Chroma ATE : 2021 Q3 Financial Report (December 6th, 2021)

Chroma ATE Inc. and Subsidiaries

Consolidated Financial Statements for the

Nine Months Ended September 30, 2021 and 2020 and Independent Auditors' Review Report

勤業眾信聯合會計師事務所

110016 台北市信義區松仁路 100 號 20 樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110016, Taiwan

Tel : + 886 (2) 2725 - 9988

Fax: + 886 (2) 4051 - 6888

www.deloitte.com.tw

INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors and Shareholders

Chroma ATE Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Chroma ATE Inc. (the "Corporation") and its subsidiaries (collectively, the "Group") as of September 30, 2021 and 2020, the related consolidated statements of comprehensive income for the three months ended September 30, 2021 and 2020 and for the nine months ended September 30, 2021 and 2020, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

The financial statements of some non-significant subsidiaries included in the consolidated financial statements were not reviewed. As of September 30, 2021 and 2020, the combined total assets of these non-significant subsidiaries were NT$5,488,154 thousand and NT$5,714,215 thousand, respectively, representing 19.29% and 21.23%, respectively, of the consolidated total assets, and the combined total liabilities of these non-significant subsidiaries were NT$2,226,834 thousand and NT$2,535,478 thousand, respectively, representing 21.65% and 21.84%, respectively, of the consolidated total liabilities. The amounts of unreviewed comprehensive income (loss) for the three months ended September 30, 2021 and 2020 were NT$186,739 thousand and NT$(104,557) thousand, respectively, representing 28.56% and (16.50%), respectively, of the consolidated total comprehensive income; and the amounts of unreviewed comprehensive income for the nine months ended September 30, 2021 and 2020 were NT$279,735 thousand and NT$82,287 thousand, respectively, representing 7.71% and 5.00%, respectively, of the consolidated total comprehensive income. In addition, as disclosed in Note 13 to the consolidated financial statements, the carrying values of investments accounted for using the equity method were NT$3,035,355 thousand and

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NT$2,930,931 thousand, representing 10.67% and 10.89% of the consolidated total assets as of September 30, 2021 and 2020, respectively; the related shares of comprehensive income of associates and joint ventures for the three months ended September 30, 2021 and 2020 were NT$77,913 thousand and NT$50,658 thousand, respectively, representing 11.92% and 7,99%, respectively, of the consolidated total comprehensive income; and the related shares of comprehensive income of associates and joint ventures for the nine months ended September 30, 2021 and 2020 were NT$149,775 thousand and NT$65,055 thousand, respectively, representing 4.13% and 3.95%, respectively, of the consolidated total comprehensive income. These investment amounts were calculated and disclosed on the basis of the unreviewed financial statements of the investees as of and for the same reporting periods as those of the Corporation. Further, as disclosed in Note 34 to the consolidated financial statements, other information on the Corporation's non-significant subsidiaries and other investees accounted for using the equity method was disclosed on the basis of the unreviewed financial statements as of and for the same reporting periods as those of the Corporation.

Qualified Conclusion

Based on our reviews, with the exception of the matter described in the preceding paragraph, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as of September 30, 2021 and 2020, its consolidated financial performance for the three months ended September 30, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors' review report are Wen-Chin Lin and Chien-Liang Liu

Deloitte & Touche

Taipei, Taiwan

Republic of China

October 28, 2021

Notice to Readers

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

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

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (In Thousands of New Taiwan Dollars)

			September 30, 2021						December 31, 2020						September 30, 2020
			(Reviewed)						(Audited)						(Reviewed)
ASSETS			Amount	%					Amount	%					Amount	%
CURRENT ASSETS
Cash and cash equivalents (Note 6)	$	2,850,276			10		$	2,896,645		10	$	2,663,601		10
Financial assets at fair value through profit or loss - current (Note 7)			518,024			2					509,015		2					447,541		2
Financial assets at amortized cost - current (Notes 9 and 30)			1,300,176			4					1,036,691		4					960,587		4
Contract assets - current (Note 22)			793,694			3					1,278,936		4					1,267,740		5
Notes receivable (Note 10)			113,835			-					127,042		-					43,015		-
Trade receivables (Note 10)			4,211,126			15					4,247,500		15				4,316,825		16
Trade receivables - related parties (Notes 10 and 29)			22,512		-					19,340		-					28,055		-
Inventories (Note 11)			3,755,306		13					3,028,457		11				3,033,664		11
Prepayments			259,182			1					197,038		1					332,988		1
Other current assets (Note 29)			166,567			1					187,175		1					151,118		-
Total current assets			13,990,698			49					13,527,839		48				13,245,134		49
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Note 7)			4,603			-					4,646		-					4,649		-
Financial assets at fair value through other comprehensive income - non-current (Note 8)			1,053,887			4					862,898		3					657,079		2
Investments accounted for using the equity method (Note 13)			3,035,355			11					3,139,227		11				2,930,931		11
Property, plant and equipment (Notes 14, 29 and 30)			6,067,480			21					3,156,634		11				3,138,387		12
Right-of-use assets (Note 15)			287,036			1					144,921		1					155,192		1
Investment properties (Note 16)			3,137,187			11					3,137,187		11				3,137,187		12
Goodwill (Note 17)			226,185			1					228,002		1					223,644		1
Other intangible assets			88,780		-					55,578		-					54,008		-
Deferred tax assets			337,857			1					314,987		1					315,829		1
Prepayments for land and equipment			127,272			1					3,463,185		13				2,941,607		11
Refundable deposits			21,273		-					13,693		-					13,422		-
Other non-current assets			79,939			-					80,086		-					101,663		-
Total non-current assets			14,466,854			51					14,601,044		52				13,673,598		51
TOTAL	$	28,457,552			100		$	28,128,883		100	$	26,918,732		100
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Notes 18 and 30)	$	2,527,456			9		$	2,554,260		9		$	3,148,520		12
Contract liabilities - current (Notes 22 and 29)			480,474			2					765,682		3					641,356		3
Notes payable			80,625		-					35,933		-					13,716		-
Notes payable - related parties (Note 29)			3,955			-					4,570		-					201		-
Trade payables			2,605,749			9					2,637,070		10				2,359,010		9
Trade payables - related parties (Note 29)			3,637			-					11,353		-					3,206		-
Other payables (Notes 19 and 29)			1,062,131			4					1,225,623		4					1,116,060		4
Current tax liabilities			341,032		1					348,441		1					273,596		1
Lease liabilities - current (Notes 15 and 29)			90,812		-					55,247		-					60,477		-
Current portion of long-term borrowings (Notes 18 and 30)			213,429			1					633,456		2					13,880		-
Other current liabilities			147,810			-					153,317		1					73,324		-
Total current liabilities			7,557,110			26					8,424,952		30				7,703,346		29
NON-CURRENT LIABILITIES
Long-term borrowings (Notes 18 and 30)			1,596,094			6					2,404,616		9					3,075,963		11
Deferred tax liabilities			711,638			3					621,111		2					561,034		2
Lease liabilities - non-current (Notes 15 and 29)			236,801		1					92,345		-					97,326		-
Net defined benefit liabilities (Note 20)			141,533			-					156,280		1					153,936		1
Guarantee deposits received			43,050			-					40,886		-					20,000		-
Total non-current liabilities			2,729,116			10					3,315,238		12				3,908,259		14
Total liabilities			10,286,226			36					11,740,190		42				11,611,605		43
EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 21)
Ordinary share capital			4,216,315			15					4,212,945		15				4,207,484		16
Advance receipts for share capital			7,163			-					-			-					20,662		-
Capital surplus			4,062,302			14					4,036,875		14				3,735,931		14
Retained earnings
Legal reserve			2,824,310			10					2,592,487		9					2,592,487		9
Special reserve			86,888		-					176,128		1					176,128		1
Unappropriated earnings			6,638,423			24					5,160,575		18				4,479,585		17
Total retained earnings			9,549,621			34					7,929,190		28				7,248,200		27
Other equity			(35,030)		-					(82,101)		-					(192,211)		(1)
Treasury shares			(33,686)		-					(33,686)		-					(33,745)		-
Total equity attributable to owners of the Corporation			17,766,685			63					16,063,223		57				14,986,321		56
NON-CONTROLLING INTERESTS			404,641			1					325,470		1					320,806		1
Total equity			18,171,326			64					16,388,693		58				15,307,127		57
TOTAL	$	28,457,552			100		$	28,128,883		100	$	26,918,732		100

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors' review report dated October 28, 2021)

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CHROMA ATE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

		For the Three Months Ended September 30					For the Nine Months Ended September 30
	2021			2020				2021			2020
		Amount	%				Amount	%				Amount	%				Amount	%
NET OPERATING REVENUE
(Notes 22 and 29)	$ 4,275,744		100	$ 4,155,091			100	$ 12,994,408	100	$ 11,354,608	100
OPERATING COSTS (Notes 11,
23 and 29)		2,131,562		50	2,151,414			52	6,678,045	51	5,742,102	51
GROSS PROFIT		2,144,182		50	2,003,677			48	6,316,363	49	5,612,506	49
UNREALIZED GAIN ON
TRANSACTIONS WITH
ASSOCIATES AND JOINT
VENTURES	-		-	(37)		-	-	-	-	-
REALIZED GAIN ON
TRANSACTIONS WITH
ASSOCIATES AND JOINT
VENTURES		13	-	-		-	149	-	3	-
REALIZED GROSS PROFIT		2,144,195		50	2,003,640			48	6,316,512	49	5,612,509	49
OPERATING EXPENSES
(Notes 10, 23 and 29)
Selling and marketing expenses	568,997		13	507,730		12	1,693,671	13	1,519,826	14
General and administrative
expenses	339,506		8	294,279		7	899,713	7	831,475	7
Research and development
expenses	357,378		9	345,694		8	1,103,778	9	989,721	9
Expected credit loss		13,427	-	146,698		4	275,552	2	243,688	2
Total operating expenses		1,279,308		30	1,294,401			31	3,972,714	31	3,584,710	32
PROFIT FROM OPERATIONS		864,887		20	709,239		17	2,343,798	18	2,027,799	17
NON-OPERATING INCOME
AND EXPENSES
Finance costs (Note 23)	(11,567)	-	(12,574)		-	(33,961)	-	(43,900)	-
Share of profit of associates
and joint ventures (Note 13)	81,632	2	34,592		1	209,511	2	84,675	1
Interest income	7,210		-	3,265		-	14,896	-	10,290	-
Dividend income	17,930	-	15,232		-	71,771	-	19,402	-
Other income (Note 29)	37,234	1	25,006		1	98,532	1	89,414	1
Gain on disposal of property,
plant and equipment, net	1,936		-	439		-	1,583,061	12	4,819	-
Gain on disposal of equity
investments	-		-	-		-	-	-	480	-
Gain on rights transferred of
sale and leaseback	-		-	-		-	154,510	1	-	-
Gain on lease modification	579	-	-		-	586	-	-	-
Net foreign exchange (loss)
gain (Note 33)	21,858	1	(20,870)		(1)	(45,880)	-	(52,644)	(1)
Gain (loss) on financial assets
at fair value through profit or
loss, net	(4,155)	-	(6,919)		-	36	-	(7,522)	-
Other expenses	(4,503)	-	(873)		-	(6,909)	-	(2,276)	-
Total non-operating
income and expenses		148,154		4	37,298		1	2,046,153	16	102,738	1
																					(Continued)

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