Realtek Semiconductor : 1Q 2022 Consolidated Financial Statements

REALTEK SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REVIEW REPORT MARCH 31, 2022 AND 2021

(Stock code: 2379)

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INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

PWCR22000008

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 March 31, 2022 and 2021, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-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$5,860,231 thousand and NT$2,653,590 thousand, constituting 5.40% and 3.20% of the consolidated total assets as at March 31, 2022 and 2021, respectively, total liabilities amounted to NT$996,120 thousand and NT$245,498 thousand, constituting 1.61% and 0.49% of the consolidated total liabilities

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as at March 31, 2022 and 2021, respectively, and the total comprehensive (loss) income amounted to NT($305,732) thousand and NT $268,170 thousand, constituting (4.69%) and 7.33% of the consolidated total comprehensive income for the three-month periods then ended, respectively. Furthermore, the investments accounted for under equity method as at March 31, 2022 and 2021 amounted to NT$185,690 thousand and NT$155,922 thousand, respectively, and the related investment loss were NT$5,704 thousand and NT$931 thousand for the three-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 March 31, 2022 and 2021, and of its consolidated financial performance and cash flows for the three-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
April 22, 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

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

(Expressed in thousands of New Taiwan dollars)

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

	Assets		Notes		March 31, 2022					December 31, 2021				March 31, 2021
			AMOUNT	%				AMOUNT	%			AMOUNT			%
	Current assets
1100	Cash and cash equivalents	6(1)			$	9,630,649		9	$	7,197,351			7	$	7,720,129			9
1110	Financial assets at fair value	6(2)
	through profit or loss - current						1,231,854		1		1,952,647			2		679,525			1
1136	Financial assets at amortised	6(4)
	cost - current						47,730,479		44		43,740,876			43		37,544,992			45
1170	Accounts receivable, net	6(5)				12,573,988		12		12,796,821			13		11,136,321			13
1180	Accounts receivable, net -		6(5) and 7
	related parties						3,289,116		3		3,192,184			3		3,019,486			4
1200	Other receivables						188,826		-		156,928			-		361,255			-
130X	Inventories, net	6(6)				17,466,154		16		16,548,712			16		9,785,315			12
1410	Prepayments						402,983		-		659,883			1		417,707			1
11XX	Total current assets
					92,514,049		85		86,245,402			85		70,664,730			85
	Non-current assets
1517	Financial assets at fair value	6(3)
	through other comprehensive
	income - non-current						3,423,958		3		3,644,878			4		3,193,493			4
1535	Financial assets at amortised		6(4) and 8
	cost - non-current						80,381		-		80,101			-		79,821			-
1550	Investments accounted for	6(7)
	under equity method						185,690		-		191,377			-		155,922			-
1600	Property, plant and equipment	6(8)				6,554,836		6		6,302,938			6		5,037,145			6
1755	Right-of-use assets	6(9)				1,593,570		2		1,587,910			2		1,622,680			2
1760	Investment property	6(10)				42,285		-		41,641			-		44,644			-
1780	Intangible assets	6(11)				3,170,192		3		2,231,694			2		2,004,072			3
1840	Deferred income tax assets						202,444		-		171,321			-		158,153			-
1900	Other non-current assets						714,493		1		734,651			1		29,802			-
15XX	Total non-current assets
					15,967,849		15		14,986,511			15		12,325,732			15
1XXX	Total assets
				$	108,481,898		100	$	101,231,913			100	$	82,990,462			100

(Continued)

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REALTEK SEMICONDUCTOR CORPORATION 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 at March 31, 2022 and 2021 are reviewed, not audited)

	Liabilities and Equity			Notes		March 31, 2022				December 31, 2021				March 31, 2021
				AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(12)	$	10,128,746		9	$	13,342,100			13	$	12,680,000		15
2130	Contract liabilities - current	6(21)				366,060		-			211,100			-		363,209		-
2150	Notes payable						3,276		-			3,276			-		3,277		-
2170	Accounts payable						11,355,824		11			11,105,568			11		11,180,369		14
2180	Accounts payable - related	7
	parties						388,119		-			334,413			-		380,176		1
2200	Other payables	6(13)				26,012,337		24			24,645,141			24		14,055,953		17
2220	Other payables - related parties	7				112,635		-			101,253			-		97,141		-
2230	Current income tax liabilities						1,658,432		2			1,458,340			2		1,192,666		1
2280	Lease liabilities - current						63,388		-			80,315			-		93,445		-
2300	Other current liabilities	6(21)				8,066,738		8			7,539,417			8		7,345,824		9
21XX	Total current liabilities
					58,155,555		54			58,820,923			58		47,392,060		57
	Non-current liabilities
2540	Long-term borrowings	6(14)				1,226,147		1			1,002,799			1		-		-
2550	Provisions - non-current	6(16)				1,108,646		1			989,475			1		1,019,527		1
2570	Deferred income tax liabilities						134,320		-			103,512			-		90,421		-
2580	Lease liabilities - non-current						1,278,669		1			1,252,390			2		1,263,700		2
2600	Other non-current liabilities						109,408		-			110,490			-		99,171		-
25XX	Total non-current
	liabilities						3,857,190		3			3,458,666			4		2,472,819		3
2XXX	Total liabilities
					62,012,745		57			62,279,589			62		49,864,879		60
	Equity
	Share capital	6(17)
3110	Common shares						5,128,636		5			5,106,849			5		5,106,849		6
	Capital surplus	6(18)
3200	Capital surplus						2,070,630		2			1,101,079			1		2,122,008		3
	Retained earnings	6(19)
3310	Legal reserve						5,577,083		5			5,577,083			5		5,577,083		7
3320	Special reserve						1,556,049		1			1,556,049			2		217,036		-
3350	Undistributed earnings						32,563,949		30			27,377,681			27		21,046,919		25
	Other equity	6(20)
3400	Other equity interest			(		436,835)	-	(		1,776,090)(		2)(		953,939)(	1)
31XX	Equity attributable to
	holders of the parent
	company						46,459,512		43			38,942,651			38		33,115,956		40
36XX	Non-controlling interest						9,641		-			9,673			-		9,627		-
3XXX	Total equity
					46,469,153		43			38,952,324			38		33,125,583		40
	Significant contingent liabilities	9
	and unrecognized contract
	commitments
	Significant events after the	11
	balance sheet date
3X2X	Total liabilities and equity				$	108,481,898		100		$	101,231,913			100	$	82,990,462		100

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

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