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TRI AGM Information 2023

Jun 1, 2023

52263_rns_2023-06-01_5265f698-82ad-4e52-a8cb-92f63392ef35.pdf

AGM Information

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Stock code: 3030

==> picture [133 x 101] intentionally omitted <==

Handbook for 2023 Shareholders Meeting of Test Research, Inc.

(Translation)

==> picture [103 x 20] intentionally omitted <==

Table of Contents

Meeting Agenda -----------------------------------------------------------------------------1
Reporting Items ------------------------------------------------------------------------------2
Approval Items ------------------------------------------------------------------------------2
Election Items --------------------------------------------------------------------------------3
Other Matters ---------------------------------------------------------------------------------5
Incidental Motions --------------------------------------------------------------------------5
Appendices
I. Annual Business Report ------------------------------------------------------------------------------ 6
II. Audit Committee’s Review Report ---------------------------------------------------------------- 7
III. CPA Audit Report and Financial Statements ---------------------------------------------------- 8
IV. Earnings Distribution Statement ----------------------------------------------------------------- 29
V. Amendments to the Company’s Codes of Ethical Conduct and the Amended Codes of
Ethical Conduct ------------------------------------------------------------------------------------30
VI. The Company’s Articles of Association ------------------------------------------------------- 34
VII. The Company’s Director Election Rules ----------------------------------------------------- 38
VIII. The Company’s Rules Governing the Shareholders Meeting ------------------------------ 40
IX. Current Shareholdings of All Directors ------------------------------------------------------- 41
X.
Any Other Matters Need to be Specified ----------------------------------------------------- 41

2023 Shareholders Meeting Agenda

of Test Research, Inc.

I. Time: 9:00 a.m. on May 31 (Wednesday), 2023

II. Venue : 3F, No. 36-1,Huangxi Street, Shilin District, Taipei City.

(2023 Annual Shareholders’ Meeting held by means of physical shareholders meeting.)

III. Meeting Agenda

  1. Call meeting to order

  2. Chairman gives the opening address

  3. Reporting items:

  4. (1) 2022 Annual Business Report.

  5. (2) Audit Committee’s Review Report on 2022 Financial Statements.

  6. (3) 2022 Employees' and Directors’ Remuneration Proposal.

  7. (4) Amendments to the Company’s Codes of Ethical Conduct.

  8. Approval items:

  9. (1) Adoption of 2022 Financial Statements.

  10. (2) Adoption of 2022 Earning Distribution Plan.

  11. Election items:

To elect nine directors (including four independent directors).

  1. Other matters:

Proposal of releasing the prohibition on new directors from participation in competitive business.

  1. Incidental motions

  2. Adjournment

~1~

Reporting Items

Proposal 1: 2022 Annual Business Report.

Explanatory Notes: Please refer to Appendix 1 of this Handbook.

Proposal 2: Audit Committee’s Review Report on 2022 Financial Statements. Explanatory Notes: Please refer to Appendix 2 of this Handbook.

Proposal 3: 2022 Employees' and Directors’ Remuneration Proposal. Explanatory Notes:

  • (1) 2022 employees’ remuneration and directors’ remuneration resolved is NT$ 38,021,838 and NT$ 19,587,008 respectively, and the above amount will be paid in cash.

  • (2) The resolution amount doesn’t have any difference from the amount of expense recognized for 2022.

  • Proposal 4: Amendments to the Company’s Codes of Ethical Conduct.

Explanatory Notes:

For the requirements for the listed companies to amend the Codes of Ethical Conduct, some articles in the Company’s Codes of Ethical Conduct are amended. As the amended articles, please refer to Appendix 5 of this handbook.

Approval Items

Proposal 1: Adoption of 2022 Financial Statements (Proposed by the Board of Directors) Explanatory Notes:

  • (1) 2022 Business Report and Financial Statements (including the consolidated financial statements) are passed upon the resolution of the Board. The Financial Statements (including the consolidated financial statements) are audited by the CPA. The above reports are reviewed by the Audit Committee.

  • (2) Please refer to the Appendix 1 and Appendix 3 of the Handbook.

Resolution:

Proposal 2: Adoption of 2022 Earning Distribution Plan (Proposed by the Board of Directors) Explanatory Notes:

  • (1) This earning distribution plan firstly considers the earning of 2022, and then distributes the undistributed profits after 1998. The common shares are distributed with cash dividend of NT$4.5 per share.

  • (2) For 2022 Earning Distribution Table, please refer to Appendix 4 of the Handbook.

  • (3) As for the cash dividend distribution, the Board is authorized to settle the related affairs after it is passed in the Shareholders Meeting.

~2~

  • (4) The Chairman is authorized to contact specific person to adjust the sum of fractional amount of the cash dividend less than NT$1.

  • (5) In the event that, the transfer, exchange and cancellation of shares or buyback of shares of the Company affects the amount of outstanding shares and the payout ratio for shareholders, it is proposed that the Board of Directors be authorized to change the related affairs.

Resolution:

Election Items

Proposal: To elect nine directors (including four independent directors). Please proceed to discuss. (Proposed by the Board of Directors)

Explanatory Notes:

  • (1) The term of the Company’s directors ended on May 26, 2023. As required by Article 16 of the Company’s Articles of Association, it is proposed to re-elect all 9 directors (including 4 independent directors) in 2023 Shareholders Meeting.

  • (2) The new directors (including independent directors) will serve a three-year term since the date of appointment during 2023 Shareholders Meeting (May 31 2023~May 30, 2026). The current directors will be relieved of office since the date of appointing new directors.

  • (3) According to the Articles of Association, the director election shall adopt Candidates Nomination System. It means the directors shall be elected from the list of director candidates by the shareholders. The basic information of the candidates is listed as below:

Candidates of Directors (a total of 5) As of April 2, 2023 ； Unit: share

Name Main Education Main Experience Position Shareholding
Chieh-
Yuan,Chen		 BE(Elec)of Tatung
University
Department Head of Philip
Co. Taiwan
Chairman of Test
Research, Inc.
37,889,235
Kuang-
Chao,Fan		 Ph.D. degree from
University of Manchester
Institute of Science and
Technology in UK		 Distinguished Professor in
the Department of
Mechanical Engineering
of National Taiwan
University.
Independent Director of
U.D. Electronic Corp.
Director of 3DFamily
Technology Co., Ltd.
Chairman of Optodyne
International Co., Ltd.
Director of Test Research,
Inc.		 151,211

~3~

Name Main Education Main Experience Position Shareholding
Chin-
Lung,Chen		 LL.M National Taiwan
University
Managing Partner, Bright
& Wise Attorneys-at-Law		 Supervisor’s representative
of Powerchip Technology
Corporation.
Director of Fu-Ding
Investment Co., Ltd.
Independent director of
Ever Supreme Bio
Technology Co., Ltd.
Director of Test Research,

415,857
Chiang-
Huai,Lin		 BE(ES)of National
Taiwan University of
Science and Technology		 Vice President of Test
Research, Inc.		 Director of Test Research,
Inc.		 2,357,864
Ming-Chuan,
Tsai		 BE(Elec)of Tatung
University		 Vice President of Test
Research,Inc.		 Director of Test Research,
Inc.		 1,006,000

Candidates of Independent Directors (a total of 4) As of April 2, 2023 ； Unit: share

Name Main Education Main Experience Position Shareholding
Yow-Shiuan,
Fu		 MBA of West Coast
University in USA
General Manager of
WYSE Technology
Taiwan Ltd. General
Manager of E Ink
Holdings Inc.		 Independent Director of
PenPower Technology Co.,
Ltd.
Independent Director of
Logah Technology Corp.
Independent Director of
Test Research, Inc.
Compensation Committee
Member of Test Research,
Inc.

0
Mei-Jin, Chen MBA of New York
University in USA		 Chairman of SinoPac
Securities Investment
Trust Co. Ltd.		 Independent Director of
Test Research, Inc.
Compensation Committee
Member of Test Research,
Inc.		 0
Liang-Chia,
Chen		 Ph.D. in Advanced
manufacturing and
mechanical engineering,
the university of South
Australia, Australia		 Chair, Manufacturing
Automation Technology
Research Center, National
Taiwan University		 Distinguished Professor,
Department of Mechanical
Engineering, National
Taiwan University.
Independent Director of
Test Research, Inc.
Compensation Committee
Member of Test Research,
Inc.		 0
Chi Jui Huang Ph.D., Department of
International Business,
National Taiwan
University		 Secretary-General of
National Taipei University
Commissioner,
Department of Economic
Development
Taipei City Government
Director of board,
Small and Medium
Enterprise Credit
GuaranteeFund of Taiwan

Professor,
Department of Finance and
Cooperative Management,
National Taipei University
Commissioner
Labor Funds Supervisory
Committee
0

~4~

(4) Please elect and appoint based on the Company’s Director Election Rules. Election results:

Other Matters

Proposal: Proposal of releasing the prohibition on new directors from participation in competitive business. Please proceed to discuss. (Proposed by the Board)

Explanatory Notes:

  • (1) According to Article 209 of the Company Act, a Director who conducts any act for himself or on behalf of another person that is within the scope of the company's business, shall explain to the Shareholders Meeting the essential contents of such act and secure its approval.

  • (2) Since the director of the Company may be engaged in investing or operating another company with the same or similar business scope of the Company, or serve as director, it is proposed to release the prohibition on new directors and their representatives from participation in competitive business in the Shareholders Meeting. The directors(including independent director) concurrently hold positions at other company is listed as below:

Title Name Present Concurrent Position at Other Companies
Director Chieh-Yuan,Chen Director of Der-Sheng Investment Co., Ltd.
Director of Der-Shin Investment Co., Ltd.
Director of Der-HongInvestment Co.,Ltd.
Director Kuang-Chao,Fan Independent Director of U.D. Electronic Corp.
Director of 3DFamily Technology Co., Ltd.
Director of Optodyne International Co.,Ltd.
Independent
Director		 Yow-Shiuan, Fu Independent Director of PenPower Technology
Co., Ltd.
Independent Director of Logah Technology
Corp.

Resolution:

Incidental Motions

Adjournment

~5~

Appendix 1

Business Report to Shareholders

Dear Shareholders:

The Company’s consolidated revenue amounted to NT$6.709 billion in 2022 with after-tax profits totaling NT$1.921 billion. The revenue increased by 20%, compared with NT$5.607 billion in 2021; In terms of profit, it increased substantially by 62%, compared with NT$1.185 billion in 2021.

As shown on the consolidated financial statements, the Company's operating net profit margin was 32%, the after-tax net profit margin was 29%, return on equity was 29%, and return on assets was 22% in 2022. The operating performance for the whole of last year was excellent, and the overall financial nature of the Company is stable and sound.

The main reasons behind the Company’s revenue and profit growth in 2022 were attributed as follows: (1) The revenue of X-RAY and electrical test ICT grew significantly. (2) The revenue of high-speed and high-precision 3D AOI continued to grow. (3) The revenue of the automotive electronics industry continued to grow. (4) The revenue of the semiconductor industry grew significantly. (5) The revenue from regions of Taiwan, Southeast Asia, Europe, and the United States continued to grow. (6) New products are commercialized, and the competitiveness of products continues to increase. (7) Close ties with customers and major international manufacturers. (8) The Covid-19 epidemic has little impact on the Company's operations, and the annual revenue and profit have increased significantly.

  • The business policy, production and sales policy, development strategy, and expected sales volume in the future:

The Company's operating strategy is focused on the improved competitiveness of two automatic inspection equipment, including image optics (AOI, SPI, X-RAY), and electrical test ICT. Other than the deep cultivation of SMT process inspection equipment, the semiconductor process inspection equipment will represent an important strategy for the future growth of the Company. The Company expects to increase the proportion of semiconductor inspection equipment revenue in its overall revenue year by year. Opportunities for future growth of the Company lie in (1) X-RAY and electrical test ICT are necessary inspection equipment in the manufacturing process of automotive electronics and servers, and the Company expects that its shipments of X-RAY and electrical test ICT will continue to grow. (2) The customer's demand for high-speed, high-precision 3D AOI continues to increase, and the Company will strive to become the leading brand of 3D AOI in the world. (3) To deepen the application of AI technology in image optics machines, reduce program preparation time, improve the detection rate, and reduce the misjudgment rate. (4) To improve the competitiveness of the Company's machines in terms of accuracy, stability, inspection function, and inspection speed. (5) Global layout, deeply cultivate the global market. Although the global economic outlook is not good this year, the Company's various product lines and regions still aim to achieve sustainable growth in shipments.

  • The impact of the external competitive environment, legal environment, and overall business environment for the Company:

Facing the world market’s fierce competition, the Company will spare no effort to improve its "leading technology", "quality reliability and stability", “globalization market development", “new product development and controls”, “internal talent cultivation”, and to enhance its entire competitiveness at the same time. I believe that the Company will continue to grow in the future.

Thanks for the support from all shareholders who bring opportunities for the continuous growth of the Company.

Sincerely yours.

Chairman: Chieh-Yuan,Chen

Manager: Chieh-Yuan,Chen

Accounting Chief: Kaun-Yuan, Chen

~6~

Appendix 2

Audit Committee’s Review Report

The Board of Directors prepares the 2022 Business Report, Financial Statements (including consolidated financial statements) and Earning Distribution Plan. PwC Taiwan audits the Financial Statements and presents the report. The above Business Report, Financial Statements and Earning Distribution Plan are reviewed by the Audit Committee, and no incompliance is found. The above report is presented as required by Article 14-4 of Securities and Exchange Act, Article 219 of the Company Act, for further inspection.

Convener of TRI Audit Committee: Mei-Jing, Chen

Feb. 23, 2023

~7~

Appendix 3

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Test Research, Inc.

Opinion

We have audited the accompanying parent company only balance sheets of Test Research, Inc. (the “Company”) as at December 31, 2022 and 2021, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

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

~8~

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Company’s 2022 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s 2022 parent company only financial statements are stated as follows:

Valuation of inventories

Description

Refer to Note 4(10) for accounting policies adopted for the valuation of inventories, Note 5 for critical accounting estimates and assumptions related to the valuation of inventories, and Note 6(3) for details of inventories. As of December 31, 2022, inventory and allowance for valuation losses are NT$1,583,177 thousand and NT$143,529 thousand, respectively.

The Company is primarily engaged in the design, manufacture, sales, repairs and maintenance of automated inspection and testing equipment, and inventories are stated at the lower of cost and net realisable value. Management considers the rapidly changing technology and the short life cycle of electronic products in evaluating inventories. For inventories that are over a certain aging and individually identified obsolete or slow-moving items, the net realisable value is determined based on inventory aging and the market demand of such items in the future for a specific period, which are based on sales, obsolescence and the inventory quality. As the amount of inventory is significant, involves numerous items, and the valuation of inventory requires critical judgement and a high degree of uncertainty in estimation, we considered the valuation of inventory a key audit matter.

How our audit addressed the matter

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

  1. Understanding the industry and operations of the Company, and assessing the reasonableness of accounting policies applied in determining the adequacy of inventory provision.

  2. Understanding the inventory management processes, examining the annual physical count plan, and performing physical inventory observation to assess the effectiveness of judgement and control over obsolete or slow-moving inventory.

  3. Obtaining inventory aging report and testing movements to confirm whether they are assigned to the correct aging category and are in accordance with the Company’s accounting policy. We also recalculated to check the adequacy of the allowance for valuation losses.

  4. Analysing and comparing the difference of inventory valuation losses between the latest two years and examining supporting evidences in relation to allowance for slow-moving inventory valuation losses, which were individually identified by the management based on the inventory clearance condition, to assess the propriety of inventory valuation losses.

~9~

Cutoff of export revenue recognition

Description

For accounting policies adopted for revenue recognition, refer to Note 4(23).

The Company recognises export revenue in accordance with the terms of the transaction with the customer. Export revenue constitutes approximately 80% of parent company only operating revenue and the period of revenue recognition is based on transaction terms of different customers. As the timing of revenue recognition is subject to management’s judgement based on past experience, revenue may not be recorded in the proper period. Thus, we considered the cutoff of export revenue recognition a key audit matter.

How our audit addressed the matter

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

  1. Understanding and assessing the effectiveness of export revenue recognition control processes.

  2. Obtaining detailed listing of export sales within a certain period before and after period end, selecting samples and assessing the completeness by agreeing the sale to supporting documentation (such as export bill of lading and proof of delivery) to ascertain whether the sale was recorded in the proper period.

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

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

~10~

Auditors’ responsibilities for the audit of the parent company only financial statements

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

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

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

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

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

~11~

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

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

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

Pan, Hui-Lin Huang, Pei-Chuan

For and on behalf of PricewaterhouseCoopers, Taiwan February 22, 2023

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

~12~

TEST RESEARCH, INC. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(2)
6(2)
7
7
6(3)
6(4)
6(5) and 8
6(16)		 December31,2022
AMOUNT
%
$
873,052
10
1,241,924
14
1,980
-
1,034,502
11
173,172
2
12,719
-
1,427
-
1,439,648
16
32,433
-
4,810,857
53
1,257,855
14
2,840,852
32
23,321
-
65,379
1
1,129
-
4,188,536
47
$
8,999,393
100		 December31,2021 December31,2021
AMOUNT
$
873,052
1,241,924
1,980
1,034,502
173,172
12,719
1,427
1,439,648
32,433
4,810,857
1,257,855
2,840,852
23,321
65,379
1,129
4,188,536
$
8,999,393		 AMOUNT
$
847,876
737,045
1,727
825,494
336,262
8,721
67,759
1,717,316
37,018
4,579,218
1,096,803
2,051,942
26,453
73,429
697
3,249,324
$
7,828,542		 %
Current assets
1100
Cash and cash equivalents
1140
Current contract assets
1150
Notes receivable, net
1170
Accounts receivable, net
1180
Accounts receivable due from related
parties, net
1200
Other receivables
1210
Other receivables due from related
parties
130X
Inventories
1470
Other current assets
11XX
Total current assets
Non-current assets
1550
Investments accounted for using
equity method
1600
Property, plant and equipment
1780
Intangible assets
1840
Deferred income tax assets
1920
Guarantee deposits paid
15XX
Total non-current assets
1XXX
Total assets		 11
9
-
11
4
-
1
22
-
58
14
26
1
1
-
42
100

(Continued)

~13~

TEST RESEARCH, INC. PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2022
December31,2021
Notes
AMOUNT
%
AMOUNT
%
6(11)
$
37,137
-
$
49,150
1
17,172
-
30,493
1
462,078
5
888,729
11
6(6)
593,658
7
298,125
4
7
32,551
-
17,304
-
317,041
4
169,051
2
7,736
-
6,010
-
1,467,373
16
1,458,862
19
13,957
-
39,920
-
6(16)
211,606
2
176,538
2
6(7)
39,580
1
56,931
1
265,143
3
273,389
3
1,732,516
19
1,732,251
22
6(8)
2,362,160
26
2,362,160
30
6(9)
53,290
1
53,290
1
6(10)
1,533,787
17
1,415,311
18
68,362
1
57,209
1
3,297,982
37
2,276,683
29
(
48,704) (
1) (
68,362) (
1)
7,266,877
81
6,096,291
78
9
11
$
8,999,393
100
$
7,828,542
100
Current liabilities
2130
Current liabilities - current
2150
Notes payable
2170
Accounts payable
2200
Other payables
2220
Other payables to related parties
2230
Current income tax liabilities
2300
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2550
Provisions for liabilities - non-current
2570
Deferred income tax liabilities
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity
Share capital
3110
Common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
3XXX
Total equity
Significant contingent liabilities and
unrecognised contract commitments
Significant events after the balance
sheet date
3X2X
Total liabilities and equity

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

~14~

TEST RESEARCH, INC. PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items YearendedDecember31
2022
2021
Notes
AMOUNT
%
AMOUNT
%
6(11) and 7
$
6,319,384
100
$
5,140,730
100
6(14)(15)
(
2,821,018 ) (
45) (
2,519,631) (
49)
3,498,366
55
2,621,099
51
6(4)
(
85,016 ) (
1) (
74,851) (
2)
6(4)
74,851
1
99,181
2
3,488,201
55
2,645,429
51
6(14)(15) and 7
(
812,903 ) (
13) (
723,531) (
14)
(
149,989 ) (
2) (
123,275) (
2)
(
534,901 ) (
9) (
497,036) (
10)
12(2)
(
4,236 )
-
1,461
-
(
1,502,029 ) (
24) (
1,342,381) (
26)
1,986,172
31
1,303,048
25
2,488
-
3,183
-
6(12)
16,616
-
17,553
1
6(13)
262,429
4 (
37,929) (
1)
(
98 )
-
-
-
6(4)
146,644
3
198,089
4
428,079
7
180,896
4
2,414,251
38
1,483,944
29
6(16)
(
492,766 ) (
8) (
298,890) (
6)
$
1,921,485
30
$
1,185,054
23
6(7)
$
8,956
- ( $
291)
-
24,573
1 (
13,941)
-
6(16)
(
4,915 )
-
2,788
-
19,658
1 (
11,153)
-
$
28,614
1 ( $
11,444)
-
$
1,950,099
31
$
1,173,610
23
6(17)
$
8.13
$
5.02
$
8.11
$
5.01
4000
Operating revenue
5000
Operating costs
5900
Gross profit from operations
5910
Unrealised loss from sales
5920
Realised profit from sales
5950
Gross margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit impairment (loss)
gain
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of associates and
joint ventures accounted for using
equity method
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Actuarial gain (loss) on defined
benefit plan
Components of other comprehensive
income that will be reclassified to
profit or loss
8361
Financial statements translation
differences of foreign operations
8399
Income tax relating to the
components of other comprehensive
(loss) income that will be
reclassified to profit or loss
8360
Other comprehensive income
(loss) that will be reclassified to
profit or loss
8300
Total other comprehensive income
(loss) for the year
8500
Total comprehensive income for the
year
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

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

~15~

TEST RESEARCH, INC. PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

2021
Balance at January 1, 2021
Profit for the year
Other comprehensive loss for the year
Total comprehensive income (loss)
Appropriations of 2020 earnings
Legal reserve
Special reserve
Cash dividends
Balance at December 31, 2021
2022
Balance at January 1, 2022
Profit for the year
Other comprehensive income for the
year
Total comprehensive income
Appropriations of 2021 earnings
Legal reserve
Special reserve
Cash dividends
Balance at December 31, 2022		 Notes Ordinary share Capital Reserves Capital Reserves Capital Reserves Capital Reserves Retained Earnings Retained Earnings Exchange
differences on
translation of
foreign financial
statements		 Total equity
Capital surplus,
additional paid-in
capital		 Capital surplus,
changes in equity
of associates and
joint ventures
accounted for
using equity
method		 Legal reserve Special reserve Unappropriated
retained earnings
6(10)
6(10)		 $ 2,362,160
-
-
-
-
-
-
$ 2,362,160
$ 2,362,160
-
-
-
-
-
-
$ 2,362,160


$
51,874
-
-
-
-
-
-
$
51,874
$
51,874
-
-
-
-
-
-
$
51,874		 $
1,416
-
-
-
-
-
-
$
1,416
$
1,416
-
-
-
-
-
-
$
1,416		 $ 1,306,390
-
-
-
108,921
-
-
$ 1,415,311
$ 1,415,311
-
-
-
118,476
-
-
$ 1,533,787		 $
67,270
-
-
-
-
(
10,061 )
-
$
57,209
$
57,209
-
-
-
-
11,153
-
$
68,362		 $ 1,970,293
1,185,054
(
291 )
1,184,763
(
108,921 )
10,061
(
779,513 )
$ 2,276,683
$ 2,276,683
1,921,485
8,956
1,930,441
(
118,476 )
(
11,153 )
(
779,513 )
$ 3,297,982		 ($
57,209 )
-
(
11,153 )
(
11,153 )
-
-
-
($
68,362 )
($
68,362 )
-
19,658
19,658
-
-
-
($
48,704 )		 $ 5,702,194
1,185,054
(
11,444 )
1,173,610
-
-
(
779,513 )
$ 6,096,291
$ 6,096,291
1,921,485
28,614
1,950,099
-
-
(
779,513 )
$ 7,266,877

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

~16~

TEST RESEARCH, INC. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortisation

Expected credit impairment loss (gain)

Interest income
Interest expense
Share of profit or loss of subsidiaries accounted for using the
equity method

Unrealised loss (profit) from sales, net

(Gains) losses on disposal of property, plant and equipment

Changes in operating assets and liabilities
Changes in operating assets
Contract assets
Accounts receivable
Notes receivable
Accounts receivable due from related parties
Other receivables
Other receivables due from related parties
Inventory
Other current assets
Changes in operating liabilities
Current liabilities - current
Notes payable
Accounts payable
Other payables
Other payables to related parties
Other current liabilities
Provisions for liabilities - non-current
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment

Increase in refundable deposits
Increase in guarantee deposits paid
Loss on disposal of property, plant and equipment
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of cash dividends

Net cash flows used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2022
2021
$
2,414,251 $
1,483,944
6(14)
63,712
66,693
6(14)
14,983
14,476
12(2)
4,236 (
1,461 )
(
2,488 ) (
3,183 )
98
-
6(4)
(
146,644 ) (
198,089 )
6(4)
10,165 (
24,330 )
6(13)
(
3,416 )
722
(
505,031 ) (
597,708 )
(
213,092 )
372,724
(
253 )
2,205
163,090 (
129,092 )
(
3,660 ) (
2,285 )
66,332
43,774
245,381 (
869,769 )
4,585 (
16,320 )
(
12,013 )
41,188
(
13,321 )
13,711
(
426,651 )
424,783
130,484
49,560
15,247 (
10,292 )
1,726
280
(
25,963 ) (
1,423 )
(
8,395 ) (
6,271 )
1,773,363
653,837
2,150
3,183
(
98 )
-
(
306,573 ) (
218,225 )
1,468,842
438,795
6(18)
(
656,065 ) (
125,290 )
(
11,851 ) (
16,598 )
(
432 ) (
155 )
4,195
-
(
664,153 ) (
142,043 )
6(10)
(
779,513 ) (
779,513 )
(
779,513 ) (
779,513 )
25,176 (
482,761 )
847,876
1,330,637
$
873,052 $
847,876

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

~17~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Test Research, Inc.

Opinion

We have audited the accompanying consolidated balance sheets of Test Research, Inc. (the “Company”) and its subsidiaries (the “Group”) as at December 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission.

Basis for opinion

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

~18~

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Group’s 2022 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Group’s 2022 consolidated financial statements are stated as follows:

Valuation of inventories

Description

Refer to Note 4(12) for accounting policies adopted for the valuation of inventories, Note 5 for critical accounting estimates and assumptions related to the valuation of inventories, and Note 6(4) for details of inventories. As of December 31, 2022, inventory and allowance for valuation losses are NT$1,618,130 thousand and NT$152,595 thousand, respectively.

The Group is primarily engaged in the design, manufacture, sales, repairs and maintenance of automated inspection and testing equipment, and inventories are stated at the lower of cost and net realisable value. Management considers the rapidly changing technology and the short life cycle of electronic products in evaluating inventories. For inventories that are over a certain aging and individually identified obsolete or slow-moving items, the net realisable value is determined based on inventory aging and the market demand of such items in the future for a specific period, which are based on sales, obsolescence and the inventory quality. As the amount of inventory is significant, involves numerous items, and the valuation of inventory requires critical judgement and a high degree of uncertainty in estimation, we considered the valuation of inventory a key audit matter.

How our audit addressed the matter

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

  1. Understanding the industry and operations of the Group, and assessing the reasonableness of accounting policies applied in determining the adequacy of inventory provision.

  2. Understanding the inventory management processes, examining the annual physical count plan, and performing physical inventory observation to assess the effectiveness of judgement and control over obsolete or slow-moving inventory.

~19~

  1. Obtaining inventory aging report and testing movements to confirm whether they are assigned to the correct aging category and are in accordance with the Group’s accounting policy. We also recalculated to check the adequacy of the allowance for valuation losses.

  2. Analysing and comparing the difference of inventory valuation losses between the latest two years and examining supporting evidences in relation to allowance for slow-moving inventory valuation losses, which were individually identified by the management based on the inventory clearance condition, to assess the propriety of inventory valuation losses.

Cutoff of export revenue recognition of the Company

Description

For accounting policies adopted for revenue recognition, refer to Note 4(24).

The Group recognises export revenue in accordance with the terms of the transaction with the customer. Export revenue constitutes approximately 80% of consolidated operating revenue and the period of revenue recognition is based on transaction terms of different customers. As the timing of revenue recognition is subject to management judgement based on past experience, revenue may not be recorded in the proper period. Thus, we considered the cutoff of export revenue recognition a key audit matter.

How our audit addressed the matter

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

  1. Understanding and assessing the effectiveness of export revenue recognition control processes.

  2. Obtaining a detailed listing of export sales of the Company within a certain period before and after period end, selecting samples and assessing the completeness by agreeing the sale to supporting documentation (such as export bill of lading and proof of delivery) to ascertain whether the sale was recorded in the proper period.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of Test Research, Inc. as at and for the years ended December 31, 2022 and 2021.

~20~

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk

~21~

of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

  3. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

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

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

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

~22~

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

Pan, Hui-Lin Huang, Pei-Chuan

For and on behalf of PricewaterhouseCoopers, Taiwan February 22, 2023

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

~23~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Assets Notes
6(1)
6(2)
6(3)
6(3)
6(3)
6(4)
6(5) and 8
6(6)
6(17)		 December31,2022
AMOUNT
%
$
1,148,655
13
285,090
3
1,443,713
16
69,748
1
1,513,877
16
37,872
-
1,465,535
16
33,618
-
5,998,108
65
3,017,829
33
45,485
1
23,992
-
74,457
1
12,675
-
3,174,438
35
$
9,172,546
100		 December31,2021 December31,2021
AMOUNT
$
1,148,655
285,090
1,443,713
69,748
1,513,877
37,872
1,465,535
33,618
5,998,108
3,017,829
45,485
23,992
74,457
12,675
3,174,438
$
9,172,546		 AMOUNT
$
1,226,378
196,790
1,007,996
37,073
1,325,315
32,136
1,746,923
35,517
5,608,128
2,227,309
56,977
26,772
80,721
10,075
2,401,854
$
8,009,982		 %
Current assets
1100
Cash and cash equivalents
1136
Current financial assets at amortised
cost
1140
Current contract assets
1150
Notes receivable, net
1170
Accounts receivable, net
1200
Other receivables
130X
Inventory
1470
Other current assets
11XX
Total current assets
Non-current assets
1600
Property, plant and equipment
1755
Right-of-use assets
1780
Intangible assets
1840
Deferred income tax assets
1920
Guarantee deposits paid
15XX
Total non-current assets
1XXX
Total assets		 15
3
13
-
17
-
22
-
70
28
1
-
1
-
30
100

(Continued)

~24~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December31,2022
December31,2021
Notes
AMOUNT
%
AMOUNT
%
6(12)
$
55,567
1
$
76,577
1
17,172
-
30,493
-
482,981
5
916,403
12
6(7)
669,984
8
354,683
5
345,442
4
179,870
2
18,654
-
25,040
-
9,707
-
7,948
-
1,599,507
18
1,591,014
20
15,743
-
39,920
1
6(17)
224,302
3
194,168
2
26,537
-
31,658
-
6(8)
39,580
-
56,931
1
306,162
3
322,677
4
1,905,669
21
1,913,691
24
6(9)
2,362,160
26
2,362,160
29
6(10)
53,290
-
53,290
1
6(11)
1,533,787
17
1,415,311
18
68,362
1
57,209
1
3,297,982
36
2,276,683
28
(
48,704) (
1) (
68,362) (
1)
7,266,877
79
6,096,291
76
7,266,877
79
6,096,291
76
9
11
$
9,172,546
100
$
8,009,982
100
Current liabilities
2130
Contract liabilities - current
2150
Notes payable
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2280
Current lease liabilities
2300
Other current liabilities
21XX
Total current liabilities
Non-current liabilities
2550
Provisions for liabilities - non-current
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2600
Other non-current liabilities
25XX
Total non-current liabilities
2XXX
Total liabilities
Equity attributable to owners of the
parent
Share capital
3110
Common stock
Capital surplus
3200
Capital surplus
Retained earnings
3310
Legal reserve
3320
Special reserve
3350
Unappropriated retained earnings
Other equity interest
3400
Other equity interest
31XX
Equity attributable to owners of
the parent
3XXX
Total equity
Significant contingent liabilities and
unrecognized contract commitments
Significant events after the balance
sheet date
3X2X
Total liabilities and equity

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

~25~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items YearendedDecember31
2022
2021
Notes
AMOUNT
%
AMOUNT
%
6(12)
$
6,708,832
100
$
5,606,690
100
6(4)(15)(16)
(
2,860,203 ) (
43) (
2,558,849) (
46)
3,848,629
57
3,047,841
54
6(15)(16)
(
967,934 ) (
14) (
836,385) (
15)
(
186,378 ) (
3) (
158,851) (
2)
(
534,901 ) (
8) (
497,036) (
9)
12(2)
(
5,934 )
-
2,531
-
(
1,695,147 ) (
25) (
1,489,741) (
26)
2,153,482
32
1,558,100
28
9,077
-
8,065
-
6(13)
23,789
1
26,080
1
6(14)
269,834
4 (
33,195) (
1)
(
2,334 )
- (
1,548)
-
300,366
5 (
598)
-
2,453,848
37
1,557,502
28
6(17)
(
532,363 ) (
8) (
372,448) (
7)
$
1,921,485
29
$
1,185,054
21
6(8)
$
8,956
- ( $
291)
-
24,573
- (
13,941)
-
6(17)
(
4,915 )
-
2,788
-
19,658
- (
11,153)
-
$
28,614
- ( $
11,444)
-
$
1,950,099
29
$
1,173,610
21
$
1,921,485
29
$
1,185,054
21
$
1,950,099
29
$
1,173,610
21
6(18)
$
8.13
$
5.02
$
8.11
$
5.01
4000
Operating revenue
5000
Operating costs
5950
Gross margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Expected credit impairment (loss)
gain
6000
Total operating expenses
6900
Operating profit
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7000
Total non-operating income and
expenses
7900
Profit before income tax
7950
Income tax expense
8200
Profit for the year
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Actuarial gain (loss) on defined
benefit plan
Components of other comprehensive
income that will be reclassified to
profit or loss
8361
Financial statements translation
differences of foreign operations
8399
Income tax relating to the
components of other comprehensive
(loss) income that will be
reclassified to profit or loss
8360
Other comprehensive income
(loss) that will be reclassified to
profit or loss
8300
Total other comprehensive income
(loss) for the year
8500
Total comprehensive income for the
year
Profit attributable to:
8610
Owners of the parent
Comprehensive income attributable to:
8710
Owners of the parent
Earnings per share (in dollars)
9750
Basic earnings per share
9850
Diluted earnings per share

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

~26~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Equity attributable to owners of the parent

2021
Balance at January 1, 2021
Profit for the year
Other comprehensive loss for the year
Total comprehensive income (loss)
Appropriations of 2020 earnings
Legal reserve
Reversal of special reserve
Cash dividends
Balance at December 31, 2021
2022
Balance at January 1, 2022
Profit for the year
Other comprehensive income for the
year
Total comprehensive income
Appropriations of 2021 earnings
Legal reserve
Special reserve
Cash dividends
Balance at December 31, 2022		 Notes Share capital -
commonstock		 Capital Reserves Capital Reserves Capital Reserves Capital Reserves Retained Earnings Retained Earnings Financial
statements
translation
differences of
foreignoperations		 Totalequity
Capital surplus,
additional paid-in
capital		 Donated assets
received		 Legal reserve Special reserve Unappropriated
retained earnings
6(11)
6(11)		 $ 2,362,160
-
-
-
-
-
-
$ 2,362,160
$ 2,362,160
-
-
-
-
-
-
$ 2,362,160


$
51,874
-
-
-
-
-
-
$
51,874
$
51,874
-
-
-
-
-
-
$
51,874		 $
1,416
-
-
-
-
-
-
$
1,416
$
1,416
-
-
-
-
-
-
$
1,416		 $ 1,306,390
-
-
-
108,921
-
-
$ 1,415,311
$ 1,415,311
-
-
-
118,476
-
-
$ 1,533,787		 $
67,270
-
-
-
-
(
10,061 )
-
$
57,209
$
57,209
-
-
-
-
11,153
-
$
68,362		 $ 1,970,293
1,185,054
(
291 )
1,184,763
(
108,921 )
10,061
(
779,513 )
$ 2,276,683
$ 2,276,683
1,921,485
8,956
1,930,441
(
118,476 )
(
11,153 )
(
779,513 )
$ 3,297,982		 ($
57,209 )
-
(
11,153 )
(
11,153 )
-
-
-
($
68,362 )
($
68,362 )
-
19,658
19,658
-
-
-
($
48,704 )		 $ 5,702,194
1,185,054
(
11,444 )
1,173,610
-
-
(
779,513 )
$ 6,096,291
$ 6,096,291
1,921,485
28,614
1,950,099
-
-
(
779,513 )
$ 7,266,877

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

~27~

TEST RESEARCH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation

Amortisation

Expected credit impairment loss (gain)

Interest income
Interest expense
Gain on disposal of property, plant and equipment

Changes in operating assets and liabilities
Changes in operating assets
Contract assets
Notes receivable
Accounts receivable
Other receivables
Inventory
Other current assets
Changes in operating liabilities
Contract liabilities
Notes payable
Accounts payable
Other payables
Other current liabilities
Provisions for liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Interest paid
Income taxes paid
Net cash flows from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
(Acquisition of) proceeds from financial assets at
amortised cost
Acquisition of property, plant and equipment

Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in guarantee deposits paid
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Lease principal repayment
Cash dividends paid

Net cash flows used in financing activities
Effect due to changes in exchange rate
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year		 Year ended December 31
Notes
2022
2021
$
2,453,848 $
1,557,502
6(15)
125,571
123,081
6(15)
15,174
14,654
12(2)
5,934 (
2,531 )
(
9,077 ) (
8,065 )
2,334
1,548
6(14)
(
7,700 ) (
4,239 )
(
441,159 ) (
825,366 )
(
32,675 )
35,767
(
189,126 )
341,095
(
4,994 ) (
10,483 )
225,041 (
875,064 )
1,899 (
7,540 )
(
21,010 )
52,275
(
13,321 )
13,711
(
433,422 )
421,806
150,252
54,380
1,759
89
(
24,177 ) (
1,423 )
(
8,395 ) (
6,271 )
1,796,756
874,926
8,335
7,262
(
2,334 ) (
1,548 )
(
335,546 ) (
289,227 )
1,467,211
591,413
(
88,300 )
34,632
6(19)
(
667,544 ) (
138,506 )
16,342
11,821
(
12,388 ) (
16,623 )
(
2,600 )
215
(
754,490 ) (
108,461 )
(
34,383 ) (
27,141 )
6(11)
(
779,513 ) (
779,513 )
(
813,896 ) (
806,654 )
23,452 (
10,829 )
(
77,723 ) (
334,531 )
1,226,378
1,560,909
$
1,148,655 $
1,226,378

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

~28~

Appendix 4

TRI 2022 Earnings Distribution Table

TRI 2022 Earnings Distribution Table TRI 2022 Earnings Distribution Table
Unit: NT$
Undistributed earnings in the beginning of 2022 1,367,539,995
Add: Net after-tax profit for the year 1,921,484,571
Add: 2022 retained earnings adjustment 8,955,607
Add: Special reserve 19,658,672
Less: 10% legal reserve (193,044,018)
Earnings available for distribution by the end of the fiscal year 3,124,594,827
Distributable item: Dividend to shareholders(NT$4.5 per share)
(1,062,972,000)
Undistributed earnings at the end of 2022 2,061,622,827

Chairman: Chieh-Yuan,Chen Manager: Chieh-Yuan,Chen Accounting Chief: Kaun-Yuan, Chen

~29~

Appendix 5

TRI Codes of Ethical Conduct Amendments Table

Article
Original Article		 Amended Article
3.1 Prevention of conflicts of interest:
The directors, managerial officers at all levels
and all employees of the Company, during
the service term, shall not be engaged in any
business that has conflicts of interest with the
business profit of the Company. The
personnel in such a position shall not take
advantage of their position in the Company to
obtain improper benefits for either
themselves or their spouse, parents, children,
or relatives within the second degree of
kinship. The Company shall pay special
attention to loans of funds, provisions of
guarantees, and major asset transactions or
the purchase (or sale) of goods involving the
affiliated enterprise at which the said
personnel work. When anyone is involved in
the incident with potential conflicts of
interest as above, it shall voluntarily explain
to the board, direct managerial officer,
internal audit chief or HR department head.

Prevention of conflicts of interest:
The directors, managerial officers at all levels
and all employees of the Company, during
the service term, shall not be engaged in any
business that has conflicts of interest with the
business profit of the Company. The
personnel in such a position shall not take
advantage of their position in the Company to
obtain improper benefits for either
themselves or their spouse, or relatives within
the second degree of kinship. The Company
shall pay special attention to loans of funds,
provisions of guarantees, and major asset
transactions or the purchase (or sale) of goods
involving the affiliated enterprise at which
the said personnel work. When anyone is
involved in the incident with potential
conflicts of interest as above, it shall
voluntarily explain to the board, direct
managerial officer, internal audit chief or HR
department head.
3.7 3.7 Encouraging reporting on illegal or
unethical activities: The Company shall
encourage employees to report to the direct
managerial officer, internal audit chief, or
HR department head upon suspicion or
discovery of any activity in violation of a law
or regulation or the Codes of Ethical
Conduct. To encourage employees to report
illegal or unethical conduct, the Company
shall establishthe whistle-blowing
regulations,establish internal and external
reporting channels and handling procedures
and protect the legal rights and benefits of the
informant and the involved party. The
Company shall use its best efforts to ensure
the safety of the said personnel and protect
them from reprisals.
3.7 Encouraging reporting on illegal or
unethical activities: The Company shall
encourage employees to report to the direct
managerial officer, internal audit chief, or HR
department head upon suspicion or discovery
of any activity in violation of a law or
regulation or the Codes of Ethical Conduct.
To encourage employees to report illegal or
unethical conduct, the Company shall
establish the “Reporting and Complaint
Handling Measures”(7.1), establish internal
and external reporting channels and handling
procedures and protect the legal rights and
benefits of the informant and the involved
party. The Company shall use its best efforts
to ensure the safety of the said personnel and
protect them from reprisals.
3.8 Disciplinary measures:
When a director or managerial officer
violates the Codes of Ethical Conduct, the
Company shall convene a board meeting to
investigate the fact and determine the
disciplinary measures. Moreover, it shall
without delay disclose on the Market
Observation Post System (MOPS) the date of
the violation by the violator, reasons for the
violation, the provisions of the code violated,
and the disciplinary actions taken. When the
ordinaryemployee violates the Codes of		 Disciplinary measures: When a director or
managerial officer violates the Codes of
Ethical Conduct, the Company shall convene
a board meeting to investigate the fact and
determine the disciplinary measures.
Moreover, it shall without delay disclose on
the Market Observation Post System (MOPS)
the date of the violation by the violator,
reasons for the violation, the provisions of the
code violated, and the disciplinary actions
taken. When the ordinary employee violates
the Codes of Ethical Conduct, the Human

~ 30 ~

Article
Original Article		 Amended Article
Ethical Conduct,the Talent Assessment
Committeeshall determine the disciplinary
actions and accept appealing.		 Resource Evaluation Committeeshall
determine the disciplinary actions and accept
appealing.
6 Enforcement
The company's code of ethical conduct, and
any amendments to it, shall enter into force
after it has been adopted by the board of
directors.		 Enforcement
The company's code of ethical conduct, and
any amendments to it, shall enter into force
after it has been adopted by the board of
directors,and submitted to a shareholders
meeting.

~ 31 ~

Amended

TRI Codes of Ethical Conduct

  1. Purpose of and basis for adoption:

  2. The Codes of Ethical Conduct is stipulated to guide the directors, managerial officers at all levels and all employees of the Company to act in line with ethical standards, and help the interested parties better understand the ethical standards of the Company, which shall be followed.

  3. Scope ：

The Codes is applicable to the Company and its subsidiaries.

  1. Content:

  2. 3.1 Prevention of conflicts of interest:

    • The directors, managerial officers at all levels and all employees of the Company, during the service term, shall not be engaged in any business that has conflicts of interest with the business profit of the Company. The personnel in such a position shall not take advantage of their position in the Company to obtain improper benefits for either themselves or their spouse, or relatives within the second degree of kinship. The Company shall pay special attention to loans of funds, provisions of guarantees, and major asset transactions or the purchase (or sale) of goods involving the affiliated enterprise at which the said personnel work. When anyone is involved in the incident with potential conflicts of interest as above, it shall voluntarily explain to the board, direct managerial officer, internal audit chief or HR department head.

  3. 3.2 Minimizing incentives to pursue personal gain: The directors, managerial officers at all levels and all employees shall not be engaged in any of the following activities:

    • (1) Seeking an opportunity to pursue personal gain by using company property or information or taking advantage of their positions.

    • (2) Obtaining personal gain by using company property or information or taking advantage of their positions.

    • (3) Competing with the company. When the company has an opportunity for profit, it is the responsibility of the directors, managerial officers at all levels and all employees to maximize the reasonable and proper benefits that can be obtained by the Company.

  4. 3.3 Confidentiality:

  5. The directors, managerial officers at all levels and all employees of the Company shall be bound by the obligation to maintain the confidentiality of any information regarding the company itself or its suppliers and customers, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the suppliers and customers.

  6. 3.4 Fair trade:

    • The directors, managerial officers at all levels and all employees shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or

~ 32 ~

through misrepresentation of important matters, or through other unfair trading practices.

  • 3.5 Safeguarding and proper use of company assets: The directors, managerial officers at all levels and all employees have the responsibility to safeguard company assets and to ensure that they can be effectively and lawfully used for official business purposes; any theft, negligence in care, or waste of the assets will all directly impact the company's profitability.

  • 3.6 Legal compliance:

    • The directors, managerial officers at all levels and all employees shall comply with the Securities and Exchange Act and other applicable laws, regulations, and bylaws.

  • 3.7 Encouraging reporting on illegal or unethical activities: The Company shall encourage employees to report to the direct managerial officer, internal audit chief, or HR department head upon suspicion or discovery of any activity in violation of a law or regulation or the Codes of Ethical Conduct. To encourage employees to report illegal or unethical conduct, the Company shall establish the “Reporting and Complaint Handling Measures”(7.1), establish internal and external reporting channels and handling procedures and protect the legal rights and benefits of the informant and the involved party. The Company shall use its best efforts to ensure the safety of the said personnel and protect them from reprisals.

  • 3.8 Disciplinary measures: When a director or managerial officer violates the Codes of Ethical Conduct, the Company shall convene a board meeting to investigate the fact and determine the disciplinary measures. Moreover, it shall without delay disclose on the Market Observation Post System (MOPS) the date of the violation by the violator, reasons for the violation, the provisions of the code violated, and the disciplinary actions taken. When the ordinary employee violates the Codes of Ethical Conduct, the Human Resource Evaluation Committee shall determine the disciplinary actions and accept appealing.

  • Procedures for exemption:

Any exemption for directors, managerial officers and ordinary employees from compliance with the codes must be adopted by a resolution of board meeting.

  1. Method of disclosure:

The Codes of Ethical Conduct, and any amendments to it, shall be disclosed in its annual reports and prospectuses and on the MOPS.

  1. Enforcement:

The company's code of ethical conduct, and any amendments to it, shall enter into force after it has been adopted by the board of directors, and submitted to a shareholders meeting.

~ 33 ~

Appendix 6

TRI Articles of Association

Chapter 1 General Principles

Article 1: The Company is organized under the provisions of Company Act, with the name of Test Research, Inc.

Article 2: The businesses of the Company include:

  • 一 、 CB01010 machinery and equipment manufacturing.

  • 二 、 CE01010 precision instruments manufacturing.

  • 、

  • 三 CE01030 photographic and optical equipment manufacturing.

  • 、

  • 四 E604010 machinery installation construction.

  • 、

  • 五 EZ05010 apparatus installation construction.

  • 、

  • 六 F113030 wholesale of precision instruments.

  • 七 、 F119010 wholesale of electronic materials.

  • 八、 F213030 retail sale of computing and business machinery equipment.

  • 九、 F213040 retail sale of precision instruments.

  • 十、 F219010 retail sale of electronic materials.

  • 十一、 F401010 international trade.

  • 十二、 I301010 information software service.

  • 十三、 I501010 product design.

  • 十四、 ZZ99999 all business items that are not prohibited or restricted by laws, except those that are subject to special approval.

  • Article 3: The Company may act as guarantor externally based on business demands.

  • Article 4: The re-investment amount of the Company is free from the restriction of no more than 40% in the paid-in capital.

  • Article 5: The Company is headquartered in Taipei County, and may set up and cancel branch or office home and abroad upon the resolution of the Board of Directors.

  • Article 6: Removed.

Chapter 2 Shares

  • Article 7: The capital amount of the Company is NT$2.5 billion composed of 250,000,000 shares with NTD10 per share. Wherein, the Board of Directors is authorized to issue the unissued shares by installments.

  • NT$50,000,000 in the above capital amount equivalent to 5,000,000 shares of NT$10 per share are retained for staff subscription right, which shall be issued by installments based on the resolution of the Board of Directors.

  • Article 8: The shares of the Company are registered, which are issued with the signature or seal of more than 3 directors based on the legal certification. The Company may issue the shares in scriptless form after issuing the shares publically. Moreover, it shall consult the Central Securities Depository for register.

  • Article 9: Regarding the change of shareholders list, it shall be stopped 60 days before the general Shareholders meeting, 30 days before the interim Shareholders meeting or 5 days before the baseline date when company decides to distribute dividend, bonuses or other profits.

  • Article 10: The shareholder affairs of the Company shall be subject to the regulations prescribed by the related laws and the competent authority.

Chapter 3 Shareholders Meeting

Article 11: It is divided into the general and interim meetings. The general meeting is held annually by the

~ 34 ~

  • Board of Directors of Directors within 6 months after each fiscal year in accordance with laws, while the interim meeting is convened in accordance with laws if necessary.

  • Article 12: The Chairman shall preside over the meetings convened by the Board of Directors. In case the Chairman is absent, s/he shall designate a person to act in lieu of him. If no one is designated, the directors shall elect one from themselves to act in lieu of the Chairman. As for the meetings convened by any other person having the convening right rather other the Board of Directors, the convener shall act as the Chairman. If there are two or more persons having the convening right, the Chairman of the meeting shall be elected among themselves.

  • Article 13: If any shareholder can’t attend the shareholder meeting for some reason, the Letter of Attorney printed by the Company shall be printed that specifies the authorization scope of the proxy to attend the meeting. The proxy appointment shall be subject to Article 177 of the Company Act and “Regulations Governing the Use of Proxies for Attendance at Shareholders Meetings of Public Listed Companies”.

  • Article 14: The shareholders of the Company shall have one vote for each share unless the voting right is restricted or prohibited by the Company Act.

  • Article 15: Unless otherwise provided by the Company Act, the resolution of the shareholders meeting requires the presence of shareholders representing more than half of the issued shared, and the approval of more than half of votes of the shareholders attending the meeting. The resolutions of the shareholders meeting shall be recorded in the meeting minutes.

  • The resolutions passed in the shareholders meeting shall be recorded in memo, which shall be signed or sealed by the Chairman, and distributed to the shareholders within 20 days after the meeting. After the Company issues the shares publically, the memo shall be distributed by making announcements. The memo can be generated and distributed in an electronic way.

Chapter 4 Directors and Audit Committee

  • Article 16: The Company sets up 5~9 directors. The Board Meeting is authorized to determine the number of directors, which shall include at least 3 independent directors. The election of directors adopts the nomination system as required by the Company Act. The independent directors and non-independent directors shall be elected in the same election, but the respective votes shall be separately calculated to determine the elected persons. The directors shall be elected and appointed based on the cumulative counts as stipulated in Article 198 of the Company Act, with a three-year term, who may be re-elected and re-appointed for one additional term. The representative of entity shareholder may be elected as director. Where there are several representatives of any entity shareholder, they may be elected as directors or supervisors, and the entity shareholder shall appoint a replacement representative based on the position until the expiration of the original term.

  • As for the professional qualifications, shareholdings, restrictions on concurrent positions held, nomination and other compliances with respect to independent directors, it is subject to the related regulations under the competent authority of the securities.

  • The Company sets up Audit Committee as required by Securities and Exchange Act, which is composed of all independent directors.

  • Article 16-1: One of the following relationships may not exist among more than half of the directors.

  • A spousal relationship.

  • A familial relationship within the second degree of kinship.

  • Article 17: The Board of Director shall exercise the legal duties in the Board. An Chairman shall be elected from themselves with the presence of more than 2/3 directors, and the approval of more than half of the directors attending the meeting. The Chairman represents the company externally, and

~ 35 ~

may appoint several consultants upon the resolution of the board meeting if necessary.

  • Article 18: The first board meeting of each new term after an election shall be convened by the director who receives the ballot representing the highest number of votes within 15 days. The other board meetings shall be convened by the Chairman, which shall specify the reason and inform the directors within written notice 7 days in advance. However, in case of emergency, the Company’s board meeting can be convened via E-mail or fax instead of written notice.

  • Article 19: Unless otherwise provided by the Company Act and the Articles of Association, the resolutions shall be attended by more than 2/3 directors and approved by more than half number of the attending directors.

  • Article 20: When the Chairman is on leave or can’t exercise the duties for some reason, the proxy shall be subject to Article 208 of the Company Act.

  • Article 21: The director may authorize another director in written form to attend the board meeting in lieu of him. However, each director can only serve as the proxy of only one director.

  • Article 22: The board organizes the board meeting, with the rights as listed below:

  • 一、 Make and revising business plan.

  • 二、Make earning distribution or loss recovery plan.

  • 三、Make capital increase/decrease plan.

  • 四、Amend the Articles of Association.

  • 五、Review the important contracts.

  • 六、Appoint managers.

  • 七、Set up and cancel the branches and offices.

  • 八、Budgeting and final accounts.

  • 九、Decide the transaction of real properties and investment into other businesses.

  • 十、Other rights granted based on the Company Act or the resolution of shareholders meeting.

  • Article 23: Removed.

  • Article 24: The duties and related affairs of the Audit Committee and its members are subject to the related regulations under the competent authority of the securities.

  • Article 25: The directors shall be distributed with remuneration as stipulated by Article 29, who shall also receive some reward of a fixed amount every month. The board is authorized to determine the reward based on the competitors and the level of listed companies.

Chapter 5 Managers

  • Article 26: The Company shall set up General Manager, whose appointment, dismiss and remuneration shall be subject to Article 29 of the Company Act.

  • Article 27: The General Manager shall deal with all businesses of the Company as instructed by the Board.

Chapter 6 Accounting

  • Article 28: The fiscal year of the Company is from Jan. 1 to Dec. 31. At the end of each fiscal year, it shall close the final accounts. After the final accounts every year, the Board will prepare various reports as required by laws, which shall be submitted to the shareholders meeting for approval.

  • Article 29: After the final accounts of the Company, if there are earnings, the Company shall first pay the tax, make up the losses for the preceding years and then set aside a legal reserve of 10% of the net profit. However, it is an exception when the legal reserve of profit reaches the capital sum. After an additional special reserve shall be set aside or reversed in compliance with laws, it shall be the distributable profit of the year. Together with the undistributed profit at the end of the period, it will be the cumulative distributable profit of the shareholders. The Board shall work out the earning distribution plan, and submit it to the shareholders meeting for resolution on distribution. The Company is engaged in the industries related to high-tech automatic inspection devices. It is in the growth period of the corporate life cycle. To cope with the overall environment and

~ 36 ~

characteristics of industrial growth, achieve business sustainability, and pursue the long-term profit of the company and stabilize operating performance goals, the dividend policy of the Company shall be based on the capital expenditure budget and the capital demands in the future. The dividend for shareholder shall be appropriated from the cumulative distributable profit, which shall be no less than 60% of the distributable profit of the current year. The cash dividend shall be no less than 50% of the amount distributed in the current year.

  • Article 29-1: If the Company gains some profits in the year, it shall make up the loss based on the pre-tax profit before deducting the remuneration of the employees. If there are still some profits remaining, it shall appropriate no less than 1% as the remuneration of the employees, and no more than 2% as the remuneration of the directors.

The subjects distributed with the above remuneration shall include the employees of the subsidiaries.

Chapter 7 Supplementary Provisions

Article 30: The affairs not mentioned herein this document shall be subject to the Company Act and other laws.

Article 31: The document was drafted on March 31, 1989

  • The 1[st] amendment was on June 1, 1989

  • The 2[nd] amendment was on April 6, 1990 The 3[rd] amendment was on February 25, 1995 The 4[th] amendment was on November 20, 1995 The 5[th] amendment was on July 18, 1996 The 6[th] amendment was on May 27, 1997 The 7[th] amendment was on June 8, 1997 The 8[th] amendment was on June 18, 1998 The 9[th] amendment was on March 27, 1999 The 10[th] amendment was on June 3, 2000 The 11[th] amendment was on April 28, 2001 The 12[th] amendment was on May 4, 2002 The 13[th] amendment was on June 23, 2003 The 14[th] amendment was on June 15, 2004 The 15[th] amendment was on June 14, 2005 The 16[th] amendment was on June 9, 2006 The 17[th] amendment was on June 15, 2007 The 18[th] amendment was on June 13, 2008 The 19[th] amendment was on June 19, 2009 The 20[th] amendment was on June 18, 2010 The 21[st] amendment was on June 6, 2011 The 22[nd] amendment was on June 3, 2016 The 23[rd] amendment was on May 26, 2018 The 24[rd] amendment was on May 29, 2019

~ 37 ~

Apendix7

TRI Director Election Rules

  • Article 1: Unless otherwise provided by the Company Act and the Articles, the election of the directors in the Company shall be subject to this regulation.

  • Article 2: The election of the directors in the Company shall be conducted in the shareholders meeting.

  • Article 3: Anyone with legal ability can be elected as director of the Company based on the regulations of the Rules.

  • Article 3-1: One of the following relationships may not exist among more than half of the directors.

  • A spousal relationship.

  • A familial relationship within the second degree of kinship.

  • Article 4: The election of the directors in the Company shall be subject to the candidate nomination system prescribed in the Company Act, together with the registered cumulative voting. The candidates are registered based on the shareholder account number or the identity card number printed on the ballot. The number of votes exercisable in respect of one share shall be the same as the number of directors to be elected, and the total number of votes per share may be consolidated for election of one candidate or split for election of multiple candidates. The independent directors and nonindependent directors shall be elected in the same election, but the respective votes shall be separately calculated.

  • Article 5: The number of directors shall be specified in the Articles of Association and passed by the Board, and the candidates receiving a majority of votes will be appointed. If two or more candidates receive an equal number of votes, a draw shall take place between them to determine who shall be elected. Where a candidate is not present, the Chairman shall draw on behalf of the candidate.

  • Article 6: The Board shall prepare the ballots. With the Company seal, the ballots shall specify the shareholder account number or the identity card number, and fill in the number of votes.

  • Article 6-1: When the elected director doesn’t meet the condition set forth in Article 3-1, the elected director who receives the lowest number of votes among those not meeting the condition shall be deemed invalid.

  • Article 7: The Chairman shall appoint several persons each to check, count and record the ballots prior to the casting of ballot.

  • Article 8: The Board shall set up a ballot box to be inspected by the ballot examiner prior to the casting of ballots.

  • Article 9: The person casting the vote shall specify the shareholder account name or the identity card number, and the name shareholder number on each ballot in the column entitled “Candidate”. If the candidate is a government entity or a juristic person, the person casting the vote shall specify the name of the government entity or juristic person and may in addition specify the name of the representative.

  • Article 10: The ballot shall be null and invalid upon occurrence of one of the following.

  • Ballots which are not in compliance with the Rules.

  • Blank ballots which are cast into the ballot box.

  • Scribbled and unidentifiable writing.

  • The account name, name, account number or identity card number, and the entitled votes of the elected candidate are altered.

  • For a candidate who is also a shareholder, the account name and the account number are -

~ 38 ~

30 - inconsistent with the information recorded in the Register of shareholders. For a candidate who is not a shareholder, the name and the identity card number provided are inconsistent upon further verification.

  1. The account name (name) of the candidate is the same with other shareholder, but no shareholder number (or identity card number) is provided for identification.

  2. Writing other words and symbols than the account name( or name) of the candidate or shareholder account number ( or identity card number) and the number of votes entitled.

  3. The number of voted candidates exceeds the number of directors to be elected.

  4. The number of votes cast by the voter exceeds the sum of votes held by him. 10. Ballots which are not put into the ballot box.

  5. Article 11: When the number of entitled votes is less than the number of votes held by the voter, the difference of votes shall be deemed as waiver.

  6. Article 12: After the voting is finished, the ballots shall be counted publically, and the voting results shall be announced by the Chairman publically.

  7. Article 13: The Company shall send each elected director a notice of appointment.

  8. Article 14: The affairs not mentioned herein this document shall be subject to the Company Act and the Articles of Association.

  9. Article 15: The Rules shall be implemented upon the approval of the shareholders meeting, and it is the same for the amendments.

~ 39 ~

Appendix 8

TRI Rules Governing the Shareholders Meeting

  1. The general shareholders meeting of the Company is subject to the Rules.

  2. The shareholders attending the meeting (or the proxies) shall present the attendance card and submit the sign-in card for checking in, based on which the attending votes shall be calculated.

  3. Unless otherwise provided by the Company Act, the Chairman shall call the general meeting to order at the time schedules and when the attending shareholders hold more than half of the issued shares. If the scheduled time is due and the number of shares represented by the attending shareholders is less than the quorum, the Chairman may announce to postpone the time for the meeting. If the number of shares represented by the attending shareholders is less than the quorum after two postponements, but more than 1/3 of the issued shares, it shall be subject to “the tentative resolution passed by more than half of the votes represented by the attending shareholders” pursuant to Article 175 of the Company Act.

If the number of shares represented by the attending shareholders reaches the above quorum before the tentative resolution is passed, the Chairman shall call the meeting to order and submit the said tentative resolution for ratification in the meeting.

  1. The meeting agenda is determined by the Board, based on which the general meeting shall be held.

  2. When making a speech, the attending shareholder shall fill out a speech note with the number of attendance card and name. The sequence of speeches shall be determined by the Chairman.

  3. When the attending shareholder makes a speech, each speech time shall not exceed five minutes, which can be extended for three minutes upon the approval of the Chairman.

  4. Any shareholder may not speak more than twice concerning the same proposal item.

  5. During the discussion of proposals, the Chairman may announce the conclusion of discussion at the appropriate time, and also announce the termination of discussion when necessary.

  6. The shareholders of the Company shall have one vote for each share unless the voting right is restricted or prohibited by the Company Act.

  7. As for voting for proposals, unless otherwise provided by the Company Act, it shall be passed upon the consent of more than half of the voting rights represented by the attending shareholders. When voting, the Chainman may consult the number of objecting shareholders. If the voting rights of the objecting shareholders are less than a half, or no objection is consulted by the Chairman, the proposal shall be deemed as being passed, which has the same effect as voting.

  8. During the general meeting, the Chairman may, at his or her discretion, set for intermission.

  9. The affairs not mentioned herein this document shall be subject to the Company Act and the Articles of Association of the Company.

The Rules shall be implemented upon the approval of the Board, and it is the same for the amendments.

~ 40 ~

Appendix 9 Current Shareholdings of All Directors:

  1. The paid-in capital of the Company is NT$2,362,160,000, with a total of 236,216,000 shares issued.

  2. According to Article 26 of Securities and Exchange Act, the minimum number of shares held by all directors is 12,000,000.

Until the book closure date of this general meeting, the shareholding of all directors recorded under the shareholder book is as listed below:

e shareholder book is as listed below: e shareholder book is as listed below: e shareholder book is as listed below: e shareholder book is as listed below:
April 2,2023
Title Account Name Number of shares
held
Shareholding
percent
Chairman Chieh-Yuan,Chen 37,889,235 16.04%
Director Kuang-Chao,Fan 151,211 0.06%
Director Chin-Lung,Chen 415,857 0.18%
Director Chiang-Huai,Lin 2,357,864 1.00%
Director Ming-Chuan,Tsai 1,006,000 0.43%
Director Representative of Der-Hong
Investment Co., Ltd.:
Chiou-Shann,Fuh		 2,738,939 1.16%
Independent Director Mei-Jing,Chen 0 0.00%
Independent Director Yow-Shiuan,Fu 0 0.00%
Independent Director Liang-Jia,Chen 0 0.00%
Total shareholdings of
all directors		 44,559,106 18.87%

Appendix 10 Any other matters that need to be specified:

The notes for proposals handled in this shareholders meeting:

Notes: 1. According to Article 172-1 of the Company Act, the shareholder representing more than 1%

  • of the issued shares shall submit proposal in written forms for the shareholders meeting, which is limited to one proposal within 300 words.

  • The period for receiving the shareholder’s proposal for this shareholders meeting is March 20, 2023~March 29, 2023, which is already disclosed on MOPS.

  • No proposal from shareholders is received by the Company.

~ 41 ~

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