Skip to main content

AI assistant

Sign in to chat with this filing

The assistant answers questions, extracts KPIs, and summarises risk factors directly from the filing text.

Sign up Log in

ECS Annual Report 2021

Aug 4, 2021

52011_rns_2021-08-04_24c059a3-aea5-483a-83fe-863ecec9270f.pdf

Annual Report

Open in viewer

Opens in your device viewer

Stock Code � 2331

==> picture [325 x 54] intentionally omitted <==

ELITEGROUP COMPUTER SYSTEMS CO., LTD.

2021 Annual Report

(Translation)

Taiwan Stock Exchange Market Observation Post System:http//mops.twse.com.tw/

The date of publication: May 07, 2021

Notice to Readers:

For the convenience of readers, the Meeting Handbook has been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese version shall prevail.

Table of Contents

Chapter 1.Letter to Shareholders .......................................................................................... 1 1.Letter to Shareholders .......................................................................................... 1
Chapter 2.Company Profile .................................................................................................... 2
I. Date of Incorporation .............................................................................................. 2
II. Company History .................................................................................................... 2
Chapter 3.Corporate Governance Report ............................................................................. 6
I. Organization Chart .................................................................................................. 6
II. Information About Director, President, Vice President, Assistant Vice President,
and Head of Department and Branch ...................................................................... 8
(I) Information about Board Members ............................................................. 8
(II) President, Vice Presidents, Assistant Vice Presidents,
and heads of departments and branches .................................................... 14
(III) Remunerations paid to Directors (including Independent Directors),
President and Vice Presidents in the Most Recent Fiscal Year .................. 15
(IV) Compare the ratio of the total remuneration paid to the Company's
Directors, President, and Vice Presidents in the most recent two years to
the net income after tax in the financial report by the Company and all
companies in the consolidated statements, and explain the policies,
standards and combinations of remuneration payment, the procedures for
determining remuneration, and the relevance with business performance
and future risks .......................................................................................... 20
III. Implementation of Corporate Governance ............................................................ 21
(I) Board of Directors ..................................................................................... 21
(II) Operations of the Audit Committee ........................................................... 24
(III) Operation of corporate governance and deviations
from the Corporate Governance Best Practice Principles
for TWSE/TPEx Listed Companies and reasons thereof .......................... 31
(IV) Establishment, functions, and operations of
Remuneration Committee .......................................................................... 43
(V) Corporate Social Responsibility (CSR), Deviations from
"Corporate Governance Best Practice Principles for TWSE/TPEx
Listed Companies" and Reasons ............................................................... 45
(VI) Implementation of ethical corporate management and deviations
from the Ethical Corporate Management Best Practice Principles for
TWSE/TPEx Listed Companies and reasons thereof ................................ 56
(VII)If the Company has formulated the Corporate Governance Best Practice
Principles and relevant regulations, it shall disclose its inquiry method:
The rules and regulations of the Company can be found on the Company's
website (http://www.ecs.com.tw/Corporate governance under investor
relations) or at the Market Observation Post System. ............................... 59
(VIII)Other information enabling a better understanding of the Company's
corporate governance ................................................................................. 59
(IX)
The following matters shall be disclosed on
the implementation of internal control system .......................................... 60
(X)
If the Company and its internal personnel are punished, or the Company
imposes punishment upon its internal personnel for violation of internal
control system in the most recent year and up to the date of the publication
of the annual report, and the penalty result may have a significant impact
on shareholders' equity or securities price, the content of punishment,
major deficiency, and improvement shall be specified .............................. 61
(XI)
Important resolutions of the shareholders' meeting and the Board of
Directors for the most recent year and up to the publication date of the
annual report .............................................................................................. 61
(XII)Major contents of any dissenting opinions on record or stated in a written
statement made by Directors regarding key resolutions of the Directors'
Meeting in the most recent year and up to the publication date of the
annual report .............................................................................................. 66
(XIII)Summary of the resignation and dismissal of the Company's Chairman,
President, Accounting Officer, Financial Officer, Head of Internal Audit,
Head of Corporate Governance, and Head of Research and Development:
................................................................................................................... 66
IV. Information About CPA Professional Fee ............................................................. 67
V. Information on change of CPA .............................................................................. 68
VI. Where the Company's Chairman, President, or any Managerial Officer in charge
of finance or accounting matters who has, in the most recent year, held a position
at the accounting firm of its CPA or at an affiliated enterprise, the name, title, and
the perod of his/her employment with the accounting firm of its CPA or the
affiliated enterprise shall be disclosed ................................................................... 69
VII. Changes in transfer and pledge of shares of directors, managers, and shareholders
holding more than 10% of their shares in the most recent year and as of the
publication date of the annual report ..................................................................... 69
VIII. Relationship Information, if Among the Company's 10 Largest Shareholders Any
One is A Related Party or A Relative within the Second Degree of Kinship of
Another .................................................................................................................. 70
  • IX. Total number of shares held in any single re-invested enterprise by the Company, its directors and managers, and any business controlled either directly or indirectly by the Company and the consolidated shareholding ............................................. 71
IX.
Total number of shares held in any single re-invested enterprise by the Company,
its directors and managers, and any business controlled either directly or indirectly
by the Company and the consolidated shareholding ............................................. 71		 IX.
Total number of shares held in any single re-invested enterprise by the Company,
its directors and managers, and any business controlled either directly or indirectly
by the Company and the consolidated shareholding ............................................. 71
Chapter 4.Capital Overview ................................................................................................. 72
I. Capital and Shares ................................................................................................. 72
(I)
Source of Capital ....................................................................................... 72
(II)
Shareholder Structure ................................................................................ 73
(III)
Diffusion of Equity Ownership ................................................................. 73
(IV)
List of Major Shareholders ........................................................................ 74
(V)
Market Prices, Net Worth Per Share, Earnings Per Share, Dividends Per
Share and Related Information in the Most Recent 2 Fiscal Years ........... 74
(VI)
Dividend Policy and Its Implementation ................................................... 75
(VII)Effect on the Operating Performance and Earnings per Share of
Distribution of Stock Dividends Proposed or
Adopted in the Most Recent Shareholders' Meeting ................................. 75
(VIII)Remuneration of employees and directors: ............................................... 75
(IX)
Buyback of Treasury Stock ........................................................................ 76
II. Corporate Bonds .................................................................................................... 77
III. Preferred Shares .................................................................................................... 77
IV. Global Depository Receipts (GDRs) ..................................................................... 77
V. Employee Stock Options ....................................................................................... 77
VI. Employee Restricted Stock ................................................................................... 77
VII. Status of New Shares Issuance in Connection
with Mergers and Acquisitions .............................................................................. 77
(I)
Acquisition or acceptance of new shares issued by
other companies in 2020 and as of
the publication date of the annual report ................................................... 77
(II)
Acquisition or acceptance of new shares issued by other companies
already adopted by the Board of Directors in 2020 and as of the
publication date of the annual report ......................................................... 77
VIII. Implementation of Capital Utilization Plan ........................................................... 77
(I)
Plan content ............................................................................................... 77
(II)
Implementation .......................................................................................... 77
Chapter 5.Operational Highlights........................................................................................ 78
I. Business Activities ................................................................................................ 78
(I)
Scope of business ....................................................................................... 78
1.
Major products/services ........................................................................... 78
2.
Major products and ratios ......................................................................... 78
3.
New products to be developed ................................................................. 79
(II)
Industry overview ...................................................................................... 83
(III)
Technology and R&D ................................................................................ 92
(IV)
Long- and Short-Term Business Plans ...................................................... 93
II. Analysis of the Market as well as Production and Marketing Situation ............... 97
(I)
Market analysis .......................................................................................... 97
1.
Sales areas of main products (services) .................................................... 97
2.
Market shares ........................................................................................... 97
3.
Future market supply and demand and prospect ...................................... 97
4.
Competitive edge ...................................................................................... 99
5.
Advantages and disadvantages for developmental and action plans ...... 100
(II)
Applications and processes of major products ........................................ 102
(III)
Supply and demand of major materials ................................................... 103
(IV)
Names of customers who accounted for more than 10% of the total amount
of purchases and sales in any year of the recent two years and the amount
and proportion of purchases and sales, together with the reasons for the
increase or decrease ................................................................................. 104
(V)
Indication of Production Volume for the Most Recent Two Fiscal Years 105
(VI)
Indication of Sales Volume for the Most Recent Two Fiscal Years ......... 105
III. Information on Employees .................................................................................. 106
IV. Environmental Protection Expenditures .............................................................. 106
V. Labor Relations ................................................................................................... 107
VI. Major Agreements ............................................................................................... 110
Chapter 6.Financial Overview ............................................................................................. 111
I. Incidents of Condensed Balance Sheets, Income Statements, Accountant Name,
and Audit Opinions for the Recent 5 Years .......................................................... 111
II. Financial Ratio Analysis for the Most Recent Five Years ................................... 115
III. The Audit Committee's Audit Report on the Financial Report of 2020 .............. 118
IV. 2020 Financial Reports ........................................................................................ 119
V. 2020 Parent Company Only Financial Reports of the Company Audited and
Attested by the CPA
(excluding a breakdown of important accounting items) .................................... 208
VI. If the Company or its Affiliates have Experienced Financial Difficulties in 2020 or
During the Current Fiscal Year up to the Date of Publication of the Annual Report,
the Annual Report shall Explain how Said Difficulties will Affect the Company's
Financial Situation ............................................................................................... 290
Chapter 7.Financial Status and Operating Results .......................................................... 291
I. Financial Status ................................................................................................... 291
II. Financial Performance ......................................................................................... 292
III. Analysis on Cash Flow ........................................................................................ 293
IV. Major Capital Expenditures in 2020 and Their Impacts on
the Company's Finance and Operations .............................................................. 293
V. Reinvestment Policies of the Most Recent Year, Main Reasons for Investment
Gains or Losses, Improvement Plans, and Investment Plans of the Upcoming
Year:..................................................................................................................... 293
VI. Risk Analysis and Assessment: ........................................................................... 294
VII. Other Important Matters ........................................................................................ 301
Chapter 8.Special Notes ...................................................................................................... 302
I. Information about the Company's Associates ..................................................... 302
II. Private placement securities in 2020 and up to
the publication date of this annual report ............................................................ 309
III. Holding or disposition of company shares of 2020 and up to
the publication date of this report ........................................................................ 309
IV. Other disclosure items ......................................................................................... 309

Chapter 1. Letter to Shareholders

Dear Shareholders,

The year 2020 was a turbulent and grim year for all industries. The COVID-19 pandemic has brought about earth-shaking changes to the international political and economic situation: the global stock markets were in meltdown at one point; countries implemented border control measures; economic momentum fell into a frozen state. Seeing the rapidly deteriorating pandemic impact, the Federal Reserve System of the US launched the largest monetary easing in history to stop the economic downturn, which also detonates a capital frenzy. Although COVID-19 vaccines have been launched, the global economy still faces adjustment and transformation. In addition to actively adjusting the structure of each product, the Company was also committed to raising the proportion of non-PC products. The consolidated revenue for 2020 was NT$26 billion, with a gross profit margin of 10.51%, and the earnings after tax were approximately NT$62 million, with an after-tax earnings of NT$0.11 per share.

According to the market research institution Gartner, the global PC shipment in 2020 was 275 million, which was 4.8% higher than in 2019. This has been the highest growth in the PC market since 2010, mainly because the pandemic forced the world to address the demands for remote work and learning. In addition, with the rising trend of home-based economy, many home-based activities have become the new normal, which is transforming industry structure. On this ground, in addition to keep operating the original products, the Company will continue to collaborate with international companies to develop tablet, mini computer, Internet of Things (IoT), vehicle-mounted devices, artificial intelligence (AI), intelligent logistics, intelligent charging, and other products. We will boost the development of non-PC product markets and increase the proportion of non-PC products.

The PC market situation in 2020 was promising, but the future is still challenging. Concerns on component shortage and trade negotiation still persist, but the good news is that the delay of order caused by the shortage of components will continue to ferment. In the future, the popularization of emerging applications such as 5G, AI, IoT, electric vehicles, will be conducive to the Company's industrial transformation. The Company will continue to grasp market demands, strengthen customer management and collection, and strictly implement cost and inventory control in addition to strengthening cost competitiveness. We will strengthen our vertical alliance with upstream and downstream partners, actively expand new customer groups, new product areas, so as to provide the best products to the end consumer market.

The Company adheres to the commitment of sustainable development, and is committed to providing global consumers with pure and environmentally friendly IT products and exploring new market opportunities to expand sales. I am grateful to shareholders' support for Elitegroup Computer. All of our staff will keep adhering to the ultimate goal of creating greater value for shareholders. Please continue to encourage and assist us. Thank you!

Chairman

1

Chapter 2. Company Profile

I. Date of Incorporation: May 6, 1987

II. Company History

  • 1987 � The company was established with a registered capital of NT$5 million.

  • Led the way to launch ECS-286 motherboard with the design of MULTI-SPEED.

  • 1988 � Led the way to launch 32-bit microcomputer motherboard.

  • NEAT AIO motherboard won the "Most Excellent Product Design Award" at Hanover Computer Fair.

  • 1989 � Officially started using the high-precision surface mounting technology (SMT) and the motherboard automatic testing equipment (ATE).

  • Signed a patent licensing contract with IBM.

  • Established a British subsidiary to expand the business in Western Europe markets, such as the UK.

  • Purchase Guandu Plant to expand production capacity and improve manufacturing level.

  • 1990 � Set up a German subsidiary to expand the business in Germany and Eastern Europe markets.

  • Set up a Japanese subsidiary to expand the business in Northeast Asia markets.

  • 1991 � Set up a Singapore subsidiary to expand the business in Southeast Asia markets.

  • Set up a subsidiary in the British Virgin Islands as an overseas holding work base for business in the United States.

  • Set up a Canadian subsidiary to expand the business in the Canadian market.

  • Approved by the Security Exchange Commission to be a public company.

  • Purchased Danshui Plant to amplify production capacity.

  • Ranked No.1 in "Comprehensive Operation Performance" by China Credit Information Service, Ltd.

  • Set up Chan-Ying Computer to promote computer system business in the Taiwan market.

  • 1992 � Rated as 5A Manufacturer by Market and Information Magazine.

  • 1993 � Obtained the ISO-9002 Quality Assurance Certification.

  • Set up a Hong Kong subsidiary to expand the business in the HK market.

  • Collaborate with DEC to take the lead in launching the first 64-bit computer motherboard ALPHA.

  • Introduced the power-saving design of GREEN PC.

  • 1994 � Stock listing application was approved and was offered for trading on September 21.

  • Successfully developed the 3DMODEM software driver, which was officially launched in the Japanese market.

  • Launched CD-ROM and officially entered the multimedia computer system market.

  • Reinvested in Powerchip Semiconductor Corporation and integrated components, motherboards, and PC products.

  • 1995 � Prepared the construction of a 4000-square meter plant in Taoyuan Plant for the mass production of discs and full-featured multimedia computer systems.

  • Developed full-featured multimedia computer system and high-resolution monitor system.

  • Re-invested in Genuine Co., Ltd. to increase the marketing network in Taiwan.

  • 1996 � Dual-CPU motherboard (P6FX2-a) and 12X CD-ROM won the National Boutique Award in 1996.

  • First manufacturer to launch dual-CPU motherboard (P6FX2-a) in Taiwan.

  • Introduced into the Global Operation Management System of Worldwide Logistic System.

  • Close its operation of the Company’s subsidiary located in the British Virgin Islands.

  • 1997 � Danshui Plant obtained the ISO-9001 Quality Assurance Certification.

  • Taoyuan Plant obtained the ISO-9002 Quality Assurance Certification.

2

  • Pentium II Dual-CPU Motherboard (P6LX2-A) and Smart100 CD-ROM driver won the National Boutique Award in 1997.

  • 1998 � The first manufacturer to launch 100MHz Socket 7 related products, which drove the trend of overclocking in the market.

  • 1999

  • The first one to launch the mini-scale easy-to-assemble highly integrated quasi-system and system products.

  • 2000 � The Danshui Plant obtained ISO-14000 environmental management system certification.

  • The P6VAP-A+ motherboard was ranked No. 1 by the German PC Welt magazine in "Most Worthwhile Motherboard Purchases".

  • P6ISA-II was awarded the "Best Motherboard Recommendation" by PC DIREKT, a German computer magazine, in November 2000.

  • Purchased land in Neihu at NT$1,273,685 thousand to build an office building, and completed the transfer procedures in June 2000.

  • Re-invested NT$182,490 thousand to Mobiletech Inc., which mainly manufactured and sold battery packs and monitors.

  • 2001 � Signed a merger contract with ALPHA-TOP Co., Ltd.

  • Set up Elitegroup Computer System Holding Co., Ltd. to be responsible for overseas investment holding related business.

  • Reinvested to set up ECS Technology (Shenzhen) Co., Ltd. to expand capacity.

  • Set up ECS Holding (America) Co. to reinvest in the subsidiaries of dealerships, PC PAQ, Inc. and PC WAVE Inc.

2002

  • Reinvested to set up Ching Yun Computer (Dongguan) Co., Ltd. to expand capacity.

  • Reinvested to set up Ching Yun Computer (Kunshan) Co., Ltd. to expand capacity.

  • Ended the operation of the Singapore subsidiary.

  • 2003 � On Jun. 17, 2003, the shareholders' meeting resolved to pass a proposal for the sale of land, plant, equipment, and designated raw materials of Zhongli Plant.

  • Set up Dragon Asia Trading Co., Ltd. (Dragon Asia) to reinvest in the establishment of Super ECS Co., Ltd., which mainly sells and deals computer motherboard, computer peripheral products, and related components.

  • In order to integrate the resources in the Americas, PC WAVE Inc. and PC PAQ, Inc. merged to become PC WAVE Inc.

  • In order to integrate factory resources, sold Ching Yun Computer (Dongguan) Co., Ltd.

  • 2004 � In February 2004, acquired 51% equity of Many Billion International Ltd. (Many Billion) through Dragon Asia, and thus indirectly acquired 51% equity in ECS Manufacture (Shenzhen) Co., Ltd. (ECSM).

  • In 2004, reinvested to set up Shining Bright Technology (Samoa) Co., Ltd. through Dragon Asia to acquire the production capacity of printed circuit board.

  • In June 2004, acquired 100% equity of PC Chips Holding Ltd., and thus indirectly held 100% equity of Protac International Computer Limited (PIC UK) and 99.8% equity of PC Chips Electronics, establishing a European pathway system. In order to integrate resources, PIC UK and its UK subsidiary changed their names in October 1993, and the (former) UK subsidiary ceased business.

  • Reinvested in PC WAVE Inc. and changed its name to PCCHIPS USA Inc.

  • 2005 � In January 2005, acquired 49% equity of Many Billion through Dragon Asia, and then indirectly acquired 100% equity of ECSM.

  • In March 2005, it acquired 100% equity in ECS EU B.V.

  • Reinvested to set up Service Alliance Mart, Inc. to provide product maintenance services in the Americas.

3

  • In order to consolidate resources in the Americas, Elitegroup Computer Systems Inc. (ECS USA), merged with PCCHIPS USA Inc., with ECS USA as the surviving company.

  • Set up a South Korean subsidiary to expand the business in the South Korean market.

  • Reinvested to set up Super ECS USA, Inc. in December 2005 to expand its business in the North American market.

  • 2006 � On Jan. 1, 2006, 314,001,100 shares were issued by the Company to acquire the desktop computer system business department of Tatung Co.

  • In March 2006, a Czech subsidiary was established as a desktop computer production base.

  • In May 2006, the Canadian subsidiary completed the liquidation operation.

  • In July 2006, acquired 38% equity of Million Up Finance Ltd. through Dragon Asia, and indirectly acquired 38% equity of Golden Elite Technology (Shenzhen) Co., Ltd., ( ���� ) (GE) so as to obtain part of its production capacity of printed circuit board and motherboard.

  • In July 2006, set up a Mexico subsidiary as a desktop computer production base.

  • In September 2006, reinvested to set up ECS Trading (Shenzhen) Co., Ltd. to engage in PC assembly and sales business.

  • On Dec. 25, 2006, the Company issued 184,930,500 shares to merge UNIWILL COMPUTER CORP., so as to engage in the production and sales of laptops and related products.

  • 2007 � In July 2007, invested NT$240,000 thousand to set up DU PRECISION INDUSTRY CO., LTD. jointly with Cheng Uei Precision Industry Co., Ltd., in which the Company held 40% equity, so as to engage in the design, manufacturing, and other related services of computer connectors.

  • In October 2007, sold all 40.10% equity held by the Company in DIGICUBE TECHNOLOGY CO., LTD.

  • 2008 � In the first quarter of 2008, increased capital of US$12,000 thousand to the original invested company Venture Well Holding Ltd. (BVI) (Venture Well) via increasing capital of US$ 12,000 thousand to the subsidiary ECS Holding (BVI), after which the equity of Venture Well directly held by Elitegroup Computer - BVI increased from 33.45% to 55.95%.

  • In August 2008, the Company purchased 62% equity of Million Up through the capital increase of US$50,000 thousand in the subsidiary Dragon Asia, so as to indirectly acquire 100% equity of its subsidiary Golden Elite Technology (Shenzhen) Co., Ltd.( ���� )

  • In November 2008, the Czech subsidiary completed the liquidation operation.

  • 2009 � In December 2009, sold E-Trend Technology (BVI) Co., Ltd. and its subsidiary ECST to a third party.

  • In August 2009, sold 40% equity in DU PRECISION INDUSTRY CO., LTD. to Cheng Uei Precision Industry Co., Ltd.

  • In 2009, Venture Well redeemed its treasury shares from individual shareholders to increase its shareholding ratio from 59.03% to 61.91%.

  • 2010 � In June 2010, reinvested to set up Elitegroup Electronics (Changshu) Co., Ltd. for the assembly and sales of motherboards and computer products.

  • In June 2010, sold Many Billion and its subsidiary ECSM to a third party.

  • In August 2010, sold Kuo Yang (BVI) Co., Ltd. and its subsidiary Ching Yun Computer (Kunshan) Co., Ltd. to a third party.

  • In 2010, ECS Holding (BVI) purchased shares from shareholders of Venture Well to increase the shareholding ratio to 68.45%.

  • 2011 � In order to adjust the investment structure, Xunrui Electronics (Shenzhen) Co., Ltd. and Beijing XunRun Technology Co., Ltd., which were 100% owned by Alpha Leader Ltd. (HK) were fully transferred to Elitegroup Computer Systems (HK) Co., Limited in March 2011; in September 2011,

4

Orbbit International Corp, which was 100% owned by Affirm International Ltd. (BVI), was fully transferred to Alpha Leader Ltd. (HK).

  • 2012 � The liquidation of PC Chips Holding Ltd. (UK) was completed in December 2012.

  • 2013 � The liquidation of ECS DE Mexico S.A. DE C.V. was completed in March 2013.

  • The liquidation of Elitegroup Computer Systems (Germany) Co., Ltd. was completed in October 2013.

  • 2014 � The liquidation of Shining Bright Technology (Samoa) Co., Ltd. was completed in March 2014.

  • The liquidation of Elitegroup Electronics (Changshu) Co., Ltd. was completed in April 2014.

  • The liquidation of ECS Trading (Samoa) Co., Ltd. was completed in April 2014.

  • 2015 � The liquidation of Super ECS Co., Ltd. (Mauritius) was completed in February 2015.

  • The liquidation of Elitegroup International Holding (HK) Co. Limited was completed in April 2015.

2016

2017

  • The liquidation of Elitegroup Computer Systems EU B.V. was completed in December 2016.

  • Set up ECS Holding (HK) Co., Limited.in April 2017 to be responsible for the business related to overseas investment and holding.

  • In June 2017, reinvested to set up Elitegroup Computer Systems Digital Technology (Shenzhen) Co., Ltd.

  • 2019 � In January 2019, Elitegroup Technology (Thailand) Co., Ltd. was established to engage in the assembly and sales of motherboard and computer products.

  • In July 2019, GE completed the division operation and divided the assets and liabilities with the net value of NT$454,051 thousand into Golden Elite Technology (Shenzhen) Co.,( ���� ) Ltd.(GECSD) as the capital to engage in the manufacturing and sales of motherboard and computer products.

5

Chapter 3. Corporate Governance Report

I. Organization Chart

==> picture [421 x 504] intentionally omitted <==

----- Start of picture text -----

Board of Directors
Remuneration Committee Audit Committee
Strategy Committee Internal Audit Committee
Chairman
Wen-Nan Tsan
President
Chih-Nan Chen
(acting)
President Office
COO
Chih-Nan Chen
(concurrently)
Chief Operation Officer Office
Validation Division
Manufacturing Division
Legal & IP Affairs Section
Information Communication Business Group Information Technology System Department Supply Chain Management Division Resource Management Department Finance and Accounting Division
----- End of picture text -----

6

2. Major Corporate Functions

Audit Committee Oversee the fair presentation of the Company's financial
statements, and the CPA's selection (dismissal), independence
and performance, the effective implementation of the
Company's internal control, the Company's compliance with
relevant decrees, rules, and the control of the Company's
existing or potential risks.
Remuneration Committee Regularly formulate the policy, system, standard and structure
related to the performance evaluation of directors, supervisors,
and managers, and their salaries and remunerations.
Strategy Committee Plan and review proposals on important operational issues,
strategies, and investments, and submit them to the Board of
Directors for reference.
Internal Audit Committee To check and evaluate the effectiveness of internal controls;
and to provide timely recommendations for improvement.
President Office Responsible for the operational management, corporate
governance, public relations, and other related business.
Chief Operation Officer Office Responsible for the operation and management of the
Information and Communication Business Group and the
R&D Verification Division.
Information Communication
Business Group		 Responsible for the planning, research and development,
marketing, sales, after-sales service, and maintenance of
motherboards and barebone systems, add-on cards, laptops,
tablets, IoT, IoV, new energy, AI and, new products.
Validation Division Responsible for the functional test and verification of
motherboards and barebone systems, add-on cards, IoT, and
new products.
Manufacturing Division Responsible for the manufacturing of mainboards, desktop
computers and barebone systems, add-on cards, notebook,
tablet computers and new products.
Finance and Accounting
Division		 Responsible for accounting, taxation, stock affairs, corporate
finance and treasury and, investor relations.
Supply Chain Management
Division		 Responsible for the establishment of systematic procedures for
raw material procurement, supply and demand planning,
production and sales coordination, supplier relationship
management, overseas storage, import and export operation,
etc.
Resource Management
Department		 Global human resources management, general affairs, and
other business.
Information Technology
System Department		 To manage information system architecture, e-commerce
strategy, information system development and operation and
information security.
Legal & IP Affairs Section Responsible for legal affairs, and intellectual property rights
management.

7

Remarks
(Note 4)		 Remarks
(Note 4)		 None None None None None None None None None

Executives, Directors or Supervisors who
Are Spouses or within
the Second Degree of Kinship
Relation		 None None None None None None None None

Name		 None None None None None None None None

Title		 None None



None		 None None None
None		 None
Other Position Concurrently Held at ECS and Other
Companies		 Adjunct Professor, Institute of Business Administration,
National Taiwan University
Independent Director of Partner Tech Corp.
Independent Director of ASolid Technology Co., Ltd.
Independent Director of Chunghwa Precision Test Tech.
Co., Ltd.
Independent Director of CTCI Group		 General Manager of the retail and wholesale business divi-
sion of Pou Chen Corporation, Corporate Director Repre-
sentative of Pou Chen Corporation; Chairman of Pau Yuen
Trading Corporation, Taiwan Taisong Trading Co., Ltd.,
and PCG Bros Co.; Chairman and Executive Director of
Pou Sheng International (Holdings) Limited; Director of
the subsidiary of Yue Yuen Industrial (Holdings) Limited,
the subsidiary of Pou Sheng International (Holdings) Lim-
ited, Baozhi (��)Investment Co., Ltd. ELITEGROUP
COMPUTER SYSTEMS CO., LTD., Supplyline Logistics
Limited, Full Pearl International Limited, Brandblack,Inc.
Venture Well Holdings Limited, and Supervisor in Run
Cheng Investment Holdings Co., Ltd., and Chih Chun Co.,
Ltd.		 Deputy General Manager of Pou Chen Corporation;
Corporate
Director
Representative
of
Pou
Chen
Corporation, and Director of the subsidiary of Yue Yuen
Industrial (Holdings) Limited, Pao Hsing Investment Co.,
Ltd., and Hua Jian Industrial Holdings Co., Limited		 President of Ching Chan Construction Co., Ltd.
President of Ching Chan Investment Co., Ltd.
Director of Strength Master Fitness Group




None

Independent Director of Eurocharm Holdings Co., Ltd.
Independent Director of OBI Pharma
Independent Director of Chien Kuo Construction Co., Ltd.
Partner, Warwick International Technology Consulting Co.,
Ltd.
Independent Director of Lotus Pharmaceutical Co. Ltd
Independent Director of P-TWO INDUSTRIES INC.
Corporate Director representative of Tai Ling Biotech, Inc.
Chairman of Easywell Biomedicals Co., Ltd.
Independent Director of eCloudvalley Digital Technology
Co., Ltd.

Principal of Min Shen Accounting Firm
Chairman of Lvzhong Investment Co., Ltd.
Education and
work experience (Note 3)
Ph.D. of Information Management, National
Central University
Director, Market Intelligence & Consulting
Institute (MIC)
Consultant, Ministry of Economic Affairs
Chairman of Asia Pacific Industrial Analysis
Association (APIAA)
Member of National Development Fund
Investment Evaluation Committee
Department of Banking and Insurance, Tamkang
University
Executive Vice President of Pou Chen Group
Corporate Supervisor Representative of
Elitegroup Computer Systems Co., Ltd.
Deputy General Manager, Business Division,
Chase & Co
Deputy General Manager, Business Division,
BNP Paribas
Deputy General Manager, Legal Person Finance
Department, Taishin Bank
Institute of Law, National Taiwan University
Deputy General Manager of HTC Corp.
Department of Electrical Engineering, Kaohsiung
Industrial College
President of Ching Chan Construction Co., Ltd.
President of Ching Chan Investment Co., Ltd.
Director of Strength Master Fitness Group
Master of Economics, University of Maryland,
USA
Chairman and General Manager of Tatung Co.,
Executive Deputy General Manager of Tatung Co.,
Chief Director of Overseas Business of Tatung
Co., Lecturer of Tatung University, Lecturer of
National Taiwan University, Teahing Assistant of
University of Maryland, USA
Ph.D. of Law, Cornell Law School
Jointly appointed professor in the College of Law
and the College of Commerce, National Chengchi
University
Convener of EMBA Biotech Medical Group,
College
of
Commerce,
National
Chengchi
University
Master of Business Studies, Wharton School of
Business, University of Pennsylvania
Bachelor of Chemical Engineering, Taiwan
University
Partner and Chief Strategy Officer, Warwick
International Technology Consulting Co., Ltd.
Vice President, Mergers and Acquisitions,
Citigroup Smith Barney (New York)
Chief
Investment
Officer,
Foxconn
(San Jose)
Master, Institute of Business Administration,
National Taiwan University
Financial Manager of Sino Cell Technologies Co.,
Ltd.
Financial Officer in Fuwan Enterprises Co., Ltd
Deputy Team Leader of Audit Department, Diwan
& Company
Senior Officer of Project, Underwriting
Department, Ching Hwa Securities Co., Ltd
Shareholding by
Nominees		 Shareholding
Ratio
0
0
0
0
0
0
0
0
0

Number
of Shares
0
0
0
0
0
0
0
0
0
Spouse & Minor
Shareholding
Shareholding
Ratio
0
0
0
0
0
0
0
0
0

Number
of
Shares
0
0
0
0
0
0
0
0
0
Current Shareholding Shareholding
Ratio
0
12.36
0
12.57
0
0
0
0
0

Number of
Shares
0		 68,884,949
0		 70,066,949
0
0
0
0
0
Shareholding When
Elected		 Shareholding
Ratio
0
12.57
0
12.57
0
0
0
0
0
Number of
Shares		 0 70,066,949 0 70,066,949 0 0 0 0 0
First
election
(Note 2)		 2012.06.25 2001.04.12 2014.06.23 2001.04.12 2006.06.24 2006.04.11 2009.06.26 2009.06.26 2017.06.22

Term
(Yrs)		 3 3 3 3 3 3 3 3
Date
elected
(appointed)		 2018.06.25 2018.06.25 2018.06.25 2018.06.25 2018.06.25 2018.06.25 2018.06.25 2018.06.25
Gender Male Male Male Male Female Male Male Female
Name Wen-Nan Tsan
(Note 5)		 Pou Chen
Corporation
Representative
Pan-Tsu Wu
(Note 6)		 Pou Chen
Corporation
Representative:
Yue-Ming Ho		 Chih-Shen
Chen
(Note 7)		 Wen-Yen
Lin Kuo
(Note 5)		 Gen-Yu Fong Han-Fei Lin Liang-Chao Lin
Nationality/
Place of
Registration		 R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C.
Title
(Note 1)		 Chairman Director Director Director Director Independent
Director		 Independent
Director		 Independent
Director

  • Note 1: In case of corporate shareholder, the name and representative of the corporate shareholder shall be presented, respectively (in case of corporate shareholder representative, the name of the corporate shareholder shall be indicated), and the following Table 1 shall be filled in.

  • Note 2: Indicate the time of first serving as a director or supervisor of the Company. If there is any interruption, a note should be attached.

  • Note 3: Experience related to the current position, if he/she worked in a certified accounting firm or affiliated company during the aforesaid reporting period, his/her title and position shall be specified.

  • Note 4: If the Chairman and the President or equivalent positions (top manager) are the same person, spouses or relatives within one generation, the information on reasons, rationality, necessity, and countermeasures (for example, increase the number of independent directors and there shall be more than half of directors being employees or managers, etc.) shall be specified.

  • Note 5: Director Wen-Nan Tsan was appointed as Chairman on April 21, 2021; Chairman Wen-Yen Lin-Kuo resigned as Chairman and Director on April 21, 2021.

  • Note 6: Pan-Tsu Wu, the representative of the juristic person director, acted as the representative of the corporate supervisor of the Company from December 1, 2006 to June 25, 2012, acted as the director of the Company from June 23, 2014 to June 15, 2015, and acted as the representative of the Company's juristic person director since June 16, 2015.

  • Note 7: Chih-Shen Chen, the representative of the juristic person director, acted as an independent director of the Company from June 24, 2006 to June 26, 2009, acted as the representative of the Company's juristic person director since November 13, 2012, and acted as an natural person director since June 25, 2018.

  • �� : The Company re-elected its directors at the shareholders' meeting on June 25, 2018, with 9 directors elected (including 3 independent directors), and set up an audit committee.

9

Table 1: Major Shareholders of the Corporate Shareholder

April 2021

April 2021 April 2021
Name of corporate shareholder
(Note 1)		 Major Shareholders of the Corporate Shareholders (Note 2)
Shareholders Percentage of
Ownership
Pou Chen Corporation Pi Hsi Bros (Panama) Co., Ltd.
Chuan Mao Investment Co., Ltd.
Hung Tzu Development (BVI) Co., Ltd.
Trust Property Account Entrusted in Taishin International Bank
ING Life Insurance Company Limited-PAR
Bright View Investments Co., Ltd.
Beevest Securities Limited entrusted for custody by Chinatrust
Commercial Bank
Liechtenstein Bank Investment Account entrusted for custody by
Chase
Investment Account in Norges Bank entrusted for custody by
Citigroup Commercial Bank
Shu-Man Huang


7.24%
5.55%
4.60%
3.46%
2.50%
2.05%
1.86%
1.71%
1.60%
1.45%

Note 1: If a director is a representative of the corporate shareholder, the name of the corporate shareholder shall be filled in. Note 2: Fill in the names of the major shareholders of the corporate shareholder (whose shareholding ratio is among the top 10) and their shareholding ratio. Where the major shareholder is a corporation, please complete the following Table 2.

Note 3: If a corporate shareholder is not a company organization, the names and shareholding ratios of the shareholders to be disclosed are the names of the investors or donors and their contribution or donation ratio.

Table 2: Major Institutional Shareholders that are Legal Persons

April 2021

April 2021
Name of corporation (Note 1) MajorShareholders ofcorporation(Note2)
Shareholders Percentage of Own-
ership
Pi Hsi Bros (Panama) Co.,Ltd. Plantegenet GroupLimited 100.00%
Chuan Mao Investment Co., Ltd. Singapore Sheng Tian Long Co., Ltd
Shuntai Investment Co., Ltd.
Seawind Management Limited
Changqing Investment Co., Ltd.
Yuqi Investment Co., Ltd.
YujieInvestment Co.,Ltd.		 49.83%
30.02%
7.97%
6.71%
3.27%
2.20%
HungTzuDevelopment (BVI) Co.,Ltd. Precision FocusInternational Limited 100.00%
Bright View Investments Co., Ltd. Crystal Coral Limited
Blot From The Blue Limited		 44.32%
55.68%

Note 1: If the major shareholder in Table 1 above is a legal person, the name of the legal person shall be filled in. Note 2: Fill in the names of the major shareholders of the legal person (whose shareholding ratio is among the top 10) and their shareholding ratio.

Note 3: If a corporate shareholder is not a company, the aforementioned names and shareholding ratios of the shareholders to be disclosed are the names of the investors or donors and their contribution or donation ratio.

10

2. Information on Director Independence

Director Information

Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information Director Information
May7,2021
Qualifications
Name		 More than 5 years working experience
and following professional
qualification
Independence Criteria (Note 1)		 Number of Other Public Companies where the Individual
Concurrently Serves as an Independent Director
An Instructor
or Higher
Position in a
Department of
Commerce,
Law, Finance,
Accounting,
or Other
Academic
Department
Related to the
Business
Needs in a
Public or
Private Junior
College,
College or
University
A Judge, Public
Prosecutor,
Attorney, Certified
Public Accountant,
or Other
Professional or
Technical
Specialist who Has
Passed a National
Examination and
Has Been Awarded
a Certificate in a
Profession
Necessary for the
Business



Having
Work
Experience
in the Areas
of
Commerce,
Law,
Finance, or
Accounting,
or
Otherwise
Necessary
for the
Business
1		 2 3 4 5 6 7 8 9 10 11 12
Wen-Nan Tsan � � � � � � � � � � � � � 4
Pan-Tsu Wu � � � � � � � � � � 0
Yue-MingHo � � � � � � � � � � 0
Chih-Shen Chen � � � � � � � � � � � � 0
Wen-Yen
Lin Kuo
(Resigned on
April 21,2021)		 � � � � � � � � 0
Gen-Yu Fong � � � � � � � � � � � � � � 3
Han-Fei Lin � � � � � � � � � � � � � 3
Liang-Chao Lin � � � � � � � � � � � � � � 0

  • Note 1: For directors who have met the following criteria in the two years prior to the election and during their tenure, tick "" in the box below each criteria. �

  • (1) Not an employee of the Company or any of its affiliates.

  • (2) Not a director or supervisor of the Company or any of its affiliates (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary).

  • (3) Not a natural-person shareholder who holds shares, together with those held by the person's spouse, minor children, or held by the person under others' names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is ranked in the top 10 in shareholdings.

  • (4) Not a spouse, relative within two generations, or direct blood relatives within three generations of the executive listed in (1) or person listed in (2) or (3).

  • (5) Not a director, supervisor, or employee of a corporate shareholder who directly holds more than 5% of the total number of issued shares of the Company or is ranked top five in terms of the number of shares held or is designated as a Director or Supervisor of the Company pursuant to Paragraph 1 or 2, Article 27 of the Company Act (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary).

  • (6) Not a director, supervisor, or employee of a company with a majority of the company's director seats or voting shares and those of any other company are controlled by the same person (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary).

  • (7) Not a director, supervisor, or employee of a company or institution with the same chairman of the board, president, or equivalent position, or a spouse thereof (not applicable in cases where the person is an independent director of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary).

11

  • (8) Not a director, supervisor, executive, or shareholder with 5% or more of shares in a specific company or institution with financial or business communication with the Company (but this does not apply if a specific company or institution holds more 20% but less than 50% of the total issued shares of the Company and concurrently serving as independent director with the Company and its parent company, subsidiary or a subsidiary of the same parent company as the Company established in accordance with this act or the laws of the country where it is located).

  • (9) Does not provide the Company or associated companies with auditing or, in the past 2 years, obtained compensation cumulated over NT$500,000 in business, legal, financial, accounting services, by professionals, sole proprietorships, partnerships, companies, or institutional owners, partners, directors, supervisors, managers, and spouses. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer, or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

  • (10)Not a spouse or relative within the second degree of kinship of any other director of the Company.

  • (11)Not under any of the categories stated in Article 30 of the Company Act.

  • (12) No Government Apparatus agency, juristic person, or its representative is elected under Article 27 of the Company Act.

12

3. Education and Training of Directors

Title Name Date First
Elected		 Date Date Training Institution
Course Name		 Training
Hours
Total
hours		 Compli
ant or
not
From To
Chairman Wen-Nan Tsan Jun. 25, 2012 May 6, 2020 May 6, 2020 Taiwan Corporate
Governance
Association		 Analysis of financial situations in response
to stressful events - a case study of Sino-
US trade war and COVID-19
3.0		 6.0 Yes
Apr. 22, 2020 Apr. 22, 2020 Securities and Futures
Institute
5G Key Technologies and Application
Opportunities
3.0
Director Pan-Tsu Wu Jun. 23, 2014 Dec. 22, 2020 Dec. 22, 2020 Taiwan Corporate
Governance
Association		 Impact of IFRS17 on the business strategy
of the Insurance Enterprise
3.0		 12.0 Yes
Oct. 22, 2020 Oct. 22, 2020 Securities and Futures
Institute
Publicity and explanation meeting on
preventing insider trading and insider
equitytradingin 2020

3.0
Aug. 24, 2020 Aug. 24, 2020
Corporate Operation
Association of the
Republic of China		 Practice
operation
of
mergers
and
acquisitions and corporate governance in
2020

3.0
Jul. 22, 2020 Jul. 22, 2020 Taiwan Academy of
Bankingand Finance		 Corporate
Governance
&
Business
SustainabilitySeminar
3.0
Director Yue-Ming Ho Jun. 25, 2018 Oct. 08, 2020 Oct. 08, 2020 Corporate Operation
Association of the
Republic of China		 Introduction to the new and revised rules
for the operation of the Board of Directors,
Independent
Directors,
and
the
Remuneration Committee


3.0		 6.0 Yes
Aug. 28, 2020 Aug. 28, 2020
Corporate Operation
Association of the
Republic of China		 Practice
operation
of
mergers
and
acquisitions and corporate governance in
2020

3.0
Director Chih-Shen Chen Jun. 24, 2006 Sep. 4, 2020 Sep. 4, 2020 Securities and Futures
Institute
Publicity and explanation meeting on
preventing insider trading and insider
equitytradingin 2020

3.0		 6.0 Yes
Feb. 14, 2020 Feb. 14, 2020 Securities and Futures
Institute
A macro view of sustainable development
for the global enterprise - from Vision 2050
to Action 2020

3.0
Director Wen-Yen Lin-Kuo
(Resigned on
April 21, 2021)		 Apr. 11, 2006 Nov. 26, 2020 Nov. 26, 2020 Securities and Futures
Institute
Intellectual property management and
corporate operatingrisk
3.0		 6.0 Yes
Feb. 14, 2020 Feb. 14, 2020 Securities and Futures
Institute
A macro view of sustainable development
for the global enterprise - from Vision 2050
to Action 2020

3.0
Independent
Director		 Gen-Yu Fong Jun. 26, 2009 Nov. 06, 2020 Nov. 06, 2020 The Institute of
Internal Auditors -
Taiwan		 Legal norms and risk responsibilities in
corporate governance that directors and
internal personnel must know about

3.0		 6.0 Yes
Feb. 14, 2020 Feb. 14, 2020 Securities and Futures
Institute
A macro view of sustainable development
for the global enterprise - from Vision 2050
to Action 2020

3.0
Independent
Director		 Han-Fei Lin Jun. 26, 2009 Aug. 13, 2020 Aug. 13, 2020 Securities and Futures
Institute
Corporate Governance and Securities
Regulation
3.0		 6.0 Yes
Jul. 28, 2020 Jul. 28, 2020 Securities and Futures
Institute
Directors'
Responsibility
and
Risk
Management Under The Latest Corporate
Governance Blueprint

3.0
Independent
Director		 Liang-Chao Lin Jun. 22, 2017 Sep. 30, 2020 Sep. 30, 2020 Securities and Futures
Institute
Publicity and explanation meeting on
preventing insider trading and insider
equitytradingin 2020

3.0		 6.0 Yes
Feb. 14, 2020 Feb. 14, 2020 Securities and Futures
Institute
A macro view of sustainable development
for the global enterprise - from Vision 2050
to Action 2020

3.0

13

May 7, 2021 Unit: Share
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.
Title
Nationality
Name
Gender
Date of
appointment
Shareholding
Spouse & Minor
Shareholding
Shareholding by Nominees
Major Experience (Education)
Concurrent Positions in Other Companies
Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Remark
(Note 1)
Number of
Shares
Shareholding ratio
Number of
Shares
Shareholding ratio
Number of Shares
Shareholding ratio
Title
Name
Relationship
President (acting)
R.O.C.
Chih-Nan Chen
(Note�1)
Male
2017.10.02
0
0.00
0
0.00
0
0.00
PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.
Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Shou-Yen Liu
Male
2012.01.05
0
0.00
0
0.00
0
0.00
Department of Electrical Engineering, Tamkang
University
President of Super ECS USA, Inc.
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Che-Kuang Lin
Male
2017.05.01
0
0.00
0
0.00
0
0.00
Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer
Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.
None
None
None
None
Vice President of R&D
Verification Division
R.O.C.
Li-Ta Yu
Male
2012.12.27
607
0.00
5,109
0.00
0
0.00
Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Yi-Ching Chung
(Note�3)
Female
2020.3.20
0
0.00
0
0.00
0
0.00
University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan
Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.
None
None
None
None
President
R.O.C.
Lung-Kuang Yang
(Note�1)
Male
2013.12.18
148
0.00
0
0.00
0
0.00
Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB
None
None
None
None
None
Vice President of
Information
Communication Business
Group
R.O.C.
Chi-Tung Huang
(Note�2)
Male
2012.03.05
14,061
0.00
0
0.00
0
0.00
Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,
None
None
None
None
None
Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
R.O.C.
Kui-Hsiang Chuang
(Note�3)
Female
2012.5.11
0
0.00
0
0.00
0
0.00
Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
None
None
None
None
None
Note 1:
Where the Chairman of the Board of Directors and the President or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, information concerning the reason for, reasonableness, necessity thereof, and the measures adopted in response
thereto (such as increasing the number of independent directors, and the way that more than half of the directors are not employees or managers) shall be disclosed:
Note�1: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.
Note�2: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.
Note�3: Yi-Ching Chung took office of Vice President of Finance and Accounting Division and was appointed as the Finance Officer and Chief Accounting Officer by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Division, resigned as the Finance Officer and Accounging
Officer on March 20, 2020, and resigned as Vice President of Finance and Accounting Division on March 31, 2020.

Remark
(Note 1)		 None None None None None None None None

Managerial Officer who Are
Spouses or within the Second
Degree of Kinship
Relationship		 None None None None None None None None

Name		 None None None None None None None None

Title		 None None None None None None None None
Concurrent Positions in Other Companies Director of Elitegroup Technology (Thailand) Co., Ltd.
Director of FoxElite Computer System Co., Ltd.		 President of Super ECS USA, Inc. Director of Elitegroup Computer Systems (Japan) Co.,
Ltd.
Director of Super ECS USA, Inc.
Director of Elitegroup Technology (Thailand) Co., Ltd.		 None Corporate director representative of Elitegroup
Computer Systems (BVI) Holdings Co., Ltd.
Director of Elitegroup Computer Systems (USA)
Co., Ltd.
Corporate director representative of Unity
Investments Limited
Chairman of Venture Well Holdings Limited
Corporate director representative of Advazone
International Limited
Corporate director representative of Affirm
International Limited
Supervisor of Elitegroup Digital Technology
(Shenzhen) Co., Ltd.
Director of Elitegroup Technology (Thailand) Co.,
Ltd.
Director of Alpha Leader Limited
Director of Elitegroup Holdings (HK) Co., Ltd.
Corporate representative of Beijing Advazone
Electronic Co., Ltd.		 None None None
Major Experience (Education) PhD Program in Electrical Engineering, National
Ocean University
IEI Integration Corp., ICP DAS Co., LTD.		 Department of Electrical Engineering, Tamkang
University		 Economic and Trade Group, Graduate Institute of
European Studies, Tamkang
University
MSI, Hon Hai
Precision, Asustek Computer, Pegatron Computer		 Department of Electrical and
Computer Engineering, Tamkang university
Hon Hai Precision,
Protop Technology Co., Ltd.		 University of Strathclyde/MBA
Pou Chen Corporation, Diodes Taiwan S.A R.L.
(Luxembourg), Deloitte Touche,
Tohmatsu Limited Taiwan,
KPMG Taiwan		 Business Management Institute, National Taipei
University of Technology
Mag, Gigabyte, Altbatron, JSB		 Department of Industrial Engineering and Engineering
Management, National Tsing Hua University
Gigabyte Technology
Gigabyte,		 Master of Finance, National Chung Cheng University
Pou Chen Corporation/Accounting assistant, Global
Brands/Financial assistant
Shareholding by Nominees Shareholding ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Number of Shares 0 0 0 0 0 0 0 0
Spouse & Minor
Shareholding		 Shareholding ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Number of
Shares		 0 0 0 5,109 0 0 0 0
Shareholding Shareholding ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Number of
Shares		 0 0 0 607 0 148 14,061 0
Date of
appointment		 2017.10.02 2012.01.05 2017.05.01 2012.12.27 2020.3.20 2013.12.18 2012.03.05 2012.5.11
Gender Male Male Male Male Female Male Male Female
Name Chih-Nan Chen
(Note�1)		 Shou-Yen Liu Che-Kuang Lin Li-Ta Yu Yi-Ching Chung
(Note�3)		 Lung-Kuang Yang
(Note�1)		 Chi-Tung Huang
(Note�2)		 Kui-Hsiang Chuang
(Note�3)
Nationality R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C. R.O.C.
Title President (acting) Vice President of
Information
Communication Business
Group		 Vice President of
Information
Communication Business
Group		 Vice President of R&D
Verification Division		 Vice President of Financial
& Accounting Division
Financial officer and
accounting officer		 President Vice President of
Information
Communication Business
Group		 Vice President of Financial
& Accounting Division
Financial officer and
accounting officer
(1)
Remuneration paid to Directors and Independent Directors (reveal the name in a summarized manner according to the range)		 Remuneration
paid to
Directors
from an
invested
company
other than the
Company's
subsidiaries
or parent
company
(Note 11)		 Remuneration
paid to
Directors
from an
invested
company
other than the
Company's
subsidiaries
or parent
company
(Note 11)		 Remuneration
paid to
Directors
from an
invested
company
other than the
Company's
subsidiaries
or parent
company
(Note 11)		 Remuneration
paid to
Directors
from an
invested
company
other than the
Company's
subsidiaries
or parent
company
(Note 11)		 1. State the remuneration payment policy, system, standard, and structure for independent directors, and the correlation with the amount of remunerations according to the responsibilities, risks, involvement time, and other factors:
In accordance with Article 13.2 of the articles of association of the Company: the remunerations of the directors of the Company shall be agreed upon by the Board of Directors according to the degree of their participation in the operation of the Company and the value of their contributions to the Company, as well as the usual standards
of the industry.
2. Except for information disclosed above, remuneration paid for services rendered by directors of the Company to all consolidated entities (e.g. serving as a non-employee consultant) in the most recent fiscal year: none.		 Note: Pension upon Retirement: All of the amounts are provisions.
Note�: Wen-Yen Lin-Kuo resigned as director on April 21, 2021.
Ratio of total compensation
(A+B+C+D+E+F+G) to net
income (Note 10)		 All Companies
in
Consolidated
Financial
Statements		 14.37 4.35
The
Company		 14.37 4.35
Relevant Remuneration Received by Directors who Are Also Employees Remuneration of Employee (G) (Note 6) All Companies in Consolidated
Financial Statements
(Note 7)
Stock		 0 0

Cash		 0 0
The Company Stock 0 0
Cash 0 0
Severance Pay and
Pension (F)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 0 0
The
Company		 0 0
Salaries, bonus and
special subsidies (E)
(Note 5)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 5,998 0
The
Company		 5,998 0
Proportion of total
amount of A, B, C, and
D to the net income after
tax
(Note 10)		 All
Companies
in
Consolidated
Financial
Statements		 4.71 4.35
The
Company		 4.71 4.35
Remuneration Paid to Directors For Services (D) (Note
4)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 1,924 1,200
The
Company		 1,924 1,200
Remuneration of
Directors (C) (Note 3)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 0 0
The
Company		 0 0
Severance Pay and
Pension (B)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 0 0
The
Company		 0 0
Remuneration (A)
(Note 2)		 All
Companies
in
Consolidated
Financial
Statements
(Note 7)		 1,000 1,500
The
Company		 1,000 1,500
Name Wen-Nan Tsan Chih-Shen Chen Pou Chen
Representative:
Pan-Tsu Wu
Yue-Ming Ho		 Wen-Yen Lin Kuo
(Note�)		 Gen-Yu Fong Han-Fei Lin Liang-Chao Lin
Title Director Independent
Director

Range of Remuneration

Range of Remuneration Range of Remuneration Range of Remuneration Range of Remuneration
Range of Remuneration Paid to Directors Names of Director
Total Amount of Remuneration (A+B+C+D) Total Amount of Remuneration (A+B+C+D+E+F+G)
The Company
(Note 8)		 All Companies in
Consolidated Financial
Statements (Note 9) H		 The Company
(Note 8)		 All Companies in
Consolidated Financial
Statements (Note 9)I
Less than NT$1,000,000 Pan-Tsu Wu, Yue-Ming Ho,
Wen-Nan Tsan, Chih-Shen
Chen, Gen-Yu Fong, Han-Fei
Lin,Liang-Chao Lin		 Pan-Tsu Wu, Yue-Ming Ho,
Wen-Nan Tsan, Chih-Shen
Chen, Gen-Yu Fong, Han-Fei
Lin,Liang-Chao Lin		 Pan-Tsu Wu, Yue-Ming Ho,
Wen-Nan Tsan, Chih-Shen
Chen, Gen-Yu Fong, Han-
Fei Lin,Liang-Chao Lin		 Pan-Tsu Wu, Yue-Ming Ho,
Wen-Nan Tsan, Chih-Shen
Chen, Gen-Yu Fong, Han-
Fei Lin,Liang-Chao Lin
NT$1,000,000(inclusive)~NT$2,000,000(exclusive) Wen-Yen Lin Kuo Wen-Yen Lin Kuo 0 0
NT$2,000,000(inclusive)~NT$3,500,000(exclusive) 0 0 0 0
NT$3,500,000(inclusive)~NT$5,000,000(exclusive) 0 0 0 0
NT$5,000,000(inclusive)~NT$10,000,000(exclusive) 0 0 Wen-Yen Lin Kuo Wen-Yen Lin Kuo
NT$10,000,000(inclusive)~NT$15,000,000(exclusive) 0 0 0
NT$15,000,000(inclusive)~NT$30,000,000(exclusive) 0 0 0
NT$30,000,000(inclusive)~NT$50,000,000(exclusive) 0 0 0
NT$50,000,000(inclusive)~NT$100,000,000(exclusive) 0 0 0
Over NT$100,000,000 0 0 0
Total 8 8 8 8

  • Note 1: The names of directors shall be listed separately (for corporate shareholders, the names of corporate shareholders and their representatives shall be listed separately) to disclose the amount of payments in a summarized manner. If a Director concurrently serves as a President or Vice President, his/her name and the amount of remuneration paid to him/her shall be listed in Table (3-1) or (3-2) above.

  • Note 2: Refers to the remuneration of directors in the most recent year (including directors' salary, post allowance, severance pay, various bonuses, rewards, etc.).

  • Note 3: Fill in the amount of remuneration for directors approved by the Board of Directors in the most recent year.

  • Note 4: Refers to the execution expenses of relevant businesses of directors in the most recent year (including travel expenses, special expenses, allowances, accomodations, car supplies, and other material supplies, etc.). In the case of expenses for the provision of housing, vehicle, and other means of transport or other exclusive personal services, disclosure shall be made of the nature and cost of the assets provided, actual or payment of rent, fuel fee, and other benefits at fair market value. If there is a driver, please note the remuneration paid by the Company to the driver, but do not include it in the remuneration.

  • Note 5: Refers to the salary, post allowance, severance pay, various bonuses, rewards, car expenses, special expenses, allowances, dormitories, car supplies, and other material supplies received by directors who are concurrently employees (including concurrently serving as the President, Vice President, other managers, and employees) in the most recent year. In the case of expenses for the provision of housing, vehicle, and other means of transport or other exclusive personal services, disclosure shall be made of the nature and cost of the assets provided, actual or payment of rent, fuel fee, and other benefits at fair market value. If there is a driver, please note the remuneration paid by the Company to the driver, but do not include it in the remuneration. In addition, the remuneration expenses recognized in accordance with IFRS 2 "Share Base Payment", including the acquisition of employee warrants, new shares restricting employee rights, and shares subscribed by participation in capital increase in cash, shall also be included in the remunerations.

  • Note 6: In the case of employee remunerations received by directors who are concurrently employees (including concurrently serving as the President, Vice President, other managers, and employees) in the most recent year, the amount of remuneration approved by the Board of Directors for the most recent year shall be disclosed. If it is impossible to estimate, the proposed amount of remuneration for the current year shall be calculated in proportion to the actual amount allocated last year and shall be separately filled in Schedule I.

  • Note 7: The total amount of remuneration paid to directors of the Company by all enterprises (including the Company) in the consolidated report should be disclosed.

  • Note 8: The total amount of remuneration paid by the Company to each director. The names of directors shall be disclosed in the corresponding range.

  • Note 9: The total amount of remuneration paid to each director of the Company by all enterprises (including the Company) in the consolidated financial report should be disclosed. The name of the director shall be disclosed in the corresponding range.

  • Note 10: Earnings after tax refer to the earnings after tax of the most recent year. For those who have adopted IFRS, the earnings after tax shall refer to the earnings after tax of an individual or separate financial statement in the most recent year.

  • Note 11: a. This column shall clearly state the amount of remuneration received by the directors in connection with the re-invested business other than the subsidiary.

  • b. If a director of the Company receives remuneration in connection with the re-invested business other than the subsidiary, the remuneration received by the director from the re-invested business other than the subsidiary into Column I of the remuneration range form, and the title of the column shall be changed to "all re-invested businesses".

  • c. Remuneration means the reward, compensation (including compensation for employees, directors, and supervisors), business execution expenses, and other related remuneration received by the directors of the Company as directors, supervisors, or managers of the invested enterprise other than a subsidiary.

  • The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purposes.

16

(2) Remunerations of the President and Vice Presidents

Unit: NT$1,000; shares

Title Name Salary (A)
(Note 2)		 Salary (A)
(Note 2)		 Severan
Pens		 ce Pay and
ion (B)		 Bonuses, special fees,
and so on (C) (Note 3)		 Bonuses, special fees,
and so on (C) (Note 3)
Employees' remuneration (D)
(Note 4)
Employees' remuneration (D)
(Note 4)
Employees' remuneration (D)
(Note 4)
Employees' remuneration (D)
(Note 4)		 Proportion of total amount
of A, B, C, and D to the
earnings after tax (%)
(Note 8)		 Proportion of total amount
of A, B, C, and D to the
earnings after tax (%)
(Note 8)		 Is there any
remuneration
received from
a re-invested
business other
than a
subsidiary or
from the
parent
company
(Note 9)
The
Company		 All
companies
included in
the financial
statement
(Note 5)
The
Company		 All companies
included in
the financial
statement
(Note 5)
The
Company
All
companies
included in
the financial
statement
(Note 5)		 The Company All companies
included in the
financial
statement
(Note 5)		 The
Company		 All
companies
included in
the
financial
statement
(Note 5)
Cash Stock Cash Stock
President (acting) (Note�2) Chih-Nan Chen 17,410 21,490 718
Note�1		 718
Note�1		 28,650 34,343 0 0 0 0 75.35 91.09 None
Vice President of Information
Communication Business Group		 Shou-Yen Liu
Vice President of Information
Communication Business Group		 Che-Kuang Lin
Vice President of R&D
Verification Division		 Li-Ta Yu
Vice President of Finance &
Accounting Division
Financial officer and accounting
officer(Note�4)
Yi-Ching Chung
President (Note�2) Lung-Kuang Yang
Vice President of Information
Communication Business Group
(Note�3)
Chi-Tung Huang
Vice President of Finance &
Accounting Division, Financial
Officer, Accounting Officer
(Note�4)		 Kui-Hsiang Chuang
  • Regardless of the title, any position equivalent to the President or Vice President (e.g., General Manager, CEO, director...) shall be disclosed.

Note � 1: Pension upon retirement: All provisions.

Information on remunerations of top 5 executives (e.g., President, Vice President, CEO, or Financial Officer) shall be separately disclosed:

  1. After-tax loss occurs in individual financial reports in the recent three years: None.

  2. If the results of the most recent year's corporate governance evaluation fall into the last range, or the evaluation is recognized to be rejected by the Corporate Governance Evaluation Committee due to change of transaction method, cease of trading, cease of listing, and so on in the most recent year or as of the publication date of the annual report: none.

Note � 2: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.

Note � 3: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.

Note � 4: Yi-Ching Chung took office of Vice President of Finance and Accounting Department and was appointed as the Chief Financial Officer and Chief Accountant by the Board of Directors on March 20, 2020. Kuei-Hsiang Chuang, Vice President of Finance and Accounting Department, resigned as Chief Financial Officer and Chief Accountant on March 20, 2020, and resigned as Vice President of Finance and Accounting Department on March 31, 2020.

17

(3) Range of Remuneration

(3)
Range of Remuneration
Range of Remuneration Paid to the President and Vice Presidents Name of President and Vice President
The Company (Note 6) All companies included in the Financial Statement
(Note 7)
Less than NT$1,000,000 0 0
NT$1,000,000(including)~ NT$2,000,000(excluding) 0 0
NT$2,000,000(including)~ NT$3,500,000(excluding) Shou-Yen Liu,Kui-HsiangChuang,Yi-ChingChung Kui-HsiangChuang,Yi-ChingChung
NT$3,500,000(including)~ NT$5,000,000(excluding) Li-Ta Yu Li-Ta Yu
NT$5,000,000(including)~ NT$10,000,000(excluding) Chi-TungHuang,Che-KuangLin Shou-Yen Liu,Chi-TungHuang,Che-KuangLin
NT$10,000,000(including)~ NT$15,000,000(excluding) Lung-KuangYang,Chih-Nan Chen Lung-KuangYang,Chih-Nan Chen
NT$15,000,000(including)~ NT$30,000,000(excluding) 0 0
NT$30,000,000(including)~ NT$50,000,000(excluding) 0 0
NT$50,000,000(including)~ NT$100,000,000(excluding) 0 0
Over NT$100,000,000 0 0
Total 8persons 8persons

  • Regardless of the title, any position equivalent to the President or Vice President shall be disclosed.

  • Note 1: The name of president or vice presidents shall be identified specifically, and the various payments shall be summarized and then disclosed. If a director also serves as a General Manager or Deputy General Manager, this form and the above form (1-1), or (1-2-1) and (1-2-2) should be filled.

  • Note 2: Please specify the salary, duty allowance, and severance paid to the presidents and vice presidents in the most recent year.

  • Note 3: Please specify the bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the presidents and vice presidents in the most recent year. In the case of expenses for the provision of housing, vehicle, and other means of transport or other exclusive personal services, disclosure shall be made of the nature and cost of the assets provided, actual or payment of rent, fuel fee, and other benefits at fair market value. If there is a driver, please note the remuneration paid by the Company to the driver, but do not include it in the remuneration. In addition, the remuneration expenses recognized in accordance with IFRS 2 "Share Base Payment", including the acquisition of employee warrants, new shares restricting employee rights, and shares subscribed by participation in capital increase in cash, shall also be included in the remunerations.

  • Note 4: Fill in the amount of employee remunerations (including stocks and cash) paid to the President and Vice Presidents as approved by the Board of Directors in the most recent year. If it is impossible to estimate, the proposed amount of remuneration for the current year shall be calculated in proportion to the actual amount allocated last year and shall be separately filled in Schedule I.

  • Note 5: Please disclose the aggregate of the remuneration paid to the Company's presidents and vice presidents by all companies included in the consolidated financial reports (including the Company).

  • Note 6: The aggregate of the remuneration to each president or vice president by the Company shall include the president's or vice president's name disclosed in the relevant space of the following table.

  • Note 7: The aggregate of the remuneration paid to each of the Company's presidents and vice presidents by the companies included in the consolidated financial reports (including the Company) shall include the president's and vice president's names disclosed in the relevant space of the following table.

  • Note 8: The earnings after tax shall refer to the earnings after tax of an individual or separate financial statement in the most recent year.

  • Note 9: a. This column shall clearly state the amount of remuneration received by the President and Vice Presidents in connection with the re-invested business other than the subsidiary or with the parent company (if none, please fill in "none").

  • b. If the President or a Vice President of the Company receives remuneration in connection with the re-invested business other than the subsidiary, the remuneration received by the President or Vice President from the reinvested business other than the subsidiary or the parent company into Column E of the remuneration range form, and the title of the column shall be changed to "parent company and all re-invested businesses".

  • c. The remuneration shall refer to the remuneration, compensation, employee bonus, and professional practicing fees received by the Company's presidents and vice presidents who acted as the directors, supervisors, or managerial officers of investees other than subsidiaries.

  • The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purposes.

18

(4) Name of Managerial Officers and the Distribution of Employee Bonus

May 7, 2021

May 7, 2021
Unit: 1,000 TWD
Title
(Note 1)		 Name
(Note 1)		 Stock Cash Total Ratio of Total
Amount to Earnings
After Tax(%)
Managerial
Officier		 President (acting) Chih-Nan Chen 0 0 0 0
Vice President Shou-Yen Liu
Vice President Che-KuangLin
Vice President Li-Ta Yu
Vice President Yi-ChingChung
Chairman
(Resigned as
director on April
21, 2021 and
dismissed on
April 30)		 Wen-Yen Lin-Kuo
President
(Retired on April
30,2021)
Lung-Kuang Yang
Vice President
(Dismissed on
April 23,2021)		 Chi-Tung Huang
Vice President
(Dismissed on
March 31,2020)		 Kui-Hsiang Chuang

  • Note 1: Please disclose the name and job title individually, while the allocation of earnings may be summarized and then disclosed.

  • Note 2: Fill in the amount of employee remunerations (including stocks and cash) paid to the manager as approved by the Board of Directors

  • in the most recent year. If it is impossible to estimate, the proposed amount of remuneration for the current year shall be calculated in proportion to the actual amount allocated last year. The net income after tax refers to the earnings after tax in the most recent year. If the IFRSs are adopted, the earnings after tax shall refer to the net income after tax identified in the entity or individual financial statement for the most recent year.

  • Note 3: The scope of managerial officers shall be defined in the following manner, as per the Board's decree under Rule No. 0920001301 issued by the FSC dated Mar. 27, 2003:

  • (1) President and equivalents;

  • (2) Vice president and equivalents;

  • (3) Assistant vice president and equivalents;

  • (4) Chief of Financial Dept.;

  • (5) Chief of Accounting Dept.;

  • (6) Any other persons in charge of the Company's affairs and entitled to sign instruments on behalf of the Company.

  • Note 4: If any director, president, or vice president has received employee bonus (including stock dividend and cash dividend), please complete table 1-2 and also this table.

19

  • (IV) Compare the ratio of the total remuneration paid to the Company's Directors, President, and Vice Presidents in the most recent two years to the net income after tax in the financial report by the Company and all companies in the consolidated statements, and explain the policies, standards and combinations of remuneration payment, the procedures for determining remuneration, and the relevance with business performance and future risks.

  • Analysis on the ratio of the total remuneration paid by the Company and all enterprises in the consolidated financial statements to the Company's Directors, President, and Vice Presidents to the earnings after tax:

Year Total remunerations paid to Directors, President
and Vice Presidents(NT$1,000) (Note)		 Total remunerations paid to Directors, President
and Vice Presidents(NT$1,000) (Note)		 Percentage of total amount to earnings after tax
in individual financial report(%)		 Percentage of total amount to earnings after tax
in individual financial report(%)
The Company All Companies in
Consolidated
Financial Statements		 The Company All Companies in
Consolidated
Financial Statements
2019 50,979 68,499 111.36 149.63
2020 58,400 68,173 94.07 109.81

Note: The shareholders' meeting was comprehensively re-elected on Jun. 25, 2018, and the Audit Committee was set up to replace the supervisory authority.

  1. The policies, standards and combinations of remuneration payment to Directors, President, and Vice Presidents, the procedures for determining remuneration, and the relevance with business performance and future risks:

  2. The remuneration of directors shall be considered by the Salary and Remuneration Committee based on the degree of their participation in the operation of the Company and the value of their contributions, and shall be submitted to the Board of Directors for resolution; The remuneration of managers shall be governed by the articles of association and the personnel regulations of the Company, and shall be reviewed by the Salary and Remuneration Committee based on the contribution, performance and the future operational risks of the Company, and shall be submitted to the Board of Directors for resolution. In determining the remunerations, in addition to the reference of the Company's overall operating performance, the sector's future operating risks and development trend, the personal performance achievement rate, the contribution to the performance of the Company shall also be considered to give reasonable remunerations, and to reduce the possibility of future operational risks to the minimum and keep the remuneration system under review in the light of actual business conditions and relevant legislation, so as to achieve a balance between the Company's sustainability and risk management.

20

III. Implementation of Corporate Governance

(I) Board of Directors

(1) Operations of the Board of Directors

The Board of Directors held 5 meetings in the most recent year (A). The attendance and appearance of directors were as follows:

Title Name (Note 1) Name (Note 1) Name (Note 1) Name (Note 1) Actual number
of attendance
(appearance) B		 Actual number
of attendance
(appearance) B		 Attendance
by Proxy		 Attendance
by Proxy		 Actual attendance
(appearance) rate
(%) [B / A] (Note
2)		 Actual attendance
(appearance) rate
(%) [B / A] (Note
2)		 Expected At-
tendance
Times		 Expected At-
tendance
Times		 Remark Remark
Chairman Wen-Nan Tsan 5 0 100 5 Took office on April
21,2021
Director Representative of Pou Chen Corporation:
Pan-Tsu Wu
5		 0 100 5
Director Representative of Pou Chen Corporation:
Yue-MingHo
5		 0 100 5
Director Chih-Shen Chen 5 0 100 5
Director Wen-Yen Lin-Kuo 4 1 80 5 Resigned on April 21,
2021
Independent
Director		 Gen-Yu Fong 4 1 80 5
Independent
Director		 Han-Fei Lin 5 0 100 5
Independent
Director		 Liang-Chao Lin 5 0 100 5
Total 38 2 NA 40 The actual attendance
rate of all directors is:
38/40=95%
Other matters to be recorded:
I.
With regard to the implementation of the Board of Directors, if any of the following circumstances occurs, the dates, terms of the meetings,
contents of motions, all independent directors’ opinions, and ECS’s handling of such opinions shall be specified:
(I) Items listed in Article 14-3 of the Securities Exchange Act: Independent directors have no dissenting or qualified opinion, please
refer to page 61-65.
(II) Any recorded or written Board resolutions to which independent directors have an objection or reservation that should be noted in
addition to the above: None, please refer to page 61-65.
II. If there are directors' avoidance of motions in conflict of interest, the directors' names, contents of motion, causes for avoidance and
voting shall be specified: Refer to page 61-65 for the board resolutions and implementation.
III. The listed company shall disclose the evaluation period, evaluation scope, method, and evaluation content of the Board of Directors' self-
evaluation (or peer evaluation), and fill in Schedule II (2) Implementation of the board evaluation: On Mar. 20, 2020, the Board of
Directors adopted the performance evaluation method of the Board of Directors, and on Mar. 22, 2021, the Board of Directors reported
the self (or peer) evaluation and made declaration in accordance with the regulations.
IV. Evaluation of targets (such as establishing the Audit Committee and enhancing information transparency) for strengthening of the func-
tions of the Board of Directors during the current and immediately preceding fiscal years, and measures taken toward achievement thereof:
The Company plans to complete the English version of the Procedure Manual of the Shareholders' Meeting for 2021 in May, 2021, and
the English version of the Annual Report for 2020 in June, 2021, and make the declaration within the prescribed time limit.
V. As for the attendance of independent directors of the Board of Directors in 2020 and up to the date of publication of the annual report, at
least one independent director shall be present in person in each Board of Directors after Jul. 28, 2017.
Date
Name		 2020.03.20 2020.05.08 2020.08.10 2020.11.06 2020.12.21 2021.03.22 2021.04.21 2021.05.07
Gen-Yu Fong Attended in
person		 Attendance
by proxy		 Attended in
person		 Attended in
person		 Attended
in person		 Attended in
person		 Attended in
person		 Attendance
by proxy
Han-Fei Lin Attended in
person		 Attended in
person		 Attended in
person		 Attended in
person		 Attended
in person		 Attendance
by proxy		 Attended in
person		 Attended in
person
Liang-Chao Lin Attended in
person		 Attended in
person		 Attended in
person		 Attended in
person		 Attended
in person		 Attended in
person		 Attended in
person		 Attended in
person

Note 1: The names of a corporate shareholder and its representative shall be disclosed if the director or supervisor is a juristic person.

  • Note 2: (1) If any director resigns before the end of the year, the date of resignation shall be indicated in the remarks column, and the actual attendance (appearance) rate (%) shall be calculated using the number of directors' meetings convened and actual attendance (appearance) during the term of service.

  • (2) Before the end of the year, if any director is re-elected, the new director and the former director shall be filled in, and whether the director is a former director, a new director, or a re-elected director and the date of re-election shall be indicated in the remarks column. Their attendance rate (%) in the Board session shall be calculated based on the number of meetings called and the actual number of sessions they attended, during the term of office.

21

(2) Execution of evaluation of the Board of Directors

Performance Evaluation of the Board of Directors

Evaluation
period		 Scope Method Content Rating
Once a year
from Jan. 1,
2020, to Dec.
31, 2020		 Overall Board of
Directors		 Self-evaluation
Questionnaire
for Performance
Evaluation of
the Board of
Directors		 Performance evaluation of
the Board of Directors:
participation in company
operation, quality of board
decision-making, board
composition and structure,
selection and continuing
education of directors,
internal control, etc.		 1. Total score: 221, average score:
4.911. Note: The average score
of 4.911 is between numeric
level 4: Good (agree) and
numeric level 5: Excellent
(strongly agree).
2. Compliance with laws and
regulations with good
operation.
Once a year
from Jan. 1,
2020, to Dec.
31, 2020		 Individual
directors		 Self-evaluation
Questionnaire
for Performance
Evaluation of
Directors		 Performance evaluation of
Directors: mastery of
corporate goals and tasks,
cognition of directors'
responsibilities,
participation in corporate
operation, internal
relationship management
and communication,
professional and
continuous education of
directors and internal
control, etc.		 1. Total score: 877 (total of eight
directors), average score:
4.766. Note: The average of
4.766 is between numeric level
4: Good (agree) and numeric
level 5: Excellent (strongly
agree).
2. Good operations of the Board
of Directors
Once a year
from Jan. 1,
2020, to Dec.
31, 2020		 Functional
Committees
A. Remuneration
Committee		 Self-evaluation
Questionnaire
for Performance
Evaluation of
Functional
Committees		 Performance evaluation of
functional committees:
participation in the
operation of the Company,
cognition of functional
committees'
responsibilities, decision-
making quality of
functional committees,
composition and selection
of members of functional
committees, internal
control, etc.		 1. Total score: 95, average score:
5. Note: The average level of 5
and its number means excellent
(strongly agree).
2. The actual attendance rate of
the members of the
Remuneration Committee in
2020 was 100%. The members
of the Remuneration
Committee gave professional
guidance and suggestions for
the Company's industry and
future development strategies,
and had an in-depth
understanding and review of
managers' qualifications and
remuneration content.
Once a year
from Jan. 1,
2020, to Dec.
31, 2020		 Functional
Committees
B. Audit
Committee		 Self-evaluation
Questionnaire
for Performance
Evaluation of
Functional
Committees		 Performance evaluation of
functional committees:
participation in the
operation of the Company,
cognition of functional
committees'
responsibilities, decision-
making quality of
functional committees,
composition and selection
of members of functional
committees, internal
control, etc.		 1. Total score: 109, average score:
4.95. Note: The average of 4.95
is between numeric level 4:
Good (agree) and numeric level
5: Excellent (strongly agree).
2. Compliance with laws and
regulations with good
operation.

22

The Company has established the performance evaluation system of the Board of Directors, and the Board of Directors adopted the performance evaluation method of the Board of Directors on Mar. 20, 2020, to give full play to the self-motivation of directors and improve the function of the Board of Directors. The internal performance evaluation of the Board of Directors shall be carried out once a year. After the end of the year, the internal self-evaluation of the Board of Directors and the self-evaluation of the directors shall be conducted. The evaluation results shall be reviewed and submitted to the Board of Directors before the end of the first quarter of the next year; External board performance evaluation shall be carried out at least once every three years by external professional independent organizations or teams of external experts and scholars, and the annual performance evaluation shall be carried out at the end of each year, and the review shall be completed and submitted to the Board of Directors before the end of the first quarter of the next year. The board performance evaluation of 2020 was reported on the Board of Directors on Mar. 22, 2021.

23

(II) Operations of the Audit Committee

The Audit Committee held 5 meetings in 2020 (A). The attendance and appearance of directors were as follows:

Title Name Attendance in Person
(B)		 Attendance by Proxy Actual attendance rate
(%)
(B/A) (Note)		 Remark
Convener
 Han-Fei Lin 5 0 100
Committee
Member
 Gen-Yu Fong 4 1 80
Committee
Member
 Liang-Chao Lin 5 0 100
Other matters to be recorded:
I. Highlights of the Audit Committee's work during the year:
1. Fair presentation of the company's financial statements.
2. The hiring (dismissal) of the CPAs and the audit of their independence and qualification.
3. The evaluation of the performance of the Company's internal control system.
4. The Company's compliance with relevant laws and regulations.
5. Control of the Company's existing or potential risks.
II. In case of one of the following circumstances on the operation of the Audit Committee, the date, session, and
proposal content of the Board of Directors, the resolution result of the Audit Committee, and the handling of the
opinions of the Audit Committee by the Company shall be stated.
(I)
Circumstancesreferredtoin Article14-5of the SecuritiesandExchangeAct:
Date
Term
Major Resolutions
Audit Committee
Resolution
The Company's handling of
the opinions of the Audit
Committee
2020.03.20
The 1st
meeting in
2020
1. Proposal on the financial statements
and operating reports of the Company
for the year 2019.
2. Proposal on the Company's annual
profit distribution in 2019.
3. Reviewed the amount and payment
method of employee remuneration of
the Company in 2019.
4. Amended the articles of association
of the Company.
5. Amended the "Organizational
Procedures of the Audit Committee" of
the Company.
6. Prepared the Statement of Internal
Control System of the Company.
7. Proposal on changing the CFO,
Financial Officer, and Accounting
Officer of the Company.
All the members
present approved
unanimously the
resolution without
objection.
The board of directors
supported and approved all
the items proposed by Audit
Committee
2020.05.08
The 2nd
meeting in
2020
1.Propsal on theConsolidated
financial statements of the Company
and its subsidiaries for 2020 Q1.
2. Amended the Corporate Governance
Best Practice Principles of the
Company.
3. Amended the Corporate Social
Responsibility Best Practice Principles
of the Company.
All the members
present approved
unanimously the
resolution without
objection.
The board of directors
supported and approved all
the items proposed by Audit
Committee
2020.08.10
The 3rd
meeting in
2020
1. Propsal on the Consolidated financial
statements of the Company and its
subsidiaries for 2020 Q2.
2. Proposal on disposal of devices of
facilities of the subsidiaryGolden Elite
All the members
present approved
unanimously the
resolution without
objection.
The board of directors
supported and approved all
the items proposed by Audit
Committee

II. In case of one of the following circumstances on the operation of the Audit Committee, the date, session, and proposal content of the Board of Directors, the resolution result of the Audit Committee, and the handling of the opinions of the Audit Committee by the Company shall be stated. (I) Circumstances referred to in Article 14-5 of the Securities and Exchange Act:

24

Technology (Shenzhen) Ltd...
3. The proposal on not to distribute the
profits of the Companyin 2020 H1.
2020.11.06 The 4th
meeting in
2020		 1. Propsal on the Consolidated financial
statements of the Company and its
subsidiaries for 2020 Q3.
2. Amended the "Rules on the Scope of
Responsibilities of Independent
Directors" of the Company.
3. Capital expenditure for new
production equipment purchased by
Elitegroup Technology (Thailand) Co.,
Ltd.,a subsidiaryof the Company.
All the members
present approved
unanimously the
resolution without
objection.		 The board of directors
supported and approved all
the items proposed by Audit
Committee
2020.12.21 The 5th
meeting in
2020		 1. The proposal on the remunerations of
the CPAs of the financial reports of the
Company and its subsidiaries for 2021.
2. Any receivables between the Com-
pany and its subsidiaries that have not
been collected within three (3) months
after the normal credit extension period
shall not be deemed as capital loans.
3. The proposal on decreasing the capital
of Elitegroup Computer Systems (SIP)
Co., Ltd., a subsidiary of the Company,
by US$10,000,000 and remit it back to
the parent company.
4. The proposal on the audit plan decla-
ration form of the Company for 2021.
5. Amended the Internal Control
System of the Company.








All the members
present approved
unanimously the
resolution without
objection.		 The board of directors
supported and approved all
the items proposed by Audit
Committee
2021.03.22 The 1st
meeting in
2021		 1. Proposal for the Company intends to re-
place the CPAs in accordance with Deloitte
Touche's internal rotation mechanism start-
ing from 2021 Q1.
2. The proposal on the appointment of CPA
and on reviwing their independence of the
CPAs of the financial reports of the Com-
pany and its subsidiaries for 2021.
3. Proposal on the financial statements and
operating reports of the Company for the
year 2020.
4. Proposal on the Company's annual profit
distribution in 2020.
5. Reviewed the amount and payment
method of employee remuneration of the
Company in 2020.
6. Amended the Director Selection Proce-
dures of the Company.
7. Amended the "Rules of Procedure of the
Board of Shareholders" of the Company.
8. Any receivables between the
Company and its subsidiaries that have
not been collected within three (3)
months after the normal credit
extension period shall not be deemed as
capital loans.
9. Prepared the Statement of Internal
Control System of the Company.








All the members
present approved
unanimously the
resolution without
objection.		 The board of directors
supported and approved all
the items proposed by Audit
Committee

25

1. Approved by all
attending Directors
without objection.
2. All attending
members consented
that up to 40% of
1. Proposal of Cash Distribution from
accounts receivable
2021.04.21
The 2nd
Session of
2021
Retained Earnings.
2. Proposal of Appointment of Golden
Elite Technology (Shenzhen) Co., Ltd.
for the Collection of Accounts
Receivable from CANTV, a Venezuelan
shall be paid as the
remuneration of the
law firm, while the
related cash flow
shall be presented to		 The board of directors
supported and approved all
the items proposed by Audit
Committee
Customer
the operation team to
evaluate the
feasibility prudently,
and shall submitted
to the Board of
Directors for
resolution.
1. Proposal on the Consolidated
Financial Statements for the First
2021.05.07
The 3rd
Session of
2021
Quarter of 2021 of the Company and its
Subsidiaries
2. Proposal that Accounts Receivable
between the Company and its
Subsidiaries that have not been
Approved by all
attending Directors
without Objection.		 The board of directors
supported and approved all
the items proposed by Audit
Committee
Collected after Overdue for Three
Months will not be Deemed as Loans.
(II) Except for the matters mentioned above, other matters that have not been approved by the Audit Committee
but have been agreed by more than two-thirds of all directors: none.
III. The implementation status of independent director's avoidance of interested proposals, which shall state the name
of independent director, the content of the proposals, the reasons for the avoidance of interests, and the
circumstances of participation in voting: none.
IV.The communications between the independent director and the internal audit supervisor and CPA (including
major issues, methods, and results of communication regarding the company's financial and business status).
1. The Company elected three independent directors at the shareholders' meeting on Jun. 25, 2018, and set up
the Audit Committee.
2. The CPA made presentation to the independent directors at the Audit Committee at least once a quarter
concerning the audit or review of the financial position of the Company, the revision of the IFRS Bulletin,
and the impact of the publication on the Company.
3. The Company's internal audit office in addition to regularly sending various internal audit reports to the
independent directors, held discussions with the independent directors from time to time. After the
establishment of the Audit Committee, the Company held regular meetings with the Audit Committee at least
once a quarter and submitted the minutes of the meeting to the Board of Directors.
4. The audit supervisor communicated with the CPA and the independent directors directly by e-mail, telephone,
or meeting as necessary.
The communications between the independent directors and the internal audit supervisor and CPA are
summarized as follows:
Date
Method
Communication
object
Communication matter		 Result
The consolidated and
2020.03.20
Audit
Committee
CPA
The CPA reviewed the consolidated and
individual financial reports of 2019 and
discussed and communicated with the
independent directors and supervisors on
the issues raised.		 individual financial reports of
2019 were passed by the Audit
Committee, and passed by the
resolution of the Board of
Directors, and announced and
reported to the competent
authorityas scheduled.

26

Audit supervisor The internal audit supervisor reported and
discussed the following:
I. Reported on the internal audit from
December 2019 to February 2020. The
audit items were as follows:
1. Derivative commodity transaction
operation
2. Management of the Board of Directors'
deliberations and operations
3. Operations and management of the
Salary and Remuneration Committee
4. Operations and management of the
Audit Committee
5. Legal and regulatory compliance
matters
6. Supervision and management of
subsidiaries (IV)
Golden Elite Technology (Shenzhen) Ltd.
(����)
(PCB Business Unit - Purchase &
Payment Cycle/Real Estate, Plant &
Equipment Cycle/Production Cycle
Golden Elite Technology (Shenzhen) Ltd.
(����)
�PCBA Plant - Property, plant, and
equipment cycle
� System plant - Production cycle/real
estate, plant, and equipment cycle
� Huanan Information Department -
Information security inspection
7. loans to others (2019 Q4)
8. Management of endorsement or
guarantee for others (2019 Q4)
9. HR management
10. Tracking report -
� Information security inspection and
control
� Supervision and management of
subsidiaries (IV)
II. Discussion - the description of the
statement of internal control system		 Report - All present members
reviewed the internal audit and
reported to the Board.
Discussion - All present
members passed the resolution
without objection, and reported
to the Board for resolution.
2020.05.08 Audit
Committee		 CPA The CPA reviewed the consolidated
financial reports of 2020 Q1 and discussed
and communicated with the independent
directors and supervisors on the issues
raised.		 The consolidated financial
reports of 2020 Q1 were passed
by the Audit Committee, and
submitted to the Board of
Directors, and announced and
reported to the competent
authorityas scheduled.
Audit supervisor The internal audit supervisor reported the
following:
Reported on the internal audit as of March
2020. The audit items were as follows:
1. Derivative commodity transaction
operation
2. Real estate, plant,and equipment cycle		 All present members reviewed
the internal audit and reported
to the Board.
2020.08.10 Audit
Committee		 CPA The CPA reviewed the consolidated
financial reports of 2020 Q2 and discussed
and communicated with the independent
directors and supervisors on the issues		 The consolidated financial
reports of 2020 Q2 were passed
by the Audit Committee, and
submitted to the Board of

27

raised. Directors, and announced and
reported to the competent
authority as scheduled.
Audit supervisor The Internal Audit Supervisor explained
the internal audit from April 2020 to June
2020. The audit items were as follows:
1. Derivative commodity transaction
operation
2. Loans to others (2020 Q1)
3. Endorsement or guarantee for others
(2020 Q1)
4. Supervision and management of
subsidiaries (I)
Subsidiary operation and management -
Elitegroup Computer Systems (South
Korea), Elitegroup Computer Systems
(Japan), Elitegroup Computer Systems
(USA), Super ECS USA, Elitegroup
Technology (Thailand)
5. Sales and collection cycle
6. Information security inspection
operation		 The independent directors
raised questions about the audit
report of "Information Security
Inspection Operation", and
requested the audit supervisor
to convey it to the Company's
Information Department to
reply with professional
explanation; The director of the
Information Department has
put forward the supplementary
explanation on August 14 and
replied to the independent
directors by Email.
2020.11.06 Audit
Committee		 CPA The CPA reviewed the consolidated
financial reports of 2020 Q3 and discussed
and communicated with the independent
directors and supervisors on the issues
raised; and explained the audit planning
for the end of 2020.		 The consolidated financial
reports of 2020 Q3 were passed
by the Audit Committee, and
submitted to the Board of
Directors, and announced and
reported to the competent
authorityas scheduled.
Audit supervisor The internal audit supervisor reported
the following:
Reported the internal audit from July
2020 to September 2020. The audit
items were as follows:
1. Derivative commodity transaction
operation
2. Loans to others (2020 Q2)
3. Management of endorsement or
guarantee for others (2020 Q2)
4. Management of seals and
important documents
5. Procurement and payment cycle
6. Management of transactions between
related parties
7. Supervision and management of
subsidiaries (II)
Golden Elite Technology (Shenzhen) Ltd.
(����)
� (PCB Business Unit - Sales & collection
cycle/Purchase & payment
cycle/Production cycle/Real estate,
Plant & equipment cycle
� PCBA Plant - Property, plant, and
equipment cycle
� System plant - Real estate, plant, and
equipment cycle
Golden Elite Technology (Shenzhen) Ltd.
(����)		 All present members reviewed
the internal audit and reported
to the Board.

28

PCBA Plant - Purchase and payment
cycle/Property, plant, and equipment
cycle/AEO security management
operation
- System plant - Procurement and payment
cycle
8. Acquisition or disposal of assets
2020.12.21 Audit
Committee		 Audit supervisor The internal audit supervisor reported
and discussed the following:
I. Reported on the internal audit from
July 2020 to September 2020. The audit
items were as follows:
1. Derivative commodity transaction
operation
2. Loans to others (2020 Q2)
3. Management of endorsement or
guarantee for others (2020 Q2)
4. Management of seals and important
documents
5. Procurement and payment cycle
6. Management of transactions between
related parties
7. Tracking report - Supervision and
management of subsidiaries (II)
II. Discussion - Explanation of the audit
plan declaration form for 2021
III. Discussion - Explanation of the
statement of the internal control system
in 2020		 Report - All present members
reviewed the internal audit and
reported to the Board.
Discussion - All present
members passed the resolution
without objection, and reported
to the board for discussion.
In addition, in view of the
information security risks, the
team is requested to make a
separate report on the
information communication
security plan.
2021.03.22 Audit
Committee		 CPA The CPA reviewed the consolidated and
individual financial reports of 2020 and
discussed and communicated with the
independent directors and supervisors
on the issues raised.		 The consolidated and
individual financial reports of
2020 were passed by the Audit
Committee, and passed by the
resolution of the Board of
Directors, and announced and
reported to the competent
authorityas scheduled.
Audit supervisor �
According to the minutes of the
meeting of the Audit Committee
on Dec. 21, 2020, in view of the
information security risks, the
team is requested to make a
separate report on the information
communication security plan.
�
The internal audit supervisor
reported and discussed the
following:
I. Reported on the internal audit from
December 2020 to February 2021. The
audit items were as follows:
1. Derivative commodity transaction
operation
2. Management of the Board of Directors'
deliberations and operations
3. Operations and management of the
Salary and Remuneration Committee
4. Operations and management of the
Audit Committee
5. Legal and regulatory compliance
matters		 �
The information unit has
made a special report on
the information security
plan in the meeting of
the Audit Committee.
�
The results of the report
and discussion by the
internal audit supervisor
were as follows:
Report - All present members
reviewed the internal audit and
reported to the Board.
Discussion - All present
members passed the resolution
without objection, and reported
to the board for discussion.

29

6. Supervision and management of
subsidiaries (III)
�
Golden Elite Technology
(Shenzhen) Ltd.(����).
- Purchase and payment
cycle, computer information
system processing
operations
�
Xunrui Electronics
(Shenzhen) Co., Ltd. - Sales
and collection cycle
7. Tracking report - R&D cycle
8. Loans to others (2020 Q4)
9. Management of endorsement or
guarantee for others (2020 Q4)
10. Management of seals and important
documents
II. Discussion - the description of the
statement of internal control system
2021.04.21 Audit
Committee		 Audit Supervisor
The Supervisor of Internal Audit
reported on the following matters:
I. Report on the internal audit (tracking) in
March 2021. The audit items are as
follows:
1. Tracking Report - Subsidiary
Supervision and Management (II)-
Golden Elite Technology (Shenzhen) Ltd.
(����)
2. Tracking Report - Subsidiary
Supervision and Management
Operations (III)- Xunrui Electronics
(Shenzhen)
�
3. Tracking Report - law and
regulation compliance matters		 � All members present have
acknowledged the internal
audit and reported it to the
Board of Directors.
2021.05.07 Audit
Committee		 CPA � The CPA explained the Consolidated
Financial Reports for the first quarter
of 2021 that have been reviewed, and
discussed and communicated the
issues raised by the independent
directors and supervisors attending
the meeting.		 � The Consolidated Financial
Reports for the first quarter
of 2021 have been adopted
by the Audit Committee and
submitted to the Board of
Directors, and was
announced and reported to
the competent authorities as
scheduled.
Audit Supervisor The Supervisor of Internal Audit
reported on the following matters:
1. Derivative commodity transaction
operation
2. Property, plant,and equipment cycle		 � All members present have
acknowledged the internal
audit and reported it to the
Board of Directors.

Note 5:

  • Where an independent may be relieved from duties before the end of the fiscal year, please specify the date of his/her discharge in the `Remarks" Section. His/her actual attendance rate (%) to the Board session shall be calculated on the basis of the number of meetings called and the actual number of sessions he/she attended, during his/her term of office.

  • Where an election may be held for filling the vacancies of independent director before the end of the fiscal year, please list out both the new and the discharged independent directors and specify if they are the former independent directors, or newly elected, re-elected, and also the date of the reelection. His or her attendance rate (%) will be calculated on the basis of the number of Audit Committee meetings held during his or her tenure and the number of such meetings attended.

30

Companies and reasons thereof Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 None


(I)
None
(II) None
(III) None
Implementation Status
Description		 The Company has prepared the Corporate Governance Best
Practice Principles, which was adopted by the Board of
Directors on Apr. 30, 2015. The latest version is available on
the Market Observation Post System and the Company's
website.		 (I) The Company has a spokesman and an acting spokesman,
a shareholder service mailbox, and telephone line to
properly handle shareholders' suggestions, doubts,
disputes, and so on.
(II) The Company regularly discloses the shareholders and
directors who hold more than 10% of the shares of the
Company, the relevant pledge, the increase or decrease of
the shares of the Company or other important matters that
may cause changes in the shares of the Company, so as to
master the major shareholders and the ultimate control of
the major shareholders.
(III)The financial, business, and accounting activities
between the Company and its affiliated enterprises are
conducted independently. The Company has formulated
the "Procedures for Managing Business Transactions with
Related Parties", and the related activities are subject to
the procedures. The head office conducts audits on a
regular or irregular basis to avoid the risks of the
Company caused by the defects of the affiliated
enterprises.
No
Yes V V
V
V
Evaluation Item (I) Conformity to the Corporate Governance Best-
Practice Principles for TWSE/GTSM Listed
Companies and disclosure of Corporate Governance
Best-Practice Principles		 II. Shareholding structure & shareholders' rights
(I) Does the Company establish internal operating
procedures or policies to handle shareholder
suggestions, doubts, disputes, and lawsuits and
implemented such procedures or policies?
(II) Does the Company possess a list of major
shareholders and list of ultimate owners of these
major shareholders?
(III) Has the company established and enforced risk
control and firewall systems with its affiliate
companies?
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof
(IV) None		 (I) None
Implementation Status
Description		 (IV)The Company has formulated the "Procedures for
Preventing Insider Trading" and the "Procedures for
Disposal of Internal Major Information" to prohibit
insiders of the Company from using the non-public
information to trade negotiable securities, and the
Company also irregularly reviews the operating
procedures to comply with current legislation and best
practice management needs. The procedures can be found
in the Company's website.		 (I)
The Company has formulated the Corporate
Governance Best Practice Principles and the Director
Selection Procedures, which stipulate that diversity
should be considered in the composition of the Board of
Directors, and that appropriate diversity policies should
be formulated in accordance with its operations, type of
operations, and development needs. In appointing
directors, the Company considers not only the
professional background of directors but also the
diversity of directors. The Company has a total of 8
directors, three of whom are independent directors.
No
Yes V V
V
V
V
Evaluation Item (IV) Has the Company adopted internal rules
prohibiting company insiders from trading securities
using information not disclosed to the market?		 III. Composition and responsibilities of the Board of
Directors
(I) Is the composition of the Board of Directors
determined by taking appropriate policy based on
diversity and ensure the actual implementation?
(II) In addition to the Remuneration Committee and
Audit Committee, has the Company voluntarily
established other functional committees?
(III) Has the Company established performance
evaluation guidelines and evaluation methods for the
Board of Directors and conducted the performance
evaluation periodically on a yearly basis?
And submit the results of performance assessments to
the Board of Directors and use them as reference in
determining remuneration for each individual
Director, and their nomination for additional term?
(IV) Does the Company regularly assess the
independence of CPAs?

==> picture [476 x 706] intentionally omitted <==

----- Start of picture text -----

Risk Management
Legal
Finance Accounting
Industry Knowledge
Leadership Decision-making
Operation Management
Gender
Companies and Reasons Thereof
Deviations from the TWSE/TPEx Listed
Corporate Governance
Best-Practice Principles for
V V V V V V V V
V V
V V V V
V V V
V V V V V V
Description
V V V V V V
Diversity of the Board of Directors: Male Male Male Male Female Male Male Female
Implementation Status
Diversified Core Item
Name and title Director Wen-Nan Tsan Director Pan-Tsu Wu Director Yue-Ming Ho Director Chih-Shen Chen Director Wen-Yen Lin Kuo (Resigned on April 21, 2021) Independent Director Gen-Yu Fong Independent Director Han-Fei Lin Independent Director Liang-Chao Lin
Yes No
Evaluation Item
----- End of picture text -----

Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 (II) None
Implementation Status
Description		 The directors who are concurrently employees of the
Company account for 12.5%, independent directors account
for 37.5%, and female directors account for 25%. The tenure
of one independent director is less than 3 years, and the
tenure of two independent directors is 9~12 years. Three
independent directors are 60~69 years old, accounting for
37.5%, three independent directors are 50~59 years old,
accounting for 37.5%, and two are under the age of 50,
accounting for 25%. The members of the Board of Directors
are constantly updated. One new female independent director
was elected in the by-election of the general meeting of
shareholders in 2017, and one new director was elected in the
re-election of directors in the general meeting of shareholders
in 2018, both of whom were under the age of 50. Considering
that the two independent directors have served more than
three terms (based on actual tenure), this situation is planned
to be improved at the next election of directors at the general
meeting of shareholders in 2021.
(II) In order to improve supervision and strengthen
management functions, the Board of Directors decided
in the board meeting on Aug. 24, 2011, to set up the
Remuneration Committee, the details of whose
operation are given in page 44; decided on the board
meeting on Mar. 20, 2014, to set up the Strategy
Committee to strengthen its strategy implementation;
and decided on the board meeting on Jun. 25, 2018, to
set up the Audit Committee, the details of its operation
are given in page 24
No
Yes
Evaluation Item
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof
(III) None
Implementation Status
Description		 (III) On Mar. 20, 2020, the Company formulated the
"Performance Evaluation Guidelines for the Board of
Directors" to perform internal performance evaluation on the
Board of Directors, individual directors, and functional
committees periodically (at least once per year) since the
year, and engage external professional independent
institutions or external expert and scholar team to perform
evaluation at least once every three years.
The Company has carried out the board performance
evaluation for the previous year in January 2021. The
evaluation objects included the overall operation of the Board
of Directors, functional committee, and the performance of
individual board members. The evaluation was carried out by
the deliberation unit and carried out by internal questionnaire.
Performance evaluation of the Board of Directors includes:
participation in company operation, quality of board decision-
making, board composition and structure, selection and
continuing education of directors, internal control, etc.
Performance evaluation of Directors includes: mastery of
corporate goals and tasks, cognition of directors'
responsibilities, participation in corporate operation, internal
relationship management and communication, professional
and continuous education of directors and internal control,
etc. Performance evaluation of functional committees
includes: participation in the operation of the Company,
cognition of functional committees' responsibilities, decision-
making quality of functional committees, composition and
selection of members of functional committees, internal
control, etc.
No
Yes
Evaluation Item
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 (IV) None
None
Implementation Status
Description		 The self-evaluation results of the "Board of Directors",
"individual directors" and "functional committees" in 2020
were all "good", which were reported to the directors by the
Board of Directors on Mar. 22, 2021, and will be used as
reference for the performance, remuneration and nomination
for renewal of the members of the Board of Directors and
functional committees.
(IV) The Finance and Accounting Division of the Company
evaluates the independence of the CPAs once a year, and has
reported the results of this year to the Audit Committee and
the Board of Directors for deliberation and approval on Mar.
22, 2021. As assessed by the Finance and Accounting
Division of the Company, both Cheng-Chun Chiu and Shih-
Tsung Wu meet the independent assessment criteria of the
Company (Note 1), and are qualified to serve as the CPAs of
the Company, and the accounting firm has issued the letter of
declaration (Note 2).		 The Company has allocated eligible and appropriate number
of corporate governance personnel, with the corporate
governance director as the convener, COO (Chih-Nan Chen),
to coordinate corporate governance-related affairs, protect
shareholders' rights and interests, and strengthen the functions
of the Board of Directors. The main responsibilities are as
follows:
1. Formulate and plan appropriate systems and
organizational architecture of the Company to improve
the independence of the Board of Directors, the
Company's transparency and compliance, and the
No
Yes


V
Evaluation Item IV. Has the publicly-listed company appointed
qualified and suitable number of corporate governance
personnel and appointed a Corporate Governance
Officer to handle governance-related affairs (including
but not limited to supplying information requested by
the directors, assisting directors with legal compliance
matters, processing company matters related to board
meetings and shareholders' meetings according to
laws, and preparing minutes of the board meetings and
shareholders' meetings)?
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof

None
Implementation Status
Description		 implementation of its internal audit and control.
2. Formulate corporate governance-related regulations, pay
attention to amendments made to laws and regulations,
and cooperate with the amendments and submit related
issues to the Board of Directors for discussion.
3. Consult with each director to plan and draw up the agenda
before the board meeting, inform all the directors to
attend at least 7 days in advance, and provide enough
meeting information to help directors know the content of
the relevant proposal; If the content of the proposal is
related to a stakeholder who shall avoid appropriately,
give prior reminder to the relevant stakeholder; Send the
significant information released after the board meeting
on the meeting date to each director; Send the minutes to
each director within 20 days after the board meeting.
4. Register the date of shareholders' meeting in accordance
with the statutory period every year, prepare and report
the notice of meeting, agenda, annual report, and minutes
of shareholders' meeting before the deadline, and register
the change after amending the articles of association or
reelection of directors.
5. Instantly update information about the Company's website
about related information for investor relationships.		 The Company has maintained smooth communication channels
with banks and other creditors, employees, consumers,
suppliers, communities, or stakeholders, and respects and
maintains their legitimate rights and interests, and sets up special
zone for stakeholders in the Company's website. When the
legitimate rights and interests of interested parties are infringed,
the Company will handle them in good faith.
No
Yes V
Evaluation Item V. Does the company establish communication
channels and a dedicated section on the company
website for stakeholders (including but not limited to
shareholders, employees, customers, and suppliers) to
respond to material corporate social responsibility
issues in a proper manner?
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 None (I) None
(II) The Company has set
up some options in the
English website, and
will discuss to
increase relevant
information
disclosure.
Implementation Status
Description		 The Company appoints the professional stock affairs agency "
The Capital Securities Corps" to handle the affairs of the
shareholders' meeting, so that the shareholders' meeting will
be held in a lawful, effective and safe manner.		 (I) The Company has set up a website
http://www.ecs.com.tw to disclose financial information,
stock affairs information, corporate governance
information, shareholders' meeting information and
investor contact window, and other information under
investor relations, and has dedicated personnel to
maintain and update the information.
Regarding the disclosure of corporate governance
information, the Company has posted important
information of the Company and its financial position,
major resolutions of the Board of Directors and the
Board of Shareholders, dividend payment situation,
internal audit organization and operation, important laws
and regulations, and relevant norms of insiders and other
information on the Company's website for investors'
reference.
(II) The Company has designated specific personnel for the
collection and disclosure of company information,
implemented the spokesman system, and set up an
investor mailbox for the external communication of the
Company's related information.
Some options have been set up on our English website.
The Company was invited to attend a corporate
presentation held by Mega Securities on November 20,
No V
V
Yes V
V
Evaluation Item VI. Does the company appoint a professional
shareholder service agency to deal with shareholder
affairs?		 VII. Information disclosure
(I) Has the Company established a corporate website
to disclose information regarding the company's
financial, business, and corporate governance status?
(II) Has the Company established any other
information disclosure channels (e.g. maintaining a
website in English, designating people to handle
information collection and disclosure, appointing
spokespersons, webcasting investors' conference,
etc.)?
(III) Does the Company publish and report its annual
financial report within two months after the end of a
fiscal year,
and publish and report its financial reports for the
first, second, and third quarters as well as its operating
status for each month before the specified deadline?
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 (III) The annual and each
season's
financial
reports have not yet
been announced and
declared.		 None 1.
Employees' rights and interests, employee care: For information related to efforts made by the Company to provide due benefits and maintain the
quality of life of employees, please refer to page 107-109 of this annual report.
2.
Investor relations: The Company has set up a special unit responsible for responding to shareholders' questions and suggestions, and posting the
relevant information on the Company's website in addition to posting it on the Market Observation Post System designated by the competent authority
in accordance with relevant regulations.
3.
Supplier relations: Subject to the Company's operating regulations, the cooperative manufacturer performed the contract in accordance with the contract
to protect the legitimate rights and interests of both parties, and maintain a good relationship with suppliers.
4.
Rights of stakeholders: A special zone for stakeholders was set up on the Company's website to communicate with and recommend to the Company, so
as to safeguard their due rights and interests.
5.
Information on the training of directors in the Company (2020 and up to the publication date of the annual report) :
The directors of the Company attended professional knowledge refresher courses in finance, business, and so on. Please refer to the list of education
and training of directors in page 13 of this annual report.
Implementation Status
Description		 2020, to introduce the Company and its recent operating
performance.
(III)In addition to the operational situation of the Company
of each month to be announced and declared in advance
before the specified period, the annual and each season's
financial reports have not yet been announced and
declared.		 Summary:
No
Yes

V
Evaluation Item VIII. Has the Company disclosed other information to
facilitate a better understanding of its corporate
governance (including but not limited to
employee's rights, employee care, investor
relations, supplier relations, stakeholders' rights,
further studies of directors, implementation of
risk management policies and measurement
standards, implementation of customer policies
and purchase of liability insurance for the
directors of the Company)?
Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 Deviations from the
Corporate Governance
Best-Practice Principles for
TWSE/TPEx Listed
Companies and
Reasons Thereof		 6.
Implementation of risk management policies and risk measurement standards: Please refer to page 295-302 of this annual report for the relevant risk
management policies, organizational structure, and risk control activities. In addition, the Company has analyzed, tracked, and addressed the events that
may cause high risks to operational objectives, so as to improve the risk management mechanism.
7.
The implementation of customer policy: The Company is dedicated to maintaining a stable and good relationship with customers as well as adhering to
quality and service so as to create company profits.
8.
The Company has purchased liability insurance for directors and supervisors since 2009 and renewed it annually. Regarding the information on the
directors' liability insurance for 2020, the amount of insurance, coverage, premium, duration, and status of insurance have been reported to the Board of
Directors on Aug. 11, 2020.
9.
Important internal information: On Dec. 23, 2009, the Board of Directors of the Company adopted the "Procedures for Preventing Insider Trading", and
revised some provisions to version C in accordance with the law and the actual needs of the Company, and the relevant personnel of the Company has
been operating in accordance with the Procedures.
The "Procedures for Preventing Insider Trading" is available on the Company's website at:
(http://www.ecs.com.tw/Corporate governance under investor relations/Internal rules in the Company).
At least once a year, the Company conducts education and publicity on the Procedures and related laws for insiders and employees, and posts the
course content on the Company's website for colleagues to read at any time.		 �. Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate Governance
Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved.
Description of improvements:
1. On Mar. 20, 2020, the Board of Directors decided to adopt the performance evaluation guidelines and evaluation methods for the Board of Directors; The
Board of Directors reported the results of the evaluation to the directors on Mar. 22, 2021.
2. Completed the English version of the agenda for the general meeting of shareholders for 2021 in May 2021 and the English version of the annual report
for 2020 in June 2021; Completed the English version of the minutes within 20 days after the general meeting of shareholders, and announced the
declaration and placed it on the company website within the time limit.
3. The rate of the directors attended to the sharehold meeting of the Company was 62.5% over 50%. One of attendance is the independent director who is
the hoster of the Audit Committee of the Company.
Priorities and measures for strengthening those not yet improved:
1. The investor section of the Company's website has not been fully set up in English, so the Company will finish the English version of all laws and
regulations first.
2. Important news will be released in English from Jan. 1, 2022.
Implementation Status
Description
No
Yes
Evaluation Item

Note 1:

Independence Evaluation Form of the CPAs for 2021

Evaluation reason: � First time � Routine Evaluation date: Mar. 22, 2021

(I) Basic information:

Name of CPAs: Cheng-Chun Chiu and
Shih-TsungWu		 Name of the ac-
countingfirm:		 Deloitte & Touche
Professional
qualification		 CPA qualification of Cheng-Chun Chiu: Approval Document No. J.G.Z.L.Z.
No. 0930160267, Financial Supervisory Commission
CPA qualification of Shih-Tsung Wu: Approval Document No. J.G.Z.S.Z. No.
1010028123,Financial SupervisoryCommission

(II) Content:

With reference to Article 47 of the CPA Act and Communique No. 10 of the Code of Professional Ethics for CPA:

Ethics for CPA:
Item Results
1.
As of the most recent assurance operation, no CPA has been replaced for
sevenyears.		 �Yes � No
2.
The CPAdoesnothave significantfinancial relationship with his/herclient.		 �Yes�No
3.
The CPA avoids any inappropriate relationship with his/her client.		 �Yes � No
4.
The CPA ensures that his/her assistants are honest, fair, and independent.		 �Yes � No
5.
The CPA has not performed audit and assurance services on financial state-
ments ofcompanieshe/shehas served withintwo years before practicing.		 �Yes � No
6.
The CPA hasnot permitted others to practice under his/her name.		 �Yes�No
7.
The CPA has not owned any shares of the Company and its affiliated com-
panies.		 �Yes � No
8.
The CPA does not loan any money from the Company and its affiliated com-
panies.		 �Yes � No
9.
No joint investment or sharing of interests with the Company or affiliated
enterprises.		 �Yes � No
10. Not simultaneously taking a regular position in the Company or associates
andreceiving afixed salary therefrom.		 �Yes � No
11. The CPA is not involved in the management function of the decision-making
ofthe Company andits affiliated companies.		 �Yes � No
12. The CPA has not concurrently engaged in other businesses that may lead to
loss of independence.		 �Yes � No
13. No spouse, lineal relatives by blood or by marriage, or collateral relative by
blood withintwo generations withthemanagement ofthe Company.		 �Yes � No
14. The CPA hasnotreceived any commission related tohis/herservice. �Yes�No
15. The CPA has not engaged in any matter that may result in disciplinary ac-
tions taken against him/her or damage to the principle of independence so
far.		 �Yes � No

(III) Work plan: annual financial report audit certification of 2021.

(IV) Evaluation results: no violation of independence.

41

Note 2: Statement Letter from The Accounting Firm

Chin Shen No. 11000821 January 26, 2021

Recipient: Elitegroup Computer Systems Co.,Ltd.

  • Subject: The firm intends to accept the offer to audit your company's financial statements for 2021. In accordance with the No. 10 Bulletin-"Integrity, Objectivity and Independence" in the Norm of Professional Ethics for Certified Public Accountant of the Republic of China set forth by the National Federation of Certified Public Accountant Associations of the Republic of China, the members of the audit team declare that they have complied with the following regulations without committing violations of independence.

Explanation:

  • I. Members of the audit team and their spouses and dependents are not involved in the following:

  • Directly or indirectly hold significant financial interests in your company

  • Have business relations with your company or directors, supervisors and managerial officers at your company, where such relations may affect our independence

  • II. During the audit, members of the audit team, their spouses and dependents do not serve as directors, supervisors or managerial officers at your company or do not assume positions that may directly and significantly affect the auditing process.

  • III. Members of the audit team are not the spouses, lineal relatives, or relatives within the second degree of kinship of the directors, supervisors or managerial officers at your company.

  • IV. Members of the audit team have not received gifts or presents of significant value (where their values have not exceeded the general etiquette standards) from your company or directors, supervisors, managerial officers or major shareholders at your company.

  • V. Members of the audit team have performed the necessary procedures for evaluating independence or conflict of interests and have not been found to commit independence violations or be involved in unresolved conflicts of interest.

Deloitte & Touche CPA: Chiu, Cheng-chun CPA: Wu Shih-Tsung

==> picture [37 x 287] intentionally omitted <==

42

  • (IV) Establishment, functions, and operations of Remuneration Committee, if any:

  • Information regarding the members of the Remuneration Committee

Identity
(Note 1)		 Qualifications
Name
More than 5 years working experience and
following professional qualification
More than 5 years working experience and
following professional qualification
More than 5 years working experience and
following professional qualification		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Independence Criteria
(Note 2)		 Number of
Other Public
Companies in
Which the
Individual is
Concurrently
Serving as a
Remuneration
Committee
Member
 Remark
An instructor or
higher position in
a department of
commerce, law,
finance,
accounting, or
other academic
department
related to the
business needs of
the Company in
a public or
private junior
college, college,
or university

A Judge, Public
Prosecutor, Attorney,
Certified Public
Accountant, or Other
Professional or
Technical Specialist
who Has Passed a
National
Examination and Has
Been Awarded a
Certificate in a
Profession Necessary
for the Business

Has work
experience in
the areas of
commerce,
law, finance,
or
accounting,
or otherwise
necessary for
the business
of the
Company		 1 2 3 4 5 6 7 8 9 10
Independent
Director		 Gen-Yu Fong � � � � � � � � � � � � 3
Independent
Director		 Han-Fei Lin � � � � � � � � � � � 3
Independent
Director		 Liang-Chao Lin � � � � � � � � � � � � 0

Note 1: For the title, please fill in director, independent director, or others.

Note 2: For members who have met the following criteria in the two years prior to election and during their tenure, please tick " " in the box below each criteria.

(1) Not an employee of ECS or any of its affiliates.

(2) Not a director or supervisor of the Company's affiliates. Not applicable in cases where the person is an independent director of the Company's parent company or any subsidiary appointed in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations.

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of ECS or is ranked in the top 10 in shareholdings.

(4) Not a spouse, relative within two generations, or direct blood relatives within three generations of the executive listed in (1) or person listed in (2) or (3).

(5) Not a director, supervisor, or employee of an institutional shareholder that directly holds 5%or more of the total number of issued shares of ECS, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a director or supervisor of ECS under Paragraph 1 or 2, Article 27 of the Company Act (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, ECS and its parent or subsidiary or a subsidiary of the same parent).

(6) Not a director, supervisor, or employee of a company controlled by the same person who has shares over half of ECS's director seats or voting rights (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, ECS and its parent or subsidiary or a subsidiary of the same parent).

(7) Not a director, supervisor, or employee of another company or institution who, or whose spouse, is a chairman, president, or person holding an equivalent position of ECS (except for an independent director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, ECS and its parent or subsidiary or a subsidiary of the same parent).

  • (8) Not a director, supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with ECS (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of ECS and concurrently serving as an independent director, as appointed in accordance with the Act or the laws and regulations of the local country, at ECS and its parent or subsidiary or a subsidiary of the same parent).

  • (9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, director, supervisor, managerial officer, or spouse thereof that provides auditing service for ECS or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer, or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.

  • (10) Not under any of the categories stated in Article 30 of the Company Act.

43

  1. Operational status of the Remuneration Committee

  2. (1) The Company's Remuneration Committee consists of 3 members.

  3. (2) Term of members of this committee: Aug. 3, 2018, to Jun. 24, 2021, in the most recent year, the Salary and Remuneration Committee held 4 meetings (A), in which the membership qualifications and attendance situation were as follows:

Title Name Attendance in
Person(B)		 Attendance by
Proxy		 Actual attendance rate (%)
(B / A) (Note)		 Remark
Convener Gen-Yu Fong 4 0 100
Member Han-Fei Lin 4 0 100
Member Liang-Chao Lin 4 0 100
Other matters to be recorded:
I.
If the Board of Directors does not adopt or amend the recommendations of the Salary and Remuneration Committee,
it shall state the date and session of the board meeting, the content of the proposal, the resolution of the board
meeting, and the company's handling of the opinions of the Salary and Remuneration Committee (If the salary and
remuneration approved by the Board of Directors exceed the recommendation of the Salary and Remuneration
Committee, the circumstances and reasons for the discrepancy shall be stated): none.
II. For the resolution matters of the Salary and Remuneration Committee, if the member has an objection or qualified
opinion and there is a record or written statement, the date and session of the Salary and Remuneration Committee,
the content of the proposal, the opinions of all the members and the disposition of the opinions of the members shall
be stated: none.
III. The implementation status is as follows:
In order to implement corporate governance and ensure a sound remuneration system for directors and managers
of the Company, the Company set up the remuneration committee in accordance with Article 14-6 of the Securities
and Exchange Act and the Regulations Governing the Appointment and Exercise of Powers by the Remuneration
Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter, to perform
the following functions and powers according to relevant regulations:
(1) Establish and periodically review the performance evaluation and remuneration policy, system, standards and
structure for directors and managerial officers.
(2) Periodically evaluate and prescribe the remuneration of directors and managerial officers.
And the Company adopted the Remuneration Committee Charter for compliance.

  • I. If the Board of Directors does not adopt or amend the recommendations of the Salary and Remuneration Committee, it shall state the date and session of the board meeting, the content of the proposal, the resolution of the board meeting, and the company's handling of the opinions of the Salary and Remuneration Committee (If the salary and remuneration approved by the Board of Directors exceed the recommendation of the Salary and Remuneration Committee, the circumstances and reasons for the discrepancy shall be stated): none.

  • II. For the resolution matters of the Salary and Remuneration Committee, if the member has an objection or qualified opinion and there is a record or written statement, the date and session of the Salary and Remuneration Committee, the content of the proposal, the opinions of all the members and the disposition of the opinions of the members shall be stated: none.

Note 5:

  • (1) If any member of the Salary and Remuneration Committee resigns before the end of the year, the date of resignation shall be indicated in the remarks column, and the actual attendance rate (%) shall be calculated using the number of meetings of the Salary and Remuneration Committee convened and the actual attendance during the term of service.

  • (2) Before the end of the year, if any member of the Salary and Remuneration Committee is re-elected, the new member and the former member shall be filled in, and whether the member is a former member, a new member, or a re-elected member and the date of re-election shall be indicated in the remarks column. His or her attendance rate (%) will be calculated on the basis of the number of Remuneration Committee meetings held during his or her tenure and the number of such meetings attended.

44

Reasons Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 None.
Implementation Status
Description		 I. With respect to environmental governance, corporate social
responsibility, and corporate governance, the Company has
specific responsible units to coordinate with each relevant
department and collaborative unit to perform the measurement of
relevant operational risks in accordance with the requirements in
international environmental ordinances, industry code of conduct
and those of competent authorities, and respond to relevant risks
and form corresponding management policies on the principle of
majority, and actively communicate with stakeholders to
incorporate them into the daily strategy of enterprise operation.
The company has so far introduced ISO 9001 Quality
Management System, ISO14001 Environmental Management
System, ISO 45001 Occupational Safety and Health Management
System, IECQ QC080000 Hazardous Substances Process
Management System, ISO 50001 Energy Management System,
RBA VAP Social Responsibility Audit, and Business Social
Compliance Initiative (BSCI), etc. Through the continuous
operation of the above management systems and third-party
audits, the Company can grasp and instantly respond to the risks
related to environmental awareness, employee safety, customers,
suppliers, and other aspects of its business activities. In addition,
regarding the information security risks increasingly rising due to
operating activities, the Company has also been actively
strengthening governance measures, and has created remote host
backup and data backup mechanisms, identified potential
information security hazards, set specific feasible emergency
response plans and disaster recovery strategies, in order to ensure
continuous business operations.
No
Yes V
Evaluation Item I Does the company assess ESG risks associated with its
operations based on the principle of materiality, and establish
related risk management policies or strategies?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 None. None.
Implementation Status
Description		 II. In order to improve the management of corporate social
responsibility, Elitegroup Computer Systems designated the
General Manager Office as the dedicated unit to promote
corporate social responsibility. The Office is responsible for the
proposal and implementation of corporate social responsibility
policies, systems or related management policies, and specific
promotion plans. It regularly reports to the Board of Directors in
March every year. The President is responsible for coordinating
the management, legal affairs, human resources, general affairs,
and green development, and guaranteeing the cooperation of all
units, promoting the corporate social responsibility within their
respective rights and responsibilities, reporting to the Board of
Directors in March every year, and announcing the results through
the corporate social responsibility report on the company website.		 (I)
1. The Company's environmental management policies include
"full participation in promoting environmental protection",
"energy conservation and waste reduction for ecological
protection", "complying with laws and regulations and making an
impact on the public", and "pollution prevention and continuous
improvement". In accordance with international environmental
protection laws and regulations, we have established, in the
Company and the plant areas, waste gas and waste control system,
implemented supervision and management in compliance with
ISO 14001, obtained ISO 14001 environmental management
system certification, and carried out energy resource consumption
reduction, regular waste gas and waste water detection and
feedback improvement. In the plant areas, we implemented the
energy management system at the end of 2016 to improve energy
efficiency, obtained the ISO 50001 Energy Management System
certification at the beginning of 2017, and established a
management system for the review and monitoring of energy
usage to continuously improve energy efficiency.
No
Yes V V
V
Evaluation Item II. Does the company establish exclusively (or concurrently)
dedicated first-line managers authorized by the board to be in
charge of proposing the corporate social responsibility policies
and reporting to the board?		 III. Environmental issues
(I) Does the company establish proper environmental
management systems based on the characteristics of their
industries?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 47
Implementation Status
Description		 (II)
1. In the Company and the plant areas, we have posted
environmental protection resource recycling publicity in the
workplace, implemented resource classification and recycling
measures, and promoted various energy conservation, water-
saving, and recycling operations internally to show our love of the
earth. In addition, we have procured and been using
environmentally-friendly equipment, instruments, and products
(such as products with green marks) in the daily operation of the
Company and the plant facilities and activities.
2. In line with international trends, the concept of green design
and the requirements of relevant international laws and
regulations were deeply rooted in the product design stage, so as
to produce products that support energy conservation, low harm,
and easy-to-recycle, and promote the sustainable utilization of the
earth's resources.
(III)
1. Elitegroup Computer Systems (ECS) is aware of the risks and
opportunities that global climate change brings to its operations
and adheres to the principle of "Earth Care, We Care." in our
sustained efforts to protect the earth. ECS continues to strengthen
the collection of and compliance with legal requirements of
various countries, formulate environmental control policies,
evaluate the green conformity of products, and introduce the
concept of environmental design in the product development
stage, introduce the concept of energy conservation, low hazard,
and easy-to-recycle to address and respond to climate change and
environmental protection issues, and perform greenhouse gas
inspection and reduction activities in the Company and the plant
areas every year.
2. Conduct regular internal EHS education and information
education
through
ECS
Biweekly
to
implement
the
environmental management system in compliance with ISO
14001 and ISO 50001.
No
Yes V
Evaluation Item (II) Does the company endeavor to utilize all resources more
efficiently and use renewable materials which have low impact
on the environment?
(III) Does the company evaluate the potential risks and
opportunities in climate change with regard to the present and
future of its business, and take appropriate action to counter
climate change issues?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 None. 48
Implementation Status
Description		 3. Post environmental protection resource recycling publicity in
the Company's workplace, and implement resource classification
and recycling measures.
4. Set up special zone for green ECS on ECS Biweekly, and
regularly provide energy conservation and carbon reduction
information for colleagues' reference and implementation.
5. Set the air conditioning of the Company's building at 26~28�
to improve the efficiency of energy conservation.
6. Save the Company's electricity consumption and review the
rationality of energy usage, such as by implementing energy
conservation measures for mechanical and electrical equipment,
changing the two-stage electricity pricing to a three-stage pricing,
and replacing the T5 lamps in the office areas and the toilets of
the headquarters building with LED lamps.
7. The company participates in Carbon Disclosure Project (CDP)
every year to share the control status of greenhouse gases and
implement energy conservation and carbon reduction operations.
8. Set carbon reduction targets to reduce the environmental
impact of business operations.
(IV)
1. The Company's environmental management policies on energy
conservation and carbon reduction, greenhouse gas reduction,
water and waste reduction, operation, and effectiveness are
disclosed in the Company's Corporate Social Responsibility
Report, and the detailed implementation status can be found in the
Company's official website (https://www.ecs.com.tw).
(I)
1. The Company is dedicated to protecting the legitimate rights
and interests of employees through the principles of protection,
respect, and compensation. We have formulated our human rights
policy based on the United Nations' Universal Declaration of
Human Rights, the UN Global Compact, and the ILO Declaration
on Fundamental Principles and Rights at Work, covering its
employees, suppliers, customers, and partners, etc., in addition to
meeting local labor regulations.
No
Yes V V
Evaluation Item (IV) Does the company take inventory of its greenhouse gas
emissions, water consumption, and total weight of waste in the
last two years, and implement policies on energy efficiency and
carbon dioxide reduction, greenhouse gas reduction, water
reduction, or waste management?		 IV. Social issues
(I) Does the company formulate appropriate management
policies and procedures according to relevant regulations and
the International Bill of Human Rights?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 49
Implementation Status
Description		 2. The Company established the working principle of labor safety
and health. To implement labor safety and health management,
we have formulated safety and health standards for different types
of work, so that the employees' work safety and health have
standards to follow.
3. We post warning signs and provide emergency response
measures and first-aid facilities in hazardous places and working
environment.
4. The Company periodically checks the air quality in the working
environment.
5. The Company conducts site audit for compliance with the Code
of Conduct of Responsible Business Alliance ("RBA", formerly
known as "EICC") and the Code of Conduct of Business Social
Compliance Initiative (BSCI) every year in the plant areas, and
maintained good implementation results. We continuously
obtained the Silver Rating Certificate for the Validated Audit
Process (VAP) of RBA from external third party in 2018 and
2020.
(II)
1. The Company regularly organizes relevant internal education
and training courses, has set compulsory class hours for all
employees based on their functions through the Elitegroup
Corporate University, and linked them with annual performance
appraisal as a reference for salary, reward, appraisal reward, and
punishment, and future promotion.
2. The training courses for new employees of the Company,
include EHS courses, corporate development direction,
management policy and related policies, and the concept of
sustainable development of corporate social responsibility.
3. The Company appropriately reflects the business performance
or results in employees' remuneration: According to Article 19 of
the Articles of Association of the Company, if the Company has
any profit in the year (the so-called profit refers to the pre-tax
profit before the deduction of the remuneration paid to employees
and the remuneration paid to directors), 6% shall be set aside for
employees' remuneration and no more than 0.6% for the
No
Yes V
Evaluation Item (II) Has the company established and offered proper employee
benefits (including compensation, leave, and other benefits)
and reflected the business performance or results in employee
compensation appropriately?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 50
Implementation Status
Description		 Directors' remuneration. If the Company has accumulated losses
(including adjustments on unappropriated profits), it shall retain
a portion of profits to offset the losses first. Accordingly, 6% of
the profits should be set aside for employees' remuneration in
2020, which is NT$23,431,316.
(III)
1. Based on the working environment, the Company or the plant
areas provide corresponding regular labor protection measures
(fire safety and first aid education and training) and safety and
health education, mainly including employee health inspection,
on-the-job training on fire safety and industrial safety, and hold a
series of lectures on occupational health protection knowledge.
2. The plant areas have all passed ISO 45001 certification, and are
continuously improved to meet the requirements of regulations
and policies. Internal staff's education, training, and advocacy are
carried out to reduce industrial safety accidents, prevent the loss
of life and property, and improve the performance of health and
safety.
3. The Company publishes or announces information related to
safety protection in Elitegroup Biweekly from time to time.
4. The Company sets up staff leisure centers to provide sports and
leisure places such as gym, rhythm classroom, karaoke room,
table tennis, billiards to employees.
5. To help employees keep a healthy diet, the Company provides
convenient, healthy, and nutritious food for colleagues to choose
from, and holds health promotion-related lectures and propaganda
from time to time.
6. In 2012, the Company was committed to promoting smoke
hazard control and health propaganda in the workplace, actively
implementing smoke-free and health promotion measures in the
workplace, and establishing an excellent healthy working
environment. We were awarded the certification of "Healthy
Workplace Independent Certification Mark", and was awarded
the "Health Excellence Award" for healthy workplace by the
Taipei Municipal Government. In 2015, the Company applied for
the extension of the "Healthy Workplace Independent
No
Yes V
Evaluation Item (III) Does the company provide a healthy and safe working
environment and organize training on health and safety for its
employees on a regular basis?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 51
Implementation Status
Description		 Certification Mark". The application was reviewed and approved
by the government, and the certification was successfully
extended to 2018. In 2018, the Company was awarded the
"Excellent Healthy Workplace Award" of Taipei granted by the
Municipal Health Bureau of Taipei. In 2019, it was awarded the
"Health Workplace Certification - Health Promotion Mark" by the
National Health Agency of the Ministry of Health and Welfare.
7. The Company attaches great importance to the health of
employees in the workplace and promotes various cancer
screening services. In November 2016, the Company was
awarded the "Excellent Workplace Award in Cancer Prevention
and Treatment" by the Taipei Municipal Government. With
respect to protecting the health of employees that are nursing
mothers, the Company successively won the "Good Breast-
feeding Room Certification" from 2017 to 2020.
8. ECS launched the Employee Assistance Program in 2015 and
worked with the Lifeline Employee Assistance Program Center
(EAPC) of Hsinchu City to establish a "professional consultation
and referral" service system for the Company. The Company is
committed to helping employees solve work or life problems,
preventing work safety accidents, improving work efficiency,
promoting the healthy development of the environment, uniting
the staff, forming a good organizational culture, and maintaining
the excellent stability of the company, so as to help the Company
and the employees achieve mutual, stable growth, and promote
the competitiveness of the organization. In 2018 and 2016, the
Company was awarded the biennial "Work-Life Balance Award -
Employee Assistance Medal and Health and Happiness Medal"
by the Ministry of Labor. (The Ministry of Labor suspended the
award application process due to COVID-19 in 2020)
(IV) ECS believes that talent is the most precious resource of an
enterprise. To promote the development of skills and vocations in
employees, ECS has established an Elitegroup Corporate
University with diversified education and training systems
covering Elitegroup Management College, Research Engineering
Institute, Marketing College, and General College of Logistics
No
Yes V
Evaluation Item (IV) Does the company provide its employees with career
development and training sessions?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 52
Implementation Status
Description		 and Marketing. This response to the demand for self-learning of
colleagues, special attention is paid to talent cultivation and
development, with the aims to improve the quality of staff, and
strengthens the management skills of junior supervisors. The
company cooperates with functional units to actively arrange
succession training at all levels and develop a talent pool, sets up
internal lecturer and professional technical training mechanism,
stimulates employees' potential, drive the vitality of the
organization, trains employees' second expertise, strengthens the
professional ability, self-management ability and working attitude
of all employees, deeply embeds the core values, so as to enable
all employees to grow and thrive together with ECS.
(V) The Company has adhered to the principle of "customer first"
in its practice. In terms of safety regulations, such as those related
to electromagnetic radiation, harmful substance control, and
energy efficiency, in addition to meeting the requirements of
international conventions, the Company makes sure that its
products are in line with the regulations of various countries and
have passed the required testing and certification, follows the
principles of honest product labeling and disclosure for marketing
in compliance with international laws and regulations, so as to
ensure the rights and interests of consumers.
1. Consumers can ask questions about products and services on
the Company's external website service platform. The technical
and service personnel will answer and help them, and directly
communicate with consumers, so as to ensure consumers' rights
and interests and improve the quality of products and services.
2. The Company has set up a customer complaint channel in the
special zone for stakeholders of the Company's website, and has
established a proper handling and response tracking mechanism.
(VI) All suppliers of the Company shall comply with ECS green
policy of "producing non-toxic products, responding to energy
saving and carbon reduction, and building a sustainable
enterprise". In our supplier management procedure, new suppliers
shall not only view and sign 11 qualification documents but also
go through the field investigation for company site and plants
No
Yes V
V
Evaluation Item (V) Does the Company comply with relevant regulations and
international standards regarding customer health and safety,
right to privacy, marketing, and labeling of its products and
services and, set up relevant consumer protection policies and
complaint procedures?
(VI) Has the Company established the supplier management
policies requesting suppliers to comply with relevant laws and
regulations related to environmental protection, occupational
safety and health or labor rights and supervised its
implementation?
Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 Deviations from the
Corporate Social
Responsibility Best Practice
Principles for TWSE/TPEx
Listed Companies and
Reasons Thereof		 No third-party verification
company is entrusted for
verification.		 VI. If the company has established corporate social responsibility best-practice principles based on the "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx
Listed Companies," describe the implementation and any deviations from such principles:
With reference to the "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies" and relevant statutory provisions, the Company has completed
the formulation of the "Social Responsibility Best Practice Policy of Elitegroup Computer Systems Co., Ltd." and the "Corporate Social Responsibility Best Practice Principles
of Elitegroup Computer Systems Co., Ltd.", and have implemented corporate social responsibility programs in accordance with the Code of Conduct - Responsible Business
Alliance (RBA) (formerly known as "EICC") and fully disclosed them in its Corporate Social Responsibility Reports.		 VII. Other important information to facilitate a better understanding of corporate social responsibility practices:
The Company has disclosed its operation situation in the Corporate Social Responsibility Report, which contains information on environmental protection, social welfare, human
rights, safety and health, etc. The Report can be downloaded from the Company's website/investor zone/corporate governance/corporate social responsibility report for the detailed
implementation status.
Implementation Status
Description		 conducted by ECS's supplier investigation team. The project
covers 14 items, such as quality management, environmental
product management, implementation of RBA code of conduct,
corporate social responsibility, and business risk assessment. To
become an official supplier of the Company, a new supplier must
pass the field investigation and have no environmental or social
impact record.		 Our Corporate Social Responsibility Reports are prepared in
accordance with GRI Standards of Global Reporting Initiative
(GRI) for Sustainability Reporting. No third-party verification
company is entrusted to verify the report.
No V
Yes
Evaluation Item V. Does the company refer to internationally-used standards or
guidelines for the preparation of reports such as CSR reports
disclosing non-financial information? Are the reports certified
or assured by a third-party accreditation body?
Activities ECS participated in the 21st "Give Love to the World" event, donated 50 sets of SF20PA2 11.6-inch laptops to family support entities (including Changhua
Family Support Center, Taiwan Fund for Children and Families (2), Southern Taichung Family Support Center, Taiwan Fund for Children and Families (8),
New Taipei Family Support Center, Taiwan Fund for Children and Families (8), Ta-Tung Children's Home (8), Maria Social Welfare Foundation (8), Huei-
Ming School (8), Taiwan Action Bodhisattva Education Association (8)), in an effort to contribute to social welfare and help disadvantaged groups in need of
help as well as encourage more enterprises to get involved.		 ECS participated in the learning assistance program promoted by the Ministry of Education and donated NT$1 million to three primary schools (Houliao
Elementary School (NT$20 thousand), Wanxing Elementary School (NT$30 thousand), and Jialao Elementary School (NT$50 thousand)) in Changhua County
in the academic year of 2019 to help students make good use of ICT products after class, shorten the academic gap with their peers, strengthen the academic
ability of students in basic subjects and strengthen the learning of curriculum content. The Company fully supported the Ministry of Education in promoting
e-learning and active teaching to enhance students' capabilities to use digital technology.		 ECS is committed to the promotion of energy conservation and carbon reduction activities and completed the replacement of the ice water machine in the
Neihu headquarters building, which saved 38,411.5 kilowatt-hour of electricity usage and reduced 19.551 metric tons of CO2 emissions during the period of
July-December 2020. ECS continues to reduce the power use and greenhouse gas emissions of the organization and product development, develop low carbon
operations and low-carbon product development, and make progress towards the goals of enterprise sustainability, energy conservation, and carbon reduction.		 Headquarters
1. Completed ISO 9001 Quality Management System certification audit in December.		 Xingying plant
1. Completed RBA CLOSURE AUDIT in July.
2. Completed IECQ QC080000 hazardous substances management system supervision and audit in April.
3. Completed ISO 9001 quality management system supervision and audit in April.
4. Completed ISO 14001 environmental management system supervision and audit in May.
5. Completed ISO 45001 occupational safety and health management system certification audit in May.
6. Completed Amfori BSCI Full Audit in September.
7. Completed IATF 16949 certification audit in September.		 Thailand plant
1. Completed ISO 9001 Quality Management System certification audit in July.		 In order to maintain the healthy development of employees' life, work, and physical and mental health, ECS has cooperated with the Employee Assistance
Service Center of Lifeline Association in Hsinchu City to promote the Employee Assistance Program since June 2015. About 2-3 employees used the system
every month. When employees have any questions, problems, or stress and need assistance, they all know that they can use this consulting service, which can
promote the physical and psychological health of employees, identify employees in need of help and provide timely assistance, solve the employees' work or
life difficulties, and promote work-life balance. In 2018 and 2016, the Company was awarded the biennial "Work-Life Balance Award - Employee Assistance
Medal and Health and Happiness Medal" by the Ministry of Labor (The Ministry of Labor suspended the award application process due to COVID-19 in
2020). ECS has been awarded the "Healthy Workplace Certification - Health Promotion Mark" by the National Health Service of the Ministry of Health in
2019, in response to the Company's efforts to promote the balance of physical and psychological health, which can help everyone work in a friendly and
healthy workplace environment away from worries.
Time January 2020 March 2020 July to December
2020		 December 2020 2020 years July 2020 June 2015 to date
In February and August, ECS's Welfare Committee held blood donation activities to invite employees to donate blood together. The staff were very enthusiastic
and actively donated 162 bags of blood in February and 152 in August, showing the willingness of ECS members to help others. In addition, for participating
in the blood donation activity held by the Association for Internal Medicine Advancement, the Company was awarded the Best Public Welfare Enterprise
Award by the Association for Internal Medicine Advancement in 2020.		 In order to thank the staff for their support to the Company, and to show appreciation for their hard work, ECS's Welfare Committee held a year-end dinner
for its entire staff. Besides providing delicious food, we also arranged wonderful artists' performances and copious lucky draw gifts for the staff to enjoy the
meal, relax their mind, and spend a fun and memorable evening.
In the Company's anniversary month, ECS's Welfare Committee organized the 33rd Anniversary Celebration Week. This year, the Welfare Committee prepared
a 6-inch light cheesecake made by the public welfare organization, Kind Garden, for each employee to share the joy of the Company's anniversary, which left
a memorable 33rd anniversary in an atmosphere of love and charity.		 ECS's Welfare Committee held the "2020 Elite Classroom" in Yilan Communication Center, and invited colleagues to experience the fun of retro time travel
with their relatives and friends. The Welfare Committee also specially prepared a lot of good gifts for employees to take home, letting the elite colleagues and
family enjoy the happiest and the best parent-child time together.
The much-anticipated "Elite Fun Day" came again in 2020. The Welfare Committee specially selected two blockbusters of the year, Doraemon 20th Anniver-
sary Movie, Nobita's New Dinosaur and The Witches. This allowed the employees to enjoy the films during their premiere weekend together with their
families and friends.		 The Health Promotion Committee specially planned the "Amazing Parent-Child Time Art Season" this year to provide different parent-child activities from
July to September to strengthen the emotional bond between parents and children, inspire children's creativity and cultivate their self-learning awareness
through edutainment, and enable a happy time for children and parents to grow and learn together.		 In order to promote healthy diets, encourage colleagues to achieve their weight loss goals, and help them manage their calorie intake, the Health Promotion
Committee organized a two-month activity called "ECS Fat Buster - 2020 Summer Fat Loss Combat". Through group competition and weight loss menu
designed by professional dietitians for the event, together with aerobic and strength exercise training, the staff was encouraged to achieve their desired weight
loss effect within two months. A total of 30 people participated in this activity. 9 people lost more than 4kg. 26 colleagues reduced their waistline by more
than 2 inches. The participants lost a total weight of 88 kg.
To promote health in colleagues and provide after-work entertainment, the Welfare Committee held an expanded "Jungle Runners 2.0 - 2020 Runner Devel-
opment Class". The class provided knowledge on sports and protection in sports. It trained participants to plan their training and follow-through, helping them
form the habit of running at weekends within 2 months. It also fully subsidized the registration fee for a road race, allowing the staff to experience the fun of
the race.		 The much-anticipated "Elite Fun Day" came again in 2020. The Welfare Committee specially selected two blockbusters of the year, Doraemon 20th Anniver-
sary Movie, Nobita's New Dinosaur and The Witches. This allowed the employees to enjoy the films during their premiere weekend together with their
families and friends.		 In addition to inviting qualified hospital planning in compliance with the provisions of the Occupational Safety and Health Act every year, the Health Promo-
tion Committee also sent medical teams to Neihu headquarters to perform regular physical examination on employees, and expanded the scope to unlimited
frequency, times, and items for examination, so as to make physical examination a welfare for all employees in every year beyond the basic requirements of
laws and regulations.
This year, the Welfare Committee of ECS held a special Christmas festival event called "Christmas Stockings TCH Out! - The Breakers of ECS", and held a
large Christmas stockings wall raffle in the lobby on the first floor. Everyone got a prize, which could be said to be a big Christmas gift presentation, so that
everyone had a happy memory for the last event in 2020.
February 2020 January 2020 May 2020 August 2020 September to
November 2020		 2020 Q3 July to August 2020 September to October
2020		 September to
November 2020		 Oct. 2020 December 2020
Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 None
Implementation status (Note)
Description		 (I) The Company has established a code of ethical conduct,
ethical corporate management code, ethical corporate
management operating procedures, and behavioral
guidelines as the basic codes for the directors and all
colleagues of the Company in the business
implementation, and also stipulated codes of conduct and
promotional courses relating to ethical business practices
in the employment contract, integrity commitment letter,
quarterly performance appraisal, and annual training
courses.
(II) Prevented various violations of integrity through the
business operations of internal audit, internal control, and
risk management; and set up methods for handling cases
of reported illegal and unethical or dishonest behaviors,
and put into practice a complaint system.
(III) Formulated various regulations and procedures (such as
procedures for preventing insider trading management,
operating procedures for endorsement guarantees, etc.,
operating procedures for lending funds to others,
operating procedures and behavior guidelines for ethical
corporate management, reporting illegal and unethical or
dishonest behaviors) as the basic principles of the
business operation of each unit, and regularly reviewed
No
Yes Yes
Yes
Yes
Evaluation Item I. Establishment of ethical corporate management policies and
programs
(I) Has the Company established the ethical corporate management
policies approved by the Board of Directors and specified in its rules
and external documents the ethical corporate management policies
and practices and the commitment of the Board of Directors and
senior management to rigorous and thorough implementation of
such policies?
(II) Has the Company established a risk assessment mechanism
against unethical conduct, analyzed and assessed on a regular basis
business activities within its business scope which are at a higher
risk of being involved in unethical conduct, and established
prevention programs accordingly, which shall at least include the
preventive measures specified in Paragraph 2, Article 7 of the
"Ethical Corporate Management Best Practice Principles for
TWSE/GTSM Listed Companies"?
(III) Has the Company specified in its prevention programs the
operating procedures, guidelines, punishments for violations, and a
grievance system and implemented them and review the prevention
programs on a regular basis?
Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 None
None
Implementation status (Note)
Description		 the contents of various provisions in accordance with the
revised versions and interpretation orders announced by
the competent authorities.		 (I) The Company signs the Honest Commitment with
suppliers and abides by the principle of good faith.
(II) With the President Office as the organizing unit, each unit
carries out the integrity management of the related
business within the scope of their own business rights and
responsibilities. The Company reported to the Board of
Directors in March 2021 on the implementation of ethical
corporate management policy and prevention plan in 2020
and explains the implementation of ethical corporate
management in 2020 on the company's website.
(III) It avoids conflicts of interest through the signature and
countersignature process.
(IV) The Company ensures that directors and employees
comply with the Company Act, the Securities Exchange
Act, the Commercial Accounting Act, the Political
Donations Act, and other relevant laws and regulations as
well as the Company's Code of Ethics in the conduct of
their business through spot inspection of its original
internal audit and internal control systems.
(V) In line with the establishment of the ethical business code,
the Company has planned ethical corporate management-
related courses in the annual training program.
No
Yes Yes
Yes
Yes
Yes
Yes
Evaluation Item II. Fulfillment of ethical corporate management
(I) Does the company evaluate business partners' ethical records and
include ethics-related clauses in business contracts?
(II) Has the Company set up a dedicated unit under the Board of
Directors to promote ethical corporate management and regularly (at
least once every year) report to the Board of Directors the
implementation of the ethical corporate management policies and
prevention programs against unethical conduct?
(IV) Has the Company established policies to prevent conflicts of
interest, provide appropriate communication channels, and
implement them accordingly?
(V) Has the company established effective accounting systems and
internal control systems to implement ethical corporate
management and had its internal audit unit, based on the results
of the assessment of the risk of involvement in unethical
conduct, devise relevant audit plans and, audit the compliance
with the prevention programs accordingly or entrusted a CPA to
conduct the audit?
(V) Does the company regularly hold internal and external
educational trainings on operational integrity?
Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 Deviations from the Ethical
Corporate Management Best
Practice Principles for
TWSE/TPEx Listed Companies
and Reasons Thereof		 None None V. If the Company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed
Companies, please describe any discrepancy between the policies and their implementation.
- The Ethical Corporate Management Best-Practice Principles of the Company is formulated and operated in accordance with the Ethical Corporate Management Best-Practice
Principles published by the competent authority.		 VI. Other important information to facilitate a better understanding of the Company's ethical corporate management (e.g., review of and amendments to ethical corporate management policies)
- Convening supplier meetings to work together to uphold the code of integrity.
- Regularly reviewing the provisions of the Code of Ethical Conduct in accordance with revised versions and interpretations published by the competent authority.
Implementation status (Note)
Description		 (I)
It sets up measures to deal with cases reporting illegal,
immoral or dishonest acts, and implements a complaint
system; sets up the report mailbox and special line for
internal and external whistleblowers, and designates
appropriate unit and personnel to handle the reports.
(II)
At present, the Company accepts complaints,
investigations and confidentiality, and other related
operations through the original internal control system
and the ethical corporate management procedures, and in
accordance with the measures for reporting illegal and
immoral or dishonest behaviors.
(III) The content of the reports and the identity of
whistleblowers will be kept confidential		 The Company discloses the contents of the code of conduct on
the Company's website and annual report, and lists them as the
code of conduct under "Discipline" in the Company's quarterly
performance appraisal.
No
Yes Yes
Yes
Yes		 Yes
Evaluation Item III. Operation of the whistle-blowing system
(I)
Does the company establish both a reward/punishment system
and an integrity hotline? Can the accused be reached by an
appropriate person for follow-up?
(II)
Has the Company established the standard operating
procedures for investigating reported misconduct, follow-up
measures to be adopted after the investigation, and related
confidentiality mechanisms?
(III) Does the company provide proper whistleblower protection?		 IV. Enhanced disclosure of ethical corporate management
information
Does the company disclose the ethical corporate management
policies and the results of its implementation on the company
website and MOPS?

(IX) The following matters shall be disclosed on the implementation of internal control system

1. Statement on Internal Control

1. Statement on Internal Control
Elitegroup Computer Systems Co., Ltd.
Statement on Internal Control
Date: Mar. 22, 2021
Regarding the internal control system of the Company in 2020, based on the results of our self-evaluation, we
hereby make the following statement:
I. The company's board of directors and management are responsible for establishing, implementing, and
maintaining an adequate internal control system. Its purpose is to reasonably ensure that operational
effectiveness and efficiency (including income, performance, and asset safety) and reporting are reliable,
timely, and transparent, as well as to ensure compliance with relevant regulations and laws.
II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal
control system can provide only reasonable assurance of accomplishing its 3 stated objectives above.
Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating
circumstances beyond control. Nevertheless, the internal control system contains self-monitoring
mechanisms, and ECS takes immediate remedial actions in response to any identified deficiencies.
III. ECS evaluates the design and operating effectiveness of the internal control system based on the criteria
provided in the "Regulations Governing the Establishment of Internal Control Systems by Public Companies"
(herein below, the "Regulations"). The criteria adopted by the Regulations identify 5 components of internal
control based on the process of management control: 1. control environment; 2. risk assessment; 3. control
activities; 4. information and communication; and 5. monitoring operations. Each key component includes
several items. Please refer to the Regulations for the aforementioned items.
IV. ECS has evaluated the design and operating effectiveness of the internal control system according to the
Regulations.
V. Based on the results of the foregoing evaluation, the Company considers that its internal control system
(including the supervision and management of its subsidiaries) as of December 31, 2020, including
understanding that the design and implementation of the internal control systems related to the effectiveness
of operations, the extent of efficiency objective achievement, the report's reliability, timeliness, transparency
and compliance, and the compliance with relevant regulations and relevant laws, are effective and can
reasonably ensure the achievement of the above objectives.
VI. This statement is an integral part of ECS's annual report and prospectus and will be made public. Any
falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles
20, 32, 171, and 174 of the Securities and Exchange Act.
VII. This statement has been approved by the Board of Directors of the Company on Mar. 22, 2021. Among the
8 Directors present, 0 of them disagreed. The rest all agreed to the contents of this statement.
Elitegroup Computer Systems Co., Ltd.
Chairman: Wen-Yen Lin-Kuo
Signature
President: Lung-Kuang Yang
Signature

60

  1. If a CPA has been hired to carry out a special audit of the internal control system, the CPA audit report shall be disclosed: None.

  2. (X) If the Company and its internal personnel are punished, or the Company imposes punishment upon its internal personnel for violation of internal control system in the most recent year and up to the date of the publication of the annual report, and the penalty result may have a significant impact on shareholders' equity or securities price, the content of punishment, major deficiency, and improvement shall be specified: none.

  3. (XI) Important resolutions of the shareholders' meeting and the Board of Directors for the most recent year and up to the publication date of the annual report:

Board of
Directors
Date/Term		 Important proceeding Proceedings
in line with
§14-3 of the
Securities
ExchangeAct		 Objections or
reservations by
Independent
Directors		 Opinion of
independent
director		 The Company's
handling of the
opinions of the
independent
director		 Results and
implementation of
resolution
March 20
2020
The 1st
Session		 1. To deliberate on the amount
of remuneration for directors of
the Company for 2019.		 NA NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. To deliberate on the number
of rewards for directors of the
Company for 2019.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. Proposal on the financial
statements and operating
reports of the Company for the
year 2019.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
4. Proposal on the Company's
annual profit distribution in
2019.		 NA NA NA NA 4. All the directors
present passed the
resolution without
objection.
5. Reviewed the amount and
payment method of employee
remuneration of the Company
in 2019.		 NA NA NA NA 5. All the directors
present passed the
resolution without
objection.
6. Amended the articles of
association of the Company.		 NA NA NA NA 6. All the directors
present passed the
resolution without
objection.
7. Amended the "Rules of
Procedure of the Board of
Shareholders" of the Company.		 NA NA NA NA 7. All the directors
present passed the
resolution without
objection.
8. Fix the date, time, place, and
other matters relating to the
general meeting of shareholders
of 2020.
NA		 NA NA NA 8. All the directors
present passed the
resolution without
objection.
9. Handle matters related to
proposals of shareholders
holding more than 1% equity.		 NA NA NA NA 9. All the directors
present passed the
resolution without
objection.
10. Amended the "Rules of
Procedure of the Board of
Directors" of the Company.		 NA NA NA NA 10. All the
directors present
passed the
resolution without
objection.
11. Amended the
"Organizational Procedures of
the Audit Committee" of the
Company.		 NA NA NA NA 11. All the directors
present passed the
resolution without
objection.

61

Board of
Directors
Date/Term		 Important proceeding Proceedings
in line with
§14-3 of the
Securities
ExchangeAct		 Objections or
reservations by
Independent
Directors		 Opinion of
independent
director		 The Company's
handling of the
opinions of the
independent
director		 Results and
implementation of
resolution
12. Prepared the Statement of
Internal Control System of the
Company.		 NA NA NA NA 12. All the
directors present
passed the
resolution without
objection.
13. The report on matters
related to the "Board of
Directors' Self-evaluation or
Peer Evaluation Method" of the
Company.		 NA NA NA NA 13. All the
directors present
passed the
resolution without
objection.
14. Proposal on changing the
CFO, Financial Officer, and
Accounting Officer of the
Company.		 V None None None 14. All the
directors present
passed the
resolution without
objection.
May 8
2020
The 2nd
Session		 1. Fix the date, time, place, and
other matters relating to the
general meeting of shareholders
of 2020. (Newreport)
NA		 NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. Amended the Corporate
Governance Best Practice
Principles of the Company.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. Amended the Corporate
Social Responsibility Best
Practice Principles of the
Company.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
Aug. 10,
2020
The 3rd
Session		 1. Proposal on disposal of facilities
of the reinvested subsidiary Golden
Elite Technology (Shenzhen) Co.,
Ltd.(����)of the Company.
V		 None None None 1. All the directors
present passed the
resolution without
objection.
2. The proposal on not to
distribute the profits of the
Company in 2020 H1.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
Nov. 6,
2020
The 4th
Session		 1. Capital expenditure for new
production equipment purchased
by Elitegroup Technology
(Thailand) Co., Ltd., a subsidiary
ofthe Company.		 V None None None 1. All the directors
present passed the
resolution without
objection.
2. Amended the
"Organizational Procedures of
the Salary and Remuneration
Committee"ofthe Company.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. Amended the "Rules on the
Scope of Responsibilities of
Independent Directors" of the
Company.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
Dec.21,
2020
The 5th
Session		 1. Revised the "Performance
Evaluation Measures of the
Board of Directors" of the
Company.		 NA NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. The proposal on the
remunerations of the CPAs of
the financial reports of the
Company and its subsidiaries
for 2021.		 V None None None 2. All the directors
present passed the
resolution without
objection.

62

Board of
Directors
Date/Term		 Important proceeding Proceedings
in line with
§14-3 of the
Securities
ExchangeAct		 Objections or
reservations by
Independent
Directors		 Opinion of
independent
director		 The Company's
handling of the
opinions of the
independent
director		 Results and
implementation of
resolution
3. Any receivables between the
Company and its subsidiaries
that have not been collected
within three (3) months after
the normal credit extension
period shall not be deemed as
capital loans.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
4. The proposal on increasing
the capital of Elitegroup
Computer Systems (SIP) Co.,
Ltd., a subsidiary of the
Company, by US$10,000,000
and remit it back to the parent
company.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
5. The proposal on the
operation plan of the Company
for 2021.		 NA NA NA NA 4. All the directors
present passed the
resolution without
objection.
6. The proposal on the audit
plan declaration form of the
Company for 2021.		 NA NA NA NA 5. All the directors
present passed the
resolution without
objection.
7. Amended the Internal
Control System of the
Company.		 NA NA NA NA 6. All the directors
present passed the
resolution without
objection.
March 22,
2021
The
1stSession		 1. To deliberate on the amount
of remuneration for directors of
the Company for 2020.		 NA NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. To deliberate on the amount
of rewards for directors of the
Company for 2020.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. The Company intends to
replace the CPAs in accordance
with Deloitte Touche's internal
rotation mechanism starting
from 2021Q1.		 V None None None 3. All the directors
present passed the
resolution without
objection.
4. The proposal on the
appointment and dependence of
the CPAs of the financial
reports of the Company and its
subsidiariesfor 2021.
V		 None None None 4. All the directors
present passed the
resolution without
objection.
5. Proposal on the financial
statements and operating
reports of the Company for the
year 2020.		 NA NA NA NA 5. All the directors
present passed the
resolution without
objection.
6. Proposal on the Company's
annual profit distribution in
2020.		 NA NA NA NA 6. All the directors
present passed the
resolution without
objection.
7. Reviewed the amount and
payment method of employee
remuneration of the Company
in 2020.		 NA NA NA NA 7. All the directors
present passed the
resolution without
objection.

63

Board of
Directors
Date/Term		 Important proceeding Proceedings
in line with
§14-3 of the
Securities
ExchangeAct		 Objections or
reservations by
Independent
Directors		 Opinion of
independent
director		 The Company's
handling of the
opinions of the
independent
director		 Results and
implementation of
resolution
8. Amended the Director
Selection Procedures of the
Company.		 NA NA NA NA 8. All the directors
present passed the
resolution without
objection.
9. Amended the "Rules of
Procedure of the Board of
Shareholders" of the Company.		 NA NA NA NA 9. All the directors
present passed the
resolution without
objection.
10. Re-election of directors. NA NA NA NA 10. All the
directors present
passed the
resolution without
objection.
11. Fix the date, time, place,
and other matters relating to the
general meeting of shareholders
of 2021.

NA		 NA NA NA 11. All the
directors present
passed the
resolution without
objection.
12. Handle matters related to
proposals of shareholders
holding more than 1% equity
and nomination of director
nominators.		 NA NA NA NA 12. All the
directors present
passed the
resolution without
objection.
13. Any receivables between
the Company and its
subsidiaries that have not been
collected within three (3)
months after the normal credit
extension period shall not be
deemed as capital loans.		 NA NA NA NA 13. All the
directors present
passed the
resolution without
objection.
14. Prepared the Statement of
Internal Control System of the
Company.		 NA NA NA NA 14. All the
directors present
passed the
resolution without
objection.
April 21,
2021
The 2nd
meeting		 1. Proposal on the acting
President.		 NA NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. To deliberate on the amount
of remuneration for President
of the Company.		 NA NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. Proposal of Cash
Distribution from Retained
Earnings.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
4. Proposal of Appointment of
Golden Elite Technology
(Shenzhen) Co., Ltd. for the
Collection of Accounts
Receivable from CANTV, a
Venezuelan Customer.		 NA NA NA NA 4. All the directors
present passed the
resolution without
objection and and
authorized the
management team
to negotiate and
agree to pay 40%
of the accounts
receivable as the

64

Board of
Directors
Date/Term		 Important proceeding Proceedings
in line with
§14-3 of the
Securities
ExchangeAct		 Objections or
reservations by
Independent
Directors		 Opinion of
independent
director		 The Company's
handling of the
opinions of the
independent
director		 Results and
implementation of
resolution
maximum
compensation (ttax
included) on the
premise that the
accounts
receivable is fully
recovered, and if
the result of the
subsequent
negotiation is not
as expected, it
would be proposed
to the board of
directors for
discussion.
5.Proposal on re-eleciton of
chairman of the Company.		 NA NA NA NA 5. With more than
two-thirds of the
directors present
and all the
directors present
agreeing to elect
Chan, WenNan as
the chairman of the
board of directors;
the meeting
continued as
chaired by the new
chairman.
May
7,2021
The 3rd
meeting		 1. Proposal on the candidates of
the borard of directors.
NA		 NA NA NA 1. All the directors
present passed the
resolution without
objection.
2. Proposal on the candidates of
the borard of directors by
shareholders holding more than
1%of the shares.
NA		 NA NA NA 2. All the directors
present passed the
resolution without
objection.
3. Proposal on releasing the
newly-elected directors from
the non-compete clause.		 NA NA NA NA 3. All the directors
present passed the
resolution without
objection.
4. Proposal on the
supplementary matters of the
convening the general meeting
of shareholders.		 NA NA NA NA 4. All the directors
present passed the
resolution without
objection.
5. Any receivables between the
Company and its subsidiaries
that have not been collected
within three (3) months after
the normal credit extension
period shall not be deemed as
capital loans.		 NA NA NA NA 5 All the directors
present passed the
resolution without
objection.
6. Poposal on the establishment
of the head of corporate
governance.		 NA NA NA NA 6. All the directors
present passed the
resolution without
objection.

65

Implementation of the resolutions of the recent shareholders' meeting:

Date of the
shareholders'
meeting
June 22, 2020		 Implementation of resolutions of the shareholders' meeting
(1) Proposal on recognizing the financial statements and operating reports of the Company for the
year 2019: adopted.
(2) Proposal on recognizing the Company's profit distribution for 2019: adopted.
(3) Proposal on amending the articles of association of the Company: adopted, announced on the
website of the Company on Jun. 24, 2020, and handled in accordance with the amended articles
of association.
(4) Proposal on amending the Rules of Procedure of the Board of Shareholders of the Company:
adopted, announced on the website of the Company on Jun. 24, 2020, and handled in accordance
with the amendedprocedure.

(XII) Major contents of any dissenting opinions on record or stated in a written statement made by Directors regarding key resolutions of the Directors' Meeting in the most recent year and up to the publication date of the annual report: none.

(XIII) Summary of the resignation and dismissal of the Company's Chairman, President, Accounting Officer, Financial Officer, Head of Internal Audit, Head of Corporate Governance, and Head of Research and Development:

of Research and Development:
May7, 2021
Title Name Date of
Assumption of Duty		 Date of Termination Reasons for Resignation or
Termination
Chairman Wen-Yen Lin-Kuo 2006/4/11 2021/4/21 Resigned
President Lung-KuangYang Dec. 18,2013 Apr. 30,2021 Retired
Chief Financial Officer
AccountingOfficer		 Kui-Hsiang Chuang May 11, 2012 Mar. 20, 2020 Job adjustment
Vice President Mar. 31,2020 Personal careerplanning

66

IV. Information About CPA Professional Fee

Information on CPAs in 2020

Name of CPA Firm Name of CPA Name of CPA Audit Period Remark
Deloitte & Touche Hsiu-Chun Huang Cheng-Chun Chiu 2020 None

Note: If there has been a change of certified public accountants or independent public accounting firm during the current fiscal year, the Company shall disclose the information regarding the audit period covered by the predecessor auditor and successor auditor as well as the reasons for the change of auditors in the commentary column.

Audit fee in 2020

Audit fee in 2020 Audit fee in 2020
Unit: NT$1,000
Category of Fees
Range		 Audit Fees Non-audit Fees Total
1 Under NT$2,000,000
2 NT$2,000,000(inclusive)- NT$4,000,000
3 NT$4,000,000(inclusive)- NT$6,000,000 �
4 NT$6,000,000(inclusive)- NT$8,000,000
5 NT$8,000,000(inclusive)- NT$10,000,000 �
6 Over NT$10,000,000(inclusive) �

(I) The details of the non-audit fees paid by the Company to the CPAs and their accounting firm and its affiliated companies in the year 2020 are shown in the following table.

Name of
CPA Firm		 Name of CPA Audit
Fees		 Non-audit Fees Non-audit Fees Non-audit Fees Audit Period Remark
System
Design		 Company
Registration
Human
Resources		 Others
(Note 1)		 Subtotal
Deloitte &
Touche		 Hsiu-Chun Huang,
Cheng-Chun Chiu		 $8,000
Above		 $ - $150 $ - $4,223 $4,373 2020

Note 1: Non-audit fee - other is the consultant fee of NT$530 thousand and the service fee of NT$3,693 thousand.

  • (II) In the case of changing an accounting firm and the audit fees paid in the year of the change are less than those in the year preceding the change, the decreased amount of audit fees shall be disclosed: none.

  • (III) Where the audit fee reduces by more than 10% compared with the previous year, the amount, proportion, and reasons for the reduction shall be disclosed: Due to the spilt-off of Golden Elite Technology (Shenzhen) Ltd.( ���� ), the audit fee decreased 25% and amounted to NTD3,000 thousand.

67

V. Information on change of CPA

  • (I) About the former CPAs:
Replacement Date Approved by the Board of Directors on March 22, 2021 Approved by the Board of Directors on March 22, 2021 Approved by the Board of Directors on March 22, 2021 Approved by the Board of Directors on March 22, 2021 Approved by the Board of Directors on March 22, 2021
Replacement Reasons and
Explanations		 Due to the internal adjustment of the CPA firm (Deloitte & Touche),
from the Q1 of 2021, the Company’s CPAs changed from “Hsiu-
Chun Huang and Cheng-Chun Chiu” to “Cheng-Chun Chiu and
Shih-Tsung Wu.”
Termination by ECS
or the CPAs		 Party
Status		 CPA Client
Termination byECS N/A N/A
Termination bythe CPAs
N/A		 N/A
Opinions
(Other than Unmodified
Opinions) in the Past 2
Years and Reasons		 None
Deviation from the Issuer Yes - Accounting principles or practices
- Disclosure of financialstatements
- Auditscope orsteps
- Other
None �
Description
Other Revealed Matters
(where 1.4 to 1.7 of paragraph
6, article 10 herein should be
disclosed)		 None

(II) About the succeeding CPAs:

(II) About the succeeding CPAs:
Name of CPA Firm Deloitte & Touche
Name of CPA Cheng-Chun Chiu and Shih-TsungWu
Date of Appointment Approved by the Board of Directors on March 22, 2021
Inquiries into Accounting Treatments or
Principles for Specific Transactions and
Possible Opinions on Financial
Statements before Appointment		 None
Succeeding CPA's written opinion of
disagreement toward the former CPA		 None

(III) Reply to item 1 and item 2.3 of paragraph 6 of article 10 hereof from former CPAs: N/A.

68

  • VI. Where the Company's Chairman, President, or any Managerial Officer in charge of finance or accounting matters who has, in the most recent year, held a position at the accounting firm of its CPA or at an affiliated enterprise, the name, title, and the period of his/her employment with the accounting firm of its CPA or the affiliated enterprise shall be disclosed: none.

  • VII. Changes in transfer and pledge of shares of directors, managers, and shareholders holding more than 10% of their shares in the most recent year and as of the publication date of the annual report

  • (I) Change of Shareholdings of Directors, Managers and Major Shareholders

Unit: Share

Title Name 2020 2020 As of Apr. 24,2021 As of Apr. 24,2021
Shares Held
Increase
(Decrease)		 Number of
shares pledged
Increase
(Decrease)		 Shares Held
Increase
(Decrease)		 Number of
shares pledged
Increase
(Decrease)
Chairman Wen-Nan Tsan(Note 1) 0
0
0
0
Director Wen-Yen Lin-Kuo(Note 1) 0
0
0
0
Director
Substantial Shareholder		 Pou Chen Corporation 0
0
(1,182,000)
0
Director Chih-Shen Chen 0
0
0
0
President Lung-KuangYang (Note 2) 0
0
0
0
COO Chih-Nan Chen(Note 2) 0
0
0
0
DeputyGeneral Manager Shou-Yen Liu 0
0
0
0
DeputyGeneral Manager Chi-TungHuang (Note 3) 0
0
0
0
DeputyGeneral Manager Li-Ta Yu 0
0
0
0
DeputyGeneral Manager Che-KuangLin 0
0
0
0
Deputy General Manager
Chief Financial Officer
Chief Accountant		 Yi-Ching Chung (Note 4) 0
0
0
0
Deputy General Manager
Chief Financial Officer
Chief Accountant		 Kuei-Hsiang Chuang
(Note 5)		 0
0
0
0
Substantial Shareholder TatungCo. 0
5,500,000
0
(61,500,000)
Independent Director Gen-Yu Fong 0
0
0
0
Independent Director Han-Fei Lin 0
0
0
0
Independent Director Liang-Chao Lin 0
0
0
0
Chairman Wen-Nan Tsan(Note 1) 0
0
0
0
  • Note 1: Director Wen-Nan Tsan was appointed as Chairman on April 21, 2021; Chairman Wen-Yen Lin-Kuo resigned as Chairman and Director on April 21, 2021.

Note 2: President Lung-Kuang Yang retired on April 30, 2021 and the position was acted by COO, Chih-Nan Chen.

Note 3: Chi-Tung Huang, Vice President of Information and Communication Business Group resigned on April 23, 2021.

Note 4: Yi-Ching Chung, Vice President and Chief Financial Officer and Chief Accountant, took office on March 20, 2020.

  • Note 5: Kuei-Hsiang Chuang resigned as Chief Financial Officer and Chief Accountant on March 20, 2020 and resigned as Vice President Financial and Accounting Department on March 31, 2020.

Note 1: Shareholder holding more than 10% of the total shares of the Company shall be marked as major shareholder and listed separately.

Note 2: If the relative person of equity transfer or equity pledge is a related person, the following table should be filled in.

(II) Equity transfer information: none

  • (III) Equity pledge information: none

69

VIII. Relationship Information, if Among the Company's 10 Largest Shareholders Any One is A Related Party or A Relative within the Second Degree of Kinship of Another:

Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share Apr. 24,2021 Unit: Share
Name Current Shareholding Spouse & Minor
Shareholding		 Shareholding by
Nominees		 Among ten largest
shareholders, name and
relationship with anyone who
is a related party or a relative
within the second degree of
kinship (Note 3)
Remark
Number of
Shares		 Shareholding
ratio		 Number of
Shares		 Shareholding
ratio
Number
of
Shares		 Shareholding
ratio		 Name Relationship
Tatung Co.
Representative:
Ming-KuangLu		 152,475,397
27.35
0
0
0
0
None		 None -
Pou Chen Corporation
Representative:
Lu-MingChan		 68,884,949
12.36
0
0
0
0
Barits
Development
Corporation		 Subsidiary -
I-Yin Hsu 21,273,000
3.82
0
0
0
0
None		 None -
Barits Development
Corporation
Representative:
Ming-Kun He		 9,237,451
1.66
0
0
0
0		 Pou Chen
Corporation		 Parent
company		 -
Investment Account of
Poluning Emerging
Markets Fund entrusted
for custody by Citigroup
(Taiwan) Commercial
Bank		 6,497,000
1.17
0
0
0
0
None		 None -
Shuang Ping
Technology Investment
Advisor Co., Ltd.
Representative:
Pei-Wei Hsu		 6,364,000
1.14
0
0
0
0
None		 None -
Gold Yu Co., Ltd.
Representative:
Tsang-Hai Tsai		 5,752,000
1.03
0
0
0
0
None		 None -
Investment Account in
Norwegian Central
Bank in the custody of
Citigroup (Taiwan)
Commercial Bank		 3,545,962
0.64
0
0
0
0
None		 None -
Investment Account of
Vanguard Emerging
Markets Stock Index
Fund, A Series of
Vanguard International
Equity Index Funds
under the Custody of
JPMorgan Chase Bank
N.A.,Taipei Branch		 3,293,000
0.59
0
0
0
0
None		 None -
Hui-Yi Cheng 3,051,000
0.55
0
0
0
0
None		 None -

Note 1: The top ten shareholders' names shall be identified separately (in the case of corporate shareholders, the corporate shareholders' names and representatives' names shall be identified separately).

Note 2: The ratio of shareholding is calculated in terms of own shareholdings, shares held by spouse & children under age, or shareholdings under the title of a third party.

Note 3: Shareholders listed above, including legal persons and natural persons, shall disclose their relationships in accordance with the financial reporting standards of the issuer.

70

Comprehensive Shareholding Ratio
Mar. 31, 2021 Unit: Share;�		 Total Investments Percentage
of
Ownership








100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99		 Note 1: Investments made by the Company using the equity method.

Number of
Shares








16,560,000
1,136
18,381,296
3,362
469,000
2,600
1,905,000
86,327,000
3,999,999
Investments by directors,
managers and directly or
indirectly controlled
enterprises		 Percentage of
Ownership








0
0
0
0
0
0
0
0
0.01

Number of
Shares








0
0
0
0
0
0
0
0
3
Investment by ECS Percentage of
Ownership








100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
Number of
Shares		 16,560,000
1,136
18,381,296
3,362
469,000
2,600
1,905,000
86,327,000
3,999,996
Reinvestment Entities (Note 1) Elitegroup Computer Systems (HK) Co., Ltd.
Elitegroup Computer Systems (Japan) Co., Ltd.
Elitegroup Computer Systems (BVI) Co., Ltd.
ECS Holding (America) Co.
Elitegroup Computer Systems (South Korea) Co., Ltd.
Unitop International Corp.
Unity Investments Limited
Elitegroup Holdings (HK) Co., Ltd.
Elitegroup Technology (Thailand) Co., Ltd.

Chapter 4. Capital Overview

I. Capital and Shares

(I) Source of Capital

Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital		 Chapter 4.
Capital Overview
I. Capital and Shares
(I)
Source of Capital
May7,2021 Unit: NT$
Year and
month		 Par
Value		 Authorized Capital Paid-inCapital Remark
Number of
Shares		 Amount Number of
Shares		 Amount Source of
Capital		 Capital
Increase by
Assets Other
than Cash		 Others
1996.10 10 170,000,000 1,700,000,000 153,090,000 1,530,900,000 Recapitalization of
retained earnings
NT$72,900,000		 None 9/7/1996 (1996)
T.C.Z. (I) No.
54978
2001.05 10 260,000,000 2,600,000,000 224,653,643 2,246,536,430 Recapitalization of
retained earnings
NT$562,546,430
Capital surplus
NT$153,090,000		 None 4/27/2001
(2001) T.C.Z. (I)
No. 121983
2001.12 10 310,000,000 3,100,000,000 280,426,622 2,804,266,220 Capital increase of
NT$557,729,790 by
merger with
ALPHA-TOP Co., Ltd.		 None 11/20/2001
(2001) T.C.Z. (I)
No. 169053
2002.07 10 600,000,000 6,000,000,000 431,467,178 4,314,671,780 Recapitalization of
retained earnings
NT$1,510,405,560		 None 6/17/2002
(2002)
T.C.Z.Y.Z. No.
0910132642
2003.07 10 720,000,000 7,200,000,000 574,032,132 5,740,321,320 Recapitalization of
retained earnings
NT$1,425,649,540		 None 7/2/2003
T.C.Z.Y.Z. No.
0920129318
2004.03 10 890,000,000 8,900,000,000 694,032,132 6,940,321,320 Increase capital by
private placement of
NT$1,200,000,000		 None
2004.08 10 1,000,000,000 10,000,000,000 732,669,072 7,326,690,720 Recapitalization of
retained earnings
NT$136,517,830
Capital surplus
NT$249,851,570		 None 7/6/2004
Z.Q.Y.Z. No.
0930129832
2006.02 10 1,250,000,000 12,500,000,000 1,046,670,172 10,466,701,720
Capital increase of
NT$3,140,011,000 by
acceptance the transfer
of Tatung		 None 12/15/2005
J.G.Z.Y.Z. No.
0940156292
2006.10 10 1,500,000,000 15,000,000,000 1,070,258,583 10,702,585,830
Recapitalization of
retained earnings
NT$235,884,110		 None 7/19/2006
J.G.Z.Y.Z. No.
0950131362
2007.01 10 1,500,000,000 15,000,000,000 1,255,189,083 12,551,890,830
Capital increase of
NT$1,849,305,000 by
merger with
UNIWILL
COMPUTER CORP.		 None 12/4/2006
J.G.Z.Y.Z. No.
0950155101
2008.10 10 1,750,000,000 17,500,000,000 1,279,482,691 12,794,826,910
Recapitalization of
retained earnings
NT$194,580,070
Capital surplus
NT$48,356,010		 None 8/6/2008
J.G.Z.Y.Z. No.
0970039649
2009.12 10 1,750,000,000 17,500,000,000 1,233,193,691 12,331,936,910
Capital decrease of
NT$462,890,000 by
cancellation of treasury
shares
None		 1/20/2010
T.Z.S.Z. No.
09900020691
2011.9 10 1,750,000,000 17,500,000,000 1,183,193,691 11,831,936,910
Capital decrease of
NT$500,000,000 by
cancellation of treasury
shares
None		 9/15/2011
T.Z.S.Y.Z. No.
1000030411
2013.9 10 1,750,000,000 17,500,000,000 733,580,089 7,335,800,890 Capital decrease of
NT$4,496,136,020		 None 9/3/2014
J.G.Z.F.Z. No.
1020034998
2014.8 10 1,750,000,000 17,500,000,000 553,852,968 5,538,529,680 Capital decrease of
NT$1,797,271,210		 None 7/15/2014
J.G.Z.F.Z. No.
1030025775
2014.10 10 1,750,000,000 17,500,000,000 556,922,968 5,569,229,680 Employee exercising
stock options of
NT$30,700,000		 None
2015.4 10 1,750,000,000 17,500,000,000 557,402,968 5,574,029,680 Employee exercising
stock options of
NT$4,800,000		 None

72

Share Type Authorized Capital Authorized Capital Authorized Capital Remark
Issued Shares Unissued Shares Total
Common stock 557,402,968 1,192,597,032 1,750,000,000 -

(II) Shareholder Structure

Apr. 24, 2021

Shareholder Structure
Quantity
Government
Agencies		 Financial In-
stitutions		 Other Legal
Persons		 Individuals Foreign Institutions
and Foreigners		 Total
Number of Individuals 2
1
78
49,357
127
49,565
Number of Shares Held 40
300,000		 257,549,913 268,562,153
30,990,862		 557,402,968
ShareholdingRatio 0.00� 0.05� 46.21� 48.18� 5.56%
100.00�

Note: Mainland China's shareholding ratio is 0%.

(III) Diffusion of Equity Ownership

usion of Equity Ownership usion of Equity Ownership usion of Equity Ownership usion of Equity Ownership
Apr. 24,2021
Shareholding Range Number of
Shareholders		 Number of
Shares Held		 Shareholding
Percentage
1 to 999 17,047 5,069,857 0.91
1,000 to 5,000 25,214 54,006,095 9.69
5,001 to 10,000 3,797 30,736,486 5.51
10,001 to 15,000 1,031 13,416,139 2.41
15,001 to 20,000 811 15,195,950 2.73
20,001 to 30,000 576 15,265,643 2.74
30,001 to 40,000 283 10,313,093 1.85
40,001 to 50,000 194 9,206,843 1.65
50,001 to 100,000 331 23,876,862 4.28
100,001 to 200,000 134 19,047,488 3.42
200,001 to 400,000 70 19,739,302 3.54
400,001 to 600,000 23 11,640,277 2.09
600,001 to 800,000 14 9,757,805 1.75
800,001 to 1,000,000 7 6,122,998 1.10
1,000,001 above 33 314,008,130 56.33
Total 49,565 557,402,968 100.00

73

(IV) List of Major Shareholders

V) List of Major Shareholders
Capital Stocks
Name of Major Shareholders		 Number of
Shares Held		 Shareholding
Percentage
Tatung Co. 152,475,397 27.35
Pou Chen Corporation 68,884,949 12.36
I-Yin Hsu 21,273,000 3.82
Barits Development Corporation 9,237,451 1.66
Investment Account of Poluning Emerging Markets Fund entrusted for
custodybyCitigroup (Taiwan)Commercial Bank		 6,497,000 1.17
Shuang Ping Technology Investment Advisor Co., Ltd. 6,364,000 1.14
Gold Yu Co., Ltd. 5,752,000 1.03
Investment Account in Norwegian Central Bank in the custody of
Citigroup (Taiwan)Commercial Bank		 3,545,962 0.64
Investment Account of Vanguard Emerging Markets Stock Index
Fund, A Series of Vanguard International Equity Index Funds under
the Custodyof JPMorgan Chase Bank N.A., Taipei Branch		 3,293,000 0.59
Hui-Yi Cheng 3,051,000 0.55
  • (V) Market Prices, Net Worth Per Share, Earnings Per Share, Dividends Per Share and Related Information in the Most Recent 2 Fiscal Years

Market Price, Net Worth, Earnings, and Dividends Per Share

Year
Item		 Year
Item		 Year
Item		 2019 2020 The Current Fiscal Year
up to April 30, 2021
(Note 8)
Market Price
Per Share
(Note 1)		 Maximum 14.40 27.90 36.20
Minimum 10.15 7.42 23.25
Average 12.44 13.48 30.53
Net Value
Per Share
(Note 2)		 Before Distribution 19.64 19.76 19.24
After distribution -- 18.76 (Note 9, 10) --
Earnings
Per Share		 Weighted Average Number of Shares
(thousand shares)		 557,403 557,403 557,403
Earnings pershare (Note 3) 0.08 0.11 (0.4)
Dividends
Per Share		 Cash Dividends -- 1.0014667 (Note 9,
10)		 --
Stock Dividends
Distribution		 Stock Dividends from
Retained Earnings		 -- --
Stock Dividends from
Capital Reserve		 -- --
Accumulated Unpaid Dividend
(Note4)		 -- -- --
Investment
Return
Analysis		 Price-to-DividendsRatio (Note 5) 155.50 122.55 --
Price-to-EarningsRatio (Note 6) -- 13.46 --
Yield on Cash Dividends (Note 7) -- 0.07 --
  • In the case of retained shares distribution or capital surplus shares distribution, please also disclose the information about the market value and cash dividend adjusted retroactively based on the quantity of shares as distributed.

Note 1: Please identify the highest market value and the lowest market value of the common stock in various years, and calculate the average market price for each year based on the trading value and turnover for each year.

Note 2: Please apply the quantity of shares already issued at the end of the year and identify the status of distribution according to the resolution made by the shareholders' meeting held in the following year.

Note 3: If it is necessary to make adjustment retroactively due to Free-Gratis dividends, please identify the EPS before and after adjustment.

Note 4: If the terms and conditions under which the equity securities are issued provide that the stock dividend retained in the year may be accumulated until the year in which there are allocable earnings available, please disclose the retained stock dividend accumulated until the then year. Note 5: Price-Earnings Ratio=Average Closing Price Per Share in current year/Earnings Per Share

Note 6: Dividend Yield=Average Closing Price Per Share in current year/Cash Dividend Per Share

Note 7: Cash Dividend Yields=Cash Dividend Per Share/Average Closing Price Per Share in current year

Note 8: Please identify the net value per share and EPS available in the latest quarterly financial information audited (reviewed) by the independent auditor before the date of publication of the annual report, and the information available until the date of publication of the annual report in the other sections.

Note 9: It is the cash dividend of NT$0.1014667 per share that was resolved to distribute by the Board of Directors on March 22, 2021. Note 10: It is the cash dividend of NT$0.9 per share of capital reserve that was resolved to pay by the Board of Directors on April 21, 2021.

74

  • (VI) Dividend Policy and Its Implementation

  • Dividends Policy in the Company's Articles of Incorporation The Company's dividend policy is in line with current and future development plans, and takes into consideration investment environment, capital requirements, domestic and overseas competition, and shareholders' interest. Not less than 50% of earnings available for distribution may be distributed as dividends and bonuses per year. However, there shall be no distribution if the earnings available for distribution is less than 10% of paidup capital. Dividends and bonuses may be distributed in the form of cash or stock, where cash dividends shall not be less than 20% of the total dividends.

  • Distribution of dividends proposed in the shareholders' meeting On March 22, 2021, the Board of Directors approved the distribution of a cash dividend of $0.1014667 per share from the profit. On April 21, 2021, the Board of Directors approved the distribution of a cash dividend of NT$0.9 per share from capital reserve.

  • (VII) Effect on the Operating Performance and Earnings per Share of Distribution of Stock Dividends Proposed or Adopted in the Most Recent Shareholders' Meeting: N/A.

  • (VIII) Remuneration of employees and directors:

  • Percentage or range of the remuneration of employees and directors as set forth in the Articles of Incorporation

  • If the Company has any profit in the year (the so-called profit refers to the pre-tax profit before the deduction of the remuneration paid to employees and the remuneration paid to directors), 6% shall be set aside for employees' remuneration and no more than 0.6% for the directors' remuneration. If the Company has accumulated losses (including adjustments on unappropriated profits), it shall retain a portion of profits to offset the losses first.

The above compensation to employees may be made in the form of stock or cash. Parties eligible may include employees in the controlling or affiliated companies who met conditions set forth by the Board. The above remuneration to Directors shall be made in the form of cash.

  1. The basis for estimating the amount of employee and director remunerations, for calculating the number of shares to be distributed as employee remuneration, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period:

  2. (1) The Company evaluates the remunerations of its employees and directors in accordance with the provisions of the articles of association.

  3. (2) No share distribution was made for employee remuneration during the year.

  4. Employee Compensation Distribution Proposals adopted in Board of Directors Meeting:

  5. (1) If there is any difference between the amount of employee remuneration and the amount of directors' remuneration paid in cash or stock and the annual estimated amount of recognized expenses, the amount of the difference, the reasons for the difference, and the disposal method shall be disclosed:

75

The remuneration for employees and directors of the Company for the year 2020: passed by the resolution of the Board of Directors on March 22, 2021, and the employee remuneration shall be fully paid in cash.

Employee remuneration, 6%: NT$23,431,316. Director remuneration, 0.6%: NT $2,343,132; resolved by the Board of Directors on Mar. 22, 2021:Considering the future development of the Company, it is resolved that the director resolution will not be distributed.

If there is any difference with the annual estimated amount of recognized expenses, the amount of the difference, the reasons for the difference, and the disposal method shall be disclosed: There is no difference in the amount of employees' remuneration; the estimated amount of directors' remuneration is NT$2,343,132, which would not be allocated based on the board of directors' resolution on March 22, 2021, and the difference is adjusted to the profit or loss in 2021.

  • (2) The amount of any employee remuneration distributed in stocks and the size of that amount as a percentage of the sum of the earnings after tax stated in the parent company only financial reports or individual financial reports for the current period and total employee remuneration: N/A

  • Actual distribution of the remunerations for employees and directors in 2019:

Unit: In New Taiwan Dollars Unit: In New Taiwan Dollars
Item Actual distribution
passed by the
shareholders' meeting
Proposed distribution
passed by the Board
of Directors		 Difference Reasons for
variance and its
handling method
Share remuneration for
employees		 0 0 0 No deviation
Cash remuneration for
employees		 3,810,808 3,810,808 0 No deviation
Director Remuneration 381,081 381,081 0 No deviation

Note: The Audit Committee of the Company was established on Jun. 25, 2018, when there was no supervisor.

  • (IX) Buyback of Treasury Stock: None.

76

  • II. Corporate Bonds: None.

  • III. Preferred Shares: None.

  • IV. Global Depository Receipts (GDRs): None.

  • V. Employee Stock Options: None.

  • VI. Employee Restricted Stock: None.

  • VII. Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.

  • (I) Acquisition or acceptance of new shares issued by other companies in 2020 and as of the publication date of the annual report: none.

  • (II) Acquisition or acceptance of new shares issued by other companies already adopted by the Board of Directors in 2020 and as of the publication date of the annual report: none.

VIII. Implementation of Capital Utilization Plan

  • (I) Plan content:

As of the quarter prior to the publication date of the annual report, there is previous issuance or private placement of securities not completed or having been completed within the last three years but the planned benefits have not yet shown: None.

  • (II) Implementation: NA.

77

Chapter 5. Operational Highlights

I. Business Activities

  • (I) Scope of business

  • Major products/services CC01060 Wired Communication Equipment and Apparatus Manufacturing CC01070 Wireless Communication Equipment and Apparatus Manufacturing CC01080 Electronic Parts and Components Manufacturing. CC01101 Restrained Telecom Radio Frequency Equipment and Materials Manufacturing

CC01110 Computers and Computing Peripheral Equipment Manufacturing CC01990 Other Electrical Engineering and Electronic Machinery Equipment Manufacturing

CE01010 General Instrument Manufacturing

E701030 Restrained Telecom Radio Frequency Equipment and Materials Installation Engineering EZ05010 Instrument and Meters Installation Engineering

F113030 Wholesale of Precision Instruments

F113050 Wholesale of Computing and Business Machinery Equipment. F113070 Wholesale of Telecommunication Apparatus

F118010 Wholesale of Computer Software

F119010 Wholesale of Electronic Materials

F213030 Retail Sale of Computing and Business Machinery Equipment. F213060 Retail Sale of Telecommunication Apparatus

F218010 Retail Sale of Computer Software

F219010 Retail Sale of Electronic Materials

F401010 International Trade

F401021 Restrained Telecom Radio Frequency Equipment and Materials Import F601010 Intellectual Property Rights

I301010 Computer Software Services

I501010 Product Designing

I599990 Other Designing

ZZ99999 All business not prohibited or restricted by law, except for those subject to special approval The Company's subsidiaries also engage in similar business.

  1. Major products and ratios ECS is a professional designer and manufacturer of computer products. Our product sales and weightings by major products in 2020 are as follows:

  2. (1) Computers and peripheral products 99.2%

  3. (2) Others 0.8%

78

  1. New products to be developed

Motherboards: In response to the rolled out of 11th Gen Rocket Lake CPUs with 14nm process by Intel® and Cezanne APU with 7nm+ process by AMD

We expect to launch our 500-series motherboards simultaneously with Intel in the first quarter of 2021, meeting the requirements for the 11th Gen Core processor and be compatible to the 10th Gen Comet Lake. We will increase the number of cores to 10 CPU cores and provide advanced Turbo Boost speed and computing performance. Once integrated with our 500-series chipsets, wireless networking standards can be enhanced to Wi-Fi 6 (802.11AX). It will greatly satisfy users' gaming and 4K streaming experiences. The AM4 500-series motherboards launched simultaneously with AMD in the third quarter of 2020 can support the Zen 3 - Vermeer (7nm+) and Zen 2 - Renoir (7nm) as well as Zen 3 Cezanne processor. The new process not only reduces the power consumption of processors but also supports PICe 4.0 bandwidth and AMD PCI4.0 graphics card to improve gaming speed.

Mini PCs: For low-end product lines, we will release Comet Lake Mobile, Pentium, Celeron, etc. along with Intel in the 15W quad-core and dual-core market. Also, we have products ready for Jasper Lake to replace Gemini Lake (Refresh), targeting the best budget desktop, AIO and Mini PC markets.

Small Form Factor (SFF) continues to grow in the overall PC market with major brands launching different types of Mini PC catering for the needs of different consumer groups. The mainstream market heading toward two opposite extremes: large-screen computers focusing on gaming performance and fancy lighting effect, and Mini PCs which are the main focus of the Company. Our LIVA possesses features of mini, compact, user friendly, energy efficient, quiet operation, space-saving, etc. and captures market attention. The product attracts industry players with its advanced product concepts, unique designs, quality appearance and enormous potential demand.

In 2021, ECS will continue to target the Mini PC market and devote more human resources to develop a variety of competitive and high-performance products as well as products for other platforms, including products for real-time streaming and stable gaming computation as well as the smallest X86 and ARM processor products. We aim to broaden the applications of Mini PCs and our Mini PC market share to increase revenue.

Looking ahead, with favorable conditions such as improved performance of key components, reduced power consumption and improved heat dissipation take shape in the market, the Mini PC product line will be more complete. In the future, high-end products are expected to be more commonly applied in business sector, which will drive the penetration of desktop products in the industrial computer applications and create new growth opportunities for desktop computers.

79

The Company's Mini PC LIVA Z3/Z3E Plus equipped with Intel's latest 14-nm Comet Lake mobile processor provides the latest USB Type C 10 Gb/s, Wi-Fi 6 expansion slot and Dual Giga Ethernet configuration. With excellent edge computing capacity, it targets business sector, AI recognition systems and general SMEs. It is also equipped with configuration to incorporate the highperformance M.2 Capture card which enables the notification function for YouTubers and expands the Mini PC market. Moreover, several Mini PC models are expected to be introduced in the first quarter of 2021. LIVA Q1D and LIVA Q1L aim at long-term supply and dual-display (HDMI+DP) or dual LAN, respectively. They are suitable for 4K viewing and LAN/WAN applications. LIVA Q1A and LIVA Q1A Plus adopt Android OS 8.1 to provide ARM SOC solutions. LIVA Q3 Plus is the smallest Mini PC which comes with the highspeed processor, AMD Ryzen 3000 series, and Zen2 display core. As for LIVA M300-W, it has LTE 4G transmission solutions to satisfy the industrial computer standards, providing edge computing facility to customers.

Notebooks: New lifestyle brought about by COVID-19 drives the growth of notebooks, e.g., the new trends of Work from Home (WFH), online learning and home entertainments. It is apparent that the focus of notebooks shall be placed on satisfying the changes in work and learning patterns. Before the pandemic comes to an end, the thriving remote office and distance learning facilitate the development of laptops for business and education purposes. In 2021, the new products ECS intends to develop will center on the horizontal and vertical extension of notebooks. In terms of vertical extension, education PC has diverse applications for the post-pandemic era. Convertible laptops with 2-in-1 designs offer four modes to users, such as normal mode as a laptop, propping it up on its leading edges like a tent or rotating the keyboard through 360 degrees, out of the way back behind the screen as a tablet. They also come with durability designs including waterproof, dust resistance, drop resistance and pressure resistance to ensure the durability and safety of the device under various scenarios. Stable, energy-saving and flexible configurations are the key requirements in the education laptop market. In particular, lightweight and affordability are key aspects in product design. When formulating product strategies, options would include two to three types of processors from Intel, MediaTek, AMD and Qualcomm to satisfy basic, medium or high-end computer capacity or all-time endurance for learners with different levels of educations ranging from fundamental or higher education.

As for internet choices and stability, i.e., the convenience and timeliness of internet connection, wireless network is the best choice. For the latest education laptops, WiFi 5 is the minimum requirements while some models support WiFi 6 as well as 4G/5G mobile network. Stay online enhances the efficiency of mobile learning and over 10-hour endurance significantly improves productivity. We also keep the Ethernet RJ45 design to improve internet quality and stability. For diversity, the majority of models retain the HDMI port while some even support the Intel Thunderbolt 3 for speedy data transfer.

As for horizontal extension, we plan to roll out 14-inch and 15-inch business notebook PCs with Intel's 12th Gen CPU for laptops to obtain a fine balance between power consumption and efficiency. They would also support Wi-Fi 6 (Gig+) to reach a maximum transmission speed of 9.6Gbps. Frames would adopt thin bezel design for users to see "more" under the existing structure. As for

80

portability, the battery can sustain up to 16 hours. In terms of appearance design, it contains features of waterproof, dust resistance and drop resistance, conveying an image of highly reliable products. In addition, by having fingerprint recognition embedded in the power button, users can enjoy one-stop power-on and identity verification. The inbuilt Intel vPro platform provides a more indepth safeguard function, facilitating enterprises with information security.

Internet of Things (IoT): In addition to continuously developing the household/industrial gateway market, the Company also carries out research and development on enhancing the data security of gateway and the encryption of general platform for IoT applications. Besides, in response to the electric vehicle (EV) trend worldwide where countries will gradually ban the use of petrol and diesel cars starting from 2025, ECS invests in the development of Smart EV Charger. To differentiate from other brands, we take the initiative to invest in 80A fast charging technology, and our products are in compliance with the latest standards (IEC-15118). We become a core member of Taiwan's Alliance for Promotion of EV Charging Technology. At the same time, by utilizing our abundant software development capacity, this product will incorporate the online management platform of OCPP2.0 agreement published by OCA, giving ECS an unique competitive advantage on smart EV chargers.

Short-term Business Plans:

Motherboards/Mini PCs:

The Company is committed to meeting consumers' needs and will proceed with the two product lines of Intel and AMD. To avoid being weighed down by Intel capacity issue, we have increased the number of products developed with AMD motherboards since 2020, allowing consumers to enjoy the soaring efficiency of the new-generation Zen 2 and Zen 3. AMD, whose popularity is on the rise, is also the current focus of motherboard companies. We hope Intel would be driven to create more inducers and offer better products upon integration to entice consumers, thereby boost the market. Same as before, we will launch new products with Intel and AMD this year. In terms of Intel, we will introduce motherboards with 11th Gen Rocket Lake CPUs and continue the expansion of 12th Gen product line into 2022. AMD will roll out new processor, Cezanne, this year. We will aggressively adopt the efficiency enhancement of the new-generation processor with AM4 500 series. While keeping the AM4 design, the new and old processors are both compatible through BIOS updates, allowing existing users to upgrade. In the future, besides increasing our ODM orders, we will closely follow up on market demand whenever a new trend emerges. On top of cost reduction, we will provide more competitive prices to distributors and consumers as well as gradually introduce unique designs and practical functions.

Also, with our experience in motherboard research and development and manufacturing, we continue to develop Mini PCs and AIO products with the latest Intel Alder Lake-P processors. The design concept centers on highspec differentiation and target the business sector as well as ordinary companies and firms. The models are designed to allow the addition of functional modules (e.g., HDD, Com Port for business application, etc.), a breakthrough from the inherent constraints of Mini PC where expansions

81

are not allowed.

Notebooks:

In 2021, the Company will continue to improve the design and development of 2-in-1 tablets, seek innovations, create product uniqueness, and enhance the overall efficiency. For education PC, we will research and develop various cross-platform CPU solutions. Modularized chipset designs can shorten the overall development time, reduce development costs and provide more competitive prices. In addition, we plan to develop a range of extended models, using Intel's low power consumption processors, Alder Lake, thereby maintain the diversity of our education laptop series.

The quality of our commercial notebooks is certified by the rigid U.S. military specification, MIL-STD-810G, thereby proven to possess high level of reliability and durability. Tests carried out include drop test, impact test, vibration test, altitude test, high/low temperature test, humidity testing, etc. In terms of safety, devices ranging from the physical hardware protection to Kensington security slot, TPM 2.0 chips, webcam cover and fingerprint sensor all offer tight security for important data. A thin bezel design allows 14-inch Full HD screen to look bigger with a refined visual enjoyment. The models are also equipped with high power capacity of 57 WHrs where battery can sustain up to 16 hours, enough for a full-day use.

IoT:

In response to the coming of EV and IoT era, besides improving the specifications of hardware products, we employ our computer software experience and collaborate with system integrators in the relevant fields to realize the overall synergy and provide customers with total solutions. We also accelerate our progress in new fields such as smart EV charger and technologies associated with new-generation EV to deliver solutions on low latency and high efficiency more quickly and accurately.

Long-term Business Plans:

Motherboards/Mini PCs/AIO:

Operated by the theme of “risk control followed by gross margin improvement and supplemented with shipment increases,” the Company’s priority is to allocate more marketing resources to major agents and form alliances with other brands so that these agents can sell by our products by sets instead of parts, and show that our products are cost-effective. Meanwhile, we find agents in various business application fields and assist them in their areas of focus for motherboards and LIVA Mini PCs to access non-PC application markets. In addition, AIO product lines will also expand its adoption of Intel H410 and H610 as well as AMD A300 series to boost the sales volume and overall gross profits of AIO products.

As for Intel H410 and B460 which has excellent sales performance, the H510/B560 (the 500-series) in the first quarter of 2021 and cost-effective products such as AMD 500-series, their comprehensive product lines give customers plentiful choices. Through medium and long-term cooperation, we build good reputation and develop certain understanding with our agents to increase their willingness to purchase, thereby fulfill our medium and long-term goal of gross margin improvement. As a result, a virtuous cycle

82

is formed, and shipments would naturally increase significantly. In the end, we hope to realize our ultimate goal of "launch projects with low risk, sell products with high gross profits and create a win-win situation to boost volume."

Notebooks:

We will continue our research and development on education laptops and adopt modular designs to expand the product portfolio in order to satisfy the needs of different customers. In terms of educational solutions, we also provide products including the interactive whiteboard and CMAP. By combining the digital learning environment of cloud technology, we offer comprehensive educational solutions to strengthen mobile learning. In addition, in the development of new products for business sector, more design requirements from business applications such as military specification certification specifications, high sensitivity screen display, 4G/5G wireless communication function, biometric function and anti-theft software function are added to provide enterprise users with complete business solutions.

IoT:

Developments center on warehousing and logistics management, Internet of Vehicle, smart AC charger and relevant industrial applications. As IoT is still at the development stage, besides core technology and the establishment of new business model, information security has been our medium and longterm focus.

  • (II) Industry overview

  • Current status and development

Motherboards:

The global shipment of motherboards was approximately 934.14 million units in 2020, representing an annual growth rate of approximately (7.5%). The shortage of some components in the first quarter was alleviated in the second quarter, and the stay-at-home economy helped to boost demand for PC games, which in turn stimulated graphics card demand and benefited motherboards. The pandemic brought about a booming stay-at-home economy and video game companies took advantages of the situation and launched several masterpieces in the first half of 2020. As for the second half of the year, graphics card giants, AMD and NVIDIA, rolled out several new products to stimulate market demand, which had a positive effect on the overall graphics card market. Looking forward at 2021, as Intel's CPU production capacity gradually stabilizes and AMD releases new Ryzen CPU in succession which effectively brings about the recovery of DIY market, we expect to see a smaller decline or even an increase in global motherboard shipment with more benefits generated.

Mini Computers:

According to the research done by Market Intelligence & Consulting Institute (MIC), the changing lifestyle in modern days has raised the demand for light and portable Mini computers. Thus, many brands are competing to invest more resources on expanding their Mini PC market shares. With favorable conditions such as improved performance of key components, reduced power consumption and improved heat dissipation take shape in the market and models and types of exchangeable CPU

83

increase, the Mini PC product line will be more complete. In the future, high-end products are expected to be more commonly applied in business sector, which will drive the penetration of desktop products in the industrial computer applications and create new growth opportunities for Mini desktop computers.

Analysis of International Data Corporation (IDC) also points out that total PC shipments of major brands worldwide is approximately 302 million units in 2020, which represents an annual growth rate of 13.1% compared to 2019. The doubledigit growth rate for the global PC shipments is rarely seen since 2010, highlighting the upward trend of PC market amid adversities which has been rare in the past decade. The strong rebound in PC shipment in 2020 also indicates a sign of market recovery. Ryan Reith, the Program Vice President of IDC's Worldwide Mobile Device Tracker, says the PC market is like a fast-going train and all signs indicate a short-term or even medium-term growth potential. Last year, the focus of market growth was on WFH and online learning, however, consumer market shall not be ignored. The shipment of gaming computers and displays reached historical highs and Chrome penetrated the consumer market on top of the education sector. When people look back on this period of time in the future, the history will show that the pandemic not only accelerates the purchasing power of the PC market, but also creates opportunities that may be difficult to recur. The soaring demand will continue into 2021.

Notebooks:

COVID-19 has reshaped people's working and living style. The rise of remote office and learning drives the demand for notebooks to grow against all odds. In light of different application scenarios, processor giants, AMD, Intel and NVIDIA all roll out brand-new processors to seize business opportunities in the laptop market. According to MIC's data in 2020, global notebook shipments reached 170 million units with a growth rate of 6%, the highest in the past five years. MIC states that the development focus of IT hardware product is to meet the changes in people's work and learning patterns. Before COVID-19 is well under control and while remote office/learning continues to flourish, notebooks still have room for growth, which benefits the sales of business and education laptops.

Notebook computer market was confronted by component shortage issues in the third and fourth quarters in 2020. The surge in laptop demand and the US-China conflict which led to tight supply of chips resulted in an unsolved component shortage crisis for laptops since the second quarter. Up to the fourth quarter, laptop panels, display driver IC, power management IC, I/O microcontroller, etc. was in short supply. Brands faced the predicament of having laptop orders but lacking the supplies to fulfill them.

Looking forward at the first quarter of 2021, Taiwan's notebook shipments are estimated to be approximately 40,255 thousand units with a quarter-on-quarter growth rate of about (19.1%) and a year-on-year increase of approximately 64.7%. COVID19 has yet to be stopped after one year period. Many countries have announced shutdown, work suspension and class suspension measures in winter. For areas severely hit by the pandemic, remote office/learning and online entertainment have become a part of life. In addition, material shortages force laptop manufacturers to postpone orders as they fail to make on-time delivery and the pandemic has resulted in massive cargo traffic jam for both air and sea freight. Confronted by those adverse factors, ODM face the pressure of rising costs in the first half of 2021, which may affect the selling price of end products.

84

==> picture [346 x 234] intentionally omitted <==

In the post-pandemic era where several vaccines are successfully developed, the business opportunities for remote office/learning still exist as people's lifestyle has changed. Whether it is learning or work, online activities and on-site operations would both be available. Learning hours would be divided into classroom and online learning while work hours may be divided between work from home and in the office. Even remote medical treatments have driven the demand in both computer and cloud markets.

Lightness and high performance are long-term trends for laptop. Both Intel's Tiger Lake-H35 series and AMD's U series under Ryzen 5000 stress features of thinness, lightness, energy-saving and excellent computing performance. The pandemic brought on an enormous need for laptop in 2020. As laptops used for work or education purpose has certain requirements on video, voice, data transmission and collaboration tools, the application specs of laptop have changed accordingly. Besides enhancing the wireless transmission capacity, information security is also a key development item. By leveraging the frameworks of the processors and the protection technology of hardware design, we can strengthen computer security against firmware hacking, e.g., ransomware, to reduce the risk of losses due to security breaches. In the long-term, there are still market demands of remote office/learning. As such, information security and remote management systems are still the key considerations in laptop's future designs.

IoT:

In recent years, new applications of IoT and artificial intelligence (AI) have been released. Large companies are speeding up on their efforts to integrate IoT technology and AI into their products. Gartner, the world's leading research and advisory company, predicts that at least 50% of companies will have IoT-related product development and application by 2024. The rapid growth in the number of IoT devices worldwide also contributes to the development of smart homes and EVs. As IoT devices continue to increase by multiples, internet security has always been an issue of concern to us. We will address more on internet security in the future to provide customers safer and more reassuring IoT solutions.

85

  1. Industry relevance of upstream, midstream and downstream companies -- Information industry supply chains

==> picture [454 x 448] intentionally omitted <==

==> picture [454 x 112] intentionally omitted <==

86

Industry relevance of upstream, midstream and downstream companies - Telematics supply chain

Upstream
(Raw Materials)		 Upstream
(Raw Materials)		 Upstream
(Raw Materials)		 Midstream
(Manufacturing)
(Main Business)
Electronic Components
Industry		 Semiconductor
Industry		 PCB Industry
DIP Parts
SMD Parts
PCB
Metal Hardware
Plastic Component
Panel
Touch Panel
Communication Module
Other components		 Telematics System
Integration

Industry relevance of upstream, midstream and downstream companies - Smart EV charger

==> picture [468 x 218] intentionally omitted <==

==> picture [468 x 110] intentionally omitted <==

87

After years of development, the information industry's supply chain system consists of upstream, midstream and downstream companies has taken shape. Major suppliers in various fields have adopted the economies of scale approach and leave little room for small suppliers to survive. At the same time, the interdependence and strategic alliances among upstream, midstream and downstream companies have also become increasingly closer. In order to enhance competitive edges, certain companies have expanded their product ranges through vertical integration with a view to produce production components required for finished products themselves. This competition pattern which adopts vertical integration has undoubtedly increased the competitive threshold significantly and created difficult barriers for new comers or smaller players.

In the face of global competition, ECS aggressively integrates companies within the supply chain in order to obtain more competitive prices to lower production costs on key components, thereby enhances our overall competitive advantages.

In recent years, new competition and collaboration mechanisms are taking shape in Taiwan, which have positive effects on the overall industry integration. In addition to having unique supply sources of components, our product development is even more distinctive. Therefore, appropriate partnerships will be more conducive to our growth and competitiveness, creating a win-win relationship for mutually beneficial collaboration.

  1. Product development trends and competitions

  2. (1) 5G

As 5G development becomes more mature and accelerates, its future direction is inevitably the most important topic for the market. With regard to the development directions of potential 5G application services, 5G stresses the importance of data transmission at real time, massive volume, same location and multiple people. At present, application services targeted by 5G include smart and connected vehicle, smart healthcare, smart education, emergency evacuation services, gaming services, and smart home/home security. Among which, smart and connected vehicle, smart healthcare, smart education, and emergency evacuation services all require the construction of infrastructure, and common as well as low-cost terminals. As they are closely related to social welfares, we expect the government to play a leading role in 5G application services. It also means that 5G would be the core of social developments and industry competitions of advanced countries in the future. In addition to significant improvement in transmission speed and image quality, 5G advantages also include stable transmission in fast moving scenarios, which will promote the popularity and widespread use of 5G application services. Examples include the installation of testing and image transmission systems in ambulances to enable image transmission and video conferencing via 5G for communications with local hospitals at traffic jams so that patients can

88

receive immediate treatment and thus have a higher survival rate. This is a combination of transportation and medical applications. In terms of smart education, students and the general public can learn without time constrains through various images. Histories can be interpreted with technologies such as virtual reality and 3D image for users to feel like they are at the scene watching stories unfold. Alternatively, teachers can employ 3D image during remote teaching for students to feel like teachers are teaching on-site. Conversations and interactions would all be the same as in a real environment. As for emergency rescues, sensors at all fields shall maintain real-time connection in the most energy-efficient manner. Where emergencies are predicted or identified based on data collected via sensors and transmitted and analyzed at cloud database, relevant units (such as security, police department, fire department, hospitals, etc.) can be promptly notified, so as to avoid or reduce the occurrence rate and severity of accidents.

(2) AIoT

It is a well-known fact that AI and IoT technologies complement each other. Gartner estimates that, by 2022, 80 % of enterprise IoT projects will incorporate AI solutions. By 2025, there will be more than 50 billion interconnection devices around the world with data output of 180 ZB, equivalent to 180 billion TB. The Global Artificial Intelligence Study points out that AI will boost global GDP by 14% by 2030, contributing US$15.7 trillion. According to McKinsey's research, IoT applications will generate an economic output of around US$11.1 trillion worldwide by 2025 while AI is expected to generate US$13 trillion by 2030. AIoT employs emerging technologies for data collection and analysis and derives knowledge and efficiency through AI and IoT application programs. The research also points out that Amazon, Microsoft, Intel, ARM and other indexing companies are actively deploying edge computing to expand the AIoT ecosystem. AIoT drives enormous demand for manufactures in the upstream, midstream and downstream of the global technology industry chain. Examples include the use of specific cloudbased machine learning algorithms to measure data generated from IoTrelated equipment and give feedback to IoT-related machines for building a smarter factory and implementing automated manufacturing, power saving, machine monitoring and diagnostics, and preventive maintenance. The scope of application and development includes smart home, smart healthcare, smart factory, autonomous vehicle, traffic management, business services and financial technology.

(3) Notebooks

Notebook computers have become a key interactive tool for new lifestyles in the stay-at-home economy brought about by the pandemic. An overview on laptops produced by different brands would reveal that in addition to updates on

89

numerous gaming laptops and products launched to satisfy the needs of creators, personal computers have become an indispensable tool for remote office/learning as the pandemic changes our life, work and learning patterns. The situation prompts portable laptop to become the preferred choice.

In particular, remote teaching and office drive up the demand for video equipment. Upgrading video-related hardware including microphone and camera for laptop products is the future trend. We can even employ our exclusive noise cancellation technology to achieve better sound quality. In addition, for people adopting remote office, we introduce privacy protection solutions at product designs and launch new laptops with enhanced privacy features to significantly enhanced security.

As for home entertainment, gaming laptop equipped with AMD Ryzen 5000 processor, Intel 11th Gen Core H series processor and NVIDIA GeForce RTX 30 series GPU can be used for eSports, creation and entertainment to enhance the quality of work from home and entertainment.

We continue to launch 5G or 5G-compabitle new laptops. Besides using ARMbased Qualcomm 8CX chip, we also opt for Qualcomm Snapdragon 8cx Gen 2 5G compute platform with either X20 LTE modem or X55 5G modem.

We have also used the 5G modems built for PCs through collaboration between MediaTek and Intel with 5G/GLTE, which allow business laptops to have 5G connectivity in future office scenarios. Taking into account the importance of future mobility, we believe laptops with mobile internet will gradually become the future trend. In addition, the dual screen design continues to evolve in various types of laptop products. Although the market share is not high at present, we expect to see diverse changes in user interfaces of the second screen in the future to enhance user experience.

(4) More comprehensive Internet of Vehicle (IoV) layout:

We can see from the shift to autonomous vehicle that innovative technologies or services constantly emerge in the IoV field, including autonomous driving technology, adoption of AI, development of in-vehicle software, and the continuous evolution of human machine interfaces. The major car companies have released semi-automated cars one after another. The introduction of 5G is expected to accelerate the realization of IoV vision.

According to a survey conducted by PricewaterhouseCoopers (PwC), the connected car and EV markets would experience robust growth over the next decade. PwC predicts that the overall penetration of connected car in EU will exceed the milestone of 50% by 2025 while the US might achieve the target earlier, i.e., by 2023. As for Mainland China, the market is expected to reach the threshold of 50% by 2029 at the latest.

Driving safety is the key focus of IoV. The cars have built-in wireless systems where real-time warnings can be obtained from nearby vehicles via wireless

90

communications, thereby supplementing the parking sensor system, lane departure warning system and blind spot detection system. Also, the systems can detect tire pressure and car conditions, ensuring safety before driving. In addition to driving safety, enhanced in-vehicle infotainment experience is also a key factor. Digitalization of the broadcasting system combines with 5G communication technology allow in-vehicle digital broadcasting system to transmit image or video information, advancing the development of in-vehicle entertainment.

In addition, ECS continues to advance in IoV application field and enhances a variety of integrated functions, including "smart vehicle all-in-one management", "intelligent logistics" and "smart charging system". We focus on the development and production of smart cockpit, advanced driver-assistance systems (ADAS), and fleet management system. We also develop advanced "telematics system" by integrating the formerly independent system into the telematics system, allowing drivers to receive real-time warning data to ensure driving safety. The device simplified the complicated parameters setting between different equipment to facilitate managers with easy data collection and analysis, and even achieve the goals of large-scaled IoT, smart cities, automated driving, etc.

Looking forward at 2021, Bloomberg's data show that the number of electric buses worldwide will reach 1.2 million by 2025. As the Telematics Control Unit, which we have developed with electric bus makers and is in compliance with car design standards, brings about smart electric buses, we utilize edge computing to develop smart bus operation management system. By integrating it with the AI management platform for cloud-based smart IoV, we can satisfy the requirements of management and operation optimization through smart solutions. The smart bus operation management system includes the Intelligent Operation Center (IOC), the operation platform and the driving behavior assessment systems. We have not only smart dispatch systems, but also precise control over the driving routes, maintenance management, energy saving, and efficiency monitoring. Through comprehensive integration, we can manage the fleet more efficiently and monitor the cars' fuel status and components' degree of wearing to prevent mechanical failure, reduce drivers' overtime frequency, and improve services, thereby enhance customer satisfaction.

91

(III) Technology and R&D

  1. R&D expenses during the most recent fiscal year up to April 2021:

The R&D expenses amounted to approximately NT$1,073,999 thousand in 2020, and were about NT$350,000 thousand up to April 2021.

  1. Technology or products successfully developed

Motherboards and systems:

  • (1) Products supporting Intel 14nm / AMD 7nm (+) processor technology.

  • (2) Equipped with USB3.2 Gen 2x2 Type-C with transmission speed of 20Gbps

  • (3) Continue to develop new Small Form Factor barebones combining with business, education, family and entertainment functions.

  • (4) Continue to study high-end and gaming motherboards, produce costeffective products and create win-win with agents.

  • (5) Embedded and digital signage motherboards and Mini PCs with quasiindustrial grades.

  • (6) Research and develop the world's smallest Mini PC with the ARM cores.

  • (7) Increased Mini PC products with AMD Zen3 (7nm+) core.

Notebooks:

Adopt Intel/AMD/Qualcomm-architecture mobile platforms with the latest Microsoft Windows 10 operating system and emphasize the unique human machine interface design, the four modes for convertible laptops, compact size for portability, and durable reinforced casing design which is suitable for classrooms where bumps occur frequently. In addition, high-performance batteries allow students to use laptops for a full day, i.e., during or after class. For laptops with full-HD or HD resolution touch-screens, users can have intuitive interface operation and interactive experience when browsing websites or using the app. The models also come with water-resistant keyboard designs which can withstand up to 330ml of water. Underneath the keyboard and touch panel, a unique drainage system is installed to navigate and drain water from the bottom of the computers.

This year, we schedule to develop laptops featuring lightness, thinness, and durability with Intel G12 mobile processors. The models will come with built-in high-resolution lenses, smart card readers, WiFi 6 and Bluetooth modules, 4G networks as well as military-grade protection of MIL-STD-810G. The inbuilt Intel vPro® platform provides a more in-depth safeguard function, facilitating enterprises with information security. We use remote management solutions to achieve strong computer management capabilities and provide enterprises with higher productivity, management capabilities and safety.

IoT:

ECS also engages in the development of Smart EV Charger. The quick charge design of our 80Ah Smart EV Charger not only makes it easier to use and complies with the latest standards (IEC-15118) but also incorporates the online

92

management platform of OCPP2.0 agreement published by OCA, allowing ECS to have competitive edge regarding smart chargers. With the coming of AIoT era, ECS continues to research and develop smart energy and smart IoV applications as well as works closely with various enterprises to vertically integrate technology. We hope to further enhance in-vehicle technology and form an industry chain ecosystem to jointly create global business opportunities.

  • (IV) Long- and Short-Term Business Plans

  • Short-term plans

Product development strategies

Motherboards:

  • (1) With Intel & AMD continues to launch new products, we not only release Intel 5 series and 6 series products accordingly to meet market demands but also have motherboard products ready with CPU/GPU supported by Ryzen chipsets as AMD Vermeer, Renoir and Cezanne CPU/GPU are rolled out. Intel's Rocket Lake product line has gradually improved, while CPU and GPU have better performance, giving the development of Mini PC and 2- in-1 devices more competitiveness in terms of price, performance and development thresholds.

  • (2) Demands for laptops and desktop computers triggered by the pandemic in 2020 and 2021 have brought on new and replacement purchases by enterprises and end customers. Purchasing demand for desktop computers far exceeds the historical record. As Gartner, the market research institute, has predicted, the demand of PC will no longer decline in 2021 and the new product lines will grow along with the market trend.

Mini systems:

  • (1) With the brand reputation of LIVA, we comprehensively update the Intel Alder Lake-P and Jasper Lake product lines. Diverse expansion interfaces can meet various demands from all levels. As for Small Form Factors, they are upgraded to Intel's 12th Gen processors, Alder Lake-P, and integrated with the business-use 500 series chipsets as we actively develop our mini systems for personal and business use.

  • (2) In order to meet the diverse specification requirements of the market, the new members of the LIVA Q3 series will be launched in 2021 to capture more business opportunities.

Notebooks:

In addition to the existing Intel platform, we have included AMD and developed products with Qualcomm platform. Moreover, under the influence of COVID-19, work from home and remote teaching quickly gains popularity which leads to the surging demand for mobile devices. We introduce long-term battery and LTE to all of our product lines to satisfy the demand from remote office and learning.

93

Based on the existing education market, we will collaborate with system integrators and telecommunications operators to expand our product series to other vertical application markets, such as offices, cargo holds, restaurants, etc. of the business sector.

We will further integrate our supply chain and adopt flexible designs and designs with common parts as well as cost-competitive components to provide customers with the most cost-effective products.

IoT:

We will continue to develop in the two key areas of IoT and EV as well as Smart and safe home. Besides working with coach bus companies and freight forwarders to develop the new-generation smart fleet cloud management system, the nextgeneration DC fast charger, green energy and energy storage management platform services are also under planning.

Marketing plans:

  • (1) With the advantages of successful vertical integration and mass production, we will continue to build the image of producing the optimal cost-effective products and expand our market share in the laptop market.

  • (2) Forge deeper relationships with existing customers and continue to expand our business with international brands. Besides developing OEM/ODM customers, we cooperate with system integrators (SI) to build a complete customer portfolio.

  • (3) Enhance our image of being a professional OEM and ODM and international recognition.

  • (4) Work with content and application software providers to increase the add-on features of hardware and innovate user scenarios.

  • (5) Continue to pursue improvement in quality and provide comprehensive services by combining the established global sales and service channels, so as to offer customers comprehensive technical support and services, strengthen brand value and meet customers' needs.

  • (6) In consideration of the overall industry demand and trend, we provide complete product lines and integrated systems to address customers' single solutions needs, and to increase the added value of products as well as enhance brand value in order to create the blue ocean market with economic value.

  • (7) By instilling uniqueness into our products and services, we have advantages over competitors and thus competitive edges. Through differentiation, e.g., special products and uniqueness, we create new value for our products and enhance customer satisfaction.

  • (8) Through collaborated research and development and design with internal and external parties, we accelerate the new product launches, improve product quality and reduce development costs as our competitive advantages.

  • (9) Actively participate in online and physical product launches held by Intel/AMD/Qualcomm, expand product application scopes, and explore different market opportunities (such as business, telecommunication, etc.)

  • (10) Incorporate our products into our overall smart city IoT application scenario

94

with a view to expand the level and scope of cooperation with customers. We work with local system integrators to provide governments various solutions for problem-solving scenario (such as smart classroom.)

  1. Long-term plans

Product development strategies

Motherboards:

We will enhance our research and development capacity in gaming products through collaborations with gaming brands in projects. By gradually establishing our gaming product line and changing the existing habits of gaming players, we aim to enter the e-sports market. As for demands from the business sector, we will continue to provide motherboards with specifications required by enterprises and projects. With R&D and manufacturing experience accumulated over the years, we will assist customers with making customized products and take part in the project market.

Mini systems:

Since we launch the "LIVA" Mini PC, our sales as well as profits have increased year by year. Both the quality appearance and diverse multi-media specifications of our products received excellent reviews and gain popularity worldwide. Besides taking into account the needs of consumer market, we also adopt modular designs for Mini PCs to be expandable and extended our products lines to applications in different scenarios such as business, AIOT, Digital signage, edge computing, etc. Also, we plan to launch brand-new Mini PC products with higher specifications and performance to satisfy the needs of different user groups.

Notebooks:

In line with global customers' demand on privacy protection and security, we will adopt new technologies including voice recognition and biometrics.

We will continue our collaboration with Qualcomm on enhancing LTE network design and verification technology and have our existing LTE channels and customers as our first step into the 5G market.

In some of the newly developed markets, we will enter the vertical channels with our own brands as well as work with agents, distributors and system integrators to gain insight on local market demand and provide solutions.

We will expand into markets with more diversified applications and optimize our product scenario to maximize our sales. As for our production bases, we will introduce AI and automation to reduce production costs and improve product quality.

IoT:

IoT and Internet of Everything (IoE) both encompass diverse wireless network technology. Our future developments aim to satisfy the demand to connect, control and process all devices in different application scenarios for the enormous applications of IoT.

95

Product marketing strategies

  • (1) Employ comprehensive information network to support Build to Order (BTO) production model. Fully satisfy customers' demand for customization and immediacy through complete integration of the global supply chain.

  • (2) Adopt innovative product designs and emphasize product differentiation. Rapidly expand market share by shortening the development process and possessing competitive cost advantage.

  • (3) Actively identify local strategic partners in line with regional characteristics. Construct comprehensive marketing channels and sound after-sales services with the advantage of localization, thereby increase market share.

  • (4) Actively develop vertical market and built a complete customer portfolio.

  • (5) Create value for our customers and strengthen product competitiveness through business model and product innovations, thereby enhance profitability.

  • (6) Vertically integrated partners in the IoT value chain and actively developed new application markets with partners.

  • (7) Offers flexible modularized product designs to provide IoT customers with speedy products for different market applications.

  • (8) Actively participate in international exhibitions to enhance corporate image and aggressively expand business.

Marketing plans:

In the future, the design and application of education laptop products will be increasingly diversified. In addition to functional considerations, they encompass new technologies such as semi-rugged mechanism designs, voice recognition and biometrics to satisfy product requirements and user scenario for business/vertical/embedded markets, providing customers with differentiated and highly competitive products. We also focus on customer needs, provide customized services, and strengthen our connections with strategic partners.

Technology learning (or digital learning) has become a global trend with governments and related industries actively invest in human, material and financial resources to meet current needs. ECS will use technology tools as the teaching foundation and combine them with classroom management applications to actively build smart classrooms and continuously expand solutions to provide customers with rich choices. We will build automated operation mechanisms, reduce labor management costs, and improve overall learning efficiency through electronization.

We will develop a series of business laptops for business application field, focusing on providing convenient, suitable, safe and cost-effective solutions for enterprises and small and medium enterprises in various industries. The designs of business laptop focus on lightweight and durability to cope with all kinds of trials during business travels and still have steady operation. Strict testing standards enable them to maintain superior performance and stability, making them the most reliable solutions that meet both business quality and safety needs.

96

II. Analysis of the Market as well as Production and Marketing Situation

  • (I) Market analysis

  • Sales areas of main products (services)

The main sales destinations of the major products in the last two years are as follows:

Unit: NT$ thousand

Years
Region		 2019 (Consolidated) 2019 (Consolidated) 2020 (Consolidated) 2020 (Consolidated)
Amount % Amount %
America 5,624,270 20% 5,237,531 20%
Asia 18,471,658 65% 16,011,328 62%
Europe 3,355,343 12% 4,422,873 17%
Others 840,032 3% 324,003 1%

2. Market shares

The Company's major products are PC motherboards, notebooks, desktop computers and interface cards. The Company formulates different products and marketing strategies in response to differences in market demands, customer characteristics and competitions. For motherboards, desktop and notebook PCs, our main customers are ODM/OEM system manufacturers, major system assembly plants and distributors in various regions/countries. Interface cards are mostly graphics cards and customers are motherboard assembly plants.

In 2020, our market shares of motherboard, laptops and desktop computers were 5.48%, 0.32% and 2.71%, respectively. (Source of global shipment: MIC, February, 2021)

  1. Future market supply and demand and prospect

Market supply and demand for motherboards

Intel launches 11th Gen Core processor, Rocket Lake, and maintains the former 14nm process. It enhances the number of cores and performance while maintaining the original power consumption level, allowing consumers to enjoy more competitive products. According to Intel's official data, the performance of Rocket Lake has been improved by 19%. ECS will continue to expand the motherboard business and aggressively take part in the niche market for vertical applications to further develop the motherboard sector.

Market supply and demand for Mini PCs

As technology advances, traditional desktop PCs are no longer the mainstream. In light of the current lifestyles, lightweight, power-saving and portable Mini PCs are slowly gaining market shares. Since 2019, due to market demand, the scale of Mini PC has continued to grow. Major brands have launched different types of Mini PCs to cater for different consumer segments. ECS has persistently focused on expanding the Mini PC market, and has invested R&D and human resources to develop more competitive products across Intel, AMD and ARM framework.

97

Market supply and demand for notebooks

Looking forward at 2021, as the pandemic stimulates computer demand and remote work and learning become the norm, products are now in short supply. Experts point out that global economy still needs some time to recover and the situation will affect the laptop market. The global shipment of laptop is projected at 216 million sets in 2021, equivalent to an annual growth rate of 8.02%. The increases in bailout funds by government worldwide to schools and businesses may intensify computer shortage. We expect the shortage to continue into 2022.

Chromebook looks promising. Asia-pacific regions such as Indonesia, India and Singapore, as well as emerging markets like Central and South America and Africa all see the price advantages of Chromebook and intend to increase their orders. The global shipments of Chromebooks are expected to reach 29.6 million units in 2020, accounting for 14.8% of the market. Besides education market, 30% of the Chromebook demand is attributable to both corporate and consumer segments. Google intends to reposition Chromebook from education market to business market.

Due to robust demand and capacity shortages, every link in the supply chain has reached its limits. Not only do PC manufacturers and ODM need to deal with the shortage of components and capacity, but the existing logistics issues force suppliers also to opt for air freight to reduce costs by cutting down the delivery time.

Market supply and demand for IoT

ECS will continue to actively penetrate the vertical application markets of IoT and EV as well as smart and safe construction and renewable energy in 2021. Also, we will work with local influential system integrators to provide comprehensive services and customized products to customers.

Market growth of motherboards

In terms of PC applications, ECS will continue to cooperate with Intel to launch various platforms and release Rocket Lake platform product series in 2021 to strengthen the Win-Tel market.

In addition, as the functions of tablets are approaching to those of traditional PCs, the boundaries between these two have become increasingly vague. ECS will continue to develop platforms required by customers based on PCB applications, and strengthen product development and sales especially in Linux and Android to enter niche markets and increase profit margin.

Market growth of notebooks

The market demand for laptops has peaked in the past eight years and is expected to continue through 2021. In 2021, suppliers and ecosystem will begin to compete for the new business opportunities stemming from the demand emerging in 2020, and more PC architecture platform products will be added to market supply in the hope of changing the ongoing dominance of the Windows platform and the x86 architecture.

98

A Mac and Windows PC will start using ARM processors. PCs used to have only Windows and mac OS for a long time, but now we have the rise of Chrome OS on the rise of Chromebook. In 2021, processors, operating systems, 5G network and case dimension are all going to be the focus of innovation. In order to meet the trends of “mixed work model” and “mixed learning model,” the laptop industry will focus on smart sensor design and 5G network. The future user scenario will center on a laptop with applications and services of smart home, smart office or smart learning connected.

Market growth of IoT

As technology advancement and increasing applications of digital products change the lifestyle of many people, the number of relevant applications such as IoT, AI, and big data analysis is climbing. The McKinsey Global Institute (MGI) report states that starting from 2025, IoT will generate an economic output between US$3.9 trillion to US$11.1 trillion annually in nine environments including factories, retail, and cities, and the number of IoT devices is forecasted to reach 75.4 billion units. This is equivalent to an increase of 127 IoT devices per second worldwide starting 2020.

  1. Competitive edge

  2. A. ECS has manufacturing centers in South China in Mainland China. From motherboards, graphics cards to computer assembly, all processes are certified under ISO 9001 and ISO 14001. We have also adopted the global eco trend of IECQ QC080000 for production and process, and practice the 4-stages of nontoxic management, i.e., non-toxic suppliers, non-toxic material, non-toxic manufacturing process, and non-toxic quality controls.

  3. B. Advantageous synergy from vertical integration: We have strategic alliances with PCB factories, connector and socket factories, power supply manufacturer and computer case manufacturers to effectively reduce costs and delivery times and enhance competitiveness.

  4. C. Sound supply chain management: Most of our suppliers are located within an hour's drive away and have implemented the Just in Time (JIT) system. We enjoy a quick supply of materials with low inventory costs.

  5. D. Swift responding capacity: Our global sales and service offices can provide timely reports on market demand, allowing the Company to develop products that meet customer needs quickly.

  6. E. Full market coverage: Our customers include ODM/OEM, reginal system integrators and DIY markets. Changes in demand from different customer level have only limited effect on our sales. Therefore, our sales enjoy a steady growth.

  7. F. Professional management team and technology development capabilities: The Company's management team has comprehensive industry background and knowledge. With rich industry intelligence and technology, managers can

99

accurately pinpoint market trends and explore innovative technologies and concepts. In addition, ECS has made continuous efforts in product development, technology improvement, process improvement and business development. Especially under the leadership of experienced and professional management team, the Company has achieved excellent performance in enhancing production technology, quality control and delivery, and has received positive feedback from customers.

  • G. Strong R&D team: Our R&D team has extensive industry experience accumulated over the years. Its ability to deliver designs quickly can effectively shorten the time for R&D. Apart from the outstanding R&D capabilities, the team has also developed many innovative technologies and obtained a number of important patents.

  • Advantages and disadvantages for developmental and action plans

  • A. Advantages:

    • (1) We have excellent advantages in production scale, shipment volume and production cost. Our scale and strength are unchallenged and will remain competitive in the future.

    • (2) We have the experience and ability to cooperate with major brands in product development and outsourcing. By replicating our successful experience, we actively take part in the supply chain of international brands.

    • (3) ECS has vast manufacturing experience accumulated over the years and a comprehensive production supply chain in China. With advanced automation equipment, process technology, engineering research and development capabilities, high quality as well as a sound IT system, we can provide speedy delivery services which not only increase the efficiency of production management but also create more flexible value in the manufacturing process. High quality and low cost are the core competitiveness of ECS.

    • (4) We have outstanding R&D talents and years of experience in product design. Through continuous innovation in product development and a shortened product development time, we continue to enhance our competitiveness.

    • (5) With the support of suppliers and strategic partners, we have advantages in stable supply of raw materials and purchasing cost control with less risk of material shortage.

  • B. Disadvantages and action plans

    • (1) Global economy is highly unpredictable and we see declines in corporate IT spending and PC growth.

Action plan: In response to the weak growth momentum in the PC market, the Company will actively adjust the cost structure of each product and continue to monitor the market demand dynamics. Enhancing our core

100

competitiveness in our markets is our number one priority. We would strengthen the company through improving production and operation performance, innovating design techniques and controlling inventory costs. During economic downturn, we shall strive to solidify existing customer relationship and aggressively explore new customer groups to maintain our market share.

  • (2) An increasing proportion of ODM/OEM customers may reduce profit margin and increase inventory level.

Action plan: We will actively monitor the changes in the end market's demand and adjust our product directions by focusing on orders of more profitable products. Meanwhile, we will actively develop new customers to reduce risks. Internally, we would aggressively reduce inventory and control costs to enhance product competitiveness.

  • (3) If the global economy recovers too slowly or the momentum is too weak in the future, the impact on computer demand worldwide will be significant. Overall, PC is not the most essential item for consumers in developing countries. The drop in purchasing power will have certain effect on computer sales.

Action plan: We will tailor products for local needs in specific markets, improve design and develop products suitable for local consumers. We plan to gain market share with competitive prices.

  • (4) International brands constantly employ strategies of brand effect, price and quick rollout of new products to squeeze the margins of regional brands as well as gaining market shares of the latter. Consequently, the shipment of ODM is affected.

Action plan: We would enhance the overall performance and added value of computer products through innovative designs for hardware and development of application software. By working with strategic partners on the research and development of new technologies, we can enter the niche market with product differentiation and diversification. In addition, we will continue to develop the education laptop and tablets markets, improve customer service and satisfaction, and strengthen the business relationship with strategic partners, so as to shorten the cycle of product innovation and development and release new products at a faster rate to enhance product competitiveness.

  • (5) Computer manufactures launch low-priced products to gain market shares. The fierce price war results in declining average selling prices, which hurt the profitability.

Action plan: We will employ the strategy of product diversification, increasing product mixes for segmented markets.

  • (6) The export industry is significantly impacted by exchange rate fluctuations.

Action plan: We will closely monitor exchange rate movements, strictly implement cost controls and initiate risk management to reduce the extent of impact.

  • (7) Escalating conflicts between U.S. and China increase import costs.

Action plan: The Company establishes production bases in Southeast Asia and cooperates with local manufacturers to further develop the Southeast Asian market.

101

  • (II) Applications and processes of major products

  • Applications of major products

    • A. PC motherboard: Its main components are PCBs, system chipsets, IC chips of different functions, and passive components (resistances, capacitors, inductances, connectors, etc.) They are the core components of the PC system and control the internal computing, input, output and expansion functions of PC.

    • B. Graphics card: Its main components are PCBs, graphics chipsets, IC chips of different functions, and passive components (resistances, capacitors, inductances, connectors, etc.) They are the core components of the PC system and control the image processing and output functions of PC.

    • C. Desktop computer: It is mainly made up of motherboards, case, power supplies, floppy disc drives and optical disc drives. Once CPU, HDD, DRAM and software are installed, it is ready for use. In addition to the traditional functions of data processing and storage, electronic communication, and word processing, the main changes in desktop computers are the added accessories to improve their computing capability and audio-visual entertainment. There are also constant innovations on their designs and incorporation of home entertainment.

    • D. Notebook computer: It is a form of PCs. Compared to desktop computers, notebooks have portability and they are normally presented as a PC in a closedbook form due to their mechanism design. Notebooks do not include WebPad or Pocket PC. Their main functions include document and data processing, engineering design, briefing and typesetting applications, multimedia applications, and internet-related hardware and software applications. Notebook PCs can be used in a variety of occasions and easily and conveniently carried by all. They can also be a basic platform for basic mobile data communication, increasing their internet and communication applications.

    • E. Tablet computer: It is a form of PCs. Compared to notebooks, tablets are more portable and they are normally presented as a PC in a flat form due to their mechanism design. Their main functions are multimedia browser applications and software and hardware applications related to online instant communications. They are easy to be carried around at any given occasion.

    • F. Smart Gateway: The IoT gateway is an intermediate hardware between sensors and devices. Its applications would calculate data captured and transform them into useful information. Gateways allow you to efficiently collect and safely transmit data between remote users, hardware devices and applications.

  • Production process of the major products

Production process of motherboard (graphics card):

Incoming quality control � Solder paste printing � Components placement

� Reflow welding � � Manual insertion � Soldering furnace� Functional test � PCBA processing � Packing � Inventory

Production process of desktop computer:

Components � Assembly(1) � Functional test � Assembly(2)

  • Visual inspection � Packing � Outgoing quality control � Inventory

102

Production process of desktop computer, notebook computer (tablets), and IoT products:

Incoming quality control � Solder paste printing � Components placement

  • Reflow welding � In-Circuit-Test � Manual insertion � Soldering furnace

  • Functional test � PCBA processing � System assembly � Preliminary test

  • Burn-in testing � Final testing � Packing � Inspection � Inventory

  • (III) Supply and demand of major materials

The raw materials used in the PC motherboards, desktop computers, notebooks and tablets come from major computer and communication components manufacturers both at home and abroad. Categories and suppliers are as follows:

Chipsets: Lenovo PC HK, Dell Global B.V., Synnex Technology International, Acer Incorporated

Motherboards: Golden Elite Technology (Shenzhen)( �� ),

Golden Elite Technology (Shenzhen) ( ���� )

Resistors/Capacitors: Everwiner Enterprise, Yageo Corp., Taiwan Murata Electronics, Taiwan Taiyo Yuden, Ralec Electronic Corp.

CPU: Intel, Acer Incorporated, Lenovo PC HK, JP SA COUTO, Medion AG

LCD Panel: Starry Electronic Technology, K&D Technology, Xinpeng Technology

Battery: Hangzhou Future Power Technology, BMSPow Green Energy, Guangzhou Great Power Energy & Technology

As we have extensive procurement plan, we provide estimated procurement volume to each supplier on a quarterly and monthly basis and all materials have more than two supply sources. Thus, our material supply has been normal and there are no shortages or idle materials for the both parties. Also, we maintain long-term cooperation and good relationship with each supplier, thereby obtain competitive prices.

103

Unit: NT$ thousands Up to the Previous Quarter of 2021 (Note 2)
Relationship
with the
Issuer		 None by contract from revealing the name of
st recent period audited and attested or
Unit: NT$ thousands		 arter of 2021 (Note 2)

Relationship
with the
Issuer		 None None None Note 1: Name of the customer with more than 10% of the total sales amount in the last two years and the amount and proportion of the sales. Due to the contractual agreement, the name of the sales or the object of the transaction may not be disclosed as an
individual and a non-relevant person.
Note 2: For a public company whose stocks are listed on a stock exchange (a "listed" company) or by an OTC company, if, before the date of publication of the annual report, there is any financial data for the most recent period audited and attested or
reviewed by a CPA, it shall also be disclosed therewith.
Reasons for the increase or decrease: due to changes in market trends, changes in customer demand for products, and other reasons.

As a Percentage of the
Net Purchases up to
the Previous Quarter
of the Year [%]		 15.82 84.18 100.00

As a Percentage of
the Net Sales up to
the Previous Quarter
of the Year [%]		 23.13 11.77 44.47 100.00
20.63

Amount		 1,050,957 5,592,012 6,642,969 mpany is prohibited
cial data for the mo		 e Previous Qu
Amount		 1,507,123 1,344,232 767,091 2,896,141 6,514,587

Name		 Manufacturer A Others Net Purchases Note1: A list of any suppliers accounting for 10 percent or more of the company's total procurement amount in either of the 2 most recent fiscal years, the amounts bought from each. Where the co
a client, or where a trading counterpart is an individual person who is not a related party, it may use a code in place of the actual name:
Note 2: For a public company whose stocks are listed on a stock exchange (a "listed" company) or by an OTC company, if, before the date of publication of the annual report, there is any finan
reviewed by a CPA, it shall also be disclosed therewith.
Reasons for the increase or decrease: due to changes in market trends, changes in customer demand for products, and other reasons.
2. Information of Major Customers		 Up to th
Name		 Customer B Customer A Customer D Others Net Sales
2020 Relationship with
the Issuer		 None 2020
Relationship
with the
Issuer		 None None None
As a Percentage
of the Annual Net
Purchases [%]		 23.06 76.94 100.00 As a Percentage
of the Annual
Net Sales [%]		 29.93 11.26 45.53 100.00
13.28
Amount 5,553,252 18,532,240 24,085,492 Amount 7,779,879 3,451,405 2,926,510 11,837,941 25,995,735
Name Manufacturer A Others Net Purchases Name Customer A Customer B Customer C Others Net Sales
2019 Relationship with
the Issuer		 None 2019
Relationship
with the
Issuer		 None None None
As a Percentage
of the Annual Net
Purchases [%]		 26.39 73.61 100.00 As a Percentage
of the Annual
Net Sales [%]		 35.94 11.92 40.02 100.00
12.12
Amount 6,494,229 18,113,650 24,607,879 Amount 10,168,853 11,322,329 28,291,303
3,427,915 3,372,206
Name Manufacturer A Others Net Purchases Name Customer A Customer B Customer C Others Net Sales
Item 1 2 3 4
Item 1

(V) Indication of Production Volume for the Most Recent Two Fiscal Years

Unit: piece; set; NT$ thousands

Year
Production
Quantity
Major
Commodities
(or byDepartment)		 2019 2020
Capacity Yield Output Value Capacity Yield Output Value
Computer & Peripherals 16,900,077 10,267,188 24,780,686 13,489,868 8,615,358 22,177,476
Total 16,900,077 10,267,188 24,780,686 13,489,868 8,615,358 22,177,476

Note 1: Capacity is the amount of production that the Company can produce using existing production facilities and under normal operation, taking into account necessary downtime, holidays, etc.

Note 2: The capacity of the Company includes the capacity of outsourced production.

(VI) Indication of Sales Volume for the Most Recent Two Fiscal Years

Unit: piece; set; NT$ thousands

Year
Sales Volume
Major
Commodities
(or byDepartment)
Computer &
Peripherals
Others
Total
2019
2019
2019
2019		 2020 2020 2020 2020
Domestic Sales Export Sales Domestic Sales Export Sales
Quantity Value Quantity Value Quantity Value Quantity Value
151,395
642,402		 8,848,009
27,480,825		 122,500
548,318		 7,444,929 25,240,621
- 48,542 - 119,534 - 2,639 - 204,157
151,395
690,944		 8,848,009
27,600,359		 122,500
550,957		 7,444,929 25,444,778

105

III. Information on Employees

Information on employees in the last two years and as of the published date of the annual report:

Year Year 2019 2020 The Current Fiscal Year up
to April 30,2021
Number of
Employees		 Direct personnel 4864 5716 4747
Indirect personnel 2273 2230 2126
Total 7137 7946 6873
Average Age 30.0 29.8 31.3
Average Service Year 3 1.6 1.8
Education
Background
Distribution
Ratio		 PhD 0.01% 0.01% 0.02%
Masters 3.06% 3.20% 3.68%
University / College 17.64% 17.27% 18.68%
Senior high school 5.59% 5.11% 5.28%
Below high school 73.70% 74.41% 72.34%

IV. Environmental Protection Expenditures

  • (I) The waste gas, waste water, noise, and waste produced in the production process of the Company meet the requirements of local laws and regulations, and no environmental pollution occurred.

  • (II) From 2020 to the date of publication of this Annual Report, the Company has not experienced any environmental pollution, nor has it experienced any major environmental punishment or loss, and its products are all designed in an ecological manner. No major environmental pollution incident is expected in the future.

  • (III) The financial and business impacts of international environmental laws and regulations and customer environmental requirements on the Company are as follows:

Financial impact:

To comply with the environmental protection laws and regulations of various countries and the environmental protection requirements of customers, the plants constantly updated or purchased production equipment and verification and testing equipment, resulting in additional capital requirements; however, there is no material impact on the financial condition of the Company because the Company had sufficient funds to support them.

Business impact:

ECS is committed to sustainable development. We integrate the green concept into the whole enterprise to meet the needs of customers, protect the environment, and advance

106

business development, creating benefits for the customers, the society, and the enterprise. ECS is engaged in the design and manufacture of motherboards, display cards, desktop computers, laptops, and tablets. With green innovations, we have introduced the concept of "green products" and the "four non-toxic principles" of non-toxic suppliers, non-toxic materials, non-toxic processes, and non-toxic products. We implement these concepts and principles in each step of operations to achieve certification for each stage.

The Company has observed the environmental protection laws and regulations and customer requirements of environmental protection, never used hazardous materials, and introduced the concept of "green design". We have built a green supply chain prohibiting hazardous substances and adopting green design, green manufacturing, and green manufacturer, which have all been in line with the requirements of green consumers and international brands, so they have no significant impact on the business of the Company.

V. Labor Relations

In order to take good care of our employees, the Company has formulated vacation and retirement systems, and a variety of benefits. As a result, the employees have a high degree of dedication to the Company. There is a harmonious relationship between the labor and capital and a lack of labor dispute.

  • (I) Employee welfare measures:

The Company has set up the Staff Welfare Committee, which is responsible for promoting various staff welfare works.

  1. Event organization: subsidize employees' travel at home and abroad, and organize parties, outdoor activities, public welfare activities, art lectures, music appreciation, various ball games, employees' family day, and other activities to help employees to de-stress and have fun.

  2. Festival gifts and subsidy measures: wedding, funeral, and festival grants, birthday gift, three-festival gift, association subsidy, travel subsidy, emergency relief subvention, etc.

  3. Club activities: Currently, the clubs include Yoga Club, Tai Chi Fitness Club, Hot Dance Club, Pilates Club, Table Tennis Club, Running Club, Basketball Club, Darts Club, Dance Club, Women's Basketball Club, Fitness Club, Riding Club, Table Games Club, Badminton Club, Flower Art Club, etc., which enrich the staff's leisure time.

  4. Staff canteen: free lunch is provided for employees, with nutritional buffet, noodles area, and fruit-based meals. The calorie of each meal is displayed to help employees stay on their diets.

  5. Staff leisure center: Gym room, lactation room, rhythm classroom, video game room, karaoke room, billiard area, library, rest area, and lavatory are set up to provide staff with places to relax.

107

  • (II) Personnel training and further training and measures to safeguard the rights and interests of employees

  • Employees are the most important assets of the Company, and the annual talent training is also one of the important annual projects. Based on functions, the curriculum structure of the functional system is comprehensively introduced, and a series of courses are launched for different functions, so as to comprehensively improve the competence of employees and achieve organizational goals.

    • (1) The staff training in 2020 was function-based, aiming to assist staff's career development, strengthen professional competence required by various categories of business, and combine various online learning resources with external professional training to help staff grow.

    • (2) The employee training details of the Company in 2020 were as follows:

2020 (consolidated information)
Total education and training expenditures $1,062,017
Training costs per person $579.56
Training Hours 111,394.7
Annual total number of training participants 12,985
Average training hours per enrollment 8.42

  1. The Company set up a Health Promotion Committee to implement the healthy weight management plan for employees and promote the employee assistance program, and establish the correct awareness of independent health management for employees through the promotion of health and sports knowledge.

  2. (1) Staff health management: provide staff health examination, physical fitness test, on-site service of special physician, and regular health information service.

  3. (2) Classes and lectures: smoke hazard prevention and control, healthy weight management program, stress relief lectures.

  4. (3) Activities and competitions: smoke cessation activities, stress relief activities, and parent-child activities.

  5. (4) Employee assistance program: established ECS employee assistance service map, combined with internal and external resources, to help solve the personal problems that affect the performance and safety of employees, help the Company and employees grow steadily together, and enhance competitiveness of the organization.

  6. Formulated the measures for employee remuneration to share the operating results.

  7. The Company provides labor insurance, health insurance, group insurance, business trip FPA insurance to ensure the livelihood of employees.

  8. Retirement system

  9. The Company formulated the retirement management measures in accordance with the laws and regulations related to the Labor Standards Act. If the new system of labor pension is applicable, 6% of the employee's salary will be contributed to the

108

pension on a monthly basis according to the "Regulations on Labor Pension (New System of Labor Pension)", which will be deposited in the individual account of labor pension set up by the Bureau of Labor Insurance. Employees can also contribute 0~6% of the pension voluntarily. The part of the voluntary contribution shall be deducted from the total personal comprehensive income of the year according to law. For employees who apply to the old pension system and have already chosen to apply to the new pension system, according to the Labor Standards Act (old pension system), 2% of the employee's taxable salary shall be allocated to the old pension reserve account of the Trust Department of the Bank of Taiwan as the fund source of the old pension payment.

  • (III) Employee Code of Conduct and Ethics

The company has an honest policy statement, which serves as a code of conduct for all staff to follow, and specifies in the employment contract the duty of loyalty and the integrity clause to be observed as a member of the Company to strive for the sustainable operation of the Company.

  • (IV) Protection measures for the work environment and employees' personal safety

Employees are an important asset of the Company. The Company is committed to providing a safe, hygienic, and comfortable working environment for employees, preventing occupational disasters, and maintaining the safety and health of all employees to fulfill the responsibility of safety and hygiene.

In terms of labor safety and health, the "Code of Practice on Labor Safety and Health" has been formulated to provide employees with appropriate personal protective equipment to ensure their safety and prevent the occurrence of hazards, and avoid the occurrence of injuries caused by occupational disasters; In order to comply with the laws and regulations, follow the provisions of indoor comprehensive smoking ban, the Company put up smoking signs, prohibited all personnel to smoke in the indoor workplace; performed regular inspection, maintenance and declaration for building public safety, fire protection, elevator, water dispensing machine, air conditioning, electric power and other equipment to ensure the safety of employees; performed regular environmental measurements in the workplace, tested the air, water, lighting, etc., to provide a good quality of the working environment.

In terms of personal safety, the Company set up access control monitoring systems inside and outside the building, and appointed professional security company to carry out access control and personnel safety maintenance; irregularly arranged safety and health education and training, and announced various kinds of safety publicity to improve the safety awareness of employees.

The company has always regarded the safe and healthy working environment and personal safety of employees as the key, continued to regard "zero hazard" as the goal, aiming to use good working environment as the basis of sustainable business.

  • (V) The losses suffered due to labor disputes in the most recent fiscal year up to the publication date of this annual report are listed (including labor inspection results in violation of the Labor Standards Act, punishment date, punishment name, violated provision of laws and regulations, content of violated laws and regulations, and punishment content), and the estimated amount for current and possible future occurrences and response measures are disclosed. If the amount cannot be reasonably estimated, the reason should be clarified. None.

109

VI. Major Agreements

Contract nature Parties Dates of commencement and
termination of the contract		 Main content Restrictions
Sales contract CONFIDENTIAL Effective as of Aug. 11, 2009 Trading of products Nontransferable
Purchase Contract CONFIDENTIAL Effective as of May 20, 2011 Purchase of products Nontransferable
Sales contract CONFIDENTIAL Effective as of Dec. 1, 2013 Trading of products Nontransferable
Sales contract CONFIDENTIAL May 4, 2016 - May 5, 2021 Trading of products Nontransferable
License contract CONFIDENTIAL Effective as of Jun. 27, 2016 Technical license Nontransferable
Sales contract CONFIDENTIAL Effective as of May 31, 2018 Trading of products Nontransferable
License contract CONFIDENTIAL Effective as of Aug. 24, 2018 Software Authorization Nontransferable
Sale and purchase agreement CONFIDENTIAL Nov. 14, 2018 - Mar. 30, 2024 Purchase of products Nontransferable
Sale and purchase agreement CONFIDENTIAL Mar. 30, 2019 - Mar. 30, 2024 Trading of products Nontransferable
License contract CONFIDENTIAL Effective as of September 24, 2020
Patent licensing		 Sublicense forbidden

110

Chapter 6. Financial Overview

  • I. Incidents of Condensed Balance Sheets, Income Statements, Accountant Name, and Audit Opinions for the Recent 5 Years

  • (I) Condensed Balance Sheets and Statements of Comprehensive Income

Condensed Balance Sheet (Consolidated)

Unit: NT$1,000

Year
Item		 Year
Item		 Financial Information For The Past 5 Years Financial Information For The Past 5 Years Financial Information For The Past 5 Years Financial Information For The Past 5 Years Financial Information For The Past 5 Years Financial Data
for the Current
Fiscal Year up
to March 31,
2021 (Note 1)
2016 2017 2018 2019 2020
Current Assets 16,383,504
15,582,748
16,896,467
16,236,514
17,640,877
17,432,681
Property, Plant, and
Equipment		 3,261,135
3,020,874
2,854,471
2,671,997
2,801,574
2,744,842
Intangible Assets 628,054
632,871
632,810
617,718
605,759
605,506
Other Assets 3,111,831
2,684,226
3,116,635
3,826,999
2,701,700
2,685,458
Total Assets 23,384,524
21,920,719
23,500,383
23,353,228
23,749,910
23,468,487
Current
Liabilities		 Before
distribution		 10,710,784 9,631,841 11,845,410 11,572,898 11,897,142 11,952,507
After
distribution		 10,710,784 10,189,244 11,845,410 11,572,898 12,455,363 12,454,170
Non-current Liabilities 698,150
528,556
483,609
761,566
766,084
720,181
Total
Liabilities		 Before
distribution		 11,408,934
10,160,397
12,329,019
12,334,464
12,663,226
12,672,688
After
distribution		 11,408,934
10,717,800
12,329,019
12,334,464
13,221,447
13,174,351
Equity Attributable to
Owners of the Parent		 11,813,693
11,606,333
11,010,705
10,950,004
11,015,472
10,724,836
Share capital 5,574,030
5,574,030
5,574,030
5,574,030
5,574,030
5,574,030
Capital Surplus 6,427,295
(Note 2)

5,869,892
(Note 3)

5,881,933
5,913,183
5,413,220
(Note 5)

5,422,297
(Note 5)
Retained
Earnings		 Before
distribution		 (34,115)
207,486
228,096
279,862
342,705
64,037
After
distribution		 0
(Note 2)

207,486
(Note 3)

228,096
279,862
286,147
(Note 4)

-
Other Equity (187,632)
(602,478)
(673,354)
(817,071)
(816,146)
(837,191)
Treasury Stock 0
0
0
0
0
0
Non-controlling interest 161,897
153,989
160,659
68,760
71,212
70,963
Equity
Total		 Before
distribution		 11,975,590
11,760,322
11,171,364
11,018,764
11,086,684
10,795,799
After
distribution		 11,975,590
11,202,919
11,171,364
11,018,764
10,528,463
10,294,136

Note 1: It is the Company's consolidated financial data for the first quarter of 2021 reviewed by the CPA adopting the International Financial Reporting Standards (IFRSs).

Note 2: The loss recovery plan has been adopted by the resolution of the general shareholders' meeting in 2017.

Note 3: The plans of earnings distribution and cash payment from capital reserves have been adopted by the resolution of the general shareholders' meeting in 2018.

Note 4: It is the amount resolved by the Board of Directors on March 22, 2021.

Note 5: It is the capital reserves of NT$501,663 thousand that was resolved to pay by the Board of Directors on April 21, 2021.

111

Condensed Balance Sheet (Parent Company Only)

Unit: NT$1,000

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year
Item		 Financial Information For The Past 5 Years
2016 2017 2018 2019 2020
CurrentAssets 10,554,614
9,831,858		 13,131,698 12,671,787 13,273,595
Property, Plant, and
Equipment		 62,960
66,824
74,985
59,757
63,422
IntangibleAssets 391,676 415,219 403,181
393,094
394,326
Other Assets 8,537,956 8,160,110 6,220,687 6,360,343 7,468,870
Total Assets 19,547,206 18,474,011
19,830,551
19,484,981
21,200,213
Current
Liabilities		 Before
distribution		 7,078,975
6,349,881
8,348,684
7,895,004
9,515,031
After
distribution		 7,078,975
6,907,284
8,348,684
7,895,004
10,073,252
Non-currentLiabilities 654,538 517,797 471,162
639,973		 669,710
Total
Liabilities		 Before
distribution		 7,733,513
6,867,678
8,819,846
8,534,977
10,184,741
After
distribution		 7,733,513
7,425,081
8,819,846
8,534,977
10,742,962
Equity Attributable to Owners
oftheParent		 11,813,693
11,606,333
11,010,705
10,950,004
11,015,472
Share capital 5,574,030 5,574,030 5,574,030 5,574,030 5,574,030
Capital Surplus 6,427,295
(Note1)
5,869,892
(Note2)
5,881,933
5,913,183
5,413,220
(Note4)
Retained
Earnings		 Before
distribution		 (34,115)
207,486
228,096
279,862
342,705
After
distribution		 0
(Note1)
207,486
(Note2)
228,096
279,862
286,147 (Note
3)
Other Equity (187,632) (602,478) (673,354) (817,071) (816,146)
Treasury Stock 0 0 0 0 0
Non-controllinginterest
Equity
Total		 Before
distribution		 11,813,693
11,606,333
11,010,705
10,950,004
11,015,472
After
distribution		 11,813,693
11,048,930
11,010,705
10,950,004
10,457,251

Note 1: The loss recovery plan has been adopted by the resolution of the general shareholders' meeting in 2017.

Note 2: The plans of earnings distribution and cash payment from capital reserves have been adopted by the resolution of the general shareholders' meeting in 2018.

Note 3: It is the amount resolved by the Board of Directors on March 22, 2021.

Note 4: It is the capital reserves of NT$501,663 thousand that was resolved to pay by the Board of Directors on April 21, 2021.

112

Condensed Composite Income Statement (Consolidated)

Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated) Condensed Composite Income Statement (Consolidated)
Unit: NT$1,000
Year
Item		 Financial Information For The Past 5 Years Financial Data for
the Current Fiscal
Year up to March
31,2021(Note1)
2016 2017 2018 2019 2020
Operating Revenue 29,945,931
29,947,340
31,796,016
28,291,303
25,995,735
6,514,587
Gross Profit 4,245,061
3,033,483
2,516,987
3,095,283
2,731,669
472,394
Operating Income (1,792,084)
(2,845)
(323,584)
14,191
40,677
(254,771)
Non-operating Income and
Expenses		 456,992
378,646
352,884
74,015
378,491
39,384
Income before Tax (1,335,092)
375,801
29,300
88,206
419,168
(215,387)
Income from Continuing
Operations		 (878,808)
224,119
22,014
53,061
65,950
(222,258)
Loss from Discontinued
Operations		 0
0
0
0
0
0
Net Income (Loss) (878,808)
224,119
22,014
53,061
65,950
(222,258)
Other composite gains or
losses for the period
(net aftertax)		 (484,597)
(429,894)
(55,644)
(142,324)
270
(21,146)
Total Comprehensive Income (1,363,405)
(205,775)
(33,630)
(89,263)
66,220
(243,404)
Net Income Attributable to
Shareholders of the Parent		 (945,256)
221,761
20,412
45,779
62,084
(222,110)
Net Income Attributable to Non-
controllingInterests		 66,448
2,358
1,602
7,282
3,866
(148)
Comprehensive Income Attributable
to Owners of the Parent		 (1,427,355)
(197,867)
(40,300)
(91,951)
63,768
(243,155)
Comprehensive Income
Attributable to
Non-controllingInterests		 63,950
(7,908)
6,670
2,688
2,452
(249)
Earnings per Share (1.70)
0.40
0.04
0.08
0.11
(0.40)

Note 1: The consolidated IFRS financial data of the Company for 2021 Q1 as reviewed by the accountant.

113

Condensed Composite Income Statement (Parent Company Only)

Unit: NT$1,000

Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000 Unit: NT$1,000
Year
Item		 Financial Information For The Past 5 Years
2016 2017 2018 2019 2020
Operating Revenue 26,914,379
27,137,286
29,108,941
25,612,724
23,256,321
Gross Profit 3,173,422
2,123,189
1,680,572
2,196,007
1,886,223
Operating Income 1,002,644
57,394
(209,464)		 461,043
(63,129)
Non-operating Income and Expenses (1,777,990) 201,270
236,994
(401,722)		 427,876
Income before Tax (775,346) 258,664
27,530
59,321
364,747
Net Income from
ContinuingOperations		 (945,256)
221,761
20,412
45,779
62,084
Loss from Discontinued
Operations		 0
0
0
0
0
Net Income (Loss) (945,256) 221,761
20,412
45,779
62,084
Other Comprehensive Income
(after Tax)		 (482,099)
(419,628)
(60,712)
(137,730)
1,684
Total Comprehensive Income (1,427,355) (197,867) (40,300) (91,951) 63,768
Earnings per Share (1.70) 0.4
0.04
0.08
0.11

(II) Names of CPAs and audit opinions in recent 5 years:

Year Name of CPA Firm CPA name Audit Opinion
2016 Deloitte & Touche Hsiu-Chun Huang,
Cheng-HungKuo		 Unqualified opinion
2017 Deloitte & Touche Hsiu-Chun Huang,
Shih-Tsung Wu		 Unqualified opinion (emphasis matter paragraphs and
other matter paragraphs)-The financial statements of
the Company were audited and reviewed by another
auditor,and the responsibilityis divided.
2018 Deloitte & Touche Hsiu-Chun Huang,
Shih-Tsung Wu		 Unqualified opinion (emphasis matter paragraphs and
other matter paragraphs)-The financial statements of
the Company were audited and reviewed by another
auditor,and the responsibilityis divided.
2019 Deloitte & Touche Hsiu-Chun Huang,
Shih-Tsung Wu		 Unqualified opinion (emphasis matter paragraphs and
other matter paragraphs)-The financial statements of
the Company were audited and reviewed by another
auditor,and the responsibilityis divided.
2020 Deloitte & Touche Hsiu-Chun Huang,
Cheng-Chun Chiu		 Unqualified opinion (emphasis matter paragraphs and
other matter paragraphs)-The financial statements of
the Company were audited and reviewed by another
auditor,and the responsibilityis divided.

114

II. Financial Ratio Analysis for the Most Recent Five Years

(1) Financial Analysis (Consolidated)

Year
Analysis Item		 Year
Analysis Item		 Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years The Current
Fiscal Year up
to March 31,
2021 (Note 1)
2016 2017 2018 2019 2020
Financial
Structure
(%)		 Debt ratio 48.79
46.35
52.46
52.82
53.32
54.00
Ratio of long-term capital to property,
plant, and equipment
388.63
406.80
408.31
440.88
423.08
419.55
Solvency
(%)		 Current ratio 152.96
161.78
142.64
140.30
148.28
145.85
Quick ratio 118.67
125.37
113.13
115.62
116.99
109.12
Times interest earned ratio (a) (32.04) 7.62
1.38
1.85
6.56
(34.50)
Operating
Ability		 Accounts receivable turnover rate
(times)		 4.32
5.88
6.18
5.96
5.87
5.74
Average days for cash receipts 84.49
62.07
59.06
61.24
62.18
63.59
Inventory turnover rate (times) 7.20
7.42
8.33
7.86
7.00
5.99
Accounts payable turnover rate
(times)		 4.46
4.94
5.90
5.70
5.48
5.40
Average days for sale of goods 50.69
49.19
43.81
46.43
52.14
60.93
Property, plant, and equipment
turnover rate (times)		 8.45
9.53
10.82
10.24
9.50
2.35
Total assets turnover rate (times) 1.21
1.32
1.40
1.21
1.10
0.28
Profitability Return on assets (%) (a) (0.85) 0.30
0.10
0.15
0.13
(0.21)
Return on equity (%) (a) (6.65) 1.89
0.19
0.48
0.60
(8.13)

Ratio of income before tax to paid-in
capital (%) (a)		 (23.95)
6.74
0.53
1.58
7.52
(15.46)
Net profit margin (%) (a) (2.93) 0.75
0.07
0.19
0.25
(3.41)
Earnings per share (NT$) (a) (1.70) 0.40
0.04
0.08
0.11
(0.40)
Cash Flows Cash flow ratio (%) (b) 7.53
8.50
(6.10)		 13.15
(3.31)		 (3.29)
Cash flow adequacy ratio (%) (b) 71.00
82.12
63.27
121.82
48.84
26.83
Cash reinvestment ratio (%) (b) (2.43) 6.66
(10.99)		 8.92
(2.30)		 (2.33)
Leverage Operating leverage (c) (2.34) (1,036.63) (8.11) 230.15
68.50
(1.84)
Financial leverage (c) 0.98
0.05
0.81
(0.16)		 (1.17) 0.98
Explain the reasons why the financial ratios have changed by more than 20% in the last two years
(a) It was mainly due to the increase in the overall profit in 2020.
(b) It was mainly due to the decrease in net cash flows from operating activities in 2020.
(c)It was mainlydue to the decrease in net operating profit in 2020.

Note 1: The consolidated IFRS financial data of the Company for 2021 Q1 as reviewed by the CPA.

115

(2) Financial Analysis (Parent Company Only)

Year
Analysis Item		 Year
Analysis Item		 Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years Financial information for the most recent five years
2016 2017 2018 2019 2020
Financial
Structure
(%)		 Debt ratio 39.56
37.17
44.48
43.80
48.04
Ratio of long-term capital to property,
plant and equipment		 19,803.55
18,143.28
15,312.30
19,395.30		 18,424.44
Solvency
(%)		 Current ratio 149.10
154.84
157.29
160.50
139.50
Quick ratio 136.27
134.77
146.11
150.16
126.08
Times interest earned ratio (a) (163.16) 24.36
16.50
3.51
17.82
Operating
Ability		 Accounts receivable turnover rate
(times)		 6.40
6.49
6.74
6.62
6.46
Average days for cash receipts 57
56
54
55
57
Inventory turnover rate (times)(b) 20.56
23.99
25.85
28.05
20.78
Accounts payable turnover rate
(times)		 5.70
6.15
8.25
8.14
8.02
Average days for sale of goods(b) 18
15
14
13
18
Property, plant, and equipment
turnover rate(times)		 417.83
418.19
410.54
380.18
377.60
Total assets turnover rate (times) 1.30
1.43
1.52
1.30
1.14
Profitability Return on assets (%) (4.55) 1.21
0.11
0.33
0.39
Return on equity (%) (c) (7.22) 1.89
0.18
0.42
0.57

Ratio of income before tax to paid-in
capital(%) (a)		 (13.91)
4.64
0.49
1.06
6.54
Net profit margin (%) (c) (3.51) 0.82
0.07
0.18
0.27
Earnings per share (NT$) (c) (1.70) 0.4
0.04
0.08
0.11
Cash Flows Cash flow ratio (%) (d) 15.95
(9.02)		 (12.37) 19.32
(27.55)
Cash flow adequacy ratio (%)(b)(d) 101.69
106.62
91.97
79.25
(59.32)
Cash reinvestment ratio (%) (e) (d) 0.13
(4.62)		 (13.52) 12.84
(21.86)
Leverage Operating leverage (f) 2.58
28.59
(6.64)		 4.18
(24.63)
Financial leverage (f) 1.00
1.24
0.99
1.05
0.74

Explain the reasons why the financial ratios have changed by more than 20% in the last two years

(a) The main reason was due to the increase income before tax in 2020 compared with 2019.

(b) The main reason was due to the increase in ending inventory in 2020 compared with 2019.

(c) The main reason was due to the increase in profit in 2020 compared with in 2019.

(d) The main reason was due to the net cash outflows from operating activities in 2020 and net cash flows in 2019.

(e) The main reason was due to the increase in long-term investment in 2020 compared with 2019.

(f) The main reason was due to the net operating loss in 2020 and the net operating profit in 2019.

116

Note 2: The formulas of the above table are as follows:

  1. Financial structure

    • (1) Debt ratio = Total liabilities/Total assets.

    • (2) Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.

  2. Solvency

    • (1) Current ratio = Current assets/Current liabilities.

    • (2) Quick ratio = (Current assets - Inventories - Prepaid expenses)/Current liabilities.

    • (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.

  3. Operating ability

    • (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.

    • (2) Average days for cash receipts = 365/Accounts receivable turnover rate.

    • (3) Inventory turnover rate = Cost of goods sold/Average inventories.

    • (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.

    • (5) Average days for sale of goods = 365/Inventory turnover rate.

    • (6) Property, plant, and equipment turnover rate = Net sales/Average net property, plant, and equipment.

    • (7) Total assets turnover rate = Net sales/Average total assets.

  4. Profitability

    • (1) Return on assets = [Income after-tax + Interest expenses x (1 - tax rate)]/Average total assets.

    • (2) Return on equity = Income after tax/Average total equity.

    • (3) Net profit margin = Income after tax/Net sales.

  5. (4) Earnings per share = (Income attributable to owners of the parent - preferred stock dividends)/Weighted average number of shares issued.

    1. Cash flows

    2. (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.

    3. (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions, and cash dividends).

    4. (3) Cash reinvestment ratio = (Net cash flows from operating - cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital).

  7. Leverage

    • (1) Operating leverage = (Net operating income - Variable operating costs and expenses) / Operating profit

    • (2) Financial leverage = Operating income/(Operating income - Interest expenses).

  8. Note 3: Special attention shall be paid to the following matters when using the calculation formula of earning per share above:

  9. Shares outstanding is based on weighted average shares, and not based on year-end shares outstanding.

  10. Cash offerings or treasury stock transactions are considered in calculating weighted average shares.

  11. Earnings appropriation or reserves to paid-in capital shall be calculated and adjusted accordingly.

  12. If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after-tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be subtracted after-tax, but no adjustments needed if there are losses.

  13. Note 4: Special attention should be paid to the following when measuring cash flow analysis:

  14. Cash flow from operating activities refers to operating cash flows.

  15. Capital expenditures are from the annual cash flow statements on capital expenditure outflows.

  16. Inventory increases are from period end balance greater than period beginning balances, if inventories are less, then zero is applied.

  17. Cash dividends include common stock and preferred shares dividends.

  18. Property, plant, and machinery balance is after subtracting accumulative depreciation.

  19. Note 5: The issuer shall classify the operating costs and operating expenses as fixed or variable as per their nature. If it involves estimation or subjective judgment, they are classified based on rationality and consistency.

  20. Note 6: Where Corporation shares have no par value or where the par value per share is not NT$10, any calculations that involve paid-in capital and its ratio shall be replaced with the equity ratio belonging to the owner of the parent Corporation of the asset balance sheet.

117

III. The Audit Committee's Audit Report on the Financial Report of 2020

Audit Committee's Review Report

The Board of Directors has prepared and submitted the Company's 2020 business report, financial statements (including the consolidated financial statements), and the profit distribution proposal, of which the financial statements have been audited by the Certified Public Accountants of Deloitte Touche, Hsiu-Chun Huang, and Cheng-Chun Chiu, with an audit report issued. The aforementioned business report, financial statements, and profit distribution proposal have been reviewed by us, the Audit Committee of the Company. We have not found any inconsistencies with applicable laws in our review of the aforementioned documents. We hereby issue this report in compliance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.

To

2021 Annual Shareholders' Meeting of Elitegroup Computer Systems Co., Ltd.

Convener of the Audit Committee: Han-Fei Lin

Mar. 30, 2021

118

IV. 2020 Financial Reports

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2020 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard No. 10, “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

ELITEGROUP COMPUTER SYSTEMS CO., LTD.

By:

March 26, 2021

119

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Elitegroup Computer Systems Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Elitegroup Computer Systems Co., Ltd. (the Company) and its subsidiaries (collectively referred to as the Group), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to the other matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit of the consolidated financial statements for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. We conducted our audit of the consolidated financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the report of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

120

Key audit matters in the audit of the Group’s consolidated financial statements for the year ended December 31, 2020 is stated as follows:

Recognition of Specific Sales Revenue

Refer to Note 4 to the consolidated financial statements for the accounting policy on revenue recognition.

The Group’s sales revenue in 2020 decreased by about 8% compared with that of 2019. However, the trend of sales revenue from specific customers was different from the Group’s overall trend and the net sales revenue from specific customers in 2020 accounted for 37.3% of the consolidated net sales revenue; thus, the recognition of these specific sales revenue was identified as a key audit matter.

Our audit procedures performed in respect of the above key audit matter include the following:

  1. We understood the design and implementation of internal controls and tested the operating effectiveness of relevant controls over revenue recognition, and evaluated the appropriateness of accounting policies for revenue recognition used by the management.

  2. We sampled details of sales revenue from the specific customers and inspected the relevant transaction documents including sales orders, shipping and receipt documents, and verified that the revenue was recognized upon satisfying the performance obligation.

  3. We checked for any occurrence of subsequent sales returns and allowances, and obtained sufficient evidence regarding cash receipts from the specific sales in identifying the existence of unusual circumstances.

Other Matter

As of and for the years ended December 31, 2020 and 2019, we did not audit the financial statements of ECS Holding (America) Co., Elitegroup Computer Systems (HK) Co., Limited, Elitegroup Computer Systems Korea Co., Ltd., ECS Holding (HK) Co., Limited, Alpha Leader Limited (HK), and Elitegroup Technology (Thailand) Co., Ltd. which were subsidiaries included in the consolidated financial statements, such statements were audited by the other auditors instead. Our opinion, insofar as it relates to the amounts included for the abovementioned subsidiaries and affiliates, is based solely on the reports of other auditors. The total assets of the abovementioned subsidiaries were $1,484,186 thousand and $1,395,096 thousand, respectively, which constituted 6% of the consolidated total assets as of December 31, 2020 and 2019, and total revenues was $780,899 thousand and $1,175,156 thousand, respectively, which constituted 3% and 4% of the consolidated total revenues for the years ended December 31, 2020 and 2019, respectively.

We have also audited the parent company only financial statements of Elitegroup Computer Systems Co., Ltd. as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified opinion with other matter paragraph.

121

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

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 Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

122

  1. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

  2. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  3. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

  4. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  5. Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

123

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Hsiu-Chun Huang and Cheng-Chun Chiu.

Deloitte & Touche Taipei, Taiwan Republic of China

March 26, 2021

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

124

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2020 AND 2019

DECEMBER 31, 2020 AND 2019
(In Thou sands of New Taiwan Dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)
Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Financial assets at amortized cost - current (Notes 4, 9 and 33)
Accounts receivables (Notes 4, 5 and 10)
Accounts receivables from related parties (Notes 4, 5, 10 and 32)
Other receivables (Notes 4, 10 and 32)
Inventories (Notes 4, 5 and 11)
Prepayments
Other current assets - others
Total current assets
NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Notes 4 and 7)
Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8)
Investments accounted for using the equity method (Notes 4 and 13)
Property, plant and equipment (Notes 4, 14 and 32)
Right-of-use assets (Notes 4, 15 and 32)
Investment properties (Notes 4 and 16)
Goodwill (Notes 4, 5 and 17)
Other intangible assets (Notes 4, 18 and 32)
Deferred tax assets (Notes 4, 5 and 27)
Prepayments for equipment
Refundable deposits
Overdue receivables (Notes 4 and 10)
Net defined benefit assets (Notes 4 and 23)
Other non-current assets
Total non-current assets
TOTAL
LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 19)

Accounts payable (Notes 4 and 20)

Other payables (Notes 21 and 32)

Current tax liabilities (Notes 4, 5 and 27)

Provisions - current (Notes 4, 5 and 22)

Lease liabilities - current (Notes 4, 15 and 32)

Other advances received (Notes 12, 21 and 30)

Other current liabilities (Notes 4 and 21)


Total current liabilities


NON-CURRENT LIABILITIES

Deferred tax liabilities (Notes 4, 5 and 27)

Lease liabilities - non-current (Notes 4, 15 and 32)

Long-term deferred revenue (Notes 4 and 21)

Net defined benefit liabilities - non-current (Note 4)

Guarantee deposits received


Total non-current liabilities


Total liabilities


EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 24 and 27)

Share capital

Ordinary shares

Capital surplus

Retained earnings

Legal reserve

Special reserve

Unappropriated earnings

Total retained earnings

Other equity


Total equity attributable to owners of the Company


NON-CONTROLLING INTERESTS (Notes 4 and 24)


Total equity


TOTAL
 2020 2019





























































Amount
%
$ 4,529,482
19
612,732
3
3,923,199
16
4,257,076
18
258,909
1
186,536
1
3,566,229
15
190,256
1

116,458

-
17,640,877

74
41,702
-
10,135
-
150
-
2,801,574
12
737,913
3
509,282
2
593,155
3
12,604
-
894,439
4
54,241
-
228,363
1
42,720
-
128,220
1

54,535

-

6,109,033

26
$ 23,749,910
100
$ 1,247,424
5
4,280,803
18
1,259,089
5
185,801
1
210,683
1
230,609
1
3,677,260
16

805,473

3
11,897,142

50
260,249
1
440,937
2
41,794
-
2,205
-

20,899

-

766,084

3
12,663,226

53

5,574,030

24

5,914,883

25
29,394
-
250,468
1

62,843

-

342,705

1

(816,146)

(3)
11,015,472

47

71,212

-
11,086,684

47
$ 23,749,910
100




















































Amount
%
$ 4,252,632
18
608,017
3
3,451,345
15
4,186,727
18
138,008
-
140,737
1
2,741,315
12
144,176
1

573,557

2
16,236,514

70
44,108
-
8,896
-
10,165
-
2,671,997
11
1,079,297
5
549,788
2
603,620
3
14,098
-
1,406,966
6
283,898
1
225,248
1
45,000
-
123,284
1

50,349

-

7,116,714

30
$ 23,353,228
100
$ 1,798,800
8
4,212,106
18
1,201,983
5
134,187
1
224,299
1
219,713
1
2,751,737
12

1,030,073

4
11,572,898

50
33,356
-
659,817
3
44,201
-
-
-

24,192

-

761,566

3
12,334,464

53

5,574,030

24

5,913,183

25
24,217
-
203,879
1

51,766

-

279,862

1

(817,071)

(3)
10,950,004

47

68,760

-
11,018,764

47
$ 23,353,228
100

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

(With Deloitte & Touche auditors’ report dated March 26, 2021)

125

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 5, 22, 25 and 32)

OPERATING COSTS (Notes 11, 26 and 32)

GROSS PROFIT

OPERATING EXPENSES (Notes 4, 23, 26 and 32)
Marketing
General and administrative
Research and development

Total operating expenses

OTHER OPERATING INCOME AND EXPENSES
(Notes 12 and 21)

INCOME FROM OPERATIONS

NON-OPERATING INCOME AND EXPENSES
(Notes 4, 13, 14, 15, 26 and 32)
Other gains and losses
Gains on disposal assets
Finance costs
Interest income
Other income
Share of loss of associates

Total non-operating income and expenses

PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4, 5 and 27)

NET PROFIT

OTHER COMPREHENSIVE INCOME (LOSS)
(Notes 4, 23, 24 and 27)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans
Unrealized gain (loss) on investments in equity
instruments at fair value through other
comprehensive income
Income tax relating to items that will not be
reclassified subsequently

 2020
Amount
%
$ 25,995,735 100

23,264,066
90


2,731,669
10

634,121
2
982,872
4

1,073,999

4


2,690,992
10


-

-


40,677

-

(180,282) (1)
343,491
1
(75,418)
-
99,471
-
201,253
1

(10,024)

-


378,491

1

419,168
1
353,218

1


65,950

-

948
-
(110)
-

(189)

-


649

-
 2019


































Amount
%
$ 28,291,303 100

25,196,020
89

3,095,283
11

618,966
2

996,408
4

942,356

3

2,557,730

9

(523,362)
(2)

14,191

-

(182,404) (1)

-
-

(103,890)
-

151,051
-

230,488
1

(21,230)

-

74,015

-

88,206
-

35,145

-

53,061

-

7,484
-

1,933
-

(1,497)

-

7,920

-
(Continued)

126

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Items that may be reclassified subsequently to
profit or loss:
Exchange differences on translating foreign
operations

Income tax related to components of other
comprehensive income


Other comprehensive income (loss) for the year,
net of income tax

TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR

NET PROFIT ATTRIBUTABLE TO:
Owners of the Company

Non-controlling interests


TOTAL COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO:
Owners of the Company

Non-controlling interests


EARNINGS PER SHARE
(NEW TAIWAN DOLLARS; Note 28)

Basic

Diluted
 2020
Amount
%
$ (8,581)
-

8,202

-


(379)

-


270

-

$ 66,220

-

$ 62,084
-

3,866

-

$ 65,950

-

$ 63,768
-

2,452

-

$ 66,220

-

$ 0.11
$ 0.11		 2019























Amount
%
$ (186,657)
-

36,413

-

(150,244)

-

(142,324)

-
$ (89,263)

-
$ 45,779
-

7,282

-
$ 53,061

-
$ (91,951)
-

2,688

-
$ (89,263)

-
$ 0.08
$ 0.08
$ $
$ $
$ $
$ $
$ $


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

(With Deloitte & Touche auditors’ report dated March 26, 2021)

(Concluded)

127

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(In Thousands of New Taiwan Dollars)		 Equity Attributable to Shareholders of the Parent (Notes 4, 13, 23, 24 and 27)
Other Equity
Retained Earnings
Exchange
Differences
Financial Assets
at Fair Value
Through
Non-controlling
Share Capital Capital Surplus Legal Reserve Special Reserve
Unappropriated
Earnings
on Translating
Foreign
Operations
Other
Comprehensive
Income
Total
Interests
(Notes 4 and 24)
Total Equity
BALANCE AT JANUARY 1, 2019
$5,574,030
$5,881,933
$ 22,176
$ 185,310
$ 20,610
$ (673,607)
$ 253
$11,010,705
$ 160,659
$11,171,364
Appropriation of the 2018 earnings
Legal reserve
-
-
2,041
-
(2,041)
-
-
-
-
-
Special reserve
-
-
-
18,569
(18,569)
-
-
-
-
-
Other changes in capital surplus - from investments in
associates accounted for using the equity method
-
31,250
-
-
-
-
-
31,250
-
31,250
Net profit for the year ended December 31, 2019
-
-
-
-
45,779
-
-
45,779
7,282
53,061
Other comprehensive income (loss) for the year ended
December 31, 2019, net of income tax

-

-
-
-

5,987
(145,650)

1,933
(137,730)

(4,594)
(142,324)
Total comprehensive income (loss) for the year ended
December 31, 2019

-
-
-
-

51,766
(145,650)

1,933
(91,951)

2,688
(89,263)
Changes in non-controlling interest through capital
reduction by subsidiary
-

-
-
-

-

-

-

-
(94,587)
(94,587)
BALANCE AT DECEMBER 31, 2019
5,574,030
5,913,183
24,217
203,879
51,766
(819,257)
2,186
10,950,004
68,760
11,018,764
Appropriation of the 2019 earnings
Legal reserve
-
-
5,177
-
(5,177)
-
-
-
-
-
Special reserve
-
-
-
46,589
(46,589)
-
-
-
-
-
Other changes in capital surplus - dividends
unclaimed by shareholders
-
1,700
-
-
-
-
-
1,700
-
1,700
Net profit for the year ended December 31, 2020
-
-
-
-
62,084
-
-
62,084
3,866
65,950
Other comprehensive income (loss) for the year ended
December 31, 2020, net of income tax

-

-
-
-

759

1,035

(110)

1,684

(1,414)

270
Total comprehensive income (loss) for the year ended
December 31, 2020

-
-
-
-

62,843

1,035

(110)

63,768

2,452

66,220
BALANCE AT DECEMBER 31, 2020
$5,574,030
$5,914,883
$ 29,394
$ 250,468
$62,843
$(818,222)
$ 2,076
$11,015,472
$71,212
$11,086,684
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 26, 2021)

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars) (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Expected credit loss reversed on accounts/other/overdue and
other receivables
Net gain on fair value changes of financial assets at fair value
through profit or loss
Finance costs
Reversal of deferred revenue
Interest income
Dividend income
Share of loss of associates
(Gain) loss on disposal of property, plant and equipment, net
Gain on disposal of assets
Impairment loss recognized on financial assets
Impairment loss (reversed) recognized on non-financial asset
Unrealized net (gain) loss on foreign currency exchange
Net changes in operating assets and liabilities
(Increase) decrease in financial assets mandatorily classified as
at fair value through profit or loss
Notes receivable
Accounts receivables
Other receivables
Inventories
Prepayments
Other current assets
Net defined benefit assets
Accounts payables
Other payables
Provisions
Other current liabilities
Net defined benefit liabilities
Other liabilities

Cash (used in) generated from operations
Interest received
Dividends received
Interest paid
Income tax paid

Net cash (used in) generated from operating activities
 2020
$ 419,168

583,146
66,650
(8,278)
(6,316)
75,418
(6,862)
(99,471)
(312)
10,024
(11)
(343,491)
2,423
(4,305)
(9,945)
(166)
-
(181,764)
(105,540)
(813,681)
(63,015)
272,417
(3,988)
113,629
82,165
(13,465)
(224,601)
1,658
5,002

(253,511)
106,445
312
(52,146)
(195,212)

(394,112)
 2019
$ 88,206
599,224
102,274

(15,961)

(25,259)
103,890

-

(151,051)

-
21,230

12,065

-
-

27,599

233,459

80,806
12,181

721,222

(45,341)

589,886

(34,851)
(84,466)

(3,768)
(347,363)
(113,329)

(23,465)

(143,630)
-
43,654
1,647,212
150,849
-

(72,843)
(160,281)
1,564,937
(Continued)

129

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars) (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM INVESTING ACTIVITIES
Financial assets at amortized cost

Acquisition of associates
Payments for property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in other advances received
Increase in refundable deposits
Decrease in refundable deposits
Payments for intangible assets
Payments for investment properties
Increase in other non-current assets
Increase in prepayments for equipment

Net cash generated from (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in short-term borrowings
Guarantee deposits received
Guarantee deposits refunded
Repayment of the principal portion of lease liabilities
Dividends unclaimed by shareholders recognized as the capital reserve

Net cash (used in) generated from financing activities

EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH
HELD IN FOREIGN CURRENCIES

NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
 2020
$ (470,521)
(150)
(231,418)
27,578
2,315,500
(2,150)
1,328
(10,329)
(191)
(44,319)

(76,200)


1,509,128

(534,838)
5,642
(8,319)
(239,793)

1,700


(775,608)


(62,558)

276,850

4,252,632

$ 4,529,482
 2019
$ (701,263)

-

(352,406)
8,848
-

(3,363)
5,359

(11,080)

(390)

(33,698)

(249,229)

(1,337,222)

300,063
15,250

(10,122)

(240,647)

-

64,544

(215,020)
77,239

4,175,393
$ 4,252,632

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

(With Deloitte & Touche auditors’ report dated March 26, 2021)

(Concluded)

130

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Elitegroup Computer Systems Co., Ltd. (the “Company”) was established in May 1987 and began operations in June 1987. The Company designs, develops, and sells motherboards, desktop computers, notebook, tablet computers, barebone systems and add-on cards.

The ordinary shares of the Company have been listed on the Taiwan Stock Exchange since September 21, 1994.

The consolidated financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors and authorized for issue on March 22, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

As of date the consolidated financial statements were authorized for issue, the initial application of IFRSs endorsed and issued into effect by the FSC did not have material impact on the Group’s accounting policies.

  • b. The IFRSs endorsed by the FSC for application starting from 2021
New IFRSs
Amendments to IFRS 4 “Extension of the Temporary Exemption from
Applying IFRS 9”

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 “Interest Rate
Benchmark Reform - Phase 2”

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”
 Effective Date
Announced by IASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

131

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs
“Annual Improvements to IFRS Standards 2018-2020”

Amendments to IFRS 3 “Reference to the Conceptual
Framework”

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”

Amendments to IFRS 17

Amendments to IAS 1 “Classification of Liabilities as Current
or Non-current”

Amendments to IAS 1 “Disclosure of Accounting Policies”

Amendments to IAS 8 “Definition of Accounting Estimates”

Amendments to IAS 16 “Property, Plant and Equipment -
Proceeds before Intended Use”

Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling
a Contract”
 Effective Date
Announced by IASB
(Note)
January 1, 2022 (Note 2)
January 1, 2022 (Note 3)
To be determined by IASB
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2023 (Note 6)
January 1, 2023 (Note 7)
January 1, 2022 (Note 4)
January 1, 2022 (Note 5)

  • Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.

  • Note 2: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.

  • Note 3: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

  • Note 4: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

  • Note 5: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

  • Note 6: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

  • Note 7: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

132

  • 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulate that, when the Group sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate or joint venture, the gain or loss resulting from the transaction is recognized in full. Also, when the Group loses control of a subsidiary that contains a business but retains significant influence or joint control, the gain or loss resulting from the transaction is recognized in full.

Conversely, when the Group sells or contributes assets that do not constitute a business to an associate or joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated. Also, when the Group loses control of a subsidiary that does not contain a business but retains significant influence or joint control over an associate or a joint venture, the gain or loss resulting from the transaction is recognized only to the extent of the Group’s interest as an unrelated investor in the associate or joint venture, i.e., the Group’s share of the gain or loss is eliminated.

  • 2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Group shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Group will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Group must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Group’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Group’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

  • 3) Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 “Inventories”. Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The Group will restate its comparative information when it initially applies the aforementioned amendments.

  • 4) Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

The amendments specify that when assessing whether a contract is onerous, the “cost of fulfilling a contract” includes both the incremental costs of fulfilling that contract (for example, direct labor and materials) and an allocation of other costs that relate directly to fulfilling contracts (for example, an allocation of depreciation for an item of property, plant and equipment used in fulfilling the contract). Upon initial application of the aforementioned amendments, the Group recognizes the cumulative effect of retrospective application in retained earnings.

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

133

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  • 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  • 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

  • 3) Level 3 inputs are unobservable inputs for the asset or liability.

c. Classification of current and non-current assets and liabilities

Current assets include:

  • 1) Assets held primarily for the purpose of trading;

  • 2) Assets expected to be realized within 12 months after the reporting period; and

  • 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

  • 1) Liabilities held primarily for the purpose of trading;

  • 2) Liabilities due to be settled within 12 months after the reporting period; and

  • 3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

134

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries). Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statements of comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company. All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of the parent.

See Note 12 and Tables 6 and 7 for details on subsidiaries, including the percentages of their ownership and main businesses.

e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations (including the subsidiaries and associates in other countries or subsidiaries that use different currencies from the functional currency of the Company) are translated into the New Taiwan dollar using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests, as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

135

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to noncontrolling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

f. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

g. Investment in associates

An associate is an entity over which the Group has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates attributable to the Group.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the

136

investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate directly disposed of the related assets or liabilities.

When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’s consolidated financial statements only to the extent that interests in the associate are not related to the Group.

h. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Except for freehold land which is not depreciated, the depreciation of property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties include right-of-use assets. Investment properties also include land and equipment held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

Investment properties acquired through leases were initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made on or before the commencement date, plus initial direct costs incurred and an estimate of costs needed to restore the underlying assets, less any lease incentives received. These investment properties are subsequently measured at cost less accumulated depreciation and accumulated impairment loss and adjusted for any remeasurement of the lease liabilities.

All the depreciation are recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

j. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

137

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (CGU) or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a CGU was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a CGU and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the relative values of the operation disposed of and the portion of the CGU retained.

k. Intangible assets

  • 1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization method are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis.

2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

  • l. Impairment of property, plant and equipment, right-of-use assets and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of any impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss is recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (deducting amortization or depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

138

m. Financial Instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

  • 1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

  • a) Measurement categories

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and equity instruments at FVTOCI.

  • i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 31.

  • ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

  • i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, accounts receivables at amortized cost, other receivables and overdue receivables, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

139

  • i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

  • ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits and repurchase agreements collateralized by bonds with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

  • iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

  • b) Impairment of financial assets and contract assets

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivables).

The Group always recognizes lifetime expected credit losses (ECLs) for accounts receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purpose, the Group considers the following situation as induction that a financial assets is in default (without taking into account any collateral held by the Group):

  • Internal or external information shows that the debtor is unlikely to pay its creditors.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their

140

carrying amounts through a loss allowance account.

  • c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

  • 2) Equity instruments

Debt and equity instruments issued by the Group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by the Group entity are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Group’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

  • 3) Financial liabilities

  • a) Subsequent measurement

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gain or loss arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any interest or dividend paid on the financial liability. Fair value is determined in the manner described in Note 31.

  • b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

n. Provisions

Provisions are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Warranties

141

Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Group of the expenditures required to settle the Group’s obligations.

o. Revenue recognition

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

  • 1) Revenue from the sale of goods

Revenue from the sale of goods mainly comes from sales of computer equipment. Sales of computer equipment are recognized as revenue when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Revenue and accounts receivables are recognized concurrently.

  • 2) Revenue from the rendering of services

Revenue from the rendering of services mainly comes from the maintenance services of computer equipment. The effort of technical personnel is required to perform maintenance services. Since the length of the maintenance service provided to each contract is only for a short duration, the Group recognizes revenue upon completion of service contracts.

p. Leasing

At the inception of a contract, the Group assesses whether the contract is, or contains, a lease.

  • 1) The Group as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

When the Group subleases a right-of-use asset, the sublease is classified by reference to the right-ofuse asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Group, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Group assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

142

  • 2) The Group as lessee

The Group recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the consolidated balance sheets. With respect to the recognition and measurement of rightof-use assets that meet the definition of investment properties, refer to caption i for the accounting policies of investment properties.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Group remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the consolidated balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

q. Government grants

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attached to them and that the grants will be received.

Government grants related to income are recognized in other income on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase,

143

construct or otherwise acquire non-current assets are recognized as deferred revenue from the carrying amount of the relevant assets and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they are received.

r. Employee benefits

  • 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

  • 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

s. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current taxes

Income tax payable (recoverable) is based on taxable profit (loss) for the year determined according to the applicable tax laws of each tax jurisdiction.

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

  • 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carry forward

144

and unused tax credits for research and development expenditures, and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

  • 3) Current and deferred tax for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Group considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

  • a. Estimated impairment of financial assets

The provision for impairment of accounts receivables, investments in debt instruments, and financial guarantee contracts is based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 10. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

145

b. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

c. Impairment of goodwill

Determining whether the goodwill is impaired requires an estimation of the value in use of the cashgenerating units which are expected to benefit from the synergies of the related combination and to which the goodwill has been allocated since the acquisition date. The calculation of the value in use requires management to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

d. Income taxes

The realizability of deferred tax assets mainly depends on whether sufficient future profit or taxable temporary differences will be available. In cases where the actual future profit generated is less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a reversal takes place.

e. Recognition and measurement of provisions

The Group estimates the cost of product warranties at the time the revenue is recognized, and the estimation is based on the quantities of products still under warranty, and those products’ historical and expected repair rate, as well as unit repair costs. Management continuously reviews the estimation used and appropriately revises it if needed, any changes of the above assumptions may have a material impact on the estimation of the provision for the expected cost of product warranties.

6. CASH AND CASH EQUIVALENTS

Petty cash and foreign cash on hand

Checking accounts and demand deposits
Cash equivalents (investments with original maturities of less than 3
months)
Time deposits
Repurchase agreements collateralized by bonds

 December 31 December 31


2020
$ 891

1,690,919
2,780,712

56,960

$ 4,529,482
 2019
$ 1,209
1,793,542
2,307,981

149,900
$ 4,252,632

The interest rates for time deposits with original maturities of less than three months were ranging from 0.10% to 2.80% and 0.59% to 2.33% as at December 31, 2020 and 2019, respectively.

146

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-current
Financial assets mandatorily classified as at FVTPL
Non-derivative financial assets
Mutual funds
Financial assets at FVTPL-non-current
Financial assets mandatorily classified as at FVTPL
Non-derivative financial assets
Foreign unlisted shares
Domestic unlisted shares		 December 31
2020
$ 612,732

December		 2019
$ 608,017
31


2020
$ 25


41,677

$ 41,702
 2019
$ 8

44,100
$ 44,108

The Group entered into cross-currency swap contracts to manage exposures to exchange rate and interest rate fluctuations of foreign currency denominated assets and liabilities. As of December 31, 2020, it did not hold any outstanding derivative financial products. The investment income from derivative financial products for the year ended December 31, 2020 was $11,133 thousand. However, those derivative financial products did not meet the criteria of hedge effectiveness and, therefore, were not accounted for using hedge accounting. (December 31, 2019: None).

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Investment in Equity Instruments at FVTOCI

Equity instruments
Non-current
Domestic investments
Listed shares and emerging market shares
Ordinary shares - MiTAC Holdings Corporation		 December 31 December 31
2020
$ 10,135		 2019
$ 8,896

The investment in equity instruments is not held for trading. Instead, it is held for medium to long-term strategic purposes. Accordingly, the management elected to designate the investment in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes.

147

9. FINANCIAL ASSETS AT AMORTIZED COST

Current
Domestic investments
Time deposits with original maturity of more than 3 months (a)

Repurchase agreements collateralized by bonds with original maturities
of more than 3 months (a)
Pledged time deposits (b)

 December 31 December 31


2020
$ 2,485,857

1,433,249

4,093

$ 3,923,199
 2019
$ 3,142,359
301,599

7,387
$ 3,451,345

  • a. The interest rates for time deposits with original maturities of more than 3 months were ranging from 0.30% to 2.80% and 0.63% to 2.35% as at December 31, 2020 and 2019, respectively.

  • b. Refer to Note 33 for information relating to investments in financial assets at amortized cost pledged as security.

  • c. Refer to Note 10 for information relating to their credit risk management and impairment.

10. ACCOUNTS RECEIVABLES, OTHER RECEIVABLES AND OVERDUE RECEIVABLES

Accounts receivables
At amortized cost
Gross carrying amount - third parties - operating

Less: Allowance for impairment loss

At amortized cost
Gross carrying amount - related parties - operating


Other receivables
Value-added tax refund receivable

Tax refund receivable
Others
Less: Allowance for impairment loss


Overdue receivables
Overdue receivables

Less: Allowance for impairment loss

 **December 31 ** **December 31 **









2020
$ 4,259,627


(2,551)

4,257,076

258,909

$ 4,515,985

$ 72,138

69,363
65,921

(20,886)

$ 186,536

$ 2,941,558


(2,898,838)

$ 42,720
 2019
$ 4,195,198

(8,471)
4,186,727

138,008
$ 4,324,735
$ 41,708
59,620
61,126

(21,717)
$ 140,737
$ 3,141,358

(3,096,358)
$ 45,000

148

a. Accounts receivables

Before accepting a new customer, the Group takes both the client evaluation results generated by the internal system and the evaluation report provided by the external hedging institution into consideration to measure the potential customer’s credit quality and define the customer’s credit limit. Customer credit limits and ratings are reviewed twice a year. For fair presentation of the accounts receivable, the Group reviews the aging and recovery of accounts receivable every week.

The average credit period of sales of goods was 30 days to 120 days. No interest was charged on accounts receivables since the credit period is short. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivables. The expected credit losses on accounts receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, and adjusted for general economic conditions of the industry in which the debtors operate. Based on the Group’s historical credit loss experience which shows different loss patterns for different customer segments, the provision for loss allowance based on past due status is further distinguished according to the Group’s different customer base.

The Group recognized an allowance for impairment loss of 100% against accounts receivables when there is information indicating that the debtor is in severe financial difficulty, and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation, or when the accounts receivables are not recoverable. For the uncollectible accounts receivables, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivables based on the Group’s provision matrix.

December 31, 2020


Gross carrying amount

Loss allowance (Lifetime
ECLs)


Amortized cost

December 31, 2019


Gross carrying amount

Loss allowance (Lifetime
ECLs)


Amortized cost
 Not Past Due
$ 4,220,952

-

$ 4,220,952

Not Past Due
$ 4,147,139

-

$ 4,147,139
 1 to 60 Days

$ 296,149

(2,048)

$ 294,101

1 to 60 Days

$ 105,102

(661)

$ 104,441
 61 to 90 Days 91 to 180 Days Over 180 Days
$ 941 $ 19 $ 475

(19)

(9)

(475)

$ 922
$ 10
$ -

61 to 90 Days 91 to 180 Days Over 180 Days
$ 7,667 $ 8,212 $ 65,086

-

(112)

(7,698)

$ 7,667
$ 8,100
$ 57,388
 Total
$ 4,518,536

(2,551)
$ 4,515,985
Total
$ 4,333,206

(8,471)
$ 4,324,735

149

The movements of the loss allowance of accounts receivables were as follows:

Balance at January 1

Less: Net remeasurement of loss allowance reversed
Reclassification
Foreign exchange gains and losses

Balance at December 31
 2020
$ 8,471

(5,913)
-

(7)

$ 2,551
 2019
$ 37,505
(2,520)
(26,681)

167
$ 8,471

b. Other receivables

For other receivables that have indications of impairment, the Group recognizes loss allowance in full amount. The movements of the loss allowance of other receivables were as follows:

Balance at January 1

Foreign exchange gains and losses

Balance at December 31
 2020
$ 21,717


(831)

$ 20,886
 2019
$ 22,124

(407)
$ 21,717

c. Overdue receivables

For overdue receivables that have the indications of impairment, the Group recognizes loss allowance at full amount after deducting the value of related collateral. The movements of the loss allowance of other receivables were as follows:

Balance at January 1

Less: Amount written off
Less: Net remeasurement of loss allowance reversed
Reclassification
Foreign exchange gains and losses

Balance at December 31
 2020
$ 3,096,358

(50,702)
(2,365)
-

(144,453)

$ 2,898,838
 2019
$ 3,167,033

(11,046)

(13,441)
26,681

(72,869)
$ 3,096,358

11. INVENTORIES

Finished goods

Work in progress
Raw materials

 December 31 December 31


2020
$ 1,239,650

137,942

2,188,637

$ 3,566,229
 2019
$ 1,186,796
136,467

1,418,052
$ 2,741,315

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019, were $23,264,066 thousand and $25,196,020 thousand, respectively. The cost of goods sold for the years ended December 31, 2020 and 2019 included reversal of inventory write-down of $4,305 thousand and inventory write-downs of $27,599 thousand, respectively.

150

12. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Name of Investor
Name of Subsidiary
Principal Activities
Elitegroup Computer Systems
Co., Ltd.
Elitegroup Computer Systems (HK)
Co., Limited
Sale of motherboards, computer peripheral products
and related components
Elitegroup Computer Systems
(Japan) Co., Ltd.
Sale of motherboards, notebook, computer peripheral
products and related components
Elitegroup Computer Systems
Holding Co., Ltd. (BVI)
Holding company
ECS Holding (America) Co. (USA) Holding company
Elitegroup Computer Systems
Korea Co., Ltd.
Sale of motherboards, maintenance and sales support
Dragon Asia Trading Co., Ltd.
(BVI)
Holding company
Unitop International Corp.
Holding company
Unity Investments Limited
Holding company
ECS Holding (HK) Co., Limited
Holding company
Elitegroup Technology (Thailand)
Co., Ltd.
Manufacture and sale of computer and computer
peripheral products
Dragon Asia Trading Co., Ltd.
(BVI)
Million Up Finance Limited
Holding company
Elitegroup Computer Systems
Holding Co., Ltd. (BVI)
Venture Well Holdings Limited
(BVI)
Holding company
Elitegroup Computer Systems
(HK) Co., Limited
Xun Rui Electron (Shenzhen) Co.,
Ltd.
Manufacture and maintenance of electrical
equipment and instrument, computer peripheral
products and cases
BeijingXunRunTechnology
Co., Ltd.
Manufacture and maintenance of electrical
equipment and instrument, computer peripheral
products and cases
ECS Holding (America) Co.
(USA)
Super ECS USA, Inc.
Sale of motherboards, computer peripheral products
and related components
Elitegroup Computer Systems Inc.
(USA)
Sale of motherboards, notebook, computer peripheral
products, related components and systems
assembled
Unitop International Corp.
Elitegroup Computer Systems (SIP)
Co., Ltd.
Research, development and manufacture of
notebook, tablets and related components
Unity Investments Limited
Unique Sino Limited
Investment holding
Million Up Finance Limited
Golden Elite Technology
(Shenzhen) Co., Ltd. (����
(��)����)
Manufacture, research and development of PCBs,
motherboards, systems, assembly of notebook,
tablets and peripheral products
Golden Elite Technology
(Shenzhen) Co., Ltd. (����
��(��)����)
Manufacture, research and development of PCBs,
motherboards, systems, assembly of notebook,
tables and peripheral products
Venture Well Holdings Limited Affirm International Limited (BVI) Holding company
(BVI)
Advazone International Limited
(BVI)
Holding company
Alpha Leader Limited (HK)
Trading of IC and electric components
Unique Sino Limited
ECS Trading (Shenzhen) Co., Ltd.
Wholesale, trade, maintenance and technical
consultation of computers and peripheral products
Affirm International Limited
(BVI)
Protac International Computer, S.L. Sale of computer peripheral products
Advazone International Limited
(BVI)
Beijing Advazone Electronic
Limited Company
Wholesale, maintenance and technical consultation
of computers and peripheral products and related
components
ECS Holding (HK) Co.,
Limited
ECS Digital Technology
(Shenzhen) Ltd.
Manufacture, research and development of PCBs,
motherboards, systems, assembly of notebook,
tablets and peripheral products
Golden Elite Technology
(Shenzhen) Co., Ltd. (����
��(��)����)
Manufacture, research and development of PCBs,
motherboards, systems, assembly of notebook,
tablets and peripheral products		 % of Ownership
December 31
2020
2019
Note
100.00
100.00
100.00
100.00
100.00
100.00
e
100.00
100.00

100.00
100.00
-
100.00
a
100.00
100.00
100.00
100.00
100.00
100.00
a, f
99.99
99.99
b
-
100.00
a
68.45
68.45
d, e
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
100.00
a
-
100.00
a
100.00
100.00
100.00
100.00
100.00
100.00
c
100.00
100.00
100.00
100.00
100.00
100.00
g
100.00
100.00
a, f
100.00
-
a

151

The subsidiaries listed above were included in the consolidated financial statements for the years ended December 31, 2020 and 2019. Although the financial statements of some subsidiaries which were undergoing liquidation or whose operations have ceased were not audited by the independent accountants, they would have no material effect on the Group’s consolidated financial statements for the years ended December 31, 2020 and 2019.

Other investment information is as follows:

  • a. The board of directors of the Company approved the Plan of Activating the Assets Located in People’s Republic of China (“Mainland Assets Activation Plan”) on April 7, 2017. And the Company entered into a contract with Ever Unicorn Estate Limited (the “Ever Unicorn”) in April 2017, which was to be executed in two sections.

  • 1) Transfer of interests in Dragon Asia:

After finishing the transfer of the operations and related assets and liabilities of Golden Elite Technology( ���� ), Ever Unicorn will make an estimated payment between RMB1,150,000 thousand and RMB1,375,000 thousand for a 100% equity interest in Dragon Asia.

  • 2) Relocation compensation for ECS Digital Technology’s operations:

ECS Digital Technology is expected to relocate its operations to another site during 2021 to 2023. A compensation of RMB2,500,000 thousand is expected to be paid by Ever Unicorn in accordance with the progress of the relocation.

The relocation income, after deducting the related relocation costs and expenses, will be used for landscaping, plant constructing, and equipment installing as well as for the funds required to operate for ECS Digital Technology.

Due to the modifications on transaction terms and payment arrangements, the board of directors of the Company approved and entered into a supplementary contract with Ever Unicorn on January 23, 2018.

In accordance with the supplementary contract, the transfer of interests in Dragon Asia was divided into two phases. During phase 1, the Company will complete the transfer of 52% interest in Dragon Asia to Ever Unicorn for RMB600,000 thousand. After the Company completed the stripping of other non-target assets and liabilities from Golden Elite Technology ( ���� ), with both parties reaching a consensus on the prerequisites including the change in procedure to the land category by Golden Elite Technology ( ���� ), phase 2 of the transaction will then commence. The Company will complete the transfer of remaining 48% interest in Dragon Asia to Ever Unicorn for RMB550,000 thousand.

The Company will be in negotiate the rest of the contract with Ever Unicorn if the land is not contained in the urban planning by the competent authority.

In order to cooperate with Mainland Assets Activation Plan, The board of directors of the Company approved to reduce the capital of Dragon Asia and Million Up on January 23, 2018, the total amount of capital reduction was US$69,327 thousand for both subsidiaries.

The Company obtained the phase 1 share price for RMB600,000 thousand, and recognized as other advances received (refer to Note 21) because the Company has not completed the transfer of significant risks and rewards of related assets as well as share transfer of 52% equity of Dragon Asia. The foregoing transaction of 52% equity of Dragon Asia had received a letter of approval from the Investment Commission, Ministry of Economic Affairs.

152

According to the contract signed with Ever Unicorn, the Company should strip non-target assets and liabilities from Golden Elite Technology ( ���� ). The board of directors of Golden Elite Technology ( ���� ) approved on April 26, 2018 to proceed with the splitting process, by means of transferring non-target assets and liabilities into newly registered company, Golden Elite Technology ( ����� � ). Golden Elite Technology ( ���� ) and Golden Elite Technology ( ������ ) will be 100% owned subsidiaries of Million Up Finance Ltd., and the original shareholders’ rights and interests shall not be affected.

In order to facilitate the splitting process, the board of directors of the Company approved the employees’ economic compensation of RMB113,963 thousand of Golden Elite Technology ( ���� ) on June 24, 2019 which was issued in 2020. Golden Elite Technology ( ���� ) completed the splitting process on July 1, 2019, and transferred non-target’s net assets of RMB 454,051 thousand to Golden Elite Technology ( ������ ) as capital.

Due to the adjustment to the investment structure, the board of directors of the Company approved the sales of 100% of Golden Elite Technology’s shares ( ������ ) to ECS Holding (HK) Co., Limited by Million Up Finance Limited on August 12, 2019. The transaction price will be determined according to Golden Elite Technology’s( ������ ) net value at the time of execution. The application for transferring the equity was approved by the Investment Commission, Ministry of Economic Affairs, Rule No. 10800244950, on May 4, 2020. On May 29, 2020, four parties (Dragon Asia, Million Up, ECS Holding (HK) Co., Limited And the Company) agreed to offset the creditor's rights and liabilities. The amounts used by the four parties to offset the creditor's rights and liabilities are based on (1) the amount of capital reduction received (paid) by the Company, Dragon Asia and Million Up; (2) the amount of capital increase that the Company owed to its subsidiary, ECS Holding (HK), which amounted to US$69,327 thousand; and (3) the amount received from selling 100% equity of Golden Elite Technology( ������ ) to ECS Holding (HK) and completion of the transfer of shares of Golden Elite Technology ( ������ ) to ECS Holding (HK).

Ever Unicorn requested the Company to transfer the remaining 48% shares of Dragon Asia according to the supplementary contract, the Company obtained the phase 2 share price for RMB550,000 thousand on August 25, 2020, which was recognized as other advanced receipts (refer to Note 21), and finished the 48% share transfer process of Dragon Asia at the same day. The foregoing transaction of 48% equity of Dragon Asia had received the a letter of approval from the Investment Commission, Ministry of Economic Affairs on September 29, 2020. After transferring all of the shares of Dragon Asia, the Company lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ), respectively.

As of the end of 2020, the Company had finished part of the transfer of significant risks and rewards of related assets after evaluating the agreement and the status of implementation, therefore the Company derecgnised the right-of-use assets, deferred income tax assets, and non current assets, which amount was NT$190,759 thousand, NT$627,104 thousand and NT$184,682 thousand, relatively, and derecgnised the unearned receipts of RMB315,453 thousand as the selling price to get a profit of NT$343,491 thousand, and recognized a tax expense of NT$288,248 thousand, refer to Note 15, 21, 27.

As of the end of 2020, the Company had not fully completed the transfer of significant risks and rewards of related assets, and the advance receipts of Ever Unicorn’s phase 1 share price were classified as other advance receipts.

The terms of the abovementioned trading contract stipulate that if the buyer or seller are involved in breach of contract, the non-defaulting party shall have the right to decide whether to terminate the contract, in addition to the actual damages and related expenses that the defaulting party should pay to the non-defaulting party.

153

  • b. The board of directors of the Company approved on December 24, 2018 to establish Elitegroup Technology (Thailand) Co., Ltd., and the registration was completed on January 18, 2019. The Company’s shareholding percentage is 99.99%. As of the end of December 31, 2020, the Company had invested THB367,500 thousand (approximately NT$360,898 thousand).

  • c. The board of directors of Alpha leader Limited (HK) approved the capital reduction to write off accumulated losses of Alpha leader Limited (HK) by US$6,955 thousand in November 2019, and returned the capital of US$10,000 thousand to its investor, Venture Well Holdings Limited (BVI).

  • d. The board of directors of Venture Well Holdings Limited (BVI) approved the reduction of its capital by US$10,000 thousand to its investors in December 2019. According to the proportion of shares held by Elitegroup Computer Systems Holding Co., Ltd. (BVI), the amount of capital reduction was US$6,845 thousand.

  • e. The board of directors of Elitegroup Computer Systems Holding Co., Ltd. (BVI) approved the reduction of its capital by US$6,845 thousand in June 2020, which was remitted back to the Company.

  • f. The board of directors of the Company approved Mainland Assets Activation Plan on April 7, 2017. It was approved by the board of directors that US$101,000 thousand be invested in a 100% owned subsidiary ECS Holding (HK) Co., Limited, and US$100,000 thousand be invested in ECS Digital Technology, a wholly-owned subsidiary of ECS Holding (HK) Co., Limited. The two aforementioned subsidiaries were legally registered in April and June 2017, respectively. The Company already remitted US$17,000 thousand to ECS Holding (HK) Co., Limited, US$5,500 thousand and US$10,000 thousand were then remitted to ECS Digital Technology by ECS Holding (HK) Co., Limited in 2017 and 2019, respectively.

  • g. The board of directors of Beijing Advazone Electronic Limited Company approved the liquidation in October 2020.

154

13. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Associates that are not individually material

IoTecha Corp.
Ordinary shares
Preference shares
FoxElite Computer System Co., Ltd.		 December 31 December 31




2020

$ -


-

-

150

$ 150
 2019
$ -

10,165
10,165

-
$ 10,165

Aggregate information of associates that are not individually material

The Group’s share of:
Loss from continuing operations
Other comprehensive income
Total comprehensive loss for the year		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ (10,024)


-

$ (10,024)
 2019
$ (21,230)

-
$ (21,230)

a. IoTecha Corp.

IoTecha Corp. is mainly engaged in the design and development of smart charging systems and software developments, of which 26.27% equity is held indirectly by the Company through the investment of ECS Holding (America) Co. (USA) for US$1,500 thousand during the year of 2016 and 2017. Iotecha Corp. increased its capital by cash in the first half of 2018, and ECS Holding (America) Co. (USA) increased its investment in Iotecha Corp. by US$625 thousand in May 2018; therefore, the shareholding percentage was increased to 30.49%. ECS Holding (America) Co. (USA) converted 1,250,005 shares from its originally held ordinary shares into 1,108,942 preference shares (IoTecha Corp. issued 3,726,402 preference shares) in 2018. After the transfer, ECS Holding (America) Co. (USA) held 2,000,000 ordinary shares (IoTecha Corp. issued 9,393,340 ordinary shares) and the shareholding percentage of ordinary shares was 21.29%. In December 2019, Iotecha Corp. increased its capital. ECS Holding (America) Co. (USA) subscribed for the newly-issued shares at a percentage different from its existing ownership, thereby causing a change in its existing ownership percentage to 15.38%. During the fourth quarter of 2020, Iotecha Corp. increased its capital by cash; however, ECS Holding (America) Co. (USA) subscribed for the newly-issued shares at a percentage different from its existing ownership, thereby causing a change in its existing ownership percentage to 19.62% (ordinary shares) and 14.47% (preference shares). However, ECS Holding (America) Co. (USA) is still a board member of IoTecha Corp, so it is accounted for using the equity method.

b. FoxElite Computer System Co., Ltd.

FoxElite Computer System Co., Ltd. is still in the process for registration of establishment on December 31, 2020, with NT$429 thousand of initial capital. The Company invested NT$150 thousand in July 2020 and had approximately 35% ownership.

155

14. PROPERTY, PLANT AND EQUIPMENT


Cost

Balance at January 1, 2020

Additions
Disposals
Transfers
Effect of foreign currency exchange
differences

Balance at December 31, 2020


Accumulated depreciation


Balance at January 1, 2020

Depreciation expenses

Disposals

Transfers

Effect of foreign currency exchange
differences

Balance at December 31, 2020


Accumulated impairment


Balance at January 1, 2020

Disposals

Effect of foreign currency exchange
differences

Balance at December 31, 2020

Carrying amounts at December 31, 2020

Cost
Balance at January 1, 2019

Adjustments on initial application of
IFRS 16

Balance at January 1, 2019 (restated)
Additions
Disposals

Effect of foreign currency exchange
differences

Balance at December 31, 2019


Accumulated depreciation

Balance at January 1, 2019

Adjustments on initial application of
IFRS 16

Balance at January 1, 2019 (restated)

Depreciation expenses
Disposals

Effect of foreign currency exchange
differences

Balance at December 31, 2019


Accumulated impairment


Balance at January 1, 2019

Disposals

Effect of foreign currency exchange
differences

Balance at December 31, 2019


Carrying amounts at December 31, 2019
 Buildings and
Improvements
$ 2,908,206

-
(3,193 )
-
29,170

2,934,183

1,828,910
127,275
(3,193 )
-
20,097

1,973,089

-
-
-

-

$ 961,094

$ 3,024,344

-

3,024,344
-
-
(116,138)

2,908,206

1,769,199
-

1,769,199
132,937
-
(73,226)

1,828,910

-
-
-

-

$ 1,079,296
 Equipment
Transportation
Equipment
$ 4,101,511
$ 21,609

458,425
1,441

(411,804 )
(2,160 )
(870 )
-
61,245

233

4,208,507

21,123

2,629,392
15,326
206,850
1,471

(347,656 )
(2,012 )

(897 )
-
39,479

147

2,527,168

14,932

74,215
224
(38,050 )
-
472

4

36,637

228

$ 1,644,702
$ 5,963

$ 4,280,619
$ 21,688

-

-

4,280,619
21,688
276,008
1,493

(289,323 )
(726 )
(165,793)

(846)

4,101,511

21,609

2,765,036
15,262
-

-

2,765,036
15,262
210,293
1,300

(237,340 )
(650 )
(108,597)

(586)

2,629,392

15,326

112,005
234

(35,770 ) -
-
-
(2,020)

(10)

74,215

224

$ 1,397,904
$ 6,059
 Assets under
Finance Lease
$ -

-

-
-
-

-

-
-

-
-
-

-

-
-
-

-

$ -

$ 6,479

(6,479)

-
-

-
-

-

1,312
(1,312)

-
-

-
-

-

-

-
-

-

$ -
 Other
Equipment
$ 914,750

57,255
(39,759 )
628
7,748

940,622

715,174
53,615
(36,418 )
864
6,609

739,844

10,838
(44 )
169

10,963

$ 189,815

$ 930,109

-

930,109
70,133
(61,229 )
(24,263)

914,750

733,308
-

733,308
56,406
(56,517 )
(18,023)

715,174

12,412
(88 )
(1,486)

10,838

$ 188,738
 Total
$ 7,946,076
517,121

(456,916 )
(242 )
98,396
8,104,435
5,188,802
389,211

(389,279 )
(33 )
66,332
5,255,033
85,277

(38,094 )
645
47,828
$ 2,801,574
$ 8,263,239
(6,479)
8,256,760
347,634

(351,278 )
(307,040)
7,946,076
5,284,117
(1,312)
5,282,805
400,936

(294,507 )
(200,432)
5,188,802
124,651

(35,858 )
(3,516)
85,277
$ 2,671,997

156

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings
Buildings 10 to 20 years
Improvements 2 to 15 years
Equipment 1 to 15 years
Transportation 4 to 5 years
Assets under finance lease 5 years
Other equipment 2 to 10 years

There were no capitalization of interests for the years ended December 31, 2020 and 2019.

In the meeting held on June 20, 2013, the Company’s shareholders authorized the board of directors to sell the headquarters land and building located in Neihu; thus, in December 2013, the Company signed a contract with a third party for the sale of these items and then leased them back under an operating lease. The rental period is 10 years from December 23, 2013 to December 22, 2023. The gain in which the selling price was in excess of fair value amounted to $581,747 thousand and is deferred and amortized periodically over the lease term. IFRS 16 has been applied since January 1, 2019 to reclassify unrealized sale and leaseback benefits to impairment of right-of-use assets. Please refer to Note 15.

Subsidiary Golden Elite Technology( ���� ) and Elitegroup Computer Systems (SIP) Co., Ltd. dealt with the equipment that had been impaired in 2020 and 2019, so the relevant accumulated impairments were excluded.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

Right-of-use assets
Carrying amounts
Land

Buildings
Machinery
Office equipment
Transportation equipment

 **December 31 **


2020
$ 571,757

156,633
917
273
8,333

$ 737,913
 2019
$ 857,953
205,006
2,914
570
12,854
$ 1,079,297

157


Additions to right-of-use assets
Depreciation charge for right-of-use assets
Land
Buildings
Machinery
Office equipment
Transportation equipment		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 25,866

$ 84,873

60,122
2,006
298

5,939

$ 153,238
 2019
$ 51,648
$ 91,060
63,320
4,234
298

4,727
$ 163,639

Except for the abovementioned additions, recognition of depreciation expenses, and the transfer of 100% of Dragon Asia’s equity, the ownership of certain right-of-use assets and significant risk and rewards had been transferred. The related right-of-use assets of $190,759 thousand were derecognized (refer to Note 12(a)). In addition, there was no major sublease or impairment of the right-of-use assets of the Group in 2020 and 2019.

The Company has been partially subleasing its headquarters located in Neihu under operating leases. The related right-of-use assets are presented as investment properties (as set out in Note 16). The amounts disclosed above with respect to the right-of-use assets do not include right-of-use assets that meet the definition of investment properties.

b. Lease liabilities

Carrying amounts
Current
Non-current		 December 31

2020
$ 230,609

$ 440,937
 2019
$ 219,713
$ 659,817

Range of discount rate for lease liabilities was as follows:

Buildings

Machinery
Office equipment
Transportation equipment		 **December 31 **
2020
2019
1.61%-4.65% 1.61%-4.65%
4.65%
4.65%
0.61%
0.61%
0.61%
0.61%

c. Material lease-in activities and terms

The Group leases certain land and building for the use of product manufacturing and office with lease terms of 3 to 50 years.

The lease of land located in People’s Republic of China is the land use rights of Elitegroup Computer Systems (SIP) Co., Ltd. and Golden Elite Technology (Shenzhen) Co., Ltd. ( ���� ). The Group does not have bargain purchase options to acquire the leasehold land and building at the end of the lease term. The lease of buildings in Taiwan is that the Company sold and leased back headquarters building located in Neihu in December 2013 (refer to note 14), through negotiating to pay rent by prepaying checks annually. The rental term is 10 years, and if the monthly rent of the first three years aligns with the floating rates of two-year time deposits of Chunghwa Post plus a few percentage points, the rent for the following month will consequentially increase. The monthly rents for the forth to seventh year and the eighth to tenth year are adjusted to increase by a certain multiplier. At the third month before expiration, if the Company intends to continue renting, it has the right of first refusal with the same renting terms, and

158

should negotiate related terms of contract extension. If both of them do not complete the negotiations by one month before the expiration, the Company is regarded as abandoning the right of first refusal, and the rental relations would be terminated automatically upon the completion of the contract. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Lease arrangement under operating lease for the leasing out of the freehold and subleases its investment properties are set out in Note 16.

properties are set out in Note 16.

Expenses relating to short-term leases
Expenses relating to low-value asset leases
Total cash outflow for leases		 For the Year Ended December 31


2020
$ 4,489

$ 2,540

$ (246,823)
 2019
$ 13,731
$ 3,080
$ (257,183)

The Group leases certain office and transportation equipment which qualify as short-term leases and lowvalue assets leases. The Group has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

The amount of cash outflow for leases disclosed above including the lease expense of charge for subleased investment properties.

16. INVESTMENT PROPERTIES

Cost
Balance at January 1, 2020

Additions

Balance at December 31, 2020

Accumulated depreciation
Balance at January 1, 2020
Depreciation expense
Balance at December 31, 2020
Accumulated impairment
Balances at January 1, 2020 and
December 31, 2020

Carrying amounts at December 31, 2020
 Land
Buildings and
Improvements
Right-of-use
Assets
$ 377,129
$ 155,206
$ 180,374


-

191

-


377,129

155,397

180,374

112,173
36,075

4,622

36,075


116,795

72,150


14,673

-

-

$ 362,456
$ 38,602
$ 108,224
 Total
$ 712,709

191

712,900
148,248

40,697

188,945

14,673
$ 509,282
(Continued)

159

Cost
Balance at January 1, 2019

Adjustments on initial application of
IFRS 16

Balance at January 1, 2019 (restated)
Additions
Reclassification

Balance at December 31, 2019

Accumulated depreciation
Balance at January 1, 2019
Depreciation expense
Reclassification
Balance at December 31, 2019
Accumulated impairment
Balances at January 1, 2019 and
December 31, 2019

Carrying amounts at December 31, 2019
 Land
Buildings and
Improvements
Right-of-use
Assets
$ 377,129
$ 154,816
$ -


-

-

124,874

377,129
154,816
124,874
-
390
-

-

-

55,500


377,129

155,206

180,374

107,587
-
4,586
30,063

-

6,012


112,173

36,075


14,673

-

-

$ 362,456
$ 43,033
$ 144,299
 Total
$ 531,945

124,874
656,819
390

55,500

712,709
107,587
34,649

6,012

148,248

14,673
$ 549,788

The investment properties held by the Group mainly consisted of buildings and improvements which are depreciated using the straight-line method over their estimated useful lives of 10 to 45 years and 3 to 10 years, respectively.

The investment properties held by the Group are located at Tamsui and Guandu; the fair values were not reliably determined because the market for comparable properties is inactive and alternative reliable measurements of fair value are not available.

Land and buildings included in investment properties were leased out for 3 to 7 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods for partial lease.

Right-of-use assets, the headquarters land and building located in Neihu, included in investment properties were leased out for 2 to 9 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

160

The maturity analysis of lease payments receivable under operating leases of investment properties was as follows:

Year 1
Year 2
Year 3
Year 4
Year 5 onwards
GOODWILL

Cost

Balance at January 1

Effect of foreign currency exchange differences

Balance at December 31
Accumulated impairment losses
Balances at January 1 and December 31

Carrying amounts at December 31
 December December 31
2020
2019
$ 69,266
$ 66,762
64,873
57,984
30,685
53,428
-
22,033

-

-
$ 164,824
$ 200,207
For the Year Ended December 31





2020
$ 1,007,117


(10,465)

996,652

(403,497)

$ 593,155
 2019
$ 1,012,245

(5,128)
1,007,117

(403,497)
$ 603,620

17. GOODWILL

The carrying amounts of goodwill allocated to cash-generating units are as follows:


Motherboard and barebone system business
Mobile product business		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 198,705


394,450

$ 593,155
 2019
$ 209,170

394,450
$ 603,620

Goodwill is the premium generated from the business combination or business acquisition of mobile products, motherboard and barebone system businesses.

Cash-generating units (CGUs) to which goodwill has been allocated, such as motherboards, barebone system businesses and mobile product businesses, are tested for impairment annually.

The calculation of the recoverable amount of the goodwill of the Group was based on their value in use. In this calculation, the Group used cash flow projections for a budget period that are based on the key asset’s remaining durable years, which is determined as 7 years. The cash flows beyond the five-year period have been extrapolated using a steady 2% to 3% per annum growth rate. In impairment tests made on December 31, 2020 and 2019, the CGUs used discount rates ranging from 12.12% to 13.36% and from 13.23% to 13.35% per annum, respectively.

161

Key assumptions and methods used to calculate the major data of the CGUs are as follows:

  • a. Estimate of the growth rate: The estimation of sales was based on the expected global future growth rate of the market trend for similar products.

  • b. Estimate of gross margin: The estimate was based on the actual ratio for 2020 and historical operating performance.

  • c. Estimate of operating profit: The operating expenses were estimated on the basis of the actual ratio of operating expenses to revenue for 2020.

The CGUs used each used the above key assumptions to calculate their recoverable amounts, which were higher than their carrying values as of December 31, 2020; thus, there was no indication of impairment.

18. OTHER INTANGIBLE ASSETS

Computer
Software
Cost
Balance at January 1, 2020 $ 57,930
Additions 10,329
Transfers (86)
Disposals (28,860)
Effect of foreign currency exchange differences
450
Balance at December 31, 2020
39,763
Accumulated amortization and impairment
Balance at January 1, 2020 43,832
Amortization expense 11,799
Disposals (28,860)
Effect of foreign currency exchange differences
388
Balance at December 31, 2020
27,159
Carrying amounts at December 31, 2020 $ 12,604
Cost
Balance at January 1, 2019 $ 52,898
Additions 11,796
Disposals (5,669)
Effect of foreign currency exchange differences
(1,095)
Balance at December 31, 2019
57,930
Accumulated amortization and impairment
Balance at January 1, 2019 28,836
Amortization expense 21,461
Disposals (5,669)
Effect of foreign currency exchange differences
(796)
Balance at December 31, 2019
43,832
Carrying amounts at December 31, 2019 $ 14,098

The amortization expense is recognized on a straight-line basis per annum at the following useful lives:

Computer software 1 to 5 years

162

19. SHORT-TERM BORROWINGS

Line of credit borrowings
 December 31 December 31
2020
$ 1,247,424
 2019
$ 1,798,800

The ranges of interest rate on bank loans were 0.75%-0.96% and 4.34%-4.70% per annum as of December 31, 2020 and 2019, respectively.

20. ACCOUNTS PAYABLE

Accounts payable
Third parties - operating
 December 31 December 31
2020
$ 4,280,803
 2019
$ 4,212,106

Accounts payable resulted mainly from the purchase of components, including CPUs, IC chip-sets, LCD panels, CD-ROM drives, hard disks, and memory modules.

21. OTHER LIABILITIES

Current
Other payables
Salaries and bonuses

Royalties
Import and export services
Service expenses
Employees economic compensation (Note 12)
Others


Other advances received (a) (Note 12)
 December 31 December 31



2020
$ 609,485

126,432
48,783
47,509
-
426,880

$ 1,259,089

$ 3,677,260
 2019
$ 623,373
107,988
37,528
62,899
2,038
368,157
$ 1,201,983
$ 2,751,737
(Continued)

163

Other liabilities
Financial guarantee contracts (b)

Contract liabilities (c)
Temporary credits
Others


Non-current
Deferred revenue
Arising from government grants
 December 31 December 31



2020
$ 546,459

225,748
18,954
14,312

$ 805,473

$ 41,794
 2019
$ 686,040
279,005
25,272
39,756
$ 1,030,073
$ 44,201
(Concluded)
  • a. The Company had completed the transfers of 52% and 48% interest in Dragon Asia in the amounts of RMB600,000 and RMB550,000 thousand according to the Phase 1 and Phase 2 of the Mainland Assets Activation Plan on March 27, 2018 and August 25, 2019, respectively.

After evaluating the agreement and the status of implementation, the Company derecognized the relevant assets and unearned receipts of RMB315,453 thousand as disposal price, and recognized a gain on disposal, refer to Note 12.

  • b. Under IFRS 15, the financial guarantee of quantity discount is not included in the provisions.

  • c. Contract liabilities are made up of unearned sales revenue.

164

22. PROVISIONS

Warranties

Balance at January 1, 2020
Additional provisions recognized
Usage
Reversing unused balances
Effect of foreign currency exchange differences
Balance at December 31, 2020		 December 31
2020
2019
$ 210,683
$ 224,299
Warranties
$ 224,299
93,896
(83,897)
(23,464)

(151)
$ 210,683

The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Group’s obligations for warranties under the legislation for the local sale of goods. The estimate has been made on the basis of historical warranty trends and may vary as a result of the use of new materials or altered manufacturing processes as well as other events affecting product quality.

23. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plan adopted by the Company in accordance with the Labor Standards Law is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the Bureau); the Company has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans are as follows:

Present value of the defined benefit obligation

Fair value of plan assets

Net defined benefit assets
 December 31 December 31


2020
$(178,071)
306,291

$ 128,220
 2019
$(171,264)
294,548
$ 123,284

165

Movements in net defined benefit assets (liabilities) are as follows:

Present Value of Net Defined
the Defined Benefit
Benefit Fair Value of the Liabilities
Obligation Plan Assets (Assets)
Balance at January 1, 2019 $ (166,918) $ 278,403 $ 111,485
Service cost
Current service cost (326) - (326)
Net interest (expense) income
(2,087)
3,501
1,414
Recognized in profit or loss
(2,413)
3,501
1,088
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 9,417 9,417
Actuarial gain (loss) - changes in financial
assumptions (8,083) - (8,083)
Actuarial gain (loss) - experience adjustments

6,150
-
6,150
Recognized in other comprehensive income
(1,933)
9,417
7,484
Benefits paid
-
3,227
3,227
Balance at December 31, 2019 (171,264)
294,548
123,284
(Continued)

166

Present Value of Present Value of
the Defined Net Defined
Benefit Fair Value of the Benefit Liabilities
Obligation Plan Assets (Assets)
Service cost
Current service cost $
(332)		 $ - $
(332)
Net interest (expense) income (1,499) 2,592 1,093
Recognized in profit or loss (1,831) 2,592 761
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 9,247 9,247
Actuarial gain (loss) - changes in demographic
assumptions (120) - (120)
Actuarial gain (loss) - changes in financial
assumptions (8,057) - (8,057)
Actuarial gain (loss) - experience adjustments (122) - (122)
Recognized in other comprehensive income (8,299) 9,247 948
Contributions from the employer - 3,227 3,227
Benefits paid 3,323 (3,323) -
Balance at December 31, 2020 $ (178,071) $ 306,291 $
128,220
(Concluded)

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

  • 1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.

  • 2) Interest risk: A decrease in the government and corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

  • 3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations are as follows:

Discount rate
Expected rate of salary increase		 **December 31 **
2020
2019
0.500%
0.875%
2.500%
2.500%

167

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s)
0.25% increase
0.25% decrease
Expected rate(s) of salary increase
0.25% increase
0.25% decrease		 December 31 December 31



2020
$ (5,427)

$ 5,659

$ 5,453

$ (5,260)
 2019
$ (5,446)
$ 5,685
$ 5,500
$ (5,298)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plan for the next year
Average duration of the defined benefit obligation		 December 31
2020
2019
$ 3,297
$ 3,285
12.3 years
12.9 years

24. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands)
Value of shares authorized

Number of shares issued and fully paid (in thousands)
Value of shares issued		 December 31 December 31



2020
1,750,000

$17,500,000


557,403

$ 5,574,030
 2019
1,750,000
$17,500,000

557,403
$ 5,574,030




Fully paid ordinary shares, with a par value of $10, carry one vote per share and a right to receive dividends.

168

b. Capital surplus

May be used to offset deficit, distributed as cash dividends, or
transferred to share capital*
Share premium

Treasury share transactions

May only be used to offset a deficit
Employee share options - expired

Dividends unclaimed by shareholders
Changes in percentage of ownership interest in associates

 December 31 December 31

2020
2019
$ 5,614,494 $ 5,614,494
216,663
216,663
(Continued)
December 31


2020
$ 38,735
13,741
31,250

$ 5,914,883
 2019
$ 38,735

12,041
31,250
$ 5,913,183
(Concluded)
  • Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year)

c. Retained earnings and dividend policy

In the annual shareholder meetings on June 20, 2019 and June 22, 2020, the amendments to the Company’s Articles of Incorporation (the “Articles”) was approved. According to the new amendment, the Company’s board of directors can propose surplus distribution and deficit compensation in compliance with Article 18 of the Article within six months after the end of the fiscal period. After approval by audit committee and board of directors, surplus distribution and deficit compensation can be implemented.

Under the dividends policy as set forth in the amended Articles, profits of the first six months in a fiscal year shall first be utilized for paying taxes, compensating accumulated deficits, appropriating employees’ compensation and directors’ remuneration, and setting aside 10% of the remaining profits unless the amount of legal reserve is equal to that of contributed capitals. After provision or reversal of special reserve in compliance with laws and regulations, remaining profits and retained earnings can be proposed to earning distribution by the Company’s board of directors. The proposal shall be approved by shareholders if earnings will be distributed by issuance of new shares, and approved by the Company’s board of directors if distributed in cash. Profits of the fiscal year shall first be utilized for paying taxes, compensating accumulated deficits, and setting aside 10% of the remaining profits unless the amount of legal reserve is equal to that of contributed capitals. After provision or reversal of special reserve in compliance with laws and regulations, remaining profits and retained earnings (including the first six months of retained earnings) can be proposed to earnings distribution by the Company’s board of directors. The proposal shall be approved by shareholders if earnings will be distributed by issuance of

169

new shares. According to the Article 240-5 of the Company Act, if two-thirds or more of all the directors attending the meeting and over half of attended directors approve the resolution, the Company can authorize the board of directors to appropriate accrued dividends or bonuses, part or of all of legal reserve and paid-in capital as stated in the Article 241-1 of the Company Act by cash, and a report shall be submitted to the shareholders’ meeting. Refer to Note 26(i) “Compensation of employees and remuneration of directors” for the distribution policy of compensation of employees and remuneration of directors under the revised Articles of Incorporation.

The Company’s dividend policy takes into account the results of the Company’s current and future development plans, investment environment, demand for funds, domestic and international competition, and shareholders’ benefits, etc. The annual distribution should be at least 50% of distributable earnings although the Company is allowed to make no distribution when the accumulated distributable earnings are less than 10% of the paid-in capital. The Articles also stipulate that the dividends can be distributed in cash or shares, whereby the distributed cash dividends are no less than 20% of the total dividends distributed.

Appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2019 and 2018 that had been resolved by the shareholders in their meetings on June 22, 2020 and June 20, 2019, respectively, were as follows:

Legal reserve
Special reserve		 Appropriation of Earnings
2019
2018
$ 5,177
$ 2,041
46,589
18,569		 Dividends Per Share(NT$)
2019
2018

$ -
$ -

-
-

The appropriations of earnings for 2020 approved in the shareholders’ meeting on March 22, 2021 are as follows:

Appropriation Dividends Per Dividends Per
of Earnings Share (NT$)
Legal reserve $ 6,284
Cash dividend 56,558
$		 0.1015

The Company’s board of directors resolved to distribute cash dividend for the year ended December 31, 2020, and the rest is subject to the resolution of the shareholders in the shareholders’ meeting to be held on June 22, 2021.

d. Unrealized gain (loss) on financial assets at FVTOCI

The Company recognized unrealized (loss) gain of $(110) thousand and $1,933 thousand in 2020 and 2019, respectively, due to change in fair value of financial assets at FVTOCI.

170

e. Non-controlling interests


Balance at January 1
Attributable to non-controlling interests:
Share of profit for the year
Subsidiary capital reduction
Exchange differences on translating the financial statements of
foreign entities

Balance at December 31
25. REVENUE

Revenue from contracts with customers
Revenue from sale of goods

Revenue from rendering of services

 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ 68,760
$ 160,659
3,866
7,282
-
(94,587)

(1,414)

(4,594)
$ 71,212
$ 68,760
For the Year Ended December 31


2020
$ 25,814,553
181,182

$ 25,995,735
 2019
$ 28,159,705

131,598
$ 28,291,303

Under IFRS 15, the Group will recognize revenue at the time of satisfying performance obligations, which consist of contracts entered into with customers for the goods or services delivered or provided.

The Group mainly produces and sells computer equipment. As the market for computer equipment launches new products frequently and the related price is highly volatile, the amount of expected discount is estimated using the most likely amount, by taking into consideration the situation of sales and the range of discount previously given.

Refer to Note 37 for information about segment revenue of the Group.

171

26. NET PROFIT (LOSS)

The components of net income are as follows:

a. Other gains and losses


Net foreign exchange loss

Net gain (loss) on disposal of property, plant and equipment
Net gain arising on financial assets designated as at FVTPL
Miscellaneous disbursements
Others
 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ (143,558)
11
21,213
(58,466)

518

$ (180,282)
 2019
$ (169,839)

(12,065)

36,722

(37,222)

-
$ (182,404)

b. Gain on disposal of assets


Gain on disposal of assets
Refer to Note 12 for explanation about gain on disposal of assets.		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 343,491
 2019
$ -

c. Finance costs


Interest on bank overdrafts and loans
Interest on lease liabilities
Other finance costs
Interest income

Bank deposits
Financial assets at amortized cost
Other interest income		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ 52,720
$ 72,421
19,014
24,486

3,684

6,983
$ 75,418
$ 103,890
For the Year Ended December 31
2020
$ 39,763
53,195
6,513
$ 99,471
 2019
$ 67,651
71,606
11,794
$ 151,051

d. Interest income

172

e. Other income


Rental income
Dividend revenue
Others		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 74,365

312
126,576

$ 201,253
 2019
$ 67,573
-

162,915
$ 230,488

f. Depreciation and amortization


Property, plant and equipment
Right-of-use assets
Investment properties
Prepayments
Other intangible assets
Other non-current assets
An analysis of depreciation by function
Operating costs
Operating expenses
Non-operating expenses

An analysis of amortization by function
Operating costs
Operating expenses		 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ 389,211
$ 400,936
153,238
163,639
40,697
34,649
21,970
34,310
11,799
21,461

32,881

46,503
$ 649,796
$ 701,498
$ 293,403
$ 311,140
249,046
253,435

40,697

34,649
$ 583,146
$ 599,224
(Continued)
For the Year Ended December 31
2020
2019
$ 46,350
$ 79,736

20,300

22,538
$ 66,650
$ 102,274
(Concluded)
2020
2019
$ 46,350
$ 79,736

20,300

22,538
$ 66,650
$ 102,274
(Concluded)

173

g. Operating expenses directly related to investment properties


Direct operating expenses from investment properties that
generated rental income
Direct operating expenses from investment properties that did not
generate rental income
h. Employee benefits expense

Post-employment benefits (Note 23)
Defined contribution plans

Defined benefit plans


Other employee benefits
Payroll
Labor and health insurance
Other employee costs


Total employee benefit expense

An analysis of employee benefit expense by function
Operating costs

Operating expenses

 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ 41,956
$ 35,921
-

-
$ 41,956
$ 35,921
For the Year Ended December 31








2020
$ 40,779
(761)


40,018

2,920,713
200,249

20,731


3,141,693

$ 3,181,711

$ 1,790,645

1,391,066

$ 3,181,711
 2019
$ 37,240

(1,088)

36,152

3,248,448

239,339

23,235

3,511,022
$ 3,547,174
$ 1,740,680

1,806,494
$ 3,547,174

174

i. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrued compensation of employees and remuneration of directors at rates of 6% and no higher than 0.6%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the year ended December 31, 2020 and 2019, which were approved by the Company’s board of directors on March 22, 2021 and March 20, 2020, respectively, are as follows:

Accrual rate

Employees’ compensation
Remuneration of directors
Employees’ compensation

Remuneration of directors		 For the Year Ended December 31
2020
2019
6.0%
6.0%
-
0.6%
For the Year Ended December 31		 For the Year Ended December 31 For the Year Ended December 31
2020
Cash
Shares
$ 23,431
$ -

-
-		 2019
Cash
Shares
$ 3,811
$ -
381
-

The remuneration of directors approved in the board of directors’ meeting on March 22, 2021 differed from those recognized in the consolidated financial statements for the year ended December 31, 2020. The differences were recorded as an adjustment to profit and loss in 2021.

Amounts approved in the board of directors’ meeting
Amounts recognized in the consolidated financial statements		 For the Year Ended
December 31, 2020
Employees’
Compensation
Remuneration
of Directors
$ 23,431
$ -
$ 23,431
$ 2,343

There is no difference between the actual amounts of compensation of employees and remuneration of directors and supervisors paid and the amounts recognized in the consolidated financial statements for the year of 2019 and 2018.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

175

27. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of income tax expense (benefit) are as follows:

For the Year Ended
2020
Current tax
In respect of the current year
$ 109,961

Adjustments for prior years
(30,862)
Regional income tax

683


79,782

Deferred tax

In respect of the current year
272,905
Adjustments for prior years

531


273,436

Income tax expense recognized in profit or loss
$ 353,218

A reconciliation of accounting profit and income tax expense is as follows:
For the Year Ended
2020
Profit before tax from continuing operations
$ 419,168

Income tax expense calculated at the statutory rate
$ 147,931

Nondeductible expenses in determining taxable income
1,634
Tax-exempt income
(546)
Unrecognized loss carryforwards
(12,136)
Tax preferences
-
Adjustment of deductible temporary difference in current year
260,094
Regional income tax
683
Adjustment of deferred tax from the prior years
(5,038)
Adjustments for prior years’ tax
(30,500)
Others

(8,904)

Income tax expense recognized in profit or loss
$ 353,218
 For the Year Ended For the Year Ended December 31
2019
$ 64,417
33,531

172

98,120
(57,413)

(5,562)

(62,975)
$ 35,145
December 31



2020
$ 419,168

$ 147,931

1,634
(546)
(12,136)
-
260,094
683
(5,038)
(30,500)

(8,904)

$ 353,218
 2019
$ 88,206
$ 29,223
5,277
(794)
1,351
(16,497)
-
295
(5,134)
33,025

(11,601)
$ 35,145

The applicable corporate income tax rate of used by the Group in the ROC is 20%, and the corporate surtax applicable to the unappropriated earnings is 5%. While the applicable tax rate used by subsidiaries in China is 25%, tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

The Group did not recognize the deferred income tax assets of $627,104 thousand from the completed transfer of Dragon Asia’s equity (refer to Note 12(a))

176

b. Income tax recognized directly in other comprehensive income

c.
Deferred tax
In respect of the current year
Translation of foreign operations
Remeasurement on defined benefit plans
Current income tax assets and liabilities
Current income tax liabilities
Income tax payable
 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ (8,202)
189
$ (8,013)
December		 2019
$ (36,413)

1,497
$ (34,916)
31
2020
$ 185,801
 2019
$ 134,187

177

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities are as follows:

For the year ended December 31, 2020

Deferred tax assets

Temporary differences
Unrealized loss on
inventory

Provisions

Gain on disposal of
property, plant and
equipment

Disposal of interest
in subsidiary

Allowance for
impairment loss

Difference in
estimated useful
lives of property,
plant and
equipment

Effect of foreign
currency exchange
differences

Loss on investment
in equity

Loss carryforwards
Others




Deferred tax liabilities


Temporary differences
Defined benefit plan
Financial assets at
FVTPL

Gain on investment
in equity


 Opening
Balance
Recognized
in Profit or
Loss
Recognized
in Other
Comprehen
sive
Income
Exchange
Differences
$ 36,099 $ 982 $ - $ 214
180,747
(30,063)
-
(26)
36,584
(9,201)
-
258,138
(24,749)
-
-
645,873
(598,339)
-
(6,437)
2,969
(12)
-
33
204,814
-
8,202
-
-
8,832
-
-
1,919
(148)
-
(91)

39,823

(21,140)

-

(287)

$ 1,406,966
$ (673,838)
$ 8,202
$ (6,594)

$ (24,657) $ (797) $ (189) $ -
(400)
(919)
-
-

(8,299)

(224,988)

-

-

$ (33,356)
$ (226,704)
$ (189)
$ -
Others
$ -


-
-

159,703

-

-

-

-

-

-


$ 159,703





$ -

-

-


$ -
 Closing
Balance
$ 37,295
150,658
27,383
393,092
41,097
2,990
213,016
8,832
1,680

18,396
$ 894,439
$ (25,643)
(1,319)

(233,287)
$ (260,249)

178

For the year ended December 31, 2019

Deferred tax assets
Temporary differences
Unrealized loss on inventory

Provisions
Gain on disposal of property, plant
and equipment
Disposal of interest in subsidiary
Allowance for impairment loss
Difference in estimated useful lives of
property, plant and equipment
Effect of foreign currency exchange
differences
Loss carryforwards
Others


Deferred tax liabilities
Temporary differences
Goodwill

Unrealized exchange gain
Defined benefit plan
Financial assets at FVTPL
Gain on investment in equity

 Opening
Balance
Recognized
in Profit or
Loss
Recognized in
Other
Comprehensive
Income
Exchange
Differences
$ 35,422
$ 1,857
$ -
$ (1,180 )
244,772
(64,013 )
-
(12 )
45,786
(9,202 )
-
-
258,138
-
-
-
671,871
-
-
(25,998 )
4,432
(1,344 )
-
(119 )
168,401
-
36,413
-
1,536
433
-
(50 )

46,392

(4,758)

-

(1,811)

$ 1,476,750
$ (77,027)
$ 36,413
$ (29,170)

$ (5,563 ) $ 5,563
$ -
$ -

(23,909 )
23,909
-
-
(22,297 )
(863 )
(1,497 )
-
-
(400 )
-
-

(120,092)

111,793

-

-

$ (171,861)
$ 140,002
$ (1,497)
$ -
 Closing
Balance
$ 36,099

180,747
36,584
258,138

645,873

2,969
204,814

1,919

39,823
$ 1,406,966
$ -
-
(24,657 )
(400 )

(8,299)
$ (33,356)
  • e. Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets
Deductible temporary differences
Allowance for doubtful accounts

Loss carryforwards
 December 31 December 31

2020
$ 86,781

$ 1,114,813
 2019
$ 104,429
$ 1,152,453

179

f. Information about unused loss carryforwards

As of December 31, 2020, loss carryforwards comprised of:

Elitegroup Computer Systems Inc. (USA), Elitegroup Computer Systems (HK) Co., Limited, Elitegroup Computer Systems (Korea) Co., Ltd., Elitegroup Computer Systems (Japan) Co., Ltd., Xun Rui Electronic (Shenzhen) Co., Ltd., ECS Trading (Shenzhen) Co., Ltd., Beijing Advazone Electronic Co., Ltd., Golden Elite Technology ( ���� ) and Elitegroup Computer Systems (SIP) Co., Ltd.

Unused Amount Unused Amount Expiry Year
$ 839,852 2020-2035
380,551 Unlimited duration
$ 1,220,403

180

g. Income tax assessments

The Company’s income tax returns through 2018, have been assessed by the tax authorities.

28. EARNINGS PER SHARE

EARNINGS PER SHARE

Basic earnings per share
Diluted earnings per share		 For Unit: NT$ Per Share
the Year Ended December 31
2020
$ 0.11
$ 0.11		 2019
$ 0.08
$ 0.08

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share are as follows:

Net Profit for the Year

For the Year Ended December 31
2020
2019
Profit for the period attributable to owners of the Company
$ 62,084
$ 45,779
Earnings used in the computation of basic and diluted earnings per share
$ 62,084
$ 45,779
Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)
For the Year Ended December 31
2020
2019
Weighted average number of ordinary shares used in the computation
of basic earnings per share
557,403
557,403
Effect of potentially dilutive ordinary shares:
Employee’s compensation

1,013

309
Weighted average number of ordinary shares used in the computation
of diluted earnings per share
558,416
557,712		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
557,403


1,013

558,416
 2019
557,403

309
557,712

If the Company offered to settle the compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

181

29. CAPITAL MANAGEMENT

The policy of the board of directors is to maintain a sound capital structure and the confidence of investors, creditors and market, in order to support the development of future operations.

The gearing ratio at end of the reporting period is as follows:

Debt

Less: Cash and cash equivalents (including cash and cash
equivalents in a disposal group held for sale)

Net debt
Equity

Total capital*

Net debt to equity ratio
 December 31 December 31




2020
$ 12,663,226
(4,529,482)

8,133,744

11,086,684

$ 19,220,428


42.32%
 2019
$ 12,334,464

(4,252,632)

8,081,832

11,018,764
$ 19,100,596

42.31%
  • Total capital is equivalent to total equity which includes capital, reserves, retained earnings, other equity and non-controlling interests of the Group plus net debt.

As of December 31, 2020, the Group’s capital management approach had not changed.

30. INFORMATION OF CASH FLOW

Non-cash Transaction

Except for those disclosed in other notes, the Group conducted the following non-cash transactions of investment activities for the year ended December 31, 2020 (December 31, 2019: None):

The Company disposed of 100% equity of Dragon Asia in August 2020 and derecognized the relevant assets (refer to Notes 12, 15 and 27). The Company received equity transfer price from Dragon Asia in 2018 and 2020 and recognized the amounts as unearned receipts; therefore, the Company derecognized the relevant assets based on the actual implementation progress and classified the relevant unearned receipts as disposal price, see Notes 12(1) and 21 for more information.

31. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments that are not measured at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values.

182

  • b. Fair value of financial instruments that are measured at fair value on a recurring basis 1) Fair value hierarchy
December 31, 2020
Financial assets at FVTPL
Mutual funds

Domestic unlisted shares
Foreign unlisted shares



Financial assets at FVTOCI
Domestic listed shares -
equity securities

December 31, 2019
Financial assets at FVTPL
Mutual funds

Domestic unlisted shares
Foreign unlisted shares


Financial assets at FVTOCI
Domestic listed shares -
equity securities
 Level 1
$ 612,732


-

-

$ 612,732

$ 10,135

Level 1
$ 608,017


-

-

$ 608,017

$ 8,896
 Level 2
$ -

-

-

$ -

$ -

Level 2
$ -

-

-

$ -

$ -
 Level 3
$ -

41,677

25

$ 41,702

$ -

Level 3
$ -

44,100

8

$ 44,108

$ -
 Total
$ 612,732
41,677

25
$ 654,434
$ 10,135
Total
$ 608,017
44,100

8
$ 652,125
$ 8,896

There were no transfers between Levels 1 and 2 in the current and prior periods.

  • 2) Reconciliation of Level 3 fair value measurements of financial instruments

Balance at January 1
Recognized in profit or loss (included in other gains and
losses)
Balance at December 31		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 44,108


(2,406)

$ 41,702
 2019
$ 44,118

(10)
$ 44,108

  • 3) Valuation techniques and inputs applied for Level 3 fair value measurement

  • a) The fair value of domestic unlisted shares are determined using the market approach and net value of investees’ major assets. The significant unobservable inputs used by the Company as of December 31, 2020 and 2019 was 10% of discount rate. If the inputs to the valuation model and discount rate were increased by 1% to reflect reasonably possible alternative assumptions while all other variables were held constant, the fair value of the shares would decrease by $463 thousand and $490 thousand, respectively.

  • b) The fair values of unlisted equity securities are determined using the closing price from public trading sessions and net value of investees’ major assets. The significant unobservable inputs used by the Company as of December 31, 2020 and 2019 was 10% of discount rate. If the inputs to the valuation model and discount rate were increased by 1% to reflect reasonably possible alternative assumptions while all other variables were held constant, the fair value of the shares would decrease by less than $1 thousand.

183

c. Categories of financial instruments

Financial assets
Financial assets at FVTPL
Designated as at FVTPL - current

Financial assets at amortized cost (1)
Financial assets at FVTOCI - equity instruments
Financial liabilities
Amortized cost (2)		 December 31
2020
2019
$ 654,434 $ 652,125
13,284,784
12,338,369
10,135
8,896
6,198,730
6,613,708

  • 1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, accounts receivable (including related parties), other receivables (excluding income tax refund receivables), overdue receivable and refundable deposits.

  • 2) The balances include financial liabilities measured at amortized cost, which comprise short-term loans, accounts payable, other payables, and guarantee deposit received.

d. Financial risk management objectives and policies

The Group’s major financial instruments include equity investments, accounts receivables, trade payables and borrowings. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Group sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Group’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Group did not enter into or trade financial instruments for speculative purposes.

The material financial activities were reviewed by the Group’s board of directors in accordance with the internal control system and related rules. The Group should implement the overall financial management objective as well as observe the levels of delegated authority and ensure that those with delegated authorities carry out their duties.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (refer to (a) below) and interest rates (refer to (b) below).

  • a) Foreign currency risk

The Group was exposed to foreign currency risk because it owned assets and liabilities which were denominated in foreign currencies. Exchange rate exposures are managed within approved

184

policy parameters by using financial instruments such as foreign exchange spot transactions, forward exchange contracts, etc.

For the Group, the main purpose of using forward exchange contracts is to eliminate the financial risks of currency exchange rates.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities (including those eliminated on consolidation) at the end of the reporting period are set out in Note 35.

Sensitivity analysis

The Group measured the risks of financial assets and liabilities with significant influence, and take the net position of outstanding foreign exchange forward contracts into consideration.

The Group was mainly exposed to the U.S. dollar.

The following table shows the Group’s sensitivity to a 5% increase and decrease in the New Taiwan dollar (the functional currency) against the U.S. dollar. The 5% sensitivity rate is used in reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency-denominated monetary items, for which their translation at the end of the reporting period is adjusted for a 5% change in foreign currency rates. A positive (negative) number below indicates an increase in pretax profit and other equity associated with the New Taiwan dollar, strengthening (weakening) by 5% against the relevant currency. For a 5% weakening (strengthening) of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pretax profit and other equity, and the balance below would be negative (positive).


Profit or loss
 U.S. Dollars Impact U.S. Dollars Impact U.S. Dollars Impact
For the Year Ended December 31
2020
$ (209,623)
 2019
$ (220,552)

b) Interest rate risk

The Group was exposed to fair value interest risk because entities in the Group hold financial assets and liabilities with fix rate, and the Group was exposed to cash flow interest rate risk because entities in the Group hold financial asset and liabilities with floating rate.

185

The carrying amounts of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period are as follows:

Fair value interest rate risk
Financial assets

Financial liabilities

Cash flow interest rate risk
Financial assets

Financial liabilities		 December 31
2020
2019
$ 6,663,523
$ 5,703,864
1,918,970
2,678,330
1,722,783
1,958,321
-
-

Sensitivity analysis

The sensitivity analysis below was determined based on the Group’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would increase by $17,228 thousand and $19,583 thousand, respectively. Had market interest rates been 100 basis points lower, the impact would have been negative but at the same amounts.

c) Other price risk

The Group was exposed to equity price risks through its investments in equity securities and mutual funds.

Sensitivity analysis

Sensitivity analysis was used to measure equity price risks at the end of the reporting period. Had the position of domestic and foreign equity investments been 5% higher/lower, the Group’s pre-tax profit for the years ended December 31, 2020 and 2019 would increase/decrease by $32,722 thousand and $32,606 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2020 and 2019 would have increased/decreased by $507 thousand and $445 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to the failure of counterparties to discharge an obligation and financial guarantees provided by the Group could arise from:

  • a) The carrying amount of the respective recognized financial assets as stated in the consolidated balance sheets; and

  • b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

186

The evaluation results generated by the internal system and the evaluation report provided by the external hedging institution are both taken into consideration before granting the appropriate credit line to counterparties. The counterparties’ transaction type, financial position and collaterals are also taken into consideration. All credit lines have expiration dates and are subject to reexamination before the granting of any extensions.

As of December 31, 2020 and 2019, the Group’s five largest customers accounted for 64% and 67% of total accounts receivable, respectively, and the concentration of credit risk was relatively insignificant for the remaining accounts receivable. After considering specific factors and conducting risk evaluation, the credit risks of the Group’s five largest customers would not have had any material impact on the Group.

3) Liquidity risk

The Group manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. Since the Group has sufficient equity and working capital, which ensure compliance with loan covenants, the Group has no liquidity risk.

The following tables show the Group’s remaining contractual maturities for its financial liabilities with agreed-upon repayment periods.

December 31, 2020

Non-derivative
financial liabilities
Accounts payable

Lease liabilities
Short-term debts

 Less than
1 Year
$ 4,280,803
243,971

1,247,424

$ 5,772,198
 2 to 3 Years
$ -

441,684

-

$ 441,684
 More than
3 Years
$ -

9,932

-

$ 9,932
 Total
$ 4,280,803

695,587

1,247,424
$ 6,223,814

Additional information about the maturity analysis for lease liabilities:

Less than
1 Year

Lease liabilities$ 243,971

December 31, 2019
Non-derivative
financial liabilities
Accounts payable

Lease liabilities
Short-term debts

 1 to 5 Years
$ 451,616

Less than
1 Year
$ 4,212,106
239,851

1,798,800
$ 6,250,757		 5 to 10
Years
10 to 15
Years
15 to 20
Years
$ -
$ -
$ -
2 to 3 Years
More than
3 Years
$ - $ -

464,036
221,482

-

-

$ 464,036
$ 221,482
 15 to 20
Years
$ -		 More than
20 Years
$ -
Total
$ 4,212,106

925,369

1,798,800
$ 6,936,275



187

Additional information about the maturity analysis for lease liabilities:

Lease liabilities Less than
1 Year
1 to 5 Years
$ 239,851
$ 685,518
 5 to 10
Years
$ -
 10 to 15
Years
$ -
 15 to 20
Years
$ -
 More than
20 Years
$ -

e. Offsetting financial assets and financial liabilities

The Group is eligible to present certain financial assets and financial liabilities on a net basis on the consolidated balance sheets since the offsetting criteria are met.

The tables below present the quantitative information on financial assets and financial liabilities that have been offset in the consolidated balance sheets.

December 31, 2020

December 31, 2020
Gross Amounts
of Recognized
Financial Net Amounts of
Gross Amounts Liabilities Financial Assets
of Recognized Offset in the Presented in the
Financial Assets Financial Assets Balance Sheets Balance Sheets
Accounts receivable $ 5,626,613
 $ (1,366,986)
 $ 4,259,627
Accounts receivable from related parties $
259,160
 $ (251)
 $ 258,909
Gross Amounts
 Gross Amounts
of Recognized		 Net Amounts of
Financial
of Recognized Financial Assets Liabilities
Financial Offset in the Presented in the
Financial Liabilities Liabilities Balance Sheets Balance Sheets
Accounts payable $ 5,647,789
 $ (1,366,986)
 $ 4,280,803
Accounts payable from related parties $
251
 $ (251)
 $ -

188

December 31, 2019

December 31, 2019
Gross Amounts of
Recognized Net Amounts of
Financial Financial Assets
Gross Amounts
Liabilities		 Presented in
of Recognized Offset in the the Balance
Financial Assets Financial Assets
Balance Sheets		 Sheets
Accounts receivable $
5,669,971		 $ (1,474,773)
 $ 4,195,198
Accounts receivable from related parties $
138,071		 $ (63)
 $ 138,008
Gross Amounts of Net Amounts of
Recognized Financial
Gross Amounts of Financial Assets Liabilities
Recognized Offset Presented in
Financial in the Balance the Balance
Financial Liabilities Liabilities Sheets Sheets
Accounts payable $
5,686,879		 $ (1,474,773)
 $ 4,212,106
Accounts payable from related parties $
63		 $ (63)
 $ -

32. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries that are related parties of the Company have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

  • a. Related party name and category
Related Party Name
Tatung Co.

Tatung System Technologies
Inc.

Tatung (Thailand) Co., Ltd.
Tatung Company of
America, Inc.

Central Research Technology
Co.

Forward Electronics Co.,
Ltd.

TISNet Technology Inc.

IoTecha Corp.
 Related Party Category
Investors with significant influence over the Group
Subsidiaries of the investors with significant influence over the
Group
Subsidiaries of the investors with significant influence over the
Group
Subsidiaries of the investors with significant influence over the
Group
Subsidiaries of the investors with significant influence over the
Group
Subsidiaries of the investors with significant influence over the
Group
Subsidiaries of the investors with significant influence over the
Group
Associates

189

b. Sales of goods

For the Year Ended December

Related Party Category
Investors with significant influence over the Group

Associates
Subsidiaries of the investors with significant influence over
the Group

 31


2020
$ 745,936

23,065
4

$ 769,005
 2019
$ 463,579
7,494
6,547
$ 477,620

The terms and conditions of sales transactions with related parties were not significantly different from those for third parties.

c. Purchases of goods

Related Party Category
Investors with significant influence over the Group
Subsidiaries of the investors with significant influence over the Group		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 944


716

$ 1,660
 2019
$ 314

-
$ 314

d. Receivables from related parties

Line Items
Related Party Category
Accounts receivable
Investors with significant influence over
the Group
Associates
Subsidiaries of the investors with
significant influence over the Group
Other accounts receivable Investors with significant influence over
the Group		 December 31



2020
$ 248,379

9,076

1,454

$ 258,909

$ 1,753
 2019
$ 131,603
2,289

4,116
$ 138,008
$ 696

The outstanding receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for receivables from related parties.

190

e. Payables to related parties

Line Items
Related Party Category
Other accounts
payable
Investors with significant influence
over the Group
Subsidiaries of the investors with
significant influence over the
Group

 December 31 December 31


2020
$ -

706

$ 706
 2019
$ 156
342
$ 498

The outstanding payables from related parties are unsecured and will be settled in cash.

  • f. Acquisition of other assets
Related Party Category
Line Items
Subsidiaries of the investors with
significant influence over the Group
Other intangible assets		 Purchase Price Purchase Price Purchase Price
For the Year Ended December 31
2020
$ -
 2019
$ 590
  • g. Acquisition of property, plant and equipment
Related Party Category
Line Items
Subsidiaries of the investors with
significant influence over the Group
Property, plant and
equipment		 Purchase Price Purchase Price Purchase Price
For the Year Ended December 31
2020
$ 1,374
 2019
$ 3,725

191

h. Lease agreement


Related Party Name
Tatung (Thailand) Co., Ltd.

Line Items
Related Party Name
Lease liabilities - current
Tatung (Thailand) Co., Ltd.
Lease liabilities - non-current
Tatung (Thailand) Co., Ltd.
Line Items
Related Party Category
Interest expenses
Subsidiaries of the investors with
significant influence over the Group
Other operating expenses
Related Party Category
Line Item
Subsidiaries of the investors with
Research material
significant influence over the Group
Repair expenses
Abnormal quality
Miscellaneous expense
Service expense
Product repair expenses
Other
Investors with significant influence
Advertisement expense
over the Group
Service expense
Miscellaneous expense
Other		 Purchase Price
For the Year Ended December 31
2020
2019
$ 2,245
$ 32,856
December 31		 Purchase Price
For the Year Ended December 31
2020
2019
$ 2,245
$ 32,856
December 31		 Purchase Price
For the Year Ended December 31
2020
2019
$ 2,245
$ 32,856
December 31
For the Year Ended
2020
$ 2,245

December
2020
2019
$ 11,179
$ 7,583
$ -
$ 13,104
For the Year Ended December 31
2020
2019
$ 597
$ 967
For the Year Ended December 31





2020
$ 470

229
54
15
11
-

-

$ 779

$ -

-
58

21

$ 79
 2019
$ -
8,564
-
-
600
1,136

23
$ 10,323
$ 296
95
-

47
$ 438
  • i. Other operating expenses

192

j. Other transactions with related parties


Related Party Category
Line Item
Associates
Other revenue
Investors with significant influence over
the Group
Other revenue		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 206


118

$ 324
 2019
$ -

3
$ 3

k. Compensation of key management personnel


Short-term employee benefits
Post-employment benefits		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 69,759


718

$ 70,477
 2019
$ 69,755

702
$ 70,457

The remuneration of directors and key executives was determined by the remuneration committee with regard to the performance of individuals and market trends.

33. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as guarantees for the tariff of imported raw materials:

Pledged deposits (classified as financial assets at amortized cost) December 31 December 31
2020
$ 4,093		 2019
$ 7,387

34. OTHER EVENTS

The Group was affected by the COVID-19 pandemic. The operations of subsidiaries in mainland China were delayed in the first quarter of 2020. However, they have returned to normal level at the end of March 2020. Therefore, the Group considers that the impact of COVID-19 is not significant.

According to the announcement by the local government, the Group’s subsidiaries in mainland China are eligible for tax reduction to cover the costs of retirement insurance, unemployment compensation and injury insurance from February to June 2020.

193

35. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Group entities’ significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between the foreign currencies and respective functional currencies are as follows:

December 31, 2020
Foreign
Currency Carrying
(In Thousands) Exchange Rate Amount
Financial assets
Monetary items
USD $
412,345
28.48
 $ 11,743,582
HKD 982
3.673		 3,606
JPY 7,527
0.276		 2,080
RMB 340,874
4.365		 1,487,916
Non-monetary items
Financial assets held for trading
USD 5,106
28.48		 145,417
(Continued)
Foreign
Currency Carrying
(In Thousands) Exchange Rate Amount
Financial liabilities
Monetary items
USD $
265,137
28.48
 $
7,551,113
HKD 3,972
3.673		 14,588
JPY 5,706
0.276		 1,577
(Concluded)

194

December 31, 2019

Foreign
Currency Carrying
(In Thousands) Exchange Rate
Amount
Financial assets
Monetary items
USD $
413,311
29.98
 $ 12,391,051
HKD 1,079
3.849		 4,153
JPY 1,586
0.276		 438
RMB 125
4.297		 536
Non-monetary items
Financial assets held for trading
USD 2,105
29.98		 63,104
Financial liabilities
Monetary items
USD 266,178
29.98		 7,980,014
HKD 3,596
3.849		 13,841
JPY 5,257
0.276		 1,451

For the years ended December 31, 2020 and 2019, realized and unrealized net foreign exchange losses gains were $143,558 thousand and $169,839 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

36. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

  • 1) Financing provided to others (None)

  • 2) Endorsements/guarantees provided (Table 1)

  • 3) Marketable securities held (Table 2)

  • 4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital (Table 3)

195

  • 5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital (None)

  • 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)

  • 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 4)

  • 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 5)

  • 9) Trading in derivative instruments (Table 7)

  • 10) Intercompany relationships and significant intercompany transactions (Table 9)

  • 11) Information on investees (Table 6)

  • b. Information on investments in mainland China

  • 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 7)

  • 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 8):

    • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the year.

    • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the year.

    • c) The amount of property transactions and the amount of the resultant gains or losses.

    • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the year and the purposes.

    • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.

    • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

  • c. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 10).

196

37. SEGMENT INFORMATION

The Group mainly produces and sells computer equipment, chief operating decision maker distributes resources and allocates operating performance depending on financial information. The Group has only one reportable segment which mainly produces and sells computer equipment; thus, based on IFRS 8 “Operating Segments”, there is no need to disclose segment information.

a. Revenue from major products and services:

The Group mainly produces and sells computer equipment; thus, there is no need to disclose additional information.

b. Geographical information:

The Group’s information on its revenue from external customers and non-current assets by location of assets is shown below:


Asia

America
Europe
Others

 Revenue from
External Customers
For the Year Ended December 31
2020
2019
$ 16,011,328 $ 18,471,658
5,237,531
5,624,270
4,422,873
3,355,343

324,003

840,032

$ 25,995,735
$ 28,291,303
 Non-current Assets Non-current Assets
December 31


2020
$ 16,011,328
5,237,531
4,422,873

324,003

$ 25,995,735



2020
$ 4,978,572

55,815

-

-

$ 5,034,387
 2019
$ 5,460,644

62,651

-

-
$ 5,523,295

Non-current assets exclude financial instruments, deferred tax assets, and net defined benefit assets.

  • c. Information about major customers:

Single customers which contributed 10% or more to the Group’s revenue are as follows:


Customer A

Customer B
Customer C

 For the Year Ended December 31 For the Year Ended December 31


2020
$ 7,779,879
3,451,405

2,926,510

$ 14,157,794
 2019
$ 10,168,853

3,427,915

3,372,206
$ 16,968,974

197


Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China		 Y Note 1:
Relationships between the endorsement/guarantee provider and the guaranteed party:
a.
A company with which it does business.
b.
A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.
c.
A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.
d.
Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.
e.
The Company fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
f.
All shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentage.
g.
Companies in the same industry provide among themselves joint and several guarantees for the performance of a sales contract for pre-construction homes pursuant to the Consumer Protection Act.
Note 2:
The total amount of the guarantee provided by Elitegroup Computer Systems Co., Ltd. to any individual entity shall not exceed 100% of Elitegroup Computer Systems Co., Ltd.’s net worth.
Note 3:
The total accumulated amount of guarantee shall not exceed one hundred percent of Elitegroup Computer Systems Co., Ltd.’s net worth.
Note 4:
The calculation of the amount was based on the highest exchange rate during 2020.
Note 5:
The calculation of the amount was based on the closing rate on December 31, 2020.
Endorsement/
Guarantee
Given by
Subsidiaries on
Behalf of
Parent		 N
Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries		 Y
Aggregate
Endorsement/
Guarantee Limit		 $ 11,015,472
(Note 3)
Ratio of
Accumulated
Endorsement/
Guarantee to Net
Equity in Latest
Financial
Statements
(%)		 1.45%
Amount Endorsed/
Guaranteed by
Collateral		 $ -
Actual Borrowing
Amount		 $ 95,256
(US$ 3,344,659)
(Note 5)

Outstanding
Endorsement/
Guarantee at the
End of the Period		 $ 160,058
(US$ 5,620,000)
(Note 5)
Maximum Amount Endorsed/
Guaranteed During
the Period		 $ 165,734
(US$ 5,620,000)
(Note 4)
Limit on Endorsement/
Guarantee Given
on Behalf of Each
Party		 $ 11,015,472
(Note 2)
Endorsee/Guarantee Nature of
Relationship		 (b)
(Note 1)
Name Golden Elite Technology
(Shenzhen) Ltd.
(������)
Endorser/Guarantor Elitegroup Computer Systems
Co., Ltd.
No. 1
Note Note: The above marketable securities had not been used as guarantees or collaterals for borrowing and were not subject to other restrictions.
December 31, 2020 Maximum
Shares/Units Held
During the Year		 4,851,680
16
6,542,512
3,346,451
9,461,365
9,684,041
985,921
1,846,722
1,514,727
1,495,081
1,037,344
2,000,000
594,832
2,000,000
20,339
299,999
7,882
100,007
343,571
-
Fair Value/
Net Asset Value
(Note)		 $ 41,677
25
100,974
50,030
42,357
100,989
10,588
18,027
11,726
12,876
17,033
20,347
9,844
20,800
59,952
85,465
23,233
(US$ 815,796)
28,491
(US$ 1,000,372)
10,135
(US$ 355,876)
-
(RMB
-)
Percentage of
Ownership		 2.24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.03
-
Carrying Amount $ 41,677
25
100,974
50,030
42,357
100,989
10,588
18,027
11,726
12,876
17,033
20,347
9,844
20,800
59,952
85,465
23,233
(US$ 815,796)
28,491
(US$ 1,000,372)
10,135
(US$ 355,876)
-
(RMB
-)
Shares 4,851,680
16
6,542,512
3,346,451
3,961,365
9,684,041
985,921
1,386,722
764,727
492,574
1,037,344
2,000,000
594,832
2,000,000
20,339
299,999
7,882
100,007
343,571
-
Financial Statement Account Financial assets at fair value through profit or loss - non-current
Financial assets at fair value through profit or loss - non-current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through other comprehensive income -
non-current
Financial assets at fair value through profit or loss - non-current
Relationship with
the Holding
Company		 No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
No
Type and Name of Marketable Securities Ordinary shares
Lu-Chu Development Corporation
Trigem Computer Inc.
Beneficiary certificate
FSITC Taiwan Money Market
Jih Sun Money Market Fund
Nomura Global Short Duration Bond Fund-TWD
Franklin Templeton Sinoam Money Market Fund
Prudential Financial Strategic Return ETF Fund of Funds-TWD
Franklin Templeton SinoAm Asia Pacific Balanced Fund-Accu-TWD
JPMorgan (Taiwan) China Income Fund - Accumulation Share Class
Fuh Hwa Global Balanced Fund-TWD
Fuh Hwa Olympic II Global Fund of Funds-TWD
Taishin Senior Secured High Yield Bond Fund A TWD
Union Advantage Global Fixed Income Portfolio Fund.
KGI Taiwan Multi-Asset Income Fund-TWD A
SinoPac Greater China Convertible Bond Fund
SinoPac USD Money Market Funds
Beneficiary certificate
SinoPac Greater China Convertible Bond Fund
SinoPac USD Money Market Funds
Share
MiTAC Holdings Corporation
Share
Beijing Beareyes Info Systems Co., Ltd.
Holding Company Name Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems (HK) Co., Limited
Elitegroup Computer Systems Inc. (USA)
Beijing Advazone Electronic Limited Company
MARKETABLE SECURITIES ACQUIRED OR DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL
FOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)		 Ending Balance (Note 2)
Amount		 $ 2,592,796
-
US$ 69,327,000
-		 Note 1:
The Company invested in ECS Holding (HK) Co., Limited by offsetting the creditor’s rights and liabilities of the four parties. Refer to Note 12.
Note 2:
The book amount was the original acquisition cost.
Note 3:
The transfer amount of 52% and 48% interest in Dragon Asia (RMB600,000 thousand and RMB550,000 thousand) had been remitted to the Company on March 27, 2018 and August 25, 2020 and was included in other advances received. The transaction was authorized by Investment Commission, MOEA on May 1, 2018 and
September 29, 2020. After evaluating the agreement and the status of implementation, the Company derecogonized the relevant assets and unearned receipts of RMB315,453 thousand as disposal price, and recognized a gain on disposal. Refer to Notes 12 and 21.
Note 4:
Million Up sold one hundred percent of Golden Elite Technology’s shares (������) to ECS Holding (HK) Co., Limited, and offset the creditor's rights and liabilities of the four parties for the transferring price of US$69,327 thousand. Refer to Note 12.

Shares
86,327,000


-
-
-
Disposal Gain (Loss) on
Disposal
$ -

343,491
(Note 3)
-

-

Carrying Amount		 $ -

3,611,459
-
US$ 69,327,000

Amount		 $ -
5,067,237
-
US$ 69,327,000
Number of Shares
-
99,635,512

-
-
Acquisition
Amount		 $ 2,081,197
-
US$ 69,327,000
-

Number of Shares
69,327,000

-
-

-
Beginning Balance (Note 2)
Amount		 $ 511,599

3,611,459
-
US$ 69,327,000

Number of Shares		 17,000,000
99,635,512
-
-
Relationship Subsidiary
-
Fellow subsidiary
Fellow subsidiary
Counterparty Note 1
Ever Unicorn Estate
Limited
Note 4
Note 4
Financial Statement
Account		 Investment accounted for
using the equity method
Investment accounted for
using the equity method
Investment accounted for
using the equity method
Investment accounted for
using the equity method
Type and Name of
Marketable Securities		 Share
ECS Holding (HK) Co.,
Limited
Dragon Asia Trading Co.,
Ltd.(BVI)
Golden Elite Technology
(Shenzhen) Ltd.
(������)
Golden Elite Technology
(Shenzhen) Ltd.
(������)
Company Name Elitegroup Computer
Systems Co., Ltd.
Elitegroup Computer
Systems Co., Ltd.
ECS Holding (HK)
Co., Limited
Million Up Finance
Limited
Note
 Note
 Note 1
Note 1
-
Note 1
Notes 1 and 2
Notes 1 and 2
Notes 1 and 2
Notes 1 and 2
Notes 1 and 2
Note 1
Notes 1 and 2
Notes 1 and 2
Note 1
Note 1
Note 1		 Note 1:
The above transactions were not included in the consolidated financial statements.
Note 2:
The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in
ECS Holding (HK) Co., Limited and Golden Elite Technology (������), respectively.
Notes/Accounts
Receivable (Payable)
% to Total		 -
3
6
-
-
(38)
-
-
-
62
-
-
-
(100)
(100)

Ending Balance		 $ -
123,731
248,379
9,492
-
(914,931)
-
-
-
914,931
-
-
-
(9,492)
(123,731)
Abnormal Transaction Payment Terms -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Unit Price $ -
-

-
-
-
-
-
-
-
-
-
-
-
-
-
Transaction Details Payment Terms OA 60 days
OA 90 days
Open account 90 days
OA 90 days
OA 75 days
OA 60 days
OA 75 days
OA 90 days
OA 90 days
OA 60 days
OA 90 days
OA 90 days
OA 60 days
OA 90 days
OA 90 days
% to Total 1
2
3
1
(25)
(18)
89
4
(7)
79
5
(3)
(100)
(100)
(100)
Amount $ 264,417
488,318
745,936
120,158
(5,334,562)
(3,826,794)
5,334,562
373,856
(661,408)
3,826,794
661,408
(373,856)
(264,417)
(120,158)
(488,318)
Purchase/
Sale
Sale

Sale
Sale
Sale
Purchase
Purchase
Sale
Sale
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Relationship Subsidiary of ECS Holding (America) Co.
(USA)
Subsidiary of ECS Holding (America) Co.
(USA)
Investors with significant influence over
the Group
Subsidiary of Unique Sino Limited
Subsidiary of Million Up Finance Limited
Subsidiary of ECS Holding (HK) Co., Limited
Ultimate parent company
Fellow company
Fellow company
Ultimate parent company
Fellow company
Fellow company
Ultimate parent company
Ultimate parent company
Ultimate parent company
Related Party Elitegroup Computer Systems Inc.
(USA)
Super ECS USA Inc.
Tatung Company
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(������)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(����)
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Buyer Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Inc.
(USA)
ECS Trading (Shenzhen) Co., Ltd.
Super ECS USA Inc.

Note Note -
-
Note 4
Note 4
-
-
Note 4		 Note 1: The subsequent period is between January 1 and February 28, 2021.
Note 2: The calculation of turnover days excludes other receivables.
Note 3: The above transactions were not included in the consolidated financial statements.
Note 4: The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted
for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology (������), respectively.

Allowance for
Impairment
Loss		 $ -

-
-

-

-
-
-
Amount Received
in Subsequent
Period
(Note 1)		 $ 85,186
123,817
-
30,554
1,004,356
-
-
Overdue Actions Taken -
-
Strengthen the
collection
-
-
Strengthen the
collection
Strengthen the
collection
Amount $ -
-
991,489
-
-
282,593
135,970
Turnover
Rate
(Note 3)		 3.93
4.65
-
-
7.01
-
0.03
Receivables
from Related
Parties Ending
Balance		 $ 250,132
123,817
991,489
257,060
1,004,356
282,593
135,970
Relationship Investors with significant influence over
the Company
Subsidiary
Subsidiary
Fellow company
Ultimate parent company
Ultimate parent company
Fellow company
Related Party Tatung Company
Super ECS USA Inc.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Company Name Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems (SIP) Co., Ltd.
Note Note Note 3
Note 3
Note 3
Note 3
Note 3
Notes 3, 5, 6
and 7
Note 3
Note 3
Notes 3, 5, 6
and 7
Note 3
Note 3
Note 3
Note 3
Notes 3 and 8
Notes 3, 5, 6
and 7
Note 3
Notes 3
Note 3
Note 3
Notes 3 and 4		 (Continued)
Note 1:
The amount was calculated based on the closing rate on December 31, 2020.
Note 2:
The amount was calculated using the average exchange rates from January to December 2020.
Note 3:
The financial statements used as a basis for calculating investment income had all been audited, except those of Protac International Computer, S.L., IoTecha Corp. and Elitegroup Computer Systems (Japan) Co., Ltd.
Note 4:
The Company is in the process of liquidation.
Note 5:
In order to cooperate with Mainland Assets Activation Plan, the board of directors of the Company approved to reduce capital of Dragon Asia and Million Up on January 23, 2018, the amount of capital reduction was US$69,327 thousand for both subsidiaries, which was approved by the Investment Commission, Ministry of
Economic Affairs, Rule No. 10800244950, on May 4, 2020, and offset the creditor's rights and liabilities of the four parties in May 2020. Refer to Note 12.
Note 6:
The board of directors approved Mainland Assets Activation Plan on January 23, 2018, and completed the transfers of 52% and 48% interest of Dragon Asia on March 27, 2018 and August 25, 2020, respectively. After the disposal of one hundred percent equity of Dragon Asia, the Company had lost control of Dragon Asia, Million
Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology (������). Refer to Note 12.
Note 7:
The transfer amount of 52% and 48% interest in Dragon Asia (RMB600,000 thousand and RMB550,000 thousand) had been remitted to the Company on March 27, 2018 and August 25, 2020 and was included in other advances received. The transaction was authorized by Investment Commission, MOEA on May 1, 2018 and
September 29, 2020. After evaluating the agreement and the status of implementation, the Company derecogonized the relevant assets and unearned receipts of RMB315,453 thousand as disposal price, and recognized a gain on disposal. Refer to Note 12 and 21.
Note 8:
ECS Holding (America) Co. (USA) held 2,000,000 ordinary shares (19.62%) and 1,108,942 preferred shares (14.47%) of IoTecha Corp. as of December 31, 2020.
(Concluded)

Share of
Profit (Loss)
(Note 2)		 $ (329)

121

8,347

9,919

68

385,105

(67,544)

5,178

170,486

(38,780)
8,387
(US$ 283,685)
11,527
(US$ 389,889)
8,487
(US$ 287,058)
(10,024)
(US$ -339,051)
384,057
(US$ 12,870,552)
5,178
(US$ 175,144)
4,507
(US$ 152,451)
3,354
(US$ 113,457)
-
(US$ 2)
-
(US$ -)
Net Income (Loss) of
the Investee
(Note 2)		 $ (329)

121

8,347

9,919

68

385,105

(67,544)

5,178

170,486

(38,780)
12,253
(US$ 414,441)
11,527
(US$ 389,889)
8,487
(US$ 287,058)

(88,854)
(US$ -3,005,275)
514,792
(US$ 17,251,750)
5,178
(US$ 175,144)
4,507
(US$ 152,451)
3,354
(US$ 113,457)
-
(US$ 2)
-
(US$ -)
As of December 31, 2020
Carrying Amount
(Note 1)
$ 263,628
22,704
202,356
732,528
9,407
-
871,479
82,139
3,001,412
271,710
154,500
(US$ 5,424,858)
588,346
(US$ 20,658,209)
120,349
(US$ 4,225,734)
-
(US$ -)
-
(US$ -)
-
(US$ -)
82,121
(US$ 2,883,449)
111,766
(US$ 3,924,365)
106,964
(US$ 3,755,752)
41
(US$ 1,454)
-
(US$ -)

%		 100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
99.99
68.45
100.00
100.00
19.62
14.47
-
100.00
100.00
100.00
100.00
100.00

Shares
16,560,000

1,136

18,381,296

3,362

469,000

-

2,600

1,905,000

86,327,000
3,999,996
15,109,864
47,552
2,500,000
Ordinary share
2,000,000
Preferred share
1,108,942
-
1,890,000
23,689,688
18,550,000
4,380,000
-
Investment Amount (Note 1)
December 31, 2019		 $ 62,413

19,078

965,081

830,259

66,780

3,611,459

399,151

62,052

511,599

202,915
430,329
(US$ 15,109,864)
477,685
(US$ 16,772,643)
14,240
(US$ 500,000)
28,480
(US$ 1,000,000)
32,040
(US$ 1,125,000)
1,390,479
(US$ 48,823,000)
53,827
(US$ 1,890,000)
86,720
(US$ 3,044,947)
528,304
(US$ 18,550,000)
124,742
(US$ 4,380,000)
-
(US$ -)

December 31, 2020		 $ 62,413
19,078
762,621
830,259
66,780
-
399,151
62,052
2,592,795
360,898
430,329
(US$ 15,109,864)
477,685
(US$ 16,772,643)
14,240
(US$ 500,000)
28,480
(US$ 1,000,000)
32,040
(US$ 1,125,000)
-
(US$ -)
53,827
(US$ 1,890,000)
86,720
(US$ 3,044,947)
528,304
(US$ 18,550,000)
124,742
(US$ 4,380,000)
-
(US$ -)
Main Businesses and Products Sale of motherboards, computer peripheral
products and related components
Sale of motherboards, notebook, computer
peripheral products and related components
Holding company
Holding company
Sale of motherboards, maintenance and sales
support
Holding company
Holding company
Holding company
Holding company
Manufacture and sales of computer and
computer peripheral products
Holding company
Sale of motherboards, notebook, computer
peripheral products, related components and
systems assembled
Sale of motherboards, computer peripheral
products and related components
Design and development of smart charging
systems and software development
Holding company
Holding company
Trading of IC and electric components
Holding company
Holding company
Sale of computer peripheral products
Location Hong Kong
Japan
British Virgin Islands
USA
Korea
British Virgin Islands
British Virgin Islands
Samoa
Hong Kong
Thailand
British Virgin Islands
USA
USA
USA
British Virgin Islands
Samoa
Hong Kong
British Virgin Islands
British Virgin Islands
Spain
Investee Company Elitegroup Computer Systems (HK)
Co., Limited
Elitegroup Computer Systems
(Japan) Co., Ltd.
Elitegroup Computer System
Holding Co., Ltd. (BVI)
ECS Holding (America) Co. (USA)
Elitegroup Computer Systems Korea
Co., Ltd.
Dragon Asia Trading Co., Ltd. (BVI)
Unitop International Corp.
Unity Investments Limited
ECS Holding (HK) Co., Limited
Elitegroup Technology (Thailand)
Co., Ltd.
Venture Well Holdings Limited
(BVI)
Elitegroup Computer Systems Inc.
(USA)
Super ECS USA, Inc.
IoTecha Corp.
Million Up Finance Limited
Unique Sino Limited
Alpha Leader Limited (HK)
Advazone International Limited
(BVI)
Affirm International Limited
(BVI)
Protac International Computer, S.L.
Investor Company Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer System Holding
Co., Ltd. (BVI)
ECS Holding (America) Co. (USA)
Dragon Asia Trading Co., Ltd. (BVI)
Unity Investments Limited
Venture Well Holdings Limited (BVI)
Affirm International Limited (BVI)

Accumulated
Repatriation of
Investment
Income as of
December 31, 2020
Accumulated
Repatriation of
Investment
Income as of
December 31, 2020		 $ -
-
-
-
-
-
539,820
(US$ 18,000,000 )
-		 Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
Investment Amounts Authorized by the Investment
Commission, MOEA
Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA (Note 4)
$3,603,444 (US$126,525,433) (Note 2)
$3,724,353 (US$130,770,829) (Note 2)
$-
Note 1:
The calculation of investment income (loss) was based on the investees’ audited financial statements.
Note 2:
The calculation was based on the closing rate as of December 31, 2020.
Note 3:
The calculation was based on the average exchange rate from January to December 2020.
Note 4:
On March 13, 2018, the Company obtained the certification as being qualified for operating the headquarters, which was issued by the Industrial Development Bureau, MOEA (Letter No. 10620404950), the effective period started from February 23, 2017 to February 22, 2020, there’s no limitation of the amount which the Company
invested in China; on February 7, 2020, the Company obtained the updated certification as being qualified for operating the headquarters, which was issued by the Industrial Development Bureau, MOEA (Letter No. 10920404360), the effective period started from February 5, 2020 to February 4, 2023, thus, the ceiling amount of
investment in mainland China is not applicable to the Company.
Note 5:
The board of directors approved Mainland Assets Activation Plan on January 23, 2018, and completed the transfers of 52% and 48% interest of Dragon Asia on March 27, 2018 and August 25, 2020, respectively, after the disposal of one hundred percent equity of Dragon Asia, the Company had lost control of Dragon Asia, Million
Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology (������). Refer to Note 12.
Note 6:
The transfer amount of 52% and 48% interest in Dragon Asia (RMB600,000 thousand and RMB550,000 thousand) had been remitted to the Company on March 27, 2018 and August 25, 2020 and was included in other advances received. The transaction was authorized by Investment Commission, MOEA on May 1, 2018 and
September 29, 2020. After evaluating the agreement and the status of implementation, the Company derecogonized the relevant assets and unearned receipts of RMB315,453 thousand as disposal price, and recognized a gain on disposal. Refer to Note 12 and 21.
Note 7:
The board of directors of Golden Elite Technology (����) approved the splitting process of Mainland Assets Activation Plan on April 26, 2018, which divided non-target assets to Golden Elite Technology (����). Refer to Note 12.
Note 8:
Million Up sold one hundred percent of Golden Elite Technology’s shares (������) to ECS Holding (HK) Co., Limited in May 2020, and offset the creditor's rights and liabilities of the four parties for the transferring price of US$69,327 thousand. Refer to Note 12.
Note 9:
According to the contract signed with Ever Unicorn, Golden Elite Technology (����) splitted the non-target assets and liabilities to Golden Elite Technology (������), and splitted the investment amount of US$29,040 thousand to Golden Elite Technology (������) by the shareholding ratio, and received the
approval from the Investment Commission, Ministry of Economic Affairs in September 2019.
(Concluded)		 Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
Investment Amounts Authorized by the Investment
Commission, MOEA
Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA (Note 4)
$3,603,444 (US$126,525,433) (Note 2)
$3,724,353 (US$130,770,829) (Note 2)
$-
Note 1:
The calculation of investment income (loss) was based on the investees’ audited financial statements.
Note 2:
The calculation was based on the closing rate as of December 31, 2020.
Note 3:
The calculation was based on the average exchange rate from January to December 2020.
Note 4:
On March 13, 2018, the Company obtained the certification as being qualified for operating the headquarters, which was issued by the Industrial Development Bureau, MOEA (Letter No. 10620404950), the effective period started from February 23, 2017 to February 22, 2020, there’s no limitation of the amount which the Company
invested in China; on February 7, 2020, the Company obtained the updated certification as being qualified for operating the headquarters, which was issued by the Industrial Development Bureau, MOEA (Letter No. 10920404360), the effective period started from February 5, 2020 to February 4, 2023, thus, the ceiling amount of
investment in mainland China is not applicable to the Company.
Note 5:
The board of directors approved Mainland Assets Activation Plan on January 23, 2018, and completed the transfers of 52% and 48% interest of Dragon Asia on March 27, 2018 and August 25, 2020, respectively, after the disposal of one hundred percent equity of Dragon Asia, the Company had lost control of Dragon Asia, Million
Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology (������). Refer to Note 12.
Note 6:
The transfer amount of 52% and 48% interest in Dragon Asia (RMB600,000 thousand and RMB550,000 thousand) had been remitted to the Company on March 27, 2018 and August 25, 2020 and was included in other advances received. The transaction was authorized by Investment Commission, MOEA on May 1, 2018 and
September 29, 2020. After evaluating the agreement and the status of implementation, the Company derecogonized the relevant assets and unearned receipts of RMB315,453 thousand as disposal price, and recognized a gain on disposal. Refer to Note 12 and 21.
Note 7:
The board of directors of Golden Elite Technology (����) approved the splitting process of Mainland Assets Activation Plan on April 26, 2018, which divided non-target assets to Golden Elite Technology (����). Refer to Note 12.
Note 8:
Million Up sold one hundred percent of Golden Elite Technology’s shares (������) to ECS Holding (HK) Co., Limited in May 2020, and offset the creditor's rights and liabilities of the four parties for the transferring price of US$69,327 thousand. Refer to Note 12.
Note 9:
According to the contract signed with Ever Unicorn, Golden Elite Technology (����) splitted the non-target assets and liabilities to Golden Elite Technology (������), and splitted the investment amount of US$29,040 thousand to Golden Elite Technology (������) by the shareholding ratio, and received the
approval from the Investment Commission, Ministry of Economic Affairs in September 2019.
(Concluded)
Carrying Amount
as of December 31,
2020
(Note 2)		 $ 17,276
(US$ 606,595 )
75,518
(US$ 2,651,631 )
106,824
(US$ 3,750,829 )
82,118
(US$ 2,883,374 )
-
(US$ - )
2,045,322
(US$ 71,816,076 )
838,690
(US$ 29,448,382 )
457,115
(US$ 16,050,399 )
Investment
Gain (Loss)
(Notes 1 and 3)		 $ (1,870 )
(US$ -63,236 )
114
(US$ 3,848 )
3,354
(US$ 113,452 )
5,178
(US$ 175,144 )
542,493
(US$ 18,180,070 )
151,596
(US$ 5,127,365 )
(66,353 )
(US$ -2,244,223 )
3,033
(US$ 102,593 )
%
Ownership
of Direct or
Indirect
Investment		 100.00
100.00
68.45
100.00
-
(Notes 5
and 6)
100.00
(Notes 7
and, 8)
100.00
100.00

Net Income (Loss)
of the Investee
(Note 3)		 $ (1,870 )
(RMB
-436,118 )
114
(RMB
26,535 )
3,354
(RMB
782,438 )
5,178
(RMB 1,207,912 )
545,179
(RMB127,766,238)
139,550
(RMB 32,551,926 )
(66,353 )
(RMB -15,477,652 )
3,033
(RMB
707,549 )
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
December 31, 2020
(Note 2)		 $ 22,634
(US$ 794,718 )

49,543
(US$ 1,739,577 )

317,955
(US$ 11,164,138 )

56,960
(US$ 2,000,000 )
-
(US$ - )

1,974,433
(US$ 69,327,000 )
(Notes 8, 9)

740,480
(US$ 26,000,000 )

441,440
(US$ 15,500,000 )
Remittance of Funds(Note 2)
Inward		 $ -

-

-

-

663,626
(US$ 23,301,464 )
-

-

-

Outward		 $ -
-
-
-
-
1,147,374
(US$ 40,287,000 )
(Notes 8, 9)
-
-
Upper Limit on the Amount of Investment Stipulated by
Investment Commission, MOEA (Note 4)
$-
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2020
(Note 2)		 $ 22,634
(US$ 794,718 )
49,543
(US$ 1,739,577 )
317,955
(US$ 11,164,138 )

56,960
(US$ 2,000,000 )
663,626
(US$ 23,301,464 )
827,059
(US$ 29,040,000 )
(Note 9)
740,480
(US$ 26,000,000 )
441,440
(US$ 15,500,000 )
Method of Investment Indirect investment by Elitegroup Computer
Systems (HK) Co., Limited
Indirect investment by Elitegroup Computer
Systems (HK) Co., Limited
Indirect investment by Advazone International
Ltd. (BVI) of Venture Well Holdings
Limited (BVI) of Elitegroup Computer
Systems Holding Co., Ltd. (BVI)
Indirect investment by Unique Sino Limited of
Unity Investments Limited
Indirect investment by ECS Holding (HK)
Co., Limited
Indirect investment by ECS Holding (HK)
Co., Limited
Indirect investment by Unitop International
Corp.
Indirect investment by ECS Holding (HK)
Co., Limited
Investment Amounts Authorized by the Investment
Commission, MOEA
$3,724,353 (US$130,770,829) (Note 2)
Paid-in Capital
(Note 2)		 $ 29,904
(US$ 1,050,000 )
45,568
(US$ 1,600,000 )
458,528
(US$ 16,100,000 )
56,960
(US$ 2,000,000 )
1,096,480
(US$ 38,500,000 )
1,723,040
(US$ 60,500,000 )
(Note 7)
740,480
(US$ 26,000,000 )
441,440
(US$ 15,500,000 )
Main Businesses and Products Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
Wholesale, maintenance and technical
consultation of computers and peripheral
products and related components
Wholesale, trade, maintenance and technical
consultation of computers and peripheral
products
Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products

Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products
Research, development and manufacture of
notebook, tablets and related components
Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
$3,603,444 (US$126,525,433) (Note 2)
Investee Company Xun Rui Electron (Shenzhen) Co., Ltd.
Beijing XunRun Technology Co., Ltd.
Beijing Advazone Electronic
Limited Company
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen)
Ltd. (������)
Elitegroup Computer Systems (SIP)
Co., Ltd.
ECS Digital Technology (Shenzhen) Ltd.

Note Note Notes 1, 2
and 3
Note 1
Note 1
Note 1
Notes 1
and 3
Notes 1
and 3
Notes 1
and 3
Notes 1
and 3		 Note 1:
The above transactions were not included in the consolidated financial statements.
Note 2:
Unrealized profit and loss are due to upstream transactions.
Note 3:
The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in
ECS Holding (HK) Co., Limited and Golden Elite Technology (������), respectively.
Unrealized (Gain) Loss $ 2,934
-
-
-
-
-
-
-
Notes/ Accounts Receivable
(Payable)
%		 -

(38)

(11)
-
-
-
-
-

Ending Balance
$ -
(914,931)
(277,403)
9,492
-
-
-
-
Transaction Details Comparison with the Market
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
Payment Terms
OA 75 days
OA 60 days
OA 60 days
OA 90 days
OA 90 days
OA 90 days
OA 90 days
OA 90 days
Comparison of Price with Market No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
Purchase/ Sale %
(25)

(18)
-
1
4

(7)
5

(3)
Amount $ (5,334,562)
(3,826,794)
-
120,158
373,856
(661,408)
661,408
(373,856)
Transaction Type Purchase
Purchase
Purchase
Sale
Sale
Purchase
Sale
Purchase
Counterparty (Investee Company) Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems (SIP) Co., Ltd.
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(������)
Golden Elite Technology (Shenzhen) Ltd.
(����)
Company Name Elitegroup Computer
Systems Co., Ltd.
Golden Elite Technology
(Shenzhen) Ltd.
(����)
Golden Elite Technology
(Shenzhen) Ltd.
(������)
Note -
-
-
-
-
-
-
Note 5
-
Note 5
-
-
-
-
-
-
-
-
-
-
-
-
-		 -
-
Note 5
Note 5
-
-
-
Note 5
-		 (Continued)
Note 1:
The information about the transactions between the Company and the subsidiaries should be marked in the note column as follows:
a.
The Company indicated by “0”.
b.
The subsidiaries were marked from 1 in ascending order of numerals.
Note 2:
Investment types are marked as follows:
a.
The Company to the subsidiaries.
b.
The subsidiaries to the Company.
c.
Between subsidiaries.
Note 3:
The ratio of the transaction amounts accounted for total sales revenue or assets is calculated as follows: (1) Asset or liability: The ratio was calculated based on the ending balance accounted for total consolidated assets; (2) Income or loss: The ratio was calculated based on the midterm
accumulated amounts accounted for total consolidated sales revenue.
Note 4:
The above transactions were not included in the consolidated financial statements.
Note 5:
The Company disposed of one hundred percent equity of Dragon Asia in August, 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co.,
Limited and Golden Elite Technology (������), respectively.
Transaction Details % to
Total Sales or Assets (Note 3)
1
-
-
-
2
1
-
4
(21)
-
-
(15)
(4)
-
(1)
-
-
-
-
-
-
-
-		 1
1
-
1
1
-
3
-
-
Payment Terms No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference		 No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
Amount $ 264,417
-
(4,767)
(27,851)
488,318
123,731
85
991,489
(5,334,562)
(1,732)
2,363
(3,826,794)
(914,931)
(91,788)
(277,403)
(5,190)
(22,676)
120,158
9,492
(33,102)
(54,677)
(7,486)
(14,161)		 135,970
373,856
-
257,060
193,572
26,342
661,408
-
45,140
Financial Statement Account Sales revenue
Accounts receivable from related parties
Other accounts payable to related parties
Commissions expense
Sales revenue
Accounts receivable from related parties
Other accounts receivable from related parties
Other accounts receivable from related parties
Purchases
Other accounts payable to related parties
Other accounts receivable from related parties
Purchases
Accounts payable to related parties
Other accounts payable to related parties
Accounts payable to related parties
Other accounts payable to related parties
Other accounts payable to related parties
Sales revenue
Accounts receivable from related parties
Repair and maintenance expense
Professional fees
Other accounts payable to related parties
Repair and maintenance expense		 Accounts receivable from related parties
Sales revenue
Accounts receivable from related parties
Other accounts receivable from related parties
Rental income
Other income
Sales revenue
Accounts receivable from related parties
Service income
Relationship
(Note 2)		 a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a		 c
c
c
c
c
c
c
c
c
Counterparty Elitegroup Computer Systems Inc. (USA)
Elitegroup Computer Systems Inc. (USA)
Elitegroup Computer Systems Inc. (USA)
Elitegroup Computer Systems Inc. (USA)
Super ECS USA Inc.
Super ECS USA Inc.
Super ECS USA Inc.
Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Elitegroup Computer Systems (SIP) Co., Ltd.
Elitegroup Computer Systems (SIP) Co., Ltd.
ECS Digital Technology Systems (Shenzhen) Ltd.
ECS Trading (Shenzhen) Co., Ltd.
ECS Trading (Shenzhen) Co., Ltd.
Beijing XunRun Technology Co., Ltd.
Beijing XunRun Technology Co., Ltd.
Beijing XunRun Technology Co., Ltd.
Xun Rui Electron (Shenzhen) Co., Ltd.		 Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (������)
Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (����)
Golden Elite Technology (Shenzhen) Ltd. (������)
Company Name Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.		 Elitegroup Computer Systems (SIP) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Beijing XunRun Technology Co., Ltd.
No.
(Note 1)		 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0		 1
2
3
4

TABLE 10

ELITEGROUP COMPUTER SYSTEMS CO., LTD. AND SUBSIDIARIES

INFORMATION OF MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020

Name of Major Shareholder Shares Shares
Number of Shares Percentage of
Ownership (%)
Tatung Company
Pou Chen Corporation		 152,475,397
70,066,949		 27.35
12.57
  • Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

207

  • V. 2020 Parent Company Only Financial Reports of the Company Audited and Attested by the CPA (excluding a breakdown of important accounting items)

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Elitegroup Computer Systems Co., Ltd.

Opinion

We have audited the accompanying financial statements of Elitegroup Computer Systems Co., Ltd. (the Company), which comprise the balance sheets as of December 31, 2020 and 2019, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”). In our opinion, based on our audits and the report of other auditors (refer to the Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit of the financial statements for the year ended December 31, 2020 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. We conducted our audit of the financial statements for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission of the Republic of China on February 25, 2020, and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the report of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2020. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

208

Key audit matters in the audit of the Company’s financial statements for the year ended December 31, 2020 are stated as follows:

Recognition of Specific Sales Revenue

Refer to Note 4 to the financial statements for the accounting policy on revenue recognition.

The Company’s sales revenue in 2020 decreased by about 9% compared with that of 2019. However, the trend of sales revenue from specific customers was different from the Company’s overall trend and the net sales revenue from specific customers in 2020 accounted for 36.2% of the net sales revenue; thus, the recognition of these specific sales revenue was identified as a key audit matter.

Our audit procedures performed in respect of the above key audit matter include the following:

  1. We understood the design and implementation of internal controls and tested the operating effectiveness of relevant controls over revenue recognition, and evaluated the appropriateness of accounting policies for revenue recognition used by the management.

  2. We sampled details of sales revenue from the specific customers and inspected the relevant transaction documents including sales orders, shipping and receipt documents, and verified that the revenue was recognized upon satisfying the performance obligation.

  3. We checked for any occurrence of subsequent sales returns and allowances, and obtained sufficient evidence regarding cash receipts from the specific sales in identifying the existence of unusual circumstances.

Other Matter

As of and for the years ended December 31, 2020 and 2019, we did not audit the financial statements of ECS Holding (America) Co., Elitegroup Computer Systems (HK) Co., Limited, Elitegroup Computer Systems Korea Co., Ltd., ECS Holding (HK) Co., Limited, Alpha Leader Limited (HK), and Elitegroup Technology (Thailand) Co., Ltd. which were subsidiaries included in the financial statements, such statements were audited by the other auditors instead. Our opinion, insofar as it relates to the amounts included for such subsidiaries is based solely on the report of other auditors. The total assets of the abovementioned investments accounted for using the equity method were $1,310,542 thousand and $1,788,720 thousand, respectively, which constituted 6% and 9% of the total assets as of December 31, 2020 and 2019, and other comprehensive loss of subsidiaries and associates accounted for using the equity method amounted to $29,177 thousand and $23,033 thousand, respectively, which constituted (46%) and 25% of total comprehensive loss for the years then ended, respectively.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial

209

statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

  2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

  3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

  4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our

210

conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

  1. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

  2. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2020 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are HsiuChun Huang and Cheng-Chun Chiu.

Deloitte & Touche Taipei, Taiwan Republic of China

March 26, 2021

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent 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. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

211

ELITEGROUP COMPUTER SYSTEMS CO., LTD. BALANCE SHEETS DECEMBER 31, 2020 AND 2019

BALANCE SHEETS
DECEMBER 31, 2020 AND 2019
(In Th ousands of New Taiwan Dollars)
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)

Financial assets at fair value through profit or loss - current (Notes 4 and 7)
Financial assets at amortized cost - current (Notes 4, 8 and 31)
Accounts receivable (Notes 4, 5 and 9)
Accounts receivable from related parties (Notes 4, 5, 9 and 30)
Other receivables (Notes 4, 9 and 30)
Inventories (Notes 4, 5 and 10)
Prepayments
Other current assets (Notes 30)

Total current assets

NON-CURRENT ASSETS
Financial assets at fair value through profit or loss - non-current (Notes 4 and 7)
Investments accounted for using the equity method (Notes 3, 4, 11 and 19)
Property, plant and equipment (Notes 3, 4, 12 and 30)
Right-of-use assets (Notes 4, 13 and 14)
Investment properties (Notes 4 and 14)
Goodwill (Notes 4, 5 and 15)
Other intangible assets (Notes 4, 16 and 30)
Deferred tax assets (Notes 4, 5 and 25)
Refundable deposits
Net defined benefit assets (Notes 4 and 21)
Other non-current assets

Total non-current assets

TOTAL

LIABILITIES AND EQUITY

CURRENT LIABILITIES

Short-term borrowings (Note 17)

Accounts payable (Notes 4 and 18)

Accounts payable to related parties (Notes 4, 18 and 30)

Other payables (Notes 19 and 30)

Current tax liabilities (Notes 4, 5 and 25)

Provisions - current (Notes 4, 5 and 20)

Lease liabilities - current (Notes 4 and 13)

Other advances received (Notes 11 and 19)

Other current liabilities (Notes 4 and 19)


Total current liabilities


NON-CURRENT LIABILITIES

Deferred tax liabilities (Notes 4, 5 and 25)

Lease liabilities - non-current (Notes 4 and 13)

Guarantee deposit received


Total non-current liabilities


Total liabilities


EQUITY (Notes 4, 21, 22, and 25)

Share capital

Common shares

Capital surplus

Retained earnings

Legal reserve

Special reserve

Unappropriated earnings

Total retained earnings

Other equity


Total equity


TOTAL
 2020 2019










































Amount
%
$ 2,814,008 13
561,008
3
3,673,865 17
3,445,722 16
390,688
2
1,084,214
5
1,183,854
6
113,500
1

6,736

-


13,273,595
63

41,702
-
5,457,513 26
63,422
-
298,419
1
509,282
2
386,205
2
8,121
-
824,737
4
194,093
1
128,220
1

14,904

-


7,926,618
37

$ 21,200,213
100

$ 1,247,424
6
1,226,552
6
1,208,275
6
858,163
4
149,304
1
208,136
1
197,166
1
3,677,260 17

742,751

3


9,515,031
45

260,249
1
397,187
2

12,274

-


669,710

3


10,184,741
48


5,574,030
26


5,914,883
28

29,394
-
250,468
1

62,843

1


342,705

2


(816,146)
(4)


11,015,472
52

$ 21,200,213
100













































Amount
%
$ 3,076,141 16

583,562
3

2,655,266 14

3,054,370 16

300,119
1

2,162,817 11

746,981
4

89,073
-

3,458

-

12,671,787
65

44,108
-

4,350,825 22

59,757
-

401,492
2

549,788
3

386,205
2

6,889
-

695,245
4

192,026
1

123,284
1

3,575

-

6,813,194
35
$ 19,484,981
100
$ -
-

1,158,659
6

1,735,206
9

760,733
4

125,952
1

220,360
1

186,916
1

2,751,737 14

955,441

5

7,895,004
41

33,356
-

594,353
3

12,264

-

639,973

3

8,534,977
44

5,574,030
29

5,913,183
30

24,217
-

203,879
1

51,766

-

279,862

1

(817,071)
(4)

10,950,004
56
$ 19,484,981
100

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche auditors’ report dated March 26, 2021)

212

ELITEGROUP COMPUTER SYSTEMS CO., LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 5, 23 and 30)

OPERATING COSTS (Notes 10 and 30)

GROSS PROFIT
UNREALIZED GAIN (LOSS) ON TRANSACTIONS
WITH SUBSIDIARIES (Note 4)

REALIZED GROSS PROFIT

OPERATING EXPENSES
(Notes 12, 13, 21, 24 and 30)
Marketing
General and administrative
Research and development

Total operating expenses

(LOSS) INCOME FROM OPERATIONS

NON-OPERATING INCOME AND EXPENSES
(Notes 4, 11, 14, 24 and 30)
Other gains and losses
Finance costs
Share of profit or loss of associates
Interest income
Other income

Total non-operating income and expenses

PROFIT BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4, 5 and 25)

NET PROFIT
 2020
Amount
%
$ 23,256,321 100

21,370,098
92

1,886,223
8

(5,498)

-


1,880,725

8

568,384
3
505,344
2
870,126

4


1,943,854

9


(63,129)
(1)

(188,515) (1)
(21,685)
-
472,571
2
75,889
-

89,616

1


427,876

2

364,747
1
302,663

1


62,084

-
 2019




























Amount
%
$ 25,612,724 100

23,416,717
91

2,196,007
9

2,092

-

2,198,099

9

523,100
2

517,839
2

696,117

3

1,737,056

7

461,043

2

(149,448)
-

(23,640)
-

(413,657) (2)

105,300
-

79,723

-

(401,722)
(2)

59,321
-

13,542

-

45,779

-
(Continued)

213

ELITEGROUP COMPUTER SYSTEMS CO., LTD. STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS)
(Notes 4, 21, 22 and 25)
Items that will not be reclassified subsequently to
profit or loss:
Remeasurement of defined benefit plans

Unrealized gain (loss) on investments in equity
instruments at fair value through other
comprehensive income
Income tax benefit related to items that will not be
reclassified subsequently


Items that may be reclassified subsequently to profit
or loss:
Exchange differences on translating foreign
operations
Income tax relating to components of other
comprehensive income


Other comprehensive income (loss) for the year,
net of income tax

TOTAL COMPREHENSIVE INCOME (LOSS) FOR
THE YEAR

EARNINGS PER SHARE
(NEW TAIWAN DOLLARS; Note 26)
Basic
Diluted		 2020
Amount
%
$ 948
-
(110)
-

(189)

-


649

-

(7,167)
-

8,202

-


1,035

-


1,684

-

$ 63,768

-

$ 0.11
$ 0.11		 2019














Amount
%
$ 7,484
-

1,933
-

(1,497)

-

7,920

-

(182,063)
-

36,413

-

(145,650)

-

(137,730)

-
$ (91,951)

-
$ 0.08
$ 0.08

$ $


The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche auditors’ report dated March 26, 2021)

(Concluded)

214

Other Equity (Notes 4, 22 and 25) Retained Earnings (Notes 21, 22, 25 and 27)
Unrealized		 Gain (Loss) on Gain (Loss) on Exchange
Financial Assets		 Differences on
at Fair Value
Unappropriated		 Translating
Through Other
Earnings		 Foreign
Comprehensive
(Deficits to Be
Share Capital
Capital Surplus		 Operations
Income
Offset)
(Notes 22 and 27)
(Notes 4, 22 and 27) Legal Reserve Special Reserve
Total Equity		 $ 5,574,030 $ 5,881,933 $ 22,176 $ 185,310 $ 20,610 $ (673,607) $ 253 $ 11,010,705 -
-
2,041
-
(2,041)
-
-
-		 -
-
-
18,569
(18,569)
-
-
-		 -
31,250
-
-
-
-
-
31,250		 -
-
-
-
45,779
-
-
45,779		 -
-
-

-
5,987
(145,650)
1,933
(137,730)		 -
-
-

-
5,987
(145,650)
1,933
(137,730)
-
-
-

-
51,766
(145,650)
1,933
(91,951)		 5,574,030
5,913,183
24,217
203,879
51,766
(819,257)
2,186
10,950,004		 -
-
5,177
-
(5,177)
-
-
-		 -
-
-
46,589
(46,589)
-
-
-		 -
1,700
-
-
-
-
-
1,700		 -
-
-
-
62,084
-
-
62,084		 -
-
-

-
759
1,035
(110)
1,684		 -
-
-

-
759
1,035
(110)
1,684
-
-
-

-
62,843
1,035
(110)
63,768		 $ 5,574,030
$ 5,914,883
$ 29,394
$ 250,468
$ 62,843
$ (818,222)
$ 2,076
$ 11,015,472
BALANCE AT JANUARY 1, 2019 Appropriation of the 2018 earnings Legal reserve Special reserve Other changes in capital surplus - from investments in associates accounted for using the equity method Net profit for the year ended December 31, 2019 Other comprehensive income (loss) for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019 Appropriation of the 2019 earnings Legal reserve Special reserve Other changes in capital surplus - dividends unclaimed by shareholders Net profit for the year ended December 31, 2020 Other comprehensive income (loss) for the year ended December 31, 2020, net of income tax Total comprehensive income (loss) for the year ended December 31, 2020 BALANCE AT DECEMBER 31, 2020 The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche auditors’ report dated March 26, 2021)

ELITEGROUP COMPUTER SYSTEMS CO., LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars) (In Thousands of New Taiwan Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax

Adjustments for:
Depreciation expenses
Amortization expenses
Impairment loss reversed on accounts receivable
Net gain on fair value change of financial assets at fair value
through profit or loss
Interest expense
Interest income
Share of (gain) loss of subsidiaries
Impairment loss recognized on financial assets
Recognition of impairment loss on non-financial assets
Realized gross profit on transactions with subsidiaries
Unrealized gross profit on transactions with subsidiaries
Unrealized net loss on foreign currency exchange
Net changes in operating assets and liabilities
Financial assets mandatorily classified as at fair value
through profit or loss
Accounts receivable
Other receivables
Inventories
Prepayments
Other current assets
Net defined benefit assets
Accounts payable
Other payables
Provisions
Other current liabilities

Cash (used in) generated from operations
Interest received
Interest paid
Income tax paid

Net cash (used in) generated from operating activities

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in other advance received
Purchase of financial assets measured at amortized cost
Proceeds from sale of financial assets measured at amortized cost
Payments for investments accounted for using the equity method
Net cash inflow on disposal of associates
Payments for property, plant and equipment
Increase in refundable deposits
Payments for intangible assets		 2020
$ 364,747
166,180
6,939
(5,410)
(4,594)
21,685
(75,889)
(472,571)
2,423
53,610
-
5,498
34,142
27,131
(483,818)
(1,055,279)
(490,483)
(24,427)
(3,278)
(3,988)
(473,722)
102,359
(12,224)

(186,295)

(2,507,264)
74,982
(5,440)

(183,641)


(2,621,363)

2,315,500
(11,510,867)
10,493,601
(158,133)
202,461
(22,337)
(7)
(8,171)		 2019
$ 59,321

168,390

11,815

(2,515)

(24,434)

23,640

(105,300)

413,657

-

5,796

(2,092)

-

100,732

79,496

873,130

22,773

102,969

(11,160)

970

(4,315)

144,578

(137,297)

(23,439)

(112,185)

1,584,530

103,449

(4,088)

(158,354)

1,525,537

-

(8,694,922)

7,922,533

(202,915)

-

(11,307)

-

(1,728)
(Continued)

216

ELITEGROUP COMPUTER SYSTEMS CO., LTD. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars) (In Thousands of New Taiwan Dollars)
2020
Acquisition of investment properties
$ (191)
(Increase) decrease in other non-current assets

(11,329)

Net cash generated from (used in) investing activities

1,300,527

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings
1,259,580
Guarantee deposits received
110
Guarantee deposits refunded
(100)
Repayment of the principal portion of lease liabilities
(202,587)
Dividends unclaimed by shareholders recognized as the capital reserve
1,700

Net cash generated from (used in) financing activities

1,058,703

NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
(262,133)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
3,076,141

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
$ 2,814,008

The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ report dated March 26, 2021)		 2019
$ (390)

8,856

(979,873)

(307,300)

2,428

-

(201,453)

-

(506,325)

39,339

3,036,802
$ 3,076,141
(Concluded)

217

ELITEGROUP COMPUTER SYSTEMS CO., LTD. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Elitegroup Computer Systems Co., Ltd. (the “Company”) was established in May 1987 and began operations in June 1987. The Company designs, develops, and sells motherboards, desktop computers, notebook, tablet computers, barebone systems and add-on cards.

The ordinary shares of the Company have been listed on the Taiwan Stock Exchange since September 21, 1994.

The financial statements are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors and authorized for issue on March 22, 2021.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

  • a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (FSC)

As of date the financial statements were authorized for issue, the initial application of IFRSs endorsed and issued into effect by the FSC did not have material impact on the Company’s accounting policies.

  • b. The IFRSs endorsed by the FSC for application starting from 2021
New IFRSs
Amendments to IFRS 4 “Extension of the Temporary Exemption
from Applying IFRS 9”

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
“Interest Rate Benchmark Reform - Phase 2”

Amendment to IFRS 16 “Covid-19-Related Rent Concessions”
 Effective Date
Announced by IASB
Effective immediately upon
promulgation by the IASB
January 1, 2021
June 1, 2020

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

218

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date
New IFRSs
Announced by IASB(Note 1)
“Annual Improvements to IFRS Standards 2018-2020”
January 1, 2022 (Note 2)
Amendments to IFRS 3 “Reference to the Conceptual Framework”
January 1, 2022 (Note 3)
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets
To be determined by IASB
between an Investor and its Associate or Joint Venture”
IFRS 17 “Insurance Contracts”
January 1, 2023
Amendments to IFRS 17
January 1, 2023
Amendments to IAS 1 “Classification of Liabilities as Current or Non-
January 1, 2023
current”
Amendments to IAS 1 “Disclosure of Accounting Policies”
January 1, 2023 (Note 6)
Amendments to IAS 8 “Definition of Accounting Estimates”
January 1, 2023 (Note 7)
Amendments to IAS 16 “Property, Plant and Equipment - Proceeds
January 1, 2022 (Note 4)
before Intended Use”
Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a
January 1, 2022 (Note 5)
Contract”
Note 1:
Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective
effective dates.
Note 2:
The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or
after the annual reporting periods beginning on or after January 1, 2022. The amendments to IAS 41 “Agriculture” will be applied
prospectively to the fair value measurements on or after the annual reporting periods beginning on or after January 1, 2022. The
amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on
or after January 1, 2022.
Note 3:
The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual
reporting period beginning on or after January 1, 2022.
Note 4:
The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them
to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 5:
The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.
Note 6:
The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 7:
The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the
beginning of the annual reporting period beginning on or after January 1, 2023.
  • 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between an Investor and its Associate or Joint Venture”

The amendments stipulate that, when the Company sells or contributes assets that constitute a business (as defined in IFRS 3) to an associate, the gain or loss resulting from the transaction is recognized in full. Also, when the Company loses control of a subsidiary that contains a business but retains significant influence, the gain or loss resulting from the transaction is recognized in full.

219

Conversely, when the Company sells or contributes assets that do not constitute a business to an associate, the gain or loss resulting from the transaction is recognized only to the extent of the Company’s interest as an unrelated investor in the associate, i.e., the Company’s share of the gain or loss is eliminated. Also, when the Company loses control of a subsidiary that does not contain a business but retains significant influence over an associate, the gain or loss resulting from the transaction is recognized only to the extent of the Company’s interest as an unrelated investor in the associate, i.e., the Company’s share of the gain or loss is eliminated.

  • 2) Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”

The amendments clarify that for a liability to be classified as non-current, the Company shall assess whether it has the right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. If such rights are in existence at the end of the reporting period, the liability is classified as non-current regardless of whether the Company will exercise that right. The amendments also clarify that, if the right to defer settlement is subject to compliance with specified conditions, the Company must comply with those conditions at the end of the reporting period even if the lender does not test compliance until a later date.

The amendments stipulate that, for the purpose of liability classification, the aforementioned settlement refers to a transfer of cash, other economic resources or the Company’s own equity instruments to the counterparty that results in the extinguishment of the liability. However, if the terms of a liability that could, at the option of the counterparty, result in its settlement by a transfer of the Company’s own equity instruments, and if such option is recognized separately as equity in accordance with IAS 32: Financial Instruments: Presentation, the aforementioned terms would not affect the classification of the liability.

  • 3) Amendments to IAS 16 “Property, Plant and Equipment: Proceeds before Intended Use”

The amendments prohibit an entity from deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of those items is measured in accordance with IAS 2 “Inventories”. Any proceeds from selling those items and the cost of those items are recognized in profit or loss in accordance with applicable standards.

The amendments are applicable only to items of property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021. The Company will restate its comparative information when it initially applies the aforementioned amendments.

  • 4) Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”

The amendments specify that when assessing whether a contract is onerous, the “cost of fulfilling a contract” includes both the incremental costs of fulfilling that contract (for example, direct labor and materials) and an allocation of other costs that relate directly to fulfilling contracts (for example, an allocation of depreciation for an item of property, plant and equipment used in fulfilling the contract).

Upon initial application of the aforementioned amendments, the Company recognizes the cumulative effect of retrospective application in retained earnings.

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

220

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

  • 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

  • 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

  • 3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing these parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates, the share of other comprehensive income of subsidiaries and associates and retained earnings in these parent company only financial statements.

c. Classification of current and non-current assets and liabilities

Current assets include:

  • 1) Assets held primarily for the purpose of trading;

  • 2) Assets expected to be realized within twelve months after the reporting period; and

  • 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

  • 1) Liabilities held primarily for the purpose of trading;

  • 2) Liabilities due to be settled within twelve months after the reporting period; and

  • 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Foreign currencies

221

In preparing the financial statements, transactions in currencies other than the Company’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purposes of presenting the financial statements, the assets and liabilities of the Company’s foreign operations (including the subsidiaries and in other countries or subsidiaries that use different currencies from the functional currency of the Company) are translated into the New Taiwan dollar using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests, as appropriate.).

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to noncontrolling interests of the subsidiary and is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

e. Inventories

Inventories consist of raw materials, supplies, finished goods and work-in-progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.

f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity over which the Company has controlling interest.

Under the equity method, investments are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of the equity of subsidiaries attributable to the Company.

222

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

g. Investment in associates

An associate is an entity over which the Company has significant influence and which is neither a subsidiary nor an interest in a joint venture.

The Company uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates attributable to the Company.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

223

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Company’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required had the investee directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is not allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate and the joint venture attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required had that associate directly disposed of the related assets or liabilities. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company continues to apply the equity method and does not remeasure the retained interest.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the parent company only financial statements only to the extent that interests in the associate are not related to the Company.

h. Property, plant and equipment

Property, plant and equipment are initially measured at cost and subsequently measured at cost less accumulated depreciation and accumulated impairment loss.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

224

i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties include right-of-use assets. Investment properties also include land held for a currently undetermined future use.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss.

Investment properties acquired through leases were initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made on or before the commencement date, plus initial direct costs incurred and an estimate of costs needed to restore the underlying assets, less any lease incentives received. These investment properties are subsequently measured at cost less accumulated depreciation and accumulated impairment loss and adjusted for any remeasurement of the lease liabilities.

Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

j. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Company’s cashgenerating units (CGU) or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributable goodwill, with its recoverable amount. However, if the goodwill allocated to a CGU was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

If goodwill has been allocated to a CGU and the entity disposes of an operation within that unit, the goodwill associated with the operation which is disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal, and is measured on the basis of the relative values of the operation disposed of and the portion of the CGU retained.

k. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization method are reviewed at the end of each year, with the effect of any changes in estimate accounted for on a prospective basis.

225

2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

  • l. Impairment of property, plant and equipment, right-of-use assets and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use assets and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount (deducting amortization or depreciation) that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

m. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI.

226

Financial assets at FVTPL are subsequently measured at fair value, and any dividends or interest earned on such financial assets are recognized in other income and interest income; any remeasurement gains or losses on such financial assets are recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

  • ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

  • i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

  • ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, account receivables at amortized cost, other receivables and overdue receivables, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

  • i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and

  • ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

Cash equivalents include time deposits and repurchase agreements collateralized by bonds with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

  • b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including c receivables).

The Company always recognizes lifetime expected credit losses (ECLs) for account receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

227

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purpose, the Company considers the following situation as induction that a financial assets is in default (without taking into account any collateral held by the Company):

  • Internal or external information shows that the debtor is unlikely to pay its creditors.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account.

  • c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

  • 2) Financial liabilities

  • a) Subsequent measurement

Except the following situation, all the financial liabilities are measured at amortized cost using the effective interest method.

Financial liabilities at fair value through profit or loss are stated at fair value, and any interest paid on such financial liabilities is recognized in finance costs; any remeasurement gains or losses on such financial liabilities are recognized in other gains or losses. Fair value is determined in the manner described in Note 29.

  • b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

n. Provisions

Provisions are measured at the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

228

Warranties

Provisions for the expected cost of warranty obligations to assure that products comply with agreed-upon specifications are recognized on the date of sale of the relevant products at the best estimate by the management of the Company of the expenditures required to settle the Company’s obligations.

o. Revenue recognition

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

  • 1) Revenue from the sale of goods

Revenue from the sale of goods mainly comes from sales of computer equipment. Sales of computer equipment are recognized as revenue when the goods are delivered to the customer’s specific location or the goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Revenue and account receivables are recognized concurrently.

  • 2) Revenue from the rendering of services

Revenue from the rendering of services mainly comes from the maintenance services of computer equipment. The effort of technical personnel is required to perform maintenance services. Since the length of the maintenance service provided to each contract is only for a short duration, the Company recognizes revenue upon completion of service contracts.

p. Leasing

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

  • 1) The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

When the Company subleases a right-of-use asset, the sublease is classified by reference to the rightof-use asset arising from the head lease, not with reference to the underlying asset. However, if the head lease is a short-term lease that the Company, as a lessee, has accounted for applying recognition exemption, the sublease is classified as an operating lease.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

When a lease includes both land and building elements, the Company assesses the classification of each element separately as a finance or an operating lease based on the assessment as to whether substantially all the risks and rewards incidental to ownership of each element have been transferred to the lessee. The lease payments are allocated between the land and the building elements in proportion to the relative fair values of the leasehold interests in the land element and building element of the lease at the inception of a contract. If the allocation of the lease payments can be made reliably, each element is accounted for separately in accordance with its lease classification. When the lease payments cannot be allocated reliably between the land and building elements, the entire lease is generally classified as a finance lease unless it is clear that both elements are operating leases; in which case, the entire lease is classified as an operating lease.

229

  • 2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets. With respect to the recognition and measurement of right-of-use assets that meet the definition of investment properties, refer to caption i for the accounting policies of investment properties.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index or a rate used to determine those payments, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the balance sheets.

Variable lease payments that do not depend on an index or a rate are recognized as expenses in the periods in which they are incurred.

q. Employee benefits

  • 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

  • 2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered services entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined

230

benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

r. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current taxes

According to the Income Tax Law in the ROC, an additional tax on unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

  • 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences, unused loss carry forward and unused tax credits for research and development expenditures, and personnel training expenditures to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

231

  • 3) Current and deferred tax for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The Company considers the economic implications of the COVID-19 when making its critical accounting estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Key Sources of Estimation Uncertainty

a. Estimated impairment of financial assets

  • The provision for impairment of account receivables is based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 9. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

b. Write-down of inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

  • c. Impairment of goodwill included in the investments in subsidiaries

Determining whether the goodwill included in the investments in subsidiaries is impaired requires an estimation of the value in use of the cash-generating units which are expected to benefit from the synergies of the related combination and to which the goodwill has been allocated since the acquisition date. The calculation of the value in use requires management to estimate the future cash flows expected to arise from the cash-generating units and a suitable discount rate in order to calculate the present value. Where the actual future cash flows are less than expected, a material impairment loss may arise.

d. Income taxes

The realizability of deferred tax assets mainly depends on whether sufficient future profit or taxable temporary differences will be available. In cases where the actual future profit generated is less than expected, a material reversal of deferred tax assets may arise, which would be recognized in profit or loss for the period in which such a reversal takes place.

232

e. Recognition and measurement of provisions

The Company estimates the cost of product warranties at the time the revenue is recognized, and the estimation is based on the quantities of products still under warranty, and those products’ historical and expected repair rate, as well as unit repair costs. Management continuously reviews the estimation used and appropriately revises it if needed, any changes of the above assumptions may have a material impact on the estimation of the provision for the expected cost of product warranties.

6. CASH AND CASH EQUIVALENTS

Petty cash and foreign cash

Checking accounts and demand deposits
Cash equivalents(investments with original maturities of less than 3 months)
Time deposits
Repurchase agreements collateralized by bonds

 December 31 December 31


2020
$ 736

565,705
2,190,607

56,960

$ 2,814,008
 2019
$ 1,053
1,182,862
1,742,326

149,900
$ 3,076,141

As of December 31, 2020 and 2019, the market rate interval of time deposits with original maturities of less than 3 months were ranging from 0.21% to 2.8% and from 0.59% to 2.33%, respectively.

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

Financial assets at FVTPL-current
Financial assets mandatorily classified as at FVTPL
Non-derivative financial assets
Mutual funds

Financial assets at FVTPL-non-current
Financial assets mandatorily classified as at FVTPL
Non-derivative financial assets
Foreign unlisted shares - equity securities

Domestic unlisted shares - equity securities

 December 31 December 31



2020
$ 561,008

$ 25

41,677

$ 41,702
 2019
$ 583,562
$ 8

44,100
$ 44,108

The Company entered into cross-currency swap contracts to manage exposures to exchange rate and interest rate fluctuations of foreign currency denominated assets and liabilities. As of December 31, 2020, it did not hold any outstanding derivative financial products. The investment income from derivative financial products for the year ended December 31, 2020 was $11,133 thousand. However, those derivative financial products did not meet the criteria of hedge effectiveness and, therefore, were not accounted for using hedge accounting (December 31, 2019: None).

233

8. FINANCIAL ASSETS AT AMORTIZED COST

Current
Domestic investments
Time deposits with original maturities of more than 3 months (a)

Repurchase agreements collateralized by bonds with original
maturities of more than 3 months
Pledged time deposits (b)

 December 31 December 31


2020
$ 2,236,916

1,433,249

3,700

$ 3,673,865
 2019
$ 2,498,367
149,900

6,999
$ 2,655,266

  • a. As of December 31, 2020 and 2019, the interest rates for time deposits with original maturities of more than 3 months were ranging from 0.3% to 2.8% and from 0.63% to 2.3%, respectively.

  • b. Refer to Note 31 for information related to pledged financial assets at amortized cost.

  • c. Refer to Note 9 for information related to credit risk management and impairment valuation of other financial assets at amortized cost.

9. ACCOUNT RECEIVABLES, OTHER RECEIVABLES AND OVERDUE RECEIVABLES

Account receivables
At amortized cost
Gross carrying amount - third parties

Less: Allowance for impairment loss

At amortized cost
Gross carrying amount - related parties


Other receivables
Other receivables - related parties (Notes 11 and 29)

Income tax refund receivables
Others
Less: Allowance for impairment loss


Overdue receivables
Overdue receivables

Less: Allowance for impairment loss

 December 31 December 31









2020
$ 3,448,262


(2,540)

3,445,722
390,688

$ 3,836,410

$ 1,007,603

69,363
24,175

(16,927)

$ 1,084,214

$ 159,257


(159,257)

$ -
 2019
$ 3,062,320

(7,950)
3,054,370

300,119
$ 3,354,489
$ 2,097,675
59,620
22,449

(16,927)
$ 2,162,817
$ 159,257

(159,257)
$ -

234

a. Account receivable

Before accepting a new customer, the Company takes both the client evaluation results generated by the internal credit rating system and the evaluation report provided by the external hedging institution into consideration to measure the potential customer’s credit quality and define its credit limit. Customer credit limits and ratings are reviewed twice a year. For fair presentation of the accounts receivable, the Company reviews the aging and recovery of accounts receivable every week.

The average credit period of sales of goods was 30 days to 120 days. No interest was charged on account receivables since the credit period is short. In order to minimize credit risk, the management of the Company has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Company’s credit risk was significantly reduced.

The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivables. The expected credit losses on accounts receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, and adjusted for general economic conditions of the industry in which the debtors operate. Based on the Company’s historical credit loss experience which shows different loss patterns for different customer segments, the provision for loss allowance based on past due status is further distinguished according to the Company’s different customer base.

The Company recognized an allowance for impairment loss of 100% against account receivables when there is information indicating that the debtor is in severe financial difficulty, and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation, or when the account receivables are not recoverable. For the uncollectible account receivables, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivables based on the Company’s provision matrix.

December 31, 2020


Gross carrying amount

Loss allowance (Lifetime ECL)

Amortized cost

December 31, 2019

Gross carrying amount

Loss allowance (Lifetime ECL)

Amortized cost
 Not Past Due
$ 3,555,570

-

$ 3,555,570

Not Past Due
$ 3,233,582

-

$ 3,233,582
 Less than 60
Days
$ 281,964

(2,046)

$ 279,918

Less than 60
Days
$ 58,168

(570)

$ 57,598
 61 to 90 Days 91 to 180 Days Over 180 Days
$ 941 $ - $ 475

(19)

-

(475)

$ 922
$ -
$ -

61 to 90 Days 91 to 180 Days Over 180 Days
$ 7 $ 5,596 $ 65,086

-

(112)

(7,268)

$ 7
$ 5,484
$ 57,818
 Total
$ 3,838,950

(2,540)
$ 3,836,410
Total
$ 3,362,439

(7,950)
$ 3,354,489

December 31, 2019

235

The movements of the loss allowance of accounts receivables were as follows:

Balance at January 1
Less: Net remeasurement of loss allowance reversed
Balance at December 31		 **December ** **31 **
2020
$ 7,950

(5,410)
$ 2,540		 2019
$ 10,465

(2,515)
$ 7,950

b. Other receivables

For other receivables that have indications of impairment, the Company recognizes loss allowance in full amount.

The movements of the loss allowance of other receivables were as follows:


Balance at January 1
Add: Net remeasurement of loss allowance
Balance at December 31		 December 31
2020

$ 16,927
-
$ 16,927		 2019
$ 16,927

-
$ 16,927

c. Overdue receivables

For overdue receivables that have indications of impairment, the Company recognizes loss allowance at full amount after deducting the value of related collateral.

The movements of the loss allowance of overdue receivables were as follows:

Balance at January 1

Add: Net remeasurement of loss allowance

Balance at December 31
 December 31 December 31


2020
$ 159,257

-

$ 159,257
 2019
$ 159,257

-
$ 159,257

236

10. INVENTORIES

Finished goods

Work in progress
Raw materials

 December 31 December 31


2020
$ 642,737

14,937
526,180

$ 1,183,854
 2019
$ 454,683
1,532

290,766
$ 746,981

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2020 and 2019 were $21,370,098 thousand and $23,416,717 thousand, respectively.

The cost of goods sold for the years ended December 31, 2020 and 2019 included inventory write-down of $53,610 thousand and $5,796 thousand, respectively.

11. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries

Associates that are not individually material

 December 31 December 31


2020
$ 5,457,363

150

$ 5,457,513
 2019
$ 4,350,825

-
$ 4,350,825

a. Investments in subsidiaries

Unlisted companies
Elitegroup Computer Systems (HK) Co., Limited

Elitegroup Computer Systems (Japan) Co., Ltd.
Elitegroup Computer Systems Holding Co., Ltd. (BVI)
ECS Holding (America) Co. (USA)
Elitegroup Computer Systems Korea Co., Ltd.
Dragon Asia Trading Co., Ltd. (BVI)
Unitop International Corp.
Unity Investments Limited
ECS Holding (HK) Co., Limited
Elitegroup Technology (Thailand) Co., Ltd.

 December 31 December 31


2020
$ 263,628

22,704
202,356
732,528
9,407
-
871,479
82,139
3,001,412
271,710

$ 5,457,363
 2019
$ 271,507
22,559
404,795
767,921
9,229
1,208,201
927,987
75,968
500,367

162,291
$ 4,350,825

237

Elitegroup Computer Systems (HK) Co., Limited
Elitegroup Computer Systems (Japan) Co., Ltd.
Elitegroup Computer Systems Holding Co., Ltd. (BVI)
ECS Holding (America) Co. (USA)
Elitegroup Computer Systems Korea Co., Ltd.
Dragon Asia Trading Co., Ltd. (BVI)
Unitop International Corp.
Unity Investments Limited
ECS Holding (HK) Co., Limited
Elitegroup Technology (Thailand) Co., Ltd.		 Proportion of Ownership and
Voting Rights December 31
2020
2019
Note
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
4)
100.00%
100.00%
100.00%
100.00%
-
100.00%
1)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
1), 2)
99.99%
99.99%
3)

  • 1) The board of directors of the Company approved the Plan of Activating the Assets Located in People’s Republic of China (“Mainland Assets Activation Plan”) on April 7, 2017. And the Company entered into a contract with Ever Unicorn Estate Limited (the “Ever Unicorn”) in April 2017, which was to be executed in two sections.

  • a) Transfer of interests in Dragon Asia:

After finishing the transfer of the operations and related assets and liabilities of Golden Elite Technology ( ���� ), Ever Unicorn will make an estimated payment between RMB1,150,000 thousand and RMB1,375,000 thousand for a 100% equity interest in Dragon Asia.

  • b) Relocation compensation for ECS Digital Technology’s operations:

ECS Digital Technology is expected to relocate its operations to another site during 2021 to 2023. A compensation of RMB2,500,000 thousand is expected to be paid by Ever Unicorn in accordance with the progress of the relocation.

The relocation income, after deducting the related relocation costs and expenses, will be used for landscaping, plant constructing, and equipment installing as well as for the funds required to operate for ECS Digital Technology.

Due to the modifications on transaction terms and payment arrangements, the board of directors of the Company approved and entered into a supplementary contract with Ever Unicorn on January 23, 2018.

In accordance with the supplementary contract, the transfer of interests in Dragon Asia was divided into two phases. During phase 1, the Company will complete the transfer of 52% interest in Dragon Asia to Ever Unicorn for RMB600,000 thousand. After the Company completed the stripping of other non-target assets and liabilities from Golden Elite Technology ( ���� ), with both parties reaching a consensus on the prerequisites including the change in procedure to the land category by Golden Elite Technology ( ���� ), phase 2 of the transaction will then commence. The Company will complete the transfer of remaining 48% interest in Dragon Asia to Ever Unicorn for RMB550,000 thousand. The Company will be in negotiate the rest of the contract with Ever Unicorn if the land is not contained in the urban planning by the competent authority.

In order to cooperate with Mainland Assets Activation Plan, The board of directors of the Company approved to reduce the capital of Dragon Asia and Million Up on January 23, 2018, the total amount of capital reduction was US$69,327 thousand for both subsidiaries.

238

The Company obtained the phase 1 share price for RMB600,000 thousand, and recognized as other advances received (refer to Note 19) because the Company has not completed the transfer of significant risks and rewards of related assets as well as share transfer of 52% equity of Dragon Asia. The foregoing transaction of 52% equity of Dragon Asia had received a letter of approval from the Investment Commission, Ministry of Economic Affairs.

According to the contract signed with Ever Unicorn, the Company should strip non-target assets and liabilities from Golden Elite Technology ( ���� ). The board of directors of Golden Elite Technology ( ���� ) approved on April 26, 2018 to proceed with the splitting process, by means of transferring non-target assets and liabilities into newly registered company, Golden Elite Technology ( ������ ). Golden Elite Technology ( ���� ) and Golden Elite Technology ( ������ ) will be 100% owned subsidiaries of Million Up Finance Ltd., and the original shareholders’ rights and interests shall not be affected.

In order to facilitate the splitting process, the board of directors of the Company approved the employees’ economic compensation of RMB113,963 thousand of Golden Elite Technology ( ��� � ) on June 24, 2019 which was issued in 2020. Golden Elite Technology ( ���� ) completed the splitting process on July 1, 2019, and transferred non-target’s net assets of RMB454,051 thousand to Golden Elite Technology ( ������ ) as capital.

Due to the adjustment to the investment structure, the board of directors of the Company approved the sales of 100% of Golden Elite Technology’s shares ( ������ ) to ECS Holding (HK) Co., Limited by Million Up Finance Limited on August 12, 2019. The transaction price will be determined according to Golden Elite Technology’s ( ������ ) net value at the time of execution. The application for transferring the equity was approved by the Investment Commission, Ministry of Economic Affairs, Rule No. 10800244950, on May 4, 2020. On May 29, 2020, four parties (Dragon Asia, Million Up, ECS Holding (HK) Co., Limited And the Company) agreed to offset the creditor's rights and liabilities. The amounts used by the four parties to offset the creditor's rights and liabilities are based on (1) the amount of capital reduction received (paid) by the Company, Dragon Asia and Million Up; (2) the amount of capital increase that the Company owed to its subsidiary, ECS Holding (HK), which amounted to US$69,327 thousand; and (3) the amount received from selling 100% equity of Golden Elite Technology ( ������ ) to ECS Holding (HK) and completion of the transfer of shares of Golden Elite Technology ( ������ ) to ECS Holding (HK).

Ever Unicorn requested the Company to transfer the remaining 48% shares of Dragon Asia according to the supplementary contract, the Company obtained the phase 2 share price for RMB550,000 thousand on August 25, 2020, which was recognized as other advanced receipts (refer to Note 19), and finished the 48% share transfer process of Dragon Asia at the same day. The foregoing transaction of 48% equity of Dragon Asia had received the a letter of approval from the Investment Commission, Ministry of Economic Affairs on September 29, 2020. After transferring all of the shares of Dragon Asia, the Company lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ), respectively.

As of the end of 2020, the Company had finished part of the transfer of significant risks and rewards of related assets after evaluating the agreement and the status of implementation. Refer to Note 12 to the consolidated financial statements.

As of the end of 2020, the Company had not fully completed the transfer of significant risks and rewards of related assets, and the advance receipts of Ever Unicorn’s phase 1 share price were classified as other advance receipts.

239

The terms of the abovementioned trading contract stipulate that if the buyer or seller are involved in breach of contract, the non-defaulting party shall have the right to decide whether to terminate the contract, in addition to the actual damages and related expenses that the defaulting party should pay to the non-defaulting party.

  • 2) The board of directors of the Company approved Mainland Assets Activation Plan on April 7, 2017. It was approved by the board of directors that US$101,000 thousand be invested in a 100% owned subsidiary ECS Holding (HK) Co., Limited, and US$100,000 thousand be invested in ECS Digital Technology, a wholly-owned subsidiary of ECS Holding (HK) Co., Limited. The two aforementioned subsidiaries were legally registered in April and June 2017, respectively. The Company already remitted US$17,000 thousand to ECS Holding (HK) Co., Limited, US$5,500 thousand and US$10,000 thousand were then remitted to ECS Digital Technology by ECS Holding (HK) Co., Limited in 2017 and 2019, respectively.

  • 3) The board of directors of the Company approved on December 24, 2018 to establish Elitegroup Technology (Thailand) Co., Ltd., and the registration was completed on January 18, 2019. The Company’s shareholding percentage is 99.99%. As of the end of December 31, 2020, the Company had invested THB367,500 thousand (approximately NT$360,898 thousand).

  • 4) The board of directors of Elitegroup Computer Systems Holding Co., Ltd. (BVI) approved the reduction of its capital by US$6,845 thousand in June 2020, which was remitted back to the Company.

Refer to Note 34 for information about the subsidiaries indirectly held by the Company.

b. Investments in associates

Associates that are not individually material
FoxElite Computer System Co., Ltd.		 December 31
2020
$ 150
 2019
$ -

FoxElite Computer System Co., Ltd. is still in the process for registration of establishment on December 31, 2020 with NT$429 thousand of initial capital. The Company invested NT$150 thousand in July 2020 and had approximately 35% ownership.

240

12. PROPERTY, PLANT AND EQUIPMENT

Equipment
Transportation
Equipment
Other
Equipment
Cost
Balance at January 1, 2020
$ 39,390
$ 719
$ 310,937

Additions
-
-
26,075
Disposals

(1,037)

-

(3,618)

Balance at December 31, 2020

38,353

719

333,394

Accumulated depreciation
Balance at January 1, 2020
38,942
719
251,628
Depreciation
448
-
21,962
Disposals

(1,037)

-

(3,618)

Balance at December 31, 2020

38,353

719

269,972

Carrying amounts at
December 31, 2020
$ -
$ -
$ 63,422

Cost
Balance at January 1, 2019
$ 39,468
$ 719
$ 317,764

Additions
-
-
10,551
Disposals

(78)

-

(17,378)

Balance at December 31, 2019

39,390

719

310,937

Accumulated depreciation
Balance at January 1, 2019
38,570
719
243,677
Depreciation
450
-
25,329
Disposals

(78)

-

(17,378)

Balance at December 31, 2019

38,942

719

251,628

Carrying amounts at
December 31, 2019
$ 448
$ -
$ 59,309
 Total
$ 351,046
26,075

(4,655)

372,466
291,289
22,410

(4,655)

309,044
$ 63,422
$ 357,951
10,551

(17,456)

351,046
282,966
25,779

(17,456)

291,289
$ 59,757

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the asset:

Equipment 3 to 10 years
Transportation equipment 4 years
Other equipment 2 to 10 years

There was no capitalization of interests for the years ended December 31, 2020 and 2019.

In the meeting held on June 20, 2013, the Company’s shareholders authorized the board of directors to sell the headquarters land and building located in Neihu; thus, in December 2013, the Company signed a contract with third party for the sale of these items and then leased them back under an operating lease. The rental period is 10 years from December 23, 2013 to December 22, 2023. The gain in which selling price was in excess of fair value amounted to $581,747 thousand and is deferred and amortized periodically over the lease term, and accounted for as unrealized gain on sale and leaseback.

Refer to Note 13 for the reclassification of unrealized gain on sale and leaseback to the deduction of right-ofuse assets with the application of IFRS 16 starting from January 1, 2019.

241

13. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amounts
Land

Buildings
Office equipment
Transportation equipment



Additions to right-of-use assets

Depreciation charge for right-of-use assets
Land

Buildings
Office equipment
Transportation equipment

 December 31 December 31
2020
$ 207,088

84,285
273

6,773

$ 298,419

For the Year Ended		 2019
$ 276,117
112,380
571

12,424
$ 401,492
December 31



2020
$ -

$ 69,029

28,095
298

5,651

$ 103,073
 2019
$ 16,952
$ 73,302
29,834
298

4,528
$ 107,962

The Company has been partially subleasing its headquarters located in Neihu under operating leases. The related right-of-use assets are presented as investment properties (refer to Note 14). The amounts disclosed above with respect to the right-of-use assets do not include right-of-use assets that meet the definition of investment properties.

b. Lease liabilities

Carrying amounts
Current

Non-current
 December 31 December 31

2020
$ 197,166

$ 397,187
 2019
$ 186,916
$ 594,353

242

Range of discount rate for lease liabilities was as follows:

Buildings
Office equipment
Transportation equipment		 December 31
2020
2019
2.33%
2.33%
0.61%
0.61%
0.61%
0.61%

c. Material lease-in activities and terms

The Company leases land and buildings for office use, and the lease period is 10 years.

The lease of buildings in Taiwan is that the Company sold and leased back headquarters building located in Neihu in December 2013 (refer to Note 12) through negotiating to pay rent by prepaying checks annually. The rental term is 10 years, and if the monthly rent of the first three years aligns with the floating rates of two-year time deposits of Chunghwa Post plus a few percentage points, the rent for the following month will consequentially increase. The monthly rents for the forth to seventh year and the eighth to tenth year are adjusted to increase by a certain multiplier. At the third month before expiration, if the Company intends to continue renting, it has the right of first refusal with the same renting terms, and should negotiate related terms of contract extension. If both of them do not complete the negotiations by one month before the expiration, the Company is regarded as abandoning the right of first refusal, and the rental relations would be terminated automatically upon the completion of the contract. In addition, the Company is prohibited from subleasing or transferring all or any portion of the underlying assets without the lessor’s consent.

d. Other lease information

Lease arrangements under operating leases for the leasing out of the freehold and subleases its investment properties are set out in Note 14.


Expenses relating to short-term leases

Expenses relating to low-value asset leases

Total cash outflow for leases
 For the Year Ended For the Year Ended December 31


2020
$ -

$ 34

$ (202,621)
 2019
$ 1,583
$ 34
$ (202,826)

The Company leases certain office and transportation equipment which qualify as short-term leases and low-value assets leases. The Company has elected to apply the recognition exemption and thus, did not recognize right-of-use assets and lease liabilities for these leases.

The amount of cash outflow for leases disclosed above including the lease expense of charge for subleased investment properties.

243

14. INVESTMENT PROPERTIES

Cost
Balance at January 1, 2020

Additions

Balance at December 31, 2020

Accumulated depreciation
Balance at January 1, 2020
Depreciation expense
Balance at December 31, 2020
Accumulated impairment
Balance at January 1 and
December 31, 2020

Carrying amounts at December 31, 2020
Cost
Balance at January 1, 2019

Adjustments on initial application
of IFRS 16

Balance at January 1, 2019
(restated)
Additions
Reclassification

Balance at December 31, 2019

Accumulated depreciation
Balance at January 1, 2019
Depreciation expense
Reclassification
Balance at December 31, 2019
Accumulated impairment
Balance at January 1 and
December 31, 2019

Carrying amounts at December 31, 2019		 Land
Buildings and
Improvements
Right-of-use
Assets
$ 377,129
$ 155,206
$ 180,374


-

191

-

377,129

155,397

180,374

112,173
36,075

4,622

36,075


116,795

72,150


14,673

-

-

$ 362,456
$ 38,602
$ 108,224

$ 377,129
$ 154,816
$ -


-

-

124,874

377,129
154,816
124,874
-
390
-

-

-

55,500

377,129

155,206

180,374

107,587
-
4,586
30,063

-

6,012


112,173

36,075


14,673

-

-

$ 362,456
$ 43,033
$ 144,299
 Total
$ 712,709

191

712,900
148,248

40,697

188,945

14,673
$ 509,282
$ 531,945

124,874
656,819
390

55,500

712,709
107,587
34,649

6,012

148,248

14,673
$ 549,788

The investment properties held by the Company mainly consisted of buildings and improvements which are depreciated using the straight-line method over their estimated useful lives of 10 to 45 years and 3 to 10 years, respectively.

244

The investment properties held by the Company are located at Tamsui and Guandu; the fair values were not reliably determined because the market for comparable properties is inactive and alternative reliable measurements of fair value are not available.

Land and buildings included in investment properties were leased out for 3 to 7 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods for partial lease.

Right-of-use assets, the headquarters land and building located in Neihu, included in investment properties were leased out for 2 to 9 years. The lessees do not have bargain purchase options to acquire the investment properties at the expiry of the lease periods.

The maturity analysis of lease payments receivable under operating leases of investment properties at December 31, 2020 and 2019 was as follows:

Year 1

Year 2
Year 3
Year 4
Year 5 onwards

 **December 31 ** **December 31 **


2020
$ 69,266

64,873
30,685
-

-

$ 164,824
 2019
$ 66,762
57,984
53,428
22,033

-
$ 200,207

15. GOODWILL



Cost

Balances at January 1 and December 31

Accumulated impairment losses
Balances at January 1 and December 31

Carrying amounts at December 31
 **For the Year Ended ** **For the Year Ended ** **December 31 **




2020
$ 539,663

(153,458)

$ 386,205
 2019
$ 539,663
(153,458)
$ 386,205

Goodwill is the premium generated from the acquisition of mobile products businesses.

Net operating assets of cash-generating units (CGUs) to which the goodwill of mobile products businesses has been allocated are tested for impairment annually.

The calculation of the recoverable amount of the above CGUs was based on their value in use. In this calculation, the Company used cash flow projections for a budget period based on the key asset’s remaining durable years, which was determined as 7 years. The cash flows beyond that five-year period have been extrapolated using a steady 2% to 3% per annum growth rate. For the CGUs impairment test made on December 31, 2020 and 2019, the discount rate used was 12.12% and 13.23%, respectively.

245

Key assumptions and the methods used to calculate the major data of the CGU were as follows:

  • a. Estimate of the growth rate: The estimation of sales was based on the expected future global growth rate of the market trend for similar products.

  • b. Estimate of gross margin: The estimate was based on the actual ratio for 2020 and historical operating performance.

  • c. Estimate of operating profit: The operating expenses were estimated on the basis of the actual ratio of operating expenses to revenue for 2020.

The CGUs used each the above key assumptions to calculate their recoverable amounts, which were higher than their carrying values as of December 31, 2020; thus there was no indication of impairment.

16. OTHER INTANGIBLE ASSETS

Computer Computer
Software
Cost
Balance at January 1, 2020 $ 31,563
Additions 8,171
Disposals (28,860)
Balance at December 31, 2020 10,874
Accumulated amortization
Balance at January 1, 2020 24,674
Amortization expenses 6,939
Disposals (28,860)
Balance at December 31, 2020 2,753
Carrying amounts at December 31, 2020 $
8,121
Cost
Balance at January 1, 2019 $ 35,505
Additions 1,728
Disposals (5,670)
Balance at December 31, 2019 31,563
Accumulated amortization
Balance at January 1, 2019 $ 18,529
Amortization expenses 11,815
Disposals (5,670)
Balance at December 31, 2019 24,674
Carrying amounts at December 31, 2019 $
6,889

246

The amortization expense is recognized on a straight-line basis per annum at the following useful lives:

Computer software 2 to 5 years

17. SHORT-TERM BORROWINGS

Line of credit borrowings-USD
 December 31 December 31
2020
$ 1,247,424
 2019
$ -

The interest rate on revolving bank loans was 0.75%-0.96% per annum as of December 31, 2020.

18. ACCOUNTS PAYABLE

Accounts payable
Third parties - operating

Related parties - operating

 **December 31 ** **December 31 **


2020
$ 1,226,552

1,208,275

$ 2,434,827
 2019
$ 1,158,659
1,735,206
$ 2,893,865

Accounts payable generated principally from the purchase of components, including motherboards, notebooks, CPUs, IC chip-sets, LCD panels, CD-ROM drives, hard disks, and memory modules.

247

19. OTHER ADVANCES RECEIVED AND OTHER LIABILITIES

Current
Other payables
Salaries and bonus

Royalty expense
Service expense
Payables for insurance
Others


Other advances received (a)

Other liabilities
Financial guarantee contracts (b)

Contracts liability (c)
Temporary receipts
Others

 **December 31 ** **December 31 **






2020
$ 400,442

126,432
44,638
44,491
242,160

$ 858,163

$ 3,677,260

$ 542,727

181,429
7,234
11,361

$ 742,751
 2019
$ 433,218
107,988
47,000
34,356
138,171
$ 760,733
$ 2,751,737
$ 680,819
226,225
12,433
35,964
$ 955,441
  • a. The Company had completed the transfers of 52% and 48% interest in Dragon Asia in the amounts of RMB600,000 and RMB550,000 thousand according to the Phase 1 and Phase 2 of the Mainland Assets Activation Plan on March 27, 2018 and August 25, 2019, respectively.

After evaluating the agreement and the status of implementation, the Company derecognized the other advanced receipts at an amount of RMB315,453 thousand, refer to Note 12 to the consolidated financial statements.

  • b. Under IFRS 15, the financial guarantee of quantity discount is not included in the provisions.

  • c. Contract liabilities are made up of unearned sales revenue.

248

20. PROVISIONS - CURRENT

Warranties (a)

Balance at January 1, 2020
Additional provisions recognized
Usage
Reversal of unused balances
Balance at December 31, 2020		 **December 31 **
2020
2019
$ 208,136
$ 220,360
Warranties
$ 220,360
93,882
(82,642)
(23,464)
$ 208,136

The provision for warranty claims represents the present value of management’s best estimate of the future outflow of economic benefits that will be required under the Company’s obligations for warranties under the legislation for the local sale of goods. The estimate has been made on the basis of historical warranty trends and may vary as a result of the use of new materials or altered manufacturing processes as well as other events affecting product quality.

21. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Law is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation

Fair value of plan assets

Net defined benefit assets
 **December 31 ** **December 31 **


2020
$(178,071)
306,291

$ 128,220
 2019
$(171,264)
294,548
$ 123,284

249

Movements in net defined benefit assets (liabilities) were as follows:

Present Value of
the Defined
Benefit Fair Value of Net Defined
Obligation the Plan Assets
Benefit Assets
Balance at January 1, 2019 $ (166,918)
 $ 278,403
 $ 111,485
Service cost
Current service cost (326) - (326)
Net interest (expense) income
(2,087)
3,501
1,414
Recognized in profit or loss
(2,413)
3,501
1,088
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 9,417 9,417
Actuarial gain (loss) - changes in financial
assumptions (8,083) - (8,083)
Actuarial gain (loss) - experience
adjustments
6,150
-
6,150
Recognized in other comprehensive income
(1,933)
9,417
7,484
Contributions from the employer
-
3,227
3,227
Balance at December 31, 2019 (171,264)
294,548
123,284
Service cost
Current service cost (332) - (332)
Net interest (expense) income
(1,499)
2,592
1,093
Recognized in profit or loss
(1,831)
2,592
761
Remeasurement
Return on plan assets (excluding amounts
included in net interest) - 9,247 9,247
Actuarial gain (loss) - changes in
demographic assumptions (120) - (120)
Actuarial gain (loss) - changes in financial
assumptions (8,057) - (8,057)
Actuarial gain (loss) - experience
adjustments
(122)
-
(122)
Recognized in other comprehensive income
(8,299)
9,247
948
Contributions from the employer
-
3,227
3,227
Benefits paid
3,323
(3,323)
-
Balance at December 31, 2020 $ (178,071)
 $ 306,291
 $ 128,220

250

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

  • 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

  • 2) Interest risk: A decrease in the government/corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.

  • 3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate
Expected rate of salary increase		 December 31
2020
2019
0.500%
0.875%
2.500%
2.500%

If possible reasonable changes in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s)
0.25% increase
0.25% decrease
Expected rate(s) of salary increase
0.25% increase
0.25% decrease		 **December ** **31 **



2020
$ (5,427)

$ 5,659

$ 5,453

$ (5,260)
 2019
$ (5,446)
$ 5,685
$ 5,500
$ (5,298)

The sensitivity analysis presented above may not be representative of the actual changes in the present value of the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Expected contributions to the plans for the next year
Average duration of the defined benefit obligation		 December 31
2020
$ 3,297

12.3 years		 2019
$ 3,285
12.9 years

251

22. EQUITY

a. Share capital

Ordinary shares

Number of shares authorized (in thousands)

Value of shares authorized

Number of shares issued and fully paid (in thousands)

Value of shares issued
 December 31 December 31



2020

1,750,000

$ 17,500,000

557,403

$ 5,574,030
 2019

1,750,000
$ 17,500,000

557,403
$ 5,574,030

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to receive dividends.

b. Capital surplus

May be used to offset a deficit, distributed as
cash dividends or transferred to share capital*
Share premium

Treasury share transaction
May be used to offset a deficit only
Employee share options - expired
Dividends unclaimed by shareholders
Changes in percentage of ownership interest in associates

 **December 31 ** **December 31 **


2020
$ 5,614,494

216,663
38,735
13,741

31,250

$ 5,914,883
 2019
$ 5,614,494
216,663
38,735
12,041

31,250
$ 5,913,183
  • Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year)

c. Retained earnings and dividend policy

In the annual shareholder meeting on June 20, 2019 and June 22, 2020, the amendment to the Company’s Articles of Incorporation (the “Articles”) was approved. According to the new amendment, the Company’s board of directors can propose surplus distribution and deficit compensation in compliance with Article 18 of the Article within six months after the end of the fiscal period. After approval by audit committee and board of directors, surplus distribution and deficit compensation can be implemented.

Under the dividends policy as set forth in the amended Articles, profits of the first six months in a fiscal year shall first be utilized for paying taxes, compensating accumulated deficits, appropriating employees’ compensation and directors’ remuneration, and setting aside 10% of the remaining profits unless the amount of legal reserve is equal to that of contributed capitals. After provision or reversal of special reserve in compliance with laws and regulations, remaining profits and retained earnings can be proposed

252

to earning distribution by the Company’s board of directors. The proposal shall be approved by shareholders if earnings will be distributed by issuance of new stocks, and approved by the Company’s board of directors if distributed in cash. Profits of the fiscal year shall first be utilized for paying taxes, compensating accumulated deficits, and setting aside 10% of the remaining profits unless the amount of legal reserve is equal to that of contributed capitals. After provision or reversal of special reserve in compliance with laws and regulations, remaining profits and retained earnings (including the first six months of retained earnings) can be proposed to earning distribution by the Company’s board of directors. The proposal shall be approved by shareholders if earnings will be distributed by issuance of new stocks. According to the Article 240-5 of the Company Act, if two-thirds or more of all the directors attending the meeting and over half of attended directors approve the resolution, the Company can authorize the board of directors to appropriate accrued dividends or bonuses, part or all of legal reserve and paid-in capital as stated by the Article 241-1 of the Company Act by cash, and a report shall be submitted at the shareholders’ meeting. Refer to Note 24(i) “Employees’ compensation and remuneration of directors” for the distribution policy of compensation of employees and remuneration of directors under the revised Articles of Incorporation.

The Company’s dividend policy takes into account the results of the Company’s current and future development plans, investment environment, demand for funds, domestic and international competition, and shareholders’ benefits, etc. The annual distribution should be at least 50% of distributable earnings although the Company is allowed to make no distribution when the accumulated distributable earnings are less than 10% of the paid-in capital. The Articles also stipulate that the dividends can be distributed in cash or shares, whereby the distributed cash dividends are no less than 20% of the total dividends distributed.

Appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. Legal reserve may be used to offset deficit. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2019 and 2018 that had been resolved by the shareholders in their meetings on June 22, 2020 and June 20, 2019, respectively, were as follows:

Legal reserve

Special reserve		 Appropriation of Earnings
2019
2018
$ 5,177
$ 2,041
46,589
18,569		 Dividends Per Share(NT$)
2019
2018
$ -
$ -
-
-

The appropriations of earnings for 2020 approved in the shareholders’ meeting on March 22, 2021 are as follows:

Appropriation Appropriation Dividends Per
of Earnings Share (NT$)
Legal reserve $
6,284
Cash dividend 56,558 $0.1015

The Company’s board of directors resolved to distribute cash dividend for the year ended December 31, 2020, and the rest is subject to the resolution of the shareholders in the shareholders’ meeting to be held on June 22, 2021.

253

d. Unrealized gain (loss) on financial assets at FVTOCI

The Company recognized unrealized gain (loss) of $(110) thousand and $1,933 thousand in 2020 and 2019, respectively, due to change in fair value of financial assets at FVTOCI.

23. REVENUE


Revenue from contracts with customers
Revenue from the sale of goods

Revenue from the rendering of services

 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 23,075,139

181,182

$ 23,256,321
 2019
$ 25,481,126

131,598
$ 25,612,724

Under IFRS 15, the Company will recognize revenue at the time of satisfying performance obligations, which consist of contracts entered into with customers for the goods or services delivered or provided.

The Company mainly produces and sells computer equipment. As the market for computer equipment launches new products frequently and the related price is highly volatile, the amount of expected discount is estimated using the most likely amount, by taking into consideration the situation of sales and the range of discount previously given.

24. NET PROFIT (LOSS)

The components of net income were as follow:

a. Other gains and losses


Net foreign exchange losses

Net gains arising on financial assets designated as at FVTPL
Others


Finance costs

Interest on bank overdrafts and loans
Interest on lease liabilities
Other finance costs		 For the Year Ended For the Year Ended December 31
2020
$ (161,217)

18,160

(45,458)

$ (188,515)

For the Year Ended		 2019
$ (143,716)
30,283

(36,015)
$ (149,448)
December 31
2020
$ 5,887
15,671
127
$ 21,685		 2019
$ 3,673
19,853

114
$ 23,640

b. Finance costs

254

c. Interest income


Financial assets at amortized cost

Bank deposits
Other interest income

 For the Year Ended For the Year Ended December 31


2020
$ 49,590

22,155

4,144

$ 75,889
 2019
$ 56,479
41,299

7,522
$ 105,300

d. Other income


Rental income
Others		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ 65,942
23,674
$ 89,616		 2019
$ 57,000

22,723
$ 79,723

e. Depreciation and amortization


Property, plant and equipment

Right-of-use assets
Investment property
Other intangible assets


An analysis of depreciation by function
Operating expenses

Non-operating expenses


An analysis of amortization by function
Operating expenses

f. Operating expenses directly related to investment properties

Direct operating expenses from investment properties that
generated rental income
Direct operating expenses from investment properties that did not
generate rental income		 For the Year Ended For the Year Ended December 31
2020
$ 22,410

103,073
40,697

6,939

$ 173,119

$ 125,483


40,697

$ 166,180

$ 6,939

For the Year Ended		 2019
$ 25,779
107,962
34,649

11,815
$ 180,205
$ 133,741

34,649
$ 168,390
$ 11,815
December 31
2020
$ 41,956
-
$ 41,956		 2019
$ 35,921

-
$ 35,921

255

g. Employee benefit expense


Post-employment benefits (Note 21)
Defined contribution plans

Defined benefit plans

Other employee benefits
Payroll
Labor and health insurance
Other employee costs

Total employee benefit expense

An analysis of employee benefit expense by function
Operating expenses
 For the Year Ended For the Year Ended December 31




2020
$ 37,932

(761)

37,171
786,431
65,739

33,526

$ 922,867

$ 922,867
 2019
$ 36,005

(1,088)
34,917
705,506
62,706

34,090
$ 837,219
$ 837,219

h. Employees’ compensation and remuneration of directors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation and remuneration of directors at rates of 6% and no higher than 0.6%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the year ended December 31, 2020 and 2019, which were approved by the Company’s board of directors on March 22, 2021 and March 20, 2020, respectively, are as follows:

Accrual rate


Employees’ compensation
Remuneration of directors		 For the Year Ended December 31
2020
2019
6.0%
6.0%
-
0.6%

Amount

Employees’ compensation

Remuneration of directors		 For the Year Ended December 31 For the Year Ended December 31
2020
Cash
Shares
$ 23,431
$ -

-
-		 2019
Cash
Shares
$ 3,811
$ -
381
-

256

The remuneration of directors approved in the board of directors’ meeting on March 22, 2021 differed from those recognized in the financial statements for the year ended December 31, 2020. The differences were recorded as an adjustment to profit and loss in 2021.

Amounts approved in the board of directors’ meeting
Amounts recognized in the financial statements		 For the Year Ended
December 31, 2020
Employees’
Compensation
Remuneration
of Directors
$ 23,431
$ -
$ 23,431
$ 2,343

There is no difference between the actual amounts of compensation of employees and remuneration of directors and supervisors paid and the amounts recognized in the financial statements for the year of 2019 and 2018.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2021 and 2020 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

25. INCOME TAXES

a. Income tax recognized in profit or loss

Major components of income tax expense (benefit) were as follows:


Current tax
In respect of the current year

Adjustments for prior years


Deferred tax
In respect of the current year
Adjustments for prior years


Income tax expense recognized in profit or loss
 For the Year Ended For the Year Ended December 31





2020
$ 67,931


(30,385)


37,546

264,586

531


265,117

$ 302,663
 2019
$ 45,031

33,132

78,163
(59,059)

(5,562)

(64,621)
$ 13,542

257

A reconciliation of accounting profit and income tax expenses is as follows:


Profit before tax

Income tax expense calculated at the statutory rate

Nondeductible expenses in determining taxable income
Tax-exempt income
Adjustment of deductible temporary difference in current year
Adjustment of deferred tax from the prior years
Adjustments for prior years’ tax
Others

Income tax expense recognized in profit or loss
 For the Year Ended For the Year Ended December 31



2020
$ 364,747

$ 72,949

20
(546)
260,094
531
(30,385)

-

$ 302,663
 2019
$ 59,321
$ 11,864
-
(794)
-
(5,562)
33,132

(25,098)
$ 13,542

The applicable corporate income tax rate of used by the Company in the ROC is 20%, and the corporate surtax applicable to the unappropriated earnings is 5%.

b. Income tax recognized directly in other comprehensive income


Deferred tax
In respect of the current year
Translation of foreign operations
Remeasurement on defined benefit plans		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
$ (8,202)

189
$ (8,013)		 2019
$ (36,413)

1,497
$ (34,916)

c. Income tax assets and liabilities

Current income tax liabilities
Income tax payable
 December 31 December 31
2020
$ 149,304
 2019
$ 125,952

258

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2020

Deferred tax assets
Temporary
differences
Unrealized loss on
inventory

Provisions

Effect of foreign
currency
exchange
differences

Gain on disposal of
property, plant
and equipment

Loss on investment
in equity
Unrealized
exchange loss
Disposal of
subsidiaries

Others


Deferred tax
liabilities
Temporary
differences
Defined benefit
plan

Financial assets at
FVTPL
Gain on investment
in equity

 Opening
Balance
Recognized
in Profit or
Loss
Recognized in
Other
Comprehensive
Income
$ 7,276
$ 10,722
$ -

180,236
(30,063)
-
204,815
-
8,202
36,584
(9,202)
-
-
8,832
-
1,453
4,043
-
258,138
(24,749)
-

6,743

2,004

-

$695,245
$(38,413)
$ 8,202

$(24,657) $ (797) $ (189)
(400)
(919)
-
(8,299)
(224,988)

-

$(33,356)
$(226,704
)
$ (189)
 Others
Closing
Balance
$ -
$ 17,998
-
150,173
-
213,017
-
27,382
-
8,832
-
5,496
159,703
393,092
-

8,747
$159,703
$824,737
$ -
$(25,643)
-
(1,319)
-
(233,287)
$ -
$(260,249
)		 Closing
Balance
$ 17,998
150,173
213,017
27,382
8,832
5,496
393,092
8,747
$824,737
$(25,643)
(1,319)
(233,287)
$(260,249

259

For the year ended December 31, 2019

Deferred tax assets
Temporary differences
Unrealized loss on
inventories

Provisions
Effect of foreign
currency exchange
differences
Gain on disposal of
property, plant and
equipment
Financial assets at
FVTPL
Unrealized exchange
loss
Disposal of subsidiaries
Others


Deferred tax liabilities
Temporary differences
Goodwill

Unrealized exchange
gain
Defined benefit plan
Financial assets at
FVTPL
Gain on investment in
equity

 Opening
Balance
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Closing Balance
$ 6,117
$ 1,159
$ -
$ 7,276
244,250
(64,014)
-
180,236
168,402
-
36,413
204,815
45,786
(9,202)
-
36,584
4,489
(4,489)
-
-
-
1,453
-
1,453

258,138
-
-
258,138

7,031

(288)

-

6,743
$ 734,213
$ (75,381)
$ 36,413
$ 695,245
$ (5,563)
$ 5,563
$ -
$ -
(23,909)
23,909
-
-
(22,297)
(863)
(1,497)
(24,657)
-
(400)
-
(400)
(120,092)

111,793

-

(8,299)
$ (171,861)
$ 140,002
$ (1,497)
$ (33,356)

e. Deductible temporary differences for which no deferred tax assets have been recognized in the balance sheets

Deductible temporary differences
Allowance for doubtful accounts
 December 31 December 31
2020
$ 86,781
 2019
$ 104,429

f. Income tax assessment

The Company’s income tax returns through 2018, have been assessed by the tax authorities.

260

26. EARNINGS PER SHARE

Unit: NT$ Per Share


Basic earnings per share
Diluted earnings per share		 For the Year Ended December 31 the Year Ended December 31
2020
$ 0.11
$ 0.11		 2019
$ 0.08
$ 0.08

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year
For the Year Ended December 31
2020
2019
Profit for the period attributable to owners of the Company
$ 62,084
$ 45,779
Earnings used in the computation of basic and diluted earnings per
share
$ 62,084
$ 45,779
Weighted Average Number of Ordinary Shares Outstanding (In Thousands of Shares)
For the Year Ended December 31
2020
2019
Weighted average number of ordinary shares in computation of basic
earnings per share
557,403
557,403
Effect of potentially dilutive ordinary shares:
Employees’ compensation

1,013

309
Weighted average number of ordinary shares used in the computation
of diluted earnings per share
558,416
557,712		 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
557,403


1,013

558,416
 2019
557,403

309
557,712

If the Company offered to settle the compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

261

27. CAPITAL MANAGEMENT

The policy of the board of directors is to maintain a sound capital structure and the confidence of investors, creditors and market, in order to support the development of future operations.

The gearing ratio at end of the reporting period were as follows.

Debt

Less: Cash and cash equivalents

Net debt
Equity

Total capital*

Net debt to equity ratio
 December 31 December 31




2020
$ 10,184,741

(2,814,008)

7,370,733

11,015,472

$ 18,386,205


40.09%
 2019
$ 8,534,977

(3,076,141)

5,458,836

10,950,004
$ 16,408,840

33.27%
  • Total capital is equivalent to total equity which includes share capital, capital surplus, retained earnings and other equity of the Company plus net debt.

As of December 31, 2020, the Company’s capital management approach had not changed.

28. INFORMATION OF CASH FLOW

Non-cash Transaction

Except for those disclosed in other notes, the Company conducted the following non-cash transactions of investment activities for the year ended December 31, 2020 (December 31, 2019: None).

The Company disposed of 100% equity of Dragon Asia in August 2020 and derecognized the relevant assets, and recognized the amounts as unearned receipts. Refer to Note 12 to the consolidated financial statements.

262

29. FINANCIAL INSTRUMENTS

  • a. Fair value of financial instruments not measured at fair value

Management believes the carrying amounts of financial assets and financial liabilities recognized in the financial statements approximate their fair values.

  • b Fair value of financial instruments measured at fair value on a recurring basis

  • 1) Fair value hierarchy

December 31, 2020

Financial assets at FVTPL
Mutual funds

Domestic unlisted shares -
equity securities
Foreign unlisted shares -
equity securities


December 31, 2019
Financial assets at FVTPL
Mutual funds

Domestic unlisted shares -
equity securities
Foreign unlisted shares -
equity securities

 Level 1
$ 561,008
-

-

$ 561,008

Level 1
$ 583,562
-

-

$ 583,562
 Level 2
$ -

-

-

$ -

Level 2
$ -

-

-

$ -
 Level 3
$ -

41,677

25

$ 41,702

Level 3
$ -

44,100

8

$ 44,108
 Total
$ 561,008

41,677

25
$ 602,710
Total
$ 583,562

44,100

8
$ 627,670

December 31, 2019

There were no transfers between Levels 1 and 2 in the current and prior periods.

  • 2) Reconciliation of Level 3 fair value measurements of financial instruments
Balance at January 1

Recognized in profit or loss (included in other gains and losses)

Balance at December 31
 2020
$ 44,108


(2,406)

$ 41,702
 2019
$ 44,118

(10)
$ 44,108

263

  • 3) Valuation techniques and inputs applied for Level 3 fair value measurement

The fair value of domestic unlisted shares are determined using the market approach and net value of investees’ major assets. The significant unobservable inputs used by the Company as of December 31, 2020 and 2019 was 10% of discount rate. If the inputs to the valuation model and discount rate were increased by 1% to reflect reasonably possible alternative assumptions while all other variables were held constant, the fair value of the shares would decrease by $463 thousand and $490 thousand, respectively.

c. Categories of financial instruments

Financial assets
Financial assets at FVTPL
Designated as at FVTPL

Financial assets at amortized cost (1)

Financial liabilities
Financial liabilities at amortized cost (2)		 December 31
2020
2019
$ 602,710 $ 627,670
11,533,227 11,381,119
4,152,246
3,233,642

  • 1) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, accounts receivable (including related parties), other receivables (excluding income tax refund receivables), overdue receivable and refundable deposits.

  • 2) The balances include financial liabilities at amortized cost, which comprise short-term loans, accounts payable (including related parties) other payables, and guarantee deposit received.

d. Financial risk management objectives and policies

The Company’s major financial instruments include equity investments, account receivables, trade payables and borrowings. The Company’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk

The Company seeks to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors continually. The Company did not enter into or trade financial instruments for speculative purposes.

The material financial activities were reviewed by the Company’s board of directors in accordance with the internal control system and related rules. The Company should implement the overall financial management objective as well as observe the levels of delegated authority to ensure that those with delegated authorities carry out their duties.

264

1) Market risk

The Company’s activities are primarily exposed to the financial risks of changes in foreign currency exchange rates (refer to (a) below) and interest rates (refer to (b) below).

  • a) Foreign currency risk

The Company is exposed to foreign currency risk because it owns assets and liabilities denominated in foreign currencies. Exchange rate exposures are managed within approved policy parameters by using financial instruments such as foreign exchange spot transactions, foreign currency forward contracts, etc.

For the Company, the main purpose of using foreign currency forward contracts is to eliminate the financial risks of fluctuation in currency exchange rates.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Company measured the risks of financial assets and liabilities with significant influence, and take the net position of outstanding foreign exchange forward contracts into consideration.

The Company was mainly exposed to the U.S. dollar.

The following table shows the Company’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency) against the U.S. dollar. The 5% sensitivity rate is used in reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency-denominated monetary items, for which their translation at the end of the reporting period is adjusted for a 5% change in foreign currency rates. A positive (negative) number below indicates an increase in pretax profit and other equity associated with the New Taiwan dollar strengthening (weakening) by 5% against the relevant currency. For a 5% weakening (strengthening) of the New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pretax profit and other equity, and the balance below would be negative (positive).


Profit or loss
b) Interest rate risk		 U.S. Dollars Impact U.S. Dollars Impact U.S. Dollars Impact
For the Year Ended December 31
2020
$ (232,606)
 2019
$ (294,234)

The Company was exposed to interest rate risk because the Company borrowed funds at fixed interest rates.

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows.

265

Fair value interest rate risk
Financial assets

Financial liabilities

Cash flow interest rate risk
Financial assets
Financial liabilities		 December 31
2020
2019
$ 5,867,732
$ 4,342,130
1,841,777
781,269
618,635
1,387,603
-
-

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for both derivative and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. 100 basis points increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 100 basis points higher and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased by $6,186 thousand and $13,876 thousand, respectively. Had market interest rates been 100 basis points lower, the impact would have been negative but at the same amounts.

c) Other price risk

The Company was exposed to equity price risks through its holding of investments in equity securities and mutual funds.

Sensitivity analysis

The Company measured risks of financial assets based on the changes in equity price.

Sensitivity analyses were used to measure equity price risks at the end of the reporting period. Had the positions of domestic and foreign equity investments been 5% higher/lower, the Company’s pre-tax profit for the years ended December 31, 2020 and 2019 would have increased/decreased by $30,136 thousand and $31,384 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL.

2) Credit risk

Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Company. As of the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and financial guarantees provided by the Company could arise from:

266

  • a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and

  • b) The maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

The evaluation results generated by the internal system and the evaluation report provided by the external hedging institution are both taken into consideration before granting the appropriate credit line to counterparties. The counterparties’ transaction type, financial position and collaterals are also taken into consideration. All credit lines have expiration dates and are subject to reexamination before the granting of any extensions.

As of December 31, 2020 and 2019, the Company’s five largest customers (including the transaction of the Company and its related parties) accounted for 70% and 75% of accounts receivable, respectively, and the concentration of credit risk was relatively insignificant for the remaining accounts receivable. After considering specific factors and conducting risk evaluation, the credit risks of the Company’s five largest customers would not have had any material impact on the Company.

  • 3) Liquidity risk

The Company manages liquidity risk by monitoring and maintaining a level of cash and cash equivalents deemed adequate to finance the Company’s operations and mitigate the effects of fluctuations in cash flows. Since the Company has sufficient equity and working capital, which ensure the compliance with loan covenants, the Company has no liquidity risk.

The following tables show the Company’s remaining contractual maturity for its financial liabilities with agreed-upon repayment periods:

December 31, 2020

Non-derivative
financial liabilities
Short-term debts

Accounts payable
Lease liabilities

 Less than
1 Year
$ 1,247,424
2,434,827
208,459

$ 3,890,710
 2 to 3 Years
$ -

-

406,094

$ 406,094
 More than
3 Years
$ -

-

-

$ -
 Total
$ 1,247,424

2,434,827

614,553
$ 4,296,804

Additional information about the maturity analysis for lease liabilities:

Lease liabilities
 Less than
1 Year
1 to 5 Years
$ 208,459
$ 406,094
 5 to 10
Years
$ -
 10 to 15
Years
$ -
 15 to 20
Years
$ -
 More than
20 Years
$ -

267

December 31, 2019

Non-derivative
financial liabilities
Accounts payable

Lease liabilities

 Less than
1 Year
$ 2,893,865
202,587

$ 3,096,452
 2 to 3 Years
$ -

412,073

$ 412,073
 More than
3 Years
$ -

202,480

$ 202,480
 Total
$ 2,893,865

817,140
$ 3,711,005

Additional information about the maturity analysis for lease liabilities:

Lease liabilities
 Less than
1 Year
$ 202,587
 1 to 5
Years
$ 614,553
 5 to 10
Years
$ -
 10 to 15
Years
$ -
 15 to 20
Years
More than
20 Years
$ -
$ -

e. Offsetting financial assets and financial liabilities

The Company is eligible to present certain financial assets and financial liabilities on a net basis on the balance sheets since the offsetting criteria are met.

The tables below present the quantitative information on financial assets and financial liabilities that have been offset in the balance sheet.

December 31, 2020

Gross Amounts
of Recognized
Financial Net Amounts of
Gross Amounts Liabilities Financial Assets
of Recognized Offset in the Presented in the
Financial Assets Financial Assets Balance Sheets Balance Sheets
Accounts receivable $ 4,815,248
 $ (1,366,986)
 $ 3,448,262
Accounts receivable - related parties $
390,939
 $ (251) $ 390,688
Other receivable - related parties 3,287,707
 (2,280,104)
 1,007,603
$ 3,678,646
 $ (2,280,355)
 $ 1,398,291

268

Gross
Amounts of Net Amounts
Gross Recognized of Financial
Amounts of Financial Liabilities
Recognized
Assets Offset
Presented in
Financial in the Balance the Balance
Financial Liabilities Liabilities Sheets Sheets
Accounts payable $ 2,593,538 $(1,366,986)
 $ 1,226,552
Accounts payable - related parties $ 3,488,630 $(2,280,355)
 $ 1,208,275
December 31, 2019
Gross
Amounts of Net Amounts
Recognized of Financial
Gross Financial Assets
Amounts Liabilities Presented in
of Recognized
Financial Offset in the the Balance
Financial Assets Assets Balance Sheets
Sheets
Accounts receivable $ 4,537,093 $(1,474,773)
 $ 3,062,320
Accounts receivable - related parties $ 300,523 $ (404) $ 300,119
Other receivable - related parties 4,514,098 (2,416,423)
 2,097,675
$ 4,814,621 $(2,416,827)
 $ 2,397,794
Gross
Amounts of Net Amounts
Gross Recognized of Financial
Amounts of Financial Liabilities
Recognized
Assets Offset
Presented in
Financial in the Balance the Balance
Financial Liabilities Liabilities Sheets Sheets
Accounts payable $ 2,633,432 $(1,474,773)
 $ 1,158,659
Accounts payable - related parties $ 4,152,033 $(2,416,827)
 $ 1,735,206

269

30. TRANSACTIONS WITH RELATED PARTIES

Besides disclosed in other notes, details of transactions between the Company and other related parties are disclosed below.

a. Related party name and category

Related Party Name

Related Party Category

Elitegroup Computer Systems (HK) Co., Limited Subsidiaries Elitegroup Computer Systems (Japan) Co., Ltd. Subsidiaries Elitegroup Computer Systems Holding Co., Ltd. (BVI) Subsidiaries Elitegroup Computer Systems Korea Co., Ltd. Subsidiaries Dragon Asia Trading Co., Ltd. (BVI) Subsidiaries (until August 25, 2020) Unitop International Corp. Subsidiaries ECS Holding (HK) Co., Limited Subsidiaries Elitegroup Technology (Thailand) Co., Ltd. Subsidiaries Million Up Finance Limited Indirect holding subsidiaries (until August 25, 2020) Golden Elite Technology (Shenzhen) Co., Ltd. Indirect holding subsidiaries (until August 25, 2020) ( ���� ( �� ) ���� ) Elitegroup Computer Systems (SIP) Co., Ltd. Indirect holding subsidiaries Elitegroup Computer Systems Inc. (USA) Indirect holding subsidiaries Super ECS USA, Inc. Indirect holding subsidiaries Alpha Leader Limited (HK) Indirect holding subsidiaries Xun Rui Electron (Shenzhen) Co., Ltd. Indirect holding subsidiaries Beijing XunRun Technology Co., Ltd. Indirect holding subsidiaries Beijing Advazone Electronic Co., Ltd. Indirect holding subsidiaries ECS Trading (Shenzhen) Co., Ltd. Indirect holding subsidiaries ECS Digital Technology (Shenzhen) Ltd. Indirect holding subsidiaries Golden Elite Technology (Shenzhen) Co., Ltd. Indirect holding subsidiaries ( ������ ( �� ) ���� ) Protac International Computer, S.L. Indirect holding subsidiaries Tatung Co. Investors with significant influence over the Company Tatung Consumer Products (Taiwan) CO., Ltd. Subsidiaries of the investors with significant influence over the Company Tatung System Technologies Inc. Subsidiaries of the investors with significant influence over the Company Central Research Technology Co. Subsidiaries of the investors with significant influence over the Company Tatung Company of America, Inc. Subsidiaries of the investors with significant influence over the Company TISNet Technology Inc. Subsidiaries of the investors with significant influence over the Company Forward Electronics Co., Ltd. Subsidiaries of the investors with significant influence over the Company IoTecha Corp. Associates

The Company disposed of 100% equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ).

270

b. Sales of goods


Related Party Category
Subsidiaries

Investors with significant influence over the Company
Associates
Subsidiaries of the investors with significant influence over the Company
 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 873,659
745,936
23,065
4

$ 1,642,664
 2019
$ 1,465,367

463,579

7,494

6,547
$ 1,942,987

The terms and conditions of sales transactions with related parties were not significantly different from those for third parties.

For the years ended December 31, 2020 and 2019, deferred unrealized sales revenue of the Company to its subsidiaries were $12,418 thousand and $6,920 thousand, respectively.

c. Purchases of goods


Related Party Category
Subsidiaries
Golden Elite Technology (����)

Golden Elite Technology (������)

Investors with significant influence over the Company
Subsidiaries of the investors with significant influence over the Company
 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31



2020
$ 5,334,562

3,826,794

9,161,356
944
716

$ 9,163,016
 2019
$ 10,080,366

346,820

10,427,186

314

-
$ 10,427,500

271

d. Receivables from related parties

Line Items
Related Party Category
Accounts
receivable
Subsidiaries
Super ECS USA, Inc.

ECS Trading (Shenzhen) Co., Ltd.
Others

Investors with significant influence over
the Company
Associates
Subsidiaries of the investors with
significant influence over the
Company


Line Items
Related Party Category
Other accounts
Subsidiaries
receivable
Golden Elite Technology
(������)

Dragon Asia Trading Co., Ltd. (BVI)
(Note 11)
Others

Investors with significant influence over the Company
Associates
Less: Allowance for doubtful account

 December 31 December 31



2020
2019
$ 123,731
$ 86,274
9,492
74,414
10

1,423
133,233
162,111
248,379
131,603
9,076
2,289
-

4,116
$ 390,688
$ 300,119
December 31



2020
$ 993,852

-

11,998

1,005,850
1,753
-

(11,821)

$ 995,782
 2019
$ -
2,078,423

18,556
2,096,979
696
-

(11,821)
$ 2,085,854

The outstanding receivables from related parties are unsecured. For the years ended December 31, 2020 and 2019, no impairment loss was recognized for receivables from related parties.

272

e. Payables to related parties

Line Items
Related Party Category
Accounts payable Subsidiaries
Golden Elite Technology (������)
Elitegroup Computer Systems (SIP) Co., Ltd.
Golden Elite Technology (����)
Others


Other accounts
Subsidiaries
payable
Golden Elite Technology (������)
Others

Subsidiaries of the investors with significant
influence over the Company
Investors with significant influence over the Company

Payables for
equipment
Subsidiaries
 December 31 December 31








2020
$ 914,931


277,403
-

15,941

$ 1,208,275

$ 87,890


45,752

133,642
36

-

$ 133,678

$ 5,949
 2019
$ 175,414
292,014
1,266,164

1,614
$ 1,735,206
$ 29

74,124
74,153
75

156
$ 74,384
$ 335

The outstanding payables from related parties are unsecured and will be settled in cash.

f. Acquisition of other assets (classified as other intangible assets)


Related Party Category
Line Item
Subsidiaries of the investors with
significant influence over the Company
Other intangible assets
 Purchase Price Purchase Price Purchase Price
For the Year Ended December 31
2020
$ -
 2019
$ 590

273

g. Acquisition of property, plant and equipment


Related Party Category
Line Item
Subsidiaries
Property, plant and equipment
Subsidiaries of the investors with
significant influence over the
Property, plant and
equipment

Company

Other operating costs - processing fee

Related Party Category
Subsidiaries
Elitegroup Technology (Thailand) Co., Ltd.

Other operating expenses

Related Party Category
Line Item
Subsidiaries
Service expense

Research material
Product repair expenses
Commission expense
Miscellaneous expense
Others


Subsidiaries of the investors with Research material

significant influence over
Repair expense
the Company
Products repair expenses
Service expense
Others


Investors with significant
Service expense

influence over the Company
Others

 Purchase Price Purchase Price Purchase Price
For the Year Ended December 31
2020
2019
$ 5,677
$ -

-

2,300
$ 5,677
$ 2,300
For the Year Ended December 31
2020
2019
$ 57,290
$ 2,885
For the Year Ended December 31








2020
$ 88,591

58,734
54,570
27,851
-

136

$ 229,882

$ 470

229
54
10

16

$ 779

$ -

79

$ 79
 2019
$ 34,313
21,497
48,396
26,204
99

-
$ 130,509
$ 126
8,564
1,136
59

-
$ 9,885
$ 95

47
$ 142

  • h. Other operating costs - processing fee

  • i. Other operating expenses

274

j. Endorsements and guarantees

Endorsements and guarantees provided by the Company


Related Party Category
Subsidiaries
Guaranteed amount

Other transactions with related parties

Related Party Category
Line Item
Subsidiaries
Other current assets

Service revenue (classified
as the deduction of
service expense)

Other revenue

Associates
Other revenue

Investors with significant
influence over the Company
Other revenue
 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31
2020
2019
$ 160,058
$ -
For the Year Ended December 31




2020
$ 3,214

$ 7,165

$ 103

$ 206

$ 118
 2019
$ -
$ 7,471
$ -
$ -
$ 3

k. Other transactions with related parties

  • l. Compensation of key management personnel

Short-term employee benefits

Post-employment benefits

 For the Year Ended December 31 For the Year Ended December 31 For the Year Ended December 31


2020
$ 59,985
718

$ 60,703
 2019
$ 52,617

702
$ 53,319

The remuneration of directors and key executives was determined by the remuneration committee with regard to the performance of individuals and market trends.

31. ASSETS PLEDGED AS COLLATERAL

The following assets were provided as guarantees for tariff:

Pledge deposits (classified as financial assets at amortized cost - current) December 31
2020
$ 3,700
 2019
$ 6,999

275

32. OTHER EVENTS

The Company was affected by the COVID-19 pandemic. The operations of subsidiaries in mainland China were delayed in the first quarter of 2020. However, they have returned to normal level at the end of March 2020. Therefore, the Company considers that the impact of COVID-19 is not significant.

According to the announcement by the local government, the Company’s subsidiaries in mainland China are eligible for tax reduction to cover the costs of retirement insurance, unemployment compensation and injury insurance from February to June 2020.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between the foreign currencies and respective functional currencies were as follows:

December 31, 2020

Foreign
Currency Carrying
(In Thousands) Exchange Rate Amount
Financial assets
Monetary items
USD $
327,806		 28.48
 $ 9,335,914
RMB 341,891 4.365 1,492,352
JPY 7,527 0.2763 2,080
HKD 653 3.673 2,398
Non-monetary items
Financial assets held for trading
USD 5,106 28.48 145,417
Investments accounted for using the equity
method
USD 180,846 28.48 5,150,489
THB 286,553 0.9482 271,709
JPY 82,172 0.2763 22,704
KRW 359,047 0.0262 9,407
Financial liabilities
Monetary items
USD 164,459 28.48 4,683,798
HKD 2,545 3.673 9,347
JPY 5,706 0.2763 1,577
EUR 11 35.02 387

276

December 31, 2019

Foreign
Currency Carrying
(In Thousands) Exchange Rate Amount
Financial assets
Monetary items
USD $
325,187		 29.98
 $ 9,749,111
JPY 1,586 0.276 438
HKD 668 3.849 2,572
Non-monetary items
Financial assets held for trading
USD 2,105 29.98 63,104
Investments accounted for using the equity
method
USD 138,651 29.98 4,156,746
JPY 81,734 0.276 22,559
KRW 356,326 0.0259 9,229
THB 163,238 0.9942 162,291
Financial liabilities
Monetary items
USD 128,900 29.98 3,864,429
JPY 5,257 0.276 1,451
HKD 2,429 3.849 9,348
EUR 14 33.59 472

For the years ended December 31, 2020 and 2019, realized and unrealized net foreign exchange losses were $161,217 thousand and $143,716 thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the Company.

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees:

  • 1) Financing provided to others (None)

  • 2) Endorsements/guarantees provided (Table 1)

  • 3) Marketable securities held (Table 2)

  • 4) Marketable securities acquired and disposed at costs or prices at least $300 million or 20% of the paid-in capital (Table 3)

277

  • 5) Acquisition of individual real estate at costs of at least NT $300 million or 20% of the paid-in capital (None)

  • 6) Disposal of individual real estate at prices of at least $300 million or 20% of the paid-in capital (None)

  • 7) Total purchases from or sales to related parties amounting to at least $100 million or 20% of the paidin capital (Table 4)

  • 8) Receivables from related parties amounting to at least $100 million or 20% of the paid-in capital (Table 5)

  • 9) Trading in derivative instruments (Table 7)

  • 10) Information on investees (Table 6)

  • c. Information on investments in mainland China

  • 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area (Table 7)

  • 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses (Table 8):

    • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.

    • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.

    • c) The amount of property transactions and the amount of the resultant gains or losses.

    • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.

    • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.

    • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

  • d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder (Table 9).

278


Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China
Endorsement/
Guarantee
Given on
Behalf of
Companies in
Mainland
China		 Y Note 1:
Relationships between the endorsement/guarantee provider and the guaranteed party:
a.
A company with which it does business.
b.
A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.
c.
A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.
d.
Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.
e.
The Company fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
f.
All shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentage.
g.
Companies in the same industry provide among themselves joint and several guarantees for the performance of a sales contract for pre-construction homes pursuant to the Consumer Protection Act.
Note 2:
The total amount of the guarantee provided by Elitegroup Computer Systems Co., Ltd. to any individual entity shall not exceed 100% of Elitegroup Computer Systems Co., Ltd.’s net worth.
Note 3:
The total accumulated amount of guarantee shall not exceed one hundred percent of Elitegroup Computer Systems Co., Ltd.’s net worth.
Note 4:
The calculation of the amount was based on the highest exchange rate during 2020.
Note 5:
The calculation of the amount was based on the closing rate on December 31, 2020.

Endorsement/
Guarantee
Given by
Subsidiaries
on Behalf of
Parent		 N
Endorsement/
Guarantee
Given by
Parent on
Behalf of
Subsidiaries		 Y

Aggregate
Endorsement/
Guarantee
Limit		 $ 11,015,472
(Note 3)
Ratio of
Accumulated
Endorsement/
Guarantee to
Net Equity in
Latest Financial
Statements
(%)		 1.45
Amount
Endorsed/
Guaranteed by
Collateral		 $ -
Actual
Borrowing
Amount		 $ 95,256
(US$3,344,659)
(Note 5)
Outstanding
Endorsement/
Guarantee at
the End of the
Period		 $ 160,058
(US$5,620,000)
(Note 5)

Maximum
Amount
Endorsed/
Guaranteed
During the
Period		 $ 165,734
(US$5,620,000)
(Note 4)
Limit on
Endorsement/
Guarantee
Given on Behalf
of Each Party		 $ 11,015,472
(Note 2)
Endorsee/Guarantee Nature of
Relationship
(b)
(Note 1)
Name Golden Elite Technology
(Shenzhen) Ltd.
(������)
Endorser/Guarantor Elitegroup Computer
Systems Co., Ltd.
No. 1
ELITEGROUP COMPUTER SYSTEMS CO., LTD.
MARKETABLE SECURITIES HELD
DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)		 Note Note: The above marketable securities had not been used as guarantees or collaterals for borrowing and were not subject to other restrictions.
December 31, 2020 Fair Value/
Net Asset Value
(Note)
$ 41,677
25
100,974
50,030
42,357
100,989
10,588
18,027
11,726
12,876
17,033
20,347
9,844
20,800
59,952
85,465
23,233
(US$ 815,796)
28,491
(US$ 1,000,372)
10,135
(US$ 355,876)
-
(RMB
-)

Percentage of
Ownership		 2.24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.03
-

Carrying Amount		 $ 41,677
25
100,974
50,030
42,357
100,989
10,588
18,027
11,726
12,876
17,033
20,347
9,844
20,800
59,952
85,465
23,233
(US$ 815,796)
28,491
(US$ 1,000,372)
10,135
(US$ 355,876)
-
(RMB
-)
Shares 4,851,680
16
6,542,512
3,346,451
3,961,365
9,684,041
985,921
1,386,722
764,727
492,574
1,037,344
2,000,000
594,832
2,000,000
20,339
299,999
7,882
100,007
343,571
-
Financial Statement Account Financial assets at fair value through profit or loss - non-
current
Financial assets at fair value through profit or loss - non-
current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through profit or loss - current
Financial assets at fair value through other comprehensive
income - non-current
Financial assets at fair value through profit or loss - non-
current
Relationship with
the Holding
Company		 No
No
No
No
No
No
No
No

No
No
No
No
No
No
No
No
No
No
No
No
Type and Name of Marketable Securities Ordinary shares
Lu-Chu Development Corporation
Trigem Computer Inc.
Beneficiary certificate
FSITC Taiwan Money Market
Jih Sun Money Market Fund
Nomura Global Short Duration Bond Fund-TWD
Franklin Templeton Sinoam Money Market Fund
Prudential Financial Strategic Return ETF Fund of
Funds-TWD
Franklin Templeton SinoAm Asia Pacific Balanced
Fund-Accu-TWD
JPMorgan (Taiwan) China Income Fund - Accumulation
Share Class
Fuh Hwa Global Balanced Fund-TWD
Fuh Hwa Olympic II Global Fund of Funds-TWD
Taishin Senior Secured High Yield Bond Fund A TWD
Union Advantage Global Fixed Income Portfolio Fund.
KGI Taiwan Multi-Asset Income Fund-TWD A
SinoPac Greater China Convertible Bond Fund
SinoPac USD Money Market Funds
Beneficiary certificate
SinoPac Greater China Convertible Bond Fund
SinoPac USD Money Market Funds
Share
MiTAC Holdings Corporation
Share
Beijing Beareyes Info Systems Co., Ltd.
Holding Company Name Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems (HK) Co., Limited
Elitegroup Computer Systems Inc. (USA)
Beijing Advazone Electronic Limited Company
Ending Balance (Note 2)
Amount		 $ 2,592,796

-
US$ 69,327,000

-		 Note 1:
The Company invested in ECS Holding (HK) Co., Limited by offsetting the creditor’s rights and liabilities of the four parties. Refer to Note 11.
Note 2:
The book amount was the original acquisition cost.
Note 3:
The transfer of 52% and 48% interest in Dragon Asia (RMB600,000 thousand and RMB550,000 thousand) had been remitted to the Company on March 27, 2018 and August 25, 2020 and was included in other advances received. The transaction was authorized by Investment Commission, MOEA on May 1, 2018 and September
29, 2020. After evaluating the agreement and the status of implementation, the Company derecognized the relevant assets and other advanced receipts. Refer to Notes 12.
Note 4:
Million Up sold one hundred percent of Golden Elite Technology’s shares (������) to ECS Holding (HK) Co., Limited in May 2020, and offset the creditor's rights and liabilities of the four parties for the transferring price of US$69,327 thousand. Refer to Note 11.

Shares
86,327,000
-

-

-
Disposal Gain (Loss) on
Disposal
$ -

343,491
(Note 3)

-

-

Carrying Amount		 $ -

3,611,459

-
US$ 69,327,000

Amount		 $ -

5,067,237

-
US$ 69,327,000
Number of Shares
-

99,635,512

-

-
Acquisition
Amount		 $ 2,081,197

-
US$ 69,327,000

-

Number of Shares
69,327,000

-

-

-
Beginning Balance (Note 2)
Amount		 $ 511,599

3,611,459

-
US$ 69,327,000

Number of Shares		 17,000,000
99,635,512
-
-
Relationship Subsidiary
-
Fellow
subsidiary
Fellow
subsidiary
Counterparty Note 1
Ever Unicorn Estate
Limited
Note 4
Note 4
Financial Statement
Account		 Investment accounted for
using the equity method
Investment accounted for
using the equity method
Investment accounted for
using the equity method
Investment accounted for
using the equity method
Type and Name of
Marketable Securities		 Share
ECS Holding (HK) Co.,
Limited
Dragon Asia Trading Co.,
Ltd. (BVI)
Golden Elite Technology
(Shenzhen) Ltd.
(������)
Golden Elite Technology
(Shenzhen) Ltd.
(������)
Company Name Elitegroup Computer
Systems Co., Ltd.
Elitegroup Computer
Systems Co., Ltd
ECS Holding (HK)
Co., Limited
Million Up Finance
Limited
Note
 Note
 Note
Note
Note
Note
Note
Note
Note		 Note:
The Company disposed of one hundred percent equity of Dragon Asia in August 2020 lost control of Dragon Asia Million Up and Golden Elite Technology (����) and derecognized the related subsidiaries. The Company accounted for the residual equity in
Notes/Accounts
Receivable (Payable)
% to Total		 -
3
6
-
-
(38)
-
-
-
62
-
-
-
(100)
(100)

Ending Balance		 $ -
123,731
248,379
9,492
-
(914,931)
-
-
-
914,931
-
-
-
(9,492)
(123,731)
Abnormal Transaction Payment Terms -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Unit Price $ -
-

-
-
-
-
-
-
-
-
-
-
-
-
-
Transaction Details Payment Terms OA 60 days
OA 90 days
Open account 90 days
OA 90 days
OA 75 days
OA 60 days
OA 75 days
OA 90 days
OA 90 days
OA 60 days
OA 90 days
OA 90 days
OA 60 days
OA 90 days
OA 90 days
% to Total 1
2
3
1
(25)
(18)
89
4
(7)
79
5
(3)
(100)
(100)
(100)
Amount $ 264,417
488,318
745,936
120,158
(5,334,562)
(3,826,794)
5,334,562
373,856
(661,408)
3,826,794
661,408
(373,856)
(264,417)
(120,158)
(488,318)
Purchase/
Sale		 Sale
Sale

Sale
Sale
Purchase
Purchase
Sale
Sale
Purchase
Sale
Sale
Purchase
Purchase
Purchase
Purchase
Relationship Subsidiary of ECS Holding (America) Co.
(USA)
Subsidiary of ECS Holding (America) Co.
(USA)
Investors with significant influence over
the Group
Subsidiary of Unique Sino Limited
Subsidiary of Million Up Finance
Limited
Subsidiary of ECS Holding (HK) Co.,
Limited
Ultimate parent company
Fellow company
Fellow company
Ultimate parent company
Fellow company
Fellow company
Ultimate parent company
Ultimate parent company
Ultimate parent company
Related Party Elitegroup Computer Systems Inc.
(USA)
Super ECS USA Inc.
Tatung Company
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(������)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(����)
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Buyer Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen)
Ltd. (������)
Elitegroup Computer Systems Inc.
(USA)
ECS Trading (Shenzhen) Co., Ltd.
Super ECS USA Inc.
RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL
DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars)		 Note Note -
-
Note 3
Note 3
-
-
Note 3		 Note 1: The subsequent period is between January 1 and February 28, 2021.
Note 2: The calculation of turnover days excludes other receivables.
Note 3: The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The
Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology (������).
Allowance for
Impairment
Loss		 $ -
-
-
-
-
-
-
Amount Received in
Subsequent
Period (Note 1)
$ 85,186
123,817
-
30,554
1,004,356
-
-
Overdue Actions Taken -
-
Strengthen the
collection
-
-
Strengthen the
collection
Strengthen the
collection
Amount $ -
-
991,489
-
-
282,593
135,970
Turnover
Rate
(Note 3)		 3.93
4.65
-
-
7.01
-
0.03
Receivables
from Related
Parties Ending
Balance		 $ 250,132
123,817
991,489
257,060
1,004,356
282,593
135,970
Relationship Investors with significant influence over the Company
Subsidiary
Subsidiary
Fellow company
Ultimate parent company
Ultimate parent company
Fellow company
Related Party Tatung Company
Super ECS USA Inc.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Company Name Elitegroup Computer Systems Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems (SIP) Co.,
Ltd.

Note Note Note 3
Note 3
Note 3
Note 3
Note 3
Notes 3, 5, 6
and 7
Note 3
Note 3
Notes 3, 5, 6
and 7
Note 3
Note 3
Note 3
Note 3
Notes 3 and 8
Notes 3, 5, 6
and 7
Note 3
Note 3
Note 3
Note 3
Notes 3 and 4		 (Continued)
Share of
Profit (Loss)
(Note 2)
$ (329)

121

8,347

9,919

68

385,105

(67,544)

5,178

170,486

(38,780)
8,387
(US$ 283,685)
11,527
(US$ 389,889)
8,487
(US$ 287,058)
(10,024)
(US$ -339,051)
384,057
(US$ 12,870,552)
5,178
(US$ 175,144)
4,507
(US$ 152,451)
3,354
(US$ 113,457)
-
(US$ 2)
-
(US$ -)
Net Income (Loss)
of the Investee
(Note 2)
$ (329)

121

8,347

9,919

68

385,105

(67,544)

5,178

170,486

(38,780)
12,253
(US$ 414,441)
11,527
(US$ 389,889)
8,487
(US$ 287,058)

(88,854)
(US$ -3,005,275)
514,792
(US$ 17,251,750)
5,178
(US$ 175,144)
4,507
(US$ 152,451)
3,354
(US$ 113,457)
-
(US$ 2)
-
(US$ -)
As of December 31, 2020
Carrying Amount
(Note 1)
$ 263,628
22,704
202,356
732,528
9,407
-
871,479
82,139
3,001,412
271,710
154,500
(US$ 5,424,858)
588,346
(US$ 20,658,209)
120,349
(US$ 4,225,734)
-
(US$ -)
-
(US$ -)
-
(US$ -)
82,121
(US$ 2,883,449)
111,766
(US$ 3,924,365)
106,964
(US$ 3,755,752)
41
(US$ 1,454)
-
(US$ -)

%		 100.00
100.00
100.00
100.00
100.00
-
100.00
100.00
100.00
99.99
68.45
100.00
100.00
19.62
14.47
-
100.00
100.00
100.00
100.00
100.00

Shares
16,560,000

1,136

18,381,296

3,362

469,000

-

2,600

1,905,000

86,327,000
3,999,996
15,109,864
47,552
2,500,000
Ordinary share
2,000,000
Preferred share
1,108,942
-
1,890,000
23,689,688
18,550,000
4,380,000
-
Investment Amount (Note 1)
December 31, 2019		 $ 62,413

19,078

965,081

830,259

66,780

3,611,459

399,151

62,052

511,599

202,915
430,329
(US$ 15,109,864)
477,685
(US$ 16,772,643)
14,240
(US$ 500,000)
28,480
(US$ 1,000,000)
32,040
(US$ 1,125,000)
1,390,479
(US$ 48,823,000)
53,827
(US$ 1,890,000)
86,720
(US$ 3,044,947)
528,304
(US$ 18,550,000)
124,742
(US$ 4,380,000)
-
(US$ -)

December 31, 2020		 $ 62,413
19,078
762,621
830,259
66,780
-
399,151
62,052
2,592,795
360,898
430,329
(US$ 15,109,864)
477,685
(US$ 16,772,643)
14,240
(US$ 500,000)
28,480
(US$ 1,000,000)
32,040
(US$ 1,125,000)
-
(US$ -)
53,827
(US$ 1,890,000)
86,720
(US$ 3,044,947)
528,304
(US$ 18,550,000)
124,742
(US$ 4,380,000)
-
(US$ -)
Main Businesses and Products Sale of motherboards, computer peripheral
products and related components
Sale of motherboards, notebook, computer
peripheral products and related components
Holding company
Holding company
Sale of motherboards, maintenance and sales
support
Holding company
Holding company
Holding company
Holding company
Manufacture and sales of computer and
computer peripheral products
Holding company
Sale of motherboards, notebook, computer
peripheral products, related components
and systems assembled
Sale of motherboards, computer peripheral
products and related components
Design and development of smart charging
systems and software development
Holding company
Holding company
Trading of IC and electric components
Holding company
Holding company
Sale of computer peripheral products
Location Hong Kong
Japan
British Virgin Islands
USA
Korea
British Virgin Islands
British Virgin Islands
Samoa
Hong Kong
Thailand
British Virgin Islands
USA
USA
USA
British Virgin Islands
Samoa
Hong Kong
British Virgin Islands
British Virgin Islands
Spain
Investee Company Elitegroup Computer Systems
(HK) Co., Limited
Elitegroup Computer Systems
(Japan) Co., Ltd.
Elitegroup Computer System
Holding Co., Ltd. (BVI)
ECS Holding (America) Co.
(USA)
Elitegroup Computer Systems
Korea Co., Ltd.
Dragon Asia Trading Co., Ltd.
(BVI)
Unitop International Corp.
Unity Investments Limited
ECS Holding (HK) Co., Limited
Elitegroup Technology (Thailand)
Co., Ltd.
Venture Well Holdings Limited
(BVI)
Elitegroup Computer Systems Inc.
(USA)
Super ECS USA, Inc.
IoTecha Corp.
Million Up Finance Limited
Unique Sino Limited
Alpha Leader Limited (HK)
Advazone International Limited
(BVI)
Affirm International Limited (BVI)
Protac International Computer, S.L.
Investor Company Elitegroup Computer Systems Co., Ltd.
Elitegroup Computer System
Holding Co., Ltd. (BVI)
ECS Holding (America) Co. (USA)
Dragon Asia Trading Co., Ltd.
(BVI)
Unity Investments Limited
Venture Well Holdings Limited
(BVI)
Affirm International Limited (BVI)


Accumulated
Repatriation of
Investment
Income as of
December 31, 2020
Accumulated
Repatriation of
Investment
Income as of
December 31, 2020		 $ -
-
-
-
-
-
539,820
(US$ 18,000,000 )
-		 Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
Investment Amounts Authorized by the
Investment Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA (Note 4)
$3,603,444 (US$126,525,433) (Note 2)
$3,724,353 (US$130,770,829) (Note 2)
$-
Note 1:
The calculation of investment income (loss) was based on the investees’ audited financial statements.		 Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
Investment Amounts Authorized by the
Investment Commission, MOEA
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA (Note 4)
$3,603,444 (US$126,525,433) (Note 2)
$3,724,353 (US$130,770,829) (Note 2)
$-
Note 1:
The calculation of investment income (loss) was based on the investees’ audited financial statements.
Carrying Amount
as of December 31,
2020
(Note 2)		 $ 17,276
(US$ 606,595 )
75,518
(US$ 2,651,631 )
106,824
(US$ 3,750,829 )
82,118
(US$ 2,883,374 )
-
(US$ - )
2,045,322
(US$ 71,816,076 )
838,690
(US$ 29,448,382 )
457,115
(US$ 16,050,399 )
Investment
Gain (Loss)
(Notes 1 and 3)		 $ (1,870 )
(US$ -63,236 )
114
(US$ 3,848 )
3,354
(US$ 113,452 )
5,178
(US$ 175,144 )
542,493
(US$ 18,180,070 )
151,596
(US$ 5,127,365 )
(66,353 )
(US$ -2,244,223 )
3,033
(US$ 102,593 )
%
Ownership
of Direct or
Indirect
Investment		 100.00
100.00
68.45
100.00
-
(Notes 5
and 6)
100.00
(Notes 7
and, 8)
100.00
100.00

Net Income (Loss)
of the Investee
(Note 3)		 $ (1,870 )
(RMB
-436,118 )
114
(RMB
26,535 )
3,354
(RMB
782,438 )
5,178
(RMB 1,207,912 )
545,179
(RMB127,766,238)
139,550
(RMB 32,551,926 )
(66,353 )
(RMB -15,477,652 )
3,033
(RMB
707,549 )
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
December 31, 2020
(Note 2)
$ 22,634
(US$ 794,718 )

49,543
(US$ 1,739,577 )

317,955
(US$ 11,164,138 )

56,960
(US$ 2,000,000 )
-
(US$ - )

1,974,433
(US$ 69,327,000 )
(Notes 8, 9)

740,480
(US$ 26,000,000 )

441,440
(US$ 15,500,000 )
Remittance of Funds (Note 2)
Inward		 $ -

-

-

-

663,626
(US$ 23,301,464 )
-

-

-

Outward		 $ -
-
-
-
-
1,147,374
(US$ 40,287,000 )
(Notes 8, 9)
-
-
Upper Limit on the Amount of Investment
Stipulated by Investment Commission, MOEA (Note 4)
$-
Accumulated
Outward
Remittance for
Investment from
Taiwan as of
January 1, 2020
(Note 2)		 $ 22,634
(US$ 794,718 )
49,543
(US$ 1,739,577 )
317,955
(US$ 11,164,138 )

56,960
(US$ 2,000,000 )
663,626
(US$ 23,301,464 )
827,059
(US$ 29,040,000 )
(Note 9)
740,480
(US$ 26,000,000 )
441,440
(US$ 15,500,000 )
Method of Investment Indirect investment by Elitegroup Computer
Systems (HK) Co., Limited
Indirect investment by Elitegroup Computer
Systems (HK) Co., Limited
Indirect investment by Advazone International
Ltd. (BVI) of Venture Well Holdings
Limited (BVI) of Elitegroup Computer
Systems Holding Co., Ltd. (BVI)
Indirect investment by Unique Sino Limited of
Unity Investments Limited
Indirect investment by ECS Holding (HK)
Co., Limited
Indirect investment by ECS Holding (HK)
Co., Limited
Indirect investment by Unitop International
Corp.
Indirect investment by ECS Holding (HK)
Co., Limited
Investment Amounts Authorized by the
Investment Commission, MOEA
$3,724,353 (US$130,770,829) (Note 2)
Paid-in Capital
(Note 2)		 $ 29,904
(US$ 1,050,000 )
45,568
(US$ 1,600,000 )
458,528
(US$ 16,100,000 )
56,960
(US$ 2,000,000 )
1,096,480
(US$ 38,500,000 )
1,723,040
(US$ 60,500,000 )
(Note 7)
740,480
(US$ 26,000,000 )
441,440
(US$ 15,500,000 )
Main Businesses and Products Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
Manufacture and maintenance of electric
equipment and instrument, computer
peripheral products and cases
Wholesale, maintenance and technical
consultation of computers and peripheral
products and related components
Wholesale, trade, maintenance and technical
consultation of computers and peripheral
products
Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products
Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products
Research, development and manufacture of
notebook, tablets and related components
Manufacture, research and development of
PCBs, motherboards, systems, assembly of
notebook, tablets and peripheral products
Accumulated Outward Remittance for Investment in
Mainland China as of December 31, 2020
$3,603,444 (US$126,525,433) (Note 2)
Investee Company Xun Rui Electron (Shenzhen) Co., Ltd.
Beijing XunRun Technology Co., Ltd.
Beijing Advazone Electronic
Limited Company
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems (SIP) Co., Ltd.
ECS Digital Technology (Shenzhen) Ltd.
SIGNIFICANT TRANSACTIONS WITH INVESTEE COMPANIES IN MAINLAND CHINA, EITHER DIRECTLY OR INDIRECTLY THROUGH A THIRD PARTY, AND THEIR PRICES, PAYMENT TERMS,
AND UNREALIZED GAINS OR LOSSES
FOR THE YEAR ENDED DECEMBER 31, 2020
(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)		 Note Notes 1
and 2
Note 2
Note 2
Note 2
Note 2		 Note 1:
Unrealized profit and loss are due to upstream transactions.
Note 2:
The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology (����), and derecognized the related subsidiaries. The Company accounted for the residual equity in
ECS Holding (HK) Co., Limited and Golden Elite Technology (������).
Unrealized
 (Gain) Loss $ 2,934
-
-
-
-
-
-
-
Notes/Accounts
Receivable (Payable)
%		 -
(38)
(11)
-
-
-
-
-

Ending Balance
$ -
(914,931)
(277,403)
9,492
-
-
-
-
Transaction Details Comparison with the Market
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
Payment Terms
OA 75 days
OA 60 days
OA 60 days
OA 90 days
OA 90 days
OA 90 days
OA 90 days
OA 90 days
Comparison of
 Price with Market No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
No significant difference
Purchase/Sale %
(25)

(18)
-
1
4

(7)
5

(3)
Amount $ (5,334,562)
(3,826,794)
-
120,158
373,856
(661,408)
661,408
(373,856)
Transaction Type Purchase
Purchase
Purchase
Sale
Sale
Purchase
Sale
Purchase
Counterparty
 (Investee Company) Golden Elite Technology (Shenzhen) Ltd.
(����)
Golden Elite Technology (Shenzhen) Ltd.
(������)
Elitegroup Computer Systems (SIP) Co., Ltd.
ECS Trading (Shenzhen) Co., Ltd.
Golden Elite Technology (Shenzhen) Ltd.
(������)
Golden Elite Technology (Shenzhen) Ltd.
(����)
Company Name Elitegroup Computer
Systems Co., Ltd.
Golden Elite Technology
(Shenzhen) Ltd.
(����)
Golden Elite Technology
(Shenzhen) Ltd.
(������)

TABLE 9

ELITEGROUP COMPUTER SYSTEMS CO., LTD.

INFORMATION OF MAJOR SHAREHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2020

Name of Major Shareholder Shares Shares
Number of
Shares		 Percentage of
Ownership (%)
Tatung Company
Pou Chen Corporation		 152,475,397
70,066,949		 27.35
12.57

Note: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preferred shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Company as of the last business day for the current quarter. The share capital in the financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.

289

  • VI. If the Company or its Affiliates have Experienced Financial Difficulties in 2020 or During the Current Fiscal Year up to the Date of Publication of the Annual Report, the Annual Report shall Explain how Said Difficulties will Affect the Company's Financial Situation: None.

290

Chapter 7. Financial Status and Operating Results

I. Financial Status

Financial Status Financial Status Financial Status Financial Status Financial Status
Unit: NT$1,000
Year
Item
2020
2019
Difference
Amount
%
Current Assets
17,640,877
16,236,514
1,404,363
8.65
Property, Plant, and
Equipment
2,801,574
2,671,997
129,577
4.85
Other Assets
3,307,459
4,444,717
(1,137,258)
(25.59)
Total Assets
23,749,910
23,353,228
396,682
1.70
Current Liabilities
11,897,142
11,572,898
324,244
2.80
Non-current Liabilities
766,084
761,566
4,518
0.59
Total Liabilities
12,663,226
12,334,464
328,762
2.67
Capital stock
5,574,030
5,574,030
0
0.00
Capital Surplus
5,914,883
5,913,183
1,700
0.03
Retained Earnings
342,705
279,862
62,843
22.45
Other Equity
(816,146)
(817,071)
925
0.11
Non-controllinginterest
71,212
68,760
2,452
3.57
Total Equity
11,086,684
11,018,764
67,920
0.62
If the change reaches 20% and the amount of change is up to NT$10 million, the description
is as follows:
Other assets: It was mainly due to the increase in the right-of-use assets, deferred tax assets
and prepayments for equipment.
Retained earnings: It was mainlydue to theprofit made bythe Companyin 2020.
Year
Item		 2020 2019 Difference
Amount %
Current Assets 17,640,877
16,236,514
1,404,363
8.65
Property, Plant, and
Equipment		 2,801,574
2,671,997
129,577		 4.85
Other Assets 3,307,459
4,444,717
(1,137,258)		 (25.59)
Total Assets 23,749,910
23,353,228
396,682		 1.70
Current Liabilities 11,897,142
11,572,898
324,244
2.80
Non-current Liabilities 766,084
761,566
4,518		 0.59
Total Liabilities 12,663,226
12,334,464
328,762		 2.67
Capital stock 5,574,030
5,574,030
0		 0.00
Capital Surplus 5,914,883
5,913,183
1,700		 0.03
Retained Earnings 342,705
279,862
62,843		 22.45
Other Equity (816,146) (817,071) 925
0.11
Non-controllinginterest 71,212
68,760
2,452		 3.57
Total Equity 11,086,684
11,018,764
67,920		 0.62
If the change reaches 20% and the amount of change is up to NT$10 million, the description
is as follows:
Other assets: It was mainly due to the increase in the right-of-use assets, deferred tax assets
and prepayments for equipment.
Retained earnings: It was mainlydue to theprofit made bythe Companyin 2020.

291

II. Financial Performance

  1. Comparative analysis of financial performance

Unit: NT$1,000

Unit: NT$1,000
Year
Item		 2020 2019 Increased or
decreased amount
Proportion of
change (%)
Net Operating Revenue 25,995,735 28,291,303 (2,295,568) (8.11)
Operating Costs 23,264,066 25,196,020 (1,931,954) (7.67)
Gross Profit 2,731,669 3,095,283 (363,614) (11.75)
Operating Expenses 2,690,992 3,081,092 (390,100) (12.66)
Operating Income 40,677 14,191 26,486 186.64
Non-operating Income
and Expenses		 378,491 74,015 304,476 411.37
Profit before tax from
continuing operations		 419,168 88,206 330,962 375.21
Income Tax Expense 353,218 35,145 318,073 905.03
Net profit after tax from
continuing operations		 65,950 53,061 12,889 24.29
Net Income Attributable to
Non-controlling Interests		 3,866 7,282 (3,416) (46.91)
Net Income Attributable to
Shareholders of the Parent		 62,084 45,779 16,305 35.62
Explain the reasons why the financial ratios have changed by more than 20% in the last two years
(1) The increase in operating profit and loss in 2020 compared with 2019 was mainly due to
the decrease in operating expenses in 2020.
(2) The increase in non-operating income and expenses, pretax profit and after-tax net profit in 2020
compared with 2019 was mainly due to the income from disposal of assets in 2020.
(3) The increase in income tax expense in 2020 compared with 2019 was mainly due to the
increase in overall profit in 2020 compared with 2019.
(4) The decrease in non-controlling interests in 2020 compared with 2019 was mainly due to
the decrease inprofit of subsidiaries.

  1. Expected sales volume and its basis:

  2. In addition to the existing products, the Company will also vigorously promote the market development of non-PC products, such as smart gateways, home displays, tablet computers, IoT, and other products. In line with future market conditions, we will continue to launch more products according to diverse customer demand and new technology developments.

  3. Potential impact on the Company's future financial business and response plan: In order to respond to the external competitive environment and future reinvestment, the Company has developed an appropriate financial strategy and a capital requirement plan for the current year.

292

III. Analysis on Cash Flow

Unit: NT$1,000

Cash at
beginning of
period
(1)		 Net Cash
Flows from
Operating
Activities
(2)		 Net cash flow from
investment
andfinancing
activities in the
year
(3)
Cash surplus
amount
(1)�(2)�(3)		 Remedial Measures for
Cash Inadequacy		 Remedial Measures for
Cash Inadequacy
Investment
Plan		 Financing
Plan
4,252,632 (394,112) 670,962 4,529,482 - -
  1. Analysis and description of cash flow changes in recent year

The net cash of the Company in 2020 increased by NT$276,850 thousand compared with 2019. The changes in cash flow from various operating activities were as follows:

  • (1) Operating activities: mainly due to cash outflow from changes in operating assets/liabilities in 2020.

  • (2) Investment activities and financing activities: cash inflows from the increase of other advances received.

  • Corrective measures to be taken in response to lack of liquidity: N/A.

  • Cash liquidity analysis for the coming fiscal year:

advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:		 advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:		 advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:		 advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:		 advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:		 advances received.
5. Corrective measures to be taken in response to lack of liquidity: N/A.
6. Cash liquidity analysis for the coming fiscal year:
Unit: NT$1,000
Cash at
beginning
of period
(1)		 Projected net cash flow
from operating activities
during the year
(2)		 Projected net cash
flow from
investment and
financing activities
in the year
(3)		 Cash surplus
amount
(1)�(2)�(3)		 Remedial Measures for
Cash Inadequacy
Investment
Plan		 Financing
Plan
4,529,482 (637,189) 738,801 4,631,094 - -

  • IV. Major Capital Expenditures in 2020 and Their Impacts on the Company's Finance and Operations

  • Use of major capital expenditures and sources of funds: none.

  • Expected benefits: N/A.

V. Reinvestment Policies of the Most Recent Year, Main Reasons for Investment Gains or Losses, Improvement Plans, and Investment Plans of the Upcoming Year:

The Company's reinvestments were all long-term strategic investments; The Company made a profit of NT$472,571 thousand through the reinvestment made by equity method in 2020, mainly due to the profit of NT$343,491 thousand from the disposal of reinvestments of the Company, resulting in the profit from the overseas reinvested enterprises. In the future, the Company will continue to carefully evaluate the reinvestment plan based on the principle of long-term strategic investment.

293

VI. Risk Analysis and Assessment:

  1. Organization structure of risk management
Risk Management Responsible Department Risk Management Measures
Strategic and
operational risks		 Board of Directors, Chairman,
and President		 Formulation and implementation
of the Company's business
policy, evaluation and analysis
of the operating benefits
Market Risks Each business marketing
department		 Promotion, market research, and
evaluation of the Company's
businesses
Financial risk,
liquidity risk		 Finance and Accounting
Department		 Cost consolidation and final
settlement, capital scheduling
control, interest rate and exchange
rate hedging
Legal risk Legal Affairs and Intellectual
Property Section		 Disposal of litigation and non-
litigation cases

  1. Effect on the Profit (Loss) of Interest and Exchange Rate Fluctuations and Changes in the Inflation Rate, and Response Measures to Be Taken in the Future:

  2. (1) Foreign exchange risk

    • The consolidated company is exposed to the risk of exchange rate fluctuations due to its holding of foreign currency assets and liabilities. The consolidated company appropriately uses the amount instruments such as spot transactions and forward foreign exchange contracts to avoid the exchange rate risk of foreign currency assets, and the financial safe-haven position shall not exceed the safe-haven position.

The purpose of the consolidated company to engage in forward foreign exchange transactions is mainly to avoid the risks arising from exchange rate fluctuations. The amount of monetary assets denominated in non-functional currency and the carrying amount of monetary liabilities of the consolidated company on the balance sheet date (including the monetary items in non-functional currency that have been written off in the consolidated financial statements) are as follows: Information on significant foreign currency assets and liabilities

The following information is summarized in terms of foreign currencies other than the functional currencies of each individual of the consolidated company. The exchange rates disclosed refer to the exchange rates converted from such foreign currencies to functional currencies. The significant impact on assets and liabilities recognized in foreign currencies is as follows:

294

Dec. 31, 2020

Dec. 31, 2020
Foreign currencyassets
Monetary items
USD
Hong Kong Dollar
JPY
CNY
Non-monetary items
Financial assets held for
trading
USD
Foreign currencyliabilities
Monetary items
USD
Hong Kong Dollar
JPY
Dec. 31, 2019
Foreign currencyassets
Monetary items
USD
Hong Kong Dollar
JPY
CNY
Non-monetary items
Financial assets held for
trading
USD
Foreign currencyliabilities
Monetary items
USD
Hong Kong Dollar
JPY		 Foreign
currency (1,000)
$412,345
982
7,527
340,874
5,106
265,137
3,972
5,706
Foreign
currency (1,000)
$413,311
1,079
1,586
125
2,105
266,178
3,596
5,257		 Exchange
Rate

28.48
3.673
0.276
4.365
28.48
28.48
3.673
0.276
Exchange
Rate

29.98
3.849
0.276
4.297
29.98
29.98
3.849
0.276		 Carrying amount
$11,743,582
3,606
2,080
1,487,916
145,417
7,551,113
14,588
1,577
Carrying amount
$12,391,051
4,153
438
536
63,104
7,980,014
13,841
1,451

The consolidated company's losses (realized and unrealized) from foreign currency exchange for the years 2020 and 2019 were NT$143,558 thousand and NT$169,839 thousand, respectively. Due to the variety of functional currencies involved in foreign currency transactions and group mergers, it is impossible to disclose the conversion gains or losses by each foreign currency with significant impact.

295

Sensitivity analysis

For the consolidated company's materially influential positions in foreign currency financial assets and liabilities, the risks are measured is performed by considering the net position of unmatured forward foreign exchange contracts.

The consolidated company is mainly affected by the fluctuation of the US dollar exchange rate. When the exchange rate of the New Taiwan dollar (functional currency) against the US dollar increases or decreases by 5%, the sensitivity analysis of the consolidated company is shown in the table below. 5% is the consolidated company's assessment of the reasonable range of possible changes in foreign exchange rates. The sensitivity analysis includes only monetary items of foreign currency in circulation and adjusted the ending calculation according to the exchange rate change of 5%. The positive (negative) numbers in the following table indicate the increase (decrease) in the amount of net profit before tax due to the appreciation of the NT dollar by 5% relative to the respective currencies; When the NT dollar depreciates by 5% relative to the respective foreign currencies, the effect on net profit before tax will be negative (positive) of the same amount.

Profit or loss from change of 5%
USD		 Dec. 31,2020
($209,623)		 Dec. 31,2019

($220,552)

(2) Interest rate risk

The consolidated company is exposed to fair value risk of interest rate change due to its holding of financial assets and financial liabilities with fixed interest rate; Holding financial assets and financial liabilities with floating interest rates exposes the Company to cash flow risk due to interest rate fluctuations. The carrying amount of financial assets and financial liabilities of the consolidated company exposed to interest rate risk on the balance sheet date was as followed:

Fair value interest rate risk
�Financial assets
�Financial liabilities
Cash flow interest rate risk
�Financial assets
�Financial liabilities		 Dec. 31,2020
$6,663,523
1,918,970
1,722,783
-		 Dec. 31,2019
$5,703,864
2,678,330
1,958,321
-

Sensitivity analysis

The following sensitivity analysis is based on the interest rate risk of derivative and non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis assumes that both the assets in circulation on the balance sheet date and the amount of the liability are in circulation during the reporting period. The rate of change used by the Company internally to report interest rate to key management is a 1% increase or decrease in interest rate and represents the management's assessment on the reasonable range of possible changes in interest rate. If the interest rate increased while all other variables kept unchanged, the Company's net profit before tax for 2020 and 2019 would increase by NT$17,228 thousand and NT$19,583 thousand, respectively. When market interest rate fell by 1%, the impact would be negative for the same amount.

296

  • (3) Other price risk

The consolidated company is exposed to equity price risk due to holding equity securities investment and beneficiary certificates. Sensitivity analysis 

  - Perform risk measurement for the financial assets with the change of equity price of the consolidated company. The Group adopted sensitivity analysis to measure the equity price risk.

  - Sensitivity analysis is based on the exposed risk of equity investment position on the balance sheet date. If the price of the domestic and foreign equity investment position increased/decreased by 5%, the profit and loss before tax for 2020 and 2019 would be increased/decreased by NT$32,722 thousand and NT$32,606 thousand, respectively due to the increase/decrease in the fair value of the financial asset as measured at fair value through the profit or loss. The profit and loss before tax for 2020 and 2019 would be increased/decreased by NT$507 thousand and NT$445 thousand, respectively due to the increase/decrease in the fair value of the financial asset as measured at fair value through other composite profit or loss.

  1. Policy regarding High-risk Investments, Highly Leveraged Investments, Loans to Other Parties, Endorsements/Guarantees, and Derivatives Transactions, Main Reasons for the Profit (Loss) Generated Thereby, and Response Measures to Be Taken in the Future

  2. (1) The Company has not engaged in high-risk and highly leveraged investments in the year 2020 up to the publication date of the annual report.

  3. (2) As of 2020 and the publication date of the annual report, the Company's lending to others:

    • In order to meet the Company's operating needs, the "Operating Procedures for Lending Funds to Others" have been formulated in accordance with the relevant laws and regulations of the competent authority, and are under the management of specific units. As of the end of 2020 and the publication date of the annual report, the Company has no lending to others.

  4. (3) As of 2020 and the publication date of the annual report, the Company's endorsement and warranty:

    • In order to meet the Company's operating needs, the "Operating Procedures for Endorsement and Warranty" have been formulated in accordance with the relevant laws and regulations of the competent authority, and are under the management of specific units. As of the end of 2020 and the publication date of the annual report, the Company's endorsement and warranty:
Endorsement and warranty
Golden Elite Technology
(Shenzhen) Co.,(����) Ltd.
Total		 Dec. 31,2020
NT$ 160,058
NT$ 160,058		 Unit: NT$1,000
Mar. 31,2021
NT$ 160,367
NT$ 160,367
  • (4) The Company is engaged in derivative transactions mainly to avoid risks, and the transactions are subject to the "Procedures for Handling Derivative Financial Commodity Transactions". There were no derivative commodity contracts outstanding as of Dec. 31, 2020, and Mar. 31, 2021.

297

Major factors that influence the success of R&D
in the future		 Raw material delivery 1. Chipset progress
2. Mechanism, hardware, and software development
progress		 RD Resource and raw material delivery 1.RD Resource and testing progress 1. AMD chips and CPU schedule
2. Raw material supply progress		 1. Intel new chip and CPU schedule
2. Raw material supply progress		 1. New specifications and technology introduction
2. Product testing		 1. SOC progress and RD resources
2. Mechanism, hardware, and software development
progress		 1. Mechanism, hardware, and software development
progress
2. COVID-19 status		 1. New specifications and technology introduction
2. Mechanism, hardware, and software development
progress
3. COVID-19 status		 1. New specifications and technology introduction
2. Mechanism, hardware, and software development
progress
3. COVID-19 status		 1. New specifications and technology introduction
2. Mechanism, hardware, and software development
progress
3. COVID-19 status		 1. Software and hardware development progress
2. Certification and testing progress
3. Customer cross-examination progress
Projected date for completion and
commercial production		 2021.Q1 2021.Q1-Q4 2021.Q2-Q3 2021.Q2-Q3 2021.Q1-Q3 2021.Q2-Q4 2021.Q2-Q4 2021.Q2-Q4 2021.Q1-Q3 2021.Q3-Q4 2021.Q2-Q4 2021.Q2-Q4 2021.Q4
Projected investment in R&D NT$2,200 thousand NT$13,000 thousand NT$1,500 thousand NT$3,000 thousand NT$2,500 thousand NT$4,500 thousand NT$1,500 thousand NT$1,500 thousand NT$10,000 thousand NT$20,000 thousand NT$10,000 thousand NT$20,000 thousand NT$25,000 thousand
Current progress of uncompleted
R&D projects		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production
& casing mold		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product
proofing/testing and mass production		 Circuit design/product proofing and
testing
R&D Project Intel Rock Lake Series
motherboard* 3 - mATX		 Intel Alder Lake motherboard
10pcs -ATX & mATX		 Jasper Lake
Series mATX motherboard		 ECS AMD new 500 series
motherboard *2
�
MicroATX		 AMD A300 series 1.2L system*1 Intel Alder Lake series 1.2L
system*3		 ECS LIVA Z4/Z4E Plus System -
Alder Lake P		 LIVA Q4 Plus - AMD Ryzen 5000
series project		 Jasper Lake
Series project		 Alder Lake Platform series project AMD Platform
Series project		 Windows on ARM series project ECS SMART Charger project

  1. Impact of major policy and legal changes at home and abroad on the financial business of the Company and corresponding measures:

  2. The management team of the Company keeps a close eye on any domestic and foreign policies and regulations that may affect the Company's financial and business operations, and establishes procedures for the identification of relevant regulations and the management of regulatory risks. The important changes in laws and regulations related to the Company's operations are as follows in 2020, and as of the publication date of the annual report:

  3. Article 14 of the Securities Exchange Act was promulgated on May 19, 2020, as amended by the President. The main purpose of this amendment is to facilitate the Company to determine reasonable remunerations for directors, supervisors, and employees. When preparing annual financial reports according to regulations, the Company shall disclose relevant information such as the Company's remuneration policy, average salaries of all employees and their adjustments, remunerations for directors and supervisors, etc., in accordance with the regulations of the competent authority.

  4. Other changes in relevant policies and regulations will not have a material impact on the Company's finance and business.

  5. Financial and business impacts of technological change and industrial change on the Company and countermeasures:

  6. There have been no major changes in the technology and industry in 2020 and up to the publication date of the annual report.

  7. Effect on the Crisis Management of Changes in the Corporate Image, and Measures to Be Taken in Response:

  8. There have been no changes in the business image of the Company in 2020 and up to the publication date of the annual report.

  9. Expected Benefits and Possible Risks Associated with Any Mergers and Acquisitions, and Measures to Be Taken in Response:

  10. There has been no merger & acquisition in the Company in 2020 and up to the publication date of the annual report.

  11. Expected benefits, possible risks, and countermeasures of plant expansion: There has been no plant expansion plan in the Company in 2020 and up to the publication date of the annual report.

  12. Risks and countermeasures faced by purchasing or selling concentrated goods: The Company is scattered in purchase and sales, and has no significant risk.

  13. The influence, risk, and countermeasures of the mass transfer or change of shares of the directors or major shareholders holding more than 10% of the shares of the Company: none.

  14. Impact and risk associated with changes in management rights, and countermeasures: There have been no significant changes in the Company's operation right in 2020 and up to the publication date of the annual report.

  15. For litigation or non-litigation events, the major litigation, non-litigation, or administrative dispute cases that have been judged or are pending of the Company and its directors, President, substantive person in charge, major shareholders holding more

299

than 10% of the shares and its affiliates shall be listed; if the results of which are likely to have a material impact on shareholders' equity or the price of securities, the facts in dispute, the amount of the subject matter, the commencement date of the proceeding, the principal parties involved and the disposition as of the date of publication of the annual report shall be disclosed:

  • (1) Any material litigation, non-litigation, or administrative dispute proceeding of the Company which has been judged or is pending in 2020 and as of the publication date of the annual report, the outcome of which is likely to have a material effect on shareholders' equity or securities prices: none.

  • (2) Any material litigation, non-litigation, or administrative dispute proceeding of the directors, President, substantive person in charge, major shareholders holding more than 10% of the shares of the Company and its affiliates, which has been judged or is pending in 2020 and as of the publication date of the annual report, the outcome of which is likely to have a material effect on shareholders' equity or securities prices: none.

  • Other important risks and countermeasures: information security risk evaluation and analysis

Financial and business impacts of information security system damage on the Company and countermeasures:

Recently, information security attacks occurred frequently. Major domestic technology companies have been attacked by hackers one after another. To secure the main transmission channels of ransomware, the Company has especially strengthened the staff's awareness on information security protection and launched information security promotion courses to prevent frauds in e-mail and other communication channels; In response to the COVID-19 pandemic, staff used video to reduce group gathering and avoid travel abroad, and used nonlocal or remote working to enhance the confidentiality and availability of information system services and Internet connections; With ISO 27001 and BS7799 as the reference standards and based on the actual management needs of the Company, the Company has appointed external experts to help develop more rigorous information security management policies. In addition, computer room control, monitoring and inspection of automatic maintenance control operations, and emergency response drills were also strengthened to ensure the normal operation of the information system, protect data, and reduce the interruption of system service caused by natural disasters or human negligence. ECS's service contracts with thirdparty service providers require them to comply with confidentiality and network security regulations and perform security inventory and vulnerability screening and improvement on an annual basis. Information security inspections are also included in the annual audit plan. With regard to ECS's measures on authorization permission management, purchasing procedures, information system redundancy and disaster recovery plan, host system operating standards, information system permission management, MIS room management, and fixed assets management, ECS's IT unit and expert consultants have developed complete information service processing procedures and regularly educated staff on the importance of information security. IT employees actively apply for external training and specialist education courses for their work. They manage and maintain IT equipment and analyze the potential threats to these assets. If a device cannot be repaired or troubleshot immediately, the manufacturers shall provide spare parts to replace or repair it. For important machinery and

300

equipment (each server, network equipment), the maintenance vendors are requested to keep regular maintenance and inspection records, so as to reduce incident impact. For ERP systems with high-risk level and service impact, in addition to performing reboot and disaster recovery drills, high-availability architecture, cloud host backup, and data backup mechanisms are also established to ensure uninterrupted service.

In 2020 and as of the date of this Annual Report, ECS has successfully prevented attacks on the corporate network from the Internet, which have or may have prevented significant adverse impact on the business and operations of the Company. In addition, the Company has not been involved in any legal case or regulatory investigation related thereto, and there were no major security events during the year that affected the Company's business and operating production. The Company also identified potential losses that might be caused by disasters, reduced the loss of critical systems and equipment when they were out of operation, developed specific and feasible emergency response plans and disaster recovery strategies, and performed personnel training, regular drills and tests, and maintenance to ensure the continuity of business operations.

  • VII. Other Important Matters: None.

301

Chapter 8. Special Notes

I. Information about the Company's Associates

Elitegroup Computer Systems Co., Ltd. and affiliates Consolidated Operating Report for Affiliated Enterprises 2020

  • (I) Organization chart of affiliated companies

==> picture [425 x 479] intentionally omitted <==

----- Start of picture text -----

||||||||||
|---|---|---|---|---|---|---|---|---|
|Elitegroup Computer Systems Co., Ltd.|
|Dec. 31, 2020|
|100%|100%|100%|100%|100%|100%|100%|100%|99.99%|
|100% 100%|100%|100%|100%|100%|100%|100%|68.45%|
|100%|100%|100%|
|100%|
|100%|100%|

----- End of picture text -----

302

(II) Basic information of affiliates

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Name of
Affiliate		 Date of
Incorporation
Address		 Paid-in Capital Main businesses
or products
Elitegroup Computer
Systems (HK) Co., Limited
Elitegroup Computer
Systems (Japan) Co., Ltd.
Elitegroup Computer
System (Holding) Co., Ltd.
ECS Holding
(America) Co.
Elitegroup Computer
Systems Korea Co., Ltd.
Dragon Asia Trading Co., Ltd.
Unitop International Corp.
Unity Investments Limited
ECS Holding (HK) Co.,
Limited
Elitegroup Technology
(Thailand) Co., Ltd.
Xun Rui Electron
(Shenzhen) Co., Ltd.
Beijing XunRun
Technology Co., Ltd.
Venture Well
Holdings Limited
Elitegroup Computer
Systems Inc.
Super ECS USA, Inc.		 Jul. 6, 1993
Jan.17, 1991
Feb. 23, 2001
Jun. 21, 2001
Jun. 23, 2005
Jan. 2, 2003
Mar. 15,
1999
Mar. 20,
2003
Apr. 20, 2017
Jan. 18, 2019
Oct. 9, 2003
Jul. 27, 2005
May 5, 2003
Jan. 4, 1990
Nov. 29, 2005		 Hong Kong
Japan
British Virgin Islands
U.S.A
Korea
British Virgin Islands
British Virgin Islands
Samoa
Hong Kong
Thailand
China
China
British Virgin Islands
U.S.A
U.S.A		 60,825
(HKD
16,560,000)
15,694
(YEN
56,800,000)

523,499
(USD
18,381,296)

1
(USD
34)

61,439
(KRW
2,345,000,000)

-
(USD
-)

371,664
(USD
13,050,000)

54,254
(USD
1,905,000)

2,458,593
(USD
86,327,000)

348,464
(THB
367,500,000)

29,904
(USD
1,050,000)

45,568
(USD
1,600,000)

727,535
(USD
25,545,462)

541,488
(USD
19,012,930)

14,240
(USD
500,000)		 Sale of motherboards,
computer peripheral
products and related
components
Sale of motherboards,
notebook, computer pe-
ripheral products and re-
lated components
Holding company
Holding company
Sale of motherboards,
maintenance and sales
support
Holding company(Note 3)
Holding company
Holding company
Holding company
Manufacture and sales of
computer and computer
peripheral products
Manufacture and
maintenance of electric
equipment and instrument,
computer peripheral products
and cases
Manufacture and
maintenance of electric
equipment and instrument,
computer peripheral products
and cases
Holding company
Sale of motherboards,
notebook, computer pe-
ripheral products, related
components and systems
assembled
Sale of motherboards,
computer peripheral prod-
ucts and related compo-
nents

303

Enterprise name Date of
Incorporation		 Address Paid-in capital Main business
orproduction item
Million Up Finance
Limited
Elitegroup Computer
Systems (SIP) Co., Ltd.
Unique Sino Limited
ECS Digital Technology
(Shenzhen) Ltd.
Alpha Leader
Limited
Advazone International
Limited
Affirm International
Limited
Golden Elite Technology
(Shenzhen) Ltd.
��������������
Golden Elite Technology
(Shenzhen) Ltd.
�����������
�����
ECS Trading
(Shenzhen) Co., Ltd.
Beijing Advazone Electronic
Limited Company.
Protac International
Computer, S.L.		 Aug. 22, 2001
Aug. 22, 2001
Mar. 5, 2003
Jun. 28, 2017
Oct. 4, 2002
May 5, 2003
Aug. 8, 2002

Dec.10, 2002
May 17,
2018
Aug. 18,
2006
May 9, 2003
Jul. 20, 1995		 British Virgin Islands
Mainland China
Samoa
China
Hong Kong
British Virgin Islands
British Virgin Islands
China
China
China
China
Spain		 -
(USD
-)

740,480
(USD
26,000,000)

53,827
(USD
1,890,000)

441,440
(USD
15,500,000)

87,012
(HKD
23,689,688)

528,304
(USD
18,550,000)

124,742
(USD
4,380,000)

-
(USD
-)

1,723,040
(USD
60,500,000)

56,960
(USD
2,000,000)

458,528
(USD
16,100,000)

-
(USD
-)		 Holding company(Note 3)
Research, development and
manufacture of notebook, tab-
lets and related components
Holding company
Manufacture, research and
development of PCBs, moth-
erboards, systems, assembly
of notebook, tablets and pe-
ripheral products
Trading of IC and electric
components
Holding company
Holding company
Manufacture, research and
development of PCBs, moth-
erboards, systems, assembly
of notebook, tablets and pe-
ripheral products
Manufacture, research and de-
velopment of PCBs, mother-
boards, systems, assembly of
notebook, tablets and periph-
eral products
Wholesale, trade, mainte-
nance and technical consulta-
tion of computers and periph-
eral products
Wholesale, maintenance and
technical consultation of
computers and peripheral
products and related compo-
nents
Sales of computer periph-
eral products (Note 1)

Note: (1) Protac International Computer, S.L. is under liquidation.

(2) Exchange rates of paid-in capital: Based on the Company's settlement rates as of December 31, 2020: USD(28.48), HKD(3.673), YEN(0.2763), KRW(0.0262), THB(0.9482)

(3) The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the re-sidual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ), respectively.

304

(III) Profiles on shareholders deemed to have dominant-subordinate relations

Unit: NT$1,000; share; �

Uni t: NT$1,000;share; �
Presumed
reason		 Name Shareholding Date of
Incorporation		 Address Paid-in
Capital		 Main Business
Activities
Number
of Shares
Percentage of
Ownership
Not applicable

  • (IV) The division of businesses between the affiliated enterprises

  • The Company and its affiliated enterprises are mainly engaged in the design, manufacture, and sales of motherboards, desktop, laptop, tablet, systems, control interface cards, computer peripheral products, and related computer components; The Company (parent company) focuses on product research and development, design and sales of the products, and sets up marketing sites all over the world. The sales units of affiliated enterprises (subsidiaries) are mainly responsible for the collection of relevant production and sales information and the sales and services of products; the manufacturing sites of Golden Elite Technology (Shenzhen) Ltd. ���������������� and Elitegroup Technology (Thailand) Co., Ltd. are responsible for the production and maintenance of motherboards, tablet, computer assembly and computer peripheral products, as well as the production, processing, and trading of printed circuit boards.

(V) Information of Directors, Supervisors, and Presidents of Affiliated Companies (as of Dec. 31, 2020)

Unit: share; %

Unit: share;% Unit: share;%
Enterprise name Title Name or representative Number of shares held
Number of
Shares		 Percentage
of
Ownership
Elitegroup Computer Systems (HK) Co.,
Limited
Director
Director		 Chen, Hui-Mei
Ming-Hung Hsieh		 -
-		 -
-
Elitegroup Computer Systems (Japan)
Co., Ltd.		 Representative
director
Director
Director
Supervisor		 Okayama Misa
Lung-Kuang Yang
Che-Kuang Lin
Wei-Lung Cheng		 -
-
-
-		 -
-
-
-
Elitegroup Computer System (Holding)
Co., Ltd.		 Director
Director		 Elitegroup Computer Systems Co.,
Ltd.
Wen-Yen Lin Kuo
(representative)
Yi-Ching Chung
(representative)		 18,381,296
-
-		 100.00%
-
-
ECS Holding (America) Co. Director
Director
Director
CEO		 Wen-Yen Lin-Kuo
Yi-Ching Chung
Ming-Hung Hsieh
Maggie Liu		 -
-
-
-		 -
-
-
-
Elitegroup Computer Systems Korea
Co., Ltd.		 Director
Director
Director
Supervisor		 Lung-Kuang Yang
Chen, Hui-Mei
Hak Sun Park
Wei-Lung Cheng		 -
-
-
-		 -
-
-
-

305

Dragon Asia Trading Co., Ltd. Director Hao Zhang - -
(Note)
Unitop Internartional Corp. Director
Director		 Elitegroup Computer Systems Co., Ltd.
Chen-Cheng Liao (representative)
Ming-HungHsieh(representative)		 2,600
-
-		 100.00%
-
-
Unity Investments Limited Director
Director
Director		 Elitegroup Computer Systems Co., Ltd.
Chen, Hui-Mei (representative)
Yi-Ching Chung (representative)
Hsiu-Hsien Chou(representative)		 1,905,000
-
-
-		 100.00%
-
-
-
ECS Holding (HK) Co., Limited Director
Director		 Wen-Yen Lin-Kuo
Yi-Ching Chung		 -
-		 -
-
Elitegroup Technology (Thailand) Co.,
Ltd.		 Director
Director
Director
Director
Director
President		 Kun-Shen Tai
Lung-Kuang Yang
Chih-Nan Chen
Che-Kuang Lin
Yi-Ching Chung
Kun-Shen Tai		 1
1
-
-
1
-		 0.00%
0.00%
-
-
0.00%
-
Xun Rui Electron (Shenzhen) Co., Ltd. Director
Director
Director
President
Supervisor		 Kun-Shen Tai
Ming-Hung Hsieh
Hui-Mei Chen
Chin-Chao Chang
Mei-Hua Lin
Beijing XunRun Technology Co., Ltd. Director
Director
Director
President
Supervisor		 Kun-Shen Tai
Ming-Hung Hsieh
Hui-Mei Chen
Chin-Chao Chang
Mei-Hua Lin
Venture Well Holdings Limited Director
Director
Director
Director
Director		 Lung-Kuang Yang
Yi-Ching Chung
Ming-Hung Hsieh
Pan-Tsu Wu
Ming-Kun Ho		 -
-
-
-
-		 -
-
-
-
-
Elitegroup Computer Systems Inc. Director
Director
Director
CEO		 Lung-Kuang Yang
Chen-Cheng Liao
Ming-Hung Hsieh
Chen-ChengLiao		 -
-
-
-		 -
-
-
-
Super ECS USA, Inc. Director
Director
President		 Chi-Tung Huang
Che-Kuang Lin
Shou-Yen Liu		 -
-
-		 -
-
-
Million Up Finance Limited Director Hao Zhang - -
(Note)
Elitegroup Computer Systems (SIP) Co.,
Ltd.
Director
Director
Director
President
Supervisor		 Lung-Kuang Yang
Kun-Shen Tai
Te-Chieh Liu
Kun-Shen Tai
Ming-HungHsieh
Unique Sino Limited Director
Director		 Unity Investments Limited
Hui-Mei Chen (representative)
Ling-Wei Wang (representative)		 1,890,000
-
-		 100.00%
-
-

306

ECS Digital Technology (Shenzhen)
Ltd.		 Director
Director
Director
President
Supervisor		 Chun-Shih Shih
Kun-Shen Tai
Lung-Kuang Yang
Kun-Shen Tai
Yi-Ching Chung
Alpha Leader Limited Director
Director
Director		 Yi-Ching Chung
Lung-Kuang Yang
Chin-Chao Chang		 -
-
-		 -
-
-
Advazone International Limited Director
Director		 Venture Well Holdings Limited
Yi-Ching Chung
(representative)
Ling-Wei Wang
(representative)		 18,550,000
-
-		 100.00%
-
-
Affirm International Limited Director
Director		 Venture Well Holdings Limited
Yi-Ching Chung
(representative)
Ling-Wei Wang
(representative)		 4,380,000
-
-		 100.00%
-
-
Golden Elite Technology (Shenzhen) Ltd.
��������������		 Director
Director
Director
President
Supervisor		 Hao Zhang
Yin-Hu Wang
Wang Dou
Kun-Shen Tai
Gu Song		 - -
(Note)
Golden Elite Technology (Shenzhen) Ltd.
����������������		 Director
Director
Director
President
Supervisor		 Chun-Shih Shih
Kun-Shen Tai
Lung-Kuang Yang
Kun-Shen Tai
Ming-Hung Hsieh
ECS Trading (Shenzhen) Co., Ltd Director
Director
Director
President
Supervisor		 Chun-Shih Shih
Chang-Ming Lee
Hsiu-Hsien Chou
Kun-Shen Tai
Ming-Hung Hsieh
Beijing Advazone Electronic Limited
Company.		 Director
Director
Director
Director		 Lung-Kuang Yang
Yi-Ching Chung
Ming-Hung Hsieh
Chi-Tung Huang
Protac International Computer, S.L. Director
 Fu-Ping Chang
 - -

Note:

The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ), respectively.

307

(VI) Operating overview of affiliated enterprises

Unit: Except for earnings per share in NT$, the remaining amount is in NT$1,000

Enterprise name Capital Total assets Total
 Net value Operating Operating Current
profit (loss)		 Earnings per
share (NT$)
amount liabilities income profit (loss)
(after tax)
(after tax)
Elitegroup Computer Systems
(HK)Co.,Limited		 60,825
263,924
296
263,628
-
(1,582)		 (329) (0.02)
Elitegroup Computer
Systems (Japan) Co., Ltd.		 15,694
33,905
11,201
22,704
18,226
990
121
106.69
Elitegroup Computer System
(Holding) Co., Ltd.		 523,499 212,361
10,005
202,356
-
(1,482)		 8,347 0.45
ECS Holding (America) Co. 1
737,029		 327 736,702
-
(276)		 9,919 2,950.34
Elitegroup Computer
Systems Korea Co., Ltd.		 61,439 14,847 5,440
9,407		 16,345
948
68
0.15
Dragon Asia Trading Co., Ltd. -
-
-
-
-
-
385,105
-
Unitop International Corp. 371,664
871,624
145
871,479		 -
(1,463)		 (67,544) (25,978.30)
Unity Investments Limited 54,254
82,139		 0
82,139		 -
0
5,178
2.72
ECS Holding (HK) Co.,
Limited		 2,458,593 3,004,500
3,088		 3,001,412
-
(5,303)		 170,486
1.00
Elitegroup Technology
(Thailand) Co., Ltd.		 348,464
290,178
18,468
271,710
62,991
(38,656)		 (38,780) (9.70)
Xun Rui Electron (Shenzhen)
Co., Ltd.
29,904
44,078
26,802
17,276
29,415
(1,130)		 (1,870) -
Beijing XunRun Technology
Co., Ltd.		 45,568
120,619		 45,101
75,518
131,993
18
114
-
Venture Well Holdings
Limited		 727,535
226,443
731
225,712
-
4,314
12,253
0.56
Elitegroup Computer
Systems Inc.		 541,488
634,163
45,817		 588,346
329,781
9,280
11,527		 242.42
Super ECS USA, Inc. 14,240
253,932
133,583
120,349		 471,481
11,181
8,487		 3.39
Million Up Finance Limited -
-
-
-
-
-
514,792
-
Elitegroup Computer
Systems (SIP) Co., Ltd.		 740,480
850,606
11,916
838,690
7,661
(61,049)		 (66,353) -
Unique Sino Limited 53,827 82,121
-
82,121
-
-
5,178
2.74
ECS Digital Technology
(Shenzhen) Co., Ltd.		 441,440
460,568
3,453
457,115
23,920
60
3,033
-
Alpha Leader Limited 87,012
112,872
1,106
111,766
-
(568)		 4,507 0.19
Advazone International Limited 528,304
106,964
-
106,964
-
-
3,354
0.18
Affirm International Limited 124,742
41
-
41
-
-
-
-
Golden Elite Technology
(Shenzhen) Ltd.
��������������		 -
-
-
-
10,506,836
9,884
545,179		 -
Golden Elite Technology
(Shenzhen) Ltd.
����������������		 1,723,040 7,177,636 5,132,314 2,045,322
12,755,282
(21,384)		 139,550
-
ECS Trading (Shenzhen)
Co., Ltd		 56,960
87,641
9,731
77,910
124,284
312
5,178
-
Beijing Advazone Electronic
Limited Company.		 458,528
108,132
1,308
106,824
1,436
(4,126)		 3,354
-
Protac International
Computer, S.L.
- - - - - - - -

308

  • Note: (1) Exchange rates of balance sheet subjects: (the Company's closing rates as of December 31, 2020)

    • USD(28.48), RMB(4.365), HKD(3.673), YEN(0.2763), KRW(0.0262), THB(0.9482)

  • (2) Exchange rates of income statement subjects: (the Company's average exchange rates from January to December, 2020) USD(29.566), RMB(4.287), HKD(3.812), YEN(0.277), KRW(0.0251), THB(0.9451)

  • (3) The Company disposed of one hundred percent equity of Dragon Asia in August 2020, lost control of Dragon Asia, Million Up and Golden Elite Technology ( ���� ), and derecognized the related subsidiaries. The Company accounted for the residual equity in ECS Holding (HK) Co., Limited and Golden Elite Technology ( ������ ), respectively.

(4) Protac International Computer, S.L. is in the process of liquidation.

  • II. Private placement securities in 2020 and up to the publication date of this annual report: none.

  • III. Holding or disposition of company shares of 2020 and up to the publication date of this report: none.

  • IV. Other disclosure items:

For the year 2020 and up to the date of publication of the annual report, if there is an event that has a material impact on shareholders' equity or securities prices as set forth in 36.3.2 of the Act: none.

309

==> picture [244 x 41] intentionally omitted <==

ELITEGROUP COMPUTER SYSTEMS CO., LTD.

More from ECS

Interim / Quarterly Report 2026
May 13
Interim / Quarterly Report 2026
May 13
Interim / Quarterly Report 2026
May 13
Regulatory Filings 2026
May 13
Interim / Quarterly Report 2026
May 13
Regulatory Filings 2026
May 13
Interim / Quarterly Report 2026
May 13
Governance Information 2026
May 12
Audit Report / Information 2026
May 11
Audit Report / Information 2026
May 11
View all filings →