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TWSE Stock Code ： 2383

Elite Material Co., Ltd.

2021

ANNUAL REPORT

Printed Date ： 5th May 2022 This annual report can also be viewed and downloaded at the following website:

http://mops.twse.com.tw https://www.emctw.com

1. The Company Spokesperson:

Name	: RandyYu
Job title	: Vice President
Telephone	: +886-3-483-7937
Email	: [email protected]

Deputy Spokesperson:

Name : Vicky Chiang Job title : Deputy Manager, Finance Department Telephone : +886-3-483-7937 Email : [email protected]

2. Elite Material Co., Ltd.

Headquarters address : No. 18, Datong 1[st] Road, Guanyin District Taoyuan City 32849, Taiwan Telephone : +886-3-483-7937 Hsinchu Factory address : No. 14, Wenhua Road, Fenshan Village Huko Township, Hsinchu County 30352, Taiwan Telephone : +886-3-598-1688

3. Stock Transfer Processing Agent:

Name : Stock Transfer Agent Department Oriental Securities Co., Ltd. Address : 13F, No. 16, Xinzhan Rd., Banqiao Dist., New Taipei City, Taiwan Telephone : +886-2-7753-1699 Website : www.osc.com.tw

4. Independent Auditor:

Name of the accountants : Calvin C. Y. Chiang; Yi-Chun Chen Name of the firm : KPMG Address : 68F, No. 7, Xinyi Road, Section 5, Taipei City, Taiwan Telephone : +886-2-8101-6666 Website : www.kpmg.com.tw

5. Name of the Transaction Place of the Overseas Securities and the

Ways to Inquire the Information of the Overseas Securities:

Not Applicable

6. The Company Website : www.emctw.com

The English version is the translation of the Chinese version and if there is any discrepancy between this English translation

and the Chinese text of this document, the Chinese text shall prevail.

Contents of the Annual Report

I. BUSINESS REPORT TO SHAREHOLDERS ..................................................... 4

II. COMPANY PROFILE

Date of Incorporation ............................................................................................................... 7 2. Company History ..................................................................................................................... 7 III. CORPORATE GOVERNANCE REPORT
Organization ............................................................................................................................ 11 2. Directors and the Management Team .................................................................................... 13 3. Remuneration for directors, president and vice presidents .................................................... 22 4. Corporate Governance ........................................................................................................... 30 5. Audit Fees .............................................................................................................................. 57 6. Information for Change of CPAs ........................................................................................... 57 7. The Company’s Chairman, President, and Managers Responsible for Finance or Accounting Who Have Held a Position in the CPA Office or Its Affiliates Within the Latest Year.............................................................................................................................. 57 8. Shareholding Transferred or Pledged by Directors, Management, and Major Shareholders Who Hold 10% of the Company Shares ................................................................................ 57 9. Top Ten Shareholders Being the Related Party as Defined in Statement of Financial Accounting Standards No. 6. ................................................................................................. 59 10 .Shareholding Proportion of EMC to Investees .................................................................... 59 IV. CAPITAL OVERVIEW 1. Capital and Shares.................................................................................................................. 60 (1) Issued Shares ........................................................................................................................ 60 (2) Composition of Shareholders ................................................................................................... 60 (3) Distribution Profile of Share Ownership .................................................................................... 60 (4) Major Shareholders ............................................................................................................... 61 (5) Net Worth, Earnings, Dividends, and Market Price per Common Share ............................................ 61 (6) Dividend Policy and Its Execution Results ................................................................................. 62 (7) Effects on Business Performance and EPS Resulted from Stock Distribution Proposed by 2017 Annual General Shareholders Meeting ...................................................................................... 62 (8) Employees’ Compensation and Directors Remuneration ............................................................... 62 (9) Share Buyback by the Company ............................................................................................... 63 2. Corporate Bonds .................................................................................................................... 63 3. Preferred Shares ..................................................................................................................... 63 4. Issuance of Overseas Depository Receipts ............................................................................ 63 5. Employee Stock Options........................................................................................................ 64 6. Employee Restricted Stock Option and Share Issued for Merger or Acquisition .................. 64 7. Fund Utilization Plans and Status .......................................................................................... 64 V. OPERATIONAL HIGHLIGHTS 1. Business Activities ................................................................................................................. 65 (1) Business Scope ..................................................................................................................... 65
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(2) Business Environment ............................................................................................................ 65 (3) Technology and R&D Overview .............................................................................................. 66 (4) Long-Term and Short-Term Business Plan ................................................................................. 67 2. Overview of the Market, Production and Sales Analysis ...................................................... 67 (1) Market Analysis .................................................................................................................... 67 (2) Applications and Production Process of Major Products................................................................ 68 (3) Sources of Major Raw Materials .............................................................................................. 68 (4) Major Suppliers or Customers Who Account for 10% of Purchases /or Revenues in Recent Two Years .................................................................................................................................. 69 (5) Volume and Value of the Production in Recent Two Years ............................................................. 69 (6) Sales Volume and Amount in Recent Two Years .......................................................................... 69 3. Information about Employees ................................................................................................ 70 4. Environmental Protection Measures and Expenses ............................................................... 70 5. Employee Welfare .................................................................................................................. 72 6. Information and communication security management......................................................... 73 7. Important Contracts and Agreements..................................................................................... 74 VI. FINANCIAL INFORMATION 1. Five-Year Financial Summary ............................................................................................... 75 2. Financial Ratio Analysis for Recent Five Years..................................................................... 79 3. The Audit Committee’s Review Report ................................................................................. 82 4. Financial Reports (Stand-alone) ............................................................................................ 82 5. Financial Reports (Consolidated) .......................................................................................... 82 6. Impact of the Financial Distress Occurred to the Company and Affiliates in Recent Years until the Annual Report Being Published............................................................................... 82 VII.REVIEW AND ANALYSIS OF THE FINANCIAL CONDITION, PERFORMANCE AND RISK MANAGEMENT 1. Review and Analysis of Financial Conditions ....................................................................... 83 2. Review and Analysis of Financial Performance .................................................................... 84 3. Review and Analysis of Cash Flow ....................................................................................... 85 4. Major Capital Expenditures in Recent Years and Impacts on Financial and Operational Situations................................................................................................................................ 85 5. Investment Policies in Recent Years ...................................................................................... 85 6. Risks Management ................................................................................................................. 86 7. Others ..................................................................................................................................... 89 VIII. SPECIAL DISCLOUSE 1. Affiliated Companies ............................................................................................................. 90 2. Private Placement Securities in the Latest Year ..................................................................... 93 3. The Company’s Shares Held or Disposed by Subsidiaries in Recent Years until the Annual Report Being Published............................................................................................. 93 4. Other Supplementary Information ......................................................................................... 93 5. Pursuant to Article 36-3-2 of Security Exchange Act, Event Having Material Impact on the Shareholders’ Equity or Share Price in the Latest Year until the Annual Report Being Published ................................................................................................................................ 93

I. BUSINESS REPORT TO SHAREHOLDERS

1. Year 2021 Business Results

i. Execution Results of Business Plan

			Unit: NT$thousands
Items	Year 2021	Year 2020	%
Revenue	38,500,026	27,200,786	41.54%
Gross profit	10,068,554	7,040,029	43.02%
Operating profit	6,922,620	4,683,451	47.81%
Income before tax	6,911,896	4,843,563	42.70%
Net income	5,500,157	3,694,270	48.88%

Note: Numbers are presented on consolidated basis. The net income of year 2021 includes the net income of NT$6,939 thousand belongs to the minority interests.

The capacity of CCL is as the following:

a. Kunshan production site of Jiangsu Province, China: Monthly production capacity has achieved 1.35 million sheets. (Expected capacity of 1.65 million/Month in Q322)
b. Zhongshan production site of Guangdong Province, China: Monthly production capacity has achieved 950,000 sheets.
c. Guanyin/Hsinchu production site of Taiwan: Monthly production capacity has achieved 650,000 sheets.
d. Huangshi production site of Hubei Province, China: Monthly production capacity has achieved 600,000 sheets. (Expected capacity of 0.9 million/Month in Q322)

ii. Status of Budget Execution: Not applicable

iii. Summary of Cash Flow Statements

Summary of Cash Flow Statements
	Unit: NT$ thousands
Items	Year 2021
Net cash provided by operating activities	4,021,522
Net cash used in investing activities	2,618,127
Net cash used in financing activities	419,758
Effects of changes in foreign exchange rate
on cash and cash equivalents	-73,430
Increase in cash in reporting period	910,207

iv. Analysis of Profitability

Items	Year 2021 Year 2020
Return on assets (%)	17.26 13.98
Return on equities (%)	30.11 24.39
Percentage of paid-in capital (%)	Operating profit 207.94 140.68
	Income before tax 207.62 145.49
Net margin (%)	14.29 13.58
Earningsper share(NT Dollar)	16.50 11.33

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v. Results of Research and Development:

EMC is the world's largest supplier of halogen-free and laminate material, continues to focus on the development of halogen-free material for handheld and high-speed related applications. In response to the needs of 5G high-speed transmission of internet of things, not only mass production of 5G handheld devices but also optimal substrate material applied in server/ base station/ networking appliance, furthermore, mitigate into next generation high end material development.

New products successfully developed by the Company in 2021:

RCC material adopted in 5G high-end handheld device
High end substrate material consumed by SiP package
PCIe 5 II and PCIe 6 high speed data transmission material
800GHz Switch material verified by global brand companies
Granted patents from ROC,China and USA

In the era of internet of things, not only require for high speed data calculation, but also high frequency signal receiver, only high frequency material can achieve truly wireless communication. In the past, the technology replies on PTFE as substrate material, however, PTFE technology has its weakness such as difficult to process, unpopular. In autonomous driving era, to fulfill self-driving and post 5G electronic material needs, EMC further engages in Radar high frequency substrate material and high end packaging substrate material development, to satisfy global customers growth trajectory.

II. Summary of Year 2021 Business Plan

i. Planning of sales and production
a. Capacity expansion
b. Promote eco-friendly laminate material
c. Balancing sales and production, flexible inventory adjustment and active cash management
ii. Operating strategy
a. To introduce high end HDI substrate material for server and switch market.
b. To extend expertise in substrate like material to substrate material.
c. To maintain lion’s share in high end HDI segment.
d. To develop laminate material for high end vehicle market.
iii. Sales volume target

Expected sales volume target:

Copper clad laminates (CCLs): 48 million sheets/year Prepreg (PP): 1.06 million rolls/year Mass Lam (M/L): 1.6 million panels/year

III. Effects from changes in competitions, regulations, and business environment on the

future development strategy of the company

i. Future development strategy of EMC:
a. To develop high speed/ high frequency and low loss materials
b. To solidify the leading position of EMC’s materials consumed by HDI PCBs in the global market.
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c. Enlarge offshore market, diversify risks.
ii. Perfectness of Internal control, enhance management efficiency
iii. Effects from changes in competitions, regulations, and business environment:

Due to the outbreak of Covid-19 in those two years, the company and all sites have been strictly following the quarantine protocol to make sure that the company still operates on the track.

From the future perspective, the demand for halogen-free keeps growing, on the back of severely environmental regulations, EMC maintains its global leading position in eco-friendly laminates, equips long lasting strength in HDI technology and environmental material. After years of waiting, it is been officially recognized by the market and take into must consideration of their material structure, enabling the company to possess elements for further success.

We sincerely thank you for your continued trust, support, and commitment to EMC, and look forward to building a prosperous future together with our shareholders.

Chairman: Ding-Yu Dong

II. COMPANY PROFILE

1. Date of Incorporation

Date of Incorporation: 24 March 1992

1.1. Company Tax ID Number : 86521351 Company Address : No. 18, Datong 1st Road, Guanyin Industrial Park, Guanyin District Taoyuan City 32849, Taiwan Company Telephone : +886-3-4837937 1.2. Factory Establishment Permission: Permission Number : 81 Jian-Yi-Tze No.083375, issued by Construction Tin, Provincial Government on 15 June 1992 Factory Address : No.18, Datong 1st Road, Guanyin Industrial Park, Guanyin District Taoyuan City 32849, Taiwan Factory Telephone : +886-3-4837937

2. Company History

1992 The first meeting of promoters convened and drew up the Articles of Incorporation. Meanwhile, resolution was formed that promoters shall make full payment for the numbers of shares respectively subscribed to by 25 February 1992.

The second meeting of promoters convened to elect Directors and Supervisors; thereafter, the first meeting of the first term Board of Directors called to elect Mr. Zhu, Ho-Zen as the Chairman.

1993 Extraordinary Shareholders’ Meeting was convened, and resolved to increase the capital of the Company by NT$22.5 million. The total paid-in capital rose to NT$430 million after the capital increase. Meanwhile, seven Directors and two Supervisors were elected in accordance with the Article 22 of the Article of Incorporation.

The Letter of Construction Tin, Taiwan Provincial Government (Letter No. 82 Jian-Yi-Tze 075808) issued the factory registration certificate to the Company, and the certificate number was 99-079038-00.

1995 For increasing business and creating more profits, the Extraordinary Shareholders’ Meeting resolved to raise capital of NT$210 million in order to expand factory space and purchase machinery and equipment. The total paid-in capital rose to NT$640 million after the capital increase.

The Company, receiving pre-listing counseling guidance, applied for OTC listing.

The Article of Incorporation was amended in the Annual General Shareholders’ Meeting, increasing the number of Supervisors from two to three. The third term of Directors were elected, and new Chairman was elected among Directors.

1996 The Company held the analyst meeting before initial public offering in the OTC market.

The common shares of the Company began to trade in the OTC market.

The Board of Directors resolved to increase capacity on existing production site.

1997 The following resolutions were approved in the Extraordinary Shareholders’ Meeting in 1997:

The Company shall issue 7 million new common shares, with a par value of NT$10 per share, at a premium price of NT$35 per share.
The Company shall apply for listing in the Taiwan Stock Exchange in 1998; meanwhile, de-listed from the OTC market.
The Company shall proceed investment business in domestic and overseas market in order to develop business opportunities and expand business scope.
1998 The Annual General Shareholders’ Meeting elected the fourth term Directors, and Mr. Zhu, Ho-Zen was again elected as the Chairman of the Board.

The common shares of the Company began to trade in the Taiwan Stock Exchange.

2001 The fifth term Directors and Supervisors were elected by the Annual General Shareholders’ Meeting, and Mr. Zhu, Ho-Zen was again elected as the Chairman of the Board by the first meeting of the fifth term Board of Directors.
2002 The Annual General Shareholders’ Meeting resolved to make up the total loss occurred in 2001 by using the legal reserve of NT$18,280,038.
2003 The Annual General Shareholders’ Meeting resolved to make up the total loss occurred in 2002 by the legal reserve of NT$56,449,987 and the capital surplus of NT$61,010,761.

Mr. Zhu, Ho-Zen retired from the position of the Chairman in the 18th meeting of the fifth term Board of Directors, and Directors subsequently elected Ms. Dong-Ho, Mei-Chin to substitute the Chairman position.

2004 The sixth term Directors and Supervisors were elected by the Annual General Shareholders’ Meeting, and the first meeting of such Board of Directors elected Mr. Tsai, Fei Liang as the Chairman, and Mr. Dong, Ding Yu as the Vice Chairman.
2005 Hsinchu Factory commenced commercial operation and the Company began to offer Mass Lamination services to printed-circuit board makers.
2006 The sixth term 24th Board of Directors Meeting resolved to re-organize the holding structure. Grand Shanghai and EMC-HK, subsidiaries originally controlled by EMC-Holding, were re-organized as subsidiaries under the control of Grand Zhuhai. Meanwhile, Grand Zhongshan was created and also put under the control of Grand Zhuhai.

2007 The seventh term Directors and Supervisors were elected by the Annual General Shareholders’ Meeting. The first meeting of the seventh term Board of Directors elected Mr. Tsai, Fei Liang and Mr. Dong, Ding Yu as Chairman and Vice Chairman, respectively.

After the capitalization of retained earnings, combined with the conversion of convertible bonds into

common shares, the number of outstanding shares of the Company increased by 27,499,796 shares. The total share capital of the Company arrived at NT$2,383,918,790.

2008	The Company bought back and canceled 2,318,000 shares. The share capital was reduced to
	NT$2,369,331,320.

After the capitalization of retained earnings, combined with the conversion of convertible bonds into common shares, the number of outstanding shares of the Company increased by 21,470,823 shares. The total share capital of the Company arrived at NT$2,575,447,020.

2009 The Company bought back and canceled 2,888,000 shares. The share capital was reduced to NT$2,546,567,020. Retained earnings was capitalized. In combination with the exercise of employees’ option certificates and conversion of convertible bonds into common shares, the number of outstanding shares of the Company increased by 13,511,674 shares. The total share capital of the Company arrived at NT$2,681,683,760.

2010	The eighth term Directors and Supervisors were elected by the Annual General Shareholders’ Meeting.
	The first meeting of the eighth Board of Directors elected Mr. Tsai, Fei Liang as the Chairman, and Mr.
	Dong, Ding Yu as the Vice Chairman.
	Retained earnings was capitalized. In combination with the exercise of employees’ option certificates
	and conversion of convertible bonds into common shares, the number of outstanding shares of the
	Company increased by 16,345,084 shares. The total share capital of the Company arrived at
	NT$2,845,134,600.
2011	After capitalization of the retained earnings, combined with the exercise of employees’ option certificates
	and conversion of convertible bonds into common shares, the number of outstanding shares of the
	Company increased by 18,029,734 shares. The total share capital of the Company arrived at
	NT$3,025,431,940.
2012	The Company bought back and canceled 3,000,000 shares. Meanwhile, the exercise of the employees’
	option certificates and the conversion of convertible bonds into common shares increased the number of
	outstanding shares by 6,849,265 shares. The total share capital of the Company reached
	NT$3,063,924,590.
2013	The ninth term Directors and Supervisors were elected by the Annual General Shareholders’ Meeting.
	The first meeting of the ninth Board of Directors elected Mr. Tsai, Fei Liang and Mr. Dong, Ding Yu as
	Chairman and Vice Chairman, respectively.

The exercise of the employees’ option certificates, combined with the conversion of convertible bonds into common shares increased the number of outstanding shares of the Company by 5,178,370 shares. The total share capital of the Company reached NT$3,115,708,290.

2014	After the exercise of the employees’ option certificates and the conversion of convertible bonds into
	common shares, the number of outstanding shares of the Company increased by 2,030,311 shares. The
	total share capital of the Company reached NT$3,136,011,400.

2015	After the exercise of the employees’ option certificates and the conversion of convertible bonds into
	common shares, the number of outstanding shares of the Company increased by 3,722,000 shares. The
	total share capital of the Company reached NT$3,173,231,400.
2016	The tenth term Directors were elected by the Annual General Shareholders’ Meeting. The first meeting
	of the tenth Board of Directors elected Mr. Dong, Ding Yu as Chairman of the Company, and Mr. Tsai, Fei
	Liang as Vice Chairman.
	The exercise of employees’ option certificates increased the number of the outstanding shares of the
	Company by 1,558,000 shares, and the total share capital of the Company arrived at NT$3,188,811,400.
2017	The exercise of employees’ option certificates increased the number of outstanding shares of the Company
	by 7,713,180 shares, and the total share capital of the Company arrived at NT$3,196,524,580.
	The Board of Directors resolved to establish a wholly-own subsidiary, Elite Material Electronic (Huangshi)
	Limited.
2018	The green-field factory located at Huangshi City, Hubei Province of China broke the ground and began
	construction.
2019	The Eleventh term Directors were elected by the Annual General Shareholders’ Meeting. The first meeting
	of the eleventh Board of Directors elected Mr. Dong, Ding Yu as Chairman of the Company, and Mr. Tsai,
	Fei Liang as Vice Chairman.
	Mass production of Huangshi City, Hubei Province of China
	CB transferred to common shares at NT$ 556060, paid in capital increased to 3,197,080,640
2020	Domestic 4th unsecure convertible bonds are fully converted, CB converted to common shares at NT$
	132,102,350, paid in capital increased to 3,329,182,990.
	Acquired Arlon EMC, CA, USA as the first manufacturing site in USA for EMC, and the 4th offshore
	manufacturing site.
2021	Purchased land and facility located in Taoyuan for further expansion in December.

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III. CORPORATE GOVERNANCE

1. Organization

1.1. Organization Chart

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1.2. Affairs in charge for each Major Department

Chairman Office	To plan and instruct the business operations; to undertake the review and examination of legal affairs, contacts of the parent company, subsidiaries, and affiliated entities that the Company has controlling interests in.
President Office	To develop the business strategy of the Company and to execute the business plan. To prepare the annual business budget, targets, and strategic management plan. To plan the key investment projects.
Group Finance& Accounting	Assist the President and be in charge of the management of finance, accounting, information system, and EHS system.
Group Human Resources Division	Assist the President and be in charge of the management of human resources, information system, and EHS system.
Group IT	To plan and manage the group IT operations.
Each Business Unit (Zhongshan, Kunshan, Guanyin, and Huangshi)	Be in charge of the sales of domestic and overseas markets, the management of inventory, product engineering design, and customer service. Be responsible for production, quality assurance, and equipment maintenance affairs.

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Audit Office	Assist the Board of Directors to perform internal control and examine the auditing, accounting and internal control system and executions.
Group Procurement	Be in charge of the evaluation, counseling, and management of suppliers and outsourcers, making sure of the product of the Company can meet the quality standards of customers and requirements of HSF regulations. Be in charge of procurement, import / export, and custom clearance.
Research & Development Division	Be in charge of the research and development of new products, patent applications and filings, and promotions of new products.
Marketing & Promotion Office	Be in charge of the market research of the Company’s products and formulation of the marketing strategies.
Group Quality &Assurance	Be in charge of the integration of quality system and establish database of related product characters.

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2. Directors and Management Team

2.1. Directors

28 March 2022

Title	Nationality or Record of Birth	Name Sex Age	Date elected Term (years)	Date first elected	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shareholding of spouse & Minor children	Shareholding of spouse & Minor children	Holding shares in the name of another person	Holding shares in the name of another person	Curriculum vitae	Other positions in EMC and other companies	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Remarks
					Share	%	Share	%	Share	%	Share	%			Title	Name	Relationship
Chairman	ROC	Ding-Yu Dong Male 63	10 Jun 2019 3 years	25 May 2001	5,265,766	1.65	5,265,766	1.58	15,842	0.00	0	0.00	Ph.D. in Engineering, Stanford University, USA Assistant Professor, San Jose State University, USA	None	None			None
Vice Chairman	ROC	Yu Chang Investment Co., Ltd. Representative: Fei-Liang Tsai Male 68	10 Jun 2019 3 years	25 Jun 2004	25,471,477 376,244	7.97 0.12	25,471,477 447,244	7.65 0.13	0 0	0.00 0.00	0 0	000 0.00	Master in Chemical Engineering, National Tsing Hua University President, Taiwan Union Technology Corp.	None	None			None
Director	ROC	Yu Chang Investment Co., Ltd. Representative: Wen-Shiung Lee Male 75	10 Jun 2019 3 years	25 Jun 2016	25,471,477 0	7.97 0.00	25,471,477 0	7.65 0.00	0 0	0.00 0.00	0 0	000 0.00	Bachelor of Chemical Engineering, Tamkung University Director, Unimicron Corporation President, Isola Asia Pacific(Taiwan)Inc.	Consultant, Taiwan Printed Circuit Association	None			None
Director	ROC	Mon-Chong Hsieh Male 55	10 Jun 2019 3 years	25 Jun 2004	0	0.00	0	0.00	0	0.00	0	0.00	Master in International Affairs, Columbia University, USAChairman, Food Industry Research and Development InstituteDirector, The Eisenhower Exchange Fellowships, Inc.	Chairman, Synmax Biochemical Co., Ltd. Vice Chairman, Royal Chef Co., Ltd.	None			None

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Title	Nationality or Record of Birth	Name Sex Age	Date elected Term (years)	Date first elected	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shareholding of spouse & Minor children	Shareholding of spouse & Minor children	Holding shares in the name of another person	Holding shares in the name of another person	Curriculum vitae	Other positions in EMC and other companies	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Remarks
					Share	%	Share	%	Share	%	Share	%			Title	Name	Relationship
Independent Director	ROC	Bing Shen Male 73	10 Jun 2019 3 years	25 Jun 2016	0	0.00	0	0.00	0	0.00	0	0.00	MBA, Harvard University Financial Analyst, World Bank Chief Investment Officer, International Bank Corp. Executive Director, Morgan Stanley & Co. Vice President, China Development Industrial Bank President, CDIB Partners Investment Holding Corporation	Director, OUC Corporation Director, ECOVE	None			None
Independent Director	ROC	Duen-Chian Cheng Male 60	10 Jun 2019 3 years	10 Jun 2019	0	0.00	0	0.00	0	0.00	0	0.00	MBA, Columbia University, USA President, Director, Appier Holdings Inc. Independent Director, TA YA ELECTRIC WIRE & CABLE CO., LTD Chairman, LuxNet Corp Chairman, Clientron President, UMC Capital Corporation	Chairman, TGVest Capital Co., Ltd. Chairman, TriKnight Capital Corporation Vice Chairman, LuxNet Corp	None			None

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Title	Nationality or Record of Birth	Name Sex Age	Date elected Term (years)	Date first elected	Shareholding when elected	Shareholding when elected	Current shareholding	Current shareholding	Shareholding of spouse & Minor children	Shareholding of spouse & Minor children	Holding shares in the name of another person	Holding shares in the name of another person	Curriculum vitae	Other positions in EMC and other companies	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Executives or Directors who are spouses or within two degrees of kinship	Remarks
					Share	%	Share	%	Share	%	Share	%			Title	Name	Relationship
Independent Director	ROC	Rong-Dong Tsai Male 69	10 Jun 2019 3 years	10 Jun 2019	0	0.00	0	0.00	0	0.00	0	0.00	MBA, Indiana University, USA President, Ta Chong Bank President, Taishin International Bank/Corporate Finance Business Group of Taishin International Bank Executive Vice President, Deutsche Bank Taipei Branch / Director, Corporate Finance Department, Deutsche Bank Taipei Branch UBS AG Taipei Branch / Director, Corporate Finance Department, UBS AG Taipei Branch.	Director, Chang Wah Technology Co., Ltd. Director, JMC Electronics Co., Ltd. Director, Golden Circuits Electronics Ltd. Independent director of Mercuries life insurance	None			None

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2.2. Major shareholders of EMC’s Directors are institutional shareholders

28 March 2022

	28 March 2022
Name of Institutional Shareholders	Major Shareholders of the Institutional Shareholders
Yu Chang Investment Co., Ltd.	Yu Sheng Investment Co., Ltd.

2.3. Major shareholders of the major shareholders who are juridical persons

28 March 2022

	28 March 2022
Name of Juridical Persons	Major Shareholders of the Juridical Persons
Yu Sheng Investment Ltd.	British Virgin Island Daton West Limited

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2.4. Professional Qualifications and Independent Analysis of Directors

(1) Professional Qualifications and Independent information disclose of Directors:

Condition Name	Professional qualifications	Curriculum Vitae	Independence situations (Meet the criteria of Note 1)	The number of independent directors of the other public offering company
Director Dong, Ding Yu	Have the work experience in business, legal, finance, accounting or corporate business	Assistant Professor, San Jose State University	`（`6`）（`8`）（`9`）（`10`）` `（`11`）（`12`）`	1
Director Tsai, Fei Liang	Have the work experience in business, legal, finance, accounting or corporate business	President, Taiwan Union Technology Corporation	`（`1`）（`3`）（`4`）（`5`）` `（`6`）（`8`）（`9`）（`10`）` `（`11`）`	-
Director Lee, Wen Shiung	Have the work experience in business, legal, finance, accounting or corporate business	Director, Unimicron Corporation President, Isola Asia Pacific (Taiwan) Inc.	`（`1`）（`2`）（`3`）（`4`）` `（`5`）（`6`）（`7`）（`8`）` `（`9`）（`10`）（`11`）`	-
Director Hsieh, Mon Chong	Have the work experience in business, legal, finance, accounting or corporate business	Chairman, Food Industry Research and Development Institute Director, The Eisenhower Exchange Fellowships, Inc. Director, Chinese National Federation of Industries	`（`1`）（`2`）（`3`）（`4`）` `（`5`）（`6`）（`7`）（`8`）` `（`9`）（`10`）（`11`）` `（`12`）`	-
Independent director Shen, Bing	Have the work experience in business, legal, finance, accounting or corporate business	Financial Analyst, World Bank Chief Investment Officer, International Bank Corp. Executive Director, Morgan Stanley & Co. Vice President, China Development Industrial Bank President, CDIB Partners Investment Holding Corporation	`（`1`）（`2`）（`3`）（`4`）` `（`5`）（`6`）（`7`）（`8`）` `（`9`）（`10`）（`11`）` `（`12`）`	-
Independent director Cheng, Duen- Chian	Have the work experience in business, legal, finance, accounting or corporate business	Managing Director, Union Investment Management Consulting Co, Ltd. Executive Director/President of Taiwan Branch, Morgan Stanley Asia Limited Executive Director, Goldman Sachs Asia L.L.C.	`（`1`）（`2`）（`3`）（`4`）` `（`5`）（`6`）（`7`）（`8`）` `（`9`）（`10`）（`11`）` `（`12`）`	2

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Independent director Tsai, Rong Dong	Have the work experience in business, legal, finance, accounting or corporate busines	President, Ta Chong Bank President, Taishin International Bank/Corporate Finance Business Group of Taishin International Bank Executive Vice President, Deutsche Bank Taipei Branch / Director, Corporate Finance Department, Deutsche Bank Taipei Branch Senior Executive Vice President, UBS AG Taipei Branch / Director, Corporate FinanceDepartment, UBS	`（`1`）（`2`）（`3`）（`4`）（`5`）` `（`6`）（`7`）（`8`）（`9`）（`10`）` `（`11`）（`12`）`	2

Note 1 : Each director meets the following conditions in the two years prior to the election and during his or her term of office.

（ 1 ） An employee who is not employed by the company or its affiliates.
（ 2 ） Directors or supervisors who are served as the position of the same company or affiliated enterprises (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established as independent directors in accordance with this Act or local national decrees).
（ 3 ） A natural person shareholder who is not a natural person who holds more than 1% of the total number of issued shares of the company or holds in the name of others or the top 10 shareholders.
（ 4 ） The spouse, second degree or third degree relatives of managers not listed in (1) or (2) or (3) listed persons.
（ 5 ） A director, supervisor or employee who does not directly hold more than 5% of the total number of issued shares of the company, the top five shareholders or the legal person shareholders designated as directors or supervisors of the company in accordance with article 27, paragraphs 1 or 2 of the company Act (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established by this law or local laws and regulations).
（ 6 ） More than half of the shares that are not seated or have voting rights in the directors of the company shall be directors, supervisors or employees of other companies controlled by the same person (except where they are independent directors of the company or its parent, subsidiary or subsidiary of the same parent company established in accordance with this Act or local national decrees).
（ 7 ） Directors, supervisors or employees of other companies or institutions that are not the same person as the chairman, president or equivalent of the company or spouse (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established as independent directors in accordance with this Law or local national laws).
（ 8 ） Directors, supervisors, president or shareholders holding more than 5% of the shares of a particular company or institution that do not have financial or business dealings with the company (unless a particular company or institution holds more than 20% of the total number of issued shares of the company, not more than 50%, and is an independent director of the company and its parent company, subsidiaries or subsidiaries of the same parent company in accordance with this Law or local national laws).
（ 9 ） Professionals, sole proprietors, partners, directors, supervisors, managers and their spouses who do not provide audits for the company or related enterprises or have obtained remuneration in the past two years in the past two years in a commercial, legal, financial, accounting and other related services of NT$500,000. However, this does not apply to members of the Remuneration Committee, the Public Takeover Review Committee or the Special Committee on Mergers and Acquisitions who perform their functions under the Securities and Exchange Act or the relevant laws and regulations of the Mergers and Acquisitions Act.
（ 10 ） There is no family relationship with other directors within the scope of a spouse or second-degree relatives.
（ 11 ） There is no circumstance under the paragraphs of article 30 of the company act.
（ 12 ） There is no any elected directors who is on behalf of a government, a legal person or its representative under the article 27 of company act.
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(2)The diversity and independence of board of directors `：`

(A)Diversity of board of directors `：`

The members of the 11th Board of Directors of the company have rich knowledge of management, operational judgment and related industry knowledge, and the company will continue to evaluate the diversified complementarity of the board members, continue to implement the diversification policy, and the specific goals for the future include increasing the number of female directors (at least one seat) or the proportion of independent directors, all of which will be used as a reference for the next director re-election.

The composition of the board of directors of the company is based on the Code of Corporate Governance and the Method of director election to consider the diversity of the board of directors from various aspects. The company has a total of 7 directors, including 3 independent directors, who have extensive experience and expertise in the fields of finance, commerce, industrial technology and management. 1 director with employee status in the Company accounts for 14%, 2 independent directors have a term of less than 3 years, 1 independent director has a term of 4-6 years, 2 directors are over 70 years old, 4 are 60 to 69 years old, and 1 is under 60 years old. All directors are male and of Chinese nationality. More diversity of board members is as follows:

Title	Name			Multiple cor	e items
		Operational judgement	Business management	Finance and accounting	Industry- knowledge	International market view	Leadership
Chairman	Ding-Yu Dong						
Director	Tsai, Fei Liang						
Director	Lee, Wen Shiung						
Director	Hsieh, Mon Chong						
Independent director	Shen, Bing						
Independent director	Cheng, Duen- Chian						
Independent director	Tsai, Rong Dong						

(B)The independence of board of directors `：`

The company has a total of 7 directors, including 3 independent directors, of which 43% are independent directors, and the independent directors do not have the circumstances stipulated in items 3 and 4 of Article 26-3 of the Securities and Exchange Act, and none of the directors of the company have a relationship of kinship within the scope of spouse or second degree relatives.

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2.5. President, Vice President, Assistant Vice President, Managers of Departments and Branches

												28 March 2022	28 March 2022	28 March 2022	28 March 2022
Title	Natio nality	Name Sex	Effective	Shareholding		Shareholding of Spouse & Minor Children		Holding shares in the name of another person		Curriculum Vitae	Other Positions	Managers who are spouses or within two degrees of kinship			Remarks
				Share	%	Share	%	Share	%			Title	Name	Relatio nship
President	ROC	Guan, En- Xiang Male	16 Aug 2021	51,222	0.02	29	0.00	None		Bachelor in Chemistry, National Cheng-Kung University Production Director, Pou Li Der Inc.	President, Elite Electronic Material (Kunshan) Co., Ltd.	None			None
Senior Vice president	ROC	Sun, Michael Male	9 Aug 2018	0	0.00	0	0.00	None		Ph.D. in Chemical Engineering, University of Southern California Senior Vice President, SOCLE Technology Corporation VP of AUO Optronics Corp./ President of AUO Business Group	None
Vice president	ROC	Peng, Yi-Ren Male	1 Apr 2011	147,774	0.04	0	0.00	None		Master in Chemistry, University of LAMAR, USA	None
Vice president (CFO)	ROC	Yu, Randy Male	14 Feb 2019	0	0.00	5,000	0.00	None		MBA, New York University, USA Senior Vice President, FIH Mobile Limited General manager, BLU of Coretronics corporation	None
Vice resident	ROC	Chuang, Michael Male	1 Mar 2020	0	0.00	0	0.00	None		Master of Science, Duke University, USA General manager, PVC, Zhuhai BU Head, Liteon Mobile	VP of Elite Material(Kuansh an)
Vice president	ROC	Su, Kenny Male	1 Jul 2020	0	0.00	0	0.00	None		Department of Mechanical Engineering, NSYSU Chief Operation Officer, Gemtek	None
Vice president	ROC	Chou, Li- Ming	19 May 2020	9,791	0.00	0	0.00	None		Master of Materials Science and Engineering, NTU	None

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		Male					Director, RD division
Vice president	ROC	Lin, Alan Male	17 May 2021	0	0.00	None	Master of information management, NSYSU Director Sercom technology Director, E-Ink	None
Vice president	ROC	Lin, Chien- Cheng Male	2 Aug 2021	0	0.00	None	University of Texas, Arlington EMBA Bourns Trading Shanghai Co. Ltd`總經理`	None
Vice president	ROC	Yang, Danny Male	6 Sep 2021	22,049	0.01	None	Institute of Mechanical Engineering, Taiwan Institute of Industrial Technology VP, EMC president office AVP, EMC (KY)	None
Vice president	ROC	Lee, De-Na Male	13 Sep 2021	2,000	0.00	None	Institute of Mechanical Engineer, CKVS AVP, EMC(ZS) AVP, EMC (KS)	None
Director (Corporate Goverrnor) "	ROC	Chang,Li- Chio Female	20 Mar 2020	23,984	0.01	None	Bachelor, Department of Accounting, Tung Hai University Manager of Audit Office, Elite Material Co., Ltd.	None
Head of Accounting Department	ROC	Yen, Sara Female	16 Mar 2015	0	0.00	None	Master of Accounting, Chung Yung Christian University	None

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3. Remuneration for directors, president and vice president

3.1.1 Remuneration paid to Directors and Independent Directors

Unit ： NTD thousand

Title	Name	Remuneration	Remuneration	Remuneration	Remuneration					Ratio of Total Remuneration (I+II+III+IV) over Net Income (%)	Ratio of Total Remuneration (I+II+III+IV) over Net Income (%)	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Relevant Compensation Received by Directors Who Are Also employees	Ratio of Total Remuneration (I+II+III+IV+V +VI+VII) to Net Income (%)	Ratio of Total Remuneration (I+II+III+IV+V +VI+VII) to Net Income (%)	Remu nerati on Paid to Direct ors from an Invest ed Comp any or the Comp any's Subsi diary
		Base Remuneration (I)		Severanc e Pay and Pension (II)		Directors' Remuneration from Distribution of Earnings (III)		Operating Allowances (IV)				Salary, Bonuses, and Allowances (V)		Severance Pay and Pension (VI)		Employees' Compensation from Distribution of Earnings (VII)
		The Co mp any	All Compani es in the Consolida ted Financial Statement s	T h e C o m p a n y	All Com pani es in the Cons olida ted Fina ncial State ment s	The Compa ny	All Comp anies in the Conso lidated Financ ial State ments	The Co mp any	All Com panie s in the Cons olidat ed Fina ncial State ment s	The Comp any	All Comp anies in the Conso lidated Financ ial State ments	The Compa ny	All Comp anies in the Conso lidated Financ ial State ments	The Compa ny	All Compan ies in the Consoli dated Financia l Stateme nts	The Company		All Companies in the Consolidated Financial Statements		The Com pany	All Compa nies in the Consoli dated Financi al Statem ents
																Cash	Stock	Cash	Stoc k
Chairman	Dong, Ding Yu	0	0	0	0	39,400	39,400	279	279	39,679 0.72%	39,679 0.72%	17,324	18,184	1,440	1,440	1,967	0	1,967	0	60,410 1.10%	61,270 1.12%	None
Vice Chairman	Yu Chang Invest ment Co., Ltd.
Director	Yu Chang Invest ment Co., Ltd.

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Director	Hsieh, Mon Chong
Independent Director	Shen, Bing	0	0	0	0	23,640	23,640	203	203	23,843 0.43%	23,843 0.43%	0	0	0	0	0	0	0	0	23,843 0.43%	23,843 0.43%	None
Independent Director	Cheng, Duen- Chian
Independent Director	Tsai, Rong Dong

(Note 1): Please state the policy, system, standard and structure of the independent director's honorarium payment, and describe the correlation with the amount of remuneration according to the responsibilities, risks, investment time and other factors undertaken: The remuneration of the general directors and independent directors of the company shall be not more than 1.2% of the remuneration of the directors if there is a profit in the year stipulated in the Articles of Association of the Company. The procedures for setting remuneration for directors are based on the Company's "Performance Assessment Method for the Board of Directors", not only with reference to the company's overall operating performance, future operational risks and development trends of the industry, but also to the individual's performance compliance rate and contribution to the company's performance. Considering the reasonable remuneration including the mastery of the company's goals and tasks, the understanding of the responsibilities of the directors, the degree of participation in the company's operations, the operation and communication of internal relationships, the professional and continuous training of directors, internal control, etc., into the performance appraisal and remuneration payment considerations, the relevant performance appraisal and remuneration rationality are reviewed by the Remuneration Committee and the Board of Directors, and the remuneration system is reviewed in a timely manner according to the actual operating conditions and relevant laws and regulations at any time, so as to seek a balance between the company's sustainable operation and risk control.
(Note 2): In addition to the above table, the remuneration received by the directors of the Company for the most recent year for the services provided by all companies in the financial report (e.g. as consultants to non-employees, etc.): None.
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3.1.2 Bracket of Remuneration paid to Directors and Independent Directors

Bracket	Name of Directors	Name of Directors	Name of Directors	Name of Directors
	Total of ( I + II + III + IV)		Total of ( I + II + III + IV + V + VI + VII )
	The Company	All Companies in the Consolidated Financial Statements	The Company	All Companies in the Consolidated Financial Statements
Under NT$2,000,000
NT$1,000,000 ~ NT$2,000,000
NT$2,000,000 ~ NT$3,500,000
NT$3,500,000 ~ NT$5,000,000
NT$5,000,000 ~ NT$10,000,000	Fei-Liang Tsai ; Mon-Chang Hsieh ; Wen-Shiung Li ; Bing Shen ; Duen-Chian Cheng ; Rong-DongTsai;	Fei-Liang Tsai ; Mon-Chang Hsieh ; Wen-Shiung Li ; Bing Shen ; Duen-Chian Cheng ; Rong-DongTsai;	Fei-Liang Tsai ; Mon-Chang Hsieh ; Wen-Shiung Li ; Bing Shen ; Duen-Chian Cheng ; Rong-DongTsai;	Fei-Liang Tsai ; Mon-Chang Hsieh ; Wen-Shiung Li ; Bing Shen ; Duen-Chian Cheng ; Rong-DongTsai;
NT$10,000,000 ~ NT$15,000,000
NT$15,000,000 ~ NT$30,000,000	Ding-Yu Dong	Ding-Yu Dong
NT$30,000,000 ~ NT$50,000,000			Ding-Yu Dong	Ding-Yu Dong
NT$50,000,000 ~ NT$100,000,000
NT$100,000,000 and above
Total	7	7	7	7

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3.2.1 Remuneration paid to President, Senior Vice President, and Vice President

												Unit`：`NTD thousand	Unit`：`NTD thousand	Unit`：`NTD thousand
Title	Name	Salary (I)		Severance Pay and Pension (II)		Compensation and Allowances (III)		Employees' Compensation from Distribution of Earnings (IV)				Ratio of Total Compensation (I+II+III+IV) to Net Income (%)		Compensation paid to President and Other Managers in This Table from an Invested Company other than the Company's Subsidiary
		The Company	All Companies in the Consolidated Financial Statements	The Company	All Companies in the Consolidated Financial Statements	The Company	All Companies in the Consolidated Financial Statements	The Company		All Companies in the Consolidated Financial Statements		The Company	All Companies in the Consolidated Financial Statements
								Cash	Stock	Cash	Stock
President (Note3)	Dong, Ding-Yu	31,307	35,740	2,773	2,773	77,659	78,422	20,050	0	20,050	0	131,789 2.40%	136,985 2.49%	None
President (Note3)	Guan, En- Xiang
SVP	Sun, Michael
VP	Peng, Yi- Ren
VP	Yu, Randy
VP	Chuang, Michael
VP	Chou, Li- Ming
VP	Su, Kenny
VP	Lin, Alan
VP	Lin, Chien- Chen
VP	Yang, Danny
VP	Lee,De-Na
VP (110.6.30resigned)	Wang, Gary

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VP (110.9.30resigned)	Pan, Jason
VP (110.9.30resigned)	Li, Jin- Lin
VP (110.5.28resigned)	Lee, Lisa

Note 1 ： Retirement pension is the amount of the company's retirement pension expense.

Note 2 ： The above is the remuneration of the general manager and vice presidents in the most recent year (Year 2021).

Note 3 ： On July 28, 2021, the company was approved by the board of directors to appoint Guan, En-Xiang, the former senior vice president as the president

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3.2.2. Bracket of Compensation paid to President, Senior Vice President, and Vice President

Bracket	Name of President, and Vice Presidents	Name of President, and Vice Presidents
	The Company	All Companies in the Consolidated Financial Statements
Under NT$1,000,000	Wang, Gary`、`Li-Jin-Lin`、`Lee, Lisa	Li,Jin-Lin`、`Lee, Lisa
NT$1,000,000 ~ NT$2,000,000		Wang, Gary
NT$2,000,000 ~ NT$3,500,000	Pan, Jason	Pan, Jason
NT$3,500,000 ~ NT$5,000,000	Lin, Chien-Chen	Lin, Chien-Chen
NT$5,000,000 ~ NT$10,000,000	Sun, Michael`、`Peng, Ri-Ren`、`Chou,Li-Ming`、`Yu, Randy`、`Chuang, Michael`、`Su, Kenny`、`Lin, Alan`、` Yang,Danny`、`Lee,De-Na	Sun, Michael`、`Peng, Ri-Ren`、`Chou,Li-Ming`、`Yu, Randy`、`Chuang, Michael`、`Su, Kenny`、`Lin, Alan`、` Yang,Danny`、`Lee,De-Na
NT$10,000,000 ~ NT$15,000,000		Chuang, Michael
NT$15,000,000 ~ NT$30,000,000	Dong, Ding Yu`、`Guan, En-Xiang	Dong, Ding Yu`、`Guan, En-Xiang
NT$30,000,000 ~ NT$50,000,000
NT$50,000,000 ~ NT$100,000,000
NT$100,000,000 and above
Total	16	16

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3.3.1 Compensation Paid to Managers

3.3.1 Compensation Paid	to Managers
				Unit: NT$ thousands
Title	Name	Compensation (Stock)	Compensation (Cash)	Total amount	Ratio of Total Amount to Net Income (%)
President(Note)	Dong,Ding-Yu	0	21,960	21,960	0.40%
President(Note)	Guang,En-Xiang
SeniorVice President	Sun,Michael
Vice President	Peng,Yi-Ren
Vice President(CFO)	Yu,Randy
Vice President	Chou,Li-Ming
Vice President	ChuangMichael
Vice President	Su,Kenny
Vice President	Lin,Alan
Vice President	Lin, Chien-Chen
Vice President	Yang,Danny
Vice President	Lee,De-Na
Head of Corporate Governance	Chang, Li-Chio
Director of Accounting Department	Yen, Sara

Note: On July 28, 2021, the company was approved by the board of directors to appoint Guan, En-Xiang, the former senior vice president as the president

3.3.2 The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two latest fiscal years to Directors, Presidents and Vice Presidents of the Company over net income:

	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)
	2020
	The Company		All Companies in the Consolidated Financial Statements
	Total amount	Ratio of Total Amount to Net Income (%)	Total amount	Ratio of Total Amount to Net Income (%)
Directors	44,826	1.22%	45,673	1.24%
Independent Directors	16,554	0.45%	16,554	0.45%
President & Vice President	95,355	2.58%	103,585	2.81%

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	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)	The Ratio of Total Paid RemunerationOver Net Income(%)
	2021
	The Company		All Companies in the Consolidated Financial Statements
	Total amount	Ratio of Total Amount to Net Income(%)	Total amount	Ratio of Total Amount to Net Income (%)
Directors	60,410	1.10%	61,270	1.12%
Independent Directors	23,843	0.43%	23,843	0.43%
President & Vice President	131,789	2.40%	136,985	2.49%

Remuneration policies, standards and combinations, procedures for determining remuneration, and relevance to business performance and future risks:

⚫ According to Article 36-1 of the company's articles of association: If the company makes a profit in the year, 3% of the employee's compensation and no more than 1.2% of the director's compensation shall be provided. However, when the company still has accumulated losses, it should reserve the compensation amount in advance. When employees' compensation is distributed in stock or cash, the distribution target must include employees of subordinate companies that meet certain conditions, and the method shall be separately formulated by the board of directors.
⚫ The remuneration of general directors and independent directors of the company, the remuneration committee reviews the degree of participation and contribution value of each director to the company's operations. The responsibilities of directors, the degree of participation in the company's operations, internal relationship management and communication, the directors' professional and continuous training, internal control, etc. are included in the performance appraisal and remuneration payment considerations and give reasonable remuneration, and the relevant performance appraisal and remuneration rationality are reviewed by the Remuneration Committee and the Board of Directors, and the remuneration system is reviewed in a timely manner according to the actual operating conditions and relevant laws and regulations at any time, so as to seek a balance between the company's sustainable operation and risk control.
⚫ The company allocated 1% of directors' remuneration in the year of 2021 for the amount of NT$ 63,040 thousand and paid director's carriage fee (attendance fee) of NT$ 482 thousand.
⚫ The salary and remuneration of the general manager and vice president of the company are reviewed by the salary and remuneration committee and approved according to the individual performance achievement rate and contribution. For the assessment items within the measures, such as: the revenue and profit of each factory to achieve the budget target, the loss of work hours in each factory is better than that of the previous year, and the internal control audit of each factory
⚫ The company's remuneration policy considers the company's current year's operating results, financial situation and future capital utilization needs planning, and the assessment of future risks is also included in the scope of consideration to minimize the possibility of risk occurrence.
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4. Corporate Governance

4.1 Board of Directors

Total six meetings were convened by the Board of Directors in 2021. Attendance of each Director and Independent Director is as follows:

Title	Name	Name	Name	Attendance in Person	By Proxy	Attendance Rate	Remarks
Chairman	Dong,Ding-Yu			6	0	100%
Vice Chairman	Tsai, Fei-Liang Representative of Yu Chang Investment Co.,Ltd.			6	0	100%
Director	Li, Wen-Shiung Representative of Yu Chang Investment Co.,Ltd.			6	0	100%
Director	Hsieh,Mon-Chang			6	0	100%
Independent Director	Sheng, Bing			5	1	83%
Independent Director	Tsai, Rong-Dong			6	0	100%
Independent Director	Cheng, Duen-Chian			6	0	100%
Other required disclosure: (1) Should anycircumstance described in Article 14-3 of the Securities and Exchange Act							The Opinions of Independent Directors and the Company's handling of the Opinions of Independent Directors No objection Pass the case No objection Pass the case No objection
Term		Date	Important Resolutions				The Opinions of Independent Directors and the Company's handling of the Opinions of Independent Directors
The 11th Board Meeting of the 11th term		25 Feb 2021	1. Approved the proposal of Procedures of lending to one another and the method of election of the directors of the company. 2. Approved the proposal of increase endorsement of the company. 3. Approved the Year 2020 Declaration of Internal Control System. 4. Approved the proposal of additional increase capital expenditure of KY site. 5. Approved the proposal of group budge and revision of capital expenditure of the company. 6. Accepted the proposal submitted by the Remuneration Committee about the directors' remuneration and managers' compensation of Year 2021. 7. Approved the proposal of Year 2020 directors' remuneration and employees' compensation. 8. Approved the Year 2020 business report and financial statements. 9. Approved the proposal of distribution of Year 2020 profits. 10. Approved the proposal of convening the Year 2021 annual general shareholders'meeting.				No objection Pass the case
The 12th Board Meeting of the 11th term		28 Apr 2021	1. Approved the proposal of endorsement among affiliates. 2. Approved the proposal of decreasing the amount of endorsement between parent and affiliate company. 3. Approved the proposal of increase short-term credit line of the company. 4. Approved proposal of lending to one another of the company. 5. Approved the proposal of revision of Procedures of Acquisition and Disposition of Assets of the company				No objection Pass the case
The 13th Board		28 May2021	1. Approved the postpone of annual general meeting of year 2021.				No objection

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Meeting of the 11th term		2. Approved the proposal of increase of capital expenditure of EMC (HS). 3. Approved the proposal of 1st unsecured ECB issuance.	Pass the case
The 14th Board Meeting of the 11th term	28 Jul 2021	1. Approved the appointment of president. 2. Approved the proposal of decreasing endorsement among affiliates. 3. Approved the proposal of increasing the short-term credit line of the company. 4. Approved the proposal of code of internal authorization of the company. 5. Approved the proposal of Taoyuan site’s capital expenditure.	No objection Pass the case
The 15th Board Meeting of the 11th term	27 Oct 2021	1. Approved the proposal of indirect investment structure of the company. 2. Approved the proposal of increase capital expenditure of OEM business unit of the company. 3. Approved the proposal of increase capital expenditure of KY site of the company. 4. Approved the proposal of capital expenditure of EMC(KS) of the company.	No objection Pass the case
The 16th Board Meeting of the 11th term	21 Dec 2021	1. Approved the review of the CPA audit fee for Year 2021. 2. Approved the Year 2022 plan of auditing of Elite Material Co., Ltd. 3. Approved the proposal of Year 2022 remuneration committee’s business plans. 4. Approved the proposal of revision of Articles of Incorporation, Method of internal control assessment procedures, operation procedure of monitoring affiliate, procedure of stamp management. 5. Approved the proposal of group budge and capital expenditure of year 2022. 6. Approved the proposal of 5th unsecure domestic CB issuance.	No objection Pass the case

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4.2 Audit Committee

Total six meetings were convened by the Audit Committee in 2021. Attendance of each Independent Director is as follows:

as follows:
Title	Name	Attendance in Person	By Proxy	Attendance Rate	Remarks
Independent Director	Sheng, Bing	5	1	83%
Independent Director	Cheng, Duen-Chian	6	0	100%
Independent Director	Tsai, Rong-Dong	6	0	100%
Other required disclosure: (1) Should any circumstance described in Article 14-5 of the Securities and Exchange Act and any resolution Term Proposals Resolutions The 11th meeting of the 3nd term dated as 25 Feb 2021 1. Approved the proposal of Procedures of lending to one another and the method of election of the directors of the company. 2. Approved the proposal of increase endorsement of the company. 3. Approved the Year 2020 Declaration of Internal Control System. 4. Approved the proposal of additional increase capital expenditure of KY site. 5. Approved the proposal of Year 2020 directors' remuneration and employees' compensation. 6. Approved the Year 2020 business report and financial statements. Resolved. All members vote For both proposals. The 12th meeting of the 2nd term dated as 28 Apr 2021 1. Approved the proposal of endorsement among affiliates. 2. Approved the proposal of decreasing the amount of endorsement between parent and affiliate company. 3. Approved the proposal of increase short-term credit line of the company. 4. Approved proposal of lending to one another of the company. 5. Approved the proposal of revision of Procedures of Acquisition and Disposition of Assets of the company 6. Approved the consolidated financial statement of 1Q21. The 13th meeting of the 2nd term dated as 28 May 2021 1. Approved the proposal of increase of capital expenditure of EMC (HS). 2. Approved the proposal of 1st unsecured ECB issuance. The 14nd meeting of the 2nd term dated as 28 July 2021 1. Approved the proposal of decreasing endorsement among affiliates. 2. Approved the proposal of code of internal authorization of the company. 3. Approved the proposal of Taoyuan site’s capital expenditure. 4. Approved the consolidated financial statement of 1H21. The 15th meeting of the 2nd term dated as 27 Oct 2021 1. Approved the proposal of indirect investment structure of the company. 2. Approved the proposal of increase capital expenditure of OEM business unit of the company. 3. Approved the proposal of increase capital expenditure of KY site of the company. 4. Approved the proposal of capital

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expenditure of EMC(KS) of the company.
1. Approved the consolidated financial statement of 1Q-3Q 2021.
1. Approved the review of the CPA audit fee for Year 2021.
1. Approved the proposal of revision of Articles of Incorporation, Method of
The 16th meeting of the 2nd term dated as internal control assessment 21 Dec 2021 procedures, operation procedure of monitoring affiliate, procedure of stamp management.
1. Approved the proposal of 5th unsecure domestic CB issuance.
(2) Should any circumstance described in Article 14-5 of the Securities and Exchange Act and any resolution on which the Audit Committee had a dissenting or qualified opinion occur with the approval of two thirds or more of the entire Board of Directors, the dates and sessions of the said board meetings, the contents of the said resolutions, opinions of the Audit Committee, and measures the Company had in responding to such opinions shall be specified: None
(3) Should there be any independent director neither joining discussion nor exercising the voting rights in board meetings for the resolution which he/she has personal interests, the name of such independent director, the contents of the said resolution, the reasons such independent director has personal interests, and the voting results shall be specified: None
(4) Communications between Independent Directors and the chief internal auditor and CPAs of the Company (for instance, the ways and topics that the aforesaid parties discuss on the financial and business situations of the Company, and the conclusions of their discussions):
a. The Audit Committee comprises of all three Independent Directors of the Company.
b. Internal Audit Office shall submit reports, including the auditing plan and the execution of such plan, to the Audit Committee for review and examination periodically. Should unusual matters, likely to cause material breach of regulations or material damage to the Company, occur during the auditing process, the chief internal auditor shall report to the Audit Committee immediately. The Audit Committee shall maintain thorough and sufficient communications with the chief internal auditor.
c. The CPAs of the Company shall commute the quarterly reports of the auditing results in the quarterly Audit Committee meetings. Should unusual matters occur, the CPA shall report to Audit Committee members immediately. The Audit Committee shall maintain thorough and sufficient communications with the CPAs of the Company.
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4.3 Corporate governance execution results and deviations from “Corporate Governance BestPractice Principles for TWSE/GTSM Listed Companies”

Item			Implementation status	Deviations from “Corporate Governance Best- Practice Principles for TWSE/GTSM listed Companies” and explanations
	Yes	No	Summary
Has the company formulated and disclosed its own corporate governance best practice principles in accordance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”?	V		The company has formulated “Corporate Governance Principles” to promote the protection of shareholders’ interests, improvement of functions of board of directors, and the transparency of the Company’s information; meanwhile, to encourage the declaration of rights of interested parties. The said principle can be viewed and downloaded from the companywebsite.	None
(2)Shareholding structure and shareholders’ rights: a. Has the company established internal operating procedures to handle shareholder proposals, doubts, disputes, and litigation related issues, and practically implemented such procedures?	V		The company has designated Stock Transfer Agent, and has appointed personnel to be in charge of stock affairs and investor relations. The said agent and personnel have handled shareholder proposals, doubts, disputes, and litigation related issues in compliance with relevant laws and regulations and the company’s Articles of Incorporation.	None
b. Has the company kept a list of major shareholders and a list of ultimate owners of these major shareholders?	V		The company, at all time, keeps updated shareholding information of directors, managers, and major shareholders with a percentage holding of 10% and more, and the ultimate owners of these major shareholders. If change in ownership occurs, the company follows the relevant regulations to disclose related information.	None
c. Has the company established and operated a risk management mechanism and “firewall” between the Company and its affiliates?	V		To manage the potential risk and establish a “firewall” between the company and its affiliates, the company and its affiliates have already established and implemented “Procedures for Acquisition and Disposition of Assets”,`“`Procedures for Lending of Capital to Others”, and “Procedures for Endorsements and Guarantees”.	None
d. Has the company established internal rules to prohibit company insiders from trading securities using information not disclosed to the market?	V		The Company has established the`“`Procedures for Handling Material Inside Information” and “Procedures for Preventing Insider Trading” to prohibit company insiders from trading securities using information not disclosed to the market. The Company has performed internal self-evaluation, and the Audit Office has audited the implementation of the said procedures periodically.	None
(3)Composition and Responsibilities of the Board of Directors: a. Have members of the board of directors formulated diverse policies and implemented them accordingly?	V		Article 16 of the company's Code of Practice on Corporate Governance provides that the composition of its board of directors shall consider diversity, and that, in addition to serving as a director of the company's managers, it shall not exceed one third of the board seats and formulate appropriate diversification guidelines for its own operation, mode of operation and development needs,	None

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			which shall include, but are not limited to, the following two criteria: (1) Basic conditions and values: gender, age, nationality and culture. (2) Expertise and skills: professional background (e.g. law, accounting, industry, finance, marketing or technology), professional skills and industry experience, etc. Board members should generally have the knowledge, skills and literacy necessary to perform their duties. In order to achieve the ideal goal of corporate governance, the board of directors as a whole should have the following capabilities: (1) Operational judgment. (2) Accounting and financial analysis capabilities. (3) Management capacity. (4) Crisis management capacity. (5) Industry knowledge. (6) International market view. (7) Leadership. (8) Decision-making ability. 2. Diversity implementation of board members: Footnote(1)
b. In addition to establishing a Remuneration Committee and an Audit Committee, has the Company voluntarily established other types of functional committees?		V	In addition to Remuneration Committee and the Audit Committee, The Company has not yet established other functional committees.	Ditto
c. Has the company established a Board performance assessment method, and have performance evaluations been conducted annually?	V		The company has formulated the "Performance Assessment Measures of the Board of Directors" and, with the approval of the board of directors on 31 July 2020, the following aspects shall be decided by the Members of the Board: 1. Compliance with relevant laws and regulations (compliance with matters discussed by the board of directors in accordance with the law, whether the board of directors meeting is convened at least once a quarter, and comply the interests of directors are avoided) 2. Level of operational involvement in the company (monitoring and understanding of the execution of the operating plan, expression of financial statements, audit reports and their tracking, assessment of the independence of accountants, assessment of risks existing or potential to monitor the company, communication and interaction with company management) Conduct the annual board performance evaluation by means of internal self-assessment. The results of the year 2020 performance appraisal of the Board of Directors of the Company are in the mid-to-high level, and the results of the evaluation were reported bythe	None

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		Board of Directors on 21 December 2020, and the above-mentioned evaluation results are also used as a reference for the payment of remuneration and the nomination of renewal.
d. Has the company evaluated the independence of CPAs on a regular basis?	V	The Company’s Accounting Department annually evaluates the independence and qualifications of its CPAs. According to the evaluation of Accounting Department, the accountants, Mr. Calvin C. Y. Chiang and Ms. Celia Chen of KPMG, both meet the requirements of independence of the Company (Note 1). And KPMG has issued a letter of declaration of independence (please refer to section 3.4). The said evaluation report and the letter of declaration have been submitted to the Board for approval in the meeting of board of directors convened on 28 April 2021. (Note 2)	None
(4)Has the company designated a full-time (or part-time) unit or personnel to be in charge of corporate governance affairs (including, but not limited to, providing Directors and Supervisors with information needed to conduct businesses, handling matters about Board of Directors meeting and Shareholders’ Meeting in compliance with laws, handling company registration and change in the company registration, document meeting minutes of Board of Director meetings and Shareholders’ Meetings)?	V	The company passed a board of directors resolution on March 20, 2020 to assign Chang, Li-Chao as the head of corporate governance. Ms. Chang possess over 3 years of experience in finance and stock transfer agent related The main responsibilities of head of corporate governance are to handle matters related to board of directors and shareholders ’meetings, producing the minutes of the board of directors and shareholders' meetings, assisting directors to take office and continuing education, and providing the information necessary for directors to perform business Assist directors to follow laws and regulations. The key business operations in 2021 are as follows: ⚫ Convened 6 board of director and 6 audit committee to provide board meeting and audit committee meetings with materials to each director. ⚫ Responsible for the announcement of major information on major resolutions on the day after the board of directors and shareholders' meeting. ⚫ The AGM held in 1stJuly, 2021. ⚫ The registration of revision article of company and total capital of the company. ⚫ Evaluate the purchase of "Director and Key Staff Insurance" of the appropriate amount of insurance and complete the insurance coverage, and report the underwriting content to the board of directors. ⚫ Irregularly provide relevant training information for directors, reminding them to complete the relevant hours of training and completion of the relevant reporting operations in accordance with the "Key Points for the Implementation of the Directors and Supervisors of Listed Companies". Trainingrecord : Please refer to Note 3.	None
(5)Has the company established a communicationchannel for	V	The company has established spokesperson and deputyspokesperson to communicate with	None
		- 36 -

interested parties, a company website dedicated to interested parties, and appropriately responded to the main social responsibility issues which are critical to the interested parties?			investors and other interested parties such as press and media. In addition, the Company has designated full-time personnel to be in charge of stock affairs and communication with other interested parties. The contact information of the responsible personnel can be found in the Company’s website.
(6)Has the company commissioned a professional stock service agent to handle matters about shareholders’ meetings?	V		The company has commissioned Oriental Securities Co., Ltd. to assist and handle matters about shareholders’ meetings.	None
(7)Information disclosure a. Has the company set up a corporate website to disclose information on financial, business and its corporate governance?	V		The Company has established a multi-language website(www.emctw.com)to disclose information on financial, business, and corporate governance. Those information can also be viewed on the Market Observatory Post System (MOPS) operated by the Taiwan Stock Exchange.	None
b. Has the company adopted other information disclosure channels (i.e. English website; designated appropriate personnel to be in charge of Company information collection and disclosure, implemented the spokesperson system, uploaded the investor conference presentations on the Company’s website, etc.)?	V		The Company has designated appropriate persons to collect information for public disclosure. Investor conference and analyst meeting are held periodically. Those information are disclosed on the Company website or the MOPS system operated by the Taiwan Stock Exchange. The Company also has established a spokesperson system, including spokesperson and deputy spokesperson.	None
c. Has the company announce and file annual report within 2 months after the accounting calendar year ends, and compliance with regulations that announce and file for first quarter, second quarter, third quarter and monthlyrevenue in advanced ?		V	The Company has not announced or published year 2018 result within 2 months after the accounting calendar years end, however, the company did announce and publish its first, second, third quarter and monthly revenue in advance.	None
(8)Does the company have other critical information which can help others to understand the implementation of corporate governance (including, but not limited to, employee welfare, staff care, investor relations, vendor relations, interested parties’ rights, training for Director, risk management policies and risk measurement standard implementation progress, customer policy implementation progress, and the Company’s purchase of liability insurance for Directors)?
a. Employee rights and interests, and staff care	V		In compliance with laws and regulations, the Company has an employee welfare committee that appropriates welfare funds and manages various welfare activities for employees. The Company also provide training courses to cultivate employee talents and enhance safety requirements of operations. The Company complies with all pertinent labor regulations and the International Bill of Human Rights,and have established and adjusted	None
			- 37 -

		internal management systems accordingly. For instance, we do not, and will not, recruit children under the age of 15. We ensure that our recruitment policy does not discriminate based on gender, ethnicity, age, marital status, and/or family conditions, and our practices ensure the equality of salaries, recruitment conditions, trainings, and career advancement opportunities. The Company also ensures a working environment that all employees are protected from not being bullied, discriminated, and harassed. Employees are informed the contact details, including email, phone number, and mail box, of the Human Resources Department, which handles employee grievances. Each case will be handled bya dedicatedperson.
b. Investor relations, vendors’ relations, rights of interested parties	V	The company has established a spokesperson system, including spokesperson and deputy spokesperson, to respond to requests and opinions from the investing public and interested parties. The Company also designates a full-time IR personnel to serve the needs of professional institutional investors. Vendors’ relationship is well maintained by the chief of theprocurement department.	None
c. The purchase of liability insurance for Directors	V	The company has purchased liability insurance for each Director, and reviewed the insurance coverage program on annual basis.	None
d. Risk management policies and risk measurement standard implementation progress	V	The Company has, in compliance with laws and regulations, formulate internal procedures to measure and manage risks. The procedures include “Procedures for Prohibiting Insider Trading” and “Procedures for Handling Material Inside Information” to prevent inside trading. The Audit Office implements the auditing process on periodical basis, and each unit is required to perform self-evaluation every year.	None
e. Customer policy implementation progress	V	The Company has maintained a stable relationship with customers in accordance with the internal guidelines. To ensure the Company will be able to meet the demand of customers, the Company consistently obtain better understanding of customers’ situations and continuouslyimprove theproductquality.	None
f. The trainingrecord of directors	V	Please refer to Note 3.	None
(9)According to the Corporate Governance Evaluation Results published by the Corporate Governance Center of Taiwan Stock Exchange in the latest year, please describe what sorts of improvements the Company has already made and what has the higher priority that the Company plans to implement or improve: Based on the said evaluation results published in 2018, The Company plans to achieve the follows in 2018: 1) The improvement of information disclosure in the annual report; 2) the improvement of the Company’s website and the information disclosure on the Company’s website; 3) Cooperating with IR Platform operated with Taiwan Depository and Clearing Corporation (TDCC) to improve the ESG ratingof the Company.

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Note:1

Criteria to evaluate the independence of CPAs (The following criteria are formulated in accordance with the Article 47 of the Accountant Law and the requirement of “Integrity, Objectivity and Independence” stipulated in the Bulletin No. 10 of the Professional Ethics of CPAs of the Republic of China):

Accreditation of Accountants Independence Assessment Form	Compliance with independence	Compliance with independence
	Yes	No
a. The CPAs have voluntarily terminated their services and transferred to other qualified ones in compliance with relevant regulations in past seven years until the latest audit/review of financial statements	V
b. Not havinga material financial interest in the audit client.	V
c. Avoid havingan inappropriate relationshipwith the audit client.	V
d. The CPA firm shall ensure its employees follow the requirement of “Integrity, Objectivity, and Independence”.	V
e. The CPA shall not audit and/or review the financial statements of an organization by which he or she has been employed and not separated with the organization for less than twoyears.	V
f. The CPA shall notpermit others topractice under his or her name.	V
g. The CPA does not hold stakes in the Companyor the affiliated entities of the Company.	V
h. The CPA shall not borrow from or lend to the Companyor the affiliated entities of the Company.	V
i. The CPA shall not cooperate with the Company or the affiliated entities of the Company to invest in the same business or make profit-sharing arrangement with the Company or the affiliated entities of the Company.	V
j. The CPA shall not be concurrently employed by the Company or the affiliated entities of the Companyto conduct routine business and receive a consistent salary.	V
k. The CPA shall not be involved in the management decision making of the Company or the affiliated entities of the Company.	V
l. The CPA shall not engage in the conduct that couldjeopardize the independence.	V
m. The CPA is not the spouse, a lineal consanguinity, a direct affinity, or a collateral consanguinity within two degree of kinshipof the management team of the Company.	V
n. The CPA shall not receive anycommission related to thepracticeperformed.	V
o. Matters could compromise or jeopardize the independence of the CPA were not found until the date the annual reportpublished.	V

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Note:2

To: Elite Material Co., Ltd.

The Declaration of Independence by the Audit Engagement Team of KPMG

The Audit Engagement Team (hereinafter referred as “the Team”) of KPMG, engaged in reviewing and auditing the Year 2021 financial statements of Elite Material Co., Ltd. declares that the Team has complied with the Bulletin of Norm of Professional Ethics for Certified Public Accountant of the Republic of China No.10 (the “Bulletin”).

The considerations on independence matters and the safeguards to be applied of KPMG includes, but not limited to, policies and procedures that regulate the independence of members of the Team (financial interests, loans and guarantees, employment with an audit client, etc.), business relationships with an audit client, the job rotation of CPAs, and nonassurance services. The important policies and procedures are elaborated further as follows:

Important regulations of independence:
1.1. KPMG, employees of KPMG, and other persons prescribed in the Bulletin (including employees of any affiliate and network firm) must always maintain independence with clients.
1.2. All members mentioned in the preceding paragraph are prohibited from engaging in, directly or indirectly, inside trading, misuse of inside information, and activities likely to cause misleading behavior in the security and capital markets. Meanwhile, KPMG will obtain the Declaration of Independence from each person mentioned hereinto.
1.3. Should the same accountant in charge, accountants, review accountants and accountants in charge of subsidiaries of an audit client have provided TWSE & OTC listed companies with audited engagement services for a period which has reached the limit of the Bulletin or laws, the positions of the aforesaid persons shall be rotated.
1.4. KPMG and the Team should identify and evaluate the materiality of the effect on independence, and adopt appropriate measure to eliminate the effect, or reduce the effect to an acceptable level. When necessary, the engagement with the audit client shall be terminated.
The compliance and monitor of independence policy
2.1. KPMG monitors if each employee and relevant member has filed Declaration of Independence each year via a computerized system.
2.2. KPMG will periodically audit the compliance result of each employee and relevant member on a random basis. Also, personal investment will be reviewed via an electronic investment declaration system to examine if any person with a title higher than vice manager (inclusive) has filed the changes of the investment he/she holds.
2.3. KPMG will periodically monitor and audit the job rotation of accountants, including the period that the audited engagement service provided and the appropriateness of non-assurance services.
2.4. Should a violation of the independence policy occurs, those who involved (including partners) will be brought to the Committee of Risk and Independence, and proper punishment will be taken by The Committee according to the severity of the violation.

Accountant in charge: Yi-Chun Chen Accountant : Calvin Y.C. Chiang

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Note 3: Training for Directors and Independent Directors

Title	Name	Study Date	Sponsoring Organization	Name of the Course	Study Hours
Chairman	Dong, Ding-Yu	14 April 21	Independent Directors Association, Taiwan	M&A strategies and corporate transformation methods for board of directors.	3
		28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		7 May 21	Independent Directors Association, Taiwan	From the chairman’s point of view to in-depth analyze the substantive significance of the financial report	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		8 Sep21	Taiwan Academy of Banking and Finance	Corporate Governance Lecture Hall - Enterprise Digital Transformation	3
		30 Sep 21	Independent Directors Association, Taiwan	Board Practice Cases - simulation	3
		10 Nov 21	Taiwan Academy of Banking and Finance	Corporate Governance Lecture Hall - The cognitive framework for the geopolitical effects of the United States, China and Taiwan under the global confrontation between China and the United States	3
		Total			21
Director	Tsai, Fei-Liang	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		Total			6
Director	Hsieh, Mon-Chang	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		Total			6
Director	Li, Wen-Shiung	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		Total			6

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Independent Director	Cheng, Bing	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
				Total	6
Independent Director	Cheng, Duen- Chian	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21		How to balance the intelligent, security and risks of enterprise to create a 3-wins situation duringdigital transformation	3
				Total	6
Independent Director	Tsai, Rong-Dong	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		19 August 21	Taiwan Insurance Institute	Integrity management and prevention of money laundering	3
				Total	9
Head of Corporate Governance	Chang, Li-Chio	28 April 21	Taiwan Corporate Governance Association	Accelerators of corporate sustainability – CSR, ESG and SDGs	3
		14 July 21	Securities and futures institute	Discussion on the Remuneration of Employees and Directors - Starting with the Amendment to Article 14 of the Securities and Exchange Act	3
		28 July 21	Taiwan Corporate Governance Association	How to balance the intelligent, security and risks of enterprise to create a 3-wins situation during digital transformation	3
		6 August 21	Securities and futures institute	Analysis and decision-making application of corporate financial information	3
		2 November 21	Taiwan Corporate Governance Association	Directors and supervisors should understand the law of commercial matters and the trend of court trials	3
				Total	15

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4.4 Remuneration Committee

4.4.1 Information of Remuneration Committee Members

Condition Identity Name	Condition Identity Name	Professional qualification	Curriculum Vitae	Independence situations (Meet the criteria of Note 1)	The number of independent directors of the other public offering company
Independent Director (Commissioner)	Tsai, Rong Dong	Have the work experience in business, legal, finance, accounting or corporate business	President, Ta Chong Bank President, Taishin International Bank/Corporate Finance Business Group of Taishin International Bank Executive Vice President, Deutsche Bank Taipei Branch / Director, Corporate Finance Department, Deutsche Bank Taipei Branch Senior Executive Vice President, UBS AG Taipei Branch / Director, Corporate Finance Department, UBS	`（`1`）（`2`）（`3`）` `（`4`）（`5`）（`6`）` `（`7`）（`8`）（`9`）` `（`10`）（`11`）` `（`12`）`	2
Independent Director	Shen, Bing	Have the work experience in business, legal, finance, accounting or corporate business	Chief Investment Officer, International Bank Corporation Executive Director, Morgan Stanley & Co. Vice President, China Development Industrial Bank President, CDIB Partners Investment Holding Corporation	`（`1`）（`2`）（`3`）` `（`4`）（`5`）（`6`）` `（`7`）（`8`）（`9`）` `（`10`）（`11`）` `（`12`）`	2
Independent Director	Cheng, Duen- Chian	Have the work experience in business, legal, finance, accounting or corporate business	President, UMC Capital Corporation Managing Director, Union Investment Management Consulting Co, Ltd. Executive Director/President of Taiwan Branch, Morgan Stanley Asia Limited Executive Director, Goldman SachsAsiaL.L.C.	`（`1`）（`2`）（`3`）` `（`4`）（`5`）（`6`）` `（`7`）（`8`）（`9`）` `（`10`）（`11`）` `（`12`）`	3

Note 1 : Each director meets the following conditions in the two years prior to the election and during his or her term of office.

（ 1 ） An employee who is not employed by the company or its affiliates.
（ 2 ） Directors or supervisors who are served as the position of the same company or affiliated enterprises (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established as independent directors in accordance with this Act or local national decrees).
（ 3 ） A natural person shareholder who is not a natural person who holds more than 1% of the total number of issued shares of the company or holds in the name of others or the top 10 shareholders.
（ 4 ） The spouse, second degree or third degree relatives of managers not listed in (1) or (2) or (3) listed persons.
（ 5 ） A director, supervisor or employee who does not directly hold more than 5% of the total number of issued shares of the company, the top five shareholders or the legal person shareholders designated as directors or
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supervisors of the company in accordance with article 27, paragraphs 1 or 2 of the company Act (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established by this law or local laws and regulations).

（ 6 ） More than half of the shares that are not seated or have voting rights in the directors of the company shall be directors, supervisors or employees of other companies controlled by the same person (except where they are independent directors of the company or its parent, subsidiary or subsidiary of the same parent company established in accordance with this Act or local national decrees).
（ 7 ） Directors, supervisors or employees of other companies or institutions that are not the same person as the chairman, president or equivalent of the company or spouse (except where the company and its parent company, subsidiaries or subsidiaries of the same parent company are established as independent directors in accordance with this Law or local national laws).
（ 8 ） Directors, supervisors, president or shareholders holding more than 5% of the shares of a particular company or institution that do not have financial or business dealings with the company (unless a particular company or institution holds more than 20% of the total number of issued shares of the company, not more than 50%, and is an independent director of the company and its parent company, subsidiaries or subsidiaries of the same parent company in accordance with this Law or local national laws).
（ 9 ） Professionals, sole proprietors, partners, directors, supervisors, managers and their spouses who do not provide audits for the company or related enterprises or have obtained remuneration in the past two years in the past two years in a commercial, legal, financial, accounting and other related services of NT$500,000. However, this does not apply to members of the Remuneration Committee, the Public Takeover Review Committee or the Special Committee on Mergers and Acquisitions who perform their functions under the Securities and Exchange Act or the relevant laws and regulations of the Mergers and Acquisitions Act.
（ 10 ） There is no family relationship with other directors within the scope of a spouse or second-degree relatives.
（ 11 ） There is no circumstance under the paragraphs of article 30 of the company act.
（ 12 ） There is no any elected directors who is on behalf of a government, a legal person or its representative under the article 27 of company act.
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4.4.2 Executive Status of Remuneration Committee

A. The number of committee members of the company is three.
B. The tenure of current Remuneration Committee is from 10 June 2019 to 9 June 2022.
C. The Remuneration Committee held two times in 2021, and the attendance status of members in most recent year is disclosed as follows:

Title	Name	Attendance in Person	By Proxy	Attendance Rate
Independent Director, Commissioner	Tsai, Rong-Dong	2	0	100%
Independent Director	Shen, Bing	2	0	100%
Independent Director	Cheng, Duen-Chian	2	0	100%
Other required disclosure: (1) Should Board of Directors reject or amend the proposal of Remuneration Committee, the dates and sessions of the said board meetings, the contents of the said resolutions, opinions of the Remuneration Committee, and measures the Company had in responding to such opinions shall be specified (for instance, the Board of Directors resolved a remuneration package that is better than the proposed remuneration by the Committee, the difference and reasons shall be specified): None (2) Should any resolution on which the member of Remuneration Committee have a dissenting or qualified opinion occur and such opinion be recorded or be expressed by writing notice, the dates and sessions of the said Remuneration Committee meetings, the contents of the said resolutions, opinions of the Remuneration Committee members,and measures the Companyhad in respondingto such opinions shall be specified: None

D. Resolutions resolved by the Remuneration Committee in year 2021:

	Proposals	Resolutions	Measures the Company had
The 4th meeting of the 4th term dated as 25 Feb 2021	1. To approve the planned remuneration of Directors and compensation of employees for year 2021. 2. To approve the distribution of remuneration of Directors and compensation of employees for year 2020.	Resolved. All members vote For all proposals.	The resolution was submitted to the Board of Directors Meeting and obtain approval from the Board.
The 5th meeting of the 4th term dated as 27 Oct 2021	1. Discussion of the Year 2022 working plan for the remuneration committee.	Resolved. All members vote For the proposal.	The resolution was submitted to the Board of Directors Meeting and obtain approval from the Board.

4.4.2 Information on the members of the Nomination Committee and information on their operations: Not applicable
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4.5 Circumstances and reasons for the implementation of sustainable development promotion and the differences with the code of practice for sustainable development of listed companies

ompanies
Item			Execution status	Differences and reasons for the code of practice for sustainable development with listed companies
	Yes	No	Summary
(1) Has the company established a governance framework to promote sustainable development, and set up a full-time (part-time) unit to promote sustainable development, which is handled by senior management authorized by the board of directors, and the board of directors supervises the situation?	V		In order to fulfill corporate social responsibility and implement the sustainable management philosophy, the Board of Directors has adopted the Code of Practice for Corporate Social Responsibility, and since 2020, it has established a Corporate Social Responsibility Committee (CSR Committee) to implement corporate social responsibility and carry out specific plans for sustainable management. The CSR Committee has four working groups, including the Corporate Governance/Economics Group, the Supply Chain/Green Products Group, the Employee Care/Social Participation Group, and the Sustainable Environment Group, and the members of each group are composed of the heads of relevant units and departments or their representatives, who are responsible for the collection, planning, evaluation and implementation of information on various topics. The Corporate Social Responsibility Committee is responsible for formulating and reviewing corporate social responsibility policies, systems and management guidelines. The Chairman of the Board of Directors is the highest level of the Committee and authorizes the Head of Corporate Governance to promote and implement corporate governance and corporate social responsibility in accordance with the relevant management measures, and submits it to the Board of Directors.	None
(2)Has the company established a governance framework to promote sustainable development, and set up a full-time (part-time) unit to promote sustainable development, which is handled by senior management authorized by the board of directors, and the board of directors supervises the situation?	V		In response to changes in the global economic environment and perpetual risks, the Company identifies and grasps the relevant risks that may affect the sustainable development of enterprises according to the three major aspects of the economy (including corporate governance), environment and society, and minimizes possible risks through relevant management strategies and countermeasures such as risk transfer, reduction and avoidance, and even transforms them into operational opportunities. The company's risk management policy is to define all kinds of risks in accordance with the company's overall operating policy, establish a risk management mechanism of early identification, accurate measurement, effective supervision and strict control, prevent possible losses within the scope of bearable risks, continuously adjust and improve the best risk management practices according to changes in the internal and external environment, in order to protect the interests of employees,shareholders,	None

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		partners and customers, increase the value of the company, and achieve the optimization principle of the company's resource allocation.
(3) Environmental Issues A. Has the Company established an appropriate environmental management system according to its industrycharacteristics?	V	In compliance with the environmental protection regulations, the Company has dedicated units responsible for prevention of water and air pollutions. The waste of the factories is disposed properly by qualified organizations.	None
B. Is the company committed to improving energy efficiency and using recycled materials that have a low impact on the environment?	V	Since establishment, the Company has committed to promote sustainability management. The Company has received qualifications of ISO 14001. The waste of the production process is classified, and the materials can be recycled and reused are properly stored and consumed again internally. The remaining waste is properly disposed by the organization qualified by the Environmental Protection Administration, Executive Yuan.	None
C. Has the company paid attention to the impact from climate changes on its business operations, carried out assessments on greenhouse gases, and set up corporate strategies to save energy and to reduce the emission of carbon and greenhouse gas?	V	The Company also organizes employee training program to promote the environmental awareness and the Company’s environmental policy. For potential risks and opportunities for the Company today and in the future, please refer to the Company's Annual Corporate Social ResponsibilityReport.	None
D. Does the company count greenhouse gas emissions, water consumption and total waste weight over the past two years and establish policies for greenhouse gas reduction, water use reduction or other waste management?	V	The company Taoyuan and Hsinchu facility are gradually using natural gas to replace heavily oil, completed ISO14064 greenhouse gas inventory and third-party verification in 2021. The company has established a baseline for greenhouse gas emissions, and set annual carbon reduction targets to continuously promote emission reductions. The total greenhouse emission in 2020, 2021 figure is as the following Total greenhouse gas emissions (tons) 2020 42,126.707 2021 41,434.990 CO2 equivalent (tons) Total waste (kg) Category 1 emission equivalent 2020 15,855.151 2021 15,679.430 CO2 equivalent (tons) Total waste (kg) Category II emission equivalent 2020 26,271.556 2021 25,755.560 Total water consumption (tons) 2020 288,648 2021 278,793 Total waste (kg) 2020 2,841,464 2021 3,270,833 The company is pursuing energy saving to push the reduction of carbon, thus, aggressively push all sorts of energy saving plans. The companyalso organizes employee training	None

47 -

		program to promote the environmental awareness and the company’s environmental policy. The office temperature is set at 27 – 28 degree Celsius, saving the energy consumed by air conditioners. The lighting of office is using LED light bulbs. Elevators and display panels of bulletin boards, which are not relevant to production process, are turned off after working hours.
(4) Social Issues A. Has the Company set up management policies and procedures according to related laws and regulations as well as the International Bill of Human Rights?	V	As a global corporate citizen, the Responsible Business Alliance (RBA), social responsibility standards (Social Accountability 8000, SA 8000) and internationally recognized human rights norms include the United Nations Universal Declaration of Human Rights, the International Labour Organization ( International Labour Organization), United Nations Guiding Principles on Business and Human Rights. And in accordance with the above-mentioned guidelines and local laws and regulations where the operation is located, develop the basis of labor standards and establish the Code of Conduct for Labor and Ethical Management, the Corporate Social and Environmental Responsibility Policy Statement, and the Corporate Social Responsibility Code of Practice as guidelines for the practice of corporate social responsibility. The use of child labour is expressly prohibited, child labour under the legal minimum age is ensured, the physical and mental health and safety of underage employees are ensured, and hazardous work is prohibited. Companies also promote freedom of employment, and all work is voluntary. Violations of Taiwan's photovoltaic human rights policy, such as non-slavery and human trafficking, will occur in 2021.	None
B. Has the Company established employee grievance mechanisms and channels, and handled these grievances properly?	V	Employees are informed the contact details, including email, phone number, and mail box, of the Human Resources Department, which handles employee grievances. Each case will be handled bya dedicatedpersonnel.	None
C.. Has the Company offered a safe and healthy work environment and routinely offered employees with safety and health education training?	V	The company has a planned implementation of environmental measurement and equipment maintenance, and built an ESH environmental safety and health management system, with environmental safety and health as the goal to implement ISO45001 (certification date: 2021/8/5, expiration date: 2021/9/5 ~ 2024/9/4) and ISO14001 (certification date: 2021/8/5, effective date: 2021/9/5 ~ 2024/9/4) two sets of management systems. New employees are fully trained before work, and the work site is mostly supervised by the supervisor to ensure the safety of the workplace. To maintain the health of employees, the Company routinely collaborates with hospitals to provide health checkups for its employees. Depending on the conditions of the working place, special health checkups will also be offered to certain workers. The Company has formulated “Procedures for Ensuring the Safety of Working Place and Health of Employees” to prevent workplace hazards and ensure the heath of each employees.	None

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D. Has the Company established employee grievance mechanisms and channels, and handled these grievances properly?	V	Employees are informed the contact details, including email, phone number, and mail box, of the Human Resources Department, which handles employee grievances. Each case will be handled bya dedicatedpersonnel.	None
E. Prior to conducting business with suppliers, has the Company evaluated if such suppliers have had records where they made an impact on the environment and on society at large?	V	Prior to conducting business with suppliers, the Company will obtain “Supplier CSR Commitment Declaration”. The legality, code of ethical management, and records of unethical behavior, if there is any, are used as a reference in the supplier selectionprocess.	None
F. Do the Company's contracts with its primary suppliers contain any immediate termination or cancellation clauses when suppliers violate their corporate social responsibility policies, and pose a significant impact on the environment and society?	V	Prior to signing contracts with suppliers, the Company will audit the records of suppliers with their compliance with laws, regulations, and code of conducts in the relevant industries. With respect to the construction contracts, the Company will make sure the turnkey provider obey relevant laws, purchase insurance coverage for construction workers. Above all, bribery is absolutely prohibited and that is written in contracts with suppliers. The Company has made every possible efforts to encourage suppliers and vendors to undertake corporate social responsibility.	None
(5) Has the company adopted international standard code or guideline of perpetual statement to prepare CSR report to disclose non-financial data? Whether fore- mentioned report acquired third part assertion or guarantee opinion?	V	In accordance with core options (Core) of the Sustainable Reporting Guidelines (GRI Standards) issued by the Global Sustainability Standards Council, the Company has commissioned the Taiwan branch of the British Standards Institute (bsi) to verify the contents of the report on the basis of the AA1000 AS (2008) Type 1 Medium Assurance Level and the Core GRI Standards Core Option (Core) to enhance correctness and credibility.	None
(6) If the company has set up the principles based on "Corporate Social Responsibility Best-Practice Principles for TWSE/GTSM Listed Companies", please illustrate the implementation progress and any difference:The Company has formulated a Code of Practice on Corporate Social Responsibility, and there is no material difference between the actual operatingconditions and the Code of Practice on Corporate Social Responsibilityof Listed Companies.
(7) Other important information that will help to promote the implementation of sustainable development (a) Environmental protection: Comply with relevant environmental laws and regulations, including, but not limited to, Waste Disposal Act, Water Pollution Control Measures and Test Reporting Management Regulations, and Air Pollution Control Act. (b) Community welfare, social services, and social welfare: The Company contributes to society through participation in activities of environmental protection, art & culture, and education. The Company also routinely makes monetary donation to non-profit organization supporting the minority group. (c) Rights and interests of consumers: Understanding customers’ demand and promptly respond to customers’ requests, in order to enhance the competitiveness of the Company. (d) Human rights: The Company ensures that its recruitment and human resource policy do not discriminate based on gender, ethnicity, age, marital status, and/or family conditions, and our practices ensure the equality of salaries, recruitment conditions, trainings, and career advancement opportunities for each employee. All employees are protected from not being discriminated, harassed, and bullied. (e) Safety and Health: The Company complies with laws and regulations to ensure the safety of labor in the work place and the health of each employee. The Companyalso adopts the EHSphilosophyand management system.

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4.6 Implementation of Code of Business Conduct

Item			ImplementationStatus	Deviations from “Ethical Corporate Management Best- Practice Principles for TWSE/GTSM listed Companies” and explanations
	Yes	No	Summary
(1) Establishment of Business Conduct Policy and Plans a. Does the Company demonstrate business conduct policy and practice in the corporate guidelines and external documents? Have the Board of Directors and management committed to actively implement such policy?	V		The Company has established “Code of Ethics” & “Best Practice Principles of Ethical Corporate Management”. All employees are required and trained to comply with our “Code of Ethics” & “Best Practice Principles of Ethical Corporate Management” throughout daily operations. In order to promote awareness, the policies are available for access through channels such as intranet, company website, and various meetings, etc. The purpose of the Principles said in the preceding paragraph is to cultivate an enterprise culture for the Company to ensure all businesses conducted with sincerity and integrity, preventing any misconduct while conducting business. The Company Directors, managers, employees, and mandatories are prohibited from, directly or indirectly, offering, promising to offer, requesting, or receiving improper benefits of any sort when conducting business with counterparties. Obtaining or sustaining benefits by conducting business without sincerity and integrity, in any illegal way, or in breach of fiduciarydutyis alsoprohibited.	None
b. Has the Company established and implemented an unethical conduct prevention plan, which stipulates operational processes, provides guidelines for conduct, discipline for violations of rules, and an appeal system in each case?	V
c. Has the Company taken any precautionary measures to prevent corruption or high-risk illegal business activities, based on Paragraph 2 in Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM- Listed Companies”?	V		The internal control system and the internal ratification system of the Company have included measures to prevent conducting business without sincerity and integrity, and that shall also be able to prevent corruption or high- risk illegal business activities.	None
(2) Implementation of the Code of Business Conduct a. Does the Company evaluate the ethical conduct records of its counterparties and specify “Ethical clauses” in business contracts?	V		Prior to engaging in a commercial transaction, the Company will take into consideration the legitimacy and legality of the counterparty such as agents, vendors, customers, and other entities, and their misconduct record, if any. The Company shall avoid engaging in business with counterparty with any record of misconducts. The Company will also make sure the counterparty will not, directly or indirectly, offer, promise to offer, request, or accept any improper benefits, including, but not limited to, bribery, kickbacks, commissions, and grease payments. When entering into material contracts with counterparties, the Company will include provisions in such contracts demandingthe	None
			- 50 -

		compliance of ethical corporate management policy.
b. Has the Company established dedicated units under the supervision of the Board of Directors to promote corporate ethical management and which regularly report to the Board on their implementation status?	V	The Human Resources Department of the Company is dedicated to set up the Principles said in this table, and to be in charge of the amendments, explanations, enforcement, and providing counseling services and other relevant matters. The implement status will be documented and submitted to the Board of Directors.	None
c. Does the Company promulgate policies to prevent conflicts of interests and offer appropriate channels for reporting conflicts of benefits?	V	The Company periodically organizes training programs for Company Directors, managers, and employees, so that the said Principles can be fully understood. For any violation of the Principles being found, each member of the Company is urged to proactively report to the Audit Committee, the management, head of internal audit, Human Resources Department, and other appropriate authorized managers, and to provide information, as comprehensive as possible, to allow the Companyto take appropriate actions.	None
d. Does the Company establish an effective operation of the accounting and internal control systems, and periodically conduct internal audits byinternal auditors,or audit byCPA?	V	The accounting system, the internal control system of the Company, and their implementation status are audited by the internal Audit Office.	None
e. Does the Company periodically conduct internal and external training on ethical management?	V	From time to time, the Company organizes training programs, or via many sorts of meetings, to promote compliance with ethical and integrity standards. The total hours of training courses, including internally designed and externally offered, reached 18,078 hours, and each employee on the average attended relevant programs of 17.27 hours in year 2021. The aforesaid courses include “Compliance with Ethical Business Conduct Regulations”, “Corporate Social Responsibility and Employees’ Code of Conduct”, “Maternity Protection in Working Place”, and “Hazard Communication Education”.	None
(3) Establishment of Reporting Channels for Violations of the Code Of Business Conduct
a. Has the company established a specific complaints and rewards system through convenient channels for lodging complaints? And does the Company assign dedicated personnel to attend to the matter?	V	For any violation of the Principles being found, each member of the Company is urged to proactively report to the Audit Committee, the management, head of internal audit, Human	None

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b. Has the company established standard operating procedures, follow-up measures to be taken after the completion of the investigation and handling complaints in a confidential manner?	V	Resources Department, and other appropriate authorized managers, and to provide information, as comprehensive as possible, to allow the Company to take appropriate actions. The Company ensures that the whistle- blower’s identity and the contents of the complaint are kept confidential in order to protect the whistle- blower from retaliation for having filed the complaint. There are also measures are in place to conduct independent investigation into the alleged misconduct.
c. Does the company adopt measures to protect whistle- blowers from reprisals for having filed the complaint report?	V
(4) Improvements in Information Disclosure Does the Company disclose the principle and the practice of business conduct related information on the corporate website and MOPS website operated by the Taiwan Stock Exchange?	V	The Company has set up the “Code of Business Conduct” and “Ethical Corporate Management Best-Practice Principles for EMC”, and both Principles has been disclosed on the Company website and the MOPS website operated by the Taiwan Stock Exchange.	None
(5) If the Company has established its own guidelines for the “Code of Business Conduct” according to Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies, please state the discrepancies (if any) between actual operation and policy: There is no material discrepancies between actual operation and thepolicy.
(6) Other important information revealing the Company’s ethical operations: For the review of the current policy and continual improvement at the ethical corporate management, the Company is paying close attention to anyfurther development at the best-practiceprinciples for ethical corporate management.

(6) Other important information revealing the Company’s ethical operations:

For the review of the current policy and continual improvement at the ethical corporate management, the Company is paying close attention to any further development at the best-practice principles for ethical corporate management.

4.7 Methods for searching the rules and relevant regulations of corporate governance:

The rules and relevant regulations of Corporate Governance can be viewed and downloaded at the Company’s website: www.emctw.com, or the Market Operation Observe System (MOPS) by the Taiwan Stock Exchange: http://mops.twse.com.tw/

4.8 Other important information that would facilitate better understanding of the Company’s status in implementing corporate governance:

Please refer to page 28 to page 34 of the Annual Book.

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4.9.1 Internal control report

4.9 Internal Control System execution status

==> picture [436 x 501] intentionally omitted <==

53 -
4.10 The investigative report of Entrusting CPA to examine the internal control system: None
4.11 In recent years until the annual report being published, violation of internal control policies by employees: None
4.12 In recent years until the annual report being published, major resolutions of shareholders’ meeting and board meetings:

4.12.1 Shareholders’ Meeting

	Date	Resolutions and executions of Shareholders’ Meeting
2021 Annual General Shareholders’ Meeting	1 July 2021	1. To accept the Year 2020 business report and financial statements 2. To approve the proposal for distribution of 2020 profits The ex-dividend date was set at 3rd September 2021, and the dividend was paid at 24th September, 2021. (Cash dividend NTD 7.0 per share.) 3. To approve the proposal of revision of the article of incorporation of the company. On July 19, 2021, completed the registration of the amendment required by the ministry of economic affairs and announced it on the company's website. 4. To approve the proposal of Overview of “Procedures of Acquisition and Disposition of Assets of Elite Material Co., Ltd.” It was announced on the company's website on July 1, 2021 and is handled in accordance with the post-repaired procedures. 5. To approve the proposal of lending to one and another of the company. It was announced on the Company's website on July 1, 2021 and is handled in accordance with the post-repaired procedures. 6. To approve the proposal of election of the 12th Directors of the Company It was announced on the Company's website on July 1, 2021 and is handled in accordance with thepost-repairedprocedures.

4.12.2 Board Meetings

Term	Date	Important Resolutions
The 11th Board Meeting of the 11th term	25 Feb 2021	1. Approved the proposal of Procedures of lending to one another and the method of election of the directors of the company. 2. Approved the proposal of increase endorsement of the company. 3. Approved the Year 2020 Declaration of Internal Control System. 4. Approved the proposal of additional increase capital expenditure of KY site. 5. Approved the proposal of group budge and revision of capital expenditure of the company. 6. Accepted the proposal submitted by the Remuneration Committee about the directors' remuneration and managers' compensation of Year 2021. 7. Approved the proposal of Year 2020 directors' remuneration and employees' compensation. 8. Approved the Year 2020 business report and financial statements. 9. Approved the proposal of distribution of Year 2020 profits. 10. Approved the proposal of convening the Year 2021 annual general shareholders' meeting.

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The 12th Board Meeting of the 11th term	28 Apr 2021	1. Approved the proposal of endorsement among affiliates. 2. Approved the proposal of decreasing the amount of endorsement between parent and affiliate company. 3. Approved the proposal of increase short-term credit line of the company. 4. Approved proposal of lending to one another of the company. 5. Approved the proposal of revision of Procedures of Acquisition and Disposition of Assets of the company
The 13th Board Meeting of the 11th term	28 May 2021	1. Approved the postpone of annual general meeting of year 2021. 2. Approved the proposal of increase of capital expenditure of EMC (HS). 3. Approved theproposal of 1st unsecured ECB issuance.
The 14th Board Meeting of the 11th term	28 Jul 2021	1. Approved the appointment of president. 2. Approved the proposal of decreasing endorsement among affiliates. 3. Approved the proposal of increasing the short-term credit line of the company. 4. Approved the proposal of code of internal authorization of the company. 5. Approved theproposal of Taoyuan site’s capital expenditure.
The 15th Board Meeting of the 11th term	27 Oct 2021	1. Approved the proposal of indirect investment structure of the company. 2. Approved the proposal of increase capital expenditure of OEM business unit of the company. 3. Approved the proposal of increase capital expenditure of KY site of the company. 4. Approved theproposal of capital expenditure of EMC(KS)of the company.
The 16th Board Meeting of the 11th term	21 Dec 2021	1. Approved the review of the CPA audit fee for Year 2021. 2. Approved the Year 2022 plan of auditing of Elite Material Co., Ltd. 3. Approved the proposal of Year 2022 remuneration committee’s business plans. 4. Approved the proposal of revision of Articles of Incorporation, Method of internal control assessment procedures, operation procedure of monitoring affiliate, procedure of stamp management. 5. Approved the proposal of group budge and capital expenditure of year 2022. 6. Approved theproposal of 5th unsecure domestic CB issuance.
The 17th Board Meeting of the 11th term	23 Feb 2022	1. Approved the Year 2021 Declaration of Internal Control System. 2. Approved the revision of Procedures of Acquisition and Disposition of Assets of Elite Material Co., Ltd.” 3. Approved the fund raising of the affiliates of the company. 4. Accepted the proposal submitted by the Remuneration Committee about the directors' remuneration and managers' compensation of Year 2022. 5. Approved the proposal of Year 2021 directors' remuneration and employees' compensation. 6. Approved the Year 2021 business report and financial statements. 7. Approved the proposal of distribution of Year 2021 profits. 8. Approved the 12th election of the directors of the company 9. Approved the proposal of convening of the year 2022 annual general meetings related affairs.
The 18th Board Meeting of the 11th term	15 Apr 2022	1. Approved the proposal of the article of incorporation and meeting rules of the shareholders of the company. 2. Approved the proposal of convening the year 2022 annual general shareholders' meeting 3. Approved the capital expenditure of the company. 4. Approved the proposal of the nomination of directors (including independent directors) by more than 1% of shareholders. 5. Approved theproposal of exempt of non-compete against directors.
The 19th Board Meeting of the 11th term	27 Apr 2022	1. Approved the proposal of increase of short -term credit line of the company. 2. Approved the proposal of increase the amount of capital expenditure of KY site. 3. Approved the changes of accountant,the independence and competence
		- 55 -

assessment of the CPAs . 4. Approved the year 1Q22 annual financial report.

4.13 In recent years until the annual report being published, dissenting comments on major BOD resolutions from Directors and Independent Directors: None
4.14 In recent years until the annual report being published, resignation or dismissal of Chairman, President, Director of Accounting Department, Director of Financial Department, Chief Internal Auditing Officer, and Head of Research and Development Department: None
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5. Audit Fees

5.1 Information of Audit Fees

					Unit: NT$ thousands	Unit: NT$ thousands
Accounting Firm	Name of CPA	Audit Period	Audit Fee	Non-Audit Fee	Total	Note
KPMG	Chen, Yi-Chun Chiang, Calvin	1 Jan 21 – 31 Dec 21	3,000	1,985	4,985	None

Note: Service fees for income tax counseling, audit fees of business tax report, and fees for English translation of financial reports.

6. Information for change of CPA:

Not Applicable

7. The Company’s Chairman, President, Managers Responsible for Finance and Accounting who have held a position in the CPA Office or its affiliates within the latest year: None

8. Shareholding Transferred or Pledged by Directors, Management, and Major Shareholders Who Hold 10% or More of the Company Shares:

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8.1 Shareholding variation

Title	Name	2021	2021	1Jan 2022 – 28 March 2022	1Jan 2022 – 28 March 2022
		Shares Increased (Decreased)	Pledged Shares Increased (Decreased)	Shares Increased (Decreased)	Pledged Shares Increased (Decreased)
Chairman	Dong, Ding-Yu	0	0	0	0
Vice Chairman	Yu Chang Investment Co.,Ltd.	0	0	0	0
	Representative: Tsai,Fei-Liang	0	0	0	0
Director	Yu Chang Investment Co.,Ltd.	0	0	0	0
	Representative: Li,Wen-Shiung	0	0	0	0
Director	Hsieh, Mon Chang	0	0	0	0
Independent Director	Shen, Bing	0	0	0	0
Independent Director	Cheng, Duen-Chian	0	0	0	0
Independent Director	Tsai, Rong-Dong	0	0	0	0
President	Guan, En-Xiang	0	0	0	0
Senior Vice President	Sun, Michael	0	0	0	0
Vice President	Peng, Yi-Ren	0	0	0	0
Vice President	Chou, Li-Ming	0	0	0	0
Vice President	Chuang, Michael	0	0	0	0
Vice President	Su, Kenny	0	0	0	0
Vice President	Lin, Alan	0	0	0	0
Vice President	Lin, Chien-Chen	0	0	0	0
Vice President	Yang, Danny	0	0	0	0
Vice President	Lee, De-Na	0	0	0	0
Vice President (CFO)	Randy Yu	0	0	0	0
Assistant Vice President (Goverrnor)	Li-Choi Chang	0	0	0	0
Director of Accounting Department	Sara Yen	0	0	0	0

8.2 Shareholding transferred:

Not applicable.

8.3 Shareholding pledged:

Not applicable.

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9 Top ten shareholders being the related party as defined in statement of financial accounting standards No. 6:

Name	Current Shareholding	Current Shareholding	Spouse & Minor Children’s Shareholding	Spouse & Minor Children’s Shareholding	Shareholding in Name of Others	Shareholding in Name of Others	Name, relationship of top ten shareholders are spouses of within 2 degrees of consanguinityto each other	Name, relationship of top ten shareholders are spouses of within 2 degrees of consanguinityto each other
	Shares	%	Shares	%	Shares	%	Name	Relationship
Yu ChangInvestment Co.,Ltd.	25,471,477	7.65	0	0	0	0	Yu Sheng Investment Co., Ltd.	100%-owned subsidiary of Yu Sheng Investment Co. Ltd.
Representative: Su-Moon Wu	3,548,859	1.07	0	0	0	0
New Labor Pension Fund-Taiwan	22,722,700	6.83	0	0	0	0	None	None
Standard Chartered International Commercial Bank, the MTX Stable Emerging Market Leader fund.	14,937,000	4.49	0	0	0	0	None	None
Si, Run-Hong	12,262,303	3.68	0	0	0	0	None	Representative of Silver topinvestment
Yu ShengInvestment Co.,Ltd.	10,485,000	3.15	0	0	0	0	Yu Chang Investment Co., Ltd.	Yu Chang Investment is 100% owned by Yu ShengInvestment.
Representative: Su-Moon Wu	3,548,859	1.07	0	0	0	0
Silver Top Investment Representative: Si, Run-Hong	10,264,000	3.08	0	0	0	0	Si, Run-Hong	Representative of Silver top investment
	12,262,303	3.68	0	0	0	0
Morgan Stanley & Co. International Plc	6,091,000	1.83					None	None
Old Labor Pension Fund - Taiwan	5,891,700	1.77	0	0	0	0	None	None
Dong, Ding-Yu	5,265,766	1.58	0	0	0	0	None	None
Tang, Shao-Hao	4,795,963	1.44	0	0	0	0	None	None

10 Shareholding proportion of EMC to Investees:

Investees by equity method	The Company’s	Holdings	Direct and Indirect Holding of Directors and Managers of EMC	Direct and Indirect Holding of Directors and Managers of EMC	Total Holdings	Total Holdings
	Shares	%	Shares	%	Shares	%
EMC Overseas HoldingInc.	36,256,950	100.00	0	0	36,256,950	100.00
Grand Wuhan Incorporated	20,020,000	100.00	0	0	20,020,000	100.00
EMC INTERNATIONAL HOLDING INCORPORATED.	26,310,000	100.00	0	0	26,310,000	100.00
Li ChengTechnologyCo.,Ltd.	16,412,918	33.50	250,000	1.53	16,662,918	35.03

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IV. CAPITAL OVERVIEW

1. Capital and Shares

1.1. Issued Shares

Month/Year	Par Value	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital	Remarks	Remarks
		Shares	Amount (NT$)	Shares	Amount (NT$)	Sources of Capital	Capital Increased by Assets other than Cash	Other
Nov 2019	10	400,000,000	4,000,000,000	319,708,064	3,197,080,640	Conversion of Corporate Bond	None	Note 1
Aug 2010	10	400,000,000	4,000,000,000	324,868,357	3,248,683,570	Conversion of Corporate Bond	None	Note 2
Nov 2010	10	400,000,000	4,000,000,000	332,918,299	3,329,182,990	Conversion of Corporate Bond	None	Note 3

Note: Dates and letter numbers capital increase approvals received from the regulatory authority:

21 April 2017 Financial Supervisory Commission Ruling Ref No. 1060012443 approved the issue of CB certificates. 14 Nov 2019 Ministry of Economic Affairs Jing-Sho-Shan-Zhi No. 10801157610.
21 April 2017 Financial Supervisory Commission Ruling Ref No. 1060012443 approved the issue of CB certificates. 17 Aug 2020 Ministry of Economic Affairs Jing-Sho-Shan-Zhi No. 10901154260.
21 April 2017 Financial Supervisory Commission Ruling Ref No. 1060012443 approved the issue of employees’ option certificates. 9 Nov 2020 Ministry of Economic Affairs Jing-Sho-Shan-Zhi No. 10901194470.

Type of Stock	Authorized Share Capital	Authorized Share Capital	Authorized Share Capital	Remarks
	Issued outstanding shares	Unissued shares	Total
Common Stock	332,918,299	267,081,701	600,000,000	None

1.1.1. Shelf registration: None

1.2. Composition of Shareholders

28 March 2022

Types Amounts	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Citizens	Foreign Institutions & Foreign Persons	Total
Number	5	20	246	21,665	405	22,341
Number of shares owned	33,586,008	20,141,237	66,998,850	69,134,925	143,057,279	332,918,299
% holding	10.09%	6.05%	20.12%	20.77%	42.97%	100.00%

1.3. Distribution Profile of Share Ownership

1.3. Distribution Profile of Share Ownership	1.3. Distribution Profile of Share Ownership	1.3. Distribution Profile of Share Ownership	1.3. Distribution Profile of Share Ownership
28 March 2022
ShareholderOwnership	Number ofShareholders	Number of shares owned	Percentage ownership
1–999	14,356	1,631,419	0.49
1,000–5,000	6,491	11,343,068	3.41
5,001–10,000	639	4,874,204	1.46
10,001–15,000	177	2,161,299	0.65
15,001–20,000	137	2,454,450	0.74
20,001–30,000	109	2,700,560	0.81
30,001 – 40,000	62	2,188,244	0.66

60 -

40,001–50,000	34	1,543,581	0.46
50,001–100,000	95	7,061,957	2.12
100,001–200,000	69	9,852,652	2.96
200,001–400,000	61	17,498,648	5.26
400,001–600,000	29	14,660,612	4.40
600,001–800,000	14	9,624,168	2.89
800,001–1,000,000	11	9,650,597	2.90
1,000,001 and over	57	235,672,840	70.79
Total	22,341	332,918,299	100.00

Note: The Company does not issue any preferred shares.

1.4. Major Shareholders

1.4. Major Shareholders
		28 March 2022
Shareholders	Totalshares owned	Ownership (%)
Yu Chang Investment Co., Ltd.	25,471,477	7.65
New Labor Pension Fund-Taiwan	22,722,700	6.83
Standard Chartered International Commercial Bank, the MTX Stable Emerging Market Leader fund.	14,937,000	4.49
Si, Run-Hong	12,262,303	3.68
Yu Sheng Investment Co., Ltd.	10,485,000	3.15
Silver Top Investment	10,264,000	3.08
Morgan Stanley & Co. International Plc	6,091,000	1.83
Old Labor Pension Fund - Taiwan	5,891,000	1.77
Ding-Yu Dong	5,265,766	1.58
Tang, Shao-Hao	4,795,963	1.44

1.5. Net worth, earnings, dividends, and market price per common share

	Unit: NT$Dollar	Unit: NT$Dollar	Unit: NT$Dollar	Unit: NT$Dollar	Unit: NT$Dollar
Items	Year		2020	2021	1 Jan 2022 – 31 Mar 2022
Market Price per Share (Note 1)	Highest		183.50	293.50	298.00
	Lowest		90.00	141.50	241.00
	Average		145.16	204.60	270.86
Net Worth per Share(Note 2)	Before Distribution		50.28	59.33	64.97
	After Distribution		43.28	(Note 9)	-
Earnings per Share	Weighted Average Shares		325,593,929	332,918,299	332,918,299
	Adjusted Earningsper Share(Note 3)		11.33	16.50	3.98
Dividends per Share	Cash Dividend		7.0	(Note 9)	Not applicable
	Stock Dividend	-	-	(Note 9)	Not applicable
		-	-	(Note 9)	Not applicable
	Accumulated Undistributed Dividend (Note 4)		-	-	Not applicable
Return on	Price/Earnings Ratio(Note 5)		12.81	12.40	Not applicable
	Price/Dividend Ratio(Note 6)		20.73	(Note 9)	Not applicable
Investment	Cash Dividend Yield(Note 7)		4.82%	(Note 9)	Not applicable

Note:

List the highest and lowest prices of each common share, and calculate the average price per common share by using the turnover and transaction volume in each year.
Based on the total number of issued outstanding shares at end of each year. Net worth per share before and after distribution is calculated based on the profit distribution resolved in the annual general shareholders’ meeting held in the next year.
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The adjusted EPS is calculated based on the number of shares after the stock dividends being distributed.
Should the terms of issuance allow the earnings to be accumulated and not to be distributed until the year the Company realizes profits, the total amount of accumulated undistributed dividend need to be disclosed.
Price/Earnings Ratio = Average closing share price of the period/ Earnings per share.
Price/Dividend ratio = Average closing share price of the period / Cash dividend per share.
Cash dividend yield = Cash dividend per share / average closing share price of that year.
Net worth per share and earnings per share are listed until the latest quarter financial statements audited by CPA. The other numbers are listed until the date the annual report being published.
To be resolved by the upcoming Year 2022 annual general shareholders’ meeting.

1.6. Dividend Policy and Execution

1. Dividend Policy

Apart from paying all its income taxes in the case where there are profits at the end of the year, the Company shall make up for accumulated losses in past years. Where there is still balance, ten per cent (10%) of which shall be set aside by the Company as legal reserve. The Company shall also set aside certain portion of the profits as special reserve as required by Article 41 of the Securities and Stock Exchange Act, or by resolutions of Shareholders’ Meetings.

While the Company distributes earnings to the shareholders, the paid-out amount shall be more than ten per cent (10%) but less than seventy per cent (70%) of the distributable earnings, which equals to earnings realized after deducting legal, special and all other required reserves, but together with undistributed profits from previous years.

Depending on the business operating results, the earnings to be distributed to shareholders shall be proposed by the Board of Directors, and submitted to the Shareholders’ Meeting and decided by the resolution from in the Shareholder’s Meeting.

Judging from the actual business circumstances, the Board of Directors may propose to adjust the amount of earnings to be distributed to shareholders, and submit to the Shareholders’ Meetings for the resolution to distribute.

1.6.1. Proposed dividend to be resolved in the upcoming 2021 Annual General Shareholders’ Meeting:

Year of Earnings	Date the Board Meeting Resolved to Distribute Earnings	Dividends	Dividends
		Cash Dividend (NT$)	Stock Dividend (NT$)
2021	23 Feb 2022	3,329,182,990 (NT$10per share)	0

Note: Cash dividend per share is calculated based on the total number of issued outstanding shares on 23 Feb 2022. This proposal is subjected to the resolution of the upcoming 2022 annual general shareholders’ meeting convened on 26 May 2022, and to be executed accordingly.

1.6.2. If the Dividend Policy Is Expected to Change Substantially: None

1.7. Effects on business performance and EPS resulted from stock distribution proposed by 2018 Annual General Shareholders’ Meeting:

Not applicable.

1.8. Employees’ Compensation and Directors’ Remuneration:

1.8.1. Employees’ Compensation and Directors’ Remuneration under Articles of Incorporation:
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In case the Company makes profits for the year, three per cent (3%) shall be allocated for the employees’ compensation, and no more than one point two per cent (1.2%) for the remuneration of Directors. However, in case there are accumulated losses carried on the accounting book of the Company, profits shall be reserved for the make-up of accumulated losses before distribution.

In case shares or cash is distributed as employees’ compensation, those employees can be distributed shall include the employees of affiliated enterprises meeting certain criteria. The distribution method shall otherwise be formed by the Board of Directors.

1.8.2. The discrepancy, if there is any, between the total amount of estimated employees’ compensation, Directors’ remuneration, stock dividends and total amount actually being paid:

Treated as the changes at the accounting estimate, and such changes are adjusted in the coming year.

1.8.3. Proposed employees’ compensation and Directors’ remuneration:

The 2021 employees’ compensation and Directors’ remuneration was resolved in the Board Meeting convened on 23 Feb 2022, and will be submitted to the 2022 shareholders' meeting for approval. The amounts and forms are listed below:

a. Employees’ compensation: NT$189,119,949 in cash
b. Directors’ remuneration: NT$63,039,983 in cash
c. Regarding the amount of employees’ compensation and Directors’ remuneration in cash or in shares, the discrepancy, if there is any, between the estimated amount and the amount being actually paid, and the reason for such discrepancy: None
d. Proposed employees’ compensation in shares as percentage of net income and total employees’ compensation: Not applicable
1.8.4. The total proposed amount of 2020 profits actually being paid as employees’ compensation and Directors’ remuneration in 2021:

remuneration in 2021:	remuneration in 2021:	remuneration in 2021:	remuneration in 2021:	remuneration in 2021:	remuneration in 2021:
Unit: NT$ Dollar
Item	Actual Amount Being Paid in 2021	Estimated Amount in 2020	Discrepancies	Reason	Adjustment
Directors’ and Supervisors’ Remuneration	43,589,005	43,589,005	0	Not	Not applicable
Employees’ Compensation	130,767,014	130,767,014	0	applicable

1.9. Share Buyback by the Company:

The Company did not buyback share in Year 2021 and in Year 2022 as of 28 March.

2. Corporate Bonds:

The company did not issue corporate bond in year 2021. Preferred Shares:None

3. Preferred Shares:

None

4. Issuance of Overseas Depository Receipts:

None

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5. Employees Stock Option:

None

6. Employee Restricted Stock Options and Share Issued for Merger or Acquisition: None

7. Fund utilization plans and status:

Not applicable

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V. OPERATIONAL HIGHLIGHTS

1. Business Activities

1.1. Business Scope

1.1.1. Current Business Scope
CC01080 Manufacturing of electronic components
CB01020 Manufacturing of business machines
CC01110 Manufacturing of computers and the peripherals
C801010 Basic chemical industry
C801990 Manufacturing of other chemical materials
C901990 Manufacturing of other non-metallic mineral products
F401010 International commerce
ZZ99999 Except where permits are required, to run operations not forbidden or limited by laws and regulations
1.1.2. Current products and services provided by the Company and subsidiaries
Copper Clad Laminates (CCLs) consumed by double-sided PCBs (Printed Circuit Boards)
Core CCLs and Prepreg (PP) consumed by multilayer PCBs
Mass Lamination Panel (Mass Lam)

1.1.3. Sales Breakdown

The factory of the Company was built in 1993, and its capacity was expanded in the mid of 2005. Since the inception of the Company, it has been focusing on the manufacturing and sales of CCLs and PP, and providing the Mass Lam service for the downstream PCB makers. The sales breakdown of major business segment of 2021 is as follows:

		Unit: NT$ thousands,%
Major Products	Revenue	Percentage of Revenue
CCLs	21,207,359	55.08%
PP	15,976,794	41.50%
Mass Lam	1,058,056	2.75%
Others	257,817	0.67%
Total	38,500,026	100.00%

1.1.4. Products and services planned to be developed and launched by the Company and subsidiaries

The Company will continue to develop eco-friendly products and create new applications for the said products to ensure the leading position in eco-friendly materials and maintain global number one ranking. Products under development at current stage:

a. High-frequency mmWave material for autonomous driving vehicle.
b. High voltage material adopted EV super charging battery.
c. Low loss substrate material for high-end AIP packaging.
d. With thermal conductivity and environmental-friendly high-speed transmission material.

1.2. Business Environment

1.2.1. Current industry situation and prospects

In year 2021, products of the Company were mainly sold in the domestic market of Taiwan, and customers

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located in Mainland China are served by the subsidiaries of the Company, Elite Electronic Materials (Zhongshan) Co., Ltd. and Elite Electronic Materials (Kunshan) Co., Ltd. The major exporting market was Korea. The Company expects that most of demand in year 2022 would still derive from Taiwan and mainland China. Korea would remain as the major exporting market. The Company set up a target to upgrade its product mix in 2022, aiming to increase the percentage of revenue from advanced products to 60% of the total revenue. The advanced products include, but not limited to, laminates with high-Tg, Br-free, and low CTE properties.

1.2.2. The supply chain analysis

Upstream Glass Fiber/ Glass Cloth Epoxy Phenolic Resin Copper Foil Polyimide Resin Production Process and Testing Equipment	Midstream Copper Clad Laminate Manufactruing of Rigid, Flexible, IC Substrate Lamination Assembly & Processing and Related Manufacturing	Dow nstream
		All Kinds of Electronic Products
	Lamination Assembly & Processing and Related Manufacturing
Production Process and Testing Equipment

1.2.3. Industry trends and competition

Consumer electronic devices, especially for handheld and wearable devices, are trending toward thinner, lighter, and easier to carry; meanwhile, incorporating multi-functions in one single device, furthermore, the trend of high frequency/high speed and green environmental materials are rising. Therefore, the applications of HDI (High-Density Interconnect) structure, high layer-count laminates, IC substrate, rigid-flexible PCBs are experiencing increase in demand. In the meantime, the evolution of wireless transmission and the emerging cloud services are also driving the changes of the laminate industry. In order to meet the demand for highspeed data transmission, more and more laminate products and base materials are created to serve for highspeed transmission purpose in the high-frequency bandwidth. Also, improving thermal reliability and dimensional reliability is a must for high-speed high-frequency radio signal transmission applications.

1.3. Technology Innovation and R&D Overview

Products and technologies the Company has successfully developed in previous three years:

Year 2019

1. New environmental-friendly laminates, consumed by 5G handheld devices,
providing ultra-low signal loss
2. Advanced ultra low loss eco-friendly laminates, used for 5G base stations,
3. Antenna laminate material consumed by millimeter wave and Sub 6G
4. Eco-friendly laminate materials for 400/800 switches.
5. Obtained collectively 20 patents from Taiwan, Mainland China, Japan, and the
United States

Year 2020

1. New eco-friendly laminates, consumed by 5G handheld devices, providing ultra-

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low signal loss 2. Out-door antenna substrate material consumed by 5G base-station. 3. High-end substrate material consumed by AIP and SIP package. 4. High frequency material consumed by mmWave laminate 5. Obtained collectively 36 patents from Taiwan, Mainland China, and the United States 1. RCC material adopted in high end 5G handheld devices. 2. High end substrate material adopted in SIP package. 3. High speed material for PCIe 5.0 and PCIe 6.0 Year 2021 4. High speed 800G switch continuously verified by customers. 5. Obtained collectively 33 patents from Taiwan, Mainland China, and the United States

1.4. Long-term and Short-term Business Plan

The Company conducts business with ethics and integrity in order to build a long-term cooperative relationship with customers. The long-term and short-term business plans that the management team makes are as follows:

1.4.1. Short-term Business Plan

a. Achieve the targets of the operating and financial budgets of Year 2022
b. Increase the percentage revenue derived from High-Tg low-CTE base materials, base materials consumed by electronic devices used for automotive vehicles, and thermal conductive base materials
c. Coordinate the sales team and customer service activities to better serve customers

1.4.2. Mid-and Long-term Business Plan

a. Expand the international market and enhance the long-term competitiveness of the company
b. Diversify the applications of the company’s products and diversify the sales channels

2. Overview of Market, Production, and Sales

2.1. Market Analysis

2.1.1. Sales regions of the Company’s products

In Year 2021, the Company’s products were mainly sold in Taiwan, Mainland China, and Korea. It is expected that the major market of the Company in Year 2022 would remain as the same. The percentage of sales for the Company’s products in Year 2021 is as follows:

Regions	Percentage of total sales
Taiwan	15.34%
Mainland China	76.85%
Others	7.81%
Total	100.00%

2.1.2. Domestic market share of major products

There are a lot of companies, including EMC, NYP, ITEQ, TUC and Taiwan Panasonic, producing FR-4 CCL, PP, and providing mass lamination service located in Taiwan in year 2021. According to Prismark, EMC is the global leader in halogen free market with 26% market share, and global CCL market share is 7%.

2.1.3. Future supply/demand situation and the prospects of the market

The demand for high-speed and high-frequency data transmission would continue to rise in the Taiwan market.

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2.1.4. The expected sales volume and the key assumption

Based on the actual sales volume, the expectation of the Company about the demand in the future, and the actual supply/demand situation in the first quarter of 2021, the Company expected the sales volume in year 2021 as follows:

Expected sales volume target:

Copper clad laminates (CCLs): 48 million sheets/year Prepreg (PP): 1.06 million rolls/year Mass Lam (M/L): 1.6 million panels/year

2.1.5. Positive factors, negative factors, and the Company’s measures to counteract the negative measures A. Positive factors
- CCLs are base materials for many sorts of electronic devices. The product life cycle is long, and at this moment, there is no product can replace the usage of CCLs.
- The penetration rate of halogen-free CCL is proliferating, and the market share is rising. Halogenfree products created much higher value for the Company.
- The Company has diversified the applications of its products, meeting the demand of different customers.
- The Company owns production base across the strait, and which are close to customers. In addition, the Company has established sales representative offices in Korea and the United States.
B. Negative factors
- The price volatility of raw materials can be significant, and therefore, has a negative impact on the gross margin of the Company.
C. Company’s measures to counteract the negative factors
- Increase the sales percentage derived from high value-added products.
- Diversify the sources of raw materials to lower the risk. In addition, negotiate with vendors based on the total volume needed for all production sites of the Company to increase the bargaining power of the Company, in order to secure a consistent volume of supply with a relatively stable price.

2.2. Applications and Production Process of Major Products

2.2.1. Applications of major products
a. CCLs: used for the production of double-sided PCBs and multi-layer PCBs
b. Prepreg: used for the production of multi-layer PCBs
c. Mass lamination: an OEM service provided to PCB makers for the production of multi-layer PCBs.

2.2.2. Production process of major products

==> picture [495 x 82] intentionally omitted <==

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

Mixing & Impregnation Dry up Lay up & Lamination Inspection Finished
compounding Composing products
Chemical resins, Glass fiber
solvents, fabrics Copper foils
additives, etc.
----- End of picture text -----

2.3. Source of Major Raw Materials

Major raw materials of the Company include, but not limited to, copper foils, glass fiber fabrics, and epoxy

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resins.

Table of major raw material sources and supply situations

Raw Materials	Major Sources	Supply Situation
Copper foil	Domestic	Normal
Glass fiber fabrics	Japan,domestic	Normal
Epoxyresins	Japan,domestic	Normal

2.4. Major suppliers or customers who account for 10% (inclusive) or above of purchases/or revenues in recent two years

2.4.1. Suppliers who account for 10% (inclusive) or above of purchases in recent two years:

								Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
	Year 2020				Year 2021			FirstQuarter of Year 2022
Name	Purchase amount	Percentage of total purchase	Subsidiary or affiliates of the Company	Name	Purchase amount	Percentage of total purchase	Subsidiary or affiliates of the Company	Name	Purchase amount	Percentage of total purchase	Subsidiary or affiliates of the Company
A	1,806,665	11%	No	A	2,532,857	10%	No	A	696,932	12%	No
Others	14,905,298	89%	No	Others	21,881,742	90%	No	Others	5,109,600	88%	No
Net amount	16,711,963	100%		Net sales	24,414,599	100%		Net sales	5,806,532	100%

The reasons why percentage of purchase of major suppliers has changed: None

2.4.2. Customers who account for 10% (inclusive) or above of revenues in recent two years:

Unit: NT$ thousands

									Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
	Year 2020				Year 2021				FirstQuarter of Year 2022
Name	Sales revenue	Percentage of total revenue	Subsidiary or affiliates of the Company	Name	Sales revenue	Percentage of total revenue	Subsidiary or affiliates of the Company	Name	Sales revenue	Percentage of total revenue	Subsidiary or affiliates of the Company
A	3,330,318	12%	No	A	4,523,496	12%	No	A	1,086,233	11%	No
Others	23,870,468	88%	No	Others	33,976,530	88%	No	Others	8,832,227	89%	No
Net sales	27,200,786	100%		Net sales	38,500,026	100%		Net sales	9,918,460	100%

The reasons why percentage of sales of major customers has changed: None

2.5. Volume and value of production in recent two years

Unit: NT$ thousands

Unit	Year 2020	Year 2020	Year 2021	Year 2021
	Volume	Value	Volume	Value
000 sheets	38,217	12,052,259	50,884	17,740,627
000 meters	153,257	8,568,460	183,376	11,041,026
000 SF	4,237	771,979	6,428	1,082,612
		21,392,698		29,864,265

2.6. Sales volume and revenue in recent two years

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Unit: NT$ thousands

Unit	Year 2020	Year 2020	Year 2020	Year 2020	Year 2021	Year 2021	Year 2021	Year 2021
	Domestic Sales		Export Sales		Domestic Sales		Export Sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
000 sheets	26,303	11,565,985	5,749	2,443,840	32,376	17,600,730	7,071	3,606,629
000 meters	78,704	9,917,438	14,702	2,417,251	103,519	12,995,948	19,210	2,980,846
000 SF	3,874	620,414	883	138,010	3,856	647,082	2,697	410,974
	-	43,817	-	54,031		35,878	-	221,939
		22,147,654		5,053,132		31,279,638		7,220,388

3. Information about Employees

Year	Year	Year 2020	Year 2021	31 March 2022
Number of Employees
Number of Employees	Direct	2,539	2,851	3,005
	Indirect	708	836	866
	Total	3,247	3,687	3,871
Average age		34.1	33.9	34.1
Averageyears of service		5.3	4.7	4.6
Breakdown	of Educational Level(%)
Distribution of Educational Level	Ph.D.	0.2	0.3	0.2
	Master	4.9	4.9	4.9
	Bachelor	39.7	49.5	49.1
	High School	52.8	41.9	41.9
	Below High School	2.4	3.4	3.9

4. Environmental Protection Measures and Expenses

4.1. License or permission granted by the regulatory authority to install equipment, the fee paid to the regulatory authority for prevention of pollution, and the license number of dedicated person responsible for environmental protection


	Hsinchu Factory
License	Expiry Date	License Number	License Number of Dedicated Person
Production process of PCBs (M01)	18 Aug 2026	Hsinchu County Huan-Kon-Tsao-Zhen-Zhi No. J0763-13	(2016) Huan-Shu-Hsun-Zhen-Zhi No. FA100460
Heating process of heating medium (M02)	21 Sep 2024	Hsinchu County Huan-Kon-Tsao-Zhen-Zhi No. J0764-07
Heating process of heating medium (M04)	19 Apr 2026	Hsinchu County Huan-Kon-Tsao-Zhen-Zhi No. J0763-03
Production process of other electronic components(M05)	12 Apr 2026	Hsinchu County Huan-Kon-Tsao-Zhen-Zhi No. J1009-04
Heating process of heating medium (M06)	19 Nov 2022	Hsinchu County Huan-Kon-Tsao-Zhen-Zhi No. J1017-03

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Water pollution control permit	19 Dec 2023	Hsinchu County Huan-Pai-Hsu-Zhi No. 00424-11	(2018) Huan-Shu-Hsun-Zhen-Zhi No. GA130492
Business waste cleaning plan	Good till revision	Fu-Huan-Yeh-Zhi No. 1108651246	(2017) Huan-Shu-Hsun-Zhen-Zhi No. HB011022
	Guanyin Factory
License	Expiry Date	License Number	License Number of Dedicated Person
Production process of other electronic components(M01)	14 July 2025	Fu-Huan-Kon-Tsao-Zhen-Zhi No. H6761- 00	(2008) Huan-Shu-Hsun-Zhen-Zhi No. FA100052
Heating process of heating medium (M02)	26 Sep 2026	Fu-Huan-Kon-Tsao-Zhen-Zhi No. H5122- 05
Water pollution control permit (Plant 1 & 3)	14 Jun 2022	Taoyun City Huan-Pai-Hsu-Zhi No. H1984-07	(2015) Huan-Shu-Hsun-Zhen-Zhi No. GA230798
Water pollution control permit (Plant 2)	16 Jul 2022	Taoyun City Huan-Pai-Hsu-Zhi No. H3094-02	Not applicable
Business waste cleaning plan (Plant 1 & 3)	Good till revision	Fu-Huan-Yeh-Zhi No. 1060305324	(2015) Huan-Shu-Hsun-Zhen-Zhi No. HA050746
Business waste cleaning plan (Plant 2)	Good till revision	Fu-Huan-Yeh-Zhi No. 1060048502	(2017) Huan-Shu-Hsun-Zhen-Zhi No. HB180146

4.2. Expenses on environment protection

4.2. Expenses on environment protection
	Unit: NT$ thousands
Item	Amount
Waste treatment fee for earth and underground water	269
Charges forprevention of airpollution from fixedpollution source	20,420
Treatment ofpolluted water	1
Treatment cost of waste water	2,700
Treatment cost of business waste	92,564
Total	115,954

4.3. List of equipment and investment of the Company for prevention of pollution and their respective purpose

Equipment	Number	Acquisition Date	Purpose
Dust collector	One	31 Aug2018	Prevention ofpollution
RTO equipment	One	31 July2017	Prevention ofpollution
MIL-1040 RTO equipment	One	31 Dec 2017	Prevention ofpollution
No. 2 RTO Factory	One	31 Dec 2013	Prevention ofpollution
RTO equipment – Zone 3	One	29 Dec 2011	Prevention ofpollution
RTO equipment improvement – Zone 3	One	30 Nov 2014	Prevention ofpollution
PLC Scan, Monitoring & Controlling system for hazardous chemical substances	One	31 Jan 2014	Prevention of pollution
Improvement of equipment for waste water treatment	One	30 Sep2010	Prevention ofpollution
SCR-6 pumping system for exhaust air	One	30 Apr 2007	Prevention ofpollution
180CM treatment equipment for exhaust air form black oxide treatment	One	30 Sep 2006	Prevention of pollution
Improvement of equipment for waste water treatment	One	12 Apr 2006	Prevention ofpollution
Equipment for waste water treatment	One	28 Feb 2006	Prevention ofpollution
Exhaust air monitoring system – Plant 2	One	22 Sep2000	Prevention ofpollution

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Flow meter of waste water – Plant 2	One	31 Aug2000	Prevention ofpollution
Flow meter of waste water	One	24 Sep1997	Prevention ofpollution
Exhaust fan and water circulation equipment for etching room	One	31 Oct 1994	Prevention of pollution
Waste water storage of etching room	One	30 Sep1993	Prevention ofpollution

4.4. Process the Company takes to reduce pollution, and to deal with the pollution related dispute in latest two years till the publishing of the annual report:

None

4.5. Loss or penalty due to pollution in latest two years till the publishing of the annual report: None
4.6. Effects on the profit, competitiveness, and capital expenditure plan of the Company from the current environment pollution and expected substantial capital expenditure for environmental protection over next two years:

None

5. Employee Welfare

5.1. Current Agreements with Employees and Employee Welfare

5.1.1. Employee welfare procedures
a. The company has an employee welfare committee that, in compliance with laws and regulations, appropriates welfare funds, and manages various welfare activities for employees. The said activities include, but are not limited to, employee domestic and overseas travelling trips. The Company also organizes a variety of clubs and games on periodical basis. In addition, the Company provides subsidy to individual employee for vacation travelling.
b. The company provides holiday bonuses for traditional festival holidays, birthdays, weddings, and funerals for its employees.
c. The company organizes and holds training program for its employees on periodical basis.
d. The company provides free health checkup, labor insurance program, health insurance program, and a variety of group insurance programs for employees to choose among from.
e. The company organizes year-end party on annual basis.
f. The company has an employee bonus system, allowing employees to participate in the sharing of management results.
g. The company had issued employee stock option certificates.

5.1.2. Employee training programs

The company provides its employees training programs designed and organized both internally and externally. A study report is required to submit for each attendee of the training courses. The training programs are integrated with the promotion system of the company. The cost for employee training in year 2021 was NT$1,698 thousands. The total training hours amounted to 18,078 hours, and on the average, each employee attended a training program for 17.27 hours.

5.1.3. Pension and retirement plan

In order to encourage employees to provide professional services and stabilize their retirement lives, EMC has set up an "Employee Retirement Scheme" to provide each employee with a labor pension. At the same time, the "Pension Supervision and Administration Commission" was established in accordance with the law to be responsible for the implementation of the old pension management and retirement measures, and the old pension

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was deposited to the old pension reserve account of the Bank of Taiwan on a monthly basis at the 2% monthly salary of each senior pensioner with the old pension system. Actuaries are also commissioned annually to submit actuarial reports to ensure full allocation to protect the rights and interests of employees. Pension funds are appropriated monthly, 6% of the monthly salary to individual pension accounts for those who are qualified or voluntarily choose the new pension fund system in accordance with the “Labor Pension Act”. If an employee meets the statutory retirement conditions, he or she may apply for retirement, and after completing the procedures, those who have the old system of seniors can receive the pension of the old system, and the pension of the personal special account can also be withdrawn according to law after reaching the age of 60.

5.1.4. The agreement between labor and management All regulations and procedures regarding labor and management relationship are implemented in good condition pursuant to the “Handbook of EMC Employees” and related laws. Since the inception of the Company, there has never been severe dispute between the labor and the management team. In addition, the Company has established an internal communication channel for employees and encourage employees to express their opinions and suggestions to the management team, in order to achieve a better cooperative relationship between labor and the management.
5.1.5. Various measures regarding protection of employees’ rights Each department of the Company has established protocols and procedures to protect employees’ rights, especially to ensure a safety working environment. In addition, the Company value the opinions and suggestions from employees, and has dedicated personnel to handle such opinions and suggestions in a way as appropriate as possible.
5.2. Loss occurs due to labor issues in the latest year until the publishing of this annual report: None

6. Information and communication security management:

6.1.1 List the security risk management structure, the security policy, the specific management plan and the resources invested in the security management of The Security.

6.1.1.1 Security risk management structure:

The company has set up a security risk management team, the president as the convener, the information department at the next level supervisor as the deputy convener, the team members include the heads of various departments and the communication network liaison personnel.

6.1.1.2 The unit responsible for enterprise information security is the IT depatment, which coordinates the security affairs and is responsible for formulating internal information security policies, planning and implementing information security operations and security policies.
6.1.2 The company's audit office is the supervision unit of information security supervision, and the audit office is responsible for supervising the implementation of internal security, regularly checking if there is any defect found, the relevant improvement plan and specific actions are proposed by the responsible unit, and the improvement results are tracked regularly to reduce the internal security risks.
6.1.2.1 Information security policy:
6.1.2.2 In order to improve the security and stable operation of the company's information and communication operations, provide secure information and communication services, and ensure the confidentiality,
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integrity and availability of information assets, the information security policy is specially formulated as the highest guiding principle of the company's information and communications security management.
6.1.2.3 All colleagues of the company have the obligation and responsibility to comply with the laws and regulations of information security, maintain the security of enterprise information, ensure the security and operation of the company's data, information systems, equipment and networks, avoid all kinds of improper use, leakage, tampering, theft, destruction and other accident threats, and reduce possible harm.

6.1.3 Physical management solutions:

At present, the company has not insured information security protection insurance, but has established information security policies and other related operational specifications, which are implemented in accordance with the operational specifications for physical and environmental security, network and computer security, system access control, system sustainable operation, information security publicity and education and training. In fiscal 2021, the company also reviewed the corporate information environment through external consultants, and on December 21, 2021, the board of directors reported the information security risk assessment to further enhance information security operations and ensure the company's continuous operation capabilities.

6.2 Loss occurs due to significant security risk issues in the latest year until the publishing of this annual report:None

7.Important Contracts and Agreements

None

74 -

VI. FINANCIAL INFORMATION

1. Five-Year Financial Summary

1.1. Condensed Balance Sheet and Statements of Comprehensive Income – IFRS

1.1.1. Condensed Consolidated Balance Sheet

Unit: NT$ thousands

Year Item	Year Item	2017	2018	2019	2020	2021	31 Mar 2022
Current assets		15,480,404	16,232,502	18,833,258	19,568,557	25,843,744	27,608,365
Property,plant and equipment		4,803,458	4,937,424	5,857,817	6,531,008	8,468,582	10,232,337
Intangible assets		7,344	7,388	10,316	671,900	669,410	698,778
Other assets		509,508	785,149	1,002,940	1,085,341	1,583,325	1,507,379
Total assets		20,800,714	21,962,463	25,704,331	27,856,806	36,565,061	40,046,859
Current liabilities	Before distribution	6,947,012	7,201,783	10,321,431	9,613,785	14,485,232	15,872,635
	After distribution	8,481,344	8,416,462	12,239,679	11,944,213	(Note)	(Note)
Non-current liabilities		1,970,190	2,845,890	1,846,331	1,487,512	2,305,942	2,522,097
Total liabilities	Before distribution	8,917,202	10,047,673	12,167,762	11,101,297	16,791,174	18,394,732
	After distribution	10,451,534	11,262,352	14,086,010	13,431,725	(Note)	(Note)
Equityattributable to	owners of the Company	11,871,679	11,900,197	13,519,931	16,738,630	19,752,846	21,628,671
Common stock		3,196,524	3,196,524	3,197,080	3,329,183	3,329,183	3,329,183
Capital surplus		623,721	623,721	628,858	1,868,661	1,868,661	1,868,661
Retained earnings	Before distribution	8,288,626	8,503,506	10,526,386	12,297,677	15,458,911	16,782,833
	After distribution	6,754,294	7,288,827	8,608,138	9,967,249	(Note)	(Note)
Other equity		(237,192)	(423,554)	(832,393)	(756,891)	(903,909)	(352,006)
Treasurystocks		-	-	-	-	-	-
Non-controllinginterests		11,833	14,593	16,638	16,879	21,041	23,456
Total equity	Before distribution	11,883,512	11,914,790	13,536,569	16,755,509	19,773,887	21,652,127
	After distribution	10,349,180	10,700,111	11,618,321	14,425,081	(Note)	(Note)

Note: The distribution of 2021 earnings is subject to the approval at the upcoming 2022 Annual General Shareholders’ Meeting.

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1.1.2. Condensed Consolidated Statements of Comprehensive Income

Unit: NT$ thousands, except earnings per share

Year Item	2017	2018	2019	2020	2021	31 Mar 2022
Operatingrevenues	23,609,983	22,890,928	24,865,522	27,200,786	38,500,026	9,918,460
Grossprofit	5,827,978	4,576,250	6,100,303	7,040,029	10,068,554	2,477,846
Operatingincome(losses)	4,006,558	2,755,333	4,079,550	4,683,451	6,922,620	1,650,992
Non-operatingincome(expenses)	21,894	71,537	124,276	160,112	(10,724)	17,475
Income before tax	4,028,452	2,826,870	4,203,826	4,843,563	6,911,896	1,668,467
Income from continuingoperations	4,028,452	2,826,870	4,203,826	4,843,563	6,911,896	1,668,467
Loss from discontinued operations	-	-	-	-	-	-
Net income	2,795,176	1,754,433	3,245,301	3,694,270	5,500,157	1,325,520
Other comprehensive income, net	(108,679)	(188,823)	(412,750)	76,198	(148,742)	552,720
Total comprehensive income	2,686,497	1,565,610	2,832,551	3,770,468	5,351,415	1,878,240
Net income attributable to the owner of the Company	2,790,957	1,751,378	3,240,845	3,688,999	5,493,218	1,323,922
Net income attributable to non-controlling interests	4,219	3,055	4,456	5,271	6,939	1,598
Total comprehensive income attributable to the owner of the Company	2,682,420	1,562,850	2,828,721	3,765,041	5,344,644	1,875,825
Total comprehensive income attributable to non-controllinginterests	4,077	2,760	3,830	5,427	6,771	2,415
Earningsper share(NT$/share)	8.74	5.48	10.14	11.33	16.50	3.98

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1.2. Condensed Balance Sheet and Statements of Comprehensive Income – IFRS (Stand-alone basis)

1.2.1. Condensed Stand-Alone Balance Sheet - IFRS

Unit: NT$ thousands

						Unit: NT$ thousa
Year Item		2017	2018	2019	2020	2021
Current assets		4,517,524	3,414,869	4,518,871	4,816,937	6,066,071
Property,plant and equipment		2,141,028	2,126,016	2,015,030	2,007,189	1,957,319
Intangible assets		2,795	4,160	5,844	18,019	41,094
Other assets		9,792,430	12,139,006	13,722,965	15,084,715	18,221,193
Total assets		16,453,777	17,684,051	20,262,710	21,926,860	26,285,677
Current liabilities	Before distribution	2,616,366	2,939,988	5,441,993	3,968,647	4,938,265
	After distribution	4,150,698	4,154,667	7,360,241	6,299,075	(Note)
Non-current liabilities		1,965,732	2,843,866	1,300,786	1,219,583	1,594,566
Total liabilities	Before distribution	4,582,098	5,783,854	6,742,779	5,188,230	6,532,831
	After distribution	6,116,430	6,998,533	8,661,027	7,518,658	(Note)
Equityattributable to	owners of the Company	11,871,679	11,900,197	13,519,931	16,738,630	19,752,846
Common stock		3,196,524	3,196,524	3,197,080	3,329,183	3,329,183
Capital surplus		623,721	623,721	628,858	1,868,661	1,868,661
Retained earnings	Before distribution	8,288,626	8,503,506	10,526,386	12,297,677	15,458,911
	After distribution	6,754,294	7,288,827	8,608,138	9,967,249	(Note)
Other equity		(237,192)	(423,554)	(832,393)	(756,891)	(903,909)
Treasurystocks		-	-	-	-	-
Non-controllinginterests		-	-	-	-	-
Total equity	Before distribution	11,871,679	11,900,197	13,519,931	16,738,630	19,752,846
	After distribution	10,337,347	10,685,518	11,601,683	14,408,202	(Note)

Note: The distribution of 2021 earnings is subject to the approval at the upcoming 2022 Annual General Shareholders’ Meeting.

77 -

1.2.2. Condensed Stand-Alone Statements of Comprehensive Income - IFRS

Unit: NT$ thousands, except earnings per share

Year Item	2017	2018	2019	2020	2021
Operatingrevenues	6,181,352	6,221,721	7,186,702	6,930,636	9,189,939
Grossprofit	1,009,314	740,996	1,316,362	1,368,523	2,085,543
Operatingincome(losses)	380,576	185,173	591,708	383,753	739,685
Non-operatingincome(expenses)	3,079,457	2,233,339	3,062,813	3,800,791	5,312,153
Income before tax	3,460,033	2,418,512	3,654,521	4,184,544	6,051,838
Income from continuingoperations	3,460,033	2,418,512	3,654,521	4,184,544	6,051,838
Loss from discontinued operations	-	-	-	-	-
Net income	2,790,957	1,751,378	3,240,845	3,688,999	5,493,218
Other comprehensive income, net	(108,537)	(188,528)	(412,124)	76,042	(148,574)
Total comprehensive income	2,682,420	1,562,850	2,828,721	3,765,041	5,344,644
Earningsper share(NT$/share)	8.74	5.48	10.14	11.33	16.50

1.3. Names and Opinions of Independent Auditors in Recent Five Years

Year	Name of CPA	Auditingopinion
2017	Calvin C. Y. Chiang& Celia Chen	Unqualified opinion
2018	Calvin C. Y. Chiang& Yi-Chun,Chen	Unqualified opinion
2019	Calvin C. Y. Chiang& Yi-Chun,Chen	Unqualified opinion
2020	Yi-Chun,Chen & Calvin C. Y. Chiang	Unqualified opinion
2021	Yi-Chun,Chen & Calvin C. Y. Chiang	Unqualified opinion

Should the CPA change in recent five years, the reason for such change: Due to the internal job rotation of the auditing firm KPMG, the CPA changed in year 2017 and year 2018.

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2. Financial Ratio Analysis for Recent Five Years

2.1. Financial Ratio Analysis (consolidated)

Item	Year	2017	2018	2019	2020	2021	31 Mar 22
Financial structure	Ratio of liabilities to assets (%)	42.87	45.75	47.34	39.85	45.92	45.93
	Ratio of long-term capital to property, plant and equipment(%)	275.20	274.84	242.24	265.38	247.13	219.36
Liquidity analysis	Current ratio (%)	222.84	225.40	182.47	203.55	178.41	173.94
	Quick ratio (%)	186.10	194.72	154.33	165.04	140.68	139.44
	Interest coverage ratio (times)	116.61	86.89	90.31	80.76	91.56	53.45
Operating ability	Receivables turnover (times)	3.09	3.03	2.96	2.84	3.32	2.98
	Average collection period (days)	118.12	120.46	123.31	128.52	109.93	122.48
	Inventory turnover (times)	7.57	7.63	7.34	6.10	6.20	5.44
	Payables turnover (times)	3.48	3.62	3.53	3.50	4.07	3.72
	Averages sales days (days)	48.21	47.83	49.72	59.83	58.87	67.09
	Property, plant and equipment turnover (times)	4.92	4.64	4.24	4.16	4.55	3.88
	Total assets turnover (times)	1.14	1.04	0.97	0.98	1.05	0.99
Profitability analysis	Return on total assets (%)	14.11	8.33	13.77	13.98	17.26	3.53
	Return on shareholders’ equity (%)	24.96	14.74	25.50	24.39	30.11	6.40
	Ratio of pre-tax income to paid-in capital (%)	126.03	88.44	131.49	145.49	207.62	50.12
	Ratio of net income to sales (%)	11.84	7.66	13.05	13.58	14.29	13.36
	Earnings per share (NT$/share)	8.74	5.48	10.14	11.33	16.50	3.98
Cash flow	Cash flow ratio (%)	44.05	28.97	23.89	36.59	27.76	11.31
	Cash flow adequacy ratio (%)	144.58	139.30	120.47	92.09	78.25	75.25
	Cash reinvestment ratio (%)	8.06	2.71	5.91	6.62	6.03	5.89
Leverage	Operating leverage	1.63	1.98	1.78	1.81	1.73	1.80
	Financial leverage	1.01	1.01	1.01	1.01	1.01	1.02

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2.2. Financial Ratio Analysis (Stand-Alone)

Item	Year	2017	2018	2019	2020	2021
Financial Structure	Ratio of liabilities to assets (%)	27.85	32.71	33.28	23.66	24.85
	Ratio of long-term capital to property, plant and equipment(%)	616.67	637.49	676.30	849.31	1,046.71
Liquidity Analysis	Current ratio (%)	172.66	116.15	83.04	121.37	122.84
	Quick ratio (%)	146.45	94.41	68.19	94.10	98.41
	Interest coverage ratio (times)	101.58	79.86	96.85	181.48	670.38
Operating Ability	Receivables turnover (times)	3.01	2.85	2.95	2.87	3.65
	Average collection period (days)	121.26	128.07	123.72	127.17	100.00
	Inventory turnover (times)	8.08	8.12	8.12	5.88	6.21
	Payables turnover (times)	3.51	3.45	3.36	3.14	3.66
	Averages sales days (days)	45.17	44.95	44.95	62.07	58.77
	Property, plant and equipment turnover (times)	2.89	2.93	3.57	3.45	4.70
	Total assets turnover (times)	0.38	0.35	0.35	0.32	0.35
Profitability Analysis	Return on total assets (%)	18.10	10.40	17.24	17.58	22.82
	Return on shareholders’ equity (%)	24.95	14.73	25.50	24.38	30.11
	Ratio of pre-tax income to paid-in capital (%)	108.24	75.66	114.31	125.69	181.78
	Ratio of net income to sales (%)	45.15	28.15	45.10	53.23	59.77
	Earnings per share (NT$/share)	8.74	5.48	10.14	11.33	16.50
Cash Flow	Cash flow ratio (%)	101.49	-11.07	34.96	80.04	49.09
	Cash flow adequacy ratio (%)	108.00	79.74	86.83	86.05	84.08
	Cash reinvestment ratio (%)	7.11	-10.77	3.96	6.09	0.39
Leverage	Operating leverage	3.82	6.61	3.08	5.07	3.67
	Financial leverage	1.10	1.20	1.07	1.06	1.01

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The Formula used for the Calculation of Numbers in the Table Above:

1. Financial Structure

(1) Liabilities to assets ratio = Total liabilities / Total assets
(2) Long-term capital to property, plant and equipment ratio = (Net shareholders' equity + Long-term liabilities) / Net value of property, plant and equipment

2. Liquidity Analysis

(1) Current ratio = Current assets / Current liabilities
(2) Quick ratio = (Current assets - Inventory - Prepaid expenses) / Current liabilities
(3) Interest coverage ratio = Net income before income tax and interest expenses / Interest expenses

3. Operating Ability

(1) Receivables turnover (including accounts and notes receivable) = Net sales / Average receivables (including accounts and notes receivable)
(2) Average collection days = 365/ Receivables turnover
(3) Inventory turnover = Costs of goods sold / Average inventory
(4) Average sales days = 365 / Inventory turnover
(5) Payables turnover (including accounts and notes payable) = Costs of goods sold / Average payables (including accounts and notes payable)
(6) Property, plant and equipment turnover ratio = Net sales / Net value of property, plant and equipment
(7) Total assets turnover ratio = Net sales / Total assets

4. Profitability Analysis

(1) Return on assets = [Net income +Interest expenses × (1-Tax rate)] / Average total assets
(2) Return on shareholders' equity =Net income / Average shareholders' equity
(3) Net income to sales ratio = Net income / Net sales
(4) Earnings per share = (Net income attributable to owner of the Company - Preferred stock dividend) / Weighted average number of outstanding shares

5. Cash Flow

(1) Cash flow ratio = Cash flows from operating activities / Current liabilities
(2) Cash flow adequacy ratio = Net cash flow from operating activities for the past 5 years / (Capital expenditures + Increase in inventory + Cash dividends) for the past 5 years
(3) Cash reinvestment ratio = (Net cash flow from operating activities - Cash dividends) / (Gross value of property, plant and equipment + Long-term Investment + Other noncurrent assets + Working capital)

6. Leverage

(1) Operating leverage = (Net sales - Variable operating costs and expenses) / Operating income
(2) Financial leverage = Operating income / (Operating income-Interest expenses)
81 -

3. Review Report of the Audit Committee

To the 2022 General Shareholders’ Meeting of Elite Material Co., Ltd.,

In accordance with Article 219 of the Company Act, we have examined the Business Report, the Resolution for Allocation of Surplus Profit, the Financial Statements submitted by the Board of Directors for the year ending 2021 which had been audited by independent auditors, Ms. Chen, YiChun and Mr. Calvin C. Y. Chiang of KPMG, and the auditing report signed by the said independent auditors, and found them in order. We thereby submit the report.

==> picture [170 x 67] intentionally omitted <==

Convener of the Audit Committee of Elite Material Co., Ltd.

23 February 2022

4. Year 2021 Stand-Alone Financial Report:

Please refer to ANNEX I

5. Year 2021 Consolidated Financial Report Reviewed and Attested by CPA: Please refer to ANNEX II

6. Impact of the Financial Distress Occurred to the Company and Affiliates in Recent Years until the Annual Report Being Published:

None
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VII. REVIEW AND ANALYSIS OF THE FINANCIAL CONDITION, PERFORMANCE, AND RISK MANAGEMENT

1. Review and Analysis of Financial Condition

Unit: NT$ thousands

Year Item	2021	2020	Difference	Difference
			Dollar Amount	%
Current asset	25,843,744	19,568,557	6,275,187	32.07
Property,plant and equipment	8,468,582	6,531,008	1,937,574	29.67
Intangible assets	669,410	671,900	(2,490)	(0.37)
Other assets	1,583,325	1,085,341	497,984	45.88
Total assets	36,565,061	27,856,806	8,708,255	31.26
Current liabilities	14,485,232	9,613,785	4,871,447	50.67
Non-current liabilities	2,305,942	1,487,512	818,430	55.02
Total liabilities	16,791,174	11,101,297	5,689,877	51.25
Common stock	3,329,183	3,329,183	0	0.00
Capital surplus	1,868,661	1,868,661	0	0.00
Retained earnings	15,458,911	12,297,677	3,161,234	25.71
Other equities	(903,909)	(756,891)	(147,018)	19.42
Non-controllinginterests	21,041	16,879	4,162	24.66
Total equities	19,773,887	16,755,509	3,018,378	18.01
Analysis of variations between two years (should the variation exceed 20% of the numbers in previous year and the dollar amount difference exceed NT$10 millions): 1. Current assets: This was mainly due to the increase in revenue for the current period compared to the same period last year, resulting in a relative increase in accounts receivable. 2. Property, plant and equipment: The main reason is due to the expansion and relocation of the factory compared with the same period last year. 3. Other assets: This is due to the higher amount of assets acquired by EMD and Kunshan in the current period. 4. Current liabilities: The main reason is that the revenue of the current period increased compared with the same period last year, so that the amount payable increased, and because of the relocation of the factory, the expansion of the factory, etc., so that the capital demand increased compared with the same period last year, so the new borrowing responded to the capital demand. 5. Non-current liabilities: Mainly due to the increase in revenue in the current period compared with the same period last year and the demand for relocation and expansion of factories, the demand for funds increased compared with the same period last year, so the new borrowing was caused by the demand for funds and the pre-receipt of government subsidies for the relocation of the factory in Kunshan. 6. Retained earnings: This was mainly due to the company's continuously making profits. 7. Non-controlling interests: This was mainly due to the increase in profits of the Greater Shanghai company compared with the same period lastyear.

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2. Review and Analysis of Financial Performance

Unit: NT$ thousands

Year Item	2021	2020	Difference	Difference
			Dollar Amount	%
Operatingrevenues – net	38,500,026	27,200,786	11,299,240	41.54
Cost ofgoods sold	28,431,472	20,160,757	8,270,715	41.02
Grossprofit	10,068,554	7,040,029	3,028,525	43.02
Operatingexpenses	3,145,934	2,356,578	789,356	33.50
Operating profit(losses)	6,922,620	4,683,451	2,239,169	47.81
Non-operating gain(expenses)	(10,724)	160,112	(170,836)	(106.70)
Pre-taxprofit from continuingoperation	6,911,896	4,843,563	2,068,333	42.70
Net income(losses)	5,500,157	3,694,270	1,805,887	48.88
Other comprehensive income – net	(148,742)	76,198	(224,940)	(295.20)
Total comprehensive income	5,351,415	3,770,468	1,580,947	41.93
Net income attributable to the owner of the Company	5,493,218	3,688,999	1,804,219	48.91
Net income attributable to non-controlling interests	6,939	5,271	1,668	31.64
Total comprehensive income attributable to the owner of the Company	5,344,644	3,765,041	1,579,603	41.95
Total comprehensive income attributable to non- controllinginterests	6,771	5,427	1,344	24.77
Analysis of variations between two years (should the variation exceed 20% of the numbers in previous year and the dollar amount difference exceed NT$10 millions): The main reason is due to the rise of applications such as 5G communication and high-performance computing, the demand for semiconductor industrial has increased, which has led to the growth of the number and price of high-end substrate laminate material , so that the company's business scale andprofit havegrown.

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3. Review and Analysis of Cash Flow

3.1. Liquidity Analysis in Recent Two Years

Unit: NT$ thousands

Year Item	Year Item	Year Item	2021	2021	2020	2020	Difference	Difference	Difference
							Dollar amount		%
Cash Flows from OperatingActivities			4,021,522		3,517,212		504,310		14.34
Cash Flows from InvestingActivities			2,618,127		1,959,127		659,000		33.64
Cash Flows from FinancingActivities			419,758		2,113,193		(1,693,435)		(80.14)
Analysis of variations between two years (should the variation exceed 20% of the numbers in previous year and the dollar): 1. Cash flows from investing activities: Net outflow is due to the capacity expansion and factory reallocation. 2. Cash flows from financingactivities: Net outflow is due to the issuance of dividends.
3.2. Liquidity Analysis for the Coming One Year
Cash and Cash Equivalents – beginning balance	Cash Flows from Operating Activities	Cash Flows from Investing and Financing Activities		Cash and Cash Equivalents – Ending Balance		Remedy Plans for Negative Balance of Cash and Cash Equivalents
						Investment Plan		Financing Plan
6,642,069	5,319,386	(3,249,766)		8,711,689		-		-

3.2.1. Liquidity analysis for 2021:
A. Operating activity: Cash net inflow from operating activities is expected to derive mainly from the cash payment from accounts receivables made by customers.
B. Investment activity: It is expected that the investing activity will lead a net cash outflow, as the company plans to increase the acquisition of property, plant, and equipment.
C. Financing activities: It is expected that the dividends paid will result in a net cash outflow from financing activities.
3.2.2. Remedy plans for negative balance of cash and cash equivalents:

It is expected that the ending balance of cash and cash equivalents will be positive in the coming year.

4. Major Capital Expenditures in Recent Years and Impacts on Financial and Operational Situations:

In recent years, benefiting from the rise of applications such as 5G communication and high-efficiency computing, with the continuous growth of server and high-end exchanger material shipments and the increase in demand for semiconductor industrial structure, the demand for high-end carrier boards has been driven at the same time, so the company's subsidiary, EMC (Huangshi) Co., Ltd., has expanded its production capacity in the Huangshi factory to meet the growth needs of the company's operations, and the project price is RMB 268 million, which will be contracted according to the company's construction schedule, which has a positive impact on future financial business.

5. Investment Policies in Recent Years

5.1. Investment Policies

“Procedures in Controlling Investment Cycle of the Internal Control System”, “Procedures for Handling the Related Party Transaction”, “Procedures for Monitoring the Operation of Subsidiaries”, and “Procedures for Acquisition

85 -

and Disposition of Assets” are major standards for the Company to manage and monitor the performance of subsidiaries. Each subsidiary is also required to submit its financial information and operating data to the Company, allowing the Parent Company to closely know the financial and operating situation of each subsidiary in time. In addition, the Audit Office of the Company from time to time perform due diligence on each subsidiary, and the audit report will be subsequently submitted to the Board of Directors, assisting the board members to follow and monitor the operating situation of subsidiaries.

5.2. Reasons for Profit/Loss in Recent Years and Plans for Improvement

Unit: NT$ thousands

					Unit: NT$ thousands
Investee	Investment Income Recognized in 2021	Percentage Holding	Reasons for Profit/Loss	Improvement Plans	Other Investment Plans in the Future
EMC Overseas Holding Incorporated	5,243,183	100.00%	Operating normally, no loss occurred.	NA	NA
Grand Wuhan Incorporated	95,217	100.00%	Operating normally, no loss occurred.	NA	NA
EMC International Holding Incorporated	26,847	100.00%	Operating normally.	NA	NA

5.3. Investment Plan over the Coming One Year:

None.

6. Sources of Risks and Management

6.1. Impacts from fluctuations of interest rate and currency exchange rate and inflation on the Company in recent years, and measures the Company undertake to manage the risks

6.1.1. Interest Rate

The Company's borrowings were on the basis of floating interest rate. The Company is not involved in the situation of changing floating interest rate into fixed rate with interest rate swap agreement. The Company periodically assessed the borrowing rates of the banks and every currency to make provisions for interest-changed rate risk. In addition, the Company creates favorable relationship with banks to get lower financial costs from borrowings in order for it to strengthen its working capital to lower its dependency on bank borrowings, as well as situation of changing floating interest rate and scatter interest-changed rate risk.

6.1.2. Foreign Currency Exchange Rate

The Company is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of each entity owned by the Company, primarily the New Taiwan Dollar (TWD), US Dollar (USD), and China Yuan (CNY). Besides, the Company uses natural hedging principle to hedge by controlling the net amount of each currency of the Company in accordance with the condition of the exchange rate market. The Company hedges the currency risk with forward foreign currency whose mature date is in a year from report date.

The interest is denominated in the currency used in the borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Company, primarily the TWD, USD, and CNY. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

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In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

6.1.3. Inflation and Inflationary Expectations

The Company’s profit/loss was little affected by the inflation and inflationary expectations.

6.2. Major reasons for transaction policies, gain or loss from engaging in high-risk and hyper-leveraged investments, fund lending to others, endorsement/ guarantee and derivatives and correspondent procedures

The Company and subsidiaries did not engage in any high-risk or hyper-leveraged investments. The trading of derivative products is to hedge the risks from fluctuations stemming from our exposure to interest and currency exchange rates. Under this policy, all positions of derivative products are covered by physical holdings of assets and liabilities owned by the Company and subsidiaries; in other words, these positions are not naked positions. Therefore, the risks of trading derivatives are minimized and can be effectively controlled. Gains or losses, if occurred, often resulting from reasons such as investment horizon miss-matches, are therefore, little and negligible. The Company and subsidiaries will maintain this policy, and will not proactively engage in naked positions of highrisk or hyper-leveraged derivative products. All trading of derivative products will be managed in accordance with the “Procedures for Acquisition and Disposition of Assets”, “Procedures of Capital Lending to Others”, “Procedures of Endorsements and Guarantees”, and “Procedures for Handling Transactions of Derivative Products” approved by the Board of Directors and Shareholders’ Meeting.

6.3. R&D Plans and Estimated Expenses in Coming Years

The Company believes that eco-friendly material is an irreversible trend in the laminate industry. Therefore, the R&D plans in the future will continue to focus on the development of eco-friendly materials.

Products and Items under R&D	Expected R&D Expenditure	Expected Time for Commercial Operation and Promotion	Major Factors Affect the R&D Results
High frequency mmWave material for autonomous drivingvehicle.	NT$850,000Thousand Dollars	The 4thQuarter of 2022	Qualifications obtained for each product and the market demand
High voltage material adopted byEV.
Low loss substrate material adopted byhigh end AIPpackage.
Thermally conductive high-speed transmission of environmental friendlysubstrates

6.4. Impacts and responses of the company in regard to material changes of policies and regulations in Taiwan and foreign countries

The management team closely monitors and evaluates the changes and impacts of policies and regulations in domestic and overseas markets on the Company. Responsive measures will be planned and implemented accordingly.

6.5. Technology Developments and Impacts on the Company

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The company and subsidiaries pay closely attention to the changes of technology about the relevant industries, and assign dedicated person or team to monitor and evaluate their impact on the financial and operational situation of the Company and subsidiaries. In recent years till the publishing of the annual report, the impact from technology developments on the Company is neither adverse nor material.

6.6. Changes of Corporate Image and Impacts on the Company's Crisis Management:

None

6.7. Expected Benefits and Risks from Mergers and Acquisitions:

None

6.8. Expected Benefits and Risks from Plant Expansion:

In response to the growth needs of the company's group operation, the board of directors resolved on October 30, 2020 to increase the production capacity of the second phase of EMC (Huangshi) Co., Ltd., and it is expected that the monthly production capacity will reach 900,000 sheets per month by the second quarter of 2022. At present, the 5G industry has driven the growth of the downstream PCB industry, and this expansion project will help the company's business promotion.

6.9. Risks from concentration in supply and sales and measures the Company undertake:

Products of the company and subsidiaries have varieties of functions, and were sold to a diversified customer base. The Company also maintains a solid and consistent relationship with a diversified list of vendors. Risks from concentration in supply and sales are negligible.

6.10. Impacts and risks from changes in Directors, Supervisors and shareholders with greater than 10% shareholding or their selling of a large number of shares in recent years until the annual report being published:

None

6.11. Impact and risks from change of ownership in recent year until the annual report being published: None

6.12. Litigations, Non-litigations, and Administrative Actions:

6.12.1. Material Impacts on shareholders’ equity or share price from litigations, non-litigations or administrative actions in recent year until the annual report being published:

None

6.12.2. Material Impacts on shareholders’ equity or share price from litigations, non-litigations or administrative actions in Directors, Supervisors, Chairman, President, shareholders with greater than 10% shareholding and subsidiaries in recent year until the annual report being published: None
6.12.3. Violations of Article 157 of Stock Exchange Act Directors, Supervisors, Chairman, President, managers, and shareholders with greater than 10% shareholding and subsidiaries in recent year until the annual report being
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published: None

6.13. Other major risks: None

7. Other Important Matters:

None

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VIII. SPECIAL DISCLOSURE

1. Affiliated Companies

1.1. Subsidiaries and Affiliated Companies in the Consolidated Financial Report

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1.2. Information of Subsidiaries and Affiliates

Company Name	Date of Incorporation	Address	Paid-in Capital	Major Business Activities
EMC Overseas Holding Inc.	July 1996	P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands	US$36,256,950	Investment
Grand Shanghai Incorporated	May 1997	P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands	US$18,200,000	Trading business and investment
Elite Electronic Material (Kunshan) Co., Ltd.	Sep 1997	No. 368 Yubi Road, Zhoushi Town, Kunshan City, Jiangsu Province, China	US$63,200,000	Production and sales of CCLs and prepreg
Grand Zhuhai Incorporated	April 2004	Scotia Center, 4thFloor, P.O. Box 2804, George Town, Grand Cayman, Cayman Islands	US$33,798,821	Trading business and investment
Grand Zhongshan Incorporated	May 2004	P.O. Box 957, Offshore Incorporations Center, Road Town, Tortola, British Virgin Islands	US$16,437,000	Trading business and investment
Elite Electronic Material (Zhongshan) Co., Ltd.	July 2004	No. 7, Technology Avenue, Huo-Ju Development Zone, Zhongshan City, GuangdongProvince,China	US$20,200,000	Production and sales of CCLs and prepreg

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Grand Wuhan Incorporated	Jan 2018	P.O. Box 31119, Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands	US$20,020,000	Trading business and investment
Elite Electronic Material (Huangshi) Co., Ltd.	Mar 2018	No. 189, Jingshan Avenue, Economic and Technology Development Zone, Huangshi City,Hubei Province,China	US$20,000,000	Production and sales of CCLs and prepreg
EMC USA Holding Incorporated	Nov 2021	P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands	-	Investment
EMC Special Application Incorporated	Aug 2020	P. O. Box 31119 Grand Pavilion, Hibiscus Way, 802 West Bay Road, Grand Cayman, KY1-1205 Cayman Islands	US`＄`26,255,000	Investment
EMD Specialty Materials,LLC	Dec 2020	9433 Hyssop Drive Rancho Cucamonga, CA 91730-USA	-	Production and sales of CCLs and prepreg

1.3. Companies presumed to have a relationship of control and subordination with Elite Material Co., Ltd. under Article 369-3 of the R.O.C. Company Act:

None

1.4. Industries Covered by the Business Operated by the Affiliates:

Please refer to the table mentioned above.

1.5. Information about the Directors, Supervisors, and Managers at Each Subsidiary and Affiliate:

Affiliate:
			31 March 2021
Company	Title	Name or representative	Registered shares owned
EMC Overseas Holding Incorporated	Director	Representative of Elite Material Co., Ltd.: Dong, Ding-Yu	100%
Grand Zhuhai Incorporated	Director	Representative of EMC Overseas Holding Incorporated: Dong, Ding-Yu	100%
Grand Shanghai Incorporated	Director	Representative of Grand Zhuhai Incorporated: Dong, Ding-Yu	99.79%
Grand Zhongshan Incorporated	Director	Representative of Grand Zhuhai Incorporated: Dong, Ding-Yu	100%
Grand Wuhan Incorporated	Director	Representative of Elite Material Co., Ltd.: Dong, Ding-Yu	100%
Elite Electronic Material (Kunshan) Co., Ltd.	Director	Representatives of Grand Shanghai Incorporated: Dong, Ding-Yu Tsai, Fei-Liang Yu, Randy	100%
	President	Guan, En-Xiang
Elite Electronic Material (Zhongshan) Co., Ltd.	Director	Representatives of Grand Zhongshan Incorporated: Dong, Ding-Yu Tsai, Fei-Liang Yu, Randy	100%
	President	Chang, Wen-Xing

91 -

Elite Electronic Material (Huangshi) Co., Ltd.	Director	Representatives of Grand Wuhan Incorporated: Dong, Ding-Yu Tsai, Fei-Liang Yu, Randy	100%
EMC International Holding Incorporated	Director	Representative of Elite Material Co., Ltd.: Dong, Ding-Yu	100%
EMC Special Application Incorporated	Director	Representative of EMC International Holding Incorporated: Dong, Ding-Yu	100%
EMD Specialty Materials,LLC	President	Brad Foster	100%

1.6. Operating Results of Each Subsidiary and Affiliate:

31 Dec 2021 / Unit: NT$ thousands

==> picture [483 x 329] intentionally omitted <==

1.7. Consolidated Financial Statements of Subsidiaries and Affiliates:

The affiliates that should be included in the combined financial statements of Elite Material Co., Ltd. as of and for the year ended 31 December 2018 in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” in the Republic of China (ROC) are the same as those already included in the consolidated financial report of Elite Material Co., Ltd. and its subsidiaries as of and for the year ended 31 December 2018. The consolidated financial report has been prepared under the International Accounting Standard 27 - “Consolidated and Separate Financial Statements.” The information required to be disclosed in the combined financial statements has already been disclosed in the consolidated financial report. Therefore, Elite Material Co. Ltd. and its subsidiaries do not prepare a separate set of combined financial statements.

92 -

2. Private Placement in the Latest Year till the Publishing of the Annual Report:

None

3. The Company’s Shares Held or Disposed by Subsidiaries in the Latest Year till the Publishing of the Annual Report:

None

4. Other Supplementary Information:

None

5. Pursuant to the Article 36-3-2 of Security Exchange Act, event having material impact on shareholders' equity or share price in the latest year until the annual report being published

None

93 -

ANNEX I

Year 2021 Stand-Alone Financial Reports Audited by CPA

94 -

Stock Code:2383

ELITE MATERIAL CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No.18, Datong 1st Rd., Guanyin Dist., Taoyuan City 328, Taiwan (R.O.C.) Telephone: (03)483-7937

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

� 1 �

Contents
1.Cover Page
2.Table of Contents
3.Independent Auditors’ Report
4.Balance Sheets
5.Statements of Comprehensive Income
6.Statements of Changes in Equity
7.Statements of Cash Flows
8.Notes to the Financial Statements
(1) Organization and Business
(2) Approval Date and Procedures of the Financial Statements
(3) New Standards and Interpretations Adopted
(4) Significant Accounting Policies
(5) Major Sources of Accounting Assumptions, Judgments and Estimation
Uncertainty
(6) Summary of Major Accounts
(7) Related-Party Transactions
(8) Pledged Assets
(9) Significant Contingencies and Commitments
(10) Significant Catastrophic Losses
(11) Significant Subsequent Events
(12) Others
(13) Additional Disclosures
a) Information on significant transactions
b) Information on investees
c) Information on investment in Mainland China
d) Major shareholders
(14) Segment Information
9.Statements of Important Account

Page

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KPMG

��110615��5�7�68�(��101��) �� Tel + 886 2 8101 6666 68F., TAIPEI 101 TOWER, No. 7, Sec. 5, �� Fax + 886 2 8101 6667 Xinyi Road, Taipei City 110615, Taiwan (R.O.C.) �� Web home.kpmg/tw

Independent Auditors’ Report

To the Board of Directors of ELITE MATERIAL CO., LTD.:

Opinion

We have audited the financial statements of ELITE MATERIAL CO., LTD.(“the Company”), which comprise the statement of financial position as of December 31, 2021 and 2020, and the statement of comprehensive income, changes in equity and cash flows for the years ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2021 and 2020, and its financial performance and its cash flows for the year ended December 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

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 of the current period. 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.

1.Revenue recognition

Please refer to Note 4(n) "Revenue" and Note 6(o) "Revenue" of the consolidated financial statements.

Description of key audit matter:

The recognition of revenue is based on the fact that the Company has transferred all its ownership and the significant risk of its products to the customers. The judgment on the arrival date of the products involves uncertainty under the FOB destination which is stated in the sales contracts between the Company and the customers. The Company still needs to take the risk of the products before they are delivered to customers.

Therefore, the recognition of revenue was considered to be one of the key audit matters in the audit.

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KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures that included: assessing the accounting policies on the recognition timing of sales revenue and the appropriateness of related internal controls; testing the effectiveness of implementation of internal control ; performing cut-off test for recognition of revenue on the period before and after the reporting date to assess the rationality to the recognition timing of sales revenue.

2. Allowance for Inventory Valuation

Please refer to Note (4)(g) "Inventories" and Note (6)(d)” Inventories” of the consolidated financial statements.

Description of key audit matter:

The printed circuit board and other electronic components are the major products of the Company. Inventories have specific life cycle due to their attributes. Apart from this, the Company prepared certain amounts of security stock to meet the delivery date required by the customers. Inventories are stated at the lower of cost or net realizable value. Consequently, there may be situations that the net realizable value of inventory will exceed its cost. In addition, the Company would purchase the materials in advance for the expected sales orders. The cancellation or the change of orders, and the change of the material used or quantities of the material may lead to product obsolescence. Therefore, the recognition on allowance for inventory valuation and obsolescence loss was considered to be one of the key audit matters in the audit.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures that included: assessing the allowance for loss due to price decline, obsolete, and slow moving inventories to determine whether policy of the Company is applied; selecting samples to examine their net realizable values to verify the accuracy and completeness of inventory aging report; reassessing the accuracy of allowance for inventory valuation and obsolescence loss according to the Company’ s accounting policy; performing a retrospective review to evaluate the completeness of disclosure for allowance for inventories.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed 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 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 are responsible for overseeing the Company’s financial reporting process.

� 3-1 �

Auditor’s 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 auditor’s 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 auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
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.
Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit.

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.

� 3-2 �

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 of the current period 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 Yi-Chun Chen and Chung-Yi Chiang.

KPMG

Taipei, Taiwan (Republic of China) Febuary 23, 2022

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and parent company only financial statements, the Chinese version shall prevail.

� 3-3 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

Balance Sheets

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

2021.12.31 ASSETS Amount % Current Assets: 1100 Cash and cash equivalents (Note (6)(a)) $ 1,292,713 5 1150 Notes receivable, net (Note (6)(b)) 114,211 - 1170 Accounts receivable, net (Note (6)(b)) 2,321,410 9 1181 Accounts receivable due from related parties (Notes (6)(b) and (7)) 361,577 1 1200 Other receivables, net (Note (6)(c)) 541,377 2 1210 Other receivables due from related parties, net (Notes (6)(c) and (7)) 180,489 1 1310 Inventories (Note (6)(d)) 1,206,273 5 1470 Other current assets 48,021 - 6,066,071 23 Non-Current Assets: 1550 Investments accounted for using equity method, net (Note (6)(e)) 17,822,990 68 1600 Property, plant and equipment (Note (6)(f)) 1,957,319 7 1780 Intangible assets 41,094 - 1840 Deferred tax assets (Note (6)(l)) 238,729 1 1900 Other non-current assets 136,289 1 1920 Guarantee deposits paid 8,566 - 1975 Net defined benefit asset, non-current (Note (6)(k)) 14,619 - 20,219,606 77 Total assets $ 26,285,677 100	2020.12.31 Amount % 962,032 5 206,128 1 1,716,921 8 312,089 1 449,618 2 50,433 - 1,082,476 5 37,240 - 4,816,937 22 14,794,570 68 2,007,189 9 18,019 - 200,749 1 85,002 - 640 - 3,754 - 17,109,923 78 21,926,860 100 2021.12.31 LIABILITIES AND STOCKHOLDERS' EQUITY Amount % Current Liabilities: 2100 Short-term borrowings (Note (6)(g)) $ 551,730 2 2110 Short-term notes payable (Note (6)(h)) 199,820 1 2170 Accounts payable 2,204,281 8 2200 Other payables 1,212,340 5 2220 Other payables to related parties (Note (7)) 453,010 2 2230 Current tax liabilities 147,095 1 2322 Long-term borrowings, current portion (Note (6)(i)) 128,571 - 2399 Other current liabilities, others 41,418 - 4,938,265 19 Non-Current liabilities: 2540 Long-term borrowings (Note (6)(i)) 721,429 3 2570 Deferred tax liabilities (Note(6)(l)) 859,997 3 2645 Guarantee deposits received 13,140 - 1,594,566 6 Total liabilities 6,532,831 25 Equity (Note (6)(m)): 3100 Capital stock 3,329,183 13 3200 Capital surplus 1,868,661 7 Retained earnings: 3310 Legal reserve 2,403,968 9 3320 Special reserve 756,891 3 3351 Accumulated profit and loss 12,298,052 47 3400 Other equity interest (903,909) (4) Total equity 19,752,846 75 Total liabilities and equity $ 26,285,677 100	2021.12.31		2020.12.31 Amount % 399,607 2 - - 1,675,322 8 850,721 4 420,724 2 94,813 - 500,000 2 27,460 - 3,968,647 18 300,000 2 910,910 4 8,673 - 1,219,583 6 5,188,230 24 3,329,183 15 1,868,661 8 2,035,014 9 832,393 4 9,430,270 43 (756,891) (3) 16,738,630 76 21,926,860 100
		Amount %

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

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

Statements of Comprehensive Income

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

4000 Operating revenue (Note (6)(o) and Note (7)) 5000 Operating costs (Note (6)(d) and Note (7)) Gross profit from operations 5910 Less: Unrealized profit from sales 5920 Add: Realized profit on from sales Gross profit from operations Operating expenses: 6100 Total selling expenses 6200 Total administrative expenses 6300 Total research and development expenses 6450 Expected credit loss 6300 Total operating expenses Net operating income Non-operating income and expenses: 7100 Total interest income (Note (6)(q)) 7020 Other gains and losses, net (Note (6)(q)) 7370 Share of profit of associates and joint ventures accounted for using equity method 7050 Finance costs (Note (6)(q)) Total non-operating income and expenses Profit from continuing operations before tax 7950 Less: Income tax expenses (Note (6)(l)) Profit 8300 Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income, net Total comprehensive income Basic earnings per share (Note (6)(n))(dollars) Diluted earnings per share (Note (6)(n))(dollars)	2021	% 100 (77) 23 - - 23 (4) (7) (4) - (15) 8 - - 58 - 58 66 (6) 60 - - - - (2) - (2) (2) 58 16.50 16.46	2020 Amount 6,930,636 (5,562,113) 1,368,523 (4,051) 4,300 1,368,772 (256,032) (473,491) (255,430) (66) (985,019) 383,753 1,026 (15,223) 3,838,173 (23,185) 3,800,791 4,184,544 (495,545) 3,688,999 675 - (135) 540 94,378 (18,876) 75,502 76,042 3,765,041	% 100 (80)
	Amount $ 9,189,939 (7,104,396) 2,085,543 (9,316) 4,051 2,080,278 (339,529) (673,876) (327,147) (41) (1,340,593) 739,685 920 (45,584) 5,365,858 (9,041) 5,312,153 6,051,838 (558,620) 5,493,218 (1,945) (15,335) 389 (16,891) (164,604) 32,921 (131,683) (148,574) $ 5,344,644 $ $
				20 - -
				20
				(4) (7) (4) -
				(15)
				5
				- - 55 -
				55
				60 (7)
				53
				- - -
				-
				1 -
				1
				1
				54
				11.33
				11.07

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

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(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

Statements of Changes in Equity

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Retained earnings	Retained earnings		Total other equity interest Exchange Differences on Unrealised gains (losses) on equity instruments at fair value Translation of Foreign Statements through other comprehensive income (831,955) (438) - - 75,502 - 75,502 - - - - - - - - - (756,453) (438) - - (131,683) (15,335) (131,683) (15,335) - - - - - - (888,136) (15,773)
			Exchange Differences on Translation of Foreign Statements (831,955) - 75,502 75,502 - - - - (756,453) - (131,683) (131,683) - - - (888,136)
Legal Reserve 1,710,929 - - - 324,085 - - - 2,035,014 - - - 368,954 - - 2,403,968	Special Reserve 423,554 - - - - 408,839 - - 832,393 - - - - (75,502) - 756,891	Unappropriated Retained Earnings
		8,391,903
		3,688,999 540
		3,689,539

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

� 6 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

Statements of Cash Flows

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit : Depreciation expense Amortization expense Expected credit loss Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share of loss of subsidiaries,associates and joint ventures accounted for using equity method Gain on disposal of property, plan and equipment Amortized discounted corporate bonds payable-interest expense Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Notes receivable Accounts receivable Accounts receivable due from related parties Other receivable Inventories Deferred revenues Other current assets Other assets Total changes in operating assets Changes in operating liabilities: Accounts payable Other payable Other payable to related parties Other current liabilities Net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from (used in) operating activities Cash flows from investing activities: Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) decrease in refundable deposits Acquisition of intangible assets Net cash flows used in investing activities Cash flows from financing activities: (Decrease) increase in short-term loans Decrease in short-term notes and bills payable Proceeds from long-term debt Repayments of long-term debt Increase in guarantee deposits received Cash dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 6,051,838 198,379 9,269 41 - 9,041 (920) (5,365,858) (338) - (5,150,386) 91,917 (604,530) (49,488) (221,869) (123,797) 5,723 (16,481) (51,287) (969,812) 528,959 348,299 32,286 13,958 (12,810) 910,692 (59,120) (5,209,506) 842,332 974 2,151,776 (9,151) (561,921) 2,424,010 - (135,259) 338 (2,226) (32,344) (169,491) 152,123 200,000 750,000 (700,000) 4,467 (2,330,428) (1,923,838) 330,681 962,032 $ 1,292,713	2020 4,184,544 191,491 5,095 66 (1,853) 9,145 (1,026) (3,838,173) (34) 14,040 (3,621,249) 1,084 153,281 208,954 83,596 (274,425) 3,667 6,663 (12,737) 170,083 (196,735) 179,667 (94,192) 8,113 (10,646) (113,793) 56,290 (3,564,959) 619,585 960 3,327,861 (9,076) (762,834) 3,176,496 (761,482) (168,639) 34 (7) (17,270) (947,364) (179,961) (100,000) 950,000 (500,000) 857 (1,918,248) (1,747,352) 481,780 480,252 962,032

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

� 7 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

Notes to the Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Organization and Business

ELITE MATERIAL CO., LTD. (the "Company") was incorporated on March 24, 1992 as a company limited by shares under the Company Act of the Republic of China (R.O.C.). The main operating activities are the manufacturing and selling of copper clad laminates, electronic-industrial specialty chemical and raw materials, work-in-process, and finished goods of electronic components. The manufacturing and selling of printed circuit board is the main source of sales revenue.

The Company's common shares were traded on the Taipei Exchange (TPEx) on December 26, 1996, and its shares were publicly listed and traded on the Taiwan Stock Exchange (TSE) on November 27, 1998. The Company's registered office is on No.18, Datong 1st Rd., Guanyin Dist., Taoyuan City 328, Taiwan (R.O.C.).

(2) Approval Date and Procedures of the Financial Statements

The Board of Directors approved and issued the financial statements on Febuary 23, 2022.

(5) New Standards and Interpretations Adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2021:

�Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
�Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “Interest Rate Benchmark Reform— Phase 2”

The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from April 1, 2021:

�Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its financial statements:

�Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
�Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
�Annual Improvements to IFRS Standards 2018–2020
�Amendments to IFRS 3 “Reference to the Conceptual Framework”

� 8 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements:

�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” and amendments to IFRS 17 “ Insurance Contracts”
�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 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Significant Accounting Policies

The significant accounting policies adopted in the financial statements are as follows. Except for those described individually.

(a) Statement of compliance

The financial statements have been prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers (the Guidelines).

(b) Basis of preparation
Basis of measurement

The financial statements have been prepared on a historical cost basis except for the following material items in the statement of financial position:

1) Financial assets and liabilities at fair value through profit or loss in fair value measurement;
2) The net defined benefit liabilities (or assets) is recognized as the fair value of plan assets, net of aggregation of the present value of the defined benefit obligation, with a limit based on a defined benefit assets as disclosed in Note 4(o).
Functional and presentation currency

The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The financial statements are presented in New Taiwan Dollars, which is the Company's functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

� 9 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(c) Foreign Currency
Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Company entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into the presentation currency at the exchange rates at the reporting date. The income and expenses of foreign operations are translated into the presentation currency at the average exchange rate. Exchange differences are recognized in other comprehensive income.

When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Company disposes of only part of investment in an associate of a joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, Exchange differences arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity.

(d) Assets and liabilities classified as current and non-current

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
It is held primarily for the purpose of trading;
It is expected to be realized within twelve months after the reporting period; or
The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

� 10 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

An entity shall classify a liability as current when:

It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(e) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents.

(f) Financial instruments

Trade receivables and debt securities issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Company becomes a party to the contractual provisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.

1.Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – debt investment; FVOCI – equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

�it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
�its contractual terms give rise on specified dates to cash flows that are solely payments of principal amount outstanding.

� 11 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

These assets are subsequently measured at amortized cost, which is the amount at which the financial asset is measured at initial recognition, plus/minus, the cumulative amortization using the effective interest method, adjusted for any loss allowance. Interest income, foreign exchange gains and losses, as well as impairment, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

2) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, other receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Company measures loss allowances at an amount equal to lifetime ECL, except for the following which are measured as 12-month ECL:

�debt securities that are determined to have low credit risk at the reporting date; and
�other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’s historical experience and informed credit assessment as well as forward-looking information.

ECL are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. The difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Company expects to receive. ECL are discounted at the effective interest rate of the financial asset.

At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

�significant financial difficulty of the borrower or issuer;
�a breach of contract;
�the lender of the borrow, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
�it is probable that the borrower will enter bankruptcy or other financial reorganization;or
�the disappearance of an active market for a security because of financial difficulties.

� 12 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognized in other comprehensive income instead of reducing the carrying amount of the asset.

The gross carrying amount of a financial asset is written off when the Company has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For corporate customers, the Company individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Company expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’s procedures for recovery of amounts due.

3) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the assets are terminated, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets.

Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

An equity instrument is any contract that evidences residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued are recognized as the amount of consideration received, less the direct cost of issuing.

Compound financial instruments issued by the Company comprise convertible notes that can be converted to share capital at the option of the holder when the number of shares to be issued is fixed.

The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition.

Interest related to the financial liability is recognized in profit or loss, and included in nonoperating income and expenses.

On conversion, the financial liability is reclassified to equity, and no gain or loss is recognized.

� 13 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in profit or loss.

3) Other financial liabilities

Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in the statement of comprehensive income.

4) Derecognizing of financial liabilities

The Company derecognizes a financial liability when its contractual obligation has been discharged or cancelled or expires. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in the statement of comprehensive income.

5) Financial guarantee contract

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.

A financial guarantee contract not designated as at fair value through profit or loss issued by the Company is recognized initially at fair value plus any directly attributable transaction costs. After initial recognition, it is measured at the higher of (a) the contractual obligation amount determined in accordance with IAS 37, or (b) the amount initially recognized less, when appropriate, cumulative amortization recognized in accordance with IAS 18.

(g) Inventories

Inventories are measured at the lower of cost or net realizable value. The cost of inventories consists of all costs of purchase and other costs incurred in bringing them to their present location and condition. Inventory cost is calculated using the weighted-average-cost formula.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(h) Investment in associates

Associates are those entities in which the Company has significant influence, but not control or joint control, over their financial and operating policies.

Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less any accumulated impairment losses.

� 14 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The financial statements include the Company’s share of the profit or loss and other comprehensive income of those associates, after adjustments to align their accounting policies with those of the Company, from the date on which significant influence commences until the date on which significant influence ceases. The Company recognizes any changes, of its proportionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Gains and losses resulting from transactions between the Company and an associate are recognized only to the extent of undated Company's interests in the associate.

When the Company’s share of losses of an associated equals or exceeds its interests in an associate, it discounters recognizing its share of further losses. After the recognized interest is redact to zero. Additional losses are provided for and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

(i) Investment in subsidiaries

The subsidiaries in which the Company holds controlling interest are accounted for under equity method in the non-consolidated financial statements. Under equity method, the net income, other comprehensive income and equity in the non-consolidated financial statement are the same as those attributable to the owners of parent in the consolidated financial statements.

The changes in ownership of the subsidiaries are recognized as equity transaction.

(j) Property, plant, and equipment
Recognition and measurement

Items of property, plant and equipment are measured at cost, which includes capitalized borrowing costs, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.

Depreciation

Depreciation is calculated on the cost of an asset less its residual value and is recognized in profit or loss on a straightline basis over the estimated useful lives of each component of an item of property, plant and equipment.

Land is not depreciated.

� 15 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1)	Buildings	2	years~	56	years
2)	Machineries	3	years~	19	years
3)	Miscellaneous equipment	2	years~	14	years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(k) Intangible assets

Software that is acquired by the Company is measured at cost less accumulated amortization and any accumulated impairment losses.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognized in profit or loss as incurred.

The depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows:

Softwares 1 years~10 years 2. Loyalties 9 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(l) Impairment – non financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

� 16 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

(m) Provisions

A provision is recognized if, as a result of a past event, the Company has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

The provision of sales discounts from defective products is recognized when selling. The provision is estimated and measured on related probabilities of historical experience data and all possible results.

(n) Revenue

1. Revenue from contracts with customers

Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below.

1) Sale of goods-electronic components

The Company manufactures and sells electronic components to computer, automobile, and tele-communication manufacturers. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.

The Company’s obligation to provide a refund for faulty products is recognized at the time of sale. Accumulated experience is used to estimate such returns at the time of sale. The amount estimated is recognized as a provision for warranty at reporting date.

A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional.

� 17 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(o) Employee benefits
Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.

Defined benefit plans

The Company’s net obligation in respect of defined benefit plans is calculated separately for each the plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income, and accumulated in retained earnings within equity. The Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset). Net interest expense and other expenses related to defined benefit plans are recognized in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

3. Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(p) Income taxes

Income taxes comprise current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes are recognized in profit or loss.

Current taxes comprise the expected tax payables or receivables on the taxable profits (losses) for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payables or receivables are the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date.

� 18 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes are recognized except for the following:

temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

Deferred taxes are measured at tax rates that are expected to be applied to temporary differences when they reserve, using tax rates enacted or substantively enacted at the reporting date, and reflect uncertainty related to income taxes, if any.

Deferred tax assets and liabilities are offset if the following criteria are met:

the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and
the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
1) the same taxable entity; or
2) different taxable entities which intend to settle current tax assets and liabilities on a net basis, or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

Deferred tax assets are recognized for the carry forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date, and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of future taxable profits improves.

(q) Earnings per share

The Company discloses the Company's basic and diluted earnings per share attributable to ordinary equity holders. The basic earnings per share are calculated as the profit attributable to the ordinary shareholders of the Company divided by the weighted average number of ordinary shares outstanding, after adjustment for the effects of all potential dilutive ordinary shares, such as convertible bonds.

(r) Operating segments

Please refer to the consolidated financial report of Elite Material Co., Ltd. for the years ended December 31, 2021 and 2020 for operating segments information.

� 19 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(5) Major Sources of Accounting Assumptions, Judgments and Estimation Uncertainty

The preparation of the financial statements in conformity with the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

(a) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Refer to note (6)(d) for further description of the valuation of inventories.

(6) Summary of Major Accounts

(a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Savings accounts Time deposits	2021.12.31 $ 375 994,218 298,120 $ 1,292,713	2020.12.31
		469 639,155 322,408
		962,032

Please refer to Note 6(r) for the interest analysis of financial assets and liabilities.

(b) Notes and accounts receivable

Note receivables from operating activities Trade receivables�measured as amortized cost Less: Loss allowance	2021.12.31 $ 114,560 2,684,035 (1,397) $ 2,797,198	2020.12.31
		206,477 2,030,017 (1,356)
		2,235,138

� 20 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Company has assessed a portion of its trade receivables that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such trade receivables were measured at fair value through other comprehensive income. In addition, trade receivables, which did not qualify to be measured at amortized costs and FVOCI, were measured at fair value through profit or loss.

The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision in Taiwan were determined as follows:

	2021.12.31
Gross carrying amount $ 2,771,496 19,567 7,532 - $ 2,798,595	Weighted- average 0.04% 0.50% 1.00% - 2020.12.31	Loss allowance provision
		1,224 98 75 -
		1,397

	Weighted- average 0.06% 0.16% 0.68%	Loss allowance provision
		1,232 63 61
		1,356

The movement in the allowance for notes and trade receivable was as follows:

The movement in the allowance for notes and trade receivable	was as follows:	was as follows:
Balance at January 1 Impairment losses recognized Amounts written off Balance at December 31	For the years ended December 31,
	2021 $ 1,356 41 - $ 1,397	2020
		1,392 66 (102
		1,356

� 21 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Other receivables
Other receivables Other receivables due related parties, net Less: Loss allowance	2021.12.31 $ 541,377 180,489 - $ 721,866	2020.12.31
		449,618 50,433 -
		500,051

Based on historical experience, the Company expects no credit losses by event of default from the aforementioned other receivables, therefore the expected credit loss rate is 0.

(d) Inventories

Materials Work-in-process Finished goods Inventory in-transit	2021.12.31 $ 871,692 85,816 221,792 26,973 $ 1,206,273	2020.12.31
		708,831 117,952 247,652 8,041
		1,082,476

As of December 31, 2021 and 2020, the details of operating cost were as follows:

Cost of goods sold Loss on disposal of scrap Losses on inventory valuation and obsolescence Revenue from sales of scraps	2021 $ 7,148,110 6,366 2,932 (53,012) $ 7,104,396	2020
		5,568,722 12,448 11,619 (30,676
		5,562,113

As of December 31, 2021 and 2020, the Company's inventories were not pledged as collateral.

Losses on inventory valuation and obsolescence are due to obsolescence or out of use, which results in net realizable value being lower than historical cost. Therefore, it’s classified as operating cost.

(e) Investments accounted for using equity method

Investments accounted for using equity method
Subsidiaries Associates	2021.12.31 $ 17,822,990 - $ 17,822,990	2020.12.31
		14,794,570 -
		14,794,570

Subsidiaries

Please refer to the consolidated financial statements of the year ended 2021.

� 22 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(f) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Company for the years ended December 31, 2021 and 2020, were as follows:

Cost: Balance at January 1, 2021 Additions Disposals Reclassification Balance at December 31, 2021 Balance at January 1, 2020 Additions Disposals Reclassification Balance at December 31, 2020 Depreciation: Balance at January 1, 2021 Depreciation for the year Disposals Balance at December 31, 2021 Balance at January 1, 2020 Depreciation for the year Disposals Balance at December 31, 2020 Carrying amounts: At December 31, 2021 At December 31, 2020 At January 1, 2020	Land $ 470,621 - - - $ 470,621 $ 470,621 - - - $ 470,621 $ - - - $ - $ - - - $ - $ 470,621 $ 470,621 $ 470,621	Buildings 866,836 - (2,662) 10,819 874,993 860,706 - - 6,130 866,836 415,240 34,613 (2,662) 447,191 380,872 34,368 - 415,240 427,802 451,596 479,834	Machinery 2,711,350 - (43,078) 112,509 2,780,781 2,661,788 - (20,704) 70,266 2,711,350 2,029,033 112,897 (43,078) 2,098,852 1,941,034 108,703 (20,704) 2,029,033 681,929 682,317 720,754	Other equipment 710,845 - (26,360) 74,520 759,005 698,169 - (29,773) 42,449 710,845 475,301 50,869 (26,360) 499,810 456,654 48,420 (29,773) 475,301 259,195 235,544 241,515	Equipment under installation and construction in progress 167,111 148,509 - (197,848) 117,772 102,306 183,650 - (118,845) 167,111 - - - - - - - - 117,772 167,111 102,306	Total 4,926,763 148,509 (72,100) -
						5,003,172
						4,793,590 183,650 (50,477) -
						4,926,763
						2,919,574 198,379 (72,100)
						3,045,853
						2,778,560 191,491 (50,477)
						2,919,574
						1,957,319
						2,007,189
						2,015,030

As of December 31, 2021 and 2020, the property, plant and equipment were not pledged as collateral for long-term debt and financing.

� 23 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(g) Short-term borrowings

Unsecured bank loans Unused short-term credit lines Range of interest rates (h) Short-terms notes payable Commercial paper payable Less: discount unamortized Net amount Interest rate (i) Long-term borrowings Unsecured bank loans Less: current portion Total Unsecured credit Range of interest rates Due year	2021.12.31 $ 551,730 $ 3,666,707 0.49%~0.85% 2021.12.31 $ 200,000 (180) $ 199,820 0.58%~0.65% 2021.12.31 $ 850,000 (128,571) $ 721,429 $ 4,650,000 0.80%~1.05% 2022~2024	2020.12.31 399,607 2,495,383 0.51%~0.90% 2020.12.31 - - - - 2020.12.31 800,000 (500,000) 300,000 4,000,000 0.89%~1.25% 2021~2023

For the exposure information of the Company's rate foreign currency and current risk, please refer to Note (6)(r).

The Company signed a loan contract with the financial institution. According to the provisions of the contract, the Company’s financial statements must maintain specific current ratios, debt ratios, net tangible assets, and interest coverage ratios on the balance sheet date during the loan period. If such financial ratios breached specific conditions of the loan contract, they shall be improved by means of cash capital increase or other means in accordance with the agreement. As of December 31, 2021 and 2020, the Company did not violate any of the above financial ratio restrictions.

� 24 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(j) Unsecured convertible bonds

Unsecured convertible bonds
Profit or loss revalued by fair value of Embedded derivative instruments – call and put rights, included in financial assets at fair value through profit or loss Interest expense	For the years ended December 31,
	2021 $ - $ -	2020
		1,853
		14,040

The Company issued the fourth unsecured 5-year convertible bonds which bear no interest on May 16, 2017, with the maturity date on May 16, 2022. The total convertible corporate bonds issued amounted to TWD 1,500,000, with an effective interest rate of 1.80%. The Holders have the right to require the Company to redeem their convertible bonds in cash at an amount equal to the principal amount of the Bonds (with interest) at any time during the forty days after May 16, 2020. The conversion price of the convertible bonds were set based on the issued regulation. The fourth unsecured convertible bonds have been fully converted as of August 17, 2019.

(k) Employee benefits

1. Defined benefit plans

The Company determined the movement in the present value of the defined benefit obligations and fair value of plan assets as follows:

and fair value of plan assets as follows:
Present value of defined benefit obligation Fair value of plan assets Net defined benefit (assets) liabilities	2021.12.31 $ 99,666 (114,285) $ (14,619)	2020.12.31
		104,435 (108,189
		(3,754)

The Company makes defines benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on years or service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Company sets aside pension funds in accordance with the regulations of the Council of Labor Affairs, and the pension funds are managed by the Pension Supervisory Committee. The annual budget for the allocation of the minimum income cannot be lower than the income calculated based on the interest rate of the banks’ two-year time deposit in accordance with the Management and Utilization of Labor Pension Funds regulations.

The Company’s Bank of Taiwan pension reserve account balance amounted to $114,285 at the end of the reporting period. The information used to calculate pension fund assets includes the asset allocation and yield of the fund. Please refer to the information published on the website of the Council of Labor Affairs and the Labor Pension Supervisory Committee.

� 25 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Company were as follows:

Defined benefit obligation at January 1 Current service costs and interest Remeasurement on the net defined benefit liabilities �Actuarial losses (gains) arising from experience adjustments �Actuarial losses (gains) arising from changes in financial assumptions Benefit pay under the plan Defined benefit obligation at December 31	2021 $ 104,435 1,209 599 2,657 (9,234) $ 99,666	2020 122,754 2,047 (3,455) 6,085 (22,996)
		104,435

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Company were as follows:

Fair value of plan assets at January 1 Interest income Remeasurement on the net defined benefit liabilities �Return on plan assets (excluding current interest) Contribution paid by the employer Benefit paid Fair value of plan assets at December 31	2021 $ 108,189 707 1,311 13,312 (9,234) $ 114,285	2020 115,187 1,313 3,306 11,379 (22,996)
		108,189

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Company were as follows:

The expenses recognized in profit or loss for the Compan	y were as follows:
Current service costs Net interest of net defined benefit liabilities	2021 $ 563 (61) $ 502	2020 709 24
		733

� 26 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Operating costs Selling expenses Administrative expenses Research and development expenses	2021 $ 357 21 80 44 $ 502	2020
		543 30 115 45
		733

5) Remeasurement on the net defined benefit liabilities recognized in other comprehensive income

The Company’ s remeasurement on the net defined benefit liabilities recognized in other comprehensive income as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31	2021 $ 19,813 1,945 $ 21,758	2020
		20,488 (675)
		19,813

6) Actuarial assumptions

The following are the Company’s principal actuarial assumptions of Present Value of defined benefit obligations:

Discount rate Future salary increase rate	2021.12.31 2020.12.31 % 0.63 % 0.63 % 2.00 % 2.00

The expected allocation payment to be made by the Company to the defined benefit plans for the one-year period after the reporting date is $13,534.

The weighted average lifetime of the defined benefits plan is 14.06 years.

7) Sensitivity analysis

When calculating the present value of the defined benefit obligations, the Company uses judgments and estimations to determine the actuarial assumptions, including discount rate and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2021 Discount rate Future salary increasing rate	Influences of defined benefit obligations
	Increased 0.25% Decreased 0.25% (2,760) 2,871 2,777 (2,685)

� 27 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

December 31, 2020 Discount rate Future salary increasing rate	Influences of defined benefit obligations Increased 0.25% Decreased 0.25% (3,104) 3,233 3,128 (3,020)

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions remain constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation of pension liabilities in the balance sheets.

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020, respectively.

2. Defined contribution plans

The Company set aside 6% of the employees’ monthly wages to the Labor Pension personal accounts at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act.

The Company set aside a fixed amount to the Bureau of the Labor Insurance without the payment of additional legal or constructive obligations.

For the years ended December 31, 2021 and 2020, the Company set aside $37,798 and $33,453, respectively, under the pension plan to the Bureau of the Labor Insurance.

(l) Income taxes (profits)

1.Income tax expense recognized in profits or losses

The amount of income tax was as follows:

Current income tax expense: Current period Adjustment for prior periods Deferred tax expense: Origination and reversal of temporary differences Income tax expense	2021 $ 634,473 (20,270) 614,203 (55,583) $ 558,620	2020 771,796 -
		771,796
		(276,251)
		495,545

� 28 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Income tax (expense) benefit recognized in other comprehensive income:

2021 Items that will not be reclassified subsequently to profit or loss: Actuarial losses and gains on defined benefit plans $ 389 Items that may be reclassified subsequently to profit or loss: Exchange differences on translation of foreign financial statements $ 32,921 The reconciliation of income tax and profit before tax was as follows: 2021 Profit excluding income tax $ 6,051,838 Income tax using the Company’s domestic tax rate $ 1,210,368 Non-deductible expenses 13,368 Tax incentives (3,140) Deductible temporary differences (694,989) Prior (overestimate) underestimate (20,270) Undistributed earnings additional tax 53,283 Total $ 558,620	2020
	(135)
	(18,876)
	2020
	4,184,544
	836,909 15,871 (9,998) (376,556) - 29,319
	495,545

The reconciliation of income tax and profit before tax was as follows:

2.Deferred tax assets and liabilities

1) Unrecognized Deferred Tax Liabilities

For the years ended December 31, 2021 and 2020, deferred tax liabilities are not recognized for taxable temporary differences associated with investments in subsidiaries, 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. The relevant amounts are as follow:

Consolidated amount of taxable temporary differences associated with investments in subsidiaries Amounts are not recognized as deferred tax liabilities	2021.12.31 $ 11,996,735 $ 2,399,347	2020.12.31
		8,521,793
		1,704,359

� 29 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 are as follows:

Deferred Tax Liabilities:
Balance at January 1, 2021
Debited (Credited) in income statement
Balance at December 31, 2021
Balance at January 1, 2020
Debited (Credited) in income statement
Balance at December 31, 2020
Deferred Tax Assets:
Balance at January 1, 2021
Debited (Credited) in income statement
Debited (Credited) in equity
Exchange differences on translation
of foreign operations
Balance at December 31, 2021
Balance at January 1, 2020
Debited (Credited) in income statement
Debited (Credited) in equity
Exchange differences on translation
of foreign operations
Balance at December 31, 2020

Unrealized gain on
investment income
Defined Benefit Plans
Total
$ (910,910)
-
(910,910)
52,295
(1,382)
50,913
$
(858,615)
(1,382)
(859,997)
$ (1,185,403)
-
(1,185,403)
274,493
-
274,493
$
(910,910)
-
(910,910)
Defined
Benefit
Plans
Current
provisions
Unrealized
losses on
inventories
Cumulative
translation
adjustment
Others
Total
$ 791
4,139
10,051
185,416
352
200,749
(1,180)
2,493
586
-
2,771
4,670
389
-
-
-
-
389
-
-
-
32,921
-
32,921
$
-
6,632
10,637
218,337
3,123
238,729
$ 3,055
2,749
7,727
204,292
179
218,002
(2,129)
1,390
2,324
-
173
1,758
(135)
-
-
-
-
(135)
-
-
-
(18,876)
-
(18,876)
$
791
4,139
10,051
185,416
352
200,749

The Company’s tax returns for the years through 2019 were examined and approved by the Taipei National Tax Administration.

(m) Capital and other equity

1. Issuance of ordinary shares

As of December 31, 2021 and 2020, the total value of nominal ordinary shares amounted to $6,000,000 and $4,000,000. The par value of each share is $10. In total, there were 332,918 in thousands of ordinary shares, issued. All issued shares were paid up upon issuance.

� 30 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Reconciliation of shares outstanding for the years ended December 31, 2021 and 2020 was as follows:

follows:
Balance at January 1 Conversion of convertible bonds Balance at December 31	Ordinary shares (in thousands of shares)
	2021 332,918 - 332,918	2020
		319,708 13,210
		332,918

As of December 31, 2020, the convertible bonds were converted to 13,210 new ordinary shares of stock, which were issued at the amount of $1,425,400. The registration procedures were completed.

2. Capital surplus

The balance of additional paid-in capital was as follows:

Share capital Premium from convertible bonds	2021.12.31 $ 95,627 1,773,034 $ 1,868,661	2020.12.31
		95,627 1,773,034
		1,868,661

According the the R.O.C company Act, capital reserves can only be reclassified as share capital or be distributed as cash dividends after offsetting against losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

3. Retained earnings

The Company's article of incorporation stipulate that Company's net earnings should first be used to offset the prior years' deficits, if any, before paying any income taxes. Of the remaining balance, 10% is to be appropriated as legal reserve, and then any remaining profit together with any undistributed retained earnings shall be distributed according to the distribution plan proposed by the Board of Directors and submitted to the stockholders’ meeting for approval.

Taking into account the characteristics of industrial growth and stabilizing the financial structure of the Company, the Company will not distribute dividends when in deficit.

Under the policy of dividend distribution, the Company shall first take into consideration its future development, financial situation and shareholders' rewards, as well as its programs to meet its capital expenditure budget in determining the cash in need. After the aforementioned consideration, the Company will distribute the cash dividends to its shareholders. Cash dividends shall not be more than 20% of the total dividends.

� 31 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Surplus distributed should be, on principle, 10% to 70% of distributable surplus. Distributable surplus is accounted for as profit, after setting aside reserves, plus, prior-year undistributed earnings. Any remaining profit shall be distributed according to the stockholders' meeting for approval.

1) Legal reserve

10 percent of net income should be set aside as statutory earnings reserve until it is equal to share capital. If the Company experienced profit for the year, the meeting of shareholders shall decide on the distribution of the statutory earnings reserve, either by new shares or by cash, of up to 25 percent of the actual share capital.

2) Special reserve

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the difference of the current-period total net reduction of other shareholders’ equity and the balance of the special reserve that mentioned in the previous paragraph. Similarly, a portion of undistributed prior period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’equity shall qualify for additional distributions. As of December 31, 2021, the special reserve of $75,502 was reversed and as of December 31, 2020, $408,839 was reclassified as special reserve.

3) Earnings distribution

The earnings distribution for 2020 and 2019 was decided by the general meeting of shareholders held on July 1, 2021, and June 18, 2020.

The relevant dividend distribution to shareholders is as follows:

Dividends distributed to ordinary shareholders Cash	2020	2020	2020	2019 Dividend per Share (TWD$) Amount 5.76 1,918,248	2019 Dividend per Share (TWD$) Amount 5.76 1,918,248
	Dividend per Share (TWD$)		Amount		Amount
	$ 7.00		2,330,428		1,918,248

� 32 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

4. Other equity

Balance at January 1, 2021 Exchange difference on translation of foreign financial statements Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income Balance at December 31, 2021 Balance at January 1, 2020 Exchange difference on translation of foreign financial statements Balance at December 31, 2020	Foreign currency translation differences for foreign operations $ (756,453) (131,683) - $ (888,136) $ (831,955) 75,502 $ (756,453)	Unrealized gains (losses) on equity instruments at fair value through other comprehensive income (438) - (15,335) (15,773) (438) - (438)	Total
			(756,891) (131,683) (15,335)
			(903,909)
			(832,393) 75,502
			(756,891)

(n) Earnings per share

The Company calculated the basic and diluted EPS as follows:

1. Basic earnings per share

The calculation of basic earnings per share for the years ended December 31, 2021 and 2020, were based on the profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding, calculated as follows:

1) Profit attributable to ordinary shareholders

Profit attributable to ordinary shareholders of the Company 2) Weighted-average number of ordinary shares Issued ordinary shares at January 1 Effect of convertible notes Weighted-average number of ordinary shares at December 31	2021 $ 5,493,218 2021 332,918 - 332,918	2020
		3,688,999
		2020
		319,708 5,886
		325,594

� 33 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Diluted earnings per share

The calculation of diluted earnings per share for the years ended December 31, 2021 and 2020, were based on profit attributable to ordinary shareholders of the Company and the weightedaverage number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows:

1) Profit attributable to ordinary shareholders of the Company (diluted)

Profit attributable to ordinary shareholders of the Company (basic) Convertible preference shares dividends Profit attributable to ordinary shareholders of the Company (diluted)	2021 $ 5,493,218 - $ 5,493,218	2020
		3,688,999 9,749
		3,698,748

2) Weighted-average number of ordinary shares (diluted)

Weighted-average number of ordinary shares (basic) Effect of convertible bond Effect of employee stock compensation Weighted-average number of ordinary shares (diluted) at December 31	2021 332,918 - 801 333,719	2020
		325,594 7,324 1,110
		334,028

For calculation of the dilutive effect of the stock option, the average market value is assessed based on the quoted market price where the Company’s option is outstanding.

3.Earnings per share were as follow:

Basic earnings per share Diluted earnings per share venue from contracts with customers Disaggregation of revenue Primary geographical markets Taiwan China Other	2021 $ 16.50 $ 16.46 2021 $ 5,856,611 1,312,375 2,020,953 $ 9,189,939	2020
		11.33
		11.07
		2020
		4,726,774 868,560 1,335,302
		6,930,636

(o) Revenue from contracts with customers
Disaggregation of revenue

� 34 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Major products Prepare Capper clad laminate Mass lam foundry Other	2021 $ 3,605,301 3,553,454 1,058,056 973,128 $ 9,189,939	2020
		3,036,645 2,696,485 758,502 439,004
		6,930,636

(p) Rewards of employees, directors and supervisors

In accordance with the Company's article, which was approved by the shareholders, the Company shall assign 3% as rewards to employees, and less than 1.2% as rewards to directors and supervisors, if there are earnings during the year. However, the Company has to retain the amount while there are accumulated loss.

The employees mentioned before include the employees in the subsidiaries who meet the specific conditions.

For the years ended December 31, 2021 and 2020, rewards of employees of $189,120 and $130,767 and directors of $63,040 and $43,589, respectively, were estimated and recognized as current expense. These amounts were calculated using the Company’s profit before tax before rewards of employees and directors for the year ended December 31, 2021 and 2020, and using the earnings allocation method which was stated under the Company’s article. These rewards were charged to profit or loss under operating costs or operating expenses for the year ended December 31, 2021 and 2020.

Related information of distributions of remuneration to employees and directors can be accessed from the Market Observation Post System on the website.

There is no difference between the rewards of employees and directors that was decided by the Board of Directors and the financial report’s estimated amounts in 2021 and 2020.

(q) Non-operating income and expenses
Interest income

The details of other revenue were as follows:

Interest income

2021 $ 920	2020
	1,026

� 35 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Other gains and losses

The details of other gains and losses were as follows:

Disposal gain on property, plant and equipment Foreign currency exchange loss, net Gain on financial assets at fair value through profit or loss Other profits (losses) Other gains (loss), net Finance costs The details of finance cost were as follows: Interest expense	2021 $ 338 (46,950) - 1,028 $ (45,584) 2021 $ 9,041	2020 34 (15,807) 1,853 (1,303)
		(15,223)
		2020 23,185

3. Finance costs

(r) Financial instruments

Credit risk
1) Credit risks exposure

As of December 31, 2021 and 2020, the maximum exposure to credit risk arising from failure of performance of the counter-party and from financial guarantee made by the Company were as follows:

A. The carrying amount of financial assets recognized in the financial statements;
B. Financial guarantee made by the Company amounting to USD 10,600 thousands, 12,200 thousands, and USD 54,600 thousands, 5,000 thousands, respectively.

2.Liquidity risk

The following are the contractual maturities of financial liabilities of the Company, including estimated interest payments and excluding the impact of netting arrangements:

Balance at December 31, 2021 Non-derivative financial liabilities Unsecured bank loans Short-term notes payable Accounts payable Balance at December 31, 2020 Non-derivative financial liabilities Unsecured bank loans Accounts payable	Carrying amount $ 1,401,730 199,820 2,204,281 $ 3,805,831 $ 1,199,607 1,675,322 $ 2,874,929	Contractual cash flows 1,418,916 200,000 2,204,281 3,823,197 1,210,112 1,675,322 2,885,434	Within 6 months 499,494 200,000 2,204,281 2,903,775 902,239 1,675,322 2,577,561	6-12 months 189,547 - - 189,547 1,596 - 1,596	1-2 years 427,672 - - 427,672 3,150 - 3,150	More than 2 years
						302,203 - -
						302,203
						303,127 -
						303,127

� 36 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

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

3.Currency risk
1) Currency risk exposure

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

Financial assets Monetary items USD Financial liabilities Monetary items USD		2021.12.31	TWD 2,895,012 2,156,681		2020.12.31
	Foreign currency (thousands of dollars)	Exchange rate		Foreign currency (thousands of dollars)	Exchange rate TWD 28.480 2,231,010 28.480 1,744,118
	$ 104,589 77,915	27.680 27.680		78,336 61,240

2) Sensitivity analysis

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

A 1% appreciation or depreciation of the TWD against the USD as at December 31, 2021 and 2020, would have increased or decreased net income by $6,441 and $4,059, respectively. This analysis assumes that all other variables remain constant.

3) Foreign exchange gain and loss on monetary items

The foreign exchange gains (losses) of Company monetary items converted into the functional currency amount and converted to parent Company’ s functional currency Taiwan Dollar exchange rate information were as follows:

TWD	2021 Foreign exchange losses Average exchange rate $ (46,950) -	2020 Foreign exchange losses Average exchange rate (15,807) -
	Foreign exchange losses $ (46,950)

4. Interest analysis

The interest rate exposure of the Company’ s financial assets and liabilities is described on liquidity risk management.

The following sensitivity analysis is based on the exposure to interest rate risk of the financial assets and liabilities on the reporting date.

� 37 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

For variable rate instruments, the sensitivity analysis assumes the variable rate liabilities are outstanding for the whole year on the reporting date. The Company’ s internal management reported the increases or decreases in the interest rates and the exposure to changes in interest rates of 0.5% is considered by management to be a reasonable change of interest rate.

If the interest rate increases or decreases by 0.5%, the Company’ s net income will decrease /increase by $8,958 and $5,127 for the years ended December 31, 2021 and 2020, respectively, assuming all other variable factors remain constant. This is mainly due to the Company’s variable rate borrowing.

5. Fair value

1) The kinds of financial instruments and fair value

The fair value of financial assets and liabilities at fair value through profit or loss is measured on a recurring basis. The carrying amount and fair value of the Company’s financial assets and liabilities, including the information on fair value hierarchy were as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and for equity investments that has no quoted prices in the active markets and whose fair value cannot be reliably measured, disclosure of fair value information is not required :

		2021.12.31	2021.12.31
Book Value $ 1,292,713 2,797,198 721,866 8,566 $ 4,820,343 $ 1,401,730 2,204,281 1,665,350 13,140 $ 5,284,501		Fair value
	Level 1 - - - - - - - - - -	Level 2 - - - - - - - - - -	Level 3 - - - - - - - - - -	Total
				- - - -
				-
				- - - -
				-

� 38 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

		2020.12.31	2020.12.31
Book value $ 962,032 2,235,138 500,051 640 $ 3,697,861 $ 1,199,607 1,675,322 1,271,445 8,673 $ 4,155,047		Fair value
	Level 1 - - - - - - - - - -	Level 2 - - - - - - - - - -	Level 3 - - - - - - - - - -	Total
				- - - -
				-
				- - - -
				-

2) Valuation techniques for financial instruments measured at fair value
A. Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market. The major exchange and the Over-the-Counter of Central Government’s bonds is the basis to the fair value of listing equity instruments and liability instruments in active market.

If quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have quoted price in active market. If a financial instrument does not accord with the definition aforementioned, then it is considered to be without quoted price in active market. In general, market with low trading volume or high bid-ask spreads is an indication of non-active market.

(s) Financial risk management
Overview

The nature and the extent of the Company’ s risks arising from financial instruments, which include credit risk, liquidity risk and market risk, are discussed below. Also, the Company’ s objectives, policies and procedures of measuring and managing risks are discussed below.

For more quantitative information about the financial instruments, please refer to the other related notes of the financial statements.

� 39 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Risk management framework

The financial management department, which provides intra-company services, is responsible for coordinating domestic and international financial market operations, as well as monitoring and managing operation-related financial risks through the internal risk report. The internal risk report analyzes risk exposure of the Company through range and depth. The Company uses derivative financial instruments to hedge risks and to alleviate their impacts. Usage of derivative financial instruments is subject to regulations approved of by the Board of Directors. The regulation is a written document pertaining the usage of exchange risk, interest risk, credit risk, derivative and non-derivative financial instruments, as well as the investment of the remaining working capital. The internal auditors review the policy compliance and risk exposure on a regular basis. The Company does not engage in opportunistic operations of financial instruments (including derivative financial instruments). The financial management department reports to The Company Risk management Committee quarterly. The Company Risk Management Committee is an independent organization that is responsible for monitoring risk management and enforcing policies to reduce risk exposure.

3. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment.

1) Accounts receivable and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Company’ s customer base, including the default risk of the industry in which customers operate, as these factors may have an influence on credit risk.

The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’ s standard payment terms are offered. The Company’ s review includes external ratings, when available, and in some cases bank references. Credit limits are established for each customer, which represent the maximum open amount without requiring approval from the General Manager’ s office; these limits are reviewed quarterly. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a cash basis.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Customers that are graded as “high risk” are placed on a restricted customer list and monitored by the General Manager’ s office. If customers default, the Company will stop transactions with those customers or trade on a cash basis.

The Company established an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss incurred but not yet identified. The collective loss allowance is determined based on historical data on payment statistics for similar financial assets.

� 40 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Bank deposit

The credit risk exposure in the bank deposits and transaction contract of foreign derivation instruments is measured and monitored by the General Manager's office. The Company only deals with financial institutions; therefore, there are no significant doubts regarding default on the above financial instruments, and as a result, there is no significant credit risk.

4. Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company uses activity-based costing to cost its products, which assists it in monitoring cash flow requirements. The Company aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash flows on financial liabilities over the succeeding 90 days. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. As of December 31, 2021 and 2020, the Company’s unused credit line were amounted to $8,316,707 and $6,495,383, respectively.

5. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Company’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Company buys and sells derivatives, and also incurs financial liabilities, in order to manage market risk. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Company is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Company’s entities, primarily the New Taiwan Dollar (TWD), and US Dollar (USD). Besides, the Company uses natural hedging principle to hedge by controlling the net amount of each currency of the Company in accordance with the condition of the exchange rate market. The Company hedges the currency risk with forward foreign currency whose mature date is in a year from report date and currency swap contract.

The interest is denominated in the currency used in the borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Company, primarily the TWD, and USD. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

� 41 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Interest risk

The Company’s borrowings were on the basis of floating interest rate. The Company is not involved in the situation of changing floating interest rate into fixed rate with interest rate swap agreement. The Company periodically assessed the borrowing rates of the banks and every currency to make provisions for interest-changed rate risk. In addition, the Company creates favorable relationship with banks to get lower financial costs from borrowings in order for it to strengthen its working capital to lower its dependency on bank borrowings, as well as situation of changing floating interest rate and scatter interest-changed rate risk.

3) Other market price risk

The Company does not enter into any commodity contracts other than to meet the Company’s expected usage and sales requirements; such contracts are not settled on a net basis.

(t) Capital management

The Company maintains and manages its capital to meet the minimum paid-in capital required by the competent authority, and to optimize the balance of liabilities and equity in order to maximize shareholders' return. By periodically reviewing and measuring relative cost, risk, and rate of return to ensure profit and to maintain adequate financial ratios, the Company may adopt various financing approaches to balance its capital structure in order to meet the demands for capital expenditures, working capital, settlements of liabilities, and dividend payments in normal course of business for the future.

(u) Investing and financing activities not affecting current cash flow

The Company investing and financing activities which did not affect the current flow in the years ended December 31, 2021 and 2020, were as follow:

Non-cash changes Acquisition Foreign exchange movement Fair value changes - - - - - - - - (180) - - (180) Non-cash changes Acquisition Foreign exchange movement Fair value changes - - - - - - - - -	Non-cash changes Acquisition Foreign exchange movement Fair value changes - - - - - - - - (180) - - (180) Non-cash changes Acquisition Foreign exchange movement Fair value changes - - - - - - - - -	2021.12.31 551,730 850,000 199,820
		1,601,550
		2020.12.31 399,607 800,000
Acquisition - - -	Foreign exchange movement - - -
		1,199,607

� 42 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(7) Related-Party Transactions

(a) Parent company and ultimate controlling company

The Company is both the parent company and the ultimate controlling party of the Group.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the financial statements.

Name of related party Relationship with the Company EMC OVERSEAS HOLDING The Company its subsidiaries INCORPORATED Grand Wuhan Incorporated The Company its subsidiaries EMC INTERNATIONAL HOLDING The Company its subsidiaries

Grand Wuhan Incorporated The Company its subsidiaries EMC INTERNATIONAL HOLDING The Company its subsidiaries INCORPORATED Grand Zhuhai Incorporated The Company its sub-subsidiaries Grand Shanghai Incorporated The Company its sub-subsidiaries Grand Zhongshan Incorporated The Company its sub-subsidiaries EMC SPECIAL APPLICATION The Company its sub-subsidiaries INCORPORATED Elite Electronic Material (Kunshan) Co., Ltd. The Company its sub-subsidiaries Elite Electronic Material (Zhongshan) Co., Ltd. The Company its sub-subsidiaries Elite Electronic Material (Huangshi) Co., Ltd. The Company its sub-subsidiaries EMD SPECIALTY MATERIALS, LLC The Company its sub-subsidiaries EMC USA HOLDING INCORPORATED The Company its sub-subsidiaries TECHNICA USA The Company associates

1. Sales

The amounts of significant sales and royalties sales by the Company to related parties were as follows:

Sub-Subsidiaries Associates	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,292,023 97,953 $ 1,389,976	2020
		787,901 70,000
		857,901

The selling price for related parties approximated the market price. The credit terms ranged from 90 to 120 days, which approximated those for routine sales transactions; the royalties are negotiated by both parties.

� 43 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Purchases

The amounts of significant purchases by the Company from related parties were as follows:

The amounts of significant purchases by the Company from	related parties were as follows:	related parties were as follows:
Sub-Subsidiaries	For the years ended December 31,
	2021 $ 100,592	2020
		78,834

The terms and pricing of purchase transactions with related parties were not significantly different from those offered by other vendors. The payment terms ranged from 90 to 120 days, which were no different from the payment terms given by other vendors.

3. Receivables from related parties

The receivables from related parties were as follows:

Account	Relationship	2021.12.31 $ 310,458 51,119 177,122 45 $ 538,744	2020.12.31
Accounts receivable Accounts receivable Other receivables Other receivables	Sub-Subsidiaries Associates Sub-Subsidiaries Associates		276,715 35,374 50,433 -
			362,522

The receivables from related parties were uncollateralized, and no provisions for doubtful debt were required after the assessment by the management.

Payables to related parties

Account	Relationship	2021.12.31 $ 63,394 450,082 2,928 $ 516,404 2021.12.31 $ 3,322	2020.12.31
			19,569 418,187 2,537
			440,293
			2020.12.31
			-

5. Loans to related parties

The loans to related parties were as follow:

The interest charged by the Company to related parties is based on the average interest rate charged by financial institutions on the Company's borrowings. The loans to related parties are unsecured.

� 44 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Guarantee

As of December 31, 2021, the Company had provided a guarantee for loans taken out by its subsidiaries, please refer to Note 13(a) for further explanations.

7.Other transactions to related parties

Account	Relationship Associates	2021.12.31 $ 3,891	2020.12.31 2,885
Selling expenses

(d) Key management personal compensation

Key management personnel compensation comprised:

Short-term employee benefits Termination benefits	For the years ended December 31,	For the years ended December 31,
	2021 $ 192,538 2,774 $ 195,312	2020
		136,535 2,891
		139,426

(8) Pledged Assets

The carrying values of pledged assets were as follows:

Assets	Purpose of Pledge Deposits for lease and natural gass, etc.	2021.12.31 $ 8,566	2020.12.31 640
Refundable deposits

(9) Significant Contingencies and Commitments

(a) Major Commitments and contingencies were as follows:
Unused standby letters of credit

Unused standby letters of credit TWD USD	2021.12.31 2020.12.31 $ 69,047 85,193 5,384 2,987

The royalties of eco-material technique treatment with Company A, etc., the paid royalties were as follows:

2021 $ 14,401	2020 14,109

As of December 31, 2021 and 2020, the amounts of Performance Letter of Guarantee issued by Mega International Commercial Bank-Zhongli Branch for the purpose of Customs for guaranty of domestic tariff and for guaranty of hiring foreigners to be employed were $5,000.

� 45 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As of October 30, 2020, the Group's Board of Directors resolved to purchase land and buildings for the growth of the Group's operations, and signed the purchase contract with an unrelated party and the total contract price was $2.16 billion. Both parties agreed that the land needs to be in compliance with the land pollution remediation regulations. Since the relevant restoration works have not been completed, the ownership registration has not yet been transferred.
5.As of December 31, 2021, the Company planned to get a government grant and obtained the performance guarantee letter issued by the bank. The amount of the guarantee letter was $7,200.

(10) Significant Catastrophic Losses: None.

(11) Significant Subsequent Events: None.

(12) Others

(a) Employee benefits, depreciation, and amortization expenses, categorized as operating cost or expense, were as follows:

Categorized as Nature	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others employee benefits Depreciation Amortization	618,111 54,972 24,735 - 37,842 184,643 249	575,146 25,850 13,565 63,522 12,194 13,736 9,020	1,193,257 80,822 38,300 63,522 50,036 198,379 9,269	561,617 47,455 23,046 - 28,143 180,730 209	374,956 18,749 11,140 44,071 7,489 10,761 4,886	936,573 66,204 34,186 44,071 35,632 191,491 5,095

As of December 31, 2021 and 2020, the additional information about the numbers of employees and employee benefit were as follows:

Number of employees Number of directors who were not employees The average employee benefit The average salaries and wages Adjustment of average salaries and wages Supervisors’ remuneration

� 46 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1.The Company's salary and remuneration policy (including directors, managers and employees) are as follows:

The remunerations to directors, managers and employees are in accordance with the principles of fairness and competition. In addition, the wages of the employees of the Company are paid based on the grade table set according to the complexity of their work, the degree of their responsibilities, and the professional skills required. Furthermore, the remuneration of the Company’ s directors and employees is determined by reference to the Company’ s overall operating performance, future risks and development trends of the industry, as well as the individual’ s performance achievement rate and contribution to the Company; reasonable remuneration is also taken into consideration.

2.The Company did not have supervisors, therefore, there was no remunerations of supervisors.
(b) As of December 31, 2021, the Company's Board of Directors resolved to issue the unsecured convertible bonds for purchasing properties and working capital needs. The total amount raised is expected to be capped at $3.5 billion, with the par value of $100 thousand, and the issue period will be 5 years. The issue price is based on 100%~102% of the par value. Other conditions and measures will be dealt with in accordance with relevant acts and regulations, and will be announced separately after reported to the competent authority for approval.

(13) Additional Disclosures

(a) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year ended December 31, 2021:

Fund financing to other parties:

								(Expressed in tho	(Expressed in tho	usands of	New Taiw	an dollars,unless other	an dollars,unless other	an dollars,unless other	wise specified)	wise specified)
No	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance ?for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0 1 2	Elite Material Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd.	TECHNICA USA Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Other receivables- related parties Other receivables- related parties Other receivables- related parties	Y Y Y	12,582 1,201,216 1,402,880	12,456 1,185,912 1,390,080	3,322 1,172,880 803,640	2.00% 3.00% 3.00%	1 2 2	97,953 - -	- Operating demand Operating demand	- - -	- - -	- - -	48,977 (Note 3) 2,982,979 (Note 4) 1,913,073 (Note 5)	5,925,854 (Note 3) 2,982,979 (Note 4) 1,913,073 (Note 5)

Note 1: The number is filled as follows:

0 is the Company.
Subsidiaries are numbered as 1 sequentially.

Note 2:1. Having dealings with the Company.

Those who have the needs in short-term financing.
Note 3:The company with business contact, the amount of each fund financing cannot exceed 50% of total amount of purchase (sales) transactions in the recent year and cannot exceed 3% of the Company's net asset value; the total amount of fund financing cannot exceed 30% of the Company's net asset value.
Note 4:The total amount of fund financing could not exceed 30% of the lender's net asset value and the Company's net asset value, while the maximum financing amount for a single company could not exceed 30% of the lender's net asset value .
Note 5:The total maximum financing amount cannot exceed 30% of the lender's net asset value, while the maximum financing amount for a single company cannot exceed 30% of the lender's net value.

� 47 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Guarantees and endorsements for other parties:

		(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)
No. (Note 1)	Name of company	Counter-party		Limitation on amount of guarantees and endorsements for a specific enterprise (Note 3)	Highest balance for guarantees and endorsements during theperiod	Balance of guarantees and endorsements as of reporting date	Actual usage amount during theperiod	Property pledged on guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements (Note 3)	Parent Company endorsement/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsement/ guarantees to third parties on behalf of parent company	Endorsements/guar antees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 0 0 0 0 1 2	Elite Material Co., Ltd. � � � � Elite Electronic Material (Kunshan) Co., Ltd. (Note 4) Elite Electronic Material (Zhongshan) Co., Ltd.	Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. EMD SPECIALTY MATERIALS,LLC TECHNICA USA Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	2 2 2 2 6 4 4	9,876,423 9,876,423 9,876,423 9,876,423 9,876,423 994,326 3,188,455	85,605 142,675 1,139,200 285,350 17,121 784,800 2,400,780	- - - 276,800 16,608 781,920 2,391,968	- - - 166,080 16,608 467,436 1,331,212	- - - - - - -	% - % - % - % 1.40 % 0.08 % 7.86 % 37.51	19,752,846 19,752,846 19,752,846 19,752,846 19,752,846 9,943,264 6,376,910	Y Y Y Y		Y Y Y Y Y

Note 1: 0 is the Company.

Note 2:1. Entities with business relationship with the Company.

A subsidiary in which the Company directly holds more than 50% of its voting shares.
A investee in which the Company and subsidiary holds more than 50% of its voting shares.
A parent company in which the Company directly or Subsidiaries indirectly holds more than 90% of its voting shares.
Companies in same type of business and providing mutual endorsements/ guarantees in favor of each other in accordance with the contractual obligations in order to fulfill the needs of the construction project.
Shareholders making endorsements and/or guarantees for their mutually invested company in proportion to their shareholding percentage.
Companies in same type of business providing guarantees of pre-sale contracts according to the regulation.
Note 3: The total maximum endorsement / guarantee cannot exceed 100% of the Company's net worth in its latest financial statements, while the maximum endorsement / guarantee amount for a single company cannot exceed 50% of the Company's net worth in its latest financial statements.
Note 4: The Company or the company in which directly or indirectly holds more than 90% of the voting shares may be endorsed and the amount shall not exceed 10% of the company’s net worth.
Information regarding securities held at balance sheet date:

Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:	Information regarding securities held at balance sheet date:
(Expressed in thousands of New Taiwan dollars, unless otherwise specified)
Name of holder	Category and name of security	Category and name of security	Account title	Ending balance				Note
				Number	Book value	Percentage	Market value
EMC OVERSEAS HOLDING INCORPORARTED	PROUD STAR INTERNATIIONAL LIMITED	-	Non-current financial assets at fair value through other comprehensive income	500,000	-	% 3.26	-

Accumulated buying/selling of the same marketable securities for which the dollar amount reaches $300 million or 20% or more of paid-in capital: None.

� 48 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Acquisition of real estate for which the dollar amount reaches $300 million or 20% or more of paid-in capital :

(In Thousands of New Taiwan Dollars)

Name of Company	Name of property	Transaction date	Transaction amount	Status of payment	Counterparty	Relationship with the Company	If the country is a related party, disclose the previous transfer information	If the country is a related party, disclose the previous transfer information	If the country is a related party, disclose the previous transfer information	If the country is a related party, disclose the previous transfer information	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
Elite Material Co., Ltd.	Land and plant	2021.12.31	2,160,000	Not yet paid	Tehchang Leather Products Co., Ltd.	None	-	-	-	-	Professional valuation report	Required for company operations	Payments are expected to be made after fulfilling contract conditions

Disposition of real estate for which the dollar amount reaches $300 million or 20% or more of paid-in capital: None.
Buying/selling products with the dollar amount reaches $100 million or 20% or more of paid-in capital:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Relationship		Transaction details	Transaction details		Reasons why and description of how the transaction conditions differ from general transactions	Reasons why and description of how the transaction conditions differ from general transactions	Account/note receivable (payable)	Account/note receivable (payable)	Notes
			Purchase /Sale	Amount	Percentage of total purchases /sales	Credit period	Unit price	Credit period	Balance	Percentage of total accounts/notes receivable (payable)
Elite Material Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Elite Electronic Material (Kunshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd.	Investee company on equity method by the Company � � � Actual related party � � � �	Sale Purchase Sale Purchase Sale Purchase Sale Purchase Sale	(537,594) 537,594 (443,710) 443,710 (113,116) 113,116 (2,803,250) 2,803,250 (1,935,891)	% (6) % 4 % (5) % 5 % (1) % 1 % (58) % 23 % (40)	Depends on subsidiaries' financial condition � � � � � � � �	- - - - - - - - -		115,050 (115,050) 195,374 (195,374) 93,616 (93,616) 958,953 (958,953) 539,590	% 4 % (3) % 7 % (8) % 2 % (4) % 61 % (26) % 34

� 49 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name of company	Counter-party	Relationship	Transaction details	Transaction details	Transaction details	Transaction details	Reasons why and description of how the transaction conditions differ from general transactions	Reasons why and description of how the transaction conditions differ from general transactions	Account/note receivable (payable)	Account/note receivable (payable)	Notes
			Purchase /Sale	Amount	Percentage of total purchases /sales	Credit period	Unit price	Credit period	Balance	Percentage of total accounts/notes receivable (payable)
Elite Electronic Material (Zhongshan) Co., Ltd.	Elite Electronic Material (Huangshi) Co., Ltd.	Actual related party	Purchase	1,935,891	% 23	Depends on subsidiaries' financial condition	-		(539,590)	% (21)

Accounts receivable from related parties for which the dollar amount reaches $100 million or 20% or more of paid-in capital:

(In Thousands of New Taiwan Dollars)

Name of related party	Counter-party	Relationship	Balance of receivables from related party	Turnover days	Past-due re relate	ceivables from d party	Subsequently received amount of receivables from related party	Allowances for bad debts
					Amount	Action taken
Elite Material Co., Ltd. Elite Material Co., Ltd. (note 1) Elite Material Co., Ltd. Elite Material Co., Ltd. (note 1) Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. (Note 1) Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. (note 1) Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. (Note 1) Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Elite Electronic Material (Kunshan) Co., Ltd. � Elite Electronic Material (Zhongshan) Co., Ltd. � Elite Material Co., Ltd. � Elite Electronic Material (Huangshi) Co., Ltd. � � � Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd.	Investee company on equity method by the Company � � � Investcc company on equity method by the Company � Actual related party � � � � �	115,050 123,316 195,374 52,059 53,379 449,977 48,728 1,196,290 4,437 815,519 958,953 539,590	4.47 Not applicable 2.56 Not applicable 2.50 Not applicable 2.98 Not applicable 3.31 Not applicable 3.96 3.72	- - - - - - - - - - - -		69,398 123,316 144,858 52,059 4,041 108,267 36,155 - 4,395 - 647,195 345,145	- - - - - - - - - - - -

Note 1: Account for other receivable due from related parties.

� 50 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Derivative transactions: None.
(b) Information on investees:

For the years ended December 31, 2021, the following was the information on investees (excluding investees in Mainland China) :

				(Amounts Expressed in Thousands	(Amounts Expressed in Thousands	(Amounts Expressed in Thousands	(Amounts Expressed in Thousands	of New Taiwan Dollars, Except for Share Data)	of New Taiwan Dollars, Except for Share Data)	of New Taiwan Dollars, Except for Share Data)	of New Taiwan Dollars, Except for Share Data)
Name of investor	Name of investee	Location	Major operations	Initial investm	ent (Amount)		Ending balanc	e	Net income (loss) of the investee	Investment income (losses)	Note
				Ending balance	Beginning balance	Shares	Ratio of shares	Book value
Elite Material Co., Ltd. � � � EMC OVERSEAS HOLDING INCORPORATED � � Grand Zhuhai Incorporated � EMC INTERNATIONAL HOLDING INCORPORATED � EMC SPECIAL APPLICATION INCORPORATED EMC USA HOLDING INCORPORATED	EMC OVERSEAS HOLDING INCORPORATED Grand Wahan Incorporated EMC INTERNATIONAL HOLDING INCORPORATED Li Cheng Tech Co., Ltd. Grand Zhuhai Incorporated TECHNICA USA Li Cheng Tech Co., Ltd. Grand Shanghai Incorporated Grand Zhongshan Incorporated EMC SPECIAL APPLICATION INCORPORATED EMC USA HOLDING INCORPORATED EMD SPECIALTY MATERIALS,LLC TECHNICA USA	British Virgin Islands Cayman Islands � Taiwan Cayman Islands USA Taiwan British Virgin Islands British Virgin Islands Cayman Islands Cayman Islands USA USA	Investment business Import / export business and investment business Investment business Electronics, Telecommunications equipment, Wholesale, Retails, Batteries, Power generation and Distribution machinery manufacturing business Import / export business and investment business Import/export business Electronics, Telecommunications equipment, Wholesale, Retails, Batteries, Power generation and Distribution machinery manufacturing business Import / export business and investment business Import / export business and investment business Investment business Investment business Copper clad laminate and prepreg business Import/export business	1,179,111 602,440 761,482 173,694 935,551 - 7,311 914,313 454,976 726,738 - 725,136 16,608	1,179,111 602,440 761,482 173,694 935,551 16,608 7,311 914,313 454,976 726,738 - 725,136 -	36,256,950 20,020,000 26,310,000 16,412,918 33,798,821 - 250,000 18,161,515 16,437,000 26,255,000 - - 600,000	% 100.00 % 100.00 % 100.00 % 33.50 % 100.00 % - % 1.53 % 99.79 % 100.00 % 100.00 % 100.00 % 100.00 % 30.00	16,367,691 714,679 754,212 - 16,313,311 - - 9,929,227 6,382,743 752,951 - 751,659 -	5,243,183 95,217 26,847 - 5,226,638 (33,146) - 3,281,452 1,952,464 29,389 (2,279) 43,580 (33,146)	5,243,183 95,217 26,847 - 5,226,638 (7,665) - 3,274,513 1,952,464 29,389 (2,279) 43,580 (2,279)	Subsidiaries Subsidiaries Subsidiaries Note 5 Sub-subsidiaries Note 3, 4 Note 5 Third-tier subsidiary � Sub-subsidiaries Third-tier subsidiary Third-tier subsidiary Note 3, 4

Note 1:The amounts of book value recognized using the equity method include investment income(losses) and the exchange differences on translation of foreign statements.

Note 2: The amount above is evaluated based on the independent audit report of the investee under equity method .

Note 3:On October 27, 2021, the Company's Board of Directors resolved to adjust the investment structure. The initial investment of $16,608 that was invested in Technica USA through EMC Overseas Holding Incorporated was adjusted to be invested in Technica USA through EMC USA Holding Incorporated.

Note 4: Because other shareholders hold more than 70% of the shares and the Company only accounts for 30%, the Company has no control. Note 5: The investment value had been impaired, the Company recognized all losses and the book value was offset to zero.

� 51 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(c) Information on investment in Mainland China:
Information on investment in Mainland China:

(Amounts Expressed in Thousands of New Taiwan Dollars)

Investee Company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan (R.O.C.)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan	Net income (loss) of the investee	Percentage of Ownership	Investment Income (Loss) Recognized (Note 2)	Carrying Amount	Accumulated Inward Remittance of Earnings
					Outflow	Inflow
Elite Electronic Material (Kunshan) Co.Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Copper clad laminate and prepreg business � �	1,749,376 559,136 553,600	(2) (2) (2)	650,816 440,613 601,858	- - -	- - -	650,816 440,613 601,858	3,273,474 1,945,565 86,742	% 99.79 % 100.00 % 100.00	3,266,552 1,945,565 86,742	9,922,238 6,376,910 699,881	7,862,841 4,038,934 -

Limitation on investment in Mainland China:

Limitation on investment	in Mainland China:
Aggregate investment amount remitted from Taiwan to Mainland China at the end of the period	Approved investment (amount) by Ministry of Economic Affairs Investment Commission	Limitation on investment in Mainland China in accordance with regulations of Ministry of Economic Affairs Investment Commission
1,710,734	4,373,813	11,851,708

Note 1: There are three investment approach of categories:

(1) Direct Investment in Mainland China.
(2) Investment in Mainland China by a third party.
(3) Other approach.
Note 2: The financial statements were audited by the Certified Public Accountants of the Company.
Note 3: The difference between the paid-in capital of Elite Electronic Material (Kunshan) Co. Ltd. and the investment amount remitted from Taiwan amounted to USD 6,012, which was invested overseas by the subsidiary, also USD 10,000, and USD 35,000, which were recognized as capital increase out of earnings, respectively.
Note 4: The difference between the paid-in capital of Elite Electronic Material (Zhongshan) Co. Ltd. and the investment amount remitted from Taiwan amounted to USD 6,255, which was recognized as capital increase out of earnings.
Note 5: The difference between the paid-in capital and investment amount remitted from Taiwan amounted to USD 110, which was invested overseas by the subsidiary.
Note 6: The items in the balance sheet and those in the income statements were translated at the exchange rate of 27.6800 and 27.9973, respectively, for the year ended December 31, 2021.

3. Significant transactions�

Please refer to the related disclosures above captioned as “ Related information on material transaction items” for direct or indirect significant transactions between the Company and its investees in Mainland China for the year ended December 31, 2021. (The transactions were eliminated in the consolidated financial statements.)

� 52 �

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) ELITE MATERIAL CO., LTD.

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(d) Major shareholders:

Major shareholders:
Shareholding Shareholder’s Name	Shares	Percentage
Yu Chang Investments Co., Ltd.	25,471,477	% 7.65
New Labor Pension Fund- Taiwan	24,182,700	% 7.26

Note: (1)The main shareholder information of this table is calculated by the insurance company on the last business day at the end of each quarter. The above information. As for the share capital recorded in the company's financial report and the number of shares actually delivered by the company without physical registration, the calculation basis may be different or different.
(2)If the information on the Shanghai Stock Exchange is a shareholder's shareholding delivery to the trust, it will be disclosed by the trustee who opened the trust account separately. As for shareholders who handle the declaration of insider equity holding more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include their shareholdings plus their delivery of trust and shares with the right to make decisions on trust property, etc. For information on insider equity declaration, please refer to Open Information Observatory.

(14) Segment Information

Please refer to the consolidated financial statements of the year ended 2021.

� 53 �

ELITE MATERIAL CO., LTD.

STATEMENT OF CASH AND CASH EQUIVALENTS

December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Description Amount Cash on hand $ 375 Check account deposits 119 Saving accounts 554,957 Foreign deposits(USD14,998 Thousands of Dollars� CNY5,524 Thousands of Dollars) 439,142 Time deposits 298,120 Sub total 1,292,338 $ 1,292,713
Cash Saving accounts Total

STATMENT OF NOTES RECEIVABLES

Client name	Description	Amount Note $ 42,410 27,552 13,123 8,696 6,304 16,475 Client included in others does not exceed 5% of the account balance. (349) $ 114,211
A Company B Company C Company D Company E Company Others Less: Loss allowance Total	Current portion � � � � �

� 54 �

ELITE MATERIAL CO., LTD.

STATEMENT OF ACCOUNT RECEIVABLES

December 31, 2021

(In Thousands of New Taiwan Dollars)

Client name	Description	Amount Note $ 115,050 195,374 34 51,119 361,577 648,309 382,421 276,878 163,608 138,873 712,369 Client included in others does not exceed 5% of the account balance. 2,322,458 2,684,035 (1,048) $ 2,682,987
Related-parties: Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. TECHNICA USA Sub total Non-related-parties: F Company G Company H Company I Company J Company Others Sub total Total Less: Loss allowance Accounts receivable, net

� 55 �

ELITE MATERIAL CO., LTD. STATEMENT OF INVENTORY

December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Amount Cost Net Realizable Value Note $ 873,764 (34,253) 839,511 884,214 32,181 32,181 91,829 (6,013) 85,816 101,045 234,707 (12,915) 221,792 324,976 26,973 26,973 $ 1,206,273
	Cost $ 873,764 (34,253) 839,511 32,181 91,829 (6,013) 85,816 234,707 (12,915) 221,792 26,973 $ 1,206,273
Materials Less: Loss allowance Sub total Supplies Work in progress Less: Loss allowance Sub total Finished goods Less: Loss allowance Sub total Inventory in-transit Inventory, net

� 56 �

ELITE MATERIAL CO., LTD.

STATEMENT OF INVESTMENTS ACCOUNTED FOR USING

EQUITY METHOD

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Investee Company EMC OVERSEAS HOLDING INCORPORATED Grand Wuhan Incorporated EMC INTERNATIONAL HOLDING INCORPORATED Licheng Technology (Stock) Company	Beginning Balance Number of shares Amount 36,257 $ 13,423,847 20,020 624,341 26,310 746,382 16,413 - $ 14,794,570	I	ncrease Amount 2,934,534 86,056 7,830 - 3,028,420	D	ecrease Amount - - - - -		Ending Balanc	e Amount 16,358,381 710,397 754,212 - 17,822,990	Mark N	et Price or et Value Total price 16,367,691 714,679 754,212 - 17,836,582	Pledged as collateral Note No No No No
	Number of shares	Number of shares - - - -		Number of shares - - - -		Number of shares 36,257 20,020 26,310 16,413	Proportion of shareholding % 100.00 % 100.00 % 100.00 % 33.50		Unit price - - - -
	36,257 20,020 26,310 16,413

� 57 �

ELITE MATERIAL CO., LTD.

STATEMENT OF SHORT-TERM LOANS

December 31, 2021

(In Thousands of New Taiwan Dollars)

Type of loans Description Financial institution

Short-term loans

Ending Balance Contract Period $ 551,730 2021.09.22~2022.03.31

Range of Loan Collaterals or Interest Rates Commitments Pledged Assets Note 0.49%~0.85% 4,814,800 Guarantee Notes

� 58 �

ELITE MATERIAL CO., LTD.

STATEMTN OF SHORT-TERMS NOTE PAYABLES

December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Guarantees or acceptances institution Mega Bills Finance CO., LTD International Bills Finance CO., LTD	Contract Period 110.12.30~ 111.02.25 110.12.24~ 111.02.22	Interest Rate		Amount	Balance Amount Note 99,907 Promissory note 99,913 � 199,820
				Issue Amount $ 100,000 100,000 $ 200,000	Discount commercial payable 93 87 180
Commercial paper �			0.58% 0.65%

� 59 �

ELITE MATERIAL CO., LTD.

STATEMENT OF ACCOUNT PAYABLES

December 31, 2021

(In Thousands of New Taiwan Dollars)

Suppliers	Description	Amount Note $ 53,379 9,993 22 63,394 224,767 206,698 206,264 203,316 152,735 124,805 114,462 113,880 793,960 Client included in others does not exceed 5% of the account balance. 2,140,887 $ 2,204,281
related-parties: Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Sub total Non-related-parties: A Company B Company C Company D Company E Company F Company G Company H Company Others Sub total Total

� 60 �

ELITE MATERIAL CO., LTD.

STATEMENT OF OTHER PAYABLES

December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Description Amount Payables for equipment $ 68,908 Payroll payables and bonuses payable 420,022 Work in progress-outsourced payable 104,312 Employees compensations payable 189,210 Directors' compensations payable 63,040 Pension expenses payable 20,192 Other expenses payable 799,666 $ 1,665,350
Other payables Total

� 61 �

ELITE MATERIAL CO., LTD.

STATEMENT OF LONG-TERM LOAN

December 31, 2021

(In Thousands of New Taiwan Dollars)

Creditor	Description	Loan Amount $ 300,000 100,000 100,000 100,000 100,000 100,000 50,000 850,000 (128,571) $ 721,429	Contract Period 2020.12.25~2023.12.25 2021.09.22~2024.09.22 2021.09.22~2024.09.22 2021.09.22~2024.09.22 2021.12.22~2023.09.22 2021.12.21~2023.08.13 2021.12.22~2023.10.14	Interest % 1.05 % 1.02 % 1.02 % 0.98 % 0.80 % 0.85 % 0.88	Collaterals or Pledged Assets Note None � � � � � �
A Bank B Bank C Bank D Bank D Bank E Bank E Bank Sub total Less: Long-term borrowings, current portion Long-term loans	Financial institution Financial institution Financial institution Financial institution Financial institution Financial institution Financial institution

� 62 �

ELITE MATERIAL CO., LTD.

STATEMENT OF NET REVENUE

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Item Capper clad laminate Prepreg Mass lam foundry Others	Quantity	Amount Note $ 3,553,454 3,605,301 1,058,056 973,128 $ 9,189,939
	6,531,737 25,664,613 6,552,660

� 63 �

ELITE MATERIAL CO., LTD.

STATEMENT OF OPERATING COSTS

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Item
Materials, beginning of the year
Plus: Purchases
Less: Material sold
Materials, end of the year
Material scraps
Transferred to manufacturing expenses
Transferred to operating expenses
Direct materials
Direct labor
Manufacturing expenses
Total Manufacturing costs
Plus: Work-in-process, beginning of the year
Purchased work-in-process
Less: Work-in-process, end of the year
Transferred to manufacturing expenses
Transferred to operating expenses
Cost of finished goods
Plus: Finished goods, beginning of the year
Purchased finished goods
Less: Finished goods, end of the year
Transferred to manufacturing expenses
Transferred to operating expenses
Inventory scraps
Cost of goods sold�Material sold
Loss on disposal of scrap
Losses on inventory valuation and obsolescence
Revenue from sales of scraps
Costs of sales

Amount
Sub total
Total
$ 697,578
5,403,318
(417,089)
(873,764)
(4,211)
(83,156)
(34,212)
4,688,464
487,219
1,638,994
6,814,677
126,585
2,913
(91,829)
(46,434)
(90,392)
(99,157)
6,715,520
281,550
97,421
(261,680)
(6,248)
(93,387)
(2,155)
15,501
6,731,021
417,089
6,366
2,932
(53,012)
$
7,104,396

� 64 �

ELITE MATERIAL CO., LTD.

STATEMENT OF SELLING EXPENSES

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Description	Amount	Note
Payroll expenses	$	41,044
Shipping expenses		96,345
Administrative expenses		45,039
Commission expenses		113,607
Other expenses		43,494	Client included in others
			does not exceed 5% of the
			account balance.
Total	$	339,529
	STATEMENT OF ADMINISTRATIVE
	EXPENSES
Item	Description	Amount	Note
Payroll expenses	$	445,952
Remuneration of directors		63,040
Other expenses		164,884	Client included in others
			does not exceed 5% of the
			account balance.
Total	$	673,876

� 65 �

ELITE MATERIAL CO., LTD.

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES

For the Year Ended December 31, 2021

(In Thousands of New Taiwan Dollars)

Item	Description	Amount Note $ 190,037 88,150 48,960 Client included in others does not exceed 5% of the account balance. $ 327,147
Research and development expenses Payroll expenses Other expenses Total

� 66 �

ANNEX II

Year 2021 Consolidated Financial Reports Audited by CPA

95 -

Stock Code:2383

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

Address: No.18, Datong 1st Rd., Guanyin Dist., Taoyuan City 328, Taiwan (R.O.C.) Telephone: (03)483-7937

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

� 1 �

Contents
1.Cover Page
2.Table of Contents
3.Representation Letter
4.Independent Auditors’ Report
5.Consolidated Statements of Financial Position
6.Consolidated Statements of Comprehensive Income
7.Consolidated Statements of Changes in Equity
8.Consolidated Statements of Cash Flows
9.Notes to the Consolidated Financial Statements
(1) Organization and Business
(2) Approval Date and Procedures of the Consolidated Financial Statements
(3) New Standards and Interpretations Adopted
(4) Significant Accounting Policies
(5) Major Sources of Accounting Assumptions, Judgments and Estimation
Uncertainty
(6) Summary of Major Accounts
(7) Related-Party Transactions
(8) Pledged Assets
(9) Significant Contingencies and Commitments
(10) Significant Catastrophic Losses
(11) Significant Subsequent Events
(12) Others
(13) Additional Disclosures
a) Information on significant transactions
b) Information on investees
c) Information on investment in Mainland China
d) Major shareholders
(14) Segment Information

Page

1
2
3
4
5
6
7
8
9
9
9�10
10�26
26
27�54
55�56
56
56�58
58
58
58
59�63
63�64
65
65
66�68

� 2 �

Representation Letter

The entities that are required to be included in the combined financial statements of Elite Material Co., Ltd. as of and for the year ended December 31, 2021 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, Elite Material Co., Ltd. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: Elite Material Co., Ltd. Chairman: Ding-Yu Dong Date: February 23, 2022

� 3 �

==> picture [76 x 31] intentionally omitted <==

==> picture [168 x 20] intentionally omitted <==

KPMG

Independent Auditors’ Report

To the Board of Directors of Elite Material Co., Ltd.:

Opinion

We have audited the consolidated financial statements of Elite Material Co., Ltd. and its subsidiaries (“ the Group”), which comprise the consolidated statement of financial position as of December 31, 2021 and 2020, and the consolidated statement of comprehensive income, changes in equity and cash flows for the year ended December 31, 2021 and 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2021 and 2020 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.

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 of the current period. 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.

Revenue recognition

Please refer to Note 4(o) "Revenue" and Note 6(s) "Revenue" of the consolidated financial statements.

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KPMG, a Taiwan partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.

Description of key audit matter:

The recognition of revenue is based on the fact that the Group has transferred all its ownership and the significant risk of its products to the customers. The judgment on the arrival date of the products involves uncertainty under the FOB destination which is stated in the sales contracts between the Group and the customers. The Group still needs to take the risk of the products before they are delivered to customers.

Therefore, the recognition of revenue was considered to be one of the key audit matters in the audit.

How the matter was addressed in our audit:

2. Allowance for Inventory Valuation

Please refer to Note (4)(h) "Inventories" and Note (6)(e)” Inventories” of the consolidated financial statements.

Description of key audit matter:

The printed circuit board and other electronic components are the major products of the Group. Inventories have specific life cycle due to their attributes. Apart from this, the Group prepared certain amounts of security stock to meet the delivery date required by the customers. Inventories are stated at the lower of cost or net realizable value. Consequently, there may be situations that the net realizable value of inventory will exceed its cost. In addition, the Group would purchase the materials in advance for the expected sales orders. The cancellation or the change of orders, and the change of the material used or quantities of the material may lead to product obsolescence. Therefore, the recognition on allowance for inventory valuation and obsolescence loss was considered to be one of the key audit matters in the audit.

How the matter was addressed in our audit:

In relation to the key audit matter above, we have performed certain key audit procedures that included: assessing the allowance for loss due to price decline, obsolete, and slow moving inventories to determine whether policy of the Group is applied; selecting samples to examine their net realizable values to verify the accuracy and completeness of inventory aging report; reassessing the accuracy of allowance for inventory valuation and obsolescence loss according to the Group's accounting policy; performing a retrospective review to evaluate the completeness of disclosure for allowance for inventories.

Other Matter

Elite Material Co., Ltd. has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unqualified opinion.

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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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed 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 are responsible for overseeing the Group’s financial reporting process.

Auditor’s 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 auditor’s 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.

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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.

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

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 of the current period 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 Yi-Chun Chen and Chung-Yi Chiang.

KPMG

Taipei, Taiwan (Republic of China) Febuary 23, 2022

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the 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 accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

2021.12.31 ASSETS Amount % Current Assets: 1100 Cash and cash equivalents (Note (6)(a)) $ 6,642,069 18 1150 Notes receivable, net (Note (6)(c)) 146,612 - 1170 Accounts receivable, net (Notes (6)(c) and (7)) 13,127,064 36 1200 Other receivables, net (Notes (6)(d) and (7)) 97,758 - 1310 Inventories, manufacturing business, net (Note (6)(e)) 5,465,411 15 1479 Other current assets, others 364,830 1 25,843,744 70 Non-Current Assets: 1517 Non-current financial assets at fair value through other comprehensive income (Note (6)(b)) - - 1550 Investments accounted for using equity method, net (Note (6)(f)) - - 1600 Property, plant and equipment (Note (6)(g)) 8,468,582 23 1755 Right-of-use assets (Note (6)(h)) 600,189 2 1780 Total intangible assets 669,410 2 1840 Deferred tax assets (Note (6)(p)) 281,368 1 1900 Other non-current assets 625,368 2 1920 Guarantee deposits paid 61,780 - 1975 Net defined benefit asset, non-current (Note (6)(o)) 14,620 - 10,721,317 30 Total assets $ 36,565,061 100	2020.12.31 Amount % 5,731,862 20 291,991 1 9,642,069 35 49,011 - 3,702,172 13 151,452 1 19,568,557 70 15,681 - 10,115 - 6,531,008 23 238,157 1 671,900 3 225,052 1 572,999 2 19,583 - 3,754 - 8,288,249 30 27,856,806 100 2021.12.31 LIABILITIES AND STOCKHOLDERS' EQUITY Amount % Current Liabilities: 2100 Short-term borrowings (Note (6)(i)) $ 2,588,894 7 2110 Short-term notes payable (Note (6)(j)) 199,820 1 2170 Accounts payable 8,127,533 22 2200 Other payables (Note (7)) 2,841,515 8 2230 Current tax liabilities 424,343 1 2280 Current lease liabilities (Note (6)(m)) 11,604 - 2322 Long-term borrowings, current portion (Note (6)(k)) 128,571 - 2399 Other current liabilities, others 162,952 - 14,485,232 39 Non-Current liabilities: 2540 Long-term borrowings (Note (6)(k)) 721,429 2 2570 Deferred tax liabilities (Note (6)(p)) 859,997 2 2580 Non-current lease liabilities (Note (6)(m)) 291,641 1 2600 Total other non-current liabilities (Note (6)(n)) 432,875 1 2,305,942 6 Total liabilities 16,791,174 45 Equity attributable to owners of parent (Note (6)(q)): 3100 Capital stock 3,329,183 9 3200 Capital surplus 1,868,661 5 Retained earnings: 3310 Legal reserve 2,403,968 7 3320 Special reserve 756,891 2 3351 Accumulated profit and loss 12,298,052 34 3400 Other equity interest (903,909) (2) 36XX Non-controlling interests 21,041 - Total equity 19,773,887 55 Total liabilities and equity $ 36,565,061 100	2021.12.31		2020.12.31 Amount % 608,724 2 - - 5,846,870 21 2,144,715 8 294,853 1 - - 552,856 2 165,767 1 9,613,785 35 564,281 2 910,951 3 - - 12,280 - 1,487,512 5 11,101,297 40 3,329,183 12 1,868,661 7 2,035,014 7 832,393 3 9,430,270 34 (756,891) (3) 16,879 - 16,755,509 60 27,856,806 100
		Amount %

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

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

4000 Operating revenue (Notes (6)(s) and (7)) 5000 Operating costs (Note (6)(e)) Gross profit from operations Operating expenses: 6100 Total selling expenses 6200 Total administrative expenses 6300 Total research and development expenses 6450 Impairment loss (Note (6)(c)) Total operating expenses Net operating income Non-operating income and expenses (Note (6)(u)): 7100 Total interest income 7020 Other gains and losses, net 7050 Finance costs, net 7370 Share of profit of associates and joint ventures accounted for using equity method Total non-operating income and expenses 7900 Profit from continuing operations before tax 7950 Less: Income tax expenses(Note (6)(p)) 8200 Profit Other comprehensive income: 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealized losses from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will not be reclassified to profit or loss 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss Other comprehensive income Total comprehensive income Loss attributable to: Owners of the parent company Non-controlling interests Comprehensive income attributable to: Owners of the parent company Non-controlling interests Earnings per share (Note (6)(r)) Basic earnings per share (dollars) Diluted earnings per share (dollars)	2021	% 100 (74) 26 (3) (3) (2) - (8) 18 - - - - - 18 (4) 14 - - - - - - - - 14 14 - 14 14 - 14 16.50 16.46	2020 Amount 27,200,786 (20,160,757) 7,040,029 (866,698) (914,229) (582,679) 7,028 (2,356,578) 4,683,451 74,266 157,482 (60,724) (10,912) 160,112 4,843,563 (1,149,293) 3,694,270 675 - (135) 540 94,534 (18,876) 75,658 76,198 3,770,468 3,688,999 5,271 3,694,270 3,765,041 5,427 3,770,468	% 100 (74)
	Amount $ 38,500,026 (28,431,472) 10,068,554 (1,114,301) (1,264,567) (770,530) 3,464 (3,145,934) 6,922,620 52,252 23,291 (76,323) (9,944) (10,724) 6,911,896 (1,411,739) 5,500,157 (1,945) (15,335) 389 (16,891) (164,772) 32,921 (131,851) (148,742) $ 5,351,415 $ 5,493,218 6,939 $ 5,500,157 $ 5,344,644 6,771 $ 5,351,415 $ $
				26
				(3) (3) (2) -
				(8)
				18
				- - - -
				-
				18 (4)
				14
				- - -
				-
				- -
				-
				-
				14
				14 -
				14
				14 -
				14
				11.33
				11.07

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

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) REVIEWED ONLY, NOT AUDITED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

		Equity attributable t	Equity attributable t	o owners of parent	o owners of parent	Total equity 13,536,569 3,694,270 76,198
Share capital Ordinary Shares $ 3,197,080 - - - - - - 132,103 - 3,329,183 - - - - - - - $ 3,329,183	Capital Surplus 628,858 - - - - - - 1,239,803 - 1,868,661 - - - - - - - 1,868,661		Retained earnings		Total other equity interest Exchange Differences on Unrealised gains (losses) Translation of Foreign Statements on available for sale financial assets (831,955) (438) - - 75,502 - 75,502 - - - - - - - - - - - (756,453) (438) - - (131,683) (15,335) (131,683) (15,335) - - - - - - - - (888,136) (15,773)
					Exchange Differences on Translation of Foreign Statements (831,955) - 75,502 75,502 - - - - - (756,453) - (131,683) (131,683) - - - - (888,136)
		Legal Reserve 1,710,929 - - - 324,085 - - - - 2,035,014 - - - 368,954 - - - 2,403,968	Special Reserve 423,554 - - - - 408,839 - - - 832,393 - - - - (75,502) - - 756,891	Unappropriated Retained Earnings
				8,391,903 3,688,999 540
				3,689,539		3,770,468
						- - (1,918,248) 1,371,906 (5,186)
						16,755,509 5,500,157 (148,742)
						5,351,415
						- - (2,330,428) (2,609)
						19,773,887

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

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Share of loss of associates and joint ventures accounted for using equity method Loss on disposal of property, plan and equipment Others Dividend income Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Notes receivable Accounts receivable Other receivable Inventories Other current assets Other operating assets Total changes in operating assets Changes in operating liabilities: Accounts payable Other payable Other current liabilities Other non-current liabilities Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Net cash flow from acquisition of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Acquisition of right-of-use assets (Increase) decrease in refundable deposits Other investing activities Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase (decrease) in short-term loans Increase (decrease) in short-term notes and bills payable Proceeds from long-term debt Repayments of long-term debt Increase in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2021 $ 6,911,896 690,156 29,238 (3,464) - 76,323 (52,252) 9,944 540 - (24,243) 726,242 144,696 (3,523,108) (92,635) (1,783,772) (230,475) (56,045) (5,541,339) 2,318,681 539,398 8,735 402,345 3,269,159 (2,272,180) (1,545,938) 5,365,958 60,664 24,243 (74,417) (1,354,926) 4,021,522 - (2,470,150) 7,942 (44,622) (74,843) (36,681) 227 (2,618,127) 1,983,991 200,000 750,000 (1,014,529) 5,179 (11,362) (2,333,037) (419,758) (73,430) 910,207 5,731,862 $ 6,642,069	2020 4,843,563 599,222 9,391 (7,028) (1,853) 46,684 (74,266) 10,912 571 14,040 - 597,673 3,321 (484,607) 17,424 (647,818) 175,253 (93,425) (1,029,852) 46,714 343,235 70,528 (10,646) 449,831 (580,021) 17,652 4,861,215 97,697 - (47,189) (1,394,511) 3,517,212 (719,072) (1,199,655) 101 (43,197) - 2,696 - (1,959,127) (226,374) (100,000) 1,052,712 (917,965) 1,868 - (1,923,434) (2,113,193) (63,820) (618,928) 6,350,790 5,731,862

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

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(1) Organization and Business

(2) Approval Date and Procedures of the Consolidated Financial Statements

The Board of Directors approved and issued the consolidated financial statements on February 23, 2022.

(3) New Standards and Interpretations Adopted:

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted.

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2021:

�Amendments to IFRS 4 “Extension of the Temporary Exemption from Applying IFRS 9”
�Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16 “ Interest Rate Benchmark Reform—Phase 2”

The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from April 1, 2021:

�Amendments to IFRS 16 “Covid-19-Related Rent Concessions beyond June 30, 2021”
(b) The impact of IFRS issued by the FSC but not yet effective

The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a significant impact on its consolidated financial statements:

�Amendments to IAS 16 “Property, Plant and Equipment Proceeds before Intended Use”
�Amendments to IAS 37 “Onerous Contracts Cost of Fulfilling a Contract”
�Annual Improvements to IFRS Standards 2018–2020
�Amendments to IFRS 3 “Reference to the Conceptual Framework”

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Group does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements:

�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” and amendments to IFRS 17 “ Insurance Contracts”
�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 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

(4) Significant Accounting Policies

The significant accounting policies adopted in the consolidated financial statements are as follows. Except for those specially indicated, the following accounting policies were applied consistently throughout the periods presented in the consolidated financial statements.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations” ) and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations endorsed and issued into effect by the Financial Supervisory Commission, R.O.C..

(b) Basis of preparation
1.Basis of measurement

The consolidated financial statements have been prepared on a historical cost basis except for the following material items in the statement of financial position:

1) Financial assets and liabilities at fair value through profit or loss in fair value measurement;
2) Available-for-sale financial assets in fair value measurement;
3) The net defined benefit liabilities (or assets) is recognized as the fair value of plan assets, net of aggregation of the present value of the defined benefit obligation, with a limit based on a defined benefit assets as disclosed in Note 4(q).

2.Functional and presentation currency

The functional currency of each Group entity is determined based on the primary economic environment in which the entity operates. The consolidated financial statements are presented in New Taiwan Dollars, which is the Company's functional currency. All financial information presented in New Taiwan Dollars has been rounded to the nearest thousand.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(c) Basis of consolidation
1.Principle of preparation of the consolidated financial statements

The consolidated financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity.

The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Losses applicable to the non-controlling interests in a subsidiary are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.

Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any differences between the Group’ s share of net assets before and after the change, and any considerations received or paid, are adjusted to or against the Group reserves.

2.List of subsidiaries in the consolidated financial statements:

Name of investor	Name of subsidiary	Principal activity	Shareholding 2021.12.31 2020.12.31 Note
The Company The Company The Company	EMC OVERSEAS HOLDING INCORPORATED Grand Wuhan Incorporated EMC INTERNATIONAL HOLDING INCORPORATED	Investment business Import/export business and Investment business Investment business	% 100.00 % 100.00 Established in British Virgin Islands in July 1996. As of December 31, 2021, the authorized issued capital of the Company was USD 36,257. % 100.00 % 100.00 Established in Cayman Islands in January 2018. As of December 31, 2021, the authorized issued capital of the Company was USD 20,020. % 100.00 % 100.00 Established in Cayman Islands in July 2020. As of December 31, 2021, the paid-in capital of the Company was USD 26,310.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name of investor	Name of subsidiary	Principal activity	Shareholding 2021.12.31 2020.12.31 Note
EMC OVERSEAS HOLDING INCORPORATED Grand Zhuhai Incorporated Grand Zhuhai Incorporated Grand Shanghai Incorporated Grand Zhongshan Incorporated Grand Wuhan Incorporated	Grand Zhuhai Incorporated Grand Shanghai Incorporated Grand Zhongshan Incorporated Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Import/export business and Investment business Import/export business and Investment business Import/export business and Investment business Copper clad laminate and prepreg business Copper clad laminate and prepreg business Copper clad laminate and prepreg business	% 100.00 % 100.00 Established in Cayman Islands in April 2004. As of December 31, 2021, the authorized issued capital of the Company was USD 33,799. % 99.79 % 99.79 Established in British virgin Islands in May 1997. As of December 31, 2021, the authorized issued capital of the Company was USD 18,200. % 100.00 % 100.00 Established in British virgin Islands in 2004. As of December 31, 2021, the authorized issued capital of the Company was USD 16.437. % 100.00 % 100.00 Established in Kunshan Economic and Technological Development Zone, Jiangsu, Mainland China in September 1997. As of December 31, 2021, the authorized issued capital of the Company was USD 63,200. % 100.00 % 100.00 Established in Zhongshan Torch Development Zone, Guangdong province, Mainland China in July 2004. As of December 31, 2021, the authorized issued capital of the Company was USD 20,200. % 100.00 % 100.00 Established in Huangshi Economic and Technological Development Zone, Hubei, Mainland China in March 2018. As of December 31, 2021, the authorized issued capital of the Company was USD 20,000.

� 12 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name of investor	Name of subsidiary	Principal activity	Shareholding 2021.12.31 2020.12.31 Note
EMC INTERNATIONAL HOLDING INCORPORATED EMC INTERNATIONAL HOLDING INCORPORATED EMC SPECIAL APPLICATION INCORPORATED	EMC SPECIAL APPLICATION INCORPORATED EMC USA HOLDING INCORPORATED EMD SPECIALTY MATERIALS, LLC	Investment business Investment business Copper clad laminate and prepreg business	% 100.00 % 100.00 Established in Cayman Islands in August 2020. As of December 31, 2021, the paid-in capital of the Company was USD 26,255. % 100.00 % - 100% invested by EMC INTERNATIONAL HOLDING INCORPORATED in December 2021. % 100.00 % 100.00 100% invested by EMC SPECIAL APPLICATION INCORPORATED in December 2020.

List of subsidiaries which are not included in the consolidated interim financial statements: None.
(d) Foreign Currency

1. Foreign currency transaction

Transactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. At the end of each subsequent reporting period, monetary items denominated in foreign currencies are translated into the functional currencies using the exchange rate at that date. Non-monetary items denominated in foreign currencies that are measured at fair value are translated into the functional currencies using the exchange rate at the date that the fair value was determined. Nonmonetary items denominated in foreign currencies that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences are generally recognized in profit or loss.

2. Foreign operations

When the Group disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of investment in an associate of a joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.

� 13 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(e) Assets and liabilities classified as current and non-current

An asset is classified as current under one of the following criteria, and all other assets are classified as non-current.

It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle;
It is held primarily for the purpose of trading;
It is expected to be realized within twelve months after the reporting period; or
The asset is cash or a cash equivalent (as defined in IAS 7) unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current.

An entity shall classify a liability as current when:

It is expected to be settled in the normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period; or
The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by issuing equity instruments do not affect its classification.
(f) Cash and cash equivalents

(g) Financia instrumentsl
1.Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

� 14 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

On initial recognition, a financial asset is classified as measured at: amortized cost; Fair value through other comprehensive income (FVOCI) – financial assets or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

1) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

�it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
�its contractual terms give rise on specified dates to cash flows that are solely payments of principal amount outstanding.

2) Fair value through other comprehensive income (FVOCI )

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

�it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
�its contractual terms give rise on specified dates to cash flows that are solely payments of principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

Debt investments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss.

� 15 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Dividend income is recognized in profit or loss on the date on which the Group’ s right to receive payment is established.

3) Impairment of financial assets

The Group recognizes loss allowances for expected credit losses (ECL) on financial assets measured at amortized cost (including cash and cash equivalents, amortized costs, notes and accounts receivable, leases receivable, other receivable, guarantee deposit paid and other financial assets), debt investments measured at FVOCI and contract assets.

The Group measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL:

�debt securities that are determined to have low credit risk at the reporting date; and
�other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information.

ECL are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls. The difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive. ECL are discounted at the effective interest rate of the financial asset.

At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial assets is credit-impaired includes the following observable data:

�significant financial difficulty of the borrower or issuer;
�a breach of contract such as a default or being more than 90 days past due;
�the lender of the borrow, for eononic or contractual rqasons relating to the borrower's finanical difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
�it is probable that the borrower will enter bankruptcy or other financial reorganization;or
�the disappearance of an active market for a security because of financial difficulties.

� 16 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Group recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss.

The gross carrying amount of a financial asset is written off either partially or in full to the extent that there is no realistic prospect of recovery. For corporate customers, the Group individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’ s procedures for recovery of amounts due.

4) Derecognition of financial assets

Financial assets are derecognized when the contractual rights of the cash inflow from the assets are terminated, or when the Group transfers substantially all the risks and rewards of ownership of the financial assets.

Financial liabilities and equity instruments
1) Classification of debt or equity

Debt and equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Compound financial instruments issued by the Group comprise convertible notes that can be converted to share capital at the option of the holder when the number of shares to be issued is fixed.

Interest related to the financial liability is recognized in profit or loss.

On conversion, the financial liability is reclassified to equity, and no gain or loss is recognized.

� 17 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Financial liabilities

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

3) Derecognizing of financial liabilities

The Group derecognizes a financial liability when its contractual obligation has been discharged or cancelled or expires. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in the statement of comprehensive income.

(h) Inventories

Inventories are measured at the lower of cost or net realizable value. The cost of inventories consists of all costs of purchase and other costs incurred in bringing the inventories to a salable and useable location and condition. Inventory cost is calculated using the weighted-average-cost formula.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

(i) Investment in associates

Associates are those entities in which the Group has significant influence, but not control or joint control, over their financial and operating policies.

The consolidated financial statements include the Group’ s share of the profit or loss and other comprehensive income of thsoe associates after adjustments to align their accounting policies with those of the Group, from the date on which significant influence commences until the date on which significant influence ceases. The Group recognizes any changes of its propertionate share in the investee within capital surplus, when an associate’s equity changes due to reasons other than profit and loss or comprehensive income, which did not result in changes in actual significant influence.

Gains and losses resulting from transactions between the Group and an associate are recognized only to the extent of unrelated Group’s interests in the associate.

When the Group’s share of losses exceeds its interests in an associate, it discontinues ecognizing its share of further losses. After the recognized interest is veduct to zeor, additional losses are provided for, and a libaility is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate.

� 18 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(j) Property, plant, and equipment
Recognition and measurement

Items of property, plant and equipment are measured at cost, less accumulated depreciation and any accumulated impairment losses.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

Depreciation

Land is not depreciated.

The estimated useful lives of property, plant and equipment for current and comparative periods are as follows:

1) Buildings 2 years~56 years 2) Machineries 2 years~19 years 3) Miscellaneous equipment 2 years~14 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(k) Lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

(i) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

� 19 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

fixed payments, including in-substance fixed payments;
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
amounts expected to be payable under a residual value guarantee; and
payments for purchase or termination options that are reasonably certain to be exercised.

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

there is a change in future lease payments arising from the change in an index or rate; or
there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or
there is a change of its assessment on whether it will exercise a extension or termination option; or
there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

� 20 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

From January 1, 2021, when the basis for determining future lease payments changes as required by interest rate benchmark reform, the Group will remeasure the lease liability by discounting the revised lease payments using the revised discount rate that reflects the change to an alternative benchmark interest rate.

(l) Intangible assets

Recognition and measurement

Goodwill arising on the acquisition of subsidiaries is measured at cost, less accumulated impairment losses.

Other intangible assets, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses.

Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, is recognized in profit or loss as incurred.

Amortization

Amortization is calculated over the cost of the asset, less its residual value, and is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use.

The estimated useful lives for current and comparative periods are as follows:

1)	Softwares	1 years~ 10 years
2)	Loyalties	9 years
3)	Customer relationships	13 years
4)	Trademarks	15 years

Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

� 21 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(m) Impairment – non financial assets

At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories, contract assets, deferred tax assets and investment properties and biological assets, measured at fair value, less costs) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.

An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

(n) Provisions

A provision is recognized if, as a result of a past event, the Group has a present obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost.

(o) Revenue

1. Revenue from contracts with customers

Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below.

� 22 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

1) Sale of goods-electronic components

The Group manufactures and sells electronic components to computer manufacturers. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

The Group’s obligation to provide a refund for faulty products is recognized at the time of sale. Accumulated experience is used to estimate such returns. The amount estimated is recognized as a provision for warranty at reporting date.

A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional.

( p ) Government grants

The Group recognizes an unconditional government grant related to factory relocation of Elite Electronic Material (Kunshan) Co., Ltd. in profit or loss as other income when the grant becomes receivable. Other government grants related to assets are initially recognized as deferred income at fair value if there is reasonable assurance that they will be received, and the Group will comply with the conditions associated with the grant; they are then recognized in deduction of depreciation on a systematic basis over the useful life of the asset. Grants that compensate the Group for expenses or losses incurred are recognized in profit or loss on a systematic basis in the periods in which the expenses or losses are recognized.

(q) Employee benefits

1. Defined contribution plans

Obligations for contributions to the defined contribution pension plans are recognized as employee benefit expense in profit or loss in the periods during which services are rendered by the employees.

2. Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’ s net obligation with respect to the defined benefit pension plans is calculated separately for each plan by estimating the amount of the future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value.

Any fair value of any plan assets is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid.

� 23 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities.

When the benefits of a plan are amended, the relating expenses, resulting from the portion of the increased benefit relating to past services provided by the employees, are recognized immediately in profit or loss to the extent that the benefits are vested immediately.

Remeasurement of the net defined benefit liability (asset), which comprise (1) actuarial gains and losses, (2) the return on plan assets (excluding interest) and (3) the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group can reclassify the amounts recognized in other comprehensive income to retained earnings or other equity. If the amounts recognized in other comprehensive income are transferred to other equity, they shall not be reclassified to profit or loss or recognized in retained earnings in a subsequent period.

Net interest expense and other expenses related to the defined benefit plans are recognized in retained earnings.

The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets and any change in the present value of the defined benefit obligation.

3. Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profitsharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(r) Income taxes

Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss.

The Group has determined that interest and penalties related to income taxes, including uncertain tax treatment, do not meet the definition of income taxes, and therefore accounted for them under IAS37.

Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years.

� 24 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The 10% surtax on undistributed retained earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the shareholders' meeting.

temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits (losses) at the time of the transaction;
temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.

A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and adjusted based on the probability that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized.

Deferred tax assets and liabilities shall be measured at the tax rates that are expected to be applied to the period when the asset is realized or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities may be offset against each other if the following criteria are met:

the entity has the legal right to settle tax assets and liabilities on a net basis; and
the taxing of deferred tax assets and liabilities fulfill one of the below scenarios:
1) levied by the same taxing authority; or
2) levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched.
(s) Business combination

The Group accounts for business combinations using the acquisition method. The goodwill arising from an acquisition is measured as the excess of (i) the consideration transferred (which is generally measured at fair value) and (ii) the amount of non-controlling interest in the acquiree, both over the identifiable net assets acquired at the acquisition date. If the amount calculated above is a deficit balance, the Group recognized that amount as a gain on a bargain purchase in profit or loss immediately after reassessing whether it has correctly identified all of the assets acquired and all of the liabilities assumed.

� 25 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

All acquisition-related transaction costs are expensed as incurred, except for the issuance of debt or equity instruments.

(t) Earnings per share

The Group discloses the Company's basic and diluted earnings per share attributable to ordinary equity holders of the Company. The basic earnings per share are calculated as the profit attributable to the ordinary shareholders of the Company divided by the weighted-average number of ordinary shares outstanding after adjustment for the effects of all potentialy dilutive ordinary shares, such as convertible bonds.

(u) Operating segments

An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. Each operating segment consists of standalone financial information.

(5) Major Sources of Accounting Assumptions, Judgments and Estimation Uncertainty

The preparation of the consolidated financial statements in conformity with the IFRSs endorsed by the FSC requires management to make judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates.

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows:

(a) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Group estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of the reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories. Refer to note (6)(f) for further description of the valuation of inventories.

� 26 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(6) Summary of Major Accounts

(a) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Savings accounts Time deposits Cash equivalents	2021.12.31 $ 520 5,034,224 877,965 729,360 $ 6,642,069	2020.12.31
		616 3,392,914 2,015,834 322,498
		5,731,862

Please refer to Note (6)(v) for the interest analysis of financial assets and liabilities.

(b) Financial assets at fair value through other comprehensive income

Equity investments at fair value through other comprehensive income: Stock unlisted in domestic markets�Proud Star International Limited	2021.12.31 $ -	2020.12.31
		15,681

1.Equity investments at fair value through other comprehensive income

The purpose that the Group invests in the abovementioned equity securities is for long-term strategies, but rather for trading purpose. Therefore, these equity securities are designated as at FVOCI, whereas, were presented under available-for-sale financial assets.

No strategic investments were disposed as of December 31, 2021 and 2020, and there were no transfers of any cumulative gain or loss within equity relating to these investments.

2.The Group’s information of credit risk and market risk please refer to note (6)(v).
3.The above financial assets did not have any long loans and financing facilities guarantee.
(c) Notes and accounts receivable

Note receivables from operating activities Trade receivables-measured as amortized cost Less: Loss allowance	2021.12.31 $ 146,961 13,131,350 (4,635) $ 13,273,676	2020.12.31
		292,341 9,649,928 (8,209
		9,934,060

� 27 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information, including macroeconomic and relevant industry information. The loss allowance provision in Taiwan were determined as follows:

			2021.12.31
Gross carrying amount			Weighted- average 0.03% 0.06% 0.98% - 2020.12.31
$ 13,061,161 209,480 7,670 - $ 13,278,311

	Gross carrying amount
		2021 $ 8,209 (3,464) - (110) $ 4,635 2021.12.31 $ 94,391 3,367 - $ 97,758

� 28 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Based on historical experience, the Group expects no credit losses by event of default from the aforementioned other recevibles, therefore, theexpected credit losses rate is 0.

(e) Inventories

Materials Work-in-process Finished goods	2021.12.31 $ 3,525,433 272,089 1,667,889 $ 5,465,411	2020.12.31
		2,411,316 287,625 1,003,231
		3,702,172

As of December 31, 2021 and 2020, the details of operating cost were as follows:

Cost of goods sold Unamortized manufacturing expenses Loss on disposal of scrap Losses on inventory valuation and obsolescence Revenue from sales of scraps Total	2021 $ 28,661,243 - 6,366 16,709 (252,846) $ 28,431,472	2020
		20,273,105 13,741 12,448 17,303 (155,840)
		20,160,757

As of December 31, 2021 and 2020, the Group's inventories were not pledged as collateral.

Losses on inventory valuation and obsolescence are due to obsolescence or out of use, which results in that the net realizable value is lower than the cost. Therefore, it's classified as operating cost.

(f) Investments accounted for using equity method

A summary of the Group's financial information for investments accounted for using the equity method at the reporting date is as follows:

Associates-TECHNICA USA (with cost of an investment of $18,624) Attributable to the Group: Loss from continuing operations Other comprehensive income Total comprehensive income	2021.12.31 $ - 2021 $ (9,944) - $ (9,944)	2020.12.31
		10,115
		2020
		(10,912) -
		(10,912)

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(g) Property, plant and equipment

The cost and depreciation of the property, plant and equipment of the Group for the years ended December 31, 2021 and 2020, were as follows:

Cost: Balance at January 1, 2021 Additions Disposals Reclassification Effect of changes in foreign exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Acquisition through business combination Additions Disposals Reclassification Effect of changes in foreign exchange rates Balance at December 31, 2020 Depreciation and impairment loss: Balance at January 1, 2021 Depreciation for the year Disposals Effect of changes in foreign exchange rates Balance at December 31, 2021 Balance at January 1, 2020 Acquisition through business combination Depreciation for the year Disposals Effect of movements in exchange rates Balance at December 31, 2020 Carrying amounts: At December 31, 2021 At January 1, 2020 At December 31, 2020	Land $ 470,621 - - - - $ 470,621 $ 470,621 - - - - - $ 470,621 $ - - - - $ - $ - - - - - $ - $ 470,621 $ 470,621 $ 470,621	Buildings 2,792,434 - (2,662) 10,819 (14,518) 2,786,073 2,647,230 - - - 112,871 32,333 2,792,434 975,102 130,549 (2,662) (4,155) 1,098,834 845,291 - 120,074 - 9,737 975,102 1,687,239 1,801,939 1,817,332	Machineries 7,416,342 - (62,007) 629,465 (35,300) 7,948,500 6,880,319 124,108 - (16,980) 343,450 85,445 7,416,342 4,905,298 342,798 (54,502) (20,302) 5,173,292 4,498,106 49,245 320,031 (16,742) 54,658 4,905,298 2,775,208 2,382,213 2,511,044	Other equipment 1,934,789 - (42,306) 297,198 (10,147) 2,179,534 1,602,055 38,567 - (35,830) 308,794 21,203 1,934,789 1,122,276 191,062 (41,329) (5,255) 1,266,754 972,904 20,525 153,205 (35,396) 11,038 1,122,276 912,780 629,151 812,513	Equipment under installation and construction in progress 919,498 2,645,562 - (937,482) (4,844) 2,622,734 573,893 5,141 1,091,451 - (765,115) 14,128 919,498 - - - - - - - - - - - 2,622,734 573,893 919,498	Total 13,533,684 2,645,562 (106,975) - (64,809) 16,007,462 12,174,118 167,816 1,091,451 (52,810) - 153,109 13,533,684 7,002,676 664,409 (98,493) (29,712) 7,538,880 6,316,301 69,770 593,310 (52,138) 75,433 7,002,676 8,468,582 5,857,817 6,531,008

As of December 31, 2021 and 2020, the property, plant and equipment were pledged as collateral for long-term debt and financing. Please refer to Notes (8).

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

For the purpose of expanding production capacity and cooperating with the local government's relocation plan, the Group purchased relevant equipment and constructions in progress. Please refer to Note (9)(a).

(j) Right-of-use assets

Information about leases for which the Group as a lessee is presented below:

Cost: Balance as of January 1, 2021 Additions Effect of changes in foreign exchange rates Balance as of December 31, 2021 Balance as of January 1, 2020 Effect of changes in foreign exchange rates Balance as of December 31, 2020 Accumulated depreciation and impairment losses: Balance as of January 1, 2021 Depreciation for the year Effect of changes in foreign exchange rates Balance as of December 31, 2021 Balance as of January 1, 2020 Depreciation for the year Effect of changes in foreign exchange rates Balance as of December 31, 2020 Carrying amount: Balance as of December 31, 2021 Balance as of January 1, 2020 Balance as of December 31, 2020	Land $ 284,615 74,843 (2,094) $ 357,364 $ 279,933 4,682 $ 284,615 $ 46,458 7,571 (345) $ 53,684 $ 39,745 5,912 801 $ 46,458 $ 303,680 $ 240,188 $ 238,157	Buildings - 318,084 (3,605) 314,479 - - - - 18,176 (206) 17,970 - - - - 296,509 - -	Total 284,615 392,927 (5,699) 671,843 279,933 4,682 284,615 46,458 25,747 (551) 71,654 39,745 5,912 801 46,458 600,189 240,188 238,157

As of December 31, 2021 and 2020, the right-of-use assets were pledged as collateral for long term debt and financing. Pleaserfer to Notes (8).

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(i) Short-term borrowings

Unsecured bank loans Unused short-term credit lines Range of interest rates Short-term notes and bills payable Commercial paper payable Less: discount unamortized Net amount Interest rate Long-term borrowings Unsecured bank loans Secured bank loans Less: current portion Total Unused short-term credit lines Range of interest rates Due year	2021.12.31 $ 2,588,894 $ 11,763,907 0.49%~3.85% 2021.12.31 $ 200,000 (180) $ 199,820 0.58%~0.65% 2021.12.31 $ 850,000 - (128,571) $ 721,429 $ 4,650,000 0.80%~1.05% 2022~2024	2020.12.31 608,724 9,766,218 0.51%~1.42% 2020.12.31 - - - - 2020.12.31 800,000 317,137 (552,856) 564,281 4,000,000 0.89%~5.23% 2021~2023

(j) Short-term notes and bills payable
(k) Long-term borrowings

For the exposure information of the Group's rate foreign currency and current risk, please refer to Note (6)(v).

The Group signed a loan contract with the financial institution. According to the provisions of the contract, the Group's financial statements must maintain specific current ratios, debt ratios, net tangible assets, and interest coverage ratios on the balance sheet date during the loan period.

If such financial ratios breached specific conditions of the loan contract, they shall be improved by means of cash capital increase or other means in accordance with the agreement. As of December 31, 2021 and 2020, the Group did not violate any of the financial ratio restrictions.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(l) Unsecured convertible bonds

Profit or loss revalued by fair value of Embedded derivative instruments-call and put rights, included in financial assets at fair value through profit or loss Interest expense	For the years ended December 31,	For the years ended December 31,
	2021 $ - $ -	2020
		1,853
		14,040

The Company issued the fourth unsecured 5-year convertible bonds which bear no interest on May 16, 2017, with the maturity date on May 16, 2022. The total convertible corporate bonds issued amounted to TWD 1,500,000, with an effective interest rate of 1.80%. The Holders have the right to require the Company to redeem their convertible bonds in cash at an amount equal to the principal amount of the Bonds (with interest) at any time during the forty days after May 16, 2020. The fourth unsecured convertible bonds have been fully converted as of August 17, 2019.

(m) Lease liabilities

The Group lease liabilities were as follows:

The Group lease liabilities were as follows:
Current Non-current For the maturities analysis, please refer to Note 6(v).	2021.12.31 $ 11,604 $ 291,641	2020.12.31
		-
		-

The amounts recognized in profit or loss were as follows:

Interest on lease liabilities Expenses relating to short-term leases	For the years ended December 31,	For the years ended December 31,
	2021 $ 10,111 $ 36,913	2020
		-
		32,287

The amounts recognized in the statement of cash flows for the Group was as follows:

The amounts recognized in the statement of cash flows for the	Group was as follows:	Group was as follows:
Total cash outflow for leases	For the years ended December 31,
	2021 $ 58,386	2020
		32,287

1. Real estate leases

As of January 1 2021, the Group leases land and buildings for its factory and office space. The leases typically run for a period of 17.5 years, and of retail stores for 3 to 5 years. The Group has no option to purchase the assets at the end of the contract term.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Other leases

The Group leases machinery and equipment, and transportation equipment with lease terms of one years.These leases are short-term and/or leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases.

(n) Other non-current liabilities

The details of other non-current liabilities for the Group were as follows:

Advance receipts Others Total	2021.12.31 $ 415,442 17,433 $ 432,875	2020.12.31
		- 12,280
		12,280

Because of the factory of Kunshan relocation plan, as of December 31, 2021, the Group have received $342,926 in advance from the government. Please refer to Note(9)(b).

(o) Employee benefits

1.Defined benefit plans

The Group determined the movement in the present value of the defined benefit obligations and fair value of plan assets as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets	2021.12.31 $ 99,666 (114,285) $ (14,619)	2020.12.31
		104,435 (108,189)
		(3,754)

The Group makes defines benefit plan contributions to the pension fund account at Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive an annual payment based on years or service and average salary for the six months prior to retirement.

1) Composition of plan assets

The Group sets aside pension funds in accordance with the regulations of the Council of Labor Affairs, and the pension funds are managed by the Pension Supervisory Committee. The annual budget for the allocation of the minimum income cannot be lower than the income calculated based on the interest rate of the banks’ two-year time deposit in accordance with the Management and Utilization of Labor Pension Funds regulations.

The Group’s Bank of Taiwan pension reserve account balance amounted to $114,285 at the end of the reporting period. The information used to calculate pension fund assets includes the asset allocation and yield of the fund. Please refer to the information published on the website of the Council of Labor Affairs and the Labor Pension Supervisory Committee.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Movements in present value of the defined benefit obligations

The movements in present value of defined benefit obligations for the Group were as follows:

Defined benefit obligation at January 1 Current service costs and interest Remeasurement on the net defined benefit liabilities �Actuarial losses (gains) arising from experience adjustments �Actuarial losses (gains) arising from changes in financial assumptions Benefit pay under the plan Defined benefit obligation at December 31	2021 $ 104,435 1,209 599 2,657 (9,234) $ 99,666	2020 122,754 2,047 (3,455) 6,085 (22,996)
		104,435

3) Movements of defined benefit plan assets

The movements in the present value of the defined benefit plan assets for the Group were as follows:

Fair value of plan assets at January 1 Interest income Remeasurement on the net defined benefit liabilities �Return on plan assets (excluding current interest) Contribution paid by the employer Benefit paid Fair value of plan assets at December 31	2021 $ 108,189 707 1,311 13,312 (9,234) $ 114,285	2020 115,187 1,313 3,306 11,379 (22,996)
		108,189

4) Expenses recognized in profit or loss

The expenses recognized in profit or loss for the Group were as follows:

Current service costs Net interest of net defined benefit liabilities Operating costs Selling expenses Administrative expenses Research and development expenses	2021 $ 563 (61) $ 502 $ 357 21 80 44 $ 502	2020 709 24
		733
		543 30 115 45
		733

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

5) Remeasurement on the net defined benefit liabilities recognized in other comprehensive income

The Group’ s remeasurement on the net defined benefit liabilities recognized in other comprehensive income as follows:

Cumulative amount at January 1 Recognized during the period Cumulative amount at December 31	2021 $ 19,813 1,945 $ 21,758	2020 20,488 (675) 19,813

6) Actuarial assumptions

The following are the Group’ s principal actuarial assumptions of Present Value of defined benefit obligations:

Discount rate Future salary increases	2021.12.31 2020.12.31 % 0.63 % 0.63 % 2.00 % 2.00

The expected allocation payment to be made by the Group to the defined benifit plans for the one-year perrod after the reporting date is $13,534.

The weighted average duration of the defined benefit obligation is 14.06 years.

7) Sensitivity analysis

When calculating the present value of the defined benefit obligations, the Group uses judgments and estimations to determine the actuarial assumptions, including discount rate and future salary changes, as of the financial statement date. Any changes in the actuarial assumptions may significantly impact the amount of the defined benefit obligations.

If the actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows:

December 31, 2021 Discount rate Future salary increasing rate December 31, 2020 Discount rate Future salary increasing rate	Influences of defined benefit obligations
	Increased 0.25% Decreased 0.25% (2,760) 2,871 2,777 (2,685) (3,104) 3,233 3,128 (3,020)

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

There is no change in the method and assumptions used in the preparation of sensitivity analysis for 2021 and 2020, respectively.

2.Defined contribution plans

The Group set aside 6% of the employees’ monthly wages to the Labor Pension personal accounts at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act.

The Group set aside a fixed amount to the Bureau of the Labor Insurance without the payment of additional legal or constructive obligations.

For the years ended December 31, 2021 and 2020, the Group set aside $37,798 and $33,453, respectively, under the pension plan to the Bureau of the Labor Insurance. For the years ended December 31, 2021 and 2020, Elite Electronic Material (Zhongshan) Co., Ltd., Elite Electronic Material (Kunshan) Co., Ltd. and Elite Electronic Material (Huangshi) Co., Ltd. set aside $61,933, $45,742, $16,505 and $5,564, $4,512, $701, respectively, under the pension plan to local Regulation.

(p) Income taxes (profits)
Income tax expense recognized in profits or losses

The amount of income tax was as follows:

2021
Current income tax expense:
Current period
$ 1,545,755
Adjustment for prior periods
(59,886)
1,485,869
Deferred tax expense:
Origination and reversal of temporary differences
(74,130)
Income tax expense
$
1,411,739
Income tax expense recognized in other comprehensive income:
2021
Items that will not be reclassified subsequently to profit or
loss:
Actuarial losses and gains on defined benefit plans
$
389
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translation of foreign financial
statements
$
32,921

2020
1,452,855
(17,007)
1,435,848
(286,555)
1,149,293
2020
(135)
(18,876)

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The reconciliation of income tax and profit before tax was as follows:

Profit excluding income tax Income tax using the Company's domestic tax rate Effect of tax rates in foreign jurisdiction Non-deductible expenses Tax incentives Deductible temporary differences Recognition of previously unrecognised tax losses Prior (overestimate) underestimate Undistributed earnings additional tax Total	2021 $ 6,911,896 $ 1,382,379 777,438 12,683 (59,169) (694,989) - (59,886) 53,283 $ 1,411,739	2020
		4,843,563
		968,713 553,691 22,139 (9,998) (376,556) (21,008) (17,007) 29,319
		1,149,293

Deferred tax assets and liabilities
1) Unrecognized Deferred Tax Liabilities

As of December 31, 2021 and 2020, deferred tax liabilities are not recognized for taxable temporary differences associated with investments in subsidiaries, 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. The relevant amounts are as follow:

Consolidated amount of taxable temporary differences associated with investments in subsidiaries Amounts are not recognized as deferred tax liabilities	2021.12.31 $ 11,996,735 $ 2,399,347	2020.12.31
		8,521,793
		1,704,359

2) Recognized deferred tax assets and liabilities

Changes in the amount of deferred tax assets and liabilities for 2021 and 2020 are as follows:

Deferred Tax Liabilities: Balance at January 1, 2021 Debited (Credited) in Income statement Balance at December 31, 2021	Unrealized gain on investment income		Defined Benefit Plans - (1,382) (1,382)	Others (41) 41	Total
					(910,951 50,954
					(859,997

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

			Unrealized	Unrealized	Unrealized
				gain on		Defined
			investment			Benefit
				income		Plans	Others				Total
Balance at January 1, 2020		$			(1,185,403)	-		-		(1,185,403)
Debited (Credited) in Income
statement					274,493	-		(41)			274,452
Balance at December 31, 2020		$			(910,910)	-		(41)			(910,951)
						Unrealized	Cumulative
		Defined			Current	losses on	translation
	Benefit Plans				provisions	inventories	adjustment	Others			Total
Deferred Tax Assets:
Balance at January 1, 2021	$		791		22,975	13,552	185,416			2,318	225,052
Debited (Credited) in Income
statement		(1,180)			(69)	2,784	-		21,641		23,176
Debited (Credited) in other			389		-	-	-		-		389
comprehensive income
Exchange differences on translation		-			(144)	(24)	32,921			(2)	32,751
of foreign operations
Balance at December 31, 2021	$	-			22,762	16,312	218,337		23,957		281,368
Balance at January 1, 2020	$		3,055		11,032	10,094	204,292			3,024	231,497
Debited (Credited) in Income
statement		(2,129)			11,571	3,394	-			(733)	12,103
Debited (Credited) in equity			(135)		-	-	-		-		(135)
Exchange differences on translation		-			372	64	(18,876)			27	(18,413)
of foreign operations
Balance at December 31, 2020	$		791		22,975	13,552	185,416			2,318	225,052

The Group's tax returns for the years through 2019 were examined and approved by the Taipei National Tax Administration.
(q) Capital and other equity
Issuance of ordinary shares

For the year ended December 31 2020, the convertible bonds were converted to 13,210 new ordinary shares of stock, which were issued at the amount of $1,425,400. The registration procedures were completed.

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Capital surplus

The balance of additional paid-in capital was as follows:

The balance of additional paid-in capital was as follows:
Share capital Premium from convertible bonds	2021.12.31 $ 95,627 1,773,034 $ 1,868,661	2020.12.31
		95,627 1,773,034
		1,868,661

Capital reserves can only be reclassified as share capital or be distributed as cash dividends after offsetting against losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10 percent of the actual share capital amount.

3. Retained earnings

Taking into account the characteristics of industrial growth and stabilizing the financial structure of the Company, the Company will not distribute dividends when in deficit.

1) Legal reserve

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Special reserve

A portion of current-period earnings and undistributed prior-period earnings shall be reclassified as special earnings reserve during earnings distribution. The amount to be reclassified should equal the difference of the current-period total net reduction of other shareholders’ equity and the balance of the special reserve that mentioned in the previous paragraph. Similarly, a portion of undistributed prior period earnings shall be reclassified as special earnings reserve (and does not qualify for earnings distribution) to account for cumulative changes to other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’equity shall qualify for additional distributions. As of December 31, 2021,the special reserve of $75,502 was reversed and as of December 31, 2020, $408,839 was reclassified as special reserve.

3) Earnings distribution

The earnings distribution for 2020 and 2019 was decided by the general meeting of shareholders held on July 1, 2021, and June 18, 2020.

The relevant dividend distribution to shareholders is as follows:

			2020				2019
		Dividend				Dividend
		per Share				per Share
		(TWD$)		Amount		(TWD$)		Amount
Dividends distributed to
common shareholders
Cash	$		7.00	2,330,428			5.76	1,918,248
Other equity
					Unrealized gain
			Foreign		(loss) from
			currency		financial assets
			translation		at	fair value
			differences for		through other
			foreign		comprehensive
			operations			income		Total
Balance at January 1, 2021		$	(756,453)			(438)		(756,891)
Exchange difference on translation of
foreign financial statements			(131,683)			-		(131,683)
Unrealized gains (losses) from financial			-			(15,335)		(15,335)
assets measured at fair value through
other comprehensive income
Balance at December 31, 2021		$	(888,136)			(15,773)		(903,909)

4. Other equity

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Balance at January 1, 2020 Exchange difference on translation of foreign financial statements Balance at December 31, 2020	Foreign currency translation differences for foreign operations $ (831,955) 75,502 $ (756,453)	Unrealized gain (loss) from financial assets at fair value through other comprehensive income (438) - (438)	Total
			(832,393) 75,502
			(756,891)

(r) Earnings per share

The Group calculated the basic and diluted EPS as follows:

1. Basic earnings per share

The calculation of basic earnings per share at December 31, 2021 and 2020, were based on the profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding, calculated as follows:

1) Profit attributable to ordinary shareholders

Profit attributable to ordinary shareholders of the Company 2) Weighted-average number of ordinary shares Issued ordinary shares at January 1 Effect of convertible notes Weighted-average number of ordinary shares at December 31	2021 $ 5,493,218 2021 332,918 - 332,918	2020
		3,688,999
		2020
		319,708 5,886
		325,594

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2. Diluted earnings per share

The calculation of diluted earnings per share at December 31, 2021 and 2020, were based on profit attributable to ordinary shareholders of the Company and the weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares, calculated as follows.

1) Profit attributable to ordinary shareholders of the Company (diluted)

Profit attributable to ordinary shareholders of the Company (basic) Convertible preference shares dividends Profit attributable to ordinary shareholders of the Company (diluted) Weighted-average number of ordinary shares (diluted) Weighted-average number of ordinary shares (basic) Effect of employee shares bonus Effect of convertible bond Weighted-average number of ordinary shares (diluted) at December 31	2021 $ 5,493,218 - $ 5,493,218 2021 332,918 - 801 333,719	2020
		3,688,999 9,749
		3,698,748
		2020
		325,594 7,324 1,110
		334,028

2) Weighted-average number of ordinary shares (diluted)

For calculation of the dilutive effect of the stock option, the average market value is assessed based on the quoted market price where the Company's option is outstanding.

Earnings per share were as follow:

Earnings per share were as follow:
Basic earrings per share Diluted earrings per share	2021 $ 16.50 $ 16.46	2020
		11.33
		11.07

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(s) Revenue from contracts with customers
1.Disaggregation of revenue

	2021	2021
Domestic $ 5,856,611 1,312,375 2,020,953 $ 9,189,939 $ 3,605,301 3,553,454 1,058,056 973,128 $ 9,189,939	Foreign Adjustment and Elimination 100,751 (49,985) 34,561,251 (6,285,496) 983,566 - 35,645,568 (6,335,481) 14,641,492 (2,269,999) 20,762,983 (3,109,078) - - 241,093 (956,404) 35,645,568 (6,335,481) 2020		Total
			5,907,377 29,588,130 3,004,519
			38,500,026
			15,976,794 21,207,359 - 257,817
			38,500,026

	Foreign 85,433 22,992,935 259,130 23,337,498 10,657,558 12,550,684 - 129,256 23,337,498	Adjustment and Elimination (58,045) (3,009,303) - (3,067,348) (1,359,514) (1,237,344) (79) (470,411) (3,067,348)	Total
			4,754,162 20,852,192 1,594,432
			27,200,786
			12,334,689 14,009,825 758,423 97,849
			27,200,786

� 44 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(t) Rewards of employees, directors and supervisors

The employees mentioned before include the employees in the subsidiaries who meet the specific conditions.

For the years ended December 31, 2021 and 2020, rewards of employees of $189,120 and $130,767, and directors of $63,040 and $43,589, respectively, were estimated and recognized as current expense. These amounts were calculated using the Company's profit before tax before rewards of employees and directors for the years ended December 31, 2021 and 2020, and using the earnings allocation method which was stated under the Company's article. These rewards were charged to profit or loss under operating costs or operating expenses for the years ended December 31, 2021 and 2020.

Related information of distributions of remuneration to employees and directors can be accessed from the Market Observation Post System on the website.

There is no difference between the rewards of employees and directors that was decided by the Board of Directors and the financial report’s estimated amounts in 2021 and 2020.

(u) Non-operating income and expenses
Interest income

The details of interest income were as follows:

Interest income Other gains and losses, net The details of other gains and losses were as follows: Foreign currency exchange gain (loss), net Finacial assets at fair value through profit or loss Disposal loss on property, plant and equipment Other profits Other losses	2021 $ 52,252 2021 $ (42,837) - (540) 24,243 42,425 $ 23,291	2020 74,266 2020 15,494 1,853 (571) - 140,706 157,482

2. Other gains and losses, net

� 45 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

3. Finance costs

The details of finance cost were as follows:

Interest expense

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2021 2020
$ 76,323 60,724
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(v) Financial instruments

1. Credit risk

1) Credit risks exposure

The carrying amount of financial assets represents the maximum exposure to credit risk.

2. Liquidity risk

The following are the contractual maturities of financial liabilities of the Group, including estimated interest payments and excluding the impact of netting arrangements:

Balance at December 31, 2021 Non-derivative financial liabilities Unsecured bank loans Short-term notes payable Accounts payable Lease liabilities Balance at December 31, 2020 Non-derivative financial liabilities Secured bank loans Unsecured bank loans Accounts payable	Carrying amount $ 3,438,894 199,820 8,127,533 303,245 $ 12,069,492 $ 317,137 1,408,724 5,846,870 $ 7,572,731	Contractual cash flows 3,481,867 200,000 8,127,533 397,642 12,207,042 352,851 1,419,290 5,846,870 7,619,011	Within 6 months 2,179,078 200,000 8,127,533 10,615 10,517,226 24,864 940,536 5,846,870 6,812,270	6-12 months 572,914 - - 10,615 583,529 41,984 172,477 - 214,461	1-2 years 427,672 - - 20,815 448,487 118,305 3,150 - 121,455	More than 2 years
						302,203 - - 355,597
						657,800
						167,698 303,127 -
						470,825

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or in significantly different amounts.

� 46 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

3. Currency risk

1) Currency risk exposure

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

Foreign currency (In thousand) Financial assets Monetary items USD $ 86,974 81,428 Financial Liabilities Monetary items USD 59,290 87,083 Foreign currency (In thousand) Financial assets Monetary items USD $ 66,849 52,261 Financial Liabilities Monetary items USD 45,871 58,537		2021.12.31
		Exchange rate Functional currency USD�TWD27.6800 2,407,432 USD�CNY6.3720 2,253,931 USD�TWD27.6800 1,641,136 USD�CNY6.3720 2,410,458 2020.12.31
		Exchange rate Functional currency USD�TWD28.4800 1,903,862 USD�CNY6.5067 1,488,387 USD�TWD28.4800 1,306,396 USD�CNY6.5067 1,667,125

2) Sensitivity analysis

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

A 1% appreciation or depreciation of the TWD against the USD as at December 31, 2021 and 2020, would have increased or decreased net income by $5,414 and $3,514, respectively. This analysis assumes that all other variables remain constant.

Due to the variety of functional currency, the group disclosed the foreign currency gain or loss on monetary items aggregately. The foreign currency gain (loss) (include realized and unrealized) were $42,837 and $15,494 in 2021 and 2020, respectively.

� 47 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

4. Interest analysis

The interest rate exposure of the Group’s financial assets and liabilities is described on liquidity risk management.

The following sensitivity analysis is based on the exposure to interest rate risk of the financial assets and liabilities on the reporting date.

For variable rate instruments, the sensitivity analysis assumes the variable rate liabilities are outstanding for the whole year on the reporting date. The Group’s internal management reported the increases or decreases in the interest rates and the exposure to changes in interest rates of 0.5% is considered by management to be a reasonable change of interest rate.

If the interest rate increases or decreases by 0.5%, the Group’s net income will decrease /increase by $12,314 and $8,901 for the years ended December 31, 2021 and 2020, respectively, assuming all other variable factors remain constant. This is mainly due to the Group’ s variable rate borrowing and the financial assets evaluation of risk-free interest rate changes on corporate bonds.

5. Fair value

1) The kinds of financial instruments and fair value

Financial assets and liabilities at fair value through profit or loss, derivative financial instruments used for hedging, and available for sale financial assets is measured on a recurring basis. The fair value of financial assets and liabilities were as follows (including information on fair value hierarchy, but excluding measurements that have similarities to fair value but are not fair value and those fair value cannot be reliably measured or inputs are unobservable in active markets):

markets):
Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable Other receivables Refundable deposits Total			2021.12.31
	Book Value $ 6,642,069 13,273,676 97,758 61,781 $ 20,075,284		Fair Value
		Level 1 - - - - -	Level 2 - - - - -	Level 3 - - - - -	Total
					- - - -
					-

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

		2021.12.31	2021.12.31
Book Value $ 3,438,894 199,820 8,127,533 2,841,515 17,433 303,245 $ 14,928,440		Fair Value
	Level 1 - - - - - - -	Level 2 - - - - - - - 2020.12.31	Level 3 - - - - - - -	Total
				- - - - - -
				-

Book Value $ 15,681 5,731,862 9,934,060 49,011 19,583 15,734,516 $ 15,750,197 $ 1,725,861 5,846,870 2,144,715 12,280 $ 9,729,726		Fair Value
	Level 1 - - - - - - - - - - - -	Level 2 - - - - - - - - - - - -	Level 3 15,681 - - - - - 15,681 - - - - -	Total
				15,681
				- - - -
				-
				15,681
				- - - -
				-

� 49 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

2) Valuation techniques for financial instruments measured at fair value
A. Non-derivative financial instruments

A financial instrument is regarded as being quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’ s-length basis. Whether transactions are taking place ‘regularly’ is a matter of judgment and depends on the facts and circumstances of the market for the instrument.

Quoted market prices may not be indicative of the fair value of an instrument if the activity in the market is infrequent, the market is not well-established, only small volumes are traded, or bid-ask spreads are very wide. Determining whether a market is active involves judgment.

Measurements of fair value of financial instruments without an active market are based on a valuation technique or quoted price from a competitor. Fair value measured by a valuation technique can be extrapolated from similar financial instruments, the discounted cash flow method, or other valuation technique including a model using observable market data at the reporting date.

B.Derivative financial instruments

Fair value of forward currency exchange is usually determined by using the forward currency rate.

3) Transfers between Level 1 and Level 2

There was no transfer from Level 1 Level 2 in 2021 and 2020.

4) Reconciliation lf Level 3 fair values

The change in level 3 at fair value in the years ended December 31, 2021 and 2020, were as follow:

Balance on January 1, 2021 Total losses recognized in other comprehensive income Effect in exchange rates Balance on December 31, 2021 Balance on January 1, 2020 Effect in exchange rates Balance on December 31, 2020	Financial assets at fair value through other comprehensive income $ 15,681 (15,335) (346) $ - $ 16,507 (826) $ 15,681

� 50 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group's financial instruments that use Level 3 inputs to measure fair value include "financial asses measured at fair value through profit or loss-debt investment" and "fair value through other comprehensive income-eqity investments".

Quantified information of significant unobservable inputs was as follows:

Item Financial assets at fair value through other comprehensive income-equity investments without an active market	Valuation technique Net Assets Value Method	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement �Net Asset Value Not applicable

(w) Financial risk management

1. Overview

The nature and the extent of the Group’s risks arising from financial instruments, which include credit risk, liquidity risk and market risk, are discussed below. Also, the Group’ s objectives, policies and procedures of measuring and managing risks are discussed below.

For more quantitative information about the financial instruments, please refer to the other related notes of the notes to the financial statements.

2. Risk management framework

The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework.

The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’ s activities. The Group, through their training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board of Directors oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. Internal auditors assist the Board of Directors as the supervisors. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures and exception management, the results of which are reported to the Board of Directors.

� 51 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

3. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’ s receivables from customers and investment.

1) Accounts receivable and other receivables

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group’ s customer base, including the default risk of the industry in which customers operate, as these factors may have an influence on credit risk.

The management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group’s standard payment terms are offered. The Group’s review includes external ratings, when available, and in some cases bank references. Credit limits are established for each customer, which represent the maximum open amount without requiring approval from the General Manager’ s office; these limits are reviewed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only on a cash basis.

In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or a legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Customers that are graded as “high risk” are placed on a restricted customer list and monitored by the General Manager’ s office. If customers default, the Group will stop transactions with those customers or trade on a cash basis.

The Group established an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss incurred but not yet identified. The collective loss allowance is determined based on historical data on payment statistics for similar financial assets.

2) Bank deposit and transaction contract of foreign derivative instruments

The credit risk exposure in the bank deposits and transaction contract of foreign derivation instruments is measured and monitored by the General Manager's office. The Group only deals with financial institutions; therefore, there are no significant doubts regarding default on the above financial instruments, and as a result, there is no significant credit risk.

4. Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

� 52 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The Group uses activity-based costing to cost its products, which assists it in monitoring cash flow requirements. The Group aims to maintain the level of its cash and cash equivalents at an amount in excess of expected cash flows on financial liabilities over the succeeding 90 days. This excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. As of December 31, 2021 and 2020, the Group's unused credit line were amounted to $16,413,907 and $13,766,218, respectively.

5. Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, and equity prices, will affect the Group’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

The Group buys and sells derivatives, and also incurs financial liabilities, in order to manage market risk. All such transactions are carried out within the guidelines set by the Risk Management Committee.

1) Currency risk

The Group is exposed to currency risk on sales, purchases, and borrowings that are denominated in a currency other than the respective functional currencies of the Group’ s entities, primarily the New Taiwan Dollar (TWD), US Dollar (USD), and China Yuan (CNY). Besides, the Group uses natural hedging principle to hedge by controlling the net amount of each currency of the Group in accordance with the condition of the exchange rate market. The Group hedges the currency risk with forward foreign currency whose mature date is in a year from report date and currency swap contract.

The interest is denominated in the currency used in the borrowings. Generally, borrowings are denominated in currencies that match the cash flows generated by the underlying operations of the Group, primarily the TWD, USD, and CNY. This provides an economic hedge without derivatives being entered into, and therefore, hedge accounting is not applied in these circumstances.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

2) Interest risk

The Group's borrowings were on the basis of floating interest rate. The Group is not involved in the situation of changing floating interest rate into fixed rate with interest rate swap agreement. The Group periodically assessed the borrowing rates of the banks and every currency to make provisions for interest-changed rate risk. In addition, the Group creates favorable relationship with banks to get lower financial costs from borrowings in order for it to strengthen its working capital to lower its dependency on bank borrowings, as well as situation of changing floating interest rate and scatter interest-changed rate risk.

� 53 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

3) Other market price risk

The Group does not enter into any commodity contracts other than to meet the Group's expected usage and sales requirements; such contracts are not settled on a net basis.

(x) Capital management

The Group maintains and manages its capital to meet the minimum paid-in capital required by the competent authority, and to optimize the balance of liabilities and equity in order to maximize shareholders' return. By periodically reviewing and measuring relative cost, risk, and rate of return to ensure profit and to maintain adequate financial ratios, the Group may adopt various financing approaches to balance its capital structure in order to meet the demands for capital expenditures, working capital, settlements of liabilities, and dividend payments in normal course of business for the future. The Group’s debt to equity ratios at the balance sheet date were as follows:

(y) Investing and financing activities not affecting current cash flow

The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2021 and 2020, were as follows:

For right-of-use assets under leases, please refer to note (6)(h).
Reconciliation of liabilities arising from financing activities were as follows:

Non-cash changes Acquisition Foreign exchange movement Fair value changes - (3,821) - - (2,608) - - (8,961) - - - (180) - (15,390) (180)	Non-cash changes Acquisition Foreign exchange movement Fair value changes - (3,821) - - (2,608) - - (8,961) - - - (180) - (15,390) (180)	December 31, 2021
Acquisition - - - - -	Foreign exchange movement (3,821) (2,608) (8,961) - (15,390)
		2,588,894 850,000 303,245 199,820
		3,941,959

Non-cash changes Acquisition Foreign exchange movement Fair value changes 171,180 44 - - 3,276 - 171,180 3,320 -	Non-cash changes Acquisition Foreign exchange movement Fair value changes 171,180 44 - - 3,276 - 171,180 3,320 -	December 31, 2020
Acquisition 171,180 - 171,180	Foreign exchange movement 44 3,276 3,320
		608,724 1,117,137
		1,725,861

� 54 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(7) Related-Party Transactions

(a) Parent company and ultimate controlling company

The Company is both the parent company and ultimate controlling party of the Group.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related party during the periods covered in the consolidated financial statements.

the consolidated financial statements.
Name of related party	Relationship with the Group
TECHNICA USA	The Group's associates

1. Sales

The amounts of significant sales by the Group to related parties were as follows:

Associates	For the years ended December 31,	For the years ended December 31,
	2021 $ 97,953	2020
		70,000

The selling price for related parties approximated the market price. The credit terms 90 days, which approximated those for routine sales transactions.

Receivables from related parties

Item	Related party categories	2020.12.31
Accounts receivable Other receivable Payables to related parties Item	Associates Associates Related party categories	35,374 -
		35,374
		2020.12.31
		2,537
		2020.12.31
		-

Payables to related parties
Loans to related parties

The loans to related parties were as follow:

The interest charged by the Group to related parties is based on the average interest rate charged by financial institutions on the Group's borrowings. The loans to related parties are unsecured.

� 55 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

5. Guarantee

As of December 31, 2021, the Group had provided a guarantee for loans taken out by its subsidiaries, please refer to Note 13(a) for further explanations.

Other transactions to related parties

Account	Relationship	For the years ended December 31,	For the years ended December 31,
		2021 $ 3,891	2020
Selling expenses	Associates		2,885

(d) Transactions with key management personnel

Key management personnel compensation comprised:

Short-term employee benefits Termination benefits	For the years ended December 31,	For the years ended December 31,
	2021 $ 197,734 2,774 $ 200,508	2020
		144,765 2,891
		147,656

(8) Pledged Assets

The following assets were restricted in use:

Assets	Purpose of Pledge	2021.12.31 $ - - 61,781 $ 61,781	2020.12.31
Buildings Rignt-of-use asset Refundable deposits	Pledged as collateral for long- term debt � Deposits for mailbox, leases and natural gas, etc.		809,693 135,726 19,583
			965,002

(9) Significant Contingencies and Commitments

(a) Major Commitments and contingencies were as follows:
Unused standby letters of credit

Unused standby letters of credit TWD USD	2021.12.31 2020.12.31 $ 69,047 85,193 29,542 29,581

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(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The significant contracts for engineering construction and purchase of properties in order to extend factories and machineries by the Group, were as follows:

Total contract price JPY USD TWD Unpaid contract price JPY USD TWD	2021.12.31 2020.12.31 $ 642,000 - $ 90,749 5,120 753,542 104,852 $ 417,300 - $ 84,254 789 299,326 61,773

The royalties of eco-material technic treatment with Japanese Company A, the paid royalties were as follows:

2020 $ 118,325	2020
	107,342

As of December 31, 2021 and 2020, the amounts of Performance Letter of Guarantee issued by Mega International Commercial Bank-Zhongli Branch for the purpose of Customs for guaranty of domestic tariff and for guaranty of hiring foreigners to be employed were $5,000.
As of October 30, 2020, the Group's Board of Directors resolved to purchase land and buildings for the growth of the Group's operations, and signed the purchase contract with an unrelated party and the total contract price was $2.16 billion. Both parties agreed that the land needs to be in compliance with the land pollution remediation regulations. Since the relevant restoration works have not been completed, the ownership registration has not yet been transferred.
As of December 31, 2021, the Group planned to get a government grant and obtained the performance guarantee letter issued by the bank. The amount of the guarantee letter was $7,200.
(b) Commitments

The subsidiary, Elite electronic Material (Kunshan) Co., Ltd., formally signed a relocation compensation agreement with the Kunshan local government. According to the local government's land planning, the Group was required to relocate the plant and equipment on Youbi Road, Zhoushi Town, Kunshan City, and return the use rights of land to the government. The government allocates compensation to the Group according to the progress of the contract. The total amount of compensation is CNY 195,000.

� 57 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

As of December 31, 2021, the disposal of the land use rights, plant and equipment has not been completed. The Group have received CNY 78,942 (TWD 342,926) in advance based on the contract, and the remaining compensation will be collected when the new plant is constructed, and the land is handed over. The Group expects to complete the plant construction by the end of 2022 and relocats in 2024. In addition, the Group expects that the relocation will be completed, and the old factory will be demolished by the end of 2024.

(10) Significant Catastrophic Losses: None.

(11) Significant Subsequent Events: None.

(12) Others

(a) Employee benefits, depreciation, and amortization expenses, categorized as operating cost or expense, were as follows:

Categorized as Nature	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
	Operating Cost	Operating Expense	Total	Operating Cost	Operating Expense	Total
Employee benefits Salary Labor and health insurance Pension Others employee benefits Depreciation Amortization	1,777,681 96,770 128,843 133,394 614,733 412	1,002,708 33,720 33,637 50,562 75,423 28,826	2,780,389 130,490 162,480 183,956 690,156 29,238	1,376,599 69,753 32,073 108,956 542,752 432	668,337 22,431 12,890 41,026 56,470 8,959	2,044,936 92,184 44,963 149,982 599,222 9,391

(b) As of December 31, 2021, the Company's Board of Directors resolved to issue the unsecured convertible bonds for purchasing properties and working capital needs. The total amount raised is expected to be capped at $3.5 billion, with the par value of $100 thousand, and the issue period will be 5 years. The issue price is based on 100%~102% of the par value. Other conditions and measures will be dealt with in accordance with relevant acts and regulations, and will be announced separately after reported to the competent authority for approval.

� 58 �

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(13) Additional Disclosures

(a) Information on significant transactions

The following is the information on significant transactions required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the year ended December 31, 2021:

Fund financing to other parties:

			(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)	(Expressed in thousands of New Taiwan dollars,unless otherwise specified)
No	Name of lender	Name of borrower	Account name	Related party	Highest balance of financing to other parties during the period	Ending balance	Actual usage amount during the period	Range of interest rates during the period	Purposes of fund financing for the borrower	Transaction amount for business between two parties	Reasons for short-term financing	Allowance for bad debt	Collateral		Individual funding loan limits	Maximum limit of fund financing
													Item	Value
0 1 2	Elite Electronic Material (Kunshan) Co., Ltd. E M ( L Elite Electronic Material (Zhongshan) Co., Ltd. E M ( L Elite Electronic Material (Zhongshan) Co., Ltd. E M ( L	lite Electronic aterial Huangshi) Co., td. r lite Electronic aterial Huangshi) Co., td. r lite Electronic aterial Huangshi) Co., td. r	Other receivables- elated parties Other receivables- elated parties Other receivables- elated parties	Yes Yes Yes	12,582 1,201,216 1,402,880	12,456 1,185,912 1,390,080	3,322 1,172,880 803,640	2.00% 3.00% 3.00%	1 2 2	97,953 O C - O C - O d	perating apital perating apital perating emand	- - -	- - -	- - -	48,977 (Note 3) 2,982,979 (Note 4) 1,913,073	5,925,854 (Note 3) 2,982,979 (Note 4) 1,913,073

Note 1: The number is filled as follows:

0 is the Company.
Subsidiaries are numbered as 1 sequentially

Note 2: 1. Having dealings with the Company.

Those who have the needs in short-term financing.
Note 3: The company with business contact, the amount of each fund financing cannot exceed 50% of total amount of purchase (sales) transactions in the recent year, and cannot exceed 3% of the Company's net asset value; the total amount of fund financing cannot exceed 30% of the Company's net asset value.
Note 4: The total amount of fund financing could not exceed 30% of the lender's net asset value and the Company's net asset value, while the maximum financing amount for a single company could not exceed 30% of the lender's net asset value .
Note 5: The total maximum financing amount cannot exceed 30% of the lender's net asset value, while the maximum financing amount for a single company cannot exceed 30% of the lender's net value.

Note 6: The total amount cannot exceed 100% of the Company's net worth in its lates financial statements.

Guarantees and endorsements for other parties:

								(Expressed in thousands	(Expressed in thousands	of New Taiw	an dollars,un	less otherwi	se specified)
No. (Note 1)	Name of company	Counter-p	arty	Limitation on amount of guarantees and endorsements for a specific enterprise (Note 3)	Highest balance for guarantees and endorsements during theperiod	Balance of guarantees and endorsements as of reporting date	Actual usage amount during theperiod	Property pledged on guarantees and endorsements (Amount)	Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements	Maximum amount for guarantees and endorsements (Note 3)	Parent Company endorsement/ guarantees to third parties on behalf of subsidiary	Subsidiary endorsement/ guarantees to third parties on behalf of parent company	Endorsements/guar antees to third parties on behalf of companies in Mainland China
		Name	Relationship with the Company (Note 2)
0 0 0 0 0	Elite Material Co., Ltd. � � � �	Elite Electronic Materia (Kunshan) Co., Ltd. Elite Electronic Materia (Zhongshan) Co., Ltd. Elite Electronic Materia (Huangshi) Co., Ltd. EMD SPECIALTY MATERIALS,LLC TECHNICA USA	l 2 l 2 l 2 2 6	9,876,423 9,876,423 9,876,423 9,876,423 9,876,423	85,605 142,675 1,139,200 285,350 17,121	- - - 276,800 16,608	- - - 166,080 16,608	- - - - -	% - % - % - % 1.40 % 0.08	19,752,846 19,752,846 19,752,846 19,752,846 19,752,846	Y Y Y Y		Y Y Y

� 59 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

==> picture [459 x 100] intentionally omitted <==

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

Limitation on Subsidiary Endorsements/guar
Counter-party amount of Highest Balance of Ratio of accumulated Maximum Parent Company endorsement/ antees
Relationship guarantees and balance for guarantees and Property pledged amounts of guarantees amount for endorsement/ guarantees to third
with the endorsements for a guarantees endorsements Actual usage on guarantees and endorsements to net guarantees and guarantees to third parties on parties on
No. Name of Company specific enterprise and endorsements as of reporting amount during and endorsements worth of the latest endorsements to third parties on behalf of parent behalf of companies
(Note 1) company Name (Note 2) (Note 3) during the period date the period (Amount) financial statements (Note 3) behalf of subsidiary company in Mainland China
1 Elite Electronic Elite Electronic Material 4 994,326 784,800 781,920 467,436 - 7.86 % 9,943,264 Y
Material (Huangshi) Co., Ltd.
(Kunshan) Co.,
Ltd. (Note 4)
2 Elite Electronic Elite Electronic Material 4 3,188,455 2,400,780 2,391,968 1,331,212 - 37.51 % 6,376,910 Y
Material (Huangshi) Co., Ltd.
(Zhongshan) Co.,
Ltd.
----- End of picture text -----

Note 1: 0 is the Company.

Note 2:1. Entities with business relationship with the Company.

A subsidiary in which the Company directly holds more than 50% of its voting shares.
A investee in which the Company and subsidiary holds more than 50% of its voting shares.
A parent company in which the Company directly or Subsidiaries indirectly holds more than 90% of its voting shares.
Companies in same type of business and providing mutual endorsements/ guarantees in favor of each other in accordance with the contractual obligations in order to fulfill the needs of the construction project.
Shareholders making endorsements and/or guarantees for their mutually invested company in proportion to their shareholding percentage.
Companies in same type of business providing guarantees of pre-sale contracts according to the regulation.
Note 3: The total maximum endorsement / guarantee cannot exceed 100% of the Company's net worth in its latest financial statements, while the maximum endorsement / guarantee amount for a single company cannot exceed 50% of the Company's net worth in its latest financial statements.
Note 4: The Company or the company in which directly or indirectly holds more than 90% of the voting shares may be endorsed and the amount shall not exceed 10% of the company’s net worth.

Note 5: The transactions with the Group were eliminated in the consolidated financial statements.

Information regarding securities held at balance sheet date:

				(Expressed in	thousands of New Taiwan	thousands of New Taiwan	dollars, unless otherwise specified)	dollars, unless otherwise specified)	dollars, unless otherwise specified)
Name of holder	Category and name of security	Category and name of security	Account title		Ending balance			Peak Holding Percentage	Note
				Number	Book value	Percentage	Market value
EMC OVERSEAS HOLDING INCORPORARTED	PROUD STAR INTERNATIIONAL LIMITED	-	Non-current available-for-sale financial assets	500,000	-	% 3.26	-	% 3.26

Accumulated buying/selling of the same marketable securities for which the dollar amount reaches $300 million or 20% or more of paid-in capital: None.
Acquisition of real estate for which the dollar amount reaches $300 million or 20% or more of paid-in capital :

(In Thousands of New Taiwan Dollars)

Name of Company	Name of property	Transaction date	Transaction amount	Status of payment	Counterparty	Relationship with the Company	If the co	untry is a rela previous transf	ted party, d er informat	isclose the ion	References for determining price	Purpose of acquisition and current condition	Others
							Owner	Relationship with the Company	Date of transfer	Amount
Elite Material Co., Ltd.	Land and plant	2021.12.31	2,160,000	Not yet paid	Tehchang Leather Products Co., Ltd.	None	-	-	-	-	Professional valuation report	Required for company operations	Payments are expected to be made after fulfilling contract conditions

Disposition of real estate for which the dollar amount reaches $300 million or 20% or more of paid-in capital: None.

� 60 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Buying/selling products with the dollar amount reaches $100 million or 20% or more of paid-in capital:

(In Thousands of New Taiwan Dollars)

Name of company	Counter-party	Relationship		Transaction details	Transaction details		Reasons why and description of how the transaction conditions differ from general transactions	Reasons why and description of how the transaction conditions differ from general transactions	Account/note receivable (payable)	Account/note receivable (payable)	Notes
			Purchase /Sale	Amount	Percentage of total purchases /sales	Credit period	Unit price	Credit period	Balance	Percentage of total accounts/notes receivable (payable)
Elite Material Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd.	Elite Electronic Material (Kunshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Material Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Investee company on equity method by the Company � � Equity investments using equity method Actual related party � � � � �	Sale Purchase Sale Purchase Sale Purchase Sale Purchase Sale Purchase	(537,594) 537,594 (443,710) 443,710 (113,116) 113,116 (2,803,250) 2,803,250 (1,935,891) 1,935,891	% (6) % 4 % (5) % 5 % (1) % 1 % (58) % 23 % (40) % 23	Depends on subsidiaries' financial condition � � � � � � � � �	- - - - - - - - - -		115,050 (115,050) 195,374 (195,374) 93,616 (93,616) 958,953 (958,953) 539,590 (539,590)	% 4 % (3) % 7 % (8) % 2 % (4) % 61 % (26) % 34 % (21)

Note 1: The transactions with the Group were eliminated in the consolidated financial statements.

� 61 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Accounts receivable from related parties for which the dollar amount reaches $100 million or 20% or more of paid-in capital:

(In Thousands of New Taiwan Dollars)

Name of related party	Counter-party	Relationship	Balance of receivables from related party	Turnover days	Past-due re relate	ceivables from d party	Subsequently received amount of receivables from related party	Allowances for bad debts
					Amount	Action taken
Elite Material Co., Ltd. Elite Material Co., Ltd. (note 1) Elite Material Co., Ltd. Elite Material Co., Ltd. (note 1) Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. (Note 1) Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Kunshan) Co., Ltd. (note 1) Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. (Note 1) Elite Electronic Material (Huangshi) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Elite Electronic Material (Kunshan) Co., Ltd. � Elite Electronic Material (Zhongshan) Co., Ltd. � Elite Material Co., Ltd. � Elite Electronic Material (Huangshi) Co., Ltd. � � � Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd.	Investee company on equity method by the Company � � � Investcc company on equity method by the Company � Actual related party � � � � �	115,050 123,316 195,374 52,059 53,379 449,977 48,728 1,196,290 4,437 815,519 958,953 539,590	4.47 Not applicable 2.56 Not applicable 2.50 Not applicable 2.98 Not applicable 3.31 Not applicable 3.96 3.72	- - - - - - - - - - - -		69,398 123,316 144,858 52,059 4,041 108,267 36,155 - 4,395 - 647,195 345,145	- - - - - - - - - - - -

Note 1: Financial statement account: Other receivables.

Note 2: The transactions with the Group were eliminated in the consolidated financial statements.

Derivative transactions: None.

� 62 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

10. Business relationships and significant inter-company transactions:

No. (Note 1)	Name of company	Name of counter-party	Existing relationship with the counter- party (Note 2)	Transaction	Transaction	Transaction	Transaction
				Account name	Amount	Terms of trading	Percentage of the total consolidated revenue or total assets
0 0 1 1 2 3 3 3 3	Elite Material Co., Ltd. � Elite Electronic Material (Kunshan) Co., Ltd. � Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. � � �	Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co., Ltd. Elite Electronic Material (Huangshi) Co., Ltd. Elite Material Co., Ltd. � Elite Electronic Material (Kunshan) Co., Ltd. � Elite Electronic Material (Zhongshan) Co., Ltd. �	1 1 3 2 3 3 3 3 3	Sales Sales Other Accounts Receivable Other Accounts Receivable Other Accounts Receivable Sales Accounts Receivable Sales Accounts Receivable	537,594 443,710 1,196,290 449,977 815,519 2,803,250 958,953 1,935,891 539,590	Note 3 � Note 4 � � Note 3 � � �	% 1.40 % 1.15 % 3.27 % 1.23 % 2.23 % 7.28 % 2.62 % 5.03 % 1.48

Note 1: Numbers denote the following:

0 represents the Company.
Subsidiaries are listed by names and numbered starting with 1.

Note 2: Relationship with the listed companies:

The Company to subsidiary
Subsidiary to the Company
Subsidiary to subsidiary

Note 3: Sales price is negotiated by vendor and purchaser. Payment Term ranges from 90-day to 120-day or depending on the financial condition of the subsidiaries.

Note 4: No other trading partners are available for comparison.

Note 5: Transaction amounts exceeding 1% of the total assets on the balance sheet accounts or 1% of the total operating revenue on the income statement accounts of the Group will not be disclosed.

(b) Information on investees:

For the year ended December 31, 2021, the following was the information on investees (excluding investees in Mainland China) :

					(Amounts Expressed in Thousands of New Taiwan Dollars,	(Amounts Expressed in Thousands of New Taiwan Dollars,	(Amounts Expressed in Thousands of New Taiwan Dollars,	(Amounts Expressed in Thousands of New Taiwan Dollars,	(Amounts Expressed in Thousands of New Taiwan Dollars,	(Amounts Expressed in Thousands of New Taiwan Dollars,	Except for Share Data)	Except for Share Data)
Name of investor	Name of investee	Location	Major operations	Initial investm	ent (Amount)	E	nding balanc	e	Peak Holding Percentage	Net income (loss) of the investee	Investment income (losses)	Note
				Ending balance	Beginning balance	Shares	Ratio of shares	Book value
Elite Material Co., Ltd. � �	EMC OVERSEAS HOLDING INCORPORATED Grand Wahan Incorporated EMC INTERNATIONA L HOLDING INCORPORATED	British Virgin Islands Cayman Islands �	Investment business Import / export business and investment business Investment business	1,179,111 602,440 761,482	1,179,111 602,440 761,482	36,256,950 20,020,000 26,310,000	% 100.00 % 100.00 % 100.00	16,367,691 714,679 754,212	% 100.00 % 100.00 % 100.00	5,243,183 95,217 26,847	5,243,183 95,217 26,847	Subsidiaries Subsidiaries Subsidiaries

� 63 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Name of investor	Name of investee	Location	Major operations	Initial investm	ent (Amount)	E	nding balanc	e	Peak Holding Percentage	Net income (loss) of the investee	Investment income (losses)	Note
				Ending balance	Beginning balance	Shares	Ratio of shares	Book value
Elite Material Co., Ltd. EMC OVERSEAS HOLDING INCORPORATED � � Grand Zhuhai Incorporated � EMC INTERNATIONAL HOLDING INCORPORATED � EMC SPECIAL APPLICATION INCORPORATED EMC USA HOLDING INCORPORATED	Li Cheng Tech Co., Ltd. Grand Zhuhai Incorporated TECHNICA USA Li Cheng Tech Co., Ltd. Grand Shanghai Incorporated Grand Zhongshan Incorporated EMC SPECIAL APPLICATION INCORPORATED EMC USA HOLDING INCORPORATED EMD SPECIALTY MATERIALS,LL C TECHNICA USA	Taiwan Cayman Islands USA Taiwan British Virgin Islands � Cayman Islands � USA �	Electronics, Telecommunications equipment, Wholesale, Retails, Batteries, Power generation and Distribution machinery manufacturing business Import / export business and investment business Import/export business Electronics, Telecommunications equipment, Wholesale, Retails, Batteries, Power generation and Distribution machinery manufacturing business Import / export business and investment business Import / export business and investment business Investment business Investment business Copper clad laminate and prepreg business Import/export business	173,694 935,551 - 7,311 914,313 454,976 726,738 - 725,136 16,608	173,694 935,551 16,608 7,311 914,313 454,976 726,738 - 725,136 -	16,412,918 33,798,821 - 250,000 18,161,515 16,437,000 26,255,000 - - 600,000	% 33.50 % 100.00 % - % 1.53 % 99.79 % 100.00 % 100.00 % 100.00 % 100.00 % 30.00	- 16,313,311 - - 9,929,227 6,382,743 752,951 - 751,659 -	% 33.50 % 100.00 % 30.00 % 1.53 % 99.79 % 100.00 % 100.00 % 100.00 % 100.00 % 30.00	- 5,226,638 (33,146) - 3,281,452 1,952,464 29,389 (2,279) 43,580 (33,146)	- 5,226,638 (7,665) - 3,274,513 1,952,464 29,389 (2,279) 43,580 (2,279)	Note 6 Sub-subsidiaries Note 4, 5 Note 6 Third-tier subsidiary � Sub-subsidiaries Third-tier subsidiary Third-tier subsidiary Note 4, 5

Note 1:The amounts of book value recognized using the equity method include investment income(losses) and the exchange differences on translation of foreign statements. Note 2: The amount above is evaluated based on the independent audit report of the investee under equity method. Note 3: The transactions with the Group were eliminated in the consolidated financial statements. Note 4: Because other shareholders hold more than 70% of the shares and the Company only accounts for 30%, the Company has no control. Note 5: On October 27, 2021, the Company's Board of Directors resolved to adjust the investment structure. The initial investment of $16,608 that was invested in Technica USA through EMC Overseas Holding Incorporated was adjusted to be invested in Technica USA through EMC USA Holding Incorporated. Note 6: The investment value had been impaired, the Company recognized all losses and the book value was offset to zero.

� 64 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

(c) Information on investment in Mainland China:
Information on investment in Mainland China:

(Amounts Expressed in Thousands of New Taiwan Dollars)

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan (R.O.C.)	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan	Net income (loss) of the investee	Percentage of Ownership	Peak Holding Percentage	Investment Income (Loss) Recognized (Note 2)	Carrying Amount	Accumulated Inward Remittance of Earnings
					Outflow	Inflow
Elite Electronic Material (Kunshan) Co., Ltd. Elite Electronic Material (Zhongshan) Co.Ltd. Elite Electronic Material (Huangshi) Co., Ltd.	Copper clad laminate and prepreg business � �	1,749,376 559,136 553,600	(2) (2) (2)	650,816 440,613 601,858	- - -	- - -	650,816 440,613 601,858	3,273,474 1,945,565 86,742	% 99.79 % 100.00 % 100.00	% 99.79 % 100.00 % 100.00	3,266,552 1,945,565 86,742	9,922,238 6,376,910 699,881	7,862,841 4,038,934 -

Limitation on investment in Mainland China:

Company	Aggregate investment amount remitted from Taiwan to Mainland China at the end of the period	Approved investment (amount) by Ministry of Economic Affairs Investment Commission(Note 3)	Limitation on investment in Mainland China in accordance with regulations of Ministry of Economic Affairs Investment Commission (Note 4)
Elite Material Co., Ltd.	1,710,734	4,373,813	11,851,708

Note 1: There are three investment approach of categories:

(1) Direct Investment in Mainland China.
(2) Investment in Mainland China by a third party.
(3) Other approach.
Note 2: The financial statements were audited by the Certified Public Accountants of the Company.
Note 3: The difference between the paid-in capital of Elite Electronic Material (Kunshan) Co. Ltd. and the investment amount remitted from Taiwan amounted to ,USD 6,012, which was invested overseas by the subsidiary, also USD 10,000, and USD 35,000, which were recognized as capital increase out of earnings, respectively.
Note 4: The difference between the paid-in capital of Elite Electronic Material (Zhongshan) Co. Ltd. and the investment amount remitted from Taiwan amounted to USD 6,255, which was recognized as capital increase out of earnings.
Note 5: The difference between the paid-in capital and investment amount remitted from Taiwan amounted to USD 110, which was invested overseas by the subsidiary.
Note 6: The items in the balance sheet and those in the income statements were translated at the exchange rate of 27.68 and 27.9973, respectively, for the year ended December 31, 2021.

Note 7: The transactions with the Group were eliminated in the consolidated financial statements.

Significant transactions�

Please refer to the related disclosures above captioned as “ Related information on material transaction items” for direct or indirect significant transactions between the Group and its investees in Mainland China for the year ended December 31, 2021. (The transactions were eliminated in the consolidated financial statements.)

(d) Major shareholders:

Shareholding Shareholder’s Name	Shares	Percentage
Yu Chang Investment Co., Ltd.	25,471,477	% 0.00
Cathay Life Insurance Co., Ltd.	24,182,700	% 0.00

� 65 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Note: (1)The main shareholder information of this table is calculated by the insurance company on the last business day at the end of each quarter. The above information. As for the share capital recorded in the company's financial report and the number of shares actually delivered by the company without physical registration, the calculation basis may be different or different.
(2)If the information on the Shanghai Stock Exchange is a shareholder's shareholding delivery to the trust, it will be disclosed by the trustee who opened the trust account separately. As for shareholders who handle the declaration of insider equity holding more than 10% of their shares in accordance with the Securities Exchange Act, their shareholdings include their shareholdings plus their delivery of trust and shares with the right to make decisions on trust property, etc. For information on insider equity declaration, please refer to Open Information Observatory.

(14) Segment Information

(a) General information

The Group has three reportable segments: Segment domestic, foreign, and other segments. domestic produces and sales different types of printed circuit board products, electronic-industrial specialty chemical, and electronic components. Segment foreign produces and sales prepreg for printed circuit board and copper clad laminate. Other segments engage in investment and product exchange business.

The reportable segments are the Group's strategic divisions. They offer different products and services, and are managed separately because they require different technological and marketing strategies. Most of the strategic divisions were acquired separately. The management of the acquired divisions remains employed by the Group.

(b) Information about reportable segments' profit and loss, assets, and liabilities and their measurement and reconciliations

The Group uses the internal management report that the chief operating decision maker reviews as the basis to determine resource allocation and make a performance evaluation. The internal management report includes profit before taxation, but not including any extraordinary activity and foreign exchange gain or losses because taxation, extraordinary activity, and foreign exchange gain or losses are managed on a group basis, and hence they are not able to be allocated to each reportable segment. In addition, not all reportable segments include depreciation and amortization of significant non-cash items. The reportable amount is similar to that in the report used by the chief operating decision maker.

� 66 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

The operating segment accounting policies are similar to those described in note (4) "significant accounting policies" except for the recognition and measurement of pension cost, which is on a cash basis.

The Group treated intersegment sales and transfers as third-party transactions. They are measured at market price.

The Group's operating segment information and reconciliations were as follows:

2021	Domestic $ 7,897,916 1,292,023 $ 9,189,939 $ 6,051,838 $ 17,822,990 2,134,702 $ 26,285,677 $ 6,532,831 $ 6,142,734 787,901 $ 6,930,635 $ 4,184,544 $ 14,794,570 2,110,210 $ 21,926,860 $ 5,188,230	Foreign 30,602,110 5,043,458 35,645,568 6,202,481 - 7,637,520 31,453,681 14,433,626 21,058,052 2,279,447 23,337,499 4,475,056 - 5,304,186 23,152,537 9,142,516	Other Segments - - - 15,852,912 51,149,945 - 49,728,940 540,075 - - - 11,279,676 42,233,968 - 40,822,477 228,076	Adjustment and Elimination - (6,335,481) (6,335,481) (21,195,335) (68,972,935) 591,327 (70,903,237) (4,715,358) - (3,067,348) (3,067,348) (15,095,713) (57,018,423) 599,668 (58,045,068) (3,457,525)	Total 38,500,026 -
Revenue: Revenue from external customers Intersegment revenues Total Revenue Reportable Segment net operating income (loss) Assets: Investments accounted for using equity method Capital expenditure of non-current assets Reportable segment assets Reportable segment liabilities 2020
					38,500,026
					6,911,896
					- 10,363,549 36,565,061
					16,791,174
					27,200,786 -
Revenue: Revenue from external customers Intersegment revenues Total Revenue Reportable Segment net operating income (loss) Assets: Investments accounted for using equity method Capital expenditure of non-current assets Reportable segment assets Reportable segment liabilities
					27,200,786
					4,843,563
					10,115 8,014,064 27,856,806
					11,101,297

� 67 �

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) ELITE MATERIAL CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2021 and 2020

(Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified)

Revenue from external customers of the Group was as follows:

Product and Services Capper clad laminate Prepreg Mass lam foundry Other Total	2021 $ 21,207,359 15,976,794 1,058,056 257,817 $ 38,500,026	2020
		14,009,825 12,334,689 758,423 97,849
		27,200,786

(d) Geographic information

In presenting information on the basis of geography, the revenue is based on the geographical location of customers and non-current assets are based on the geographical location of the assets.

Geographic information Revenue from external revenue: Taiwan Mainland China Other countries Total Geographic information Non-current assets: Taiwan Mainland China Other countries Total	2021 $ 5,907,377 29,588,130 3,004,519 $ 38,500,026 2021.12.31 $ 2,134,702 7,196,751 1,032,096 $ 10,363,549	2020
		4,754,162 20,852,192 1,594,432
		27,200,786
		2020.12.31
		2,110,210 5,178,962 724,892
		8,014,064

Non-current assets include property, plant and equipment, intangible assets, and other assets, not including financial instruments, deferred tax assets, and guarantee deposits.

(e) Major customers

	2021	Ratio % 12 % 8		2020
Customer	Sales $ 4,523,496 2,953,361		Customer	Sales 3,330,318 2,264,262	Ratio
A B			A B		% 12 % 8

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AI assistant

EMC — Annual Report 2021

52046_rns_2022-06-01_896af922-f197-4741-90cb-6f9d503625a9.pdf

Elite Material Co., Ltd.

2021

ANNUAL REPORT

1. The Company Spokesperson:

2. Elite Material Co., Ltd.

3. Stock Transfer Processing Agent:

4. Independent Auditor:

5. Name of the Transaction Place of the Overseas Securities and the

Ways to Inquire the Information of the Overseas Securities:

6. The Company Website : www.emctw.com

Contents of the Annual Report

I. BUSINESS REPORT TO SHAREHOLDERS ..................................................... 4

II. COMPANY PROFILE

I. BUSINESS REPORT TO SHAREHOLDERS

1. Year 2021 Business Results

i. Execution Results of Business Plan

ii. Status of Budget Execution: Not applicable

iii. Summary of Cash Flow Statements

iv. Analysis of Profitability

II. Summary of Year 2021 Business Plan

III. Effects from changes in competitions, regulations, and business environment on the

future development strategy of the company

Chairman: Ding-Yu Dong

II. COMPANY PROFILE

1. Date of Incorporation

2. Company History

III. CORPORATE GOVERNANCE

1. Organization

1.1. Organization Chart

1.2. Affairs in charge for each Major Department

2. Directors and Management Team

2.1. Directors

2.2. Major shareholders of EMC’s Directors are institutional shareholders

2.3. Major shareholders of the major shareholders who are juridical persons

2.4. Professional Qualifications and Independent Analysis of Directors

(2)The diversity and independence of board of directors ：

(A)Diversity of board of directors ：

(B)The independence of board of directors ：

2.5. President, Vice President, Assistant Vice President, Managers of Departments and Branches

3. Remuneration for directors, president and vice president

3.1.1 Remuneration paid to Directors and Independent Directors

3.1.2 Bracket of Remuneration paid to Directors and Independent Directors

3.2.1 Remuneration paid to President, Senior Vice President, and Vice President

3.2.2. Bracket of Compensation paid to President, Senior Vice President, and Vice President

3.3.1 Compensation Paid to Managers

3.3.2 The ratio of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two latest fiscal years to Directors, Presidents and Vice Presidents of the Company over net income:

4. Corporate Governance

4.1 Board of Directors

4.2 Audit Committee

4.3 Corporate governance execution results and deviations from “Corporate Governance BestPractice Principles for TWSE/GTSM Listed Companies”

Note:1

Note:2

4.4 Remuneration Committee

4.4.1 Information of Remuneration Committee Members

4.4.2 Executive Status of Remuneration Committee

4.5 Circumstances and reasons for the implementation of sustainable development promotion and the differences with the code of practice for sustainable development of listed companies

4.6 Implementation of Code of Business Conduct

4.7 Methods for searching the rules and relevant regulations of corporate governance:

4.9 Internal Control System execution status

4.12.1 Shareholders’ Meeting

4.12.2 Board Meetings

5. Audit Fees

5.1 Information of Audit Fees

6. Information for change of CPA:

Not Applicable

8.1 Shareholding variation

8.2 Shareholding transferred:

8.3 Shareholding pledged:

9 Top ten shareholders being the related party as defined in statement of financial accounting standards No. 6:

10 Shareholding proportion of EMC to Investees:

IV. CAPITAL OVERVIEW

1. Capital and Shares

1.1. Issued Shares

1.1.1. Shelf registration: None

1.2. Composition of Shareholders

1.3. Distribution Profile of Share Ownership

1.4. Major Shareholders

EMC Annual Report 2021

(2)The diversity and independence of board of directors `：`

(A)Diversity of board of directors `：`

(B)The independence of board of directors `：`