UMEC - Annual Report 2023 | FinancialReports.eu

UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT AUDITORS

FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

Address: 3,27TH RD.,Taichung Industrial Park.Taichung, Taiwan, R.O.C. Telephone: 886-4-23590096

The reader is advised that parent company only financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

Independent Auditors’ Report Translated from Chinese

To UNIVERSAL MICROELECTRONICS Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of UNIVERSAL MICROELECTRONICS Co., Ltd. (the “Company”) as of 31 December 2023 and 2022, and the related parent company only statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2023 and 2022, and notes to the parent company only financial statements, including the summary of significant accounting policies (together “the parent company only financial statements”).

In our opinion, the parent company only financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 31 December 2023 and 2022, and its financial performance and cash flows for the years ended 31 December 2023 and 2022, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Based on our audits and the report(s) of the other auditors, 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 2023 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Impairment of accounts receivable

As of 31 December 2023, gross accounts receivable and loss allowance by the Company amounted to NT$986,782 thousand and NT$1,910 thousand, respectively. Net accounts receivable accounted for 21 % of total assets, which was significant to the Company’s financial statements. Since the loss allowance of account receivables is measured by the expected credit loss for the duration of the account receivables, it is necessary to divide account receivables into groups in the process of measurement and analyze the application of related assumptions, including appropriate aging intervals and their respective loss rate. As the measurement of expected credit loss involves making judgment, analysis and estimates, and the result will affect the net account receivable, we therefore determined this a key audit matter.

Our audit procedures included, but not limited to, assessing the effectiveness of internal controls around accounts receivable management, including performing simple tests by sampling and understanding management’s assessment for expected credit losses of accounts receivable, dividing the expected loss rate of risk group and determining appropriate aging intervals and each group, selecting samples to perform the accounts receivable confirmation, analyzing trends of changes in account receivable of prior and subsequent periods and turnover rates, reviewing the collection in subsequent period to assess their recoverability. We also assessed the adequacy of the disclosures related to accounts receivable in Notes 5 and 6.

2. Valuation for inventories (Including inventories of the subsidiaries under the equity method)

The amount of inventories of the Company and its subsidiaries was significant to the financial statements. Due to uncertainty arising from rapid changes in product technology, the provision for valuation loss, sluggish or obsolete inventories involves major judgments by the management. We therefore determined this a key audit matter.

Our audit procedures included, but not limited to, evaluate the effectiveness of the internal control established by the management for inventory, including performing simple tests and understanding the appropriateness of the management's assessment of inventory evaluation policies and methods, evaluating the management's stocktaking plan and conducting inventory inspections on the spot, obtain the inventory aging table and test the correctness of the inventory age, re-calculating the unit cost of inventories, and evaluating and testing net realizable value adopted by management. We also assessed the adequacy of the disclosures related to inventories in Notes 5 and 6.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

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

In preparing the parent company only financial statements, management is responsible for assessing the ability to continue as a going concern of the Company, 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 financial reporting process of the Company.

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s 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 auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
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 internal control of the Company.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 ability to continue as a going concern of the Company. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the accompanying notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters,

the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2023 parent company only financial statements and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Lo, Wen Chen

Huang, Ching Ya

Ernst & Young, Taiwan

12 March 2024

Notice to Readers

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

Accordingly, the accompanying parent company only financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or auditing standards in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets	Notes	As of 31 December	As of 31 December
		2023	2022
Current assets Cash and cash equivalents Current financial assets at fair value through profit or loss Notes receivable, net Accounts receivable, net Accounts receivable due from related parties, net Other receivables Other receivable due from related parties, net Current inventories Prepayments Other current assets Total current assets Non-current assets Non-current financial assets at fair value through other comprehensive income Investments accounted for using equity method Property, plant and equipment Right-of-use assets Investment property, net Intangible assets Deferred tax assets Other non-current assets Total non-current assets	4,6(1) 4,6(2) 4,7 4,6(3) 4,6(3),7 4 4,7 4,6(4) 7 4,6(5) 4,6(6) 4,6(7) 4,6(8) 4,6(18) 4,6(9) 4 4,6(22) 7	$443,592 $3,177 454 550,835 434,037 12,456 207,306 1,255,009 126,889 35,593	$344,047 $ - 11,741 836,144 384,916 20,520 340,527 1,344,998 87,195 207,917
		3,069,348	3,578,005
		201,649 407,973 513,888 1,001 102,778 12,062 45,552 287,779	287,274 471,728 505,165 2,948 103,254 6,714 40,755 147,299
		1,572,682	1,565,137

Total assets

$4,642,030 $5,143,142

(continued)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY BALANCE SHEETS

31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Notes	As of 31 December	As of 31 December
	2023	2022
4,6(10) 4,6(11) 4,6(2) 6(16) 6(12),7 4 4,6(18) 4,6(13) 4,6(13) 4,6(18) 4,6(14) 4,6(15)	$228,000 79,944 - 59,291 554,451 165,404 39,703 826 513,310 20,002	$240,800 44,945 957 228,452 635,193 173,380 66,073 2,263 844,877 10,500
	1,660,931	2,247,440
	912,432 189 49,434 1,015	809,295 721 47,707 2,239
	963,070	859,962
	2,624,001	3,107,402
	1,273,592 373,076 48,839 332,604 349,167	1,273,592 373,076 11,494 135,032 581,301
	730,610	727,827
	(353,098) (6,151)	(332,604) (6,151)
	2,018,029	2,035,740
	$4,642,030	$5,143,142

(The accompanying notes are an integral part of the parent company only financial statements)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the years ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Notes	For theyears ended 31 December	For theyears ended 31 December
	2023	2022
4,6(16),7 4,6(19),7 4,6(19),7 6(17) 4,6(20),7 4,6(7) 4,6(22) 4,6(21) 6(23)	$5,147,932 (4,641,034)	$5,627,188 (5,070,377)
	$506,898	$556,811
	(140) 104	(104) 105
	$506,862	$556,812
	(80,812) (154,683) (201,076) 83	(80,262) (154,969) (193,747) (282)
	(436,488)	(429,260)
	70,374	127,552
	10,313 20,678 8,504 (35,557) 47,181	9,770 15,907 155,916 (32,597) 46,752
	51,119	195,748
	121,493 (15,007)	323,300 (60,723)
	106,486	262,577
	(3,256) (55,183) 124 10,073 (15,680) 3,136	13,519 (115,163) (77) 3,597 13,090 (1,658)
	(60,786)	(86,692)
	$45,700	$175,885
	$0.84	$2.07
	$0.84	$2.06

(The accompanying notes are an integral part of the parent company only financial statements)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY For the years ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Ordinaryshare	Capital surplus		Retained earnings	Retained earnings	Other equityinterest	Other equityinterest	Treasuryshares	Total equity
		Legal reserve	Special reserve	Unappropriated retained earnings	Exchange differences on translation of foreign financial statements	Unrealised gains (losses) on financial assets measured at fair value through other comprehensive income
$1,273,592	$370,396 2,680	$4,699 6,795	$281,724 (146,692)	$67,947 (6,795) 146,692 262,577 10,815	$(30,064) 11,432	$(104,968) (108,939)	$(6,151)	$1,857,175 - - 2,680 262,577 (86,692)
-	-	-	-	273,392	11,432	(108,939)	-	175,885
				100,065		(100,065)		-
$1,273,592	$373,076	$11,494	$135,032	$581,301	$(18,632)	$(313,972)	$(6,151)	$2,035,740
$1,273,592	$373,076	$11,494 37,345	$135,032 197,572	$581,301 (37,345) (197,572) (63,411) 106,486 (2,605)	$(18,632) (12,544)	$(313,972) (45,637)	$(6,151)	$2,035,740 - - (63,411) 106,486 (60,786)
-	-	-	-	103,881	(12,544)	(45,637)	-	45,700
				(37,687)		37,687		-
$1,273,592	$373,076	$48,839	$332,604	$349,167	$(31,176)	$(321,922)	$(6,151)	$2,018,029

(The accompanying notes are an integral part of the parent company only financial statements)

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the years ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Profit from continuing operations before tax Adjustments: Adjustments to reconcile profit: Depreciation expense Amortization expense Expected credit loss (gain) Net (gain) loss on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Gain on disposal of property, plan and equipment Loss on disposal of investments Unrealized profit from sales Realized profit on from sales Others Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories (Increase) decrease in prepayments (Increase) decrease in other current assets (Decrease) Increase in contract liabilities (Decrease) Increase in accounts payable (Decrease) Increase in other payable Increase (decrease) in other current liabilities Decrease in net defined benefit liability Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid (Continued) Net cash flows from (used in) operating activities	For theyears ended 31 December	For theyears ended 31 December
	2023 $121,493 63,399 12,109 (83) (922) 35,557 (10,313) (3,113) (47,181) (8) 10,274 140 (104) - 11,287 236,271 141,310 89,989 (39,694) (263) (169,161) (80,742) (7,940) 9,502 (1,529) 370,278 10,288 3,113 (35,593) (32,965) 315,121	2022
		$323,300 61,097 8,694 282 957 32,597 (9,770) (2,700) (46,752) - 9,662 104 (105) (1,631) (8,525) 19,206 (50,990) (508,072) 8,264 6,920 137,615 169,901 51,259 (2,906) (1,642)
		196,765 9,881 8,897 (32,289) (8,054)
		175,200

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS(Continued) For the years ended 31 December 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars)

Cash flows from investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through profit or loss Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets (Increase) decrease in other financial assets Increase in other non-current assets Net cash flows (used in) from investing activities Cash flows from financing activities: Increase in short-term loans (Decrease) increase in short-term notes and bills payable Proceeds from long-term debt Repayments of long-term debt Payments of lease liabilities Decrease in other non-current liabilities Cash dividend distribution Net cash used in financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For theyears ended 31 December	For theyears ended 31 December
	2023 (22,400) - (3,212) 233,743 (70,609) 1,238 (13,729) 172,587 (240,039) 57,579 (12,800) 34,999 973,585 (1,202,015) (2,289) (1,224) (63,411) (273,155) 99,545 344,047 $443,592	2022
		(19,600) 151,795 - 102,838 (67,674) - (7,221) (207,599) (41,646)
		(89,107)
		41,274 (35,026) 752,200 (790,270) (1,984) (1,330) -
		(35,136)
		50,957 293,090
		$344,047

(The accompanying notes are an integral part of the parent company only financial statements)

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS

For the Year Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. History and organization

UNIVERSAL MICROELECTRONICS Co., Ltd. (the Company) was incorporated in Republic of China (R.O.C) on 18 February 1984. The main activities of the Company include manufacturing and selling computer peripherals, connectors, wires and other parts. The shares of the Company commenced trading on Taiwan’s Overthe-Counter Market in 1998 and were listed on the Taiwan Stock Exchange on 11 September 2000. Its registered location and main operational base were situated at No. 3, Industrial Road 27, Nantun District, Taichung City.

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (the Group) were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on 12 March 2024.

3. Newly issued or revised standards and interpretations

(1) Changes in accounting policies resulting from applying for the first time certain standards and amendments.

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2023. The adoption of these new standards and amendments had no material impact on the Group.

(2) Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued byIASB
a	Classification of Liabilities as Current or Non-current – Amendments to IAS 1	1 January 2024
b	Lease Liability in a Sale and Leaseback – Amendments to IFRS 16	1 January 2024
c	Non-current Liabilities with Covenants – Amendments to IAS 1	1 January 2024
d	Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7	1 January 2024

(a) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

(b) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

The amendments add seller-lessees additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

The amendments improved the information companies provide about longterm debt with covenants. The amendments specify that covenants to be complied within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

(d) Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The amendments introduced additional information of supplier finance arrangements and added disclosure requirements for such arrangements.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2024. The remaining new or amended standards and interpretations have no material impact on the Group.

(3) Standards or interpretations issued, revised or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.

Items	New,Revised or Amended Standards and Interpretations	Effective Date issued by IASB
a	IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures	To be determined by IASB
b	IFRS 17 “Insurance Contracts”	1 January2023
c	Lack of Exchangeability– Amendments to IAS 21	1 January2025

(a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017, and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

(c) Lack of Exchangeability – Amendments to IAS 21

These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide. The amendments apply for annual reporting periods beginning on or after 1 January 2025.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The remaining new or amended standards and interpretations have no material impact on the Group.

4. Summary of significant accounting policies

(1) Statement of Compliance

The parent company only financial statements of the Company for the year ended 31 December 2023 and 2022 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”).

(2) Basis of Preparation

The Company prepared the parent company only financial statements in accordance with the Regulations. According to the Article 21 of the Regulation, which provided that the profit or loss and other comprehensive income for the period presented in the parent company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent company only financial statements shall be the same as the equity attributable to the parent company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“NT$”) unless otherwise stated.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Foreign Currency Transactions

The Company’s parent company only financial statements are presented in its functional currency, New Taiwan Dollars (NT$). Items included in the financial statements are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Company at the respective functional currency rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Nonmonetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

(a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.
(b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.
(c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a nonmonetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

UNIVERSAL MICROELECTRONICS CO., LTD.

(4) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

(a) when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and
(b) when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reattributed to the non-controlling interests in that foreign operation In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

(5) Current and non-current distinction

An asset is classified as current when:

(a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle
(b) The Company holds the asset primarily for the purpose of trading

UNIVERSAL MICROELECTRONICS CO., LTD. NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) The Company expects to realize the asset within twelve months after the reporting period
(d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

(a) The Company expects to settle the liability in its normal operating cycle
(b) The Company holds the liability primarily for the purpose of trading
(c) The liability is due to be settled within twelve months after the reporting period
(d) The Company does not have an unconditional right to defer settlement of the liability for at least twelve 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.

All other liabilities are classified as non-current.

(6) Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and shortterm, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(7) Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

(1) Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

A. the Company’s business model for managing the financial assets
B. the contractual cash flow characteristics of the financial asset

Financial assets measured at amortized cost.

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

A. the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and
B. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

A. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

B. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

A. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and
B. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income are described as below:

(a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.
(b) When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment.
(c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:
i. Purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

ii. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

In addition, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Company made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represent a recovery of part of the cost of investment.

Financial asset measured at fair value through profit or loss.

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

(2) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company measures expected credit losses of a financial instrument in a way that reflects:

(a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;
(b) the time value of money; and
(c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

The loss allowance is measured as follows:

(a) At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.
(b) At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.
(c) For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.
(d) For lease receivables arising from transactions within the scope of IFRS 16, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Derecognition of financial assets

A financial asset is derecognized when:

i. The rights to receive cash flows from the asset have expired
ii. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred
iii. The Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

(4) Financial liabilities and equity

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term
ii. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking
iii. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument)

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

i. it eliminates or significantly reduces a measurement or recognition inconsistency; or
ii. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the Company is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any noncash assets transferred or liabilities assumed, is recognized in profit or loss.

(5) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(8) Derivative financial instruments

The Company uses derivative financial instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in equity.

When the host contracts are either non-financial assets or liabilities, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not designated at fair value though profit or loss.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or

(b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials - Purchase cost under weighted average cost method Finished goods and work in progress – Cost of direct materials and labor and a

proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(11) Investments accounted for under the equity method

According to Article 21 of the Regulation, the Company’s investment in subsidiaries was presented as “Investments accounted for using equity method” and made necessary adjustments. The profit or loss during the period and other comprehensive income presented in the parent company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis, and the shareholders’ equity presented in the parent company only financial statements shall be the same as the equity attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis. The adjustment was considered the difference between investment in subsidiaries in consolidated financial statements according to IFRS 10 “Consolidated financial statements” and application of IFRS to different reporting entities, debit/credit “Investment accounted for using equity method”, “Share of profit or loss of subsidiaries, associates and joint ventures” or “Share of other comprehensive profit or loss of subsidiaries, associates and joint ventures” etc.

The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence. Joint venture means the Company has rights to the net assets of the joint agreement (with joint controller).

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate or joint venture.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures . If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Company estimates:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or
(b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, 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 entity continues to apply the equity method and does not remeasure the retained interest.

(12) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Company recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Buildings Machinery and equipment Transportation equipment Office equipment Other equipment	Useful Lives
	20`〜`40 years 6`〜`10 years 5`〜`10 years 3`〜`10 years 2`〜`15 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.

(13) Investment property

The Company’s owned investment properties are measured initially at cost, including transaction costs. The carrying amount includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met and excludes the costs of day-to-day servicing of an investment property. Subsequent to initial recognition, other than those that meet the criteria to be classified as held for sale (or are included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations , investment properties are measured using the cost model in accordance with the requirements of IAS 16 Property, plant and equipment for that model. If investment properties are held by a lessee as right-of-use assets and is not held for sale in accordance with IFRS 5, investment properties are measured in accordance with the requirements of IFRS 16.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Buildings 20 years

Investment properties are derecognized when either they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss in the period of derecognition.

The Company transfers properties to or from investment properties according to the actual use of the properties.

The Company transfers to or from investment properties when there is a change in use for these assets. Properties are transferred to or from investment properties when the properties meet, or cease to meet, the definition of investment property and there is evidence of the change in use.

(14) Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

(a) the right to obtain substantially all of the economic benefits from use of the identified asset; and

(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the stand-alone price, maximizing the use of observable information.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

(a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;
(b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
(c) amounts expected to be payable by the lessee under residual value guarantees;
(d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and
(e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

(a) the amount of the initial measurement of the lease liability;
(b) any lease payments made at or before the commencement date, less any lease incentives received;
(c) any initial direct costs incurred by the lessee; and
(d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-ofuse applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the rightof-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

(15) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Company’s intangible assets is as follows:

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Useful lives Amortization method used Internally generated or acquired	Patents	Computer software 10 years Amortized on a straight- line basis over the estimated useful life Acquired	Others
	10 years Amortized on a straight-line basis over the period of the patent Acquired		2`〜`5 years Amortized on a straight- line basis over the estimated useful life Acquired

(16) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an assets or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the assets or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(17) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

(18) Treasury shares

Own equity instruments which are reacquired (treasury shares) are recognized at cost and deducted from equity. Any difference between the carrying amount and the consideration is recognized in equity.

(19) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

The Company manufactures and sells goods. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. Revenue from the sale of goods is recognized based on the prices stipulated in the contracts.

The credit period of the Company’s sale of goods is from 10 to 150 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Company usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Company has transferred the goods to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Company measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

UNIVERSAL MICROELECTRONICS CO., LTD.

(20) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(21) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

Where the Company receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(22) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore, fund assets are not included in the Company’s parent company only financial statements.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a) the date of the plan amendment or curtailment, and
(b) the date that the Company recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(23) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the Shareholders’ meeting.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

i Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.
ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities 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. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

According to the temporary exception in the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12), information about deferred tax assets and liabilities related to Pillar Two income tax will neither be recognized nor be disclosed.

5. Significant accounting judgments, estimates and assumptions

The preparation of the parent company only financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flow model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

(2) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date less incremental costs that would be directly attributable to the disposal of the asset or cash generating unit. The value in use calculation is based on a discounted cash flow model. The cash flows projections are derived from the budget for the next five years and do not include restructuring activities that The Company is not yet committed to or significant future investments that will enhance the asset’s performance of the cash generating unit being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cashinflows and the growth rate used for extrapolation purposes.

(3) Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(4) Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

Deferred tax assets are recognized for all carry forward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

Please refer to Note 6 for more details of the unrecognized deferred income tax assets as of 31 December 2023.

(5) Accounts receivables–estimation of impairment loss

The Company estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(6) Inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

6. Contents of significant accounts

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Demand deposits Total	As of31 December
	2023 $511 443,081 $443,592	2022
		$2,058 341,989
		$344,047

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

Financial assets mandatorily at fair value through profit or loss: Index Bond Fund Held for trading: Cross Currency Swap	As of 31 December	As of 31 December
	2023 $3,177 $-	2022
		$ - $(957)

Financial assets at fair value through profit or loss were not pledged.

(3) Accounts receivables and accounts receivable - related parties

Accounts receivables Less: loss allowance Subtotal Accounts receivable – related parties Total	As of31 December	As of31 December
	2023	2022
	$552,745 (1,910)	$838,137 (1,993)
	550,835 434,037	836,144 384,916
	$984,872	$1,221,060

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accounts receivables were not pledged.

Accounts receivables are generally on 10-150 day terms. The total carrying amount as of 31 December 2023 and 31 December 2022 were NT$986,782 thousand and NT$1,223,053 thousand, respectively. Please refer to Note 6(17) for more details on loss allowance of accounts receivables for the year ended 31 December 2023 and 2022. Please refer to Note 12 for more details on credit risk management.

(4) Inventories

Raw materials Supplies & parts Semi-finished goods Work in progress Finished goods Total	As of 31 December	As of 31 December
	2023 $868,889 36,140 27,207 78,377 244,396 $1,255,009	2022
		$948,512 27,920 17,449 118,725 232,392
		$1,344,998

The cost of inventories recognized as operating costs for the year ended 31 December 2023 and 2022 were NT$4,641,034 thousand and NT$5,070,377 thousand, respectively. The gain from price recovery of inventories related to cost of goods sold were NT$6,078 thousand and NT$(12,148) thousand.

The gain from price recovery of inventories in 2022 was due to the selling slow-moving inventories that was originally provided for write-down.

No inventories were pledged.

(5) Other current assets

Restricted deposit Temporary debits Other assets Total	As of 31 December	As of 31 December
	2023 $35,012 473 108 $35,593	2022
		$207,599 279 39
		$207,917

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Please refer to Note 8 for more details on other current assets under pledge.

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

Equity instrument investments measured at fair value through other comprehensive income – Non-current Listed companies stocks Emerging companies stocks Unlisted companies stocks Total	As of31 December	As of31 December
	2023	2022
	$114,112 35,288 52,249	$122,777 29,730 134,767
	$201,649	$287,274

The Group entered into a stock conversion agreement with Lightel Corporation in 28 September 2023, as the stock conversion reference date. The Group exchanged 5,082,027 shares of Lightel Technologics Inc. it held for 5,082,027 ordinary shares of. The fair value at the time of exchange was NT$57,306 thousand. The unrealized valuation loss accumulated at the time of exchange was NT$47,109 thousand, and the income tax benefit directly recognized in equity NT$ (9,422) thousand was transferred from other equity to retained earnings.

In the year ended 31 December 2023, the Group disposed of the listed stocks and emerging stocks, which were reported under equity instrument investments measured at fair value through other comprehensive income during the period. Upon derecognition, the fair value of the investments was NT$151,797 thousand, and the cumulative disposal gain of NT$100,065 thousand was transferred from other components of equity to retained earnings.

The Company’s dividend income related to equity instrument investments measured at fair value through other comprehensive income for the years ended 31 December 2023 and 2022 are as follow:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Related to investments held at the end of the reporting period Related to investments derecognized during the period Dividends recognized during the period	For the years ended 31 December	For the years ended 31 December
	2023 $3,113 - $3,113	2022
		$2,700 -
		$2,700

Financial assets at fair value through other comprehensive income were not pledged.

(7) Investments accounted for using the equity method

The following table lists the investments accounted for using the equity method of the Company:

As of 31 December	As of 31 December	As of 31 December
2023 Amount % $200,522 100.00% 58,313 100.00% 11,955 84.78% 1,229 100.00% 43,215 99.99% 31,481 25.73% - 60.00% 346,715 61,258 23.88% - - - - 61,258 $407,973	2022
Amount $200,522 58,313 11,955 1,229 43,215 31,481 - 346,715 61,258 - - 61,258 $407,973	Amount $346,399 49,321 20,381 1,339 47,760 - - 465,200 - 3,139 3,389 6,528 $471,728	%
		100.00% 100.00% 84.78% 100.00% 99.99% -% 60.00% -% 14.75% 13.89%

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) For the year ended 31 December 2023 and 2022, the Company recognized share of profit or loss of subsidiaries and associates, and the details are as follows:

Investees UMEC Investment Co., Ltd. Tien Lung Investment Co., Ltd. Advanced Radar Technology Co., Ltd. Lightel Corporation AMIT System Service Ltd. UEC System Solutions Corporation UMEC JAPAN CO., LTD. UMEC USA, Inc. UMEC VIETNAM Co., Ltd. PT UMEC Green Tech Indonesia Total	For the years ended 31 December	For the years ended 31 December
	2023 $56,986 8,868 (8,426) 3,953 (1,354) (711) (21) (4,557) (7,557) - $47,181	2022
		$65,832 (6,882) (9,923) - (1,880) (473) 17 61 - -
		$46,752

(2) For the year ended 31 December 2023 and 2022, the Company recognized exchange differences on translation of foreign operations accounted for using equity method, and the details are as follows:

Investees UMEC Investment Co., Ltd. UMEC JAPAN CO., LTD. UMEC USA, Inc. UMEC VIETNAM Co., Ltd. Total	For the years ended 31 December	For the years ended 31 December
	2023 $(13,016) (89) 48 (2,623) $(15,680)	2022
		$8,346 (46) 4,790 -
		$13,090

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Investments in subsidiaries

Investing subsidiaries was expressed as “Investments accounted for under the equity method” in the parent company only financial statements and was made the adjustment which was necessary.

In 2022, Tien Lung Investment Co., Ltd. repatriated a total of NT$6,197 thousand in earnings, which was recorded as a deduction in the equity-method investment.

In 2023, the Company reduced its shareholding in UMEC Investment Co., Ltd. by 5,720 shares to offset losses, and reduced its shareholding by 5,083 shares due to the return of capital. The Company received a total of NT$102,838 thousand in refunded capital.

The Company adjusted its investment structure in 2023 and transferred UMEC (USA), a subsidiary of UMEC (B.V.I.) and Universal (Japan), a subsidiary of Global, 100% ownership to the Company.

In the fourth quarter of the year the year ended 31 December 2022 the company engaged in debt-to-equity swap for capital increase in UMEC VIETNAM Co., Ltd. In the second quarter of the year ended 31 December 2023, the company obtained the business license issued by the Vietnamese government to complete the capital increase, acquiring a 25.73% stake.

In the year ended 31 December 2023, the company reduced its capital by 7,437 shares through UMEC Investment Co., Ltd., and received a refund of NT$233,743 thousand.

(4) Investments in associates

The Company entered into a share conversion agreement with Lightel Corporation with 28 September 2023, as the share conversion reference date, whereby it exchanged 5,082,027 shares of Lightel technology, Inc. held for 5,082,027 ordinary shares of Lightel Corporation.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

UNIVERSAL MICROELECTRONICS CO., LTD.

The Company did not participate in the cash capital increase of AMIT System Service Ltd., in the third quarter of the year ended 31 December 2023, and its shareholding ratio decreased from 14.75% to 11.00%. As a result, the Company lost significant influence over AMIT System Service Ltd., and therefore reclassified it as a financial asset measured at fair value through other comprehensive income.

In the third quarter of the year ended 31 December 2023, the Company participated in the cash capital increase of UEC System Solutions Corporation, increasing its investment amount by NT$1,400 thousand. However, as the Group did not subscribe in proportion to its shareholding, its shareholding ratio decreased from 13.89% to 11.08%. Consequently, the Company lost significant influence over UEC System Solutions Corporation, and therefore reclassified it as a financial asset measured at fair value through other comprehensive income.

The Company’s investments in the companies above are not individually material. The aggregate financial information of the Company’s share of its associates is as follows:

Profit from continuing operations Other comprehensive income (net of tax) Total comprehensive income	For the years ended 31 December	For the years ended 31 December
	2023 $1,888 - $1,888	2022
		$(2,353) -
		$(2,353)

The associates had no contingent liabilities or capital commitments as of 31 December 2023 and 2022.

(5)Property, plant and equipment

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Land $149,380 - - - $149,380 $(449) - - $(449)	Buildings $495,055 770 10,614 (340) $506,099 $(367,110) (13,171) 284 $(379,997)	Machinery and equipment $551,026 11,726 16,680 (15,392) $564,040 $(419,994) (33,216) 14,218 $(438,992)	Transportati on equipment $8,483 - 1,490 (1,040) $8,933 $(7,212) (413) 1,040 $(6,585)	Office equipment	Mold equipment	Other equipment $116,754 1,964 13,151 (321) $131,548 $(100,116) (5,622) 321 $(105,417)	Construction in progress and equipment pending examination $66,297 15,249 (10,614) - $70,932 $ - - - $ -	Total $1,555,899 37,647 32,962 (18,595) $1,607,913 $(1,050,734) (60,656) 17,365 $(1,094,025)
				$57,597 6,424 - (1,502)	$111,307 1,514 1,641 -
				$62,519	$114,462
				$(48,936) (5,103) 1,502	$(106,917) (3,131) -
				$(52,537)	$(110,048)
$149,380 - - - $149,380 $(449) - - $(449) $148,931 $148,931	$495,055 - - - $495,055 $(354,423) (12,687) - $(367,110) $126,102 $127,945	$538,571 12,066 6,250 (5,861) $551,026 $(392,756) (33,099) 5,861 $(419,994) $125,048 $131,032	$9,512 - 1,273 (2,302) $8,483 $(9,251) (263) 2,302 $(7,212) $2,348 $1,271	$56,784 3,946 - (3,133)	$107,941 2,743 723 (100)	$107,149 5,121 5,300 (816) $116,754 $(97,312) (3,620) 816 $(100,116) $26,131 $16,638	$36,045 30,252 - - $66,297 $ - - - $ - $70,932 $66,297	$1,500,437 54,128 13,546 (12,212) $1,555,899 $(1,004,316) (58,630) 12,212 $(1,050,734) $513,888 $505,165
				$57,597	$111,307
				$(47,346) (4,723) 3,133	$(102,779) (4,238) 100
				$(48,936)	$(106,917)
				$9,982	$4,414
				$8,661	$4,390

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Components of building that have different useful lives are the main building structure and air conditioning, which are depreciated 20~40 years and 10~15 years, respectively.

Please refer to Note 8 for more details on property, plant and equipment under pledge.

The company did not have any instances where interest capitalization was required for the acquisition of real estate, plants, and equipment.

(8) Investment property

Land	Buildings	Total
$96,713 -	$9,514 -	$106,227 -
$96,713	$9,514	$106,227
$96,713 -	$9,514 -	$106,227 -
$96,713	$9,514	$106,227
$ - -	$(2,973) (476)	$(2,973) (476)
$-	$(3,449)	$(3,449)
$ - -	$(2,498) (475)	$(2,498) (475)
$-	$(2,973)	$(2,973)
$96,713	$6,065	$102,778
$96,713	$6,541	$103,254

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Please refer to Note 8 for more details on investment property under pledge.

Investment properties held by The Company are not measured at fair value but for which the fair value is disclosed. The fair value measurements of the investment properties are categorized within Level 3.

The fair value of the investment properties held by the Company as of 31 December 2023 and 2022 was NT$231,797 thousand and NT$181,374 thousand, respectively. The aforementioned fair values were determined by independent external valuation experts and evaluated based on recent transaction prices of comparable properties obtained from the Ministry of the Interior's real estate transaction actual price inquiry. The valuation method employed was the comparison approach, with the primary input being the price per square meter.

(9) Short-term loans

Unsecured bank loans Secured bank loans Total Interest rates applied Unsecured bank loans Secured bank loans	As of 31 December	As of 31 December
	2023 2022 $200,000 $100,000 28,000 140,800 $228,000 $240,800 As of 31 December	2022 $100,000 140,800
		$240,800
	2023 1.81% 1.81%	2022 1.69% 1.56%~1.69%

The Company’s unused short-term lines of credits amounted to NT$1,296,130 thousand and NT$823,260 thousand as of 31 December 2023 and 2022, respectively.

The short- term loans are guaranteed by time deposits, please refer to Note 8 for details.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Short-term notes and bills payable

Nature Commercial papers payable Less: discount on short-term notes and bills payable Total Interest rates applied	Guarantee or acceptance institution China Bills Finance Corporation Ta Ching Bills Finance Corporation Union Bank Of Taiwan	As of31 December 2023 2022 $50,000 $ - 30,000 - - 45,000 (56) (55) $79,944 $44,945 As of31 December 2023 2022 1.39%-1.51% 1.42%
		2023 1.39%-1.51%

Short-term notes and bills payable represent credit borrowings were not pledged.

(11) Other payables

Wages and salaries payable Employee bonus payable Insurance expense payable Compensation due to directors Payable on machinery and equipment Pension expense payable Other payables to related parties Other payables, others Total	As of31 December	As of31 December
	2023 $70,913 13,859 8,884 2,508 13,770 5,175 7,449 42,846 $165,404	2022
		$87,646 13,758 8,472 6,878 5,380 4,873 9,248 37,125
		$173,380

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(12) Long-term loans

Details of long-term loans as at 31 December 2023 and 31 December 2022 are as follows:

are as follows:
Lenders	Maturity date	As of31 December
		2023 2022 $486,690 $579,251 434,318 422,384 104,883 179,596 102,009 184,512 200,000 120,000 31,333 72,666 52,509 65,763 14,000 30,000 1,425,742 1,654,172 (513,310) (844,877) $912,432 $809,295 As of31 December		2022
Mega International Commercial Bank Chang Hwa Commercial Bank Bank of Taiwan Taiwan Cooperative Bank Hua Nan Commercial Bank Land Bank of Taiwan First Commercial Bank Taichung Commercial Bank Subtotal Less: current portion Total Interest rates applied				$579,251 422,384 179,596 184,512 120,000 72,666 65,763 30,000
				1,654,172 (844,877)
				$809,295
			2022
			1.73%~2.31%

Please refer to Note 8 for more details on property, plant and equipment and investment property under pledge.

(13) Post-employment benefits

Defined contribution plan

The Company adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Pension expenses under the defined contribution plan for the year ended 31 December 2023 and 2022 were NT$17,090 thousand and NT$16,620 thousand, respectively.

Defined benefits plan

The Company adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute NT$11,743 thousand to its defined benefit plan during the 12 months beginning after 31 December 2023.

The weighted average duration of the defined benefits obligation was 7.1 years as of 31 December 2023.

Pension costs recognized in profit or loss are as follows:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Current service costs Net interest on the net defined benefit liabilities Total	For the years ended 31 December	For the years ended 31 December
	2023	2022
	$31 467	$69 371
	$498	$440

Reconciliations of liabilities of the defined benefit obligation and plan assets at fair value are as follows:

	As of
31 Dec. 2023	31 Dec. 2022	1 Jan.2022
$167,784 (118,350)	$179,622 (131,915)	$184,796 (121,928)
$49,434	$47,707	$62,868

Reconciliation of liabilities (assets) of the defined benefit plan are as follows:

Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
$184,796 69 1,109 -	$(121,928) - (738) -	$62,868 69 371 -
185,974	(122,666)	63,308
- (3,230) (799) -	- - - (9,490)	- (3,230) (799) (9,490)
(4,029)	(9,490)	(13,519)
(2,323) -	2,323 (2,082)	- (2,082)
179,622 31 1,797 -	(131,915) - (1,330) -	47,707 31 467 -
181,450	(133,245)	48,205

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
- - 4,167 -	- - (911)	- - 4,167 (911)
4,167	(911)	3,256
(17,833) -	17,833 (2,027)	- (2,027)
$167,784	$(118,350)	$49,434

The principal assumptions used in determining the Company’s defined benefit plan are shown below:

Discount rate Expected rate of salary increases	As of31 December	As of31 December
	2023	2022
	1.00% 2.00%	1.00% 2.00%

Sensitivity analysis for significant assumption are shown below:

Forthe years ended 31 December	Forthe years ended 31 December	Forthe years ended 31 December	Forthe years ended 31 December
2023		2022
Defined benefit obligation increase	Defined benefit obligation decrease	Defined benefit obligation increase	Defined benefit obligation decrease
$ - 3,382 3,368 -	$3,222 - - 3,243	$ - 4,060 4,028 -	$3,845 - - 3,855

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(14) Equity

(a) Common stock

The Company’s authorized capital and the issued capital was NT$2,207,460 thousand and NT$1,273,592 thousand in a total of 220,746 thousand shares and 127,359 thousand shares as of 31 December 2023 and 2022. Each share has one voting right and a right to receive dividends.

(b) Capital surplus

apital surplus
Additional paid-in capital Treasury share transactions Increase through changes in ownership interests in subsidiaries Share of changes in net assets of associates and joint ventures accounted for using the equity method Total	As of 31 December
	2023 $335,197 34,058 (564) 4,385 $373,076	2022
		$335,197 34,058 (564) 4,385
		$373,076

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

(c) Treasury stock

As of 31 December 2023 and 2022, the treasury stock held by the Company was NT$6,151 thousand, and the number of treasury stock held by the Company was 538 thousand.

In order to encourage employees, the Company decided to repurchase shares as treasury shares by the propose of the Board of Directors on March 25, 2020. The Company repurchased 538 thousand shares between March 26 and May 25, 2020. The range of the repurchased price is between $6.68 and $18.68.

As of 31 December 2023 and 2022, the treasury shares of the Company had not been transferred to employees.

According to the Securities and Exchange Act, the number of shares bought back under the preceding paragraphs might not exceed ten percent of the total number of issued and outstanding shares of the Company. The total amount of the shares bought back might not exceed the amount of retained earnings plus premium on capital stock plus realized capital reserve.

The Company's treasury stocks, as stipulated by securities trading regulations, should not be pledged nor entitled to receive dividends or voting rights.

(d) Retained earnings and dividend policies

According to the Company’s original Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

a. Payment of all taxes and dues;
b. Offset prior years’ operation losses;
c. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve;
d. Set aside or reverse special reserve in accordance with law and regulations; and
e. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

The Company's dividend policy is determined in accordance with the current and future development plans, considering the investment environment, capital needs and domestic and foreign competition conditions as well as taking the interests of shareholders and other factors into account. When distributing dividends to shareholders, they may be distributed through the issuance of new shares of the Company or cash, in which cash dividends shall not be less than 10% of the total dividends.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

When the Company distributing distributable earnings, it shall set aside to special reserve, an amount equal to “other net deductions from shareholders” equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements for the adoption of IFRS, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed from the special reserve

On 31 March 2022, the FSC issued Order No. Financial-SupervisorySecurities-Corporate-1090150022, which sets out the following provisions for compliance:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

On a public company's first-time adoption of the IFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside special reserve. For any subsequent use, disposal or reclassification of related assets, the special reserve in the amount equal to the reversal may be released for earnings distribution.

Details of the 2023 and 2022 earnings distribution and dividends per share as approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 16 March 2023 and 20 June 2023, respectively, are as follows:

Appropriationofearnings	Appropriationofearnings	Dividend pershare (NT$)	Dividend pershare (NT$)
For the year ended 31 December		For the year ended 31 December
2023	2022	2023	2022
$6,619 20,494 25,364	$37,345 197,572 63,411	$0.2	$0.5

Please refer to Note 6(19) for further details on employees’ compensation and remuneration to directors.

(15) Operating revenue

Operating revenue
Revenue from contracts with customers Sale of goods Other operating revenue Total	For the years ended 31 December
	2023 $5,128,196 19,736 $5,147,932	2022
		$5,600,597 26,591
		$5,627,188

Analysis of revenue from contracts with customers for the years ended 31 December 2023 and 2022 are as follows:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) Disaggregation of revenue

For the year ended 31 December 2023

Sale of goods Other operating revenues Total	Magnetic Component & Power product department $2,789,844 - $2,789,844	Information and communication product department $2,325,028 - $2,325,028	Optical Communication Product Office $13,324 - $13,324	Others department $- 19,736 $19,736	Total
					$5,128,196 19,736
					$5,147,932

For the year ended 31 December 2022

Sale of goods Other operating revenues Total	Magnetic Component & Power product department $3,405,596 - $3,405,596	Information and communication product department $2,173,733 - $2,173,733	Optical Communication Product Office $21,268 - $21,268	Others department $ - 26,591 $26,591	Total
					$5,600,597 26,591
					$5,627,188

The Company recognizes sales revenue when control of goods has been transferred to the customer at a point in time.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Contract balances
A. Contract assets – current

As of December 31 2023 and 2022, the company did not have any contract assets.

B. Contract liabilities - current

Sales of goods	2023.12.31	2022.12.31	2022.1.1
	$59,291	$228,452	$90,837

The significant changes in the Company’s balances of contract liabilities for the year ended 31 December 2023 and 2022 are as follows:

The opening balance transferred to revenue Increase in receipts in advance during the period (excluding the amount incurred and transferred to revenue during the period)	For the years ended 31 December	For the years ended 31 December
	2023 $(199,812) 30,651	2022
		$(46,806) 184,421

(3) Transaction price allocated to unsatisfied performance obligations

As of 31 December 2023, since all customer contracts for the sale of goods are shorter than one year, there is no requirement to provide information related to unrecognized performance obligations.

(4) Assets recognized from costs to fulfil a contract

None.

(16) Expected credit losses/ (gains)

The Company had no expected credit losses for the years ended 31 December 2023 and 31 December 2022.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Operating expenses – Expected credit losses/(gains) Accounts receivables	For the years ended 31 December	For the years ended 31 December
	2023 $(83)	2022
		$282

Please refer to Note 12 for more details on credit risk.

The Company measures the loss allowance of its trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit losses. The assessment of the Company’s loss allowance as at 31 December 2023 and 2022 are as follows:

The historical credit loss experience of accounts receivable indicates no significant difference in loss patterns among different customer groups. Therefore, the provision for expected credit losses is measured without distinction of groups and based on the expected credit loss rates. Relevant information is as follows:

31 December 2023

Gross carrying amount Loss ratio Lifetime expected credit losses Carrying amount	Not yet due (note) $966,860 - % - $966,860	<=30 days	31-60 days 2,666 0.05% (1) $2,665	Overdue 61-90 days 91-120 days $226 $1,269 0.31% 3.63% (1) (46) $225 $1,223	>=121 days $1,860 100% (1,860) $-	Total
		$14,355 0.01% (2)				$987,236 (1,910)
		$14,353				$985,326

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

31 December 2022

		Overdue	Overdue	Total
<=30 days	31-60 days $2,105 -% - $2,105	61-90 days $166 -% - $166	91-120 days $267 14.13% (38) $229
$32,432 -% -				$1,234,794 (1,993)
$32,432				$1,232,801

Note: The Company’s note receivables were not overdue.

The movement in the provision for impairment of note receivables and trade

receivables during the years ended 31 December 2023 and 2022 are as follows:

follows:
As of 1 January 2023 Addition/(reversal) for the current period Write off As of 31 December 2023 As of 1 January 2022 Addition/(reversal) for the current period Write off As of 31 December 2022	Note receivables $ - - - $- $ - - - $-	Trade receivables
		$1,993 (83) -
		$1,910
		$1,746 282 (35)
		$1,993

(17) Leases

(1) The Company is a lessee

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company leases various properties, including real estate such as land, buildings, office equipment and transportation equipment. The lease terms range from 1 to 4 years.

The Company’s leases effect on the financial position, financial performance and cash flows are as follow:

A. Amounts recognized in the balance sheet

(a)Right-of-use asset

The carrying amount of right-of-use assets

Buildings Transportation equipment Office equipment Total	As of31 December	As of31 December
	2023	2022
	$433 275 293	$2,166 702 80
	$1,001	$2,948

During the year ended 31 December 2023 and 2022, The Company’s additions to right-of-use assets amounting to NT$320 thousand and NT$853 thousand, respectively.

(b)Lease liabilities

Lease liabilities Current Non-Current Total	As of31 December	As of31 December
	2023	2022
	$826 189	$2,263 721
	$1,015	$2,984

Please refer to Note 6(20)(d) for the interest on lease liabilities recognized during the year ended 31 December 2023 and 2022 and refer to Note 12(5) Liquidity Risk Management for the maturity analysis for lease liabilities.

B. Amounts recognized in the statement of profit or loss

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Depreciation charge for right-of-use assets

Buildings Transportation equipment Office equipment Total	For the years ended 31 December	For the years ended 31 December
	2023	2022
	$1,733 427 107	$1,733 152 107
	$2,267	$1,992

C. Income and costs relating to leasing activities

The expenses relating to short- term leases	For the years ended 31 December	For the years ended 31 December
	2023 $483	2022
		$481

D. Cash outflow related to lessee and lease activity

During the years ended 31 December 2023 and 2022, the Company’s total cash outflows for leases amounting to NT$2,806 thousand and NT$2,525 thousand.

(18) Summary statement of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2023 and 2022:

Function Nature		For the years ended 31 December	For the years ended 31 December	For the years ended 31 December	For the years ended 31 December
		2023			2022
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$216,221	$201,756	$417,977	$221,581	$202,382	$423,963
Laborandhealth insurance	23,757	20,491	44,248	21,335	18,954	40,289
Pension	8,035	9,553	17,588	7,871	9,189	17,060
Remunerationto directors	-	3,889	3,889	-	7,543	7,543
Other employee benefits expense	8,864	5,868	14,732	7,070	5,532	12,602
Depreciation	40,544	22,855	63,399	38,570	22,527	61,097
Amortization	2,910	9,199	12,109	1,183	7,511	8,694

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the years ended 31 December 2023 and 2022, the average number of employees of the Company were 762 and 733, respectively; the number of directors who were not concurrently employees were both 8.

For the years ended 31 December 2023 and 2022, the average of employees benefits expense of the Company were NT$656 thousand and NT$681 thousand ； the average of employees salaries of the Company were NT$554 thousand and NT$584 thousand, respectively. The Company’s average salary expense adjustment for the years ended 31 December 2023 increased by 5%.

The Company had established an audit committee to replace the supervisor in accordance with the regulations, resulting in the non-recognition of the supervisor's remuneration.

The Company’s policy for compensation of directors, managers and employees is as follows:

Implemented in accordance with the Company's Articles of Incorporation and the remuneration payment method for directors and functional members. The remuneration of directors shall be determined by the board of directors according to their participation in the operation of the company and the value of their contributions and with reference to the domestic industry standards. Owing that the manager's management ability, strategic planning and execution are the important forces to create the Company's operating performance. In order to closely integrate the personal goals of managers with the long-term and short-term business goals of the Company and the interests of shareholders, the principle of the Company's manager's salary policy is that the fixed salary is at a competitive level in the market, and the variable salary is based on the reasonable cooperation between the Company's operation and personal performance. And the Company also put emphasis on long-term incentive salaries and consideration of future risk for the purpose of encouraging managers to pay attention to the Company's long-term business goals and create a win-win-win situation for the Company, employees and shareholders. The employee remuneration and manager's remuneration for the distribution of the surplus shall be handled in accordance with the regulations of the Company's Articles of Incorporation.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company formulates working conditions and various salary and welfare measures for employees in accordance with government laborrelated laws and regulations, and according to the job title, function, learning experience, performance, market conditions, future development of the company and other factors, taking into account the retention of outstanding colleagues and shareholders' rights, pay a market-competitive salary level.

Employee monthly compensation includes monthly salaries, bonuses based on performance, year-end bonuses based on business performance and individual achievements, and employee compensation as stipulated in the Articles of Association. The Company conducts regular performance evaluations of all employees to accurately assess their job performance as the basis for promotion, salary and bonus distribution, and talent development.

According to the Articles of Incorporation, no lower than 4% of profit of the current year is distributable as employees’ compensation and no higher than 3% of profit of the current year is distributable as remuneration to directors. However, when the Company has accumulated losses, they should have been covered in advance.

Employee compensation may be distributed in the form of stocks or cash, and the recipients may include employees of subsidiary companies who meet certain conditions. The conditions and distribution methods should be determined by the Board of Directors. The distribution of employee compensation and director remuneration shall be approved by a resolution of the Board of Directors with the attendance of two-thirds or more of the directors and the consent of a majority of the attending directors and shall be reported to the shareholders' meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Based on profit of 31 December 2023, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended of 31 December 2023 to be 10% and 1.82% of profit, respectively. The employees’ compensation and remuneration to directors for the year ended of 31 December 2023 amount to NT$13,778 thousand and NT$2,508 thousand respectively, recognized as salaries. Based on profit of 31 December 2022, the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended of 31 December 2022 to be 4% and 2% of profit, respectively. The employees’ compensation and remuneration to directors for the year ended of 31 December 2022 amount to NT$13,758 thousand and NT$6,878 thousand respectively, recognized as salaries

In the year ended 31 December 2022, actual distributions of employee remuneration and director remuneration amounted to NT$13,758 thousand and NT$6,878 thousand, respectively. These amounts do not differ significantly from the expenses recognized in the year ended 31 December 2022 financial statements.

(19) Non-operating income and expenses

(a)Interest income

Financial assets measured at amortized cost	For theyears ended 31 December	For theyears ended 31 December
	2023 $10,313	2022
		$9,770

(b) Other income

her income
Rental income Dividend income Other income - others Total	For theyears ended 31 December
	2023 $660 3,113 16,905 $20,678	2022
		$660 2,700 12,547
		$15,907

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Gain on disposal of property, plan and equipment Losses on disposal of investments Foreign exchange (losses) gains, net Gain (Losses) of financial liabilities at fair value through profit or loss Other expense Total	For theyears ended 31 December	For theyears ended 31 December
	2023 $8 (10,274) 18,399 922 (551) $8,504	2022
		$ - $(9,662) 167,893 (957) (1,358)
		$155,916

(d) Finance costs

Interest on loans from bank Interest on lease liabilities Total	For theyears ended 31 December	For theyears ended 31 December
	2023 $35,523 34 $35,557	2022
		$32,537 60
		$32,597

(20) Components of other comprehensive income

For the year ended 31 December 2023

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using the equity method To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of foreign operations Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income	Income tax benefit (expense)	Other comprehensive income
	$(3,256) (55,183) 124 (15,680)	$ - - - -	$(3,256) (55,183) 124 (15,680)	$651 9,422 - 3,136	(2,605) (45,761) 124 (12,544)
	$(73,995)	$-	$(73,995)	$13,209	$(60,786)

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended 31 December 2022

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using the equity method To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of foreign operations Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income	Income tax benefit (expense)	Other comprehensive income
	$13,519 (115,163) (77) 13,090	$ - - - -	$13,519 (115,163) (77) 13,090	$(2,704) 6,301 - (1,658)	$10,815 (108,862) (77) 11,432
	$(88,631)	$ -	$(88,631)	$1,939	$(86,692)

(21) Income tax

The major components of income tax expense are as follows:

Income tax expense recognized in profit or loss

Current income tax expense (income): Current income tax charge Adjustments in respect of current income tax of prior periods Deferred tax expense (income): Deferred tax income relating to origination and reversal of temporary differences Total income tax expense (income)	For the years ended 31 December	For the years ended 31 December
	2023 $15,624 393 (1,010) $15,007	2022
		$44,484 41 16,198
		$60,723

Income tax relating to components of other comprehensive income

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

	For the years ended	For the years ended
	31 December
	2023	2022
Deferred tax expense (income):
Remeasurements of defined benefit plans	$(651)	$2,704
Unrealized (losses) gains from equity	(9,422)	(6,301)
instruments investments measured at fair
value through other comprehensive income
Exchange differences on translation	(3,136)	1,658
Income tax relating to components of other
comprehensive income	$(13,209)	$(1,939)
Income tax charged directly to equity
	For the years ended
	31 December
	2023	2022
Current income tax expense (income):
Realized losses from equity instruments	$(9,422)	$21,913
investment measured at fair value
through other comprehensive income

A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

Accounting profit before tax from continuing operations At the Company’s statutory income tax rate Tax effect of revenues exempt from taxation Tax effect of expenses not deductible for tax purposes Tax effect of deferred tax assets/liabilities Corporate income surtax on undistributed retained earnings Adjustments in respect of current income tax of prior periods Others Total income tax expense recognized in profit or loss	For the years ended 31 December	For the years ended 31 December
	2023	2022
	$121,493	$323,300
	$24,299 (245) 320 (9,807) 1,800 393 (1,753)	$64,660 3,731 280 (13,622) 5,633 41 -
	$15,007	$60,723

Deferred tax assets (liabilities) relate to the following:

For the year ended 31 December 2023

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Temporary differences Unrealized foreign exchange gains or losses Allowance for inventory valuation losses Unrealized impairment losses of prepayments to suppliers Impairment on financial assets measured at amortized cost Pension expense payable Exchange differences on translation Revaluations of financial assets at fair Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Non-current liability – Defined benefit liability Deferred tax income (expense) Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of 1 January $4,732 6,228 1,826 10,249 9,502 6,216 191 - 1,811 $40,755 $40,755 $ -	Recognized in profit or loss $284 1,216 - - (306) - (184) - - $(1,010)	Recognized in other comprehensive income $ - - - - - 3,136 9,422 651 $13,209	Recognized in equity $- - - - - - - (9,422) - $(9,422)	Balance as of 31 December $5,016 7,444 1,826 10,249 9,196 9,352 7 - 2,462
					$45,552
					$45,552
					$ -

For the year ended 31 December 2022

Temporary differences Unrealized foreign exchange gains or losses Allowance for inventory valuation losses Unrealized impairment losses of prepayments to suppliers Impairment on financial assets measured at amortized cost Pension expense payable Exchange differences on translation Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income Non-current liability – Defined benefit liability Unused tax losses Deferred tax income (expense) Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of 1 January $18,363 8,658 1,826 10,249 9,830 7,874 - (28,214) 4,515 $33,101 $61,314 $(28,213)	Recognized in profit or loss $(13,631) (2,430) - - (328) - 191 - - $(16,198)	Recognized in other comprehensive income $ - - - - - (1,658) - 6,301 (2,704) $1,939	Recognized in equity $ - - - - - - - 21,913 - $21,913	Balance as of 31 December $4,732 6,228 1,826 10,249 9,502 6,216 191 - 1,811
					$40,755
					$40,755
					$ -

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Unrecognized deferred tax assets

As of 31 December 2023 and 2022, deferred tax assets had not been recognized NT$206,727 thousand and NT$216,534 thousand, respectively.

The assessment of income tax returns

As of 31 December 2023, the assessment of the income tax returns of the Company is as follows:

The Company

The assessment of income tax returns Assessed and approved up to 2021

(22) Earnings per share

Basic earnings per share is calculated by dividing net profit for the year attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share is calculated by dividing the net profit attributable to ordinary equity owners of the Company by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

(a) Basic earnings per share Profit (in thousand NT$) Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Basic earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2023 $106,486 126,821 $0.84	2022
		$262,577
		126,821
		$2.07

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Diluted earnings per share Profit (in thousand NT$) Profit attributable to ordinary equity holders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (thousand shares) Effect of dilution: Employee compensation-stock (thousand shares) Weighted average number of ordinary shares outstanding after dilution (thousand shares) Diluted earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2023 $106,486 $106,486 126,821 473 127,294 $0.84	2022
		$262,577
		$262,577
		126,821 555
		127,376
		$2.06

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date of completion of the financial statements.

Related party transactions

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of the related parties
Tien Lung Investment Co., Ltd.
Advanced Radar Technology Co., Ltd.
PT UMEC Green Tech Indonesia
UMEC Investment Co., Ltd
UMEC JAPAN CO., LTD.
UMEC USA, INC.
UMEC VIETNAM Co., Ltd.
UMEC Company Ltd.
Global Development Co. Ltd
JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)
UMEC Renlong Electronics Co., Ltd. (Meizhou)
UMEC Fulong Electronics Co., Ltd. (Longyan)
PORIS ELECTRONICS CO., LTD.

Nature of relationship

Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Associate

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Name oftherelated parties AMIT System Service Ltd.(note) UEC System Solutions Corporation(note) Lightel Corporation Connection Technology Systems Inc. Lightel Technologics Inc.	Nature of relationship
	Associate Associate Associate Substantive related party Substantive related party

Note: No longer an associate company starting from the third quarter of the year ended 31 December 2023.

Significant transactions with related parties

(a) Sales

les
Subsidiaries JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) Others Associates Substantive related party Total	For the years ended 31 December
	2023 $620,991 6,648 2,163 2,114 $631,916	2022
		$918,908 8,745 3 11,275
		$938,931

The selling prices to related parties by the Company were not significantly different from those to regular customers. Accounts receivable were generally collected in the form of foreign currency checks or through T/T (wire transfer) within three months from the shipment month, except in cases where the financial condition of the related party required different arrangements.

(b) Purchases

JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	For the years ended 31 December	For the years ended 31 December
	2023 $2,002,280	2022
		$2,361,233

The purchase price from related parties by the Company was determined through mutual agreement based on market rates. The payment terms for purchases from related parties by the Company are comparable to those for regular suppliers, with a payment period of one to three months.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) Notes receivable

PORIS ELECTRONICS CO., LTD.	As of 31 December	As of 31 December
	2023 $-	2022
		$3

(d) Accounts receivable

Subsidiaries JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) Others Substantive related party Total	As of31 December	As of31 December
	2023 $433,432 125 480 $434,037	2022
		$383,948 883 85
		$384,916

(e) Other receivables

Subsidiaries JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) Others Total	As of 31 December	As of 31 December
	2023 $185,557 21,749 $207,306	2022
		$339,415 1,112
		$340,527

Other receivables represent amounts due from related parties for goods collected on their behalf, expenses advanced on their behalf, equipment and raw materials purchased on their behalf, and funds lent to them.

(f) Prepayments

UMEC VIETNAM Co., Ltd.	As of 31 December	As of 31 December
	2023 $112,709	2022 $60,391

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(g) Prepayments for investments

Subsidiaries Global Development Co. Ltd UMEC VIETNAM Co., Ltd. Total	As of31 December	As of31 December
	2023 $233,743 - $233,743	2022
		$ - 95,831
		$95,831

(h) Other payables

her payables
Subsidiaries UMEC Company Ltd. Advanced Radar Technology Co., Ltd. Others Total	As of 31 December
	2023 $4,728 2,166 555 $7,449	2022 $7,756 748 744 $9,248

Other payables represent payments due to related parties for the purchase of equipment, payment of processing fees, and outstanding loans.

(i) Processing expense

UMEC VIETNAM Co., Ltd.	For the years ended 31 December	For the years ended 31 December
	2023 $125,959	2022 $166,291

(j) Management service income

Subsidiaries JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) UMEC VIETNAM Co., Ltd. Total	For the years ended 31 December	For the years ended 31 December
	2023 $876 522 $1,398	2022 $933 584 $1,517

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the years ended 31 December 2023 and 2022, the company recorded management service income provided to subsidiaries in deduction of expenses of NT$25,425 thousand and NT$27,574 thousand and recorded in other income of NT$1,398 thousand and NT$1,517 thousand, respectively.

(k) Management expense

Management expense
UMEC Company Ltd.	For the years ended 31 December
	2023 $20,803	2022
		$29,527

(l) Rent income

Advanced Radar Technology Co., Ltd.	For the years ended 31 December	For the years ended 31 December
	2023 $660	2022
		$660

The determination and collection of rental fees for the lease agreement were based on general market conditions.

(m) Royalty expense

Advanced Radar Technology Co., Ltd. ommissioned research expenses Advanced Radar Technology Co., Ltd.	For the years ended 31 December	For the years ended 31 December
	2023 2022 $3,728 $3,795 For the years ended 31 December	2022
		$3,795
	2023 $8,571	2022
		$8,571

(n) Commissioned research expenses

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(o) Interest revenue

Subsidiaries JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) Others Total her expense Subsidiaries UMEC JAPAN CO., LTD. Others Total	For the years ended 31 December	For the years ended 31 December
	2023 2022 $2,722 $4,754 - 1,185 $2,722 $5,939 For the years ended 31 December
	2023 $6,089 - $6,089	2022 $5,773 557 $6,330

(p) Other expense

(q) Key management personnel compensation

Key management personnel compensation
Short-term employee benefits Post-employment benefits Total	For the years ended 31 December
	2023 $22,766 574 $23,340	2022
		$24,347 503
		$24,850

8. Assets pledged as security

The following table lists assets of the Company pledged as security:

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Items	Carryingamount 31 December 2023 31 December 2022 $148,931 $148,931 107,662 115,825 50,678 60,712 48,000 48,000 35,012 207,599 $390,283 $581,067	Secured liabilities
	31 December 2023
Property, plant and equipment - land Property, plant and equipment - buildings Property, plant and equipment - machinery and equipment Investment property Other current assets - restricted deposit Total	$148,931 107,662 50,678 48,000 35,012	Long-term borrowings Long-term borrowings Long-term borrowings Long-term borrowings Short-term borrowings, Short- term notes and bills payable
	$390,283

9. Significant contingencies and unrecognized contract commitments

(a) The Company provided guarantees notes receivable NT$2,700,204 thousand for loan to banks for the year ended 31 December 2023.
(b) The important contracts for construction in progress or provision of services

Contracting parties Company A Company B	Contract subject Plant expansion project Plant mechanical and electrical equipment	Total contract price (before tax) $68,571 35,048	Price paid as of 31 December 2023
			$63,634 31,543

10. Significant disaster loss

None.

11. Significant subsequent events

None.

12. Others

(1) Categories of financial instruments

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial assets

Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Financial assets measured at amortized cost: Cash and cash equivalents (excluded cash on hand) Notes receivable Accounts receivable Other receivables Other current assets - restricted deposit Guarantee deposits paid Subtotal Total Financial liabilities Financial liabilities at amortized cost: Short-term loans Short-term notes and bills payable Accounts payable Other payables Long-term loans (including current portion with maturity less than 1 year) Lease liabilities Subtotal Financial liabilities at fair value through profit or loss: Held for trading Total	As of 31 December	As of 31 December
	2023 2022 $201,649 $287,274 3,177 - 443,081 341,989 454 11,741 984,872 1,221,060 219,762 361,047 35,012 207,599 1,719 518 1,684,900 2,143,954 $1,889,726 $2,431,228 As of 31 December	2022
		$287,274 - 341,989 11,741 1,221,060 361,047 207,599 518
		2,143,954
		$2,431,228
	2023	2022
	$228,000 79,944 554,451 165,404 1,425,742 1,015	$240,800 44,945 635,193 173,380 1,654,172 2,984
	2,454,556	2,751,474
	-	957
	$2,454,556	$2,752,431

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, there are usually interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. The Company also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Company’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analysis is as follows:

When NTD strengthens/weakens against USD by 1%, the profit for the year ended 31 December 2023 and 2022 is decreased/increased by NT$10,967 thousand and NT$15,059 thousand, respectively.

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s loans and receivables at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit for the years ended 31 December 2023 and 2022 to decrease/increase by NT$1,654 thousand and NT$1,895 thousand, respectively.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Equity price risk

The fair value of the Company’s listed, emerging and unlisted equity securities is susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company’s listed, emerging and unlisted equity securities are classified under financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, a change of 1% in the price of the listed and emerging companies stocks classified as equity instruments investments measured at fair value through other comprehensive income could have an impact of NT$1,494 thousand and NT$1,525 thousand on the equity attributable to The Company for the years ended 31 December 2023 and 2022, respectively.

Please refer to Note 12(9) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that a counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Company’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of 31 December 2023 and 2022, amounts receivables from top ten customers represented 79% and 68% of the total accounts receivables of the Company. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

Non-derivative financial instruments

As of 31 December 2023 Loans Short-term notes and bills payable Accounts payable Other payables Lease liabilities	Less than 1year $748,423 80,000 554,451 165,404 834	2 to 3years $458,016 - - - 192	4 to 5years $253,094 - - - -	> 5years $273,055 - - - -	Total
					$1,732,588 80,000 554,451 165,404 1,026

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of 31 December 2022 Loans Short-term notes and bills payable Accounts payable Other payables Lease liabilities	Less than 1year $1,095,442 45,000 635,193 173,380 2,296	2 to 3years $561,226 - - - 724	4 to 5years $189,591 - - - -	> 5years $106,119 - - - -	Total
					$1,952,378 45,000 635,193 173,380 3,020

Derivative financial instruments

None.

(6) Reconciliation of liabilities from financing activities

Reconciliation of liabilities for the year ended 31 December 2023:

As of 1 January 2023 Cash flow Non-cash change As of 31 December 2023	Short-term loans $240,800 (12,800) - $228,000	Short-term notes and bills payable $44,945 34,999 - $79,944	Long-term loan (including maturity within ayear) $1,654,172 (228,430) - $1,425,742	Lease liabilities $2,984 (2,289) 320 $1,015	Other non- current liabilities $2,239 (1,224) - $1,015	Total liabilities from financing activities $1,945,140 (209,744) 320 $1,735,716

Reconciliation of liabilities for the year ended 31 December 2022:

As of 1 January 2022 Cash flow Non-cash change As of 31 December 2022	Short-term loans $199,526 41,274 - $240,800	Short-term notes and bills payable $79,971 (35,026) - $44,945	Long-term loan (including maturity within ayear) $1,692,242 (38,070) - $1,654,172	Lease liabilities $4,115 (1,984) 853 $2,984	Other non- current liabilities $3,569 (1,330) - $2,239	Total liabilities from financing activities
						$1,979,423 (35,136) 853
						$1,945,140

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Fair values of financial instruments

(a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

a. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.
b. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities, beneficiary certificates, bonds and futures etc.) at the reporting date.
c. Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).
d. Fair value of debt instruments without market quotations, bank loans, bonds payable and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

e. The fair value of derivatives which are not options and without market quotations, is determined based on the counterparty prices or discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using on the counterparty prices or appropriate option pricing model (for example, Black-Scholes model) or other valuation method (for example, Monte Carlo Simulation).
(b) Fair value of financial instruments measured at amortized cost

The carrying amount of the Company’s financial assets and liabilities measured at amortized cost approximate their fair value.

Please refer to Note 12. (9) for fair value measurement hierarchy for financial instruments of the Company.

(8) Derivative financial instruments

The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2023 and 2022 are as follows:

Foreign exchange swaps

The Company entered into foreign exchange swaps to manage its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to foreign exchange swaps:

As of 31 December 2023

None.

Items As of 31 December 2022 Foreign exchange swaps	Amount(in thousands) Sell USD 4,500	Contract Period
		9 November 2022 – 28 March2023

The counterparties for the aforementioned derivatives transactions are well known local or overseas banks, as they have sound credit ratings, the credit risk is insignificant.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The foreign exchange swaps have been entered into to hedge the foreign currency risk of net assets or net liabilities, and there will be corresponding cash inflow or outflows upon maturity and the Company has sufficient operating funds, the cash flow risk is insignificant.

(9) Fair value measurement hierarchy

(a) Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

(b) Fair value measurement hierarchy of the Company’s assets and liabilities

The Company does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Company’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of 31 December 2023

Financial assets at fair value: Index Bond Fund Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income	Level 1 $3,177 149,400	Level 2 $ - -	Level 3 $ - 52,249	Total
				$3,177 201,649

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of 31 December 2022
Level 1
Level 2
Level 3
Financial assets at fair value:
Financial assets at fair value through other
comprehensive income
Equity instrument measured at fair value
through other comprehensive income
$152,507
$ -
$134,767
Financial liabilities at fair value:
Financial liabilities at fair value through profit or
loss
Foreign exchange swaps
-
957
-
Transfers between Level 1 and Level 2 during the period
During the years ended 31 December 2023 and 2022, there were no
transfers between Level 1 and Level 2 fair value measurements.

Total

$287,274
957

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Beginning balance Total gains and losses recognized for the year: Amount recognized in OCI (presented in “unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income”) Acquisition Reclassification Ending balance	Assets	Assets
	At fair value through other comprehensive income
	Stocks
	For theyears ended 31 December
	2023	2022
	$134,767 (52,076) 22,400 (52,842)	$115,581 (414) 19,600 -
	$52,249	$134,767

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of 31 December 2023

Quantitati Significant ve Relationship Valuation unobservable informatio between inputs Sensitivity of the input to fair value techniques inputs n and fair value Financial assets: At fair value through other comprehensive income Stocks and others Market Discount for 30% The higher the 1% increase (decrease) in the approach lack of discount for lack discount for lack of marketability marketability of marketability, would result in increase (decrease) the lower the fair in the Company’s equity by value of the stocks NT$522 thousand

As of 31 December 2022

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

UNIVERSAL MICROELECTRONICS CO., LTD.

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As at 31 December 2023 Financial assets not measured at fair value but for which the fair value is disclosed: Investment properties (please refer to Note 6(8)) As at 31 December 2022 Financial assets not measured at fair value but for which the fair value is disclosed: Investment properties (please refer to Note 6(8))	Level 1	Level 2	Level3	Total
	$ - Level 1	$ - Level 2	$231,797 Level3	$231,797 Total
	$ -	$ -	$181,374	$181,374

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets Monetary items: USD Financial liabilities Monetary items: USD	As of 31 December 2023 Foreign currencies Foreign exchange rate NTD $49,931 30.705 $1,533,131 14,215 30.705 436,472	As of 31 December 2023 Foreign currencies Foreign exchange rate NTD $49,931 30.705 $1,533,131 14,215 30.705 436,472	As of 31 December 2022	As of 31 December 2022	As of 31 December 2022
	Foreign currencies $49,931 14,215	Foreign exchange rate 30.705 30.705	Foreign currencies $65,459 16,422	Foreign exchang e rate 30.71 30.71	NTD
					$2,010,242 504,327

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

UNIVERSAL MICROELECTRONICS CO., LTD.

The Company has a number of different functional currencies; therefore, we are unable to disclose the exchange loss and gain of monetary financial assets and financial liabilities under each foreign currency that has significant impact. The Company recognized NT$18,399 thousand and NT$167,893 thousand foreign exchange gain (losses) for the years ended 31 December 2023 and 2022, respectively.

(11) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

13. Other disclosure

(1) Information at significant transactions and information on investees:
(a) Financing provided to others: Please refer to Attachment 1.
(b) Endorsement/Guarantee provided to others: Please refer to Attachment 2.
(c) Securities held (excluding the portion related to investments in subsidiaries, associated companies, and joint ventures): Please refer to Attachment 3.
(d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.
(e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital: None.
(f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock: None.

UNIVERSAL MICROELECTRONICS CO., LTD.

NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(g) Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock: Please refer to Attachment 4.
(h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock: Please refer to Attachment 5.
(i) Financial instruments and derivative transactions: Please refer to Note 12 (8).
(j) The business relationship, significant transactions and amounts between parent company and subsidiaries: Please refer to Attachment 6.
(2) Information on investees:

Names, locations, main businesses and products, original investment amount, investment as of 31 December 2023, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2023 (exclude the information on investments in mainland China): Please refer to Attachment 7.

(3) Information on investments in mainland China
(a) The Company's investments in mainland China through Global Development Company Ltd. included names, main businesses and products, total amount of paid-in capital, method of investment, Investment flow situation, percentage of ownership, investment income (loss) recognized, carrying value as of 31 December 2023, accumulated inward remittance of earnings as of 31 December 2023 and upper limit on investment in mainland China: Please refer to Attachment 8.
(b) Significant transactions through third regions with the investees in Mainland China: Please refer to Attachment 1,2,4,5 and 6.
(4) Information of major shareholders

Stocks Major shareholders	Quantity of shares	Shareholding
OU,CHENG-MING	34,870,964	27.38%
OUMEIYA INVESTMENT CO.,LTD	12,693,541	9.96%

Attachment 1: Financing provided to others

No.	Lender (Note 1)	Counterparty	Financial statement account	Related Party	Maximum balance for the period	Ending balance	Actual amount provided	Interest rate	Nature of financing Note 6	Amount of sales to (purchases from) counter-party	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit of financing amount for individual counter-party	Limit of total financing amount
													Item	Value
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Other receivables	Y	368,460	368,460	184,230	1.30%	1	2,002,280	-	-	-	-	807,212 (Note1)	807,212 (Note1)
1	UMEC (B.V.I.)	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Other receivables	Y	92,115	92,115	-	0.00%	2	-	Need for operating	-	-	-	124,397 (Note2)	124,397 (Note2)
2	Global	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Other receivables	Y	61,410	61,410	-	0.00%	2	-	Need for operating	-	-	-	102,874 (Note3)	102,874 (Note3)

Note 1: JA-LONG TECHNOLOGY CO., LTD.(Shenzhen) had business transactions with the Company. The maximum loan amount extended to the Company was limited to 40% of the audited net worth of NT$2,018,029 thousand as of 31 December 2023. Individual loan amounts were limited to the extent of the business transactions between the two parties.

The business transaction amount referred to was the higher of the purchase or sales amount between the two parties. This year, the business transaction amount exceeded 40% of the Company's net worth as of 31 December 2023.

Therefore, the individual loan amounts were limited to 40% of the audited net worth of NT$2,018,029 thousand as of 31 December 2023.

Note 2: The loan amount was calculated based on 60% of the audited net worth of UMEC (B.V.I.) as of 31 December 2023, which amounted to NT$207,329 thousand.

Note 3: The loan amount was calculated based on 60% of the audited net worth of Global as of 31 December 2023, which amounted to NT$171,456 thousand.

Note 4: To fill in the nature of the loan, please follow the instructions below:

(1) If there is a business transaction, please fill in "1".

(2) If there is a need for short-term financing, please fill in "2".

Attachment 2: Endorsement/Guarantee provided to others

(Note 1) No.	Endorsor/ Guarantor	Receiving party	Receiving party	Limit of guarantee/endorsement amount for receiving party (Note 3)	Maximum balance for the period	Ending balance	Actual amount provided	Amount of collateral guarantee/ endorsement	Percentage of accumulated guarantee amount to net assets value from the latest financial statement	Limit of total guarantee/ endorsement amount (Note 4)	Parent company's guarantee/ endorsement amount to subsidiaries (Note 5)	Subsidiaries' guarantee/ endorsement amount to parent company (Note 5)	Guarantee/ endorsement amount to company in Mainland China (Note 5)
		Company name	Releationship (Note 2)
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	2	$403,606	$216,350	$216,350	$ -	$ -	10.72%	$807,212	Y	N	Y
1	UMEC (B.V.I.)	The Company	2	51,832	30,705	30,705	-	-	14.81%	62,199	N	Y	N
2	Global	The Company	2	51,437	46,058	46,058	-	-	26.86%	60,010	N	Y	N

Note 1: The Company and its subsidiaries are coded as follows:
The Company is coded "0".
The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.
Note 2: According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, receiving parties should be disclosed as one of the following:
A company with which it does business.
A company in which the public company directly and indirectly holds more than 50% of the voting shares.
A company that directly and indirectly holds more than 50% of the voting shares in the public company.
A company in which the public company holds, directly or indirectly, 90% or more of the voting shares.
A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
A company that all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.
Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 3: 1. Limit of guarantee/endorsement amount for for a single enterprise by the Company is limited to 20% of the Company's net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$2,018,029 thousand.
Limit of guarantee/endorsement amount for for a single enterprise by UMEC (B.V.I.) is limited to 25% of UMEC (B.V.I.)'s net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$207,329 thousand.
Limit of guarantee/endorsement amount for for a single enterprise by Global is limited to 30% of Global's net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$171,456 thousand.
Note 4: 1. The total limit of guarantee/endorsement amount by the Company is limited to 40% of the Company's net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$2,018,029 thousand.
The total limit of guarantee/endorsement amount by UMEC (B.V.I.) is limited to 30% of UMEC (B.V.I.)'s net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$207,329 thousand.
The total limit of guarantee/endorsement amount by Global is limited to 35% of Global's net worth of the financial report audited by the certified public accountants as of 31 December 2023, which amounts to NT$171,456 thousand.
Note 5: "Y" for the listed (OTC) parent company guarantees/endorses for subsidiary, subsidiary guarantees/endorses for the listed (OTC) parent company or guarantee/endorse for companies in Mainland China.

Attachment 3: Securities held (Excluding subsidiaries, associates and joint ventures)

Holding Company	Type of securities	Name of securities	Relationship (Note 1)	Financial statement account		As of 31 December 2023	As of 31 December 2023	As of 31 December 2023	Note
					Shares	Carrying amount	Percentage of ownership (%)	Fair value
Tien LungInvestment Co., Ltd.	Stocks	LELON ELECTRONICS CORP.	-	Financial assets at fair value throughprofit or loss- current	484,153 shares	$34,908	0.29%	$34,908	-
				Subtotal		$34,908		$34,908
Tien Lung Investment Co., Ltd.	Stocks	GOODWAY MACHINE CORP.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	34,327 shares	$2,317	0.03%	$2,317	-
Tien Lung Investment Co., Ltd.	Stocks	INTEGRATED DIGITAL TECHNOLOGIES,INC.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	279,129 shares	-	0.97%	-	-
Tien Lung Investment Co., Ltd.	Stocks	Asia Pacific Microsystems, Inc.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	62,044 shares	353	0.13%	353	-
Tien Lung Investment Co., Ltd.	Stocks	EVERMORE TECHNOLOGY, INC.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	195,192 shares	-	2.87%	-	-
						$2,670		$2,670
The Company	Stocks	GOODWAY MACHINE CORP.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	50,567 shares	3,413	0.05%	3,413	-
The Company	Stocks	Partner Tech Corp.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	649,151 shares	17,430	0.86%	17,430	-
The Company	Stocks	Connection Technology Systems Inc.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	4,481,726 shares	110,699	14.10%	110,699	-
The Company	Stocks	Asia Pacific Microsystems, Inc.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	1,208,872 shares	6,979	2.57%	6,979	-
The Company	Stocks	EVERMORE TECHNOLOGY, INC.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	457,921 shares	-	6.73%	-	-
The Company	Stocks	SysJust Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	221,015 shares	17,858	0.84%	17,858	-
The Company	Stocks	AESOPOWER, INC.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	2,505,643 shares	3,158	10.89%	3,158	-
The Company	Stocks	Hannlync Technologies Inc.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	700,000 shares	-	0.55%	-	-
The Company	Stocks	Silver PAC Inc.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	1,809,609 shares	-	-	-	-
The Company	Stocks	Terasilic Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	535,523 shares	1,559	1.83%	1,559	-
The Company	Stocks	Phoenix 3 Venture Capital Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	2,000,000 shares	15,856	8.70%	15,856	-
The Company	Stocks	LIEN SHEN ELECTRONICS CORP.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	500,000 shares	5,068	14.29%	5,068	-
The Company	Stocks	GaN Power Technology Co., Ltd.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	3,000,000 shares	13,992	6.59%	13,992	-
The Company	Stocks	AMIT System Service Ltd.	-	Financial assets measured at fair value through other comprehensive income- noncurrent	301,036 shares	1,407	11.00%	1,407
The Company	Stocks	UEC System Solutions Corporation	-	Financial assets measured at fair value through other comprehensive income- noncurrent	1,640,000 shares	4,230	11.08%	4,230
				Subtotal		$201,649		$201,649

Note 1: Not required if the issuer of securities is not a related party.

100

Attachment 4: Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock

Related-party	Counter-party	Relationship	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Details of non-arm's length transaction	Details of non-arm's length transaction	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)
			Purchases (Sales)	Amount	Percentage of total consolidated purchase (Sales)	Credit period	Unit price	Credit period	Carrying amount	Percentage of total consolidated receivables (payable)
The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Subsidiary	Purchase	$2,002,280	49.09%	Collected over a specific period	$ -	-	$ -	-%
The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Subsidiary	Sales	620,991	12.06%	Collected over a specific period	-	-	433,432	43.99%
JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	The Company	Subsidiary	Sales	2,002,280	97.12%	Collected over a specific period	-	-	-	-%
JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	The Company	Subsidiary	Purchase	620,991	47.22%	Collected over a specific period	-	-	(433,432)	(76.57)%

Attachment 5: Receivables from related parties with accounts exceeding the lower of NT$100 million or 20 percent of the capital stock

Related-party	Counter-party	Relationship	Amount	Average collection turnover	Overdue account receivable-related parties	Overdue account receivable-related parties	Collection in subsequent period	Allowance for doubtful debts
					Amount	Processingmethod
The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Subsidiary	Accounts receivable $433,432	1.52	$ -	-	$ -	$ -
The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	Subsidiary	Other receivables $185,557		-	-	-	-

101

Attachment 6: The business relationship, significant transactions and amounts between parent company and subsidiaries

No. (Note 1)	Related-party	Counterparty	Relationship with the Company (Note 2)	Transactions	Transactions	Transactions	Transactions
				Account	Amount	Terms	Percentage of consolidated operating revenues or consolidated total assets(Note3)
0	The Company	UMEC VIETNAM Co., Ltd.	1	Processing fees	$125,959	(Note 4)	2.45%
0	The Company	UMEC VIETNAM Co., Ltd.	1	Prepayment	112,709	(Note 4)	2.43%
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	1	Sales	620,991	(Note 4)	12.06%
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	1	Accounts receivable	433,432	(Note 4)	9.34%
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	1	Purchase	2,002,280	(Note 4)	38.89%
0	The Company	JA-LONG TECHNOLOGY CO., LTD.(Shenzhen)	1	Other receivables	185,557	(Note 4)	4.00%
0	The Company	Global Development Co. Ltd	1	Prepayment	233,743	(Note 4)	5.04%

Note 1: The Company is coded "0".The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: Transactions are categorized as follows:

The holding company to subsidiary.
Subsidiary to holding company.
Subsidiary to subsidiary.
Note 3: The percentage with respect to the Company asset/liability for transactions of balance sheet items are based on each item's balance at period-end. For profit or loss items, interim cumulative balances are used as basis.

Note 4: The transaction terms include collecting payments over a specified period.

102

Attachment 7: Names, locations, main businesses and products, original investment amount, net income (loss) of investee company and investment income (loss) recognized: (Excluding investment in Mainland China)

Investor	Investee company	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of 31 December 2023	Investment as of 31 December 2023	Investment as of 31 December 2023	Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares	Percentage of ownership (%)	Book value
The Company	UMEC (B.V.I.)	Vistra Corporate Services Centre, Wickhams Cay II, Road Town Tortola ,VG1110 ,BRITISH VIRGIN ISLANDS	Investment and holding company	$753,401	$997,418	22,961,020	100.00%	$200,522	$20,397	$56,986	Note1
The Company	Tien Lung Investment Co., Ltd.	1F., No. 37, Sec. 2, Meicun Rd., South Dist., Taichung City, Taiwan (R.O.C.)	Investment company	88,000	88,000	8,800,000	100.00%	58,313	8,868	8,868
The Company	ARadTek	8F-2, No.487, Dayou Rd., Taoyuan Dist., Taoyuan City, Taiwn (R.O.C.)	Manufacturing and sales of electronic parts and components	42,559	42,559	4,255,894	84.78%	11,955	(9,939)	(8,426)
The Company	AMIT SYSTEM SERVICE LTD.	~~4F., No.149, Wugong Rd., Wugu~~ Dist.,New Taipei City 248, Taiwan ~~R O C~~	Electronic information supply services industry	-	11,780	-	-	-	-	(1,354)	Note2
The Company	PT UMEC Green Tech Indonesia	~~( )~~ Ketapang Business Centre,Jl. Kh. Zainul Arifin No 20 Blok A16 Jakarta Barat, Indonesia 11140	Manufacturing and sales of electronic parts and components	3,519	3,519	-	60.00%	-	-	-
				USD 114,600	USD 114,600
The Company	UEC System Solutions Corporation Limited	5th Floor, No. 219, Xinhu 2nd Road, Neihu District, Taipei City, Taiwn (R.O.C.)	IoT product applications and services and electronic product trading	-	6,000	-	-	-	-	(711)	Note3
The Company	UMEC (JAPAN)	No. 5-3, Osaki 3-chome, Shinagawa-ku, Tokyo	~~Promotion and sales of switch mode~~ power supply, transformer and ~~fi d bl f ii~~	1,368	1,368	-	100.00%	1,229	(21)	(21)
The Company	UMEC (USA)	1921 Ellen St #7 Sturgis,SD 57785,USA	~~manuacturng an assemy o crcut~~ R&D and sales of electromagnetic parts	43,013	43,013	499,999	99.99%	43,215	(4,557)	(4,557)
The Company	UMEC VIETNAM Co., Ltd.	B(B1)lot, Quang Chau Industrial Park, Bac Giang Province, Vietnam	Manufacturing and sales of switch mode power supply, transformer and circuit board	95,831	-	-	25.73%	31,481	(34,875)	(7,557)
The Company	Lightel Corporation	Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands	Investment and holding company	57,306	-	5,082,027	23.88%	61,258	57,385	3,953
UMEC (B.V.I.)	UMEC (H.K.)	FLAT B 5/F NO.38 HUNG TO RD KWUN TONG KOWLOON, HONG KONG	Established in Hongkong to handle export shipping affairs of China.	7,001	7,001	1,782,000	100.00%	12,821	206	206
				HKD 1,782,000	HKD 1,782,000
UMEC (B.V.I.)	Global	P.O.Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands.	Investment and holding company	712,815	941,162	23,214,961	100.00%	171,456	20,173	20,173
				23,214,961 USD	30,651,744 USD
Global	UMEC VIETNAM Co., Ltd.	B(B1)lot, Quang Chau Industrial Park, Bac Giang Province, Vietnam	Manufacturing and sales of switch mode power supply, transformer and circuit board	276,455	276,455	-	74.27%	90,870	(34,875)	(27,318)
				9,003,574 USD	9,003,574 USD
Tien Lung Investment Co.,Ltd.	ARadTek	8F-2, No.487, Dayou Rd., Taoyuan Dist., Taoyuan City,Taiwn(R.O.C.)	Manufacturing and sales of electronic parts and components	5,420	5,420	541,945	10.80%	1,523	(9,939)	(1,073)
Tien Lung Investment Co., Ltd.	PORIS ELECTRONICS CO., LTD.	11 F., No. 866-7, Zhongzheng Rd., Zhonghe Dist., New Taipei City, Taiwan (R.O.C.)	Electronic information supply services industry	10,400	10,400	1,201,637	33.55%	6,008	(2,192)	(736)

Note1: The investment income recognized in the current period includes the investment gains or losses generated by the investee company due to favorable or unfavorable market conditions.

Note2: Significant influence over the investee was lost in the third quarter of the year ended 31 December 2023, resulting in the reclassification of the investment from 'Equity Method Investments' to 'Financial Assets at Fair Value through Other

Comprehensive Income - Non-current'. For further details, please refer to Notes 6 and 7. The period of disclosure of the investee's income and expenses for this period is from 1 January to 31 August of the 2023.

Note3: Significant influence over the investee was lost in the third quarter of the year ended 31 December 2023, resulting in the reclassification of the investment from 'Equity Method Investments' to 'Financial Assets at Fair Value through Other

103

Attachment 8: 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 1 January 2022	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2023	Net income (loss) of investee company	Percentage of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2023	Accumulated Inward Remittance of Earnings as of 31 December 2023
					Outflow	Inflow
JA-LONG TECHNOLOGY CO., LTD. (Shenzhen)	Assembly, manufacturing and sales of switch mode power supply, transformer and circuit board	$541,943	Establishing a company through investment in a third jurisdiction and subsequently reinvesting in a companyin mainland China.	$537,338	$ -	$ -	$537,338	$72,137	100.00%	$72,137	$265,061	$ -
		USD 17,650,000		USD 17,500,000			USD 17,500,000
UMEC Wuhan Company Limited	Assembly, manufacturing and sales of switch mode power supply, transformer and circuit board	184,230	Establishing a company through investment in a third jurisdiction and subsequently reinvesting in a companyin mainland China.	184,230	-	-	184,230	-	-%	-	(Note4)	-
		USD 6,000,000		USD 6,000,000			USD 6,000,000
UMEC Renlong Electronics Co., Ltd. (Meizhou)	Manufacturing and sales of switch mode power supply and transformer	18,423	Establishing a company through investment in a third jurisdiction and subsequently reinvesting in a companyin mainland China.	18,423	-	-	18,423	(11,542)	100.00%	(11,542)	(26,709)	-
		USD 600,000		USD 600,000			USD 600,000
UMEC Fulong Electronics Co., Ltd. (Longyan)	Manufacturing and sales of switch mode power supply and transformer	92,115	Establishing a company through investment in a third jurisdiction and subsequently reinvesting in a companyin mainland China.	92,115	-	-	92,115	(22,620)	100.00%	(22,620)	55,705	-
		USD 3,000,000		USD 3,000,000			USD 3,000,000

Accumulated Investment in Mainlan as of 31 December 2023		d China	Investment Amounts Investment Commission	Authorized by , MOEA (Note1)	Upper Limit on In		vestment (Note2)
$832,241			$912,184		$1,210,817

Note 1: The Investment Commission of the Ministry of Economic Affairs has approved an investment amount of USD 29,708 thousand.

Note 2: According to Ministry of Economic Affairs, R.O.C., the Company's investment in Mainland China is not limited to 60% of net worth or consolidated net worth specified by the Investment Commission. Note 3: The aforementioned amount in foreign currency will be converted into New Taiwan Dollars using the exchange rate on the balance sheet date.

Note 4: The company obtained the approval for deregistration from the Administration for Industry and Commerce of Ma'anshan City on November 16, 2018.

The liquidation process was completed on January 17, 2019, and the company received the notification letter of filing for deregistration from the Investment Commission of the Ministry of Economic Affairs on June 9, 2022.

104

UNIVERSAL MICROELECTRONICS CO., LTD.

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

FOR THE YEAR ENDED 31 DECEMBER 2023

ITEM	INDEX
STATEMENT OF CASH AND CASH EQUIVALENTS	1
STATEMENT OF ACCOUNTS RECEIVABLE	2
STATEMENT OF ACCOUNTS RECEIVABLE-RELATED PARTIES	Note 7(3)
STATEMENT OF OTHER RECEIVABLES-RELATED PARTIES	Note 7(4)
STATEMENT OF INVENTORIES	3
STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME,NONCURRENT	4
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD	5
STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT	Note 6 (7)
STATEMENT OF SHORT-TERM LOANS	6
STATEMENT OF ACCOUNTS PAYABLE	7
STATEMENT OF LONG-TERM LOANS	Note 6(13)
STATEMENT OF NET OPERATING REVENUES	8
STATEMENT OF OPERATING COSTS	9
STATEMENT OF MANUFACTURING EXPENSES	10
STATEMENT OF OPERATING EXPENSES	11
STATEMENT OF NON-OPERATING INCOME AND EXPENSES	Note 6(20)
STATEMENT OF EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION	Note 6 (19)

105

UNIVERSAL MICROELECTRONICS CO., LTD. 1. STATEMENT OF CASH AND CASH EQUIVALENTS 31 DECEMBER 2023

		(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Item	Description	Amount		Note
		Subtotal	Total
Cash on hand Cash in banks Total	Demand deposits`－`NTD Demand deposits`－`foreign currency Checking account deposits Time deposits	Mainly includes: USD 6,729 thousand EUR 265 thousand	$511 87,473 217,010 425 138,173 $443,592

106

UNIVERSAL MICROELECTRONICS CO., LTD. 2. STATEMENT OF ACCOUNTS RECEIVABLE

31 DECEMBER 2023

	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)	(In Thousands of New Taiwan Dollars)
Client Name	Description	Amount	Note
Third parties: Client A Client B Client C Client D Others (Note) Subtotal Less: loss allowance Accounts receivable, net		$146,830 69,082 47,933 35,387 253,513 552,745 (1,910) $550,835

(Note) The amount of individual client in others does not exceed 5% of the account balance.

107

UNIVERSAL MICROELECTRONICS CO., LTD.

3. STATEMENT OF INVENTORIES

31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Item	Description	Cost	Net Realizable Value	Note
Raw materials Supplies & parts Semi-finished goods Work in progress Finished goods Total		$868,889 36,140 27,207 78,377 244,396 $1,255,009	$890,910 36,572 27,868 83,118 308,402 $1,346,870	Please refer to Note 4 (10) for more details on net realizable value

108

UNIVERSAL MICROELECTRONICS CO., LTD.

4. STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME, NONCURRENT

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Name of Securities	As of 1 January2023	As of 1 January2023	Additions	Additions	Decrease	Decrease	Gains (losses) on valuation	As of 31 December 2023	As of 31 December 2023	Accumulated impairment	Collateral
	Shares	Shares	Shares	Amount	Shares	Amount		Shares	Fair Value
Listed companies stocks: GOODWAY MACHINE CORP. Connection Technology Systems Inc. Subtotal Emerging companies stocks: SysJust Co., Ltd. Partner Tech Corp. Subtotal Unlisted companies stocks: Asia Pacific Microsystems, Inc. EVERMORE TECHNOLOGY, INC. AESOPOWER, INC. Hannlync Technologies Inc. Lightel Technologics Inc. Silver PAC Inc. Terasilic Co., Ltd. Phoenix 3 Venture Capital Co., Ltd. LIEN SHEN ELECTRONICS CORP. GaN Power Technology Co., Ltd. AMIT System Service Ltd. UEC System Solutions Corporation Subtotal Total	50,567 4,481,726 221,015 649,151 1,208,872 457,921 2,088,976 700,000 5,082,027 1,809,609 535,523 2,000,000 500,000 1,400,000 - -	$3,115 119,662	- - - - - - 416,667 (Note1) - - (Note2) - - - - 1,600,000 (Note3) 301,036 (Note4) 1,640,000 (Note5)	$ - - - - - - 5,000 - - - - - - 16,000 1,785 4,078	- - - - - - - - (5,082,027) - - - - - -	$ - - - - - - - - (57,305) - - - - - - -	$298 (8,963)	50,567 4,481,726 221,015 649,151 1,208,872 457,921 2,505,643 700,000 1,809,609 535,523 2,000,000 500,000 3,000,000 301,036 1,640,000	$3,413 110,699	N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A	None None None None None None None None None None None None None None None None
		122,777					(8,665)		114,112
		16,455 13,275					1,403 4,155		17,858 17,430
		29,730					5,558		35,288
		8,535 - 8,709 - 76,930 - 2,621 13,592 4,780 19,600 - -					(1,556) (10,551) - (19,625) (1,062) 2,264 288 (21,608) (378) 152		6,979 - 3,158 - - - 1,559 15,856 5,068 13,992 1,407 4,230
		134,767		26,863		(57,305)	(52,076)		52,249
		$287,274		$26,863		$(57,305)	(55,183)		$201,649

109

Note:

1.In this period, AESOPOWER, INC.increased its capital by issuing 416,667 shares of stocks, totaling NT$5,000 thousand.

2.In this period, our company entered into a stock conversion agreement with Laid Optical (Stock) Company, exchanging 5,082,027 shares of Lightel technology, Inc stocks held by us for 5,082,027 shares of common stocks of Lightel Corporation. Following the stock conversion, our company holds 23.88% of the voting rights in Lightel Corporation, which constitutes significant influence, thus reclassified as equity investments.

3.In this period, GaN Power Technology Co., Ltd. increased its capital by issuing 1,600,000 shares of stocks, totaling NT$16,000 thousand.

4.In this period, in a cash capital increase of AMIT System Service Ltd., the company did not subscribe according to its shareholding ratio, resulting in the loss of significant influence. Therefore, the investment previously accounted for using the equity method is reclassified as financial assets measured at fair value through other comprehensive income.

5.In this period, there was a capital increase of NT$1,400 thousand for UEC System Solutions Corporation. However, as our company did not subscribe according to its shareholding ratio, our ownership percentage decreased from 13.89% to 11.08%. This resulted in the loss of significant influence over UEC System Solutions Corporation. Therefore, the investment previously accounted for using the equity method is reclassified as financial assets measured at fair value through other comprehensive income.

110

UNIVERSAL MICROELECTRONICS CO., LTD.

5. STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Name	As of 1January2023	As of 1January2023	Additions	Additions	Decrease	Decrease	Changes in transaction volume for inflows and outflows	Investment income (loss)	Unrealized gains/losses on financial assets.	Exchange differences	Changes in accordance with the percentage of shareholding	As of31 December 2023	As of31 December 2023	As of31 December 2023	Collateral
	Shares	Amount	Shares	Amount	Shares	Amount						Shares	%	Amount
UMEC Investment Co., Ltd. PT UMEC Green Tech Indonesia Tien Lung Investment Co., Ltd. Advanced Radar Technology Co., Ltd. UMEC JAPAN CO., LTD. UMEC USA, Inc. UMEC VIETNAM Co., Ltd. Lightel Corporation AMIT SYSTEM SERVICE LTD. UEC System Solutions Corporation Total	30,397,803 114,600 8,800,000 4,255,894 - 499,999 - 1,178,000 1,500,000	$346,399 - 49,321 20,381 1,339 47,760 - 3,139 3,389	- - - - - - - 5,082,027	$ - - - - - 95,831 (Note4) 57,305 (Note5)	(7,436,783) (Note1) - - - - - - (1,178,000) (1,500,000)	$(244,017) - -- - - - - (1,785) (2,678)	$36,589 - - - - (36) - - - -	$20,397 - 8,868 (8,426) (21) (4,557) (7,557) 3,953 (1,354) (711)	$ - - 124 - - - - - - -	$(13,016) - (89) 48 (2,623) - - -	$54,170 - (54,170) - - -	22,961,020 114,600 8,800,000 4,255,894 - 499,999 - - - -	100% 60% 100% 84.78% 100% 99.99% 25.73% 23.88% - % - %	$200,522 - 58,313 11,955 1,229 43,215 31,481 61,258 - -	None None None None None None None None None None
		$471,728		$153,136		$(248,480)	$36,553	$10,592	$124	$(15,680)	$ -			$407,973

111

Note `：`

In this period, UMEC Investment Co., Ltd. reduced its capital and returned funds by 7,437 shares, receiving a total of NT$233,743 thousand, and recognized an investment loss of NT$10,274 thousand.
In this period, AMIT System Service Ltd. underwent a cash capital increase. As the company did not subscribe according to its shareholding proportion, it lost significant influence. Consequently, the investment previously accounted for using the equity method is reclassified as financial assets measured at fair value through other comprehensive income.
In this period, there was a capital increase of NT$1,400 thousand forUEC System Solutions Corporation. However, as our company did not subscribe according to its shareholding ratio, our ownership percentage decreased from 13.89% to 11.08%. This resulted in the loss of significant influence over UEC System Solutions Corporation. Consequently, the investment previously accounted for using the equity method is reclassified as financial assets measured at fair value through other comprehensive income.
In the fourth quarter of the year the year ended 31 December 2022 the company engaged in debt-to-equity swap for capital increase in UMEC VIETNAM Co., Ltd. In the second quarter of the year ended 31 December 2023, the company obtained the business license issued by the Vietnamese government to complete the capital increase, acquiring a 25.73% stake.
In the third quarter of the year ended 31 December 2023, the Company participated in the cash capital increase of UEC System Solutions Corporation, increasing its investment amount by NT$1,400 thousand. However, as the Group did not subscribe in proportion to its shareholding, its shareholding ratio decreased from 13.89% to 11.08%. Consequently, the Company lost significant influence over UEC System Solutions Corporation, and therefore reclassified it as a financial asset measured at fair value through other comprehensive income.

112

UNIVERSAL MICROELECTRONICS CO., LTD.

6. STATEMENT OF SHORT-TERM LOANS

31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Type	Lending bank		Balance, End of Year	Contract Period	Financing limit	Collateral	Note
Credit loan Secured loans Material procurement loan	First Commercial Bank`－`Taichung Branch First Commercial Bank`－`Taichung Branch First Commercial Bank`－`Taichung Branch First Commercial Bank`－`Taichung Branch Chang Hwa Commercial Bank`－`Hsitun Branch Total		$40,000 60,000 40,000 60,000 28,000 $228,000	2023/08- 2024/02 2023/10- 2024/04 2023/10- 2024/04 2023/11- 2024/05 2023/12- 2024/01	200,000 28,000	None None None None Time deposits

As of 31 December

	As of31 December
Interest rates applied Unsecured bank loans Secured bank loans	2023
	1.81% 1.81%

113

UNIVERSAL MICROELECTRONICS CO., LTD.

7. STATEMENT OF ACCOUNTS PAYABLE

31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Vendor Name	Description	Amount	Note
Vendor A Vendor B Others (Note)		$66,552 30,139 457,760 $554,451

(Note)The amount of individual client in others does not exceed 5% of the account balance.

114

UNIVERSAL MICROELECTRONICS CO., LTD.

STATEMENT OF NET OPERATING REVENUES

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Item	Amount	Note
Magnetic Component & Power product Assembly of circuit board Optical cables Others Net operating revenues	$2,789,844 2,325,028 13,324 19,736 $5,147,932

115

UNIVERSAL MICROELECTRONICS CO., LTD. 9. STATEMENT OF OPERATING COSTS

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Item Amount

Direct raw material: Raw material, beginning of year
Add：Raw material purchased
Transferred from work in progress
Inventory surplus
Less: Raw material, end of year
Cost of raw material sold
Updated standard cost
Transferred to expenses
Direct raw material used
Supplies & parts: Supplies & parts , beginning of year
Add：Supplies & parts purchased
Updated standard cost
Less: Supplies & parts, end of year
Cost of supplies & parts sold
Transferred to expenses
Supplies & parts used
Direct labor
Manufacturing expenses (Refer to 10)
Manufacturing cost
Add: Semi-finished goods, beginning of year
Semi-finished goods purchased
Transferred from work in progress
Updated standard cost
Less: Semi-finished goods, end of year
Cost of semi-finished goods sold
Transferred to expenses
Semi-finished goods used
Add: Work in process, beginning of year
Transferred from finished goods
Updated standard cost
Less: Work in process, end of year
Reprocessing cost
Transferred to semi-finished goods
Transferred to raw material
Transferred to expenses $966,902
2,009,862
4,923
2
(890,930)
(651,142)
(1,602)
(461)
1,437,554
28,261
93,470
1,028
(36,639)
(4,193)
(16,945)
64,982
100,760
276,239
1,879,535
17,982
3,066
431,008
727
(28,130)
(14,156)
(461)
410,036
120,027
179,966
2,904
(80,219)
(3,520)
(431,008)
(4,923)
(4,995)

116

Item

Amount

Cost of finished goods
Add: Finished goods, beginning of year
Finished goods purchased
Updated standard cost
Less: Finished goods, end of year
Transferred to work in process
Transferred to expenses
Subtotal of cost of goods sold
Other operating costs
Cost of raw material sold
Cost of supplies & parts sold
Cost of semi-finished goods sold
Inventory Impairment Loss
Inventory surplus
Updated standard cost
Purchase price variance
Reprocessing cost
Direct labor cost variance
Manufacturing expense variance
Others
Subtotal
Operating Costs

2,067,803
242,968
1,568,957
2,362
(256,313)
(179,966)
(3,949)
3,441,862
651,142
4,193
14,156
6,078
(2)
(5,419)
403,330
3,521
60,019
63,794
(1,640)
1,199,172
$4,641,034

117

UNIVERSAL MICROELECTRONICS CO., LTD.

10. STATEMENT OF MANUFACTURING EXPENSES

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Item		Amount
Indirect labor Processing costs Depreciation Consumption of materials and tools Utilities Expenses Other expense Subtotal Manufacturing expense variance Total		$86,589 133,344 40,544 22,085 17,392 40,079 340,033 (63,794) $276,239

(Note) The amount of individual client in others does not exceed 5% of the account balance.

118

UNIVERSAL MICROELECTRONICS CO., LTD.

11. STATEMENT OF OPERATING EXPENSES

FOR THE YEAR ENDED 31 DECEMBER 2023

(In Thousands of New Taiwan Dollars)

Item	Selling Expenses	Administrativ e Expenses	Research and Development Expenses	Impairment Loss	Total
Wages and salaries Insurance expense Depreciation Commissions expense Import/export expense Management expense Commissioned research expense Instrument calibration fees R&D material expenses Others Total	$32,843 4,015 774 22,913 7,459 - - - - 12,808 $80,812	$60,374 6,277 9,942 - 8 20,803 - - - 57,279 $154,683	$121,981 11,787 12,139 - 83 - 10,155 12,332 16,862 15,737 $201,076	$ - - - - - - - - (83) $(83)	$215,198 22,079 22,855 22,913 7,550 20,803 10,155 12,332 16,862 85,741 $436,488

(Note) The amount of individual client in others does not exceed 5% of the account balance.

119

AI assistant

UMEC — Annual Report 2023

52064_rns_2023-11-13_e94cf0c8-9802-45c5-bbfe-b23178be1f9b.pdf

UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT AUDITORS

FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

Independent Auditors’ Report Translated from Chinese

Opinion

Basis for Opinion

Key Audit Matters

1. Impairment of accounts receivable

2. Valuation for inventories (Including inventories of the subsidiaries under the equity method)

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

PARENT COMPANY ONLY BALANCE SHEETS

31 December 2023 and 2022

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNIVERSAL MICROELECTRONICS CO., LTD.

UNIVERSAL MICROELECTRONICS CO., LTD.

1. History and organization

2. Date and procedures of authorization of financial statements for issue

3. Newly issued or revised standards and interpretations

UNIVERSAL MICROELECTRONICS CO., LTD.

(b) IFRS 17 “Insurance Contracts”

(c) Lack of Exchangeability – Amendments to IAS 21

4. Summary of significant accounting policies

(1) Statement of Compliance

(2) Basis of Preparation

UNIVERSAL MICROELECTRONICS CO., LTD.

UNIVERSAL MICROELECTRONICS CO., LTD.

(4) Translation of Foreign Currency Financial Statements

(5) Current and non-current distinction

(7) Financial Instruments

(1) Financial instruments: Recognition and Measurement

Financial assets measured at amortized cost.

Financial asset measured at fair value through other comprehensive income

Financial asset measured at fair value through profit or loss.

(2) Impairment of financial assets

(3) Derecognition of financial assets

Classification between liabilities or equity

Equity instruments

Financial liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities at amortized cost

Derecognition of financial liabilities

(5) Offsetting of financial instruments

(8) Derivative financial instruments

(9) Fair value measurement

(a) In the principal market for the asset or liability, or

(10) Inventories

(11) Investments accounted for under the equity method

UNIVERSAL MICROELECTRONICS CO., LTD.

(12) Property, plant and equipment

(13) Investment property

(14) Leases

Company as a lessee

Company as a lessor

UNIVERSAL MICROELECTRONICS CO., LTD.

(15) Intangible Assets

UNIVERSAL MICROELECTRONICS CO., LTD.

(16) Impairment of non-financial assets

(17) Provisions

(18) Treasury shares

(19) Revenue recognition

Sale of goods

UNIVERSAL MICROELECTRONICS CO., LTD.

(20) Borrowing costs

(21) Government grants

(22) Post-employment benefits

UNIVERSAL MICROELECTRONICS CO., LTD.

Current income tax

Deferred tax

UNIVERSAL MICROELECTRONICS CO., LTD.

5. Significant accounting judgments, estimates and assumptions

Estimates and assumptions

UNIVERSAL MICROELECTRONICS CO., LTD.

(1) Fair value of financial instruments

UMEC Annual Report 2023