Realtek Semiconductor : 2Q 2022 Consolidated Financial Statements

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REVIEW REPORT

JUNE 30, 2022 AND 2021

(Stock code: 2379)

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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

PWCR22000078

To the Board of Directors and Shareholders of Realtek Semiconductor Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of Realtek Semiconductor Corporation and subsidiaries as at June 30, 2022 and 2021, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these 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" as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65, "Review of Financial Information Performed by the Independent Auditor of the Entity" in the Republic of China. 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

As explained in Notes 4(3) and 6(7), the consolidated financial statements of certain insignificant consolidated subsidiaries, investments accounted for under equity method and the information disclosed in Note 13 were based solely on the reports prepared by those subsidiaries and investee companies, which were not reviewed by independent auditors. Total assets of these subsidiaries amounted to NT$6,729,145 thousand and NT$6,702,872 thousand, constituting 5.63% and 7.06% of the consolidated total assets as at June 30, 2022 and 2021, respectively, total liabilities amounted to NT$1,328,501

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thousand and NT$1,099,676 thousand, constituting 1.64% and 1.68% of the consolidated total liabilities as at June 30, 2022 and 2021, respectively, and the total comprehensive (loss) income amounted to NT ($152,702) thousand, NT$110,767 thousand, NT($458,434) thousand and NT$378,937 thousand, constituting (2.55%), 3.22%, (3.66%) and 5.34% of the consolidated total comprehensive income for the three-month and six-month periods then ended, respectively. Furthermore, the investments accounted for under equity method as at June 30, 2022 and 2021 amounted to NT$180,113 thousand and NT$194,927 thousand, respectively, and the related investment loss were NT$5,577 thousand, NT$7,662 thousand, NT$11,281 thousand and NT$8,593 thousand for the three-month and six-month periods then ended, respectively.

Qualified conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain insignificant consolidated subsidiaries and investments accounted for under equity method been reviewed by independent auditors as described in the Basis for qualified conclusion section above, 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 Realtek Semiconductor Corporation and subsidiaries as at June 30, 2022 and 2021, and of its consolidated financial performance for the three-month and six-month periods then ended and its consolidated cash flows for the six-month periods then ended in accordance with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and International Accounting Standard 34, "Interim Financial Reporting" as endorsed by the Financial Supervisory Commission.

Li, Tien-Yi	Cheng, Ya-Huei
For and on behalf PricewaterhouseCoopers, Taiwan

July 28, 2022

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The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors' review report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers 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.

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REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2022, DECEMBER 31, 2021 AND JUNE 30, 2021

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as at June 30, 2022 and 2021 are reviewed, not audited)

						June 30, 2022				December 31, 2021				June 30, 2021
	Assets		Notes		AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current assets
1100	Cash and cash equivalents	6(1)		$	6,010,435		5	$	7,197,351			7	$	10,001,376		10
1110	Financial assets at fair value	6(2)
	through profit or loss - current					1,570,655		1			1,952,647			2			770,077		1
1136	Financial assets at amortised	6(4)
	cost - current					59,136,885		50			43,740,876			43			41,899,828		44
1170	Accounts receivable, net	6(5)			13,567,705		11			12,796,821			13			11,856,854		12
1180	Accounts receivable, net -		6(5) and 7
	related parties					3,291,388		3			3,192,184			3			2,758,054		3
1200	Other receivables					292,744		-			156,928			-			96,192		-
130X	Inventories, net	6(6)			19,773,668		17			16,548,712			16			13,073,429		14
1410	Prepayments					452,513		-			659,883			1			562,913		1
11XX	Total current assets
				104,095,993		87			86,245,402			85			81,018,723		85
	Non-current assets
1517	Financial assets at fair value	6(3)
	through other comprehensive
	income - non-current					2,901,426		3			3,644,878			4			3,231,795		3
1535	Financial assets at amortised		6(4) and 8
	cost - non-current					85,319		-			80,101			-			79,769		-
1550	Investments accounted for	6(7)
	under equity method					180,113		-			191,377			-			194,927		-
1600	Property, plant and equipment	6(8)			6,863,949		6			6,302,938			6			5,415,641		6
1755	Right-of-use assets	6(9)			1,599,251		1			1,587,910			2			1,591,756		2
1760	Investment property	6(10)			40,628		-			41,641			-			43,296		-
1780	Intangible assets	6(11)			2,808,769		2			2,231,694			2			2,472,430		3
1840	Deferred income tax assets					157,610		-			171,321			-			175,674		-
1900	Other non-current assets					751,512		1			734,651			1			712,268		1
15XX	Total non-current assets
				15,388,577		13			14,986,511			15			13,917,556		15
1XXX	Total assets
			$	119,484,570		100	$	101,231,913			100	$	94,936,279		100

(Continued)

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REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2022, DECEMBER 31, 2021 AND JUNE 30, 2021

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as at June 30, 2022 and 2021 are reviewed, not audited)

							June 30, 2022				December 31, 2021				June 30, 2021
	Liabilities and Equity			Notes	AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(12)	$	10,194,948		9	$	13,342,100		13		$	14,713,320		16
2130	Contract liabilities - current	6(21)				360,845		-			211,100		-			277,167		-
2150	Notes payable						3,276		-			3,276		-			3,276		-
2170	Accounts payable						13,171,611		11			11,105,568		11			12,730,505		13
2180	Accounts payable - related	7
	parties						342,869		-			334,413		-			378,138		-
2200	Other payables	6(13)				42,401,340		36			24,645,141		24			26,206,640		28
2220	Other payables - related parties	7				108,091		-			101,253		-			111,365		-
2230	Current income tax liabilities						1,662,338		1			1,458,340		2			1,364,896		1
2280	Lease liabilities - current						86,466		-			80,315		-			91,675		-
2300	Other current liabilities	6(21)				8,461,162		7			7,539,417		8			7,207,703		8
21XX	Total current liabilities
					76,792,946		64			58,820,923		58			63,084,685		66
	Non-current liabilities
2540	Long-term borrowings	6(14)				1,394,791		2			1,002,799		1			-		-
2550	Provisions - non-current	6(16)				1,181,134		1			989,475		1			995,908		1
2570	Deferred income tax liabilities						88,767		-			103,512		-			108,173		-
2580	Lease liabilities - non-current						1,264,193		1			1,252,390		2			1,237,367		2
2600	Other non-current liabilities						143,778		-			110,490		-			98,247		-
25XX	Total non-current
	liabilities						4,072,663		4			3,458,666		4			2,439,695		3
2XXX	Total liabilities
					80,865,609		68			62,279,589		62			65,524,380		69
	Equity
	Share capital	6(17)
3110	Common shares						5,128,636		4			5,106,849		5			5,106,849		5
	Capital surplus	6(18)
3200	Capital surplus						1,044,903		1			1,101,079		1			1,100,638		1
	Retained earnings	6(19)
3310	Legal reserve						7,262,359		6			5,577,083		5			5,577,083		6
3320	Special reserve						1,776,089		1			1,556,049		2			1,556,049		2
3350	Undistributed earnings						22,514,153		19			27,377,681		27			17,884,361		19
	Other equity	6(20)
3400	Other equity interest						883,162		1	(		1,776,090) (		2) (		1,822,727) (	2)
31XX	Equity attributable to
	holders of the parent
	company						38,609,302		32			38,942,651		38			29,402,253		31
36XX	Non-controlling interest
					9,659		-			9,673		-			9,646		-
3XXX	Total equity						38,618,961		32			38,952,324		38			29,411,899		31
	Significant contingent liabilities	9
	and unrecognized contract
	commitments
3X2X	Total liabilities and equity			$	119,484,570		100	$	101,231,913		100		$	94,936,279		100

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

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