effective accounting and internal control systems in place to implement ethical corporate management? Does the internal audit unit follow the results of unethical conduct risk assessments and devise audit plans to audit the systems accordingly to prevent unethical conduct, or hire outside accountants to perform the audits? (5) Does the company regularly hold internal and external educational trainings on operational integrity?	V V V		A.Assist in integrating integrity and ethical values into the company's business strategies. B. Create plans for the internal organization, structure and responsibility designation, and put mechanisms of checks and balances in place for business activities involving higher-risk unethical behaviors. C. Facilitate and coordinate the propagation and training of the integrity policy. D. Create plans for the reporting system to ensure the effectiveness of implementation. E. Assist the board of directors and managers in checking and evaluating whether the prevention measures for the implementation of business integrity are operating effectively, and regularly assess the compliance of relevant business procedures for the preparation of reports. (3) Directors shall exercise a high degree of self-discipline, a director is prohibited from participating in discussion of or voting on any proposal where the director or the juristic person that the director represents is an interested party, and such participation is likely to prejudice the interests of OPTOTECH. Employees when encounters conflicts in interests while conducting businesses shall report to their supervisors or the dedicated unit. (4) We have established effective accounting systems and internal control systems according to the related laws and regulations. The Audit Department formulates an annual audit plan based on the results of risk assessments, and devise audit plans to audit the systems accordingly to prevent unethical conduct, and assesses the Company's internal control system accordingly. (5) The responsible unit of our company will organize an internal propagate once every year. In 2020, the theme of promotion was "Prohibition of Insider Trading". To announces the message to board directors, managements, employees, and assignees our company regarding the importance of integrity, such that they can fully understanding the resolution, policy, and preventive plan of our business integrity, and the consequences of unethical conduct.	None
3. Operation of the integrity channel (1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?	V		(1) Our company has stipulated the reporting and appeal system in the “Procedures for Ethical Management and Guidelines for Conduct” to encourage internal and external staff to report the unethical or improper conducts. The reports will be granted proper rewards according to the severity of reported violation. We have also established and announced internal independent reporting mailbox on our company website and our intranet website for our internal and external staff.	None

				Deviations from “the
	Implementation Status			Ethical Corporate
				Management
Evaluation Item
	Yes			Best-Practice Principles
		No	Abstract Illustration
				for TWSE/TPEx Listed
				Companies” and Reasons

(2) Does the company have in place standard operating procedures for investigating accusation cases, as well as follow-up actions and relevant post-investigation confidentiality measures? (3) Does the company provide proper whistleblower protection?	V V		(2) Our company has formulated a procedure for submission of reports and set up a hotline, mailbox, and entity email address for appeal. The prosecutor can submit a written or oral appeal, and the acceptance unit must handle it confidentially to ensure the privacy of the party involved. (3) Our company will keep the identity of whistleblewer and the content of report confidential via written statement, and promise that the whistleblewer will not be punished due to such report.
4. Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?	V		The operation of OPTOTECH has followed applicable laws. Related operating procedures and regulations for the operation of OPTOTECH have been established and announced on OPTOTECH’s corporate website. It has been clearly stated in “Ethical Corporate Management Best Practice Principles ”and“Procedures for Ethical Management and Guidelines for Conduct” that our employees should stay on their post and strictly follow all applicable regulations. Our employees, when conducting businesses, shall not offer or accept anyimproper benefits includingrebates,commissions, greasepayments,etc.	None
5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation. OPTOTECH announces the importance of integrity to all of its Directors, Managers, and employees every year. In 2020, the theme of promotion was "Prohibition of Insider Trading". Education and training were conducted by means of lectures, e-mails and paper materials to fulfill the integrity operating policy and prevent dishonest behaviors. Up to now, there has been no dishonest behavior found in the Corporation. The actual operation is the same as that described in the Code of Conduct of OPTOTECH.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies). The company has been formulated the "Ethical Corporate Management Best Practice Principles" and "Ethical Procedures and Code of Conduct" and has revised them in accordance with the latest laws and regulations, which was submitted to the Board of Directors for review "Ethical Procedures and Code of Conduct" on November 6, 2020 to enhance the effectiveness of the management of corporate ethics.

(7) Corporate Governance Guidelines and Regulations:

OPTOTECH has instituted “Corporate Social Responsibility Best Practice Principles” and “Corporate ” Governance Best Practice Principles .Its control and management functions have been operated smoothly.

A. Based on the “Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies”, OPTOTECH has instituted the following regulations:
Rules of Procedure for Shareholders Meeting
Rules of Procedure for Board of Directors Meeting
Rules of Election of Directors and Supervisors
-Remuneration Committee Charter
Procedures for Acquistion or Disposal Assets
-Procedures for Endorsement and Guarantee
Procedures for Lending Funds to Other Parties
Rules Governing for Subsidiary
Rules Governing for Investments
Procedures for Handling Material Inside Information
Directors and Management Ethical Conduct Principles
Procedures for Halt and Resumption Applications
-Method for Performance Evaluation and Remuneration of Board of Directors
Regulations Governing the Exercise of Powers by Audit Committees of Public Companies
Ethical Corporate Management Best Practice Principles
Procedures for Ethical Management and Guidelines for Conduct
Rules Governing the Appeal and Punishment of Preventive Measures for Sexual Harassment, Workplace Unlawful Infringement and Unreasonable Management.
The standard operating procedure for processing the requests by board directors.
Corporate Social Responsibility Best Practice Principles
Corporate Governance Best Practice Principles
B. Enquiry: OPTOTECH’s corporate website at http://www.opto.com.tw for the financial data and corporate governance information disclosed by OPTOTECH.

(8) Other Important Information Regarding Corporate Governance:

A. Program and training of manager:

Title		Date or program /training	Organizing unit	Program Name	Hours
	Name

Chief Internal Auditor	Steven Chen	2020/07/02	Accounting Research and Development Foundation	Excel & Word combined application and Pivot Report analysis class.	6
		2020/10/26	Accounting Research and Development Foundation	Policy analysis and key discussions on internal audit and internal control practices for enterprises to improve their ability to prepare financial reports on their own.	6

B. Procedures for Handling Material Inside Information:

To manage our internal material information, our board of directors instituted the “Procedure for Handling Internal Material Information”. At the same time, the procedure system and precautious matters have been posted on OPTOTECH’s corporate website for all the colleagues across the board to comply with. In so doing, it is hoped that there will be no violation or insider trading occurring in the company.

(9) Internal Control System:

A. Internal control statement: (P.41)
B. Those that entrust a CPA to examine the internal control system as a project shall disclose the CPA’s audit report: None.
(10) If there has been any legal penalty against the company and its internal personnel, or any disciplinary penalty by the company against its internal personnel for violation of the internal control system, during the most recent fiscal year or during the current fiscal year up to the publication date of the annual report, where the result of such penalty could have a material effect on shareholder interests or securities prices, the annual report shall disclose the penalty, the main shortcomings, and condition of improvement: None.

(11)Major Resolutions of Shareholders’ Meeting and Board Meetings:

A. Major resolutions made in the 2020 regular shareholders’ meeting:

Major Resolutions					Implementation Status
				-	The elected directors and Independent Director are as
					below.Directors: H.T.Wang , Tsun-Chia Tai ,
					Shun-Chih Chen , Tzu-Chun Lin , Su-Chin Tai ,
					Nichia Taiwan Corp.,Rep. of legal person:Ishigami
The 13th Election of Directors					Koji , Nichia Taiwan Corp.,Rep. of legal person:
					Sakamoto Takashi , Inwood Information System
					Co.,Ltd. Independent Director : Kao-Ming Tsai ,
					Kuo-Kuang Li , Pei-Chang Wang. The term is from
					June 16,2020 to June 15,2023.
Approval of the 2019 business statements.	report and	financial		-	The Company operating revenue was NT$5.42 billion, and net Income was NT$0.60 billion in 2019. Thegainwas NT$1.45 per share.
				-	Modified distribution items: shareholder
Approval of the distribution earnings. (amendment)	of 2019	retained		-	dividend-cash is 0, and allotment of 0 yuan per share. The board of directors shall continue to implement resolutions in response to the resolutions of the
					shareholders meeting.
Resolved to revise the “Articles of Incorporation”.				-	It is surely executed in accordance with result of
(amendment)					discussion.
Resolved to revise the “Rules of Procedure			for	-	It is surely executed in accordance with result of
Shareholders Meetings”.					discussion.
Approval of Secondary offering through private				-	It is surely executed in accordance with result of
placement of common shares or/andpreferred shares.					discussion.
Agreed to pass the proposal (1) of non-competition permission for the new Director and his/her				-	It is surely executed in accordance with result of discussion.
representative
Disagreed to pass the	proposal	(2)	of
non-competition permission for the new Director			and	-	Disagreed.
his/her representative

B. Major resolutions made in board meetings include the following:

Year	Major Resolutions	Implementation Status
	- Approval of remuneration for board directors and supervisors and remuneration	All the resolutions of
	for employees of our company in 2019.	the Board Meeting
	- Approval of financial report and operation report of our company in 2019.	have been fully
	- Approval of the distribution of 2019 retained earnings.	implemented in
	- Approval of election of the 13th of diretors of board.	accordance with the
	- Resolved to revise the “Rules of Procedure for Shareholders Meetings” and	resolutions.
	“Rules of Procedure for Board of Directors Meetings” and “Audit Committee
	Charter” and “Remuneration Committee Charter” and “Method for Performance
	Evaluation and Remuneration of Board of Directors”.
2020	- Resolved to revise and Addition of “Corporate Social Responsibility Best Practice Principles” and “Corporate Governance Best Practice Principles” and “Ethical
	Corporate Management Best Practice Principles ” and “Procedures for Ethical
	Management and Guidelines for Conduct”.
	- Determination of matters related to sharedholders’ meeting.
	- Approval of “Internal Control System” of our company in 2019.
	- Resolved to revise the “Internal Control System”.

Approval of the company’s reinvested venture ‘Opto Tech (Macao) Company Ltd.’ (hereinafter referred to as OPTOTECH Macau) is to be dissolved and liquidated.
Approval of nominate the qualification of director candidates.

	- Approval of new directors and their representatives from particition in competitive
	business.
	- Resolved to revise the “Articles of Incorporation”.
	- Approval of Secondary offering through private placement of common shares
	or/and preferred shares.
	- Resolved to revise the reasons for convening the 2020 regular shareholders'
	meeting.
	- Passed the proposal of electing OPTOTECH's Managing Directors one by one.
	- Passed the proposal to appoint members of the Remuneration Committee of
	OPTOTECH.
	- Resolved to revise the “Rules of Procedure for Board of Directors Meetings” and
	“Audit Committee Charter” and “Remuneration Committee Charter” and “Method
	for Performance Evaluation and Remuneration of Board of Directors”.
	- Passed the proposal of appointment of OPTOTECH’s audit supervisors.
	- Resolved to Evaluation on the transfer of funds to loans after a certain period
	based on the amendment of the "Questions and Answers on the Regulations
	Governing Loaning of Funds and Making of Endorsements/Guarantees by Public
	Companies" issued by the Financial Supervisory Commission on May 27, 2020.
	- Passed the proposal for the reassignment of the legal person Director
	Representative of the subsidiary.
	- Passed the proposal for the adjustment of OPTOTECH's investment structure.
	- Resolved to revise and Addition of“Procedures for Ethical Management and
	Guidelines for Conduct”.
	- Passed the proposal for obtaining OPTOTECH’s ratification of real estate.
	- Passed the proposal of buying back OPTOTECH’s common stock and transferring
	it to employees.
	- Amending OPTOTECH’s 2019 surplus appropriation based on the resolutions
	made during the shareholders' meeting.
	- Approval of 2020 audit plan of our company.
	- Approval of 2020 annual budget of our company.
	- Changingcertifiedpublic accountant.
	- Passed the proposal to carry out the buy-back of OPTOTECH’s common stock	All the resolutions of
	and transfer it to employees for the first time in 2021.	the Board Meeting
	- Resolved to revise the “Articles of Incorporation”.	have been fully
	- Determination of matters related to sharedholders’ meeting.	implemented in
	- Approved by resolution of shareholders’ meeting of OPTOTECH in 2020 not to	accordance with the
	proceed with secondary offering through private placement of common shares	resolutions.
	or/and preferred shares.
	- Approval of remuneration for board directors and supervisors and remuneration
	for employees of our company in 2020.
	- Approval of financial report and operation report of our company in 2020.
	- Approval of the distribution of 2020 retained earnings.
2021	- A transfer of shares to employees at a price lower than the average price of the shares actually repurchased.
	- Resolved to revise the “ Transfer of First Repurchased Shares to Employees”.
	- Resolved to revise the “Regulations Governing the Acquisition and Disposal of
	Assets”.
	- Resolved to revise the “Rules Governing Election of Board Directors”.
	- Resolved to revise the determination of matters related to sharedholders’ meeting
	in 2021.
	- Cash capital increase of the subsidiary –Tung Chun Asset Management Co., Ltd.
	- It is proposed to undertake a private placement of ordinary shares by cash capital
	increase.
	- Resolved to revise the determination of matters related to sharedholders’ meeting
	in 2021.

Optotech Corporation Limited

Statement of Internal Control System

Date:March 18,2021

Based on its internal control system in 2020, Optotech Corporation Limited (OPTOTECH) declares the results of its self-examination as below:

1.OPTOTECH is fully aware that establishing, operating, and maintaining an internal control system are the responsibility of its Board of Directors and management. OPTOTECH has established such a system aimed at providing reasonable assurance regarding the achievement of objectives in the following categories: effectiveness and efficiency of operations (including profitability, performance, and safeguarding of assets), reliability of financial reporting, and compliance with applicable laws and regulations.
2.An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three objectives mentioned above. Moreover, the effectiveness of an internal control system may be subject to changes of environment or circumstances. Nevertheless, the internal control system of OPTOTECH contains self-monitoring mechanisms, and OPTOTECH takes corrective actions whenever a deficiency is identified.
3.OPTOTECH evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: 1.control environment, 2.risk assessment, 3.control activities, 4.information and communication, and 5.monitoring. Each component further contains several items. Please refer to the Regulations for details.
4.OPTOTECH has evaluated the design and operating effectiveness of its internal control system according to the aforesaid criteria.
5.Based on the findings of the evaluation mentioned in the preceding paragraph, OPTOTECH believes that, during the year 2020, its internal control system (including its supervision and management of subsidiaries), as well as its internal controls to monitor the achievement of its objectives concerning operational effectiveness and efficiency, reliability of financial reporting, and compliance with applicable laws and regulations, were effective in design and operation, and reasonably assured the achievement of the above-stated objectives.
6.This Statement will be an integral part of OPTOTECH’s Annual Report for the year 2020 and Prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law.
7.This Statement has been passed by the Board of Directors in their meeting held on March 18, 2021, with zero of the Nine attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

OPTOTECH Corporation Limited

Chairman: H.T.Wang

President: David Hwang

(12)Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors : None.
(13)Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D :

Title	Name	Date of Appointment	Date of Termination	Reasons for Resignation or Dismissal
President	Jung-Huan Lee	2017.01.06	2020.07.01	Job adjustment
audit supervisors	Chien-Chang Chen	2017.01.20	2020.07.30	Retirement
Senior Assistant Vice President	Alan Hu	2018.07.01	2020.11.03	Retirement
Vice President	Shun-Chih Chen	2017.07.01	110.02.20	Retirement
Vice President	Wen-TsungLai	2017.07.01	110.05.06	Job adjustment

5.Information Regarding the Company’s Audit Fee

Accounting Firm	Name of CPA	Name of CPA	Period Covered by CPA’s Audit	Remarks
Pricewaterhouse Coopers	Yu-Kuan Lin	Chung-Hsi Lai	2020.01.01-2020.12.31	-

Fee Items Fee Range	Fee Items Fee Range	Audit Fee	Non-audit Fee	Total
1	Under NT$ 2,000,000		V
2	NT$2,000,001 ~ NT$4,000,000
3	NT$4,000,001 ~ NT$6,000,000	V		V
4	NT$6,000,001 ~ NT$8,000,000
5	NT$8,000,001 ~ NT$10,000,000
6	Over NT$100,000,000

(1)In the case that the amount of the non-audit fee paid to the CPA, the CPA’s firm or its affiliated enterprise is more than 1/4 of that of the audit fee, the audit and non-audit amounts and nonnonauditservices shall be disclosed: None.
(2)In the case that the accounting firm is replaced and the audit fee paid for the year making replacement is less than that of the year before replacement, the audit fees before and after replacement of the accounting firm and the reason for replacement shall be disclosed: None.
(3)The company whose audit fee is reduced by no less than 10% from the previous year shall disclose the audit fee reduction amount, ratio and reason. The audit fee referred to in item (1) is the amount paid by the company to the CPA for audit, examination, re-review of financial reports, financial prediction review and taxation certificat: None.

6.Replacement of CPA

(1)Regarding the former CPA ：

(1) Regarding the former CPA：
Replacement Date	Resolved by the board of directors on 18th Dec., 2020
	As PricewaterhouseCoopers reorganized its internal structure, the CPAs auditing the financial statements of January 1,2021 would be changed from the CPAs Yu-Kuan Lin and Chung-His Lai to theCPAs Tsai-YenChiangandChung-His Lai.
Reason of change and explanation

	Parties Status		CPA	CPA
Describe whether the Company
	Termination of appointment		-	-
terminated or the CPA did not accept
the appointment
	Did not accept (continue) the appointment		-	-

Other issues (except for unqualified	None
issues) in the audit reports within the
last twoyears
	Yes		Accounting principles orpractices
			Disclosure of FinancialStatements
			Audit scope or steps
Differences with the company
			Others

	None	V
	Remarks/specifydetails:
	None
Other Revealed Matters

(2)Regarding the successor CPA ：

Name of accountingfirm	PricewaterhouseCoopers
Name of CPA	Tsai-YenChiang/ Chung-Hsi Lai
Date of appointment	18th Dec.,2020
Consultation results and opinions on accounting treatments or principles with	None
respect to specified transactions and the company's financial reports that the
CPA might issueprior to the engagement.
SucceedingCPA’s written opinion of disagreement toward the former CPA	None

(3)Reply letter from the former CPA: None.

7.The Company’s Chairman, Chief Executive Officer, Chief Financial Officer, and managers in charge of its finance and accounting operations did not hold any positions in the Company’s independent auditing firm or its affiliates in the most recent two years.

8.Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

(1) Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders:


		2020		As of April. 26, 2021

			Pledged		Pledged
		Holding		Holding
Title	Name		Holding		Holding
		Increase		Increase
			Increase		Increase
		(Decrease)		(Decrease)
			(Decrease)		(Decrease)

Chairman & Chief Executive Officer	H.T.Wang	0	0	0	0
Vice Chairman & Chief Strategy Officer	Tsun-Chia Tai	0	0	0	0
Director &	Tzu-Chun Lin	0	0	0	0
Chief of Staff &
Senior Vice President
Director	Su-Chin Tai	0	0	20,000	0
Director	Nichia Taiwan Corp.	4,809,000	0	0	0
	Rep. of legal person:Ishigami Koji	0	0	0	0
	Rep. of legal person:Sakamoto Takashi	0	0	0	0
Director	Inwood Information System Co.,Ltd.	192,000	0	0	0
	Rep of legal person:Pin-Lun Wang	0	0	0	0
Independent Director	Kao-Ming Tsai	0	0	0	0
Managing Director & Independent Director	Kuo-Kuang Li	0	0	0	0
Independent Director	Pei-Chang Wang	0	0	0	0
Director	Shun-Chih Chen	0	0	-	-
Director	Jung-Huan Lee	0	0	-	-
Director	Tsang-Der Ni	0	0	-	-
Director	Shin-Etso Opto Electronic Co.,Ltd	0	0	-	-
	Rep of legal person:Yamada Masato	0	0	-	-
Independent Director	Shih-Tung Ho	0	0	-	-
President & Chief of Operation	David Hwang	0	0	12,000	0
Vice President	Chang-Da Tsai	0	0	0	0
Vice President	Wen-Tsung Lai	0	0	0	0
Assistant Vice President	Jeffery Tai	-	-	0	0
Assistant Vice President	Chin-Lung Ma	0	0	-	-
Assistant Vice President	Alan Hu	54,000	0	-	-
Head of Financing and Accounting & Chief Financial Officer	Yin-Rui Chen	10,000	0	0	0

Note1: OPTOTECH has no shareholders who hold more than 10% of the shares.

Note2:Tsun-Chia Tai, Tzu-Chun Lin, Inwood Information System Co.,Ltd.and Kuo-Kuang Li elected as director and Independent Director on Jun.16th,2020.The change of equity is the information at the time of taking office.

Note3:Inwood Information System Co.,Ltd. designate Pin-Lun Wang as representative of legal person director on Sep.30th,2020. The change of equity is the information at the time of taking office.

Note4:Jung-Huan Lee, Tsang-Der Ni, Shin-Etso Opto Electronic Co.,Ltd and Shih-Tung Ho were expiration of the term of office of the current director and Independent director Jun.on 16th,2020. The change of equity is the information at the time of taking office.

Note5:David Hwang acted as President on Oct. 1st,2020. The change of equity is the information at the time of taking office. Note6:Jeffery Tai acted as Assistant Vice President on Jan. 1st,2021. The change of equity is the information at the time of taking office. Note7:Chin-Lung Ma dismissaled insider on Jan.1st,2021. The change of equity is the information at the time of taking office. Note8:Alan Hu retired Vice President on Nov.2nd,2020. The change of equity is the information at the time of taking office.

(2) Shares Trading with Related Parties: None.

(3) Shares Pledge with Related Parties: None.

9.Relationship among the Top Ten Shareholders

Apr. 26, 2021

Name	Current Shareholding	Current Shareholding	Spouse’s /minor’s Shareholding	Spouse’s /minor’s Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees
	Shares	%	Shares	%	Shares	%	Name	Relationship
Nichia Taiwan Corp.	26,448,822	6.99	0	0.00	0	0.00	Nichia Corp. entrusted to Chinatrust Commercial Bank	Parent company
Nichia Corp. entrusted to Chinatrust Commercial Bank	11,014,657	2.91	0	0.00	0	0.00	Nichia Taiwan Corp.	Subsidiary
Polunin Emerging Markets Small Cap Fund, LLC	6,426,023	1.70	0	0.00	0	0.00	None	None
Credit Suisse International	5,365,150	1.42	0	0.00	0	0.00	None	None
Norges Bank-fund mgr Keywise Capital Management(HK)Limited	5,079,081	1.34	0	0.00	0	0.00	None	None
VANGUARD EMERGING MARKETS STOCK INDEX FUND, A SERIES OF VANGUARD INTERNATIONAL EQUITY INDEX FUNDS	4,291,987	1.13	0	0.00	0	0.00	None	None
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	4,144,266	1.09	0	0.00	0	0.00	None	None
J.P. MORGAN SECURITIES PLC	3,308,813	0.87	0	0.00	0	0.00	None	None
Medison Pacific Investment Co.,Ltd.	3,250,027	0.86	0	0.00	0	0.00	None	None
Dimensional Emerging Markets Value Fund	2,537,828	0.67	0	0.00	0	0.00	None	None

10.Ownership of Shares in Affiliated Enterprises: None.

、 IV Capital Overview

1.Capital and Shares

(1) Source of Capital

A.Issued Shares


		Authorized Capital

Share Type

	Issued Shares	Treasury stock(shares)	Un-issued Shares	Total

Common stock (the shares of companies listed in Taiwan)	368,975,303	9,647,543	621,377,154	1,000,000,000

B. Information for Shelf Registration: None.

(2) Status of Shareholders

						Apr. 26,2021
			Other	Domestic	Foreign
	Government	Financial
Item			Juridical	Natural	Institutions &	Total
	Agencies	Institutions
			Persons	Persons	Natural Persons

Number of Shareholders	0	17	186	68,912	130	69,245
Shareholding (shares)	0	4,627,820	43,732,662	260,535,009	69,727,355	378,622,846
Percentage	0.00%	1.22%	11.55%	68.81%	18.42%	100.00%

(3) Shareholding Distribution Status (Common Shares)

			Apr. 26,2021
Class of Shareholding		Shareholding
	Number of Shareholders		Percentage
(Unit: Share)		(Shares)

1 ~ 999	30,888	7,697,540	2.03%
1,000 ~ 5,000	28,973	63,874,225	16.87%
5,001 ~ 10,000	5,155	40,527,430	10.70%
10,001 ~ 15,000	1,414	18,035,914	4.76%
15,001 ~ 20,000	905	16,645,009	4.40%
20,001 ~ 30,000	705	17,875,519	4.72%
30,001 ~ 50,000	569	22,780,822	6.02%
50,001 ~ 100,000	372	27,023,150	7.14%
100,001 ~ 200,000	141	19,687,105	5.20%
200,001 ~ 400,000	61	17,537,342	4.63%
400,001 ~ 600,000	22	11,397,191	3.01%
600,001 ~ 800,000	9	6,435,151	1.70%
800,001 ~ 1,000,000	4	3,418,418	0.90%
1,000,001 or over	27	105,688,030	27.91%
Total	69,245	378,622,846	100.00%

(4) List of Major Shareholders

		Apr. 26, 2021

Shareholder's Name	Shares	Percentage

Nichia Taiwan Corp.	26,448,822	6.99%
Nichia Corp. entrusted to Chinatrust Commercial Bank.	11,014,657	2.91%
Polunin Emerging Markets Small Cap Fund, LLC.	6,426,023	1.70%
Credit Suisse International.	5,363,150	1.42%
Norges Bank-fund mgr Keywise Capital Management (HK) Limited.	5,079,081	1.34%
Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International EquityIndex Funds.	4,291,987	1.13%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds.	4,144,266	1.09%
J.P. Morgan Securities PLC.	3,308,813	0.87%
Medison Pacific Investment Co.,Ltd.	3,250,027	0.86%
Dimensional Emerging Markets Value Fund.	2,537,828	0.67%

(5) Market Price, Net Worth, Earnings, and Dividends per Share

					01/01/2021
	Items		2019	2020	-
					03/31/2021
Market Price per Share	Highest Market Price		27.80	28.30	27.95
	Lowest Market Price		17.20	14.00	23.05
	Average Market Price		22.81	22.24	25.43
Net Worth per Share	Before Distribution		19.23	20.48	19.67
	After Distribution		18.22	19.11	-
Earnings per Share	Weighted Average Shares		415,685,581	377,806,386	370,555,626
	Diluted Earnings Per Share		1.45	1.52	0.66
Dividends per Share	Cash Dividends		0.00	1.39	-
	Stock Dividends	-	-	-	-
		-	-	-	-
	Accumulated Undistributed Dividends		-	-	-
Return on Investment	Price / Earnings Ratio(Note 1)		15.73	14.63	-
	Price / Dividend Ratio(Note 2)		-	16.00	-
	Cash Dividend Yield Rate(Note 3)		-	6.25%	-

Note 1: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 2: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 3: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

(6) Dividend Policy and Implementation Status

A.Dividend Policy:

If there is any surplus in the company’s yearly final accounts, it will be distributed as follows:

(a)Offset the losses from previous years.
(b) Withdrawing 10% statutory surplus reserve until the accumulated amount has reached paid-in capital of OPTOTECH.
(c) Provision or rotation of special reserves depending on company’s need of operation and legal requirement.
(d) After deducting Items 1 to 3, if there is any balance, the dividends of the preferred shares in the current year shall be provided in priority. If there is still any balance, the accumulated undistributed surplus from the previous year shall be added to the balance, and the remaining balance shall be regarded as shareholder dividend. The Board of Directors shall determine the allocation amount and organize a shareholders’ meeting for resolution.

Since OPTOTECH requires capital expenditure in order to pursue sustainable development needs. Hence, we will distribute both stock dividend and cash dividend in accordance with our growth rate and capital expenditure status, in which the cash dividend shall be no less than 50% of the total amount of the dividend distribution of the year that the dividend occurs.

The Board of Directors of the Company shall, with the resolution adopted by the attendance of two-thirds or more of the directors and more than half of the directors in attendance, distribute in cash all or part of the dividends and bonuses distributable, capital reserve or statutory surplus reserve, for which the provisions of these Articles of Incorporation regarding resolutions of the shareholder meeting shall not apply.

B. Proposed Distribution of Dividend:

The 2020 surplus appropriation proposal was resolved by the Board of Directors on March 18, 2021 to distribute a cash dividend of NT$ 1.39 per share, and formulate a surplus distribution table as shown below. The 2020 surplus appropriation proposal was reviewed by the Audit Committee and submitted to shareholders’ meeting for discussion after being approved by the Board of Directors.

OPTOTECH Corporation

Statement of Earning Distribution 2020

Unit ： NT$ dollars

Item	Amount
Undistributed earnings at the beginningofyear.	1,786,082,990
Plus: After-taxprofit of theyear.	575,133,081
Plus: Actuarialgains and losses of current fiscalyear.	524,698
Plus:Proceeds from disposal of equity instrument at fair value through other cpmprehensive income	180,000
Subtotal.	575,837,779
Less: Allocated legal earningreserve.	(57,583,778)
Plus: Rotatingspecial reserves.	1,320,451
Distributable retained earnings.	2,305,657,442
Cash dividends to shareholders.	(514,927,071)
Undistributed surplus atyear end.	1,790,730,371

(7)Effect of the free share allotment to be proposed at the shareholders’ meeting on the Company’s business performance and its EPS: None.

(8)Employee and Directors' Remuneration:

A. Information Relating to Employee and Directors' Remuneration in the Articles of Incorporation:

10%-15% of the Company's annual profit, if any, should be allocated to employee remuneration, and not more than 5% to director and supervisors' remuneration. However, in the event of accumulated loss, the Company should be compensated.

Employees' remuneration can in be the form of stock or cash. Allocation stock or cash recipients must include Company employees who satisfy certain conditions.

The current year profit referred to in Paragraph 1 is defined as pre-tax profit minus benefits prior to remunerating dispatch employees and directors.

Allocation for employees and directors must be approved by a board meeting in which more than two-thirds of the directors are present and more than half of those present agree to the resolution, which is reported at the shareholders meeting.

With the attendance of more than two-thirds of the directors in the Directors' Meeting and more than half of the attending directors' consent, the whole or a part of the distributable dividends & bonuses and the capital reserve/legal reserve shall be distributed in the form of cash. Regulations on the decisions of shareholders meetings which are not applicable to this Articles of Association shall be reported to the shareholders meetings.

B. The Estimated Basis for Calculating the Employee, Director and Supervisors' Remuneration:

Employee, director and supervisors' remuneration that is calculated according to legal stipulations or construction obligation and reasonably estimated is recognized as expense and liability. Subsequent to resolution, discrepancy between actual allocated amount and estimated amount will be handled according to changes in accounting estimate.

C. Profit Distribution for Employee, Director and Supervisors’ Remuneration for 2020 Approved in Board of Directors Meeting:
(a)Recommended Distribution of Employee, Director and Supervisors’ Remuneration:

Unit ： NT$ dollars

	Unit：NT$dolla
Employees' Remuneration	$115,175,082
Director Remuneration	$ 38,391,694
Total	$153,566,776

(b)Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings:None.
D. Information of 2019 Distribution of Compensation of Employees, Directors and Supervisors (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed) and, if there is any discrepancy between the actual distribution and the recognized employee, director, or supervisor compensation, additionally the discrepancy, cause, and how it is treated.

					Unit：NT$ dollars
Item	Estimated amount	Actual allocated amount	Difference	Reasons	Situation
Employees' Remuneration	108,745,924	108,745,924	0	None	None
Director Remuneration	36,248,641	36,248,641	0	None	None

(9)Buyback of Treasury Stock:

(a) Repurchases already completed

		As of Mar.10,2021 First Repurchase in 2021 Transfer of shares to employees January11,2021-March 10,2021 NT$16.75 – NT$38.80 Ordinary shares 4,599,000 shares NT$112,006,279 61.32% 0 shares 8,893,000 shares 2.35%
Treasurystocks: Batch Order	First Repurchase in 2020	First Repurchase in 2021
Purpose of buy-back	Transfer of shares to employees	Transfer of shares to employees
Timeframe of buy-back	December 15,2020-January8,2021	January11,2021-March 10,2021
Price range	NT$16.70 – NT$35.20	NT$16.75 – NT$38.80
Class, quantity of shares repurchased	Ordinary shares 4,294,000 shares	Ordinary shares 4,599,000 shares
Value of shares repurchased (in NT$thousands)	NT$109,250,710	NT$112,006,279
Quantity of repurchased shares as a percentage of total shares to be repurchased(%)	57.25%	61.32%
Shares sold/transferred	0 shares	0 shares
Accumulated number of company shares held	4,294,000 shares	8,893,000 shares
Percentage of total company shares held(%)	1.13%	2.35%

(b) Any repurchase still in progress ： None.

2.Bonds :None.

3.Preferred Stock :None.

4.Global Depository Receipts :None.

5.Employee Stock Options :The issuance of Employee Stock Warrants was approved and validated by Financial Supervisory Commission on October 22, 2019. The total issuance is 20,000,000 units. It has not been issued as of the expiry date of the issuance period on Oct.21th,2020.

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

7.Financing Plans and Implementation: None.

、 V Operational Highlights

1.Business Activitie

(1)Business Scope:

A. Main areas of business operations:
(A) Production and sales of opto-electronic semiconductor devices:
- (a) LED (b) Infrared LED (c) Photodiode (d) Phototransistor
- (e) Opto-electronic coupler (f) Laser diode (g) Optical integrated circuit
(B) Production and sales of semiconductor electronic devices:
- (a) Varactor diode (b) Field effect transistor (c) Microwave transistor (d) Diode (e) Transistor
- (f) All kinds of semiconductor devices
(C) Production and sales of wireless communication equipments:

UHF wireless hopping communication device.

(D)Production and sales of wired communication equipments:intercom system inside the artillery armored vehicle.
(E) The research, development, design, manufacturing, sales, leasing (only for self-owned products), promotion and after-sale service of aforementioned items and associated system products.
(F) We are also involved in export/import trading activities associated with our company’s business.

B. Revenue distribution:

Unit: NT$ thousands

Majorproducts	2020 revenue,net	Ratio %
Light emittingdevices	1,486,955	26.60
Sensor devices	2,979,337	53.30
Systemproduct	845,023	15.12
PackagingProducts	262,415	4.69
Other	16,316	0.29
Total	5,590,046	100.00

C. Main products:

In the aspect of LED products, the opto-electronic product division has devoted its efforts to servicing each of its clients with its well-rounded resources and processes and providing innovative resolution schemes to meet its clients’ respective requirements. These products include GaP (red, yellowish green, standard green, pure green), VPE (red, orange, light orange, yellow), AlGaAs (SH, DH, DDH), IR (infrared LED), AlGaInP (red, orange, yellow, yellowish green, pure green), InGaN (green, cyanine, blue, purple), and Flip-Chip (green, blue) LED chip. We will continue to focus on enhancing brightness and efficiency in order to develop LED chip products at a higher level.

The silicon electronic product division has combined current technology, integrated the resources to be developed in the years to come and adopted the cutting edge process to provide clients with flexible services and the overall resolution schemes. Main product are Zener diode chips,Photo diode chips,Photo transistor chips,Photo triac chips,these new integrated technologies.Just in a few short years, this new integration technology has gained recognition and support from clients. The silicon electronic product division is still making every effort to provide its clients with on-time delivery and low-defect quality products, in an attempt to become its clients’ “most reliable partner”. Its products are especially acclaimed by its Japanese clients.

System Products division - full-color display: using unique technologies, with 16-bit red, green and blue bands to achieve the best gamma curve to allow delicate and vivid color distribution on the display. At the same time, the Company has overcome the flashing and interference effects of low-level color and low brightness in order to create clearer screen rendition; in addition, pixel sharing technology can enhance the overall resolution of the display, producing superb high-quality images. Use modular design that allows easy removal as well as unique cooling technology to rapidly and effectively reduce the heat generated by the optical module. Equipped with excellent power module, the lights’ conversion efficiency is up to 90%,

and with the characteristics of a constant current output, reducing the long-term decay of LED. Other system products include LED car lighting systems, variable information sign board and LED traffic lights, etc.

D. New products development
(A) Light emitting devices

Light emittingdevices
a.high-power Deep UV UVC LED chip.	b.Development of high power IR LED customproductgroup.
c. Band-pass NIR light sensing element.	d. NIR LED of wearable device.
Sensordevices
a.Development of high-voltage Zener protection components for automotive.	b.Triac product development.
c.OVP/SLICsproduct development.	d.APDproduct development.
e.Silicon cap product development.	f.Development of wearable sensingelements.
g.Fliptype sensingelement development.

(B) Sensor devices
(C) System products

a.Low-cost indoor and lightweight display module design.	b.Development of passenger information system forpublic transportation.
c.Development of smart signal lights.	d.Development of indoor light weight frameless displayscreen.
e.Development of new version of BillBoard displayscreen.	f.Development of 3D control system.
g.Development of light weight lighting for buildingfaçade.	h.Plant growth lighting and control development.
i.Development of deep UV disinfection application modules andproducts.
Packagingof special application optoelectronic components
a.Establishment avalanche photodiode (APD) arraychip packagingtechnology.	b.Biological detection photoelectric module technologydevelopment.

(D) Packaging of special application optoelectronic components

(2)Industry Overview:

A. Current status and future development:

According to TrendForce's research on LED market, the latest 2020 market trend of infrared sensing applications includes: 3D sensing in mobile phones, LIDAR and driving monitoring system. The research pointed out that the market output value of automotive LIDAR reached 127 million US dollars in 2019. It is estimated that in 2020 there will be more than 10 high-end models that may adopt 3D sensing solutions and part of the models will be upgraded to use both front and rear lenses, thereby further increasing the output value of VCSEL.

B. Relationship with Up-, Middle- and Downstream Companies:

The current LED supply chain is relatively excessively lengthy: from upstream raw materials supplying: single crystal wafer, epitaxial wafer to midstream electrode production, die cutting, die testing, the downstream die bonding, wire bonding to packaging, and finally into the application side. In recent years, competition in the LED industry is very intense, resulting in constant changes in the overall up, middle and down stream industrial chain. Particularly in the lighting market where demand fell short of expectation, the oversupply of LED packages has resulted in a slow growth in LED. Coupled with price competition among China's manufacturers, investment, joint venture, merger and acquisition, strategic alliance and other business patterns have gradually emerged in the overall LED industrial chain, forcing small and medium sized companies to eventually withdraw from the market. However, from a long-term

perspective, this could stimulate the overall LED industrial chain into restoring the supply and demand balance.

C. Product trends:

LED emits cold light, and the advantages of low electricity consumption, long lifetime, no need for warm-up, quick response time, small dimension, vibration resistant and suitable for mass production have made LED applicable to all kinds of electronic products. The development overview is shown below:

 Backlight application

In response to the demand of compact and space saving dimension, along with the advancing technology, the cold light and compact feature of LED have been utilized for the backlight applications for electronic products such as cell phone display panel, LCD TV, and NB display panel.

 Lighting application

In light of the environmental protection issues such as greenhouse effect and energy saving, the low electricity consumption and cold light features of LED have enabled the applications as street lights, traffic signals, car lights and household lighting.

Large-size display

Due to the compact size, good plasticity, and full-color capability, the system-controlled large-size LED displays have been constantly applied to entertainment venues, shopping malls, and concerts.

Sensor product

This kind of product is usually based on LED with invisible light, and the applications are mainly consumer products such as household appliance, communication devices, computers, remote controls, ear thermometers, rapid temperature measuring devices, and temperature sensors for car or household appliance.

D. Product competition:

As the COVID-19 epidemic continues to cause impact in 2021, the LED industry has adjusted its development towards products in relation to medical and sterilization system. LEDinside also analyzed that in the next 5 years, the sterilization and purification equipment market will be the main driving force for the growth of the UV LED market, among which the UVA LED photocatalyst air purifier market will maintain steady growth in the future. This epidemic has greatly stimulated the market demand for UVC sterilizing and disinfecting products. It is expected that this will be a trending product market that all LED manufacturers will compete for in 2021, and will accelerate the commercialization of UVC LED.

(3)Research and Development

A. R&D expense of the most recent fiscal year up to the publication date of this annual report:

Year	Total Expenses(NT$thousands)
2020	335,103
2021(As of March 31)	27,071

B. Technologies and R&D achievements

R&D and innovation have been the driving force behind everlasting growth of Optotech. There are R&D engineering units under each business division with major objectives including new product development, innovative improvement of existing products, and development of customer service oriented customized products. The technologies and R&D achievements of R&D engineering units in each division is shown below:

 Optoelectronics Operations Center

(A) Organization

This unit is mainly in charge of the development, the characteristic improvement, process stability and the mass production of compound semiconductor LED materials and devices. Currently the

organization is divided into several sectors based on product features such as epitaxial material development sector, R&D and specifications formulation of new devices and new processes sector, process parameter setting sector, process technology improvement and upgrading sector, process capability control sector and yield improvement sector for satisfying customers’ demands.

(B) Strategy
(a)Continue to invest in the development and production of quaternary epitaxy. With the foundation of the existing visible light and infrared products, keep improving product characteristics to meet the needs of high-end market applications.
(b)Engage in strategic alliance with substrate material and epitaxial wafer suppliers in achieving vertical integration and complementary for epitaxial wafer and chip production in anticipation of stable expansion market share.
(c)Continue to cooperate with customers to develop infrared vertical-cavity surface-emitting laser (VCSEL), infrared metal-bonding LED, and infrared metal-bonded MPD to satisfy the demands in the lighting, optical communications and sensing markets.
(d)To focus on patent deployment and alliance for breaking through LED patent dilemma in addition to continuously improving existing high power LED efficiency, so as to respond to the future demand in the high power LED market, in response to future market of high power LED.
(e)With the increased application of infrared products in recent years, besides the LPE infrared products, the company has also developed MO Epitaxial Wafer infrared products to provide more infrared products options for customers to develop more new products.
(f) Continue to cooperate with our Research Center and R&D units of Silicon Operations Center and Systems Operations Center in the development of new and niche products.
(g)To continue to cooperate with Nichia Corp to expand the Japan, Korea, Europe and America market.
(h)Continue to deepen blue light flip-chip technology and advanced packaging technology as well as the vertical integration of wafer level package.
(i) Develop deep ultraviolet UVC LED and UVC PD niche products to meet the growing demands for disinfection and epidemic prevention.
(C) Performance and achievement
(a) The quaternary LED high-end and low-end products will be focused on the display and automotive markets. New red light and infrared products will be used to increase gross margin and market share with new.
(b) Cooperate with major Japanese manufacturers to develop TOF VCSEL sensing applications, and complete sample certification. In addition, for the contact switch applications of major Singapore manufacturers, Proximity & TWS VCSEL, the development of 6mil power and small divergence angle products will be completed.
(c) Through internal vertical integration, improve the luminous efficiency of UVC epitaxy and flip-chip products, strengthen product reliability, and reduce costs to achieve good cost-performance ratio. In response to the COVID-19 pandemic, products are applied to applications such as surface sterilization, water sterilization and solid hardening.
(d) For binary and ternary niche products, besides quality improvement, the company is actively striving for opportunities to promote the utilization of the products among major international manufacturers to expand the market share and continue to maintain the number one position in the traditional LED production capacity.
(e) Cooperate with customers to develop new applications and demand. Complete the development of new infrared products. In addition to consolidating the existing market, new infrared markets will be acquired to continuously increase the market share. Currently, infrared dies still have the largest market share for the original applications. At present, the new MO-type TS infrared has been steadily shipped, and we will continue to win more customers and orders in the future.
Silicon Operations Center:

(A) Organization

Major duties are to assist the mass production of silicon electronic products and the development of new products. This unit will enhance competitiveness among peers and expand the scope of applications by improving product features and satisfying customers’ demand based on existing foundation.

(B) Strategy

(a) Continuously enhancing the production efficiency and process yield of existing standard production lines in order to enhance the market competitiveness of standard products.
(b)Developing and preparing new production process technologies and establishing mass production platform in response to the special application demands of the markets of IoT sensing, wearable device, and industrial automation.
(c) Providing customers with complete production process technology platform and mass production platform for integration of application creativities in order to enhance the market competitiveness of products at customer end.
(d)To have technological cooperation with foreign manufacturers, the Company has developed a semiconductor protection and sensing component.
(C) Performance and achievement
(a)Development of sensing elements for wearable devices: The development has been completed and mass production has been introduced.
(b)Development of flip-type sensing element: the sample has been completed and certification by the customer is in progress.
(c)Development of high S/N type APD: products of different specifications are under development.
(d)Development of high-voltage MOS components: the development has been completed and mass production has been implemented.
(e)Development of high-power SCR components: the in-factory verification of the sample has been completed and the sample has been sent to the customer for evaluation.

 Systems Operations Center:

(A) Organization

(a) The role of Technology I Department of OPTOTECH is to develop products and related control systems for applications such as indoor/outdoor LED full-color billboards, and traffic displays.
(b)The role of Technology II Department of OPTOTECH is to develop products for applications such as architectural lighting system, special display or lighting, and automotive lighting.
(B) Strategy
(a) Insist on providing high-quality products and complete after-sales service.
(b)Integration of the supply chain for the best interest of the Company group.
(c) Prioritize technology in order to meet the engineering and product needs of high-end customers.
(d)Implement materials and component verification to ensure product quality.
(e) Combine global customer demand to develop future products.
(f) Gradually expand production energy to establish Taiwan's manufacturing reputation.
(C) Performance and achievement

Performance and achievement
(a)New York UniversityGymnasium P3project.	(b)Transfer station P8project in the U.S.
(c)Building lighting system in Hong Kong.	(d)Baseball stadium P25 and P20 projects in Japan.
(e)Displays for traffic and transportation applications in Taiwan.	(f)U.S.: Plant Factory Lighting.
(g)Displays for traffic and transportation applications in Singapore.

Research Center:
(A) Organization

Mainly responsible for the evaluation and development of new products and special packages corresponding to each business center, as well as the establishment of new processing technologies.

(B) Strategy

By integrating the self-determined silicon-based photoelectric material (epitaxy, grain) with advanced packaging process technology and system module development advantages, we can provide our customers with packaging or modular products with high cost-performance ratio. We have also been integrating the resources of various business divisions in order to achieve the competitiveness and future prospects of various OPTOTECH products.

The development and verification of inorganic (b)Flip-chip PD chip and packaging process packaging technology for ultraviolet high-power verification has been completed. light-emitting diodes has been completed.

(4)Long-term and Short-term Development

A. Short-term Development
(A)With our sound and down-to-earth corporate culture, we have accumulated profound experience and professionalism. Also, with our dedication to clients and our focus on the LED business, we have provided diversified products and customized services for our clients, and come up with resolution schemes exclusively for our respective clients.
(B)Our goal of strategic alliance with Nichia Corp. has been successfully achieved. We have also cooperated with Nichia Corp to build a cooperation platform for the blue ray, in which OPTOTECH is responsible for producing epitaxial dies. Our obtaining of the material patented by Nichia Corp. enable us to produce LED epitaxial dies without worrying about infringement.
(C)We will increase production capacity of LED and silicon electronic products in response to market demand by bottleneck analysis and expansion of key production equipments. In light of the potential risk after production expansion, other than adopting selective approaches for hardware expansion, the observation on customer orders and global economy will be early warning signs for potential dangerous situations.
B. Long-term Development
(A)In order to pursue product innovation, technological sophistication, quality enhancement and cost reduction, our has constantly devoted to the research and development of new products such as high-brightness chip, light emitting device product with high response speed, high frequency high power silicon electronics products, in the hope of further developing the market and enhancing our company’s overall competiveness.
(B)OPTOTECH has many LED international technology patents, and they all came from many years of professionalism and originality of our R&D crew. We have especially accumulated rich experience and fruition in die process technology and design of application products. Also, in response to the change in the world industrial trends, we have combined the aggressive corporate management concept and outstanding technological capacity to make every effort to promote the innovative, environmentally friendly and energy efficiency products.

2.Market and Sales Overview

(1)Market Analysis

A. Sales (Service) Region:

Our major products include LED Light emitting devices, Sensor devices and system products. The sales of 2020 are as follows:

2020 are as follows:
	Unit: NT$ thousands
Year	2020
Item	Subtotal	Total
Operatingincome from import of domestic region(i.e. Taiwan)	1,591,111	1,591,111
Operatingincome from export of domestic region(i.e. Taiwan)
Europe	122,254
America	518,236
Southeast Asia	2,650,895
Northeast Asia	640,705
Other areas(not reaching10%)	66,845
Operatingincome from export		3,998,935
Net operatingincome		5,590,046

B. Market Share:

At the beginning of 2021, the world continues to be affected by the COVID-19 pandemic, which has not only reduced the terminal demand in the world but also seriously affected the operation of many manufacturers especially in Mainland China, Europe and America. With the severe impact of the pandemic, lockdown measures were taken in many regions, which forced many manufacturers to suspend operations and resulted in increased costs for raw materials and components. Due to this uncertainty about the future, major manufacturers in the global market have gradually withdrawn their performance and revenue estimates for this year. Looking ahead to 2021, the overall LED industry is still facing highly unstable environments. Being faced with the current situation, LED manufacturers should maintain their existing core values to hold their market shares, and should also take active epidemic prevention measures to stand firmly to go through this pandemic crisis.

C. Market Analysis of Major Product Categories: Expected LED trends:
(A)It is estimated that new momentum will be added into the LED industry with the increasing demand for some niche products/high-tech products such as TV backlighting, automotive LEDs, 3D sensing, AI, 5G, UVC LED, etc.
(B)Although the US-China trade war has cooled down and the two sides have gradually compromised, the LED industry is recovering slowly due to the impact of COVID-19.
(C)Being influenced by the pandemic, manufacturers have invested more in UV LED production. It is estimated that the development of UV LED will grow substantially in 2020.

D. Competitive niche

LED chips are our core business. With the core business, we have built our position today, earned trust and respect in the industry and gained a place in the local and foreign market. Our advantages are as below:

(A)Owning a vertical integration supply chain

By having the advantage of vertical integration of our supply chain, we are in the position to establish a strong strategic alliance with our suppliers, buyers or customers in the aspects covering material sources and chip and LED related product lines. We have made every effort to promote stable growth. On the other hand, we and our cooperation partners all consider good faith and customer prioritization the core of our business conviction.

(B)Put stress on patent technology research and development and yield rate improvement We have put focus on technology research and development and accumulation of experiences and

strength in order to overcome the risk resulting from rapid change of the market. Our R&D crew are constituted by the professionals integrated across the board, so professionals in different fields can be gathered to research and develop new products and new technologies. As a result of our research and development, we have more than 100 patents in the world. Furthermore, with our product strategy to broaden and strengthen our cooperation with Nichia Corp., we hope to overcome patent related problems.

(C)Equipped with strong and extraordinarily flexible capacity to customize our products Our products are all customer oriented. Our professional crew have specifically tailored the resolution scheme for our respective clients, which enable us to respond to extensive requirements and produce the products which can meet the needs of varying projects. With OPTOTECH’s customizing capacity, we can always actualize our client’s design originality, and that is why we are popular for cooperation among dealers, agents and even proprietors throughout the world.
E. Favorable and unfavorable factors and countermeasures for development outlook
(A)Favorable factors
- (a) In the global market where competition is keen, how to use your competition edge to have a presence in the market turns out to be the challenge every enterprise would face. To look into the future, we will make the most of our operating advantages including integration of the following three major categories of products: light emitting components, sensor components and system products, which are not available to our competitors, to create profuse operating income.
- (b)To integrate “vertical alliance” and “horizontal alliance”, give aggressive strategic deployment and provide customers with most efficient services: With our professional teamwork, we use our rich talent resources and profound experience to keep pursuing innovation.
- (c) As a member of the LED energy efficiency industry, we have devoted our efforts to develop LED energy efficiency products so as to counter the problem of global warming, actualize environmental protection and do our share of corporate social responsibility.
(B)Unfavorable factors
- (a) The risk of patent infringement

Currently there are four major high brightness LED makers in the world such as Nichia, Samsung LED, OSRAM, Philips, and LG Innotek, and together they occupy 75% of global market share. Almost all patents associated with LED technology are in the hands of these major players, and most of them are not open for licensing. Therefore Taiwanese companies have been facing the risk of patent infringement.

Corresponding countermeasure:

Our strong R&D team has been actively developing products and manufacturing processes different from other companies and applying for all kinds of patent with the objectives of mutual licensing and collaboration. We will also expand our collaboration with Nichia Chemical in order to obtain patented epitaxial materials.

(b)With China’s enterprises on the rise, the price war is ignited

The scale of China’s local market is greater and greater, so more and more Chinese enterprises have jumped on the bandwagon. Our LED lighting market is still threatened by China’s seizure of the market share with low-price competition.

Corresponding countermeasure:

With the aim of opening up new markets and expanding marketing channels, the company has been actively collaborating with international manufacturers in recent years to combine each other's advantages for the development of competitive and innovative products and the grasp of real-time market pulse.

(2)Key Performance Indicator (KPI):

Product yield of our optoelectronic products is 93.30%

Product yield of our silicon electronic products is 90.60%

(3)The Production Procedures of Main Products

A. Important applications


	Product Name	Important applications

Light Emitting Device	LED chip	Full color LED, digital display, Dot-Matrix display, light source display for fax machine, indicating devices for consumer products such as household appliance, communication and computers, indoor lighting, car lights and tail lights,displaybacklight and lighting products
	IR emitting diode chip	Remote control device for infrared LED, photo-coupler, photo-replay,and infrared lightingapplications
Sensor Device	Photodiode chip Phototransistor chip Liquid crystal light valve FET chip	Photodiode, phototransistor device, devices for remote control reception of consumer products such as home appliance, communication, computers and cars. AC motor driving, SSR (Solid State Relay), Dimming control. Condenser microphone.
	High power electric device	Devices for opto-electronic solid-state relay and power supply
System Product	LED Information Display	Road condition display, indoor display, outdoor display
	LED lighting system and LED head light	Indoor and outdoor lighting system, all kinds of head lights

B. Manufacturing Process

(B) Sensor device (Phototransistor chip)

○Silicon waferSilicon wafer │ ○OxidationOxidation │ ○Base photolithography │ ○DiffusingDiffusing │

○Emitter photolithography │

○Metal layer vapor deposition │

│

 Stocking

○Protection laypr deposition

│

○Photolithography

│

○Grinding

│

○Back metal deposition

│

□Testing

│

□Visual inspection

│

▽Stocking

(C) System product (LED Display)

(C) System product (LED Display)	(C) System product (LED Display)
○Central ○Address ○50W ○Control box ○LED ○Display ○ASIC chip ○Other electric ○Driver		○300W Power supply ○Cables ○Body materials ○Assembly of main body ○Wiring ○Power configuration ○Assembly of display system □Testing of display system ○Assembly of control system □Reliability test ▽Stocking
control panel	control panel	Power supply

(4)Supply Status of Main Materials

Product Group			Supply
	Major Raw Materials	Source of Supply
			Situation

Light emitting devices	GaAs, GaAlAs, GaP, GaAsP, AlInGaN wafers	Japan, Korea, Taiwan,China	Sufficient
Sensor devices	Silicon wafer	Germany, Japan, Taiwan,China	Sufficient
System product	Chip, control IC, circuit board	Taiwan	Sufficient

(5)Major Suppliers and Clients

A. Major Clients to which products have been sold:
(A)Major Clients in the Last Two Calendar Years

Unit: NT$ thousands


		2019				2020			2021 (As of March 31)

Item				Relation				Relation				Relation
	Company				Company				Company
		Amount	Percent	with		Amount	Percent	with		Amount	Percent	with
	Name				Name				Name
				Issuer				Issuer				Issuer

1	Client A	837,123	15.45	-	Client A	961,963	17.21	-	Client A	377,158	23.82	-
2	Client B	581,548	10.73	-	Client B	320,191	5.73	-	Client B	47,864	3.02	-
3	Others	3,999,333	73.82	-	Others	4,307,892	77.06	-	Others	1,158,389	73.16	-
	Net Sale	5,418,004	100.00		Net Sale	5,590,046	100.00		Net Sale	1,583,411	100.00

(B)Explanation of reasons of any change, increase or decrease:

There is no obvious difference between the ratio of sale from major clients of 2020 and that of 2019.

B. Major Suppliers to which products have been purchased:

(A)Major Suppliers in the Last Two Calendar Years

Unit: NT$ thousands


	2019					2020			2021 (As of March 31)

Item				Relation				Relation				Relation
	Company				Company				Company
		Amount	Percent	with		Amount	Percent	with		Amount	Percent	with
	Name				Name				Name
				Issuer				Issuer				Issuer

1	Supplier A	223,490	10.34	-	Supplier A	223,490	10.34	-	Supplier A	133,147	22.63	-
2	Others	1,938,731	89.66	-	Others	1,938,731	89.66	-	Others	455,249	77.37	-
	Net purchase	2,162,221	100.00		Net purchase	2,162,221	100.00		Net purchase	588,396	100.00

(B)Explanation of reasons of any change, increase or decrease:

There is no obvious difference between the ratio of purchase from major suppliers of 2020 and that of 2019.

(6)Production in the Last Two Years

Unit: NT$ thousands/Thousand pieces

Year
		2019			2020
Output

Major Products	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Light emitting devices	31,000,000	14,830,144	945,782	31,000,000	15,630,727	1,063,685
Sensor devices	33,600,000	26,521,062	1,565,892	33,600,000	25,597,627	1,887,237
System product	-	-	554,123	-	-	640,108
Packaging Products	336,469	133,143	174,779	320,532	106,753	166,891
Other products	-	-	-	-	-	-
Total	64,936,469	41,484,349	3,240,576	64,920,532	41,335,107	3,757,921

Note: System products vary, with different types, so there is no meaning to compare the quantity.

(7)Shipments and Sales in the Last Two Years

Unit: NT$ thousands/Thousand pieces

Year	2019	2019	2019	2019	2020	2020	2020	2020

Shipments	Local		Export		Local		Export
& Sales

Major
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Products

Light emitting devices	2,471,783	250,447	12,074,593	1,044,399	2,664,234	362,725	13,251,861	1,124,230
Sensor devices	3,255,598	608,004	23,458,995	2,047,033	3,737,301	846,614	22,266,268	2,132,723
System product	59	252,924	258	882,045	52	333,004	261	512,020
Packaging Products	37,094	44,339	88,375	237,859	1,217	1,654	27,390	69,378
Other products	38	20,068	100	30,886	28,954	47,114	50,415	160,584
Total	5,764,572	1,175,782	35,622,321	4,242,222	6,067,758	1,591,111	35,596,195	3,998,935

Note: System products vary, with different types of compounds to be sold, so there is no meaning to compare the quantity.

3.Human Resources

Mar. 31, 2021

Year	Year	2019	2020	As of Mar. 31, 2021
Number of Employees	Management personnel	350	260	249
	Technology personnel	358	284	279
	Directpersonnel	898	690	667
	Total	1,606	1,234	1,195
Average Age		38.26	38.98	39.60
Average Years of	Service	9.65	10.83	10.86
Education	Ph.D.	0.31	0.33	0.25
	Masters	6.48	7.37	7.62
	Bachelor’s Degree	55.44	55.42	55.98
	Senior High School	25.91	25.71	25.33
	Below Senior High School	11.86	11.17	10.82

4.Environmental Protection Expenditure:

Any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to labor disputes (including labor inspection results found in violation of the Labor Standards Act, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions):No losses due to environmental pollution including compensation and sanctions occurred in 2020.

5.Labor Relations

(1)A variety of employee welfare measures, studies, training and retirement system taken by the company and the implementation status, and the progress made for agreements with employees and protection of employee rights and interests.
A. Employee welfare measures and the implementation status:
(A)OPTOTECH began production in July 1984, and, based on the Rules Governing Organization of Employees’ Welfare Committee decreed by the Ministry of the Interior, OPTOTECH set up its employees’ welfare committee on August 7, 1984 to carry out various welfare matters. Our current welfare measures, such as local and foreign travel activities, annual physical examinations, birthday gift coupons, presents given for festivals, wedding, funeral and childbirth subsidies and employee counseling, have all been literally executed in accordance with our status and employees’ demands.
(B)Other than the labor insurance and national health insurance, OPTOTECH has also purchased group life insurance, casualty insurance, serious disease, hospitalization insurance and cancer medical insurance for its employees at its expense. At the same time, our company and employees will each pay 50% of the spouse’s and children’s insurance fee. Our employees will be responsible for 100% of their parents’ insurance fee.
B. Employee studies and training:
(A)OPTOTECH has gone to great lengths to cultivate its employees. Based on the perspectives on lifetime learning and career development education training, resources are continuously invested every year in personnel’s talent cultivation. HR units conduct annual ‘training needs assessment’ and ‘course analysis & planning’ based on the strategic goals of the organization and the needs of various units. In order to encourage employees to learn and enhance their learning motivations, the company also actively creates an atmosphere in which colleagues teach each other through teamwork, thereby building up an environment for learning, sharing and innovating. Moreover, enriched courses and diverse learning channels are also provided for employees to grow and demonstrate their talents.
(B)The company’s education and training system can be divided into four categories: managerial training, professional training, Self-development training and joint training. And appropriate training courses are provided according to the professional skills required for different ranks:

	General employee	Supervisor / Vice Manager	Supervisor / Vice Manager	Manager /Vice Manager
Management trainig				High-ranking director training
			Medium level director training
	General management training	Basic director training
Professional training	Advanced skill training
	Basic skill training
Self- Development training Common training	Languages, computer and etc training. Corporation policy, mission and brand training. Quality control training, new employees’ training, security and health training and etc.

(C)OPTOTECH 2020 education training courses came in four major categories. A total of 2,318 employees participated in the training courses, which included the ones held by OPTOTECH, various competent authorities, the CPA firm and the industry. The following are the categories of the training courses and the training execution status:

Program category	Number of classes	Number of total people	Total hours	Total fee
General knowledge	91	440	2,517	202,450
Management	2	2	6	6,000
Professional program	108	1,642	3,886	318,785
Environmental safetyand health	103	234	1,706	176,110
Total	304	2,318	8,115	703,345

C. Implementation status of the retirement system:

OPTOTECH set up a supervisory committee of workers’ retirement reserve on November 19, 1986 to supervise labor retirement reserve related contribution and payment. In conjunction with the new system of the Labor Standards Act enacted on July 1, 2005, our old employees are allowed to have the optional choice while the new entrants shall follow the new system. In addition, OPTOTECH has also instituted its own retirement system, which is better than what is regulated in the Labor Standards Act, and reported it to the competent authorities for approval and future reference.
D. Labor-management agreements:None.
E. Employee behavior and ethics rules:

OPTOTECH uses the exclusive stamp of “service discipline” included in its working rules to discipline its employees’ behavior and ethics. The following articles are the excerpt from the working rules of the industry attendants:

Chapter 3 Service discipline

Article 18: Employees shall be devoted to their work, follow OPTOTECH’s regulations and obey reasonable command from respective ranks of superiors. They are not allowed to be delinquent and give feign compliance. On the other hand, all ranks of superiors shall guide the employees in an obliging and earnest manner.
Article 19:Inside OPTOTECH, employees shall work hard, well protect public property, reduce wear and tear, enhance quality and increase production. Outside the company, they shall keep trade or task secrets. Do not make any authorized statement which could result in damage to company’s reputation.
Article 20:Employees shall directly report to their immediate superior. Bypassing immediate superior to report is not allowed. However, it is not limited to the emergency or special situation.
Article 21:After enrollment and proper task assignment, employees are not allowed to use any excuse to request changes.
Article 22:Employees are not allowed to leave their posts without permission during the working hours.
Article 23:Without permission, employees are not allowed to bring their friends or relatives into the working site.
Article 24:Employees are not allowed to bring contraband goods or the ones irrelevant to production into the working site.
Article 25:Without permission, employees are not allowed to bring public property out of the factory. In the case that the public property is required to be brought out of the factory, the employee shall process the required procedure before bringing it out of the factory.
Article 26:Employees shall not take advantage of their authority to benefit themselves or others.
Article 27:Employees are not allowed to engage in the business same as or similar to OPTOTECH’s.
Article 28:Employees shall not have the violating behavior, such as receiving entertainment treats, presents, kickbacks or other illegal benefits.

Article 29:Employees shall abide by occupational safety and health laws and regulations and OPTOTECH’s regulations, protect the working site, keep the environment clean and safe, and prevent occurrence of theft, fires or other natural disasters.
Article 30:Employees shall wear work uniforms along with I.D. badges at work as regulated. The original work uniform and I.D. badge shall be returned to OPTOTECH when they are changed or re-issued or the employee leaves his or her job.
Article 31:Employees are not allowed to discretionarily read the documents, correspondence and account books not in their charge. They shall also not to present the documents in their charge to the persons irrelevant to the task.
Article 32:When getting off work, employees shall tidy away all the used tools before leaving the working site. In case of working on shift, the employees shall clearly hand over the work to the next shift employees before departing the working site.
Article 33:Except for the errand-running leave, employees shall follow the regulated working time to work and leave on time, and clock in and out accordingly.
F. Measures taken to protect the working environment and employees’ personal safety:
(A)Environment safety and health management meeting company management system policy:
- (a) Well-rounded quality together with sustainable ecology concept and establishment of a friendly workplace
  - Optotech has placed a high premium on the well-rounded quality for its products, environment and safety and health issues. In addition to continuously improving the efficiency of its process and operation activities, it has also banned or cut down on environmentally hazardous substances. As a whole, Optotech has been devoted to fulfilling energy efficiency and waste reduction as an enterprise citizen,promotion of health management, protection of physical and mental health of our employees, and creation of environment for sustainable lives.
- (b)Present management efficiency through self-discipline with promotion of communication and participation
  - By using internal education training and communication, Opotech has made every effort with high standard self-discipline to enhance its employees’ perception of product quality, prohibition from use of environmentally hazardous substances, and environmental safety and health. With education and fulfillment of product and environmental safety and health related laws and regulations, Optotech has come a long way to produce the products which even surpass customers’ expectations. Moreover, Optotech has even showcased its overall management efficiency by presenting its internal safety and unpolluted environment.
(B)Concrete safety and health management measures
- (a) Hazard appraisal, risk evaluation and countermeasures

The high and low risks identified after risk assessments implemented by various units should be under control via various approaches such as restriction, replacement, engineering control, and administrative management in order to prevent the occurrence of accident. The progress of execution of subsequent control measures should be tracked by Occupational Safety and Health Committee in order to protect the health of staff and company property.

(b)Health management
In accordance with the “Labor Health Protection Regulations”, OPTOTECH has provided health examinations for the employees involved in the general operation and special hazardous operation respectively. For the working personnel having to touch ionizing radiation, organic solvents, specific chemical substances and provide services for long-term night shift workers, OPTOTECH has provided with many items of the special health examination. The results of the special health examination will be graded for management. Other than the items required to be included in the health examination as regulated in the statutory laws and regulations, OPTOTECH has also additionally included other items, such as cancer detection, abdominal echo,blood unrine index test, liver and kidney function test, etc, in the annual health examination. It shows that what OPTOTECH has provided for its employees’ health is better than the items regulated in laws and

regulations. To give more care for its employees’ health, OPTOTECH has also cooperated with the hospital to provide its employees with free services of health consultation, ultrasound check-ups for women's health, maternal health risk assessment and consultation, abnormal workload-induced disease prevention assessment and consultation, and human factor risk assessment and consultation, etc. to implement personal health management.

(c) Operation environment testing
In accordance with the “Regulations Governing Implementation of Labor Operation Environment Testing”, OPTOTECH has conducted chemical factor and physical factor operation environment testing. The chemical factors include organic solvents, specific chemical substances, and heavy metal ,whereas the physical factor refers to noise, for which OPTOTECH has entrusted a qualified operation environment testing agency to test and inspect if the noise is within the standard regulated in statutory laws and regulations. In the case that irregularity is found, We will proceed with project management and give remediation, so as to protect employees’ health.
(d)Hazard prevention education training
To have employees better understand the danger resulting from hazardous factors in various kinds of operations and the prevention measures, OPTOTECH has periodically or non-periodically held hazard prevention education training. The education training teaches employees how to prevent hazard other than wearing required protection devices, and reinforce their occupational safety and health professional knowledge. In so doing, the risk of occupational disasters in the working environment will be greatly reduced.
(e) Contractor management
As stipulated in Career safety and health related laws and regulations, the undertaking construction unit shall process safety and health operation control, in which, in addition to the hazard notification given by the contractor on the site and education training, general work permission and special operation shall also be controlled. Furthermore, when working on the high risk operation, the safety and health personnel shall be designated to oversee and ensure safety of the construction operation all the way through. Also, the task safety protection schedule shall be submitted, examined and approved before going into operation. In order to fulfill contractor’s safety and health supervision, OPTOTECH has laid down related operation controls and promoted safety and health related experiences for all the units and employees to refer to accordingly.
(f) Automatic examination
In accordance with the “Labor Safety and Health Organizational Management and Automatic Examination Regulations”, OPTOTECH has laid down an annually automatic examination schedule for routine examinations of the hazardous machines and equipment in the factory zone, in which other than the items and frequency as regulated in laws and regulations, other examination items required by respective units for hazardous prevention have been added and a surveillance and audit mechanism has been executed, so as to prevent accidents from happening.
(g)Safety and health round checks
In order to carry out the safety and health management system and establish the mechanism for the safety and health personnel to make round checks of the factory zone and give mobile checks of the operation status in the factory zone so as to effectively prevent accidents from happening or reduce the frequency of accident occurrence, in addition to monitoring the surrounding operation environment, the safety and health personnel shall come to assist in emergency rescue for the accidents occurring in the factory zone, so property loss and personnel casualties can be reduced.
(h)Radiation protection management
To ensure the actual execution of routine detection and inspection work, avoid anomaly of the equipment and resulting in radiation damage of operating personnel, workers are required to wear lonizing radiation armband during work and attend radiation operation medical checks in order to specifically grasp operating personnel’s health condition.
(i) Unlawful infringement in the workplace
The company’s Workplace Unlawful Infringement Policy is formulated to establish a friendly workplace and to create a workplace culture of safety, dignity, non-discrimination, mutual respect & tolerance and equal opportunities. The company has set up internal grievance/reporting channels and unlawful infringement processing mechanisms, which are propagated to employees through education & training and announcements, etc. Moreover, risk assessment of workplace unlawful infringements is regularly performed to ensure the safety of personnel in the factory.

G. Current labor relations
(a) Based on the conviction of taking good care of its employees, OPTOTECH has provided its employees with various welfare benefits, retirement system and management system regulated in the Labor Standards Act or better than what are regulated the Act. Also, OPTOTECH has mostly handled its labor issues by mutual coordination and communication, so its employees have high sense of coherence to OPTOTECH, its labor relationship is based on mutual respect and understanding, and there is no labor dispute.
(b) CS Bright Corporation, a subsidiary of OPTOTECH, is currently in the liquidation stage, and there are still some labor-management matters to be clarified. However, it has no impact on the Corporation's overall operation.
(2)Loss resulting from labor disputes in the latest year and before the annual report was published, and disclosure of estimated losses for the current (including labor inspection results found in violation of the Labor Standards Act, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions) and future periods and the countermeasures to be taken:

There had been no labor dispute occurring to OPTOTECH in the latest year and before the annual report was published.

6.Important Contracts

				Mar. 31,2021

Agreement	Counterparty	Period	Main contents	Restrictions

Lease of land	Science Park Administration	2010.11.25 ~ 2029.12.31	Rental of land of Ke-Guan Sec.	Limited to the use for the target business
Lease of land	Science Park Administration	2017.06.16 ~ 2037.06.15	Rental of land of the 3rdphase of the Park	Limited to the use for the target business

、 VI Financial Information

1.Five-Year Financial Summary

(1)Condensed Balance Sheet -IFRSs

A. Condensed Balance Sheet (Consolidated)- IFRSs

						Unit: NT$thousands	Unit: NT$thousands
Year							Financial data
			Five-Year Financial Summary(Note1)
							as of


							Mar. 31, 2021
		2016	2017	2018	2019	2020
Item							(Note2)

Current assets		6,716,565	5,601,375	5,973,084	5,957,852	6,306,500	6,546,595
Property, Plant and Equipment		2,985,178	2,877,768	3,071,603	2,909,127	2,705,133	2,632,179
Intangible assets		9,313	9,051	8,840	14,229	14,318	14,404
Other assets		1,094,400	1,402,839	1,140,805	1,424,936	1,615,476	1,607,813
Total assets		10,805,456	9,891,033	10,194,332	10,306,144	10,641,427	10,800,991
Current liabilities	Before distribution	2,600,701	2,390,122	2,126,506	1,694,700	1,733,564	3,089,873
	After distribution	3,255,496	2,991,464	2,349,225	1,694,700	2,248,491	-
Non-current liabilities		290,982	277,038	536,978	1,343,128	1,214,537	450,292
Total liabilities	Before distribution	2,891,683	2,667,160	2,663,484	3,037,828	2,948,101	3,540,165
	After distribution	3,546,478	3,268,502	2,886,203	3,037,828	3,463,028	-
Equity attributable to shareholders of the parent		7,910,195	7,220,265	7,527,207	7,264,675	7,689,689	7,257,187
Capital stock		5,456,621	4,454,386	4,454,386	3,786,228	3,786,228	3,786,228
Capital surplus		639,351	701,323	702,521	702,965	703,108	703,108
Retained earnings	Before distribution	1,888,896	1,865,714	2,141,427	2,519,185	3,095,023	2,825,155
	After distribution	1,234,101	1,264,372	1,918,708	2,519,185	2,580,096	-
Other equity interest		(47,974)	223,345	253,376	279,469	187,351	187,125
Treasury stock		(26,699)	(24,503)	(24,503)	(23,172)	(82,021)	(244,429)
Non-controlling interest		3,578	3,608	3,641	3,641	3,637	3,639
Total equity	Before distribution	7,913,773	7,223,873	7,530,848	7,268,316	7,693,326	7,260,826
	After distribution	7,258,978	6,622,531	7,308,129	7,268,316	7,178,399	-

Note1:The financial data of latest 5 years have been audited and certified by CPAs. Note2:The financial data of the 1st quarter of 2021 have been approved by CPAs.

Unit: NT$ thousands

B. Condensed Balance Sheet (Unconsolidated) - IFRSs

Year	Year
			Five-Year Financial Summary(Note)


Item
		2015	2016	2017	2018	2019


Current assets		6,380,831	5,343,528	5,685,900	5,714,524	6,044,925
Property, plant and equipment		2,783,486	2,688,176	2,898,912	2,759,452	2,568,311
Intangible assets		9,009	8,746	8,569	13,958	14,046
Other assets		1,349,267	1,595,189	1,377,389	1,666,171	1,853,486
Total assets		10,522,593	9,635,639	9,970,770	10,154,105	10,480,768
Current liabilities	Before distribution	2,327,039	2,148,760	1,916,007	1,546,572	1,576,556
	After distribution	2,981,834	2,750,102	2,138,726	1,546,572	2,091,483
Non-current liabilities		285,359	266,614	527,556	1,342,858	1,214,523
Total liabilities	Before distribution	2,612,398	2,415,374	2,443,563	2,889,430	2,791,079
	After distribution	3,267,193	3,016,716	2,666,282	2,889,430	3,306,006
Capital		5,456,621	4,454,386	4,454,386	3,786,228	3,786,228
Capital reserves		639,351	701,323	702,521	702,965	703,108
Retained earnings	Before distribution	1,888,896	1,865,714	2,141,427	2,519,185	3,095,023
	After distribution	1,234,101	1,264,372	1,918,708	2,519,185	2,580,096
Other Equity Adjustments		(47,974)	223,345	253,376	279,469	187,351
Treasury stocks		(26,699)	(24,503)	(24,503)	(23,172)	(82,021)
Total equity	Before distribution	7,910,195	7,220,265	7,527,207	7,264,675	7,689,689
	After distribution	7,255,400	6,618,923	7,304,488	7,264,675	7,174,762

Note:The financial data of latest 5 years have been audited and certified by CPAs.

(2)Condensed Statement of Comprehensive Income -IFRSs

A. Condensed Statement of Comperehensive Income (Consolidated) - IFRSs

Unit: NT$ thousands

Year		Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)	Five-Year Financial Summary(Note1)		Financial data
						as of
	2016	2017	2018	2019	2020	Mar. 31, 2021
Item						(Note2)

Operatingrevenue	5,488,496	5,589,853	5,364,610	5,418,004	5,590,046	1,583,411
Grossprofit	1,594,547	1,654,098	1,621,872	1,638,329	1,643,558	496,553
Income from operations	681,716	783,575	738,007	740,157	689,147	282,159
Non-operating income and expenses	299,802	29,256	41,988	46,428	(69,391)	17,217
Income before tax	981,518	812,831	779,995	786,585	619,756	299,376
Net income(Loss)	854,758	672,313	653,141	604,635	575,129	245,061
Other comprehensive income (income after tax)	(108,566)	230,649	264,514	21,935	(91,413)	(226)
Total comprehensive income	746,192	902,962	917,655	626,570	483,716	244,835
Net income attributable to shareholders of theparent	854,727	672,283	653,107	604,633	575,133	245,059
Net income attributable to non-controllinginterest	31	30	34	2	(4)	2
Comprehensive income attributable to Shareholders of theparent	746,164	902,932	917,622	626,570	483,720	244,833
Comprehensive income attributable to non -controllinginterest	28	30	33	-	(4)	2
Earningsper share	1.57	1.33	1.47	1.45	1.52	0.66

Note1:The financial data have been audited and certified by CPAs. Note2:The financial data of the 1st quarter of 2021 have been approved by CPAs.

B. Condensed Statement of Comperehensive Income (Unconsolidated) - IFRSs

Unit: NT$ thousands

		Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)	Five-Year Financial Summary (Note)
Year
	2016	2017	2018	2019	2020
Item

Operatingrevenue	5,164,598	5,275,911	5,060,329	5,144,198	5,337,870
Grossprofit	1,503,104	1,554,620	1,526,900	1,560,727	1,572,618
Income from operations	698,922	743,808	709,570	733,329	689,915
Non-operating income and expenses	276,079	65,681	73,835	44,541	(75,511)
Income before tax	975,001	809,489	783,405	777,870	614,404
Net income(Loss)	854,727	672,283	653,107	604,633	575,133
Other comprehensive income (income after tax)	(108,563)	230,649	264,515	21,937	(91,413)
Total comprehensive income	746,164	902,932	917,622	626,570	483,720
Earningsper share	1.57	1.33	1.47	1.45	1.52

Note:The financial data have been audited and certified by CPAs.

(3)Auditors’ Opinions from 2016 to 2020

Year	CPA’s Name	AuditingOpinion	Remark
2016	Yu-Kuan Lin, Charles Lai,	Unqualified opinions	For the needs of the adjustment of internal operation, the auditing CPAs have been changed to the CPAs Lin,Yu-Kuan and Charles Lai.
2017	Yu-Kuan Lin, Charles Lai,	Unqualified opinions
2018	Yu-Kuan Lin, Charles Lai,	Unqualified opinions
2019	Yu-Kuan Lin, Charles Lai,	Unqualified opinions
2020	Yu-Kuan Lin, Charles Lai,	Unqualified opinions

2.Five-Year Financial Analysis

(1)Consolidated Financial Analysis – Based on IFRS

A. Financial Analysis (Consolidated) –IFRS

Year	Year	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial data
							as of Mar. 31,

Item		2016	2017	2018	2019	2020	2021

Financial structure (%)	Debt Ratio	26.76	26.97	26.13	29.48	27.70	32.78
	Ratio of long-term capital to property, plant and equipment	274.85	260.65	262.66	296.01	329.29	292.96
Solvency (%)	Current ratio	258.26	234.36	280.89	351.56	363.79	211.87
	Quick ratio	204.60	186.10	217.04	275.75	295.73	174.94
	Interest earned ratio(times)	30.61	33.22	29.94	24.68	24.39	58.81
Operating performance	Accounts receivable turnover(times)	3.42	3.48	3.32	3.46	3.58	3.99
	Average collectionperiod	107	105	110	105	102	91
	Inventoryturnover(times)	3.11	3.20	3.08	2.94	3.30	3.87
	Accountspayable turnover(times)	4.45	4.73	5.14	5.43	5.45	6.01
	Average days in sales	117	114	119	124	111	94
	Property, plant and equipment turnover(times)	1.79	1.91	1.80	1.81	1.99	2.37
	Total assets turnover(times)	0.49	0.54	0.53	0.53	0.53	0.59
Profitability	Return on total assets(%)	7.81	6.70	6.72	6.16	5.69	9.30
	Return on stockholders' equity (%)	10.94	8.88	8.85	8.17	7.69	13.11
	Pre-tax income topaid-in capital(%)	17.99	18.25	17.51	20.77	16.37	7.91
	Profit ratio(%)	15.57	12.03	12.17	11.16	10.29	15.48
	Earningsper share(NT$)	1.57	1.33	1.47	1.45	1.52	0.66
Cash flow	Cash flow ratio(%)	31.91	57.87	34.79	85.68	52.19	11.93
	Cash flow adequacyratio(%)	115.84	115.79	96.04	107.15	111.43	120.95
	Cash reinvestment ratio(%)	1.79	4.69	0.85	7.09	5.14	2.23
Leverage	Operatingleverage	1.85	1.79	1.85	1.85	1.98	1.53
	Financial leverage	1.05	1.03	1.04	1.05	1.04	1.02
Analysis of financial ratio change in the last two years： 1. Income before tax to paid-in capital ratio: Mainly due to the decrease in income before tax for the current period. 2. Cash flows ratio,Cash reinvestment ratio:Mainly due to decrease of cashflows form operating activities in this fiscalyear.

Note 1:The financial data of latest 5 years have been audited and certified by CPAs. Note 2:The financial data of the 1[st] quarter of 2021 were calculated based on the financial statements audited by CPAs.

B. Financial Analysis (Unconsolidated) –IFRS

Year	Year
		Financial analysis in the past five years


Item
		2016	2017	2018	2019	2020


Financial structure (%)	Debt Ratio	24.83	25.07	24.51	28.46	26.63
	Ratio of long-term capital to property, plant and equipment	294.43	278.51	277.85	311.93	346.70
Solvency (%)	Current ratio	274.20	248.68	296.76	369.50	383.43
	Quick ratio	215.88	196.23	227.27	288.30	307.86
	Interest earned ratio (times)	48.57	50.39	43.11	29.64	29.38
Operating performance	Accounts receivable turnover (times)	3.35	3.36	3.19	3.35	3.49
	Average collection period	109	109	114	109	105
	Inventory turnover (times)	3.00	3.09	2.97	2.84	3.22
	Accounts payable turnover (times)	4.41	4.71	5.11	5.40	5.45
	Average days in sales	122	118	123	129	113
	Property, plant and equipment turnover(times)	1.83	1.93	1.81	1.82	2.00
	Total assets turnover (times)	0.48	0.52	0.52	0.51	0.52
Profitability	Return on total assets (%)	8.03	6.81	6.81	6.22	5.74
	Return on stockholders' equity (%)	10.94	8.89	8.86	8.18	7.69
	Pre-tax income to paid-in capital (%)	17.87	18.17	17.59	20.54	16.23
	Profit ratio (%)	16.55	12.74	12.91	11.75	10.77
	Earnings per share (NT$)	1.57	1.33	1.47	1.45	1.52
Cash flow	Cash flow ratio (%)	32.95	66.58	38.36	95.62	53.63
	Cash flow adequacy ratio (%)	123.05	119.29	96.56	108.70	110.31
	Cash reinvestment ratio (%)	1.41	5.09	0.83	7.38	4.90
Leverage	Operating leverage	1.76	1.77	1.81	1.80	1.92
	Financial leverage	1.03	1.02	1.03	1.04	1.03
Analysis of financial ratio change in the last two years： 1. Income before tax to paid-in capital ratio: Mainly due to the decrease in income before tax for the current period. 2. Cash flows ratio,Cash reinvestment ratio:Mainly due to decrease of cashflows form operating activities in this fiscalyear.

Analysis of financial ratio change in the last two years ： 1. Income before tax to paid-in capital ratio: Mainly due to the decrease in income before tax for the current period.

Cash flows ratio ,Cash reinvestment ratio:Mainly due to decrease of cashflows form operating activities in this fiscal year.

Note :financial data of latest 5 years have been audited and certified by CPAs.

1.Financial structure
(1)Ratio of liabilities to assets ＝ Total liabilities ／ Total assets
(2)Ratio of long-term capital to Property, plant and equipment ＝（ Total equity ＋ Non-current liabilities ）／ Net Property, plant and equipment
Solvency
(1)Current ratio ＝ Current assets ／ Current liabilities
(2)Quick ratio ＝（ Current assets － Inventory － Prepaid expenses ）／ Current liabilities
＝
(3)Times interest earned Profit before income tax and Interest expense ／ Interest expenses of the period
3.Operation ability
(1)Receivables (including accounts receivable and notes receivable from business) turnover ratio ＝ Net sales ／ Balance of average receivables (including accounts receivable and notes receivable from business)
(2)Average collection period (days) ＝ 365 ／ Receivables turnover ratio
(3)Inventory turnover ratio ＝ Sales cost ／ Average inventory
(4)Payables (including accounts payable and notes payable from business) turnover ratio ＝ Sales cost ／ Balance of average payables (including accounts payable and notes payable from business)
(5)Inventory turnover in days ＝ 365 ／ Inventory turnover ratio
(6)Property, plant and equipment turnover ratio ＝ Net sales ／ Net average property, plant and equipment
(7)Total assets turnover ratio ＝ Net sales ／ Average total assets
4.Profitability
(1)Return on assets ＝〔 After-tax profit or loss ＋ Interest expense× （１－ Tax rate ）〕／ Average Total assets
＝
(2)Return on shareholders’ equity After-tax profit or loss ／ Net average total equity
(3)Net profit ratio ＝ After-tax profit or loss ／ Net sales
－
(4)EPS ＝（ Equity attributable to owners of parent Dividends of preferred stock ）／ Weighted average shares issued
5.Cash flows
(1)Cash flows ratio ＝ Net cash flows of operating activities ／ Current liabilities
(2)Net cash flow adequacy ratio ＝ Net cash flows of operating activities in latest 5 years ／ (Capital expense ＋ Increase in inventories ＋ Cash Dividends) in latest 5 years
＝－
(3)Cash re-investment ratio (Net cash flows of operating activities Cash Dividends) ／ (Gross of property, plant and equipment ＋ Long-term investments ＋ Other non-current assets ＋ Operational funds)
6.Leverage:
＝－
(1)Degree of operational leverage (Net operating income Variable operating costs and expenses) ／ Operating profit
＝－
(2)Degree of financial leverage Operating profit ／ (Operating profit Interest expense)

3.Audit Committee’s Review Report for the Most Recent Year

Audit Committee’ s Report

To: The General Meeting of Shareholders as of year 2020

The Board of Directors has prepared the Company’s 2020 business report, financial statements, and proposal for allocation of profits. The CPAs Lin, Yu-Kuan and Lai, Chung-Hsi of PricewaterhouseCoopers was retained to audit OPTOTECH Corporation’s financial statements and has issued an audit report relating to the financial statements. The business report , financial statements, and profit allocation proposal have been reviewed by the Audit Committee and no irregularities were found. We hereby report as above according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please kindly approve.

OPTOTECH Corporation

Chairman of the Audit Committee: Kao-Ming Tsai

Mar. 18, 2021

4.Consolidated Financial Statements for the Years Ended December 31, 2016 and 2015, and Independent Auditors’ Report

OPTO TECH CORPORATION AND SUBSIDIARIES Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2020, pursuant to the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the company that is required to be included in the consolidated financial statements of affiliates, is the same as the company that is required to be included in the consolidated financial statements of parent and subsidiary companies under International Financial Reporting Standard 10. And if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Opto Tech Corporation

Opinion

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

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditor’s’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants 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 consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

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

Key audit matter- Allowance for inventory valuation losses

Description

Please refer to Note 4(12) for accounting policies on inventory valuation, Note 5(2) for accounting

estimates and assumption uncertainty on inventory valuation, and Note 6(5) for details of allowance for inventory valuation losses. As of December 31, 2020, the balances of inventories and allowance for inventory valuation losses were NT$ 1,285,891 thousand and NT$ 130,302 thousand, respectively.

As the value of the Group’s inventories are effected by market prices and product life cycles, there is a higher risk of obsolescence. For inventories aged over a certain period of time and individually identified as obsolete, the net realisable value is estimated based on historical data of inventory closeout. The net realisable value utilised in evaluating obsolete inventories involves uncertainty of estimation as it is subject to management’s judgment. Since inventories and allowance for inventory valuation losses were material to the consolidated financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter: Assessed the reasonableness of policies and procedures in the provision of allowance for inventory valuation losses and the reasonableness in the identification of obsolete inventories; validated the appropriateness of system logic of inventory aging report in order to confirm the compliance with respective policies; and assessed the reasonableness of the Group’s determination of the provision of allowance for inventory valuation losses through obtaining assessment documents and supporting evidences in relation to individually identified obsolete or damaged inventories from management.

Key audit matter- Estimation of fair values of unlisted securities without active market Description

Please refer to Note 4(7)(8) for accounting policies on financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss, Note 5(2) for accounting estimates and assumption uncertainty on estimation of financial assets-fair value measurement of unlisted stocks without active market, and Note 6(2)(3),12(3) for details of financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income or loss. As of December 31, 2020, the carrying amount of unlisted securities without active market was NT$805,199 thousand.

For unlisted securities without active market held by the Group, management assesses their fair values through market approach or asset-based approach and takes into account the discount for liquidity. Since the valuation method is subject to management’s judgment and involves uncertainty, which would affect fair value, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed the reasonableness of valuation method and parameters referred to in the appraisal report by the independent appraiser who was engaged by the management, including the net assets value measured at fair value, comparability and market liquidity of comparable companies; and assessed

the reasonableness of price multipliers and discounts for liquidity in the market.

Key audit matters –Cut-off of sales of goods from hub warehouse

Description

Please refer to parent company financial statement Note 4(30) for accounting policies on revenue recognition.

For the types of revenue of the Group, revenue from sales of goods from hub warehouse is recognised when the custodians (hub warehouses) deliver the goods to the customer (the control of goods have been transferred). The Group recognises revenue based on movements of inventories contained in the statements or other information provided by the custodians. Because the frequency and timing of statements provided by custodians vary and the process of revenue recognition contains numerous manual procedures and judgement, which would potentially result in inaccurate timing of revenue recognition. Due to that the revenue from sales of goods from hub warehouse is material to the Group, and the transaction amounts prior to and after the balance sheet date has significant effects on the financial statements, it was identified as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

Assessed and validated the appropriateness of management’s internal controls over the cut-off of sales of goods from hub warehouse prior to and after every month end in 2020, including verifying acceptance reports provided by the hub warehouse custodians and ensuring movements of inventories and cost of goods sold have been recorded in appropriate periods. Furthermore, we performed confirmation procedures or conducted inventory physical observation on inventory quantities held by hub warehouses and validated the quantities against accounting records.

Other matter–Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Opto Tech Corporation as at and for the years ended December 31, 2020 and 2019.

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

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

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

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

Auditor’s responsibilities for the audit of the consolidated financial statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Lin, Yu-Kuan Lai, Chung-Hsi

For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

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

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

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December31,2020 AMOUNT % $ 3,100,161 29 320,419 3 8,873 - 1,634,913 16 16,880 - 20,218 - 1,155,589 11 24,202 - 25,245 - 6,306,500 59 106,990 1 783,998 7 5,394 - 2,705,133 26 236,135 2 399,307 4 14,318 - 48,337 1 35,315 - 4,334,927 41 $ 10,641,427 100	December31,2019	December31,2019
	AMOUNT $ 3,100,161 320,419 8,873 1,634,913 16,880 20,218 1,155,589 24,202 25,245 6,306,500 106,990 783,998 5,394 2,705,133 236,135 399,307 14,318 48,337 35,315 4,334,927 $ 10,641,427	AMOUNT $ 2,997,465 169,315 13,051 1,415,163 32,788 19,011 1,239,698 45,102 26,259 5,957,852 106,853 925,373 8,768 2,909,127 251,529 - 14,229 88,920 43,493 4,348,292 $ 10,306,144	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Notes receivable, net Accounts receivable - net Accounts receivable - related parties - net Other receivables Inventories - net Prepayments Other current assets Current Assets Non-current assets Financial assets at fair value through profit or loss - non-current Financial assets at fair value through other comprehensive income or loss - non-current Investments accounted for using equity method Property, plant and equipment - net Right-of-use assets Investment property Intangible assets Deferred tax assets Other non-current assets Non-current assets Total assets			29 2 - 14 - - 12 1 -
			58
			1 9 - 28 3 - - 1 -
			42
			100

(Continued)

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities andEquity	December31,2020 December31,2019 Notes AMOUNT % AMOUNT % 6(11) $ 230,758 2 $ 249,640 3 6(2) 799 - 31 - 1,757 - 6 - 665,926 6 651,067 6 7 51,920 1 78,691 1 6(12) 619,042 6 548,988 5 25,969 - 102,901 1 6(15) 4,033 - 8,272 - 7 19,560 - 19,598 - 6(13)(20) and 7 113,800 1 35,506 - 1,733,564 16 1,694,700 16 6(13) 748,555 7 814,504 8 6(15) 18,808 - 15,745 - 6(27) 42,986 1 81,572 1 7 216,706 2 229,898 2 6(14) 187,482 2 201,409 2 1,214,537 12 1,343,128 13 2,948,101 28 3,037,828 29 6(16) 3,786,228 35 3,786,228 37 6(17) 703,108 7 702,965 7 6(18) 729,360 7 669,312 6 3,743 - 8,392 - 2,361,920 22 1,841,481 18 6(19) 187,351 2 279,469 3 6(16) ( 82,021) ( 1) ( 23,172) - 7,689,689 72 7,264,675 71 3,637 - 3,641 - 7,693,326 72 7,268,316 71 9 11 $ 10,641,427 100 $ 10,306,144 100	December31,2019	December31,2019
			%
Current liabilities Short-term loans Financial liabilities at fair value through profit or loss - current Notes payable Accounts payable Accounts payable - related parties Other payables Current income tax liabilities Provisions for liabilities - current Current lease liabilities Other current liabilities Current Liabilities Non-current liabilities Long-term loans Provisions for liabilities - non-current Deferred tax liabilities Non-current lease liabilities Other non-current liabilities Non-current liabilities Total Liabilities Equity attributable to owners of parent Capital Common stock Capital Reserve Capital surplus Retained Earnings Legal reserve Special reserve Unappropriated earnings Other Equity Adjustments Other equity interest Treasury stocks Treasury stocks Equity attributable to owners of parent Non-controlling interest Total equity Significant contingent liabilites and unrecognised contract commitments Significant events after the balance sheet date Total liabilities and equity			3 - - 6 1 5 1 - - -
			16
			8 - 1 2 2
			13
			29
			37 7 6 - 18 3 -
			71
			-
			71
			100

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

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items

Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(20) and 7
$ 5,590,046
100
$ 5,418,004
100
6(5)(25)(26)
and 7
(
3,946,488) (
71) (
3,779,675) (
70)
1,643,558
29
1,638,329
30
6(25)(26)
(
127,614) (
2) (
125,590) (
2)
(
489,207) (
9) (
422,121) (
8)
(
335,103) (
6) (
351,895) (
7)
12(2)
(
2,487)
-
1,434
-
(
954,411) (
17) (
898,172) (
17)
689,147
12
740,157
13
6(21)
11,234
-
16,373
-
6(22)
55,611
1
58,907
1
6(23)
(
108,250) (
2) (
2,979)
-
6(24)
(
27,611)
- (
34,342)
-
6(6)
(
375)
-
8,469
-
(
69,391) (
1)
46,428
1
619,756
11
786,585
14
6(27)
(
44,627) (
1) (
181,950) (
3)
$ 575,129
10
$ 604,635
11

Operating revenue

Operating costs

Gross profit, net
Operating expenses

Selling expenses
General and administrative expenses
Research and development expenses
Expected credit (loss) gain on financial
assets

Total operating expenses
Operating profit
Non-operating income and expenses
Interest income

Other income

Other gains and losses

Finance costs

Share of (loss) profit of associates and
joint ventures accounted for under equity
method

Total non-operating income and
expenses
Profit before income tax
Income tax expense

Net income

(Continued)

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2020 AND 2019

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

Items	Year ended December 31	Year ended December 31
	2020	2019
			%
Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealised (losses) gains on valuation of fiancial assets at fair value through other comprehensive (loss) income Income tax related to components of other comprehensive income (loss) that will not be reclassified to profit or loss Total other comprehensive (loss) income that will not be reclassified to profit or loss, net of tax Items that will be reclassified to profit or loss Currency translation differences of foreign operations Share of other comprehensive income (loss) of associates and joint ventures accounted for using the equity method Total other comprehensive income (loss) that will be reclassified to profit or loss, net of tax Total other comprehensive (loss) income that will be reclassified to profit or loss, net of tax Total comprehensive income for the year Profit (loss), attributable to: Owners of the parent Non-controlling interest Total comprehensive income attributable to: Owners of the parent Non-controlling interest Earnings per share Profit for the year Diluted earnings per share Profit for the year			- 1 -
			1
			- -
			-
			1
			12
			11 -
			11
			12 -
			12
			1.45
		$	1.44

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

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Note					Equity attributable to owners o	Equity attributable to owners o	ft	he parent	he parent				Non-controlling interest
	Common stock	Capital reserve		Re	tained Earnings			Other equityinterest		Treasury stocks		Total
			Legal reserve		Special reserve	Unappropriated earnings	d	Financial statements translation ifferences of foreign operations	Unrealised gains or loss on financial assets measured at fair value through other comprehensive income
6(3)(14)(19) 6(18) 6(6) 6(16) 6(3)(14)(19) 6(18) 6(6) 6(3) 6(16)	$ 4,454,386 - - - - - - - ( 668,158 ) $ 3,786,228 $ 3,786,228 - - - - - - - - $ 3,786,228	$ 702,521 - - - - - - 444 - $ 702,965 $ 702,965 - - - - - 143 - - $ 703,108	$ 604,001 - - - 65,311 - - - - $ 669,312 $ 669,312 - - - 60,048 - - - - $ 729,360	$ - - - - - 8,392 - - - $ 8,392 $ 8,392 - - - - ( 4,649 ) - - - $ 3,743		$1,537,426 604,633 ( 4,156 ) 600,477 ( 65,311 ) ( 8,392 ) ( 222,719 ) - - $1,841,481 $1,841,481 575,133 525 575,658 ( 60,048 ) 4,649 - 180 - $2,361,920	$ 2,021 - ( 11,393 ) ( 11,393 ) - - - - - ( $ 9,372 ) ( $ 9,372 ) - 5,309 5,309 - - - - - ( $ 4,063 )		$ 251,355 - 37,486 37,486 - - - - - $ 288,841 $ 288,841 - ( 97,247 ) ( 97,247 ) - - - ( 180 ) - $ 191,414	( $ 24,503 ) - - - - - - - 1,331 ( $ 23,172 ) ( $ 23,172 ) - - - - - - - ( 58,849 ) ( $ 82,021 )	$7,527,207 604,633 21,937 626,570 - - ( 222,719 ) 444 ( 666,827 ) $7,264,675 $7,264,675 575,133 ( 91,413 ) 483,720 - - 143 - ( 58,849 ) $7,689,689		$ 3,641 2 ( 2 ) - - - - - - $ 3,641 $ 3,641 ( 4 ) - ( 4 ) - - - - - $ 3,637	$7,530,848 604,635 21,935 626,570 - - ( 222,719 ) 444 ( 666,827 ) $7,268,316 $7,268,316 575,129 ( 91,413 ) 483,716 - - 143 - ( 58,849 ) $7,693,326

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

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash flows
Expected credit losses (reversal of gains) on financial
assets
Depreciation
Amortization
Net (gain) loss on financial assets and liabilities at fair
value through profit or loss
Interest expense
Interest income
Dividend income
Loss (gain) on sale of investments
Loss on disposal of property, plant and equipment
Gain on lease termination
Impairment loss on non-financial assets
Share of loss (profit) of associates accounted for using
the equity method
Changes in assets/liabilities relating to operating
activities
Changes in operating assets
Acquisition of financial assets at fair value through
profit or loss
Notes receivable - net
Accounts receivable - net
Accounts receivable - related parties - net
Other receivables
Inventories - net
Prepayments
Other current assets
Other non-current assets
Net changes in liabilities relating to operating activities
Notes payable
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Provisions for liabilities
Net defined benefit liability
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

Year ended December 31
Notes
2020
2019
$ 619,756 $ 786,585
12(2)
2,487 (
1,434 )
6(7)(8)(25)
457,472
474,289
6(10)(24)
15,090
12,298
6(2)(23)
(
473 )
1,144
6(24)
26,492
33,219
6(21)
(
11,234 ) (
16,373 )
6(22)
(
14,454 ) (
20,051 )
6(23)
5,443 (
8,486 )
6(7)(23)
30,897
-
6(8)(23)
(
5 )
-
6(7)(23)
35,585
-
6(6)
375 (
8,469 )
(
150,000 )
52,003
4,178
68
(
222,237 )
160,710
15,908
46,684
(
5,120 ) (
6,026 )
84,109
91,703
20,900 (
18,692 )
1,014
179
3,394
739

1,751 (
27 )
14,859
77,060
(
26,771 ) (
9,272 )
71,456 (
50,739 )
15,334 (
10,349 )
(
1,171 ) (
10,382 )
(
12,595 )
1,287
982,440
1,577,668
11,930
16,181
17,671
20,051
(
27,894 ) (
33,020 )
(
79,345 ) (
128,942 )
904,802
1,451,938

(Continued

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value throughs other
comprehensive income
Proceeds from disposal of finanacial assets at fair value
through other comprehensive income
Acquisition of investment property
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
Decrease in deposits-out
Increase in other financial assets
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Decrease in short-term loans
Increase in long-term loans
Decrease in long-term loans
Repayments of principal portion of lease liabilities
Decrease in guarantee deposits
Stock repurchased
Payment of cash dividends
Payment of capital reduction
Net cash flows used in financing activities
Effect of change in exchange rate
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year

Year ended December 31
Notes
2020
2019
7
$ - ( $ 3,600 )
6(3)
3,780
-
6(8)
(
399,307 )
-
6(7)(8)
(
297,209 ) (
294,331 )
1
-
6(10)
(
15,179 ) (
17,687 )
4,784
9,899
8
- (
1,950 )
(
703,130 ) (
307,669 )
6(29)
666,529
1,071,311
6(29)
(
685,411 ) (
1,546,477 )
6(29)
-
814,504
6(29)
(
2,989 ) (
250,000 )
6(29)
(
20,221 ) (
21,206 )
6(29)
(
676 ) (
849 )
6(16)
(
58,849 )
-
6(18)
- (
222,275 )
6(15)(16)
- (
666,827 )
(
101,617 ) (
821,819 )
2,641 (
15,211 )
102,696
307,239
2,997,465
2,690,226
$ 3,100,161 $ 2,997,465

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

OPTO TECH CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

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

1. History and Organization

Opto Tech Corporation (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Law of the Republic of China (R.O.C.). The shares of the Company have been traded on the Taiwan Stock Exchange since May 2, 1995. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture and sales of semiconductor components as well as research and development, design, manufacture and sales of systems products.

2. The Date of Authorization for Issuance of the Financial Statements and Procedures for

Authorization

These consolidated financial statements were authorised for issuance by the Board of Directors on March 18, 2021.

3. Application of New Standards, Amendments and Interpretations

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

New Standards,Interpretations and Amendments Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS7 , ‘Interest rate benchmark reform’ Amendment to IFRS 16, ‘Covid-19-related rent concessions’ Note：Earlier application from January 1, 2020 is allowed by FSC.	Effective date by International Accounting Standards Board
	January 1, 2020 January 1, 2020 January 1, 2020 June 1, 2020 (Note)

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

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

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

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

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

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

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

IFRSs endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

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

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

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

4. Summary of Significant Accounting Policies

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income.
- (c) Defined benefit liabilities recognised based on present value of defined benefit obligation less the net amount of pension fund assets.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with

the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.

(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:

Ownership (%)

Name of Investor	Name of Subsidiary	Main Business Activities	December 31, 2020	December 31, 2019 100.00 100.00 100.00 99.87 - - 100.00 50.00 100.00 50.00 100.00	Description
Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Opto CSB Bright Everyung	Ho Chung Investment Co., Ltd. (Ho Chung Investment) Opto Technology International Group Co., Ltd. (Opto) Opto Tech (Macao) Co., Ltd. (Opto Macao) CS Bright Corporation (CSB) Everyung Investment Ltd. (Everyung) Dongzhen Asset Co., Ltd. Opto Tech (Cayman) Co., Ltd. (Cayman) Everyung Investment Ltd. (Everyung) Bright Investment International Ltd. (Bright) Everyung Investment Ltd. (Everyung) Opto Plus Technology Co., Ltd. (Opto Plus)	Investment business Holding company International trade Manufacture and sales of LED and electronic products Holding company Investment business Holding company Holding company Holding company Holding company Manufacture and sales of LED and electronic products	100.00 - - 99.87 50.00 100.00 - - 100.00 50.00 100.00		Note 1 Note 2 Note 3 Note 4 Note 2 Note 5 Note 2 Note 2 Note 4

Note 1: Ho Chung Investment has been continuously acquiring the Company’s common stock amounting to 755 thousand shares and disposed 352 thousand shares from 1998 to 2000. It holds about 0.2% of the Company’s outstanding common stock.
Note 2: The Board of Directors of the Company resolved the liquidation of foreign subsidiaries, Opto Technology International Group Co., Ltd. (OTIG) and OptoTech (Cayman)Co., Ltd. (Opto (Cayman)), on August 14, 2017. Opto (Cayman) has completed the liquidation process on September 16, 2020 and remitted share capital back to OTIG. OTIG has completed the liquidation process on October 26, 2020. The Company formerly held 50% equity shares of foreign controlling company, Everyung Investment Ltd. (Everyung), through OTIG. After OTIG completed the liquidation process, the Company generally accepted its assets and directly held 50% equity shares of Everyung.
Note 3: The Board of Directors of the Company resolved the liquidation of foreign subsidiaries, Opto Macao on April 28, 2020. Opto Macao has completed the liquidation process on September 29, 2020 and remitted share capital back to Opto Tech Corporation.
Note 4: The Board of Directors of the Company resolved the liquidation of subsidiary, CS Bright Corporation (CSB), on September 10, 2020. The effective date was set on December 31, 2020, the liquidation is still in process.
Note 5: The Company was established on November 25, 2020 and acquired 100% equity interests in subsidiary, Dongzhen Asset Co., Ltd., which was included in the consolidated statements starting from the acquisition date.
C. Subsidiaries not included in the consolidated financial statements ： None.
D. Adjustments for subsidiaries with different balance sheet dates ： None.
E. Nature and extent of significant restrictions on its ability to access or use assets, and settle liabilities of the Group ： None.
F. Subsidiaries that have non-controlling interests that are material to the Group ： None.

(4) Foreign currency translation

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

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
B. Translation of foreign operations
(a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
iii. All resulting exchange differences are recognised in other comprehensive income.
(b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Group retains partial interest in the former foreign associate or joint arrangement after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangement, such transactions should be accounted for as disposal of all interest in these foreign operations.
(c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

(5) Classification of current and non-current items

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

(6) Cash equivalents

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

(7) Financial assets at fair value through profit or loss

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(8) Financial assets at fair value through other comprehensive income
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:
(a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(9) Accounts and notes receivable
A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(10) Impairment of financial assets
For accounts receivable or contract assets that do not contain a significant financing component, at each reporting date, the Group recognises the impairment provision for lifetime expected credit losses (ECLs).
(11) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.
(12) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item-by-item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for using equity method / associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.
G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
H. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognised as capital surplus in relation to the associate are transferred to profit or loss proportionately.
(14) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

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

Buildings and structures 10 ~ 50 years Machinery and equipment 08 ~ 10 years Utility equipment 06 ~ 25 years Pollution prevention facilities 08 ~ 20 years Transportation equipment 03 ~ 05 years Office equipment 03 ~ 07 years Other equipment 03 ~ 25 years

(15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.
C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date;
(c) Any initial direct costs incurred by the lessee; and
(d) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(16) Investment property

Investment property is stated initially at its cost which including purchase price and any direct expenses. Directly attributable expenses include legal service expense, tax on the transfer of properties and other transaction costs and subsequently measured using the cost model.

(17) Intangible assets

Intangible assets, mainly computer software, is stated at cost and amortised on a straight-line basis over its estimated useful life of 2 to 10 years.

(18) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. When the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(19) Borrowings

A. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.
B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

(20) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(21) Financial liabilities at fair value through profit or loss

A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges, or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:
(a) Hybrid (combined) contracts; or
(b) They eliminate or significantly reduce a measurement or recognition inconsistency; or
(c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

C. If the credit risk results in fair value changes in financial liabilities designated as at fair value through profit or loss, they are recognised in other comprehensive income in the circumstances other than avoiding accounting mismatch or recognising in profit or loss for loan commitments or financial guarantee contracts.
(22) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(23) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(24) Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

(25) Provisions

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

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

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

B. Pensions
(a) Defined contribution plans

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

(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

     - ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

C. Termination benefits
- Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.
D. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognised as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.
(27) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognised as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonmarket vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date.

Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(28) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is

determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology and research and development expenditures to the extent that it is possible future taxable profit will be available against which the unused tax credit can be utilised.
(29) Share capital
A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

(30) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(31) Revenue recognition
A. Sales of goods
- (a) The Group is primarily engaged in the manufacture and sales of semiconductor components. Sales are recognised when control of the products has transferred, being when the products are delivered to the client, the client has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the client, and either the client has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied. As the time interval between the transfer of committed goods and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.
- (b) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

100

B. Sales and installation of systems products
- (a) Contracts include sales and installation services of systems products. The system products and the installation services provided by the Group are mostly not distinct and are identified to be one performance obligation since the installation services involve significant customisation and modification. Some contracts are accounted for as a separate performance obligation, and the transaction price will be allocated to each performance obligation based on the stand-alone selling prices. The Group recognises revenue when the performance obligation is satisfied.
- (b) The Group provides standard warranties on system products sold. Warranties are estimated based on historical warranty data of system products, and recognised when the amount can be reliably estimated.
(32) Operating segments

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

(33) Reorganisation

Reorganisation under common control is recognised using book value approach.

5. Critical Accounting Judgements, Estimates and Key Sources of Assumption Uncertainty

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

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

None.

(2) Critical accounting estimates and assumptions

A. Allowance for inventory valuation losses
As the value of the Group’s inventories are effected by market prices and product life cycles, there is a higher risk of obsolescence. For inventories aged over a certain period of time and individually identified as obsolete, the net realisable value is estimated based on historical data of inventory closeout. The net realisable value utilised in evaluating obsolete inventories involves uncertainty of estimation as it is subject to management’s judgement. Inventories and allowance for inventory voluation losses were material to the consolidated financial statements.

As of December 31, 2020, the carrying amount of inventories was $1,155,589.

B. Financial assets - fair value measurement of unlisted stocks without active market For unlisted securities without active market held by the Group, management assesses their fair values through market approach and takes into account the discount for liquidity. The valuation method is subject to management’s judgement and involves uncertainty, which would effect fair value. Please refer to Note 12(3).
As of December 31, 2020, the carrying amount of unlisted stocks without active market was $805,199.

101

6. Details of Significant Accounts

(1) Cash and cash equivalents

tails of Significant Accounts Cash and cash equivalents
Cash on hand Checking demand deposits Time deposits Cash equivalents - Resale bonds Total	December31,2020 341 $ 677,614 2,064,206 358,000 3,100,161 $	December31,2019
		478 $ 456,624 2,030,363 510,000
		2,997,465 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. Cash and cash equivalents amounting to $22,810 and $22,810 were pledged to others as collateral for the leases of land and dormitory as of December 31, 2020 and 2019, respectively, and were classified as other financial assets. Please refer to Note 8 for the details.

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

Items		December 31,2020		December 31,2019
Current items:
Financial assets mandatorily measured at fair
value through profit or loss
Funds	$	315,000	$	165,000
Valuation adjustment
Funds		5,248		4,315
Forward exchange contracts		171		-
Total	$	320,419	$	169,315
Financial liabilities mandatorily measured at fair
value through profit and loss
Forward exchange contracts	($	799)	($	31)
Non-current items:
Financial assets mandatorily measured at fair
value through profit and loss
Unlisted stocks	$	127,048	$	127,048
Valuation adjustment	(	20,058)	(	20,195)
Total	$	106,990	$	106,853

A. The Group recognised net gain (loss) of $473 and ($1,144) on financial assets measured at fair value through profit or loss for the years ended December 31, 2020 and 2019, respectively.
B. The non-hedging derivative instrument transactions and contract information are as follows: December 31, 2020

Financial instruments Assets-Current items: Forward exchange contracts Liabilities - Current items: Forward exchange contracts Financial instruments Liabilities - Current items: Forward exchange contracts	Contractperiod USD 2,000 $ (thousands) USD 3,000 $ (thousands) Contract Amount (Nominal Principal) December 1,2020~ January 21,2021 December 31,2019 December 21,2020~ January 26,2021	Contractperiod USD 2,000 $ (thousands) USD 3,000 $ (thousands) Contract Amount (Nominal Principal) December 1,2020~ January 21,2021 December 31,2019 December 21,2020~ January 26,2021
	USD USD
	USD 1,000 $ (thousands) Contract Amount (Nominal Principal)	Contractperiod
	USD	December 30, 2019~ January 21, 2020

102

The Group entered into forward exchange contracts to sell USD and buy TWD to hedge exchange rate risk of export proceeds. However, these forward exchange contracts are not accounted for under hedge accounting.

C. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.
D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

(3) Financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed stocks Unlisted stocks Subtotal Valuation adjustment Total	December 31,2020 73,574 $ 477,809 551,383 232,615 783,998 $	December 31,2019
		73,574 $ 481,409
		554,983 370,390
		925,373 $

A. The Group sold all its stocks of Guang Xin Vision Co., Ltd. for $3,780 and resulted in transfers of $180 from other equity to retained earnings on disposal during the second quarter of 2020.
B. The Group has elected to classify equity instruments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $783,998 and $925,373 as at December 31, 2020 and 2019, respectively.
C. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

	financial assets at fair value through other comprehensive income are listed below:	financial assets at fair value through other comprehensive income are listed below:
(4)	2020 2019 Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income 97,247) ($ 37,486 $ Cumulative gains reclassified to retained earnings due to recognition 180 $ - $ Dividend income recognised in profit or loss Held at end of period 14,454 $ 20,051 $ Years endedDecember31, December 31,2020 December 31,2019 Notes receivable 8,873 $ 13,051 $ Accounts receivable 1,642,933 1,436,984 Accounts receivable - related parties 16,880 32,788 Less: Allowance for uncollectible accounts 8,020) ( 21,821) ( 1,660,666 $ 1,461,002 $ Notes and accounts receivable
		1,461,002 $

As of December 31, 2020 and 2019, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $1,717,828.

103

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

Without past due Up to 180 days 181 to 360 days Over 361 days	December 31,2020 1,618,397 $ 34,823 4,771 1,822 1,659,813 $	December 31,2019
		1,425,938 $ 21,705 2,838 19,291
		1,469,772 $

The ageing analysis was based on the past due collection date.

B. The ageing analysis of notes receivable is as follows:

Without past due	December 31,2020 8,873 $	December 31,2019 13,051 $

The ageing analysis was based on the maturity date of the promissory note.

C. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(5) Inventories

in Note 12(2). Inventories
Raw materials Supplies Work in process Semi-finished goods Finished goods Total	December 31,2020 196,857 $ 252,103 261,112 88,817 356,700 1,155,589 $	December 31,2019
		230,552 $ 233,340 360,946 78,894 335,966
		1,239,698 $

The cost of inventories recognised as expense for the period:

The cost of inventories recognised as expense	for the period:	for the period:
Cost of goods sold Loss (gain on reversal) on decline in market value	Years ended December 31,
	2020 2019 3,840,197 $ 3,860,475 $ 106,291 80,800) ( 3,946,488 $ 3,779,675 $	2019
		3,779,675 $

A. During the year ended December 31, 2020, the Group wrote down inventory from cost to net realisable value accounted for as ‘cost of goods sold’.
B. For the year ended December 31, 2019, because of the rise of the Group’s product price and clearance of low-value product, the net realised value was reversed and recognised as reduction of cost of goods sold.

(6) Investments accounted for using the equity method

		2020			2019
At January 1	$		8,768	$		641
Share of (loss) profit of investments accounted
for using the equity method	(		375)			8,469
Earnings distribution of investments accounted
for using the equity method	(		3,217)			-
Change in other equity items (Note 6(18))			218	(		342)
At December 31	$		5,394	$		8,768
Associated enterprises		December 31,	2020		December 31,	2019
VML TECHNOLOGIES B.V.	$		5,394	$		8,768

104

(7) Property, plant and equipment

2020

nt and equipment										2020
															Construction in
								Pollution							progress and
		Buildings				Utility	prevention		Transportation			Office		Other	prepayment for
At January 1	and structures			Machinery		facilities		facilities		equipment		equipment		equipment		equipment		Total
Cost	$	2,028,554	$	5,625,019	$	1,118,047	$	717,932	$	8,703	$	78,865	$	1,949,344	$	116,824	$	11,643,288
Accumulated depreciation	(	1,135,179)	(	4,381,982)	(	974,309)	(	594,031)	(	7,337)	(	66,858)	(	1,567,562)		-	(	8,727,258)
Accumulated impairment	(	59)	(	6,742)		-		-		-	(	19)	(	83)		-	(	6,903)
	$	893,316	$	1,236,295	$	143,738	$	123,901	$	1,366	$	11,988	$	381,699	$	116,824	$	2,909,127
Year ended December 31
Opening net book amount	$	893,316	$	1,236,295	$	143,738	$	123,901	$	1,366	$	11,988	$	381,699	$	116,824	$	2,909,127
Additions		3,112		36,949		4,054		2,204		2,155		4,735		13,511		230,489		297,209
Disposals		-	(	4,959)	(	13,275)	(	1,149)		-	(	66)	(	11,448)		-	(	30,897)
Reclassifications		8,846		173,523		5,131		1,230		2,425	(	16)		41,651	(	232,790)		-
Depreciation expense	(	58,320)	(	275,039)	(	21,109)	(	16,845)	(	762)	(	4,188)	(	58,726)		-	(	434,989)
Impairment loss		-	(	35,585)		-		-		-		-		-		-	(	35,585)
Net exchange differences		245		17		-		-		-		6		-		-		268
Closing net book amount	$	847,199	$	1,131,201	$	118,539	$	109,341	$	5,184	$	12,459	$	366,687	$	114,523	$	2,705,133

At December 31
Cost	$	2,041,199	$	5,444,530	$	1,050,132	$	707,319	$	13,288	$	81,650	$	1,937,717	$	114,523	$	11,390,358
Accumulated depreciation	(	1,193,941)	(	4,277,941)	(	931,593)	(	597,978)	(	8,104)	(	69,172)	(	1,570,993)		-	(	8,649,722)
Accumulated impairment	(	59)	(	35,388)		-		-		-	(	19)	(	37)		-	(	35,503)
	$	847,199	$	1,131,201	$	118,539	$	109,341	$	5,184	$	12,459	$	366,687	$	114,523	$	2,705,133

2019

										2019
															Construction in
								Pollution							progress and
		Buildings				Utility	prevention		Transportation			Office		Other	prepayment for
At January 1	and structures			Machinery		facilities		facilities		equipment		equipment		equipment		equipment		Total
Cost	$	2,027,334	$	5,520,427	$	1,097,977	$	706,514	$	8,969	$	76,724	$	1,899,447	$	174,848	$	11,512,240
Accumulated depreciation	(	1,081,716)	(	4,251,295)	(	947,667)	(	577,068)	(	6,863)	(	64,280)	(	1,503,780)		-	(	8,432,669)
Accumulated impairment	(	59)	(	7,807)		-		-		-	(	19)	(	83)		-	(	7,968)
	$	945,559	$	1,261,325	$	150,310	$	129,446	$	2,106	$	12,425	$	395,584	$	174,848	$	3,071,603
Year ended December 31
Opening net book amount	$	945,559	$	1,261,325	$	150,310	$	129,446	$	2,106	$	12,425	$	395,584	$	174,848	$	3,071,603
Additions		7,217		26,810		11,133		3,902		-		3,745		18,144		223,380		294,331
Reclassifications		3,553		229,935		8,937		7,516		-		-		31,463	(	281,404)		-
Depreciation expense	(	58,616)	(	280,504)	(	26,642)	(	16,963)	(	720)	(	4,178)	(	63,492)		-	(	451,115)
Net exchange differences	(	4,397)	(	1,271)		-		-	(	20)	(	4)		-		-	(	5,692)
Closing net book amount	$	893,316	$	1,236,295	$	143,738	$	123,901	$	1,366	$	11,988	$	381,699	$	116,824	$	2,909,127

At December 31
Cost	$	2,028,554	$	5,625,019	$	1,118,047	$	717,932	$	8,703	$	78,865	$	1,949,344	$	116,824	$	11,643,288
Accumulated depreciation	(	1,135,179)	(	4,381,982)	(	974,309)	(	594,031)	(	7,337)	(	66,858)	(	1,567,562)		-	(	8,727,258)
Accumulated impairment	(	59)	(	6,742)		-		-		-	(	19)	(	83)		-	(	6,903)
	$	893,316	$	1,236,295	$	143,738	$	123,901	$	1,366	$	11,988	$	381,699	$	116,824	$	2,909,127

105

A. Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

Amount capitalized Interest rate	Years ended December 31,	Years ended December 31,
	2020 960 $ 0.24%~1.38%	2019
		1,042 $
		0.45%~1.41%

B. In June 2020, in consideration of its future operation plan, the Group assessed that certain machineries did not meet production requirements and showed an indication of idling. As a result, the Group recognised an impairment loss amounting to $35,585 as the recoverable amounts of these machineries were less than their carrying amounts. The Group used the value-in-use standard recoverable amount and the discount rate used was 9.82%.
－
(8) Leasing arrangements lessee
A. The Group leases various assets including land, buildings and business vehicles. Rental contracts are typically made for periods of 3 to 20 years.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Transportation equipment (Business vehicles) Office equipment (Internet equipment) Land Buildings Transportation equipment (Business vehicles) Office equipment (Internet equipment)	December 31,2020 December 31,2019 Carryingamount Carryingamount $ 223,498 $ 238,804 4,635 7,947 5,400 2,778 2,602 2,000 236,135 $ 251,529 $ Years ended December 31,	December 31,2019
		Carryingamount
		$ 238,804 7,947 2,778 2,000
		251,529 $
	2020 Depreciation charge $ 15,314 2,926 3,294 949 22,483 $	2019
		Depreciation charge
		$ 15,325 3,124 3,956 769
		23,174 $

C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets amount to $7,521 and $4,874, respectively.
D. The information on income and expense accounts relating to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts	Years ended December 31,	Years ended December 31,
	2020 4,351 $ 10,582 $	2019
		4,287 $
		9,317 $

E. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases amounts to $35,155 and $34,810, respectively.
F. The Group terminated the lease of the subsidiary’s office prior to the expiration date in September 2020, recognised gain on lease termination amounting to $5, and decreased right-of-use asset and lease liability by $434 and $502, respectively. No penalty was paid due to the early termination.

106

(9) Investment property

nvestment property
At January 1 Additions- from acquisitions Year ended December 31	2020
	Land
	- $ 399,307
	399,307 $

For the year ended December 31, 2019: None.

A.On December 31, 2020, the fair value of investment properties was $410,640, which based on the valuation results from independent appraisers calculated by comparison method and was level 3 fair value.

B.The Group has no investment property pledged to others as collateral.

(10) Intangible assets

Intangible assets
		2020		2019
At January 1		Software		Software
Cost	$	38,298	$		31,627
Accumulated amortisation	(	24,069)	(		22,787)
	$	14,229	$		8,840
Year ended December 31
Opening net book amount	$	14,229	$		8,840
Additions		15,179			17,687
Amortisation expense	(	15,090)	(		12,298)
Closing net book amount	$	14,318	$		14,229

At December 31
Cost	$	40,624	$		38,298
Accumulated amortisation	(	26,306)	(		24,069)
	$	14,318	$		14,229

Details of amortisation on intangible assets are as follows:

Operating costs Selling expenses General and administration expenses Research and development expenses Total Type of borrowings Unsecured bank borrowings Interest rate range Salaries and bonus payable Compensation payable to employees Remuneration payable to directors and supervisors Others Total )Short-term borrowings )Other payables	2020 2019 4,366 $ 3,972 $ 747 677 6,536 5,018 3,441 2,631 15,090 $ 12,298 $ Years ended December 31, December 31,2020 December 31,2019 230,758 $ 249,640 $ 0.51%~5.25% 0.53%~5.25% December 31,2020 December 31,2019 186,138 $ 152,867 $ 115,354 110,224 38,410 36,618 279,140 249,279 619,042 $ 548,988 $	2020 2019 4,366 $ 3,972 $ 747 677 6,536 5,018 3,441 2,631 15,090 $ 12,298 $ Years ended December 31, December 31,2020 December 31,2019 230,758 $ 249,640 $ 0.51%~5.25% 0.53%~5.25% December 31,2020 December 31,2019 186,138 $ 152,867 $ 115,354 110,224 38,410 36,618 279,140 249,279 619,042 $ 548,988 $
	2020 4,366 $ 747 6,536 3,441 15,090 $ December 31,2020 230,758 $ 0.51%~5.25% December 31,2020 186,138 $ 115,354 38,410 279,140 619,042 $
Unsecured bank borrowings Interest rate range Salaries and bonus payable Compensation payable to employees Remuneration payable to directors and supervisors Others Total Other payables
		152,867 $ 110,224 36,618 249,279
		548,988 $

(11) Short-term borrowings

(12) Other payables

107

- (13) Long term borrowings

Interest rate

Long-term borrowings			Interest rate
Type of borrowings	Credit line	Period	range		December	31,2020
Syndicated borrowings with	$ 1,200,000	2019.02.20~	1.169%~	$		811,515
four financial institutions		2022.02.20	1.797%
including China Trust
Commercial Bank (Unsecured)
Less: Current portion (shown as	“Other non-current liabilities”)			(		62,960)
				$		748,555
			Interest rate
Type of borrowings	Credit line	Period	range		December	31,2019
Syndicated borrowings with	$ 1,200,000	2019.02.20~	1.797%~	$		814,504
four financial institutions		2022.02.20	3.2865%
including China Trust
Commercial Bank (Unsecured)
Less: Current portion (shown as	“Other non-current liabilities”)					-
				$		814,504

A. On January 15, 2019, the Company signed a joint credit facility of $1.2 billion with four financial institutions including China Trust Commercial Bank. The loan agreement includes the following covenants:
(a)The current ratio should be no less than 100% per half year.
(b)The debt ratio should not be higher than 100%.
(c)The interest coverage ratio shall not be less than 300%.
(d)The tangible net value shall be maintained at more than 5 billion yuan (inclusive). If the Company fails to meet the required financial ratios, the bank will stop the allocation. In case of violation of the contract, the bank has the right to ask the Company to repay in full the unpaid balance of the loan in advance.
B. Although the long-term borrowing contracts are due on June 7, 2021 and August 28, 2021, the Company had settled the loan in advance on February 20, 2019 due to financial planning considerations.

(14) Pensions

A. (a) The Company and CS Bright Corporation have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and CS Bright Corporation contributes monthly an amount equal to 3.18% and 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and CS Bright Corporation would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and CS Bright Corporation will make contributions to cover the deficit.

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(b) The amounts recognised in the balance sheet are as follows:

		December 31,2020		December 31,2019
Present value of defined benefit	$	551,918	$	648,021
obligations
Fair value of plan assets	(	365,305)	(	448,157)
Net defined benefit liability	$	186,613	$	199,864

(c) Movements in net defined benefit liabilities are as follows:

2020 Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31 2019 Balance at January 1 Current service cost Interest expense (income) Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31		Present value of defined benefit obligations	Fair value of plan assets		Net defined benefit liability
	648,021 $ 8,000 5,300 661,321 - 162) ( 35,811 21,285) ( 14,364 - 123,767) ( 551,918 $ Present value of defined benefit obligations		448,157) ($ - 3,661) ( 451,818) ( 15,020) ( - - - 15,020) ( 22,234) ( 123,767 365,305) ($ Fair value of plan assets	199,864 $ 8,000 1,639 209,503 15,020) ( 162) ( 35,811 21,285) ( 656) ( 22,234) ( - 186,613 $ Net defined benefit liability
	627,717 $ 8,099 7,532 643,348 - 300 36,745 17,563) ( 19,482 - 14,809) ( 648,021 $		434,334) ($ - 5,212) ( 439,546) ( 14,287) ( - - - 14,287) ( 9,133) ( 14,809 448,157) ($	193,383 $ 8,099 2,320 203,802 14,287) ( 300 36,745 17,563) ( 5,195 9,133) ( - 199,864 $

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and CS Bright Corporation’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and CS Bright Corporation have no right to participate in managing and operating that fund and hence the Company and CS Bright Corporation are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years ended December 31,	Years ended December 31,
	2020 0.39% 3.00%	2019
		0.8%~0.82% 1.5%~3%

Future mortality rate was estimated based on the 5th Taiwan Standard Ordinary Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31, 2020 Effect on present value of defined benefit obligation December 31, 2019 Effect on present value of defined benefit obligation	Discount rate	Discount rate	Discount rate		Future salaryincreases	Future salaryincreases
	Increase 0.25%~0.5%		Decrease 0.25%~0.5%		Increase 0.25%~0.5%	Decrease 0.25%~0.5%
	41,350) ($ 47,878) ($		45,456 $ 52,628 $		44,026 $ 51,201 $	40,537) ($ 47,127) ($

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $8,059.
(g) As of December 31, 2020, the Company’s and CS Bright Corporation’s weighted average duration of the retirement plan is 16 years, respectively. The analysis of timing of the future pension payment was as follows:

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Within 1 year 1-2 year(s) 2-5 years Over 5 years	388,610 $ 6,857 1,076 320 396,863 $

B. (a) Effective July 1, 2005, the Company and its CS Bright Corporation established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and CS Bright Corporation contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) The Company’s Mainland China subsidiaries, Opto Plus Technology Co., Ltd., have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (P.R.C.) are based on certain percentage of employees’ monthly salaries and wages. The above Mainland China subsidiaries’ contribution percentage for both the years ended December 31, 2020 and 2019 were both 14%. Other than the monthly contributions, the Group has no further obligations.
(c) The pension costs under defined contribution pension plans of the Group for the years ended December 31, 2021 and 2020 were $34,799 and $38,587, respectively.

(15) Provisions

Provisions
Warranty			2020			2019
At January 1		$		24,017	$		34,229
Accrued (reversed) during the period				8,177	(		153)
Used during the period	(			9,348)	(		10,229)
Exchange differences	(			5)			170
At December 31	$			22,841	$		24,017
Analysis of total provisions:
			December 31,	2020		December 31,	2019
Current	$			4,033	$		8,272
Non-current	$			18,808	$		15,745

The Group provides warranties on products sold. Provision for warranties is estimated based on historical warranty data of products.

(16) Share capital

A. As of September 30, 2020, the Company’s authorized capital was $10,000,000, consisting of 1,000,000 thousand shares of common stock, and the paid-in capital was $3,786,228, consisting of 378,623 thousand shares of common stock with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. Movements in the number of the Company’s ordinary shares outstanding for the years ended December 31, 2020 and 2019 are as follows (Treasury stock was deducted):

					(In thousands of shares)
		2020			2019
At January 1			377,868		444,551
Capital reduction			-	(	66,683)
Purchased of treasury shares	(		2,327)		-
At December 31			375,541		377,868

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B. On March 19, 2020, the Board of Directors of the Company adopted a resolution to raise additional cash through private placement by issuing the maximum 60,000 thousand common stocks or / and preferred stocks to fulfil the capital needs for strengthening the financial capacity, introducing strategic investors as proposed, maintaining the sustainable development and strengthening the competitiveness of the Company. The issuance was approved at the stockholders’ meeting on June 16, 2020.
C. On April 25, 2019, the Board of Directors proposed a capital reduction of 668,158 thousand, representing 66,816 thousand shares of outstanding shares whose ratio is around 15%. The capital reduction was resolved in the shareholders’ meeting on June 13, 2019, and the Company submitted an application to FSC for registration. Subsequently, the Company obtained the registration of the capital reduction on July 18, 2019, with the effective date set on July 26, 2019. The return of the share payment has been completed on September 23, 2019.
D. Treasury stock
(a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

Name of company holdingthe shares The Company The Company Subsidiary-Ho Chung Investment Co., Ltd. Name of company holdingthe shares The Company Subsidiary-Ho Chung Investment Co., Ltd.	Reason for reacquisition For transfer of shares to employees The Company’s shares held by its subsidiary Reason for reacquisition The Company’s shares held by its subsidiary	(In thousands of shares) December 31,2020	(In thousands of shares) December 31,2020
		Number of Shares(thousand) 2,327 755 December	Carryingamount
			58,849 $ 23,172
			82,021 $
			31,2019
		Number of Shares(thousand) 755	Carryingamount
			23,172 $

(b) The Company’s shares held by its subsidiary had no voting rights before being transferred to the third party.
(c) As abovementioned in item C, the number of shares of the Company held by the subsidiary-Ho Chung Investment Co., Ltd. was decreased by 133 thousand shares and the carrying amount of the treasury stocks was decreased by $1,331 as result of the capital reduction in 2019.
(d) On November 6, 2020, the Board of Directors of the Company approved to repurchase the Company’s common shares and transfer to employees. The Company expected to repurchase 7,500,000 shares with an upper limit of cash amount of NT$3,103,739 thousand. As of January 8, 2021, the final date of repurchase period, the Company repurchased 4,294,000 shares for a total consideration of NT$109,251 thousand.
(e) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realised capital surplus.

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(f) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.
(g) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within five years from the reacquisition date and shares not reissued within the five-year period are to be retired.
(17) Capital reserve

Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(18) Retained earnings
A. Under the Group’s Articles of Incorporation, the current year’s earnings, if any, shall first be distributed as follows:
- (a) Offset prior years’ operating losses.
- (b) 10% of the remaining amount shall be set aside as legal reserve, unless the accumulated legal reserve equals the total capital of the Company.
- (c) Special reserve set aside in accordance with relevant laws or regulations or as required for operations.
- (d) Aside from some of accumulated unappropriated retained earnings will be reserved, remaining retained earnings will be allocated to shareholders as dividends. The Board of Directors proposes a dividend distribution plan for approval by resolution at the shareholders’ meeting.
- (e) The Group appropriated all or some dividends, bonus, capital surplus or legal reserve in the form of cash, which were resolved by the Board of Directors and reported to the shareholders.
B. The Group operates in the high-tech industry and its business life cycle is in the growth stage. In view of its capital expenditure demand and comprehensive financial plan for continuous development, the Company issues both stock and cash dividends. The proportion of dividends to be distributed in stocks and cash is determined based on the Company’s rate of growth and capital expenditures. However, the amount of cash dividends shall not be lower than 50% of the dividends distributed.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve excess 25% of the Company’s paid-in capital.
D. In accordance with the regulations, the Group shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. The amendment to the appropriation of 2019 earnings as resolved by the Board of Directors on December 18, 2020 and the appropriation of 2018 earnings as resolved by the shareholders on June 13, 2019 are as follow:

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Dividends per share Amount (in dollars) Legal reserve 60,048 $ Special reserve 4,649) ( Cash dividends - - $ Total 55,399 $ 2019	2018	2018
	Amount 65,311 $ 8,392 222,719 296,422 $	Dividends per share (in dollars)
		0.50 $

On March 19, 2020, the Board of Directors of the Company resolved the appropriation of earnings and expected to distribute cash dividends of $378,623 with $1 per share. On June 16, 2020, shareholders proposed an amendment, “shareholders’ bonus - cash” is $0, for the proposed resolution of 2019 earnings appropriation, which means that cash dividends will be distributed at $0 per share. The Board of Directors shall subsequently distribute dividends following the resolution of shareholders. Consequently, the Company’s Board of Directors resolved the amendments to the appropriation of earnings on December 18, 2020 and no cash dividend will be distributed. Please refer to the website of “Market Observation Post System” for information about appropriation of earnings which was approved by the Board of Directors and resolved by shareholders.

F. The appropriation of 2020 earnings had been approved by the Board of Directors on March 18, 2021. Details are summarized below:

Legal reserve Special reserve Cash dividends Total	Dividends per share Amount (indollars) 57,584 $ 1,320 514,927 1.39 $ 573,831 $ 2020	Dividends per share Amount (indollars) 57,584 $ 1,320 514,927 1.39 $ 573,831 $ 2020
		Dividends per share (indollars)
		1.39 $

Note: It was approved by the Board of Directors and currently is pending for reporting to the

shareholders.

(19) Other equity items

Other equity items
				2020
	Currency translation
	differences of foreign		Unrealized gain (loss)
		operations		on valuation		Total
At January 1	($	9,372)	$	288,841	$	279,469
Financial assets at fair value through
other comprehensive income (loss)
Revaluation - Group		-	(	137,595)	(	137,595)
Tax on revaluation		-		40,348		40,348
Revaluation transferred to retained
earnings		-	(	180)	(	180)
Currency translation differences:
-Group		5,091		-		5,091
-Associates		218		-		218
At December 31	($	4,063)	$	191,414	$	187,351

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2019

					2019
		Currency translation
	differences of foreign			Unrealized gain (loss)
			operations		on valuation		Total
At January 1		$	2,021	$	251,355	$	253,376
Financial assets at fair value through
other comprehensive income (loss)
Revaluation - Group			-		50,226		50,226
Tax on revaluation			-	(	12,740)	(	12,740)
Currency translation differences:
-Group	(		11,051)		-	(	11,051)
-Associates	(		342)		-	(	342)
At December 31	($		9,372)	$	288,841	$	279,469

(20) Operating revenue

Operating revenue
Revenue from contracts with customers	Years ended December 31,
	2020 5,590,046 $	2019
		5,418,004 $

A. The Group derives revenue in the following major product lines:

Year ended December 31,2020	LED and Silicon Sensor Chips Group	Displays and Lighting Group	Packaging Business Group	Total
Revenue from external customer contracts Year ended December 31,2019	4,446,496 $ LED and Silicon Sensor Chips Group	854,651 $ Displays and Lighting Group	262,415 $ Packaging Business Group	5,590,046 $
				Total
Revenue from external customer contracts	3,944,471 $	1,180,708 $	282,198 $	5,418,004 $

B. The Group has recognised the following revenue-related contract liabilities:

Contract liabilities:	December 31,2020 44,086 $	December 31,2020 44,086 $	December 31,2019 January1,2019 30,360 $ 40,808 $ Years ended December 31,	January1,2019
				40,808 $

			2020 2019

Revenue recognised that was included in the contract liability balance at the beginning of the year

$ 12,978 $ 32,894

(21) Interest income

Interest income
Interest income from bank deposits Interest income from resale bonds Other interest income	Years ended December 31,
	2020 9,615 $ 1,511 108 11,234 $	2019
		14,138 $ 1,924 311
		16,373 $

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(22) Other income

Years ended December 31,

Rent income Dividend income Other income	2020 81 $ 14,454 41,076 55,611 $	2019
		80 $ 20,051 38,776
		58,907 $

(23) Other gains and losses

Other gains and losses
		Years ended	December	31,
		2020		2019
Loss on disposal of property, plant and	($	30,897)	$		-
equipment
(Loss) gain on disposal of investments	(	5,443)			8,486
Net currency exchange loss	(	36,408)	(		9,239)
Net gain (loss) on financial assets and liabilities
at fair value through profit or loss		473	(		1,144)
Gain on lease termination		5			-
Losses on disposals of property, plant and
equipment	(	35,585)			-
Others	(	395)	(		1,082)
Total	($	108,250)	($		2,979)

(24) Finance costs

Interest expense: Bank borrowings Lease liabilities Less: Capitalisation of qualifying assets

Other financial costs Total

		Years ended	December	31,
		2020		2019
	$	23,101	$		29,974
		4,351			4,287
(		960)	(		1,042)
		26,492			33,219
		1,119			1,123
	$	27,611	$		34,342

(25) Expenses by nature

Employee benefit expense Depreciation on property, plant and equipment Amortisation on intangible assets Total

Years ended December 31,	Years ended December 31,
2020 1,347,187 $ 457,472 15,090 1,819,749 $	2019
	1,243,302 $ 474,289 12,298
	1,729,889 $

(26) Employee benefit expense

Wages and salaries Termination benefits Labor and health insurance fees Pension costs Other personnel expenses

Years ended December 31,	Years ended December 31,
2020 1,131,655 $ 51,231 87,398 44,438 32,465 1,347,187 $	2019
	1,077,452 $ - 88,778 49,006 28,066
	1,243,302 $

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A. According to the Articles of Incorporation of the Company, if the Company has distributable profit during the year, the Company shall distribute bonus to the employees that account for 10%~15% and pay remuneration to the directors and supervisors that shall not be higher than 5%, of the total distributed amount. If the Company has an accumulated deficit, earnings should be used to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Qualification requirements of employees, including the employees of subsidiaries of the Company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation.
B. For the years ended December 31, 2020 and 2019, the employees’ compensation was accrued at $115,175 and $108,746, respectively; directors’ remuneration was accrued at $38,392 and $36,249, respectively. The aforementioned amounts were recognised in salary expense. The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 15%, 5%, 11.8% and 3.9%, respectively, of distributable profit of current period distributable as of the end of reporting period.
C. For the years ended December 31, 2020 and 2019, employees’ compensation of the Company’s subsidiary, CS Bright Corporation, was accrued at $179 and $1,478, respectively; while directors’ and supervisors’ remuneration was accrued at $18 and $369, respectively. The aforementioned amounts were recognised in salary expenses. The employees’compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 10%, 1%, 12% and 3%, respectively of distributable profit of current period as of the end of reporting period.
D. Employees’ compensation and directors’ and supervisors’ remuneration of 2019 as resolved by the Board of Directors are the same as the amount recognised in the consolidated financial statements.
E. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the Board of Directors’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(27) Income tax

A. Income tax expense
(a) Components of income tax expense:

e tax ome tax expense Components of income tax expense:
		Years ended	December	31,
		2020		2019
Current tax:
Current tax on profit for the period	$	495	$		133,720
Tax on undistributed surplus earnings		27,254			30,236
Prior year income tax overestimation	(	25,336)	(		1,603)
Total current tax		2,413			162,353
Deferred tax:
Origination and reversal of temporary
differences		42,214			12,149
Impact of tax losses		-			7,448
Total deferred tax		42,214			19,597
Income tax expense	$	44,627	$		181,950

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(b) The income tax charge relating to components of other comprehensive income are as follows:

follows:
		Years ended	December	31,
		2020		2019
Remeasurement of defined benefit	$	131	($		1,039)
obligations
Changes in fair value of financial assets
at fair value through other
comprehensive income	(	40,348)			12,740
	($	40,217)	$		11,701

B. Reconciliation between income tax expense and accounting profit

		Years ended	December	31,
		2020		2019
Tax calculated based on profit before tax
and statutory tax rate	$	123,360	$		160,418
Expenses disallowed by tax regulation		2,827			3,252
Tax exempt income by tax regulation	(	2,126)	(		11,473)
Temporary differences not recognised as
deferred tax assets	(	26,494)			-
Effect from investment tax credits	(	18,304)	(		2,612)
Change in assessment of realisation of
deferred tax assets	(	36,554)			3,731
Prior year income tax overestimation	(	25,336)	(		1,603)
Tax on undistributed earnings		27,254			30,237
Income tax expense	$	44,627	$		181,950

C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and investment tax credits are as follows:

Temporary differences: - Deferred tax assets (liabilities): Loss on inventory value decline Expected credit loss Service warranty expense Impairment loss Net pension costs Remeasurement of defined benefit obligations Unrealized gain on valuation of financial assets Others Tax losses Total		Year ended December 31,2020	Year ended December 31,2020	Year ended December 31,2020
	January1	Recognised in profit or loss	Recognised in other comprehensive income	December 31
	14,358 $ 8,530 4,696 4,921 13,886 26,546 81,548) ( 10,906 5,053 7,348 $	7,354) ($ 8,530) ( 128) ( 2,710 12,790) ( 106) ( - 10,963) ( 5,053) ( 42,214) ($	- $ - - - - 131) ( 40,348 - - 40,217 $	7,004 $ - 4,568 7,631 1,096 26,309 41,200) ( 57) ( - 5,351 $

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Year ended December 31, 2019

Temporary differences: - Deferred tax assets (liabilities): Loss on inventory value decline Expected credit loss Service warranty expense Impairment loss Net pension costs Remeasurement of defined benefit obligations Unrealized gain on valuation of financial assets Others Tax losses Total	January1	Recognised in profit or loss	Recognised in other comprehensive income	December 31	December 31
	26,435 $ 9,185 4,912 6,143 13,629 25,507 68,808) ( 9,142 12,501 38,646 $	12,077) ($ 655) ( 216) ( 1,222) ( 257 - - 1,764 7,448) ( 19,597) ($	- $ - - - - 1,039 12,740) ( - - 11,701) ($	14,358 $ 8,530 4,696 4,921 13,886 26,546 81,548 ( 10,906 5,053 7,348 $
					7,348 $

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

as follows:
	December 31,2020
Year incurred	Amount filed/ assessed	Unused amount	Amount of unrecognised deferred tax assets
2011 2012	7,266 $ 7,266 $ 10,332 10,332 17,598 $ 17,598 $ December 31,2019		7,266 $ 10,332
			17,598 $

Year incurred	Amount filed/ assessed	Unused amount	Amount of unrecognised deferred tax assets
2010 2011 2012	123,142 $ 7,266 10,332 140,740 $	123,142 $ 7,266 10,332 140,740 $	114,142 $ - 1,332 115,474 $

E. The amounts of deductible temporary difference that are not recognised as deferred tax assets are as follows:

assets are as follows:
Deductible temporary differences	December 31,2020 169,393 $	December 31,2019
		301,864 $

F. As of December 31, 2020, the Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority.

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(28) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to owners of the parent Dilutive effect of common stock equivalents: Employees’ compensation Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents Basic earnings per share Profit attributable to owners of the parent Dilutive effect of common stock equivalents: Employees’ compensation Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents	Year ended December 31,2020
	Weighted-average outstanding common shares Earnings per share Profit after tax (in thousands) (in dollars) 575,133 $ 377,806 1.52 $ - 7,185 575,133 $ 384,991 1.49 $ Year ended December 31,2019		Earnings per share (in dollars)
			1.52 $
			1.49 $
	Profit after tax 604,633 $ - 604,633 $	Weighted-average outstanding common shares (in thousands) 415,686 5,229 420,915	Earnings per share (in dollars)
			1.45 $
			1.44 $

(29) Changes in liabilities from financing activities

Long-term Liabilities from Short-term borrowings (including Lease Guarantee financing borrowings currentportion) liabilities deposits activities-gross At January 1 249,640 $ 814,504 $ 249,496 $ 1,545 $ 1,315,185 $ Changes in cash flow from financing activity 18,882) ( 2,989) ( 20,221) ( 676) ( 42,768) ( Interest payment - - 4,351) ( - 4,351) ( Increase in lease principal - - 7,521 - 7,521 Amortization of interest expenses - - 4,351 - 4,351 Decrease for the period - - 502) ( - 502) ( Impact of changes in foreign exchange rate - - 28) ( - 28) ( At December 31 230,758 $ 811,515 $ 236,266 $ 869 $ 1,279,408 $ 2020			2020

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2019

	2019
Short-term borrowings At January 1 737,660 $ Changes in cash flow from financing activity 475,166) ( Interest payment - Increase in lease principal - Amortization of interest expenses - Impact of changes in foreign exchange rate 12,854) ( At December 31 249,640 $	Long-term Liabilities from borrowings (including Lease Guarantee financing currentportion) liabilities deposits activities-gross 250,000 $ 265,950 $ 2,394 $ 1,256,004 $ 564,504 21,206) ( 849) ( 67,283 - 4,287) ( - 4,287) ( - 4,762 - 4,762 - 4,287 - 4,287 - 10) ( - 12,864) ( 814,504 $ 249,496 $ 1,545 $ 1,315,185 $	Liabilities from financing activities-gross
		1,315,185 $

7. Related Party Transactions

(1) Names of related parties and relationship

Names of related parties Relationship with the Company Shin-Etsu Opto Electronic Co., Ltd. The Company is the director of this company; this company is the director of the Company.(Note 1) Giga Epitaxy Technology Corp. The Company is the director of this company. Nichia Taiwan Corp. This company is the director of the Company. Nichia Corp. This company's subsidiary is the director of the Company. VML Technologies B.V. This company is an investment of Ho Chung Investment

VML Technologies B.V. This company is an investment of Ho Chung Investment Co., Ltd. accounted for using the equity method. Shen Zhen Guang Xin Vision Technology The chairman of this company is an independent director Co., Ltd.(Shen Zhen Guang Xin) of the Company.(Note 2) The chairman of this company is an independent director Guang Xin Vision Technology Co., Ltd of the Company.(Note 2) Guang Xin Vision Tech. (HK) CO., The chairman of this company is an independent director Ltd.(Hong kong Guang Xin) of the Company.(Note 2)

Note 1: The shareholders of the Company during their meeting resolved to reelect all its directors on June 16, 2020. The shareholders of Shin-Etsu Opto Electronic Co., Ltd. (Shin-Etsu) also resolved to reelect all its directors on June 18, 2020. After the reelection, the Company is no longer a legal person of Shin-Etsu, and Shin-Etsu is no longer a legal person of the Company, thus, Shin-Etsu has not been a related party of the Company since June 18, 2020.
Note 2: The chairman of this company was no longer an independent director of the Company after the re-election at the stockholders’ meeting on June 16, 2020. Thereafter, it became a non-related party.

(2) Significant transactions and balances with related parties

A. Operating revenue:

Operating revenue:
Sales of goods: Associates Other related parties Total	Years ended December 31,
	2020 240 $ 234,463 234,703 $	2019
		120,137 $ 317,830
		437,967 $

The selling prices charged to the above related parties are not materially different from those charged to non-related parties. For the years ended December 31, 2020 and 2019, the credit term for the related parties was 45 ~136 days. Some related parties adopt the method of shipping after receiving the payment. The credit term was 90 ~ 150 days for the non-related parties for both periods.

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B. Purchases:

Purchases:
Purchases of goods: Other related parties	Years ended December 31,
	2020 181,343 $	2019
		243,781 $

The purchase prices charged by the above related parties were not materially different from those charged by non-related parties. For the years ended December 31, 2020 and 2019, the credit term was 60 ~ 120 days for the related parties, and 90 ~ 120 days for the non-related parties for both periods.

C. Accounts receivable:

non-related parties for both periods. C. Accounts receivable:
Receivables from related parties: Other related parties Payables to related parties: Other related parties D. Accounts payable:	December 31,2020 16,880 $ December 31,2020 51,920 $	December 31,2019
		32,788 $
		December 31,2019
		78,691 $

E. Advance receipts

Advance receipts
Other related parties Acquisition of property, plant and equipment: Other related parties Acquisition of financial assets at fair value through other comprehensive income-other related parties Property transactions	December 31,2020 942 $	December 31,2019
		- $
		2019
		459 $
		2019
		3,600 $

F. Property transactions
G. Lease
(a) Rent expense

Other related parties

Years ended December 31,	Years ended December 31,
2020 2,400 $	2019
	2,400 $

The Company leases plant and machinery from related parties. The monthly rental payments are mutually agreed upon. The payment terms are not materially different from those charged by non-related parties.

(b) Lease liabilities
(i) Outstanding balance:

Other related parties (ii) Interest expense Other related parties

December 31,2020 December 31,2019 4,518 $ 6,815 $ Years ended December 31,	December 31,2019
	6,815 $
2020 104 $	2019
	144 $

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(3) Key management compensation

					Years ended	Years ended	December	31,
					2020			2019
Salaries and other	short-term employee benefits			$		93,772	$	76,822
Post-employment	benefits					464		459
Total				$		94,236	$	77,281
Pledged Assets
The Group’s assets	pledged as collateral are as			follows:
		Book value					Purpose ofpledge
	December	31,	December		31,
Pledged assets	2020			2019		Creditor Bank		Type
Restricted assets-						Chang Hwa		Land lease and
Time deposits,						Commercial Bank		dormitory lease
(shown as "other						Far Eastern		deposits
current assets")	$	22,810	$		22,810	International Bank

8. Pledged Assets

9. Significant Contingent Liabilities and Unrecognized Contract Commitments

(1) As of December 31, 2020, the guarantees provided by the Group through banks were as follows:

follows:
Guarantor Far Eastern International Bank Chang Hwa Commercial Bank Chang Hwa Commercial Bank Mega International Commercial Bank Taipei Fubon Commercial Bank Taishin International Bank	Nature of Guarantee Warranty Customs duty Warranty 〞〞 Borrowing	Amount
		19,450 $ 13,000 3,360 20,771 2,055 98,508
		157,144 $

(2) As of December 31, 2020, the outstanding letters of credit issued for the importation of raw materials and machinery were as follows:
(3) Operating lease commitments: Please refer to Note 6(8).

	Amount	(thousands)
	TWD	14,640
	JPY	20,911
	USD	678

(4) As of December 31, 2020, the promissory notes issued by the Company and CS Bright Corporation for loans, performance guarantee for purchases and loans granted for subsidiaries amounted to $4,288,964.
(5) As of December 31, 2020, the capital expenditure contracted but not yet incurred is $26,382.

10. Significant Disaster Loss

None.

11. Significant Events after the Balance Sheet Date

A. On January 8, 2021, the Board of Directors of the Company approved to repurchase the Company’s common shares and transfer to employees. The Company repurchases 7,500,000 shares with an upper limit of cash amount of NT$3,482,361 thousand. The repurchase will be completed from January 11, 2021 to March 10, 2021. As of March 18, 2021, the Company repurchased 4,599,000 shares, the total cash amount was NT$112,006 thousand.
B. To fulfil the working capital of the Company’s wholly owned subsidiary, Dongzhen Asset Co., Ltd., the Board of Directors of the Company resolved to increase its capital in

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Dongzhen Asset Co., Ltd., by issuing new shares of 37,020 thousand common shares with a par value of NT$10 per share, equivalent to NT$370,200 thousands, on March 18, 2021.

C. In accordance with paragraph 7, Article 43-6 of Securities and Exchange Act, private placements of securities can be conducted subsequently within one year after the date that shareholders made their resolution as approved by the Board of Directors on March 18, 2021. Taken into consideration capital market condition, the Company discontinued the private replacement of securities as approved by the shareholders in 2020.
D. Information on the appropriation of 2020 earnings is provided in Note 6(18).
E. On March 18, 2021, the Board of Directors of the Company resolved to transfer treasury shares to employees at a price lower than the actual average repurchased price. This case is pending for the discussion of shareholders’ meeting in 2021.

12. Others

(1) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders or issue new shares to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.

As of December 31, 2020 and 2019, the gearing ratios were (36.52%) and (36.24%), respectively.

(2) Financial instruments

A. Financial instruments by category

Financial assets Financial assets measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable-net (including related parties) Other accounts receivable Guarantee deposits paid Other financial assets	December 31,2020 427,409 $ 783,998 3,100,161 8,873 1,651,793 20,218 11,763 22,810 6,027,025 $	December 31,2019
		276,168 $ 925,373 2,997,465 13,051 1,447,951 19,011 16,547 22,810
		5,718,376 $

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Financial liabilities Financial liabilities mandatorily measured at fair value through profit or loss Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable (including related parties) Other accounts payable Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities	December 31,2020 799 $ 230,758 1,757 717,846 619,042 811,515 869 2,382,586 $ 236,266 $	December 31,2019
		31 $ 249,640 6 729,758 548,988 814,504 1,545
		2,344,472 $
		249,496 $

B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial position and financial performance.
(b) The plans for material treasury activities are reviewed by Board of Directors in accordance with procedures required by relevant regulations or internal controls. During the implementation of such plans, Corporate Treasury function must comply with certain treasury procedures that provide guiding principles for overall financial risk management and segregation of duties.
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and JPY. Exchange rate risk arises from future commercial transactions and recognised assets and liabilities.
ii. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Group use forward foreign exchange contracts, transacted with Group treasury. The expired dates of these forward foreign exchange contracts are shorter than 6 months and are not accounted for under hedge accounting. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.
iii. As the foreign operations are strategic investments, the Company does not hedge for them.
iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: TWD; other subsidiaries’ functional currency: CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2020	Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2020	Year ended December 31,	Year ended December 31,	Year ended December 31,	Unrealized exchange gain(loss) 2020
			SensitivityAnalysis
Exchange rate		Extent of variation	Effect on profit or loss	Effect on other compre- hensive income
28.43 0.2743 4.3520 6.5091 28.53 0.2783 6.5091	1,341,555 $ 81,008 109,065 24,644 919,722 $ 141,377 1,265	1% 1% 1% 1% 1% 1% 1%	13,416 $ 810 1,091 246 9,197) ($ 1,414) ( 13) (	- $ - - - - $ - -	33,270) ($ 483) ( 97) ( 136 24,369 $ 265) ( 51) (

Non-monetary items: None.

Note ： If the consolidated entities’ functional currency is not TWD, the foreign currency denominated assets and liabilities of the consolidated entities should be disclosed. For example, when the functional currency of a subsidiary is CNY, its USD foreign currency positions should also be disclosed.

Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2019	Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2019	Year ended December 31,	Year ended December 31,	Year ended December 31,	Unrealized exchange gain(loss) 2019
			SensitivityAnalysis
Exchange rate		Extent of variation	Effect on profit or loss	Effect on other compre- hensive income
29.93 0.274 4.28 6.9640 30.03 0.2780 6.9640	1,277,442 $ 39,075 113,317 30,430 893,873 $ 115,694 40,143	1% 1% 1% 1% 1% 1% 1%	12,774 $ 391 1,133 304 8,939) ($ 1,157) ( 401) (	- $ - - - - $ - -	28,863) ($ 394) ( 1,102) ( 719) ( 19,395 $ 1,644 25

Note ： If the consolidated entities’ functional currency is not TWD, the foreign currency denominated assets and liabilities of the consolidated entities should be disclosed. For example, when the functional currency of a subsidiary is CNY, its USD foreign currency positions should also be disclosed.

Price risk

i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.

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ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these domestic funds, equity securities of listed company or unlisted company had increased/decreased by 5%, 20% or 10%, respectively, with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $26,711 and $19,151, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $86,979 and $100,613 as a result of gains/losses on equity securities classified as at fair value through other comprehensive income.
Interest rate risk
i. The Group’s interest rate risk arises from long-term and short-term borrowings. Borrowings issued at floating rates expose the Group to cash flow interest rate risk which is partially offset by cash and cash equivalents held at floating rates. During the years ended December 31, 2020 and 2019, the Group’s borrowings at floating rate were denominated in TWD, USD and JPY.
ii. At December 31, 2020 and 2019, if interest rates on borrowings had been 100 basis point higher/lower with all other variables held constant, post-tax profit for the years ended December 31, 2020 and 2019 would have been $8,293 and $8,513 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors, the utilisation of credit limits is regularly monitored. Credit risk arises from cash and equivalents, derivative financial instruments and deposits with bank and financial institutions, as well as operating activities, including outstanding receivables.
ii. The Group adopts following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition : If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
iii. The default occurs when the contract payments are past due over 180 days for distributors and 360 days for other customers, respectively.
iv. The Group classifies customers’ accounts receivable, in accordance with credit risk on trade and customer types. The Group applies the simplified approach using loss rate methodology to estimate expected credit loss under the provision matrix basis.
v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
- (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
- (ii) The disappearance of an active market for that financial asset because of financial difficulties;
- (iii) Default or delinquency in interest or principal repayments;

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(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
vi. The Group used historical and timely information to assess the default possibility of notes receivable and accounts receivable (including related parties). As of December 31, 2020 and 2019, the loss rate methodology is as follows:

At December 31, 2020 Expected loss rate Total book value Loss allowance At December 31, 2019 Expected loss rate Total book value Loss allowance	Individual 100% 4,997 $ 4,997 $ Individual 100% - $ - $	Group 0.01%~100% 1,663,689 $ 3,023 $ Group 0.01%~100% 1,482,823 $ 21,821 $	Total
			1,668,686 $
			8,020 $
			Total
			1,482,823 $
			21,821 $

vi. As at December 31, 2020 and 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable was $1,660,666 and $1,461,002, respectively.
vii. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

		2020		2019
	Accounts receivable		Accounts receivable
At January 1	$	21,821	$	50,443
Provision (reversal) of impairment loss		2,487	(	1,434)
Write-offs	(	16,288)	(	27,543)
Effect of foreign exchange		-		355
At December 31	$	8,020	$	21,821

viii. The Group conducts business with banks and financial institutions with sound reputation, and therefore do not expect the financial assets at amortized cost to have credit risk.
(c) Liquidity risk
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times.
ii. The table below analyses the Group’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities.

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December 31, 2020 Less than Non-derivative financial liabilities : 1year Short-term borrowings 231,089 $ Notes payable 1,757 Accounts payable 717,846 (including related parties) Lease liabilities 23,642 Other payables 619,042 Long-term borrowings 74,285 (including current portion) Forward exchange contracts 799 Derivative financial liabilities ： December 31, 2019 Less than Non-derivative financial liabilities : 1year Short-term borrowings 250,319 $ Notes payable 6 Accounts payable 729,758 (including related parties) Lease liabilities 20,903 Other payables 548,988 Long-term borrowings 22,389 (including current portion) Forward exchange contracts 31 Derivative financial liabilities ：	Between 1 and 2 years - $ - - 22,305 - 751,637 - Between 1 and 2 years - $ - - 21,444 - 83,394 -	Between 2 and 3 years - $ - - 18,933 - - - Between 2 and 3 years - $ - - 7,361 - 713,706 -	Between 3 and 5 years - $ - - 35,782 - - - Between 3 and 5 years - $ - - 35,135 - - -	Over 5 years
				- $ - - 168,130 - - - Over 5 years
				- $ - - 185,671 - - -

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. The carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable, other payables, lease liabilities and long-term borrowings are approximate to their fair value.
D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2020 and 2019 is as follows:

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December 31, 2020 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss Domestic funds Equity securities Forward exchange contract Financial assets at fair value through other comprehensive income Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contract December 31, 2019 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss Domestic funds Equity securities Financial assets at fair value through other comprehensive income Total Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contract	Level 1 320,248 $ - - 85,789 406,037 $ - $ Level 1 169,315 $ - 80,760 250,075 $ - $	Level 2 - $ - 171 - 171 $ 799 $ Level 2 - $ - - - $ 31 $	Level3 - $ 106,990 - 698,209 805,199 $ - $ Level3 - $ 106,853 844,613 951,466 $ - $	Total
				320,248 $ 106,990 171 783,998
				1,211,407 $
				799 $
				Total
				169,315 $ 106,853 925,373
				1,201,541 $
				31 $

E. The methods and assumptions the Group used to measure fair value are as follows:
(a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are composed of listed shares using closing price and open-end fund using net asset value at balance sheet date.
(b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.
(c) When assessing non-standard and low-complexity financial instruments, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market. Forward exchange contracts are usually valued based on the current forward exchange rate.
(d) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
F. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

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G. The following chart is the movement of Level 3 financial instruments of equity securities for the years ended December 31, 2020 and 2019.


At January 1	$		951,466	$	889,926
(Sold) Acquired in the period	(		3,600)		3,600
Losses recognised in income			137	(	46)
Losses recognised in other
comprehensive income	(		142,804)		57,986
At December 31		$	805,199	$	951,466

H. For the years ended December 31, 2020 and 2019, there was no transfer into or out from Level 3.
I. Financial segment is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions and reviewing periodically.
J. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Unlisted shares Unlisted shares Non-derivative equity: Unlisted shares Unlisted shares Non-derivative equity:	Fair value at December Valuation 31,2020 technique 698,209 $ Market comparable companies 106,990 Net asset value Fair value at December Valuation 31,2019 technique 841,013 $ Market comparable companies 106,853 Net asset value	Significant unobservable input Price to earnings ratio multiple Discount for lack of volatility Discount for lack of volatility Significant unobservable input Price to earnings ratio multiple Discount for lack of volatility Discount for lack of volatility	Range (weighted average) 0.94~2.3 30%~35% 19.25% Range (weighted average) 0.75~1.21 25%~35% 19.25%	Relationship of inputs to fair value
				The higher the multiple, the higher the fair value. The higher the discount for lack of marketability, the lower the fair value. The higher the discount for lack of marketability, the lower the fair value. Relationship of inputs to fair value
				The higher the multiple, the higher the fair value. The higher the discount for lack of marketability, the lower the fair value. The higher the discount for lack of marketability, the lower the fair value.

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K. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurements. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

Financial assets Equity instrument Financial assets Equity instrument	Input	Change ±5% Change ±5%	December	Favourable Unfavourable change change 15,582 $ 15,582) ($ 31,2020 Recognised in other comprehensive income Favourable Unfavourable change change 14,571 $ 14,571) ($ 31,2019 Recognised in other comprehensive income
			Favourable Unfavourable change change 1,275 $ 1,275) ($ Recognised inprofit or loss December
	Discount of lack of volatility Input
			Favourable Unfavourable change change 1,274 $ 1,274) ($ Recognised inprofit or loss
	Discount of lack of volatility

’
(4) Explanation of the impact of the COVID 19 pandemic to the Group s operation in 2020 During the first three quarters of 2020, sales of certain customers were affected by the COVID-19 pandemic and the costs of transportation also increased. The aforementioned situation had no significant impact to the Group’s operation. However, the Group will continually monitor the development of the pandemic and adjust strategy accordingly.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(2).
J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 6.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 7.

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B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 8.
(4) Information on major shareholders

Please refer to table 9.

14. SEGMENT INFORMATION

(1) General information

The Group identifies the entity’s operating segments based on the decision of the Chief Operating Decision-Maker and in accordance with IFRS 8 “Operating Segments”.

For the years ended December 31, 2020 and 2019, operating segments required to be disclosed are categorized as LED and Silicon Sensor Chips Group, Displays and Lightening Group, Packaging

Business Group, and Other Segments.

(2) Measurement of segment information

The Group’s segment is measured by Board of Directors with operating profit (loss) before tax, which is used as a basis for the Group in assessing the performance of the operating segments.

The accounting policies of the operating segments are in agreement with the significant accounting policies summarized in Note 4.

(3) Segment information

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

	Year ended December 31,2020	Year ended December 31,2020
LED and Displays and Packaging Silicon Sensor Lighting Business Other Chips Group Group Group segments 4,446,496 $ 854,651 $ 262,415 $ 26,484 $ 771,825 $ 77,376) ($ 5,107 $ 79,800) ($ Year ended December 31,2019			Total
			5,590,046 $
			619,756 $

LED and Silicon Sensor Chips Group 3,944,471 $ 615,462 $	Displays and Lighting Group 1,180,708 $ 168,727 $	Packaging Business Other Group segments 282,198 $ 10,627 $ 18,330 $ 15,934) ($	Total
			5,418,004 $
			786,585 $

(4) Reconciliation for segment income (loss)

A. The revenue from external customers reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income.
B. A reconciliation of reportable segment income or loss to the income (loss) before tax from continuing operations is measured in a manner consistent with that in the statement of comprehensive income.

(5) Information on products and services

External revenue mainly comes from sales of semiconductor, system and packaging products.

Summary of balance of revenue is as follows:

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LED Silicon sensor System product revenues Packaging product revenues Others	Years ended December 31,	Years ended December 31,
	2020 1,486,955 $ 2,979,337 845,023 71,033 207,698 5,590,046 $	2019
		1,294,846 $ 2,655,037 1,134,969 282,198 50,954
		5,418,004 $

(6) Geographical information

Geographic information for the years ended December 31, 2020 and 2019 is as follows:

Revenue Non-current assets Revenue Non-current assets Years ended December 31, 2020 2019	Revenue Non-current assets Revenue Non-current assets Years ended December 31, 2020 2019	Revenue Non-current assets Revenue Non-current assets Years ended December 31, 2020 2019	Revenue Non-current assets Revenue Non-current assets Years ended December 31, 2020 2019
Revenue Non-current assets 2020
Revenue		Revenue
1,591,111 $ 2,039,152 1,959,783 5,590,046 $	2,846,182 $ 139,976 - 2,986,158 $	1,175,782 $ 1,861,002 2,381,220 5,418,004 $	3,062,582 $ 154,197 - 3,216,779 $

(7) Major customer information

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

as follows:
Customer A Customer B(Note)	2020 2019 961,963 $ 837,123 $ 320,191 581,548 1,282,154 $ 1,418,671 $ Years ended December 31,
	2020 961,963 $ 320,191 1,282,154 $

Note: The transaction amount in 2020 did not reach 10% of consolidated operating income.

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、 VII Review of Financial Conditions, Financial Performance, and Risk Management

1. Analysis of Financial Status

Unit: NT$ thousands

Year			Difference	Difference

Item	2020	2019	Amount	%


Current Assets	6,306,500	5,957,852	348,648	5.85
Funds and Investments	896,382	1,040,994	(144,612)	(13.89)
Property, plant and equipment	2,705,133	2,909,127	(203,994)	(7.01)
Other Assets	733,412	398,171	335,241	84.20
Total Assets	10,641,427	10,306,144	335,283	3.25
Current Liabilities	1,733,564	1,694,700	38,864	2.29
Long-term Liabilities	1,214,537	1,343,128	(128,591)	(9.57)
Total Liabilities	2,948,101	3,037,828	(89,727)	(2.95)
Capital	3,786,228	3,786,228	0	0.00
Capital reserves	703,108	702,965	143	0.02
Retained Earnings	3,095,023	2,519,185	575,838	22.86
Other equityinterest	187,351	279,469	(92,118)	(32.96)
Treasurystock	(82,021)	(23,172)	(58,849)	253.97
Non-controllinginterest	3,637	3,641	(4)	(0.11)
Total shareholders’ Equity	7,693,326	7,268,316	425,010	5.85
Analysis of changes in financial ratios: 1. The increase in other assets was mainly due to add Investment property in the current period. 2. Increase in retained surplus: Mainly to the fact that no surplus appropriation was made in the current year. 3. Decrease in other equity: Mainly due to a decrease in the value of financial assets measured at fair value through other comprehensive gains and losses. 4. Increaseintreasury stocks:mainly due to the buying backoftreasury stocks.

Increase in retained surplus: Mainly to the fact that no surplus appropriation was made in the current year.
Decrease in other equity: Mainly due to a decrease in the value of financial assets measured at fair value through other comprehensive gains and losses.

2. Analysis of Financial Performance

(1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2

years

2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2 years	2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2 years	2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2 years	2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2 years	2. Analysis of Financial Performance (1) Major reason of changes in operating income, operating profit and before-tax profit during latest 2 years
Unit: NT$thousands
Year			Increase	Ratio of change
	2020	2019
Item			（Decrease）	％

Operatingrevenue	5,590,046	5,418,004	172,042	3.18
Operatingcost	3,946,488	3,779,675	166,813	4.41
Grossprofit	1,643,558	1,638,329	5,229	0.32
Operatingexpense	954,411	898,172	56,239	6.26
Income from operations	689,147	740,157	(51,010)	(6.89)
Non-operatingincome	(69,391)	46,428	(115,819)	(249.46)
Income before tax	619,756	786,585	(166,829)	(21.21)
Tax Expense(Benefit)	44,627	181,905	(137,278)	(75.47)
Net income(Loss)	575,129	604,635	(29,506)	(4.88)
Analysis and explanation of changes in ratio of increase or decrease during latest 2 years： 1. Decrease in non-operating income: mainly due to the disposal of real estate, loss of factory facility and equipment, impairment loss of real estate, factory facility and equipment, and increase in currency exchange loss. 2. Deecreased for tax expense income:Mainly due to the recognition of the liquidation loss of the reinvestment.

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(2) Effect of change on the company’s future business and future response plans:

Please refer to P. 1 of the annual report for more details.

3. Analysis of Cash Flow

(1) Cash Flow Analysis for the Current Year

Year Item	2020	2019	Ratio of increase of decrease%
Cash flow ratio(%)	52.19	85.68	(39.09)
Cash Flow AdequacyRatio(%)	111.43	107.15	3.99
Cash Reinvestment Ratio(%)	5.14	7.09	(27.50)
Cash flow ratio、Cash Flow Adequacy Ratio、Cash Reinvestment Ratio:Mainly due to decrease of cashflows form operating activities in this fiscal year.

(2) Cash Flow Analysis for the Coming Year

(2) Cash Flow Analysis for the Coming Year	(2) Cash Flow Analysis for the Coming Year	(2) Cash Flow Analysis for the Coming Year	(2) Cash Flow Analysis for the Coming Year	(2) Cash Flow Analysis for the Coming Year	(2) Cash Flow Analysis for the Coming Year
Unit: NT$ thousands

Cash and Cash	Net Cash Flow			Leverage of Cash Deficit

Equivalents,	from Operating	Cash Outflow	Cash Surplus
				Itt
Beginning of Year	Activities		(Deficit)	nvesmen	Financing Plans
				Plans

3,100,161	1,496,009	2,285,897	2,310,273	－	－
1.Analysis of change in cash flow in the current year: - Operating activities:The expectation for continuous operating growth resulted in net cash inflow from operating activities. - Investing activities:The expectation for continuous reinforcement of production capacity resulted in increase of capital expenditure. - Financing activities: It mainly resulted from cash dividend distribution. 2. Remedy for cash shortage and its liquidity analysis：None.

Operating activities:The expectation for continuous operating growth resulted in net cash inflow from operating activities.
Investing activities:The expectation for continuous reinforcement of production capacity resulted in increase of capital expenditure.

4. Major Capital Expenditure Items and Source of Capital: None.

5. Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year:

(1) OPTOTECH’s 2020 reinvestment losses were mainly the losses recognized in the liquidation of part of the reinvestment.
(2) OPTOTECH will continue to devote its efforts to growing its core business. For its Investment policy, we will place focus on following the product trend to give up and down-stream integration. At the same time, we will persistently supervise and assist its subsidiaries, so as to accelerate its speed to make more profits. In the future, it will be in conjunction with the market’s overall trend to timely adjust its product policy and reinforce its investment effects.

6.Analysis of Risk Management

(1) Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

Unit: NT$ thousands

Item	2020	Ratio on net revenue	Ratio on net operating profit
Net interest income or expense	(15,258)	0.27%	2.21%
Net foreign exchangegain or loss	(36,408)	0.65%	5.28%
Operatingrevenue	5,590,046	-	-
Income from operations	689,147	-	-

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A. Interest rate

Since OPTOTECH has good financial status, sound system and good as well as close long term cooperation with its banks, it has obtained better interest rates. At the same time, OPTOTECH has closely watched the trend of market interest rates and adjusted its position of its floating rate loans and fixed rate loans at any time when necessary. By taking risks into consideration, OPTOTECH will still stably handle its cash management.

B. Foreign exchange rates

Given that OPTOTECH has the substantive demand for foreign currencies (such as U.S. dollars and Japanese yen, etc.), except for reducing required hedge position through natural hedge, lowering the impact of changes in currency rates on operating gain or loss, we will use spot swap and forward foreign exchange contracts and currency options to hedge the risk resulting from exchange rate volatility.

C. Inflation

The quotations provided by OPTOTECH for its clients or suppliers are mostly flexibly adjusted according to the market status. Hence, OPTOTECH is not significantly affected by inflation. Nevertheless, it will devote its efforts to improve its product structure and production process while continuously executing the cost efficiency plan to counter the problem of inflation.

(2) Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions:

A. Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments:
OPTOTECH has handled its financial affairs with stability, so it has a sound financial base. It does not give high leverage investment.

B. Lending or Endorsement Guarantees:

(A) Our endorsement guarantee and capital loans to others are mainly made to meet business requirements of its re-investment companies. Based on the laws and regulations stipulated by Securities and Futures Bureau, OPTOTECH has instituted “Procedures for Endorsement and Guarantee” and “Procedures for Lending Funds to Other Parties”, and evaluated and controlled risks through internal responsible units. At the same time, based on the “Regulations Governing Establishment of Internal Control Systems by Public Companies” stipulated by Securities and Futures Bureau, the audit unit of OPTOTECH has also laid down relevant systems for management and risk evaluation and regular audits of execution status.
(B) OPTOTECH has currently only endorsed and guaranteed the affiliated enterprises under its control. The endorsement and guarantee items are mostly in the nature of financing, Since its affiliated enterprises have healthy finance and have been stably operating, it has never inflicted any loss from endorsement and guarantee.
C. Derivatives Transactions:
(A) OPTOTECH has engaged in derivative product trading in accordance with its regulated “Procedures for Acquistion or Disposal Assets”.
(B) The main purpose for OPTOTECH to engage in derivative financial product transactions is to hedge our operating and financial risk. OPTOTECH assets in US dollar is greater than liabilities, and the NT dollar was appreciation such that there is losses on exchange.
(C) To meet our future requirements, we will engage in the transactions related to forward foreign exchange and currency swap contracts and options, and adjust its foreign asset and liability positions as needed, so as to hedge the risk resulting from changes in exchange rates.

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(3) Future Research & Development Projects and Corresponding Budget

Unit ： NT$ dollars

		Expected research	Expected
				Major factors that will impact future
Research projects	Present progress	expenditure in the	completion
				success
		future	schedule

High-power deep ultraviolet UVC LED.	Epitaxial and trial production.	10,000,000	2021/12	Key epitaxial technology development and process.
Development of vertical-cavity surface-emitting laser (VCSEL).	Epitaxial and trial production.	27,000,000	2021/12	Key epitaxial technology development and process.
Band-pass NIR light sensing element.	Epitaxial and trial production.	14,000,000	2021/12	Key epitaxial technology development and process.
NIR LED of wearable device.	Epitaxial and trial production.	44,000,000	2021/12	Key epitaxial technology development and process.
Low-cost indoor and lightweight display module design.	In the process of development and design.	3,000,000	2021/10	According to business evaluation, carry out indoor P6/P10/P3 and lightweight P4 module design to reduce module cost and improveproduct competitiveness.
Development of passenger information system for public transportation.	In the process of development and design.	2,000,000	2021/12	Carry out the LED information display system design based on the requirements of the rail transportation system contractor.
Development of smart traffic signal lights.	In the process of development and design.	1,000,000	2021/03	Wireless transmission can be used to control traffic signal lights based on road conditions, and full-color animation display can be added to increase the function ofproduct.
Development of indoor light weight frameless display screen.	In the process of development.	3,000,000	2021/12	Going beyond the existing display framework concept to create differentiated product. Reduced installation time in order to enhance customer’spurchase willingness.
Development of new version of BillBoard display screen.	In the process of development.	2,000,000	2021/06	New IP65 institution Systematic assembly method. Debuggingmechanism and backupsystem.
Application of 3D system architecture.	In the process of development.	2,000,000	2021/04	Enhancing product application scope and increasing demands from different customer bases. Forming horizontal alliance to create new application demand.
Development of light weight lightings for outdoor-V2.	In the process of development and design.	1,000,000	2021/12	Reduce wiring complexity and light size to meet the lighting needs in building spaces with special lightingrequirements.
Development of products relating to deep ultraviolet sterilization.	In the process of development and design.	2,500,000	2022/06	Product performance and market acceptance.
Development of plant growth lighting lamps and their control system.	In the process of development and design.	1,500,000	2021/12	Developing products corresponding to different markets and plantation subjects in order to achieve optimizedperformance.
Development of high-voltage Zener protection components for automotive.	Under development and design.	1,500,000	2021/12	Product design and product characteristics.
Triac product development.	Under development and design.	1,000,000	2021/09	Product design and product characteristics.
OVP/SLICs product development.	Under development and design.	1,500,000	2021/12	Product design and product characteristics.
APD product development.	Under development and design.	1,500,000	2021/12	Product design and product characteristics.
Silicon cap product development.	Customer verification is in progress.	1,000,000	2021/06	Product design and process control capability.
Development of wearable sensing device product.	Under development and design.	1,500,000	2021/12	Product design and product characteristics.
Development of Flip type sensing component products.	Customer verification is in progress.	1,500,000	2021/12	Product design and process control capability.
Biological detection photoelectric module technology development.	Feasibility assessment.	8,000,000	2021/12	The establishment of key long-wavelength light-emitting and receiving chips as well as special packaging process and algorithm capabilities.
Development of technologies for flip-chip photodiode UVC PD chip packaging and avalanche photodiode (APD) array chip.	Executing.	7,500,000	2021/12	The existing testing equipment is unable to meet the test requirements. Procurement of dedicated machines and establishment of chip processing technology.
Development of technologies for the automatic machine specialized in AVI testing.	Executing.	17,500,000	2021/09	The establishment of AVI testing data and calculation reconstruction technology for each chip product.

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(4) Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales:

OPTOTECH has complied with government policies and national laws and regulations. The Management division of OPTOTECH has kept abreast of major policies and changes of laws and abided by them. In addition, our business activities and governance directions have also been flexibly and timely adjusted to meet the change of policies, laws and regulations, so as to maintain smooth business operation.By now OPTOTECH has not yet been penalized by supervisor by law or supervisory authority, nor has it suffered any major financial or reputational loss.

(5) Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales:

In recent years, many Taiwanese companies have been attacked by hackers. Many cases have shown that hackers have been aiming targets for advanced attacks for quite a long time, causing significant losses for many companies. In response to the endless hacking attacks, besides regular update of the corresponding software and hardware, strengthening employees’ information security awareness through related education and training is also essential. For this reason, social media attack drills were implemented for employees of OPTOTECH. To prevent unexpected information security attacks, damage recovery drills are carried out regularly within the organization to ensure that after the attack, system operation can be restored within a tolerable period of time.

In order to ensure the independence and legitimacy of technology utilization, on one hand our own R&D team will develop new technologies, on the other hand we aggressively cooperate with various domestic research institutions to develop emerging technologies in order to ensure our leading position in terms of technology; in addition, to avoid preemptive patent registration of newly developed technology by other peers, we will take the initiative to apply for patents in Europe, US, Japan, and Mainland China right after the completion of new technology development in order to ensure the protection of R&D achievement and business interest while reducing the overall operational risk.

(6) The impacts of changes to corporate image on the management of corporate crisis, and the corresponding measures:

Adhering to the corporate image concept of our company, our effort in promoting brand operation will continue, and there has not been any need or situation of change to corporate image during 2020. In terms of external cooperation, we will maintain the good interaction and communication with our customers, and we will be dedicated to the development of “light and sensing” application technology.

OPTOTECH continues to promote brand internalization educational training in order to establish the recognition and centripetal force of company among entire staff based on the conveying of corporate vision and brand knowledge, such that all staff can fulfill their duties in their positions while implementing the brand values of our company in terms of “professionalism”, “trust”, “innovation”, and “flexibility”. From the management aspect, our company requires the behaviors of all employees to be in compliance with company’s business philosophy by providing customers with high quality product and service. We must all be in compliance with government laws and regulations, and all management regulations and systems of our company must be formulated and amended according to law in order to surely maintain our corporate image.

For the latest year until the publication date of the annual report, there is no incident occurring to affect our corporate image.

(7) Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans: As of the publication date of the annual report, OPTOTECH had not had any acquisition plan.

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(8) Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans:

In view of business volatility in the industry, the silicon division of OPTOTECH gives a production expansion plan in order to meet the market demand, for which, by analyzing the bottleneck area and expanding major production equipment.

Regarding the potential risk after production expansion, other than prudently selecting required hardware for expansion, the silicon division has also carefully observed client order placement status and the world economy as the indicator for risk management. In addition, new product development, market survey and new product application have all been included in the measures to counter the potential risk.

(9) Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration:

A. Our raw materials have all been purchased from more than two suppliers and the individual supplier having the highest supply ratio in terms of the company’s procurement only takes up 12.49% of the company’s total procurement, so the company does not have the risk resulting from too much concentration of goods purchase on an individual supplier.
B. Our major sales client is an acknowledged firm do not more than taking up 15.45% of our total sales, so OPTOTECH does not have the risk resulting from too much sales concentration on an individual client.

(10) Effects of Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%:

Before the publication day of the annual report, there had been no mass equity transfer or replacement from our directors, supervisors or major shareholders holding more than 10% of our shares.

(11) Effects of Risks Relating to and Response to Changes in Control over the Company:

As of the publication date of latest year annual reports, there had not been such incident occurring to OPTOTECH.

(12) Litigation or Non-litigation Matters:

As of the publication dates of 2021 and 2020 annual reports, there had not been such incident occurring to OPTOTECH.

(13) Other Major Risks: None.

7.Other Major Events: None.

、 VIII Special Disclosure

1.Summary of Affiliated Companies

(1) Consolidated business report of affiliated enterprises (Base date ： Dec. 31, 2020)

Please refer page 148~ 152

(2) Consolidated financial statements of affiliated enterprises:

Please refer the consolidated financial statements and auditors’ report.

(3) Affiliation report: None.

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A. OPTO Subsidiaries Chart

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B.OPTO Subsidiaries

B.OPTO Subsidiaries
		Mar. 31,2021；Unit: NT$ thousands
	Date of		Capital	Business
Company		Place of Registration
	Incorporation		Stock	Activities

Ho Chung Investment Co.,Ltd.	1998.03.24	2F, No. 363, Sec. 2, Gong-Dao 5thRd., Hsinchu City	12,988	General investment.
CS Bright Corp.	1973.03.01	11F, No.659, Bannan Rd., Zhonghe Dist., New Taipei City	49,999	Manufacturing and sale of LED.
Bright Investment International Ltd.	2002.07.31	Trustnet Chambers,P.O.Box 3444 Road Town,Tortola,British Virgin Islands	171,332	Holding company.
Everyung Investment Ltd.	2002.07.31	Trustnet Chambers Lotemau Centre,P.O.Box1225 Apia,Samoa	317,331	Holding company.
OPTO Plus Technology Co., Ltd.	2002.09.19	No. 696, Yangming North Rd., Shaoxing City, Zhejiang Province, China	317,341	Manufacturing and sale of LED.
Tung Chun Asset Management Co., Ltd.	2020.11.25	5F.-3, No. 88, Daxue Rd., East Dist., Hsinchu City , Taiwan (R.O.C.)	400,000	General investment. Real Estate Business.

Note1:All amounts involving in foreign currencies were converted into NTD at the exchange rate used for original investments of each company.
Note2:OPTO TECH (CAYMAN) CO., LTD. on September 16, 2020, OPTO TECH (MACAU) CO., LTD. on September 29, 2020, and OPTO TECHNOLOGY INTERNATIONAL GROUP CO., LTD. on October 26, 2020 have completed resolution and liquidation.
Note3:On September 10, 2020, OPTOTECH passed the resolution of the Board of Directors to carry out the dissolution and liquidation for CS Bright Corporation. CS Bright Corporation is currently in the process of dissolution and liquidation.
Note4:Tung Chun Asset Management Co., Ltd. has handled cash capital increase and issuance of new shares, and capital increase base date is on March 19,2021.
C.Data of the shareholders presumed having control or subordinate relationship with the company: None.
D. Businesses and related details covered in the overall affiliated enterprises and their labor division status:
(A) Businesses covered in the overall affiliated enterprises:

They are mainly LED downstream and application related manufacturing, sales and service footholds, while part of them are investment, share holding and international trading businesses.

(B) Business exchange and labor division among respective affiliated enterprises:
(a). To expand the businesses in China and overseas market, OPTOTECH is engaged in the manufacturing and selling of LED downstream and application products.
(b). To build a complete industrial structure, OPTOTECH is responsible for manufacturing and selling the Corporation's products in order to expand businesses in China and overseas market.

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E.Rosters of Director, Supervisor and President of OPTO Subsidiaries

			Mar. 31,2021	Mar. 31,2021
			Shareholding
Company	Title	Name
			Shares	Percentage

Ho Chung Investment Co.,Ltd.	Chairman	Opto Tech Corp.	1,298,000	100.00
		H.T.Wang	-	-
	Director	Opto Tech Corp.	1,298,000	100.00
		Yin-Rui Chen	-	-
	Director	Opto Tech Corp.	1,298,000	100.00
		Steven Chen	-	-
	Supervisor	Opto Tech Corp.	1,298,000	100.00
		Tzu-Chun Lin	-	-
Bright Investment International Ltd	Director	Opto Tech Corp	5,100,000	100.00
		H.T.Wang	-	-
Everyung Investment Ltd.	Director	Opto Tech Corp	5,000,000	50.00
		Bright Investment International Ltd	5,000,000	50.00
		H.T.Wang	-	-
Opto Plus Technology Co. Ltd.	Chairman	Everyung Investment Ltd.	10,000,000	100.00
		Shun-Chih Chen	-	-
	Director	Everyung Investment Ltd.	10,000,000	100.00
		Tzu-Chun Lin	-	-
	Director	Everyung Investment Ltd.	10,000,000	100.00
		Steven Chen	-	-
	Supervisor	Everyung Investment Ltd.	10,000,000	100.00
		Yin-Rui Chen	-	-
Tung Chun Asset Management Co., Ltd.	Chairman	Opto Tech Corp	40,000,000	100.00
		H.T.Wang	-	-
	Director	Opto Tech Corp	40,000,000	100.00
		Tzu-Chun Lin	-	-
	Director	Opto Tech Corp	40,000,000	100.00
		Yin-Rui Chen	-	-
	Supervisor	Opto Tech Corp	40,000,000	100.00
		Steven Chen	-	-

Note:The date of dissolution for CS Bright Corporation was December 31, 2020. Currently, it is in the process of dissolution and liquidation and its Board of Directors no longer exists in accordance with regulations.

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F. Operational Highlights of OPTO Subsidiaries

Unit: NT$ thousands

							Profit / Loss Of
					Operating	Operating		EPS (NTD)
Name of Enterprise	Capital	Total Assets	Total Liabilities	Net Worth			The Period
					Income	Profit		(After-Tax)
							(After-Tax)

Ho Chung Investment Co.,Ltd.	12,988	43,848	110	43,738	1,424	912	915	-
Opto Tech (Macao) Co., Ltd.	0	0	0	0	46	(3,286)	(3,426)	-
CS Bright Corp.	49,999	209,670	54,135	155,535	205,663	(11,494)	(3,744)	-
Opto Technology International Group Co., Ltd.	0	0	0	0	0	(587)	1,619	-
Opto Tech (Cayman) Co., Ltd.	0	0	0	0	0	(538)	(598)	-
Bright Investment International Limited	171,332	42,785	0	42,785	0	0	3,095	-
Everyung Investment Ltd.	317,331	84,691	0	84,691	0	0	6,246	-
Opto Plus Technology Co. Ltd.	317,341	238,738	154,047	84,691	237,750	14,941	6,246	-
Tung Chun Asset Management Co., Ltd.	29,800	29,764	0	29,764	0	(37)	(36)	-

Note1:For all amounts involving in foreign currencies, the capital was converted into NTD at the exchange rate used for original investments of each company, and the rest was converted into NTD at the exchange rate of Dec. 31, 2020.

Note2:Opto Tech (Cayman) Co., Ltd. completed the procedures of dissolution and liquidation on September 16, 2020.

Note3:Opto Tech (Macao) Co., Ltd. completed the procedures of dissolution and liquidation on September 29, 2020.

Note4:Opto Technology International Group Co., Ltd. completed the procedures of dissolution and liquidation on October 26, 2020. Note5:CS Bright Corp. was disbanded on December 31, 2020, and the liquidation process is in progress.

2.Private Placement Securities in the Most Recent Years:

1. A private placement of common stock or/and preferred stock for cash capital increase was passed in the shareholders’ meeting of OPTOTECH on June 16, 2020. However, appropriate strategic investors have not yet been found, resulting in the failing of implementation. The Board of Directors of OPTOTECH resolved on March 18, 2021 that no further operation on this regard will be carried out within the remaining period.

2. Issuance of common stock/preferred stock for cash was passed in the Board of Directors of OPTOTECH on April 7, 2021. It is proposed to undertake a private placement of ordinary shares by cash capital increase within a quota of not more than 60,000,000 shares and the subscriber that has currently been determined is Nichia Taiwan Corporation. It has not yet been processed by the Annual Report Printing Date.

151

3.The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years:

Unit: NT$ thousands ； Shares ；％

				Date of	Shares and	Shares and		Shareholdings &		Endorsement	Amount loaned
Name of	Stock capital	Fund	Shareholding ratio				Investment gain
				acquisition or	amount	amount		amount in the most	Mortgage	amount made for	to the
subsidiary	collected	source	of the company				(loss)
				disposition	acquired	disposed of		recentyear		the subsidiary	subsidiary

Ho Chung Investment Co.,Ltd.	12,988	Self- owned capital	100%	－	－	－	－	754,543 Shares NTD 18,109	None	None	None

4.Others Supplementary Events: None.

5.Matters Significantly Influenced on Shareholders’ Equity or Securities Price: None.

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OPTOTECH Co., Ltd

Chairman: H.T. Wang

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AI assistant

TASC — Annual Report 2020

52015_rns_2021-11-02_16556af5-e1d8-4019-b992-3b11e3d0edc4.pdf

Contents

VII.Review of Financial Conditions, Operating Results, and Risk Management

、 I Letter to shareholders

1. Operating Performance in 2020:

2. Business plan for 2021:

(1) Business objectives:

3.Impact of the company’s future development strategy, external competitive environment,

legal environment and Macroeconomic environment on the company:

(1) The company’s future development strategy:

、 II Company Profile

1.Date of Incorporation: December 21[st] , 1983

2.Company History:

、 III Corporate Governance Report

1.Organization:

(1) Organizational Chart

OPTOTECH CORPORATION

(2) Major Corporate Functions

G. Silicon Operations Center

K. Auditing Office

2.Directors, Supervisors and Management Team ：

(1) Directors and Supervisors

A. Major shareholders of the institutional shareholders

C. Professional qualifications and independence analysis of directors and supervisors

(2) Management Team

3.Remuneration of Directors, Independent Directors, President, and Vice President

B. Remuneration of the President and Vice Presidents

C. Employee Bonus to Executive Officers

4.Implementation of Corporate Governance

(1) Board of Directors:

(2) Audit Committee:

(4) Composition, Responsibilities and Operations of the Remuneration Committee:

A.Information of the remuneration committee member

(5) Fulfillment of CSR and Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies:

(6) Fulfillment of Ethical Corporate Management and Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies

(7) Corporate Governance Guidelines and Regulations:

(8) Other Important Information Regarding Corporate Governance:

A. Program and training of manager:

B. Procedures for Handling Material Inside Information:

(9) Internal Control System:

(11)Major Resolutions of Shareholders’ Meeting and Board Meetings:

A. Major resolutions made in the 2020 regular shareholders’ meeting:

B. Major resolutions made in board meetings include the following:

Optotech Corporation Limited

Statement of Internal Control System

5.Information Regarding the Company’s Audit Fee

6.Replacement of CPA

(1)Regarding the former CPA ：

(2)Regarding the successor CPA ：

(3)Reply letter from the former CPA: None.

8.Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

(1) Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders:

(2) Shares Trading with Related Parties: None.

(3) Shares Pledge with Related Parties: None.

9.Relationship among the Top Ten Shareholders

10.Ownership of Shares in Affiliated Enterprises: None.

、 IV Capital Overview

1.Capital and Shares

(1) Source of Capital

A.Issued Shares

B. Information for Shelf Registration: None.

(2) Status of Shareholders

(3) Shareholding Distribution Status (Common Shares)

(4) List of Major Shareholders

(5) Market Price, Net Worth, Earnings, and Dividends per Share

(6) Dividend Policy and Implementation Status

A.Dividend Policy:

B. Proposed Distribution of Dividend:

OPTOTECH Corporation

Statement of Earning Distribution 2020

(8)Employee and Directors' Remuneration:

(9)Buyback of Treasury Stock:

(a) Repurchases already completed

2.Bonds :None.

3.Preferred Stock :None.

4.Global Depository Receipts :None.

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

7.Financing Plans and Implementation: None.

TASC Annual Report 2020