TMC - Annual Report 2021 | FinancialReports.eu

Taiwan Mask Corporation

Standalone financial statements and independent auditor’s report 2021 and 2020 (Stock Code: 2338)

Company address: No. 11, Chuangxin 1st Road, Hsinchu County, Hsinchu Science Park

Telephone: (03)563-4370

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Taiwan Mask Corporation

2021 and 2020 standalone financial statements and independent auditor’s report

Items	Page/No./Index
I. Cover	1
II. Table of Contents	2 ~ 4
III. Independent Auditors’ Report	5 ~ 10
IV. Standalone Balance Sheets	11 ~ 13
V. Standalone Statements of Comprehensive Income	14 ~15
VI. Standalone Statements of Changes in Equity	16 ~17
VII. Standalone Statements of Cash Flows	18 ~21
VIII. Notes to the Standalone Financial Statements	22 ~74
(I) Company History	22
(II) Date and procedures for passing the financial statement	22
(III) Application of New and Revised International Financial Reporting
Standards	22 ~ 23
(IV) Summary of Significant Accounting Policies	23 ~ 33
(V) Significant Accounting Judgments and Estimations, and Main Sources of
Assumption Uncertainties	33
(VI) Su	34 ~ 59
(VII) Related Party Transactions	60 ~ 62

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Items	Page/No./Index
(VIII) Pledge Assets	62
(IX) Significant Contingent Liabilities and Unrecognized Contract
Commitments	63
(X) Significant Disaster Loss	63
(XI) Significant Subsequent Events	63
(XII) Others	63 ~ 60
(XIII) Supplementary Disclosure	73
1. Information on significant transactions	73
2. Information on investees	73
3. Information on investments in Mainland China	73
4. Information on Major Shareholders	73
(XIV) Segment Information	73
IX. Schedule of Significant Accounting Items
Cash Schedule	Schedule 1
Accounts Receivable Schedule	Schedule 2
Inventories Schedule	Schedule 3
Financial assets schedule at fair value through profit and loss	Schedule 4
Schedule of Investments Changes Accounted for Using Equity Method	Schedule 5
Property, Plant and Equipment Cost Changes Schedule	Schedule 6
Property, Plant and Equipment Accumulated Depreciation Changes Schedule	Schedule 7
Right-of-Use Assets Schedule	Schedule 8
Right-of-Use Assets Accumulated Depreciation Schedule	Schedule 9

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Items	Page/No./Index
Short-Term Borrowings Schedule	Schedule 10
Long-Term Borrowings Schedule	Schedule 11
Lease liabilities schedule	Schedule 12
Sales Income Schedule	Schedule 13
Operating Costs Schedule	Schedule 14
Manufacturing Expenses Schedule	Schedule 15
Operating Expenses Schedule	Schedule 16
Employee Benefits, Depreciation, Depletion and Amortization in the Current
Period	Schedule 17

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Independent Auditors’ Report (2022) Tsai-Sheng-Bao-Zi No. 21002896

To Taiwan Mask Corporation,

Opinions

We have audited the accompanying standalone balance sheets of Taiwan Mask Corporation as of December 31, 2021 and 2020, and the related statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2021 and 2020, and notes to the standalone financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other independent auditors, as described in the Other matters section of our report, the standalone financial statements present fairly, in all material respects, the standalone financial position of Taiwan Mask Corporation as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years ended December 31, 2021 and 2020, 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 generally accepted auditing standards. Our responsibilities under those standards are further described in the Independent Auditor’s Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of TAIWAN MASK CORPORATION in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the reports of the other independent auditors, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of Taiwan Mask Corporation of fiscal year 2021. These matters were addressed in the context of our audit of the standalone financial statements as a whole and, in forming our opinion thereon, we do not provide a standalone opinion on these matters.

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Key audit matters for the standalone financial statements in fiscal year 2021 are stated as follows:

Evaluation of Inventories

Description

Refer to Note 4(11) for the accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, inventory accounts description please refer to Note 6(5), for the details of allowance for inventory valuation. The inventory amount and allowance for inventory valuation loss as of December 31, 2021 is NT$115,891 thousand and NT$6,002 thousand respectively.

Taiwan Mask Corporation is primarily engaged in mask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuations, loss on decline in value of inventories and obsolescence is higher than that of other industries. Management evaluates inventories stated at the lower of cost and net realizable value. Since the evaluation of inventories is subject to management’s judgment and the accounting estimations will have significant influence on the inventory values, the evaluation of inventories has been identified as one of the key audit matters.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

Understand and evaluate the accounting policy for the provision of allowance for losses on decline in value of inventories.
Perform test to evaluate the ageing statement of inventories and the statement of lower of cost and net realizable value of inventories, including validating the supporting documents related to the date of inventory movement to confirm the correct ageing classification, and validating the supporting documents related to the net realizable value to assess and confirm the reasonableness of the net realizable value determination.
Verify the reasonableness of allowance for inventory valuation loss.

Income recognition

Description

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For the accounting policy on income recognition, please refer to Note 4(26) of the financial report. For sales revenue please refer to Note 6(21); the operating income in fiscal year 2021 is NT$2,773,339 thousand.

Taiwan Mask Corporation mainly produces and sells products such as masks and integrated circuits used in semiconductors, and has a large and diversified sales base. Trading conditions vary according to market conditions and customer needs. Considering that sales revenue is a major transaction that has a significant impact on the standalone financial statements, we believe that the recognition of sales revenue is one of the most important matters to be considered in this year's audit.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

Understand the type of major income and assess internal operations, review revenue recognition and accounting treatment.
Obtain the sales revenue statement, sample the sales transactions and verify the relevant documents to determine the appropriateness of the sales revenue.
Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.

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

Management is responsible for the preparation and fair presentation of the standalone financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and 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 standalone financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing Taiwan Mask Corporation’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 Taiwan Mask Corporation or to cease operations, or has no realistic alternative but to do so.

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Those charged with governance, including the Audit Committee, are responsible for overseeing TAIWAN MASK CORPORATION's financial reporting process.

Independent auditor’s responsibilities for the audit of the standalone financial statements

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

As part of an audit conducted in accordance with ROC GAAS, we exercise professional judgment and maintain professional skepticism throughout the audit. We also conduct the following undertakings:

Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 TAIWAN MASK CORPORATION’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on Taiwan Mask Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures

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in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause TAIWAN MASK CORPORATION to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Taiwan Mask Corporation to express an opinion on the standalone financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicated 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 for the current period.

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.

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the 2021 audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit for the current period. We describe these matters in our Auditors’ Report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonable are expected to outweigh the public interest benefits of such communication.

PricewaterhouseCoopers Taiwan

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Tien-I Li

Accountant

Ya-Hui Cheng

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Financial Supervisory Commission of the Executive Yuan Approval Document for Attestation: Jin-Guan-Zheng-ShenZi No. 1020028992

Securities and Futures Bureau of Financial Supervisory Commission of the Executive Yuan

Approval Document for Attestation: Jin-Guan-Zheng-ShenZi No. 0960072936

March 4, 2022

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Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

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Unit: NT$Thousand

Assets	December31,2021 Amount % $ 1,798,841 16 824,558 7 3,000 - 115,854 1 - - 592,967 5 5,112 - 3,826 - 14,870 - 109,889 1 36,959 - 973 - 3,506,849 30 296,800 3 35,425 - 2,599,908 22 3,178,465 28 563,415 5 703,953 6 8,518 - - - 650,211 6 8,036,695 70 $ 11,543,544 100	December31,2020	December31,2020
	Amount $ 1,798,841 824,558 3,000 115,854 - 592,967 5,112 3,826 14,870 109,889 36,959 973 3,506,849 296,800 35,425 2,599,908 3,178,465 563,415 703,953 8,518 - 650,211 8,036,695 $ 11,543,544	Amount $ 493,838 - 3,000 78,897 29 425,006 9,003 51 624,065 110,856 63,704 650 1,809,099 147,632 35,422 1,903,864 2,746,203 395,869 544,878 2,366 2,014 5,466 5,783,714 $ 7,592,813	%
Current assets 1100 Cash and Cash Equivalents 1110 Financial Assets at Fair Value Through Profit or Loss - Current 1136 Financial Assets at Amortized Cost - Current 1140 Contract Asset - Current 1150 Notes Receivables (Net) 1170 Accounts Receivables (Net) 1180 Accounts Receivables - Related Parties (Net) 1200 Other Receivables 1210 Other Receivables - Related Parties 130X Inventories 1410 Prepayments 1470 Other Current Assets 11XX Total Current Assets Non-Current Assets 1510 Financial Asset at Fair Value Through Profit or Loss - Non Current 1535 Financial Assets at Amortized Cost - Non Current 1550 Investment under Equity Method 1600 Property, plant and equipment 1755 Right-of-use Asset 1760 Investment property (Net) 1780 Intangible assets 1840 Deferred Income Tax Assets 1900 Other Non-Current Assets 15XX Total Non-Current Assets 1XXX Total Assets			7 - - 1 - 6 - - 8 1 1 -
			24
			2 1 25 36 5 7 - - -
			76
			100

(Continued)

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Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

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Unit: NT$Thousand

Liabilities and Equities	December31,2021 December31,2020 Notes Amount % Amount % 6(12) $ 860,000 7 $ 1,448,600 19 6(21) 7,660 - 6,131 - 81,451 1 109,043 1 6(13) 446,349 4 288,967 4 119,062 1 50,952 1 28,054 - 15,721 - 6(15) 60,000 1 87,143 1 32,567 - 7,296 - 1,635,143 14 2,013,853 26 6(14) 1,657,049 14 - - 6(15) 2,590,000 23 1,634,284 22 6(28) 59 - 226 - 540,421 5 383,752 5 6(16) 15,540 - 17,731 - 4,805 - 4,369 - 4,807,874 42 2,040,362 27 6,443,017 56 4,054,215 53 6(17) 2,556,735 22 2,527,136 33 6(18) 1,315,828 11 439,898 6 6(19) 656,037 6 587,990 8 - - 2,666 - 1,509,318 13 814,617 11 6(20) 4,032 - 889 - 6(17) ( 941,423) ( 8 ) ( 834,598) ( 11) 5,100,527 44 3,538,598 47 9 11
Current liabilities 2100 Short Term Loans 2130 Contract Liabilities - Current 2170 Accounts Payable 2200 Other Payables 2230 Current Income Tax Liabilities 2280 Lease Liability - Current 2320 Long-term liabilities due within one year or one business cycle 2399 Other Current Liabilities - Other 21XX Total Current Liabilities Non-current liabilities 2530 Corporate bonds payable 2540 Long-term Loans 2570 Deferred Income Tax 2580 Lease liability - Non Current 2640 Defined Benefit Liabilities - Non Current 2645 Guarantee Deposits Received 25XX Total Non-Current Liabilities 2XXX Total Liabilities Capital 3110 Capital stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Other equity interests 3400 Other equity interests 3500 Treasury stock 3XXX Total Equities Major Commitments and Contingencies Major Events after Financial Statement

Liabilities and Equities

December31,2021

December31,2020
Notes
Amount

%
Amount

%
6(12)
$ 860,000
7
$ 1,448,600
19
6(21)
7,660
-
6,131
-
81,451
1
109,043
1
6(13)
446,349
4
288,967
4
119,062
1
50,952
1
28,054
-
15,721
-
6(15)
60,000
1
87,143
1
32,567
-
7,296
-
1,635,143
14
2,013,853
26
6(14)
1,657,049
14
-
-
6(15)
2,590,000
23
1,634,284
22
6(28)
59
-
226
-
540,421
5
383,752
5
6(16)
15,540
-
17,731
-
4,805
-
4,369
-
4,807,874
42
2,040,362
27
6,443,017
56
4,054,215
53
6(17)
2,556,735
22
2,527,136
33
6(18)
1,315,828
11
439,898
6
6(19)
656,037
6
587,990
8
-
-
2,666
-
1,509,318
13
814,617
11
6(20)
4,032
-
889
-
6(17)
(
941,423) (
8 ) (
834,598) (
11)
5,100,527
44
3,538,598
47
9
11

Current liabilities
2100
Short Term Loans
2130
Contract Liabilities - Current
2170
Accounts Payable
2200
Other Payables
2230
Current Income Tax Liabilities
2280
Lease Liability - Current
2320
Long-term liabilities due within one
year or one business cycle
2399
Other Current Liabilities - Other
21XX
Total Current Liabilities
Non-current liabilities
2530
Corporate bonds payable
2540
Long-term Loans
2570
Deferred Income Tax
2580
Lease liability - Non Current
2640
Defined Benefit Liabilities - Non
Current
2645
Guarantee Deposits Received
25XX
Total Non-Current Liabilities
2XXX
Total Liabilities
Capital
3110
Capital stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated earnings
Other equity interests
3400
Other equity interests
3500
Treasury stock
3XXX
Total Equities
Major Commitments and Contingencies
Major Events after Financial Statement

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

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Chairperson: Sean Chen

Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

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Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

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Unit: NT$Thousand
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Date

3X2X Total Liabilities and Equities

$ 11,543,544 100 $ 7,592,813 100

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

Chairperson: Sean Chen

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Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

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Taiwan Mask Corporation Standalone Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

Items	2021 2020 Notes Amount % Amount % 7 $ 2,773,339 100 $ 2,175,018 100 6(5) ( 1,454,152) ( 52)( 1,323,825)( 61) 1,319,187 48 851,193 39 6(26) (27) ( 56,719 ) ( 2) ( 57,533 ) ( 3) ( 459,279 ) ( 17) ( 187,251 ) ( 8) ( 64,936 ) ( 2) ( 67,060 ) ( 3) 12(2) ( 117) - 600 - ( 581,051) ( 21)( 311,244)( 14) 738,136 27 539,949 25 6(22) 3,264 - 11,402 1 6(23) 153,506 5 32,565 1 6(24) 81,799 3 ( 369,831 ) ( 17) 6(25) ( 55,918 ) ( 2) ( 27,744 ) ( 1) 442,208 16 560,549 26 624,859 22 206,941 10 1,362,995 49 746,890 35 6(28) ( 177,218) ( 6)( 62,993)( 3) 1,185,777 43 683,897 32 $ 1,185,777 43 $ 683,897 32 $ 1,189 - $ 424 - 1,189 - 424 -
4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling Expenses 6200 Administrative Expenses 6300 R&D Expenses 6450 Expected Credit Impairment (Loss) Gain 6000 Total Operating Expenses 6900 Operating profit Non-operating income and expenses 7100 Interest income 7010 Other Incomes 7020 Other Gains and Losses 7050 Financial Costs 7070 The share of subsidiaries, affiliates and joint venture profits and losses recognized by the equity method 7000 Total Non-Operating Incomes and Losses 7900 Earnings Before Tax 7950 Income Tax Expense 8000 Net income of current period from continuing operations 8200 Net Income (Loss) Other Comprehensive Incomes (Net) Components of other comprehensive income that will not be reclassified to profit or loss 8311 Re-measurements of defined benefit plan 8310 Total items that will not be reclassified subsequently to profit or loss Components of other comprehensive income that will

Items

2021
2020
Notes
Amount
%
Amount
%
7
$ 2,773,339
100
$ 2,175,018
100
6(5)
(
1,454,152) (
52)(
1,323,825)(
61)
1,319,187
48
851,193
39
6(26)
(27)
(
56,719 ) (
2) (
57,533 ) (
3)
(
459,279 ) (
17) (
187,251 ) (
8)
(
64,936 ) (
2) (
67,060 ) (
3)
12(2)
(
117)
-
600
-
(
581,051) (
21)(
311,244)(
14)
738,136
27
539,949
25
6(22)
3,264
-
11,402
1
6(23)
153,506
5
32,565
1
6(24)
81,799
3
(
369,831 ) (
17)
6(25)
(
55,918 ) (
2) (
27,744 ) (
1)
442,208
16
560,549
26
624,859
22
206,941
10
1,362,995
49
746,890
35
6(28)
(
177,218) (
6)(
62,993)(
3)
1,185,777
43
683,897
32
$ 1,185,777
43
$ 683,897
32
$ 1,189
-
$ 424
-
1,189
-
424
-

4000
Operating revenue
5000
Operating costs
5900
Gross profit
Operating expenses
6100
Selling Expenses
6200
Administrative Expenses
6300
R&D Expenses
6450
Expected Credit Impairment
(Loss) Gain
6000
Total Operating Expenses
6900
Operating profit
Non-operating income and
expenses
7100
Interest income
7010
Other Incomes
7020
Other Gains and Losses
7050
Financial Costs
7070
The share of subsidiaries,
affiliates and joint venture
profits and losses recognized by
the equity method
7000
Total Non-Operating Incomes
and Losses
7900
Earnings Before Tax
7950
Income Tax Expense
8000
Net income of current period
from continuing operations
8200
Net Income (Loss)
Other Comprehensive Incomes
(Net)
Components of other
comprehensive income that will
not be reclassified to profit or
loss
8311
Re-measurements of defined
benefit plan
8310
Total items that will not be
reclassified subsequently to
profit or loss
Components of other
comprehensive income that will

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

Chairperson: Sean Chen Managerial Officer: Lidon Chen Accounting Officer: Eve Yang

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Taiwan Mask Corporation Standalone Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand (Except for earnings per share)

3,143 3,143 $ 1,190,109 $	2,761 2,761 $ 687,082 $	-
		-
		32
		3.34
$	$	3.30

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

Chairperson: Sean Chen Managerial Officer: Lidon Chen Accounting Officer: Eve Yang ~15~

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Notes	For Capitalstock $ 2,527,136 - - - - - - - - - - - $ 2,527,136 $ 2,527,136 - - - - - - 29,599 - - - -	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings $ 322,777 $ 544,712 $ - $ 432,801 - - - 683,897 - - - 424 - - - 684,321 - 43,278 - ( 43,278 ) - - 2,666 ( 2,666 ) - - - ( 252,714 ) 37,081 - - - ( 11,799 ) - - ( 3,847 ) 88,273 - - - - - - - 3,566 - - - $ 439,898 $ 587,990 $ 2,666 $ 814,617 $ 439,898 $ 587,990 $ 2,666 $ 814,617 - - - 1,185,777 - - - 1,189 - - - 1,186,966 - 68,047 - ( 68,047 ) - - ( 2,666 ) 2,666 - - - ( 379,071 ) 216,415 - - - 55,622 - - - 27,526 - - ( 47,813 ) 169,174 - - - - - - -	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings $ 322,777 $ 544,712 $ - $ 432,801 - - - 683,897 - - - 424 - - - 684,321 - 43,278 - ( 43,278 ) - - 2,666 ( 2,666 ) - - - ( 252,714 ) 37,081 - - - ( 11,799 ) - - ( 3,847 ) 88,273 - - - - - - - 3,566 - - - $ 439,898 $ 587,990 $ 2,666 $ 814,617 $ 439,898 $ 587,990 $ 2,666 $ 814,617 - - - 1,185,777 - - - 1,189 - - - 1,186,966 - 68,047 - ( 68,047 ) - - ( 2,666 ) 2,666 - - - ( 379,071 ) 216,415 - - - 55,622 - - - 27,526 - - ( 47,813 ) 169,174 - - - - - - -	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings $ 322,777 $ 544,712 $ - $ 432,801 - - - 683,897 - - - 424 - - - 684,321 - 43,278 - ( 43,278 ) - - 2,666 ( 2,666 ) - - - ( 252,714 ) 37,081 - - - ( 11,799 ) - - ( 3,847 ) 88,273 - - - - - - - 3,566 - - - $ 439,898 $ 587,990 $ 2,666 $ 814,617 $ 439,898 $ 587,990 $ 2,666 $ 814,617 - - - 1,185,777 - - - 1,189 - - - 1,186,966 - 68,047 - ( 68,047 ) - - ( 2,666 ) 2,666 - - - ( 379,071 ) 216,415 - - - 55,622 - - - 27,526 - - ( 47,813 ) 169,174 - - - - - - -	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings $ 322,777 $ 544,712 $ - $ 432,801 - - - 683,897 - - - 424 - - - 684,321 - 43,278 - ( 43,278 ) - - 2,666 ( 2,666 ) - - - ( 252,714 ) 37,081 - - - ( 11,799 ) - - ( 3,847 ) 88,273 - - - - - - - 3,566 - - - $ 439,898 $ 587,990 $ 2,666 $ 814,617 $ 439,898 $ 587,990 $ 2,666 $ 814,617 - - - 1,185,777 - - - 1,189 - - - 1,186,966 - 68,047 - ( 68,047 ) - - ( 2,666 ) 2,666 - - - ( 379,071 ) 216,415 - - - 55,622 - - - 27,526 - - ( 47,813 ) 169,174 - - - - - - -	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings $ 322,777 $ 544,712 $ - $ 432,801 - - - 683,897 - - - 424 - - - 684,321 - 43,278 - ( 43,278 ) - - 2,666 ( 2,666 ) - - - ( 252,714 ) 37,081 - - - ( 11,799 ) - - ( 3,847 ) 88,273 - - - - - - - 3,566 - - - $ 439,898 $ 587,990 $ 2,666 $ 814,617 $ 439,898 $ 587,990 $ 2,666 $ 814,617 - - - 1,185,777 - - - 1,189 - - - 1,186,966 - 68,047 - ( 68,047 ) - - ( 2,666 ) 2,666 - - - ( 379,071 ) 216,415 - - - 55,622 - - - 27,526 - - ( 47,813 ) 169,174 - - - - - - -	Otherequityinterests	Otherequityinterests	Unit: NT$Thousan Treasury stock Total Equity ($ 835,332 ) $ 2,990,222 - 683,897 - 3,185 - 687,082 - - - - - ( 252,714 ) - 37,081 - ( 15,646 ) 307,654 395,927 ( 306,920 ) ( 306,920 ) - 3,566 ($ 834,598 ) $ 3,538,598 ($ 834,598 ) $ 3,538,598 - 1,185,777 - 4,332 - 1,190,109 - - - - - ( 379,071 ) - 246,014 - 55,622 - ( 20,287 ) 722,059 891,233 ( 828,884 ) ( 828,884 )	Unit: NT$Thousan Treasury stock Total Equity ($ 835,332 ) $ 2,990,222 - 683,897 - 3,185 - 687,082 - - - - - ( 252,714 ) - 37,081 - ( 15,646 ) 307,654 395,927 ( 306,920 ) ( 306,920 ) - 3,566 ($ 834,598 ) $ 3,538,598 ($ 834,598 ) $ 3,538,598 - 1,185,777 - 4,332 - 1,190,109 - - - - - ( 379,071 ) - 246,014 - 55,622 - ( 20,287 ) 722,059 891,233 ( 828,884 ) ( 828,884 )
		the Years Ended
		Capitalsurplus
			Legal reserve	Special reserve		Unappropriated earnings	Financial statement translation differences of foreign operations	Unrealized gain or loss on financial assets measured at fair value through other comprehensive income
6(20) 6(19) 6(18) 6(18) 6(18) 6(17) 6(18) 6(20) 6(19) 6(17) 6(18) 6(18) 6(18) 6(17)	$ 2,527,136 - - - - - - - - - - - $ 2,527,136 $ 2,527,136 - - - - - - 29,599 - - - -	$ 322,777 - - - - - - 37,081 ( 11,799 ) 88,273 - 3,566 $ 439,898 $ 439,898 - - - - - - 216,415 55,622 27,526 169,174 -	$ 544,712 - - - 43,278 - - - - - - - $ 587,990 $ 587,990 - - - 68,047 - - - - - - -	$ - - - - - 2,666 - - - - - - $ 2,666 $ 2,666 - - - - ( 2,666 ) - - - - - -	$ 432,801 683,897 424 684,321 ( 43,278 ) ( 2,666 ) ( 252,714 ) - ( 3,847 ) - - - $ 814,617 $ 814,617 1,185,777 1,189 1,186,966 ( 68,047 ) 2,666 ( 379,071 ) - - ( 47,813 ) - -		$ 794 - 2,761 2,761 - - - - - - - - $ 3,555 $ 3,555 - 3,143 3,143 - - - - - - - -	($ 2,666 ) - - - - - - - - - - - ($ 2,666 ) ($ 2,666 ) - - - - - - - - - - -	($ 835,332 ) - - - - - - - - 307,654 ( 306,920 ) - ($ 834,598 ) ($ 834,598 ) - - - - - - - - - 722,059 ( 828,884 )	$ 2,990,222 683,897 3,185 687,082 - - ( 252,714 ) 37,081 ( 15,646 ) 395,927 ( 306,920 ) 3,566 $ 3,538,598 $ 3,538,598 1,185,777 4,332 1,190,109 - - ( 379,071 ) 246,014 55,622 ( 20,287 ) 891,233 ( 828,884 )

Unit: NT$Thousand

Chairperson: Sean Chen

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The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

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==> picture [40 x 39] intentionally omitted <==

Managerial Officer: Lidon Chen ~16~

Accounting Officer: Eve Yang

Capital surplus - convertible bond stock options Acceptance of gifts from shareholders Payment of overdue unclaimed dividends to shareholders Balance as of 2021/12/31

Notes	For Capitalstock - - - $ 2,556,735	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings 406,616 - - - 586 - - - ( 9 ) - - - $ 1,315,828 $ 656,037 $ - $ 1,509,318	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings 406,616 - - - 586 - - - ( 9 ) - - - $ 1,315,828 $ 656,037 $ - $ 1,509,318	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings 406,616 - - - 586 - - - ( 9 ) - - - $ 1,315,828 $ 656,037 $ - $ 1,509,318	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings 406,616 - - - 586 - - - ( 9 ) - - - $ 1,315,828 $ 656,037 $ - $ 1,509,318	Taiwan Mask Corporation Standalone Changes of Equity Statements the Years Ended December 31, 2021 and 2020 Retained earnings Capitalsurplus Legal reserve Special reserve Unappropriated earnings 406,616 - - - 586 - - - ( 9 ) - - - $ 1,315,828 $ 656,037 $ - $ 1,509,318	Otherequityinterests	Otherequityinterests
		the Years Ended
		Capitalsurplus
			Legal reserve	Special reserve		Unappropriated earnings	Financial statement translation differences of foreign operations	Unrealized gain or loss on financial assets measured at fair value through other comprehensive income
6(18) 6(18) 6(18)	- - - $ 2,556,735	406,616 586 ( 9 ) $ 1,315,828	- - - $ 656,037		- - - $ -	- - - $ 1,509,318	- - - $ 6,698	- - - ($ 2,666 )	- - - ($ 941,423 )

Chairperson: Sean Chen

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The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

==> picture [45 x 48] intentionally omitted <==

==> picture [40 x 39] intentionally omitted <==

Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

~17~

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

Cash Flow from Operating Activities
Net Income(Loss) Before Tax
Adjustments to Reconcile Net Income to Net Cash
Flow from Operating Activities
Revenues and Expenses
Depreciation

Amortization

Expected Credit Impairment loss (reversal
gain)

Interest income

Interest Incomes

Loss (gain) on financial assets measured at
fair value through profit or loss

Loss (gain) on disposal of investments

Impairment Loss of Financial Assets

Dividend income

Share-based payment transaction
The Share of Subsidiaries and Affiliates
Profits and Losses Recognized by the Equity
Method
Gains (losses) on Disposal of Property, Plants
and Equipment
The Changes of Assets/ Liabilities related to
Operating Activities
The Changes of Assets/ Liabilities related to
Operating Activities
Mandatory financial assets at fair value
through profit or loss
Contract Assets
Notes Receivables
Accounts Receivables
Accounts Receivables－Related Parties
Other Receivables
Other Receivables－Related Parties
Inventories
Prepayments
Other Current Assets
Net Changes of Liabilities related to
Operating Activities
Contract Liabilities
Accounts Payable
Other Payables
Other Current Liabilities
Defined Benefit Liabilities
Net Cash In-Flow from Operating
Interest Received
Dividends Received

Notes
January 1 to
December31,2021
January 1 to
December31,2020
$ 1,362,995 $ 746,890
6(26)
355,573
216,207
6(26)
6,105
3,302
12(2)
117 (
600 )
6(22)
(
3,264 ) (
11,402 )
6(25)
55,918
27,744
6(24)
(
85,115 )
254,506
6(24)
(
393 )
6,642
6(24)
-
98,416
6(23)
(
3,288 )
-
119,544
88,273
(
442,208 ) (
560,549 )
-
72
(
888,218 ) (
67,449 )
(
36,957 ) (
78,897 )
29 (
29 )
(
168,078 ) (
56,093 )
3,891 (
33 )
(
3,756 )
6,660
- (
3,068 )
967
26,889
26,745 (
36,695 )
(
323 )
759
1,529 (
179 )
(
27,592 )
13,167
191,147
29,968
25,271 (
4,554 )
(
2,013 ) (
1,626 )
488,626
698,321
3,245
11,688
3,288
-

~18~

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand

Interest Paid Income Tax Paid Net Cash In-Flow from Operating Activities	Notes January 1 to December31,2021 January 1 to December31,2020 ( 56,986 ) ( 26,774 ) ( 106,485 ) ( 29,470 ) 331,688 653,765

(Continued)

~19~

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Cash Flow from Investment Activities
Acquisition of Amortized Cost Financial Assets
Acquisition of investment property by the Equity
Method
Return of capital by investee company
Other Receivables－Related Parties
Acquisition of Property, Plants and Equipment

Disposal of Property, Plants and Equipment
Acquisition of Intangible Assets
Decrease (Increase) of Refundable Deposits
Net Cash Outflow from Investing
Activities
Cash Flows from Financing Activities
Increase of Short Term Loan

Redemption of Short Term Loan

Increase of Long Term Loan

Redemption of Long Term Loan

Issue of convertible bonds

Distribution of cash dividends

Treasury stocks transfer to employees
Treasury stock buyback cost
Redemption of Lease Principal

Increase in Guarantee Deposits Received

Transfer of unclaimed dividends as Additional
Paid-in Capital
Payment of overdue unclaimed dividends
Net Cash In-Flow (Out-Flow) from
Funding Activities
Increase (Decrease) of Cash and Cash Equivalents

Unit: NT$Thousand
Notes
January 1 to
December31,2021
January 1 to
December31,2020
( $ 3 ) ( $ 6,004 )
(
367,671 ) (
300,000 )
180,000
8,206
609,195 (
94,782 )
6(30)
(
1,562,684 ) (
2,011,023 )
-
62
(
12,257 ) (
3,491 )
(
4,956 )
1,682
(
1,158,376 ) (
2,405,350 )
6(31)
2,960,484
2,550,534
6(31)
(
3,549,084 ) (
1,801,934 )
6(31)
1,891,000
1,332,000
6(31)
(
962,427 ) (
55,000 )
6(31)
2,297,099
-
6(19)
(
379,071 ) (
252,714 )
722,059
307,591
(
828,884 ) (
306,920 )
6(31)
(
19,912 ) (
17,016 )
6(31)
436
3,359
-
3,566
(
9 )
-
2,131,691
1,763,466
1,305,003
11,881

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

==> picture [40 x 39] intentionally omitted <==

Chairperson: Sean Chen Managerial Officer: Lidon Chen

Accounting Officer: Eve Yang

~20~

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Unit: NT$Thousand January 1 to January 1 to Notes December 31, 2021 December 31, 2020 Beginning Balance of Cash and Cash Equivalents 493,838 481,957 Ending Balance of Cash and Cash Equivalents $ 1,798,841 $ 493,838

The accompanying notes are an integral part of the standalone financial statements and should be read in conjunction.

==> picture [43 x 43] intentionally omitted <==

==> picture [40 x 39] intentionally omitted <==

Managerial Officer: Lidon Chen

==> picture [41 x 47] intentionally omitted <==

Chairperson: Sean Chen

Accounting Officer: Eve Yang

~21~

Taiwan Mask Corporation Notes to the Standalone Financial Statements 2021 and 2020

Unit: NT$Thousand (Unless otherwise specified)

(I) Company history

Taiwan Mask Corporation (hereinafter referred to as the "Company") was established on October 21, 1988, and started its operations in March 1989. The Company was approved by the shareholders meeting on June 12, 2000 to acquire Shin-Tai Technology Co., Ltd., on the merger record date of December 1, 2000, with the Company being the surviving entity. The Company mainly engage in the research, development, manufacturing and sales of photomask, providing technical assistance, consultation, inspection and repair of the abovementioned products.

(II) Date and procedures for passing the financial report

The accompanying standalone financial statements were approved and authorized for issuance by the Board of Directors on March 4, 2022.

(III) Application of New and Revised International Financial Reporting Standards

(1) The impact from adopting the newly released and revised International Financial Reporting Standards recognized by the Financial Supervisory Commission (FSC).

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards recognized by the Financial Supervisory Commission in 2021:

the Financial Supervisory Commission in 2021:
	Effective Date Issued by
Newlyreleased / corrected / amended standards and interpretations	IASB
Amendment to IFRS 4, "Extension to Temporary Exemption from	January 1, 2021
Application of IFRS 9"
IFRS 9, IAS 39, IFRS 7, IFRS 4 and Phase II amendment to interest	January 1, 2021
rate benchmark reform of IFRS 16.
Amendment to IFRS 16 for “Rent Concessions in the Coronavirus	April 1, 2021 (Note)
Pandemic after June 30, 2021”

Note: The FSC allows the application in advance starting January 1, 2021.

The Company believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

~22~

(2) Impact of the newly released and amended IFRS recognized by the FSC not yet adopted by the Company.

pact of the newly released and amended IFRS recognized by the FSC mpany. The following table summarizes the applicable newly released, standards and interpretations of the International Financial Reporting the Financial Supervisory Commission in 2022:	not yet adopted by the corrected and amended Standards recognized by
	Effective Date Issued
Newlyreleased / corrected / amended standards and interpretations	byIASB
IFRS 3 amendment, "Reference to Conceptual Framework"	January 1, 2022
Amendment to IAS 16 - "Property, Plant and Equipment: Proceeds	January 1, 2022
before Intended Use".
Amendment to IAS 37 "Onerous Contracts - Cost of Fulfilling a
Contract"	January 1, 2022
Annual improvements to 2018 - 2020 cycle	January 1, 2022

The Company believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

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

The following table summarizes the applicable newly released, corrected and amended standards and interpretations of the International Financial Reporting Standards issued by the IASB but not yet recognized by the FSC:

IASB but not yet recognized by the FSC:
	Effective Date Issued by
Newlyreleased / corrected / amended standards and interpretations	IASB
IFRS 10 and IAS 28 amendments, Sale or contribution of assets	To be determined by the
between an investor and its associate or joint venture	IASB
IFRS 17 - Insurance contracts	January 1, 2023
Amendment to IFRS 17 - Insurance contracts	January 1, 2023
Amendments to IFRS 17 "First-time Adoption of IFRS 17 and IFRS	January 1, 2023
9 - Comparative Information"
Amendment to IAS 1 "Classification of Liabilities as Current or	January 1, 2023
Non-Current"
Amendment to IAS 1 - "Disclosure of Accounting Policies"	January 1, 2023
Amendment to IAS 8 - "Definition of Accounting Estimates"	January 1, 2023
Amendments to IAS 12, "Deferred Income Taxes Related to Assets	January 1, 2023
and Liabilities Arising from a Single Transaction"

The Company believes that the adoption of aforementioned IFRSs will not have a significant effect on the financial position and performance.

(IV) Summary of significant accounting policies

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

1. Compliance statement

These standalone financial statements of the Company have been prepared in accordance with the "Rules Governing the Preparation of Financial Statements by Securities Issuers".

~23~

2. Basis of Preparation

Except for the following items, these standalone financial statements have been prepared under the historical cost convention.
(1) Financial assets and financial liabilities at fair value through profit or loss (including derivatives).
(2) Financial assets at fair value through other comprehensive income
(3) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the standalone financial statements are disclosed in Note 5.

3. Foreign currency translation

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (the "functional currency"). The standalone financial statements are presented in New Taiwan dollars, which is the Company's functional currency and reporting currency.

Foreign currency transactions and balances
(1) Foreign currency transactions are translated into the functional currency using spot exchange rate 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 recognized in profit or loss in the period in which they arise.
(2) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated using spot exchange rate at the balance sheet date. Exchange differences arising from re-translation at the balance sheet date are recognized in profit or loss.
(3) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated using spot exchange rate at the balance sheet date. Their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated using spot exchange at the balance sheet date. Their translation differences are recognized in other comprehensive income. For those which are not measured at fair value, they measured by the historical exchange rate of the initial transaction date.
(4) All foreign exchange gains and losses are presented in the statement of comprehensive income within "Other gains and losses".
Translation of foreign operations
(1) The operating results and financial position of all corporate group entities and affiliates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- A. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet.
- B. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period.

~24~

C. All resulting exchange differences are recognized in other comprehensive income.
(2) When the foreign operation that is partially disposed of or sold is a subsidiary, the accumulated conversion difference recognized as other comprehensive income is reattributed to the foreign operation's non-controlling interests on a pro rata basis. However, even if the Company retains part of its equity in the former subsidiary, but has lost control of the subsidiary of the foreign operation, it will be treated with as a disposal of the entire equity of the foreign operation
(3) Goodwill and fair value adjustments arising on acquisition of a foreign entity are regarded as assets and liabilities of the foreign entity, and are translated at the closing rate.

4. Classification of current and non-current items

Assets that meet one of the following criteria are classified as current assets:
(1) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
(2) Assets held mainly for trading purposes.
(3) Assets that are expected to be realized within twelve months from the balance sheet date.
(4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.

Assets that do not meet the above criteria are considered non-current.

Liabilities that meet one of the following criteria are classified as current liabilities:
(1) Liabilities that are expected to be paid off within the normal operating cycle.
(2) Assets held mainly for trading purposes.
(3) Liabilities that are to be paid off within twelve months from the balance sheet date.
(4) 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.

Liabilities that do not meet the above criteria are considered non-current.

5. Financial assets at fair value through profit and loss

Refer to the financial assets that are not measured at amortized cost, or are measured at fair value through other comprehensive gain or loss.
On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
The Company measures financial assets at fair value in initial recognition. The related transaction costs are recognized in profit and loss. These financial assets are subsequently re-measured and stated at fair value, and any changes in the fair value of these financial assets are recognized in profit or loss.
When the right to receive dividends is established, the economic benefits associated with the dividends are likely to flow in, and the amount of dividends can be reliably measured, the Company recognizes dividend income in profit or loss.

6. Financial assets measured at amortized cost

Refer to those that meet the following criteria at the same time:

~25~

(1) The objective of the business model is achieved by collecting contractual cash flows.
(2) The assets’ contractual cash flows solely represent payments of principal and interest.
The Company holds time deposits that are not considered cash equivalents. Due to the short holding period, the impact of discounting is insignificant and is measured by the amount of investment.

7. Accounts and notes receivable

Refers to accounts and notes that have been unconditionally charged for the right to exchange the value of the consideration due to the transfer of goods or services.
The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

8. Impairment Loss of Financial Assets

Regarding debt instruments measured at FVTOCI, financial assets measured at amortized cost, accounts receivable or contract assets and lease receivables that contain significant financing components, the Company, on each balance sheet date, considers all reasonable and supportable information (including forward-looking ones) and measure the loss allowance based on the 12month expected credit losses for those that do not have their credit risk increased significantly since initial recognition. For those that have increased significantly since initial recognition, the loss allowance is measured based on the full lifetime expected credit losses. A loss allowance for full lifetime expected credit losses is also required for contract assets or trade receivables that do not constitute a financing transaction.

9. De-recognition of financial assets

A financial asset is derecognized when the Company's rights to receive cash flows from the financial assets have expired.

10. Lessor's lease transaction -- Operating lease

Lease income from operating leases, less any incentives given to the lessee, is amortized in current profit or loss on a straight-line basis over the lease term.

11. Inventories

Inventories are measured at the lower of cost or net realizable value, and the cost is determined by weighted-average method. The cost of finished goods and work-in-progress comprises raw materials, direct labor, other direct costs and related production overheads (amortized according to normal production capacity), but excludes borrowing costs. At the end of year, inventories are evaluated at the lower of cost or net realizable value. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable costs of completion and selling expenses.

12. Investments accounted for using equity method -- Subsidiaries and associates

Subsidiaries are all entities (including structured 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.
Unrealized gains or losses on transactions between Company and its subsidiaries are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to

~26~

ensure consistency with the policies adopted by the Company.

The Company recognized the profit and loss upon the acquisition of subsidiaries as the current profit and loss. Other comprehensive profit and loss after the acquisition are recognized as the other comprehensive profit and loss. If the Company's recognized profit and loss of the subsidiaries equal to or exceed the equity in the subsidiaries, the Company will continue to recognize the loss in proportion to its shareholding.
Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are equity transactions, and they are considered as transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is directly recognized in equity.
When the Company loses control of a subsidiary, the Company remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Company loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
Associates refer to entities over which the Company has significant influence but is not in control. In general, the associates may have more than 20% of their voting shares directly or indirectly owned by the Company. The Company accounts for its investment in associates using the equity method, and the investment is initially recognized at cost.
The Company recognizes the profit and loss upon the acquisition of associates as the current profit and loss. Other comprehensive profit and loss after the acquisition are recognized as the other comprehensive profit and loss. 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 will not recognize further losses, unless it has incurred legal or constructive obligations or make payments on behalf of the associate.
If an associate has changes in equity not from profit or loss or other comprehensive income, and such changes do not affect the Company's shareholding in the associate, the Company will recognize all changes in equity attributable to the Company's share of the associate as "capital surplus" according to the shareholding percentage.
Unrealized gains on transactions between the Company and associates are eliminated to the extent of the Company's interest in the associates. Unrealized 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.
In the event that an associate issues new shares and the Company does not subscribe to or acquire the new shares in proportion, which results in a change to the Company's shareholding percentage but the Company maintains a significant influence on the associate, the increase or decrease of the Company's share of equity interest is the

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adjustment of "capital surplus" and "investments accounted for under the equity method". If the investment percentage is reduced, in addition to the above adjustments, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionally on the same basis as would be required if the relevant assets or liabilities were disposed of.

Pursuant to the “Guidelines Governing the Preparation of Financial Statements by Securities Issuers”, the profit or loss during the period and other comprehensive income presented in consolidated financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to owners of the parent presented in the financial statements prepared on a consolidated basis, and the owners' equity presented in the parent company only financial statements shall be the same as the equity attributable to owners of the parent presented in the financial statements prepared on a consolidated basis.

13. Property, plant and equipment

Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
Subsequent costs are included in the asset's carrying amount or recognized 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 costs of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
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.
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. 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 changes are accounted for as a change in estimate under IAS 8, "Accounting Policies, Changes in Accounting Estimates and Errors," from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 3 years to 56 years Machinery and equipment 5 years to 14 years Transportation equipment 6 years Office equipment 3 years to 6 years

14. Leasing agreements (lessee) - Right-of-use assets/lease liabilities

Leases are recognized as right-of-use assets and lease liabilities at the date at which the leased assets are available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognized as expenses on a straight-line basis over the lease term.
Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease

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payments include fixed payments, less any lease incentives receivables.

The Company subsequently measures the lease liability at amortized cost using the interest method and recognizes interest expense over the lease term. The lease liability is remeasured and the amount of re-measurement is recognized 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.

At the commencement date, the right-of-use asset is recognized at cost which includes:
(1) The amount of initial measurement of lease liability.
(2) Any lease payments made at or before the commencement date.
(3) Any original direct costs incurred.
(4) The estimated cost of dismantling, removing the underlying asset and restoring its location, or restoring the underlying asset to the condition required in the lease terms and conditions.

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 service life or the end of lease term. When the lease liability is remeasured, the amount of re-measurement is recognized as an adjustment to the right-of-use asset.

15. Real estate investment

Investment properties are initially measured at cost, and may be subsequently measured using a cost model. Except for land, the service life is recognized on a straight-line basis of depreciation and is about 45 years.

16. Intangible assets

Computer software is recognized at the cost of acquisition, and amortized based on the estimated useful life of 3 years based on the straight-line method.

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 recognized 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 disposal cost 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 amortized historical cost would have been if the impairment had not been recognized.

18. Borrowings

Refers to long- and short-term funds borrowed from banks. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.

19. Accounts and notes receivable

Refers to debts incurred as a result of the purchase of raw materials, goods or services and the notes payable due to business and non-business purposes.

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The short-term accounts and notes payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
Convertible bonds payable

The convertible bonds payable issued by the Company are embedded with conversion options (i.e., the holder's right to choose to convert to the Company's common stock for a fixed amount of shares), put options and call options. The issuance price is classified as financial assets, financial liabilities or equity at the time of initial issuance according to the terms of issuance, which is treated as follows:

Embedded put options and call options: "Financial assets or liabilities at fair value through profit or loss" are recorded at their net fair value on initial recognition; subsequently, "Gain or loss on financial assets (liabilities) at fair value through profit or loss" is recognized on the balance sheet date, with the difference valued at current fair value.
Master contract of corporate bonds: The difference between the fair value of the corporate bonds and the redemption value is recognized as a premium or discount on the corporate bonds payable at the time of original recognition; subsequently, it is recognized in profit or loss as an adjustment to "finance costs" using the effective interest method under the amortization procedure over the circulation period.
Embedded conversion options (which meet the definition of equity): On initial recognition, the remaining value of the issue amount, net of the above "financial assets or liabilities at fair value through profit or loss" and "corporate bonds payable", is recorded as "capital surplus - stock options" and is not subsequently remeasured.
Any directly attributable transaction costs of the issuance are allocated to each component of liabilities and equity in proportion to the original carrying amount of each component mentioned above.
Upon conversion, the components of liabilities (including "corporate bonds payable" and "financial assets or liabilities at fair value through profit or loss") are subsequently measured according to their respective classifications, and the carrying amount of the aforementioned components of liabilities is added to the carrying amount of "capital surplus - stock options" as the issuance cost of common stock exchanged.

21. Employee benefits

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 recognized as expenses in that period when the employees render service.

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2. Pension

(1) Defined contribution plans

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

(2) Defined-benefit plans
A. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized 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 the current interest rates of government bonds (at the balance sheet date) consistent with the currency and period of the defined-benefit plan instead.
B. Re-measurements arising on defined-benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as 。
retained earnings.
C. The related expenses of the past service cost are immediately recognized as profit or loss.

3. Termination benefits

Refer to when companies decide to terminate the employees before the normal retirement date, or when employees decide to accept the benefits in exchange for the termination. The Company recognizes expenses when it is no longer able to withdraw the offer of termination benefits or when the relevant restructuring costs are recognized, whichever is earlier. Liabilities that are not expected to be paid off within twelve months from the balance sheet date should be discounted.

Employees' bonuses and directors' and supervisors' remuneration

Employees' bonuses and directors' and supervisors' remuneration are recognized 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.

22. Share-based payment to employees

The share-based payment agreement for delivery of equity is a transaction in which employees' labor service received as consideration for the Company's equity instrument at fair value, and it is recognized as compensation costs during the vesting period, and the equity is adjusted accordingly. The fair value of equity instrument shall reflect the effects of vesting and non-vesting conditions of market value. The recognized remuneration costs are adjusted in accordance with the expected service conditions to be met and the non-vesting market value conditions, until the final recognized amount is recognized with the vesting amount on the vesting date.

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23. Income tax

The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted by 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 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.
Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, 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 income 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 income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.

24. Capital

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.
When the Company buys back the issued shares, the consideration paid, including any directly attributable incremental costs, is recognized as a deduction of shareholders’ equity with the net amount after tax. When the purchased shares are subsequently reissued, the difference between the consideration received and the book value after deducting any directly attributable incremental costs and the impact of income tax is recognized as an adjustment to shareholders’ equity.

25. Dividend distribution

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. Stock dividends are recorded as dividends to be distributed and transferred to be common stocks and share premium on the record date of issuance of new shares.

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26. Recognized revenue

The Company manufactures and sells photomasks. The sales revenue is recognized when the control of the product is transferred to the customer. That is, once products are delivered to customers, the customers have discretion on the channel and price of product sales, and the Company has no outstanding performance obligations that may affect customers' acceptance of the products. The delivery of products occurs when products are shipped to a designated location and the risk of obsolescence and loss has been transferred to customers, and the customers accept the products in accordance with the sales contract or have objective evidence that all criteria have been met.
The time interval between the transfer products or services promised to customers and the customers' payment has not exceeded one year, so the Company has not adjusted the transaction price to reflect the time value of money.
Accounts receivable are recognized when goods are delivered to customers. The Company has unconditional rights to the contract price, and will be able to collect the amount from the customers after the time has passed.

27. Government subsidies

Government subsidies are recognized at fair value once it is reasonably convinced that the Company complies with the conditions for subsidies and will be receiving the subsidies. If the nature of the government subsidies is to compensate the expenses incurred by the Company, the government subsidies are recognized as current gains and losses on a systematic basis during the period in which the related expenses are incurred.

(V) Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

The preparation of these standalone financial statements requires the management to make critical judgments 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. Please see the following explanation of critical accounting judgments and key sources of estimation and uncertainty:

(1). Important judgments adopted by the accounting policies

Not applicable.

(2). Critical accounting estimates and assumptions

Evaluation of Inventories

The Company is primarily engaged in photomask and integrated circuit services in the semiconductor industry. Due to rapid technological innovations, short life-cycle and competition within the photomask industry, the risk of price fluctuations, Loss on decline in value of inventories and obsolescence is higher than that of other industries. The Company measures inventory based on the lower of cost and net realizable value. For inventories that are older than a certain period of age or are outdated and obsolete, the Company must use judgment and estimation to determine the net realizable value of the inventory on the balance sheet date. The valuation of inventory may undergo major changes.

As of December 31, 2021, the book value of the Company's inventory was NT$109,889.

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(VI) Statements of main accounting items

(1). Cash

ments of main accounting items Cash
	December 31,2021 December 31,2020
Demand Deposit	$ 948,521 $ 452,038
Time deposits	850,320 41,800
Total	$ 1,798,841 $ 493,838

The Company associates 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.
The Company has not pledged cash to others.
(2). Financial assets at fair value through profit and loss

Financial assets at fair value through profit and loss	Financial assets at fair value through profit and loss
Items December 31,2021		December 31,2020
Current items:
Shares of listed and OTC company $ 830,575		$ -
Convertible bond call/put options 5,000		-
835,575		-
Valuation adjustment ( 11,017 )		-
	$ 824,558	$ -
Non-current items:
Financial assets at fair value through	$ 251,343	$ 197,506 17,716
profit or loss for stocks of publicly traded
and OTC companies
Not listed, OTC or emerging stock board
stocks	11,756
	263,099	215,222
Valuation adjustment	33,701 ( 67,590 )
	$ 296,800 $ 147,632

Financial assets at fair value through profit or loss are detailed as follows:

Financial assets at fair value through profit or	loss are detailed as follows:
	2021 2020
Mandatory financial assets at fair value
through profit or loss
Shares of listed and OTC company	$ 85,508 ( $ 254,506 )
Not listed, OTC or emerging stock board	7,590 ( 25,995 )
stocks
	$ 93,098 ( $ 280,501 )

The Company has financial assets at fair value through profit or loss pledged to others.
Please see Note 12 (2) and (3) for the price risk and fair value information related to financial assets at fair value through profit or loss.
(3). Financial assets measured at amortized cost

assets at fair value through profit or loss. Financial assets measured at amortized cost
Items	December 31,2021	December 31,2020
Current items:
Time deposits	$ 3,000	$ 3,000
Non-current items:
Time deposits	$ 35,425	$ 35,422

Financial assets at amortized cost is recognized in the profit or loss shown as follows:

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	2021 2020
Interest income	$ 118 $ 138

While not considering the collaterals or other credit enhancements, the financial assets at amortized cost held by the Group had the maximum exposure of credit risk at $38,425 and $38,422 as of December 31, 2021 and 2020, respectively.
Please see Note 8 how the Company provides financial assets at amortized cost as a pledged collateral.
(4). Notes and accounts receivable

Notes and accounts receivable
	December 31,2021	December 31,2020
Notes Receivables	$ -	$ 29
Accounts Receivables	$ 594,052	$ 425,974
Accounts Receivables－Related Parties	5,112	9,003
	599,164	434,977
Less: Loss allowance ( 1,085 )		( 968 )
	$ 598,079	$ 434,009

Aging of accounts receivable notes receivable is as follows:

	December	31,2021	December 31,2020
	Accounts	Notes	Accounts Notes
	Receivable s	Receivable s	Receivable s Receivable s
Not past due	$ 504,835	$ -	$ 381,537 $ 29
Within 30 days	81,417	-	43,655 -
31-90 days	11,447	-	8,267 -
91-180 days	1,465	-	1,362 -
More than 181 dayspast due	-	-	156 -
	$ 599,164	$ -	$ 434,977 $ 29

The above is an aging report based on the number of days past due.

As of December 31, 2021 and 2020, accounts receivable and notes receivable were from contracts with customers. The balances of notes and accounts receivable as of January 1, 2020 was NT$378,851
While not considering the collaterals or other credit enhancements, the accounts receivable held by the Company had the maximum exposure of credit risk at $598,079 and $434,009, respectively, as of December 31, 2021 and 2020.
Please refer to Note 12 (2) for the information on credit risk of accounts receivable.

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(5). Inventories

(5). Inventories	Inventories
December 31,2021 Cost (Gain from reversal of) loss allowance on decline in market value of inventories Book value Raw materials $ 105,224 ( $ 6,002 ) $ 99,222 Work in process 9,596 - 9,596 Finishedgoods 1,071 - 1,071 Total $ 115,891 ( $ 6,002 ) $ 109,889 December 31,2020 Cost (Gain from reversal of) loss allowance on decline in market value of inventories Book value Raw materials $ 107,837 ( $ 5,212 ) $ 102,625 Work in process 7,264 - 7,264 Finishedgoods 967 - 967 Total $ 116,068 ( $ 5,212 ) $ 110,856 The cost of inventories recognized as losses by the Company. 2021 2020 Cost of goods sold $ 1,453,362 $ 1,323,738 Loss on falling prices of inventory and inventoryobsolescence 790 87 $ 1,454,152 $ 1,323,825 (6). Investment under Equity Method 2021 2020 SunnyLake Park International Holdings, Inc. $ 5,139 $ 5,355 Youe Chung Capital Corporation 1,776,924 1,359,028 Innova Vision INC. 235,591 520 Advagene Biopharma Co., Ltd. 63,578 69,308 Miracle Technology Co., LTD. 430,778 384,228 Weida Hi-Tech Company 87,898 85,425 $ 2,599,908 $ 1,903,864		December 31,2021
		Cost (Gain from reversal Book value
		of) loss allowance on decline in market value of inventories
	Raw materials	$ 105,224 ( $ 6,002 ) $ 99,222
	Work in process	9,596 - 9,596
	Finishedgoods	1,071 - 1,071
	Total	$ 115,891 ( $ 6,002 ) $ 109,889

			December 31,2020
		Cost	(Gain from reversal Book value
			of) loss allowance on decline in market value of inventories
	Raw materials	$ 107,837 ( $ 5,212 ) $ 102,625
	Work in process	7,264 - 7,264
	Finishedgoods	967 - 967
	Total	$ 116,068 ( $ 5,212 ) $ 110,856
			2021 2020
	Cost of goods sold		$ 1,453,362 $ 1,323,738
	Loss on falling prices of inventory and
	inventoryobsolescence		790 87
			$ 1,454,152 $ 1,323,825
	Investment under Equity Method
			2021 2020
	SunnyLake Park International Holdings, Inc.		$ 5,139 $ 5,355
	Youe Chung Capital Corporation		1,776,924 1,359,028
	Innova Vision INC.		235,591 520
	Advagene Biopharma Co., Ltd.		63,578 69,308
	Miracle Technology Co., LTD.		430,778 384,228
	Weida Hi-Tech Company		87,898 85,425
			$ 2,599,908 $ 1,903,864

For information on the Company's subsidiaries, please refer to Note 4 (3) of 2021 consolidated financial statements.
Innova Vision issued new shares for a cash capital increase on May 3, 2019. The Company did not subscribe to shares to keep up with the shareholding, which caused the shareholding to drop to 17.81%, thus losing the control of the firm. Therefore, the Company ceased to invest in Innova Vision using the equity method from that date. Please refer to Note 6 (30) of the 2020 consolidated financial statement for details. Innova Vision held an extraordinary general meeting of shareholders on December 16, 2020 to elect new directors. The Company’s subsidiary Youe Chung Capital Corporation won all of the director seats, obtaining substantial control of this firm, and then negotiated with other shareholders to acquire their shares, accumulating the shareholding to 60.02%. From that date on, the investment in that firm adopted the equity method. Please see Note 6 (29) of the Company's 2020 consolidated financial statements for details. As

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for December 31, 2021, the Company's and the subsidiary's shareholding of Innova Vision was 91.76%.

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(7). Property, plant and equipment

Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment	Property, plant and equipment
Buildings and structures (includingland) Machinery and equipment Office equipment Transportation equipment					Other equipment	Unfinished construction and equipment under acceptance Total
January 1, 2021
Cost $ 1,556,325 $ 2,678,584 $ 22,659 $ 2,759					$ -	$ 135,173 $ 4,395,500
Accumulated depreciation ( 566,010 ) ( 1,070,324 ) ( 11,213 ) ( 1,750 )					-	- ( 1,649,297 )
	$ 990,315	$ 1,608,260	$ 11,446	$ 1,009	$ -	$ 135,173	$ 2,746,203
2021
January 1	$ 990,315	$ 1,608,260	$ 11,446	$ 1,009	$ -	$ 135,173	$ 2,746,203
Additions	288,982	478,829	8,446	2,876	10,942	135,470	925,545
Depreciation ( 76,853 ) ( 234,410 ) ( 5,144 ) ( 831 ) ( 1,248 )						- ( 318,486 )
Reclassification - Cost ( 152,341 )		57,614	-	-	- (	120,894 ) ( 215,621 )
Reclassification -	40,824						40,824
Accumulated depreciation		-	-	-	-	-
December 31	$ 1,090,927	$ 1,910,293	$ 14,748	$ 3,054	$ 9,694	$ 149,749	$ 3,178,465

December 31,
2021
Cost	$ 1,692,966	$ 3,215,027	$ 31,105	$ 5,635	$ 10,942	$ 149,749	$ 5,105,424
Accumulated depreciation ( 602,039 ) ( 1,304,734 ) ( 16,357 ) ( 2,581 ) ( 1,248 )						- ( 1,926,959 )
	$ 1,090,927	$ 1,910,293	$ 14,748	$ 3,054	$ 9,694	$ 149,749 $ 3,178,465

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Buildings and structures (includingland) Machinery and equipment Office equipment	Buildings and structures (includingland) Machinery and equipment Office equipment	Buildings and structures (includingland) Machinery and equipment Office equipment	Buildings and structures (includingland) Machinery and equipment Office equipment	Transportation equipment	Unfinished construction and equipment under acceptance Total	Unfinished construction and equipment under acceptance Total
January 1, 2020
Cost $ 1,002,772 $ 1,545,698 $ 15,235				$ 2,189	$ 253,644 $ 2,819,538
Accumulated depreciation ( 529,905 ) ( 911,358 ) ( 6,969 ) (				1,338 )	- ( 1,449,570 )
	$ 472,867	$ 634,340	$ 8,266	$ 851	$ 253,644	$ 1,369,968
2020
January 1	$ 472,867	$ 634,340	$ 8,266	$ 851	$ 253,644	$ 1,369,968
Additions	1,086,372	903,958	7,424	570	123,585	2,121,909
Disposals - Cost	- ( 89 )		-	-	- ( 89 )
Disposal -					- 27
Accumulated depreciation	- 27		-	-
Depreciation ( 37,015 ) ( 158,993 ) ( 4,244 ) (				412 )	- ( 200,664 )
Reclassification - Cost ( 532,819 )		229,017	-	- (	242,056 ) ( 545,858 )
Reclassification -	910					910
Accumulated depreciation		-	-	-	-
December 31	$ 990,315	$ 1,608,260	$ 11,446	$ 1,009	$ 135,173	$ 2,746,203

December 31, 2020
Cost	$ 1,556,325	$ 2,678,584	$ 22,659	$ 2,759	$ 135,173	$ 4,395,500
Accumulated				1,750 )	- ( 1,649,297 )
	$ 990,315	$ 1,608,260	$ 11,446	$ 1,009	$ 135,173 $ 2,746,203

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The capitalized borrowing costs for property, plant and equipment and their interest rates are as follows:

as follows:
		2021			2020
Capitalized amount	$		-	$	2,364
Range of capitalized interest			-		1.797%

The major components of the Company's houses and buildings include land, buildings and factory renovation projects. Except for land, they are depreciated for 3 to 56 years.
Information on property, plant and equipment pledged to others as collateral is provided in Note 8.
The abovementioned property, plant and equipment of the Company are for self-use.
(8). Leasing arrangements - lessee
The underlying assets leased by the Company include land, buildings and company vehicles, and the leasing contracts are typically made for periods of 3 to 20 years. Lease contracts are negotiated separately and include a variety of terms and conditions. There are no restrictions for the leased assets, except that they cannot be used as loan collaterals.
The leased underlying assets were other equipment of low value.
The carrying amount of right-of-use assets and the depreciation charge are as follows:

	December 31,2021	December 31,2020
	Book value	Book value
Land	$ 526,294	$ 390,879
Buildings and structures	1,003	1,926
Transportation equipment (company	9,385	3,064
vehicles)
Other equipment	26,733	-
	$ 563,415	$ 395,869

	2021	2020
	Depreciation	Depreciation
Land	$ 17,498	$ 12,341
Buildings and structures	984	876
Transportation equipment (company
vehicles)	2,883	2,326
	$ 21,365	$ 15,543

For 2021 and 2020, the increases of right-of-use assets were $193,652 and $93,052, respectively. The decreases of right-of-use assets of the Company in 2021 and 2020 were $4,741 and $1,211, respectively.
The information on profit or loss items related to lease contracts is as follows:


Items affecting current profit and loss
Interest expenses on lease liabilities	$	5,596	$	3,919
Lease of low-value assets		266		208

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The Company's total cash outflow on leases for 2021 and 2020 was $25,774 and $21,143, respectively.
Options to extend or terminate leases
- In determining lease terms, the Company into consideration all facts and circumstances that create economic incentives to exercise an option to extend or terminate leases. The assessment of lease period is reviewed if a significant event occurs which affects the assessment of options to extend or options not to terminate.
(9). Leasing arrangements - lessor
The Company leases out assets such buildings. The lease contracts are typically made for periods of 1 to 5 years. The terms of lease contracts are negotiated separately and include various terms and conditions. In order to preserve the condition of leased assets, the Group usually requires lessees not to pledge the underlying leased assets.
The Company recognized rental income of $133,714 and $30,915 based on operating lease contracts in 2021 and 2020, respectively, and none of the lease contracts were variable lease payments.
The maturity analysis of the lease payments under the operating leases is as follows:

Re		December 31,2021 December 31,2020 $ - $ 103,805 81,389 92,421 63,099 190,300 34,580 - 27,683 - $ 206,751 $ 386,526	December 31,2021 December 31,2020 $ - $ 103,805 81,389 92,421 63,099 190,300 34,580 - 27,683 - $ 206,751 $ 386,526
	2021	$ - $
	2022	81,389
	2023	63,099
	2024	34,580
	2025	27,683
	Total	$ 206,751 $
	al estate investment
			Buildings and
			structures
January 1, 2021
Cost			$ 545,788
Accumulated depreciation		(	910 )
			$ 544,878
2021
January 1			$ 544,878
Reclassification - Cost			215,621
Reclassification - Accumulated depreciation		(	40,824 )
Depreciation		(	15,722 )
December 31			$ 703,953

December 31, 2021
Cost			$ 761,409
Accumulated depreciation		(	57,456 )
			$ 703,953

(10).Real estate investment

~41~

	Buildings and
	structures
January 1, 2020
Cost	$ -
Accumulated depreciation	-
	$ -
2020
January 1	$ -
Reclassification - Cost	545,788
Reclassification - Accumulated depreciation (	910 )
Depreciation	-
December 31	$ 544,878

December 31, 2020
Cost	$ 545,788
Accumulated depreciation (	910 )

Rental income and direct operating expenses of investment real estate:
The fair value of the investment property held by the Group as of December 31, 2021 and 2020 were $706,464 and $544,878, respectively. They were valuated using the income method and were of Level 3 fair value, and the major assumptions are as follows:

	December 31,2021	December 31,2021		December 31,2020
Discount rate		10.53%		5.03%
Annual rent (net income)	$	86,801	$	58,497
Number of years		2〜20		2〜20

No capitalization of interest for investment property in 2021 and 2020.
As of December 31, 2021 and 2020, the investment properties had been used as collaterals.

(11).Other Non-Current Assets

her Non-Current Assets
	December 31,2021 December 31,2020
Prepayments for equipment	$ 643,858 $ 4,069
Refundable deposit	6,353 1,397
	$ 650,211 $ 5,466

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(12).Short Term Loans

ort Term Loans
Type of borrowings	December 31,2021 Range of interest rate Collateral
Bank credit loan	$ 660,000 1.000%~1.250% None
Secured bank borrowings	200,000 1.188% Shares of listed and OTC company

	$ 860,000

Type ofborrowings	December31,2020	Range of interest rate Collateral
Bank credit loan	$ 1,381,000 0.900%~1.797% None
Funds borrowed from	67,600 0.888%~1.060% None
banks to purchase materials
	$ 1,448,600

The interest expenses recognized in profit and loss in 2021 and 2020 were $7,591 and $13,976, respectively.

(13).Other Payables

her Payables
	December 31,2021 December 31,2020
Payroll and bonus payable	$ 41,668 $ 37,150
Director and supervisor remuneration
and employee bonus payable	190,830 103,865
Payable on equipment	44,545 41,895
Machine maintenance payable	29,411 31,851
Others	139,895 74,206
	$ 446,349 $ 288,967

(14).Corporate bonds payable

rporate bonds payable	rporate bonds payable
December31,2021 December31,2020
Corporate bonds payable $ 2,000,000 $ -
Less: Amount of exercised conversion options ( 258,700 ) -
Less: discount on corporate bondspayable ( 84,251 ) -
	1,657,049 -
Less: Bonds due or exercised within one year or
one business cycle	- -
	$ 1,657,049 $ -

The terms of issuance for the Company's 3rd domestic unsecured convertible bonds are as follows:
(1) The Company has been approved by the competent authority to raise and issue $2,000,000 of the 3rd domestic unsecured convertible bonds, with a coupon rate of 0% and an issuance period of 5 years from August 3, 2021 to August 3, 2026. The convertible bonds are repayable in cash at par value on maturity. The convertible bonds were listed for trading on August 3, 2021
(2) The bondholders may request the conversion of the convertible bonds into the Group's common shares at any time from the day after the expiration of three months from the date of issuance of the corporate bonds to the maturity date, except during the period when the transfer of the corporate bonds is suspended in accordance with the regulations or laws, and the rights and obligations of the converted common shares are the same as those of the original issued common shares.

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(3) The conversion price of the convertible bonds is determined in accordance with the pricing model stipulated in the Measures, and the conversion price will be adjusted in accordance with the pricing model stipulated in the Conversion Measures in the event that the Company is subject to anti-dilution provisions. The conversion price will be reset on the base date set by the Regulations in accordance with the pricing model stipulated in the Conversion Measures. As of December 31, 2021, the conversion price was NT$87.4 per share.
(5) If the closing price of the Company's common stock exceeds 30% of the then conversion price for 30 consecutive business days from the day following the third month of the issuance of the convertible bonds to the 40th business day prior to the expiration of the issuance period, the Company may redeem the outstanding corporate bonds within the next 30 business days at the par value of the corporate bonds in cash.
(6)If the outstanding balance of the convertible bonds is less than 10% of the total par value of the corporate bonds issued, the Company may redeem the convertible bonds at any time thereafter for cash at the par value of the corporate bonds, from the day following the third month of the issuance of the corporate bonds to the 40th business day prior to the expiration of the issuance period.
Upon issuance of convertible bonds, the Company separated the conversion options from the components of liabilities in accordance with IAS 32, "Financial Instruments: Presentation," and recorded "capital surplus - stock options" at $406,616. The embedded repurchase and repurchase rights are separated from the principal contractual debt instruments in accordance with IFRS 9, "Financial Instruments", because they are not closely related to the economic characteristics and risks of the principal contractual debt instruments, and are recorded as "financial assets or liabilities at fair value through profit or loss" on a net basis. The effective interest rate of the master contract debt after the separation was 0.0902%.

(15).Long-term Loans

ng-term Loans
		Range of		December	31, 2021
Type of	Borrowing period and	interest
borrowings	payment method	rate	Collateral
Secured	Repaid in instalments and	1.800%	Houses and	$	1,250,000
borrowings	different amounts		buildings,
	according to the agreed		machinery
	period between 2021/12/28		equipment and
	and 2027/01/28.		investment
			property
Secured	Repaid in instalments and	1.580%	Buildings and		250,000
borrowings	different amounts		structures
	according to the agreed
	period between 2021/12/27
	and 2024/12/27.
Secured	Repaid in instalments and	1.300%	Machinery and		300,000
borrowings	different amounts		equipment
	according to the agreed
	period between 2021/12/27
	and 2026/12/15.
Secured	Repaid in instalments and	1.440%	Houses and		850,000
borrowings	different amounts		buildings and

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according to the agreed period between 2020/11/09 and 2023/11/09. investment property	according to the agreed period between 2020/11/09 and 2023/11/09. investment property
2,650,000
Less: Long-term borrowings(includingcurrentportion) ( 60,000 )
	$ 2,590,000

Type of borrowings Borrowing period and payment method Range of interest rate Collateral	December 31, 2020

Secured Repaid in instalments and 1.797% Houses and	$ 871,427
borrowings different amounts according to the agreed period between 2019/12/20 and 2022/08/12. buildings and machine and equipment
Secured Repaid in instalments and 1.070% Houses and	850,000
borrowings different amounts according to the agreed period between 2020/11/09 and2022/08/14. buildings and investment property
	1,721,427
Less:Long-termborrowings (including currentportion) (	87,143 )
	$ 1,634,284

With respect to the long-term loan contracts of the Company that expire between December 20, 2019 to August 12, 2022, the Company had already settled the loan in advance in March 2020 due to financial planning considerations.

Note: According to the loan contract provisions of some banks, the Company shall maintain a specific debt-to-equity ratio and interest solvency every six months during the loan duration.

(16).Pensions

(1) The Company operates a defined-benefit pension plan in accordance with the Labor Standards Act, which cover all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Labor Standards Act. 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 six months prior to retirement. The Company contributes a monthly amount equal to 2% of employees’ monthly salaries and wages to a retirement fund at the 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 December 31, every year. If the account balance is not enough 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 contribution for the deficit by the end of next March.
(2) The amounts recognized in the balance sheet are as follows:

December 31, 2021 December 31, 2020

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Present value of defined benefit (	$ 22,595 ) ( $ 22,557 )
obligations
Fair value ofplan assets	7,145 4,916
Defined Benefit Liabilities (	$ 15,450 ) ( $ 17,641 )

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(3) Changes in net defined benefit liabilities are as follows:

	Present value of	Fair value of plan assets	Defined Benefit
	defined benefit obligations		Liabilities
2021
Balance on January 1 (	$ 22,557 )	$ 4,916 (	$ 17,641 )
Current service cost (	61 )	- (	61 )
Interest(expense)income (	79 )	21 (	58 )
(	22,697 )	4,937 (	17,760 )
Re-measurements:
Return on plan assets	321	75	396 1,084 1,303 )
(excluding amounts included in interest income or expense)
Change in financial
assumptions	1,084
Change in demographic assumptions (	1,303 )	- (
	102	75	177
Pension fund contribution	-	2,133	2,133
Paidpension	-	-	-
Balance on December 31 (	$ 22,595 )	$ 7,145 (	$ 15,450 )

	Present value of defined benefit obligations	Fair value of plan assets	Defined Benefit Liabilities

2020
Balance on January 1 (	$ 24,072 )	$ 4,957 (	$ 19,115 )
Current service cost (	123 )	- (	123 )
Interest(expense)income (	193 )	48 (	145 )
(	24,388 )	5,005 (	19,383 )
Re-measurements:
Return on plan assets	-	188	188 1,307 ) 261 )
(excluding amounts included in interest income or expense)
Change in financial assumptions ( Change in demographic assumptions (	1,307 ) 261 )	- ( - (
Experience adjustments	1,139	-	1,139
(	429 )	188 (	241 )
Pension fund contribution	-	1,983	1,983
Paidpension	2,260 (	2,260 )	-
Balance on December 31 (	$ 22,557 )	$ 4,916 (	$ 17,641 )

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(4) 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 utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization 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 utilization 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 are less than the aforementioned rates, government shall make payments for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating the fund and hence the Company is unable to disclose the classification of fair value of plan asset in accordance with IAS19 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 Utilization Report announced by the government.
(5) The principal actuarial assumptions used were as follows:

	2021	2020
Discount rate	0.75%	0.35%
Future salary increases	2.125%	2.125%

Assumptions for 2021 and 2020 regarding future mortality experience are set based on the Taiwan Standard Ordinary Experience Mortality Table.

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

	Discount rate	Discount rate	Future salaryincreases	Future salaryincreases
	0.25%	0.25%	0.25%	0.25%
	increase	decrease	increase	decrease
December 31, 2021
Effect on present	( $ 685 )	$ 713	$ 687 (	$ 664 )
value of defined benefit obligation
December 31, 2020
Effect on present		$ 765	$ 734 (	$ 708 )

The sensitivity analysis above analyzes the impact from changing one of the assumptions while others remain constant. In practice, more than one assumption may change all at once. The sensitivity analysis is the same with the method used to calculate the net pension liabilities of the balance sheet.

(6) The expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2022 are $2,133.
(7) As of December 31, 2021, the weighted average duration of the retirement plan is 13 years.
(1) Starting July 1, 2005, the Company has established a retirement plan based on the

~48~

Labor Pension Act applicable to the domestic employees. 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.

(2) For 2021 and 2020, the pension costs recognized by the Company in accordance with the abovementioned pension measures were $9,982 and $7,736, respectively.

(17).Capital

As of December 31, 2021, the Company's authorized capital was $5,000,000, consisting of 500,000 thousand shares (including 20,000 thousand shares which can be subscribed to as employee stock options). The paid-in capital was $2,556,735 with a par value of NT$10. All proceeds from shares issued have been collected.

The movements in the number of the Company's common stocks outstanding are as follows:

follows:
	Unit: Thousand shares
	2021 2020
January 1	205,632 198,400
Conversion of convertible bonds	2,960 -
Treasury stocks transfer to employees	20,000 17,232
TreasuryStock Buyback (	14,485 ) ( 10,000 )
December 31	214,107 205,632

2. Treasury stock

(1) Reasons for repurchase of shares and changes in the quantity:

	December	31,2021
Company name of the shareholding Reasons for buyback	Number of
	shares (thousand)
		Book value
Subsidiary -
Youe Chung Capital Subsidiary holds the	37,081	$ 527,678
Corporation company's stock
Transfer shares to
The Company employees	4,485	413,745
	41,566	$ 941,423
	December	31,2020
Company name of the shareholding Reasons for buyback	Number of
	shares (thousand)
		Book value
Subsidiary -
Youe Chung Capital Subsidiary holds the	37,081	$ 527,678
Corporation company's stock
Transfer shares to
The Company employees	10,000	306,920
	47,081	$ 834,598

(2) Remuneration costs related to the transfer of treasury stocks of the Company in 2021

~49~

and 2020 were $119,544 and $75,779, respectively.

(3) The Securities and Exchange Act stipulates that the percentage of the Company's repurchase of outstanding shares shall not exceed 10% of the Company's total issued shares, and the total value of shares purchased shall not exceed the retained earnings plus the premium of issued shares and the amount of realized capital reserve.
(4) The shares bought back by the Company in accordance with the Securities and Exchange Act shall not be pledged. Before transfer, shareholders are not entitled to the shareholders' rights.
(5) According to the provisions of the Securities and Exchange Act, the share repurchased to be transferred to employees shall be transferred within three years from the date of the purchase. If the transfer is not made within the time limit, the shares are deemed as unissued shares, and change of registration shall be made to cancel the shares. In order to maintain the Company’s credit and shareholders equity, the shares bought back should have the registration changed to cancel the shares within six months from the date of the purchase.
(6) The Company's stock held by the subsidiary Youe Chung Capital is treated as treasury stock. As of December 31, 2021 and 2020, Youe Chung Capital held 37,081 thousand shares of the Company. The average book value per share was NT$14.23, and the fair value per share was NT$108.00 and NT$40.35, respectively. The cost of transferring treasury stocks is calculated based on the book value of the Company's stock held by Youe Chung Capital and the Company's indirect shareholding during each period.
(7) The Company was approved by the Board of Directors on August 5, 2020, to buy back 10,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 3.96% of the total issued shares. The buy-back was completed and executed between August 6 and September 30, 2020.
(8) The Company was approved by the Board of Directors on February 3, 2021, to buy back 10,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 3.96% of the total issued shares. The buy-back was completed and executed between February 4, 2021 and April 3, 2021
(9) The Company was approved by the Board of Directors on November 3, 2021, to buy back 6,000 thousand shares of the Company in the centralized trading market and transfer them to employees, and the number of shares repurchased accounted for 2.37% of the total issued shares. The buy-back of 4,485 thousand shares was completed and executed between November 4, 2021 and January 3, 2022

(18).Capital surplus

In accordance with the Company Act, any capital surplus arising from paid-in capital in excess of the 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 Securities and Exchange Act requires that the amount of capital surplus to be capitalized, as above, should not exceed 10% of paid-in capital each year. Capital reserves should not be used to cover accumulated deficit unless the legal reserve is insufficient. The following is a breakdown of the capital reserve:

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	Issue premiums	Trading of treasury stock Changes in ownership interests in subsidiaries recognized stock option	Trading of treasury stock Changes in ownership interests in subsidiaries recognized stock option	Trading of treasury stock Changes in ownership interests in subsidiaries recognized stock option	Trading of treasury stock Changes in ownership interests in subsidiaries recognized stock option	Trading of treasury stock Changes in ownership interests in subsidiaries recognized stock option		Equity changes in affiliates	Others	Total

January 1, 2021	$ -	$ 411,379 $ 6,097 $ -						$ 18,540	$ 3,882	$ 439,898
Adjustment of capital	-	55,622 - -						-	-	55,622 27,526 169,174 406,616 216,415 586 ( 9 )
reserve by dividends paid to subsidiaries
Changes in shares of	(	76 ) ( 1,178 )						28,780
affiliates recognized under the equity method
Share-based payment	-	228,121		- ( 58,947 )				-	-
transaction
Convertible bond stock	-	-		- 406,616				-	-
options
Conversion of	269,010	-		- ( 52,595 )				-	-
convertible bonds
Acceptance of gifts from		-		-		-		-	586
shareholders
Payment of overdue	-	-		-		-		- (	9 )
unclaimed dividends to shareholders
December 31, 2021	$ 269,010	$ 695,046		$ 4,919		$ 295,074		$ 47,320	$ 4,459	$ 1,315,828
									Others Total
		Changes in ownership						Equity changes in affiliates

	Trading of
January 1, 2020	$ 187,873 $ 27,255 $ 98,152						$ 9,181		$ 316 $ 322,777
Adjustment of capital	37,081 - -						-		- 37,081 - ( 11,799 )
reserve by dividends
paid to subsidiaries
Changes in shares of	- ( 21,158 ) -						9,359
affiliates recognized
under the equity
method
Share-based payment	186,425		- ( 98,152 )				-		- 88,273
transaction
Unclaimed dividends of	-		-		-		-		3,566 3,566
shareholders
December 31, 2020	$ 411,379		$ 6,097		$ -		$ 18,540		$ 3,882 $ 439,898

(19).Retained earnings

According to the Articles of Incorporation, any surplus from profit concluded at the end of year by the Company is first subject to reimbursement of previous losses and payment of taxes, followed by 10% provision for legal reserve and provision or reversal of special reserve as the laws may require. Any earnings remaining shall be distributed as shareholders’ dividends in whole or partially.
The Company takes into account the overall business environment, industrial growth, and the Company's long-term financial planning for stable operation and development to adopt a residual dividend policy, which is mainly based on the Company's future capital budgeting plan to measure the annual capital needs. After using the retained earnings for funding, the remaining surplus will be distributed in the form of dividends, and the distribution steps are shown as follows:
(1) Decide on the best capital budgeting.

~51~

(2) Decide on the financing required for one of the capital budgeting items.
(3) Decide on the amount of the financing to be supported by retained earnings (methods such as cash capital increase or corporate bonds and so on can be adopted as support).
(4) After retaining the portion required for operation needs out of the earnings remainder, the rest should be distributed to shareholders in the form of dividends. Cash dividends distribution proportion should not be lower than 20% of the total amount of dividends for the distribution proportion of the Company’s dividends.
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 the legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
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.
The Company's Board meeting resolved on March 4, 2022 to distribute a cash dividend of NT$1.00 per common share from the 2021 earnings, with a total dividend of $255,674 In addition, a cash distribution of NT$1.00 per share was made from capital surplus for a total of NT$255,674. The above motions are subject to the resolution of the shareholders' meeting.
The Company's shareholders’ meeting resolved on July 5, 2021 to distribute a cash dividend of NT$1.50 per common share from the 2020 earnings, with a total dividend of $379,071.
The Company's shareholders’ meeting resolved on June 10, 2020 to distribute a cash dividend of NT$1.07 per common share from the 2019 earnings, with a total dividend of $252,714.

(20).Other equity interests

her equity interests	her equity interests
		2021
Unrealized gains		Foreign currency	Total
and losses		translation
January 1 ( $ 2,666 )		$ 3,555	$ 889
Difference in foreign	-		3,143
currencytranslation		3,143
December 31 (	$ 2,666 )	$ 6,698	$ 4,032

		2020
	Unrealized gains	Foreign currency	Total
	and losses	translation
January 1 ( $ 2,666 )		$ 794 (	$ 1,872 )
Difference in foreign -			2,761
currencytranslation		2,761
December 31 ( $ 2,666 )		$ 3,555	$ 889

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(21).Operating revenue

ting revenue
	2021 2020
Revenue from contracts with customers	$ 2,773,339 $ 2,175,018

1. Segmentation of revenue from contracts with customers

The Company derives its revenue from the transfer of goods and services either over time or at a point in time. The revenue can be divided into the following main product lines:

time or at a point in time. The revenue can be divided into the lines:	following main produc
2021	Photomask and
	semiconductor
	segment
Revenue from contracts with
	$ 2,773,339
external customers

Cut-off point of income
recognition
Income recognized at a	$ 2,657,485
particular point in time
Income recognized	115,854
graduallyover time
	$ 2,773,339
2020	Photomask and
	semiconductor
	segment
Revenue from contracts with
	$ 2,175,018
external customers

Cut-off point of income
recognition
Income recognized at a	$ 2,096,121
particular point in time
Income recognized	78,897
graduallyover time
	$ 2,175,018

2. Contract Liabilities

(1) Contract liabilities related to contracts with customers recognized by the Company:

	December 31,2021	December 31,2020 January1,2020
Contract Liabilities	$ 7,660	$ 6,131 $ 6,310

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(2) Contract liabilities at the beginning of the period recognized as revenue of the period

period	period
Opening balance of contract liabilities recognized in the current period (including other income transferred) st income		2021 2020 $ 3,436 $ 4,561 2021 2020 $ 1,332 $ 1,549 118 138 1,781 8,397 33 1,318 $ 3,264 $ 11,402 2021 2020 $ 133,714 $ 30,915 3,288 - 4,668 - 11,836 1,650 $ 153,506 $ 32,565 2021 2020 $ 393 ( $ 6,642 ) 7 2,486 12,107 ( 10,445 ) 85,115 ( 254,506 ) - ( 98,416 ) 15,722 ) - 101 ) ( 2,308 ) $ 81,799 ( $ 369,831 ) 2021 2020 $ 50,322 $ 26,189 - ( 2,364 ) 5,596 3,919 $ 55,918 $ 27,744
	Opening balance of contract
	liabilities recognized in the
	current period (including other
	income transferred)

Interest from bank deposits
Interest income from financial assets
measured at amortized cost
Interest income from related parties
Other interest incomes

Incomes

Rental income
Dividend income
Subsidy income
Other income -- Others

Gains and Losses

Loss (gain) on disposal of investments
Gain on lease modifications
Losses on foreign currency exchange
Loss (gain) on financial assets
measured at fair value through profit or loss
Impairment Loss of Financial Assets
Other losses -- Depreciation of investment properties (
Other miscellaneous expenses (

cial Costs

Bank borrowings
Less: Amount of capitalization of
qualifying assets
Lease liabilities

(22).Interest income

(23).Other Incomes

(24).Other Gains and Losses

(25).Financial Costs

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Expenses by nature	Expenses by nature
Employee benefits expenses Depreciation Amortization expense Employee benefits expenditure		2021 2020
	Employee benefits expenses	$ 592,890 $ 380,381
	Depreciation	355,573 216,207
	Amortization expense	6,105 3,302

		2021 2020
	Payroll expenses	$ 429,563 $ 271,738
	Employee stock options	119,544 75,779
	Labor and health insurance fees	23,886 16,568
	Pension expense	10,101 8,004
	Otherpersonnel expenses	9,796 8,292
		$ 592,890 $ 380,381

According to the Articles of Incorporation, the Company shall distribute not less than 10% of the current year’s profit situation for employee remuneration and not more than 2% of current year’s profit situation for director remuneration. However, profits must first be taken to offset against cumulative losses, if any.
For 2021 and 2020, employee remuneration was accrued at $158,000 and $85,723, respectively, and director remunerations was accrued at $30,800 and $16,969, respectively. The amounts were listed as payroll expenses.

The remuneration to employees and directors were estimated at 10.18% and 1.98%, respectively, based on the profitability for the year ended December 31, 2021; the remuneration to employees and directors were estimated at 10.09% and 1.90%, respectively, based on the profitability for the year ended December 31, 2020.

The employee remuneration and director remuneration resolved by the Board of Directors for 2020 were $86,000 and $16,000, respectively, which were different from $85,723 and $16,969 recognized in the 2020 financial statements by $277 and ($969). This is mainly due to changes in estimates which have been adjusted to the profit or loss of 2021.

Information about employees remuneration and director remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System”.

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(28).Income tax

1. Income tax expense

Components of income tax expense:

			2021 2020	2021 2020	2021 2020	2021 2020
Tax calculated based on profit			$ 272,599 $ 149,378
before tax and statutory tax rate
Tax-exempt income under the tax law (			106,318 ) ( 94,758 ) 10,937 8,373
Changes in assessment of
realizability of deferred income tax assets
Income Tax Expense			$ 177,218 $ 62,993
Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:
				2021
	January1 Recognized in profit or loss			Recognized	Recognized in equity	December 31
				in other comprehensi ve income
Temporary differences:
- Deferred income tax
assets:
Unrealized exchange	$ 2,014 ( $ 2,014 )			$ -	$ -	$ -
loss
Subtotal	$ 2,014 (	$ 2,014 )		$ -	$ -	$ -
- Deferred income tax
liabilities:
Unrealized exchange gain ( $ 226 )		$ 167		$ -	$ - (
						$ 59 )

Total	$ 1,788 (	$ 1,847 )		$ -	$ - (	$ 59 )

2. Reconciliation between income tax expense and accounting profit

Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

~56~

2020 January1 Recognized in profit or loss Recognized in other comprehensi ve income Recognized in equity December 31 Temporary differences: - Deferred income tax assets: Unrealized exchange loss $ 1,048 $ 966 $ - $ - $ 2,014 Subtotal $ 1,048 $ 966 $ - $ - $ 2,014 - Deferred income tax liabilities: Unrealized exchange gain ( $ 660 ) $ 434 $ - $ - ( $ 226 ) Total $ 388 $ 1,400 $ - $ - $ 1,788 4. Deductible temporary difference not recognized as deferred income tax assets December 31,2021 December 31,2020 Deductible temporary difference $ 106,261 $ 105,405 5. The Company’s income tax returns through 2019 have been assessed and approved by the tax authority. ngs per share 2021 Amount after tax Weighted average share outstanding (thousand shares) Earnings per share(NTD) Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 $ 5.65 Diluted Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 Assumed conversion of all dilutive potential ordinary shares Convertible bonds 6,713 3,220 Employee remuneration - 1,791 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares $ 1,192,490 214,781 $ 5.55	2020 January1 Recognized in profit or loss Recognized in other comprehensi ve income Recognized in equity December 31 Temporary differences: - Deferred income tax assets: Unrealized exchange loss $ 1,048 $ 966 $ - $ - $ 2,014 Subtotal $ 1,048 $ 966 $ - $ - $ 2,014 - Deferred income tax liabilities: Unrealized exchange gain ( $ 660 ) $ 434 $ - $ - ( $ 226 ) Total $ 388 $ 1,400 $ - $ - $ 1,788 4. Deductible temporary difference not recognized as deferred income tax assets December 31,2021 December 31,2020 Deductible temporary difference $ 106,261 $ 105,405 5. The Company’s income tax returns through 2019 have been assessed and approved by the tax authority. ngs per share 2021 Amount after tax Weighted average share outstanding (thousand shares) Earnings per share(NTD) Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 $ 5.65 Diluted Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 Assumed conversion of all dilutive potential ordinary shares Convertible bonds 6,713 3,220 Employee remuneration - 1,791 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares $ 1,192,490 214,781 $ 5.55	2020 January1 Recognized in profit or loss Recognized in other comprehensi ve income Recognized in equity December 31 Temporary differences: - Deferred income tax assets: Unrealized exchange loss $ 1,048 $ 966 $ - $ - $ 2,014 Subtotal $ 1,048 $ 966 $ - $ - $ 2,014 - Deferred income tax liabilities: Unrealized exchange gain ( $ 660 ) $ 434 $ - $ - ( $ 226 ) Total $ 388 $ 1,400 $ - $ - $ 1,788 4. Deductible temporary difference not recognized as deferred income tax assets December 31,2021 December 31,2020 Deductible temporary difference $ 106,261 $ 105,405 5. The Company’s income tax returns through 2019 have been assessed and approved by the tax authority. ngs per share 2021 Amount after tax Weighted average share outstanding (thousand shares) Earnings per share(NTD) Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 $ 5.65 Diluted Earnings per share Profit attributable to ordinary shareholders $ 1,185,777 209,770 Assumed conversion of all dilutive potential ordinary shares Convertible bonds 6,713 3,220 Employee remuneration - 1,791 Profit attributable to ordinary shareholders plus assumed conversion of all dilutive potential ordinary shares $ 1,192,490 214,781 $ 5.55
		2021
		Weighted average
	Amount after tax	share outstanding (thousand shares)
Earnings per share
Profit attributable to ordinary	$ 1,185,777	209,770
shareholders
Diluted Earnings per share
Profit attributable to ordinary	$ 1,185,777
shareholders		209,770
Assumed conversion of all
dilutive potential ordinary shares
Convertible bonds	6,713	3,220
Employee remuneration	-	1,791
Profit attributable to ordinary
shareholders
plus assumed conversion of all	$ 1,192,490	214,781
dilutive potential ordinary shares

Deductible temporary difference not recognized as deferred income tax assets
The Company’s income tax returns through 2019 have been assessed and approved by the tax authority.

(29).Earnings per share

			2020
			Weighted average
		Amount after	share outstanding	Earnings per
		tax	(thousand shares)	share(NTD)
Earnings	per share

~57~

Profit attributable to ordinary	$ 683,897	204,801
shareholders
Diluted Earnings per share
Profit attributable to ordinary	$ 683,897	204,801
shareholders
Assumed conversion of all
dilutive potential ordinary shares
Employee remuneration	-	2,599
Profit attributable to ordinary
shareholders
plus assumed conversion of all	$ 683,897	207,400
dilutive potential ordinary shares

The weighted average number of shares outstanding in 2021 and 2020 has deducted the number of shares held by the subordinate company Youe Chung Capital deemed as the Company's treasury stock (the number of shares is based on the Company’s shareholding).

(30).Supplemental cash flow information

Investing activities with partial cash payments:

	2021 2020
Purchase of property, plant and	$ 925,545 $ 2,121,909 41,895 100,062 643,858 4,069
equipment
Add: Opening balance of payable on
equipment
Prepayments for equipment at the
end of the period
Less: Ending balance of payable on equipment (	44,545 ) ( 41,895 )
Prepayments for equipment at the beginningof theperiod (	4,069 ) ( 173,122 )
Cash paid during the year	$ 1,562,684 $ 2,011,023

(31).Changes in liabilities arising from financing activities

Short Term Loans Corporate bondspayable	Short Term Loans Corporate bondspayable	Short Term Loans Corporate bondspayable	Long-term	Lease liabilities	Guarantee Deposits Received Total liabilities arising from financing activities
			borrowings (including portion due within 1year)
January 1, 2021 $ 1,448,600 $ -			$ 1,721,427	$ 399,473	$ 4,369 $ 3,573,869
Change in cash ( 588,600 ) 2,297,099			928,573 (	19,912 )	436 2,617,596
flow from financing activities
Interest Incomes	- 8,392		-	5,596	- 13,988
Interest Paid	- -		- (	5,596 )	- ( 5,596 )
Other non-cash	( 648,442 )				( 459,528 )
transactions				188,914
December 31, 2021	$ 860,000	$ 1,657,049	$ 2,650,000	$ 568,475	$ 4,805 $ 5,740,329

~58~

		due within 1year)		activities
January 1, 2020	$ 700,000	$ 444,427	$ 323,213	$ 1,010 $ 1,468,650
Change in cash flow from	748,600	1,277,000 (	17,016 )	3,359 2,011,943
financing activities
Interest Incomes	-	-	3,919	- 3,919
Interest Paid	-	- (	3,919 )	- ( 3,919 )
Other non-cash transactions	-	-	93,276	- 93,276
December 31, 2020	$ 1,448,600	$ 1,721,427	$ 399,473	$ 4,369 $ 3,573,869

~59~

(VII) Related-Party Transactions

(1). Related parties' names and relationship

d-Party Transactions Related parties'names and relationship
Name of the relatedparties	Relationshipwith the Company
Miracle Technology Co., LTD.	Subsidiary
Youe Chung Capital Corporation	Subsidiary
Aptos Technology INC.	2nd-tier subsidiary
Miracle International Enterprise (Shanghai)	2nd-tier subsidiary
Co., Ltd.
MIKO Technology Company Ltd.	2nd-tier subsidiary
Innova Vision INC.	Subsidiary (Note 1)
Innova Vision Kabushiki Kaisha	2nd-tier subsidiary
Xsense Technology Corporation	Sub-subsidiary (Note 2)
Weida Hi-Tech Company	Affiliate (Note 3)
Advanced Silicon SA	Affiliate (Note 3)
Powerchip Technology Corporation	Other related party
IMAGE MATCH DESIGN INC.	Other related party
BKS Tec Corp.	Other related party
Taiwan Mask Charity Foundation	Other related party

Note 1: On June 18, 2020, the Company resigned from the position of corporate director of Innova Vision INC. and since then, the firm is no longer a related party of the Company.
On December 16, 2020, Innova Vision held elections for all directors at its extraordinary general meeting. The Company’s subsidiary Youe Chung Capital Corporation won all the director seats, obtaining substantial control of this company. Therefore, it has been included as a consolidated entity from that date.
Note 2: In April 2021, the Company participated in the management and operating policies of Xsense Technology Corporation, including strategic decisions, and therefore included the firm in the consolidated financial statements as a consolidated entity as of that date.
Note 3: The Company's shareholding of Weida Hi-Tech has dropped to 36.70% in May 2020, and there are changes to the number of Board seats, thus losing control of the firm. Since then, Weida Hi-Tech is no longer a subsidiary of the Company, but is still the Company's related party.
(2). Significant transactions with the related parties
Operating revenue

Operating revenue
	2021 2020
Product sales:
Subsidiary	$ 6,621 $ 3,067
2nd-tier subsidiary	29,027 38,329
Affiliates	72 674
Other relatedparty	1,171 349
	$ 36,891 $ 42,419

There are no major abnormalities in the transaction prices and payment terms of the related party compared to that of non-related parties.

Account receivable from related parties

		December 31,2021		December 31,2020
Accounts Receivables:
Subsidiary	$	2,204	$	897

~60~

2nd-tier subsidiary	2,908 8,043
Other relatedparty	- 63
Subtotal	5,112 9,003
Other receivables:
Subsidiary	2,168 -
2nd-tier subsidiary	12,702 11,505
Affiliates	- 16,021
Other relatedparty	- 3,303
Subtotal	14,870 30,829
Total	$ 19,982 $ 39,832

Loans to related parties (recognized as "Other accounts receivable -- related parties")

	2021	2021	2020
	Balance at	Interest income	Balance at the end ofperiod Interest income
	the end of period
Subsidiary	$ -	$ 1,143	$ 448,000 $ 6,838
2nd-tier subsidiary	-	638	140,000 1,559
	$ -	$ 1,781	$ 588,000 $ 8,397

The loans to subsidiaries and affiliated companies are to be repaid within one year. The interests in 2021 and 2020 were charged at an annual interest rate of 2% and 2.0%~2.616%, respectively.

Acquisition of other assets

Acquisition of other assets
	2021 2020
Account item	Acquisitionprice Acquisitionprice
Other related party Intangible assets	$ 8,926 $ -
Other relatedparty Fixed assets	1,750 -
Total	$ 10,676 $ -
Acquisition of financial assets		2021 Acquisitionprice $ 367,671 2020 Acquisitionprice $ 300,000 19,943 $ 319,943

	Number of
Account item	shares acquired
Subsidia ry Investment under Equity Method	36,767,141

	Number of
Account item	shares acquired
Subsidia	30,000,000
ry Investment under Equity Method
Subsidia Financial assets at fair value through	1,994,300
ry profit and loss

Acquisition of financial assets

~61~

6. Others

Others
(1) Guarantee Deposits	2021
Received:		2020
Subsidiary	$ 416	$ -
2nd-tier subsidiary	792	792
Other relatedparty	95	-
	$ 1,303	$ 792
(2)Rental income:	2021	2020
Subsidiary	$ 2,417	$ 1,584
2nd-tier subsidiary	112,593	13,421
Affiliates	-	12,679
	$ 115,010	$ 27,684

The Company leases buildings to subsidiaries, 2nd-tier subsidiaries and other related parties. The lease contract period is from 2018 to 2023, and the rent is collected in accordance with the contract.

(3) The Company issued cash dividends of $55,622 and $37,081 to Youe Chung Capital in 2021 and 2020, respectively.
(4) The Company donated $31,801 in cash to the Taiwan Mask Charity Foundation in 2021.

(3). Compensation of key management personnel

Compensation of key management	personnel
	2021 2020
Salary and short-term employee	$ 7,514 $ 7,761
benefits
Post-employment benefits	- 3,000
Other long-term employee
benefits	18,082 7,480
Share-based payment to
employees	13,990 5,200
	$ 39,586 $ 23,441

(VIII) Pledged assets

Assets pledged by the Company as collateral are as follows:

	Book value
	December 31, 2021 December 31,2020 Purpose
Assets
Time deposit (Recognized as	$ 35,425 $ 35,422 Guarantee of cargo out
"Financial assets at amortized cost - Non-current assets")	of free trade zone and lease deposit
Stocks of publicly traded and OTC	149,500 Short Term Loans
companies (recognized as "Financial assets at fair value through profit or loss")
Buildings and structures	623,354 683,814 Long-term Loans
Real estate investment	703,953 544,878 Long-term Loans
Machinery and equipment and	2,339,034 1,146,700 Long- and short-term
equipmentunder acceptance	borrowings
	$ 3,851,266 $ 2,410,814

~62~

(IX) Material contingent liabilities and unrecognized contractual commitments

(1). Contingencies

Not applicable.

(2). Commitments
Machine equipment maintenance contracts that have been signed but not yet paid

December 31,2021 December 31,2020 Machine maintenance $ 29,411 $ 31,851 2. Capital expenditures that have been signed but not yet incurred December 31,2021 December 31,2020 Property, plant and equipment $ 119,059 $ 153,985		December 31,2021 December 31,2020
	Machine maintenance	$ 29,411 $ 31,851
		December 31,2021 December 31,2020
	Property, plant and equipment	$ 119,059 $ 153,985

Lease agreement

Please see Note 6 (8) and (9)

(X) Losses due to major disasters

Not applicable.

(XI) Major Events after Financial Statement Date

The resolution of the Company's Board on March 4, 2022 passed the appropriation of earnings. The proposal has yet to be resolved by the shareholders meeting. Please refer to Note 6 (19) for details.
On March 4, 2022, the Board of Directors resolved to process the issuance of new shares by way of shelf registration and the initial issuance of new shares by way of cash capital increase for 2022.

(XII) Others

(1). Capital 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, return capital to shareholders, issue new shares or sell assets 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 (including "current and noncurrent borrowings" as shown in the standalone balance sheet) less cash and cash equivalents. Total capital is calculated as "equity" as shown in the standalone balance sheet plus net debt.

The Company maintained the same strategy in 2021 as in 2020. It is committed to keeping the debt-to-capital ratio under a reasonable risk level. For the years ended December 31, 2021 and 2020, the debt-to-capital ratios were as follows:

~63~

		December 31,2021 December 31,2020	December 31,2021 December 31,2020
Total borrowings		$ 3,510,000 $ 3,170,027
Less: Cash and cash equivalents (		1,798,841 ) ( 493,838 )
Net debt		1,711,159	2,676,189
Total equity		5,100,527	3,538,598
Total capital		$ 6,811,686	$ 6,214,787
Debt-to-equity ratio		25.11%	43.06%
			December 31,2020 $ 147,632 $ 493,838 38,422 29 434,009 624,116 1,397 $ 1,591,811 $ 1,448,600 109,043 288,967 - 1,721,427 4,369 $ 3,572,406 $ 399,473
		December 31,2021
	Financial assets
	Financial assets at fair value through
	profit and loss
	Mandatory financial assets at fair	$ 1,121,358
	value throughprofit or loss
	Financial assets measured at
	amortized cost
	Cash and Cash Equivalents	$ 1,798,841
	Financial assets measured at
	amortized cost	38,425
	Notes Receivables	-
	Accounts receivable (Including
	related parties)	598,079
	Other accounts receivable
	(Including related parties)	18,696
	Refundable deposit	6,353
		$ 2,460,394
	Financial liabilities
	Financial liabilities at amortized cost
	Short Term Loans	$ 860,000
	Accounts Payable	81,451
	Other Payables	446,349
	Corporate bonds payable	1,657,049
	Long-term borrowings (including
	current portion)	2,650,000
	Guarantee Deposits Received	4,805
		$ 5,699,654
	Lease liabilities	$ 568,475

2. Risk management policies

(1) The Company’s activities expose it to a variety of financial risks, including market risk (exchange rate, interest rate and price), credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial position and performance.

(2) Risk management is carried out by the Company's finance department under policies approved by the Board of Directors. Company's finance department identifies,

~64~

evaluates and hedges financial risks in close collaboration with the Company’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as currency exchange risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments and investment of excess liquidity.

Significant financial risks and degrees of financial risks
(1) Market risk

A. Foreign exchange risk

The Company's operations involve certain non-functional currencies (the Company’s functional currency is the New Taiwan dollar (NTD), so it is subject to the impact of exchange rate fluctuation. The details of assets and liabilities denominated in foreign currencies whose values would be materially affected by exchange rate fluctuations are as follows:

exchange rate fluctuations are as follows:	exchange rate fluctuations are as follows:
December 31,2021
(Foreign currency: functional currency) Foreign currency (in thousands) Exchange rate Carrying amount (in thousands of NTD)
Financial assets
	Monetary items
	USD : NTD USD 14,010 27.68 $ 387,799
	JPY : NTD JPY 65,669 0.2405 15,793
Financial liabilities
	Monetary items
	USD : NTD USD 2,099 27.68 $ 58,113
	JPY : NTD JPY 188,577 0.2405 45,353

December 31,2020	December 31,2020
Foreign Carrying amount
(Foreign currency: functional currency) currency (in thousands) Exchange rate (in thousands of NTD)
Financial assets
	Monetary items
	USD : NTD US 16,298 28.48 $ 464,170
	D
	JPY : NTD JPY 83,532 0.2763 23,080
Financial liabilities
	Monetary items
	USD : NTD US 3,447 28.48 $ 98,168
	D
	JPY : NTD JPY 345,057 0.2763 95,339

B. Total exchange gain, including realized and unrealized gains from significant foreign exchange variations on monetary items held by the Company amounted to $12,107 and ($10,445) for the years ended December 31, 2021 and 2020, respectively.

~65~

C. The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:

The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:	The analysis of foreign currency risk due to significant exchange rate fluctuation is as follows:
2021
SensitivityAnalysis
Fluctuation Effect on profit or loss Other comprehensive profit and loss affected
(Foreign currency:
functional currency)
Financial assets
	Monetary items
	USD : NTD 1% $ 3,878 $ -
	JPY : NTD 1% 158 -
Financial liabilities
	Monetary items
	USD : NTD 1% ( $ 581 ) -
	JPY : NTD 1% ( 454 ) -
	2020
	SensitivityAnalysis
	Fluctuation Effect on profit or loss Other comprehensive profit and loss affected

(Foreign currency:
functional currency)
Financial assets
	Monetary items
	USD : NTD 1% $ 4,642 $ -
	JPY : NTD 1% 231 -
Financial liabilities
	Monetary items
	USD : NTD 1% ( $ 982 ) -
	JPY : NTD 1% ( 953 ) -

Price risk

A. The equity instruments owned by the Company exposing to the price risk are financial assets at fair value through profit or loss.
B. The Company invests primarily in beneficiary certificates and equity instruments. The price of such equity instrument is subject to the uncertainty of the future value of investment target. If the price of such equity instrument increases or decreases by 1%, while all other factors remain unchanged, the net profit after tax affected by equity instruments at fair value through profit or loss after tax for 2021 and 2020 is an increase or decrease of $11,214 and $1,476, respectively.

Cash flow and fair value interest rate risk

A. The Company’s interest rate risk mainly comes from long-term borrowings issued at floating rates, which exposes the Company to cash flow interest rate risk. For

~66~

2021 and 2020, the Company's borrowings issued at floating rates were mainly denominated in New Taiwan Dollars.

B. The Company's borrowings are measured at amortized cost, and the annual interest rate is re-priced according to the contract, which exposes the Company to the risk of future market interest rate changes.
C. If the long- and short-term borrowing rates increase or decrease by 0.25%, while all other factors remain constant, the net profit after tax for 2021 and 2020 is a decrease or increase of $7,020 and $6,340, respectively, mainly due to the interest expense changes caused by the floating interest rate.
(2) Credit risk
A. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments under contract obligations, and the defaults are accounts receivable and the contract cash flow from debt instruments measured at amortized cost, measured at fair value through other comprehensive income and measured at fair value through profit or loss.
B. The management of credit risk is established with a Company perspective. Only the banks and financial institutionals with an independent credit rating of at least "A" can be accepted as transaction partners of the Group. According to the internal credit policy, each operating entity of the Company is responsible for managing and analyzing 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. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored.
C. The Company considers a contract payment overdue in accordance with the agreed
- payment terms a breach of contract.
D. The Company uses IFRS 9 to provide the following assumption as a basis for determining whether there is a significant increase in the credit risk of financial instruments after the original recognition:
- (A) If the contract payment is overdue for more than 30 days in accordance with the agreed payment terms, the credit risk of the financial asset is significantly increased since the original recognition.
- (B) For bond investments in Taipei Exchange, if any external rating agency rates it as an investment grade on the balance sheet date, the credit risk of the financial asset is considered low.
E. The Company uses the following indicators to determine the status of credit impairments of debt instruments:
- (A) The issuer has suffered significant financial difficulties or is likely to enter bankruptcy or other financial restructuring.
- (B) The issuer has suffered significant financial difficulties or is likely to enter bankruptcy or other financial restructuring.
- (C) The issuer delays or does not pay for the interest or principal.
- (D) Unfavorable changes in the national- or regional-level economic situation

~67~

resulting in the issuer's default.

F. The Company categorizes the accounts receivable from customers based on the characteristics of trade credit risks. The simplified approach is adopted for estimating the expected credit loss based on the provision matrix.
G. The Company may write off the amount of financial assets that cannot be reasonably expected to be recovered after recourse. However, the Company will continue the recourse to protect the rights of the claims.
H. The Company has incorporated forward-looking considerations to adjust the loss rate built according to historic and current data in order to estimate the loss allowance of accounts receivables. The provision matrix for the years ended December 31, 2021 and 2020 are shown as follows:

Not past due 30 days past 31 to 90 days	91 to 180 days 181 to 360 days Total
due past due	past due past due
December 31,2021
Expected loss rate 0.01% 0.21% 2.03%	5.11% 5 37.18%〜
	100%
Total book value $ 504,835 $ 81,417 $ 11,447	$ 1,465 $ - $ 599,164
Loss allowance $ - $ - ( $ 572 ) (	$ 513 ) $ - ( $ 1,085 )
Not past due 30 days past 31 to 90 days	91 to 180 days 181 to 360 days Total
due past due	past due past due
December 31,2020
Expected loss rate 0.01% 0.15% 1.36%	3.62% 4 11.84%〜
	100%
Total book value $ 381,537 $ 43,655 $ 8,267	$ 1,362 $ 156 $ 434,977
Loss allowance $ - $ - ( $ 413 ) (	$ 477 ) ( $ 78 ) ( $ 968 )

I. The Company adopts a simplified method in which the loss allowance for the accounts receivable is shown as follows:

accounts receivable is shown as follows:
	2021
	Accounts Receivables
January 1	$ 968
Reversal for theperiod	117
December 31	$ 1,085
	2020
	Accounts Receivables
January 1	$ 1,568
Reversal for theperiod (	600 )
December 31	$ 968

(3) Liquidity risk

A. Cash flow forecasting is performed by the operating entities of the Company and aggregated by the Company’s finance department. It monitors rolling forecasts of liquidity requirements to ensure the Company has sufficient cash to meet operational needs.
B. The remaining cash held by each operating entity will be transferred back to the Company's finance department. The finance department of the Company invests the remaining funds in interest-bearing demand deposits, time deposits, financial assets at fair value through profit or loss, financial assets at amortized cost (time deposits with a maturity of more than 3 months and less than 12 months), as the instruments chosen have appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. For the years ended December 31, 2021 and 2020, the position of

~68~

money market held by the Company is at $1,801,841 and $496,838, respectively, and is expected to generate immediate cash flow to manage liquidity risk.

C. The Company's undrawn borrowing facilities are shown as follows:

	December 31,2021 December 31,2020
Floating rate
Due within 1 year	$ 900,000 $ 873,400
Maturity of more than 1 year	- 363,851
	$ 900,000 $ 1,237,251

D. The following table shows the Company’s non-derivative financial liabilities and derivative financial liabilities settled on a net or total amount, grouped according to the relevant maturity date. Non-derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the contract maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31,2021	Within 1year	Within 1year	1	to 2years	2 to 5years	Over	5years
Non-derivative
financial liabilities:
Short Term Loans	$	860,000	$	- $	-	$	-
Accounts Payable		81,452		-	-		-
Other Payables		446,349		-	-		-
Lease liabilities		33,601		31,696	89,142		490,467
Corporate bonds payable		-		-	1,657,049		-
Long-term		61,250		782,605	1,840,595		-
borrowings
(including portion
due within 1 year)
Guarantee Deposits Received		-		4,805	-		-
December 31,2020	Within 1year		1	to 2years	2 to 5years	Over	5years
Non-derivative
financial liabilities:
Short Term Loans	$	1,448,600	$	- $	-	$	-
Accounts Payable		109,043		-	-		-
Other Payables		288,967		-	-		-
Lease liabilities		20,846		20,846	57,779		365,950
Long-term		91,408		1,696,463	-		-
borrowings
(including portion
due within 1 year)
Guarantee Deposits
Received		-		4,369	-		-

~69~

(3). Fair value information

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. The fair value of the Company’s investment in stocks of publicly traded or OTC firms and beneficiary certificates is included in Level 1.
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. The fair value of the Company’s investment in stocks of non-publicly traded or non-OTC firms is included in Level 3.
Financial instruments not measured at fair value

Cash and cash equivalents, notes receivable, accounts receivable, other receivable, shortterm borrowings, notes payable, accounts payable and other payable as reasonable approximation of fair value.

The related information for 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 is as follows:

as follows:	as follows:
December 31,2021		Level 1	Level 2	Level 3 Total
Assets
Recurring fair value
measurements
Financial assets at fair
value through profit or loss
Equity securities		$ 1,109,226	$ -	$ 7,132 $ 1,116,358
Convertible bonds		5,000	-	- 5,000
Total		$ 1,114,226	$ -	$ 7,132 $ 1,121,358

December 31,2020		Level 1	Level 2	Level 3 Total
Assets
Recurring fair value
	measurements
Financial assets at fair
value through profit or loss
Equity securities		$ 140,500	$ -	$ 7,132 $ 147,632
		$ 140,500	$ -	$ 7,132 $ 147,632

The methods and assumptions adopted by the Company for assessing the fair value are as follows:
(1) The Company adopt market pricing as the input of fair value (i.e. Level ), and the

~70~

breakdown of the characteristics of the instrument is as follows:

	Shares of listed and OTC
	company	Open-end funds
Market price	Closing price	Net Value

(2) Except for the abovementioned financial instruments with active markets, the fair value of the remaining financial instruments is obtained using valuation techniques. The fair value obtained through valuation techniques can refer to the current fair value of other financial instruments with similar substantive conditions and characteristics, discounted cash flow method, or other valuation techniques, including the use of market information available on the date of the standalone balance sheet (for example, the Taipei Exchange refers to the yield curve, the Reuters adopts the average quotation of interest rate of commercial promissory notes).
(3) The output of the valuation model is the estimated value, and the valuation technique may not reflect all the relevant factors of the financial instruments and non-financial instruments held by the Company. Therefore, the estimated value of the valuation model will be appropriately adjusted according to additional parameters, such as model risk or liquidity risk. According to the Company's fair value valuation model management policies and related control procedures, the management believes that in order to properly express the fair value of financial instruments and nonfinancial instruments in the standalone balance sheet, valuation adjustments are appropriate and necessary. The price information and parameters used in the valuation process are carefully assessed and appropriately adjusted according to current market conditions.
(4) The Company incorporates credit risk valuation adjustments into the consideration of fair value of financial instruments and non-financial instruments to reflect counterparty credit risk and the credit quality of the Company, respectively.

~71~

There were no transfers between Level 1 and 2 in 2021 and 2020.
The following table shows the changes in Level 3 in 2021 and 2020:

There were no transfers between Level 1 and 2 in 2021 and 2020. The following table shows the changes in Level 3 in 2021 and 2020:	There were no transfers between Level 1 and 2 in 2021 and 2020. The following table shows the changes in Level 3 in 2021 and 2020:
Equityinstruments
January 1, 2021 (i.e. December 31) $ 7,132
Equityinstruments
January 1, 2020 $ 21,390
Acquisition cost of the period 19,943
Return of capital by investee company ( 8,206 )
Recognize impairment loss ( 25,995 )
December 31, 2020	$ 7,132

The quantitative information about the significant unobservable input value of the valuation model and the sensitivity analysis of the significant unobservable input value change used in the Level 3 fair value measurements are explained as follows:

December 31,2021
				Significant	Range		Relationship between
			Valuation	unobservable	(Weighted		inputs and fair value
	Fair value		technique	inputs	average)
Non-derivative
equity instruments:
Shares of non-	$	7,132	Net asset value	Net asset value		-	The higher the net
listed and non-			method				asset value, the
OTC company							higher the fair value.
December 31,2020
				Significant	Range		Relationship between
			Valuation	unobservable	(Weighted		inputs and fair value
	Fair value		technique	inputs	average)
Non-derivative equity
instruments:
Shares of non-	$	7,132	Net asset value	Net asset value		-	The higher the net
listed and non-			method				asset value, the
OTC company							higher the fair value.

The Company has carefully assessed the valuation models and parameters used to measure fair value. However, use of different valuation models or parameters may result in different measurement. For financial assets or liabilities classified in Level 3, changes in valuation parameters have the following impacts on the income or other comprehensive income of the period:

income of the period:
	December 31,2021
	Recognized in profit or		Recognized in other
	loss		comprehensive income
Change	Favorable	Adverse	Favorable		Adverse
Inputs s	changes	changes		changes	changes
Financial
assets
Equity Net asset ±1%	$ 71 (	$ 71 )	$	-	$ -
instrument s value
		December 31,2020

	Recognized in profit or Recognized in other
	loss comprehensive income

~72~

Change	Favorable	Adverse	Favorable Adverse
Inputs s	changes	changes	changes changes
Financial
assets
Equity instrument s Net asset value ±1%	$ 71 (	$ 71 )	$ - $ -

(4). Others

The Company has evaluated the Company's operations and financial information, and amid the novel coronavirus crisis, the Company's ability to continue as a going concern, asset impairment and financing risks have not been greatly affected.

(XIII) Supplementary Disclosure

Information on significant transactions
(1). Loans to others: Please refer to Table I.
(2). Provision of endorsements and guarantees to others: Please refer to Table II.
(3). Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please see Table III.
(4). Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of the Company's paid-in capital: Please see Table II.
(5). Acquisition of real estate exceeding $300 million or 20% of paid-in capital or more: None.
(6). Disposal of real estate exceeding $300 million or 20% of paid-in capital or more: None.
(7). Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: None.
(8). Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
(9). Engaged in derivative trading: None.
(10).Significant inter-company transactions during the reporting periods: Please refer to Table V.
Information on investees

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

Information on investments in Mainland China

Please see Table VII.

Information on Major Shareholders

Please see Table VIII.

(XIV) Segments information

Not applicable.

~73~

Taiwan Mask Corporation Cash Schedule December 31, 2021

Unit: NT$Thousand

Taiwan Mask Corporation Cash Schedule December 31, 2021
Schedule 1	Unit: NT$Thou
Items Summary	Amount
Bank deposits
Demand deposits -- NTD	$ 846,590
-- Foreign currency USD3,004 exchange rate 27.68	83,151
JPY65,669 exchange rate 0.2405	15,793
SGD145 exchange rate 20.46	2,967
EUR0.637 exchange rate 31.32	20
Time deposits -- NTD	850,320
	$ 1,798,841

Page 1, Schedule 1

Taiwan Mask Corporation Accounts Receivable Schedule December 31, 2021

Unit: NT$Thousand

Taiwan Mask Corporation Accounts Receivable Schedule December 31, 2021	Taiwan Mask Corporation Accounts Receivable Schedule December 31, 2021	Taiwan Mask Corporation Accounts Receivable Schedule December 31, 2021
Schedule 2 Unit: NT$Thousand
Customer Name Summa ry Amount Note
General customers
Company A. $ 109,906
Company B 75,779
Company C 41,590
Company D 29,649
The balance of each
separate account did not Others 337,128
exceed 5%of this account.
Account balance that has
594,052 been more than a year is $0
Less: Allowance for bad debts ( 1,085 )
	$ 592,967
Related party
Miracle International Enterprise	$ 2,908
(Shanghai) Co., Ltd.
Miracle TechnologyCO.,LTD.	2,204
	Account balance that has
	5,112 been more than a year is $0
Less: Allowance for bad debts	-
	$ 5,112

Page 1, Schedule 2

Taiwan Mask Corporation Inventories Schedule December 31, 2021

Unit: NT$Thousand

Taiwan Mask Corporation Inventories Schedule December 31, 2021	Taiwan Mask Corporation Inventories Schedule December 31, 2021	Taiwan Mask Corporation Inventories Schedule December 31, 2021	Taiwan Mask Corporation Inventories Schedule December 31, 2021
Schedule 3 Unit: NT$Thousand
		Amount
Items	Summary	Cost	Market value Note
		$ 105,224	$ 103,303 Net realizable value as the market value
Raw materials
		9,596	9,522 Net realizable value as the market value
Work in process


		1,071	3,233 Net realizable value as the market value
Finished goods


		115,891	$ 116,058
Add: Loss on falling prices of		( 6,002 )
inventory and inventory
obsolescence
		$ 109,889

Page 1, Schedule 3

Taiwan Mask Corporation

Financial assets schedule at fair value through profit and loss January 1 to December 31, 2021

Schedule 4

Unit: NT$Thousand

OpeningBalance Increase thisperiod Decrease thisperiod Balance at the end ofperiod	OpeningBalance Increase thisperiod Decrease thisperiod Balance at the end ofperiod	OpeningBalance Increase thisperiod Decrease thisperiod Balance at the end ofperiod	OpeningBalance Increase thisperiod Decrease thisperiod Balance at the end ofperiod
Number of	Number of	Number of	Guarantee Number of
Name Shares	Book value Shares	Amount Shares	orpledge Amount Shares Book value	Note
Common stocks of Pu-Shi Venture Capital 806,400	$ - -	$ - ( 806,400 )	$ - - $ - None

Common stocks of Athena Capital 207,025	- -	- ( 124,215 )	- 82,810 - None
Common stocks of Fu-Run Investment 713,235	7,132 -	- -	- 713,235 7,132 None
Common stocks of Unicon Vision 10,000,000	23,200 2,959,318	34,032 ( 5,129,121 )	( 49,400 ) 7,830,197 77,832 None
Common stocks of Acer 2,000,000	47,300 4,150,000	139,968 -	- 6,150,000 187,268 None
Stock of CHINA STEEL STRUCTURE CO., LTD -	- 6,980,000	413,216 -	- 6,980,000 413,216 None

Common stocks of AVISION INC. -	- 10,000,000	102,400 -	- 10,000,000 102,400 None
Common stocks of United Microelectronics Corporation -	- 5,054,000	328,510 -	- 5,054,000 228,510 Yes

Convertible bond call/put options -	- -	5,000 -	- - 5,000 None
Total	$ 147,632	$ 689,616	( $ 49,400 ) $ 1,121,358

Page 1, Schedule 4

Schedule 5	Schedule 5	Taiwan Mask Corporation Schedule of Investments Changes Accounted for Using Equity Method January 1 to December 31, 2021 Unit: NT$Thousand	Taiwan Mask Corporation Schedule of Investments Changes Accounted for Using Equity Method January 1 to December 31, 2021 Unit: NT$Thousand	Taiwan Mask Corporation Schedule of Investments Changes Accounted for Using Equity Method January 1 to December 31, 2021 Unit: NT$Thousand	Taiwan Mask Corporation Schedule of Investments Changes Accounted for Using Equity Method January 1 to December 31, 2021 Unit: NT$Thousand
			January 1 to December 31, 2021
Increase in investment for the Decrease in investment for					Increase (decrease) in investments accounted for using the equity method (Note) Balance at the end of period Market value or equity net value Guaran tee or pledge Ratio of Share Proportio n Unit price (NTD) Number of Shares Amount Total amount Note
OpeningBalance period theperiod

Name Number of Shares
	Amount Number of Shares	Amount Number of Shares
				Amount
SunnyLake Park International Holdings, Inc. 3,120,000	$ 5,355 -	$ - -		$ -	$ 216 3,120,000 100.00% $ 5,139 $ - $ 5,139 None

Youe Chung Capital Corporation 201,969,484	1,359,028 71,598,182	- 18,000,000		180,000	597,896 255,567,666 100.00% 1,776,924 - 1,776,924 None
Innova Vision INC. 2,599,457	520 36,767,141	367,671 2,573,462		-	132,600 36,793,136 91.53% 235,591 - 235,591 None
Advagene Biopharma Co., Ltd. 12,549,652	69,308 -	- -		-	5,730 12,549,652 25.46% 63,578 - 63,578 None
Miracle Technology Co., LTD. 22,955,033	384,228 -	- -		-	46,550 22,955,033 100.00% 430,778 - 430,778 None
Weida Hi-Tech Company 12,176,880	85,425 -	- -		-	2,473 12,176,880 28.20% 87,898 - 87,898 None
Total	$ 1,903,864	$ 367,671		$ 180,000	$ 508,373 $ 2,599,908

Note: Mainly the share of profit or loss of subsidiaries and affiliates accounted for using the equity method, the share of other comprehensive income, and the cash dividends received from investees.

Page 1, Schedule 5

Taiwan Mask Corporation Property, Plant and Equipment Cost Changes Schedule January 1 to December 31, 2021 Schedule 6

Unit: NT$Thousand

	Opening	Increase this	Decrease this	Reclassificatio n for theyear Balance at the end ofperiod Guarantee orpledge Note
Items	Balance	period	period
Buildings and structures	$ 1,556,325	$ 188,982	$ - (	$ 152,341 ) $ 1,692,966 Yes
(including land)
Machinery and equipment	2,678,584	478,829	-	57,614 3,215,027 Yes
Transportation equipment	2,759	2,876	-	- 5,635 None
Office equipment	22,659	8,446	-	- 31,105 None
Other equipment	-	10,942	-	- 10,942 None
Unfinished construction and
equipment to be inspected	135,173	135,470	- (	120,894 ) 149,749 None
	$ 4,395,500	$ 925,545	$ - (	$ 215,621 ) $ 5,105,424

Page 1, Schedule 6

Taiwan Mask Corporation Property, Plant and Equipment Accumulated Depreciation Changes Schedule January 1 to December 31, 2021

Unit: NT$Thousand


Schedule 7				Unit: NT$T
Items		Increase this	Decrease this	Reclassification Balance of the
	OpeningBalance	period	period	for theyear period Note
Buildings and structures	$ 566,010	$ 76,853	$ - (	$ 40,824 ) $ 602,039
Machinery and equipment	1,070,324	234,410	-	- 1,304,734
Transportation equipment	1,750	831	-	- 2,581
Office equipment	11,213	5,144	-	- 16,357
Other equipment	-	1,248	-	- 1,248
	$ 1,649,297	$ 318,486	$ - (	$ 40,824 ) $ 1,926,959

Page 1, Schedule 7

Taiwan Mask Corporation Right-of-Use Assets Schedule January 1 to December 31, 2021

Schedule 8

Unit: NT$Thousand

	OpeningBalance	Decrease this Balance at the end
Items		Increase thisperiod period ofperiod Note
Land	$ 414,784	$ 152,913 $ - $ 567,697
Buildings and structures	3,673	138 ( 155 ) 3,656
Transportation equipment		13,868 ( 4,773 ) 12,650
(company vehicles)	3,555
Other equipment	-	26,733 - 26,733
Total	$ 422,012	$ 193,652 ( $ 4,928 ) $ 610,736

Page 1, Schedule 8

Taiwan Mask Corporation Right-of-Use Assets Accumulated Depreciation Schedule January 1 to December 31, 2021

Schedule 9

Unit: NT$Thousand

	OpeningBalance		Decrease this Balance at the end
Items		Increase thisperiod	period ofperiod Note
Land	$ 23,905	$ 17,498	$ - $ 41,403
Buildings and structures	1,747	984 (	78 ) 2,653
Transportation equipment		2,883 (	109 ) 3,265
(companyvehicles)	491
Total	$ 26,143	$ 21,365 (	$ 187 ) $ 47,321

Page 1, Schedule 9

Taiwan Mask Corporation Short-Term Borrowings Schedule December 31, 2021

Schedule 10

Unit: NT$Thousand

Types of borrowings Explanation	Balance at the Range of Financing Pledge or
	end ofperiod Contract Duration interest rate Amount Guarantee Note
Yuanta Commercial Bank Co.,	$ 80,000 2021.12.3〜2022.3.3 1.050% $ 80,000 None
Ltd.
Land Bank of Taiwan	50,000 2021.11.3〜2022.1.20 1.020% 150,000 None
Taiwan Cooperative Bank	100,000 2021.8.11〜2022.8.11 1.200% 100,000 None
KGI Commercial Bank Co., Ltd.	70,000 2021.9.24〜2022.3.1 1.041% 150,000 None
Taishin International Bank	120,000 2021.11.11〜2022.1.11 1.070% 300,000 None
Far Eastern International Bank	50,000 2021.12.6〜2022.1.5 1.100% 100,000 None
Taiwan Shin Kong Commercial	80,000 2021.11.4〜2022.1.4 1.250% 80,000 None
Bank
Chang Hwa Bank	60,000 2021.12.28〜2022.3.28 1.200% 100,000 None
First Commercial Bank of	50,000 2021.11.9〜2022.3.8 1.000% 100,000 None
Taiwan
International Bills Finance	100,000 2021.12.29〜2022.3.29 1.188% 100,000 None
Corporation
International Bills Finance	100,000 2021.12.29〜2022.3.29 1.188% 500,000 Note
Corporation
	$ 860,000

Note: Stocks of publicly traded and OTC companies (recognized as "Financial assets at fair value through profit or loss").

Page 1, Schedule 10

Taiwan Mask Corporation - Long Term Borrowings Schedule December 31, 2021

Schedule 11

Unit: NT$Thousand

Creditors Summary Amount Borrowed Contract Duration Interest rate (Note 1) Pledge or Guarantee Note	Creditors Summary Amount Borrowed Contract Duration Interest rate (Note 1) Pledge or Guarantee Note
King's Town Bank Intermediate- and long-term secured loans $ 1,250,000 2021.12.28~2027.1.28 1.800% Houses and buildings, machinery equipment and investment property
Shanghai Commercial and Intermediate- and 850,000 2020.11.9~2023.11.9 1.440% Buildings and
Savings Bank long-term secured loans investment property
Taishin International Bank Intermediate- and 250,000 2021.12.27~2024.12.27 1.580% Buildings and
long-term secured loans structures
Shanghai Commercial and Savings Bank Intermediate- and long-term secured loans 300,000 2021.12.27~2026.12.15 1.300% Machinery and equipment
2,650,000
Less: Portion due within one year ( 60,000 )
	$ 2,590,000

Page 1, Schedule 11

Taiwan Mask Corporation Lease liabilities schedule December 31, 2021

Schedule 12

Unit: NT$Thousand

Items Summary Lease Period Discount rate Balance at the end ofperiod Note	Items Summary Lease Period Discount rate Balance at the end ofperiod Note
Land Hsinchu 2005/1/13〜2041/10/6 1.000%〜1.903% $ 531,603
Buildings and structures Hsinchu 2018/1/1〜2022/12/31 1.136%〜1.903% 1,013
Transportation equipment (company vehicles) 2020/9/7〜2024/8/30 0.079%〜0.950% 9,263
Other equipment 2021/12/1〜2036/12/1 1.000% 26,596
568,475
Less: Portion due within one ( 28,054 )
year
	$ 540,421

Page 1, Schedule 12

Taiwan Mask Corporation Sales Income Schedule January 1 to December 31, 2021

Schedule 13	Unit: NT$Thousand Amount $ 2,773,339
Items Quantity
Photomask 65,049 pieces

Page 1, Schedule 13

Taiwan Mask Corporation Operating Costs Schedule January 1 to December 31, 2021

Schedule 14

Unit: NT$Thousand

Items	Amount Note
Direct materials
Opening raw materials	$ 107,837
Incoming materials in the current period	490,627
Endingraw materials (	105,224 )
Consumption in this period	493,240
Director labor	69,189
Manufacturingexpenses	893,369
Manufacturing cost	1,455,798
Add: Opening work-in-progress	7,264
Less: Endingwork-in-progress (	9,596 )
Cost of finished goods	1,453,466
Add: Opening finished goods	967
Less: Endingfinishedgoods (	1,071 )
Costs of good sold	1,453,362
Other operating costs
Loss on falling prices of inventory and	790
inventoryobsolescence
Operating costs	$ 1,454,152

Page 1, Schedule 14

Taiwan Mask Corporation Manufacturing Expenses Schedule January 1 to December 31, 2021

Unit: NT$Thousand


Schedule 15	Unit: NT$Thousand
Items Summary	Amount Note
Depreciation	$ 313,960
Contract maintenance	270,302
fee
Salaries expense	131,715
Utilities	68,329
Others	109,063 The balance of each separate account did not exceed 5%of this account.
	$ 893,369

Page 1, Schedule 15

Taiwan Mask Corporation Operating Expenses Schedule January 1 to December 31, 2021

Unit: NT$Thousand


Schedule 16	Unit: NT$Thousand
Items Summary	Amount Note
Marketing expenses:
Shipping expenses	$ 23,673
Salaries expense	22,535
Export declaration fee	4,003
	The balance of each
Others	separate account did not exceed 5% of this account. 6,508
	$ 56,719
Administrative Expenses:
Salaries expense	$ 271,879
Donation	42,245
Depreciation	24,776
	The balance of each
Others	separate account did not exceed 5% of this account. 120,379
	$ 459,279
Research and development
expenses:
Salaries expense	$ 32,630
Research and experiment
fee	13,392
Experimental material
costs	9,060
	The balance of each
Others	separate account did not exceed 5% of this account. 9,854
	$ 64,936

Page 1, Schedule 16

Taiwan Mask Corporation

Employee Benefits, Depreciation, Depletion and Amortization in the Current Period January 1 to December 31, 2021

Schedule 17

Unit: NT$Thousand

Function		2021			2020
Type	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expenditure
Payroll expenses	$ 190,628	$ 207,880	$ 398,508	$ 178,447	$ 76,673	$ 255,120
Employee stock options	-	119,544	119,544	1,102	74,677	75,779
Labor and health insurance fees	14,230	9,656	23,886	11,789	4,779	16,568
Pension expense	6,150	3,951	10,101	6,380	1,624	8,004
Director remuneration	-	31,055	31,055	-	16,618	16,618
Other employee benefit expenses	7,329	2,467	9,796	6,382	1,910	8,292
Depreciation	313,960	41,613	355,573	203,736	12,471	216,207
Amortization expense	3,640	2,465	6,105	1,047	2,255	3,302

The number of employees in the current year and the previous year were 304 and 250, respectively, of which the number of directors who were not also employees was 5 and 5, respectively.
Stocks are listed on the Taiwan Stock Exchange or the Taipei Exchange and the following information is disclosed:
(1) Average employee benefit expenses for the current year were $1,879 ("Total employee benefit expenses for the current year - total directors' remuneration"/"Number of employees for the current year - number of directors who are not also employees").
Average employee benefit expenses for the previous year were $1,485 ("Total employee benefit expenses for the previous year - total directors' remuneration"/"Number of employees for the previous year - number of directors who are not also employees").
(2) Average employee salary expense for the current year was $1,333 (Total salary expense for the current year / "Number of employees for the current year - Number of directors who were not also employees").
Average employee salary expense for the previous year was $1,041 (Total salary expense for the previous year / "Number of employees for the previous year - Number of directors who were not also employees").
(3) Change in average employee salary expense adjustment was 28.05% ("Average employee salary expense for the current year - Average employee salary expense for the previous year"/ Average employee salary expense for the previous year)
(4) The Company has an audit committee, so there is no supervisor's remuneration.

Page 1, Schedule 17

Taiwan Mask Corporation

Employee Benefits, Depreciation, Depletion and Amortization in the Current Period (continued) January 1 to December 31, 2021

Schedule 17

Unit: NT$Thousand

(5) The Company has established and regularly reviewed the policies, systems, standards and structure of performance appraisal and salary remuneration of directors and managerial officers according to the Remuneration Committee charter, and abided by the following rules:

A. The performance evaluation of the directors and managerial officers and their salary and remuneration shall be considered in reference to the payment standard among industry peers and individual performances, in relevance to its reasonableness with the Company’s operations performance and future risks.

B. Shall not lead directors and managerial officers to pursue salary and remuneration, engaging in risky conducts that outstrip the Company’s capacity to handle.
C. The bonus proportion of short-term performance for directors and senior level managerial officers and partial changes to remuneration payment time shall be decided in consideration of the industrial characteristics and the nature of the Company’s business.

(6) Directors' remuneration and employee remuneration are subject to the Company's Articles of Incorporation. The distribution shall be executed after the resolution approval at the Board meeting with more than two-thirds of directors attending and of more than half of the attending directors agreed and passed the resolution, and reported to the shareholders meeting.

A. Employee remuneration: Allocated based on the Company's operating condition, and is distributed based on employee's position, performance, and tenure of service.

B. Quarterly bonus: Allocated based on the Company's operating condition, and is given as an incentive for achieving the set targets.

C. Annual salary adjustment: Carried out in accordance with the Company's operating condition. Annual salary adjustment: Carried out in accordance with the Company's operating condition. The salary adjustment range takes into account the salary adjustment in the industry, domestic economic growth, price index, and individual performance appraisal.

Page 2, Schedule 17

AI assistant

TMC — Annual Report 2021

52014_rns_2021-12-28_d22fec66-b6f6-40f4-8816-bbdb4d8f6448.pdf

Taiwan Mask Corporation

2021 and 2020 standalone financial statements and independent auditor’s report

Table of Contents

Opinions

Basis for Opinion

Key Audit Matters

Evaluation of Inventories

Description

How our audit addressed the matter

Income recognition

Description

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

Independent auditor’s responsibilities for the audit of the standalone financial statements

Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Balance Sheets December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Comprehensive Income Statements For the Years Ended December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Taiwan Mask Corporation Standalone Statements of Cash Flow For the Years Ended December 31, 2021 and 2020

Taiwan Mask Corporation Notes to the Standalone Financial Statements 2021 and 2020

(I) Company history

(II) Date and procedures for passing the financial report

(III) Application of New and Revised International Financial Reporting Standards

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

(IV) Summary of significant accounting policies

1. Compliance statement

2. Basis of Preparation

3. Foreign currency translation

4. Classification of current and non-current items

5. Financial assets at fair value through profit and loss

6. Financial assets measured at amortized cost

7. Accounts and notes receivable

8. Impairment Loss of Financial Assets

9. De-recognition of financial assets

10. Lessor's lease transaction -- Operating lease

11. Inventories

12. Investments accounted for using equity method -- Subsidiaries and associates

13. Property, plant and equipment

14. Leasing agreements (lessee) - Right-of-use assets/lease liabilities

15. Real estate investment

16. Intangible assets

17. Impairment of non-financial assets

18. Borrowings

19. Accounts and notes receivable

21. Employee benefits

2. Pension

3. Termination benefits

22. Share-based payment to employees

23. Income tax

24. Capital

25. Dividend distribution

26. Recognized revenue

27. Government subsidies

(V) Critical Accounting Judgments and Key Sources of Estimation and Uncertainty

(1). Important judgments adopted by the accounting policies

(2). Critical accounting estimates and assumptions

(VI) Statements of main accounting items

(7). Property, plant and equipment

(12).Short Term Loans

(13).Other Payables

(14).Corporate bonds payable

(15).Long-term Loans

(16).Pensions

(3) Changes in net defined benefit liabilities are as follows:

(17).Capital

2. Treasury stock

(18).Capital surplus

1. Segmentation of revenue from contracts with customers

2. Contract Liabilities

(28).Income tax

1. Income tax expense

2. Reconciliation between income tax expense and accounting profit

(29).Earnings per share

(30).Supplemental cash flow information

(VII) Related-Party Transactions

(1). Related parties' names and relationship

TMC Annual Report 2021