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Financial Instruments

12 Months Ended

Dec. 31, 2021

Financial Instruments

Financial Instruments

Note 23. Financial Instruments

(a)

Categories of financial instruments

(i)

Financial assets


	December 31,		December 31,
	2020		2021

		(in thousands)
Financial assets measured at fair value through profit or loss (including current and noncurrent)	$	21,765	16,013
Financial assets measured at fair value through other comprehensive income		742	410
Measured at amortized cost:
Cash and cash equivalents		184,938	336,024
Financial assets at amortized cost		8,682	26,013
Accounts receivable and other receivables (including related parties)		252,162	423,357
Restricted deposit (including current and noncurrent)		104,141	154,136
Refundable deposits (including current and noncurrent)		12,144	231,415
Subtotal		562,067	1,170,945
Total	$	584,574	1,187,368

(ii)

Financial liabilities


	December 31,		December 31,
	2020		2021

	(in thousands)
Measured at amortized cost:
Short-term secured borrowings	$	104,000	151,400
Accounts payables and other payables (including related parties)		222,739	305,755
Long-term unsecured borrowings (including current portion)		58,500	52,500
Lease liabilities (including current and noncurrent)		10,454	15,860
Guarantee deposits		5,765	55,215
Total	$	401,458	580,730

(b)

Liquidity risk

The following, except for payables (including related parties) that are repayable within a year, are the contractual maturities of financial liabilities, including estimated interest payments of unsecured borrowings, secured borrowings and lease liabilities.


	Contractual		Within 6	6‑12			Over 5
(in thousands)	cash flows		months	months	1‑2 years	2‑5 years	years
December 31, 2020
Non-derivative financial liabilities
Short-term secured borrowings	$	104,106	104,106	-	-	-	-
Long-term unsecured borrowings (including current portion)		60,684	3,216	3,209	6,379	18,862	29,018
Lease liabilities		10,725	1,600	1,603	4,538	2,984	-
Guarantee deposits		5,765	5,765	-	-	-	-
	$	181,280	114,687	4,812	10,917	21,846	29,018
December 31, 2021
Non-derivative financial liabilities
Short-term secured borrowings	$	151,601	111,582	40,019	-	-	-
Long-term unsecured borrowings (including current portion)		54,015	3,167	3,159	6,287	18,624	22,778
Lease liabilities		16,174	2,460	2,298	3,881	7,513	22
Guarantee deposits		55,215	1,165	-	5,840	48,210	-
	$	277,005	118,374	45,476	16,008	74,347	22,800

The Company does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(c)

Currency risk

i. Exposure to foreign currency risk

The Company’s significant exposure to foreign currency risk was as follows:


(in thousands)	December 31, 2020			December 31, 2021
	Foreign	Exchange	Functional	Foreign	Exchange	Functional
	currency	rate	currency	currency	rate	currency

Financial assets
Monetary items
NTD	155,418	28.48	5,457	447,596	27.68	16,170
CNY	35,630	6.5428	5,461	36,450	6.3941	5,701
Financial liabilities
Monetary items
NTD	1,084,594	28.48	38,083	3,450,959	27.68	124,672
JPY	632,215	103.0786	6,133	1,459,700	115.0936	12,683

ii. Sensitivity analysis

The Company’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivable, accounts payable, other payable and lease liabilities that are denominated in foreign currency.

Depreciation or appreciation of the USD by 10% against the New Taiwan Dollars (NTD), CNY and JPY at December 31, 2020 and 2021, while all other variables were remained constant, would have increased or (decreased) the net profit before tax of $3,330 thousand and $11,548 thousand, respectively.

iii. Interest rate risk

The Company’s short-term secured borrowings and long-term unsecured borrowings carried floating interest rates and fixed interest rates. The Company’s exposure to changes in interest rates is mainly from floating-rate borrowings. Any change in interest rates will cause the effective interest rates of borrowings to change and thus cause the future cash flows to fluctuate over time.

The following sensitivity analysis is determined based on the exposure to interest rate risk. For floating-rate debts, the analysis assumes that the balances of outstanding debts at the end of the reporting period had been outstanding for the entire year.

For the Company’s floating-rate debts, assuming all other variables were remained constant, an increase or a decrease in the interest rate by 0.25% would have resulted in a decrease or an increase in the net profit before tax for the years ended December 31, 2020 and 2021 by $146 thousand and $131 thousand, respectively.

(d)

Fair value information

i. Financial instruments not measured at fair value

The Company considers that the carrying amounts of financial assets and financial liabilities measured at amortized cost approximate their fair values.

ii. Financial instruments measured at fair value

(1) Fair value hierarchy


	December 31, 2020
	Carrying		Fair Value
(in thousands)	Amount		Level 1	Level 2	Level 3	Total
Financial assets measured at fair value through profit or loss
Money market fund	$	7,799	7,799	-	-	7,799
Equity securities-unlisted company		13,966	-	-	13,966	13,966
Subtotal		21,765	7,799	-	13,966	21,765
Financial assets measured at fair value through other comprehensive income
Equity securities-unlisted company		742	-	-	742	742
Total	$	22,507	7,799	-	14,708	22,507


	December 31, 2021
	Carrying		Fair Value
(in thousands)	Amount		Level 1	Level 2	Level 3	Total
Financial assets measured at fair value through profit or loss
Money market fund	$	2,345	2,345	-	-	2,345
Equity securities-unlisted company		13,668	-	-	13,668	13,668
Subtotal		16,013	2,345	-	13,668	16,013
Financial assets measured at fair value through other comprehensive income
Equity securities-unlisted company		410	-	-	410	410
Total	$	16,423	2,345	-	14,078	16,423

(2) Valuation techniques and assumptions used in fair value measurement

The fair value of financial instruments traded in active markets is determined with reference to quoted market prices.

The fair value of financial instruments is based on the valuation techniques. The fair value using valuation techniques refers to the current fair value of other financial instruments with similar conditions and characteristics, or using a discounted cash flow method, or other valuation techniques which include model calculating with observable market data at the reporting date.

The fair value of equity securities-unlisted company is determined by reference to market valuations for similar operating entities quoted in an active market based on the net assets value of investees. The significant unobservable input is primarily the liquidity discounts, 28% for 2021. The estimated fair value would increase (decrease) if the liquidity discount rate were lower (higher).

(3) Transfer between levels of the fair value hierarchy

There were no transfers between levels for the years ended December 31, 2020 and 2021.

(4) Movement in financial assets included in Level 3 of fair value hierarchy


			Financial assets
	Financial assets		at fair value
	at fair value		through other
	through profit or		comprehensive
(in thousands)	loss		income	Total
January 1, 2020	$	13,500	709	14,209
Disposal-capital reduction of investment		-	(32)	(32)
Recognized in other comprehensive income		-	65	65
Recognized in profit or loss		466	-	466
December 31, 2020	$	13,966	742	14,708


			Financial assets
	Financial assets		at fair value
	at fair value		through other
	through profit or		comprehensive
(in thousands)	loss		income	Total
January 1, 2021	$	13,966	742	14,708
Disposal-capital reduction of investment		-	(151)	(151)
Recognized in other comprehensive income		-	(181)	(181)
Recognized in profit or loss		(298)	-	(298)
December 31, 2021	$	13,668	410	14,078