Headway - Interim / Quarterly Report 2024

HEADWAY ADVANCED MATERIALS INC. AND SUBSIDIARIES

Consolidated Financial Statements for the Six Months Ended June 30, 2024, and 2023 and Independent Auditors’ Review Report

(English Version)

Address: No. 71, Guangfu Road, Hukou, Hsinchu County TEL: (03)5978899

Note: 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 §

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Financial
Statements
Items Page
Note No.
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Items	Page	Financial Statements Note No.
1. Cover Page	1	-
2. Contents	2	-
3. Independent Auditors’ Review Report	3~4	-
4. Consolidated Balance Sheets	5	-
5. Consolidated Statement of Comprehensive
Income	6~7	-
6. Consolidated Statement of Changes in Equity	8	-
7. Consolidated Cash Flow Statement	9~10	-
8. Notes to Consolidated Financial Statements
(1) Company History	11	1
(2) Date and Procedures of the Authorization of
Consolidated Financial Statement	11	2
(3) Application of the newly announced and
Amended regulations and interpretations	11~14	3
(4) Summary of Significant Accounting Policies	14~16	4
(5) Significant Accounting judgments,
Estimations, and the Main Sources of
Assumption Uncertainties	16	5
(6) Description of Major Accounting Items	17~52	6~29
(7) Related Party Transactions	52~54	30
(8) Collateral Assets	54	31
(9) Contractual Commitment with Material or
Liabilities without Recognition	54	32
(10) Major Casualty Loss	-	-
(11) Major Post-Period Matters	-	-
(12) Other Matters	54~56	33
(13) Notes to Disclosure
1. Major Transaction Related Information	56~57,60~61	34
2. Investments Related Information	56~57,62	34
3. Investments in Mainland China	57~58,63~64	34
4. Major Shareholders	58,65	34
(14) Segment Information	58~59	35

Independent Auditors’ Review Report

To Headway Advanced Materials Inc.:

Introduction

We have reviewed the accompanying financial statements of Headway Advanced Materials Inc.(the Company) and its subsidiaries, which comprise the consolidated balance sheets as of June 30, 2024, and 2023, the related consolidated statements of comprehensive income from April 1 to June 30, 2024 and 2023 and from January 1 to June 30, 2024 and 2023, the consolidated statements of changes in equity and cash flows from January 1 to June 30, 2024 and 2023, and the notes to the consolidated financial statements (including a summary of significant accounting policies). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 "Interim Financial Reporting" endorsed and issued into effect by the Financial Supervisory Commission ("FSC") of the Republic of China ("ROC''). Our responsibility is to express a conclusion on the consolidated fincncial statements based on our reviews.

Scope of Review

Except as stated in the following paragraph, we conducted our reviews in accordance with the International Standard on Review Engagements 2410 "Review of Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Note 13 to the consolidated financial statements, the financial statements of non-significant subsidiaries included in the consolidated financial statements referred to in the first paragraph were not reviewed. As of June 30, 2024 and 2023, combined total assets of these non-significant subsidiaries were NT$ 568,162 thousand and NT$ 567,855 thousand, respectively,

representing 34% and 33%, respectively, of the consolidated total assets, and combined total liabilities of these subsidiaries were NT$ 58,598 thousand and NT$ 60,334 thousand, respectively, representing 9% and 9%, respectively, of the consolidated total liabilities; for the three months ended June 30, 2024 and 2023, the amounts of combined comprehensive income of these subsidiaries were NT$ 7,142 thousand and NT$ 1,146 thousand, representing 64% and (174)%, respectively, of the consolidated total comprehensive income; for the six months ended June 30, 2024 and 2023, the amounts of combined comprehensive income of these subsidiaries were NT$ 10,508 thousand and NT$ 10,065 thousand, representing 26% and 440%, respectively, of the consolidated total comprehensive income.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the accompanying consolidated financial statements do not give a true in all material respects, the consolidated financial position of the Company and its subsidiaries as of June 30, 2024 and 2023, its consolidated financial performance for the three months ended June 30, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for the six months ended June 30, 2024 and 2023 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting” endorsed and issued into effect by the FSC of the ROC.

Deloitte & Touche

Taipei, Taiwan Republic of China August 7, 2024

Auditor Ming-Hui Chen Auditor Chih-I Chang Securities and Futures Securities and Futures Commission Approval Document No. Commission Approval Document No. Jin-Guang-Zheng—Sheng-Zi Jin-Guang-Zheng—Sheng-Zi No. 0930128050 No. 1100378647

Headway Advanced Materials Inc. and Subsidiaries

Consolidated Balance Sheets

June 30, 2024 & 2023

Units: In Thousands of New Taiwan Dollars

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June 30, 2024 December 31, 2023 June 30, 2023 June 30, 2024 December 31, 2023 June 30, 2023
Code Assets Amount ％ Amount ％ Amount ％ Code Liabilities & Equity Amount ％ Amount ％ Amount ％
Current Assets Current Liabilities
1100 Cash and cash equivalents (Note 6 & 29) $ 431,694 26 $ 387,330 23 $ 448,399 26 2100 Short-term borrowings (Note 19, 29 & 31) $ 96,113 6 $ 113,574 7 $ 177,017 10
1110 Current Financial assets at fair value through 2110 Short-term bills payable (Note 19 & 29) - - 19,984 1 - -
profit or loss (Note 7 & 29) 289 - - - - - 2130 Contract liabilities (Note 23) 6,689 - 9,704 1 2,183 -
1136 Current financial assets at amortized cost 2150 Notes payable (Note 29 & 30) 91,248 6 75,181 4 49,835 3
(Note 9 & 29) 124,647 7 138,360 8 161,879 9 2170 Accounts payable (Note 29 & 30) 88,434 5 59,458 4 61,111 4
1150 Notes receivable, net (Note 11, 29 & 30) 40,546 2 40,797 2 44,712 3 2206 Compensation payable to employees &
1170 Accounts receivable, net (Note 11, 29 & 30) 279,147 16 316,935 19 252,800 14 directors (Note 24) 2,220 - 2,724 - 3,585 -
1220 Current tax assets (Note 25) 10,623 1 7,359 1 10,454 1 2216 Dividend payable 30,053 2 - - 42,182 2
130X Inventories (Note 12) 296,530 18 271,446 16 303,216 17 2220 Other payables (Note 20) 56,197 3 92,049 5 61,575 4
1476 Other financial assets-current (Note 10, 29 2230 Current tax liabilities (Note 25) 1,692 - 778 - 943 -
& 31) 30,000 2 30,000 2 30,000 2 2280 Lease liabilities – current (Note 15 & 29) 6,513 - 7,526 - 9,419 1
1479 Other current Assets (Note 18) 17,813 1 10,564 1 26,377 1 2399 Other current liabilities (Note 20) 8,542 1 9,041 1 5,814 -
11XX Total Current Assets 1,231,289 73 1,202,791 72 1,277,837 73 21XX Total Current Liabilities 387,701 23 390,019 23 413,664 24
Non-current Assets Non-current Liabilities
1510 Financial assets at fair value through profit or 2540 Long-term borrowings (Note 19, 29 & 31) 255,000 15 250,000 15 200,000 11
loss, non-current (Note 7 & 29) 23,019 1 25,596 2 13,753 1 2570 Deferred tax liabilities (Note 25) 24,475 2 24,475 1 24,475 1
1520 Financial assets at fair value through other 2580 Lease liabilities, non-current (Note 15 & 29) 22,208 1 25,483 2 28,721 2
comprehensive income, non-current (Note 25XX Total Non-current Liabilities 301,683 18 299,958 18 253,196 14
- - -
8 & 29) 1,384 1,555 1,670
1600 Property, plant, and equipment (Note 14 & 31) 330,817 20 308,908 18 322,221 19 2XXX Total Liabilities 689,384 41 689,977 41 666,860 38
1755 Right-of-use assets (Note 15) 63,936 4 68,223 4 64,758 4
1780 Intangible assets (Note 17) 686 - 859 - 167 - Equity (Note 22)
1805 Goodwill (Note 16) 1,687 - 1,642 - 1,625 - Equity Attributable to Owners of The Company
1840 Deferred tax assets (Note 25) 22,146 1 26,081 2 23,581 1 Capital
1920 Guarantee deposits paid (Note 29) 5,507 - 6,155 - 6,161 - 3110 Common stock capital 601,070 36 601,070 36 703,033 40
1975 Net defined benefit assets (Note 21) 1,286 - 1,185 - 361 - 3200 Capital surplus 13,104 1 13,104 - 13,081 1
1990 Other non-current assets (Note 18) 7,352 1 36,202 2 28,004 2 Retained earnings
15XX Total Non-current Assets 457,820 27 476,406 28 462,301 27 3310 Legal reserve 220,378 13 217,716 13 217,716 13
3320 Special reserve 68,170 4 58,130 3 58,130 3
3350 Unappropriated retained earnings 40,321 2 58,218 4 33,514 2
3300 Total Retained Earnings 328,869 19 334,064 20 309,360 18
3400 Other equity ( 51,876 ) ( 3 ) ( 68,171 ) ( 4 ) ( 57,100 ) ( 3 )
31XX Total Equity Attributable to Owners of
The Company 891,167 53 880,067 52 968,374 56
36XX Non-controlling Interests 108,558 6 109,153 7 104,904 6
3XXX Total Equity 999,725 59 989,220 59 1,073,278 62
1XXX Total Assets $ 1,689,109 100 $ 1,679,197 100 $ 1,740,138 100 Total Liabilities & Equity $ 1,689,109 100 $ 1,679,197 100 $ 1,740,138 100
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The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ review report dated August 7, 2024)

Chairman ： Liou, Han Yin Manager ： Chao, Wei Chun Accountant in Charge ： Liao, Pei Hung

Headway Advanced Materials Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

For the Three Months and for the Six Months Ended June 30, 2024 & 2023

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Unit: In Thousands of NTD, EPS in NTD
For the Three Months For the Three Months For the Six Months For the Six Months
Ended June 30,2024 Ended June 30,2023 Ended June 30,2024 Ended June 30,2023
Code Amount ％ Amount ％ Amount ％ Amount ％
4000 Net operating revenue (Note
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4000	Net operating revenue (Note
	23, 30 & 35)		$	294,564		100		$	242,907		100		$	575,359		100		$	562,093		100
5000	Operating costs (Note 12, 24
	&30)			238,512		81			213,247		88			469,826		82			490,698		87
5900	Gross Profit			56,052		19			29,660		12			105,533		18			71,395		13
	Operating expenses (Note 24
	& 30)
6100	Selling expenses			13,432		5			11,822		5			25,795		4			24,563		5
6200	Administrative expenses			24,000		8			21,563		9			47,598		8			44,913		8
6300	R&D expenses			5,730		2			6,146		2			11,259		2			11,929		2
6450	Expected credit gain			6,157		2			2,043		1			4,310		1	(		907)		-
6000	Total operating
	expenses			49,319		17			41,574		17			88,962		15			80,498		15
6900	Profit (loss) on operations			6,733		2	(		11,914)	(	5)			16,571		3	(		9,103)	(	2)
	Non-operating income and
	Expenses (Note 24)
7100	Interest income			5,408		2			6,500		3			10,321		2			12,733		2
7010	Other income			1,975		1			3,013		1			3,428		-			4,390		1
7020	Other gains and losses	(		1,048 )	(	1 )			748		-			1,240		-	(		202 )		-
7050	Financial costs	(		3,184)	(	1)	(		2,230)	(	1)	(		6,038)	(	1)	(		4,436)	(	1)
7000	Total non-operating
	income and
	expenses			3,151		1			8,031		3			8,951		1			12,485		2
7900	Pre-tax Profit (loss)			9,884		3	(		3,883 )	(	2 )			25,522		4			3,382		-
7950	Income tax (Note 4 & 25)	(		823)		-	(		1,130)		-	(		1,699)		-	(		1,650)		-
8200	Net Profit for the period			9,061		3	(		5,013)	(	2)			23,823		4			1,732		-
	Other comprehensive income
	(Note 22)
8310	Items that will not be
	reclassified
	subsequently to profit
	or loss:
8316	Unrealized gains or
	losses on investments
	in equity instruments
	at fair value through
	other comprehensive
	income	(		162 )		-	(		129 )		-	(		171 )		-			203		-
8360	Items that may be
	reclassified
	subsequently to profit
	or loss:
8361	Exchange differences on
	translation of the
	financial statement of
	foreign operations			2,861		1	(		1,996 )	(	1 )			21,062		4			557		-
8399	Income tax related to
	items that may be
	reclassified (Note 25)	(		542)		-			293		-	(		4,116)	(	1)	(		207)		-
8300	Total other
	comprehensive
	income (After
	Tax)			2,157		1	(		1,832)	(	1)			16,775		3			553		-

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For the Three Months For the Three Months For the Six Months For the Six Months
Ended June 30,2024 Ended June 30,2023 Ended June 30,2024 Ended June 30,2023
Code Amount ％ Amount ％ Amount ％ Amount ％
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8500 Total comprehensive income Profit (loss) attributable to: 8610 The Company owners 8620 Non-controlling interests ( 8600 Comprehensive income attributable to: 8710 The Company owners 8720 Non-controlling interests ( 8700 Earnings per share (Note 26) 9750 Basic 9850 Diluted	$ 11,218 4 ($ 6,845) ( 3) $ 10,622 4 ( $ 3,742 ) ( 2 ) 1,561) ( 1) ( 1,271) - ( $ 9,061 3 ($ 5,013) ( 2) $ 12,628 4 ( $ 5,043 ) ( 2 ) 1,410) - ( 1,802) ( 1) ( $ 11,218 4 ($ 6,845) ( 3) $ 0.18 ($ 0.05) $ 0.18 ($ 0.05)	$ 40,598 7 $ 24,858 4 1,035) - ( $ 23,823 4 $ 41,153 7 555) - ( $ 40,598 7 $ 0.41 $ 0.41	$ 2,285 - $ 1,918 - 186) - $ 1,732 - $ 2,948 - 663) - $ 2,285 - $ 0.03 $ 0.03

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche auditors’ review report dated August 7, 2024)

Chairman: Manager: Accountant in Charge ： Liou, Han Yin Chao, Wei Chun Liao, Pei Hung

Un it : I n Th ous a nds o f N TD, un les s st ate d o th er wis e

Head wa y Ad va nced Mat eria ls I n c. and Su bs id ia ries Cons ol id ate d Sta te me nt of C ha nges i n Eq ui ty

F ro m Jan ua ry 1 t o J u ne 3 0, 2 02 4 & 2023

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Equity Attributable to The Company Owners
Other Equity
Unrealized
gains and
Capital surplus (Note 22) losses on
Common stock capital Retained earnings (Note 22) Exchange investments in
differences on equity
translation of instruments at
the financial fair value
Shares Unappropriated statement of Unrealized through other Non
(Thousand Additional from long-term Employee Restricted retained foreign revaluation comprehensive Unearned -controlling
Code shares) Amount paid-in capital investment stock options stock units From merger Total Legal reserve Special reserve earnings Total operations increments income compensation Total Interests Total Equity
A1 Balance as of January 1, 2023 70,304 $ 703,033 $ 5,587 $ 1,497 $ 3,225 $ 1,881 $ 891 $ 13,081 $ 215,371 $ 95,488 $ 38,765 $ 349,624 ( $ 61,897 ) $ 6,800 ( $ 3,033 ) ( $ 245 ) $ 1,007,363 $ 106,640 $ 1,114,003
2022 Appropriation and
distribution of retained
earnings:
B1 Legal reserve - - - - - - - - 2,345 - ( 2,345 ) - - - - - - - -
B3 Special reserve - - - - - - - - - ( 37,358 ) 37,358 - - - - - - - -
B5 Cash dividends - - - - - - - - - - ( 42,182 ) ( 42,182 ) - - - - ( 42,182 ) - ( 42,182 )
D1 Net profit for the six months
ended June 30, 2023 - - - - - - - - - - 1,918 1,918 - - - - 1,918 ( 186 ) 1,732
D3 Other comprehensive income
for the six months ended
June 30, 2023 - - - - - - - - - - - - 827 - 203 - 1,030 ( 477 ) 553
D5 Total comprehensive income
for the six months ended
June 30, 2023 - - - - - - - - - - 1,918 1,918 827 - 203 - 2,948 ( 663 ) 2,285
N1 Compensation cost from
restricted stock units - - 936 - - ( 936 ) - - - - - - - - - 245 245 - 245
O1 Cash dividends for non-
controlling interests - - - - - - - - - - - - - - - - - ( 1,073 ) ( 1,073 )
Z1 Balance as of June 30, 2023 70,304 $ 703,033 $ 6,523 $ 1,497 $ 3,225 $ 945 $ 891 $ 13,081 $ 217,716 $ 58,130 $ 33,514 $ 309,360 ( $ 61,070 ) $ 6,800 ( $ 2,830 ) $ - $ 968,374 $ 104,904 $ 1,073,278
A1 Balance as of January 1, 2024 60,107 $ 601,070 $ 7,491 $ 1,497 $ 3,225 $ - $ 891 $ 13,104 $ 217,716 $ 58,130 $ 58,218 $ 334,064 ( $ 72,026 ) $ 6,800 ( $ 2,945 ) $ - $ 880,067 $ 109,153 $ 989,220
2023 Appropriation and
distribution of retained
earnings:
B1 Legal reserve - - - - - - - - 2,662 - ( 2,662 ) - - - - - - - -
B3 Special reserve - - - - - - - - - 10,040 ( 10,040 ) - - - - - - - -
B5 Cash dividends - - - - - - - - - - ( 30,053 ) ( 30,053 ) - - - - ( 30,053 ) - ( 30,053 )
D1 Net profit for the six months
ended June 30, 2024 - - - - - - - - - - 24,858 24,858 - - - - 24,858 ( 1,035 ) 23,823
D3 Other comprehensive income
for the six months ended
June 30, 2024 - - - - - - - - - - - - 16,466 - ( 171 ) - 16,295 480 16,775
D5 Total comprehensive income
for the six months ended
June 30, 2024 - - - - - - - - - - 24,858 24,858 16,466 - ( 171 ) - 41,153 ( 555 ) 40,598
O1 Cash dividends for non-
controlling interests - - - - - - - - - - - - - - - - - ( 40 ) ( 40 )
Z1 Balance as of June 30, 2024 60,107 $ 601,070 $ 7,491 $ 1,497 $ 3,225 $ - $ 891 $ 13,104 $ 220,378 $ 68,170 $ 40,321 $ 328,869 ( $ 55,560 ) $ 6,800 ( $ 3,116 ) $ - $ 891,167 $ 108,558 $ 999,725
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The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche auditors’ review report dated August 7, 2024)

Chairman ：

： Chao, Wei Chun Accountant in Charge ： Liao, Pei Hung

Headway Advanced Materials Inc. and Subsidiaries

Consolidated Cash Flow Statement

For the Six Months Ended June 30, 2024 & 2023

Unit: In Thousands of NTD

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For the Six Months For the Six Months
Code Ended June 30,2024 Ended June 30,2023
Cash Flows from Operating Activities:
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Code	Cash Flows from Operating Activities:	Ended	June 30,2024	Ended	June 30,2023
A10000	Pre-tax Profit (loss)	$	25,522	$	3,382
A20000	Adjustments to reconcile profit (loss):
A20100	Depreciation expense		31,757		31,729
A20200	Amortization expense		173		65
A20300	Expected credit loss(gain)/ Provision
	(reversal of provision) for bad
	debt expense		4,310	(	907 )
A20400	Net loss (gain) on financial liabilities
	at fair value through loss(profit)	(	910 )	(	191 )
A20900	Interest cost		6,038		4,436
A21200	Interest income	(	10,321 )	(	12,733 )
A21900	Compensation cost relating to share-
	based payment		-		245
A22500	Gain on disposal of property, plant,
	and equipment	(	64 )		-
A23700	Loss (gain) for market price decline
	and obsolete and slow-moving
	inventories	(	5,202 )		1,570
A24100	Loss (gain) on foreign exchange, net		12,196	(	348 )
A30000	Net changes in operating assets and
	liabilities:
A31130	Notes receivable		241	(	12,554 )
A31150	Accounts receivable		34,729		11,239
A31200	Inventories	(	20,287 )		42,406
A31240	Other current assets	(	7,794 )	(	9,780 )
A31250	Other financial assets - current		-		-
A31990	Net defined benefit assets	(	101 )	(	30 )
A32130	Notes payable		16,067	(	9,472 )
A32150	Accounts payable		28,984	(	12,815 )
A32180	Other payable & Other current
	liabilities	(	31,023 )	(	389 )
A32190	Compensation payable to
	employees & directors	(	504 )		130
A32125	Contract liabilities	(	3,015 )	(	7,898 )
A32240	Net defined benefit liabilities		-	(	150)
A33000	Cash generated (used in) from operations		80,796		27,935
A33300	Interest paid	(	6,329 )	(	4,741 )
A33500	Income tax paid	(	4,230)	(	2,844)
AAAA	Net Cash Generated (Used In) from
	Operating Activities		70,237		20,350
	Cash Flows from Investing Activities:
B00040	Payment for financial assets at amortized
	cost	( $	53,153 )	( $	70,626 )

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For the Six Months For the Six Months
Code Ended June 30,2024 Ended June 30,2023
B00050 Proceeds from disposal of financial assets
at amortized cost 69,605 40,544
B00100 Acquisition of financial assets at fair
value through profit or loss ( 3,220 ) ( 3,458 )
B00200 Proceeds from disposal of financial assets
at fair value through profit or loss 6,411 1,009
B02700 Payment for property, plant, and
equipment ( 52,035 ) ( 10,521 )
B02800 Proceeds from disposal of property, plant,
and equipment 68 -
B03800 Decrease in guarantee deposits paid 669 -
B04500 Payment for intangible assets - ( 180 )
B07100 Decrease (Increase) in prepayments for
equipment 28,850 ( 1,230 )
B07500 Interest received 10,788 12,391
BBBB Net Cash Generated (Used In) from
Investing Activities 7,983 ( 32,071 )
Cash Flows from Financing Activities:
C00100 Increase in Short-term borrowings 240,670 474,046
C00200 Decrease in Short-term borrowings ( 259,221 ) ( 457,564 )
C00500 Decrease in Short-term bills payable ( 20,000 ) ( 100,000 )
C01600 Proceeds from long-term borrowings 35,000 35,000
C01700 Payment for long-term borrowings ( 30,000 ) -
C04020 Repayment of the principal portion of
lease liabilities ( 4,296 ) ( 4,985 )
C05200 Cash dividends for non-controlling
interests paid ( 40 ) ( 1,073 )
CCCC Net Cash Generated (Used In) from
Financing Activities ( 37,887 ) ( 54,576 )
DDDD Effects of Exchange Rate Changes on the
Balance of Cash Held in Foreign Currencies 4,031 ( 600 )
EEEE Net Decrease in Cash and Cash Equivalents 44,364 ( 66,897 )
E00100 Cash and Cash Equivalents at the Beginning of
the Period 387,330 515,296
E00200 Cash and Cash Equivalents at the End of the
Period $ 431,694 $ 448,399
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Th e acc ompa ny in g n ote s are an integ ra l pa rt o f t he c ons ol id ate d fi nan cia l s t ate me nt s.

(Wi th De lo it te & Touche a ud i to rs’ re vi ew re po rt da ted A ug us t 7, 202 4)

Chairman: Liou, Han Yin

Manager: Chao, Wei Chun

Accountant in Charge ： Liao, Pei Hung

10 -

Headway Advanced Materials Inc. and Subsidiaries

Notes to Consolidated Financial Statements

For the Six Months Ended June 30, 2024 & 2023

(Amounts expressed in Thousands of NTD, unless stated otherwise)

1. Company History

Headway Advanced Materials Inc. (hereinafter referred to as "the Company") was established on April 24, 1976. Its business includes the manufacture, processing, and sale of PU curing agents, processing agents, coatings, resin for coatings, adhesives, flatting agents, and related raw materials.

The Company's stock has been listed on the Taiwan Stock Exchange since May 2016.

This consolidated financial report is expressed in the functional currency of the Company, which is New Taiwan dollars.

Hereinafter, the Company and its subsidiaries will be collectively referred to as "the Consolidated Company".

2. Date and Procedures of the Authorization of Financial Statements

The consolidated financial statement was authorized by the Board of Directors on August 7, 2024.

Application of the Newly Announced and Amended Regulations and Interpretations
(1) The Company has adopted International Financial Reporting Standards (IFRSs) that were recognized by the Financial Supervisory Commission, International Accounting Standards (IAS), Interpretations, and Notices (IFRS), Interpretation (IFRIC), and Interpretative Announcement (SIC) for the first time.

The Company has started applying the amended International Financial Reporting Standards (IFRSs) that were recognized and announced by the Financial Supervisory Commission (FSC), and it will not have a significant impact on the accounting policies of the Consolidated Company.

11 -
(2) The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC:

Newly announced / revised / amended regulations and Effective date for the interpretations announcement of IASB Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Remark1)

Remark1: An entity applies the amendments for annual reporting periods beginning on or after 1 January 2025. An entity recognizes any effect of initially applying the amendments as an adjustment to the opening balance of retained earnings when the entity reports foreign currency transactions. When the Company uses a presentation currency other than its functional currency, it recognizes the cumulative amount of translation differences in equity.
(3) The IFRSs issued by IASB but not yet endorsed and issued into effect by the FSC:

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

Effective date for the
Newly announced / revised / amended regulations and announcement of the
interpretations IASB (Remark1)
----- End of picture text -----

Newly announced / revised / amended regulations and interpretations	Effective date for the announcement of the IASB (Remark1)
Annual Improvements to IFRS Accounting Standards -
Volume 11	January 1, 2026
Amendments to IFRS 9 and IFRS 7 “the Classification
and Measurement of Financial Instruments”	January 1, 2026
Amendments to IFRS 10 and IAS 28 “Sale or
Contribution of Assets between an Investor and its
Associate or Joint Venture”	To be determined by IASB
IFRS 17“Insurance Contracts”	January 1, 2023
Amendments to IFRS 17	January 1, 2023
Amendments to IFRS 17“Initial Application of IFRS 17
and IFRS 9 — Comparative Information”	January 1, 2023
IFRS 18“Presentation and Disclosure in Financial
Statements”	January 1, 2027
IFRS 19”Subsidiaries without Public Accountability:
Disclosures”	January 1, 2027

Remark1: Unless otherwise stated, the above newly announced/ revised/ amended regulations or interpretations become effective for annual reporting periods beginning on or after the respective dates mentioned.

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A) IFRS 18 “Presentation and Disclosure in Financial Statements”
IFRS 18 will replace IAS 1 ‘Presentation of Financial Statements’, the main
differences between the two standards include:
a) All items of income and expense need to be classified in one of five categories in the statement of profit or loss: operating, investing, financing, income tax, and discontinued operations categories.
b) An entity must present totals and subtotals in the statement of profit or loss for operating profit or loss, profit or loss before financing and income taxes and profit or loss.
c) Guidelines are provided to strengthen the aggregation and disaggregation rules: the Consolidated Company must identify assets, liabilities, equity, income, expenses, and cash flows from individual transactions or other matters, and classify and aggregate them based on shared characteristics, so that each line item reported in the primary financial statements has at least one similar characteristic. Items with characteristics that are not shared should be disaggregated in the primary financial statements and notes. the Consolidated Company should only label these items as ‘other’ when they cannot find a more informative name.
d) Increasing the disclosure of Management-defined performance measures (MPMs): When the Consolidated Company conducts public communication outside financial statements and communicates with financial statement users about the management’s view of a certain aspect of the overall financial performance of the consolidated company, it should disclose relevant information about the MPMs in a single note to the financial statements. This includes the description of the measure, how it is calculated, its adjustments to the subtotals or totals specified by the IFRS accounting standards, and the impact of related adjustment items on income tax and non-controlling interests, etc.
Besides the impacts, up until the date the accompanying consolidated
financial statements were authorized for issue, the Consolidated Company continues to assess the impact on its financial position and financial performance from the initial adoption of standards or
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interpretations and related applicable period. The related impact will be disclosed when the Consolidated Company completes its assessment.

4. Summary of Significant Accounting Policies

(1) Statement of compliance

These interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual consolidated financial statements.

(2) Preparation basis for financial statements

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments measured at fair value, and net defined benefit assets/ liabilities measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

A) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.
B) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
C) Level 3 inputs are unobservable inputs for an asset or liability.

(3) Consolidation basis

This consolidated financial report includes the financial statements of the Company, and the entities (subsidiaries) controlled by the Company. The consolidated statements of comprehensive income have included the

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operating profit and loss of the acquired or disposed subsidiary companies in the current period from the date of acquisition or till the date of disposal. The financial reports of the subsidiaries have been adjusted to make their accounting policies consistent with the accounting policies of the Consolidated Company. All transactions, account balances, incomes, and expenses between business entities have been written-off at the time of preparing the consolidated financial report. The total comprehensive income of subsidiaries is attributable to the owners and non-controlling interests of the Company, even if the non-controlling interests are with a negative balance thereafter.

When the changes in the equity of the subsidiary owned by the Consolidated Company do not result in the loss of control, it is treated as an equity transaction. The book amount of the Consolidated Company and non-controlling interests have been adjusted to reflect changes in its relative equity in the subsidiary. The difference between the adjustment amount of non-controlling interests and the fair value of the consideration paid or received is directly recognized as equity and attributable to the Company owners.

Please refer to Note 13 and Table 3 & 4 for the subsidiaries, shareholding ratio, and business items in detail.

(4) Other significant accounting policies

Except for the following, for the summary of other significant accounting policies, please refer to the 2023 fiscal year consolidated financial statements.

A) Classification criteria for classifying assets and liabilities as current and noncurrent

Current assets include:

a) Assets held primarily for trading purposes; and
b) Assets that are expected to be realized within 12 months after the reporting period; or that
c) Cash and cash equivalents (excluding restricted items that will be exchanged or used to liquidate liabilities within 12 months after the balance sheet date).
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Current liabilities include:

a) Liabilities held primarily for trading purposes; and
b) Liabilities that will be due for settlement within 12 months after the balance sheet date. (Even if an agreement to refinance or to reschedule payments on a long-term basis is completed after the balance sheet date and before the financial statements are authorized for issue); or that
c) the Consolidated Company on the balance sheet date does not have in substance the right to defer settlement of the liability for at least 12 months after the balance sheet date.
Assets and liabilities other than current assets and current liabilities
are classified as noncurrent assets and noncurrent liabilities.
B) Defined benefit retirement benefits

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year adjusted for significant market fluctuations since that time and for significant plan amendments, settlements, or other significant one-off events.

C) Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated on an interim period's pre-tax income by applying to the tax rate that would be applicable to expected total annual earnings.

Significant Accounting Judgments, Estimations, and the Main Sources of Assumption Uncertainties

The main sources of uncertainty in significant accounting judgments, estimates, and assumptions are the same as the 2023 fiscal year consolidated financial statements.

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6. Cash and Cash Equivalents

Cash and Cash Equivalents
		June 30,	December 31,			June 30,
		2024		2023		2023
Cash on hand and petty cash		$ 278		$ 359		$ 1,074
Bank checking deposit and demand
deposit		352,267		302,855		242,214
Cash equivalents
Bank term deposit		213,796		237,087		396,990
Repurchase agreement bonds		20,000		15,389		-
		586,341		555,690		640,278
Term deposits with original
maturity exceeding 3 months	(	82,105)	(	98,106)	(	121,054)
Restricted bank deposit	(	42,542)	(	40,254)	(	40,825)
Pledged bank deposit	(	30,000)	(	30,000)	(	30,000)
Total		$ 431,694		$ 387,330		$ 448,399

The interest rate range of bank deposits on the balance sheet date is as follows:

	follows:
7.	June 30, 2024 December 31, 2023 Bank deposit 0.05%~7.8% 0.05%~8.27% Repurchase agreement bonds 1.30% 5.50% Financial Assets Measured at Fair Value through Profit or Loss	June 30, 2023
		0.05%~5.6% -

Financial assets-current Measured at fair value through profit or loss mandatorily Derivative financial assets - Foreign exchange swap Financial assets-non-current Measured at fair value through profit or loss mandatorily Non-derivative financial assets - Foreign Bonds - Domestic TWSE/TPEx listing stock - Domestic Fund beneficiary certificate		June 30, 2024 $ 289 $ 22,566 453 - $ 23,019	December 31, 2023 $ - $ 18,747 470 6,379 $ 25,596		June 30, 2023
					$ - $ 7,136 406 6,211 $ 13,753

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8. Financial Assets Measured at Fair Value through Other Comprehensive income

Equity investment Non-current Domestic investment Non-TWSE/TPEx listing stock		June 30, 2024 $ 1,384	December 31, 2023 $ 1,555		June 30, 2023
					$ 1,670

The Consolidated Company has based on the mid-term and long-term strategic purpose to invest in non-TWSE/TPEx listing stocks and expect to make profits through long-term investment. The management of the Consolidated Company believes that if the short-term fluctuation in the fair value of the investment is included in the profit and loss, it is inconsistent with the long-term investment plan; therefore, the management chooses to have such investments measured at fair value through other comprehensive income.

Financial Assets Measured at the Amortized Cost

Current Domestic investment Term deposits with original maturity exceeding 3 months (Remark 1) Restricted bank deposit (Remark 2)		June 30, 2024 $ 82,105 42,542 $ 124,647	December 31, 2023 $ 98,106 40,254 $ 138,360		June 30, 2023
					$ 121,054 40,825 $ 161,879

Remark 1: As of June 30, 2024, and for the periods ending on December 31, 2023, and June 30, 2023, the annual interest rate ranges for Term deposits with original maturity exceeding 3 months were as follows: 1.32%~7.78%, 1.32%~8.5%, and 1.20%~8.5%.

Remark 2: The Company has obtained approval from the National Taxation Bureau of Northen

Area, Ministry of Finance (R.O.C.) to repatriate USD 1.5 million under the "Regulations Governing the Investment of Overseas Funds Repatriated" and has submitted an investment plan to the Ministry of Economic Affairs. According to the regulations, the repatriated funds are restricted in the approved investment plan and cannot be used for other purposes.

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10. Other Financial Assets

Current Pledged bank deposit		June 30, 2024 $ 30,000	December 31, 2023 $ 30,000		June 30, 2023
					$ 30,000

The Consolidated Company has established pledges as collateral for borrowings, please refer to Note 31.

11. Notes Receivable and Accounts Receivable

Notes Receivable Measured at the amortized cost Total book amount Less: Allowance for loss Accounts Receivable Measured at the amortized cost Total book amount Less: Allowance for loss		June 30, 2024 $ 40,660 114) $ 40,546 $ 308,394 29,247) $ 279,147	December 31, 2023 $ 40,901 ( 104) $ 40,797 $ 341,282 ( 24,347) $ 316,935		June 30, 2023
	( (		( (	( (	$ 44,802 90) $ 44,712 $ 277,685 24,885) $ 252,800

Accounts Receivable

The credit period granted by the Consolidated Company to customers is generally between 30 and 120 days from the end of the month. The allowance for loss is estimated based on the analysis of overdue accounts, customer creditworthiness, and financial status to estimate the number of uncollectible accounts. Before accepting new customers, the Consolidated Company evaluates the credit quality of the potential customer through a credit rating system and sets the customer's credit limit. The customer's credit limit and rating are reviewed regularly every year.

The Consolidated Company recognizes the allowance for loss of accounts receivable based on the expected credit loss over the remaining lifetime of the accounts. The expected credit loss is calculated using a provision matrix, which considers the customer's past default history and current financial

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condition, the economic situation of the industry, and prospects. Because the credit loss historical experience of the Consolidated Company shows no significant differences in the loss patterns among different customer groups, the provision matrix does not distinguish between customer groups, but only sets the expected credit loss rate based on the number of days overdue of accounts receivable.

The provision for doubtful accounts and notes receivable of the Consolidated Company is measured based on the provision matrix as follows:

June 30, 2024

June 30, 2024
Total book amount Allowance for loss (expected credit loss in the duration) Amortized cost December 31, 2023 Total book amount Allowance for loss (expected credit loss in the duration) Amortized cost June 30, 2023 Total book amount Allowance for loss (expected credit loss in the duration) Amortized cost		Not Overdue $ 270,648 3,527) $ 267,121 Not Overdue $ 313,816 1,091) $ 312,725 Not Overdue $ 227,587 562) $ 227,025		Overdue 1 ~ 60 days $ 49,053 1,951) $ 47,102 Overdue 1 ~ 60 days $ 39,164 1,809) $ 37,355 Overdue 1 ~ 60 days $ 62,419 1,641) $ 60,778		Overdue 61~245 days $ 5,695 2,747) $ 2,948 Overdue 61~245 days $ 6,502 1,566) $ 4,936 Overdue 61~245 days $ 9,646 2,275) $ 7,371		Overdue 246~429 days $ 5,044 2,522) $ 2,522 Overdue 246~429 days $ 5,432 2,716) $ 2,716 Overdue 246~429 days $ 4,675 2,337) $ 2,338		Overdue Over 430 Days $ 18,614 18,614) $ - Overdue Over 430 days $ 17,269 17,269) $ - Overdue Over 430 days $ 18,160 18,160) $ -		Total
	(		(		(		(		(		(	$ 349,054 29,361) $ 319,693 Total
	(		(		(		(		(		(	$ 382,183 24,451) $ 357,732 Total
	(		(		(		(		(		(	$ 322,487 24,975) $ 297,512

The changes in the allowance for loss of the notes receivable and accounts receivable are as follows:

Beginning Balance Add: Expected credit impairment loss (reversed) for the current year Less: Actual write-off for the current year	For the Six Months Ended June 30, 2024 $ 24,451 4,310 -	For the Six Months Ended June 30, 2023 $ 26,606 ( 907) ( 89)

20 -

Exchange differences on translation Ending Balance	For the Six Months Ended June 30, 2024 600 $ 29,361	For the Six Months Ended June 30, 2023 ( 635) $ 24,975

12. Inventories

Commodities Finished goods Work-in-process goods Raw materials Construction in progress		June 30, 2024 $ 5,103 142,052 14,189 134,714 472 $ 296,530	December 31, 2023 $ 1,163 139,413 17,070 113,800 - $ 271,446		June 30, 2023
					$ 2,544 152,202 18,567 129,813 90 $ 303,216

The nature of the operating cost is as follows:

Cost of inventory sold Inventory impairment loss (reversed) Physical inventory Gain (loss)	For the Three Months Ended June 30,2024 $ 238,512 ( $ 2,168 ) ( $ 130 )	For the Three Months Ended June 30,2023 $ 213,247 ( $ 139 ) $ 59	For the Six Months Ended June 30,2024 $ 469,826 ( $ 5,202 ) ( $ 141 )	For the Six Months Ended June 30,2023 $ 490,698 $ 1,570 ( $ 112 )

13. Subsidiaries

(1) Subsidiaries included in the consolidated financial report

The main business entities of the consolidated financial report are as follows:

Name of Investing Company The Company URASIA	Name of Subsidiary Urasia International Inc. (URASIA) Headway Polyurethane Corporation Limited (TPU Company) Shanghai Huiyu Construction Co., Ltd. (Shanghai Huiyu Company)	Nature of Business General investment business Manufacturing and sales of TPU Construction of housing projects, construction of municipal public works projects, construction of mechanical and electrical	Location of establish ment and operation Panama Taiwan Shanghai	The ratio of ownership equity held by The Company	The ratio of ownership equity held by The Company	The ratio of ownership equity held by The Company
				June 30, 2024 100% 50% 74%	December 31, 2023 100% 50% 74%	June 30, 2023
						100% 50% 74%

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

The ratio of ownership equity held by
The Company
Location
of
Name of establish
Investing Name of ment and June 30, December June 30,
Company Subsidiary Nature of Business operation 2024 31, 2023 2023
installation projects,
----- End of picture text -----

Name of Investing Company	Name of Subsidiary	Nature of Business installation projects,	of establish ment and operation	June 30, 2024	December 31, 2023	June 30, 2023
		construction of building
		decoration projects,
		construction of anti-
		corrosion and waterproofing
		projects, construction of
		sports tracks, stadiums,
		artificial turf projects, and
		wholesale of sports field
		materials.
	Headway Advanced	PU resin products	Vietnam	100%	100%	100%
	Materials (Vietnam)
	Co., Ltd. (Headway
	Vietnam Company)
	Cheng Yu Develop Co.,	General investment business	Hong	100%	100%	100%
	Ltd. (Cheng Yu		Kong
	Company)
Cheng Yu	Fo-Shan City Shanshui	PU resin products	Fo-Shan	100%	100%	100%
Company	Lianmei Chemical		City
	Co., LTD. (Shanshui
	Lianmei Company)
Shanghai	Anhui Huiyu Materials	Research, manufacturing,	Chizhou	100%	100%	100%
Huiyu	Technology Co., Ltd.	import and export of plastic	City
Company	(Anhui Huiyu	materials for sports fields,
	Company)	and sports facility
		construction.

Remark 1: Except for TPU Company and Headway Vietnam Company in the Second quarter of 2024 and the Second quarter of 2023, whose financial reports have been reviewed by the independent auditors, the financial reports of other non-significant subsidiaries have not been reviewed by the independent auditors.

(2) Information on subsidiaries with significant non-controlling interests

Name of Subsidiary TPU Company	The ratio of equity and voting rights held by non- controlling interests	The ratio of equity and voting rights held by non- controlling interests	The ratio of equity and voting rights held by non- controlling interests
	June 30, 2024 50%	December 31, 2023 50%	June 30, 2023
			50%

The information of the Company's main business premises and the country of registration are available in Table 4.

Name of Subsidiary TPU Company		Profit and loss distributed to non-controlling interest	Profit and loss distributed to non-controlling interest			Non-controlling interests	Non-controlling interests	Non-controlling interests	Non-controlling interests	Non-controlling interests
	For the Three Months Ended June 30,2024 ($ 880)	For the Three Months Ended June 30,2023 ($ 615)	For the Six Months Ended June 30,2024 ($ 111)	For the Six Months Ended June 30,2023 ($ 1,372)		June 30, 2024 $ 91,092		December 31, 2023 $ 91,243		June 30, 2023 $ 89,938

The financial information summary of TPU Company is compiled according to the amount before writing off the inter-company transactions:

22 -

June 30, 2024 December 31, 2023 Current Assets $ 238,796 $ 230,732 Non-current Assets 44,126 51,155 Current Liabilities 78,442 73,819 Non-current Liabilities 22,208 25,484 Equity $ 182,272 $ 182,584 Equity attributable to: The Company owners $ 91,136 $ 91,292 Non-controlling interests of TPU Company 91,136 91,292 $ 182,272 $ 182,584 For the Three Months Ended June 30,2024 For the Three Months Ended June 30,2023 For the Six Months Ended June 30,2024 Operating Income $ 39,583 $ 41,904 $ 85,251 Net Profit (loss) for the period ( $ 1,764 ) ( $ 1,036 ) ( $ 232 ) Other comprehensive income - - - Total comprehensive income ( $ 1,764 ) ( $ 1,036 ) ( $ 232 ) Net Profit (loss) attributable to: The Company owners ( $ 882 ) ( $ 518 ) ( $ 116 ) Non-controlling interests of TPU Company ( 882) ( 518) ( 116) ( $ 1,764 ) ( $ 1,036 ) ( $ 232 ) Comprehensive income attributable to: The Company owners ( $ 882 ) ( $ 518 ) ( $ 116 ) Non-controlling interests of TPU Company ( 882) ( 518) ( 116) ( $ 1,764 ) ( $ 1,036 ) ( $ 232 ) Cash flow Operating activities $ 6,772 Investing activities ( 148 ) Financing activities 21,718 Effect of exchange rate 228 Net cash generated $ 28,570 Cash dividends for non- controlling interests paid: TPU Company $ 40		June 30, 2023
		$ 188,571 58,342 38,040 28,721 $ 180,152 $ 90,076 90,076 $ 180,152 For the Six Months Ended June 30,2023 $ 84,841 ( $ 2,566 ) - ( $ 2,566 ) ( $ 1,283 ) ( 1,283) ( $ 2,566 ) ( $ 1,283 ) ( 1,283) ( $ 2,566 ) $ 13,593 724 ( 25,255 ) 500 ( $ 10,438 ) $ 1,073

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14. Property, Plant and Equipment

Self-Use

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Land House and Machinery Transportation Miscellaneous Other Construction
Land improvements Building equipment equipment equipment equipment in progress Total
----- End of picture text -----

Balance as of January 1, 2024 Addition Disposal Reclassification Net exchange difference Balance as of June 30, 2024 Accumulated depreciation Balance as of January 1, 2024 Depreciation Disposal Reclassification Net exchange difference Balance as of June 30, 2024 Net balance as of June 30, 2024 Net balance as of December 31, 2023, and January 1, 2024 Cost Balance as of January 1, 2023 Addition Disposal Reclassification Net exchange difference Balance as of June 30, 2023 Accumulated depreciation Balance as of January 1, 2023 Depreciation Disposal Net exchange difference Balance as of June 30, 2023 Net balance as of June 30, 2023	$ 109,145 - - - - $ 109,145 $ - - - - - $ - $ 109,145 $ 109,145 $ 109,145 - - - - $ 109,145 $ - - - - $ - $ 109,145	$ 151 - - - - $ 151 $ 151 - - - - $ 151 $ - $ - $ 151 - - - - $ 151 $ 151 - - - $ 151 $ -	$ 289,217 $ 431,466 $ 41,200 $ 16,257 $ 142,896 $ 4,077 $ 1,034,409 3,542 36,786 2,280 818 3,367 192 46,985 - ( 110 ) ( 590 ) ( 540 ) ( 10 ) ( 1,250 ) 6,478 13,234 80 - ( 19,419 ) ( 373 ) - 2,232 2,470 241 55 159 ( 4) 5,153 $ 301,469 $ 483,846 $ 43,211 $ 16,590 $ 126,993 $ 3,892 $ 1,085,297 $ 216,913 $ 366,916 $ 32,622 $ 12,678 $ 96,221 $ - $ 725,501 5,011 13,779 2,131 896 5,062 - 26,879 - ( 110 ) ( 590 ) ( 540 ) ( 6 ) - ( 1,246 ) 4,968 12,030 80 - ( 17,078 ) - - 1,300 1,737 174 51 84 - 3,346 $ 228,192 $ 394,352 $ 34,417 $ 13,085 $ 84,283 $ - $ 754,480 $ 73,277 $ 89,494 $ 8,794 $ 3,505 $ 42,710 $ 3,892 $ 330,817 $ 72,304 $ 64,550 $ 8,578 $ 3,579 $ 46,675 $ 4,077 $ 308,908 $ 289,670 $ 419,682 $ 41,617 $ 15,493 $ 134,959 $ 8,569 $ 1,019,286 655 4,000 650 677 3,587 2,199 11,768 - - - ( 57 ) ( 437 ) - ( 494 ) - 572 - - 347 ( 919 ) - ( 1,338) ( 1,384) ( 73) ( 74) ( 114) ( 166) ( 3,149) $ 288,987 $ 422,870 $ 42,194 $ 16,039 $ 138,342 $ 9,683 $ 1,027,411 $ 209,020 $ 345,011 $ 28,988 $ 12,079 $ 86,478 $ - $ 681,727 4,547 12,461 2,509 858 5,831 - 26,206 - - - ( 57 ) ( 437 ) - ( 494 ) ( 1,037) ( 1,062) ( 31) ( 72) ( 47) - ( 2,249) $ 212,530 $ 356,410 $ 31,466 $ 12,808 $ 91,825 $ - $ 705,190 $ 76,457 $ 66,460 $ 10,728 $ 3,231 $ 46,517 $ 9,683 $ 322,221

Depreciation expenses are accrued on a straight-line basis according to the following years of useful life:

wing years of useful life:
Land improvements	25 Years
House and Building	3~47 Years
Machinery equipment	1~14 Years
Transportation equipment	3~10 Years
Miscellaneous equipment	3~07 Years
Other equipment	1~18 Years

Please refer to Note 31 for the property, plant and equipment that are pledged as collateral for loans.

15. Lease Agreement

(1) Right-of-use assets

Right-of-use assets
Book amount of right-of-use assets: Right-of-use land Building Transportation equipment		June 30, 2024 $ 27,119 36,817 - $ 63,936	December 31, 2023 $ 27,032 40,979 212 $ 68,223		June 30, 2023
					$ 27,649 36,579 530 $ 64,758

24 -

Addition of right-of-use assets Depreciation expense of right-of-use assets: Right-of-use land Building Transportation equipment	For the Three Months Ended June 30,2024 $ 224 1,676 53 $ 1,953	For the Three Months Ended June 30,2023 $ 225 2,490 159 $ 2,874	For the Six Months Ended June 30,2024 $ - $ 446 4,220 212 $ 4,878	For the Six Months Ended June 30,2023 $ 29,123 $ 449 4,756 318 $ 5,523

Apart from the recognition of addition and depreciation expenses, there was no significant subleasing or impairment of the right-of-use assets of the Consolidated Company during the period from January 1 to June 30, 2024, and 2023, respectively.

(2) Lease liability

Lease liability
Book amount of lease liability Current Non-current		June 30, 2024 $ 6,513 $ 22,208	December 31, 2023 $ 7,526 $ 25,483		June 30, 2023
					$ 9,419 $ 28,721

The discount rate ranges for lease liabilities are as follows:

Building Transportation equipment	June 30, 2024 2.1%~2.5% -	December 31, 2023 2.10%~3.85% 1.07%	June 30, 2023
			2.10%~3.85% 1.07%

(3) Key leasing activities and terms:

The Consolidated Company leases buildings for use as factories and offices with lease terms of 1 to 10 years. At the end of the lease term, the Consolidated Company has no preferential purchase option for the leased buildings. Additionally, the Consolidated Company has land use rights in Mainland China and Vietnam with lease terms of 50 years and 48 years, respectively.

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(4) Other lease information

Short-term lease expense Low-value assets lease expense Total lease cash (outflow)	For the Three Months Ended June 30,2024 $ 1,263 $ 21	For the Three Months Ended June 30,2023 $ 327 $ 16	For the Six Months Ended June 30,2024 $ 1,600 $ 37 ( $ 6,365 )	For the Six Months Ended June 30,2023 $ 780 $ 32 ( $ 6,184 )

The Consolidated Company chose to apply the recognition Exemption for assets, such as employee dormitories, company vehicles, and office equipment, qualify for short-term leases and qualify for low-value asset leases, and did not recognize related right-of-use assets and lease liabilities for such leases.

16. Goodwill

16.	Goodwill	Goodwill
17.	June 30, 2024 December 31, 2023 June 30, 2023 Cost Beginning Balance $ 1,642 $ 1,673 $ 1,673 Net exchange difference 45 ( 31) ( 48) $ 1,687 $ 1,642 $ 1,625 Intangible Assets Computer software Cost Balance as of January 1, 2024 $ 1,387 Net exchange difference 9 Balance as of June 30, 2024 $ 1,396 Accumulated amortization Balance as of January 1, 2024 $ 528 Amortization expense 173 Net exchange difference 9 Balance as of June 30, 2024 $ 710 Net balance as of June 30, 2024 $ 686 Net balance as of December 31, 2023, and January 1, 2024 $ 859 Cost Balance as of January 1, 2023 $ 769 Separate purchase 180 Reclassification ( 415) Net exchange difference ( 10) Balance as of June 30, 2023 $ 524			June 30, 2023
		$ 1,387 9 $ 1,396 $ 528 173 9 $ 710 $ 686 $ 859 $ 769 180 ( 415) ( 10) $ 524

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Computer software

Accumulated amortization
Balance as of January 1, 2023		$	449
Amortization expense			65
Reclassification	(		148)
Net exchange difference	(		9)
Balance as of June 30, 2023		$	357
Net balance as of June 30, 2023		$	167

Amortization expenses are accrued on a straight-line basis according to the following years of useful life:

Computer software

3~5 Years

Summarized by functions:

Summarized by functions:
Operating costs Selling expenses Administrative expenses	For the Three Months Ended June 30,2024 $ 4 1 81 $ 86	For the Three Months Ended June 30,2023 $ - - 32 $ 32	For the Six Months Ended June 30,2024		For the Six Months Ended June 30,2023 $ - - 65 $ 65
				$ 8 2 163 $ 173		$ - - 65 $ 65

18. Other Assets

Other Assets
Current Prepaid expenses income tax refund receivable overpaid sales tax Other receivable Other Non-current Advance payments for equipment and construction		June 30, 2024 $ 12,984 1,775 1,638 928 488 $ 17,813 $ 7,352	December 31, 2023 $ 5,652 1,504 1,656 1,387 365 $ 10,564 $ 36,202		June 30, 2023
					$ 19,031 1,108 2,512 2,997 729 $ 26,377 $ 28,004

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19. Borrowings

(1) Short-term borrowings

rowings Short-term borrowings
Pledged loans Bank loans Unsecured loans Credit line loans		June 30, 2024 $ 11,113 85,000 $ 96,113	December 31, 2023 $ 10,818 102,756 $ 113,574		June 30, 2023
					$ 19,269 157,748 $ 177,017

Remark 1: As of June 30, 2024, and for the periods ending on December 31, 2023, and June 30, 2023, the annual interest rate ranges for Bank loans were 3.85%.

Remark 2: As of June 30, 2024, and for the periods ending on December 31, 2023, and June 30, 2023, the annual interest rate ranges for Credit line loans were as follows: 1.83%~2.22%, 1.82%~2.10%, and 1.80%~1.95%.

(2) Short-term bills payable

Short-term bills payable
Commercial paper payable Less: Discount on Short-term bills payable		June 30, 2024 $ - - $ -	December 31, 2023 $ 20,000 ( 16) $ 19,984		June 30, 2023
			(		$ - - $ -

The outstanding short-term bills payable, which have not yet matured, are as follows:

December 31, 2023

Guarantor/Acceptor institution		Face value		Discount amount		Book value $ 19,984	Interest rate range	Collateral	Book value of Collateral	Book value of Collateral
Commercial paper payable China bills finance co.		$ 20,000		$ 16			1.83%	None		$ -

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(3) Long-term borrowings

Pledged loans Mortgage loan (Remark 1) Mortgage loan (Remark 2) Mortgage loan (Remark 3) Mortgage loan (Remark 4) Mortgage loan (Remark 5) Mortgage loan (Remark 6) Mortgage loan (Remark 7) Unpledged Loans Credit loan (Remark 8) Long-term borrowings		June 30, 2024 $ 80,000 85,000 35,000 20,000 - - - 35,000 $ 255,000	December 31, 2023 $ 80,000 85,000 35,000 50,000 - - - - $ 250,000		June 30, 2023
					$ - - - - 85,000 80,000 35,000 - $ 200,000

Remark 1: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of November 6, 2025. As of June 30, 2024, and December 31, 2023, the effective annual interest rate is 1.945% and 1.82%, respectively.
Remark 2: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of November 6, 2025. As of June 30, 2024, and December 31, 2023, the effective annual interest rate is 1.945% and 1.82%, respectively.
Remark 3: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of November 3, 2028. As of June 30, 2024, and December 31, 2023, the effective annual interest rate is 2.22% and 2.095%, respectively.
Remark 4: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of October 11, 2025. As of June 30, 2024, and December 31, 2023, the effective annual interest rate is 1.97% and 1.85%, respectively.
Remark 5: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of
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October 14, 2024. It was fully repaid on November 6, 2023, and as of March 31, 2023, the effective annual interest rate is 1.82%. Remark 6: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of October 14, 2024. It was fully repaid on November 6, 2023, and as of March 31, 2023, the effective annual interest rate is 1.82%.

Remark 7: The bank loan is secured by the Company's real estate, plant, and equipment (refer to Note 31), with a maturity date of January 30, 2025. It was fully repaid on November 3, 2023, and as of March 31, 2023, the effective annual interest rate is 1.82%.
Remark 8: The bank loan is credit loan, with a maturity date of May 16, 2029. As of June 30, 2024, the effective annual interest rate is 2.22%.

20. Other Liabilities

Current Other payable Payroll payable Professional service payable Payables on equipment Rental payable Other Other current liabilities		June 30, 2024 $ 27,740 4,971 3,049 60 20,377 $ 56,197 $ 8,542	December 31, 2023 $ 30,609 4,548 8,099 6,574 42,219 $ 92,049 $ 9,041		June 30, 2023
					$ 26,358 4,343 4,944 3,070 22,860 $ 61,575 $ 5,814

21. Retirement Benefit Plan

(1) Defined contribution plan

The retirement pension system of the Company and its domestic subsidiaries in the Consolidated Company, is a defined contribution plan under the "Labor Pension Act" regulated by the government. The Company contributes 6% of employees' monthly salaries to their personal accounts at the labor insurance bureau as retirement pension.

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URASIA and Cheng Yu Company do not have an employee retirement policy, and there are no mandatory government regulations regarding employee retirement policy. Anhui Huiyu Company, Shanghai Huiyu Company, Sanshui Lianmei Company, and Headway Vietnam Company pay basic endowment insurance premiums to the government-managed retirement plan, which are recognized as current expenses when they are provided.

(2) Defined benefit plan

The pension expenses of defined benefit plans were NT$ 10 thousand, NT$ 15 thousand, NT$ 5 thousand and NT$ 30 thousand for the three months and six months ended June 30, 2024, and 2023, respectively, and these were calculated based on the actuarially determined pension cost rate on December 31, 2023, and 2022, respectively.

22. Equity

(1) Common stock capital

Authorized stock shares (thousand shares) Authorized capital stock Stock shared issued and paid in full (thousand shares) Outstanding capital stock		June 30, 2024 80,000 $ 800,000 60,107 $ 601,070	December 31, 2023 80,000 $ 800,000 60,107 $ 601,070		June 30, 2023 80,000 $ 800,000 70,304 $ 703,033

The par value of the issued common shares is NT$ 10 per share, with each share entitled to one voting right and the right to receive dividends. The Company's Shareholders' Meeting resolved to implement capital reduction on May 31, 2023, which was further approved and came into effect by Taiwan Stock Exchange Corporation on July 18, 2023. Amount of capital reduction is NTD 101,940 thousand and shares to be cancelled are 10,194 thousand shares. Capital reduction percentage is 14.5%. Furthermore, the board of directors, in a meeting held on August 10, 2023,

31 -

decided that August 16, 2023, would be the record date for the capital reduction.

The other changes in the Company's common stock capital are mainly due to the issuance and cancellation of restricted stock units granted to employees.

(2) Capital surplus

Capital surplus
Applicable for making up for losses, distributing cash, or capitalization Additional paid-in capital Difference between consideration and book amount of subsidiary’s stock shares acquired or disposed From merger Cannot be used for any purpose Employee stock options Restricted stock units		June 30, 2024 $ 7,491 1,497 891 3,225 - $ 13,104	December 31, 2023 $ 7,491 1,497 891 3,225 - $ 13,104		June 30, 2023
					$ 6,523 1,497 891 3,225 945 $ 13,081

The portion of capital surplus that exceeds the par value of stock issuance (including the issuance of ordinary shares above par) and the portion received as donations may be used to offset losses. When the Company has no losses, it may also be used to distribute cash dividends or allocate to common stock capital, subject to an annual limit based on a certain percentage of the paid-in capital.

(3) Retained earnings and dividend policy

According to the Articles of Incorporation, if there are profits in the annual financial statements, the Company shall first pay taxes, make up for losses from previous years, set aside 10% of the legal reserve, and adjust for special reserves according to laws or regulations. After adding the accumulated unappropriated retained earnings from previous years, the remaining amount shall be distributable earnings. The board of directors shall propose a shareholder dividend or profit distribution plan for approval

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at the shareholder meeting, with a distribution range of 50% to 100% of distributable earnings.

If the distribution of dividends or profits is made in cash, the board of directors may authorize it with the approval of two-thirds of the directors present and the majority of attending directors and report it to the shareholder meeting.

For the Company's employee and director compensation distribution policy, please refer to (7) of Note 24 on employee and director compensation.

According to the Company's Articles of Incorporation, the dividend policy will consider the overall development needs of the enterprise and make appropriate dividend distributions. The cash dividends shall not be less than 10% of the total amount of dividends.

The legal reserve should be set aside until its balance reaches the total amount of the Company's issued and paid-up capital. The legal reserve can be used to offset losses. If the legal reserve exceeds 25% of the total amount of the outstanding capital, the excess can be used for cash distribution in addition to capitalization.

The earnings distribution proposal for the year 2023 and 2022 were approved by the shareholders' meeting held on May 24, 2024, and May 31, 2023, respectively. The details are as follows:

Legal reserve Special reserve Cash dividends Cash dividend per share`（`NTD`）`		2023 $ 2,662 $ 10,040 $ 30,053 $ 0.5	(	2022 $ 2,345 $ 37,358) $ 42,182 $ 0.60

(4) Special reserve

Special reserve
Beginning balance Appropriation (reversal) of Special reserve Reversal of reduction in other equity items Ending balance	For the Six Months Ended June 30,2024 $ 58,130 10,040 $ 68,170	For the Six Months Ended June 30,2023
		$ 95,488 ( 37,358) $ 58,130

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(5) Other equity

A) Exchange differences on translation of the financial statement of foreign

operations

operations
Beginning balance Exchange differences on translation of the financial statement of foreign operations Income tax effect Ending balance	For the Six Months Ended June 30,2024 ($ 72,026) 20,582 ( 4,116) ($ 55,560)	For the Six Months Ended June 30,2023
		($ 61,897) 1,034 ( 207) ($ 61,070)

B) Unrealized profit and loss in valuation of financial assets measured at fair value through other comprehensive income

fair value through other comprehensive income
For the Six Months Ended June 30,2024 Beginning balance ($ 2,945) Incurred in the current period- Unrealized profit and loss Equity instrument ( 171) Ending balance ($ 3,116) nrealized revaluation increments For the Six Months Ended June 30,2024 Beginning & Ending Balance $ 6,800	For the Six Months Ended June 30,2023
	($ 3,033) 203 ($ 2,830) For the Six Months Ended June 30,2023 $ 6,800

C) Unrealized revaluation increments
D) Unearned compensation

The Company's shareholders' meeting resolved on May 31, 2019, to issue restricted stock units. Please refer to Note 27 for further details.

Beginning balance Recognition of share-based payment expense Ending balance	For the Six Months Ended June 30,2024 $ - - $ -	For the Six Months Ended June 30,2023
		( $ 245 ) 245 $ -

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(6) Non-controlling interests

Non-controlling interests
Beginning balance Attribution to Non- Controlling Interests Profit (loss) for the period Exchange differences on translation of the financial statement of foreign operations Cash dividends from subsidiaries Ending balance	For the Six Months Ended June 30,2024 $109,153 ( 1,035) 480 ( 40) $108,558	For the Six Months Ended June 30,2023
		$106,640 ( 186) ( 477) ( 1,073) $104,904

23. Operating revenue

Operating revenue
Revenue from contracts with customers: PU resin Thermoplastic polyurethane (TPU) Others 1) Contract balance Accounts receivable (Note 11) Contract liabilities Contract liabilities- current	For the Three Months Ended June 30,2024		For the Three Months Ended June 30,2023 $ 178,259 39,545 25,103 $ 242,907 December 31, 2023 $ 316,935 $ 9,704	For the Six Months Ended June 30,2024 $ 448,993 84,094 42,272 $ 575,359 June 30, 2023 $ 252,800 $ 2,183	For the Six Months Ended June 30,2023
		$ 234,444 38,994 21,126 $ 294,564 June 30, 2024 $ 279,147 $ 6,689				$ 392,081 81,454 88,558 $ 562,093 January 1, 2023 $ 262,139 $ 10,081

(1) Contract balance

The changes in contract liabilities mainly arise from the timing difference between satisfying performance obligations and the timing of customer payments.

(2) Subdivision of contract revenues by customers

Please refer to Note 35 for details on subdivision of contract revenues.

24. Profit (loss) from Continuing Operations

(1) Interest income

Bank deposits	For the Three Months Ended June 30,2024 $ 5,408	For the Three Months Ended June 30,2023 $ 6,500	For the Six Months Ended June 30,2024 $ 10,321	For the Six Months Ended June 30,2023 $ 12,733

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(2) Other income

Other income
Rental income Miscellaneous income	For the Three Months Ended June 30,2024 $ 1,389 586 $ 1,975	For the Three Months Ended June 30,2023 $ 974 2,039 $ 3,013	For the Six Months Ended June 30,2024 $ 2,460 968 $ 3,428	For the Six Months Ended June 30,2023
					$ 1,919 2,471 $ 4,390

(3) Other gains and losses

Other gains and losses
Net gain (loss) from foreign currency exchange Gain on disposal of property, plant, and equipment Profit (loss) from financial assets measured at fair value through profit and loss mandatorily Gain on disposal of investments Miscellaneous losses Financial costs Interest on bank borrowing Interest on lease liabilities	For the Three Months Ended June 30,2024 $ 220 ( 4 ) 759 - ( 2,023) ( $ 1,048 ) For the Three Months Ended June 30,2024 $ 3,023 161 $ 3,184	For the Three Months Ended June 30,2023 $ 1,286 - ( 36 ) 96 ( 598) $ 748 For the Three Months Ended June 30,2023 $ 2,006 224 $ 2,230	For the Six Months Ended June 30,2024 $ 3,004 64 677 233 ( 2,738) $ 1,240 For the Six Months Ended June 30,2024 $ 5,706 332 $ 6,038	For the Six Months Ended June 30,2023
				$ 649 - 191 96 ( 1,138) ( $ 202 ) For the Six Months Ended June 30,2023
					$ 4,049 387 $ 4,436

(4) Financial costs

(5) Depreciation and Amortization

Depreciation expense summarized by functions: Operating costs Operating expenses Miscellaneous losses Amortization expense summarized by functions: Operating costs Operating expenses	For the Three Months Ended June 30,2024 $ 13,420 2,288 33 $ 15,741 $ 4 82 $ 86	For the Three Months Ended June 30,2023 $ 13,791 2,182 33 $ 16,006 $ - 32 $ 32	For the Six Months Ended June 30,2024 $ 26,559 5,132 66 $ 31,757 $ 8 165 $ 173	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
					$ 27,335 4,328 66 $ 31,729 $ - 65 $ 65

Please refer to Note 17 for details on amortization expense of intangible assets.

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(6) Employee benefit expense

Short-term employee benefits Post-employment benefits (Note 21): Defined contribution plan Defined benefit plan Share-based payment: Equity settlement Other employee benefit Total employee benefit expense Summarized by functions: Operating costs Operating expenses	For the Three Months Ended June 30,2024	For the Three Months Ended June 30,2024	For the Three Months Ended June 30,2023 $ 33,853 1,817 15 1,832 33 5,580 $ 41,298 $ 20,113 21,185 $ 41,298	For the Six Months Ended June 30,2024 $ 69,410 2,861 5 2,866 - 10,602 $ 82,878 $ 38,963 43,915 $ 82,878	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
		$ 35,092 1,423 10 1,433 - 5,320 $ 41,845 $ 19,542 22,303 $ 41,845				$ 67,683 3,654 30 3,684 245 11,394 $ 83,006 $ 40,544 42,462 $ 83,006

(7) Compensation to employees and directors

The Company has compensation to employees and directors appropriated for an amount to 5%~8% and not higher than 5% of the net income before tax and before deducting the compensation to employees and directors, respectively, in accordance with the Article of Incorporation. The estimated employee compensation and director compensation for the three months ended June 30, 2024, and June 30, 2023, are as follows:

Estimation ratio

Estimation ratio
Employee compensation Director compensation	For the Six Months Ended June 30,2024 5% 3%	For the Six Months Ended June 30,2023
		5% 3%

Amount

Employee compensation Director compensation	For the Three Months Ended June 30,2024 $ 613 $ 369	For the Three Months Ended June 30,2023 ( $ 191 ) ( $ 115 )	For the Six Months Ended June 30,2024 $ 1,387 $ 833	For the Six Months Ended June 30,2023 $ 119 $ 71

The changes in the amount of the consolidated financial report after the publication date shall be processed according to the change in accounting estimates and adjusted and recorded in the next year.

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The appropriations of compensation of employees and directors for 2023 and 2022, which were resolved by the Company’s board of directors on March 5, 2024, and March 14, 2023, respectively, are as follows:

Employee compensation Director compensation	2023 Cash Stock $ 1,697 $ - 1,018 -	2022	2022
	Cash $ 1,697 1,018	Cash $ 2,089 1,305	Stock
			$ - -

There is no difference between the actual amounts of compensation of employees and directors paid and the amounts recognized in the consolidated financial statements for the years 2023 and 2022.

Please refer to the Market Observation Post System of Taiwan Stock Exchange for information on the compensation to employees and directors resolved by the Company’s board of directors.

(8) Foreign currency exchange profit (loss)

Total foreign currency exchange profit Total foreign currency exchange loss Net profit (loss)	For the Three Months Ended June 30,2024 $ 1,831 ( 1,611) $ 220	For the Three Months Ended June 30,2023 $ 4,758 ( 3,472) $ 1,286	For the Six Months Ended June 30,2024 $ 4,615 ( 1,611) $ 3,004	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
	(	(	(	(	$ 8,158 7,509) $ 649

25. Income Tax from Continuing Operations

(1) Income tax recognized in profit and loss

The main composition items of income tax expense as follows:

Current income tax Incurred in the current period Levied on the undistributed earnings Deferred income tax Incurred in the current period Income tax expense recognized in profit and loss	For the Three Months Ended June 30,2024 $ 784 - 784 39 $ 823	For the Three Months Ended June 30,2023 $ 951 275 1,226 ( 96) $ 1,130	For the Six Months Ended June 30,2024 $ 1,880 - 1,880 ( 181) $ 1,699	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
		(	(	(	$ 1,411 275 1,686 36) $ 1,650

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The tax rate applicable to the subsidiaries in Mainland China is 25%; the tax amounts generated in other territories are calculated based on the tax rates applicable to each respective territory.

(2) Income tax recognized in other comprehensive income.

Deferred income tax Incurred in the current period -Conversion through foreign operations Income tax recognized in other comprehensive income	For the Three Months Ended June 30,2024 ($ 542) ( $ 542 )	For the Three Months Ended June 30,2023 $ 293 $ 293	For the Six Months Ended June 30,2024 ($ 4,116) ( $ 4,116 )	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
	( (		( (	( (	$ 207) $ 207 )

(3) Income tax audit

The income tax returns for the Company have been approved by the tax authorities up to the year 2021. The income tax returns for TPU Company have been approved by the tax authorities up to the year 2022.

26. Earnings per Share

Earnings per Share
Basic earnings per share From continuing operations Diluted earnings per share From continuing operations	For the Three Months Ended June 30,2024 $ 0.18 $ 0.18	For the Three Months Ended June 30,2023 ( $ 0.05 ) ( $ 0.05 )	Unit: NTD/Share For the Six Months Ended June 30,2024 For the Six Months Ended June 30,2023 $ 0.41 $ 0.03 $ 0.41 $ 0.03
		( (			$ 0.03 $ 0.03

The net income and weighted average number of outstanding common shares used to compute earnings per share are as follows:

Net profit for the period

Net income for the calculation of basic and diluted earnings per share Shares	For the Three Months Ended June 30,2024 $ 10,622 For the Three Months Ended June 30,2024	For the Three Months Ended June 30,2023 ( $ 3,742 ) For the Three Months Ended June 30,2023	For the Six Months Ended June 30,2024 For the Six Months Ended June 30,2023 $ 24,858 $ 1,918 Unit: Thousand shares For the Six Months Ended June 30,2024 For the Six Months Ended June 30,2023

Weighted average number of common stock shares for the

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calculation of basic earnings per share The impact of potential diluted common stock shares: Employee compensation Restricted stock units Weighted average number of common stock shares for the calculation of diluted earnings per share	For the Three Months Ended June 30,2024 60,107 79 - 60,186	For the Three Months Ended June 30,2023 70,251 - - 70,251	For the Six Months Ended June 30,2024 60,107 112 - 60,219	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
					70,109 56 194 70,359

If the Company may choose to pay remuneration to employees in the form of stocks or cash, when calculating the diluted earnings per share, it is assumed that the remuneration to employees is paid in the form of stocks, and the weighted average number of outstanding shares is included in the potential diluted common stock for the calculation of the diluted earnings per share. When calculating the diluted earnings per share before the distribution of remuneration in the form of stock resolved in the shareholders meeting of the following year, the dilution effect of this potential common stock will be considered continuously.

27. Share-based Payment

Restricted stock units

The Company resolved to issue restricted stock units at the shareholder meeting held on May 28, 2018, with an issuance price of NT$ 0 per share (i.e., free of charge). The issuance of restricted stock units was approved by the Securities and Futures Bureau under the Financial Supervisory Commission R.O.C. and became effective on May 20, 2019. The details of the issuance resolved by the Board of Directors are as follows:

Grant date 108.09.25 109.04.15	Grant amount 426 374	Fair value per share 15.10 17.65	Unit: Thousand shares Issuance and capital raising record date Actual shares issued 108.09.25 426 109.04.15 374	Unit: Thousand shares Issuance and capital raising record date Actual shares issued 108.09.25 426 109.04.15 374
				426 374

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After the restricted stock units are granted to employees under this policy, they must meet certain conditions and fulfill their service obligations without any violation of the Company's employment agreement, code of conduct, work rules, contractual obligations, or regulations. In addition, they must achieve a certain level of annual performance evaluation. The granted restricted stock units shall vest in the employees according to the following schedule, subject to their continued employment on the vesting date:

(1) After one year of employment, employees can receive 30% of the granted restricted stock units if they achieve a performance evaluation level of B or above.
(2) After two years of employment, employees can receive an additional 30% of the granted restricted stock units if they achieve a performance evaluation level of B or above.
(3) After three years of employment, the remaining 40% of the granted restricted stock units can be vested if they achieve a performance evaluation level of B or above.
If the above-mentioned dates fall on a holiday, the transaction will be
processed on the next business day.

The handling methods for employees who fail to meet the vested conditions are as follows:

(1) If an employee violates these regulations, trust agreements, labor contracts, work rules, or contractual agreements between the employee and the Company (related contractual agreements are authorized by the Board of Directors to be negotiated and signed by the Chairman on behalf of the Company), the Company has the right to retrieve the restricted stock units granted but not yet vested to the employee and cancel them free of charge.
(2) If an employee fails to meet the vested conditions, the Company has the right to retrieve the restricted stock units granted but not yet vested to the employee and cancel them free of charge.
(3) For general resignation (voluntary/retirement/layoff/dismissal), the Company will retrieve the restricted stock units granted but not yet vested to the employee in accordance with the law and cancel them free of charge.
(4) For leave without pay: Employees who are granted restricted stock units and have applied for leave without pay with the Company's approval will
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be deemed as not having met the vested conditions during the period of leave. After returning to their original position, the employee's restoration of their rights will be subject to approval by the Chairman. The vested conditions, percentage, and deadline for meeting them will be reevaluated within the scope of the granted shares.

(5) For general death, the Company will retrieve the restricted stock units granted but not yet vested to the employee in accordance with the law and cancel them free of charge.
(6) Occupational accidents:
A) If an employee suffers a disability due to an occupational accident and cannot continue working, the restricted stock units granted but not yet vested will be vested ahead of schedule from the date of effective resignation.
B) If an employee dies due to an occupational accident, the restricted stock units granted but not yet vested will be vested ahead of schedule from the date of death, and the inheritance will receive them.
(7) For job transfer: If an employee transfers to a related enterprise or another company (excluding subsidiaries), the restricted stock units granted but not yet vested will be handled in the same manner as specified in the "general resignation" clause. However, for operational needs, if an employee is assigned by the Company to work at a related enterprise or another company, their restricted stock units granted but not yet vested will not be affected by the transfer.
(8) Employees who have been granted restricted stock units but have not met the vested conditions are not required to return the stock dividend and cash dividend they have received.
The restricted rights and obligations of employees who have been allocated
or subscribed to new shares but have not yet met the vesting conditions are as follows:
(1) Prior to meeting the vesting conditions, employees shall not sell, pledge, transfer, gift, or otherwise dispose of the restricted stock units allocated under this policy.
(2) Employees who have been allocated new shares but have not yet met the vesting conditions shall have the same rights and obligations (including
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the right to participate in rights issues, dividends, attend shareholder meetings, propose resolutions, speak, vote, elect, subscribe to cash increases, and other matters related to shareholder rights and interests) as the common shares already issued by the Company, except for the aforementioned restricted rights.

(3) The restricted stock units issued this time may be held in trust by a trustee. Before meeting the vesting conditions, the employee shall not request the trustee to return the restricted stock units for any reason or by any means. Summary of restricted stock units’ information of the Company:

Beginning balance Cancellation in current period Ending balance	Shares (Thousand shares) For the Six Months Ended June 30,2024 - - -	Shares (Thousand shares)	Shares (Thousand shares)
		For the Six Months Ended June 30,2024
		(	743 743) -

The recognized compensation costs of the Company for the three months and for the six months ended June 30, 2024, and June 30, 2023, were NT$ 0 thousand, NT$ 33 thousand, NT$ 0 thousand and NT$ 245 thousand, respectively.

28. Capital Risk Management

The Consolidated Company conducts capital management to ensure that each enterprise within the group can maximize shareholder returns by optimizing debt and equity balances under the assumption of going concern. The overall strategy of the Consolidated Company has not undergone significant changes.

The Consolidated Company's senior management regularly reviews its capital structure, considering the cost and associated risks of various types of capital. Based on the recommendations of senior management, The Consolidated Company balances its overall capital structure through methods such as paying dividends, issuing new stocks, and so on.

The Consolidated Company is not required to comply with any other external capital regulations.

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29. Financial Instruments

(1) Fair value information - Financial instruments that are not measured at fair value.

The management of the Company believes that the carrying amounts of financial assets and financial liabilities that are not measured at fair value approximate their fair value.

(2) Fair value information - financial instruments measured at fair value on a repeatability basis
A) Fair value level

June 30, 2024

June 30, 2024
Financial assets valued at fair value through profit and loss Foreign Bonds Domestic TWSE/TPEx listing stock Domestic Fund beneficiary certificate Total Financial assets measured at fair value through other comprehensive income Domestic non-TWSE /TPEx listing stock December 31, 2023 Financial assets valued at fair value through profit and loss Foreign Bonds Domestic TWSE/TPEx listing stock Domestic Fund beneficiary certificate Total Financial assets measured at fair value through other comprehensive income Domestic non-TWSE /TPEx listing stock	Level 1 $ 22,566 453 - $ 23,019 $ - Level 1 $ 18,747 470 6,379 $ 25,596 $ -	Level 2 $ - - - $ - $ - Level 2 $ - - - $ - $ -	Level 3 $ - - - $ - $ 1,384 Level 3 $ - - - $ - $ 1,555	Total
				$ 22,566 453 - $ 23,019 $ 1,384 Total
				$ 18,747 470 6,379 $ 25,596 $ 1,555

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June 30, 2023

June 30, 2023
Financial assets valued at fair value through profit and loss Foreign Bonds Domestic TWSE/TPEx listing stock Domestic Fund beneficiary certificate Total Financial assets measured at fair value through other comprehensive income Domestic non-TWSE /TPEx listing stock		Level 1 $ 7,136 406 6,211 $ 13,753 $ -		Level 2 $ - - - $ - $ -		Level 3 $ - - - $ - $ 1,670		Total
								$ 7,136 406 6,211 $ 13,753 $ 1,670

There was no transfer between Level 1 and Level 2 fair value measurements for the Three Months Ended June 30, 2024, and June 30, 2023.

B) Evaluation technology and the input value of Level 2 fair value measurement

Type of financial instruments Derivatives - foreign exchange forward contracts

Evaluation technology and the input value Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

C) Evaluation technology and the input value of Level 3 fair value measurement

The domestic unlisted equity investments are valued using the net asset value method, where the company measures the fair value of the investments based on its net assets on the balance sheet date.

(3) Types of financial instruments

Financial assets Financial assets measured at fair value through other comprehensive income	June 30, 2024 $ 1,384	December 31, 2023 $ 1,555	June 30, 2023
			$ 1,670

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Financial assets measured at the amortized cost (Remark 1) Measured at fair value through profit and loss Financial assets measured at fair value through profit and loss mandatorily Financial liabilities Measured at the amortized cost (Remark 2)	June 30, 2024 911,541 23,019 530,795	December 31, 2023 919,577 25,596 518,197	June 30, 2023
			943,951 13,753 487,963

Remark 1: The balance includes financial assets measured at amortized cost such as cash and cash equivalents, financial assets measured at amortized cost, notes receivable, accounts receivable, other financial assets, and Guarantee deposits.
Remark 2: The balance includes financial liabilities measured at amortized cost such as short-term borrowings, short-term bills payable, notes payable, accounts payable and long-term borrowings.

(4) Financial risk management objectives

The main financial instruments of the Consolidated Company include notes and accounts receivable, accounts payable, lease liabilities, longterm and short-term borrowings. The financial management department of the Consolidated Company provides services to all business units, plans and coordinates entering the domestic and international financial markets, analyzes internal risk exposure according to the degree and breadth of risk, and reports, supervises, and manages the financial risks related to the operations of the Company. These risks include market risk (including exchange rate risk and interest rate risk), credit risk, and liquidity risk. A) Market risk

The main financial risks from the operating activities of the Consolidated Company are the risk of changes in foreign currency

46 -

exchange rates (see a) below) and the risk of changes in interest rates (see b) below).

a) Exchange rate risk

Several subsidiaries of the Company engage in sales and purchase transactions denominated in foreign currencies, which exposes the Consolidated Company to foreign exchange risk.

Please refer to Note 33 for the book value of monetary assets and monetary liabilities denominated in non-functional currencies (including monetary items denominated in non-functional currencies that have been offset in the consolidated financial statements) and the book value of derivative instruments with foreign exchange risk exposure of the Consolidated Company as of the balance sheet date.

Sensitivity Analysis

The Consolidated Company is mainly exposed to fluctuations in the exchange rates of the U.S. dollar and Chinese yuan.

The sensitivity analysis below illustrates the impact on the Consolidated Company's pre-tax profit when the functional currency of the relevant foreign currencies increases or decreases by 5% against the New Taiwan Dollar (the functional currency). The 5% sensitivity ratio is used by the Company's management to report foreign exchange risks to senior management and represents the reasonable possible range of exchange rate fluctuations assessed by management. The sensitivity analysis includes only the foreign currency-denominated monetary items outstanding and adjusts their year-end translation by 5% for exchange rate movements. A positive number in the table below indicates that a 5% depreciation of the New Taiwan Dollar against the relevant foreign currency will increase pre-tax profit by the stated amount, while a 5% appreciation will reduce pre-tax profit by the same amount.

pre-tax profit	EffectofUSD For the Six Months Ended June 30,2024 For the Six Months Ended June 30,2023 $ 10,201 $ 7,653	EffectofChineseYuan	EffectofChineseYuan
	For the Six Months Ended June 30,2024 $ 10,201	For the Six Months Ended June 30,2024 $ 3,304	For the Six Months Ended June 30,2023 $ 3,182

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(I) The primary source of the impact is from the US dollar cash and US dollar-denominated accounts receivable and accounts payable of the Consolidated Company that were outstanding and not hedged against cash flow risks on the balance sheet date.
(II) The primary source of the impact is from the Chinese yuan cash and Chinese yuan-denominated accounts receivable and accounts payable of the Consolidated Company that were outstanding and not hedged against cash flow risks on the balance sheet date.

The management believes that sensitivity analysis cannot fully represent the inherent risk of exchange rate fluctuations, as the exchange rate exposure at the balance sheet date may not reflect the exposure throughout the year.

b) Interest rate risk

The Consolidated Company is exposed to interest rate risk since individual entities within the Consolidated Company borrow funds at both fixed and floating rates. To manage this risk, the Consolidated Company maintains an appropriate mix of fixed and floating rate instruments and uses interest rate swap and forward rate contracts. The Consolidated Company regularly evaluates its hedging activities to ensure that they align with its interest rate outlook and established risk preferences, to adopt the most costeffective hedging strategies.

The book amount of the financial assets and financial liabilities of the Consolidated Company with interest rate risk exposure on the balance sheet date are as follows:

With fair value interest rate risk `－`Financial assets `－`Financial liabilities With cash flow interest rate risk `－`Financial assets `－`Financial liabilities	June 30, 2024 $ 233,796 124,834 352,267 255,000	December 31, 2023 $ 252,476 116,567 302,855 300,000	June 30, 2023
			$ 396,990 165,157 242,214 250,000

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Sensitivity Analysis

The sensitivity analysis below is based on the interest rate risk exposure of the non-derivative instruments on the balance sheet date. For floating rate liabilities, the analysis assumes that the amount of liabilities that were in circulation on the balance sheet date was in circulation throughout the reporting period.

If the interest rate increases/decreases by 1% with all other variables held constant, the Consolidated Company's pre-tax profit for the three months ended June 30, 2024, and June 30, 2023, will increase/decrease by NT$ 486 thousand and NT$ 39 thousand, respectively, mainly due to the interest rate risk associated with the Consolidated Company's variable-rate borrowings.

B) Credit risk

Credit risk refers to the risk that the counterparty of the transaction defaults on contractual obligations and causes financial losses to the Consolidated Company. As of the balance sheet date, the maximum credit risk exposure of the Consolidated Company that may cause financial losses due to the counterparty’s failure to perform its obligations and financial guarantees provided by the Consolidated Company is mainly derived from:

a) the book value of financial assets recognized in the consolidated balance sheet.
b) The maximum amount that may need to be paid by the Consolidated Company for providing financial guarantees, regardless of the likelihood of occurrence.

The Consolidated Company adopts a policy of conducting credit ratings on counterparties and obtaining adequate collateral in necessary situations to mitigate the risk of financial losses caused by default. The Consolidated Company continues to monitor credit risk and counterparties' credit ratings and diversifies the total transaction amount among qualified clients with different credit ratings. The credit risk is controlled by annual credit limit reviews by the credit control unit.

49 -

To mitigate credit risk, the Consolidated Company's management assigns dedicated units to decide on credit limits, credit approval, and other monitoring procedures to ensure that appropriate actions are taken to recover overdue receivables. In addition, the Consolidated Company conducts a review of the recoverable number of receivables on the balance sheet date to ensure that appropriate impairment losses are recognized for irrecoverable receivables. Therefore, the management of the Consolidated Company believes that the credit risk of the Company has been significantly reduced.

C) Liquidity risk

The Consolidated Company manages and maintains sufficient positions of cash and cash equivalents to support the group's operations and reduce the impact of cash flow volatility. The management of the Consolidated Company supervises the usage of bank financing facilities and ensures compliance with the terms of borrowing agreements.

Bank borrowings are an important source of liquidity for the Company. As of June 30, 2024, December 31, 2023, and June 30, 2023, the unused financing facilities of the Consolidated Company are explained in the following b) financing facilities.

a) Non-derivative financial liabilities liquidity and interest rate risk list

The remaining contract maturity analysis of non-derivative financial liabilities is prepared based on the earliest date when the Consolidated Company may be required to repay the liabilities, using the undiscounted cash flows of the financial liabilities. Therefore, the bank borrowings that the Consolidated Company may be required to repay immediately are listed in the earliest period in the table, without considering the probability of the bank immediately exercising such rights; other non-derivative financial liabilities are prepared based on the contractual repayment dates.

June 30, 2024

Immediate payment or paying within 3months ~ 1 1 month 1~3 months year 1~5 years Over 5 years

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Non-derivative financial liabilities Non-interest-bearing liabilities Lease liabilities Floating interest rate instrument Fixed interest rate instrument	$ - 538 - - $ 538	$ 179,682 1,077 - 50,000 $ 230,759	$ - 4,898 - 46,113 $ 51,011	$ - 19,887 255,000 - $ 274,887	$ - 2,321 - -
					$ 2,321

Further information on the maturity analysis of financial liabilities mentioned above is as follows:

Lease liabilities	Less than 1 year $ 7,066		1~5 years $ 20,799		5`～`10 years $ 2,333		10`～`15 years $ -		15`～`20 years $ -		Over 20 years $ -

December 31, 2023

December 31, 2023
Non-derivative financial liabilities Non-interest-bearing liabilities Lease liabilities Floating interest rate instrument Fixed interest rate instrument		Immediate payment or paying within 1 month $ - 1,457 - 22,740 $ 24,197		1~3 months $ 134,639 1,172 50,000 40,000 $ 225,811		3months ~ 1 year $ - 4,897 - 10,818 $ 15,715		1~5 years $ - 21,196 250,000 10,000 $ 281,196	Over 5 years
									$ - 4,287 - - $ 4,287

Further information on the maturity analysis of financial liabilities mentioned above is as follows:

Lease liabilities	Less than 1 year $ 8,167		1~5 years $ 22,332		5`～`10 years $ 4,333		10`～`15 years $ -		15`～`20 years $ -		Over 20 years $ -

June 30, 2023

June 30, 2023
Non-derivative financial liabilities Non-interest-bearing liabilities Lease liabilities Floating interest rate instrument Fixed interest rate instrument		Immediate payment or paying within 1 month $ - 1,428 - 5,053 $ 6,481		1~3 months $ 110,946 1,133 50,000 113,400 $ 275,479		3months ~ 1 year $ - 6,858 - 8,564 $ 15,422		1~5 years $ - 22,487 200,000 - $ 222,487		Over 5 years
										$ - 6,234 - - $ 6,234

Further information on the maturity analysis of financial liabilities mentioned above is as follows:

Lease liabilities	Less than 1 year $ 10,222		1~5 years $ 23,865		5`～`10 years $ 6,332		10`～`15 years $ -		15`～`20 years $ -		Over 20 years $ -

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b) Financing facilities

Financing facilities
Unsecured bank overdraft facility (reviewed annually) `－`Used amount `－`Unused amount Secured bank borrowing facility (extendable by mutual agreement) `－`Used amount `－`Unused amount		June 30, 2024 $ 94,404 560,596 $ 655,000 $ 262,865 170,036 $ 432,901	December 31, 2023 $ 122,740 512,260 $ 635,000 $ 262,414 164,373 $ 426,787		June 30, 2023
					$ 168,996 451,004 $ 620,000 $ 220,191 98,724 $ 318,915

30. Related Party Transactions

The transactions, account balances, and income and expenses between the Company and its subsidiaries (related parties) are all eliminated at the time of consolidation; therefore, they are not disclosed in this note. In addition to the disclosure in other notes, the transactions between the Consolidated Company and other related parties are as follows.

(1) Name and relationship of related parties

me and relationship of related parties
Name of related praties Isotech Products Incorporated Chaei Hsin Enterprise Co., Ltd. Liou, Han -Yin	Relation with the Consolidated Company
	Substantial related party Substantial related party Key management personnel

(2) Operating revenue

Account Operating revenue	Classification of Related party Substantial related party	For the Three Months Ended June 30,2024 $ 22,749	For the Three Months Ended June 30,2023 $ 21,135	For the Six Months Ended June 30,2024 $ 51,063	For the Six Months Ended June 30,2023 $ 46,327

Transactions with related parties are carried out at the agreed prices between both parties, with a payment term of 90 days from the end of the month, in principle.

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(3) Purchase

Classification of Related party Substantial related party	For the Three Months Ended June 30,2024 $ 1,270	For the Three Months Ended June 30,2023 $ 238	For the Six Months Ended June 30,2024 $ 2,112	For the Six Months Ended June 30,2023 $ 483

The price and transaction terms for purchases made by the Consolidated Company from related parties are determined by mutual agreement, with a payment period of 90 days from the end of each month.

(4) Receivables from related parties (excluding the loaning of funds to the related parties)

Account Notes receivable Notes receivable	Classification of Related party Substantial related party Substantial related party		June 30, 2024 $ 2,755 $ 36,379	December 31, 2023 $ 2,701 $ 51,533		June 30, 2023 $ 1,922 $ 30,524

There is no guarantee for the outstanding receivables from related parties. As of June 30, 2024, December 31, 2023, and June 30, 2023, the provision for doubtful accounts related to receivables from related parties was NT$ 159 thousand, NT$ 148 thousand and NT$ 114 thousand, respectively.

(5) Payables to related parties (excluding the loaning of funds from the related parties)

Account Notes payable Accounts payable	Classification of Related party Substantial related party Substantial related party		June 30, 2024 $ 2,267 $ -	December 31, 2023 $ 373 $ 4,061		June 30, 2023 $ 362 $ -

The balance of payables to related parties outstanding is unsecured.

(6) Endorsements/guarantees

Guaranteed by

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Classification of Related party The amount guaranteed by key management personnel		June 30, 2024 $ 431,000	December 31, 2023 $ 372,130		June 30, 2023
					$ 393,420

(7) Remunerations to the management

The total remuneration of directors and other key management personnel is as follows:

Short-term employee benefits	For the Three Months Ended June 30,2024 $ 3,206	For the Three Months Ended June 30,2023 $ 2,578	For the Six Months Ended June 30,2024 $ 5,601	For the Six Months Ended June 30,2023 $ 4,676

The remuneration of directors and other key management personnel is determined by the Remuneration Committee of the Company based on individual performance and market trends. In addition, the Consolidated Company provides official cars for business use by key management personnel, with a total acquisition cost of NT$ 2,290 thousand.

31. Collateral Assets

The following assets of the Consolidated Company have been pledged as collateral for short-term and long-term borrowings:

Pledged bank deposit Property, plant, and equipment		June 30, 2024 $ 30,000 121,476 $ 151,476	December 31, 2023 $ 30,000 120,749 $ 150,749		June 30, 2023
					$ 30,000 110,675 $ 140,675

32. Contractual Commitment with Material or Liabilities without Recognition

As of June 30, 2024, December 31, 2023, and June 30, 2023, the balance of letters of credit issued but unused was USD 190 thousand, USD 142 thousand, and USD 640 thousand, respectively.

Information on Significantly Influential Assets and Liabilities in Foreign Currency

The following information is summarized and expressed in foreign currencies other than the functional currencies of each business entity in the

54 -

Consolidated Company. The disclosed exchange rates refer to the exchange rates for the conversion of the foreign currencies into functional currencies. The influential assets and liabilities in foreign currency are as follows: June 30, 2024

June 30, 2024
F o r e i g n c u r r e n c y a s s e t s Monetary item USD CNY ZAR Foreign currency liabilities Monetary item USD December 31, 2023 F o r e i g n c u r r e n c y a s s e t s Monetary item USD CNY ZAR Foreign currency liabilities Monetary item USD June 30, 2023 F o r e i g n c u r r e n c y a s s e t s Monetary item USD CNY ZAR Foreign currency liabilities Monetary item USD CNY	Foreign currency $ 10,611 14,871 1,896 4,324 Foreign currency $ 12,551 16,685 1,736 3,446 Foreign currency $ 5,956 14,877 910 1,041 17	Exchange rate 32.45 4.445 1.781 32.45 Exchange rate 30.705 4.327 1.657 30.705 Exchange rate 31.14 4.282 1.649 31.14 4.282	Carrying amount
			$ 344,327 66,102 3,377 $ 413,806 $ 140,314 Carrying amount
			$ 385,378 72,196 2,877 $ 460,451 $ 105,809 Carrying amount
				$ 185,470 63,703 1,501 $ 250,674 $ 32,417 73 $ 32,490

55 -

The foreign exchange gains (losses) (realized and unrealized) of the Consolidated Company for the three months and six months ended June 30, 2024, and 2023, respectively, were NT$ 220 thousand, NT$ 1,286 thousand, NT$ 3,004 thousand and NT$ 649 thousand, respectively. Due to the variety of foreign currency transactions and functional currencies of individual entities within the Consolidated Company, it is not possible to disclose the exchange gains or losses by significant foreign currency types.

34. Notes to Disclosure

(1) Information on major transactions and (2) Investment related information: A) Financing provided to others: Table 1.
B) Endorsements/guarantees provided: None.
C) The Marketable securities held (excluding investment in the equity of the subsidiaries and associates): Table 2.
D) Marketable securities acquired or disposed at costs or prices at least NTD 300 million or 20% of the paid-in capital: None.
E) Acquisition of individual real estate at costs of at least NTD 300 million or 20% of the paid-in capital: None.
F) Disposal of individual real estate at prices of at least NTD 300 million or 20% of the paid-in capital: None.
G) Total purchases from or sales to related parties amounting to at least NTD 100 million or 20% of the paid-in capital: None.
H) Receivables from related parties amounting to at least NTD 100 million or 20% of the paid-in capital: None.
I) Trading in derivative instruments: None.
J) Others: The business relationship between the parent company and the subsidiaries and between each subsidiary, and the circumstances and amounts of any significant transactions:

Company Name The Company	Counterparty TPU Company	Relationshi p (Remark1) 1		Transactions	Transactions
			Account	Amount $ 3 2,684 525 279 92 1,463	Trade terms (Remark2) `－` `－` `－` `－` `－` `－`	Ratio to consolidated income or assets (%)
			Sales revenue Cost of sales Other income Notes receivable Accounts receivable Notes payable			- - - - - -

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Transactions

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

Ratio to
Relationshi consolidated
p Trade terms income or
Company Name Counterparty (Remark1) Account Amount (Remark2) assets (%)
The Company TPU Company Accounts
----- End of picture text -----

The Company	TPU Company		Accounts
			payable	425	`－`	-
	Shanshui Lianmei	1	Sales revenue	23,312	`－`	4
	Company
			Cost of sales	100	`－`	-
			Accounts
			receivable	16,678	`－`	1
	Headway Vietnam	1	Sales revenue	7,763	`－`	1
	Company
			Cost of sales	69	`－`	-
			Accounts
			receivable	3,686	`－`	-
	URASIA	1	Short-term
			borrowing	97,350	`－`	6
			Interest expense	2,009	`－`	-
			Other payable	3,186	`－`	-
Shanshui	Shanghai Huiyu	2	Selling expense	888	`－`	-
Lianmei	Company
Company
			Prepaid expense	40	`－`	-
Shanghai Huiyu	Anhui Huiyu	2	Sales revenue	2,981	`－`	1
Company	Company
			Cost of sales	31,907	`－`	6
			Accounts
			receivable	3,358	`－`	-
			Prepaid expense	20,962	`－`	1
	URASIA	2	Short-term
			borrowing	17,780	`－`	1
			Interest expense	233	`－`	-
			Other payable	94	`－`	-

Remark1: “1” represents the parent company dealings with its subsidiaries. “2” represents the subsidiary dealings with other subsidiaries.

Remark2: The selling prices of products to subsidiaries by the Company are generally equivalent to those charged to third-party customers, with a payment term of 90 days after month-end. However, for certain products that assist subsidiaries in expanding local business, their selling prices are based on agreed prices between the Company and the subsidiaries. As of June 30, 2024, the payment terms for subsidiaries are subject to their respective financial conditions.

K) Information on investees: Table 3.
(3) Information on investment in Mainland China:
A) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment gain or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 4.
57 -
B) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, unrealized gains or losses and other information relevant to understanding the impact of Mainland China investment on the financial statements: Table 5.
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
- e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
- f) The other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services.
(4) Information of major shareholders: list of the shareholders with ownership of 5% or greater, showing the names, the number of shares and percentage of ownership held by each shareholder: Table 6.

35. Segment Information

The operating decision-makers of the Consolidated Company focus on the financial information of each operating segment to allocate resources and evaluate segment performance, and the measurement basis of this financial information is the same as that of the financial statements. The reporting segments of the Consolidated Company are Taiwan, Mainland China, and Vietnam.

(1) Segment revenues and operating results
The revenue and operating results of the continuing operations of the
Consolidated Company are analyzed by the reporting segments as follows.
58 -

For the Three Months Ended June 30,2024 Taiwan $ 191,877 Mainland China 66,174 Vietnam 36,513 Total form Continuing operations $ 294,564 (2) Segment operating results For the Three Months Ended June 30,2024 Taiwan $ 2,099 Mainland China 4,576 Vietnam 58 Total form Continuing operations 6,733 Net exchange profit (loss) 220 Interest income 5,408 Gain on disposal of investments - Net profit(loss) on financial assets measured at fair value through profit and loss mandatorily 759 Net profit on disposal of property, plant, and equipment ( 4 ) Financial costs ( 3,184 ) Others ( 48) Profit (loss) from continuing operations before tax $ 9,884	For the Three Months Ended June 30,2023 $ 148,413 52,298 42,196 $ 242,907 For the Three Months Ended June 30,2023 ( $ 13,510 ) 492 1,104 ( 11,914 ) 1,286 6,500 96 ( 36 ) - ( 2,230 ) 2,415 ( $ 3,883 )	For the Six Months Ended June 30,2024 $ 387,037 106,323 81,999 $ 575,359 For the Six Months Ended June 30,2024 $ 7,594 6,906 2,071 16,571 3,004 10,321 233 677 64 ( 6,038 ) 690 $ 25,522	For the Six Months Ended June 30,2023	For the Six Months Ended June 30,2023
			$ 328,676 142,711 90,706 $ 562,093 For the Six Months Ended June 30,2023
	( ( ( ( (	(	( ( (	$ 18,152 ) 6,098 2,951 9,103 ) 649 12,733 96 191 - 4,436 ) 3,252 $ 3,382

Segment profit refers to the profits earned by each segment, excluding allocated operating expenses, non-operating income and gains, and nonoperating expenses and losses. This measurement amount is provided to the main operating decision-makers for allocating resources to segments and evaluating their performance.

(2) Segment assets

The Company did not provide the operating decision-makers with a measure of departmental assets, and therefore the measured amount of assets is zero.

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Headway Advanced Materials Inc. and Subsidiaries

Financing Provided to Others

From January 1 to June 30, 2024

Table 1 Unit: In NTD Thousand, Unless Stated Otherwise

No.	Lender	Borrower	Account	Related party	Maximum balance for theperiod	Ending balance	Actual amount drawn	Interest rate range	Nature of financing	Transaction amount	Reason for financing	Allowance for bad debt	Collateral	Collateral	Financing limits for each borrower	Lander’s total financinglimit	Note
													Item	Value
1 1	URASIA INTER- NAIONAL INC. URASIA INTER- NAIONAL INC.	Shanghai Huiyu Company The Company	Other receivable Other receivable	Y Y	$ 39,817 94,885	$ 17,492 94,885	$ 17,492 94,885	2.5% 5%	Remark 2 Remark 2	$ - -	Working capital Workingcapital	$ - -	`－` `－`	$ - -	$ 275,635 275,635	$ 275,635 275,635	Remark 1 Remark 1

Remark 1: The short-term financing provided by URASIA INTERNATIONAL INC. to entities in need of working capital are subject to individual and aggregate limits, which shall not exceed 40% of the net worth of the Company both.
Remark 2: In need of short-term financing.
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Headway Advanced Materials Inc. and Subsidiaries

The Marketable Securities List

June 30, 2024

Table 2

Unit: In NTD Thousand, Unless Stated Otherwise

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June 30, 2024
Type and name of marketable Relationship with the Shares Percentage of
Holding company name Financial statement account Note
securities holding company (Thousand Carrying Amount ownership Fair value
shares) (%)
The Company Anchor digital technology Financial assets at fair value through other
－－
Corporation/ Stock shares comprehensive income - non-current 185 $ 1,384 6.06 $ 1,384
Bank of America/ Corporate Financial assets at fair value through profit or
bond － loss - non-current - 6,239 - 6,239 －
American Express/ Corporate Financial assets at fair value through profit or
bond － loss - non-current - 3,149 - 3,149 －
General Motors Company/ Financial assets at fair value through profit or
Corporate bond － loss - non-current - 2,986 - 2,986 －
European Investment Bank/ Financial assets at fair value through profit or
Corporate bond － loss - non-current - 3,007 - 3,007 －
Apple Inc./ Corporate bond Financial assets at fair value through profit or
－ loss - non-current - 2,084 - 2,084 －
Verizon Communications Inc/ Financial assets at fair value through profit or
Corporate bond － loss - non-current - 1,972 - 1,972 －
Taiwan Biomedical Company Financial assets at fair value through profit or
－－
Limited. / Stock shares loss - non-current 15 453 0.04 453
URASIA European Investment Bank/ Financial assets at fair value through profit or
Corporate bond － loss - non-current - 3,129 - 3,129 －
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Remark 1: The marketable securities were not provided as collateral, pledged, or otherwise restricted as of June 30, 2024. Remark 2: Please refer to Table 3 for the information of investment in subsidiaries.

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Headway Advanced Materials Inc. and Subsidiaries

Information on investees

From January 1 to June 30, 2024

Table 3 Unit: In Thousands of NTD, Unless Stated Otherwise

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Original Investment Amount Balance as of June 30, 2024 Net Income
Investment Gain
Investor company Investee company Location Main businesses and products Shares Ratio (Loss) of the Note
June 30, 2024 December 31, 2023 Carrying Amount (Loss)
(Thousand shares) (%) Investee
The Company URASIA Panama General investment business $ 180,087 $ 180,087 83 100 $ 718,773 $ 15,226 $ 14,312 －
TPU Company Taiwan Manufacturing and sales of TPU 68,084 68,084 6,808 50 91,092 ( 232 ) ( 111 ) －
URASIA Headway Vietnam Company Vietnam PU resin products USD 5,000 thousand USD 5,000 thousand - 100 USD 7,184 thousand USD 131 thousand USD 131 thousand －
Cheng Yu Company Hong Kong General investment business USD 7,384 thousand USD 7,384 thousand - 100 USD 6,064 thousand USD 330 thousand USD 330 thousand －
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Remark1: Please refer to Table 4 for the information on investment in Mainland China.

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Headway Advanced Materials Inc. and Subsidiaries

Information on Investment in Mainland China

From January 1 to June 30, 2024

Table 4

Unit: In Thousands of NTD, Unless Stated Otherwise

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Accumulated outward Investment flows Accumulated outward Percentage of Accumulated
remittance for remittance for ownership of repatriation of
Investee company Main businesses and products [Total amount of paid-in ] Method of investments from investments from direct or Investment gain (Loss) Carrying amount as of investment income as of
capital investment Outward Inward June 30, 2024
Taiwan as of Taiwan as of indirect June 30, 2024
January 1, 2024 June 30, 2024 investment (Remark 5)
Shanghai Huiyu Construction of housing CNY 10,600 thousand Remark 1 USD 324 thousand $ - $ - USD 324 thousand 74% ( USD 54 thousand) USD 1,561 thousand USD 5,958 thousand
Company projects, construction of
municipal public works
projects, construction of
mechanical and electrical
installation projects,
construction of building
decoration projects,
construction of anti-
corrosion and
waterproofing projects,
construction of sports
tracks, stadiums, artificial
turf projects, and
wholesale of sports field
materials.
Shanshui Lianmei PU resin products HKD 57,170 thousand Remark 2 - - - - 100% HKD 2,577 thousand HKD 47,358 thousand -
Company
Anhui Huiyu Research, manufacturing, CNY 8,058 thousand Remark 3 - - - - 100% CNY 24 thousand CNY 2,819 thousand -
Company import and export of
plastic materials for sports
fields, and sports facility
construction.
Accumulated outward remittance for Limits on the investment in Mainland
Investment amount authorized by the
investments in Mainland China as of China according to the Investment
Investment Commission, MOEA
June 30, 2024 Commission, MOEA
USD 23,020 thousand &
USD 324 thousand (Remark 4)
HKD 26,200 thousand
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Remark 1: Invested through subsidiary URASIA.

Remark 2: Invested through subsidiary Cheng Yu Company.

Remark 3: Invested through Shanghai Huiyu Company.

Remark 4: According to the revised "Principles for Reviewing Investment or Technical Cooperation in the Mainland" on August 29, 2008, enterprises that have been issued a

certificate of operation headquarters scope by the Industrial Development Bureau of the Ministry of Economic Affairs are not subject to this limit.

Remark 5: As of June 30, 2024, the accumulated investment income repatriated was USD 5,958 thousand for Shanghai Huiyu Company, which exceeded the cumulative investment amount remitted out, and the Investment Commission, MOEA has approved USD 5,958 thousand.

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Headway Advanced Materials Inc. and Subsidiaries

Significant Transactions with Investee Companies in Mainland China, either Directly or Indirectly through a Third Party, and their Prices, Payment Terms, Unrealized Gains or Losses and Other Related Information

From January 1 to June 30, 2024

Table 5

Unit: In Thousands of NTD, Unless Stated Otherwise

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Notes receivable (payable),
Purchase, sales Transaction terms accounts receivable
unrealized
Investee company Transaction type Price (payable) Note
gains/losses
Comparison with
Amount Percentage Payment term Amount Percentage
ordinary transactions
Shanshui Lianmei Company Sales $ 23,312 4% Remark Remark Remark $ 16,678 5% $ - －
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Remark: The selling prices of products to subsidiaries by the Company are generally equivalent to those charged to third-party customers, with a payment term of 90 days after month-end. However, for certain products that assist subsidiaries in expanding local business, their selling prices are based on agreed prices between the Company and the subsidiaries. As of June 30, 2024, the payment terms for subsidiaries are subject to their respective financial conditions.

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Headway Advanced Materials Inc. and Subsidiaries Information of major shareholders June 30, 2024

Table 6

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Shares
Name of the major shareholder Percentage of
Number of shares owned
ownership
Jinteng Investment Co., Ltd. 5,359,941 8.91%
Youlong Investment Co., Ltd. 3,291,443 5.47%
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Remark 1: The information of major shareholders presented in this table is provided by the Taiwan Depository & Clearing Corporation based on the number of ordinary shares and preference shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration (including treasury shares) by the Consolidated Company as of the last business day for the current quarter. The share capital in the consolidated financial statements may differ from the actual number of shares that have been issued without physical registration because of different preparation basis.
Remark 2: If a shareholder delivers the shareholdings to the trust, the above information will be disclosed by the individual trustee who opened the trust account. For shareholders who declare insider shareholdings with ownership greater than 10% in accordance with the Security and Exchange Act, the shareholdings include shares held by shareholders and those delivered to the trust over which shareholders have rights to determine the use of trust property. For information relating to insider shareholding declaration, refer to Market Observation Post System.
65 -

AI assistant

Headway — Interim / Quarterly Report 2024

51919_rns_2024-11-13_5c2f8e84-0822-4a9a-8b8a-f975edcf3914.pdf

HEADWAY ADVANCED MATERIALS INC. AND SUBSIDIARIES

§ CONTENTS §

Independent Auditors’ Review Report

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Deloitte & Touche

Headway Advanced Materials Inc. and Subsidiaries

Consolidated Balance Sheets

Headway Advanced Materials Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

Consolidated Cash Flow Statement

1. Company History

2. Date and Procedures of the Authorization of Financial Statements

4. Summary of Significant Accounting Policies

(1) Statement of compliance

(3) Consolidation basis

(4) Other significant accounting policies

6. Cash and Cash Equivalents

8. Financial Assets Measured at Fair Value through Other Comprehensive income

10. Other Financial Assets

11. Notes Receivable and Accounts Receivable

Accounts Receivable

June 30, 2024

12. Inventories

13. Subsidiaries

(1) Subsidiaries included in the consolidated financial report

(2) Information on subsidiaries with significant non-controlling interests

14. Property, Plant and Equipment

Self-Use

15. Lease Agreement

(1) Right-of-use assets

(2) Lease liability

(4) Other lease information

16. Goodwill

Computer software

3~5 Years

18. Other Assets

19. Borrowings

(3) Long-term borrowings

20. Other Liabilities

21. Retirement Benefit Plan

(1) Defined contribution plan

(2) Defined benefit plan

22. Equity

(1) Common stock capital

(2) Capital surplus

(3) Retained earnings and dividend policy

(4) Special reserve

(5) Other equity

(6) Non-controlling interests

23. Operating revenue

(1) Contract balance

(2) Subdivision of contract revenues by customers

24. Profit (loss) from Continuing Operations

(1) Interest income

(2) Other income

(3) Other gains and losses

(4) Financial costs

(5) Depreciation and Amortization

(6) Employee benefit expense

(7) Compensation to employees and directors

Estimation ratio

Amount

(8) Foreign currency exchange profit (loss)

25. Income Tax from Continuing Operations

(1) Income tax recognized in profit and loss

(2) Income tax recognized in other comprehensive income.

(3) Income tax audit

26. Earnings per Share

Net profit for the period

27. Share-based Payment

Restricted stock units

28. Capital Risk Management

29. Financial Instruments

June 30, 2024

Headway Interim / Quarterly Report 2024