TXC — Annual Report 2020

Dec 25, 2020

TXC Corporation

Financial Statements for the Years Ended December 31, 2020 and 2019 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders TXC Corporation

Opinion

We have audited the accompanying financial statements of TXC Corporation (the “Company”), which comprise the balance sheets as of December 31, 2020 and 2019, and 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 audits 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. 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.

The key audit matter identified in the Company’s financial statements for the year ended December 31, 2020 is stated as follows:

Revenue of the Company for the year ended December 31, 2020 amounted to NT$11,048,392 thousand, which had an approximate 31% increase compared to revenue of NT$8,430,970 thousand for the year ended December 31, 2019. In comparison with 2019, the revenue derived from specific products increased significantly on average in 2020; therefore, we considered the validity of revenue derived from specific products as a key audit matter.

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The key audit procedures that we performed in respect of sales derived from specific products included the following:

1. We tested and obtained an understanding of the appropriateness of the design and the implementation of internal control system that is related to revenue recognition of these specific products.

2. We selected samples from revenue details of specific products, and checked the sales orders and delivery orders to confirm the occurrence of the sales revenue.

3. We inspected the sales returns details of some specific products to check whether there is any abnormal circumstance on the occurrence of the sales returns.

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.

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.

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3. 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.

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

5. 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.

6. 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.

7. Obtain sufficient 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.

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The engagement partners on the audit resulting in this independent auditors’ report are Ming-Chung Hsieh and Yu-Shiou Su.

Deloitte & Touche Taipei, Taiwan Republic of China

March 11, 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 financial statements shall prevail.

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TXC 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 amortized cost - current (Notes 4 and 9) Notes receivable (Notes 4 and 10) Trade receivables (Notes 4 and 10) Trade receivables from related parties (Notes 4, 10 and 27) Other receivables (Notes 4 and 10) Other receivables from related parties (Notes 4 and 27) Current tax assets (Note 23) Inventories (Notes 4 and 11) Non-current assets held for sale (Notes 4 and 12) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Right-of-use assets (Notes 4 and 15) Investments accounted for using equity method (Notes 4 and 13) Property, plant and equipment (Notes 4 and 14) Investment properties (Notes 4 and 16) Other intangible assets (Note 4) Deferred tax assets (Notes 4 and 23) Prepayment for equipment Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 17) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Trade payables Trade payables to related parties (Note 27) Other payables (Note 18) Other payables to related parties (Note 27) Current tax liabilities (Notes 4 and 23) Lease liabilities - current (Notes 4 and 15) Current portion of long-term borrowings and bonds payable (Note 17) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 17) Lease liabilities - non-current (Notes 4 and 15) Deferred tax liabilities (Notes 4 and 23) Net defined benefit liabilities - non-current (Notes 4 and 19) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY (Note 20) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating the financial statements of foreign operations Unrealized gain on financial assets at fair value through other comprehensive income Total other equity Total equity TOTAL		2020 Amount % $ 1,300,005 9 66,424 1 162 - 2,959,055 21 72,598 1 19,094 - 9 - - - 1,073,090 7 35,892 - 64,521 - 5,590,850 39 9,255 - 213,736 2 2,931 - 6,107,268 42 2,328,906 16 21,511 - 8,984 - 34,387 - 112,372 1 2,508 - 8,841,858 61 $ 14,432,708 100 $ 526,986 3 1,455 - 699,223 5 1,017,833 7 563,091 4 1,482 - 112,834 1 1,777 - 100,000 1 11,659 - 3,036,340 21 1,600,000 11 1,172 - 67,032 1 63,560 - 9,598 - 1,741,362 12 4,777,702 33 3,097,570 21 1,668,269 12 1,480,696 10 524,372 4 3,230,861 22 5,235,929 36 (523,275) (3) 176,513 1 (346,762) (2) 9,655,006 67 $ 14,432,708 100		2019
				Amount % $ 672,110 6 43,052 - 813 - 2,199,290 18 51,691 1 14,371 - 42,888 - 8,176 - 870,180 7 - - 22,074 - 3,924,645 32 9,255 - 185,477 2 6,024 - 5,862,128 49 1,961,704 16 26,881 - 3,692 - 33,066 - 89,157 1 2,508 - 8,179,892 68 $ 12,104,537 100 $ 3,525 - 3,963 - 503,621 4 797,801 7 431,397 4 4,449 - 38,273 - 3,087 - - - 7,948 - 1,794,064 15 1,400,000 11 2,949 - 123,400 1 74,031 1 12,342 - 1,612,722 13 3,406,786 28 3,097,570 25 1,666,690 14 1,413,518 12 254,907 2 2,789,438 23 4,457,863 37 (584,617) (5) 60,245 1 (524,372) (4) 8,697,751 72 $ 12,104,537 100

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

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TXC 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 (Note 21) Sales Less: Sales returns Less: Sales allowances Net operating revenue COST OF GOODS SOLD (Notes 11 and 22) GROSS PROFIT UNREALIZED GAIN ON ASSOCIATES/AND JOINT VENTURES REALIZED GAIN ON TRANSACTIONS WITH ASSOCIATES /AND JOINT VENTURES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4 and 22) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income (Note 22) Other income (Notes 4 and 22) Other gains and losses (Note 22) Finance costs (Notes 4 and 22) Share of profit of associates and joint ventures (Note 13) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 23) NET PROFIT FOR THE YEAR		2020 Amount % $ 9,219,457 101 39,113 - 39,930 1 9,140,414 100 7,193,029 79 1,947,385 21 (2,022) - 1,364 - 1,946,727 21 253,830 2 164,331 2 550,247 6 968,408 10 978,319 11 4,477 - 54,438 1 (74,424) (1) (9,676) - 672,677 7 647,492 7 1,625,811 18 196,524 2 1,429,287 16		2019
				Amount % $ 6,778,865 102 32,011 1 74,783 1 6,672,071 100 5,596,803 84 1,075,268 16 (1,364) - 1,064 - 1,074,968 16 252,422 3 123,024 2 396,050 6 771,496 11 303,472 5 6,506 - 57,162 1 (23,982) (1) (12,472) - 380,860 6 408,074 6 711,546 11 39,764 1 671,782 10 (Continued)

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TXC CORPORATION

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 Unrealized gain on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Share of the other comprehensive loss of associates accounted for using the equity method Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 24) From continuing and discontinued operations Basic Diluted		2020 Amount % $ (451) - 174,625 2 65,266 - 239,440 2 58,311 1 3,031 - 61,342 1 300,782 3 $ 1,730,069 19 $ 4.61 $ 4.58		2019
				Amount % $ (12,331) - 74,642 1 55,452 1 117,763 2 (216,643) (4) (8,051) - (224,694) (4) (106,931) (2) $ 564,851 8 $ 2.17 $ 2.16
		$		$

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

(Concluded)

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TXC 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 20) Legal reserve Special reserve Cash dividends distributed by the Company Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 Disposal of equity instruments at fair value through other comprehensive income (Note 8) Surplus donated Changes in capital surplus from investment in associates and join ventures accounted for using the equity method BALANCE AT DECEMBER 31, 2019 Appropriation of 2019 earnings (Note 20) Legal reserve Special reserve Cash dividends distributed by the Company Net profit for the for the year ended December 31, 2020 Other comprehensive loss for the for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 Disposal of equity instruments at fair value through other comprehensive income (Note 8) Disposal of investments accounted for using the equity method Surplus donated Changes in capital surplus from investment in associates and joint ventures accounted for using the equity method Other changes in capital surplus BALANCE AT DECEMBER 31, 2020	Shares (In Thousands) Share Capital Capital Surplus 309,757 $ 3,097,570 $ 1,665,116 - - - - - - - - - - - - - - - - - - - - - - - 1,617 - - (43) 309,757 3,097,570 1,666,690 - - - - - - - - - - - - - - - - - - - - - - - (1,068) - - 347 - - 1,219 - - 1,081 309,757 $ 3,097,570 $ 1,668,269	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,349,083 $ 222,793 $ 2,671,184 64,435 - (64,435) - 32,114 (32,114) - - (619,514) - - 671,782 - - (12,270) - - 659,512 - - 174,805 - - - - - - 1,413,518 254,907 2,789,438 67,178 - (67,178) - 269,465 (269,465) - - (774,393) - - 1,429,287 - - (508) - - 1,428,779 - - 123,680 - - - - - - - - - - - - $ 1,480,696 $ 524,372 $ 3,230,861	Others Exchange Differences on Unrealized Gain (Loss) on Financial Assets at Fair Value Through Other Translating Comprehensive Foreign Operations Income $ (359,923) $ 105,017 - - - - - - - - (224,694) 130,033 (224,694) 130,033 - (174,805) - - - - (584,617) 60,245 - - - - - - - - 61,342 239,948 61,342 239,948 - (123,680) - - - - - - - - $ (523,275) $ 176,513	Total Equity $ 8,750,840 - - (619,514) 671,782 (106,931) 564,851 - 1,617 (43) 8,697,751 - - (774,393) 1,429,287 300,782 1,730,069 - (1,068) 347 1,219 1,081 $ 9,655,006

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

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TXC 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 Net loss on fair value change of financial assets and liabilities designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates and joint ventures Gain on disposal of property, plant and equipment Loss on disposal of investments accounted for using the equity method Unrealized gain on the transactions with subsidiaries, associates and joint ventures Realized gain on the transactions with subsidiaries, associates and joint ventures Changes in operating assets and liabilities: Financial assets mandatorily classified as at fair value through profit or loss Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Decrease in financial liabilities mandatorily classified as at fair value through profit or loss Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Defined benefit liabilities - non-current Cash generated from operations Interest paid Income taxes paid Net cash generated from operating activities	2020 $ 1,625,811 370,757 4,379 1,455 9,676 (4,477) (1,635) (672,677) (4,584) 6,106 2,022 (1,364) - 651 (759,765) (20,907) (4,786) 42,879 (202,910) (42,447) (3,963) 195,602 220,032 131,799 (2,967) 3,711 (11,035) 881,363 (9,743) (179,982) 691,638	2019 $ 711,546 323,026 4,809 4,055 12,472 (6,506) (2,385) (380,860) (885) - 1,364 (1,064) 21,714 480 (77,463) 58,310 (519) (36,430) 127,600 (12,722) - (73,645) 161,808 77,119 1,228 (538) (6,333) 906,181 (12,721) (49,466) 843,994 (Continued)

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TXC CORPORATION

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Acquisition of associates Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Payments for investment properties Decrease in refundable deposits Payments for intangible assets Increase in prepayment for equipment Interest received Dividend received from associates Other dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Payments for right-of-use assets Dividends paid to owners of the Company Other changes in capital surplus Net cash generated from (used in) financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS NET 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 $ 165,952 (66,424) 43,052 (9,877) (730,344) 5,976 (544) - (9,671) (23,215) 4,540 491,890 18,505 (110,160) 523,461 300,000 - (2,744) (3,125) (774,393) 1,428 44,627 1,790 627,895 672,110 $ 1,300,005	2019 $ 241,715 (43,052) 68,946 (67,083) (299,849) 1,923 - (1,500) (8,331) (38,330) 7,507 20,447 2,385 (115,222) 3,525 1,400,000 (1,396,875) - (2,857) (619,514) 1,617 (614,104) - 114,668 557,442 $ 672,110

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

(Concluded)

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

TXC CORPORATION

1. ORGANIZATION AND OPERATIONS

TXC Corporation (the “Company”) was incorporated in the Republic of China (ROC) on December 28, 1983.

The Company specializes in producing high quality quartz unite crystal, automotive crystal, crystal oscillator (CXO), and timing module (TM) as well as develops a variety of sensors by core technology to satisfy the market demand. Sensors are applied to various applications including mobile communication, wearable device, internet of things and vehicle electronics, etc.

The Company’s shares have been listed on the Taiwan Stock Exchange since August 26, 2002.

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

In order to ensure investors’ rights and interests, the Company filed an application to Taiwan Corporate Governance Association for corporate governance assessment certification. The Company acquired CG6005 general version of corporate governance assessment and authentication and CG6008 advanced version of corporate governance assessment and authentication on March 23, 2011 and June 27, 2013, respectively. On the first “Corporate Governance Assessment and Authentication” which is jointly held by the “Taiwan Stock Exchange” and “Taipei Exchange”, the Company was listed as the top 20 percent of the listed companies in 2014 and awarded the top 5 percent of the listed companies from 2015 to 2017. The Company will continue to strengthen corporate governance functions in order to work with international standards and to protect public interests.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 11, 2021.

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

• a. Initial application of the amendments to 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).

Except for the following, the initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies:

• Amendments to IAS 1 and IAS 8 “Definition of Material”

The Company adopted the amendments starting from January 1, 2020. The threshold of materiality that could influence users has been changed to “could reasonably be expected to influence”. Accordingly, disclosures in the financial statements do not include immaterial information that may obscure material information.

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• b. The IFRSs endorsed by the Financial Supervisory Commission (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

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.

• 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.

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• 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.

• 1) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Group should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;

• The Group may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and

• Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

• a) The Group changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;

• b) The Group chose the accounting policy from options permitted by the standards;

• c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;

• d) The accounting policy relates to an area for which the Group is required to make significant judgements or assumptions in applying an accounting policy, and the Group discloses those judgements or assumptions; or

• e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

• 2) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Group may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Group uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

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Except for the above impacts, 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.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments that are measured at fair values. Historical cost is generally based on the fair value of the consideration given in exchange for 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 the 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 the asset or liability.

When preparing its parent company only financial statements, the Company used equity method to account for its investment in subsidiaries, associates and jointly controlled entities. 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 with the amounts attributable to the owner of the Company in its financial statements, adjustments arising from the differences in accounting treatment between parent company only basis and basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries, associates and joint ventures, share of other comprehensive income of subsidiaries, associates and joint ventures and 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;

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• 2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

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

• d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (i.e., 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.

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 item denominated in a foreign currency and measured at historical cost is stated at the reporting currency as originally translated from the foreign currency.

For the purpose of presenting financial statements, the functional currencies of the Company and its foreign operations (including subsidiaries, associates, joint ventures and branches 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 (attributed to the owners of the Company and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e., a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an associate that includes 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.

In a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is not recognized in profit or loss. For all other partial disposals (i.e., partial disposals of associates or jointly controlled entities that do not result in the Company losing significant influence or joint control), the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

• 15 -

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-process 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. 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 specific identification of cost on the balance sheet date.

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiary is an entity that is controlled by the Company.

Under the equity method, 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.

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 loss 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 loss, if any.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business over the cost of acquisition is recognized immediately in profit or loss.

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 had the Company 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 and only to the extent of interests in the subsidiaries that are not related to the Company.

• 16 -

• g. Investments in associates

An associate is an entity over which the Company has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Company uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates and joint ventures accounted for using the equity method. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (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 associate), the Company discontinues recognizing its share of further loss, if any. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method and does not remeasure the retained interest.

• 17 -

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’s financial statements only to the extent of interests in the associate that are not related to the Company.

• h. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently 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 and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

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.

i. Investment properties

Investment properties are properties held to earn rental and/or for capital appreciation.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

For a transfer of classification from investment properties to property, plant and equipment, the deemed cost of the property for subsequent accounting is its carrying amount at the commencement of owner-occupation.

For a transfer of classification from property, plant and equipment to investment properties, the deemed cost of an item of property for subsequent accounting is its carrying amount at the end of owner-occupation.

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

j. 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. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

• 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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• k. 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, excluding goodwill, to determine whether there is any indication that those assets have suffered an 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. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually and whenever there is an indication that the assets may be impaired.

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 that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

• l. Non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset is available for immediate sale in its present condition. To meet the criteria for the sale being highly probable, the appropriate level of management must be committed to the sale, and the sale should be expected to qualify for recognition as a completed sale within 1 year from the date of classification

When the Company is committed to a sale plan involving the disposal of an investment or a portion of an investment in an associate or a joint venture, only the investment or the portion of the investment that will be disposed of is classified as held for sale when the classification criteria are met, and the Company discontinues the use of the equity method in relation to the portion that is classified as held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. If the Company ceases to have significant influence or joint control over the investment after the disposal takes place, the Company accounts for any retained interest that has not been classified as held for sale in accordance with the accounting policies for financial instruments.

Non-current assets classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Such assets classified as held for sale are not depreciated

m. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

• 19 -

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 FVTPL) 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 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 investments in equity instruments at FVTOCI.

• i Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income, respectively; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 26.

• ii Financial assets at amortized cost

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

• i) The financial assets are 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 assets 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, note and trade receivables at amortized cost, other receivables, 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:

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

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• ii) Financial asset that is not credit impaired on purchase or origination but has 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 repurchase agreement with original maturities within 3 months from the date of acquisition, 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 disposal 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.

• b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables) and investments in debt instruments that are measured at FVTOCI.

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.

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.

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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 a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and 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 liability 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 26.

• 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 interest rate and foreign exchange rate risks, including foreign exchange forward contracts, interest rate swaps.

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 are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (e.g., financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts, and the host contracts are not measured at FVTPL.

• 22 -

n. Revenue recognition

The Company 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 crystals frequency control devices and sensors. Sales of crystals frequency control devices and sensors are recognized as revenue when the goods are delivered to the customer’s specific location, the goods are shipped and the goods are picked up by customers because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

o. Leases

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

1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

2) The Group 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 by 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 adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. 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 lessee’s incremental borrowing rate will be used

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.

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p. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than those stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

• q. Government grants

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

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Company recognizes as expenses the related costs that the grants intend to compensate. Specifically, government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognized as a deduction from the carrying amount of the relevant assets and recognized in profit or loss on a systematic and rational basis over the useful lives of the related assets.

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

r. 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.

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, 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, the effect of the changes to the asset ceiling 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.

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s. 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 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 and associates and interests in joint ventures, 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 recognized only 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 such temporary differences 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.

Deferred tax liabilities and assets 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 tax 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.

Where current tax or deferred tax arises from the initial accounting for a business combination and the acquisition of a subsidiary, the tax effect is included in the accounting for the business combination and investments in a subsidiary.

• 25 -

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations, 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.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents (investments with original maturities less than 3 months) Time deposits		December 31	December 31
		2020 $ 1,035 1,041,455 257,515 $ 1,300,005	2019 $ 988 627,967 43,155 $ 672,110

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

Demand deposits Time deposits	**December 31 **
	2020 2019 0.001%-0.26% 0.001%-1.92% 0.35%-3.09% 2.12%-3.20%

7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-non-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Domestic unlisted shares Financial liabilities at FVTPL-current Financial liabilities held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts and exchange contracts (a)		December	31
		2020 $ 9,255 $ 1,455	2019 $ 9,255 $ 3,963

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

			Contract Amount
	Currency	Maturity Date	(In Thousands)
December 31, 2020
Knock-out forward	USD/JPY	2021.01.04-2021.01.11	USD 2,000/JPY 210,500
Exchange contracts	USD/NTD	2021.01.05-2021.02.17	USD 4,000/NTD 114,778
Foreign exchange forward contracts USD/NTD		2021.01.29	USD 4,000/NTD 115,560
December 31, 2019
Knock-out forward	USD/JPY	2020.01.09	USD1,500/JPY163,525
Knock-out forward	USD/RMB	2020.01.09	RMB10,000/USD1,430
Exchange contracts	USD/NTD	2020.01.13-2020.02.19	USD11,000/NTD335,658
Foreign exchange forward contracts USD/NTD		2020.01.09-2020.01.17	USD4,000/NTD122,500

The Company entered into foreign exchange forward contracts and exchange contracts during the years ended December 31, 2020 and 2019 to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. Those contracts did not meet the criteria of hedge effectiveness and therefore were not accounted for by using hedge accounting.

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Non-current Investments in equity instruments at FVTOCI Investments in Equity Instruments at FVTOCI		December 31	December 31
		2020 $ 213,736	2019 $ 185,477

Non-current Domestic investments Unlisted shares Win Win Precision Technology Company Limited Marson Technology Company Limited. UPI Semiconductor Corp. Godsmith Sensors Inc. Foreign investments Listed shares Guandong Failong Crystal Technology Company Limited		December 31	December 31
		2020 $ 89,323 - 113,446 10,967 213,736 - $ 213,736	2019 $ 18,388 4,773 45,202 - 68,363 117,114 $ 185,477

• 27 -

These investments in equity instruments are not held for trading. Instead, they 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.

In 2020 and 2019, the Company sold its shares in Guandong Failong Crystal Technology Company Limited in order to manage concentration risk. The sold shares had a fair value of $160,211 thousand and $241,715 thousand, respectively. The Company transferred a gain of $122,086 thousand and $174,805 thousand, from other equity to retained earnings.

In 2020, the Company sold its shares in Marson Technology Company Limited in order to manage concentration risk. The sold shares had a fair value of $5,741 thousand. The Company transferred a gain of $967 thousand from other equity to retained earnings

9. FINANCIAL ASSETS AT AMORTIZED COST

Current Domestic investments Pledge deposits (a) Time deposits with original maturities of more than 3 months (b)		**December **	**31 **
		2020 $ 52,170 14,254 $ 66,424	2019 $ 43,052 - $ 43,052

• a. Refer to Note 28 for information relating to investments in financial assets at amortized cost pledged as security.

• b. The ranges of interest rates for time deposits with original maturities of more than 3 months were approximately 2.42% per annum as of December 31, 2020.

10. NOTES, ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Notes receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31	December 31
		2020 $ 168 (6) $ 162 $ 3,041,706 (10,053) $ 3,031,653	2019 $ 819 (6) $ 813 $ 2,261,034 (10,053) $ 2,250,981 (Continued)

• 28 -

Other receivables Income tax refund receivable Others		**December 31 **	**December 31 **
		2020 $ 18,312 782 $ 19,094	2019 $ 13,989 382 $ 14,371 (Concluded)

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 reporting period 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 applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

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 of trade receivables based on the Company’s provision matrix.

December 31, 2020

Not Past Due 31 to 90 Days Gross carrying amount $ 2,889,931$ 151,943 Loss allowance (Lifetime ECL) (8,692) (1,367) Amortized cost $ 2,881,239 $ 150,576 December 31, 2019 Not Past Due 31 to 90 Days Gross carrying amount $ 2,149,529 $ 111,098 Loss allowance (Lifetime ECL) (8,998) (1,000) Amortized cost $ 2,140,531 $ 110,098	91 to 150 Days $ - - $ - 91 to 150 Days $ 1,226 (61) $ 1,165	151 to 180 Days $ - - $ - 151 to 180 Days $ - - $ -	Over 180 Days $ - - $ - Over 180 Days $ - - $ -	Total $ 3,041,874 (10,059) $ 3,031,815 Total $ 2,261,853 (10,059) $ 2,251,794

• 29 -

The expected credit loss rate for each above range of the Company is not more than 1% within and within 90 days of the overdue period; 5% or less within the overdue period from 91 to 180 days; and 5%-100% when the overdue period exceeds 180 days.

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

Balance at January 1 Balance at December 31		**December **	**31 **
		2020 $ 10,059 $ 10,059	2019 $ 10,059 $ 10,059

11. INVENTORIES

Finished goods Work in process Raw materials Supplies and spare parts Merchandise Inventory in transit		December 31	December 31
		2020 $ 188,727 206,168 305,043 81,286 271,758 20,108 $ 1,073,090	2019 $ 184,618 183,371 228,402 65,247 204,141 4,401 $ 870,180

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 was $7,193,029 thousand and $5,596,803 thousand, respectively.

12. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

	December 31,
	2020
Domestic investments
Unlisted shares
Godsmith Sensors Inc.	$ 35,892

In November 2020, the Company’s board of directors approved to dispose of 24% of its interest in Godsmith Sensor Inc., and the disposal is expected to be completed within twelve months. Accordingly, the Company has reclassified Godsmith Sensor Inc. as non-current assets held for sale, and were presented separately in the accompanying balance sheets.

The expected sales proceeds are lower than the carrying amount of investments accounted for using the equity method. Accordingly, the non-current assets held for sale were measured at the fair value $36,000 thousand less costs to sell of $108 thousand when reclassifying investments accounted for using the equity method as non-current assets held for sale. And the differences from the previous carrying amounts were recognized as loss on disposal of investments, which are presented in other gains and losses

• 30 -

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2020 $ 5,733,642 373,626 $ 6,107,268	2019 $ 5,470,284 391,844 $ 5,862,128

Investments in Subsidiaries

Unlisted companies Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology (HK) Limited TXC Europe GmbH		December 31	December 31
		2020 $ 5,557,976 16,371 31,490 124,227 3,578 $ 5,733,642	2019 $ 5,332,390 16,858 30,643 87,652 2,741 $ 5,470,284

The proportion of the Company’s ownership was as follows:

Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology (HK) Limited TXC Europe GmbH Investments in Associates Associate that is not individually material The Company’s share of: Profit from continuing operations Other comprehensive loss Total comprehensive income for the year		December 31	December 31
		2020 2019 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% **December 31 **
	2020 $ 373,626 For the Year Ended		2019 $ 391,844 December 31
		2020 $ 38,742 (2,845) $ 35,897	2019 $ 15,261 (7,394) $ 7,867

Refer to Table 6 “name, locations, and related information of investees on which the Company exercises significant influence” for the nature of activities, principal place of business and country of incorporation of the associates.

• 31 -

Because some directors of TXC are the same as Tai-Shing, TXC has the power to govern the financial and operating policies of Tai-Shing. As a result, Tai-Shing is accounted for using the equity method.

In 2020 and 2019, the Company subscribed 256 thousand and 1,266 thousand shares of the ordinary shares of Tai-Shing for cash $9,877 thousand and $67,083 thousand, respectively. After the subscription, the Company’s percentage of ownership in Tai-Shing was 31.95% and 30.98%, respectively. The Group recognized goodwill of $3,698 thousand and $33,970 thousand respectively as cost of investments in associates.

In 2019, the Company held a 31% interest in Godsmith Sensor Inc., which was accounted for the using the equity method. In November 2020, the Company’s board of directors approved to dispose of 24% of its interest in Godsmith Sensor Inc. and consequently ceased to have significant influence over Godsmith Sensor Inc. The Company retained the remaining 7% interest as financial assets at FVTOCI whose fair value was $10,967 thousand. This transaction resulted in the recognition of a loss in profit or loss, calculated as follows:

Carrying amount of investment on at the date of loss of significant influence Less: Transfer to non-current assets held for sale Less: Transfer to financial assets at fair value through other comprehensive income Less: Reversal of changes in capital surplus from investments in associates accounted for using the equity method. Loss recognized	$ 54,033 (35,892) (10,967) (1,068) $ 6,106

14. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2019 Additions Reclassifications Transfer to investment property Transfer from investment property Disposals Balance at December 31, 2019 Accumulated depreciation and impairment Balance at January 1, 2019 Disposals Reclassifications Transfer from investment property Transfer to investment property Depreciation expense Balance at December 31, 2019 Carrying amount at December 31, 2019 Cost Balance at January 1, 2020 Additions Transfer from investment property Disposals Balance at December 31, 2020	Freehold Land Land Improvements $ 598,145 $ 1,315 - 284 - - (5,135 ) - - - (1,038) - $ 591,972 $ 1,599 $ - $ 463 - - - - - - - - - 193 $ - $ 656 $ 591,972 $ 943 $ 591,972 $ 1,599 - - 1,883 - - - $ 593,855 $ 1,599	Buildings $ 1,254,580 74,792 - (26,409 ) 244,584 (4,040) $ 1,543,507 $ 612,696 (4,039 ) - 141,236 (5,526 ) 71,717 $ 816,084 $ 727,423 $ 1,543,507 39,679 3,589 (7,722) $ 1,579,053	Machinery and Equipment $ 2,888,785 219,874 (1,417 ) - - (5,069) $ 3,102,173 $ 2,252,171 (5,069 ) (997 ) - - 228,954 $ 2,475,059 $ 627,114 $ 3,102,173 673,002 - (164,438) $ 3,610,737	Transpor- tation Equipment $ 1,534 - - - - - $ 1,534 $ 548 - - - - 307 $ 855 $ 679 $ 1,534 - - - $ 1,534	Office Equipment Total $ 96,523 $ 4,840,882 4,899 299,849 1,417 - - (31,544 ) - 244,584 (8,003) (18,150) $ 94,836 $ 5,335,621 $ 80,517 $ 2,946,395 (8,004 ) (17,112 ) 997 - - 141,236 - (5,526 ) 7,753 308,924 $ 81,263 $ 3,373,917 $ 13,573 $ 1,961,704 $ 94,836 $ 5,335,621 17,663 730,344 - 5,472 (2,903) (175,063) $ 109,596 $ 5,896,374 (Continued)

• 32 -

Accumulated depreciation and impairment Balance at January 1, 2020 Disposals Transfer from investment property Depreciation expense Balance at December 31, 2020 Carrying amount at December 31, 2020	Freehold Land Land Improvements $ - $ 656 - - - - - 245 $ - $ 901 $ 593,855 $ 698	Buildings $ 816,084 (7,722 ) 1,194 75,852 $ 885,408 $ 693,645	Machinery and Equipment $ 2,475,059 (163,046 ) - 280,726 $ 2,592,739 $ 1,017,998	Transpor- tation Equipment $ 855 - - 307 $ 1,162 $ 372	Office Equipment Total $ 81,263 $ 3,373,917 (2,903 ) (173,671 ) - 1,194 8,898 366,028 $ 87,258 $ 3,567,468 $ 22,338 $ 2,328,906 (Concluded)

No impairment assessment was performed for the year ended December 31, 2020 and 2019 as there was no indication of impairment.

The above items of property, plant and equipment are depreciated on a straight-line basis at follows:

Land improvements 5-7 years Buildings Industrial building 35-51 years Electrical power systems 3-11 years Engineering systems 3-51 years Equipment Major production equipment 2-15 years Temperature control systems 4-7 years Transportation equipment 4-7 years Transportation equipment 5 years Office equipment 2-6 years

Property, plant and equipment pledged as collateral for bank borrowings were set out in Note 28.

15. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amounts Buildings Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Buildings Transportation equipment		December	31
	2020 2019 $ 1,323 $ 3,967 1,608 2,057 $ 2,931 $ 6,024 For the Year Ended December 31
		2020 $ - $ 2,644 449 $ 3,093	2019 $ 7,533 $ 2,652 187 $ 2,839

• 33 -

b. Lease liabilities

Carrying amounts Current Non-current		December	31
		2020 $ 1,777 1,172 $ 2,949	2019 $ 3,087 2,949 $ 6,036

Range of discount rate for lease liabilities was as follows:

Buildings Transportation equipment	**December 31 **
	2020 2019 0.86% 0.86% 0.86% 0.86%

c. Material lease-in activities and terms

The Company leases certain warehouses in economic zone with lease term of 2 years, and leases car for business use with lease term of 5 years for the nine months ended September 30, 2019. The Company does not have a bargain purchase option to acquire the leased warehouse at the expiry of the lease period.

d. Other lease information

Expenses relating to short-term leases Total cash outflow for leases	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2020 $ 192 $ (3,317)	2019 $ 44 $ (2,901)

The Company leases certain building which qualify as short-term leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

16. INVESTMENT PROPERTIES

	Completed	Completed
	Investment
	Property
Cost
Balance at January 1, 2019	$	259,612
Transferred from property, plant and equipment		31,544
Transferred to property, plant and equipment		(244,584)
Disposals		(11,417)
Balance at December 31, 2019	$	35,155
		(Continued)

• 34 -

	Completed	Completed
	Investment
	Property
Accumulated depreciation and impairment
Balance at January 1, 2019	$	(144,138)
Transferred from property, plant and equipment		(5,526)
Transferred to property, plant and equipment		141,236
Disposals		11,417
Depreciation expense		(11,263)
Balance at December 31, 2019	$	(8,274)
Carrying amount at December 31, 2019	$	26,881
Cost
Balance at January 1, 2020	$	35,155
Additions		544
Transferred to property, plant and equipment		(5,472)
Balance at December 31, 2020	$	30,227
Accumulated depreciation and impairment
Balance at January 1, 2020	$	(8,274)
Transferred to property, plant and equipment		1,194
Depreciation expense		(1,636)
Balance at December 31, 2020	$	(8,716)
Carrying amount at December 31, 2020	$	21,511
		(Concluded)

The investment properties are depreciated using the straight-line method over their estimated useful lives of 3-51 years.

The fair value of the Company’s investment properties as of December 31, 2020 and 2019 was $98,999 thousand and $165,824 thousand, respectively. The fair value valuation had not been performed by independent qualified professional appraisers. The management of the Company had used the valuation model that market participants would use in determining the fair value. The valuation was arrived at by reference to market evidence of transaction prices for similar properties.

All of the Company’s investment property was held under freehold interests. The investment properties pledged as collateral for bank borrowing were set out in Note 28.

• 35 -

17. BORROWINGS

a. Short-term borrowings

Unsecured borrowings Bank loans Letters of credit		**December 31 **	**December 31 **
		2020 $ 519,996 6,990 $ 526,986	2019 $ - 3,525 $ 3,525

The range of weighted average effective interest rates on bank loans was 0.65%-0.68% per annum at December 31, 2020.

b. Long-term borrowings

Unsecured borrowings Line of credit borrowings Less: Current portions Long-term borrowings		December 31	December 31
		2020 $ 1,700,000 (100,000) $ 1,600,000	2019 1,400,000 - $ 1,400,000

The borrowings of the Group were as follows:

Maturity Date Floating rate borrowings Unsecured bank borrowing denominated in NT$ 2025.01.03 Unsecured bank borrowing denominated in NT$ 2025.01.03 Unsecured bank borrowing denominated in NT$ 2025.01.03 Unsecured bank borrowing denominated in NT$ 2024.09.15 Unsecured bank borrowing denominated in NT$ 2025.04.01 Unsecured bank borrowing denominated in NT$ 2025.04.15 Unsecured bank borrowing denominated in NT$ 2021.08.12

December 31

2020 2019 $ 150,000 $ - 100,000 - 150,000 - 200,000 - 300,000 - 200.000 - - 200,000 (Continued)

• 36 -

Maturity Date Unsecured bank borrowing denominated in NT$ 2024.09.15 Unsecured bank borrowing denominated in NT$ 2024.09.15 Unsecured bank borrowing denominated in NT$ 2022.09.05 Unsecured bank borrowing denominated in NT$ 2022.08.19 Unsecured bank borrowing denominated in NT$ 2022.09.02 Unsecured bank borrowing denominated in NT$ 2021.11.04 Unsecured bank borrowing denominated in NT$ 2022.08.19 Less: Current portions		**December 31 **	**December 31 **
		2020 $ 300,000 100,000 - - - - 200,000 (100,000) $ 1,600,000	2019 $ 300,000 100,000 200,000 200,000 200,000 200,000 - - $ 1,400,000 (Concluded)

The interest rate on the line of credit was 0.10%-0.75% and 0.40%-0.86% annum as of December 31, 2020 and 2019, respectively.

18. OTHER LIABILITIES

Current Other payables Payables for bonus to employees and directors Payables for commission Payables for salaries Payables for bonus Payables for annual leave Payable for purchase of equipment Others		December 31	December 31
		2020 $ 190,888 26,199 43,123 140,054 20,108 58,107 84,612 $ 563,091	2019 $ 83,477 20,736 37,649 112,352 18,486 88,065 70,632 $ 431,397

19. 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.

The Company has set up appointed manager’s pension fund and contributes monthly an amount of not less than 8% of the appointed manager’s monthly salaries and wages to the Bank of Taiwan.

• 37 -

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. 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 9% 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 were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability		**December 31 **	**December 31 **
		2020 $ 179,235 (115,675) $ 63,560	2019 $ 173,416 (99,385) $ 74,031

Movements in net defined benefit liability (asset) were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of		Benefit
	Obligation	the Plan Assets	Liability (Asset)
Balance at January 1, 2019	$ 165,146	$ (97,113)	$	68,033
Service cost
Current service cost	1,897	-		1,897
Past service cost and loss on settlements	1,032	-		1,032
Net interest expense (income)	1,858	(1,168)		690
Recognized in profit or loss	4,787	(1,168)		3,619
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(3,214)		(3,214)
Actuarial (gain) loss - changes in
demographic assumptions	5,229	-		5,229
Actuarial (gain) loss - changes in financial
assumptions	6,952	-		6,952
Actuarial (gain) loss - experience
adjustments	6,448	-		6,448
Recognized in other comprehensive income	18,629	(3,214)		15,415
Contributions from the employer	-	(13,036)		(13,036)
Benefits paid	(15,146)	15,146		-
Balance at December 31, 2019	173,416	(99,385)		74,031
				(Continued)

• 38 -

	Present Value	Present Value
	of the Defined				Net Defined
		Benefit	Fair Value of			Benefit
	Obligation		the Plan Assets		Liability (Asset)
Service cost
Current service cost	$	1,567	$	-	$	1,567
Net interest expense (income)		1,300		(792)		508
Recognized in profit or loss		2,867		(792)		2,075
Remeasurement
Return on plan assets (excluding amounts
included in net interest)		-		(3,287)		(3,287)
Actuarial (gain) loss - changes in
demographic assumptions		6,151		-		6,151
Actuarial (gain) loss - changes in financial
assumptions		4,799		-		4,799
Actuarial (gain) loss - experience
adjustments		(7,099)		-		(7,099)
Recognized in other comprehensive income		3,851		(3,287)		564
Contributions from the employer		-		(13,110)		(13,110)
Benefits paid		(899)		899		-
Balance at December 31, 2020	$	179,235	$ (115,675)		$	63,560
						(Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Cost of goods sold Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 1,046 157 319 553 $ 2,075	2019 $ 1,756 327 584 952 $ 3,619

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 and corporate 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 plan’s 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.

• 39 -

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 0.50% 0.75% 2.00% 2.00%

If possible reasonable change 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 decrease/increase 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 $ (4,987) $ 5,190 $ 5,025 $ (4,855)	2019 $ (4,812) $ 5,010 $ 4,859 $ (4,693)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2020 $ 13,056 11.3 years	2019 $ 12,480 11.4 years

20. EQUITY

• a. Share capital

Ordinary shares

Numbers of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		**December 31 **	**December 31 **
		2020 500,000 $ 5,000,000 309,757 $ 3,097,570	2019 500,000 $ 5,000,000 309,757 $ 3,097,570

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

30,000 thousand shares of the Company’s shares authorized were reserved for the issuance of convertible bonds and employee share options.

• 40 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital* Issuance of ordinary shares Conversion of bonds Overdue options The difference between consideration received or paid and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition Donated assets received May only be used to offset a deficit Share of changes in capital surplus of associates or joint venture Others		December 31	December 31
		2020 $ 611,776 977,028 73,377 331 1,964 2,712 1,081 $ 1,668,269	2019 $ 611,776 977,028 73,377 331 1,617 2,561 - $ 1,666,690

• 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 capital surplus and once a year).

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the amended Articles, where the Company made 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, 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 distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, refer to employee benefits expense in Note 22(g).

Dividends are recommended by the board of directors in accordance with the Corporation’s dividend policy. Under this policy, industry trend and growth should be evaluated, investment opportunities should be fully understood, and proper capital adequacy ratios should be considered in determining the dividend to be distributed. In addition, cash dividends should not be less than 20% of the total dividends to be appropriated.

Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. 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, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and 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.

• 41 -

The appropriations of earnings for 2019 and 2018 were approved in the shareholders’ meetings on June 9, 2020 and June 12, 2019, respectively. The appropriations and dividends per share were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For Fiscal For Fiscal Year 2019 Year 2018 $ 67,178 $ 64,435 269,465 32,114 774,393 619,514	Dividends Per Share (NT$)
		For Fiscal For Fiscal Year 2019 Year 2018 $ - $ - - - 2.5 2.0

The appropriations of earnings for 2020 annual surplus distribution on March 11, 2021 was as follows:

		Dividends	Dividends
	Appropriation	Per	Share
	of Earnings	(NT$)
Legal reserve	$ 155,246	$	-
Reversal of special reserve	(177,611)		-
Cash dividends	1,177,077		3.8

The appropriation of earnings for 2020 is subject to the resolution of the shareholders’ meeting to be held on May 31, 2021.

d. Others equity items

• 1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Exchange differences on translating the financial statements of foreign operations Share of exchange differences of associates accounted for using the equity method Balance at December 31	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2020 $ (584,617) 58,311 3,031 $ (523,275)	2019 $ (359,923) (216,643) (8,051) $ (584,617)

2) Unrealized gain (loss) on financial assets at FVTOCI

Balance at January 1 Recognized during the period Unrealized loss - equity instruments Share from associates accounted for using the equity method Other comprehensive income recognized in the period Cumulative unrealized gain/(loss) of equity instruments transferred to retained earnings due to disposal Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2020 $ 60,245 174,625 65,323 239,948 (123,680) $ 176,513	2019 $ 105,017 74,642 55,391 130,033 (174,805) $ 60,245

• 42 -

21. REVENUE

Revenue from contracts with customers Revenue from sale of goods Trade receivables (Note 10)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 2019 $ 9,140,414 $ 6,672,071 December 31
		2020 $ 3,031,653	2019 $ 2,250,981

22. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations had been arrived at after charging:

a. Interest income

Bank deposits Financial assets at amortized cost Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 3,425 729 323 $ 4,477	2019 $ 3,330 2,189 987 $ 6,506

b. Other income

Rental income Dividends income Income from government grants Others Other gains and losses Gain on disposal of property, plant and equipment Fair value changes of financial assets and financial liabilities Financial assets mandatorily at FVTPL Net foreign exchange losses Loss on disposal of associates accounted for using equity method Depreciation expenses of investment properties Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
	2020 2019 $ 4,358 $ 6,664 1,635 2,385 44,236 40,551 4,209 7,562 $ 54,438 $ 57,162 **For the Year Ended December 31 **
		2020 $ 4,584 (1,455) (60,458) (6,106) (1,636) (9,353) $ (74,424)	2019 $ 885 (4,055) (8,223) - (11,263) (1,326) $ (23,982)

c. Other gains and losses

• 43 -

d. Finance costs

Interest on bank loans Interest on lease liabilities	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ (9,638) (38) $ (9,676)	2019 $ (12,442) (30) $ (12,472)

e. Depreciation and amortization

Property, plant and equipment Investment property Right-of-use assets Intangible assets An analysis of deprecation by function Cost of goods sold Operating expenses Non-operating expenses An analysis of amortization by function Cost of goods sold Operating expenses f. Employee benefits expense Post-employment benefits Defined contribution plans Defined benefit plans (Note 18) Other employee benefits Salaries Labor and health insurance Others Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
	2020 $ 366,028 1,636 3,093 4,379 $ 375,136 $ 266,727 102,394 1,636 $ 370,757 $ 74 4,305 $ 4,379 For the Year Ended		2019 $ 308,924 11,263 2,839 4,809 $ 327,835 $ 229,385 82,378 11,263 $ 323,026 $ - 4,809 $ 4,809 December 31
		2020 $ 25,933 2,075 28,008 906,457 61,265 1,523 969,245 $ 997,253 $ 531,426 465,827 $ 997,253	2019 $ 25,248 3,619 28,867 672,892 56,409 1,037 730,338 $ 759,205 $ 422,700 336,505 $ 759,205

• 44 -

g. Employees’ compensation and remuneration of directors for 2020 and 2019

The Company accrued employees’ compensation and remuneration of directors at the rates no less than 3% and no higher than 2%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2020 and 2019 which were approved by the Company’s board of directors on March 11, 2021 and March 23, 2020, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors	**For the Year Ended December 31 **
	2020 2019 9.0% 9.0% 1.5% 1.5%

Amount

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2020 Cash Bonus Share Bonus $ 163,489 $ - 27,248 -	2019
		Cash Bonus Share Bonus $ 71,552 $ - 11,925 -

If there is a change in the amounts after the actual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of employees’ compensation 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 employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

23. INCOME TAXES RELATING TO CONTINUING OPERATIONS

• a. Major components of tax expense recognized in profit or loss

Current tax In respect of the current year Adjustments for prior year Deferred tax In respect of the current period Income tax expense recognized in profit or loss	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2020 $ 233,906 (1,710) 232,196 (35,672) $ 196,524	2019 $ 43,711 (2,601) 41,110 (1,346) $ 39,764

• 45 -

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Tax-exempt income Subsidiaries to repatriate earnings withholding tax Investment tax credits Adjustment for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2020 $1,625,811 $ 325,162 (133,283) 42,798 (36,443) (1,710) $ 196,524	2019 $ 711,546 $ 142,309 (76,787) - (23,157) (2,601) $ 39,764

• b. Income tax expense recognized in other comprehensive income

Deferred tax In respect of the current year Fair value changes of financial assets at FVTOCI Remeasurement of defined benefit plans Reclassification adjustment Disposal of equity instruments at fair value through other comprehensive income Current income tax assets and liabilities Current tax assets Income tax receivable Current tax liabilities Income tax payable	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 8,617 (113) (30,521) $ (22,017) December	2019 $ 21,627 (3,083) (43,700) $ (25,156) 31
		2020 $ - $ 112,834	2019 $ 8,176 $ 38,273

• c. Current income tax assets and liabilities

• 46 -

d. 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 Unrealized loss on inventories Unrealized exchange loss Payable for annual leave Determine benefit obligation Financial liabilities at fair value through profit or loss Others Deferred tax liabilities Associates Financial assets at fair value through other comprehensive income For the year ended December 31, 2019 Deferred tax assets Unrealized loss on inventories Unrealized exchange loss Payable for annual leave Determine benefit obligation Financial assets at fair value through profit or loss Others Deferred tax liabilities Financial assets at fair value through profit or loss Associates Financial assets at fair value through other comprehensive income	Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 6,392 $ 769 $ - 5,359 2,073 - 3,697 325 - 17,171 (2,208) 113 171 120 - 276 129 - $ 33,066 $ 1,208 $ 113 $ 101,496 $ (34,464) $ - 21,904 - (21,904) $ 123,400 $ (34,464) $ (21,904) Opening Balance Recognize in Profit or Loss Recognize in Other Comprehen- sive Income $ 8,182 $ (1,790) $ - 621 4,738 - 3,667 30 - 15,971 (1,883) 3,083 - 171 - 213 63 - $ 28,654 $ 1,329 $ 3,083 $ 17 $ (17) $ - 101,496 - - 43,977 - (22,073) $ 145,490 $ (17) $ (22,073)	Closing Balance $ 7,161 7,432 4,022 15,076 291 405 $ 34,387 $ 67,032 - $ 67,032 Closing Balance $ 6,392 5,359 3,697 17,171 171 276 $ 33,066 $ - 101,496 21,904 $ 123,400

• 47 -

f. Income tax assessments

The tax returns through 2017, have been assessed by the tax authorities.

24. EARNINGS PER SHARE

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share from continuing operations were as follows:

Net Profit for the Year

Weighted average number of ordinary shares outstanding (in thousand shares):

Earnings used in the computation of basic earnings per share Earnings used in the computation of diluted earnings per share Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended	For the Year Ended	December 31
	2020 $1,429,287 $1,429,287 For the Year Ended		2019 $ 671,782 $ 671,782 December 31
		2020 309,757 2,599 312,356	2019 309,757 1,959 311,716

If the Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus 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.

25. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company 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 Company consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity).

The Company is not subject to any externally imposed capital requirements.

• 48 -

26. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments that are not measured at fair value

The management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

• 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 Foreign unlisted shares Financial liabilities Foreign exchange forward contracts and exchange contracts Financial assets at FVTOCI Domestic unlisted shares December 31, 2019 Financial assets at FVTPL Foreign unlisted shares Financial liabilities Foreign exchange forward contracts and exchange contracts Financial assets at FVTOCI Domestic unlisted shares Foreign listed shares	Level 1 $ - $ - $ - Level 1 $ - $ - $ - 117,114 $ 117,114	Level 2 $ - $ 1,455 $ - Level 2 $ - $ 3,963 $ - - $ -	Level 3 $ 9,255 $ - $ 213,736 Level 3 $ 9,255 $ - $ 68,363 - $ 68,363	Total $ 9,255 $ 1,455 $ 213,736 Total $ 9,255 $ 3,963 $ 68,363 117,114 $ 185,477

There were no transfers between Levels 1 and 2 in the current and prior periods.

• 49 -

• 2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2020

Balance at January 1, 2020 Income recognized for the year Other comprehensive income recognized for the year Balance at December 31, 2020	Financial Assets at FVTPL	Financial Assets at FVTOCI Equity Instruments $ 68,363 - 145,373 $ 213,736
	Equity Instruments $ 9,255 - - $ 9,255

For the year ended December 31, 2019

Balance at January 1, 2019 Purchases Other comprehensive income recognized for the year Balance at December 31, 2020	Financial Assets at FVTPL Equity Instruments $ - 9,255 - $ 9,255	Financial Assets at FVTOCI Equity Instruments $ 80,227 - (11,864) $ 68,363

• 3) Valuation techniques and inputs applied for the purpose of measuring Level 2 fair value measurement

Financial Instruments Derivatives - foreign exchange forward contracts and exchange 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.

• 4) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

The fair values of part of the unlisted equity securities - ROC were determined using the market approach. In this approach, the fair values were measured based on analysis of financial position and financial performance of investees. We refer to the value at active market and the index and trade information of the companies, which have similar businesses. Then, we considered the financial performance of the underlying value and used proper index to determined the underlying value.

• 50 -

c. Categories of financial instruments

Financial assets FVTPL Mandatorily at FVTPL (1) Financial assets at amortized cost (2) Financial assets at FVTOCI Equity instruments Financial liabilities FVTPL Mandatorily (3) Amortized cost (4)	December 31
	2020 2019 $ 9,255 $ 9,255 4,419,855 3,026,723 213,736 185,477 1,455 3,963 4,518,213 3,153,135

• 1) The balances include the carrying amount of domestic and foreign unlisted preferred stocks.

• 2) The balances include financial assets measured at amortized cost, which comprise cash and cash equivalents, notes receivable, trade receivables, other receivables and refundable deposits.

• 3) The balances included the carrying amount of foreign exchange forward contracts and exchange contracts.

• 4) The balances included financial liabilities measured at amortized cost, which comprise short-term and long-term loans, notes payable, trade payable, other payables and guarantee deposits received.

• d. Financial risk management objectives and policies

The Company’s major financial instruments included equity and debt investments, notes receivable, trade receivables, other receivables, notes payable, trade payables, other payables, 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 currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Company sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Company’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was 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.

• 51 -

The financial department reported quarterly to the board of directors, which monitors risks and policies implemented to mitigate risk exposures.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (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 on the Company’s foreign currency monetary.

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

Several subsidiaries of the Company had foreign currency sales and purchases, which exposed the Company to foreign currency risk. Exchange rate exposures are managed within approved policy parameters utilizing foreign exchange forward contracts.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period (see Note 32).

Sensitivity analysis

The Company was mainly exposed to the USD and RMB.

The following table details the Company’s sensitivity to a 1% increase and decrease in the New Taiwan dollar (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 1%. The sensitivity analysis included only outstanding foreign currency denominated monetary items and foreign exchange forward contracts designated as cash flow hedges, and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. The sensitivity analysis included external loans/borrowings as well as loans/borrowings to foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower. A positive number below indicates an increase in post-tax profit and other equity associated with the New Taiwan dollar strengthening 1% against the relevant currency. For a 1% weakening of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on post-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 $ 23,046 $ 14,215	RMB Impact
		For the Year Ended **December 31 **
		2020 2019 $ 2,095 $ 2,305

• i. This was mainly attributable to the exposure outstanding on USD receivables and payables, which were not hedged at the end of the reporting period.

• ii. This was mainly attributable to the exposure to outstanding RMB payables, which were not hedged, at the end of the reporting period.

• 52 -

b) Interest rate risk

The Company was exposed to interest rate risk because the Company’s bank deposits and the Company borrowed funds at floating interest rates.

The carrying amount 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 Sensitivity analysis	**December 31 **
	2020 2019 $ 323,939 $ 43,155 519,996 - 1,039,945 626,326 1,706,990 1,403,525

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% basis point increase or decrease was 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 0.25% 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 decrease by $1,668 thousand and $1,943 thousand, respectively, which was mainly attributable to the Company’s exposure to interest rates on its floating rate bank deposits and bank borrowings.

c) Other price risk

The Company was exposed to equity price risk through its investments in listed equity securities. Equity investments are held for strategic rather than trading purposes. The Company does not actively trade these investments. The Company’s equity price risk was mainly concentrated on equity instruments operating in Shenzhen stock exchange, growth enterprise.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity price risks at the end of the reporting period.

If equity prices had been 1% higher/lower, other comprehensive income for the years ended December 31, 2019 would increase/decrease by $1,171 thousand.

• 53 -

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 will cause a financial loss to the Company due to failure of discharge an obligation by the counterparties and financial guarantees provided by the Company arises from:

a) The carrying amount of the respective recognized financial assets as stated in the balance sheets;

b) The amount of contingent liabilities in relation to financial guarantee issued by the Company.

3) Liquidity risk

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 liability. As of December 31, 2020 and 2019, the Company had available unutilized overdraft and short-term bank loan facilities of approximately $3,799,720 thousand and $3,164,982 thousand, respectively.

• a) Liquidity and interest risk rate tables

The following table details the Company’s remaining contractual maturity 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 extend that interest flows are floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2020

	Weighted
	Interest
	Average
	Effective Rate	Less Than
	(%)		1 Year		2-3 Years		4-5 Years		5+ Years			Total
Non-derivative financial
liabilities
Trade payable	-	$	1,717,056	$	-	$	-	$		-	$	1,717,056
Other payables	-		564,573		-		-			-		564,573
Other current liabilities	-		11,659		-		-			-		11,659
Lease liabilities	0.86		1,777		905		267			-		2,949
Variable interest rate
liabilities	0.65-0.68		519,996		-		-			-		519,996
Fixed interest rate liabilities	0.10-0.75		106,990		979,000		621,000			-		1,706,990

• 54 -

December 31, 2019

	Weighted
	Interest
	Average
	Effective Rate	Less Than
	(%)		1 Year		2-3 Years		4-5 Years		5+ Years			Total
Non-derivative financial
liabilities
Trade payable	-	$	1,301,422	$	-	$	-	$		-	$	1,301,422
Other payables	-		435,846		-		-			-		435,846
Other current liabilities	-		7,948		-		-			-		7,948
Lease liabilities	0.86		3,087		2,228		721			-		6,036
Fixed interest rate liabilities	0.40-0.86		3,525		1,400,000		-			-		1,403,525

The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Liquidity and interest risk rate tables for derivative financial liabilities

The following table detailed the Company’s liquidity analysis for its derivative financial instruments. The table was 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.

December 31, 2020

On Demand or Less than 1 Month 1-3 Months 3 Net settled Foreign exchange forward contracts and exchange contracts$ (1,230) $ (225) December 31, 2019 On Demand or Less than 1 Month 1-3 Months 3 Net settled Foreign exchange forward contracts and exchange contracts$ (1,636) $ (2,327)	Months to 1 Year 1-5 Years $ - $ - Months to 1 Year 1-5 Years $ - $ -	5+ Years $ - 5+ Years $ -

• 55 -

27. TRANSACTIONS WITH RELATED PARTY

Details of transactions between the Company and related parties are disclosed below.

• a. Related party name and relationship

Related Party Name Relationship with the Company

Tai-Shing Electronics Components Corporation	Associate
Liang Shing Eclife Corp. (“Eclife”)	Other associate
Godsmith Sensor INC.	Associate
TXC (Ningbo) Corporation	Subsidiaries
TXC (Chongqing) Limited	Subsidiaries
Ningbo Jingyu Company Limited	Subsidiaries
Taiwan Crystal Technology (HK) Limited	Subsidiaries
Growing profits Trading Ltd.	Subsidiaries
TXC Technology, Inc.	Subsidiaries
TXC Japan Corporation	Subsidiaries
TXC Europe GmbH	Subsidiaries

• b. Sales of goods

Subsidiaries Other associate Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 143,831 7,371 64,445 $ 215,647	2019 $ 212,427 9,597 8,331 $ 230,355

Selling prices and payment terms offered to related parties were similar with those offered to third parties.

• c. Purchase of goods

Subsidiaries TXC (Ningbo) Corporation TXC (Chongqing) Limited Others Associates Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,515,798 1,230,037 116,409 3,862,244 - 355 $ 3,862,599	2019 $ 1,869,765 822,274 86,628 2,778,667 261 217 $ 2,779,145

The Company mainly purchased of finished goods from related parties. Purchase prices and payment terms offered by related parties were similar with those offered by third parties.

• 56 -

d. Operating expenses

Subsidiaries TXC Technology, Inc. TXC Japan Corporation TXC Europe GmbH Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 53,264 34,520 12,009 99,793 1,420 $ 101,213	2019 $ 66,598 34,005 9,674 110,277 1,559 $ 111,836

The consulting fee above is due to the Company’s part of business activities committed to the related parties.

• e. Rental income

Associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 4,117	2019 $ 4,172

In 2020 and 2019, the selling price and purchasing price were not significantly different from those with third parties, except those for NGB, GPT, CKG, Ningbo Jingyu, TXC Technology, TCTH and TXC JP whose trading price depends on its function within the Group.

• f. Trade receivables from related parties

Subsidiaries Associates Other associates Less: Allowance for impairment loss		**December 31 **	**December 31 **
		2020 $ 42,436 28,006 2,223 (67) $ 72,598	2019 $ 47,653 2,187 1,918 (67) $ 51,691

The outstanding accounts receivables from related parties are unsecured.

• g. Trade payables to related parties

Subsidiaries TXC (Ningbo) Corporation TXC (Chongqing) Limited Others Other associates		**December 31 **	**December 31 **
		2020 $ 624,504 357,633 35,642 1,017,779 54 $ 1,017,833	2019 $ 591,234 204,868 1,621 797,723 78 $ 797,801

• 57 -

The outstanding trade payables to related parties are unsecured.

h. Other receivables from related parties

Subsidiaries TXC (Ningbo) Corporation Others Associates Other associates		**December 31 **	**December 31 **
		2020 $ - - - 9 - $ 9	2019 $ 42,751 69 42,820 58 10 $ 42,888

Other receivables resulted from purchasing machinery and equipment on behalf of subsidiaries.

• i. Other payables to related parties

Subsidiaries Associates Other associates		**December 31 **	**December 31 **
		2020 $ 3 - 1,479 $ 1,482	2019 $ 1,599 - 2,850 $ 4,449

The credit period of the transaction above is similar to those for the third parties.

• j. Payments for property, plant and equipment

Other associates	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 2,755	2019 $ 745

• k. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2020 $ 121,647 3,696 $ 125,343	2019 $ 78,076 3,087 $ 81,163

The remuneration of directors and key executives was determined by the remuneration committee based on the performance of individuals and market trends.

• 58 -

28. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings and foreign exchange forward contracts:

Pledged deposits Land and land improvement Building equipment, net Investment properties, net		December 31	December 31
		2020 $ 66,424 570,178 656,625 19,458 $ 1,312,685	2019 $ 43,052 450,148 725,120 18,273 $ 1,236,593

29. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Company as of December 31, 2020 and 2019 were as follows:

• a. As of December 31, 2020 and 2019, unused letters of credit amounted to approximately JPY142,664 thousand and JPY27,600 thousand.

• b. As of December 31, 2020, the Company unrecognized commitments are as follows:

In Thousand of Foreign Currencies/New Taiwan Dollars

Acquisition of equipment Acquisition of equipment Acquisition of equipment Acquisition of equipment	Contract Amount Paid Amount Unpaid Amount $ 45,961 $ 37,051 $ 8,910 RMB 2,885 RMB 1,443 RMB 1,442 JPY 214,000 JPY 83,900 JPY 130,100 EUR 1,697 EUR 509 EUR 1,188

30. OTHER ITEMS

On December 29, 2020, the Company’s board of directors approved to establish a 100% owned sub-subsidiary, TETC CORP. NINGBO through its subsidiary, TXC (Ningbo) Corporation with the investment amount of RMB 100,000 thousand. As of March 11, 2021, the registration procedure has been completed.

31. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD: NONE

• 59 -

32. 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 foreign currencies and respective functional currencies were as follows:

Unit: In Thousands of Foreign Currencies and New Taiwan Dollars

December 31, 2020

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	117,525	28.5080 (USD:NTD)	$ 3,350,403
JPY		91,491	0.2765 (JPY:NTD)	25,297
RMB		130,102	4.3691 (RMB:NTD)	568,429
Non-monetary items
Investments accounted for using equity
method
USD		4,932	28.5080 (USD:NTD)	140,598
JPY		113,888	0.2765 (JPY:NTD)	31,490
RMB		1,272,110	4.3691 (RMB:NTD)	5,557,976
EUR		102	35.0563 (EUR:NTD)	3,578
Financial liabilities
Monetary items
USD		36,683	28.5080 (USD:NTD)	1,045,759
JPY		269,487	0.2765 (JPY:NTD)	351,013
RMB		82,141	4.3691 (RMB:NTD)	358,882
December 31, 2019
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	76,087	30.1060 (USD:NTD)	$ 2,290,675
JPY		562,326	0.2771 (JPY:NTD)	155,820
RMB		95,284	4.3155 (RMB:NTD)	411,198
Non-monetary items
Investments accounted for using equity
method
USD		3,471	30.1060 (USD:NTD)	104,510
JPY		110,584	0.2771 (JPY:NTD)	30,643
RMB		1,235,637	4.3155 (RMB:NTD)	5,332,390
EUR		81	33.7488 (EUR:NTD)	2,741
Financial liabilities
Monetary items
USD		28,870	30.1060 (USD:NTD)	869,160
JPY		1,004,826	0.2771 (JPY:NTD)	278,437
RMB		41,879	4.3155 (RMB:NTD)	180,729

• 60 -

For the years ended December 31, 2020 and 2019, unrealized net foreign exchange gains or loss were $(60,458) thousand and $(8,223) thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

33. SEPARATELY DISCLOSED ITEMS

• a. Information on significant transactions and information on investees:

• 1) Lending funds to others. (None)

• 2) Providing endorsements or guarantees for others. (Table 1)

• 3) Holding of securities at the end of the period. (Table 2)

• 4) Aggregate purchases or sales of the same securities reaching NT$300 million or 20 percent of paid-in capital or more. (Table 3)

• 5) Acquisition of real estate reaching NT$300 million or 20 percent of paid-in capital or more. (None)

• 6) Disposal of real estate reaching NT$300 million or 20 percent of paid-in capital or more. (None)

• 7) Purchases or sales of goods from or to related parties reaching NT$100 million or 20 percent of paid-in capital or more. (Table 4)

• 8) Trade receivables from related parties reaching NT$100 million or 20 percent of paid-in capital or more. (Table 5)

• 9) Trading in derivative instruments. (Note 7)

• 10) Others: The business relationship between the parent and the subsidiaries and between each subsidiary, and the circumstances and amounts of any significant transactions between them. (Table 6)

• b. 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, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gains, and limit on the amount of investment in the mainland China area. (Table 7)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third area, and their prices, payment terms, and unrealized gains or losses: (Table 8)

  • 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.

• 61 -

• 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 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 receiving of services.

• c. 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 9)

• 62 -

TABLE 1

TXC 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	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit	Note
		Name	Relationship
1	TXC (Ningbo) Corporation	Chongqing All Sun Company Limited	Subsidiary with equity method	$ 2,786,550	$ 480,601	$ 480,601	$ 285,287	$ -	8.62	$ 5,573,100

Note: The total amount of TXC (Ningbo) Corporation endorsements and guarantees provided shall not exceed 100% of the amount of the net value of TXC (Ningbo) Corporation; the amount of individual entity endorsements shall not exceed 5% of the amount of the net value of the individual entity. However, the amount of individual entity endorsements is permitted with 50% of net value of subsidiary.

• 63 -

TABLE 2

TXC CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account			December	31, 2020			Note
				Shares		Carrying Amount	Percentage of Ownership		Shares
TXC Corporation TXC (Ningbo) Corporation TXC (Chongqing) Limited Ningbo Jingyu Company Limited Ding Kai Investment Management Company Limited	Shares-unlisted company Godsmith Sensor Inc. ″ Win Precision Technology Co., Ltd. UPI Semiconductor Corp. Shares overseas-unlisted company RFIC Technology preference shares Beneficiary certificate CICC Wealth Management No. 800 Funds Qingxia No. 2 Assembled Funds Trust Plan Huifeng Zhicheng No. 6 ABS Funds Shares overseas-unlisted company Ningbo SJ Electronics Co., Ltd. Structured deposits China Merchants Bank Beneficiary certificate Southern Cash Fund Shares unlisted overseas Zhejiang Bright Semiconductor Technology Co., Ltd.	None ″ None The Company is a direct of UPI Semiconductor Corp. None None ″ ″ None None None None	Financial assets at fair value through other comprehensive income - non-current Non-current assets held for sale Financial assets at fair value through other comprehensive income - non-current ″ Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - current ″ ″ Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current	550 1,800 1,365 1,516 10,000 RMB 23,834 RMB 20,000 RMB 15,460 RMB 6,000 RMB 10 RMB 63 7,000		$ 10,967 35,892 89,323 113,446 $ 249,628 $ 9,255 $ 104,132 87,382 67,546 $ 259,060 $ 70,630 $ 44 $ 273 $ 236,095	7 24 3 2 - - - - 7 - - 6		$ 10,967 35,892 89,323 113,446 $ 249,628 $ 9,255 $ 104,132 87,382 67,546 $ 259,060 $ 70,630 $ 44 $ 273 $ 236,095
									(Continued)

• 64 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account			**December **	31, 2020			Note
				Shares		Carrying Amount	Percentage of Ownership		Shares
TXC Technologies Inc. Chongqing All Sun Company Limited	Shares overseas-unlisted company Investment QST LLC Structured deposits Chongqing Rural Commercial Bank China Construction Bank Corporation	None None ″	Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current ″	US$ 250 RMB 49,164 RMB 11,410		$ 4,843 $ 214,802 49,851 $ 264,653	- - -		$ 4,843 $ 214,802 49,851 $ 264,653

(Concluded)

• 65 -

TABLE 3

TXC CORPORATION

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES 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)

Company Name	Marketable Securities Type andName	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Equity in Net Gain (Loss)	Ending	Balance
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain (Loss) on Disposal		Shares	Amount
TXC (Chongqing) Limited	QianYuan - Ri Xin Open-end Financial Investment Product	Financial instruments at FVTPL - current	China Construction Bank	None	-	$ -	-	$836,780	-	$ (837,789)	$ (836,780)	$ 1,009	$ -	-	$ -

• 66 -

TABLE 4

TXC CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF 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)

Buyer	Related Party	Relationship		Transaction Details	Transaction Details	Transaction Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
TXC Corporation TXC (Ningbo) Corporation	TXC (Ningbo) Corporation ″ TXC (Chongqing) Limited TXC (Chongqing) Limited	Subsidiary ″ Subsidiary Subsidiary	Purchase Sale Purchase Purchase	$ 2,515,798 123,658 1,230,037 237,321	38 1 19 11	No significant differences with the third parties. ″ ″ ″	Its trading price depends on its function within the Group ″ ″ ″	No significant differences with the third parties. ″ ″ ″	$ (624,504) 40,473 (357,633) (88,351)	(36) 1 (21) (11)

• 67 -

TABLE 5

TXC 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)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period	Allowance for Impairment Loss
					Amount	**Actions Taken **
TXC (Ningbo) Corporation TXC (Chongqing) Corporation	TXC Corporation TXC Corporation	Parent entity Parent entity	$ 624,504 357,633	4.14 4.37	$ - -	- -	$ 385,366 206,877	$ - -

• 68 -

TABLE 6

TXC CORPORATION

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES ON WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars or U.S. Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Balance	as of December 31, 2020	as of December 31, 2020	Net Income (Losses) of the Investee	Equity in the Earnings (Losses)	Note
				December 31, 2020	December 31, 2019	Shares (In Thousands)	Percentage of Ownership	Carrying Value
TXC Corporation Taiwan Crystal Technology International Ltd.	Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology International (HK) Limited TXC Europe GmbH Tai-Shing Electronics Components Corporation Godsmith Sensor Inc. Growing Profit Trading Ltd.	Western Samoa U.S.A. Japan Hong Kong Germany Taiwan Taiwan B.V.I.	Investment Marketing activities Marketing activities Investment Marketing activities Manufacture and sales of electronics products Manufacture of equipment International trading	$ 1,390,461 9,879 6,172 2,371 1,746 359,266 38,100 -	$ 1,390,461 9,879 6,172 2,371 1,746 349,389 38,100 1,691	42,835 300 2 80 50 8,435 - -	100 100 100 100 100 31.95 - -	$ 5,557,976 16,371 31,490 124,227 3,578 373,626 - -	$ 592,110 1,850 782 42,562 682 57,079 65,308 175	$ 588,059 1,850 782 42,562 682 18,008 20,734 175

• 69 -

TABLE 7

TXC CORPORATION

INFORMATION ON INVESTMENT IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars or U.S. Dollars)

1. Name of the investees in mainland China, main businesses and products, paid-in capital, method of investment, information on inflow or outflow of capital, percentage of ownership, investment income or loss, ending balance of investment, dividends remitted by the investee, and the limit of investment in mainland China:

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of January 1, 2020 (In Thousand)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of December 31, 2020 (In Thousand)	Investee Company Current Net Income	Percentage of Ownership	Investment Income (Loss) Recognized	Carrying Amount as of December 31, 2020	Accumulated Inward Remittance of Earnings as of December 31, 2020
					Outflow	Inflow
TXC (Ningbo) Corporation Guandong Failong Crystal Technology Co., Ltd. TXC (Chongqing) Corporation Chongqing All Suns Company Limited Ningbo Jingyu Company Limited Ningbo Longying Semiconductor Co., LTD. Ningbo Meishan Free Trade Port Area Ding Kai Investment Management Company Limited ChongQing Dingsen Commercial Management Co., Ltd	Manufacturing and sales of crystal and crystal oscillator Manufacturing and sales of new electronic components Manufacturing and sales of crystal and crystal oscillator Real estate intermediary service, real estate management and electronic product wholesale Purchasing and selling electronic component Research and development in integrated circuit Investment Management Logistic Management	$ 1,487,211 580,949 1,162,074 684,908 7,090 183,180 160,043 2,085	Indirect investment of the Corporation in mainland China through the Corporation’s subsidiary in a third region Direct investment of the Corporation in mainland China Direct investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China Other investment of the Corporation in mainland China	$ 1,427,630 46,478 - - - - - -	$ - - - - - - - -	$ - 46,478 - - - - - -	$ 1,427,630 - - - - - - -	$ 564,076 Note 2 167,052 (35,320) 850 (20,784) 120 (57)	100.00 Note 2 100.00 100.00 100.00 40.00 100.00 100.00	$ 564,076 Note 2 167,052 (35,320) 850 (8,312) 120 (57)	$ 5,573,100 Note 2 1,400,737 586,321 5,895 47,886 236,362 2,127	$ 566,321 443,606 306,500 - - - - -

1. The limited amounts of the investment in Mainland China

Accumulated Investment in Mainland China as of December 31, 2020	Investment Amounts Authorized by the investment Commission, MOEA	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$1,427,630	$1,786,400	Note 1

Note 1: The investment in mainland China has no maximum limit since the Company has acquired the approval from the Industrial Development Bureau for the establishment of the Company’s operating headquarters in Taiwan.

Note 2: The Company sold all of shares in Guandong Failong Crystal Technology Company Limited in 2020.

• 70 -

TABLE 8

FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

TXC CORPORATION

SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD AREA, AND THEIR PRICES, PAYMENT TERMS, AND UNREALIZED GAINS OR LOSSES

1. Significant direct or indirect transactions with the investees, prices and terms of payment, unrealized gain or loss:

Company Name	Related Party	Transaction Type			Transaction Details	Transaction Details		Accounts/Notes Receivable/Payable	Accounts/Notes Receivable/Payable	Unrealized Gain or Loss
			Amount	Percentage (%)	Price	Payment Term	Compared with Terms of Third Parties	Balance	%
TXC Corporation	NGB NGB CKG	Purchase Sale Purchase	$ 2,515,798 123,658 1,230,037	38 1 19	Its trading price depends on its function within the Group ″ ″	Similar with third parties ″ ″	Its trading price depends on its function within the Group ″ ″	$ (624,504) 40,473 (357,633)	(36) 1 (21)	$ 1,229 1,958 59

1. The transactions of properties and the profit or loss: None.

2. Endorsements guarantees or collateral directly or indirectly provided to the investees: None

3. Financings directly or indirectly provided to the investees: None

4. Other transactions that significantly impacted the current year’s profit or loss or financial position: None

5. 71 -

TABLE 9

TXC CORPORATION AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2020

Shareholders	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
2018 2nd Discretionary Investment Account of New Labor Pension Fund	21,693,000	7

• Note 1: 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 (included 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.

• Note 2: If a shareholder delivers their shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, please refer to Market Observation Post System.

• 72 -

TXC CORPORATION

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of financial assets at fair value through profit or loss - non- current Statement of notes receivable Statement of trade receivables Statement of other receivables Statement of inventories Statement of non-current held for sale Statement of other current assets Statement of changes in financial assets at fair value through other comprehensive income - non-current Statement of changes in investments accounted for using equity method Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation of property, plant and equipment Statement of changes in accumulated impairment of property, plant and equipment Statement of changes in right-of-use assets Statement of change in accumulated depreciation of right-of-use assets Statement of changes in investment properties Statement of changes in accumulated depreciation of investment properties Statement of deferred income tax assets Statement of short-term loans Statement of financial liabilities at fair value through profit or loss - current Statement of trade payables Statement of other payables Statement of lease liabilities Statement of long-term loans Statement of deferred income tax liabilities Major Accounting Items in Profit or Loss Statement of net revenue Statement of cost of goods sold Statement of manufacturing expenses Statement of operating expenses Statement of other gain and losses Statement of finance costs Statement of labor, depreciation and amortization by function

**Statement Index **

Statement 1 Table 2 Note 10 Statement 2 Note 10 Statement 3 Note 12 Statement 4 Statement 5 Statement 6 Note 14 Note 14 Note 14 Statement 7 Statement 7 Note 16 Note 16 Note 23 Note 17 Note 7 Statement 8 Note 18 Statement 9 Note 17 Note 23 Statement 10 Statement 11 Statement 12 Statement 13 Note 22 Note 22 Statement 14

• 73 -

STATEMENT 1

TXC CORPORATION

CASH AND CASH EQUIVALENTS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars, and Foreign Currency)

Item Cash Cash on hand Including US$15 thousand @28.508; JPY597 thousand @0.2765; HK$4 thousand @3.6775; and RMB27 thousand @4.3691; SGD3 thousand @21.5798; EUR6 thousand @35.0563 Cash in banks Checking accounts and demand deposits Foreign-currency deposits Including US$13,583 thousand @28.508; JPY64,329 thousand @0.2765; EUR115 thousand @35.0563; RMB102,851 thousand @4.3691; and HK$7 thousand @3.6775 Time deposits Including RMB49,785 thousand @4.3691

Amount $ 1,035 183,026 858,429 257,515 $ 1,300,005

• 74 -

STATEMENT 2

TXC CORPORATION

TRADE RECEIVABLES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Explanation Related parties TXC (Ningbo) Corporation For goods TXC (Chongqing) Corporation ″ Tai-Shing Electronics Components Corporation ″ TXC Japan Corporation ″ TXC Europe GmbH ″ Liang Shing Eclife Corp. Less: Allowance for impairment loss Third parties A Company For goods B Company ″ C Company ″ Others (Note) ″ Less: Allowance for doubtful accounts	Amount $ 40,473 992 28,006 388 583 2,223 72,665 (67) $ 72,598 $ 324,603 299,469 137,967 2,207,002 2,969,041 (9,986) $ 2,959,055

Note: Each of the accounts was less than 5% of the total account balance.

• 75 -

STATEMENT 3

TXC CORPORATION

INVENTORIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Raw materials Supplies and spare parts Work in process Finished goods Merchandise Goods in transit Less: Allowance for loss	Cost Market Value (Note) $ 313,013 $ 305,043 81,409 81,286 212,429 206,168 202,755 188,727 277,485 271,758 20,109 20,108 1,107,200 $ 1,073,090 (34,110) $ 1,073,090

Note: The market value is based on net realizable value.

• 76 -

STATEMENT 4

TXC CORPORATION

OTHER CURRENT ASSETS FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Prepaid insurance Prepayment for purchases Other prepaid expenses Payment on behalf of others Advances to employees	Amount $ 1,461 52,190 9,790 326 754 $ 64,521

• 77 -

STATEMENT 5

TXC CORPORATION

CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NON- CURRENT FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars and Shares)

Listed shares Guandong Failong Crystal Technology Co., Ltd. Unlisted shares Marson Technology Ltd. Win Win Precision Technology Co., Ltd. UPI Semiconductor Corp Godsmith Sensor Inc.	Beginning Balance Shares Amount Remeasure 1,652$ 117,114 $ - 523 4,773 - 1,365 18,388 - 1,516 45,202 - - - - 68,363 - $ 185,477 $ -	Increase Shares Amount -$ - - - - 70,935 - 68,244 550 10,967 150,146 $ 150,146	Decrease Shares Amount 1,652$ 117,114 523 4,773 - - - - - - 4,773 $ 121,887	Ending Balance	Pledge or Amount Security $ - None - 〃 89,323 〃 113,446 〃 10,967 〃 213,736 $ 213,736
				% of Shares Ownership - 1 - - 1,365 3 1,516 2 550 -
	Shares 1,652 523 1,365 1,516 -	Shares - - - - 550	Shares 1,652 523 - - -

• 78 -

STATEMENT 6

TXC CORPORATION

CHANGES IN INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2020

(In Thousands of New Taiwan Dollars and Shares)

Unlisted company Taiwan Crystal Technology International Ltd. TXC Technology Inc. TXC Japan Corporation Taiwan Crystal Technology International (HK) Limited Tai-Shing Electronics Components Corporation TXC Europe GmbH Godsmith Sensor Inc.	Beginning Balance Shares Amount 42,835 $ 5,332,390 300 16,858 2 30,643 80 87,652 8,179 359,765 50 2,741 2,350 32,079 $ 5,862,128	Increase Shares Amount - $ - - - - - - - 256 9,877 - - - - $ 9,877	Decrease Shares Amount - $ 491,890 - - - - - - - - - - 2,350 32,079 $ 523,969	Equity in Investees Gain (Loss) $ 717,476 (487) 847 36,575 3,984 837 - $ 759,232	Ending Balance	Amount $ 5,557,976 16,371 31,490 124,227 373,626 3,578 - $ 6,107,268	Market Price or Net Asset Value Valuation Pledge or Unit Price Amount Method Security - $ 5,577,356 (Note) Equity method None - 16,371 (Note) Equity method None - 31,490 (Note) Equity method None - 124,227 (Note) Equity method None 38.55 325,169 Equity method None - 3,578 (Note) Equity method None - - - $ 6,078,191
					% of Shares Ownership 42,835 100.00 300 100.00 2 100.00 80 100.00 8,435 31.95 50 100.00 - -
	Shares 42,835 300 2 80 8,179 50 2,350	Shares - - - - 256 - -	Shares - - - - - - 2,350				Unit Price - - - - 38.55 - -

Note: All the above are unlisted company which do not have market price to evaluated.

• 79 -

STATEMENT 7

TXC CORPORATION

CHANGES IN RIGHT-OF-USE ASSETS DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Beginning Balance Cost Buildings $ 5,289 Equipment 2,244 $ 7,533 Accumulated depreciation Buildings $ 1,322 Equipment 187 $ 1,509	Increase $ - - $ - $ 2,644 449 $ 3,093	Decrease Ending Balance $ - $ 5,289 - 2,244 $ - $ 7,533 $ - $ 3,966 - 636 $ - $ 4,602

• 80 -

STATEMENT 8

TXC CORPORATION

ACCOUNTS PAYABLE DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Explanation Related parties TXC (Ningbo) Corporation Payment for goods TXC (Chongqing) Corporation ″ Taiwan Crystal Technology (HK) Limited ″ TXC Japan Corporation ″ Liang Shing Eclife ″ Ningbo Jingyu Company Limited ″ Third parties A Corporation Payment for goods B Corporation ″ C Corporation ″ D Corporation ″ E Corporation ″ F Corporation ″ Others (Note) ″	Amount $ 624,504 357,633 35,566 - 54 76
	1,017,833
	100,053 97,999 91,247 81,444 73,317 62,867 192,296
	699,223
	$ 1,717,056

Note: Each of the accounts was less than 5% of the total account balance.

• 81 -

STATEMENT 9

TXC CORPORATION

LEASE LIABILITIES DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item	Lease Period	Discount Rate	Ending Balance	Ending Balance
Buildings	2019.01-2021.06	0.86%	$	1,331
Equipment	2019.07-2024.07	0.86%		1,618
			$	2,949

• 82 -

STATEMENT 10

TXC CORPORATION

OPERATING REVENUE FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Quartz crystal products Less: Sales returns Less: Sales allowances	Amount $ 9,219,457 (39,113) (39,930) $ 9,140,414

• 83 -

STATEMENT 11

TXC CORPORATION

COST OF GOODS SOLD FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Direct materials Beginning materials Add: Material purchase Add: Unfavorable cost variance Less: Expense Less: Adjustment items Ending materials Direct labor Overhead Manufacturing cost Beginning work in process Add: Purchases Add: Others Less: Expense Less: Favorable cost variance Ending work in process Finished goods cost Beginning finished goods Add: Unfavorable cost variance Less: Expense Less: Others Ending finished goods Production cost Beginning merchandise inventory Add: Purchase Less: Others Less: Favorable cost variance Less: Expense Ending merchandise inventory Purchase cost Loss on physical inventory

Amount $ 293,649 1,122,465 72,800 (147,400) (16,997) (386,329) 938,188 322,942 797,337 2,058,467 183,371 55,661 (1,632) (42,431) (47,607) (206,168) 1,999,661 184,618 25,071 (18,296) (1,452) (188,727) 2,000,875 204,141 5,250,713 (710) (8,842) (772) (271,758) 5,172,772 19,382 $ 7,193,029

• 84 -

STATEMENT 12

TXC CORPORATION

OVERHEAD EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Explanation Indirect labor Including salary and wages, pension, food stipend, employee benefits and insurance etc. Indirect materials Depreciation Utilities Others	Amount $ 222,706 102,532 266,727 80,638 124,734 $ 797,337

Note: Each of the accounts was less than 5% of the total account balance.

• 85 -

STATEMENT 13

TXC CORPORATION

OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

		Selling and	Selling and	General and	Research and
Item	Explanation	Marketing		Administration	Development
Salary		$	53,096	$ 101,232	$ 271,233
Insurance			4,056	10,912	15,852
Depreciation			868	5,558	95,968
Research expense			-	-	115,949
Commission			17,545	-	-
Import and export expense			40,051	2	67
Others			138,214	46,627	51,178
		$	253,830	$ 164,331	$ 550,247

Note: Each of the accounts was less than 5% of the total account balance.

• 86 -

STATEMENT 14

TXC CORPORATION

EMPLOYEE WELFARE, DEPRECIATION AND AMORTIZATION EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2020 (In Thousands of New Taiwan Dollars)

Item Salaries Insurance Pension Remuneration of directors Other employee benefit Depreciation expense			2020	Total $ 877,293 61,265 28,008 29,164 1,523 $ 997,253 $ 369,121 $ 1,366,374			2019
		Operating Cost $ 480,896 35,457 15,040 - 33 $ 531,426 $ 266,727 $ 798,153	Operating Expense $ 396,397 25,808 12,968 29,164 1,490 $ 465,827 $ 102,394 $ 568,221			Operating Cost $ 374,205 33,570 14,696 - 229 $ 422,700 $ 229,385 $ 652,085	Operating Expense $ 284,914 22,839 14,171 13,773 808 $ 336,505 $ 82,378 $ 418,883	Total $ 659,119 56,409 28,867 13,773 1,037 $ 759,205 $ 311,763 $ 1,070,968

• Note 1: As of December 31, 2020 and 2019, the number of employees was 1,055 and 990 people with 6 and 6 directors not included in the employees, respectively.

Note 2: Information should be disclosed:

• a. The average of employee benefit is $922,869 in the current year. The average of employee benefit is $757,424 in the previous year.

• b. The average of salaries is $836,314 in the current year. The average of salaries is $669,722 in the previous year.

• c. Change in the average of salaries adjustment rates is 25%.

• Note 3: The Company didn’t have the supervisors for the year ended December 31, 2020 and 2019. Therefore, the Company did not have the corresponding remuneration of supervisors.

• Note 4: The Company and its subsidiaries set the salary scales according to the relative contribution of the employees’ positions, in line with the company's operation and development strategy, and based on their personal performance, future development potential and the Company's operation status as the basis for salary adjustment and bonus payment, so as to encourage the employees to make positive efforts and excellent performance and to achieve the "internal fairness" and "individual fairness" pursuant to the salary; and to encourage employees to deliver great performance at work, the Company allocates a certain proportion of profit-making earnings as the basis of employee dividends and shares the earnings results with colleagues, considers the benchmark enterprises of the industry, regularly checks the rationality of various salary and welfare systems by the “remuneration committee”, maintains the company's high level employee welfare, attracts outstanding talents to join and stay for a long time.

• Note 5: The remuneration of directors is determined based on the Company’s Articles of Incorporation. Fair remuneration is provided by considering the operation results and contributions towards company performance. President and vice presidents remuneration payment policy is based on the Company’s Salary Management Rules and salary levels for that job position in the industry market, the scope of authority of that job position inside the Company and the degree of contribution toward operation targets. The procedure for setting remuneration follows evaluation and review procedures under the Company’s Director and Manager Performance Evaluation Rules. In addition, the Company’s overall operational performance, future industry risks and development trends, individual performance achievement rates and contribution towards company performance are also considered in order to provide a fair compensation. The fairness of related performance evaluations and remuneration are reviewed by the salary and compensation committee and board of directors. The remuneration system is discussed at appropriate time based on the actual operating conditions and with respect to related laws to achieve a balance between sustainable company operation and risk control.

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