NANTEX Industry : CONSOLIDATED FINANCIAL STATEMENTS 2022Q1

NANTEX INDUSTRY CO., LTD. AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS' REVIEW REPORT

MARCH 31, 2022 AND 2021

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For the convenience of readers and for information purpose only, the auditors' report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors' report and financial statements shall prevail.

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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of NANTEX INDUSTRY CO., LTD.

Introduction

We have reviewed the accompanying consolidated balance sheets of NANTEX INDUSTRY CO., LTD. and subsidiaries (the "Group") as at March 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three months 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 Note 4(3), the financial statements and related information disclosed in Note 13 of an insignificant consolidated subsidiary, Nanmat Technology Co., Ltd., were not reviewed by independent auditors. Total assets of the subsidiary amounted to NT$1,522,071 thousand and NT$1,174,885 thousand, constituting 7.30% and 6.62% of the consolidated total assets, and total liabilities amounted to NT$480,166 thousand and NT$370,735 thousand, constituting 7.23% and 6.48% of the consolidated total liabilities as at March 31, 2022 and 2021, respectively, and the total comprehensive income

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amounted to NT$64,246 thousand and NT$53,305 thousand, constituting 7.20% and 1.97% of the consolidated total comprehensive income for the three months 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 an insignificant consolidated subsidiary and the information disclosed in Note 13 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 the Group as at March 31, 2022 and 2021, and of its consolidated financial performance and its consolidated cash flows for the three months 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.

Lin, Yung-Chih

Independent Accountants

Lin, Tzu-Shu

PricewaterhouseCoopers, Taiwan

Republic of China

May 9, 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' 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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NANTEX INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2022, DECEMBER 31, 2021 AND MARCH 31, 2021

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2022 and 2021 are reviewed, not audited)

						March 31, 2022				December 31, 2021		March 31, 2021
	Assets		Notes		AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current assets
1100	Cash and cash equivalents	6(1)		$	11,523,324			55	$	10,997,019	53	$	6,986,753			39
1110	Current financial assets at fair	6(2)
	value through profit or loss					30,870			-			31,080	-		-			-
1136	Current financial assets at		6(1)(3) and 8
	amortised cost					2,107,747			10			2,377,272	11		2,211,684			13
1150	Notes receivable, net	6(4)			257,564			1			235,769	1		199,429			1
1170	Accounts receivable, net	6(4)			1,139,836			6			1,586,109	8		2,497,811			14
1200	Other receivables					91,486			1			104,447	-		134,380			1
130X	Inventories		5 and 6(5)		1,325,143			6			1,152,031	6		1,170,814			7
1410	Prepayments					387,413			2			328,456	2		611,126			3
11XX	Total current assets
				16,863,383			81			16,812,183	81		13,811,997			78
	Non-current assets
1517	Non-current financial assets at	6(6)
	fair value through other
	comprehensive income					488,620			2			478,240	2		487,673			3
1535	Non-current financial assets at	6(1)(3)
	amortised cost					-			-			-	-		217,722			1
1600	Property, plant and equipment		6(7) and 8		2,832,713			14			2,854,958	14		2,593,331			14
1755	Right-of-use assets		6(8) and 7		100,974			1			105,702	1		119,407			1
1780	Intangible assets	6(9)			14,788			-			14,945	-		11,017			-
1840	Deferred income tax assets	6(24)			51,136			-			65,920	-		58,733			-
1915	Prepayments for equipment					80,529			-			33,228	-		148,082			1
1920	Guarantee deposits paid	8			2,630			-			1,100	-		582			-
1975	Net defined benefit assets	6(14)			28,661			-			20,917	-		-			-
1990	Other non-current assets					373,764			2			364,377	2		301,320			2
15XX	Total non-current assets
				3,973,815			19			3,939,387	19		3,937,867			22
1XXX	Total assets
			$	20,837,198			100	$	20,751,570	100	$	17,749,864			100

(Continued)

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NANTEX INDUSTRY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2022, DECEMBER 31, 2021 AND MARCH 31, 2021

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2022 and 2021 are reviewed, not audited)

						March 31, 2022				December 31, 2021		March 31, 2021
	Liabilities and Equity		Notes			AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(10)	$	100,000			1		$	170,000		1	$	190,000			1
2110	Short-term notes and bills	6(11)
	payable					9,994			-			9,999		-		9,988			-
2130	Current contract liabilities	6(17)			137,361			1			96,793		-		154,542			1
2170	Accounts payable					407,396			2			414,794		2		559,703			3
2200	Other payables	6(12)(16)			4,238,000			20			1,674,668		8		3,139,671			18
2230	Current income tax liabilities	6(24)			1,226,471			6			1,162,401		6		1,191,874			7
2280	Current lease liabilities		6(8) and 7			18,004			-			22,009		-		20,818			-
2320	Long-term liabilities, current		6(13) and 8
	portion					40,000			-			20,000		-		10,000			-
2365	Current refund liabilities					-			-			20,418		-		-			-
21XX	Total current liabilities
				6,177,226			30			3,591,082		17		5,276,596			30
	Non-current liabilities
2540	Long-term borrowings		6(13) and 8			56,667			-			21,667		-		15,000			-
2570	Deferred income tax liabilities	6(24)			342,078			2			320,475		2		325,672			2
2580	Non-current lease liabilities		6(8) and 7			50,134			-			51,721		-		65,109			-
2640	Net defined benefit liabilities	6(14)			13,045			-			13,892		-		42,392			-
25XX	Total non-current
	liabilities					461,924			2			407,755		2		448,173			2
2XXX	Total liabilities
				6,639,150			32			3,998,837		19		5,724,769			32
	Equity
	Equity attributable to owners of
	parent
	Share capital
3110	Common stock	6(15)			4,924,167			24			4,924,167		24		4,924,167			28
	Capital surplus
3200	Capital surplus					608			-			608		-		301			-
	Retained earnings	6(16)
3310	Legal reserve					1,683,582			8			1,683,582		8		1,328,744			8
3320	Special reserve					433,442			2			433,442		2		433,442			2
3350	Unappropriated retained
	earnings					6,695,309			32			9,564,596		46		5,231,023			29
	Other equity interest
3400	Other equity interest	6(6)	(	120,443)(		1)(		399,196)(	2)(		341,298)(	2)
31XX	Total equity attributable to
	owners of the parent					13,616,665			65			16,207,199		78		11,576,379			65
36XX	Non-controlling interest					581,383			3			545,534		3		448,716			3
3XXX	Total equity
				14,198,048			68			16,752,733		81		12,025,095			68
	Significant Contingent Liabilities		7 and 9
	and Unrecognised Contract
	Commitments
3X2X	Total liabilities and equity				$	20,837,198			100		$	20,751,570		100	$	17,749,864			100

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

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