TASC — Audit Report / Information 2021

Dec 14, 2021

OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT December 31, 2021 AND 2020

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For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

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OPTO TECH CORPORATION AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

For the year ended December 31, 2021, 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,

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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, 2021 and 2020, 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, 2021 and 2020, 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.

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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(6) for details of allowance for inventory valuation losses. As of December 31, 2021, the balances of inventories and allowance for inventory valuation losses were NT$ 1,366,749 thousand and NT$ 96,756 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)(4),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, 2021, the carrying amount of unlisted securities without active market was

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NT$899,053 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.

– 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, 2021 and 2020.

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.

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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:

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

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

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

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1. 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.

2. 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.

3. 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.

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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.

Chiang, Tsai-Yen[Lai, Chung-Hsi ]

For and on behalf of PricewaterhouseCoopers, Taiwan February 23,2022

------------------------------------------------------------------------------------------------------------------------------------------------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.

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OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

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

Assets	Notes 6(1) 6(2) 6(3) and 8 6(5) 6(5) 6(5) and 7 6(6) 6(2) 6(4) 6(7) 6(8) and 7 6(9) 6(10) 6(11) 6(29) 6(31) and 7	December 31, 2021 AMOUNT % $ 3,467,411 28 714,461 6 820,785 7 4,883 - 1,270,884 10 15,015 - 16,027 - 1,269,993 10 102,351 1 1,673 - 7,683,483 62 112,528 1 1,037,218 8 65,646 1 2,664,220 22 216,448 2 399,307 3 14,040 - 46,348 - 106,121 1 4,661,876 38 $ 12,345,359 100	December 31, 2020	December 31, 2020
		AMOUNT $ 3,467,411 714,461 820,785 4,883 1,270,884 15,015 16,027 1,269,993 102,351 1,673 7,683,483 112,528 1,037,218 65,646 2,664,220 216,448 399,307 14,040 46,348 106,121 4,661,876 $ 12,345,359	AMOUNT $ 3,100,161 320,419 22,810 8,873 1,634,913 16,880 20,218 1,155,589 24,202 2,435 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	%
Current assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Current financial assets at amortised cost, net 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, net Intangible assets Deferred tax assets Other non-current assets Non-current assets Total assets				29 3 - - 16 - - 11 - -
				59
				1 7 - 26 2 4 - 1 -
				41
				100

(Continued)

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OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2021 AND 2020

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

Liabilities and Equity

December 31, 2021 December 31, 2020 Notes AMOUNT % AMOUNT % 6(12) $ 334,047 3 $ 230,758 2 6(2) - - 799 - - - 1,757 - 783,125 6 665,926 6 7 60,499 - 51,920 1 6(13) and 7 765,708 6 619,042 6 186,710 2 25,969 - 6(17) 6,831 - 4,033 - 7 19,103 - 19,560 - 6(14) - - 62,960 1 6(22) and 7 90,669 1 50,840 - 2,246,692 18 1,733,564 16 6(14) - - 748,555 7 6(17) 19,068 - 18,808 - 6(29) 33,178 - 42,986 1 7 199,148 2 216,706 2 6(15) 149,755 1 187,482 2 401,149 3 1,214,537 12 2,647,841 21 2,948,101 28 6(18) 4,386,228 36 3,786,228 35 6(19) 1,489,822 12 703,108 7 6(20) 786,944 6 729,360 7 2,423 - 3,743 - 2,645,077 21 2,361,920 22 6(21) 438,344 4 187,351 2 6(16)(18) ( 54,954) - ( 82,021) ( 1) 9,693,884 79 7,689,689 72 3,634 - 3,637 - 9,697,518 79 7,693,326 72 9 11 $ 12,345,359 100 $ 10,641,427 100

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 Long-term liabilities, current portion 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 Total 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

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

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OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

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

Items

Year ended December 31 2021 2020 Notes AMOUNT % AMOUNT % 6(22) and 7 $ 6,143,243 100 $ 5,590,046 100 6(6)(16)(27)(28) and 7 ( 4,166,464 ) ( 68) ( 3,946,488) ( 71) 1,976,779 32 1,643,558 29 6(16)(27)(28) ( 120,338 ) ( 2) ( 127,614) ( 2) ( 703,121 ) ( 11) ( 489,207) ( 9) ( 140,334 ) ( 2) ( 335,103) ( 6) 12(2) ( 2,198 ) - ( 2,487) - ( 965,991 ) ( 15) ( 954,411) ( 17) 1,010,788 17 689,147 12 6(23) 9,179 - 11,234 - 6(24) 55,393 1 55,611 1 6(25) ( 40,966 ) ( 1) ( 108,250) ( 2) 6(26) ( 17,226 ) - ( 27,611) - 6(7) ( 4,489 ) - ( 375) - 1,891 - ( 69,391) ( 1) 1,012,679 17 619,756 11 6(29) ( 183,306 ) ( 3) ( 44,627) ( 1) $ 829,373 14 $ 575,129 10

Operating revenue Operating costs Gross profit, net Operating expenses Selling expenses General and administrative expenses Research and development expenses Expected credit loss 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 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)

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OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

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

Items

Year ended December 31 2021 2020 Notes AMOUNT % AMOUNT % 6(15) $ 31,220 - $ 656 - 6(4)(21) 238,220 4 ( 137,595) ( 2) 6(29) 1,779 - 40,217 1 271,219 4 ( 96,722) ( 1) 6(21) 4,751 - 5,091 - 6(7)(21) ( 340 ) - 218 - 4,411 - 5,309 - $ 275,630 4 ($ 91,413) ( 1) $ 1,105,003 18 $ 483,716 9 $ 829,371 14 $ 575,133 10 2 - ( 4) - $ 829,373 14 $ 575,129 10 $ 1,105,006 18 $ 483,720 9 ( 3 ) - ( 4) - $ 1,105,003 18 $ 483,716 9 6(30) $ 2.11 $ 1.52 6(30) $ 2.09 $ 1.49

Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealised (loss) gains on valuation of fiancial assets at fair value through other comprehensive income Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total other comprehensive 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 foriegn operations Share of other comprehensive (loss) income of associates and joint ventures accounted for using equity method Total other comprehensive income(loss) that will be reclassified to profit or loss, net of tax 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 (loss) attributable to: Owners of the parent Non-controlling interest Earnings per share Profit for the year Diluted earnings per share Profit for the year

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

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OPTO TECH CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Note 2020 Balance at January 1, 2020 Net income for the year Other comprehensive income (loss) for the year 6(4)(15)(21) Total comprehensive income Distribution of 2019 earnings: 6(20) Legal reserve Special reserve Liquidation of the subsidiary Disposal of financial assets at fair value through 6(4)(19) Stock repurchased 6(18) Balance at December 31, 2020 2021 Balance at January 1, 2021 Net income for the year Other comprehensive income (loss) for the year 6(4)(15)(21) Total comprehensive income Distribution of 2020 earnings 6(20) Legal reserve Special reserve Cash dividends Proceeds from issuance of shares 6(18) Stock repurchased 6(18) Treasury shares transferred to employees 6(18)(19) Proceeds from disposal of investment accounted for using equity method of the subsidiary 6(3) Other changes in capital surplus: 6(19) Changes in long-term investment Adjustments of capital surplus for the Company’s cash dividends received by subsidiaries 6(19) Balance at December 31, 2021	Note								Equity attributable to owners	Equity attributable to owners	of the parent	of the parent	of the parent				Non-controlling interest		Total equity
			Common stock		Capital reserve			R	etained Earnings		Other equityinterest			Treasury stocks		Total
							Legal reserve		Special reserve	Unappropriated earnings	Financial statements translation differences of foreign operations		Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income
			$ 3,786,228 - - - - - - - - $ 3,786,228 $ 3,786,228 - - - - - - 600,000 - - - - - $ 4,386,228	$ 702,965 - - - - - 143 - - $ 703,108 $ 703,108 - - - - - - 775,800 - 13,968 - ( 4,105 ) 1,051 $ 1,489,822			$ 669,312 - - - 60,048 - - - - $ 729,360 $ 729,360 - - - 57,584 - - - - - - - - $ 786,944	$ 8,392 - - - - ( 4,649 ) - - - $ 3,743 $ 3,743 - - - - ( 1,320 ) - - - - - - - $ 2,423		$ 1,841,481 575,133 525 575,658 ( 60,048 ) 4,649 - 180 - $ 2,361,920 $ 2,361,920 829,371 24,977 854,348 ( 57,584 ) 1,320 ( 514,927 ) - - - - - - $ 2,645,077	($ 9,372 ) - 5,309 5,309 - - - - - ($ 4,063 ) ($ 4,063 ) - 4,416 4,416 - - - - - - 335 - - $ 688	$ 288,841 - ( 97,247 ) ( 97,247 ) - - - ( 180 ) - $ 191,414 $ 191,414 - 246,242 246,242 - - - - - - - - - $ 437,656		($ 23,172 ) - - - - - - - ( 58,849 ) ($ 82,021 ) ($ 82,021 ) - - - - - - - ( 162,408 ) 189,475 - - - ($ 54,954 )	$ 7,264,675 575,133 ( 91,413 ) 483,720 - - 143 - ( 58,849 ) $ 7,689,689 $ 7,689,689 829,371 275,635 1,105,006 - - ( 514,927 ) 1,375,800 ( 162,408 ) 203,443 335 ( 4,105 ) 1,051 $ 9,693,884		$ 3,641 ( 4 ) - ( 4 ) - - - - - $ 3,637 $ 3,637 2 ( 5 ) ( 3 ) - - - - - - - - - $ 3,634	$ 7,268,316 575,129 ( 91,413 ) 483,716 - - 143 - ( 58,849 ) $ 7,693,326 $ 7,693,326 829,373 275,630 1,105,003 - - ( 514,927 ) 1,375,800 ( 162,408 ) 203,443 335 ( 4,105 ) 1,051 $ 9,697,518

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

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OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(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 on financial assets Depreciation Amortization Net profit on financial assets and liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates accounted for using equity method Loss on disposals of investments Loss on disposal of property, plant and equipment Gain on lease termination Impairment loss on non-financial assets Share-based payments 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 Current 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 Net defined benefit liability Provisions for liabilities Cash inflow generated from operations Interest received Dividends received Interest paid Income tax paid Net cash flows from operating activities

YearendedDecember 31 Notes 2021 2020 $ 1,012,679 $ 619,756 12(2) 2,198 2,487 6(8)(9)(27) 454,344 457,472 6(11)(27) 18,122 15,090 6(2)(25) ( 39,404 ) ( 473 ) 6(26) 15,908 26,492 6(23) ( 9,179 ) ( 11,234 ) 6(24) ( 18,763 ) ( 14,454 ) 6(7) 4,489 375 6(7)(25) 1,591 5,443 6(8)(25) 234 30,897 6(9)(25) - ( 5 ) 6(8)(25) 77,577 35,585 6(16) 105,473 - ( 360,975 ) ( 150,000 ) 3,990 4,178 361,831 ( 222,237 ) 1,865 15,908 4,782 ( 5,120 ) ( 114,404 ) 84,109 ( 78,149 ) 20,900 762 1,014 3,370 7,337 ( 1,757 ) 1,751 117,199 14,859 8,579 ( 26,771 ) 148,048 71,456 39,829 15,334 ( 8,618 ) ( 12,595 ) 3,058 ( 1,171 ) 1,754,679 986,383 8,588 11,930 18,763 17,671 ( 17,290 ) ( 27,894 ) ( 28,606 ) ( 79,345 ) 1,736,134 908,745

(Continued)

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OPTO TECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Acquistion of current financial assets at amortised cost Acquisition of available-for-sale financial assets Proceeds from disposal of finanacial assets at fair value through other comprehensive income Acquisition of investments accounted for using the equity method Proceeds from disposal of investment accounted for using equity method (Increase)decrease deposits-out Acquisition of property, plant and equipment Acquisition of investment property Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Decrease in long-term loans Repayments of principal portion of lease liabilities Decrease in guarantee deposits Stock repurchased Proceeds from issuance of shares Cash dividends paid Treasury shares transferred to employees Net cash flows from (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

YearendedDecember 31 Notes 2021 2020 6(3) ($ 797,975 ) $ - ( 15,000 ) - 6(4) - 3,780 6(7) ( 70,000 ) - 6(7) 3,663 - ( 5,969 ) 4,784 6(8)(31) ( 537,327 ) ( 301,152 ) 6(10) - ( 399,307 ) 144 1 6(11) ( 17,844 ) ( 15,179 ) ( 1,440,308 ) ( 707,073 ) 6(32) 952,423 666,529 6(32) ( 849,134 ) ( 685,411 ) 6(32) ( 811,515 ) ( 2,989 ) 6(32) ( 19,732 ) ( 20,221 ) 6(32) 2,111 ( 676 ) 6(18) ( 162,408 ) ( 58,849 ) 6(18) 1,375,800 - 6(20) ( 513,876 ) - 6(18) 97,970 - 71,639 ( 101,617 ) ( 215 ) 2,641 367,250 102,696 3,100,161 2,997,465 $ 3,467,411 $ 3,100,161

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

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OPTO TECH CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020

(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 CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorised for issuance by the Board of Directors on February 23, 2022.

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 2021 are as follows:

follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
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’ Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond 30 June 2021’	January 1, 2021 January 1, 2021 April 1, 2021(Note)

Note ： Earlier application from January 1, 2021 is allowed by

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

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(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 2022 are as follows:

	Effective date by
	International
	Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IAS 16, ‘Property, plant and equipment:	January 1, 2022
proceeds before intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a	January 1, 2022
contract’
Annual improvements to IFRS Standards 2018–2020	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.

(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:

endorsed by the FSC are as follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
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' Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 – comparative information' Amendments to IAS 1, ‘Classification of liabilities as current or non- current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising from a single transaction’	To be determined by International Accounting Standards Board January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023

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

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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.

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• (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:

Name of Investor	Name of Subsidiary	Main Business Activities	December 31, 2021 December 31, 2020 100.00 100.00 - - - - 99.87 99.87 50.00 50.00 100.00 - 100.00 100.00 100.00 - Ownership (%)	Description Notes 1 Notes 2 Notes 3 Note 4 Note 2 Note 4 Note 5 Note 6
			December 31, 2021
Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp.	Ho Chung Investment Co., Ltd. (Ho Chung Investment) Opto Technology International Group Co., Ltd. (OTIG) Opto Tech (Macao) Co., Ltd. (Opto Macao) CS Bright Corporation(CSB) Everyung Investment Ltd.( Everyung) Bright Investment International Ltd. (Bright) River Asset Co., Ltd. Opto System Technologies Inc.	Investment business Holding company International trade Manufacture and sales of LED and electronic products Holding company Holding company Investment business Manufacture and sales of lighting	100.00 - - 99.87 50.00 100.00 100.00 100.00

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

Ownership (%)
Name of Name of Main Business December 31, December 31,
Investor Subsidiary Activities 2021 2020 Description
----- End of picture text -----

Investor	Subsidiary	Activities	2021	2020	Description
OTIG	Opto Tech (Cayman)	Holding company	-	-	Note 2
	Co., Ltd. ( Opto
	(Cayman) )
OTIG	Everyung Investment	Holding company	-	-	Note 2
	Ltd. (Everyung)
CSB	Bright Investment	Holding company	-	100.00	Note 4
	International
	Ltd. (Bright)
Bright	Everyung Investment	Holding company	50.00	50.00
	Ltd. (Everyung)
Everyung	Opto Plus	Manufacture and	100.00	100.00
	Technology Co.,	sales of LED and
	Ltd. (Opto Plus)	electronic products

• Note 1: Ho Chung Investment has been continuously acquiring the Company’s common stock amounting to 755 thousand shares (after capital reduction amounting to 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 black 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 subsidiary, 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 foreign subsidiary, CS Bright Corporation (CSB), on September 10, 2020. The effective date was set on December 31, 2020, and the liquidation is still in process. The share equity of Bright Investment International Ltd. which was held by CSB had been transferred to the Company on April 22, 2021.

• Note 5: The subsidiary - River Asset Co., Ltd. is a wholly-owned subsidiary established by the Company on November 25, 2020, and has been included in the consolidated financial statements since the date of acquisition.

• Note 6: The subsidiary - Opto System Technologies Inc. is a wholly-owned subsidiary established by the Company on September 16, 2021, and has been included in the consolidated financial statements since the date of acquisition. The first extraordinary shareholders’ meeting approved the transfer of the relevant business of the Company's "system business group". The base date for the split was January 28, 2022.

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• 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 retranslated 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, nonmonetary 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.

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• (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.

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• 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.

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• 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.

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• 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.

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• 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:

are as follows:
Buildings and structures	10 ~ 50 years
Machinery and equipment	03 ~ 10 years
Utility equipment	06 ~ 25 years
Pollution prevention facilities	05 ~ 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 lowvalue 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.

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(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.

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• 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.

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  - (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.

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(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.

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(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.

• 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.

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(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, 2021, the carrying amount of inventories was $1,269,993.

• 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, 2021, the carrying amount of unlisted stocks without active market was $899,053.

~32~

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
	December 31, 2021			December 31, 2020
Cash on hand	$	169		$	341
Checking accounts and demand deposits		1,127,782			677,614
Time deposits		1,976,460			2,064,206
Cash equivalents - Resale bonds		363,000			358,000
Total	$	3,467,411		$	3,100,161
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 all amounting to $22,810 were pledged to others as collateral for the
leases of land and dormitory as of December 31, 2021 and		2020, and were	classified as financial
assets at amortised cost. Please refer to Notes 6(3) and 8 for the details.
Financial assets at fair value through profit or loss
Items	December31,2021			December31,2020
Current items:
Financial assets mandatorily
measured at fair value
through profit or loss
Funds	$	565,000		$	315,000
Listed stocks		146,730			-
Valuation adjustment
Funds		6,389			5,248
Forward exchange contracts		-			171
Equity instruments	(	3,658)			-
Total	$	714,461		$	320,419
Financial liabilities mandatorily
measured at fair value
fair value through profit and loss
Forward exchange contracts	$	-	($		799)
Non-current items:
Financial assets mandatorily
measured at fair value
through profit or loss
Unlisted stocks	$	127,048		$	127,048
Valuation adjustment	(	14,520)	(		20,058)
Total	$	112,528		$	106,990

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

• A. The Group recognised net gain of $39,404 and $473 on financial assets and financial liabilities held for trading for the years ended December 31, 2021 and 2020, respectively.

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• B. The non-hedging derivative instrument transactions and contract information are as follows: December 31, 2021: None.

==> picture [475 x 161] intentionally omitted <==

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

December 31, 2020
Contract amount
Derivative financial
instruments (notional principal) Contract period
Asset-Current items:
Forward foreign exchange contracts USD $ 2,000 December 1, 2020~
(thousands) January 21, 2021
Liabilities-Current items:
Forward foreign exchange contracts USD $ 3,000 December 21, 2020~
(thousands) January 26, 2021
----- End of picture text -----

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 profit or loss pledged to others.

• 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 amortised cost

in Note 12(2). Financial assets at amortised cost
Items Current items: Time deposits with maturity over three months Restricted time deposit	December31,2021 797,975 $ 22,810 820,785 $	December 31, 2020
		- $ 22,810
		22,810 $

• A. The Group recognised interest income of $1,805 and $94 for financial assets at amortised cost for the years ended December 31, 2021 and 2020, respectively.

• B. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

• C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

~34~

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

Items Non-current items: Equity instruments Listed stocks Unlisted stocks Subtotal Valuation adjustment Total	December31,2021 88,574 $ 477,809 566,383 470,835 1,037,218 $	December31,2020 73,574 $ 477,809
		551,383 232,615 783,998 $

• 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 $1,037,218 and $783,998 as at December 31, 2021 and 2020, respectively.

• C. The Group has no financial assets at fair value through other comprehensive income pledged to others as collateral.

• D. Amounts recognised in profit or los and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Equity instrument at fair value through other comprehensive income Fair value change recognised in other comprehensive income (loss) Cumulative gains reclassified to retained earnings due to recognition Dividend income recognised in profit or loss Held at end of period	2021 2020 246,242 $ 97,247) ($ - $ 180 $ 13,643 $ 14,454 $ Years endedDecember31

~35~

(5) Notes and accounts receivable

Notes and accounts receivable
		December	31,2021		December	31,2020
Notes receivable		$	4,883		$	8,873
Accounts receivable			1,279,119			1,642,933
Accounts receivable - related parties			15,015			16,880
Less : Allowance for uncollectible
accounts	(		8,235)	(		8,020)
		$	1,290,782		$	1,660,666

As of December 31, 2021 and 2020, accounts receivable and notes receivable were all from contracts with customers. And as of January 1, 2020, the balance of receivables from contracts with customers amounted to $ 1,482,823.

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

Without past due Up to 180 days 181 to 360 days Over 361 days	December31,2021 December 31, 2020 1,276,743 $ 1,618,397 $ 9,156 34,823 - 4,771 8,235 1,822 1,294,134 $ 1,659,813 $

The ageing analysis was based on past due date.

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

Without past due	December 31, 2021 4,883 $	December31,2020
		8,873 $

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).

(6) Inventories

12(2). Inventories
Raw materials Supplies Work in process Semi-finished goods Finished goods Total	December31,2021 312,443 $ 332,712 247,104 133,769 243,965 1,269,993 $	December31,2020
		196,857 $ 252,103 261,112 88,817 356,700
		1,155,589 $

~36~

• B. The cost of inventories recognised as expense for the period:

			Years ended	December31	December31
			2021		2020
Cost of goods sold		$	4,178,187	$	3,840,197
(Gain on reversal ) loss on decline in
market value	(		11,723)		106,291
		$	4,166,464	$	3,946,488

• B. For the years ended December 31, 2021, the Group recognized a decrease in the 'cost of goods sold' due to the rise in product prices, resulting in a rebound in the net realizable value.

• C. For the years ended December 31, 2020, the Group wrote down inventory from cost to net realisable value accounted for as 'cost of goods sold'.

(7) Investments accounted for using equity method

2021 At January 1 5,394 $ Share of loss of investment accounted for using equity method 4,489) ( Earnings distribution of investments accounted for using equity method - Proceeds from disposal of investments accounted for using equity method 3,663) ( Acquisition of investments accounted for using equity method 70,000 Gain on disposals of investments 1,591) ( Change in other equity items 5) ( At December 31 65,646 $ Associated enterprises December 31, 2021 NEW SMART TECHNOLOGY CO., LTD. 65,646 $ VML TECHNOLOGIES B.V. - 65,646 $

2020 8,768 $ 375) ( 3,217) ( - - - 218 5,394 $ December31,2020 - $ 5,394 5,394 $

The Group's Ho Chung Investment Co., Ltd. disposed of the holding of .VML TECHNOLOGIES B.V. in November, 2021. In November, 2021, the company received all the proceeds of the disposal.

~37~

(8) Property, plant and equipment

2021

													2021
																				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	$	2,041,199		$	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
For the year ended December 31
Opening net book amount	$	847,199		$	1,131,201		$	118,539		$	109,341	$	5,184		$	12,459		$	366,687	$	114,523		$	2,705,133
Additions		4,270			12,225			3,026			2,460		-			2,705			7,122		437,312			469,120
Disposals		-	(		246)			-			-		-	(		132)			-		-	(		378)
Reclassifications		-			96,674			10,545			22,230		-			9,983			17,268	(	156,700)			-
Depreciation expense	(	58,858)	(		273,232)	(		19,632)	(		14,939)	(	1,358)	(		6,664)	(		58,237)		-	(		432,920)
Provision for impairment loss		-	(		77,577)			-			-		-			-			-		-	(		77,577)
Net exchange differences		658			181			-			-		3			-			-		-			842
Closing net book amount	$	793,269		$	889,226		$	112,478		$	119,092	$	3,829		$	18,351		$	332,840	$	395,135		$	2,664,220
At December 31
Cost	$	2,047,020		$	5,443,283		$	1,063,703		$	731,271	$	12,758		$	89,523		$	1,962,107	$	395,135		$	11,744,800
Accumulated depreciation	(	1,253,692)	(		4,441,091)	(		951,225)	(		612,179)	(	8,929)	(		71,153)	(		1,629,230)		-	(		8,967,499)
Accumulated impairment	(	59)	(		112,966)			-			-		-	(		19)	(		37)		-	(		113,081)
	$	793,269		$	889,226		$	112,478		$	119,092	$	3,829		$	18,351		$	332,840	$	395,135		$	2,664,220

~38~

2020

At January 1 Cost Accumulated depreciation Accumulated impairment For the year ended December 31 Opening net book amount Additions Disposals Reclassifications Depreciation expense Impairment loss Net exchange differences Closing net book amount At December 31 Cost Accumulated depreciation Accumulated impairment

Construction in Pollution progress and Buildings Utility prevention Transportation Office Other prepayment for and structures Machinery facilities facilities equipment equipment equipment equipment Total 2,028,554 $ 5,625,019 $ 1,118,047 $ 717,932 $ 8,703 $ 78,865 $ 1,949,344 $ 116,824 $ 11,643,288 $ 1,135,179) ( 4,381,982) ( 974,309) ( 594,031) ( 7,337) ( 66,858) ( 1,567,562) ( - 8,727,258) ( 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 $ 893,316 $ 1,236,295 $ 143,738 $ 123,901 $ 1,366 $ 11,988 $ 381,699 $ 116,824 $ 2,909,127 $ 3,112 36,949 4,054 2,204 2,155 4,735 13,511 230,489 297,209 - 4,959) ( 13,275) ( 1,149) ( - 66) ( 11,448) ( - 30,897) ( 8,846 173,523 5,131 1,230 2,425 16) ( 41,651 232,790) ( - 58,320) ( 275,039) ( 21,109) ( 16,845) ( 762) ( 4,188) ( 58,726) ( - 434,989) ( - 35,585) ( - - - - - - 35,585) ( 245 17 - - - 6 - - 268 847,199 $ 1,131,201 $ 118,539 $ 109,341 $ 5,184 $ 12,459 $ 366,687 $ 114,523 $ 2,705,133 $ 2,041,199 $ 5,444,530 $ 1,050,132 $ 707,319 $ 13,288 $ 81,650 $ 1,937,717 $ 114,523 $ 11,390,358 $ 1,193,941) ( 4,277,941) ( 931,593) ( 597,978) ( 8,104) ( 69,172) ( 1,570,993) ( - 8,649,722) ( 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 $

~39~

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

	Years ended	December31
	2021	2020
Amount capitalised	159 $	960 $
Interest rate	0%~0.53%	0.24%~1.38%

• B. Taking into consideration the future operating plan, some machines did not meet the production demand and presented to be idle in December 2021 and June 2020. After assessment, the recoverable amounts of machines were less than their carrying amount, thus the Group provisioned impairment loss in the amount of $77,577 and $35,585, respectively. The Group measured recoverable amounts with use value, the discount rate was 13% and 9.82%, respectively.

• －

• (9) 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)	December31,2021 December 31, 2020 Carrying amount Carrying amount 208,202 $ 223,498 $ 2,318 4,635 3,838 5,400 2,090 2,602 216,448 $ 236,135 $ Years endedDecember31	December 31, 2020
		Carrying amount
		223,498 $ 4,635 5,400 2,602
		236,135 $
	2021 Depreciationcharge 15,316 $ 2,318 2,511 1,279 21,424 $	2020
		Depreciationcharge
		15,314 $ 2,926 3,294 949
		22,483 $

• C. For the years ended December 31, 2021 and 2020, the additions to right-of-use assets amounted to $1,717 and $7,521, respectively.

~40~

D. The information on income and expense accounts relating to lease contracts is as follows:

==> picture [468 x 83] intentionally omitted <==

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

Years ended December 31
2021 2020
Items affecting profit or loss
Interest expense on lease liabilities $ 4,082 $ 4,351
Expense on short-term lease contracts $ 8,798 $ 10,582
----- End of picture text -----

• E. For the years ended December 31, 2021 and 2020, the Group’s total cash outflow for leases amounted to $32,612 and $35,155, 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.

(10) Investment property

Investment property
At January 1 Additions- from acquisitions At December 31	2021 Land 399,307 $ - 399,307 $	2020
		Land
		- $ 399,307
		399,307 $

• A. On December 31, 2021, the fair value of investment properties was $410,640, which was based on the market evidence on transaction price of similar property and publicly announced present value. On December 31, 2020, the fair value of investment properties was $410,640, which was based on the valuation results from independent appraisers.

• B. The Group has no investment properties pledged to others.

(11) Intangible assets

Intangible assets
		2021		2020
At January 1		Software		Software
Cost	$	40,624	$	38,298
Accumulated amortisation	(	26,306)	(	24,069)
	$	14,318	$	14,229
For the years ended December 31
Opening net book amount	$	14,318	$	14,229
Additions		17,844		15,179
Amortisation expense	(	18,122)	(	15,090)
Closing net book amount	$	14,040	$	14,318
At December 31
Cost	$	31,902	$	40,624
Accumulated amortisation	(	17,862)	(	26,306)
	$	14,040	$	14,318

~41~

Details of amortisation on intangible assets are as follows:

==> picture [499 x 352] intentionally omitted <==

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

Years ended December 31
2021 2020
Operating costs $ 9,095 $ 4,366
Operating expenses 9,027 10,724
Total $ 18,122 $ 15,090
(12) Short-term borrowings
Type of borrowings December 31, 2021 December 31, 2020
Unsecured bank borrowings $ 334,047 $ 230,758
Interest rate range 0.6%~5% 0.51%~5.25%
(13) Other payables
December 31, 2021 December 31, 2020
Salaries and bonus payable $ 272,930 $ 186,138
Compensation payable to
employees 189,670 115,354
Remuneration payable to
63,674 38,410
directors
Others 239,434 279,140
Total $ 765,708 $ 619,042
-
(14) Long term borrowings
December 31, 2021: None.
----- End of picture text -----

Long-term borrowings December 31, 2021: None.
Type ofborrowings Creditline Period Syndicated borrowings with four financial institutions including China Trust Commercial Bank(Unsecured) $ 1,200,000 2019.02.20~ 2022.02.20 Less: Current portion (shown as “Other current liabilities”)	Period	Interest rate range	December 31, 2020
		1.169%~ 1.797%	811,515 $ 62,960) ( 748,555 $

~42~

• A. On January 15, 2019, the Company signed a joint credit facility of $1.2 billion with four financial institution including China Trust Commercial Bank. The loan agreement includes the following covenants.

  • (a) The current ratio should be no less than 100% per share every 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. The long-term borrowings maturing on February 20, 2022 were repaid in advance on October 21, 2021 due to the financial planning considerations.

• (15) 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 and managers 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 2.68% and 3.18% 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.

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

			December31,2021			December31,2020
Present value of defined benefit		$	450,675		$	551,918
obligations
Fair value of plan assets	(		303,900)	(		365,305)
Net defined benefit liability		$	146,775		$	186,613

~43~

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

2021 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 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	Present value of defined benefit obligations 551,918 $ 6,111 2,146 560,175 - 943 18,871) ( 6,611) ( 24,539) ( - 84,961) ( 450,675 $ Present value of defined benefit obligations	Fair value of plan assets	Net defined benefit liability
		365,305) ($ - 1,417) ( 366,722) ( 8,389) ( - - 1,847 6,542) ( 6,030) ( 75,394 303,900) ($ Fair value of plan assets	186,613 $ 6,111 729 193,453 8,389) ( 943 18,871) ( 4,764) ( 31,081) ( 6,030) ( 9,567) ( 146,775 $ Net defined benefit liability
	648,021 $ 8,000 5,300 661,321 - 162) ( 35,811 21,285) ( 14,364 - 123,767) ( 551,918 $	448,157) ($ - 3,661) ( 451,818) ( 15,020) ( - - - 15,020) ( 22,234) ( 123,767 365,305) ($	199,864 $ 8,000 1,639 209,503 15,020) ( 162) ( 35,811 21,285) ( 656) ( 22,234) ( - 186,613 $

~44~

• (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, 2021 and 2020 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	2020 Manager Regularemployee 0.5% 0.75% 0.39% 3.00% 3.00% 3.00% Years ended December31, 2021	2020 Manager Regularemployee 0.5% 0.75% 0.39% 3.00% 3.00% 3.00% Years ended December31, 2021
	Manager 0.5% 3.00%	0.39% 3.00%

Future mortality rate in 2021 and 2020 were estimated based on the 6th and 5[th] Taiwan Standard Ordinary Experience Mortality Table, respectively.

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

December 31, 2021 Effect on present value of defined benefit obligation December 31, 2020 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%
	12,756) ($ 41,350) ($		13,275 $ 45,456 $	12,947) ($ 44,026 $	12,512 $ 40,537) ($

~45~

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, 2022 amount to $4,500

• (g) As of December 31, 2021, the Company’s and CS Bright Corporation’s weighted average duration of the retirement plan is 3 years and 11 years, respectively. The analysis of timing of the future pension payment was as follows:

Within 1 year	$	13,572
1-2 year(s)		35,667
2-5 years		36,025
Over 5 years		406,169
	$	491,433

• B. (a) Effective July 1, 2005, the Company and domestic subsidiaries 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, 2021 and 2020 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 $33,825 and $34,799, respectively.

~46~

(16) Share-based payment

• A. For the year ended December 31, 2021, the Group’s share-based payment arrangements were as follows:

follows:
		Quantity	Contract
Type of arrangement	Grant date	granted	period	Vesting conditions
Treasury stock transferred to	2021.07.20	7,588	-	Vested immediately
employees

Transfer restriction is no transfer within two years.

The grant date is the date that the number of shares subscribable by employees is confirmed by the Company.

• B. The fair value of stock options granted on grant date is measured using the Black-Scholes optionpricing model. Relevant information is as follows:

Type of arrangement	Grant date	Stock price	Exercise price	Expected price volatility	Expected option life Expected dividends 0.01～ 0.02years -	Risk-free interest rate Fair value per unit 0.1241% 13.91
Treasury stock transferred to employees	2021.07.20	31.6	12.95	40.63%

• C. Expenses incurred on share-based payment transactions are shown below:

	For	the	year	ended	December 31
Equity-settled	$				105,473

For the year ended December 31, 2020: None.

(17) Provisions

Provisions
Warranty			2021			2020
At January 1		$	22,841		$	24,017
Accrued during the period			5,831			8,177
Used during the period	(		2,773)	(		9,348)
Exchange differences			-	(		5)
At December 31		$	25,899		$	22,841
Analysis of total provisions:
		December31,2021			December31,2020
Current		$	6,831		$	4,033
Non-current		$	19,068		$	18,808

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

~47~

(18) Share capital

• A. As of December 31, 2021, 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 $4,386,228, consisting of 438,623 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, 2021 and 2020 are as follows:

		(In	thousands of shares)	thousands of shares)
		2021		2020
At January 1		375,541		377,868
Proceeds from issuance of shares		60,000		-
Purchase of treasury shares	(	6,566)	(	2,327)
Treasury stock transferred to employees		7,588		-
At December 31		436,563		375,541

• B. 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, which has not yet been approved at the shareholders’ meeting. Taking into consideration capital market condition, the Company discontinued the private replacement of securities as approved by the shareholders in 2020.

• C. To meet the strategic cooperation needs of the Company’s long-term development, strengthen the Company’s competitiveness and introduce strategic investors, the Company raised additional cash by issuing 60 million new shares at the price of $22.93 (in dollars) per share, totaling $1,375,800 as approved by the Board of Directors on July 1, 2021. All proceeds from shares issued have been collected. Pursuant to the Securities and Exchange Act, the ordinary shares raised through the private placement are subject to certain transfer restrictions and cannot be listed on the stock exchange until three years after they have been issued and have been offered publicly. Other than these restrictions, the rights and obligations of the ordinary shares raised through the private placement are the same as other issued ordinary shares. The effective date for the aforesaid cash capital increase was set on August 30, 2021, the registration was completed on September 9, 2021.

~48~

D. Treasury stock

• (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows: (In thousands of shares)

Name of company holding the shares The Company The Company Subsidiary-Ho Chung Investment Co., Ltd. Name of company holding the shares The Company The Company Subsidiary-Ho Chung Investment Co., Ltd.	Reason for reacquisition For transfer of shares to empoyees The Company’s shares held by its subsidiary Reason for reacquisition For transfer of shares to empoyees The Company’s shares held by its subsidiary	Number of Shares 1,305 755 2,060 December Number of Shares 2,327 755 3,082 December	Carrying amount 31,782 $ 23,172 31,2021
			54,954 $
			Carrying amount 31,2020
			58,849 $ 23,172
			82,021 $

• (b) The Company’s shares held by its subsidiary had no voting rights before being transferred to the third party.

• (c) On November 6, 2020, the Board of Directors of the Company approved to repurchase the Company’s common shares and transfer them to employees. The Company expected to repurchase 7,500,000 shares with an upper limit of cash amount of $3,103,739. As of January 8, 2021, the final date of repurchase period, the Company repurchased 4,294 thousand shares for a total consideration of $109,251.

• (d) 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 expected to repurchase 7,500,000 shares with an upper limit of cash amount of $3,482,361. As of March 10, 2021, the final date of repurchase period, the Company repurchased 4,599 thousand shares for a total consideration of $112,006.

~49~

• (e) The Company passed a resolution at the shareholders’ meeting on July 1, 2021 to transfer treasury shares to employees at a price lower than the average price of the shares actually bought back. The transfer price was set at $12.95 (in dollars) per share and approved by the Board of Directors on the same day, and will buy back shares to transfer to employees. The regulations stipulate that 8,893 thousand shares of treasury shares shall be transferred to employees. (The actual number of treasury shares transferred was 7,588 thousand shares.)

• (f) Pursuant to R.O.C. Securities and Exchange Act, the number of shares bought back as treasury shares 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 raised capital surplus.

• (g) 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.

• (h) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares not 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.

• (19) 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.

At January 1 Cash capital increase Changes in ownership interests in subsidiaries Treasury stock transferred to employees Adjustments of capital surplus for the Company's cash dividends received by subsidiaries At December 31					2021
		Share premium		Treasury share transactions	Long-term investments	Employee stock options			Total
		373,792 $ 775,800 - - - 1,149,592 $		60,256 $ - - 13,968 - 74,224 $	82,760 $ - 4,105) ( - 1,051 79,706 $		186,300 $ - - - - 186,300 $		703,108 $ 775,800 4,105) ( 13,968 1,051 1,489,822 $

~50~

At January 1 Resolved the liquidation of subsidiaries At December 31		Share premium Treasury share transactions Long-term investments Employee stock options 373,792 $ 60,256 $ 82,617 $ 186,300 $ - - 143 - 373,792 $ 60,256 $ 82,760 $ 186,300 $ 2020	Share premium Treasury share transactions Long-term investments Employee stock options 373,792 $ 60,256 $ 82,617 $ 186,300 $ - - 143 - 373,792 $ 60,256 $ 82,760 $ 186,300 $ 2020		Total
			186,300 $ - 186,300 $		702,965 $ 143 703,108 $

(20) Retained earnings

• A. Under the Company’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 that 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 Company 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 Company 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 is in excess of 25% of the Company’s paid-in capital.

• D. In accordance with the regulations, the Company 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.

~51~

• E. The appropriation of 2020 earnings as resolved by the shareholder’s meeting July 1, 2021 and the appropriation of 2019 earnings as resolved by the shareholder’s meeting on June 16, 2020 are as follows:

are as follows:
			2020					2019
					Dividends					Dividends
					per share					per share
			Amount		(in dollars)			Amount		(indollars)
Legal reserve		$	57,584				$	60,048
Reversal of special	(		1,320)			(		4,649)
reserve
Cash dividends			514,927	$	1.39			-	$	-
Total		$	571,191				$	55,399

• (a) The distribution of cash dividends in 2020 was approved by the Company's Board of Directors on March 18, 2021. The statutory surplus reserve and the special surplus reserve were approved at the general meeting of shareholders on July 1, 2021. There was no difference between the surplus distribution in 2020 and the Company's approval by the Board of Directors on March 18, 2021. For the surplus distribution approved by the Board of Directors and resolutions of the shareholders' meeting, please refer to the Market Observation Post System for further information.

• (b) 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.

~52~

(21) Other equity items

Other equity items
					2021
		Currency translation
	differences of foreign			Unrealized gain (loss) on
			operations		valuation			Total
At January 1	($		4,063)	$	191,414		$	187,351
Financial assets at fair value
through other comprehensive
income(loss)
Revaluation - Group			-		238,220			238,220
Tax on revaluation			-		8,022			8,022
Currency translation differences:
-Group			4,756		-			4,756
-Associates	(		340)		-	(		340)
-Subsidiaries dispose
on associates			335		-			335
At December 31		$	688	$	437,656		$	438,344
					2020
		Currency translation
	differences of foreign			Unrealized gain (loss) on
			operations		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

~53~

(22) Operating revenue

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

Years ended December 31
2021 2020
Revenue from contracts with customers $ 6,143,243 $ 5,590,046
A. The Group derives revenue in the following major product lines:
LED and Displays and Packaging
Year ended Silicon Sensor Lighting Business Other
December 31, 2021 Chips Group Group Group segments Total
Revenue from
external contracts $ 5,049,639 $ 787,247 $ 306,357 $ - $ 6,143,243
LED and Displays and Packaging
Year ended Silicon Sensor Lighting Business Other
December 31, 2020 Chips Group Group Group segments Total
Revenue from
external contracts $ 4,446,496 $ 854,651 $ 262,415 $ 26,484 $ 5,590,046
----- End of picture text -----

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

	December	31,2021	December 31, 2020	December 31, 2020	January1,2020
Contract liabilities	$	83,611		44,086 $	30,360 $
				Years ended December 31
				2021	2020
Revenue recognised that was included in the
contract liability balance at the beginning
of the period			$	40,845	12,978 $

(23) Interest income

Interest income
Interest income from bank deposits Interest income from resale bonds Other interest income	Years ended December31
	2021 8,510 $ 661 8 9,179 $	2020
		9,615 $ 1,511 108
		11,234 $

(24) Other income

Other income
Rental income Dividend income Other income	Years endedDecember31
	2021 80 $ 18,763 36,550 55,393 $	2020
		81 $ 14,454 41,076
		55,611 $

~54~

(25) Other gains and losses

Loss on disposals of property, plant and equipment Loss on disposals of investments Net currency exchange gain (loss) Net gain on financial assets and liabilities at fair value through profit or loss Impairment loss on disposal of property, plant and equipment Gain on lease termination Others Total

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

Years ended December 31
2021 2020
($ 234) ($ 30,897)
( 1,591) ( 5,443)
302 ( 36,408)
39,404 473
( 77,577) ( 35,585)
- 5
( 1,270) ( 395)
($ 40,966) ($ 108,250)
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(26) Finance costs

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

Other financial costs Total

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

Years ended December 31
2021 2020
$ 11,985 $ 23,101
4,082 4,351
( 159) ( 960)
15,908 26,492
1,318 1,119
$ 17,226 $ 27,611
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(27) Expenses by nature

Expenses by nature
Employee benefit expense Depreciation on property, plant and equipment Amortisation on intangible assets Total	Years endedDecember31
	2021 1,491,807 $ 454,344 18,122 1,964,273 $	2020
		1,347,187 $ 457,472 15,090
		1,819,749 $

~55~

(28) Employee benefit expense

Employee benefit expense
		Years ended	December31
		2021		2020
Wages and salaries	$	1,303,616	$	1,131,655
Termination benefits		40,000		51,231
Labor and health insurance fees		86,573		87,398
Pension costs		40,665		44,438
Other personnel expenses		20,953		32,465
	$	1,491,807	$	1,347,187

• A. According to the Articles of Incorporation of the Company, if the Company has profit during the year, the Company shall distribute bonus to the employees that account for 10%~15% and pay remuneration to the directors 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. The shareholders’ meeting on July 1, 2021 approved the amendment to the Company’s Articles of Incorporation, and revised the employee remuneration ratio to 10%~20% based on profitability, and the directors’ remuneration ratio to no more than 10%.

• B. For the years ended December 31, 2021 and 2020, employees’ compensation was accrued at $187,978 and $115,175, respectively; directors’ remuneration was accrued at $62,659 and $38,392, respectively. The aforementioned amounts were recognised in salary expense. The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based both on 15% and 5%.

• C. For the years ended December 31, 2021 the Company’s subsidiary, CS Bright Corporation, was liquidated. Therefore, remuneration for directors and employees is not estimated. For the years ended December 31, 2020 was accrued at $179 ; while directors’ and supervisors’ remuneration was accrued at $18. The aforementioned amounts were recognised in salary expenses, which were accrued based on distributable profit of current year as of the end of reporting period. And for the years ended December 31, 2020, the subsidiary accrued employees’ compensation and directors’ remuneration at 10% and 1%, respectively.

• D. For the years ended December 31, 2021, employees’ compensation of the Company’s subsidiary, River Asset Co., Ltd., was accrued at $1,692; while directors’ remuneration was accrued at $1,015. The aforementioned amounts were recognised in salary expenses and were estimated and accrued based on 5% and 3% of distributable profit of current year for the year ended December 31, 2021.

~56~

• E. Employees’ compensation and directors’ and supervisors’ remuneration of 2020 as resolved by the Board of Directors are the same as the amount recognised in the consolidated financial statements.

• F. Information about employees’ compensation and directors’ 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.

(29) 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,
			2021			2020
Current tax:
Current tax on profit for the year		$	187,738		$	495
Tax on undistributed surplus earnings			273			27,254
Prior year income tax overestimation			1,335	(		25,336)
Total current tax			189,346			2,413
Deferred tax:
Origination and reversal of temporary
differences	(		6,040)			42,214
Income tax expense		$	183,306		$	44,627

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

			Years ended	December	December	31,
			2021			2020
Remeasurement of defined benefit		$	6,243		$	131
obligations
Changes in fair value of financial assets
at fair value through other
comprehensive income	(		8,022)	(		40,348)
	($		1,779)	($		40,217)

~57~

B. Reconciliation between income tax expense and accounting profit

			Years ended	December	December	31
			2021			2020
Tax calculated based on profit before tax
and statutory tax rate		$	214,248		$	123,360
Expenses disallowed by tax regulation			1,533			2,827
Tax exempt income by tax regulation	(		16,682)	(		2,126)
Temporary differences not recognised as
deferred tax assets	(		7,802)	(		26,494)
Effect from investment tax credits	(		23,363)	(		18,304)
Change in assessment of realisation of
deferred tax assets			13,764	(		36,554)
Prior year income tax overestimation			1,335	(		25,336)
Tax on undistributed earnings			273			27,254
Income tax expense		$	183,306		$	44,627

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 Total		Year ended December 31,2021	Year ended December 31,2021	Year ended December 31,2021
	January1	Recognised in profit or loss	Recognised in other comprehensive income	December31
	7,004 $ - 4,568 7,631 1,096 26,309 41,200) ( 57) ( 5,351 $	4,919) ($ 2,934 612 10,361 1,641) ( - - 1,307) ( 6,040 $	- $ - - - - 6,243) ( 8,022 - 1,779 $	2,085 $ 2,934 5,180 17,992 545) ( 20,066 33,178) ( 1,364) ( 13,170 $

~58~

Year ended December 31, 2020

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	December31
	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 $

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

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December 31, 2021
Year Amount filed/ Amount of unrecognised
incurred assessed Unused amount deferred tax assets
2012 $ 10,332 $ 10,332 $ 10,332
December 31, 2020
Year Amount filed/ Amount of unrecognised
incurred assessed Unused amount deferred tax assets
2011 $ 7,266 $ 7,266 $ 7,266
2012 10,332 10,332 10,332
$ 17,598 $ 17,598 $ 17,598
----- End of picture text -----

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

are as follows:
Deductible temporary differences	December31,2021 130,381 $	December31,2020
		169,393 $

• F. As of December 31, 2021, the Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority.

~59~

(30) Earnings per share

(30)	Earnings per share
(31)	Supplemental cash flow information Investing activities with partial cash payments： Weighted-average outstanding common shares Earnings per share Profit aftertax (inthousands) (indollars) Basic earnings per share Profit attributable to owners of the parent 829,371 $ 393,116 2.11 $ Dilutive effect of common stock equivalents: Employees’ compensation - 3,563 Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents 829,371 $ 396,679 2.09 $ Weighted-average outstanding common shares Earnings per share Profit aftertax (inthousands) (indollars) Basic earnings per share Profit attributable to owners of the parent 575,133 $ 377,806 1.52 $ Dilutive effect of common stock equivalents: Employees’ compensation - 7,185 Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents 575,133 $ 384,991 1.49 $ YearendedDecember31,2021 Year ended December 31, 2020 2021 2020 Purchase of property, plant and equipment 469,120 $ 297,209 $ Add：Ending balance of prepayments for business facilities 72,150 3,943 Less:Opening balance of prepayments for business facilities 3,943) ( - Cash paid during the year 537,327 $ 301,152 $ Years endedDecember31	Weighted-average outstanding common shares Earnings per share Profit aftertax (inthousands) (indollars) 829,371 $ 393,116 2.11 $ - 3,563 829,371 $ 396,679 2.09 $ YearendedDecember31,2021 Year ended December 31, 2020
				Earnings per share (indollars) 1.52 $
				1.49 $
			2020
			297,209 $ 3,943 -
			301,152 $

~60~

(32) Changes in liabilities from financing activities

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

2021
Short-term Long-term borrowings Lease Guarantee Liabilities from financing
borrowings ( including current portion) liabilities deposits activities-gross
At January 1 $ 230,758 $ 811,515 $ 236,266 $ 869 $ 1,279,408
Changes in cash
flow from financing
activities 103,289 ( 811,515) ( 19,732) 2,111 ( 725,847)
- - -
Interest payment ( 4,082) ( 4,082)
Amorization of
- - -
interest expenses 4,082 4,082
Increase in lease
liabilities - - 1,717 - 1,717
Impact of changes in
foreign exchange
rate - - - - -
At December 31 $ 334,047 $ - $ 218,251 $ 2,980 $ 555,278
2020
Short-term Long-term borrowings Lease Guarantee Liabilities from financing
borrowings ( including current portion) liabilities deposits activities-gross
At January 1 $ 249,640 $ 814,504 $ 249,496 $ 1,545 $ 1,315,185
Changes in cash
flow from financing
activities ( 18,882) ( 2,989) ( 20,221) ( 676) ( 42,768)
- - -
Interest payment ( 4,351) ( 4,351)
Interest in lease
- - -
principal 7,521 7,521
Amorization of
-
interest expenses 4,351 4,351
Decrease for the
- - -
period ( 502) ( 502)
Impact of changes
in foreign exchange
- - ( 28) - ( 28)
rate
At December 31 $ 230,758 $ 811,515 $ 236,266 $ 869 $ 1,279,408
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~61~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

LATED PARTY TRANSACTIONS Names of related parties and relationship
Names of relatedparties	Relationship with theCompany
Opto Medical Public Welfare Foundation	Other related parties
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.(Note 3)
Nichia Taiwan Corp.	This company investments by the Company accounted for using the equity method.(Note 4)
Nichia Corp.	This company is the Company's parent company of
	enterprise group accounted for using equity method.
VML Technologies B.V.	This company is an investment of Ho Chung Investment
	Co., Ltd. accounted for using equity method. (Note 5)
Shen Zhen Guabg Xin Vision Technology	The chairman of this company is an independent
CO., Ltd.( Shen Zhen Guang Xin)	director of the Company.(Note 2)
Guang Xin Vision Tech. (HK) CO., Ltd.	The chairman of this company is an independent
(Hong Kong Guang Xin)	director of the Company.(Note 2)
NEW SMART TECHNOLOGY CO.,	The company is the company's direct and indirect
LTD.	investment using the equity method company.

• 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 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 was no longer a related party.

• Note 3: It was no longer a related party of the Company after the Company resigned as director on February 28, 2021.

• Note 4: The shareholders of the Company during their meeting resolved to issue common shares for capital increase through a private placement on July 1, 2021. The entity became an investor which accounted for its investment in the Company using the equity method after the effective date (August 30, 2021) for capital increase.

• Note5:.The Subsidiary- Ho Chung Investment Co., Ltd. disposed of its ownership of VML TECHNOLOGIES B.V. on November 30, 2021. The company is not a related party of the Company starting from the date.

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(2) Significant transactions and balances with related parties

A. Operating revenue:

Operating revenue:
		Years ended	December 31
		2021		2020
Sales of goods:
-Associates	$	23,475	$	240
-Individuals with significant
influence on the Group		83,287		-
-Other related parties		241,763		234,463
Total	$	348,525	$	234,703

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, 2021 and 2020, the credit term was 45 ~ 136 days, some related parties adopt advance payment post-shipment method and 90 ~ 150 days for the non-related parties for both periods.

B. Purchases:

Purchases:
Purchases of goods: -Individuals with significant influence on the Group -Other related parties	Years endedDecember31
	2021 48,797 $ 94,122 142,919 $	2020
		- $ 181,343
		181,343 $

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, 2021 and 2020, the credit term was 60 ~ 120 days and 90 ~ 120 days for the non-related parties, respectively.

C. Accounts receivable:

Accounts receivable:
Receivables from related parties: -Other related parties -Individuals with significant influence on the Group	December31,2021 - $ 15,015 15,015 $	December31,2020
		16,880 $ -
		16,880 $

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D. Accounts payable:

Accounts payable:
Advance receipt Payables to related parties: -Individuals with significant influence on the Group -Other related parties Total Other payables: -Individuals with significant influence on the Group -Other related parties Total Associates	December31,2021 60,499 $ - 60,499 $ 210 $ - 210 $ December 31, 2021 - $	December31,2020 - $ 51,920
		51,920 $
		- $ 211
		211 $
		December 31, 2020
		942 $

• E. Advance receipt

Associates

• F. Property transactions:

• (a) Acquisition of property, plant and equipment(including prepayments for business facilities shown as other non-current assets):

shown as other non-current assets):
NEW SMART TECHNOLOGY CO., LTD.	Years endedDecember31
	2021 246,567 $	2020 - $

• (b) Acquisition of financial assets:

Acquisition of financial assets:
Accounts Associates Investments accounted for using the equity method	No. of shares	Objects Consideration Common stocks 70,000 $ Years endedDecember31,2021
	5,000		70,000 $

For the year ended December 31, 2020: None.

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G. Lease

(a) Rent expense

ease a) Rent expense
		Years ended	December31
		2021		2020
-Other related parties	$	1,600	$	2,400
-Individuals with significant
influence on the Group		800		-
	$	2,400	$	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:

by non-related parties. (b) Lease liabilities (i) Outstanding balance:
(ii) Interest expense Others Other related parties -Other related parties -Individuals with significant influence on the Group Donation expense： -Opto Medical Public Welfare Foundation Expenditure of labor service： -Associates	December 31, 2021 2,180 $ Years ended	December31,2020 4,518 $ 2020 104 $ - 104 $ December 31 Years ended December31,2021
	2021 46 $ 16 62 $
			50,000 $ 20,000 $

H. Others

For the year ended December 31, 2020 ： None.

The purpose of the donation is mainly for the medical emergency relief needed by the society and the cooperative development of medical technology. The above-mentioned donation has no major agreement between the Group and the recipient.

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(3) Key management compensation

Key management compensation
		Years ended	December	31
		2021		2020
Salaries and other short-term employee benefits	$	189,653	$	93,772
Post-employment benefits		296		464
Total	$	189,949	$	94,236

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged assets Restricted assets- Time deposits, (shown as "other current assets")	December 31, December 31, 2021 2020 22,810 $ 22,810 $ Book value	Creditor Bank Type Chang Hwa Commercial Bank and Far Eastern International Bank Land lease and dormitory lease deposits Purpose ofpledge

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) As of December 31, 2021, the guarantees provided by the Company through banks were as follows:

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Guarantor Nature of Guarantee Amount
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Guarantor Nature of Guarantee	Amount
Far Eastern International Bank Performance guarantee Chang Hwa Commercial Bank Customs duty Chang Hwa Commercial Bank Performance guarantee Mega International Commercial Bank Performance guarantee and warranty Taipei Fubon Commercial Bank Performance guarantee Taishin International Bank Borrowing	19,450 $ 15,000 3,360 7,058 755 96,968
	142,591 $

(2) As of December 31, 2021, the outstanding letters of credit issued for the importation of raw materials and machinery were as follows:

Amount	(thousands)
TWD	27,380
JPY	7,795
USD	770

• (3) Operating lease commitments:

See Note 6(9).

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(4) As of December 31, 2021, the promissory notes issued by the Company and subsidiary corporation for loans, performance guarantee for purchases and loans granted for subsidiaries amounted to $4,021,808

• (5) As of December 31, 2021, the capital expenditure contracted but not yet incurred is $124,460.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

To implement work specialisation and increase overall operational performance and market competitiveness of the Company through effective planning, the shareholders of the Company at their first interim meeting held on October 21, 2021 resolved to spin off the operations relating to the ‘ Displays and Lighting Group’ (including assets, liabilities and operations) to an existing whollyowned subsidiary, Opto System Technologies Inc. in accordance with the requirements stipulated in the Article 35 of Business Mergers And Acquisitions Act. The spin off completed on January 28, 2022, and the net operating value amounted to $200,000.

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, 2021 and 2020, the gearing ratios were (47.73%)% and (36.52%), respectively.

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(2) Financial instruments

A. Financial instrument by category

Financial assets Financial assets 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 Financial assets at amortised cost Notes receivable Accounts receivable - net (including related parties) Other accounts receivable Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities mandatorily measured at fair value through profit or loss Financial liabilities at amortised cost Financial assets at fair value through other comprehensive income Short-term borrowings Notes payable Accounts payable (including related parties) Other accounts payable Long-term borrowings (including current portion) Guarantee deposits received Lease liabilities	December31,2021 826,989 $ 1,037,218 3,467,411 820,785 4,883 1,285,899 16,027 17,732 7,476,944 $ December31,2021 - $ 334,047 - 843,624 765,708 - 2,980 1,946,359 $ 218,251 $	December31,2020 427,409 $ 783,998 3,100,161 22,810 8,873 1,651,793 20,218 11,763
		6,027,025 $
		December31,2020
		799 $
		230,758 1,757 717,846 619,042 811,515 869
		2,381,787 $
		236,266 $

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• 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 currency exposures, 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.

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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:

Foreign currency amount (in thousands) Exchange rate Book value (TWD) (Foreign currency: functional currency) Financial assets Monetary items USD : TWD 38,914 $ 27.63 1,075,194 $ JPY : TWD 333,627 0.2385 79,570 CNY : TWD 15,222 4.4319 67,462 USD : CNY (Note) 477 6.3720 13,203 Non-monetary items :None. (Foreign currency: functional currency) Financial liabilities Monetary items USD : TWD 20,517 $ 27.73 568,936 $ JPY : TWD 430,400 0.2425 104,372 USD : CNY (Note) 738 6.3720 20,428 Non-monetary items :None. December31,2021		Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealize d exchange gain 1% 10,752 $ - $ 3,116) ($ 1% 796 - 1,091) ( 1% 675 - 224 1% 132 - 229) ( 1% 5,689) ($ - $ 1,489 $ 1% 1,044) ( - 538 1% 204) ( - - Years ended December31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealize d exchange gain 1% 10,752 $ - $ 3,116) ($ 1% 796 - 1,091) ( 1% 675 - 224 1% 132 - 229) ( 1% 5,689) ($ - $ 1,489 $ 1% 1,044) ( - 538 1% 204) ( - - Years ended December31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealize d exchange gain 1% 10,752 $ - $ 3,116) ($ 1% 796 - 1,091) ( 1% 675 - 224 1% 132 - 229) ( 1% 5,689) ($ - $ 1,489 $ 1% 1,044) ( - 538 1% 204) ( - - Years ended December31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealize d exchange gain 1% 10,752 $ - $ 3,116) ($ 1% 796 - 1,091) ( 1% 675 - 224 1% 132 - 229) ( 1% 5,689) ($ - $ 1,489 $ 1% 1,044) ( - 538 1% 204) ( - - Years ended December31,2021 SensitivityAnalysis
			SensitivityAnalysis
		Extent of variation	Effect on profit or loss	Effect on other compre- hensive income
		1% 1% 1% 1% 1% 1% 1%	10,752 $ 796 675 132 5,689) ($ 1,044) ( 204) (	- $ - - - - $ - -	3,116) ($ 1,091) ( 224 229) ( 1,489 $ 538 -

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.

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Foreign currency amount (in thousands) Exchange rate (Foreign currency: functional currency) Financial assets Monetary items USD : TWD 47,188 $ 28.43 JPY : TWD 295,326 0.2743 CNY : TWD 25,061 4.3520 USD : CNY (Note) 877 6.5091 Non-monetary items : None. Financial liabilities Monetary items USD : TWD 32,237 $ 28.53 JPY : TWD 508,001 0.2783 USD : CNY (Note) 45 6.5091 Non-monetary items :None. December31,	December31,	December31,	Book value (TWD) 2020		Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) 1% 13,416 $ - $ 33,270) ($ 1% 810 - 483) ( 1% 1,091 - 97) ( 1% 246 - 136 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( 1% 13) ( - 51) ( Year ended December 31,2020 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) 1% 13,416 $ - $ 33,270) ($ 1% 810 - 483) ( 1% 1,091 - 97) ( 1% 246 - 136 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( 1% 13) ( - 51) ( Year ended December 31,2020 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) 1% 13,416 $ - $ 33,270) ($ 1% 810 - 483) ( 1% 1,091 - 97) ( 1% 246 - 136 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( 1% 13) ( - 51) ( Year ended December 31,2020 SensitivityAnalysis
						SensitivityAnalysis
		Exchange rate			Extent of variation	Effect on profit or loss Effect on other compre- hensive income 13,416 $ - $ 810 - 1,091 - 246 - 9,197) ($ - $ 1,414) ( - 13) ( -
		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%		33,270) ($ 483) ( 97) ( 136 24,369 $ 265) ( 51) (

• 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.

• 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, 2021 and 2020 would have increased/decreased by $68,437 and $26,711, 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 $128,791 and $86,979 as a result of gains/losses on equity securities classified as at fair value through other comprehensive income.

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Cash flow and fair value 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, 2021 and 2020, the Group’s borrowings at floating rate were denominated in TWD, USD and JPY.

• ii. At December 31, 2021 and 2020, 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, 2021 and 2020 would have been $2,628 and $8,293 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 cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as operating activities, including outstanding receivables.

• ii. The Group adopts following assumptions 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 customer’s 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 reorganisation 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;

  • (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

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viii. 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, 2021 and 2020, the loss rate methodology is as follows :

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Individual Group Total
At December 31, 2021
-
Expected loss rate 0.01%~100%
-
Total book value $ $ 1,299,017 $ 1,299,017
-
$ $ 8,235 $ 8,235
Loss allowance
At December 31, 2020 Individual Group Total
Expected loss rate 100% 0.01%~100%
Total book value $ 4,997 $ 1,663,689 $ 1,668,686
$ 4,997 $ 3,023 $ 8,020
Loss allowance
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• vi. As at December 31, 2021 and 2020, 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 and notes receivable was $1,290,782 and $1,660,666, respectively.

• vii. Movements in relation to the Group applying the simplified approach to provided loss allowance for accounts receivable are as follows:

At January 1 Provision for impairment loss Write-offs At December 31	2021	2020
	Accountsreceivable	Accounts receivable
	8,020 $ 2,198 1,983) ( 8,235 $	21,821 $ 2,487 16,288) ( 8,020 $

• vii. 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.

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• ix. For investments in debt instruments at amortised cost, the credit rating levels are presented below:

below:
Financial assets at amortised cost Financial assets at amortised cost		12 months 820,785 $	December 31,2021 Lifetime	Total
			Significant increase in creditrisk Impairment ofcredit - $ - $ December 31, 2020
				820,785 $
		12 months	Lifetime	Total
			Significant increase in credit risk Impairment of credit - $ - $
		22,810 $		22,810 $

(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.

December 31, 2021 Non-derivative financial liabilities ： Short-term borrowings Accounts payable (including related parties) Other payables (including related parties) Lease liabilities	Less than 1year 334,376 $ 843,624 765,708 22,847	Between 1 and 2 years - $ - - 19,398	Between 2 and 3 years - $ - - 18,285	Between 3 and 5 years - $ - - 35,639	Over 5 years
					- $ - - 150,536

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Less than December 31, 2020 1year Non-derivative financial liabilities ： Short-term borrowings 231,089 $ Notes payable 1,757 Accounts payable 717,846 (including related parties) Other payables 619,042 (including related parties) Lease liabilities 23,642 Long-term borrowings 74,285 (including current portion) Derivative financial liabilities ： Forward exchange contracts 799 $	Between Between 1 and 2 2 and 3 years years - $ - $ - - - - - 22,305 18,933 751,637 - - $ - $	Between 3 and 5 Over 5 years years - $ - $ - - - - 35,782 168,130 - - - $ - $

(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(10).

• C. The carrying amounts of cash and cash equivalent, notes receivable, accounts receivable, other receivables, long-term and short-term borrowings, notes payable, accounts payable, other payables and lease liabilities 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, 2021 and 2020 is as follows:

2021 and 2020 is as follows:
December 31, 2021 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 Equity securities Total	Level 1 571,389 $ 143,072 250,693 965,154 $	Level 2 - $ - - - $	Level3 - $ 112,528 786,525 899,053 $	Total
				571,389 $ 255,600 1,037,218
				1,864,207 $

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December 31, 2020 Level 1 Level 2 Level 3 Total
Assets:
Recurring fair value measurements
Financial assets at fair value through
profit or loss
Domestic funds $ 320,248 $ - $ - $ 320,248
- -
Equity securities 106,990 106,990
Forward exchange contract - 171 - 171
Financial assets at fair value through other
comprehensive income
Equity securities 85,789 - 698,209 783,998
Total $ 406,037 $ 171 $ 805,199 $ 1,211,407
Liabilities:
Recurring fair value measurements
Financial liabilities at fair value through
profit or loss
Forward exchange contract $ - $ 799 $ - $ 799
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• 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, 2021 and 2020, there was no transfer between Level 1 and Level 2.

• G. The following chart is the movement of Level 3 financial instruments of equity securities For the years ended December 31, 2021 and 2020.

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		2021			2020
At January 1	$	805,199		$	951,466
Sold in the period		-	(		3,600)
Losses recognised in income		5,538			137
Losses recognised in other
comprehensive income		88,316	(		142,804)
At December 31	$	899,053		$	805,199

• H. For the years ended December 31, 2021 and 2020, 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:	Fair value at September 30,2021 786,525 $ 112,528	Valuation technique Market comparable companies Net asset value	Significant unobservable input Price to earnings ratio multiple Price to earnings ratio multiple Enterprise value multiple Discount for lack of volatility Discount for lack of volatility	Range (weighted average) 3.05 11.72~18.9 13.22~15.71 30%~35% 19.25%	Relationship of inputs to fairvalue The higher the multiple, the higher the fair value. The higher the multiple, the higher the 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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Unlisted shares Unlisted shares Non-derivative equity:	Fair value at December 31,2020 698,209 $ 106,990	Valuation Significant unobservable technique input Market Price to comparable earnings companies ratio multiple Price to earnings ratio multiple Enterprise value multiple Discount for lack of volatility Net asset Discount for value lack of volatility	Range (weighted average) 1.22 18.63~22.76 14.01~16.60 30%~35% 19.25%	Relationship of inputs to fairvalue The higher the multiple, the higher the fair value. The higher the multiple, the higher the 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.

• K. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in difference 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	Input	Change ±5%	Favourable Unfavourable Favourable Unfavourable change change change change 1,341 $ 1,341) ($ 18,180 $ 18,180) ($ December31,2021 Recognised in other Recognised inprofit or loss comprehensive income
			Favourable Unfavourable change change 1,341 $ 1,341) ($ Recognised inprofit or loss
	Discount of lack of volatility

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December 31, 2020
Recognised in other
Recognised in profit or loss comprehensive income
Favourable Unfavourable Favourable Unfavourable
Input Change change change change change
Financial assets
Discount of
Equity
lack of ±5% $ 1,275 ($ 1,275) $ 15,582 ($ 15,582)
instrument
volatility
----- End of picture text -----

- ’ (4) Impact of the COVID 19 pandemic to the Group s operation in 2021

With the ever-changing situation of the global pandemic, the global supply chains were impacted at different levels by the preventive measures against the pandemic and the stress on shipping. Moreover, the prices of raw materials have risen due to the strong demand to replenish inventories. The Group will continue to follow up the situation and timely adjust the countermeasures.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: None.

• B. Provision of endorsements and guarantees to others: Please refer to table 1.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.

• 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 $100 million or 20% of paid-in capital or more: Please refer to table 3.

• 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: None.

• J. Significant inter-company transactions during the reporting periods: Please refer to table 4.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 5.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 6.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 7.

(4) Information on major shareholders

Please refer to table 8.

~79~

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, 2021 and 2020, 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:

egments is as follows:
Revenue from external customers Segment income (loss) Revenue from external customers Segment income (loss)		Year ended December31,2021
	LED and Displays and Packaging Silicon Sensor Lighting Business Other ChipsGroup Group Group segments 5,049,639 $ 787,247 $ 306,357 $ - $ 1,055,148 $ 109,426) ($ 9,910 $ 57,047 $ YearendedDecember31,2020			Total
				6,143,243 $
				1,012,679 $
	LED and Displays and Silicon Sensor Lighting Chips Group Group 4,446,496 $ 854,651 $ 771,825 $ 77,376) ($		Packaging Business Other Group segments 262,415 $ 26,484 $ 5,107 $ 79,800) ($	Total
				5,590,046 $
				619,756 $

(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.

~80~

(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:

LED Silicon sensor System product revenues Packaging product revenues Others	2021 2020 1,491,158 $ 1,486,955 $ 3,556,474 2,979,337 777,912 845,023 306,357 207,698 11,342 71,033 6,143,243 $ 5,590,046 $ Years endedDecember31,

(6) Geographical information

Geographic information for the years ended December 31, 2021 and 2020 is as follows:

Years ended December 31,

Taiwan Mainland China Other countries	Revenue Non-current assets 1,781,034 $ 2,797,002 $ 1,994,784 131,677 2,367,425 - 6,143,243 $ 2,928,679 $ 2021	Revenue Non-current assets 1,781,034 $ 2,797,002 $ 1,994,784 131,677 2,367,425 - 6,143,243 $ 2,928,679 $ 2021		Revenue Non-current assets 1,591,111 $ 2,846,182 $ 2,039,152 139,976 1,959,783 - 5,590,046 $ 2,986,158 $ 2020	Revenue Non-current assets 1,591,111 $ 2,846,182 $ 2,039,152 139,976 1,959,783 - 5,590,046 $ 2,986,158 $ 2020	Revenue Non-current assets 1,591,111 $ 2,846,182 $ 2,039,152 139,976 1,959,783 - 5,590,046 $ 2,986,158 $ 2020
	Revenue			Revenue
	1,781,034 $ 1,994,784 2,367,425 6,143,243 $	2,797,002 $ 131,677 - 2,928,679 $		1,591,111 $ 2,039,152 1,959,783 5,590,046 $		2,846,182 $ 139,976 - 2,986,158 $

(7) Major customer information

Major customer information of the Group for the years ended December 31, 2021 and 2020 is as follows:

ollows:
Customer A	Years ended December31,
	2021 1,105,200 $	2020
		961,963 $

~81~

Table 1

Expressed in thousands of TWD

Opto Tech Corporation and subsidiaries

Provision of endorsements and guarantees to others

Year ended December 31, 2021

Number (Note 1) Endorser/ guarantor	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of December 31, 2021	Outstanding endorsement/ guarantee amount at December 31, 2021	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 3)	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Remark
	Company name Relationship with the endorser/ guarantor (Note2)
0 Opto Tech Corp.	Opto Plus Technology Co.,Ltd. 3	1,938,777 $	100,048 $	97,055 $	89,190 $	- $	1.00%	4,846,942 $	Y	N	Y	-

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

• (1)The Company is “0”.

• (2)The subsidiaries are numbered in order starting from “1”.

Note 2: Relationship with the endorser/guarantor is classified into the following categories:

• (1) Having business relationship.

• (2) The Company owns more than 50% voting shares of the endorsed/guaranteed company.

• (3) The Company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

• (4) The endorsed/guaranteed company directly or indirectly owns more than 50% voting shares of the endorser/guarantor.

• (5) Mutual guarantees in the same trade due to construction undertaking pursuant to the contracts.

• (6) Due to joint venture, each shareholder provides guarantees for the company in proportion to its ownership.

• Note 3: The calculation and amount of ceiling on providing endorsement / guarantee to others shall be disclosed. It there was contingent loss recogniSed in the financial statements, the recognised amount shall be disclosed Under the Company’s “Procedures for Provision of Endorsem , the Company’s total guarantees and endorsements to others should not exceed 50% of the Company’s net asset value, and total guarantees and

• endorsements provided for a single party should not exceed 20% of the Company’s net asset value. The calculation is shown below:

• (1) $9,693,884 thousand dollars × 20% ＝ $1,938,777 thousand dollars.

• (2) $9,693,884 thousand dollars × 50% ＝ $4,846,942 thousand dollars.

Opto Tech Corporation and subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

December 31, 2021

Table 2

Expressed in thousands of TWD

Securitiesheld by	Type of marketable securities	Name of marketable securities	Relationship with the securitiesissuer	General ledgeraccount		As of Decem	ber31,2019		Remark
					Numberofshares	Bookvalue	Ownership (%)	Fairvalue
Opto Tech Corp. 〞 〞 〞 〞 〞 〞 〞 Ho Chung Investment Co., Ltd. River Asset Co., Ltd. Opto Tech Corp. 〞 〞 〞 〞 〞 〞	Stock 〞 〞 〞 〞 〞 〞 〞 〞 〞 Fund 〞 〞 〞 〞 〞 〞	AXT, Inc. Nichia Corp. Viking Tech Corporation. Lu Zhu Development Co., Ltd. Giga Epitaxy Technology Corp. Shin-Etsu Opto Electronic Co., Ltd. Fubon Financial Holding Co., Ltd. Top Increasing Technology Co., Ltd. Opto Tech Corp. United Microelectronics Corp. Jih Sun Money Market fund Taishin 1699 Money Market fund TCB Taiwan Money Market fund FSITC Taiwan Money Market fund Franklin Templeton Sinoam Money Market fund Capital Money Market fund Union Money Market	None. This company is the parent company of Nichia Taiwan Corp. None. None. None. None. None. None. Parent company None. None. None. None. None. None. None. None.	Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income 〞 Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income 〞 〞 Financial assets at fair value through profit or loss 〞 〞 〞 〞 〞 〞 〞 〞 〞	124,100 10,000 2,873,994 13,808,725 4,950,491 2,000,000 250,000 10,000,000 754,543 4,208,000 5,391,133 4,477,862 4,885,150 5,965,267 9,247,290 5,837,819 7,134,275	- $ 545,143 235,668 112,528 18,798 222,584 15,025 - 53,648 143,072 80,797 61,251 50,098 92,290 96,668 95,140 95,145	- 0.45 2.45 6.38 15.00 10.00 0.00 16.67 0.17 1.06 None None None None None None None	- $ 545,143 235,668 112,528 18,798 222,584 15,025 - 53,648 143,072 80,797 61,251 50,098 92,290 96,668 95,140 95,145	Note None None None None None None None None None None None None None None None None

Note : The 124,000 shares of AXT, Inc. which are owned by the Company, are preferred stocks.

Opto Tech Corporation and subsidiaries

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more

Year ended December 31, 2021

Table 3

Expressed in thousands of NTD

Differences in transaction terms

							Differences in transaction terms	Differences in transaction terms
Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction			transactions compared to third party		Notes/accounts receivable(payable)		Remark
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
Opto Tech Corp.	Nichia Corp.	This company is the Company's parent company of enterprise group accounted for using equity method.	sales	324,800) ($	(5.54%)	45days	Equivalent to general transaction	-	15,015 $	1.19%	none

Opto Tech Corporation and subsidiaries

Significant inter-company transactions during the reporting period

Year ended December 31, 2021

Table 4

Expressed in thousands of TWD

Number	Companyname	Counterparty	Relationship			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 Opto Tech Corp. Opto Plus Technology Co., Ltd. (Opto Plus) 1 Sales Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows: (1)Parent company is “0”. (2)The subsidiaries are numbered in order starting from “1”. Note 2: Relationship between transaction company and counterparty is classified into the following six categories: (1)Parent company to subsidiary. (2)Subsidiary to parent company. (3)Subsidiary to subsidiary.					11,085 $	Note 4	0.18%

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: The unit sales prices are equivalent to third parties. The credit term was 30~85 days for the related parties. Note 5: The disclosure standard requires above $10,000 thousand for the transaction amount. Only assets and revenue are disclosed, related transactions are not disclosed.

Table 5

Expressed in thousands of TWD

Opto Tech Corporation and subsidiaries

Information on investees Year ended December 31, 2021

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shares held	as at Decem	ber 31,2021	Net income (loss) of the investee	2,751) ($ 1,883 6,803 11,267 27,193 - 870) ( 139) ( 3,480) ( 4,457 11,267 Investment income (loss) recognized by investor	Remark
				Balance as of December 31,2021	Balance as of December 31,2020	Numberofshares	Ownershi p (%)	Bookvalue
Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Opto Tech Corp. Ho Chung Investment Co., Ltd. River Asset Co., Ltd. CS Bright Corporation Bright Investment International Ltd.	Ho Chung Investment Co., Ltd. CS Bright Corporation Bright Investment International Everyung Investment Ltd. River Asset Co., Ltd. Opto System Technologies Inc. NEW SMART TECHNOLOGY CO., LTD. VML TECHNOLOGIES B.V. NEW SMART TECHNOLOGY CO., LTD. Bright Investment International Ltd. Everyung Investment Ltd.	Taiwan Taiwan B.V. I. Samoa Taiwan Taiwan Taiwan Netherlands Taiwan B.V. I. Samoa	Investment business Manufacture and Sales of Displays, SMD Lamps and other LED related products Investment business Investment business Investment business Manufacture and sales of lighting equipment Automatic control equipment engineering business Manufacture and Design of system products Automatic control equipment engineering business Investment business Investment business	258,348 $ 50,170 171,332 42,343 400,000 1,000 14,000 - 56,000 - 168,421	258,348 $ 50,170 - 42,343 29,800 - - 37,436 - 171,332 168,421	1,298,800 4,993,562 5,100,000 5,000,000 40,000,000 100,000 1,000,000 - 4,000,000 - 5,000,000	100.00 99.87 100.00 50.00 100.00 100.00 5.00 - 20 - 50.00	21,286 $ 149,578 54,368 53,494 427,155 1,000 13,129 - 52,517 - 53,935	31,198 $ 67,549 11,260 22,533 27,193 - 11,021) ( 555) ( 11,021) ( 11,260 22,533		Subsidiary of the Company Subsidiary of the Company、Note Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Investment accounted for using equity method Investment accounted for using equity method Investment accounted for using equity method Indirect subsidiary Indirect subsidiary

Note：The Board of Directors of the Company resolved to process liquidation through the company on September 10, 2020, the liquidation was still in process.

Opto Tech Corporation and subsidiaries

Information on investments in Mainland China Year ended December 31, 2021

Table 6 Investee in Mainland China	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance to Mainland China as of January 1, 2021	Amount remitted to Mainland China during the year	Amount remitted back to Taiwan during the year	Accumulated amount of remittance to Mainland China as of December 31, 2021	Net income of investee for the year ended December 31, 2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2021 (Note 2)	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2021 Remark Book value of investments in Mainland China as of December 31, 2021 Expressed in thousands of TWD	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2021 Remark Book value of investments in Mainland China as of December 31, 2021 Expressed in thousands of TWD	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2021 Remark Book value of investments in Mainland China as of December 31, 2021 Expressed in thousands of TWD
Opto Plus Technology Co., Ltd.	Manufacture and Sales of LED and Electronic products	317,341 $	(2)	317,341 $	- $	- $	317,341 $	22,533 $	100	22,533 $	107,870 $	- $	-

Note 1: The investment methods are classified into three categories as follows:

• (1) Directly investing in the investee company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee company in Mainland China. (Everyung Investment Ltd. Invests Opto plus Technology Co., Ltd.)

• (3) Others.

Note 2: The investment income or loss was recognised by indirect weighted ownership based on the financial statements of these investees which were audited by the independent auditors of the parent company for the corresponding periods.

Investments in Mainland China for the year ended December 31, 2021:

Name of company	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2021	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs(MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Opto Tech Corp.	$ 317,341	$ 317,849	$ 5,816,330

Opto Tech Corporation and subsidiaries

Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas

Year ended December 31, 2021

Table 7

Expressed in thousands of TWD

Investee in Mainland China	Sale(purchase)	Sale(purchase)	Propertytransaction	Propertytransaction	Accounts receivable (payable)	Accounts receivable (payable)	Provision of endorsements/guarantees or collaterals	Provision of endorsements/guarantees or collaterals		Financing			Others
	Amount	%	Amount	%	Balance at December 31, 2021	%	Balance at December 31, 2021	Purpose	Maximum balance during the year ended December 31,2021	Balance at December 31,2021	Interest rate	Interest during the year ended December 31,2021
Opto Plus Technology Co., Ltd.	$ 11,085	0.18	$ -	-	$ 4,047	0.31%	$ 97,055	Guarantee of bank line of credit	- $	- $	-	- $	None

Opto Tech Corporation and subsidiaries Major shareholders information

December 31, 2021

Table 8 Name of major shareholders	Shares	Shares
	Name of shares held	Ownership (%)
Nichia Taiwan Corp.	88,811,822	20.24%

• Description: If company applies to Taiwan Depository & Clearing Corporation for the information of the table, the followings can be explained in the notes of the table. (a) The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation.

• The share capital which was recorded in the financial statements is different from the actual number of shares issued in dematerialised form because of the different calculation basis or the differences.

• (b) If the aforementioned data contains shares which were kept at the trust by the shareholders, the data was disclosed as separate account of client which was set by the trustee.

• As for the shareholder who reports share equity as an insider whose shareholding ratio greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio including the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information of reported share equity of insider, please refer to Market Observation Post System.