Nan Ya Printed Circuit Board : Consolidated Financial Statement FY2023 Third Quarter

1

Stock Code:8046

NAN YA PRINTED CIRCUIT BOARD

CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors' Review Report

For the Nine Months Ended September 30, 2023 and 2022

Address:	3F., No. 201-36, Dunhua N. Rd., Jinzhong Vil., Songshan Dist., Taipei City
Telephone:	[phone]

The independent auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' review report and consolidated financial statements, the Chinese version shall prevail.

2

Table of contents

		Contents		Page
1.	Cover Page	1
2.	Table of Contents	2
3.	Independent Auditors' Review Report	3
4.	Consolidated Balance Sheets	4
5.	Consolidated Statements of Comprehensive Income	5
6.	Consolidated Statements of Changes in Equity	6
7.	Consolidated Statements of Cash Flows	7
8.	Notes to the Consolidated Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted		8～9
	(4)	Summary of significant accounting policies		9～10
	(5)	Significant accounting assumptions and judgments, and major sources	10
		of estimation uncertainty
	(6)	Explanation of significant accounts		10～29
	(7)	Related-party transactions		30～33
	(8)	Pledged assets	33
	(9)	Commitments and contingencies		33～34
	(10)	Losses Due to Major Disasters	34
	(11)	Subsequent Events	34
	(12)	Other	34
	(13)	Other disclosures
		(a) Information on significant transactions		35～36
		(b) Information on investees	36
		(c) Information on investment in mainland China	37
		(d) Major shareholders	37
	(14)	Segment information		38～39

3

Independent Auditors' Review Report

To the Board of Directors of

Nan Ya Printed Circuit Board Corporation:

Introduction

We have reviewed the accompanying consolidated balance sheets of Nan Ya Printed Circuit Board Corporation and its subsidiaries as of September 30, 2023 and 2022, and the related consolidated statements of comprehensive income for the three months and nine months ended September 30, 2023 and 2022, as well as the changes in equity and cash flows for the nine months ended September 30, 2023 and 2022, and 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

We conducted our reviews in accordance with the Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" of the Republic of China. A review of the 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 conducted in accordance with the Standards on Auditing of the Republic of China 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.

3-1

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of Nan Ya Printed Circuit Board Corporation and its subsidiaries as of September 30, 2023 and 2022, and of its consolidated financial performance for the three months and nine months ended September 30, 2023 and 2022, as well as its consolidated cash flows for the nine months ended September 30, 2023 and 2022 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 Hui-Chih Ko and Tzu-Hui Lee.

KPMG

Taipei, Taiwan (Republic of China)

November 2, 2023

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and cash flows in accordance with the 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 accepted and applied in the Republic of China.

The independent auditors' review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' review report and consolidated financial statements, the Chinese version shall prevail.

4

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

September 30, 2023, December 31 and September 30, 2022

(Expressed in Thousands of New Taiwan Dollars)

		September 30, 2023	December 31, 2022	September 30, 2022
	Assets		Amount	%		Amount	%		Amount	%
	Current assets:
1100	Cash and cash equivalents (note 6(a))	$	10,445,210		15		20,044,117		25		17,341,689		23
1120	Current financial assets at fair value through other		239,080		-		-		-		-		-
	comprehensive income
1170	Notes and accounts receivable, net (notes 6(b) and		8,522,384		12		14,790,920		18		14,026,799		18
	(m))
1180	Accounts receivable due from related parties (notes
	6(b), (m) and 7)		42,026		-		102,237		-		116,260		-
1200	Other receivables (note 6(c))		298,705		-		237,260		-		299,575		-
1210	Other receivables due from related parties (notes
	6(c) and 7)		2,527		-		5,349		-		3,065		-
1310	Inventories (note 6(d))		4,852,995		7		5,802,751		7		6,065,667		8
1410	Prepayments		311,714		1		327,741		-		721,443		1
	Total current assets		24,714,641		35		41,310,375		50		38,574,498		50
	Non-current assets:
1550	Investments accounted for using equity method (note
	6(e))		483,406		1		513,814		1		505,006		1
1600	Property, plant and equipment (note 6(f))		43,847,748		61		37,266,777		46		35,028,385		46
1755	Right-of-use assets (notes 6(g) and 7)		1,774,196		2		1,936,781		2		1,763,790		2
1840	Deferred tax assets		618,560		1		711,133		1		698,729		1
1900	Other non-current assets		9,480		-		11,597		-		5,991		-
	Total non-current assets		46,733,390		65		40,440,102		50		38,001,901		50

Total assets	$	71,448,031 100	81,750,477 100	76,576,399 100

	Liabilities and equity	September 30, 2023	December 31, 2022	September 30, 2022
		Amount	%			Amount	%				Amount	%
	Current liabilities:
2130	Current contract liabilities (note 6(m))	$	1,912,696		3		1,082,286		2		879,472		1
2170	Accounts payable		3,720,444		5		5,003,404		6		5,788,013		8
2180	Accounts payable to related parties (note 7)		294,094		-		316,155		1		374,706		-
2219	Other payables		2,684,171		4		3,575,022		4		3,145,448		4
2220	Other payables to related parties (note 7)		61,057		-		36,960		-			36,194		-
2230	Current tax liabilities		936,675		2		3,207,309		4		2,558,159		3
2281	Current lease liabilities (note 6(h))		12,036		-		9,797		-			-		-
2282	Current lease liabilities, related parties (notes 6(h)
	and 7)		245,472		-		237,025		-			213,831		-
2399	Other current liabilities		195,710			-			220,572			-				389,738			1
	Total current liabilities		10,062,355		14		13,688,530		17		13,385,561		17
	Non-current liabilities:
2527	Non-current contract liabilities (note 6(m))		7,360,145		11		7,634,928		9		8,011,302		10
2570	Deferred tax liabilities		3,360,339		5		3,005,723		4		2,746,699		4
2581	Non-current lease liabilities (note 6(h))		2,951		-		7,411		-			-		-
2582	Non-current lease liabilities, related parties (notes
	6(h) and 7)		1,497,233		2		1,660,156		2		1,524,692		2
2640	Net defined benefit liability, non-current		1,563,280		2		1,902,087		2		2,151,421		3
2645	Guarantee deposits received		205,999			-			129,075			-				129,775			-
	Total non-current liabilities		13,989,947			20			14,339,380			17			14,563,889			19
	Total liabilities		24,052,302		34		28,027,910		34		27,949,450		36
	Equity (note 6(k)):
3100	Ordinary shares		6,461,655		9		6,461,655		8		6,461,655		9
3200	Capital surplus		18,125,589		25		18,125,608		22		18,125,608		24
3310	Legal reserve		7,857,185		11		5,896,621		7		5,896,621		8
3320	Special reserve		761,647		1		861,246		1		861,246		1
3350	Unappropriated retained earnings		14,620,559		21		23,139,084		29		17,798,575		23
3400	Other equity interest		(430,906)	(1)	(761,647)	(1)	(516,756)	(1)
	Total equity		47,395,729			66			53,722,567			66			48,626,949			64
	Total liabilities and equity	$	71,448,031		100		81,750,477		100		76,576,399		100

See accompanying notes to consolidated financial statements.

5

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and nine months ended September 30, 2023 and 2022

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

4000

5000

		For the three months ended				For the nine months ended
		September 30,				September 30,
	2023				2022				2023				2022
		Amount		%		Amount		%			Amount		%		Amount		%
Operating revenue (notes 6(m) and 7)	$ 10,227,384		100		17,195,441	100		32,941,684		100		46,942,811		100
Operating costs (notes 6(d), (f), (g), (h), (i), (n) and 7)		8,706,219		85		10,186,268	59			25,780,429		78		28,598,361		61
Gross profit from operations	1,521,165		15		7,009,173	41		7,161,255		22		18,344,450		39
Operating expenses (notes 6(b), (f), (g), (h), (i), (n) and 7):

6100	Selling expenses	120,949		1	162,734		1		366,146		1		523,717		1
6200	Administrative expenses	369,544		4	400,329		2		1,155,160		4		1,206,362		3
6450	Gain on reversal of expected credit impairment	-		-		(1)	-		-		-		(488)	-
6000	Total operating expenses	490,493		5		563,062		3		1,521,306		5		1,729,591		4
6900	Net operating income	1,030,672		10	6,446,111		38		5,639,949		17		16,614,859		35
	Non-operating income and expenses (notes 6(e), (f), (h), (o) and 7):
7100	Interest income	68,142		1	36,652		-		253,553		1		74,980		-
7010	Other income	48,694		-	54,759		-		180,326		1		145,194		1
7020	Other gains and losses	298,844		3	895,747		5		489,690		1		1,867,634		4
7050	Finance costs	(4,783)	-	(5,961)	-		(14,759)	-		(17,484)	-
7060	Share of profit of associates accounted for using equity method	1,319		-		19,314		-		15,397		-		53,262		-
	Total non-operating income and expenses	412,216		4	1,000,511		5		924,207		3		2,123,586		5
7900	Profit before tax	1,442,888		14	7,446,622		43		6,564,156		20		18,738,445		40
7950	Less: Tax expense (note 6(j))	367,251		3	1,929,585		11		1,590,738		5		4,473,312		10
8200	Profit	1,075,637		11	5,517,037		32		4,973,418		15		14,265,133		30
8300	Other comprehensive income (notes 6(e), (j) and (k)):
8310	Components of other comprehensive income that will not be
	reclassified to profit or loss

8316

8320

8349

Unrealized gains (losses) from investments in equity instruments
measured at fair value through other comprehensive income	(17,677)	-	-		-	(37,526)	-	-		-
Share of other comprehensive income of associates accounted for
using equity method	(4,884)	-	(6,914)	-	(2,026)	-	(16,768)	-
Less: income tax related to components of other comprehensive
income that will not be reclassified to profit or loss	-		-	-		-	-		-	-		-
Components of other comprehensive income that will not be

reclassified to profit or loss

8360 Components of other comprehensive income that will be reclassified to profit or loss

8361 Exchange differences on translation

8399 Less: income tax related to components of other comprehensive income that will be reclassified to profit or loss

Components of other comprehensive income that will be reclassified to profit or loss

8300 Other comprehensive income, net

8500 Total comprehensive income

Earnings per share (note 6(l))

9750 Basic earnings per share

9850 Diluted earnings per share

(22,561)	-	(6,914)	-	(39,552)	-	(16,768)	-

	1,000,201	10	190,808	1	462,867	1		451,571	1
	200,040		2		38,161		-		92,574		-		90,314		-
	800,161		8		152,647		1		370,293		1		361,257		1
	777,600		8		145,733		1		330,741		1		344,489		1
$	1,853,237		19	5,662,770		33		5,304,159		16		14,609,622		31
$		1.66			8.54			7.70			22.08
$		1.66			8.54			7.70			22.07

See accompanying notes to consolidated financial statements.

6

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the nine months ended September 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

																	Other equity interest
																					Unrealized
																					gains (losses)
																					on financial
																	Exchange		assets
																	differences on		measured at
																	translation of		fair value
												Unappropriated			foreign	through other
		Ordinary			Capital	Legal			Special		retained			financial	comprehensive				Total
Balance at January 1, 2022		share			surplus	reserve			reserve		earnings			statements		income	Total	equity
$	6,461,655			18,125,600		4,859,640			592,160			11,301,164				(860,048)		(1,197)			(861,245)		40,478,974
Profit for the nine months ended September 30, 2022		-		-		-		-			14,265,133			-				-				-			14,265,133
Other comprehensive income for the nine months ended September 30, 2022		-		-		-		-			-			361,257				(16,768)		344,489			344,489
Total comprehensive income for the nine months ended September 30, 2022		-		-		-		-			14,265,133			361,257				(16,768)		344,489			14,609,622
Appropriation and allocation of earnings:
Legal reserve appropriated		-	-		1,036,981	-		(1,036,981)	-			-				-			-
Special reserve appropriated		-	-		-	269,086		(269,086)	-			-				-			-
Cash dividends of ordinary share		-	-		-	-		(6,461,655)	-			-				-			(6,461,655)
Other changes in capital surplus:
Other changes in capital surplus		-		8		-		-			-			-				-				-			8
Balance at September 30, 2022	$	6,461,655		18,125,608		5,896,621		861,246			17,798,575			(498,791)	(17,965)		(516,756)	48,626,949
Balance at January 1, 2023
$	6,461,655		18,125,608		5,896,621		861,246			23,139,084			(744,544)	(17,103)		(761,647)	53,722,567
Profit for the nine months ended September 30, 2023		-		-		-		-			4,973,418			-				-				-			4,973,418
Other comprehensive income for the nine months ended September 30, 2023		-		-		-		-			-			370,293				(39,552)		330,741			330,741
Total comprehensive income for the nine months ended September 30, 2023		-		-		-		-			4,973,418			370,293				(39,552)		330,741			5,304,159
Appropriation and allocation of earnings:
Legal reserve appropriated		-	-		1,960,564	-		(1,960,564)	-			-				-			-
Reversal of special reserve		-	-		-	(99,599)	99,599		-			-				-			-
Cash dividends of ordinary share		-	-		-	-		(11,630,978)	-			-				-			(11,630,978)
Other changes in capital surplus:
Other changes in capital surplus		-		(19)	-	-		-		-			-				-			(19)
Balance at September 30, 2023	$	6,461,655		18,125,589		7,857,185		761,647			14,620,559			(374,251)	(56,655)		(430,906)	47,395,729

See accompanying notes to consolidated financial statements.

7

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the nine month ended September 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

For the nine months ended

		September 30,
		2023		2022
Cash flows from operating activities:
Profit before tax	$	6,564,156		18,738,445
Adjustments:
Adjustments to reconcile profit:
Depreciation expense		4,308,651		3,219,686
Gain on reversal of expected credit impairment		-		(488)
Interest expense		14,759		17,484
Interest income		(253,553)	(74,980)
Dividend income		(12,583)	-
Share of profit of associates accounted for using equity method		(15,397)	(53,262)
Loss on disposal of property, plant and equipment		42,340		59,767
Reversal of impairment loss on non-financial assets		(72)	-
Unrealized foreign exchange gain		(153,707)	(546,235)
Total adjustments to reconcile profit		3,930,438		2,621,972
Changes in operating assets and liabilities:
Changes in operating assets:
Decrease (increase) in notes and accounts receivable (including related parties)		6,457,962		(2,598,511)
Increase in other receivables (including related parties)		(49,803)	(160,629)
Decrease (increase) in inventories		948,990		(719,529)
Decrease (increase) in prepayments		15,904		(300,798)
Total changes in operating assets
	7,373,053		(3,779,467)
Changes in operating liabilities:
Increase in contract liabilities		554,816		8,068,118
(Decrease) increase in accounts payable (including related parties)		(1,303,930)	2,490,586
(Decrease) increase in other payables (including related parties)		(866,775)	80,369
(Decrease) increase in other current liabilities		(24,862)	158,902
Decrease in net defined benefit liabilities		(338,807)	(38,159)
Total changes in operating liabilities
	(1,979,558)	10,759,816
Total changes in operating assets and liabilities		5,393,495		6,980,349
Total adjustments		9,323,933		9,602,321
Cash inflow generated from operations		15,888,089		28,340,766
Interest received		245,001		75,549
Interest paid		(14,759)	(18,413)
Income taxes paid		(3,508,313)	(2,632,589)
Net cash flows from operating activities		12,610,018		25,765,313
Cash flows used in investing activities:
Acquisition of financial assets at fair value through other comprehensive income		(276,606)	-
Acquisition of property, plant and equipment		(10,439,325)	(13,331,552)
Proceeds from disposal of property, plant and equipment		23,829		23,975
Decrease (increase) in other non-current assets		2,117		(472)
Dividends received		56,364		33,168
Net cash flows used in investing activities		(10,633,621)	(13,274,881)
Cash flows used in financing activities:
Increase in short-term loans		-		294,811
Decrease in short-term loans		-		(1,550,961)
Repayments of long-term debt		-		(724,868)
Increase in guarantee deposits received		76,924		247
Payment of lease liabilities		(190,649)	(160,633)
Cash dividends paid		(11,630,978)	(6,461,655)
Net cash flows used in financing activities
	(11,744,703)	(8,603,059)
Effect of exchange rate changes on cash and cash equivalents		169,399		259,866
Net increase in cash and cash equivalents		(9,598,907)	4,147,239
Cash and cash equivalents at beginning of period		20,044,117		13,194,450
Cash and cash equivalents at end of period	$	10,445,210		17,341,689

See accompanying notes to consolidated financial statements.

8

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the Nine Months Ended September 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Company history

Nan Ya Printed Circuit Board Corporation "the Company" was legally established with the approval by the Ministry of Economic Affairs on October 28, 1997, with registered address at 3F, No.201-36, Dunhua N. Rd., Jingzhong Vil., Songshan Dist., Taipei City, Taiwan. The Company and its subsidiaries " the Group" main operating activities are primarily in the manufacturing and selling of printed circuit boards.

(2) Approval date and procedures of the consolidated financial statements

The accompanying consolidated financial statements were approved and authorized for issuance by the Board of Directors on November 2, 2023.

1. New standards, amendments and interpretations adopted:
2. 1. The impact of the International Financial Reporting Standards ("IFRSs") endorsed by the Financial Supervisory Commission, R.O.C. ("FSC") which have already been adopted.
      The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2023:
   2. • Amendments to IAS 1 "Disclosure of Accounting Policies"
      • Amendments to IAS 8 "Definition of Accounting Estimates"
      • Amendments to IAS 12 " Deferred Tax related to Assets and Liabilities arising from a Single Transaction"

The Group has initially adopted the new amendment, which do not have a significant impact on its consolidated financial statements, from May 23, 2023:

1. • Amendments to IAS 12 "International Tax Reform-Pillar Two Model Rules"
2. The impact of IFRS issued by the FSC but not yet effective
   The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its consolidated financial statements:
3. • Amendments to IAS 1 "Classification of Liabilities as Current or Non-current"
   • Amendments to IAS 1 "Non-current Liabilities with Covenants"
   • Amendments to IAS 7 and IFRS 7 "Supplier Finance Arrangements"
   • Amendments to IFRS 16 "Lease Liability in a Sale and Leaseback"

(Continued)

9

NAN YA PRINTED CIRCUIT BOARD CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. 1. The impact of IFRS issued by IASB but not yet endorsed by the FSC
      The Group does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:
   2. • Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture"
      • IFRS 17 " Insurance Contracts" and amendments to IFRS 17 " Insurance Contracts"
      • Amendments to IAS21 "Lack of Exchangeability"
2. Summary of significant accounting policies
3. 1. Statement of compliance
      The accompanying consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as the Regulations) and IAS 34 "Interim Financial Reporting" which was endorsed by the FSC. These consolidated interim financial statements do not include all disclosures required for full annual consolidated financial statements under International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations as endorsed by the FSC (hereinafter referred to as IFRS endorsed by the FSC).
      Except as described below, the significant accounting policies adopted in the accompanying consolidated financial statements are the same as those in the consolidated financial statements as of and for the year ended December 31, 2022. Please refer to note 4 of the consolidated financial statements as of and for the year ended December 31, 2022 relevant information.
   2. Basis of consolidation

1. List of subsidiaries in the consolidated financial statements include:

		Name of				Percentage of ownership (%)
					September 30,		December 31,		September 30,
Investor		subsidiary		Business activity	2023	2022	2022
The Company		NPUC		Selling and other services		100 %		100 %		100 %
The Company		NPHK		Selling and investing in electronic	100 %	100 %	100 %
				products
NPHK		NPKC		Producing and selling PCB	100 %	100 %	100 %

1. 1. Subsidiaries excluded from the consolidated financial statements: None.
2. Employee benefits
   The pension cost in the interim period was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events.

(Continued)