TASC — Audit Report / Information 2021

Dec 14, 2021

OPTO TECH CORPORATION

PARENT COMPANY ONLY 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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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Opto Tech Corporation

Opinion

We have audited the accompanying parent company only balance sheets of Opto Tech Corporation (the “ Company”) as at December 31, 2021 and 2020, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the accompanying parent company only financial position of the Company as at December 31, 2021 and 2020, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and 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 parent company only financial statements section of our report. We are independent of the Company in accordance with the 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 judgement, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the parent company only financial statements of the current period are stated as

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follows :

Key audit matter- Allowance for inventory valuation losses

Description

Please refer to Note 4(11) 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$ 1,273,340 thousand and NT$ 58,295 thousand, respectively.

As the value of the Company’s inventories are affected 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. Since inventories and allowance for inventory valuation losses were material to the parent company only 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 Company’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(6)(7) 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 NT$899,053

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thousand.

For unlisted securities without active market held by the Company, 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 judgement 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 asset values measured at fair value, comparability and market liquidity of comparable companies; assessed the reasonableness of price multipliers and discounts for liquidity in the market.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements 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 Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only 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 parent company only 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 parent company only 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 Company’s internal control.

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only 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 Company to cease to continue as a going concern.

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only 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

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The accompanying parent company only 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 parent company only 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

PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(5) 6(5) 6(5) and 7 6(6) 6(2) 6(4) 6(7) 6(8) 6(9) 6(10) 6(11) 6(29) 7	December 31, 2021 AMOUNT % $ 3,017,141 25 571,389 4 820,785 7 4,883 - 1,236,081 10 19,062 - 15,739 - 1,215,045 10 98,558 1 1,428 - 7,000,111 57 112,528 1 1,037,218 9 720,010 6 2,537,066 21 213,270 2 399,307 3 14,040 - 46,348 - 104,776 1 5,184,563 43 $ 12,184,674 100	December 31, 2020	December 31, 2020
		AMOUNT $ 3,017,141 571,389 820,785 4,883 1,236,081 19,062 15,739 1,215,045 98,558 1,428 7,000,111 112,528 1,037,218 720,010 2,537,066 213,270 399,307 14,040 46,348 104,776 5,184,563 $ 12,184,674	AMOUNT $ 2,857,629 320,419 22,810 8,873 1,602,380 21,009 19,689 1,126,850 64,449 817 6,044,925 106,990 783,998 246,899 2,568,311 232,876 399,307 14,046 48,487 34,929 4,435,843 $ 10,480,768	%
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 the equity method Property, plant and equipment Right-of-use assets Investment property, net Intangible assets Deferred tax assets Other non-current assets Total non-current assets Total assets				27 3 - - 16 - - 11 1 -
				58
				1 8 2 25 2 4 - - -
				42
				100

(Continued)

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OPTO TECH CORPORATION PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2021 December 31, 2020 Notes AMOUNT % AMOUNT % 6(12) $ 245,367 2 $ 139,923 1 6(2) - - 799 - 741,958 6 627,516 6 7 61,224 - 56,030 1 6(13) and 7 749,651 6 597,572 6 182,792 2 25,969 - 6(17) 6,831 - 4,033 - 7 19,103 - 19,560 - 6(14) - - 62,960 1 6(22) and 7 82,758 1 42,194 - 2,089,684 17 1,576,556 15 6(14) - - 748,555 7 6(17) 19,068 - 18,808 - 6(29) 33,178 - 42,962 1 7 199,148 2 216,706 2 6(15) 149,712 1 187,492 2 401,106 3 1,214,523 12 2,490,790 20 2,791,079 27 6(18) 4,386,228 36 3,786,228 36 6(19) 1,489,822 12 703,108 7 6(20) 786,944 6 729,360 7 2,423 - 3,743 - 2,645,077 22 2,361,920 22 6(21) 438,344 4 187,351 2 6(18) ( 54,954) - ( 82,021) ( 1) 9,693,884 80 7,689,689 73 9 11 $ 12,184,674 100 $ 10,480,768 100

Current liabilities Short-term loans Financial liabilities at fair value through profit or loss - current 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 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 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 parent company only financial statements.

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OPTO TECH CORPORATION

PARENT COMPANY ONLY 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 $ 5,847,971 100 $ 5,337,870 100 6(6)(16)(27)(28) and 7 ( 3,954,955) ( 68) ( 3,765,252) ( 70) 1,893,016 32 1,572,618 30 ( 441 ) - ( 97) - 98 - 108 - 1,892,673 32 1,572,629 30 6(27)(28) ( 106,456 ) ( 2) ( 112,675) ( 2) ( 667,120 ) ( 11) ( 441,594) ( 9) ( 124,393 ) ( 2) ( 326,037) ( 6) ( 2,198) - ( 2,408) - ( 900,167) ( 15) ( 882,714) ( 17) 992,506 17 689,915 13 6(23) 8,083 - 10,754 - 6(24) 46,973 1 38,699 1 6(25) ( 70,323 ) ( 1) ( 96,230) ( 2) 6(26) ( 12,675 ) - ( 22,699) - 6(7) 43,525 - ( 6,035) - 15,583 - ( 75,511) ( 1) 1,008,089 17 614,404 12 6(29) ( 178,718) ( 3) ( 39,271) ( 1) $ 829,371 14 $ 575,133 11

Operating revenue Operating costs Gross profit, net Unrealized profit from sales Realized profit from sales Net operating margin Operating expenses Selling expenses General and administrative expenses Research and development expenses Expected credit loss on financial assets Total operating expenses Operating income Non-operating income and expenses Interest income Other income Other gains and losses Finance costs Share of profit (loss) of associates and joint ventures accounted for using equity method Total non-operating revenue and expenses Profit before losses tax Income tax expense Net income

(Continued)

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OPTO TECH CORPORATION PARENT COMPANY ONLY 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 1 $ 656 - 6(4)(21) 238,220 4 ( 137,595) ( 3) 6(28) 1,779 - 40,217 1 271,219 5 ( 96,722) ( 2) 6(21) 4,756 - 5,091 - ( 340) - 218 - 4,416 - 5,309 - $ 275,635 5 ($ 91,413) ( 2) $ 1,105,006 19 $ 483,720 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 gains (losses) on valuation of fiancial assets at fair value through other comprehensive (loss) income Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total other comprehensive (loss) income that will not be reclassified to profit or loss, net of tax Items that will be reclassified to profit or loss Currency translation differences of foreign operations Share of other comprehensive (loss) income of associates and joint ventures accounted for using equity method Total other comprehensive (loss) income that will be reclassified to profit or loss, net of tax Total other comprehensive (loss) income that will be reclassified to profit or loss, net of tax Total comprehensive income for the year Earnings per share Profit for the year Diluted earnings per share Profit for the year

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

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OPTO TECH CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Notes 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 reverse Special reverse Liquidation of the subsidiary 6(7)(19) Disposal of financial assets at fair value through other comprehensive income 6(4) Stock repurchased 6(18) Balance at December 31,2020 2021 Balance at January 1, 2021 Net income for the year Other comprehensive income for the year 6(4)(15)(21) Total comprehensive income Distribution of 2020 earnings: 6(20) Legal reverse Special reverse 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(21) 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 Balance at December 31,2021	Notes	Common stock	Common stock	Capital reserve		Retained Earnings	Retained Earnings	Retained Earnings	Other equity interest	Other equity interest	Treasury stocks		Total
						Legal reserve	Special reserve	Unappropriated earnings	Financial statements translation differences of foreign operations	Unrealised gain or loss on financial assets 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

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

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OPTO TECH CORPORATION

PARENT COMPANY ONLY 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 Adjustments to reconcile profit (loss) Realised sales profit Unrealised slaes profit Depreciation Amortization Expected credit losses on financial assets Net profit on financial assets and liabilities at fair value through profit or loss Interest income Dividend income Loss on disposal of investments Interest expense Share of (profit) loss of subsidairy, associates accounted for using equity method Loss on disposal of property, plant and equipment Impairment loss on non-financial assets Share-based payments Changes in operating assets and liabilities Changes in operating assets Acquisition of financial assets at fair value through profit or loss Notes receivable - net Accounts receivable - net Accounts receivable - related parties - net Other receivables Inventories - net Prepayments Other current assets Other non-current assets Changes in operating liabilities Accounts payable Accounts payable - related parties Other payables Provisions for liabilities Other current liabilities Net defined benefit liability Cash inflow generated from operations Interest received Dividends received Interest paid Income tax paid Net cash flows from operating activities

Years endedDecember 31 Notes 2021 2020 $ 1,008,089 $ 614,404 ( 98 ) ( 108 ) 441 97 6(8)(9)(27) 436,030 439,082 6(11)(27) 17,850 14,547 12(2) 2,198 2,408 6(2)(25) ( 7,307 ) ( 473 ) 6(23) ( 8,083 ) ( 10,754 ) 6(24) ( 13,643 ) ( 14,454 ) 6(25) - 5,443 6(26) 11,429 21,649 6(7) ( 43,525 ) 6,035 6(8)(25) 164 30,826 6(25) 77,577 35,585 6(16) 105,473 - ( 250,000 ) ( 150,000 ) 3,990 4,178 364,101 ( 221,732 ) 1,947 13,634 3,316 ( 1,599 ) ( 88,195 ) 85,807 ( 34,109 ) ( 21,273 ) ( 611 ) 2,419 3,370 7,247 114,442 9,760 5,194 ( 24,012 ) 153,451 67,774 3,058 ( 639 ) 40,564 9,046 ( 8,757 ) ( 12,475 ) 1,898,356 912,422 8,717 11,375 13,643 26,781 ( 12,801 ) ( 23,016 ) ( 27,761 ) ( 78,176 ) 1,880,154 849,386

(Continued)

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OPTO TECH CORPORATION

PARENT COMPANY ONLY 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 financial assets at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase)decrease in deposits-out Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Acquisition of investment property Acquisition of intangile assets Subsidiary reduced capital and returned share monies 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-terms loans Decrease in lease principal Increase (decrease) in guarantee deposits Payment of cash dividends Proceeds from issuance of shares Stock repurchased Treasury shares transferred to employees Net cash flows from (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Years endedDecember 31 Notes 2021 2020 ($ 797,975 ) $ - ( 15,000 ) - 6(8)(31) ( 529,492 ) ( 296,520 ) 82 - ( 5,010 ) 4,507 6(4) - 3,780 6(7) ( 428,232 ) ( 29,800 ) 6(10) - ( 399,307 ) 6(11) ( 17,844 ) ( 14,635 ) 6(7) - 24,868 ( 1,793,471 ) ( 707,107 ) 6(32) 953,356 669,167 6(32) ( 847,912 ) ( 685,411 ) 6(32) ( 811,515 ) ( 2,989 ) 6(32) ( 19,732 ) ( 19,761 ) 6(32) 2,197 ( 675 ) 6(20) ( 514,927 ) - 6(18) 1,375,800 - 6(18) ( 162,408 ) ( 58,849 ) 6(16) 97,970 - 72,829 ( 98,518 ) 159,512 43,761 2,857,629 2,813,868 $ 3,017,141 $ 2,857,629

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

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OPTO TECH CORPORATION

NOTES TO THE PARENT COMPANY ONLY 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 is primarily engaged in the manufacture and sales of semiconductor components as well as research and development, design, manufacture and sales of systems products.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE FINANCIAL STATEMENTS AND

PROCEDURES FOR AUTHORIZATION

These parent company only 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:

International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 4, ‘Extension of the temporary exemption from January 1, 2021 applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest January 1, 2021 Rate Benchmark Reform— Phase 2’ Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond 30 April 1, 2021(Note) June 2021’

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

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

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:proceeds before	January 1, 2022
intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling a contract’	January 1, 2022
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’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 and Amendments	Effective date by International Accounting Standards Board
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 Company’s financial condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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(1) Compliance statement

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

(2) Basic of preparation

• A. Except for the following items, the accompanying parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (b) 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 Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 5.

(3) Foreign currency translation

Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”).The parent company only financial statements are presented in New Taiwan dollars, which is the Company’s functional 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.

~17~

• B. Translation of foreign operations

  • (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

    • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

    • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

    • iii. All resulting exchange differences are recognised in other comprehensive income.

  • (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the Company 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 Company retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

• (4) Classification of current and non-current items

• A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

  • (a) Assets arising from operating activities that are expected to be 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;

~18~

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

• (5) Cash 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.

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Company measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Company recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

• (7) 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 Company 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 Company’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 Company measures the financial assets at fair value plus transaction costs. The Company 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 Company and the amount of the dividend can be measured reliably.

~19~

(8) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company 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.

(9) Impairment of financial assets

For accounts receivable or contract assets that do not contain a significant financing component, at each reporting date, the Company recognises the impairment provision for lifetime expected credit losses (ECLs).

(10) Derecognition of financial assets

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

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company 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 Company has not retained control of the financial asset.

(11) 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.

(12) Investments accounted for using equity method / associates

• A. Subsidiaries are all entities controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

• B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies and the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company recognise loss continuously in proportion to its ownership.

~20~

• D. Associates are all entities over which the Company 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.

• E. The Company’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 Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• F. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income and such changes do not affect the Company’s ownership percentage of the associate, the Company recognises change in ownership interests of the associate in ‘capital surplus’ in proportion to its ownership.

• G. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’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 Company.

• H. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company’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 Company’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.

• I. Upon loss of significant influence over an associate, the Company 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.

• J. When the Company disposes its investment in an associate, if it 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.

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• K. When the Company 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.

• L. Pursuant to the “Regulations Governing the Preparation of Financial Reports by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the nonconsolidated financial statements shall equal to the amount attributable to owners of the parent in the financial statements prepared with basis for consolidation. Owners’ equity in the nonconsolidated financial statements shall equal to equity attributable to owners of the parent in the financial statements prepared with basis for consolidation.

• (13) 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 Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

re 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

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(14) 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 Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are fixed payments, less any lease incentives receivable. The Company 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.

(15) Investment property

Investment property is stated initially at its cost which includes 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.

(16) 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.

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(17) Impairment of non-financial assets

• The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is 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.

(18) 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.

• (19) 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.

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

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges, or financial liabilities at fair value through profit or loss. Financial liabilities that meet one of the following criteria are designated as at fair value through profit or loss at initial recognition:

• (a) Hybrid (combined) contracts; or

• (b) They eliminate or significantly reduce a measurement or recognition inconsistency; or

• (c) They are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk management policy.

• B. At initial recognition, the Company measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Company subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

~24~

• 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.

(21) 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.

• (22) 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.

(23) 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.

(24) Provisions

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

(25) 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.

~25~

(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 Company 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 Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company 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.

• (26) 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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(27) 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 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 Company 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.

(28) 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.

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• 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.

(29) 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.

• (30) Revenue recognition

• A. Sales of goods

  • (a) The Company 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 Company 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 Company 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 Company 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 Company recognises revenue when the performance obligation is satisfied.

  • (b) The Company 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.

(31) Reorganisation

Reorganisation under common control is recognised using book value approach.

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

The preparation of these financial statements requires management to make critical judgements in applying the Company’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 Company’s accounting policies

None.

(2) Critical accounting estimates and assumptions

• A. Allowance for inventory valuation losses

• As the value of the Company’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 financial statements.

• As of December 31, 2021, the carrying amount of inventories was $1,215,045.

• B. Financial assets - fair value measurement of unlisted stocks without active market For unlisted securities without active market held by the Company, 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.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

$899,053. TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
Cash on hand Checking demand deposits Time deposits Cash equivalents - Resale bonds Total	December 31,2021 - $ 698,182 1,955,959 363,000 3,017,141 $	December 31,2020
		1 $ 451,422 2,048,206 358,000
		2,857,629 $

• A. The Company 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.

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• B. Cash and cash equivalents amounting to $22,810 were pledged to others as collateral for the leases for land and dormitory as of December 31, 2021 and 2020 and were classified as other financial assets. Please refer to Notes 6(3) and 8 for the details.

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

Items		December	31,2021	December	31,2020
Current items:
Financial assets mandatorily measured at fair value
through profit or loss
Funds	$		565,000	$	315,000
Valuation adjustment
Funds			6,389		5,248
Forward exchange contracts			-		171
Total	$		571,389	$	320,419
Financial assets mandatorily measured at fair value
through profit and loss unlisted stocks
Forward exchange	$		-	($	799)
Non-current items:
Financial assets mandatorily measured at fair value
through profit and loss
Unlisted stocks	$		127,048	$	127,048
Valuation adjustment	(		14,520)	(	20,058)
Total	$		112,528	$	106,990

• A. The Company recognised net gain of $7,307 and $473 on financial assets measured at fair value through profit or loss for the years ended December 31, 2021 and 2020, respectively.

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

December 31, 2021: None.
Derivative Instruments Assets - Current items: Forward exchange contracts Liabilities - Current items: Forward exchange contracts	December 31,2020
	USD 2,000 $ (thousands) USD 3,000 $ (thousands) Contract Amount (Nominal Principal)	Contractperiod
	USD USD	December 1, 2020~ January 21, 2021 December 21, 2020~ January 26, 2021

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The Company 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 Company 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

Items Current items: Time deposits with maturity over three months Restricted time deposit	December 31, 2021 December 31, 2020 797,975 $ - $ 22,810 22,810 820,785 $ 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).

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

Items Non-current items: Equity instruments Listed stocks Unlisted stocks Subtotal Valuation adjustment Total	December 31, 2021 88,574 $ 477,809 566,383 470,835 1,037,218 $	December 31,2020
		73,574 $ 477,809
		551,383 232,615
		783,998 $

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

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

			Years ended	December 31	December 31	December 31
			2021			2020
Equity instruments at fair value through other
comprehensive income
Fair value change recognised in other
comprehensive income-the Company		$	246,242	($		97,247)
Cumulative gains reclassified to retained
earnings due to recognition-the Company		$	-		$	180
Dividend income recognised in profit or loss
Held at end of year		$	13,643		$	14,454
Notes and accounts receivable
		December 31, 2021			December 31,2020
Notes receivable	$		4,883	$		8,873
Accounts receivable			1,244,316			1,610,400
Accounts receivable - related parties			19,062			21,009
Less: Allowance for uncollectible accounts	(		8,235)	(		8,020)
	$		1,260,026	$		1,632,262

(5) Notes and accounts receivable

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 $1,430,750.

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

ounted to $1,430,750. The ageing analysis of accounts receivable is as follows:
The ageing analysis was based on the past due collection date. The ageing analysis of notes receivable is as follows: December 31,2021 Without past due 1,246,788 $ Up to 180 days 8,355 181 to 360 days - Over 361 days 8,235 1,263,378 $ December31,2021 Without past due 4,883 $	December 31,2020
	1,590,972 $ 33,845 4,771 1,821
	1,631,409 $
	December31,2020
	8,873 $

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

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

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).

~32~

(6) Inventories

Raw materials Supplies Work in process Semi-finished goods Finished goods Total	December 31,2021 306,035 $ 330,878 237,778 128,291 212,063 1,215,045 $	December 31,2020 188,597 $ 250,039 253,618 83,845 350,751 1,126,850 $

The cost of inventories recognised as expense for the period:

	The cost of inventories recognised as expense for the period:	eriod:	eriod:
(7)	Investments accounted for using equity method 2021 2020 Cost of goods sold 3,954,379 $ 3,657,967 $ loss on decline in market value 576 107,285 3,954,955 $ 3,765,252 $ Years ended December 31 2021 2020 At January 1 246,899 $ 260,308 $ Share of profit or loss of investments accounted for using equity method 43,525 6,035) ( Earnings distribution of investments accounted for using equity method - 12,326) ( Adjustments of capital surplus for the Company's cash dividends 1,051 - Currency translation differences 4,751 5,309 Gain on disposals of investments (Note B) - 5,443) ( Remittance of proceeds from liquidation of subsidiary (Note B) - 24,868) ( Transfer from reorganisation (Note C) - 143 Subsidiaries invested during the period 428,232 29,800 Changes in long-term investment 4,105) ( - Others 343) ( 11 At December 31 720,010 $ 246,899 $ December 31,2021 December 31,2020 Subsidiaries 706,881 $ 246,899 $ Associated enterprises 13,129 - 720,010 $ 246,899 $	Years ended December 31
			2020
			3,657,967 $ 107,285 3,765,252 $
			2020
			246,899 $
			December 31,2020
			246,899 $ -
			246,899 $

~33~

• A. Details of the subsidiaries of the Company are provided in Note 4(3) in the Company’s consolidated financial statements as of and for the year ended December 31, 2021.

• B. The Board of Directors of the Company resolved the liquidation of foreign subsidiaries, Opto Technology International Group Co.,Ltd. (OTIG) and Opto Tech (Macao) Co., Ltd. (Opto Macao), on August 14, 2017 and April 28, 2020, respectively. OTIG has completed the liquidation process on October 26, 2020. Opto Macao has completed the liquidation process on September 29, 2020.

• C. The Company formerly held 50% equity interests in 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.

• D. The Board of Directors of the Company resolved the liquidation of subsidiary, CS Bright Corporation (CSB), on September 10, 2020. The effective date was set on December 31, 2020, the liquidation is still in process.

~34~

(8) Property, plant and equipment

2021

															Construction in	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	$	1,793,199	$	5,223,295	$	1,050,132	$	707,320	$	11,895	$	69,576	$	1,937,717	$	114,523	$	10,907,657
Accumulated depreciation	(	1,052,056)	(	4,086,561)	(	931,593)	(	597,978)	(	7,059)	(	57,603)	(	1,570,993)		-	(	8,303,843)
Accumulated impairment	(	59)	(	35,388)		-		-		-	(	19)	(	37)		-	(	35,503)
	$	741,084	$	1,101,346	$	118,539	$	109,342	$	4,836	$	11,954	$	366,687	$	114,523	$	2,568,311
For the year ended December 31
Opening net book amount	$	741,084	$	1,101,346	$	118,539	$	109,342	$	4,836	$	11,954	$	366,687	$	114,523	$	2,568,311
Additions		2,950		7,664		3,026		2,460		-		751		7,122		437,312		461,285
Disposals		-	(	246)		-		-		-		-		-		-	(	246)
Reclassifications		-		96,674		10,545		22,230		-		9,983		17,268	(	156,700)		-
Depreciation expense	(	50,024)	(	264,554)	(	19,632)	(	14,940)	(	1,237)	(	6,082)	(	58,238)		-	(	414,707)
Provision for impairment		-	(	77,577)		-		-		-		-		-		-	(	77,577)
Closing net book amount	$	694,010	$	863,307	$	112,478	$	119,092	$	3,599	$	16,606	$	332,839	$	395,135	$	2,537,066
At December 31
Cost	$	1,796,149	$	5,284,855	$	1,063,703	$	731,271	$	11,356	$	79,385	$	1,962,106	$	395,135	$	11,323,960
Accumulated depreciation	(	1,102,080)	(	4,308,582)	(	951,225)	(	612,179)	(	7,757)	(	62,760)	(	1,629,230)		-	(	8,673,813)
Accumulated impairment	(	59)	(	112,966)		-		-		-	(	19)	(	37)		-	(	113,081)
	$	694,010	$	863,307	$	112,478	$	119,092	$	3,599	$	16,606	$	332,839	$	395,135	$	2,537,066

~35~

2020

															Construction in	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	$	1,782,219	$	5,404,370	$	1,118,047	$	717,932	$	7,314	$	66,404	$	1,949,323	$	116,824	$	11,162,433
Accumulated depreciation	(	1,002,340)	(	4,196,418)	(	974,309)	(	594,030)	(	6,468)	(	54,965)	(	1,567,548)		-	(	8,396,078)
Accumulated impairment	(	59)	(	6,741)		-		-		-	(	19)	(	84)		-	(	6,903)
	$	779,820	$	1,201,211	$	143,738	$	123,902	$	846	$	11,420	$	381,691	$	116,824	$	2,759,452
For the year ended December 31
Opening net book amount	$	779,820	$	1,201,211	$	143,738	$	123,902	$	846	$	11,420	$	381,691	$	116,824	$	2,759,452
Additions		2,133		33,550		4,054		2,204		2,155		4,481		13,511		230,489		292,577
Disposals		-	(	4,959)	(	13,275)	(	1,149)		-		-	(	11,443)		-	(	30,826)
Reclassifications		8,847		173,522		5,131		1,229		2,426	(	17)		41,652	(	232,790)		-
Depreciation expense	(	49,716)	(	266,393)	(	21,109)	(	16,844)	(	591)	(	3,930)	(	58,724)		-	(	417,307)
Provision for impairment		-	(	35,585)		-		-		-		-		-		-	(	35,585)
Closing net book amount	$	741,084	$	1,101,346	$	118,539	$	109,342	$	4,836	$	11,954	$	366,687	$	114,523	$	2,568,311
At December 31
Cost	$	1,793,199	$	5,223,295	$	1,050,132	$	707,320	$	11,895	$	69,576	$	1,937,717	$	114,523	$	10,907,657
Accumulated depreciation	(	1,052,056)	(	4,086,561)	(	931,593)	(	597,978)	(	7,059)	(	57,603)	(	1,570,993)		-	(	8,303,843)
Accumulated impairment	(	59)	(	35,388)		-		-		-	(	19)	(	37)		-	(	35,503)
	$	741,084	$	1,101,346	$	118,539	$	109,342	$	4,836	$	11,954	$	366,687	$	114,523	$	2,568,311

~36~

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

	Years ended	December 31
	2021	2020
Amount capitalized	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 Company provisioned impairment loss in the amount of $77,577 and $35,585, respectively. The Company measured recoverable amounts with use value, the discount rate was 13% and 9.82%, respectively.

• －

• (9) Leasing arrangements lessee

• A. The Company leases various assets including land, buildings and business vehicles. Rental contracts are typically made for periods of 3 to 20 years.

• B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Transportation equipment (Business vehicles) Office equipment (Internet equipment) Land Buildings Transportation equipment (Business vehicles) Office equipment (Internet equipment)	December 31, 2021 December31,2020 Carryingamount Carrying amount $ 205,024 $ 220,239 2,318 4,635 3,838 5,400 2,090 2,602 213,270 $ 232,876 $ Years ended December 31	December31,2020
		Carrying amount
		$ 220,239 4,635 5,400 2,602
		232,876 $
	2021 Depreciation charge $ 15,215 2,318 2,511 1,279 21,323 $	2020
		Depreciation charge
		$ 15,215 2,317 3,294 949
		21,775 $

• C. For the years ended December 31, 2021 and 2020, the additions to right-of-use assets amounted to $1,717 and $7,499, respectively.

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

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts	Years ended December 31	Years ended December 31
	2021 4,082 $ 7,648 $	2020
		4,344 $
		8,228 $

~37~

• E. For the years ended December 31, 2021 and 2020, the Company’s total cash outflow for leases amounted to $31,462 and $32,333, respectively.

• F. The Company terminated the lease of the Company’s car prior to the expiration date in October 2020. As a result, right-of-use asset and lease liability both decreased by $33. No penalty was paid due to the early termination.

(10) Investment property

due to the early termination. Investment property
		2021		2020
At January 1	$	399,307	$	-
Additions- from acquisitions		-		399,307
At December 31	$	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 Company has no investment properties pledged to others.

(11) Intangible assets

Intangible assets
		2021		2020
At January 1		Software		Software
Cost	$	40,080	$	37,760
Accumulated amortisation	(	26,034)	(	23,802)
	$	14,046	$	13,958
For the year ended December 31
Opening net book amount	$	14,046	$	13,958
Additions		17,844		14,635
Amortisation expense	(	17,850)	(	14,547)
Closing net book amount	$	14,040	$	14,046
At December 31
Cost	$	31,902	$	40,080
Accumulated amortisation	(	17,862)	(	26,034)
	$	14,040	$	14,046

~38~

Details of amortisation on intangible assets are as follows:

(12) (13)	Short-term borrowings Other payables Operating costs Operating expense Total Type of borrowings Unsecured bank borrowings Interest rate range Salaries and bonus payable Compensation payable to employee Remuneration payable to directors Others Total	2021 2020 9,094 $ 4,366 $ 8,756 10,181 17,850 $ 14,547 $ Years ended December31 December 31, 2021 December 31,2020 245,367 $ 139,923 $ 0.6%~1.34% 0.53%~1.22% December31,2021 December31,2020 263,327 $ 177,138 $ 187,978 115,175 62,659 38,392 235,687 266,867 749,651 $ 597,572 $	2021 2020 9,094 $ 4,366 $ 8,756 10,181 17,850 $ 14,547 $ Years ended December31 December 31, 2021 December 31,2020 245,367 $ 139,923 $ 0.6%~1.34% 0.53%~1.22% December31,2021 December31,2020 263,327 $ 177,138 $ 187,978 115,175 62,659 38,392 235,687 266,867 749,651 $ 597,572 $
			0.53%~1.22%
			December31,2020
			177,138 $ 115,175 38,392 266,867
			597,572 $

- (14) Long term borrowings

December 31, 2021: None.

==> picture [487 x 31] intentionally omitted <==

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

Interest rate
Type of borrowings Credit line Period range December 31, 2020
----- End of picture text -----

Syndicated borrowings with	$ 1,200,000	2019.02.20~	1.169%~	$	811,515
four financial institutions		2022.02.20	1.797%
including China Trust
Commercial Bank (Unsecured)
Less: Current portion (shown as	“Other non-current liabilities”)			(	62,960)
				$	748,555

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

• (a) The current ratio should be no less than 100% per half year.

• (b) The debt ratio should not be higher than 100%.

• (c) The interest coverage ratio shall not be less than 300%.

• (d) The tangible net value shall be maintained at more than 5 billion yuan (inclusive).

If the Company fails to meet the required financial ratios, the bank will stop the allocation. In case of violation of the contract, the bank has the right to ask the Company to repay in full the unpaid balance of the loan in advance.

~39~

• 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 has 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 contributes monthly an amount equal to 2.68% 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 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 will make contributions to cover the deficit.

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

	December	31,2021	December	31,2020
Present value of defined benefit obligations	$	450,675	$	550,210
Fair value of plan assets	(	303,900)	(	363,458)
Net defined benefit liability	$	146,775	$	186,752

~40~

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

	Present value of	Present value of	Present value of	Fair value of	Fair value of
		defined benefit			plan		Net defined
			obligations		assets	benefit liability
2021
Balance at January 1	$		550,210	($	363,458)	$	186,752
Current service cost			6,111		-		6,111
Interest expense (income)			2,146	(	1,417)		729
			558,467	(	364,875)		193,592
Remeasurements:
Return on plan asset
(excluding amounts included in
interest income or expense)			-	(	8,389)	(	8,389)
Change in demographic assumptions			943		-		943
Change in financial assumptions	(		18,871)		-	(	18,871)
Experience adjustments	(		4,903)		-	(	4,903)
	(		22,831)	(	8,389)	(	31,220)
Pension fund contribution			-	(	6,030)	(	6,030)
Paid pension	(		84,961)		75,394	(	9,567)
Balance at December 31	$		450,675	($	303,900)	$	146,775
	Present value of			Fair value of
		defined benefit			plan		Net defined
			obligations		assets	benefit liability
2020
Balance at January 1	$		646,313	($	446,430)	$	199,883
Current service cost			8,000		-		8,000
Interest expense (income)			5,300	(	3,661)		1,639
			659,613	(	450,091)		209,522
Remeasurements:
Return on plan asset
(excluding amounts included in
interest income or expense)			-	(	15,020)	(	15,020)
Change in demographic assumptions	(		162)		-	(	162)
Change in financial assumptions			35,811		-		35,811
Experience adjustments	(		21,285)		-	(	21,285)
			14,364	(	15,020)	(	656)
Pension fund contribution			-	(	22,114)	(	22,114)
Paid pension	(		123,767)		123,767		-
Balance at December 31	$		550,210	($	363,458)	$	186,752

~41~

• (d) The Bank of Taiwan was commissioned to manage the Fund of the Company’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 has no right to participate in managing and operating that fund and hence the Company is 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:

The principal actuarial assumptions used were as follows:	The principal actuarial assumptions used were as follows:
Employee Manager Discount rate 0.75% 0.50% Future salary increases 3.00% 3.00% 2021		2020
		0.39% 3.00%
	0.50% 3.00%

Future mortality rate was estimated based on the 6th and the 5th Taiwan Standard Ordinary Experience Mortality Table.

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

		Discount	Discount	rate		Future salaryincreases	Future salaryincreases	Future salaryincreases
		Increase		Decrease		Increase		Decrease
		0.25%		0.25%		0.25%		0.25%
December 31, 2021
Effect on present value of
defined benefit obligation	($	12,756)	$	13,275	($	12,947)	$	12,512
		Discount		rate		Future salaryincreases
		Increase		Decrease		Increase		Decrease
		0.5%		0.5%		0.5%		0.5%
December 31, 2020
Effect on present value of
defined benefit obligation	($	41,350)	$	45,456	$	44,026	($	40,537)

~42~

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 Company for the year ending December 31, 2022 amount to $4,500.

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

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. Effective July 1, 2005, the Company 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 contributes 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. The pension costs under defined contribution pension plans of the Company for the years ended December 31, 2021 and 2020 were $29,743 and $33,056, respectively.

• (16) Share-based payment

• A. For the years ended December 31, 2021, the Company share-based payment arrangements were as follows:

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

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.

~43~

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

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

			Year	ended December 31,	ended December 31,	ended December 31,
						2021
Equity-settled			$			105,473
For the year ended December 31, 2020: None.
(17)Provisions
Warranty			2021			2020
At January 1	$		22,841	$		23,480
Accrued during the period			5,831			8,709
Used during the period	(		2,773)	(		9,348)
At December 31	$		25,899	$		22,841
Analysis of total provisions:
		December 31,2021			December 31,2020
Current	$		6,831	$		4,033
Non-current	$		19,068	$		18,808

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

~44~

(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 (Treasury stock was deducted):

(Treasury stock was deducted):
			(In	thousands of shares)
		2021		2020
At January 1	$	375,541	$	377,868
Proceeds form issuance of shares		60,000		-
Purchase of treasury shares	(	6,566)	(	2,327)
Treasury shares 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.

~45~

• D. Treasury stock

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

==> picture [445 x 286] intentionally omitted <==

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

(In thousands of shares)
December 31, 2021
Name of company Number of
holding the shares Reason for reacquisition Shares Carrying amount
The Company To be reissued to employees 1,305 $ 31,782
The Company The Company’s shares
Subsidiary-Ho Chung held by its subsidiary
Investment Co., Ltd. 755 23,172
2,060 $ 54,954
December 31, 2020
Name of company Number of
holding the shares Reason for reacquisition Shares Carrying amount
The Company To be reissued to employees 2,327 $ 58,849
The Company The Company’s shares
Subsidiary-Ho Chung held by its subsidiary
Investment Co., Ltd. 755 23,172
3,082 $ 82,021
----- End of picture text -----

• (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.

• (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.)

~46~

• (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.

al reserve is insufficient.
At January 1 Cash capital increase Changes in long-term investment Treasury stock transferred to employees Adjustments of capital surplus for the Company's cash dividends received by subsidiaries At December 31 At January 1 Liquidation of subsidiary At December 31					2021
		Share premium		share transactions	Long-term investments			stock options Total 186,300 $ 703,108 $ - 775,800 - 4,105) ( - 13,968 - 1,051 186,300 $ 1,489,822 $
		373,792 $ 775,800 - - - 1,149,592 $		60,256 $ - - 13,968 - 74,224 $	82,760 $ - 4,105) ( - 1,051 79,706 $ 2020
		Share premium		share transactions		Long-term investments		stock options 186,300 $ - 186,300 $	Total 702,965 $ 143 703,108 $
		373,792 $ - 373,792 $		60,256 $ - 60,256 $		82,617 $ 143 82,760 $

~47~

(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 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 excess 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.

~48~

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

as follows:
		2020				2019
				Dividends				Dividends
				per share				per share
		Amount		(in dollars)		Amount		(in dollars)
Legal reserve	$	57,584			$	60,048
Reverse of special reserve	(	1,320)			(	4,649)
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.

~49~

(21) Other equity items

2021

(22)

Operating revenue Currency translation differences of foreign Unrealized gain (loss) operations on valuation Total At January 1 4,063) ($ 191,414 $ 187,351 $ Financial assets at fair value through other comprehensive income (loss) Revaluation - Company - 238,220 238,220 Tax on revaluation - Company - 8,022 8,022 Currency translation differences: -Subsidiaries 4,756 - 4,756 -Associates 340) ( - 340) ( -Subsidiaries dispose of associates 335 - 335 At December 31 688 $ 437,656 $ 438,344 $ Currency translation differences of foreign Unrealized gain (loss) operations on valuation Total At January 1 9,372) ($ 288,841 $ 279,469 $ Financial assets at fair value through other comprehensive income (loss) Revaluation - Company - 137,595) ( 137,595) ( Tax on revaluation - Company - 40,348 40,348 Revaluation transferred to retained earnings– gross - 180) ( 180) ( Currency translation differences: -Subsidiaries 5,091 - 5,091 -Associates 218 - 218 At December 31 4,063) ($ 191,414 $ 187,351 $ 2020 2021 2020 Revenue from contracts with customers 5,847,971 $ 5,337,870 $ Years ended December 31

~50~

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

==> picture [469 x 278] intentionally omitted <==

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

LED and Displays and
Silicon Sensor Lighting Other
For the year ended December 31, 2021 Chips Group Group segments Total
Revenue from customer contracts $ 5,060,724 $ 787,247 $ - $ 5,847,971
LED and Displays and
Silicon Sensor Lighting Other
For the year ended December 31, 2020 Chips Group Group segments Total
Revenue from customer contracts $ 4,456,621 $ 854,765 $ 26,484 $ 5,337,870
B. The Company has recognised the following revenue-related contract liabilities:
December 31, 2021 December 31, 2020 January 1, 2020
Contract liabilities: $ 76,070 $ 35,773 $ 28,301
Years ended December 31
2021 2020
Revenue recognised that was included in
the contract liability balance at the beginning
of the year $ 32,485 $ 10,961
----- End of picture text -----

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

(23) Interest income

Interest income
Interest income from bank deposits Interest income from resale bonds Other interest income Total	Years ended December 31
	2021 7,414 $ 661 8 8,083 $	2020
		9,135 $ 1,511 108
		10,754 $

(24) Other income

Other income
Rental revenue Dividend income Others Total	Years ended December 31
	2021 80 $ 13,643 33,250 46,973 $	2020
		81 $ 14,454 24,164
		38,699 $

~51~

(25) Other gains and losses

Other gains and losses
		Years ended	December 31
		2021		2020
Net gain on financial assets and liabilities
at fair value through profit or loss	$	7,307	$	473
Net currency exchange gain(loss)		911	(	24,563)
Loss on disposal of property, plant and equipment	(	164)	(	30,826)
Loss on disposal of investments		-	(	5,443)
Impairment loss on property, plant and equipment	(	77,577)	(	35,585)
Others	(	800)	(	286)
Total	($	70,323)	($	96,230)

(26) Finance costs

Finance costs
		Years ended	December 31
		2021		2020
Interest expense:
Bank borrowings	$	7,506	$	18,265
Lease liabilities		4,082		4,344
Less: Capitalisation of qualifying assets	(	159)	(	960)
		11,429		21,649
Other financial costs		1,246		1,050
Total	$	12,675	$	22,699

(27) Expenses by nature

Expenses by nature
Employee benefit expense Depreciation Amortisation on intangible assets Total	Years ended December 31
	2021 1,413,827 $ 436,030 17,850 1,867,707 $	2020
		1,257,185 $ 439,082 14,547
		1,710,814 $

(28) Employee benefit expense

Employee benefit expense
Wages and salaries Post-employment benefits Labor and health insurance fees Pension costs Other personnel expenses	Years ended December 31
	2021 1,236,053 $ 40,000 81,392 36,583 19,799 1,413,827 $	2020
		1,060,025 $ 44,553 82,908 42,695 27,004
		1,257,185 $

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• 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 and supervisors that shall not be higher than 5%, of the total distributed amount. If the Company has an accumulated deficit, earnings should be used to cover losses. Employees’ compensation can be distributed in the form of shares or in cash. Qualification requirements of employees, including the employees of subsidiaries of the Company meeting certain specific requirements, entitled to receive aforementioned stock or cash may be specified in the Articles of Incorporation. 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, the employees’ compensation was accrued at $187,978 and $115,175, respectively; directors’ and supervisors’ 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 on 15% and 5%, respectively, of distributable profit of current period distributable as of the end of reporting period.

• C. Employees’ compensation and directors’ remuneration of 2020 as resolved at the Board of Directors were in agreement with those amounts recognised in the profit or loss of 2020. The employees’ compensation of 2020 will be distributed in the form of cash.

• D. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved at the Board of Directors’ meeting will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(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 profits for the period	$	183,815		$	497
Tax on undistributed surplus earnings			232		27,254
Prior year income tax overestimation			537	(	25,336)
Total current tax		184,584			2,415
Deferred tax:
Origination and reversal of temporary
differences	(		5,866)		36,856
Total deferred tax	(		5,866)		36,856
Income tax expense	$	178,718		$	39,271

~53~

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

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

B. Reconciliation between income tax expense and accounting profit

		Years ended	December 31
		2021	2020
Tax calculated based on profit before tax
and statutory tax rate	$	201,618	$	122,881
Expenses disallowed by tax regulation		1,533		1,472
Tax exempt income by tax regulation	(	10,701)		1,679
Temporary differences not recognised as
deferred tax assets	(	7,677)	(	22,418)
Change in assessment of realisation of
deferred tax assets		16,539	(	47,957)
Prior year income tax overestimation		537	(	25,336)
Effect from investment tax credits	(	23,363)	(	18,304)
Tax on undistributed earnings		232		27,254
Income tax expense	$	178,718	$	39,271

~54~

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

					Year	ended December 31,2021	ended December 31,2021	ended December 31,2021	ended December 31,2021	ended December 31,2021	ended December 31,2021
								Recognised
									in other
				Recognised in			comprehensive
		January1			profit	or loss			income		December 31
Temporary differences:
- Deferred tax assets (liabilities):
Loss on inventory value decline	$		7,005	($		4,920)	$		-	$		2,085
Expected credit loss			-			2,934			-			2,934
Service warranty expense			4,568			612			-			5,180
Impairment loss			7,630			10,361			-			17,991
Net pension costs			1,206	(		1,752)			-	(		546)
Remeasurement of defined
benefit obligations			26,310			-	(		6,243)			20,067
Unrealized gain on valuation
of financial assets	(		41,200)			-			8,022	(		33,178)
Others			6	(		1,369)			-	(		1,363)
Total	$		5,525	$		5,866	$		1,779	$		13,170
					Year	ended December 31,2020
								Recognised
									in other
				Recognised in			comprehensive
		January1			profit	or loss			income		December 31
Temporary differences:
- Deferred tax assets (liabilities):
Loss on inventory value decline	$		14,357	($		7,352)	$		-	$		7,005
Expected credit loss			8,530	(		8,530)			-			-
Service warranty expense			4,696	(		128)			-			4,568
Impairment loss			4,921			2,709			-			7,630
Net pension costs			13,996	(		12,790)			-			1,206
Remeasurement of defined
benefit obligations			26,441			-	(		131)			26,310
Unrealized gain on valuation
of financial assets	(		81,548)			-			40,348	(		41,200)
Others			10,771	(		10,765)			-			6
Total	$		2,164	($		36,856)	$		40,217	$		5,525

D. 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
		168,766 $

~55~

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

(30) Earnings per share

and approved by the Tax Authority. Earnings per share
Basic earnings per share Profit attributable to owners of the parent Dilutive effect of common stock equivalents: Employees’ compensation Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents Basic earnings per share Profit attributable to owners of the parent Dilutive effect of common stock equivalents: Employees’ compensation Diluted earnings per share Profit attributable to owners of the parent plus dilutive effect of common stock equivalents	Year ended December 31,2021
	Weighted-average outstanding common shares Earnings per share Profit after tax (in thousands) (in dollars) 829,371 $ 393,116 2.11 $ - 3,563 829,371 $ 396,679 2.09 $ Year ended December 31,2020		Earnings per share (in dollars)
			2.11 $
			2.09 $
	Profit after tax 575,133 $ - 575,133 $	Weighted-average outstanding common shares (in thousands) 377,806 7,185 384,991	Earnings per share (in dollars)
			1.52 $
			1.49 $

~56~

(31) Supplemental cash flow information

A. Investing activities with partial cash payments

		Year ended December		Year ended December
		31,2021		31,2020
Purchase of property, plant and	$	461,285	$	292,577
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	$	529,492	$	296,520

(32) Changes in liabilities from financing activities

								2021
													Liabilities from
			Short-term			Long-term		Lease		Guarantee			financing
		borrowings			borrowings			liabilities		deposits		activities-gross
At January 1	$		139,923	$		811,515	$	236,266	$	740	$		1,188,444
Changes in cash flow from financing activity			105,444	(		811,515)	(	19,732)		2,197	(		723,606)
Interest payment			-			-	(	4,082)		-	(		4,082)
Increase in lease principal			-			-		1,717		-			1,717
Amortization of interest
expenses			-			-		4,082		-			4,082
At December 31	$		245,367	$		-	$	218,251	$	2,937	$		466,555
								2020
													Liabilities from
			Short-term			Long-term		Lease		Guarantee			financing
		borrowings			borrowings			liabilities		deposits		activities-gross
At January 1	$		156,167	$		814,504	$	248,562	$	1,415	$		1,220,648
Changes in cash flow from financing activity	(		16,244)	(		2,989)	(	19,761)	(	675)	(		39,669)
Interest payment			-			-	(	4,344)		-	(		4,344)
Increase in lease principal			-			-		7,498		-			7,498
Amortization of interest expenses			-			-		4,344		-			4,344
Decrease			-			-	(	33)		-	(		33)
At December 31	$		139,923	$		811,515	$	236,266	$	740	$		1,188,444

~57~

7. Related Party Transactions

(1) Names of related parties and relationship

Names of related parties Relationship with the Company CS Bright Corporation This company is the subsidiary of the Company. (Note 1) Opto Plus Technology Co., Ltd. This company is the subsidiary of the Company. Opto Tech (Macao) Co., Ltd. This company is the subsidiary of the Company. (Note 2) Shin-Etsu Opto Electronic Co., Ltd. The Company is the director of this company; this company is the director of the Company. (Note 3) Giga Epitaxy Technology Corp. The Company is the director of this company. (Note 4) This company investments by the Company accounted for Nichia Taiwan Corp. using the equity method. (Note 5) This company is the Company's parent company of Nichia Corp. enterprise VML Technologies B.V. This company is an investment of Ho Chung Investment Co., Ltd. accounted for using the equity method. (Note 6) Shen Zhen Guang Xin Vision The chairman of this company is an independent director Technology Co., Ltd.(Shen Zhen Guang of the Company. (Note 7) Guang Xin Vision Co., Ltd.(Guang Xin The chairman of this company is an independent director Vision) of the Company. (Note 7) Guang Xin Vision Tech. (HK) CO., The chairman of this company is an independent director Ltd.(Hong kong Guang Xin) of the Company. (Note 7) Opto Medical Public Welfare Other related parties. Foundation NEW SMART TECHNOLOGY CO., The company is the Company's direct and indirect LTD. investment using the equity method company.

Note 1: CS Bright Corporation (CSB) implemented liquidation on December 31, 2020.

• Note 2: This Company has completed liquidation process on September 29, 2020, please refer to Note 6(6)B for details.

• Note 3: The shareholders of the Company during their meeting resolved to reelect all its directors on June 16, 2020. The shareholders of Shin-Etsu Opto Electronic Co., Ltd. (Shin-Etsu) also resolved to reelect all its directors on June 18, 2020. After the reelection, the Company is no longer a legal person of Shin-Etsu, and Shin-Etsu is no longer a legal person of the Company, thus, Shin-Etsu has not been a related party of the Company since June 18, 2020.

• Note 4: It was no longer a related party of the Company after the Company resigned as director on February 28, 2021.

• Note 5: 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.

~58~

• Note 6: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.

• Note 7: The Company’ shareholders during their meeting resolved to reelect all its directors on June 16, 2020. The company’s chairman is no longer an independent director of the Company due to the reelection, thus, the company is not a related party of the Company starting from the date.

(2) Significant transactions and balances with related parties

• A. Operating revenue:

Sales of goods: Subsidiaries Associates Individuals with significant influence on the Group Other related parties Total	2021 2020 11,085 $ 10,286 $ 23,475 240 83,287 - 241,763 234,463 359,610 $ 244,989 $ Years ended December 31

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 for the related parties was 45 ~136 days. Some related parties adopt the method of shipping after receiving the payment. The credit term was 90 ~ 150 days for the non-related parties for both periods.

B. Purchases:

periods. Purchases:
Purchases of goods: Subsidiaries Individuals with significant influence on the Group Other related parties Total	Years ended December 31
	2021 2,749 $ 48,797 94,122 145,668 $	2020
		6,398 $ - 181,207
		187,605 $

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 for the related parties, and 90 ~ 120 days for the non-related parties for both periods.

~59~

C. Accounts receivable:

C. Accounts receivable:
	December	31,2021		December	31,2020
Receivables from related parties:
Subsidiaries	$	4,047	$		4,129
Individuals with significant influence
on the Group		15,015			-
Other related parties		-			16,880
Total	$	19,062	$		21,009
D. Accounts payable:
	December	31,2021		December	31,2020
Payables to related parties:
Subsidiaries	$	725	$		4,110
Individuals with significant influence
on the Group		60,499			-
Others related parties		-			51,920
Total	$	61,224	$		56,030
Other payables
Individuals with significant influence on the Group	$	210	$		-
Other related parties		-			211
Total	$	210	$		211
E. Prepayment
	December	31,2021		December	31,2020
Subsidiaries	$	-	$		43,032
The prepayment for obtaining Bright Investment International		Ltd.-indirect		subsidiary	from CS
Bright Corporation (CSB).

• F. Advance receipts

Bright Corporation (CSB). F. Advance receipts
G. Endorsements and guarantees provided to related parties: December 31,2021 Associates - $ December 31,2021 Subsidiaries - $	December 31,2020
	942 $
	December 31,2020
	98,613 $

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H. Lease

(a) Rent expense

e ent expense
		Years ended	December 31
		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:

Lease liabilities (i) Outstanding balance:
ii) Interest expense Individuals with significant influence on the Group Other related parties Individuals with significant influence on the Group	December 31,2021 December 31,2020 2,180 $ 4,518 $ 2021 2020 46 $ 104 $ 16 - 62 $ 104 $ Years ended December31	December 31,2020
		4,518 $

• (ii) Interest expense

I. 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 ended December31
	2021 246,567 $	2020
		- $

• (b) Acquisition of financial assets:

Acquisition of financial assets:
Accounts Associates Investments accounted for using equity method	No. of shares 1,000	Objects Common stock	Year ended December31,2021
			Consideration
			14,000 $

~61~

J. Others

ers
		Years ended	December31
		2021		2020
Donation expense:
Opto Medical Public Welfare Foundation	$	50,000	$	-
Expenditure of labor service:
Associates	$	20,000	$	-

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.

(3) Key management compensation

Key management compensation
	Year ended December 31, 2021		Year ended December 31, 2020
Salaries and other short-term employee	$	189,553	$	93,754
Post-employment benefits		296		464
Total	$	189,849	$	94,218

8. PLEDGED ASSETS

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

Pledged assets Restricted assets-Time deposits, (shown as "Current financial asssts at amortised cost")	December 31, December 31, 2021 2020 Creditor Bank Type 22,810 $ 22,810 $ Chang Hwa Commercial Bank Far Eastern International Bank Land lease and dormitory lease deposits Bookvalue Purpose ofpledge	Purpose ofpledge	Purpose ofpledge
	December 31, 2021 22,810 $		Type

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

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

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

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

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

• (3) Operating lease commitments: Please refer to Note 6(9).

• (4) As of December 31, 2021, the promissory notes issued by the Company 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 wholly-owned 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 Company’s objectives when managing capital are to safeguard the Company’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 Company may adjust the amount of dividends paid to shareholders or issue new shares to reduce debt. The Company 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 balance sheet plus net debt.

As of December 31, 2021 and 2020, the gearing ratios were (40.04%) and (32.57%), respectively.

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(2) Financial instruments

A. Financial instruments by category

Financial assets Financial assets measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable-net (including related parties) Other accounts receivable Guarantee deposits paid Financial liabilities Financial assets mandatorily measured at fair value through profit or loss Financial liabilities at amortised cost Short-term borrowings Accounts payable (including related parties) Other accounts payable Long-term borrowings(including current portion) Guarantee deposits received Lease liabilities	December 31,2021 683,917 $ 1,037,218 820,785 3,017,141 4,883 1,255,143 15,739 16,387 6,851,213 $ - $ 245,367 803,182 749,651 - 2,937 1,801,137 $ 218,251 $	December 31,2020
		427,409 $ 783,998 22,810 2,857,629 8,873 1,623,389 19,689 11,377
		5,755,174 $ 799 $ 139,923 683,546 597,572 811,515 740
		2,234,095 $
		236,266 $

B. Financial risk management policies

• (a) The Company’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 Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’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.

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• C. Significant financial risks and degrees of financial risks

• (a) Market risk

  • Foreign exchange risk

  • i. The Company operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and JPY. Exchange rate risk arises from future commercial transactions and recognised assets and liabilities.

  • ii. To manage their foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, entities in the Company use forward foreign exchange contracts, transacted with Company treasury. The expired dates of these forward foreign exchange contracts are shorter than 6 months and are not accounted for under hedge accounting. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

  • iii. As the foreign operations are strategic investments, the Company does not hedge for them.

  • iv. The Company’s businesses involve some non-functional currency operations.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 38,371 $ 27.63 1,060,191 $ JPY : TWD 333,627 0.2385 79,570 CNY : TWD 15,222 4.4319 67,462 Investment for using equity method USD : CNY (Note) - - - Non-monetary items :None. Financial liabilities USD : TWD 20,543 $ 27.730 569,657 $ JPY : TWD 430,400 0.2425 104,372 Non-monetary items :None. December 31,2021		Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2021	Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2021	Foreign currency amount (in thousands) Exchange rate Book value (TWD) December 31,2021		Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) Year ended December 31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) Year ended December 31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) Year ended December 31,2021 SensitivityAnalysis	Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) Year ended December 31,2021 SensitivityAnalysis
		Foreign currency amount (in thousands)	Exchange rate			Extent of variation	Effect on profit or loss	Effect on other compre- hensive income
			27.63 0.2385 4.4319 - 27.730 0.2425	1,060,191 $ 79,570 67,462 - 569,657 $ 104,372		1% 1% 1% 1% 1% 1%	10,602 $ 796 675 - 5,697) ($ 1,044) (	- $ - - - - $ -	4,854) ($ 1,091) ( 224 - 1,491 $ 538

• Note ： If the entities’ functional currency is not TWD, the foreign currency denominated assets and liabilities of the entities should be disclosed.

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Foreign currency amount (in thousands) Exchange rate Book value (TWD) (Foreign currency: functional currency) Financial assets Monetary items USD : TWD 43,908 $ 28.4300 1,248,304 $ JPY : TWD 290,236 0.2743 79,612 CNY : TWD 25,061 4.3520 109,065 Investment for using equity method USD : CNY (Note) - - - Non-monetary items :None. Financial liabilities USD : TWD 32,237 $ 28.530 919,722 $ JPY : TWD 508,001 0.2783 141,377 Non-monetary items : None. December 31,2020	Foreign currency amount (in thousands) Exchange rate Book value (TWD) (Foreign currency: functional currency) Financial assets Monetary items USD : TWD 43,908 $ 28.4300 1,248,304 $ JPY : TWD 290,236 0.2743 79,612 CNY : TWD 25,061 4.3520 109,065 Investment for using equity method USD : CNY (Note) - - - Non-monetary items :None. Financial liabilities USD : TWD 32,237 $ 28.530 919,722 $ JPY : TWD 508,001 0.2783 141,377 Non-monetary items : None. December 31,2020	Foreign currency amount (in thousands) Exchange rate Book value (TWD) (Foreign currency: functional currency) Financial assets Monetary items USD : TWD 43,908 $ 28.4300 1,248,304 $ JPY : TWD 290,236 0.2743 79,612 CNY : TWD 25,061 4.3520 109,065 Investment for using equity method USD : CNY (Note) - - - Non-monetary items :None. Financial liabilities USD : TWD 32,237 $ 28.530 919,722 $ JPY : TWD 508,001 0.2783 141,377 Non-monetary items : None. December 31,2020		Extent of variation Effect on profit or loss Effect on other compre- hensive income Unrealized exchange gain(loss) 1% 12,483 $ - $ 31,638) ($ 1% 796 - 469) ( 1% 1,091 - 97) ( 1% - - - 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( 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% 12,483 $ - $ 31,638) ($ 1% 796 - 469) ( 1% 1,091 - 97) ( 1% - - - 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( 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% 12,483 $ - $ 31,638) ($ 1% 796 - 469) ( 1% 1,091 - 97) ( 1% - - - 1% 9,197) ($ - $ 24,369 $ 1% 1,414) ( - 265) ( Year ended December 31,2020 SensitivityAnalysis
	Exchange rate			Extent of variation	Effect on profit or loss Effect on other compre- hensive income 12,483 $ - $ 796 - 1,091 - - - 9,197) ($ - $ 1,414) ( -
	28.4300 0.2743 4.3520 - 28.530 0.2783	1,248,304 $ 79,612 109,065 - 919,722 $ 141,377		1% 1% 1% 1% 1% 1%		31,638) ($ 469) ( 97) ( - 24,369 $ 265) (

• Note ： If the entities’ functional currency is not TWD, the foreign currency denominated assets and liabilities of the entities should be disclosed.

Price risk

• i. The Company’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 Company diversifies its portfolio.

• ii. The Company’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 $39,822 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 Company’s interest rate risk arises from long-term and short-term borrowings. Borrowings issued at floating rates expose the Company 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 Company’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 $1,963 and $7,612 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 Company arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Company’s credit policy, each local entity in the Company is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors, the utilisation of credit limits is regularly monitored. Credit risk arises from cash and equivalents, derivative financial instruments and deposits with bank and financial institutions, as well as operating activities, including outstanding receivables.

• ii. The Group adopts following 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;

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

• vi. The Company 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 $ - $ 1,268,261 $ 1,268,261
Loss allowance $ - $ 8,235 $ 8,235
Individual Group Total
At December 31, 2020
Expected loss rate 100% 0.01%~100%
Total book value $ 4,997 $ 1,635,285 $ 1,640,282
Loss allowance $ 4,997 $ 3,023 $ 8,020
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• vii. 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 Company’s accounts receivable was $1,260,026 and $1,632,262, respectively.

• viii. Movements in relation to the company applying the simplified approach to provide loss allowance for accounts receivable are as follows:

			2021		2020
		Accounts receivable			Accounts receivable
At January 1	$		8,020	20,700 $
(Reversal) provision of impairment loss			2,198		2,408
Write-offs	(		1,983)	(	15,088)
At December 31	$		8,235	8,020 $

• ix. The Company 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.

isk.
Financial assets at amortised cost				December31,2021				Total
		12 months		Lifetime
				Significant increase in credit risk		Impairment of credit
		820,785 $		- $		- $		820,785 $

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Significant increase in credit risk Impairment of credit Financial assets at amortised cost 22,810 $ - $ - $ December31,2020 12 months Lifetime	Total
	22,810 $

(c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by Company treasury. Company treasury monitors rolling forecasts of the Company’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 Company’s non-derivative financial liabilities and derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities.

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Between Between Between
December 31, 2021 Less than 1 and 2 2 and 3 3 and 5 Over 5
Non-derivative financial 1 year years years years years
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December 31, 2021 Less than Non-derivative financial 1year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 5 years	Over 5 years
liabilities : Short-term borrowings 245,551 $ Accounts payable 803,182 (including related parties) Other payables 749,651 (including related parties) Lease liabilities 22,847 December 31, 2020 Less than Non-derivative financial liabilities : 1year Short-term borrowings 140,100 $ Accounts payable 683,546 (including related parties) Other payables 597,572 (including related parties) Lease liabilities 23,642 Long-term borrowings 74,285 (including current portion) Forward exchange contracts 799 Derivative financial liabilities ：	- $ - - 19,398 Between 1 and 2 years - $ - - 22,305 751,637 -	- $ - - 18,285 Between 2 and 3 years - $ - - 18,933 - -	- $ - - 35,639 Between 3 and 5 years - $ - - 35,782 - -	- $ - - 150,536 Over 5 years
				- $ - - 168,130 - -

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(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 equivalents, notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable, accounts payable, other payables, lease liabilities and long-term borrowings are approximate to their fair value.

• D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities as at December 31, 2021 and 2020 is as follows:

31, 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 Total December 31, 2020 Assets: Recurring fair value measurements Financial assets at fair value through profit or loss Domestic funds Forward exchange contracts Equity securities Financial assets at fair value through other comprehensive income Total Liabilities: Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contract	Level 1 571,389 $ - 250,693 822,082 $ Level 1 320,248 $ - - 85,789 406,037 $ - $	Level 2 - $ - - - $ Level 2 - $ 171 - - 171 $ 799 $	Level 3 - $ 112,528 786,525 899,053 $ Level 3 - $ - 106,990 698,209 805,199 $ - $	Total
				571,389 $ 112,528 1,037,218
				1,721,135 $
				Total
				320,248 $ 171 106,990 783,998
				1,211,407 $
				799 $

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• E. The methods and assumptions the Company used to measure fair value are as follows:

• (a) The instruments the Company 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 Company 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 Company’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs. In accordance with the Company’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 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.

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

• G. For the years ended December 31, 2021 and 2020, there was no transfer into or out from Level 3.

• H. 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.

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• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Unlisted shares Unlisted shares Non-derivative equity: Unlisted shares Unlisted shares Non-derivative equity:	Fair value at December 31,2021 786,525 $ 112,528 Fair value at December 31, 2020 698,209 $ 106,990	Valuation Significant unobservable technique input Market comparable Price book ratio multiple companies Price to earnings ratio multiple EV/EBITDA Discount for lack of volatility Net asset value Discount for lack of volatility Valuation Significant unobservable technique input Market comparable Price book ratio multiple companies Price to earnings ratio multiple EV/EBITDA Discount for lack of volatility Net asset value Discount for lack of volatility	Range (weighted average) 3.05 11.72~18.90 13.22~15.71 30%~35% 19.25% Range (weighted average) 1.22 18.63~22.76 14.01~16.60 30%~35% 19.25%

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

Financial assets Equity instrument Financial assets Equity instrument	Input	Change ±5% Change ±5%	Favourable Unfavourable change change 1,341 $ 1,341) ($ December Recognised in profit or loss Favourable Unfavourable change change 1,275 $ 1,275) ($ December Recognised inprofit or loss	Favourable Unfavourable change change 18,180 $ 18,180) ($ 31,2021 Recognised in other comprehensive income Favourable Unfavourable change change 15,582 $ 15,582) ($ 31,2020 Recognised in other comprehensive income
	Discount of lack of volatility Input
	Discount of lack of volatility

• ’

• (4) Explanation of the impact of the COVID 19 pandemic to the Company 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 Company 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

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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.

14. SEGMENT INFORMATION

Operating segments information was disclosed in the consolidated financial statements in accordance with the standard.

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OPTO TECH CORPORATION STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2021

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

Item Description Cash on hand and petty Cash in banks Checking accounts Demand deposits Foreign currency deposits JPY 184,922 thousand USD 4,967 thousand RMB 2,467 thousand EUR 0.305 thousand Time deposits USD 5,000 thousand Cash equivalents - Resale bonds 0.2%~0.22%	Amount Note - $ 7,179 498,994 44,104 JPY exchange rate 0.2385 137,242 USD exchange rate 27.63 10,654 RMB exchange rate 4.319 9 EUR exchange rate 31.12 1,817,124 Maturity date 2022/1/4~2022/3/29 138,835 USD exchange rate 27.63 Maturity date 2022/1/7~ 2022/1/12 363,000 Maturity date 2022/1/3~ 2022/1/17 3,017,141 $

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OPTO TECH CORPORATION STATEMENT OF TRADE RECEIVABLES DECEMBER 31, 2021

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

Client Name Description Company A USD 8,527 thousand Company B Company C Company D USD 4,145 thousand Company E USD 2,576 thousand Others Less: Allowance for doubtful accounts Related parties- Nichia Corp. JPY 62,956 thousand Opto Plus Technology Co., Ltd. USD 146 thousand Less: Allowance for doubtful accounts		Amount	Note
	235,617 $ 198,602 114,526 114,521 71,179 509,871 1,244,316 8,235) ( 1,236,081 $ 15,015 4,047 19,062 - 19,062 $		None of balances of each remaining items is greater than 5% of this account; among which $8,235 was past due more than a year

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OPTO TECH CORPORATION STATEMENT OF INVENTORIES

DECEMBER 31, 2021

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

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Amount
Item Cost Net Realizable Value Note
Raw materials $ 309,190 $ 317,073
Supplies 369,219 325,049
Work in process 244,853 462,303
Semi-finished goods 132,983 142,289
Finished goods 217,095 321,865
Total 1,273,340 $ 1,568,579
Less: Allowance for inventory
valuation and
obsolescence losses ( 58,295)
Net amount $ 1,215,045
----- End of picture text -----

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OPTO TECH CORPORATION

STATEMENT OF FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON-CURRENT FOR THE YEAR ENDED DECEMBER 31, 2021

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

Shares (inthousands) Nichia Corp. 10 Viking Tech Corp. 2,874 Giga Epitaxy Technology Corp. 4,950 Shin-Etsu Opto Electronic Co., Ltd. 2,000 Fubon Financial Holding Co., Ltd. - Total Name Beginning	Shares (inthousands) Nichia Corp. 10 Viking Tech Corp. 2,874 Giga Epitaxy Technology Corp. 4,950 Shin-Etsu Opto Electronic Co., Ltd. 2,000 Fubon Financial Holding Co., Ltd. - Total Name Beginning	FairValue Balance	Addition	Addition	Addition	Decrease	Decrease	Shares (inthousands) FairValue 10 545,143 $ 2,874 235,668 4,950 18,798 2,000 222,584 250 15,025 1,037,218 $ EndingBalance	Collateral	Note
			Shares (in thousands)		Amount	Shares (in thousands)	Amount
		585,253 $ 85,789 16,391 96,565 - 783,998 $	- - - - 250		- $ 149,879 2,407 126,019 15,025 293,330 $	- - - - -	40,110) ($ - - - - 40,110) ($		None 〃 〃 〃 〃

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OPTO TECH CORPORATION STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 2021

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

Item Beginning Balance Addition Decrease Ending Balance Note

Refer to Note 6(8) for more details.

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OPTO TECH CORPORATION

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2021

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

Nature	Creditor Description Mega International Commercial Bank Hsinchu Science Park Xin'an Branch General borrowings Taipei Fubon Commercial Bank Hsinchu Branch 〞 Taishin International Bank Jiali Branch Cathay United Bank Hsinchu Science-Based Industrial Park Branch E.Sun Bank Hsinchu Branch 〞 Land Bank of Taiwan Hsinchu Branch 〞 Bank of Taiwan Hsinchu Science-Based Industrial Park Branch 〞 Far Eastern International Bank Science-Based Industrial Park Branch 〞		Ending Balance	Contract Period	Interest Rate	Credit Line	Collateral	Note
Unsecured borrowing 〞 〞 〞 〞 〞 〞 〞			13,884 $ 34,703 27,730 55,460 13,378 3,717 41,036 55,460 #######	1 year 〞 〞 〞 〞 〞 〞 〞	Note1 〞 〞 〞 〞 〞 〞 〞	USD 10,000 USD 6,000 NTD 400,000 USD 6,000 NTD 200,000 NTD 300,000 NTD 250,000 NTD 200,000	None 〞 〞 〞 〞 〞 〞 〞

Note1: Interest is calculated based on floating rates, and the interest rate was ranged from 0.6% to 1.34%. for the year. Note2: Guaranteed note issued $2,408,310.

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OPTO TECH CORPORATION STATEMENT OF TRADE PAYABLES DECEMBER 31, 2021

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

Client Name Description Company A USD 2,394 thousand Company B JPY 269,482 thousand Company C Company D JPY 170,515 thousand Company E Others Related parties- Nichia Taiwan Corp. Nichia Corp. USD 139 JPY 60,617 thousand Opto Plus Technology Co., Ltd. USD 26 thousand		Amount	Note
		66,399 $ 65,349 57,004 44,185 37,042 471,979 741,958 $ 41,953 $ 3,846 14,700 725 61,224 $	None of balances of each remaining items is greater than 5% of this account

~81~

OPTO TECH CORPORATION STATEMENT OF OTHER PAYABLES DECEMBER 31, 2021

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

Item Description Amount Refer to Note 6(13) for more details on ‘other payables’.

~82~

OPTO TECH CORPORATION STATEMENT OF OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2021

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

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

Item Volume Amount Note
LED 13,815,025,730 EA $ 1,507,642
1,164 IN2 484
210 PCS 464
Silicon sensor 30,413,645,470 EA 3,559,403
1,484 PCS 3,302
System product 780,588
Others 11,343
Total 5,863,226
Less: Sales returns ( 4,179)
Sales discounts and
allowances ( 11,076)
Operating revenue, net $ 5,847,971
----- End of picture text -----

~83~

OPTO TECH CORPORATION STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2021

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

Item Description Beginning materials Add: Materials purchased Less: Ending materials Transfers to expenses Materials scrapped Cost to sell materials Cost of consumption materials Direct labor Manufacturing expense Manufacturing cost Add:Beginning work in progress Transfers from expenses Less:Ending work in progress Cost of finished goods Add:Beginning finished goods Finished goods purchased Transfers from expenses Less:Ending finished goods Finished goods scrapped Cost of finished goods Add: Cost to sell materials Processing cost Inventory depreciation and sluggish losses Less: Revenue from sale of scraps Total operating cost	Amount	Note
	592,694 $ 2,407,474 811,392) ( 1,084,235) ( 19,478) ( 121,130) ( 963,933 467,088 2,219,832 3,650,853 256,613 13,407 244,853) ( 3,676,020 357,462 22,901 77,030) ( 217,095) ( 2,664) ( 3,759,594 121,130 73,911 576 256) ( 3,954,955 $

~84~

OPTO TECH CORPORATION STATEMENT OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021

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

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

Item Description Amount Note
----- End of picture text -----

Indirect materials Depreciation Utilities expense Indirect labour Repairs and maintenance expense Other expenses	861,364 $ 395,802 165,909 269,374 191,940 335,443 None of balances of each remaining items is greater than 5% of this account 2,219,832 $

~85~

OPTO TECH CORPORATION STATEMENT OF SELLING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2021

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

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

Item Description Amount Note
----- End of picture text -----

Wages and salaries Import/export (customs) expense Commissions expense Advertising costs Service warranty expense Other expenses	44,839 $ 20,512 14,320 6,444 5,831 14,510 None of balances of each remaining items is greater than 5% of this account 106,456 $

~86~

OPTO TECH CORPORATION STATEMENT OF ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021

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

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

Item Description Amount Note
Wages and salaries $ 448,693
Donation 50,014
Depreciations 34,419
Labor cost 33,821
None of balances of
each remaining items is
Other expenses
greater than 5% of this
100,173 account
Total $ 667,120
----- End of picture text -----

~87~

OPTO TECH CORPORATION STATEMENT OF DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021

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

Item Description		Amount	Note
Wages and salaries	$	46,059
Experimental expense		28,431
Labor cost		32,737
			None of balances of
Other expenses			each remaining items is greater than 5% of this
		17,166	account
	$	124,393

~88~

OPTO TECH CORPORATION

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2021

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

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

Year ended December 31, 2021 Year ended December 31, 2020
Classified as Operating Classified as Classified as Operating Classified as
Costs Operating Expenses Total Costs Operating Expenses Total
Employee Benefit
Expense(Note)
Wages and salaries $ 736,462 $ 435,031 $ 1,171,493 $ 600,565 $ 418,968 $ 1,019,533
Retirement - 40,000 40,000 18,629 25,924 44,553
benefitsExpense
Labour and health 58,828 22,564 81,392 53,076 29,832 82,908
insurance fees
Pension costs 25,513 11,070 36,583 24,660 18,035 42,695
Directors' - 64,560 64,560 - 40,492 40,492
Other personnel 13,107 6,692 19,799 12,948 14,056 27,004
$ 833,910 $ 579,917 $ 1,413,827 $ 709,878 $ 547,307 $ 1,257,185
Depreciation Expense $ 395,802 $ 40,228 $ 436,030 $ 382,409 $ 56,673 $ 439,082
Amortisation Expense $ 9,095 $ 8,755 $ 17,850 $ 4,367 $ 10,180 $ 14,547
----- End of picture text -----

~89~

OPTO TECH CORPORATION

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION (Cont.)

FOR THE YEAR ENDED DECEMBER 31, 2021

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

Note:

A. As at December 31, 2021 and 2020, the Company had 990 and 1,249 employees, including 10 and 7 non-employee directors .

B. A company whose stock is listed for trading on the stock exchange or over-the-counter securities exchange shall additionally disclose the following information ：

• (a) Average employee benefit expense in current year was $1,376 ((Total employee benefit expense in current year – Total directors’

compensation in current year)/(Number of employees in current year–Number of non-employee directors in current year)).

Average employee benefit expense in previous year was $979 ((Total employee benefit expense in previous year–Total directors’ compensation in previous year)/ (Number of employees in previous year – Number of non-employee directors in previous year)).

• (b) Average employee salaries in current year were $1,195 (Total employee salaries in current year /

(Number of employees in current year–Number of non-employee directors in current year)).

Average employee salaries in previous year was $821 (Total employee salaries in previous year / (Number of employees in previous year– Number of non-employee directors in previous year)).

• (c) Adjustments of average employee salaries was 45.55% ((Average employee salaries in current year-

Average employee salaries in previous year)/ Average employee salaries in previous year).

(d)There was no remuneration for supervisors in this year and last year. (The Company has an Audit Committee, thus there was no remuneration for supe

(e)Aforementioned salary expenses in 2021 and 2020 excluded the severance pay incurred in the current year.

~90~

OPTO TECH CORPORATION

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES BY FUNCTION (Cont.)

FOR THE YEAR ENDED DECEMBER 31, 2021

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

(f)The Company’s remuneration policies:

• i.The Company’s total directors’ remuneration is distributed based on the Company’s Articles of Incorporation, which was resolved by the Board of Di and reported to shareholders.

ii.The Company’s directors’ renumeration is determined based on “Self-Evaluation or Peer Evaluation of the Board of Directors”.

The performance of individual directors will be assessed annually, and the individual assessment result and the participation frequency in and contribut the Company’s operation of individual directors will be adopted to be a reference of determining directors’ personal remuneration. Directors’ remuneration will be reviewed by the remuneration committee and reported to the Board of Directors for further review.

iii.Managers’ remuneration is determined based on “Self-Evaluation or Peer Evaluation of Manager”. The Company took into consideration managers’ operating performance, extent of contribution and job responsibilities as well as the Company’s operating condition, market pay rate in order to grant a reasonable remuneration to managers. Managers’ remuneration will be implemented after the review of the remuneration committee and approval of the Board of Directors.

• iv.Employees’ remuneration includes base salary, bonus, employees’ compensation and benefit. Base pay is determined based on personal job

• responsibility taking into consideration the “average monthly personal consumption expenditure/household disposable income” summarized by the Directorate-General of Budget, Accounting and Statistics, Executive Yuan and the pay level within the domestic industry. Bonus and employees’ compensation are distributed based on employees’ performance and contribution to the Company. Under the Company's Articles of

Incorporation, the current year's earnings, if profit, appropriate over 10%~15% for employee’s compensation and under 5% for remuneration to direc In conclusion, the Company’s remuneration policies and related policy-making process for directors’, managers’ and employees’remuneration have be taken into consideration the Company’s future operating risk and positive correlation with operating performance.

~91~

Table 1

Expressed in thousands of TWD

Opto Tech Corporation

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

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. Dongzhen 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

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 TWD

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

Expressed in thousands of TWD

Opto Tech Corporation

Significant inter-company transactions during the reporting period

Year ended December 31, 2021

Table 4

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.

Opto Tech Corporation Information on investees Year ended December 31, 2021

Table 5

Expressed in thousands of TWD

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. Dongzhen Asset Co., Ltd. CS Bright Corporation Bright Investment International Ltd.	Ho Chung Investment Co., Ltd. CS Bright Corporation Bright Investment International Everyung Investment Ltd. Dongzhen 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

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

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

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.