YFY — Annual Report 2021

Dec 16, 2021

YFY Inc.

Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders YFY Inc.

Opinion

We have audited the accompanying financial statements of YFY Inc. (the Company), which comprise the balance sheets as of December 31, 2021 and 2020, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to Other Matter section), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion based on our audits and the report of other auditors.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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Key audit matters of the Company’s financial statements for the year ended December 31, 2021 are stated as follows:

The Valuation of Investments Accounted for Using the Equity Method

Under the investments accounted for using the equity method, the financial position and performance of some significant components of the Company will significantly affect the Company. The accounts receivable of significant components of the Company are material in amount. In consideration of transactions with various counterparties, the recoverability of accounts receivable is subject to not only each customer’s financial condition but also management’s estimation and judgment. Therefore, we identified the estimation of expected credit loss recognized on accounts receivable as a key audit matter.

For related policies and relevant information about investments accounted for using the equity method, refer to Notes 4 and 9 to the accompanying financial statements.

The key audit procedures that we performed in respect of the valuation of investments accounted for using the equity method included the following:

1. We obtained and assessed the reasonableness of the method and the information used by management for the estimation of expected credit loss recognized on accounts receivable.

2. We tested sample items in the aging report on the balance sheet date and verified the correctness of the calculation of the expected credit loss.

3. We analyzed overdue receivables and performed sampling on the collections of overdue receivables after the balance sheet date. We assessed the reasonableness of the expected credit loss recognized on accounts receivable based on customers’ historical payment records, credit line control and overdue receivables tracking.

Other Matter

We did not audit the financial statements as of and for the year ended December 31, 2020 of Fidelis IT Solutions Co., Ltd., Sustainable Carbohydrate Innovation Co., Ltd., Taiwan Genome Sciences, Inc., YFY Biotech Management Company and Livebricks Inc., which are accounted for using the equity method by YFY Paradigm Investment Co., Ltd., Jupiter Prestige Group Holdings Limited and its subsidiaries, which are accounted for using the equity method by YFY Global Investment Limited, but such financial statements were audited by other auditors, whose reports have been furnished to us, and our opinion, insofar as it relates to the investments accounted for using the equity method and the net profit of investments, is based solely on the reports of other auditors. As of December 31, 2020, the investments accounted for using equity method of these investee companies were NT$487,116 thousand, representing 0.7% of the Company’s total assets. As of and for the year ended December 31, 2020, the net investment income of these investee companies was NT$4,730 thousand, representing 0.1% of the Company’s total comprehensive income and loss.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

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

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2021 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Hui-Min Huang and Ya-Ling Wong.

Deloitte & Touche Taipei, Taiwan Republic of China March 15, 2022

Notice to Readers

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

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

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YFY INC.

BALANCE SHEETS DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS (Note 4) Cash (Note 6) Current financial assets at fair value through profit or loss (Note 7) Accounts receivable due from related parties, net (Note 22) Other receivables Other current assets, others Total current assets NON-CURRENT ASSETS (Note 4) Non-current financial assets at fair value through other comprehensive income (Notes 8 and 22) Investments accounted for using equity method (Notes 9 and 22) Property, plant and equipment (Notes 10, 16 and 22) Right-of-use assets (Notes 11 and 16) Investment property, net (Notes 12, 16 and 22) Deferred tax assets (Note 17) Net defined benefit asset, non-current (Note 14) Other non-current assets, others (Note 16) Total non-current assets TOTAL ASSETS LIABILITIES AND EQUITY CURRENT LIABILITIES (Note 4) Current borrowings (Note 13) Short-term notes and bills payable (Note 13) Accounts payable to related parties (Note 22) Other payables, others (Note 10) Current tax liabilities Current lease liabilities (Note 11) Other current liabilities, others Total current liabilities NON-CURRENT LIABILITIES (Note 4) Non-current portion of non-current borrowings (Note 13) Deferred tax liabilities (Note 17) Non-current lease liabilities (Note 11) Other non-current liabilities, others Total non-current liabilities Total liabilities EQUITY (Notes 4 and 15) Share capital Capital surplus Retained earnings Other equity interest Total equity TOTAL LIABILITIES AND EQUITY		2021 Amount % $ 13,188 - 6,302 - 26,625 - 7,713 - 4,097 - 57,925 - 14,141,481 19 56,382,018 77 613,296 1 3,369 - 1,849,656 3 7,555 - 331,864 - 68,759 - 73,397,998 100 $ 73,455,923 100 $ 1,580,000 2 482,418 1 1,431 - 105,360 - 147,096 - 1,307 - 3,685 - 2,321,297 3 19,409,942 26 466,794 1 2,068 - 54,422 - 19,933,226 27 22,254,523 30 16,603,715 23 3,288,518 5 22,919,766 31 8,389,401 11 51,201,400 70 $ 73,455,923 100		2020
				Amount % $ 4,381 - 16,283 - 129 - 5,549 - 6,147 - 32,489 - 12,140,404 18 52,189,672 78 615,945 1 2,526 - 1,857,909 3 - - 37,265 - 21,363 - 66,865,084 100 $ 66,897,573 100 $ 805,000 1 929,046 2 10,539 - 85,367 - 101,347 - 1,264 - 14,842 - 1,947,405 3 19,544,992 29 412,016 1 1,279 - 6,616 - 19,964,903 30 21,912,308 33 16,603,715 25 2,504,194 4 20,756,081 31 5,121,275 7 44,985,265 67 $ 66,897,573 100

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

(With Deloitte & Touche auditors’ report dated March 15, 2022)

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YFY INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE Investment (Note 4) OPERATING EXPENSES (Notes 14, 16 and 22) NET OPERATING INCOME NON-OPERATING INCOME AND EXPENSES Other gains and losses Finance costs (Notes 4 and 16) Rent income (Notes 12 and 22) Dividend income Other income, others Gain on disposal of investment properties (Note 22) Miscellaneous disbursements Total non-operating income and expenses PROFIT FROM CONTINUING OPERATIONS BEFORE TAX TAX EXPENSE (Notes 4 and 17) PROFIT FROM CONTINUING OPERATIONS OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 14, 15 and 17) Components of other comprehensive income that will not be reclassified to profit or loss: Gains on remeasurements of defined benefit plans Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method		2021 Amount % $ 5,356,934 100 419,467 8 4,937,467 92 (651) - (222,279) (4) 49,626 1 526,725 10 48,205 1 24,053 - (92) - 425,587 8 5,363,054 100 (158,800) (3) 5,204,254 97 187,406 4 1,618,538 30 2,331,512 44 4,137,456 78		2020
				Amount % $ 5,481,543 100 361,679 7 5,119,864 93 5,577 - (285,625) (5) 50,745 1 415,469 8 24,798 - - - (749) - 210,215 4 5,330,079 97 (121,000) (2) 5,209,079 95 583,663 11 413,634 7 (320,559) (6) 676,738 12

(Continued)

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YFY INC.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Components of other comprehensive loss that will be reclassified to profit or loss: Share of other comprehensive loss of subsidiaries and associates accounted for using equity method Other comprehensive income, net TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 18) Basic earnings per share Diluted earnings per share		2021 Amount % $ (688,236) (13) (688,236) (13) 3,449,220 65 $ 8,653,474 162 $ 3.13 $ 3.13		2020
				Amount % $ (525,143) (9) (525,143) (9) 151,595 3 $ 5,360,674 98 $ 3.14 $ 3.14

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

(With Deloitte & Touche auditors’ report dated March 15, 2022)

(Concluded)

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YFY INC.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2020 Appropriation of the 2019 earnings Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Changes in equity of associates accounted for using equity method Other changes in capital surplus Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interests in subsidiaries Profit Other comprehensive income (loss) Total comprehensive income (loss) Disposal of investments in equity instruments designated at fair value through other comprehensive income (loss) BALANCE AT DECEMBER 31, 2020 Appropriation of the 2020 earnings Legal reserve appropriated Cash dividends of ordinary share Reversal of special reserve Changes in equity of associates accounted for using equity method Other changes in capital surplus Difference between consideration and carrying amount of subsidiaries acquired or disposed Changes in ownership interests in subsidiaries Profit Other comprehensive income (loss) Total comprehensive income (loss) Disposal of investments in equity instruments designated at fair value through other comprehensive income (loss) BALANCE AT DECEMBER 31, 2021		Share Capital Shares (In Thousands) Amount 1,660,372 $ 16,603,715 - - - - - - - - - - - - - - - - - - - - - - 1,660,372 16,603,715 - - - - - - - - - - - - - - - - - - - - - - 1,660,372 $ 16,603,715			Capital Surplus	Capital Surplus		Total $ 1,000,169 - - - (338 ) 1,487 1,431,233 71,643 - - - - 2,504,194 - - - (13,088 ) 1,128 218,052 578,232 - - - - $ 3,288,518	Retained Earnings	Total $ 15,879,283 - (1,162,260 ) - (17 ) - 27 (22,727 ) 5,209,079 552,880 5,761,959 299,816 20,756,081 - (2,490,557 ) - 382 - (742,428 ) 26 5,204,254 157,638 5,361,892 34,370 $ 22,919,766		Other Equity	Gains (Losses) on Hedging Instruments $ (6,377 ) - - - - - - 2,285 - 1,067 1,067 - (3,025 ) - - - - - - - - 3,025 3,025 - $ -	Total Equity $ 39,250,233 - (1,162,260 ) - (355 ) 1,487 1,481,811 53,675 5,209,079 151,595 5,360,674 - 44,985,265 - (2,490,557 ) - (15,417 ) 1,128 (526,520 ) 594,027 5,204,254 3,449,220 8,653,474 - $ 51,201,400
				Difference Between Consideration and Carrying Amount of Subsidiaries Acquired or Disposed $ 128,978 - - - - - 1,431,233 - - - - - 1,560,211 - - - - - 218,052 - - - - - $ 1,778,263	Changes in Ownership Interests in Subsidiaries $ 374,052 - - - - - - 71,643 - - - - 445,695 - - - - - - 578,232 - - - - $ 1,023,927	Consolidation Excess $ 293,124 - - - - - - - - - - - 293,124 - - - - - - - - - - - $ 293,124	Other $ 204,015 - - - (338 ) 1,487 - - - - - - 205,164 - - - (13,088 ) 1,128 - - - - - - $ 193,204					Exchange Differences on Translation of Unrealized Gains (Losses) on Financial Assets Measured at Fair Value Foreign Through Other Financial Statements Comprehensive Income $ (1,036,202 ) $ 6,809,645 - - - - - - - - - - 50,578 (27 ) 2,827 (353 ) - - (526,210) 123,858 (526,210) 123,858 - (299,816) (1,509,007 ) 6,633,307 - - - - - - - (2,711 ) - - (1,143 ) (1,001 ) 15,795 (26 ) - - (691,261) 3,979,818 (691,261) 3,979,818 - (34,370) $ (2,185,616) $ 10,575,017
									Unappropriated Legal Reserve Special Reserve Retained Earnings $ 3,559,373 $ 4,028,583 $ 8,291,327 263,411 - (263,411 ) - - (1,162,260 ) - (26,770 ) 26,770 - - (17 ) - - - - - 27 - - (22,727 ) - - 5,209,079 - - 552,880 - - 5,761,959 - - 299,816 3,822,784 4,001,813 12,931,484 606,583 - (606,583 ) - - (2,490,557 ) - (1,812 ) 1,812 - - 382 - - - - - (742,428 ) - - 26 - - 5,204,254 - - 157,638 - - 5,361,892 - - 34,370 $ 4,429,367 $ 4,000,001 $ 14,490,398
		Shares (In Thousands) 1,660,372 - - - - - - - - - - - 1,660,372 - - - - - - - - - - - 1,660,372

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

(With Deloitte & Touche auditors’ report dated March 15, 2022)

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YFY INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES, INDIRECT METHOD Profit before tax Adjustments to reconcile profit (loss) Depreciation and amortization expenses Net gain on financial assets or liabilities at fair value through profit or loss Finance costs Interest income Dividend income Share-based payments Share of profit of subsidiaries and associates accounted for using equity method Loss (gain) on disposal of property, plant and equipment Gain on disposal of investment property Loss on disposal of investments Unrealized foreign exchange loss Converted overdue payables to other income Gain from lease modification Changes in operating assets and liabilities Decrease (increase) in current financial assets at fair value through profit or loss, mandatorily measured at fair value Decrease (increase) in accounts receivable due from related parties, net Decrease (increase) in other receivable Decrease (increase) in other current assets, others Decrease (increase) in net defined benefit asset, non-current Increase (decrease) in accounts payable to related parties Increase (decrease) in other payable, others Increase (decrease) in other current liabilities, others Cash outflow generated from (used in) operations Interest received Dividends received Interest paid Income taxes paid Net cash flows generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income	2021 $ 5,363,054 11,380 (19) 222,279 (33) (526,725) - (5,356,934) 14 (24,053) 660 1 (11,714) (47) 10,000 24 (3,498) 1,282 (60,341) (9,108) 16,564 557 (366,657) 33 2,685,873 (213,629) (110,699) 1,994,921 (152,098) 87,923	2020 $ 5,330,079 12,081 (5,528) 285,625 (52) (415,469) 1,144 (5,481,543) (52) - - 1 - - 202,000 297 102,014 (2,336) (54,028) 9,132 28,002 272 11,639 6,479 2,209,417 (282,667) (2,915) 1,941,953 (11,940) 45,453 (Continued)

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YFY INC.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Proceeds from liquidation of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other non-current assets, others Net cash flows generated from investing activities CASH FLOWS USED IN FINANCING ACTIVITIES Increase in current borrowings Decrease in current borrowings Decrease in short-term notes and bills payable Repayments of long-term debt Payments of lease liabilities Increase (decrease) in other non-current liabilities, others Cash dividends paid Overdue dividends received Net cash flows used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH NET INCREASE (DECREASE) IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	2021 $ 26,122 - 252,383 103,241 - (695) 48 762 317,686 775,000 - (447,000) (140,000) (2,110) (292) (2,490,557) 1,160 (2,303,799) (1) 8,807 4,381 $ 13,188	2020 $ 41,056 (1,054,579) 2,613,810 - 35,000 (260) 88 5,758 1,674,386 - (1,172,000) (200,000) (1,084,000) (1,792) 112 (1,162,260) 1,487 (3,618,453) (1) (2,115) 6,496 $ 4,381

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

(With Deloitte & Touche auditors’ report dated March 15, 2022)

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

YFY INC.

1. GENERAL INFORMATION

YFY Inc. (the Company) was incorporated in Kaohsiung in February 1950. The Company’s shares have been listed on the Taiwan Stock Exchange (TWSE) since February 1977.

The Company was originally principally engaged in the manufacture and sale of paper and paper-related products and the design, manufacture and sale of equipment. To increase its sales and competitiveness, the Company carried out a restructuring of the organization and spin-off of its specialized divisions. The Company spun off the assets, liabilities, and operations of its consumer products and packaging segments to its subsidiaries, Yuen Foong Yu Consumer Products Co., Ltd., in October 2007 and YFY Packaging Inc., in September 2005.

In addition, the Company spun off the assets, liabilities and operations of its paper and cardboard business segment to Chung Hwa Pulp Corporation (CHPC) and acquired the shares issued by CHPC on October 1, 2012. After this transaction, CHPC became a subsidiary of the Company, and the Company became an investment holding company, with investment as its main business.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 15, 2022.

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

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

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have any material impact on the Company’s accounting policies.

• b. The IFRSs endorsed by the FSC for application starting from 2022

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

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

• Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.

• Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.

• Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the financial statements were authorized for issue, the Company has assessed that the application of above standards and interpretations will not have a material impact on the Company’s financial position and financial performance.

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

New IFRSs Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IFRS 17 Amendments to IFRS 17 “Initial Application of IFRS 9 and IFRS 17 - Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”

Effective Date Announced by IASB (Note 1)

To be determined by IASB January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2023 (Note 2) January 1, 2023 (Note 3) January 1, 2023 (Note 4)

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

• Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.

• Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.

• Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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

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

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

• 2) Amendments to IAS 1 “Disclosure of Accounting Policies”

The amendments specify that the Company should refer to the definition of material to determine its material accounting policy information to be disclosed. Accounting policy information is material if it can reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements. The amendments also clarify that:

• Accounting policy information that relates to immaterial transactions, other events or conditions is immaterial and need not be disclosed;

• The Company may consider the accounting policy information as material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial; and

• Not all accounting policy information relating to material transactions, other events or conditions is itself material.

The amendments also illustrate that accounting policy information is likely to be considered as material to the financial statements if that information relates to material transactions, other events or conditions and:

• a) The Company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements;

• b) The Company chose the accounting policy from options permitted by the standards;

• c) The accounting policy was developed in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” in the absence of an IFRS that specifically applies;

• d) The accounting policy relates to an area for which the Company is required to make significant judgements or assumptions in applying an accounting policy, and the Company discloses those judgements or assumptions; or

• e) The accounting is complex and users of the financial statements would otherwise not understand those material transactions, other events or conditions.

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• 3) Amendments to IAS 8 “Definition of Accounting Estimates”

The amendments define that accounting estimates are monetary amounts in financial statements that are subject to measurement uncertainty. In applying accounting policies, the Company may be required to measure items at monetary amounts that cannot be observed directly and must instead be estimated. In such a case, the Company uses measurement techniques and inputs to develop accounting estimates to achieve the objective. The effects on an accounting estimate of a change in a measurement technique or a change in an input are changes in accounting estimates unless they result from the correction of prior period errors.

Except for the above impact, as of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact of the application of other standards and interpretations on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

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

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value, net defined benefit assets which are measured at the present value of the defined benefit obligation less the fair value of plan assets and investments accounted for using the equity method.

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

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

• 3) Level 3 inputs are unobservable inputs for an asset or liability.

When preparing the financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income (loss) for the year and total equity in the financial statements to be the same with the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in accounting treatments between the parent company only basis and the consolidated basis were made to investments accounted for using the equity method, the share of profit or loss of subsidiaries and associates (accounted for as investment revenue), the share of other comprehensive income (loss) of subsidiaries and associates and the related equity items.

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• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within twelve months after the reporting period; and

• 3) Cash, unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the entity’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting financial statements, the functional currencies of the Company and the Company entities (including subsidiaries and associates in other countries that use currency different from the currency of the Company) are translated into the presentation currency - the New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

On the disposal of a foreign operation or a disposal involving the loss of control over a subsidiary that includes a foreign operation, all of the exchange differences accumulated in equity in respect of that operation are reclassified to profit or loss.

In relation to a partial disposal of a subsidiary that does not result in the Company losing control over the subsidiary, the proportionate share of accumulated exchange differences is included in the calculation of equity transactions but is not recognized in profit or loss. For all other partial disposals, the proportionate share of the accumulated exchange differences recognized in other comprehensive income is reclassified to profit or loss.

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• e. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share of other equity of subsidiaries.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share of losses of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary that constitutes a business over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the investee’s financial statements as a whole. If the recoverable amount of the investment subsequently increases, the Company recognizes a reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized net of amortization or depreciation. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides this, all amounts previously recognized in other comprehensive income in relation to that subsidiary are reclassified to profit and loss on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries that are not related to the Company.

f. Investment in associates

An associate is an entity over which the Company has significant influence and that is not a subsidiary.

The Company uses the equity method to account for its investments in associates.

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Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the associate. The Company also recognizes the changes in the Company’s share of the equity of associates.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of an associate at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost acquisition, after reassessment, this is recognized immediately in profit or loss.

When the Company subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the associate. The Company records such a difference as an adjustment to investments, with the corresponding amount charged or credited to capital surplus - changes in the Company’s share of equity of associates. If the Company’s ownership interest is reduced due to the additional subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for by the equity method is insufficient, the shortage is debited to retained earnings.

When the Company’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for by the equity method and long-term interests that, in substance, form part of the Company’s net investment in the associate), the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Company discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When the Company transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Company’ financial statements only to the extent of interests in the associate that are not related to the Company.

• g. Property, plant and equipment

Property, plant and equipment are stated at cost, less subsequent accumulated depreciation and subsequent accumulated impairment loss.

Except for freehold land which is not depreciated, the depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.

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On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

• h. Investment properties

Investment properties are properties held to earn rentals or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

• i. Impairment of property, plant and equipment, right-of-use assets, investment properties and intangible assets

At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment, right-of-use assets, investment properties and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

• j. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (i.e., FVTPL) are recognized immediately in profit or loss.

• 1) Financial assets

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

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a) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at fair value through other comprehensive income (i.e., FVTOCI).

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL are debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporate any dividends or interest earned on the financial asset. Fair value is determined in the manner described in Note 21.

• ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

• i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit adjusted effective interest rate to the amortized cost of such financial assets; and

• ii) Financial assets that are not credit impaired on purchase or origination but have subsequently become credit impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.

A financial asset is credit impaired when one or more of the following events have occurred:

• i) Significant financial difficulty of the issuer or the borrower;

• ii) Breach of contract, such as a default;

• iii) It is becoming probable that the borrower will enter bankruptcy or undergo a financial reorganization; or

• iv) The disappearance of an active market for that financial asset because of financial difficulties.

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iii. Investments in equity instruments at FVTOCI

On initial recognition, the Company may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

b) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on financial assets at amortized cost.

The Company always recognizes lifetime expected credit losses (ECLs) for receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

Expected credit losses reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

For internal credit risk management purposes, the Company determines that the following situation indicate that a financial asset is in default (without taking into account any collateral held by the Company) when internal or external information show that the debtor is unlikely to pay its creditors.

The impairment loss of all financial assets is recognized in profit or loss by a reduction in their carrying amounts through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and the carrying amounts of such financial assets are not reduced.

• c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

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On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Financial liabilities

• i. Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

• ii. Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• k. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

• l. Leases

At the inception of a contract, the Company assesses whether the contract is, or contains, a lease.

1) The Company as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lease payments (less any lease incentives payable) from operating leases are recognized as income on a straight-line basis over the terms of the relevant leases. Initial direct costs incurred in obtaining operating leases are added to the carrying amounts of the underlying assets and recognized as expenses on a straight-line basis over the lease terms.

• 2) The Company as lessee

The Company recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for applying an exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at present value of the lease payments and subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms.

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Lease liabilities are initially measured at the present value of the lease payments. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses the lessee’s incremental borrowing rate.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term or a change in future lease payments resulting from a change in an index, the Company remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. For a lease modification that is not accounted for as a separate lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset of lease modifications that decreased the scope of the lease, and recognizing in profit or loss any gain or loss on the partial or full termination of the lease; making a corresponding adjustment to the right-of-use asset of all other lease modifications. Lease liabilities are presented on a separate line in the balance sheets.

m. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Other than stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

n. Employee benefits

1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit assets are recognized as employee benefits expense in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit assets represent the actual surplus in the Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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• o. Share-based payment arrangements – employee share options granted to Company’s employees by subsidiaries

The fair value at the grant date of the employee share options is expensed on a straight-line basis over the vesting period, based on the Company’s best estimates of the number of shares or options that are expected to ultimately vest, with a corresponding increase in investments accounted for using equity method. It is recognized as an expense in full at the grant date if vested immediately.

At the end of each reporting period, the Company revises its estimate of the number of employee share options that are expected to vest. The impact of the revision of the original estimates is recognized in profit or loss such that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to investments accounted for using equity method.

• p. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

• 1) Current tax

According to the Income Tax Act in the ROC, an additional tax on unappropriated earnings is provided for in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profit against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

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• 3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimations and assumptions on the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Company considers the possible impact of the recent development of the COVID-19 in Taiwan and the economic environment implications when making its critical accounting estimates on cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

The fair value measurement of equity investment in unlisted shares is determined by the estimated fair value under appropriate valuation methods primarily based on investees’ financial positions, operation results and recent financing activities, the market transaction prices of similar investments, market conditions and the required discount factors. As such, the estimated fair value may be different from the actual disposal price in the future.

6. CASH

Cash on hand Checking accounts and demand deposits		**December **	**31 **
		2021 $ 294 12,894 $ 13,188	2020 $ 281 4,100 $ 4,381

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)

Financial assets at FVTPL-current Financial assets mandatorily classified as at FVTPL Non-derivative financial assets Mutual funds		**December 31 **	**December 31 **
		2021 $ 6,302	2020 $ 16,283

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI)

Investments in equity instruments at FVTOCI-non-current Domestic investments Listed shares Unlisted shares		December 31	December 31
		2021 $ 10,090,731 4,050,750 $ 14,141,481	2020 $ 8,146,163 3,994,241 $ 12,140,404

The Company invested in listed and unlisted on domestic equity securities, and elected to designate these investments in equity instruments as at FVTOCI.

The Company acquired Zhen Ding Technology Holding Limited (“ZDTHL”) through stock exchange. The Company’s board of directors approved the stock exchange of all of its ownership of Boardtek Electronics Corporation (“BEC”) for ownership of “ZDTHL” in May 2020. The stock exchange was conducted at an exchange ratio of 1 ordinary share of “BEC” for 0.2 newly issued ordinary share of “ZDTHL”. The above stock exchange has been completed on November 4, 2020.

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31
		2021 $ 52,249,143 4,132,875 $ 56,382,018	2020 $ 48,151,353 4,038,319 $ 52,189,672

a. Investment in subsidiaries

Listed company Chung Hwa Pulp Corporation Shin Foong Specialty and Applied Materials Co., Ltd. Yuen Foong Yu Consumer Products Co., Ltd. (Note) Unlisted company YFY International Limited YFY Packaging Inc. YFY Global Investment Limited YFY Development Corp. (originally named as YFY Capital Co., Ltd.) YFY Paradigm Investment Co., Ltd. China Color Printing Co., Ltd. Union Paper Corp. Effion Enertech Co., Ltd.

December 31

2021 2020 $ 8,990,329 $ 8,596,617 3,533,897 2,367,344 3,131,418 2,602,532 15,081,675 15,737,977 6,661,743 7,124,383 6,128,215 5,973,380 4,223,452 2,133,843 3,119,423 2,332,943 485,546 449,718 238,494 232,759 230,807 215,659 (Continued)

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YFY Japan Co., Ltd. San Ying Enterprise Co., Ltd. Fidelis IT Solutions Co., Ltd. Yuen Yan Paper Container Co., Ltd. YFY Corporate Advisory & Service Co., Ltd. Sustainable Carbohydrate Innovation Co., Ltd.		December 31	December 31
		2021 $ 110,373 102,606 73,499 72,861 35,360 29,445 $ 52,249,143	2020 $ 116,122 62,966 56,959 74,701 42,197 31,253 $ 48,151,353 (Concluded)

Note: Yuen Foong Yu Consumer Products Co., Ltd. has been listed on the TWSE since September 2021.

The percentage of ownership and voting rights held by the Company were as follows:

Name of Corporation Chung Hwa Pulp Corporation Shin Foong Specialty and Applied Materials Co., Ltd. Yuen Foong Yu Consumer Products Co., Ltd. YFY International Limited YFY Packaging Inc. YFY Global Investment Limited YFY Development Corp. (originally named as YFY Capital Co., Ltd.) YFY Paradigm Investment Co., Ltd. China Color Printing Co., Ltd. Union Paper Corp. Effion Enertech Co., Ltd. YFY Japan Co., Ltd. San Ying Enterprise Co., Ltd. Fidelis IT Solutions Co., Ltd. Yuen Yan Paper Container Co., Ltd. YFY Corporate Advisory & Service Co., Ltd. Sustainable Carbohydrate Innovation Co., Ltd.

December 31

2021 2020 57.8% 57.8% 48.0% 48.9% 59.1% 64.5% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 49.7% 49.7% 18.9% 18.9% 49.0% 49.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 50.9% 50.9% 100.0% 100.0% 100.0% 100.0%

The Company disposed of its partial ownership of Shin Foong Specialty and Applied Materials Co., Ltd. and equity changes such as employee share options, which reduced its shareholding ratio to 48.0%. Shin Foong Specialty and Applied Materials Co., Ltd. was deemed a subsidiary since the Company did not cease to have control over these subsidiaries; China Color Printing Co., Ltd., Effion Enertech Co., Ltd. and Union Paper Corp. were deemed subsidiaries because the Company had substantial control over them even though the Company held less than 50% equity interests in each of the subsidiaries’ voting shares.

The Company sold 2.1% and 6.5% of its shares in Yuen Foong Yu Consumer Products Co., Ltd. to YFY Development Corp. (originally named as YFY Capital Co., Ltd.) and YFY Paradigm Investment Co., Ltd., respectively, in June 2020. Due to equity changes such as employee share options conversion of Yuen Foong Yu Consumer Products Co., Ltd. and the Company’s partial disposal of shares in Yuen Foong Yu Consumer Products Co., Ltd. to designated persons and financial investors from July through October in 2020, the shareholding ratio of the Company in Yuen Foong Yu Consumer Products Co., Ltd. was reduced to 64.5%. Due to the equity changes, such as the Company’s subscription of

• 26 -

additional shares of Yuen Foong Yu Consumer Products Co., Ltd. at a percentage different from its existing ownership percentage in September 2021, the shareholding ratio of the Company in Yuen Foong Yu Consumer Products Co., Ltd. was reduced to 59.1%. Yuen Foong Yu Consumer Products Co., Ltd. was deemed as subsidiary since the Company did not cease to have control over this subsidiary.

Refer to Note 30 in consolidated financial statements for the year ended December 31, 2021 for equity transactions with non-controlling interests.

Due to equity changes such as purchase of treasury shares from June through July in 2020, the shareholding ratio of the Company in Chung Hwa Pulp Corporation was increased to 57.8%.

In response to the overseas operation mode of its subsidiaries and the application of YFY Packaging Inc. on the stock exchange in Taiwan and to boost management performance, the Company’s board of directors approved the overseas investment structure adjustment in July 2020. The Company has completed the overseas investment structure adjustment in November 2020. The Company acquired the 100% shares of YFY Packaging Inc. owned by YFY International Labuan Co., Ltd.

The Company’s board of directors approved the merger of its subsidiary YFY Paradigm Investment Co., Ltd. and Lotus Ecoscings & Engineering Co., Ltd. and the merger of its subsidiary YFY Capital Co., Ltd. and YFY Venture Capital Investment Co., Ltd. in August 2020. The reference date of the above mergers was October 7, 2020 and the mergers have been completed. The board of the directors of YFY Capital Co., Ltd. approved the name change from YFY Capital Co., Ltd. to “YFY Development Corp.” in October 2020.

In order to specialize on its major business operation, the Company’s board of directors approved the “division spin-off capital reduction proposal” that spin-off assets, liabilities and business operation of the Chenggong plant of YFY Packaging Inc., integrate them into YFY Development Corp. (originally named as YFY Capital Co., Ltd.), and issue new shares by YFY Development Corp. (originally named as YFY Capital Co., Ltd.) as the consideration for the transfer of the division in January 2021. The above process was completed in January 2021.

Except for YFY Japan Co., Ltd., investments accounted for using the equity method and the share of profit or loss and other comprehensive income (loss) of those investments were calculated based on audited financial statements. Management believes there will not be a material differences even if the financial statements were audited.

b. Investments in associates

Material associates E Ink Holdings Inc. Associates that are not individually material Name of Associate E Ink Holdings Inc.		**December 31 **
		2021 2020 $ 4,123,242 $ 3,595,979 9,633 442,340 $ 4,132,875 $ 4,038,319 Proportion of Ownership and Voting Rights
		December 31
		2021 2020 11.7% 11.8%

• 27 -

• 1) Material associates

Refer to Table 3 “Information on Investees” for the nature of activities, principal place of business and country of incorporation of the associates.

The investments in E Ink Holdings Inc. was accounted for using the equity method since the Company had significant influence over E Ink Holdings Inc. even though the Company held less than 20% of the investee’s voting shares.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income (loss) of those investments were calculated based on the associates’ audited financial statements.

In 2013, the Company increased its investment in E Ink Holdings Inc. by buying 20,000 thousand shares of the investee’s privately placed ordinary shares for $329,000 thousand. Under the related regulations, privately placed ordinary shares should not be transferred within three years from the date of acquisition. E Ink Holdings Inc. has not yet completed publishing procedures as of March 15, 2022, the report date. The other rights and obligations are the same as those of ordinary shares.

Fair values (Level 1) of investments in E Ink Holdings Inc. with available published price quotations are summarized as follows (excluding the privately placed ordinary shares):

	December 31	December 31
	2021 $ 17,134,409	2020 $ 5,197,059

The summarized financial information below represents amounts shown in the financial statements of E Ink Holdings Inc. prepared in accordance with IFRSs and has been adjusted by the Company for equity accounting purposes:

Current assets Non-current assets Current liabilities Non-current liabilities Equity Non-controlling interests Proportion of the Company’s ownership Equity attributable to the Company Goodwill Carrying amount		December 31	December 31
		2021 $ 19,263,374 37,746,625 (17,839,575) (3,472,539) 35,697,885 (530,719) $ 35,167,166 11.7% $ 4,115,977 7,265 $ 4,123,242	2020 $ 21,914,321 23,886,312 (11,564,821) (3,191,039) 31,044,773 (536,163) $ 30,508,610 11.8% $ 3,588,714 7,265 $ 3,595,979

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Operating revenue Profit for the year Other comprehensive income Total comprehensive income for the year	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 19,650,564 $ 5,212,048 2,298,867 $ 7,510,915	2020 $ 15,362,855 $ 3,673,688 181,826 $ 3,855,514

2) Aggregate information of associates that are not individually material

The Company’s share of: Profit for the year Other comprehensive income (loss) Total comprehensive income for the year	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 75,893 (40,462) $ 35,431	2020 $ 6,919 57,759 $ 64,678

The investments in Taiwan Genome Sciences, Inc. was accounted for using the equity method since the Company and its subsidiaries held more than 20% of the investee’s voting shares even though the Company held less than 20% of the investee’s voting shares.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the audited financial statements.

All the associates were accounted for using the equity method.

10. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Disposals Balance at December 31, 2021 Carrying amounts at December 31, 2021	Land $ 593,549 - - $ 593,549 $ - - - $ - $ 593,549	Buildings Machinery and Equipment Miscellaneous Equipment $ 157,897 $ 141,677 $ 78,472 - - 921 (517) (126,416) (22,080) $ 157,380 $ 15,261 $ 57,313 $ 137,888 $ 141,588 $ 76,174 2,466 59 983 (502) (126,416) (22,033) $ 139,852 $ 15,231 $ 55,124 $ 17,528 $ 30 $ 2,189	Total $ 971,595 921 (149,013) $ 823,503 $ 355,650 3,508 (148,951) $ 210,207 $ 613,296 (Continued)

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Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposals Balance at December 31, 2020 Carrying amounts at December 31, 2020	Land $ 593,549 - - $ 593,549 $ - - - $ - $ 593,549	Buildings Machinery and Equipment Miscellaneous Equipment Total $ 157,897 $ 141,677 $ 89,833 $ 982,956 - - 260 260 - - (11,621) (11,621) $ 157,897 $ 141,677 $ 78,472 $ 971,595 $ 135,334 $ 141,502 $ 86,808 $ 363,644 2,554 86 951 3,591 - - (11,585) (11,585) $ 137,888 $ 141,588 $ 76,174 $ 355,650 $ 20,009 $ 89 $ 2,298 $ 615,945 (Concluded)

The above items of property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings Main buildings 15-55 years Others 3-50 years Machinery and equipment 5-15 years Miscellaneous equipment 3-50 years

The non-cash investing activities of the Company for the years ended December 31, 2021 and 2020 were as follows:

Acquisition of property, plant and equipment Changes in payment of payables on equipment (accounted for as other payables, others)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 921 (226) $ 695	2020 $ 260 - $ 260

11. LEASE ARRANGEMENTS

• a. Right-of-use assets

Carrying amounts Land Others		December	31
		2021 $ 610 2,759 $ 3,369	2020 $ 712 1,814 $ 2,526

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b.	Additions to right-of-use assets Depreciation charge for right-of-use assets Land Others Lease liabilities Carrying amounts Current Non-current	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
			2021 $ 6,310 $ 102 2,044 $ 2,146 December	2020 $ - $ 102 1,717 $ 1,819 31
			2021 $ 1,307 $ 2,068	2020 $ 1,264 $ 1,279

The discount rates for lease liabilities adopted by the Company’s assets were both 1.68%.

c. Other lease information

Expenses relating to short-term leases and low-value asset leases Total cash outflow for leases 12. INVESTMENT PROPERTIES	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,860 $ 8,058	2020 $ 6,770 $ 8,622

Cost Balance at January 1, 2021 Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Balance at December 31, 2021 Carrying amounts at December 31, 2021	Amount $ 1,955,936 (7,401) $ 1,948,535 $ 98,027 852 $ 98,879 $ 1,849,656 (Continued)

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Amount

Cost Balance at January 1, 2020 and December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Balance at December 31, 2020 Carrying amounts at December 31, 2020	$ 1,955,936 $ 97,175 852 $ 98,027 $ 1,857,909 (Concluded)

The fair values of the investment properties owned by the Company were both $7,593,118 thousand as of December 31, 2021 and 2020. The valuation was partially made by the Company using market transaction prices for similar properties and not by independent qualified professional valuers. The rental incomes were $37,889 thousand and $39,151 thousand for the years ended December 31, 2021 and 2020, respectively.

The Company’s board of directors approved the resolution of carrying out a joint construction of housing with Ho Tien Co., Ltd. (as a substantive related party of the Company) and cooperated in the construction of a portion of land in the Zhongshan Section of Zhongshan District, Taipei City. The Company provided the land, and Ho Tien Co., Ltd. was responsible in completing the construction. The joint construction was completed in October 2021 and a license for use was obtained. As of December 31, 2021, the house for the Company has not been transferred and was accounted for as other non-current assets, others. The transfer of ownership was completed in February 2022. In addition, the Company disposed of a portion of the land to Ho Tien Co., Ltd. in accordance with the contract terms agreed upon for the construction of the house, refer to Note 22.

The investment properties held by the Company were depreciated over their estimated useful lives of 20 to 55 years, using the straight-line method.

All of the Company’s investment property was held under freehold interests.

13. BORROWINGS

a. Current borrowings

Bank credit loans		December 31	December 31
		2021 $ 1,580,000	2020 $ 805,000

As of December 31, 2021 and 2020, the interest rate intervals of bank credit loans were 0.75%-0.80% per annum and 0.81%-0.84% per annum, respectively.

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b. Short-term notes and bills payable

Commercial paper Less: Discount on short-term notes and bills payable		December 31	December 31
		2021 $ 483,000 (582) $ 482,418	2020 $ 930,000 (954) $ 929,046

Short-term notes and bills payable are commercial paper due within one year. Interest rate intervals on these notes and bills payable were 0.80%-0.81% per annum and 0.80%-0.85% per annum as of December 31, 2021 and 2020, respectively.

c. Non-current borrowings

Syndicated loans Long-term bank credit loans		December 31	December 31
		2021 $ 18,609,942 800,000 $ 19,409,942	2020 $ 18,744,992 800,000 $ 19,544,992

Long-term bank loans included syndicated and credit loans. Syndicated loans with monthly interest payments expire in December 2026 and have interest rate intervals of both 1.79% per annum as of December 31, 2021 and 2020; credit loans expire in December 2023 and have interest rate intervals of 0.78% per annum and 0.85% per annum as of December 31, 2021 and 2020, respectively.

14. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The Company in accordance with the Labor Standards Act is operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Company contribute amounts equal to certain percentage of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Company has no right to influence the investment policy and strategy.

• 33 -

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit assets		December 31	December 31
		2021 $ 1,594,659 (1,926,523) $ (331,864)	2020 $ 1,585,277 (1,622,542) $ (37,265)

Movements in net defined benefit liabilities (assets) were as follows:

Present Value of the Defined Benefit Obligation Fair Value of the Plan Assets Balance at January 1, 2021 $ 1,585,277 $ (1,622,542) Service cost Net interest expense (income) 7,582 (7,923) Recognized in profit or loss 7,582 (7,923) Remeasurement Return on plan assets - (368,355) Actuarial loss (gain) Changes in financial assumptions (22,114) - Changes in demographic assumptions 29,702 - Experience adjustments 126,509 - Recognized in other comprehensive loss (income) 134,097 (368,355) Contributions from the employer - (60,000) Benefits paid (132,297) 132,297 Balance at December 31, 2021 $ 1,594,659 $ (1,926,523) Balance at January 1, 2020 $ 1,690,148 $ (943,806) Service cost Net interest expense (income) 16,172 (9,016) Recognized in profit or loss 16,172 (9,016) Remeasurement Return on plan assets - (777,512) Actuarial loss (gain) Changes in financial assumptions 49,137 - Experience adjustments (1,204) - Recognized in other comprehensive loss (income) 47,933 (777,512) Contributions from the employer - (61,184) Benefits paid (168,976) 168,976 Balance at December 31, 2020 $ 1,585,277 $ (1,622,542)

Net Defined Benefit Liabilities (Assets) $ (37,265) (341) (341) (368,355) (22,114) 29,702 126,509 (234,258) (60,000) - $ (331,864) $ 746,342 7,156 7,156 (777,512) 49,137 (1,204) (729,579) (61,184) - $ (37,265)

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An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans was as follows:

Operating costs	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ (341)	2020 $ 7,156

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a two-year time deposit with local banks. The pension fund monitoring committee of the Company invested the pension fund in domestic equity securities. The income from the investment in the equity securities will affect the fair value of plan assets and the status of financial contribution.

• 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s investments.

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rates Expected rates of salary increase	December 31
	2021 2020 0.75% 0.50% 1.00%-1.50% 1.00%-1.50%

If possible reasonable change in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rates 0.125% increase 0.125% decrease Expected rates of salary increase 0.125% increase 0.125% decrease		December	31
		2021 $ (10,853) $ 10,988 $ 10,951 $ (10,843)	2020 $ (12,534) $ 12,705 $ 12,629 $ (12,490)

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The sensitivity analysis presented above might not have been representative of the actual change in the present value of the defined benefit obligation because it was unlikely that the changes in assumptions had occurred in isolation of one another, i.e., some of the assumptions might have been correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	**31 **
		2021 $ 60,000 5.5 years	2020 $ 62,102 6.4 years

15. EQUITY

• a. Ordinary shares

Numbers of shares authorized (in thousand) Value of shares authorized Number of shares issued and fully paid (in thousand) Value of shares issued		December 31	December 31
		2021 2,200,000 $ 22,000,000 1,660,372 $ 16,603,715	2020 2,200,000 $ 22,000,000 1,660,372 $ 16,603,715

Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.

b. Capital surplus

Depending on the source, capital surplus may be used in these ways: (1) arising from shares issued in excess of par (including share premiums from issuance of ordinary shares for mergers, treasury share transactions, and excess of the consideration received over the carrying amount of the subsidiaries’ net assets during disposal or acquisition) - may be used to offset a deficit; in addition, when the Company has no deficit, this capital surplus may be distributed as cash dividends, or may be transferred to share capital once a year within a certain percentage of the Company’s capital surplus; (2) arising from the effect of changes in ownership interests in subsidiaries due to equity transactions other than actual disposals or acquisitions - may be used to offset a deficit.; (3) arising from changes in equity in associates - may be used in compliance with related regulations if the capital surplus source is either of the foregoing two sources.

c. Retained earnings and dividend policy

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve of 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations or in the necessary situation, and then any remaining profit together with any undistributed retained earnings shall be used for distribution of dividends and bonuses to shareholders

In making its dividend policy, the Company takes into account future capital expenditures and working capital requirements. Based on this policy, dividends should be distributed as follows:

• 1) At least 20% as cash dividends; and

• 2) The remainder after the distribution of cash dividends as share dividends. If there is a requirement for capital expenditures, the Company may distribute only share dividends.

• 36 -

The board of directors of the Company is authorized to adopt a special resolution to distribute dividends and bonuses in cash and a report of such distribution should be submitted in the shareholders’ meeting.

An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company. For any subsequent reversal of the deduction in other shareholders’ equity, the appropriate amount of earnings distribution should be reversed from the net debit balance.

The appropriations of earnings for 2020 and 2019 were as follows:

Legal reserve Cash dividends Cash dividends per share (NT$)	Appropriation of Earnings	Appropriation of Earnings	Appropriation of Earnings
	**For the Year Ended December 31 **
		2020 $ 606,583 $ 2,490,557 $ 1.5	2019 $ 263,411 $ 1,162,260 $ 0.7

The appropriation of earnings for 2019 was resolved in the shareholders’ meeting on June 22, 2020. The above 2020 appropriation for cash dividends was resolved by the Company’s board of directors on February 26, 2021 and the other proposed appropriations were resolved by the shareholders’ meeting held on May 17, 2021.

The appropriations of earnings for 2021 had been proposed by the Company’s board of directors on March 15, 2022. The appropriations and dividends per share were as follows:

Legal reserve Cash dividends Cash dividends per share (NT$)	2021 $ 465,605 $ 2,490,557 $ 1.5

The above appropriation for cash dividends had been resolved by the board of directors; the other proposed appropriations will be resolved by the shareholders’ meeting to be held on June 23, 2022.

d. Special reserves

Beginning at January 1 Reversal: Disposal of investment properties Disposal of partial interests in subsidiaries Balance at December 31	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 4,001,813 (1,812) - $ 4,000,001	2020 $ 4,028,583 - (26,770) $ 4,001,813

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e. Other equity items

Exchange of Differences on Translation of Foreign Financial Statements Unrealized Gains (Losses) on Financial Assets Measured at Fair Value Through Other Comprehensive Income Gains (Losses) on Hedging Instruments For the year ended December 31, 2021 Balance at January 1 $ (1,509,007) $ 6,633,307 $ (3,025) Unrealized gains on financial assets measured at FVTOCI - 1,618,538 - Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method (691,261) 2,361,280 3,025 Changes in equity of associates accounted for using equity method - (2,711) - Disposal of partial interests in subsidiaries (1,143) (1,001) - Changes in ownership interest in subsidiaries 15,795 (26) - Cumulative unrealized gains of equity instruments transferred to retained earnings due to disposal - (34,370) - Balance at December 31 $ (2,185,616) $ 10,575,017 $ - For the year ended December 31, 2020 Balance at January 1 $ (1,036,202) $ 6,809,645 $ (6,377) Unrealized gains on financial assets measured at FVTOCI - 413,634 - Share of other comprehensive income (loss) of subsidiaries and associates accounted for using equity method (526,210) (289,776) 1,067 Disposal of partial interests in subsidiaries 50,578 (27) - Changes in ownership interest in subsidiaries 2,827 (353) 2,285 Cumulative unrealized gains of equity instruments transferred to retained earnings due to disposal - (299,816) - Balance at December 31 $ (1,509,007) $ 6,633,307 $ (3,025)

Total $ 5,121,275 1,618,538 1,673,044 (2,711) (2,144) 15,769 (34,370) $ 8,389,401 $ 5,767,066 413,634 (814,919) 50,551 4,759 (299,816) $ 5,121,275

• 38 -

16. NET PROFIT

a. Finance costs

Interest on bank loans Interest on lease liabilities b. Depreciation and amortization Property, plant and equipment Right-of-use assets Investment properties Other non-current assets An analysis of deprecation by function Operating expenses An analysis of amortization by function Operating expenses c. Employee benefits expense Post-employment benefits Defined contribution plans Defined benefit plans Share-based payments Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating expenses		**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 222,191 88 $ 222,279 For the Year Ended		2020 $ 285,565 60 $ 285,625 December 31
		2021 $ 3,508 2,146 852 4,874 $ 11,380 $ 6,506 $ 4,874 **For the Year Ended **		2020 $ 3,591 1,819 852 5,819 $ 12,081 $ 6,262 $ 5,819 **December 31 **
			2021 $ 3,907 (341) 3,566 - 253,700 $ 257,266 $ 257,266	2020 $ 2,442 7,156 9,598 1,144 169,731 $ 180,473 $ 180,473

• 39 -

• d. Compensation of employees and remuneration of directors

The Company accrued compensation of employees and remuneration of directors at the rates no less than 0.1% and no higher than 2%, respectively, of net profit before income tax, compensation of employees, and remuneration of directors. The compensation of employees and remuneration of directors for the years ended December 31, 2021 and 2020 which have been approved by the Company’s board of directors on March 15, 2022 and February 26, 2021, were as follows:

Accrual rate

Compensation of employees Remuneration of directors Amount Compensation of employees Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2021 2020 0.10% 0.10% 0.41% 0.41% **For the Year Ended December 31 **
	2021 Cash $ 5,550 22,000	2020
		Cash $ 5,361 22,000

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate.

There is no difference between the actual amounts of compensation of employees and remuneration of directors paid and the amounts recognized in the financial statements for the years ended December 31, 2020 and 2019.

Information on the compensation of employees and remuneration of directors resolved by the Company’s board of directors is available at the Market Observation Post System website of the Taiwan Stock Exchange.

17. INCOME TAXES

• a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Land value increment tax Adjustment for prior periods Deferred tax In respect of the current year Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2021 $ - 147,096 11,333 - 158,429 371 $ 158,800	2020 $ 40,925 60,422 - 2,481 103,828 17,172 $ 121,000

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A reconciliation of accounting profit and income tax expense was as follows:

Income before tax Income tax expense calculated at the statutory rate (20%) Nondeductible expenses in determining taxable income Tax-exempt income Additional income tax under the Income Basic Tax Act Income tax on unappropriated earnings Land value increment tax Unrecognized deductible temporary differences Adjustments for prior years’ tax Income tax expense recognized in profit or loss b. Income tax recognized in other comprehensive income (loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,363,054 $ 1,072,610 1,609 (1,177,026) - 147,096 11,333 103,178 - $ 158,800	2020 $ 5,330,079 $ 1,066,016 148 (1,181,091) 40,925 60,422 - 132,099 2,481 $ 121,000

Deferred tax In respect of the current year Remeasurement on defined benefit plan Share of the other comprehensive loss of subsidiaries and associates	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2021 $ 46,852 (7,442) $ 39,410	2020 $ 145,916 (7,696) $ 138,220

• c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2021

Deferred tax assets Temporary difference Others Deferred tax liabilities Temporary difference Reserve for land revaluation increment tax Defined benefit plan Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income (Loss) Closing Balance $ - $ 7,555 $ - $ 7,555 $ 350,116 $ - $ - $ 350,116 61,374 7,928 46,852 116,154 526 (2) - 524 $ 412,016 $ 7,926 $ 46,852 $ 466,794

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For the year ended December 31, 2020

Deferred tax assets Temporary difference Defined benefit plan Deferred tax liabilities Temporary difference Reserve for land revaluation increment tax Defined benefit plan Others	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensive Income (Loss) Closing Balance $ 101,728 $ (17,186) $ (84,542) $ - $ 350,116 $ - $ - $ 350,116 - - 61,374 61,374 540 (14) - 526 $ 350,656 $ (14) $ 61,374 $ 412,016

• d. Income tax approved situation

The application case for the year end of 2017 has been approved by taxing authority.

18. EARNINGS PER SHARE

Basic earnings per share (NT$) Diluted earnings per share (NT$)	For	the Year Ended December 31	the Year Ended December 31
		2021 $ 3.13 $ 3.13	2020 $ 3.14 $ 3.14

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

Profit for the year Earnings used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,204,254 $ 5,204,254	2020 $ 5,209,079 $ 5,209,079

Number of Share (In Thousands)

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Compensation of employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 1,660,372 186 1,660,558	2020 1,660,372 230 1,660,602

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If the Company offered to settle compensation paid to employees in cash or shares, the Company assumed the entire amount of the compensation would be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, if the effect is dilutive. Such dilutive effect of the potential shares was included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

19. SHARE-BASED PAYMENT ARRANGEMENTS

Employee share options plan of the subsidiary - Yuen Foong Yu Consumer Products Co., Ltd.

In order to attract and retain the professional talents needed by the subsidiary, improve the employees’ cohesion and sense of belonging to the subsidiary, and jointly create the interests of subsidiary and shareholders, the board of directors of the subsidiary resolved to issue 3,320 employee share options in July 2020. Each option entitles the holder to subscribe for 1,000 ordinary shares of Yuen Foong Yu Consumer Products Co., Ltd. The eligible participants for share options are the full-time employees (including the controlling companies and subordinate companies) who meet certain specific requirements. The options granted are valid for 0.02 years and the exercise price is $15 per share.

Information on compensatory employee share options issued to the employees of the Company in July 2020 is as follows:

	Number of
	Options
	(In Thousands
Employee Share Options	of Units)	Exercise	Price
Granted in July 2020	80	$	15
Weighted-average fair value of options granted in July 2020 (NT$)	$ 14.3

Information on employee share options certificates that the subsidiary issued is as follows:

Share Options Certificates Balance at January 1 Options granted Options exercised Balance at December 31 Options exercisable, end of period	For the Year Ended December 31, 2020
	Number of Options (In Thousands of Units) Exercise Price - 80 (80) - - $ 15

• 43 -

The subsidiary measured employee share options by using the Black-Scholes-Merton Option Pricing Model, and the inputs to the models were as follows:

Share price at the grant date $29.3 Exercise price $15 Expected volatility (%) 45.69 Expected lives (years) 0.02 Expected dividend yield (%) Expected grant (%) 100 Risk free interest rate (%) 0.28

The employee benefit expenses recognized on the employee share option plans were $1,144 thousand for the year ended December 31, 2020.

20. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, reserves, retained earnings, other equity and non-controlling interests).

21. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments that are not measured at fair value

The management of the Company considers that the carrying amounts of those financial assets and financial liabilities that are not measured at fair value recognized in the financial statements approximate their fair values or their fair values cannot be reliably measured.

• b. Fair value of financial instruments that are measured at fair value on a recurring basis

• 1) Fair value hierarchy

December 31, 2021

Financial assets at FVTPL Mutual funds Financial assets at FVTOCI Equity instruments Domestic listed shares Domestic unlisted shares	Level 1 $ 6,302 $ 10,090,731 - $ 10,090,731	Level 2 $ - $ - - $ -	Level 3 $ - $ - 4,050,750 $ 4,050,750	Total $ 6,302 $ 10,090,731 4,050,750 $ 14,141,481

• 44 -

December 31, 2020

Financial assets at FVTPL Mutual funds Financial assets at FVTOCI Equity instruments Domestic listed shares Domestic unlisted shares	Level 1 $ 16,283 $ 8,146,163 - $ 8,146,163	Level 2 $ - $ - - $ -	Level 3 $ - $ - 3,994,241 $ 3,994,241	Total $ 16,283 $ 8,146,163 3,994,241 $ 12,140,404

There were no transfers between Levels 1 and 2 for the years ended December 31, 2021 and 2020.

• 2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2021

Balance at January 1, 2021 Recognized in other comprehensive income (accounted for as unrealized gain (loss) on investments in equity instruments designated as at FVTOCI) Disposals Return of capital upon investees’ capital reduction Balance at December 31, 2021 For the year ended December 31, 2020 Balance at January 1, 2020 Recognized in other comprehensive income (accounted for as unrealized gain (loss) on investments in equity instruments designated as at FVTOCI) Purchases Disposals Return of capital upon investees’ capital reduction Balance at December 31, 2020	Financial Assets at FVTOCI	Financial Assets at FVTOCI
	Equity Instruments $ 3,994,241 86,998 (4,367) (26,122) $ 4,050,750 Financial Assets at FVTOCI
		Equity Instruments $ 3,215,515 853,295 11,940 (45,453) (41,056) $ 3,994,241

• 45 -

• 3) Valuation techniques and inputs used for Level 3 fair value measurement

Financial Instruments Domestic unlisted shares

Valuation Techniques and Inputs

Asset-based approach: The fair value is determined based on the net asset value of the investment target. The significant unobservable inputs are discounted prices based on market liquidity and non-controlling interests. Market approach: The fair value is assessed according to the recent transaction price of the investment target or similar market transaction prices and market conditions. The significant unobservable inputs are discounted prices for the lack of marketability. Income approach: Discounted cash flows are determined based on the present value of the expected future economic benefits that will be derived from the investment. Unobservable inputs mainly include the long-term growth rate, discount rate and the discount of liquidity. The fair value will increase if the long-term growth rate increases, discount rate decreases or the discount for liquidity decreases.

• c. Categories of financial instruments

Financial assets FVTPL Mandatorily classified as at FVTPL FVTOCI Equity instruments Amortized cost (1) Financial liabilities Amortized cost (2)	**December 31 **
	2021 2020 $ 6,302 $ 16,283 14,141,481 12,140,404 47,526 10,059 21,579,151 21,374,944

• 1) The balances include financial assets measured at amortized cost, which comprise cash, accounts receivable due from related parties, net and other receivables.

• 2) The balances include financial liabilities measured at amortized cost, which comprise current borrowings, short-term notes and bills payable, accounts payables to related parties, other payables, others, and non-current borrowings.

• d. Financial risk management objectives and policies

The Company’s main target of financial risk management was to manage the market risk related to operating activity (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk. To reduce the potential and detrimental influence of the fluctuations in market on the Company’s financial performance, the Company was devoted to identify, analyze and estimate related financial risk factor which may lead to unfavorable effect on the financial performance of the Company, and conduct related program to lower and hedge financial risk.

• 46 -

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in interest rates and equity prices.

a) Interest rate risk

The Company was exposed to interest rate risk arising from borrowing at both fixed and floating interest rates.

The carrying amount of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial liabilities Lease liabilities Cash flow interest rate risk Financial assets Financial liabilities	**December 31 **
	2021 2020 $ 482,418 $ 929,046 3,375 2,543 12,894 4,100 20,989,942 20,349,992

Sensitivity analysis

The sensitivity analysis below was determined based on the Company’s exposure to interest rates for non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of each liability outstanding at the end of the reporting period was outstanding for the whole year. A 0.25% basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 0.25% basis points higher/lower and all other variables were held constant, the Company’s post-tax profit for the years ended December 31, 2021 and 2020 would decreased/increased by $41,954 thousand and $40,692 thousand, respectively.

b) Other price risk

The Company was exposed to equity and commodity price risk through its investments in equity securities and mutual funds. The management of the Company manages risk by holding different risk portfolios.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to equity and commodity price risks at the end of the reporting period.

If equity and commodity prices had been 5% higher/lower, pre-tax profit for the years ended December 31, 2021 and 2020 would have increased/decreased by $315 thousand and $814 thousand, respectively, as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income (loss) for the years ended December 31, 2021 and 2020 would have increased/decreased by $707,074 thousand and $607,020 thousand, respectively, as a result of the changes in fair value of financial assets at FVTOCI.

• 47 -

The Company’s sensitivity to price risk of investments in equity securities increased during the year, which was mainly due to the fair value of equity investments increased.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk, which will cause a financial loss to the Company due to failure to discharge an obligation by the counterparties, is arising from the carrying amount of the respective recognized financial assets as stated in the balance sheet.

The financial credit risk created by investing is evaluated and monitored by the Company’s financial department. Since the counterparties are creditworthy banks and financial institutions with good credit rating, thus, there’s no significant credit risk.

3) Liquidity risk

The objective of liquidity risk management is to maintain adequate cash and cash equivalents with high liquidity and sufficient bank facilities that business operation requires and to ensure the Company has sufficient financial flexibility.

As of December 31, 2021 and 2020, the amount of unused financing facilities was $17,202,440 thousand and $15,446,840 thousand, respectively.

The following table details the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods by financial institutions. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. The tables included both interest and principal cash flows. Specifically, loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the financial institutes choosing to exercise their rights.

To the extent that interest cash flows paid at floating rate, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

December 31, 2021

Non-derivative financial liabilities Floating interest rate liabilities Fixed interest rate liabilities Lease liabilities	Less than 1 Year $ 1,920,615 483,000 1,353 $ 2,404,968	1 - 5 Years $ 20,216,453 - 2,010 $ 20,218,463	5+ Years $ - - 113 $ 113

• 48 -

December 31, 2020

Non-derivative financial liabilities Floating interest rate liabilities Fixed interest rate liabilities Lease liabilities	Less than 1 Year $ 1,148,136 930,000 1,296 $ 2,079,432	1 - 5 Years $ 20,467,817 - 1,136 $ 20,468,953	5+ Years $ - - 225 $ 225

22. TRANSACTIONS WITH RELATED PARTIES

Besides information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below.

a. Names and categories of related parties

Related Party Relationship with the Company

Hsin-Yi Enterprise Co., Ltd. Entities with key management personnel Yuen Foong Paper Co., Ltd. Entities with key management personnel Wei-Li Tsai Entities with key management personnel Chung Hwa Pulp Corporation Subsidiary YFY Packaging Inc. Subsidiary YFY Jupiter (BVI) Inc. Subsidiary Fidelis IT Solutions Co., Ltd. Subsidiary Yuen Foong Yu Consumer Products Co., Ltd. Subsidiary Yuen Foong Shop Co., Ltd. Subsidiary YFY Corporate Advisory & Services Co., Ltd. Subsidiary China Color Printing Co., Ltd. Subsidiary Sustainable Carbohydrate Innovation Co., Ltd. Subsidiary YFY Development Corp. (originally named as Subsidiary YFY Capital Co., Ltd.) YFY Paradigm Investment Co., Ltd. Subsidiary YFY Biotech Co., Ltd. Associate E Ink Holdings Inc. Associate YuanHan Materials Inc. Associate Taiwan Global BioFund Co., Ltd. (Note) Associate SinoPac Securities Corporation Substantive related party Hsin-Yi Foundation Substantive related party SinoPac Leasing Corporation Substantive related party Ho Tien Co., Ltd. Substantive related party Hoi Toy&Play Corporation Substantive related party Lui Co., Ltd. Substantive related party Hsin Yuan Investment Co., Ltd. Substantive related party Hsinex International Corp. Substantive related party Fu Hwa Development Enterprise Co., Ltd. Substantive related party YFY Co., Ltd. Substantive related party

Note: Taiwan Global BioFund Co., Ltd. was liquidated in September 2021; therefore, only the transactions prior to liquidation were listed.

• 49 -

b. Receivables from related parties

Line Item Related Party Category/Name Receivables from related Associate parties YFY Biotech Co., Ltd. Subsidiaries Fidelis IT Solutions Co., Ltd. Others Substantive related party Ho Tien Co., Ltd.		December	31
		2021 $ 105 - - - 26,520 $ 26,625	2020 $ 109 18 2 20 - $ 129

The outstanding accounts receivable from related parties were unsecured and no expected credit losses should be recognized after estimating.

• c. Payables to related parties

Line Item Related Party Category/Name Payables to related parties Subsidiaries China Color Printing Co., Ltd. YFY Corporate Advisory & Services Co., Ltd. Others Entities with key management personnel Hsin-Yi Enterprise Co., Ltd. Others Substantive related party SinoPac Securities Corporation Others Associate		December	31
		2021 $ 312 8 78 398 651 4 655 304 - 304 74 $ 1,431	2020 $ 33 9,497 11 9,541 694 1 695 272 3 275 28 $ 10,539

The outstanding accounts payable to related parties were unsecured.

• d. Acquisitions of property, plant and equipment

Related Party Category/Name Subsidiaries Fidelis IT Solutions Co., Ltd.	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 98	2020 $ 133

• 50 -

e. Disposal of investment properties

Related Party Category/Name Substantive related party Ho Tien Co., Ltd.		Proceeds For the Year Ended December 31 2021 2020 $ 26,520 $ -		Gain (Loss) on Disposal	Gain (Loss) on Disposal
				For the Year Ended December 31
		2021 $ 26,520		2021 $ 24,053	2020 $ -

The proceeds of $26,520 thousand were fully collected in February 2022.

• f. Acquisitions of financial assets

For the year ended December 31, 2021

Related Party Category/Name Line Item Number of Shares Underlying Assets Subsidiaries Non-current financial assets at fair value through other comprehensive income (loss) 7,455,438 Ordinary shares Associate Non-current financial assets at fair value through other comprehensive income (loss) 1,319,000 Ordinary shares Associate Non-current financial assets at fair value through other comprehensive income (loss) 14,664,953 Ordinary shares

Proceeds Note $ 92,160 - 59,938 - 344,486 (Note) $ 496,584

Note: Taiwan Global BioFund Co., Ltd. was liquidated in September 2021, and the remaining assets were distributed in accordance with the proportion of the original shareholders’ capital contribution.

• g. Disposal of financial assets

For the year ended December 31, 2020

Related Party Category/Name Line Item Number of Shares Underlying Assets Subsidiaries Investments accounted for using equity method 20,841,215 Ordinary shares Associate Investments accounted for using equity method 337,000 Ordinary shares Entities with key management personnel Investments accounted for using equity method 100,000 Ordinary shares	Proceeds Gain (Loss) on Disposal $ 256,659 (Note) 11,447 (Note) 3,400 (Note) $ 271,506

In response to the initial public offering of Yuen Foong Yu Consumer Products Co., Ltd, the Company conducted the share diversification. The Company disposed of partial ownership of Yuen Foong Yu Consumer Products Co., Ltd. to shareholders and employees of the Company, refer to Note 9.

Note: Since the Company did not cease to have control over this subsidiary, the transactions were accounted for as equity transactions. Gain (loss) on disposal is recognized in capital surplus.

• 51 -

h. Others

Rental income

Related Party Category/Name Subsidiaries Chung Hwa Pulp Corporation Others Entities with key management personnel Yuen Foong Paper Co., Ltd. Others Substantive related party Associate	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2021 $ 11,028 709 11,737 7,885 159 8,044 7,205 1,410 $ 28,396	2020 $ 10,885 709 11,594 7,885 159 8,044 7,205 1,207 $ 28,050

Rental expenses (accounted for as operating expenses)

Related Party Category/Name Entities with key management personnel Subsidiaries Substantive related party	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 5,708 114 10 $ 5,832	2020 $ 6,625 114 31 $ 6,770

Service fee expenses (accounted for as operating expenses)

Related Party Category/Name Subsidiaries Substantive related party Other expenses (accounted for as operating expenses) Related Party Category/Name Associate	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2021 2020 $ 31,645 $ 41,675 4,013 3,822 $ 35,658 $ 45,497 For the Year Ended December 31
		2021 $ 5,210	2020 $ 962

Depending on the agreements, rental income and expenses, service fee and other expenses were received or paid by per month or per half-year.

• 52 -

Other

In November 2015, the Company bought Bank SinoPac’s 3rd unsecured perpetual non-cumulative subordinated financial debentures issued in 2015, which amounted to $160,000 thousand (accounted for as non-current financial assets at FVTPL) and had an interest rate of 3.9%. The debentures had been redeemed by Bank SinoPac in November 2020.

• i. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 89,858 6,326 $ 96,184	2020 $ 76,300 431 $ 76,731

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

23. OTHER ITEMS

Due to the impact of the COVID-19 pandemic, some of the Company’s subsidiaries, customers, and suppliers were required to implement policies such as isolation and travel restrictions. In response to the pandemic, the Yangzhou Municipal Government in mainland China implemented measures to place the city under lockdown and required local companies to suspend operation in August 2021, which affected the operation of some subsidiaries. The suspension of operation was lifted and the subsidiaries, which were affected by the lockdown, returned to normal operations in September 2021. However, due to the hot sales of anti-epidemic concept products, increase in demand and price of paper and paper products, the subsidiaries’ revenue and operating profit increased for the year ended December 31, 2021. The Company will continue to evaluate the impact of subsequent epidemic events on its operations.

24. SIGNIFICANT FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The Company’s significant financial assets and liabilities denominated in foreign currencies aggregated by the foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follow:

Foreign currency assets Investments in subsidiaries USD	December 31, 2021
	Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 766,253 27.68 (USD:NTD) $ 21,209,890

• 53 -

Foreign currency assets Investments in subsidiaries USD	December 31, 2020
	Foreign Currencies (In Thousands) Exchange Rate Carrying Amount $ 762,337 28.48 (USD:NTD) $ 21,711,357

25. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions:

• 1) Financing provided to others. (None)

• 2) Endorsements/guarantees provided. (Table 1)

• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint controlled entities). (Table 2)

• 4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital. (None)

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (None)

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (None)

• 9) Trading in derivative instruments. (None)

• b. Information on investees (Table 3)

• c. Information on investments in mainland China:

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 4)

• 54 -

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses:

  • a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period. (None)

  • b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period. (None)

  • c) The amount of property transactions and the amount of the resultant gains or losses. (None)

  • d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes. (Table 1)

  • e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds. (None)

  • f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services. (None)

• d. Information of major shareholders: List all shareholders with ownership of 5% or greater showing the name of the shareholder, the number of shares owned, and percentage of ownership of each shareholder. (Table 5)

26. SEGMENT INFORMATION

The Company has disclosed related segment information in accordance with IFRS 8 in consolidated financial statement.

• 55 -

TABLE 1

YFY INC.

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee		Limit on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Year	Outstanding Endorsement/ Guarantee at the End of the Year	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiary	Endorsement/ Guarantee Given by Subsidiary on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Company in Mainland China
		Name	Relationship
1	Endorsement/guarantee YFY Inc. Credit line (Note 4) YFY Inc.	YFY Packaging (Yangzhou) Investment Co., Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd. YFY Global Investment Limited YFY Paradigm Investment Co., Ltd. YFY International Limited YFY Development Corp. (originally named as YFY Capital Co., Ltd.) YFY Jupiter Limited YFY Jupiter (BVI) Inc. Mobius105 Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd.	Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3 Note 3	$ 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331 72,602,331	$ 1,045,866 3,007,536 1,278,800 2,370,000 3,010,500 3,900,000 282,127 428,025 83,400 435,778	$ 1,041,956 2,560,985 1,273,280 2,370,000 2,998,800 3,900,000 270,408 415,200 83,040 434,148	$ - 737,564 46,577 706,000 833,031 1,780,000 139,408 174,661 - -	$ - - - - - - - - - -	2.04 5.00 2.49 4.63 5.86 7.62 0.53 0.81 0.16 0.85	$ 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108 96,803,108	Yes Yes No No No No No No No No	No No No No No No No No No No	Yes Yes No No No No No No No No

Note 1: Represents 150% of the net equity on the most current financial statements.

Note 2: Represents 200% of the net equity on the most current financial statements.

Note 3: The relationship between guarantor and guarantee is subsidiary.

Note 4: In accordance with regulations, the credit lines jointly issued by the Company were disclosed.

• 56 -

TABLE 2

YFY INC.

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

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

Holding Company Name	Type and Name of Marketable Security	Relationship with the Holding Company (Note)	Financial Statement Account		December 31, 2021	December 31, 2021		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
YFY Inc.	Beneficiary certificates SinoPac TWD Money Market Fund Ordinary shares SinoPac Financial Holdings Co., Ltd. Zhen Ding Technology Holding Limited TaiGen Biopharmaceuticals Holdings Ltd. Medeon Biodesign, Inc. Taiwan Stock Exchange Corporation Canada Investment and Development Co., Ltd. Synmax Biochemical Co., Ltd. Universal Investment Co., Ltd. Fu Hwa Development Enterprise Co., Ltd. Taiwan Creative Industry Development Co., Ltd. Shin Taiwan Kubota Co., Ltd. China Trade and Development Corp. Sino Cell Technologies Ltd. Yuen Foong Paper Co., Ltd. KHL IB Venture Capital Co., Ltd.	- - - Note 1 - Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 - - Note 2 -	Current financial assets at fair value through profit or loss Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income	448,629 475,940,588 7,464,617 97,502,590 1,687,565 25,215,244 20,826,000 5,999,371 5,221,228 4,200,000 1,600,000 5,612 377,634 1,691,656 544,067 12,443,688	$ 6,302 7,686,441 750,194 1,501,540 152,556 3,198,935 229,687 140,378 43,338 74,601 17,865 49,289 3,279 8,246 11,414 273,718	- 4.2 0.8 13.6 2.3 3.0 12.9 13.9 3.0 14.0 8.0 5.5 0.6 10.0 0.7 14.9	$ 6,302 7,686,441 750,194 1,501,540 152,556 3,198,935 229,687 140,378 43,338 74,601 17,865 49,289 3,279 8,246 11,414 273,718

Note 1: The investor is a member of the board of directors or a supervisor.

Note 2: A member of the board of directors of the investor.

• 57 -

TABLE 3

YFY INC.

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Business and Products	Investment Amount	Investment Amount	As of	December 31, 2021	December 31, 2021	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020	Number of Shares	%	Carrying Amount
YFY Inc.	Chung Hwa Pulp Corporation Shin Foong Specialty and Applied Materials Co., Ltd. Yuen Foong Yu Consumer Products Co., Ltd. E Ink Holdings Inc. YFY Packaging Inc. YFY International Limited YFY Global Investment Limited Taiwan Global BioFund Co., Ltd. China Color Printing Co., Ltd. Effion Enertech Co., Ltd. YFY Development Corp. (originally named as YFY Capital Co., Ltd.) YFY Corporate Advisory & Services Co., Ltd. Union Paper Corp. YFY Paradigm Investment Co., Ltd. San Ying Enterprise Co., Ltd. YFY Japan Co., Ltd. Yuen Yan Paper Container Co., Ltd. Fidelis IT Solutions Co., Ltd. Taiwan Genome Sciences, Inc. Sustainable Carbohydrate Innovation Co., Ltd.	Hualien, Taiwan Pingtung, Taiwan Taipei, Taiwan Hsinchu, Taiwan Taipei, Taiwan Cyprus Cyprus Taipei, Taiwan New Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan Yunlin, Taiwan Taipei, Taiwan Taipei, Taiwan Japan Miaoli, Taiwan Taipei, Taiwan Taipei, Taiwan Taipei, Taiwan	Pulp and paper production, trading and forestry business Production and sale of SBR (styrene butadiene rubber) latex Production and sale of high quality paper and paper-related merchandise Research, development, production and sale of thin-film transistor liquid crystal monitors Production and sale of high-quality craft paper and corrugated paper Investment and holding Investment and holding Biotechnology and biopharmaceutical business investment Design and printing of magazines, posters and books To operate cogeneration and provide power technology Real estate investment and development Consulting Manufacture and sale of paper Investment and holding Design and construction of water processing and environmental facilities Trade of paper, chemical material and machinery Sale and manufacture of corrugated paper and materials 1. Provides services in information software and information processing. 2. Wholesale of information software and electric appliances. 1. Develop skills in genome medicine. 2. Manufacture and wholesale of chemical material. 3. Medicine testing. Researching and development	$ 5,715,988 71,687 1,046,360 1,361,355 6,451,806 11,956,125 2,153,335 - 190,068 343,000 2,311,115 30,000 200,700 619,177 - 2,099 62,462 10,000 5,613 30,000	$ 5,715,988 72,960 1,046,360 1,361,355 7,222,888 11,956,125 2,153,335 169,700 190,068 343,000 1,540,033 30,000 200,700 619,177 - 2,099 62,462 10,000 5,613 30,000	627,827,088 50,968,248 158,004,565 133,472,904 410,150,000 363,689,638 79,000,000 - 32,896,330 34,300,000 168,500,000 3,000,000 19,584,000 155,550,000 2,500,000 200 6,178,500 2,857,000 561,291 3,000,000	57.8 48.0 59.1 11.7 100.0 100.0 100.0 - 49.7 49.0 100.0 100.0 18.9 100.0 100.0 100.0 50.9 100.0 19.4 100.0	$ 8,990,329 3,533,897 3,131,418 4,123,242 6,661,743 15,081,675 6,128,215 - 485,546 230,807 4,223,452 35,360 238,494 3,119,423 102,606 110,373 72,861 73,499 9,633 29,445	$ 488,231 3,476,386 1,062,266 5,150,045 1,640,309 (417,486 ) 354,329 325,205 8,220 26,192 223,028 (683 ) 46,034 165,743 58,602 (2,134 ) 6,391 10,191 (2,053 ) (1,808 )	$ 267,660 1,684,150 672,979 605,704 1,629,885 (417,486 ) 354,329 76,290 4,082 14,847 223,028 (683 ) 8,697 165,743 58,602 (2,134 ) 3,255 10,191 (397 ) (1,808 )	Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 2 and 3 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 2, 3 and 4 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Notes 1 and 3 Note 1 Notes 1 and 3 Notes 1 and 3 Notes 2 and 3 Notes 1 and 3

Note 1: Subsidiary.

Note 2: Associate.

Note 3: Recognized from financial statements audited by the auditors for the same periods.

Note 4: Taiwan Global BioFund Co., Ltd. was liquidated in September 2021.

• 58 -

TABLE 4

YFY INC.

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. Information on investments in mainland China

Investee Company (Note 7)	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment (Note 4)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021 (Note 1)	Net Income (Loss) of the Investee (Note 1)	Ownership of Direct or Indirect Investment (%)	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2021 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2021
					Outward	Inward
YFY Paper Enterprise (Fuzhou) Co., Ltd. YFY Paper Enterprise (Kunshan) Co., Ltd. YFY Paper Enterprise (Suzhou) Co., Ltd. YFY Paper Enterprise (Tianjin) Co., Ltd. YFY Paper Enterprise (Dongguan) Co., Ltd. YFY Paper Enterprise (Shanghai) Co., Ltd. YFY Paper Enterprise (Qingdao) Co., Ltd. YFY Paper Enterprise (Nanjing) Co., Ltd. YFY Paper Enterprise (Guangzhou) Co., Ltd. YFY Paper Enterprise (Xiamen) Co., Ltd. YFY Paper Enterprise (Zhongshan) Co., Ltd.	Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard Manufacture and sale of paper and cardboard	$ 138,400 (US$ 5,000 thousand) 304,480 (US$ 11,000 thousand) 193,760 (US$ 7,000 thousand) 221,440 (US$ 8,000 thousand) 166,080 (US$ 6,000 thousand) 221,440 (US$ 8,000 thousand) 221,440 (US$ 8,000 thousand) 275,665 (US$ 9,959 thousand) 262,960 (US$ 9,500 thousand) 179,920 (US$ 6,500 thousand) 166,080 (US$ 6,000 thousand)	a.(a) a.(b) a.(b) a.(b) a.(b) a.(b) a.(b) a.(o) a.(b) a.(b) a.(b)	$ 41,520 (US$ 1,500 thousand) 193,760 (US$ 7,000 thousand) 193,760 (US$ 7,000 thousand) 221,440 (US$ 8,000 thousand) 55,360 (US$ 2,000 thousand) 224,568 (US$ 8,113 thousand) 221,440 (US$ 8,000 thousand) 249,120 (US$ 9,000 thousand) 207,600 (US$ 7,500 thousand) 179,920 (US$ 6,500 thousand) 132,864 (US$ 4,800 thousand)	$ - - - - - - - - - - -	$ - - - - - - - - - - -	$ 41,520 (US$ 1,500 thousand) 193,760 (US$ 7,000 thousand) 193,760 (US$ 7,000 thousand) 221,440 (US$ 8,000 thousand) 55,360 (US$ 2,000 thousand) 224,568 (US$ 8,113 thousand) 221,440 (US$ 8,000 thousand) 249,120 (US$ 9,000 thousand) 207,600 (US$ 7,500 thousand) 179,920 (US$ 6,500 thousand) 132,864 (US$ 4,800 thousand)	$ (49,057) 25,938 (2,705) 39,118 23,984 42,911 46,840 66,746 18,299 468,755 53,196	100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 93.8 100.0 100.0	$ (49,057) (Note 2) 25,938 (Note 2) (2,705) (Note 2) 39,118 (Note 2) 23,984 (Note 2) 42,911 (Note 2) 46,840 (Note 2) 66,746 (Note 2) 17,155 (Note 2) 468,755 (Note 2) 53,196 (Note 2)	$ - 606,783 263,635 870,706 526,405 460,701 1,062,063 530,541 500,592 342,887 1,081,402	$ - - - - - - - - - - -
												(Continued)

• 59 -

Investee Company (Note 7)	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment (Note 4)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021 (Note 1)	Net Income (Loss) of the Investee (Note 1)	Ownership of Direct or Indirect Investment (%)	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2021 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2021
					Outward	Inward
YFY Paper Enterprise (Jiaxing) Co., Ltd. YFY Packaging (Yangzhou) Investment Co., Ltd. YFY Paper Mfg. (Yangzhou) Co., Ltd. YFY Paper Mfg. (Jiangyin) Co., Ltd. Yuen Foong Yu Blue Economy Natural Resource (Yangzhou) Co., Ltd. Kunshan YFY Advertising and Printing Co., Ltd. (Note 8) Arizon RFID Technology Co., Ltd. Yeon Technologies (Yangzhou) Co., Ltd. YFY Jupiter (Shenzhen) Ltd. Kunshan YFY Jupiter Green Packaging Ltd. YFY Jupiter Supply Chain Management Services (Shenzhen) Limited Chengdu JieLianDa Warehousing Co., Ltd. Chengdu JieLianDa Supply Chain Co., Ltd. Chengdu JingShiTong Packing Co., Ltd.	Manufacture and sale of paper and cardboard Investment and holding Manufacture and sale of paper Manufacture, sale and print of cardboard and paper Technological development of agricultural resource recycling Design and print of advertisements Sale and design of RFID (radio frequency identification) products Sale and design of RFID (radio frequency identification) products Design of packaging and sale of paper Design of packaging and sale of paper Design of packaging and sale of paper General trade Management of supply chain General trade	$ 138,400 (US$ 5,000 thousand) 9,081,033 (US$ 328,072 thousand) 6,773,158 (US$ 244,695 thousand) 412,432 (US$ 14,900 thousand) 221,440 (US$ 8,000 thousand) - 843,507 (RMB 194,290 thousand) 34,732 (RMB 8,000 thousand) 9,688 (US$ 350 thousand) 8,683 (RMB 2,000 thousand) 21,707 (RMB 5,000 thousand) 6,512 (RMB 1,500 thousand) - 8,683 (RMB 2,000 thousand)	a.(b) a.(a) a.(b) a.(c) a.(c) a.(e) a.(f) a.(g) a.(h) a.(i) a.(i) a.(i) a.(i) a.(i)	$ 138,400 (US$ 5,000 thousand) 2,408,160 (US$ 87,000 thousand) 6,781,600 (US$ 245,000 thousand) 387,686 (US$ 14,006 thousand) 221,440 (US$ 8,000 thousand) - 702,851 (US$ 25,392 thousand) - - - - - - -	$ - - - - - - - - - - - - - -	$ - - - - - - - - - - - - - -	$ 138,400 (US$ 5,000 thousand) 2,408,160 (US$ 87,000 thousand) 6,781,600 (US$ 245,000 thousand) 387,686 (US$ 14,006 thousand) 221,440 (US$ 8,000 thousand) - 702,851 (US$ 25,392 thousand) - - - - - - -	$ (8,427) (330,099) (1,016,607) 5,542 2,141 - 260,395 (1,630) 186,513 20,816 40,829 184 343 (1,586)	100.0 100.0 100.0 94.0 100.0 - 86.5 86.5 85.3 85.3 85.3 29.8 29.8 29.8	$ (8,427) (Note 2) (330,099) (Note 2) (1,016,607) (Note 2) 5,209 (Note 2) 2,141 (Note 2) - 225,276 (Note 2) (1,410) (Note 2) 153,932 (Note 2) 17,267 (Note 2) 33,741 (Note 2) 29 (Note 6) 96 (Note 6) (451) (Note 6)	$ 114,387 6,150,093 138,512 331,993 100,930 - 3,060,591 50,516 203,014 51,858 62,648 3,117 91 2,283	$ - - - - - - - - - - - - - -
												(Continued)

• 60 -

Investee Company (Note 7)	Main Businesses and Products	Paid-in Capital (Note 1)	Method of Investment (Note 4)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2021 (Note 1)	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2021 (Note 1)	Net Income (Loss) of the Investee (Note 1)	Ownership of Direct or Indirect Investment (%)	Investment Gain (Loss) (Note 1)	Carrying Amount as of December 31, 2021 (Note 1)	Accumulated Repatriation of Investment Income as of December 31, 2021
					Outward	Inward
YFY Investment Co., Ltd. YFY Family Care (Kunshan) Co., Ltd. Yuen Foong Yu Consumer Products (Yangzhou) Co., Ltd. Shanghai YFY International Trade Co., Ltd. (Note 9) Guangdong Dingfung Pulp & Paper Co., Ltd. Zhaoqing Dingfung Forestry Co., Ltd. Guizhou Yuanfeng Forestry Co., Ltd. Zhaoqing Xinchuan Green Technology Co., Ltd. Shenzhen Jinglun Paper Co., Ltd. YFY (Shanghai) Financial Services Co., Ltd. Kunshan Actview Carbon Technology Co., Ltd. (Note 10)	Investment and holding and sale of paper Manufacture and sale of tissue paper and napkins Manufacture and sale of tissue paper and napkins General trade Pulp and paper production and trading business Seedling cultivation and sales, reforestation, sales-cum-forest logging and other forestry, processing and transportation Seedling cultivation and sales, reforestation, sales-cum-forest logging and other forestry, processing and transportation Environmental equipment technology research and development; construction of wastewater, flue gas, noise and solid waste treatment; pure water treatment construction; environmental technology consulting; sale of environmental protection equipment and chemical raw material; import and export of cargo and technology Sale of paper merchandise and import/export business Export factoring, domestic factoring, business factoring and related consulting services, development of credit risk management platform Manufacture and sale of active carbon	$ 3,183,200 (US$ 115,000 thousand) 830,400 (US$ 30,000 thousand) 830,400 (US$ 30,000 thousand) 4,341 (RMB 1,000 thousand) 2,370,238 (US$ 85,630 thousand) 605,638 (US$ 21,880 thousand) - 8,683 (RMB 2,000 thousand) 13,893 (RMB 3,200 thousand) 217,074 (RMB 50,000 thousand) 34,877 (US$ 1,260 thousand)	a.(j) a.(k) a.(k) b.(a) a.(l) a.(m) a.(p) a.(d) a.(d) a.(n) b.(b)	$ 3,183,200 (US$ 115,000 thousand) 830,400 (US$ 30,000 thousand) 830,400 (US$ 30,000 thousand) 4,341 (RMB 1,000 thousand) 608,960 (US$ 22,000 thousand) 204,278 (US$ 7,380 thousand) - - - 217,074 (RMB 50,000 thousand) 23,140 (US$ 836 thousand)	$ - - - - - - - - - - -	$ - - - 4,341 (RMB 1,000 thousand) - - - - - - -	$ 3,183,200 (US$ 115,000 thousand) 830,400 (US$ 30,000 thousand) 830,400 (US$ 30,000 thousand) - 608,960 (US$ 22,000 thousand) 204,278 (US$ 7,380 thousand) - - - 217,074 (RMB 50,000 thousand) 23,140 (US$ 836 thousand)	$ 210,713 14,039 13,158 666 (77,424) 45,297 - 1,622 (11,102) 16,109 (320)	67.6 67.6 67.6 - 75.2 75.2 50.4 75.2 75.2 79.3 -	$ 152,512 (Note 2) 9,916 (Note 2) 7,596 (Note 2) 486 (Note 2) (58,185) (Note 2) 34,042 (Note 2) - (Note 2) 1,219 (Note 2) (8,343) (Note 2) 12,774 (Note 2) (212) (Note 2)	$ 1,515,690 187,123 780,488 - 3,322,091 2,205,446 - 8,287 98,809 69,546 -	$ - - - - - - - - - - -
												(Continued)

• 61 -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2021 (Notes 1 and 5)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 1)	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$15,197,324	$16,954,753	$43,592,899

Note 1: Except for investment gain or loss which were translated at exchange rates of US$1=NT$28.009 or RMB1=NT$4.341673, the rest were translated at exchange rates of US$1=NT$27.68 or RMB1=NT$4.341484 as of December 31, 2021.

• Note 2: Recognized from financial statements audited by the auditors for the same periods.

Note 3: Difference between the amount of the paid-in capital multiplied by percentage of ownership and the cumulative amount of investment exports from Taiwan at the end of period: Guangdong Dingfung Pulp & Paper Co., Ltd. and YFY Paper Enterprise (Guangzhou) Co., Ltd. capitalized retained earnings; YFY Paper Enterprise (Zhongshan) Co., Ltd., YFY Paper Enterprise (Kunshan) Co., Ltd., YFY Paper Enterprise (Dongguan) Co., Ltd. and YFY Paper Enterprise (Fuzhou) Co., Ltd. are subsidiaries reinvested earnings from China. YFY Jupiter (Shenzhen) Ltd. was acquired indirectly due to the acquirement of YFY Jupiter (BVI) Inc.

• Note 4: Methods of investment and the related investors are as follow:

• a. Investment in mainland China through companies set up in another company. The related investors are as follow:

(a) YFY Mauritius Corp. (b) YFY Packaging (Yangzhou) Investment Co., Ltd. (c) YFY International Limited (d) Guangdong Dingfung Pulp & Paper Co., Ltd. (e) YFY Paper Enterprise (Xiamen) Co., Ltd. and YFY Paper Enterprise (Guangzhou) Co., Ltd. (f) YFY RFID Co., Ltd. (g) Arizon RFID Technology Co., Ltd. (h) Mobius105 Ltd. (i) YFY Jupiter (Shenzhen) Ltd. (j) Yuen Foong Yu Consumer Products Investment Limited (k) YFY investment Co., Ltd. (l) YFY International Limited and CHP International (BVI) Corporation (m) YFY International Limited, CHP International (BVI) Corporation and Guangdong Dingfung Pulp & Paper Co., Ltd. (n) YFY Capital Holdings Corp. (o) YFY Packaging (Yangzhou) Investment Co., Ltd. and YFY Paper Enterprise (Kunshan) Co., Ltd. (p) Zhaoqing Dingfung Forestry Co., Ltd.

• b. Direct investment in mainland China and the investors are as follows:

• (a) Yuen Foong Shop Co., Ltd. (b) San Ying Enterprise Co., Ltd.

Note 5: In calculating the accumulated outward remittance for investment, the reinvestment amount of $3,261,617 thousand made by investor of mainland China has been deducted.

Note 6: Recognized from financial statements in the same period that have not been audited.

Note 7: Except Chengdu JieLianDa Warehousing Co., Ltd., Chengdu JieLianDa Supply Chain Co., Ltd., and Chengdu JingShiTong Packing Co., Ltd. are associates accounted for using the equity method, other investments have been eliminated in preparing the consolidated financial statements.

Note 8: Kunshan YFY Advertising and Printing Co., Ltd. entered the bankruptcy procedure in January 2021. Due to the Group’s loss of control, it has not been included in the consolidated financial statements since January 2021.

Note 9: On July 14, 2021, the board of directors of subsidiary, Yuen Foong Shop Co., Ltd., resolved to dispose all its ownership of Shanghai YFY International Trade Co., Ltd. The contract was signed in August 2021. The Group completed the disposal in August 2021 and lost control of it.

Note 10: On September 3, 2021, the board of directors of subsidiary, San Ying Enterprise Co., Ltd., resolved to dispose all its ownership of Kunshan Actview Carbon Technology Co., Ltd. The contract was signed in October 2021. The Group completed the disposal in December 2021 and lost control of it.

1. Investment in mainland China’s significant transaction events that occur directly or indirectly through companies set up in another country are referred to in Table 1.

(Concluded)

• 62 -

TABLE 5

YFY INC.

INFORMATION OF MAJOR SHAREHOLDERS DECEMBER 31, 2021

Name of Major Shareholder	Shares	Shares
	Number of Shares	Percentage of Ownership (%)
Shou-Chung Ho Hsin-Yi Foundation	170,615,028 94,004,485	10.27 5.66

Note: The information of major shareholders presented in this table is provided by Taiwan Depository & Clearing Corporation based on the number of ordinary shares held by shareholders with ownership of 5% or greater, that have been issued without physical registration by the Company as of the last business day for the current year.

• 63 -

YFY INC.

CONTENTS OF THE STATEMENTS OF IMPORTANT ACCOUNTING ITEMS

Item Statement of Assets, Liabilities and Equities Statement of cash Statement of financial assets at FVTOCI Statement of changes in investments accounted for using the equity method Statement of changes in property, plant and equipment Statement of changes in accumulated depreciation of property, plant and equipment Statement of changes in investment properties Statement of changes in accumulated depreciation of investment properties Statement of deferred tax assets Statement of current borrowings Statement of short-term notes and bills payable Statement of non-current borrowings Statement of deferred tax liabilities Statement of Profit and Loss Statement of operating expenses Statement of finance costs Statement of employee benefits expense, depreciation and amortization by function

**Index **

Note 6 Schedule 1 Schedule 2 Note 10 Note 10 Note 12 Note 12 Note 17 Schedule 3 Schedule 4 Schedule 5 Note 17 Schedule 6 Note 16 Schedule 7

• 64 -

SCHEDULE 1

YFY INC.

STATEMENT OF FINANCIAL ASSETS AT FVTOCI FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Securities Name Ordinary Shares - listed company SinoPac Financial Holdings Co., Ltd. TaiGen Biopharmaceuticals Holdings Ltd. Zhen Ding Technology Holding Limited Medeon Biodesign, Inc. Ordinary Shares - unlisted company Taiwan Stock Exchange Corporation KHL IB Venture Capital Co., Ltd. Canada Investment and Development Co., Ltd. Synmax Biochemical Co., Ltd. Fu Hwa Development Enterprise Co., Ltd. Shin Taiwan Kubota Co., Ltd. Universal Investment Co., Ltd. Taiwan Creative Industry Development Co., Ltd. Yuen Foong Paper Co., Ltd. Sino Cell Technologies Ltd. China Trade and Development Corp. iXensor Inc.	Balance, December 31, 2020 Shares Amount 468,485,150 $ 5,364,155 84,509,502 1,931,042 7,464,617 850,966 - - 8,146,163 22,513,611 3,155,583 15,055,884 371,960 20,826,000 183,214 5,999,371 81,446 4,200,000 58,282 5,612 61,397 5,221,228 34,318 1,600,000 16,150 544,067 10,495 1,691,656 14,234 377,634 3,265 191,000 3,897 3,994,241 $ 12,140,404	Increase in 2021 Shares Amount (Note 1) 7,455,438 $ 92,160 12,993,088 224,780 - - 3,006,565 179,644 496,584 2,701,633 - - - - - - - - - - - - - - - - - - - - - - - - $ 496,584	The Amount Decrease in 2021 of This Year’s Shares Evaluation (Note 2) Amount (Note 3) - $ - $ 2,230,126 - - (654,282) - - (100,772) (1,319,000) (83,556) 56,468 (83,556) 1,531,540 - - 43,352 (2,612,196) (26,122) (72,120) - - 46,473 - - 58,932 - - 16,319 - - (12,108) - - 9,020 - - 1,715 - - 919 - - (5,988) - - 14 (191,000) (4,367) 470 (30,489) 86,998 $ (114,045) $ 1,618,538	**FairValue at the End of the Year **	**FairValue at the End of the Year **
				Percentage of Ownership Shares (%) 475,940,588 4.2 97,502,590 13.6 7,464,617 0.8 1,687,565 2.3 25,215,244 3.0 12,443,688 14.9 20,826,000 12.9 5,999,371 13.9 4,200,000 14.0 5,612 5.5 5,221,228 3.0 1,600,000 8.0 544,067 0.7 1,691,656 10.0 377,634 0.6 - -	Amount Note $ 7,686,441 Note 4 1,501,540 Note 4 750,194 Note 4 152,556 Note 4 10,090,731 3,198,935 273,718 229,687 140,378 74,601 49,289 43,338 17,865 11,414 8,246 3,279 - 4,050,750 $ 14,141,481
			Shares (Note 2) - - - (1,319,000) - (2,612,196) - - - - - - - - - (191,000)
	Shares 468,485,150 84,509,502 7,464,617 - 22,513,611 15,055,884 20,826,000 5,999,371 4,200,000 5,612 5,221,228 1,600,000 544,067 1,691,656 377,634 191,000	Shares (Note 1) 7,455,438 12,993,088 - 3,006,565 2,701,633 - - - - - - - - - - -

Note 1 The increase of capital was due to the acquisitions of shares of SinoPac Financial Holdings Co., Ltd. 92,160 thousand and Medeon Biodesign, Inc. 59,938 thousand, respectively, which totaled 152,098 thousand and investments accounted for using equity method of Taiwan Global BioFund Co., Ltd. liquidated, and distributed TaiGen Biopharmaceuticals Holdings Ltd. 224,780 thousand and Medeon Biodesign, Inc. 119,706 thousand, respectively, which totaled 344,486 thousand.

• Note 2: The decrease of capital was due to the sale of shares of Medeon Biodesign, Inc. 83,556 thousand and iXensor Inc. 4,367 thousand, respectively, which totaled 87,923 thousand and KHL IB Venture Capital Co., Ltd. executed cash capital reduction 26,122 thousand.

Note 3: Accounted for unrealized gain (loss) on financial assets at FVTOCI.

Note 4: The unit price is calculated by the closing price as of December 31, 2021.

• 65 -

SCHEDULE 2

YFY INC.

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Investee Company (Note 1) Listed company Chung Hwa Pulp Corporation Shin Foong Specialty and Applied Materials Co., Ltd. Yuen Foong Yu Consumer Products Co., Ltd. OTC company E Ink Holdings Inc. Unlisted company YFY Packaging Inc. YFY International Limited YFY Global Investment Limited Taiwan Global BioFund Co., Ltd. China Color Printing Co., Ltd. Effion Enertech Co., Ltd. YFY Development Corp. (originally named as YFY Capital Co., Ltd.) YFY Corporate Advisory & Services Co., Ltd. Union Paper Corp. YFY Paradigm Investment Co., Ltd. San Ying Enterprise Co., Ltd. YFY Japan Co., Ltd. Yuen Yan Paper Container Co., Ltd. Fidelis IT Solutions Co., Ltd. Taiwan Genome Sciences, Inc. Sustainable Carbohydrate Innovation Co., Ltd.	Balance, December 31, 2020 Shares Amount 627,827,088 $ 8,596,617 51,871,248 2,367,344 158,004,565 2,602,532 13,566,493 133,472,904 3,595,979 410,150,000 7,124,383 363,689,638 15,737,977 79,000,000 5,973,380 16,970,040 430,897 32,896,330 449,718 34,300,000 215,659 112,820,686 2,133,843 3,000,000 42,197 19,584,000 232,759 146,726,235 2,332,943 2,500,000 62,966 200 116,122 6,178,500 74,701 2,857,000 56,959 561,291 11,443 3,000,000 31,253 35,027,200 $ 52,189,672	Increase in 2021 (Note 2) Shares Amount - $ - - - - - - - - 77,108,200 - - - - - - - - - - - 14,881,325 - - - - - 8,823,765 - - - - - - - - - - - - - - $ -	Share of Profit or Loss of Decrease in 2021 (Note 3) Subsidiaries and Shares Amount Associates - $ - $ 267,660 (903,000 ) (564,074 ) 1,684,150 - (632,018) 672,979 (1,196,092) 2,624,789 - (358,468) 605,704 - (615,225 ) 1,629,885 - - (417,486 ) - - 354,329 (16,970,040 ) (447,731 ) 76,290 - (8,224 ) 4,082 - - 14,847 - - 223,028 - (6,936 ) (683 ) - (3,916 ) 8,697 - - 165,743 - (17,800 ) 58,602 - - (2,134 ) - (5,095 ) 3,255 - - 10,191 - (1,403 ) (397 ) - - (1,808) (1,106,330) 2,126,441 $ (2,660,890) $ 5,356,934	Equity Adjustments (Note 4) $ 126,052 46,477 487,925 660,454 280,027 (706,218 ) (238,816 ) (199,494 ) (59,456 ) 39,970 301 1,095,499 782 954 620,737 (1,162 ) (3,615 ) - 6,349 (10 ) - 555,821 $ 1,496,302	Other Adjustments (Note 5) Shares Amount - $ - - - - - - - - (77,108,200 ) (771,082 ) - - - - - - - - - - 40,797,989 771,082 - - - - - - - - - - - - - - - - - - - - $ -	Balance, December 31, 2021 Percentage of Ownership Shares (%) Amount 627,827,088 57.8 $ 8,990,329 50,968,248 48.0 3,533,897 158,004,565 59.1 3,131,418 15,655,644 133,472,904 11.7 4,123,242 410,150,000 100.0 6,661,743 363,689,638 100.0 15,081,675 79,000,000 100.0 6,128,215 - - - 32,896,330 49.7 485,546 34,300,000 49.0 230,807 168,500,000 100.0 4,223,452 3,000,000 100.0 35,360 19,584,000 18.9 238,494 155,550,000 100.0 3,119,423 2,500,000 100.0 102,606 200 100.0 110,373 6,178,500 50.9 72,861 2,857,000 100.0 73,499 561,291 19.4 9,633 3,000,000 100.0 29,445 36,603,132 $ 56,382,018	Market Price (Note 6)
						Percentage of Ownership Shares (%) 627,827,088 57.8 50,968,248 48.0 158,004,565 59.1 133,472,904 11.7 410,150,000 100.0 363,689,638 100.0 79,000,000 100.0 - - 32,896,330 49.7 34,300,000 49.0 168,500,000 100.0 3,000,000 100.0 19,584,000 18.9 155,550,000 100.0 2,500,000 100.0 200 100.0 6,178,500 50.9 2,857,000 100.0 561,291 19.4 3,000,000 100.0
							Unit Price (NT$) Total Amount $ 24.80 $ 15,570,112 165.00 8,409,761 50.20 7,931,829 151.00 17,134,409 - - - - - - - - - - - - - - - -
	Shares 627,827,088 51,871,248 158,004,565 133,472,904 410,150,000 363,689,638 79,000,000 16,970,040 32,896,330 34,300,000 112,820,686 3,000,000 19,584,000 146,726,235 2,500,000 200 6,178,500 2,857,000 561,291 3,000,000	Shares - - - - 77,108,200 - - - - - 14,881,325 - - 8,823,765 - - - - - -	Shares - (903,000 ) - - - - - (16,970,040 ) - - - - - - - - - - - -		Shares - - - - (77,108,200 ) - - - - - 40,797,989 - - - - - - - - - -

Note 1: Except for YFY Japan Co., Ltd., the rest were calculated according to the audited annual financial statements.

Note 2: The companies issued stock dividends.

Note 3: Except for the issuance of cash dividends of Shin Foong Specialty and Applied Materials Co., Ltd. and the sale of the Company’s shares of Shin Foong Specialty and Applied Materials Co., Ltd., Taiwan Global BioFund Co., Ltd. liquidated, other companies issued cash dividends.

Note 4: This includes recognition of adjustments not recognized by shareholding ratio, exchange differences on translation of foreign financial statements, remeasurement of defined benefit plans, and unrealized gain (loss) on financial assets measured at FVTOCI, etc.

Note 5: YFY Packaging Inc. integrated the spin-off assets, liabilities and business operation of the Chenggong plant into YFY Development Corp. (originally named as YFY Capital Co., Ltd.), and issued new shares of 771,082 thousand by YFY Development Corp. (originally named as YFY Capital Co., Ltd.) as the consideration for the transfer of the division, refer to Note 9.

Note 6: Calculated based on the closing price at the end of 2021.

• 66 -

SCHEDULE 3

YFY INC.

STATEMENT OF CURRENT BORROWING DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

				Balance,
			December 31,		Amount of the
Type of Loan and Creditor	Deadline of the Loan	Rate (%)		2021	Financing
Credit loan of the bank
First Bank	2021.12.15-2022.01.14	0.75	$	470,000	$	470,000
Sumitomo Mitsui Banking	2021.11.24-2022.01.12	0.80		400,000		415,200
Corporation
Yuanta Bank	2021.12.02-2022.03.02	0.78		300,000		300,000
Taishin Bank	2021.12.15-2022.01.14	0.79		300,000		600,000
Taipei Fubon Bank	2021.11.10-2022.02.08	0.77		110,000		200,000
			$	1,580,000	$	1,985,200

• 67 -

SCHEDULE 4

YFY INC.

STATEMENT OF SHORT-TERM NOTES AND BILLS PAYABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Guarantee Agency Deadline of Issue Discount Rate (%) China Bills 2021.12.24-2022.03.17 0.81 Dah Chung Bills 2021.12.02-2022.01.14 0.80 Dah Chung Bills 2021.11.29-2022.01.14 0.80 China Bills 2021.12.17-2022.03.17 0.81 Dah Chung Bills 2021.12.13-2022.01.12 0.80 China Bills 2021.12.24-2022.03.17 0.81		Amount of Commercial Principal Unamortized Short-term Amount of Issue Notes and Bills Payable Discount Carrying Amount Mortgage or Guarantee $ 300,000 $ 498 $ 299,502 - 120,000 34 119,966 - 35,000 10 34,990 - 18,000 30 17,970 - 5,000 1 4,999 - 5,000 9 4,991 - $ 483,000 $ 582 $ 482,418
		Unamortized Short-term Amount of Issue Notes and Bills Payable Discount $ 300,000 $ 498 120,000 34 35,000 10 18,000 30 5,000 1 5,000 9 $ 483,000 $ 582

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SCHEDULE 5

YFY INC.

STATEMENT OF NON-CURRENT BORROWING DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Bank of Loan Period of the Contract Repayment Method Rate (%) Syndicated loans Taiwan Bank 2018.12.24-2023.12.24 Due repayment, monthly interest payment 1.79 Taiwan Bank 2020.02.10-2025.02.10 Due repayment, monthly interest payment 1.79 Taiwan Bank 2020.12.30-2025.12.30 Due repayment, monthly interest payment 1.79 First Bank 2021.12.24-2026.12.24 Due repayment, monthly interest payment 1.79 Less: Hosting fee of bank joint loan Bank credit loans Taiwan Bank 2021.12.01-2023.12.01 Due repayment, monthly interest payment 0.78	Balance, December 31, 2021	Total Guarantee and Guarantee Situation $ 5,040,000 - 4,800,000 - 7,200,000 - 1,600,000 - (30,058) 800,000 - $ 19,409,942
	Due within One Year Expires After One Year $ - $ 5,040,000 - 4,800,000 - 7,200,000 - 1,600,000 - (30,058) - 800,000 $ - $ 19,409,942

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SCHEDULE 6

YFY INC.

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Items Employee benefits expense Agency fee expenses Tax Professional service expenses Others (Note)	Amount $ 257,266 26,125 36,292 24,334 75,450 $ 419,467

Note: The amount of each item does not exceed 5% of the account balance.

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SCHEDULE 7

YFY INC.

STATEMENT OF EMPLOYEE BENEFITS EXPENSE, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Employee benefits expense Salary Labor and health insurance Pension Board compensation Share-based payments Others Depreciation Amortization	2021	Total $ 218,348 10,929 3,566 22,000 - 2,423 $ 257,266 $ 6,506 $ 4,874	2020
	Classified as Operating Costs Classified as Operating Expense $ - $ 218,348 - 10,929 - 3,566 - 22,000 - - - 2,423 $ - $ 257,266 $ - $ 6,506 $ - $ 4,874		Classified as Operating Costs Classified as Operating Expense $ - $ 141,379 - 5,413 - 9,598 - 22,000 - 1,144 - 939 $ - $ 180,473 $ - $ 6,262 $ - $ 5,819	Total $ 141,379 5,413 9,598 22,000 1,144 939 $ 180,473 $ 6,262 $ 5,819

• Note 1: For the years ended December 31, 2021 and 2020, the Company had average 92 and 40 employees, respectively, which included 6 non-employee directors.

• Note 2: a. Average employee benefits expense for the years ended December 31, 2021 and 2020 were $2,736 thousand and $4,661 thousand, respectively.

• b. Average salary for the years ended December 31, 2021 and 2020 were $2,539 thousand and $4,158 thousand, respectively.

• c. The average salary changed by (39)% year over year.

• d. The Company did not have supervisors.

Note 3: The Company’s compensation policies:

• a. According to the Articles of Incorporation, if the Company made a profit based on operating results in the current year, 0.1% or more of the income shall be set aside as compensation of employees and 2% or less shall be distributed as remuneration of directors.

• b. The total compensation paid to the executive officers which included salary, bonus, and compensation of employees is based on the condition of the industry to meet the market standard and company performance, personal performance, and projected future risks. Such compensation and remuneration are submitted to the compensation committee for review and approval.

• c. The Company participates in compensation surveys to measure pay levels in the market of employment. Besides, the Company also takes into account the pay levels of the industry in order to make an adequate adjustment to the overall compensation policies. In addition to annual salary adjustment and comprehensive promotional practices, various award systems are established to attract, retain, develop, and encourage talents.

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