CMC Magnetics Corporation

Stock Code: 2323

CMC

CMC Magnetics Corporation 2020 Annual Report

Published on April 20, 2021

Information available on TWSE: http://mops.twse.com.tw Link to this annual report: http://www.cmcnet.com.tw

I. Spokesperson of the Company and Deputy Spokesperson:
Spokesman: Chen, Chun-Wei, Senior Finance Manager Deputy Spokesperson: Hsu, Ya-Ping, Assistant Finance Manager

Tel: (02)2598-9890

II. Headquarter and Factory Contact Information: Headquarters: 15th, Fl., No.53, Ming Chuan W. Road.,Taipei, Taiwan, R.O.C. Tel: (02)2598-9890

Linkou Production Factory:

No. 50, Huaya 3rd Rd., Guishan Dist., Taoyuan City Tel: (03) 397-8886

III. Stock Transfer Agency
Name: Agency Service for Stock Affairs, KGI Securities Co. Ltd. Address: 5F, No. 2, Sec. 1, Chongqing South Rd., Taipei City Website: http://www.kgieworld.com.tw Tel: (02)2389-2999
IV. Contact Information of the CPA for the Latest Financial Report Name of CPA: Yu, Shu-Fen, Chang, Shu-Chiung Firm: PWC Taiwan

Address: 27F, No. 333, Sec. 1, Keelung Rd, Taipei City Website: http://www.pwc.tw Tel: (02) 2729-6666

V. Overseas trade places for listed negotiable securities: None.
VI. Company website: http://www.cmcnet.com.tw

No Excuse, Teamwork, Cost concept, Living in the moment

			Table of Contents
Chapter	1	Letter	to Shareholders ··········································································· 1
Chapter	2	Company Profile
		I.	Establishment Date ······································································ 3
		II.	Company History ········································································ 3
Chapter	3	Corporate Governance Report
		I.	Organization ·············································································· 9
		II.	Information of the Directors, Supervisors, General Managers, Deputy General
			Managers, Assistant Managers and the Heads of Each Department and
			Branch ····················································································· 11
		III.	Remuneration Paid to the Directors, Supervisors, General Manager, and
			Deputy General Managers in the Most Recent Fiscal Year ························ 15
		IV.	The State of the Company’s Implementation of Corporate Governance ········ 21
		V.	Information on CPA Professional Fees ··············································· 49
		VI.	Information on Replacement of the CPA ············································· 50
		VII.	Information on Service of the Company’s Chairman, General Manager,
			Financial or Accounting Management Personnel at the Accounting Firm or Its
			Affiliates Shall be Disclosed ··························································· 50
		VIII.	Any Transfer of Equity Interests and/or Pledge of or Change in Equity
			Interests by a Director, Supervisor, and Management Personnel with a Stake
			of More Than 10% During the Most Recent Fiscal Year and up to the Date of
			Publication of This Annual Report ···················································· 50
		IX.	Information of Relationship if among the Company's Top 10 Largest
			Shareholders Who Are Related, as Spouse, or within the Second Degree of
			Kinship of Another ······································································ 51
		X.	The Total Number of Shares and Total Equity Stake Held in Any Single
			Enterprise by the Company, Its Directors and Supervisors, Managers, and
			Any Companies Controlled either Directly or Indirectly by the Company ······ 52
Chapter	4	Capital Raising Activities
		I.	Capital and Shares ······································································· 53
		II.	Corporate Bonds ········································································· 57
		III.	Preferred Shares ·········································································· 57
		IV.	Status of Global Depository Receipts (GDR) ······································ 57
		V.	Status of Employee Stock Warrants ··················································· 57
		VI.	Status of New Restricted Employee Shares ·········································· 57
		VII.	Status of New Shares Issuance in Connection with Mergers and Acquisitions · 57
		VIII.	The Status of Implementation for Capital Allocation Plans ······················· 57
Chapter	5	Operational Overview
		I.	Business Operation ······································································ 58
		II.	Market and Production/Sales Overview ·············································· 64

		III.	Human Resources and Employee Profile ············································· 74
		IV.	Disbursements for Environmental Protection ········································ 75
		V.	Labor Relations ·········································································· 78
		VI.	Important Contract ······································································· 82
Chapter	6	Financial Status Overview
		I.	Condensed Balance Sheets and Statements of Comprehensive Income for the
			Past 5 Fiscal Years ······································································· 83
		II.	Financial Analyses for the Past Five Fiscal Years ·································· 87
		III.	Annual Report of the Audit Committee for the Most Recent Fiscal Year ······· 90
		IV.	Annual Financial Report for the Most Recent Fiscal Year ························ 91
		V.	A Parent Company Only Financial Statement for the Most Recent Fiscal Year,
			Certified by CPAs········································································ 205
		VI.	The Impact on the Company’s Financial Status Due to the Company or Its
			Affiliates’ Encounter of Financial Turnover Difficulties ·························· 307
Chapter	7	Management's Discussion and Analysis of Financial Condition and Risk Factors
		I.	Financial Status ·········································································· 308
		II.	Financial Performance ·································································· 309
		III.	Cash Flow ················································································· 310
		IV.	Effect on Financial Operations of Any Major Capital Expenditures during the
			Most Recent Fiscal Year ································································ 310
		V.	The Most Recent Annual Investment Transfer Policy, the Main Reason for Its
			Profit or Loss, Improvement Plan and Investment Plan for the Next Year ······ 311
		VI.	Analysis and Assessment of Risk Issues in the Most Recent Year and up to
			the Date of Publication of the Annual Report ······································· 311
		VII.	Other Important Matters ································································ 315
Chapter	8	Special Remarks
		I.	Information related to the Company’s Affiliate ····································· 316
		II.	Overview of operations of company's affiliates………………………………..323
		III.	Holding or Disposal of Shares in the Company by Its Subsidiaries during the
			Most Recent Fiscal Year or during the Current Fiscal Year up to the Date of
			Publication of the Annual Report ······················································ 325
		IV.	Holding or disposal of shares in the Company by its subsidiaries during the
			most recent fiscal year or during the current fiscal year up to the date of
			publication of the annual report ························································ 325
		V.	Other Mandatory Supplementary Notes ·············································· 325
		VI.	Matters That Have Significant Impact on Shareholders' Equity or Securities
			Prices as Set Forth in Subparagraph 2, Paragraph 3, Article 36 of the
			Securities and Exchange Act in the Most Recent Year and up to the Date of
			Publication of the Annual Report ······················································ 325

Chapter 1 Letter to Shareholders

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After acquisition of the Verbatim brand at the end of 2019, CMC Magnetics Corporation stepped out of the recession in the optical disc industry and transformed into a global electronic brand leader. Its product line expanded from optical disc products to storage media such as hard discs and flash memory, and also covered electronic peripherals and LED lighting equipment.It will stride into the cloud and big data fields.

The fruitful operating results in 2020 in respect of operating income, profit and finance are as follows:

(I) Consolidated growth of operating income: the operating income in 2020 was increased by 33% as compared with 2019.
(II) Stable profitability: The profit target was reached for three consecutive years, and the gross profit margin increased from 16% in 2019 to 21% in 2020.
(III) Strong financial structure: With the debt ratio of 22%and the current ratio of 390% in 2020, the financial structure was far better than the industry standard. Working capital is abundant. As of 2020, the accumulated capital reserve amounted to NT$ 7.64 billion. In order to reward shareholders, it plans to allocate NT$ 810 million from the capital reserve in 2021 and distribute a cash dividend of NT$0.7 per share.

The reports on the operation in 2020 and the future planning direction are made in the following:

I. Business Performance and Achievements in 2020
(I) Implementation results of the business plan:
- The consolidated net operating income of the Company in 2020 was NT$9,401,027 thousand (the same below), an increase of 33% from the same period last year, and operating margin increased by 79% from the same period last year. The net profit for the period was NT$124,827 thousand, and the net profit attributable to the parent company was NT$111,073 thousand.
(II) Financial income and expenditure:

The net cash inflow from operating activities of the Company’s consolidated statement in 2020 was NT$233,410 thousand, net cash inflow from investment activities was NT$584,773 thousand, and net cash outflow from financing activities was NT$392,588 thousand. The negative impact of exchange rate changes on cash and cash equivalents was NT$54,908 thousand and the overall financial income and expenditure situation was a net increase of NT$370,687 thousand in cash and cash equivalents.

(III) Profitability analysis:

ofitability analysis:
Item	2020	2019
Return on Assets (ROA) (%)	0.65	0.77
Equityreturn ratio (%)	0.64	0.86
Ratio of Operating Income to Paid-in Capital (%)	(2.00)	(0.81)
Ratio of income before tax to paid-in capital (%)	1.98	1.84
Net Profit Margin (%)	1.33	2.38
Earnings Per Share (NT$)	0.10	0.20

(IV) Research and Development Status

Please refer to page 61 of this annual report for the Company’s technology and research status.

II. The business plan summary and development strategy for 2021 are as follows:
(I) Global brand marketing

With strong management teams in the European, American and Japanese markets, Verbatim will provide customers with reliable

products by following the image of an excellent brand, through the dense network and physical sales channels.

(II) Development of product lines

The 200G archive discs have been mass-produced and shipped. The Company will continuously develop high-end and high-margin archive disc products of 300G and higher capacity. In response to network information security and trend of science and technology, the Company also actively invests in the research and development of cloud products to provide customers with more comprehensive data storage solutions.

(III) Development of the soft power of cultural, creative and leisure industries

From 2017, CMC Magnetics Corporation established the Beaumont Park in Yangmingshan, Taipei. It has opened six restaurants of different types, Com In Dim, Vino Fiore, Jin Zhi Zui, Beaumont Bakery, Tai Zhi Zui and Guo Zhi Zui, turning the formerly deserted dormitory area of the US army into the most beautiful leisure landmark in Shanzihou.

In terms of cultural and creative undertaking, the TSUTAYA BOOKSTORE was created. In addition to the Hsinyi Business Circle, Taipei, and the foothold close to Taichung National Opera, the Company will open a third operating foothold in Tainan by the end of 2021 to complete the layout in the north, middle and south.

(IV) Optimize business management and activate assets

To concentrate business resources and save business management costs, the Company continues to adjust its production plans to optimize the operation efficiency. Regarding the lands and factories with lower application efficiency, the Company conducts activation or disposal plans to enhance asset benefits.

The Company's management team will be committed to enhancing the Company's long-term value and sustainable operation. At the end, we hope that all shareholders will continue to give encouragement and advice, and to support and care for the Company.

Best Regards,

We wish you all good fortune and health.

Chairman: Wong, Ming-Sen

Chapter 2 Company Profile

====================================================================

I. Establishment Date

December 2, 1978

II. Company History

1978 . CMC Magnetics Corporation was founded . Company registered at 6F, No.63-1, Sec. 1 ChangAn E. Rd., Taipei City . First factory established at No. 433, MingAn Rd., Xinzhuang City, New Taipei City . Registered Capital: NT$10,000,000 . Production items: Audio cassette, video tapes, etc. 1991 . The capital increase of the Company was NT$430,773,940. . Leased Taoyuan factory and added new video assembly line . Researched and developed videotape, 3D surround sound, wireless headsets, compact discs, and other products to initiate diversification business8mm . Approved by the Securities and Exchange Commission for stock listing 1992 . Leased Xindian factory and added automatic disk assembly line . Stock officially listed2 月 17 日 . Company capital increased to NT$930,000,000 . Approved by the Securities and Exchange Commission for preferred share listing . Leased Jingling factory and added disk assembly line 1993 . Company capital increased to NT$1,182,000,000 1994 . Company capital increased to NT$2,040,000,000 . Awarded with ISO 9002 international certification 1995 . Company capital increased to NT$2,331,000,000 . Zhongli new factory completed and began mass production 1996 . Company capital increased to NT$2,665,650,000 . Successfully developed CD-Recordable disc (CD-R) and proceeded with mass production in December. 1997 . Company capital increased to NT$4,372,062,500 . Purchased a land at LinKou for plant construction to expand the CD-R and non-analog optical disc product facilities2,407 坪 . Leased Jinling factory II for an additional disc box and magnetic disc lining cloth production line . Successfully launched DVD recordable production line . Honorably ranked by Forbes Magazine as No.21 of the Global Top 100 SMB Enterprise in 1997

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1998 . Company capital increased to NT$6,252,049,370
. Obtained the film distribution agency of NEW LINE Cinema and began business in the film and media industry
. Formed strategic alignment with Japan Mitsubishi company and Verbatim, a subsidiary of Mitsubishi in the United States
. Obtained ISO 9002 certification on CD-R as the first ever manufacturing factory in Taiwan
1999 . Company capital increased to NT$9,750,786,760
. 8X CD-R proceeded mass production, and the quality was certified by Japanese vendor partners
. Signed alliance contract with Pioneer Japan, for an exclusive partnership of DVD recordable products with CMC
. CMC independently and successfully developed 3.95GB DVD recordable product
. Officially launched New MP3 player product launched in November
2000 . Company capital increased to NT$17,323,482,540
. Obtained ISO 9002 certification on CD-R
. CMC received the 9th place of “Taiwan’s Top 50 Golden Tech Jobs” by International Institute for Management Development (IMD)
. CMC was awarded by Common Wealth Magazine as “#1 of Taiwan’s Top 100 Best Technology Company”
. Received “High-speed CD-RW and DVD-R” Industry Contribution Award from the Taiwan Association for Magnetic Technology (R.O.C)
. Launched CyberBoy, the world's first single-chip multimedia PDA device, and officially entered IA IT appliances industry
. Established a joint venture Transtouch Technology Inc. with Fujitsu (Japan) to manufacture LCD Touch Panel in Taiwan and officially enter the photoelectric communication industry
2001 . Successfully launched DVD-RAM 4.7GB/9.4GB CD-RW . Successfully launched 4.7GB DVD-R
. Launched and showcased the first “Simple PDA” with a full Chinese operating system
. Launched #1 export brand “Mr. Data” in Taiwan market
. Dazhu factory received CD-P (CD Jewel case) ISO 9002 certification
. Obtained Patent on Low-Profile Compact Disk Case
. Obtained Patent on Compact Disc Container with Locking Tube
. LinKou Industrial Zone obtained ISO 9002 certification on stampers for CD-R/RW, CD-ROM, and DVD-ROM manufacturing
. 16X, 20X and 24X CD-R passed the industry-leading compatibility with global popular recorders/players, and are recommended by recorder makers
2002 . DVD-RAM 4.7GB version 2.1 obtained compatibility test certification from DVD Forum Class A Verification Laboratory.
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. DVD-R 4.7GB 1X recording obtained product verification from DVD

Forum Class A Verification Laboratory.

. DVD-R 4.7GB 2X recording obtained product verification from Pioneer, taking leadership position among Taiwanese manufacturers
. DVD+RW 4.7GB 1-2.4X recording obtained product verification from Philips, taking leadership position among Taiwanese manufacturers
. DVD-RW 4.7GB version 1.1 obtained product verification from worldwide well-known recorder makers
. Deltamac (Taiwan) Co., Ltd. was listed in the OTC of Taiwan1 月 23 日
. LinKou factory obtained ISO 9001:2000 certification
. Certified as the “Top 500 Excellent Import & Export Vendor of 2001” by the Ministry of Economic Affairs, R.O.C
. Ranked as No.30 of the Best Import & Export Performance Vendor of 2001 by the Ministry of Economic Affairs, R.O.C
. Honorably listed as Taiwan 50 Index in TSEC
. Obtained the 10th award for industrial technology advancement granted by the Ministry of Economic Affairs, R.O.C
. 32X, 40X, 48X and 52X CD-R were well compatible with global famous recorders/players and recommended by popular recorder makers
2003 . Established CMC Nano-Technology R&D Department
. DVD+R 4.7GB 2.4X and 4X obtained product verification from Philips, taking leadership position among Taiwanese manufacturers
. DVD-R 4.7GB 4X recording obtained product verification from global popular recorder makers
. CD-RW Ultra Speed 24X obtained Product Verification from Philips, taking leadership position among Taiwanese manufacturers
. CMC received IRMA (International Recording Media Association) certified plant on pre-recorded media
. CMC Culture Foundation was awarded with the 6th Arts & Business Awards by Taiwan Council for Cultural Affairs
. Fortune (Jiangsu) Multimedia (Nantong Factory) obtained the Award from Nantong City for the city’s “Top 10 Export Enterprise from Foreign Investment,” “Top 10 Foreign Investment Enterprises,” and the 1st place for both “Double Excellence” Single Award (2nd industry), and the “Forward Cup” by the Nantong Gangzha Economic Development Zone Administration Committee
2004 . Received the 2nd Golden Root Award by the Taiwan Industrial Technology Association
. DVD+R 4.7GB 8X obtained product verification from Philips, taking leadership position among Taiwanese manufacturers
. Received Vendor Excellence Award from Taiwan Photonics Society
. DVD+R Part 1, Single Layer, 4.7GB 16X obtained product verification from Philips, taking leadership position among Taiwanese manufacturers
. DVD+R Part 2, Dual Layer, 8.5GB 2.4X obtained product verification from Philips, taking leadership position among Taiwanese manufacturers
5 -
2005 . Formed “Mobile TV Strategic Alliance” with Nokia, local Taiwanese broadcasters, radio stations, and telecommunicators, to develop DVB-Handheld cable TV platform.
. Received the 2nd Information Storage Industry Contribution Award from TISA . Received 2005 Vendor Excellence Award from Taiwan Photonics Society
2006 . CMC 's IA products – Portable Karaoke Station, MP3 Player, and PAV portable audio & video player–were awarded with the Best Golden Diamond Product Award from the Republic of China Consumers Association
. DVD+R Part 2, Dual Layer, and 8.5GB 8X media obtained product verification and full certification from Philips Format Verification Laboratory
. DVD-R Dual Layer, 8.5GB 4X media obtained product verification and full certification from Class-A Verification Laboratory
. HD DVD-R 15GB 1X SL Blu-ray media obtained the world’s only product verification from Class-A Verification Laboratory
. CMC Culture Foundation Received the 8th Arts & Business Award from the Council for Cultural Affairs, Executive Yuan (Taiwan, R.O.C)
2007 . BD-R SL 1-2X obtained Product Verification from Class-A Verification Laboratory, taking leadership position among Taiwanese manufacturers
. LinKou factory obtained OHSAS 18001:1999 certification
. ZhongLi Plant Obtained certification of OHSAS 18001:1999
.8cmDVD+R Dual Layer 2.6GB 2.4X media obtained product verification and full certification from Philips Standards & Format Verification Laboratory
. DVD-R Dual Layer 8.5GB 8X media obtained product verification and full certification from Class-A Verification Laboratory
. BD-RE SL 1-2X obtained product verification from Class-A Verification Laboratory, taking leadership position among Taiwanese manufacturers
. HD DVD-R Single Layer 15GB 2X Blu-ray obtained product verification from Class-A Verification Laboratory
. BD-R SL 4X obtained product verification from Class-A Verification Laboratory, taking leadership position among Taiwanese manufacturers
. Received 2006 Golden Trade Award and ranked as No. 52 of the “Best Import & Export Performance Vendor” as well as “Top 500 Excellent Import & Export Vendor of 2006” by the Ministry of Economic Affairs, R.O.C
. HD DVD-RW 2X obtained product verification from Class-A Verification Laboratory15G
2008 . BD-R 25GB 6X media obtained product verification from Philips Standards & Format Verification Laboratory.
. BD-ROM SL media obtained product verification from Philips Standards & Format Verification Laboratory.
. Taiwan Chi Yuan Culture Foundation was awarded with the 9th Arts & Business Awards by the Taiwan Council for Cultural Affairs
2009 . CMC was awarded the 7th Annual Taiwan Golden Root Award by TITA
. DVD-R CSS download EST type obtained Product Verification from Class-A Verification Laboratory and Certification for Compatibility from Drive
6 -

Manufacturers

. Awarded with “Best Employer of 2009” by Taoyuan, Hsinchu and Miaoli Employment Services Center, Vocational Training Bureau, Council of Labor Affairs, Executive Yuan

. Awarded with the 3rd Magistrate Evergreen Business Excellent Awards
. Received 2008 Golden Trade Award and ranked as No. 79 of the “Best Import & Export Performance Vendor” as well as “Top 500 Excellent Import & Export Vendor of 2008” by the Ministry of Economic Affairs, R.O.C.
2010 . Fortune (Jiangsu) Multimedia Co., Ltd. was awarded with "2009-2010 Annual Cultural Export Enterprise Prize" by the Ministry of Commerce, the Ministry of Culture, the National Radio and Television Administration, and the State Administration of Press, Publication, Radio, Film and Television of the People's Republic of China
. The shares of Transtouch Technology Inc. were officially listed on April 28
. BD-R 6X DL received the disc factory product compatibility certification
. BD-R DL 6x-speed 50GB media received product verification from Blu-ray Disc Association
. Received 2009 Golden Trade Award and ranked as No. 66 of the “2009 Best Import & Export Performance Vendor” as well as “Top 500 Excellent Import & Export Vendor of 2009” by the Ministry of Economic Affairs, R.O.C.
2011 . BD-R from LinKou 3rd Plant received PAS 2050:2008 product carbon footprint verification certificate
. CMC Blu-ray discs (BD-R 6X SL) passed the ambient temperature80℃/80RH% humidity/750hr durability test from TÜ V Rheinland Group. Test result shows that CMC Blu-ray disc data storage is valid at room temperature (25℃) for 50 years
. BD-R DISC received Carbon Footprint label certifications from Taiwan Electrical and Electronic Manufacturers’ Association’s (TEEMA)
. Obtained ISO 14064-1 greenhouse gas certification in Linkou 3rd Plant
2012 . CMC Blu-ray discs (BD-R 6X SL) passed the ambient temperature80℃/80RH% humidity/900hr durability test from TÜ V Rheinland Group. Test result shows that CMC Blu-ray disc data storage is valid at room temperature (25℃) for 70 years
. CMC Blu-ray discs (BD-RE 2X SL) passed the ambient temperature/80RH% humidity/600hr durability test from TÜ V Rheinland Group. Test result shows that CMC Blu-ray disc data storage is valid at room temperature (25℃) for 30 years
. DVDR from LinKou 3rd Plant, LinKou 2nd plant, ZhongLi 1st plant, and YangMei 2nd plant received PAS 2050:2011 product carbon footprint verification certificate

. CMC Blu-ray discs (BD-R 6X DL) passed the ambient

temperature80℃/80RH% humidity/600hr durability test from TÜ V Rheinland Group. Test result shows that CMC Blu-ray disc data storage is valid at room temperature (25℃) for 30 years
. Fortune (Jiangsu) Multimedia Co., Ltd. was awarded "2011-2012 Annual Cultural Export Enterprise Prize" by the Ministry of Commerce, the Department of Publicity, the Ministry of Culture, the National Radio and Television Administration, and the State Administration of Press, Publication, Radio, Film,
7 -

and Television of the People’s Republic of China. The Company also received 2011-2012 Central Cultural Industry Project Funding from the Ministry of Commerce, the Ministry of Culture, and the Ministry of Finance of the People's Republic of China

2013 . CMC DVDR received Carbon Footprint label certifications from Taiwan Electrical and Electronic Manufacturers’ Association’s (TEEMA)
. CMC Culture Foundation was awarded the certificate of appreciation from Eden Social Welfare Foundation
2014 . CMC Magnetics Corp. acquired the occupational safety certificate of merit award of the North District Association of the Occupational Safety and Health Administration, Ministry of Labor.
2015 . 5 factories under CMC Magnetics Corp. passed the healthy workplace authentication by the Health Promotion Administration, Ministry of Health and Welfare
2016 . Received the 1st Safety and Health Award in 2016 by the Department of Labor, 2017 Taoyuan City Government
2017
. CMC Magnetics Provided long-term sponsorship to the cultural industry (including chess institutes and art and culture organizations), and was awarded the 13th Arts & Business Awards by the Taiwan Council for Cultural Affairs
2018 . Archival Disc passed ISO16963 international certification
2019 . BD-R XL 4x-speed 100GB media profile received verification from Blu-ray Disc Association
. Acquired the business of the world renowned storage media brand Verbatim subsidiaries
in America, Europe, Australia, and Hong Kong for 100% shareholding, patent, trademarks, technology, and channels, etc.
2020 . Verbatim GmbH officially launched the E-sports brand "SUREFIRE" in Europe, providing storage and accessories products for electronic sports games
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Chapter 3 Corporate Governance Report

==> picture [715 x 401] intentionally omitted <==

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

=========================================================================================================
I. Organization
(I) Organization Chart of the Company
Shareholders
Audit
Board of
Remuneration
Auditing
Chairman
General
Office
Office
Investment Office Legal Office Research & Business Group
Development Center Photoelectric Product Procurement Office Human Resources
Finance and Accounting Information Technology
----- End of picture text -----

(II) Department Functions

Audit Office: In charge of auditing Company's operational status, analysis of anomaly, and suggestions for improvements
Human Resource Office: In charge of
- (1) Employee recruitment, hiring, payroll management, training, consulting, and employee service
- (2) Sanitation of the plant, and the management of staff meal, shuttle buses, and dormitory
- (3) Plant security protection, access control, water and electrical maintenance, plant maintenance, and hardware maintenance
- (4) Enforcement and management of labor safety, security, and environmental related matters
3.Procurement Office: In charge of all procurement matters of the production business units
4.Photoelectric Product Business Group: In charge of production, marketing and sales of optical disc and photoelectric products.
5.Research & Development Center: In charge of the new product R&D, improvement of manufacturing process and equipment, product specifications, and more.
6.Information Technology Office: System maintenance, management, and the design, planning, and deployment of both hardware and software.
7.Legal Office: In charge of the contract review and draft; trademark and patent application, and legal disputes as well as advice provisions.
8.Finance and Accounting Investment Office: Each department is responsible for the following:
- (1) Accounting Department: Responsible for accounting system establishment, accounting and tax treatment, costing, operational cost analysis, and more.
- (2) Finance Department: Responsible for capital scheduling, transactions with financial institutions, cashier, stock affairs, and other related businesses.
- (3) Investment Department: Responsible for the Company’s domestic and foreign investment evaluation, follow-up tracking and audit businesses.
(III) Functional Committees
1.Audit Committee: To oversight the responsibilities listed as per below:
- (1) The fair presentation of the Company's financial reports.
- (2) Appointment or dismissal of the certifying CPAs and evaluation of their independence and performance.
- (3) The effective implementation of the Company's internal control system.
- (4) The compliance to relevant regulations and rules.
- (5) Management of existing or potential risks.
2.Remuneration Committee: Improving the compensation system for Directors and managerial officers of the Company
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II. Information of the Directors, Supervisors, General Managers, Deputy General Managers, Assistant Managers and the Heads of Each Department and Branch

(I) Directors and Supervisors

Directors and Supervisors’ names, genders, nationalities or residence, professional and academic experiences, current positions of the Company and other companies, commencement date, term of office, date of initial appointment, shares held by oneself, spouse, minor children, and others in the name of others, professional knowledge, and independence:

April 20, 2021

Position	Nationality/ Place of Registration	Name	Gender	Date First Elected	Term	Shareholding	When Elected	Current Sh	areholding	Spouse and M Shareh	inor’s Current olding	Shareholdin	g by Nominees	Major Experience (Education)	Other Position Concurrently Held at the Company and Other Companies (Note 1)	Executives, Dire who Are Spouse	ctors or Superviso s or within the Se Kinship	rs cond Degree of	Note
				Date Elected (R.O.C.)		Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership			Position	Name	Relationship
Chairman	R.O.C.	Wong, Ming-Sen	Male	671202	3	133,697,296	7.30%	91,978,038	7.94%	Spouse 29,566.296	2.55%	0	0%	Agricultural Engineering Department of National Taiwan University	Chairman and Director of the partial subsidiaries of CMC Group, Legal Representative of Chung-Hsin Electric & Machinery Manufacturing Corp and Château Capital Group	Senior Deputy General Manager Director	Yang, Li-Jung Tsai Wong, Ya-Li	Spouse Second-degree relative	Note 2
				20180612
Director	R.O.C.	Yang, Ya-Hsiu	Female	20000614	3	13,372,373	0.73%	9,612,762	0.83%	0	0%	0	0%	Commercial Department of National Taiwan University	Director of the partial subsidiaries of CMC Group	None	None	None	None
				20180612
Director	R.O.C.	Kuo, Junne-Huey	Male	20060615	3	82,618	0.00%	55,471	0.00%	0	0%	0	0%	Department of Accounting Soochow University General Manager of Taiwan Power Company	Director of Legal Representative of China Petrochemical Development Corporation	None	None	None	None
				20180612
Director	R.O.C.	Tseng, Yi-An	Male	20030513	3	1,686,286	0.09%	1,132,206	0.10%	0	0%	0	0%	Department of Information Engineering, Chun Yuan Christian University	None	None	None	None	None
				20180612
Director	R.O.C.	Tsai, Tsung-Han	Male	20030513	3	2,280,542	0.12%	1,531,201	0.13%	0	0%	0	0%	Department of Chemistry, University of California, Berkeley School of Dental Medicine, TUFTS University	None	None	None	None	None
				20180612
Director	R.O.C.	Tsai Wong, Ya-Li	Female	20090616	3	2,077,648	0.11%	1,394,974	0.12%	0	0%	0	0%	National Tainan Girls' Senior High School	None	Chairman	Wong, Ming-Sen	Second-degree relative	None
				20180612

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Position	Nationality/ Place of Registration	Name	Gender	Date First Elected	Term	Shareholding	When Elected	Current Sh	areholding	Spouse and M Shareh	inor’s Current olding	Shareholdin	g by Nominees	Major Experience (Education)	Other Position Concurrently Held at the Company and Other Companies (Note 1)	Executives, Dire who Are Spouse	ctors or Superviso s or within the Se Kinship	rs cond Degree of	Note
				Date Elected (R.O.C.)		Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership			Position	Name	Relationship
Director	R.O.C.	Yeh, Min-Cheng	Male	19970614	3	2,660,777	0.15%	1,786,498	0.15%	Spouse 117,719	0.01%	0	0%	Department of Industrial Engineering, Chun Yuan Christian University	None	None	None	None	None
				20180612
Director	R.O.C.	Chen, Hsien-Tai	Male	19940614	3	5,895,282	0.32%	3,710,497	0.32%	Spouse 2,273,873	0.20%	0	0%	Chemical Engineering Department of Taiwan Provincial Tainan Industrial High School	None	None	None	None	None
				20180612
Independent Director	R.O.C.	Shiau, Fung-Shyung	Male	20120615	3	0	0%	0	0%	0	0%	0	0%	Ph.D. in economics conferred by Chinese Culture University	Independent Director of EASTECH Co., Ltd., Independent Director of Wayi International Digital Entertainment Co., Ltd., Supervisor of China City, Independent Director of Transtouch Technology inc.	None	None	None	None
				20180612
Independent Director	R.O.C.	Wu, Cheng-Hsiu	Male	20120615	3	1,680,000	0.09%	0	0%	0	0%	0	0%	Passed Higher Examination for Lawyers	Independent Director of DELTAMAC (TAIWAN) Co., Ltd., Independent Director of Transtouch Technology Inc., Legal Advisor of Lih Pao Construction Co., Ltd.	None	None	None	None
				20180612
Independent Director	R.O.C.	Lee, Ming-Yen	Female	20150602	3	0	0%	0	0%	0	0%	0	0%	Finance & Legal Science Major at Department of Law in Fu Jen Catholic University	Special Assistant to Chairman of Premier Capital Management Corp., Director of Sunriser Medical Co., Ltd., Supervisor of Premier Assets Management Corporation	None	None	None	None
				20180612

Note 1: Please refer to page 320 for the concurrent positions in the related enterprises.

Note 2: Where the Chairman of the Board of Directors and the General Manager or person of an equivalent post (the highest level manager) of a company are the same person, spouses, or relatives within the first degree of kinship, an explanation shall be given the related information of the reason for, reasonableness, necessity thereof, and the measures adopted in response thereto (ways such as appointing Independent Directors, and a majority of the Directors may not serve concurrently as an employee or managerial officer).

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2. Professional Qualifications and Independence Analysis of the Directors and Supervisors

April 20, 2021

				April	April	April	April	April	April	April	April	April	April	April	April	20, 2021
Qualifications Name	Meeting One of the Following Professional Qualification Requirements, Together with At Least Five Years of Work Experience			Status of independence (Note 1)												Number of Other Public Companies where the Individual Concurrently Serves as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist who Has Passed a National Examination and Has Been Awarded a Certificate in a Profession Necessary for the Business	Having Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business	1	2	3	4	5	6	7	8	9	10	11	12
Wong, Ming-Sen			✓					✓	✓			✓		✓	✓	None
Yang, Ya-Hsiu			✓					✓	✓	✓	✓	✓	✓	✓	✓	None
Kuo, Junne-Huey			✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None
Tseng, Yi-An			✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None
Tsai, Tsung-Han				✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None
Tsai Wong, Ya-Li				✓		✓		✓	✓	✓		✓		✓	✓	None
Yeh, Min-Cheng			✓	✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None
Chen, Hsien-Tai				✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None
Shiau, Fung-Shyung	✓			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	3
Wu, Cheng-Hsiu		✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2
Lee, Ming-Yen			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	None

Note 1: Please check “ ✓ ” the corresponding boxes if the Directors and Supervisors meet the following conditions during the two years prior to the nomination and during the term of office.

(1) Not an employee of this Company or its affiliates.
(2) Not a Director or Supervisor of the Company's affiliates. Not applicable in cases where the person is an Independent Director of the Company's parent company or any subsidiary appointed in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is ranked in the top 10 in shareholdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the above persons in the preceding three subparagraphs.
(5) Not a Director, Supervisor, or employee of an institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a Director or Supervisor of the Company under Paragraph 1 or 2, Article 27 of the Company Act (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(6) Not a Director, Supervisor or employee of a company controlled by the same person who has shares over half of the Company's Director seats or voting rights (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a Chairman, General Manager, or employee of another company or institution who, or whose spouse, is a Director, Supervisor, or an employee holding an equivalent position of the Company (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a Director, Supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of the Company and concurrently serving as an Independent Director, as appointed in accordance with the Act or the laws and regulations of the local country, at the Company and its parent or subsidiary or a subsidiary of the same parent).
(9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, Director, Supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other Director of the Company.
(11) Not a condition defined in Article 30 of the Company Law.
(12) Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.
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(II) Information of the General Manager, Deputy General Managers, Assistant Managers, and the Heads of Each Department and Branch April 20, 2021

Position	Nationality	Name	Gender	Date Elected (R.O.C.)	Shareho	lding	Spouse & Mi	nor Shareholding	Shareholdin	g by Nominees	Major Experience (Education)	Other Position Concurrently Held at Other Companies (Note 1)	M who Are S D	anagerial Officer pouses or within th egree of Kinship	e Second	Note
					Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership			Position	Name	Relationship
General Manager	R.O.C.	Wong, Ming-Sen	Male	19781202	91,978,038	7.94%	Spouse 29,566,296	2.55%	0	0%	Agricultural Engineering Department of National Taiwan University	Chairman and Director of the partial subsidiaries of CMC Group Director; Representative of Chung-Hsin Electric & Machinery Manufacturing Corp and Château Capital Group	Senior Deputy General Manager	Yang, Li-Jung	Spouse	Note 2
Executive Deputy General Manager	R.O.C.	Yang, Ya-Hsiu	Female	19850502	9,612,762	0.83%	0	0%	0	0%	Commercial Department of National Taiwan University	Director of the partial subsidiaries of CMC Group	None	None	None	None
Senior Deputy General Manager	R.O.C.	Yang, Li-Jung	Female	19781202	29,566,296	2.55%	Spouse 91,978,038	7.94%	0	0%	Department of Chinese Language and Literature, National Chung Hsing University	Director of the partial subsidiaries of CMC Group	General Manager	Wong, Ming-Sen	Spouse	None
Deputy General Manager	R.O.C.	Huang, Ying-Yen	Male	20080901	0	0.00%	0	0%	0	0%	Administration Institute of Fu Jen Catholic University	Director of the partial subsidiaries of CMC Group	None	None	None	None
Deputy General Manager	Japan	Sekiyama Takayuki	Male	20171001	0	0.00%	0	0%	0	0%	OSAKA SANGYO UNIVERSITY	None	None	None	None	None
Accounting Controller	R.O.C.	Yang, Pi-Yin	Female	20180612	0	0.00%	0	0%	0	0%	Research Institute of National Taipei University	Director of the partial subsidiaries of CMC Group	None	None	None	None
Chief Financial Officer	R.O.C.	Chen, Chun-Wei	Male	20160915	0	0.00%	0	0%	0	0%	Corporate Research Institute of Pace University	Director of the partial subsidiaries of CMC Group	None	None	None	None

Note 1: Please refer to page 320 for the concurrent positions in the related enterprises.

14 -
III. Remuneration Paid to the Directors, Supervisors, General Manager, and Deputy General Managers in the Most Recent Fiscal Year (I) Compensation of Directors (including Independent Directors)

Unit: NT$1,000

Title	Name	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	Remuneration Paid to Directors	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	The sum of A, B, C and D in proportion to Earnings After Tax (%) (Note 10)	Relevant Remuneration Received by D	Relevant Remuneration Received by D	Relevant Remuneration Received by D	Relevant Remuneration Received by D	irectors who Are Also Employees	irectors who Are Also Employees	irectors who Are Also Employees	irectors who Are Also Employees	Ratio of Total Remuneration (A+B+C+D+E+F+G) to Net Income (Note 10)	Ratio of Total Remuneration (A+B+C+D+E+F+G) to Net Income (Note 10)	Remuneration from Invested Business or Companies Other than Subsidiaries (Note 11)
		Remuneration (A) (Note 2)		Severance Pay and Pension (B)		Remuneration of Directors (C) Note 3)		Business execution expenses (D) (Note 4)				Salaries, bonus and special subsidies (E) (Note 5)		Severance Pay and Pension (F)		Remuneration of Employee (G) (Note 6)
		The Company	All Companies included into the financial statement (Note 7)	The Company	All Companies in Consolidated Financial Statements (Note 7)	The Company	All Companies in Consolidated Financial Statements (Note 7)	The Company	All Companies in Consolidated Financial Statements (Note 7)	The Company	All Companies in Consolidated Financial Statements (Note 7)	The Company	All Companies in Consolidate d Financial Statements (Note 7)	The Company	All companies included into the financial statement (Note 7)	The Company		All companies included into the financial statement (Note 7)		The Company	All Companies in Consolidated Financial Statements (Note 7)
																Cash amount	Stock amount	Cash amount	Stock amount
Director	Wong, Ming-Sen	0	0	0	0	200	200	120	120	0.29%	0.29%	4,315	4,315	0	0	0	0	0	0	4.17%	4.17%	None
Director	Yang, Ya-Hsiu	0	0	0	0	200	200	120	120	0.29%	0.29%	5,194	5,194	0	0	0	0	0	0	4.96%	4.96%	None
Director	Kuo, Junne-Huey	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Director	Tseng, Yi-An	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Director	Tsai, Tsung-Han	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Director	Tsai Wong, Ya-Li	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Director	Yeh, Min-Cheng	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Director	Chen, Hsien-Tai	0	0	0	0	200	200	120	120	0.29%	0.29%	0	0	0	0	0	0	0	0	0.29%	0.29%	None
Independent Director	Shiau, Fung-Shyung	0	110	0	0	200	200	240	252	0.40%	0.51%	0	0	0	0	0	0	0	0	0.40%	0.51%	None
Independent Director	Wu, Cheng-Hsiu	0	290	0	0	200	200	240	273	0.40%	0.69%	0	0	0	0	0	0	0	0	0.40%	0.69%	None
Independent Director	Lee, Ming-Yen	0	0	0	0	200	200	240	240	0.40%	0.40%	0	0	0	0	0	0	0	0	0.40%	0.40%	None
1. Please explain the Independent D According to Article 20 of the Ar home and abroad. 2. Other than disclosures in the abo		irector remuneration policy, system, standard, and structure, and the connection between the amount of remuneration and the considered factors such as their job responsibilities, risks, and working time. ticles of Association of the Company, the remuneration paid to the Directors shall be determined by the Board of Directors based on the degree of their participation in and contributions to the business operations of the Company, as well as industry standards at ve table,remunerationpaid to Directors forprovidingservices(e.g., providingconsultingservices as a non-employee)for all companies in consolidated financial statements in the most recentyear: None.

Note1: The Company shall disclose the names and remuneration of its Directors or Supervisors individually if any of the following applies. Otherwise, the Company may choose between consolidating the disclosure according to the scale of remuneration, or disclose individually by names and ways of remuneration being paid (For individual disclosures, please fill in the title, names, and amount separately. It is not necessary to fill in the scale of remuneration chart)
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(1) The names and remunerations of the “Directors and Supervisors” shall be disclosed separately if there are losses after tax in the three most recent financial statements of the financial year, however, shall not apply if the Company has posted net income after tax in the parent company only financial reports or individual financial report for the most recent fiscal year and such net income after tax is sufficient to offset the accumulated deficits.
(2) A company with Directors whose shareholding percentages have been insufficient for three (3) or more consecutive months during the most recent fiscal year shall disclose the remuneration of Individual Directors. A company with Supervisors whose shareholding percentages have been insufficient for three (3) or more consecutive months during the most recent fiscal year shall disclose the remuneration of individual Supervisors.
(3) A company with an average ratio of shares pledged by Directors or Supervisors that exceeds 50 percent in any three (3) months during the most recent fiscal year shall disclose the remuneration paid to each Individual Director or Supervisor who owns a ratio of shares pledged that exceeds 50 percent for each of these three months.
(4) If the total amount of remuneration received by all the Directors and Supervisors of a company from all the companies listed in its financial statements exceeds two (2) percent of its net income after tax, and the amount of remuneration received by any individual Director or Supervisor exceeds NT$15 million, the Company shall disclose the amount of remuneration paid to Individual Directors or Supervisors.
(5) Any result of evaluation made on corporate governance in the most recent year is in the last level, or any trading method changes, any trading or marketing stops, or any evaluation is rejected by the Corporate Governance Evaluation Committee in the most recent year as of the publication date of this Annual Report as a listed company.
(6) The average annual salary of a full-time employee of a listed company who does not hold a managerial position in the most recent year has not reached NT$500,000.
Note 2: Refer to the remuneration of the Directors for the most recent year (including Director's salary, position bonus, severance pay, various bonuses, incentive bonus, etc.).
Note 3: Refer to the amount of the remuneration for Directors approved by the Board of Directors in the most recent year.
Note 4: Refers to the relevant business execution expenses of the Directors in the most recent year (including transportation expenses, special allowance, various allowances, housing, cars, supply offerings, etc.). If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation.
Note 5: Refers to the salary, position bonus, severance, various bonuses, incentives, transportation fees, special allowance, various allowances, dormitory, cars, and other supply offerings for the Directors and concurrent employees of the most recent year (including concurrent General Manager, Deputy General Manager, other management personnel, and employees). If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation. The salary recognized in accordance with the IFRS 2 “Share-based payment,” including obtaining employee stock option certificates, restricting employee rights to new shares, and participating in cash incremental subscription shares shall also be included in the remuneration.
Note 6: The Directors and concurrent employees of the most recent year (including concurrent General Manager, Deputy General Manager, other management personnel, and employees) shall disclose the amount of the compensation (including stock and cash) paid by the Board of Directors in the most recent year. Those who cannot estimate the amount shall calculate based on the proportion of the actual distribution amount from last year, and complete the chart in Appendix 1.3.
Note 7: The total amount of remuneration paid to the Directors of the Company by all companies (including the Company) in the consolidated report shall be disclosed.
Note 8: The Company shall compensate each Director the total amount of remuneration and disclose the name of the Director in the associated tier interval.
Note 9: The total amount of remuneration paid to each Director of all companies (including the Company) in the consolidated report shall be disclosed, as well as the name of the Directors in the accordance of the associated tier interval.
Note 10: Net profit after-tax refers to the net income stated in the parent company only financial reports or individual financial reports

Note 11: a. This column should specify the amount of remuneration received by the Directors of the Company from the reinvested business outside the subsidiary.

b. If any Director of the Company receives remuneration related to a reinvestment business outside of a subsidiary, then the remuneration received by the Director of the Company from the subsidiary to the investment enterprise shall be included in Column I of the remuneration scale and rename the column to “All reinvestment businesses.”
c. Remuneration refers to the remuneration, compensation (including remuneration for employees, Directors, and Supervisors), and business execution fees etc. received by the Directors of the Company as a Director, Supervisor, or management personnel of a reinvested enterprise outside of a subsidiary.
The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purpose.
(II) Remunerations of Supervisors: Not Applicable. The Company has established an Audi Committee to replace the authority of the Supervisors.
16 -

(III) Remunerations of the General Manager and Deputy General Manager

Position	Name	Salary (A) (Note 2)	Salary (A) (Note 2)	Severance Pay and Pension (B)	Severance Pay and Pension (B)	Bonus and Allowance (C) (Note 3)	Bonus and Allowance (C) (Note 3)	Employee's Compensation (D) (Note 4)	Employee's Compensation (D) (Note 4)	Employee's Compensation (D) (Note 4)	Employee's Compensation (D) (Note 4)	Subtotal of (A+B+C+D) as a % of net profit after tax (Note 8)	Subtotal of (A+B+C+D) as a % of net profit after tax (Note 8)	Remuneration from Invested Business or Parent Company Other than Subsidiaries (Note 9)
		The Company	All companies in the financial statement (Note 5)	The Company	All companies included into the financial statement (Note 5)	The Company	All companies included into the financial statement (Note 5)	The Company		All companies included into the financial statement (Note 5)		The Company	All companies included into the financial statement (Note 5)
								Cash amount	Stock amount	Cash amount	Stock amount
General Manager	Wong, Ming-Sen	15,744	15,744	207	207	0	0	300	0	300	0	14.63`％`	14.63`％`	None
Executive Deputy General Manager	Yang, Ya-Hsiu
Senior Deputy General Manager	Yang, Li-Jung
Deputy General Manager	Huang, Ying-Yen
Deputy General Manager	Sekiyama Takayuki

17 -

Range of Remuneration Paid to the General Manager and Deputy General Manager	Name of General Manager and Deputy General Manager	Name of General Manager and Deputy General Manager
	The Company (Note 7)	All companies included into the financial statement (Note 8) E
Less than NT$1,000,000	0	0
NT$1,000,000 (inclusive)~NT$2,000,000 (exclusive)	Huang, Ying-Yen	Huang, Ying-Yen
NT$2,000,000 (inclusive)~NT$3,500,000 (exclusive)	Yang, Li-Jung Sekiyama Takayuki	Yang, Li-Jung Sekiyama Takayuki
NT$3,500,000 (inclusive)~NT$5,000,000 (exclusive)	Wong, Ming-Sen	Wong, Ming-Sen
NT$5,000,000 (inclusive)~NT$10,000,000 (exclusive)	Yang, Ya-Hsiu	Yang, Ya-Hsiu
NT$10,000,000 (inclusive)~NT$15,000,000 (exclusive)	0	0
NT$15,000,000 (inclusive)~NT$30,000,000 (exclusive)	0	0
NT$30,000,000 (inclusive)~NT$50,000,000 (exclusive)	0	0
NT$50,000,000 (inclusive)~NT$100,000,000 (exclusive)	0	0
Over NT$100,000,000	0	0
Total	5	5

Note 1: The name of General Manager or Deputy General Managers shall be identified specifically, and the various payments shall be summarized and then disclosed. If a Director also serves as the General Manager or Deputy General Manager, please fill in this table and Table 1-1 or Table 1-2-1 and Table 1-2-2.
Note 2: Please specify the salary, duty allowance and severance paid to the General Managers and Deputy General Managers in the most recent year.
Note 3: Please specify the bonus, reward, transportation allowance, special allowance, various allowances, and provision of such tangible objects as dormitory and car, as well as other remunerations, received by the General Managers and Deputy General Managers in the most recent year. If housing, vehicle or other means of transportation, or personal expenses are provided, the nature and cost of the asset provided, the rental calculated based on the actual cost or the fair market value, fuel, and other payments shall be disclosed. If a driver is provided, disclose compensation paid to the driver in a note; however, do not calculate such as part of executive compensation. The salary recognized in accordance with the IFRS 2 “Share-based payment,” including obtaining employee stock option certificates, restricting employee rights to new shares, and participating in cash incremental subscription shares shall also be included in the remuneration.
Note 4: Refers to the remuneration (including stock and cash) for the General Managers and Deputy General Managers paid by the Board of the Directors in the most recent year. Those who cannot estimate the amount shall calculate based on the proportion of the actual distribution amount from last year, and complete the chart in Appendix 1.3.
Note 5: The total amount of remuneration paid to each General Manager and Deputy General Manager of all companies (including the Company) in the consolidated report shall be disclosed.
Note 6: The aggregate of the remuneration to each president or vice president by the Company shall include the General Manager's or Deputy General Manager's name disclosed in the relevant space of the following table.
Note 7: The aggregate of the remuneration paid to each of the Company's General Managers and Deputy General Managers by the companies included into the consolidated financial reports (including the Company) shall include the president's and vice president's names disclosed in the relevant space of the following table.
Note 8: Net profit after-tax refers to the net income stated in the parent company only financial reports or individual financial reports
Note 9: a. This column should specify the amount of remuneration received by the General Managers and Deputy General Managers of the Company from the reinvested business outside the subsidiary (please fill in” None” if none)
b. If the Company's General Managers and Deputy General Managers have received remuneration form investees beyond subsidiaries, please include the same into Section E in the following table and changed the name of the section into "all investees".
c. The remuneration shall refer to the remuneration, compensation, employee bonus and professional practicing fees received by the Company's General Managers and Deputy General Managers who acted as the Directors, Supervisors or managerial officers of investees other than subsidiaries.
The remuneration contents disclosed in this table are different from the concept of income specified in the Income Tax Act, thus the purpose of this table is for information disclosure only, rather than taxation purpose.
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(IV) Name and status of the managers who allocate employee remuneration:

Unit: NT$1,000

						Unit: NT$1,000
	Job Title (Note 1)	Name (Note 1)	Stock amount	Cash amount	Total	Ratio of Total Amount to Net Income (%)
Managerial Officer	Deputy General Manager	Huang, Ying-Yen	N/A	480	480	0.43%
	Deputy General Manager	Sekiyama Takayuki
	Chief Financial Officer	Chen, Chun-Wei
	Accounting Controller	Yang, Pi-Yin

Note 1: Please disclose the name and job title individually, while the allocation of earnings may be summarized and then disclosed.
Note 2: The value of remunerations approved to be assigned to managers by the Board of Directors in the most recent year (including shares and cash). If it is impossible to estimate the value planned to be distributed this year, follow the actual value distributed last year and calculated proportionally. The earnings after tax refers to the earnings after tax in the most recent year. If the IFRSs are adopted, the earnings after tax shall refer to the earnings after tax identified in the entity or individual financial statement for the most recent year.
Note 3: For the applicability of managers, follow the Tai-Cai-Zheng-San No. 0920001301 letter dated March 27, 2003.
(1) General Manager and equivalents;
(2) Deputy General Manager and equivalents;
(3) Assistant Manager and equivalents;
(4) Chief of Financial Dept.;
(5) Chief of Accounting Dept.;
(6) Any other persons in charge of the Company's affairs and entitled to sign instruments on behalf of the Company.
19 -
(V) A cross-analysis of the percentage of total remuneration paid to the Directors, Supervisors, General Manager and Deputy General Manager, etcetera, of the Company as a percentage of net profit after tax of the individual financial reports in the most recent two years of the Company and consolidated statements, as well as the relevance between remuneration policies, standards, and the composition of the remuneration payment to the procedures of determining remuneration and business performance:
Analysis of the proportion of the total remuneration of Directors, supervisors, General Managers and Deputy General Managers of the Company paid by the Company and all companies in the consolidated financial statement to net profit after tax in individual financial statements of the past two years:

Unit: NT$1,000

	financial statements of the past two years:	financial statements of the past two years:	Unit: NT$1,000	Unit: NT$1,000
Year	Total Remuneration Paid to the Director, General Manager, and DeputyGeneral Manager		Percentage of total net profit after tax (%)
	The Company	Companies in the consolidated financial statements	The Company	Companies in the consolidated financial statements
108	19,091	19,226	8.35%	11.47%
109	19,624	20,024	17.67%	16.04%

2.Relevance between remuneration policies, standards, and the composition of the remuneration payment to the procedures of determining remuneration and business performance:

In accordance with Article 27 of the Articles of Association, if the Company is profitable in the year, it shall be paid at least 1% for the employee's remuneration and not more than 1.5% for the Director's remuneration. The remuneration of the managers includes salary and bonus. The salary shall be reported to the Board of Directors for approval by the Remuneration Committee in accordance with the provisions of salary of the Company, and the bonus is given as per the value of their contribution.

Directors emoluments include business execution fees and Director remuneration, in which the business execution fee is a fixed remuneration and Director remuneration shall be reported to the Board of Directors for approval by the Remuneration Committee in accordance with the articles of association of the Company, the degree of participation in the operation of the Company (e.g., management performance assessment results reviewed by the Board of Directors) and the value of their contribution, and in consideration of the standard of the domestic industry, and/or the industry in the same field.

20 -

IV. The State of the Company’s Implementation of Corporate Governance

(I) The state of operations of the Board of Directors: 7 meetings were held by the Board of Directors in the Fiscal Year of 2020. The attendance of Directors is listed as per below:

Position	Name (Note 1)	Attendance in Person	Attendance by Proxy	Actual Attendance (%) (Note 2)
Chairman	Wong, Ming-Sen	7	0	100%
Director	Yang, Ya-Hsiu	4	3	57%
Director	Kuo, Junne-Huey	7	0	100%
Director	Tseng, Yi-An	7	0	100%
Director	Tsai, Tsung-Han	4	3	57%
Director	Tsai Wong, Ya-Li	7	0	100%
Director	Yeh, Min-Cheng	7	0	100%
Director	Chen, Hsien-Tai	4	3	57%
Independent Director	Shiau, Fung-Shyung	7	0	100%
Independent Director	Wu, Cheng-Hsiu	5	2	71%
Independent Director	Lee, Ming-Yen	7	0	100%
Other matters to be recorded: I. If any of the following circumstances occurs, the meeting date, period, content, qualified opinion and resolution made by any Independent Director should be specified. (1) Matters specified in Article 14-3 of the Taiwan Securities and Exchange Act. (2) Aside from matter stated above, any other Board meeting resolutions that have been objected to or retained by Independent Directors with a record or written statement. Board of Directors Content of Motion and Follow-up Matters specified in Article 14-3 of the Securities and Exchange Act Objections or Reservations by Independent Directors The 14th meeting of the 14th session March 4, 2020 1. Intended to dispose of the shares of Benmeng Photoelectric Co., Ltd. held by the Company. V Independent Director's Opinion: None Handling of Independent Director's Opinion by the Company: None Resolution result: Approved by all Directors present at the meeting The 15th meeting of the 14th session March 27, 2020 1. The suitability and independence evaluation and appointment of the Company’s Certified Accountant. V 2. 2019 annual statement of internal control system. V Independent Director's Opinion: None Handling of Independent Director's Opinion by the Company: None Resolution result: Approved by all Directors present at the meeting

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	The 18 th meeting 1. The Company intended to sell the land and buildings in Guishan District, Taoyuan City. V
	of the 14th session Independent Director's Opinion: None
	August 13, 2020 Handling of Independent Director's Opinion by the Company: None
	Resolution result: Approved by all Directors present at the meeting
	1. Amended the Company's "Internal Audit
	System", "Accounting Professional Judgment
	The 19 th meeting Procedure, Accounting Policy and Estimation Change Process", "Management of V
	of the 14th session Applicable International Financial Reporting
	November 12, Standards" and "Accounting System".
	2020 Independent Director's Opinion: None
	Handling of Independent Director's Opinion by the Company: None
	Resolution result: Approved by all Directors present at the meeting
II.	Regarding recusals of Directors from voting due to conflicts of interests, the names of the Directors, contents of
	motions, reasons for recusal, and results of voting shall be specified:
	On January 16, 2020, the Board of Directors of the Company discussed the distribution of the year-end bonus for
	2019. The related party of interest, Director Yang, Ya-Hsiu, withdrew from the discussion and voting.
III.	The assessment implementation status of the Board of Directors, please refer to [Table 1].
IV.	Assessment of enforcement for the function of Board of Directors in the current and most recent years (i.e.
	establishment of Audit Committee and improving the transparency of information):
	1. The Company has established an Audit Committee, which shall be formed by 3 Independent Directors and
	meet at least once per quarter to exercise the functions and powers prescribed by the Securities and Exchange
	Act, the Company Act, and other regulations. Please refer to #page 22# of this annual report for the operation
	of the Audit Committee.
	2. The Company has established a Remuneration Committee, which is unanimously approved by all the attending
	Directors to appoint the Independent Directors Wu, Cheng-Hsiu, Shiau, Fung-Shyung, and Lee, Ming-Yen as
	members of the Committee, in which the meeting should be held at least twice per year.	Please refer to #page
	32# of this annual report for the operation of the Remuneration Committee.

Note 1: For a Director or Supervisor who is a corporation, please specify the corporate shareholder's name and its representative's name.
Note 2: (1) If a Director or Supervisor resigns before the end of the accounting year, the resignation date shall be noted in the "Remarks" column. His or her attendance rate (%) will be calculated on the basis of number of Board meetings held during his or her tenure and number of such meetings attended.
(2) If a Director or Supervisor is re-elected before the end of the accounting year, the names of the current and previous Director or Supervisor shall be listed and their appointment status and re-election date shall be noted in the "Remarks" column. Their attendance rate (%) to Board session shall be calculated based on the number of meetings called and the actual number of sessions they attended, during the term of office.
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Table 1: The assessment implementation status of the Board of Director

Assessment cycle (Note 1)	Assessment period (Note 2)	Assessment range (Note 3)	Assessment approach (Note 4)	Content (Note 5)
		1. The Board of Directors 2. Members of the Board of Directors 3. Functional committees (Remuneratio n Committee and Audit Committee)	In accordance with the questionnaire responded by members of the company’s Board of Directors and each functional committee (Audit Committee and Remuneration Committee), and actual meeting status, to conduct analysis and sorting.	1. The criteria for evaluating the performance of the Board of Directors, which should cover the following five aspects: Participation in the operation of the Company; Improvement of the quality of the Board of Directors' decision making; Composition and structure of the Board of Directors; Election and continuing education of the Directors; and internal control. 2. The criteria for evaluating the performance of the Board members (on themselves or peers), should cover the following six aspects: Alignment of the goals and missions of the Company; Awareness of the duties of a Director; Participation in the operation of the Company; Management of internal relationship and communication; The Director's professionalism and continuing education; and Internal control. 3. The criteria for evaluating the performance of functional committees should cover the following five aspects: Participation in the operation of the Company; Awareness of the duties of the functional committee; Improvement of quality of decisions made by the functional committee; Makeup of the functional committee and election of its members and Internal control.

Note 1: Fill out the frequency of the evaluation of the Board of Directors, e.g. once a year.
Note 2: Fill in the period covered for the assessment of the performance of the Board of Directors, for example: The assessment period of the performance of the Board of Directors is from January 1, 2020 to December 31, 2020.
Note 3: The evaluation scopes include the assessment of the performance of the Board of Directors, individual members of the Board of Directors, and functional committee.
Note 4: Methods of evaluations include the self-evaluation of the Board, self-evaluation by individual Board members, peer review, and evaluation by appointed external professional institutions, experts, or other appropriate methods.
Note 5: the evaluation contents shall include at least the following items according to the scope of evaluation:
(1) The assessment of the performance of the Board of Directors, at a minimum, including participation in the operation of the Company; The quality of the Board of Directors' decision making; Composition and structure of the Board of Directors; Election and continuing education of the Directors; and Internal control.
(2) The assessment of the performance of the individual member of the Board of Directors, at a minimum, including alignment of the goals and missions of the Company; Awareness of the duties of a Director; Participation in the operation of the Company; Management of internal relationship and communication; The Director's professionalism and continuing education; and Internal control.
(3) The assessment of the performance of the functional committee, at a minimum, including participation in the operation of the Company; Awareness of the duties of the functional committee; The quality of decisions made by the functional committee; Makeup of the functional committee and election of its members and Internal control.
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(II) Operation of the Audit Committee:

The Audit Committee has held 5 meetings (A) in the most recent fiscal year. The attendance of the Independent Directors is listed as per below:

Position	Position	Name	Name	Attendance in Person (B)	Attendance by Proxy	% of Actual Attendance (B/A) (Note)	% of Actual Attendance (B/A) (Note)
Independent Director		Shiau, Fung-Shyung		5	0	100%
Independent Director		Wu, Cheng-Hsiu		3	2	60%
Independent Director		Lee, Ming-Yen		5	0	100%
Audit (1) (2) (3) (4)	Committee’ s annual tasks aggregate The tasks of the Audit Committee mainly include the following: 1. The adoption of or amendments to the internal control system pursuant to Article 14-1 of the Securities and Exchange Act. 2. Assessment of the effectiveness of the internal control system. 3. The adoption or amendment, pursuant to Article 36-1 of the Securities and Exchange Act, of the procedures for handling financial or business activities of a material nature, such as acquisition or disposal of assets, derivatives trading, loaning of funds to others, and endorsements or guarantees for others. 4. Matters in which a Director is an interested party. 5. Asset transactions or derivatives trading of a material nature. 6. Loans of funds, endorsements, or provision of guarantees of a material nature. 7. The offering, issuance, or private placement of equity-type securities 8. The hiring or dismissal of a certified public accountant, or their compensation. 9. The appointment or discharge of a financial, accounting, or internal audit officer. 10. Annual financial reports and second quarter financial reports audited and certified by the CPAs. Audit and review financial reports The Board of Directors has created the business report, financial statements, and appropriation of earnings for recent year. The financial statements are verified by PwC Taiwan, which issued a verification report. The above-mentioned business report, financial statements, and appropriation of earnings are approved by the Audit Committee and it is considered that there is no disagreement. Assessment of the effectiveness of the internal control system Audit Committee assesses the effectiveness of the design and execution of the Company’s internal control system (includes control measures in finance, operation, risk management, information security, regulation compliance, etc.), and review the regular reports of the Company’s audit department and certified accountants such as risk management and regulation compliance. The operating status in 2020 Board of Directors Meeting Date Date Content of Motion and Follow-up Matters specified in Article 14-5 of the Securities and Exchange Act Other resolutions passed by two thirds of all Directors but yet to be approved by the Audit Committee The 15th meeting of the 14th session March 27, 2020 1. The suitability and independence evaluation and appointment of the Company’s Certified Accountant. V 2. 2019 annual statement of internal control system. V Resolution result of the Audit Committee (March 27, 2020) : Approved by all directors present at the meeting. Handling of the opinion of the Audit Committee by the Company: Approved by all
	Board of Directors Meeting Date Date		Content of Motion and Follow-up			Matters specified in Article 14-5 of the Securities and Exchange Act	Other resolutions passed by two thirds of all Directors but yet to be approved by the Audit Committee
	The 15th meeting of the 14th session March 27, 2020		1. The suitability and independence evaluation and appointment of the Company’s Certified Accountant.			V
			2. 2019 annual statement of internal control system.			V
			Resolution result of the Audit Committee (March 27, 2020) : Approved by all directors present at the meeting.
			Handling of the opinion of the Audit Committee by the Company: Approved by all

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Directorspresent at the meeting.
The 18 th meeting
of the 14th
session
August 13, 2020
1. The Company intended to sell the land and buildings in
Guishan District, Taoyuan City.
V
Resolution result of the Audit Committee (August 13, 2020) : Approved by all directors
present at the meeting.
Handling of the opinion of the Audit Committee by the Company: Approved by all
Directors present at the meeting.
The 19 th meeting
of the 14th
session
November 12,
2020
1. Amended the Company's "Internal Audit System",
"Accounting Professional Judgment Procedure,
Accounting Policy and Estimation Change Process",
"Management of Applicable International Financial
Reporting Standards"and"Accounting System".
V
Resolution result of the Audit Committee (November 12, 2020): Approved by all directors
present at the meeting.
Handling of the opinion of the Audit Committee by the Company: Approved by all
Directors present at the meeting.
Other matters to be recorded:
I. With regard to the implementation of the Audit Committee, if any of the following circumstances occurs, the dates,
terms of the meetings, contents of motions, all Audit Committee resolutions, and the Company's handling of such
resolutions shall be specified:
(1) Matters specified in Article 14-5 of the Securities and Exchange Act.
(2) Aside from matter stated above, other resolutions passed by two thirds of all Directors but yet to be approved by
the Audit Committee.
II.Regarding recusals of Independent Directors from voting due to conflicts of interests, the names of the Independent
Directors, contents of motions, reasons for recusal, and results of voting shall be specified: None.
III.Communication between the Independent Directors, chief internal auditor, and CPAs (including the key items,
methods, and results of audit of finances and operations)
(1) The Company holds regular Audit Committee meeting. Besides having the internal audit officers who shall attend
the meeting, the Company will invite accountants and relevant supervisors to attend as required.
(2) The Audit Committee is formed by all Independent Directors of the Company. The internal audit officers would
meet with the Independent Directors before the end of each month to provide audit report for the Directors’
review and signature. In addition, the audit officers would regularly meet with the Independent Directors and
accountants twice every year to ensure a good communication.
Date
Way of
communication
Motion
Results
January 16,
2020
Meeting
Discuss the preliminary views on
the audit plan, risk assessment
and key audit matters in 2019.
All the Independent Directors present at
this meeting had no opinion.
March 27,
2020
Corporate
governance meeting
Accountants report and explain
the verification status and result
of the individual and consolidated
financial reports of 2019.
The Audit Committee passed the financial
report 2019 and submitted it to the Board
of Directors for approval, and announced
and reported to the competent authority as
scheduled.
August 13,
2020
Corporate
governance meeting
Accountants report and explain
the verification status and result
of the individual and consolidated
financial reports of the first half
of 2020.
The Audit Committee passed the financial
report for the first half of 2020 and
submitted it to the Board of Directors for
approval, and announced and reported to
the competent authority as scheduled.
December 30,
2020
Meeting
Discuss the preliminary views on
the audit plan, risk assessment
and key audit matters in 2020.
All the Independent Directors present at
this meeting had no
opinion.
(3) The Audit Committee shall meet with the Company's CPA on a regular basis every year to review and verify the
financial statements with, and communicate matters according to relevant laws and regulations.

25 -

(III)Corporate Governance Implementation Status and Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof

Thereof
Evaluation Item	Implementation Status (Note)			Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
I. Does the Company establish and disclose its corporate governance best-practice principles based on the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies?	`✓`		The Company has formed a “Corporate Governance Best-Practice Principles” to protecting shareholders' rights and interests, strengthening the functions of the Board of Directors, respecting the rights and interests of the stakeholders, and enhancing the transparency of information	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
II. Shareholding structure & shareholders' rights (I) Does the Company establish internal operating procedures or policies to handle shareholder suggestions, doubts disputes and lawsuits and implemented such procedures or policies? (II) Does the Company possess a list of major shareholders and list of ultimate owners of these major shareholders? (III) Has the Company established and enforced risk control and firewall systems with its affiliate companies? (IV) Has the Company adopted internal rules prohibiting company insiders from trading securities using information not disclosed to the market?	`✓` `✓` `✓` `✓`		(I) The Company has set up a website to collect shareholder’s suggestions, and positions for spokesperson, and legal office to handle shareholders’ suggestions, doubts, and litigations. (II) The Company would by law report the changes to the shareholdings of the internal employees, including Directors, managers, and shareholders who hold more than 10% of the shares on the website the public information observatory on a monthly basis. (III) The Company has established the “Measures for Governance and Supervision of Subsidiaries” to ensure that all financial activities are operated in accordance with the internal control system. (IV) The Company has established an “Insider Trading Policy” to prohibit internal employees from trading securities using undisclosed market information.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed

26 -

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
				Companies.
III. Composition and responsibilities of the Board of Directors (I) Is the composition of the Board of Directors determined by taking appropriate policy based on diversity and ensure the actual implementation? (II) In addition to the Remuneration Committee and Audit Committee, has the Company voluntarily established other functional committees? (III) Has the Company established standards to measure the performance of the Board, and does the Company implement such annually? Does it report the results of the performance evaluation to the BOD and use them as a reference for each Director's remuneration and nomination of term renewal?	`✓` `✓` `✓` `✓`		(I) 1. The Company is governed by the diversification policy of the “Corporate Governance Best-Practice Principle”, in which members of the Board of Directors have different professional backgrounds, genders and working fields, so it helps to improve the board structure of the Company. 2. Current Board of Directors in office is composed of 11 Directors, including 3 independent Directors. The experienced members are well equipped with expertise in finance, business and management. In alignment with the policy of gender equality promotion, the ratio goal of female Board members is 25% and above. Currently, there are 11 Directors include 3 female Board members are appointed, reaching 27%. Please refer to Table 2 for detailed information. (II) The Company has established a Remuneration Committee and the Audit Committee; other functional committees will be formed according to the future operational needs to strengthen the supervision and management function of the Board of Directors. (III) The Company has established a “Board Assessment Management Method” and regularly conducts performance appraisal every year and submit the results of performance assessments to the Board of Directors, to improve the function, operational efficiency, and reference in the nomination and additional office term of the Board of Directors of the Company. The result of the assessment (submitted on March 25, 2021) is based on the questionnaire responded by members of the Company’s Board of Directors and each functional committee (Audit Committee and Remuneration Committee) and actual meetingstatus,to conduct analysis and	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.

27 -

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
			sorting. The overall operation result is “nearly strongly agree” (average is approximate 4.6 points, 1 strongly disagree, 2 disagree, 3 neutral, 4 agree, 5 strongly agree.) , giving a positive appraisal. Evaluating matters and results are listed as the followings: 1. Evaluation of the performance of the Company’s Board of Directors (1) Evaluating items cover five aspects: Participation in the operation of the Company; Improvement of the quality of the Board of Directors' decision making; Composition and structure of the Board of Directors; Election and continuing education of the Directors; and Internal control. (2) Evaluating result: the Board of Directors and operating team have great communication and respect professions, enable the Board members to grasp the operating status. 2. Board members’ evaluation (1) Evaluating items cover six aspects: Alignment of the goals and missions of the Company; Awareness of the duties of a Director; Participation in the operation of the Company; Management of internal relationship and communication; The Director's professionalism and continuing education; and Internal control. (2) Evaluating result: Directors (including Independent Directors) are professional and responsible. They have great communication and the meetings are going smoothly. 3. Evaluation of the performance of functional committee (1) Evaluating items cover five aspects: Participation in the operation of the Company; Awareness of the duties of the functional committee; Improvement of quality of decisions made by the functional committee; Makeup of the functional committee and election of its members and Internal control. (2) Evaluating result: Independent Directors can perform operation of each functional committee

28 -

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
(IV) Does the Company regularly assess on the independence of CPAs?	`✓`		independently and effectively. (IV) The Company shall evaluate the independence of the CPA voluntarily once a year, in line with the “Regulations for the Appointment and Administration Changes of CPA firm and CPA” and report the results for resolutions in Audit Committee meeting on March 27, 2020 and Board of Directors meeting on March 27, 2020. Both Yu, Shu-Fen and Chang, Shu-Chiung (CPA) from PwC Taiwan are qualified with the independence assessment standards, and are eligible to obtain the CPA position for the Company. The important evaluation categories of the CPA are listed as per below: 1. The CPA has not been a Director or an Independent Director of the Company or its affiliated enterprise presently or in the last two years. 2. The CPA is not a shareholder of the Company or its affiliated enterprises. 3. The CPA is not remunerated by the Company or its affiliated enterprises.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
IV. Does the Company appoint adequate persons and a chief governance officer to be in charge of corporate governance matters (including but not limited to providing Directors and Supervisors required information for business execution, assisting Directors and Supervisors in following laws and regulations, handling matters in relation to the Board meetings and shareholders' meetings and keeping minutes at the Board meetings and shareholders' meetings according to law)?	`✓`		(I) The Company has appointed a chief corporate governance officer, and the finance and accounting investment office of the Company is in charge of the corporate governance related affairs. Main responsibilities are as follows: 1. Develop and plan appropriate corporate systems and organizational structures to promote the independence of the Board of Directors, corporate transparency, the compliance of laws and regulations, and the implementation of internal audit and control. 2. Consult and develop meeting agenda before the Board meeting, and notify all Directors to attend the meeting at least 7 days before the meeting to facilitate the Directors' understanding of the meeting topics, and shall provide prior notice if there are potential topics related to the stakeholders which should be avoided as necessary. 3. Register the date of shareholders' meeting every year before the due date prescribed by law. Prepare and report the meetingnotice,handbook,and minutes	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.

29 -

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
			before the due date. Apply for registration change after an amendment of the articles or a re-election of Directors have taken place. (II) The status of continuing education hours of the chief corporate governance officer, please refer to page 42 in this annual report.
V. Does the Company establish communication channels and a dedicated section on the Company website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers) to respond to material corporate social responsibility issues in a proper manner?	`✓`		The Company has established the position of a spokesperson and a deputy spokesperson. Depending on the stakeholders, it may instruct the Accounting and Investment Management Office, the Human Resources Office, the Purchasing Office and other departments to establish appropriate communication channels with all stakeholders to maintain legal rights of both parties, with contact information for spokespersons and business teams on the Company's website.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
VI. Does the Company appoint a professional shareholder service agency to deal with shareholder affairs?	`✓`		The Company has appointed KGI Securities Co., Ltd. as the professional stock service agency for shareholder affairs.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
VII. Information disclosure (I) Has the Company established a corporate website to disclose information regarding the Company's financial, business, and corporate governance status? (II) Has the Company established any other information disclosure channels (e.g. maintaining a website in English, designating people to handle information collection and disclosure, appointing spokespersons, webcasting investors' conference, etc.)? (III) Does the Company announce and declare the annual financial report within two months after the end of the fiscal year? Does it announce and declare the first, second and third quarter financial reports and operating conditions of each month as	`✓` `✓`	`✓`	(I) The Company has established Mandarin/English websitehttp://www.cmcnet.com.tw/maintai ned by professional, to disclose finance, business, stock affairs, corporate governance, and other related information for investor’s reference. (II) The Company has established the spokesperson system, in which a professional is in charge of collecting the important information of the Company and disclosing at the “Public Information Observatory” according to the operating procedures prescribed by the competent authority. The spokesperson/deputy spokesperson would make unified statement to the public. (III) The Company publicly announces and registers the financial reports for the first, second and third quarters as well as its operating status for each month. They are all in line with related principles from the competent authority.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.

30 -

Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
soon as possible before the prescribed period?
VIII.Does the Company have other important information that helps to understand the operation of corporate governance? (I) Employee’s rights, interests, and care (II) Investor relation (III) Supplier relations (IV) Stakeholders’ rights	`✓` `✓` `✓` `✓`		(I) The Company upholds respect for human rights and eliminates all forms of forced labor and employment discrimination. The Company promise that human resource policy will be regardless of race, class, language, thought, religion, party, place of birth, gender tendency, age, marriage, appearance, facial features, and trade union status; for employment conditions, compensation, welfare, training, assessment and promotion, the Company also strives for fairness. For the possibility of harming the rights and interests, the Company also set up multiple channels such as employee symposiums, publicity sessions, suggestion boxes and grievance lines to help employees provide advice and achieve harmonious labor relations. (II) The Company's website has an investor relations area. Exposing financial stocks and corporate governance and other assets. Relevant information and instant announcement in accordance with the regulations on the website of the public information observatory designated by the competent authority. Relevant information and instant announcement in accordance with the regulations on the website of the public information observatory designated by the competent authority. (III) In accordance with the internal control system and ISO quality process system of CMC, including the requisition, procurement process and feeding, quality acceptance process, payment verification process, etc. (IV) The Company has a variety of channels to communicate with interested parties to safeguard the legitimate rights and interests of both parties.	In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed

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Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
(V) Continuous education and training and the Directors (VI) Risk management policies and risk evaluation implementation standards (VII) Implementation of customer policies (VIII) What is the circumstance of the Company purchasing liability insurance for the Directors?	`✓` `✓` `✓` `✓`		(V) Please refer to Table 3 “Directors' Training of the Company”. (VI) Please refer to page 311 Management's Discussion and Analysis of Financial Condition and Risk Factors. (VII) The Company maintains a good communication channel with its customers on weekdays, keeps control of customer order requirements, and regularly tracks customer payment progress, in order to create profitability of the Company while taking into account the control of customer credit risk. (VIII) The Company purchases liability insurance with an upper limit of USD10 million in order to meet the requirements of the competent authority and protect the Directors from personal liability and financial losses caused by third-party litigation due to the execution of their duties.	Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies.
(IX) Improvements made in the most recent fiscal year in response to the results of corporate governance evaluation conducted by the Corporate Governance Center of the Taiwan Stock Exchange Corporation, and improvement measures and plans for items yet to be improved. (I) Indicators of improvement drawn from the seventh Corporate Governance Evaluation in comparison with last year’s result: 1. The Company has revised its dividend policy and disclosed the specific and accurate dividend policy in the annual report. 2. The Company pays dividends in the year under evaluation, which are distributed within 30 days after the ex-dividend base date. 3. An information security risk management structure has been set up and exposed on the Company's website. 4. Planning on referring to The International Covenant of Human Rights, establishing human-rights-protected policy and specific managing programs. (II) Priorities and measures to be undertaken from the result of the seventh Corporate Governance Evaluation: 1. Disclose the Connection between the Performance Evaluation and Remuneration of Directors and Managers. 2. Intends to develop an intellectual property management plan which is linked to the operational target.

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Evaluation Item	Evaluation Item	Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
			Yes		No	Description
[Table 2] Diversification of Board Members										Industrial experience and professional expertise Business Administration Decision-Making Industrial Knowledge Finance and Accounting Legal matters V V V V V V V V V V V V V V V V V V V V V
Diversified Core Competences Name of Director		Basic composition								Industrial experience and professional expertise
	Nationality	Gender		Serve concurrently as the Company's employees			Tenure of Independent Director			Business Administration	Decision-Making	Industrial Knowledge	Finance and Accounting	Legal matters
							Under 3 years	3 to 9 years	Over 9 years
Wong, Ming-Sen	R.O.C.	Male		V						V	V	V
Yang, Ya-Hsiu	R.O.C.	Female		V						V	V	V
Kuo, Junne-Huey	R.O.C.	Male									V		V
Tseng, Yi-An	R.O.C.	Male										V
Tsai, Tsung-Han	R.O.C.	Male										V
Tsai Wong, Ya-Li	R.O.C.	Female								V			V
Yeh, Min-Cheng	R.O.C.	Male										V	V
Chen, Hsien-Tai	R.O.C.	Male										V
Shiau, Fung-Shyung	R.O.C.	Male						V		V	V		V
Wu, Cheng-Hsiu	R.O.C.	Male						V						V
Lee, Ming-Yen	R.O.C.	Female						V					V	V

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Evaluation Item	Evaluation Item	Evaluation Item	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Implementation Status (Note)	Deviations from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
			Yes	No	Description
[Table 3] Status of Continued Studies Taken by Directors in Year 2020							Training Hours 3 3 3 3 3 3 3 3 3 3 3 3 3
Position	Name	Date		Training Institution		Course Name	Training Hours
Chairman	Wong, Ming-Sen	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Chairman	Wong, Ming-Sen	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Director	Yang, Ya-Hsiu	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Director	Yang, Ya-Hsiu	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Director	Kuo, Junne-Huey	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Director	Kuo, Junne-Huey	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Director	Yeh, Min-Cheng	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Independent Director	Shiau, Fung-Shyun g	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Independent Director	Shiau, Fung-Shyun g	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Independent Director	Wu, Cheng-Hsiu	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Independent Director	Wu, Cheng-Hsiu	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Independent Director	Lee, Ming-Yen	2020.08.06		Taiwan Corporate Governance Association		How Corporates Strengthen Their Strategy Execution	3
Independent Director	Lee, Ming-Yen	2020.11.11		Taiwan Corporate Governance Association		Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3

Note: Reasons for checks of "Yes" or "No" of status should be specified in "Summary Description" column.

(IV) The composition, responsibilities and operation of the Company's Salary and Remuneration Committee:
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Professional Qualifications and Independence Analysis of the Remuneration Committee Members

Title (Note 1)	Qualifications Name	Meeting One of the Following Professional Qualification Requirements, Together with At Least Five Years of Work Experience	Meeting One of the Following Professional Qualification Requirements, Together with At Least Five Years of Work Experience	Meeting One of the Following Professional Qualification Requirements, Together with At Least Five Years of Work Experience	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Status of independence (Note 2)	Number of Other Public Companies in Which the Individual is Concurrently Serving as a Remuneration Committee Member
		An instructor or higher position in a departmen t of commerce , law, finance, accountin g, or other academic departmen t related to the business needs of the Company in a public or private junior college, college or university	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist who Has Passed a National Examination and Has Been Awarded a Certificate in a Profession Necessary for the Business	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	Shiau, Fung-Shyung	✓			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	3
Independent Director	Wu, Cheng-Hsiu		✓		✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	2
Independent Director	Lee, Ming-Yen			✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	✓	-

Note 1: For the title, please fill in Director, Independent Director, or others.

Note 2: Please check “ ✓ ” the corresponding boxes if the members meet the following conditions during the two years prior to the nomination and during the term of office.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a Director or Supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an Independent Director of the Company's parent company or any subsidiary appointed in accordance with the Regulations Governing the Appointment of Independent Directors and Compliance Matters for Public Companies or other local laws and regulations.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or is ranked in the top 10 in shareholdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the above persons in the preceding three subparagraphs.
(5) Not a Director, Supervisor, or employee of an institutional shareholder that directly holds 5%or more of the total number of issued shares of the Company, or that ranks among the top 5 in shareholdings, or that designates its representative to serve as a Director or Supervisor of the Company under Paragraph 1 or 2, Article 27 of the Company Act (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(6) Not a Director, Supervisor or employee of a company controlled by the same person who has shares over half of the Company's Director seats or voting rights (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(7) Not a Chairman, General Manager, or employee of another company or institution who, or whose spouse, is a Director, Supervisor, or employee holding an equivalent position of the Company (except for an Independent Director appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, the Company and its parent or subsidiary or a subsidiary of the same parent).
(8) Not a Director, Supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specified company or institution that has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% but less than 50% of the total issued shares of the Company and concurrently serving as an Independent Director, as appointed in accordance with the Act or the laws and regulations of the local country, at the Company and its parent or subsidiary or a subsidiary of the same parent).
(9) Not a professional individual, sole proprietorship, partnership, owner of a company or institution, partner, Director, Supervisor, managerial officer or spouse thereof that provides auditing service for the Company or any of its affiliates, or provides commercial, legal, financial, or accounting service with cumulative remuneration less than NT$500,000 in the past two years. However, this does not apply in cases where members of the Remuneration Committee, the Review Committee for Public Tender Offer or the Special Committee for Mergers and Acquisitions perform their functions in accordance with the Securities and Exchange Act or the Business Mergers and Acquisitions Act.
(10) Not under any of the categories stated in Article 30 of the Company Act.
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Operational status of the Remuneration Committee
(1) There are 3 members in the Company’s Remuneration Committee.
(2) Current term: June 12, 2018 – June 11, 2021. There were 3 Remuneration Committee meetings (A) in the most recent year (2020). The qualifications and attendance are listed as per below:

Position	Position	Name	Name	Attendance in Person (B)	Attendance by Proxy	Attendance Rate (%) (B/A)(Note 1)	Note
Convener		Shiau, Fung-Shyung		3	0	100%
Committee Member		Wu, Cheng-Hsiu		3	0	100%
Committee Member		Lee, Ming-Yen		3	0	100%
Remuneration Committer Content of Motion and Follow-up Resolution The Company's treatment of the Remuneration Committee's opinion 4th Session 4th meeting 2020.01.16 The Company’s year-end bonus distribution for managers of 2019. Approved by all Committee members. Proposed to, and approved by all attended Board members 4th Session 5th meeting 2020.3.27 The Company’s Distribution of Employee Remuneration and Director Remuneration for 2019. Approved by all Committee members. Proposed to, and approved by all attended Board members and proposed to the report of the shareholders’ meeting. 4th Session 6th meeting 2020.8.1 The Company’s Distribution of Director Remuneration for 2019 Approved by all Committee members. Proposed to, and approved by all attended Board members Other matters to be recorded: I. If the Board of Directors decline to adopt or modify a suggestion from the Remuneration Committee, it should specify the date of the meeting, session, content, resolution of the Board of Directors, and the Company’s response to the opinion of Remuneration Committee: None II. For resolution(s) made by the Remuneration Committee with the Committee members voicing opposing or qualified opinions on the record or in writing, please state the meeting date, term, contents of motion, and opinions of all members and the Company's handling of said opinions: None.
	Remuneration Committer		Content of Motion and Follow-up			Resolution	The Company's treatment of the Remuneration Committee's opinion
	4th Session 4th meeting 2020.01.16		The Company’s year-end bonus distribution for managers of 2019.			Approved by all Committee members.	Proposed to, and approved by all attended Board members
	4th Session 5th meeting 2020.3.27		The Company’s Distribution of Employee Remuneration and Director Remuneration for 2019.			Approved by all Committee members.	Proposed to, and approved by all attended Board members and proposed to the report of the shareholders’ meeting.
	4th Session 6th meeting 2020.8.1		The Company’s Distribution of Director Remuneration for 2019			Approved by all Committee members.	Proposed to, and approved by all attended Board members

Note 1:

(1)Those who have resigned from the Remuneration Committee before the end of the year, shall indicate the date of resignation in the remarks column. The actual attendance rate (%) shall be calculated based on the number of meetings of the Salary and Remuneration Committee, during their employment and their actual attendance.
(2) Before the end of the year, if the Salary and Remuneration Committee is re-elected, the members of the new and old Salary and Remuneration Committee shall be filled in, and the remarks column shall indicate the member as the old, new or re-election and re-election date. His or her attendance rate (%) will be calculated on the basis of number of Remuneration Committee meetings held during his or her tenure and number of such meetings attended.
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(V) Corporate Social Responsibility

Evaluation Item	Status (Note 1)	Status (Note 1)	Status (Note 1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary Description (Note 2)
I. Does the Company follow the significant principle, conducting risk assessment of environment, society, and corporate management issues related to business operation, and stipulate related risk management policy or strategies? (Note 3)	`✓`		I. The Company has established a Code of Practice for Corporate Social Responsibility, while actively implement corporate social responsibility for the Company's overall operational activities, review and revise it in the future based on actual implementation. Refer to #page 276# of the annual report for risk assessment of environment, society, and corporate management issues related to business operation, and management policy.	In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.
II. Does the Company establish exclusively (or concurrently) dedicated first-line managers authorized by the Board to be in charge of proposing the corporate social responsibility policies and reporting to the Board?	`✓`		II. The Company promotes corporate social responsibility by the Finance and Investment Management Office, and regularly reports to the Board of Directors.	In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.
III. Environmental issues (I) (I)Does the Company establish proper environmental management systems based on the characteristics of their industries? (II) Does the Company endeavor to improve utilized efficiency of each resource, and use recycled materials that have mild impact on environment? (III) Does the Company evaluate the potential risk and chance of climate change posing to the business now and future, and adopt countermeasures of issues related to climate? (IV) Does the Company calculate greenhouse-gas emissions, water consumption, and total weight of wastes in the past two years, and set up the policy of energy conservation and carbon reduction, greenhouse-gas reduction, water consuming reduction, or other waste management? IV. Social issues (I) Does the Company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?	`✓` `✓` `✓` `✓` `✓`		(I) The Company is promoted in accordance with relevant laws and regulations such as labor safety and health and environmental protection and continues to promote the TOSHMS, OHSAS18001 and ISO14001 systems to provide a safe working environment. Certified Item Acquired Date Effective Date TOSHMS November 28, 2018 March 11, 2021 OHSAS18001 November 28, 2018 March 11, 2021 ISO 14001 November 28, 2018 November 27, 2021 (II) The Company is committed to improving the efficiency of the use of various resources to reduce the amount of raw materials, waste, and reduce environmental damage. (III) The Company has passed the ISO14064 International Greenhouse Gas Inventory certification, and related products to obtain product carbon footprint certification, and based on the operating conditions and greenhouse gas inventory results, established the Company's energy-saving and carbon reduction and greenhouse gas reduction strategies, to reduce the impact of the Company's operating activities on climate change. (IV) The Company has calculated greenhouse-gas emissions, water consumption, and total weight of wastes in the past two years, and set up the policy of energy conservation and carbon reduction, greenhouse-gas reduction, water consuming reduction, or other waste management. (I) The Company has established working rules and management methods in accordance with labor laws and regulations to protect the legitimate rights and interests of employees, and does not discriminate or discriminate because of: race, class, nationality, religion, age, gender,	In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.

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Evaluation Item	Status (Note 1)	Status (Note 1)	Status (Note 1)	Deviations from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Summary Description (Note 2)
(II) Does the Company establish employee remuneration policy (including compensation, furlough, and other benefits), and reflect the corporate business performance or achievements in the employee remuneration? (III) Does the Company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis? (IV) Does the Company provide its employees with career development and training sessions? (V) In terms of customer health and safety and customer privacy in marketing or labeling their products and services, does the Company follow related laws and international guidelines, establishing related consumers’ rights protected policy and grievance procedure? (VI) Has the Company established the supplier management policies requesting suppliers to comply with relevant laws and regulations related to environmental protection, occupational safety and health or labor rights and supervised its implementation?	`✓` `✓` `✓` `✓` `✓`		disability, marriage, pregnancy, sexual orientation, and social group preferences. (II) The Company established working regulations, salary management guidelines, and the standard of calculating salary, and staff and workers’ Welfare Committee in accordance with labor laws and regulations; implementing employee remuneration policy, and reflect the corporate business performance or achievements in the employee remuneration. (III) The Company continues to promote the TOSHMS, OHSAS18001 and ISO14001 systems to provide a safe working environment for employees, and regularly conduct health checks for general and special operations, paying attention to the health of employees, and organizing health talks from time to time to increase the concept of employees caring for themselves. (IV) The Company has established education training for employees. (V) The Company conducted costumer’s management following related laws and regulations and international guidelines, and provides product grievance procedure to ensure consumers’ rights. (VI) The Company requires suppliers follow related regulations of eco-friendly, occupational safety and hygiene, and practiced implementation.	In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies. In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.
V. Does the Company refer to internationally-used standards or guidelines for the preparation of reports such as CSR reports to disclose non-financial information? Are the reports certified or assured by a third-party accreditation body?	`✓`		V. By referring to internationally-used standards or guidelines, the Company has prepared reports such as CSR reports to disclose non-financial information. The report has not been certified or assured by a third-party accreditation body.	In line with the Corporate Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.
VI. If the Company has established corporate social responsibility best-practice principles based on the "Corporate Social Responsibility Best Practice Principles for TWSE/TPEx Listed Companies," describe the implementation and any deviations from such principles: The Company has a "Code of Practice for Corporate Social Responsibility" which is relevant to environmental protection, community participation, social contribution, social services, social welfare, customer rights, human rights, safety and health, etc., can be found on the Company's website; For social responsibility strategies and implementation, please refer to #page 33# of this annual report, for the implementation of social responsibility.
VII. Other important information to facilitate a better understanding of corporate social responsibility practices: (I) Environmental protection: According to the test conducted by approved Environmental Protection Agency (as per contract of the Company), the substances emitted into the air are volatile organic gases, and the overall emissions are lower than the regulatory standards. According to the test report, detected gas exhaust values are in line with regulatory standards. In the care of the environment and the reduction of environmental impact, the Company comes from my requirements with the most stringent standards. If the regulations set new standards in the future, the Company will adhere to the new regulations. (II) Community service, social contribution and social welfare CMC and the Chairman,Wong,Ming-Sen,have established the CMC Culture Foundation and Taiwan Chi Yuan Culture Foundation for over

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Status (Note 1) Deviations from the Corporate Social Responsibility Best Evaluation Item Practice Principles for Yes No Summary Description (Note 2) TWSE/TPEx Listed Companies and Reasons Thereof nearly 2 decades. Taiwan Chi Yuan Culture Foundation aims to aim to enhance Taiwan’s occupational strength of the go, complete the go’s professional system in Taiwan, generally improve go culture level in Taiwan, and provide professional and amateur players in Taiwan with actual experience and exchanged chance in international competitions, and cultivate more brilliant talents of go. In order to let Taiwan professional go formally reach the global stage, and make Taiwanese professional go players have a stand in international go, and further improve Taiwan’s go competence. The Chairman, Wong, Ming-Sen, has been passionate about art and culture in many years, and has taken account of the combination of culture and life, therefore, he established the CMC Culture Foundation. Since the establishment of the cultural foundation, it has conducted culture-establishing works such as strongly promoting artistic cultural life, sponsoring exhibitions and performances of Taiwanese artistic crew, taking account of the conservation of traditional cultures, sponsoring researches of art history essay, and paying close attention to artistic publishing. [Taiwan Chi Yuan Culture Foundation] Founded since 2000, Taiwan Chi Yuan Culture Foundation was donated by, and inaugurated as the Chairman, Wong, Ming-Sen of the CMC Group with an aim to enhance Taiwan’s occupational strength of the go, improve the go’s professional system, and promote the cultural level in the go. Because Go can cultivate people's thinking and logical reasoning ability; the overall view of human adjustments, and the psychological resistance to setbacks; therefore, the go club also encourages people to get in touch with the Go culture and develop a professional go player system. In order to train professional go players, the go club has specially set up a student training system to allow more outstanding and potential amateur go players to enter the go club for training, and established a professional go player selection and promotion mechanism. In addition to focusing on hosting professional go tournaments domestically, Taiwan Chi Yuan also actively participates in international world tournaments and selects Taiwanese representatives for world tournaments. Four professional competitions were hold in 2020: the Tianyuan Championship, the CMC Gosei Championship, National Championship and the UMC Cup Professional Go Race as well as more than ten international world tournaments and Taiwan Representative Selection. In addition, the Taiwan Chi Yuan also co-organizes several highly iconic world tournaments, the “LG Cup Korean Daily War Chess, “GLOBIS Cup World Go Championship”, “Chunlan Cup World Professional Go Championship”, “Tsingyuan Wu Cup World Female Championship” and “Samsung Fire Cup World Go Masters Tournament”. In summary, Taiwan Chi Yuan provides professional and amateur players in Taiwan with actual experience and exchanged chance in international competitions, and cultivates more brilliant talents of go. In order to let Taiwan professional go formally reach the global stage, and make Taiwanese professional go players have a stand in international go, and further improve Taiwan’s go competence. [CMC Culture Foundation] In 2020, Covid-19 became globally rampant. Internationally renowned art museums were closed one after another, art fairs and auctions were canceled successively, and art performances were postponed, causing an unprecedented blow to the global cultural industry. In cooperation with the government's anti-pandemic regulations, the CMC Culture Foundation continued to support domestic art performance groups during the pandemic, such as sponsoring the annual winter performance of the NTU Symphony Orchestra, and also recommending and sponsoring outstanding art exhibitions, such as: purchasing the tickets to support the "Edo Elegance - Five Ukiyoe Artists Exhibition" curated by Media Sphere Communications LTD, donating money to sponsor the Paper Windmill Theater Troupe's 368 Township and Urban Children's Art Project, Godot Theater, etc., and sharing the difficulties with art groups. As the pandemic eased in October, the CMC Culture Foundation participated for the first time in the "2020 Shilin International Culture and Arts Festival" hosted by the Shilin District Office and the Government of Taipei City. The event was held in the dormitory area of the US army in Shanzihou of the historic Yangming Mountain. The Foundation provided cultural and historical lectures in collaboration with Chinese Culture University, sponsored lunch boxes for all art and cultural performance groups, and assisted the Shilin District Office to plan a two-week US-aid military model exhibition, etc., adding cultural and historical intellectual elements to the garden party, and guiding the participants to understand the unique humanistic texture of Shanzihou. In addition to the promotion and sharing of art and culture, CMC Culture Foundation also plays an important role in charitable events. It purchased all the grapes from Lu Grapes Farm in Puhsin, Changhua for a charity sale, and donated all the profit to Huashan Social Welfare Foundation. It also supports senior meal service of Eden Social Welfare Foundation and Private Pu-man Jen-Ai Home, sponsors Wan-fang Disability Center and its art creation exhibition, and funds Fu-shan Church that extremely lack of resources in building classroom in tribes to preserve aboriginal traditional culture. It hopes to deliver kindness to every corner and contributes. A combination of arts and social charity is a popular culture that CMC values more. It is the best support and encouragement for art creation ability from people with disabilities. The "City Art Gallery - The Whole City Is My Art Gallery” was held by Eden Social Welfare Foundation’s Wan-fang Disability Center and assisted by the Department of Social Welfare, Taipei City Government and funded by CMC Culture Foundation. Through united creation fair, micro-living theatre for the handicapped, and workshop, it helps people with physical and mental disabilities to connect with public, and further encourages the family of the people with disabilities to build up confidence and self-value affirmation that creates special meanings. The foundation has participated in annual presentations from Wan-fang Disability Center in recent years. The center has helped many people who are severely handicapped learn some basic skills in life and art education. Through painting, they get to express many feelings that cannot be described in words and emotions that cannot be controlled. They hold presentations every year for support and affirmation. CMC culture foundation has been participated in three consecutive years and surprisingly found that the control ability and performance of the handicapped people are getting better. Arts can be great therapy and also increases the confidence and courage of the family that creates a positive cycle. The CMC culture foundation strongly believes that arts and culture are inevitable parts of life that enrich and nourish our hearts and souls. The foundation will continue to promote arts and culture, support great artists and performing groups, promote cultural interaction, in hopes that art can elevate the living tastes and brings more positive energy and aesthetics to society.

Note 1: If “YES” is marked in the operating status, please illustrate the significant policies, strategies, measures, and implement that are adopted; if “NO” is marked in the operating status, please explain reasons and illustrate the plan of related policies, strategies, and measures that will be adopted in the future.
Note 2: The operating status shall be substituted by marking referring to the corporate social responsibility report and pages of the index if the Company has prepared the corporate social responsibility report.
Note 3:The significant principle refers to issues related to environment, society, and business management, bringing significant impacts on investors and shareholders of the Company.
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(VI) Ethical Corporate Management

Evaluation Item	Status (Note 1)	Status (Note 1)	Status (Note 1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
I. Establishment of ethical corporate management policies and programs (I) Has the Company established the ethical corporate management policies approved by the Board of Directors and specified in its rules and external documents the ethical corporate management policies and practices and the commitment of the Board of Directors and senior management to rigorous and thorough implementation of such policies? (II) Does the Company establish assessment mechanism for risks of unethical behaviors, and regularly analyze and evaluate operating activities having higher risks of unethical behaviors within the operating scope, and thus establish plans preventing unethical behaviors, and at least include preventive measures set out in paragraph 2, Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”? (III) Does the Company clearly state the operating procedure, behavior guidelines, discipline of violation, and grievance procedure in the unethical behavior prevented programs, and practice implementation, and regularly review and amend the preceding program?	`✓` `✓` `✓`		(I) The Company has established an Ethical Corporate Management Best Practice Principles with reference to the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies” and has actively implemented its operating policies. (II) The Company has established” Moral Behaviors Principle”, and analyzed operating activities with higher risks of unethical behaviors within the operating scope, and enhanced related prevention measures. (III) The Company’s “Ethical Operation Principle” sets program of preventing unethical behaviors, and states operating procedure, behavior guidelines, and grievance system, and practice implementation.	In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies.
II. Fulfillment of ethical corporate management (I) Does the Company evaluate business partners’ ethical records and include ethics-related clauses in the business contracts signed with the counterparties? (II) Has the Company set up a dedicated unit under the Board of Directors to promote ethical corporate management and regularly (at least once every year) report to the Board of Directors the implementation of the ethical corporate management policies and prevention programs against unethical conduct?	`✓` `✓`		(I) The Company will assess the ethical corporate management of business records from vendors or business entities in contact, and require important suppliers to sign a “Letter of Commitment" to indicate the terms against improper interest. (II) The Company appointed the General Accounting and Investment Management Office, to be responsible for establishing policy and supervision of ethical corporate management (presented on January 21, 2021): 1. Each Board of Directors, the stakeholders involved in the Board of Directors are subject to the principle of avoidance of interests. 2. Under the supervision of the Board of Directors, the management personnel's financial information disclosed to the securities authorities on a quarterly basis is complete, fair, accurate and immediate. 3. The new employee training emphasizes the importance of integrity, and clearly prohibits dishonesty. 4. In 2020, the total number of participants in internal and external education training related to integrity operation is 370 people, and total training hours are 1175 hours. The course contents include product safety, labor safety, corporategovernance,and internal	In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies.

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Evaluation Item	Status (Note 1)	Status (Note 1)	Status (Note 1)	Deviations from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and Reasons Thereof
	Yes	No	Description
(III) Has the Company established policies to prevent conflicts of interest, provide appropriate communication channels, and implement them accordingly? (IV) Has the Company established an effective accounting system and internal control system for the implementation of integrity operation, and the internal auditing unit made related audit plan based on the assessment result of the dishonesty risk to check the implementation of the dishonesty prevention plan, or entrusts an accountant to perform the check? (V) Does the Company regularly hold internal and external education training for ethical corporate management?	`✓` `✓` `✓`		control and internal audit, etc. (III) The Company has established a policy to prevent conflicts of interest and providing appropriate representation channels in the “Ethical Corporate Management Best Practice Principles” and “Rules of Procedure for Board of Directors Meetings” and implemented them. (IV) The Company has established an effective accounting system and internal control system, and the auditors regularly check the compliance of the internal control system. (V) The Company holds educational training from time to time, to allow all personnel fully understands the Company's determination, policies, prevention programs and results in violations of dishonesty.	In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies.
III. Operation of the whistle-blowing system (I) Does the Company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up? (II) Has the Company established the standard operating procedures for investigating reported misconduct, follow-up measures to be adopted after the investigation, and related confidentiality mechanisms? (III) Does the Company provide proper whistleblower protection?	`✓` `✓` `✓`		(I) If the Company finds that it has violated the ethical corporate management of the business, it may report to the Audit Committee or the auditing unit. (II) The Company's “Ethical Corporate Management Best Practice Principles” stipulates, identity of the prosecutor and the content of the report are kept confidential. (III) The Company's “Ethical Corporate Management Best Practice Principles” stipulates that if a case is found to be true, it shall be handled in accordance with the law and the relevant penalties of the Company.	In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies. In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies.
IV. Enhanced disclosure of ethical corporate management information (I) Does the Company disclose its ethical corporate management policies and the results of its implementation on the Company's website and MOPS?	`✓`		(I) The Company has disclosed the Ethical Operation Principle on the Company's website and promoted the achievements.	In line with the Ethical Operation Principle for TWSE/TPEx Listed Companies.
V. If the Company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation. The Company has established a "Code of Integrity" which is in line with the “Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies”.
VI. Other important information to facilitate better understanding of the Company's ethical corporate management (e.g., review of and amendments to ethical corporate management policies) The Company shall, at all times, monitor the development of relevant local and international regulations concerning ethical corporate management and encourage their Directors, managers and employees to make suggestions based on which the adopted ethical corporate management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.

Note 1: Reasons for checks of "Yes" or "No" of status should be specified in "Summary Description" column.

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(VII) The Company has established a corporate governance code and the methods for query of related regulations:

The Company currently has relevant regulations such as the "Code of Corporate Governance", the "Code of Ethical Conduct" and the "Code of Conduct for Good Faith", and it is posted on the Company's website.

(VIII)Other important information that is sufficient to enhance the understanding on the operation of corporate governance:
Major information processing procedures within the Company

The Company currently has relevant regulations such as the "Ethical Code of Conduct" and the "Measures for the Prevention of Internal Transactions", and organizes educational training courses from time to time, highlighting matters that require employee attention.

Continued studies and training on corporate governance taken by management personnel

Position	Name	Date	Training Institution	Course Name	Training Hours
General Manager	Wong, Ming-Sen	2020.08.06	Taiwan Corporate Governance Association	How Corporates Strengthen Their Strategy Execution	3
General Manager	Wong, Ming-Sen	2020.11.11	Taiwan Corporate Governance Association	Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Executive Deputy General Manager	Yang, Ya-Hsiu	2020.08.06	Taiwan Corporate Governance Association	How Corporates Strengthen Their Strategy Execution	3
Executive Deputy General Manager	Yang, Ya-Hsiu	2020.11.11	Taiwan Corporate Governance Association	Director and Supervisor Responsibility Based on Illegal Cases in Securities Market	3
Accounting Controller	Yang, Pi-Yin	2020.07.30	Taiwan Accounting Research and Development Foundation	Continuing Education Training for Chief Accounting Officers of Issuers, Securities Firms and the Securities Exchange	12
Financial Officer/Corporate Governance Supervisor	Chen, Chun-Wei	2020.02.12	Taiwan Accounting Research and Development Foundation	The Legal Risks of Business Management and the Corresponding Ways of Internal Auditors	6
Financial Officer/Corporate Governance Supervisor	Chen, Chun-Wei	2020.08.06	Taiwan Corporate Governance Association	How Corporates Strengthen Their Strategy Execution	3

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(IX) Internal Control System Execution Status
Statement of Internal Control System

CMC Magnetics Corporation Statement on Internal Control

Date: March 25, 2021

Based on the findings of a self-assessment, CMC Magnetics Corporation states the following with regard to its internal control system during the year 2020:

I. The Board of Directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Its purpose is to reasonably ensure that operational effectiveness and efficiency (including income, performance, and asset safety) and reporting are reliable, timely, and transparent, as well as to ensure compliance with relevant regulations and laws.
II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its 3 stated objectives above. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond control. Nevertheless, the internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.
III. The Company evaluates the design and operating effectiveness of the internal control system based on the criteria provided in the "Regulations Governing the Establishment of Internal Control Systems by Public Companies" (herein below, the "Regulations"). The criteria adopted by the Regulations identify 5 components of internal control based on the process of management control: 1. control environment; 2. risk assessment; 3. control activities; 4. information and communication; and 5. monitoring operations. Each key component includes several items. Please refer to the Regulations for the aforementioned items.
IV. The Company has evaluated the design and operating effectiveness of the internal control system according to the Regulations.
V. Based on the findings of such evaluation, the Company believes that, on December 31, 2020, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations
VI. This statement is an integral part of the Company's annual report and prospectus and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.
VII. This statement was passed by the Board of Directors in their meeting held on March 25, 2021, with none of the eleven attending Directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

CMC Magnetics Corporation Chairman: Wong, Ming-Sen General Manager:

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If the contract accountant project examines the internal control system, it shall disclose the accountant's review report: not applicable.
(X) For the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report, disclose any sanctions imposed in accordance with the law upon the Company or its internal personnel, any sanctions imposed by the Company upon its internal personnel for violations of internal control system provisions, and such sanctions might have significant impact on shareholders’ equity or securities prices, the sanction contents, principal deficiencies, and the state of any efforts to make improvements: None.
(XI) Important resolutions of the shareholders' meeting and the Board of Directors in the most recent year and up to the date of publication of the annual report:
Important Resolutions of the shareholders' meeting and their implementation status.

Meeting date	Category	Important resolutions and implementation status
June 16, 2020	Shareholders' Meeting	1. Adoption of the 2019 business report and financial statements. Implementation Status: The approval ratio of this vote was 94.29%, therefore the case was passed. 2. Adoption of 2019 Profit Distribution Plan. Implementation Status: The approval ratio of this vote was 94.55%, therefore the case was passed. According to the resolution of the Board of Directors, the record date was July 25, 2020. 3. The Company’s cash dividend of capital reserve. Implementation Status: The approval ratio of this vote was 94.56%, therefore the case was passed. According to the resolution of the Board of Directors, the record date was July 25, 2020. 4. Passed the amendment to the "Rules of Procedure for Shareholders' Meetings” of the Company. Implementation Status: The approval ratio of this vote was 94.55%, therefore the case was passed. It has been published on the website of the Company and will be processed in accordance with the revised content. 5. Amendment to the Articles of Association of the Company. Implementation Status: The approval ratio of this vote was 94.55%, therefore the case was passed. On July 2, 2020, the Ministry of Economic Affairs approved the registration and it is announced in the Company's website.

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2. Major Resolutions of Board Meetings:

Meeting date	Category	Major Resolutions	Implementation Status
January 16, 2020	Board of Directors	None
March 4, 2020	Board of Directors	1. Intended to dispose of the shares of Benmeng Photoelectric Co., Ltd. held by the Company.	Implemented according to the resolution.
March 27, 2020	Board of Directors	1. The Company’s financial report and business report of 2019. 2. The Company’s appropriation of earnings of 2019. 3. The Company’s cash dividend of capital reserve. 4. The distribution of the employees’ and Directors’ remuneration of 2019. 5. Asset impairment status report of 2019. 6. The suitability and independence evaluation and appointment of the Company’s Certified Accountant. 7. 2019 annual statement of internal control system. 8. Amendment of the “Audit Committee procedure”. 9. Passed the amendment to the "Rules of Procedure for Shareholders' Meetings” of the Company. 10. Amendment of the Articles of Incorporation of the Company. 11. Matters related to the Company’s General shareholders meeting in 2020.	Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution Implemented according to the resolution
May 14, 2020	Board of Directors	None
June 16, 2020	Board of Directors	1. Intended to formulate the record date of earnings, capital reserve and cash dividends.	Implemented according to the resolution.

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Meeting date	Category	Major Resolutions	Implementation Status
August 13, 2020	Board of Directors	1. The Company intended to sell the land and buildings in Guishan District, Taoyuan City. 2. If the accounts receivable, other receivables, prepayments, and refundable deposits of the Company exceed the normal credit line or the transaction period for more than three months and the amount is significant, it needs to evaluate whether to transfer the capital loans. 3. The Company’s Distribution of Director Remuneration for 2019.	Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution
November 12, 2020	Board of Directors	1. Proposal to adopt the Company's 2021 audit plan. 2. Amended the Company's "Internal Audit System", "Accounting Professional Judgment Procedure, Accounting Policy and Estimation Change Process", "Management of Applicable International Financial Reporting Standards" and "Accounting System". 3. Proposed amendments to the Company's Operational Procedures for Financial Statements Preparation Process. 4. If, as of September 30, 2020, the Company experiences the accounts receivable with a significant amount that have not been recovered 3 months after the normal credit period, and the payment has not been recovered after more than 3 months (such as other receivables, prepayments, deposits and deposits) because the amount is significant or the nature of the payment is not contractual, the payment amount is not related to the contract, the performance obligations in the contract are not met or the reason for payment disappears, it needs to evaluate whether to transfer the capital loans. 5. Amendment of the Company’s “Audit Committee Procedure”. 6. Amendment of the Company's “Rules of Procedure for Board of Directors Meetings”, "Rules for the Responsibilities of Independent Directors" and “Board Assessment Management Method”.	Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution.
January 21, 2021	Board of	None

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Meeting date	Category	Major Resolutions	Implementation Status
	Directors
March 25, 2021	Board of Directors	1. The Company’s financial report and business report of 2020. 2. The Company’s appropriation of earnings of 2020. 3. The Company’s cash dividend of capital reserve. 4. Change to the Certified Accountant of PricewaterhouseCoopers, Taiwan. 5. The suitability and independence evaluation and appointment of the Company’s Certified Accountant. 6. The Company's account receivables transferred to capital loans as of December 31, 2020. 7. 2020 annual statement of internal control system. 8. Amendment to the Procedures for Acquisition and Disposal of Assets of the Company 9. The distribution of the employees’ and Directors’ remuneration of 2020 10. Amendment to the Rules for Election of Directors of the Company 11. Reelection of Directors.	Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution.

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Meeting date	Category	Major Resolutions	Implementation Status
		12. Nomination and consideration of Candidates for Directors (including Independent Directors). 13. Proposal to release the newly elected Directors of the Fifteenth Board of Directors of the Company and their Representatives from non-competition restrictions. 14. Matters related to the Company’s General shareholders meeting in 2021.	Implemented according to the resolution. Implemented according to the resolution. Implemented according to the resolution.

(XII) In the most recent year and the date of publication of the annual report, the Director or Supervisor has different opinions on the important resolutions passed by the Board of Directors and has a record or written statement. The main content: none
(XIII) Summary of the resignation of the Company's Chairman, General Manager, accounting supervisor, financial supervisor, internal audit supervisor and R&D supervisor in the most recent year and the end of the annual report: none
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V. Information on CPA Professional Fees

(I) Table of tiers in CPA Professional Fee

Table of tiers in CPA Professional	Fee
Name of CPA Firm	Name of CPA	Audit Period	Note
PricewaterhouseCoopers, Taiwan	Yu, Shu-Fen/ Chang, Shu-Chiung	2020	None

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

Unit: NT$ 1,000

Category of Fees Range	Category of Fees Range	Category of Fees Range	Category of Fees Range	Category of Fees Range	Category of Fees Range	Audit Fees	Audit Fees	Audit Fees	Non-audit Fees	Non-audit Fees	Non-audit Fees	Total
1	Less than NT$2,000,000								✓
2	NT$2,000,000 (inclusive)~NT$4,000,000
3	NT$4,000,000 (inclusive)~NT$6,000,000
4	NT$6,000,000 (inclusive)~NT$8,000,000					✓						✓
5	NT$8,000,000 (inclusive)~NT$10,000,000
6	More than NT$10,000,000 (inclusive)
1. The non-audit fee paid to certified CPA, certified Office of CPA and affiliated companies accounts for over one-fourth to audit fee: Unit: NT$ 1,000
Name of CPA Firm		Name of CPA	Audit Fees	Non-audit Fees						Audit Period	Note
				System Design	Compa ny Registr ation		Human Resour ces	Others (Note)	Subtotal
Pricewaterh ouseCooper s, Taiwan		Yu, Shu-Fen	6,900	0	0		0	550	550	2020	Note: Mainly for the transfer of fixed price test fees and the direct deduction of business tax from legal visa fees, etc.
		Chang, Shu-Chiung

The CPA Firm is altered and the audit fee in altering year is less than that in the previous year, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: None
The audit fee is reduced by over 10% compared with the previous year, the reduction in the amount of audit fees, reduction percentage, and reason(s) therefor shall be disclosed: None
(II) The audit fee referred to in the previous note refers to the fee paid by the Company to the CPA for the purpose of examining and reviewing financial reports, forecast, and tax payment.
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VI. Information on Replacement of the CPA

None.

VII.Information on Service of the Company’s Chairman, General Manager, Financial or Accounting Management Personnel at the Accounting Firm or Its Affiliates Shall be Disclosed

None.

VIII. Any Transfer of Equity Interests and/or Pledge of or Change in Equity Interests by a Director, Supervisor, and Management Personnel with a Stake of More Than 10% During the Most Recent Fiscal Year and up to the Date of Publication of This Annual Report

Unit: Share

				Unit: Share	Unit: Share
Position	Name	2020		As of April 20, 2021
		Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)	Shareholding Increase (Decrease)	Pledged Shares Increase (Decrease)
Chairman	Wong, Ming-Sen	2,210,000	0	0	10,000,000
Director	Yang, Ya-Hsiu	400,000	0	100,000	0
Director	Kuo, Junne-Huey	0	0	0	0
Director	Tseng, Yi-An	0	0	0	0
Director	Tsai, Tsung-Han	0	0	0	0
Director	Tsai Wong, Ya-Li	0	0	0	0
Director	Yeh, Min-Cheng	0	0	0	0
Director	Chen, Hsien-Tai	(50,000)	0	(10,000)	0
Independent Director	Wu, Cheng-Hsiu	0	0	0	0
Independent Director	Shiau, Fung-Shyung	0	0	0	0
Independent Director	Lee, Ming-Yen	0	0	0	0
Senior Deputy General Manager	Yang, Li-Jung	0	0	0	0
Deputy General Manager	Huang, Ying-Yen	0	0	0	0
Deputy General Manager	Sekiyama Takayuki	0	0	0	0
Accounting Controller	Yang, Pi-Yin	0	0	0	0
Chief Financial Officer	Chen, Chun-Wei	0	0	0	0

Note: The counterparties of the equity pledge are related, then the party should fill in the information on the equity pledge: None

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IX. Information of Relationship if among the Company's Top 10 Largest Shareholders Who Are Related, as Spouse, or within the Second Degree of Kinship of Another

April 20, 2021

NAME (NOTE 1)	CURRENT SHAREHOLDING	CURRENT SHAREHOLDING	SPOUSE & MINOR SHAREHOLDING	SPOUSE & MINOR SHAREHOLDING	TOTAL SHAREHOLDING BY NOMINEES	TOTAL SHAREHOLDING BY NOMINEES	THE DESIGNATION, NAME OR RELATION OF THE COMPANY'S TOP 10 LARGEST SHAREHOLDERS WHO ARE RELATED, AS SPOUSE, OR WITHIN THE SECOND DEGREE OF KINSHIP OF ANOTHER. (NOTE 3)	THE DESIGNATION, NAME OR RELATION OF THE COMPANY'S TOP 10 LARGEST SHAREHOLDERS WHO ARE RELATED, AS SPOUSE, OR WITHIN THE SECOND DEGREE OF KINSHIP OF ANOTHER. (NOTE 3)
	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Designation (Name)	Relationship
Wong,Ming-Sen	91,978,038	7.94%	Spouse 29,566,296	2.55%	None	None	Yang, Li-Jung	Spouse
Yang,Li-Jung	29,566,296	2.55%	Spouse 91,978,038	7.94%	None	None	Wong, Ming-Sen	Spouse
Concord International Securities Co., Ltd.	29,342,083	2.53%	None	None	None	None	None	None
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund	14,093,950	1.22%	None	None	None	None	None	None
JPMorgan Chase Bank N.A. Escrow Advanced Starlight Advanced Aggregate International Share Index	12,366,610	1.07%	None	None	None	None	None	None
Standard Chartered is entrusted to hold iShares MSCI Emerging Markets ETF	11,099,640	0.96%	None	None	None	None	None	None
Investment special account with Citi bank entrusted with the investment account of Norges Bank	9,990,922	0.86%	None	None	None	None	None	None
Yang, Ya-Hsiu	9,612,762	0.83%	None	None	None	None	None	None
Citi (Taiwan) Commercial Bank was entrusted for custodial DFA investment in Diversified Group	8,037,944	0.69%	None	None	None	None	None	None
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index II Fund	7,185,000	0.62%	None	None	None	None	None	None

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

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

Note 3:Relationship between the aforementioned shareholders (including juristic and natural persons) shall be disclosed according to Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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X. The Total Number of Shares and Total Equity Stake Held in Any Single Enterprise by the Company, Its Directors and Supervisors, Managers, and Any Companies Controlled either Directly or Indirectly by the Company

	Unit: Thousand Shares December 31, 2020	Unit: Thousand Shares December 31, 2020	Unit: Thousand Shares December 31, 2020	Unit: Thousand Shares December 31, 2020	Unit: Thousand Shares December 31, 2020	Unit: Thousand Shares December 31, 2020
Investee business (Note 1)	Ownership by the Company		Investment by Directors/Supervisor/Managerial Officers and Companies Directly or Indirectly Controlled by the Company		Total Ownership
	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership	Number of Shares	Percentage of Ownership
SUN WELL SOLAR CORPORATION	154,991	98.82%	723	0.47%	155,714	99.29%
Transtouch Technology Inc.	15,353	52.60%	99	0.34%	15,452	52.94%
DELTAMAC (TAIWAN) Co., Ltd.	14,892	38.91%	7,128	18.62%	22,020	57.53%
Asia 1 Entertainment Co., Ltd.	11,869	93.59%	372	2.94%	12,240	96.53%
SUN Q CORPORATION LIMITED	64,052	58.20%	7,544	6.85%	71,596	65.05%
CIA Holding Corporation	29,688	86.35%	4,692	13.65%	34,380	100.00%

Note 1: The investment of the Company under equity method

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Cha ter 4 Ca ital Raisin Activities p p g

I. Capital and Shares

(I) Source of Capital

Unit: Thousand Shares; NT$ 1,000

Year/Month	Par Value	Authorized Capital	Authorized Capital	Paid-in Capital	Paid-in Capital		Note
		Number of Shares	Amount	Number of Shares	Amount	Source of Capital	Capital Increase by Assets Other than Cash	Others
2019.04	10	4,500,000	45,000,000	1,726,016	17,260,163	Note 1	None	None
2019.08	10	4,500,000	45,000,000	1,158,881	11,588,812	Note 2	None	None

Note 1: 48,110,000 shares were withdrawn from the Treasury Shares (approved by the Ministry of Economic Affairs, April 11, 2019, Document No. 10801033420).

Note 2: 567,135,167 shares were decreased for covering losses (approved by the Ministry of Economic Affairs, August 12, 2019, Document No. 10801107180)

Share Type	Authorized Capital	Authorized Capital	Authorized Capital	Note
	Issued Shares (Note)	Unissued Shares	Total
Common stock	1,158,881 thousands shares	3,341,119 thousands shares	4,500,000 thousands shares	Note:

Note: This Stock is the stock of a TWSE listed company, and can be traded without restriction.

General information about the reporting system: None.

(II) Status of Shareholders

April 20, 2021

						April 20, 2021
Structure Number/ Amount	Government Agencies	Financial Institutions	Other Institutional Shareholders	Domestic Natural Persons	Foreign Institutions and Natural Persons	Total
Number of shareholders	0	1	212	142,467	166	142,846
Shareholding (shares)	0	2,199	38,255,811	991,483,170	129,140,020	1,158,881,200
Shareholding Ratio (%)	0.00%	0.00%	3.30%	85.55%	11.15%	100%

Note:The source of data is the number of shares held by the Company as provided by the centralized custody clearing house (stock) on the day of the suspension.

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(III) Distribution of Shares

April 20, 2021

(III) Distribution of Shares			April 20, 2021
Class of Shareholding	Number of shareholders	Shareholding (shares)	Shareholding Ratio (%)
1~999	63,185	17,945,226	1.55
1,000~5,000	53,147	119,970,643	10.35
5,001~10,000	13,497	98,640,394	8.51
10,001~15,000	4,377	53,681,728	4.63
15,001~20,000	2,380	43,358,884	3.74
20,001~30,000	2,251	56,288,341	4.86
30,001~40,000	972	34,240,016	2.95
40,001~50,000	713	33,117,594	2.86
50,001~100,000	1,304	92,396,548	7.97
100,001~200,000	556	78,822,949	6.80
200,001~400,000	252	70,187,225	6.06
400,001~600,000	77	37,834,035	3.26
600,001~800,000	41	28,430,674	2.45
800,001~1,000,000	16	14,625,474	1.26
Over 1,000,001	78	379,341,469	32.75
Total	142,846	1,158,881,200	100.00

Note: All common shares. The Company does not release preferred share.

(IV) Major Shareholders

April 20, 2021

(IV) Major Shareholders		April 20, 2021
Shareholding Name of Major Shareholders	Shareholding (shares)	Shareholding Ratio (%)
Wong, Ming-Sen	91,978,038	7.94%
Yang, Li-Jung	29,566,296	2.55%
Concord International Securities Co., Ltd.	29,342,083	2.53%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund	14,093,950	1.22%
JPMorgan Chase Bank N.A. Escrow Advanced Starlight Advanced Aggregate International Share Index	12,366,610	1.07%
Standard Chartered is entrusted to hold iShares MSCI Emerging Markets ETF	11,099,640	0.96%
Investment special account with Citi bank entrusted with the investment account of Norges Bank	9,990,922	0.86%
Yang, Ya-Hsiu	9,612,762	0.83%
Citi (Taiwan) Commercial Bank was entrusted for custodial DFA investment in Diversified Group	8,037,944	0.69%
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index II Fund	7,185,000	0.62%

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(V) Share prices for the past two fiscal years, with company net worth per share, earnings per share, dividends per share, and related information

Item	Year	Year	2019	2020	Current Year, up to April 20, 2021 (Note 8)
Market Price per share (Note 1)	Highest		12.35	10.20	12.20
	Lowest		6.17	5.90	8.03
	Average		8.04	8.00	9.02
Net Worth per share (Note 2)	Before distribution		16.59	16.37	-
	After distribution		16.39	16.37	-
Earnings per Share	Weighted Average Shares (thousand shares)		1,158,811	1,158,811	-
	Earnings per share (Note 3)		0.2	0.1	-
Dividends Per Share	Cash dividends		0.20	0.70	-
	Stock dividends	Stock dividends appropriated from earnings	0	0	-
		Stock dividends appropriated from capital surplus	0	0	-
	Accrued (Note 4)	Unpaid Dividends	0	0	-
Return on Investment	P/E Ratio (Note 5)		40.2	80	-
	Price/Dividend Ratio (Note 6)		40.2	11.43	-
	Cash Dividend Yield (Note 7)		2.49%	8.75%	-

In the case of retained shares distribution or capital surplus shares distribution, please also disclose the information about the market value and cash dividend adjusted retroactively based on the quantity of shares as distributed.
Note 1: Please identify the highest market value and the lowest market value of the common stock in various years, and calculate the average market price for each year based on the trading value and turnover for each year.
Note 2: Please apply the quantity of shares already issued at the end of the year and identify the status of distribution according to the resolution made by the shareholders' meeting held in the following year.
Note 3: If it is necessary to make adjustment retroactively due to Free-Gratis dividends, please identify the EPS before and after adjustment.
Note 4: If the terms and conditions under which the equity securities are issued provide that the stock dividend retained in the year may be accumulated until the year in which there are allocable earnings available, please disclose the retained stock dividend accumulated until the then year.
Note 5: Price-Earnings Ratio=Average Closing Price Per Share in current year/Earnings Per Share
Note 6: Dividend Yield=Average Closing Price Per Share in current year/Cash Dividend Per Share
Note 7: Cash Dividend Yields=Cash Dividend Per Share/Average Closing Price Per Share in current year
Note 8: Please identify the net value per share and EPS available in the latest quarterly financial information audited (reviewed) by the independent auditor before the date of publication of the annual report, and the information available until the date of publication of the annual report in the other sections.
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(VI) Dividend Policy and Its Implementation
Dividends Policy in the Company's Articles of Incorporation

The earnings of the Company in the annual final accounts, if any, shall be first appropriated to pay taxes and offset accumulated losses before allocating 10% of the remaining earning to the legal reserve (not applicable where accumulated legal reserve has reached the amount required by law and regulations) and a special reserve pursuant to the applicable law and regulations. Any retained earnings available for distribution together with accumulated undistributed retained earnings may be proposed by the Board of Directors to appropriate and be resolved at the shareholders meeting. The Company's dividend policy is based on the consideration of the needs of capital expenditures and in line with the Company's long-term financial planning. The total dividend is not less than 10% of the distributable surplus for the current year, provided that no allocation shall be made if the distributable surplus is less than 1% of the paid-in capital. When the dividend is distributed, cash dividend shall be no less than 10% of the total dividend.

The proposed dividend distribution of the shareholders' meeting: The Board of Directors planned the surplus distribution and allotted cash dividend of NT$0.7 per share in capital reserve on Mar 25, 2021. It will propose for approval in the shareholders’ meeting on Jun 18, 2021.
Expected significant changes in the dividend policy: none.
(VII) Effect on the Operating Performance and Earnings per Share of Distribution of Stock Dividends Proposed or Adopted in the Most Recent Shareholders' Meeting: N/A.
(VIII) Remuneration of Employees and Directors
In accordance with Article 27 of the Articles of Association, if the Company is profitable in the year, it shall be paid at least 1% for the employee's remuneration and not more than 1.5% for the Director's remuneration. But if the Company still has an accumulated deficiency, the amount to cover should be retained in advance. The object of employee compensation in the preceding paragraph includes employees of domestic and foreign subsidiaries; the aforementioned “subsidiary” refers to the compliance with the International Financial Accounting Standards Bulletin No. 27, directly or indirectly holding more than half of the Company’s body for ordinary shares.
In the current period, the estimated basis of the compensation for employees and Directors, the calculation basis for the number of shares paid by the employees of the stock, and the actual distribution amount are calculated when there is a difference between the estimated number of shares: The Board of Directors passed the resolution on March 25, 2021 of allocation of remuneration payable of 2020 to employees and Directors shall be entered based on the estimated annual profit. If there is a difference between the estimated amount and actual allocation amount, it will be treated as changes in Accounting estimates and adjusted in the year of allocation.
The Board of Directors passed the distribution of compensation: The Board of Directors passed the resolution on March 25, 2021 of allocation of remuneration payable of 2020 is NT$3,000 thousand for employees and NT$2,200 thousand for Directors.
4.The actual distribution of employees and Directors' compensation in the previous year (including the number of shares, amount and stock price), and the difference between the recognition of employees and Directors' compensation shall be stated, the reason and status: In year 2019, remuneration for employees and Directors was not disbursed.
(IX) Status of share repurchases:

None.

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II. Corporate Bonds None.
III. Preferred Shares
None.
IV. Status of Global Depository Receipts (GDR)
None.
V. Status of Employee Stock Warrants
None.
VI. Status of New Restricted Employee Shares None.
VII. Status of New Shares Issuance in Connection with Mergers and Acquisitions None.
VIII.The Status of Implementation for Capital Allocation Plans None.
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Chapter 5 Operational Overview

====================================================================

I. Business Operation
(I) Scope of Business
1. The business of the Company is mainly based on optoelectronics and peripheral products.
2. Business operation mix:

products. Business operation mix:
Item	Percentage accounted for operation revenue in year 2019	Percentage accounted for operation revenue in year 2020
Photoelectric and peripheral products	78.10%	91.77%
Others	21.90%	8.23%

Currently, primary business operation, products produced and sold are as follows:
˙Photolectronic products manufacturing and trading
˙Manufacture and sale of various packaging boxes
Future projects development:
(1) high-end optical discs
- a. Develop the mass production of high-level archival disc
- b. Develop high-level double-sided discs of 300GB and 500GB and with higher storage capacity
- c. Develop system and discs specified for the big data and B-to-B markets
- d. Develop holographic discs with high storage capacity of over 1.5TB
(2) Engraving development: developing high-capacity and professional optical disc master process
(3) Special surface treatment of disc: super hard surface, laser sensitivity, image surface
(4) Development of high-capacity disc process equipment

(II) Industry overview

Current status and development of industry, development trend and competition of products:

As the price of polycarbonate, the main raw material for optical discs, in the international market has risen sharply in the past six months, the competitors in the mainland are forced to reduce their production lines or even close their factories due to the inability of the terminal prices of CD-R and DVD-R products to reflect their costs, and small optical disc factories are also confronted with severe cost pressures. However, the Verbatim brand and years of sales channels established by subsidiaries of the Company in the United States, Europe, Japan, Asia Pacific and other regions have not only maintained stable sales during the pandemic in the past year, but also takes advantage of the opportunity of competitors withdrawal from the market. The current global market share has exceeded 50%, and it is expected to increase year by year. Although the cost of raw materials has increased, Verbatim optical disc products have

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occupied a high brand market share in major markets around the world due to the continued Mitstubishi production technology, and are more able to reflect production costs and stabilize sales and profit than other optical disc peers. Furthermore, the era of digital television and high-resolution 4K/8K programs have officially arrived. Blu-ray discs have become one of the mainstream of home audio-visual entertainment. In particular, NHK in Japan began broadcasting 8K satellite channel programs in December 2018, with the resolution increasing to 7680X4320 pixels, 16 times that of FULL HD. Consumers in the Japanese market have always had the habit of backup of TV programs. Once the resolution increases, the capacity demand for storage media will also double, and driven by the popularization of peripheral software and hardware applications, it is expected that high-end optical disc products will become the most popular optical storage products.

Data tsunami is coming, and 80% of the enterprise information by digital documents, multimedia files, and other forms of unstructured content, information is becoming the fastest growing types, the next five years 70% of the world's data center need to be changed, it's difficult to satisfy the next generation of high density on the one hand, the original room server and storage device and cooling energy demand. Moreover, due to the COVID-19 pandemic, enterprise operations and business activities are rapidly changing. At this stage, business travel is temporarily suspended, and replaced with online video conferencing. Work from home has accelerated the arrival of the trend of remote management and process automation, thus doubling the demand for storage capacity. In order to accelerate the computing speed and transmission of data, the hybrid cloud architecture that combines public cloud and private cloud resources is conducive to the development of regional data center systems. High-capacity archive disc system cabinets can be flexibly connected to regional data center systems in series, and is featured by low energy consumption, long storage time and high data security. In particular, regardless of NAND FLASH, HDD or TAPE, there is a risk of data loss. The high-capacity archive discs of CMC have passed the certification from TÜ V Rheinland Group, and the data storage time is more than fifty years. They have the same level as the discs produced by Japanese optical disc factories, and are ahead of other optical discs in the industry. They can provide regional data centers with optical storage media with stable quality and high data security.

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2.The relevance between upstream, midstream, and downstream of the industry

==> picture [446 x 407] intentionally omitted <==

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

Upstrea Plastic manufacturer, raw materials and equipment supplier
Midstre Optical storage media manufacturers
Downst Channel partners, distributors, and brand owners
General consumer and data backup operators
----- End of picture text -----

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(III) Research and Development Achievements and Plans

1. R&D Department Organization

Organization Unit	Responsibilities and Functions
CMC Media Institute of Technology (CMCMIT)	CMC Media Institute of Technology (CMCMIT) is the creative and strategic center of CMC. During the operating, the elite of each department of CMC would be gathered: such as the R&D engineers, intellectual property team, and strategic marketing professionals to brainstorm and deep dive into discussion, and careful evaluation. Product development schedule is planned based on thorough planning and put into action. The key objective is to improve the competitiveness of the Company and achieve the concept of sustainable management. The current pioneering research plan includes: 1. Forwardly oversee the technical development of optical storage media product. 2. Technical development of B2B professional optical disc. 3. Product development and promotion of a total solution from custom disk drive to disc.
One-time recording process group	4x/6x SL high-end disc process yield and capacity increase. Development of high-end disc organic and inorganic materials. 6x DL high-end disc process yield and capacity increase. 4x TL high-end disc process and material development. A study on the compatibility of a one-time burn-in disc and a disc player. Analysis of recording materials and related papers in a one-time burn-in disc. Patent applications and international journal paper submissions.
Rewritable disc process group	High-end 2x SL disc process yield and capacity increase. High-end 2x DL disc process yield and capacity increase. CD, DVD rewritable optical disc and disc player compatibility research. Research on the compatibility of rewritable discs and disc players. Reproducible recording material analysis and related paper research. Patent applications and international journal paper submissions.
Dye Development Team	Treatment of dyes and various chemical solvents in the plant for recycling, in order to save costs and implement the concept of environmental protection and corporate social responsibility. Deepen the research strength of chemical synthesis, further development of next-generation optical storage materials: Research and develop dyes for high-capacity optical disc wavelengths.
Mastering Study Group	Develop high-capacity mastering such as blue single-layer and multi-layer storage discs, and research the development of new generation materials to achieve the best balance between cost, performance and quality.
Prospective Technical Research Group	Set-up and research of advanced optical storage systems. Development and research of optical discs for testing.

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2. R&D Strategy

The R&D center of CMC facilitates innovative technical knowledge, extends the research scope and application, shortens the product development schedule, and stimulates knowledge growth and development. CMC focuses on material development, quality improvement, eco-friendly execution, elevates the production yield rate, and R&D production efficiency. With respect to business management, CMC values cost-effective control, streamlined organization structure, and creative production process to reach the creation, circulation, and added value of industrial technology to improve the industry growth.

CMC is a member of the BDA, DVD Forum, DVD+RW Alliance, RDVDC, RWPPI, OSTA, TRIA, ASOAR, CDs21 Solutions, and many other global organizations., CMC also applies to be a member of the AACS LA to promote the application of copy-protection technology. Given the close cooperation and vertical integration among domestic upstream and downstream suppliers (e.g. Hardware, material, system, and chip-design suppliers), CMC participates in various product innovation, exchanges experiences and technical know-how to enhance overall R&D quality; all of these helps create a win-win situation for the industry’s growth and development.

The R&D development center actively participates in the global organizations and research associations to gain the latest product development information, specification development technology, and exchanges experiences, resources, as well as creative ideas with foreign companies. CMC partners with government institutions to joint-develop new product research and development; expands the cooperation with academic institutions to launch industry-school collaboration, works on resource integration and diverse advanced key technology. Through technology transfer, research collaboration, and strategic alliance, CMC provides tech support to shorten the domestic product development schedule, raises the key added value, and lowers the development cost to stimulate the industry’s development and global market expansion.

In addition to focusing on storage media and combining abundant reinvestment resources, CMC has been actively developing diversified businesses related to key components, entertainment, food & beverage, and channel business in recent years. CMC hopes to fully allocate the capabilities of the Company, and combines with professional expertise from various fields to achieve a peak for the business.

3. Future R&D Plans

The Company will continue the development of new storage and recording media and dominate the trend of the new era recording media products in the industry. In the future, it is expected to carry out the development of 300GB, 500GB and higher capacity double-sided multilayer optical disc products. In the field of archive disc products, in addition to the original archival products, the Company will also launch M-Disc's 50G and 100G high-capacity products with long shelf life to increase the product layout in niche markets. The Company's research and development center will also develop new products with potential value in the use of the storage industry expertise, such as the development of Biotech related technologies.

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4. Performance and Achievements

(1) Performance

2020

In addition to the continuous effort in the market of B2B professional optical disc products, also for the high capacity of 8K

CMC has also started the mass production of high-end BD-R TL 100GB to accommodate the high capacity audiovisual demand. In terms of the high-end data backup market, CMC sells BD-R TL double side 200GB products and plans the mass production and improvement of 200GB and development of 300GB and 500GB in 2021 to increase the ratio of high gross margin products.

(2) Achievements
Awarded Items Achievements
⚫ Obtained international certification for: ⚫ The Company inherited its own disc manufacturing BD-R SL 2X/4X/6X technology, developed BD-R TL 100G Blu-ray
⚫ Obtained international certification for: products, and passed the international A-level BD-RE SL 2X laboratory certification, which was recognized by customers.
⚫ Obtained international certification for: BD-R DL 6X ⚫ The Company has obtained ISO16963 international
⚫ Obtained German TUV certification certification for DVD file-level optical discs. laboratory durability certification: BD-R ⚫ Besides Japan, BD-R SL 6x/BD-R DL 6x/BD-RESL SL 6X/BD-RE SL 2X/BD-R DL 6X 2x made the Company as the first optical disc
⚫ Obtained international certification for: manufacturer to pass the durability certification of BD-R TL 4X100G the German TUV certification laboratory. The Company mainly develops for entities with large and long-term data preservation demands, such as hospitals, libraries, cloud data centers, military units, etc.
(3) R&D Expenses spent in the most recent year and up to the publishing date of this annual report:

Unit: NT$1,000

annual report:			Unit: NT$1,000
Year Descriptions	2019	2020	Current Year, up to April 20, 2021
R&D Investment Amount	$399,583	$296,480	$82,222
% of the total operating income	5.67%	3.15%	3.73%

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

1. Short-term sales strategy

In the consumer disc market in Europe, America, Japan, and Asia, besides received HP, Philips and other internationally known brands’ authorization, CMC also acquired the brand Verbatim in 2020. With the multiple effect of the various international brands, many small manufacturers were forced to exit market because of sharp increase in price of raw materials. By taking advantage of the brand force of Verbatim in major markets

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and the OEM channels built up over long-term operation from the past, it will further expand the market share. In Addition, the Company has an exclusive disc technology and ink formula authorized from Japan Taiyo Yuden in the professional market. Its production line CMC Pro has been used for backup saving in government agencies, schools, libraries, and medical units in Europe and America. It is also the best choice of customized discs for video and audio studios. Not only is the market demand stable and high unit price, but it is also the cornerstone for CMC’s leadership in the disc industry technology and continuous growth in market share.

Long-term sales strategy

With acquisition of the brand Verbaim in 2020, not only does it open up the business channels to Europe, America, Japan, and Asia regions, but also expanded the product from disc to USB flash drive, Micro SD memory card, SSD solid-state drive, and consumer electronic parts. The sales team will integrate channels in every regions and expand the production line, and transform from a disc manufacturer to a business brand and distributor of storage media.

In response to 5G technology, mature layout of equipment, the increasing demand of data and cloud storage, the Company’s 100G and 200G discs are the best storage media for cold data backup because of the benefits of long-term storage and low energy consumption. Currently, it has actively worked with domestic and international data equipment vendors to supply the data backup demands in government agencies, small and medium size corporations, and large data centers.

II. Market and Production/Sales Overview

(I) Market Analysis
1.Sales region of primary products

The main revenue source of the Company is the proportion of revenues from the production and sales of optical discs and peripheral products.

Area of sales listed as per below:

Sales Territory	America	Asia	Europe	Domestic	Others
Percentage of Sales	28%	33%	28%	6%	5%

==> picture [307 x 189] intentionally omitted <==

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2. Market Share

The Company continues to invest and focus on long-term basis, for the development of storage media products, production technology and stable quality to maintain the leading position in the industry. The Company’s quality service and R&D team are deeply favored by international storage media manufacturers. In the past few years, it has been committed to the development of market-oriented and forward-looking high-performance storage media products, and through TUV Rheinland certification, has become a professional storage media manufacturer recognized by the world's largest manufacturers.

3. Future supply and demand circumstance and potential growth of the main products

The next-generation game consoles were launched by game machine manufacturers in 2020. For example, SONY PS5 and Microsoft XBOX SERIES X, support 4K UHD Blu-ray players and the demand for Blu-ray discs is still expected to increase in the future. In addition, the current 4K TV has been promoted to the mainstream of the market. Japan’s NHK began broadcasting 8K satellite channel programs in December 2018, with the resolution increasing to 7680X4320 pixels, 16 times that of FULL HD. Consumers in the Japanese market have always had the habit of backup of audio and video programs. As 8K audio and video programs become more popular and drive the demand for Blu-ray discs, CMC continues to develop high-end storage products. Its production technology has been certified and affirmed by major international manufacturers, making it the first choice for ultra-high-definition generation audio and video backup.

Beneficial factors for competitive niche and development prospects
(1) Successfully mastered mainstream products and obtained leadership position

The Company understands that the development of magnetic storage media has been limited by the maturity of the market, so it has long been actively working with international companies to achieve leading disc manufacturing technology. Along the way, the Company has always been committed to becoming the best storage media manufacturer, and actively establish strategic alliances with major international companies in Europe and the United States to launch high-capacity storage media BD ARCHIVE to obtain leader position of the market.

(2) Excellent R&D team and material development & production quality

Since its inception in 1978, the Company has been committed to the research and development of storage media. In this specialty, it has accumulated many years of production know-how technology, and is more active in the next generation of new products, high-definition, high-capacity storage products, while constantly committed to management and product quality improvements. In addition to recruiting senior technicians from the Academia Sinica and the Industrial Research Institute and hiring domestic and foreign technical consultants to conduct research and development, and through the Japanese technology transfer contract to obtain the production technology of related products, and with foreign famous manufacturers such as Mitsubishi Chemical Corporation, Pioneer, etc. The research and development energy of MCM will fully join the Company in 2020. Technical cooperation has greatly contributed to its production technology, product quality, and even marketing channels.

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(3) Production capacity of key raw materials, easy to control cost and quality

In the process of producing recordable optical disc products, the key raw material Dye is expensive, and the phase change technology materials and mastering technology are also the same. However, the Company is committed to the success of this key raw material, not only the exclusive patented material technology but also a large number. Production can be easily controlled in terms of production quality, thus significantly reducing manufacturing costs.

(4) Consistent product source, master the advantages of channel

The Company has been operating the production and sales of storage media for a long time and has gradually transformed into a professional manufacturer of optical discs and related optoelectronic products with the evolution of technology trends. The downstream customers have established many years of cooperation with the Company, confident in professional quality and reputation of the Company. Therefore, CMC can accumulate past experience and have a stable and abundant competitive advantage in sales source and sales channels. In addition, the Company has established an operating base around the world to better serve its customers and gain a competitive edge.

(5) Long-term and close strategic partners and stable growth

CMC is favored by internationally renowned manufacturers. In the market of optical discs, CMC works with well-known client entities; retain an enduring business relationship with these international companies has become one of the most important core competitiveness of CMC. In addition, the Company is currently one of the leading suppliers of internationally renowned channel optical discs. This is one of the reasons why CMC can maintain a friendly relationship with long-term and close strategic partners in a highly competitive industry.

In the ever-changing information generation, consumer habits have changed rapidly, although CD-R/DVD-R global demand has declined slightly in some regional markets due to the popularity of USB Flash drive. However, CD-R/DVD-R is still the best choice for consumers when it comes to data back-ups, because CD-R/DVD-R has the characteristics of being able to record only once, plus the advantage of lower unit recording cost. one. Therefore, despite the peak demand for CD-R/DVD-R, it is expected that its product life cycle will continue to expand.

In terms of industry outlook, CMC placed more emphasis on product research and development, actively cooperated with international companies and developed the next phase of product development, to have a solid grip of high- margin market opportunities and gain an advantage to take lead in technology.

Unfavorable factors in prospects of development, the corresponding measures
(1) New storage media is constantly launched, making the replacement competition among storage media increasingly large
(2) Lack of uniform specifications/standards for non-standard products or emerging technologies.
(3) With the continuous development of technology, digital content is rapidly becoming more abundant and high-quality, and people's expectations for information storage are getting higher and higher.
(4) Smart products continue to evolve and change consumer behaviors

Based on the Company history, the management team can successfully grasp the

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market opportunity, determine the dependence of mainstream products, and take the lead. Looking toward the future, the demand on cloud data continues to increase globally. The file disc is the best solution of storage media for cold data backup due to the low consumption and long-term preservation. Especially, the Company focused on the technology and production ability of Mistubishi high-capacity archival discs in 2020. For its superior cost control earlier than competitors, the Company will continue to maintain its solid leadership position in the highly competitive optical disc industry.

(II) Production management

1. Production strategy

The COVID-19 (novel coronavirus pneumonia) pandemic has paused the operation of the global economy, but accidentally sped up "stay-at-home economy", which has doubled the growth of related industries. The high frequency use of mobile phones and computers has led to the rise of demand for home movie entertainment, virtual reality (VR)/augmented reality (AR), streaming services (ICT industry), multimedia audio-visual content, mobile games, etc., driving the increase in demand for data storage. The Company will also continue to make process improvements, technology upgrades and key technology deepening to increase productivity and profitability.

Production strategy and objectives for the year:

A. Customer-Value Proposition: to provide world-class product quality and become the most trusted strategic partner of customers with excellent customer service commitment and lower total cost.
a. In response to 8K high quality TV, AR (Augmented Reality), VR (Virtual Reality), and 360 degree surrounding audio and video demands, it can expect high demand for BD-R/RE TL (Triple Layer). The Company actively develops new 4-layer high-end BD-QL formats for large-capacity data storage and high-definition recording.
b. The rapid development of terminal electronic products in the future will enable customers to adopt the innovative technologies and services of CMC more widely, and actively participate in and develop international certification of record-type high- capacity audio-visual disc storage media, and all well-known disc players such as: Pioneer, Panasonic, Philips, SONY, HLDS, NEC, Lite-On, BenQ, TSST, Plextor, ASUS, LG, SAMSUNG and other strategies to develop high-multiple storage media to quickly respond to the ever-changing optical disc market and enhance industrial competitiveness.
B. Profit Proposition: Local raw materials reduce the cost of purchasing materials and reduces inventory risks. Through process technology to improve production efficiency and reduce production costs, and through the development of alternatives, the cost of acquisition can be effectively reduced to cope with the ever-changing environment and raw material fluctuations.
C. For-employee: entrust that “good employees comes with a successful company”, through the Passion, Reliability, Dedication, Excellence, four core values to help organizations and organizations Employees personally understand how to improve their work performance and creativity, so that each employee can adapt to the situation and enhance competitiveness. Establish a systematic and programmatic training development framework, and through organizational learning, through mutual encouragement to enhance self-ability and cultivate the ability of the organization to think as a whole, so that its quality and ability can meet the Company's development needs.
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With these three propositions, CMC will achieve the goal of “value creation, management and management” in a win-win direction with customers, companies and personnel, and quickly grasp the direction of sustainable development of industrial progress.

2. Key product functions and manufacturing process

Majorproducts	Keyfunctions	Manufacturing process
Recording optical storage media	Burn and record data for long¬term storage, high stability, commonly used for data archiving and backup (e.g. CD- R, CD-RW, and other products).	Substrate injection molding, recording layer production (chemical dye coating for CD-R , and inorganic sputtering for CD-RW), sputtered metal reflective layer, and protective coating are applied to the final printing package.
Digital optical storage media	Featured high capacity and media playback such as TV and movie. E.g. DVD+/-R SL, DVD+/-R DL, DVD+/-RW, DVD-RAM, HD DVD-R / RW, BD, and more.	Substrate injection molding, recording layer production (chemical dye coating for DVD+/ -R, and inorganic sputtering for DVD+/ -RW and advanced compact disc), sputtered metal reflective layer, protective coating splash and laminating procedures applied to the final printing package.

3. Product Quality

(1) Enhanced Feature: improved from recording optical storage media product to digital optical storage media, and from low recording speed to high recording speed optical disc.
(2) Improved satisfaction level: work closely with customers to satisfy needs, solve problems, and achieve zero customer complaint product quality.
(3) Verification of Optical storage media products:
-CD-R obtained Philips 2-52X product verification.
-DVD-R obtained 1X, 4X, and Pioneer 2X, 4X, 8X, 16X product verification from DVD Forum Class A Verification Laboratory. Obtained 8X and 16X product verification in 2005. 18X and above received verification.
-Obtained Pioneer DL 4x verification in 2006, DL 8X verification in 2007, and DVD- R CSS-MR (MOD type) from DVD Forum Class A Verification Laboratory in 2008; whilst develop DL 12X.
-DVD+R obtained Philips 2.4X , 4X , 8X , 16X , and DL 2.4X product verification, whilst received verification for 18X and above in series. Obtained Philips DL 8X product verification in 2006. DL 2.4X Philips verification in 2007. Simultaneously developing DL 16X.8cm
DVD+RW obtained Philips 2.4X/4X/8X product verification.
BD-R SL 25GB 2X/4X obtained product verification from Class-A Verification Laboratory and Certification in 2007.
BD-RE SL 25GB 2X obtained product verification from Class-A Verification Laboratory and Certification in 2007.
BD-RE SL 25GB 6X obtained product verification from Class-A Verification Laboratory and Certification in 2008.
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Pre-recordable Blu-ray disc BD-ROM obtained product verification from Class-A Verification Laboratory and Certification in 2008.
DVD-R CSS download EST type obtained Product Verification from Class-A Verification Laboratory and Certification for Compatibility from Drive Manufacturers in 2009.
Single-layer Blu-ray disc (BD-R) received “carbon footprint of product demonstration model of manufacturing industry” and PAS 2050:2008 product carbon footprint verification certificate from Industrial Development Bureau
BD-R DL 50GB 6X obtained product verification from Class-A Verification Laboratory and Certification in 2010.

-Single-layer DVDR disc received “carbon footprint of product demonstration model of manufacturing industry” and PAS 2050:2011 product carbon footprint verification certificate from Industrial Development Bureau.

Imported TAIYO YUDEN manufacturing technology from Japan in 2015.
DVD-R obtained ISO16963 product verification from Class-A Verification Laboratory (TDTC) in 2018.
BD-R TL 100GB 4X obtained product verification from Class-A Verification Laboratory and Certification in 2019.
(4) Factory Certification and Accreditation:
All factories have obtained ISO 9001 certification.
LinKou factory obtained ISO 14001 certification.
LinKou factory obtained SONY Green Partner certification.
Implementation of OHSAS 18001 began.
Implementation of ISO 14064 certification in 2010
Implementation of AEO Quality Enterprise Supply Chain Management Counseling in 2011.
All factories have passed the Taiwan Occupational Safety & Health Management System certification (TOSHMS).
Implementation of ISO 28000 Supply Chain Security Management in 2012.
Obtained ISO 14064 greenhouse gas certification in 2013.
All factories are certified with C-TPAT Customs and Border Protection of the U.S. Department of Homeland Security in 2013
DVDR of all factories have obtained PAS 2050:2011 product carbon footprint verification certificate in 2013.
Blu-ray disc have obtained PAS 2050:2011 product carbon footprint verification certificate in 2013.
(5) Quality control monitoring equipment:

Pulstec DVD ODU-1000, Dr. Schenk DVDR MT-146/MT-200, Dr. Schenk BD MT-200-blu, Ono-soki LM1200/1210, CD-CATS, DVD-CATS, Expert CDTR/DVDT-R, Sony DUC-10, Sony DUC-12, Dr.schwab Argus-blu, Expert SP-1, ETA- ECC, ETA-RT, ETA-RT-blu, ETA-GT, ETA-GT-blu, ETA-GT2, SONY DEC12-T03, Toyo TH-7DE, Pulstec DES-21, Basler REF100, Pulstec DVD-TE/FE, Pulstec Master, Expert DVD-TE/FE2, Expert BD-TE/FE, Expert BDT-201, Expert BDT-203, Expert BDT-SDX, Expert BDT-SDXM.

Establishing Culture of Quality
(1) Expedite operation flow: from the beginning, we discussed the direction of
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experiment and test, to accelerate product development.

(2) Eliminate waste costs: eliminate waste of time, personnel, materials and other costs caused by poor planning.
(3) Improving on-site efficiency: observe on-site improvement status, investigation problems behind the problem, development of improvement of development process, establishment of new breakthrough station, delivery site efficiency.
(4) Create a learning organization: see mistakes as opportunities for learning, not to blame individuals, but to take corrective action and widely disseminate knowledge gained from each experience within the organization.
Establish risk management

Through order demand estimation and production and sales coordination, in-depth analysis of customers’ real needs, coordination of production, supply and sales operations, reduce overall inventory turnover, and achieve integrated application of risk management, to control and give early warning, as well as performance monitoring.

Occupational Safety Management

The safety and health management structure of the Company is promoted in accordance with the "Taiwan Occupational Safety and Health Management System TOSHMS". It complies with the safety and health regulations, promotes full participation, reduces operational risks, continuously improves, eliminates occupational disasters, and implements government occupational safety policies to protect labor lives, safety and health.

CMC has undertaken the transfer plan of the ISO 45001:2018 Occupational Health and Safety Management System.

Energy Management

In response to the development trend of international energy conservation and carbon reduction and energy management systems, the Company has made structural adjustments in manufacturing energy use and established energy management mechanisms to save energy and improve energy efficiency to reduce production costs, enhance competitiveness, and significantly reduce operating costs and Greenhouse gas emissions and environmental sustainability.

Promote green policy and establish sustainable business

Sustainability has become an international trend that governments and enterprises value in every country. The Company applies 3 indicators (3R) “reduce”, “recycle”, and “reuse” as design principle to introduce energy-saving, green energy-friendly (decomposable) materials into the process, minimizing environmental impacts during production, while reducing the consumption of global resources and greenhouse gas emissions.

Corporate Social Responsibility (CSR)

As an important member of the technology industry, CMC recognizes the possible impact of the Company on the environment. Therefore, it hopes to provide environmentally friendly products and services through advanced technology and innovative practices to maintain a sustainable environment for the next generation. In addition to complying with relevant government laws and regulations, we will reduce pollution by “reducing →recycling →recycling”, purifying and reducing the remaining pollutants, and finally using the process and technology to achieve the purpose of recycling and let the environment With the goal of sustainable development and zero-emission green factory, we will continue to practice corporate social responsibility and strive to become a good corporate citizen.

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(III) Supply status of main raw materials

Main Raw Material	Source of Raw Materials	Supply Situation
PC material	Taiwan, Middle East, Germany, Thailand, etc.	1. The Company purchases PC materials from Taiwan, the Middle East, Germany, Thailand and other regions to increase bargaining flexibility and diversify procurement risks. 2. The Company has formed a partnership with some suppliers, so it has an advantage in the acquisition of raw materials. 3. The Company has high sensitivity to the PC material market price and fast decision-making efficiency; and in the group bargaining mode, it has a purchasing advantage for the price control of PC materials.
Target materials	Japan, Taiwan and Europe	1. More than half of the target materials have been supplied by Taiwan target suppliers; therefore, the delivery period is short and the supply source is relatively stable. In addition, it helps to reduce procurement costs and reduce the safety stock in the plant. 2. The direct material of the target is mainly silver. The price fluctuation of silver in the market varies greatly with the crude oil and financial index. It is well controlled by the procurement department and will not be disconnected due to market changes. 3. Work with suppliers to continuously plan and improve targets in order to increase the number and efficiency of spills per target, which will help to significantly reduce costs.
Dye	Switzerland, Japan	1. Suppliers in Switzerland and Japan help to diversify procurement and purchase risks. 2. The Company regularly estimates the purchase amount per quarter according to the capacity demand and expansion plan, and negotiates the price and orders at the quarter to guarantee the supply of raw materials for the first quarter. 3. The Company has the ability to develop dyes, and from time to time arrange suppliers to the factory and process and R & D departments for technical exchanges to control the market development.

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(IV) Major import (export) customers in the last two years

Customers who account for more than 10% of the purchase price Unit: NT$ thousand

Unit: NT$1,000

	2019	2019	2019	2019	2020	2020	2020	2020
Item	Name	Amount	Percentage in Total Net Purchases (%)	Relationship with the Issuer	Name	Amount	Percentage in Total Net Purchases (%)	Relationship with the Issuer
1	A	1,195,002	34	None	B	594,529	11	None
2	Others	2,349,243	66	None	Others	4,945,731	89	None
	Net purchase	3,544,245	100		Net purchase	5,540,260	100

Reason for changes: Based upon sales requirements.

2. Customers who account for more than 10% of the sale price Unit: NT$ thousand

Unit: NT$1,000

	2019	2019	2019	2019	2020	2020	2020	2020
Item	Name	Amount	Percentage in Total Net Sales (%)	Relationship with the Issuer	Name	Amount	Percentage in Total Net Sales (%)	Relationship with the Issuer
1	Others	7,045,247	100	None	A	1,277,673	14	None
2				None	Others	8,123,354	86
	Net sales	7,045,247	100		Net sales	9,401,027	100

Reason for changes: Based upon sales requirements.

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(V) Production value in the last two years

Unit: NT$1,000/ 1,000 sets

				Unit: NT$1,000/ 1,000 sets	Unit: NT$1,000/ 1,000 sets	Unit: NT$1,000/ 1,000 sets
Year Main Products	2019			2020
	Production Capacity	Production Volume	Production Value	Production Capacity	Production Volume	Production Value
Optical storage and peripheralproducts	60,831	43,508	4,209,164	32,451	27,271	2,669,438
Others	-	-	635,381	-	-	16,581
Total	60,831	43,508	4,844,9545	32,451	27,271	2,686,019

(VI) Sales volume in the last two years

Unit: NT$1,000/ 1,000 sets

					Unit: NT$1,000/ 1,000 sets	Unit: NT$1,000/ 1,000 sets	Unit: NT$1,000/ 1,000 sets	Unit: NT$1,000/ 1,000 sets
Year Main Products	2019				2020
	Domestic Sales		Foreign Sales		Domestic Sales		Foreign Sales
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Optical storage and peripheralproducts	533	92,975	170,654	5,615,738	201	28,247	171,190	8,627,234
Others	-	821,809	-	514,725	-	502,660	-	242,886
Total	533	914,784	170,654	6,130,463	201	530,907	171,190	8,870,120

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III. Human Resources and Employee Profile

(I) Human resources strategy
Human resources strategy of the Company:
- ＊ Search, develop, and retain talents
- ＊ Utilize talents in high efficiency organizations
- ＊ Integrate business plans to achieve corporate business goals
Objectives:
- ＊ Recruit talents with advanced education
- ＊ Eliminate the underperformed staff and strengthen existed manpower
- ＊ Strengthen corporate and employee training

(II) Number of total employees in the last two years and as of the date of publication of this annual report

	Year	2019	2020	Current Year, up to April 20, 2021
Number of Employees	Operator	1,033	763	511
	Technician	83	63	57
	Employees	202	166	150
	Total	1,318	992	718
Average age		39.44	39.79	40.95
Average Service Year		10.42	10.82	11.38
Academic distribution ratio	PhD	1.21%	1.31%	1.81%
	Master's	2.96%	4.44%	6.13%
	Bachelor's	68.36%	69.75%	70.48%
	High school	21.93%	19.46%	16.71%
	Below high school	5.54%	5.04%	4.87%

Note: Chart above refers to the average number of the individual employees of the Company.

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IV. Disbursements for Environmental Protection
(I) Emission of greenhouse gases:

Even though the Company does not reach the requirement to keep record of the greenhouse gas emissions by the Environmental Protection Administration, it considers the reduction of greenhouse gas emission as necessary in response to climate change and global warming and has been working to reduce the greenhouse gas emissions in recent years. All employees participate in energy saving and carbon reduction in order to reach the reduction goal. It makes and executes energy saving plan through the management plans of ISO14001 and ISO50001 environmental management systems every year. By measures such as improving manufacture process, replacing old equipment, or adjusting air compressor efficacy, it implements energy management in the factory while tracking and reviewing greenhouse gas emissions and related management policies regularly. The Company converts the electricity consumption to calculate the greenhouse gas emissions, and take the self-evaluation result as the goal basis to strive to achieve the specific goal of 1% reduction by every year.

Based on the emission of 2018, the emission of 2019 was 105,356 metric ton CO2e/year. It was 12,335 metric ton CO2e/year less than the emission of 2018, which is 10.4% reduction. Emission of 2020 was 77,506 metric ton CO2e/year. It was 40,185 metric ton CO2e/year less than the emission of 2018, which is 34.1% reduction.

(II) Annual water consumption:

The total water consumption of the Company in 2020 was 537,919 cubic meters. It was 144,167 cubic meters less than 682,086 in 2019. The Company is still committed to various water-saving measures, continuous leakage monitoring to prevent abnormal loss of water. This year, we will continue to cooperate with production and research to carry out various water-saving improvement measures.

The total water consumption of the Company in 2020 was 537,919 cubic meters. It was 144,167 cubic meters less than 682,086 in 2019. The Company is still committed to various water-saving measures, continuous leakage monitoring to prevent abnormal loss of water. This year, we will continue to cooperate with production and research to carry out various water-saving improvement measures.	The total water consumption of the Company in 2020 was 537,919 cubic meters. It was 144,167 cubic meters less than 682,086 in 2019. The Company is still committed to various water-saving measures, continuous leakage monitoring to prevent abnormal loss of water. This year, we will continue to cooperate with production and research to carry out various water-saving improvement measures.	The total water consumption of the Company in 2020 was 537,919 cubic meters. It was 144,167 cubic meters less than 682,086 in 2019. The Company is still committed to various water-saving measures, continuous leakage monitoring to prevent abnormal loss of water. This year, we will continue to cooperate with production and research to carry out various water-saving improvement measures.	The total water consumption of the Company in 2020 was 537,919 cubic meters. It was 144,167 cubic meters less than 682,086 in 2019. The Company is still committed to various water-saving measures, continuous leakage monitoring to prevent abnormal loss of water. This year, we will continue to cooperate with production and research to carry out various water-saving improvement measures.
Unit: cubic meter
Year	Initial water withdraws	Water consumption	Water disposal
2019	682,086	164,716	517,370
2020	537,919	129,901	408,018

(III) Water waste disposal:

At the initial stage of planning, the Company has certainly completed the rainwater and sewage diversion, and the rainwater is discharged to the general drainage ditch; sewage (waste) water shall be collected into the pipe and discharged after treatment by the Company's wastewater treatment equipment (or industrial sewage plant), and water quality testing and filter material cleaning and replacement shall be carried out regularly and irregularly. Sewage (waste) water detection values are in line with the national discharge standards (or industrial park standards). In the future, strict standards will be applied to meet our commitment to environmental policy.

(IV) Electrical energy use:

Performance result on energy conservation in recent years

Cooling water tower becomes energy-saving fan blade - increase heat dissipation and reduce ice water load, energy saving 64,982KWH / month
Connect the transformer in parallel to turn off the useless transformer *5 groups energy saving 98,983KWH / month
Air compressor plate thermal modification, energy saving 15,251KWH / month
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In the future, the Company will continue to cooperate with production to improve energy efficiency. In addition to continuing to reward energy-saving proposals and education and training, an external energy-saving auditing mechanism will be arranged, and professional teams will be invited to conduct energy-saving health inspections and project implementation in a timely manner so that all employees can inject new energy-saving thinking and attitudes to maintain energy-saving results.

Power management data Unit: million KW/H

Power management data Unit: million KW/H
Year	Electricity
2019	207
2020	152

(V) Waste treatment:

The waste currently produced by the Company can be divided into 4 types as per follow:

General business waste (general waste): It is currently submitted to the incineration plant after being cleared by the B-level removal agency for disposal.
General business waste (inorganic sludge): This waste belongs to the factory with independent wastewater operation equipment. It is currently handled by a Class A Clearing and Processing Company.
Hazardous business waste: It is currently being disposed of or reused by a Class A cleaning and disposal company.
Recycling of resources: Handed over to the disposal and recycling entities, due to the implementation of waste classification management, recycling tonnage has grown substantially, and CMC will continue to work to reduce general business waste and harmful businesses in the future. Other waste, such as pallets, scrap iron, and space bags are all acquired by related companies.

The concept of waste management has been transformed from traditional cleanup and disposal into integrated resource management. It has a dedicated unit for waste resource management, and treats waste as a valuable resource for recycling. For the sustainable use of resources, the principle of waste management is firstly to reduce the amount of waste generated by process chemicals, and then to recycle and reuse waste, energy recovery, and finally other treatment methods such as incineration.

The Company does implement the classification of hazardous business wastes. In the near future, it is more committed to the classification and management of general business wastes, and improves the recycling rate of resources. The average monthly general waste quantity has been reduced year by year, and the resource recycling program continues to promote and abandon. The material handling procedures are in compliance with relevant environmental regulations.

The Company's products are subject to the EU environmental protection (RoHS) related directives, the product commission is tested by the SGS legal certification body, and the detailed operation process is carried out by the Company's central quality assurance department. The production, manufacture, transportation and sale of products, except for general waste, do not produce or transport toxic waste as defined by the Basel Convention. All commercial waste is directly disposed of locally and not exported to other countries.

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Calculation on waste

Calculation on waste	Calculation on waste	Calculation on waste	Calculation on waste	Calculation on waste
Unit: ton
Year	Processing method	Toxic Business Waste	General Business Waste	Total weight
2019	Incineration	82.50	204.51	287.01
2020	Incineration	64.85	208.83	273.68

(VI) Work environment and employee safety protection:

The Company continues to promote the TOSHMS, OHSAS18001 and ISO14001 systems to provide a safe and healthy working environment for employees:

Safety:
Comply with the requirements of the law, follow the relevant national environmental protection and occupational safety and health laws and regulations, and strive to meet the advanced international environmental standards.
Implement contractor management and strengthen applications for construction and special operations.
Popularize the activities of environmental protection, implement environmental safety education and publicity, enhance employees' awareness of environmental safety, and promote participation and implementation of environmental safety and health work.
Conduct regular fire drills, equipment testing, overhaul, and legal declaration.
Implement emergency contingency plans, conduct regular escape refuge drills, and conduct drills with firefighting units.
Control risk on work environment: provide appropriate protective facilities or operational controls to control the impact of domestic sewage, waste sorting, stacker operations, falling from heights, and hazardous materials management.
Implement on-site automatic inspections, strengthen on-site labor safety and sanitation check, review safety and sanitation measures from time to time.
Continuous improvement of performance: continuous improvement of environmental protection and occupational safety and sanitation performance through hazard prevention, continuous improvement, setting goals and programs.
Organize employee education and training to raise employees' awareness of safety and health and participate in government safety and sanitation activities.
Health:
Regularly hold general employee health checkups and special work health checks.
Regularly carry out the measurement of the working environment and continue to improve the environment.
Regularly implement drinking water quality measurements to ensure compliance with drinking water quality standards.
Enhance the proper use of the safety-guards equipment, and regularly check and record the usage conditions
Regularly arrange professional health practitioners to conduct health promotion
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training course, to inform employees know about health information.

Strengthen traffic safety education and training, and conduct drills to reduce traffic accidents for colleagues to and from work.
Check the central kitchen of food service company, and works conducted by its service personnel from time to time, demand to have the food service company perform physical health check-ups for its employees on a regular basis every year.
(VII) Environmental protection expenditure

Amount of environmental investment are as follow:

Unit: NT$1,000

Environmental protection expenditure Amount of environmental investment are as follow:		Unit: NT$1,000
Item	2020	Current Year, up to April 20, 2021
Air pollution control expense	3,930	426
Water pollution control expense	476	6
Waste reduction and treatment, resource recovery, energyconservation expense	5,533	805
Environmental protection system certification fee (certification fee, environmental monitoringfee)	509	120
Environmental protection related education and trainingexpense	204	0
Environmental protection related personnel expenses	1,994	486
Environmental related hardware expenses	2,471	0
Total	15,117	1,843

The Company violated Water Pollution Control Act in 2020, and was corrected by Department of Environmental Protection, Taoyuan. The company has completed relative modification and improvement..

V. Labor Relations

(I) The Company has established a well-established personnel system and employee operation guidelines and maintained a smooth communication channel. The employees' welfare, treatment, family life, etc. are all very concerned. Therefore, the working relationship with employees has been positive, no severe labor disputes occurred.
(II) The employee benefit measures currently implemented by the Company include:
Labor insurance: new employee will be insured under labor insurance upon first day of employment.
National Health Insurance: new employee will be insured under National Health Insurance on the first day of employment.
Group insurance: All employees enjoy multiple guarantees such as free life insurance, medical insurance and accident insurance.
Withdraw residual revenue to share dividends with employees: Pay dividends to employees, to share positive performance of the Company
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Employee outing: Arrange several different options for company travel tours for employees to choose from.
Leisure activities: Organize photography competitions and essay competitions.
Festival gifts: Provide gifts during Dragon Boat Festival, Mid-Autumn Festival, Labor Day and other festivals to celebrate
Birthday gift: Provide birthday gifts and hold birthday party.
Staff Restaurant: Provides a clean, bright, hygienic dining environment and delicious meals at great value.
Employee dormitory: Provide convenient accommodation for employees not from local area
Wedding and funeral funds: Subsidy for employee wedding and funeral
Injury and sympathy funds: Subsidy for employee going through injury or hospitalization
Departmental luncheon or get-together: Reserve certain funding for department function, for team unity.
Year-end party: Year-end employee appreciation dinner party.
Year-end lottery raffle: Conduct lottery of various prizes, to show gratitude to staff for their year- round contribution.
Christmas party: Get together with employee during holiday season.
Audio-visual library: Regularly purchase high-quality videos for employees to rent on a monthly basis.
Movie-night and appreciation of art exhibitions: Give away tickets to employee, to increase appreciation of letter arts and literature.
Periodical health check-up: Routine health check-up for the employee
Scholarships: Set up a Central Scholarship to provide school grants and attract talents to join CMC.
Various discounts from corporate account: Work with various business entities to offer diverse corporate account perks and discounts for employee to enjoy and shop at.
Groupon: Use CMC’s corporate resources to purchase good quality products in group-on price.
Employee retirement system: Well-rounded retirement plan for employee
Nutrition management: In order to strengthen employees' health awareness, we provide health care information for employees' reference and invite professional doctors to provide psychological counseling and health advice to employees.
Employee care for major injuries and disasters: Give periodical care and greeting to staff, and help to find a variety of cancer-related information for staff to refer from.
(III) The Company is committed to nurturing talents. In addition to implementing pre-employment training, it also provides multiple on-the-job training to enrich staff skills and advance toward multiple functional goals. The current training plan includes: The current training plan includes:
New employee orientation: After the new recruits report, in addition to the introduction of rules and regulations, work safety, environmental guidance, etc.,
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there are dedicated counselors to provide professional pre-employment training.

Skills Certification Training: Encourage newcomers to learn quickly, develop certification standards, authenticate successfully and give bonus incentives.
Internal training: The Company schedules annual plans according to training needs, external lecturers or in-house training instructors, and conducts training courses according to job level and work needs.
External training: The Company does not have its own training courses, and colleagues can apply for external training according to the needs of the work.
Safety and health training: The Company attaches great importance to work safety. It arranges various safety maintenance and certification courses in the year. In addition to strengthening work safety awareness, colleagues can also self-improve their licenses.
Evacuation drills: In order to ensure the safety of employee accommodation, the evacuation drills of the accommodation personnel are handled quarterly.
Emergency Training: Hold regular training on simulation of disasters to ensure the safety of colleagues.
Fire drill training: Conduct fire safety seminars every six months in accordance with the regulations, and apply internship training so that the participants can actually operate fire extinguishers, fire hydrants, and test the effectiveness of emergency escape grouping on a large scale.
Elite training: Train elite employee and arrange management courses to activate the organization.
License and certification: Encourage colleagues to study for professional skill licenses.
Language training: Encourage colleagues to pursue language proficiency.
Policy on rotation of job position and shifts: With internal transfer and rotation of job position, employees can understand the depth and breadth of work, thus strengthen the growth of employees.
Performance appraisals: Periodical performance interviews with employees, actively understand employee needs and suggestions, to improve on existing problems.
Working capabilities training: Encourage employees to participate in the industry talent investment program training pipeline and cultivate a variety of skills.

Results of 2020 Employee Education and Training:

Course	Total Headcounts	Total Hours
New Employee Orientation	55	330
SafetyCourse	105	315
Disaster Prevention	126	378
Professional Skill	690	2,640
Management Course	53	159
Total	1,029	3,822

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(IV) Employee Code of Ethics: The Company prepares working rules, employee handbooks, employment consent, internal announcements, posters, etc. as guidelines for employee work and behavior. The Company's employee code of conduct are as follows:
Protection of business confidentiality: The employees of the Company are prohibited from revealing the Company's business confidential content via verbal, written, photocopying, copying, photography, circulation or any other means or forms without the authorization of the Company.
Respect for intellectual property rights: The Company protects intellectual property rights and prohibits employees from installing illegal software or copying copyrighted intellectual property.
Emphasize on importance of information security: The equipment and assets used by the Company, including but not limited to computers and peripheral equipment, online accounts, documents and information, are limited to job related purposes. Employees of the Company are not allowed to install non-corporate authorized software or hardware without permission or bring the electronic devices required for non-services into the Company without permission.
Prohibition of employment discrimination: The Company recruits employees, and the management method must not be treated or despised due to factors such as race, class, nationality, religion, age, disability, gender, marital status, pregnancy, sexual orientation, community, etc.
Protection of gender equality: In order to maintain gender equality and personal dignity, the Company has established measures for the prevention and control of sexual harassment in the workplace and for disciplinary measures for all employees to comply with.
Prohibition of improper benefits: The Company strictly prohibits employees from using their duties to obtain improper or unlawful interests for themselves or any third party, group or company, regardless of whether the behavior is due to personal feelings or personal interests.
Emphasis on work safety: The Company focuses on work safety and hygiene, sets various work procedures and codes of practice, requires employees to follow the correct work steps and regularly check relevant equipment, and relevant departments will check them regularly and irregularly to ensure employees work safely.
Encourage for honesty: The Company employs employees to pay most attention to personal character, honesty, and ownership of responsibility, as these are most basic work attitude.
The spirit of teamwork: Every employee of the Company should work in a division of labor, play the spirit of the team, and believe that even the big problems can be solved.
The culture of innovative thinking: The Company encourages employees to have a positive working attitude and innovative thinking mode, in order to respond to the external environment of rapid changes, and to establish a win-win situation for labor and capital.
(V) The Company has not suffered any significant losses due to labor disputes in the most recent year up to the printing date of this annual report. In the future, the Company will continue to uphold the principle of consistent improvement of employees' welfare measures and maintain a smooth communication channel. CMC believe that maintaining a good labor relationship with employees, there should be no labor disputes in the future.
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VI. Important Contract

Type of Contract	Party	Contract Duration	Contract Content	Restrictions
Authorized contract	4CEntity LLC	From September 30, 2002	Technology licensing	The Company carries a duty of confidentiality
Authorized contract	Philips	From December 31, 2009	Patent licensing	The Company carries a duty of confidentiality
Authorized contract	SONY	From April 1, 2010	Patent licensing	The Company carries a duty of confidentiality
Authorized contract	HP	From April 1, 2005	Trademark licensing	The Company carries a duty of confidentiality
Authorized contract	HP	From November 4, 2005	Technology licensing	The Company carries a duty of confidentiality
Purchase and sales contract	Maxell	From April 17, 2006	Manufacture of products	The Company carries a duty of confidentiality
Authorized contract	Pioneer	From April 1, 2009	Patent licensing	The Company carries a duty of confidentiality
Authorized contract	JVC	From January 1, 2010	Patent licensing	The Company carries a duty of confidentiality
Authorized contract	Taiyo Yuden	From August 24, 2015	Patent licensing	The Company carries a duty of confidentiality
Authorized contract	One Blue	From January 1, 2018	Patent licensing	The Company carries a duty of confidentiality
License Agreement	YOURSCO	From January 1, 2021	Technology licensing	The Company carries a duty of confidentiality

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Chapter 6 Financial Status Overview

======================================================================

I. Condensed Balance Sheets and Statements of Comprehensive Income for the Past 5 Fiscal Years
(I) Condensed Balance Sheets and Statements of Comprehensive Income
1. Condensed consolidated balance sheet

Unit: NT$1,000

Year Item	Year Item	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)
		2016	2017	2018	2019	2020
Current assets		10,881,094	9,900,844	13,262,729	14,096,882	13,284,631
Property, plant and equipment		14,797,071	12,980,006	8,900,335	6,329,013	5,547,534
Intangible assets		202,699	169,990	88,685	181,740	146,877
Other Assets		3,377,697	2,874,518	3,109,102	4,850,505	5,825,967
Total Assets		29,258,561	25,925,358	25,360,851	25,458,140	24,805,009
Current liabilities	Before distribution	5,373,369	3,424,284	3,464,537	3,995,718	3,406,467
	After distribution	5,373,369	3,424,284	3,464,537	4,227,494	(Note 2)
Non-current	liabilities	2,711,815	2,927,647	2,402,081	1,928,774	2,076,891
Total Liabilities	Before distribution	8,085,184	6,351,931	5,866,618	5,924,492	5,483,358
	After distribution	8,085,184	6,351,931	5,866,618	6,156,268	(Note 2)
Equity attributable to owners of parent		20,586,627	19,077,273	19,066,404	19,226,542	18,976,575
Share capital		18,778,715	18,306,475	17,741,264	11,588,812	11,588,812
Capital surplus		7,170,157	7,441,417	7,542,770	7,700,295	7,642,963
Retained earnings	Before distribution	(5,199,745)	(6,293,519)	(5,671,352)	213,793	150,933
	After distribution	(5,199,745)	(6,293,519)	(5,671,352)	(17,983)	(Note 2)
Other equity interest		6,570	(208,030)	(295,175)	(276,358)	(406,133)
Treasury Stock		(169,070)	(169,070)	(251,103)	0	0
Non-controlling interest		586,750	496,154	427,829	307,106	345,076
Total Equity	Before distribution	21,173,377	19,573,427	19,494,233	19,533,648	19,321,651
	After distribution	21,173,377	19,573,427	19,494,233	19,301,872	(Note 2)

Note 1: Financial information in the last 5 years have been checked and verified by certified accountants Note 2: To be approved by the resolution of shareholders’ meeting.

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2. Condensed Consolidated Income Statement

Unit: NT$1,000

Year Item	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)	Financial information in the last 5 years (Note 1)
	2016	2017	2018	2019	2020
Sales Revenue	10,962,317	9,155,743	8,569,339	7,045,247	9,401,027
Gross Profit	253,670	52,560	576,505	1,118,481	2,003,393
Operating Income	(1,728,167)	(1,328,829)	(596,688)	(93,604)	(231,344)
Non-operating income and expenses	(341,289)	346,755	1,262,120	307,283	460,894
Net profit (loss) before tax	(2,069,456)	(982,074)	665,432	213,679	229,550
Net loss for the ongoing operating business unit	(2,203,609)	(1,127,310)	443,401	211,516	124,827
Loss from Discontinued Operations	0	0	(20,002)	(43,930)	0
Net Income	(2,203,609)	(1,127,310)	423,399	167,586	124,827
Other Comprehensive Income (Loss), After Tax	(188,587)	(148,678)	85,958	38,983	(149,294)
Total comprehensive income for the year	(2,392,196)	(1,275,988)	509,357	206,569	(24,467)
Net profit (loss) attributable to the equity holders of the parent company	(2,370,564)	(1,128,344)	430,204	228,705	111,073
Net profit (loss) attributable to non-controlling interests	166,955	1,034	(6,805)	(61,119)	13,754
Comprehensive Income Attributable to Owners of the Parent	(2,557,820)	(1,297,126)	525,464	256,575	(44,537)
Comprehensive Income Attributable to Non-controlling Interests	165,624	21,138	(16,107)	(50,006)	20,070
Basic Earnings (Loss) Per Share	(1.17)	(0.61)	0.36	0.20	0.10

Note 1: Financial information in the last 5 years have been checked and verified by certified accountants

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3. Condensed individual balance sheet

Unit: NT$1,000

					Unit: NT$1,000	Unit: NT$1,000
Year Item			Financial information in the last		5 years (Note 1)
		2016	2017	2018	2019	2020
Current assets		6,840,022	7,148,885	8,368,705	8,867,449	7,992,051
Property, plant and equipment		6,802,121	6,014,825	5,219,840	4,840,399	4,235,057
Intangible assets		70,360	40,575	21,951	105,379	93,161
Other Assets		12,902,058	11,695,645	12,301,060	10,317,279	11,119,484
Total Assets		26,614,561	24,899,930	25,911,556	24,130,506	23,439,753
Current liabilities	Before distribution	3,777,957	2,871,615	4,388,064	2,073,851	1,606,112
	After distribution	3,777,957	2,871,615	4,388,064	2,305,627	(Note 2)
Non-current liabilities		2,249,977	2,951,042	2,457,088	2,830,113	2,857,066
Total Liabilities	Before distribution	6,027,934	5,822,657	6,845,152	4,903,964	4,463,178
	After distribution	6,027,934	5,822,657	6,845,152	5,135,740	(Note 2)
Share capital		18,778,715	18,306,475	17,741,264	11,588,812	11,588,812
Capital surplus		7,170,157	7,441,417	7,542,770	7,700,295	7,642,963
Retained earnings	Before distribution	(5,199,745)	(6,293,519)	(5,671,352)	213,793	150,933
	After distribution	(5,199,745)	(6,293,519)	(5,671,352)	(17,983)	(Note 2)
Other equity interest		6,570	(208,030)	(295,175)	(276,358)	(406,133)
Treasury Stock		(169,070)	(169,070)	(251,103)	0	0
Total Equity	Before distribution	20,586,627	19,077,273	19,066,404	19,226,542	18,976,575
	After distribution	20,586,627	19,077,273	19,066,404	18,994,766	(Note 2)

Note 1: Financial information in the last 5 years have been checked and verified by certified accountants Note 2: To be approved by the resolution of shareholders’ meeting.

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4. Condensed Consolidated Individual Income Statement

Unit: NT$1,000

	Unit: NT$1,00	Unit: NT$1,00	Unit: NT$1,00	Unit: NT$1,00	Unit: NT$1,00
Year Item	Financial information in the last 5 years (Note)
	2016	2017	2018	2019	2020
Sales Revenue	8,228,573	6,727,951	6,643,919	5,504,373	3,935,194
Gross Profit	364,633	132,571	550,704	887,759	648,258
Operating Income	(906,112)	(563,293)	(66,544)	328,510	(120,969)
Non-operating income and expenses	(1,367,737)	(445,808)	557,588	(90,196)	262,551
Net profit (loss) before tax	(2,273,849)	(1,009,101)	491,044	238,314	141,582
Net loss for the ongoing operating business unit	(2,370,564)	(1,128,344)	430,204	228,705	111,073
Loss from Discontinued Operations	0	0	0	0	0
Net Income	(2,370,564)	(1,128,344)	430,204	228,705	111,073
Other Comprehensive Income (Loss), After Tax	(187,256)	(168,782)	95,260	27,870	(155,610)
Total comprehensive income for the year	(2,557,820)	(1,297,126)	525,464	256,575	(44,537)
Basic Earnings (Loss) Per Share	(1.17)	(0.61)	0.36	0.20	0.10

Note: Financial information in the last 5 years have been checked and verified by certified accountants.

(II) Name of the CPA in the most recent five years and the audit comments:

Year	CPA	Opinion
2016	Lin, Chun-Yao, Yu, Shu-Fen	Unmodified opinion
2017	Yu, Shu-Fen, Chang, Shu-Chiung	Unmodified opinion
2018	Yu, Shu-Fen, Chang, Shu-Chiung	Unmodified opinion
2019	Yu, Shu-Fen, Chang, Shu-Chiung	Unmodified opinion
2020	Yu, Shu-Fen, Chang, Shu-Chiung	Unmodified opinion

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II. Financial Analyses for the Past Five Fiscal Years

(I) Financial ratio analysis

1. Consolidated financial ratio analysis

Analysis Item	Year	Financial Analyses for the Past Five Fiscal Years(Note 1)	Financial Analyses for the Past Five Fiscal Years(Note 1)	Financial Analyses for the Past Five Fiscal Years(Note 1)	Financial Analyses for the Past Five Fiscal Years(Note 1)	Financial Analyses for the Past Five Fiscal Years(Note 1)
		2016	2017	2018	2019	2020
Financial Structure (%)	Debt ratio	27.63	24.50	23.13	23.27	22.11
	Ratio of long-term capital to property, plant, and equipment	161.42	173.35	246.02	339.11	385.73
Solvency (%)	Current ratio	202.50	289.14	382.81	352.80	389.98
	Quick ratio	158.40	239.19	332.97	268.61	301.55
	Interest coverage ratio	-	-	10.00	6.75	5.71
Operating Ability	Receivable Turnover (Times)	4.65	4.52	5.01	3.56	4.28
	Average days for cash receipts	78.00	80.00	72.85	102.52	85.28
	Inventory Turnover (Times)	3.53	3.61	3.73	1.93	1.99
	Payable Turnover (Times)	8.82	7.73	9.11	7.57	7.60
	Average days for sale of goods	103.00	101.00	97.85	189.11	183.41
	Property, Plant and Equipment Turnover (Times)	0.69	0.66	0.78	0.93	1.58
	Total Assets Turnover (Times)	0.35	0.33	0.33	0.28	0.37
Profitability	Return on Total Assets (%)	(6.58)	(3.78)	1.88	0.77	0.65
	Return on equity (%)	(9.72)	(5.53)	2.17	0.86	0.64
	Pre-tax net profit to paid-in capital ratio (%)	(11.02)	(5.36)	3.75	1.84	1.98
	Net Margin (%)	(20.10)	(12.31)	4.94	2.38	1.33
	Earnings Per Share (NT$)	(1.17)	(0.61)	0.36	0.2	0.1
Cash Flow	Cash Flow Ratio (`％`)	18.13	8.52	7.89	-	6.85
	Cash Flow Adequacy Ratio (`％`)	637.72	642.60	661.06	334.23	156.94
	Cash Reinvestment Ratio (`％`)	1.64	0.56	0.58	-	1.2
Leverage	Operating leverage	-	-	-	-	-
	Financial leverage	-	-	-	-	0.83

Note 1: Financial information in the last 5 years have been checked and verified by certified accountants

Reasons for the changes in financial ratios in the Company over the last two years: (analysis can be avoided if the increase or decrease is less than 20%)

(1)Operating ability analysis:

The main reason is that the Group strengthened its collection this year, which resulted in a better turnover rate of accounts receivable than last year.

(2)Analysis on profitability:

The profitability indicators were not as well as the previous period due to decrease in net profit after tax.

(3)Cash flow analysis:

For relevant analysis, please refer to page 310 Description of cash flow, of the annual report.

Analysis of individual financial ratio
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Year Analysis Item	Year Analysis Item		Financial Analyses for the Past Five Fiscal Years (Note 1)	Financial Analyses for the Past Five Fiscal Years (Note 1)	Financial Analyses for the Past Five Fiscal Years (Note 1)
		2016	2017	2018	2019	2020
Financial Structure (%)	Debt ratio	22.65	23.38	26.42	20.32	19.04
	Ratio of long-term capital to property, plant, and equipment	335.73	366.23	412.34	455.68	515.55
Solvency (%)	Current ratio	181.05	248.95	190.72	427.58	497.60
	Quick ratio	148.37	218.67	168.25	368.31	428.77
	Interest coverage ratio	-	-	7.71	7.87	4.48
Operating Ability	Receivable Turnover (Times)	4.19	4.10	4.72	4.40	3.15
	Average days for cash receipts	87.00	89.00	77.33	82.95	115.87
	Inventory Turnover (Times)	6.25	6.07	6.04	3.94	2.55
	Payable Turnover (Times)	7.02	6.22	5.47	5.72	6.78
	Average days for sale of goods	58.00	60.13	60.43	92.63	143.13
	Property, Plant and Equipment Turnover (Times)	1.11	1.05	1.18	1.09	0.87
	Total Assets Turnover (Times)	0.29	0.26	0.26	0.22	0.17
Profitability	Return on Total Assets (%)	(7.97)	(4.08)	1.92	1.02	0.60
	Return on equity (%)	(10.72)	(5.69)	2.26	1.19	0.58
	Pre-tax net profit to paid-in capital ratio (%)	(12.11)	(5.51)	2.77	2.06	1.22
	Net Margin (%)	(28.81)	(16.77)	6.48	4.15	2.82
	Earnings Per Share (NT$)	(1.17)	(0.61)	0.36	0.2	0.1
Cash Flow	Cash Flow Ratio (`％`)	19.50	7.03	4.71	-	-
	Cash Flow Adequacy Ratio (`％`)	593.99	604.28	529.49	203.44	105.56
	Cash Reinvestment Ratio (`％`)	1.63	0.54	0.62	-	0.73
Leverage	Operating leverage	-	-	-	1.69	-
	Financial leverage	-	-	-	1.11	0.75

Note 1: Financial information in the last 5 years have been checked and verified by certified accountants Reasons for the changes in financial ratios in the Company over the last two years: (analysis can be avoided if the increase or decrease is less than 20%)

(1) Analysis on solvency:

All indicators of solvency were better due to the repayment of bank loan.

(2) Analysis on profitability:

The profitability indicators were not as well as the previous period due to decrease in net profit after tax.

(3) Cash flow analysis:

For relevant analysis, please refer to page 310 Description of cash flow, of the annual report.

Note 2: Calculation Formula
1 . Financial structure
- (1) Ratio of liabilities in assets = total liabilities/total assets.
- (2)Ratio of long-term capital to property, plant, and equipment = (Total equity + Non-current liabilities)/Net value of property, plant, and equipment.
Solvency
- (1) Current ratio = Current assets/Current liabilities.
- (2) Quick ratio = (Current assets - Inventories - Prepaid expenses)/Current liabilities.
- (3) Interest coverage ratio = Income before tax and interest expenses/Interest expenses.
Operating ability
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- (1) Accounts receivable (including accounts receivable and notes receivable generated from operations) turnover rate = Net sales/Average balance of accounts receivable (including accounts receivable and notes receivable generated from operations) for each period.
- (2) Average days for cash receipts = 365/Accounts receivable turnover rate.
- (3) Inventory turnover rate = Cost of goods sold/Average inventories.
- (4) Accounts payable (including accounts payable and notes payable generated from operations) turnover rate = Cost of goods sold/Average balance of accounts payable (including accounts payable and notes payable generated from operations) for each period.
- (5) Average days for sale of goods = 365/Inventory turnover rate.
- (6) Real estate, plants and equipment turnover rate ＝ Net sales ／ Average real estate, plants and equipment, net.
- (7) Total assets turnover rate = Net sales/Average total assets.
Profitability
- (1) Return on assets = [Income after tax + Interest expenses x (1 - tax rate)]/Average total assets.
- (2) Return on equity = Income after tax/Average total equity.
- (3) Net profit margin = Income after tax/Net sales.
- (4) Earnings per share = (Income attributable to owners of the parent - preferred stock dividends)/Weighted average number of shares issued. (Note 4)
Cash flows
- (1) Cash flow ratio = Net cash flows generated from operating activities/Current liabilities.
- (2) Cash flow adequacy ratio = Five-year sum of net cash flows generated from operating activities/Five-year sum of capital expenditure, inventory additions and cash dividends).
- (3) Cash reinvestment ratio = (Net cash flows from operating - cash dividends)/(Gross amount of property, plant, and equipment + Long term investment + Other non-current assets + Working capital). (Note 4)
Leverage
- (1) Operating leverage = (Net operating revenue - Variable operating costs & expenses)/Operating income (Note 6).
- (2) Financial leverage = Operating income/(Operating income - Interest expenses).
Note 3:Special attention shall be paid to the following matters when using the calculation formula of earning per share above:
Shares outstanding is based on weighted average shares, and not based on year end shares outstanding.
Cash offerings or treasury stock transactions are considered in calculating weighted average shares.
Earnings appropriation or reserves to paid in capital shall be calculated and adjusted accordingly.
If preferred shares are cumulative non-convertible preferred shares, dividends shall be subtracted (regardless of whether they are paid out in dividends), from after tax net profit. If preferred shares are non-cumulative, in the event of net profits, preferred shares shall be subtracted after tax, but no adjustments needed if there are losses.
Note 4: Special attention should be paid to the following when measuring cash flow analysis:
Cash flows from operating activities refers to operating cash flows.
Capital expenditures are from the annual cash flow statements on capital expenditure outflows.
Inventory increases are from period end balance greater than period beginning balance, if inventories are less, then zero is applied.
Cash dividends includes common stock and preferred shares dividends.
Real estate, plant and equipment gross refers to the total amount of real estate, plant and equipment before deducting accumulated depreciation.

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

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

CMC Magnetics Corporation Audit Committee's Report

It is to certify that

The 2020 Business Report, Financial Statements, and the profit distribution plan submitted by the Board of Directors have been reviewed by us, the Audit Committee of the Company. We have not found any inconsistencies with applicable laws in our review of the aforementioned documents. Therefore, we are hereby issuing this report in compliance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please review.

Sincerely,

2021 Annual General Meeting of CMC Magnetics Corporation

Convener of the Audit Committee

SHIAU, FUNG-SHYUNG

March 25, 2021

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IV. Annual Financial Report for the Most Recent Fiscal Year

Representation Letter of CMC Magnetics Corporation

The entities that are required to be included in the consolidated financial statements of the Company as of and for the year ended December 31, 2020, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard 10. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, a separate set of combined financial statements will not be prepared.

Hereby certify

CMC Magnetics Corporation

Chairman: Wong, Ming-Sen

March 31, 2021

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Independent Auditors' Report

(2021) Order Cai-Shen-Pao No. 20004977

To CMC Magnetics Corporation,

Audit Opinion

We have reviewed the accompanying consolidated balance sheets of CMC Magnetics Corporation, (the “Company”) and its subsidiaries (collectively, the “Group”) for the years ended December 31, 2020 and 2019 and the relevant consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and relevant notes, including a summary of significant accounting policies “(collectively referred to as the consolidated financial statements)”.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2020 and 2019 and for the years then ended, and its consolidated financial performance and its consolidated cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China, based on our audit results and the audit reports of other certified public accountants (CPAs)(refer to the section of “Other Matters”).

Basis for Audit Opinion

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China for 2020, while in compliance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants, FSC Letter Jin-Guan-Zheng-Shen No. 1090360805 dated February 25, 2020, and the auditing standards generally accepted in the Republic of China for 2019. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of this report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Based on our auditing results and other independent auditors' reports, we believe that we have obtained sufficient and appropriate audit evidence to serve as the basis for our opinion.

Key Audit Matters

Key audit matters refer to the most vital matters in our audit of the consolidated financial statements of the Group for the year ended December 31, 2020 based on our professional judgment. Such matters have been dealt with in the course of auditing and compiling the consolidated financial statements and in the preparation of our audit opinion. As such, we do not respond to each key matter individually.

Key audit matters of the consolidated financial statements of the Group for the year ended December 31, 2020 are stated as follows

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Accounting estimation of inventory valuation

Description

Refer to Note 4(13) to the consolidated financial statements for accounting policies regarding inventory valuation; Note 5(2) for uncertainty of accounting estimates and assumptions regarding inventory valuation; and Note 6(7) for details of inventory accounting titles.

The Group mainly manufactures and sells optical discs. Due to frequent market price fluctuations in such inventories, there is a higher risk of inventory valuation losses. Since the monetary amount of Group’s inventory is significant and there are many items that require manual judgment of obsolescence of inventories, we have listed the estimate of the Group’s allowance for inventory valuation losses as one of the key audit matters for the current year.

Corresponding audit procedures

Our major audit procedures executed in response to this key audit matter are as follows.

Assess the policy adopted for its allowance for valuation loss on its inventories based on the understanding of the Group's operations and the nature of the industry.
Test whether the basis for the net realizable value is consistent with the policies set by the Group, and randomly inspect the correctness of the selling prices of individual inventory part numbers and the way the net realized value is calculated.
Acquire obsolete inventory details that have been identified and approved by the management, inspect the relevant information and verify it based on the records in the account.

Evaluation of impairment of property, plant and equipment

Description

For the accounting policies for impairment of property, plant and equipment and non-financial assets, please refer to Notes 4(16) and 4(21) of the consolidated financial statements; for the uncertainty of accounting estimates and assumptions for impairment of property, plant and equipment, please refer to Note 5(2) of the consolidated financial statements; for the description of impairment accounting items of property, plant and equipment and non-financial assets, please refer to Notes 6(9) and 6(12) of the consolidated financial statements.

The Group estimates the recoverable amount of property, plant and equipment based on value in use, which serves as the basis for impairment assessment. Since the value-in-use evaluation process involves the judgment of the management, any changes in economic conditions or changes in the Company’s strategy may cause impairment in the future. Therefore, we have listed the impairment assessment of the Group’s property, plant and equipment as one of the key audit items for the current year.

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Corresponding audit procedures

Our major audit procedures executed in response to this key audit matter are as follows.

Recalculate relevant amounts to check the correctness of the management's relevant calculations of the recoverable amount of assets with signs of impairment at the balance sheet date.
Understand and evaluate whether the Company’s asset impairment assessment procedures and accounting policies are consistent with accounting principles and adopted consistently, including methods used by management to determine the recoverable amount of individual assets.
Obtain the evaluation information used by the management to determine the recoverable amount based on the asset usage model and industry characteristics, evaluate and determine the reasonableness of the independent cash flow of the asset group, the useful life of the asset, and the possible future income and expenses.

Other Matters – Audits by other CPAs

The financial statements of some of the subsidiaries and investees under the equity method that are included in the consolidated financial statements of the Group were not audited by us but by other CPAs. Therefore, the opinions issued by us regarding the amounts listed in such subsidiary financial reports from the consolidated financial statements mentioned above are based on the audit report from other CPAs. The total assets (including investments using the equity method) of the aforementioned companies as of December 31, 2020 and 2019 were NT$3,813,941 thousand and NT$5,477,804 thousand, respectively, accounting for 15.38% and 21.52% of the total consolidated assets; the operating income for 2020 and 2019 was NT$2,889,487 thousand and NT$324,473 thousand, respectively, accounting for 30.74% and 4.61% of the consolidated operating income. In addition, part of the Group’s investments using the equity method in 2020 and 2019 and part of the information on investees disclosed in Note 13 are based on their evaluation and disclosures of the financial statements made by other CPAs appointed by the investees. We did not audit said financial statements. The balance of said investment using the equity method disclosed as of December 31, 2020 and 2019 was NT$300,803 thousand and NT$461,465 thousand, respectively, accounting for 1.21% and 1.81% of the total consolidated assets; the comprehensive income (including the share of profit and loss and other comprehensive income on associates and joint ventures recognized under the equity method) are NT$(64,094) thousand and NT$106,694 thousand, accounting for 261.96% and 51.65% of the total comprehensive income.

Other Matters - Parent Company Only Financial Reports

The Company has also prepared the parent company only financial statements for the years ended December 31, 2020 and 2019, for which we have issued an unqualified opinion, plus the audit report as in the section of other matters

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

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Statements

The responsibilities of the management are to prepare the consolidated financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and regulations of IFRS and IAS as well as IFRIC and SIC interpretations endorsed by the FSC with effective dates, and to maintain necessary internal control associated with the preparation in order to ensure that the financial statements are free from material misstatement arising from fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing the ability of the Group in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting unless the management intends to liquidate the Group or cease the operations without other viable alternatives.

The governance bodies of the Group (including the Audit Committee) are responsible for supervising the financial reporting process.

CPAs' Responsibilities for the Audit of Consolidated Financial Statements

Our objectives are to obtain reasonable assurance on whether the consolidated financial statements as a whole are free from material misstatement arising from fraud or error, and to issue an independent auditors' report. Reasonable assurance is a high-level 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 may be caused by fraud or errors. If the amounts of misstatements, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the consolidated financial statements, they are considered material.

We have utilized our professional judgment and maintained professional doubt when performing the audit work in accordance with the auditing standards generally accepted in the Republic of China. We have also performed the following tasks:

Identify and evaluate the risk of material misstatements due to fraud or error in the consolidated financial statements; design and carry out appropriate countermeasures for the evaluated risk; and obtain sufficient and appropriate evidence as the basis for their audit 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.
Understand the internal control related to the audit in order to design appropriate audit procedures under the circumstances, while not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies adopted by the management and the reasonableness of the accounting estimates and relevant disclosures.
Conclude on the appropriateness of the management's adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we believe there are events or conditions indicating the existence of a material uncertainty, we are required to remind the users of the consolidated financial statements in our audit report of the relevant disclosures therein, or to amend our audit opinion when any inappropriate disclosure is found. Our conclusion is based on the audit
95 -

evidence acquired as of the date of the audit report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall expression, structure and contents of the consolidated financial statements (including relevant Notes), and whether the consolidated financial statements fairly present relevant transactions and items.
Obtain sufficient and appropriate audit evidence concerning the financial information of entities within the Group, to express an opinion on the consolidated financial statements. We are responsible for guiding, supervising, and performing the audit and forming an audit opinion on the Group.

The matters communicated between us and the governance bodies include the planned scope and times of the audit and significant audit findings (including any significant deficiencies in internal control identified during the audit).

We also provided governance bodies with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China regarding independence, and communicated with them all relationships and other matters that may possibly be regarded as detrimental to our independence (including relevant protective measures).

From the matters communicated with the governance bodies, we determined the key audit matters for the audit of the Group's consolidated financial statements for the year ended December 31, 2020. We describe these matters in our audit 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.

PricewaterhouseCoopers Taiwan

Yu, Shu-Fen

CPA

Chang, Shu-chiung

Financial Supervisory Commission

Approval No.: Jin-Guan-Zheng-Shen No. 1030027246 Former Financial Supervisory Commission, Executive Yuan, Approval No.: Jin-Guan-Zheng-Shen No. 0990042602

March 31, 2021

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CMC Magnetics Corporation and Its Subsidiaries

Consolidated Balance Sheets

For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

Assets	December 31, 2020 Amount % $ 3,697,814 15 4,186,911 17 257,006 1 4,236 - 1,702,325 7 413,384 2 2,796,644 11 4,810 - 221,501 1 13,284,631 54 3,097,478 12 369,487 1 16,198 - 300,803 1 5,547,534 22 261,700 1 626,145 3 146,877 1 488,033 2 666,123 3 11,520,378 46 $ 24,805,009 100	December 31, 2019	December 31, 2019
	Amount $ 3,697,814 4,186,911 257,006 4,236 1,702,325 413,384 2,796,644 4,810 221,501 13,284,631 3,097,478 369,487 16,198 300,803 5,547,534 261,700 626,145 146,877 488,033 666,123 11,520,378 $ 24,805,009	Amount $ 3,327,127 4,122,089 258,714 6,786 2,356,468 270,246 3,093,515 384,444 277,493 14,096,882 2,171,840 427,196 25,392 463,760 6,329,013 125,178 374,418 181,740 515,798 746,923 11,361,258 $ 25,458,140	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1150 Notes receivable, net 1170 Net trade receivable 1200 Other receivables 130X Inventories 1460 Non-current assets held for sale, net 1479 Other current assets - others 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 1535 Financial assets at amortized cost - non-current 1550 Investments accounted for using the equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment properties, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			13 16 1 - 9 1 12 2 1
			55
			9 2 - 2 25 - 1 1 2 3
			45
			100

(Continued on the next page)

97 -

						December31,2020			December31,2019
	Liabilities and equity		Notes			Amount	%		Amount	%
	Current liabilities
2100	Short-term borrowings		6(15) and 8		$	353,017	2	$	206,000	1
2120	Financial liabilities at fair value		6(16)
	through profit or loss- current					-	-		670	-
2130	Contract liabilities – current		6(25)			85,641	-		245,282	1
2150	Notes payable					88,478	-		327,272	1
2170	Trade payables					797,840	3		733,673	3
2200	Other payables		6(17)(34)			1,127,022	5		1,218,841	5
2230	Current tax liabilities					181,506	1		64,900	-
2260	Liabilities directly associated with		6(13)
	non-current assets held for	sale				-	-		147,444	1
2280	Lease liabilities - current					63,188	-		61,465	-
2320	Long-term liabilities due	within	6(18) and 8
	one year or one operating cycle					541,000	2		875,460	3
2399	Other current liabilities - others					168,775	1		114,711	1
21XX	Total current liabilities					3,406,467	14		3,995,718	16
	Non-current liabilities
2540	Long-term borrowings		6(18) and 8			1,589,000	6		1,485,000	6
2570	Deferred income tax liabilities		6(31)			96,884	-		100,339	-
2580	Lease liabilities - non-current					187,261	1		50,671	-
2600	Other non-current liabilities		6(8)(19)			203,746	1		292,764	1
25XX	Total non-current liabilities					2,076,891	8		1,928,774	7
2XXX	Total liabilities					5,483,358	22		5,924,492	23
	Equity
	Equity attributable to the owners
	of parent company
	Share capital		6(21)
3110	Common stock					11,588,812	47		11,588,812	45
	Capital surplus		6(22)
3200	Capital surplus					7,642,963	31		7,700,295	31
	Retained earnings		6(23)
3310	Legal reserve					21,379	-		-	-
3350	Retained earnings					129,554	1		213,793	1
	Other equity		6(24)
3400	Other equity			(		406,133 ) (	2 ) (		276,358 ) (	1 )
31XX	Total equity attributable to
	the owners of	parent
	company					18,976,575	77		19,226,542	76
36XX	Non-controlling interests		4(3)			345,076	1		307,106	1
3XXX	Total equity					19,321,651	78		19,533,648	77
	Significant contingent liabilities		6(18) and 9
	and unrecognized contractual
	commitments
	Material events after the balance		11
	sheet date
3X2X	Total liabilities and equity				$	24,805,009	100	$	25,458,140	100

The notes attached are part of the Consolidated Financial Statements and shall be read together. Chairman: Wong, Ming-Sen Manager: Wong, Ming-Sen Accounting Manager: Pi-yin Yang

98 -

CMC Magnetics Corporation and Its Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands, except for earnings per share

Items
4000
Operating revenue
5000
Operating costs
5900
Gross operating profit
Operating expenses
6100
Selling and marketing expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Expected credit loss
6000
Total operating expenses
6900
Operating losses
Non-operating income and expenses
7100
Interest revenue
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit (loss) on associates
and joint ventures accounted for
using equity method
7000
Total non-operating income and
expenses
7900
Net income before tax
7950
Income tax expense
8000
Net
profit
from
continuing
operations
8100
Loss from discontinued operations
8200
Net profit

2020
2019
Notes
Amount
%
Amount
%
6(2)(8)(25)
and 7
$ 9,401,027
100
$ 7,045,247
100
6(7)(19)(30) (
7,397,634 ) (
79 ) (
5,926,766 ) (
84 )
2,003,393
21
1,118,481
16
6(19)(30)and
7
(
984,317 ) (
11 ) (
502,807 ) (
7 )
(
845,637 ) (
9 ) (
309,189 ) (
4 )

(
296,480 ) (
3 ) (
399,583 ) (
6 )
12(2)
(
108,303 ) (
1 ) (
506 )
-
(
2,234,737 ) (
24 ) (
1,212,085 ) (
17 )
(
231,344 ) (
3 ) (
93,604 ) (
1 )

6(4)(26)
16,470
-
18,154
-
6(27)
279,870
3
1,920,351
27
6(2)(16)(28)
277,150
3 (
1,587,124 ) (
22 )
6(29)
(
49,599 )
- (
44,960 ) (
1 )
6(8)
(
62,997 ) (
1 )
862
-
460,894
5
307,283
4
229,550
2
213,679
3
6(31)
(
104,723 ) (
1 ) (
2,163 )
-
124,827
1
211,516
3
6(13)
-
- (
43,930 ) (
1 )
$ 124,827
1
$ 167,586
2

(Continued on the next page)

99 -

Items
Other comprehensive income, net
Items that will not be reclassified
to profit or loss
8311
Remeasurement of defined benefit
plans
8316
Unrealized
gains
(losses)
on
investments in equity instruments at
fair
value
through
other
comprehensive income
8349
Income tax related to items that will
not be reclassified
8310
Sum of items that will not be
reclassified to profit or loss
Items that may be reclassified
subsequently to profit or loss
8361
Exchange differences on translating
the financial statements of foreign
operations
8365
Equity directly related to non-current
assets held for sale (or disposal
groups)
8370
Share
of
other
comprehensive
income (loss) of associates and joint
ventures accounted for using the
equity method
8360
Sum
of
items
that
may
be
reclassified subsequently to profit
or loss
8500
Total comprehensive income for
current period
Net income (loss) attributable to:
8610
Owners of parent company
8620
Non-controlling interests
Total
Total comprehensive income/(loss)
attributable to:
8710
Owners of parent company
8720
Non-controlling interests
Total
Earnings per share
9750
Basic earnings per share
Diluted earnings per share
9850
Diluted earnings per share

2020
2019
Notes
Amount
%
Amount
%
6(19)
$ 4,736
-
$ 15,260
-
6(3)(24)
and 12(3)
(
29,458 )
-
46,006
1
6(31)
373
- (
3,253 )
-
(
24,349 )
-
58,013
1
6(24)
(
123,848 ) (
1 )
1,153
-
6(13)
(24)
-
- (
23,709 )
-
6(24)
(
1,097 )
-
3,526
-
(
124,945 ) (
1 ) (
19,030 )
-
( $ 24,467 )
-
$ 206,569
3
$ 111,073
1
$ 228,705
3
13,754
- (
61,119 ) (
1 )
$ 124,827
1
$ 167,586
2
( $ 44,537 )
-
$ 256,575
4
20,070
- (
50,006 ) (
1 )
( $ 24,467 )
-
$ 206,569
3
6(32)
$ 0.10
$ 0.20
$ 0.10
$ 0.20

The notes attached are part of the Consolidated Financial Statements and shall be read together.

Manager: Wong, Ming-Sen

Chairman: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

100 -

CMC Magnetics Corporation and Its Subsidiaries

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

Notes			Equityattributable to the owners ofparent company
	Common stock	Capital surplus	Retained earnings Other equity	Equity directly associated with non-current assets held for sale Treasuryshares
			Legal reserve Unappropriated earnings (losses to be compensated) Exchange differences on translating the financial statements of foreign operations Unrealized gains or losses on financial assets at fair value through other comprehensive income
$ 17,741,2 $ 7,542,770 $ ( $ 5,671,352 ) ( $ 115,4 ) ( $ 179,7 ) $ ( $ 251,10 ) $ 19,066,40 $ 427,8 $ 19,494,233 - - - 228,705 - - - - 228,705 ( 61,119 ) 167,586 4(3), 6(3)(13)(24) - - - 12,047 ( 6,505 ) 46,037 ( 23,709 ) - 27,870 11,113 38,983 - - - 240,752 ( 6,505 ) 46,037 ( 23,709 ) - 256,575 ( 50,006 ) 206,569 6(21) ( 5,671,352 ) - - 5,671,352 - - - - - - - 6(21) - - - - - - - ( 72,904 ) ( 72,904 ) - ( 72,904 ) 6(21)(22) ( 481,100 ) 157,093 - - - - - 324,007 - - - 6(22) - 355 - - - - - - 355 ( 355 ) - r 6(22)(33) - 77 - ( 23,965 ) - - - - ( 23,888 ) 23,888 - r 6(24) - - - ( 2,994 ) - 2,994 - - - - - 6(20) - - - - - - - - - 2,959 2,959 6(33) - - - - - - - - - ( 97,480 ) ( 97,480 ) 6(33) - - - - - - - - - 271 271 $ 11,588,8 $ 7,700,295 $ $ 213,793 ( $ 121,9 ) ( $ 130,7 ) ( $ 23,7 ) $ $ 19,226,54 $ 307,1 $ 19,533,648 $ 11,588,8 $ 7,700,295 $ $ 213,793 ( $ 121,9 ) ( $ 130,7 ) ( $ 23,7 ) $ $ 19,226,54 $ 307,1 $ 19,533,648 - - - 111,073 - - - - 111,073 13,754 124,827 6(3)(24) - - - ( 962 ) ( 125,226 ) ( 29,422 ) - - ( 155,610 ) 6,316 ( 149,294 ) - - - 110,111 ( 125,226 ) ( 29,422 ) - - ( 44,537 ) 20,070 ( 24,467 ) 6(22)(23) - - 21,379 ( 21,379 ) - - - - - - - - ( 57,944 ) - ( 173,832 ) - - - - ( 231,776 ) - ( 231,776 ) 6(22) - 612 - - - - - - 612 ( 612 ) - r 6(24) - - - 861 - ( 861 ) - - - - - 6(20) - - - - - - - - - ( 903 ) ( 903 ) - - - - - - - - - ( 777 ) ( 777 ) 6(24)(35) - - - - 2,025 - 23,709 - 25,734 20,192 45,926 $ 11,588,8 $ 7,642,963 $ 21, $ 129,554 ( $ 245,1 ) ( $ 161,0 ) $ $ $ 18,976,57 $ 345,0 $ 19,321,651

The notes attached are part of the Consolidated Financial Statements and shall be read together.

Chairman: Wong, Ming-Sen

Manager: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

101 -

CMC Magnetics Corporation and Its Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands

Cash flows from operating activities
Profit/(loss) before income tax from continuing operations
Pre-tax net loss of discontinued operations
Net income before tax for the period
Adjustments
Adjustments for
Depreciation expenses (including property, plant and
equipment, right-of-use assets, and investment properties)
Amortization expenses
Expected credit impairment losses (gains)
Interest expenses
Interest revenue
Dividend income
Net losses (gains) on financial assets and liabilities at fair
value through profit and loss
Share-based payment (benefit) cost
Share of loss (profit) of associates accounted for using
equity method
Gains on disposal of property, plant and equipment
Gains on disposal of subsidiaries
Gains on disposal of investments
Gains on disposal of non-current assets held for sale
Financial asset impairment losses
Non-financial asset impairment losses
Gains on lease modification
Gains on bargain purchase
Gains on contract modification
Changes in assets/liabilities related to operating activities
Net changes in operating assets
Financial assets mandatorily at fair value through profit
or loss
Notes receivable (including related and non-related
parties)
Trade receivable (including related and non-related
parties)
Other receivables
Inventories
Other current assets
Net changes in operating liabilities
Financial liabilities at fair value through profit or loss
Notes and trade payable
Other payables
Contract liabilities
Other current liabilities
Decrease in accrued pension liability
Cash inflow (outflow) from operating activities
Interest received
Dividends received
Interest paid
Income tax paid
Net cash inflow (outflow) from operating activities

Notes
For the Year Ended
December 31,
2020
For the Year Ended
December 31, 2019
$ 229,550
$ 213,679
-
(
44,086 )
229,550
169,593
6(9)(10)(1)(28)(30)
787,195
1,145,621
6(30)
105,733
82,155
12(2)
108,303
(
921 )
6(29)
48,333
36,172
6(26)
(
16,470 )
(
18,356 )
6(27)
(
169,347 )
(
106,276 )
6(2)(16)
(28)
136,476
(
325,352 )
6(20)
(
903 )
5,051
6(8)
62,997
(
106,694 )
6(9)(28)
(
2,287 )
(
3,507 )
6(28)
(35)
(
231,435 )
-
6(28)
-
(
49,866 )
6(13)(28)
(
212,335 )
-
6(28)
-
174
6(12)(28)
8,407
1,605,033
6(10)
(
40 )
-
6(27)
(34)
-
(
1,810,471 )
6(28)(34)
(
133,523 )
-
(
1,010,566 )
(
1,425,614 )
1,348
17,216
511,566
43,718
(
14,605 )
336,770
289,206
(
11,654 )
39,878
(
2,952 )
(
9,259 )
(
3,937 )
(
148,702 )
(
595,695 )
(
73,590 )
(
120,522 )
(
149,664 )
(
7,029 )
54,933
(
20,727 )
(
88,658 )
-
122,541
(
1,168,070 )
16,029
18,098
169,398
212,582
(
48,281 )
(
37,720 )
(
26,277 )
(
17,371 )
233,410
(
992,481 )

(Continued on the next page)

102 -

Cash flows from investing activities
Price of acquisition of financial assets mandatorily at fair
value through profit or loss
Refund from capital reduction related to financial assets at
fair value through other comprehensive income
Price of acquisition of financial assets mandatorily at fair
value through other comprehensive income
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Decrease (increase) in financial assets measured at amortized
cost
Acquisition of subsidiaries (less the cash received)
Refund from capital reduction related to investments
accounted for using the equity method
Price of acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in advance receipt for sale of land and equity (listed
as liabilities directly associated with non-current assets held
for sale)
Proceeds from disposal of non-current assets held for sale
Price of acquisition of intangible assets
Decrease in other financial assets
Increase in net cash of disposal of subsidiaries
Increase in other non-current assets
Increase in prepayments for equipment (listed in other
non-current assets)
Net cash inflow (outflow) from investing activities
Cash flows from financing activities
Increase (decrease) in short-term borrowings
Increase in long-term notes payable
Long-term borrowings taking place for current period
Repayment of long-term borrowings for current period
Decrease in other non-current liabilities
Repayment of principal of lease liabilities
Cost of repurchase of treasury shares
Cash dividends distributed by subsidiaries
Cash dividends distributed
Changes in non-controlling interests
Net cash outflow from financing activities
Effects of exchange rate changes on the balance of cash held in
foreign currencies
Reclassified to cash and cash equivalents of non-current assets
held for sale
Increase (decrease) in cash and cash equivalents for current
period
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

Notes
For the Year Ended
December 31,2020
For the Year Ended
December 31,2019
( $ 86,449 )
( $ 1,270,546 )
12(3)
15,021
11,385
12(3)
-
(
35,092 )
12(3)
-
15,709
9,004
(
195,833 )
6(34)
-
86,193
6(8)
-
8,000
6(35)
(
65,783 )
(
13,037 )
6(9)
12,898
7,476
6(13)
-
145,200
6(13)
394,518
-
(
50,430 )
(
31,428 )
-
136,770
6(35)
463,989
-
(
3,654 )
(
35,811 )
6(35)
(
104,341 )
(
212,590 )
584,773
(
1,383,604 )
6(36)
153,017
(
44,000 )
6(36)
200,000
-
6(36)
621,000
1,960,000
6(36)
(
1,051,460 )
(
2,707,940 )
(
1,592 )
(
18,429 )
6(10)(36)
(
81,000 )
(
66,175 )
-
(
80,266 )
4(3)
-
(
34,829 )
6(23)
(
231,776 )
-
6(33)
(
777 )
(
62,380 )
(
392,588 )
(
1,054,019 )
(
54,908 )
61,896
6(13)
-
(
3,977 )
370,687
(
3,372,185 )
3,327,127
6,699,312
$ 3,697,814
$ 3,327,127

The notes attached are part of the Consolidated Financial Statements and shall be read together.

Chairman: Wong, Ming-Sen

Manager: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

103 -

CMC Magnetics Corporation and Its Subsidiaries Notes to the consolidated financial statements For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands (Unless specified otherwise)

1. Company History

CMC Magnetics Corporation (hereinafter referred to as the "Company") was incorporated in the Republic of China. The main business items of the Company and its subsidiaries (hereinafter collectively referred to as the "Group") are the manufacturing and sale of consumer electronic products, including optical discs, and the acquisition of film agency rights , and production and distribution of digital discs and Blu-ray discs for sales and rental business. The Company’s shares have been listed on the Taiwan Stock Exchange for trading since February 17, 1992.

2. Date and Procedure for Approval of Financial Statements

The consolidated financial statements were approved by the board of directors on March 25, 2021 for release.

3. Application of New and Amended Standards and Interpretations

a. Effect of the adoption of new issuance of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC")

The following table summarizes new, revised, and amended standards and interpretations endorsed by FSC applicable in 2020:

Effective Date New, Revised, and Amended Standards and Interpretations Announced by IASB Amendments to IAS 1 and IAS 8, "Disclosure Initiative - January 1, 2020 Definition of Materiality" Amendment to IFRS 3 - "Definition of a Business" January 1, 2020 Amendments to IFRS 9, IAS 39, and IFRS 7 "Changes in January 1, 2020 Interest Rate Indicators" Amendments to IFRS 16 "Covid-19-Related Rent June 1, 2020 (Note) Concessions"

Note: The FSC allows early application on January 1, 2020.

The standards and interpretations above have no significant impact on the Group's financial position and financial performance based on the Group's reasonable assessment.

b. Effect of the new issuance of or amendments to IFRSs as endorsed by the FSC but not yet adopted
104 -

The following table summarizes the new, revised, and amended standards and interpretations of IFRSs endorsed by the FSC that are applicable in 2021:

New, Revised, and Amended Standards and Interpretations

Effective Date Announced by IASB

Amendments to IFRS 4 "Temporary Exemption from Applying IFRS 9"

January 1, 2021

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS January 1, 2021 16 - “Interest Rate Benchmark Reform - Phase 2”

The standards and interpretations above have no significant impact on the Group's financial position and financial performance based on the Group's reasonable assessment.

c. Effects of IFRSs issued by IASB but not yet endorsed by the FSC

The following table sets out the criteria and explanations for the new releases, amendments and revisions of the IFRSs that have been published by the IASB but not yet endorsed by the FSC:

yet endorsed by the FSC:
	Effective Date
New, Revised, and Amended Standards and Interpretations	Announced by IASB
Amendments to IFRS 3 "Reference to the Conceptual	January 1, 2022
Framework"
Amendments to IFRS 10 and IAS 28 "Sale or Contribution	To be determined by the
of Assets between an Investor and its Associate or Joint	IASB
Venture"
Amendments to IFRS 17 "Insurance Contracts"	January 1, 2023
Amendments to IFRS 17 “Insurance Contracts”	January 1, 2023
Amendments to IAS 1 “Classification of Liabilities as	January 1, 2023
Current or Non-current”
Amendments to IAS 1 "'Disclosure of Accounting Policies"	January 1, 2023
Amendments to IAS 8 "Definition of Accounting Estimates"	January 1, 2023
Amendments to IAS 16 "Property, Plant and Equipment –	January 1, 2022
Proceeds before Intended Use"
Amendments to IAS 37 "Onerous Contracts - Cost of	January 1, 2022
Fulfilling a Contract"
Annual Improvements to IFRSs 2018-2020 Cycle	January 1, 2022

The Group has assessed that the standards and interpretations above have no significant influence on the Group's financial position and financial performance, except as those indicated below:

1) Amendments to IAS 1 "'Disclosure of Accounting Policies"

The amendments require companies to disclose information about their significant accounting policy information, rather than their significant accounting policies. The amendments clarify how companies can identify significant accounting policy information and examples of assessing if accounting policy information is significant.

105 -
2) Amendments to IAS 8 "Definition of Accounting Estimates"

The amendments clarify how companies shall distinguish between changes in accounting policies and changes in accounting estimates. The amendments also make it clear that changes in accounting estimates caused by new information or new developments are not error correction. In addition, the impact of changes in inputs or measurement techniques used to establish accounting estimates is a change in accounting estimates if it is not caused by previous error corrections.

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. Unless otherwise specified, the policies shall be applicable to all reporting periods presented.

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation
1) Except for the following significant items, the consolidated financial statements have been prepared on the historical cost basis:
- a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- b) Financial assets at fair value through other comprehensive income.
- c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
2) The preparation of financial statements has been in conformity with IFRSs, requiring the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

c. Basis of consolidation

1) Principle of preparation of the consolidated financial statements
a) All subsidiaries are included in the Group's consolidated financial statements. Subsidiaries are all entities controlled by the Group (including structured entities). The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement in the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control over the subsidiaries.
106 -
b) Inter-company transactions, balances, and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries are adjusted, when necessary, to remain consistent with those of the Company.
c) The profit or loss and each component of other comprehensive income is attributed to the owners of the parent company and to the non-controlling interest. Total comprehensive income is also attributed to the owners of the parent company and non-controlling interest even if this results in the non-controlling interests having a deficit balance.
d) Changes in a parent's ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, namely transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.
e) When the Group loses control over a subsidiary, the Group re-measures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognized in profit or loss. For all amounts previously recognized in other comprehensive income related to the subsidiary, the accounting treatment is the same as if the Group directly disposes of relevant assets or liabilities, that is, if the benefit or loss previously recognized as other comprehensive income will be reclassified as profit or loss when the relevant assets or liabilities are disposed of, when control over the subsidiary is lost, the gains or loss will be reclassified as profit or loss from equity.
2) Subsidiaries included in the consolidated financial statements:

Ownership percentage (%)
Investor
Subsidiary
Nature of business
December 31,
2020
December 31,
2019
The Company
Zhong Jia International
Investment Co., Ltd. (Zhong Jia)
General
investment
business
100.00
100.00
The Company
CIA Holding Corp. (CIA)
General
investment
business
86.35
86.35
Zhong Jia
CIA
General
investment
business
13.65
13.65
The Company
EMC Investment Holding Ltd.
(EMCH)
General
investment
business
100.00
100.00
The Company
CMC Movie Corporation (CMC
Movie)
Motion picture
distribution
100.00
100.00
The Company
CMC Entertainment Holding
Corporation (CMC Entertainment)
Film production
and distribution
industry
100.00
100.00

Description

107 -

The Company	CMC Entertainment Hub	Shopping mall	100.00	100.00
	Corporation (CMC Entertainment	business
	Hub)
The Company	Sun Well Solar Corporation (Sun	Production and	98.82	98.82
	Well)	sales of thin-film
		solar cells
Zhong Jia	Sun Well	Production and	0.44	0.44
		sales of thin-film
		solar cells
The Company	Sun Q Corporation Limited (Sun	Production and	58.20	58.20
	Q)	sales of solar
		panels
The Company	Transtouch Technology Inc.	Production and	52.60	52.47
	(Transtouch)	sales of touch
		panels
The Company	Asia 1 Entertainment Co., Ltd.	Production,	93.59	93.59
	(Asia 1 Entertainment)	distribution,
		rental, and trading
		of film and
		audio-visual
		digital disc
		products
CMC Entertainment	Asia 1 Entertainment	Production,	2.77	2.77
		distribution,
		rental, and trading
		of film and
		audio-visual
		digital disc
		products

Ownership percentage (%)
Investor
Subsidiary
Nature of business
December 31,
2020
December 31,
2019
The Company
Benmeng Optoelectronics Co.,
Ltd. (Benmeng)
Dyeing and
finishing of cloth,
weaving,
processing, and
trading of various
textiles, as well as
manufacturing and
trading of
electronic products
-
47.10
Zhong Jia
Benmeng
Dyeing and
finishing of cloth,
weaving,
processing, and
trading of various
textiles, as well as
manufacturing and
trading of
electronic products
-
31.41
The Company
Deltamac (Taiwan) Co., Ltd.
(Deltamac)
Production,
distribution, rental,
and sales of film
and television
products
38.91
38.91
Zhong Jia
Deltamac
Production,
distribution, rental,
and sales of film
and television
18.62
18.62 Description

Note 6
〃

108 -

products

Zhong Jia	Taiwan Net Co. Ltd. (Taiwan Net)	Electronic	100.00	100.00
		information supply
		service and general
		advertising service
		business
Zhong Jia	EV Power Corporation (EV	Automobile rental	100.00	100.00
	Power)	business
Zhong Jia	Taiwan Dakang Internet Co., Ltd.	Internet-related	100.00	100.00
	(Taiwan Dakang)	service business
CMC Entertainment	Com In Dim Corporation (Com In	Food and beverage	100.00	100.00
Hub	Dim)
CMC Entertainment	Jing Zhi Zui Co., Ltd. (Jing Zhi	Food and beverage	100.00	10.00
Hub	Zui)
Benmeng	Jing Zhi Zui	Food and beverage	-	90.00
CMC Movie	CMC Content Corporation (CMC	Audiovisual	100.00	100.00
	Content)	business
CIA	Super Net Holding Ltd. (Super	General investment	100.00	100.00
	Net)	business
CIA	Kinease Investment Ltd.	Real estate	100.00	100.00
	(Kinease)	development
		business
EMCH	Media Factory LLC (MFLLC)	General investment	100.00	100.00
		business
EMCH	F5 Holdings, Ltd. (F5)	General investment	100.00	100.00
		business
EMCH	Zhonghong Packaging Products	Production and	-	100.00	Note 3
	(Dongguan) Co., Ltd.	sales of plastic
	(Zhonghong Packaging)	boxes, boxes,
		baskets, and
		similar products
EMCH	Jiangsu Yongxing Electronic	Production and	100.00	100.00
	Materials Co., Ltd. (Yongxing	sales of plastic
	Electronic)	boxes, boxes,
		baskets, and
		similar products
EMCH	Jet-Thai Hi-Tech Co.,	Production and	100.00	100.00
	Ltd.(Jet-Thai)	sales of optical
		discs
EMCH	Verbatim Japan Ltd. (VJP)	Trading of storage	100.00	100.00	Note 2
		media and
		electronic products

Ownership percentage (%)

Investor Subsidiary Nature of business EMC H Verbatim Americas LLC(VUS) Trading of storage media and electronic products EMC H Verbatim Australia Pty. Ltd.(VAU) Trading of storage media and electronic products EMC H Verbatim GmbH (VGmbH) Trading of storage media and electronic products	December 31, 2020 - 100.00 100.00	December 31,	Description

109 -

EMC H	Verbatim (Hong Kong)	Trading of storage	100.00	100.00	`〃`
	Limited(VHK)	media and
		electronic products
F5	Hotan Corp.(HOTAN)	Trading of optical	100.00	100.00
		discs and other
		electronic products
F5	VUS	Trading of storage	100.00	-
		media and
		electronic products
MFLLC	Jiangsu Yongxing Multimedia	Production and	90.00	90.00
	Co., Ltd. (Yongxing Multimedia)	sales of optical
		discs
Yongxing Electronic	Yongxing Multimedia	Production and	7.00	7.00
		sales of optical
		discs
MFLLC	Nantong Zhongxing Multimedia	Production and	49.00	49.00
	Co., Ltd. (Zhongxing	sales of optical
	Multimedia)	discs
Benmeng	FJKL Technology (BVI)	Holding and	-	28.96	Note 1
	Corp.(FJKL)	investment
		business
EMC H	FJKL	Holding and	-	71.04	`〃`
		investment
		business
Benmeng	FJKL Technology Corporation	Manufacturing and	-	100.00	Note 6
	(FJKL)	trading of
		optoelectronic
		products
Deltamac	Deltamac (Hong Kong) Co.,Ltd	Sales of TV and	-	-	Note 5
	(Deltamac (H.K.))	film program tapes
		and audio-visual
		CD products
Deltamac(H.K.)	Clickplay Limited (Clickplay)	Sales of digital	-	-	`〃`
		audio and video
		products
Deltamac(H.K.)	Photopia Workshop	Advertising design	-	-	`〃`
	Limited(Photopia)	and sales agency

For the subsidiaries mentioned in the above, except for the ones mentioned in Note 1 and Note 3, all of them have been evaluated based on the financial statements audited by CPAs.

Note 1: The liquidation was completed in 2020.

Note 2: It was established in July 2019.

Note 3: One hundred percent of the equity was sold in January 2020, and the control has been lost since the date of sale.

Note 4: The Group acquired 100% of its equity on December 31, 2019, so it is listed as a subsidiary from the date of acquisition.
Note 5: Deltamac (HK), Clickplay and Photopia were resolved to be dissolved by their shareholders' meetings on December 19, 2019, and the dissolution and liquidation process began from that date. Therefore, the Group has lost its control over said companies and ceased to include them in the consolidated financial statements and delisted the relevant assets and liabilities from said
110 -

statements from that date, while reclassifying the remaining assets that could be obtained to other receivables totaling NT$70,350 according based on the shareholding ratio, and reclassifying the exchange differences on translating the financial statements of foreign operations to exchange losses in the amount of NT$48,736. As of December 31, 2020, the balance of other receivables was NT$67,066.

Note 6: On March 4, 2020, the board of directors resolved to sell the equity, and the settlement was completed on March 5, 2020, over which the Group lost control. Therefore, it was no longer a subsidiary of the Group from December 31, 2020.
3) For subsidiaries above that specialize in investment, due to the adjustment of the Group’s business model, the profit and loss or valuation generated by their investment transactions were listed in the 2020 consolidated statements of comprehensive income as other gains and losses, while listed as operating income and operating costs in the 2019 consolidated statements of comprehensive income; the cash flows of relevant investments are listed under operating activities or investing activities in the consolidated statements of cash flows based on the original investment purpose.
4) Subsidiaries not listed in the consolidated financial statements: N/A.
5) Different adjustments and treatment methods of subsidiaries in the accounting period: N/A.
6) Major restriction: N/A.
7) Subsidiaries with significant non-controlling interests that are material to the Group:
8) The total amount of non-controlling interests of the Group as of December 31, 2020 and 2019 was NT$345,076 and NT$307,106, respectively. The following is information on non-controlling interests and subsidiaries that are material to the Group:

Subsidiary Principal Place of Business Transtouch ROC Deltamac "	Non-controlling interests December 31, 2020 Amount Ownership Percentage $236,119 47.40% 149,910 42.47%	Non-controlling interests December 31, 2019 Amount Ownership Percentage $255,046 47.53% 148,512 42.47%

111 -

Aggregate financial information of subsidiaries: Balance Sheet

Balance Sheet
Current assets Non-current assets Current liabilities Non-current liabilities Total net assets	Transtouch
	December 31, 2020 $ 458,897 174,626 ( 95,058) ( 86,303) $ 452,162	December 31, 2019 $ 489,149 212,875 ( 111,347) ( 104,111) $ 486,566

Current assets Non-current assets Current liabilities Non-current liabilities Total net assets	Deltamac	Deltamac
	December 31, 2020 $ 382,613 84,597 ( 63,874) ( 16,891) $ 386,445	December 31, 2019 $ 384,667 95,505 ( 88,215) ( 8,886) $ 383,071

Statement of Comprehensive Income

Statement of Comprehensive Income
Revenue Net loss before tax Income tax benefit Net loss Comprehensive income (after tax) Total comprehensive income for current period Total comprehensive income attributable to non-controlling interests Dividends paid to non-controlling interests		Transtouch
		2020	2019
	(	$ 326,657 ($ 33,310) 665 ( 32,645) 79) ($ 32,724) ($ 16,636) $-	$ 439,169 ($ 8,212) 1,387 ( 6,825) ( 388) ($ 7,213) ($ 4,977) $ 34,829

112 -

Deltamac

Revenue Net income (loss) before tax Income tax (expenses) benefits Loss from discontinued operations Net profit (loss) Other comprehensive income (after tax) Total comprehensive income for current period Total comprehensive income attributable to non-controlling interests Statements of		2020	2019
		$ 245,057 $ 2,584 ( 156) - 2,428 946 $ 3,374 $ 1,397 Cash	$ 316,893 ($ 50,953) 2,962 ( 43,930) ( 91,921) ( 52) ($ 91,973) ($ 32,265) Flows
Net cash inflow from operating activities Net cash outflow from investing activities Net cash outflow from financing activities Decrease in cash and cash equivalents for current period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Net cash inflow from operating activities Net cash outflow from investing activities Net cash outflow from financing activities Impact of exchange rate changes on cash and cash equivalents Increase (decrease) in cash and cash equivalents for current period Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period		Transtouch
		2020	2020
	( (	$ 10,096 $ 36,799 5,102) ( 158,151) 17,942) ( 90,066) 12,948) ( 211,418) 142,153 353,571 $ 129,205 $ 142,153 Deltamac
	(



		2020	2020
		$ 43,102 ( 1,241) ( 7,647) - 34,214 97,734 $ 131,948	$ 67,501 ( 75,719) ( 23,845) ( 920) ( 32,983) 130,717 $ 97,734

d. Foreign currency translation

All items on the financial statements of each entity of the Group are measured at the

113 -

currency of the principal economic environment in which the entity operates (i.e. functional currency). The consolidated financial statements were expressed in New Taiwan Dollars, the Company's functional currency.

1) Foreign currency transactions and balances
a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
b) Balances of monetary assets and liabilities denominated in foreign currencies are adjusted at the spot exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from such adjustments are recognized in profit or loss
c) Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value through profit or loss, are translated at the exchange rates prevailing at the balance sheet date, where their translation differences are recognized in profit or loss as part of the fair value gain or loss. Non-monetary assets and liabilities denominated in foreign currencies measured at fair value through other comprehensive income are translated at the exchange rates prevailing at the balance sheet date, where their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the initial transaction dates.
d) All other foreign exchange gains or losses based on the nature of the transactions are presented in the statement of comprehensive income in the category of "other gains and losses."
2) Translation of foreign operations
a) The operating results and financial positions of all the Group's entities, associates, and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
- ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of the period; and
- iii. All resulting exchange differences are recognized in other comprehensive income.
b) When the foreign entity partially disposed of or sold is an associate or a joint arrangement, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. However, when the Group retains partial interest in the associate or joint arrangement, after losing significant influence over the former foreign associate or losing joint control over the joint arrangement, such a transaction shall be accounted for as disposal of all interests in the foreign operation.
c) When the foreign operation that is partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interests of the
114 -

foreign operation. However, if the Group still retains partial interests in the former foreign subsidiary after losing control of the former foreign subsidiary, such a transaction shall be accounted for as disposal of all interests in the foreign operation.

e. Classification of Current and Non-current Assets and Liabilities
1) Assets that meet one of the following criteria are classified as current assets:
- a) Assets that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
- b) Assets held primarily for the purpose of trading.
- c) Assets that are expected to be realized within twelve months from the balance sheet date.
- d) Cash or cash equivalents, excluding assets restricted from being exchanged or used to settle a liability for at least 12 months after the balance sheet date.

The Group classifies assets not meeting the aforesaid criteria into non-current assets.

2) Liabilities that meet one of the following criteria are classified as current liabilities:
a) Liabilities that are expected to be settled within the normal operating cycle.
b) Assets held primarily for the purpose of trading.
c) Liabilities that are expected to be settled within 12 months after the balance sheet date.
d) Liabilities with a repayment deadline that cannot be unconditionally deferred for at least 12 months after the balance sheet date. 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.

The Group classifies liabilities not meeting the aforesaid criteria into non-current liabilities.

f. Cash equivalents

Cash equivalents refer to investments that are short-term, highly liquid, subject to a low risk of changes in value, and readily convertible to a known amount of cash. Time deposits satisfying the afore-mentioned definition and for which the objective of holding is to meet the short-term operating cash commitment are classified as the cash equivalent.

g. Financial assets at fair value through profit or loss (FVTPL)

1) Financial assets that are not measured at amortized cost or at fair value through other comprehensive income (FVTOCI).
2) Regular way purchases and sales of financial assets at FVTPL are accounted for on the trade date.
3) The Group's initial recognition is on a fair value basis, with relevant transaction costs recognized in profit or loss, and subsequently at fair value, and gains or losses thereof are recognized in profit or loss.
4) When the right to receive dividends is established, the future economic benefits related to dividends may flow to the Group, and when the amount of dividends can be reliably measured, the Group recognizes dividend income in profit or loss.

h. Financial assets at fair value through other comprehensive income (FVTOCI)

1) Refers to the irrevocable election made at initial recognition that allows the Group to
115 -

present fair value changes of equity investment not held for trading in other comprehensive income; or debt investment that meets all the criteria simultaneously:

a) The objective of the Group's business model is achieved both by collecting contractual cash flows and selling financial assets.
b) The contract terms of the financial asset generate cash flow on a specific date, which is entirely to pay for the interest on the principal and the amount of principal outstanding.
2) The Group's financial assets measured at FVTOCI in accordance with trading conventions are accounted for on the trade date.
3) At initial recognition, the Group measures the financial assets at fair value plus transaction costs, and subsequently measures the financial assets at fair value:
a) Any changes in the fair value of equity instruments are recognized in other comprehensive income, while subsequently accrued benefits or losses previously recognized in other comprehensive income are not then reclassified to profit or loss, but are transferred to retained earnings. The Group recognizes the dividend income in profit or loss when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group, and the amount of the dividend can be measured reliably.
b) The changes in fair value of debt instruments are recognized in other comprehensive income. Before derecognition, impairment loss, interest revenue, and gain or loss on foreign exchange are recognized in profit or loss. Upon derecognition, the accumulated gains or losses previously recognized in other comprehensive income are reclassified from equity to profit or loss.

i. Financial assets at amortized cost

1) Financial assets at amortized cost are those that meet all of the following criteria:
a) The financial assets are held under a business model for the purpose of collecting contractual cash flows.
b) The contract terms of the financial asset generate cash flow on a specific date, which is entirely to pay for the interest on the principal and the amount of principal outstanding.
2) The Group's financial assets measured at amortized cost in accordance with trading conventions are accounted for on the trade date.
3) At initial recognition, the Group measures the financial assets at fair value plus transaction costs, and subsequently adopts the effective interest method to recognize said assets in interest revenue and in impairment loss during the outstanding period according to the amortization procedure. During derecognition, the gains or losses thereof are recognized in profit or loss.
4) The Group’s time deposits which do not meet the condition of cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

j. Trade receivable and notes receivable

1) Trade receivable and notes receivable are accounts and notes of which the contractual right to consideration for goods sold or services rendered is unconditional.
2) These include interest-free short-term trade and notes receivables, where the effect of discounting is not material, and the Group measures the receivable by the original
116 -

invoice amount.

3) The Group’s operating pattern of trade receivable that are expected to be factored is for the purpose of selling, and the trade receivable are subsequently measured at fair value, with any changes in fair value, recognized in profit or loss.

k. Impairment of financial assets

Considering all reasonable and corroborative information (including forward-looking one), the Group measures the credit risk through investment in equity instruments measured at FVTOCI, financial assets at amortized cost, and trade receivable that contain significant financial components at each balance sheet date. If the credit risk has not increased significantly since the initial recognition, the loss allowance is measured based on the 12-month expected credit loss. In the case of a significant increase in the credit risk since the initial recognition, the loss allowance is measured based on the lifetime expected credit loss. For trade receivable that do not contain significant financial components, the loss allowance is measured based on the lifetime expected credit loss.

l. Derecognition of financial assets

The Group derecognizes a financial asset when one of the following conditions is met:

1) The contractual rights to receive the cash flows from the financial asset expire.
2) The contractual rights to receive cash flows of the financial asset have been transferred, and substantially all risks and rewards of ownership of the financial asset have been transferred.
3) The contractual rights to receive cash flows of the financial asset have been transferred; and the control over the financial asset has not been retained.

m. Inventories

Inventories are measured at cost and net realizable value, whichever is lower. The cost of the storage media department is calculated by the moving average method, and the other departments are calculated by the weighted average method. The cost of finished goods and work-in-process comprises raw materials, direct labor, other direct costs, and relevant production overheads (allocated based on normal operating capacity) without including borrowing costs. The item by item approach is employed when evaluating the lower of costs and net realizable value. Net realizable value is the balance of estimated selling price in the ordinary course of business less the estimated cost of completion and applicable variable selling expenses.

n. Non-current assets held for sale

When the carrying amount of a non-current asset is mainly recovered through a sale transaction rather than continuing use, and it is highly likely to be sold, it is classified as an asset held for sale and measured at the lower of its carrying amount or fair value less the cost of sale.

o. Investments accounted for using equity method- associates

1) Associates are all entities over which the Group has significant influence without control. In general, it is an entity, in which at least 20% of its voting shares are directly or indirectly held by the Group. Investments in associates are accounted for using the equity method and are initially recognized at cost.
2) The Group's share of profit or loss on its associates after acquisition is recognized in profit or loss, and its share of other comprehensive income after acquisition is recognized in other comprehensive income. When the Group’s share of losses on an associate equals or exceeds its interest in the associate (including any other unsecured
117 -

receivables), the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

3) When changes in an associate's equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group's ownership percentage of the associate, the Group recognizes the change in ownership interests in the associate in "capital surplus" in proportion to its ownership.
4) Unrealized gains or losses on transactions between the Group and its associates are eliminated in proportion to the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associates have been adjusted as necessary, and are consistent with the policies adopted by the Group.
5) Where an associate issues new shares and the Group does not subscribe for or acquire new shares proportionately, which results in a change in the Group's ownership percentage of the associate but still maintains significant influence on the associate, the "capital surplus" and "investments accounted for using the equity method" shall be adjusted for the increase or decrease in the net value of the equity. Where its investment proportion decreases, in addition to the adjustments above, the profit or loss previously recognized in other comprehensive income due to decrease in its ownership interest and the profit or loss to be reclassified to profit or loss during the disposal of assets or liabilities shall be reclassified to profit or loss based on the proportion of decrease.
6) Upon loss of significant influence over an associate, the Group shall remeasure the remaining investment retained in the former associate at its fair value. Any difference between the fair value and the carrying amount is recognized in profit or loss for the period.
7) When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of by the Group directly. That is, if the gains or losses previously recognized as other comprehensive income will be reclassified as profit or loss when the relevant assets or liabilities are disposed of, when the loss has a significant impact on the associate, the gains or losses are reclassified from equity to profit or loss. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
8) When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, said amounts are transferred to profit or loss in proportion to the percentage of disposal.

p. Property, plant and equipment

1) Property, plant, and equipment are initially recognized in cost. Borrowing costs incurred during the construction period are capitalized.
2) Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the part replaced shall be derecognized.
118 -

All other amount of repairs and maintenance are recognized as profit or loss during the financial period in which they are incurred.

3) Except for land which is not depreciated, other property, plant, and equipment are subsequently measured using the cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If the components of property, plant and equipment are significant, they shall be separately depreciated.
4) The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8 "Accounting Policies, Changes in Accounting Estimates, and Errors," from the date of the change. Useful lives of property, plant and equipment are as follows:

Buildings and structures 2–50 years Machinery and equipment 2–11 years Others 1–25 years

q. Lease transactions with lessees—right-of-use assets / lease liabilities
1) Leased assets are recognized as right-of-use assets and lease liabilities on the date when they are available for use by the Group. When the lease contract is a short-term lease or lease of a low-value asset, the lease payments are recognized as an expense on a straight-line basis over the lease term.
2) Lease liabilities are recognized at the present value of the unpaid lease payments at the beginning of the lease at the discounted interest rate of the Group's incremental borrowings. Lease payments are fixed payments after deducting any lease incentives that can be collected. The lease liability is measured at amortized cost using the effective interest method subsequently, and the interest expense is recognized during the lease period. When a non-contractual modification causes a change in the lease term or lease payment, the lease liability will be reassessed and remeasured to adjust the right-of-use asset.
3) The right-of-use asset is recognized at cost at the lease commencement date. The cost comprises:
- a) The originally measured amount of lease liabilities; and
- b) Lease payments made at or before the commencement of the lease;
- c) Any original direct costs incurred; and
- d) The estimated cost of dismantling, removing an underlying asset, and restoring its location, or restoring the underlying asset to the state required in the terms and conditions of the lease.

In the subsequent measurement in which the cost model in adopted, depreciation expenses are recognized at the earlier of the expiration date of the useful life of the right-of-use asset or the lease term. When the lease liability is reassessed, the remeasurement of the lease liability will be adjusted for the right-of-use asset.

119 -

r. Investment property

An investment property is recognized initially at cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 10–50 years.

s. Intangible assets

1) The cost of purchasing video copyrights for the distribution of digital discs and Blu-ray discs and other products is recognized based on the acquisition cost. The cost is based on the estimated distribution rights and quantity of individual films, and the relevant copyright costs are classified to inventories and leased assets at the time of distribution. At the end of the period, whether the recoverable amount of films is lower than the unamortized film cost is evaluated. When the cost is higher than the recoverable amount, it will be recognized as valuation loss, and the recoverable amount will be recognized as the new cost.
2) Trademark and franchise

Trademarks and franchises obtained separately are recognized at the cost of acquisition, and trademarks and franchises obtained as a result of a business combination are recognized at their fair value on the acquisition date. Trademarks and franchise rights are assets with a limited useful life, which are amortized based on the remaining useful life of 3 to 5 years on the straight-line basis.

3) The royalties paid for obtaining the patents are amortized based on the estimated useful years or the contract period.
4) Computer software is recognized at the cost of acquisition and amortized by the straight-line method based on the estimated or economic life on the contract.

t. Other assets - office ornaments (listed in other non-current assets-others)

Antiques purchased, such as oil paintings and sculptures displayed in the company, are recognized at the cost of acquisition, and is not depreciated; however, the cost will be written off when the actual disposal is carried out.

u. Impairment of non-financial assets

1) The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount refers to the fair value of an asset less the cost of disposal or its value in use, whichever is higher. Except for goodwill, when circumstances contributed to the recognition of impairment loss of an asset in the previous period do not exist or are decreased, the recognized impairment loss is reversed to the carrying amount of an asset to the extent that it does not exceed the carrying amount (net of depreciation and amortization) if the impairment loss had not been recognized.
2) Goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be regularly estimated for their recoverable amounts. An impairment loss is recognized when the amount of an asset’s carrying amount exceeds its recoverable amount. The impairment loss for impairment of goodwill will not be reversed in subsequent years.
3) Goodwill is allocated to cash-generating units for the purpose of impairment testing. This allocation is based on the judgment of the operating units, and the goodwill is allocated among cash-generating units or groups that are expected to benefit from goodwill generated from business combinations.
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v. Borrowings

1) Borrowings comprise long-term and short-term borrowings from banks. When the initial recognition of Group's borrowings is based on its fair value less transaction cost, for any subsequent difference between the price and redemption value after deducting transaction costs, interest expenses are recognized by the effective interest method during the outstanding period in profit or loss.
2) Fees paid on the establishment of borrowing facilities are recognized as transaction costs of the borrowing to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When there is no evidence of the possibility that some or all the facility will be drawn down, the fee is recognized as a prepayment and amortized over the period of the facility to which it relates.

w. Trade and notes payables

1) Trade and notes payables refer to the debts incurred by purchase of raw materials, goods, or services on credit, and the notes payables incurred from both operating and non-operating activities.
2) The non-interest-bearing short-term notes and trade payable are measured at initial invoice amount as the effect of discounting is immaterial.

x. Financial liabilities at fair value through profit or loss

1) Financial liabilities that are mainly for sale or repurchase in the short-term, and are held for trading except for derivatives other than those designated as hedging instruments based on hedge accounting.
2) The Group recognizes the fair value of the relevant transaction costs on initial recognition, and the transaction costs are recognized in profit or loss, and the gains or losses are recognized in profit or loss.

y. Derecognition of financial liabilities

The Group derecognizes a financial liability when the obligation under the contract is performed, canceled, or expires.

z. Non-hedging derivatives

Non-hedging derivatives are initially measured at the fair value on the date when a contract is signed and recognized as financial assets or liabilities at FVTPL. Subsequently, they are measured at fair value with gains or losses recognized in profit or loss.

aa. Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation at the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The amortization of discount is recognized as interest expense. Future operating losses shall not be recognized as provisions.

bb. Employee benefits

1) Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and shall be recognized as expense in the period when the employees render service.

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2) Pension

a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expense when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

b) Defined benefit plans
i. The net obligation under a defined benefit plan is calculated by discounting the amount of future benefits earned by employees for the services rendered in the current or the prior periods, and the amount recognized is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is computed by independent actuaries every year using the projected unit credit method. The discount rate employed is by reference either to the market yields on high quality corporate bonds of which the currency and duration are consistent with the currency and duration of the defined benefit plan, or to the market yields on government bonds (at the balance sheet date) in countries where there is no deep market for high quality corporate bonds.
ii. The remeasurement amount generated by the defined benefit plan is recognized in other comprehensive income in the current period and presented in retained earnings.
iii. Expenses related to past service costs are immediately recognized in profit or loss.

3) Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee's employment before the normal retirement date or an employee's decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expenses when it is no longer able to withdraw the offer of termination benefits or when the relevant restructuring costs are recognized, whichever is earlier. The benefits that are not expected to be fully settled 12 months after the balance sheet date shall be discounted.

4) Remuneration of employees and directors

Remuneration of employees and directors are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligations and those amounts can be reliably estimated. Any difference between the actual amount resolved to be distributed and the estimated amount will be treated as a change in accounting estimates. If employee remuneration is paid in shares, the Group calculates the number of shares based on the closing price on the previous day of the resolution made by the board of directors.

cc. Employee share-based payments

1) In the share-based payment agreement for equity delivery, the employees' services obtained are measured at fair value of the equity given on the grant day, and it is recognized as a remuneration cost, and the equity is adjusted relatively during the vesting period. The fair value of the equity instruments granted shall reflect the effect of market vesting conditions and non-market vesting conditions.
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Remuneration cost recognized is subject to adjustment based on the service conditions that are expected to be satisfied and the amount of rewards under non-market vesting conditions. The amount of remuneration cost ultimately recognized is based on the number of equity instruments that are eventually vested at the vesting date.

2) New restricted employee shares
a) Remuneration costs recognized in the vesting period on the basis of the fair value of the equity instruments granted on the grant date.
b) Those restricted stocks do not restrict distribution of dividends to employees and employees are not required to return the dividends received if they resign during the vesting period, the Group recognizes the fair value of the dividends received by the employees who are expected to resign during the vesting period as remuneration cost at the date of dividends declared.
c) Employees must pay the respective price to obtain new shares with restricted employee rights, and if an employee leaves the Company during the vesting period, the employee shall return the share, then the Company must also refund the price, and the part of the price paid by the employee who is expected to leave employment within the vesting period on the grant date is recognized as liabilities, and the portion of the price paid by the employee who is expected to be ultimately vested is recognized as "capital surplus- others".

dd. Income tax

1) The tax expense for the period comprises current and deferred income taxes. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
2) The Group calculates the current income tax based on the tax rate enacted in laws or substantively enacted in laws at the balance sheet date in the country where the taxable income is generated and the operations occur. The management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. For the income tax levied on the unappropriated retained earnings in accordance with the Income Tax Act, it will be recognized as income tax for unappropriated retained earnings based on the actual distribution of earnings after the earnings distribution proposal is adopted at the shareholders' meeting in the year following the year in which said earnings are generated.
3) Deferred income tax is recognized, using the balance sheet liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. Deferred income tax liabilities from goodwill arising from initial recognition are not recognized. If the deferred income tax is derived from initial recognition of an asset or liability in a transaction (excluding business combinations), and if the accounting profit or taxable income (taxable loss) is not affected at the time of the transaction, then the liabilities will not be recognized. With temporary differences caused by the investment in subsidiaries, if the Group can control the timing of the reversal of the temporary differences, and it is probable that temporary differences will not be reversed in the foreseeable future, the liabilities will not be recognized. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and
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are expected to apply when the relevant deferred income tax asset is realized or the deferred income tax liability is settled.

4) Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are re-assessed.
5) Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis, or realize the asset and settle the liability, simultaneously.

ee. Share capital

1) Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are listed in equity as a deduction, net of tax, from the proceeds.
2) Where the Company repurchases the Company's shares that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's shareholders. Where such shares are subsequently reissued, the difference between their carrying amount and any consideration received, net of any directly attributable incremental costs and the relevant income tax effects, is recognized as adjustment to equity attributable to the Company’s shareholders.

ff. Dividend allocation

Dividends are recognized in the Company’s financial statements in the period in which they are approved to be distributed as resolved by the Company’s shareholders' meeting. Cash dividends are recognized as liabilities. Stock dividends are recognized as stock dividends to be allocated and reclassified to ordinary shares on the record date of issue of new shares.

gg. Revenue recognition

Sales

1) The Group mainly manufactures and sells consumer electronic products, such as optical discs. Sales revenue is recognized when the control of the product is transferred to a customer, that is, when goods are delivered to the customer, the customer has the discretion to sell the goods and set the price, and the Group has no outstanding performance obligations that may affect the customers' acceptance of the goods. When goods are shipped to a designated location, the risk of obsolescence and lost has been transferred to the customer, and the customer is required to accept the goods in accordance with the sales contract, or when there is objective evidence that all acceptance criteria have been met, the goods are delivered.
2) The sales of the goods are recognized at the contract price, and the amount of sales revenue recognized is limited to the part where it is highly likely that there will not be a major reversal in the future. The payment terms for sales are usually 30 to 180 days after the date of shipment. Because the time interval between the transfer of the promised goods or services to the customer and the customer’s payment did not
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exceed one year, the Group did not adjust the transaction price to reflect the time value of money.

3) Trade receivable is recognized when goods are delivered to customers because at which time the Group's right to the consideration for contracts from customers is unconditional, except for the passage of time.
4) The sales policies of some of the Group's subsidiaries allow customers to return goods. Therefore, the Group recognizes products that are expected to be returned as the refund liabilities and the right to recover goods (listed in other current assets). The estimation of sales returns is based on historical experience and the expected value method to estimate such returns at the time of sale. The number of returned goods has been stable over the years, so it is highly probable that the accumulated revenue recognized, based on the assessment, will not undergo a major reversal. Subsequently, the validity of the assumptions is re-evaluated at each balance sheet date, and the estimated refund amount is updated.

hh. Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received. Government grants to compensate the Group’s expense are recognized as profit or loss on a systematic basis in the period in which the expense occurs.

ii. Acquisition transactions

1) The Group uses the acquisition method to account for acquisitions. The acquisition consideration is calculated on the basis of the assets transferred, liabilities generated or assumed, and the fair value of equity instruments issued. The consideration transferred includes the fair value of any asset and liability as a result of contingent consideration agreements. The costs associated with the acquisition are recognized as expenses when incurred. The identifiable assets and liabilities acquired through acquisition transaction shall be measured at fair value on the acquisition date.
2) If the consideration transferred exceeds the fair value of the identifiable assets acquired and liabilities assumed, it shall be recognized as goodwill on the acquisition date; if the fair value of the identifiable assets acquired and liabilities assumed exceeds the transferred consideration, the difference shall be recognized as the current profit or loss on the acquisition date.

jj. Operating segments

The Group’s information on operating segments is reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources to the operating segments and assessing their performance, which has been identified as the board of directors that makes decisions about the Group’s major operating decisions.

5. Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty

During the preparation of the consolidated financial statements, the management has exercised its judgments to adopt the accounting policies to be used, and made accounting estimates and assumptions based on reasonable expectations of future events with reference to the circumstances at the balance sheet date. If there is any difference between any critical accounting estimates and assumption made and actual results, assessment and adjustment will be conducted continuously by taking into account the historical experience and other factors. Such assumptions and estimates have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year. Please refer to the description of

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the uncertainties of critical accounting judgments, assumptions, and estimation uncertainty below:

a. Critical judgments for applying the Group's accounting policies

N/A.

b. Critical accounting estimates and assumptions

1) Estimated impairment of tangible assets and intangible assets other than goodwill

The Group assesses impairment based on its subjective judgment and determines the separate cash flows of individual groups of assets, useful lives of assets, and the future possible income and expenses arising from the assets depending on how assets are utilized and industrial characteristics. Any changes in economic position or in the estimates due to the Group's strategy might cause material impairment of assets in the future.

2) Inventory valuation

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories at balance sheet date based on judgments and estimates. With the rapid advancement of technology, the Group evaluates the amounts of normal inventory consumption, obsolescence, or inventories without market selling value at the balance sheet date, and writes down the cost of inventories to the net realizable value. The valuation of the inventories is mainly determined based on the future product demand within a specific time period, which may cause a material change.

6. Description of Significant Accounting Titles

a. Cash and cash equivalents

which may cause a material change. iption of Significant Accounting Titles ash and cash equivalents
Cash on hand and petty cash Checks and demand deposits Time deposit Bank acceptance bill Bonds with repurchase agreement	December 31, 2020 $ 3,652 2,968,974 677,711 47,477 - $ 3,697,814	December 31, 2019
		$ 3,100 3,123,330 183,442 2,260 14,995 $ 3,327,127

1) The Group deals with financial institutions with high credit ratings. The Group also deals with various financial institutions at the same time to diversify credit risks. Therefore, the expected risk of default is rather low.
2) The Group has classified the cash and cash equivalents for borrowings and customs deposits into financial assets measured at amortized cost - current. Please refer to Note 8 for details.
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b. Financial assets at fair value through profit or loss (FVTPL)

Items Current items: Financial assets mandatorily at fair value through profit or loss Listed stocks Beneficiary certificates Derivative instruments Adjustment to valuation Non-current items: Financial assets mandatorily at fair value through profit or loss Listed stocks Beneficiary certificates Principal-protected film investment agreements Privately offered funds Adjustment to valuation Prepaid investment (listed in other current assets - others) Stocks listed in emerging stock markets	December 31, 2020 $ 4,003,567 78,335 301	December 31, 2019
		$ 3,754,737 158,552 -
	4,082,203 104,708 $ 4,186,911 $ 2,599,320 428,312 20,866 9,047 3,057,545 39,933 $ 3,097,478 $ 3,000	3,913,289 208,800 $ 4,122,089 $ 1,556,061 428,312 30,685 -
		2,015,058 156,782 $ 2,171,840 $-

1) The details of financial assets at FVTPL recognized in profit or loss are as follows:

Financial assets mandatorily at FVTPL (Note) Equity instruments Beneficiary certificates Derivative instruments	($ ( ($	2020 132,481) 2,360) 15,881 118,960)	$ $	2019 276,278 50,625 2,386 329,289

Note: Presented in the statements of comprehensive income as follows:

Operating revenue Investment income from securities held for operations Other gains and losses Financial assets at fair value through profit or loss (FVTPL) Net (loss) Profit	$ (	2020 - 118,960) 118,960)	$	2019 246,541 82,748
	($		$	329,289

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2) The information on the contracts of transactions of non-hedging derivative financial assets is as follows:

December 31, 2020 Contract amount Derivative financial assets (notional principal) Contract period Current items: Foreign exchange forward US$10,100 thousand2020.12.11–2021.03.25 contract- buy NTD and sell USD

The foreign exchange forward transactions made by the Group are forward transactions, in which foreign currencies are pre-sold, for the purpose of avoiding the exchange rate risk of import and export prices, without hedging accounting applied.

3) For the situation in which the Group has pledged financial assets at FVTPL as collateral, please refer to Note 8 for details.
4) Regardless of the collateral held and other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Group’s financial assets at FVTPL is the carrying amount.

c. Financial assets at fair value through other comprehensive income (FVTOCI)

Items Non-current items: Equity instruments Unlisted stocks Adjustment to valuation Prepaid long-term investment (listed in other non-current assets) Unlisted stocks	December 31, 2020 $ 373,784 ( 4,297) $ 369,487 $ 118	December 31, 2019
		$ 399,617 27,579 $ 427,196 $-

1) The Group has elected to classify equity instrument investments that are strategic investments as financial assets at FVTOCI. The fair values of these investments as of December 31, 2020 and 2019 were NT$369,487 and NT$427,196, respectively.
2) The breakdown of financial assets at FVTOCI recognized in comprehensive income is as follows:

s as follows:
Equity instruments at FVTOCI Changes in fair value recognized in other comprehensive income Accumulated losses reclassified to retained earnings due to derecognition (losses to be compensated) Dividend income recognized in profit or loss At end of current period	2020	2019
	($ 29,422) ($ 861) $ 6,990	$ 46,037 $ 2,994 $ 3,661

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3) As of December 31, 2020 and 2019, regardless of the collateral held and other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Group’s financial assets at FVTOCI is the carrying amount.
4) The Group did not pledge financial assets at FVOCI as collateral.
d. Financial assets at amortized cost

Items Current items: Time deposit Restricted demand deposit Restricted time deposit Non-current items: Foreign financial bonds Restricted time deposit	December 31, 2020 $ 241,471 5,935 9,600 $ 257,006 $ 8,673 7,525 $ 16,198	December 31, 2019 $ 234,114 - 24,600 $ 258,714 $ 8,615 16,777 $ 25,392

1) Bank time deposits as well as restricted demand and time deposits with the original maturity date of more than 3 months.
2) The breakdown of financial assets measured at amortized cost recognized in profit or loss is as follows:

loss is as follows:
Interest revenue	2020	2019
	$ 2,135	$ 1,219

3) As of December 31, 2020 and 2019, regardless of the collateral held and other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Group’s financial assets at amortized cost (including current and non-current) is the carrying amount.
4) For the situation in which the Group has pledged financial assets at amortized cost as collateral, please refer to Note 8 for details.
e. Notes and trade receivable

Notes and trade receivable
Notes receivable Less: Allowance for loss Trade receivable Less: Allowance for loss	December 31, 2020 $ 4,266 ( 30) $ 4,236 $ 1,908,606 ( 206,281) $ 1,702,325	December 31, 2019
		$ 6,872 ( 86) $ 6,786
		$ 2,474,963 ( 118,495) $ 2,356,468

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1) The aging analysis of trade and notes receivable (including related parties) is as follows:

Not past due Overdue for less than 30 days Overdue for 31–60 days Overdue for 61–90 days Overdue for 91–180 days Overdue for 181 or more	December 31, 2020 December 31, 2019 Trade receivable Notes receivable Trade receivable Notes receivable	December 31, 2020 December 31, 2019 Trade receivable Notes receivable Trade receivable Notes receivable	December 31, 2020 December 31, 2019 Trade receivable Notes receivable Trade receivable Notes receivable	December 31, 2020 December 31, 2019 Trade receivable Notes receivable Trade receivable Notes receivable
	$1,409,462 113,811 30,518 12,294 70,812 271,709 $1,908,606	$ 4,266 - - - - - $ 4,266	$1,857,760 253,000 81,306 44,522 168,260 70,115 $2,474,963	$ 6,872 - - - - - $ 6,872

The aging analysis above is based on the number of days overdue.

2) The balances of notes and trade receivable (including related parties) as of December 31, 2020 and 2019 were all generated from customer contracts, and the balance of the notes and trade receivable from customer contracts (including related parties) and allowance for loss as of January 1, 2019 were NT$1,473,828 and NT$57,361, respectively.
3) As of December 31, 2020 and 2019, regardless of the collateral held and other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Group’s notes and trade receivable (including related parties) is the carrying amount.
4) 4The Group did not pledge notes and trade receivable as collateral.
5) Please refer to Note 12(2) for details of the information on the credit risk of trade and notes receivable.

f. Financial asset transfer

The Group signed a trade receivable factoring contract with Taipei Fubon Bank. According to the contract, the Group does not have to bear the risk of default over the transferred trade receivable but only the loss from business disputes. As the Group did not have any continuous involvement in these transferred trade receivable, the Group derecognized these transferred trade receivable. Information on outstanding receivables is as follows:

Unit: NT$ thousands

Factor Amount of trade receivable in factoring Taipei Fubon Bank USD 1,034	December 31, 2020 Amount derecognized Amount of advance received USD 1,034 USD-	Amount of remaining advance available Interest rate range of advance USD 3,000 -

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Unit: NT$ thousands

					Unit: NT$ thousands	Unit: NT$ thousands
Taipei	Factor Fubon Bank	Amount of trade receivable in factoring USD 2,270	December 31, 2019 Amount derecognized Amount of advance received USD 2,270 USD-	Amount of remaining advance available USD 9,000	Interest rate range of

						advance -

As of December 31, 2020 and 2019, the Group’s retained amount in the trade receivable transferred through factoring was NT$27,846 and NT$67,968, respectively, which have been reclassified to other receivables.

g. Inventories

been reclassified to other receivables. nventories
Raw materials Work-in-progress Finished goods Merchandise inventory Inventory in transit	December 31, 2020 $ 362,888 11,319 1,688,611 525,081 208,745 $ 2,796,644	December 31, 2019
		$ 572,578 39,783 1,886,576 513,779 80,799 $ 3,093,515

1) The Group’s inventory cost recognized as an expense for the current period:

Cost of inventories sold Unamortized fixed production overheads Valuation losses (gains on recovery) Warranty cost Others Less: Operating cost of discontinued operations (Note)	2020	2019
	$ 7,416,788 69,225 ( 99,079) 11,111 ( 411) - $ 7,397,634	$ 5,548,285 292,917 161,837 - ( 118) ( 76,155) $ 5,926,766

Note: Please refer to Note 6(13)2 for details.

2) The Group recognized gains on recovery for 2020 because of the sale of inventories that had been recognized as inventory valuation losses in prior years.
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h. Investments accounted for using the equity method

1) The details of investments accounted for using the equity method are as follows:

January 1 Disposal of investments accounted for using the equity method (Note 1) Share of profit or loss on investments accounted for using the equity method (Note 2) Refund from capital reduction related to investments accounted for using the equity method Earnings distributed from investments accounted for using the equity method Credit balance of investments accounted for using the equity method Reclassified to other non-current liabilities Changes in other equity (see Note 6(24)) December 31	2020	2019
	$ 463,760 ( 2,295) ( 62,997) - ( 96,838) 270 ( 1,097) $ 300,803	$ 469,743 - 106,694 ( 8,000) ( 106,308) ( 1,895) 3,526 $ 463,760

Note 1: Sixty-seven percent of the equity of Benmeng had been sold in March 2020, and the Group has lost control over it since the date of sale, and has also lost significant influence on its investment using the equity method. Please refer to Note 6(35)2 for details.
Note 2: Please refer to Note 4 (3) 3 for the judgment of the classification of the investment profit and loss share table using the equity method.

Name of associates Vie Show Cinemas Co., Ltd. (Vie Show Cinemas) Absecon Taiwan Ltd. (Absecon Taiwan) (Note) Sun Biotech Limited (Sun Biotech) Hero's Journey Co., Ltd. (Hero's Journey) Lady In Red Co., Ltd. (Lady In Red) Add: Credit balance of investments accounted for using the equity method reclassified to "other non-current liabilities"	December 31, 2020 $ 299,554 - ( 7,743) 190 1,059 7,743 $ 300,803	December 31, 2019 $ 459,651 2,295 ( 7,473) 731 1,083 7,473 $ 463,760	December 31, 2019

Note: Please refer to Note 6(8)1 and Note 1 for details.

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2) The aggregate information on the operating results of the associates that are not individually material of Group is as follows:

Current net profit (loss) Other comprehensive income (after tax) Total comprehensive income for current period	2020	2019
	($ 212,561) ( 3,209) ($ 215,770)	$ 355,759 6,701 $ 362,460

3) The Investments accounted for using the equity method as of December 31, 2020 and 2019 was evaluated based on each investee's financial statements audited by CPAs.
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i. Property, plant and equipment

		2020	2020	2020	2020	2020	2020
		Buildings and structures			Machinery and equipment			Others	Total
January 1 Cost Accumulated depreciation and impairment January 1 Additions Disposal of subsidiary (Note 1) Disposal Reclassification (Note 2) Depreciation expenses Reclassified to non-current assets held for sale (Note 4) Net exchange difference December 31 December 31 Cost Accumulated depreciation and impairment	Land	For self-use	For leasing	Subtotal	For self-use	For leasing	Subtotal
	$ 2,342,146 - $ 2,342,146 $ 2,342,146 997 - ( 3,162) ( 2,124) - ( 6) $ 2,337,851 $ 2,337,851 - $ 2,337,851	$ 3,636,116 ( 1,694,005) $ 1,942,111 $ 1,942,111 54 - ( 1,263) ( 205,523) ( 72,604) ( 4,810) ( 2,543) $ 1,655,422 $ 3,024,406 ( 1,368,984) $ 1,655,422	$ - - $- $ - - - - 24 ( 24) - - $- $ 24 ( 24) $-	$ 3,636,116 ( 1,694,005) $ 1,942,111 $ 1,942,111 54 - ( 1,263) ( 205,499) ( 72,628) ( 4,810) ( 2,543) $ 1,655,422 $ 3,024,430 ( 1,369,008) $ 1,655,422	$ 26,631,484 (24,884,229) $1,747,255 $1,747,255 4,293 ( 112) ( 4,657) 113,196 ( 525,377) - 763	$ - -	$ 26,631,484 (24,884,229) $1,747,255 $1,747,255 4,293 ( 112) ( 4,657) 114,924 ( 526,526) - 763	$ 1,264,379 ( 966,878) $ 297,501 $ 297,501 60,531 ( 585) ( 1,931) ( 50,781) ( 85,060) - ( 1,354) $ 218,321 $ 926,991 ( 708,67) $ 218,321	$ 33,874,125 (27,545,112) $6,329,013 $6,329,013 65,875 ( 697) ( 11,013) ( 143,480) ( 684,214) ( 4,810) ( 3,140) $5,547,534 (22,439,681) $5,547,534
						$-
						$ - - - - 1,728 ( 1,149) - -
					$1,335,361 (20,360,854) $1,335,361	$ 579	$1,335,940 (20,362,003) $1,335,940
						$ 1,728 ( 1,149) $ 579

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	2019	2019
Land	Buildings and structures Machinery and equipment		Others	Total
$ 2,437,400 - $ 2,437,400 $ 2,437,400 - - - 721 ( 100,741 ) - - 4,766 $ 2,342,146 $ 2,342,146 - $ 2,342,146	$4,265,677 ( 2,013,456) $2,252,221 $2,252,221 - - - ( 12,433 ( 216,475) ( ( 101,012) ( - ( 5,056) $1,942,111 $3,636,116 ( 1,694,005) $1,942,111	$27,882,097 (23,853,893) $4,028,204 $4,028,204 5,487 85,850 131) 73,397 52,946) 906,471) ( 1,527,173) 41,038 $1,747,255 $ 26,631,484 (24,884,229) $1,747,255

Note 1: Please refer to Note 6(35)2 for details.

Note 2: It is mainly for the reclassification from prepayments for equipment (listed in other non-current assets) and reclassification to investment property.
Note 3: Please Note 6(34) for details. Note 4: Please Note 6(13) for details.
1) Capitalized amount of borrowing costs attributable to property, plant and equipment and interest range:

equipment and interest range:
Capitalized amount Range of capitalized interest rate	2020	2019
	$ 323 1.58%	$ 848 2.01%

2) For the impairment of property, plant and equipment, please refer to Note 6(12) for details.
3) 3For the reclassification of property, plant and equipment to the net non-current assets held for sale, please refer to Note 6(13) for details.
4) For information about the Group's pledging of property, plant and equipment as collateral, please refer to Note 8 for details.
j. Lease transaction - the lessee
1) The assets leased by the Group include land, buildings, and transportation equipment. The lease contract term is usually from 1 to 3 years. The lease contract is negotiated individually and contains a variety of different terms and conditions. Except that the leased assets cannot be used as collateral for loans and
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cannot be leased, subleased, or lent, or the ease rights cannot be transferred to others, no other restrictions are imposed.

2) The lease term of part of the land and buildings leased by the Group does not exceed 12 months, and the low-value assets leased are mostly multi-function printers, so they are not included in the right-of-use assets.
3) The carrying amount of right-of-use assets and depreciation expenses recognized are shown as follows:

Land Property Transportation equipment (company cars)	December 31, 2020 Carrying amount $ 19,606 234,861 7,233 $ 261,700	December 31, 2019
		Carrying amount $ 20,962 104,216 -
		$ 125,178

2020	2020	2020	2019	2019	2019
Depreciation expenses			Depreciation expenses
For self-use	For leasing	Total	For self-use For leasing		Total
$20,236 50,550 4,374 - $75,160	$ - 7,921 - - $7,921	$20,236 58,471 4,374 - $83,081	$ 4,191 44,343 - 7,147 $55,681	$ - 2,748 - - $2,748	$ 4,191 47,091 - 7,147 $58,429

4) The additions of the Group's right-of-use assets in 2020 and 2019 were NT$219,515 and NT$77,735, respectively. Among them, the acquisition through an acquisition transaction in 2019 was in the amount of NT$65,452. Please refer to Note 6(34) for details.
5) The profit and loss items related to lease contracts are shown as follows:

Items that affect profit or loss Interest expenses on lease liabilities Less: Interest expenses on lease liabilities of discontinued oeprations Short-term lease expenses Expense on leases with low-value assets Expense on variable lease payments Revenue from sublease of right-of-use assets Gains on lease modification		2020	2019
		$ 3,293 - $ 3,293 $ 20,133 $ 908 $ 9,376 $ 5,834 $ 40	$ 1,594 ( 621) $ 973 $ 11,376 $ 2,028 $ 10,057 $ 1,940 $-

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6) The Group's total cash outflows of leases in 2020 and 2019 were NT$114,710 and NT$91,230, respectively.
7) The impact of variable lease payments on lease liabilities
a) In the Group's lease contract, the subject matter to which the variable lease payment terms are applied is connected with the sales amount generated by stores. For the objects leased by individual stores, about 16% is based on variable payment terms and mainly related to the sales amount. Changes in variable lease payments related to the sales amount are recognized as expenses during the period in which these payment terms are satisfied.
b) When the sales of all stores in the Group increase by 10%, the lease contract with variable lease payment terms will increase the total lease payments by approximately 4%.
8) For the reclassification of the right-of-use assets to the net non-current assets held for sale sold, please refer to Note 6(13) for details.

k. Investment property

January 1 Cost Accumulated depreciation January 1 Reclassification (Note) Depreciation expenses Net exchange difference December 31 December 31 Cost Accumulated depreciation		2020
	Land	Land	Land
	$ 71,897 - $ 71,897 $ 71,897 - - - $ 71,897 $ 71,897 - $ 71,897	$ 600,533 ( 298,012) $ 302,521 $ 302,521 271,504 ( 19,900) 123 $ 554,248 $ 1,223,006 ( 668,758) $ 554,248	$ 672,430 ( 298,012) $ 374,418 $ 374,418 271,504 ( 19,900) 123 $ 626,145 $ 1,294,903 ( 668,758) $ 626,145

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January 1 Cost Accumulated depreciation January 1 Reclassification (Note) Depreciation expenses Net exchange difference December 31 December 31 Cost Accumulated depreciation		2019
	Land	Land	Land
	$ 71,897 - $ 71,897 $ 71,897 - - - $ 71,897 $ 71,897 - $ 71,897	$ 661,726 ( 346,987) $ 314,739 $ 314,739 1,005 ( 13,463) 240 $ 302,521 $ 600,533 ( 298,012) $ 302,521	$ 733,623 ( 346,987) $ 386,636 $ 386,636 1,005 ( 13,463) 240 $ 374,418 $ 672,430 ( 298,012) $ 374,418

Note: It is mainly for the reclassification from property, plant and equipment.

1) Rental revenue and direct operating expenses of investment property:

Rental revenue of investment property Direct operating expenses incurred by investment property generating rental revenue in the current period Direct operating expenses incurred by investment property not generating rent revenue in current period	2020	2019
	$ 32,045 $ 6,141 $ 13,759	$ 33,392 $ 7,067 $ 6,396

2) The fair value of the investment property held by the Group as of December 31, 2020 and 2019 was $3,187,374 and $1,578,585, respectively, based on the evaluation results of transaction prices in the neighborhood to which could be referred.
3) For information on the Group's pledging of investment property as collateral, please refer to Note 8 for details.
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l. Impairment of non-financial assets

1) The impairment losses recognized by the Group for 2020 and 2019 amounted to $8,407 and $1,586,418, respectively. The details are as follows:

Impairment loss - other assets (list in other current and non-current assets) Impairment loss - machinery and equipment (listed in property, plant and equipment) Mitigation loss - lease modification (listed in property, plant and equipment) Impairment loss - right-of-use assets Impairment loss - intangible assets Less: Impairment loss of discontinued operations	2020	2020	2019	2019
	Recognized in the current profit or loss $ 46 - - - 8,361 8,407 - $ 8,407	Recognized in other comprehensive income $ - - - - - - - $-	Recognized in the current profit or loss $ 31,795 1,527,173 39,536 6,247 282 1,605,033 ( 18,615) $ 1,568,418	Recognized in other comprehensive income $ - - - - - - - $-

2) The details of the aforesaid impairment losses disclosed by segment are as follows:

Storage media segment Other optoelectronics segment Investment segment Other segments Less: Impairment loss of discontinued operations		2020	2020	2019	2019
		Recognized in the current profit or loss	Recognized in other comprehensive income	Recognized in the current profit or loss Recognized in other comprehensive income
		$ - - 46 8,361 8,407 - $ 8,407	$ - - - - - - $-	$ 902,077 605,474 73,767 23,715 1,605,033 ( 18,615) $1,586,418	$ - - - - - - $-

3) The Group adopted the value in use and the net disposal value of existing assets as the recoverable amount in the impairment test on December 31, 2020 and 2019. The discount rate used to estimate the value in use is as follows:

Storage media segment Other optoelectronics segment Other segments	December 31, 2020 10.42% 8.41% 4.64%	December 31, 2019
		11.52% 10.37% 6.18%

4) Accumulated write-off of impairments
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Machinery and equipment Buildings and structures Other equipment		2020	2019
		$ 1,169,843 31,134 75,551 $ 1,276,528	$ 26,811 - 12,259 $ 39,070

  - a) The Group sold 67% of the equity of Benmeng in March 2020 and has lost control since the date of the sale. Therefore, the relevant accumulated impairments were also written off. Please refer to Note 6 (35)2 for details.

  - b) In 2020, the Group disposed of Jet-Thai's machinery and equipment and other equipment that had been recognized as impairments. Therefore, the accumulated impairment amount of NT$1,159,497 was written off altogether to calculate the gains or losses on the disposal.

  - c) In addition to the above, the accumulated impairments related to the disposal of machinery and equipment in 2020 and 2019 were also written off in order to calculate the gains or losses on the disposal.

m. Non-current assets held for sale and discontinued operations
1) Non-current assets held for sale
- a) Jet-Thai's board of directors approved to sell its land, buildings, and structures on December 10, 2019, and formally signed a contract on December 26 of the same year, and reclassified the assets and liabilities to disposal groups held for sale. The transaction was completed in September 2020, and relevant gains of NT$212,335 were generated. The assets and liabilities of the disposal groups held for sale as of December 31, 2019 were NT$300,138 and NT$110,843, respectively.
- b) EMC H's board of directors approved on December 18, 2019 and formally signed a contract to sell all the equity of Zhonghong Packing Products (Dongguan) Co.,Ltd. held on the same day, and reclassified the relevant assets and liabilities to disposal groups held for sale. The transaction was completed in January 2020. The assets and liabilities of the disposal groups held for sale as of December 31, 2019 were NT$84,306 and NT$36,601, respectively.
- c) Deltamac's board of directors approved on May 11, 2020 to sell the land, buildings, and structures held. The relevant assets have been reclassified to disposal groups held for sale. The transaction is expected to be completed within one year. The assets of the disposal groups held for sale as of December 31, 2020 were $4,810.
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d) Assets of the disposal groups held for sale:

Cash and cash equivalents Other receivables Property, plant and equipment Right-of-use assets	December 31, 2020 $ - - 4,810 - $ 4,810	December 31, 2019 $ 3,977 8 370,162 10,297 $ 384,444

e) Liabilities directly associated with non-current assets held for sale

Other payables Other current liabilities	December 31, 2020 $ - - $-	December 31, 2019 $ 273 147,171 $ 147,444

f) Accumulated income or expenses recognized in other comprehensive income related to the disposal groups classified as held for sale:

Adjustments to foreign currency translation	December 31, 2020 $-	December 31, 2019
		$ 23,709

2) Discontinued operations
a) Deltamac (H.K.) passed the proposal for dissolution and liquidation as resolved by the shareholders' meeting on December 19, 2019, and entered the dissolution and liquidation process from that date, and was presented as a discontinued operation as it met the definition of a discontinued operation. This dissolution and liquidation process is expected to be completed within 1 to 2 years.
b) The information on cash flow of the discontinued operation is as follows:

	2019
Cash flow of operating activities	$ 18,860
Cash flow of investing activities	( 549)
Cash flow of financing activities	( 10,861)
Effects of exchange rate changes
on cash	2,771
Total cash flow	$ 10,221
he analysis of the operating results of the discontinued operation is as follows:
	2019
Net operating revenue	$ 100,372
Operating costs	( 76,155)
Gross operating profit	24,217

c) The analysis of the operating results of the discontinued operation is as follows:
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Operating expenses Net operating loss Total non-operating income and expenses Pre-tax net loss of discontinued operations Income tax benefit Net loss after tax of discontinued operation Loss on the discontinued operation is attributable to Owners of parent company Non-controlling interests	( 47,521) ( 23,304) ( 20,782) ($ 44,086) 156 ($ 43,930) ($ 31,036) ( 12,894) ($ 43,930)

d) The amount of loss attributable to the owners of the parent company from the continuing operations unit the discontinued operation: please refer to Note 6 (32).
n. Other non-current assets

Prepayments for equipment Refundable deposits Overdue receivables Less: Allowance for loss Other non-current assets - others	December 31, 2020 $ 5,189 26,037 67,915 ( 67,915) 634,897 $ 666,123	December 31, 2019 $ 50,190 30,057 548,369 ( 548,369) 666,676 $ 746,923

o. Short-term borrowings

Short-term borrowings
Nature of borrowings Borrowings from financial Institutions Secured borrowings Credit borrowings Borrowings for raw material purchase Interest rate range	December 31, 2020 $ 210,000 132,676 10,341 $ 353,017 1.32%~1.55%	December 31, 2019 $ 56,000 150,000 - $ 206,000 1.5%~1.7%

1) Commercial paper of NT$2,270,300 and NT$2,244,870 has been issued as a guarantee for the short-term borrowing facilities as of December 31, 2020 and 2019, respectively.
2) Please refer to Note 8 for details of short-term borrowings and the guarantees.
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p. Financial liabilities at fair value through profit or loss

December 31, 2019 Items December 31, 2020 Current items: Financial liabilities held for trading Non-hedging derivative financial instruments -Forward exchange agreements $ - $ 670

1) The net losses on the Group’s financial liabilities held for trading recognized were in the amount of NT$17,516 and NT$3,937 for 2020 and 2019, respectively.
2) The information on the transactions and contracts of non-hedging derivative financial liabilities is as follows:

Derivative financial liabilities Current items:	December 31, 2019 Nominal principal Contract period	December 31, 2019 Nominal principal Contract period

Forward exchange agreements AUD 1,318 thousand 2019.11.15~2020.02.28

The forward foreign exchange transactions conducted by the Group are forward transactions of pre-purchase and pre-sale of foreign currencies, which aim to hedge the exchange rate risk of import and export prices, but no hedging accounting is applied.

q. Other payables

applied. Other payables
Payable for acquisition transaction (please refer to Note 6 (34)) Personnel expenses payable Stock payment payable Royalty fees payable Service expense payable Other expenses payable	December 31, 2020 $ 245,875 163,717 245,085 53,600 22,690 396,055 $ 1,127,022	December 31, 2019 $ 397,927 229,358 81,525 23,144 11,184 475,703 $ 1,218,841

r. Long-term borrowings

Borrowings from financial Institutions Secured borrowings Credit borrowings Long-term notes Less: Long-term loans due within one year or one operating cycle Interest rate range	December 31, 2020 $1,695,000 235,000 200,000 2,130,000 (541,000) $1,589,000 1.24%~1.67%	December 31, 2019 $2,026,000 334,460 - 2,360,460 (875,460) $1,485,000 1.5%~2.25%

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1) The Company signed a financing commitment contract with O-Bank Co., Ltd. in April 2018. In 36 months from the date of the first drawdown, the total amount of borrowings is NT$200 million. From November 2019, the principal is amortized and repaid every six months, and the remaining principal will be repaid in the last installment. The Company’s main commitments are as follows:

During the contract period, the current ratio shall be maintained at 100% or above; the debt ratio shall not be higher than 120%, and the interest coverage ratio (including depreciation and amortization expenses) shall not be lower than 250%.

The outstanding balance of the Company's borrowings as of December 31, 2020 and 2019 was NT$110,000 and NT$170,000, respectively.

2) The Company signed a financing commitment contract with Taipei Fubon Bank in March 2019. In 36 months from the date of the first drawdown, the total amount of borrowing is NT$1 billion. The Company's main commitments are as follows:

The current ratio during the contract period shall be maintained at 100% or above; the debt ratio shall not be higher than 90% (inclusive); the net value of tangible assets shall not be lower than NT$12 billion; the interest coverage ratio (including depreciation and amortization expenses) shall not be less than 250%.

The outstanding balance of the Company's borrowings as of December 31, 2020 and 2019 was were NT$650,000 and NT$800,000, respectively.

3) The remaining loan installment repayment periods start from 2017 to 2023.
4) Please refer to Note 8 for details of the guarantees for long-term borrowings.
5) The Company's amounts of loans not drawn down as of December 31, 2020 and 2019 are as follows:

Due in more than one year	December 31, 2020 $ 950,000	December 31, 2019 $ 373,000

s. Pension
1)
a) The Company and domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, applicable to all formal employees who were employed prior to the enforcement of the Labor Pension Act on July 1, 2005 and to the formal employees who still chose the pension mechanism under the Labor Standards Act after the Labor Pension Act took effect. Under the defined benefit pension plan, two units are granted for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units granted and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes 2% of the total salaries every month as a pension fund and deposit it to the designated account in the name of the Labor Pension Funds Supervisory Committee at the Bank of Taiwan. Before the end of each year, the Company shall assess the balance in the designated
144 -

account. If the total balance of the contribution is less than the amount required for the payment of pensions to all the employees who are eligible to retire in the following year, calculated according to the method above, the Company will make up for the difference in a lump sum before the end of March in the following year.

b) The amounts recognized in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities (listed in other non-current liabilities)	December 31, 2020 $ 258,597 ( 134,827) $ 123,770	December 31, 2019 $ 366,740 ( 166,817) $ 199,923

c) The changes in net defined benefit liabilities are as follows:

January 1 Service cost for the current period Service cost for the previous period Interest (expense) revenue Re-measurements: Return on plan assets (not including interest revenue or expenses) The effect of changes in financial assumptions Experience adjustments Pension contributed Pension paid Effect of disposal of subsidiaries December 31	2020 Present value of defined benefit obligations Fair value of plan assets	2020 Present value of defined benefit obligations Fair value of plan assets	2020 Present value of defined benefit obligations Fair value of plan assets	Net defined benefit liabilities
		$ 366,740 708 ( 68,280) 2,556 301,724 - 8,154 ( 7,393) 761 - ( 42,444) ( 1,444) $ 258,597	($ 166,817) - - ( 1,037) ( 167,854) ( 5,497) - - ( 5,497) ( 22,762) 42,444 18,842 ($ 134,827)	$ 199,923 708 ( 68,280) 1,519 133,870 ( 5,497) 8,154 ( 7,393) ( 4,736) ( 22,762) - 17,398 $ 123,770

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Present value of defined benefit obligations January 1 $ 412,491 Service cost for the current period 1,070 Interest (expense) revenue 3,750 417,311 Re-measurements: Return on plan assets (not including interest revenue or expenses) - Change in demographic assumptions 31 The effect of changes in financial assumptions 6,964 Experience adjustments ( 15,828) ( 8,833) Pension contributed - Pension paid ( 41,738) December 31 $ 366,740	2019 Fair value of plan assets ($ 182,305) - ( 1,705) ( 184,010) ( 6,427) - - - ( 6,427) ( 18,118) 41,738 ($ 166,817)	Net defined benefit	Net defined benefit	Net defined benefit
				liabilities $ 230,186 1,070 2,045 233,301 6,427) 31 6,964 15,828) 15,260) 18,118) - $ 199,923


			( (
			(
			(

d) Bank of Taiwan was commissioned to manage the assets of the Company's and domestic subsidiaries' defined benefit plan fund in accordance with the scope of the percentages and amounts in the annual investment and utilization plan of the fund and the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund (Article 6: The scope of utilization for the fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or privately placed equity securities, investment in domestic or foreign real estate securitization products, etc.). The status of the utilization is supervised by the Labor Pension Funds Supervisory Committee. With regard to utilization of the fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. In case any deficiency in the earnings arises, Treasury Funds can be used to cover the deficits after the approval of the competent authority. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with paragraph 142 of IAS 19. For the composition of the fair value of the fund in total as of the years ended December 31, 2020, and 2019, please refer to the various labor pension utilization reports issued by the government.
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e) The actuarial assumptions related to pension are summarized as follows:

Discount rate Rate of future salary increase		2020	2019
		0.3~0.4% 1.0~2.5%	0.7~0.8% 1.0~2.5%

The assumptions for the future mortality rate are based on the published statistics and experience of each country.

The present value of the defined benefit obligation affected by the changes in the main actuarial assumptions adopted is as follows:

December 31, 2020 The effects on the present value of defined benefit obligations December 31, 2019 The effects on the present value of defined benefit obligations		Discount rate	Discount rate	Discount rate	Rate of future salary increase	Rate of future salary increase	Rate of future salary increase	Rate of future salary increase
		Increase 0.25~1.00% ($ 5,260) ($ 8,087)		Decrease 0.25~1.00% $ 5,339 $ 8,371		Increase 0.25~1.00% $ 4,650 $ 7,337		Decrease 0.25~1.00% ($ 4,434) ($ 7,316)

The method and assumptions used for the preparation of the sensitivity analysis for the current period are the same as those used in the previous period.

f) The Group expects to make a contribution of NT$18,305 to the pension plan for the year ended December 31, 2021.
g) As of December 31, 2020, the weighted average duration of the pension plan is 11 years. The maturity analysis of the pension payments is as follows:

Less than 1 year 1–5 years Over 5 years	$ 12,137 95,262 70,286 $ 177,685

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2)

a) Since July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan under the Labor Pension Act, applicable to all formal employees with R.O.C. nationality. For employees who choose the labor pension system stipulated under the Labor Pension Act, the Company and its domestic subsidiaries make monthly contributions to employees’ individual pension accounts of the Bureau of Labor Insurance at 6% of their monthly salaries and wages. Based on the employee’s individual pension accounts and the amount of accumulated income from the annual investment and utilization plan, the payment of employee pension is made on a monthly basis or in a lump sum. For 2020 and 2019, the pension costs recognized according to the above-mentioned pension method were NT$$33,228 and NT$41,610, respectively.
b) HOTAN and VUS have established employee retirement regulations to determine the contribution obligations. The pension expenses recognized for 2020 and 2019 were NT$12,797 and NT$630, respectively.
c) According to the Conditions of Employment—Severance Payment and Long Service Payment of the Government of the Hong Kong Special Administrative Region, employees who have been employed continuously for 24 months or more than 5 years can receive severance payment or long service payment based on a certain percentage of their most recent salary multiplied by their retrospective seniority. VHK's pension expenses recognized for 2020 in accordance with local laws and regulations was NT$3,461. Deltamc (HK)'s 2019 pension expense recognized for the contribution made based on a certain percentage of the employees' most recent salaries was NT$996 (attributable to discontinued operations), which was not there is not significantly different from the relevant liabilities calculated in accordance with the Conditions of Employment—Severance Payment and Long Service Payment of the Government of the Hong Kong Special Administrative Region
d) The pension expenses of VAU, VJP, and VGmbH recognized in accordance with local laws and regulations for 2020 were $6,527.
e) Zhonghong, Yongxing Multimedia and FJKL Suzhou make monthly contributions according to a certain percentage of the total salaries of the local employees in accordance with the pension system stipulated by the government of the People's Republic of China, and the contribution percentages are 10%, 20%, and 20%, respectively. The pension for each employee is managed by the government; thus, the Group does not have further obligation except for making a monthly contribution. The cost of pensions recognized for 2020 and 2019 were NT$822 and NT$10,685, respectively.
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t. Share-based payments

1) Transtouch's share-based payment arrangements for 2020 and 2019 are as follows:

		Number of
Type of Agreement	Grant Date	Shares Granted (thousand		Period		Vesting Conditions
		shares)
						Vested in 1
New Restricted Employee Shares Plan	2016.07.28	500	3	years		year: 50% Vested in 2 years: 25% Vested in 3
						years: 25%
"	2017.07.27	160	"		"
"	2018.05.03	140	"		"

a) The new restricted employee shares issued by Transtouch cannot be transferred during the vesting period, but there are no restrictions on voting rights and the right to participate in dividend distribution. Employees who resign within the vesting period must return their votes but do not need to return the dividends they have already received.
b) The above-mentioned share-based payment arrangements are all settled by equity.
2) The detailed information on the above-mentioned share-based payment arrangement is as follows (unit: thousand shares):

New Restricted Employee Shares Plan

as follows (unit: thousand shares): ew Restricted Employee Shares Plan
Outstanding, at January 1 Number of shares collected Number of shares vested Outstanding, at December 31	2020	2019
	79 ( 78) ( 1) -	292 ( 37) ( 176) 79

3) Transtouch uses the Black-Scholes options model to estimate the fair value of the stock options for its share-based payment transactions. The relevant information is as follows:

llows:
Type of Agreement Grant Date	Stock price (NT$) $63.80 42.50 37.35	Strike price (NT$) $10.00 10.00 10.00	Expected volatility Expected duration (years) - 3 - 3 - 3	Expected	Expected dividends Risk-free interest rate Fair value per unit (NT$) - - $63.80 - - 42.50 - - 37.35	Risk-free Fair value per
							unit (NT$) $63.80 42.50 37.35
			volatility
New Restricted Employee Shares Plan 2016.07.28 " 2017.07.27 " 2018.05.03			- - -

Note: The expected volatility is based on the stock prices of similar companies during the comparable period of their lives, while considering the impact of the annual earnings distribution on the changes in stock trading prices.

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4) The (gains) expenses on the share-based payment transactions are as follows:

Equity settlement		2020	2019
		($ 903)	$ 5,051

u. Share capital

1) In order to improve the financial structure and compensate the accumulated losses, it was resolved to reduce the capital by 567,135,167 shares at the shareholders' meeting on June 5, 2019. The capital reduction rate was 32.858%. The record date of the capital reduction was July 30, 2019. The change registration for the capital reduction was completed on August 12, 2019.
2) As of December 31, 2020, the Company's registered capital was NT$45,000,000, divided into 4,500,000,000 shares, and the paid-in capital was NT$11,588,812, with a par value of NT$10 per share. Share payments for the Company’s issued shares have been collected in full. The reconciliation of the number of shares outstanding at the beginning and end of the period for the Company's common stock is as follows (unit: share):

(unit: share):
January 1 Capital reduction to offset losses Cancellation of treasury shares December 31		2020	2019
		1,158,881,200 - - 1,158,881,200	1,774,126,367 (567,135,167) (48,110,000) 1,158,881,200

3) Treasury stock

a) On March 15, 2019, the board of directors approved the cancellation of 48,110,000 ordinary shares for capital reduction through treasury shares, and the registration of the change has been completed.
b) The Securities and Exchange Act stipulates that the proportion of the Company's repurchase of shares outstanding shall not exceed 10% of the total number of shares issued by the Company, and the total monetary amount of shares repurchased shall not exceed the amount of retained earnings plus the share premium and the realized capital surplus.
c) The treasury shares held by the Company shall not be pledged as collateral under the Securities and Exchange Act, and shall not be entitled to shareholders’ rights before transferred.
d) According to the Securities and Exchange Act, the shares repurchased by the Company for shares transferable to employees shall be transferred within five years from the date of the repurchase. If the transfer is not made within the time limit, the Company shall be deemed to have not issued the shares, and the shares shall be cancelled through change registration. For the shares repurchased to maintain the Company's credit and shareholders' rights, the change registration and share cancellation shall be conducted within 6 months after the repurchase.
e) The Company and its subsidiaries did not hold the Company's shares as of December 31, 2020 and 2019.
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v. Capital surplus

According to the Company Act, capital surplus including the income derived from issuing shares at a premium and from endowments, in addition to being used to compensate deficit, where the Company has no accumulated losses, shall be used to issue new shares or cash in proportion to the shareholders’ original shares. In addition, according to relevant provisions of the Securities and Exchange Act, when the capital is replenished from the aforementioned capital surplus, the total amount each year shall not exceed 10% of the paid-in capital. The Company shall not use the capital surplus to compensate the capital losses, unless the surplus reserve is insufficient to compensate such losses.

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2020

	2020	2020	2020	2020	2020	2020
January 1 Changes in ownership interests in subsidiaries Cash dividends issued from capital surplus December 31 January 1 Cancellation of treasury shares Changes in ownership interests in subsidiaries Difference between the equity price of subsidiary actually acquired or disposed of and the book value December 31	Share premium Treasury share transactions Changes in percentage of ownership interests in subsidiaries recognized Difference between the equity price of subsidiary actually acquired or disposed of and the bookvalue						Others		Total
	$ 2,683,492 - ( 57,944) $ 2,625,548		$ 5,014,346 - - $ 5,014,346	$ 458 612 - $ 1,070 2019		$ 77 - - $ 77	$ 1,922 - - $ 1,922		$ 7,700,295 612 ( 57,944) $ 7,642,963


		Share premium Treasury share transactions Changes in percentage of ownership interests in subsidiaries recognized Difference between the equity price of subsidiary actually acquired or disposed of and the book value						Others		Total
	$ 2,758,290 ( 74,798) - - $ 2,683,492		$ 4,782,455 231,891 - - $ 5,014,346	$ 103 - 355 - $ 458	$ - - - 77 $ 77			$ 1,922 - - - $ 1,922		$ 7,542,770 157,093 355 77 $ 7,700,295

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w. Retained earnings

1) According to the Company's Articles of Incorporation, if there are earnings in the annual final accounts, the Company shall pay taxes first and compensate the accumulated losses; appropriate 10% of the balance for legal reserve, but this does not apply when the legal reserve has reached the amount of the Company's total capital. Subsequently, the Company shall make an appropriation for or reverse the special reserve in accordance with the law. Then, if there are still earnings, together with the undistributed earnings accumulated from the beginning of the same period, the board of directors shall put forth an earnings distribution proposal for the resolution by the shareholders' meeting before distribution. The Company’s dividend policy is based on the consideration for capital expenditures and the Company’s long-term financial planning. The total dividend shall not less be than 10% of the current year’s distributable earnings. However, if the distributable earnings is less than 1% of the paid-in capital, dividend many not need to be distributed. When the dividend is distributed, the cash dividends shall not be less than 10% of the total dividends.
2) The legal reserve shall not be used except for compensation for the Company's losses and issue of new shares or cash in proportion to the shareholders' original shares. However, in the case of issue of new shares or cash, it shall be limited to the portion of the legal reserve in excess of 25% of the paid-in capital.
3) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount may be included in the distributable earnings.
4) On June 5, 2019, the Company's shareholders' meeting resolved to compensate the losses for 2018. Please visit the Market Observatory Post System (MOPS) of the Taiwan Stock Exchange for the details of the board of directors' approval for submission of the proposal for loss compensation to be resolved by the shareholders' meeting.
5)
a) The Company passed the proposal for 2019 earnings distribution as resolved by the shareholders' meeting on June 16, 2020 as follows:

Legal reserve appropriation Cash dividends		2019
		Amount Earnings per share (NT$)
		$ 21,379 173,832 $ 0.15 $ 195,211

b) (On June 16, 2020, the Company passed a proposal to distribute a cash dividend of NT$57,944 with NT$0.05 per share from the capital surplus from paid-in capital in excess of par value as resolved by the shareholders' meeting.
6)
a) The Company's board of directors passed the proposal for 2020 earnings distribution on March 25, 2021 as follows:
153 -

Legal reserve appropriation Special reserve		2020
		Amount Earnings per share (NT$)
		$ 11,097 $ - 118,457 - $ 129,554

b) The Company's board of directors passed a resolution on March 25, 2021, and approved to distribute a cash dividend of NT$811,217 with NT$0.7 per share from the capital surplus of the premium from the issue of stocks in excess of par value.

As of March 31, 2021, the aforementioned 2020 earnings distribution proposal and the capital surplus distribution proposal have not yet been resolved by the shareholders' meeting.

7) Please refer to Note 6(30) for the information of employee compensation and directors' remuneration.
x. Other equity items

) Please refer to Note 6(30) directors' remuneration. Other equity items	for the information of employee compensation and	for the information of employee compensation and	for the information of employee compensation and
January 1 Foreign currency translation difference: – Group – Associates Adjustment to valuation Reclassified from valuation adjustment to retained earnings Disposal of subsidiaries December 31	2020
	Foreign currency translation Unrealized valuation gains and losses		Equity related to assets held for sale Total
		($121,927) ($130,722) ( 124,129) - ( 1,097) - - ( 29,422) - ( 861) 2,025 - ($245,128) ($161,005)	($ 23,709) ($276,358) - ( 124,129) - ( 1,097) - ( 29,422) - ( 861) 23,709 25,734 $- ($406,133)

January 1 Foreign currency translation difference: – Group – Associates	2019
	Foreign currency translation Unrealized valuation gains and losses Equity related to assets held for sale Total
	($115,422) ($179,753) $ - ($295,175) ( 10,031) - ( 10,031) 3,526 - - 3,526

154 -

-Reclassified to equity related to assets held for sale (Note) Adjustment to valuation Reclassified from valuation adjustment to retained earnings December 31	- - - ($121,927)	- 46,037 2,994 ($130,722)	( 23,709) - - ($ 23,709)	( 23,709) 46,037 2,994 ($276,358)

Note: For the equity related to held for sale, please refer to Note 6 (13) for details.

y. Operating revenue

Operating revenue
Revenue from customer contracts Revenue from investment in securities held for operations (Note 1) Less: Contract revenue of discontinued operations (Note 2)	2020	2019
	$ 9,401,027 - - $ 9,401,027	$ 6,731,756 413,863 ( 100,372) $ 7,045,247

Note 1: Please refer to Note 4 (3) 3 for details. Note 2: Please refer to Note 6 (13) 2 for details.

1) Breakdown of revenue from customer contracts

The Group's revenue comes from the provision of goods and services that are gradually transferred over time and transferred at a certain point in time. The revenue can be broken down into the following main product lines:

		2020	2020
Storage media		Other optoelectronic products	Others	Total
	$8,627,234 - $8,627,234	$ 328,474 - $ 328,474	$ 427,469 17,850 $ 445,319	$9,383,177 17,850 $9,401,027

155 -

2019

Timing of revenue recognition Revenue recognized at a specific timing Revenue recognized over time Less: Revenue of discontinued operations		Storage media	Storage media	Other optoelectronic products	Others	Total
			$5,502,143 - - $5,502,143	$ 439,323 - - $ 439,323	$ 769,504 20,786 ( 100,372) $ 689,918	$6,710,970 20,786 ( 100,372) $6,631,384

2) Contract liabilities
a) Contract liabilities related to revenue from customer contracts recognized by the Group are as follows:

December 31, 2020 December 31, 2019 January 1, 2019

Contract liabilities: Advance sales receipts Others Total	$ 76,810 8,831 $ 85,641	$ 232,304 12,978 $ 245,282	$ 107,233 22,910 $ 130,143

b) Contract liabilities at beginning of period recognized as revenue for the period

Opening balance of contract liabilities recognized as income for the period Product sales contracts		2020	2019
		$ 102,535	$ 123,204

z. Interest revenue

Interest revenue
Interests on bank deposits Interest revenue from financial assets at amortized cost - interest revenue Less: Interest revenue of discontinued operations	2020	2019
	$ 14,335 2,135 - $ 16,470	$ 17,137 1,219 ( 202) $ 18,154

156 -

aa. Other income

Other income
Rental income Dividend income Revenue from packaging changes Government grant income (Note 2) Other income Gains on bargain purchase (Note 1) Less: Other income from discontinued operations	2020		2019
	$ 41,232 169,347 18,725 15,027 35,539 - - $ 279,870	(	$ 43,838 44,787 - - 21,421 1,810,471 166) $ 1,920,351

Note 1: Please note 6 (34) for details.

Note 2: Since January 2020, the COVID-19 outbreaks have occurred in various countries around the world, which has had an impact on the demand side of Transtouch, while the supply side was less affected as suppliers were mostly domestic businesses. However, the overall impact of the pandemic on actual operations still depends on the subsequent development of the epidemic. As the Regulations of the Ministry of Economic Affairs for Relieving and Revitalizing Industries and Businesses Affected by Severe Special Infectious Pneumonia with Business Difficulties applies to Transtouch, it obtained the government's salary and working capital subsidies in 2020, which is recognized as the government grant income of NT$15,027.

bb. Other gains and losses

Net gains (losses) on the financial assets at
FVTPL
Net loss on financial liabilities at FVTPL
Gains on disposal of property, plant and
equipment
Gains on disposal of non-current assets held
for sale (Note 3)
Gains on disposal of investments (Note 2)
Gains on contract modifications (Note 4)
Gains on disposal of subsidiaries (Note 1)
Loss on onerous contracts
Net foreign currency exchange losses (Note 5)
Non-financial asset impairment losses
Financial asset impairment losses
Depreciation expenses not for self use
Other expenditures

2020
2019

($ 118,960)
$ 82,748
( 17,516)
( 3,937)
2,287
3,507
212,335
-
-
49,866
133,523
231,435
-
-
( 2,440)
( 115,674)
( 68,382)
( 8,407)
( 1,605,033)
-
( 174)
( 28,994)
( 16,211)
( 12,879)
( 47,724)
277,150
( 1,607,780)

157 -
20,656 $ 277,150 ($ 1,587,124)

Add: Other losses of discontinued operations

Note 1: Please refer to Note 6 (35)2 for details.

Note 2: FJKL Technology (Suzhou) Corporation completed the de-registration process on September 23, 2019, and offset the assets and liabilities accounted for, leading to gains on liquidation.
Note 3: Please refer to Note 6 (13)1(1) for details.
Note 4: Please refer to Note 6 (34)1 for details.
Note 5: For the exchange loss of NT$48,736 recognized for 2019, please refer to Note 4(3)2 and 5.
cc. Finance costs

4(3)2 and 5. Finance costs
Interest expenses Bank borrowings Interest expenses on lease liabilities Borrowing facility management expense Less: Amount qualified for capitalization Finance costs attributable to discontinued operations		2020		2019
	$ 45,363 3,293 1,266 49,922 ( 323) - $ 49,599		$ 35,426 1,594 9,282 46,302 ( 848) ( 494) $ 44,960

dd. Employee benefit, depreciation, and amortization expenses

			2020
			Operating
Function	Operating costs		expenses		Total
Employee benefit expenses
Salaries and wages	$	716,145	$ 482,029		$ 1,198,174
Labor and health insurance
premiums		62,637	75,095		137,732
Pension expenses	(	30,497)	21,279	(	9,218)
Other employee benefit
expenses		16,252	16,474		32,726
Depreciation expenses		536,345	221,856		758,201
Amortization expenses		38,188	67,545		105,733
			2019
			Operating
Function	Operating costs		expenses		Total
Employee benefit expenses
Salaries and wages	$	790,176	$ 277,104	$	1,067,280
Labor and health insurance
premiums		83,956	28,715		112,671

158 -

Pension expenses	41,665	15,371	57,036
Other employee benefit
expenses	26,694	9,652	36,346
Depreciation expenses	840,430	288,980	1,129,410
Amortization expenses	49,591	32,564	82,155
Less: Employee benefit,	( 973)	( 32,470)	( 33,443)
depreciation, and amortization
expenses attributable to
discontinued operations

1) According to the Company's Articles of Incorporation, if the Company makes a profit at the end of the year, at least 1% of the balance shall be allocated for employee compensation and no more than 1.5% for the remuneration of directors. However, when the Company still has accumulated losses, it shall reserve an amount to compensate the losses.
2) The Company's estimates for 2020 and 2019 employee compensation and directors' remuneration are based on the profitability of the years. The employee compensation was estimated at 2.04% and 1.31%, and the remuneration of directors was estimated at 1.50% and 0.96%, respectively. The estimated amounts of employee compensation were $3,000 and $3,000, respectively; the estimated amounts of directors’ remuneration were $2,200 and $2,200, respectively, and the said amounts were accounted for under salaries and wages.
3) The amounts of the employee compensation and the remuneration of directors and supervisors for 2019 approved by the board of directors were the same as the amounts recognized in the 2019 financial statements. They were $3,000 and $2,200, respectively and all paid in cash.
4) The information on employee compensation and the remuneration of directors approved by the board of directors of the Company is available on the MOPS.
5) The Group combined its production lines and optimized production efficiency in 2020. As a result, the Group recognized $155,822 of employee resignation-related expenses due to the streamlining of personnel in 2020 under operating costs.

ee. Income tax

1) Income tax expense
a) Components of income tax expense:

x e tax expense Components of income tax expense:
Current income tax: Income tax incurred in current period A surtax on subsidiaries' undistributed earnings Income tax underestimates (overestimates) for prior years Effect of exchange rate Total current income tax Deferred income tax: Initial recognition and reversal of temporary differences	2020 2019
	$ 74,724 $ 9,458 - 13 ( 769) ( 831) - 6 73,955 8,646 26,692 ( 1,014)

159 -

Acquisition from acquisition transactions (Note) Net exchange difference Income tax expense	- 4,076 $ 104,723	( 5,984) 515 $ 2,163

Note: Please note 6 (34) for details. b) The amount of income tax related to other comprehensive income: 2020 2019 Remeasurement of defined benefit obligations $ 373 ($ 3,253)	Note: Please note 6 (34) for details. b) The amount of income tax related to other comprehensive income: 2020 2019 Remeasurement of defined benefit obligations $ 373 ($ 3,253)	Note: Please note 6 (34) for details. b) The amount of income tax related to other comprehensive income: 2020 2019 Remeasurement of defined benefit obligations $ 373 ($ 3,253)	Note: Please note 6 (34) for details. b) The amount of income tax related to other comprehensive income: 2020 2019 Remeasurement of defined benefit obligations $ 373 ($ 3,253)
		$ 373	($ 3,253)

2) Reconciliation between income tax expense and accounting profit

	2020		2019
Income tax calculated at the statutory tax
rate on net income before tax	$	45,862	$	43,128
Expenses that shall be (added) excluded
according to tax laws	( 35,424)			7,143
Income on which income tax shall be
levied according to tax law		1,220		419
Items exempt from taxation according to
tax law	( 76,923)		( 19,125)
Unrealized gains or losses on financial
assets that are not taxable		42,119	( 54,687)
Temporary differences not recognized in
deferred income tax assets	(	1,634)	285,694
Taxable loss not recognized in deferred
income tax assets		39,987	172,922
Change in realizability evaluation of		74,678	( 70,514)
deferred income tax liabilities
Income tax
overestimates/underestimates for prior
years	(	769)	(	831)
A surtax on subsidiaries' undistributed
earnings		47		13
Land value increment tax on the land
sold		156		-
Effect of income tax of the applicable
tax rate in the Group		15,404	( 362,155)
	104,723			2,007
Add: Gains on income tax of the
discontinued operations		-		156
Income tax expense	$ 104,723		$	2,163

160 -
3) The amount of deferred income tax assets or liabilities that arise from temporary differences and tax losses are set out below:

					2020	2020
				Recognized	in
				other
			Recognized in	comprehensive		Recognized in		Disposal of
		January 1	profit or loss	income		equity		subsidiaries	December 31
Deferred income tax assets:
-Temporary differences
Over-limit of allowance for loss		$ 123,851	($83,604)	$	-	$	-	$ -	$ 40,247
Unrealized gains on sales		22	21,744		-		-	-	21,766
Unrealized exchange loss		14,232	5,190		-		-	-	19,422
Inventory valuation loss		98,456	( 21,222)		-		-	-	77,234
Compensation for unused annual		7,900	( 2,783)		-		-	-	5,117
leave
Remeasurement of defined benefits		14,197	-	369			-	-	14,566
Unrealized losses on investment		7,435	( 1,994)		-		-	-	5,441
Impairment loss of Non-financial		89,373	-		-		-	-	89,373
assets
Others		2,642	( 2,581)		-		-	-	61
- Tax losses		157,690	57,982		-	( 866)		-	214,806
Subtotal		$515,798	($27,268)	$ 369		($ 866)		$-	$488,033
Deferred income tax liabilities:
-Temporary differences
Unrealized exchange gains		($ 2,006)	$ 304	$	-	$	-	$ -	($ 1,702)
Unrealized losses on sales	(	557)	557		-		-	-	-
Unrealized gains on investment	(	6,058)	281		-		-	-	( 5,777)
Book-tax differences in	(	67,423)	-		-		-	-	( 67,423)
depreciation expenses of fixed
assets
Provision for land value increment	(	21,379)	-		-		-	-	( 21,379)
tax
Others	(	2,916)	( 566)		4		-	2,875	( 603)
Subtotal	($ 100,339)		$ 576	$	4	$	-	$2,875	($ 96,884)
Total	$ 415,459		($26,692)	$ 373		($ 866)		$2,875	$391,149

161 -



$133,711 23 3,471 75,729 8,523 17,354 7,185 88,373 1,802 184,474 $520,645 ($ 1,572) ( 405) ( 15,027) ( 67,423) ( 21,379) ( 3,168) ($108,974) $411,671	($ 9,856) - 6,108 22,727 ( 514) - 250 1,000 ( 481) ( 26,951) ($ 7,717) ($ 434) ( 152) 8,969 - - 348 $ 8,731 $ 1,014	$ - - - - - ( 3,157) - - - - ($ 3,157) $ - - - - - ( 96) ($ 96) ($ 3,253)	($ 4) ( 1) - - ( 109) - - - ( 10) 167 $ 43 $ - - - - - - $- $ 43

162 -
4) The validity period of the Group's unused tax loss carryforwards and the relevant amounts of unrecognized deferred income tax assets are as follows:

December 31, 2020

December 31, 2020	December 31, 2020	December 31, 2020
Year of occurrence Declared/Approv ed amount Amount of unused tax loss carryforwards Amount of unrecognized deferred income tax assets Final year the carryforwards are due
2011 Approved amount 2012 " 2013 " 2014 " 2015 " 2016 " 2017 " 2018 " 2019 Declared amount 2020 Estimated amount	1,915,788 576,522 2,138,865 1,504,300 1,904,500 3,363,155 1,169,522 1,994,843 605,899 645,220 $15,818,614	1,701,524 2016–2031 572,990 2017–2022 2,017,168 2018–2023 1,337,128 2019–2034 1,670,682 2020–2035 3,332,703 2021–2036 1,126,213 2022–2037 1,945,173 2023–2038 446,829 2024–2039 643,185 2025–2040 $14,793,595

December 31, 2019

December 31, 2019	December 31, 2019	December 31, 2019
Year of occurrence Declared/Approv ed amount Amount of unused tax loss carryforwards Amount of unrecognized deferred income tax assets Final year the carryforwards are due
2010 Approved amount 2011 " 2012 " 2013 " 2014 " 2015 " 2016 " 2017 Declared amount 2018 " 2019 Estimated amount	$3,998,919 2,207,194 520,028 2,154,481 1,772,567 2,139,168 3,456,623 1,256,871 2,134,365 840,199 $20,480,415	$3,885,002 2020 2,178,568 2016–2031 516,496 2017–2022 2,082,619 2018–2023 1,650,702 2019–2034 1,946,219 2020–2035 3,427,556 2021–2036 1,213,571 2022–2037 1,907,405 2023–2038 670,221 2024–2039 $19,478,359

5) Deductible temporary differences that are not recognized in deferred income tax assets by the Group:

Deductible temporary differences	December 31, 2020 $11,974,907	December 31, 2019 $13,673,666

163 -
6) The profit-seeking enterprise income tax returns filed by the Company and its domestic subsidiaries' have been approved by the tax collection authorities as follows:

The profit-seeking enterprise income tax returns filed by the Company and its domestic subsidiaries' have been approved by the tax collection authorities as follows:	The profit-seeking enterprise income tax returns filed by the Company and its domestic subsidiaries' have been approved by the tax collection authorities as follows:	The profit-seeking enterprise income tax returns filed by the Company and its domestic subsidiaries' have been approved by the tax collection authorities as follows:	The profit-seeking enterprise income tax returns filed by the Company and its domestic subsidiaries' have been approved by the tax collection authorities as follows:	the Company and its n authorities as follows:	the Company and its n authorities as follows:
Status of approval a) Sun Well, EV Power, Sun Q, Taiwan Net, Taiwan Dakang, CMC Entertainment Hub, Com In Dim, Deltamac, and Jing Zhi Zui Approved up to 2019 b) The Company, Zhong Jia, CMC Movie, Asia 1 Entertainment, CMC Entertainment, and Transtouch Approved up to 2018 rnings per share 2020 Amount aftertax Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) Basic earnings per share Current net profit attributable to ordinary shareholders of the parent company $ 111,073 $ 1,158,881 $ 0.10 Diluted earnings per share Current net profit attributable to ordinary shareholders of the parent company $ 111,073 1,158,881 Potential effect of dilutive ordinary shares Employee compensation - 423 Current net profit attributable to ordinary shareholders of the parent company plus potential effect of ordinary shares $ 111,073 1,159,304 $ 0.10				Status of approval
				Approved up to 2019 Approved up to 2018
	Amount aftertax Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$)
		$ 111,073 $ 111,073 - $ 111,073	$ 1,158,881 1,158,881 423 1,159,304		$ 0.10 $ 0.10

ff. Earnings per share

164 -

Basic earnings per share Current net profit attributable to the continuing operations of the parent company Current net loss attributable to the discontinued operations of the parent company Current net profit attributable to ordinary shareholders of the parent company Diluted earnings per share Current net profit attributable to the continuing operations of the parent company Potential effect of dilutive ordinary shares Employee compensation Current net profit attributable to the continuing operations of the parent company plus potential effect of dilutive ordinary shares Current net loss attributable to the discontinued operations of the parent company Current net profit attributable to ordinary shareholders of the parent company plus potential effect of ordinary shares			2019	2019
		Amount aftertax	Number of outstanding shares adjusted retrospectively (thousand shares) (Note) Earnings per share (NT$)
		$ 259,741 ( 31,036) $ 228,705 259,741 - 259,741 ( 31,036) $ 228,705	1,158,881 `〃` `〃` 1,158,881 373 1,159,254 " `〃`	$ 0.23 ( 0.03) $ 0.20 $ 0.23 ( 0.03) $ 0.20

Note: The retrospective adjustment of the number of outstanding shares above has been conducted based on the proportion of capital reduction in 2019.

165 -

gg. Transactions with non-controlling interests

1) The Group had no significant transactions with non-controlling interests in 2020.
2) Acquisition of additional equity interests in subsidiaries
a) The Group purchased a total of 0.18% of the issued shares of Sun Well between June 2019 and August 2019 in the amount of NT$79 in cash. The carrying amount of Sun Well's non-controlling interests on the acquisition date was (NT$21,264,000). The transaction reduced non-controlling interests by NT$96 and the equity attributable to owners of the parent company decreased by NT$17. The effect of the changes in Sun Well's equity in 2019 on the equity attributable to owners of the parent company is as follows:

Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests To make up for losses		2019
		($ 17) ( 79) ($ 96)

b) The Group purchased a total of 8.82% of the issued shares of Deltamac in the amount of NT$62,200,000 in cash between January 2019 to March 2019. The carrying amount of Deltamac's non-controlling interests at the acquisition date was NT$190,865. The transaction reduced the non-controlling interests by NT$23,869 and the equity attributable to the owners of the parent company increased by NT$38,331. The effect of changes in Deltamac's equity on the equity attributable to owner of the parent company in 2019 is as follows:

Carrying amount of non-controlling interests acquired Consideration paid to non-controlling interests To make up for losses		2019
		$ 38,331 ( 62,200) ($ 23,869)

hh. Acquisition transactions

1) The Group purchased 100% of the equity of 4 companies on December 31, 2019, namely Verbatim GmbH (VGmbH) and Verbatim Australia Pty. Ltd. (VAU), Verbatim (Hong Kong) Limited (VHK), Verbatim Americas LLC. (hereinafter referred to as VUS), Verbatim Americas LLC. (VUS), and part of the assets of Mitsubishi Chemical Media Co., Ltd. (including Verbatim trademark, franchise, and equipment) at the original contract price of US$32,000 thousand and the difference between the net value on the record date of evaluation and the net value on the record date of acquisition, and obtained control of VGmbH, VAU, VHK, and VUS, which engaged in the trading of electronic products, including optical discs in Germany, Australia, Hong Kong, and the U.S., respectively. The Group expects to strengthen its position in these markets after the acquisition and expects to reduce costs via the economic scale. According to the agreement between both parties, the payment shall be carried out in two installments. The first installment in the amount of approximately US$23,000 thousand has been paid on December 24, 2019. The remaining payment has been recognized as relevant rights and obligations based on the relevant contractual commitments (listed in other payables and the balances were NT$245,875,000 and NT$397,927,000 as of December 31, 2020 and 2019, respectively).
166 -

Subsequently, both parties continued to deal with the contractual matters in accordance with the agreement, and signed a supplementary agreement on October 16, 2020, specifying that the Group will no longer need to pay approximately US$4,269 thousand of the aforementioned difference in the net values, and the Group recognized the gains on amended agreement in the amount of NT$133,523 (listed in other gains and losses).

2) In this acquisition transaction, the information on the fair value of the consideration paid by the subsidiaries, the assets acquired, and the liabilities assumed at the acquisition date is as follows:

acquisition date is as follows:

Consideration for the acquisition
Cash
Other payables
Fair value of identifiable assets acquired and liabilities
assumed
Cash
Trade receivable
Other receivables
Inventories
Prepayments to suppliers
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred income tax assets
Other non-current assets
Financial liabilities at FVTPL- current
Contract liabilities
Trade payables
Other payables
Current tax liabilities
Lease liabilities - current
Other current liabilities
Lease liabilities - non-current
Other non-current liabilities
Total net identifiable assets
Effect of exchange rate
Gains on bargain purchase

December 31, 2019
$ 689,770
397,927
$ 1,087,697
$ 775,963
1,321,074
2,769
1,611,465
57,611
192,504
65,452
125,977
5,984
13,581
( 670)
( 122,168)
( 703,208)
( 325,133)
( 63,098)
( 33,548)
( 47,107)
( 32,775)
( 488)
$ 2,844,185
($ 1,756,488)
53,983
($ 1,810,471)

3) If it is assumed that VGmbh, VAU, VHK, and VUS have been incorporated into the Group since January 1, 2019, the operating income and net income before tax of the Group for 2019 would be NT$12,292,772 and NT$180,429, respectively.
167 -

ii. Additional information on cash flows

1) Investing activities with only partial cash payment: a) Property, plant and equipment

a) Property, plant and equipment
Acquisition of property, plant and equipment Add: Payables for equipment, beginning of period Less: Payables for equipment, end of period Less: Payables for equipment from disposal of subsidiaries Cash paid in the current period b) Prepayments for equipment Increase in prepayments for equipment Add: Payables for equipment, beginning of period Less: Payables for equipment, end of period Cash paid in the current period	2020	2019
	$ 65,875 70,844 ( 66,280) ( 4,656) $ 65,783 2020	$ 15,974 67,907 ( 70,844) - $ 13,037 2019

	$ 100,362 50,204 ( 46,225) $ 104,341	$ 215,303 47,491 ( 50,204) $ 212,590

2) The Group sold 100% of Zhonghong and 67% of Benmeng’s equity in January 2020 and March 2020, respectively, resulting in the loss of the Group’s control over these subsidiaries. Please see Note 4(3) 2, Note 3, Note 6, and Note 6(13)1(2) for details. The consideration received for the transactions and information on the relevant assets and liabilities of these subsidiaries are as follows (it was not applicable for 2019):

Consideration received
Cash
Carrying amount of the assets and
liabilities of the subsidiaries
Cash and cash equivalents
Other current assets
Property, plant and equipment
Investments accounted for using the
equity method
Other non-current assets
Other payables
Other current liabilities
Other non-current liabilities
Non-controlling interests
Total net assets
Effect of exchange rate
Gains on disposal

December 31, 2020
$ 478,291
$ 14,302
151,376
70,721
2,295
27,969
( 19,545)
( 4,012)
( 2,875)
( 20,003)
$ 220,228
258,063
( 26,628)
$ 231,435

168 -

jj. Changes in liabilities from financing activities

January 1 Changes in cash flow from financing activities Effect of changes in exchange rates Other non-cash changes December 31			2020
		Short-term borrowings	Long-term borrowings (including due within one year or one operating cycle) Lease liabilities Total liabilities from financing activities
		$206,000 153,017 - ( 6,000) $353,017	$ 2,360,460 $112,136 $2,678,596 ( 230,460) ( 81,000) ( 158,443) - 2,155 2,155 - 217,158 211,158 $ 2,130,000 $250,449 $2,733,466

	2019
Short-term borrowings	Long-term borrowings (including due within one year or one operating cycle) Lease liabilities	Total liabilities from financing activities
$250,000 ( 44,000) - - $206,000	$ 3,108,400 $107,715 ( 747,940) ( 66,175) - 108 - 70,488 $ 2,360,460 $112,136	$3,466,115 ( 858,115) 108 70,488 $2,678,596

169 -

7. Related-Party Transactions

a. Name of the related party and relationship

ed-Party Transactions Name of the related party and relationship
Name of related party Vie Show Cinemas Taiwan Chi Yuan Culture Foundation	Relationship with the Group
	Associate Other related parties

b. Significant transactions with related parties

1) Operating revenue

ant transactions with related parties erating revenue
Sales Associate Other related parties	2020	2019
	$ 2,206 12 $ 2,218	$ 4,054 2,752 $ 6,806

The Group's sales prices and transaction conditions for said related parties are determined separately in accordance with the economic environment and market competition in each region.

2) Trade receivable from related parties

Trade receivable and notes receivable Associate Other related parties	December 31, 2020 $ 7 - $ 7	December 31, 2019 $ 264 1,660 $ 1,924

The trade receivable from related parties mainly come from the sales of goods, and there is no significant difference in the payment terms from those in general transactions, which is O/A with net 30–120 days. There is no mortgage and interest borne on receivables. No allowance for losses is provided for trade receivable from related parties.

3) Administrative expenses - rent expenses

Associate		2020	2019
		$ 1,217	$ 363

The Group has leased buildings from associates. The lease contract term was from July 2017 to September 2020. The rent was paid at the beginning of each month. However, the lease contract was re-signed in November 2019, and the lease term did not exceed 12 months, which is was an exemption for short-term leases. The rent was negotiated based on the rental market of similar real estate nearby, and is paid on a monthly basis.

4) Other

The total amount of donation by the Group to other related parties in 2020 and 2019 was NT$3,500 and NT$7,000, respectively.

170 -

c. Information on the remuneration of the key management:

Short-term employee benefits Post-employment benefits Other long-term employee benefits Share-based payments		2020	2019
		$ 74,677 1,327 47 82 $ 76,133	$ 37,753 1,153 1,517 1,161 $ 41,584

8. Pledged Assets

The details of the assets pledged by the Group as collateral are as follows

Carrying amount

	Carrying amount	Carrying amount
Asset items Restricted demand and time deposit (listed in financial assets at amortized cost - current and non-current) Listed stocks (listed in financial assets at FVTPL- non-current) Beneficiary certificates (listed in financial assets at FVTPL- non-current) Property, plant and equipment Investment property	December 31, 2020 December 31, 2019 Purpose of collateral $ 23,060 $ 41,377 Customs guarantee, margin for issue of letters of credit, and bank loan guarantee 1,556,930 710,600 Bank borrowings 491,450 470,500 `〃` 2,791,879 2,834,917 `〃` 85,834 88,108 `〃` $ 4,949,153 $ 4,145,502
		$ 23,060 1,556,930 491,450 2,791,879 85,834 $ 4,949,153

The Group pledged 2,643,000 shares of Transtouch's stock as security for bank loans on December 31, 2020 and 2019.

9. Significant contingent liabilities and unrecognized contractual commitments

a. Contingencies: N/A.
b. Commitments:
1) Capital expenditure for contracts signed but not effective is as follows

Property, plant and equipment Intangible assets	December 31, 2020 $ 84,582 1,152 $ 85,734	December 31, 2019	December 31, 2019
			$ 84,731 7,860 $ 92,591

2) The Company signed license agreements for relevant optical disc products with Pioneer Corporation, HP Inc., and One-Blue LLC, and paid royalties to the companies in installments based on the sales volume of the relevant products or in installments.
171 -

10. Major Disaster Loss

N/A.

11. Material events after the balance sheet date

Please refer to Note 6(24)6 for the earnings distribution proposal for 2020 proposed by the board of directors on March 25, 2021.

12. Others

a. Capital management

The Group’s capital management objectives are to ensure that the Group can continue as a going concern, maintain the best capital structure to meet the needs for equipment, and provide dividends to shareholders.

b. Financial instruments

1) Type of financial instruments

e dividends to shareholders. ial instruments ype of financial instruments
Financial assets Financial assets at fair value through profit or loss (FVTPL) Financial assets mandatorily at fair value through profit or loss Financial assets at fair value through other comprehensive income (FVTOCI) Investment in designated equity instruments selected Financial assets measured at amortized cost/loans and receivables Cash and cash equivalents Financial assets at amortized cost Notes receivable Trade receivable Other receivables Refundable deposits (listed in other non-current assets) Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trade Financial liabilities measured at amortized cost Short-term borrowings Notes payable Trade payables	December 31, 2020 December 31, 2019 $7,284,389 $6,293,929 $ 369,487 $ 427,196 $3,697,814 $3,327,127 257,006 284,106 4,236 6,786 1,702,325 2,356,468 413,384 270,246 26,037 30,057 $6,100,802 $6,274,790 $- $ 670 $ 353,017 $ 206,000 88,478 327,272 797,840 733,673
		$7,284,389 $ 369,487 $3,697,814 257,006 4,236 1,702,325 413,384 26,037 $6,100,802 $- $ 353,017 88,478 797,840

172 -

Other payables Long-term borrowings (including due within one year or one operating cycle) Guarantee deposits received (listed in other current and non-current liabilities) Long-term notes and trade payable (listed in other non-current liabilities) Lease liabilities	1,127,022 2,130,000 6,115 63,507 $4,565,979 $ 250,449	1,218,841 2,360,460 7,184 63,507 $4,916,937 $ 112,136

2) Risk management policy

a) The daily operations of the Group are affected by a number of financial risks, including market risks (including exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk. In order to reduce the adverse effects of uncertainty on the financial performance of the Group, the Group engages in forward foreign exchange contracts and options to avoid exchange rate risk. The derivatives traded by the Group are for the purpose of hedging risks and are not used for trading or speculation.
b) Risk management is carried out by the Group's finance department in accordance with the policies approved by the board of directors. The Group’s finance department is responsible for identifying, evaluating, and avoiding financial risks through close collaboration with the Group’s operating units. The board of directors has formulated principles for overall risk management, and also provided written policies for specific areas and matters, such as exchange rate risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment using remaining liquidity.
c) For information on derivatives trading to avoid financial risks, please refer to Note 6(2) and (16) in detail.
3) The nature and level of material financial risks
a) Market risk

Exchange rate risk

i. The Group operates its business transnationally, so it is subject to the exchange rate risk arising from transactions in currencies different from the functional currencies (mainly USD and CNY) used by the Company and its subsidiaries. The exchange rate risk arises from future business transactions and assets and liabilities recognized.
ii. The management of the Group has established policies to regulate the exchange rate risk of each company within the Group in relation to its functional currency. The companies shall hedge against the overall exchange rate risk through the Group's finance department. The exchange rate risk is measured by expected transactions with USD and CNY expenditures that are highly likely to occur. Forward foreign exchange contracts are used to reduce the impact of exchange rate fluctuations on the expected cost of inventory purchase.
iii. The Group uses forward foreign exchange contracts to hedge against exchange rate risk while hedging accounting is not applied, which are
173 -

listed in financial assets or liabilities at FVTPL. Please see Note 6(2) and (16) for details.

iv. The Group’s business involves a number of non-functional currencies (the functional currencies of the Company and some subsidiaries are NT$, while the functional currencies of other subsidiaries are USD and CNY, etc.). Therefore, it is affected by exchange rate fluctuations. Information on foreign currency assets and liabilities influenced by significant exchange rate fluctuations is as follows:

December 31, 2020

(Foreign currency:
Functional currency)
Financial assets
Monetary items
USD: NTD
USD: EUR
NTD: USD
USD: CNY
CAD: USD
MXN: USD
HKD: NTD
Financial liabilities
Monetary items
USD: NTD
USD: EUR
(Foreign currency:
Functional currency)
Financial assets
Monetary items
USD: NTD
NTD: USD
CAD: USD
MXN: USD
USD: CNY
USD: HKD
USD: EUR
Financial liabilities
Monetary items
USD: CNY
USD: EUR
USD: NTD
JPY: HKD
EUR: NTD
JPY: NTD

Foreign currencies
(thousand)
Exchange rate
Carrying amount
(NTD)
$ 29,291
28.1000
$ 823,077
7,038
0.8124
198,228
141,889
0.0356
141,889
3,105
6.4971
87,250
2,419
0.7712
86,569
37,324
0.0466
52,755
11,714
3.6240
42,452
$ 5,925
28.1000
$ 166,493
3,196
0.8124
90,017
December 31, 2019
Foreign currencies
(thousand)
Exchange rate
Carrying amount
(NTD)

$ 46,864
29.99
$ 1,405,451
230,824
0.0333
230,824
6,261
0.7700
144,581
53,490
0.0524
84,058
2,663
6.9762
79,863
2,231
7.7866
66,899
1,774
0.8937
53,336
$ 1,152
6.9762
$ 148,385
2,153
0.8937
64,730
2,145
29.99
64,329
232,624
0.0715
64,096
1,667
33.64
56,078
182,728
0.2761
50,451

v. The aggregate amount of all exchange losses (including realized and unrealized) on Group's monetary items influenced by significant exchange rate fluctuations was NT$115,674 and NT$68,382 in 2020 and 2019, respectively.
174 -

vi. The Group's foreign currency market risk analysis due to significant influence of exchange rate fluctuations is as follows: 2020

Sensitivity analysis

Exchange rate band
Effect on profit and loss
Effect on other
comprehensive income

1%
$ 8,231
$ -
1%
1,982
-
1%
1,419
-
1%
873
-
1%
866
-
1%
528
-
1%
425
-
1%
$ 1,665
$ -
1%
900
-
2019
Sensitivity analysis
Exchange rate band
Effect on profit and loss
Effect on other
comprehensive income

1%
$ 14,055
$ -
1%
2,308
-
1%
1,446
-
1%
841
-
1%
799
-
1%
669
-
1%
533
-
1%
$ 1,484
$ -
1%
647
-
1%
643
$ -
1%
641
-
1%
561
-
1%
505
-

Price risk

i. The Group's equity instruments exposed to price risk are financial assets held at FVTPL and financial assets at FVTOCI. To manage its price risk arising from investments in equity instruments, the Group diversifies its portfolio. Diversification of the portfolio is conducted in
175 -

accordance with limits set by the Group.

ii.The Group mainly invests in equity instruments and open-end funds issued by domestic companies, and the prices of those equity instruments will be affected by the uncertainty of the future values of said instruments. If the price of said equity instruments rose or fell by 1%, with all other factors remaining unchanged, the net income (loss) after tax for 2020 and 2019 would have increased or decreased by NT$66,865 and NT$56,637, respectively, due to the gains or losses on equity instruments at FVTPL, and the other comprehensive income would have increased or decreased by NT$3,695 and NT$4,272 for 2020 and 2019, respectively, because of the gains or losses on the equity instrument investment at FVTOCI.

Interest rate risk of cash flow and fair value

i. The Group's interest rate risk mainly comes from long-term borrowings issued at floating interest rates, exposing the Group to the interest rate risk of cash flow. In 2020 and 2019, the Group's loans taken out at floating interest rates were mainly denominated in NTD.
ii. B. The Group's loans are measured at amortized cost and the annual interest rate will be repriced every year according to the contracts. Therefore, the Group is exposed to the risk of future market interest rate changes.
iii. C. When the NTD borrowing interest rate rose or fell by 0.25%, while all other factors remained unchanged, the net income (loss) after tax would have decreased or increased by NT$4,260 and NT$5,901 in 2020 and 2019, respectively, as the interest expenses would change with the floating interest rates for the borrowings.

b) Credit risk

i. The credit risk of the Group is the risk of financial loss suffered by the Group arising from the failure of customers or counterparties of financial instruments to fulfill contractual obligations. It mainly comes from counterparties' inability to settle the contractual cash flow of trade receivable in accordance with the payment terms.
ii. The Group has established credit risk management from the Group's perspective. For banks and financial institutions with whom it is dealing, only those with good credit ratings can be accepted as transaction counterparties. In accordance with the internal credit policy, each operating entity within the Group must conduct management and credit risk analysis of each new customer before deciding payment and delivery terms and conditions. The internal risk control system evaluates the credit quality of customers by considering their financial positions, past experience, and other factors. Individual risk limits are set by the board of directors based on internal or external ratings, and the drawdown of credit limits is regularly monitored.
iii. The Group adopts IFRS 9 to set the premise and assumption that when a contract payment is overdue for more than 90 days according to the agreed payment terms, it is deemed to have been in default.
iv. The Group adopts IFRS 9 to set the following assumptions as the basis for judging whether the credit risk of financial instruments has
176 -

increased significantly since initial recognition:

When a contract payment is overdue for more than 30 days in accordance with the agreed payment terms, it is deemed that the credit risk of a financial asset has increased significantly since the initial recognition.

v. The Group groups customers' trade receivable according to the customers' characteristics, and adopts a simplified approach to estimate expected credit losses based on a provision matrix and the loss rate method.
vi. After the recourse procedures, the Group writes off the amount of financial assets that cannot be reasonably expected to be recovered. However, the Group will continue to carry out the legal recourse procedures to preserve the creditor's rights. As of December 31, 2020 and 2019, the Group had no claims that had been written off nor recourse activities underway.
vii.
(i) The Group has included forward-looking considerations for the future global business information and adjusted the loss rate established based on historical and current information for a specific period to estimate the loss allowance for the notes and trade receivable of customers with general credit ratings (including related parties). The provision matrix as of December 31, 2020 and 2019 is as follows:

Expected loss rate Total carrying amount Loss allowance December 31, 2020 Not past due 0%~4% $ 1,118,867 ($ 302) Overdue for 1–30 days 2.7%~22% 113,208 ( 267) Overdue for 31–60 days 4.4%~82% 30,518 ( 184) Overdue for 61–90 days 8.5%~100% 12,294 ( 1,644) Overdue for 1–180 days 10.6%~100% 63,664 ( 4,926) Overdue for 181 or more 26.7%~100% 192,978 ( 112,286) $ 1,531,349 ($119,609)	Expected loss rate Total carrying amount Loss allowance	Expected loss rate Total carrying amount Loss allowance	Total
		$ 1,118,867 ($ 302) 113,208 ( 267) 30,518 ( 184) 12,294 ( 1,644) 63,664 ( 4,926) 192,978 ( 112,286) $ 1,531,349 ($119,609)	$ 1,118,385 112,941 30,334 10,650 58,738 80,692 $ 1,411,740

177 -

Expected loss rate December 31, 2019 Not past due 0~4% Overdue for 1–30 days 1~35% Overdue for 31–60 days 4.4~76% Overdue for 61–90 days 8.5~100% Overdue for 91–180 days 10.6~100% Overdue for 181 or more 26.7~100%	Expected loss rate	Total carrying amount	Loss allowance	Total
		$1,094,141 252,890 81,306 44,522 168,260 11,478 $1,652,597	($ 1,096) ( 1,844) ( 2,273) ( 1,546) ( 21,337) ( 11,478) ($39,574)	$1,093,045 251,046 79,033 42,976 146,923 -
				$1,613,023

(ii) For customers with good credit ratings, the Group adopts the loss rate method to calculate the expected credit loss because the expected credit impairment is not significant. The expected loss rate is 0.2%. The total amount of trade receivable as of December 31, 2020 and 2019 was NT$295,644 and NT$751,947, respectively, and the loss allowance was NT$823 and NT$1,716, respectively.
(iii) Based on historical experience, the Group conducts individual assessments to calculate expected credit losses for customers with higher credit risks, and 100% of the allowance for losses is provided. The total amount of trade receivable and loss allowance as of December 31, 2020 and 2019 were both NT$85,879 and NT$77,291, respectively.

viii. The table of the changes in the Group's simplified loss allowance for notes and trade receivable (including related parties), overdue receivables, and other trade receivable is as follows:

2020 Trade receivable Overdue receivables Other receivables	2020 Trade receivable Overdue receivables Other receivables	Total

$118,581 $578,960 ( 5,869) 5,869 108,204 ( 406) ( 12,872) ( 513,864) ( 1,532) ( 2,644) ( 201) - $206,311 $ 67,915	$ 77,564 - 505 - - - $ 78,069	$ 775,105 - 108,303 ( 526,736) ( 4,176) ( 201
		) $ 352,295

178 -

2019

	2019	2019	2019	2019
January 1 Impairment loss recognized (reversed) Impairment loss attributable to discontinued operations Loss allowance for acquisition through acquisition transaction Write-off of unrecoverable accounts Effect of exchange rate December 31	Trade receivable Overdue receivables Other receivables				Total $ 722,159 506 ( 1,427) 37,075 ( 1,382) 18,174 $ 775,105
		$ 57,361 8,780 ( 1,427) 37,075 ( 1,382) 18,174 $118,581	$587,234 ( 8,274) - - - - $578,960	$ 77,564 - - - - - $ 77,564

Among the losses recognized in 2020 and 2019, the impairment losses recognized for receivables arising from customer contracts were NT$107,798 and NT$506, respectively.

c) Liquidity risk

i. The cash flow forecast is executed by each operating entity in the Group and is compiled by the Group’s finance department. The Group’s finance department monitors the forecast of the Group’s liquidity requirements to ensure that it has sufficient funds to meet operational needs.
ii. The following table shows the Group’s non-derivative financial liabilities and derivative financial liabilities that are settled on a net or total basis, grouped according to the relevant maturity dates. Non-derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the contract maturity date. Derivative financial liabilities are analyzed based on the remaining period from the balance sheet date to the expected maturity date. The contractual cash flows disclosed in the table below are the undiscounted amounts.

December 31, 2020 Non-derivative financial liabilities: Short-term borrowings Notes payable Trade payables Other payables Lease liabilities Long-term borrowings (including due within one year or one operating cycle and estimated interest) Long-term notes and trade payable (listed in other non-current liabilities) Guarantee deposits received (listed in other current and non-current liabilities)	Within 1 year 1-2 years 2-5 years $ 353,017 $ - $ - 88,478 - - 797,840 - - 1,127,022 - - 69,606 63,216 112,689 570,949 587,991 1,016,333 - - - 1,455 67 916	Over 5 years $ - - - - 15,562 - 63,507 3,677

179 -

December 31, 2019 Non-derivative financial liabilities: Short-term borrowings Notes payable Trade payables Other payables Lease liabilities Long-term borrowings (including due within one year or one operating cycle and estimated interest) Long-term notes and trade payable (listed in other non-current liabilities) Guarantee deposits received (listed in other non-current liabilities) Derivative financial liabilities: Forward exchange agreements	Within 1 year 1-2 years 2-5 years $ 206,000 $ - $ - 327,272 - - 733,673 - - 1,218,841 - - 71,450 34,475 29,304 911,406 697,372 819,992 - - - - 1,990 1,516 $ 670$ - $ -	Over 5 years $ - - - - - - 63,507 3,678 $ -

c. Fair value information

1) The fair value levels of the financial instruments and non-financial instruments measured using the valuation technique are defined as follows:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities on the measurement date. An active market refers to a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the listed stocks and beneficiary certificates invested by the Group belong to this level.
Level 2: Inputs, other than quoted market prices within level 1 that are observable, either directly or indirectly for assets or liabilities. The fair value of most of the derivatives invested by the Group belongs to this level.
Level 3: Unobservable inputs for assets or liabilities. The equity instruments without active markets invested by the Group belong to this level.
2) Financial instruments not measured at fair value

The carrying amounts of the Group's financial instruments not measured at fair value, including cash and cash equivalents, notes receivable, trade receivable, other receivables, financial assets at amortized cost, refundable deposits (listed in other current and non-current assets), overdue receivables (listed in other non-current assets), short-term borrowings, notes payables, trade payables, other payables, lease liabilities, long-term borrowings (including due within one year or one operating cycle), guarantee deposits received (listed in other non-current liabilities), and long-term notes and trade payable (listed in other non-current liabilities), are reasonable approximations of the fair values.

3) Financial and non-financial instruments measured at fair value are classified by the Group based on the nature, characteristics, risk, and the level of fair value of assets and liabilities. The relevant information is as follows:
a) The Group’s classification is based on the nature of assets and liabilities. The relevant information is as follows:

December 31, Level 1 Level 2 Level 3 Total 2020 Assets

180 -

Fair value on a
recurring basis
Financial assets
at fair value
through profit or
loss (FVTPL)
Beneficiary certificates	$ 568,323	$	-	$ -	$ 568,323
Equity securities	6,686,533		-	-	6,686,533
Principal-prot	-		-	20,866	20,866
ected film
investment
agreements
Privately offered funds	-		-	8,366	8,366
Forward	-	301		-	301
exchange
agreements
Financial assets
at fair value
through other
comprehensive
income
(FVTOCI)
Equity
securities	-		-	369,487	369,487
Total	$ 7,254,856	$ 301		$ 398,719	$ 7,653,876
December 31, 2019	Level 1	Level 2		Level 3	Total
Assets
Fair value on a
recurring basis
Financial assets
at fair value
through profit or
loss (FVTPL)
Beneficiary certificates	$ 630,187	$	-	$ -	$ 630,187
Equity securities	5,633,057		-	-	5,633,057
Principal-prot	-		-	30,685
ected film investment					30,685
agreements
Financial assets
at fair value
through other
comprehensive
income
(FVTOCI)
Equity
securities	-		-	427,196	427,196
Total	$ 6,263,244	$	-	$ 457,881	$ 6,721,125

181 -

Liabilities

Fair value on a recurring basis Financial liabilities at fair value through profit or loss Forward - - exchange $ $ 670 $ $ 670 agreements

b) The methods and assumptions used by the Group to measure fair value are as follows:
i. The market quoted prices adopted by the Group as fair value inputs (i.e. Level 1) are listed below by characteristics:

Closed-end Listed stocks Open-end Funds funds Market quoted prices Closing price Net worth Net worth

ii. Except for the above-mentioned financial instruments with active markets, the fair value of other financial instruments is obtained through valuation techniques or with reference to the quoted prices of counterparties.
iii. When evaluating non-standard and less complex financial instruments, the Group adopts the valuation techniques widely used by market participants. The parameters used in the valuation models for such financial instruments are usually market observable information.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present discounted value techniques and option pricing models. Forward exchange contracts are usually valued based on current forward exchange rates.
v. The output of the valuation models is an estimated value, and the valuation techniques may not reflect all the relevant factors of the financial instruments and non-financial instruments held by the Group. Therefore, the estimated value of the valuation models will be appropriately adjusted according to additional parameters.
4) There were no transfers between Level 1 and Level 2 fair value in 2020 and 2019.
5) The table below shows the changes in Level 3 fair value in 2020 and 2019:
182 -

On January 1_IFRS 9 Increase for the current period Decrease for the current period Listed in unrealized gain/loss on investments in equity instruments at FVTOCI - parent company Listed in unrealized gain/loss on investments in equity instruments at fair value through other comprehensive income - non-controlling interests Disposal of equity instruments at FVTOCI - parent company Refund from capital reduction through equity instruments at FVTOCI Effect of exchange rate December 31	2020 2019 Equity instruments Equity instruments	2020 2019 Equity instruments Equity instruments	2020 2019 Equity instruments Equity instruments
	$ 457,881 9,047 ( 9,819) ( 29,422) ( 36) 861 ( 15,021) ( 14,772) $ 398,719		$ 406,899 42,019 ( 15,709) 46,037 1,857 2,994 ( 11,385) ( 14,831) $ 457,881

6) here were no transfers into or out of Level 3 fair value in 2020 and 2019.
7) In the Group’s valuation process for fair value classified as Level 3, the strategic investment department is responsible for independent fair value verification for financial instruments, uses data from independent sources to make the valuation results close to the market level, and confirms that the source of the data is independent, reliable, consistent with other resources, and representative of the executable price, while regularly calibrating the valuation model, updating the inputs and data required by the valuation model, and making any other necessary fair value adjustments to ensure that the valuation results are reasonable.
8) The quantitative information on the significant unobservable inputs of the valuation model used in the Level 3 fair value measurement and the sensitivity analysis of the significant unobservable input change are explained as follows:

	Fair value on		Significant	Interval	Relationship
	December 31,	Valuation	unobservable	(weighted	between input and
	2020	technique	input	average)	fair value
Non-derivative equity instruments:
Unlisted stocks	$ 275,039	Comparable	Price-to-earnings	N/A	The higher the
		public company	ratio,		multiple, the
		approach	price-to-book		higher the fair
			ratio, enterprise		value;
			value-to-operating
			income ratio,		The higher the
			enterprise		discount for
			value-to-earnings		market liquidity,
			before interest,		the lower the fair
			taxes,		value.
			depreciation, and
			amortization ratio,
			and lack of
			market liquidity
			discount
Stocks of venture capital	94,448	Net asset value	N/A	N/A	N/A
companies		method

183 -

	Fair value on		Significant	Interval	Relationship
	December 31,	Valuation	unobservable	(weighted	between input and
	2019	technique	input	average)	fair value
Non-derivative equity instruments:
Unlisted stocks	$ 323,529	Comparable	Price-to-earnings	N/A	The higher the
		public company	ratio,		multiple, the
		approach	price-to-book		higher the fair
			ratio, enterprise		value;
			value-to-operating
			income ratio,		The higher the
			enterprise		discount for
			value-to-earnings		market liquidity,
			before interest,		the lower the fair
			taxes,		value.
			depreciation, and
			amortization ratio,
			and lack of
			market liquidity
			discount
Stocks of venture capital	103,667	Net asset value	N/A	N/A	N/A
companies		method

9) The Group has selected valuation model and valuation parameters after careful evaluation, but different valuation results may occur due to the use of different valuation models or valuation parameters.

13. Supplementary Disclosures

a. Information on significant transactions
1) Loans to others: Table 1.
2) Endorsements/Guarantees provided to others: Table 2.
3) Marketable securities held at the end of the period (disclosing those amounting to at least NT$100 million while excluding investment in subsidiaries, associates, and joint ventures): Table 3.
4) Marketable securities acquired or sold amounting to at least NT$300 million or 20% of the paid-in capital: Table 4.
5) Acquisition of real estate amounting to at least NT$300 million or 20% of the paid-in capital: N/A.
6) Disposal of real estate amounting to at least NT$300 million or 20% of the paid-in capital: Table 5.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7.
9) Trading in derivative instruments: Notes 6(2) and (16).
10) Business relations and important transactions between parent company and subsidiaries and among subsidiaries and amounts: Table 8.
b. Information on investees

Information on name and location of investees (disclosing those with original investment amounting to at least NT$200 million at the end of the period while excluding investees in mainland China): Table 9.

184 -
c. Information on investments in mainland China
1) Basic information: Please refer to Table 10.
2) Significant transactions with investees in mainland China, either directly or indirectly, through a business in a third region, the prices, payment terms, and unrealized gains or losses: Note 7: Related-party transactions and Note 13(1)10.
d. Information on major shareholders

Information on major shareholders: Table 11.

185 -

14. Segment Information

a. General information.

The Group operates its business from the perspective of different industries, and divides its business into storage media segment, other optoelectronics segment, and other segments. The types of industries are as follows:

1) Storage media segment: Manufacturing and sales of consumer electronic products, including optical discs.
2) Other optoelectronic segment: Manufacturing and sales of panels and solar products.
3) Investment segment: Investment in various businesses.
4) Other segments: Audio-visual sales and business other than sales of optical discs.

b. Measurement of segment information

The profit or loss of the operating segments of the Group is measured based on operating income/loss after tax, which serves as the basis for performance evaluation. In addition, the accounting policies for the business segment of the Group are the same as the summary of significant accounting policies described in Note 4.

c. Information on profit or loss of segments

The information on segments to be reported to the chief operating decision maker is as follows:

External revenue Internal segment revenue Profit or loss of segments Profit or loss of segments includes: Depreciation and amortization	2020 Storage media segment Other $ 8,627,234 2,399,690 $ 11,026,924 $ 262,474 $ 737,512	optoelectronics segment Investment segment Other segments Adjustments and write-offs $ 328,474 $ - $ 445,319 $ - - - 106,330 ( 2,506,020) $ 328,474 $- $ 551,649 ($ 2,506,020) ($ 109,015) ($ 44,360) ($ 163,107) $ 178,835 $ 96,946 $ 1,245 $ 79,691 ($ 22,466)		Total $ 9,401,027 - $ 9,401,027 $ 124,827 $ 892,928

186 -

2019

	optoelectronics segment	Investment segment	Other segments	Adjustments and write-offs
External revenue Internal segment revenue Less: Revenue of discontinued operations Profit or loss of segments Less: Profit or loss of discontinued operations Profit or loss of segments includes: Depreciation and amortization Less: Depreciation and amortization of discontinued operations	$ 439,323 - - $ 439,323 ($ 903,405) - ($ 903,405) $ 223,881 - $ 223,881	$ 413,863 - - $ 413,863 $ 2,265,098 - $ 2,265,098 $ 1,724 - $ 1,724	(	$ - ( 603,478) - ($ 603,478) $ 20,804 - $ 20,804 ($ 22,567) - ($ 22,567)	(



					(

187 -

The impact of the Group’s adoption of IFRS 16 “Leases” on the segment information for the year 2019 is as follows:

2019 Storage media segment Other optoelectronics segment Investment segment Other segments	2019 Storage media segment Other optoelectronics segment Investment segment Other segments	2019 Storage media segment Other optoelectronics segment Investment segment Other segments	2019 Storage media segment Other optoelectronics segment Investment segment Other segments	Adjustments and write-offs	Total

$ 13,819 - $ 13,819	$ 21,407 - $ 21,407	$ - - $-	$ 45,770 ( 7,147) $ 38,623	($ 22,567) - ($ 22,567)	$ 58,429 ($ 7,147) $ 51,282

d. Information on the reconciliation of profit or loss of segments

As the Group's information on pre-tax profit or loss of the segments to be reported is consistent with that of continuing operations, so no reconciliation is required.

188 -

e. Information on products and services

Please Note 6(25) for details.

f. Geographical region information

Geographical region information for 2020 and 2019 is as follows:

	2020 Revenue	2020 Revenue	Non-current assets	2019 Revenue	2019 Revenue	Non-current assets

Taiwan Americas Japan Asia Mainland China Europe Others Less: Revenue attributable to discontinued operations Total		$530,907 1,885,859 2,202,914 590,843 379,918 2,649,268 1,161,318 - $9,401,027	$6,387,866 68,627 3,218 6,020 514,190 207,171 35,132 - $7,222,224		$914,784 1,563,728 1,682,209 676,716 325,147 1,109,835 873,200 (100,372) $7,045,247	$6,917,237 59,693 13,697 14,542 544,541 123,842 32,294 - $7,705,846

g. Major customer information

The Group only had one individual customer from the storage media segment who accounted for at least 10% of its operating income in 2020 and 2019, with the amount of NT$1,277,673 and NT$1,882,428, respectively.

189 -

TABLE 1

CMC Magnetics Corporation and Its Subsidiaries

Loans to Others For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

No. (Note 1) Lender Borrower 0 The Company Sun Well 0 The Company EMCH 1 CMC Movie Asia 1 Entertainment 2 EMCH Yongxing Multimedia 2 EMCH VJP 3 SuperNet FJKL 4 Yongxing Electronic Sun Biotech Limited 5 CMC Entertainment Asia 1 Entertainment 6 Deltamac Asia 1 Entertainment 7 Zhong Jia Asia 1 Entertainment 8 VAU VHK	Financial Statement Other receivables -Related party Other receivables -Related party Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related Y Y Y Y Y N Y Y Y Y Y	Highest Amount of $1,175,300 697,360 34,000 250,090 28,110 10,612 - 16,502 10,000 - 19,673 280,000 45,308 -	Ending Balance (Note 14) $1,175,300 213,560 34,000 250,090 27,250 - 9,883 - 13,148 220,000 -	Actual Amount Drawn $1,175,300 213,560 34,000 250,090 27,250 9,883 11,897 217,000	Range of 1.7 1.55 1.17 0 0 0 4.35 1.17 2.4 1.5 2.328	Type of 2 2 2 2 2 2 2 2 1 2 2	Amount of Transaction $- - - - - - - - 2,808 - -	Reason for Working i l $- Working it l - Working - Working - Working - Working - Working - Working - Working Working - Working -	Loss Allowance Name Movable - - - - - - - 25 - - -	Collateral Value $253,122 - - - - - - - - - -	Limit for Individual $2,846,486 2,846,486 68,773 557,202 557,202 140,500 47,609 20,302 2,808 300,000 374,806	Total Limit $7,590,630 7,590,630 68,773 1,485,871 1,485,871 157,071 No 47,609 20,302 154,578 No 1,487,698 374,806	Remarks Note 7 Note 7 Note 8 Note 10 Note 10 tes 11 and 15 Note 8 Note 8 tes 12 and 16 Note 9 Note 13

Note 1: The information on funds lent between the Company and its subsidiaries shall be entered as follows:

(1) The Company is coded “0”.
(2) The subsidiaries are coded sequentially beginning from “1” by each individual company.

Note 2: The financial statement accounts including trade receivable from associates, amount receivable from related parties, shareholders' transactions, advance payments, temporary debits, etc.; in the case of lending of funds, this field shall be entered. Note 3: The maximum balance of loans to others in the current year.

Note 4: The nature of lending of funds shall be listed as business transactions or necessary for short-term financing.

(1) In the case of business transactions, please enter 1.
(2) If there is a need for short-term financing, please enter 2.
Note 5: If the nature of lending of funds belongs to business transactions, the amount of business transactions shall be entered. The amount of business transactions refers to the amounts of business transactions between the lender and the borrower in the most recent year.

Note 6: If the nature of lending of funds belongs to a need for short-term financing, the reasons for the necessity of the lending and the purpose of borrowing, such as repayment of loans, purchase of equipment, or working capital shall be specified.

Note 7: The total funds lent shall be limited to 40% of the current net worth of the lender. For subsidiaries in which the Company holds 50% of the shares directly and indirectly and with which the Company conducts business, the limit on the funds lent to each of said subsidiaries is 15% of the Company's net worth or the total business transaction amount between both parties, whichever is higher. For subsidiaries in which the Company holds 50% of the shares directly and indirectly without business conducted between both parties, the limit on the funds lent to each of said subsidiaries is 15% of the Company's net worth.

Note 8: The upper limit on the funds lent is 40% of the current net worth of the lender.

The limit on the funds lent to each entity is 40% of the net worth of the lender.

Note 9: The upper limit on the funds lent is 40% of the current net worth of the lender. The limit on the funds lent to each entity shall not exceed NT$300,000.

The upper limit on the parent company’s loans to others shall not exceed 40% of the company’s net worth.

Note 10: The upper limit on the funds lent is 40% of the current net worth of the lender. The limit on the funds lent to each entity shall not exceed US$10,000 thousand. For subsidiaries in which the Company holds 50% of the shares directly and indirectly without business conducted between both parties, the limit on the funds lent to each of said subsidiaries is 15% of the Company's net worth. For foreign companies in which the parent company holds 100% of the shares directly and indirectly, the upper limit on the funds lent shall not exceed 50% of the Company’s current net worth.

Note 11: The upper limit on the funds lent is 40% of the current net value of the lender. For companies in which the Company does not hold 50% of the shares directly or indirectly without business conducted between both parties, the limit on the funds lent to each of said companies shall not exceed US$5,000 thousand.
Note 12: The upper limit on the funds lent shall not exceed 40% of the net worth in the current period; if it is a business transaction, it shall not exceed the transaction amount. The "business transaction amount" refers to the purchase or sale of goods between both parties, whichever is higher.
Note 13: The upper limit on the funds lent shall not exceed the current net worth of the lender. For the parent company and foreign companies in which the parent company holds 100% of the shares directly and indirectly, the limit on the funds lent shall not exceed the net worth of the Company.

Note 14: The translation is based on the original currency multiplied by the exchange rate at the end of the period.

Note 15: Relevant processing procedures have been reported to the board of directors in accordance with the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees.

Note 16: On March 8, 2021, the Deltamac's board of directors approved an improvement plan to improve the situation of excess of loans to others.

Table 1 Page 1

190 -

TABLE 2

CMC Magnetics Corporation and Its Subsidiaries

Endorsements/Guarantees Provided to Others For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

			Party Endorsed/Guaranteed	Party Endorsed/Guaranteed
										Cumulative
						Maximum Balance of				Endorsements/Guarantees
		Company Name			Limit of	Endorsement/Guarantee	Balance of	Actual Amount		to the Net Equity in the		Parent to		To Entity in
		(Endorsement/Guarantee		Relationship	Endorsement/Guarantee	For the Current Period	Endorsement/Guarantee,	Drawn Down	Endorsement/Guarantee	Latest Financial	Upper Limit of	subsidiary (Note	Subsidiary to	Mainland China
No. (Note	1)	Provider)	Company Name	(Note 2)	for a Single Entity	(Note 4)	End of Period (Note 5)	(Note 6)	Secured with Collateral	Statements (%)	Endorsements/Guarantees	7)	parent (Note 7)	(Note 7)	Remarks
1		CMC Entertainment	CMC Entertainment Hub	4	$15,226	$1,632	$1,632	$ -	$ -	3.22	$15,226	N	N	N	Note 3

Note 1: The description of No. column is as follows:

(1) The issuer is coded “0”.
(2) The investees are coded sequentially beginning from “1” by each individual company.

Note 2: There are seven types of relationships between the endorsement/guarantee provider and the endorsed/guaranteed party. Just enter the code:

(1) A company with which it conducts business.

(2) A subsidiary in which the Company holds at least 50% of the voting shares directly and indirectly.

(3) A company that holds at least 50% of the Company's voting shares directly and indirectly.
(4) Between companies in which the Company holds at least 90% of the voting shares directly and indirectly.
(5) Between companies in the same industry or joint applicants to undertake projects who are required to provide mutual endorsements/guarantees to the other company in accordance with the contractual terms.
(6) Companies that are endorsed and guaranteed by all shareholders based on their shareholding ratios because of a joint investment relationship.
(7) The joint guarantee for the performance of a pre-sale property sales contract between entities in the same industry in accordance with the Consumer Protection Act.

Note 3: The upper limit of CMC Entertainment endorsements/guarantees to external entities shall not exceed 30% of its net worth of the current period, and the limit of endorsement/guarantee to a single enterprise shall not exceed 30% of its net worth of the current period.

Note 4: The maximum balance of endorsements/guarantees provided to others in the current year.

Note 5: As of the balance sheet date, when the amount of an endorsement/guarantee contract or bill signed by the Company with a bank is approved, the Company shall assume the endorsement/ guarantee responsibility; other relevant endorsements/guarantees shall be included in the endorsement/guarantee balance.

Note 6: The actual amount drawn down by the endorsed/guaranteed company within the endorsement/guarantee balance shall be entered.

Note 8: As of December 31, 2020, Transtouch's balance of customs guarantee provided to the Customs Office for post-release duty payments was NT$2,261.

Table 2 Page 1

191 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) Relationship with Securities Issuer General Ledger Account Number of Shares		End of Period Carrying Amount (Note 2) Shareholding Percentage (%)	Fair Value Remarks
The Company Stock of Taiwan High Speed Rail Corporation Financial assets at FVTPL - current 39,133,000 Stock of Chateau International Development Company Limited " 12,391,421 Stock of FarGlory Hotel Co., Ltd " 3,346,000 Stock of United Microelectronics Corp. " 4,553,000 Stock of Chung Hsin Electric & Machinery Manufacturing Corporation " 6,557,000 Stock of Tainan Enterprises Co., Ltd. " 13,645,000 Stock of Largan Precision Company Limited " 148,000 Stock of Tatung Company " Adjustment to valuation Stock of Taiwan High Speed Rail Corporation Financial assets at FVTPL - non-current 28,500,000 Stock of FarGlory Hotel Co., Ltd " 5,000,000 Stock of Chateau International Development Company Limited " 3,800,000 Stock of Big Sunshine Co., Ltd. " Adjustment to valuation Stock of Riselink Venture Capital Corp. Financial assets at FVTOCI - non-current Adjustment to valuation	(	$ 1,299,241 0.7 $ 386,650 11.11 98,042 3.19 213,668 0.04 362,566 1.38 364,779 9.27 489,726 0.11 228,858 140,075) $ 3,303,455 $946,219 0.51 146,505 4.76 118,572 3.41 6,616 86,544 $ 1,304,456 $5,920 41,521 $ 47,441	1,240,516 354,395 173,657 214,674 351,455 259,937 472,860 235,961 - $ 3,303,455 $ 903,450 Note 3 259,500 Note 3 108,680 Note 3 32,826 - $ 1,304,456 $ 47,441

		$

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates, and securities derived from the items above that fall within the scope of IFRS 9 "Financial Instruments". Note 2: For those measured at fair value, please fill in the carrying amount after fair value valuation adjustment. Note 3: The Company pledged securities of NT$1,271,630 as collateral as of December 31, 2020.

Table 3 Page 1

192 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) Relationship with Securities Issuer General Ledger Account			End of Period	Fair Value Remarks
	Number of Shares		Carrying Amount (Note 2) Shareholding Percentage (%)
Zhong Jia Stock of FarGlory Hotel Co., Ltd Financial assets at FVTPL - current Shin Kong Financial Holding Co.,Ltd. Preferred Shares B " Stock of FDC International Hotels Corporation " Adjustment to valuation Stock of Chateau International Development Company Limited Financial assets at FVTPL - non-current Millerful No.1 REIT " Cathay No.1 Real Estate Investment Trust " Stock of Taiwan High Speed Rail Corporation " Stock of Tainan Enterprises Co., Ltd. " Stock of Chung Hsin Electric & Machinery Manufacturing Corporation " Adjustment to valuation Stock of Orgchem Technologies, Inc. Financial assets at FVTOCI - non-current Adjustment to valuation	9,078,000 3,309,000 5,928,269 25,251,000 9,521,000 2,256,730	(	$ $	$ 471,148 140,136 113,152 - $ 724,436 $ 169,548 210,800 Note 3 280,650 Note 3 800,457 Note 3 181,375 120,960 - $ 1,763,790 $ 79,603
			$

Note 2: For those measured at fair value, please fill in the carrying amount after fair value valuation adjustment.

Note 3: As of December 31, 2020, Zhong Jia pledged securities of NT$285,300 and beneficiary certificates of NT$491,450 as collateral.

Table 3 Page 2

193 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) December 31, 2020

Unit: NT$ thousands (Unless specified otherwise)

Type and	End of Period Carrying Amount (Note 2) Shareholding Percentage (%) $ 7,901 2,192 $ 10,093 $ 93,768 -33,442 $ 60,326 $ 135,073 12,462 $ 147,535 $ 20,866 $ 21,500 ( 17,213) $ 4,287	$
(Note 1) Stock of Transpac Corporation in Shanghai-Hong Kong Stock Connect Stock of High Connection Density, Inc. Principal-protected film investment agreements Stock of Mandarin Vision Co., Ltd.
	$
	$
	$ $	$
	$ $	$
	$	$
	$ (	$
	$

Table 3 Page 3 - 194 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities Relationship with Securities General Ledger Account		End of Period	Fair Value Remarks
	Number of Shares C	arrying Amount (Note 2) Shareholding Percentage (%)
Deltamac Common stock of Self Pick Inc. Financial assets at FVTOCI - non-current Adjustment to valuation Transtouch Mega 3-Year Maturity Emerging Market Bond Fund Financial assets at FVTPL - current Taiwan Cement Corp. 2nd " Adjustment to valuation Privately offered fund—First Financial assets at FVTPL - Adjustment to valuation EMCH CDIB Yida Private Equity (Kunshan) Biomedical Equity Financial assets at FVTOCI - non-current Adjustment to valuation Yongxing Electronic CDIB Yida Private Equity (Kunshan) Investment Fund Financial assets at FVTOCI - non-current Adjustment to valuation	500,000 (	$ 828 6.25 467) $ 361 $ 78,335 20,000 58 $ 98,393 $ 9,047 ( 681) $ 8,366 $ 20,700 311 $ 21,011 $ 58,210 946 $ 59,156	$ 361 $ 98,393 $ 8,366 $ 21,011 $ 59,156

Table 3 Page 4

195 -

TABLE 4

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Acquired or Sold Amounting to at Least NT$300 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Trading
Type and Name of Securities
General Ledger Account
CounterpartyRelationship
Number of
Amount

Acquired(Note 3)
Sold(Note 3)
End of Period

Number of
Amount
Number of
Selling Price
Book Cost
Gains or Losses
Number of
Amount

The Company
Stock of Taiwan High Speed
Financial assets at FVTPL -
-
-
63,547
$ 2,463,011
91,465
$ 2,938,087
87,379
$ 2,941,371
$ 3,155,638 ($ 214,267)
67,633
$ 2,245,460
Stock of Chung Hsin Electric Financial assets at FVTPL -
-
-
4,365
93,966
43,965
1,934,576
41,773
1,767,696
1,665,976 101,720
6,557
362,566
Stock of United
"
-
-
-
-
58,796
1,968,262
54,243
1,841,771
1,754,594 87,177
4,553
213,668
Stock of Tatung Company
"
-
-
2,207
47,132
37,542
725,486
37,561
795,928
729,170 66,758
2,188
43,448
Stock of Hon Hai Precision
"
-
-
-
-
8,165
672,485
8,165
657,214
672,485 ( 15,271) -
-
Stock of Taiwan
"
-
-
-
-
9,403
3,647,722
9,403
3,739,165
3,647,722 91,443 -
-
Stock of Fubon Financial
"
-
-
-
-
14,796
620,025
14,796
617,642
620,025 ( 2,383) -
-
Stock of Cathay Financial
"
-
-
-
-
10,660
423,194
10,660
423,358
423,194 164 -
-
Stock of CTBC Financial
"
-
-
-
-
16,729
337,793
16,729
326,623
337,793 ( 11,170) -
-
Stock of First Financial
"
-
-
-
-
20,311
436,188
20,311
444,571
436,188 8,383 -
-
Stock of Largan Precision
"
-
-
-
-
1,509
5,129,684
1,361
4,619,085
4,639,958 ( 20,873)
148
489,726
Stock of the Shanghai
"
-
-
-
-
10,318
431,971
10,318
431,373
431,971 ( 598) -
-
Stock of Globalwafers. Co.,
"
-
-
-
-
1,947
793,642
1,947
780,609
793,642 ( 13,033) -
-
Zhong Jia
Stock of Tatung Company
Financial assets at FVTPL -
-
-
2,028
43,101
45,479
931,059
44,851
922,684
903,082 19,602
2,656
71,078
Supernet
Stock of Sands China Limited Financial assets at FVTPL -
-
-
16
2,235
4,082
472,434
4,074
474,909
471,671 3,238
24
2,998

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates, and securities derived from the items above.

Note 2: For securities recognized as investments accounted for using the equity method, these two columns must be entered, with the remaining columns left blank. Note 3: Accumulated amounts of marketable securities acquired or disposed of shall be calculated separately based on market prices to determine whether they amount to $300 million or 20% of the paid-in capital.

Table 4 Page 1

196 -

TABLE 5

CMC Magnetics Corporation and Its Subsidiaries

Disposal of Real Estate Amounting to at Least NT$300 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Company Asset Date of Occurrence Original Acquisition Date Carrying amount Transaction Amount Proceeds Collection Gains or Losses on Disposal Counterparty Relationship	Unit: NT$ thousands (Unless specified otherwise)
	Purpose of Disposal Basis or Reference for Price Setting Other Agreed Matters
Jet-Thai Land, buildings and structures December 10, 2019 (Note 4) May 23, 2007 $271,828 $505,441 Proceeds fully collected $212,335 TPV Technology (Thailand) Co., Ltd. Non-related party	To increase working capital and improve financial structure Note 1 N/A

Note 1: The price was determined with reference to the valuation report issued by Tobtavee Appraisal And Service Co., Ltd.

Note 3: The date of occurrence refers to the date when the transaction contract is signed, the payment date, the date of transaction made by agents, the ownership transfer date, the board resolution date, or the date when the transaction counterparty and transaction amount are fully determined, whichever is earlier.

Note 4: The transaction was completed in 2020.

Table 5 Page 1

197 -

TABLE 6

CMC Magnetics Corporation and Its Subsidiaries

Total Purchases from or Sales to Related Parties Amounting to at least NT$100 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Company Counterparty Relationship	Transaction Situation and Reason that Transaction Notes/Trade Receivable (Payable) Purchase (Sale) Amount Proportion to Total Credit Period Unit Price Credit Period Balance Proportion to Total Remarks (Note2)
The Company Yongxing Subsidiary of `〞` `〞` `〞` `〞` VJP Sub-subsidiary `〞` VUS `〞` `〞` VGmbH `〞` VHK Yongxing Sister companies	Purchase $118,425 6% As it is between Equivalent to As it is between $4,761 1% Sale 173,692 4% `〞` `〞` `〞` 86,387 7% Sale 987,241 25% No significant `〞` No significant 491,102 42% Sale 457,972 12% `〞` `〞` `〞` 78,469 7% Sale 342,493 9% `〞` `〞` `〞` 57,310 5% Sale 134,033 26% `〞` `〞` `〞` 91,280 62%

Note 1: If related-party transaction terms are different from general transaction terms, situations and reasons for the differences shall be specified in the unit price and the credit period columns.

Note 2: In case of advance receipts (prepayments), reasons, the terms of the agreement, the amount and differences from the general transactions shall be specified in the Remarks column.

Table 6 Page 1

198 -

TABLE 7

CMC Magnetics Corporation and Its Subsidiaries

Receivables from Related Parties Amounting to at Least NT$100 Million or 20% of the Paid-in Capital December 31, 2020

Unit: NT$ thousands (Unless specified otherwise)

Company under Trade Receivable Counterparty Relationship Balance of Trade Receivable from Related Parties (Note1) Turnover Rate (Times)	Overdue Receivables from Related Parties Amount Response Method Recovered Amount from Related Party After Balance Sheet Date Loss Allowance Provided
The Company Sun Well Subsidiary $1,195,992 Note 2 `〞` VJP Sub-subsidiary 491,102 4.02 `〞` EMCH Subsidiary 214,587 Note 2 EMCH Yongxing Multimedia Sub-subsidiary 250,090 Note 2 Zhong Jia Asia 1 Entertainment Sister companies 217,000 Note 2	$ - - $ - $ - 256,242 - 256,242 1,278 - - - - - - - - - - - -

Note 1: Please enter respectively according to trade receivable from related parties, notes receivables, other receivables, etc.

Note 2: It is other receivables arising from funds lent, so it is not applicable.

Table 7 Page 1

199 -

TABLE 8

CMC Magnetics Corporation and Its Subsidiaries

Business Relations and Important Transactions Between Parent Company and Subsidiaries and Among Subsidiaries and Amounts For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

No. (Note 1) Company Counterparty 0 The Company Yongxing Multimedia `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` EMC H `〞` `〞` Sun Well `〞` `〞` VJP `〞` `〞` `〞` `〞` `〞` VUS `〞` `〞` `〞` `〞` `〞` VGmbH `〞` `〞` `〞` `〞` `〞` VHK 1 EMC H Yongxing Multimedia 2 Zhong Jia Asia 1 Entertainment 3 VHK Yongxing Multimedia `〞` `〞` `〞`	Nature of Relationship (Note 2) 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3	General Ledger Account Purchase Sale Trade receivable Other receivables Other receivables Sale Trade receivable Sale Trade receivable Sale Trade receivable Sale Other receivables Other receivables Sale Trade receivable	Transaction Details Amount (Note 7) Transaction Conditions $118,425 Note 5 173,692 Note 4 86,387 Note 4 214,587 Note 6 1,195,992 Note 6 987,241 Note 4 491,102 Note 4 457,972 Note 4 78,469 Note 4 342,493 Note 4 57,310 Note 4 66,188 Note 4 250,090 Note 6 217,000 Note 6 134,033 Note 4 91,280 Note 4	Proportion to Total Consolidated Revenue or	Proportion to Total Consolidated Revenue or
					Assets (Note 3) 1.26% 1.85% 0.35% 0.87% 4.82% 10.50% 1.98% 4.87% 0.32% 3.64% 0.23% 0.70% 1.01% 0.87% 1.43% 0.37%

Note 1: The information on transactions between the parent company and its subsidiaries shall be indicated in the No. column as follows:

(1) The parent company is coded “0”.

(2) The subsidiaries are coded sequentially beginning from “1” by each individual company.

Note 2: There are three types of relationships with the company. Just enter the code:

(1) Parent to subsidiary

(2) Subsidiary to parent

(3) Between subsidiaries
Note 3: Regarding the proportion of transaction amount to the total consolidated revenue or assets, if it is recognized in the balance sheet account, it is shown with the ending balance as a percentage of the total consolidated assets; if it is in the profit or loss account, it is shown with the cumulative amount throughout the period as a percentage of the total consolidated revenue.

Note 4: The Company's transaction price for related parties is equivalent to that for non-related parties; the payment term for overseas subsidiaries and sub-subsidiaries is 60 to 120 days after the arrival of goods. The payment term for general overseas customers is 30 to 120 days after the arrival of goods, and for general domestic customers, it is open account (O/A) with net 90 to 120 days.

Note 5: The Company does not have the same type of company for comparison in terms of the purchases from Yongxing Multimedia. In addition to the payment terms of Yongxing Multimedia, which is O/A with net 90 days, the payments to other related parties is all O/A with net 90 days.

Note 6: It refers to receivable for funds lent and advance payment receivable.

Note 7: Individual amounts less than NT$50,000 will not be disclosed, and the transactions between both parties will no longer be disclosed.

Table 8 Page 1

200 -

TABLE 9

CMC Magnetics Corporation and Its Subsidiaries

Information on Name and Location of Investees (Excluding Investees in Mainland China) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Investor
Name of

Location
Principal Business Original Investment Cost
Shares Held at the End of Period
End of Current Period
End of Last Year
Number of Shares
Percentage

Carrying amount
Profit or Loss on

Investment Gains or

Remarks

~~I~~
~~(%)~~
~~I~~
~~(N~~
~~2(2))~~
~~L~~
~~R~~
~~i~~
~~d~~
The
C
EMCH
Cayman
I l
d
Professional
investment
$ 10,453,855
$ 10,453,855
61,527
100.00
$ 3,605,849
$290,276
$396,279
Subsidiary of
h C
〞
CIA
Cayman
I l
d
Professional
investment
872,018
872,018
29,688,245
86.35
408,452
( 10,277)
( 8,874)
〞
〞
Zhong Jia
Taiwan
Investment
in
various
d
ti
b
i
180,421
180,421
261,595,273
100.00
3,457,629
( 59,216)
( 2,828)
〞
〞
CMC Movie
Taiwan
Motion picture distribution
1,297,918
1,297,918
35,000,000
100.00
173,381
( 7,371)
( 7,371)
〞
〞
Asia
1
E t t i
Taiwan
Film
distribution,
video
t
d
ti
d
856,125
856,125
11,868,528
93.59
( 246,401)
( 10,763)
( 10,073)
〞
〞
Benmeng
Taiwan
Dyeing and finishing of
l th
i
-
1,709,291
-
-
-
-
( 834)
Note 4
〞
CMC
E t t i
Taiwan
Film
production
and
di t ib ti
i d
t
714,888
714,888
66,400,000
100.00
50,754
7,932
7,932
Subsidiary of
th C
〞
Transtouch
Taiwan
Production and sales of
t
h
l
d
th
515,768
515,768
15,353,223
52.60
376,723
( 32,645)
( 16,047)
〞
〞
Sun Well
Taiwan
Production and sales of
thi
fil
l
ll
3,516,412
3,516,412
154,991,112
98.82
( 848,093)
( 74,565)
( 73,685)
〞
〞
Sun Q
Taiwan
Production and sales of
t lli
ili
l
664,676
664,676
64,052,000
58.20
( 22,310)
( 1,806)
( 1,051)
〞
〞
Deltamac
Taiwan
Sales of audio-visual CD
d
t
377,635
377,635
14,892,015
38.91
176,181
2,428
66
〞
〞
CMC
E t t i
Taiwan
Shopping mall business
260,000
220,000
13,300,000
100.00
97,022
( 35,595)
( 35,595)
〞
EMCH
F5
U.S.
Professional
investment
3,704,046
2,346,049
23,464
100.00
1,456,356
( 38,442)
-
Sub-subsidiary
f th
〞
MFLLC
U.S.
Professional
investment
1,283,980
1,283,980
-
100.00
360,576
( 69,213)
-
〞
〞
Jet-Thai
Thailand
Production and sales of
ti
l di
4,207,638
4,207,638
49,200,416
100.00
559,684
215,506
-
〞

Table 9 Page 1

201 -

Investor
Name of
~~It~~
Location
Principal Business Original Investment Cost
Shares Held at the End of Period
End of Current Period
End of Last Year
Number of Shares
Percentage
~~%~~
Carrying amount
Profit or Loss on Investee
~~Nt 22~~
Investment Gains or
~~L Rid~~
Remarks

~~nvesee~~
~~()~~
~~(oe ())~~
~~osses ecognze~~
EMCH
VJP
Japan
Trading of storage media and
electronic products
$16,368
$2,476
5,900
100
$29,347
$13,901
-
Sub-subsidiary
of the
〞
VUS
U.S.
Trading of storage media and
electronic products
-
1,418,407
-
-
-
-
-
〞
〞
VAU
Australia
Trading of storage media and
electronic products
411,105
411,105
100,000
100
374,806
43,456
-
〞
〞
VGmbH
Germany
Trading of storage media and
electronic products
731,912
731,912
-
100
822,380
67,992
-
〞
〞
VHK
Hong Kong
Trading of storage media and
electronic products
136,683
52,383
1,170,500
100
130,368
( 3,386)
-
〞
〞
Others
Others
-
-
-
-
( 7,742)
-
-
Note 3
F5
HOTAN
U.S.
Trading of electronic products,
including floppy discs and optical
discs
406,287
466,697
14,990,000
100
109,879
( 45,360)
-
Subsidiary of
F5
〞
VUS
U.S.
Trading of storage media and
electronic products
1,418,407
-
-
100
1,337,446
8,857
-
〞
CIA
SuperNet
British Virgin
Islands
Professional investment company
577,337
577,337
5,720,085
100
425,785
( 8,420)
-
Sub-subsidiary
of the
〞
Others
Others
-
-
-
-
78,516
-
-
Note 3
Zhong Jia
CIA
Cayman IslandsProfessional investment company
111,185
111,185
4,692,049
13.65
95,870
( 10,277)
-
Subsidiary of
the Company
〞
Benmeng
Taiwan
Dyeing and finishing of cloth,
weaving, processing, and trading
of various textiles, as well as
-
483,606
-
-
-
-
-
Note 4
〞
Vie
Show
Cinemas
Taiwan
Operation and management of
cinemas,
restaurants,
and
amusement parks
14,090
14,090
23,970,000
29.96
299,180
( 210,861)
-
Subsidiary of
the Company
Investee
measured
〞
Others
Others
-
-
-
-
50,815
-
-
Note 3

Note 1 If a public company has a foreign holding company and the consolidated financial report is the main financial report according to local laws and regulations, the disclosure of information about the foreign investee may only include the relevant information of the holding company.

Note 2: In cases other than those described in Note 1, the following information shall be provided:

(1) "Name of Investee", "Location", "Principal Business", "Original Investment Cost", and "Holdings, End of Period" shall be entered in order according to the investment situation of the (public) Company and the status of investment by each investee directly or indirectly controlled, and the relationship between each investee and the (public) Company shall be indicated in the Remarks column (e.g., a subsidiary or a sub-subsidiary).
(2) In the column "Profit or Loss on Investee", the current profit and loss on each investee shall be entered.
(3) In the column "Investment Gains or Losses Recognized for Current Period", only the profit and loss on each investee directly invested by the (public) Company and each investee measured under the equity method recognized by the Company shall be entered, and the rest of the investees are exempted from disclosed in this regard. Where the "gains and losses on subsidiaries that are invested directly are recognized for the current period," it shall be confirmed that the gains and losses on the subsidiaries have included their investment gains and losses that shall be recognized in accordance with the regulations.

Note 3: The Company did not directly recognize investment gains and losses.

Note 4: On March 4, 2020, the Company's board of directors resolved to sell the equity of the company, and the settlement was completed on March 5, 2020, and, thus lost control over the company. Therefore, it was no longer a subsidiary of the Group on December 31, 2020.

Table 9 Page 2

202 -

TABLE 10

CMC Magnetics Corporation and Its Subsidiaries

Information on Investments in Mainland China - Basic Information For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Name of
Principal
Paid-in Capital
Investment
Accumulated

Amount of Investment Remitted
Remitted to Mainland China Remitted back to Taiwan
Accumulated
Current Profit or
The
Investment
Carrying
Accumulated
Remarks

Jiangsu
Production
$1,345,476
2
$1,345,476 $-
$-
1,345,476
($ 82,930)
97 ( $80,442)
$378,954 $-
Note 2(2)B
Jiangsu
Production
777,852
2
777,852-
-
777,852
( 7,680)
100 ( 7,680)
119,023-
Note 2(2)B
Nantong
Production
35,678
2
35,678-
-
35,678 ( 14)
49
( 7)
7,891-
Note 2(2)B
Sun
R&D
and
14,786
2
14,786-
-
14,786
1,686
50
843 ( 21,833)-
Note 2(2)B
Company
Accumulated Outward
Investment Amount
Limit on Investment Amount
CMC
$3,139,894
$3,708,536
$11,592,991

Note 1: There are three types of methods for investment in mainland China. Just enter the code:
(1). Direct investment in mainland China
(2). Indirect investment in mainland China through third-region companies: Investment in companies in mainland China through EMCH.
(3). Other methods
Note 2: Investment gains (losses) recognized for the current period:
(1) If there is no investment gains (losses) recognized due to the investment still being in the development stage, it shall be indicated.
(2) The investment gains (losses) are recognized based on the three following methods, which shall be indicated:
- A. The financial statements certified by international accounting firms that has partnership with CPAs of Republic of China.
- B. The financial statements that have been audited by the parent company's CPAs in Taiwan.
- C. Others
Note 3: The numbers related to this table shall be presented in NTD.

Note 4: Individual companies that have been liquidated will not be disclosed.

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Table 10 Page 1

203 -

TABLE 11

CMC Magnetics Corporation and Its Subsidiaries

Information on major shareholders December 31, 2020

Name of Major Shareholder	Shares
	Number of Shares Held Shareholding Percentage
Wong, Ming-Sen	91,978,038 7.93

Note 1: The major shareholders in this table are shareholders holding more than 5% of the ordinary and preference shares (including treasury stocks) that have completed delivery of non-physical registration on the last business day of each quarter calculated by the Taiwan Depository & Clearing Corporation.

However, share capital recorded in the Company's financial statements and the number of shares actually delivered by the Company with the dematerialized registration completed may differ due to different calculation bases.

Note 2: If the information above is for the shares entrusted by shareholders to a trust, the aforesaid information shall be disclosed by the individual trust account opened by the trustees. For information on shareholders, who declare to be insiders holding more than 10% of shares in accordance with the Securities and Exchange Act, and their shareholdings include their shareholdings plus the shares entrusted to the trust and with the right to make decisions on trust property, please refer to MOPS.

Table 11 Page 1

204 -
V. A Parent Company Only Financial Statement for the Most Recent Fiscal Year, Certified by CPAs

Independent Auditors' Report

(2021) Order Cai-Shen-Pao No. 20004289

To CMC Magnetics Corporation,

Audit Opinion

We have reviewed the accompanying parent company alone balance sheets of CMC Magnetics Corporation (the “Company”) for the years ended December 31, 2020 and 2019 and the relevant parent company alone statements of comprehensive income, changes in equity and cash flows for the years then ended, and relevant notes, including a summary of significant accounting policies “(collectively referred to as the parent company only financial statements)”.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019 and for the years then ended, and its standalone financial performance and its standalone cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers based on our audit results and the audit reports of other certified public accountants (CPAs)(refer to the section of “Other matters”).

Basis for Audit Opinion

We conducted our audits in accordance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China for 2020, while in compliance with the Regulations Governing the Auditing and Attestation of Financial Statements by Certified Public Accountants, FSC Letter Jin-Guan-Zheng-Shen No. 1090360805 dated February 25, 2020, and the auditing standards generally accepted in the Republic of China for 2019. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements section of this 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. Based on our auditing results and other independent auditors' reports, we believe that we have obtained sufficient and appropriate audit evidence to serve as the basis for our opinion.

Key Audit Matters

Key audit matters refer to the most vital matters in our audit of the parent company only financial statements of the Company for the year ended December 31, 2020 based on our professional judgment. Such matters have been dealt with in the course of auditing and compiling the parent company only financial statements and in the preparation of our audit opinion. As such, we do not respond to each key matter individually.

205 -

Key audit matters of the parent company only financial statements of the Company for the year ended December 31, 2020 are stated as follows

Accounting estimation of inventory valuation

Description

Refer to Note 4(12) to the parent company only financial statements for accounting policies regarding inventory valuation; Note 5(2) for uncertainty of accounting estimates and assumptions regarding inventory valuation; and Note 6(6) for details of inventory accounting titles.

The Company mainly manufactures and sells optical discs. Due to frequent market price fluctuations in such inventories, there is a higher risk of inventory valuation losses. Since the monetary amount of Company's inventory is significant and there are many items that require manual judgment of obsolescence of inventories, we have listed the estimate of the Company's allowance for inventory valuation losses as one of the key audit matters for the current year.

Corresponding audit procedures

This matter covers the Company and some of its subsidiaries (investments accounted for using the equity method). Our major audit procedures executed are as follows:

Assess the policy adopted for its allowance for valuation loss on its inventories based on the understanding of the Company's operations and the nature of the industry.
Test whether the basis for the net realizable value is consistent with the policies set by the Company, and randomly inspect the correctness of the selling prices of individual inventory part numbers and the way the net realized value is calculated.
Acquire obsolete inventory details that have been identified and approved by the management, inspect the relevant information and verify it based on the records in the account.

Evaluation of impairment of property, plant and equipment

Description

For the accounting policies for impairment of property, plant and equipment and non-financial assets, please refer to Notes 4(14) and 4(19) of the parent company only financial statements; for the uncertainty of accounting estimates and assumptions for impairment of property, plant and equipment, please refer to Note 5(2) of the parent company only financial statements; for the description of impairment accounting items of property, plant and equipment and non-financial assets, please refer to Notes 6(8) and 6 (11) of the parent company only financial statements.

The Company estimates the recoverable amount of property, plant and equipment based on value in use, which serves as the basis for impairment assessment. Since the value-in-use evaluation process involves the judgment of the management, any changes in economic conditions or changes in the Company’s strategy may cause impairment in the future. Therefore, we have listed the impairment

206 -

assessment of the Company’s property, plant and equipment as one of the key audit items for the current year.

Corresponding audit procedures

This matter covers the Company and some of its subsidiaries (investments accounted for using the equity method). Our major audit procedures executed are as follows:

Recalculate relevant amounts to check the correctness of the management's relevant calculations of the recoverable amount of assets with signs of impairment at the balance sheet date.
Understand and evaluate whether the Company’s asset impairment assessment procedures and accounting policies are consistent with accounting principles and adopted consistently, including methods used by management to determine the recoverable amount of individual assets.
Obtain the evaluation information used by the management to determine the recoverable amount based on the asset usage model and industry characteristics, evaluate and determine the reasonableness of the independent cash flow of the asset group, the useful life of the asset, and the possible future income and expenses.

Other Matters – Audits by other CPAs

The financial statements of some of the subsidiaries and investees under the equity method that are included in the parent company only financial statements of the Company were not audited by us but by other CPAs. Therefore, the opinions issued by us regarding the amounts listed in such subsidiary financial reports from the parent company only financial statements mentioned above are based on the audit report from other CPAs. The amount of investment in the aforementioned companies using the equity method as of December 31, 2020 and 2019 was NT$2,020,878 thousand and NT$2,954,517 thousand, respectively, accounting for 8.62% and 12.24% of total assets, respectively. For the year ended December 31, 2020 and 2019, the comprehensive income recognized for the aforementioned companies was NT$64,122 thousand and NT$(1,914,014) thousand, respectively, accounting for (143.97%) and (745.99%) of the total comprehensive income, respectively.

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

The responsibilities of the management are to prepare the parent company only financial statements with fair presentation in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and to maintain necessary internal control associated with the preparation in order to ensure that the financial statements are free from material misstatement arising from fraud or error.

In preparing the parent company only financial statements, the management is responsible for assessing the ability of the Company in continuing as a going concern, disclosing relevant matters, and adopting the going concern basis of accounting unless the management intends to liquidate the Company or cease the operations without other viable alternatives.

207 -

The governance bodies of the Company (including the Audit Committee) are responsible for supervising the financial reporting process.

Auditor's responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance on whether the parent company only financial statements as a whole are free from material misstatement arising from fraud or error, and to issue an independent auditors' report. Reasonable assurance is a high-level 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 may be caused by fraud or errors. If the amounts of misstatements, either separately or in aggregate, could reasonably be expected to influence the economic decisions of the users of the parent company only financial statements, they are considered material.

Identify and assess the risks of material misstatement arising from fraud or error within the parent company only financial statements; design and execute appropriate countermeasures in response to said risks, and obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error.
Understand the internal control related to the audit in order to design appropriate audit procedures under the circumstances, while not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
Evaluate the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by the management.
Conclude on the appropriateness of the management's adoption of the going concern basis of accounting based on the audit evidence obtained and whether a material uncertainty exists for events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we are of the opinion that a material uncertainty exists for said events or conditions, we shall remind users of the parent company only financial statements to pay attention to relevant disclosures in said statements within our audit report. If such disclosures are inadequate, we need to modify our opinion. Our conclusions is based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the parent company only financial statements (including relevant notes), and whether the parent company only financial statements adequately present the relevant transactions and events.
208 -
Obtain sufficient and appropriate audit evidence concerning the financial information of entities within the Company, to express an opinion on the parent company only financial statements. We are responsible for guiding, supervising, and performing the audit and forming an audit opinion on the Company.

From the matters communicated with the governance bodies, we determined the key audit matters for the audit of the Company's parent company only financial statements for the year ended December 31, 2020. We describe these matters in our audit 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.

PricewaterhouseCoopers Taiwan

Yu, Shu-Fen

CPA

Chang, Shu-chiung

Financial Supervisory Commission

Approval No.: Jin-Guan-Zheng-Shen No. 1030027246 Former Financial Supervisory Commission, Executive Yuan, Approval No.: Jin-Guan-Zheng-Shen No. 0990042602

March 31, 2021

209 -

Parent Company Only Balance Sheet For the Years Ended December 31, 2020 and 2019 Unit: NT$ thousands

Assets	December 31, 2020 Amount % $ 759,771 3 3,303,756 14 2,400 - 242 - - - 392,301 2 763,224 3 166,492 1 1,416,015 6 1,140,733 5 47,117 - 7,992,051 34 1,304,456 6 47,441 - 8,345,991 36 4,235,057 18 11,841 - 759,485 3 93,161 - 217,821 1 432,449 2 15,447,702 66 $ 23,439,753 100	December 31, 2019	December 31, 2019
	Amount $ 759,771 3,303,756 2,400 242 - 392,301 763,224 166,492 1,416,015 1,140,733 47,117 7,992,051 1,304,456 47,441 8,345,991 4,235,057 11,841 759,485 93,161 217,821 432,449 15,447,702 $ 23,439,753	Amount $ 1,101,394 3,267,508 8,400 1,094 4,330 935,139 275,234 154,109 1,879,346 1,147,662 93,233 8,867,449 365,000 32,160 8,642,496 4,840,399 22,265 531,472 105,379 248,585 475,301 15,263,057 $ 24,130,506	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Financial assets at amortized cost - current 1150 Notes receivable, net 1160 Notes receivable - related parties, net 1170 Net trade receivables 1180 Trade receivables - related parties, net 1200 Other receivables 1210 Other receivables from related parties 130X Inventories 1479 Other current assets - others 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non-current 1517 Financial assets at fair value through other comprehensive income - non-current 1550 Investments accounted for using the equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment properties, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets			5 13 - - - 4 1 1 8 5 -
			37
			2 - 36 20 - 2 - 1 2
			63
			100

(Continued on the next page)

210 -

Liabilities and equity	December 31, 2020 Amount % 110,341 1 53,173 - 86,349 - 342,211 2 7,365 - 415,098 2 25,591 - 9,957 - 541,000 2 15,027 - 1,606,112 7 1,589,000 7 21,397 - 1,977 - 1,244,692 5 2,857,066 12 4,463,178 19 11,588,812 50 7,642,963 32 21,379 - 129,554 1 406,133 2 18,976,575 81 23,439,753 100	December 31, 2019	December 31, 2019
	Amount 110,341 53,173 86,349 342,211 7,365 415,098 25,591 9,957 541,000 15,027 1,606,112 1,589,000 21,397 1,977 1,244,692 2,857,066 4,463,178 11,588,812 7,642,963 21,379 129,554 406,133 18,976,575 23,439,753	Amount 150,000 77,431 321,338 205,175 7,749 300,556 89,087 11,686 875,460 35,369 2,073,851 1,485,000 21,954 10,638 1,312,521 2,830,113 4,903,964 11,588,812 7,700,295 - 213,793 276,358 19,226,542 24,130,506	%
Current liabilities 2100 Short-term borrowings 2130 Contract liabilities – current 2150 Notes payable 2170 Trade payables 2180 Trade payables - related parties 2200 Other payables 2220 Other receivables - related parties 2280 Lease liabilities - current 2320 Long-term liabilities due within one year or one operating cycle 2399 Other current liabilities - others 21XX Total current liabilities Non-current liabilities 2540 Long-term borrowings 2570 Deferred income tax liabilities 2580 Lease liabilities - non-current 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity Share capital 3110 Common stock Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Retained earnings Other equity 3400 Other equity 3XXX Total equity Significant contingent liabilities and unrecognized contractual commitments Material events after the balance sheet date 3X2X Total liabilities and equity			1 - 1 1 - 1 - - 4 -
			8
			6 - - 6
			12
			20
			48 32 - 1 1
			80
			100

The notes attached are part of the Parent Company Only Financial Statements, and shall be read together.

Chairman: Wong, Ming-Sen

Manager: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

211 -

CMC Magnetics Corporation

Parent Company Only Statement of Comprehensive Income For the Years Ended December 31, 2020 and 2019 Unit: NT$ thousands, except for earnings per share

						2020					2019
	Items		Notes			Amount	%				Amount	%
4000	Operating revenue		6(20) and 7		$	3,935,194	100			$	5,504,373	100
5000	Operating costs		6(6)(15)(25) and 7	(		3,286,936)(	83)		(		4,616,614) (	84)
5900	Gross operating profit					648,258	17				887,759	16
5910	Unrealized (gains) losses on sales			(		108,828 ) (		3 )			2,780		-
5920	Realized losses on sales			(		2,780)		-	(		2,022)		-
5950	Gross operating profit, net					536,650	14				888,517	16
	Operating expenses		6(15)(25)
6100	Selling and marketing expenses			(		234,321 ) (		6 )	(		219,728 ) (		4 )
6200	Administrative expenses			(		130,572 ) (		3 )	(		140,471 ) (		2 )
6300	Research and development expenses			(		219,738 ) (		6 )	(		204,830 ) (		4 )
6450	Expected credit impairment (losses) gains		12(2)	(		72,988)(		2)			5,022		-
6000	Total operating expenses			(		657,619)(	17)		(		560,007) (	10)
6900	Operating (losses) gains			(		120,969)(		3)			328,510		6
	Non-operating income and expenses
7100	Interest revenue		6(21) and 7			27,937		1			24,043		-
7010	Other income		6(22) and 7			212,007		6			115,028		2
7020	Other gains and losses		6(2)(23)	(		183,729 ) (		5 )			33,718		1
7050	Finance costs		6(24)	(		41,583 ) (		1 )	(		42,992 ) (		1 )
7070	Share of profit (loss) on subsidiaries,
	associates, and joint ventures accounted
	for using equity method					247,919		6	(		219,993) (		4)
7000	Total non-operating income and expenses					262,551		7	(		90,196) (		2)
7900	Net income before tax					141,582		4			238,314		4
7950	Income tax expense		6(26)	(		30,509)(		1)	(		9,609)		-
8200	Net profit				$	111,073		3		$	228,705		4
	Other comprehensive income, net
	Items that will not be reclassified to
	profit or loss
8311	Remeasurement of defined benefit plans		6(15)	(	$	1,843 )		-		$	14,009		-
8316	Unrealized gains (losses) on investments		6(3)(19)
	in equity instruments at fair value
	through other comprehensive income					17,215		-			11,128		-
8330	Share of other comprehensive income on
	subsidiaries, associates, and	joint
	ventures accounted for using the equity
	method – not reclassified to profit or	loss		(		45,997 ) (		1 )			35,959		1
8349	Income tax related to items that will not		6(26)
	be reclassified					241		-	(		3,012)		-
8310	Sum of items that will not be reclassified
	to profit or loss			(		30,384)(		1)			58,084		1
	Items that may be reclassified
	subsequently to profit or loss
8361	Exchange differences on translating the		6(19)
	financial statements of foreign operations			(		124,129 ) (		3 )	(		10,031 )		-
8380	Share of other comprehensive income on		6(19)
	subsidiaries, associates, and	joint
	ventures accounted for using the equity
	method – may be reclassified to profit or
	loss			(		1,097)		-	(		20,183)		-
8360	Sum of items that may be reclassified
	subsequently to profit or loss			(		125,226)(		3)	(		30,214)		-
8500	Total comprehensive income for current
	period			(	$	44,537)(		1)		$	256,575		5
	Earnings per share		6(27)
9750	Basic earnings per share				$		0.10			$		0.20
9850	Diluted earnings per share				$		0.10			$		0.20

The notes attached are part of the Parent Company Only Financial Statements, and shall be read together. Chairman: Wong, Ming-Sen Manager: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

212 -

CMC Magnetics Corporation

Parent Company Only Statements of Changes in Equity For the Years Ended December 31, 2020 and 2019 Unit: NT$ thousands

Retained earnings Notes Commonstock Capitalsurplus Legal reserve Unappropriated earnings (losses to be compensated) 2019 Balance as of January 1, 2019 $ 17,741,264 $ 7,542,770 $ ( $ 5,671,352 ) Net profit - - - 228,705 Other comprehensive income for current period 6(19) - - - 12,047 Total comprehensive income for current period - - - 240,752 Capital reduction to offset losses 6(16) ( 5,671,352 ) - - 5,671,352 Treasury stock repurchase 6(16) - - - - Cancellation of treasury shares 6(16)(17) ( 481,100 ) 157,093 - - Changes in ownership interests in subsidiaries 6(17) - 355 - - Difference between the equity price of subsidiary actually acquired or disposed of and the book value 6(17) - 77 - ( 23,965 ) Disposal of equity instruments measured at fair value through other comprehensive income 6(19) - - - ( 2,994 ) Balance as of December 31, 2019 $ 11,588,812 $ 7,700,295 $ $ 213,793 2020 Balance as of January 1, 2020 $ 11,588,812 $ 7,700,295 $ $ 213,793 Net profit - - - 111,073 Other comprehensive income for current period 6(19) - - - ( 962 ) Total comprehensive income for current period - - - 110,111 Appropriation of earnings for 2019: 6(18) Legal reserve - - 21,379 ( 21,379 ) Cash dividends 6(17) - ( 57,944 ) - ( 173,832 ) Changes in ownership interests in subsidiaries 6(17) - 612 - - Disposal of equity instruments measured at fair value through other comprehensive income 6(3)(19) - - - 861 Disposal of subsidiaries - - - - Balance as of December 31, 2020 $ 11,588,812 $ 7,642,963 $ 21, $ 129,554	Notes	Commonstock	Capitalsurplus	Retained earnings	Retained earnings		Otherequity	Equity directly associated with non-current assets held for sale	Treasury shares	Total
				Legal reserve	Unappropriated earnings (losses to be compensated)	Exchange differences on translating the financial statements of foreign operations	Unrealized gains or losses on financial assets at fair value through other comprehensive income
						( $ 115,422 ) ( $ 179,753 ) - - ( 6,505 ) 46,037 ( 6,505 ) 46,037 - - - - - - - - - - - 2,994 ( $ 121,927 ) ( $ 130,722 ) ( $ 121,927 ) ( $ 130,722 ) - - ( 125,226 ) ( 29,422 ) ( 125,226 ) ( 29,422 ) - - - - - - - ( 861 ) 2,025 - ( $ 245,128 ) ( $ 161,005 )		$ ( $ 251,103 ) $ 19,066,404 - - 228,705 ( 23,709 ) - 27,870 ( 23,709 ) - 256,575 - - - - ( 72,904 ) ( 72,904 ) - 324,007 - - - 355 - - ( 23,888 ) - - - ( $ 23, ) $ - $ 19,226,542 ( $ 23, ) $ - $ 19,226,542 - - 111,073 - - ( 155,610 ) - - ( 44,537 ) - - - - - ( 231,776 ) - - 612 - - - 23,709 - 25,734 $ $ - $ 18,976,575

Chairman: Wong, Ming-Sen

The notes attached are part of the Parent Company Only Financial Statements, and shall be read together. Manager: Wong, Ming-Sen Accounting Manager: Pi-yin Yang

213 -

CMC Magnetics Corporation Parent Company Only Statements of Cash Flows For the Years Ended December 31, 2020 and 2019 Unit: NT$ thousands

Cash flows from operating activities Net income before tax for the period Adjustments Adjustments for Depreciation expenses Amortization expenses Depreciation expenses not for self-use (listed in other gains and losses) Expected credit impairment losses (gains) Net losses (gains) on financial assets and liabilities at fair value through profit and loss Interest expenses Interest revenue Dividend income Share of profit (loss) on subsidiaries, associates, and joint ventures accounted for using equity method Gains on disposal of property, plant and equipment and other non-current assets Realized losses between associates Unrealized gains (losses) between associates Gains on disposal of investments Gains on lease modification Changes in assets/liabilities related to operating activities Net changes in operating assets Financial assets mandatorily at fair value through profit or loss Notes receivable (including related and non-related parties) Trade receivable (including related and non-related parties) Other receivables (including related and non-related parties) Inventories Other current assets Net changes in operating liabilities Financial liabilities at fair value through profit or loss Contract liabilities Notes and trade payable (including related and non-related parties) Other payables (including related and non-related parties) Other current liabilities Net defined benefit liabilities Cash outflow from operating activities Interest received Dividends received Interest paid Income tax paid Net cash outflow from operating activities	Notes For the Year Ended December 31, 2020 $ 141,582 6(8)(9)(25) 506,824 6(25) 53,155 6(8)(9)(10)(23) 33,835 12(2) 72,988 ( 6(2)(23) 47,879 ( 6(24) 40,318 6(21) ( 27,937 ) ( 6(22) ( 110,445 ) ( ( 247,919 ) 6(23) ( 1,095 ) ( 2,780 108,828 ( 6(23) ( 12,531 ) 6(9) ( 1 ) ( 1,007,708 ) ( 5,192 29,925 ( 73,181 ) ( 6,929 ( 46,114 ( ( 9,259 ) ( ( 24,258 ) ( ( 75,178 ) ( 103,708 ( ( 20,342 ) ( 88,440) ( ( 498,237 ) ( 27,953 110,397 ( 40,635 ) ( ( 57) ( ( 400,579) (	For the Year Ended December 31, 2019 $ 238,314 548,552 40,744 20,197 5,022 ) 74,679 ) 33,710 24,043 ) 44,750 ) 219,993 2,247 ) 2,022 2,780 ) - - 1,509,319 ) 4,445 450,422 56,033 ) 223,146 ) 31,119 ) 3,937 ) 16,455 ) 548,592 ) 86,269 ) 4,555 14,402) 1,079,839 ) 24,042 45,069 34,772 ) 2,350) 1,047,850)

(Continued on the next page)

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Cash flows from investing activities
Decrease (increase) in receivables from financing
provided to related parties
Price of acquisition of financial assets mandatorily at
fair value through other comprehensive income
Proceeds from disposal of financial assets at fair value
through other comprehensive income
Refund from capital reduction related to financial
assets at fair value through other comprehensive
income
Increase in financial assets at amortized cost
Acquisition of investments accounted for using the
equity method
Proceeds from disposal of investments accounted for
using the equity method
Refund from capital reduction related to investments
accounted for using the equity method
Price of acquisition of property, plant and equipment
Proceeds from disposal of property, plant and
equipment and other non-current assets
Acquisition of intangible assets
Increase in refundable deposits
Increase in other non-current assets
Increase in prepayments for equipment (listed in other
non-current assets)
Dividends received
Net cash inflow from investing activities
Cash flows from financing activities
Decrease in short-term borrowings
Decrease in payable for financing provided by related
parties
Increase in long-term notes payable
Long-term borrowings taking place for current period
Repayment of long-term borrowings for current
period
Repayment of principal of lease liabilities
Increase in guarantee deposits received
Cost of repurchase of treasury shares
Cash dividends distributed
Net cash outflow from financing activities
Decrease in cash and cash equivalents for current
period
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period

Notes
For the Year Ended
December 31,
2020
For the Year
Ended December
31, 2019
$ 476,210
( $ 723,070 )
-
(
4,471 )
7
-
6,222
1,934
9,077
6,000
(
6,000 )
7
(
40,000 )
(
112,200 )
46,697
271
7
-
700,000
6(28)
(
898 )
(
662 )
1,236
2,493
6(28)
(
104,482 )
(
3,844 )
(
479 )
(
801 )
(
16,528 )
(
46,856 )
6(28)
(
102,057 )
(
165,827 )
305,289
2,107,243
572,922
1,761,575
6(29)
(
39,659 )
(
100,000 )
-
(
1,400,000 )
6(29)
200,000
-
6(29)
621,000
1,960,000
6(29)
(
1,051,460 )
(
2,707,940 )
6(9)(29)
(
12,896 )
(
13,265 )
825
-
6(16)
-
(
80,266 )
6(18)
(
231,776)
-
(
513,966)
(
2,341,471)
(
341,623 )
(
1,627,746 )
1,101,394
2,729,140
$ 759,771
$ 1,101,394

The notes attached are part of the Parent Company Only Financial Statements, and shall be read together. Chairman: Wong, Ming-Sen Manager: Wong, Ming-Sen

Accounting Manager: Pi-yin Yang

215 -

CMC Magnetics Corporation

Notes to the parent company only financial statements For the Years Ended December 31, 2020 and 2019

Unit: NT$ thousands (Unless specified otherwise)

1. Company History

CMC Magnetics Corporation (hereinafter referred to as the "Company") was incorporated in the Republic of China. The main business items of the Company are the manufacturing and sale of consumer electronic products, including optical discs. The Company’s shares have been listed on the Taiwan Stock Exchange for trading since February 17, 1992.

2. Date and Procedure for Approval of Financial Statements

The parent company only financial statements were approved by the board of directors on March 25, 2021 for release.

3. Application of New and Amended Standards and Interpretations

a. Effect of the adoption of new issuance of or amendments to International Financial Reporting Standards ("IFRS") as endorsed by the Financial Supervisory Commission ("FSC")

The following table summarizes new, revised, and amended standards and interpretations endorsed by FSC applicable in 2020:

The standards and interpretations above have no significant impact on the Company's financial position and financial performance based on the Company's reasonable assessment.

b. Effect of the new issuance of or amendments to IFRSs as endorsed by the FSC but not yet adopted

The following table summarizes the new, revised, and amended standards and interpretations of IFRSs endorsed by the FSC that are applicable in 2021:

Effective Date New, Revised, and Amended Standards and Interpretations Announced by IASB Amendments to IFRS 4 "Temporary Exemption from January 1, 2021 Applying IFRS 9" Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 January 1, 2021 - “Interest Rate Benchmark Reform - Phase 2”

The standards and interpretations above have no significant impact on the Company's financial position and financial performance based on the Company's assessment.

216 -

c. Effects of IFRSs issued by IASB but not yet endorsed by the FSC

The following table sets out the criteria and explanations for the new releases, amendments and revisions of the IFRSs that have been published by the IASB but not yet endorsed by the FSC:

dorsed by the FSC:
	Effective Date
	Announced by
New, Revised, and Amended Standards and Interpretations	IASB
Amendments to IFRS 3 "Reference to the Conceptual Framework"	January 1, 2022
Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets	To be
between an Investor and its Associate or Joint Venture"	determined by
	the IASB
Amendments to IFRS 17 "Insurance Contracts"	January 1, 2023
Amendments to IFRS 17 “Insurance Contracts”	January 1, 2023
Amendments to IAS 1 “Classification of Liabilities as Current or Non-current”	January 1, 2023
Amendments to IAS 1 "'Disclosure of Accounting Policies"	January 1, 2023
Amendments to IAS 8 "Definition of Accounting Estimates"	January 1, 2023
Amendments to IAS 16 "Property, Plant and Equipment – Proceeds	January 1, 2022
before Intended Use"
Amendments to IAS 37 "Onerous Contracts - Cost of Fulfilling a Contract"	January 1, 2022
Annual Improvements to IFRSs 2018-2020 Cycle	January 1, 2022

The Company has assessed that the standards and interpretations above have no significant influence on the Company's financial position and financial performance, except as those indicated below:

1) Amendments to IAS 1 "'Disclosure of Accounting Policies"

2) Amendments to IAS 8 "Definition of Accounting Estimates"

4. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of the parent company only financial statements are set out below. Unless otherwise specified, the policies shall be applicable to all reporting periods presented.

a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the

217 -

Regulations Governing the Preparation of Financial Reports by Securities Issuers.

b. Basis of preparation

1) Except for the following significant items, the parent company only financial statements have been prepared on the historical cost basis:
a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
b) Financial assets at fair value through other comprehensive income.
c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
2) The preparation of financial statements has been in conformity with IFRSs endorsed by the FSC, requiring the use of certain critical accounting estimates. It also requires the management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

c. Foreign currency translation

The currency of the main economic environment in which the Company operates (i.e. functional currency) is measured by the Company. The parent company only financial statements are presented in the Company’s functional currency, the New Taiwan dollars.

1) Foreign currency transactions and balances
a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
b) Balances of monetary assets and liabilities denominated in foreign currencies are adjusted at the spot exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from such adjustments are recognized in profit or loss
c) Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value through profit or loss, are translated at the exchange rates prevailing at the balance sheet date, where their translation differences are recognized in profit or loss as part of the fair value gain or loss. Non-monetary assets and liabilities denominated in foreign currencies measured at fair value through other comprehensive income are translated at the exchange rates prevailing at the balance sheet date, where their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the initial transaction dates.
d) All other foreign exchange gains or losses based on the nature of the transactions are presented in the statement of comprehensive income in the category of "other gains and losses."
2) Translation of foreign operations
a) The operating results and financial positions of all the Group's entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
218 -
```
 - i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

 - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of the period; and

 - iii. All resulting exchange differences are recognized in other comprehensive income.
```
- b) When the foreign entity partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. However, when the Company retains partial interest in the associate, after losing significant influence over the former foreign associate, such a transaction shall be accounted for as disposal of all interests in the foreign operation.
- c) When the foreign operation that is partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interests of the foreign operation. However, if the Company still retains partial interests in the former foreign subsidiary after losing control of the former foreign subsidiary, such a transaction shall be accounted for as disposal of all interest in the foreign operation.
- d) Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at balance sheet date.
d. Classification of Current and Non-current Assets and Liabilities
1) Assets that meet one of the following criteria are classified as current assets:
- a) Assets that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle.
- b) Assets held primarily for the purpose of trading.
- c) Assets that are expected to be realized within twelve months from the balance sheet date.
- d) Cash or cash equivalents, excluding assets restricted from being exchanged or used to settle a liability for at least 12 months after the balance sheet date.

The Company classifies assets not meeting the aforesaid criteria into non-current assets.

2) Liabilities that meet one of the following criteria are classified as current liabilities:
a) Liabilities that are expected to be settled within the normal operating cycle.
b) Assets held primarily for the purpose of trading.
c) Liabilities that are expected to be settled within 12 months after the balance sheet date.
d) Liabilities with a repayment deadline that cannot be unconditionally deferred for at least 12 months after the balance sheet date. 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.

The Company classifies liabilities not meeting the aforesaid criteria into non-current liabilities.

219 -

e. Cash equivalents

f. Financial assets at fair value through profit or loss (FVTPL)

1) Financial assets that are not measured at amortized cost or at fair value through other comprehensive income (FVTOCI).
2) Regular way purchases and sales of financial assets at FVTPL are accounted for on the trade date.
3) The Company's initial recognition is on a fair value basis, with relevant transaction costs recognized in profit or loss, and subsequently to fair value, and gains or losses are recognized in profit or loss.
4) When the right to receive dividends is established, the future economic benefits related to dividends may flow to the Company, and when the amount of dividends can be reliably measured, the Company recognizes dividend income in profit or loss.

g. Financial assets at FVTOCI

1) Refers to the irrevocable election made at initial recognition that allows the Company to present fair value changes of equity investment not held for trading in other comprehensive income; or debt investment that meets all the criteria simultaneously:
a) The objective of the Company’s business model is achieved both by collecting contractual cash flows and selling financial assets.
b) The contract terms of the financial asset generate cash flow on a specific date, which is entirely the interest on the payment of the principal and the amount of principal outstanding.
2) The Company's financial assets measured at FVTOCI in accordance with trading conventions, are accounted for on the trade date.
3) At initial recognition, the Company measures the financial assets at fair value plus transaction costs, and subsequently measures the financial assets at fair value:
a) Any changes in the fair value of equity instruments are recognized in other comprehensive income, while subsequently accrued benefits or losses previously recognized in other comprehensive income are not then reclassified to profit or loss, but are transferred to retained earnings. The Company recognizes the dividend income in profit or loss when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company, and the amount of the dividend can be measured reliably.
b) The changes in fair value of debt instruments are recognized in other comprehensive income. Before derecognition, impairment loss, interest revenue, and gain or loss on foreign exchange are recognized in profit or loss. Upon derecognition, the accumulated gains or losses previously recognized in other comprehensive income are reclassified from equity to profit or loss.
220 -

h. Financial assets at amortized cost

1) Financial assets at amortized cost are those that meet all of the following criteria:
a) The objective of the Company's business model is achieved by collecting contractual cash flows.
b) The contract terms of the financial asset generate cash flow on a specific date, which is entirely the interest on the payment of the principal and the amount of principal outstanding.
2) The Company accounts for financial assets measured at amortized cost, which are in line with trade practices on the trade day.
3) At initial recognition, the Company measures the financial assets at fair value plus transaction costs, and subsequently adopts the effective interest method to recognize said assets as interest revenue and as impairment loss during the outstanding period according to the amortization procedure. During derecognition, the gains or losses are recognized in the profit or loss.
4) The Company’s time deposits which do not meet the condition of cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

i. Trade receivable and notes receivable

1) Trade receivable and notes receivable are accounts and notes of which the contractual right to consideration for goods sold or services rendered is unconditional.
2) These include interest-free short-term trade and notes receivables, where the effect of discounting is not material, and the Company measures the receivable by the original invoice amount.
3) The Company’s operating pattern of trade receivable that are expected to be factored is for the purpose of selling, and the trade receivable are subsequently measured at fair value, with any changes in fair value, recognized in profit or loss.

j. Impairment of financial assets

The Company, at each balance sheet date, considers all reasonable and corroborative information (including forward-looking one) based on the trade receivable that contains significant financial components. For those with no significant increase in credit risk since initial recognition, the loss allowance is measured at 12-month expected credit losses; for those with a significant increase in credit risk since initial recognition, the loss allowance is measured at the lifetime expected credit losses. For trade receivable that does not contain significant financial components, the loss allowance is measured at the lifetime expected credit losses.

k. Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

1) The contractual rights to receive the cash flows from the financial asset expire.
2) The contractual rights to receive cash flows of the financial asset have been transferred, and substantially all risks and rewards of ownership of the financial asset have been transferred.
3) The contractual rights to receive cash flows of the financial asset have been transferred; and the control over the financial asset has not been retained.
221 -

l. Inventories

Inventories are measured at cost and net realizable value, whichever is lower. The cost is calculated by the moving average method. The cost of finished goods and work-in-process comprises raw materials, direct labor, other direct costs, and relevant production overheads (allocated based on normal operating capacity) without including borrowing costs.

The item by item approach is employed when evaluating the lower of costs and net realizable value. Net realizable value is the balance of estimated selling price in the ordinary course of business less the estimated cost of completion and applicable variable selling expenses.

m. Investments accounted for using the equity method/subsidiaries and associates

1) A subsidiary refers to an entity under the control of the Company. When the Company is exposed to variable returns from the participation in the entity or is entitled to said variable returns, and has the ability to affect such returns through its power over the entity, the Company controls the entity.
2) Unrealized gains and losses between the Company and its subsidiaries have been eliminated. The accounting policies of the subsidiaries have been adjusted as necessary and are consistent with the policies adopted by the Company.
3) The Company’s share of profit or loss on subsidiaries after acquisition is recognized in profit or loss, whereas its share of other comprehensive income on subsidiaries after acquisition is recognized in other comprehensive income. When the share of loss from a subsidiary exceeds the Company's interests in that subsidiary, the Company continues to recognize the loss in proportion to its ownership percentage.
4) If the change in the ownership of a subsidiary does not result in the loss of control (transaction with non-controlling interests), it is treated as an equity transaction, that is, transactions with owners in their capacity as owners. The difference between the adjustment amount of non-controlling interests and the fair value of the consideration paid or received is directly recognized as equity.
5) When the Company loses control over a subsidiary, the retained investment in such former subsidiary is remeasured, and the remeasurement is regarded as the fair value of a financial asset on initial recognition, or as the cost of an investment in an associate or joint venture on initial recognition. Difference between fair value and carrying amount is recognized in profit or loss. For all amounts previously recognized in other comprehensive income related to said subsidiary, the accounting treatment is on the same basis as if the Group directly disposes of the relevant assets or liabilities, that is, the gains or losses previously recognized in other comprehensive income will be reclassified to profit or loss when the relevant assets or liabilities are disposed of, so when the control over the subsidiary is lost, the gains or losses will be reclassified from equity to profit or loss.
6) Associates are all entities over which the Company has significant influence without control. In general, it is an entity, in which at least 20% of its voting shares are directly or indirectly held by the Company. Investments in associates are accounted for using the equity method and are initially recognized at cost.
7) The Company's share of profit or loss on its associates after acquisition is recognized in profit or loss, and its share of other comprehensive income after acquisition is recognized in other comprehensive income. When the Company's share of losses on an associate equals or exceeds its interest in the associate (including any other unsecured receivables), the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
222 -
8) When changes in an associate's equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Company's ownership percentage of the associate, the Company recognizes the change in ownership interests in the associate in "capital surplus" in proportion to its ownership.
9) Unrealized gains or losses on transactions between the Company and its associates are eliminated in proportion to the Company's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of associates have been adjusted as necessary, and are consistent with the policies adopted by the Company.
10) Where an associate issues new shares and the Company fails to subscribe for or acquire new shares proportionately, which results in a change in the Company's ownership percentage of the associate but still maintains significant influence on the associate, the "capital surplus" and "investments accounted for using the equity method" shall be adjusted for the increase or decrease in the net value of the equity. Where its investment proportion decreases, in addition to the adjustments above, the profit or loss previously recognized in other comprehensive income due to decrease in its ownership interest and the profit or loss to be reclassified to profit or loss during the disposal of assets or liabilities shall be reclassified to profit or loss based on the proportion of decrease.
11) Upon loss of significant influence over an associate, the Company shall remeasure the remaining investment retained in the former associate at its fair value. Any difference between the fair value and the carrying amount is recognized in profit or loss for the period.
12) When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of by the Company directly. That is, if the gains or losses previously recognized in other comprehensive income will be reclassified to profit or loss when the relevant assets or liabilities are disposed of, when the loss has a significant impact on the associate, the gains or losses are reclassified from equity to profit or loss. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
13) When the Company disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, said amounts are transferred to profit or loss in proportion to the percentage of disposal.
14) In accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the current profit or loss and other comprehensive income in the parent company only financial statements shall be the same as those attributable to the owners of the parent company in the financial statements prepared on a consolidated basis. The owners’ equity in the parent company only financial statements shall be the same as the equity attributable to owners of the parent company in the financial statements prepared on a consolidated basis.
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n. Property, plant and equipment

1) Property, plant, and equipment are initially recognized in cost. Borrowing costs incurred during the construction period are capitalized.
2) Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the part replaced shall be derecognized. All other amount of repairs and maintenance are recognized as profit or loss during the financial period in which they are incurred.
3) Except for land which is not depreciated, other property, plant, and equipment are subsequently measured using the cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. If the components of property, plant and equipment are significant, they shall be separately depreciated.
4) The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets' residual values and useful lives differ from previous estimates or the patterns of consumption of the assets' future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8 "Accounting Policies, Changes in Accounting Estimates, and Errors," from the date of the change. Useful lives of property, plant and equipment are as follows:

Buildings and structures 2–50 years Machinery and equipment 2–11 years Others 2–7 years

o. Lease transactions with lessees—right-of-use assets / lease liabilities

1) Leased assets are recognized as right-of-use assets and lease liabilities on the date when they are available for use by the Company. When the lease contract is a short-term lease or lease of a low-value asset, the lease payments are recognized as an expense on a straight-line basis over the lease term.
2) When the lease contract is a short-term lease or lease of a low-value asset, the lease payments are recognized as an expense on a straight-line basis over the lease term. The lease liability is measured at amortized cost using the effective interest method subsequently, and the interest expense is recognized during the lease period. When a non-contractual modification causes a change in the lease term or lease payment, the lease liability will be reassessed and remeasured to adjust the right-of-use asset.
3) The right-of-use asset is recognized at cost at the lease commencement date. The cost comprises:
a) The originally measured amount of lease liabilities; and
b) Lease payments made at or before the commencement of the lease;
c) Any original direct costs incurred; and
d) The estimated cost of dismantling, removing an underlying asset, and restoring its location, or restoring the underlying asset to the state required in the terms and conditions of the lease.

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p. Investment property

q. Intangible assets

1) Trademark and franchise

2) The royalties paid for obtaining the patents are amortized based on the estimated useful years or the contract period.
3) Computer software is recognized at the cost of acquisition and amortized by the straight-line method based on the estimated useful life of one year.

r. Other assets - office ornaments (listed in other non-current assets-others)

s. Impairment of non-financial assets

1) The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount refers to the fair value of an asset less the cost of disposal or its value in use, whichever is higher. Except for goodwill, when circumstances contributed to the recognition of impairment loss of an asset in the previous period do not exist or are decreased, the recognized impairment loss is reversed to the carrying amount of an asset to the extent that it does not exceed the carrying amount (net of depreciation and amortization) if the impairment loss had not been recognized.
2) Goodwill, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use shall be regularly estimated for their recoverable amounts. An impairment loss is recognized when the amount of an asset’s carrying amount exceeds its recoverable amount. The impairment loss for impairment of goodwill will not be reversed in subsequent years.
3) Goodwill is allocated to cash-generating units for the purpose of impairment testing. This allocation is based on the judgment of the operating units, and the goodwill is allocated among cash-generating units or groups that are expected to benefit from goodwill generated from business entities.

t. Borrowings

1) Borrowings comprise long-term and short-term borrowings from banks. When the initial recognition of Company's borrowings is based on its fair value less transaction cost, for any subsequent difference between the price and redemption value after deducting transaction costs, interest expenses are recognized by the effective interest method during the outstanding period in profit or loss.
2) Fees paid on the establishment of borrowing facilities are recognized as transaction
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costs of the borrowing to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. When there is no evidence of the possibility that some or all the facility will be drawn down, the fee is recognized as a prepayment and amortized over the period of the facility to which it relates.

u. Trade and notes payables

1) Trade and notes payables refer to the debts incurred by purchase of raw materials, goods, or services on credit, and the notes payables incurred from both operating and non-operating activities.
2) The non-interest-bearing short-term notes and trade payables are measured at initial invoice amount as the effect of discounting is immaterial.

v. Derecognition of financial liabilities

The Company derecognizes a financial liability when the obligation under the contract is performed, canceled, or expires.

w. Offsetting of financial assets and liabilities

The financial assets and liabilities may be offset and the net amount is presented in the balance sheet when there is a legally enforceable right to offset the recognized amounts of the financial assets and liabilities and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

x. Non-hedging derivatives

y. Employee benefits

1) Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid and shall be recognized as expense in the period when the employees render service.

2) Pension

a) Defined contribution plans

b) Defined benefit plans

i. The net obligation under a defined benefit plan is calculated by discounting the amount of future benefits earned by employees for the services rendered in the current or the prior periods, and the amount recognized is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is computed by independent actuaries every year using the projected unit credit method. The discount rate employed is by reference either to the market yields on high quality corporate bonds of which the currency and duration are consistent with the currency and duration of the defined benefit plan, or to the market yields on government bonds (at the
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balance sheet date) in countries where there is no deep market for high quality corporate bonds.

ii. The remeasurement amount generated by the defined benefit plan is recognized in other comprehensive income in the current period and presented in retained earnings.
iii. Expenses related to past service costs are immediately recognized in profit or loss.

c) Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee's employment before the normal retirement date or an employee's decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognizes expenses when it is no longer able to withdraw the offer of termination benefits or when the relevant restructuring costs are recognized, whichever is earlier. The benefits that are not expected to be fully settled 12 months after the balance sheet date shall be discounted.

d) Remuneration of employees and directors

z. Income tax

1) The tax expense for the period comprises current and deferred income taxes. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
2) The Company calculates the current income tax based on the tax rate enacted in laws or substantively enacted in laws at the balance sheet date in the country where the taxable income is generated and the operations occur. The management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. For the income tax levied on the unappropriated retained earnings in accordance with the Income Tax Act, it will be recognized as income tax for unappropriated retained earnings based on the actual distribution of earnings after the earnings distribution proposal is adopted at the shareholders' meeting in the year following the year in which said earnings are generated.
3) Deferred income tax is recognized, using the balance sheet liability method, for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. Deferred income tax liabilities from goodwill arising from initial recognition are not recognized. If the deferred income tax is derived from initial recognition of an assets or liability in a transaction (excluding business entities), and if the accounting profit or taxable income (taxable loss) is not affected at the time of the transaction, then the liabilities
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will not be recognized. With temporary differences caused by the investment in subsidiaries and associates, if the Company can control the timing of the reversal of the temporary differences, and it is probable that temporary differences will not be reversed in the foreseeable future, the liabilities will not be recognized. Deferred income tax is determined using tax rates and laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the relevant deferred income tax asset is realized or the deferred income tax liability is settled.

4) Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are re-assessed.
5) Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis, or realize the asset and settle the liability, simultaneously.

aa. Share capital

1) Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are listed in equity as a deduction, net of tax, from the proceeds.
2) Where the Company repurchases the Company's shares that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company's shareholders. Where such shares are subsequently reissued, the difference between their carrying amount and any consideration received, net of any directly attributable incremental costs and the relevant income tax effects, is recognized as adjustment to equity attributable to the Company’s shareholders.

bb. Dividend allocation

cc. Revenue recognition

Sales

1) The Company mainly manufactures and sells consumer electronic products, such as optical discs. Sales revenue is recognized when the control of the product is transferred to a customer, that is, when goods are delivered to the customer, the customer has the discretion to sell the goods and set the price, and the Company has no outstanding performance obligations that may affect the customers' acceptance of the goods. When goods are shipped to a designated location, the risk of obsolescence and lost has been transferred to the customer, and the customer is required to accept the goods in accordance with the sales contract, or when there is objective evidence that all acceptance criteria have been met, the goods are delivered.
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2) The sales of the goods are recognized at the contract price, and the amount of sales recognized is limited to the part where it is highly likely that there will not be a major reversal in the future. The payment terms for sales are usually 30 to 180 days after the date of shipment. Because the time interval between the transfer of the promised goods or services to the customer and the customer’s payment did not exceed one year, the Company did not adjust the transaction price to reflect the time value of money.
3) Trade receivable is recognized when goods are delivered to customers because at which time the Company's right to the consideration for contracts from customers is unconditional, except for the passage of time.

dd. Acquisition transactions

1) The Company uses the acquisition method to account for acquisitions. The acquisition consideration is calculated on the basis of the assets transferred, liabilities generated or assumed, and the fair value of equity instruments issued. The consideration transferred includes the fair value of any asset and liability as a result of contingent consideration agreements. The costs associated with the acquisition are recognized as expenses when incurred. The identifiable assets and liabilities acquired through acquisition transaction shall be measured at fair value on the acquisition date.
2) If the consideration transferred exceeds the fair value of the identifiable assets acquired and liabilities assumed, it shall be recognized as goodwill on the acquisition date; if the fair value of the identifiable assets acquired and liabilities assumed exceeds the transferred consideration, the difference shall be recognized as the current profit or loss on the acquisition date.
Critical Accounting Judgments, Assumptions, and Key Sources of Estimation Uncertainty During the preparation of the parent company only financial statements, the Company's management has exercised its judgments to adopt the accounting policies to be used, and made accounting estimates and assumptions based on reasonable expectations of future events with reference to the circumstances at the balance sheet date. If there is any difference between any critical accounting estimates and assumption made and actual results, assessment and adjustment will be conducted continuously by taking into account the historical experience and other factors. Such assumptions and estimates have a risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year. Please refer to the description of the uncertainties of critical accounting judgments, assumptions, and estimation uncertainty below:

a. Critical judgments for applying the Group's accounting policies

N/A.

b. Critical accounting estimates and assumptions

1) Estimated impairment of tangible assets and intangible assets other than goodwill The Company assesses impairment based on its subjective judgment and determines the separate cash flows of individual groups of assets, useful lives of assets, and the future possible income and expenses arising from the assets depending on how assets are utilized and industrial characteristics. Any changes in economic position or in the estimates due to the Company's strategy might cause material impairment of assets in the future.
2) Inventory valuation

As inventories are stated at the lower of cost and net realizable value, the Company

229 -

must determine the net realizable value of inventories at balance sheet date based on judgments and estimates. With the rapid advancement of technology, the Company evaluates the amounts of normal inventory consumption, obsolescence, or inventories without market selling value at the balance sheet date, and writes down the cost of inventories to the net realizable value. The valuation of the inventories is mainly determined based on the future product demand within a specific time period, which may cause a material change.

6. Description of Significant Accounting Titles

a. Cash and cash equivalents

Cash on hand and petty cash Checks and demand deposits Time deposit Total	December 31, 2020 $ 338 729,433 30,000 $ 759,771	December 31, 2019 $ 408 1,070,986 30,000 $ 1,101,394

1) The Company deals with financial institutions with high credit ratings. The Company also deals with various financial institutions at the same time to diversify credit risks. Therefore, the expected risk of default is rather low.
2) The Company has classified the cash and cash equivalents provided as loans to others to financial assets at amortized cost-current. Please refer to Note 8 for details.

b. Financial assets at fair value through profit or loss (FVTPL)

Items Current items: Financial assets mandatorily at fair value through profit or loss Listed stocks Derivative instruments Adjustment to valuation Total Non-current items: Financial assets mandatorily at fair value through profit or loss Listed stocks Adjustment to valuation Total	December 31, 2020 $ 3,443,530 301 3,443,831 ( 140,075) $ 3,303,756 $ 1,217,912 86,544 $ 1,304,456	December 31, 2019 $ 3,284,368 - 3,284,368 ( 16,860) $ 3,267,508 $ 261,101 103,899 $ 365,000

1) The details of financial assets at FVTPL recognized in profit or loss are as follows:

	2020	2019
Financial assets mandatorily at
fair value through profit or loss
Equity instruments	($ 54,501)	$ 76,230

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Derivative instruments Total	15,881 ($ 38,620)	2,386 $ 78,616

2) The Company's transactions of derivative financial assets and contract information with hedging accounting applied are described below:

December 31, 2020

Contract amount Derivative financial assets (notional principal) Contract period Current items: Foreign exchange forward contract- buy NTD and sell USD US$10,100 thousand 2020.12.11~2021.03.25

Derivative financial assets Current items:

The foreign exchange forward transactions made by the Company are forward transactions, in which foreign currencies are pre-sold, for the purpose of avoiding the exchange rate risk of import and export prices, without hedging accounting applied.

3) For the situation in which the Company has pledged financial assets at FVTPL as collateral, please refer to Note 8 for details.
4) Regardless of the collateral held or other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Company's financial assets at FVTPL is the carrying amount.
c. Financial assets at FVTOCI

Items Non-current items: Equity instruments Unlisted stocks Adjustment to valuation Total	December 31, 2020 $ 5,920 41,521 $ 47,441	December 31, 2019 $ 7,854 24,306 $ 32,160

1) The Company has elected to classify equity instrument investments that are strategic investments as financial assets at FVTOCI. The fair values of these investments as of December 31, 2020 and 2019 were NT$47,441 and NT$32,160, respectively.
2) The breakdown of financial assets at FVTOCI recognized in profit or loss and comprehensive income is as follows:

Equity instruments at FVTOCI Changes in fair value recognized in other comprehensive income Accumulated (gains) losses reclassified to retained earnings due to derecognition (losses to be compensated)	$ ($	2020 17,215 861)	$	2019 11,128 2,994
			$

231 -
3) As of December 31, 2020 and 2019, regardless of the collateral held or other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Company's financial assets at FVTOCI was NT$47,441 and NT$32,160, respectively.
4) The Company did not pledge financial assets at FVOCI as collateral.
d. Notes and trade receivable

Notes receivable Less: Allowance for loss Trade receivable Less: Allowance for loss	December 31, 2020 $ 244 ( 2) $ 242 $ 490,838 ( 98,537) $ 392,301	December 31, 2019 $ 1,105 ( 11) $ 1,094 $ 964,310 ( 29,171) $ 935,139

1) The aging analysis of trade and notes receivable (including related parties) is as follows:

follows:
Not past due Overdue for less than 30 days Overdue for 31–60 days Overdue for 61–90 days Overdue for 91–180 days Overdue for 181 or more	December 31, 2020 Trade receivable Notes receivable $ 763,437 $ 244 95,909 - 70,520 - 129,506 - 23,928 - 172,040 - $ 1,255,340 $ 244	December 31, 2019 Trade receivable Notes receivable $ 1,055,680 $ 5,435 42,737 - 36,822 - 17,138 - 76,893 - 10,274 - $ 1,239,544 $ 5,435
			$ 5,435 - - - - - $ 5,435

The aging analysis above is based on the number of days overdue.

2) The balances of notes and trade receivable (including related parties) as of December 31, 2020 and 2019 were all generated from customer contracts, and the balance of the notes and trade receivable from customer contracts (including related parties) and allowance for loss as of January 1, 2019 were NT$1,259,311 and NT$25,930, respectively.
3) As of December 31, 2020 and 2019, regardless of the collateral held or other credit enhancements, the maximum amount of the exposure to the credit risk arising from the Group’s notes and trade receivable (including related parties) was NT$1,155,767 and NT$1,215,797, respectively.
4) The Company did not pledge notes and trade receivable as collateral.
5) Please refer to Note 12(2) for details of the information on the credit risk of trade and notes receivable.
e. Financial asset transfer

The Company signed a trade receivable factoring contract with Taipei Fubon Bank. According to the contract, the Company does not have to bear the risk of default over the transferred trade receivable but only the loss from business disputes. As the Company did

232 -

not have any continuous involvement in these transferred trade receivable, the Company derecognized these transferred trade receivable. Information on outstanding receivables is as follows:

as follows:
December 31, 2020 Factor Amount of trade receivable in factoring Taipei Fubon Bank USD 1,034 December 31, 2019 Factor Amount of trade receivable in factoring Taipei Fubon Bank USD 2,270	Amount derecogni zed USD 1,034 Amount derecogni zed USD 2,270	Unit: NT$ thousands Amount of advance received Amount of remaining advance available Interest rate range of advance USD- USD 3,000 - Unit: NT$ thousands Amount of advance received Amount of remaining advance available Interest rate range of advance USD- USD 9,000 -

f. Inventories

Raw materials Work-in-progress Finished goods Merchandise inventory Inventory in transit Total	December 31, 2020 $ 310,781 693 345,626 450,076 33,557 $ 1,140,733	December 31, 2019 $ 428,132 - 318,420 401,110 - $ 1,147,662

The Company's inventory cost recognized as an expense for the current period:

2020 Cost of inventories sold $ 3,226,119 Unamortized fixed production overheads 54,246 Valuation losses (gains on recovery) ( 3,033) Others 9,604 $ 3,286,936	2020		2019
		(	$ 4,568,884 30,334 17,993 597) $ 4,616,614

The Company recognized gains on recovery for 2020 because of the sale of inventories that had been recognized as inventory valuation losses in prior years.

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g. Investments accounted for using the equity method

Zhong Jia International Investment Co., Ltd. (Zhong
Jia)
CMC Movie Corporation (CMC Movie)
CMC Entertainment Holding Corporation (CMC
Entertainment)
Asia 1 Entertainment Co., Ltd. (Asia 1 Entertainment)
Benmeng Optoelectronics Co., Ltd. (Benmeng)
Sun Well Solar Corporation (Sun Well)
Sun Q Corporation Limited (Sun Q)
Transtouch Technology Inc. (Transtouch)
CMC
Entertainment
Hub
Corporation
(CMC
Entertainment Hub)
EMC Investment Holding Ltd.
(EMC H)
CIA Holding Corp. (CIA)
Deltamac (Taiwan) Co., Ltd. (Deltamac)
Add:
Credit
balance
of
long-term
investment
reclassified to other non-current liabilities

December 31, 2020
December 31, 2019
$ 3,457,629
$ 3,768,033
173,381
188,006
50,754
42,823
( 246,401)
( 236,292)
-
( 66,902)
( 848,093)
( 774,408)
( 22,310)
( 21,259)
376,723
392,200
97,022
92,617
3,605,849
3,492,143
408,452
490,927
176,181
175,747
1,116,804
1,098,861
$ 8,345,991
$ 8,642,496

1) Subsidiaries

a) For information about the Company's subsidiaries, please refer to Note 4(3) of the Company's consolidated financial statements for the 2020.
b) The Company purchased additional shares issued by its subsidiaries in cash in 2019. Please refer to Note 6(33) of the Company's consolidated financial statements for 2020 for details.
c) The Company acquired 100% of equity of Verbatim Americas LLC., Verbatim Australia Pty. Ltd., Verbatim GmbH, and Verbatim (Hong Kong) Limited through its subsidiary EMC Investment Holding Ltd. on December 31, 2019, and acquired control over said companies, please refer Note 6(34) of the Company's consolidated financial statements for 2020 for details.
d) The Company sold the equity of its subsidiaries in 2020, please refer to Note 6(35) of the Company's consolidated financial statements for 2020 for details.
e) Please refer to Note 8 for details of the investment under the equity method pledged by Company for collateral.
2) Associates

The carrying amounts of the Company’s associates that are individually immaterial and their share of operating results are aggregated as follows: As of December 31, 2020 and 2019, the carrying amounts of the Company’s associates that are individually immaterial were NT$293,060 and NT$456,287, respectively.

Current net profit (loss) Other comprehensive income (after tax) Total comprehensive income for current period		2020	2019
		($ 212,561) ( 3,209) ($ 215,770)	$ 355,759 6,701 $ 362,460

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h. Property, plant and equipment

Buildings and structures For self-use For leasing $ 2,493,486 $ 3,678 ( 1,201,680) ( 2,172) $ 1,291,806 $ 1,506 $ 1,291,806 $ 1,506 - - ( 189,298) ( 1,482) ( 52,690) ( 24) $ 1,049,818 $- $ 1,961,345 $ 24 ( 911,527) ( 24) $ 1,049,818 $-	Buildings and structures For self-use For leasing $ 2,493,486 $ 3,678 ( 1,201,680) ( 2,172) $ 1,291,806 $ 1,506 $ 1,291,806 $ 1,506 - - ( 189,298) ( 1,482) ( 52,690) ( 24) $ 1,049,818 $- $ 1,961,345 $ 24 ( 911,527) ( 24) $ 1,049,818 $-	Buildings and structures For self-use For leasing $ 2,493,486 $ 3,678 ( 1,201,680) ( 2,172) $ 1,291,806 $ 1,506 $ 1,291,806 $ 1,506 - - ( 189,298) ( 1,482) ( 52,690) ( 24) $ 1,049,818 $- $ 1,961,345 $ 24 ( 911,527) ( 24) $ 1,049,818 $-	Machinery and equipment For self-use For leasing $13,346,241 $ - ( 11,986,827) - $ 1,359,414 $- $ 1,359,414 $ - ( 225) - 107,771 1,728 ( 438,386) ( 1,149) $ 1,028,574 $ 579 $12,513,007 $ 1,728 ( 11,484,433) ( 1,149) $ 1,028,574 $ 579	Machinery and equipment For self-use For leasing $13,346,241 $ - ( 11,986,827) - $ 1,359,414 $- $ 1,359,414 $ - ( 225) - 107,771 1,728 ( 438,386) ( 1,149) $ 1,028,574 $ 579 $12,513,007 $ 1,728 ( 11,484,433) ( 1,149) $ 1,028,574 $ 579	Subtotal $13,346,241 ( 11,986,827) $ 1,359,414 $ 1,359,414 ( 225) 109,499 ( 439,535) $ 1,029,153 $12,514,735 ( 11,485,582) $ 1,029,153	Total $18,048,313 ( 13,207,914) $ 4,840,399 $ 4,840,399 ( 225) ( 102,130) ( 502,987) $ 4,235,057 $16,646,086 ( 12,411,029) $ 4,235,057
For self-use $ 2,493,486 ( 1,201,680) $ 1,291,806 $ 1,291,806 - ( 189,298) ( 52,690) $ 1,049,818 $ 1,961,345 ( 911,527) $ 1,049,818			For	self-use $13,346,241 ( 11,986,827) $ 1,359,414 $ 1,359,414 225) 107,771 438,386) $ 1,028,574 $12,513,007 ( 11,484,433) $ 1,028,574
		( (	( (		( (	( ( (

	(

235 -

January 1 Cost Accumulated depreciation and impairment January 1 Additions Disposal Reclassification (Note) Depreciation expenses December 31 December 31 Cost Accumulated depreciation and impairment	2019 Land $ 2,118,488 - $ 2,118,488 $ 2,118,488 - - - - $ 2,118,488 $ 2,118,488 - $ 2,118,488	Buildings and structures For self-use For leasing $ 2,503,987 $ - ( 1,171,510) - $ 1,332,477 $- $ 1,332,477 $ - - - - - 10,984 1,577 ( 51,655) ( 71) $ 1,291,806 $ 1,506 $ 2,493,486 $ 3,678 ( 1,201,680) ( 2,172) $ 1,291,806 $ 1,506	Subtotal $ 2,503,987 ( 1,171,510) $ 1,332,477 $ 1,332,477 - - 12,561 ( 51,726) $ 1,293,312 $ 2,497,164 ( 1,203,852) $ 1,293,312	Machinery and equipment $ 13,646,977 ( 11,892,446) $ 1,754,531 $ 1,754,531 - ( 130) 75,859 ( 470,846) $ 1,359,414 $ 13,346,241 ( 11,986,827) $ 1,359,414	Others T $ 26,606 ( 12,262) $ 14,344 $ 14,344 4,490 ( 433) ( 66,259 ( 15,475) $ 69,185 $ 86,420 ( 17,235) $ 69,185	otal $ 18,296,058 ( 13,076,218) $ 5,219,840 $ 5,219,840 4,490 563) 154,679 ( 538,047) $ 4,840,399 $ 18,048,313 ( 13,207,914) $ 4,840,399
		For self-use $ 2,503,987 ( 1,171,510) $ 1,332,477 $ 1,332,477 - - 10,984 ( 51,655) $ 1,291,806 $ 2,493,486 ( 1,201,680) $ 1,291,806
				(

Note: It is mainly for the reclassification from prepayments for business facilities (listed in other non-current assets) and reclassification to investment property.

236 -
1) Capitalized amount of borrowing costs attributable to property, plant and equipment and interest range:

				2020		2019
Capitalized amount			$	323	$	848
Range interest	of rate	capitalized		1.58%		2.01%

2) For the impairment of property, plant and equipment, please refer to Note 6(11) for details.
3) For information about the Company's pledging of property, plant and equipment as collateral, please refer to Note 8 for details.
i. Lease transaction - the lessee
1) The assets leased by the Company include land and buildings. The lease contract term is usually from 1 to 3 years. The lease contracts are negotiated separately and contain various terms and conditions. Except that the leased asset cannot be used as collateral for loans, no other restrictions are imposed.
2) The lease term of part of the land and buildings leased by the Group does not exceed 12 months, and the low-value assets leased are mostly multi-function printers, so they are not included in the right-of-use assets.
3) The carrying amount of right-of-use assets and depreciation expenses recognized are shown as follows:

				December 31, 2020	December 31, 2020	December	31, 2019
				Carrying amount		Carrying	amount
		Land			$1,290		$1,219
		Property			10,551		21,046
					$11,841		$22,265
		2020			2019
		Depreciation expenses			Depreciation expenses
		For self-use	For leasing	Total	For self-use For leasing		Total
Land		$ 2,509	$ -	$ 2,509	$ 2,579	$ -	$ 2,579
Property		2,501	7,921	10,422	7,997	2,748	10,745
		$ 5,010	$ 7,921	$ 12,931	$10,576	$ 2,748	$13,324
	4)	The additions of the Company's		right-of-use assets in 2020 and 2019 were			NT$2,580
		and NT$2,438, respectively.

5) The profit and loss items related to lease contracts are shown as follows:

Items that affect profit or loss Interest expenses on lease liabilities Short-term lease expenses Revenue from sublease of right-of-use assets Gains on lease modification	2020 $245 1,059 5,834 1	2019 $227 3,410 1,940 -

6) The Company's total cash outflows of leases in 2020 and 2019 were NT$14,200 and NT$16,902, respectively.
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j. Investment property

		2020
				Buildings and
			Land	structures	Total
January 1
Cost		$	63,362	$ 919,571	$ 982,933
Accumulated depreciation				( 451,461)	( 451,461
and impairment			-		)
		$	63,362	$ 468,110	$ 531,472
January 1		$	63,362	$ 468,110	$ 531,472
Reclassification (Note)				252,754	252,754
			-
Depreciation expenses			-	( 24,741)	( 24,741 )
December 31		$	63,362	$ 696,123	$ 759,485
December 31
Cost		$	63,362	$ 1,509,350	$ 1,572,712
Accumulated depreciation					( 813,227
and impairment			-	( 813,227)	)
		$	63,362	$ 696,123	$ 759,485
		2019
			Land	Buildings and structures	Total
January 1
Cost		$	63,362	$ 985,360	$ 1,048,722
Accumulated
depreciation	and
impairment			-	( 500,877)	( 500,877)
		$	63,362	$ 484,483	$ 547,845
January 1		$	63,362	$ 484,483	$ 547,845
Reclassification (Note)			-	1,005	1,005
Depreciation expenses			-	( 17,378)	( 17,378)
December 31		$	63,362	$ 468,110	$ 531,472
December 31
Cost		$	63,362	$ 919,571	$ 982,933
Accumulated
depreciation	and
impairment			-	( 451,461)	( 451,461)
		$	63,362	$ 468,110	$ 531,472

Note: It is mainly for the reclassification from property, plant and equipment.

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1) Rental revenue and direct operating expenses of investment property:

Rental revenue of investment property Direct operating expenses incurred by investment property generating rental revenue in the current period Direct operating expenses incurred by investment property not generating rent revenue in current period	$	2020 46,739 10,982 13,759	$	2019 47,481 10,982 6,396
	$		$
	$		$

2) The fair value of the investment property held by the Company as of December 31, 2020 and 2019 was $4,851,873 and $2,400,465, respectively, based on the evaluation results of transaction prices in the neighborhood to which could be referred.
3) For information on the investment property pledged as collateral, please refer to Note 8 for details.
k. Impairment of non-financial assets
1) The Company adopted the value in use and the net disposal value of existing assets as the recoverable amount in the impairment test on December 31, 2020 and 2019. The discount rate used to estimate the value in use is as follows:

Machinery and equipment 2) Accumulated write-off of impairments Machinery and equipment	December 31, 2020 10.42% 2020 $ 38,001	December 31, 2019 11.52% 2019 $ 23,734

When the Company disposed of machinery and equipment in 2020 and 2019, the relevant accumulated impairments were also written off in order to calculate the gains or losses on the disposal.

l. Other non-current assets

gains or losses on the disposal. ther non-current assets	gains or losses on the disposal. ther non-current assets
Prepayments for equipment Refundable deposits Overdue receivables Less: Allowance for loss ( Other non-current assets - others		December 31, 2020 December 31, 2019 $ 5,189 $ 49,263 5,053 5,531 50,555 545,725 50,555) ( 545,725) 422,207 420,507 $ 432,449 $ 475,301

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m. Short-term borrowings

Nature of borrowings Borrowings from financial Institutions Credit borrowings Borrowings for raw material purchase Interest rate range	December 31, 2020 $ 100,000 10,341 $ 110,341 1.48~1.55%	December 31, 2019 $ 150,000 - $ 150,000 1.6~1.7%

Commercial paper of NT$1,770,300 and NT$1,744,870 has been issued as a guarantee for the short-term borrowing facilities as of December 31, 2020 and 2019, respectively.

n. Long-term borrowings

Borrowings from financial Institutions Secured borrowings Credit borrowings Long-term notes Less: Long-term loans due within one year or one operating cycle Interest rate range	December 31, 2020 $ 1,695,000 235,000 200,000 2,130,000 ( 541,000) $ 1,589,000 1.24%~1.67%	December 31, 2019 $ 2,026,000 334,460 - 2,360,460 ( 875,460) $ 1,485,000 1.5%~2.25%

1) The Company signed a financing commitment contract with O-Bank Co., Ltd. in April 2018. In 36 months from the date of the first drawdown, the total amount of borrowings is NT$200 million. From November 2019, the principal is amortized and repaid every six months, and the remaining principal will be repaid in the last installment. The Company’s main commitments are as follows:

The outstanding balance of the Company's borrowings as of December 31, 2020 and 2019 was NT$110,000 and NT$170,000, respectively.

2) The Company signed a financing commitment contract with Taipei Fubon Bank in March 2019. In 36 months from the date of the first drawdown, the total amount of borrowing is NT$1 billion. The Company's main commitments are as follows:

The outstanding balance of the Company's borrowings as of December 31, 2020 and 2019 was were NT$650,000 and NT$800,000, respectively.

3) The remaining loan installment repayment periods start from 2017 to 2023.
4) Please refer to Note 8 for details of the guarantees for long-term borrowings.
5) The Company's amounts of loans not drawn down as of December 31, 2020 and 2019 are as follows:

019 are as follows:
Due in more than one year	December 31, 2020 $ 950,000	December 31, 2019
		$ 373,000

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o. Pension

1)
a) The Company and domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, applicable to all formal employees who were employed prior to the enforcement of the Labor Pension Act on July 1, 2005 and to the formal employees who still chose the pension mechanism under the Labor Standards Act after the Labor Pension Act took effect. Under the defined benefit pension plan, two units are granted for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units granted and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes 2% of the total salaries every month as a pension fund and deposit it to the designated account in the name of the Labor Pension Funds Supervisory Committee at the Bank of Taiwan. Before the end of each year, the Company shall assess the balance in the designated account. If the total balance of the contribution is less than the amount required for the payment of pensions to all the employees who are eligible to retire in the following year, calculated according to the method above, the Company will make up for the difference in a lump sum before the end of March in the following year.
b) The amounts recognized in the balance sheet are as follows:

Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities (listed in other non-current liabilities)	December 31, 2020 $ 238,786 ( 116,946) $ 121,840	December 31, 2019 $ 339,624 ( 131,187) $ 208,437

c) The changes in net defined benefit liabilities are as follows:

2020 Balance at January 1 Service cost for the current period Service cost for the previous period Interest (expense) revenue Re-measurements: Return on plan assets (not including interest revenue or expenses) The effect of changes in financial assumptions Experience adjustments Pension contributed Pension paid Balance, December 31	Present value of defined benefit obligations $ 339,624 737 ( 68,280) 2,377 274,458 - 7,433 ( 661) 6,772 - ( 42,444) $ 238,786	Fair value of plan assets ($ 131,187) - - ( 919) ( 132,106) ( 4,929) - - ( 4,929) ( 22,355) 42,444 ($ 116,946)	Net defined benefit liabilities $ 208,437 737 ( 68,280) 1,458 142,352 ( 4,929) 7,433 ( 661) 1,843 ( 22,355) - $ 121,840	Net defined benefit liabilities $ 208,437 737 ( 68,280) 1,458 142,352 ( 4,929) 7,433 ( 661) 1,843 ( 22,355) - $ 121,840
		($ (
		(
	(	(
		(
	(	( ($
	$

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2019 Balance at January 1 Service cost for the current period Interest (expense) revenue Re-measurements: Return on plan assets (not including interest revenue or expenses) The effect of changes in financial assumptions Experience adjustments Pension contributed Pension paid Balance, December 31	Present value of defined benefit obligations $ 385,592 1,070 3,470 390,132 - 5,902 ( 14,672) ( 8,770) - ( 41,738) $ 339,624	Present value of defined benefit obligations $ 385,592 1,070 3,470 390,132 - 5,902 ( 14,672) ( 8,770) - ( 41,738) $ 339,624	Fair	value of plan assets ($ 148,744) - ( 1,338) ( 150,082) ( 5,239) - - ( 5,239) ( 17,604) 41,738 ($ 131,187)	Net	defined benefit liabilities $ 236,848 1,070 2,132 240,050 ( 5,239) 5,902 ( 14,672) ( 14,009) ( 17,604) - $ 208,437

d) As the Company closed the Zhongli factory, a decrease in the benefit by NT$68,280 occurred during the current period, and the defined benefit liabilities of the employees of the factory have been settled.
e) The Bank of Taiwan was commissioned to manage the assets of the Company's defined benefit plan fund in accordance with the scope of the percentages and amounts in the annual investment and utilization plan of the fund and the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund (Article 6: The scope of utilization for the fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or privately placed equity securities, investment in domestic or foreign real estate securitization products, etc.). The status of the utilization is supervised by the Labor Pension Funds Supervisory Committee. With regard to utilization of the fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. In case any deficiency in the earnings arises, Treasury Funds can be used to cover the deficits after the approval of the competent authority. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan assets fair value in accordance with paragraph 142 of IAS 19. For the composition of the fair value of the fund in total as of the years ended December 31, 2020, and 2019, please refer to the various labor pension utilization reports issued by the government.
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f) The actuarial assumptions related to pension are summarized as follows:

Discount rate Rate of future salary increase		2020 0.3% 2%		2019 0.7% 2%

The assumptions for the future mortality rate are based on the published statistics and experience of each country.

The present value of the defined benefit obligation affected by the changes in the main actuarial assumptions adopted is as follows:

December 31, 2020 The effects on the present value of defined benefit obligations December 31, 2019 The effects on the present value of defined benefit obligations	Increase	Discount	rate Decrease by 0.25% $ 4,844 $ 7,607	Rate of future salary increase Increase by 0.25% Decrease by 0.25% $ 4,154 ($ 4,049) $ 6,642 ($ 6,462)	Rate of future salary increase Increase by 0.25% Decrease by 0.25% $ 4,154 ($ 4,049) $ 6,642 ($ 6,462)	Rate of future salary increase Increase by 0.25% Decrease by 0.25% $ 4,154 ($ 4,049) $ 6,642 ($ 6,462)	Rate of future salary increase Increase by 0.25% Decrease by 0.25% $ 4,154 ($ 4,049) $ 6,642 ($ 6,462)
						($	0.25% 4,049)
						($	6,462)

With other assumptions unchanged, the sensitivity analysis above analyzes the effects of changes in a single assumption. In practice, many changes in assumptions may be linked together. The sensitivity analysis is consistent with the method used to calculate the net pension liabilities of the balance sheet. The method and assumptions used for the preparation of the sensitivity analysis for the current period are the same as those used in the previous period.

g) The Company expects to make a contribution of NT$12,098 to the pension plan for the year ended December 31, 2021.
h) As of December 31, 2020, the weighted average duration of the pension plan is 8 years. The maturity analysis of the pension payments is as follows:

Less than 1 year 1–5 years Over 5 years	$12,008 92,709 62,891 $167,608

2)

a) Since July 1, 2005, the Company has established a defined contribution pension plan under the Labor Pension Act, applicable to all formal employees with R.O.C. nationality. For employees who choose the labor pension system stipulated under the Labor Pension Act, the Company makes monthly contributions to employees’ individual pension accounts of the Bureau of Labor Insurance at 6% of their monthly salaries and wages. Based on the employee’s individual pension accounts and the amount of accumulated income from the annual investment and utilization plan, the payment of employee pension is made on a monthly basis or in a lump sum.
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- b) For 2020 and 2019, the pension costs recognized according to the above-mentioned pension method were NT$$23,116 and NT$30,128, respectively.
p. Share capital
1) In order to improve the financial structure and compensate the accumulated losses, it was resolved to reduce the capital by 567,135,167 shares at the shareholders' meeting on June 5, 2019 The capital reduction rate was 32.858%. The record date of the capital reduction was July 30, 2019. The change registration for the capital reduction was completed on August 12, 2019.
2) As of December 31, 2020, the Company's registered capital was NT$45,000,000, divided into 4,500,000,000 shares, and the paid-in capital was NT$11,588,812, with a par value of NT$10 per share. Share payments for the Company’s issued shares have been collected in full. The reconciliation of the number of shares outstanding at the beginning and end of the period for the Company's common stock is as follows (unit: share):

it: share):
January 1 Capital reduction to offset losses Cancellation of treasury shares December 31	2020 1,158,881,200 - - 1,158,881,200	2019
		1,774,126,367 ( 567,135,167) ( 48,110,000) 1,158,881,200

3) Treasury stock
a) On March 15, 2019, the board of directors approved the cancellation of 48,110,000 ordinary shares for capital reduction through treasury shares, and the registration of the change has been completed.
b) The Securities and Exchange Act stipulates that the proportion of the Company's repurchase of shares outstanding shall not exceed 10% of the total number of shares issued by the Company, and the total monetary amount of shares repurchased shall not exceed the amount of retained earnings plus the share premium and the realized capital surplus.
c) The treasury shares held by the Company shall not be pledged as collateral under the Securities and Exchange Act, and shall not be entitled to shareholders’ rights before transferred.
d) According to the Securities and Exchange Act, the shares repurchased by the Company for shares transferable to employees shall be transferred within five years from the date of the repurchase. If the transfer is not made within the time limit, the Company shall be deemed to have not issued the shares, and the shares shall be cancelled through change registration. For the shares repurchased to maintain the Company's credit and shareholders' rights, the change registration and share cancellation shall be conducted within 6 months after the repurchase.
e) The Company and its subsidiaries did not hold the Company's shares as of December 31, 2020 and 2019.

q. Capital surplus

According to the Company Act, capital surplus including the income derived from issuing shares at a premium and from endowments, in addition to being used to compensate

244 -

deficit, where the Company has no accumulated losses, shall be used to issue new shares or cash in proportion to the shareholders’ original shares. In addition, according to relevant provisions of the Securities and Exchange Act, when the capital is replenished from the aforementioned capital surplus, the total amount each year shall not exceed 10% of the paid-in capital. The Company shall not use the capital surplus to compensate the capital losses, unless the surplus reserve is insufficient to compensate such losses.

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2020

	2020
January 1 Changes in ownership interests in subsidiaries Cash dividends issued from capital surplus December 31 January 1 Cancellation of treasury shares Changes in ownership interests in subsidiaries Difference between the equity price of subsidiary actually acquired or disposed of and the book value December 31	Share premium $2,683,492 - ( 57,944) $2,625,548 2019 Share premium $2,758,290 ( 74,798) - - $2,683,492	Treasury share transactions Changes in percentage of ownership interests in subsidiaries recognized $5,014,346 $ 458 - 612 - - $5,014,346 $ 1,070 Treasury share transactions Changes in percentage of ownership interests in subsidiaries recognized $4,782,455 $ 103 231,891 - - 355 - - $5,014,346 $ 458	Difference between the equity price of subsidiary actually acquired or disposed of and the book value $ 77 - - $ 77 Difference between the equity price of subsidiary actually acquired or disposed of and the book value $ - - - 77 $ 77	Others $ 1,922 - - $ 1,922 Others $ 1,922 - - - $ 1,922	Total $7,700,295 612 ( 57,944) $7,642,963 Total $7,542,770 157,093 355 77


						$7,700,295

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r. Retained earnings

1) According to the Company's Articles of Incorporation, if there are earnings in the annual final accounts, the Company shall pay taxes first and compensate the accumulated losses; appropriate 10% of the balance for legal reserve, but this does not apply when the legal reserve has reached the amount of the Company's total capital. Subsequently, the Company shall make an appropriation for or reverse the special reserve in accordance with the law. Then, if there are still earnings, together with the undistributed earnings accumulated from the beginning of the same period, the board of directors shall put forth an earnings distribution proposal for the resolution by the shareholders' meeting before distribution. The Company’s dividend policy is based on the consideration for capital expenditures and the Company’s long-term financial planning. The total dividend shall not less be than 10% of the current year’s distributable earnings. However, if the distributable earnings is less than 1% of the paid-in capital, dividend many not need to be distributed. When the dividend is distributed, the cash dividends shall not be less than 10% of the total dividends.
2) The legal reserve shall not be used except for compensation for the Company's losses and issue of new shares or cash in proportion to the shareholders' original shares. However, in the case of issue of new shares or cash, it shall be limited to the portion of the legal reserve in excess of 25% of the paid-in capital.
3) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount may be included in the distributable earnings.
4) On June 5, 2019, the Company's shareholders' meeting resolved to compensate the losses for 2018. Please visit the Market Observatory Post System (MOPS) of the Taiwan Stock Exchange for the details of the board of directors' approval for submission of the proposal for loss compensation to be resolved by the shareholders' meeting.
5)
a) The Company passed the proposal for 2019 earnings distribution as resolved by the shareholders' meeting on June 16, 2020 as follows:

Legal reserve appropriation Cash dividends		2019 Amount Earnings per share (NT$)	2019 Amount Earnings per share (NT$)
			$ 21,379 $ - 173,832 0.15 $ 195,211

b) On June 16, 2020, the Company passed a proposal to distribute a cash dividend of NT$57,944 with NT$0.05 per share from the capital surplus from paid-in capital in excess of par value as resolved by the shareholders' meeting.
247 -

6)

a) The Company's board of directors passed the proposal for 2020 earnings distribution on March 25, 2021 as follows:

Legal reserve appropriation Special reserve		2020 Amount Earnings per share (NT$)	2020 Amount Earnings per share (NT$)
			$ 11,097 $- 118,457 - $ 129,554

  - b) The Company's board of directors passed a resolution on March 25, 2021, and approved to distribute a cash dividend of NT$811,217 with NT$0.7 per share from the capital surplus of the premium from the issue of stocks in excess of par value.

     - As of March 31, 2021, the aforementioned 2020 earnings distribution proposal and the capital surplus distribution proposal have not yet been resolved by the shareholders' meeting.

7) Please refer to Note 6(25) for the information of employee compensation and directors' remuneration.
s. Other equity items

January 1 Adjustment to valuation: - Parent company - Subsidiaries and associates Reclassified from valuation adjustment to retained earnings Foreign currency translation difference: - Parent company - Subsidiaries and associates Disposal of subsidiary: - Subsidiaries and associates December 31		2020 Foreign currency translation Unrealized valuation gains and losses Equity related to assets held for sale Total	2020 Foreign currency translation Unrealized valuation gains and losses Equity related to assets held for sale Total	2020 Foreign currency translation Unrealized valuation gains and losses Equity related to assets held for sale Total
			($121,927) ($130,722) - 17,215 - ( 46,637) - ( 861) - - ( 124,129) - ( 1,097) - 2,025 - ($245,128) ($161,005)	($ 23,709) ($276,358) - 17,215 - ( 46,637) - ( 861) - - ( 124,129) - ( 1,097) 23,709 25,734 $- ($406,133)

248 -

2019

2019	2019
Foreign currency translation Unrealized valuation gains and losses		Equity related to assets held for sale		Total
January 1 ($115,422) ($179,753) Adjustment to valuation: - Parent company - 11,128 - Subsidiaries and associates - 34,909 Reclassified from valuation adjustment to retained earnings - 2,994 Foreign currency translation difference: - Parent company ( 10,031) - - Subsidiaries and associates 3,526 - December 31 ($121,927) ($130,722) t. Operating revenue Revenue from customer contracts	$ - - - - - ( 23,709) ($ 23,709) 2020 $3,935,194		($295,175) 11,128 34,909 2,994 ( 10,031) ( 20,183) ($276,358) 2019 $5,504,373

1) Breakdown of revenue from customer contracts

The Company's revenue comes from the provision of goods and services that transferred at a certain point in time. The revenue can be broken down into the following main product lines:

following main product lines:
Timing of revenue recognition Revenue recognized at a specific timing Timing of revenue recognition Revenue recognized at a specific timing	Storage media $3,770,257 Storage media $5,321,508	2020 Others $164,937 Others $182,865	Total $3,935,194


			2019 Total $5,504,373	2019
				Total

2) Contract liabilities
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a) Contract liabilities related to revenue from customer contracts recognized by the Company are as follows:

ontract liabilities related to revenue from customer contracts recognized by the ompany are as follows:	ated to revenue from customer contracts recognized by the ws:	ated to revenue from customer contracts recognized by the ws:	ated to revenue from customer contracts recognized by the ws:	ated to revenue from customer contracts recognized by the ws:
December 31, 2020 December 31, 2019 January 1, 2019 Product sales contracts $53,173 $77,431 $93,886	December 31, 2020 December 31, 2019 January 1, 2019
		$53,173	$77,431	$93,886

b) Contract liabilities at beginning of period recognized as revenue for the period

Opening balance of contract liabilities recognized as income for the period Product sales contracts	2020 $67,299	2019 $82,686

u. Interest revenue

terest revenue
Interests on bank deposits Interest revenue from financial assets at amortized cost - interest revenue Others (refer to Note 7(2)8(2))	$	2020 1,207 18 26,712 27,937	$	2019 2,400 21 21,622 24,043
	$		$

v. Other income

v. Other income
	2020		2019
Rental income	$	58,995	$	56,274
Dividend income		110,445		44,750
Other income		42,567		14,004
	$	212,007	$ 115,028
w. Other gains and losses
	2020		2019
Net gains (losses) on financial assets at	($	38,620)	$	78,616
FVTPL
Net losses on financial liabilities at fair	(	9,259)	(	3,937)
value through profit or loss
Net foreign currency exchange losses	(	109,145)	(	22,917)
Gains on disposal of property, plant and		1,095		2,247
equipment and other non-current assets
Depreciation expenses not for self use	(	33,835)	(	20,197)
(Note)
Gains on disposal of investments		12,531		-
Other expenditures	(	6,496)	(	94)
	($	183,729)	$	33,718

Note: Depreciation expenses of investment property, right-of-use assets subleased, and equipment for lease

250 -

x. Finance costs

inance costs
Interest expenses: Bank borrowings Others Borrowing facility management expense Less: Amount qualified for capitalization	$ (	$	2020 40,328 313 1,265 41,906 323) 41,583	$ (	$	2019 29,877 4,681 9,282 43,840 848) 42,992
		$			$

y. Employee benefit, depreciation, and amortization expenses

In 2020 and 2019, the employee benefit, depreciation, and amortization expenses incurred by the Company are summarized as follows by function:

Function		2020
	Operating costs	Operating expenses		Total
Employee benefit expenses
Salaries and wages	$ 569,506	$ 92,694		$ 662,200
Labor and health insurance
premiums	51,392		9,295	60,687
Pension expenses	( 35,545)	(	7,424)	( 42,969)
Remuneration of directors	-		3,880	3,880
Other personnel expenses	8,529		2,878	11,407
Depreciation expenses	463,261		43,563	506,824
Amortization expenses	9,745		43,410	53,155
Function		2019
	Operating costs	Operating expenses		Total
Employee benefit expenses
Salaries and wages	$ 629,956	$	98,353	$ 728,309
Labor and health insurance
premiums	67,065		10,049	77,114
Pension expenses	28,536		4,794	33,330
Remuneration of directors	-		3,880	3,880
Other employee benefit
expenses	12,883		2,826	15,709
Depreciation expenses	513,320		35,232	548,552
Amortization expenses	11,100		29,644	40,744

1) According to the Company's Articles of Incorporation, if the Company makes a profit at the end of the year, at least 1% of the balance shall be allocated for employee compensation and no more than 1.5% for the remuneration of directors. However, when the Company still has accumulated losses, it shall reserve an amount to compensate the losses.
2) The Company's estimates for 2020 and 2019 employee compensation and directors' remuneration are based on the profitability of the years. The employee compensation was estimated at 2.04% and 1.31%, and the remuneration of directors was estimated at 1.50% and 0.96%, respectively. The estimated amounts of employee compensation were $3,000 and $3,000, respectively; the estimated amounts of directors’ remuneration were $2,200 and $2,200, respectively, and the said amounts were accounted for under salaries and wages.
3) The amounts of the employee compensation and the remuneration of directors and supervisors for 2019 approved by the board of directors were the same as the
251 -

amounts recognized in the 2019 financial statements. They were $3,000 and $2,200, respectively and all paid in cash.

4) The information on employee compensation and the remuneration of directors approved by the board of directors of the Company is available on the MOPS.
5) The Company's number of employees was 1,001 and 1,318, respectively as of the end of 2020 and 2019, and the number of directors who did not serve as employees concurrently was both 9.
6) The Company's stock has been listed on the Taiwan Stock Exchange, so the following information is additionally disclosed:
- a) The average employee benefit expenses in 2020 and 2019 were NT$588 and NT$653, respectively.
- b) The average employee salaries and wages in 2020 and 2019 were NT$559 andNT$556, respectively.
- c) The average employee salary adjustment is 0.5%.
- d) The company has set up an audit committee in 2020 and 2019, so there was no remuneration for supervisors.
- e) The Company's salary and remuneration policy:
  - i. The overall salary and remuneration level of employees is based on external competitiveness and internal fairness with the aim of effectively attracting and retaining talents.
  - ii. Employee salary and remuneration is linked with the performance management system to motivate employees to develop, and drive the Company's positive development.
  - iii. The Company's long-term and short-term goals, individual dedication time, positions held, and overall work performance are connected to motivate employees.
  - iv. A remuneration committee is set up to effectively measure the overall salary and remuneration of the Company’s directors and managers.
- f) The Company consolidated its production lines and optimized production efficiency in 2020. As a result, the Company recognized employee resignation related expenses for NT$107,797 due to the streamlining of personnel in 2020 and was accounted for under operating costs.
z. Income tax
1) Income tax expense
- a) Components of income tax expense:

tax expense mponents of income tax expense:	tax expense mponents of income tax expense:
Current income tax: Income tax overestimates/underestimates for prior years ($ Deferred income tax: Initial recognition and reversal of temporary differences Effect of tax rate changes Income tax expense $		2020 67) 30,576 - 30,509	$	2019 - 9,609 - 9,609
	$		$

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b) The amount of income tax related to other comprehensive income:

Share of other comprehensive income on associates ($ Remeasurement of defined benefit obligations $	Share of other comprehensive income on associates ($ Remeasurement of defined benefit obligations $	2020 128) ($ 369 ( 241 ($	2020 128) ($ 369 ( 241 ($	2019 210) 2,802) 3,012)
	$		($

2) Reconciliation between income tax expense and accounting profit

Income tax calculated based on income before tax and statutory tax rate Expenses which shall be excluded in accordance with the provisions of the tax law Income on which income tax shall be levied according to tax law Items exempt from taxation according to the tax law Unrealized gains or losses on financial assets that are not taxable Temporary differences not recognized in deferred income tax assets Taxable loss not recognized in deferred income tax assets Change in realizability evaluation of deferred income tax liabilities Income tax overestimates/underestimates for prior years Income tax expense	$ ( ( (	$ ( ( (	2020 28,316 1,845 804 54,778) 28,114 53,621) 11,494 68,402 67) 30,509	$ ( ( (	2019 47,663 325 419 2,803) 21,367) 41,111 - 55,739) - 9,609
		$		$

253 -
3) The amount of deferred income tax assets or liabilities that arise from temporary differences and tax losses are set out below:

Deferred in come tax assets: - Temporary differences: Over-limit of allowance for loss Inventory valuation loss Compensation for unused annual leave Unrealized exchange loss Remeasurement of defined benefit obligations Unrealized sales gains -Tax losses Subtotal Deferred income tax liabilities - Temporary differences: Unrealized sales losses Provision for land value increment tax Others Subtotal Total	2020 January 1 Recognized in profit or loss Recognized in other comprehensiv eincome $111,400 ($ 83,938) $ - 29,101 ( 606) - 7,193 ( 2,742) - 9,313 3,452 - 14,197 - 369 - 21,766 - 77,381 30,935 - $248,585 ($ 31,133) $ 369 ($ 557) $ 557 $ - ( 21,379) - - ( 18) - - ($ 21,954) $ 557 $- $226,631 ($ 30,576) $ 369	December 31 $ 27,462 28,495 4,451 12,765 14,566 21,766 108,316 $217,821 $ - ( 21,379) ( 18) ($ 21,397) $196,424	December 31 $ 27,462 28,495 4,451 12,765 14,566 21,766 108,316 $217,821 $ - ( 21,379) ( 18) ($ 21,397) $196,424
			(

2019
January 1
Recognized in
profit or loss
Recognized in
other
comprehensive
income
Deferred in come tax assets:
- Temporary differences:
Over-limit of allowance for loss
$115,524
($ 4,124)
$ -
Inventory valuation loss
25,503
3,598
-
Compensation for unused annual leave
7,629 ( 436)
-
Unrealized exchange loss
3,471
5,842
-
Remeasurement of defined benefit
obligations
17,192 ( 193)
( 2,802)
-Tax losses
91,525
( 14,144)
-
Subtotal
$260,844
($ 9,457)
($ 2,802)

December 31
$111,400
29,101
7,193
9,313
14,197
77,381
$248,585

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2019

		2019
Deferred income tax liabilities - Temporary differences: Unrealized sales losses Provision for land value increment tax Others Subtotal Total	January 1 ($ 405) ( 21,379) ( 18) ($ 21,802) $239,042	Recognized in profit or loss Recognized in other comprehensive income ($ 152) $ - - - - - ($ 152) $- ($ 9,609) ($ 2,802)	December 31

				($ 557) ( 21,379) ( 18) ($ 21,954) $226,631

4) The validity period of the Company's unused tax loss carryforwards and the relevant amounts of unrecognized deferred income tax assets are as follows:

December 31, 2020

December 31, 2020
Year of occurrence 2011 2013 2014 2015 2016 2017 2018 2020	Declared/Approved amount Approved amount ' ' ' ' ' ' Estimated amount	Amount of unused tax loss carryforwards $ 1,269,401 1,396,315 792,870 1,242,438 2,413,223 570,239 674,553 57,472 $ 8,416,511	Amount of unrecognized deferred income tax assets $ 1,189,982 1,296,877 638,449 1,034,133 2,413,223 570,239 674,553 57,472 $ 7,874,928		Final year the carryforwards are

				$
					due 2021 2023 2024 2025 2026 2027 2028 2030
				$

December 31, 2019

December 31, 2019
Year of occurrence 2010 2011 2013 2014 2015 2016 2017 2018	Declared/Approved amount Approved amount ' ' ' ' ' ' Declared amount	Amount of unused tax loss carryforwards $ 3,421,887 1,269,401 1,396,315 792,870 1,242,438 2,413,223 570,239 674,553 $11,780,926	Amount of unrecognized deferred income tax assets $ 3,034,980 1,269,401 1,396,315 792,870 1,242,438 2,413,223 570,239 674,553 $ 11,394,019		Final year the carryforwards are

				$
					due 2020 2021 2023 2024 2025 2026 2027 2028

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5) Deductible temporary differences that are not recognized in deferred income tax assets:

December 31, 2020 December 31, 2019 Deductible temporary differences $11,117,466 $11,525,054

6) The profit-seeking enterprise income tax returns filed by the Company up to 2018 have been approved by the tax collection authorities:

aa. Earnings per share

rnings per share
Basic earnings per share Net profit Diluted earnings per share Net profit Potential effect of dilutive ordinary shares Employee compensation Current net profit plus potential effect of ordinary shares Basic earnings per share Net profit Diluted earnings per share Net profit Potential effect of dilutive ordinary shares Employee compensation Current net profit plus potential effect of ordinary shares	2020 Amount after tax		Weighted average number of outstanding shares (thousand shares) Earnings per share (NT$) 1,158,881 $ 0.10 1,158,881 423 1,159,304 $ 0.10 Number of outstanding shares adjusted retrospectively (thousand shares) (Note) Earnings per share (NT$) 1,158,881 $ 0.20 1,158,881 373 1,159,254 $ 0.20
	$ 111,073 111,073 - $ 111,073 2019 Amount after tax
		$ 228,705 228,705 - $ 228,705	1,158,881 1,158,881 373 1,159,254

Note: The retrospective adjustment of the number of outstanding shares above has been conducted based on the proportion of capital reduction in 2019.

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bb. Additional information on cash flows

Investing activities with only partial cash payments:

1) Property, plant and equipment and prepayments for equipment (listed in other non-current assets)

non-current assets)
Acquisition of property, plant and equipment Prepayments for purchase of equipment Add: Payable, beginning of period Less: Payable, end of period Cash paid for current period 2) Intangible assets: Acquisition of intangible assets Add: Payable, beginning of period Less: Payable, end of period Cash paid for current period	2020 $ - 112,955 50,922 ( 60,922) $ 102,955 2020 $ 18,977 85,930 ( 425) $ 104,482	2019 $ 4,490 169,835 43,086 ( 50,922) $ 166,489 2019 $ 89,774 - ( 85,930) $ 3,844

cc. Changes in liabilities from financing activities

2020

	Short-term borrowings Long-term borrowings (including due within one year or one operating cycle) Lease	Short-term borrowings Long-term borrowings (including due within one year or one operating cycle) Lease	Short-term borrowings Long-term borrowings (including due within one year or one operating cycle) Lease	liabilities Total liabilities from financing activities	liabilities Total liabilities from financing activities	liabilities Total liabilities from financing activities
$ 150,000 $ 2,360,460 ( 39,659) ( 230,460) - - $ 110,341 $ 2,130,000 2019 Short-term borrowings Long-term borrowings (including due within one year or one operating cycle) Lease				$ 22,324 ( 12,896) 2,506 $ 11,934 liabilities		(

	$ 250,000 ( 100,000) - $ 150,000	$ 3,108,400 ( 747,940) - $ 2,360,460	(	$ 33,151 13,265) 2,438 $ 22,324	(	$ 3,391,551 861,205) 2,438 $ 2,532,784

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7. Related-Party Transactions

a. Name and relationship of related parties

ame and relationship of related parties
	Relationship with the
Names of related party	Company
Sun Q Corporation Limited (Sun Q)	Subsidiaries
Transtouch Technology Inc. (Transtouch)	`〃`
Deltamac (Taiwan) Co., Ltd. (Deltamac)	`〃`
Benmeng Optoelectronics Co., Ltd. (Benmeng) (Note 1)	`〃`
Asia 1 Entertainment Co., Ltd. (Asia 1 Entertainment)	`〃`
CMC Movie Corporation (CMC Movie)	`〃`
CHC International Investment Corporation	`〃`
CMC Entertainment Holding Corporation (CMC Entertainment)	`〃`
Sun Well Solar Corporation (Sun Well)	`〃`
CMC Entertainment Hub Corporation (CMC Entertainment Hub)	`〃`
Fortune (Jiangsu) Multimedia Co., Ltd.	`〃`
FJKL Technology (Suzhou) Corporation (FJKL Suzhou) (Note 2)	`〃`
Com In Dim Corporation (Com In Dim)	`〃`
Taiwan Net Co. Ltd. (Taiwan Net)	`〃`
Jet-Thai Hi-Tech Co. Ltd.`（`Jet-Thai`）`	`〃`
Hotan Corp.`（`Hotan`）`	`〃`
EMC Investment Holding Ltd. (EMC H)	`〃`
Verbatim Americas LLC. (VUS) (Note 3)	`〃`
Verbatim Australia Pty. Ltd. (VAU) (Note 3)	`〃`
Verbatim GmbH (VGmbH) (Note 3)	`〃`
Verbatim (Hong Kong) Limited (VHK) (Note 3)	`〃`
Verbatim Japan (VJP)	`〃`
Vie Show Cinemas Co., Ltd. (Vie Show Cinemas)	Associate
C & Multi Enterprise Corp. (C & Multi)	Other related parties

Note 1: On March 4, 2020, the board of directors resolved to sell the equity, and the settlement was completed on March 5, 2020, over which the Company lost control. Therefore, it was no longer a related party of the Company from this year.
Note 2: The liquidation was completed in 2019.
Note 3: Please refer to Note 6(7)1(3) for details.
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b. Significant transactions with related parties 1) Operating revenue

perating revenue
Sales Subsidiary - VJP -VUS -Others Other related parties Associate	$	2020 987,241 457,972 622,039 - 285 2,067,537	$	2019 - - 220,489 2,719 238 223,446
	$		$

The Company's transaction price for related parties is equivalent to that for non-related parties; the payment term for overseas subsidiaries is 60 to 120 days after the arrival of goods. The payment term for general overseas customers is 30 to 120 days after the arrival of goods, and for general domestic customers, it is open account (O/A) with net 90 to 120 days.

2) Purchases

Purchases of goods: Subsidiaries	$	2020 147,654	$	2019 352,803

The goods are purchased from subsidiaries in accordance with general business terms and conditions.

3) Trade receivable from related parties

a) Notes receivable Trade receivable from related parties: Subsidiary - Sun Well Other related parties - C & Multi	December 31, 2020 $ - - $-	December 31, 2019 $ 3,866 464 $ 4,330

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b) Accounts receivable

Trade receivable from related parties: Subsidiary - VJP - Yongxing Multimedia -VUS -VGmbH -VHK -Hotan -Others Other related parties Loss allowance	December 31, 2020 $ 491,102 86,387 78,469 57,310 45,789 2,698 2,747 - ( 1,278) $ 763,224	December 31, 2019 $ - 23,616 118,365 75,432 23,851 31,134 1,640 1,196 - $ 275,234

4) Trade payables

orne on receivables. rade payables
Subsidiary - Yongxing Multimedia -VJP	December 31, 2020 $ 4,761 2,604 $ 7,365	December 31, 2019
		$ 7,749 - $ 7,749

Trade payable to related parties mainly come from purchase transactions and are due 90 days after the date of purchase. There is no interest borne on trade payable.

5) Financial asset transaction
a) The Company conducted cash capital increase for subsidiary CMC Entertainment Hub (listed in investment using the equity method) in the amount of NT$40,000 in 2020.
b) The total refund from capital reduction by the Company's subsidiary Zhong Jia in 2019 (listed in investment using the equity method) was NT$700,000.
c) The Company sold a total of 536,000 shares of Hexawave, Inc. (listed in financial assets at FVTOCI - non-current) to its subsidiaries in 2019. The proceeds from the disposal were NT$6,222, and there was no gains or losses on the disposal.
260 -

6) Asset transactions:

Subsidiary - EMCH -VJP -Others Total	Financial statement account Franchise (listed in intangible assets) Machinery and equipment Other non-current assets Machinery and equipment	2020 Acquisition price $ - 12,309 1,496 168 $ 13,973		2019 Acquisition price $ 85,930 - - - $ 85,930

7) Other income

a) Rental income

income ental income
Subsidiary - Transtouch -Others	$	2020 20,274 3,487 23,761	$ $	2019 21,222 3,787 25,009
	$

b) Other income

Subsidiaries	$	2020 8,158	$	2019 8,556

8) Lending of funds - related parties

a) Loans to related parties (list in other receivables-related parties)

Subsidiary - Sun Well `－`EMCH - Sun Q Less: Allowance for loss nterest revenue Subsidiary - Sun Well `－`EMCH	December 31, 2020 $ 1,175,300 213,560 329,389 ( 329,389) ( $ 1,388,860 2020 $ 19,980 6,732 $ 26,712	December 31, 2019 $ 1,175,300 689,770 329,389 329,389) $ 1,865,070 2019 $ 21,351 257 $ 21,608
	$ (	$
	$ $	$
		$
	$	$

b) Interest revenue

The funds lent to subsidiaries shall be recovered within 1 year after the funds were lent as agreed. The interest on the funds lent for 2020 and 2019 is based on an annual interest rates of 1.55%–1.7% and 1.7%–2.215%, respectively.

261 -

9) Other receivables

Subsidiaries Less: Allowance for loss	December 31, 2020 $ 96,779 ( 69,624) $ 27,155	December 31, 2019 $ 83,380 ( 69,104) $ 14,276

For other receivables from subsidiaries, they are mainly for the income from receivables for outsourced processing services.

10)Other payables

Subsidiary - EMCH -VJP -Others	December 31, 2020 $ - 22,585 3,006 $ 25,591	December 31, 2019 $ 85,930 - 3,157 $ 89,087

Other payables to subsidiaries mainly include payables for equipment, intangible assets, and hardware parts.

11)Endorsements and guarantees provided

As of December 31, 2020 and 2019, the balance of endorsements and guarantees provided by the Company to some subsidiaries is as follows:

Subsidiary - Benmeng (Note)	December 31, 2020 $-	December 31, 2019 $ 100,000

Note: Please refer to Note 1 in Note 7(1) for details.

c. Information on the remunerations of the key management:

Salaries and other short-term employee benefits Post-employment benefits Total	$	2020 19,626 449 20,075	$	2019 16,905 449 17,354
	$		$

262 -

8. Pledged Assets

Details on the Company's assets pledged as collateral are as follows:

Asset items Time deposits pledged (listed in financial assets at amortized cost - current) Listed stocks (listed in financial assets measured at FVTPL - non-current and investments accounted for using the equity method) Property, plant and equipment Investment property		Carrying amount December 31, 2020 December 31, 2019 $ 2,400 $ 8,400 1,336,478 432,512 2,791,879 2,818,325 85,834 88,108 $ 4,216,591 $ 3,347,345	Purpose of collateral Bank borrowings `〃` `〃` `〃`
		$
		$

263 -

9. Significant contingent liabilities and unrecognized contractual commitments

a. Contingencies: N/A.
b. Commitments:
1) Capital expenditure for contracts signed but not effective is as follows

Property, plant and equipment		December 31, 2020 $ 20,502	December 31, 2019 $ 20,775

2) The Company signed license agreements for relevant optical disc products with Pioneer Corporation, HP Inc., and One-Blue LLC, and paid royalties to the companies in installments based on the sales volume of the relevant products or in installments.

10. Major Disaster Loss

None.

11. Material events after the balance sheet date

Please refer to Note 6(18)6 for the earnings distribution proposal for 2020 proposed by the board of directors on March 25, 2021.

12. Others

a. Capital management

The Company's capital management objectives are to ensure that the Company can continue as a going concern, maintain the best capital structure to reduce capital cost, and provide dividends to shareholders.

264 -

b. Financial instruments

1) Type of financial instruments Financial assets Financial assets at fair value through profit or loss (FVTPL) Financial assets mandatorily at fair value through profit or loss Financial assets at FVTOCI Investment in designated equity instruments selected Financial assets measured at amortized cost/loans and receivables Cash and cash equivalents Financial assets at amortized cost - current Notes receivable Trade receivable Other receivables Refundable deposits (listed in other non-current assets) Financial liabilities Financial liabilities measured at amortized cost Short-term borrowings Notes payable Trade payables Other payables Long-term borrowing (including due within one year or one operating cycle) Guarantee deposits received (listed in other non-current liabilities) Lease liabilities	December 31, 2020 $ 4,608,212 $ 47,441 $ 759,771 2,400 242 1,155,525 1,582,507 5,053 $ 3,505,498 $ 110,341 86,349 349,576 440,689 2,130,000 6,048 $ 3,123,003 $ 11,934	December 31, 2019 $ 3,632,508 $ 32,160 $ 1,101,394 8,400 5,424 1,210,373 2,033,455 5,531 $ 4,364,577 $ 150,000 321,338 212,924 389,643 2,360,460 5,223 $ 3,439,588 $ 22,324

2) Risk management policy

265 -
a) The Company's daily operations are affected by a number of financial risks, including market risks (including exchange rate risk, interest rate risk, and price risk), credit risk, and liquidity risk. In order to reduce the adverse effects of uncertainty on the financial performance of the Company, the Company engages in forward foreign exchange contracts and currency swap contracts to avoid exchange rate risk. The derivatives traded by the Company are for the purpose of hedging risks and are not used for trading or speculation.
b) Risk management is carried out by the Company finance department in accordance with the policies approved by the board of directors. The Company's finance department is responsible for identifying, evaluating, and avoiding financial risks through close collaboration with the Company's operating units. The board of directors has formulated principles for overall risk management, and also provided written policies for specific areas and matters, such as exchange rate risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments, and the investment using remaining liquidity.
3) The nature and level of material financial risks
a) Market risk

Exchange rate risk

i. The Company operates its business transnationally, so it is subject to the exchange rate risk arising from transactions in currencies different from the functional currencies (mainly USD and CNY) used by the Company. The exchange rate risk arises from future business transactions and assets and liabilities recognized.
ii. The management of the Company has established policies to regulate the Company's exchange rate risk in relation to its functional currency. The finance department shall hedge against the overall exchange rate risk. The exchange rate risk is measured by expected transactions with USD and CNY expenditures that are highly likely to occur. Forward foreign exchange contracts are used to reduce the impact of exchange rate fluctuations on the expected cost of inventory purchase.
iii. The Company uses forward foreign exchange contracts to hedge against exchange rate risk while hedging accounting is not applied.
iv. The Company's business involves a number of non-functional currencies (the functional currencies of the Company and some subsidiaries are NTD, while the functional currencies of other subsidiaries are USD and CNY). Therefore, it is affected by exchange rate fluctuations. Information on foreign currency assets and liabilities influenced by significant exchange rate fluctuations is as follows:

December 31, 2020

266 -

(Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD EUR: NTD CNY: NTD Non-monetary items USD: NTD Financial liabilities Monetary items USD: NTD JPY: NTD (Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD Non-monetary items USD: NTD Financial liabilities Monetary items USD: NTD JPY: NTD		currencies (thousand) (NTD)
		$ 55,085 28.10 $ 1,547,889 119,366 0.2725 32,527 788 34.59 27,257 9,488 4.325 41,036 $ 148,774 28.10 $ 4,180,549 $ 5,935 28.10 $ 166,774 43,465 0.2725 11,844 December 31, 2019 Foreign currencies (thousand) Exchange rate Carrying Amount (NTD)
		$ 78,823 29.99 $ 2,363,902 151,093 0.2761 41,717 $ 132,224 29.99 $ 3,965,398 $ 3,689 29.99 $ 110,633 30,875 0.2761 8,525

267 -
v. The information on unrealized exchange gains or losses on Company's monetary items influenced by significant exchange rate fluctuations is as follows:

(Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD EUR: NTD CNY: NTD Financial liabilities Monetary items USD: NTD JPY: NTD (Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD Financial liabilities Monetary items USD: NTD JPY: NTD	Foreign currencies (thousand)	2020 Exchange gains or losses Exchange rate Carrying amount
	$ - 28.10 ($ 104,110) - 0.2725 ( 430) - 34.59 749 - 4.325 285 $ - 28.10 ($ 11,217) - 0.2725 ( 157) 2019 Exchange gains or losses Foreign currencies (thousand) Exchange rate Carrying amount
	$ - 29.99 $ 58,723 - 0.2761 196 $ - 29.99 $ 2,748 - 0.2761 40

268 -

vi. The Company's foreign currency market risk analysis due to significant influence of exchange rate fluctuations is as follows:

(Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD EUR: NTD CNY: NTD Financial liabilities Monetary items USD: NTD JPY: NTD (Foreign currency: Functional currency) Financial assets Monetary items USD: NTD JPY: NTD Financial liabilities Monetary items USD: NTD JPY: NTD	Exchange rate band 1 % 1 % 1 % 1 % 1 % 1 % Exchange rate band 1 % 1 % 1 % 1 %	2020 Sensitivity analysis Effect on profit and loss Effect on other comprehensive income $ 15,479 $ - 325 - 273 - 410 - $ 1,668 $ - 118 - 2019 Sensitivity analysis Effect on profit and loss Effect on other comprehensive income $ 23,639 $ - 417 - $ 1,106 $ - 85 -
		$ $

269 -

Price risk

i. The Company's equity instruments exposed to price risk are financial assets held at FVTPL and financial assets at FVTOCI. To manage its price risk arising from investments in equity instruments, the Company diversifies its portfolio. Diversification of the portfolio is conducted in accordance with limits set by the Company.
ii. The Company primarily invests in equity instruments and open-end funds issued by domestic companies, and the price of such equity instruments is affected by the uncertainty of the future value of the investment target. If the price of said equity instruments rose or fell by 1%, with all other factors remaining unchanged, the net income after tax for 2020 and 2019 would have increased or decreased by NT$46,079 and NT$36,325, respectively, due to the gains or losses on equity instruments at FVTPL, and the other comprehensive income would have increased or decreased by NT$474 and NT$322 for 2020 and 2019, respectively, because of the gains or losses on the equity instrument investment at FVTOCI .

Interest rate risk of cash flow and fair value

i. The Company's interest rate risk mainly comes from long-term borrowings issued at floating interest rates, exposing the Group to the interest rate risk of cash flow. In 2020 and 2019, the Company's loans taken out at floating interest rates were mainly denominated in NTD, USD, and CNY.
ii. The Company's loans are measured at amortized cost and the annual interest rate will be repriced every year according to the contracts. Therefore, the Company is exposed to the risk of future market interest rate changes.
iii. When the NTD borrowing interest rate rose or fell by 0.25%, while all other factors remained unchanged, the net income (loss) after tax would have decreased or increased by NT$4,260 and NT$5,901 in 2020 and 2019, respectively, as the interest expenses would change with the floating interest rates for the borrowings.

b) Credit risk

i. The credit risk of the Company is the risk of financial loss suffered by the Company arising from the failure of customers or counterparties of financial instruments to fulfill contractual obligations. It mainly comes from counterparties' inability to settle the contractual cash flow of trade receivable in accordance with the payment terms.
ii. The Company has established credit risk management from the Company's perspective. For banks and financial institutions with whom it is dealing, only those with good credit ratings can be accepted as transaction counterparties. In accordance with the internal credit policy, the Company must conduct management and credit risk analysis of each new customer before deciding payment and delivery terms and conditions. The internal risk control system evaluates the credit quality of customers by considering their financial positions, past experience, and other factors. Individual risk limits are set by the board of directors based on internal or external ratings, and the drawdown of credit limits is regularly monitored.
iii. The Company adopts IFRS 9 to set the premise and assumption that when a contract payment is overdue for more than 90 days according to the
270 -

agreed payment terms, it is deemed to have been in default.

iv. The Company adopts IFRS 9 to set the following assumptions as the basis for judging whether the credit risk of financial instruments has increased significantly since initial recognition:

v. The Company groups customers' trade receivable according to the customers' characteristics, and adopts a simplified approach to estimate expected credit losses based on a provision matrix and the loss rate method.
vi. After the recourse procedures, the Company writes off the amount of financial assets that cannot be reasonably expected to be recovered. However, the Company will continue to carry out the legal recourse procedures to preserve the creditor's rights. As of December 31, 2020 and 2019, the Company had no claims that had been written off nor recourse activities underway.
vii.
(i) The Company has included forward-looking considerations for the future global business information and adjusted the loss rate established based on historical and current information for a specific period to estimate the loss allowance for the notes and trade receivable of customers with general credit ratings (including related parties). The provision matrix as of December 31, 2020 and 2019 is as follows:

as	follows:
December 31, 2020 Not past due Overdue for 1–30 days Overdue for 31–60 days Overdue for 61–90 days Overdue for 91–180 days Overdue for more than 180 days Total December 31, 2019 Not past due Overdue for 1–30 days Overdue for 31–60 days Overdue for 61–90 days Overdue for 91–180 days Overdue for more than 180 days Total	Expected loss rate 0.5% 2.7% 4.4% 8.5% 10.6~22.4% 26.7~100% Expected loss rate 0.5% 2.7% 4.4% 8.5% 10.6~22.4% 26.7~100%	Total carrying amount $30,103 8,865 4,142 2,231 23,928 163,543 $232,812 Total carrying amount $80,870 42,737 36,822 17,138 76,893 10,274 $264,734	Loss	allowance ($151) (239) (182) (190) (4,057) (93,203) ($98,022) allowance ($404) (1,154) (1,620) (1,457) (12,863) (10,274) ($27,772)	Total $29,952 8,626 3,960 2,041 19,871 70,340 $134,790
			Loss
					Total $80,466 41,583 35,202 15,681 64,030 - $236,962

(ii) For customers with good credit ratings, the Company adopts the

271 -

loss rate method to calculate the expected credit loss because the expected credit impairment is not significant. The expected loss rate is 0.2%. The total amount of trade receivable as of December 31, 2020 and 2019 was NT$1,022,772 and NT$980,245, respectively, and the loss allowance was NT$1,795 and NT$1,410, respectively.

viii. The table of the changes in the Company's simplified loss allowance for notes and trade receivable (including related parties), other trade receivable (including related parties), and overdue receivables is as follows:

2020

Notes receivable and trade receivable (including related parties) Other receivables (including related parties)	Notes receivable and trade receivable (including related parties) Other receivables (including related parties)	Overdue receivables Total	Overdue receivables Total	Overdue receivables Total
$ 29,182 72,669 - ( 2,034) $ 99,817 2019 Notes receivable and trade receivable (including related parties) r	$ 406,914 520 - ( - $ 407,434 Other eceivables	$545,725 $ 981,821 - 73,189 201) ( 201) ( 494,969) ( 497,003) $ 50,555 $ 557,806 Overdue receivables Total
				$ 557,806
				Total
$ 25,930 3,252 - $ 29,182	$ 406,914 - - $ 406,914	$553,999 - ( 8,274) $545,725	$ 986,843 3,252 ( 8,274)
				$ 981,821

In the losses recognized in 2020 and 2019, the impairment (losses) gains arising from receivables from customer contracts were NT$72,468 and NT$5,022, respectively.

c) Liquidity risk
i. The cash flow forecast is executed by each operating entity in the Company and is compiled by the Group’s finance department. The Company's finance department monitors the forecast of the Company's liquidity requirements to ensure that it has sufficient funds to meet operational needs.
272 -
ii. In the table below, The Company's non-derivative financial liabilities are grouped according to their relevant maturity dates, and are analyzed based on the remaining period from the balance sheet date to the contractual maturity date. The contractual cash flow amounts disclosed in the table below are undiscounted amounts.

	Non-derivative financial liabilities: December 31, 2020 Short-term borrowings Notes payable Trade payables Other payables Lease liabilities Long-term borrowings (including due within one year or one operating cycle and estimated interest accrued) Guarantee deposits received (listed in other non-current liabilities) Non-derivative financial liabilities: December 31, 2019 Short-term borrowings Notes payable Trade payables Other payables Lease liabilities Long-term borrowings (including due within one year or one operating cycle and estimated interest accrued) Guarantee deposits received (listed in other non-current liabilities)	Within 1 year $ 110,341 86,349 349,576 440,689 10,072 570,948 - Within 1 year $ 150,000 321,338 212,924 389,643 11,916 911,406 -	1-2 years 2-5 years $ - $ - - - - - - - 1,980 - 587,991 1,016,333 1,455 916 1-2 years 2-5 years $ - $ - - - - - - - 8,772 1,980 697,372 819,992 630 916	Over 5 years $ - - - - - - 3,677 Over 5 years $ - - - - - - 3,677

273 -
c. Fair value information:
1) The fair value levels of the financial instruments and non-financial instruments measured using the valuation technique are defined as follows:
- Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities on the measurement date. An active market refers to a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the listed stocks and beneficiary certificates invested by the Company belong to this level.
- Level 2: Inputs, other than quoted market prices within level 1 that are observable, either directly or indirectly for assets or liabilities. The fair value of most of the derivatives invested by the Company belongs to this level.
- Level-III: Unobservable asset or liability inputs. The equity instruments without active markets invested by the Company belong to this level.
2) Financial instruments not measured at fair value

The carrying amounts of the Company's financial instruments not measured at fair value, including cash and cash equivalents, financial assets at amortized cost, notes receivable, trade receivable, other receivables, refundable deposits (listed in other non-current assets), overdue receivables (listed in other non-current assets), short-term borrowings, notes payables, trade payables, other payables, long-term borrowings (including due within one year or one operating cycle), and guarantee deposits received (listed in other non-current liabilities), are reasonable approximations of the fair values.

3) Financial and non-financial instruments measured at fair value are classified by the Company based on the nature, characteristics, risk, and the level of fair value of assets and liabilities. The relevant information is as follows:
a) The Company's classification is based on the nature of assets and liabilities. The relevant information is as follows:

December 31, 2020 Assets Fair value on a recurring basis Financial assets at fair value through profit or loss (FVTPL) Equity securities Derivative instruments Financial assets at FVTOCI Equity securities Total		Level 1 $ 4,607,911 - - $ 4,607,911	Level 2 $ - 301 - $ 301	Level 3 $ - - 47,441 $ 47,441	Total $4,607,911 301 47,441 $4,655,653

274 -

December 31, Level 1 Level 2 Level 3 Total 2019 Assets Fair value on a recurring basis Financial assets at fair value through profit or loss (FVTPL) Equity $ 3,632,508 $ - $ - $3,632,508 securities Financial assets at FVTOCI Equity securities - - 32,160 32,160 Total $ 3,632,508 $ - $ 32,160 $3,664,668

b) The methods and assumptions used by the Company to measure fair value are explained as follows:
i. The market quoted prices adopted by the Company as fair value inputs (i.e. Level 1) are listed below by characteristics:

Market quoted prices

Listed Stocks Closing price

ii. Except for the above-mentioned financial instruments with active markets, the fair value of other financial instruments is obtained through valuation techniques or with reference to the quoted prices of counterparties.
iii. When evaluating non-standard and less complex financial instruments, the Company adopts the valuation techniques widely used by market participants. The parameters used in the valuation models for such financial instruments are usually market observable information.
iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present discounted value techniques and option pricing models. Forward exchange contracts are usually valued based on current forward exchange rates.
v. The output of the valuation models is an estimated value, and the valuation techniques may not reflect all the relevant factors of the financial instruments and non-financial instruments held by the Company. Therefore, the estimated value of the valuation models will be appropriately adjusted according to additional parameters.
4) There were no transfers between Level 1 and Level 2 fair value in 2020 and 2019.
5) The table below shows the changes in Level 3 fair value in 2020 and 2019:

January 1 Increase for the current period Decrease for the current period Listed in unrealized gain/loss on investments in equity instruments at FVTOCI December 31	2020 Equity instruments $ 32,160 - ( 1,934) 17,215 $ 47,441	2019 Equity instruments $ 31,860 4,471 ( 15,299) 11,128 $ 32,160

275 -
6) There were no transfers into or out of Level 3 fair value in 2020 and 2019.
7) In the Company's valuation process for fair value classified as Level 3, the strategic investment department is responsible for independent fair value verification for financial instruments, uses data from independent sources to make the valuation results close to the market level, and confirms that the source of the data is independent, reliable, consistent with other resources, and representative of the executable price, while regularly calibrating the valuation model, updating the inputs and data required by the valuation model, and making any other necessary fair value adjustments to ensure that the valuation results are reasonable.
8) The quantitative information on the significant unobservable inputs of the valuation model used in the Level 3 fair value measurement and the sensitivity analysis of the significant unobservable input change are explained as follows:

		Fair value on December 31, 2020	Valuation techniques	Valuation techniques	Significant unobservable inputs	Interval (weighted average)	Relationship between input and fair value	Relationship between input and fair value
Non-derivative equity instruments:
Unlisted stocks		$46,575	Comparable		Price-to-earnings	N/A	The higher	the
			public		ratio, price-to-book		multiple,	the
			company		ratio, enterprise		higher the	fair
			approach		value-to-operating		value;
					income ratio,
					enterprise		The higher	the
					value-to-earnings		discount	for
					before interest,		market liquidity,
					taxes, depreciation,		the lower	the
					and amortization		fair value.
					ratio, and lack of
					market liquidity
					discount
Stocks	of	866	Net	asset	N/A	N/A	N/A
venture capital			value
companies			method
		Fair value on December 31, 2019	Valuation techniques		Significant unobservable inputs	Interval (weighted average)	Relationship between input and fair value
Non-derivative equity instruments:
Unlisted stocks		$28,579	Comparable		Price-to-earnings	N/A	The higher	the
			public		ratio, price-to-book		multiple,	the
			company		ratio, enterprise		higher the	fair
			approach		value-to-operating		value;
					income ratio,
					enterprise		The higher	the
					value-to-earnings		discount	for
					before interest,		market liquidity,
					taxes, depreciation,		the lower	the
					and amortization		fair value.
					ratio, and lack of
					market liquidity
					discount
Stocks	of	3,581	Net	asset	N/A	N/A	N/A
venture capital			value
companies			method

9) The Company has selected valuation model and valuation parameters after careful evaluation, but different valuation results may occur due to the use of different valuation models or valuation parameters.
276 -

13. Supplementary Disclosures

a. Information on significant transactions

1) Loans to others: Table 1.
2) Endorsements/Guarantees provided to others: Table 2.
3) Marketable securities held at the end of the period (disclosing those amounting to at least NT$100 million while excluding investment in subsidiaries, associates, and joint ventures): Table 3.
4) Marketable securities acquired or sold amounting to at least NT$300 million or 20% of the paid-in capital: Table 4.
5) Acquisition of real estate amounting to at least NT$300 million or 20% of the paid-in capital: N/A.
6) Disposal of real estate amounting to at least NT$300 million or 20% of the paid-in capital: Table 5.
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 6.
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 7.
9) Trading in derivative instruments: Note 6(2).
10) Business relations and important transactions between parent company and subsidiaries and among subsidiaries and amounts: Table 8.
b. Information on investees

c. Information on investments in mainland China
1) Basic information: Table 10.
2) Significant transactions with investees in mainland China, either directly or indirectly, through a business in a third region, the prices, payment terms, and unrealized gains or losses: Note 7: Related-party transactions and Note 13(1)10.

Information on major shareholders

Information on major shareholders: Table 11.

14. Segment Information

N/A.

277 -

TABLE 1

CMC Magnetics Corporation and Its Subsidiaries Loans to Others For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

No. (Note 1) Lender Borrower 0 The Company Sun Well 0 The Company EMCH 1 CMC Movie Asia 1 Entertainment 2 EMCH Yongxing Multimedia 2 EMCH VJP 3 SuperNet FJKL 4 Yongxing Electronic Sun Biotech Limited 5 CMC Entertainment Asia 1 Entertainment 6 Deltamac Asia 1 Entertainment 7 Zhong Jia Asia 1 Entertainment 8 VAU VHK	F	inancial Statement Account (Note 2) Other receivables -Related party Other receivables -Related party Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Related Party Status Y Y Y Y Y N Y Y Y Y Y	Highest Amount of the Period (Note 3) $1,175,300 697,360 34,000 250,090 28,110 10,612 16,502 10,000 19,673 280,000 45,308	Highest Amount of the Period (Note 3) $1,175,300 697,360 34,000 250,090 28,110 10,612 16,502 10,000 19,673 280,000 45,308	Ending Balance (Note 14) $1,175,300 213,560 34,000 250,090 27,250 - - 9,883 - - 13,148 220,000 - -	Actual Amount Drawn Down $1,175,300 213,560 34,000 250,090 27,250 9,883 11,897 217,000	Range of Interest Rates (%) 1.7 1.55 1.17 0 0 0 4.35 1.17 2.4 1.5 2.328	Type of Lending (Note 4) Tra 2 $- 2 - 2 - 2 - 2 - 2 - 2 - 2 - 1 2 - 2 -	Tra	Amount of nsaction (Note 5) 2,808	Reason for Short-term Financing (Note 6) Working capital $- Working capital - Working capital - Working capital - Working capital - Working capital - Working capital - Working capital - Working capital Working capital - Working capital -	Los	s Allowance Provided Name Movable propert y - - - - - - - 25 - - -	Collateral Value $253,122 - - - - - - - - - -	Limi	t for Individual Borrower $2,846,486 2,846,486 68,773 557,202 557,202 140,500 47,609 20,302 2,808 300,000 374,806	Total Limit $7,590,630 7,590,630 68,773 1,485,871 1,485,871 157,071 No 47,609 20,302 154,578 No 1,487,698 374,806	Remarks Note 7 Note 7 Note 8 Note 10 Note 10 tes 11 and 15 Note 8 Note 8 tes 12 and 16 Note 9 Note 13
					o

Note 1: The information on funds lent between the Company and its subsidiaries shall be entered as follows:
(3) The Company is coded “0”.
(4) The subsidiaries are coded sequentially beginning from “1” by each individual company.
Note 2: The financial statement accounts including trade receivable from associates, amount receivable from related parties, shareholders' transactions, advance payments, temporary debits, etc.; in the case of lending of funds, this field shall be entered.
Note 3: The maximum balance of loans to others in the current year.
Note 4: The nature of lending of funds shall be listed as business transactions or necessary for short-term financing.
(3) In the case of business transactions, please enter 1.
(4) If there is a need for short-term financing, please enter 2.
Note 5: If the nature of lending of funds belongs to business transactions, the amount of business transactions shall be entered. The amount of business transactions refers to the amounts of business transactions between the lender and the borrower in the most recent year.
Note 6: If the nature of lending of funds belongs to a need for short-term financing, the reasons for the necessity of the lending and the purpose of borrowing, such as repayment of loans, purchase of equipment, or working capital shall be specified.

Note 8: The upper limit on the funds lent is 40% of the current net worth of the lender.

The limit on the funds lent to each entity is 40% of the net worth of the lender.

Note 9: The upper limit on the funds lent is 40% of the current net worth of the lender. The limit on the funds lent to each entity shall not exceed NT$300,000.
The upper limit on the parent company’s loans to others shall not exceed 40% of the company’s net worth.
Note 10: The upper limit on the funds lent is 40% of the current net worth of the lender. The limit on the funds lent to each entity shall not exceed US$10,000 thousand. For subsidiaries in which the Company holds 50% of the shares directly and indirectly without business conducted between both parties, the limit on the funds lent to each of said subsidiaries is 15% of the Company's net worth. For foreign companies in which the parent company holds 100% of the shares directly and indirectly, the upper limit on the funds lent shall not exceed 50% of the Company’s current net worth.
Note 11: The upper limit on the funds lent is 40% of the current net value of the lender. For companies in which the Company does not hold 50% of the shares directly or indirectly without business conducted between both parties, the limit on the funds lent to each of said companies shall not exceed US$5,000 thousand.
Note 12: The upper limit on the funds lent shall not exceed 40% of the net worth in the current period; if it is a business transaction, it shall not exceed the transaction amount. The "business transaction amount" refers to the purchase or sale of goods between both parties, whichever is higher.
Note 13: The upper limit on the funds lent shall not exceed the current net worth of the lender. For the parent company and foreign companies in which the parent company holds 100% of the shares directly and indirectly, the limit on the funds lent shall not exceed the net worth of the Company.

Note 14: The translation is based on the original currency multiplied by the exchange rate at the end of the period.

Note 15: Relevant processing procedures have been reported to the board of directors in accordance with the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees.

Note 16: On March 8, 2021, the Deltamac's board of directors approved an improvement plan to improve the situation of excess of loans to others.

Table 1 Page 1

278 -

TABLE 2

CMC Magnetics Corporation and Its Subsidiaries Endorsements/Guarantees Provided to Others For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

			Party Endorsed/Guaranteed	Party Endorsed/Guaranteed
								Actual			Cumulative
						Maximum Balance of	Balance of	Amount			Endorsements/Guarantee				To Entity in
		Company Name			Limit of	Endorsement/Guarante	Endorsement/Guarante	Drawn	Endorsement/Guarantee		s to the Net Equity in the	Upper Limit of	Parent to	Subsidiary to	Mainland
		(Endorsement/Guarante		Relationship	Endorsement/Guarante	e For the Current	e, End of Period (Note	Down (Note		Secured with	Latest Financial	Endorsements/Guarantee	subsidiary	parent (Note	China (Note
No. (Note	1)	e Provider)	Company Name	(Note 2)	e for a Single Entity	Period (Note 4)	5)	6)		Collateral	Statements (%)	s	(Note 7)	7)	7)	Remarks
1		CMC Entertainment	CMC Entertainment Hub	4	$15,226	$1,632	$1,632	$ -	$	-	3.22	$15,226	N	N	N	Note 3

Note 1: The description of No. column is as follows:

(3) The issuer is coded “0”.
(4) The investees are coded sequentially beginning from “1” by each individual company.

Note 2: There are seven types of relationships between the endorsement/guarantee provider and the endorsed/guaranteed party. Just enter the code:

(8) A company with which it conducts business.

(9) A subsidiary in which the Company holds at least 50% of the voting shares directly and indirectly.

(10) A company that holds at least 50% of the Company's voting shares directly and indirectly.

(11) Between companies in which the Company holds at least 90% of the voting shares directly and indirectly.

(12) Between companies in the same industry or joint applicants to undertake projects who are required to provide mutual endorsements/guarantees to the other company in accordance with the contractual terms.

(13) Companies that are endorsed and guaranteed by all shareholders based on their shareholding ratios because of a joint investment relationship.
(14) The joint guarantee for the performance of a pre-sale property sales contract between entities in the same industry in accordance with the Consumer Protection Act.
Note 3: The upper limit of CMC Entertainment endorsements/guarantees to external entities shall not exceed 30% of its net worth of the current period, and the limit of endorsement/guarantee to a single enterprise shall not exceed 30% of its net worth of the current period.

Note 4: The maximum balance of endorsements/guarantees provided to others in the current year.

Note 6: The actual amount drawn down by the endorsed/guaranteed company within the endorsement/guarantee balance shall be entered.

Note 7: "Y" shall be entered only for the endorsement/guarantee provided by the publicly listed parent company to subsidiary, by subsidiary to the publicly listed parent company, and to entities in mainland China. Note 8: As of December 31, 2020, Transtouch's balance of customs guarantee provided to the Customs Office for post-release duty payments was NT$2,261.

Table 2 Page 1

279 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) Relationship with Securities Issuer General Ledger Account Number of Shares		End of Period Carrying Amount (Note 2) Shareholding Percentage (%)	Fair Value Remarks
The Company Stock of Taiwan High Speed Rail Corporation Financial assets at FVTPL - current 39,133,000 Stock of Chateau International Development Company Limited " 12,391,421 Stock of FarGlory Hotel Co., Ltd " 3,346,000 Stock of United Microelectronics Corp. " 4,553,000 Stock of Chung Hsin Electric & Machinery Manufacturing Corporation " 6,557,000 Stock of Tainan Enterprises Co., Ltd. " 13,645,000 Stock of Largan Precision Company Limited " 148,000 Stock of Tatung Company " Adjustment to valuation Stock of Taiwan High Speed Rail Corporation Financial assets at FVTPL - non-current 28,500,000 Stock of FarGlory Hotel Co., Ltd " 5,000,000 Stock of Chateau International Development Company Limited " 3,800,000 Stock of Big Sunshine Co., Ltd. " Adjustment to valuation Stock of Riselink Venture Capital Corp. Financial assets at FVTOCI - non-current Adjustment to valuation	(	$ 1,299,241 0.7 386,650 11.11 98,042 3.19 213,668 0.04 362,566 1.38 364,779 9.27 489,726 0.11 228,858 140,075) $ 3,303,455 $946,219 0.51 146,505 4.76 118,572 3.41 6,616 86,544 $ 1,304,456 $5,920 41,521 $ 47,441	$ 1,240,516 354,395 173,657 214,674 351,455 259,937 472,860 235,961 - $ 3,303,455 $ 903,450 Note 3 259,500 Note 3 108,680 Note 3 32,826 - $ 1,304,456 $ 47,441

		$

Table 3 Page 1

280 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) Relationship with Securities Issuer General Ledger Account			End of Period	Fair Value Remarks
	Number of Shares		Carrying Amount (Note 2) Shareholding Percentage (%)
Zhong Jia Stock of FarGlory Hotel Co., Ltd Financial assets at FVTPL - current Shin Kong Financial Holding Co.,Ltd. Preferred Shares B " Stock of FDC International Hotels Corporation " Adjustment to valuation Stock of Chateau International Development Company Limited Financial assets at FVTPL - non-current Millerful No.1 REIT " Cathay No.1 Real Estate Investment Trust " Stock of Taiwan High Speed Rail Corporation " Stock of Tainan Enterprises Co., Ltd. " Stock of Chung Hsin Electric & Machinery Manufacturing Corporation " Adjustment to valuation Stock of Orgchem Technologies, Inc. Financial assets at FVTOCI - non-current Adjustment to valuation	9,078,000 3,309,000 5,928,269 25,251,000 9,521,000 2,256,730	(	$ $	$ 471,148 140,136 113,152 - $ 724,436 $ 169,548 210,800 Note 3 280,650 Note 3 800,457 Note 3 181,375 120,960 - $ 1,763,790 $ 79,603
			$

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates, and securities derived from the items above that fall within the scope of IFRS 9 "Financial Instruments". Note 2: For those measured at fair value, please fill in the carrying amount after fair value valuation adjustment. Note 3: As of December 31, 2020, Zhong Jia pledged securities of NT$285,300 and beneficiary certificates of NT$491,450 as collateral.

Table 3 Page 2

281 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) CIA Stock of Transpac Corporation Supernet in Shanghai-Hong Kong Stock Connect Stock of High Connection Density, Inc. CMC Movie Principal-protected film investment agreements Stock of Mandarin Vision Co., Ltd.	Relationship with Securities Issuer General Ledger Account Financial assets at FVTOCI - non-current Adjustment to valuation Financial assets at FVTPL - current Adjustment to valuation Financial assets at FVTOCI - non-current Adjustment to valuation Financial assets at FVTPL - non-current Financial assets at FVTOCI - non-current Adjustment to valuation	Number of Shares	End of Period Carrying Amount (Note 2) Shareholding Percentage (%) $ 7,901 2,192 $ 10,093 $ 93,768 -33,442 $ 60,326 $ 135,073 12,462 $ 147,535 $ 20,866 $ 21,500 ( 17,213) $ 4,287	$	Fair Value

			$
			$
			$ $
			$ $	$
			$	$
			$ (	$
			$

Table 3 Page 3

282 -

TABLE 3

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Held at the End of the Period (Excluding Investment in Subsidiaries, Associates, and Joint Ventures) December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Securities held by Type and Name of Securities (Note 1) Relationship with Securities Issuer General Ledger Account		End of Period		Remarks
	Number of Shares	Carrying Amount (Note 2) Shareholding Percentage (%)	Fair Value
Deltamac Common stock of Self Pick Inc. Financial assets at FVTOCI - non-current Adjustment to valuation Transtouch Mega 3-Year Maturity Emerging Market Bond Fund Financial assets at FVTPL - current Taiwan Cement Corp. 2nd Preferred Shares " Adjustment to valuation Privately offered fund—First Financial–UBS Global Real Estate Private Equity Securities Investment Trust Fund Financial assets at FVTPL - non-current Adjustment to valuation EMCH CDIB Yida Private Equity (Kunshan) Biomedical Equity Investment Fund Financial assets at FVTOCI - non-current Adjustment to valuation Yongxing Electronic CDIB Yida Private Equity (Kunshan) Investment Fund Financial assets at FVTOCI - non-current Adjustment to valuation	500,000 (	$ 828 6.25 467) $ 361 $ 78,335 20,000 58 $ 98,393 $ 9,047 ( 681) $ 8,366 $ 20,700 311 $ 21,011 $ 58,210 946 $ 59,156	$	361 $ 98,393 8,366 21,011 59,156
			$
			$
			$

Table 3 Page 4 - 283 -

TABLE 4

CMC Magnetics Corporation and Its Subsidiaries

Marketable Securities Acquired or Sold Amounting to at Least NT$300 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Trading
Company
Type and Name of Securities
(Note1)
General Ledger Account
Counterparty
(Note2)
Relationship
(Note2)
Number of
Shares,
Beginning of
Period
(Thousand
Shares)
Amount

Acquired (Note 3)
Sold (Note 3)
End of Period

Number of
Shares
(Thousand
Shares)
Amount
Number of
Shares
(Thousand
Shares)
SellingPrice
BookCost
Gains or Losses on
Disposal
Number of
Shares
(Thousand
Shares)
Amount

The CompanyStock of Taiwan High Speed
Rail Corporation
Financial assets at FVTPL -
current and non-current
-
-
63,547
$ 2,463,011
Stock
of
Chung
Hsin
Electric
&
Machinery
Manufacturing Corporation
Financial assets at FVTPL -
current
-
-
4,365
93,966
Stock
of
United
Microelectronics Corp.
"
-
-
-
-
Stock of Tatung Company
"
-
-
2,207
47,132
Stock of Hon Hai Precision
Industry Co., Ltd.
"
-
-
-
-
Stock
of
Taiwan
Semiconductor
Manufacturing Co., Ltd.
"
-
-
-
-
Stock of Fubon Financial
Holding Co., Ltd.
"
-
-
-
-
Stock of Cathay Financial
Holdings
"
-
-
-
-
Stock of CTBC Financial
Holding Co., Ltd.
"
-
-
-
-
Stock of First Financial
Holding Co., Ltd.
"
-
-
-
-
Stock of Largan Precision
Company Limited
"
-
-
-
-
Stock
of
the
Shanghai
Commercial
&
Savings
Bank, Ltd.
"
-
-
-
-
Stock of Globalwafers. Co.,
Ltd.
"
-
-
-
-
Zhong Jia
Stock of Tatung Company
Financial assets at FVTPL -
current
-
-
2,028
43,101
Supernet
Stock
of
Sands
China
Limited
Financial assets at FVTPL -
current
-
-16
2,235

91,465
$ 2,938,087
87,379
$ 2,941,371
$ 3,155,638
($ 214,267)
67,633
$ 2,245,460

43,965
1,934,576
41,773
1,767,696
1,665,976
101,720
6,557
362,566
58,796
1,968,262
54,243
1,841,771
1,754,594
87,177
4,553
213,668

37,542
725,486
37,561
795,928
729,170
66,758
2,188
43,448
8,165
672,485
8,165
657,214
672,485
( 15,271)
-
-
9,403
3,647,722
9,403
3,739,165
3,647,722
91,443
-
-
14,796
620,025
14,796
617,642
620,025
( 2,383)
-
-
10,660
423,194
10,660
423,358
423,194
164
-
-
16,729
337,793
16,729
326,623
337,793
( 11,170)
-
-
20,311
436,188
20,311
444,571
436,188
8,383
-
-
1,509
5,129,684
1,361
4,619,085
4,639,958
( 20,873)
148
489,726
10,318
431,971
10,318
431,373
431,971
( 598)
-
-
1,947
793,642
1,947
780,609
793,642
( 13,033)
-
-

45,479
931,059
44,851
922,684
903,082
19,602
2,656
71,078

4,082
472,434
4,074
474,909
471,671
3,238
24
2,998

Note 1: The securities mentioned in this table refer to stocks, bonds, beneficiary certificates, and securities derived from the items above. Note 2: For securities recognized as investments accounted for using the equity method, these two columns must be entered, with the remaining columns left blank. Note 3: Accumulated amounts of marketable securities acquired or disposed of shall be calculated separately based on market prices to determine whether they amount to $300 million or 20% of the paid-in capital.

Table 4 Page 1

284 -

TABLE 5

CMC Magnetics Corporation and Its Subsidiaries Disposal of Real Estate Amounting to at Least NT$300 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Company Asset Date of Occurrence Original Acquisition Date Carrying amount Transaction Amount Proceeds Collection Gains or Losses on Disposal Counterparty Relationship	Unit: NT$ thousands (Unless specified otherwise)
	Purpose of Disposal Basis or Reference for Price Setting Other Agreed Matters
Jet-Thai Land, buildings and structures December 10, 2019 (Note 4) May 23, 2007 $271,828 $505,441 Proceeds fully collected $212,335 TPV Technology (Thailand) Co., Ltd. Non-related party	To increase working capital and improve financial structure Note 1 N/A

Note 1: The price was determined with reference to the valuation report issued by Tobtavee Appraisal And Service Co., Ltd.

Note 2: The amount of paid-in capital refers to the amount of paid-in capital of the parent company. If the issuer’s stock has no par value or the par value per share is not NT$10, the transaction amount of 20% of the paid-in capital shall be calculated based on the 10% of the equity attributable to owners of the parent company on the balance sheet. Note 3: The date of occurrence refers to the date when the transaction contract is signed, the payment date, the date of transaction made by agents, the ownership transfer date, the board resolution date, or the date when the transaction counterparty and transaction amount are fully determined, whichever is earlier.

Note 4: The transaction was completed in 2020.

Table 5 Page 1

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TABLE 6

CMC Magnetics Corporation and Its Subsidiaries

Total Purchases from or Sales to Related Parties Amounting to at least NT$100 Million or 20% of the Paid-in Capital For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Company
Counterparty
Relationship Transaction
Situation and Reason that Transaction
Conditions are Different from General
Ones (Note 1)
Notes/Trade Receivable (Payable)
Purchase (Sale)
Amount
Proportion to Total
Purchases (Sales)
Credit Period
Unit Price
Credit Period
Balance
Proportion to Total
Notes/Trade
Receivable
(Payable)
Remarks (Note2)

The Company
Yongxing
Multimedia
Subsidiary of
sub-subsidiary
〞
〞
〞
〞
VJP
Sub-subsidiary
〞
VUS
〞
〞
VGmbH
〞
VHK
Yongxing
Multimedia
Sister companies Purchase
$118,425
6%
As it is between
parent and
sub-subsidiary, the
credit period is
slightly longer
than that of general
customers
Equivalent to
non-related party
As it is between
parent and
sub-subsidiary, the
credit period is
slightly longer
than that of general
customers
$4,761
1%
Sale
173,692
4%
〞
〞
〞
86,387
7%
Sale
987,241
25%
No significant
difference from
general
transactions
〞
No significant
difference from
general
transactions
491,102
42%
Sale
457,972
12%
〞
〞
〞
78,469
7%
Sale
342,493
9%
〞
〞
〞
57,310
5%
Sale
134,033
26%
〞
〞
〞
91,280
62%

Note 1: If related-party transaction terms are different from general transaction terms, situations and reasons for the differences shall be specified in the unit price and the credit period columns. Note 2: In case of advance receipts (prepayments), reasons, the terms of the agreement, the amount and differences from the general transactions shall be specified in the Remarks column.

Table 6 Page 1

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TABLE 7

CMC Magnetics Corporation and Its Subsidiaries

Receivables from Related Parties Amounting to at Least NT$100 Million or 20% of the Paid-in Capital December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Company under Trade Receivable Counterparty Relationship Balance of Trade Receivable from Related Parties (Note1) Turnover Rate (Times)	Overdue Receivables from Related Parties Amount Response Method Recovered Amount from Related Party After Balance Sheet Date Loss Allowance Provided
The Company Sun Well Subsidiary $1,195,992 Note 2 `〞` VJP Sub-subsidiary 491,102 4.02 `〞` EMCH Subsidiary 214,587 Note 2 EMCH Yongxing Multimedia Sub-subsidiary 250,090 Note 2 Zhong Jia Asia 1 Entertainment Sister companies 217,000 Note 2	$ - - $ - $ - 256,242 - 256,242 1,278 - - - - - - - - - - - -

Note 1: Please enter respectively according to trade receivable from related parties, notes receivables, other receivables, etc. Note 2: It is other receivables arising from funds lent, so it is not applicable.

Table 7 Page 1

287 -

TABLE 8

CMC Magnetics Corporation and Its Subsidiaries

Business Relations and Important Transactions Between Parent Company and Subsidiaries and Among Subsidiaries and Amounts For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

No. (Note 1) Company Counterparty 0 The Company Yongxing Multimedia `〞` `〞` `〞` `〞` `〞` `〞` `〞` `〞` EMC H `〞` `〞` Sun Well `〞` `〞` VJP `〞` `〞` `〞` `〞` `〞` VUS `〞` `〞` `〞` `〞` `〞` VGmbH `〞` `〞` `〞` `〞` `〞` VHK 1 EMC H Yongxing Multimedia 2 Zhong Jia Asia 1 Entertainment 3 VHK Yongxing Multimedia `〞` `〞` `〞`	Nature of Relationship (Note 2) 1 1 1 1 1 1 1 1 1 1 1 1 1 3 3 3	General Ledger Account Purchase Sale Trade receivable Other receivables Other receivables Sale Trade receivable Sale Trade receivable Sale Trade receivable Sale Other receivables Other receivables Sale Trade receivable	Transaction Details Amount (Note 7) Transaction Conditions $118,425 Note 5 173,692 Note 4 86,387 Note 4 214,587 Note 6 1,195,992 Note 6 987,241 Note 4 491,102 Note 4 457,972 Note 4 78,469 Note 4 342,493 Note 4 57,310 Note 4 66,188 Note 4 250,090 Note 6 217,000 Note 6 134,033 Note 4 91,280 Note 4	Proportion to Total Consolidated Revenue or	Proportion to Total Consolidated Revenue or
					Assets (Note 3) 1.26% 1.85% 0.35% 0.87% 4.82% 10.50% 1.98% 4.87% 0.32% 3.64% 0.23% 0.70% 1.01% 0.87% 1.43% 0.37%

Note 1: The information on transactions between the parent company and its subsidiaries shall be indicated in the No. column as follows:

(3) The parent company is coded “0”.

(4) The subsidiaries are coded sequentially beginning from “1” by each individual company.

Note 2: There are three types of relationships with the company. Just enter the code:

(4) Parent to subsidiary

(5) Subsidiary to parent

(6) Between subsidiaries
Note 3: Regarding the proportion of transaction amount to the total consolidated revenue or assets, if it is recognized in the balance sheet account, it is shown with the ending balance as a percentage of the total consolidated assets; if it is in the profit or loss account, it is shown with the cumulative amount throughout the period as a percentage of the total consolidated revenue.

Note 5: The Company does not have the same type of company for comparison in terms of the purchases from Yongxing Multimedia. In addition to the payment terms of Yongxing Multimedia, which is O/A with net 90 days, the payments to other related parties is all O/A with net 90 days.

Note 6: It refers to receivable for funds lent and advance payment receivable.

Note 7: Individual amounts less than NT$50,000 will not be disclosed, and the transactions between both parties will no longer be disclosed.

Table 8 Page 1

288 -

TABLE 9

CMC Magnetics Corporation and Its Subsidiaries

Information on Name and Location of Investees (Excluding Investees in Mainland China) For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Investor
Name of
Investee
(Notes 1 and
2)
Location
Principal Business Original Investment Cost
Shares Held at the End of Period
End of Current Period
End of Last Year
Number of Shares
Percentage
(%)
Carrying amount
Profit or Loss on
Investee (Note 2(2))
Investment Gains or
Losses Recognized
for Current Period
(Note 2(3))
Remarks

The
Company
EMCH
Cayman
Islands
Professional
investment
company
$ 10,453,855
$ 10,453,855
61,527
100.00
$ 3,605,849
$290,276
$396,279
Subsidiary of
the Company
〞
CIA
Cayman
Islands
Professional
investment
company
872,018
872,018
29,688,245
86.35
408,452
( 10,277)
( 8,874)
〞
〞
Zhong Jia
Taiwan
Investment
in
various
production businesses
180,421
180,421
261,595,273
100.00
3,457,629
( 59,216)
( 2,828)
〞
〞
CMC Movie
Taiwan
Motion picture distribution
1,297,918
1,297,918
35,000,000
100.00
173,381
( 7,371)
( 7,371)
〞
〞
Asia
1
Entertainme
nt
Taiwan
Film
distribution,
video
tape
production
and
distribution, and retail of
toys
856,125
856,125
11,868,528
93.59
( 246,401)
( 10,763)
( 10,073)
〞
〞
Benmeng
Taiwan
Dyeing and finishing of
cloth,
weaving,
processing, and trading of
various textiles, as well as
manufacturing and trading
of electronic products
-
1,709,291
-
-
-
-
( 834)
Note 4
〞
CMC
Entertainme
nt
Taiwan
Film
production
and
distribution industry
714,888
714,888
66,400,000
100.00
50,754
7,932
7,932
Subsidiary of
the Company
〞
Transtouch
Taiwan
Production and sales of
touch panels and other
products
515,768
515,768
15,353,223
52.60
376,723
( 32,645)
( 16,047)
〞
〞
Sun Well
Taiwan
Production and sales of
thin-film solar cells
3,516,412
3,516,412
154,991,112
98.82
( 848,093)
( 74,565)
( 73,685)
〞
〞
Sun Q
Taiwan
Production and sales of
crystalline
silicon
solar
panels
664,676
664,676
64,052,000
58.20
( 22,310)
( 1,806)
( 1,051)
〞
〞
Deltamac
Taiwan
Sales of audio-visual CD
products
377,635
377,635
14,892,015
38.91
176,181
2,428
66
〞
〞
CMC
Entertainme
nt Hub
Taiwan
Shopping mall business
260,000
220,000
13,300,000
100.00
97,022
( 35,595)
( 35,595)
〞
EMCH
F5
U.S.
Professional
investment
company
3,704,046
2,346,049
23,464
100.00
1,456,356
( 38,442)
-
Sub-subsidiary
of the
Company
(Note 3)
〞
MFLLC
U.S.
Professional
investment
company
1,283,980
1,283,980
-
100.00
360,576
( 69,213)
-
〞
〞
Jet-Thai
Thailand
Production and sales of
optical discs
4,207,638
4,207,638
49,200,416
100.00
559,684
215,506
-
〞

Table 9 Page 2

289 -

Investor
Name of
Investee
(Notes 1
and 2)
Location
Principal Business Original Investment Cost
Shares Held at the End of Period
End of Current Period
End of Last Year
Number of Shares
Percentage
(%)
Carrying amount
Profit or Loss on Investee
(Note 2(2))
Investment Gains or
Losses Recognized
for Current Period
(Note 2(3))
Remarks

EMCH
VJP
Japan
Trading of storage media
and electronic products
$16,368
$2,476
5,900
100
$29,347
$13,901
-
Sub-subsidiary
of the
Company
(Note 3)
〞
VUS
U.S.
Trading of storage media
and electronic products
-
1,418,407
-
-
-
-
-
〞
〞
VAU
Australia
Trading of storage media
and electronic products
411,105
411,105
100,000
100
374,806
43,456
-
〞
〞
VGmbH
Germany
Trading of storage media
and electronic products
731,912
731,912
-
100
822,380
67,992
-
〞
〞
VHK
Hong Kong
Trading of storage media
and electronic products
136,683
52,383
1,170,500
100
130,368
( 3,386)
-
〞
〞
Others
Others
-
-
-
-
( 7,742)
-
-
Note 3
F5
HOTAN
U.S.
Trading
of
electronic
products, including floppy
discs and optical discs
406,287
466,697
14,990,000
100
109,879
( 45,360)
-
Subsidiary of
F5,
sub-subsidiar
y of the
Company
(Note 3)
〞
VUS
U.S.
Trading of storage media
and electronic products
1,418,407
-
-
100
1,337,446
8,857
-
〞
CIA
SuperNet
British Virgin
Islands
Professional
investment
company
577,337
577,337
5,720,085
100
425,785
( 8,420)
-
Sub-subsidiary
of the
Company
(Note 3)
〞
Others
Others
-
-
-
-
78,516
-
-
Note 3
Zhong Jia
CIA
Cayman IslandsProfessional
investment
company
111,185
111,185
4,692,049
13.65
95,870
( 10,277)
-
Subsidiary of
the Company
(Note 3)
〞
Benmeng
Taiwan
Dyeing and finishing of
cloth, weaving, processing,
and trading of various
textiles,
as
well
as
manufacturing and trading
of electronic products
-
483,606
-
-
-
-
-
Note 4
〞
Vie
Show
Cinemas
Taiwan
Operation and management
of cinemas, restaurants,
and amusement parks
14,090
14,090
23,970,000
29.96
299,180
( 210,861)
-
Subsidiary of
the Company
Investee
measured
using the
equity
method by
Zhong Jia
(Note 3)
〞
Others
Others
-
-
-
-
50,815
-
-
Note 3
Note 1 If a public company has a foreign holding company and the consolidated financial report is the main financial report according to local laws and regulations, the disclosure of information about the foreign investee may only include the relevant information of the holding company.
Note 2: In cases other than those described in Note 1, the following information shall be provided:

(1) "Name of Investee", "Location", "Principal Business", "Original Investment Cost", and "Holdings, End of Period" shall be entered in order according to the investment situation of the (public) Company and the status of investment by each investee directly or indirectly controlled, and the relationship between each investee and the (public) Company shall be indicated in the Remarks column (e.g., a subsidiary or a sub-subsidiary).

(2) In the column "Profit or Loss on Investee", the current profit and loss on each investee shall be entered.

(3) In the column "Investment Gains or Losses Recognized for Current Period", only the profit and loss on each investee directly invested by the (public) Company and each investee measured under the equity method recognized by the Company shall be entered, and the rest of the investees are exempted from disclosed in this regard. Where the "gains and losses on subsidiaries that are invested directly are recognized for the current period," it shall be confirmed that the gains and losses on the subsidiaries have included their investment gains and losses that shall be recognized in accordance with the regulations.

Note 3: The Company did not directly recognize investment gains and losses.

Note 4: On March 4, 2020, the Company's board of directors resolved to sell the equity of the company, and the settlement was completed on March 5, 2020, and, thus lost control over the company. Therefore, it was no longer a subsidiary of the Group on December 31, 2020.

Table 9 Page 2 - 290 -

TABLE 10

CMC Magnetics Corporation and Its Subsidiaries Information on Investments in Mainland China - Basic Information For the Year Ended December 31, 2020 Unit: NT$ thousands (Unless specified otherwise)

Name of
Investee in
China
(Note 4)
Principal
Business
Paid-in Capital
Investment
Method
(Note 1)
Accumulated
Investment
Remitted from
Taiwan, Beginning
of Period

Amount of Investment Remitted
or Recovered in Current Period

Remitted to Mainland China Remitted back to Taiwan
Accumulated
Investment
Remitted from
Taiwan, End of
Period
Current Profit or
Loss on Investee
The
Company's
Direct or
Indirect
Ownership
(%)
Investment Gains
(Losses)
Recognized for
Current Period
(Note 2)
Carrying Amount
of Investment,
End of Period
Accumulated
Repatriation of
Investment Income
as of End of Period
Remarks

Jiangsu
Yongxing
Multimedia
Co., Ltd.
Production
and sales of
optical discs
$1,345,476
2
$1,345,476 $-
$-
1,345,476 ($ 82,930)
97 ( $80,442)
$378,954 $-
Note 2(2)B
Jiangsu
Yongxing
Electronic
Materials
Co., Ltd.
Production
and sales of
plastic boxes,
boxes,
baskets, and
similar
products
777,852
2
777,852-
-
777,852 ( 7,680)
100 ( 7,680)
119,023-
Note 2(2)B
Nantong
Zhongxing
Multimedia
Co., Ltd.
Production
and sales of
optical discs
35,678
2
35,678-
-
35,678 ( 14)
49 ( 7)
7,891-
Note 2(2)B
Sun Biotech
Limited
(Nantong)
R&D and
wholesale of
biological
probiotics
14,786
2
14,786-
-
14,786
1,686
50
843 ( 21,833)-
Note 2(2)B
Company
Name
Accumulated Outward Remittance
for Investment in Mainland China,
End of Period
Investment Amount
Authorized by Investment
Commission,MOEA
Limit on Investment Amount Stipulated
by Investment Commission, MOEA
CMC
Magnetics
Corporation
$3,139,894
$3,708,536
$11,592,991

Note 1: There are three types of methods for investment in mainland China. Just enter the code:
(1). Direct investment in mainland China
(2). Indirect investment in mainland China through third-region companies: Investment in companies in mainland China through EMCH. (3). Other methods

Note 2: Investment gains (losses) recognized for the current period:

(1) If there is no investment gains (losses) recognized due to the investment still being in the development stage, it shall be indicated.
(2) The investment gains (losses) are recognized based on the three following methods, which shall be indicated:
A. The financial statements certified by international accounting firms that has partnership with CPAs of Republic of China.
B. The financial statements that have been audited by the parent company's CPAs in Taiwan.
C. Others

Note 3: The numbers related to this table shall be presented in NTD.

Note 4: Individual companies that have been liquidated will not be disclosed.

Table 10 Page 1

291 -

TABLE 11

CMC Magnetics Corporation and Its Subsidiaries Information on major shareholders December 31, 2020

Name of Major Shareholder	Shares
	Number of Shares Held ShareholdingPercentage
Wong, Ming-Sen	91,978,038 7.93

Note 2: If the information above is for the shares entrusted by shareholders to a trust, the aforesaid information shall be disclosed by the individual trust account opened by the trustees. For information on shareholders, who declare to be insiders holding more than 10% of shares in accordance with the Securities and Exchange Act, and their shareholdings include their shareholdings plus the shares entrusted to the trust and with the right to make decisions on trust property, please refer to MOPS.

Table 10 Page 1

292 -

STATEMENT 1

CMC Magnetics Corporation Cash and cash equivalents December 31, 2020 Unit: NT$ thousands

Items
Summary
Cash on hand
Petty cash
Bank deposits
-Checking account deposits
-NTD demand deposits
-Foreign currency demand deposits
USD 3,525,464.65 at an exchange rate of USD 1 to NTD 28.10
GBP 110,901.67 at an exchange rate of GBP 1 to NTD 38.35
EUR 654,698.68 at an exchange rate of EUR 1 to NTD 34.59
JPY 106,164,778 at an exchange rate of JPY 1 to NTD 0.2725
CNY 210,166.74 at an exchange rate of CNY 1 to NTD 4.325
AED 30,001.36 at an exchange rate of AED 1 to NTD 7.651
- Time deposits

Amount
$ 218
120
400
572,999
99,066
4,253
22,646
28,930
909
230
30,000
$ 759,771

The time deposits above are all maturing within three months, and the interest rate is approximately 0.38%

Statement 1 Page 1

293 -

STATEMENT 2

CMC Magnetics Corporation

Financial assets at fair value through profit or loss - current December 31, 2020 Unit: NT$ thousands

Name of Securities Listed stocks - Taiwan High Speed Rail Listed st -Chateau International Development Co.,Ltd. - Tainan Enterprises Co., Ltd. - Chung Hsin Electric & Machinery Manufacturing Corporation - Farglory Hotel Co., Ltd. - United Microelectronics Corp. - Largan Precision Company Limited - Others Derivative financial products -Forward contracts Adjustment to valuation	Summary ocks (Taiwan Stock Exchange) `〞` `〞` `〞` `〞` `〞` `〞`	Number of Shares/Units Face value (NT$) 39,133,000 $ 10 12,391,421 10 13,645,000 10 6,557,000 10 3,346,000 10 4,553,000 10 148,000 10 - -	Total Amount InterestRate $ 391,330 - 123,914 - 136,450 - 65,570 - 33,460 - 45,530 - 1,480 - - -		Market price Guarantee or Pledge Cost of Acquisition Unit Price (NT$) TotalAmount $ 1,299,241 $ 31.70 $ 1,240,516 N/A 386,650 28.60 354,395 `〞` 364,779 19.05 259,937 `〞` 362,566 53.60 351,455 `〞` 98,042 51.90 173,657 `〞` 213,668 47.15 214,674 `〞` 489,726 3,195.00 472,860 `〞` 228,858 - 235,961 `〞` 301 301 3,443,831 $ 3,303,756 140,075) $ 3,303,756
				(

Statement 2 Page 1

294 -

STATEMENT 3

CMC Magnetics Corporation Trade receivable December 31, 2020 Unit: NT$ thousands

Customer Name	Amount	Remarks
Non-related Parties
Customer A	$ 187,089
Customer B	76,206
		The balance of each
		customer in this
		category did not exceed
		5% of the balance of this
Others	227,543	account
	490,838
Related Parties
Customer C	491,102
Customer D	86,387
Customer E	78,469
Customer F	57,310
Customer G	45,789
		The balance of each
		customer in this
		category did not exceed
		5% of the balance of this
Others	5,445	account
	764,502
Subtotal	1,255,340
Less: Allowance for loss	( 99,815)
	$ 1,155,525

Statement 3 Page 1

295 -

STATEMENT 4

CMC Magnetics Corporation Other receivables December 31, 2020 Unit: NT$ thousands

Items Summary Non-related Parties Receivables on sale of stocks Retained receivables on trade receivable factored Tax refunds receivable Others Related Parties Financing receivables - related parties Others Subtotal Less: Allowance for loss	Amount Remarks $ 125,483 27,846 12,299 9,284 The balance of each item in this category did not exceed 5% of the balance of this account 174,912 $ 1,718,249 96,780 The balance of each item in this category did not exceed 5% of the balance of this account 1,815,029 1,989,941 ( 407,434 ) $ 1,582,507

Statement 4 Page 1

296 -

STATEMENT 5

CMC Magnetics Corporation

Inventories December 31, 2020 Unit: NT$ thousands

Items Raw materials Work-in-progress Finished goods Merchandise inventory Inventory in transit Less: Allowance for inventory valuation losses	Summary	$	Amount Cost Net realizable value Remarks 329,330 $ 305,564 The allowance for inventory valuation losses is based on cost or net realizable value, whichever is lower. 693 693 469,550 445,663 450,076 512,893 33,557 33,557 1,283,206 $ 1,298,370 142,473) 1,140,733
		$ (
		$

Statement 5 Page 1

297 -

STATEMENT 6

CMC Magnetics Corporation Changes in investments accounted for using the equity method For the Year Ended December 31, 2020 Unit: NT$ thousands

Name of Investee EMC Investment Holding Ltd. CIA Holding Corp. Zhong Jia International Investment Co., Ltd. CMC Entertainment Holding Corporation CMC Movie Corporation Sun Well Solar Corporation Sun Q Corporation Limited Transtouch Technology Inc. Asia 1 Entertainment Co., Ltd. Benmeng Optoelectronics Co., Ltd. Deltamac (Taiwan) Co., Ltd. CMC Entertainment Hub Corporation Add: Credit balance of long-term investment reclassified to other liabilities	Opening Balance Number of Shares Shareholding Percentage (%) 61,527 100.00 29,688,245 86.35 261,595,273 100.00 66,400,000 100.00 35,000,000 100.00 154,991,112 98.82 64,052,000 58.20 15,353,223 52.47 11,868,528 93.59 7,543,758 47.10 28,449,575 38.91 22,000,000 100.00	Amount $ 3,492,143 490,927 3,768,033 42,823 188,006 ( 774,408) (21,259) 392,200 ( 236,292) (66,902) 175,747 92,617 7,543,635 1,098,861 $ 8,642,496	Increase for the c Number of Shares - - - - - - - - - - - 4,000,000	Increase for the c	urre	nt period Amount 376,278 744 626 3,192 7 - - 612 - - 467 40,000 421,926 - 421,926	Decrease for the curr Number of Shares - ($ - ( - ( - - ( - ( - ( - ( - ( (7,543,758) (13,557,560) ( (12,700,000) ( ( ($	Decrease for the curr	Decrease for the curr	ent period Amount 262,572) 83,219) 313,596) - 14,632) 73,685) 1,051) 16,089) 10,109) 66,902 33) 35,595) 743,679) 17,943 725,736)	Closing Balance Number of Shares Shareholding Percentage (%) 61,527 100.00 29,688,245 86.35 261,595,273 100.00 66,400,000 100.00 35,000,000 100.00 154,991,112 98.82 64,052,000 58.20 15,353,223 52.60 11,868,528 93.59 - - 14,892,015 38.91 13,300,000 100.00	Amount $ 3,605,849 $ 408,452 3,457,629 50,754 173,381 ( 848,093) ( ( 22,310) ( 376,723 ( 246,401) ( - 176,181 97,022 7,229,187 1,116,804 $ 8,345,991	Market Value or Net Equity Security or Pledge Unit Price (NT$) Total Price 60,374.76 $ 3,714,678 N/A 14.96 465,875 `〞` 14.22 3,719,245 `〞` 0.76 50,754 `〞` 4.91 171,931 `〞` 5.61) (869,040) `〞` 3.97) ( 254,234) `〞` 15.70 241,046 Note: 20.76) ( 246,401) N/A - - `〞` 11.85 176,470 `〞` 3.73 97,022 `〞`
					$

									(
					$				($

Note: Th Company has pledged 2,643,000 shares as collateral for bank loans.

Statement 6 Page 1

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STATEMENT 7

CMC Magnetics Corporation

Notes payable and trade payables - non-related parties December 31, 2020 Unit: NT$ thousands

Name of Supplier Notes payable Supplier A Supplier B Supplier C Supplier D Supplier E Other minor suppliers Trade payables Supplier F Supplier G Supplier H Supplier I Supplier J Other minor suppliers	Summary	$ $ $	Amount Remarks 20,830 16,371 10,233 8,061 4,486 26,368 The balance of each supplier in this category did not exceed 5% of the balance of this account 86,349 63,842 59,619 49,915 27,263 19,061 122,511 The balance of each supplier in this category did not exceed 5% of the balance of this account 342,211 428,560

Statement 7 Page 1

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STATEMENT 8

CMC Magnetics Corporation Long-term borrowings December 31, 2020 Unit: NT$ thousands

Lender	Summary	Summary	Due Within One Year	Due Beyond One Year	Total	Loan Period	Interest Rate	Security or Collateral
	Mid-term	loan (secured)	$	$	$	2020.06–2023.0	Note 1	Property, plant and
Entie Commercial Bank, Ltd.			-	350,000	350,000	6		equipment
Taipei Fubon Commercial Bank	Mid-term	loan (secured)	-	650,000	650,000	2019.03–2022.0 4	`〞`	`〞`
The Shanghai Commercial & Savings Bank, Ltd.	Mid-term	loan (secured)	56,000	14,000	70,000	2017.03–2022.0 3	`〞`	`〞`
The Shanghai Commercial & Savings Bank, Ltd.	Mid-term	loan (secured)	50,000	25,000	75,000	2018.05–2022.0 5	`〞`	`〞`
Taishin International Bank	Mid-term	loan (secured)	-	250,000	250,000	2020.05–2022.0 5	`〞`	Securities
	Mid-term	loan (secured)				2019.11–2021.1		Property, plant and
KGI Commercial Bank Co., Ltd.			300,000	-	300,000	1	`〞`	equipment
KGI Commercial Bank Co., Ltd.	Mid-term	loan	25,000	-	25,000	2019.11–2021.1 1	`〞`	Credit
O-Bank Co., Ltd.	Mid-term	loan	110,000	-	110,000	2018.04–2021.0 4	`〞`	`〞`
O-Bank Co., Ltd.	Mid-term	loan	-	100,000	100,000	2020.06–2022.0 6	`〞`	`〞`
O-Bank Co., Ltd.	Mid-term paper	commercial	-	200,000	200,000	2020.06–2022.0 6	`〞`	Securities
			$	$	$
			541,000	1,589,000	2,130,000

Note: The interest rate range is 1.24%–1.67%.

Statement 8 Page 1

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STATEMENT 9

CMC Magnetics Corporation Operating revenue For the Year Ended December 31, 2020 Unit: NT$ thousands

Items	Summary	Amount
Sales revenue	Storage media products	$ 3,950,866
Less: Sales return and discount		( 15,672)
		$ 3,935,194

Statement 9 Page 1

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STATEMENT 10

CMC Magnetics Corporation Operating costs For the Year Ended December 31, 2020 Unit: NT$ thousands

Items Raw materials, beginning of period Add: Purchase of raw materials Less: Sale of raw materials Raw materials, end of period (inventory in transit) Others Direct raw materials consumed Direct labor Production overheads Less: Unamortized fixed production overheads Production overheads in current period Less: Work-in-process, end of period Less: Others Cost of finished goods Finished goods, beginning of period Less: Finished products, end of period Others Cost of self-made products sold Merchandise inventory, beginning of period Add: Purchases in current period Less: Merchandise inventory, end of period Cost of merchandise inventory and goods sold Cost of raw materials sold Cost of inventories sold Other operating costs Gains on price recovery of inventory Revenue from sale of tailings and scraps Unamortized fixed production overheads Cost of goods sold	Summary ( ( (	$ ( (	Amount 448,433 1,254,981 5,871) (362,887) 4,890) 1,329,766 461,428 994,552 54,246) 2,731,500 693) 591) 2,730,216 443,625 469,550) 7,561) 2,696,730 401,110 572,484 450,076) 523,518 5,871 3,226,119 10,067 3,033) 463) 54,246 3,286,936	Remarks

		(

		( (
		(


		(
		$

Statement 10 Page 1

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STATEMENT 11

CMC Magnetics Corporation Production overheads For the Year Ended December 31, 2020 Unit: NT$ thousands

Items Summary Depreciation Water, electricity, and gas fee Indirect labor Insurance premium Other production overheads	Amount Remarks $ 463,261 277,144 108,363 54,686 91,098 The balance of each item did not exceed 5% of the amount of this account $ 994,552

Statement 11 Page 1

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STATEMENT 12

CMC Magnetics Corporation Selling and marketing expenses For the Year Ended December 31, 2020 Unit: NT$ thousands

Items Summary Royalties and export fees Freight charge Amortization expenses Advertising expenses Salaries and wages Other expenses	Amount Remarks 113,562 44,706 21,482 20,783 13,401 20,387 The balance of each item did not exceed 5% of the amount of this account $ 234,321

Statement 12 Page 1

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STATEMENT 13

CMC Magnetics Corporation Administrative expenses For the Year Ended December 31, 2020 Unit: NT$ thousands

Items Summary Salaries and wages Entertainment fee Tax expense Service fees Utility fees Other expenses	Amount Remarks $ 49,417 24,382 16,442 11,434 7,572 21,325 The balance of each item did not exceed 5% of the amount of this account $ 130,572

Statement 13 Page 1

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STATEMENT 14

CMC Magnetics Corporation Research and development expenses For the Year Ended December 31, 2020 Unit: NT$ thousands

Items Summary Testing expense Depreciation Salaries and wages R&D material expense Utility fees Service fees Hardware parts Other expenses	Amount Remarks $ 47,660 39,909 33,756 18,874 16,580 15,124 14,533 33,302 The balance of each item did not exceed 5% of the amount of this account $ 219,738

Statement 14 Page 1

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VI. The Impact on the Company’s Financial Status Due to the Company or Its Affiliates’ Encounter of Financial Turnover Difficulties

None.

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Chapter 7 Management's Discussion and Analysis of Financial Condition and Risk Factors

======================================================================

I. Financial Status

(I) Comparative table of financial condition:

Consolidated Balance Sheets

Unit: NT$1,000

			Unit: NT$1,000	Unit: NT$1,000	Unit: NT$1,000
Year Item	2019	2020	Difference
			Amount (812,251) 695,778 (781,479) 244,821 (653,131) (589,251) 148,117 (441,134) 0 (57,332) (62,860) (211,997)	% (6%) 23% (12%) 13% (3%) (15%) 8% (7%) 0% (1%) (29%) (1.1%)	Descriptio n
Current assets	14,096,882	13,284,631 3,783,966 5,547,534 2,188,878 24,805,009 3,406,467 2,076,891 5,483,358 11,588,812 7,642,963 150,933 19,321,651
Long-term investment Note 1	3,088,188				1
Property, plant and equipment	6,329,013
Other Assets	1,944,057				2
Total Assets	25,458,140
Current liabilities	3,995,718
Non-current liabilities	1,928,774
Total Liabilities	5,924,492
Share capital	11,588,812
Capital surplus	7,700,295
Retained earnings	213,793				2
Total Equity	19,533,648
Description on the analysis of the increase and decrease of the proportion change: the change ratio is less than 20% and the absolute amount is less than $10,000,000, which will not be analyzed.

Note 1: Long-term investment includes non-current financial assets measured at fair value through profit and loss, non-current financial assets measured at fair value through other comprehensive profits and losses, non-current financial assets measured at amortized cost and investment under the equity method.

(II) Description on financial difference analysis:

It is mainly due to reclassification of financial assets-current measured at fair value through profit or loss to non-current in accordance with the purpose of holding.
It is mainly due to the impact of the operating results of the current year and the distribution of cash dividends.
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II. Financial Performance

(I) Comparative table of financial performance:

Consolidated Statements of Comprehensive Income

Unit: NT$1,000

Year Item	2019	2020	Change, by Amount	Change (%)	Description
Sales Revenue Operating costs Gross Profit Operating Expenses Net Operating Profit (Loss) Non-operating income and expenses Net profit (loss) before tax Income tax (expense) profit Net loss for the ongoing operating business unit Loss from Discontinued Operations Net Income Other comprehensive income (loss) for the year Total comprehensive income for the year Equity attributable to owners of parent company in current period Comprehensive equity attributable to owners of parent company in current period	7,045,247 (5,926,766) 1,118,481 (1,212,085) (93,604) 307,283 213,679 (2,163) 211,516 (43,930) 167,586 38,983 206,569 228,705 256,575	9,401,027 (7,397,634) 2,003,393 (2,234,737) (231,344) 460,894 229,550 (104,723) 124,827 0 124,827 (149,294) (24,467) 111,073 (44,537)	2,355,780 1,470,868	33 25 79 84 (147) 50 7 4,742 41 100 (26) (483) (112) (51) (117)	1 2 3 4 5
			884,912 1,022,652
			(137,740)
			153,611
			15,871 102,560
			(86,689)
			43,930
			(42,759)
			(188,277)
			(231,036)
			(117,632)
			(301,112)

(II) Financial performance analysis:

It is mainly due to acquisition of business entity of Verbatim brand on December 31, 2019, causing the higher operating income than previous year.
It is mainly due to acquisition of business entity of Verbatim brand on December 31, 2019, causing the higher operating income than previous year.
It is mainly due to acquisition of Verbatim brand on December 31, 2019, causing the higher operating expense than previous year.
It is mainly due to acquisition of Verbatim brand on December 31, 2019, which is recognized as buy cheap benefit.
It is mainly due to acquisition of business entity of Verbatim brand on December 31, 2019, causing the higher income expense than previous year.
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III. Cash Flow

(I) Analysis on changes in cash flow in recent years

Unit: NT$1,000

			Unit: NT$1,000
Year Item	2019	2020	Increase (decrease) ratio
Cash Flow Ratio (%)	N/A	6.85	N/A
Cash Flow Adequacy Ratio (%)	334.23	156.94	(53%)
Cash Reinvestment Ratio (%)	N/A	1.2	N/A
Description on Cash Flows: The Company continued to improve its financial structure. In the current period, it repaid bank loans of approximately NT$770 million. The debt ratio at the end of the period dropped to 22%. With regard to the cash reinvestment, as the industry has reached a mature stage, the Company adopts a prudent and conservative strategy and actively seeks opportunities for transformation.

Note: The above table analysis description is based on the consolidated financial statements of the Company.

(II) Analysis of cash liquidity for the upcoming year

Unit: NT$1,000

				Unit: NT$1,000	Unit: NT$1,000
Cash balance amount at the beginning of the year (1)	Net cash provided by operating activities (2)	Cash flow from Investment & financing inflow (outflow) activities throughout the year (3)	Amount of cash flow balance (insufficiency) (1)+(2)+(3)	Measures for managing cash deficit
				Investment Plan	Financing Plan
759,771	208,329	(29,425)	938,675	0	0
Analysis on cash flow in next financial year: (1) Despite tougher competitions in the industry in 2021, the Company will continue its expansion in emerging markets and optimization on product structure. We aim to increase the ratio of high-end products to its business revenue. The net cash of business activities is estimated to remain positive. (2) The Company has no major investment plan for year 2021. Operating cash is mainly aimed to repay bank loans. A healthier financial structure, as well as lower total liabilities, is expected.

(1) Despite tougher competitions in the industry in 2021, the Company will continue its expansion in emerging markets and optimization on product structure. We aim to increase the ratio of high-end products to its business revenue. The net cash of business activities is estimated to remain positive.
(2) The Company has no major investment plan for year 2021. Operating cash is mainly aimed to repay bank loans. A healthier financial structure, as well as lower total liabilities, is expected.
Note: The above table analysis is based on the individual financial projections of the Company in the coming year.
IV. Effect on Financial Operations of Any Major Capital Expenditures during the Most Recent Fiscal Year

Annual capital expenditure of the Company was NT$ 170 million in 2020, mainly used to expand and improve the production equipment of high-grade products. It is expected to increase market share of high-grade products with improved quality of products.

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V. The Most Recent Annual Investment Transfer Policy, the Main Reason for Its Profit or Loss, Improvement Plan and Investment Plan for the Next Year

The group has acquired Verbatim brand in the end of 2019. The production line has expanded from disc product to hard disc, flash memory and other storage product and electronic accessories. With the global marketing channel of Verbatim, it became an international company that owns global brand, channel, patent, and a complete production line in storage media field. For the future investment plan, in addition to develop brand strategy and improve product technology, and will continue to invest in refined cultural, creative and entertainment industries.

VI. Analysis and Assessment of Risk Issues in the Most Recent Year and up to the Date of Publication of the Annual Report
(I) Organizational structure of risk management:

The management of the Company's various risks is handled by the relevant units according to the nature of its business. The Board of Directors is the highest decision-making body for responding to and handling various risks. The audit unit reviews the existing or potential risks of each operation, and plans to implement a risk-oriented annual audit plan.

Aspect of Consideration	Items of major risk	Risk management authority unit	Influence of impact	Response measures
Environmental	Environmental risk	Human Resources Office	This risk, when occurring, will affect the Company's continuous operation, and even lead to production interruption and loss of personnel and property.	Implement daily security awareness and drills, get familiar with the rescue process, make inspection afterwards to prevent recurrence, and establish a disaster recovery plan to restore production in the shortest time.
Social	Human resource management risk		This risk, when occurring, may cause delays in shipments and delays in product production and replacement personnel, and result in a negative impact on the Company's operations.	Strengthen healthy and safe workplaces, pay attention to environment and personnel management, and perform training on occupational safety knowledge and mechanical protection operations. Strengthening infectious disease prevention measures, including access control at factories, incident response measures, factory disinfection, employee self-health management and health checkups, pandemic reporting mechanism and hospitalization mechanism, and inspection and storage of quarantine supplies
Corporate Governance	Production capacity risk - Insufficient order, and delay in supply of materials - Adjustment of production equipment, and quality control - Natural disasters of force majeure	Procurement Office Photoelectric Product Business Group	Single suppliers of raw material supplier and production equipment may cause the risk of interruption of supply of materials or instability in operation and production.	The Company will avoid exclusive suppliers of raw materials, and foreign suppliers will be required to set up agents or warehouses in Taiwan to avoid affecting production due to insufficient supply. Implement quality system management, regularly confirm production capacity, and provide customer service that can satisfy customers to minimize risks.

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Aspect of Consideration	Items of major risk	Risk management authority unit	Influence of impact	Response measures
Corporate Governance	Market Risks - New product development, new customer development - Competitor action, product price changes	Research & Development Center Photoelectric Product Business Group	Customers are too concentrated, rapid change is required, competition among peers is fierce, and the demand for advanced manufacturing processes continues to increase.	It will actively develop diversified products and customer groups in line with customer needs to diversify business concentration risks.
	Information risk - The information system is not working properly - Network security control and protection	Information Technology Office	Any loss of data will affect the normal operation of the individual; in the serious case, it will damage the Company's reputation and cause the loss of operation.	Strengthen information security management and employee law-abiding concepts, and reinforce the Company's computer system backup, encryption capabilities and dedicated management measures; implement employee education and training to avoid the risk of loss of important information.
	Litigation and non-litigation matters	Legal Office	The Company has to pay huge expenses, resulting in increased operating costs.	Minimize possible losses due to claims and litigation of intellectual property rights, strengthen the Company’s intellectual property rights portfolio, obtain defensive and offensive intellectual property rights for the Company’s technology immediately, and continue to strengthen employees’ basic legal awareness through education and training.
	Interest rates, exchange rates, and financial risks	Finance Accounting Investment Office General Manager Office	Changes in interest rates and exchange rates will increase the uncertainty of the Company's operating profit.	By identifying and assessing market risks, for the purpose of avoiding risks, the Company manufactures derivative products to avoid risks in interest rate, exchange rate and finance risks.
	Investment, re-investment and M&A benefits	Finance Accounting Investment Office General Manager Office General Manager Office	Due to the impact of slowdown in economic growth and the economic downturn, investment losses occurred.	The Company's reinvestments are all long-term strategic investments, and the reinvestment plans will continue to be carefully evaluated in the future.

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(II) Interest rate, exchange rate changes, the impact of inflation on the Company's profit and loss, as well as corresponding measures to be taken in the near future:

The financial department of the Company conducts evaluation and analysis on the Company's overall risk location, including exchange rate and interest rate risk, and existing transactions, based on the international political and economic situation. In accordance with the principle of conservative and stable, the net part of natural hedging is used as a hedge trade. The hedging instruments include pre-purchase/pre-sale forward foreign exchange, option, exchange and combination of derivative products, which are handled according to Company regulations. The procedure has been implemented and regularly announced.

Please refer to note 12(2) financial instruments of the consolidated financial statements of this annual report.

(III) The policy of engaging in high-risk, high-leverage investment, fund lending with others, endorsement guarantees and derivative commodity transactions, the main reasons for profit or loss and future corresponding measures:

The Company's financial operations are based on the principle of conservative and stability, and do not engage in high-risk, high-leverage investment related activities; the derivative commodity trading contracts (see the Company's consolidated financial statements), mainly for the avoidance of profits, exchange rate changes The resulting risks, their benefits, the benefits of exchange rate changes will generally be offset against the profits and losses of the hedged items, in order to achieve the purpose of hedging.

The purpose of the fund loan and other people's and endorsement guarantees is to conduct the review and risk assessment according to the specifications of the Company's “finance loan and endorsement guarantee operation procedures”.

All of the above are handled in accordance with the procedures set by the Company and approved by the Board of Directors. The Company also has a full-time audit department to regularly check the operating procedures of relevant departments to ensure that there are no high-risk, high-level investment related activities.

(IV) Future R&D projects and intended project expense:

The estimated future investment in research and development is estimated to account for 5.6% of the revenue in 2021. Please refer to page 61 of this annual report for the planned research and development plans.

(V) The impact of important policies and laws at home and abroad on the Company's financial business and the corresponding measures: None.
(VI) The impact of technological changes and industrial changes on the Company's financial business and the corresponding measures:
Trends in technological advancement:
- (1) The demand for high-definition video and audio materials has grown.
- (2) Long-term data preservation market.
- (3) Environmental protection trends.
- (4) Cloud and long-distance storage.
Measures taken by CMC:
- (1) In recent years, Full HD, 3D movies and even the latest 4K audio and video demand, the use of high-capacity high-end optical discs as storage media is currently the best choice, its main feature is to continue to expand storage capacity, whether it is a
313 -

single layer (25GB), double Layer (50GB) or three layers (100GB) can meet the needs of various types of high-definition audio and video capacity, and the Company is currently continuing to develop and promote various high-end products.

(2) Either USB, HDD or Tape all have the shortcomings of long-term preservation of information. The public institutions in the United States, France, Japan, South Korea and China have begun to use CDs as a medium for long-term preservation of important data. How to further increase the capacity and extend the data storage period, and develop the file-level optical disc, which is the goal we have jointly developed with the optical disc manufacturer. This market development trend is also the direction that the Company's business pays close attention to; the Company's high-end products have passed the German Rheinland certification. Laboratory data long-term preservation ability test, estimated to last for 50 years, is the only optical disc manufacturer outside the Japanese disc factory to pass this certification, technical ability and Japanese disc manufacturers.

In addition, during year 2015, the Company officially collaborated with the world's first optical disc brand, Taiyo Yuden, and obtained its exclusive license. With stable quality and special printing technology, it not only grasps the high-margin market opportunities but also take lead in technology.

(3) The goal of energy saving and carbon saving has become the focus of the research, development, sales and development of enterprises. Currently, all kinds of storage media, CD-ROM is the most energy-saving and lowest carbon dioxide storage media in use, fully in line with the global energy-saving and carbon-reducing environmental trends; the Company's leading global disc manufacturers, the first to complete the carbon footprint certification, with practical proof of the Company's intentions for the global environment. In addition, in effort to respond towards global environmental awareness, CMC continues to use environmentally friendly designs on the appearance or packaging of the products. The optical disc products will become the most friendly products for the global environment in all storage media.
(4) 5G technology and hardware equipment have gradually improved in recent years, driving the production of more high-speed, low-latency IOT devices. Moreover, the capacity and computing requirements of data centers have doubled, resulting in the development of data centers toward miniaturization and terminalization. The use of terminal data centers in combination with the resources of public and private clouds can reduce the computational complexity of large data centers in the past, and gradually decrease the time and cost of data conversion. In particular, micro data centers can flexibly match storage media according to data types. The Company's high-capacity archival optical discs are characterized by low energy consumption and long storage life, coupled with the characteristics of CD burning and the inability to tamper with data. They are suitable for the high security and high preservation requirements of government agencies, national defense, courts, finance, and medical care. As long as carrying the archival optical disc database in series, micro data centers can be used for long-term backup and preservation of cold data, and can effectively reduce the operating cost and energy consumption of the data center.
(VII) The impact of corporate image change on corporate crisis management and response measures:

The Company is listed on the Taiwan Stock Exchange, managed and supervised by competent authorities, abide by the laws and regulations, and upholds the business

314 -

philosophy of integrity, law-abiding and social responsibility, and maintains good relations with customers, investors and employees. There is no change in quality, but in order to avoid irresistible external factors during the business operation and affect the reputation of the Company, the Company's crisis management mechanism is convened by the General Manager, and the senior directors of each unit act as members of the contingency project team. The team was able to take the necessary measures as soon as possible to ensure the safety of employees and the environment, while ensuring that the Company's operations were normal, in order to maintain corporate image and protect the Company's rights and interests.

(VIII) Expected benefits and possible risks of the merger and the corresponding measures: None.
(IX) Expected benefits and possible risks of the expansion of the plant and corresponding measures: None.
(X) Risks and countermeasures for the concentration of incoming goods or sales: None.
(XI) Directors, Supervisors or shareholders holding more than 10% of the shares, the impact of a large number of shares transferred or replaced on the Company and the risks and corresponding measures: None.
(XII) The impact of changes in management rights on the Company and its risks and corresponding measures: None.

(XIII) Litigation or non-litigation incidents:

The Company is still in a major lawsuit in the department, non-litigation or administrative litigation: none.
The Directors, Supervisors and shareholders of the Company with a shareholding ratio of more than 10% are currently in the middle of the system. Major litigation, non-litigation or administrative litigation, the result may be significant to shareholders' equity or securities prices influencer: None.

(XIV) Other important risks and corresponding measures: None.

VII. Other Important Matters

Disclosure of information on financial product: For fair value information, please refer to note 12(3) of the consolidated financial statement of the annual report.
Adopting hedge accounting and its objectives and methods: The Company's financial products (including derivative financial products) do not comply with the hedge accounting, not applicable.
315 -

Chapter 8 Special Remarks

===================================================================

I. Information related to the Company’s Affiliate
(I) Report on consolidated operation of related enterprises

CMC Magnetics Corporation

Business report on merger of related enterprises for 2020

Item Page

I. Information of the Company’s affiliates
(I) Organizational chart of the Company’s affiliates
(II) Basic information of the Company’s affiliates
(III) Shareholder information of presumed controlled or family relations.
(IV) Scope of business covered by the Company’s affiliates
(V) Information of Directors, Supervisors and General Managers of related enterprises
II. Overview of the financial and business operations of the Company’s affiliates
316 -

I. Information of the Company’s affiliates

(I) Organizational chart of the Company’s affiliates

CMC

==> picture [707 x 437] intentionally omitted <==

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

SUN CMC CHC Transtouch CMC CMC MOVIE DELTAMAC Asia1 EMC H. CIA
WELL ENTERTAINMENT 100% 52.6% ENTERMAINMENT HOLDING CORPORATION 100% 38.91% 93.59% 100% 86.35%
98.82% HUB CORPORATION
100% 100%
CORPORATION SUN Q COM IN DIM DELTAMAC 18.62% Content 100%(Note) CMC Deltamac 62.31% (HK) Jet Thai 100% Supernet 100% Deltamac 34.81% (HK)
LIMITED 100% Asia1 (Note) (Note)
58.25% SUN WELL 2.77% Kinease
0.44% 100%
Jin Zhi Zui Clickplay
100%
100%
TAIWANET.COM (Note) Fortune Fortune Multimedia
100% Electronic (FMC)
Photopia 100% 7%
Workshop
CIA 100%
MF LLC Fortune Multimedia
13.65% (Note)
100% (FEC)
90%
TAIWAN.COM
CORPORATION Nantong Zhongxing
100% Multimedia
49%
CORPORATION EV POWER F5 H. 100% Hotan
100% 100%
Verbatim JP
100% Verbatim US
100%
Note: Subsidiary of the Company goes into liquidation procedure
Verbatim
GmbH 100%
Verbatim AU
100%
- 317 -
Verbatim HK
100%
----- End of picture text -----

Unit: NT$1,000

II. Basic information of the Company’s affiliates

				Unit: NT$1,000
Company Name	Establishment date	Address	Paid-in Capital	Major Lines of Business or Products
DELTAMAC (TAIWAN) Co., Ltd.	1995/07/19	10th floor, 53 Ming Chuan W. Road, Taipei	382,737	Manufacturing, distribution, lease and sale of VCD products
CHC International Investment Corporation	1995/08/10	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	2,615,953	General investment business
EV POWER CORPORATION	1996/02/01	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	21,000	Passenger car rental industry
Asia 1 Entertainment Co., Ltd.	1997/11/29	17/F, 53 Ming Chuan W. Road, Taipei	126,810	Rental and sale of DVD products
CMC ENTERTAINMENT HOLDING CORPORATION	1997/12/17	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	664,000	Film production and distribution industry
CMC MOVIE CORPORATION	1998/05/07	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	350,000	Film distribution industry
TAIWANET.COM CORPORATION	1999/05/17	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	3,000	Provision of electronic information
TAIWAN.COM CORPORATION	1999/05/18	16/F, 53 Ming Chuan W. Road, Taipei	1,000	Internet service
Transtouch Technology Inc.	2000/11/27	1-6/F, No. 50, Huayasan 3rd Road, Qiushan District, Taoyuan City	291,859	Production and sales of touch panels
SUN WELL SOLAR CORPORATION	2007/07/25	16/F, 53 Ming Chuan W. Road, Taipei	1,568,400	Production and sales of thin film solar cells
SUN Q CORPORATION LIMITED	2007/10/18	16/F, 53 Ming Chuan W. Road, Taipei	1,100,590	Production and sales of silicon solar cells
CMC ENTERTAINMENT HUB CORPORATION	2015/03/06	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	133,000	Amusement Park business
COM IN DIM Co. Ltd.	2016/11/01	17/F, 53 Ming Chuan W. Road, Taipei	26,800	Catering industry
JinZhiZui Co. Ltd.	2018/11/27	15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C.	1,000	Catering industry
Verbatim Australia Pty. Ltd	1980/08/01	Victoria, Australia	2,168	Trade in storage media and electronic products
Verbatim (Hong Kong) Limited	19807/31	Hong Kong	128,135	Trade in storage media and electronic products
Deltamac (Hong Kong) Co. Ltd. (Note)	1991/03/28	Hong Kong	127,080	Sale of VCD products
Company Name	Establishment date	Address	Paid-in Capital	Major Lines of Business or Products
Hotan Corp.	1996/01/03	California, USA	370,280	Trade in optical discs and electronic products

318 -

EMC Investment Holding Ltd.	1997/01/29	Cayman Islands	1,754	General investment business
Super Net Holding Ltd.	1999/06/04	British Virgin Isla nds	163,051	General investment business
F5 Holdings Ltd.	2000/12/11	Delaware, USA	680	General investment business
Media Factory LLC	2002/04/19	California, USA	1,225,305	General investment business
CIA Holding Corp.	2002/05/23	Cayman Islands	980,010	General investment business
Fortune (Jiangsu) Multimedia Co., Ltd.	2002/07/01	No. 15 Yongxing Road, Nantong City, Jiangsu Province	3,155,826	Production and marketing of optical discs
Fortune (Jiangsu) Electronic Materials Co., Ltd.	2002/10/22	No. 15 Yongxing Road, Nantong City, Jiangsu Province	71,772	Production and sales of plastic cases, boxes, baskets and similar products
Photopia Workshop Limited	2002/11/18	Hong Kong	-	Provide product design and promotion services
Verbatim GmbH	2004/11/24	Eschborn,Germany	854	Trade in storage media and electronic products
CMC Content Corp. (Note)	2005/02/08	Labuan FT,Malaysia	82,665	Film distribution
Nantong Zhongxing Multimedia Co., Ltd.	2005/07/06	No. 15 Yongxing Road, Nantong City, Jiangsu Province	77,141	Production and marketing of optical discs
Kinease Investment Ltd.	2005/08/12	British Virgin Islands	-	Development of real estate
Jet-Thai Hi-Tech Co. Ltd.	2005/09/26	Srimaphaphat, Prachinburi province, Thailand	4,501,838	Production and marketing of optical discs
Verbatim Americas LLC	2007/08/01	North Carolina, USA	1,811,895	Trade in storage media and electronic products
ClickPlay (Hong Kong) Limited (Note)	2012/10/10	Hong Kong	59,018	Sale of VCD products
Verbatim Japan Ltd.	2019/07/22	Tokyo, Japan	15,134	Trade in storage media and electronic products

(Note): Going into liquidation procedure

(III) Shareholders presumed to have control and subordinate relationship with the same information: Not Applicable

(IV) Industries covered by the overall business operation of the enterprise:

The manufacture and sales of the computer storage media, manufacturing and sales of electronic products, film/video production and distribution, disc rental business, commercial product trading business, general investment business, vehicle rental business, performing arts related business activities and film agency distribution business, electronic information supply service, food and beverage business, etc.

319 -

(V) Information of Directors, Supervisors and General Managers of related enterprises

Unit: Share

Company Name	Position	Name or Representative	Number of shares/capital contribution	Percentage of ownership/ca pital contribution
DELTAMAC (TAIWAN) Co., Ltd.	Chairman Director Director Independent Director	CHC International Investment Corporation Representative: Wu, Chao- Hung Representative: Lin, Kun-Ming Nippon corporation TSUTAYA Representative: Ogino Katsuyuki, Hashimoto Ryunosuke Huang, Jen-Yung; Lee, Mei-Lin; Wu, Cheng-Hsiu	7,126,792 12,783,427 0	18.62% 33.40% 0.00%
CHC International Investment Corporation	Chairman	CMC Magnetics Corporation Representative: Cheng, Tsung-An	261,595,273	100.00%
EV POWER CORPORATION	Chairman	CHC International Investment Corporation Representative:Huang,Ming-Yu	2,100,000	100.00%
Asia 1 Entertainment Co., Ltd.	Chairman Supervisor	CMC Magnetics Corporation Representative: Wu, Chao- Hung Huang, Ming-Yu	11,868,528 0	93.59% 0.00%
CMC ENTERTAINMENT HOLDING CORPORATION	Chairman	CMC Magnetics Corporation Representative: Wu, Chao- Hung	66,400,000	100.00%
CMC MOVIE CORPORATION	Chairman	CMC Magnetics Corporation Representative: Chiu,Hui-Li	35,000,000	100.00%
TAIWANET.COM CORPORATION	Chairman	CHC International Investment Corporation Representative:Tseng,Yi-Wen	300,000	100.00%
TAIWAN.COM CORPORATION (Note)	Director	CHC International Investment Corporation Representative: Cheng,Tsung-An	NT$1,000,000	100.00%
Transtouch Technology Inc.	Chairman Director Director Director Director Independent Director Independent Director Independent Director	CMC Magnetics Corporation Representative: Wong, Ming-Sen Representative: Yang, Ya-Hsiu; Tsai, Fu-Yuan Wangke International Co. Ltd Representative: Chen, Mao-Sheng Yang, Ming-Xian Yeh, Fang-Yu Huang, Jen-Yung Wu, Cheng-Hsiu Shiau, Fung-Shyung	15,365,223 266,044 0 9,667 0 0 0 0	52.47% 0.91% 0.00% 0.03% 0.00% 0.00% 0.00% 0.00%
SUN WELL SOLAR CORPORATION	Chairman	CMC Magnetics Corporation Representative: Wong,Ming-Sen	154,991,112	98.82%
	Director Supervisor	Representative: Liu, Huang-Sheng; Lin, Ching-Woei Huang,Ming-Yu	1,600	0.00%
SUN Q CORPORATION LIMITED	Chairman Supervisor	CMC Magnetics Corporation Representative: Yang, Ming-Xian Huang, Ming-Yu	64,052,000 0	58.20% 0.00%

320 -

Company Name	Position	Name or Representative	Number of shares/capital contribution	Percentage of ownership/ca pital contribution
CMC ENTERTAINMENT HUB CORPORATION	Chairman	CMC Magnetics Corporation Representative: Wu, Chao- Hung	13,300,000	100.00%
COM IN DIM Co. Ltd.	Chairman	CMC ENTERTAINMENT HUB CORPORATION Representative: Chang, Min-Yu	2,680,000	100.00%
JinZhiZui Co. Ltd.	Chairman Supervisor	CMC ENTERTAINMENT HUB CORPORATION Representative: Wu, Chao- Hung Representative: Huang, Ming-Yu	100,000	100.00%
Verbatim Australia Pty. Ltd	Director Director	EMC Investment Holding Ltd. Representative: Paul Johnson Representative: Chen, Chun-Wei, Huang, Ming-Yu	100,000	100.00%
Verbatim (Hong Kong) Limited (Note)	Director Director	EMC Investment Holding Ltd. Representative: Paul Johnson Representative: Yang, Pi-Yin, Huang, Ming-Yu	HKD34,955,000	100.00%
Hotan Corp.	Director	F5 Holdings Ltd. Representative:Tom Hsieh	12,990,000	100.00%
EMC Investment Holding Ltd.	Director Director	CMC Magnetics Corporation Representative: Wong, Ming-Sen, Yang, Li-Jung Representative:Yang,Ya-Hsiu	61,527	100.00%
Super Net Holding Ltd.	Director	CIA Holding Corporation Representative: Wong,Ming-Sen	5,720,085	100.00%
F5 Holdings Ltd.	Director Director	EMC Investment Holding Ltd. Representative: Wong, Ming-Sen, Yang, Ya-Hsiu Representative:Yang,Li-Jung	23,864	100.00%
Media Factory LLC (Note)	Manager Manager	EMC Investment Holding Ltd Representative: Wong, Ming-Sen, Yang, Li-Jung Representative:Yang,Ya-Hsiu	USD42,985,600	100.00%
CIA Holding Corp.	Director	CMC Magnetics Corporation Representative: Wong,Ming-Sen	29,688,245	86.35%
Fortune (Jiangsu) Multimedia Co., Ltd. (Note)	Chairman Director Director Supervisor Director Supervisor Director Supervisor	Media Factory LLC Representative: Chang, Chia-Chieh Representative: Wong, Ming-Sen, Yang, Ya-Hsiu Representative: Chou, Wei-Li; Huang, Ying-Yen Representative: Chen, Ming-Chung Fortune (Jiangsu) Electronic Materials Co., Ltd. Representative: Wu, Chao- Hung Representative: Chen, Ming-Chung Jiangsu Nantone EDZ Representative: Gu, Hua Representative: Shih,Hsueh-Mei	USD80,640,000 USD6,272,000 USD2,688,000	90.00% 7.00% 3.00%
Fortune (Jiangsu) Electronic Materials Co., Ltd. (Note)	Chairman Director	EMC Investment Holding Ltd. Representative: Wu, Chao- Hung Representative: Chang, Chia-Chieh; Tien, Min-Hsiung	USD2,000,000	100.00%

321 -

Company Name	Position	Name or Representative	Number of shares/capital contribution	Percentage of ownership/ca pital contribution
Verbatim GmbH (Note)	Director Director Director Director	EMC Investment Holding Ltd. Representative: HClive Alberts Representative: Hussin Diraki Representative: Michel Blonk Representative: Chen, Chun-Wei, Huang, Ming-Yu	EUR25,565	100.00%
Nantong Zhongxing Multimedia Co., Ltd. (Note)	Chairman Director Director	Jiangsu Nantone EDZ Head Office Representative: Yao, Kuo-Cheng Head Office Representative: Su, Mei-Yun; Chi, Chung-Hua Media Factory LLC Representative: Pan, Wei-Wen; Huang, Ying-Yen	USD1,122,000 USD1,078,000	51.00% 49.00%
Kinease Investment Ltd.	Director	CIA Holding Corporation Representative: Wong,Ming-Sen	2	100.00%
Jet-Thai Hi-Tech Co., Ltd.	Director	EMC Investment Holding Ltd. Representative:Li,Hai-Lu	49,200,415	100.00%
Verbatim Americas LLC (Note)	Director Director	F5 Holdings Ltd. Representative: Takuya Fujiwara Representative: Chen, Chun-Wei, Huang, Ming-Yu	USD63,564,127	100.00%
Verbatim Japan Ltd.	Chairman	EMC Investment Holding Ltd. Representative: Hideharu Takeshima	5,900	100.00%

Note: The Company is a limited Company.

322 -

II. Overview of operations of company's affiliates

(I) Financial Status and Operation Results of the Related Enterprises

	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)	Unit: NT$1,000 (Except for earnings per share that is calculated in NTD)
Company Name	Capital	Total Assets	Total Liabilities	Net Worth	Sales Revenue	Net operating income	Profit or Loss (after Tax)	Basic Earnings (Loss) Per Share
DELTAMAC (TAIWAN) Co., Ltd.	382,737	467,210	80,765	386,445	245,057	(6,170)	2,428	0.06
CHC International Investment Corporation	2,615,953	4,034,184	314,939	3,719,245	0	(17,668)	(59,216)	(0.23)
EV POWER CORPORATION	21,000	3,499	0	3,499	0	0	0	0.00
Asia 1 Entertainment Co., Ltd.	126,810	13,823	279,837	(266,014)	17,293	(6,103)	(10,763)	(0.85)
CMC ENTERTAINMENT HOLDING CORPORATION	664,000	58,097	7,343	50,754	14,356	8,194	7,932	0.12
CMC MOVIE CORPORATION	350,000	181,307	9,376	171,931	17,850	1,597	(7,371)	(0.21)
TAIWANET.COM CORPORATION	3,000	3,502	357	3,145	3,926	(83)	101	0.34
TAIWAN.COM CORPORATION	1,000	526	70,007	(69,481)	0	0	0	(Note)
Transtouch Technology Inc.	291,859	633,523	181,361	452,162	326,657	(47,861)	(32,645)	(1.12)
SUN WELL SOLAR CORPORATION	1,568,400	387,922	1,267,338	(879,416)	1,816	(59,923)	(74,565)	(0.48)
SUN Q CORPORATION LIMITED	1,100,590	19,106	57,440	(38,334)	0	(283)	(1,806)	(0.02)
CMC ENTERTAINMENT HUB CORPORATION	133,000	144,920	47,898	97,022	33,808	(33,974)	(35,595)	(2.46)
COM IN DIM Co. Ltd.	26,800	15,835	4,554	11,281	33,979	(10,055)	(10,029)	(3.74)
JinZhiZui Co. Ltd.	1,000	4,240	2,599	1,641	15,327	(628)	(627)	(6.27)
Verbatim Australia Pty. Ltd	2,165	455,516	80,709	374,807	381,608	25,410	43,456	434.56
Verbatim (Hong Kong) Limited	126,708	273,545	143,178	130,367	522,369	(2,354)	(3,386)	(Note)
Hotan Corp.	365,019	121,290	11,411	109,879	70,114	(26,395)	(45,360)	(3.49)
EMC Investment Holding Ltd.	1,729	4,303,850	1,034,390	3,269,460	0	(12,517)	484,396	7,872.90
Supernet Holding Ltd.	160,734	392,770	93	392,677	0	(98)	(8,420)	(1.47)
F5 Holdings Ltd.	671	1,483,594	0	1,483,594	0	(2,023)	(9,800)	(410.66)

(Note) It is not applicable to limited company.

323 -

Unit: NT$1,000

(Except for earnings per share that is calculated in NTD)

Company Name	Capital	Total Assets	Total Liabilities	Net Worth	Sales Revenue	Net operating income	Profit or Loss (after Tax)	Basic Earnings (Loss) Per Share
Media Factory LLC	1,207,895	360,576	0	360,576	0	(17)	(69,213)	(Note)
CIA Holding Corp.	966,086	539,518	0	539,518	0	(221)	(10,277)	(Note)
Fortune (Jiangsu) Multimedia Co., Ltd.	3,147,819	835,133	455,322	379,811	459,962	(101,674)	(76,883)	(Note)
Fortune (Jiangsu) Electronic Materials Co., Ltd.	71,590	123,208	4,185	119,023	41,931	(2,762)	(7,680)	(Note)
Verbatim GmbH	884	1,512,891	690,511	822,380	2,413,564	115,691	67,992	(Note)
Nantong Zhongxing Multimedia Co., Ltd.	76,945	16,112	0	16,112	0	(44)	(4)	(Note)
Kinease Investment Ltd.	0	86,809	8,292	78,517	0	(3,021)	(3,491)	(1,745,500.00)
Jet-Thai Hi-Tech Co. Ltd.	4,645,502	561,535	1,827	559,708	157	(9,456)	213,604	(Note)
Verbatim Americas LLC	1,786,152	1,730,467	365,783	1,364,684	2,030,623	34,547	37,499	(Note)
Verbatim Japan Ltd.	16,083	686,445	657,094	29,351	1,406,655	26,730	13,903	2,356.44

(Note) It is not applicable to limited company.

(II) Consolidated financial statements of the related enterprises: with the latest consolidated financial statements of parent-subsidiary company audited and certified by accountant.

324 -
III. Holding or Disposal of Shares in the Company by Its Subsidiaries during the Most Recent Fiscal Year or during the Current Fiscal Year up to the Date of Publication of the Annual Report

There are no new securities for private placement for the year 2020 and up to the date of publication of the annual report.

IV. Holding or disposal of shares in the Company by its subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report

None.

V. Other Mandatory Supplementary Notes

None.

VI. Matters That Have Significant Impact on Shareholders' Equity or Securities Prices as Set Forth in Subparagraph 2, Paragraph 3, Article 36 of the Securities and Exchange Act in the Most Recent Year and up to the Date of Publication of the Annual Report

None.

325 -

CMC Magnetics Corporation

Chairman: Wong, Ming-Sen

Address: 15th, Fl., No.53, Ming Chuan W. Road., Taipei, Taiwan, R.O.C. Tel: (02) 2598-9890

Date: Published on April 20, 2021

CMC CMC Magnetics Corporation

Address: 15th, Fl., 53, Ming Chuan W. Road, Taipei Tel: (02)2598-9890 Fax: (02) 2598-9896

AI assistant

CMC Magnetics Corporation — Annual Report 2020

52006_rns_2021-08-06_1af5535f-45c7-4c2b-9f1b-d38575e02557.pdf

CMC

CMC Magnetics Corporation 2020 Annual Report

No Excuse, Teamwork, Cost concept, Living in the moment

Chapter 1 Letter to Shareholders

(III) Profitability analysis:

Best Regards,

Chapter 2 Company Profile

I. Establishment Date

II. Company History

Chapter 3 Corporate Governance Report

(I) Directors and Supervisors

2. Professional Qualifications and Independence Analysis of the Directors and Supervisors

Unit: NT$1,000

(III) Remunerations of the General Manager and Deputy General Manager

IV. The State of the Company’s Implementation of Corporate Governance

(II) Operation of the Audit Committee:

(V) Corporate Social Responsibility

(VI) Ethical Corporate Management

CMC Magnetics Corporation Statement on Internal Control

2. Major Resolutions of Board Meetings:

V. Information on CPA Professional Fees

Cha ter 4 Ca ital Raisin Activities p p g

I. Capital and Shares

(I) Source of Capital

(II) Status of Shareholders

(III) Distribution of Shares

(IV) Major Shareholders

Chapter 5 Operational Overview

(II) Industry overview

(III) Research and Development Achievements and Plans

1. R&D Department Organization

2. R&D Strategy

3. Future R&D Plans

4. Performance and Achievements

1. Short-term sales strategy

II. Market and Production/Sales Overview

2. Market Share

3. Future supply and demand circumstance and potential growth of the main products

(II) Production management

1. Production strategy

2. Key product functions and manufacturing process

3. Product Quality

(IV) Major import (export) customers in the last two years

2. Customers who account for more than 10% of the sale price Unit: NT$ thousand

(V) Production value in the last two years

Unit: NT$1,000/ 1,000 sets

(V) Waste treatment:

V. Labor Relations

VI. Important Contract

Chapter 6 Financial Status Overview

2. Condensed Consolidated Income Statement

3. Condensed individual balance sheet

4. Condensed Consolidated Individual Income Statement

(II) Name of the CPA in the most recent five years and the audit comments:

II. Financial Analyses for the Past Five Fiscal Years

(I) Financial ratio analysis

1. Consolidated financial ratio analysis

Representation Letter of CMC Magnetics Corporation

Independent Auditors' Report

To CMC Magnetics Corporation,

Audit Opinion

Basis for Audit Opinion

Key Audit Matters

Accounting estimation of inventory valuation

Description

Corresponding audit procedures

Evaluation of impairment of property, plant and equipment

Description

Corresponding audit procedures

Other Matters – Audits by other CPAs

Other Matters - Parent Company Only Financial Reports

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

Statements

CPAs' Responsibilities for the Audit of Consolidated Financial Statements

CMC Magnetics Corporation and Its Subsidiaries

Consolidated Balance Sheets

For the Years Ended December 31, 2020 and 2019

CMC Magnetics Corporation Annual Report 2020