Transcend - Annual Report 2021 | FinancialReports.eu

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2021 AND 2020

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

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR21000372

To the Board of Directors and Shareholders of Transcend Information, Inc.

Opinion

We have audited the accompanying consolidated balance sheets of Transcend Information, Inc. and its subsidiaries (the “Group”) as at December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Group’s 2021 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2021 consolidated financial statements are stated as follows:

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Valuation of inventories

Description

Refer to Notes 4(13), 5(2) and 6(5) to the consolidated financial statements for the information on the Group’s inventory accounting policy, estimates and assumptions and allowance for inventory valuation losses.

The percentage of the Group’s inventories to total assets is material and the Group applies judgements and estimates in determining the net realizable value of inventories at the balance sheet date. The Group mainly produces DRAM and flash memory. As these products have a short life cycle and belong to a highly competitive industry, the market prices change frequently. Since the Group’s inventories and the allowance for inventory valuation losses are material to the financial statements, the valuation of inventories has been identified as a key audit matter.

How our audit addressed the matter

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

A. Obtained an understanding of the Group’s operations and industry. Assessed the reasonableness of the policy and procedures to recognize allowance for inventory valuation losses.
B. Obtained an understanding of the Group’s inventory control procedures. Reviewed annual inventory count plan and observed the annual physical count of inventory in order to assess the effectiveness of internal controls over inventory.
C. Obtained relevant evaluation reports of inventory and tested the logic and accuracy of information to assess the reasonableness of allowance for inventory valuation losses.

Estimation of allowance for sales discount

Description

In consideration of business volume, the Group provides a variety of business incentives to specific customers or products, and based on that, the Group can estimate the allowance for sales discount monthly. Refer to Notes 4(25) and 6(4) to the consolidated financial statements for the information on the estimation of allowance for sales discount.

Since the contracts are numerous and the result could affect the net revenue in the consolidated financial statements, the estimation of allowance for sales discount has been identified as a key audit matter.

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How our audit addressed the matter

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

A. Obtained an understanding of the Group’s operations, industry and the procedures to recognize allowance for sales discount.
B. Obtained an understanding of the Group’s sales procedures and interviewed management to assess the appropriateness of sales allowance contracts and internal control over estimation of allowance.
C. Obtained the evaluation list of allowance for sales discount, and tested material sales allowance contracts and recalculated it to assess the reasonableness of allowance determined by the Group.

Other matter –Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Transcend Information, Inc. as at and for the years ended December 31, 2021 and 2020.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the 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 consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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Auditors’ responsibilities for the audit of the consolidated financial statements

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

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

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

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

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

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

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

Lin, Chun-Yao Chen, Chin-Chang

For and on behalf of PricewaterhouseCoopers, Taiwan

March 3, 2022

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

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

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

Assets	December 31, 2021 AMOUNT % `$` `2,018,106` `9` `1,506,595` `7` `5,567,177` `25` `2,499` `-` `1,622,484` `7` `108,850` `-` `5,774,825` `26` `159,976` `1` `13,445` `-` `16,773,957` `75` `111,599` `-` `629,576` `3` `148,514` `1` `1,942,013` `9` `124,054` `-` `2,602,088` `12` `47,355` `-` `59,345` `-` `5,664,544` `25` `$` `22,438,501` `100`	December 31, 2020	December 31, 2020
	AMOUNT `$` `2,018,106` `1,506,595` `5,567,177` `2,499` `1,622,484` `108,850` `5,774,825` `159,976` `13,445` `16,773,957` `111,599` `629,576` `148,514` `1,942,013` `124,054` `2,602,088` `47,355` `59,345` `5,664,544` `$` `22,438,501`	AMOUNT `$` `736,852` `3,510,998` `5,659,889` `759` `1,434,454` `71,351` `3,190,466` `-` `10,495` `14,615,264` `744,922` `111,000` `95,724` `2,282,324` `187,079` `2,612,426` `41,472` `47,411` `6,122,358` `$` `20,737,622`	%
Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss - current Current financial assets at amortised cost, net Notes receivable, net Accounts receivable, net Other receivables Inventories, net Non-current assets held for sale, net Other current assets Total Current Assets Non-current Assets Non-current financial assets at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income Investments accounted for using equity method Property, plant and equipment, net Right-of-use assets Investment property, net Deferred tax assets Other non-current assets Total Non-current Assets Total Assets			`4` `17` `27` `-` `7` `-` `15` `-` `-`
			`70`
			`4` `1` `-` `11` `1` `13` `-` `-`
			`30`
			`100`

(Continued)

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

Liabilities and Equity December 31, 2021
December 31, 2020
Notes
AMOUNT
%
AMOUNT
%
$
1,364,835
6
$
1,134,266
6
7
52,241
-
37,416
-
286,168
1
246,635
1
592,886
3
295,381
2
7
16,917
-
51,010
-
88,606
1
73,046
-
2,401,653
11
1,837,754
9
6(24)
128,784
1
139,700
1
7
26,033
-
34,705
-
6(14)
47,196
-
53,437
-
202,013
1
227,842
1
2,603,666
12
2,065,596
10
6(15)
4,290,617
19
4,290,617
21
6(16)
3,730,914
16
3,945,369
19
6(17)
4,803,503
21
4,683,878
22
117,244
1
130,902
1
7,083,072
32
5,738,504
28
6(18)
(
190,515) (
1) (
117,244) (
1 )
19,834,835
88
18,672,026
90
9
11
$
22,438,501
100
$
20,737,622
100

Current Liabilities
Accounts payable
Accounts payable - related parties
Other payables
Current tax liabilities
Current lease liabilities
Other current liabilities
Total Current Liabilities
Non-current Liabilities
Deferred tax liabilities
Non-current lease liabilities
Other non-current liabilities
Total Non-current Liabilities
Total Liabilities
Equity Attributable to Owners of Parent
Share capital
Common stock
Capital surplus
Capital surplus
Retained earnings
Legal reserve
Special reserve
Unappropriated retained earnings
Other equity interest
Other equity interest
Total Equity
Significant contingent liabilities and
unrecognized contract commitments
Significant events after the balance sheet date
Total Liabilities and Equity

Liabilities and Equity	December 31, 2021 December 31, 2020 Notes AMOUNT % AMOUNT % `$` `1,364,835` `6` `$` `1,134,266` `6` 7 `52,241` `-` `37,416` `-` `286,168` `1` `246,635` `1` `592,886` `3` `295,381` `2` 7 `16,917` `-` `51,010` `-` `88,606` `1` `73,046` `-` `2,401,653` `11` `1,837,754` `9` 6(24) `128,784` `1` `139,700` `1` 7 `26,033` `-` `34,705` `-` 6(14) `47,196` `-` `53,437` `-` `202,013` `1` `227,842` `1` `2,603,666` `12` `2,065,596` `10` 6(15) `4,290,617` `19` `4,290,617` `21` 6(16) `3,730,914` `16` `3,945,369` `19` 6(17) `4,803,503` `21` `4,683,878` `22` `117,244` `1` `130,902` `1` `7,083,072` `32` `5,738,504` `28` 6(18) `(` `190,515) (` `1) (` `117,244) (` `1 )` `19,834,835` `88` `18,672,026` `90` 9 11 `$` `22,438,501` `100` `$` `20,737,622` `100`
Current Liabilities Accounts payable Accounts payable - related parties Other payables Current tax liabilities Current lease liabilities Other current liabilities Total Current Liabilities Non-current Liabilities Deferred tax liabilities Non-current lease liabilities Other non-current liabilities Total Non-current Liabilities Total Liabilities Equity Attributable to Owners of Parent Share capital Common stock Capital surplus Capital surplus Retained earnings Legal reserve Special reserve Unappropriated retained earnings Other equity interest Other equity interest Total Equity Significant contingent liabilities and unrecognized contract commitments Significant events after the balance sheet date Total Liabilities and Equity

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

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars, except for earnings per share amount)

Items Year ended December 31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6(19) and 7
$
14,314,815
100
$
11,446,696
100
6(5)(23) and 7
(
10,139,129) (
71) (
8,976,600) (
78)
4,175,686
29
2,470,096
22
6(23)
(
765,171) (
5) (
692,592) (
6)
(
366,696) (
3) (
431,320) (
4)
(
151,458) (
1) (
133,355) (
1)
6(4)
(
567)
- (
893)
-
(
1,283,892) (
9) (
1,258,160) (
11)
2,891,794
20
1,211,936
11
6(20)
79,117
1
73,952
1
6(21)
37,253
-
38,721
-
6(22)
69,148
1
163,899
1
6(3)
-
-
17,210
-
6(10)
(
1,248)
- (
2,038)
-
6(8)
52,590
- (
1,299)
-
236,860
2
290,445
2
3,128,654
22
1,502,381
13
6(24)
(
595,360) (
4) (
304,646) (
2)
$
2,533,294
18
$
1,197,735
11
6(14)
$
2,344
- ($
1,072)
-
6(7)(18)
11,826
- (
3,164)
-
200
- (
411)
-
6(18)
(
95,365) (
1)
21,027
-
6(18)(24)
19,072
- (
4,205)
-
($
61,923) (
1) $
12,175
-
$
2,471,371
17
$
1,209,910
11
$
2,533,294
18
$
1,197,735
11
$
2,471,371
17
$
1,209,910
11
6(25)
$
5.90
$
2.79
$
5.90
$
2.79

Operating Revenue
Operating Costs
Gross Profit
Operating Expenses
Sales and marketing expenses
Administrative expenses
Research and development expenses
Impairment loss determined in accordance
with IFRS 9
Total operating expenses
Operating Profit
Non-operating Income and Expenses
Interest income
Other income
Other gains and losses
Net gain from derecognizing financial assets
measured at amortised cost
Finance costs
Share of profit (loss) of associates and joint
ventures accounted for using the equity
method
Total non-operating income and expenses
Profit before Income Tax
Income tax expense
Profit for the Year
Other Comprehensive Income (Loss)
Components of other comprehensive
income (loss) that will not be reclassified to
profit or loss
Gains (losses) on remeasurements of defined
benefit plans
Unrealized gain (loss) on financial assets at
fair value through other comprehensive
income
Share of other comprehensive income (loss)
of associates and joint ventures accounted for
using the equity method
Components of other comprehensive
income (loss) that will be reclassified to
profit or loss
Exchange differences on translation of
foreign financial statements
Income tax related to components of other
comprehensive income that will be
reclassified to profit or loss
Other Comprehensive (Loss) Income for the
Year
Total Comprehensive Income
Net profit attributable to:
Owners of parent
Comprehensive income attributable to:
Owners of parent
Earnings Per Share (in dollars)
Basic earnings per share
Diluted earnings per share

Items	Year ended December 31 2021 2020 Notes AMOUNT % AMOUNT % 6(19) and 7 `$` `14,314,815` `100` `$` `11,446,696` `100` 6(5)(23) and 7 `(` `10,139,129) (` `71) (` `8,976,600) (` `78)` `4,175,686` `29` `2,470,096` `22` 6(23) `(` `765,171) (` `5) (` `692,592) (` `6)` `(` `366,696) (` `3) (` `431,320) (` `4)` `(` `151,458) (` `1) (` `133,355) (` `1)` 6(4) `(` `567)` `- (` `893)` `-` `(` `1,283,892) (` `9) (` `1,258,160) (` `11)` `2,891,794` `20` `1,211,936` `11` 6(20) `79,117` `1` `73,952` `1` 6(21) `37,253` `-` `38,721` `-` 6(22) `69,148` `1` `163,899` `1` 6(3) `-` `-` `17,210` `-` 6(10) `(` `1,248)` `- (` `2,038)` `-` 6(8) `52,590` `- (` `1,299)` `-` `236,860` `2` `290,445` `2` `3,128,654` `22` `1,502,381` `13` 6(24) `(` `595,360) (` `4) (` `304,646) (` `2)` `$` `2,533,294` `18` `$` `1,197,735` `11` 6(14) `$` `2,344` `- ($` `1,072)` `-` 6(7)(18) `11,826` `- (` `3,164)` `-` `200` `- (` `411)` `-` 6(18) `(` `95,365) (` `1)` `21,027` `-` 6(18)(24) `19,072` `- (` `4,205)` `-` `($` `61,923) (` `1) $` `12,175` `-` `$` `2,471,371` `17` `$` `1,209,910` `11` `$` `2,533,294` `18` `$` `1,197,735` `11` `$` `2,471,371` `17` `$` `1,209,910` `11` 6(25) `$` `5.90` `$` `2.79` `$` `5.90` `$` `2.79`
Operating Revenue Operating Costs Gross Profit Operating Expenses Sales and marketing expenses Administrative expenses Research and development expenses Impairment loss determined in accordance with IFRS 9 Total operating expenses Operating Profit Non-operating Income and Expenses Interest income Other income Other gains and losses Net gain from derecognizing financial assets measured at amortised cost Finance costs Share of profit (loss) of associates and joint ventures accounted for using the equity method Total non-operating income and expenses Profit before Income Tax Income tax expense Profit for the Year Other Comprehensive Income (Loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealized gain (loss) on financial assets at fair value through other comprehensive income Share of other comprehensive income (loss) of associates and joint ventures accounted for using the equity method Components of other comprehensive income (loss) that will be reclassified to profit or loss Exchange differences on translation of foreign financial statements Income tax related to components of other comprehensive income that will be reclassified to profit or loss Other Comprehensive (Loss) Income for the Year Total Comprehensive Income Net profit attributable to: Owners of parent Comprehensive income attributable to: Owners of parent Earnings Per Share (in dollars) Basic earnings per share Diluted earnings per share

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

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

Notes						Equity attributable to	Equity attributable to	o	wners of the parent	wners of the parent
		Common stock			Capital Reserves				Retained Earnings			Other EquityInterest			Treasuryshares
				Additional paid-in capital	Donated assets received	Net assets from merger	Legal reserve		Special reserve		Unappropriated retained earnings	Exchange differences on translation of foreign financial statements	a	Unrealized gain or loss on financial ssets at fair value through other comprehensive income
6(7)(18) 6(17) 6(17) 6(15) 6(15) 6(7)(18) 6(17) 6(17) 6(7)(18)	`$ 4,307,617` `-` `-` `-` `-` `-` `-` `-` `-` `-` `(` `17,000` `)` `$ 4,290,617` `$ 4,290,617` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$ 4,290,617`		`$ 4,307,541` `-` `-` `-` `-` `-` `-` `(` `386,156 )` `-` `-` `(` `15,422 )` `$ 3,905,963` `$ 3,905,963` `-` `-` `-` `-` `-` `-` `(` `214,531 )` `-` `-` `$ 3,691,432`		`$` `4,185` `-` `-` `-` `-` `-` `-` `-` `93` `-` `-` `$` `4,278` `$` `4,278` `-` `-` `-` `-` `-` `-` `-` `-` `76` `$` `4,354`	`$` `35,128` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `35,128` `$` `35,128` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `35,128`	`$ 4,510,981` `-` `-` `-` `172,897` `-` `-` `-` `-` `-` `-` `$ 4,683,878` `$ 4,683,878` `-` `-` `-` `119,625` `-` `-` `-` `-` `-` `$ 4,803,503`	`$` `61,572` `-` `-` `-` `-` `-` `69,330` `-` `-` `-` `-` `$` `130,902` `$` `130,902` `-` `-` `-` `-` `-` `(` `13,658 )` `-` `-` `-` `$` `117,244`		`$ 6,427,300` `1,197,735` `(` `1,483 )` `1,196,252` `(` `172,897 )` `(` `1,544,622 )` `(` `69,330 )` `-` `-` `-` `(` `98,199 )` `$ 5,738,504` `$ 5,738,504` `2,533,294` `2,544` `2,535,838` `(` `119,625 )` `(` `1,094,107 )` `13,658` `-` `8,804` `-` `$ 7,083,072`		`($` `138,461` `)` `-` `16,822` `16,822` `-` `-` `-` `-` `-` `-` `-` `($` `121,639` `)` `($` `121,639` `)` `-` `(` `76,293` `)` `(` `76,293` `)` `-` `-` `-` `-` `-` `-` `($` `197,932` `)`	`$` `7,559` `-` `(` `3,164 )` `(` `3,164 )` `-` `-` `-` `-` `-` `-` `-` `$` `4,395` `$` `4,395` `-` `11,826` `11,826` `-` `-` `-` `-` `(` `8,804 )` `-` `$` `7,417`		`($` `116,574 )` `-` `-` `-` `-` `-` `-` `-` `-` `(` `14,047 )` `130,621` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 19,406,848` `1,197,735` `12,175` `1,209,910` `-` `(` `1,544,622` `)` `-` `(` `386,156` `)` `93` `(` `14,047` `)` `-` `$ 18,672,026` `$ 18,672,026` `2,533,294` `(` `61,923` `)` `2,471,371` `-` `(` `1,094,107` `)` `-` `(` `214,531` `)` `-` `76` `$ 19,834,835`

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

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net gain on financial assets at fair value through profit or loss

Share of profit or loss of associates and joint ventures accounted for
using the equity method

Expected credit loss

(Gain) loss on disposal of property, plant and equipment

Depreciation

Interest income

Interest expense

Dividend income

Changes in operating assets and liabilities
Changes in operating assets
Financial assets mandatorily measured at fair value through profit
or loss
Notes receivable
Accounts receivable
Accounts receivable - related parties
Other receivables
Inventories
Other current assets
Changes in operating liabilities
Accounts payable
Accounts payable - related parties
Other payables
Other current liabilities
Other non-current liabilities
Cash inflow (outflow) generated from operations
Dividends received
Interest received
Income tax paid
Net cash flows from (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of non-current financial assets at fair value through
profit or loss
Acquisition of non-current financial assets at fair value through profit or
loss
Proceeds from disposal of financial assets at amortised cost
Acquisition of financial assets at amortised cost
Proceeds from disposal of non-current financial assets at fair value through
other comprehensive income

Acquisition of non-current financial assets at fair value through other
comprehensive income
Proceeds from disposal of property, plant and equipment
Acquisition of property, plant and equipment

Acquisition of investment property

(Increase) decrease in other non-current financial assets
Net cash flows from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid (including cash payment from capital surplus)

Repayment of lease liabilities
Expired unclaimed dividends recognized as capital surplus
Purchase of treasury stock
Net cash flows used in financing activities
Effect of exchange rate changes
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year Year ended December 31
Notes
2021
2020
$
3,128,654 $
1,502,381
6(2)(22)
(
84,872 ) (
147,742 )
6(8)
(
52,590 )
1,299
6(4)
567
893
6(22)
(
12 )
2,098
6(23)
253,806
257,272
6(20)
(
79,117 ) (
73,952 )
6(10)
1,248
2,038
6(7)(22)
(
6,787 ) (
3,834 )
2,012,362 (
916,025 )
(
1,740 )
2,295
(
188,555 )
43,310
-
8
(
41,547 )
43,684
(
2,584,359 ) (
1,127,807 )
(
2,950 )
7,478
230,569
128,916
14,825 (
15,412 )
39,533 (
20,481 )
15,560
57,735
(
3,897 ) (
819 )
2,650,698 (
256,665 )
6,787
3,834
83,165
82,994
(
295,582 ) (
78,570 )
2,445,068 (
248,407 )

841,021
-
(
130,785 ) (
611,063 )
2,619,758
6,287,094
(
2,530,400 ) (
3,884,624 )
6(7)
54,426
-
(
561,176 )
-
20
-
6(9)
(
15,334 ) (
29,700 )
6(12)
(
2,409 ) (
1,082 )
(
11,934 )
3,783
263,187
1,764,408

6(17)
(
1,308,638 ) (
1,930,778 )
(
56,105 ) (
54,459 )
76
93
- (
37,371 )
(
1,364,667 ) (
2,022,515 )
(
62,334 )
9,959
1,281,254 (
496,555 )
736,852
1,233,407
$
2,018,106 $
736,852

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

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020

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

1. HISTORY AND ORGANIZATION

Transcend Information, Inc. (the “Company”) was incorporated under the provisions of the Company Law of the Republic of China (R.O.C.) in August 1989. The main activities of the Company and its subsidiaries (collectively referred herein as the “Group”) are manufacturing, processing and sales of computer software and hardware, peripheral equipment and other computer components. The Securities and Futures Commission of the Republic of China had approved the Company’s shares to be listed on the Taiwan Stock Exchange and the shares started trading on May 3, 2001.

THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on March 3, 2022.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

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

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

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

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2022 are as follows:

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

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

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

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, ‘Insurance contracts’ Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 – comparative information' Amendments to IAS 1, ‘Classification of liabilities as current or non- current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising from a single transaction’	To be determined by International Accounting Standards Board January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023

endorsed by the FSC are as follows:

New Standards,Interpretations and Amendments

Effective date
by International
Accounting
Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between
an investor and its associate or joint venture’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendment to IFRS 17, 'Initial application of IFRS 17 and IFRS 9 –
comparative information'
Amendments to IAS 1, ‘Classification of liabilities as current or non-
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’
Amendments to IAS 8, ‘Definition of accounting estimates’
Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising
from a single transaction’

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets at fair value through profit or loss.
(b) Financial assets at fair value through other comprehensive income.
(c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligations.
B. The preparation of financial statements in conformity with requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

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(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is 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 Group 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.
B. Subsidiaries included in the consolidated financial statements:

Name of Name of Main Business Investor Subsidiary Activities Transcend Taiwan Saffire Investment Ltd. (Saffire) Investment holdings Transcend Japan Inc. (Transcend Japan) Wholesale and import of computer memory modules and peripheral products Transcend Information Inc. (Transcend USA) Wholesale and import of computer memory modules and peripheral products Transcend Korea Inc. (Transcend Korea) Wholesale and import of computer memory modules and peripheral products	December December 31,2021 31,2020 100 100 100 100 100 100 100 100 Ownership (%)	Description
	December 31,2021 100 100 100 100

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Name of Name of Main Business Investor Subsidiary Activities Saffire Investment Ltd. Memhiro Pte. Ltd. (Memhiro) Investment holdings Memhiro Pte. Ltd. Transcend Information Europe B.V. (Transcend Europe) Wholesale and import of computer memory modules and peripheral products Transcend Information Trading GmbH (Transcend Germany) Wholesale and import of computer memory modules and peripheral products Transcend Information (Shanghai), Ltd. (Transcend Shanghai) Manufacture and sales of computer memory modules, storage products and disks, and lease of self-owned buildings Transtech Trading (Shanghai) Co., Ltd. (Transtech Shanghai) Wholesale, agent, import and export and retail of computer memory modules, storage products and computer components Transcend Information (Hong Kong), Ltd. (Transcend Hong Kong) Wholesale and import of computer memory modules and peripheral products	December December 31,2021 31,2020 100 100 100 100 100 100 100 100 100 100 100 100 Ownership (%)	Description
	December 31,2021 100 100 100 100 100 100

C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustment for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group: None.

(4) Foreign currency translation

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

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.

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(b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are 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 at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(d) All other foreign exchange gains and losses based on the nature of those transactions are presented in the statement of comprehensive income within‘other gains and losses’.
B. Translation of foreign operations

The operating results and financial position of all the group entities 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; and

(5) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
(a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
(b) Assets held mainly for trading purposes;
(c) Assets that are expected to be realized within twelve months from the balance sheet date;
(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

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B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
(a) Liabilities that are expected to be settled within the normal operating cycle;
(b) Liabilities arising mainly from trading activities;
(c) Liabilities that are to be settled within twelve months from the balance sheet date;
(d) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

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

A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.

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

A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognize changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting. (Irrevocable election is separately classified, and needs to be disclosed when there is various election).
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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(9) Financial assets at amortised cost

A. Financial assets at amortised cost are those that meet all of the following criteria:
(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
(b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortised cost are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognized in profit or loss when the asset is derecognized or impaired.

(10) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(11) Financial assets impairment

For debt instruments measured at fair value through other comprehensive income and financial assets at amortised cost including accounts receivable that have a significant financing component, at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

(12) Derecognition of financial assets

The Group derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (allocated based on actual operating capacity). It excludes borrowing costs. The item by item approach is used in applying the

~19~

lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(14) Non-current assets (or disposal groups) held for sale

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

(15) Investments accounted for using equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’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 Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

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F. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

(16) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. 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 Group and the cost 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.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 8 ~ 50 years Machinery and equipment 2 ~ 10 years Transportation equipment 3 ~ 5 years Office equipment and others 2 ~ 5 years

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

A. Leases are recognized as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognized as an expense on a straight-line basis over the lease term.

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B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:
(a) Fixed payments, less any lease incentives receivable; and
(b) Variable lease payments that depend on an index or a rate.

The Group 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 remeasurement 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.

C. At the commencement date, the right-of-use asset is stated at cost comprising the amount of the initial measurement of lease liability.

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

(18) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10 ~ 55 years.

(19) Impairment of non-financial assets

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

(20) Notes and accounts payable

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

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(21) Employee benefits

A. Short-term employee benefits

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

B. Pensions

(a) 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.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability 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 interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
- ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognized immediately in profit or loss.
C. Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation 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) Income tax

A. 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.

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B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is 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 consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
D. Deferred 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 tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from acquisitions of equipment or technology and research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(23) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s shares that have been issued, the consideration paid, excluding any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders.

(24) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

~24~

(25) Revenue recognition

A. Sales of goods
(a) The Group manufactures and sells computer software and hardware, computer peripheral equipment, and computer component products. When the right of control is transferred to the customer, sales revenue is recognized. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
(b) Sales revenue is recognized based on contract price, net of sales returns, volume discounts and estimated sales discounts. The goods are often sold with volume discounts based on aggregate sales over a one-month period. Sales discounts and allowances are estimated and provided for based on customer contracts, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date and recognized as allowance for sales discounts. No element of financing is deemed present as the sales are made with a credit term of 30-60 days after monthly billing, which is consistent with market practice.
(c) A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
B. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Group recognizes the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.

(26) Operating segments

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

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

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

~25~

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

Investment property

The Group uses a portion of the property for its own use and another portion to earn rentals or for capital appreciation. When these portions cannot be sold separately and cannot be leased out separately under a finance lease, the property is classified as investment property only if the own use portion accounts for an insignificant portion of the property.

(2) Critical accounting estimates and assumptions

Valuation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. The valuation of inventories is based on recent market price and demand of products in the future specific period, thus there might be significant changes in the valuation.

As of December 31, 2021, the carrying amount of inventories was $5,774,825.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

December 31, 2021 Cash on hand and petty cash 217 $ Checking accounts and demand deposits 1,931,009 Time deposits 86,880 2,018,106 $	December 31, 2020
	844 $ 736,008 -
	736,852 $

A. The aforementioned time deposits pertain to high liquidity investments with maturity within three months.
B. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
C. The Group has no cash and cash equivalents pledged to others.

~26~

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

==> picture [484 x 199] intentionally omitted <==

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

Items December 31, 2021 December 31, 2020
Current items:
Financial assets mandatorily measured at
fair value through profit or loss
Beneficiary certificates $ 1,501,948 $ 3,501,229
Valuation adjustments 4,647 9,769
$ 1,506,595 $ 3,510,998
Non-current items:
Financial assets mandatorily measured at
fair value through profit or loss
Beneficiary certificates $ 100,976 $ 611,063
Valuation adjustments 10,623 133,859
$ 111,599 $ 744,922
----- End of picture text -----

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Financial assets mandatorily measured at fair value through profit or loss Beneficiary certificates Financial products Non-hedging derivatives	2021 2020 84,375 $ 145,108 $ 497 859 - 1,775 84,872 $ 147,742 $ Years ended December 31,	2021 2020 84,375 $ 145,108 $ 497 859 - 1,775 84,872 $ 147,742 $ Years ended December 31,
		145,108 $ 859 1,775
		147,742 $

B. The Group has no financial assets at fair value through profit or loss pledged to others.

(3) Financial assets at amortised cost

Items Current items: Time deposits with original maturity of more than three months	December 31,2021 5,567,177 $	December 31,2020
		5,659,889 $

A. Amounts recognized in profit or loss in relation to financial assets at amortised cost are listed below:

Interest income Gain on disposal	Years ended December 31,	Years ended December 31,
	2021 24,813 $ - 24,813 $	2020
		65,622 $ 17,210
		82,832 $

~27~

B. The Group has no financial assets at amortised cost pledged to others as collateral.
C. The Group used the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information to assess the default possibility of debt instruments on December 31, 2021 and 2020, and considered guarantee for repurchase agreement held by the Group to estimate expected credit loss. The Group does not expect material credit loss after assessment.
D. The Group transacts time deposits with reputable domestic and foreign banks. The Group’s counterparties have good credit quality, and the impairment loss is assessed using a 12-month expected credit loss approach.

(4) Notes and accounts receivable

	December	31,2021	December	31, 2020
Notes receivable	$	2,499	$	759
Accounts receivable	$	1,623,284	$	1,438,764
Less: Loss allowance	(	800)	(	4,310)
	$	1,622,484	$	1,434,454

A. As of December 31, 2021 and 2020, the estimated sales discounts and allowances were $63,361 and $93,140, respectively. Since the sales discounts and allowances met the requirements for offset of financial liabilities and financial assets, the net amounts were shown under accounts receivable.
B. The ageing analysis of accounts receivable and notes receivable is as follows:

Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December	31,2021
	Accounts receivable 1,347,477 $ 258,288 11,418 406 5,695 1,623,284 $ December	Notes receivable
		2,499 $ - - - -
		2,499 $
		31,2020
	Accounts receivable 1,177,490 $ 237,151 8,835 406 14,882 1,438,764 $	Notes receivable
		759 $ - - - -
		759 $

The above ageing analysis was based on past due date.

~28~

C. The Group has credit insurance that covers accounts receivable from major customers. Should bad debts occur, the Group will receive 90% of the losses resulting from non-payment.
D. As of December 31, 2021 and 2020, notes receivable and accounts receivable were all from contracts with customers. As of January 1, 2020, the balance of notes receivable and accounts receivable from contracts with customers amounted to $1,487,056.
E. As at December 31, 2021 and 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $2,499 and $759, respectively; the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable were $1,622,484 and $1,434,454, respectively.
F. The Group classifies customers’ accounts receivable in accordance with the credit rating of the customer. The Group applies the simplified approach to estimate expected credit loss under the provision matrix basis.
G. The Group wrote-off the financial assets, which cannot reasonably be expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. On December 31, 2021 and 2020, the Group has no written-off financial assets that are still under recourse procedures.
H. The Group used forecastability, historical and timely information to assess the loss rate of accounts receivable. On December 31, 2021 and 2020, the provision matrix is as follows:

December 31, 2021 Expected loss rate Total book value December 31, 2020 Expected loss rate Total book value	Not past due 0.002%~0.496% 1,347,477 $ Not past due 0.003%~0.386% 1,177,490 $	1-180 days past due 0.015%~36% 270,112 $ 1-180 days past due 0.018%~41% 246,392 $	Over 180 days past due 25%~100% 5,695 $ Over 180 days past due 25%~100% 14,882 $	Total
				1,623,284 $ Total
				1,438,764 $

~29~

I. The balance of allowance for loss and movements are as follows:

		2021	2021
	Accounts	receivable		Notes receivable
At January 1	$	4,310	$	-
Provision for impairment		567		-
Write-offs	(	903)		-
Reclassified to overdue receivables	(	3,132)		-
Effect of exchange rate changes	(	42)		-
At December 31	$	800	$	-

			2020	2020
		Accounts	receivable		Notes receivable
At January 1	$		5,471	$		-
Provision for impairment			893			-
Write-offs	(		616)			-
Reclassified to overdue receivables	(		178)			-
Reclassified to other income	(		1,134)			-
Effect of exchange rate changes	(		126)			-
At December 31	$		4,310	$		-

J. The Group does not hold any collateral as security.

(5) Inventories

Raw materials Work in progress Finished goods	December 31,2021
	Allowance for Cost valuation loss 4,555,175 $ 48,311) ($ 604,979 438) ( 667,191 3,771) ( 5,827,345 $ 52,520) ($	Book value
		4,506,864 $ 604,541 663,420
		5,774,825 $

Raw materials Work in progress Finished goods		December 31,2020
	Allowance for Cost valuation loss 2,161,744 $ 28,593) ($ 487,023 1,023) ( 576,861 5,546) ( 3,225,628 $ 35,162) ($		Book value
			2,133,151 $ 486,000 571,315
			3,190,466 $

~30~

A. The cost of inventories recognized as expense for the year:

		Years ended	December 31,	December 31,
		2021		2020
Cost of goods sold	$	10,121,771	$	8,970,221
Loss on decline in market value of inventory		17,358		6,379
	$	10,139,129	$	8,976,600

B. No inventories were pledged to others.

(6) Non-current assets held for sale

December 31, 2021 Buildings and structures held for sale 143,596 $ Right-of-use assets held for sale - land 16,380 159,976 $	December 31,2020
	- $ -
	- $

A. On November 26, 2021, the Board of Directors of the Group’s overseas second-tier subsidiary, Transcend Information (Shanghai), Ltd., resolved to sell its buildings in response to the land expropriation and the related assets were transferred to non-current assets held for sale. Refer to Note 11 for related transactions.
B. The carrying amount of non-current assets held for sale was lower than the fair value less costs to sell based on the assessment. Thus, no impairment has occurred.

(7) Non-current financial assets at fair value through other comprehensive income

Items Non-current items: Equity instruments Listed stocks Others Valuation adjustments	December 31,2021 621,034 $ 1,125 622,159 7,417 629,576 $	December 31,2020
		105,480 $ 1,125
		106,605 4,395
		111,000 $

A. The Group has elected to classify equity investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $629,576 and $111,000 as at December 31, 2021 and 2020, respectively.
B. For the year ended December 31, 2021, the Group disposed equity investments whose fair value was $54,426, and the cumulative gain on disposal was transferred to retained earnings in the amount of $8,804. There was no such transaction for the year ended December 31, 2020.

~31~

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

==> picture [472 x 196] intentionally omitted <==

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

Years ended December 31,
2021 2020
Equity instruments at fair value through
other comprehensive income
Fair value change recognized in other
comprehensive income (loss) $ 11,826 ($ 3,164)
Cumulative gain reclassified to retained
-
earnings due to derecognition $ 8,804 $
Dividend income recognized in profit or loss
Held at end of year $ 6,787 $ 3,834
- -
Derecognized during the year
$ 6,787 $ 3,834
----- End of picture text -----

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

(8) Investments accounted for using equity method

Investee Company Taiwan IC Packaging Corp.	December31,2021 148,514 $	December31,2020
		95,724 $

A. The basic information of the associate that is material to the Group is as follows:

Associate name Taiwan IC Packaging Corp.	Principal place of business Taiwan	December December 31,2021 31,2020 12.52% 12.74% Shareholding ratio	Nature of relationship Note	Method of measurement
		December 31,2021 12.52%
				Equity method

Note: Taiwan IC Packaging Corp. is engaged in IC packaging and testing and is the upstream supplier in the IT and semiconductor industries. In order to reach synergy of vertical integration, Taiwan IC Packaging Corp. processes the raw materials provided by the Group into relevant semi-finished goods.
B. The Group held a 12.52% equity interest in Taiwan IC Packaging Corp., and is the company’s largest single shareholder. However, the Group does not hold the majority of the voting power during the shareholders’ meeting of Taiwan IC Packaging Corp. and the Group has no seat in the Board of Directors of Taiwan IC Packaging Corp., which indicate that the Group has no control ability to direct the relevant activities of Taiwan IC Packaging Corp. In addition, the Company’s chairman is the same with Taiwan IC Packaging Corp.; hence, the Group has significant influence over Taiwan IC Packaging Corp.

~32~

C. The summarized financial information of the associate that is material to the Group is as follows:

Balance sheet

		Taiwan IC PackagingCorp.	Taiwan IC PackagingCorp.	Taiwan IC PackagingCorp.
	December 31,2021		December 31,2020
Current assets	$	1,408,762	$	942,507
Non-current assets		1,219,160		1,224,429
Current liabilities	(	374,580)	(	327,211)
Non-current liabilities	(	83,523)	(	85,765)
Total net assets	$	2,169,819	$	1,753,960
Share in associate’s net assets	$	271,661	$	223,480
Net equity differences	(	123,147)	(	127,756)
	$	148,514	$	95,724

Statement of comprehensive income

A Revenue Gain (loss) for the year from continuing operations Total comprehensive income (loss) Dividends received from associates	2021 2020 1,944,950 $ 1,210,125 $ 411,645 $ 11,040) ($ 409,917 $ 9,466) ($ - $ - $ Taiwan IC Packaging Corp. Years ended December 31,

D. Share of profit (loss) of associates accounted for using the equity method is as follows:

Investee Company Taiwan IC Packaging Corp.	2021 2020 52,590 $ 1,299) ($ Years ended December 31,

E. The Group’s investment in Taiwan IC Packaging Corporation has quoted market price. The fair value of Taiwan IC Packaging Corporation was $446,724 and $239,053 as of December 31, 2021 and 2020, respectively.

~33~

(9) Property, plant and equipment

									2021
			Buildings and									Office
		Land		structures		Machinery			Vehicles		equipment			Others		Total
At January 1
Cost	$	725,983	$	2,601,967	$		418,357	$	26,892	$		28,116	$	52,518	$	3,853,833
Accumulated depreciation		-	(	1,257,196)	(		243,085)	(	12,767)	(		21,134)	(	37,327)	(	1,571,509)
	$	725,983	$	1,344,771	$		175,272	$	14,125	$		6,982	$	15,191	$	2,282,324
Opening net book amount as at January 1	$	725,983	$	1,344,771	$		175,272	$	14,125	$		6,982	$	15,191	$	2,282,324
Additions (including transfers)		-		500			2,710		1,216			7,731		3,177		15,334
Disposals		-		-			-		-	(		8)		-	(	8)
Transfers to non-current assets held for
sale		-	(	143,596)			-		-			-		-	(	143,596)
Depreciation charge		-	(	106,069)	(		63,254)	(	4,328)	(		3,490)	(	6,085)	(	183,226)
Net exchange differences	(	13,847)	(	14,457)	(		57)	(	69)	(		364)	(	21)	(	28,815)
Closing net book amount as at
December 31	$	712,136	$	1,081,149	$		114,671	$	10,944	$		10,851	$	12,262	$	1,942,013
At December 31
Cost	$	712,136	$	2,227,274	$		383,459	$	27,859	$		32,077	$	48,096	$	3,430,901
Accumulated depreciation		-	(	1,146,125)	(		268,788)	(	16,915)	(		21,226)	(	35,834)	(	1,488,888)
	$	712,136	$	1,081,149	$		114,671	$	10,944	$		10,851	$	12,262	$	1,942,013

~34~

								2020
			Buildings and							Office
		Land		structures	Machinery			Vehicles	equipment			Others		Total
At January 1
Cost	$	727,072	$	2,582,168	$	479,560	$	25,696	$	30,700	$	58,042	$	3,903,238
Accumulated depreciation		-	(	1,144,423)	(	245,826)	(	8,675)	(	23,730)	(	42,430)	(	1,465,084)
	$	727,072	$	1,437,745	$	233,734	$	17,021	$	6,970	$	15,612	$	2,438,154
Opening net book amount as at January 1	$	727,072	$	1,437,745	$	233,734	$	17,021	$	6,970	$	15,612	$	2,438,154
Additions (including transfers)		-		5,830		13,616		1,348		2,396		6,510		29,700
Disposals		-		-	(	2,098)		-		-		-	(	2,098)
Depreciation charge		-	(	105,764)	(	69,921)	(	4,197)	(	2,464)	(	6,968)	(	189,314)
Net exchange differences	(	1,089)		6,960	(	59)	(	47)		80		37		5,882
Closing net book amount as at
December 31	$	725,983	$	1,344,771	$	175,272	$	14,125	$	6,982	$	15,191	$	2,282,324
At December 31
Cost	$	725,983	$	2,601,967	$	418,357	$	26,892	$	28,116	$	52,518	$	3,853,833
Accumulated depreciation		-	(	1,257,196)	(	243,085)	(	12,767)	(	21,134)	(	37,327)	(	1,571,509)
	$	725,983	$	1,344,771	$	175,272	$	14,125	$	6,982	$	15,191	$	2,282,324

A. The relevant assets of the Group recognized as property, plant and equipment are all for self-use.

B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.

~35~

(10) Leasing arrangements-lessee

A. The Group leases various assets including land, buildings, and business vehicles. Rental contracts are typically made for periods of 1 to 11 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.
B. The carrying amounts of right-of-use assets and the depreciation charge are as follows:

Land Buildings Transportation equipment (business vehicles) Land Buildings Transportation equipment (business vehicles)	December 31, 2021 December 31, 2020 Carrying amount Carrying amount 82,013 $ 138,189 $ 41,158 47,034 883 1,856 124,054 $ 187,079 $ 2021 2020 Depreciation charge Depreciation charge 39,117 $ 39,080 $ 18,238 16,045 845 726 58,200 $ 55,851 $ Years ended December 31,	December 31, 2020
		Carrying amount
		138,189 $ 47,034 1,856
		187,079 $
		Depreciation charge
		39,080 $ 16,045 726
		55,851 $

C. For the years ended December 31, 2021 and 2020, the additions to right-of-use assets were $15,494 and $1,200, respectively.
D. Information on profit or loss in relation to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	Years ended December 31,	Years ended December 31,
	2021 1,248 $ 8,534 1,455	2020
		2,038 $ 11,514 1,510

E. For the years ended December 31, 2021 and 2020, the Group’s total cash outflow for leases were $66,094 and $67,483, respectively.
F. On November 26, 2021, the Board of Directors of the Group’s overseas second-tier subsidiary, Transcend Information (Shanghai), Ltd., approved a resolution on land expropriation. Refer to Note 6(6) for details of right-of-use assets transferred to non-current assets held for sale, and Note 11 for related transactions.

~36~

(11) Leasing arrangements-lessor

A. The Group leases various assets including land and buildings. Rental contracts are typically made for periods of 1 to 3 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions . To protect the lessor’s ownership rights on the leased assets, leased assets may not be used as security for borrowing purposes.
B. For the years ended December 31, 2021 and 2020, the Group recognized rent income in the amount of $37,253 and $38,721, respectively, based on the operating lease agreement, which does not include variable lease payments.
C. The maturity analysis of the lease payments under the operating leases is as follows:

2022 2023 2024 2025 2026	December 31,2021 38,925 $ 2021 26,757 2022 16,806 2023 9,406 2024 9,406 2025 101,300 $	December 31,2020
		23,725 $ 3,900 400 - - 28,025 $

(12) Investment property

2021

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions (including transfers) Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation	Buildings and Land structures Total 2,268,726 $ 459,716 $ 2,728,442 $ - 116,016) ( 116,016) ( 2,268,726 $ 343,700 $ 2,612,426 $ 2,268,726 $ 343,700 $ 2,612,426 $ - 2,409 2,409 - 12,380) ( 12,380) ( - 367) ( 367) ( 2,268,726 $ 333,362 $ 2,602,088 $ 2,268,726 $ 461,381 $ 2,730,107 $ - 128,019) ( 128,019) ( 2,268,726 $ 333,362 $ 2,602,088 $

~37~

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions (including transfers) Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation		2020
	Buildings and Land structures Total 2,268,726 $ 446,392 $ 2,715,118 $ - 104,826) ( 104,826) ( 2,268,726 $ 341,566 $ 2,610,292 $ 2,268,726 $ 341,566 $ 2,610,292 $ - 13,498 13,498 - 12,107) ( 12,107) ( - 743 743 2,268,726 $ 343,700 $ 2,612,426 $ 2,268,726 $ 459,716 $ 2,728,442 $ - 116,016) ( 116,016) ( 2,268,726 $ 343,700 $ 2,612,426 $		Total
			2,612,426 $

A. Rental income from the investment property and direct operating expenses arising from investment property are shown below:

Rental income from investment property Direct operating expenses arising from investment property that generated rental income Direct operating expenses arising from investment property that did not generate rental income	Years ended December 31,	Years ended December 31,
	2021 37,253 $ 11,679 $ 701 $	2020
		38,721 $
		11,399 $
		708 $

B. The fair value of the investment property held by the Group was $5,702,362 and $5,380,484 as of December 31, 2021 and 2020, respectively, which was based on the transaction prices of similar properties in the same area.
C. No investment property was pledged to others.

~38~

(13) Other non-current assets

Guarantee deposits paid Prepayment for business facilities Others	December 31,2021 December 31,2020 31,414 $ 32,823 $ 12,416 - 15,515 14,588 59,345 $ 47,411 $

(14) Pensions

A. Defined benefit plan
(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Act. Under the defined benefit plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with 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 insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions to cover the deficit by next March.
(b) The amounts recognized in the balance sheet are as follows:

	December	31,2021	December	31,2020
Present value of defined benefit obligations	$	38,857	$	43,239
Fair value of plan assets	(	25,454)	(	26,678)
Net defined benefit liability	$	13,403	$	16,561

~39~

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

		Present value of				Net defined
		defined benefit		Fair value of		benefit
		obligations		plan assets		liability
2021
Balance at January 1	$	43,239	($	26,678)	$	16,561
Current service cost		608		-		608
Interest expense (income)		151	(	96)		55
		43,998	(	26,774)		17,224
Remeasurements:
Return on plan assets		-	(	369)	(	369)
(excluding amounts included
in interest income or expense)
Change in demographic		1,941		-		1,941
assumptions
Change in financial	(	1,836)		-	(	1,836)
assumptions
Experience adjustments	(	2,080)		-	(	2,080)
	(	1,975)	(	369)	(	2,344)
Pension fund contribution		-	(	1,477)	(	1,477)
Paid pension	(	3,166)		3,166		-
Balance at December 31	$	38,857	($	25,454)	$	13,403
		Present value of				Net defined
		defined benefit		Fair value of		benefit
		obligations		plan assets		liability
2020
Balance at January 1	$	40,765	($	24,411)	$	16,354
Current service cost		431		-		431
Interest expense (income)		326	(	200)		126
		41,522	(	24,611)		16,911
Remeasurements:
Return on plan assets		-	(	802)	(	802)
(excluding amounts included
in interest income or expense)
Change in demographic		105		-		105
assumptions
Change in financial		527		-		527
assumptions
Experience adjustments		1,242		-		1,242
		1,874	(	802)		1,072
Pension fund contribution		-	(	1,422)	(	1,422)
Paid pension	(	157)		157		-
Balance at December 31	$	43,239	($	26,678)	$	16,561

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-thecounter, or private placement equity securities, investment in domestic or foreign real estate securitisation products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorised by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2021 and 2020 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	Years ended December 31,	Years ended December 31,
	2021 0.750% 1.625%	2020
		0.350%
		1.625%

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

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

Increase Decrease 0.25% 0.25% December 31, 2021 Effect on present value of defined benefit obligation 1,158) ($ 1,208 $ December 31, 2020 Effect on present value of defined benefit obligation 1,306) ($ 1,364 $ Discount rate	Future salaryincreases	Future salaryincreases
	Increase Decrease 0.25% 0.25% 1,170 $ 1,127) ($ 1,315 $ 1,267) ($	Decrease 0.25%

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

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

(f) Expected contributions to the defined benefit pension plan of the Company for the year ending December 31, 2021 amount to $1,474.
(g) As of December 31, 2021, the weighted average duration of the retirement plan is 12.4 years.
B. Defined contribution plans
(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.
(b) Transcend Shanghai, Transtech Shanghai and Transcend Hong Kong have defined contribution plans. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on a certain percentage of employees' monthly salaries and wages, ranging from 12.5% to 20%. Other than the monthly contributions, the Group has no further obligations.
(c) Transcend Japan, Transcend Korea, Transcend USA, Transcend Europe and Transcend Germany have defined contribution plans. Monthly contributions are based on a certain percentage of employees’ monthly salaries and wages and are recognized as pension costs accordingly. Other than the monthly contributions, the Group has no further obligations.
(d) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2021 and 2020 were $41,055 and $41,061, respectively.

(15) Share capital

A. As of December 31, 2021, the Company’s authorized capital was $5,000,000, consisting of 500 million shares of ordinary stock (including 25 million shares reserved for employee stock options), and the paid-in capital was $4,290,617 with par value of $10 per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares (shares in thousands) outstanding are as follows:

At January 1 Purchase of treasury shares (retired) At December 31	2021 2020 429,062 429,248 - 186) ( 429,062 429,062

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B. Treasury shares

(a) To enhance the Company’s credit rating and stockholders’ equity, on November 7, 2019, the Board of Directors resolved to repurchase and retire 3 million ordinary shares. The repurchase period is from November 8, 2019 to January 7, 2020, and the price ranged between $49 and $97 (in dollars) per share. The details are as follows:

Name of company Numbers of shares holding the shares Reason for reacquisition (in thousands) Carrying amount The Company Enhance the Company’s 1,700 $ 130,621 credit rating and stockholders’ equity

On March 5, 2020, the Board of Directors during its meeting resolved to retire treasury shares for capital reduction with the effective date set on March 31, 2020. The registration was completed on April 15, 2020.

(b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury share should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus.
(c) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should not be pledged as collateral and is not entitled to dividends before it is reissued.
(d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

(16) Capital surplus

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

(17) Retained earnings

A. In accordance with the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and to offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The Company shall also set aside special reserve in accordance with the regulations. On the premise that there is no effect on the Company’s normal operations and no violation of regulations, the Company shall reserve certain

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amount for maintaining stability of dividends. The remainder, if any, is the distributable earnings to be appropriated as resolved by stockholders at the stockholders’ meeting. The Board of Directors is authorized by the shareholders to resolve the appropriation of cash dividends and cash payment from capital surplus by a resolution adopted by a majority vote at its meeting attended by two-thirds of the total number of directors, which will then be reported to the shareholders.

B. The Company distributes dividends taking into consideration the Company’s economic environment, growth phases, future demands for funds, long-term financial planning and the cash flow needs of stockholders. Cash dividends shall account for at least 5% of the total dividends distributed.
C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. (a) The cash appropriation of earnings and cash payment from capital surplus for the years ended December 31, 2020 and 2019 have been resolved at the shareholders’ meeting on August 26, 2021 and June 19, 2020, respectively. Details are summarized below:

Amount Dividends per share(in dollars) Legal reserve 119,625 $ (Reversal of) special reserve 13,658) ( Cash dividends 1,094,107 2.55 $ 1,200,074 $ Cash payment per share Amount (in dollars) Cash payment from capital surplus 214,531 $ 0.50 $ Year ended December 31,2020	Amount Dividends per share(in dollars) 172,897 $ 69,330 1,544,622 3.60 $ 1,786,849 $ Cash payment per share Amount (in dollars) 386,156 $ 0.90 $ Year ended December 31,2019	Amount Dividends per share(in dollars) 172,897 $ 69,330 1,544,622 3.60 $ 1,786,849 $ Cash payment per share Amount (in dollars) 386,156 $ 0.90 $ Year ended December 31,2019	Amount Dividends per share(in dollars) 172,897 $ 69,330 1,544,622 3.60 $ 1,786,849 $ Cash payment per share Amount (in dollars) 386,156 $ 0.90 $ Year ended December 31,2019
	Amount 172,897 $ 69,330 1,544,622 1,786,849 $ Amount 386,156 $
			3.60 $ Cash payment per share (in dollars) 0.90 $

Actual distribution of retained earnings for 2020 and 2019 was in agreement with the amounts resolved at the stockholders’ meeting.

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(b) The appropriations of earnings and capital surplus for the year ended December 31, 2021 as proposed by the Board of Directors on March 3, 2022 are as follows:

Legal reserve Special reserve Cash dividends Total Cash payment from capital surplus	Dividends per share Amount (in dollars) 254,464 $ 73,270 2,231,121 5.20 $ 2,558,855 $ Cash dividends Amount per share(in dollars) 343,249 $ 0.80 $ Year ended December 31,2021	Dividends per share Amount (in dollars) 254,464 $ 73,270 2,231,121 5.20 $ 2,558,855 $ Cash dividends Amount per share(in dollars) 343,249 $ 0.80 $ Year ended December 31,2021
		0.80 $

Aforementioned proposal for the appropriations of 2021 earnings and capital surplus have not yet been resolved by the stockholders.

(18) Other equity items

				2021
				Exchange
				differences
		Unrealized		on translation of
		gain or loss		foreign financial
		on valuation		statements		Total
At January 1	$	4,395	($	121,639)	($	117,244)
Revaluation - gross		11,826		-		11,826
Revaluation transferred to
retained earnings - gross	(	8,804)		-	(	8,804)
Currency translation
differences		-	(	95,365)	(	95,365)
Effect from income tax		-		19,072		19,072
At December 31	$	7,417	($	197,932)	($	190,515)

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				2020
				Exchange
				differences
		Unrealized		on translation of
		gain or loss		foreign financial
		on valuation		statements		Total
At January 1	$	7,559	($	138,461)	($	130,902)
Revaluation - gross	(	3,164)		-	(	3,164)
Currency translation
differences		-		21,027		21,027
Effect from income tax		-	(	4,205)	(	4,205)
At December 31	$	4,395	($	121,639)	($	117,244)

(19) Operating revenue

==> picture [211 x 14] intentionally omitted <==

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

Years ended December 31,
----- End of picture text -----

Sales revenue

2021 14,314,815 $	2020 11,446,696 $

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods at a point in time in the following geographical regions:

	Electronic products	Electronic products	Electronic products	Total
Taiwan 3,400,049 $	Asia America Europe 5,221,283 $ 1,759,042 $ 3,155,301 $ Electronic products
				14,314,815 $
				Total
Taiwan 2,521,695 $	Asia 4,075,807 $	America 1,163,131 $	Europe 2,822,582 $
				11,446,696 $

B. The delay of the Group’s sales orders has a knock-on effect on the overall revenue due to Covid19 in the first half of 2020. However, there is no significant impact to the scope and price of the service contracts as the Group negotiated with customers and continuously invests in the manufacture of products for the subsequent shipments.
C. Contract assets and liabilities

The Group has no revenue-related contract assets and liabilities.

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(20) Interest income

Interest income from bank deposits Interest income from financial assets measured at amortised cost Other interest income	2021 2020 1,467 $ 3,114 $ 24,813 65,622 52,837 5,216 79,117 $ 73,952 $ Years ended December 31,

(21) Other income

		Years ended December 31,	Years ended December 31,	Years ended December 31,
		2021		2020
Rental income	$	37,253	$	38,721
Other gains and losses
		Years ended	December 31,
		2021		2020
Gain (loss) on disposal of property, plant and
equipment	$	12	($	2,098)
Net currency exchange loss	(	14,506)	(	54,016)
Net gain on financial assets and liabilities at fair
value through profit or loss		84,872		147,742
Dividend income		6,787		3,834
Royalty refund		-		62,738
Others	(	8,017)		5,699
	$	69,148	$	163,899

(22) Other gains and losses

(23) Expenses by nature

Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses Depreciation on property, plant and equipment (including investment property and right-of-use assets)	Years ended December 31,	Years ended December 31,
	2021 1,167,733 $ 122,002 41,718 53,910 253,806	2020
		1,104,801 $ 114,392 41,618 53,914 257,272

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A. In accordance with the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ remuneration. The ratio shall not be lower than 1% for employees’ compensation and shall not be higher than 0.2% for directors’ and supervisors’ remuneration.
B. For the years ended December 31, 2021 and 2020, employees’ compensation was accrued at $32,691 and $15,225, respectively; while directors’ remuneration was accrued at $4,577 and $2,131, respectively. The aforementioned amounts were recognized in salary expenses.

The employees’ compensation and directors’ remuneration were estimated and accrued based on 1% and 0.2% of distributable profit of current period for the year ended December 31, 2021. The employees’ compensation and directors’ remuneration resolved by the Board of Directors were $31,542 and $3,200, respectively, and the employees’ compensation will be distributed in the form of cash.

The difference between employees’ compensation and directors’ remuneration as resolved by the Board of Directors and the amounts recognized in the 2020 financial statements by $438 and $29, respectively, has been adjusted in profit or loss for 2021.

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

(24) Income tax

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

A		Years ended	December 31,
		2021	2020
Current tax:
Current tax on profits for the year	$	603,473	$	261,380
Prior year income tax (overestimation)
underestimation	(	10,386)		28,866
Total current tax		593,087		290,246
Deferred tax:
Origination and reversal of temporary
differences		2,273		14,400
Total deferred tax		2,273		14,400
Income tax expense	$	595,360	$	304,646

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

		Years ended	December 31,	December 31,
		2021		2020
Exchange differences on translation of
foreign financial statements	($	19,072)	$	4,205

B. Reconciliation between income tax expense and accounting profit

		Years ended	December 31,	December 31,
		2021		2020
Income tax calculated by applying statutory	$	640,025	$	296,358
rate to the profit before tax
Effects from tax exemption and items
disallowed by tax regulation	(	33,620)	(	19,985)
Prior year income tax (overestimation)
underestimation	(	10,386)		28,866
Effect from investment tax credits	(	659)	(	593)
Income tax expense	$	595,360	$	304,646

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

2021	2021
Recognized in At January1 profit or loss 2,282 $ 1,932) ($ 5,137 163) ( 4,342 2,171) ( - 1,794 1,336 171) ( 16,108 6,572) ( 2,692 540) ( 7,092 3,470 - - 2,483 1,103 41,472 $ 5,182) ($	Recognized in other comprehensive income - $ - - - - - - - 11,065 - 11,065 $	At December 31
		350 $ 4,974 2,171 1,794 1,165 9,536 2,152 10,562 11,065 3,586
		47,355 $

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				2021	2021	2021
						Recognized in
							other
				Recognized in		comprehensive
		At January1		profit or loss			income		At	December 31
Deferred income tax liabilities
Unrealized exchange gain	($	2,774)	$	1,845		$	-	($		929)
Currency translation differences	(	8,007)		-			8,007			-
Net gain on investment accounted for
using equity method	(	128,821)		1,059			-	(		127,762)
Others	(	98)		5			-	(		93)
Total	($	139,700)	$	2,909	$		8,007	($		128,784)
				2020
						Recognized in
							other
				Recognized in		comprehensive
		At January1		profit or loss			income		At	December 31
Deferred income tax assets
Amount of allowance for bad debts	$	2,740	($	458)	$		-	$		2,282
that exceed the limit for tax purpose
Unrealized exchange loss		30,166	(	30,166)			-			-
Pension provision amount in excess
of appropriation amount		5,310	(	173)			-			5,137
Royalty fees		-		4,342			-			4,342
Unused compensated absences		2,025	(	689)			-			1,336
Unrealized sales discounts and
allowances		19,982	(	3,874)			-			16,108
Unrealized gross profit from sales		6,138	(	3,446)			-			2,692
Unrealized loss on market value
decline and obsolete and
slow-moving inventories		5,805		1,287			-			7,092
Others		3,693	(	1,210)			-			2,483
Total	$	75,859	($	34,387)	$		-	$		41,472
Deferred income tax liabilities
Unrealized exchange gain	$	-	($	2,774)	$		-	($		2,774)
Currency translation differences	(	3,802)		-	(		4,205)	(		8,007)
Net gain on investment accounted	(	151,574)		22,753			-	(		128,821)
for using equity method
Others	(	106)		8			-	(		98)
Total	($	155,482)	$	19,987	($		4,205)	($		139,700)

D. The Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority.

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(25) Earnings per share

Year ended December 31,2021	Year ended December 31,2021	Year ended December 31,2021
Weighted-average common shares Earnings outstanding per share Profit after tax (in thousands) (in dollars) 2,533,294 $ 429,062 5.90 $ 2,533,294 $ 429,062 - 485 2,533,294 $ 429,547 5.90 $ Year ended December 31,2020		Earnings per share (in dollars)
		5.90 $
		5.90 $
Profit after tax 1,197,735 $ 1,197,735 $ - 1,197,735 $	Weighted-average common shares outstanding (in thousands) 429,064 429,064 366 429,430	Earnings per share (in dollars)
		2.79 $
		2.79 $

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties Relationship with the Group Taiwan IC Packaging Corporation Associate accounted for using equity method Won Chin Investment Inc. (Won Chin) Other related party Cheng Chuan Technology Development Inc. Other related party (Cheng Chuan)

(2) Significant transactions and balances with related parties

A. Operating revenue

Sales of goods Associates accounted for using the equity method	2021 2020 1,393 $ 2,016 $ Years ended December 31,

The sales prices charged to related parties are approximate to those charged to third parties. The credit term to Taiwan IC Packaging Corporation is 30 days after receipt of goods. The credit term to third parties is 30 to 60 days after monthly billings.

B. Purchases

Purchases of goods Associates accounted for using the equity method	2021 2020 235,161 $ 231,335 $ Years ended December 31,	2021 2020 235,161 $ 231,335 $ Years ended December 31,
		231,335 $

The purchase prices charged by related parties are approximate to those charged by third parties. The payment term from Taiwan IC Packaging Corporation is 30 days after monthly billings. The payment term from third parties is 30 to 45 days after monthly billings.

C. Payables to related parties

Accounts payable: Associates accounted for using equity method	December 31,2021 52,241 $	December 31,2020
		37,416 $

The payables to related parties arise mainly from purchase transactions and are due 30 days after the date of purchase. The payables bear no interest.

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D. Leasing arrangements - lessee

The Company signed a land lease contract with its related party, Won Chin and Cheng Chuan, to build a new plant on the leased land with a lease term of 3 years from June 12, 2019 to June 11, 2022. The annual rental payment is $37,058 (excluding tax), which was determined based on the average rent of land near the leased land shown in the appraisal report issued by Sinyi Real Estate Appraisers Firm. Rent was paid on the contract date and becomes payable on the same date each following year until the end of the lease. As of December 31, 2021 and 2020, the balance of related right-of-use assets amounted to $15,263 and $51,893 while lease liabilities amounted to $0 and $36,815, respectively.

(3) Key management compensation

Salaries and other employee benefits	2021 2020 44,300 $ 35,811 $ Years ended December 31,	2021 2020 44,300 $ 35,811 $ Years ended December 31,
		35,811 $

8. PLEDGED ASSETS

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

Pledged assets Property, plant and equipment	December31,2021 December 31, 2020 $127,675 $ 148,671 Book value	Pledgepurpose
		Collateral for general credit limit granted by financial institutions

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

As of December 31, 2021, except for the provision of endorsements and guarantees mentioned in Note 13(1) B, there are no other significant commitments.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

(1) Information on distribution of 2021 earnings and cash dividends from capital surplus is provided in Note 6(17) E(b).
(2) To cooperate with the government’s expropriation policy, the Group’s second-tier subsidiary, Transcend Information (Shanghai), Ltd., entered into a compensation agreement with Shanghai Minhang Export Processing Zone Development Co., Ltd. on November 26, 2021 with respect to land use right and buildings for staff dormitory in Fengxian District, Shanghai (shown as non-

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current assets held for sale of $159,976). The compensation amounted to RMB 125 million. As of March 3, 2022, 90% of the compensation has been collected, and the remaining 10% will be collected after the transfer is completed.

(3) On February 18, 2022, the Board of Directors of the Group’s second-tier subsidiary, Transcend Information (Shanghai), Ltd., approved to sell land use right and factory buildings in Fengxian District, Shanghai to Shanghai Fengpu Construction Development Co., Ltd. The contract price is expected to be RMB 392 million.

12. OTHERS

(1) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group’s own funds are currently sufficient, daily operations can create stable cash inflows, and there are no significant capital expenditure plans in the short term. Except for obtaining loans to reduce the exchange rate exposure, the Group has sufficient funds to cover its own needs. Debt financing is not necessary.

(2) Financial instruments

A. Financial instruments by category

Financial assets Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost Notes receivable Accounts receivable (including related parties) Other receivables Refundable deposits	December 31,2021 1,618,194 $ 629,576 2,018,106 5,567,177 2,499 1,622,484 108,850 31,414 11,598,300 $	December 31,2020
		4,255,920 $ 111,000 736,852 5,659,889 759 1,434,454 71,351 32,823
		12,303,048 $

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Financial liabilities Accounts payable (including related parties) Other payables Lease liabilities	December31,2021 1,417,076 $ 286,168 1,703,244 $ 42,950 $	December31,2020 1,171,682 $ 246,635
		1,418,317 $
		85,715 $

B. Financial risk management policies

Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to exchange rate risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD. Exchange rate risk arises from future commercial transactions and recognized assets and liabilities.
ii. The Group’s businesses involve some non-functional currency operations (the Company’s functional currency: NTD; the subsidiaries’ functional currencies: JPY, KRW, USD, EUR, GBP and RMB, etc.). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

Financial assets Financial liabilities		December31,2021	December31,2021
	Foreign Currency USD`：`NTD RMB`：`NTD EUR`：`NTD JPY`：`NTD GBD`：`EUR USD`：`EUR USD`：`NTD	Foreign Currency Amount 104,112 $ 28,260 1,492 90,334 1,887 1,712 41,900 $	Exchangerate Bookvalue 27.68 2,881,820 $ 4.344 122,761 31.32 46,729 0.241 21,725 1.1909 70,385 0.8838 47,388 27.68 1,159,792 $

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December 31, 2020

Financial assets Financial liabilities	Foreign Foreign Currency Currency Amount Exchangerate Bookvalue USD`：`NTD 24,579 $ 28.48 700,010 $ EUR：NTD 3,551 35.02 124,356 RMB：NTD 9,070 4.3770 39,699 JPY：NTD 122,026 0.2763 33,716 USD：EUR 4,859 0.8132 138,384 USD：HKD 817 7.7539 23,268 USD：JPY 395 103.0764 11,250 GBP：EUR 972 1.1108 37,811 USD`：`NTD 35,425 $ 28.48 1,008,904 $

The information on total exchange (loss) gain, including realized and unrealized, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2021 and 2020 is provided in Note 6(22).

Sensitivity analysis relating to foreign exchange rate risks is primarily for financial reporting period-end date of foreign currency monetary item. If the New Taiwan dollar exchange rate to the U.S. dollar increases or decreases by 1%, the Group’s net income will decrease or increase by $17,220 and $3,089 for the years ended December 31, 2021 and 2020, respectively.

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the Group and classified on the balance sheet as financial assets at fair value through profit or loss and other comprehensive income. The Group is not exposed to commodity price risk. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.
ii. The Group’s investments in listed and unlisted equity securities and financial instruments by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, post-tax profit for the years ended December 31, 2021 and 2020 would have increased/decreased by $16,182 and $42,559, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $6,296 and $1,110, respectively, as a result of other comprehensive income classified as equity investment at fair value through other comprehensive income.

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Cash flow and fair value interest rate risk

i. The Group’s principal interest-bearing assets are cash and cash equivalents and financial assets at amortised cost. Cash and cash equivalents are due within twelve months. Financial assets at amortised cost are maintained at fixed rates. Therefore, it is assessed that there is no significant cash flow interest rate risk.
ii. The Group has not used any financial instruments to hedge its interest rate risk.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortised cost.
ii. The Group manages its credit risk taking into consideration the entire group’s concern. According to the Group’s credit policy, each local entity in the Group 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. To control internal risk, the Group 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 utilisation of credit limits is regularly monitored.
iii. The Group determines that the default occurs when the contract payments are past due over 180 days.
iv. The Group adopts the following assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:
- (i) If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.
- (ii) For investments in bonds that are traded over the counter, if any external credit rating agency rates these bonds as investment grade, the credit risk of these financial assets is low.
v. If the credit rating grade of an investment target degrades two scales, there has been a significant increase in credit risk on that instrument since initial recognition.
vi. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
- (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

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(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments;
(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
vii. For details of credit risk in relation to accounts receivable and notes receivable, please refer to Note 6(4).

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts, time deposits, monetary funds and financial instruments, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. As at December 31, 2021 and 2020, the Group held money market position of $9,091,878 and $9,907,739, respectively, that are expected to readily generate cash inflows for managing liquidity risk.
iii. The Group’s non-derivative financial liabilities are analysed based on the remaining period at the balance sheet date to the contractual maturity date and all the Group’s financial liabilities expire within one year.

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks 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. The fair value of the Group’s investment in non-hedging derivatives is included in Level 2.

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Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market, financial products and investment property is included in Level 3.

B. Fair value information of investment property at cost is provided in Note 6(12).
C. Financial instruments not measured at fair value

Except for those listed in the table below, the carrying amounts of cash and cash equivalents, financial assets at amortised cost, notes receivable, accounts receivable, other receivables, accounts payable and other payables are approximate to their fair values.

D. The related information on 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 are as follows:

December 31, 2021 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Beneficiary certificates Financial assets at fair value through other comprehensive income Equity securities December 31, 2020 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Beneficiary certificates Financial assets at fair value through other comprehensive income Equity securities	Level 1 1,618,194 $ - 628,451 2,246,645 $ Level 1 4,255,920 $ 109,875 4,365,795 $	Level 2 - $ - - - $ Level 2 - $ - - $	Level 3 - $ - 1,125 1,125 $ Level 3 - $ 1,125 1,125 $	Total
				1,618,194 $ 629,576
				2,247,770 $
				Total
				4,255,920 $ 111,000
				4,366,920 $

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E. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the closing price. These instruments are included in Level 1. Instruments included in Level 1 comprise primarily listed stocks classified as financial assets at fair value through other comprehensive income and beneficiary certificates classified as financial assets at fair value through profit or loss.
F. For the years ended December 31, 2021 and 2020, there was no transfer between Level 1 and Level 2.
G. If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
H. The financial products purchased for the years ended December 31, 2021 and 2020 were categorised to Level 3.
I. Finance segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions and frequently review the fair value.
J. The qualitative information of significant unobservable inputs to valuation model used in Level 3 fair value measurement is as follows: financial products are income investments, and the judgements of their valuation technique and significant unobservable inputs are based on the cash flow of individual contract.

(4) Other matter

Due to the strong demand in the industrial chain and the use of its products in diverse applications this year, the Group’s orders from domestic and foreign customers were not impacted by the COVID19 pandemic. The operation and production headquarters in Taiwan have activated the relevant contingency mechanisms, adopted high-standard COVID-19 preventive measures and monitored employees’ health condition on a daily basis. Overall, in 2021, the pandemic had no significant impact on the Group’s operations and financial performance and did not cause any suspension of work and production. Also, the Group has delivered good sales and profit performance.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.
B. Provision of endorsements and guarantees to others: Please refer to table 1.

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

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) : Please refer to table 7.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 6.

(4) Major shareholders information

Major shareholders information: Please refer to table 9.

14. SEGMENT INFORMATION

(1) General information

The Group operates business only in a single industry. The Chairman of the Board of Directors who allocates resources and assesses performance of the Group as a whole, has identified that the Group has only one reportable operating segment.

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(2) Segment information

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

Segment revenue Segment income	2021 2020 14,314,815 $ 11,446,696 $ 2,533,294 $ 1,197,735 $ Years ended December 31,

(3) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external customers reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income.

(4) Information on products and services

All external customer revenue comes from sale of electronic products. Please refer to Note 6(19)A for details.

(5) Geographical information

For details of geographical information of the Group’s revenue, please refer to Note 6(19)A. The information on the Group’s non-current assets is as follows:

Taiwan Asia America Europe Total	December 31,2021 Non-current assets 4,052,455 $ 726,026 64,566 44,429 4,887,476 $	December 31,2020
		Non-current assets
		4,185,560 $ 812,348 78,320 53,012
		5,129,240 $

(6) Major customer information

None.

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Expressed in thousands of NTD (Except as otherwise indicated)

Transcend Information, Inc. and Subsidiaries

Provision of endorsements and guarantees to others

Year ended December 31, 2021

Table 1

Number (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of December 31, 2021(Note 4)	Outstanding endorsement/ guarantee amount at December 31, 2021(Note 5)	Actual amount drawn down (Note 6)	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements /guarantees provided(Note 7)	Provision of endorsements/ guarantees by parent company to subsidiary (Note 8)	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Company name	Relationship with the endorser/ guarantor (Note 2)
0	Transcend Taiwan	Transcend Japan Inc.	2	3,966,967 $	$ 543,200 (JPY $2,000,000) (In thousands)	$ 481,000 (JPY $2,000,000) (In thousands)	- $	-	2	7,933,934 $	Y	-	-	-

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:
(a) The Company is ‘0’.
(b) The subsidiaries are numbered in order starting from ‘1’.
Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories; fill in the number of category each case belongs to:
(a) Having business relationship
(b) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(c) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(d) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.
(e) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.
(f) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(g) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.
Note 3: Not exceeding 20% of the Company’s net asset value. ($19,834,835*20%=$3,966,967)
Note 4: The maximum outstanding endorsement/guarantee amount during and as of December 31, 2021 is JPY$2,000,000 (In thousands).
Note 5: The amount was approved by the Board of Directors.
Note 6: The actual amount of endorsement drawn down is $0.
Note 7: Not exceeding 40% of the Company’s net asset value.( $19,834,835*40%=$7,933,934)
Note 8: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

Table 1, Page 1

Table 2

Expressed in thousands of NTD

Transcend Information, Inc. and Subsidiaries

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

December 31, 2021

(Except as otherwise indicated)

Securities held by	Marketable securities (Note 1)	Relationship with the securities issuer(Note 2)	General ledger account		As of December 31,2021	As of December 31,2021		Footnote (Note 4)
				Number of shares	Book value (Note 3)	Ownership (%)	Fair value
Transcend Taiwan	Stocks TrendForce Corporation Fubon Financial Holding Co., Ltd. Preferred Shares B Taiwan Semiconductor Manufacturing Co., Ltd. ASUSTek Computer Inc. Fubon Financial Holding Co., Ltd. Cathay Financial Holding Co. Ltd. AU Optronics Corporation Innolux Corporation Formosa Plastics Corporation Beneficiary certificates Taishin 1699 Money Market Fund Yuanta Taiwan Top 50 ETF	- - - - - - - - - - -	Non-current financial assets at fair value through other comprehensive income " " " " " " " " Current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss	60,816 1,758,000 380,000 410,000 1,067,016 200,000 200,000 200,000 262,000 110,142,508 767,000	1,125 $ 110,930 233,700 154,160 81,413 12,500 4,580 3,920 27,248	1 - - - - - - - - - -	1,125 $ 110,930 233,700 154,160 81,413 12,500 4,580 3,920 27,248 1,506,595 $ 111,599 $	- - - - - - - - - - -
					629,576 $
					1,506,595 $
					111,599 $

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 ‘Financial instruments’. Note 2: Leave the column blank if the issuer of marketable securities is non-related party. Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the marketable securities not measured at fair value.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Table 2, Page 1

Transcend Information, Inc. and Subsidiaries

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

Year ended December 31, 2021

Table 3 Investor	Marketable securities `（`Note 1`）`	General ledger account	Counterparty `（`Note 2`）`	Relationship with the investor `（`Note 2`）`	Balance as at January1,2021	Balance as at January1,2021	Addition `（`Note 3`）`	Addition `（`Note 3`）`		Disposal `（`Note 3`）`	Disposal `（`Note 3`）`		(Except as otherwise indicated) Expressed in thousands of NTD Balance as at December 31,2021	(Except as otherwise indicated) Expressed in thousands of NTD Balance as at December 31,2021
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain on disposal	Number of shares	Amount
Transcend Taiwan	Taishin 1699 Money Market Fund Yuanta Taiwan High-yield Leading Company Fund B	Current financial assets at fair value through profit or loss Non-current financial assets at fair value through profit or loss	- -	- -	257,293,248 50,000,000	$ 3,501,229 500,000	109,792,580 -	$ 1,500,000 -	256,943,320 50,000,000	$ 3,511,865 680,350	$ 3,499,281 500,000	$ 12,584 180,350	110,142,508 -	$ 1,501,948 -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.
Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Table 3, Page 1

Transcend Information, Inc. and Subsidiaries

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

Year ended December 31, 2021

Table 4

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions (Note1)	Differences in transaction terms compared to third party transactions (Note1)	Notes/accountsreceivable (payable)	Notes/accountsreceivable (payable)	Footnote
			Sales (purchases)	Amount	Percentage of total sales (purchases)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Transcend Taiwan " " " " " " Transcend Information Europe B.V. Transcend Taiwan	Transtech Trading (Shanghai) Co., Ltd. Transcend Japan Inc. Transcend Information, Inc. Transcend Information Europe B.V. Transcend Korea Inc. Transcend Information Trading GmbH Transcend Information (H.K) Ltd. Transcend Information Trading GmbH Taiwan IC Packaging Corporation	Subsidiary of Memhiro The Company’s subsidiary The Company’s subsidiary Subsidiary of Memhiro The Company’s subsidiary Subsidiary of Memhiro Subsidiary of Memhiro Controlled by the same ultimate parent company Associate accounted for using equity method	Sales " " " " " " " (Purchase)	$ 1,196,974 710,838 627,401 594,935 387,849 378,089 298,392 138,609 ( 235,161)	9 5 5 4 3 3 2 20 (2)	120 days after monthly billings " " " " " " 30 days after delivery 30 days after monthly billings	No significant difference " " " " " " " "	30 to 60 days after monthly billings to third parties " " " " " " 7 to 60 days after delivery to third parties 30 to 45 days after monthly billings to third parties	$ 132,276 78,741 13,312 27,658 10,834 7,563 5,346 602 ( 52,241)	9 6 1 2 1 1 - 1 (3)	- - - - - - - - -

Note 1: The Company’s sales to subsidiaries were equivalent to subsidiaries' purchases from the Company; accordingly, the Company did not disclose the information on subsidiaries’ purchases from the Company.

Table 4, Page 1

Transcend Information, Inc. and Subsidiaries

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

Year ended December 31, 2021

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2021	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Transcend Taiwan Transcend Information (Shanghai), Ltd.	Transtech Trading (Shanghai) Co., Ltd. Transcend Taiwan	Subsidiary of Memhiro Ultimate parent company	$ 132,276 408,198	7.87 -	$ - 408,198	- -	$ 132,276 -	- -

Table 5, Page 1

Transcend Information, Inc. and Subsidiaries

Year ended December 31, 2021

Significant inter-company transactions during the reporting year

Table 6

Expressed in thousands of NTD

(Except as otherwise indicated)

Transaction

						Transaction	(Except as otherwise indicated)
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 3)
0 " " " " " " "	Transcend Taiwan " " " " " " "	Transtech Trading (Shanghai) Co., Ltd. Transcend Japan Inc. Transcend Information, Inc. Transcend Information Europe B.V. Transcend Korea Inc. Transcend Information Trading GmbH Transcend Information (H.K) Ltd. Transcend Information (Shanghai), Ltd.	1 " " " " " " "	Sales " " " " " " Accounts Payable	$ 1,196,974 710,838 627,401 594,935 387,849 378,089 298,392 408,198) (	There is no significant difference in unit price from those to third parties. " " " " " " 120 days after monthly billings	8 5 4 4 3 3 2 2) (

(Individual transactions not exceeding 1% of the consolidated total revenue and total assets are not disclosed.)

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(a) Parent company is "0".
(b) Subsidiaries were numbered from 1.
Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):
(a) Parent company to subsidiary.
(b) Subsidiary to parent company.
(c) Subsidiary to subsidiaries.
Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Table 6, Page 1

Transcend Information, Inc. and Subsidiaries

Information on investees

Table 7

Year ended December 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2021	Shares held as at December 31,2021	Shares held as at December 31,2021	Net profit (loss) of the investee for the year ended December 31, 2021	Investment income (loss) recognized by the Company for the year ended December 31, 2021(Note 1)	Footnote
				Balance as at December 31, 2021	Balance as at December 31, 2020	Number of shares	Ownership (%)	Book value
Transcend Taiwan Saffire Investment Ltd. Memhiro Pte Ltd.	Saffire Investment Ltd. Transcend Japan Inc. Transcend Information, Inc. Transcend Korea Inc. Taiwan IC Packaging Corp. Memhiro Pte Ltd. Transcend Information Europe B.V. Transcend Information Trading GmbH Transcend Information (H.K.) Ltd.	B.V.I. Japan United States of America Korea Taiwan Singapore Netherlands Germany Hong Kong	Investment holdings Wholesale of computer memory modules and peripheral products Wholesale of computer memory modules and peripheral products Wholesale of computer memory modules and peripheral products Packaging of Semi-conductors Investment holdings Wholesale of computer memory modules and peripheral products Wholesale of computer memory modules and peripheral products Wholesale of computer memory modules and peripheral products	$ 1,202,418 89,103 38,592 6,132 354,666 1,156,920 1,693 2,288 7,636	$ 1,202,418 89,103 38,592 6,132 354,666 1,156,920 1,693 2,288 7,636	36,600,000 6,400 625,000 40,000 21,928,036 55,132,000 100 - 2,000,000	100 100 100 100 12.52 100 100 100 100	1,496,302 $ 229,616 184,082 55,861 148,514 1,463,177 220,732 112,428 29,868	23,916) ($ 6,218 8,448 3,942 411,645 24,050) ( 8,813 12,251 4,924	23,916) ($ 6,218 8,448 3,942 52,590 24,050) ( 8,813 12,251 4,924	Note 2 Note 2 Note 2 Note 2 Note 5 Note 3 Note 4 Note 4 Note 4

Note 1: The Company does not directly recognize the investment income (loss) except for the subsidiaries directly held. Note 2: Subsidiary of the Company.

Note 3: Subsidiary of Saffire. Note 4: Subsidiary of Memhiro. Note 5: Please refer to Note 6 (8).

Table 7, Page 1

Transcend Information, Inc. and Subsidiaries

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

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Table 8
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Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method `（`Note 1`）`	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2021	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2021	Amount remitted from Taiwan to Mainland China/Amount remitted back to Taiwan for the year ended December 31,2021	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2021	Net income (loss) of investee for the year ended December 31,2021	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2021(Note 2)	Book value of investments in Mainland China as of December 31,2021	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2021	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Transcend Information (Shanghai), Ltd. Transtech Trading (Shanghai) Co., Ltd.	Manufacture and sales of computer memory modules, storage products and disks, and lease of self-owned buildings Wholesale, agent, import and export and retail of computer memory modules, storage products and computer components	$ 1,134,178 16,310	2 2	$ 1,134,178 16,310	- -	- -	$ 1,134,178 16,310	($ 74,909) 9,550	100 100	($ 74,909) 9,550	$ 1,048,836 46,360	$ 1,464,028 -	- -

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2021	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
Transcend Information (Shanghai), Ltd. Transtech Trading (Shanghai) Co., Ltd.	1,134,178 $ 16,310 1,150,488 $	1,134,178 $ 16,310 1,150,488 $	- $ - 11,900,901 $

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area (Memhiro Pte Ltd.), which then invested in Mainland China. (3) Others.

Note 2: The gain and loss on investment recognized for the year was based on the financial statements that were audited by R.O.C. parent company’s CPA. Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Table 8, Page 1

Transcend Information, Inc. and Subsidiaries

Table 9

Major shareholders information

December 31, 2021

Name of major shareholders	Shares	Shares
	Number of shares held	Shareholdingratio
Won Chin Investment Inc. Wan An Technology Inc. Cheng Chuan Technology Development Inc. Wan Min Investment Inc. Wan Chuan Investment Inc.	74,783,600 34,142,854 32,971,701 29,726,397 29,505,896	17.42 7.95 7.68 6.92 6.87

Table 9, Page 1

AI assistant

Transcend — Annual Report 2021

52092_rns_2021-12-31_fd94f53b-21df-4a89-8b05-ae5d5a038cf2.pdf

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

Opinion

Basis for opinion

Key audit matters

Valuation of inventories

Description

How our audit addressed the matter

Estimation of allowance for sales discount

Description

How our audit addressed the matter

Other matter –Parent company only financial reports

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

Auditors’ responsibilities for the audit of the consolidated financial statements

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 AND 2020

1. HISTORY AND ORGANIZATION

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

(4) Foreign currency translation

(6) Cash equivalents

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

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

(9) Financial assets at amortised cost

(10) Accounts and notes receivable

(11) Financial assets impairment

(12) Derecognition of financial assets

(13) Inventories

(16) Property, plant and equipment

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

(18) Investment property

(19) Impairment of non-financial assets

(20) Notes and accounts payable

(21) Employee benefits

B. Pensions

(22) Income tax

(23) Share capital

(24) Dividends

(25) Revenue recognition

(26) Operating segments

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

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

Investment property

(2) Critical accounting estimates and assumptions

Valuation of inventories

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

(3) Financial assets at amortised cost

(4) Notes and accounts receivable

I. The balance of allowance for loss and movements are as follows:

(5) Inventories

(6) Non-current assets held for sale

Balance sheet

Statement of comprehensive income

(9) Property, plant and equipment

(10) Leasing arrangements-lessee

(11) Leasing arrangements-lessor

(12) Investment property

(13) Other non-current assets

(14) Pensions

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

(15) Share capital

B. Treasury shares

(16) Capital surplus

(17) Retained earnings

(18) Other equity items

(19) Operating revenue

(20) Interest income

(21) Other income

Transcend Annual Report 2021