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Transcend Interim / Quarterly Report 2021

Dec 31, 2021

52092_rns_2021-12-31_6d706ee8-b3f2-41c4-ab29-b1865d4288d3.pdf

Interim / Quarterly Report

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TRANSCEND INFORMATION, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REVIEW REPORT MARCH 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.

~1~

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INDEPENDENT AUDITORS’ REVIEW REPORT TRANSLATED FROM CHINESE

PWCR21000002

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Transcend Information Inc. and subsidiaries (the “Group”) as at March 31, 2021 and 2020, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for qualified conclusion

As explained in Note 4(3), the financial statements of certain insignificant consolidated subsidiaries were not reviewed by independent auditors. Total assets of these subsidiaries amounted to NT$2,110,219 thousand and NT$2,215,257 thousand, both constituting 10% of the consolidated total assets as at March 31, 2021 and 2020, respectively, total liabilities amounted to NT$129,727 thousand and NT$148,754 thousand, both constituting 4% of the consolidated total liabilities as at March 31, 2021 and 2020, respectively, and the total comprehensive (loss) income amounted to (NT$16,083) thousand and NT$26,051 thousand, constituting (3%) and 6% of the consolidated total comprehensive income for the three months then ended, respectively.

~2~

資誠聯合會計師事務所 PricewaterhouseCoopers, Taiwan 11012 臺北市信義區基隆路一段 333 號 27 樓 27F, No. 333, Sec. 1, Keelung Rd., Xinyi Dist., Taipei 11012, Taiwan T: +886 (2) 2729 6666, F:+ 886 (2) 2729 6686, www.pwc.tw

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Qualified conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries been reviewed by independent auditors as described in the Basis for qualified conclusion section above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at March 31, 2021 and 2020, and of its consolidated financial performance and its consolidated cash flows for the three months then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

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Lin, Chun-Yao Chen, Chin-Chang
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For and on behalf of PricewaterhouseCoopers, Taiwan May 6, 2021

The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and 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.

~3~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

MARCH 31, 2021, DECEMBER 31, 2020 AND MARCH 31, 2020

(Expressed in thousands of New Taiwan Dollars)

(The balance sheets as of March 31, 2021 and 2020 are reviewed, not audited)

Assets Notes March 31, 2021
AMOUNT
%
$
997,539
5
3,738,340
17
5,183,485
24
1,419
-
1,719,555
8
68
-
65,914
-
3,353,011
16
7,819
-
15,067,150
70
882,983
4
285,593
1
-
-
104,681
1
2,224,339
11
180,563
1
2,609,844
12
46,018
-
46,245
-
6,380,266
30
$
21,447,416
100		 December 31, 2020
AMOUNT
%
$
736,852
4
3,510,998
17
5,659,889
27
759
-
1,434,454
7
-
-
71,351
-
3,190,466
15
10,495
-
14,615,264
70
744,922
4
111,000
1
-
-
95,724
-
2,282,324
11
187,079
1
2,612,426
13
41,472
-
47,411
-
6,122,358
30
$
20,737,622
100		 March 31, 2020 March 31, 2020
AMOUNT
$
997,539
3,738,340
5,183,485
1,419
1,719,555
68
65,914
3,353,011
7,819
15,067,150
882,983
285,593
-
104,681
2,224,339
180,563
2,609,844
46,018
46,245
6,380,266
$
21,447,416		 AMOUNT
$
793,494
1,805,725
9,149,256
-
1,532,832
595
114,074
2,526,991
17,121
15,940,088
500,000
108,011
149,143
95,941
2,396,248
225,339
2,620,040
50,535
47,039
6,192,296
$
22,132,384		 %
Current assets
Cash and cash equivalents
Financial assets at fair value through
profit or loss - current
Current financial assets at amortised
cost, net
Notes receivable, net
Accounts receivable, net
Accounts receivable due from
related parties, net
Other receivables
Inventories, 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
Non-current financial assets at
amortised cost
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		 6(1)
6(2)
6(3)
6(4)
6(4)
7
6(5)
6(2)
6(6)
6(3)
6(7)
6(8) and 8
6(9) and 7
6(11)
6(12)		 4
8
41
-
7
-
1
11
-
72
2
1
1
-
11
1
12
-
-
28
100

(Continued)

~4~

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

(Expressed in thousands of New Taiwan Dollars) (The balance sheets as of March 31, 2021 and 2020 are reviewed, not audited)

March 31, 2021 December 31, 2020 December 31, 2020 March 31, 2020
Liabilities and Equity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
Accounts payable $ 1,317,875 6 $ 1,134,266 6 $ 1,445,447 7
Accounts payable - related parties 7 41,675 - 37,416 - 35,624 -
Other payables 6(16) 1,555,363 7 246,635 1 2,183,320 10
Current tax liabilities 338,022 2 295,381 2 158,498 1
Current lease liabilities 7 54,892 1 51,010 - 53,179 -
Other current liabilities 36,412 - 73,046 - 55,128 -
Total Current Liabilities 3,344,239 16 1,837,754 9 3,931,196 18
Non-current liabilities
Deferred tax liabilities 133,806 1 139,700 1 160,077 1
Non-current lease liabilities 7 34,869 - 34,705 - 80,055 -
Other non-current liabilities 52,249 - 53,437 - 53,633 -
Total Non-current Liabilities 220,924 1 227,842 1 293,765 1
Total Liabilities 3,565,163 17 2,065,596 10 4,224,961 19
Equity attributable to owners of
parent
Share capital 6(14)
Common stock 4,290,617 20 4,290,617 21 4,290,617 20
Capital surplus 6(15)
Capital surplus 3,730,838 17 3,945,369 19 3,945,276 18
Retained earnings 6(16)
Legal reserve 4,683,878 22 4,683,878 22 4,510,981 20
Special reserve 130,902 1 130,902 1 61,572 -
Unappropriated retained earnings 5,208,126 24 5,738,504 28 5,248,188 24
Other equity interest 6(17)
Other equity interest ( 162,108 ) ( 1) ( 117,244) ( 1) ( 149,211 )( 1 )
Total Equity 17,882,253 83 18,672,026 90 17,907,423 81
Significant contingent liabilities and 9
unrecognized contract commitments
Total Liabilities and Equity $ 21,447,416 100 $ 20,737,622 100 $ 22,132,384 100

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

~5~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

Items Three months ended March 31
2021
2020
Notes
AMOUNT
%
AMOUNT
%
6(18) and 7
$
3,498,620
100
$
3,220,410
100
6(5)(22) and 7
(
2,645,772) (
76) (
2,397,044) (
74)
852,848
24
823,366
26
6(22)
(
216,719) (
6) (
210,061) (
7)
(
72,235) (
2) (
154,782) (
5)
(
42,059) (
1) (
41,066) (
1)
6(4)
(
3,380)
-
51
-
(
334,393) (
9) (
405,858) (
13)
518,455
15
417,508
13
6(19)
57,202
2
24,225
1
6(20)
8,734
-
9,498
-
6(21)
69,027
2
124,427
4
6(3)
-
-
5,799
-
6(9)
(
372)
- (
517)
-
6(7)
8,757
- (
1,082)
-
143,348
4
162,350
5
661,803
19
579,858
18
6(23)
(
102,417) (
3) (
115,738) (
4)
$
559,386
16
$
464,120
14
6(6)(17)
($
5,212)
- ($
6,153)
-
200
- (
411)
-
6(17)
(
44,385) (
1) (
15,195)
-
6(17)(23)
8,876
-
3,039
-
($
40,521) (
1) ($
18,720)
-
$
518,865
15
$
445,400
14
$
559,386
16
$
464,120
14
$
518,865
15
$
445,400
14
6(24)
$
1.30
$
1.08
$
1.30
$
1.08
Operating Revenue
Operating Costs
Gross Profit
Operating Expenses
Sales and marketing expenses
Administrative expenses
Research and development expenses
(Impairment loss) reversal of 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 Period
Other Comprehensive Income (Loss)
Components of other comprehensive
income (loss) that will not be reclassified to
profit or loss
Unrealized 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 for the period
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.

~6~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

(UNAUDITED)

Three months ended March 31, 2020
Balance at January 1, 2020
Net income for the period
Other comprehensive loss
Total comprehensive income (loss)
Appropriation and distribution of 2019
earnings
Cash dividends
Cash payment from capital surplus
Purchase of treasury stock
Cancellation of treasury stock
Balance at March 31, 2020
Three months ended March 31, 2021
Balance at January 1, 2021
Net income for the period
Other comprehensive income (loss)
Total comprehensive income (loss)
Appropriation and distribution of 2020
earnings
Cash dividends (Note)
Cash payment from capital surplus (Note)
Net gain on disposal of financial assets at fair
value through other comprehensive income
Balance at March 31, 2021		 Notes Equityattributable to o wners of theparent Total equity
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		 Unrealized gain or
loss on financial
assets at fair value
through other
comprehensive
income
6(6)(17)
6(16)
6(14)
6(14)
6(6)(17)
6(16)
6(16)
6(6)		 $
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
-
-
-
-
-
-
-
$
4,185
$
4,278
-
-
-
-
-
-
$
4,278		 $
35,128
-
-
-
-
-
-
-
$
35,128
$
35,128
-
-
-
-
-
-
$
35,128		 $
4,510,981
-
-
-
-
-
-
-
$
4,510,981

$
4,683,878
-
-
-
-
-
-
$
4,683,878


$
61,572
-
-
-
-
-
-
-
$
61,572
$
130,902
-
-
-
-
-
-
$
130,902






$
6,427,300
464,120
(
411 )
463,709
(
1,544,622 )
-
-
(
98,199 )
$
5,248,188
$
5,738,504
559,386
200
559,586
(
1,094,107 )
-
4,143
$
5,208,126		 ($
138,461 )
-
(
12,156 )
(
12,156 )
-
-
-
-
($
150,617 )

($
121,639 )
-
(
35,509 )
(
35,509 )
-
-
-
($
157,148 )







$
7,559
-
(
6,153 )
(
6,153 )
-
-
-
-
$
1,406
$
4,395
-
(
5,212 )
(
5,212 )
-
-
(
4,143 )
($
4,960 )








($
116,574 )
-
-
-
-
-
(
14,047 )
130,621
$
-
$
-
-
-
-
-
-
-
$
-		 $
19,406,848
464,120
(
18,720 )
445,400
(
1,544,622 )
(
386,156 )
(
14,047 )
-
$
17,907,423
$
18,672,026
559,386
(
40,521 )
518,865
(
1,094,107 )
(
214,531 )
-
$
17,882,253

Note: The appropriation for cash dividends and cash payment from capital surplus have been resolved by the Board of Directors during its meeting on March 4, 2021, but have not yet been reported to the shareholders.

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

~7~

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

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(Expressed in thousands of New Taiwan Dollars)

(UNAUDITED)

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 on reversal of expected credit
loss)

Loss on disposal of property, plant and equipment

Depreciation

Interest income

Interest expense

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 generated from operations
Interest received
Income tax paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
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 financial assets at fair value through
other comprehensive income

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

Acquisition of investment property
Decrease in other non-current financial assets
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of lease liabilities
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 period
Cash and cash equivalents at end of period		 Three months ended March 31
Notes
2021
2020
$
661,803 $
579,858
6(2)(21)
(
72,659 ) (
3,346 )
6(7)
(
8,757 )
1,082
6(4)
3,380 (
51 )
6(21)
-
38
6(22)
64,360
66,255
6(19)
(
57,202 ) (
24,225 )
6(9)
372
517
(
224,846 )
779,185
(
660 )
3,054
(
288,389 ) (
54,276 )
(
68 ) (
587 )
3,322
2,001
(
162,545 ) (
464,332 )
2,676
852
183,609
440,097
4,259 (
17,204 )
90 (
14,574 )
(
36,634 )
39,817
(
1,188 )
449
70,923
1,334,610
59,317
32,227
(
61,340 ) (
7,986 )
68,900
1,358,851
(
68,088 ) (
500,000 )
1,762,654
1,065,097
(
1,286,836 ) (
2,297,574 )
6(6)
29,097
-
(
208,902 )
-
6(8)
(
4,121 ) (
11,366 )
(
842 ) (
852 )
1,166
4,154
224,128 (
1,740,541 )
(
5,132 ) (
4,426 )
- (
37,371 )
(
5,132 ) (
41,797 )
(
27,209 ) (
16,426 )
260,687 (
439,913 )
736,852
1,233,407
$
997,539 $
793,494

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

~8~

TRANSCEND INFORMATION, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2021 AND 2020

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

(UNAUDITED)

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.

2. 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 May 6, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

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

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

~9~

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

None.

(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:

==> picture [464 x 60] intentionally omitted <==

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

Effective date
by International
Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New Standards, Interpretations and Amendments Effective date
by International
Accounting
StandardsBoard
Amendments to IFRS 3, ‘Reference to the conceptual framework’ January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined
between an investor and its associate or joint venture’ by International
Accounting
Standards Board
IFRS 17, ‘Insurance contracts’ January 1, 2023
Amendments to IFRS 17, ‘Insurance contracts’ January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or non- January 1, 2023
current’
Amendments to IAS 1, ‘Disclosure of accounting policies’ January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’ January 1, 2023
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.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted are consistent with Note 4 in the consolidated financial statements for the year ended December 31, 2020, except for the compliance statement, basis of preparation and basis of consolidation as set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

  • A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, ‘Interim financial reporting’ as endorsed by the FSC.

  • B. These consolidated financial statements are to be read in conjunction with the consolidated financial statements for the year ended December 31, 2020. 

~10~

(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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

  • A. Basis for preparation of consolidated financial statements:

Basis for preparation of these consolidated financial statements is the same as that for the preparation of the consolidated financial statements as of and for the year ended December 31, 2020.

  • B. Subsidiaries included in the consolidated financial statements:
Name of
Name of
Investor
Subsidiary
Transcend
Taiwan
Saffire Investment
Ltd. (Saffire)


〞
Transcend Japan
Inc.
(Transcend Japan)






〞
Transcend
Information Inc.
(Transcend USA)






〞
Transcend Korea
Inc. (Transcend
Korea)





 Main Business
Activities
Investment holding
company
Wholesale and
import of
computer memory
modules and
peripheral
products
Wholesale and
import of
computer memory
modules and
peripheral
products
Wholesale and
import of
computer memory
modules and
peripheral
products		 March
December
March
31,2021
31,2020
31,2020
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 March
December
March
31,2021
31,2020
31,2020
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 Description
March
31,2021
100
100
100
100		 December
31,2020
100
100
100
100
Note
"
"		 
~11~
Name of
Name of
Investor
Subsidiary
Saffire
Investment
Ltd.
Memhiro Pte. Ltd.
(Memhiro)


Memhiro
Pte. Ltd.
Transcend
Information Europe
B.V. (Transcend
Europe)






〞
Transcend
Information Trading
GmbH, Hamburg
(Transcend
Germany)






〞
Transcend
Information
(Shanghai), Ltd.
(Transcend
Shanghai)





〞
Transtech Trading
(Shanghai) Co., Ltd.
(Transtech
Shanghai)








〞
Transcend
Information (Hong
Kong), Ltd.
(Transcend Hong
Kong)





 Main Business
Activities
Investment holding
company
Wholesale and
import of
computer memory
modules and
peripheral
products
Wholesale and
import of
computer memory
modules and
peripheral
products
Manufacture and
sales of computer
memory modules,
storage products
and disks
Wholesale, agent,
import and export
and retail of
computer memory
modules, storage
products and
computer
components
Wholesale and
import of
computer memory
modules and
peripheral
products		 March
December
March
31,2021
31,2020
31,2020
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 March
December
March
31,2021
31,2020
31,2020
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 Description
March
31,2021
100
100
100
100
100
100		 December
31,2020
100
100
100
100
100
100
Note
"
"
"
"

Note: The financial statements of insignificant subsidiary as of and for the three months ended March 31, 2021 and 2020 were not reviewed by independent auditors.

  • 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. 

~12~

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

There was no significant change during this period. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2020 for related information.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and petty cash
Checking accounts and
demand deposits		 March31,2021
December 31, 2020
March 31, 2020
692
$ 844
$ 795
$ 996,847
736,008
792,699

997,539
$ 736,852
$ 793,494
$

  • A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

  • B. The Group has no cash and cash equivalents pledged to others.

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

Items
Current items:
Financial assets
mandatorily measured at
fair value through profit
or loss
Beneficiary certificates
Financial products
Valuation adjustments
Non-current items:
Financial assets
mandatorily measured at
fair value through profit
or loss
Beneficiary certificates
Valuation adjustments		 March31,2021
3,701,442
$ 24,759
12,139
3,738,340
$ 679,151
$ 203,832
882,983
$		 December31,2020
3,501,229
$ -
9,769
3,510,998
$ 611,063
$ 133,859
744,922
$		 March31,2020
1,799,435
$ -
6,290
1,805,725
$
500,000
$ -
500,000
$		 
~13~
  • A. Amounts recognized in profit or loss in relation to financial assets and liabilities at fair value through profit or loss are listed below:
Three months ended March 31,
2021 2020
Financial assets mandatorily measured at fair
value through profit or loss
Beneficiary certificates $ 72,515
 $ 3,227
Financial products 144
 119
$ 72,659 $ 3,346
  • 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
Bonds with repurchase
agreement
Non-current items:
Foreign currency bonds		 March31,2021
5,183,485
$ -
5,183,485
$ -
$		 December31,2020
5,659,889
$ -
5,659,889
$ -
$		 March31,2020
8,392,508
$ 756,748
9,149,256
$
149,143
$
  • A. Amounts recognized in profit or loss in relation to financial assets at amortised cost are listed below:
Interest income
Gain on disposal		 Three months ended March31, Three months ended March31,
2021
8,035
$ -
8,035
$		 2020
23,051
$ 5,799
28,850
$

  • 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 March 31, 2021, December 31, 2020 and March 31, 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, and the counterparties of the debt instrument investments are Yuanta Asset Management Limited, Yuanta Securities Co., Ltd., International Bills Finance Corporation, Standard Chartered Bank, and BNP 

~14~

Paribas. 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

March31,2021 December31,2020 December31,2020 March31,2020
Notes receivable $ 1,419 $ 759 $ -
Accounts receivable $ 1,723,709
 $ 1,438,764
 $ 1,538,278
Less: Loss allowance ( 4,154)
 ( 4,310)
 ( 5,446)
$ 1,719,555 $ 1,434,454 $ 1,532,832

  • A. As of March 31, 2021, December 31, 2020 and March 31, 2020, the estimated sales discounts and allowances were $93,043, $93,140 and $68,745, 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
Not past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days		 March 31,2021 March 31,2021
Accounts receivable
1,549,514
$ 154,076
8,019
2,515
9,585
1,723,709
$ December		 Notes receivable
1,419
$ -
-
-
-
1,419
$
31,2020
Accounts receivable
Notes receivable
1,177,490
$ 759
$ 237,151
-
8,835
-
406
-
14,882
-
1,438,764
$ 759
$ March 31,2020		 Notes receivable
759
$ -
-
-
-
759
$
Accounts receivable
1,300,471
$ 203,501
14,085
268
19,953
1,538,278
$		 Notes receivable
-
$ -
-
-
-
-
$		 
~15~

The above ageing analysis was based on past due date.

  • 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 March 31, 2021, December 31, 2020 and March 31, 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 March 31, 2021, December 31, 2020 and March 31, 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 $1,419, $759 and $0, respectively; the maximum exposure to credit risk in respect of the amount that best represents the Group’s accounts receivable were $1,719,555, $1,434,454 and $1,532,832, 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 March 31, 2021, December 31, 2020 and March 31, 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 March 31, 2021, December 31, 2020 and March 31, 2020, the provision matrix is as follows:

March 31, 2021
Expected loss rate

Total book value
December 31, 2020
Expected loss rate

Total book value
March 31, 2020
Expected loss rate
Total book value		 Not
past due
0.003%~0.392%
1,549,514
$ Not
past due
0.003%~0.386%
1,177,490
$ Not
past due
0.011%~0.9%
1,300,471
$		 1-180 days
past due
0.017%~34%
164,610
$ 1-180 days
past due
0.018%~41%
246,392
$ 1-180 days
past due
0.06%~60%
217,854
$		 Over 180 days
past due
25%~100%
9,585
$ Over 180 days
past due
25%~100%
14,882
$ Over 180 days
past due
25%~100%
19,953
$		 Total
1,723,709
$ Total
1,438,764
$ Total
1,538,278
$		 
~16~

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 3,380
 -
Effect of exchange rate changes ( 92)
 -
Reclassified to other income ( 3,444)
 -
At March 31 $ 4,154
 -
$
2020 2020
Accounts receivable Notes receivable
At January 1 $ 5,471
 $ -
Reversal of impairment ( 51)
 -
Effect of exchange rate changes 26
 -
At March 31 $ 5,446
 $ -

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

(5) Inventories

Raw materials
Work in progress
Finished goods
Raw materials
Work in progress
Finished goods		 March 31,2021
Allowance for
Cost
valuation loss
2,118,385
$ 26,198)
($ 728,114
432)
(
535,023
1,881)
(
3,381,522
$ 28,511)
($ December 31,2020		 Book value
2,092,187
$ 727,682
533,142
3,353,011
$
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
$		 
~17~
Raw materials
Work in progress
Finished goods		 March 31,2020
Allowance for
Cost
valuation loss
1,697,709
$ 28,113)
($ 462,911
663)
(
397,485
2,338)
(
2,558,105
$ 31,114)
($		 Bookvalue
1,669,596
$ 462,248
395,147
2,526,991
$
  • A. The cost of inventories recognized as expense for the period:
Three months ended March 31, Three months ended March 31,
2021 2020
Cost of goods sold $ 2,652,423
 2,394,713
$
(Gain on reversal of) loss on decline in
market value of inventory ( 6,651)
 2,331
$ 2,645,772 2,397,044
$

The gain on reversal of decline in market value of inventory for the three months ended March 31, 2021 was due to an increase in market value of inventory.

  • B. No inventories were pledged to others.

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

Items
March31,2021
Non-current items:
Equity instruments
Listed stocks
289,428
$ Others
1,125
290,553
Valuation adjustments
4,960)
(
285,593
$		 December31,2020
105,480
$ 1,125
106,605
4,395
111,000
$		 March31,2020
105,480
$ 1,125
106,605
1,406
108,011
$

  • 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 $285,593, $111,000 and $108,011 as at March 31, 2021, December 31, 2020 and March 31, 2020, respectively.

  • B. For the three months ended March 31, 2021, the Group disposed equity investments whose fair value was $29,097, and accumulated gain on disposal was transferred into retained earnings in the amount of $4,143. There was no such transaction in 2020.

  • 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: 

~18~

==> picture [456 x 121] intentionally omitted <==

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

Three months ended March 31,
2021 2020
Equity instruments at fair value through
other comprehensive income
Fair value change recognized in other
comprehensive loss ($ 5,212) ($ 6,153)
Cumulative gains reclassified to
$ 4,143 $ -
retained earnings due to derecognition
----- End of picture text -----

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

(7) Investments accounted for using equity method

==> picture [463 x 31] intentionally omitted <==

  • A. The basic information of the associate that is material to the Group is as follows:
Principal
Associate
place of
name
business
Taiwan IC
Packaging Corp.
Taiwan		 March
December
March
Nature of
31,2021
31,2020
31,2020
relationship
12.74%
12.74%
12.74%
Note
Shareholding ratio		 March
December
March
Nature of
31,2021
31,2020
31,2020
relationship
12.74%
12.74%
12.74%
Note
Shareholding ratio		 Method of
measurement
March
31,2021
12.74%		 December
31,2020
12.74%
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 12.74% 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.

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

~19~

Balance sheet

Taiwan IC Packaging Corp.

March31,2021 December31,2020 December31,2020 March31,2020
Current assets $ 965,306
 $ 942,507
 $ 879,728
Non-current assets 1,227,340 1,224,429 1,181,104
Current liabilities ( 284,700)
 ( 327,211)
 ( 220,374)
Non-current liabilities ( 85,651)
 ( 85,765)
 ( 87,018)
Total net assets $ 1,822,295
 $ 1,753,960
 $ 1,753,440
Share in associate’s net
assets		 $ 232,187
 $ 223,480
 $ 223,414
Net equity differences ( 127,506)
 ( 127,756)
 ( 127,473)
$ 104,681 $ 95,724 $ 95,941

Statement of comprehensive income

A
Revenue
Gain (loss) for the period from continuing
operations
Total comprehensive income (loss)
Dividends received from associates		 2021
2020
411,183
$ 273,914
$ 68,335
$ 9,986)
($ 68,335
$ 9,986)
($ -
$ -
$ Taiwan ICPackaging Corp.
Threemonths endedMarch31,
  • D. Share of loss of associates accounted for using the equity method is as follows:
Investee Company
Taiwan IC Packaging Corp.		 2021
2020
8,757
$ 1,082)
($ Threemonths endedMarch31,
  • E. The Group’s investment in Taiwan IC Packaging Corporation has quoted market price. The fair value of Taiwan IC Packaging Corporation was $334,120, $239,053 and $140,663 as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively. 
~20~

(8) 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) - - 937 - 3,084 100 4,121
Depreciation charge - ( 26,647)
 ( 16,671)
 ( 1,073)
 ( 689)
 ( 1,508)
 ( 46,588)
Net exchange differences ( 6,814)
 ( 8,483)
 ( 17)
 ( 21)
 ( 163)
 ( 20)
 ( 15,518)
Closing net book amount as at March 31 $ 719,169 $ 1,309,641 $ 159,521 $ 13,031 $ 9,214 $ 13,763 $ 2,224,339
At March 31
Cost $ 719,169
 $ 2,584,045
 $ 408,104
 $ 26,843
 $ 30,190
 $ 49,217
 $ 3,817,568
Accumulated depreciation - ( 1,274,404)
 ( 248,583)
 ( 13,812)
 ( 20,976)
 ( 35,454)
 ( 1,593,229)
$ 719,169 $ 1,309,641 $ 159,521 $ 13,031 $ 9,214 $ 13,763 $ 2,224,339 
~21~
At January 1
Cost
Accumulated depreciation
Opening net book amount as at January 1
Additions (including transfers)
Disposals
Depreciation charge
Net exchange differences
Closing net book amount as at March 31
At March 31
Cost

Accumulated depreciation		 2020

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. 

~22~

(9) 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:

March31,2021
Carrying amount
Land
127,747
$ Buildings
51,238

Transportation equipment
(business vehicles)
1,578

180,563
$ Land
Buildings
Transportation equipment (business vehicles)		 December31,2020
March31,2020
Carrying amount
Carrying amount
138,189
$ 165,103
$ 47,034
58,842

1,856
1,394
187,079
$
225,339
$ Threemonths endedMarch31,		 March31,2020
Carrying amount
165,103
$ 58,842

1,394
225,339
$
2021
Depreciationcharge
9,784
$ 4,691
222
14,697
$		 2020
Depreciationcharge
9,774
$ 4,187
223
14,184
$

  • C. For the three months ended March 31, 2021 and 2020, the additions to right-of-use assets were $9,917 and $313, 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		 Three months ended March31, Three months ended March31,
2021
372
$ 2,208
364		 2020
517
$ 2,351
383
  • E. For the three months ended March 31, 2021 and 2020, the Group’s total cash outflow for leases were $7,704 and $7,160, respectively.

(10) 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 
~23~

assets, leased assets may not be used as security for borrowing purposes.

  • B. For the three months ended March 31, 2021 and 2020, the Group recognized rent income in the amount of $8,734 and $9,498, 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:

2021
2022
2023
2024		 March 31, 2021
December 31, 2020
19,643
$ 2021
23,725
$ 2020
7,416

2022
3,900

2021
5,448

2023
400
2022
1,362

2024
-

2023
33,869
$ 28,025
$		 March 31, 2020
29,338
$ 24,228

2,400

-
55,966
$

(11) Investment property

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 March 31
At March 31
Cost
Accumulated depreciation		 2021 
~24~
At January 1
Cost
Accumulated depreciation
Opening net book amount
as at January 1
Additions
Depreciation charge
Net exchange differences
Closing net book amount
as at March 31
At March 31
Cost
Accumulated depreciation		 2020
  • 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		 2021
2020
8,734
$ 9,498
$ 2,900
$ 2,786
$ 175
$ 182
$ Three months ended March 31,

  • B. The fair value of the investment property held by the Group was $5,407,192, $5,380,484 and $5,105,214 as of March 31, 2021, December 31, 2020 and March 31, 2020, respectively, which was based on the transaction prices of similar properties in the same area.

  • C. No investment property was pledged to others. 

~25~

(12) Other non-current assets

March31,2021
Guarantee deposits paid
31,861
$ Prepayments for business
facilities
-
Others
14,384

46,245
$		 December31,2020
32,823
$ -

14,588

47,411
$		 March31,2020
31,925
$ 255

14,859
47,039
$

(13) 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) For the aforementioned pension plan, the Group recognized pension costs of $166 and $148 for the three months ended March 31, 2021 and 2020, respectively.

  • (c) Expected contributions to the defined benefit pension plan of the Company for the year ending December 31, 2021 amount to $1,422.

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. 
~26~

  • (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 three months ended March 31, 2021 and 2020 were $10,479 and $10,628, respectively.

(14) Share capital

  • A. As of March 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 March 31		 2021
2020
429,062
429,248
-
186)
(
429,062
429,062

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

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 

~27~

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.

(15) 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.

(16) 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 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. 

~28~

  • 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. The cash appropriation of earnings and cash payment from capital surplus for the year ended December 31, 2020 have been proposed by the Board of Directors on March 4, 2021 and the cash appropriation of earnings and cash payment from capital surplus for the year ended December 31, 2019 have been resolved at the shareholders’ meeting on June 19, 2020. Details are summarized below:

Legal reserve
Special reserve
Cash dividends
Cash payment from
capital surplus		 Amount
Dividends per
share(in dollars)
119,625
$ -
1,094,107
2.55
$ 1,213,732
$ Cash payment per
Amount
share(in dollars)
214,531
$ 0.50
$ Year ended December 31,2020		 Amount
Dividends per
share(in dollars)
119,625
$ -
1,094,107
2.55
$ 1,213,732
$ Cash payment per
Amount
share(in dollars)
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
Amount
share(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
Amount
share(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
Amount
share(in dollars)
386,156
$ 0.90
$ Year ended December 31,2019
Amount
119,625
$ -
1,094,107
1,213,732
$ Amount
214,531
$		 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 2019 was in agreement with the amounts resolved at the stockholders’ meeting. The appropriation for cash dividends from 2020 earnings and cash payment from capital surplus have been resolved by the Board of Directors during its meeting on March 4, 2021, but have not yet been reported to the shareholders. Related liabilities were shown as other payables. The appropriations for legal reserve and special reserve from 2020 earnings have yet to be resolved at the shareholders’ meeting.

(17) 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 ( 5,212)
 - ( 5,212)
Revaluation transferred to
retained earnings - gross ( 4,143)
 - ( 4,143)
Currency translation
differences - ( 44,385)
 ( 44,385)
Effect from income tax - 8,876 8,876
At March 31 ($ 4,960) ($ 157,148) ($ 162,108) 
~29~
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 ( 6,153)
 - ( 6,153)
Currency translation
differences -
 ( 15,195)
 ( 15,195)
Effect from income tax -
 3,039
 3,039
At March 31 $ 1,406 ($ 150,617)
 ($ 149,211)

(18) Operating revenue

Sales revenue 2021
2020
3,498,620
$ 3,220,410
$ Three months ended March31,

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:

Three months ended
March31,2021
Revenue from external
customer contracts
Three months ended
March31,2020
Revenue from external
customer contracts		 Taiwan
846,521
$		 Asia
America
Europe
1,219,066
$ 288,416
$ 925,592
$ Electronicproducts
Electronic products		 Asia
America
Europe
1,219,066
$ 288,416
$ 925,592
$ Electronicproducts
Electronic products		 Asia
America
Europe
1,219,066
$ 288,416
$ 925,592
$ Electronicproducts
Electronic products		 Others
219,025
$ Others
238,327
$		 Total
3,498,620
$
Total
Taiwan
839,567
$		 Asia
1,053,100
$		 America
307,203
$		 Europe
782,213
$
3,220,410
$

B. Contract assets and liabilities

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

~30~

(19) Interest income

Interest income from bank deposits
Interest income from financial assets measured
at amortised cost
Other interest income		 Threemonths endedMarch31,
2021
2020
102
$ 1,134
$ 8,035

23,051
49,065
40
57,202
$ 24,225
$

(20) Other income

Rental income 2021
2020
8,734
$ 9,498
$ Three months ended March31,

(21) Other gains and losses

0 Threemonths ended Threemonths ended March31,
2021 2020
Loss on disposal of property, plant and equipment -
$		 ($ 38)
Net currency exchange (loss) gain ( 10,402)
 39,914
Net gain on financial assets and liabilities at fair
value through profit or loss 72,659 3,346
Royalty refund - 78,251
Others 6,770 2,954
69,027
$		 $ 124,427

(22) 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)		 Threemonths endedMarch31, Threemonths endedMarch31,
2021
329,522
$ 30,112
10,645
13,316
64,360		 2020
338,037
$ 29,246
10,776
14,233
66,255

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. 

~31~
  • B. For the three months ended March 31, 2021 and 2020, employees’ compensation was accrued at $7,018 and $6,036, respectively; while directors’ remuneration was accrued at $982 and $845, 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 three months ended March 31, 2021.

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, will be adjusted in profit or loss for 2021. The employees’ compensation and directors’ and supervisors’ remuneration for 2020 have yet to be paid.

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.

(23) Income tax

  • A. Income tax expense

  • (a) Components of income tax expense:

Threemonths ended Threemonths ended March31,
2021 2020
Current tax:
Current tax on profits for the period $ 109,410
 $ 82,404
Prior year income tax (over)
underestimation ( 5,430)
 375
Total current tax 103,980 82,779
Deferred tax:
Origination and reversal of temporary
differences ( 1,563)
 32,959
Total deferred tax ( 1,563)
 32,959
Income tax expense $ 102,417
 $ 115,738
  • (b) The income tax relating to components of other comprehensive income is as follows:
Threemonths endedMarch31, Threemonths endedMarch31,
2021 2020
Exchange differences on translation of
foreign financial statements ($ 8,876) ($ 3,039)
  • B. The Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority. 
~32~

(24) Earnings per share

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary
shares
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Assumed conversion of all
dilutive potential ordinary
shares
Employees’ compensation
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all
dilutive potential ordinary
shares		 Three months ended March 31,2021 Three months ended March 31,2021 Three months ended March 31,2021
Weighted-average
common shares
Earnings
outstanding
per share
Profit after tax
(in thousands)
(in dollars)
559,386
$ 429,062
1.30
$ 559,386
$ 429,062
-
334
559,386
$ 429,396
1.30
$ Three months ended March 31,2020		 Earnings
per share
(in dollars)
1.30
$
1.30
$
Profit after tax
464,120
$ 464,120
$ -
464,120
$		 Weighted-average
common shares
outstanding
(in thousands)
429,070
429,070
402
429,472		 Earnings
per share
(in dollars)
1.08
$
1.08
$		 
~33~

(25) Supplemental cash flow information

Financing activities with no cash flow effects:

Three months ended March 31, Three months ended March 31, Three months ended March 31,
2021 2020
Cash dividends $ 1,094,107
 1,544,622
$
Cash payment from capital surplus 214,531
 386,156
Less: Shown as other payables ( 1,308,638)
 ( 1,930,778)
Financing cash flows $ -
 -
$

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		 Threemonths endedMarch31, Threemonths endedMarch31,
2021
382
$		 2020
631
$

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		 Threemonths endedMarch31, Threemonths endedMarch31,
2021
57,198
$		 2020
57,633
$

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. 

~34~

C. Receivables from related parties

Accounts receivable:
Associates accounted
for using equity method		 March31,2021
December31,2020
68
$
-
$		 March31,2020
595
$

The receivables from related parties arise mainly from sale transactions. The credit term to Taiwan IC Packaging Corporation is 30 days after receipt of goods. The receivables are unsecured in nature and bear no interest. There are no allowances for uncollectible accounts held against receivables from related parties.

D. Payables to related parties

Accounts payable:
Associates accounted for
using equity method		 March31,2021
41,675
$		 December31,2020
March31,2020
37,416
$ 35,624
$

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.

E. 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 March 31, 2021, December 31, 2020 and March 31, 2020, the balance of related right-of-use assets amounted to $42,736, $51,893 and $79,364 while lease liabilities amounted to $36,948, $36,815 and $73,257, respectively.

(3) Key management compensation

Salaries and other employee benefits

Three months ended March31, Three months ended March31,
2021
11,368
$		 2020
8,630
$		 
~35~

8. PLEDGED ASSETS

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

March 31,
December 31,
Pledged assets
2021
2020
Property, plant and
equipment
$ 138,199
$148,671

Book value		 March 31,
2020
Pledge purpose
$ 151,523
Collateral for general
credit limit granted by
financial institutions

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

As of March 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 SUBSEQUENT EVENTS

None.

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. 

~36~

(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
Financial liabilities
Financial liabilities at
amortised cost
Accounts payable
(including related parties)
Other payables
Lease liabilities		 March 31,2021
4,621,323
$ 285,593
997,539
5,183,485
1,419
1,719,623
65,914
31,861
12,906,757
$ March 31,2021
1,359,550
$ 1,555,363
2,914,913
$ 89,761
$		 December 31,2020
4,255,920
$ 111,000

736,852

5,659,889

759
1,434,454
71,351
32,823
12,303,048
$ December 31,2020
1,171,682
$ 246,635
1,418,317
$ 85,715
$		 March 31,2020
2,305,725
$ 108,011
793,494
9,298,399
-

1,533,427
114,074
31,925
14,185,055
$ March 31,2020
1,481,071
$ 2,183,320
3,664,391
$
133,234
$

B. Financial risk management policies

There was no significant change during this period. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2020 for related information.

  • C. Significant financial risks and degrees of financial risks

There is no significant change except for the following information. Please refer to Note 12 in the consolidated financial statements for the year ended December 31, 2020 for the related information. 

~37~

(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
Financial assets
Financial liabilities		 March31,2021 March31,2021
Foreign
Currency
USD：NTD
EUR：NTD
RMB：NTD
JPY：NTD
USD：EUR
USD：HKD
USD：JPY
GBP：EUR
USD：NTD		 Foreign Currency
Amount
Exchangerate
Bookvalue
35,390
$ 28.54
1,010,031
$ 7,068
33.48
236,637
11,391
4.3440
49,483
90,240
0.2577
23,255
2,865
0.8524
81,767
824
7.7766
23,517
489

110.7489
13,956
1,354
1.1717
53,117
40,501
$ 28.54
1,155,899
$ December31,2020
Foreign
Currency
USD：NTD
EUR：NTD
RMB：NTD
JPY：NTD
USD：EUR
USD：HKD
USD：JPY
GBP：EUR
USD：NTD		 Foreign Currency
Amount
24,579
$ 3,551
9,070
122,026
4,859
817
395
972
35,425
$		 Exchangerate
Bookvalue
28.48
700,010
$ 35.02
124,356
4.3770
39,699

0.2763
33,716
0.8132
138,384
7.7539
23,268
103.0764
11,250
1.1108

37,811
28.48
1,008,904
$		 
~38~

==> picture [423 x 46] intentionally omitted <==

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

March 31, 2020
Foreign Foreign Currency
Currency Amount Exchange rate Book value
----- End of picture text -----

Currency Amount
E		 xchange rate B ookvalue
Financial assets USD：NTD $ 115,294
 30.23 $ 3,485,338
JPY：NTD 520,802 0.2788 145,200
EUR：NTD 1,901 33.24 63,189
GBP：NTD 289
 37.25 10,765
USD：EUR 5,689 0.9094 171,978
USD：HKD 682 7.7553 20,617
USD：JPY 560 108.4290 16,929
GBP：EUR 1,143
 1.1206 42,577
Financial liabilities USD：NTD $ 43,374
 30.23 $ 1,311,196

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 three months ended March 31, 2021 and 2020 is provided in Note 6(21).

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 $1,459 and $21,741 for the three months ended March 31, 2021 and 2020, respectively.

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 

~39~

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;

  • (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).

  • viii. For details of credit risk in relation to debt instrument investments measured at amortised cost, please refer to Note 6(3).

(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 

~40~

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.

  • 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(11).

  • 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:
March 31, 2021
Assets
Recurring fair value measurements
Financial assets at fair value through
profit or loss
Beneficiary certificates
Financial products
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
4,596,448
$ -
284,468
4,880,916
$ Level 1
4,255,920
$ 109,875
4,365,795
$		 Level 2
-
$ -
-
-
$ Level 2
-
$ -
-
$		 Level3
-
$ 24,875
1,125
26,000
$ Level3
-
$ 1,125
1,125
$		 Total
4,596,448
$ 24,875
285,593
4,906,916
$
Total
4,255,920
$ 111,000
4,366,920
$		 
~41~
March 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
2,305,725
$ 106,886
2,412,611
$		 Level 2
-
$ -
-
$		 Level3
-
$ 1,125
1,125
$		 Total
2,305,725
$ 108,011
2,413,736
$

  • 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 three months ended March 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 three months ended March 31, 2021 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. 

~42~

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

  • A. Loans to others: None.

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

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

  • D. Acquisition or sale of the same security with the accumulated cost exceeding 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. 

~43~

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.

(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
3,498,620
$ 3,220,410
$ 559,386
$ 464,120
$ Threemonths endedMarch31,		 2021
2020
3,498,620
$ 3,220,410
$ 559,386
$ 464,120
$ Threemonths endedMarch31,
3,220,410
$
464,120
$

(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. 

~44~

Transcend Information, Inc. and Subsidiaries

Provision of endorsements and guarantees to others

Three months ended March 31, 2021

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

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
March 31,
2021(Note 4)		 Outstanding
endorsement/
guarantee
amount at
March 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 3,576,451
$		 $ 543,200
(JPY $2,000,000)
(In thousands)		 $ 515,400
(JPY $2,000,000)
(In thousands)		 -
$		 - 3 7,152,901
$		 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. ($17,882,253*20%=$3,576,451)

  • Note 4: The maximum outstanding endorsement/guarantee amount during and as of March 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. ($17,882,253*40%=$7,152,901)

  • Note 8: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary.

Table 1, Page 1

Transcend Information, Inc. and Subsidiaries

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

March 31, 2021

Table 2

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities
(Note 1)		 Relationship with the
securities issuer(Note 2)		 General
ledger account		 As of March31,2021 As of March31,2021 Footnote
(Note 4)
Number of shares Book value
(Note3)		 Ownership (%) Fairvalue
Transcend Taiwan
Transcend Information (Shanghai), Ltd.		 Stocks
Dramexchange Tech Inc.
Fubon Financial Holding
Co., Ltd. Preferred Shares B
Taiwan Semiconductor Manufacturing
Co., Ltd.
Yuanta Financial Holding Co., Ltd.
Beneficiary certificates
Taishin 1699 Money Market Fund
Yuanta Taiwan High-yield Leading
Company Fund B
Yuanta Taiwan Top 50 ETF
Yuanta Taiwan Dividend Plus ETF
Financial products
Financial products of Industrial and
Commercial Bank of China		 -
-
-
-
-
-
-
-
-		 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
"
"
Current financial assets
at fair value through
profit or loss		 60,816
1,758,000
260,000
1,000,000
271,941,070
50,000,000
1,417,000
290,000
-		 1,125
$ 109,348
152,620
22,500		 1
-
-
-
-
-
-
-
-		 1,125
$ 109,348
152,620
22,500
3,713,464
$ 682,000
$ 190,941
10,042
24,875
$		 -
-
-
-
-
-
-
-
-
285,593
$
3,713,464
$
682,000
$ 190,941
10,042
882,983
$
24,875
$

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

Three months ended March 31, 2021

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

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
（Note3）		 Addition
（Note3）		 Disposal
（Note3）		 Disposal
（Note3）		 Balance as at
March31,2021		 Balance as at
March31,2021
Number
of shares		 Amount Number
of shares		 Amount Number
of shares		 Selling price Bookvalue Gain on
disposal		 Number
of shares		 Amount
Transcend Taiwan Taishin 1699
Money Market
Fund		 Current
financial assets
at fair value
through profit
or loss		 - - 257,293,248 $ 3,501,229 21,980,813 $ 300,000 7,332,991 $ 100,076 $ 99,787 $ 289 271,941,070 $ 3,701,442

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

Three months ended March 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
thirdpartytransactions(Note 1)		 Differences in transaction terms compared to
thirdpartytransactions(Note 1)		 Notes/accounts receivable(payable) Notes/accounts receivable(payable) Footnote
Sales
(purchases)		 Amount Percentage
of total sales
(purchases)		 Credit term Unitprice Credit term Balance Percentage of
total notes/accounts
receivable(payable)
Transcend Taiwan
"
"
"
"
"		 Transcend Japan Inc.
Transcend Information
Europe B.V.
Transcend Information, Inc.
Transcend Korea Inc.
Transtech Trading (Shanghai)
Co., Ltd.
Transcend Information
Trading GmbH		 The Company's subsidiary
Subsidiary of Memhiro
The Company's subsidiary
The Company’s subsidiary
Subsidiary of Memhiro
Subsidiary of Memhiro		 Sales
"
"
"
"
"		 $ 224,996
157,668
122,722
100,349
256,850
105,038		 7
5
4
3
8
3		 120 days after
monthly billings
"
"
"
"
"		 No significant
difference
"
"
"
"
"		 30 to 60 days after monthly
billings to third parties
"
"
"
"
"		 $ 143,348
23,805
25,138
14,075
154,601
12,982		 9
2
2
1
10
1		 -
-
-
-
-
-

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

Table 5

Transcend Information, Inc. and Subsidiaries

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

Three months ended March 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor Counterparty Relationship
with the counterparty		 Balance as at
March 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.		 Transcend Japan Inc.
Transtech Trading (Shanghai) Co., Ltd.
Transcend Taiwan		 Subsidiary of the Company
Subsidiary of Memhiro
Ultimate parent company		 $ 143,348
154,601
408,198		 6.36
6.29
-		 $ -
-
408,198		 -
-
-		 $ 57,698
72,545
-		 -
-
-

Table 5, Page 1

Transcend Information, Inc. and Subsidiaries

Three months ended March 31, 2021

Expressed in thousands of NTD

Significant inter-company transactions during the period

Table 6

(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
"
"
"
"
"
"
"
1		 Transcend Taiwan
"
"
"
"
"
"
"
Transcend Information Europe B. V.		 Transcend Japan Inc.
Transcend Information Europe B. V.
Transcend Information, Inc.
Transcend Korea Inc.
Transtech Trading (Shanghai) Co., Ltd.
Transcend Information (H.K) Ltd.
Transcend Information Trading GmbH
Transcend Information (Shanghai), Ltd.
Transcend Information Trading GmbH		 1
〞
〞
〞
〞
〞
〞
〞
3		 Sales
"
"
"
"
"
"
Accounts Payable
Sales		 $ 224,996
157,668
122,722
100,349
256,850
71,776
105,038
408,198)
(
46,385		 There is no significant
difference in unit price
from those to third parties.
"
"
"
"
"
"
"
There is no significant
difference in unit price
from those to third parties.		 6
5
4
3
7
2
3
2)
(
1

(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

Table 7

Information on investees

Three months ended March 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 March31,2021 Shares held as at March31,2021 Shares held as at March31,2021 Net profit (loss)
of the investee
for the three
months ended
March31,2021		 Investment
income
(loss) recognized
by the Company
for the three
months ended
March 31, 2021
（Note 1）		 Footnote
Balance as at
March 31,
2021		 Balance as at
December 31,
2020		 Number of shares Ownership (%) Bookvalue
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
12.74
100
100
100
100		 1,542,039
$ 243,650
159,467
62,063
104,681
1,533,928
232,104
115,979
26,494		 23,025
$ 9,273
19,141)
(
6,268
68,335
23,029
5,153
8,342
616		 23,025
$ 9,273
19,141)
(
6,268
8,757
23,029
5,153
8,342
616		 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 (7).

Table 7, Page 1

Transcend Information, Inc. and Subsidiaries

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investments in Mainland China Three months ended March 31, 2021

==> picture [22 x 5] intentionally omitted <==

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

Table 8
----- End of picture text -----

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 three months ended
March 31,2021		 Amount remitted from
Taiwan to Mainland
China/Amount remitted
back to Taiwan for
the three months ended
March 31,2021		 Accumulated
amount of remittance
from Taiwan to
Mainland China as of
March 31,2021		 Net income (loss)
of investee for
the three months
ended March 31,
2021		 Ownership
held by
the Company
(direct or
indirect)		 Investment income
(loss) recognized
by the Company
for the three
months ended
March 31,
2021(Note 2)		 Book value of
investments in
Mainland China
as of March 31,
2021		 Accumulated amount
of investment income
remitted back to Taiwan
as of March 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
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		 ($ 14,606)
7,860		 100
100		 ($ 14,606)
7,860		 $ 1,109,482
44,614		 $ 1,464,028
-		 -
-
Companyname Accumulated amount of
remittance from Taiwan to
Mainland China as of
March 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
$		 -
$ -
10,729,352
$

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 recognition basis of gain and loss on investment was the financial statements which were not reviewed by independent auditors. 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

March 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

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