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Tripod Annual Report 2020

Jul 12, 2021

52276_rns_2021-07-12_bf38662d-1594-4015-a181-a73dca9209b3.pdf

Annual Report

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Stock Code: 3044

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TRIPOD TECHNOLOGY CORPORATION 2020 Annual Report

Time of Publication: May 6[th] , 2021

Electronic File Website:

https://mops.twse.com.tw/mops/web/index http://www.tripod-tech.com

Company Spokesperson

Deputy Spokesperson

Name: Xiu-Li Lin Name: Cheng-I Lee Title: Vice President Title: Director Tel: 886-3-419-5678#21883 Tel: 886-3-419-5678#21808 Fax: 886-3-469-3572 Fax: 886-3-469-3572 Email: [email protected] Email: [email protected]

Locations of Company and Factories:

Company-No.21 Kuang-Yeh 5th rd., Pingzhen Industrial Park, Pingzhen District Taoyuan City, Taiwan (R.O.C)

Tel: 886-3-419-5678 Fax: 886-3-469-3572

Factory-No.21 Kuang-Yeh 5th rd., Pingzhen Industrial Park, Pingzhen District Taoyuan City, Taiwan (R.O.C)

Tel: 886-3-419-5678

No.1-3, Lane 305, Sec.1, Xinnan Road, Luzhou District, Taoyuan City,

Taiwan (R.O.C)

Tel: 886-3-357-6998

Share Transfer Agent

Stock Affair Agent Dept., Capital Securities Corp.

B2, No. 97, Sec. 2, Dunhua S. Rd., Taipei, Taiwan (R.O.C)

Tel: 886-2-2703-5000 Fax: 886-2-2708-5000 Website: https://www.capital.com.tw/en_v7/

Certified Public Accountants of Latest Annual Financial Reports

Name: Accountant Chung-Cheng Chen, Accountant Chao-Mei Chen, Deloitte Touche Tohmatsu Limited

20F, No. 100, Songren Rd., Xinyi District, Taipei, Taiwan (R.O.C) Tel: 886-2-2725-9988 Fax: 886-2-4051-6888 Website: https://www2.deloitte.com/tw/en.html

Overseas marketable securities flotation market exchange name and method of searching overseas marketable securities information: None

Company Website: http://www.tripod-tech.com

Index

1. Letter to Shareholders ...............................................................................................1
2. Company Profile ........................................................................................................7
3. Corporate Governance Report .............................................................................… 10
3.1 Organizational System……………………………………………………..………….…….......….......10
3.2 Information of Director, Supervisor, President, Vice President, Assistant Vice President
and Executives of Each Department and Division.…………....…….…………………………...….11
3.3 Corporate Governance Operational Status……………………...……………….…….….………….18
3.4 Information of Audit Fee………………………………………………………………….….................40
3.5 Information of CPA Replacement……………………………………………………….….………….41
3.6 Chairperson, President, Financial or Accounting Manager as Employee of CPA’S
Firm or Affiliates for Recent Year………………………...………………….………….…..………….41
3.7 Share Transfer and Change of Stock Right Pledge Status of Director, Supervisor and
Manager of Over 10% of Shares of Latest Year and Until Publication Date of Annual Report. 42
3.8 Top Ten Shareholder as Related Party or Spouse, Relative within Second Degree
Relationship Information……………………………………………......................................................43
3.9 Shares of Company, Director, Supervisor, Manager and Company’s Directly or
Indirectly Controlled Business on Invested Business and Calculation of Consolidated
Shareholding Percentage……………………………………………………..…………………………44
4. Fund Raising Status ..................................................................................... ……....45
4.1 Capital and Share…………………………………………………………………………………...……45
4.2 Issue and Proceeding Status of Corporate Bond, Preferred Stock, Global Depositary Receipt,
Employee Stock Option Certificate, Restricted Stock Awards and Merger & Acquisition
(Merger, Acquisition and Spinoff)……………………………………….………………………..…..51
4.3 Execution Status of Fund Application Plan…………………………………………….………….....51
5. Business Overview .................................................................................................. 52
5.1 Business Content…………………………………………………………………………………………52
5.2 Market, Production and Sales Overview…………………………………………………………..….59
5.3 Employee…………………………………………………………………………………………………..64
5.4 Environmental Protection Expense Information……………………………………………………..64
5.5 Labor Relations…………………………………………………………………………………………...65
5.6 Major Agreement………………………………………………………………………………….…...…67
6. Financial Overview. ............................................................................................ ....68
6.1 Five-Year Condensed Balance Sheet, Income Statement, CPA Name and Audit Opinion…….68
6.2 Five-Year Financial Analysis………………………………………………………………………..…..72
6.3 2020 Audited Committee Reports for Annual Financial Reports………………………………….74
6.4 Latest Year Annual Financial Reports…………………………………………………………………75
6.5 Latest Year Unconsolidated Financial Reports Audited by CPA…………………………………150
6.6 Financial Solvency Status of Company and Affiliates in Latest Year and Until Publication
Date of Annual Report…………………………………………………………………………………218
7. Financial Status, Performance Analysis and Risk Items ....................................... 219
7.1 Financial Status………………………………………………………………………………………….219
7.2 Financial Performance………………………………………………………………………………….220
7.3 Cash Flows……………………………………………………………………………………………….221
7.4 Impact of Latest Year Major Capital Expenditure on Finance and Business………………..…..222
7.5 Investment Status of Latest Year, Major Reason for Profits or Losses, Improvement Plan and
Investment Plan for Next year…………………………………………………………………………222
7.6 Risk Items………………………………………………………………………………………………...223
7.7 Other Important Items………………………………………………………………………………….226
8.
Special Items ........................................................................................................ .227
8.1 Affiliate Information……………………………………………………………………………………227
8.2 Private Placement of Securities of Latest Year and Until Publication Date of Annual Report.230
8.3 Shareholding or Disposal of Company Shares of Subsidiaries of Latest Year and Until
Publication Date of Annual Report: None…………………………………………………………...230
8.4 Other Necessary Items to be Recorded……………………………………………………………….230
9. Major Impact Items on Shareholders’ Rights or Securities Prices under Clause 2,
Section 2 of Article 36, Securities and Exchange Act of Latest Year and Until
Publication Date of Annual Report: None. ........................................................... 230

1. Letter to Shareholders

Tripod Technology Corporation Letter to Shareholders

1.1 2020 Business Report

1.1.1 Business Plan Execution Result

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Item
2020 2019 Y/Y
(NT$Thousands)
Consolidated
Operational 55,547,908 54,450,944 2.01%
Revenues
Consolidated
11,150,422 11,265,984 -1.03%
Operational Profits
Consolidated
Pre-Tax Profits 7,756,790 7,798,291 -0.53%
Consolidated Net
6,125,394 6,037,320 1.46%
Profits
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1.1.2 Budget Execution Status

The Company mainly sells PCBs (Printed Circuit Boards), with major production locations at Pingzhen (Taoyuan), Wuxi (Jiangsu) and Xiantao (Hubei). The expected sales volume in 2020 was 102,000 thousand square feet. The actual sales volume in 2020 was 90,981 thousand square feet.

1.1.3 Consolidated Financial Income/Expenditures and Profitability Analysis

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Analysis Item 2020 2019
Debt to Total Asset Ratio (%) 52.07 52.30
Financial
Structure Long Term Funds to Fixed Assets 205.61 220.30
Ratio (%)
Current Ratio (%) 146.58 151.88
Solvency Quick Ratio (%) 121.75 129.30
Interest Coverage Ratio 74.36 32.04
Return on Asset (ROA) Ratio (%) 8.45 8.71
Return on Equity (ROE) Ratio (%) 17.44 18.13
Pre-Tax Profits to Capital Stock
Profitability 147.57 148.36
Ratio (%)
Profit Margin (%) 11.02 11.08
Earnings per Share (EPS) (NTD) 11.65 11.49
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1.1.4 R&D Status

TrendForce offers 10 technology trends for the 2021 industrial developments:

  1. DRAM will officially migrate to the EUV generation while the NAND Flash150 stacking technology will upgrade.

  2. Global operators will speed up 5G base station establishment; Japan and South Korea have followed 6G with attention.

  3. IoT (Internet of Things) will upgrade to AIoT (Artificial Intelligence+IoT) and march toward autonomation with AI enabling devices.

~1~

  1. AR (Augmented Reality) glasses will combine with smartphones to bring about terminal cross-field integration.

  2. Keeping close tabs on self-driving, DMS (Driver Monitoring System) demand will surge.

  3. Folding device concept will upgrade again, product size will become larger while application domains will become wider.

  4. White OLED (Organic Light-Emitting Diode) technology will meet strong opponents; Mini LED, QLED (Quantum Dots Light Emitting Diode Display) will join the war.

  5. First AM (Active Matrix) Micro LED TV will hit the market in 2021.

  6. Advanced packaging technology will migrate to HPC (High Performance Computing) and AiP (Antenna-in-Package) fields with full force.

  7. Chip makers will speed up expanding strategies and are ready for the AIoT market opportunities.

With the industrial developments, the development focuses of PCB will march toward the following trends:

  1. With the developments of 5G and 6G trends, the high-frequency antenna and high-frequency, high-speed transmission wire design improve the requirements of PCB SI (Signal Integrity), PI (Power Integrity), EMI (Electromagnetic Interference) and RF (Radio Frequency) characteristics, including considerations such as Dielectric Constant (Dk), Loss Tangent (Df) and Passive Intermodulation (PIM) adoption, antenna pattern, signal circuit forming ability, characteristic impedance value control, signal loss and S-Parameter.

  2. The functions of smart electronic mobile devices are stronger while integrative degree is higher. Appearance design wise, a design balance will be reached between light, slim, small and material level. The design of high-density interconnectivity will move toward an ultimate perfection. In addition, higher requirements will be made for the registration accuracy, smoothness of the board as well as the coplanarity of pad whereas stricter requirements will be made for material characteristics.

  3. High-density and multi-layer boards for high-end HPC, server, switch router, data center, storage and back panel will feature more and more layers with stricter requirements for board thickness and registration accuracy. Also, with considerations of high speed and SI, the use of board materials, backdrill requirements, HDI (High Density Interconnect) design matching, circuit forming ability of thick copper and reliance will all be the challenges.

  4. New energy electric vehicle brings demand for heat dissipation and high-current carrying capacity, bringing about application and development of thick copper, heat-dissipation material and related heat-dissipation technologies. Under the requirements of product functions and operational efficiency, the heat-dissipation and PI are among the major concerns.

~2~

  1. High-frequency and high-speed related controlling ability for materials and antenna pattern among base station, radar and various sensing products will be the challenges and the key to victory or defeat. As a millimeter miss is as good as a thousand miles.

  2. With the products of 5G and 6G, minitype, multi-function and high-density integration will be the development trends of electronic products. This will push PCB requirements to migrate toward multi-layer high-density, high 、

integration, encapsulation and refinement. Therefore, HDI HLC (High Layer Count), flexible, rigid-flex, semi-flex, cavity, thermal, embedded, RF and IC substrate (BGA; Ball Grid Array, CSP; Chip Scale Package) will be the major trends of PCB developments.

Faced with the trends, the Company adopts the following strategies to fully invest in product development, manufacturing process yield rate improvement and stability, new-manufacturing process technologies and equipment material evaluation introduction as well as cooperation in development with academic fields:

  1. Use R&D center to strengthen technical development and product incubation

  2. Implement smart factory, promoting Industry 4.0 in new factory implementation and existing factory renovation, realizing lean production while using equipment and information automation to improve yield rate and reduce manpower costs

  3. Continue to participate in industrial strategic alliance for technical developments and improvements to boost quality

  4. Actively increase the coverage rate of using environmental-protection materials, preserving energy and reducing emission to love the Earth together;

  5. Regularly research into industrial trends and customer needs to launch R&D in advance to meet the swift changes of the industry

1.2 Business Plan Summary of this Year

  • 1.2.1 Business Policy

  • The industry is recovering gradually and emerging application products continue to roll out whereas the supply chain demand slowly bounces back. However, the global economic status is changeable; therefore, we should carefully respond to the developments of industrial economic status while strictly control new product development risks and materials as well as exchange rate price fluctuations.

  • Focus on PCB manufacturing, continuing diverse end-user product application developments to reach capacity risk diversification and collaborating with customers to launch risk shift, improving differentiation value while customer mutual-trust core

establishing long-term relationship competitiveness

~3~

  1. Continue to perform product and manufacturing process market exploration and technical ability improvements while working with customers to expand material and product application fields to create value differentiation against competitors

  2. Continue to strengthen manpower recruitment and educational training plans to realize talent cultivation and strengthen professional organizational and management abilities, effectively control direct staff turnover rate to boost production yield rate while improving production efficiency, product quality and reliability

  3. With issues of the continuous increase in labor costs and labor shortage, we arrange with care various production factory equipment and human resources while seeking the model of optimizing resources; faced with demand of the industry market status, we effectively deploy capacity while increasing production efficiency by adding automation equipment.

  4. Raise staff stability, accumulate cultivation of engineering technical staff, continue developing niche and new-generation product market technologies

  5. With persisting global trends such as COVID-19 (Coronavirus disease) epidemic threat, trade status tension and uncertain policy, we carefully review the business risks and evaluate locations.

  6. 1.2.2 Expected Sales Volume and Reference

    • The Company’s major product is PCB. With the capacity of existing production locations, the expected sales capacity target for this year is 120,000 thousand square feet.

  7. 1.2.3 Key Production and Sales Policies

  8. End-user demand and product application are variable. To reduce the risks of relying on single customer and product, we continue to be diversified for customer and product mix while carefully plotting capacity expansion. With the overall utilization rate increase of the Company’s equipment, we can have the most cost-efficient long-term stable business model.

  9. Regarding customer product line diversity, we effectively adopt information system management while strictly requiring production discipline, timely controlling the production status of each factory and the change in customer delivery date to lower inventory, pursuing after the maximum production and sales profits.

  10. Continue to boost manufacturing process ability and yield rate, striving to have capacity and cost leadership advantages while strengthening production flexibility to keep delivery date precise

  11. Collect and analyze potential market share growth and the technical manufacturing process type of future products as references for continuous capacity and equipment expansion

  12. Improve the manufacturing process ability of each factory, delivering the maximum production scale advantage to face the competition of peers in single product economy of scale and flexible delivery date

~4~ 

  6. Have economy of scale for in-house capacity to combine the advantages of various neighboring factories, share resources among the factories while boosting capacity utilization rate for extreme business cycle changes in a single industry

  7. With the slowing demand growth for certain end-user products, besides improving the reasonable market shares for existing customers, keep developing new application products and customers to keep the development direction of continuous growths in revenues and profits

  • 1.3 Future Development and Business Strategies

  • 1.3.1 Value environmental protection, industrial safety and health management, social ethical responsibilities and corporate governance, actively reducing issues such as industrial environmental pollution, product hazard as well as resource and energy consumption, striving to become a green environmental-protection enterprise with sustainable developments

  • 1.3.2 Material price and exchange rate fluctuations, stricter environmental-protection specifications, rising labor costs, insufficient manpower, as well as rapidly-emerging competitors and continued capacity expansion cause overall PCB business threat to rise; amid the uncertain economic business cycle, we actively and effectively respond to theses in broaden sources of income and reduce expenditure

  • 1.3.3 The market scale remains significant; we can expand capacity with management competitiveness to stabilize and expand revenues while increasing market share; however, we would be strict in evaluating and executing capital expenditure plans.

  • 1.3.4 Continue to fulfill the business strategies set by the management team of the Company:

    • Promise win-win of customers and the Company

    • Promise win-win of employees and the Company

    • Promise win-win of partners and the Company

    • Promise win-win of shareholders and the Company

    • Promise win-win of the society and corporate responsibilities

  • 1.4 Influences of External Competition Environment, Regulation Environment and Macro Business Environment:

  • 1.4.1 External Competition Environment

~5~

Among competition from various competitors, the price bargaining power is relatively weak; therefore, the key to survival and profitability lies in effective diversification of product and customer as well as cost control of production, shipment and inventory faced with disadvantages such as continued price-reduction pressure and low order visibility. With the influences of uncertainties of global economic developments, the variety of product demand is rising while material price fluctuation is significant; it is difficult to control manufacturing industry costs.

1.4.2 Environment al Regulation

With promotion of policies such as environmental-protection regulations, tax system adjustment and labor salary increase, to meet stricter demand of regulations, besides actively reducing pollution brought by industrial manufacturing process, following tax administration with appropriate deployment while improving automation production ability, we strive to solve the issue of resource and energy consumption of products to reduce business pressure of the industry

1.4.3 Macro Business Environment

The IMF (International Monetary Fund) (2021/01) expects the global macro-economic growth of 5.5% for 2021. However, with continued influences from uncertainties of epidemic and politics on global political and economic status, the global macro-economic developments are highly volatile while end-user consuming demand is uncertain. We need the be cautious of the changes of the global manufacturing industry demand to ensure we stay up to date of possible development trends. To enable a persistent growth of the Company, we continue to improve operational efficiency and flexibility to respond to the swift-changing economic status. With niche products and raising percentage of high-added value emerging electronic products, we expect to create a continuously-growing new kinetic energy for the Company.

Chairperson: Jing-Chun Wang

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2. Company Profile

2.1 Date of Incorporation: December 16[th] , 1991

2.2 Milestone:

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Year Description
Tripod Technology Corporation was established, with paid-in capital of NT$45,360,000.
1991 Initial focus was mainly production, sales and peripheral design of POS (Point of Sales,
sales location analysis system or connectable electronic cashier) system.
1993 Capital increase of NT$24,640,000 by cash, capital increased to NT$70,000,000
1995 Capital increase of NT$10,000,000 by cash, developing 2 [nd] -generation POS-MPOS
Capital increase of NT$20,000,000 by cash, establishing AUTO BU for automation
machinery design, production and sales
1996
Established PCB BU, launching PCB sales by all-manufacturing process OEM, started
planning PCB factory
Capital increase of NT$450,000,000 by cash, IPO (Initial Public Offering) issuance
granted by Securities and Futures Institute (SFI)
1997
Capital increase by cash of NT$150,000,000, paid-in capital was NT$700,000,000; started
constructing PCB factory in Pingzhen Industrial Park, Taoyuan County
Establishment of Pingzhen PCB factory was completed with 3,800 square feet of land
and factory area of 7,200 square feet; volume produced various multi-layer precision
PCBs
1998 POS System BU obtained ISO 9002 certificate in May
PCB BU Pingzhen factory obtained ISO 9002 certificate in August
Capital increase of NT$150,000,000 by cash and of NT$50,000,000 by earnings, paid-in
capital was NT$900,000,000
Rambus Module developed by PCB BU was certified, volume produced and shipped;
1999
the first in Taiwan to volume produce Rambus Modules and ship to customers
Won best quality award by SAMSUNG
Approved by SFI to increase capital of NT$50,000,000 by earnings with paid-in capital of
2000 NT$950,000,000
PCB BU obtained QS 9000 certificate in September
Officially listed on Over-the-Counter (OTC) market on December 7 [th]
Approved by SFI to increase capital of NT$185,000,000 by cash in March, with paid-in
capital of NT$1,135,000,000
Approved by SFI to increase capital of NT$247,000,000 by earnings, employee bonus and
2001
additional paid-in capital in July, with paid-in capital of NT$1,382,000,000
Approved by Investment Board, Ministry of Economic Affairs (MOEA) in August to
indirectly invest in China and set up Tripod (WUXI) Electronic Co., Ltd.
Approved by SFI to issue Overseas Convertible Bonds (OCB) of maximum amount of
US$25,000,000 in January
PCB BU obtained ISO 14001 certificate in February
Finished raising CB of US$25,000,000 in April
Approved by SFI to be listed on the Taiwan Stock Exchange (TWSE) on July 31 [st]
2002
Officially listed on TWSE on August 26 [th]
Approved by SFI to increase capital of NT$297,580,000 by earnings, employee bonus and
additional paid-in capital in August, with paid-in capital of NT$1,679,580,000
Headquarter moved to Pingzhen Industrial Park of Pingzhen City, Taoyuan County in
September due to business development needs
Approved by SFI to issue CB of NT$400,000,000 in May
2003 Finished issuance and collection of CB of NT$400,000,000 on May 27 [th]
Approved by SFI to increase capital of NT$137,774,800 by earnings, employee bonus and
additional paid-in capital in July, with paid-in capital of NT$1,817,354,800
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Year Description
Approved by SFI to issue OCB of maximum amount of US$20,000,000 in November
Finished raising OCB of US$20,000,000 in November
Issue OCB of US$25,000,000 in 2002, all converted to ordinary shares in mid-November,
with paid-in capital totaled NT$2,116,332,250
Approved by SFI to issue CB of NT$600,000,000 in March
Finished issuance and collection of CB of NT$600,000,000 on March 17 [th]
2004 Approved by SFI to increase capital of NT$371,169,830 by earnings, employee bonus and
additional paid-in capital in June; issue OCB of US$20,000,000 in 2003, offered to convert
to ordinary shares of 1,587,499, paid-in capital increased to NT$2,503,377,070
Group revenues exceeded NT$10 billion
Offered to convert the OCB issued in 2003 through the first quarter of 2005 into ordinary
shares of 2,452,433, with paid-in capital of NT$2,527,901,400
Approved by Financial Supervisory Commission (FSC) to increase capital of
NT$551,467,600 by earnings, employee bonus and additional paid-in capital in June,
2005
paid-in capital increased to NT$3,079,369,000
Offered to convert the OCB issued in 2003 through the fourth quarter of 2005 into
ordinary shares of 15,524,085, with paid-in capital increased to NT$3,234,609,850
Group revenues exceeded NT$15 billion
Approved by FSC to increase capital of NT$417,038,580 by earnings and employee bonus
in June, paid-in capital increased to NT$3,651,648,430
2006 OCB of US$20,000,000 in 2003 all converted to ordinary shares in mid-November, with
paid-in capital totaled NT$3,721,104,410
Group revenues exceeded NT$20 billion
Approved by FSC to increase capital of NT$575,897,800 by earnings and employee bonus
in June, paid-in capital increased to NT$4,297,002,210
2007
Group revenues exceeded NT$27 billion; ranked 10 [th] (Prismark) in global PCB company
ranking
Approved by FSC to increase capital of NT$5329,856,010 by earnings, employee bonus
and additional paid-in capital in June, paid-in capital increased to NT$4,626,858,220
2008
Group revenues exceeded NT$30 billion; ranked 8 [th] (Prismark) in global PCB company
ranking
Approved by FSC to increase capital of NT$347,328,801 by earnings and employee bonus
in June, paid-in capital increased to NT$4,735,188,270
2009
Group revenues exceeded US$10 billion (NT$33.9 billion); ranked 6 [th] (Prismark) in
global PCB company ranking
Obtained private placements of securities of 114,000,000 and 1,000,000, respectively, of
Victory Circuit Co., Ltd. in April and August, with percentage of shares boosting to
2010 51.67%
Group revenues exceeded NT$43 billion; ranked 5 [th] (Prismark) in global PCB company
ranking
Approved by Investment Board in February to invest indirectly in China to establish Tripod
(Hubei) Electronic Co., Ltd.
Approved by Investment Board in May to indirectly invest in China to obtain 100% of shares
of Hi Board Electronic (Jiaxing) Co., Ltd.
2011
Approved by FSC to increase capital by NT$520,870,710 with earnings and additional
paid-in capital, with paid in capital increased to NT$5,256,058,980
Group revenues exceeded NT$40.899 billion; ranked 7 [th] (Prismark) in global PCB
company ranking
Group revenues exceeded NT$39.121 billion, ranked 8 [th] (Prismark) in global PCB
2012
company ranking
Board meeting resolved in December 10 [th] , 2012 to approve the Company and subsidiary
Trison Technology Corporation to merge to promote corporate integration and improve
operational efficiency while meeting future industry developments, boosting corporate
2013
competiveness; after merger, the Company is the surviving one while the merger date
was set at December 30 [th] , 2012, change registration was completed in January 21 [st] , 2013
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Year Description
Group revenues exceeded NT$40.772 billion; ranked 8 [th] (Prismark) in global PCB
company ranking
Group revenues exceeded NT$42.433 billion; ranked 8 [th] (Prismark) in global PCB
company ranking
2014 Finished scheduled milestone of investing in Victory Circuit Co., Ltd.; signed dismissal
agreement in June 30 [th] , 2014, finished sales of all shares in Victory Circuit Co., Ltd. by
July 30 [th] , 2014
Group revenues exceeded NT$43.383 billion; ranked 7 [th] (Prismark) in global PCB
2015
company ranking
Group revenues exceeded NT$43.513 billion; ranked 6 [th] (Prismark) in global PCB
2016
company ranking
Group revenues exceeded NT$45.819 billion; ranked 6 [th] (Prismark) in global PCB
2017
company ranking
Group revenues exceeded NT$52.105 billion; ranked 5 [th] (Prismark) in global PCB
2018
company ranking
Group revenues exceeded NT$54.451 billion; ranked 7 [th] (Prismark) in global PCB
2019
company ranking
Group revenues exceeded NT$55.548 billion; ranked 7 [th] (Prismark) in global PCB
2020
company ranking
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3. Corporate Governance Report

3.1 Organizational System

3.1.1 Organizational Structure

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Shareholders’ Meeting
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Board of Directors Meeting Audit Committee
Audit Office Chairperson
Vice Chairperson
Compensation
Committee
CEO
Chairperson Office
Vice CEO
President Office
President
PCB BU AUTO BU Pingzhen BU Trison BU Admin. BU Industry
Safety BU
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3.1.2 Business of Major Bus

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Major BU Business
Audit Room Audit and review implementation and amendment of internal control systems
1.Legal business including compliance of domestic/overseas laws & regulations,
management of agreements, patents and IP rights, lawsuits
2.Promotion of corporate governance, integrity management and ethical behavior
management
Chairperson Office 3.Negotiation and planning of short-, mid-, long-term fund applications
4.Establishment, promotion and improvement of corporate business guidelines and
systems
5.Promotion of reliability of corporate financial reports
6.Promotion of corporate ESG (Environmental, Social, and Governance)
1.Set the short-term, mid-term, long-term business policies and development
directions
President Office
2.Advancement of project production technologies and promotion of quality
improvements
PCB BU R&D, production and sales of PCB products
AUTO BU R&D, production and sales of automation equipment products
Pingzhen BU R&D, production and sales of products of Pingzhen factory
Trison BU R&D, production and sales of mobile system products
1.Company’s HR and administration matters
Admin. BU 2.Company’s PC and Internet system establishment, integration, promotion,
improvement and maintenance
Industry Safety BU Matters related to industry safety hygiene and prevention of pollution
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3.2Information of Director, Supervisor, President, Vice President, Assistant Vice President and

Executives of Each Department and Division

3.2.1 Information of Director and Supervisor

April 18[th] , 2021

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Title Nationality Name Gender (inauguration) DateElection (Year)Term Initial Election Date No. of SharesShareholding Status when Elected Percentage No. of SharesExisting No. of Shares Percentage Existing No. of Shares of Spouse and Minor Shares No. of Percentage Shares under Others’ Names SharesNo. of Percentage Major Work (Education) Experience Company and other Concurrent Post at Companies Other Executives, Directors or Supervisors of Spousal or 2 [nd] -DegTitle ree Relative RelationshiName p Relationship Note
December 10 [th] , BA, Tamsui Institute of Business Administration /
Chairperson R.O.C Jing-Chun Wang M June 21 [st] , 2018 3 8,362,532 1.59% 7,022,532 1.34% None None None None Note 1 Director Zheng-Ding Wang Father-Son Note
1991 Texas Instruments (TI)
BA, Tatung Institute of Technology/
Vice Chairperson R.O.C Jing-Xiu Hu M June 21 [st] , 2018 3 July 19 [th] , 1997 7,023,713 1.34% 6,325,713 1.20% 99,719 0.02% None None Note 2 None None None
Texas Instruments (TI)
BA, Department of Electrical Engineering, National
Chairperson, MDS Multimedia Corp. /
Director R.O.C Chao-Kuei Hsu M June 21 [st] , 2018 3 July 19 [th] , 1997 8,982,056 1.71% 10,482,056 1.99% None None None None Taiwan University (NTU)/ None None None
Chairperson, Ray Ing Co.
Chairperson, MDS Multimedia Corp.
BA, School of Medicine, Kaohsiung Medical
Yun An Investment Ltd. - 630,000 0.12% 630,000 0.12% University /
Dr. of Medicine, Freie Universität Berlin (FU Berlin)/
Director R.O.C June 21 [st] , 2018 3 June 21 [st] , 2012 None None None None Professor, Department of Surgery, National None None None None
Legal Person Representative: Yang-Ming University School of Medicine /
Chew-Wun Wu M None None None None Director, Department of General Surgery , Taipei
Veterans General Hospital
Yun Jie Investment Ltd. - 630,000 0.12% 630,000 0.12% None None None None BA, Electrical Engineering department, National
Director R.O.C June 21 [st] , 2018 3 June 21 [st] , 2012 Central University (NCU)/ Note 3 Chairperson Jing-Chun Wang Father-Son
Legal Person Representative:
M 1,634,802 0.31% 2,304,802 0.44% 16,997 0.00% None None Chairperson, Trison Technology Corporation
Zheng-Ding Wang
Qin Shan International Investment Ltd. - 1,915,329 0.36% 1,915,329 0.36% BA, Co l ege of Medicine, NTU/
Director R.O.C June 21 [st] , 2018 3 June 21 [st] , 2018 None None None None Dr. of Philosophy, Trinity International University (TIU)/ None None None None
Legal Person Representative: Mao-Tong Tsai None None None None Director, Heng Chun Christian Hospital
M
Chao Sheng Investment Co., Ltd. - 753,080 0.14% 753,080 0.14% None None None None BA, Department of Accounting, National Chengchi
Director R.O.C June 21 [st] , 2018 3 June 21 [st] , 2018 University/ Note 4 None None None
Legal Person Representative: Mei-Lan
F 259,866 0.05% 259,866 0.05% 745 0.00% None None Vice President, Tripod Technology Corporation
Chang
Attorney in charge, Iustitia Law Firm/
Independent BA, Co l ege of Law, NTU/
R.O.C Hong-Cheng Wu M June 21 [st] , 2018 3 June 12 [t] , 2003 None None None None 433,278 0.08% None None Independent Director, Posiflex None None None
Director MA, School of Law, American University
Technology
BA, Department of Electrical Engineering, NTU/
Independent Compensation Commi t ee Member,
R.O.C Yong-Cheng Wu M June 21 [st] , 2018 3 June 25 [th] , 2015 None None None None None None None None MA, Department of Electrical Engineering, NTU/ None None None
Director HTC
Vice president, VIA Embedded, VIA Technologies
Independent Director, Hotel Royal/
MA, Finance, NTU/CPA, Ernst & Young Taiwan/
Independent Independent Director, KGI Securities/
R.O.C Xing-Zheng Dai M June 21 [st] , 2018 3 June 21 [st] , 2018 2,266 0.00% 2,266 0.00% None None None None Director, CPA Associations, R.O.C/Director, Institute of Internal None None None
Director Independent Director, China Development
Auditors
Financial
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Note: The Company’s chairperson and president are served by the same person, the reason, reasonableness, necessity and countermeasure are described in the president c c section

~11~

Note 1: 1. CEO, Tripod Technology Corporation

  1. Director, J&J Holding Co., Ltd. (legal person representative of Tripod Technology Corporation)

  2. Director, Tripod Overseas Co., Ltd. (legal person representative of J&J Holding Co., Ltd.)

  3. Director, Able International Limited (legal person representative of J&J Holding Co., Ltd.)

  4. Director, Tripod International Holding Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  5. Director, Tripod Global Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  6. Director, Tripod Worldwide Holding Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  7. Managing director, Tripod (Xiantao) Zhiye Co.Ltd. (legal person representative of Tripod (Hubei) Co., Ltd.)

Note 2: 1. Vice CEO, Tripod Technology Corporation

  1. Supervisor, Tripod (WUXI) Electronic Co., Ltd. (legal person representative of Tripod International Holding Pte. Ltd.)

  2. Supervisor, Tripod (Xiantao) Zhiye Co., Ltd. (legal person representative of Tripod (Hubei) Electronic Co., Ltd.)

Note 3: 1. Director, Yun Jie Investment Ltd.

  1. Chairperson, Trison (legal person representative of Tripod Technology Corporation)

  2. Chairperson, Tripod Nano Technology Corporation (legal person representative of Tripod)

Note 4: Supervisor, Tripod (Hubei) Co., Ltd. (legal person representative of Tripod Worldwide Holding Pte. Ltd.)

A. Major Shareholder of Legal-Person Shareholder

A.
Major Shareholder of Legal-Person Shareholder		 A.
Major Shareholder of Legal-Person Shareholder
April 18th, 2021

Name of Legal Person Shareholder
Major Shareholder and Percentage of Share of Legal Person Shareholder
Yun An Investment Ltd.
Zeng-MingWang (100%)
YunJie Investment Ltd.
Zheng-DingWang (100%)
Qin Shan International Investment Ltd.
Huei-Mei Chuang (100%)
Chao ShengInvestment Co.,Ltd. Zhao-Wei Hu(99%),Chung-Hua Hu(1%)
  • B. Major Shareholder for Major Shareholder as Legal Person in Above Table: N/A
B.
Major Shareholder for Major Shareholder a		 B.
Major Shareholder for Major Shareholder a
Name of Legal Person
Shareholder
Major Shareholder of Legal Person
- -

~12~

3.2.2 Professional Knowledge of Directors and Independent Status

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Over 5-Year Work Experiences and Meet Following Professional Qualifications Independent Status (Note 1)
Lecturer and Above of Business, Judge, Prosecutor, Accountant or Business, Legal, Finance,
Condition
Legal, Finance, Accounting or Other Professional and Technical Accounting or Corporate No. of Public
Corporate Business-Required Personnel with Certificates Business-Required Work Companies as
related Departments at Regarding Corporate Experiences 1 2 3 4 5 6 7 8 9 10 11 12 Independent Director
Public/Private Universities Business-Required related
Name
National Exams
Jing-Chun Wang         0
Jing-Xiu Hu           0
Chao-Kuei Hsu            0
Chew-Wun Wu            0
Zheng-Ding Wang          0
Mao-Tong Tsai            0
Mei-Lan Chang             0
Hong-Cheng Wu               1
Yong-Cheng Wu              0
Xing-Zheng Dai               3
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Tick the checkbox of each condition code if directors and supervisors meet the following conditions two years before elected and during their terms.

  • (1) Not employed at the Company or affiliates

  • (2) Not serving as directors or supervisors at the Company or affiliates (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • (3) Self or spouse and minor or under others’ names not as natural person shareholder of 1% shares or top ten shareholders

  • (4) Not as managers listed in (1) or spouse, relative of within second-degree or lineal relatives by blood within third-degree relationship with personnel listed in (2) and (3)

  • (5) Not directly holding over 5% issued shares, as among top five shareholders or appointing representatives as Company directors or supervisors as directors, supervisors or employees of legal person shareholder pursuant to the provisions under Section 1 and 2 of Article 27 of Company Act (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • (6) Not as directors, supervisors or employees of other Companies serving as directors of the Company or controlling over half of shares with voting right (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • (7) Not as directors, supervisors or employees of other Companies while as the same person as or the spouse of the chairperson, president or similar position of the Company (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • (8) Not as directors, supervisors, managers or shareholders of over 5% of the Company’s shares of companies or institutions having financial or business relationship with the Company (excluding certain companies or institutions having over 20% of issued shares of the Company but not over 50% while as independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • (9) Not providing auditing services for the Company or affiliates or as professionals providing services such as business, legal, financial and accounting for over NT$500,000 in the recent two years; owner, partner, director, supervisor, manager and spouse of single investor, partner, company or institution; excluding members of Compensation Committee, Tender Offer Review Committee or Special Committee on Mergers and Acquisitions under regulations such as the Securities and Exchange Act or Business Mergers and Acquisitions Act.

  • (10) Not as spouse or having relative of within second-degree by blood with other directors

  • (11) Not involving Article 30 of the Company Act

  • (12) Not elected as government, legal person or their representatives under the provision of Article 27 of the Company Act

~13~

3.2.3 Name, Term, Share, Major Work (Education) Experience, Spouse, Minor or Shareholding via Others of President, VP, AVP, BU Head

April 18[th] , 2021

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Title Nationality Name Gender Inauguration date Shareholding Status No. of when ElectedPercen Existing No. of SharesNo. of Existing No. of Shares of Spouse and Minor No. of Major Work (Education) Experience Company and other Concurrent Post at 2 [nd] Other Managers of Spousal or -Degree Relative Relationship None
Shares tage Shares Percentage Shares Percentage Companies Title Name Relationship
CEO/President R.O.C Jing-Chun Wang M September 30 [th] , 2015 7,022,532 1.34% None None None None BA, Tamsui Institute of Business Administration / Texas Instruments (TI) Note 1 None None None Note 9
Vice CEO R.O.C Jing-Xiu Hu M September 26 [th] , 2006 6,325,713 1.20% 99,719 0.02% None None BA, Tatung Institute of Technology /Engineer, TI / President, Fuyo Co. Note 2 None None None
Vice President R.O.C Le-Ren Huang M February 9 [th] , 2007 89,961 0.02% None None None None BA, Chemical Engineering Department, Chung Yuan University Note 3 None None None
Marketing Sales Head/Vice President R.O.C Kung-Xuan Ho M February 2 [nd] , 2012 80,000 0.02% None None None None Master of Science, Indiana State University, USA None None None None
Financial Officer /Vice President R.O.C Lien-Fa Tsai M July 42015 [th] , None None None None None None BA, Department of Accounting, Fu Jen Catholic University Note 4 None None None
R&D Officer /Vice President R.O.C Zheng-Ming Lu M June 292018 [th] , None None 1,000 0.00% None None MBA, NCU Note 5 None None None
Vice President R.O.C Wen-Tang Chen M 26February [th] , 2019 None None None None None None Nanya Institute of Technology Note 5 None None None
Vice President R.O.C Chao-Xian Fang M June 292018 [th] , 3,294 0.00% None None None None Hwa Hsia University of Technology Note 5 None None None
Vice President R.O.C Yi-Xu Hung M June 12020 [st] , None None None None None None MA, Department of Mechanical Engineering, National Chiao Tung University Note 5 None None None
Vice President R.O.C Chih-Chung M March 6 [th] , None None None None None None BA, Chemical Engineering Department, Chung Yuan Note 6 None None None
Chen 2015 University
Vice President R.O.C Fu-Gen Ou M January 12016 [st] , 63,022 0.01% None None None None Kaohsiung Municipal Kaohsiung Industrial High School None None None None
Vice President R.O.C Da-Lun Wang M June 102019 [th] , 590,297 0.11% None None None None National Taipei University of Technology, None None None None
Vice President R.O.C Xiu-Li Lin M June 102019 [th] , 206,101 0.04% None None None None National Taipei University of Business Note 7 None None None
Internal Auditing Officer R.O.C Li-Yang Liao M 22February [nd] , 2012 3,718 0.00% 346 0.00% None None Georgia State University, USAMaster of Professional Accountancy None None None None
Accounting Officer R.O.C Cheng-I Lee M November 8 [th] , 2013 None None None None None None MA, Department of Accounting and Information Technology, National Chung Cheng University Note 8 None None None
Corporate Governance Officer R.O.C Wu-Rong Yao M May 102019 [th] , None None 60,000 0.01% None None BA, Department of Accounting, Tamkang University None None None None
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Note 1:1. CEO, Tripod Technology Corporation

  1. Director, J&J Holding Co., Ltd. (legal person representative of Tripod Technology Corporation)

  2. Director, Tripod Overseas Co., Ltd. (legal person representative of J&J Holding Co., Ltd.)

  3. Director, Able International Limited (legal person representative of J&J Holding Co., Ltd.)

  4. Director, Tripod International Holding Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  5. Director, Tripod Global Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  6. Director, Tripod Worldwide Holding Pte. Ltd. (legal person representative of Tripod Overseas Co., Ltd.)

  7. Managing director, Tripod (Xiantao) Zhiye Co., Ltd. (legal person representative of Tripod (Hubei) Co., Ltd.)

Note 2:1.Vice CEO, Tripod Technology Corporation

  1. Supervisor, Tripod (WUXI) Electronic Co., Ltd. (legal person representative of Tripod International Holding Pte. Ltd.)

  2. Supervisor, Tripod (Xiantao) Zhiye Co., Ltd. (legal person representative of Tripod (Hubei) Electronic Co., Ltd.)

  3. Note 3:1. President, Tripod (WUXI) Electronic Co., Ltd.

  4. President, Tripod (Hubei) Electronic Co., Ltd.

  5. Note 4:1. Director, Paiho Shih Holdings Corp.

  6. Director, Trison (legal person representative of Tripod Technology Corporation)

  7. Director, Tripod Nano Technology Corporation (legal person representative of Tripod Technology Corporation)

  8. Note 5: Vice president, Tripod (WUXI) Electronic Co., Ltd.

Note 6: Vice president, Tripod (Hubei) Electronic Co., Ltd.

  • Note 7: 1. Director, Trison (legal person representative of Tripod Technology Corporation)

  • Director, Tripod Nano Technology Corporation (legal person representative of Tripod Technology Corporation)

  • Note 8: 1. Supervisor, Trison Technology Corporation

  • Supervisor, Tripod Nano Technology Corporation (legal person representative of Tripod Technology Corporation)

Note 9: The Company’s chairperson and president are served by the same person mainly due to actual operation needs; the Company’s major BUs and subsidiaries all have responsible managers while the Company’s Audit Committee consists of three independent directors, with over half of directors not serving as the Company’s managers and employees, ensuring the objectivity of the board meeting operations and can monitor the Company well.

~14~

3.2.4 Compensations for Director, Supervisor, President and VP in Latest Year

A. Compensation for Director and Independent Director (Note)

==> picture [766 x 236] intentionally omitted <==

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Unit: NT$ Thousands
Remuneration(A) Pension (B) Director Compensation Director Compensation (C) Professional Practice Allowance (D) Percentage of A, B, C, D Sum of versus Net Profits Salary, Bonus, Special Allowance, etc. (E) Pension (F) Compensation as EmpEmployee Compensation (G) loyee Percentage of Sum of A, B, C, D, E, F, G versus Net Profits Compensation from Invested
Title Name Business or
Company in Financial Companies ReAll ports Company All Companies in Financial Reports Company All Companies in Financial Reports Company All Companies in Financial Reports Company All Companies in Financial Reports Company All Companies in Financial Reports Company in Financial Companies ReAll ports CashCompany Share All Companies in Financial ReCash Shareports Company All Companies in Financial Reports Company Parent
CEO Jing-Chun Wang
Vice CEO Jing-Xiu Hu
Director Chao-Kuei Hsu
Yun An Investment Ltd.
Director Legal Person Representative:
Chew-Wun Wu
Yun Jie Investment Ltd.
Director Legal Person Representative:
Zheng-Ding Wang - - - - 34,000 34,000 310 310 0.56% 0.56% 3,886 5,197 - - 47,203 - 47,203 - 1.39% 1.39% -
Qin Shan International
Investment Ltd.
Director Legal Person Representative:
Mao-Tong Tsai
Chao Sheng Investment Co.,
Ltd.
Director Legal Person Representative: Mei-Lan
Chang
Independent
Director Hong-Cheng Wu
Independent Director Yong-Cheng Wu - - - - 8,000 8,000 150 150 0.13% 0.13% - - - - - - - - 0.13% 0.13% -
Independent
Director Xing-Zheng Dai
1. Please specify independent director compensation issuance policy, system, standard and structure while specifying the connection between factors such as responsible duties, risks and invested time with issued compensation amount.
2. Use the issuance standard as stipulated in the Articles of Association while referring to the Company’s business performance status and the levels of competitors Besides the above table content, any other compensation the Company’s directors received from services (such as consultant as non-employee) provided for companies listed in the financial reports: None.
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Compensation Class Interval Table (Note)

==> picture [739 x 122] intentionally omitted <==

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Director’s Name
Class Interval of Compensation for Each Company Director Total of Previous Four Items (A+B+C+D) Total of Previous Five Items (A+B+C+D+E+F+G)
Company All Companies in Financial Reports (I) Company All Companies in Financial Reports (I)
NT$1,000,000 (including)-2,000,000 - - - -\
NT$2,000,000 (including)-3,500,000 Hong-Cheng Wu, Yong-Cheng Wu, Xing-Zheng Dai, Yun An Investment Ltd., Yun Jie Investment Ltd. Hong-Cheng Wu, Yong-Cheng Wu, Xing-Zheng Dai, Yun An Investment Ltd., Yun Jie Investment Ltd.\
NT$3,500,000 (including)-5,000,000 - - - -\
NT$5,000,000 (including)-10,000,000 Jing-Chun Wang, Jing-Xiu Hu, Chao-Kuei Hsu, Qin Shan International Investment Ltd., Chao Sheng Investment Co., Ltd. Chao-Kuei Hsu, Qin Shan International Investment Ltd., Chao Sheng Investment Co., Ltd.\
NT$10,000,000 (including)-15,000,000 - - - -\
NT$15,000,000 (including)-30,000,000 - - Jing-Xiu, Hu\
NT$30,000,000 (including)-50,000,000 - - Jing-Chun Wang\
NT$50,000,000 (including)-100,000,000 - - - -\
>NT$100,000,000 - - - -
Total 10
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Note: The Company ’ s board meeting resolved on February 25[th] , 2021 that the director compensation for 2020 was NT$42,000,000; until the publication of the annual report, the Company ’ s director compensation list is not yet decided and the above amount for 2020 is estimation only.

B. Remuneration of supervisor: N/A, the Company set up Audit Committee on June 21[st] , 2018

~15~

C. Compensation for President and VP (Note)

Unit: NT$ Thousands; Share

==> picture [766 x 162] intentionally omitted <==

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Salary (A) Pension (B)) Bonus, Special Allowance, etc. (C) Employee Compensation Amount (D) [Percentage of A, B, C, D Sum of versus ]
Title Name Company All Companies in Company All Companies in Company All Companies in Company All Companies in Financial Reports Company [All Companies in Financial ] Net Profits (%) Compensation from Invested Business or Parent Company
Financial Reports Financial Reports Financial Reports Cash Share Cash Share Reports
CEO/President Jing-Chun Wang
Vice CEO Jing-Xiu Hu
Vice President Le-Ren Huang
Marketing Sales Head/Vice President Kung-Xuan Ho
Financial Officer /Vice President Lien-Fa Tsai
Vice President Wen-Tang Chen
R&D Officer/Vice President Jen-Ming Lu 20,268 28,157 767 767 26,228 26,228 90,053 - 97,453 - 2.24% 2.49% -
Vice President Chao-Xian Fang
Vice President Yi-Xu Hung
Vice President Chih-Chung Chen
Vice President Fu-Gen Ou
Vice President Da-Lun Wang
Vice President Xiu-Li Lin
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Compensation Class Interval Table (Note)

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Names of President, VP and Manager
Class Interval of Compensation for Each President and VP
Company All Companies in Financial Reports (E)
NT$1,000,000 (including)-2,000,000 - -\
NT$2,000,000 (including)-3,500,000 - -\
NT$3,500,000 (including)-5,000,000 Chih-Chung Chen, Fu-Gen Ou\
Kung-Xuan Ho, Lien-Fa Tsai, Wen-Tang Chen, Zheng-Ming Lu, Chao-Xian Fang, Lien-Fa Tsai, Wen-Tang Chen, Zheng-Ming Lu, Chao-Xian Fang, Yi-Xu Hung,\
NT$5,000,000 (including)-10,000,000 Yi-Xu Hung, Da-Lun Wu, Xiu-Li Lin Da-Lun Wu, Xiu Li Lin\
NT$10,000,000 (including)-15,000,000 - Kung-Xuan Ho\
NT$15,000,000 (including)-30,000,000 Jing-Chun Wang, Jing-Xiu Hu, Le-Ren Huang\
NT$30,000,000 (including)-50,000,000 - -\
NT$50,000,000 (including)-100,000,000 - -\
>NT$100,000,000 - -
Total 13
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Note: The Company ’ s board meeting resolved on February 25[th] , 2021 that the employee compensation for 2020 was NT$714,175,356; until the publication of the annual report, the Company ’ s employee compensation list is not yet decided and the above amount for 2020 is estimation only.

~16~

D. Names and Issuance Status of Employee Compensation Issuance (Note)

Unit: NT$ Thousands; Share

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Title Name Amount of Shares Amount of Cash Total Percentage of Amount
Versus Net Profits (%)
CEO/President Jing-Chun Wang
Vice CEO Jing-Xiu Hu
Vice President Le-Ren Huang
Marketing Sales Head/Vice President Kung-Xuan Ho
Financial Officer/Vice President Lien-Fa Tsai
Vice President Wen-Tang Chen
R&D Officer/Vice President Jen-Ming Lu 100,782 100,782 1.65%
Vice President Chao-Xian Fang
Vice President Yi-Xu Hung
Vice President Chih-Chung Chen
Vice President Fu-Gen Ou
Vice President Da-Lun Wang
Vice President Xiu-Li Lin
Internal Auditing Officer Li-Yang Liao
Accounting Officer Cheng-I Lee
Corporate Governance Officer Wu-Rong Yao
r
e
g
a
n
a
M
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Note: The Company ’ s board meeting resolved on February 25[th] , 2021 that the employee compensation for 2020 was NT$714,175,356; until the publication of the annual report, the Company ’ s employee compensation list is not yet decided and the above amount for 2020 is estimation only.

  • E. Percentage of compensation for director, supervisor, president and VP from the Company and all companies in consolidated re orts for recent two ears versus net rofits: p y p
reports for recent twoyears versus netprofits: reports for recent twoyears versus netprofits: reports for recent twoyears versus netprofits: reports for recent twoyears versus netprofits: reports for recent twoyears versus netprofits:
Item
Title		 Percentage of Compensation Versus Net Profits
2020(Note) 2021
Company All Companies in Consolidated
Reports		 Company All Companies in Consolidated
Reports
Director 0.69% 0.69% 0.70% 0.70%
Supervisor N/A N/A N/A N/A
President and VP 2.24% 2.49% 2.13% 2.40%

Note: The CompanyCompany ’ s employee compensation list is not yet decided and the above amount for 2020 is estimation only. ’ s board meeting resolved on February 25[th] , 2021 that the director compensation was NT$42,000,000 while employee compensation was NT$714,175,356 for 2020; until the publication of the annual report, the

  • F. Description of connection between policy, standard, mix, procedure of compensation for director, supervisor, president and VP from Company and all companies in consolidated reports for recent two years and performance & future risks:

  • (1) The Company ’ s director compensation is issued according to the stipulation of Articles of Association as well as corporate performance and competitiors ’ levels.

  • (2) The compensation issued to president and vice presidents in the recent two years including salary, bonus and employee compensation are issued following the HR and compensation regulations of the Company according to personal performance and level of contribution to business operation while the amount is offered to be approved by the Compensation Committee to be resolved by the board meeting.

~17~

3.3 Corporate Governance Operational Status:

3.3.1 Board Meeting

The Company’s board of directors convened four board meetings in 2020, with attendance status listed as follows:

==> picture [452 x 652] intentionally omitted <==

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Number of
Number of Times of )
Title Name Times of Actual Proxy Actual Attendance Note
Attendance (B) Attendance Rate (B/A) (Note)
(B)
Chairperson Jing-Chun Wang 4 0 100%
Director Jing-Xiu Hu 4 0 100%
Director Chao-Kuei Hsu 4 0 100%
Yun An
Investment Ltd.
Director Legal Person 4 0 100%
Representative:
Chew-Wun Wu
Yun Jie
Investment Ltd.
Director Legal Person 4 0 100%
Representative:
-
Zheng Ding Wang
Qin Shan
International
Director Investment Ltd. 4 0 100%
Legal Person
Representative:
Mao-Tong Tsai
Chao Sheng
Investment Co.,
Director Ltd. 4 0 100%
Legal Person
Representative:
Mei-Lan Chang
Independent Director Hong-Cheng Wu 4 0 100%
Independent Director Yong-Cheng Wu 4 0 100%
Independent Director Xing-Zheng Dai 4 0 100%
Note: Actual Attendance Rate (%) is calculated by the number of times of board meetings during his/her
term and the actual number of times of attendance.
Other Items to be Recorded:
1. For any of the following situations for board meeting operations, specify the date, term, proposal content,
opinions of all independent directors and the Company’s dealing with the opinions:
(1) Items listed in the Article 14-3 of Securities and Exchange Act: The Company sets up the Audit
(2) Committee is in accordance with related items listed in Article 14-5 of the Act.
Besides the aforementioned item, other resolved items that the independent directors have objections or
reservations: None; there were no resolved items of board meeting that are objected or have reservations
by independent directors.
2. Execution status of directors for avoidance of interest conflict of proposals
Title Name Proposal Content Reason to Avoid Interest Status of Voting
Conflict Participation
Jing-Chun Ninth board meeting, 10 [th] round, May 7 [th] , Director and manager of Not participate
Wang 2020-The Company ’ s issuance of the Company when discussing
Director Jing-Xiu Hucompensation for directors and Director and manager of and voting
managers/employees for 2019. the Company
Zheng-Din Director and employee of
g Wang the Company
Hong-Chen
g Wu
Independent Yong-Chen Independent director
Director g Wu compensation
Xing-Zheng
Dai
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~18~

3. Execution status description forperformance evaluation of board meetingand functional committees: Execution status description forperformance evaluation of board meetingand functional committees: Execution status description forperformance evaluation of board meetingand functional committees: Execution status description forperformance evaluation of board meetingand functional committees: Execution status description forperformance evaluation of board meetingand functional committees: Execution status description forperformance evaluation of board meetingand functional committees:
Evaluation Cycle Evaluation Term Evaluation Range Evaluation Method Evaluation Content
Board of directors
performance
evaluation		 Board member
internal
self-performance
evaluation		 1. Participation degree of
corporate business 2.
Improve board meeting
decisional quality 3.
Board member
composition and
structure 4. Director
election and continued
training 5. Internal
control 6. Others
Once Per Year January 1stto
December 31st, 2020		 Board of directors
performance
evaluation		 Board member
self-evaluation		 1. Control of corporate
goals and tasks 2.
Recognition of director’s
duties 3. Participation
degree of corporate
business 4. Internal
relationship maintenance
and communication 5.
Director’s professional
and continued training 6.
Internal control
1. Participation degree of
Functional corporate business 2.
committee
performance
evaluation (Audit
Committee,
Compensation		 Functional
committee internal
self-performance
evaluation		 Recognition of committee
duties 3. Improve
committee decisional
quality 4. Committee
composition and member
Committee) election 5. Internal control
6. Others

  • (1) The Company’s board meeting stipulated Rules of Performance Evaluation for Board of Directors and Functional Committees on August 10[th] , 2020, ruling at least one related evaluation to be performed each year.

    • The Company already finished 2020 performance evaluation, with result reported at the board meeting on February 25[th] , 2021.

  • (2) The results of performance evaluation for board directors and functional committees will be served as references for continued strengthening of competency of directors and functional committees.

  • (3) The rules of performance evaluation for board directors and functional committees as well as evaluation results are disclosed at company website for investors to refer to.

    1. Goals of strengthening competency of board meeting of the year and most recent year (e.g. Set up Audit Committee, increase information transparency, etc.) and evaluation of execution status:

  • (1) The Company’s first round of Audit Committee was set up on June 21[st] , 2018, formed by three independent directors and convened at least once a year to perform auditing of financial reports of the Company, CPA election, independence and performance, effective implementation of internal control, legal compliance, corporate risk control, etc.; from the start of the Audit Committee, the meetings always invite related personnel to attend to receive questions while discussing matters, with communication records listed in the shareholders’ meeting annual report and website information of the Company; four meetings already convened in 2020, with a smooth operation.

  • (2) The Company’s first Compensation Committee was officially kicked off on October 26[th] , 2010; this round (the fourth), the committee was appointed by the board meeting on June 29[th] , 2018, formed by three independent directors and convened twice a year, responsible for corporate salary and compensation structure as well as actual execution status; issuance of director and manager/employee compensation, etc.; the committee meeting always invite related personnel to attend to receive questions while discussing matters; two meetings already convened in 2020, with a smooth operation.

~19~

  • 3.3.2 Audit Committee Operational Information:

  • A. Committee aims to assist board of directors in monitoring the following items: (1) Fair presentation of the Company’s financial reports

    • (2) Independence and performance of CPA election (dismissal)

    • (3) Effective implementation of internal control of the Company

    • (4) Compliance of the Company for related laws and regulations

    • (5) Control of the existing or potential risks of the Company

  • B. Committee’s annual duties and job items are as follows:

    • (1) Compile or amend internal control system

    • (2) Audit of internal control system effectiveness

    • (3) Compile or amend procedures for major financial and business behaviors such as asset possession or disposal, derivatives trading, loans, endorsement or guarantee

    • (4) Major trading of assets or derivatives

    • (5) Major loans, endorsement or guarantee

    • (6) Raising, issuance or private placement of marketable securities with shareholders’ rights

    • (7) CPA assignment, dismissal or remuneration

    • (8) Assignment and dismissal of financial, accounting or internal auditing officer

    • (9) Signature or seal of chairperson, manager and accounting officer for annual financial reports

    • (10) Business report and earning distribution proposal

  • C. Four meetings were convened by Audit Committee for the most recent year, the attendance status of in ndent directors is as follows: depe

Title Name Name Name Number of Times
of Actual
Attendance (B)
Number of
Times of
Proxy
Attendance
(B)		 Actual
Attendance Rate
(B/A) (Note)		 Actual
Attendance Rate
(B/A) (Note)		 Note
Independent
Director
Xing-Zheng Dai
4
0		 100.00% Convener
Independent
Director
Hong-Cheng		 Wu
4
0		 100.00%
Independent
Director
Yong-Cheng		 Wu
4
0		 100.00%
Other Items to be Recorded:
1. Specify the date, term and proposal content of the board meeting, Audit Committee resolution
and dealing of the Company of the opinions should the Audit Committee operations involve the
following items:
(1) Items listed in Article 14-5 of Securities and Exchange Act:
Board
Meeting
Date/Term		 Proposal Content Independ
ent
Director
Opinion		 Company’s
Dealing of
Independent
Director
Opinion
March 25th, 1. Proposal of internal audit report All agreed All
2020 (Eighth 2. Employee and director compensation allotment status and attending
meeting of 3. 2019 business and annual reports approved directors
10thround) 4. Company and affiliate loan status agreed and
5. Company’s derivatives trading status approved
6. Follow Regulations Governing Establishment of Internal
Control Systems by Public Companies and offer to board
meeting to approve the “2019 Statement of Internal
Control”
7. Proposal to amend Rules of Procedures of Board of
Directors Meeting
8. Proposal to amend Compensation Committee Charter

~20~

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May 7 [th] , 2020 1. Proposal of internal audit report
(Ninth 2. Proposal of Directors and officers liability Insurance
meeting of (D&O) status report
10 [th] round) 3. Proposal of the Company’s 2019 earnings distribution
4. Company and affiliate loan status
5. Company’s derivatives trading status
6. Evaluate the independence of Company’s CPA according
to corporate governance regulations
7. Proposal to amend corporate the Company’s corporate
governance regulations
8. Company ’ s 2019 employee and director compensation
issuance
August 10 [th] , 1. Proposal of internal audit report
2020 (Tenth 2. Company and affiliate loan status
meeting of 3. Company’s derivatives trading status
10 [th] round) 4. Amend Company’s Regulations Governing Internal
Control Systems and Internal Audit
5. Amend Company’s Regulations Governing Financial
Reporting Procedure
6. Compile Company’s Regulations for Assessing Board of
Directors and Functional Committees
November 9 [th] , 1. Proposal of internal audit report
2020 2. Company and affiliate loan status
(Eleventh 3. Company’s derivatives trading status
meeting of 4. Amend Company’s Regulations Governing Seal Usage
10 [th] round) 5. Obtain assets-Proposal to ratify investment in
nanotechnology business
6. Proposal of 2021 annual audit plan
(2) Besides the above items, other resolved items not passed by Audit Committee while agreed by
other two thirds of directors:
None, there were no objections or reservations from independent directors this year.
2. Execution status of independent director on interest conflict proposal avoidance should specify
independent director’s name, proposal content, avoidance reason and status of participating in voting:
None, each independent director expressed his/her opinion during the meetings.
3. Communication status of independent director and internal audit officer as well as CPA (must
include major item, method and result of corporate financial and business status communications)
(1) Method of Communication
1. Independent director and internal audit officer
Internal audit officer should report at least once per quarter on internal audit execution status
and internal control operational status; for major abnormal financial and business situations,
report to independent directors at any time.
2. Independent director and CPA
Independent directors and CPAs should convene meetings at least once per year; CPAs
should offer report for financial and business operational status and internal audit status of
the Company and affiliates while launching full communications for major adjustments and
regulation amendment influence status; for major abnormal financial and business situations,
report to independent directors at any time.
(2) Communication Item and Result
1. Communication status of independent director and internal audit officer
Result of
Date Excerpts of Communication Status
Communication
March 25 [th] , 2020 Internal audit operation checking plan and actual execution No suggestion,
status for November, 2019-February, 2020. approval granted
May 7 [th] , 2020 Internal audit operation checking plan and actual execution No suggestion,
status for March-April, 2020. approval granted
August 8 [th] , 2020 Internal audit operation checking plan and actual execution No suggestion,
status for May-July, 2020. approval granted
November 9 [th] , Internal audit operation checking plan and actual execution No suggestion,
2020 status for August-September, 2020. approval granted
2. Communication status of independent director and CPA
Result of
Date Excerpts of Communication Status Communica
tion
1. Explain and discuss on financial reports including key
checking items No
June 17 [th] , 2020 2. Discuss and communicate regarding issues offered by suggestion
attending personnel
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~21~

  • 3.3.3 Information of operational status of supervisor participating in board meeting The Company formed Audit Committee in June 21[st] , 2018 to execute supervisor competency ruled by related regulations.

  • 3.3.4 Discrepancy and reason between corporate governance operational status and Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies

==> picture [534 x 461] intentionally omitted <==

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Discrepancy
Operational Status
and reason
between
corporate
governance
operational
status and
Evaluation Item Corporate
Y N Excerpt Governance
Best Practice
Principles
for
TWSE/TPEx
Listed
Companies
1. Does the Company compile and disclose its Corporate V The Company has compiled and disclosed its corporate governance practice None
Governance Best Practice Principles according to “Corporate principles at its website/investor relations/corporate governance according
Governance Best Practice Principles for TWSE/TPEx Listed to “Corporate Governance Best Practice Principles for TWSE/TPEx Listed
Companies”? Companies”?
2. Corporate share structure and shareholders’ rights None
(1) Does the Company compile internal operational V (1) The Company already set up spokesperson system according to
procedures to deal with shareholders’ opinions, regulations to deal with related matters.
questions, disputes and lawsuit matters while
implement according to procedures?
(2) Does the company control major shareholders of V (2) The Company have access to the list of major shareholders of actual
actual controlling companies and final controller controlling companies, ensuring the stability of ownership.
list of major shareholders?
(3) Does the Company establish and execute risk V (3) Affiliates operate independently while the Company has regulations on
control and firewall mechanism with affiliates? financial and business operational regulations regarding group
affiliates and specific companies; interactions with affiliates also
comply with related regulations.
(4) Does the company compile internal regulations to V (4) The Company has regulations for insider trading prevention.
prohibit insiders to trade marketable securities by
using undisclosed market information?
----- End of picture text -----

~22~

3. Composition and Duties of Board of Directors
(1) Does the board of directors realize execution of
diversity policy for member composition?
(2) Besides setting up Compensation and Audit
Committees to comply with regulations, does the
Company voluntarily implement other functional
committees?
(3) Does the company compile Rules for Performance
Evaluation of Board of Directors and its evaluation
method, perform annual evaluation while offering
the result to board of directors and use that as
reference for individual director salary remuneration
and nomination for the following term?
(4) Does the company regularly evaluate the
independence of CPA?		 V
V
V
V		 (1) The Company follows rules of “Corporate Governance Best
Practice Principles” to gradually realize diversity policy for board
meeting member composition with various gender, professional
background and work field. The Composition of board members
features various professional background and work field, including
but not restricting to gender, age, nationality, culture, professional
background (such as legal, accounting, industry, financial
marketing or technology), professional skill and industry
experience; this round of board members consists of ten seats,
including 3 independent directors and one female director; the
members’ professional background and work field cover industry,
legal, financial, accounting, investment management and business
management; the professional background and work field of other
members also cover industry, financial, accounting, investment
management and business management while having contribution
to public welfare, offering a diverse business management method.
Related professional filed description is listed in Note 1.
The Company’s directors also serving as employees account for
30% of overall members, while the percentage for independent
director is also 30%, while that for female members is 10%. For
duration of independent director tenure: 2 members have served
this position for five years and under, one has served for over five
years. For gender equality, we plan to add female director for the
next round of board meeting to reach the goal of increasing the
percentage of female member.
(2) The Company already set up Compensation Committee as
required while implementing Audit Committee. We also set
up CSR Committee to compile sustainable policies to monitor
sustainable-related operations.
(3) The Company compiled the Rules for Performance Evaluation
of Board of Directors and Functional Committees in August
10th, 2020. In 2020, the Company performed internal
evaluation according to the evaluation procedures and
indicators while the execution status and result of the
evaluation were reported to the board meeting in February
25th, 2021 and finish announcement matters.
(4)
The Company evaluates once per year the independence of
CPA. The independence of Deloitte CPAs Hai-Yue Huang
and Chao-Mei Chen is evaluated together with various items
according to the provision of“The Bulletin of Norm of
Professional Ethics for Certified Public Accountant of the
Republic of China No.10”while passed by the board
meeting in February 25th, 2021. The independence of CPAs are
normal while Deloitte has offered its Letter of Independence.
None

~23~

4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None		 4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None		 4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None		 4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None		 4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None		 4. Do public companies have competent and suitable
numbers of corporate governance personnel while
appoint a corporate governance officer to handle
corporate governance matters (including but not
restricting to offering necessary information for directors
and supervisors in performing duties, assisting directors
and supervisors to comply with regulations, handling
items relating to board meeting and shareholders’
meeting in compliance with the law, performing
company registration and change registration and
compiling meeting minutes for board meetings and
shareholders’ meeting)?
V
The Company’s corporate governance matters are handled by the
chairperson office while there is a corporate governance unit under
the office, appointing a corporate governance officer to handle
promotion of corporate governance and ethical management matters
while negotiating execution to protect shareholders’ rights,
strengthening board director competency; matters include legally
handle board meeting and shareholders’ meeting, cooperate with
directors to offer them information for performing duties, assisting
them to comply with the law, compile meeting minutes for board
meeting, shareholders’ meeting and functional committees, handle
company registration, participate in and arrange investment forum,
establish a diverse communication channel for investors, promote
corporate social responsibility (CSR) matters, disclose material
information, company website maintenance, etc.
The 2020 corporate governance officer continuing education
information: 2.5hr course of “Public Company’s Board of Directors IP
Management Duty Promotional Event-Complete Corporate
Governance Structure with IP Management” by Institute for
Information Industry (III), 3hr course of “Corporate Director and
Supervisor Legal Risk and Countermeasure-Start with Corporate
Fraud and Anti-Money Laundering (AML)” by Taiwan Corporate
Governance Association (CGA), 3hr course of “2020 Anti-Insider
Trading and Insider Share Right Trading Promotional Seminar” by
SFI, 3hr course of “Board of Directors Performance Evaluation” and
3hr course of “Economic Regulation Influence” by CGA; total
education hours were 14.5.
None
5. Does the Company establish communication channels with
interest parties (including but not restricting to shareholder,
employee, customer, supplier, etc.) while setting up interest
party area on company website, appropriately responding to
interestparties for the major CSR issues of their interest?
V
The Company already set up an interest party area on its website
(http://www.tripod-tech.com) as well as spokesperson and deputy
spokesperson system to handle important CSR matters.
None
6. Does the Company appoint a stock affair agent to handle
shareholders’ meetingmatters?
V
The Company appoints Capital Securities Corporation to handle
shareholders’ meetingmatters.
None
7. Information Disclosure
(1) Does the Company set up a website to disclose
financial, business and corporate governance
information?
(2) Does the Company have other information
disclosure methods? (such as English website,
appoint personnel to handle corporate information
collection and disclosure, realize spokesperson
system, upload the process of investors conference
to corporate website)?
(3) Does the Company announce and report annual
financial reports within two months after the close of
fiscal year while announce and report earlier than
required the financial reports of 1-3Q and
operational status of each month?
V
V
V		 (1)
(2)
(3)		 The Company sets up a website to disclose financial, business
and corporate governance information at
http://www.tripod-tech.com
The Company already set up spokesperson system according to
regulations while the chairperson office handles corporate
information collection and disclosure.
The Company sets up its goals to finish announcing and reporting
quarterly financial reports and monthly operational status before
required deadlines. Its annual financial reports also are set to be
announced and reported within two months of the close of fiscal
year; the 2020 financial reports were announced and reported in
February25th,2021.		 None

~24~

8. Does the Company have important information that helps to
understand the status of corporate governance operations
(including but not restricting to employee right, employee
care, investor relations, supplier relationship, interest party
right, director/supervisor education status, status of risk
management policy and risk assessment standard, customer
policy execution status and D&O status)?
V
Employee right: Employee is the most important asset of the Company.
Trident values employee welfare, health and on-job
training, plans each welfare measures and HR system
according to considerations of prioritizing employees and
protects employee rights according to Labor Standards Act.
Employee care: Besides legally providing labor insurance, health insurance
and labor pension system, the Company provides group
insurance which covers certain amount of life insurance,
cancer medical insurance, accidental injury medical
insurance, accidental insurance, hospital medical insurance
and occupational hazard insurance. Other welfare measures
include wedding and funeral condolences, festive cash gifts,
birthday cash gifts and year-end lottery, health check,
business trip insurance, birth cash gifts, children
scholarship, etc.
Investor relations: The Company sets up spokesperson and deputy
spokesperson system to handle related matters.
Supplier relationship: The Company has a close and fair relationship with
suppliers.
Rights of interest parties: Interest parties communicate with the Company
for demand to maintain self rights; they can communicate
via the interest party area on the website.
Status of director and supervisor education: The Company’s directors have
industry processional knowledge and experiences while
irregularly participating in corporate governance courses
(Note 2).
Execution status of risk management policy and risk assessment standard:
The Company already set up related management
regulations as required while launching appropriate risk
evaluation and control when performing business
operations.
Customer policy execution status: The Company has a close and fair
relationship with customers.
D&O status: The Company purchased D&O for directors to protect
shareholders’ rights. The insurance level for May 8th, 2020 to
May 8th, 2021 is US$100 million. When the term ends while a
new insurance needs to be purchased, we will announce
and disclose as required the amount, range and rate of the
insurance after providing to be reviewed at the board
meeting.
None
9. Offer improved status, prioritized items to be improved and measures regarding the results of Corporate Governance Evaluation by the Corporate
Governance Center of TWSE.
(1) Improved status:
1. Compile Performance Evaluation of Board of Directors and Functional Committees and finish annual performance evaluation matters.
2. Set up Sustainable Development Committee to promote corporate ESG matters
3. Disclose Chinese and English versions of material information at the same time
(2) Status of improvements to be made:
1. Diverse competency and member of board of directors
2. Corporate ESG information disclosure transparency
3. Corporate financial information disclosure efficiency and quality
4. Corporate Market Observation Post System(MOPS)and website corporategovernance information disclosure efficiencyandquality

~25~

Note 1: Execution status for realization of policy for diverse composition of board members

==> picture [473 x 451] intentionally omitted <==

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

Core Item Diversity Diverse Policy Execution Status
Accounting
Name Gender Operational Judgement Financial and Legal ManagementBusiness DealingRisk KnowledgeIndustry Leadership Decision and
Analysis
Jing-Chun M      
Wang
Jing-Xiu Hu M     
Chao-Kuei
M      
Hsu
Yun An
Investment
Ltd. M    
Legal Person
Representative:
Chew-Wun Wu
Yun Jie
Investment
Ltd.
Legal Person M     
Representative:
Zheng-Ding
Wang
Qin Shan
International
Investment
Ltd. M    
Legal Person
Representative:
Mao-Tong Tsai
Chao Sheng
Investment
Co., Ltd. F      
Legal Person
Representative:
Mei-Lan Chang
Hong-Cheng M      
Wu
Yong-Cheng M     
Wu
Xing-Zheng M       
Dai
----- End of picture text -----

~26~

Note 2: 2020 director and supervisor education status

==> picture [441 x 277] intentionally omitted <==

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

Title Name Host Date Course Name Hours
Director Jing-Chun CGA November Economic Regulation Influence 3
Wang 9 [th] , 2020 Board of Directors Performance Evaluation 3
November Economic Regulation Influence 3
Director Jing-Xiu Hu CGA 9 [th] , 2020 Board of Directors Meeting Performance 3
Evaluation
Chao-Kuei November Economic Regulation Influence 3
Director Hsu CGA 9 [th] , 2020 Board of Directors Meeting Performance 3
Evaluation
Chew-Wun November Economic Regulation Influence 3
Director Wu CGA 9 [th] , 2020 Board of Directors Meeting Performance 3
Evaluation
Director Zheng-Ding CGA November Economic Regulation Influence 3
Wang 9 [th] , 2020 Board of Directors Performance Evaluation 3
Director Mao-Tong CGA November Economic Regulation Influence 3
Tsai 9 [th] , 2020 Board of Directors Performance Evaluation 3
Director Mei-Lan CGA November Economic Regulation Influence 3
Chang 9 [th] , 2020 Board of Directors Performance Evaluation 3
Independent Hong-Cheng CGA November Economic Regulation Influence 3
Director Wu 9 [th] , 2020 Board of Directors Performance Evaluation 3
Independent Yong-Cheng CGA November Economic Regulation Influence 3
Director Wu 9 [th] , 2020 Board of Directors Performance Evaluation 3
2020 Annual Conference and Independent
Independent Director Association Taiwan April 292020 [th] , Director Forum- Bringing Goods and 3
Removing Evils for Independent Director
Independent Director Xing-Zheng Dai Accounting Research and Development October 2020 New Insurance Horizon 3
Foundation 23th, 2020
CGA November Economic Regulation Influence 3
9 [th] , 2020 Board of Directors Performance Evaluation 3
----- End of picture text -----

  • 3.3.5 If the Company has a Compensation Committee, it should disclose its composition, duty and operational status:

  • A. Compensation Committee Member Information:

==> picture [469 x 211] intentionally omitted <==

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

Over 5-Year Work Experience and Meet Following
Condition Independence Status (Note 2)
Professional Qualifications
Lecturer and Judge, Prosecutor, Business,
Above of Accountant or Other Legal, Finance, Number of
Business, Legal, Professional and Accounting or Public
Technical Personnel
Finance, Corporate Companies
ID Type Accounting or with Certificates Business-Requ as Note
(Note 1) Regarding Corporate
Corporate ired Work 1 2 3 4 5 6 7 8 9 10 Compensation
Business-Required
Business-Require related National Experiences Committee
d related Exams Member
Departments at
Public/Private
Name
Universities
Independent Hong-Cheng             1
Director Wu
Independent Yong-Cheng            1
Director Wu
Independent Xing-Zheng             3
Director Dai
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~27~

Note 1: ID type is director, independent director or others.

  • Note 2: Tick the checkbox of each condition code if each member meets the following conditions two years before elected and during their terms. 1. Not employed at the Company or affiliates

  • Not serving as directors or supervisors at the Company or affiliates (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • Self or spouse and minor or under others ’ names not as natural person shareholder of 1% shares or top ten shareholders 4. Not as managers listed in (1) or spouse, relative of within second-degree or lineal relatives by blood within third-degree relationship with personnel listed in (2) and (3)

  • Not directly holding over 5% issued shares, as among top five shareholders or appointing representatives as Company directors or supervisors as directors, supervisors or employees of legal person shareholder pursuant to the provisions under Section 1 and 2 of Article 27 of Company Act (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • Not as directors, supervisors or employees of other Companies serving as directors of the Company or controlling over half of shares with voting right (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • Not as directors, supervisors or employees of other Companies while as the same person as or the spouse of the chairperson, president or similar position of the Company (excluding independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • Not as directors, supervisors, managers or shareholders of over 5% of the Company ’ s shares of companies or institutions having financial or business relationship with the Company (excluding certain companies or institutions having over 20% of issued shares of the Company but not over 50% while as independent directors at the Company, parent company or affiliates with the same parent company in accordance with the regulation or local regulations)

  • Not providing auditing services for the Company or affiliates or as professionals providing services such as business, legal, financial and accounting for over NT$500,000 in the recent two years; owner, partner, director, supervisor, manager and spouse of single investor, partner, company or institution; excluding members of Compensation Committee, Tender Offer Review Committee or Special Committee on Mergers and Acquisitions under regulations such as the Securities and Exchange Act or Business Mergers and Acquisitions Act.

  • Not involving Article 30 of the Company Act

  • B. Compensation Committee Operational Status Information

  • (1) The Company’s Compensation Committee consists of 3 members.

  • (2) Term of this Committee round: June 29[th] , 2018 to June 20[th] , 2021. In the latest year, the committee convened twice (A), the qualification and attendance of the members are as follows:

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Number of Time of
Actual Attendance
Title Name Actual Attendance Note
Rate (B/A)
(B)
Hong-Cheng
Convener 2 100.00%
Wu
Member Yong-Cheng Wu 2 100.00%
Member Xing-Zheng Dai 2 100.00%
Other items to be recorded:
1. Duties of Compensation Committee: The Committee should dutifully fulfill the following jobs and offer suggestions
to the board meeting to discuss based on due care of a good administrator.
(1) Regularly review the Company’s salary/compensation regulations to offer amendment suggestions
(2) Review the performance goals of the Company’s directors and managers as well as the policy, system, standard
and structure of salary and compensation
(3) Evaluate the goal-reaching status of the performance of the Company ’ s directors and managers and salary and
compensation
2. Should the board meeting does not adopt or amend the suggestions, specify the date, term, proposal
content, resolution result of the board meeting and the Company’s dealing with the Compensation
Committee opinions: None.
3. For the resolved items of the committee, should members have objections or reservations while recorded
or have written statements, specify the date, term, proposal content, all members’ opinions and dealing
with the opinions: None.
Company
Compensation Compensation Dealing with
Committee Proposal Content Committee Board Meeting Compensation
Date/Term Opinion Date/Term Committee
Opinions
March 25 [th] , 2020 1. Amend Compensation Committee Charter All May 25 [th] , 2020 All
(Fourth time, 2. Review and issue of the salary and compensationmembers March 25 [th] , 2020 attending
fourth round) operations of the Company’s directors andagreed and (Eighth time, tenth members
managers approved round) agreed and
3. Range of suitable managers offered by the approved
Company to Compensation Committee
May 7 [th] , 2020 Issuance operations of the Company’s 2019 director May 7 [th] , 2020
(fifth time, fourth and manager compensation (ninth time, tenth
round) round)
----- End of picture text -----

Compensation
Committee
Date/Term		 Proposal Content
Compensation
Committee
Opinion		 Board Meeting
Date/Term		 Company
Dealing with
Compensation
Committee
Opinions
March 25th, 2020
(Fourth time,
fourth round)		 1. Amend Compensation Committee Charter
2. Review and issue of the salary and compensation
operations
of
the
Company’s
directors
and
managers
3. Range of suitable managers offered by the
Companyto Compensation Committee
All
members
agreed and
approved		 May 25th, 2020
March 25th, 2020
(Eighth time, tenth
round)
All
attending
members
agreed and
approved
May 7th, 2020 Issuance operations of the Company’s 2019 director May 7th, 2020
(fifth time, fourth
and manager compensation		 (ninth time, tenth
round) round)

~28~

3.3.6 Discrepancy and reason of CSR fulfillment and Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies

==> picture [530 x 686] intentionally omitted <==

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Discrepancy
Operational Status and reason
between CSR
and Corporate
Social
Evaluation Item Responsibility
Y N Excerpt Best Practice
Principles for
TWSE/GTSM
Listed
Companies
1. Does the company evaluate the risks of environmental, V The Company already set up Corporate Social Responsibility None
social and corporate governance issues related to Code of Conduct and risk management regulations while
corporate operations according to materiality principle proceeding with risk control priorities and risk level
while compiling related risk management policy or evaluation regarding corporate business-related ESG issues
strategy? according to the Company’s materiality principle.
For related content of risk items, please refer to the 7.6 Risk
Items of “7. Financial Status and Performance Analysis and
Risk Items”
2. Does the Company set up CSR full (part) time promotion V The Company reported to the board of directors in February None
unit while the board of directors authorize high-end 25 [th] , 2021 to set up a Corporate Sustainable Development
management level personnel to handle and report to the Committee under the chairperson office; the chairperson
board about the processing status? leads the Company’s high-level management team to realize
sustainable strategies and operations covering aspects of
corporate ESG while inspecting implementation performance
and compiling improvement plan. For related matters of
promoting CSR, the Company realizes CSR via each
department’s duties while reports to the board of directors by
year-end.
The Company reported to the board of directors in November
9 [th] , 2020 about annual CSR operations and execution status.
3. Environmental Issue None
(1) Does the Company establish appropriate environmental V (1) The Company already established environmental and occupational
safety hygiene management system considering own industry while
management system according to its industry characteristics? considering substantial environmental protection issues such as air
pollution, water pollution, waste and water/electricity consumption
during production/sales process as well as hazardous substances
introduced during product manufacturing process. It also meets
requirements of ISO 14001, ISO 14064 and ISO 50001.
(2) The Company has unit and personnel dedicated to environmental
(2) Does the Company strive to improve the utilization efficiency of each V management, introducing innovative energy-preservation technologies
resource while using recyclable materials with less impact on the considering own industry characteristics while striving to improve
environment? utilization efficiency of various resources. For items such as water
pollution, water pollution, waste and energy consumption, it uses
recyclable materials having low impacts on the environment while
preventing environmental pollution and controlling energy usage.
(3) Does the Company evaluate the potential risks and opportunities of V (3) Since our industry can be easily affected by energy and
water-consumption issues due to climate changes, for possible
climate changes on the present and future of the enterprise while
operational risks, we will evaluate risks and opportunities for climate
adopting countermeasures for climate-related issues? and environmental issues while launching necessary countermeasures
through Corporate Sustainability Committee.
1. Gas emission reduction
Actively promote related greenhouse gas verification, product
carbon footprint verification and carbon free label as well as energy
management international certificates; since 2008, use ISO 14064
standard to establish corporate greenhouse gas emission list control
amid the continued capacity expansion demand of the Company,
effectively reduce carbon dioxide emission.
2. Energy control:
Regularly review energy consumption status, reasonably plan and
evaluate equipment efficiency, proceed with energy preservation
project, continue to focus on energy preservation and waste
reduction, lower production costs to realize energy control
3. Water resource management:
Actively adopt water preservation measures, compose standard
water consumption volume and launch audit control, regularly
promote water preservation, avoid unnecessary waste; Company
has dedicated sewage processing factory, use branched passage and
distributary collection for factory effluent and domestic sewage,
appropriately deal with and control, review water quality; when
reaching standard, discharge water; use new recycling technology to
proceed with water resource recycling and reuse, reduce sewage
mud creation to improve processing efficiency, reduce pollution
degree of effluent
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~29~

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Discrepancy
Operational Status and reason
between CSR
and Corporate
Social
Evaluation Item Responsibility
Y N Excerpt Best Practice
Principles for
TWSE/GTSM
Listed
Companies
(4) Does the Company collect statistics of the V (4) The Company ’ s related statistics for environmental
greenhouse gas emission volume, water management of latest two years:
consumption and waste weight for the past two 1. Greenhouse gas emission:
years while composing policies of In 2020 and 2019, emission volume was 801,845
energy-preservation, carbon-reduction, Tonne/CO2 and 784,097 Tonne/CO2, respectively;
greenhouse gas reduction, water reduction or calculated according to Company’s sales value, the
other waste management? volume was 17.21 Tonne/CO2/Mtwd and 17.59
Tonne/CO2/Mtwd, respectively.
2. Water consumption:
In 2020 and 2019, water consumption was 16,767,403
Tonnes and 14,990,656 Tonnes, respectively; calculated
according to Company’s sales value, the volume was
360 Tonne /Mtwd and 336 Tonne /Mtwd, respectively.
3. Total weight of waste:
The Company’s waste management is performed
strictly according to regulations, classifying and
collecting produced wastes while delivering for legal
and qualified companies to process according to
various types; waste management mainly considers
recycling and reuse; the Company actively develops
efficient recycling technology to perform resource
recycling and reuse while realizing “ reduce volume ”
of wastes; in 2020 and 2019, the total waste weight was
167,831 Tonnes and 162,096 Tonnes; in both years, the
percentages of recycled and reused weight against total
weight were 96% and 95%.
Since the Company still continues to expand business
scale due to factory expansion plans, it rules related
environmental management strategies for effective
control.
1.Energy preservation and carbon reduction:
Factory energy consumption review, compile
reasonable equipment efficiency evaluation standard,
continue to launch energy preservation project,
effectively reduce production costs via energy control.
2. Greenhouse gas reduction
standard certificates at own factories, precisely control
corporate greenhouse gas emission status, combine
with operating activities to compile volume reduction
strategies to respond to business impacts due to climate
changes.
3. Reduce water usage:
Set up unit standard water usage volume at factories
while launching audit control, regularly promote
preservation of water usage, improve volume of usage
for reclaimed water, reuse of purge water, sewage and
effluent, strengthen water resource usage, actively
adopt water consumption preservation measures.
4. Waste management policy:
Actively perform waste classification and collection
while delivering to legal companies to process; waste
processing mainly focuses on recycling and reuse; the
Company actively develops effective recycling
technology to perform recycling and reuse of resources
while performing volume reduction of wastes, resource
recovery of waste, and innocuous treatment of waste.
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~30~

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

Discrepancy
Operational Status and reason
between CSR
and Corporate
Social
Evaluation Item Responsibility
Y N Excerpt Best Practice
Principles for
TWSE/GTSM
Listed
Companies
----- End of picture text -----

4. Social Issue
(1) Does the Company follow related regulations and International Bill of
Human Rights to set up related management policy and procedure?
(2) Does the Company set up and launch reasonable employee welfare
measures (including compensation, leave and other welfare) while
appropriately reflecting business performance or result on employee
compensation?
(3) Does the Company offer a safe and healthy work environment while
performing regular safety and health education for employees?
(4)
Does
the
Company
establish for
employees
efficient
career
competency development training program?
(5)
Does the Company follow related regulations and international
principles for consumer health and safety, customer privacy,
marketing and label of products and services while composing related
policy to protect consumers’ rights and appeal procedures?








V
V
V
V
V		 (1)
Strictly abide by various labor regulations, strive to follow stricter labor,
health and safety, environment, ethics and management system standards
such as SA 900, RBA (Responsible Business Alliance), customer code of
conduct, etc. while compiling regulations by observing RBA to protect
employees to have internationally-recognized codes of conduct such as free
choice of occupation, child labor prohibition, legal salary/welfare and
humanized treatment, promise to maintain and respect employees’ human
right management policy and procedure
(2)
To attract and retain talents, we encourage employees to create performance
and long-term contribution and offer competitive overall compensation
including salary, allowance, cash reward and other reward; the overall
compensation of each employee is granted according to his/her professional
knowledge skill, job competency, performance and long-term involvement,
combining with corporate business goals to compile salary offering structure
that meets labor regulations, is competitive and far; there is no difference in
treatment regarding upbringing, class, blood relationship, religion, physical
disability, gender, sexual preference, marital state, labor union, political
opinion, age or other factors; rookies are paid equally regardless of gender
while salary is provided regarding educational level and work experiences;
combined with attendance system to offer complete paid leaves; every half
year, we launch employee performance review to offer encouragements such
as reward, adjustment in salary and promotion for outstanding employees
according to their performances in work to promote HR management; we
encourage excellent employees with corporate operating results and personal
performance to boost morale and improve efficiency for them to remain at
the Company to contribute their specialty; besides employee compensation
system, the Articles of Association rules the Company allots 6-18% of profits
as employee compensation to share corporate profits with them; to improve
competitiveness, we strive to offer complete and high-quality welfare
measures, caring them with heart, enrich their body, mind and spirit
including: set up welfare committee and actively promote various welfare
plans; including employee travel subsidy, festive and birthday cash gifts,
condolences and subsidies; set up library for various magazine and
publication borrowing; set up restaurant, cafeteria and sign contract with
appointed stores, supply healthy and balanced food/beverage and
high-quality and inexpensive goods; irregularly hold various employee fun
fair
(3)
The Company values employee safety training, rookies participate in level-3
safety education, existing employees are educated with safety courses;
according to related regulations of occupational hygiene protection, we
assign qualified occupational hygiene technical service institutions to offer
annual occupational hazard element inspection regarding operating locations
with occupational hazard elements, items including physics and chemical
ones; when sample test results exceed standard, we launch repeated
sampling inspection to verify; for confirmed abnormal areas, we review the
case on site while requesting production unit to launch adjustments
regarding solution utilization status, ventilation and waste gas processing to
provide a healthy and safe work environment; following our production
characteristics, we compile various emergency processing programs and
methods when emergency occurs, strengthen employees’ ability to respond
and escape amid emergency to ensure the Company’s property and
personnel are safe while minimizing losses of disasters; regularly organize
fire emergency and escape drills including personnel escape principles, fire
facility utilization, etc.; on-site unit regularly organizes emergency drills,
performing drills regarding fire, solution pipe leakage and sprinkler pipe
leakage, improving on-site immediate coping ability
(4)
The Company constantly promotes employees’ professional knowledge and
skills according to educational training promoting concept and long-term
development needs to cultivate problem-shooting ability and strengthen
corporate business constitution; employee growth and prosperity are the
foundation of corporate sustainable operations; systematically launch
technical, professional and management training courses for employees of
various job competencies; actively cultivate internal coaches to pass on
professional skills and experiences, integrate external good-quality training
courses, encourage employees to continue study, improve employees’ quality
and competitiveness with various methods, offer mixed learning including
online and offline courses, knowledge management, etc.; teaching methods
include classroom teaching, seminar, group discussion, audio/video
teaching and mentorship, design various trainings according to job ranks for
employees to gradually strengthen abilities according to various posts
(5)
The Company effectively controls quality and meet various hazardous
substance regulations while protecting customer right needs by establishing
quality management system and hazardous substance management system;
for verification standard of certification institutes, please refer to the
description of section 7; we already have “Interest Parties” section on our
website to deal with related matters of processing customer right appeals
while featuring customers’ complaint processing procedure to meet
customers’ demand and the sustainability promise of constant improvement.
The Company asks suppliers to uphold related regulations of environment
while offering related letter of guarantee and compiling regulations ruling
that for any violations, the Company may end or dismiss the agreement; the
Company lists past records of suppliers as evaluation items of management
procedure for supplier qualification review.


None

~31~

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Discrepancy
Operational Status and reason
between CSR
and Corporate
Social
Evaluation Item Responsibility
Y N Excerpt Best Practice
Principles for
TWSE/GTSM
Listed
Companies
(6) Does the Company compose supplier management V (6) The Company refers to the principles or guidance of None
policy, requesting suppliers to follow related international-standard reports to compile CSR report
regulations in issues such as environmental-protection, while the report has not yet received certificate from
occupational safety hygiene or labor right and the third-party verification unit. For information
implementation status? regarding the Company’s CSR, refer to the CSR
Does the company refer to the principles or guidance report of the Company’s website.
of international-standard reports to compile reports for
non-financial information disclosure such as CSR
report? Do the above reports obtain third-party
verification or guarantee?
5. Should the Company have CSR Principles following The Company refers to the principles or guidance of
“Corporate Social Responsibility Best Practice Principles for international-standard reports to compile CSR report while
TWSE/GTSM Listed Companies”, specify the discrepancy the report has not yet received certificate from third-party
between operations and principles: verification unit. For information regarding the Company’s
CSR, refer to the CSR report of the Company’s website.
6. The Company sets up CSR Code of Conduct while gradually launching and promote actions observing this code to realize effectively CSR.
7. Other important information that helps to understand CSR operational status:
(1) The Company’s system, measure and implementation status for CSR activities are listed on the Company’s website and its CSR report:
http://www.tripod-tech.com
(2) The Company’s certificates: ISO 9001, IATF16949, IECQ-QC 080000, TL9000, ISO 45001, ISO 14001, ISO 14064-1, ISO 27001
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~32~

3.3.7 Discrepancy and reason of ethical management fulfillment and Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies

Evaluation Item Operational Status Discrepancy
and reason
between
corporate
governance
operational
status and
Corporate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies
Y N Excerpt
1. Compile ethical management and plan
(1) Does the Company compile ethical management
policy passed by the board members while disclose
the policy and actions of ethical management as well
as promise of board directors and high-level
management team to actively realize management
policy?
(2) Does the Company establish evaluation mechanism
for unethical conduct risks, regularly analyze and
evaluate business activities with higher unethical
conduct risk within the range of business while
compose plans to prevent unethical conducts while at
least covering the prevention measures of conducts
listed in Section 2, Article 7 of “Ethical Corporate
Management
Best
Practice
Principles
for
TWSE/GTSM Listed Companies”?
(3) Does the Company disclose operational procedure for
preventing unethical conduct plan, guideline for
conduct, punishment for violation and appeal system
while realizing the implementation and regularly
reviewing and amending the aforementioned plans?
















V
V
V		 (1) The Company set up “Ethical Corporate.
Management Principles”, “Codes of Ethical
Conduct” and “Procedures for Ethical
Management and Guidelines for Conduct”
(Ethical Management Regulations), regulating
noteworthy items for corporate personnel in
performing duties; actively realizing promised
items for external parties basing on the principle
of trust and mutual benefit.
(2) Besides composing Ethical Management
Regulations, the Company also has prevention of
insider training management operations and
interest conflict avoidance management
guidelines, offering code of conduct for
personnel performing duties, preventing matters
from happening such as business activities of
unethical conducts, bribery and receiving bribes
and offering illegal political donations.
(3) The Company’s Ethical Management
Regulations specify the various operational
methods for preventing unethical conducts such
as violation processing procedure, award and
punishment, appeal and record sanction; the
Company educates employees about the
importance of ethical conducts at any time
according to related regulations while
immediately report and deal with violations
accordingto related rules.
None

~33~

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Operational Status Discrepancy
and reason
between
corporate
governance
operational
status and
Evaluation Item
Y N Excerpt Corporate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies
2. Realize ethical management None
(1) Does the Company evaluate ethical record of business V (1) The Company has review system for its
counterpart while specify ethical conduct clauses in customers and suppliers while specifying duties
the agreement with them? and rights for both parties when entering into
agreements.
V
(2) Does the Company have a full-time unit handling (2) To promote the monitoring mechanism of ethical
promotion of corporate ethical management while management, the Company appoints
regularly (at least once per year) report to the board chairperson office to execute related matters in a
members about its ethical management policy, plans part time fashion while internal audit realizes
of prevention of unethical conduct and monitor the execution of review according to department’s
execution status? competency to follow Ethical Management
Regulations while regularly reporting to board
members about execution status.
(3) Does the Company compile anti-interest conflict V (3) The Company has interest conflict avoidance
policy, offer appropriate reporting channel while management guidelines while featuring an
realizing execution? appeal channel for related personnel to describe
any potential interest conflict with the Company.
(4) Does the Company establish efficient accounting V (4) The Company already has an efficient
system and internal control system for realizing accounting system and internal control system to
ethical management while internal auditing unit realize ethical management while featuring
composes related audit plan according to the annual auditing plan. Internal auditing unit also
evaluation results of unethical conduct risks to review performs various auditing operations according
the compliance status of plans to prevent unethical to auditing plans. For special matters,
conducts or appoint CPA to execute such audit? arrangements will be made for exceptional
(5) Does the Company regularly hold internal/external audits.
trainings for ethical management? V (5) The Company irregularly trains its employees
and weekly trains its executives at management
meetings.
3. Operational status of corporate reporting system None
(1) Does the Company have a concrete reporting and V (1) The Company has rules for reporting matters in
rewarding system while establishing a channel Ethical Management Regulations while features
convenient for such reporting and appointing a reporting channel for management and
appropriate personnel responsible for the reported auditing unit to perform related rules. Any
party? violations of ethical management rules are dealt
with following related regulations.
(2) Does the Company set up an investigation standard (2) The Company’s Ethical Management
processing procedure for answering reported matters? V Regulations concretely rules the investigation
Does it adopt following measures and related standard processing procedure for answering
confidential mechanism after investigation is reported matters and confidential mechanism.
finished? With a reporting line and mail box for reported
cases, the Company’s auditing personnel will
perform related investigation matters while
protecting the reporting person’s rights upon
receiving reports or when discovery is made
when performing regular audits.
(3) Does the Company adopt measures to protect the V (3) The Company protects the reporting person’s
reporting person from inappropriate dealings out of rights and from inappropriate dealings out of
reporting? reporting for reported cases.
4. Strengthen information disclosure The Company already discloses Ethical Corporate None
(1) Does the Company disclose Ethical Corporate V Management Best Practice Principles and promotion
Management Best Practice Principles and promotion performance at its website and MOPS.
performance at its website and MOPS?
5. If the Company has own Ethical Corporate Management Best Practice Principles following Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed Companies, specify the discrepancy between operations and set principles:
The Company already set up Ethical Corporate Management Best Practice Principles following Ethical Corporate Management Best
Practice Principles for TWSE/GTSM Listed Companies while continues to promote and educate to strengthen realization and
execution of corporate management-level employees.
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~34~

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Operational Status Discrepancy
and reason
between
corporate
governance
operational
status and
Evaluation Item
Y N Excerpt Corporate
Governance
Best Practice
Principles for
TWSE/TPEx
Listed
Companies
6. Other important information that helps to understand the operational status of corporate ethical management (such as educating
business counterparts about the Company’s will for ethical management, policy and inviting them to participate in educational
trainings, review and amend corporate ethical management principles)
(1) The Company’s CSR Code of Conduct already asks a company to follow applicable laws, regulations and corresponding industry
rules as the basis of ethical management.
(2) The Company has anti-insider trading management operations and interest conflict avoidance guidelines to rule insiders and
employees should meet ethical management principles when performing duties.
----- End of picture text -----

  • 3.3.8 If the Company has corporate governance code of conduct and related regulations, it should disclose the search method:

The Company has a website to disclose related information at

  • http://www.tripod-tech.com under the directory of investor relations/corporate governance

  • 3.3.9 The Company should disclose other important information for more understanding of corporate governance operational status: The Company has a website to disclose related information at

http://www.tripod-tech.com under the directory of investor relations/corporate governance.

~35~

3.3.10 Internal control system execution status:

A. Statement of Internal Control

Tripod Technology Corporation

Statement of Internal Control

February 25[th] , 2021

  • The Company states the following for its internal control of 2020 according to self-evaluation results:

  • The Company understands that establishing, implementing and maintaining internal control system are the duties of the Company ’ s board of directors and managers and the Company already established the system. The purpose is to provide reasonable assurance of the accomplishments of goals including the effect and efficiency of operations (including profits, performance and protecting asset safety), reliable, timely, transparent reports and compliance with related regulations.

  • The internal control system has its natural limitations. No matter how complete the design, effective internal control system also can only offer reasonable assurance for accomplishment for abovementioned three goals; also, with the changes of environment and condition, internal control system effectiveness may change accordingly. Nevertheless, the Company ’ s internal control system features self-monitoring mechanism. Should errors be identified, the Company will immediately launch corrections.

  • The Company determines whether design and execution of internal control system are effective by items of the effectiveness of internal control system according to the rules of “ Regulations Governing Establishment of Internal Control Systems by Public Companies ” (The Regulations). The determining items of the internal control system of the Regulations are the procedure of management control, dividing the system into five factors: 1. Control environment, 2. Risk evaluation, 3. Control operation, 4. Information and communication and 5. Monitoring operation. Each factor includes several items. The aforementioned items are explained in the rules of The Regulations.

  • The Company already adopts the above internal control system determining items to evaluate internal control system design and execution effectiveness.

  • Based on the previous evaluation results, the Company regards the internal control system of December 31[st] , 2020 (including monitoring and management of subsidiaries) including the accomplishments of goals and reports of the effect and efficiency of operations are reliable, timely, transparent and internal control system design and execution compliant with related regulation are effective and can reasonably ensure that the above goals can be reached.

  • The Statement will become the major content of the Company ’ s annual report and prospectus while is made public. The aforementioned public content, if bearing any falsehood or hiding any illegal matters, will carry legal responsibilities ruled by provisions under Article 20, 32, 171 and 174 of Securities and Exchange Act.

  • The Statement was passed by the board of directors meeting in February 25[th] , 2021, with 10 attending directors all agreeing the content of the Statement.

Tripod Technology Corporation

Chairperson: Jing-Chun Wang

President: Jing-Chun Wang

~36~

  • B. FSC requests the Company to appoint CPA to perform internal control system exceptional auditing report: N/A.

  • 3.3.11 If the Company and internal personnel are punished legally, or the Company punishes internal personnel for violating internal control system rules for latest year and until publication date of annual report, and the punishment results may have major impact on shareholders’ rights or securities prices, such punishment content, major flaws and improvement status: None.

  • 3.3.12 Major resolutions of shareholders’ meeting and board meeting for latest year and until publication date of annual report:

May6th,2021 May6th,2021
Name of
Meeting		 Date of
Meeting		 Important Proposal
Resolution and
Execution
Shareholders’
Meeting		 June 17th,
2020		 1. Proposal for 2019 review reports
2. Proposal for 2019 earning distribution
1. Approved
2. Distribute cash
dividend of
NT$7.25 per share
to be issued in
August 7th,2020
Board Meeting March 25,
2020		 1. Employee and director compensation allotment
status
2. 2019 business and annual reports
3. 2020 business plan
4. Shareholders’meeting date, location and reason
for 2020
5. Company and affiliate loan status
6. Company’s derivatives trading status
7. Plan to apply to bank for short-term credit limit
in 2020
8. Propose to be agreed 2019 Statement of Internal
Control
9. Proposal for management change
10. Proposal to amend Rules of Procedures for Board
of Directors Meetings
11. Proposal to amend Compensation Committee
Charter
1. Attending
directors agreed
and approved
2. Attending
directors agreed
and approved
3. Attending
directors agreed
and approved
4. Attending
directors agreed
and approved
5. Attending
directors agreed
and approved
6. Attending
directors agreed
and approved
7. Attending
directors agreed
and approved
8. Attending
directors agreed
and approved
9. Attending
directors agreed
and approved
10. Attending
directors agreed
and approved
11. Attending
directors agreed
and approved
Board Meeting May 7th,
2020		 1. Proposal for 2019 earning distribution
2. Company and affiliate loan status
3. Company’s derivatives trading status
4. Plan to applyto bank for short-term credit limit		 1. Attending
directors agreed
and approved
2. Attending
directors agreed
and approved
3. Attending
directors agreed
and approved
4. Attending

~37~

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

Name of Date of Resolution and
Important Proposal
Meeting Meeting Execution
in 2020 directors agreed
and approved
5. Evaluate independence of CPA to strengthen 5. Attending
corporate governance directors agreed
and approved
6. Company ’ s 2019 employee and director 6. Director of interest
compensation issuance relationship
avoided voting,
the rest attending
directors agreed
and approved
Board Meeting August 10 [th] , 1. Company and affiliate loan status 1. Attending
2020 directors agreed
and approved
2. Company ’ s derivatives trading status 2. Attending
directors agreed
and approved
3. Plan to apply to bank for short-term credit limit 3. Attending
in 2020 directors agreed
and approved
4. Proposal to donate to Tripod Technology 4. Director of interest
Corporation relationship
avoided voting,
the rest attending
directors agreed
and approved
5. Amend Company’s Regulations Governing 5. Attending
Internal Control Systems and Internal Audit directors agreed
and approved
6. Amend Company’s Regulations Governing 6. Attending
Financial Reporting Procedure directors agreed
and approved
7. Compile Company’s Regulations for Assessing 7. Attending
Board of Directors and Functional Committees directors agreed
and approved
Board Meeting November 1. Company and affiliate loan status 1. Attending
9 [th] , 2020 directors agreed
and approved
2. Company’s derivatives trading status 2. Attending
directors agreed
and approved
3. Plan to apply to bank for short-term credit limit 3. Attending
in 2020 directors agreed
and approved
4. Amend Company’s Regulations Governing Seal 4. Attending
Usage directors agreed
and approved
5. Obtain assets-Proposal to ratify investment in 5. Attending
nanotechnology business directors agreed
and approved
6. Attending
6. Proposal of 2021 annual audit plan directors agreed
and approved
Board Meeting February 1. Employee and director compensation allotment 1. Attending
25 [th] , 2021 status directors agreed
and approved
2. Proposal of 2020 business and financial reports 2. Attending
directors agreed
and approved
3. 2021 business plan 3. Attending
directors agreed
and approved
4. Shareholders ’ meeting date, location and 4. Attending
----- End of picture text -----

~38~

Name of
Meeting		 Date of
Meeting
Important Proposal
Resolution and
Execution		 Date of
Meeting
Important Proposal
Resolution and
Execution		 Date of
Meeting
Important Proposal
Resolution and
Execution
reason for 2021
5. Company and affiliate loan status
6. Company’s derivatives trading status
7. Plan to apply to bank for short-term credit limit
in 2021
8. Provide 2020 Statement of Internal Control for
board directors to agree
9. Plan to change CPA starting from 1Q, 2021,
evaluate independence of the new CPA
according to corporate governance rules
10. Obtain asset-Proposal to invest in
communication technology business
11. Proposal of change of managers
12. Proposal to amend Articles of Association
13. Proposal to amend Rules of Procedures of
Shareholders' Meetings
14. Proposal to amend Rules of Procedures for Board
of Directors Meetings
15. Proposal to amend Audit Committee Charter
16. Proposal to amend Compensation Committee
Charter
17. Proposal to amend Codes of Ethical Conduct
18. Amend Regulations Governing Internal Control
Systems and Internal Audit
directors agreed
and approved
5. Attending
directors agreed
and approved
6. Attending
directors agreed
and approved
7. Attending
directors agreed
and approved
8. Attending
directors agreed
and approved
9. Attending
directors agreed
and approved
10. Attending
directors agreed
and approved
11. Attending
directors agreed
and approved
12. Attending
directors agreed
and approved
13. Attending
directors agreed
and approved
14. Attending
directors agreed
and approved
15. Attending
directors agreed
and approved
16. Attending
directors agreed
and approved
17. Attending
directors agreed
and approved
18. Attending
directors agreed
and approved
Board Meeting May 6th, 2021 1. Proposal of 2020 earning distribution
2. Company and affiliate loan status
3. Company’s derivatives trading status
4. Plan to apply to bank for short-term credit limit
in 2021
5. Proposal of change of managers
6. Proposal to amend Articles of Association
7. Proposal to review nominated directors
(includingindependent directors)		 1. Attending
directors agreed
and approved
2. Attending
directors agreed
and approved
3. Attending
directors agreed
and approved
4. Attending
directors agreed
and approved
5. Attending
directors agreed
and approved
6. Attending
directors agreed
and approved
7. Attending
directors agreed

~39~

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Name of Date of Resolution and
Important Proposal
Meeting Meeting Execution
----- End of picture text -----

Date of
Meeting		 Important Proposal Resolution and
Execution
8. Proposal to dismiss restriction of non-compete
for new directors
9. Employee and director compensation issuance
operations		 and approved
8. Attending
directors agreed
and approved
9. Director of interest
relationship
avoided voting,
the rest attending
directors agreed
and approved

  • 3.3.13 Major content for director or supervisor having different opinions from major proposals passed by board meetings while having record or written statement for latest year and until publication date of annual report: None.

  • 3.3.14 Summary for resignation and dismissal status for chairperson, president, accounting, financial, internal auditing, corporate governance and R&D officers for latest year and until publication date of annual report: None.

3.4 Information of Audit Fee

Audit Fee Class Interval Table

Information of Audit Fee
Audit Fee Class Interval Table		 Information of Audit Fee
Audit Fee Class Interval Table		 Information of Audit Fee
Audit Fee Class Interval Table
Unit: NT$ Thousands
Non Audit Fee
Total
Fee Item
Amount Class Interval
Audit Fee		 Non Audit Fee Total
1 < NT$2,000,000
2 NT$2,000,000(including)-4,000,000
3 NT$4,000,000(including)-6,000,000
4 NT$6,000,000(including)-8,000,000
5 NT$8,000,000(including)-10,000,000
6 > NT$10,000,000

3.4.1 Percentage of non-audit fee versus audit fee exceeds one fourth for CPA, CPA’s accounting firm and affiliates:

Unit: NT$ Thousands

Accounting
Firm Name
CPA Name		 Audit
Fee		 Non-Audit Fee
CPA Audit
Period
Company
Registration
HR
Other
Sum		 Non-Audit Fee
CPA Audit
Period
Company
Registration
HR
Other
Sum		 Non-Audit Fee
CPA Audit
Period
Company
Registration
HR
Other
Sum		 Non-Audit Fee
CPA Audit
Period
Company
Registration
HR
Other
Sum		 Non-Audit Fee
CPA Audit
Period
Company
Registration
HR
Other
Sum		 Note
System
Design		 Company
Registration		 HR
Deloitte Chung-Chen
g Chen,
Chao-Mei
Chen		 6,440 - - - 530 530 January
1st-December
31st, 2020
Others were
mainly tax
service fee

  • 3.4.2 Change accounting firm while new audit fee amount is less than before, specify amount and reason: N/A.

  • 3.4.3 For audit fee reduced more than 10%, specify reduced amount, percentage and reason: N/A

~40~

3.5 Information of CPA Replacement:

  • 3.5.1 Previous CPA: N/A.

  • 3.5.2 New CPA: N/A

  • 3.5.3 Previous CPA’s replied letter for Clause 1, 2-3 of Section 5, Article 10 of the Code: N/A.

  • 3.6 Chairperson, President, Financial or Accounting Manager as Employee of CPA’S Firm or Affiliates for Recent Year: None.

~41~

3.7 Share Transfer and Change of Stock Right Pledge Status of Director, Supervisor and Manager of Over 10% of Shares of Latest Year and Until Publication Date of Annual Report:

  • 3.7.1 Share right change status for director, supervisor, manager and shareholder with over 10% of shares

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2020 2021: Until April 30 [th]
Title Name Sum of Share Increase Sum of Share Pledge Sum of Share Increase Sum of Share Pledge
(Decrease) Increase (Decrease) (Decrease) Increase (Decrease)
Chairperson and President Jing-Chun Wang 0 0 0 0
Director and Vice
Chairperson Jing-Xiu Hu 0 0 0 0
Director Chao-Kuei Hsu 0 0 1,500,000 0
Yun An Investment Ltd. 0 0 0 0
Director Legal Person Representative: 0 0 0 0
Chew-Wun Wu
Yun Jie Investment Ltd. 0 0 0 0
Director Legal Person
Representative:-Zheng-Ding 0 0 0 0
Wang
Qin Shan International
Investment Ltd. 0 0 0 0
Director
Legal Person Representative: 0 0 0 0
Mao-Tong Tsai
Chao Sheng Investment Co., 0 0 0 0
Ltd.
Director
Legal Person 0 0 0 0
Representative-Mei-Lan Chang
IndependentDirector Hong-Cheng Wu 0 0 0 0
IndependentDirector Yong-Cheng Wu 0 0 0 0
IndependentDirector Xing-Zheng Dai 0 0 0 0
Vice President Le-Ren Huang 0 0 0 0
Vice President Lien-Fa Tsai 0 0 0 0
Vice President Kung-Xuan Ho 0 0 0 0
Vice President Zheng-Ming Lu (2,000) 0 0 0
Vice President Feng-Xing Chen (Note 1) 0 0 0 0
Vice President Wen-Tang Chen 0 0 0 0
Vice President Chao-Xian Fang
Vice President Yi-Xu Hung (Note 2)
Vice President Chih-Chung Chen
Vice President Da-Lun Wang
Vice President Xiu-Li Lin
Vice President Fu-Gen Ou
Internal Auditing
Officer Li-Yang Liao
Accounting
Officer Cheng-I Lee
Corporate
Governance Wu-Rong Yao
Officer
----- End of picture text -----

Note 1: Dismissed (resigned) from manager position in February, 2021; statistics collected until dismissal date for 2021. Note 2: New manager since June, 2020; statistics collected since June, 2020.

3.7.2 Information of share right transfer or share right pledge trading counterparty as related party: None.

~42~

3.8 Top Ten Shareholder as Related Party or Spouse, Relative within Second Degree Relationship Information:

Relationship information for top ten shareholders:

==> picture [751 x 388] intentionally omitted <==

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

Name and Relationship for Top Ten Shareholder
’ with Spouse, Relatives Within Second Degree as
Share of Self Shares of Spouse, Minor Children Share in Others Name
Related Party under Statement of Financial
Name Accounting Standard 6 Note
Share Shareholding Percentage Share Shareholding Percentage Share Shareholding Percentage Name Relationship
An Ho International
An Ho 41,741,167 7.94% None None None None None None
Investment Ltd.
International
Investment Ltd. Representative: 110 0.00% None None None None None None
Qing-Gai Yang
Yuanta/P-shares Taiwan Dividend Plus
18,287,847 3.48% None None None None None None None
ETF
Zhong-An Investment
Zhong-An Co., Ltd. 17,582,566 3.35% None None None None None None
Investment Co.,
Ltd. Representative: Li-Jing 0 0.00% None None None None None None
Chao
JPMorgan Chase Bank N.A. Taipei Branch
13,445,000 2.56% None None None None None None
in custody for Capital Income Builder
Nan Shan Life
Nan Shan Life 12,506,000 2.38% None None None None None None
Insurance Co., Ltd.
Insurance Co.,
Ltd. Representative: Tang 0 0.00% None None None None None None
Chen
Chunghwa Post Co.,
11,893,000 2.26% None None None None None None
Chunghwa Post Ltd.
Co., Ltd. Representative:
0 0.00% None None None None None None
Hong-Mo Wu
Banking Department, Standard Chartered
11,500,000 2.19% None None None None None None
in custody for LGT Bank (Singapore) Ltd.
JPMorgan Chase Bank N.A. Taipei Branch
in custody for Universities Superannuation 11,463,300 2.18% None None None None None None
Scheme Limited
Chao-Kuei Hsu 10,482,056 1.99% None None None None None None
JPMorgan Chase Bank N.A. Taipei Branch
in custody for Columbia Variable Portfolio - 9,469,000 1.80% None None None None None None
Overseas Core Fund
----- End of picture text -----

~43~

3.9 Shares of Company, Director, Supervisor, Manager and Company’s Directly or Indirectly Controlled Business on Invested Business and Calculation of Consolidated Shareholding Percentage

December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%		 December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%		 December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%		 December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%		 December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%		 December 31st,2020 Unit: Share;%
Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
128,396,297
100.00%
None
None
128,396,297
100.00%
3,000,000
80.00%
None
None
3,000,000
80.00%
10,000,000
100.00%
None
None
10,000,000
100.00%
Investment Business Company Investment
Investment of Director, Supervisor, Manager
and Directlyor IndirectlyControlled Business
Consolidated Investment
Share
Shareholding
Parentage
Share
Shareholding
Parentage
Share
Shareholding Parentage
J & J Holding Co., Ltd. 128,396,297
100.00%
None
None
128,396,297
100.00%
Trison Technology
Corporation		 3,000,000
80.00%
None
None
3,000,000
80.00%
Tripod Nano Technology
Corporation		 10,000,000 100.00% None None 10,000,000 100.00%

~44~

4. Fund Raising Status

4.1 Capital and Share

4.1.1 Capital Source

A. Capital Formation Process

Unit: NT$/Share

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

Approved Capital Paid-in Capital Note
Share
Month Year Contributed by
Issue Price No. of Share Amount No. of Share Amount Capital Source Asset Other Than Others
Cash
Capital increase of
Approved by Business Letter No.
August, 1992 10 4,536,000 45,360,000 4,536,000 45,360,000 NT$45.36 million by None
cash 117211 in August 13 [th] , 1992
Capital increase of
Approved by Business Letter No.
August, 1992 10 7,000,000 70,000,000 7,000,000 70,000,000 NT$24.64 million by None
116082 in August 30 [th] , 1993
cash
November, 12 8,000,000 80,000,000 8,000,000 80,000,000 [Capital increase of ] None Approved by Business Letter No.
1995 NT$10 million by cash 438866 in November 3 [rd] , 1995
April, 1996 10 10,000,000 100,000,000 10,000,000 100,000,000 [Capital increase of ] None Approved by Business Letter No.
NT$20 million by cash 005280 in April 25 [th] , 1996
Capital increase of
June, 1997 10 70,000,000 700,000,000 55,000,000 550,000,000 NT$450 million by None Approved by Business Letter No.
48596 in June 20 [th] , 1997
cash
Capital increase of
September, Approved by Business Letter No.
10 70,000,000 700,000,000 70,000,000 700,000,000 NT$150 million by None
1997 72455 in September 19 [th] , 1997
cash
Capital increase of
Approved by Business Letter No.
June, 1998 25 120,000,000 1,200,000,000 85,000,000 850,000,000 NT$150 million by None
51357 in June 11 [th] , 1998
cash
Capital increase of
June 1998 - 120,000,000 1,200,000,000 90,000,000 900,000,000 NT$50 million by None Approved by Business Letter No.
51357 in June 11 [th] , 1998
earning
Capital increase of
September, NT$50 million by Approved by Business Letter No.
- 120,000,000 1,200,000,000 95,000,000 950,000,000 None
2000 earning and employee 74751 in June 11 [th] , 1998
bonus
Approved by Business Letter No.
Capital increase of
112230 in March 16 [th] , 2001
March, 2001 27 120,000,000 1,200,000,000 113,500,000 1,135,000,000 NT$185 million by None
Approved by Business Letter No.
cash
116315 in March 27 [th] , 2001
Capital increase of
NT$247 million by
Approved by Business Letter No.
July, 2001 - 250,000,000 2,500,000,000 138,200,000 1,382,000,000 earning, employee None
143698 in July 6 [th] , 2001
bonus and additional
paid-in capital
Capital increase of
NT$297.58 million by
Approved by Business Letter No.
August, 2002 - 250,000,000 2,500,000,000 167,958,000 1,679,580,000 earning, employee None
091014540 in August 15 [th] , 2002
bonus and additional
paid-in capital
Capital increase of
NT$137.748 million by
July, 2003 - 250,000,000 2,500,000,000 181,735,480 1,817,354,800 earning, employee None Approved by Business Letter No.
0920129484 in July 2 [nd] , 2003
bonus and additional
paid-in capital
Capital increase of
NT$298.97745 million
Approved by Business Letter No.
2003 24.03 250,000,000 2,500,000,000 211,633,225 2,116,332,250 by ECB None
178702 in January 25 [th] , 2002
(Euro-Convertible
Bond)
----- End of picture text -----

~45~

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

Approved Capital Paid-in Capital Note
Share
Month Year Contributed by
Issue Price No. of Share Amount No. of Share Amount Capital Source Asset Other Than Others
Cash
Capital increase of
NT$371.16983 million
June, 2004 - 390,000,000 3,900,000,000 248,750,208 2,487,502,080 by earning, employee None Approved by Business Letter No.
0930126255 in June 14 [th] , 2004
bonus and additional
paid-in capital
Capital increase of
2004 37.5 390,000,000 3,900,000,000 250,337,707 2,503,377,070 NT$158.7499 million None Approved by Business Letter No.
0920146251 in November 4 [th] , 2003
by ECB
Capital increase of
Approved by Business Letter No.
2005 31.21 390,000,000 3,900,000,000 252,790,140 2,527,901,400 NT$245.2433 million None
0920146251 in November 4 [th] , 2003
by ECB
Capital increase of
NT$551.4676 million
June, 2005 - 390,000,000 3,900,000,000 307,936,900 3,079,369,000 by earning, employee None Approved by Business Letter No.
0940122456 in June 3 [rd] , 2005
bonus and additional
paid-in capital
Capital increase of
2005 25.2 390,000,000 3,900,000,000 323,460,985 3,234,609,850 NT$155.24085 million None Approved by Business Letter No.
0940122456 in November 4 [th] , 2003
by ECB
Capital increase of
NT$417.03858 million Approved by Business Letter No.
August, 2006 500,000,000 5,000,000,000 365,164,843 3,651,648,430 None
by earning and 0950126199 in June 26 [th] , 2006
employee bonus
Capital increase of
November, 22.04 500,000,000 5,000,000,000 372,110,441 3,721,104,410 NT$69.45598 million None Approved by Business Letter No.
2006 0920146251 in November 4 [th] , 2003
by ECB
Capital increase of
NT$575.58978 million Approved by Business Letter No.
August, 2007 600,000,000 6,000,000,000 429,700,221 4,297,002,210 None
by earning and 0960032563 in June 27 [th] , 2007
employee bonus
Capital increase of
NT$329.85601 million
Approved by Business Letter No.
August, 2008 600,000,000 6,000,000,000 462,685,822 4,626,858,220 by earning, employee None
0970031963 in June 26 [th] , 2008
bonus additional
paid-in capital
Capital increase of
NT$347.328801
million by earning, Approved by Business Letter No.
July, 2009 600,000,000 6,000,000,000 473,518,827 4,735,188,270 None
employee bonus and 0980031905 in June 26 [th] , 2009
additional paid-in
capital
Capital increase of
NT$520,870,710 by
Approved by Business Letter No.
June, 2011 600,000,000 6,000,000,000 525,605,898 5,256,058,980 earning and None
1000030306 in June 30 [th] , 2011
additional paid-in
capital
----- End of picture text -----

B. Issued share type

Unit: Share

Unit: Share Unit: Share Unit: Share Unit: Share
Approved Capital
Share Type
Note
Outstanding Share
(Note)
Unissued Share
Total
Common
Share		 525,605,898 74,394,102 600,000,000 Include retained subscription
right certificate limit of 20,000,000
shares

Note: Public shares.

C. Overall reporting system information: N/A.

~46~

4.1.2 Shareholder Structure

April 18th, 2021 April 18th, 2021
Shareholder
Structure
Number
Government
Institution		 Financial
Institution		 Other Legal
Person		 Person Foreign
Institution and
Person
China
Investment
Total
Person 4 56 99 13,015 434 0 11,975
Share 15,920,000 69,641,955 110,771,048 82,848,342 246,424,553 0 525,605,898
Shareholding
Percentage		 3.03% 13.25% 21.07% 15.76% 46.88% 0.00% 100.00%

4.1.3 Share Right Distribution Status:

A. Common Share:

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

April 18 [th] , 2021
Shareholding Class ShareholdersNumber of Number of Shares [Shareholding] Percentage %
1-999 3,016 493,869 0.09
1,000-5,000 8,708 15,228,349 2.90
5,001-10,000 779 6,211,538 1.18
10,001-15,000 226 2,861,126 0.54
15,001-20,000 151 2,796,201 0.53
20,001-30000 127 3,252,572 0.62
30,001-50,000 129 5,154,256 0.98
50,001-100,000 125 9,333,467 1.78
100,001-200,000 95 13,689,157 2.61
200,001-400,000 76 20,682,289 3.94
400,001-600,000 32 15,160,748 2.88
60,001-800,000 25 17,222,609 3.28
800,001-1,000,000 19 16,930,564 3.22
>1,000,001 100 396,589,153 75.45
Total 13,608 525,605,898 100.00
----- End of picture text -----

  • B. Special Share: The Company doesn’t issue special shares.

4.1.4 Major shareholder list: Name, share number and percentage for shareholders

  • with over 5% or share percentage ranks top ten

==> picture [413 x 233] intentionally omitted <==

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

April 18 [th] , 2021
Major Shareholder Name/Share Number of Share Shareholding
Percentage
An Ho International Investment Ltd. 41,741,167 7.94%
Yuanta/P-shares Taiwan Dividend Plus ETF 18,287,847 3.48%
Zhong An Investment Ltd. 17,582,566 3.35%
JPMorgan Chase Bank N.A. Taipei Branch in custody
13,445,000 2.56%
for Capital Income Builder
Nan Shan Life Insurance Co., Ltd. 12,506,000 2.38%
Chunghwa Post Co., Ltd. 11,893,000 2.26%
Banking Department, Standard Chartered in custody
11,500,000 2.19%
for LGT Bank (Singapore) Ltd.
JPMorgan Chase Bank N.A. Taipei Branch in custody
11,463,300 2.18%
for Universities Superannuation Scheme Limited
Chao-Gui Hsu 10,482,056 1.99%
JPMorgan Chase Bank N.A. Taipei Branch in custody
9,469,000 1.80%
for Columbia Variable Portfolio - Overseas Core Fund
----- End of picture text -----

~47~

4.1.5 Price, net value, earning, dividend per share and related information of latest two years

Unit: NT$/Share

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

Year
Item 2019 2020 Until April 30 [th] , 2021
Before Adjustment 141.50 141.00 147.00
Maximum
After Adjustment 141.50 (Note 1) (Note 1)
Price per Share Minimum Before Adjustment 78.30 78.00 118.00
After Adjustment 78.30 (Note 1) (Note 1)
Average 105.70 115.50 135.55
Net Before Distribution 64.97 68.61 -
Value perShare After Distribution 54.27 (Note 2) -
Weighted Before Adjustment 525,606 525,606 -
Average No.
of Share
Earnings (Thousand After Adjustment 525,606 525,606 -
per Share Shares)
Current Period 11.49 11.65 -
Retrospective Adjustment 11.49 11.65 -
Cash Dividend 7.25 (Note 2) -
Dividend Stock Dividend from - (Note 2) -
Retained Earnings
per Share Stock Grant Stock Dividend from
Additional Paid-in - (Note 2) -
Capital
Price-to-Earning (P/E) Ratio (Note 3) 9.20 9.91 -
AnalysisROI Price-to-Dividend Ratio (Note 4) 14.58 (Note 2) -
Dividend Yield (Note 5) 6.86 (Note 2) -
----- End of picture text -----

Note 1: Adjust after resolution of 2021 shareholders’ meeting Note 2: Finalize after resolution of shareholders’ meeting Note: P/E Ratio=Annual average closing price per share/adjusted earnings per share (EPS) Note 4: Price-to-Dividend Ratio=Annual average closing price per share/cash dividend per share Note 5: Dividend Yield=Cash dividend per share/annual average closing price per share

4.1.6 Company’s dividend policy and execution status

A. Dividend policy

Dealing is made according to the provisions under Article 32-1, Articles of Association of the Company, the content is as follows:

If there are earnings left after annual review report, the Company will pay for the tax according to the law whereas 10% will be put allotted after offsetting accumulated losses as legal surplus reserve. However, for the legal surplus reserve meeting the Company ’ s paid-in capital, no such provision is necessary, with the rest to be legally made into provision or reversed as special surplus reserve; for any amount left, it will be combined with undistributed earnings to be offered by the chairperson in the undistributed proposal for shareholders ’ meeting to resolve in issuing bonus dividend.

The Company is on the rise during the corporate lifecycle. For future expansion, funding need and influences on the Company and shareholders of tax system, the Company’s dividend policy is mainly based on the funding need of its future capital budget planning and the board meeting will compile earning distribution proposal for shareholders’ meeting to resolve and distribute. However, the distribution of dividend should be put forward as cash dividend of no less than 10% among the dividend distributed for the year.

~48~

B. Dividend execution status

  • For 2020, the Company has decided to distribute shareholders’ dividend as cash dividend of NT$7.35 per share after resolution of the board meeting; the Company’s dividend policy considers the funding need of its future capital budget planning and bases on its dividend distribution on no less than 40% of annual earning. The five-year shareholders’ dividend distribution status is as follows:
Unit: NT$
Item Year 2016 2017 2018 2019 2020
Cash Dividend Per Share (A) 4.25 5.25 5.90 7.25 7.35
EPS (B) 6.80 8.31 9.40 11.49 11.65
Percentage (A/B) 63% 63% 63% 63% 63%
  • 4.1.7 Influence of the proposal for stock grant of this round of shareholders’ meeting on the Company’s business performance and EPS

The proposed stock grant status of this round of shareholders’ meeting is as specified in the 4.1.6 Company’s dividend policy and execution status. For the influence of the proposal for stock grant of this round of shareholders’ meeting on the Company’s business performance and EPS, refer to the rules of “Regulations Governing the Publication of Financial Forecasts of Public Companies”, the Company is not required to disclose its 2021 financial forecast information, therefore, this item is not applicable.

~49~

  • 4.1.8 Employee and director compensation

  • A. Percentage or range of employee and director compensation recorded in Articles of Associations

According to the rules of the Company’s Articles of Association regarding employee and director compensation:

If there are annual profits for the Company, it should allot 6-18% as employee compensation for board of directors to decide to issue as shares or cash while the target of issuance should be subordinating employees meeting certain criteria; the Company may ask the board meeting to resolve to allot no more than 1% as director compensation of the above profit amount. The proposal to distribute employee and director compensation should be reported to the shareholders’ meeting. When the Company still has accumulated losses, it should retain in advance an amount to offset the losses while allotting employee and director compensation according to the above percentages.

  • B. The basis for estimating allotment of employee and director compensation, calculating basis for the employee compensation shares when distribute by shares and dealing with the case by accounting rules if any discrepancy happens between the estimated and actual issuance amount,

  • (1) Employee and director compensation amount estimation basis: According to the percentage range ruled by Articles of Association, use the 8.97% and 0.53% of pre-tax profits of this year deducting distributing employee and director/supervisor compensation.

  • (2) Calculating basis of number of shares of employee compensation in share distribution: There was no share distribution for employee compensation this term.

  • (3) Accounting dealing for discrepancy between actual and estimated amount: The amount is the same.

  • C. Status of distributed compensation passed by the board

  • (1) Amount of employee and director compensation distributed by cash or shares: The Company received resolution from the board meeting in February 25[th] , 2021 to distribute employee compensation of NT$714,175,356 and director compensation of NT$42,000,000 by cash.

  • (2) Percentage of employee compensation amount distributed by shares versus the sum of net profits in unconsolidated or individual financial reports of this term and employee compensation amount: There was no employee compensation by shares this term.

~50~

  • D. Actual distribution status of employee, director and supervisor compensation of previous year (including distributed number of shares, amount and prices), any difference between the amount recognized for employee, director and supervisor compensation, specify the different amount, reason and dealing status:

Unit: NT$

Unit: NT
Distributed Item Actual Allotted
Amount (A)
Recognize
Expense
Annual
Estimated
Amount		 Amount of
Difference (A-B)		 Reason of Difference and
Dealing Status
Director
Compensation		 42,000,000 42,000,000 0 None
Employee
Compensation		 711,921,502 711,921,502 0

  • 4.1.9 Buy-back of Company’s shares: None.

  • 4.2Issue and Proceeding Status of Corporate Bond, Preferred Stock, Global Depositary Receipt, Employee Stock Option Certificate, Restricted Stock Awards and Merger & Acquisition (Merger, Acquisition and Spinoff)

  • 4.2.1 Corporate bond proceeding status: None.

  • 4.2.2 Preferred stock proceeding status: None.

  • 4.2.3 Issue GDR proceeding status: None.

  • 4.2.4 Employee stock option certificate proceeding status: None.

  • 4.2.5 Restricted stock awards: None.

  • 4.2.6 Merger and acquisition (including merger, acquisition and spinoff) proceeding status: None.

  • 4.3Execution Status of Fund Application Plan: N/A.

~51~

5. Business Overview

5.1 Business Content

  • 5.1.1 Business content and percentage:
Business Content Business Percentage
PCB 98.92%
Other 1.08%
Total 100.00%

  • 5.1.2 Current product item and planned new product:

  • A. Current product item: Mainly double-sided, multi-layer PCBs

  • B. Planned new product:

The planned new product, technology and manufacturing procedure items are as follows:

  • (1) Product development:

  • a. Enterprise SSD PCB-mSATA/slim SATA/SAS2/SAS3/PCIe3/PCIe4

  • b. High current/Voltage PCB-DC-DC convertor: IMS (Insulation Metal Substrate)

  • c. Semi-flex car board and consumer product

  • d. Embedded PCB- Enterprise DDR5 Thin film resistor automotive: thin film resistor/ferrite

  • e. Up to 32Layers PCQR2 certificate

  • f. HLC+HDI server product

  • g. Cavity Board with and without pattern product

  • h. High speed network-optoelectronic transceiver: 100G/200G/400G

  • i. Automotive & industrial radar-SRR (Short Range Radar)/MRR (Mid Range radar)/LRR (Long Range Radar)

  • (2) Manufacturing procedure yield improvement and stability:

  • a. Product antenna control ability improvement

  • b. High-end rigid/flex board yield improvement-4 Layers flexible board/4+N4 HDI

  • c. Backdrilling manufacuring procedure ability improvement

  • (3) New manufacturing procedure technology and equipment material introduction

  • a. Pulse reverse plating equipment introduction

  • b. Quick scan high-precision measuring equipment introduction

  • c. Hybrid material (low loss material + normal FR4) evaluation and introduction

  • d. White substrate material and ink evaluation and introduction

  • e. Selective etching process introduction

  • f. HSP (Heat Sink Paste) material and printing technology introduction

  • g. Cu coin press fit & lamination technology introduction

  • (4) Industry and academia co-development

  • a. Eagle stream platform material evaluation cooperation and introduction

  • b. Smart factory item industry, academia and research cooperation

~52~

c. High-frequency, high-speed laboratory establishment and technical cooperation development

  • 5.1.3 Industry overview:

  • A. Industry status and development:

According to IMF (International Monetary Fund) (2021/01) prediction, although the new wave of epidemic and mutated virus appearance cast doubts on economic prospect and the epidemic continues to affect various economic body ’ s economic and trading activities, vaccine has been approved to hit the market and vaccination is ongoing, people have become more hopeful in an improving status of epidemic. The 2021 global economic growth is expected to reach 5.5%. The upward adjustment of the projection reflects the expectation for vaccine to boost economy and influence of the support of policies of major economic bodies. Amid factors of uncertain risks of economic development, recovering demand for end-user electronic products, products upgrade and inventory replenishment affect the supply/demand developments of electronic components. Prismark predicts in 2021 that 2021 global PCB growth to reach 8.6%.

Industry applications are affected by consumer demand. In 2020, due to restriction of personal consumption and mobile activity, demand of consumer electronic, mobile phone and automobile were impacted. However, this boosted demand for enterprise cloud, data center, Internet communications, etc. Moreover, government infrastructure policy and medical electronic demand were increasing; in 2021, post-epidemic life will bring about product demand whereas the sales volume of car market and 5G phones will rebound while demand for cloud Internet and portable products will persist. These will all bring the overall PCB industry production value to grow.

  • B. Connection between industry upstream, midstream and downstream:

The Company mainly produces PCB, which carries electronic component and connect to electronic circuit. Therefore, it is the basic material of electronic products. The PCB upstream is its material manufacturing industry; with major materials include substrate, copper foil, glass cloth, dry film, ink and chemical components.

Downstream industries cover information, communication, consumer electronic, semiconductor, industrial control equipment, car, medical equipment, aerospace industry and defense industry. The upstream materials are nearly all developed and made by domestic companies, ensuring a steady supply of material source. The downstream industries feature a variety of choices. Therefore, the industry upstream and downstream development is sound.

==> picture [457 x 65] intentionally omitted <==

~53~

==> picture [129 x 10] intentionally omitted <==

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

PCB Vertical Structure
----- End of picture text -----

==> picture [417 x 428] intentionally omitted <==

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

FCFT Taiwan Glass QingGuang Chang Chun Chang Chun
TCF NITTOBO Oak Union Nanya Eternal Chemical SiWei/
Chang Chun Nanya NPL XingYa QingGuang IEK
Nanya ISOLA
Copper Foil Glass Cloth Fiber Resin Epoxy Resin Phenolic Polyimide
Resin
Dry Film Eternal Materials, Grecoe
Nanya Ink DaFeng, Qualipoly,
ISOLA Utek, Eternal Materials,
ACHEM HuanHua… Chang
Chun
NPL
EMC Film Nanya, IOSLA, EMC, NPL… Eternal
Chemi
TaiZheng
cals
Hong-Tai
Plated through Hole MacDiarmid, Forte QingG
Chemical Chemical… uang
Tatung
Etchants TongZhou, YouYuan…
Electroplate Chemical MacDiarmid, QiSheng…
Multi-Layer Board Double Sided Board Multi-Layer Board Double Sided Board Flexible
Circuit Board
Consumer Industrial Precision Aerospace Defense
PC & Communicati Electronic Product Equipment Industry Industry
Peripherals on Product Product
Source: IEK
Phenolic Substrate
Epoxy Substrate
----- End of picture text -----

~54~

C. Product development trend

Common PCB classification method is by application field, mainly covering PC system, communication equipment, consumer electronic, car-use electronic product, industry-use/medical-use electronic and military-use/aerospace-use electronic; however, with developments of new-generation network communication, cloud and artificial intelligence (AI), the future growth driving force of PCB industry has changed accordingly. With convenience of product usage, new material, new technology and new equipment continuously compelling industry growth, the key trends of industry developments include:

  • (1) DRAM officially migrates to EUV generation, NAND Flash 150 stacking technology upgrades again.

  • (2) Global operators will speed up 5G base station establishment; Japan and South Korea have followed 6G with attention.

  • (3) IoT will upgrade to AIoT and march toward autonomation with AI enabling devices.

  • (4) AR glasses will combine with smartphones to bring about terminal cross-field integration.

  • (5) Keeping close tabs on self-driving, DMS demand will surge

  • (6) Folding device concept will upgrade again, product size will become larger while application domains will become wider.

  • (7) White OLED technology will meet strong opponents; Mini LED and QLED will join the war.

  • (8) First AM Micro LED TV will hit the market in 2021.

  • (9) Advanced packaging technology will migrate to HPC and AiP fields with full force.

  • (10) Chip makers will speed up expanding strategies and are ready for the AIoT market opportunities. 5G commercial service range is enlarging whereas more hardware end-user products will hit the market.

In the future when service applications rapidly converge, smart applications will see diverse developments while it will no longer suffice to stimulate consumption with hardware upgrade. The development trends will shift to the software/hardware connection of application service experience to enrich the value of smart hardware in crossover application; therefore, the industry does not merely pursue after product hardware specification upgrade, but will migrate toward innovative technology and application integration developments; with the industrial developments, the development focuses of PCB will march toward the following trends:

  • (1) With the developments of 5G and 6G trends, the high-frequency antenna and high-frequency, high-speed transmission wire design improve the requirements of PCB SI, PI, EMI and RF characteristics, including considerations such as Dk, Df and PIM adoption, antenna pattern, signal circuit forming ability, characteristic impedance value control, signal loss and S-Parameter.

~55~

  • (2) The functions of smart electronic mobile devices are stronger while integrative degree is higher. Appearance design wise, a design balance will be reached between light, slim, small and material level. The design of high-density interconnectivity will move toward an ultimate perfection. In addition, higher requirements will be made for the registration accuracy, smoothness of the board as well as the coplanarity of pad whereas stricter requirements will be made for material characteristics.

  • (3) New energy electric vehicle brings demand for heat dissipation and high-current carrying capacity, bringing about application and development of thick copper, heat-dissipation material and related heat-dissipation technologies. Under the requirements of product functions and operational efficiency, the heat-dissipation and PI are among the major concerns.

  • (4) High-density and multi-layer boards for high-end HPC, server, switch router, data center, storage and back panel will feature more and more layers with stricter requirements for board thickness and registration accuracy. Also, with considerations of high speed and SI, the use of board materials, backdrill requirements, HDI design matching, circuit forming ability of thick copper and reliance will all be the challenges.

  • (5) High-frequency and high-speed related controlling ability for materials and antenna pattern among base station, radar and various sensing products will be the challenges and the key to victory or defeat. As a millimeter miss is as good as a thousand miles.

  • (6) With the products of 5G and 6G, minitype, multi-function and high-density integration will be the development trends of electronic products. This will push PCB requirements to migrate toward multi-layer high-density, high 、

  • integration, encapsulation and refinement. Therefore, HDI HLC, flexible, rigid-flex, semi-flex, cavity, thermal, embedded, RF and IC substrate (BGA, CSP) will be the major trends of PCB developments.

D. Competition status

  • The global economic trading development continues to be affected by the epidemic. Although control of epidemic is expected to push the economy while there is the influence of major economic body policy support, uncertainties still exist in customer, product, application technology even overall industry environment and development outlook. Meanwhile, PCB requires stricter ability in high-frequency and anti-interference to meet the future demand of high-precision specifications of electronic products. With the stricter requirement of application environment, PCB precision and reliability requirements are higher and specifications of production equipment and prices dramatically rise. This will directly influence the costs of each company ’ s business capital and production technology. The industry competition pressure will continue to increase.

~56~

Since PCB companies still offer highly-similar products while continuous expansion of capacity brings about price competition; there is nearly no profit left. In addition, the changes in environmental regulations, industry and tax policy as well as labor conditions also create impacts on PCB makers’ business; the epidemic creates economic dramatic fluctuations while the business environment continues to remain difficult. Besides speeding up upgrading technology and production/sales deployment, the control over production and business capital is more essential. Currently, economic business cycle remains uncertain. One can only continue to strengthen corporate operational efficiency while developing niche products and market to improve competitiveness.

5.1.4 Technology and R&D status

  • A. R&D expenses for latest two years
.1.4 Technology and R&D status
A. R&D expenses for latest two years		 .1.4 Technology and R&D status
A. R&D expenses for latest two years		 .1.4 Technology and R&D status
A. R&D expenses for latest two years
Unit: NT$ Thousands
Year
Amount
~~Percentage of Annual~~
Revenues
Until March 31st,2021
49,667
0.33%
2020
224,494
0.40%
2019 205,446 0.38%

  • B. R&D results of latest two years

  • (1) Product developments:

  • a. 。 DDR5/DDR6 developments

  • b. 12/14 Layers HDI (ELIC) design 0.35/0.3mm BGA PCB development

  • c. Advanced rigid/flex board development-enterprise SSD, TFT, automotive

  • d. High thermal dissipation PCB development-automotive heavy copper

  • e. High current / voltage PCB-DC-DC convertor

  • f. High-end server/switch/base station/small cell PCB development

  • g. LiDAR product development

  • (2) Manufacturing procedure yield improvement and stability:

  • a. Product insertion loss control/measuring ability improvement

  • b. Fine Line L/S 40/40um volume production introduction and 30/30um development

  • c. Laser alignment ability improvement (+/- 37.5um --> +/-25um)

  • d. Molding dimension manufacturing procedure ability improvement (+/-0.075um--> +/-0.05 mm)

  • (3) New manufacturing procedure technology and equipment material introduction:

  • a. MSAP manufacturing procedure and equipment evaluation

  • b. High aspect ratio solution evaluation and introduction

  • c. High voltage allowance material evaluation and introduction

  • (4) Industry/Academia co-development

  • a. Purley/Whitley material evaluation cooperation and introduction

  • b. Self-driving technical development cooperation between industry and academia

  • c. Embedded Ferrite-related technical cooperation

~57~

  • 5.1.5 Long, short-term business development plans

  • A. Short-term plans

    • (1) Marketing strategies

    • a. Continue to explore major international players, diverse emerging application products and niche product market orders while establishing a stable cooperation relationship

    • b. Employ management information system to ensure the product production is flexible and delivery date is precise to improve overall benefits

    • c. Establish technical ability position, develop high added-value products, enlarge market differentiation against peers, increase competitiveness

    • d. Realize customer service system, improve service quality and customer reliance

    • (2) Production policies

    • a. Effective and rapid order distribution to reach the optimal model of business benefits

    • b. Employ automation machinery equipment, continue to improve manufacuring flow and introduce the latest production technology to improve product quality, lower costs and improve yields

    • c. Continue to invest in new equipment and develop new technology, cultivate self-improving and maintenance abilities while strengthening production flexibility and stable quality, keep delivery date precise

    • d. Strictly control material and product inventory risks, demand for production flow and production discipline to ensure the product quality is fair, lower production wastes

    • (3) Product development directions

    • a. Increase high-end product percentage and product application field while improving new-generation product production technology and capacity

    • b. Respond to the market trend of product diversity, flexibly adjust product mix

    • c. Develop high-reliability manufacturing procedure, meet demand of product develop trend of high frequency and high speed.

    • d. Control development rend of cycle economy product application

    • (4) Business scale and financial cooperation

    • a. Amid variable economic cycle, adopt the most active countermeasure in broadening sources of income and reducing expenses

    • b. Carefully evaluate and execute factory expansion and establishment plans

    • c. Ensure a healthy business organization, strenghthen professional educational training, realize talent cultivation, effectively control personnel turnover to respond to the business model of multiple factories and business bodies

~58~

  • d. Amid the external severe economic environment, offer timely countermeasures and solutions

  • B. Long-term plans

  • (1) Marketing strategies

  • a. Control market demand and industry development trend, all-around expansion of product market, inrcease product supply, reach capacity risk sharing, assist customers to transfer risks, create differentiation value

  • b. Continue to develop new product markets, enlarge customer source and sales value, further offer customers total solution service strategy

  • (2) Production policies

  • a. With market demand and economic cycle, timely control production structure to optimize capacity and efficiency of producton equipment

  • b. Continue to build precision automation machinery equipment, migrate to development of high added-value products

  • c. Effectively improve production scale, lower product costs, strenghthen corporate competitiveness

  • (3) Product development directions

  • a. Continue to develop products of high-level performance and technology to respond to variable product development trend

  • b. Cooperate with customer product development and strenghthen manufaturing procedure and R&D ability to respond to the trend of shortened product lifecycle and enlarged differentiation degree

  • (4) Business scale and financial cooperation

  • a. Uphold the concept of corporate sustainable operations, cater to industry development, business development and customer demand, actively and effectively plan the capacity scale

  • b. Ensure the Company continues to grow, effectively plan the Company’s financial structure to grow in steady operations

5.2 Market, Production and Sales Overview

  • 5.2.1 Market analysis

  • A. Major product and market:

The Company’s major product is double-sided, multi-layer PCBs to domestic and Asia, the Americas and Europe.

  • B. Product market share

  • According to Prismark, the global PCB market value in 2020 was US$65.219 billion whereas the Company’s consolidated revenues were US$1.891 billion, about 2.9% of the global market.

  • C. Future market supply/demand status and growth:

Global PCB Market Scale

Unit: US$M
Y2025(F)
86,325
5.8%
(‘20~’25CAAGR)
Item Y2019 Y2020(E) Y2021(F) Y2025(F)
Global 61,311 65,219 70,857 86,325
Y/Y - 6.4% 8.6% 5.8%
(‘20~’25CAAGR)

Source: Prismark (2021)

~59~

According to Prismark projection, with the easing of epidemic and recovering growth of overall electronic industry, the market is boosted by product demand for 5G mobile phone/base station, PC, packaging substrate, high-speed server, car-use electronic and portable wearable device. In 2021, the global PCB market is expected to grow 8.6%, with CAGR (Compound annual growth rate) of 5.8% in 2020-2025. The global market size of PCB industry will reach US$86.325 billion.

  • D. Expected sales volume and source of calculation:

  • The Company mainly produces PCBs. With the current production location capacity, the expected sales capacity target for this year is around 120,000,000 square feet.

  • E. Competitive niche and advantages disadvantages of development prospect: (1) Competitive niche

  • a. Actively develop high added-value product market and continue to improve production manufacturing technology to strenghthen product differentiation against peers

  • b. Focus on core business manufacturing, develop a diverse end-user product market, diversify business risks

  • c. Organizational structure is sound, management team’s business concept is honest, carefully plan for corporate development, avoid blindly expanding capacity, helping Company to maintain steady growth amid fierce competition

  • d. Maintain product quality, precise delivery date and reasonable prices, partners are mostly famous companies domestically and abroad, obtain downstream customer approval, continue to establish business relationship with world-class customers

  • e. Base on years of production experience, apply computer information system to integrate management demand of complicated and variable industry to reach precise delivery date, improved quality and efficient cost control

  • f. Stable financial and profit status to keep investing in capacity expansion and high-end innovative technology

  • (2) Advantages, disadvantages of development vision and countermeasures

  • a. Advantages

    • (a) PCB market scale is still large wile new product demand still brings certain degree of growth

    • (b) Strong international marketing ability helps to obtain a steady order for major international companies

    • (c) Continue to strenghthen manufacturing technology and R&D ability, control the growth demand of niche product market; this helps to expand global market share

    • (d) Diverse product production & sales business model helps to deal with uncertainties of global economic developments

    • (e) Computerized management, disciplinary production, fair control of operation and costs

~60~

  • (f) Healthy finance, relative low customer business risks

  • b. Disadvantages and countermeasures

  • (a) Shortage of manpower supply, rising labor costs Countermeasures:

    1. Increase degree of automation for equipment, improve manufacturing procedure, reduce manpower reliance

    2. Actively promote educational training, improve manpower production quality

  • (b) Belong to industry with pollution possibilities, higher environmentalprotection costs

Countermeasures:

  1. Full-time personnel management, focus on equipment maintenance

  2. Promote all-factory manufacturing procedure waste reduction and recylcing operation, use pollution free or low pollution material

  3. Sign contract to appoint certified professional environmental-protection companies to deal with pollutive wastes

  4. Realize executing green product regulations and circular economy application

  5. (c) Industry group production, peer competition is fierce

  6. Countermeasures:

  7. Strenghthen operational management, reduce costs, improve yields, lower production costs

  8. Strenghthen high-end production technology, increase sales of high added-value products

  9. Control market trends, explore diverse international-standard products, obtain long-term stable orders

  10. Effective order distribution to reach the most cost-efficient business model

  11. Stay up to date of competitors’ development status to timely adjust business strategies

  12. (d) Global political and economic status is variable, financial status changes influence business and profitability

  13. Countermeasures:

  14. Immediate control over exchange rate trend information

  15. Use hedge financial commodities to lower unfavorable risks of exchange rate fluctuations

  16. Track customers’ business status, strenghthen cerdit control

  17. (e) Economic and trading policy as well as trade conflict impact business efficiency

Countermeasures:

  1. Continue to strenghthen production base intergration and expansion to maintain business flexibility

  2. Increase degree of automation for equipment, reduce manpower reliance, speed up technical upgrade

  3. Strenghthen business control to improve competitiveness and maintain stable growth

~61~

5.2.2 Major product application and production/manufacturing procedure

A. Major product application

Product Major Application
PCB Information products such as PC and peripherals, communication products,
industryequipment,consumer electronicproducts,car-use boards,etc.
Others PCB manufacturing and semiconductor testing production equipment, POS,
etc.

B. Production manufacturing process-Major PCB manufacturing flow

==> picture [449 x 179] intentionally omitted <==

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

Sheet
Inner Layer Positive Film Stripping AOI
Issuance Cutting Circuit Etching Film/Ink Inspection
Manufacturing
Black Oxide
PTH Routing/Grinding Drilling Pin Lam Treatment
Chemical
Scrubbing/Degumming Copper Copper Outer Circuit Pattern
Plating Plating
Plating Manufacturing
鍍錫鉛
Surface Printing of Stripping/Etching/Tin Tin-Lead
Processing Legend Solder Lead Stripping Plating
Finished
Vacuum Inbound
Molding Conductance/Impedance Good
Test Inspection Packaging Inventory
----- End of picture text -----

5.2.3 Major material supply status:

The Company’s major materials for each product include chemical materials such as substrate, resin, copper foil, gold salt, dry film, phosphorus copper ball and ink. They are not special materials, so can be easily obtained via perfect competition market. The purchase source decision is mainly based on quality and costs. Since the Company has fair credit in the industry and has favorable relationship with major suppliers; therefore, major material supply and prices can be dynamically stable in the future.

5.2.4 Major suppliers and customers of latest two years

A. Major suppliers of latest two years

Unit: NT$ Thousands

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

2019 2020 Until 1Q, 2021
Percentage Percentage of Percentage of
of Annual Relationshi Annual Net Relations Annual Net
Item Name Amount Net p with Name Amount Purchase hip with Name Amount Purchase Relationship with Issuer
Purchase Issuer Amount Issuer Amount
Amount
1 A 3,238,807 12.88 None A 3,347,282 12.64 None A 949,711 12.52 None
2 B 2,728,947 10.85 None B 2,700,977 10.20 None None
Others 19,180,312 76.27 None Others 20,438,273 77.16 None Others 6,638,419 87.48 None
Net Purchase Net Purchase Net Purchase
Amount 25,148,066 100.00 Amount 26,486,532 100.00 Amount 7,588,130 100.00
----- End of picture text -----

The Company mainly purchases materials such as substrate, resin, copper foil and gold salt.

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B. Major customers of latest two years

Unit: NT$ Thousands

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

2019 2020 Until 1Q, 2021
Percent Relatio Percent Relatio Percentage Relatio
age of nship age of nship of Annual nship
Annual with Annual with Net with
Item Net Issuer Net Issuer Purchase Issuer
Name Amount Name Amount Name Amount
Purcha Purcha Amount
se se
Amoun Amoun
t t
1 Others 54,450,944 100.00 None Others 55,547,908 100.00 None Others 15,101,053 100.00 None
Net Sales Net Sales Net Sales
Amount 54,450,944 100.00 Amount [55,547,908] 100.00 Amount [15,101,053] 100.00
----- End of picture text -----

The Company mainly sells PCBs. In 2019 and 2018, there were no single customers attributing to over 10% of net sales amount.

5.2.5 Production and sales volume/value of latest two years

  • A. Production volume/value of latest two years

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

Unit: Square feet, unit/NT$ Thousands
Year 2019 2020
Major Product Production Production Production Production
Capacity Volume Value Capacity Volume Value
PCB 108,500,000 89,614,346 44,577,557 108,500,000 90,765,744 46,580,506
Others (Note) - 910,178 266,789 - 1,056,017 271,393
----- End of picture text -----

Note: Others are mainly PCB manufacturing and semiconductor equipment testing-use production equipment product; capacity cannot be expressed since this is out of request of customer order to manufacture.

B. Sales volume/value of latest two years

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

Unit: Square feet, unit/NT$ Thousands
Year 2019 2020
M ajor Product Domestic Abroad Domestic Abroad
Volume Value Volume Value Volume Value Volume Value
PCB 5,480,807 3,184,362 87,293,330 50,698,050 7,589,763 4,584,039 83,390,769 50,366,072
Others (Note) 1,352,915 217,056 875,566 351,476 808,247 142,212 1,946,200 455,585
----- End of picture text -----

Note: Others are mainly PCB manufacturing and semiconductor equipment testing-use production equipment product.

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5.3 Employee

5.3.1 Number of employees, average seniority, average age and education distribution

percentages for latest two years and until the publication date of annual report

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Year April 30 [th] , 2021 2020 2019
Operation Management 279 279 278
Personnel
Operation Supporting 494 447 436
Number of Personnel
Employees Operation Manufacturing 18,492 17,642 16,919
Procedure Personnel
Operation Technical Personnel 1,362 1,236 1,037
Total 20,627 19,604 18,670
Average Age 36.25 36.25 34.75
Average Seniority 6.05 6.05 5.84
Doctor 0.00 0.00 0.00
Education Master 1.44 1.41 1.84
Distribution Bachelor 36.22 35.25 35.51
(%) High School 32.03 34.09 34.18
Under High School 30.31 29.25 28.47
----- End of picture text -----

5.4 Environmental Protection Expense Information

  • 5.4.1 Losses caused by polluting the environment:

  • 5.4.2 There were no losses and punishments due to polluting the environment in 2020 for the Company.

  • 5.4.3 Potential expenses due to current and future countermeasures against polluting the environment:

The Company have always realized environmental protection is “ social duty and corporate conscience ” , from the start of factory establishment, we have invested significant manpower, capital expansion and maintain pollution-preventing equipment while assigning environmental engineering technicians and professional environmental engineering companies to launch overall planning and construction for various pollution-prevention construction; not only have we reached the standard set by the government, but actively seek more efficient measures to improve environmental pollution to upgrade factory work environment for employees to work in a safe and clean environment.

~64~

To increase energy utilization benefits while accelerating replacement of old production equipment with new ones, continue to replace with new-type variable frequency air compressor and integrate air-conditioning electricity of factories while realizing energy management and execute energy-preservation projects to reduce unnecessary wastes, effectively lowering overall electricity consumption; also, for more complete pollution-prevention measures, we are equipped with new automation equipment and continue to expand various related pollution-prevention equipment and necessary prevention measures while realizing various environmental-protection regulations and effectively control environmental standard; we continue to proceed with energy-preservation and emission reduction projects while following ISO 14064-1 and kicking off greenhouse gas check whereas receiving verification from international certification institutions while introducing ISO 50001 to launch energy management and energy-preservation engineering improvement as well as equipment efficiency improvement; we have effectively reduced electricity expenses and controlled carbon dioxide emission volume; via overall systematical improvement and cooperation, we not only effectively reach waste reduction goals and lower processing costs, but fully utilize resources.

With current environmental protection regulations become stricter, the Company also actively cooperates with government polices to improve ourselves to ensure various pollutants meet national standards.

5.5 Labor Relations

  • 5.5.1 Various employee welfare measures, advanced studies, educational trainings, retirement system and implementation status:

  • A. Various employee welfare measures

  • Demand of each employee is our most treasured reflection, creating a healthy and happy work environment is also our continued stance. Therefore, we listen with our heart, striving to provide software/hardware equipment and activities for employee ’ s body, clothing, housing, transportation, education and entertainment.

Provide a complete welfare system for employees to more heartily work, including:

  • Establish welfare committee, actively promoting various employee welfare plans including employee travel subsidy, festive and birthday cash gift, wedding cash gift, condolences, subsidies, etc.; set up library for various magazine and publication borrowing; set up restaurant and sign contract with appointed stores, supply healthy and balanced food/beverage and high-quality and inexpensive goods; irregularly hold various employee fun fair

  • Legally provide various labor and health insurance to protect the work safety of employees

~65~

  • Sign contracts with nearby certified child care centers for nursery measures

  • Implement occupational safety and hygiene office, medical clinic and nursery room, launch occupational safety and fire trainings, health check, health promotion activities, etc., introduce ISO 14001 environmental management system and OHSAS 18001 occupational safety and hygiene management system management, striving to maintain a healthy and safe working environment.

  • Offer employee compensation system for sharing corporate profits with employees.

B. Advanced studies and educational trainings

Talent cultivation is the key to corporate sustainable operations. Therefore, the Company continuously advances employees ’ professional knowledge and skills by promoting educational training concept and long-term development needs, cultivating their problem-shooting abilities, strengthening corporate business constitution.

The Company systematically launches a series of technical, professional and management training courses for employees of various job competencies. In addition, we actively cultivate internal coaches to pass on professional skills and experiences, integrate external good-quality training courses, encourage employees to continue study, improve employees ’ quality and competitiveness with various methods.

  • C. Retirement system

Compile “ Employee Retirement Management Enforcement Rules ” according to Labor Standards Act, establish Labor Retirement Reserve Fund Audit Committee; according to the “ Labor Pension Act ” , the Company already pays for 2% of total salary amount each month as retirement reserve fund to be deposited into the account of the Committee under the Central Trust of China for the Committee to manage.

“ “ In July, 1[st] , 2005, the new Labor Pension Act kicked off. Employees using the new version and those joined the Company after the implementation of the new version adopt the defined contribution plan; the Company allots 6% of salary into personal labor pension account each month; employees can choose to allot an additional 0-6% of salary to the account; at legal retirement age, they can apply to withdraw monthly or one-time pension from related institutions.

  • 5.5.2 Agreement between labor and management and status of maintenance measures of various employee rights:

~66~

Regularly convene meetings with departments, listen to employees’ opinions and suggestions on the Company; pass all-factory mail, bulletin board, uploading to BPM (Business Process Management) system and departmental meeting methods to deliver internal policies immediately to employees; strictly prohibit sexual harassment, set up appealing mailbox and line for employees, prevent unlawful attack and sexual harassment matters from happening with full force; set up Unlawful Attack Harm Appealing Audit Committee in compliance with the law; after receiving appealing cases, the HR unit is responsible to investigate, convene related gender-equality evaluation meeting to discuss and resolve and hand over to Reward and Disciplinary Committee to make dealings according to working rules or related regulations.

  • 5.5.3 Losses due to labor disputes, current and future potential amount and countermeasures for latest year and until the publication date of annual report:

Strictly prohibit any discrimination, unequal treatment and sexual harassment behaviors in work environment; compile related management regulations and appealing channel; launch open and double-direction communication method for any policy propaganda and employee opinions so that labor relations can be harmonious; offer diverse appealing channels, assisting employees to solve any discontent, dissent and damaged rights due to work; set up appealing channels such as employee mailbox, audit office and labor/management meeting, investigate and evidence collection regarding the appealing content; if any appeals prove to be valid, related units and responsible personnel immediately cooperate and deal with the case to create a fair, just, open and reasonable occupational environment. Until now, labor relations are harmonious, there have been no labor dispute matters causing losses.

5.6 Major Agreement: None.

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6. Financial Overview

6.1Five-Year Condensed Balance Sheet, Income Statement, CPA Name and Audit Opinion

6.1.1 Condensed consolidated balance sheet and income statement information

  • A. Condensed consolidated balance sheet

Unit: NT$ Thousands

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

Five-Year Financial Information Financial
Year Information
2016 2017 2018 2019 2020 until March 31 [st] ,
Item 2021
Current Assets 49,197,743 52,179,992 51,834,382 52,662,225 52,817,975 51,949,605
Property, Plant and
11,012,269 14,774,414 16,414,443 15,501,041 17,537,643 20,671,927
Equipment
Intangible Assets 31,228 25,453 43,441 52,996 39,075 69,032
Other Assets 3,059,317 3,214,152 3,228,239 3,388,770 4,854,537 6,741,107
Total Assets 63,300,557 70,194,011 71,520,505 71,605,032 75,249,230 79,431,671
Before
31,784,144 37,437,808 36,763,697 34,671,917 36,031,188 38,324,714
Current Distribution
Liabilities After
34,017,969 40,197,239 39,864,772 38,482,559 Note Note
Distribution
Non-Current Liabilities 1,950,711 2,050,840 2,328,162 2,784,297 3,157,613 3,178,530
Before
33,734,855 39,488,648 39,091,859 37,456,214 39,188,801 41,503,244
Total Distribution
Liabilities After
35,968,680 42,248,079 42,192,934 41,266,856 Note Note
Distribution
Equity Attributable to Owners
29,565,702 30,697,948 32,421,104 34,141,210 36,052,947 37,920,910
of Parent
Capital 5,256,059 5,256,059 5,256,059 5,256,059 5,256,059 5,256,059
Additional Paid-in
325,651 333,778 333,778 333,778 333,778 333,778
Capital
Before
24,690,108 26,811,261 29,023,045 31,954,144 34,274,302 35,682,554
Retained Distribution
Earnings After
22,456,283 24,051,830 25,921,970 28,143,502 Note Note
Distribution
Other Equity Interests (706,116) (1,703,150) (2,191,778) (3,402,771) (3,811,192) (3,351,481)
Treasure Shares 0 0 0 0 0 0
Non-Controlling Interest 0 7,415 7,542 7,608 7,482 (3,351,481)
Total Equity Before
29,565,702 30,705,363 32,428,646 34,148,818 36,060,429 37,928,427
Interests Distribution
After
27,331,877 27,945,932 29,327,571 30,338,176 Note Note
Distribution
----- End of picture text -----

Note: 2020 earning distribution proposal was offered by board directors but not yet resolved and passed by shareholders’ meeting.

~68~

B. Condensed consolidated income statement

Unit: NT$ Thousands

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

Year Five-Year Financial Information Financial
Information until
Item 2016 2017 2018 2019 2020 March 31 [st] , 2021
Operating Revenues 43,512,927 45,818,601 52,105,683 54,450,944 55,547,908 15,101,053
Operating Gross
7,817,533 8,354,941 9,764,495 11,265,984 11,150,422 2,824,966
Profits
Operating Profits
3,689,029 4,797,883 5,421,885 6,770,584 6,574,342 1,549,616
(Losses)
Non-Operating
Revenues and 787,748 744,865 1,103,388 1,027,707 1,182,448 223,665
Expenses
Pre-Tax Profits 4,476,777 5,542,748 6,525,273 7,798,291 7,756,790 1,773,281
Profits from
Continuing Operation 3,573,040 4,365,599 4,938,525 6,037,320 6,125,394 1,408,287
before Income Tax
Profits (Losses) from
Discontinued 0 0 0 0 0 0
Operation
Net Profits (Losses) 3,573,040 4,365,599 4,938,525 6,037,320 6,125,394 1,408,287
Other Comprehensive
Profits (Losses) (Net (2,066,962) (1,007,737) (458,614) (1,216,073) (403,141) 459,711
Profits)
Total Comprehensive
1,506,078 3,357,862 4,479,911 4,821,247 5,722,253 1,867,998
Profits (Losses)
Net Profits Attributable
3,573,040 4,365,681 4,938,398 6,037,254 6,125,520 1,408,252
to Owners of Parent
Net Profits
Attributable to
0 (82) 127 66 (126) 35
Non-Controlling
Equity
Comprehensive Profits
(Losses) Attributable to 1,506,078 3,357,944 4,479,784 4,821,181 5,722,379 1,867,963
Owners of Parent
Comprehensive Profits
(Losses) Attributable
0 (82) 127 66 (126) 35
to Non-Controlling
Equity
Current
6.80 8.31 9.40 11.49 11.65 2.68
Period
EPS (NT$)
Retroactive
6.80 8.31 9.40 11.49 11.65 2.68
Adjustment
----- End of picture text -----

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6.1.2 Condensed unconsolidated balance sheet and income statement information A. Condensed unconsolidated balance sheet

Unit: NT$ Thousands

==> picture [451 x 354] intentionally omitted <==

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

Five-Year Financial Information Financial
Y e a r Information
Item 2016 2017 2018 2019 2020 until March
31 [st] , 2021
Current Assets 1,248,685 7,673,654 5,208,454 6,639,653 6,800,284 N/A
Property, Plant and
573,857 764,641 1,094,102 1,098,801 1,241,144 N/A
Equipment
Intangible Assets 28,477 19,190 12,647 18,569 11,357 N/A
Other Assets 38,995,875 39,223,275 41,321,548 43,823,907 47,039,813 N/A
Total Assets 40,846,894 47,680,760 47,636,751 51,580,930 55,092,598 N/A
Before
Current Distribution 9,375,812 14,991,396 12,956,037 14,777,950 16,038,154 N/A
Liabilities After
Distribution 11,609,637 17,750,827 16,057,112 18,588,592 Note N/A
Non-Current Liabilities 1,905,380 1,991,416 2,259,610 2,661,770 3,001,497 N/A
Before
Total Distribution 11,281,192 16,982,812 15,215,647 17,439,720 19,039,651 N/A
Liabilities After
Distribution 13,515,017 19,742,243 18,316,722 21,250,362 Note N/A
Current Liabilities 29,565,702 30,697,948 32,421,104 34,141,210 36,052,947 N/A
Capital 5,256,059 5,256,059 5,256,059 5,256,059 5,256,059 N/A
Additional Paid-in
325,651 333,778 333,778 333,778 333,778 N/A
Capital
Before
Retained Distribution 24,690,108 26,811,261 29,023,045 31,954,144 34,274,302 N/A
Earning After Distribution 22,456,283 24,051,830 25,921,970 28,143,502 Note N/A
Other Equity (706,116) (1,703,150) (2,191,778) (3,402,771) (3,811,192) N/A
Treasure Shares 0 0 0 0 0 N/A
Before
Total Distribution 29,565,702 30,697,948 32,421,104 34,141,210 36,052,947 N/A
Equity After Distribution 27,331,877 27,938,517 29,320,029 30,330,568 Note N/A
----- End of picture text -----

Note: 2020 earning distribution proposal was offered by board directors but not yet resolved and passed by shareholders’ meeting.

B. Condensed unconsolidated income statement

Unit: NT$ Thousands

==> picture [451 x 282] intentionally omitted <==

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

Year Five-Year Financial Information Financial
Information until
Item 2016 2017 2018 2019 2020 March 31 [st] , 2021
Operating Revenues 2,825,215 4,729,172 9,098,357 9,461,697 10,799,548 N/A
Operating Gross
Profits (400,467) 685,402 4,242,906 4,927,496 4,910,680 N/A
Operating Profits
(1,801,923) (299,871) 3,150,628 3,433,995 3,865,902 N/A
(Losses)
Non-Operating
Revenues and 5,911,253 5,458,095 2,874,969 3,750,137 3,340,027
N/A
Expenses
Pre-Tax Profits 4,109,330 5,158,224 6,025,597 7,184,132 7,205,929 N/A
Profits from
Continuing Operation 3,573,040 4,365,681 4,938,398 6,037,254 6,125,520 N/A
before Income Tax
Profits (Losses) from
Discontinued 0 0 0 0 0 N/A
Operation
Net Profits (Losses)
3,573,040 4,365,681 4,938,398 6,037,254 6,125,520
N/A
Other Comprehensive
Profits (Losses) (Net (2,066,962) (1,007,737) (458,614) (1,216,073) (403,141) N/A
Profits)
Total Comprehensive
1,506,078 3,357,944 4,479,784 4,821,181 5,722,379 N/A
Profits (Losses)
Before 6.80 8.31 9.40 11.49 11.65 N/A
Distribution
EPS (NT$)
After 6.80 8.31 9.40 11.49 11.65 N/A
Distribution
----- End of picture text -----

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6.1.3 Five-year CPA names and audit opinions

Year
CPA Name		 Year
CPA Name		 Audit Opinion
2016
Chung-Cheng Chen,
Keng-Hsi Chang		 No reserved opinion and other item paragraph

2017
Chung-Cheng Chen,
Keng-Hsi Chang		 No reserved opinion and other item paragraph

2018
Chung-ChengChen,		 No reserved opinion and other itemparagraph
2019
Chung-Cheng Chen,
Chao-Mei Chen		 No reserved opinion and other item paragraph
2020 Chung-Cheng Chen,
Chao-Mei Chen		 No reserved opinion and other item paragraph

~71~

6.2 Five-Year Financial Analysis

6.2.1 Consolidated financial analysis

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

Year Five-Year Financial Analysis Until
Analysis Item 2016 2017 2018 2019 2020 March 312021 (Note [st] , )
Financial Debt to Total Asset Ratio 53.29 56.25 54.65 52.30 52.07 52.25
Structure (%) Long-term Capital to PPE 268.47 207.82 197.56 220.30 205.61 183.47
Current Ratio (%) 154.78 139.37 140.99 151.88 146.58 135.55
Solvency Quick Ratio (%) 137.96 119.90 116.81 129.30 121.75 110.48
Interest Coverage Ratio 30.27 26.16 20.66 32.04 74.36 84.47
Receivables Turnover Ratio (Times) 3.47 3.33 3.45 3.36 3.23 3.43
Average Days to Collect Receivables 105 109 105 108 113 106
Inventory Turnover (Times) 7.08 6.60 5.80 5.39 5.38 5.39
Operating Payables Turnover (Times) 6.95 6.70 7.09 6.90 6.87 7.34
Ability
Average Days to Sell Inventory 51 55 62 67 67 67
Average Days to Sell PPE)(Times) 3.47 3.55 3.34 3.41 3.36 3.16
Total Asset Turnover (No. of Times) 0.69 0.68 0.73 0.76 0.75 0.78
ROA (%) 5.88 6.81 7.34 8.71 8.45 7.37
ROE (%) 12.04 14.48 15.64 18.13 17.44 15.22
Pre-Tax Profits to Capital Stock
Profitability Ratio %) 85.17 105.45 124.14 148.36 147.57 134.95
Profit Margin (%) 8.21 9.52 9.47 11.08 11.02 9.32
EPS (NT$) 6.80 8.31 9.40 11.49 11.65 2.68
Cash Flow Ratio 26.32 12.37 20.79 30.15 23.86 6.65
Cash Flows
Cash Flow Adequacy Ratio 132.19 130.74 112.18 116.34 99.23 85.32
(%)
Cash Flow Reinvestment Ratio 10.17 3.56 6.93 9.89 6.04 3.10
Degree of Degree of Operating Leverage 1.75 1.44 1.55 1.48 1.50 1.57
Leverage Degree of Financial Leverage 1.04 1.04 1.06 1.03 1.01 1.01
Difference Description:
1. Increased interest protection multiples; mainly due to reduced interest expenses
2. Reduced cash flow ratio, cash reinvestment ratio; mainly due to reduced cash flow from operating activities, cash reinvestment ratio; mainly due to reduced cash flow from operating activities cash reinvestment ratio; mainly due to reduced cash flow from operating activities; mainly due to reduced cash flow from operating activities mainly due to reduced cash flow from operating activitiesy due to reduced cash flow from operating activities due to reduced cash flow from operating activitiesperating activitieserating activitiesg activities activities
----- End of picture text -----

  1. Reduced cash flow ratio, cash reinvestment ratio; mainly due to reduced cash flow from operating activities, cash reinvestment ratio; mainly due to reduced cash flow from operating activities cash reinvestment ratio; mainly due to reduced cash flow from operating activities; mainly due to reduced cash flow from operating activities mainly due to reduced cash flow from operating activitiesy due to reduced cash flow from operating activities due to reduced cash flow from operating activitiesperating activitieserating activitiesg activities activities Note: The 1Q, 2021 consolidated financial reports were reviewed and audited by CPAs while profitability is calculated with amount of 1Q, 2021 consolidated financial reports.

6.2.2 Unconsolidated financial analysis

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

Year Five-Year Financial Analysis Until
Analysis Item 2016 2017 2018 2019 2020 March 312021 [st] ,
Financial Debt to Total Asset Ratio 27.61 35.61 31.94 33.81 34.55 N/A
Structure (%) Long-term Capital to PPE 5,152.10 4,014.68 2,963.26 3,107.13 2,904.81 N/A
Current Ratio (%) 13.31 51.18 40.20 44.92 42.40 N/A
Solvency Quick Ratio (%) 9.56 48.49 37.71 42.64 39.38 N/A
Interest Coverage Ratio 82.89 75.81 128.32 171.17 188.16 N/A
Receivables Turnover Ratio (Times) 3.47 4.33 5.93 5.07 4.79 N/A
Average Days to Collect Receivables 105 84 62 71 76 N/A
Inventory Turnover (Times) 8.88 9.68 10.12 8.81 10.57 N/A
Operating Payables Turnover (Times) 6.22 6.20 7.01 6.87 7.48 N/A
Ability
Average Days to Sell PEE 41 38 36 41 34 N/A
Average Days to Sell Inventory)(Times) 3.55 7.06 9.78 8.62 9.23 N/A
Total Asset Turnover (Times) 0.07 0.10 0.19 0.19 0.20 N/A
ROA (%) 9.15 9.99 10.44 12.23 11.54 N/A
ROE (%) 12.04 14.48 15.64 18.14 17.45 N/A
Pre-Tax Profits to Capital Stock
Profitability Ratio %) 78.18 98.13 114.64 136.68 137.09 N/A
Profit Margin (%) 126.46 92.31 54.27 63.80 56.72 N/A
EPS (NT$) 6.80 8.31 9.40 11.49 11.65 N/A
Cash Flow Ratio - 1.39 29.36 21.42 24.22 N/A
Cash Flow
Cash Flow Adequacy Ratio - 2.21 35.48 55.41 71.06 N/A
(%)
Cash Flow Reinvestment Ratio - - 2.77 0.16 0.17 N/A
Degree of Degree of Operating Leverage 0.87 0.80 1.03 1.04 1.04 N/A
Leverage Degree of Financial Leverage 0.97 0.81 1.01 1.01 1.01 N/A
Difference description:
1. Increased inventory turnover; mainly due to increased amount of operating costs were more than that of inventory balance
2. Increased cash flow adequacy ratio; mainly due to increased cash flows from operating activities
----- End of picture text -----

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6.2.3 Above-mentioned financial analysis information calculation formula is as follows:

  1. Financial structure

  2. (1) Debt to total asset ratio-total debts/total assets

  3. (2) Long-term capital to PPE=(Total equity+non-current liabilities)/PPE net amount

  4. Solvency

  5. (1) Current ratio=current assets/current liabilities

  6. (2) Quick ratio=(current assets-inventory-pre-paid expenses)/current liabilities

  7. (3) Interest Coverage Ratio=profits before income tax and interest expenses/current period interest expenses

  8. Operating ability

  9. (1) Receivables (include accounts receivables and notes receivable due to operations) turnover ratio=net revenues/average receivables (include accounts and notes receivable due to operations) balance

  10. (2) Average days to collect receivables=365/receivables turnover ratio

  11. (3) Inventory turnover=operating costs/average inventory amount

  12. (4) Payables (include accounts payables and notes payable due to operations) turnover=operating costs/average payables (include accounts payables and notes payable due to operations) balance

  13. (5) Average days to sell inventory=365/inventory turnover

  14. (6) Average days to sell PPE=Net revenues/average net PPE amount

  15. (7) Total asset turnover=net revenues/average total assets

  16. Profitability

  17. (1) ROA=[net profits (losses) + interest expenses x(1-tax rate)]/average total assets

  18. (2) ROE=net profits (losses)/ average total assets

  19. (3) Profit margin=net profits (losses)/net revenues

  20. (4) EPS=(profits (losses) attributable to owners of parent-preferred stock)/weighted average issued shares

  21. Cash flows

  22. (1) Cash flow ratio=Net cash flows from operating activities

  23. (2) Cash flow adequacy ratio=five-year net cash flows from operating activities/five year (capital expenses+inventory increase amount+cash dividend)

(3) Cash reinvestment ratio=(net cash flows from operating activities - cash dividend)/(PPE gross amount + long-term investment + other non-current assets+operating funds)

  1. Degree of leverage

(1) Degree of operating leverage=(net revenues - variable operating costs and expenses)/operating profits

  • (2) Degree of operating leverage=operating profits/operating profits-interest expenses

~73~

6.3 2020 Audited Committee Reports for Annual Financial Reports

TRIPOD TECHNOLOGY CORPORATION Audit Committee’s Review Report

The Board of Directors has submitted the Company's 2020 Business Report, Financial Statements (including consolidated financial statements), and proposal for allocation of earnings. The CPA firm of Deloitte & Touche was retained to Audit Tripod’s Financial Statements and has issued an audit report relating to the above mentioned Financial Statements. The Business Report, Financial Statements (including consolidated financial statements), and earnings allocation proposal have been reviewed by the Audit Committee and found in compliance with requirements. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

To: 2021 Annual Shareholders' Meeting

TRIPOD TECHNOLOGY CORPORATION

Chairman of Audit Committee: Hsing-Cheng Tai

May 6[th] , 2021

~74~

6.4 Latest Year Annual Financial Reports

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INDEPENDENT AUDITORS’ REPORT

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The Board of Directors and Shareholders Tripod Technology Corporation

Opinion

We have audited the accompanying consolidated financial statements of Tripod Technology Corporation (the “Company”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, 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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. We conducted our audit of the consolidated financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

~75~

Key audit matter of the Group’s consolidated financial statements for the year ended December 31, 2020 is stated as follows:

Revenue Recognition

For the year ended December 31, 2020, the consolidated operating revenue of the Group amounted to $55,547,908 thousand, which accounted for an overall operating revenue growth rate of 2%. Based on our assessment, there was a risk that the recognition of sales revenue from significant amount of sales with customers whose individual revenue growth rates exceeded the Group’s revenue growth rate and operating revenue with longer turnover days might not actually occur. Thus, the occurrence of operating revenue from customers that met the abovementioned criteria was identified as a key audit matter.

Refer to Notes 4 and 22 to the consolidated financial statements for details on accounting policies and relevant disclosures of revenue recognition.

Our key audit procedures performed in respect of the recognition of operating revenue were as follows:

  1. We understood the internal controls related to the aforementioned sales, assessed and tested the operating effectiveness of the design and implementation of these controls.

  2. We performed substantive analytical procedures testing of the aforementioned sales transactions, and further examined the external documents and the recovery of receivables to verify the occurrence of such transactions. We also verified that the settlement of trade receivables was consistent with the trade terms of major customers.

Other Matter

We have also audited the parent company only financial statements of Tripod Technology Corporation as of and for the years ended December 31, 2020 and 2019 on which we have issued an unmodified opinion.

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 IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, 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.

~76~

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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

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

  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 Group’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 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.

  5. 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.

  6. Obtain sufficient and 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.

~77~

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 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.

The engagement partners on the audits resulting in this independent auditors’ report are Chung Chen Chen and Chao Mei Chen.

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Deloitte & Touche Taipei, Taiwan Republic of China February 25, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

~78~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4, 7 and 29)
Financial assets at fair value through other comprehensive income - current (Notes 4, 8 and 29)
Financial assets at amortized cost (Notes 4, 9 and 31)
Notes receivable (Notes 4 and 10)
Trade receivables (Notes 4 and 10)
Trade receivables from related parties (Notes 4 and 30)
Other receivables (Notes 4 and 10)
Inventories (Notes 4 and 11)
Prepayments
Other current assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment (Notes 4, 5, 13 and 32)
Right-of-use assets (Notes 4 and 14)
Other intangible assets (Notes 4 and 15)
Deferred tax assets (Notes 4 and 24)
Other non-current assets (Note 16)
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 17)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 29)
Contract liabilities - current (Note 22)
Trade payables
Other payables (Notes 18 and 27)
Other payables to related parties (Note 30)
Current tax liabilities (Note 4)
Provisions - current (Notes 4 and 19)
Lease liabilities - current (Notes 4 and 14)
Other current liabilities (Note 18)
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 24)
Lease liabilities - non-current (Notes 4 and 14)
Net defined benefit liabilities - non-current (Notes 4 and 20)
Guarantee deposits (Note 18)
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital (Note 21)
Capital surplus (Note 21)
Retained earnings (Note 21)
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity (Note 21)
Total equity attributable to owners of the Company
NON-CONTROLLING INTERESTS
Total equity
TOTAL		 2020
Amount
%
$ 26,032,815
35
288,775
-
3,709
-
12,000
-
383,310
1
16,836,508
22
-
-
304,760
-
7,431,903
10
1,515,804
2

8,391

-

52,817,975
70
17,537,643
23
306,563
1
39,075
-
2,795,373
4

1,752,601

2

22,431,255
30
$ 75,249,230
100
$ 13,970,849
19
506
-
1,119,402
1
6,424,351
8
11,757,737
16
2
-
1,378,693
2
518,817
1
14,839
-

845,992

1

36,031,188
48
3,011,869
4
12,617
-
110,675
-

22,452

-

3,157,613

4

39,188,801
52

5,256,059

7

333,778

-
5,715,814
8
3,402,772
5

25,155,716
33

34,274,302
46

(3,811,192
)
(5
)
36,052,947
48

7,482

-

36,060,429
48
$ 75,249,230
100		 2019






































Amount
%
$ 27,614,136
39
100,383
-
-
-
7,000
-
312,424
-
16,352,110
23
88
-
428,854
1
6,541,797
9
1,289,353
2

16,080

-

52,662,225
74
15,501,041
22
316,888
-
52,996
-
2,569,190
3

502,692

1

18,942,807
26
$ 71,605,032
100
$ 14,410,764
20
5,547
-
787,518
1
6,492,984
9
10,605,488
15
-
-
1,087,356
1
526,600
1
12,361
-

743,299

1

34,671,917
48
2,634,839
4
18,685
-
107,455
-

23,318

-

2,784,297

4

37,456,214
52

5,256,059

7

333,778

1
5,112,088
7
2,190,702
3

24,651,354
35

31,954,144
45

(3,402,771
)
(5
)
34,141,210
48

7,608

-

34,148,818
48
$ 71,605,032
100

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

~79~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 22 and 30)
OPERATING COSTS (Notes 11 and 23)
GROSS PROFIT
OPERATING EXPENSES (Notes 10 and 23)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit loss (gain)
Total operating expenses
OTHER OPERATING INCOME AND EXPENSES
(Notes 13 and 23)
PROFIT FROM OPERATIONS
NON-OPERATING INCOME AND EXPENSES
(Notes 4 and 23)
Interest income
Other income
Other gains and losses
Finance costs
Total non-operating income and expenses
PROFIT BEFORE INCOME TAX FROM
CONTINUING OPERATIONS
INCOME TAX EXPENSE (Notes 4 and 24)
NET PROFIT FROM CONTINUING OPERATIONS		 2020
Amount
%
$ 55,547,908
100

44,397,486
80

11,150,422
20
1,950,910
4
2,352,146
4
224,494
-

48,530

-

4,576,080

8

-

-

6,574,342
12
293,489
-
455,983
1
538,707
1

(105,731
)

-

1,182,448

2
7,756,790
14

(1,631,396
)
(3
)

6,125,394
11		 2019




















Amount
%
$ 54,450,944
100

43,184,960
80

11,265,984
20
1,978,524
4
2,218,436
4
205,446
-

(9,603
)

-

4,392,803

8

(102,597
)

-

6,770,584
12
434,409
1
393,484
1
450,978
1

(251,164
)
(1
)

1,027,707

2
7,798,291
14

(1,760,971
)
(3
)

6,037,320
11
(Continued)

~80~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans (Notes 4
and 20)
Unrealized gain (loss) on investments in equity
instruments at fair value through other
comprehensive income (Notes 4 and 21)
Income tax relating to items that will not be
reclassified subsequently to profit or loss
(Notes 4 and 24)
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of the
financial statements of foreign operations
(Note 21)
Income tax relating to items that may be
reclassified subsequently to profit or loss
(Notes 21 and 24)
Other comprehensive loss for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
NET PROFIT ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the Company
Non-controlling interests
EARNINGS PER SHARE (Note 25)
From continuing operations
Basic
Diluted		 2020
Amount
%
$ (3,354)
-
8,376
-

671

-

5,693

-
(511,043)
(1)

102,209

-

(408,834
)
(1
)

(403,141
)
(1
)
$ 5,722,253
10
$ 6,125,520
11

(126
)

-
$ 6,125,394
11
$ 5,722,379
10

(126
)

-
$ 5,722,253
10
$11.65
$11.48		 2019
























Amount
%
$ (7,018)
-
535
-

1,403

-

(5,080
)

-
(1,513,742)
(3)

302,749

1

(1,210,993
)
(2
)

(1,216,073
)
(2
)
$ 4,821,247

9
$ 6,037,254
11

66

-
$ 6,037,320
11
$ 4,821,181
9

66

-
$ 4,821,247

9
$11.49
$11.34

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

(Concluded)

~81~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2019
Appropriation of 2018 earnings (Note 21)
Legal reserve
Special reserve
Cash dividends
Differences between equity purchase price and carrying amount
arising from actual acquisition or disposal of subsidiary
(Notes 21 and 26)
Disposals of investments in equity instruments at fair value
through other comprehensive income (Note 21)
Net profit for the year ended December 31, 2019
Other comprehensive income (loss) for the year ended
December 31, 2019 (Note 21)
Total comprehensive income (loss) for the year ended
December 31, 2019
BALANCE AT DECEMBER 31, 2019
Appropriation of 2019 earnings (Note 21)
Legal reserve
Special reserve
Cash dividends
Disposals of investments in equity instruments at fair value
through other comprehensive income (Note 21)
Net profit for the year ended December 31, 2020
Other comprehensive income (loss) for the year ended
December 31, 2020 (Note 21)
Total comprehensive income (loss) for the year ended
December 31, 2020
BALANCE AT DECEMBER 31, 2020		 Equity Attributable to Owners of the Company Equity Attributable to Owners of the Company Non-controlling
Total
Interests
$ 32,421,104
$ 7,542

-
-
-
-
(3,101,075)
-

-
-
-
-
6,037,254
66
(1,216,073
)

-


4,821,181

66

34,141,210
7,608

-
-
-
-
(3,810,642)
-

-
-
6,125,520
(126)

(403,141
)

-


5,722,379

(126
)

$ 36,052,947
$ 7,482
 Total Equity
$ 32,428,646
-
-
(3,101,075)
-
-
6,037,320
(1,216,073
)

4,821,247
34,148,818
-
-
(3,810,642)
-
6,125,394

(403,141
)

5,722,253
$ 36,060,429
Share Capital
Capital Surplus
$ 5,256,059
$ 333,778
-
-
-
-
-
-
-
-
-
-
-
-

-

-

-

-
5,256,059
333,778
-
-
-
-
-
-
-
-
-
-

-

-

-

-
$ 5,256,059
$ 333,778
Retained Earnings
Unappropriated
Legal Reserve
Special Reserve
Earnings

$ 4,618,248
$ 1,703,150
$ 22,701,647
493,840
-
(493,840)
-
488,628
(488,628)
-
-
(3,101,075)
-
(1,076)
1,076
-
-
535
-
-
6,037,254

-

-

(5,615
)

-

-

6,031,639
5,112,088
2,190,702
24,651,354
603,726
-
(603,726)
-
1,212,070
(1,212,070)
-
-
(3,810,642)
-
-
7,963
-
-
6,125,520

-

-

(2,683
)

-

-

6,122,837
$ 5,715,814
$ 3,402,772
$ 25,155,716		 Others
Unrealized
Exchange
Gain (Loss) on
Differences on
Financial Assets at
Translation of the
Fair Value
Financial
Through Other

Statements of
Comprehensive
Foreign Operations
Income
$ (2,065,527)
$ (126,251)

-
-
-
-
-
-

-
-
-
(535)
-
-
(1,210,993
)

535

(1,210,993
)

535

(3,276,520)
(126,251)

-
-
-
-
-
-

-
(7,963)
-
-

(408,834
)

8,376


(408,834
)

8,376

$ (3,685,354
)
$ (125,838
)

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

~82~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Expected credit loss (reversed) recognized on trade receivables
Net gain on fair value changes of financial assets and liabilities at
fair value through profit or loss
Finance costs
Interest income
Gain on disposal of subsidiary
Loss on disposals of property, plant and equipment
Impairment loss recognized on non-financial assets
Gain on reversal of non-financial assets
Unrealized foreign exchange loss
Changes in operating assets and liabilities:
Financial assets mandatorily classified at fair value through profit or
loss
Notes receivable
Trade receivables
Trade receivables from related parties
Other receivables
Inventories
Prepayments
Other current assets
Financial liabilities held for trading
Contract liabilities
Trade payables
Other payables
Other payables to related parties
Provisions - current
Other current liabilities
Net defined benefit liabilities

Cash generated from operations
Interest received
Interest paid
Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other comprehensive
income
Proceeds from sale of financial assets at fair value through other
comprehensive income		 2020
$ 7,756,790

3,257,380
32,208
48,530
(1,205,542)
105,731
(293,489)
-
1,667
219,565
-
365,744
1,101,739
(70,613)
(1,385,676)
88
72,981
(1,261,522)
(232,192)
7,468
(84,152)
330,488
(68,113)
750,042
2
19,852
(11,261)

(134
)

9,457,581
343,445
(115,722)

(1,087,343
)


8,597,961

(75,408)
80,075		 2019
$ 7,798,291
3,274,434
26,434
(9,603)
(393,336)
251,164
(434,409)
(253)
5,740
102,597
(224,073)
133,393
658,043
6,563
(1,829,315)
(57)
(12,735)
368,131
646,133
1,976
(365,601)
129,358
715,489
993,177
-
16,776
115,855

133
11,974,305
434,702
(268,263)

(1,687,115
)

10,453,629
(6,394)
6,929
(Continued)

~83~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Purchase of financial assets at amortized cost

Net cash inflow on disposal of subsidiary
Payments for property, plant and equipment
Proceeds from disposals of property, plant and equipment
Increase in refundable deposits
Decrease in refundable deposits
Payments for intangible assets
Increase in prepayments for other equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from guarantee deposits received
Repayment of the principal portion of lease liabilities
Distributed cash dividends

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2020
$ (5,000)

-
(4,252,831)
3,164
(983)
-
(18,343)

(1,717,867
)


(5,987,193
)

70,321
-
125,381
(15,316)

(3,810,642
)


(3,630,256
)


(561,833
)

(1,581,321)

27,614,136

$ 26,032,815
 2019
$ -
193
(3,010,851)
3,426
-
8,095
(36,038)

(412,406
)

(3,447,046
)
-
(2,397,233)
30,879
(13,880)

(3,101,075
)

(5,481,309
)

(1,061,699
)
463,575

27,150,561
$ 27,614,136

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

(Concluded)

~84~

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Tripod Technology Corporation (the “Company”), was incorporated in the Republic of China (ROC) on December 16, 1991. The Company offers a comprehensive range of printed circuit boards (PCB), electronic cash registers and is engaged in the design, manufacture and sale of a variety of devices produced using computer automation.

In December 2000, the Company’s shares began trading on the Taipei Exchange (TPEx), and were subsequently listed on the Taiwan Stock Exchange (TWSE) on August 26, 2002.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s Board of Directors on February 25, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC) and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The IFRSs endorsed and issued into effect by the FSC did not have any material impact on the accounting policies of Tripod Technology Corporation and its subsidiaries (collectively referred to as the “Group”).

  • b. The IFRSs endorsed by the FSC for application starting from 2021
New IFRSs
Amendments to IFRS 4 “Extension of the Temporary Exemption from
Applying IFRS 9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
“Interest Rate Benchmark Reform - Phase 2”
Amendment to IFRS 16 “Covid-19 - Related Rent Concessions”		 Effective Date
Announced by IASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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  • c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC
New IFRSs
“Annual Improvements to IFRS Standards 2018-2020”
Amendments to IFRS 3 “Reference to the Conceptual Framework”
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
Amendments to IFRS 17
Amendments to IAS 1 “Classification of Liabilities as Current or
Non-current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
Amendments to IAS 8 “Definition of Accounting Estimates”
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a
Contract”		 Effective Date
Announced by IASB (Note 1)
January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

  • Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

  • Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

  • Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

  • Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

  • Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For the convenience of readers, the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese language consolidated financial statements shall prevail.

  • a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

  • b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  • 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  • 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

  • 3) Level 3 inputs are unobservable inputs for an asset or liability.

  • c. Classification of current and non-current assets and liabilities

Current assets include:

  • 1) Assets held primarily for the purpose of trading;

  • 2) Assets expected to be realized within 12 months after the reporting period; and

  • 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

  • 1) Liabilities held primarily for the purpose of trading;

  • 2) Liabilities due to be settled within 12 months after the reporting period; and

  • 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and any investment retained in the former subsidiary at its fair value at the date when control is lost and (ii) the assets and liabilities of the former subsidiary at their carrying amounts at the date when control is lost. The Group accounts for all amounts recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required had the Group directly disposed of the related assets or liabilities.

See Note 12, Table 8 and Table 9 for detailed information on subsidiaries (including percentages of ownership and main businesses).

e. Foreign currencies

In preparing the financial statements of each individual entity in the Group, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

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For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company and entities in the Group’s foreign operations (including subsidiaries in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income and attributed to the owners of the Company and non-controlling interests as appropriate.

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

f. Inventories

Inventories consist of raw materials, supplies, finished goods, semi-finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

  • g. Property, plant and equipment

Property, plant and equipment are initially measured at cost less accumulated depreciation and accumulated impairment loss.

Property, plant and equipment in the course of construction are measured at cost less any recognized impairment loss. Cost includes professional fees. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

  • 2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

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  • i. Impairment of property, plant and equipment, right-of-use asset and intangible assets

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (after deducting amortization and depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

  • j. Financial instruments

Financial assets and financial liabilities are recognized when an entity in the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (FVTPL) are recognized immediately in profit or loss.

  • 1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

  • a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at fair value through other comprehensive income (FVTOCI).

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, with interest earned recognized in interest income and any gains or losses arising on remeasurement recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

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  • ii. Financial assets at amortized cost

Financial assets that meet the following two conditions are subsequently measured at amortized cost:

  • i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, trade receivables, trade receivables from related parties at amortized cost, other receivables (less tax refund receivables), other financial assets - current and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for the following two conditions:

  • i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

  • ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits and bank acceptances, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

  • iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposals of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

  • b) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

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The Group always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Group determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Group):

  • i. Internal or external information show that the debtor is unlikely to pay its creditors.

  • ii. When a financial asset is more than 365 days past due unless the Group has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

  • c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

  • 2) Financial liabilities

  • a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

  • Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities is held for trading.

Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses on such financial liabilities are recognized in other gains or losses.

Fair value is determined in the manner described in Note 29.

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b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

  • 3) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 “Financial Instruments” are not separated; instead, the classification is determined in accordance with the entire hybrid contract.

k. Provisions

Provisions, are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

  • Warranties

Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Company of the expenditures required to settle the Group’s obligations.

  • l. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

  • Revenue from the sale of goods

Revenue from the sale of goods comes from sales of products. Sales of products are recognized as revenue when the goods are shipped or the goods are delivered to the customer’s specific location, since it is the time when the customer has full discretion over the manner of distribution, price to sell the goods and has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received in advanced is recognized as a contract liability until the goods have been delivered to the customer. Provisions for sales returns and allowances are estimated based on historical experience and consideration of various contract conditions, which are recognized as refund liabilities (accounted as other current liabilities).

The Group does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

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m. Leasing

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

  • The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

  • n. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants related to revenue are recognized in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs that the grants intend to compensate.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they are received.

  • o. Employee benefits

  • 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

  • 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

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Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

  • 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

  • 3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Critical Accounting Judgements

  • Impairment of property, plant and equipment

The impairment of equipment in relation to the production of printed circuit boards was based on the recoverable amounts of the equipment, which is the higher of their fair values less costs of disposals and their value in use. Any changes in the market prices or future cash flows will affect the recoverable amounts of the equipment and may lead to the recognition of additional impairment losses or the reversal of impairment losses.

6. CASH AND CASH EQUIVALENTS

Cash on hand
Checking accounts and demand deposits
Cash equivalents
Bank acceptances
Time deposits		 **December 31 ** **December 31 **


2020
$ 4,384

14,431,340
72,204

11,524,887

$ 26,032,815
 2019
$ 2,714
16,858,106
25,033

10,728,283
$ 27,614,136

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The market rate intervals of cash in bank at the end of the reporting period were as follows:

December 31
2020
2019
Demand deposits and time deposits
0.0001%-1.90%
0.001%-3.75%
FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS
December 31
2020
2019
Financial assets at FVTPL-current
Financial assets mandatorily classified as at FVTPL
Derivative financial assets (not under hedge accounting)
Forward exchange contracts
$ 288,775
$ 100,383
Financial liabilities at FVTPL-current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge accounting)
Forward exchange contracts
$ 506
$ 5,547		 December 31 December 31 December 31

2020
$ 288,775

$ 506
 2019
$ 100,383
$ 5,547

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

At the end of the reporting period, outstanding forward exchange contracts not under hedge accounting were as follows:


were as follows:
Notional Amount
Currency Maturity Date (In Thousands)
December 31, 2020
Sell foreign exchange forward contracts USD/RMB 2021.01-2021.05 USD325,000/RMB2,198,774
Buy foreign exchange forward contracts USD/NTD 2021.01 USD4,000/NTD112,360
December 31, 2019
Sell foreign exchange forward contracts USD/RMB 2020.01-2020.05 USD276,000/RMB1,954,196
Sell foreign exchange forward contracts JPY/USD 2020.01 JPY8,179,000/USD75,197

The Group entered into foreign exchange forward contracts on December 31, 2020 and 2019 to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investment in equity instruments at FVTOCI

Current
Domestic investments
Listed shares and emerging market shares		 **December ** **31 **
2020
$ 3,709		 2019
$ -

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These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

FINANCIAL ASSETS AT AMORTIZED COST
Current
Restricted time deposits		 **December ** **31 **
2020
$ 12,000
 2019
$ 7,000

Refer to Note 31 for information relating to financial assets at amortized cost pledged as securities.

Management of the Company assigns credit management committee to develop a credit risk grading framework for determining whether the credit risk of the financial assets at amortized cost has increased significantly since the initial recognition and measuring the expected credit losses. The credit rating information may be obtained from independent rating agencies where available and, if not available, the credit management committee uses other publicly available financial information to rate the debtors. The Group considers the current financial condition of debtors, the future prospects of the industries, the 12-month expected credit losses and lifetime expected credit losses of the financial assets at amortized cost. As of December 31, 2020 and 2019, the Group assessed that the expected credit loss of financial assets measured at amortized cost was 0%.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable
Gross carrying amount at amortized cost
Trade receivables
Gross carrying amount at amortized cost
Less: Allowance for impairment loss
Other receivables
Receivables from scraps
Tax refund receivables
Accrued income
Others		 **December 31 ** **December 31 **






2020
$ 383,310

$ 17,063,335


(226,827
)

$ 16,836,508

$ 168,712

11,082
49,373

75,593

$ 304,760
 2019
$ 312,424
$ 16,538,102

(185,992
)
$ 16,352,110
$ 168,528
45,175
100,142

115,009
$ 428,854

~98~

Notes Receivable

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the year to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group measures the loss allowance for notes receivable at an amount equal to lifetime expected credit losses. The expected credit losses on notes receivable are estimated by reference to the past default experience of the debtor, an analysis of the debtor’s current financial position, and economic conditions. As of December 31, 2020 and 2019, the Group assessed that the expected credit loss of notes receivable was 0%.

The aging of notes receivable was as follows:

Not past due **December 31 ** **December 31 **
2020
$ 383,310
 2019
$ 312,424

The above aging schedule was based on the number of past due days.

Trade Receivables

The average credit period of the sales of goods was 30 to 180 days, and no interest was charged on overdue trade receivables. In determining the recoverability of the trade receivables, the Group considered any change in the credit quality of the trade receivables since the date credit was initially granted to the end of the reporting period. From historical experience, most of the receivables were recovered.

Before accepting new customers, the Group assesses that the credit quality of the potential customer complied with the administration regulations of customer credit, and sets up the credits limit for each customer. The credit rating of customers would then be assessed by the supervisors and given an ultimate credit limit.

The Group measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience of the debtor, an analysis of the debtor’s current financial position, and economic conditions. As the Group’s historical credit loss experience shows different loss patterns for different customer segments, the provision for loss allowance based on past default experience, current financial status, and reasonable forecasts for the future economy is distinguished according to the Group’s different customer segment.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

~99~

The following table details the loss allowance for trade receivables based on the Group’s provision matrix:

December 31, 2020

Group A
Expected credit loss rate
0.54%
Gross carrying amount
$ 12,031,633

Allowance for impairment
loss (Lifetime ECLs)

(64,869
)

Amortized cost
$ 11,966,764

December 31, 2019
Group A
Expected credit loss rate
0.52%
Gross carrying amount
$ 12,000,234

Allowance for impairment
loss (Lifetime ECLs)

(62,930
)

Amortized cost
$ 11,937,304
 Group B
0.99%
$ 5,537


(55
)

$ 5,482

Group B
1.01%
$ 32,750


(332
)

$ 32,418
 Group C
1.16%
$ 473,632


(5,512
)

$ 468,120

Group C
1.02%
$ 715,345


(7,282
)

$ 708,063
 Group D
1.25%
$ 2,939,507


(36,636
)

$ 2,902,871

Group D
1.29%
$ 2,900,225


(37,300
)

$ 2,862,925
 Group E
2.03%
$ 712,094


(14,462
)

$ 697,632

Group E
2.04%
$ 403,530


(8,250
)

$ 395,280
 Group F
10.32%
$ 887,230


(91,591
)

$ 795,639

Group F
10.90%
$ 467,011


(50,891
)

$ 416,120
 Group G
100%
$ 13,702


(13,702
)

$ -

Group G
100%
$ 19,007


(19,007
)

$ -
 Total
$ 17,063,335

(226,827
)
$ 16,836,508
Total
$ 16,538,102

(185,992
)
$ 16,352,110

Expected credit loss rate
Gross carrying amount

Allowance for impairment
loss (Lifetime ECLs)

Amortized cost

The aging of trade receivables was as follows:

Not past due
0-60 days
61-90 days
91-120 days
More than 121 days		 December 31 December 31


2020
$ 15,158,428

1,794,800
50,646
13,484

45,977

$ 17,063,335
 2019
$ 14,120,665
2,041,419
118,459
95,894

161,665
$ 16,538,102

The above aging schedule was based on the number of past due days.

The movements of the loss allowance for trade receivables were as follows:

Balance at January 1
Add: Net remeasurement of loss allowance
Less: Net impairment losses reversed
Foreign exchange gains and losses
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31


2020
$ 185,992

48,530
-

(7,695
)

$ 226,827
 2019
$ 201,227
-
(9,603)

(5,632
)
$ 185,992

Other Receivables

Other receivables are comprised of receivables from sale of scraps and outstanding interest receivables from banks. The Group only transacts with counterparties that have good credit ratings. The Group continues to engage in enforcement activity to trace the conditions of the receivables while also refer to the past default experience of the debtor and an analysis of the debtor’s current financial position, in determining whether the credit risk of other receivables has increased significantly since the initial recognition as well as measuring the expected credit losses. As of December 31, 2020 and 2019, the Group assessed that the expected credit loss of other receivables was 0%.

~100~

11. INVENTORIES

INVENTORIES
Finished goods
Semi-finished goods
Work in progress
Supplies
Raw materials		 December 31


2020
$ 4,211,933

1,590
2,545,562
342,327

330,491

$ 7,431,903
 2019
$ 3,593,444
2,455
2,343,248
278,816

323,834
$ 6,541,797

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $43,962,991 thousand and $43,143,220 thousand, respectively. The unallocated manufacturing expenses for the year ended December 31, 2020 included related expenses incurred during shutdown period due to the impact of the COVID-19. The cost of goods sold for the years ended December 31, 2020 and 2019 included inventory write-downs (reversal) of $219,565 thousand and $(224,073) thousand, respectively. The reversals of previous write-downs for the year ended December 31, 2019 resulted from selling the obsolete inventory that had accounted for allowance.

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Investor
Investee
Nature of Activities
The Company
J & J Holding Co., Ltd.
Investment activities
Trison Technology (HK)
Limited
International trade
Trison Technology
Corporation
Manufacturing and wholesaling of
electronic parts
Tripod Nano Technology
Corporation
Manufacturing and wholesaling of
chemical materials
J & J Holding Co., Ltd.
Able International Limited
Trading of printed circuit boards and
raw materials of electronic parts
Tripod Overseas Co., Ltd.
Investment activities and selling of
printed circuit board and raw
materials of electronic parts
Tripod Overseas Co., Ltd.
Tripod Global Pte. Ltd.
Trading of printed circuit boards and
raw materials of electronic parts
Tripod International Holding
Pte. Ltd.
Investment activities
Tripod Worldwide Holding
Pte. Ltd.
Investment activities
Tripod International Holding
Pte. Ltd.
Tripod (Wuxi) Electronic
Co., Ltd.
Processing, manufacturing and
selling of printed circuit boards
and other related components
Tripod Worldwide Holding
Pte. Ltd.
Tripod (HuBei) Electronic
Co., Ltd.
Processing, manufacturing and
selling of printed circuit boards
and other related components
Tripod (HuBei) Electronic
Co., Ltd.
Tripod (Xiantao) Zhiye Co.,
Ltd.
The wholesales, import and export of
electronic products, development
of real estate, sales and rental of
the commercial housing,
own-built commercial housing and
management of related support
measure.		 Percentage of Ownership
December 31
2020
2019
Remark
100%
100%
The main operating risk is
exchange rate risk.
-
-
The disposal of the company was
completed in November 2019.
80%
80%
The subsidiary company has no
significant non-controlling
interests.
100%
100%
100%
100%
The main operating risk is
exchange rate risk.
100%
100%
The main operating risk is
exchange rate risk.
100%
100%
The main operating risk is
exchange rate risk.
100%
100%
The main operating risk is
exchange rate risk.
100%
100%
The main operating risk is
exchange rate risk.
100%
100%
The main operating risks are
political risk and exchange rate
risk due to government decrees
and the cross-strait relations
between the ROC and
mainland China.
100%
100%
The main operating risks are
political risk and exchange rate
risk due to government decrees
and the cross-strait relations
between the ROC and
mainland China.
100%
100%
The main operating risks are
political risk and exchange rate
risk due to government decrees
and the cross-strait relations
between the ROC and
mainland China.

~101~

13. PROPERTY, PLANT AND EQUIPMENT

Cost
Balance at January 1, 2019

Additions
Disposals
Reclassifications (Note)
Effect of foreign currency
exchange differences

Balance at December 31, 2019

Accumulated depreciation
and impairment
Balance at January 1, 2019

Disposals
Impairment losses recognized
Depreciation expense
Effect of foreign currency
exchange differences

Balance at December 31, 2019

Carrying amount at
December 31, 2019

Cost
Balance at January 1, 2020

Additions
Disposals
Reclassifications (Note)
Effect of foreign currency
exchange differences

Balance at December 31, 2020

Accumulated depreciation
and impairment
Balance at January 1, 2020

Disposals
Depreciation expense
Effect of foreign currency
exchange differences

Balance at December 31, 2020

Carrying amount at
December 31, 2020
 Land
$ 291,251

-
-
-

-

$ 291,251

$ -

-
-
-

-

$ -

$ 291,251

$ 291,251

-
-
-

-

$ 291,251

$ -

-
-

-

$ -

$ 291,251
 Buildings

$ 12,777,426

230,971
(50,070 )
221,030

(455,000
)

$ 12,724,357

$ 6,189,513

(44,734 )
3,682
735,155

(235,657
)

$ 6,647,959

$ 6,076,398

$ 12,724,357

157,833
(15,426 )
73,049

(1,868
)

$ 12,937,945

$ 6,647,959

(12,990 )
720,216

1,910

$ 7,357,095

$ 5,580,850
 Machinery and
Equipment

$ 38,086,501

1,615,997
(330,017 )
326,915

(1,322,617
)

$ 38,376,779

$ 28,750,277

(326,501 )
73,189
2,453,682

(1,012,861
)

$ 29,937,786

$ 8,438,993

$ 38,376,779

2,928,112
(732,388 )
365,384

215,233

$ 41,153,120

$ 29,937,786

(730,023 )
2,447,306

163,163

$ 31,818,232

$ 9,334,888
 Transportation
Equipment
$ 33,778

8,709
(4,948 )
-

(1,148
)

$ 36,391

$ 17,281

(4,948 )
-
4,784

(561
)

$ 16,556

$ 19,835

$ 36,391

2,176
(2,310 )
2,638

5

$ 38,900

$ 16,556

(2,310 )
5,666

9

$ 19,921

$ 18,979
 Furniture,
Fixtures and
Equipment
$ 723,230

21,161
(23,772 )
1,520

(23,437
)

$ 698,702

$ 658,657

(23,651 )
-
23,158

(21,406
)

$ 636,758

$ 61,944

$ 698,702

20,182
(16,699 )
3,930

(112
)

$ 706,003

$ 636,758

(16,669 )
27,748

(92
)

$ 647,745

$ 58,258
 Leasehold
Improvements
$ 48,708

395
-
-

-

$ 49,103

$ 45,446

-
-
835

-

$ 46,281

$ 2,822

$ 49,103

410
-
-

-

$ 49,513

$ 46,281

-
922

-

$ 47,203

$ 2,310
 Other
Equipment
$ 147,691

47,105
(32,213 )
2,370

(531
)

$ 164,422

$ 76,319

(32,020 )
25,726
36,239

(478
)

$ 105,786

$ 58,636

$ 164,422

25,170
(27,898 )
510

(9
)

$ 162,195

$ 105,786

(27,898 )
33,574

(7
)

$ 111,455

$ 50,740
 Property in
Construction
$ 43,351

547,398
-
(17,765 )

(21,822
)

$ 551,162

$ -

-
-
-

-

$ -

$ 551,162

$ 551,162

1,643,469
-
(2,235 )

7,971

$ 2,200,367

$ -

-
-

-

$ -

$ 2,200,367
 Total
$ 52,151,936
2,471,736
(441,020 )
534,070

(1,824,555
)
$ 52,892,167
$ 35,737,493
(431,854 )
102,597
3,253,853

(1,270,963
)
$ 37,391,126
$ 15,501,041
$ 52,892,167
4,777,352
(794,721 )
443,276

221,220
$ 57,539,294
$ 37,391,126
(789,890 )
3,235,432

164,983
$ 40,001,651
$ 17,537,643

Note: These were transferred from prepayments for equipment to cost.

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:


estimated useful lives as follows:
Buildings
Main buildings 9-45 years
Others 3-20 years
Machinery and equipment 2-8 years
Transportation equipment 4-5 years
Furniture, fixtures and equipment 2-5 years
Leasehold improvements 3-5 years
Other equipment 1-5 years

The estimated future cash flows expected to arise from buildings, machinery equipment and other equipment in the Pingzhen factory had decreased. The Group assessed the recoverable amount of such equipment and determined that the carrying amount exceeded the recoverable amount by $1,240,288 thousand. This assessment led to the recognition of an impairment loss of $102,597 thousand for the year ended December 31, 2019. The Group determined that the recoverable amounts of buildings, machinery equipment and other equipment were based on their value in use. The discount rate used in measuring the value in use was 8.57% per annum, and the impairment loss was accounted for as other operating income and expenses in the consolidated statements of comprehensive income.

The Group performed an impairment assessment for the year ended December 31, 2020 and concluded that there was no indication of impairment.

The unrecognized commitments for the acquisition of property, plant and equipment are set out in Note 32.

~102~

14. LEASE ARRANGEMENTS

  • a. Right-of-use assets
Carrying amount
Land (including land use rights)
Buildings
Transportation equipment		 **December 31 ** **December 31 **


2020
$ 278,876

18,167

9,520

$ 306,563
 2019
$ 285,612
22,756
8,520
$ 316,888

b. Lease liabilities

Carrying amount
Current
Non-current		 December 31
2020
$ 14,839

$ 12,617
 2019
$ 12,361
$ 18,685

15. OTHER INTANGIBLE ASSETS

Computer
Software
Environmental
Pollution Use
Rights
Cost
Balance at January 1, 2019
$ 76,158
$ 11,813

Additions
35,859
-
Disposals
(33,709)
-
Reclassification (Note)
1,315
-
Effect of foreign currency exchange
differences

(1,805
)

(430
)

Balance at December 31, 2019
$ 77,818
$ 11,383

Accumulated amortization
Balance at January 1, 2019
$ 41,060
$ 3,938

Amortization expenses
22,441
3,945
Disposals
(33,709)
-
Effect of foreign currency exchange
differences

(584
)

(294
)

Balance at December 31, 2019
$ 29,208
$ 7,589

Carrying amount at December 31,
2019
$ 48,610
$ 3,794
 Others
$ 600

179
-

-

(7
)

$ 772

$ 132

48
-


-

$ 180

$ 592
 Total
$ 88,571
36,038
(33,709)
1,315

(2,242
)
$ 89,973
$ 45,130
26,434
(33,709)

(878
)
$ 36,977
$ 52,996
(Continued)

~103~

Computer
Software
Environmental
Pollution Use
Rights
Cost
Balance at January 1, 2020
$ 77,818
$ 11,383

Additions
9,339
9,003
Disposals
(13,098)
-
Effect of foreign currency exchange
differences

(16
)

42

Balance at December 31, 2020
$ 74,043
$ 20,428

Accumulated amortization
Balance at January 1, 2020
$ 29,208
$ 7,589

Amortization expenses
26,132
6,026
Disposals
(13,098)
-
Effect of foreign currency exchange
differences

54

27

Balance at December 31, 2020
$ 42,296
$ 13,642

Carrying amount at December 31,
2020
$ 31,747
$ 6,786
 Others
$ 772

-
-


-

$ 772

$ 180

50
-


-

$ 230

$ 542
 Total
$ 89,973
18,342
(13,098)

26
$ 95,243
$ 36,977
32,208
(13,098)

81
$ 56,168
$ 39,075
(Concluded)

Note: These were transferred from prepayments of equipment.

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: estimated useful lives as follows: estimated useful lives as follows:
Computer software
Environmental pollution use rights
Others
An analysis of depreciation by function
Operating costs
Selling and marketing expenses
General and administrative expenses
Research and development expenses		 1-5 years
3 years
Based on contractual terms
For the Year Ended December 31


2020
$ 25,313

-
6,094

801

$ 32,208
 2019
$ 14,765
15
10,470
1,184
$ 26,434

~104~

16. OTHER ASSETS

OTHER ASSETS
Non-current
Prepayments for equipment
Refundable deposits		 December 31


2020
$ 1,735,939


16,662

$ 1,752,601
 2019
$ 486,985

15,707
$ 502,692

17. BORROWINGS

Short-term Borrowings

Short-term Borrowings
Unsecured borrowings
Bank loans		 December 31
2020
$ 13,970,849
 2019
$ 14,410,764

The interest rates on bank loans were 0.54%-0.7148% and 0.7%-2.5996% per annum as of December 31, 2020 and 2019, respectively.

18. OTHER LIABILITIES

OTHER LIABILITIES
Current
Other payables
Payables for purchase of equipment (Note 27)
Payables for salaries and bonuses (including employee bonuses)
Payables for consumables
Payables for insurance
Payables for GST
Others
Other liabilities
Receipts under custody
Guarantee deposits received
Refund liabilities
Non-current
Other liabilities
Guarantee deposits received		 December 31






2020
$ 1,151,799

4,196,128
1,846,419
1,460,239
250,279

2,852,873

$ 11,757,737

$ 249,872

435,967

160,153

$ 845,992

$ 22,452
 2019
$ 675,337
3,622,776
1,588,442
1,725,149
269,792

2,723,992
$ 10,605,488
$ 261,294
309,212

172,793
$ 743,299
$ 23,318

~105~

19. PROVISIONS-CURRENT

PROVISIONS-CURRENT
Warranties
Balance at January 1, 2020
Additional provisions recognized
Amount used
Reversal of unused balance
Effect of foreign currency exchange differences
Balance at December 31, 2020		 December 31
2020
2019
$ 518,817
$ 526,600
Warranties
$ 526,600
535,571
(20,534)
(495,186)

(27,634
)
$ 518,817

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company of the Group adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

The employees of the Group’s subsidiaries in mainland China are members of a state-managed retirement benefit plan operated by the government of mainland China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits.

According to the aforementioned regulations, the Group recognized $1,306,197 thousand and $1,648,931 thousand as expenses in the consolidated statements of comprehensive income for the years ended December 31, 2020 and 2019, respectively.

b. Defined benefit plans

The defined benefit plan adopted by the Company of the Group in accordance with the Labor Standards Law is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

~106~

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans are as follows:

Present value of defined benefit obligation
Fair value of plan assets
Deficit (surplus)
Asset ceiling
Net defined benefit liabilities		 December 31 December 31



2020
$ 158,018


(47,343
)

110,675

-

$ 110,675
 2019
$ 151,283

(43,828
)
107,455

-
$ 107,455

Movements in net defined benefit liabilities were as follows:

Present Value Present Value
of the Defined Net Defined
Benefit Fair Value of Benefit
Obligation the Plan Assets Liabilities
Balance at January 1, 2019 $ 145,338 $ (45,034
)		 $ 100,304
Service cost
Current service cost 1,559 - 1,559
Past service cost and loss on settlements 31 - 31
Net interest expense (income)
1,635
(522
)
1,113
Recognized in profit or loss
3,225
(522
)
2,703
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - (1,610) (1,610)
Actuarial loss - changes in demographic
assumptions 2,174 - 2,174
Actuarial loss - changes in financial
assumptions 6,013 - 6,013
Actuarial loss - experience adjustments
441
-
441
Recognized in other comprehensive income
8,628
(1,610
)
7,018
Benefits paid (5,908) 5,908 -
Contributions from the employer
-
(2,570
)
(2,570
)
Balance at December 31, 2019
151,283
(43,828
)
107,455
Service cost
Current service cost 1,552 - 1,552
Net interest expense (income)
1,135
(338
)
797
Recognized in profit or loss
2,687
(338
)
2,349
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - (1,558) (1,558)
Actuarial loss - changes in demographic
assumptions 1,860 - 1,860
Actuarial loss - changes in financial
assumptions 4,015 - 4,015
Actuarial loss - experience adjustments
(963
)
-
(963
)
Recognized in other comprehensive income
4,912
(1,558
)
3,354
Benefits paid (864) 864 -
Contributions from the employer
-
(2,483
)
(2,483
)
Balance at December 31, 2020 $ 158,018 $ (47,343
)		 $ 110,675

~107~

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

  • 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

  • 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

  • 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s)
Expected rate(s) of salary increase		 **December 31 **
2020
2019
0.500%
0.750%
2.000%
2.000%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase/decrease as follows:

Discount rate(s)
0.25% increase
0.25% decrease
Expected rate(s) of salary increase
0.25% increase
0.25% decrease		 December 31



2020
$ (4,039
)

$ 4,200

$ 4,069

$ (3,934
)
 2019
$ (4,073
)
$ 4,241
$ 4,120
$ (3,979
)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year
Average duration of the defined benefit obligation		 December 31
2020
$ 2,500

10.2 years		 2019
$ 2,600
10.8 years

~108~

21. EQUITY

a. Share capital

Number of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in thousands)
Shares issued		 **December 31 ** **December 31 **



2020

600,000

$ 6,000,000


525,606

$ 5,256,059
 2019

600,000
$ 6,000,000

525,606
$ 5,256,059

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

Of the authorized capital, a total of $200,000 thousand should be reserved for warrants, preference shares attached with warrants or bonds attached with warrants.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or
transferred to share capital (Note)
Issuance of ordinary shares
Donations
The difference between the consideration received or paid and
the carrying amount of the subsidiaries’ net assets during
actual disposal or acquisition		 **December 31 ** **December 31 **


2020
$ 325,282

369

8,127

$ 333,778
 2019
$ 325,282
369

8,127
$ 333,778

Note: Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s paid-in capital and once a year).

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s Board of Directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on the distribution of compensation of employees and remuneration of directors after the amendment, refer to employee benefits expense in Note 23(h).

In consideration of the future expansion of business, capital needs and the tax effects on the Company and its shareholders, the Company’s dividend policy was mainly based on capital needs based on future capital budget planning, where the Board of Directors would propose a distribution plan on the appropriation of earnings, where the earnings can be distributed once approval is obtained in the shareholders’ meeting. Nonetheless, cash dividends distributed shall not be less than 10% of total dividends distributed in the current year.

~109~

According to the Company Act No. 237, the Company shall recognize as legal reserve 10% of the remaining profit, until the accumulated legal reserve equals the total amount of paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and is thereafter distributed.

The appropriations of earnings for 2019 and 2018 approved in the shareholders’ regular meetings on June 17, 2020 and June 21, 2019, respectively, were as follows:

Legal reserve
Special reserve
Cash dividends
Cash dividends per share (NT$)		 Appropriation of Earnings
For the Year Ended December 31
2019
2018
$ 603,726
$ 493,840
1,212,070
488,628
3,810,642
3,101,075
7.25
5.90

The appropriation of earnings for 2020 has not been proposed by the Company’s Board of Directors as of February 25, 2021.

  • d. Special reserve

Special reserve consists of the followings:

  • 1) According to Paragraph 1, Article 41 of the Securities Exchange Act, the Company may appropriate as special reserve the deductions of equity items of the year where part of the distribution of earnings may be reserved if there is subsequent reversal of debits to other equity items.

  • 2) The directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The special reserves recognized as of December 31, 2020 and 2019 were as follows:

Appropriation in respect of
Paragraph 1, Article 41 of the Securities Exchange Act
Exempt items due to initial application of IFRSs, reclassified
to retained earnings
Balance at December 31		 **December 31 ** **December 31 **


2020
$ 2,886,552


516,220

$ 3,402,772
 2019
$ 1,674,482

516,220
$ 2,190,702

~110~

e. Other equity items

  • 1) Exchange differences on translation of the financial statements of foreign operations:
Balance at January 1
Recognized for the year
Exchange differences on translation of the financial
statements of foreign operations
Related income tax
Reclassification adjustments
Disposal of foreign operation
Related income tax
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ (3,276,520)

(511,043)

102,209
-

-

$ (3,685,354
)
 2019
$ (2,065,527)
(1,513,505)
302,701
(237)

48
$ (3,276,520
)
  • 2) Unrealized valuation gain (loss) on financial assets at FVTOCI:
Balance at January 1
Recognized for the year
Unrealized gain - equity instruments
Other comprehensive income recognized for the period
Cumulative unrealized loss on equity instruments transferred
to retained earnings due to disposals
Balance at December 31		 **For the Year Ended ** **For the Year Ended ** December 31




2020
$ (126,251)


8,376


8,376


(7,963
)

$ (125,838
)
 2019
$ (126,251)

535

535

(535
)
$ (126,251
)
  • f. The appropriations of earnings of the Company and its subsidiaries were based on the Articles of each company, and there was no situation of restrictions by the amendments.

22. REVENUE

  • a. Contract information

Revenue from the sale of goods

The main operating revenue of the Group is from the manufacture and sale of printed circuit boards (PCB). All goods are sold at respective fixed amounts as agreed in the contracts.

  • b. Contract balances
Trade receivables (including related parties)
and notes receivable (Notes 10 and 30)

Contract liabilities
Sale of goods
 December 31,
2020

$ 17,219,818

$ 1,119,402
 December 31,
2019
$ 16,664,622

$ 787,518
 January 1,
2019
$ 15,305,738

$ 687,874

~111~

The amounts of contract liability at the beginning of the period recognized as revenue in 2020 and 2019 were $777,397 thousand and $679,657 thousand, respectively.

  • c. Disaggregation of revenue

Refer to Note 35 for the related information on the analysis of each major products.

23. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

  • a. Other operating income and expenses
Impairment loss recognized on property, plant and equipment
b. Interest income
Bank deposits
c. Other income
Others
d. Other gains and losses
Loss on disposals of property, plant and equipment
Gain on disposal of subsidiary
Fair value changes of financial assets and financial liabilities
Net foreign exchange (losses) gains
Others
e. Finance costs
Interest on bank loans		 For the Year Ended For the Year Ended December 31
2020
$ -

For the Year Ended		 2019
$ (102,597
)
December 31
2020
$ 293,489

For the Year Ended		 2019
$ 434,409
December 31
2020
$ 455,983

For the Year Ended		 2019
$ 393,484
December 31
2020
2019
$ (1,667)
$ (5,740)
-
253
1,205,542
393,336
(661,283)
67,733

(3,885
)

(4,604
)
$ 538,707
$ 450,978
For the Year Ended December 31
2020
$ 105,731
 2019
$ 251,164

~112~

f. Depreciation and amortization

Property, plant and equipment
Intangible assets
Right-of-use assets
An analysis of depreciation by function
Operating costs
Operating expenses
An analysis of amortization by function
Operating costs
Operating expenses		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31








2020
$ 3,235,432

32,208

21,948

$ 3,289,588

$ 3,087,233


170,147

$ 3,257,380

$ 25,313


6,895

$ 32,208
 2019
$ 3,253,853
26,434

20,581
$ 3,300,868
$ 3,098,192

176,242
$ 3,274,434
$ 14,765

11,669
$ 26,434

g. Employee benefits expense

Short-term benefits
Other employee benefits
Post-employment benefits (Note 20)
Defined contribution plans
Defined benefit plans
Total employee benefits expense
An analysis of employee benefits expense by function
Operating costs
Operating expenses		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31





2020
$ 9,212,762

545,089
1,306,197

2,349

$ 11,066,397

$ 9,383,291


1,683,106

$ 11,066,397
 2019
$ 8,399,603
519,774
1,648,931

2,703
$ 10,571,011
$ 8,748,575

1,822,436
$ 10,571,011
  • h. Compensation of employees and remuneration of directors

According to the Company’s Articles of Incorporation, the Company accrues compensation of employees at rates of no less than 6% and no higher than 18%, and remuneration of directors at rates of no higher than 1% of net profit before income tax, compensation of employees and remuneration of directors.

~113~

The compensation of employees and remuneration of directors for the years ended December 31, 2020 and 2019, which had been approved by the Company’s Board of Directors on February 25, 2021 and March 25, 2020, respectively, were as follows:

Compensation of employees
Remuneration of directors
Compensation of employees
Remuneration of directors		 For the Year Ended December 31
2020
2019
8.97%
8.97%
0.53%
0.53%
For the Year Ended December 31		 For the Year Ended December 31 For the Year Ended December 31
2020
Cash
Shares
$ 714,209
$ -
42,000
-		 2019
Cash
Shares
$ 711,922
$ -
42,000
-

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate, and will be recognized in the following year.

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2019 and 2018.

Information on the compensation of employees and remuneration of directors resolved by the Company’s Board of Directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

  • i. Gains and losses on foreign currency exchange
Foreign exchange gains
Foreign exchange losses
Net foreign exchange gains (losses)		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 1,284,308

(1,945,591
)

$ (661,283
)
 2019
$ 1,323,776
(1,256,043
)
$ 67,733

24. INCOME TAXES RELATING TO CONTINUING OPERATIONS

  • a. Major components of income tax expense are as follows:
Current tax
In respect of the current year
Income tax on unappropriated earnings
Adjustments for prior years
Others
Deferred tax
In respect of the current year
Income tax expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 1,411,522

20,355
(73,949)

20,716

1,378,644

252,752

$ 1,631,396
 2019
$ 1,390,583
44,384
(89,453)

26,121
1,371,635

389,336
$ 1,760,971

~114~

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax from continuing operations
Income tax expense calculated at the statutory rate
Nondeductible expenses in determining taxable income
Deferred tax effect of earnings of subsidiaries
Tax-exempt income
Income tax on unappropriated earnings
Unrecognized loss carryforwards/deductible temporary
differences
Adjustments for prior years’ income tax
Other
Income tax expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 7,756,790

$ 1,962,745

36,727
(342,446)
-
20,355
7,248
(73,949)

20,716

$ 1,631,396
 2019
$ 7,798,291
$ 2,027,157
36,613
(376,928)
(53)
44,384
93,130
(89,453)

26,121
$ 1,760,971

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Group only deducts the amount of the unappropriated earnings that has been reinvested in capital expenditure.

In accordance with the income tax law of high technology enterprises and the implementation of related administrative regulations, once the enterprise obtained the approval of the application and are qualified as high technology enterprises supported by the country, they were entitled to a reduced income tax rate of 15%. The valid term is 3 years and second application to the authorities is permitted 3 months before the expiry date. Tripod (Wuxi) Electronic Co., Ltd. obtained the certificates of high technology enterprises in November 2018, and therefore eligible to have a 15% preferential tax rate from 2018 to 2020. Tripod (Hubei) Electronic Co., Ltd. obtained the certificates of high technology enterprises in November 2019, and therefore eligible to have a 15% preferential tax rate from 2019 to 2021.

b. Income tax recognized in other comprehensive income

Deferred tax
In respect of the current period:
Exchange differences arising from the translation of the
financial statements of foreign operations
Remeasurement on defined benefit plans
Reclassification adjustments
Disposal of foreign operations
Total income tax recognized in other comprehensive income		 **For the Year Ended ** **For the Year Ended ** December 31


2020
$ (102,209)

(671)

-


$ (102,880
)
 2019
$ (302,701)
(1,403)

(48
)
$ (304,152
)

~115~

c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2020

Deferred tax assets
Temporary differences
Property, plant and equipment

Unrealized employee benefits
Contract liabilities
Allowance for impairment
loss
Exchange differences on
translation of the financial
statements of foreign
operations
Unrealized loss on
investments in equity
instruments at FVTOCI
Right-of-use assets
Others


Deferred tax liabilities
Temporary differences
Unappropriated earnings of
subsidiaries

Others


For the year ended December		 Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
$ 1,101,687
$ 61,986
$ -

248,587
(38,612)
-
105,784
40,597
-
160,953
36,942
-
682,781
-
102,209
31,563
-
-
108,246
(2,469)
-

129,589

25,682

671

$ 2,569,190
$ 124,126
$ 102,880

$ 2,585,159
$ 341,136
$ -


49,680

35,742

-

$ 2,634,839
$ 376,878
$ -

31, 2019
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
$ 1,076,621
$ 66,601
$ -

266,973
(9,012)
-
94,033
15,776
-
207,185
(41,421)
-
380,032
-
302,749
31,563
-
-
118,635
(6,312)
-

108,108

21,271

1,403

$ 2,283,150
$ 46,903
$ 304,152
 Exchange
Differences
$ (1,063)

(251)
175
183
-
-
(39)

172

$ (824
)

$ (12)


164

$ 152

Exchange
Differences
$ (41,535)

(9,374)
(4,025)
(4,811)
-
-
(4,077)

(1,193
)

$ (65,015
)
 Closing
Balance
$ 1,162,610
209,724
146,556
198,078
784,990
31,563
105,738

156,114
$ 2,795,373
$ 2,926,283

85,586
$ 3,011,869
Closing
Balance
$ 1,101,687
248,587
105,784
160,953
682,781
31,563
108,246

129,589
$ 2,569,190
(Continued)

Deferred tax assets
Temporary differences
Property, plant and equipment

Unrealized employee benefits
Contract liabilities
Allowance for impairment
loss
Exchange differences on
translation of the financial
statements of foreign
operations
Unrealized loss on
investments in equity
instruments at FVTOCI
Right-of use assets
Others

~116~

Deferred tax liabilities
Temporary differences
Unappropriated earnings of
subsidiaries

Others

 Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
$ 2,158,612
$ 428,494
$ -


43,827

7,745

-

$ 2,202,439
$ 436,239
$ -
 Exchange
Differences
Closing
Balance
$ (1,947)
$ 2,585,159

(1,892
)

49,680
$ (3,839
)
$ 2,634,839
(Concluded)
  • d. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets
Loss carryforwards
Expiry in 2023
Expiry in 2024
Expiry in 2025
Expiry in 2028
Expiry in 2029
Expiry in 2030
Deductible temporary differences		 **December 31 ** **December 31 **



2020
$ 838

405
296
11,547
27,970

25,631

$ 66,687

$ 1,387,107
 2019
$ 838
405
-
11,547
27,970

-
$ 40,760
$ 1,217,493
  • e. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2020 and 2019, the taxable temporary differences associated with investments in subsidiaries and branches for which no deferred tax liabilities have been recognized were $31,613,069 thousand and $29,894,105 thousand, respectively.

  • f. Income tax assessments

  • 1) The income tax returns through 2018 have been assessed by the tax authorities, and the difference between the amount filed and the amount assessed has been recognized under the current period’s income tax expenses.

  • 2) There were no significant pending litigations of tax for the rest of the offshore subsidiary companies.

~117~

25. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share		 Unit: NT$ Per Share
For the Year Ended December 31
2020
$ 11.65
$ 11.48		 2019
$ 11.49
$ 11.34

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share are as follows:

Net profit for the year

Profit for the year attributable to owners of the Company For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 6,125,520
 2019
$ 6,037,254

The weighted average number of ordinary shares outstanding (in thousands of shares) is as follows:

Weighted average number of ordinary shares used in the
computation of basic earnings per share
Effect of potentially dilutive ordinary shares:
Compensation of employees
Weighted average number of ordinary shares used in the
computation of diluted earnings per share		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
525,606


7,979

533,585
 2019
525,606

6,687
532,293

If the Group offered to settle the compensation or bonuses paid to employees in cash or shares, the Group assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

26. DISPOSAL OF SUBSIDIARY

The disposal was completed in November 2019, the day on which the Group lost control of Trison Technology (HK) Limited.

a. Consideration received from disposal

Consideration received from disposal
Trison
Technology
(HK) Limited
Consideration received in cash and cash equivalents $ 2,522

~118~

  • b. Analysis of assets and liabilities on the date control was lost
Analysis of assets and liabilities on the date control was lost
Trison
Technology
(HK) Limited
Total assets $
2,546
Total liabilities 40
Net assets on disposal of subsidiary $
2,506
Gain on disposal of subsidiary
Trison
Technology
(HK) Limited
Consideration received $
2,522
Net assets disposed of (2,506)
Reclassification of accumulated exchange differences of foreign
operations as profit and loss in respect of subsidiary 237
Gain on disposal $
253
Net cash inflow on disposal of subsidiary
Trison
Technology
(HK) Limited
Consideration received in cash and cash equivalents $
2,522
Less: Cash and cash equivalent balances on disposal of
subsidiary (2,329
)
$
193

  • c. Gain on disposal of subsidiary

  • d. Net cash inflow on disposal of subsidiary

27. CASH FLOW INFORMATION

  • a. Non-cash transactions

For the years ended December 31, 2020 and 2019, the Group entered into the following non-cash investing and financing activities which were not reflected in the consolidated statements of cash flows:

  • As of December 31, 2020 and 2019, the unpaid amounts from the Group’s acquisition of property, plant and equipment were $1,151,799 thousand and $675,337 thousand, respectively, and were recognized in other payables - equipment payables.

~119~

  • b. Changes in liabilities arising from financing activities

For the year ended December 31, 2020

For the year ended December 31, 2020
Short-term borrowings

Lease liabilities
Guarantee deposits received

 Opening
Balance
$ 14,410,764

31,046

332,530

$ 14,774,340
 Cash Flows
$ 70,321
(15,316 )

125,381
$ 180,386		 Non-cash Changes
New Leases
Exchange Rate
Changes
Closing Balance
$ -
$ (510,236 )
$ 13,970,849
11,726
-
27,456

-

508

458,419
$ 11,726
$ (509,728
)
$ 14,456,724


For the year ended December 31, 2019

Short-term borrowings

Lease liabilities
Guarantee deposits received

 Opening
Balance
$ 16,997,441

35,335

313,887

$ 17,346,663
 Cash Flows
$ (2,397,233 )
(13,880 )

30,879
$ (2,380,234
)		 Non-cash Changes Others
Closing Balance
$ -
$ 14,410,764
978
31,046

-

332,530
$ 978
$ 14,774,340


New Leases
Exchange Rate
Changes
$ -
$ (189,444 )

8,613
-

-

(12,236
)

$ 8,613
$ (201,680
)

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, reserves, retained earnings and other equity).

The management of the Group periodically reviews its capital structure. As part of the review, the management considers the cost of capital, and related risks in determining the proper structure for its capital. The Group balances its overall capital structure by obtaining short-term financing facilities from financial institutions.

29. FINANCIAL INSTRUMENTS

  • a. Fair value of financial instruments that are not measured at fair value

The Group’s management believes that the carrying amount of financial assets and financial liabilities recognized in the consolidated financial statements which are not measured at fair value approximates their fair value.

~120~

  • b. Fair value of financial instruments that are measured at fair value on a recurring basis

  • 1) Fair value hierarchy

December 31, 2020
Financial assets at FVTPL
Derivative instruments

Financial assets at FVTOCI
Investments in equity
instruments
Listed shares and emerging
market shares

Financial liabilities at FVTPL
Derivative instruments

December 31, 2019
Financial assets at FVTPL
Derivative instruments

Financial liabilities at FVTPL
Derivative instruments
 Level 1
$ -

$ 3,709

$ -

Level 1
$ -

$ -
 Level 2
$ 288,775

$ -

$ 506

Level 2
$ 100,383

$ 5,547
 Level 3
$ -

$ -

$ -

Level 3
$ -

$ -
 Total
$ 288,775

$ 3,709
$ 506
Total
$ 100,383

$ 5,547

There were no transfers between Levels 1 and 2 in 2020 and 2019.

  • 2) Valuation techniques and inputs applied for the purpose of Level 2 fair value measurement

Financial Instruments Valuation Techniques and Inputs Derivatives - foreign exchange Discounted cash flow: Future cash flows are estimated based on forward contracts observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

  • c. Categories of financial instruments
Financial assets
FVTPL
Mandatorily classified as at FVTPL
Financial assets at amortized cost (Note 1)
FVTOCI
Investments in equity instruments		 December 31
2020
2019
$ 288,775
$ 100,383
43,574,973
44,685,144
3,709
-
(Continued)

~121~

Financial liabilities
Measured at FVTPL - held for trading
Financial liabilities at amortized cost (Note 2)		 **December 31 **
2020
2019
$ 506
$ 5,547
26,654,714
26,178,641
(Concluded)

  • Note 1: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, trade receivables from related parties, other receivables (excluding GST refund receivable), financial assets at amortized cost-current and refundable deposits.

  • Note 2: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, trade payables, other payables (less payable for salaries and bonus, payable for pension fees and payable for GST), other payables to related parties and guarantee deposits.

d. Financial risk management objectives and policies

The Group’s major financial instruments include trade receivables, trade payables, other payables, lease liabilities and borrowings. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Group seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (refer to (a) below) and interest rates (refer to (b) below). The Group entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including forward foreign exchange contracts to hedge the exchange rate risk arising from the export of printed circuit boards.

There has been no change to the Group’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

As many of the Company’s subsidiaries have foreign currency denominated transactions, the Group is exposed to risk of fluctuation in exchange rates. The Group’s risk management policy on foreign exchange rate fluctuations is within the standard scope allowed, and utilizes derivative - foreign currency forward contracts to manage risks.

~122~

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) and of the derivatives exposed to foreign currency risk at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Group was mainly exposed to the changes in the exchange rate of the USD, RMB and JPY.

The following table details the Group’s sensitivity to a 5% increase and decrease in the functional currency against the relevant foreign currencies.

The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 5%. The sensitivity analysis included only outstanding foreign currency denominated monetary items, and adjusts their translation at the end of the reporting period for a 5% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit and other equity associated with the functional currency strengthening 5% against the relevant foreign currency. For a 5% weakening of the functional currency against the relevant foreign currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss
Profit or loss
Profit or loss		 USD Impact
For the Year Ended December 31
2020
2019
$ 10,019 (i)
$ 10,739 (i)
RMB Impact
For the Year Ended December 31
2020
2019
$ 29,119 (ii)
$ 16,009 (ii)
JPY Impact
For the Year Ended December 31
2020
2019
$ (13,747) (iii)
$ (1,490) (iii)
  • i. This was mainly attributable to the exposure from outstanding receivables and payables in USD which were hedged at the end of the reporting period.

The Group’s sensitivity to USD was not significantly different in the current period compared to the previous period.

  • ii. This was mainly attributable to the exposure from outstanding receivables and payables in RMB at the end of the reporting period.

The Group’s sensitivity to foreign currency increased during the current period mainly due to the addition of net assets denominated in RMB.

  • iii. This was mainly attributable to the exposure from outstanding receivables and payables in JPY which were hedged at the end of the reporting period.

The Group’s sensitivity to foreign currency increased during the current period mainly due to the addition of liabilities denominated in JPY.

~123~

b) Interest rate risk

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

Fair value interest rate risk
Financial assets
Financial liabilities
Cash flow interest rate risk
Financial assets
Financial liabilities		 **December 31 **
2020
2019
$ 11,501,087
$ 10,704,483
11,139,055
7,177,160
14,467,095
16,888,861
2,859,250
7,264,650

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liabilities outstanding at the end of the reporting period was outstanding for the whole year. A sensitivity rate of 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% basis points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $116,078 thousand and $96,242 thousand, respectively. The Group’s sensitivity to interest rates increased during the current period mainly due to the decrease in variable rate bank deposits.

c) Other price risk

The Group was exposed to equity price risk through its investments in equity securities. Equity investments are held for strategic rather than for trading purposes. In addition, the Group has appointed a special team to monitor the price risk and will consider hedging the risk exposure should the need arise.

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risks at the end of the year.

If equity prices had been 5% higher/lower, pre-tax profit for the year ended December 31, 2020 would have increased/decreased by $185 thousand. As a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which would cause a financial loss to the Group due to failure of counterparties to discharge its obligations and due to the financial guarantees provided by the Group, could be equal to the carrying amount of the respective recognized financial assets as stated in the balance sheets.

~124~

The Group adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables.

The Group would continuously assess the financial positions of the customers’ trade receivables continuously and purchase credit insurance if necessary.

The credit risk was mainly concentrated on the top 10 customers of the Group. As of December 31, 2020 and 2019, the percentages of total trade receivables from the top 10 customers were 45% and 44%, respectively.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2020 and 2019, the Group had available unutilized short-term bank loan facilities set out in (c) below.

  • a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following tables detail the Group’s remaining contractual maturities for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2020

December 31, 2020
On Demand or
Less than
3 Months
Non-derivative financial liabilities
Non-interest bearing liabilities
$ 12,385,599

Lease liabilities
3,811
Variable interest rate liabilities
2,859,250
Fixed interest rate liabilities
11,111,599

$ 26,360,259
 3 Months to
1 Year
$ 435,967

11,028
-

-

$ 446,995
 1-5 Years
$ 22,452

12,617
-

-

$ 35,069
 5+ Years
$ -
-
-

-
$ -

~125~

December 31, 2019

On Demand or
Less than
3 Months
Non-derivative financial liabilities
Non-interest bearing liabilities
$ 11,608,138

Lease liabilities
3,378
Variable interest rate liabilities
7,264,650
Fixed interest rate liabilities

7,146,114

$ 26,022,280
 3 Months to
1 Year
$ 309,212

8,983
-

-

$ 318,195
 1-5 Years
$ 23,318

18,685
-

-

$ 42,003
 5+ Years
$ -
-
-

-
$ -

b) Liquidity and interest rate risk tables for derivative financial liabilities

The following table details the Group’s liquidity analysis for its derivative financial instruments. The table is based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed is determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

December 31, 2020

Net settled
Foreign exchange forward
contracts

Gross settled
Foreign exchange forward
contracts
Inflows

Outflows


December 31, 2019
Gross settled
Foreign exchange forward
contracts
Inflows

Outflows

 On Demand
or Less than
3 Months
3 Months to 1
Year
$ (382
)
$ -

$ 6,607,018
$ 2,855,513

(6,346,762
)
(2,827,118
)

$ 260,256
$ 28,395

On Demand
or Less than
3 Months
3 Months to 1
Year
$ 7,239,772
$ 3,426,652

(7,166,382
)
(3,405,206
)

$ 73,390
$ 21,446
 1-5 Years
$ -

$ -


-

$ -

1-5 Years
$ -


-

$ -
 5+ Years
$ -
$ -

-
$ -
5+ Years
$ -

-
$ -

~126~

c) Financing facilities

Unsecured bank overdraft facilities, reviewed annually
and payable on demand:
Amount used
Amount unused		 December 31 December 31


2020
$ 13,970,849


20,781,855

$ 34,752,704
 2019
$ 14,410,764

20,238,831
$ 34,649,595

30. TRANSACTIONS WITH RELATED PARTIES

Balances, transactions, revenue and expenses between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

  • a. Related party names and categories
Related Party Name
Delta Mobile Software, Inc.
Delta Mobile Systems. Inc., Taiwan Branch		 Related Party Category
Other related party (Note 1)
Other related party (Note 2)

  • Note 1: The investor that has significant influence on the subsidiary of the Group, Trison Technology Corporation.

  • Note 2: The investor (a branch company) that has significant influence on the subsidiary of the Group, Trison Technology Corporation.

  • b. Operating revenue

Line Item
Related Party Category
Sales
Other related parties		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 4,205
 2019
$ 85

The selling price for related parties is calculated with reference to the applicable market price. The credit terms for the related parties are comparable to those for unrelated parties.

  • c. Receivables from related parties (excluding loans to related parties)
Line Item
Related Party Category
Trade receivables from related
parties
Other related parties		 December 31
2020
$ -
 2019
$ 88

The outstanding trade receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for trade receivables from related parties.

~127~

d. Payable to related parties

Line Item
Related Party Category
Other payables
Other related parties
The outstanding payables to related parties are unsecured.
Other transactions with related parties
Expense
Related Party Category
Types
Other related parties
Sample fee
Compensation of key management personnel
The compensation of key management personnel are as follows:
Short-term employee benefits		 December 31
2020
$ 2

**For the Year Ended **		 2019
$ -
December 31
2020
$ 2

**For the Year Ended **		 2019
$ -
December 31
2020
$ 178,060
 2019
$ 187,739

  • e. Other transactions with related parties

  • f. Compensation of key management personnel

According to the distribution policy of Articles, the remuneration of directors was determined by the Group's operating performance and benchmarking to market compensation surveys. Base on the regulations of personnel and compensation, the remuneration of the key management including salary, bonus and compensation of employees which were determined by individual performance and their contribution to the Group's overall performance. It is submitted to the Company’s Board of Directors for resolution after reviewed by the remuneration committee.

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The amounts of restricted assets of the Group that were provided for as collateral for the import transactions in the Customs Administration, MOF, are as follows:

Time deposits December 31
2020
$ 12,000
 2019
$ 7,000

~128~

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The significant commitments of the Group were as follows:

Significant commitments

  • a. As of December 31, 2020 and 2019, the amounts of unused letters of credit for purchases of machinery and equipment were as follows:
December 31
Currency
2020
2019
USD
$ 4,754
$ 450
JPY
2,132,959
230,100
b. Unrecognized commitments were as follows:
December 31
2020
2019
Purchases of property, plant and equipment
$ 4,735,553
$ 2,248,944
SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the
foreign currencies other than functional currencies of the entities in the Group and the related exchange
rates between the foreign currencies and respective functional currencies were as follows:
December 31, 2020
Foreign
Currency
Exchange Rate
Carrying
Amount
(In NTD)
Financial assets
Monetary items
USD
$ 221,479
28.1 (USD:NTD)
$ 6,223,562
USD
614,530
6.52950 (USD:RMB)
17,268,295
RMB
134,771
0.15315 (RMB:USD)
579,992
JPY
235,331
0.00970 (JPY:USD)
64,154
Financial liabilities
Monetary items
USD
227,726
28.1 (USD:NTD)
6,399,093
USD
272,153
6.52950 (USD:RMB)
7,647,491
RMB
65
0.15315 (RMB:USD)
281
JPY
1,223,451
0.00970 (JPY:USD)
333,529		 December 31
2020
2019
$ 4,754
$ 450
2,132,959
230,100
December 31

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies of the entities in the Group and the related exchange rates between the foreign currencies and respective functional currencies were as follows:

~129~

December 31, 2019

December 31, 2019
Carrying
Foreign Amount
Currency Exchange Rate (In NTD)
Financial assets
Monetary items
USD $
205,136		 29.98 (USD:NTD) $
6,149,971
USD 523,265 6.96465 (USD:RMB) 15,687,490
RMB 74,114 0.14358 (RMB:USD) 319,029
JPY 8,367,024 0.00921 (JPY:USD) 2,309,299
Financial liabilities
Monetary items
USD 203,891 29.98 (USD:NTD) 6,112,663
USD 241,346 6.96465 (USD:RMB) 7,235,541
RMB 548 0.14358 (RMB:USD) 2,359
JPY 296,030 0.00921 (JPY:USD) 81,704

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign
Currency
USD
USD
JPY
RMB		 For the Year Ended December 31, 2020
Exchange Rate
Net Foreign
Exchange Gains
(Losses)
Foreign
Currency
29.552 (USD:NTD)
$ (28,759)
USD
6.9028 (USD:RMB)
(649,077)
USD
0.00937 (JPY:USD)
(16,541)
JPY
0.14497 (RMB:USD)

32,977
RMB
$ (661,400
)		 For the Year Ended December 31, 2019
Exchange Rate
Net Foreign
Exchange Gains
(Losses)
30.912 (USD:NTD)
$ (3,764)
6.9103 (USD:RMB)
113,463
0.00918 (JPY:USD)
(38,966)
0.14478 (RMB:USD)

(4,881
)
$ 65,852

34. SEPARATELY DISCLOSED ITEMS

  • a. Information about significant transactions:

  • 1) Financing provided to others (Table 1)

  • 2) Endorsements/guarantees provided (Table 2)

  • 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)

  • 4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)

  • 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (Table 4)

  • 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)

~130~

  • 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 5)

  • 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 6)

  • 9) Trading in derivative instruments (Notes 7 and 29)

  • 10) Intercompany relationships and significant intercompany transactions (Table 7)

  • b. Information on investees (Table 8)

  • c. Information on investments in mainland China

  • 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, current profit and loss and recognized investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 9)

  • 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 10):

    • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

    • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

    • c) The amount of property transactions and the amount of the resultant gains or losses.

    • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

    • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to the financing of funds.

    • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

  • d. The subsidiaries holding the parent company’s shares should list clearly the Company’s name, number of shares held, the total amounts and the related reasons: None.

  • e. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 11)

~131~

  • f. The disclosure of related information on affiliated companies as follows:

  • 1) Disclosed items on the consolidated financial statements of affiliates are as follows:

No. Items **Description **
1 Subsidiaries’ company names, relationships to the controlling
company, nature of business, and the controlling company’s
shareholdingor capitalproportion.		 Refer to Note 12
2 Variation of subsidiaries which are included in the current
consolidated financial statements.		 Refer to Note 12
3 Subsidiaries’ company names, shareholding or capital proportion
and the reasons that they are not listed on the consolidated
financial statements.		 None
4 The adjustments and the ways to manage when the controlling
company and a subsidiary have different fiscal year start/end
dates.		 None
5 The adjustments when the controlling company and a subsidiary
have different accounting policies.		 None
6 Operatingrisk such as exchange risk for an overseas subsidiary. Refer to Note 12
7 Retained earnings allocation of each subsidiary restricted by
regulations or contracts.		 Refer to Note 21
8 Consolidated amortization methods and expirations. None
9 Others. None
  • 2) Disclosed items from each individual affiliate are as follows:
No. Items **Description **
1 Elimination transactions between the controlling company and
subsidiaries and between subsidiaries.		 Refer to Table 7
2 Information about accommodations of funds or endorsements. Refer to
Tables 1 and 2
3 Information about derivative instrument transactions. Refer to
Notes 7 and 29
4 Significant contingencies. None
5 Significant events after the reporting period. None
6 Names, quantities, costs, market prices (if not available, disclose
net worth per share), capital proportions and the highest
shareholdingsituation of the securities.		 Refer to
Tables 3, 8 and 9
7 Others. None

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments were identified as printed circuit boards (PCB) and others.

The PCB units are considered as a separate operating segment by the chief operating decision maker (CODM). For the purpose of presenting the consolidated financial statements, these individual operating segments have been aggregated into a single operating segment taking into account the following factors:

  • These operating segments have similar long-term gross profit margins;

  • The nature of the products and production processes are similar;

  • The methods used to distribute the products to the customers are the same.

~132~

a. Segment revenue and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segments.

PCB
Others
Continuing operations
Interest income
Other revenue
Other gains and losses
Central administration costs
and directors’ salaries
Finance costs
Profit before tax (continuing
operations)		 Segment Revenue
For the Year Ended
December 31
2020
2019
$ 54,950,111
$ 53,882,412

597,797

568,532
$ 55,547,908
$ 54,450,944		 Segment Income Segment Income
For the Year Ended
December 31


2020
$ 54,950,111


597,797

$ 55,547,908


2020
$ 7,194,203


(28,611
)

7,165,592
293,489
455,983
538,707
(591,250)

(105,731
)

$ 7,756,790
 2019
$ 7,552,748

(47,920
)
7,504,828
434,409
393,484
450,978
(734,244)

(251,164
)
$ 7,798,291

The amounts included in revenue were from external customers, and the amounts of inter-segment revenue for 2020 and 2019 were eliminated.

Segment profit represents the profit before tax earned by each segment without allocation of central administration costs and directors’ salaries, interest income, other revenue, other gains and losses, finance costs and income tax expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Segment total assets and liabilities

Segment total assets and liabilities are not reported to the chief operating decision maker and not required to be disclosed.

  • c. Geographical information

The Group’s revenue by location was mainly categorized by the location of the customers.

~133~

The Group’s revenue from continuing operations from external customers by location of customers and information about its non-current assets by location of assets are detailed below:

Revenue from External

Revenue from External
Taiwan
China
Vietnam
Thailand
South Korea
Malaysia
Others		 Customers
For the Year Ended
December 31
2020
2019
$ 4,726,251
$ 3,401,418
35,429,381
34,676,682
2,234,080
2,098,520
1,928,448
1,859,065
1,651,903
1,409,482
2,405,422
2,060,984

7,172,423

8,944,793
$ 55,547,908
$ 54,450,944		 Non-current Assets
**December 31 **


2020
$ 4,726,251

35,429,381
2,234,080
1,928,448
1,651,903
2,405,422

7,172,423

$ 55,547,908

2020
$ 1,582,291

17,515,970
-
-
-
-

537,621

$ 19,635,882
 2019
$ 1,261,562
15,074,207
-
-
-
-

37,848
$ 16,373,617

Non-current assets exclude deferred tax assets.

  • d. Information about major customers

The operating revenue were $55,547,908 thousand and $54,450,944 thousand in 2020 and 2019, respectively. There was no single customer that contributed 10% or more to the revenue in the consolidated statements of comprehensive income for the years ended December 31, 2020 and 2019.

~134~

TABLE 1

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.
(Note 1)		 Lender Borrower Financial Statement
Account		 Related
Party		 Highest
Balance for the
Period
(Note 6)
Ending
Balance
(Note 6)		 Actual
Amount
Borrowed
(Note 6)		 Interest Rate
(%)		 Nature of
Financing
(Note 2)
Business
Transaction
Amount		 Reasons for Short-term
Financing
Allowance for
Impairment
Loss		 Collateral Collateral Financing
Limit for Each
Borrower
(Note 5)		 Aggregate
Financing
Limit
(Note 5)		 Note
Item Value
1 J&J Holding Co.,
Ltd.		 Tripod Overseas Co.,
Ltd.		 Other receivables from
related parties		 Yes $ 484,303 $ 449,600 $ 449,600 - 2 $ - The need for financing
operating capital		 $ - - - $ 92,060,696 $ 92,060,696
2 Tripod Overseas
Co., Ltd.		 Tripod (Wuxi)
Electronic Co., Ltd.
Tripod (Hubei)
Electronic Co., Ltd.		 Other receivables from
related parties
Other receivables from
related parties		 Yes
Yes		 457,095
7,044,045
-

4,636,500
-

4,636,500		 -
(Note 7)
0.7555-0.76663
(Note 8)		 2
2		 -
-		 The need for financing
operating capital
The need for financing
operating capital		 -
-		 -
-		 -
-		 91,130,293
91,130,293		 91,130,293
91,130,293
3 Tripod (Wuxi)
Electronic Co.,
Ltd.		 Tripod (Hubei)
Electronic Co., Ltd.		 Other receivables from
related parties		 Yes 1,118,923
1,118,923
1,118,923		 4.10377
(Note 9)		 2 - The need for financing
operating capital		 - - - 67,043,846 67,043,846
  • Note 1: The Company is coded “0.”

The investees are coded consecutively beginning from “1” in the order presented in the table above.

  • Note 2: The financing that occurred due to business transaction is coded “1.”

The financing that occurred due to short-term financing is coded “2.”

  • Note 3: The total amounts available for lending purposes shall not exceed the net worth of the Company (lending company). Nonetheless, the short-term financing facility is necessary provided that the total amounts lendable to a company shall not exceed 40% of the net worth of the Company (lending company).

  • Note 4: The limit on the amount for lending to a company that has a business relationship with the lending company: for companies that have a business relationship with the lending company, the total amount available for financing to the borrower shall not exceed the total amount of the business transactions within the lender and borrower. The total amount of the business transactions refers to the purchases and sales made within the two parties in the current year. For short-term financing facility needs, the limit on the amounts available for lending to a company shall not exceed 40% of the net worth of the Company (lending company) in the period.

  • Note 5: The inter-company loans for funding between offshore subsidiaries in which the Company holds, directly or indirectly, 100% of the voting shares, the aggregate financing amount and the limit on the amount available for lending to a company for short-term financing facility needs both shall not exceed 200% of the net worth of the lending company in the period.

  • Note 6: The highest balance for the period and ending balance represented above are listed in the New Taiwan dollars. The highest balance denominated in foreign currencies is translated using the highest prevailing exchange rate; and the ending balance is translated into NTD using the exchange rate as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355.

  • Note 7: Total interest in the period is $4,860 thousand.

  • Note 8: Total interest in the period is $103,001 thousand.

  • Note 9: Total interest in the period is $35,075 thousand.

  • Note 10: The listed amounts were eliminated upon consolidation.

~135~

TABLE 2

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Endorser/Guarantor Endorsee/Guarantee Endorsee/Guarantee Limit on
Endorsement/
Guarantee
Given on
Behalf of Each
Party
(Note 3)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
(Notes 4 and 5)		 Outstanding
Endorsement/
Guarantee at
the End of the
Period
(Notes 4 and 5)		 Actual
Amount
Borrowed		 Amount
Endorsed/
Guaranteed by
Collateral
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest
Financial
Statements		 Aggregate
Endorsement/
Guarantee
Limit
(Note 3)		 Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries		 Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent		 Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Name Relationship
(Note 2)
1 Tripod (Wuxi) Electronic
Co., Ltd. (Note 4)		 Tripod (Wuxi)
Electronic Co., Ltd.		 c. $ 67,043,846 $ - $ - $ - $ - - $ 67,043,846 No No Yes
2 Tripod (Hubei) Electronic
Co., Ltd. (Note 5)		 Tripod (Hubei)
Electronic Co., Ltd.		 c. 72,105,894
-
-
-
-		 - 72,105,894 No No Yes

  • Note 1: 1. The Company is coded “0.”

  • The investees are coded consecutively beginning from “1” in the order presented in the table above.

Note 2: The seven types of relationships between the endorser/guarantor and endorsee/guarantee indicated as numbers in the table above are as follows:

  • a. Companies with business relationship.

  • b. Subsidiary in which over 50% of its ordinary shares is directly or indirectly owned by the Company.

  • c. The total amount of the guarantee provided by the Company to subsidiaries whose direct or indirect voting shares are 50% or above.

  • d. Subsidiaries in which over 90% of their ordinary shares are directly or indirectly owned by the Company.

  • e. Mutually endorsed/guaranteed companies for the construction project based on the construction contract.

  • f. Companies of the same investment relationship as the stockholders of the companies provide endorsements/guarantees, in proportion to their stockholding amounts, due to co-investment.

  • g. Companies in the same industry that are liable for joint endorsements/guarantees of the pre-construction house contract regulated by consumer protection law.

  • Note 3: The total amounts of guarantee to any individual entity and the accumulated amounts shall not exceed 200% of the net worth of Tripod (Wuxi) Electronic Co., Ltd. in the period. The total amounts of guarantee to any individual entity and the accumulated amounts of Tripod (Hubei) Electronic Co., Ltd. shall not exceed 200% of the net worth of Tripod Technology Corporation.

Note 4: The amounts that Tripod (Wuxi) Electronic Co., Ltd. guaranteed to itself for tariffs is RMB25,000 thousand.

Note 5: The amounts that Tripod (Hubei) Electronic Co., Ltd. guaranteed to itself for tariffs is RMB30,000 thousand.

~136~

TABLE 3

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name Type and Name of Marketable Securities Relationship with the
Holding Company		 Financial Statement Account December 31, 2020 December 31, 2020 Note
Number of
Shares
(Thousands of
Shares)		 Carrying
Amount		 Percentage of
Ownership (%)		 Fair Value
The Company
Tripod Overseas Co., Ltd.		 Stock
AirDio Wireless Inc.
Catalina Media Ltd.
CHIN-POON Industrial Co., Ltd.
Delta Mobile Software, Inc.		 -
-
-
Other related parties		 Financial assets at FVTPL - current
Financial assets at FVTPL - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - non-current		 600
563
117
118		 $ -
-
3,709
-		 11.68
19.54
0.03
-		 $ -
-
3,709
-		 Note 1
Note 2
Note 3
  • Note 1: The Company held 600 thousand shares of AirDio Wireless Inc. at the end of the period, and the shareholding percentage was 11.68%. AirDio Wireless Inc. has been in liquidation, the net worth of the equity was negative and the carrying amount as assessed by the fair value was zero.

Note 2: The Company held 563 thousand shares of Catalina Media Ltd. at the end of the period, and the shareholding percentage was 19.54%. Catalina Media Ltd. has ceased operations, and the carrying amount assessed by its fair value was zero.

Note 3: The Company held 118 thousand shares of Delta Mobile Software, Inc. at the end of the period, and the carrying amount assessed by the fair value was zero.

Note 4: Refer to Tables 8 and 9 for information relating to investments in subsidiaries.

Note 5: The amounts of stockholding held by investee companies were the same as the ending balance, and all the securities above were not pledged.

~137~

TABLE 4

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer Property Event Date Transaction
Amount		 Payment Status Counterparty Relationship Information o n Previous Title Transfer If Counterparty Is A
Related Party		 n Previous Title Transfer If Counterparty Is A
Related Party		 n Previous Title Transfer If Counterparty Is A
Related Party		 Pricing
Reference		 Purpose of
Acquisition		 Other Terms
Property
**Owner **		 Relationship Transaction
Date		 Amount
Tripod (Hubei)
Electronic Co., Ltd.		 Buildings 2020.8.6 $ 707,457 Based on the progress
of construction		 L&K Engineering
(Suzhou) Co., Ltd.		 - - - - $ - N/A
(Note)		 For operational use
-

Note: These were contracts with third parties to construct on land rented by the government, thus the appraisal reports were not required.

~138~

TABLE 5

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer Related Party Relationship Transaction Details Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Note
Purchases/
Sales		 Amount % of
**Total **		 Payment Terms Unit Price Payment Terms Ending Balance % of
**Total **
Tripod Technology Corporation
Able International Limited
Tripod Overseas Co., Ltd.
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Parent company
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company		 Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales		 $ 586,584
1,625,051
4,455,458
369,036
1,582,890
326,553
2,662,536
37,610,749
158,796
142,648
615,971
29,549,297
1,076,573
8,369,079
1,809,504		 5
15
41
16
69
14
6
99
-
-
2
76
9
73
16		 Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued		 N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A		 N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A		 Trade receivables
$ 172,191
Trade receivables
217,263
Trade receivables
668,063
Trade receivables
94,696
Trade receivables
407,979
Trade receivables
85,608
Trade receivables
510,710
Trade receivables
624,817
Trade receivables
-
Trade receivables
-
Trade receivables
103,734
Trade receivables
5,105,595
Trade receivables
297,481
Trade receivables
870,229
Trade receivables
303,429		 7
9
28
16
69
15
4
100
-
-
1
60
20
58
20		 (Note 2)

Note 1: The amounts above are listed in the New Taiwan dollars. Foreign currencies are translated into NTD using the exchange rates as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355; net income denominated in foreign currencies are translated using the average exchange rate of 2020.

Note 2: Service revenue in the current period.

Note 3: The listed amounts were eliminated upon consolidation.

~139~

TABLE 6

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name Related Party Relationship Ending Balance
(Note 2)		 Turnover
Rate		 Overdue Amount
Received in
Subsequent
Period		 Allowance for
Impairment
Loss
Amount Actions Taken
Tripod Technology Corporation
J & J Holding Co., Ltd.
Able International Limited
Tripod Overseas Co., Ltd.
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Technology Corporation
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company		 Trade receivables
$ 172,191
Trade receivables
217,263
Trade receivables
668,063
Other receivables
3,737,316
Other receivables
449,600
(Note 1)
Trade receivables
407,979
Trade receivables
510,710
Other receivables
194,463
(Note 1)
Other receivables
6,143,683
(Note 1)
Trade receivables
624,817
Other receivables
5,355,887
Trade receivables
103,734
Trade receivables
5,105,595
Other receivables
1,150,752
(Note 1)		 2.88
8.96
5.61
(Note 3)
N/A
N/A
4.11
6.86
N/A
N/A
8.62
N/A
3.44
6.13
N/A		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
-		 -
-
-
-
-
-
-
-
-
-
-
-
-
-		 $ 88,421
146,454
488,131
2,719,347
-
208,316
268,795
52,318
-
326,559
2,784,043
-
2,470,227
-		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
-

(Continued)

~140~

Company Name Related Party Relationship Ending Balance
(Note 2)		 Turnover
Rate		 Overdue Amount
Received in
Subsequent
Period		 Allowance for
Impairment
Loss
Amount Actions Taken
Tripod (Hubei) Electronic Co., Ltd. Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Sister company
Sister company
Sister company		 Trade receivables
$ 297,481
Trade receivables
870,229
Trade receivables
303,429		 4.02
8.07
5.60		 $ -
-
-		 -
-
-		 $ 137,442
870,229
114,634		 $ -
-
-

Note 1: Refer to Table 7 for the related information on loans to related parties, accrued income and equipment transactions etc.

Note 2: The amounts above are listed in the New Taiwan dollars. Foreign currencies are translated into NTD using the exchange rates as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355.

Note 3: Trade receivables generated from service revenue in the current period.

Note 4: The listed amounts were eliminated upon consolidation.

(Concluded)

~141~

TABLE 7

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No
(Note 1)		 Company Name Related Party Relationship
(Note 2)		 Transaction Details Transaction Details
Entry Amount
(Note 5)		 Transaction conditions Percentage of
Consolidated Net
Revenue or Total
Assets (%) (Note 3)
0 Tripod Technology Corporation Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.		 1
1
1
1
1
1
1		 Sales
Sales
Service revenue
Trade receivables - related parties
Trade receivables - related parties
Trade receivables - related parties
Other receivables - related parties		 $ 586,584
1,625,051
4,455,458
172,191
217,263
668,063
3,737,316		 Price set based on order
Price set based on order
Based on contractual terms
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
Based on contractual terms		 1.06
2.93
8.02
0.23
0.29
0.89
4.97
1 J & J Holding Co., Ltd. Tripod Overseas Co., Ltd. 3 Other receivables - related parties 449,600 Based on contractual terms 0.60
2 Able International Limited Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 2
3
3
2
3
3		 Sales
Sales
Sales
Trade receivables - related parties
Trade receivables - related parties
Trade receivables - related parties		 369,036
1,582,890
326,553
94,696
407,979
85,608		 Price set based on order
Price set based on order
Price set based on order
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies		 0.66
2.85
0.59
0.13
0.54
0.11
3 Tripod Overseas Co., Ltd. Tripod Technology Corporation
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 2
3
2
3
3
3		 Sales
Interest income - related parties
Trade receivables - related parties
Other receivables - related parties
Other receivables - related parties
Other receivables - related parties (Note 6)		 2,662,536
103,001
510,710
194,463
1,506,103
4,637,580		 Price set based on order
Based on contractual terms
The transaction terms are not significantly
different with other companies
Property, plant and equipment, and the transaction
has no significant difference with other
companies
Property, plant and equipment, and the transaction
has no significant difference with other
companies
Based on contractual terms		 4.79
0.19
0.68
0.26
2.00
6.16

(Continued)

~142~

No
(Note 1)		 Company Name Related Party Relationship
(Note 2)		 Transaction Details Transaction Details
Entry Amount
(Note 5)		 Transaction conditions Percentage of
Consolidated Net
Revenue or Total
Assets (%) (Note 3)
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 3
3		 Proceeds from disposals of the property
transaction
Proceeds from disposals of the property
transaction		 $ 991,428
1,773,299		 Price set based on order
Price set based on order		 1.78
3.19
4 Tripod Global Pte. Ltd. Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Technology Corporation		 3
3
3
3
2		 Sales
Sales
Sales
Trade receivables - related parties
Other receivables - related parties		 37,610,749
158,796
142,648
624,817
5,355,887		 Price set based on order
Price set based on order
Price set based on order
The transaction terms are not significantly
different with other companies
Based on contractual terms		 67.71
0.29
0.26
0.83
7.12
5 Tripod (Wuxi) Electronic Co., Ltd. Able International Limited
Tripod Global Pte. Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 3
3
3
3
3
3
3		 Sales
Sales
Sales
Trade receivables - related parties
Trade receivables - related parties
Trade receivables - related parties
Other receivables - related parties (Note 6)		 615,971
29,549,297
58,234
103,734
5,105,595
55,056
1,143,957		 Price set based on order
Price set based on order
Price set based on order
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
Based on contractual terms		 1.11
53.20
0.10
0.14
6.78
0.07
1.53
6 Tripod (Hubei) Electronic Co., Ltd. Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 3
3
3
3
3
3		 Sales
Sales
Sales
Trade receivables - related parties
Trade receivables - related parties
Trade receivables - related parties		 1,076,573
8,369,079
1,809,504
297,481
870,229
303,429		 Price set based on order
Price set based on order
Price set based on order
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies
The transaction terms are not significantly
different with other companies		 1.94
15.07
3.26
0.40
1.16
0.40

Note 1: The Company and its investees are coded as follows:

  • a. The Company is coded “0.”

  • b. The investees are coded consecutively beginning from “1” in the order presented in the table above.

Note 2: The types of relationship between the transacting parties are as follows:

  • a. The Company to the consolidated subsidiary.

  • b. The consolidated subsidiary to the Company.

  • c. The consolidated subsidiary to another consolidated subsidiary.

(Continued)

~143~

(Concluded)

  • Note 3: Regarding percentage of transaction amount to consolidated total operating revenue or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenue for income statement accounts.

  • Note 4: The amounts above are listed in the New Taiwan dollars. Foreign currencies are translated into NTD using exchange rate as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355; net income dominated in foreign currencies are translated using average exchange rate of 2020.

Note 5: The significant intercompany transaction listed above was eliminated upon consolidation.

Note 6: Other receivables from related parties consist of interest income receivables.

~144~

TABLE 8

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Original Investment Amount As of December 31, 2020 December 31, 2020 Net
Income/(Loss)
of the Investee
Share of
Profit/(Loss)
of Investee		 Remark
December 31,
2020		 December 31,
2019		 Number of
Shares
(Thousands of
Shares)		 % Carrying
Amount
The Company
J & J Holding Co., Ltd.
Tripod Overseas Co., Ltd.		 J & J Holding Co., Ltd.
Trison Technology Corporation
Tripod Nano Technology Corporation
Tripod Overseas Co., Ltd.
Able International Limited
Tripod International Holding Pte. Ltd.
Tripod Global Pte. Ltd.
Tripod Worldwide Holding Pte. Ltd.		 Palm Grove House, P.O. Box 438, Road
Town, Tortola, British Virgin Islands
1F., No. 598, Longci Rd., Zhongli Dist.,
Taoyuan City 32091, Taiwan (R.O.C.)
No. 171, Sec. 1, Meishi Rd., Yangmei Dist.,
Taoyuan City 32659, Taiwan (R.O.C.)
Palm Grove House, P.O. Box 438, Road
Town, Tortola, British Virgin Islands
Portcullis Chambers, P.O. Box 1225, Apia,
SAMOA
10 Anson Road #30-01 International Plaza
Singapore 079903
10 Anson Road #30-01 International Plaza
Singapore 079903
10 Anson Road #30-01 International Plaza
Singapore 079903		 Investment activities
Manufacturing and wholesaling of electronic parts
Manufacturing and wholesaling of chemical materials
Investment activities and selling of printed circuit
board and raw materials of electronic parts
Trading of printed circuit boards and raw materials of
electronic parts
Investment activities
Trading of printed circuit boards and raw materials of
electronic parts
Investment activities		 $ 4,246,360
30,000

100,000
4,171,875
19,558
5,532,140
3,153
6,025,716		 $ 4,246,360

30,000

75,000

4,171,875

19,558

5,532,140

3,153

6,025,716
128,396

3,000

10,000

128,000

600

172,900

100

200,050		 100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00		 $ 45,690,459
29,932
32,946
45,565,146
15,154
33,125,411
9,797
3,783,078		 $ 3,431,193

(627)

(26,155)

3,431,390

(67)

2,531,459

1,213

446,906		 $ 3,424,458

(502)

(26,155)

(Note 2)

(Note 2)

(Note 2)

(Note 2)

(Note 2)		 Subsidiary (Note 1)
Subsidiary
Subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary

Note 1: The investment gains and losses recognized in the current period are the reversal of unrealized sales gross profit from upstream transactions recognized in the previous period amounting to $2,742 thousand and unrealized gain of $498 thousand from the disposals of property, plant and equipment in the previous period, subtracting the unrealized sales gross profit from upstream transactions recognized in the current period amounting to $9,718 thousand and unrealized gain of $257 thousand from the disposals of property, plant and equipment in the current period.

Note 2: The share of profits/losses of each investee company was summed up as the unrealized gross profit and recognized as the share of profits/losses on investment of J & J Holding Co., Ltd. in the period.

Note 3: Refer to Table 9 for information relating to investment in mainland China.

Note 4: The amounts of stockholding held by investee companies were the same as the ending balance, and all the securities above were not pledged.

Note 5: The listed amounts were eliminated upon consolidation.

~145~

TABLE 9

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

  • a.

Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, investment income or loss, carrying amount of the investment at the end of the period and repatriations of investment income:

Investee Company Main Businesses and Products Paid-in Capital Method of
Investment
(Note 1)		 Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2020		 Remittance of Funds Remittance of Funds Accumulated
Outward
Remittance for
Investment from
Taiwan as of
December 31,
2020		 Net Income (Loss)
of the Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)		 Carrying Amount
as of
December 31,
2020		 Accumulated
Repatriation of
Investment
Income as of
December 31,
2020		 Note
Outward Inward
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod (Xiantao) Zhiye Co., Ltd.		 Processing, manufacturing and
selling of printed circuit board
and other related components
Processing, manufacturing and
selling of printed circuit board
and other related components
The wholesale, import and export
of electronic products,
development of real estate,
sales and rental of the
commercial housing, own-built
commercial housing and
management of related support
measure.		 $ 10,186,008
(US$ 311,190)
(Note 4)
6,024,188
(US$ 200,000)
243,082
(RMB 50,050)		 b.
b.
c.		 $ 4,713,315
(US$ 144,600)
6,024,188
(US$ 200,000)
-		 $ -
-

-		 $ -
-
-		 $ 4,713,315
(US$ 144,600)
6,024,188
(US$ 200,000)
-		 $ 2,530,972
446,835
(5,847)		 100
100
100		 $ 2,593,777
(Note 2,b,2)
410,498
(Note 2,b,2)
(5,847)
(Note 2,b,2)		 $ 33,423,679
4,227,587
192,546		 $ -
-
-
  • b. Limit on the amount of investments in the mainland China area:
Accumulated Outward Remittance for
Investments in Mainland China as of
December 31, 2020		 Investment Amount Authorized by the
Investment Commission, MOEA		 Upper Limit on the Amount of
Investments Stipulated by the
Investment Commission, MOEA
$ 11,888,548 (Note 5)
(US$ 383,571)		 $ 17,184,585
(US$ 550,161)		 (Note 6)

  • Note 1: The method of investment includes the following:

  • a. Direct investment in mainland China.

  • b. Indirect investment in mainland China through companies registered in a third region.

    • 1) Tripod (Wuxi) Electronic Co., Ltd. was invested through Tripod International Holding Pte. Ltd.

    • 2) Tripod (Hubei) Electronic Co., Ltd. was invested through Tripod Worldwide Holding Pte. Ltd.

  • c. Other method.

    • 1) Tripod (Xiantao) Zhiye Co., Ltd. was invested through Tripod (Hubei) Electronic Co., Ltd.

(Continued)

~146~

Note 2: The method of the investment income (loss) recognition includes the following:

  • a. The company was in the preparatory period with no income or losses.

  • b. The method for the basis of investment income (loss) recognition includes the following:

    • 1) The basis for investment income (loss) recognition is from the financial statements audited and attested by an international accounting firm which has cooperative relationship with an accounting firm in the ROC.

    • 2) The basis for investment income (loss) recognition is from the financial statements audited and attested by the parent company’s CPA in the ROC.

    • 3) The basis for investment income (loss) recognition is from the financial statements that have not been audited and attested by any CPA.

  • Note 3: These were transactions between subsidiaries and upstream transactions and the amortization expense of the unrealized gross profit.

  • Note 4: As of December 31, 2020, the paid-in capital of Tripod (Wuxi) Electronic Co., Ltd. was $10,186,008 thousand (US$311,190 thousand). The reason for the difference between the paid-in capital and accumulated outward remittance from Taiwan for investment is that Tripod (Wuxi) Electronic Co., Ltd. had conducted capitalization of retained earnings amounting to $5,472,693 thousand (US$166,590 thousand) since 2006. The aforementioned capitalization of retained earnings was approved by the Investment Commission, Ministry of Economic Affairs.

  • Note 5: The amounts were translated into foreign currencies using the exchange rate on each actual transaction date.

Note 6: Pursuant to the Jing-Shou-Gong-Zi Letter No. 10920422630 of the Ministry of Economic Affairs on July 30, 2020, the Company has obtained the certificate of being qualified as the operating headquarters issued by the Industrial Development Bureau, MOEA, and the ceiling amount of the investment in mainland China is not applicable to the Company.

  • Note 7: The amounts above listed in the New Taiwan dollars were originally denominated in RMB in the original financial statements.

Note 8: The amounts of paid-in capital held by investee companies were the same as the ending balance, and all the amounts above were not pledged.

Note 9: The listed amounts were eliminated upon consolidation.

(Concluded)

~147~

TABLE 10

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

  • a. There were the amounts and percentages of the purchases, also the amounts and percentages displayed in the ending balance of the related payables.

  • b. There were the amounts and percentages of the sales, also the amounts and percentages displayed in the ending balance of the related receivables.

  • c. The profits/losses were incurred from the proceeds from property transactions:

Seller Related Party Relationship Transaction
Type		 Amount % to
Total
Sales or
Purchase		 Transaction Details Transaction Details Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Unrealized
(Gain) Loss
Price Payment Terms Comparison with Normal Transactions Ending Balance %
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Able International Limited
Tripod (Wuxi) Electronic Co., Ltd.		 Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd
Tripod Technology Corporation
Able International Limited		 Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary		 Sales
Sales
Sales
Sales
Sales
Sales
Sales		 $ 2,306,041
356,495
3,396
507,142
79,442
2,748
369,036		 6
3
-
22
3
-
1		 Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders		 Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued		 Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties		 Trade receivables
$ 387,327
Trade receivables
123,383
Trade receivables
556
Trade receivables
88,596
Trade receivables
43,259
Trade receivables
6,219
Trade receivables
94,696		 5
8
-
15
7
-
1		 $ 7,715
2,003
-
-
-
-
-

  • d. Refer to Table 2 for information relating to the ending balance and purposes of notes endorsements/guarantees or the collaterals provided.

  • e.

  • Refer to Table 1 for information relating to the maximum balance and ending balance of financing facility, the rate intervals and the gross amounts of interest in the period.

  • f. There was no other transaction that had a significant impact on the gains or losses for the period, such as the rendering or receipt of services.

~148~

TABLE 11

TRIPOD TECHNOLOGY CORPORATION AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

Name of Major Shareholder Shares Shares
Number of
Shares		 Percentage of
Ownership (%)
Anhe International Investment Co., Limited 41,741,167 7.94

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

~149~

6.5 Latest Year Unconsolidated Financial Reports Audited by CPA

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INDEPENDENT AUDITORS’ REPORT

==> picture [160 x 180] intentionally omitted <==

The Board of Directors and Shareholders Tripod Technology Corporation

Opinion

We have audited the accompanying financial statements of Tripod Technology Corporation (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, 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 audit of the financial statements for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. We conducted our audit of the financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

~150~

Key audit matter of the Company’s financial statements for the year ended December 31, 2020 is stated as follow:

Revenue Recognition

For the year ended December 31, 2020, the revenue from the sale of goods of the Company amounted to $6,208,007 thousand, and the Company’s overall sales revenue growth rate increased by 36% compared to the previous period. Based on our assessment, there was a risk that the recognition of sales revenue from significant amount of sales with customers whose individual revenue growth rates exceeded the Company’s revenue growth rate and operating revenue with longer turnover days might not actually occur. Thus, the occurrence of sales revenue from customers that met the abovementioned criteria was identified as a key audit matter.

Refer to Notes 4 and 22 to the financial statements for details on accounting policies and relevant disclosures of revenue recognition.

Our key audit procedures performed in respect of the recognition of operating revenue were as follows:

  1. We understood the internal controls related to the aforementioned sales, assessed and tested the operating effectiveness of the design and implementation of these controls.

  2. We performed substantive analytical procedures testing of the aforementioned sales transactions, and further examined the external documents and the recovery of receivables to verify the occurrence of such transactions. We also verified that the settlement of trade receivables was consistent with the trade terms of major customers.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

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

In preparing the 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.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the 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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

~151~

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

  1. Identify and assess the risks of material misstatement of the 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 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 financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2020 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.

~152~

The engagement partners on the audits resulting in this independent auditors’ report are Chung Chen Chen and Chao Mei Chen.

==> picture [458 x 95] intentionally omitted <==

February 25, 2021

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

~153~

TRIPOD TECHNOLOGY CORPORATION

BALANCE SHEETS DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through other comprehensive income - current (Notes 4, 8 and 29)
Financial assets at amortized cost - current (Notes 4, 9 and 31)
Notes receivable (Notes 4 and 10)
Trade receivables (Notes 4 and 10)
Trade receivables from related parties (Notes 4 and 30)
Other receivables (Notes 4 and 10)
Other receivables from related parties (Notes 4 and 30)
Inventories (Notes 4 and 11)
Prepayments
Other current assets
Total current assets
NON-CURRENT ASSETS
Investments accounted for using the equity method (Notes 4, 12 and 30)
Property, plant and equipment (Notes 4, 5, 13, 30 and 32)
Right-of-use assets (Notes 4 and 14)
Other intangible assets (Notes 4 and 15)
Deferred tax assets (Notes 4 and 24)
Other non-current assets (Note 16)
Total non-current assets
TOTAL
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 17)
Financial liabilities at fair value through profit or loss - current (Notes 4, 7 and 29)
Contract liabilities - current (Note 22)
Trade payables
Trade payables to related parties (Note 30)
Other payables (Notes 18 and 27)
Other payables to related parties (Note 30)
Current tax liabilities (Note 4)
Provisions - current (Notes 4 and 19)
Lease liabilities - current (Notes 4 and 14)
Other current liabilities (Note 18)
Total current liabilities
NON-CURRENT LIABILITIES
Deferred tax liabilities (Notes 4 and 24)
Lease liabilities - non-current (Notes 4 and 14)
Net defined benefit liabilities - non-current (Notes 4 and 20)
Guarantee deposits (Note 18)
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY
Share capital (Note 21)
Capital surplus (Note 21)
Retained earnings (Note 21)
Legal reserve
Special reserve
Unappropriated earnings
Total retained earnings
Other equity (Note 21)
Total equity
TOTAL		 2020
Amount
%
$ 134,461
-
3,709
-
12,000
-
673
-
1,341,060
2
1,059,297
2
24,534
-
3,737,316
7
416,074
1
67,258
-

3,902

-

6,800,284
12
45,753,337
83
1,241,144
2
24,447
-
11,357
-
973,589
2

288,440

1

48,292,314
88
$ 55,092,598
100
$ 6,182,600
11
382
-
16,175
-
268,136
1
611,625
1
2,728,977
5
5,355,898
10
816,024
1
7,141
-
13,399
-

37,797

-

16,038,154
29
2,877,220
6
10,817
-
110,675
-

2,785

-

3,001,497

6

19,039,651
35

5,256,059

9

333,778

1
5,715,814
10
3,402,772
6

25,155,716
46

34,274,302
62

(3,811,192
)
(7
)

36,052,947
65
$ 55,092,598
100		 2019




































Amount
%
$ 104,846
-
-
-
7,000
-
717
-
774,819
1
1,301,867
3
53,070
-
4,050,866
8
283,959
1
53,698
-

8,811

-

6,639,653
13
42,795,788
83
1,098,801
2
26,596
-
18,569
-
901,717
2

99,806

-

44,941,277
87
$ 51,580,930
100
$ 5,693,200
11
-
-
6,878
-
417,914
1
276,824
1
2,358,192
5
5,411,373
10
558,083
1
12,461
-
10,921
-

32,104

-

14,777,950
29
2,536,085
5
15,445
-
107,455
-

2,785

-

2,661,770

5

17,439,720
34

5,256,059
10

333,778

1
5,112,088
10
2,190,702
4

24,651,354
48

31,954,144
62

(3,402,771
)
(7
)

34,141,210
66
$ 51,580,930
100

The accompanying notes are an integral part of the financial statements.

~154~

TRIPOD TECHNOLOGY CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 22 and 30)
OPERATING COSTS (Notes 11, 23 and 30)
GROSS PROFIT
UNREALIZED GAIN ON TRANSACTIONS WITH
SUBSIDIARIES, ASSOCIATES AND JOINT
VENTURES (Note 4)
REALIZED GAIN ON TRANSACTIONS WITH
SUBSIDIARIES, ASSOCIATES AND JOINT
VENTURES (Note 4)
REALIZED GROSS PROFIT
OPERATING EXPENSES (Notes 10, 23 and 30)
Selling and marketing expenses
General and administrative expenses
Research and development expenses
Expected credit gain
Total operating expenses
OTHER OPERATING INCOME AND EXPENSES
(Notes 13 and 23)
PROFIT FROM OPERATIONS
NON-OPERATING INCOME AND EXPENSES
Interest income (Notes 4 and 23)
Other income (Notes 4, 23 and 30)
Other gains and losses (Notes 4, 23 and 30)
Finance costs (Notes 4 and 23)
Share of profit of subsidiaries, associates and joint
ventures (Note 4)
Total non-operating income and expenses		 2020
Amount
%
$ 10,799,548
100

5,888,868
55

4,910,680
45
(329,913)
(3)

375,703

4

4,956,470
46
238,810
2
709,436
7
142,373
1

(51
)

-

1,090,568
10

-

-

3,865,902
36
452
-
9,489
-
(29,215)
-
(38,501)
-

3,397,802
31

3,340,027
31		 2019




















Amount
%
$ 9,461,697
100

4,534,201
48

4,927,496
52
(375,704)
(4)

210,875

2

4,762,667
50
230,287
3
866,540
9
129,294
1

(46
)

-

1,226,075
13

(102,597
)
(1
)

3,433,995
36
1,629
-
52,825
1
(2,785)
-
(42,215)
-

3,740,683
39

3,750,137
40
(Continued)

~155~

TRIPOD TECHNOLOGY CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

PROFIT BEFORE INCOME TAX FROM
CONTINUING OPERATIONS
INCOME TAX EXPENSE (Notes 4 and 24)
NET PROFIT FROM CONTINUING OPERATIONS
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans (Notes 4
and 20)
Unrealized gain on investments in equity
instruments at fair value through other
comprehensive income (Notes 4 and 21)
Income tax relating to items that will not be
reclassified subsequently to profit or loss
(Notes 4 and 24)
Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translation of the
financial statements of foreign operations
(Notes 4 and 21)
Income tax relating to items that may be
reclassified subsequently to profit or loss
(Notes 4 and 24)
Other comprehensive loss for the year, net of
income tax
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
EARNINGS PER SHARE (Note 25)
From continuing operations
Basic
Diluted		 2020
Amount
%
$ 7,205,929
67

(1,080,409
)
(10
)

6,125,520
57
(3,354)
-
8,376
-

671

-

5,693

-
(511,043)
(5)

102,209

1

(408,834
)
(4
)

(403,141
)
(4
)
$ 5,722,379
53
$ 11.65
$ 11.48		 2019
















Amount
%
$ 7,184,132
76

(1,146,878
)
(12
)

6,037,254
64
(7,018)
-
535
-

1,403

-

(5,080
)

-
(1,513,742)
(16)

302,749

3

(1,210,993
)
(13
)

(1,216,073
)
(13
)
$ 4,821,181
51
$ 11.49
$ 11.34
$ $


The accompanying notes are an integral part of the financial statements.

(Concluded)

~156~

TRIPOD TECHNOLOGY CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)


BALANCE AT JANUARY 1, 2019

Appropriation of 2018 earnings (Note 21)
Legal reserve
Special reserve
Cash dividends
Differences between equity purchase price and carrying amount arising from actual
acquisition or disposal of subsidiary (Notes 12, 21 and 26)
Disposals of investments in equity instruments at fair value through other comprehensive
income (Note 21)
Net profit for the year ended December 31, 2019
Other comprehensive income (loss) for the year ended December 31, 2019 (Note 21)

Total comprehensive income (loss) for the year ended December 31, 2019

BALANCE AT DECEMBER 31, 2019
Appropriation of 2019 earnings (Note 21)
Legal reserve
Special reserve
Cash dividends
Disposals of investments in equity instruments at fair value through other comprehensive
income (Note 21)
Net profit for the year ended December 31, 2020
Other comprehensive income (loss) for the year ended December 31, 2020 (Note 21)

Total comprehensive income (loss) for the year ended December 31, 2020

BALANCE AT DECEMBER 31, 2020
 Share Capital Capital Surplus
$ 5,256,059 $ 333,778
-
-
-
-
-
-
-
-
-
-
-
-

-

-


-

-

5,256,059
333,778
-
-
-
-
-
-
-
-
-
-

-

-


-

-

$ 5,256,059
$ 333,778
 Retained Earnings

Legal Reserve Special Reserve
Unappropriated
Earnings
$ 4,618,248 $ 1,703,150 $ 22,701,647

493,840
-
(493,840)

-
488,628
(488,628)

-
-
(3,101,075)

-
(1,076)
1,076

-
-
535

-
-
6,037,254

-

-

(5,615
)

-

-

6,031,639


5,112,088
2,190,702
24,651,354

603,726
-
(603,726)

-
1,212,070
(1,212,070)

-
-
(3,810,642)

-
-
7,963

-
-
6,125,520

-

-

(2,683
)

-

-

6,122,837

$ 5,715,814
$ 3,402,772
$ 25,155,716
 Others
Exchange
Differences on
Translation of
the Financial
Unrealized
Gain (Loss) on
Financial Assets
at Fair Value
Statements of
Through Other
Foreign
Operations
Comprehensive
Income
$ (2,065,527)
$ (126,251)

-
-

-
-

-
-

-
-

-
(535)

-
-

(1,210,993
)

535


(1,210,993
)

535


(3,276,520)
(126,251)

-
-

-
-

-
-

-
(7,963)

-
-

(408,834
)

8,376


(408,834
)

8,376

$ (3,685,354
)
$ (125,838
)		 Total Equity
$ 32,421,104

-

-

(3,101,075)

-

-

6,037,254

(1,216,073
)

4,821,181

34,141,210

-

-

(3,810,642)

-

6,125,520

(403,141
)

5,722,379
$ 36,052,947

The accompanying notes are an integral part of the financial statements.

~157~

TRIPOD TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Reversal of expected credit loss on trade receivables
Net loss (gain) on fair value changes of financial assets and
liabilities at fair value through profit or loss
Finance costs
Interest income
Share of profit of subsidiaries, associates and joint ventures

Loss (gain) on disposals of property, plant and equipment
Gain on disposals of investment in equity method
Impairment loss recognized on non-financial assets
Gain on reversal of non-financial assets
Unrealized gain on sales with subsidiaries, associates and joint
ventures
Realized gain on sales with subsidiaries, associates and joint
ventures
Unrealized foreign exchange (gain) loss
Changes in operating assets and liabilities:
Financial assets mandatorily classified at fair value through profit or
loss
Notes receivable
Trade receivables
Trade receivables from related parties
Other receivables
Other receivables from related parties
Inventories
Prepayments
Other current assets
Financial liabilities held for trading
Contract liabilities
Trade payables
Trade payables to related parties
Other payables
Other payables to related parties
Provisions-current
Other current liabilities
Net defined benefit liabilities

Cash generated from operations
Interest received		 2020
$ 7,205,929

164,233
9,025
(51)
836
38,501
(452)
(3,397,802)

268
-
-
(34,923)
329,913
(375,703)
(10,381)
1,429
44
(589,454)
244,471
28,489
303,636

(97,192)
(13,560)
4,967
(1,883)
9,297
(151,295)
342,991
394,131
(26,883)
(5,320)
474

(134
)

4,373,601
452		 2019
$ 7,184,132
146,250
10,571
(46)
(1,224)
42,215
(1,629)
(3,740,683)
(26)
(253)
102,597
(20,233)
375,704
(210,875)
9,087
1,083
179
(117,669)
(356,828)
(33,727)
(1,125,648)
12,582
(7,963)
11,960
-
(2,338)
27,221
53,271
510,036
1,460,774
1,110
7,343

133
4,337,106
1,921
(Continued)

~158~

TRIPOD TECHNOLOGY CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars)

Interest paid

Income tax paid

Net cash generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other comprehensive
income
Proceeds from sale of financial assets at fair value through other
comprehensive income
Purchase of financial assets at amortized cost
Net cash inflow on disposal of subsidiary
Payments for property, plant and equipment
Proceeds from disposals of property, plant and equipment
Increase in refundable deposits
(Increase) decrease in other receivables from related parties
Payments for intangible assets
Increase in prepayments for other equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
Proceeds from guarantee deposits received
Repayment of the principal portion of lease liabilities
Dividends paid

Acquisition of subsidiaries

Net cash used in financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH HELD IN FOREIGN CURRENCIES

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2020
$ (39,047)


(450,325
)


3,884,681

(75,408)
80,075
(5,000)
-
(226,214)
21,793
(250)
(399)
(1,813)

(296,809
)


(504,025
)

492,520
5,816
(13,876)
(3,810,642)


(25,000
)

(3,351,182
)


141

29,615

104,846

$ 134,461
 2019
$ (45,979)
(1,126,325
)

3,166,723
(6,394)
6,929
-
2,522
(220,122)
524
(800)
3,153
(16,493)

(83,119
)

(313,800
)
154,757
4,772
(12,439)
(3,101,075)

(25,000
)
(2,978,985
)

(3,251
)
(129,313)

234,159
$ 104,846

The accompanying notes are an integral part of the financial statements.

(Concluded)

~159~

NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

TRIPOD TECHNOLOGY CORPORATION

1. GENERAL INFORMATION

Tripod Technology Corporation (the “Company”), was incorporated in the Republic of China (ROC) on December 16, 1991. The Company offers a comprehensive range of printed circuit boards (PCB), electronic cash registers and is engaged in the design, manufacture and sale of a variety of devices produced using computer automation.

In December 2000, the Company’s shares began trading on Taipei Exchange (TPEx), and were subsequently listed on the Taiwan Stock Exchange (TWSE) on August 26, 2002.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s Board of Directors on February 25, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • a. Initial application of the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC) and SIC Interpretations (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

The IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

  • b. The IFRSs endorsed by the FSC for application starting from 2021
The IFRSs endorsed by the FSC for application starting from 2021
New IFRSs
Amendments to IFRS 4 “Extension of the Temporary Exemption from
Applying IFRS 9”
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
“Interest Rate Benchmark Reform - Phase 2”
Amendment to IFRS 16 “Covid-19 - Related Rent Concessions”		 Effective Date
Announced by IASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

~160~

  • c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) “Annual Improvements to IFRS Standards 2018-2020” January 1, 2022 (Note 2) Amendments to IFRS 3 “Reference to the Conceptual Framework” January 1, 2022 (Note 3) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 6) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 7) Amendments to IAS 16 “Property, Plant and Equipment - Proceeds January 1, 2022 (Note 4) before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a January 1, 2022 (Note 5) Contract”

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

  • Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

  • Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

  • Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

  • Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

  • Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

~161~

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

For the convenience of readers, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language financial statements shall prevail.

  • a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer.

  • b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  • 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  • 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

  • 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries, associates and joint ventures, the share of other comprehensive income of subsidiaries, associates and joint ventures and the related equity items, as appropriate, in the parent company only financial statements.

  • c. Classification of current and non-current assets and liabilities

Current assets include:

  • 1) Assets held primarily for the purpose of trading;

  • 2) Assets expected to be realized within 12 months after the reporting period; and

  • 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

  • 1) Liabilities held primarily for the purpose of trading;

  • 2) Liabilities due to be settled within 12 months after the reporting period; and

~162~

  • 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

  • d. Foreign currencies

In preparing the financial statements of the Company, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income; in which cases, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting the parent company only financial statements, the assets and liabilities of the Company’s foreign operations are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation, all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

  • e. Inventories

Inventories consist of raw materials, supplies, finished goods, semi-finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

  • f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of equity of subsidiaries attributable to the Company.

~163~

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are accounted for as equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profit or loss resulting from downstream transactions is eliminated in full only in the parent company only financial statements. Profit and loss resulting from upstream transactions and transactions between subsidiaries is recognized only in the parent company only financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

  • g. Property, plant and equipment

Property, plant and equipment are initially measured at cost less accumulated depreciation and accumulated impairment loss.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

h. Intangible assets

  • 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each reporting period, with the effect of any changes in the estimates accounted for on a prospective basis.

~164~

2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

  • i. Impairment of property, plant and equipment, right-of-use asset and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use asset and intangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (after deducting amortization and depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

  • j. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (FVTPL) are recognized immediately in profit or loss.

  • 1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

  • a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at fair value through other comprehensive income (FVTOCI).

  • i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at fair value through other comprehensive income (FVTOCI).

~165~

Financial assets at FVTPL are subsequently measured at fair value, with interest earned recognized in interest income and any gains or losses arising on remeasurement recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

  • ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

  • i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable, trade receivables, trade receivables from related parties, other receivables (less tax refund receivables), other receivables from related parties, other financial assets - current and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for the following two conditions:

  • i) Purchased or originated credit impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

  • ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

  • iii. Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposals of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

~166~

  • b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for trade receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Company determines that the following situations indicate that a financial asset is in default (without taking into account any collateral held by the Company):

  • i. Internal or external information show that the debtor is unlikely to pay its creditors.

  • ii. When a financial asset is more than 365 days past due unless the Company has reasonable and corroborative information to support a more lagged default criterion.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

  • c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Financial liabilities

  • a) Subsequent measurement

Except the following situations, all financial liabilities are measured at amortized cost using the effective interest method:

Financial liabilities at FVTPL

Financial liabilities are classified as at FVTPL when such financial liabilities are held for trading.

~167~

Financial liabilities held for trading are stated at fair value, and any remeasurement gains or losses on such financial liabilities are recognized in other gains or losses.

Fair value is determined in the manner described in Note 29.

  • b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

  • 3) Derivative financial instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Derivatives embedded in hybrid contracts that contain financial asset hosts that is within the scope of IFRS 9 “Financial Instruments” are not separated; instead, the classification is determined in accordance with the entire hybrid contract.

  • k. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

  • Warranties

Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Company of the expenditures required to settle the Company’s obligations.

  • l. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

  • 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of products. Sales of products are recognized as revenue when the goods are shipped or the goods are delivered to the customer’s specific location, since it is the time when the customer has full discretion over the manner of distribution, price to sell the goods and has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently. The transaction price received in advanced is recognized as a contract liability until the goods have been delivered to the customer. Provisions for sales returns and allowances are estimated based on historical experience and

~168~

consideration of various contract conditions, which are recognized as refund liabilities (accounted as other current liabilities).

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

  • 2) Revenue from the rendering of services

Revenue from the rendering of services comes from the procurement of goods on behalf of customers. The Company acts as an agent in the procurement of printed circuit boards for the customer, and recognizes net revenue after the control of goods has passed to the customer and the Company has no further obligations to the customer.

  • m. Leasing

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

  • The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

n. Employee benefits

  • 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

~169~

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost and past service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

  • o. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

  • 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deductible temporary differences associated with such investments are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

~170~

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

  • 3) Current and deferred taxes

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates, and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Critical Accounting Judgements

  • Impairment of property, plant and equipment

The impairment of equipment in relation to the production of printed circuit boards was based on the recoverable amounts of the equipment, which is the higher of their fair values less costs of disposals and their value in use. Any changes in the market prices or future cash flows will affect the recoverable amounts of the equipment and may lead to the recognition of additional impairment losses or the reversal of impairment losses.

6. CASH AND CASH EQUIVALENTS

Cash on hand
Checking accounts and demand deposits		 December 31 December 31


2020
$ 3,561


130,900

$ 134,461
 2019
$ 932

103,914
$ 104,846

The market rate intervals of cash in bank at the end of the reporting period were as follows:

Demand deposits and time deposits December 31
2020
2019
0.0001%-0.15%
0.001%-0.38%

~171~

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial liabilities at FVTPL-current
Financial liabilities held for trading
Derivative financial liabilities (not under hedge accounting)
Forward exchange contracts		 December 31
2020
$ 382
 2019
$ -

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

Notional Amount Currency Maturity Date (In Thousands) December 31, 2020 Buy foreign exchange forward contracts USD/NTD 2021.01 USD4,000/NTD112,360

The Company entered into foreign exchange forward contracts on December 31, 2020 to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investment in equity instruments at FVTOCI

Current
Domestic investments
Listed shares and emerging market shares		 December 31
2020
$ 3,709
 2019
$ -

These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Company’s strategy of holding these investments for long-term purposes.

9. FINANCIAL ASSETS AT AMORTIZED COST

FINANCIAL ASSETS AT AMORTIZED COST
Current
Restricted time deposits		 December 31
2020
$ 12,000
 2019
$ 7,000

Refer to Note 31 for information relating to financial assets at amortized cost pledged as securities.

~172~

Management of the Company assigns credit management committee to develop a credit risk grading framework for determining whether the credit risk of the financial assets at amortized cost has increased significantly since the initial recognition and measuring the expected credit losses. The credit rating information may be obtained from independent rating agencies where available and, if not available, the credit management committee uses other publicly available financial information to rate the debtors. The Company considers the current financial condition of debtors, the future prospects of the industries, the 12-month expected credit losses and lifetime expected credit losses of the financial assets at amortized cost. As of December 31, 2020 and 2019, the Company assessed that the expected credit loss of financial assets measured at amortized cost was 0%.

10. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable
Gross carrying amount at amortized cost
Trade receivables
Gross carrying amount at amortized cost
Less: Allowance for impairment loss
Other receivables
Receivables from scraps
Tax refund receivables
Others		 December 31 December 31






2020
$ 673

$ 1,354,278


(13,218
)

$ 1,341,060

$ 12,505

11,081

948

$ 24,534
 2019
$ 717
$ 788,088

(13,269
)
$ 774,819
$ 9,042
13,259

30,769
$ 53,070

Notes Receivable

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the year to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

The Company measures the loss allowance for notes receivable at an amount equal to lifetime expected credit losses. The expected credit losses on notes receivable are estimated by reference to the past default experience of the debtor, an analysis of the debtor’s current financial position, and economic conditions. As of December 31, 2020 and 2019, the Company assessed that the expected credit loss of notes receivable was 0%.

The aging of notes receivable was as follows:

Not past due December 31
2020
$ 673
 2019
$ 717

~173~

The above aging schedule was based on the number of past due days.

Trade Receivables

The average credit period of the sales of goods was 30 to 180 days, and no interest was charged on overdue trade receivables. In determining the recoverability of the trade receivables, the Company considered any change in the credit quality of the trade receivables since the date credit was initially granted to the end of the reporting period. From historical experience, most of the receivables were recovered.

Before accepting new customers, the Company assesses that the credit quality of the potential customer complied with the administration regulations of customer credit, and sets up the credits limit for each customer. The credit rating of customers would then be assessed by the supervisors and given an ultimate credit limit.

The Company measures the loss allowance for trade receivables at an amount equal to lifetime expected credit losses. The expected credit losses on trade receivables are estimated using a provision matrix by reference to the past default experience of the debtor, an analysis of the debtor’s current financial position, and economic conditions. As the Company’s historical credit loss experience shows different loss patterns for different customer segments, the provision for loss allowance based on past default experience, current financial status, and reasonable forecasts for the future economy is distinguished according to the Company’s different customer segment.

The Company writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance for trade receivables based on the Company’s provision matrix:

December 31, 2020

December 31, 2020
Expected credit loss rate
Gross carrying amount

Allowance for impairment loss
(Lifetime ECLs)

Amortized cost
 Group A
0.55%
$ 1,003,054


(5,532
)

$ 997,522
 Group B
-
$ -


-

$ -
 Group C
1.78%
$ 7,356


(131
)

$ 7,225
 Group D
1.20%
$ 311,997


(3,753
)

$ 308,244
 Group E
-
$ -


-

$ -
 Group F
10.42%
$ 31,333


(3,264
)

$ 28,069
 Group G
100%
$ 538


(538
)

$ -
 Total
$ 1,354,278

(13,218
)
$ 1,341,060
December 31, 2019
Expected credit loss rate
Gross carrying amount

Allowance for impairment loss
(Lifetime ECLs)

Amortized cost
 Group A
0.52%
$ 512,014


(2,649
)

$ 509,365
 Group B
-
$ -


-

$ -
 Group C
1.51%
$ 8,938


(135
)

$ 8,803
 Group D
1.66%
$ 214,090


(3,559
)

$ 210,531
 Group E
-
$ -


-

$ -
 Group F
10.00%
$ 51,244


(5,124
)

$ 46,120
 Group G
100%
$ 1,802


(1,802
)

$ -
 Total
$ 788,088

(13,269
)
$ 774,819

~174~

The aging of trade receivables was as follows:

Not past due
0-60 days
61-90 days
91-120 days
More than 121 days		 December 31 December 31


2020
$ 1,270,475

83,129
83
53

538

$ 1,354,278
 2019
$ 656,349
125,049
236
168

6,286
$ 788,088

The above aging schedule was based on the number of past due days.

The movements of the loss allowance for trade receivables were as follows:

Balance at January 1
Less: Net impairment losses reversed
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 13,269

(51
)
$ 13,218		 2019
$ 13,315

(46
)
$ 13,269

Other Receivables

Other receivables are comprised of receivables from sale of scraps and outstanding interest receivables from banks. The Company only transacts with counterparties that have good credit ratings. The Company continues to engage in enforcement activity to trace the conditions of the receivables while also refer to the past default experience of the debtor and an analysis of the debtor’s current financial position, in determining whether the credit risk of other receivables has increased significantly since the initial recognition as well as measuring the expected credit losses. As of December 31, 2020 and 2019, the Company assessed that the expected credit loss of other receivables was 0%.

11. INVENTORIES

INVENTORIES
Finished goods
Semi-finished goods
Work in progress
Supplies
Raw materials		 December 31


2020
$ 223,189

1,013
139,414
23,604

28,854

$ 416,074
 2019
$ 148,287
2,273
89,449
14,854

29,096
$ 283,959

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $5,876,541 thousand and $4,520,430 thousand, respectively. The cost of goods sold for the years ended December 31, 2020 and 2019 included reversal of inventory write-downs of $34,923 thousand and $20,233 thousand, respectively. The reversals of previous write-downs for the years ended December 31, 2020 and 2019 resulted from selling the obsolete inventory that had accounted for allowance.

~175~

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Subsidiaries

J & J Holding Co., Ltd.
Trison Technology Corporation
Tripod Nano Technology Corporation
Name of Subsidiary
J & J Holding Co., Ltd.
Trison Technology (HK) Limited (Note)
Trison Technology Corporation
Tripod Nano Technology Corporation		 December 31


2020
2019
$ 45,690,459
$ 42,731,253
29,932
30,434

32,946

34,101
$ 45,753,337
$ 42,795,788
Proportion of Ownership and
Voting Rights Held by
Non-controlling Interests
December 31
2020
2019
100%
100%
-
-
80%
80%
100%
100%

Note: Refer to Note 26 to the consolidated financial statements for the disclosure relating to the disposal of Trison Technology (HK) Limited.

Refer to Note 34 for the detail of the subsidiaries indirectly held by the Company.

The investments in subsidiaries accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2020 and 2019 were based on the subsidiaries’ financial statements which have been audited for the same years.

13. PROPERTY, PLANT AND EQUIPMENT

Cost
Balance at January 1, 2019

Additions
Disposals
Reclassifications (Note)

Balance at December 31, 2019

Accumulated depreciation
and impairment
Balance at January 1, 2019

Disposals
Impairment losses recognized
Depreciation expense

Balance at December 31, 2019

Carrying amount at
December 31, 2019

Cost
Balance at January 1, 2020

Additions
Disposals
Reclassifications (Note)

Balance at December 31, 2020
 Land
$ 291,251

-
-

-

$ 291,251

$ -

-
-

-

$ -

$ 291,251

$ 291,251

-
-

-

$ 291,251
 Buildings

$ 679,845

935
(310 )

17,765

$ 698,235

$ 424,169

(259 )
3,682

14,819

$ 442,411

$ 255,824

$ 698,235

-
-

-

$ 698,235
 Machinery and
Equipment

$ 2,843,469

159,797
(62,602 )

26,967

$ 2,967,631

$ 2,393,184

(62,347 )
73,189

79,273

$ 2,483,299

$ 484,332

$ 2,967,631

179,766
(364,693 )

107,915

$ 2,890,619
 Transportation
Equipment
$ 6,320

4,530
(4,650 )

-

$ 6,200

$ 6,070

(4,650 )
-

489

$ 1,909

$ 4,291

$ 6,200

-
-

-

$ 6,200
 Furniture,
Fixtures and
Equipment
$ 77,893

1,324
(3,503 )

-

$ 75,714

$ 69,420

(3,503 )
-

3,586

$ 69,503

$ 6,211

$ 75,714

1,612
(2,249 )

-

$ 75,077
 Leasehold
Improvements
$ 44,855

-
-

-

$ 44,855

$ 44,851

-
-

4

$ 44,855

$ -

$ 44,855

-
-

-

$ 44,855
 Other
Equipment
$ 133,591

46,971
(31,938 )

1,311

$ 149,935

$ 63,193

(31,746 )
25,726

35,870

$ 93,043

$ 56,892

$ 149,935

24,959
(26,733 )

510

$ 148,671
 Property in
Construction
Total
$ 17,765
$ 4,094,989
-
213,557
-
(103,003 )

(17,765
)

28,278
$ -
$ 4,233,821
$ -
$ 3,000,887
-
(102,505 )
-
102,597

-

134,041
$ -
$ 3,135,020
$ -
$ 1,098,801
$ -
$ 4,233,821
-
206,337
-
(393,675 )

-

108,425
$ -
$ 4,154,908
(Continued)

~176~

Accumulated depreciation
and impairment
Balance at January 1, 2020

Disposals
Depreciation expense

Balance at December 31, 2020

Carrying amount at
December 31, 2020
 Land
$ -

-

-

$ -

$ 291,251
 Buildings

$ 442,411

-

14,055

$ 456,466

$ 241,769
 Machinery and
Equipment

$ 2,483,299

(342,632 )

98,967

$ 2,239,634

$ 650,985
 Transportation
Equipment
$ 1,909

-

797

$ 2,706

$ 3,494
 Furniture,
Fixtures and
Equipment
$ 69,503

(2,249 )

3,383

$ 70,637

$ 4,440
 Leasehold
Improvements
$ 44,855

-

-

$ 44,855

$ -
 Other
Equipment
$ 93,043

(26,733 )

33,156

$ 99,466

$ 49,205
 Property in
Construction
Total
$ -
$ 3,135,020
-
(371,614 )

-

150,358
$ -
$ 2,913,764
$ -
$ 1,241,144
(Concluded)

Note: These were transferred from prepayments for equipment.

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Main buildings 9-45 years
Others 3-20 years
Machinery and equipment 2-8 years
Transportation equipment 5 years
Furniture, fixtures and equipment 2-5 years
Leasehold improvements 4-5 years
Other equipment 1-5 years

The estimated future cash flows expected to arise from buildings, machinery equipment and other equipment in the Pingzhen factory had decreased. The Company assessed the recoverable amount of such equipment and determined that the carrying amount exceeded the recoverable amount by $1,240,288 thousand. This assessment led to the recognition of an impairment loss of $102,597 thousand for the year ended December 31, 2019. The Company determined that the recoverable amounts of buildings, machinery equipment and other equipment were based on their value in use. The discount rate used in measuring the value in use was 8.57% per annum, and the impairment loss was accounted for as other operating income and expenses in the statements of comprehensive income.

The Company performed an impairment assessment for the year ended December 31, 2020 and concluded that there was no indication of impairment.

The unrecognized commitments for the acquisition of property, plant and equipment are set out in Note 32.

14. LEASE ARRANGEMENTS

  • a. Right-of-use assets
Carrying amount
Buildings
Transportation equipment		 December 31


2020
$ 14,927


9,520

$ 24,447
 2019
$ 18,076

8,520
$ 26,596

~177~

b. Lease liabilities

Carrying amount
Current
Non-current		 December 31

2020
$ 13,399

$ 10,817
 2019
$ 10,921
$ 15,445

15. OTHER INTANGIBLE ASSETS

Computer
Software
Cost
Balance at January 1, 2019
$ 45,492

Additions
16,493
Disposals
(31,088
)

Balance at December 31, 2019
$ 30,897

Accumulated amortization
Balance at January 1, 2019
$ 33,313

Amortization expense
10,530
Disposals
(31,088
)

Balance at December 31, 2019
$ 12,755

Carrying amount at December 31, 2019
$ 18,142

Cost
Balance at January 1, 2020
$ 30,897

Additions
1,813
Disposals

(4,888
)

Balance at December 31, 2020
$ 27,822

Accumulated amortization
Balance at January 1, 2020
$ 12,755

Amortization expense
8,983
Disposals

(4,888
)

Balance at December 31, 2020
$ 16,850

Carrying amount at December 31, 2020
$ 10,972
 Others
$ 600

-

-

$ 600

$ 132

41

-

$ 173

$ 427

$ 600

-

-

$ 600

$ 173

42

-

$ 215

$ 385
 Total
$ 46,092
16,493
(31,088
)
$ 31,497
$ 33,445
10,571
(31,088
)
$ 12,928
$ 18,569
$ 31,497
1,813

(4,888
)
$ 28,422
$ 12,928
9,025

(4,888
)
$ 17,065
$ 11,357

~178~

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows:

Other intangible assets are amortized on a straight-line basis over their estimated useful lives as follows: estimated useful lives as follows: estimated useful lives as follows:
Computer software
Others
An analysis of depreciation by function
Operating costs
General and administrative expenses
Research and development expenses		 1-5 years
Based on contractual terms
For the Year Ended December 31


2020
$ 5,279
3,704

42
$ 9,025		 2019
$ 2,167
8,363

41
$ 10,571

16. OTHER ASSETS

OTHER ASSETS
Non-current
Prepayments for equipment
Refundable deposits		 December 31


2020
$ 285,510


2,930

$ 288,440
 2019
$ 97,126

2,680
$ 99,806

17. BORROWINGS

Short-term borrowings

Unsecured borrowings
Bank loans		 December 31 December 31
2020
$ 6,182,600
 2019
$ 5,693,200

The interest rates on bank loans were 0.55%-0.62% and 0.70%-0.76% per annum as of December 31, 2020 and 2019, respectively.

~179~

18. OTHER LIABILITIES

OTHER LIABILITIES
Current
Other payables
Payables for purchase of equipment (Note 27)
Payables for salaries and bonuses (including employee bonuses)
Payables for consumables
Payables for insurance
Payables for processing
Others
Other liabilities
Receipts under custody
Guarantee deposits received
Refund liabilities
Non-current
Other liabilities
Guarantee deposits received		 December 31






2020
$ 51,708

2,418,711
83,547
16,620
64,175

94,216

$ 2,728,977

$ 17,770

12,638

7,389

$ 37,797

$ 2,785
 2019
$ 71,585
2,038,233
79,035
16,379
48,111

104,849
$ 2,358,192
$ 22,547
6,822

2,735
$ 32,104
$ 2,785

19. PROVISIONS - CURRENT

PROVISIONS - CURRENT
Warranties
Balance at January 1, 2020
Additional provisions recognized
Amount used
Reversal of unused balance
Balance at December 31, 2020		 December 31
2020
2019
$ 7,141
$ 12,461
Warranties
$ 12,461
4,166
(6,729)

(2,757
)
$ 7,141

20. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (LPA), which is a state-managed defined contribution plan. Under the LPA, the Company makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

~180~

According to the aforementioned regulations, the Company recognized $33,320 thousand and $32,818 thousand as expenses in the statements of comprehensive income for the years ended December 31, 2020 and 2019, respectively.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans are as follows:

Present value of defined benefit obligation
Fair value of plan assets
Deficit (surplus)
Asset ceiling
Net defined benefit liabilities		 December 31 December 31



2020
$ 158,018


(47,343
)

110,675

-

$ 110,675
 2019
$ 151,283

(43,828
)
107,455

-
$ 107,455

Movements in net defined benefit liabilities were as follows:

Present Value
of the Defined Net Defined
Benefit Fair Value of Benefit
Obligation the Plan Assets Liabilities
Balance at January 1, 2019 $ 145,338 $ (45,034
)		 $ 100,304
Service cost
Current service cost 1,559 - 1,559
Past service cost and loss on settlements 31 - 31
Net interest expense (income)
1,635
(522
)
1,113
Recognized in profit or loss
3,225
(522
)
2,703
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - (1,610) (1,610)
Actuarial loss - changes in demographic
assumptions 2,174 - 2,174
Actuarial loss - changes in financial
assumptions 6,013 - 6,013
Actuarial loss - experience adjustments
441
-
441
Recognized in other comprehensive income
8,628
(1,610
)
7,018
(Continued)

~181~

Present Value Present Value
of the Defined Net Defined
Benefit Fair Value of Benefit
Obligation the Plan Assets Liabilities
Benefits paid $
(5,908)		 $ 5,908 $
-
Contributions from the employer - (2,570
)		 (2,570
)
Balance at December 31, 2019 151,283 (43,828
)		 107,455
Service cost
Current service cost 1,552 - 1,552
Net interest expense (income) 1,135 (338
)		 797
Recognized in profit or loss 2,687 (338
)		 2,349
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - (1,558) (1,558)
Actuarial loss - changes in demographic
assumptions 1,860 - 1,860
Actuarial loss - changes in financial
assumptions 4,015 - 4,015
Actuarial loss - experience adjustments (963
)		 - (963
)
Recognized in other comprehensive income 4,912 (1,558
)		 3,354
Benefits paid (864) 864 -
Contributions from the employer - (2,483
)		 (2,483
)
Balance at December 31, 2020 $ 158,018 $ (47,343
)		 $ 110,675
(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

  • 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

  • 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

  • 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s)
Expected rate(s) of salary increase		 December 31
2020
2019
0.500%
0.750%
2.000%
2.000%

~182~

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase/decrease as follows:

Discount rate(s)
0.25% increase
0.25% decrease
Expected rate(s) of salary increase
0.25% increase
0.25% decrease		 December 31



2020
$ (4,039
)

$ 4,200

$ 4,069

$ (3,934
)
 2019
$ (4,073
)
$ 4,241
$ 4,120
$ (3,979
)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year
Average duration of the defined benefit obligation		 December 31
2020
$ 2,500

10.2 years		 2019
$ 2,600
10.8 years

21. EQUITY

  • a. Share capital
Number of shares authorized (in thousands)
Shares authorized
Number of shares issued and fully paid (in thousands)
Shares issued		 December 31 December 31



2020

600,000

$ 6,000,000


525,606

$ 5,256,059
 2019

600,000
$ 6,000,000

525,606
$ 5,256,059

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

Of the authorized capital, a total of $200,000 thousand should be reserved for warrants, preference shares attached with warrants or bonds attached with warrants.

~183~

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or
transferred to share capital (Note)
Issuance of ordinary shares
Donations
The difference between the consideration received or paid and
the carrying amount of the subsidiaries’ net assets during
actual disposal or acquisition		 December 31 December 31


2020
$ 325,282

369

8,127

$ 333,778
 2019
$ 325,282
369

8,127
$ 333,778

Note: Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s paid-in capital and once a year).

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s Board of Directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for distribution of dividends and bonus to shareholders. For the policies on the distribution of compensation of employees and remuneration of directors after the amendment, refer to employee benefits expense in Note 23(h).

In consideration of the future expansion of business, capital needs and the tax effects on the Company and its shareholders, the Company’s dividend policy was mainly based on capital needs based on future capital budget planning, where the Board of Directors would propose a distribution plan on the appropriation of earnings, where the earnings can be distributed once approval is obtained in the shareholders’ meeting. Nonetheless, cash dividends distributed shall not be less than 10% of total dividends distributed in the current year.

According to the Company Act No. 237, the Company shall recognize as legal reserve 10% of the remaining profit, until the accumulated legal reserve equals the total amount of paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company. Any special reserve appropriated may be reversed to the extent that the net debit balance reverses and is thereafter distributed.

~184~

The appropriations of earnings for 2019 and 2018 approved in the shareholders’ regular meetings on June 17, 2020 and June 21, 2019, respectively, were as follows:

Legal reserve
Special reserve
Cash dividends
Cash dividends per share (NT$)		 Appropriation of Earnings
For the Year Ended December 31
2019
2018
$ 603,726
$ 493,840
1,212,070
488,628
3,810,642
3,101,075
7.25
5.90

The appropriation of earnings for 2020 has not been proposed by the Company’s Board of Directors as of February 25, 2021.

  • d. Special reserve

Special reserve consists of the followings:

  • 1) According to Paragraph 1, Article 41 of the Securities Exchange Act, the Company may appropriate as special reserve the deductions of equity items of the year where part of the distribution of earnings may be reserved if there is subsequent reversal of debits to other equity items.

  • 2) The directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The special reserves recognized as of December 31, 2020 and 2019 were as follows:

Appropriation in respect of
Paragraph 1, Article 41 of the Securities Exchange Act
Exempt items due to initial application of IFRSs, reclassified
to retained earnings
Balance at December 31		 December 31 December 31


2020
$ 2,886,552


516,220

$ 3,402,772
 2019
$ 1,674,482

516,220
$ 2,190,702

  • e. Other equity items

  • 1) Exchange differences on translation of the financial statements of foreign operations:

Balance at January 1
Recognized for the year
Exchange differences on translation of the financial
statements of foreign operations
Related income tax
Reclassification adjustments
Disposal of foreign operation
Related income tax
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ (3,276,520)

(511,043)

102,209
-

-

$ (3,685,354
)
 2019
$ (2,065,527)
(1,513,505)
302,701
(237)

48
$ (3,276,520
)

~185~

  • 2) Unrealized valuation gain (loss) on financial assets at FVTOCI:
Balance at January 1
Recognized for the year
Unrealized gain - equity instruments
Other comprehensive income recognized for the period
Cumulative unrealized gain on equity instruments transferred
to retained earnings due to disposals
Balance at December 31		 For the Year Ended For the Year Ended December 31




2020
$ (126,251)


8,376


8,376


(7,963
)

$ (125,838
)
 2019
$ (126,251)

535

535

(535
)
$ (126,251
)

22. REVENUE

  • a. Contract information

Revenue from the sale of goods

The main operating revenue of the Company is from the manufacture and sale of printed circuit boards (PCB). All goods are sold at respective fixed amounts as agreed in the contracts.

Revenue from rendering of services

The Company acts as an agent in the procurement of printed circuit boards for the customer, and recognizes net revenue after the control of goods has passed to the customer and the Company has no further obligations to the customer.

  • b. Contract balances
December 31,
2020
December 31,
2019
Trade receivables (including related parties)
and notes receivable (Notes 10 and 30)
$ 2,401,030
$ 2,077,403

Contract liabilities
Sale of goods
$ 16,175
$ 6,878
 January 1,
2019
$ 1,625,104
$ 9,216

The amounts of contract liability at the beginning of the period recognized as revenue in 2020 and 2019 were $4,235 thousand and $6,610 thousand, respectively.

  • c. Disaggregation of revenue
Type of goods or services
Sale of goods
Processing
Rendering of services		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 6,208,007

135,297

4,456,244

$ 10,799,548
 2019
$ 4,561,479
80,965

4,819,253
$ 9,461,697

~186~

23. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

  • a. Other operating income and expenses
Impairment loss recognized on property, plant and equipment
b. Interest income
Bank deposits
c. Other income
Administration income (Note 30)
Others		 For the Year Ended For the Year Ended December 31
2020
$ -

For the Year Ended		 2019
$ (102,597
)
December 31
2020
$ 452

For the Year Ended		 2019
$ 1,629
December 31


2020
$ -


9,489

$ 9,489
 2019
$ 46,215

6,610
$ 52,825

d. Other gains and losses

(Loss) gain on disposals of property, plant and equipment
Investment income recognized under the equity method
Fair value changes of financial assets and financial liabilities
Net foreign exchange losses
Others
e. Finance costs
Interest on bank loans		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ (268)
$ 26
-
253
(836)
1,224
(27,591)
(3,813)

(520
)

(475
)
$ (29,215
)
$ (2,785
)
For the Year Ended December 31
2020
$ 38,501
 2019
$ 42,215

~187~

f. Depreciation and amortization

Property, plant and equipment
Intangible assets
Right-of-use assets
An analysis of depreciation by function
Operating costs
Operating expenses
An analysis of amortization by function
Operating costs
Operating expenses
Employee benefits expense
Short-term benefits
Other employee benefits
Post-employment benefits (Note 20)
Defined contribution plans
Defined benefit plans
Total employee benefits expense
An analysis of employee benefits expense by function
Operating costs
Operating expenses		 For the Year Ended For the Year Ended For the Year Ended December 31
2020
2019
$ 150,358
$ 134,041
9,025
10,571

13,875

12,209
$ 173,258
$ 156,821
$ 147,295
$ 130,666

16,938

15,584
$ 164,233
$ 146,250
$ 5,279
$ 2,167

3,746

8,404
$ 9,025
$ 10,571
For the Year Ended December 31





2020
$ 1,506,692

145,264
33,320

2,349

$ 1,687,625

$ 774,175


913,450

$ 1,687,625
 2019
$ 1,595,043
154,118
32,818

2,703
$ 1,784,682
$ 745,922

1,038,760
$ 1,784,682

g. Employee benefits expense

  • h. Compensation of employees and remuneration of directors

According to the Company’s Articles of Incorporation, the Company accrues compensation of employees at rates of no less than 6% and no higher than 18%, and remuneration of directors at rates of no higher than 1% of net profit before income tax, compensation of employees and remuneration of directors.

~188~

The compensation of employees and remuneration of directors for the years ended December 31, 2020 and 2019, which had been approved by the Company’s Board of Directors on February 25, 2021 and March 25, 2020, respectively, were as follows:

Compensation of employees
Remuneration of directors
Compensation of employees
Remuneration of directors		 For the Year Ended December 31
2020
2019
8.97%
8.97%
0.53%
0.53%
For the Year Ended December 31		 For the Year Ended December 31 For the Year Ended December 31
2020
Cash
Shares
$ 714,209
$ -
42,000
-		 2019
Cash
Shares
$ 711,922
$ -
42,000
-

If there is a change in the amounts after the annual financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate, and will be recognized in the following year.

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2019 and 2018.

Information on the compensation of employees and remuneration of directors resolved by the Company’s Board of Directors in 2020 and 2019 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

  • i. Gains and losses on foreign currency exchange
Foreign exchange gains
Foreign exchange losses
Net foreign exchange losses		 For the Year Ended For the Year Ended December 31


2020
$ 497,834

(525,425
)

$ (27,591
)
 2019
$ 399,489
(403,302
)
$ (3,813
)

24. INCOME TAXES RELATING TO CONTINUING OPERATIONS

  • a. Major components of income tax expense are as follows:
Current tax
In respect of the current year
Income tax on unappropriated earnings
Adjustments for prior years
Deferred tax
In respect of the current year
Income tax expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 763,952

20,340

(76,026
)

708,266

372,143

$ 1,080,409
 2019
$ 759,615
44,384

(2,923
)
801,076

345,802
$ 1,146,878

~189~

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax from continuing operations
Income tax expense calculated at the statutory rate
Nondeductible expenses in determining taxable income
Deferred tax effect of earnings of subsidiaries
Tax-exempt income
Income tax on unappropriated earnings
Unrecognized loss carryforwards/deductible temporary
differences
Adjustments for prior years’ income tax
Income tax expense recognized in profit or loss		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 7,205,929

$ 1,441,186

35,829
(342,446)
-
20,340
1,526

(76,026
)

$ 1,080,409
 2019
$ 7,184,132
$ 1,436,827
35,636
(376,928)
(53)
44,384
9,935

(2,923
)
$ 1,146,878

In July 2019, the president of the ROC announced the amendments to the Statute for Industrial Innovation, which stipulate that the amounts of unappropriated earnings in 2018 and thereafter that are reinvested in the construction or purchase of certain assets or technologies are allowed as deduction when computing the income tax on unappropriated earnings. When calculating the tax on unappropriated earnings, the Company only deducts the amount of the unappropriated earnings that has been reinvested in capital expenditure.

  • b. Income tax recognized in other comprehensive income
Deferred tax
In respect of the current period
Exchange differences arising from the translation of the
financial statements of foreign operations
Remeasurement of defined benefit plans
Reclassification adjustments
Disposal of foreign operations
Total income tax recognized in other comprehensive income		 For the Year Ended For the Year Ended December 31


2020
$ (102,209)

(671)

-


$ (102,880
)
 2019
$ (302,701)
(1,403)

(48
)
$ (304,152
)

~190~

  • c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2020

Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
Deferred tax assets
Temporary differences
Property, plant and equipment
$ 58,101
$ (13,829)
$ -

Investment accounted for using
the equity method
32,330
(767)
-
Exchange differences on
translation of the financial
statements of foreign
operations
682,781
-
102,209
Payables for annual leave
5,109
463
-
Allowance for impairment loss
31,806
(6,286)
-
Others

91,590

(10,589
)

671

$ 901,717
$ (31,008
)
$ 102,880

Deferred tax liabilities
Temporary differences
Unappropriated earnings of
subsidiaries
$ 2,536,085
$ 341,135
$ -

For the year ended December 31, 2019
Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
Deferred tax assets
Temporary differences
Property, plant and equipment
$ 55,009
$ 3,092
$ -

Investment accounted for using
the equity method
32,330
-
-
Exchange differences on
translation of the financial
statements of foreign
operations
380,032
-
302,749
Payables for annual leave
4,303
806
-
Allowance for impairment loss
35,448
(3,642)
-
Others

59,316

30,871

1,403

$ 566,438
$ 31,127
$ 304,152
 Closing
Balance
$ 44,272
31,563
784,990
5,572
25,520

81,672
$ 973,589
$ 2,877,220
Closing
Balance
$ 58,101
32,330
682,781
5,109
31,806

91,590
$ 901,717
(Continued)

Deferred tax assets
Temporary differences
Property, plant and equipment

Investment accounted for using
the equity method
Exchange differences on
translation of the financial
statements of foreign
operations
Payables for annual leave
Allowance for impairment loss
Others

~191~

Deferred tax liabilities
Temporary differences
Unappropriated earnings of
subsidiaries

Others

 Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehen-
sive Income
$ 2,158,612
$ 377,473
$ -


544

(544
)

-

$ 2,159,156
$ 376,929
$ -
 Closing
Balance
$ 2,536,085
-
$ 2,536,085
(Concluded)
  • d. Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets
Deductible temporary differences December 31
2020
$ 82,914
 2019
$ 95,882
  • e. The aggregate amount of temporary differences associated with investments for which deferred tax liabilities have not been recognized

As of December 31, 2020 and 2019, the taxable temporary differences associated with investments in subsidiaries and branches for which no deferred tax liabilities have been recognized were $31,613,069 thousand and $29,894,105 thousand, respectively.

  • f. Income tax assessments

The income tax returns through 2018 have been assessed by the tax authorities, and the difference between the amount filed and the amount assessed has been recognized under the current period’s income tax expenses.

25. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share		 Unit: NT$ Per Share
For the Year Ended December 31

2020
$ 11.65
$ 11.48		 2019
$ 11.49
$ 11.34

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share are as follows:

Profit for the year For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 6,125,520
 2019
$ 6,037,254

~192~

The weighted average number of ordinary shares outstanding (in thousands of shares) is as follows:

Weighted average number of ordinary shares used in the
computation of basic earnings per share
Effect of potentially dilutive ordinary shares:
Compensation of employees
Weighted average number of ordinary shares used in the
computation of diluted earnings per share		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
525,606


7,979

533,585
 2019
525,606

6,687
532,293

If the Company offered to settle the compensation or bonuses paid to employees in cash or shares, the Company assumed that the entire amount of the compensation or bonuses will be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

26. DISPOSAL OF SUBSIDIARY

The disposal was completed in November 2019, the day on which the Company lost control of Trison Technology (HK) Limited. Refer to Note 26 to the Company’s consolidated financial statements for the year ended December 31, 2020 for the details relating to the disposal of Trison Technology (HK) Limited.

27. CASH FLOW INFORMATION

  • a. Non-cash transactions

For the years ended December 31, 2020 and 2019, the Company entered into the following non-cash investing and financing activities which were not reflected in the statements of cash flows:

  • As of December 31, 2020 and 2019, the unpaid amounts from the Company’s acquisition of property, plant and equipment were $51,708 thousand and $71,585 thousand, respectively, and were recognized in other payables - equipment payables.

  • b. Changes in liabilities arising from financing activities

For the year ended December 31, 2020

Short-term borrowings

Lease liabilities
Guarantee deposits received

 Opening
Balance
$ 5,693,200

26,366

9,607

$ 5,729,173
 Cash Flows
$ 492,520
(13,876 )

5,816
$ 484,460		 Non-cash Changes
New Leases
Exchange Rate
Changes
$ -
$ (3,120 )

11,726
-

-

-

$ 11,726
$ (3,120
)
 Closing
Balance
$ 6,182,600
24,216

15,423


$ 6,222,239

~193~

For the year ended December 31, 2019

Short-term borrowings

Lease liabilities
Guarantee deposits
received

 Opening
Balance
$ 5,538,218

29,419

4,835

$ 5,572,472
 Cash Flows
$ 154,757
(12,439 )

4,772
$ 147,090		 Non-cash Changes Others
$ -

774

-

$ 774
 Closing
Balance
$ 5,693,20
26,36

9,60


New Leases
Exchange Rate
Changes
$ -
$ 225

8,612
-
-

-

$ 8,612
$ 225
$ 5,729,17

28. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, reserves, retained earnings and other equity).

The management of the Company periodically reviews its capital structure. As part of the review, the management considers the cost of capital, and related risks in determining the proper structure for its capital. The Company balances its overall capital structure by obtaining short-term financing facilities from financial institutions.

29. FINANCIAL INSTRUMENTS

  • a. Fair value of financial instruments that are not measured at fair value

The Company’s management believes that the carrying amount of financial assets and financial liabilities recognized in the financial statements which are not measured at fair value approximates their fair value.

  • b. Fair value of financial instruments that are measured at fair value on a recurring basis

  • 1) Fair value hierarchy

December 31, 2020
Financial assets at FVTOCI
Investments in equity
instruments
Listed shares and emerging
market shares

Financial liabilities at FVTPL
Derivative instruments
 Level 1
$ 3,709

$ -
 Level 2
$ -

$ 382
 Level 3
$ -

$ -
 Total
$ 3,709
$ 382

There were no transfers between Levels 1 and 2 in 2020.

~194~

  • 2) Valuation techniques and inputs applied for the purpose of Level 2 fair value measurement
Financial Instruments
Derivatives - foreign exchange
forward contracts		 Valuation Techniques and Inputs
Discounted cash flow:
Future cash flows are estimated based on observable forward
exchange rates at the end of the reporting period and contract
forward rates, discounted at a rate that reflects the credit risk
of various counterparties.
  • c. Categories of financial instruments
Financial assets
Financial assets at amortized cost (Note 1)
Financial assets at FVTOCI
Investments in equity instruments
Financial liabilities
Measured at FVTPL - held for trading
Financial liabilities at amortized cost (Note 2)		 December 31
2020
2019
$ 6,301,190
$ 6,282,606
3,709
-
382
-
12,727,328
12,112,498

  • Note 1: The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, trade receivables from related parties, other receivables (excluding GST refund receivable), other receivables from related parties, financial assets at amortized cost - current and refundable deposits.

  • Note 2: The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, trade payables, trade payables to related parties, other payables (less payable for salaries and bonus, payable for pension fees and payable for GST), other payables to related parties and guarantee deposits.

  • d. Financial risk management objectives and policies

The Company’s major financial instruments include trade receivables, trade payables, other payables, lease liabilities and borrowings. The Company’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk.

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the Board of Directors, which provided written principles on foreign currency risk, interest rate risk, credit risk, the use of derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

~195~

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (refer to (a) below) and interest rates refer to (b) below). The Company entered into a variety of derivative financial instruments to manage its exposure to foreign currency risk and interest rate risk, including forward foreign exchange contracts to hedge the exchange rate risk arising from the export of printed circuit boards.

There has been no change to the Company’s exposure to market risks or the manner in which these risks are managed and measured.

a) Foreign currency risk

The Company have foreign currency denominated transactions, the Company is exposed to risk of fluctuation in exchange rates. The Company’s risk management policy on foreign exchange rate fluctuations is within the standard scope allowed, and utilizes derivative - foreign currency forward contracts to manage risks.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) and of the derivatives exposed to foreign currency risk at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Company was mainly exposed to the changes in the exchange rate of the USD.

The following table details the Company’s sensitivity to a 5% increase and decrease in the New Taiwan dollar (i.e. the functional currency) against the relevant foreign currencies. The sensitivity rate used when reporting foreign currency risk internally to key management personnel and representing management’s assessment of the reasonably possible change in foreign exchange rates is 5%. A positive number below indicates a decrease in pre-tax profit and other equity associated with the New Taiwan dollar weakening 5% against the relevant currency. For a 5% strengthening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity, and the balances below would be negative.

Profit or loss USD Impact
For the Year Ended December 31
2020
2019
$ (14,920)
$ 1,424
  • This was mainly attributable to the exposure from outstanding receivables and payables in USD which were hedged at the end of the reporting period.

The Company’s sensitivity to foreign currency increased during the current period mainly due to the increase in liabilities denominated in USD.

~196~

b) Interest rate risk

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk
Financial assets
Financial liabilities
Cash flow interest rate risk
Financial assets
Financial liabilities		 December 31
2020
2019
$ 7,000
$ 7,000
4,092,216
3,776,366
135,855
103,869
2,114,600
1,943,200

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liabilities outstanding at the end of the reporting period was outstanding for the whole year. A sensitivity rate of 1% increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 1% basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $19,787 thousand and $18,393 thousand, respectively. The Company’s sensitivity to interest rates increased during the current year mainly due to the increase in short-term borrowings at floating rates.

c) Other price risk

The Company was exposed to equity price risk through its investments in equity securities. Equity investments are held for strategic rather than for trading purposes. In addition, the Company has appointed a special team to monitor the price risk and will consider hedging the risk exposure should the need arise.

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risks at the end of the year.

If equity prices had been 5% higher/lower, pre-tax profit for the year ended December 31, 2020 would have increased/decreased by $185 thousand. As a result of the changes in fair value of financial assets at FVTOCI .

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which would cause a financial loss to the Company due to failure of counterparties to discharge its obligations and due to the financial guarantees provided by the Company could be equal to the carrying amount of the respective recognized financial assets as stated in the balance sheets.

~197~

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults.

In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue receivables.

The Company would continuously assess the financial positions of the customers’ trade receivables and purchase credit insurance if necessary.

The credit risk was mainly concentrated on the top 10 customers of the Company. As of December 31, 2020 and 2019, the percentages of total trade receivables from the top 10 customers were 87% and 91%, respectively.

3) Liquidity risk

The Company’s current liabilities exceeded current assets by $9,237,870 thousand, however, in consideration of the Group’s cash flow and investing operations, the Group’s current assets exceeded current liabilities by 16,786,787 thousand, hence, there is no liquidity risk from an overall perspective. The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. In addition, management monitors the utilization of bank borrowings and ensures compliance with loan covenants.

The Company relies on bank borrowings as a significant source of liquidity. As of December 31, 2020 and 2019, the Company had available unutilized short-term bank loan facilities set out in (c) below.

a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following tables detail the Company’s remaining contractual maturities for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are at floating rates, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2020

On Demand or On Demand or
Less than 3 Months to 1
3 Months Year 1-5 Years 5+ Years
Non-derivative
financial liabilities
Non-interest bearing
liabilities $
6,536,694		 $
12,638		 $
2,785		 $
-
Lease liabilities 3,451 9,948 10,817 -
(Continued)

~198~

On Demand or
Less than
3 Months
Variable interest rate
liabilities
$ 2,114,600

Fixed interest rate
liabilities

4,068,000

$ 12,722,745

December 31, 2019
On Demand or
Less than
3 Months
Non-derivative
financial liabilities
Non-interest bearing
liabilities
$ 6,412,426

Lease liabilities
3,018
Variable interest rate
liabilities
1,943,200
Fixed interest rate
liabilities

3,750,000

$ 12,108,644
 3 Months to 1
Year
$ -


-

$ 22,586

3 Months to 1
Year
$ 6,822

7,903
-

-

$ 14,725
 1-5 Years
$ -


-

$ 13,602

1-5 Years
$ 2,785

15,445
-

-

$ 18,230
 5+ Years
$ -

-
$ -
(Concluded)
5+ Years
$ -
-
-

-
$ -

b) Liquidity and interest rate risk table for derivative financial liabilities

The following table details the Company’s liquidity analysis for its derivative financial instruments. The table is based on the undiscounted contractual net cash inflows and outflows on derivative instruments that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross settlement. When the amount payable or receivable is not fixed, the amount disclosed is determined by reference to the projected interest rates as illustrated by the yield curves at the end of the reporting period.

December 31, 2020

On Demand
or Less than
3 Months
3 Months to
1 Year
Net settled
Foreign exchange
forward contracts
$ (382
)
$ -
 1-5 Years
$ -
 5+ Years
$ -

~199~

c) Financing facilities

Unsecured bank overdraft facilities, reviewed annually
and payable on demand:
Amount used
Amount unused		 December 31 December 31


2020
$ 6,182,600


11,659,200

$ 17,841,800
 2019
$ 5,693,200

12,936,240
$ 18,629,440

30. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Company and other related parties are disclosed below.

  • a. Related party names and categories
Related Party Name
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Global Pte. Ltd.
Tripod Overseas Co., Ltd.
Able International Limited
Trison Technology Corporation
Tripod Nano Technology Corporation
Delta Mobile Software, Inc.
Delta Mobile Systems. Inc., Taiwan Branch		 Related Party Category
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Other related party (Note 1)
Other related party (Note 2)

  • Note 1: The investor that has significant influence on the subsidiary of the Company, Trison Technology Corporation.

  • Note 2: The investor (a branch company) that has significant influence on the subsidiary of the Company, Trison Technology Corporation.

  • b. Operating revenue

Line Item
Related Party Category
Sales
Tripod Overseas Co., Ltd.
Able International Limited
Subsidiaries
Other related parties
Service revenue
Tripod Overseas Co., Ltd.		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 1,625,051

586,584
6,730

4,205

$ 2,222,570

$ 4,455,458
 2019
$ 1,272,676
543,955
4,481

85
$ 1,821,197
$ 4,816,618

The selling price for related parties is calculated with reference to the applicable market price. The credit terms for the related parties are comparable to those for unrelated parties.

The service revenue and payment terms to related parties were not significantly different from those of sales to third parties.

~200~

  • c. Purchases of goods
Related Party Category
Tripod Overseas Co., Ltd.
Able International Limited
Subsidiaries		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 2,662,536

369,036

2,810

$ 3,034,382
 2019
$ 1,650,392
119,192

6,318
$ 1,775,902

The purchase prices and payment terms to related parties were not significantly different from those of purchase from third parties.

  • d. Receivables from related parties (excluding loans to related parties)
Line Item
Related Party Category
Trade receivables
Tripod Overseas Co., Ltd.

Able International Limited
Subsidiaries
Other related parties


Line Item
Related Party Category
Types
Other receivables
Tripod Overseas Co., Ltd.
Collections and
payment transfer		 December 31 December 31
$ 2020
2019

885,326
$ 1,064,633
172,191
235,662
1,780
1,484
-

88
1,059,297
$ 1,301,867
December 31
$
2020
$ 3,737,316
 2019
$ 4,050,866

The outstanding trade and other receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for trade and other receivables from related parties.

  • e. Payables to related parties (excluding loans from related parties)
Line Item
Related Party Category
Trade payables
Tripod Overseas Co., Ltd.

Able International Limited
Subsidiaries


Line Item
Related Party Category
Types
Other payables
Tripod Global Pte. Ltd.
Collections and
payment transfer
Subsidiaries
Others
Other related parties
Others		 December 31 December 31
$ 2020
2019

510,710
$ 265,185
94,696
8,437
6,219

3,202

611,625
$ 276,824
December 31
$


2020
$ 5,355,887

9

2

$ 5,355,898
 2019
$ 5,411,373
-

-
$ 5,411,373

~201~

The outstanding trade and other payables to related parties are unsecured.

  • f. Acquisitions of property, plant and equipment
Related Party Category
Subsidiaries		 Purchase Price Purchase Price Purchase Price
For the Year Ended December 31
2020
$ -
 2019
$ 775
  • g. Disposals of property, plant and equipment
Related Party Category
Tripod Overseas Co., Ltd.		 Disposal Proceeds
For the Year Ended
December 31
2020
2019
$ 20,752
$ -		 Gain on Disposal Gain on Disposal
For the Year Ended
December 31
2020
$ 20,752
 2020
$ -
 2019
$ -
  • h. Acquisitions of financial assets

For the year ended December 31, 2020

i. Related Party Category
Line Item
Number of
Shares
(Thousands
of Shares)
Tripod Nano Technology
Corporation
Investments accounted
for using the equity
method
2,500
For the year ended December 31, 2019
Related Party Category
Line Item
Number of
Shares
(Thousands
of Shares)
Tripod Nano Technology
Corporation
Investments accounted
for using the equity
method
2,500
Other related party transactions
Revenue
Related Party Category
Type of Revenue
Tripod Overseas Co., Ltd.
Management service revenue
Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000

Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000
For the Year Ended December 31
Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000

Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000
For the Year Ended December 31
Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000

Underlying Assets
Purchase
Price
Tripod Nano
Technology
Corporation
$ 25,000
For the Year Ended December 31
2020
$ -
 2019
$ 46,215

~202~

Expense

Expense
Related Party Category
Type of Expense
Other related parties
Sample fee		 For the Year Ended December 31
2020
$ 2
 2019
$ -

The revenue from management services offered to subsidiaries in 2019 was classified under other revenue.

  • j. Compensation of key management personnel

The compensation of key management personnel are as follows:

Short-term employee benefits For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 168,628
 2019
$ 178,906

According to the distribution policy of Articles, the remuneration of directors was determined by the Group's operating performance and benchmarking to market compensation surveys. Base on the regulations of personnel and compensation, the remuneration of the key management including salary, bonus and compensation of employees which were determined by individual performance and their contribution to the Group's overall performance. It is submitted to the Company’s Board of Directors for resolution after reviewed by the remuneration committee.

31. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The amounts of restricted assets of the Company that were provided for as collateral for the import transactions in the Customs Administration, MOF, are as follows:

Time deposits December 31
2020
$ 12,000
 2019
$ 7,000

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The significant commitments of the Company were as follows:

Significant commitments

  • a. As of December 31, 2020 and 2019, the amounts of unused letters of credit for purchases of machinery and equipment were as follows:
Currency
USD
JPY		 December 31
2020
2019
$ 33
$ 34
6,300
7,600

~203~

  • b. Unrecognized commitments were as follows:
December 31
2020
2019
Purchases of property, plant and equipment
$ 76,464
$ 84,527
SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES
The Company’s significant financial assets and liabilities denominated in foreign currencies aggregated by
the foreign currencies other than functional currencies and the related exchange rates between the foreign
currencies and respective functional currencies were as follows:
December 31, 2020
Foreign
Currency
Exchange Rate
Carrying
Amount
(In NTD)
Financial assets
Monetary items
USD
$ 221,107
28.1 (USD:NTD)
$ 6,213,095
Non-monetary items
Investments accounted for using the equity
method
USD
1,625,995
28.1 (USD:NTD)
45,690,459
Financial liabilities
Monetary items
USD
227,726
28.1 (USD:NTD)
6,399,093
December 31, 2019
Foreign
Currency
Exchange Rate
Carrying
Amount
(In NTD)
Financial assets
Monetary items
USD
$ 204,842
29.98 (USD:NTD)
$ 6,141,150
Non-monetary items
Investments accounted for using the equity
method
USD
1,425,325
29.98 (USD:NTD)
42,731,253
Financial liabilities
Monetary items
USD
203,891
29.98 (USD:NTD)
6,112,663		 December 31

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between the foreign currencies and respective functional currencies were as follows:

~204~

The significant realized and unrealized foreign exchange gains (losses) were as follows:

Foreign
Currency
USD
JPY		 For the Year Ended
December 31, 2020
Exchange Rate
Net Foreign
Exchange
Gains (Losses)
Foreign
Currency
29.552 (USD:NTD) $ (27,962)
USD
0.27687 (JPY:NTD)
307

JPY
$ (27,655
)		 For the Year Ended
December 31, 2019
Exchange Rate
Net Foreign
Exchange
Gains (Losses)
30.912 (USD:NTD) $ (3,692)
0.28369 (JPY:NTD)
(49
)
$ (3,741
)

34. SEPARATELY DISCLOSED ITEMS

  • a. Information about significant transactions:

  • 1) Financing provided to others (Table 1)

  • 2) Endorsements/guarantees provided (Table 2)

  • 3) Marketable securities held (excluding investments in subsidiaries, associates and joint ventures) (Table 3)

  • 4) Marketable securities acquired or disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)

  • 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (Table 4)

  • 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)

  • 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 5)

  • 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 6)

  • 9) Trading in derivative instruments (Notes 7 and 29)

  • b. Information on investees (Table 7)

  • c. Information on investments in mainland China

  • 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income (loss) of investees, investment gain or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 8)

~205~

  • 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 9):

    • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period

    • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period

    • c) The amount of property transactions and the amount of the resultant gains or losses

    • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes

    • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to the financing of funds

    • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services

  • d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 10)

~206~

TABLE 1

TRIPOD TECHNOLOGY CORPORATION

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.
(Note 1)		 Lender Borrower Financial Statement
Account		 Related
Party		 Highest
Balance for the
Period
(Note 6)
Ending
Balance
(Note 6)		 Actual
Amount
Borrowed
(Note 6)		 Interest Rate
(%)		 Nature of
Financing
(Note 2)
Business
Transaction
Amount		 Reasons for
Short-term
Financing		 Allowance for
Impairment
Loss		 Collateral Collateral Financing
Limit for Each
Borrower
(Note 5)		 Aggregate
Financing
Limit
(Note 5)		 Note
Item Value
1 J&J Holding Co.,
Ltd.		 Tripod Overseas Co.,
Ltd.		 Other receivables
from related parties		 Yes $ 484,303 $ 449,600 $ 449,600 - 2 $ - The need for financing
operating capital
$ -		 - - $ 92,060,696 $ 92,060,696
2 Tripod Overseas
Co., Ltd.		 Tripod (Wuxi)
Electronic Co., Ltd.
Tripod (Hubei)
Electronic Co., Ltd.		 Other receivables
from related parties
Other receivables
from related parties		 Yes
Yes		 457,095
7,044,045
-

4,636,500
-

4,636,500		 -
(Note 7)
0.7555-0.76663
(Note 8)		 2
2		 -
-		 The need for financing
operating capital
The need for financing
operating capital
-

-		 -
-		 -
-		 91,130,293
91,130,293		 91,130,293
91,130,293
3 Tripod (Wuxi)
Electronic Co.,
Ltd.		 Tripod (Hubei)
Electronic Co., Ltd.		 Other receivables
from related parties		 Yes 1,118,923
1,118,923
1,118,923		 4.10377
(Note 9)		 2 - The need for financing
operating capital
-		 - - 67,043,846 67,043,846

Note 1: The Company is coded “0.”

The investees are coded consecutively beginning from “1” in the order presented in the table above.

  • Note 2: The financing that occurred due to business transaction is coded “1.”

The financing that occurred due to short-term financing is coded “2.”

  • Note 3: The total amounts available for lending purposes shall not exceed the net worth of the Company (lending company). Nonetheless, the short-term financing facility is necessary provided that the total amounts lendable to a company shall not exceed 40% of the net worth of the Company (lending company).

  • Note 4: The limit on the amount for lending to a company that has a business relationship with the lending company: for companies that have a business relationship with the lending company, the total amount available for financing to the borrower shall not exceed the total amount of the business transactions within the lender and borrower. The total amount of the business transactions refers to the purchases and sales made within the two parties in the current year. For short-term financing facility needs, the limit on the amounts available for lending to a company shall not exceed 40% of the net worth of the Company (lending company) in the period.

  • Note 5: The inter-company loans for funding between offshore subsidiaries in which the Company holds, directly or indirectly, 100% of the voting shares, the aggregate financing amount and the limit on the amount available for lending to a company for short-term financing facility needs both shall not exceed 200% of the net worth of the lending company in the period.

  • Note 6: The highest balance for the period and ending balance represented above are listed in the New Taiwan dollars. The highest balance denominated in foreign currencies is translated using the highest prevailing exchange rate; and the ending balance is translated into NTD using the exchange rate as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355.

  • Note 7: Total interest in the period is $4,860 thousand.

  • Note 8: Total interest in the period is $103,001 thousand.

  • Note 9: Total interest in the period is $35,075 thousand.

~207~

TABLE 2

TRIPOD TECHNOLOGY CORPORATION

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No. Endorser/Guarantor Endorsee/Guarantee Endorsee/Guarantee Limit on
Endorsement/
Guarantee
Given on
Behalf of Each
Party
(Note 3)
Maximum
Amount
Endorsed/
Guaranteed
During the
Period
(Notes 4 and 5)		 Outstanding
Endorsement/
Guarantee at
the End of the
Period
(Notes 4 and 5)		 Actual
Amount
Borrowed		 Amount
Endorsed/
Guaranteed by
Collateral
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest
Financial
Statements		 Aggregate
Endorsement/
Guarantee
Limit
(Note 3)		 Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries		 Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent		 Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Name Relationship
(Note 2)
1 Tripod (Wuxi) Electronic
Co., Ltd. (Note 4)		 Tripod (Wuxi)
Electronic Co., Ltd.		 c. $ 67,043,846 $ - $ - $ - $ - - $ 67,043,846 No No Yes
2 Tripod (Hubei) Electronic
Co., Ltd. (Note 5)		 Tripod (Hubei)
Electronic Co., Ltd.		 c. 72,105,894
-
-
-
-		 - 72,105,894 No No Yes

  • Note 1: a. The Company is coded “0.”

  • b. The investees are coded consecutively beginning from “1” in the order presented in the table above.

  • Note 2: The seven types of relationships between the endorser/guarantor and endorsee/guarantee indicated as numbers in the table above are as follows:

  • a. Companies with business relationship.

  • b. Subsidiary in which over 50% of its ordinary shares is directly or indirectly owned by the Company.

  • c. The total amount of the guarantee provided by the Company to subsidiaries whose direct or indirect voting shares are 50% or above.

  • d. Subsidiaries in which over 90% of their ordinary shares are directly or indirectly owned by the Company.

  • e. Mutually endorsed/guaranteed companies for the construction project based on the construction contract.

  • f. Companies of the same investment relationship as the stockholders of the companies provide endorsements/guarantees, in proportion to their stockholding amounts, due to co-investment.

  • g. Companies in the same industry that are liable for joint endorsements/guarantees of the pre-construction house contract regulated by consumer protection law.

  • Note 3: The total amounts of guarantee to any individual entity and the accumulated amounts shall not exceed 200% of the net worth of Tripod (Wuxi) Electronic Co., Ltd. in the period. The total amounts of guarantee to any individual entity and the accumulated amounts of Tripod (Hubei) Electronic Co., Ltd. shall not exceed 200% of the net worth of Tripod Technology Corporation.

Note 4: The amounts that Tripod (Wuxi) Electronic Co., Ltd. guaranteed to itself for tariffs is RMB25,000 thousand.

Note 5: The amounts that Tripod (Hubei) Electronic Co., Ltd. guaranteed to itself for tariffs is RMB30,000 thousand.

~208~

TABLE 3

TRIPOD TECHNOLOGY CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name Type and Name of Marketable Securities Relationship with the
Holding Company		 Financial Statement Account December 31, 2020 December 31, 2020 Note
Number of
Shares
(Thousands of
Shares)		 Carrying
Amount		 Percentage of
Ownership (%)		 Fair Value
The Company
Tripod Overseas Co., Ltd.		 Stock
AirDio Wireless Inc.
Catalina Media Ltd.
CHIN-POON Industrial Co., Ltd.
Delta Mobile Software, Inc.		 -
-
-
Other related parties		 Financial assets at FVTPL - current
Financial assets at FVTPL - current
Financial assets at FVTOCI - current
Financial assets at FVTOCI - non-current		 600
563
117
118		 $ -
-
3,709
-		 11.68
19.54
0.03
-		 $ -
-
3,709
-		 Note 1
Note 2
Note 3
  • Note 1: The Company held 600 thousand shares of AirDio Wireless Inc. at the end of the period, and the shareholding percentage was 11.68%. AirDio Wireless Inc. has been in liquidation, the net worth of the equity was negative and the carrying amount as assessed by the fair value was zero.

Note 2: The Company held 563 thousand shares of Catalina Media Ltd. at the end of the period, and the shareholding percentage was 19.54%. Catalina Media Ltd. has ceased operations, and the carrying amount assessed by its fair value was zero.

Note 3: The Company held 118 thousand shares of Delta Mobile Software, Inc. at the end of the period, and the carrying amount assessed by the fair value was zero.

Note 4: Refer to Tables 7 and 8 for information relating to investments in subsidiaries.

Note 5: The amounts of stockholding held by investee companies were the same as the ending balance, and all the securities above were not pledged.

~209~

TABLE 4

TRIPOD TECHNOLOGY CORPORATION

ACQUISITION OF INDIVIDUAL REAL ESTATE AT COSTS OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer Property Event Date Transaction
Amount		 Payment Status Counterparty Relationship Information o n Previous Title Transfer If Counterparty Is A
Related Party		 n Previous Title Transfer If Counterparty Is A
Related Party		 n Previous Title Transfer If Counterparty Is A
Related Party		 Pricing
Reference		 Purpose of
Acquisition		 Other Terms
Property
**Owner **		 Relationship Transaction
Date		 Amount
Tripod (Hubei) Electronic
Co., Ltd.		 Buildings 2020.8.6 $ 707,457 Based on the progress
of construction		 L&K Engineering
(Suzhou) Co., Ltd.		 - - - - $ - N/A
(Note)		 For operational use
-

Note: These were contracts with third parties to construct on land rented by the government, thus the appraisal reports were not required.

~210~

TABLE 5

TRIPOD TECHNOLOGY CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer Related Party Relationship Transaction Details Transaction Details Transaction Details Abnormal Transaction Abnormal Transaction Notes Receivable (Payable)/Trade
Receivables (Payables)		 Notes Receivable (Payable)/Trade
Receivables (Payables)		 Note
Purchases/
Sales		 Amount % of
Total		 Payment Terms Unit Price Payment Terms Ending Balance % of
Total
Tripod Technology Corporation
Able International Limited
Tripod Overseas Co., Ltd.
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Parent company
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company
Sister company		 Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales
Sales		 $ 586,584
1,625,051
4,455,458
369,036
1,582,890
326,553
2,662,536
37,610,749
158,796
142,648
615,971
29,549,297
1,076,573
8,369,079
1,809,504		 5
15
41
16
69
14
6
99
-
-
2
76
9
73
16		 Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued		 N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A		 N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A		 Trade receivables
$ 172,191
Trade receivables
217,263
Trade receivables
668,063
Trade receivables
94,696
Trade receivables
407,979
Trade receivables
85,608
Trade receivables
510,710
Trade receivables
624,817
Trade receivables
-
Trade receivables
-
Trade receivables
103,734
Trade receivables
5,105,595
Trade receivables
297,481
Trade receivables
870,229
Trade receivables
303,429		 7
9
28
16
69
15
4
100
-
-
1
60
20
58
20		 (Note 2)

Note 1: The amounts above are listed in the New Taiwan dollars. Foreign currencies are translated into NTD using the exchange rates as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355; net income denominated in foreign currencies are translated using the average exchange rate of 2020.

Note 2: Service revenue in the current period.

~211~

TABLE 6

TRIPOD TECHNOLOGY CORPORATION

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name Related Party Relationship Ending Balance
(Note 2)		 Turnover
Rate		 Overdue Overdue Amount
Received in
Subsequent
Period		 Allowance for
Impairment
Loss
Amount Actions Taken
Tripod Technology Corporation
J & J Holding Co., Ltd.
Able International Limited
Tripod Overseas Co., Ltd.
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Able International Limited
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod Technology Corporation
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod Technology Corporation
Able International Limited
Tripod Global Pte. Ltd.
Tripod (Hubei) Electronic Co., Ltd.		 Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Second-tier subsidiary
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company
Parent company
Sister company
Sister company
Sister company		 Trade receivables
$ 172,191
Trade receivables
217,263
Trade receivables
668,063
Other receivables
3,737,316
Other receivables
449,600
(Note 1)
Trade receivables
407,979
Trade receivables
510,710
Other receivables
194,463
(Note 1)
Other receivables
6,143,683
(Note 1)
Trade receivables
624,817
Other receivables
5,355,887
Trade receivables
103,734
Trade receivables
5,105,595
Other receivables
1,150,752
(Note 1)		 2.88
8.96
5.61
(Note 3)
N/A
N/A
4.11
6.86
N/A
N/A
8.62
N/A
3.44
6.13
N/A		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
-		 -
-
-
-
-
-
-
-
-
-
-
-
-
-		 $ 88,421
146,454
488,131
2,719,347
-
208,316
268,795
52,318
-
326,559
2,784,043
-
2,470,227
-		 $ -
-
-
-
-
-
-
-
-
-
-
-
-
-
(Continued)

~212~

Company Name Related Party Relationship Ending Balance
(Note 2)		 Turnover
Rate		 Overdue Overdue Amount
Received in
Subsequent
Period		 Allowance for
Impairment
Loss
Amount Actions Taken
Tripod (Hubei) Electronic Co., Ltd. Able International Limited
Tripod Global Pte. Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Sister company
Sister company
Sister company		 Trade receivables
$ 297,481
Trade receivables
870,229
Trade receivables
303,429		 4.02
8.07
5.60		 $ -
-
-		 -
-
-		 $ 137,442
870,229
114,634		 $ -
-
-

Note 1: Including the related information on loans to related parties, accrued income and equipment transactions etc.

Note 2: The amounts above are listed in the New Taiwan dollars. Foreign currencies are translated into NTD using the exchange rates as of December 31, 2020: USD/NTD=28.1 and RMB/NTD=4.30355.

Note 3: Trade receivables generated from service revenue in the current period.

(Concluded)

~213~

TABLE 7

TRIPOD TECHNOLOGY CORPORATION

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company Investee Company Location Main Businesses and Products Original Investment Amount Original Investment Amount As of December 31, 2020 December 31, 2020 Net
Income/(Loss)
of the Investee
Share of
Profit/(Loss)
of Investee		 Remark
December 31,
2020		 December 31,
2019		 Number of
Shares
(Thousands of
Shares)		 % Carrying
Amount
The Company
J & J Holding Co., Ltd.
Tripod Overseas Co., Ltd.		 J & J Holding Co., Ltd.
Trison Technology Corporation
Tripod Nano Technology Corporation
Tripod Overseas Co., Ltd.
Able International Limited
Tripod International Holding Pte. Ltd.
Tripod Global Pte. Ltd.
Tripod Worldwide Holding Pte. Ltd.		 Palm Grove House, P.O. Box 438, Road
Town, Tortola, British Virgin Islands
1F., No.598, Longci Rd., Zhongli Dist.,
Taoyuan City 32091, Taiwan (R.O.C.)
No.171, Sec. 1, Meishi Rd., Yangmei Dist.,
Taoyuan City 32659, Taiwan (R.O.C.)
Palm Grove House, P.O. Box 438, Road
Town, Tortola, British Virgin Islands
Portcullis Chambers, P.O. Box 1225, Apia,
SAMOA
10 Anson Road #30-01 International Plaza
Singapore 079903
10 Anson Road #30-01 International Plaza
Singapore 079903
10 Anson Road #30-01 International Plaza
Singapore 079903		 Investment activities
Manufacturing and wholesaling of electronic parts
Manufacturing and wholesaling of chemical materials
Investment activities and selling of printed circuit
board and raw materials of electronic parts
Trading of printed circuit boards and raw materials of
electronic parts
Investment activities
Trading of printed circuit boards and raw materials of
electronic parts
Investment activities		 $ 4,246,360
30,000

100,000
4,171,875
19,558
5,532,140
3,153
6,025,716		 $ 4,246,360

30,000

75,000

4,171,875

19,558

5,532,140

3,153

6,025,716
128,396

3,000

10,000

128,000

600

172,900

100

200,050		 100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00		 $ 45,690,459
29,932
32,946
45,565,146
15,154
33,125,411
9,797
3,783,078		 $ 3,431,193

(627)

(26,155)

3,431,390

(67)

2,531,459

1,213

446,906		 $ 3,424,458

(502)

(26,155)

(Note 2)

(Note 2)

(Note 2)

(Note 2)

(Note 2)		 Subsidiary (Note 1)
Subsidiary
Subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary
Second-tier
subsidiary

Note 1: The investment gains and losses recognized in the current period are the reversal of unrealized sales gross profit from upstream transactions recognized in the previous period amounting to $2,742 thousand and unrealized gain of $498 thousand from the disposals of property, plant and equipment in the previous period, subtracting the unrealized sales gross profit from upstream transactions recognized in the current period amounting to $9,718 thousand and unrealized gain of $257 thousand from the disposals of property, plant and equipment in the current period.

Note 2: The share of profits/losses of each investee company was summed up as the unrealized gross profit and recognized as the share of profits/losses on investment of J & J Holding Co., Ltd. in the period.

Note 3: Refer to Table 8 for information relating to investment in mainland China.

Note 4: The amounts of stockholding held by investee companies were the same as the ending balance, and all the securities above were not pledged.

~214~

TABLE 8

TRIPOD TECHNOLOGY CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

  • a.

Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, investment income or loss, carrying amount of the investment at the end of the period and repatriations of investment income:

Investee Company Main Businesses and Products Paid-in Capital Method of
Investment
(Note 1)		 Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2020		 Remittance of Funds Remittance of Funds Accumulated
Outward
Remittance for
Investment from
Taiwan as of
December 31,
2020		 Net Income (Loss)
of the Investee
% Ownership
of Direct or
Indirect
Investment
Investment
Gain (Loss)		 Carrying Amount
as of
December 31,
2020		 Accumulated
Repatriation of
Investment
Income as of
December 31,
2020		 Note
Outward Inward
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod (Xiantao) Zhiye Co., Ltd.		 Processing, manufacturing and
selling of printed circuit board
and other related components
Processing, manufacturing and
selling of printed circuit board
and other related components
The wholesale, import and export
of electronic products,
development of real estate,
sales and rental of the
commercial housing, own-built
commercial housing and
management of related support
measure.		 $ 10,186,008
(US$ 311,190)
(Note 4)
6,024,188
(US$ 200,000)
243,082
(RMB 50,050)		 b.
b.
c.		 $ 4,713,315
(US$ 144,600)
6,024,188
(US$ 200,000)
-		 $ -
-

-		 $ -
-
-		 $ 4,713,315
(US$ 144,600)
6,024,188
(US$ 200,000)
-		 $ 2,530,972
446,835
(5,847)		 100
100
100		 $ 2,593,777
(Note 2,b,2)
410,498
(Note 2,b,2)
(5,847)
(Note 2,b,2)		 $ 33,423,679
4,227,587
192,546		 $ -
-
-
  • b. Limit on the amount of investments in the mainland China area:
Accumulated Outward Remittance for
Investments in Mainland China as of
December 31, 2020		 Investment Amount Authorized by the
Investment Commission, MOEA		 Upper Limit on the Amount of
Investments Stipulated by the
Investment Commission, MOEA
$ 11,888,548 (Note 5)
(US$ 383,571)		 $ 17,184,585
(US$ 550,161)		 (Note 6)

  • Note 1: The method of investment includes the following:

  • a. Direct investment in mainland China.

  • b. Indirect investment in mainland China through companies registered in a third region.

    • 1) Tripod (Wuxi) Electronic Co., Ltd. was invested through Tripod International Holding Pte. Ltd.

    • 2) Tripod (Hubei) Electronic Co., Ltd. was invested through Tripod Worldwide Holding Pte. Ltd.

  • c. Other method.

    • 1) Tripod (Xiantao) Zhiye Co., Ltd. was invested through Tripod (Hubei) Electronic Co., Ltd.

(Continued)

~215~

  • Note 2: The method of the investment income (loss) recognition includes the following:

  • a. The company was in the preparatory period with no income or losses.

  • b. The method for the basis of investment income (loss) recognition includes the following:

    • 1) The basis for investment income (loss) recognition is from the financial statements audited and attested by an international accounting firm which has cooperative relationship with an accounting firm in the ROC.

    • 2) The basis for investment income (loss) recognition is from the financial statements audited and attested by the parent company’s CPA in the ROC.

    • 3) The basis for investment income (loss) recognition is from the financial statements that have not been audited and attested by any CPA.

  • Note 3: These were transactions between subsidiaries and upstream transactions and the amortization expense of the unrealized gross profit.

  • Note 4: As of December 31, 2020, the paid-in capital of Tripod (Wuxi) Electronic Co., Ltd. was $10,186,008 thousand (US$311,190 thousand). The reason for the difference between the paid-in capital and accumulated outward remittance from Taiwan for investment is that Tripod (Wuxi) Electronic Co., Ltd. had conducted capitalization of retained earnings amounting to $5,472,693 thousand (US$166,590 thousand) since 2006. The aforementioned capitalization of retained earnings was approved by the Investment Commission, Ministry of Economic Affairs.

  • Note 5: The amounts were translated into foreign currencies using the exchange rate on each actual transaction date.

Note 6: Pursuant to the Jing-Shou-Gong-Zi Letter No. 10920422630 of the Ministry of Economic Affairs on July 30 2020,, the Company has obtained the certificate of being qualified as the operating headquarters issued by the Industrial Development Bureau, MOEA, and the ceiling amount of the investment in mainland China is not applicable to the Company.

Note 7: The amounts above listed in the New Taiwan dollars were originally denominated in RMB in the original financial statements.

Note 8: The amounts of paid-in capital held by investee companies were the same as the ending balance, and all the amounts above were not pledged.

(Concluded)

~216~

TABLE 9

TRIPOD TECHNOLOGY CORPORATION

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

  • a. There were the amounts and percentages of the purchases, also the amounts and percentages displayed in the ending balance of the related payables.

  • b. There were the amounts and percentages of the sales, also the amounts and percentages displayed in the ending balance of the related receivables.

  • c. The profits/losses were incurred from the proceeds from property transactions:

Seller Related Party Relationship Transaction
Type		 Amount % to
Total
Sales or
Purchase		 Transaction Details Transaction Details Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Notes Receivable
(Payable)/Trade Receivables
(Payables)		 Unrealized
(Gain) Loss
Price Payment Terms Comparison with Normal Transactions Ending Balance %
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd.
Tripod Technology Corporation
Able International Limited
Able International Limited
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.		 Tripod Overseas Co., Ltd.
Tripod Overseas Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Wuxi) Electronic Co., Ltd.
Tripod (Hubei) Electronic Co., Ltd
Tripod Technology Corporation
Able International Limited		 Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary		 Sales
Sales
Sales
Sales
Sales
Sales
Sales		 $ 2,306,041
356,495
3,396
507,142
79,442
2,748
369,036		 6
3
-
22
3
-
1		 Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders
Price set based on orders		 Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued
Net 30-120 days from the end of the
month of when invoice is issued		 Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties
Not significantly different from those of sales
to third parties		 Trade receivables
$ 387,327
Trade receivables
123,383
Trade receivables
556
Trade receivables
88,596
Trade receivables
43,259
Trade receivables
6,219
Trade receivables
94,696		 5
8
-
15
7
-
1		 $ 7,715
2,003
-
-
-
-
-

  • d. Refer to Table 2 for information relating to the ending balance and purposes of notes endorsements/guarantees or the collaterals provided.

  • e.

  • Refer to Table 1 for information relating to the maximum balance and ending balance of financing facility, the rate intervals and the gross amounts of interest in the period.

  • f. There was no other transaction that had a significant impact on the gains or losses for the period, such as the rendering or receipt of services.

~217~

TABLE 10

TRIPOD TECHNOLOGY CORPORATION

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

Name of Major Shareholder Shares Shares
Number of
Shares		 Percentage of
Ownership (%)
Anhe International Investment Co., Limited 41,741,167 7.94

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

6.6 Financial Solvency Status of Company and Affiliates in Latest Year and Until Publication Date of Annual Report

~218~

7. Financial Status, Performance Analysis and Risk Items

7.1 Financial Status

7.1.1 Consolidated financial status

==> picture [460 x 288] intentionally omitted <==

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

Unit: NT$ Thousands
Year Difference
2020 2019
Item Amount ％
Current Assets 52,817,975 52,662,225 155,750 0.30
Non-Current Assets 22,431,255 18,942,807 3,488,448 18.42
Total Assets 75,249,230 71,605,032 3,644,198 5.09
Current Liabilities 36,031,188 34,671,917 1,359,271 3.92
Non-Current
3,157,613 2,784,297 373,316 13.41
Liabilities
Total Liabilities 39,188,801 37,456,214 1,732,587 4.63
Capital 5,256,059 5,256,059 - -
Additional Paid-in
333,778 333,778 - -
Capital
Retained Earnings 34,274,302 31,954,144 2,320,158 7.26
Other Equity (3,811,192) (3,402,771) (408,421) (12.00)
Non-Controlling
7,482 7,608 (126) (1.66)
Equity
Total Shareholders’
36,060,429 34,148,818 1,911,611 5.60
Equity Amount
Description:
Perform analysis for varied percentage of over 20% for latest two years while the varied amount
reach NT$10 million: None 。
----- End of picture text -----

7.1.2 Unconsolidated financial status

Unit: NT$ Thousands

==> picture [448 x 255] intentionally omitted <==

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

Year Difference
2020 2019
Item Amount ％
Current Assets 6,800,284 6,639,653 160,631 2.42
Non-Current Assets 48,292,314 44,941,277 3,351,037 7.46
Total Assets 55,092,598 51,580,930 3,511,668 6.81
Current Liabilities 16,038,154 14,777,950 1,260,204 8.53
Non-Current
3,001,497 2,661,770 339,727 12.76
Liabilities
Total Liabilities 19,039,651 17,439,720 1,599,931 9.17
Capital 5,256,059 5,256,059 - -
Additional Paid-in
333,778 333,778 - -
Capital
Retained Earnings 34,274,302 31,954,144 2,320,158 7.26
Other Equity (3,811,192) (3,402,771) (408,421) (12.00)
Non-Controlling 36,052,947 34,141,210 1,911,737 5.60
Equity
Description:
Perform analysis for varied percentage of over 20% for latest two years while the varied amount
reach NT$10 million: None 。
----- End of picture text -----

Perform analysis for varied percentage of over 20% for latest two years while the varied amount reach NT$10 million: None 。

~219~

7.2 Financial Performance

7.2.1 Consolidated financial comparative analysis

Unit: NT$ Thousands

==> picture [431 x 248] intentionally omitted <==

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

Amount of
Year Varied
2020 2019 Increase
Item Percentage %
(Decrease)
Operating Revenues 55,547,908 54,450,944 1,096,964 2.01
Operating Costs 44,397,486 43,184,960 1,212,526 2.81
Operating Gross Profits 11,150,422 11,265,984 (115,562) (1.03)
Operating Expenses 4,576,080 4,392,803 183,277 4.17
Other Profits and Losses - (102,597) 102,597 100
Operating Profits 6,574,342 6,770,584 (196,242) (2.90)
Non-Operating Revenues and 1,182,448 1,027,707 154,741 15.06
Expenses
Pre-Tax Profits from
Continuing Operation 7,756,790 7,798,291 (41,501) (0.53)
before Income Tax
Income Tax Expenses (1,631,396) (1,760,971) (129,575) (7.36)
Net Profits from Continuing 6,125,394 6,037,320 88,074 1.46
Operation
Other Comprehensive Profits (403,141) (1,216,073) 812,932 66.85
(Losses) Net Profits
Total Comprehensive Profits 5,722,253 4,821,247 901,006 18.69
(Losses)
----- End of picture text -----

7.2.2 Unconsolidated financial comparative analysis

Unit: NT$ Thousands

==> picture [430 x 285] intentionally omitted <==

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

Amount of
Year Varied
2020 2019 Increase
Item Percentage %
(Decrease)
Operating Revenues 10,799,548 9,461,697 1,337,851 14.14
Operating Costs 5,888,868 4,534,201 1,354,667 29.88
Operating Gross Profits 4,910,680 4,927,496 (16,816) (0.34)
Unrealized Profits of Subsidiaries, Affiliates
(329,913) (375,704) 45,791 12.19
and Joint Ventures
Realized Profits of Subsidiaries,
375,703 201,875 173,828 86.11
Affiliates and Joint Ventures
Realized Operating Profits 4,956,470 4,762,667 193,803 4.07
Operating Costs 1,090,568 1,226,075 (135,507) (11.05)
Other Profits and Losses - (102,597) 102,597 100
Operating Profits 3,865,902 3,433,995 431,907 12.58
Non-Operating Revenues and
3,340,027 3,750,137 (410,110) (10.94)
Expenses
Pre-Tax Profits from Continuing 7,205,929 7,184,132 21,797 0.30
Operation before Income Tax
Income Tax Expenses (1,080,409) (1,146,878) (66,469) (5.80)
Net Profits from Continuing 6,125,520 6,037,254 88,266 1.46
Operation
(403,141) (1,216,073) 812,932 66.85
Total Comprehensive Profits 5,722,379 4,821,181 901,198 18.69
(Losses)
----- End of picture text -----

~220~

7.2.3 Varied percentage analysis description for latest two years

A. Consolidated financial erformance: p

Item ~~Varied Percentage Analysis Description~~
Other Revenue and loss amount
Increased

Mainly due to recognition of PPE depreciation losses last year
Other comprehensive profit
(loss) amount increased		 Mainly due to exchange amount difference from overseas operating
institutions’ financial reports caused by exchange rate fluctuations

B. Unconsolidated financial erformance: p

Item ~~Varied Percentage Analysis Description~~
Operatingcost increase
Mainlydue to increased operatingrevenues thisyear
(Un)Realized benefits of subsidiaries,
affiliates and joint ventures increased		 Mainly due to higher unrealized benefits of sales to invested
company in end of 2019 in comparison with that of 2018, while
realized nextyear
Other comprehensive profit
(loss)amount increased		 Mainly due to recognition of PPE depreciation losses last year
Other comprehensive profit
(loss)amount increased		 Mainly due to exchange amount difference from overseas operating
institutions’ financial reports caused byexchange rate fluctuations

7.2.4 Expected sales volume and basis, possible influences on future

financial/business and countermeasures

  • A. Expected sales volume and basis

  • Please refer to the Section 1.2 Business Plan Summary of this Year of “1. Letter to Shareholders”.

  • B. Possible influences on future financial/business and countermeasures Please refer to Section 1.2 Business Plan Summary of this Year of “1. Letter to Shareholders” and Section 1.3 Future Development and Business Strategies.

7.3 Cash Flows

7.3.1 Consolidated cash flows

Shareholders” and Section 1.3 Future Development and
3 Cash Flows
7.3.1 Consolidated cash flows		 Shareholders” and Section 1.3 Future Development and
3 Cash Flows
7.3.1 Consolidated cash flows
BOY
(Beginning of
Year) Balance
Annual Cash
Flows from
Operating
Activities
Annual Cash
Flows from
Investment
Activities
Annual Cash
Flows from
Fund-Raising
Activities
Year-End
Balance		 Improvement Plan for
Insufficient Liquidity

Investme
nt Plan
Fund-Raising
Plan
27,614,136
8,597,961
(5,987,193)
(3,630,256)
26,032,815		 -
-
Annual consolidated cash flow analysis:
Annual cash flows from operating activities: Mainly net profits and depreciation and amortization
expenses
Annual cash flows from investment activities: Mainly due to capital expenditure
Annual cash flows from fund-raising activities: Mainly due to issuance of cash dividend
Improvementplan for insufficient liquidity:No insufficient cash situation

7.3.2 Next year cash liquidity analysis

~221~

The Company will adjust production, sales and operations according to the global economy cycle status, considering future product development trends to replace old machinery equipment with new ones, expecting capital expenses and business funding demand can be satisfied by own funds; for any funding demand, we will consider the market status and funding costs to effectively cope with the situation with fund-raising methods such as bank loan limit and issuance of share right.

7.4 Impact of Latest Year Major Capital Expenditure on Finance and Business

  • 7.4.1 Major capital expenditure application status and funding source
Unit: NT$ Thousands Unit: NT$ Thousands Unit: NT$ Thousands
Plan Item Actual or
Expected
Funding
Source		 Actual or
Expected
Completion
Date		 Actual or Expected Funding Application
Status
2019
2020
2021
PCB factory and
machineryequipment		 Own fund December,
2021		 3,423,257 5,970,698 7,000,000

  • 7.4.2 Impact of major capital expenditure on finance and business

    • The Company expects to expand capacity and replace old equipment with new ones with own funds to continue steadily grow and strengthen manufacturing procedure ability.

  • 7.5 Investment Status of Latest Year, Major Reason for Profits or Losses, Improvement Plan and Investment Plan for Next year

The Company’s investment policy mainly covers expanding capacity and considers corporate long-term development to continue seek for strategic goals. In 2020, we adopted equity method to recognize investment benefits of NT$3,397,802,000 mainly thanks to continuing realizing various management systems.

The Company will continue to use long-term strategic angles such as strengthening competitiveness to carefully evaluate investment plans.

~222~

7.6 Risk Items

  • 7.6.1 Impacts of interest rate, exchange rate changes, inflation status, etc. on corporate profits/losses and future countermeasures

  • A. Impacts of latest year of interest rate changes on corporate profits/losses and future countermeasures

    • The Company constantly controls market interest rate trend and evaluate whether interest rate hedge is needed according to bank book loan status to avoid interest rate risks.

  • B. Impact of latest year exchange rate changes on corporate profits/losses and future countermeasures

    • The Company mainly exports its products; therefore, it pays extra attention on exchange rate fluctuations while adopting a steady foreign exchange management method, constantly controlling exchange rate trends; launch foreign exchange transaction contracts according to foreign exchange asset and liability status to avoid exchange rate fluctuation risks.

  • C. Impacts of latest year inflation on corporate profits/losses and future countermeasures: None.

  • 7.6.2 Major reasons for profits or losses out of high-risk, high-leverage investment, loan, guarantee and derivative trading policy and future countermeasures

In latest year, besides 100% direct or indirect share investment, loan and affiliate customs tax guarantee, we did not have high risk, high-leverage investment and other loan and guarantee matters, the loan and balance of aforementioned investments all meet internal limitations while not causing any damages to our profitability. Also, we had foreign exchange trading as derivative trading to avoid exchange rate fluctuation risks to reduce abnormal profits and losses, so did not cause major damages to our profitability.

7.6.3 Future R&D plan and expected R&D expenses

For the Company’s planned new products, technologies and manufacturing procedure developments, please refer to the 5.1 Business Content of “5. Business Overview”; considering planned R&D item status was the same as that of previous year, the R&D expenses of 2021 are expected to be around NT$230,000,000.

  • 7.6.4 Impacts of domestic and overseas major policy and regulation changes on corporate finance and business and countermeasures: None.

  • 7.6.5 Impacts of technology and industry changes on corporate finance and business and countermeasures:

~223~

The Company’s products and technologies are influenced by a rapid alternate development of electronic industry whereas related up- and downstream players constantly introduce advanced manufacturing procedure technologies and expand capacities which cause imbalanced PCB supply and demand while price competition is fierce, causing PCB industry operations to be tough. Therefore, the Company continues to strengthen advanced manufacturing technology upgrade while striving to diversify its products and customers and strengthen marketing and customer service channels. For financial operations, we specifically reinforce cash flow management, maintaining appropriate financial structure to keep a stable corporate operation and spread business risks.

  • 7.6.6 Impacts of corporate image change on corporate risk management and countermeasures: N/A.

  • 7.6.7 Expected benefits, potential risks and countermeasures of mergers: N/A.

  • 7.6.8 Expected benefits, potential risks and countermeasures of factory expansion:

The Company properly plans and keeps capacity flexible when expanding factory; when product demand can be effectively controlled, we hereby boost manufacturing procedure production volume to avoid risks of idle capacity.

7.6.9 Risks and countermeasures of concentrated purchase or sales:

There were two companies from whom the Company purchased more than 10% of materials in 2020 while there were no customers accounting for over 10% of overall sales. To avoid over reliance on major suppliers or customers which may cause risks of operational difficulties, the Company has strict purchase, sales and credit control policies while regularly inspecting the purchase and sales status to effectively and timely control status of suppliers or customers.

  • 7.6.10 Impacts, risks and countermeasures of massive transfers of share rights of director, supervisor or shareholder of over 10% shares:

Since the inception of the Company, there were no massive transfers of share rights of director, supervisor or shareholder of over 10% of shares while the Company’s management team is stable, continuing to maintain a fair business performance while gradually enhancing the Company’s industry competitiveness.

7.6.11 Impacts, risks and countermeasures of ownership change: N/A

  • 7.6.12 Litigation or non-litigation incidents: None.

~224~

  • 7.6.13 Other major risks and countermeasures:

  • A. Information safety:

    • With the development trends of technology, the information security risks faced by the enterprise is rising. To cope with such trend changes, the Company set up Information Security Committee in June, 2017 to promote information security management and boost information security management ability; the committee is responsible to compile information security policy and guideline, audit information security management matters while appointing a Chief of Information Security Officer (CISO) to handle promoting and maintaining information security system operations to construct all-around information security prevention ability, increasing employees’ fair information security awareness. The committee regularly reports to the Company’s management team about the status of information security management.

    • (1) Information Security Management Structure

==> picture [467 x 83] intentionally omitted <==

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

Information Security Committee
CISO
Information Security Team Information Security Audit Emergency Team
T
----- End of picture text -----

Information Security Committee members: Management representative (President), CISO (information division executive) and executives of division-level units

  • (2) Information security policy

  • To protect the Company’s information from violation of various threats, ensure business continuity, minimize business risks, maximize investment returns and business opportunities, the Company compiles information security management guidelines:

  • Continue to improve information security ability

  • Effectively protect customer confidential information

  • (3) Management project

  • The Company compiles complete information security management regulations, concrete information security management procedure, via regular information security risk evaluation, performance measurement, internal/external audit to continue improve information security ability while passing ISO 27001 information security management system certificate. Also, the Company continues to add information security investment and cultivate information security talents, boosting professional competency with expanding talent scale while asking all personnel to participate in information security trainings to improve awareness of information security.

~225~

B. COVID-19 epidemic:

With continued influence of COVID-19 epidemic, although the recent vaccine hitting the market and granted vaccination bring about hopeful improvement of epidemic, there is a continued border control of each country; therefore, the Company will continue to focus on epidemic developments and realize epidemic-prevention measures. The Company proceeds with capacity allocation after ensuring the safety of employees to meet customers’ demand to avoid influences on corporate operations.

7.7 Other Important Items: None.

~226~

8. Special Items

8.1 Affiliate Information:

8.1.1 Affiliate organizational chart: (base date: December 31[st] , 2020)

==> picture [382 x 268] intentionally omitted <==

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

Tripod Technology Corporation
80% 100% 100%
Trison Technology J & J Holding Co., Ltd. Tripod Nano Technology
Corporation Corporation
100% 100%
Able International Limited Tripod Overseas Co., Ltd.
100% 100% 100%
Tripod Worldwide Holding Pte. Ltd. Tripod Global Pte. Ltd. Tripod International Holding Pte. Ltd.
100% 100%
Tripod (Hubei) Electronic Co., Ltd Tripod (WUXI) Electronic Co., Ltd
100%
Tripod (Xiantao) Zhiye Co., Ltd
----- End of picture text -----

8.1.2 Affiliate information: (base date: December 31[st] , 2020)

Unit: NT$ Thousands

==> picture [476 x 337] intentionally omitted <==

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

Name Incorporation Address Paid-in Major Operating or Production
Date Capital Item
No.21 Kuang-Yeh 5th Rd., Design, manufacturing and sales of
Controlling Tripod Technology Corporation 1991/12/16 Pingzhen District, Taoyuan NT$5,256,059 PCB and mix, POS and PC
Company
City automation production equipment
Palm Grove House, P.O. Box
J & J Holding Co., Ltd. 2000/10/18 438, Road Town, Tortola, US$128,396 Investment
British Virgin Islands
Trison Technology 2016/09/08 1F, No. 598-1, Longci Rd., Zhongli District, Taoyuan NT$37,500 [Manufacturing and wholesale of ]
Corporation electronic components
City, Taiwan
Tripod Nano No.171, Sec. 1, Meishi Rd.,
Technology 2018/01/23 Yangmei District, Taoyuan NT$100,000 [Manufacturing and wholesale of ] chemical materials
Corporation City
Palm Grove House, P.O. Box
Tripod Overseas Co., Ltd. 2000/10/18 438, Road Town, Tortola, US$128,000 [Investment, sales business of PCB, ] material electronic components
British Virgin Islands
Able International Portcullis Chambers,
Limited 2004/7/13 P.O.Box1225, Apia, SAMOA US$600 [Trading business of PCB, material ] electronic components
10 Anson Road #30-01
Tripod International 2007/10/4 International Plaza Singapore US$172,900 Investment
Holding Pte. Ltd. 079903
Subordinating 10 Anson Road #30-01
Company Tripod Global Pte. Ltd. 2008/5/26 International Plaza Singapore US$100 [Trading business of PCB, material ]
079903 electronic components
10 Anson Road #30-01
Tripod Worldwide 2010/5/14 International Plaza Singapore US$200,050 Investment
Holding Pte. Ltd. 079903
No.6, Mid Tuanjie Rd.,
Tripod (WUXI) 2000/12/28 Development Zone, Wuxi US$311,190 [OEM, manufacturing and trading ]
Electronic Co., Ltd. City, Jiangsu Province, of PCB and components
China
Tripod (Hubei) No.1, Mid-Section,
Electronic Co., Ltd. 2010/8/24 Mianzhou Avenue, Xiantao US$200,000 [OEM, manufacturing and trading ]
of PCB and components
City, Hubei Province, China
Wholesale and import/export
business of electronic products,
Tripod (Xiantao) Zhiye No.5, 7, 9, Mid-Section,
Co., Ltd. 2014/3/31 Mianzhou Avenue, Xiantao CNY 50,050 development and operations of
real estate, sales, lease, building
City, Hubei Province, China
and related facility management of
commercial houses
----- End of picture text -----

~227~

8.1.3 Information of same shareholder for controlling and subordinating relationship: None.

8.1.4 Industry of affiliates: Manufacturing, trading and investment industries

8.1.5 Information of director, supervisor and president of affiliates:

==> picture [477 x 658] intentionally omitted <==

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

Unit: Share, December, 31 [st] , 2020
Number of Shares
Company Name Title Name or Representative Number of Shareholding
Shares Percentage %
Controlling Company
Tripod Technology Corporation Chairperson Jing-Chun Wang 7,022,532 1.34
Vice
Jing-Xiu Hu 6,325,713 1.20
Chairperson
President Jing-Chun Wang 7,022,532 1.34
Director Chao-Kuei Hsu 8,982,056 1.71
Director Chew-Wun Wu (legal person representative of Yun An 630,000 0.12
Investment Ltd.)
Director Zheng-Ding Wang (legal person representative of Yun Jie 630,000 0.12
Investment Ltd.)
Director Mao-Tong Tsai (legal person representative of Qin Shan International 1,915,329 0.36
Investment Ltd.)
Director Mei-Lan Chang (legal person representative of Chao Sheng 753,080 0.14
Investment Co., Ltd.)
Independent Director Xing-Zheng Dai 2,266 0.00
IndependentDirector Hong-Cheng Wu 0 0.00
Independent Director Yong-Cheng Wu 0 0.00
Subordinating Company
J & J Holding Co., Ltd. Director Jing-Chun Wang (legal person representative of Tripod 128,396,297 100.00
Technology Corporation)
Tripod Overseas Co., Ltd. Director Jing-Chun Wang (legal person representative of J & J 128,000,000 100.00
Holding Co., Ltd.)
Able International Limited Director Jing-Chun Wang (legal person representative of J & J 600,000 100.00
Holding Co., Ltd.)
Tripod International Holding Pte. Ltd. Director Jing-Chun Wang Overseas Co., Ltd.(legal person representative of Tripod ) 172,900,000 100.00
Director Zheng-Ming Wang (legal person representative of Tripod 172,900,000 100.00
Overseas Co., Ltd.)
Director Lim-Say Wan 0 0.00
Tripod Global Pte. Ltd. Director Jing-Chun Wang Overseas Co., Ltd.(legal person representative of Tripod ) 100,000 100.00
Director Zheng-Ming Wang (legal person representative of Tripod 100,000 100.00
Overseas Co., Ltd.)
Director Lim-Say Wan 0 0.00
Tripod Worldwide Holding Pte. Ltd. Director Jing-Chun Wang Overseas Co., Ltd.(legal person representative of Tripod ) 200,050,000 100.00
Director Zheng-Ming Wang (legal person representative of Tripod 200,050,000 100.00
Overseas Co., Ltd.)
Director Lim-Say Wan 0 0.00
(legal person representative of Tripod International
Tripod (WUXI) Electronic Co., Ltd. Managing Director Holding Pte. Ltd.) Wen-Chuan Chen (legal person representative of Tripod (Note) 100.00
International Holding Pte. Ltd.)
Supervisor Jing-Xiu Hu (legal person representative of Tripod (Note) 100.00
International Holding Pte. Ltd.)
Tripod (Hubei) Electronic Co., Ltd. Managing Director Wen-Chuan Chen (legal person representative of Tripod Worldwide Holding Pte. Ltd.) (Note) 100.00
Supervisor Me-Lan Chang (legal person representative of Tripod (Note) 100.00
Worldwide Holding Pte. Ltd.)
Tripod (Xiantao) Zhiye Co., Ltd. Managing Director (Hubei) Jing-Chun Wang (legal person representative of Tripod (Note) 100.00
Electronic Co., Ltd.)
Supervisor Jing-Xiu Hu (legal person representative of Tripod (Hube (Note) 100.00
Electronic Co., Ltd.)
Trison Technology Corporation Chairperson Zheng-Ding Wang (legal representative of Tripod 3,000,000 80.00
Technology Corporation)
Director Lian-Fa Tsai (legal representative of Tripod Technology 3,000,000 80.00
Corporation)
Director Xiu-Li Lin (legal representative of Tripod Technology 3,000,000 80.00
Corporation)
Supervisor Cheng-I Lee 0 0.00
Tripod Nano Technology Chairperson Zheng-Ding Wang (legal representative of Tripod 10,000,000 100.00
Technology Corporation)
Corporation
Director
Lian-Fa Tsai (legal representative of Tripod Technology 10,000,000 100.00
Director Corporation)
Xiu-Li Lin (legal representative of Tripod Technology 10,000,000 100.00
Corporation)
Supervisor
Cheng-I Lee (legal representative of Tripod Technology 10,000,000 100.00
Corporation)
----- End of picture text -----

Note: Limited company, no shares

~228~

8.1.6 Operating status of affiliates: (base date December 31[st] , 2020)

Unit: NT$ Thousands

==> picture [471 x 233] intentionally omitted <==

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

Operating Profits
Company Name Capital Capital Value Liability Amount Net Value Operating Revenues Profits (Losses) EPS (NT$) (Net)
(Losses) (Net)
Tripod Technology Corporation 5,256,059 55,092,598 19,039,651 36,052,947 10,799,548 3,865,902 6,125,520 11.65
Trison Technology 37,500 42,145 4,730 37,415 0 (116) (627) (0.17)
Corporation
Tripod Nano Technology
100,000 41,243 8,297 32,946 1,947 (26,595) (26,155) (3.26)
Corporation
J&J Holding Co., Ltd. 4,246,360 46,030,348 0 46,030,348 0 (129) 3,431,193 0.91 Note 1
Tripod Overseas Co., Ltd. 4,171,875 61,220,055 15,654,909 45,565,146 47,864,438 326,228 3,431,390 0.91 Note 1
Able International Limited 19,558 588,559 573,405 15,154 2,278,479 (48) (67) -Note 1
Tripod International Holding Pte. 5,532,140 33,526,095 142 33,525,953 891 509 2,531,459 0.49Note 1
Ltd.
Tripod Global Pte. Ltd. 3,153 5,986,324 5,976,527 9,797 37,918,561 1,671 1,213 0.27Note 1
Tripod Worldwide Holding Pte. 6,025,716 4,316,482 116 4,316,366 297 78 446,906 0.08Note 1
Ltd.
Tripod (WUXI) Electronic 10,186,008 47,043,101 13,521,178 33,521,923 38,937,411 2,114,830 2,530,972 - Note 2
Co., Ltd.
Tripod (Hubei) Electronic
6,024,188 15,294,798 10,978,723 4,316,075 11,527,255 260,884 446,835 -Note 2
Co., Ltd.
Tripod (Xiantao) Zhiye 243,082 192,647 101 192,546 0 (4,661) (5,847) -Note 2
Co., Ltd.
----- End of picture text -----

Note 1: USD Note 2: Limited company, no shares

~229~

8.1.7 Consolidated financial reports of affiliates:

Statement of Affiliate Consolidated Financial Reports

For 2020 (January 1[st] -December 31[st] , 2020), the Company refers to the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” and ascertains that the companies relating to preparation of consolidated financial reports for affiliates and those in preparation of consolidated reports of parent company/subsidiary under the provision of IAS 10 of International Financial Reporting Standards (IFRS) are the same while the information to be disclosed for consolidated financial reports of affiliates are all disclosed, thereby no additional consolidated reports of affiliates are required.

Thereby states the above

Company Name: Tripod Technology Corporation Owner: Jing-Chun Wang

February 25[th] , 2021

8.1.8 Affiliate report: None.

  • 8.2 Private Placement of Securities of Latest Year and Until Publication Date of Annual Report

  • 8.3 Shareholding or Disposal of Company Shares of Subsidiaries of Latest Year and Until Publication Date of Annual Report: None

  • 8.4 Other Necessary Items to be Recorded:

The directors and supervisors of the Company all follow regulations to irregularly participate in continued study training; for related information of the study content, the Company has already disclosed at MOPS.

9. Major Impact Items on Shareholders ’ Rights or Securities

Prices under Clause 2, Section 2 of Article 36, Securities and Exchange Act of Latest Year and Until Publication Date of Annual Report: None.

~230~

Tripod Technology Corporation

Owner: Jing-Chun Wang

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