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2023 ReportStock Ticker 2324 2023 Annual Report This translated document is prepared in accordance with the Chinese version and is for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese version shall prevail. Taiwan Stock Exchange Market Observation Post System: http://mops.twse.com.tw Company Website: http://www.compal.com Printed on April 2, 2024 I. Spokesperson Spokesperson: Ching-Hsiung Lu/Vice President Deputy Spokesperson: Cheng-Chiang Wang /Vice President of Accounting Dept. Tel: 886-2-8797-8588 E-mail: Investor@compal.com II. Headquarters, Branches and Plant Headquarters Address: No.581 and 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan Tel: 886-2- 8797-8588 Manufacturing Site Address: No. 8, South East Rd., Pingzhen City, Taoyuan City Tel: 886-3-439-1707 Kaohsiung Branch Address: No. 189, Linsen 4th Rd., Qianzhen Dist., Kaohsiung City, Taiwan Tel: 886-7-535-3855 III. Share Administration Agency Chinatrust Transfer Agent Address: 5F, No. 83, Sec 1, Chung Ching Nan Road, Taipei, Taiwan Tel: 886-2-6636-5566 Website: https://www.ctbcbank.com IV. Auditors CPA Firm: KPMG Taiwan Auditors: Kuo,Kuan Ying and Chien, Szu Chuan Address: 68F, No. 7, Sec. 5, Xinyi Road, Taipei, Taiwan Tel.: 886-2-8101-6666 Website: http://www.kpmg.com.tw V. Overseas Securities Exchange Luxembourg Stock Exchange: http://www.bourse.lu London Stock Exchange http://www.londonstockexchange.com VI. Corporate Website http://www.compal.com 1 Table of Contents 4 I. Letter to Shareholders II. Company Profile 7 7 2.1 Date of Incorporation 2.2 Company History III. Corporate Governance Report 9 11 41 125 126 127 3.1 Organization 3.2 Directors, Supervisors and Management Team 3.3 Implementation of Corporate Governance 3.4 Certified Public Accountant (CPA) Fee Information 3.5 Replacement of CPA 3.6 If the chairman, president, and financial or accounting manager of the Company had worked for the accounting firm or related parties thereof in the most recent year 127 3.7 For the most recent year and as of the date of publication of the annual report, changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders 130 131 3.8 Relationship among the Top Ten Shareholders 3.9 Ownership of shares in Affiliated Enterprises IV. Capital Overview 133 137 137 138 140 140 140 140 4.1 Capital and Shares 4.2 Bonds 4.3 Preferred shares 4.4 Global Depository Receipts 4.5 Employee Warrants 4.6 Subscription of New Shares by Employees and Restricted Shares 4.7 New Share Issuance in Connection with Mergers and Acquisitions 4.8 Financing Plans and Implementation V. Operational Highlights 5.1 Business Activities 5.2 Market and Sales Overview 5.3 Human Resources 5.4 Environmental Protection Expenditure 5.5 Labor Relations 5.6 Information Security Management 5.7 Important Contracts 141 170 191 192 192 195 197 2 VI. Financial Information 198 202 208 209 209 209 6.1 Five-Year Financial Summary 6.2 Five-Year Financial Analysis 6.3 Audit Committee’s Report in the Most Recent Year 6.4 Consolidated Financial Statements and Independent Auditors’ Report (Attachment I) 6.5 Parent-Company-Only Financial Statements and Independent Auditors’ Report (Attachment II) 6.6 Status of financial difficulties for the Company and its subsidiaries VII. Review of Financial Position, Operating Results, and Risk Management 210 211 212 212 213 214 217 7.1 Analysis of Financial Status 7.2 Analysis of Operation Results 7.3 Analysis of Cash Flow 7.4 Major Capital Expenditures 7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year 7.6 Analysis of Risk Management 7.7 Other material issues VIII. Special Disclosure 218 252 252 252 252 8.1 Summary of Affiliated Companies 8.2 Private Placement of Securities in the Most Recent Year 8.3 Subsidiaries’ Holding of the Company’s Shares in the Most Recent Year 8.4 Other supplementary notes, where applicable 8.5 Events with Significant Impacts Attachment I II Consolidated Financial Statements and Independent Auditors’ Report Parent-Company-Only Financial Statements and Independent Auditors’ Report 3 I. Letter to Shareholders Dear Shareholders, We sincerely thank all shareholders for your long-term support of Compal. 2023 was still a year full of changes and there are many new risks and challenges in the industry, technology and even economy and politics. In terms of industry, as the pandemic receded, the pandemic dividend enjoyed by electronic products gradually disappeared and the industry experienced a drastic downward adjustment in demand in the past year. However, in terms of technology, we also see the rise of AI, which has brought many application opportunities in work, products and manufacturing, and has become an important trend for future development. In terms of economy, the world is still affected by inflation, which poses a great challenge to terminal consumer demand. In terms of politics, the competition between the United States and China is ongoing and even develops into a conflict between countries which brings many uncertainties to the future. In the face of rapid changes in the overall environment, Compal has adopted many strategies and countermeasures in recent years and gradually established our long-term competitiveness. We hereby present our financial and business results for 2023, as well as the business outlook for 2024 as follows: Financial and Business Results Compal’s 2023 consolidated revenue was NT$946,715 million, a decline of 12% from last year. The total shipment of 5C products also decreased by 17% to 79 million units. Although the annual revenue declined due to a lower demand, under the Company's strategy of improving profitability and operational capabilities, product portfolio enhancement and automation efficiency improved, driving the annual gross profit margin to increase from 3.8% in the previous year to 4.5%, and the operating profit margin also increased from 0.9% in the previous year to 1.3%. The consolidated net operating profit for the year increased by 31% to NT$12,048 million from that of the previous year. Although interest rate hikes, exchange rate fluctuations and declining investment incomes form affiliates led to a decrease in non-operating income in 2023, the net profit before tax for the year was still NT$11,890 million, an increase of 11% from that of the previous year. The net profit after tax for the whole year which belongs to the parent company is NT$7,668 million, and the earnings per share are NT$1.76. Business Development and Layout Under the economic momentum slowdown and geopolitical development, the entire industry and even Compal are going through an important transformation period. It is necessary to differentiate through emerging applications and specific products, and promote regional development to sustain our growth momentum. Therefore, AI, Cloud Server, Auto Electronics, Communication and MedTech are the big Five important emerging industries that we define. Compal has invested resources, actively made deployments, and gradually seen results. In the future, we will make it our important development goal to gain a leading position in new business fields. In terms of regional development, Taiwan, Mainland China and Vietnam have become the important operating bases of Compal in Asia. Over the past two years, we have been continuously expanding our operational capacity 4 in North America in the United States and Mexico; to further meet customer needs and growth, we are currently evaluating the establishment of factories in Europe and hope to provide more complete operational support in various regions. In addition, in terms of regional development, we also leverage the resources of the Kinpo- Compal Group and work closely with our sister companies to make the investment and utilization of resources more efficient. In terms of MedTech, Compal is gradually showing achievements in the field of advanced medical equipment, including: the investment in Aco Healthcare on its portable ultrasound solutions has obtained FDA certification in the United States and TFDA certification in Taiwan, the AI brainwave detection equipment of HippoScreen is helpful in the treatment and diagnosis of depression and is currently undergoing clinical trials, General Life Biotechnology which is a blood glucose cholesterol and uric acid reagent factory has achieved stable profitability and plans to establish a new factory in Indonesia, and Compal internal medical team has developed a radiofrequency ablation system to collaborate with National Taiwan University Hospital to jointly establish a treatment training center. In addition, Rueifang Hospital, a collaboration between Compal and New Taipei City, will begin construction this year. It combines daycare and long-term care services, and will become a practical application field for Compal's smart medical products in the future. Progress of Corporate Sustainability On the corporate sustainability, Compal continues to improve its various ESG work. In terms of the environment, we have introduced digital tools with upgraded the air conditioning and power systems in the factories, and introduced smart meter settings and energy intelligence monitoring platforms to further help achieving the carbon reduction goals. In the green supply chain project, we assist suppliers in establishing carbon management information platforms in a "big-leading-small" manner to help the quantification and integration of supply chain carbon information. In terms of the society, Compal has launched the DEI project, committed to establishing the workplace awareness of Diversity, Equity and Inclusion, and creating a diverse and happy workplace. As for social feedback, Compal has long collaborated with Hsu Chauing Social Welfare Charity Foundation to invest in cultural education and public welfare, which has been highly recognized by the outside world. In 2023, we were honored to receive the "Social Education Contribution Award" from the Ministry of Education and the "Social Service Award" from the Library Association of the Republic of China. In terms of corporate governance enhancement, Compal amended its Corporate Governance Best Practice Principles in 2023, added a diversity policy for the composition of the board of directors, and appointed external professional independent institutions to conduct external evaluations of board performance. We have comprehensively promoted the issue of corporate sustainability, allowing Compal to significantly improve its sustainability performance in the evaluations of external ESG organizations (such as S&P CSA, MSCI ESG, ISS ESG and Sustainalytics ESG Risk). In 2023, Compal was once again selected by the Taiwan Institute for Sustainable Energy as one of the "Top 100 Model Sustainable Enterprises in Taiwan", which is a recognition of Compal's continued investment in sustainability work. Future Outlook and Plans Looking ahead, although market research institutions are looking forward to a recovery of the industry in 2024, 5 their estimates are relatively conservative. The expectation of an economic soft landing indicates that there are still significant challenges and uncertainties in the market development this year. In such an environment, Compal's business priority, in addition to continuing our profit-focused strategy, is to implement the following three plans. On the operations side, we will continue to invest in digital projects on the basis of automation, carry out comprehensive intelligent transformation, and further strengthen Compal's operational resilience. On the technology side, especially the application of AI technology will have a revolutionary impact on the industry. Compal's deployment in AI is not only widespread in servers, laptops, mobile phones, wearable devices, medical products, etc., but also the application of AI capabilities into smart production and manufacturing. Our investment and layout in AI will definitely not fall behind. On the growth side, a solid foundation has been established for Compal's five emerging businesses in recent years. Looking ahead, in addition to organic growth, we will actively take external M&A opportunities to accelerate the growth momentum further. At the same time, we will effectively utilize external resources to combine with our core capabilities to create a synergistic effect and long-term value for the company. Finally, we would like to once again thank all shareholders for your long-term support to Compal, and we wish you all peace and good health, and prosperity in everything! Chairman: Sheng-Hsiung Hsu (Rock Hsu) CEO: Chung-Pin Wong (Martin Wong) Head of Accounting: Cheng-Chiang Wang (Jack Wang) 6 II. Company Profile 2.1 Date of Incorporation: June 1, 1984 2.2 Company History ■ Company history in the past two years: 2022 • Won 8 awards at the 2022 “iF Design Awards”, ranked 10 in the iF Global Innovation Companies Ranking. • • Selected into the “TIP Customized Environmental Sustainability Dividend +Index”. Selected to take part in the CDP climate change program for 9 consecutive years (2014-2022). In 2022, received a score of B in the CDP climate change and were rated at the management level for the water questionnaire. • Ranked among the top 21%-35% in the TWSE-listed companies in the 8th round of "Corporate Governance Evaluation” organized by Taiwan Stock Exchange and Taipei Exchange. • Ranked 4th in CommonWealth Magazine’s “Top-2000 Manufacturers”. Selected into the FTSE4GOOD Index and the FTSE4GOOD TIP Taiwan ESG Index. Selected as a constituent stock of “Taiwan High Salary 100 Index” and “Taiwan Employment 99 Index”. Ranked 317th on the Fortune Global 500. Ranked 1345th on the Forbes Global 2000. Ranked the Gold Award in the Technology R&D of 2022 Happiness Enterprise online voting by 1111. • The Company acquired Poindus Systems Corp. (Poindus) through tender offer to expand Industrial PC business. • The Company signed the contract of “New Taipei City RuiFang District Medical & Long-Term Care Facility BOT+BTO” with New Taipei City Government. • The Company obtained the land use rights of 40 ha (hectare) located in the Thai Binh province, Vietnam to further expand the production in Vietnam. The Company’s share capital reached TWD 44.1 billion in 2022. The Company’s consolidated revenue reached TWD 1,073.2 billion in 2022. • • 2023 • Kinpo-Compal Group Headquarter, located in Beitou Shilin Technology Park, was officially ground breaking in February 2023. • Selected into the FTSE4GOOD Index and the FTSE4GOOD TIP Taiwan ESG Index. • Selected as a constituent stock of “Taiwan High Salary 100 Index” and “Taiwan Employment 99 Index”. 7 • Won 17 awards at the 2023 “iF Design Awards”. • Selected into the“Taiwan Tech High Dividend Index”. • Ranked among the top 21%-35% in the TWSE-listed companies in the 9th round of "Corporate Governance Evaluation” organized by Taiwan Stock Exchange and Taipei Exchange. • Ranked 6th in CommonWealth Magazine’s “Top-2000 Manufacturers”. • Ranked 420th on the Fortune Global 500. • Ranked 1522th on the Forbes Global 2000. • Ranked the Gold Award in the Technology R&D of 2023 Happiness Enterprise online voting by 1111. • Selected to take part in the CDP climate change program for 10 consecutive years (2014-2023). In 2023, received a score of B in the CDP climate change and were rated at the management level for the water questionnaire. • The Compal Sustainability report in 2023 won the Platinum Medal of Taiwan Corporate Sustainability Report Award of TCSA and Taiwan Top 100 Sustainability Award.. • Social Education Contribution Awards by Ministry of Education Republic of China (Taiwan) and Ministry of Education Kaohsiung respectively. • Welfare Service Award by Library Association of the Republic of China (Taiwan) in 2023 • The Company’s share capital reached TWD 44.1 billion in 2023. • The Company’s consolidated revenue reached TWD 9,467 billion in 2023. 2024 • Won 20 awards at the 2024 “iF Design Awards”. • Selected into the FTSE4GOOD Index and the FTSE4GOOD TIP Taiwan ESG Index. • Selected as a constituent stock of “Taiwan High Salary 100 Index” and “Taiwan Employment 99 Index”. • Selected into the“Taiwan Tech High Dividend Index”. ■ Any changes to the management rights, significant changes of the management mode or business content, and other important matters that can affect shareholders' equity and their impact on the Company in the most recent year and up to the date of printing of the annual report: None. 8 III. Corporate Governance Report 3.1 Organization 3.1.1 Organizational Chart (As of March 1st, 2024) Shareholders Board of Directors Sustainability Committee Audit Office Remuneration Committee Audit Committee Risk Management Committee President’s Office Personnel Evaluation Committee Top Management Committee Digital Transformation Committee Investment Planning and Management Office Legal Affairs Office Insider Trading Prevention Office Digital Transformation Office ESG Office Occupational Safety and Health Office P C B G G O B G S D B G F i n a n c i a l G r o u p A c c o u n t i n g G r o u p H R a n d A D M G r o u p 9 3.1.2 Major Corporate Functions Department Functions President’s Office Responsible for the Company’s operations Risk Management Committee Implements risk management related affairs Sustainability Committee Promotes and executes sustainability-related plans Auditing Office Conducts internal audits Investment Planning and Management Office Responsible for investment-related activities Legal Affairs Office Handles the Company’s legal affairs Insider Trading Prevention Office Implements preventive measures against insider trading Digital Transformation Office Promotes and executes digital transformation projects ESG Office Promotes and executes ESG-related affairs Occupational Safety and Health Office Implementing a comprehensive occupational health and safety program PCBG GOBG SDBG Responsible for the R&D, production, quality control and sale of PCs and other related products Responsible for production, quality control, and worldwide operation affairs Responsible for the R&D, production, quality control, and the sale of smart devices Accounting Group Handles accounting, share administration, and funding affairs Financial Group Responsible for the Company's financial planning, capital scheduling, and payment controlling. HR and Administration Group Responsible for human resources, training, education, employee relations, general affairs, and building management 10 Directors and Management Team 3.2 3.2.1 Directors Title/ Name/ Nationality (Note 1, 2) Gender/ Age Elected Date Term First Elected Date Shareholding at the election date Current shareholding Shares held by spouse and underage children Current shareholding Shares held by proxy Major career/academic achievements Shareholding Shareholding Shareholding Shareholding Shares Percentage Shares Percentage Shares Percentage Shares Percentage (%) (%) (%) (%) Chairman Sheng-Hsiung Hsu Male 81-90 2021.8.27 3 years 1984.04.16 8,975,401 0.20% 8,975,401 0.20% 17,107,025 0.39% 0 0.00% Vice-Chairman Jui-Tsung Chen Male 66-80 2021.8.27 3 years 1992.04.30 35,352,587 0.80% 35,352,587 0.80% 1,069,405 0.02% 0 0.00% Director Binpal Investment Co., Ltd. Representative: Wen-Being Hsu Director Kinpo Electronics, Inc. - Male 81-90 - Representative: Chieh-Li Hsu Male 36-50 Director Charng-Chyi Ko Male 81-90 2018.6.22 5,000,000 0.11% 5,000,000 0.11% 1984.04.16 5,000,000 0.11% 5,000,000 0.11% 1990.06.22 151,628,692 3.44% 151,628,692 3.44% 0 0 0 0.00% 0.00% 0.00% 2020.07.21 4,117,569 0.09% 4,117,569 0.09% 631 0.00% 0 0 0 0 0.00% 0.00% 0.00% 0.00% 2021.8.27 3 years 2021.8.27 3 years 3 years 2021.8.27 1984.04.16 7,896,867 0.18% 7,896,867 0.18% 30,645 0.00% 0 0.00% Co-Founder of Compal Electronics, Inc. Honorary Doctorate, National Taiwan Normal University Chair of Kinpo Electronics, Inc. Honorary Doctorate, National Cheng Kung University Chair of Arcadyan Technology Corp. Co-Founder of Compal Electronics, Inc. National Tao-Yuan Sr. Vocational Agricultural and Industrial School Director of BAOTEK, Inc. Master of International Business, Waseda University, Japan Chair and President of AcBel Polytech Inc. Co-Founder of Compal Electronics, Inc. Bachelor of Business Dept., National Taiwan University PhD, Lincoln University, USA Chair of Taiwan Biotech Co., Ltd. April 2, 2024 Spouse or relatives of second degree or closer acting as Directors, Supervisors, or department heads Title Name Relationship Selected Current Position at COMPAL and Other Companies (Note 5) Director Director Sheng-Chieh Hsu Chieh-Li Hsu Brother’s father and son (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) Chairman Sheng-Hsiung Hsu father and son (Note 5) N/A N/A N/A 11 Title/ Name/ Nationality (Note 1, 2) Gender/ Age Elected Date Term First Elected Date Shareholding at the election date Current shareholding Shares held by spouse and underage children Current shareholding Shares held by proxy Major career/academic achievements Shareholding Shareholding Shareholding Shareholding Shares Percentage Shares Percentage Shares Percentage Shares Percentage (%) (%) (%) (%) Director Sheng-Chieh Hsu Male 66-80 3 2021.8.27 years 1997.05.29 9,204,201 0.21% 9,204,201 0.21% 8,152,928 0.18% (Note 4) (Note 4) Director Yen-Chia Chou Male 66-80 2021.8.27 3 years 1987.06.13 8,022,874 0.18% 8,022,874 0.18% 2,502,768 0.06% 0 0.00% Director Chung-Pin Wong Male 51-65 2021.8.27 3 years 2007.06.15 6,618,618 0.15% 6,618,618 0.15% 1,398 0.00% 0 0.00% Director Chiung-Chi Hsu Male 51-65 2021.8.27 3 years 1994.04.23 2,117,731 0.05% 2,117,731 0.05% 30,000 0.00% 0 0.00% Director Ming-Chih Chang Male 51-65 2021.8.27 Director Anthony Peter Bonadero Male 51-65 2021.8.27 Director Sheng-Hua Peng Male 51-65 2021.8.27 3 years 3 years 3 years Independent Director Min-Chih Hsuan Male 66-80 2021.8.27 3 years 2018.6.22 1,919,489 0.04% 1,919,489 0.04% 2018.6.22 0 0.00% 0 0.00% 2018.6.22 835,000 0.02% 835,000 0.02% 0 0 0 0.00% 0 0.00% 0.00% 0 0.00% 0.00% 0 0.00% 2012.6.22 0 0.00% 0 0.00% 0 0.00% 0 0.00% Bachelor of Architectural Dept., Tam- Kang University Director of Kinpo Electronics Inc. Bachelor of Geology Dept. National Taiwan University Director of Kinpo Electronics Inc. Master of Management Science, National Chiao- Tung University Chair of Compal Broadband Networks, Inc. Master of Golden Gate University, San Francisco, USA Director of I PAO Bearing Co., Ltd. Electrical Engineering Dept., Ming Chi Institute of Technology Director of Mactech Co., Ltd. Texas A&M University Executive Vice-President of Auscom Engineering Inc. Master of Electronics Engineering, National Taiwan University Director of Arcadyan Technology Corp. Bachelor of Electrical Engineering Dept., National Chiao Tung University Chair and President of United Microelectronics Corp. Selected Current Position at COMPAL and Other Companies Spouse or relatives of second degree or closer acting as Directors, Supervisors, or department heads Title Name Relationship (Note 5) Chairman Sheng-Hsiung Hsu Brothers (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A 12 Title/ Name/ Nationality (Note 1, 2) Gender/ Age Elected Date Term First Elected Date Shareholding at the election date Current shareholding Shares held by spouse and underage children Current shareholding Shares held by proxy Major career/academic achievements Shareholding Shareholding Shareholding Shareholding Shares Percentage Shares Percentage Shares Percentage Shares Percentage (%) (%) (%) (%) Independent Director Duei Tsai Male 66-80 2021.8.27 3 years Independent Director Wen-Chung Shen Male 66-80 2021.8.27 3 years 2012.6.22 0 0.00% 0 0.00% 0 0.00% 0 0.00% 1998.4.8 2,836,000 0.06% 2,836,000 0.06% 2,315,000 0.05% 0 0.00% Note: 1. Except for Director Anthony Peter Bonadero, who is a US citizen, the rest of the directors are ROC nationals. 2. The Chairman, Chief Strategy Officer and President of the Company are not the same person, spouses, or related to each other. 3. Wen-Chung Shen served as Director from April 22, 1998 to June 22, 2018. 4. Director Sheng-Chieh Hsu held 2,578,000 shares (0.06%) through proxies. Ph.D., Electrical Engineering, National Taiwan University Independent Director of Taiwan High Speed Rail Corporation Bachelor of Electrical Engineering Dept., National Taiwan University Director of Compal Electronics, Inc. Selected Current Position at COMPAL and Other Companies Spouse or relatives of second degree or closer acting as Directors, Supervisors, or department heads Title Name Relationship (Note 5) N/A N/A N/A (Note 5) N/A N/A N/A 5. Selected Current Positions as below: Title Name Chairman Sheng-Hsiung Hsu Selected Current Positions Chairman: Kinpo Electronics, Inc., Cal-Comp Electronics(Thailand) Public Company Limited, Cal-Comp Electronics and communications Co., Ltd., Gempal Technology Corp., Panpal Technology Corp., Teleport Access Services, Inc., Kinpo Group Management Consultant Company, Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., NTNU Innovation Investment Holding Company, Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Electronics, (China) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd., Kinpo Electronics (China) Co., Ltd., Cal-Comp Precision Holding Co., Ltd., Cal-Comp Semiconductor, Ltd. Managing Director: Taiwan Biotech Co., Ltd. Director: Crownpo Technology Inc., Compal System Trading (Kunshan) Co., Ltd., Cal-Comp Optical Electronics (Suzhou) Co., Ltd., Ascendant Private Equity Investment Ltd., Billion Sea Holdings Ltd., Big Chance International Co., Ltd., Cal-Comp Electronics (USA) Co., Ltd., Cal-Comp Electronics de Mexico Co. S.A. de C.V., Cal-Comp Precision (Philippines), Inc., Cal-Comp Precision (Singapore) Limited, Cal-Comp Precision (Thailand) Limited, Cal-Comp USA (San Diego), Co., Inc., Center Mind International Co., Ltd., Compal Display Holding (HK) Limited, Compal Electronics (Holding) Ltd., Compal Electronics International Ltd., Compal International Ltd., Compal International Holding (HK) Limited, Compal International Holding Co., Ltd., Compal Mexico Electromex, S.A. de C.V., Compal Rayonnant Holdings Ltd., Confiar Land Corp., Core Profit Holdings Ltd., Flight Global Holding Inc., Fortune Way Technology Corp., Goal Reach Enterprises Ltd., HengHao Holdings A Co., Ltd., HengHao Holdings B Co., Ltd., High Shine Industrial Corp., 13 Title Name Selected Current Positions Intelligent Universal Enterprise Ltd., Jenpal International Ltd., Just International Ltd., Kinpo Electronics (Philippines), Inc., Kinpo International (Singapore) Pte. Ltd., Kinpo International Ltd., Lipo Holding Co., Ltd., Prospect Fortune Group Ltd., Prisco International Co., Ltd., Ranashe International Ltd., Smart International Trading Ltd. Group CEO: Kinpo Electronics, Inc. President: Kinpo Group Management Consultant Company, Cal-Comp Precision Holding Co., Ltd. Other: Honorary Chair of Chinese National Federation of Industries, Honorary Chair of Importers and Exporters Association of Taipei, Honorary Chair of The Third Wednesday Club, Policy Consultant of Taiwan Electrical and Electronic Manufacturers' Association., Chair of China Productivity Center, Vice Chair of Straits Exchange Foundation, Vice-Chair of Sinocon Industrial Standards Foundation Chairman: Arcadyan Technology Corporation, Ripal Optotronics Co., Ltd., Palcom International Corporation, General Life Biotechnology Co., Ltd., ARCE Therapeutics, Inc., UniCore Biomedical Co., Ltd., Aco Healthcare Co., Ltd., Raypal Biomedical Co., Ltd., River Regeneration and Rejuvenation Biotechnology Co. Ltd., Kinpo&Compal Group Assets Development Corporation, Compal Ruifang Health Assets Development Corporation, Ray- Kwong Medical Management Consulting Co., Ltd., Compal System Trading (Kunshan) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd., Compal Smart Device India Private Limited. Director: Compal Broadband Networks, Inc., Mactech Co., Ltd., HengHao Technology Co. Ltd., UNICOM GLOBAL, INC., Kinpo Group Management Consultant Company, Phoenix Innovation Venture Capital Co., Ltd., Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Electronics, (China) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., Compal Networking (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd., Compal (Vietnam) Co., Ltd., Compal Development & Management (Vietnam) Co., Ltd., Ascendant Private Equity Investment Ltd., Arcadyan Holding (BVI) Corp., Arch Holding (BVI) Corp., Billion Sea Holdings Ltd., Big Chance International Co., Ltd., Bizcom Electronics, Inc., Center Mind International Co., Ltd., Compal Americas (US) Inc., Compal Display Holding (HK) Limited, Compal Electronics International Ltd., Compal Electronics N.A. Inc., Compal Electronics (Holding) Ltd., Compal Electronics (Vietnam) Co., Ltd., Compal International Ltd., Compal International Holding Co., Ltd., Compal International Holding (HK) Limited, Compal Rayonnant Holdings Ltd., Compal USA (Indiana), Inc., Compalead Electronics B.V., Compal Wise Electronic (Vietnam) Co., Ltd., Core Profit Holdings Ltd., Etrade Management Co., Ltd., Flight Global Holding Inc., Forever Young Technology Inc., Fortune Way Technology Corp., Giant Rank Trading Ltd., Goal Reach Enterprises Ltd., High Shine Industrial Corp., Intelligent Universal Enterprise Ltd., Jenpal International Ltd., Just International Ltd., Prospect Fortune Group Ltd., Prisco International Co., Ltd., Smart International Trading Ltd., Sinoprime Global Inc., Wah Yuen Technology Holding Ltd., Webtek Technology Co., Ltd. Independent Director: Powertech Technology Inc. Audit Committee Member: Powertech Technology Inc. Chief Strategy Officer: Compal Electronics, Inc. Other: Director of Chengdian Culture and Education Foundation Vice Chairman Jui-Tsung Chen Director Representative of Binpal Investment Co., Ltd.: Wen-Being Hsu Chairman: Binpal Investment Co., Ltd., Yuanbao Investment Co., Ltd. Director: Liu Pao Trading Co., Ltd. 14 Title Name Kinpo Electronics, Inc. Director Representative of Kinpo Electronics Inc.: Chieh-Li Hsu Selected Current Positions Director: AcBel Polytech Inc., CastleNet Technology Inc., Crownpo Technology Inc., iHELPER Inc., Norm Pacific Automation Corp., Teleport Access Services, Inc., XYZprinting, Inc., Kinpo Group Management Consultant Company, Cal-Comp Asset Management, Inc., Prudence Venture Investment Corp., NTNU Innovation Investment Holding Company Chairman: AcBel Polytech Inc., AcSacca Solar Energy Co., Ltd., AcTel Power Co., Ltd., AcGile EV Power Inc., KangYang New Energy Co., Ltd., AcSun Energy Inc., AcRay Energy Co., Ltd., AcTek Energy Co., Ltd., AcRise Power Inc., AcLeap Power Inc., Sumray Power Company, AcBel Electronic (XIANTAO) Co., Ltd., AcBel Electronic (Dong Guan) Co., Ltd., AcBel Electronic (Wuhan) Co., Ltd., Shanghai Sino Hardware Electronics (Wujiang) Co., Ltd., AcAmple Power Pte. Ltd., Acbel Polytech Philippines, Inc., OmniOn Power (China) Co., Ltd., OmniOn Power Holdings Inc., OmniOn Power Overseas LLC, OmniOn Power Shanghai Co., Ltd. Vice-Chairman: Cal-Comp Electronics (Thailand) Public Company Limited Executive Director: Chongqing Tongliang District Shanghai Sino Hardware Electronics Co., Ltd., Chongqing Kanghua Metal Product Co., Ltd. Director: CastleNet Technology Inc., ARCE Therapeutics, Inc., Raypal Biomedical Co., Ltd., VesCir Ltd., XYZprinting, Inc., Kinpo&Compal Group Assets Development Corporation, Compal Ruifang Health Assets Development Corporation, Ray-Kwong Medical Management Consulting Co., Ltd., Melvita Taiwan Ltd., Shangbao Enterprise Inc., Ginza Sakoh Taiwan Co., Ltd., NKG Advanced Intelligence and Technology Development (Yue Yang) Co., Ltd., LIZ Electronics (Nantong) Co., Ltd., Cal-Comp Precision Holding Co., Ltd., ABB Lineage Power Mexico, S. de R.L. de C.V., Acbel (USA) Polytech Inc., Acbel Polytech (Ireland) Limited, AcBel Polytech (SAMOA) Investment Inc., Acbel Polytech (Singapore) Pte. Ltd., Acbel Polytech (UK) Limited, Acbel Polytech Holdings Inc., AcBel Polytech International Inc., AcBel Polytech Japan Inc., Cal-Comp Electronics (USA) Co., Ltd., Cal-Comp Electronics de Mexico Co., S.A. de C.V., Cal-comp Industria De Semicondutores S.A., Cal-Comp Precision (Malaysia) SDN. BHD., Cal-Comp Precision (Thailand) Limited, Cal-Comp USA (San Diego), Co., Inc., CK Holdings Inc., CSA Holdings Inc., Lineage Power Matamoros, S.A. de C.V., OmniOn Power (Singapore) Pte. Ltd., OmniOn Power Inc., Power Station Holdings Ltd., Cal-Comp Semiconductor, Ltd., Target Gain Corporation Supervisor: Teleport Access Services, Inc., Kinpo Group Management Consultant Company, Full Power Investment Co., Ltd Chief Strategy Officer: Cal-Comp Electronics and Communications Co., Ltd. President: AcBel Polytech Inc., Kinpo&Compal Group Assets Development Corporation, AcGile EV Power Inc., AcBel Electronic (XIANTAO) Co., Ltd., AcBel Electronic(Dong Guan) Co., Ltd., AcBel Electronic (Wuhan) Co., Ltd., Acbel (USA) Polytech Inc., Acbel Polytech Philippines, Inc. Other: Vice-Chair of Taiwan Electrical and Electronic Manufacturers' Association, Director of Chinese National Federation of Industries, Managing Director of Japan-Taiwan Exchange Association, Managing Director of Importers and Exporters Association of Taipei, Managing Director of Monte Jade Science and Technology Association (Taiwan), Director of The Third Wednesday Club, Director of Epoch Foundation. Branch Manager: AcSacca Solar Energy Co. Ltd. Changhua Branch. 15 Title Name Director Charng-Chyi Ko Selected Current Positions Chairman: Taiwan Biotech Co., Ltd., All For Health Biotech Co., Ltd., Evergene Biotech Industrial Co., Ltd., T.B.C. Development and Construction Co., Ltd., Weck Tech Biotech Co., Ltd., Global BioParma Ltd., Taiwan Veterans Pharmaceutical Co., Ltd., Aseptic Innovative Medicine Co., Ltd., Young & Health Care Resorts Inc., Long Yee Investment Co. Ltd., Taiwan Venture Capital Co., Ltd., Yinfeng International, Inc., Taiwan Chariston AMC Corp., Ltd, Twin Luck Global Company Ltd. Vice-Chairman: OmniHealth Group, Inc. Director: Kinpo Electronics, Inc., Chang Yao Technology Inc., Genhealth Pharma Co., Ltd., All Information Inc., Taiwan Carefor Home Pharmacy Co., Ltd., Gold Precision Ltd., KKXC Integrated Management Holding (CYPRUS) Ltd., Optics Lab Inc., Synpharm, Inc. Supervisor: Teleport Access Services, Inc., Sunny Special Dyeing & Finishing Co., Ltd. Other: Chair of Yang Bi Li Education Foundation of Management, Director of Health, Welfare & Environment Foundation, Managing Supervisor of Cross-Strait Health Care and Leisure Activities Association Chairman: Integrate Investment Corp. Director: Cal-Comp Electronics (Thailand) Public Company Limited, Cal-Comp Electronics and communications Co., Ltd., Kinpo&Compal Group Assets Director Sheng-Chieh Hsu Development Corporation, Kinpo Electronics (China) Co., Ltd., Kinpo International Ltd. Director Yen-Chia Chou Director Chung-Pin Wong Supervisor: Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd. Chairman of Development Executive Committee: Kinpo&Compal Group Assets Development Corporation Chairman: Sceptre Industry Co., Ltd. Director: Micro Metal Electronics Co., Ltd. Supervisor: Full Power Investment Co., Ltd. President: Sceptre Industry Co., Ltd. Chairman: Compal Broadband Networks, Inc., Poindus System Corp., Starmems Semiconductor Corp., Compal Healthcare and Technology Ltd., HengHao Technology Co. Ltd., Rayonnant Technology Co., Ltd., HippoScreen Neurotech Corp., Shennona Co., Ltd., UNICOM GLOBAL, INC., Compal USA (Indiana), Inc., Wah Yuen Technology Holding Ltd. Executive Director: Compower Global Service Co., Ltd. Director: Arcadyan Technology Corporation, Mactech Co., Ltd., Gempal Technology Corp., Panpal Technology Corp., Taiwan Sanga Co., Ltd., Ripal Optotronics Co., Ltd., Infinno Technology Corp., General Life Biotechnology Co., Ltd., ARCE Therapeutics, Inc., UniCore Biomedical Co., Ltd., Aco Healthcare Co., Ltd., Raypal Biomedical Co., Ltd., Kinpo&Compal Group Assets Development Corporation, Compal Ruifang Health Assets Development Corporation, Kinpo Group Management Consultant Company, Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Compal System Trading (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Electronics Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Management (Chengdu) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd., Allied Power Holding Corp., Auscom Engineering Inc., Bizcom Electronics, Inc., Compal Connector Manufacture Ltd., HengHao Holdings A Co., Ltd., HengHao Holdings B Co., Ltd., Primetek Enterprises Ltd., Shennona Corporation, Sirqul Inc. Supervisor: Hong Ya Technology Corporation President: Compal Electronics, Inc., Gempal Technology Corp., Panpal Technology Corp., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd. Sustainability Committee Member: Compal Electronics, Inc. Risk Management Committee Member: Compal Electronics, Inc. Branch Manager: Compal Electronics, Inc. Kaohsiung Branch 16 Title Name Director Chiung-Chi Hsu Chairman: E-Bow Bearing Co., Ltd., Full Power Investment Co., Ltd. Director: Juan Hsin Bao Hardware co., Ltd., Jin Yongxiang co., Ltd. Chairman: FIPOLL Electronics (Chongqing) Co., Ltd. Director: Mactech Co., Ltd., Panpal Technology Corp., Kunshan Botai Electronics Co., Ltd., CGS Technology (Poland) Sp. z o.o., Compal Europe (Poland) Sp. z Selected Current Positions Director Ming-Chih Chang Director Anthony Peter Bonadero Director Sheng-Hua Peng o.o. President: Compal System Trading (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Electronics Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., FIPOLL Electronics (Chongqing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd., Kunshan Botai Electronics Co., Ltd., Compower Global Service Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Management (Chengdu) Co., Ltd. Executive Vice-President: Compal Electronics, Inc. Executive Vice-President: Auscom Engineering Inc. Chief Sustainability Officer of ESG Office: Compal Electronics, Inc. Chairman: Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., HANHELT Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd. Director: Arcadyan Technology Corporation, Gempal Technology Corp., Palcom International Corporation, Ripal Optotronics Co., Ltd., UniCore Biomedical Co., Ltd., Hong Ji Capital Co., Ltd., Hong Jin Investment Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., Compal Electronics, (China) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Bizcom Electronics, Inc., Compal Smart Device India Private Limited. Supervisor: General Life Biotechnology Co., Ltd. President: Palcom International Corporation, Compal Investment (Jiangsu) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., HANHELT Communications (Nanjing) Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd. Executive Vice-President: Compal Electronics, Inc. Chairman: Clientron Corp., Taiwan Memory Company, Fusionvax, Inc., TC-1 Culture Fund, Zhi Cheng Retro-style EV-mobility Design Co., Ltd., Vital First Investment Corporation, Maxima Ventures II, Inc. Independent Director Min Chih Hsuan Director: SIPP, Inc., Meribank Biotech Co., Ltd., Meridigen Biotech Co., Ltd., Htsensortek co., Ltd., Allied Focus Holding Corporation (Seychelles), Angeluca Science Ltd. (Republic of Seychelles), Bohe Biopharma Global Corporation (Cayman), Moral Express Holding Corporation (Seychelles), Orilitia Biopharma Limited (Hong Kong), Pacgen Biopharmaceuticals Corporation (Canada) Independent Director Duei Tsai Remuneration Committee Member: Compal Electronics, Inc. Audit Committee Member: Compal Electronics, Inc. Risk Management Committee Member: Compal Electronics, Inc. Director: Daai Satellite TV Co., Ltd. Independent Director: Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd. Independent Director for Public Welfare: Starlux Airlines Co., Ltd. Remuneration Committee Member: Compal Electronics, Inc., Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd., Starlux Airlines Co., Ltd. Audit Committee Member: Compal Electronics, Inc., Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd., Starlux Airlines Co., Ltd. Sustainability Committee Member: Compal Electronics, Inc., TTY Biopharm Company Ltd. 17 Title Name Selected Current Positions Independent Director Wen-Chung Shen Risk Management Committee Member: Compal Electronics, Inc. Nominating Committee Member: Taiwan High Speed Rail Corporation, Corporate Governance Committee Member: Taiwan High Speed Rail Corporation, Chairman: Her Tuo Co., Ltd. Remuneration Committee Member: Compal Electronics, Inc. Audit Committee Member: Compal Electronics, Inc. Sustainability Committee Member: Compal Electronics, Inc. Risk Management Committee Member: Compal Electronics, Inc. 18 ▓ Major shareholders of the Company’s corporate shareholders Name of corporate shareholder Kinpo Electronics, Inc. Major shareholders of the corporate shareholder (Note) Compal Electronics, Inc. (8.26%), Panpal Technology Corp. (4.62%), GEBO Limited (3.00%), Ho Bao Investment Co., Ltd. (2.00%), Ruey Shinn Co., Ltd. (1.87%), Li Chu Tsai (1.44%), UBS Taipei Branch is subject to Li Chu Tsai trust property account (1.33%), Lai Shun Shen Tsai (1.28%), JPMorgan Chase Bank Taipei Branch is entrusted with the safekeeping of Van Gard Emerging Market Stock Index Fund investment account of the manager of Van Gard Group (1.24%), JPMorgan Chase Bank N.A. Taipei Branch in Custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (1.21%) Note: If the major shareholder is also a corporate entity, please refer to the following table. ▓ Major shareholders of the Company’s major corporate shareholders Name of corporate shareholder Panpal Technology Corporation GEBO Limited Ho Bao Investment Co., Ltd. Ruey Shinn Co., Ltd. Major shareholders of corporate shareholders Compal Electronics, Inc. (100%) Li-Chu Tsai (95.39%), Chieh-Li Hsu (1.77%), Chun-Chi Hsu (1.42%), Yung-Hsu Hsu (1.42%) Chieh-Li Hsu (45.76%), Li-Chu Tsai (20.06%), Chun-Chi Hsu (17.09%), Yung-Hsu Hsu (17.09%) Hsin Chung Chen (33.34%), Hsin Tso Chen (33.33%), Hsin Yu Chen (33.33%) 19 ▓ Professional qualification of Directors and independence Information of Independent Directors: Conditions Name Professional Qualification & Experience Chairman Sheng-Hsiung Hsu Vice Chairman Jui-Tsung Chen Director Representative of Binpal Investment Co., Ltd.: Wen-Being Hsu Director Representative of Kinpo Electronics Inc.: Chieh-Li Hsu Director Charng-Chyi Ko Director Sheng-Chieh Hsu Director Yen-Chia Chou Department of Chinese, Honorary Doctorate, National Taiwan Normal University Chairman of Kinpo Electronics Inc. and Cal-Comp Electronics (Thailand) Public Company Limited The Chairman possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Electrical Engineering, Honorary Doctorate, National Cheng Kung University Chairman of Arcadyan Technology Corp. and Compal Communication Inc., and Chief Strategy Officer of Compal The Vice Chairman possesses more than 40 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. National Tao-Yuan Sr. Vocational Agricultural and Industrial School Director of BAOTEK, Inc. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. IMBA, Waseda Business School Chairman and President of AcBel Polytech Inc. The Director possesses more than 20 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Business, National Taiwan University and Doctorate Degree, University of Lincoln Director of Kinpo Electronics Inc. and Chairman of Taiwan Biotech Co., Ltd. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Architecture, Tam-Kang University Director of Kinpo Electronics Inc. and Cal-Comp Electronics (Thailand) Public Company Limited The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Geosciences, National Taiwan University Director of Kinpo Electronics Inc. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. 20 Independence Status of Independent Directors No. of concurrent Independent directorships of other public firms held 1 N/A N/A N/A N/A N/A N/A N/A Conditions Name Professional Qualification & Experience Director Chung-Pin Wong Director Chiung-Chi Hsu Director Ming-Chih Chang Director Anthony Peter Bonadero Director Sheng-Hua Peng Master of Management Science, National Chiao Tung University Chairman of Compal Broadband Networks, Inc. and Poindus Systems Corp., and President of Compal The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Master’s Degree, Golden Gate University, San Francisco, USA Director of Eb-Bow-Bearing Co., Ltd. The Director possesses more than 20 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Electrical Engineering, Ming Chi University of Technology Director of Mactech Co., Ltd., Executive Vice President of Compal and President of LCFC (HeFei) Electronics Technology Co., Ltd. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Texas A&M University Executive Vice President of Auscom Engineering Inc. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Master of Science in Electrical Engineering, National Taiwan University Director of Arcadyan Technology Corp., Executive Vice President of Compal and Senior Vice President of Compal Communications, Inc. The Director possesses more than 20 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Independence Status of Independent Directors No. of concurrent Independent directorships of other public firms held N/A N/A N/A N/A N/A 21 Conditions Name Professional Qualification & Experience Honorary Doctorate, Department of Electrical Engineering, National Chiao Tung University Chairman, Vice Chairman, CEO, President and Honorary Vice Chairman of United Microelectronics Corp. Chairman of Faraday Technology Corp., Clientron Corp. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Independent Director Min Chih Hsuan PhD, Graduate Institute of Electrical Engineering, National Taiwan University Independent Director of Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd. and Independent Director for Public Welfare of Starlux Airlines Co., Ltd. Part-time professor-level professional and technical personnel in the Department of Electrical Engineering, National Taipei University of Technology and the Department of Digital Multimedia Design, Kainan University; Adjunct professor at the Department of Electronics, National Taiwan University of Science and Technology and the Department of Electronics, Yuanzhi University. Government positions such as Minister of Transportation and Director of the Civil Aviation Bureau of the Ministry of Transportation. The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Department of Electrical Engineering, National Taiwan University Chairman of Her Tuo Co., Ltd., and Director and Executive Vice President of Compal The Director possesses more than 30 years of work experience required for the business of the Company and has not been a person of any conditions defined in the Company Act, Article 30. Independent Director Duei Tsai Independent Director Wen-Chung Shen Note: Independent Directors shall indicate the fulfillment of independence criteria. 22 No. of concurrent Independent directorships of other public firms held 3 Independence Status of Independent Directors Compliance with independence criteria (note) Number of shares of the Company and shareholding ratio of the person or their spouse or relatives within the second degree of kinship (or in the name of others): 0 shares, 0% Compliance with independence criteria (note) Number of shares of the Company and shareholding ratio of the person or their spouse or relatives within the second degree of kinship (or in the name of others): 0 shares, 0% Compliance with independence criteria (note) Number of shares of the Company and shareholding ratio of the person or their spouse or relatives within the second degree of kinship (or in the name of others): 5,151,000 shares, 0.11% • These criteria include but are not limited to the following: the Director or the Director’s spouse or relatives within the second degree of kinship have not worked as directors, supervisors or employees of the Company or its affiliated enterprises; • The Director has not assumed a position as a director, supervisor or employee of any company in a specified relationship with the Company (Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, Article 3, Paragraph 1, Sub-paragraphs 5 to 8). • The Director has not received remuneration for providing business, legal, financial, accounting, or other services to the Company or its affiliates in the last 2 years. • Number of shares of the Company and shareholding ratio of the person or their spouse or relatives within the second degree of kinship (or in the name of others). 23 ▓ The Diversity & Independence of the Board of Directors: 1. The Diversity of the Board of Directors: (1)In accordance with the Company’s Corporate Governance Best-Practice Principles, the composition of the board of directors shall be determined by taking diversity. It is advisable that directors concurrently serving as company officers not exceed one-third of the total number of the board members, and that an appropriate policy on diversity based on the company's business operations, operating dynamics, and development needs be formulated. All members of the board shall have the knowledge, skills, and experience necessary to perform their duties. To achieve the ideal goal of corporate governance, the board of directors shall possess the following abilities: 1. Ability to make operational judgments. 2. Ability to perform accounting and financial analysis. 3. Ability to conduct management administration. 4. Ability to conduct crisis management. 5. Knowledge of the industry. 6. An international market perspective. 7. Ability to lead. 8. Ability to make policy decisions. 24 (2) Status of board member diversification: Core items for diversification Name of Director Sheng-Hsiung Hsu Jui-Tsung Chen Representative of Binpal Investment Co., Ltd.: Wen-Being Hsu Representative of Kinpo Electronics Inc.: Chieh-Li Hsu Charng-Chyi Ko Sheng-Chieh Hsu Yen-Chia Chou Chung-Pin Wong Chiung-Chi Hsu Ming-Chih Chang Anthony Peter Bonadero Sheng-Hua Peng Min-Chih Hsuan Duei Tsai Wen-Chung Shen Employee Status (Note 1) Operation management Leadership and decision- making Knowledge of the industry International market perspective Risk Management Finance and accounting Investment M&A Communications and network Architecture V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V V Industry Experience (Note 2) Information Technology Information Technology Consumer Discretionary Information Technology Healthcare Industrial Information Technology Information Technology Materials Information Technology Information Technology Information Technology Information Technology Industrial Information Technology Note: 1. Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng have the status of employees of the company, and directors Chieh-Li Hsu and Anthony Peter Bonadero have the status of employees of the subsidiaries. 2. The GICS Level 1 sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Healthcare, Financials, Information Technology, Communication Services, Utilities, and Real Estate. 25 Age Gender Country of Citizenship Employee Status shareholder Seniority of Independent Directors Item 36 ~ 50 years old 51~65 years old 65 years or older Male Female Republic of China U.S.A. The company The companies’ subsidiaries The company The companies’ subsidiaries Less than 3 years More than 9 years Director Independent Director Number of people 1 5 6 12 0 11 1 4 2 11 1 - - % 7% 33% 40% 80% 0% 73% 7% 27% 13% 73% 7% - - Number of people 0 0 3 3 0 3 0 0 0 1 2 1 2 % 0% 0% 20% 20% 0% 20% 0% 0% 0% 7% 13% 33% 67% The current Board of Directors is comprised of 15 Directors. The management goals and implementation status of the diversity policy of the Board are as follows: Management goal The number of Directors holding concurrent positions as the Company Managers does not exceed one-third of the Board seats. At least four Directors possess expertise in the computer industry, sales and technology. At least two Directors possess expertise in law, finance, accounting and technology. Implementation Implemented Implemented Implemented When the company plans to re-elect the next term of directors, the number of independent directors shall not be less than 1/3 of all directors and more than half of the independent directors shall serve no more than three consecutive terms. In addition, at least one female director shall serve, helping achieve the specific goal of diversification of the company's directors members. 26 2. Independence of the Board of Directors: The current Board of Directors comprises 15 Directors, including Independent Directors (constituting 20% of the Board members). The establishment of Independent Directors and their roles are compliant with the provisions of the Securities and Exchange Act, and “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.” Apart from Sheng-Hsiun Hsu (Chairman), Sheng-Chieh Hsu (Director) and Chieh-Li Hsu (representative of juristic person Director, Kinpo Electronics Inc.) who are relatives within the second degree of kinship, the rest of the Directors do not have spousal or familial relationships within the second degree of kinship. As such, the Directors are not persons of conditions listed in the Securities and Exchange Act, Articles 26-3 and 26-4. In conclusion, the Board of Directors of the Company is deemed independent. 27 3.2.2 Management Team Title Name/ Nationality/ Gender (Note 1, 2) Date elected /appointed Shares held Shares held by spouse and underage children Subsidiary shareholding Total shares held in the names of others Shares held Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Major career/academic achievements Chief Strategy Officer Jui-Tsung Chen 2018.07.04 35,352,587 0.80% 1,069,405 0.02% President Chung-Pin Wong 2018.07.04 6,618,618 0.15% 1,398 0.00% Executive Vice- President Executive Vice- President Executive Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Ming-Chih Chang 2018.07.04 1,919,489 0.04% Sheng-Hua Peng 2018.07.04 835,000 0.02% Chen-Chang Hsu 2011.08.31 0 0.00% 0 0 0 0.00% 0.00% 0.00% Chun-Te Shen 2007.01.01 2,953,700 0.07% 900,000 0.02% Kuo-Chuan Chen 2007.01.01 685,823 0.02% 10,924 0.00% Chyou-Jui Wei 2010.03.18 0 0.00% Wen-Da Hsu 2014.02.27 1,333,000 0.03% 0 0 0.00% 0.00% 28 0 0 0 0 0 0 0 0 0 0.00% Honorary Doctorate, National Cheng Kung University Chair of Arcadyan Technology Corp. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Master of Management Science, National Chiao-Tung University Chair of Compal Broadband Networks, Inc. Electrical Engineering Dept., Ming Chi University of Technology Director of Mactech Co., Ltd. Master of Electronics Engineering, National Taiwan University Director of Arcadyan Technology Corp. National Chiao Tung University EMBA Vice-Chair of HengHao Technology Co. Ltd. Master of Electrical Engineering, National Taiwan University Director of Kinpo Electronics Inc. Bachelor of Physics Dept., Chung Yuan Christian University Senior Vice-President of Compal Communication Inc. Master of Business Administration, University of Washington, USA Director of General Life Biotechnology Co., Media Administration Dept., Shih Hsin University Senior Vice-President of Compal Communication Inc. April 2, 2024 Spouse or relatives of second degree or closer acting as managers Title Name Relationship Vice- President Vice- President Po-Tang Wang Hsin-Chung Chen Relative by affinity father and son N/A N/A N/A N/A N/A N/A N/A N/A N/A Selected Current Position at COMPAL and Other Companies Refer to Page 14 Refer to Page 16 Refer to Page 17 Refer to Page 17 (Note 4) N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A (Note 4) N/A N/A N/A Title Name/ Nationality/ Gender (Note 1, 2) Date elected /appointed Shares held Shares held by spouse and underage children Subsidiary shareholding Total shares held in the names of others Shares held Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Shi-Kuan Chen 2017.02.08 Chi-Wai Wan 2017.05.10 0 0 0.00% 0.00% Min-Tung Weng 2018.12.01 623,786 0.01% Lo-Chun Lee 2018.12.01 420,000 0.01% Sheng-Hung Li 2019.11.11 285,574 0.01% Bor-Heng Chen 2020.05.13 280,010 0.01% 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Chung-Hsing Tan 2020.08.12 0 0.00% 5,320 0.00% Ta-Chun Wang 2016.06.29 204,200 0.00% 4,119 0.00% 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Vice-President Chih-Chuan Cheng 2003.01.01 2,103,786 0.05% 51,194 0.00% 0 0.00% Vice-President Ching-Hsiung Lu 2003.01.01 7,237,007 0.16% 650,000 0.01% Chief Information Security Officer Po-Tang Wang 2007.07.10 510,548 0.01% 486 0.00% 0 0 0.00% 0.00% 29 Major career/academic achievements Master of Industrial Design, Cranbrook Academy of Art Director of Design and Customer Affairs, Philips (Hong Kong) Bachelor of Electrical Engineering Dept., Fu Jen Catholic University Senior Vice-President of Inventec Corp. Master of Business Administration, Washington University, USA Deputy Manager of Sales, Kapok Computer Company Electronic Engineering Dept., Lee-Ming Institute of Technology Chair's Special Assistant, Mag Technology Co., Ltd. Electronics Dept., National Taiwan University of Science and Technology Master of Industrial Engineering and Operations Management, Columbia University Master of Electrical Engineering, Tatung University Vice-President of Compal Communication Inc. Tamkang University PhD of Finance Managing Vice-President of Shanghai Real Industrial Co., Ltd. Department of Electronic Engineering, Lunghwa University of Science and Technology Deputy Manager of Research and Development, Top Information Technologies Co., Ltd. Bachelor of Accounting Dept., Feng Chia University Director Compal Communication Inc. Bachelor of Computer Science and Information Engineering Dept., National Taiwan University Selected Current Position at COMPAL and Other Companies Spouse or relatives of second degree or closer acting as managers Title Name Relationship (Note 4) N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A (Note 4) Chief Strategy Officer Jui-Tsung Chen Relative by affinity Name/ Nationality/ Gender (Note 1, 2) Date elected /appointed Shares held Shares held by spouse and underage children Subsidiary shareholding Total shares held in the names of others Shares held Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Major career/academic achievements Selected Current Position at COMPAL and Other Companies Spouse or relatives of second degree or closer acting as managers Title Name Relationship Title and Vice- President Vice-President Tzong-Ming Wang 2009.07.16 263,184 0.01% Vice-President Yong-Ho Su 2011.07.01 410,401 0.01% Vice-President Jyh-Shyan Liang 2011.10.31 58,000 0.00% Vice-President Yi-Yun Chang 2014.08.13 85,246 0.00% Vice-President Hsin-Kung Mao 2014.11.13 500,714 0.01% Vice-President Shih-Hong Huang 2016.02.24 0 0.00% Vice-President Yi-Chiang Chiu 2016.02.24 280,000 0.01% Vice-President Jui-Chun Shyur 2016.05.11 0 0.00% Chief Legal Officer and Vice-President Peng-Hong Chan 2018.05.09. 0 0.00% 0 0 0 0 0 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Corporate Governance & Cheng-Chiang Wang 2018.07.04 2019.05.13 955,808 0.02% 30 0.00% 30 President of Vibo Telecom Inc. 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% National Taipei Institute of Technology Head of Research and Development, CLEVO Company Department of Electrical Engineering, National Taipei Institute of Technology Vice-President of Arima Photovoltaic and Optical Corp. Master of Digital Communication, University of Colorado Boulder, USA Vice-President of Wireless Communication, Altek Corporation Master of Electrical Engineering, National Taiwan University Senior Manager of Compal Communication Inc. Master of Business Administration, University of Lincoln Vice-Chairman of Poindus System Corp. Master in Control Engineering, National Chiao Tung University Director of Coretronic Corporation Master of Earth Sciences, National Central University Ph.D., Electrical Engineering, National Taiwan University President of Photonics Industries International, Inc. 0.00% Master of Cornell University Law School, USA CSO, Pou Chen Group N/A N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.00% Bachelor of Accounting Dept., Fu Jen Catholic University (Note 4) N/A N/A N/A 0 0 0 0 0 0 0 0 0 0 Title Name/ Nationality/ Gender (Note 1, 2) Date elected /appointed Shares held Shares held by spouse and underage children Subsidiary shareholding Total shares held in the names of others Shares held Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Shares Shareholding Percentage (%) Major career/academic achievements Financial officer of Allied Circuit Co., Ltd. Selected Current Position at COMPAL and Other Companies Spouse or relatives of second degree or closer acting as managers Title Name Relationship Accounting Officer and Vice-President Vice-President Cheng-Hui Su 2018.12.01 105,000 0.00% 0 Vice-President Chuan-Fan Tu 2018.12.01 593,081 0.01% 62,105 Financial Officer and Vice-President Guo-Dung Yu 2020.08.12 60,000 0.00% Vice-President Peng Kuee Lau 2020.08.12 Vice-President Wu-Ching Chi 2022.02.10 0 0 0.00% 0.00% 0.00% 0.00% 0.00% 0 0 Vice-President Hsin-Chung Chen 2022.02.10 10,662,383 0.24% 10,000 0.00% Vice-President Jue-Teng Chang 2022.02.10 Vice-President Choo-Tain Chiu 2022.02.10 0 0 0.00% 0.00% Vice President Wei-Chia Wang 2024.02.29 120,000 0.00% Internal Audit Officer Hui Chun Yu 2024.03.12 4,000 0.00% 0 0 0 0 0.00% 0.00% 0.00% 0.00% 0 0 0 0 0 0 0 0 0 0 0.00% Master of Business Administration, Tulane University 0.00% Vanung University, Vanung University Master of Accounting, George Washington University Financial officer of Arcadyan Technology Corp. Bachelor of Science and Technology Dept., IOWA State University 0.00% 0.00% N/A N/A N/A N/A N/A N/A N/A N/A (Note 4) N/A N/A N/A (Note 4) N/A N/A N/A N/A N/A 0.00% 0.00% 0.00% 0.00% 0.00% Master of Electrical Engineering, Columbia University, NY Director of Raypal Biomedical Co., Ltd. Master of EMBA, National Central University Master of Business Administration, Nanyang Technological University, Singapore Chung Yuan Christian University, Electrical Engineering Vice President of AAC Technologies Pte. LTD MA International Economic Management of University of Birmingham UK Audit Office Project Director r of Walsin Lihwa Corp. (Note 4) N/A N/A Chief Strategy Officer Jui-Tsung Chen father and son N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.00% 8,000 0.00% 0.00% Master of Computer Engineering, NCTU N/A N/A Note: 1. Except for Senior Vice-President Peng Kuee Lau, a Malaysian national, all managers are ROC nationals; except for Senior Vice-President Chyou-Jui Wei, Internal Audit Officer Hui Chun Yu, all managers are male. 2. The Chairman, Chief Strategy Officer, and President of the Company are not the same person, spouses, or related to each other 3. Vice Presidents Jen-Liang Lin transferred and Hou-Chun Liu resigned in 2023, Vice Presidents Chang-Chieh Tien and Fu-Chuan Chang retired, Internal Audit Officer Chenyi Li transferred in 2024. 4. Concurrent positions in other companies: 31 Title Name Selected Current Positions Chairman: HengHong Optoelectronics Technology (Kunshan) Co., Ltd., Henghao Optoelectronics Technology (Zhejiang) Co., LTD., LUCOM Display Executive Vice- President Senior Vice- President Technology (KunShan) Ltd. Chen-Chang Hsu Vice-Chairman: HengHao Technology Co. Ltd. President: HengHao Technology Co. Ltd., HengHong Optoelectronics Technology (Kunshan) Co., Ltd., Henghao Optoelectronics Technology (Zhejiang) Co., LTD., LUCOM Display Technology (KunShan) Ltd. Chun-Te Shen Director: HippoScreen Neurotech Corp., Auscom Engineering Inc., Shennona Corporation Senior Vice- President Chyou-Jui Wei Director: Chenfeng Optronics Corp., General Life Biotechnology Co., Ltd., ARCE Therapeutics, Inc., IIH Biomedical Venture Fund I Co., Hua Vi Venture Capital Corporation, Hua VII Venture Capital Corporation, Cdib & Partners Investment Holding Corp., Compal Electronic Technology (Chongqing) Co., Ltd., Compal Precision Module(Jiangsu) Co., Ltd., ShengBao Precision Electronics (Taicang) Ltd., Rayonnant Technology (HK) Holdings Limited, Ju Teng Electronic Technology (Vietnam) Limited., Compal Americas (US) Inc., Compal Electronics N.A. Inc. Supervisor: Rayonnant Technology Co., Ltd., Mactech Co., Ltd., Taiwan Intelligent Robotics Company, Ltd., Infinno Technology Corp., Ripal Optotronics Co., Ltd., UniCore Biomedical Co., Ltd., Aco Healthcare Co., Ltd., Ray-Kwong Medical Management Consulting Co., Ltd., Novascope Diagnostics Inc., Rayonnant Technology (Taicang) Co., Ltd. President: Compal Ruifang Health Assets Development Corporation Independent Director: SYNergy ScienTech Corp., Visco Vision Inc. Remuneration Committee Member: SYNergy ScienTech Corp., Visco Vision Inc. Audit Committee Member: SYNergy ScienTech Corp., Visco Vision Inc. Wen-Da Hsu Director: HANHELT Communications (Nanjing) Co., Ltd. Shi-Kuan Chen Director: Rayonnant Technology Co., Ltd., Rayonnant Technology (Taicang) Co., Ltd. Min-Tung Weng Director: Auscom Engineering Inc. President: Auscom Engineering Inc. Sheng-Hung Li Deputy Sustainability Officer of ESG Office: Compal Electronics, Inc. Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Chung-Hsing Tan Ta-Chun Wang Vice-President Ching-Hsiung Lu Director: Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., HANHELT Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd. Director: Compal USA (Indiana), Inc., Compal Americas (US) Inc., Compal Electronics N.A. Inc. President: Compal USA (Indiana), Inc., Compal Americas (US) Inc., Compal Electronics N.A. Inc. Director: Zhi-Bao Technology Corporation, Arcadyan Technology (Shanghai) Corp. Supervisor: Kinpo&Compal Group Assets Development Corporation, Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd., Compal Electronics, (China) Co., Ltd., Compal Digital Technology (Kunshan) Co., Ltd., Compal Electronics (Chengdu) Co., Ltd., Compal Electronics (ChongQing) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal Display Electronics (Kunshan) Co., Ltd., Compal Networking (Kunshan) Co., Ltd., 32 Title Name Selected Current Positions Kunshan Botai Electronics Co., Ltd., Compal Investment (Sichuan) Co., Ltd., Compal Investment (Jiangsu) Co., Ltd., Compal Management (Chengdu) Co., Ltd. Independent Director: Galaxy Software Services Corporation Remuneration Committee Member: Galaxy Software Services Corporation Audit Committee Member: Galaxy Software Services Corporation Information Security Committee Member: Galaxy Software Services Corporation Po-Tang Wang Director: Bizcom Electronics, Inc., CGS Technology (Poland) Sp. z o.o., Compal Europe (Poland) Sp. z o.o. CISO and Vice- President Vice-President Jyh-Shyan Liang Supervisor: HANHELT Communications (Nanjing) Co., Ltd. Chairman: Chia Dah Knitting Co., Ltd. Vice-Chairman: Poindus System Corp. Director: Avalue Technology Inc., UNICOM GLOBAL, INC., Ruixing Investment Co., Ltd., Compalead Electronics B.V., Mexcom Electronics, LLC, Vice-President Hsin-Kung Mao Vice-President Jui-Chun Shyur Director: Compal Healthcare and Technology Ltd. Mexcom Technologies, LLC Chief Operating Officer: Poindus Systems Corp. Director: Allied Circuit Co., Ltd., Poindus System Corp., Zhi-Bao Technology Corporation, Palcom International Corporation, Infinno Technology Corp., Mactech Co., Ltd., UniCore Biomedical Co., Ltd., Phoenix Innovation Venture Capital Co., Ltd., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd., Rayonnant Technology (Taicang) Co., Ltd., Compal Electronics India Private Limited Cheng-Chiang Wang Supervisor: HippoScreen Neurotech Corp., UNICOM GLOBAL, INC., HengHao Technology Co. Ltd., Compal Ruifang Health Assets Development Corporation, Compal System Trading (Kunshan) Co., Ltd., Compower Global Service Co., Ltd., Compal Smart Device (Chongqing) Co., Ltd., FIPOLL Electronics (Chongqing) Co. Ltd., HengHong Optoelectronics Technology (Kunshan) Co., Ltd., Henghao Optoelectronics Technology (Zhejiang) Co., LTD. Deputy Sustainability Officer of ESG Office: Compal Electronics, Inc. Chairman: Compal Electronics India Private Limited Supervisor: Palcom International Corporation, ARCE Therapeutics, Inc., Compal Wireless Communications (Nanjing) Co., Ltd., Compal Digital Communications (Nanjing) Co., Ltd., Compal Communications (Nanjing) Co., Ltd. President: Compal Electronics India Private Limited Chairman: Ruey Shinn Industrial Co., Ltd. Director: Raypal Biomedical Co., Ltd., River Regeneration and Rejuvenation Biotechnology Co. Ltd. 33 Corporate Governance & Accounting Officer and Vice-President Financial Officer and Vice- President Guo-Dung Yu Vice-President Hsin-Chung Chen 3.2.3 Remuneration of Directors, Independent Directors, President and Vice-Presidents 1. Remuneration of Directors and Independent Directors Directors' remuneration Remuneration as an employee Remuneration (A) Pension (B) Remuneration from earnings appropriation (C) Business department implementation Fees for services rendered (D) The sum of A, B, C and D as a percentage of after- tax profits Salaries, bonuses, special allowances, etc (E) Retirement pension (F) Share of profits as an employee (G) The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements Cash Stock Amount Amount Cash Stock The sum of A, B, C, D, E, F, and G as a percentage of after-tax profits The Company All companies included in the financial statements Remunerati on from ventures other than subsidiaries or from the parent company (H) Unit: TWD 1,000; Thousand shares; % 0 0 0 0 43,051 43,051 2,284 3,055 0.5913% 0.6013% 89,587 140,629 794 899 24,880 0 24,880 0 2.0945% 2.7716% 39,437 Title Name Chairman Sheng-Hsiung Hsu Vice-Chairman Jui-Tsung Chen Director Director Director Director Director Director Director Director Director Representative: of Binpal Investment Co., Ltd. Wen-Being Hsu Representative of Kinpo Electronics Inc.: Chieh-Li Hsu, Charng-Chyi Ko Sheng-Chieh Hsu Yen-Chia Chou Chung-Pin Wong Chiung-Chi Hsu Ming-Chih Chang Anthony Peter Bonadero Director Sheng-Hua Peng Independent Director Independent Director Independent Director Min-Chih Hsuan Duei Tsai 7,200 7,200 0 0 0 0 475 475 0.1001% 0.1001% 0 0 0 0 0 0 0 0 0.1001% 0.1001% 0 Wen-Chung Shen 1. Please state the remuneration payment policy, system, standard and structure of Independent Directors, and the relationship between factors such as the responsibilities, risks and time devoted, and the amount of remuneration: The remuneration of Independent Directors shall be submitted by the remuneration committee to the Board of Directors and decided by the Board of Directors, which depends on personal participation in and contribution to the Company’s business and benchmarks within the same industry according to the “Articles of Association". 2. Remuneration collected by Directors for their services (i.e. acting as advisor for non-employees) as disclosed in the Financial Report in the most recent year not shown in the table: 0 Note: 1. In 2023, the Company made pension contributions totaling TWD 794 (including TWD324 under the new system and TWD 470 under the old system) for Directors who also assumed managerial roles as employees; Meanwhile, all companies reported in the financial statements had made pension contributions totaling TWD 899 (including TWD 429 under the new system and TWD 470 under the old system). 2. The distribution of directors' remuneration was approved by the Board of Directors meeting on February 29, 2024. The remuneration amount of the aforementioned Directors is not determined fully until authorized by a meeting of the Board of Directors. 34 ▓ Table of Remuneration Ranges Range of Remuneration Under TWD 1,000,000 TWD 1,000,000 - TWD 2,000,000 (exclusive) TWD 2,000,000 - TWD 3,500,000 (exclusive) TWD 3,500,000 - TWD 5,000,000 (exclusive) TWD 5,000,000 - TWD 10,000,000 (exclusive) TWD 10,000,000 - TWD 15,000,000 (exclusive) TWD 15,000,000 - TWD 30,000,000 (exclusive) TWD 30,000,000- TWD 50,000,000 (exclusive) TWD 50,000,000 - TWD 100,000,000 (exclusive) Over TWD 100,000,000 (inclusive) Total Total of (A+B+C+D) Total of (A+B+C+D+E+F+G+H) Number of Directors The Company Companies in the consolidated financial statements The Company Companies in the consolidated financial statements 2 (Note 1) 11 (Note 2) 3 (Note 3) 1 (Note 4) 2 (Note 5) 11 (Note 6) 2 (Note 7) 2 (Note 8) 2 (Note 9) 8 (Note 10) 2 (Note 11) 1 (Note 12) 2 (Note 13) 2 (Note 14) 1 (Note 15) 6 (Note 16) 1 (Note 17) 2 (Note 18) 1 (Note 19) 2 (Note 20) 4 (Note 21) 17 17 17 17 Note: 1. Wen-Being Hsu,Chieh-Li Hsu-2 positions 2. 3. 4. 5. Wen-Being Hsu,Chieh-Li Hsu-2 positions 6. Sheng-Chieh Hsu,Yen-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Ming-Chih Chang, Sheng-Hua Peng, Min Chih Hsuan, Duei Tsai, Wen-Chung Shen, Anthony Peter Bonadero, Kinpo Electronics, Inc.-11 positions Jui-Tsung Chen, Charng-Chyi Ko, Binpal Investment Co., Ltd.-3 positions Sheng-Hsiung Hsu-1 position Sheng-Chieh Hsu, Yen-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Ming-Chih Chang, Sheng-Hua Peng, Min Chih Hsuan, Duei Tsai, Wen-Chung Shen, Anthony Peter Bonadero, Kinpo Electronics, Inc.-11 positions Charng-Chyi Ko, Binpal Investment Co., Ltd.-2 positions Sheng-Hsiung Hsu. Jui-Tsung Chen-2 position 7. 8. 9. Wen-Being Hsu, Chieh-Li Hsu-2 positions 10. Sheng-Chieh Hsu, Yen-Chia Chou, Chiung-Chi Hsu, Min Chih Hsuan, Duei Tsai, Wen-Chung Shen, Anthony Peter Bonadero, Kinpo Electronics, Inc.-8 positions 11. Charng-Chyi Ko, Binpal Investment Co., Ltd.-2 positions 12. Sheng-Hsiung Hsu-1 position 13. Ming-Chih Chang, Sheng-Hua Peng -2 positions 14. Jui-Tsung Chen, Chung-Pin Wong -2 positions 15. Wen-Being Hsu-1 position 16. Yen-Chia Chou, Chiung-Chi Hsu, Min Chih Hsuan, Duei Tsai, Wen-Chung Shen, Kinpo Electronics, Inc. -6 positions 35 17. Binpal Investment Co., Ltd.-1 position 18. Charng-Chyi Ko,Sheng-Chieh Hsu-2 positions 19. Chieh-Li Hsu -1 position 20. Ming-Chih Chang, Sheng-Hua Peng-2 positions 21. Sheng-Hsiung Hsu, Jui-Tsung Chen, Chung-Pin Wong, Anthony Peter Bonadero-4 positions 2. Remuneration of Supervisors: Not Applicable (The Company adopts an Audit Committee system) 3. Remuneration of the President and Vice-Presidents Salary (A) Pension (B) Bonus and special allowances (C) Title Name The Company All companies included in the financial statements The Company All companies included in the financial statements The Company All companies included in the financial statements Share of profits as an employee (D) The Company All companies included in the financial statements Cash Stock Cash Amount Amount Amount Stock Amount Unit: TWD 1,000; Thousand shares; % Sum of A, B, C and D as a percentage of after-tax profits (%) Remuneration from ventures other than All companies subsidiaries or from The Company included in the the parent company financial statements (E) 43 employees, including CSO Jui- 126,717 132,251 5,711 5,711 255,177 255,679 98,870 0 98,870 0 6.34453% 6.42325% 158 Tsung Chen (Note1) Note: 1. Managers’ titles and names Chief Strategy Officer: Jui-Tsung Chen - 1 position President: Chung-Pin Wong - 1 position Executive Vice-Presidents: Ming-Chih Chang, Shen-Hua Peng, and Chen-Chang Hsu - 3 positions Senior Vice-Presidents: Chun-Te Shen, Kuo-Chuan Chen, Chyou-Jui Wei, Wen-Da Hsu, Shi-Kuan Chen, Chi-Wai Wan, Min-Tung Weng, Lo-Chun Lee, Sheng-Hung Li, Bor-Heng Chen, Chung-Hsing Tan, and Ta-Chun Wang - 12 positions Vice-Presidents: Chih-Chuan Cheng, Ching-Hsiung Lu, Po-Tang Wang, Tzong-Ming Wang, Yong-Ho Su, Jyh-Shyan Liang, Yi-Yun Chang, Hsin-Kung Mao, Shih-Hong Huang, Yi-Chiang Chiu, Jui-Chun Shyur, Peng-Hong Chan, Cheng- Chiang Wang, Cheng-Hui Su, Chuan-Fan Tu Guo-Dung Yu, Peng Kuee Lau, Wu-Ching Chi, Hsin-Chung Chen, Jue-Teng Chang, Choo-Tain Chiu,Wei-Chia Wang, Liang-Jen Lin, Hou-Chun Liu , Chang-Chieh Tien, Fu-Chuan Chang, - 26 positions 2. In 2023, the Company made pension contributions totaling TWD 5,711 (including TWD 3,976 under the new system and TWD 1,735 under the old system). In contrast, all companies reported in the financial statements made pension contributions totaling TWD 5,711 (including TWD 3,976 under the new system and TWD 1,735 under the old system). 3. Employees’ compensation appropriation was approved by the Board of Directors at the meeting on February 29, 2024. The compensations of the aforementioned managers were not yet final and will be reviewed prior to the date of distribution. 36 ▓ Table of Remuneration Ranges Range of Remuneration Under TWD 1,000,000 TWD 1,000,000 - TWD 2,000,000 (exclusive) TWD 2,000,000 - TWD 3,500,000 (exclusive) TWD 3,500,000 - TWD 5,000,000 (exclusive) TWD 5,000,000 - TWD 10,000,000 (exclusive) TWD 10,000,000 - TWD 15,000,000 (exclusive) TWD 15,000,000 - TWD 30,000,000 (exclusive) TWD 30,000,000- TWD 50,000,000 (exclusive) TWD 50,000,000 - TWD 100,000,000 (exclusive) Over TWD 100,000,000 (inclusive) Total Total of (A+B+C+D) The Company 1 (Note 1) 1 (Note 2) 1 (Note 3) 2 (Note 4) 20 (Note 5) 11 (Note 6) 5 (Note 7) 2 (Note 8) 43 Number of President and Vice-Presidents Total of (A+B+C+D+E) Companies in the consolidated financial statements 1(Note 9) 1(Note 10) 1(Note 11) 2 (Note 12) 20 (Note 13) 11 (Note 14) 5 (Note 15) 2 (Note 16) 43 Jen-Liang Lin-1 position Hou-Chun Liu-1 position Note: 1. 2. 3. Wei-Chia Wang-1 position 4. 5. Ching-Hsiung Lu, Fu-Chuan Chang -2 positions Chun-Te Shen, Kuo-Chuan Chen, Wen-Da Hsu, Chih-Chuan Cheng, Po-Tang Wang, Tzong -Ming Wang, Jyh-Shyan Liang, Yi-Yun Chang, Hsin-Kung Mao, Jui-Chun Shyur, Peng-Hong Chan, Cheng- Chiang Wang, Cheng-Hui Su, Chuan-Fan Tu, Chang-Chieh Tien, Guo-Dung Yu, Peng Kuee Lau, Wu-Ching Chi, Jue-Teng Chang, Choo-Tain Chiu -20 positions Chyou-Jui Wei, Min-Tung Weng, Lo-Chun Lee, Sheng-Hung Li, Bor-Heng Chen, Chung-Hsing Tan, Ta-Chun Wang, Yong-Ho Su, Shih-Hong Huang, Yi-Chiang Chiu, Hsin-Chung Chen -11 positions 6. 7. Ming-Chih Chang, Sheng-Hua Peng, Chen-Chang Hsu, Shi-Kuan Chen, Chi-Wai Wan -5 positions 8. Jui-Tsung Chen, Chung-Pin Wong-2 positions 9. Jen-Liang Lin-1 positions 10. Hou-Chun Liu-1 position 11. Wei-Chia Wang-1 position 12. 13. Ching-Hsiung Lu, Fu-Chuan Changr -2 positions Chun-Te Shen, Kuo-Chuan Chen, Wen-Da Hsu, Chih-Chuan Cheng, Po-Tang Wang, Tzong -Ming Wang, Jyh-Shyan Liang, Yi-Yun Chang, Hsin-Kung Mao, Jui-Chun Shyu, Peng-Hong Chan, Cheng- Chiang Wang, Cheng-Hui Su, Chuan-Fan Tu, Chang-Chieh Tien, Guo-Dung Yu, Peng Kuee Lau, Wu-Ching Chi, Jue-Teng Chang, Choo-Tain Chiu-20 positions Chyou-Jui Wei, Min-Tung Weng, Lo-Chun Lee, Sheng-Hung Li, Bor-Heng Chen, Chung-Hsing Tan, Ta-Chun Wang, Yong-Ho Su, Shih-Hong Huang, Yi-Chiang Chiu, Hsin-Chung Chen -11 positions 14. 15. Ming-Chih Chang, Sheng-Hua Peng, Chen-Chang Hsu, Shi-Kuan Chen, Chi-Wai Wan-5 positions 37 16. Jui-Tsung Chen, Chung-Pin Wong-2 positions ▓ Employee profits sharing granted to the management team Title Name Stock dividends Cash dividends Total Total as a percentage of after-tax profits (%) Unit: TWD 1,000 39 employees, including CSO Jui-Tsung Chen (Note 1) Note: 1. Managers’ titles and names 0 98,870 98,870 1.28944% ‧Chief Strategy Officer: Jui-Tsung Chen - 1 position ‧President: Chung-Pin Wong - 1 position ‧Executive Vice-Presidents: Ming-Chih Chang, Shen-Hua Peng, and Chen-Chang Hsu – 3 positions ‧Senior Vice-Presidents: Chun-Te Shen, Kuo-Chuan Chen, Chyou-Jui Wei, Wen-Da Hsu, Shi-Kuan Chen, Chi-Wai Wan, Min-Tung Weng, Lo-Chun Lee, Sheng-Hung Li, Bor- Heng Chen, Chung-Hsing Tan, and Ta-Chun Wang – 12 positions. ‧Vice-Presidents: Chih-Chuan Cheng, Ching-Hsiung Lu, Po-Tang Wang, Tzong-Ming Wang, Yong-Ho Su, Jyh-Shyan Liang, Yi-Yun Chang, Hsin-Kung Mao, Shih-Hong Huang, Yi-Chiang Chiu, Jui-Chun Shyur, Peng-Hong Chan, Cheng-Chiang Wang, Cheng-Hui Su, Chuan-Fan Tu, Guo-Dung Yu, Peng Kuee Lau, Wu-Ching Chi, Hsin-Chung Chen, Jue-Teng Chang, Choo-Tain Chiu, Wei-Chia Wang – 22 positions 2. Vice Presidents Jen-Liang Lin transferred and Hou-Chun Liu resigned in 2023, Vice Presidents Chang-Chieh Tien and Fu-Chuan Chang retired in 2024 3. Employees’ compensation appropriation was approved by the Board of Directors at the February 29, 2024 meeting. The compensations of the aforementioned managers have not been finalized and will be reviewed prior to the date of distribution. 38 3.2.4 Comparison of Remuneration for Directors, Supervisors, Presidents and Vice-Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents, and Vice-Presidents ▓ The percentage of total remuneration paid by the Company and by all companies included in the consolidated financial statements for the two most recent fiscal years to Directors, supervisors, presidents, and vice presidents of the Company, relative to net income. Analysis Directors CSO, Presidents, and Vice- Presidents 2023 2022 (Note) Increase (Decrease) Amount % Amount % Amount % Unit: TWD 1,000 596,583 7.78% 541,037 7.42% 55,546 10.27% Net Income 7,667,627 7,288,292 379,335 Note: 2022 is the actual amount. ▓ The policies, standards, and portfolios for the payment of remuneration, the procedures for determining remuneration, and correlation with business performance. ‧ Remuneration paid by the Company to Directors has been made in accordance with the Articles of Association. When the Company makes a profit in a year, no more than 2% of the Company’s pre-tax profits (not including remuneration for employees and Directors) shall be paid to Directors as remuneration along with reasonable compensation based on other factors such as the Company’s operational performance and the individual Director’s personal contribution to the Company’s performance taken into consideration. ‧ The Company's directors and independent directors receive a transportation allowance. Independent directors receive fixed remuneration and do not participate in the distribution of directors' remuneration, and the remaining directors do not receive fixed remuneration, but participate in the distribution of directors' remuneration. Based on the analysis of performance evaluation results, the Remuneration Committee will report to the Board of Directors and make extra recommendations, which will serve as a reference for the remuneration of individual directors. ‧ The Company’s remuneration policy for Managers has been established based on various factors, including the Company’s wage policy, the average wage offered by competitors for the same position, education/experience, professional ability, the duties and responsibilities for the position in question, and the Manager’s comprehensive performance indexes. Moreover the remuneration system of directors and managers is reviewed timely in accordance with the actual operating conditions, relevant laws and regulations. Managers’ performance indexes include financial indexes (such as revenue, gross margin, net profit, return on assets, and return on equities), and non-financial indexes (such as leading internal transformation, driving sustainable development, and managing operational risk). 39 ‧ The Company’s procedure for determining remuneration not only takes into account the Company’s overall operational performance but is also based on managers’ performance (about 70% based on financial indexes, about 30% based on non-financial indexes). Relevant salaries and compensations are reviewed by the Remuneration Committee and resolved by the Board of Directors. The Company will also be keeping a close eye on the latest developments in the global economy, international financial environment, and state of the industry in order to predict its operational development, profits status, operational risks and changes in pertinent regulations in the near future in order to review the compensation system, thereby striving for an ideal balance between the Company’s sustainable operation and relevant risk control. 40 Implementation of Corporate Governance 3.3 3.3.1 Board of Directors ‧The term of the 14 th committee ran from August 27, 2021 to August 26, 2024. ‧There were seven Board meetings during 2023 (A). Director’s attendance records are as shown below: Attendance in Person (B) 7 Attendance Rate (%) [B/A] 100% Sheng-Hsiung Hsu Chairman Remarks By Proxy Name Title 0 Vice Chairman Jui-Tsung Chen Director Director Binpal Investment Co., Ltd. Representative: Wen-Being Hsu Kinpo Electronics, Inc. Representative: Chieh-Li Hsu, Director Charng-Chyi Ko Director Sheng-Chieh Hsu Director Yen-Chia Chou Director Chung-Pin Wong Director Chiung-Chi Hsu Director Ming-Chih Chang Director Anthony Peter Bonadero Director Sheng-Hua Peng Independent Director Independent Director Independent Director Min-Chih Hsuan Duei Tsai Wen-Chung Shen 5 5 7 7 6 5 7 7 7 5 7 4 7 7 2 2 0 0 1 1 0 0 0 2 0 3 0 0 71.43% 71.43% Note 1 100% 100% 85.71% 71.43% 100% 100% 100% 71.43% 100% 57.14% 100% 100% Note 2 Note: 1. Due to health reasons, director Wen-Being Hsu was not present for 2 of 7 board meetings. 2. Foreign director Anthony Peter Bonadero was not present for 2 of 7 board meetings due to scheduling and timezone differences. ‧ Independent Director’s attendance records for 2023: Title Name Independent Director Independent Director Independent Director Min-Chih Hsuan Duei Tsai Wen-Chung Shen 1st Meeting ★ ● ● 2nd Meeting ● ● ● 3rd Meeting ★ ● ● 4th Meeting 5th Meeting 6th Meeting 7th Meeting ● ● ● ● ● ● ● ★ ● ● ● ● Note: ●: Attendance in Person; ★: By Proxy; ◎: Absent ▓ Other notes: 1. For Board of Directors meetings that meet any of the following descriptions, state the date, session, the discussed topics, Independent Directors' opinions, and how the Company has responded to such opinions: (1) Conditions described in Article 14-3 of the Securities and Exchange Act: Not applicable (the Company has an Audit Committee rather than supervisors) (2) Any other documented objections or qualified opinions raised by Independent Directors against board resolutions in relation to matters other than those described above: None. 41 2. Disclosure regarding avoidance of interest-conflicting agendas, including the names of Directors concerned, the agendas, the nature of conflicting interests, and the voting outcome: Board of Directors Meeting The agendas, the nature of conflicting interests, and the voting outcome 9th Meeting (14th Term) 2023.03.15 10th Meeting (14th Term) 2023.05.08 ˙Approved fund loan to 70% owned subsidiary Kinpo&Compal Group Assets Development Corporation Chairman Sheng-Hsiung Hsu asked the Independent Director Min Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Directors of the Company, Jui-Tsung Chen, Chung-Pin Wong, Sheng-Chieh Hsu, and Chieh-Li Hsu are also acting as Directors of Kinpo&Compal Group Assets Development Corporation. In addition, Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son). To avoid conflict of interest, they recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the first mid-year employees’ bonus of the year 2023 In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung- Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the appointment of the 1st term Risk Management Committee members An interested party relationship exists between Director Chung-Pin Wong and Independent Directors Min Chih Hsuan (attended by proxy of Duei Tsai), Duei Tsai, and Wen-Chung Shen. In order to avoid conflict of interest, these Independent Directors excused themselves from discussion and voting on this proposal. Upon solicitation of comments by the Chairman of the meeting, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the release of non-competition restrictions for the managers An interested party relationship existed with Director Jui-Tsung Chen. In order to avoid a conflict of interest, this Director excused himself from discussion and voting on this proposal. Upon solicitation of comments by the Chairman of the meeting, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved employees’ salary adjustment for the year 2023 In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung- Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved to obtain newly issued shares of ARCE Therapeutics, Inc. by participating in the capital injection by cash. Chairman Sheng-Hsiung Hsu asked Independent Director Duei Tsai to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Directors Directors Jui-Tsung Chen, Chieh-Li Hsu, Chung-Pin Wong are also acting as Directors of the ARCE. Director Sheng-Hsiung Hsu, the Father-son relationship, who is 42 Board of Directors Meeting 11th Meeting (14th Term) 2023.07.18 12th Meeting (14th Term) 2023.08.11 13th Meeting (14th Term) 2023.09.07 14th Meeting (14th Term) 2023.11.10 The agendas, the nature of conflicting interests, and the voting outcome relatives within first degree, of kinship of the Director Chieh-Li Hsu of ARCE, recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved to obtain newly issued shares of AcBel Polytech Inc. by participating in the capital injection by cash. Chairman Sheng-Hsiung Hsu asked Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Director Chieh-Li Hsu who is also acting as Director of the AcBel, Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son), Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the Directors’ Remuneration for the year 2022 Chairman Sheng-Hsiung Hsu asked the Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Since an interested party relationship exists, the Directors (i.e., Sheng-Hsiung Hsu, Jui-Tsung Chen, Wen Being Hsu, Chieh-Li Hsu, Charng-Chyi Ko, Sheng-Chieh Hsu, Yen-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Ming-Chih Chang, Sheng-Hua Peng amd Anthony Peter Bonadero) recuse and exclude themselves from discussion and voting on this proposal to avoid conflict of interest. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved 2nd mid-year employees’ bonus for the year 2023 In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists among any Directors and any agenda proposals, such Directors shall recuse and exclude themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved to obtain newly issued shares of Cal-Comp Electronics (Thailand) Public Company Limited. by participating in the capital injection by cash. Chairman Sheng-Hsiung Hsu asked Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Directors Sheng-Hsiung Hsu, Chieh-Li Hsu, Sheng-Chieh Hsu, who are also acting as Director of the CCET, recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the compensation of Employees’ bonus in cash for 2022 In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung- Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by 43 Board of Directors Meeting The agendas, the nature of conflicting interests, and the voting outcome the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved the proposal for the 2023 year-end employees’ bonus In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung- Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ˙Approved to obtain newly issued shares of Kinpo&Compal Group Assets Development Corporation. by participating in the capital injection by cash. Chairman Sheng-Hsiung Hsu asked the Independent Director Wen-Chung Shen to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Directors of the Company, Jui-Tsung Chen, Chung-Pin Wong, Sheng-Chieh Hsu, and Chieh-Li Hsu are also acting as Directors of Kinpo&Compal Group Assets Development Corporation. In addition, Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son). To avoid conflict of interest, they recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 44 3. Self-Evaluation of the Board of Directors: ■ Performance Evaluation of the Board of Directors Evaluation cycles Evaluation periods Scope of evaluation Method of evaluation Once a year From June 1, 2022 to May 31, 2023 Board of Directors, Functional Committees (Including Audit Committee, Remuneration Committee), individual Directors Internal self-evaluation of the Board of Directors and Functional Committees (Including Audit Committee, Remuneration Committee), Self-evaluation of individual Directors ◆Criteria for evaluating the performance of the Board of Directors, which should cover the following five aspects: 1. Participation in the operation of the Company; 2. Improvement of the quality of the Board of Directors' decision-making; 3. Composition and structure of the Board of Directors; 4. Election and continuing education of the Directors; and 5. Internal control. Content of evaluation ◆Criteria for evaluating the performance of the Functional Committees, which should cover the following five aspects: 1. Participation in the operation of the Company; 2. Awareness of the duties of the Functional Committee; 3. Improvement of quality of decisions made by the Functional Committee; 4. Makeup of the Functional Committee and election of its members; and 5. Internal control. ◆Criteria for evaluating the performance of the individual Directors, which should cover the following six aspects: 1. Alignment with the goals and mission of the Company; 2. Awareness of the duties of a Director; 3. Participation in the operation of the Company; 4. Management of internal relationships and communication; 5. The Director's professionalism and continuing education; and 6. Internal control. ■ External performance evaluation of the Board of Directors Evaluation cycles Evaluation periods Scope of evaluation Method of evaluation Content of evaluation once every three years From January 1, 2023 to December 31, 2023 Board of Directors, Functional Committees (Including Audit Committee, Remuneration Committee), individual Directors Methodology incorporated the application of questionnaires, conducting interviews, and performing document reviews and analyses. ◆The company entrusted Ernst & Young Business Consulting Services Co., Ltd. to conduct a performance evaluation of Compal Electronics, Inc.'s Board of Directors, which includes three dimensions, the structure, members, and processes and information of the Board, and eight evaluation items covering structure and processes of the Board, composition of the Board, corporate and organizational structure, roles and responsibilities, behavior and culture, training and development of the Board, risk management oversight, oversight of report/ disclosure and performance. ◆The reason for the independence of the external professional organization: Ernst & Young Management Consulting Co., Ltd. is not an affiliate of the Company, nor 45 does it have a business relationship that could affect its independence. The personnel and their immediate family members have not held positions of significant influence in the Company, nor do they have a direct or indirect financial interest or have received any gifts from the Company. 4. Enhance the valuation regarding the target achievement and execution by the Board of Directors in the current and most recent year: The Company established a “Remuneration Committee” in 2011. During the election of the 11th Board of Directors and Supervisors at the 2012 annual shareholders’ meeting, three (3) Independent Directors were elected and appointed as committee members of the Remuneration Committee. Supervisor positions were replaced with the Audit Committee after the 12th Board of Directors was elected at the 2015 annual shareholders’ meeting. In 2019, the “Rules and Procedures for Board of Directors Meetings” was amended in accordance with the “Taiwan Stock Exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers” and “Company Act,” and the Company shall appoint a chief corporate governance officer to execute corporate governance matters. In 2020, to implement corporate governance, enhance the function of the Board of Directors and set performance targets, the “Rules of Self-Evaluation of the Board of Directors and Functional Committees Performance” were adopted to strengthen their operation efficiency. The performance of evaluation results for the year 2022, submitted to the Remuneration Committee for analytical review and reported to the Board of Directors for discussion and improvement, shall be used as a reference in determining individual Director’s compensation and their nomination for a next office term. The performance evaluation results have been published on the Company's website. In 2022, to fulfill the company's commitment to sustainable development and improve the company's overall capacity in ESG risk management, Compal Electronics established a Sustainability Committee. In 2023, in order to strengthen corporate governance and risk management functions, it is to set up a Risk Management Committee. In addition, in conjunction with the added external performance evaluation mechanism in “Board of Directors Self-Assessment of Performance,” passed by the Board on November 10, 2023, and the Company commissioned an external independent professional organization to conduct an external performance evaluation of the overall Board of Directors for the first time in 2023. 46 3.3.2 Audit Committee ▓ Duties of the Audit Committee The Audit Committee exists as an enhancement to the Company's supervisory and management function. It assists the Board of Directors in various decisions such as review of financial statements, internal control policies, transactions, appointment/dismissal/independence/suitability of certified public accountants, appointment/dismissal of the chief accountant and chief auditor, etc., thereby ensuring that the Company operates in compliance with the competent authority's instructions and relevant laws. internal audits, accounting policies and procedures, major asset ▓ The powers of the Committee are as follows: 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, which are signed or sealed by the Chairman, managerial officer, and accounting officer. 11. Business Report, proposal for distribution of profits or covering of losses. 12. Other material matters as may be required by this Corporation or by the competent authority. ▓ Professional Qualifications and Experience of Audit Committee Members Title Name Professional Qualifications and Experience Convener Min-Chih Hsuan Committee Member Duei Tsai Honorary Doctorate, Department of Electrical Engineering, National Chiao Tung University Chairman, Vice Chairman, CEO, President and Honorary Vice Chairman of United Microelectronics Corp. Chairman of Faraday Technology Corp., Clientron Corp. The individual has rich knowledge and adequate experience in business operations, performance evaluation, investment, and corporate merger/acquisition, which is extremely helpful to the company's development. The Independent Director possesses more than 30 years of work experience required for the Company's business. PhD, Graduate Institute of Electrical Engineering, National Taiwan University Independent Director of Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd. and Independent Director for Public Welfare of Starlux Airlines Co., Ltd. Part-time professor-level professional and technical personnel in the Department of Electrical Engineering, National Taipei University of Technology and the Department of Digital Multimedia Design, Kainan University; Adjunct professor at the Department of Electronics, National Taiwan University of Science and Technology and the Department of Electronics, Yuanzhi University. Government positions such as Minister of Transportation and Director of the Civil Aviation Bureau of the Ministry of Transportation. The individual has professional capability in the communications network 47 Title Name Professional Qualifications and Experience field, rich knowledge, and adequate experience in company management and information security protection, which will help the company strengthen relevant management measures. The Independent Director possesses more than 30 years of work experience required for the Company's business. Department of Electrical Engineering, National Taiwan University Chairman of Her Tuo Co., Ltd., and Director and Executive Vice President of Compal The individual has rich knowledge and adequate experience in the electronics industry, business operations, and risk management, which is extremely helpful to the company's development. The Independent Director possesses more than 30 years of work experience required for the Company's business. Committee Member Wen-Chung Shen ▓ Attendance of Members at Audit Committee Meetings ‧The Company's Audit Committee is composed of three independent directors. ‧The term of the 3rd committee ran from August 27, 2021 to August 26, 2024. ‧There were six Audit Committee meetings during 2023 (A). The attendance records of the Independent Directors are as follows: Title Name Convener Committee Member Committee Member Wen-Chung Shen Min-Chih Hsuan Duei Tsai Attendance in Person (B) 4 6 6 By Proxy 2 0 0 Attendance Rate (%) [B/A] 66.67% 100% 100% Remarks - - - ■ The major audit items of the Audit Committee in 2023 are as follows: 1. Annual and interim financial reports, Business reports, and Proposals for distribution of profits. 2. To evaluate the CPAs’ independence and competence in performing the financial report audit. 3. Matters in which a Director is an interested party. 4. A material monetary loan and providing of Corporate Guaranty Letter. 5. A material asset transaction. 6. Assessment of the design and operation effectiveness of the internal control system. 7. The defects, irregularities, and the status of corrections in the internal control system. 8. Annual audit plan for 2024. 9. Compliance with the relevant laws and regulations by the Corporation. ▓ Other notes: 1. The Company should record the date of the Board of Directors’ meeting, the term, content of discussion, the result of the Audit Committee’s decision and the actions the Company has taken in response should any of the following situations arise in the operation of the Audit Committee: (1) Matters listed in Item 5, Article 14 of the Securities and Exchange Act: Board of Directors Meeting Content of discussion and actions taken in response 8th Meeting (14th Term) 2023.3.15 1. To approve the Audited Consolidated Financial Report and Parent Company Only Financial Report for the year 2022 2. To approve the Business Report for the year 2022 3. To approve the proposal for the Distribution of Earnings for the year 2022 48 Matters listed in Item 5, Article 14 of the Security Act Not approved by the Audit Committee but had the consent of more than two- thirds of all directors. V V V None None None Board of Directors Meeting Content of discussion and actions taken in response Matters listed in Item 5, Article 14 of the Security Act Not approved by the Audit Committee but had the consent of more than two- thirds of all directors. 4. To approve fund loan to 100% owned subsidiary Compalead Eletrônica do Brasil Indústria e Comércio Ltda. 5. To approve fund loan to 100% owned subsidiary Compal Eletrônica Da Amazônia Ltda. 6. To approve fund loan to 70% owned subsidiary Kinpo&Compal Group Assets Development Corporation 7. To approve the “Non-Assurance Service Pre-Approval Policy - General Policy“ 8. To evaluate CPAs’ independence and competence in performing financial report audits. 9. To approve the Internal Control System Statement for the year 2022 V V V V V V None None None None None None ▲Resolution adopted by the Audit Committee (2023.3.15): Upon solicitation of comments by the Chairman, no objection was addressed, and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: ・Except for motion 6 Upon solicitation of comments by the Chairman, no objection was addressed, and the resolution was adopted unanimously by the Committee Members present. ・Motion 6 Chairman Sheng-Hsiung Hsu asked the Independent Director Min Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Directors of the Company, Jui-Tsung Chen, Chung-Pin Wong, Sheng-Chieh Hsu, and Chieh-Li Hsu are also acting as Directors of Kinpo&Compal Group Assets Development Corporation. In addition, Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son). To avoid conflict of interest, they recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 1. To approve the 1Q 2023 Consolidated Financial Review V None Report 9th Meeting (14th Term) 2023.5.08 2. To approve the release of non-competition restrictions for the managers 3. To approve to obtain newly issued shares of ARCE Therapeutics, Inc. by participating in the capital injection by cash. 4. To approve the proposal for providing Corporate Guaranty Letter to Quanta Computer Inc. V V V None None None ▲Resolution adopted by the Audit Committee (2023.5.8): Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: ・Except for motions 2 and 3 Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ・Motion 2 An interested party relationship existed with Director Jui-Tsung Chen. In order to avoid a conflict of interest, this Director excused himself from discussion and voting on this proposal. Upon solicitation of comments by the Chairman of the meeting, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ・Motion 3 Chairman Sheng-Hsiung Hsu asked Independent Director Duei Tsai to act as a deputy chairman 49 Board of Directors Meeting 10th Meeting (14th Term) 2023.7.18 11th Meeting (14th Term) 2023.8.11 12th Meeting (14th Term) 2023.9.07 13th Meeting (14th Term) 2023.11.10 Content of discussion and actions taken in response Matters listed in Item 5, Article 14 of the Security Act Not approved by the Audit Committee but had the consent of more than two- thirds of all directors. to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Directors Directors Jui-Tsung Chen, Chieh-Li Hsu, Chung-Pin Wong, who is also acting as Director of the ARCE Director Sheng-Hsiung Hsu, the Father-son relationship, who are relatives within first degree kinship of Director Chieh-Li Hsu of ARCE, recused and excluded themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 1. To approve obtaining newly issued shares of AcBel Polytech Inc. by participating in the capital injection by cash. V None ▲Resolution adopted by the Audit Committee (2023.7.18): Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: Chairman Sheng-Hsiung Hsu asked Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Director Chieh-Li Hsu who is also acting as Director of the AcBel, Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son), Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present 1. To approve the 1H 2023 Consolidated Financial Review V None Report V V 2. To approve a loan to Henghao Technology Co. Ltd. 3. To approve a loan to Unicom Global, Inc. ▲Resolution adopted by the Audit Committee (2023.8.11): Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. 1. To approve obtaining newly issued shares of Cal-Comp Electronics (Thailand) Public Company Limited. by participating in the capital injection by cash. None None None V ▲Resolution adopted by the Audit Committee (2023.9.07): Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: Chairman Sheng-Hsiung Hsu asked Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. To avoid conflict of interest, Directors Sheng-Hsiung Hsu, Chieh-Li Hsu, Sheng-Chieh Hsu, who are also acting as Director of the CCET, recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present 1. To approve the 3Q 2023 Consolidated Financial Report 2. To approve obtaining newly issued shares of None V Kinpo&Compal Group Assets Development Corporation. by participating in the capital injection by cash. 3. To approve fund loan to 100% owned subsidiary COMPAL EUROPE (POLAND) Sp. z o.o V V None None 50 Board of Directors Meeting Content of discussion and actions taken in response 4. To propose approval of the annual audit plan for year 2024 Matters listed in Item 5, Article 14 of the Security Act Not approved by the Audit Committee but had the consent of more than two- thirds of all directors. V None ▲Resolution adopted by the Audit Committee (2023.11.10): Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ▲Action taken by the Company in response to the opinion of the Audit Committee: ・Except for motion 2 Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Committee Members present. ・Motion 2 Chairman Sheng-Hsiung Hsu asked the Independent Director Wen-Chung Shen to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Directors of the Company, Jui-Tsung Chen, Chung-Pin Wong, Sheng-Chieh Hsu, and Chieh-Li Hsu are also acting as Directors of Kinpo&Compal Group Assets Development Corporation. In addition, Sheng-Hsiung Hsu and Sheng-Chieh Hsu are second cousins (brothers), Sheng-Hsiung Hsu and Chieh-Li Hsu are first cousins (father and son). To avoid conflict of interest, they recuse and exclude themselves from discussion and voting on this proposal in accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. (2) With the exception of the aforementioned matters, other matters not approved by the Audit Committee but receiving the consent of more than two-thirds of all Directors: None. 2. Actions of the Independent Directors with respect to the avoidance of conflict of interest should be disclosed, including the name of the Independent Director, the matter, the reasons for the avoidance, and the voting and attendance status: None. 3. Status of communication between Independent Directors, Internal Audit Officer, and CPA: (1) Method of communication between Independent Directors, the Internal Audit Officer, and CPA: • After the Internal Audit Officer has submitted an audit report and follow-up report, he/she should provide the completed audited items to the Independent Directors for their review by the end of the following month. Should the Independent Directors require clarification of the audit and follow-up, they should contact the internal audit supervisor. The internal auditor shall report the audit results to the Audit Committee on a quarterly basis and discuss the relevant matters in person with the committee. • The Independent Directors must communicate with the CPA on a yearly basis through the Audit Committee or Board of Directors’ Meeting. The CPA shall report to the Independent Directors on the results of the financial statement audit and other pertinent legal requirements while the Audit Committee shall also evaluate the selection, independence, and fitness of the CPA engaged by the Company. (2) Summary of the communications between Independent Directors and Internal Audit Officer: Audit Committee 8th Meeting (3rd Term) 2023.3.15 Content of discussion 1. Report on the operational status of the internal audit activities 2. To approve the Internal Control 51 Results The report was reviewed by the Audit Committee, and independent directors raised no objections or further instructions. The proposal was approved by the Audit Audit Committee 9th Meeting (3rd Term) 2023.5.8 11th Meeting (3rd Term) 2023.8.11 13th Meeting (3rd Term) 2023.11.10 14th Meeting (3rd Term) 2024.2.29 15th Meeting (3rd Term) 2024.3.12 Content of discussion System Statement for the year 2022 1. Report on the operational status of the internal audit activities 1. Report on the operational status of the internal audit activities 1. Report on the operational status of the internal audit activities 2. To propose for approval of annual audit plan for year 2024 1. Report on the operational status of the internal audit activities 1. Report on the operational status of the internal audit activities 2.To approve the Internal Control System Statement for the year 2023 Results Committee and will be resolved by the Board of Directors The report was reviewed by the Audit Committee whereupon independent directors raised no objection or further instruction. The report was reviewed by the Audit Committee whereupon independent directors raised no objection or further instruction. The report was reviewed by the Audit Committee whereupon independent directors raised no objection or further instruction. The proposal was approved by the Audit Committee and will be resolved by the Board of Directors The report was reviewed by the Audit Committee whereupon independent directors raised no objection or further instruction. The report was reviewed by the Audit Committee whereupon independent directors raised no objection or further instruction. The proposal was approved by the Audit Committee and will be resolved by the Board of Directors. 52 (3) Summary of the communications between the Independent Directors and CPA: Audit Committees Meeting 8th Meeting (3rd Term) 2023.3.15 14th Meeting (3rd Term) 2024.2.29 Content of discussion Results 1. To approve the 2022 Audited Consolidated Financial Statements and Parent Company Only Financial Statements ‧ Declaration of Independence ‧ The responsibility of auditors in auditing financial statements. ‧ The types of audit opinion ‧ The audit scope (including Explanation of key audit items) ‧ The audit Findings 1. To approve the 2023 Audited Consolidated Financial Statements and Parent Company Only Financial Statements ‧ Declaration of Independence ‧ The responsibility of auditors in auditing financial statements. ‧ The audit scope ‧ The audit Findings and Conclusions ‧ Communication on Audit Firm Quality Management System The proposal was approved by the Audit Committee and will be resolved by the Board of Directors The proposal was approved by the Audit Committee and will be resolved by the Board of Directors 4. Status of individual communication between independent directors, internal audit supervisor and CPA: Forum 2023.11.10 Object Internal Audit Officer Communication focus 1. The risk assessment model used by the internal audit office when formulating the annual audit plan. CPA 1. Annual audit plan 2. Audit Quality Indicators in 2022 Results Agree with the current assessment method of the internal audit office. The independent directors have no issue with the content of communication 53 3.3.3 Corporate Governance Implementation and Deviations from the “Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies” Yes Yes Assessment criteria I. Has the Company established and disclosed its corporate governance principles based on the “Corporate Governance Best Practice Principles for TWSE/TPEX Listed Companies?” II. Shareholding structure and shareholders’ interests 1. Has the Company Yes implemented a set of internal procedures to handle shareholders’ suggestions, queries, disputes, and litigation? Actual governance Deviation and causes of deviation No Summary description The Company’s corporate governance principles were approved by the Board of Directors on November 10, 2023, and have been disclosed on its official website and MOPS. No deviations were found The Company has a spokesperson and acting spokesperson that represent the interests of the shareholders and a unit that specializes in addressing shareholders’ suggestions, queries, disputes, and litigation. No deviations were found 2. Is the Company constantly Yes The Company keeps track of the identities of its ultimate beneficiaries by monitoring insider informed of the identities of its major shareholders and the ultimate controller? 3. Has the Company established Yes and implemented risk management practices and firewalls for companies it is affiliated with? 4. Has the Company established internal policies that prevent insiders from trading securities against non-public information? Yes shareholding positions (including Directors, supervisors, managers, and shareholders with more than 10% ownership interest), with the shareholder registry held by the share administration agency. The Company has an “Internal Control Policy - Non-trade Activities - Supervision and Management of Subsidiaries," “Internal Control Policy - Trade Activities – Investment Management," and “Guidelines on Financial and Business Dealings Between Affiliated Enterprises” to set up and execute firewalls and risk controls over related parties. To prevent insider trading, the “CO10 Insider Trading Prevention Management” and “Insider Trading Prevention Procedures” have been included as part of the internal control of the Company and details are published on the intranet and linked to the TWSE website to which employees have access. Both policies have been included as part of the compulsory e-Learning courses for departmental heads, and eCSA questionnaires are issued on a yearly basis to facilitate self- assessment. Insiders such as Directors, supervisors, and managers are given a copy of the TWSE “Directions Concerning Securities Market Regulatory Matters for TWSE Listed Companies and Their 54 No deviations were found No deviations were found No deviations were found Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description Directors, Supervisors, and Major Shareholders” when they come aboard to make them aware of the company insider rules. In accordance with the 'Key Points for Managing Insider Trading Prevention,' when the company becomes aware of significant internal information, it must not trade in the company's or its invested businesses' stocks, other securities with equity characteristics, or non-equity corporate bonds, whether in its own name or in the name of others, until the information is clarified and remains unpublished, or within eighteen hours after it has been made public. The directors of the company are not allowed to trade their stocks during the closed period of 30 days before the announcement of the annual financial report and 15 days before the announcement of the quarterly financial report. The company also reminded directors by email seven days before the closure that they are prohibited from buying and selling the company's stocks. III. Assembly and obligations of the Board of Directors 1. Has the board devised and implemented policies to ensure the diversity of its members? Yes 2. Apart from the Remuneration Yes Committee and Audit Committee, has the Company assembled other functional committees at its own discretion? The Company has rules in place such as the “Corporate Governance Guidelines” and “Rules for Director Elections” to ensure a diversified board member composition in addition to drafting suitable guidelines for diversification based on the Board’s operation, the Company’s operating format, and its needs and developments. These rules and regulations are formulated and include, without being limited to, the following two general standards:1. Basic requirements and values: Gender, age, nationality and culture; 2. Professional knowledge and skills. As such, board members are required to possess the required knowledge, skills, and character in order to accomplish the goal of ideal corporate governance. For more information on the diversification of board members, please refer to page 25. Apart from the Remuneration and Audit Committees, the Company also has a Sustainability Committee headed by President and member Chung-Pin Wong. The Sustainability Committee is responsible for taking point in explaining company policies and positions externally, defining goals and directions internally, integrating resources, reviewing action plans, monitoring execution progress and reporting results to the board of directors on a yearly basis. In order to strengthen corporate governance and risk management functions, the Company has established a "Risk Management Committee" and reports regularly (at least once a year) to the 55 No deviations were found No deviations were found Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description Board of Directors to review the implementation of risk management and make necessary recommendations for improvement. No deviations were found 3. Has the Company established Yes The Board of Directors adopted the “Rules of Self-Evaluation of the Board of Directors and performance evaluation measures and methods for the Board of Directors, conducted performance evaluation annually and regularly, reported the results of performance evaluation to the Board of Directors and applied them to the reference of salary and remuneration of individual Directors and for nomination and renewal?) Functional Committees Performance” on March 30, 2020. The performance evaluation scope covers the evaluation of the Board as a whole, as well as individual Directors and Functional Committees. Methods of evaluation included the Self-Evaluation of the Board of Directors and Functional Committees, self-evaluation by individual board members, or other appropriate methods. The evaluation results, being submitted to the Remuneration Committee for analytical review and reported to the Board of Directors for discussion and improvement, shall be used as a reference in determining individual Director’s compensation and their nomination for the next office term. In order to implement corporate governance and enhance the functions of the company's board of directors, the Board of Directors amended the “Rules for Performance Evaluation of the Board of Directors and Functional Committees” on November 10, 2023. The Company shall appoint an external independent professional institution or a panel of external experts and scholars to conduct a performance evaluation at least once every three years. The external board performance evaluations shall be completed before the end of the first quarter of the following year, and the evaluation results shall be reported to the Board of Directors. ▓Internal performance evaluation of the Board of Directors and Functional Committees in 2023 are as follows: Items Individual board members Board of Directors Audit Committee Total average 4.61 4.80 5.00 Evaluation level Good Good Excellent 56 Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description Remuneration Committee Sustainability Committee 5.00 4.67 Good Good ■ External performance evaluation of the Board of Directors and Functional Committees in 2023 The company has appointed EY Business Advisory Services Inc. ("EY") to conduct a performance evaluation of the board of directors for the first time in November 2023. EY’s methodology incorporated the application of questionnaires, conducting interviews, and performing document reviews and analyses. EY executed a performance evaluation of the board of directors between January 1 and December 31, 2023. According to the evaluation, Compal's performance in the structure, members, and information processes of the board of directors is deemed advanced. Suggestions are presented below to continuously optimize and refine the operation of the board of directors. According to the evaluation, Compal's performance in the structure, members, and information processes of the board of directors is deemed advanced (Note). Suggestions are presented below to continuously optimize and refine the operation of the board of directors. The evaluation result was reported to the Board of Directors on February 29, 2024 and disclosed on the company’s website for investors’ reference. Note: The evaluation result will be divided into as follows: ˙Basics: Comply with the basic requirements of the competent authority and relevant laws and regulations. ˙Advanced: Comply with the basic requirements of the competent authorities and relevant laws and regulations, and have a set of established and effective practices, or actively improve the performance of this aspect. ˙Benchmark: Not only is it better than the basic requirements of the competent authority and relevant laws and regulations, but the practice is equivalent to a benchmark model. 4. Is the independence of Yes external auditors assessed on a regular basis? The Company evaluates the independence and competence of the CPA at least once a year, in accordance with Article 47 of the Certified Public Accountant Act and No. 10 of the Professional Ethics for Certified Public Accountants of the Republic of China. The CPA cannot be a Director, supervisor, or shareholder of the No deviations were found 57 Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description Company and may not receive payroll or be a related party to the Company. The Company requests the “Evaluation Form of the CPA's Independence and Competence” along with “the CPA’s Independent Confirmation” and the “Audit Quality Indicators (AQIs)” from the CPA. The company also evaluates the independence of the CPA in accordance with the items listed (please refer to page 62) as well as 13 indicators of AQIs. After evaluation, the CPA has no other financial interests or joint investment relationship with the Company except for the service fees due from audit, financial and tax cases. The CPA's family members do not violate the independence requirements, and the experience in auditing, professional support, and training hours of the CPA and his/her firm are all better than the average of the peer industry by referring to the AQIs. The latest evaluation of the independence and competence of CPA will be approved by the Audit Committee held on April 16, 2024, and will be resolved by the Board of Directors held on April 16, 2024. The same evaluation applies to the condition whenever there is an internal rotation within the CPA firm. Vice-President Cheng-Chiang Wang was appointed to lead and supervise affairs pertaining to corporate governance in accordance with the Company’s “Corporate Governance Guidelines," while the Board of Directors secretariat was assigned as the Company’s responsible unit to handle corporate governance affairs. No deviations were found Vice-President Cheng-Chiang Wang and the designated personnel responsible for corporate governance have more than 25 years of experience in stock affairs and meeting-related management for publicly traded companies. They are primarily responsible for handling corporate governance affairs, such as handling matters relating to board meetings and shareholders meetings according to the laws, producing minutes of board meetings and shareholders meetings, assisting in onboarding and continuous development of Directors, reviewing the legality of Independent Director qualifications, conduct matter related to Director change, furnishing information required for duty execution by Directors and members of the audit committee, ensuring legal compliance and taking other matters set out in the articles or corporation or contracts, periodically examining and revising the Company’s corporate governance guidelines and relevant procedures, improving disclosure transparency, safeguarding shareholder rights and promoting better corporate governance. For more information on the status of Compal’s corporate governance operations for 2023, refer to page 62. 58 IV. Is the listed or OTC Company Yes equipped with competent and sufficient corporate governance personnel and is its designated corporate governance Director responsible for corporate governance related matters (including but not limited to providing information required by Directors and supervisors to carry out business, assisting Directors and supervisors in complying with laws and regulations, managing related matters of the Board of Directors’ meeting and shareholders' meeting in accordance with laws, taking minutes of the Board of Directors’ meeting Yes No Summary description Actual governance Deviation and causes of deviation Yes The Company addresses its stakeholder relations on its corporate website, Sustainability report, and Compal ESG website. Separate contact persons, phone numbers, and e-mail addresses have been provided for each type of stakeholder relation to ensure that queries are directed to the relevant departments. In addition, an online “Material Aspects” questionnaire was also created for stakeholders to identify issues that are of significant concern. The Company will address stakeholders’ responses properly and take their suggestions as part of the Company’s goals. No deviations were found Yes The Chinatrust Commercial Bank – Securities Trust has been appointed as the share administration agency responsible for handling shareholder affairs and meetings and for providing share administration services. No deviations were found Assessment criteria and shareholders' meeting, etc.) V. Has the Company provided proper communication channels and created dedicated sections on its website to address corporate social responsibility issues that are of significant concern to stakeholders (including but not limited to shareholders, employees, customers, and suppliers)? VI. Does the Company engage a share administration agency to handle shareholder meeting affairs? VII. Information disclosure 1. Has the Company established a Yes The Company website at (www.compal.com) is regularly updated with information such as financial website that discloses financial, business and corporate governance-related information? 2. Has the Company adopted other means to disclose information (e.g. an English website, assignment of specific personnel to collect and disclose corporate information, implementation of a spokesperson system, Yes performance, corporate governance and shareholder meetings. ‧ The Company website has both Chinese and English pages. The information is gathered and disclosed by a dedicated department. ‧ The Company also has a spokesperson and an acting spokesperson. ‧ Investor conferences are held regularly and whenever deemed necessary. The proceedings are posted on the Company’s website and also broadcast on the TWSE platform (at https: /www.compal.com/investor-relations/financial-release/). 59 No deviations were found No deviations were found Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description broadcasting of investor conferences via the Company website)? 3. Does the Company announce Yes and declare an annual financial report within two months after the end of the fiscal year and announce and declare the first, second, and third quarter financial reports and the operation of each month ahead of the required time limit? VIII. Does the Company offer Yes other vital information (including but not limited to employee rights, employee care, investor relationships, supplier relationships, stakeholders’ interests, continuing education of Directors/supervisors, risk management policies, risk assessment standard implementation status, implementation status of customer policies, insuring against liabilities of Company Directors and supervisors) that would enable a better understanding of the Company’s corporate governance practices? ‧ The Company’s CSR to publicly disclose the Company's ESG actions. (URL: https: //www.facebook.com/compalCSR). The Company’s financial reports have been announced and filed within two months after the end of the fiscal year since fiscal year 2023. In addition, the Company’s announcement and filing of financial reports for the year and the first, second and third quarters, as well as business operational results for each month, were ahead of the required time limit. No significant difference No deviations were found Investor relations (please refer to pages 64) Employee rights and care for employees (please refer to page 63) • • Code of Conduct for Directors, managers, and employees (please refer to page 64) • • Supplier relations and operation status of customer policy (please refer to page 64-65) • Stakeholders’ interests (please refer to page 65) • Risk management practice and framework (please refer to pages 65-68), Risk analysis (please refer to pages 214) • Purchasing liability coverage for the Company’s Directors & Supervisors(please refer to page 70) • Continuing education for Directors and managers (please refer to pages 70-72) • Succession plan for Board members and key Management team (please refer to page72) • Acquisition of certificate(s) by the Company's personnel related to the transparency of financial information (please refer to page 73) 60 Assessment criteria Actual governance Deviation and causes of deviation Yes No Summary description IX. State the improvements that have been made with regard to the results of the latest Corporate Governance Evaluation conducted by TWSE in the most recent year. For items that have yet to be improved upon, state the Company’s priorities and measures for improvement. • With regard to the further education of Directors (including Independent Directors), Compal has encouraged its Directors to take part in courses on the pertinent regulations offered by the subsidiary Kinpo Group Management Consultant Company or training provided by external professional organizations. In 2023, members of the Board of Directors completed a total of 107 hours of training. • In 2023, establish a Risk Management Committee the enactment of the “Risk Management Best Practice Principles”, “Risk Management Committee Charter ", “Human Rights Policy”, “Tax Policy and Management Guidelines”, and the amendment “Corporate Governance Best-Practice Principles", “Sustainable Development Best Practice Principles", “Rules for Performance Evaluation of the Board of Directors and Functional Committees”, “Management Rules for Preventing Insider Trading” to “Main Point of Insiders Trading Prevention Management”, “Risk management policy of Compal Group” to “Company's Risk Management Policies and Procedures” were proposed to accommodate corporate governance, all of which have been submitted to the Board of Directors for resolution. • In 2023, EY Business Advisory Services Inc., an external professional and independent organization, was appointed to conduct the performance evaluation of the Board of Directors. • The corporate governance unit irregularly gave referrals for relevant training information from the competent authorities, external professional institutions, and Kinpo Group Management Consultant Company from time to time. The company and Kinpo Electronics, Inc. also regularly hold refresher courses. • We uploaded the Chinese and English Annual Report of shareholders’ meeting 18 days before the shareholders’ meeting. • In 2023, the " Corporate Governance Best-Practice Principles " and the " Main Point of Insiders Trading Prevention Management " were revised to prohibit directors and other insiders from using undisclosed information in the market to buy and sell securities. The content includes that directors are not allowed to trade securities thirty days before the announcement of the annual financial report. , and trade its stocks during the closed period of 15 days before the announcement of each quarterly financial report. 61 ▓ Items to evaluate the independence of the CPA: Item Evaluation result Meets independence or not Whether or not the CPA has a direct or material indirect financial interest in the Company Whether or not the CPA has a joint investment relationship with the Company or its affiliates or has shares in financial gains therewith with the Company or its affiliates Whether or not the CPA holds any share of the Company and its affiliates, or the CPA lends or borrows funds to or from the Company and its affiliates Whether or not the CPA has any improper relationship with the Company, or is currently employed by the Company to perform routine work for which the CPA receives a fixed salary Whether or not the CPA participates in the Company’s management and operational decision-making Whether or not the CPA is a spouse, lineal relative, direct relative by marriage, or a collateral relative within the second degree of kinship of any responsible person or managerial officer of the Company Whether or not the CPA provides management consulting or other non- attestation services that may affect the CPA’s independence Whether or not the CPA permits others to practice under his/her name Whether or not the CPA accepts commission related to his/her business As for the latest attestation work, whether or not the CPA remains unchanged over seven years Whether or not the CPA has received any sanction or has any circumstances which affect his/her independence NO NO NO NO NO NO NO NO NO NO NO YES YES YES YES YES YES YES YES YES YES YES ▓ The results of Compal’s corporate governance unit operations for 2023 are as follows: ‧ Compile and prepare relevant documents in need for the Audit Committee and the Board of Directors’ Meetings in accordance with pertinent regulations and operational/financial request; and be responsible for coordination with proposal making relevant units. ‧ Establishment of a Risk Management Committee the enactment of the “Risk Management Best Practice Principles”, “Risk Management Committee Charter", “Human Rights Policy”, “Tax Policy and Management Guidelines”, and the amendment “Corporate Governance Best-Practice Principles", “Sustainable Development Best Practice Principles", “Rules for Performance Evaluation of the Board of Directors and Functional Committees”, “Management Rules for Preventing Insider Trading” to “Main Point of Insiders Trading Prevention Management”, “Risk management policy of Compal Group” to “Company's Risk Management Policies and Procedures” were proposed to accommodate the corporate governance, all of which have been submitted to the Board of Directors for resolution. ‧ The performance evaluation of directors and independent directors, the Board of Directors, the audit committee, and the remuneration committee are submitted to the Board of Directors. ‧ EY Business Advisory Services Inc., an external professional and independent organization, was appointed to conduct the performance evaluation of the Board of Directors. 62 ‧ Planned the communication meeting between Independent Directors, Internal Audit Supervisors and CPA to have the Audit Committee determine the independence and fitness of the CPA engaged by the Company, as well as to ensure sound corporate governance. For the records of the communication meetings, please see page 51. ‧ Pursuant to “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies”, Compal has advocated and encouraged Directors to take part in the courses. In addition, the corporate governance unit irregularly gave referrals relevant training information from the competent authorities, external professional institutions, and Kinpo Group Management Consultant Company from time to time. The company and Kinpo Electronics, Inc. also regularly hold refresher courses. ‧ The Company disclosed and announced important financial and operational information in conjunction with the events of the Board of Directors Meetings and Shareholders Meetings. In addition, the Company has held financial result announcement conferences at least twice a year and was invited to participate in domestic/foreign brokers’ investor forums on a quarterly basis to help investors understand the Company’s financial and operational results. ‧ Registered the date for Shareholder Meetings as required by law; prepared meeting notifications within the scheduled deadline, meeting handbook, and meeting minutes and filing; coordinated relevant units, agents for stock affairs, CPA, attorneys, and so forth. ‧ Edit contents on the chapter on corporate governance in the Annual Report– responsible for the collection of data, compilation of stock affairs data, and coordination of different units and editing. ‧ Corporate governance evaluation – responsible for the collection of data, plan setting, compilation of stock affairs data, coordination of different units and website maintenance. ‧ The Company has offered liability coverage for directors, supervisors and managers. The amount for their liability insurance in 2023 came to USD 50,000 thousand, which was roughly equivalent to TWD 1,582,000 thousand. Vital information relating to their liability insurance was reported to the Board of Directors at the latest meeting of the Board of Directors. ‧ The Corporate Governance Officer took 12 hours of continuing education. For the exact education program, please see page 72. X. Other vital information on the operating status of corporate governance: ▓ Employees' rights and care for employees Compal respects employees' rights and tends to their needs. Internal policies are updated constantly to reflect the latest labor regulations and published to ensure employees understand and comply. Compal's subsidiaries in the USA, China, Brazil, and Vietnam have all established employment guidelines in accordance with local labor regulations, and all terms of employment are compliant with the laws of the local countries and regions. The Company's support for equal work opportunities and respect for employees' freedom of association has led to the assembly of a union at the Kunshan Factory. Employees are offered equal compensation for equal work, whereas salary details are approved based on the nature of work involved and individual performance. The Company has nursery rooms available throughout the organization. It actively prevents and resolves workplace unlawful infringement incidents, grants workers the breaks and overtime pay they deserve, purchases social insurance coverage, and contributes to employees' pension funds. Compal is committed to creating communication platforms where employees may exchange opinions and information. We set up the employees' opinions mailbox and the anti-violence mailbox. Moreover, A “Sunshine Group” and hotlines have been set up at all plant sites and are run by compassionate people who promptly respond to employees' thoughts. By providing employees with the means to express feelings and complaints, the Company is able to help employees resolve difficulties in a timely manner. In an attempt to create a joyful work environment where talents are assigned to suitable positions, Compal publishes recruitment information 63 internally and offers employees the freedom to choose or transfer to positions they consider suitable, and thereby assuring satisfaction across the workforce and protecting employees' interests. Compal provides employees with the following health-related facilities and services outside of work: ‧ ‧ ‧ Common dining: Employee dining facilities have been made available to serve nutritious and healthy foods. Recreation centers: Places where employees may hold club activities, exercise, and socialize. Spiritual, health, and arts seminars: The Company organizes health seminars, spiritual seminars, musical performances, and art exhibitions from time to time, and uses them as a means of stress relief to cater to employees' physical and mental health. Infirmary and stationed physicians: Employees may consult physicians and access timely medical assistance for themselves and their family members. Employee assistance services are available. Employees can consult with consultants on work, family, relationships, physical and mental health, mental illness, finance, legal, and management issues through a dedicated line or E-mail. ‧ ‧ ▓ Code of conduct for Directors, managers, and employees Compal has established an ethics policy as described below to enforce business integrity and to guide employees toward complying with laws and ethics for the protection of Compal's and stakeholders' assets, interests, and reputation: ‧ ‧ Comply with government regulations. Protect the interests of employees, customers, shareholders, suppliers, communities, and relevant organizations. Uphold business integrity and the principles of fair trade, fair advertising, and fair competition. Refrain from making illicit gains. Make information transparent to stakeholders while at the same time respecting intellectual property rights, privacy, and identity protection. Prohibit retaliation and make responsible purchases of minerals. Continually improve, execute, and convey the Company's ethics policy to relevant organizations. ‧ ‧ In addition to implementing an ethics policy, Compal has also established a Human Resource Management Policy, Director and Manager Code of Conduct, and Employee Code of Conduct not only in the employees' best interest, but also to communicate with stakeholders about the moral standards and behavioral guidelines that employees are bound to obey when carrying out their duties. All employees are required to sign a "Confidentiality Pledge" when coming on board, which is a declaration to abide by the Company's rules, the Human Resources Management Policy and to maintain the confidentiality of the Company's business secrets. ▓ Investor relations The Company has an Investor Relations Department, which handles shareholders' recommendations. The department bridges communication between the Company and its investors. In addition to hosting investor seminars on a regular and ad-hoc basis, the department has also created an Investor Relations section on the Company's website to facilitate complete and fair disclosure of Compal's latest progress, and thereby provide investors with a full understanding of the Company's business performance and long-term goals. In 2023, Compal proactively participated in online investor forums and investor conference calls, hosted by either local or foreign brokers every quarter, 13 events in total, to regularly update its financial results and business progress to shareholders and investors, which to enhance investors' understanding for the Company operation and increase the communication and engagements. ▓ Supplier relations and execution of customer policy The Company signs contracts with all suppliers and customers not only to protect the interests of both parties, but also to maintain a strong working relationship. 64 The Company maintains close cooperation with suppliers via systematic method in order to implement effective communication, follow-up and management. Since 2015, Compal has established the Supplier Opinion on the Compal Procurement System (CPS) platform to provide improved communication channel with suppliers. In 2023, Compal further planned the upgrade of the supplier management system of “Vendor Integration Portal”, such that through system platform upgrade and integration, the Company is able to satisfy the due diligence operation on various management policies of ESG sustainable supply chain more efficiency, and to also demonstrate the commitment in achieving sustainable operation with suppliers jointly. Each year, the Procurement Center and Safety Regulation and Environmental Protection Affairs Department organizes the Supplier Conference jointly. For 2020~2021, due to the impact of COVID-19 pandemic, the meeting convention method was changed to online meeting. In 2022, third party consulting company was also invited to participate in the Supplier Conference, and contents related to global green product regulatory updates and implementation guidelines, RBA VAP v7.0 updates, conflict minerals, introduction to Compal’s supplier management system and environmental education in the supply chain were explained to 205 suppliers attending the Supplier Conference. In 2023, to accelerate supply chain’s participation in net zero emissions and carbon reduction, Compal invited 34 key suppliers to join Compal’s ONE+N electronic industry supply chain net zero acceleration program, and a physical Supplier Conference was also held on September 13, 2023. Compal continues to communicate the latest trend of sustainable supply chain to suppliers through the Supplier Conference and also works with suppliers to improve the ESG performance continuously. Compal is committed to providing customer service while also prioritizing customer privacy and confidentiality. We sign confidentiality agreements with our customers to ensure the security of their confidential information. Additionally, we require employees to adhere to intellectual property protection policies, gradually strengthening confidential management and establishing a data classification system. We have implemented various measures, including the introduction of cloud virtual desktops and centralized data backup management systems, the establishment of inspection systems, the implementation of electronic storage device tracking controls, and the management of filming behaviors within the factory premises. We require project teams to sign confidentiality agreements based on the level of confidentiality and strengthen procedures for managing departing employees to meet the highest standards of information security in the industry. In 2023, there were no penalties imposed due to appeals from customers or regulatory authorities, demonstrating our rigorous protection of confidential customer information and strengthening customer confidence in Compal. We collect quarterly performance evaluation scores from major OEM customer partners, which account for ninety percent of the total revenue, to assess achievement and execution efficiency. The customer satisfaction score in 2023 was 89.10%, maintaining a customer satisfaction level of over 89% for four consecutive years, solidifying Compal's good partnership with its customers. internal and external email ▓ Stakeholders' interests Interested parties are able to communicate with and make suggestions to the Company for the protection of their interests. The Company provides safe and high-quality products along with complete and accurate product information to customers. Customers' complaints are addressed immediately. ▓ Risk management 1. Risk management practice The Company has established a risk management policy, which was approved by the Board of Directors on March 15, 2022. The core values of the policy are complying with the laws and regulations of the place where it operates, and setting up the risk control procedures in accordance with the international standard systems. The Company expects that the policy can identify the operation risk in advance. Therefore, the 65 Company can adopt appropriate assessments and actions to transform, reduce or prevent the risks. (1) Comply with the policies and regulations of the country in which it operates: relations, R&D, human supplier management, customer The Company has its own financial, sales, and accounting system, and a system for monitoring the financial and business information of its subsidiaries in accordance with "Regulations Governing the Establishment of Internal Control Systems by Public Companies". The Company also has guidelines in place for financial affairs, credit/endorsement/ guarantee arrangements with affiliated businesses, and acquisition/disposal of key assets. These policies, risk assessment standards, and procedures serve as guidelines by which employees may abide for risk assessment and management. Dedicated personnel have been appointed in every department to manage, control, minimize, and prevent Company risks. Follow the local policies and regulations of important production bases. For example: the relevant guidelines of the "The Basic Norms of Enterprise Internal Control" issued by the Ministry of Finance of the People's Republic of China in conjunction with the China Securities Regulatory Commission, the National Audit Office, the China Banking Regulatory Commission and the China Insurance Regulatory Commission. resources, (2) Establish the risk control procedures in accordance with the international standard systems. In accordance with the methodology of ISO 31000, the Company performs the identification, analysis, and evaluation processes to confirm the risk issues, then compile the risk issues in five major areas: strategy, finance, operations, legal compliance, and environment. Finally, the Company uses the "Risk Analysis Matrix" to prioritize risk management by considering the Company's resources. The internal control system was developed by the company to consider the organization's structures, authorization, and control points of operation procedure, and it has been distinguished between the overall level and operation level. Five elements (Control Environment, Risk Assessment, Control Operation, Information and Communication, Supervision) have been incorporated into each transaction cycle at the operation level. The Company achieves the goal of implementing internal control through the internal control self-assessment and performance assessment. Besides, the company has referred to the Three Lines of Defense (TLD) model for risk management issued by the IIA, and the company operates practices to set up organization and procedures for risk management. (3) From the implementation perspective, all the divisions of the Company evaluate various business risks to make contingency plans, while preparing the annual budget and work plan. At the same time, the internal audit office drafts the annual audit plans for the coming year based on the risk assessment of operating activities. The annual audit plan is implemented after approval by the Board of Directors, and the execution status is also reported to the Board of Directors. Given the Company's role as an ODM for 5C electronics, we review and assess business risks on an annual basis, and reflect our findings in the financial statements under accounts such as allowance for doubtful debts, warranty reserves, and royalties. All provisioning policies are submitted to the CPA for review whenever adjustments are made. This is to ensure that financial reports present a fair view of the Company's operations. Furthermore, the Company has dedicated personnel appointed to monitor and control exchange rate risks, and take hedging measures as necessary (please refer to page 215). 66 (4) If an important operating activity is identified with a potential urgent risk, it can be reported to the supervisor immediately for proper prevention. Extremely important matters, such as investments or engineering project bidding, will be jointly reviewed by relevant departments. Audits will be performed on a regular or irregular basis. (5) The future plan of risk management in the following five years. a. Continue to manage the "new type of risk" refer to the GRPS research report issued by WEF. According to the Global Risks Perception Survey carried out by the World Economic Forum every year, we evaluate key issues such as economy, geopolitics, environment, society and technology, from the "likelihood" and "impact" of the event, and we also take new types of risks into management scope such as climate change or contagious disease. b. Digital transformation to enhance corporate governance As business models become more complex, manual post-checks become outdated. We use the information system continuously to save labor costs, enhance the effectiveness of the Three Lines of Defense (TLD) model through IT techniques and, most importantly to achieve the goal of warning in advance. 67 Board of Directors, Audit Committee, Risk Management Committee, Auditing Office (Level 3) ‧ Auditing Office: Risk inspection, evaluation, supervision, improvement and reporting ‧ Board of Directors, ‧ Audit Committee, ‧ Risk Management Committee Decision-making and ultimate control over risk evaluation 2. Risk management framework Key risk areas Front line unit (Business organizer) (Level 1) Risk review and control (Executive management meeting) (Level 2) ‧ Interest rate, exchange rate, inflation ‧ Finance Group ‧ Operation Team and financial risks ‧ High-risk or highly leveraged investment, loan to third party, endorsement, guarantee, trading of derivatives and treasury investment ‧ R&D planning ‧ Changes in policy and law ‧ Changes in technology and industry ‧ Changes in corporate image ‧ Investment, subsidiary and M&A ‧ Business departments/centers (Note 1) ‧ Common departments (Note 3) ‧ Corporate investment review ‧ Executive management meeting ‧ Subsidiaries monitoring and management report benefits ‧ Expansion of factory, production site and equipment ‧ Centralized purchase or sale ‧ Business departments/centers (Note 1) ‧ Common departments (Note 3) ‧ Monthly operating meeting ‧ Production and marketing meeting ‧ Equity transfer involving Directors, ‧ Share administration supervisors, and major shareholders affairs ‧ Change of management ‧ Board of Directors ‧ Share administration affairs ‧ Head of Finance/Accounting ‧ Litigation and non-contentious cases ‧ Handling of product safety incidents ‧ Other operational affairs ‧ Product risk management ‧ Managers of all levels ‧ Legal affairs ‧ Business groups/centers (Note 2) ‧ Personnel behavior, ethics, and conduct ‧ Managers of all levels ‧ HR and Administration ‧ Rules (including SOPs), internal ‧ Managers of all levels control system and compliance with regulations ‧ Personnel Evaluation Committee ‧ Legal Affairs Office ‧ Investment Planning and Management Office ‧ Finance ‧Accounting ‧ HR and Administration ‧ IT ‧ Board of Directors Meetings ‧ Share administration affairs ‧ Secretary of the Board of Directors ‧ Legal Affairs Office ‧ Prevention of insider trading ‧ Managers of all levels ‧ Insider Trading Prevention Office ‧ Information security management ‧ Managers of all levels ‧ Information Security (ISMS) Committee ‧ Information Security Team Notes: 1. Business departments/centers: America/Europe, Asia Pacific, Operations, Enterprise Products, Auto Electronics, Creativity, Quality Assurance, Procurement, R&D, Manufacturing, and Sales, etc. 2. Business groups/centers: PCBG, Worldwide PC Sub.BG, Global Operations & Quality Sub. BG, GOBG, SD Operation Sub. BG, SDBG, etc. 3. Common departments: Finance, Accounting, HR and Administration, Investment Planning and Management Office, Legal Affairs Office, etc. 68 3. The actual performance of risk management in 2023 (1) Committee Appointment On May 8, 2023, Compal established the Risk Management Committee with the approval of the Board of Directors. According to the regulations, the first session of the Risk Management Committee consists of all independent directors Min Chih Hsuan, Duei Tsai, Wen-Chung Shen and director Chung-Pin Wong. Independent director Min Chih Hsuan was elected by all members as the convener and chairman of the meeting. (2) Attendance of Members at Risk Management Committee Meetings: ‧ The term of the 1st committee is from May 8, 2023 to August 26, 2024. ‧ In 2023, the Risk Management Committee held two meetings (A) and the qualifications and attendance of Committee members are as follows: Title Name Major Actual attendance (B) Number of delegated attendances Attendance Rate (%) [B/A] Convener Min Chih Hsuan Committee Member Committee Member Committee Member Duei tsai Wen-Chung Shen Chung-Pin Wong (3) Management System: Business Management, Performance Management, Investment, Mergers and Acquisitions Operation Management, Information Security Business Management, Risk Management Business Management, Performance Management, Risk Management 0 2 2 2 1 0 0 0 0% 100% 100% 100% In response to regulatory requirements and to implement corporate risk management, Compal revised the Risk Management Practice Principles, Risk Management Policies and Procedures, and Corporate Governance Practices Principles at the board meeting on May 8, 2023. (4) Reporting Process: On November 10, 2023, Compal reported the annual risk management performance to the Risk Management Committee and submitted it to the Board of Directors for review. (5) Risk Evaluation Mechanism: Compal has established a risk evaluation mechanism to analyze and summarize the risk appetite and then set related action plans. 69 ▓ Purchasing liability coverage for the Company’s Directors, supervisors, and managers Since 2002, the Company has purchased liability insurance for its Directors, supervisors, and managers. The summary of the insurance policies purchased in 2023 is listed as follows: Insured Individuals Insured amount Insured Period Date of submission to the Board of Directors Directors, Supervisors and Managers USD 50,000,000 (Equivalent to TWD 1,582,000,000) From:2023.11.21 To: 2024.11.21 2024.02.29 ▓ Continuing education for Directors and managers All Directors and managers possess relevant professional knowledge and skills. In addition to offering relevant information both on a regular and intermittent basis to Directors and managers, the Company would also organize seminars and workshops when deemed necessary. Training completed by Directors and managers in 2023 includes: ˙Continuing education for directors Date of training Name Title Organized by Course title Chairman Chairman Chairman Sheng-Hsiung Hsu Sheng-Hsiung Hsu Sheng-Hsiung Hsu 2023.05.15 Securities and Futures Institute 2023.11.10 Taiwan Corporate Governance Association 2023.11.14 Taiwan Corporate Governance Association Vice Chairman Jui-Tsung Chen 2023.07.14 Compal Electronics, Inc. Vice Chairman Jui-Tsung Chen 2023.09.08 Vice Chairman Jui-Tsung Chen 2023.10.12 Vice Chairman Jui-Tsung Chen 2023.11.10 Taiwan Institute of Directors Taiwan Institute of Directors Taiwan Corporate Governance Association Director Wen-Being Hsu 2023.11.10 Taiwan Corporate Governance Association Director Chieh-Li Hsu 2023.02.22 Director Chieh-Li Hsu 2023.11.10 Director Chieh-Li Hsu 2023.11.14 Director Charng-Chyi Ko 2023.05.15 Director Charng-Chyi Ko 2023.05.26 Director Charng-Chyi Ko 2023.11.10 Director Charng-Chyi Ko 2023.11.14 Director Sheng-Chieh Hsu 2023.07.04 Taiwan Institute of Directors Taiwan Corporate Governance Association Taiwan Corporate Governance Association Securities and Futures Institute Kinpo Group Management Consultant Company Taiwan Corporate Governance Association Taiwan Corporate Governance Association Taiwan Stock Exchange Corporation 70 the business Competitiveness VS Viability, ESG trends and strategies Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Trends and risk management of digital technology and artificial intelligence Global Economic Outlook for the Second Half Year of 2023 ESG rating analysis in the capital market and implications of sustainability evaluation Legal Risks of Enterprise Investment and Financing Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Centennial Enterprise Strategy Turning Point Series-2 Innovation Wheel Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Trends and risk management of digital technology and artificial intelligence Competitiveness VS Viability, ESG trends and strategies Challenges and responses of Taiwanese companies under global risks in 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Trends and risk management of digital technology and artificial intelligence 2023 Cathay Sustainable Finance and Climate Change Summit Forum Hours of training 3 3 3 1 3 3 3 3 3 3 3 3 2 3 3 6 Title Name Date of training Organized by Course title Hours of training Director Sheng-Chieh Hsu 2023.11.10 Taiwan Corporate Governance Association Director Yen-Chia Chou 2023.11.10 Taiwan Corporate Governance Association Director Director Director Chung-Pin Wong Chung-Pin Wong Chung-Pin Wong 2023.07.14 Compal Electronics, Inc. 2023.11.10 Taiwan Corporate Governance Association 2023.11.24 Taiwan Institute of Directors Director Chiung-Chi Hsu 2023.11.10 Taiwan Corporate Governance Association Director Director Director Director Director Ming-Chih Chang 2023.11.10 Taiwan Corporate Governance Association Sheng-Hua Peng Sheng-Hua Peng Sheng-Hua Peng Sheng-Hua Peng 2023.04.13 Taiwan Institute of Directors 2023.05.26 Kinpo Group Management Consultant Company 2023.07.14 Compal Electronics, Inc. 2023.11.10 Taiwan Corporate Governance Association Independent Director Min Chih Hsuan 2023.01.13 Taiwan Corporate Governance Association Independent Director Min Chih Hsuan 2023.12.27 Taiwan Corporate Governance Association Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director Duei Tsai 2023.04.13 Taiwan Institute of Directors Duei Tsai 2023.05.16 Duei Tsai 2023.05.26 Duei Tsai 2023.08.09 Duei Tsai 2023.10.13 Duei Tsai 2023.11.10 Securities and Futures Institute Kinpo Group Management Consultant Company Securities and Futures Institute Taiwan Corporate Governance Association Taiwan Corporate Governance Association Independent Director Wen-Chung Shen 2023.4.13 Taiwan Institute of Directors Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Global Economic Outlook for the Second Half Year of 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Things to be noted in corporate IPO planning: General company and group spin-offs Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 KPMG Taiwan 2023 Business Leader Academy Forum: Business Opportunities and Challenges Under the Net Zero Spotlight Challenges and responses of Taiwanese companies under global risks in 2023 Global Economic Outlook for the Second Half Year of 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 Explanation and case introduction of directors and supervisors’ responsibilities under corporate governance Enterprise resilience-oriented information security management and risk control KPMG Taiwan 2023 Business Leader Academy Forum: Business Opportunities and Challenges Under the Net Zero Spotlight Global future risks and opportunities for sustainable transformation Challenges and responses of Taiwanese companies under global risks in 2023 Kindness. True beauty. Charity. Doing it right. Doing it well is good business. Trends and risk management of digital technology and artificial intelligence Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 KPMG Taiwan 2023 Business Leader Academy Forum: Business Opportunities 3 3 1 3 3 3 3 3 2 1 3 3 3 3 3 2 3 3 3 3 71 Title Name Date of training Organized by Course title Hours of training Independent Director Wen-Chung Shen 2023.5.26 Kinpo Group Management Consultant Company Independent Director Wen-Chung Shen 2023.11.10 Taiwan Corporate Governance Association and Challenges Under the Net Zero Spotlight Challenges and responses of Taiwanese companies under global risks in 2023 Global trends and business opportunities for low-carbon economy and corporate low-carbon innovation in 2023 2 3 ˙ Continuing education for managers Date of training Name Title Organized by Course title Hours of training Vice President Cheng-Chiang Wang 2023.07.14 Compal Electronics, Inc. Vice President Guo-Dung Yu 2023.07.14 Compal Electronics, Inc. Global Economic Outlook for the Second Half of 2023 Global Economic Outlook for the Second Half of 2023 Corporate Governance Officer Corporate Governance Officer Corporate Governance Officer Corporate Governance Officer Cheng-Chiang Wang 2023.04.18 Accounting Research and Development Foundation Corporate Ethics and Sustainable Development Cheng-Chiang Wang 2023.05.18 Accounting Research and Development Foundation To Correctly Understand the Corporate Governance Evaluation Cheng-Chiang Wang 2023.05.19 Accounting Research and Development Foundation Analysis of the latest corporate governance policies and laws and common deficiencies Cheng-Chiang Wang 2023.09.15 Taiwan Corporate Governance Association Board Meetings: Common Board Meeting Mistakes for Listed Companies Accounting Officer Cheng-Chiang Wang 2023.10.16- 2023.10.17 Accounting Research and Development Foundation Audit Chief Executive Chenyi Li 2023.12.08 Accounting Research and Development Foundation 2024.01.11 Accounting Research and Development Foundation “Training program for the new Accounting Officer” The class for the new Accounting Officer was requested due to the company's share exchange/transaction being in a public place. Practical measures to improve the “Three Lines of Defense of Internal Control” Common internal control management deficiencies in enterprises and analysis of practical cases 1 1 3 3 3 3 12 6 6 ▓ Succession plan for Board members and key Management team Compal launched the succession plan for Board members and the key management team in 2018. The former President Jui-Tsung Chen, was promoted to the position of Vice-Chairman and Chief Strategy Officer of the Company, responsible for the Company’s long-term strategy development and implementation. The President's position was taken by Executive Vice-President Chung-Pin Wong, who joined Compal in 1989 and has over 30 years of experience in various positions, such as marketing, procurement, sales, etc. In addition, Anthony Peter Bonadero, Sheng-Hua Peng, and Ming-Chih Chang were promoted from Senior Vice-President to Executive Vice-President Positions and were appointed to lead the three business groups: PCBG, SDBG, and GOBG, respectively. They were also elected to serve on the 13th Board of Directors in 2018. Compal has successfully completed the succession of its board members and key management team, which symbolizes the transition to a new generation. The abovementioned top management of the Company was re-elected as the 14th term of the Board of Directors at the 2021 Annual General Shareholders Meeting. 72 In response to the future growth, the Company will continue to invest in the talents and promote the key management team’s experience sharing and inheritance through the arrangement of the regular “Group General Managers Meetings” and “Executive Management Meetings." This plan and mechanism will enable the Company to achieve its long-term sustainability goals. ▓ Certificate and qualification acquisition status for personnel involved in financial information Name of certificate transparency CPA qualification USCPA qualification Senior Securities Specialist Securities Specialist Futures Specialist Securities Investment Trust and Consulting Professional Chartered Financial Analyst Certificate In ESG Investing Investor Relations Charter (IRC®) Certified Internal Auditor - Taiwan Certified Internal Auditor Certified Information Systems Auditor Information Security Management Lead Auditor Certified Basic Proficiency for credit officers No. of persons 5 persons 2 persons 11 persons 4 persons 4 persons 5 persons 1 person 1 person 1 person 3 persons 3 persons 1 person 1 person 1 person 73 3.3.4 Composition, Responsibilities, and Operations of the Remuneration Committee 1. Professional Qualifications and Independence Analysis of Remuneration Committee Members Conditions Identity Name Professional Qualifications and Experience Independence Criteria April 2, 2024 Number of Other Public Companies in Which the Individual is Concurrently Serving as a Remuneration Committee Member Convener Independent Director Wen-Chung Shen Independent Director Min Chih Hsuan Bachelor of Electrical Engineering Dept., National Taiwan University Chair of Hetuo Investment Co., Ltd. Director & Executive Vice-President of Compal Electronics, Inc. Possesses 30 or more years of work experience required for the Company's business, and not been a person of any conditions defined in Article 30 of the Company Law. Honorary Doctorate, National Chiao Tung University Bachelor of Electrical Engineering Dept., National Chiao Tung University Chairman, Vice Chairman, CEO, President and Honorary Vice Chairman of United Microelectronics Corp. Chairman of Faraday Technology Corp., Clientron Corp. Possesses 30 or more years of work experience required for the Company's business, and not been a person of any conditions defined in Article 30 of the Company Law. ‧ ‧ ‧ ‧ Compliance with independence requirement (note) The person him/herself or his/her spouse or relatives within the second degree (or in the name of others) hold 5,151,000 shares of the Company at a ratio of 0.11%. Compliance with independence requirement (note) The person him/herself or his/her spouse or relatives within the second degree (or in the name of others) hold 0 shares of the Company at a ratio of 0%. 74 Independent Director Duei Tsai ‧ ‧ Compliance with independence requirement (note) The person him/herself or his/her spouse or relatives within the second degree (or in the name of others) hold 0 shares of the Company at a ratio of 0%. 3 Ph.D., Electrical Engineering, National Taiwan University Independent Director of Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd. and Independent Director for Public Welfare of Starlux Airlines Co., Ltd. Part-time professor-level professional and technical personnel in the Department of Electrical Engineering, National Taipei University of Technology and the Department of Digital Multimedia Design, Kainan University; Adjunct professor at the Department of Electronics, National Taiwan University of Science and Technology and the Department of Electronics, Yuanzhi University. Government positions such as Minister of Transportation and Director of the Civil Aviation Bureau of the Ministry of Transportation. Possesses 30 or more years of work experience required for the Company's business, and not been a person of any conditions defined in Article 30 of the Company Law. Note: Compliance with independence requirement: State whether the members of the Remuneration Committee meet the independence requirement. ˙ Including but not limited to that the person him/herself or his/her spouse or relatives within the second degree have not worked as the directors, supervisors or employees of the Company or its affiliated enterprises; ˙ Have not worked as a director, supervisor or employee of a company that has a specific relationship (per the provisions of subparagraphs 5~8, paragraph 1, Article 6 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange) with the Company; ˙ Have not received remuneration by providing business, legal, financial, accounting and other services to the Company or its affiliates in the last 2 years; ˙ Number of shares of the Company and shareholding ratio of the person him/herself or his/her spouse or relatives within the second degree (or in the name of others). 2. Responsibility of the Remuneration Committee ˙ Formulate and regularly review the policies, systems, standards and results for the performance evaluation and remuneration of directors (including independent directors) and managers. ˙ Regularly evaluate and determine the remuneration of directors (including independent directors) and managers. The salary and remuneration mentioned above include cash remuneration, stock options, dividends, retirement benefits or severance payments, various allowances and other measures with substantial incentives. 75 3. Attendance of Members at Remuneration Committee Meetings • • • The Company's Remuneration Committee is composed of three Independent Directors. The term of the 5th committee ran from August 27, 2021 to August 26, 2024. There were four Remuneration Committee meetings during 2023(A) and the committee member qualifications and attendance records are as follows: Attendance in Person (B) 4 2 4 Attendance Rate (%) [B/A] 100% 50% 100% Wen-Chung Shen Min-Chih Hsuan Duei Tsai Convener Committee Member Committee Member By Proxy 0 2 0 Name Title Remarks ■ The discussion of the Remuneration Committee and the resolution, as well as the actions the Company has taken in response to any opinions arising from the Remuneration Committee. Board of Directors Meeting 9th Meeting (14th Term) 2023.3.15 10th Meeting (14th Term) 2023.5.08 Resolution Adopted by the Remuneration Committee 1. To approve the proposal for the distribution of compensation to employees and directors for the year 2022 2. To approve the first mid-year employees’ bonus of the year 2023 ▲Resolution Adopted by the Remuneration Committee (2023.3.15): The Board will resolve to approve the proposal after the Committee’s approval. ▲Action taken by the Company in Response to the opinion of the Remuneration Committee: ・Motion 1: Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Directors present. ・Motion 2: In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 1. To approve the proposal for the appropriated percentage for the remuneration of employees and Directors of the year 2023 2. To approve employees’ salary adjustment for the year 2023 ▲Resolution Adopted by the Remuneration Committee (2023.5.08): The Board will resolve to approve the proposal after the Committee’s approval. ▲Action taken by the Company in Response to the opinion of the Remuneration Committee: ・Motion 1: Upon solicitation of comments by the Chairman, no objection was addressed and the resolution was adopted unanimously by the Directors present. ・Motion 2: In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors 76 Board of Directors Meeting 12th Meeting (14th Term) 2023.8.11 14th Meeting (14th Term) 2023.11.10 Resolution Adopted by the Remuneration Committee Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 1. To approve the Directors’ Remuneration for the year 2022 2. To approve 2nd mid-year employees’ bonus for the year 2023 ▲Resolution Adopted by the Remuneration Committee (2023.8.11): The Board will resolve to approve the proposal after the Committee’s approval. ▲Action taken by the Company in Response to the opinion of the Remuneration Committee: ・Motion 1: Chairman Sheng-Hsiung Hsu asked the Independent Director Min-Chih Hsuan to act as a deputy chairman to preside at this meeting to discuss and vote on this proposal. Since an interested party relationship exists, the Directors (i.e., Sheng- Hsiung Hsu, Jui-Tsung Chen, Wen Being Hsu, Chieh-Li Hsu, Charng-Chyi Ko, Sheng- Chieh Hsu, Yen-Chia Chou, Chung-Pin Wong, Chiung-Chi Hsu, Ming-Chih Chang, Sheng-Hua Peng and Anthony Peter Bonadero) recuse and exclude themselves from discussion and voting on this proposal to avoid conflict of interest. Upon solicitation of comments by the deputy chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. ・Motion 2: In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists among any Directors and any agenda proposals, such Directors shall recuse and exclude themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng- Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 1. To approve the compensation of Employee bonuses in cash for 2022 2. To approve the proposal for the 2023 year-end employees’ bonus ▲Resolution Adopted by the Remuneration Committee (2023.11.10): The Board will resolve to approve the proposal after the Committee’s approval. ▲Action taken by the Company in Response to the opinion of the Remuneration Committee: ・Motion 1 and 2: In accordance with the Company’s Regulations Governing the Proceedings of Board of Directors Meetings, an interested party relationship exists between any Directors and any agenda proposals, such Directors shall excuse themselves during discussion of and voting on those proposals. Accordingly, to avoid conflict of interest, Directors Jui-Tsung Chen, Chung-Pin Wong, Ming-Chih Chang and Sheng-Hua Peng, who are also acting as managerial officers of Compal, avoided discussion and voting on this proposal. Upon solicitation of comments by the chairman, no objection was addressed and the resolution was adopted unanimously by the remaining Directors present. 77 ■ Other notes: 1. 2. If the Board of Directors declines to adopt or modify a recommendation of the remuneration committee, it should specify the date of the meeting, the session, the nature of the motion, the resolution made by the Board of Directors, and the Company’s response to the remuneration committee’s opinion (e.g., if the amount of remuneration passed by the Board of Directors exceeds the remuneration committee’s recommended amount, the circumstances and cause for the difference shall be specified): None. If resolutions of the remuneration committee are objected to by members or become subject to a qualified opinion, which has been recorded or declared in writing, then the date of the meeting, the session, the nature of the motion, all members’ opinions and the response to members’ opinions should be specified: None. 78 3.3.5 Corporate Sustainability Development Assessment criteria Actual governance Yes No Summary description Yes 1. Does the Company conduct risk assessments on environmental, social, and corporate governance issues related to the Company's operation in accordance with the principle of materiality and formulate relevant risk management policies or strategies? To fulfill the company's commitment to sustainable development and improve the company's overall capacity in ESG risk management, Compal Electronics established a Sustainability Committee (the "Committee") with the approval of the board of directors in March 2022. Composed of three members appointed by the board of directors, more than half (two) of the members of the Committee are independent directors, and the member Chung-Pin Wong is elected by all Committee members as the chairperson. Holding at least one meeting a year, the Committee is responsible for taking point in explaining company policies and positions externally, defining goals and directions internally, integrating resources, reviewing action plans, monitoring execution progress, and reporting results to the board of directors. Deviation and causes of deviation No deviations were found Composition, Responsibilities, and Operations of the Sustainability Committee, Board of Directors' Supervision of the Sustainability Committee. Please refer to page 98-99. Yes 2. Has the Company set up a full- time (or part-time) unit to promote corporate social responsibility, which is authorized by the Board of Directors to be handled by the senior management and reported to the Board of Directors? For the 2023 Sustainable Development operation and implementation, please refer to page 100- 102, the targets and plans of 2024 Sustainable Development please refer to page 103-104. The results of implementation are also disclosed in our Annual Report, Sustainability Report, and on our corporate website/Compal ESG. The Group performs risk identification, assessment and analysis, response and management at least once a year. The scope of execution includes parent company and subsidiary company. 1. Risk identification: Collect environmental, social and corporate governance issues that stakeholders are concerned about, and refer to analysis reports on international situations and industry trends, then classify risk issues into "Strategy," "Finance," "Operation," and "Legal Compliance", "Environment". 2. Risk assessment Through a risk analysis matrix, the likelihood and impact of risk issues are evaluated 79 No deviations were found Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation respectively, and ranked by the result of the evaluation. Among them, "supply chain material interruption risk", "risk of overseas factory expansion" and "infectious disease spread " were rated as the top three risk issues. 3. Risk response and management (1) Supply chain material interruption risk The Company's revenue continues to grow, and it is highly dependent on the stable supply of key components. In order to reduce the risk of sluggish materials and increase profits, the Company implements real-time production and precise control of inventory management. However, the conflict between Russia and Ukraine could lead to shortages of semiconductor-related raw materials, and Covid-19 continues to rage, causing energy shortages in various countries. The risk of material outage and production stoppage arising from the model of precise inventory management is also increasing day by day. Under this circumstance, the Company intends to take the following countermeasures a. Continue to strengthen the supply chain information system and improve the platform's management mechanisms such as demand forecasting, inventory inquiry and delivery instructions. b. Strengthen the strategic partnership of key component manufacturers. c. Big data analysis to grasp the changing trend of the raw material market. d. In response to the impact of Covid-19, plan and promote online bidding (inquiry and price negotiation) and the modularization of the procurement system. (2) Risk of overseas factory expansion Due to the changes in the international situation such as the China-United States trade war, the demand for international strategic planning of customers, as well as the fact that multinational factory operations can strengthen the company's flexible and efficient management model and build the advantage of continuous and uninterrupted operations, the demand for overseas expansion of operating bases is increasing However, factors such as geopolitics and infectious diseases may affect the smoothness 80 Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation of the supply chain, thereby affecting the company's ability to flexibly produce and respond flexibly. In response to this risk, the company intends to take the following measures: a. Prudent investment evaluation and analysis, drawing on other past business failure cases and taking into account national policies and research reports of professional institutions (for example, geopolitical risk index) b. Introduce local professionals and establish a management team with international vision and risk awareness c. Build an "agglomeration economy" with strategic partners, increase productivity, reduce production costs and expenses through resource sharing, increase the degree of localization of the supply chain, and coordinate with existing suppliers to set up cargo distribution centers around the new factory. (3) Human Resource Risk Due to the Company's international strategic planning and cross-industry diversification, the demand for international talent continues to increase. However, due to the increasing competition in the industries to which the Company belongs, the impact of child rearing, the emergence of technology and the change of regulations and standards, the supply and demand of talents in the market are imbalanced, which makes it difficult to recruit talents for strategic planning, professional skills and management, and there is a risk of a talent gap or technology succession in the medium to long term. The following measures will be taken: a. Complete layout of the succession echelon of strategic management professionals b. Excavation and cultivation of high-potential talents. c. Continuous implementation of bilingual ability and international vision development education. 3. Environmental issues. (1) Has the Company established an appropriate environmental management system according Yes Compal has established environmental sustainability policies, and each plant has its own responsible personnel. Each month, they collect and transfer relevant laws and regulations on environment, safety and health to relevant personnel, and designate personnel to review the No deviations were found 81 Assessment criteria to its industrial characteristics? Actual governance Deviation and causes of deviation Yes No Summary description operations and methods related to laws, and to amend the operations and methods that do not conform to the regulations. If there is a major change in laws and regulations, it is necessary to change the Company's relevant policies, objectives and targets, and amendments should be proposed at any time. (2) Is the Company committed to improving the efficiency of resource utilization and using recycled materials with a low impact on the environment? Yes In order to grasp the possible operational challenges faced by Compal in terms of environment, we are gradually building, managing and implementing the environmental management system, Taiwan, China and Vietnam factories have adopted ISO 14001, ISO14064-1, and ISO 45001, conduct internal audits every year, and obtain third-party verification to ensure the effective operation of the management system, effectively tracking and controlling various environmental performance, actively practicing waste reduction, promoting zero landfill of regulation update waste, providing various complaint pipelines, and continuously and stably providing products and services recognized by stakeholders. All production processes and products of Compal shall comply with the requirements of environmental protection laws and regulations. We shall continue to improve and effectively manage our operation. In 2023, no violation of the environmental laws or regulations has occurred. Throughout the "product lifecycle," we consider the environmental impacts of raw material procurement, manufacturing, transportation and distribution, consumer use and disposal, etc., at the beginning of product design. In addition to focusing on user needs, functionality and added value, the R&D team is more focused on product development and design from the perspective of “environmental load minimization” at each stage, covering at least the three core directions of “green materials," “energy efficiency," and “ease of dis-assembly/recycling." Improve production line yield and energy efficiency, develop and use recycled materials stably, design energy-saving products to reduce energy consumption during reuse, and increase the recoverable proportion of waste entering the waste phase. In 2023, recycled materials will be fully introduced into commercial laptops, and the weight ratio of recycled materials for each model must be more than 5%. A total of 36 laptop projects meet the 82 No deviations were found Assessment criteria Yes No requirements. Actual governance Summary description Deviation and causes of deviation (3) Does the Company assess the Yes risks and opportunities of climate change for the enterprise now and in the future and take measures to deal with climate- related issues? In 2023, the electricity intensity was 350 kWh per million in revenue, which represents a decrease of 3 kWh per million in revenue compared to 2022, but the target of reducing electricity intensity by 1% was not achieved. Setting 100% RE by 2050, the long-term goal of using renewable energy is to continue to promote and maintain solar power generation systems, to purchase renewable energy and to invest in renewable energy funds. PCP, KS3, CDT, CD, CQA, and CQ passed the ISO 50001 energy management system certification, and continuously optimized the "Energy and Environmental Monitoring" platform, which can instantly understand the energy consumption of plants, Calculate the daily energy usage budget according to the production capacity, and provide employees with energy-saving reminders at any time. Extreme weather conditions caused by global warming and climate change have had significant impacts on the world and Taiwan and pose unprecedented challenges to mankind. Apart from mitigation, we must also begin adaptation operations since climate change is inevitable. Adaptation applies not only to individuals, but to corporations as well, for it is important for companies to minimize business risks caused by extreme weather, which will require extensive and thorough risk assessments in order to turn risks into opportunities. Continue to follow the TCFD framework to identify risks and opportunities, incorporate strategic planning and risk management mechanisms, further identify financial shocks, and plan the use of capital. According to the results of identification, evaluation and sorting of risks and opportunities, the operating decision-making committee will select three risks and three opportunities for calculating financial risks, which are: Risk 1. Importing alternative recycled raw materials, increasing the cost of R&D technology transformation. Action 1. In the design stage, Compal considers waste reduction and resource reuse, introduces environmentally friendly materials and low-polluting alternative materials, and introduces many regulation update design patterns that can reduce the use of natural resources and 83 No deviations were found Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation increase recycling. Actively develop and introduce recycled plastics and biodegradable plastics in electronic products to meet international trends and meet customer expectations. Risk 2. In response to external requirements, the increase in the use of renewable energy will increase operating costs. Action 2. The global awareness of environmental protection is gradually on the rise. Green production is the most important part of maintaining environmental resources and industrial competitiveness. Compal continues to abide by its excellent green production methods, and improves the operation mode of power saving, water saving and waste reduction. In 2023, procurement included 7,709.8 MWh of photovoltaic power, 75,451.2 MWh of hydroelectric power, and 75,243 green energy certificates. Risk 3. Improve the energy efficiency standards of various assets and increase operating costs. Action 3. The "Energy and Environment Monitoring" platform has been completed, which can immediately understand the energy consumption of the plants, calculate the daily energy usage budget according to the production capacity, and provide energy saving tips to employees at any time; create new means to improve energy efficiency, and choose energy- saving products when energy-consuming equipment needs to be replaced. We have actively introduced external counseling units, and a total of 6 plants have passed the ISO 50001 energy management system certification and are on par with the EP100 target. Opportunity 1. Actively take sustainability as a way to continuously gain customers' favor. Action 1. In recent years, climate actions such as carbon reduction have been raging like a storm around the world, and internationally renowned large companies have issued relevant carbon reduction commitments. Being confronted by the environmental impacts brought about by those climate changes, Compal has also actively invested itself into green product design, plant energy-saving management, and coping measures to extreme 84 Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation climate by promoting lean production, controlling energy use, reducing useless waste in the production process, and creating higher economic benefits as well as environmental protection Opportunity 2. Assist suppliers in low-carbon transformation and reduce procurement costs affected by climate change. Action 2. Compal uses the ISO 14001 environmental management system to evaluate the environmental policies and implementation of suppliers in the new supplier selection criteria, and adds a green management evaluation form for new supplier management and selection. To accelerate supply chain participation in achieving net zero carbon emissions, we invite 34 key suppliers to join the Compal ONE+N Electronics Industry Supply Chain Net Zero Acceleration Program. We aim to collectively achieve a substantial reduction of 10,000 tons of carbon emissions over two years to enhance the industry's low-carbon competitiveness. External energy-saving and carbon reduction experts will be combined to establish a Compal industrial low-carbon coaching team. Actively assist manufacturers in formulating carbon reduction plans and provide carbon footprint monitoring guidance, encourage manufacturers to invest in the introduction of high-efficiency technologies and processes, and implement system performance optimization to reduce energy consumption and carbon emissions. Opportunity 3. Introduce smart manufacturing processes to improve production and distribution efficiency, thereby reducing operating cost Action 3. Although Compal Electronics is not a high-energy consuming industry, it is also actively working to improve the energy efficiency of its production lines. In addition to promoting the automation of production lines, it has also eliminated all difficulties in building its equipment networking system to connect different equipment usage conditions at various stages, which is convenient for remote monitoring and management. 85 Yes (4) Does the Company prepare statistics of greenhouse gas emissions, water consumption, and the total weight of waste in the past two years and formulate policies for energy conservation and carbon reduction, greenhouse gas reduction, water consumption reduction, or other waste management? No deviations were Since 2009, Compal has been continuously conducting greenhouse gas inventories, setting Scope 1 and Scope 2 emissions based on the year 2019, for the base year inventory. Stage-wise short and medium-term reduction targets are established, aiming to reduce carbon emissions by 4.2% annually compared to the previous year. By 2030, achieving a 50% reduction in carbon emissions is an intermediate goal, gradually working towards the ultimate goal of achieving RE100 and net zero emissions by 2050. Scope 3 emissions are set based on the year 2021, aiming to achieve a 25% reduction target by 2030. Actively participating in international initiatives, signing the Science Based Targets initiative (SBTi), and submitting carbon reduction targets in October 2023. Additionally, it is responding to the RE100 initiative by committing to using 63% renewable energy by 2030 and 100% renewable energy by 2050 through energy conservation and procurement of renewable energy. Waste reduction efforts involve promoting the management practices of UL 2799 Waste Zero Landfill from the source, communicating with suppliers to use reusable and recyclable raw materials and packaging materials to reduce waste generation. Achieving a 50% reduction target in waste generation by 2025 (base year 2019). Although Compal does not have high water consumption in its manufacturing processes and is not a water-intensive industry, it also pays attention to watershed resources and strives to achieve water-saving effects. Scope 1 and 2 greenhouse gas emissions have decreased by 28.0% compared to the previous year and by 57.8% compared to the base year, achieving the interim reduction target. GHG emission, the total water consumption, and various types of waste generated in the past two years are as follows: Items Scope 1 greenhouse gas emissions (Ton CO2e) Scope 2 (Market-based) greenhouse gas emissions (Ton CO2e) Scope 1+2 greenhouse gas emissions Total water consumption Total general waste (Tons) Total hazardous industrial waste (Tons) 86 2022 20,437.044 156,320.187 176,757.231 2,499,769.00 8,321.5 1,002.2 Unit: Tons 2023 19,142.734 107,349.886 (Note 2) 127,212.730 2,068,110 6,275 1,422 Assessment criteria Actual governance Yes No Summary description 4. Social issues (1) Has the Company formulated Yes management policies and specific management plans regarding social issues in accordance with relevant laws and regulations and International Human Rights Conventions? Yes (2) Has the Company established and implemented reasonable employee welfare measures (including compensation, vacation, and other benefits) and properly reflected the operating performance or the results of employee compensation? Note: 1. Relevant figures are currently under continuous verification. For detailed explanations and verified data, please refer to the Sustainability Report. 2. In this context, only Scope 2 emissions are disclosed based on market standards. For complete disclosure, please refer to the Sustainability report. The company is committed to creating a respectful and dignified working environment, which is considered one of its core values. We strictly adhere to the labor-related laws and regulations of the operating location, and follow the "International Bill of Human Rights," "United Nations Guiding Principles on Business and Human Rights," "International Labour Organization Declaration of Fundamental Principles and Rights at Work," "Organization for Economic Co-operation and Development Guidelines for Multinational Enterprises," and "The United Nations’ Ten Principles of United Nations Global Compact” (UNGC)," and take actions consistent with the Responsible Business Alliance Code of Conduct (RBA) Code of Conduct. We treat all personnel with dignity and respect, and have established a human rights policy and implemented management practices. In order to identify, assess, and mitigate the impact of human rights on the company and its supply chain, we have established a comprehensive human rights due diligence process, assessed risk issues, developed mitigation measures, and completed investigation reports. Investigations are conducted at least every three years, with the last investigation conducted in 2022. Human rights policy and labor-related training courses have been included as mandatory courses for all employees. Employee Benefits The Company allocates 0.05% of its turnover to welfare funds every year, and has employee welfare committees to handle various welfare matters, including marriage, funeral, and childbirth allowance, social activities allowance, employee health and travel allowance, festival gift certificates, birthday gift certificates, cultural and leisure allowance and other welfare matters. Employee compensation Pursuant to the Articles of Association, when the Company makes a profit in a year, no more than 2% of the Company’s pre-tax profits (not including remuneration for employees and Directors) shall be appropriated to employees. The aforementioned bonus, adjustment in wages, and employee compensations are reviewed by the Remuneration Committee and resolved by the Board of Directors. The Company's remuneration policy is based on personal ability, contribution 87 Deviation and causes of deviation No deviations were found No deviations were found Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation to the Company, performance, and is considered to be a correlation between operating performance of the Company and personal job performance. In addition, the Company aims to create a diverse and equal working environment. In 2023, 38.56% of worldwide Compal employees are women, and 29.63% of female supervisors. The Company is committed to cultivating local talent in overseas factories. In 2023, the proportion of local supervisors in China and Brazil was 93.58% and 93.75%. (3) Does the Company provide Yes employees with a safe and healthy work environment? Are employees trained regularly on safety and health issues? The Company is well aware of how significantly “workplace safety and health” affect a company, its employees, and stakeholders. This was the reason why the Company enhanced its environmental, safety, and quality policies and obtained ISO 14001 and ISO 45001 certification, which requires all departments to implement proper safety and health practices, as well as regular training on matters such as fire safety equipment, utility plans, working environment monitoring, waste disposal, emergency response procedures, etc. No deviations were found The Company organizes health and safety training for employees on a regular basis as a means to prevent occupational accidents and ensure workplace safety. In addition, we analyze the causes of occupational accidents and provide suggestions and measures to improve the situation. In 2023, 1,947 employees had completed their training for a total of 5,211 hours, and the number of occupational accidents among employees was 179, involving 179 employees (accounting for 0.39% of the total number of employees). The primary category of occupational injuries was commuting accidents, prompting an enhanced promotion of employee awareness regarding traffic safety. In 2023, there were no fire incidents at any factory site, and fire drills were conducted every six months as required to strengthen employees' emergency response capabilities. Related Verification Scenarios All major sites implement ISO 45001 OH&SMS and commit to maintaining sustainable operations 88 Assessment criteria Actual governance Yes No Summary description for employees’ working environment. Deviation and causes of deviation (4) Has the Company established an effective career development training program for its employees? Yes Annual training programs are tailored to suit the needs of different employees, based on the Company’s business strategies, policy guidelines, and career roadmaps, including newcomer training, core competencies, managerial competencies, and common competencies courses. The Company constantly aims to establish itself as a learning organization and coaching management. No deviation was found (5) Does the Company follow Yes relevant laws and regulations and international standards for customer health and safety, customer privacy, marketing and labeling of products and services and formulate relevant policies and grievance procedures to protect the rights and interests of consumers or customers? In 2023, a total of 721 training sessions (both internal and external) were organized; these courses delivered 208,483 hours of training and 115,751 persons enrolled. The Company is an OEM/ODM. It manufactures TV sets, notebooks, cell phones and electronics for the world’s top brands. All products are printed with customers’ trademarks, names, and labeling that conform to relevant laws and international guidelines. However, the Company does not print its own logos or names on the products it produces. Until customers have officially launched their products, employees are not allowed to disclose product appearance, design, specifications, or technical information in any way. We offer a complaint channel for stakeholders on Compal's official website. Compal is committed to protecting customers' information at every step along the way and is operated based on the policy and plans of Compal’s “Information Security Committee.” Compal aims for customers’ health and safety. Maintaining customer health and safety is the most basic and important issue. All products produced by Compal have passed the IEC 60950-1 certification standard, gradually convert the version to IEC 62368-1, and have never violated product safety and health regulations and voluntary regulations and the development of Halogen- free products and construction of a more robust production capacity are our promise and responsibility. No deviations were found 89 Yes No Yes Assessment criteria (6) Does the Company have a supplier management policy that requires suppliers to follow relevant specifications and implement them in environmental protection, occupational safety and health, or labor human rights issues? Deviation and causes of deviation No deviations were found Actual governance Summary description As one of the key members of global computers and peripheral equipment industry and RBA member, Compal values sustainable supply chain management significantly and ensures to provide products and services complying with the requirements of ethics, environment and human rights to customers. We have incorporated international sustainability standard to improve the sustainable supply chain management efficiency. With regard to the procurement operation, new suppliers are requested to sign the “Compal Purchase Agreement” before engagement in cooperation and transactions. According to different product types, we also request suppliers to comply with relevant international quality and environmental regulations, and the E, S, G performance is also considered during the supplier selection process. Suppliers are also required to have implemented international quality and environmental standards such as ISO 9001, ISO 14001, ISO 13485, ISO 17025, IATF 16949 and so on, depending on the product category. We require suppliers to accept their social responsibility and sign the “Letter of Commitment to the RBA Code of Conduct” covering the five RBA dimensions of Labor, Health and Safety, Environment, Ethics, and Management. To keep up with international ESG standards, we have made adjustments and amendments to the “Compal Supplier Code of Contract” to set higher standards for suppliers based on the RBA Code of Conduct. At the same time, suppliers must also sign the “Prohibition Non-support/Non-use of “Conflict Minerals” Statement” to help suppliers understand and commit to the importance of the ban on conflict minerals. Compal Supplier Code of Conduct: http://www.compal.com/CRS/Upload/ArticleImages/2023/ 07/19/2023071915520317.pdf In terms of sustainability risk management, Compal conducts sustainability assessment on suppliers annually. The assessment is conducted via the “Supplier ESG Risk Assessment Questionnaire” and the assessment result is able to indicate supplier’s sustainability risk. Subsequently, suppliers of high sustainability risk are further audited according to the RBA VAP standard. In 2023, a total of 18 suppliers were sampled and audited, and suppliers of poor performance were required to complete improvement within a time-limit. Annual supplier self-assessments and audits are used to realize 90 Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation the goals of promoting social responsibility and improving sustainability performance together. In 2023, Compal organized the “Common Good Academy” and its purpose was to enhance the cooperative partnership between Compal and suppliers through information and knowledge sharing. Compal’s “Common Good Academy” has shared a series of online courses related to environmental sustainability, social responsibility, corporate governance (ESG) and green energy and manufacturing technologies, etc. Through the courses and sharing of the Common Good Academy, Compal’s sustainability goal and actions for carbon reduction and net zero emissions are conveyed. In addition, we also expect to provide greater professional knowledge and competence to suppliers at the same time, in order to enhance and improve the overall sustainability action and competitiveness. In the future, we will continue to plan and expand courses of the “Common Good Academy”, to enhance the communication and cooperation with suppliers, and to expand the participation scope of suppliers and stakeholders, in order to facilitate the experience learning and sharing with each other, thereby achieving the goal of economic and sustainable development jointly. As international sustainability topics continue to pick up pace, we invited suppliers to follow our lead and the Compal philosophy in taking an interest in social topics such as the environment, labor, health and safety. We are continuing to improve supply chain resilience through the abovementioned actions. Yes 5. Does the Company prepare the Corporate Sustainability and Social Responsibility Report and other reports that disclose the Company's non-financial information in accordance with the international reporting standards or guidelines? Is the aforesaid report confirmed or guaranteed by a third-party verification organization? The Company has published annual CSR reports (The name was changed to Sustainability Report in 2022) for its stakeholders on its website since 2010. The Sustainability report was first certified by an external institution in 2012. The Company adopted the Global Reporting Initiative’s most updated guidelines (GRI Standards, published in 2018) to prepare its Sustainability report. The report was compiled based on issues concerning stakeholders and the Company’s key objectives. In 2021, we added Sustainability Accounting Standards Board (SASB) standards to disclose relevant information. To ensure the credibility of reported contents, the Company commissioned SGS to provide independent assurance based on the criteria specified in AA 1000, GRI Standards and SASB Standards. After their assurance, the report was certified as meeting AA 1000 Standard Type 2, mid-level accountability and the GRI Standards Core Requirements. No deviations were found 91 Assessment criteria Actual governance Yes No Summary description Deviation and causes of deviation The Company was awarded Awards by the Taiwan Institute for Sustainable Energy for its “Taiwan Corporate Sustainability Report Award” for many years. In 2023, we received the Platinum Award of this award and the Taiwan Top 100 Sustainable Model Enterprises Award. 92 ▓ Climate-Related Information of TWSE/TPEx Listed Company Item 1. Describe the board of directors' and management's oversight and governance of climate- related risks and opportunities. Implementation Status In 2022, the Sustainability Committee was established to make decisions and supervise sustainable development initiatives. Led by the General Manager and appointed by the Board of Directors, the committee members were elected among themselves to appoint a Chairperson. The committee is tasked with implementing corporate social responsibility, establishing good governance systems, and aligning with international trends to advance towards sustainable business goals. 2. Describe how the identified climate risks and opportunities affect the business, strategy, and finances of the business (short, medium, and long term). Simultaneously, the ESG Office was established, led by the Chief Sustainability Officer, with two Deputy Chief Sustainability Officers assisting. This office comprises ten functional groups, each setting strategic objectives, overseeing implementation, and reporting on effectiveness. Under the Sustainability Committee, a Responsible Manufacturing Functional Group was established to spearhead green environmental initiatives, climate change mitigation and adaptation efforts within the factory premises. It evaluates relevant risks and opportunities and regularly reports progress and achievements in green initiatives to the sustainability committee. Type Transition risks Transition risks Transition risks Transition risks Transition risks Transition risks Transition risks Transition risks Transition risks Physical risks Physical risks Physical risks Physical risks Physical risks Physical risks Risk Topics Failure to take initiative on sustainable action may cause the loss of customers. Failure to take initiative on sustainable action may cause the loss of investors. The increased use of renewable energy required by the society boosted operating costs. Operating costs increased from meeting assets with the latest energy efficiency standards. Operating costs increased from emerging technology inclusion in smart processes. Technology development costs continue to climb due to renewed product standards. Declined customer orders due to passive response to new standard requirements. Enhancing GHG emissions reporting obligations Failure to invest in the introduction of emerging technologies. Service interruption due to high frequency and severity of heavy rain and flood. Costs increased or Company operations are affected as a result of supply shortage due to suppliers under the influence of climate change. Detriment to assets caused by low-lying land submerged as a result of sea level rise. Operating costs increased from raised temperature, which caused equipment to consume more energy. Time Short-term Short-term Short-term Mid-term Mid-term Short-term Short-term Short-term Mid-term Mid-term Mid-term Long-term Short-term Business pressure and impact from water scarcity. Long-term Company operations are affected as a result of supply shortage due to water scarcity. Mid-term 93 Item Implementation Status Opportunity Topis Inclusion of smart manufacturing process to make productivity and distribution more efficient, and operating costs lower. Low carbon products and services to win higher market share. Recycled aluminum and plastics sourced products in support of emission reduction and material reuse. Remain customers' favorite with ongoing sustainable actions. Remain investors' favorite with ongoing sustainable actions. Assist suppliers in their low carbon transition to reduce purchase costs affected by climate change. Gain more orders with an effective contingency plan that navigates operations back to normal in a shorter time than others when disasters occur. Time Short-term Short-term Mid-term Short-term Short-term Mid-term Short-term Participating program in the use of renewable energy. Short-term Obtaining incentives from the Public Sector and collaborating with stakeholders. Improve energy efficiency in factories Short-term Short-term 3. Describe the financial impact of extreme weather events and transformative actions. Risk event Introduce alternative recycled raw materials and increase the cost of R&D technology transformation. In response to external requirements, the increase in renewable energy consumption has increased operating costs. Improve the energy efficiency standards of various assets and increase operating costs. Scope of impact Increased indirect operating costs Increased indirect operating costs Increased indirect operating costs Opportunity event Scope of impact Take proactive and sustainable actions to continue to gain customer favor. Assist suppliers to carry out low-carbon transformation and reduce procurement costs affected by changes in climate factors. Introduce smart manufacturing processes to improve production and distribution efficiency, thereby reducing operating costs. Revenue increase Improve business resilience Reduced operating costs 94 Item 4. Describe how climate risk identification, assessment, and management processes are integrated into the overall risk management system. 5. 6. 7. 8. If scenario analysis is used to assess resilience to climate change risks, the scenarios, parameters, assumptions, analysis factors and major financial impacts used should be described. If there is a transition plan for managing climate- related risks, describe the content of the plan, and the indicators and targets used to identify and manage physical risks and transition risks. If internal carbon pricing is used as a planning tool, the basis for setting the price should be stated. If climate-related targets have been set, the activities covered, the scope of greenhouse gas emissions, the planning horizon, and the progress achieved each year should be specified. If carbon credits or renewable energy certificates (RECs) are used to achieve relevant targets, the source and quantity of carbon credits or RECs to be offset should be specified. 9. Greenhouse gas inventory and assurance status and reduction targets, strategy, and concrete action plan (separately fill out points 1- 1 and 1-2 below). Implementation Status Using the TCFD framework, we systematically analyze policies and regulations, technology, market dynamics, corporate reputation, and acute and chronic climate risks. We evaluate the impacts of these risks and opportunities on the company, multiplying the values of "likelihood of occurrence" and "impact severity" to prioritize them. Significant climate risks/opportunities are confirmed by the board of directors. Following the TCFD framework, we analyze the risks and opportunities that the company faces under different climate scenarios, using scenarios such as the Sustainable Development Scenario (SDS) and Stated Policies Scenario (STEPS) discussed by the International Energy Agency (IEA), as well as the Shared Socioeconomic Pathways (SSP1-2.6 and SSP2-4.5) proposed by the Intergovernmental Panel on Climate Change (IPCC). To effectively reduce greenhouse gas emissions from "purchased goods and services" and "product usage," we are implementing the "Compal ONE+N Electronic Industry Supply Chain Net Zero Acceleration Plan." We have invited 34 key suppliers to join this initiative. Additionally, we are starting to calculate the carbon emissions generated throughout the product lifecycle. We are organizing educational training sessions for both suppliers and internal company staff to encourage investment in the adoption of high-efficiency technologies and processes. This will ensure system optimization to reduce energy consumption and carbon emissions. Our short-term goal is to achieve a substantial reduction of 10,000 tons of carbon emissions by the years 2023 and 2024, with gradual implementation towards achieving net zero emissions. No internal carbon pricing yet. Compal submitted its Science Based Targets (SBT) in October 2023, setting boundaries that include both the Compal Group and its consolidated subsidiaries. The goal is to achieve net zero Scope 1 and 2 emissions by 2050, with an annual reduction of 4.2% compared to the previous year. Building upon energy-saving initiatives, there is a proactive acceleration in the proportion of renewable energy usage, installation of photovoltaic power generation systems in factories, purchasing directly from renewable energy suppliers, investing in green energy funds, and obtaining renewable energy certificates. In 2023, Compal obtained 75,243 renewable energy certificates. including the Since 2009, Compal has complied with ISO 14064 standards to complete GHG inventories for Scope 1 and Scope 2 emissions, obtaining certification through third-party verification. In 2023, the inventory work has been completed, with plans to obtain certification by June 2024. 95 1-1 Greenhouse Gas Inventory and Assurance Status for the Most Recent 2 Fiscal Years 1-1-1 Greenhouse Gas Inventory Information Item Greenhouse Gas Inventory InformationDescribe the emission volume (metric tons CO2e), intensity (metric tons CO2e/NT$ million), and data coverage of greenhouse gases in the most recent 2 fiscal years. Implementation Status The greenhouse gas inventory data covers emissions from the entire Compal Group, including its consolidated subsidiaries. The 2023 verification boundary at the time of publication of the annual report includes Compal and its own factories in Taiwan, China, and Vietnam, and it will be gradually updated. Items Scope 1 (tons CO2e) Scope 2 (market-based) (tons CO2e) Total Emissions (tons CO2e) Emission Intensity (tons CO2e per million TWD) 2022 20,437.044 156,320.187 176,757.231 2023 19,142.734 107,349.886 127,212.730 0.165 0.134 1-1-2 Greenhouse Gas Assurance Information Item Describe the status of assurance for the most recent 2 fiscal years as of the printing date of the annual report, including the scope of assurance, assurance institutions, assurance standards, and assurance opinion. Implementation Status Since 2009, Compal has been consistently conducting greenhouse gas inventories and has obtained verification statements through third-party audits. The verification status for the years 2022 and 2023 is as follows: ˙Verification Scope: Taiwan headquarters, research and development center, and production bases in Taiwan, mainland China, and Vietnam. ˙Verification Agency: SGS Taiwan Inspection Technology Co., Ltd. Verification ˙Opinion: A verification statement was obtained for the year 2022. The inventory results for the year 2023 are expected to be verified, and the verification statement is anticipated to be obtained in June 2024. The complete verification status will be disclosed in the Sustainability Report. 1-2 Greenhouse Gas Reduction Targets, Strategy, and Concrete Action Plan Item Specify the greenhouse gas reduction base year and its data, the reduction targets, strategy and concrete action plan, and the status of achievement of the reduction targets. Implementation Status ■Greenhouse Gas Reduction Targets • Scope 1 and Scope 2 baseline year is 2019. Short-term: Reduce carbon emissions by 4.2% compared to the previous year. Mid-term: Achieve a 50% reduction in carbon emissions by 2030. Long-term: Achieve net zero emissions by 2050. • Scope 3 baseline year is 2021. Mid-term: Achieve a 25% reduction in carbon emissions by 2030. ■Achievement of reduction goals Greenhouse gas emissions from Scope 1 and Scope 2 decreased by 28.0% compared to the previous year and by 57.8% compared to the baseline year, achieving interim reduction targets. ■Greenhouse gas emissions base year Scope 1 + 2 data in 2019 96 Boundary includes consolidated subsidiary reports 2019 Scope 1 Scope 2 - market-based Emissions (tCO2e) 19,361.27 349,671.86 Scope 3 data in 2021 2021 Category 1: Purchased goods and services Category 2: Capital goods Category 3: Fuel- and Energy-Related Category 4: Upstream transport Category 5: Waste Category 6: Business travel Category 7: Employee commuting Category 8: Upstream leased assets Category 9: Downstream transport Category 10: Processing of sold products Category 11: Use of sold products Category 11a: Use of sold products, excluding sale of fossil fuels Category 11b: Sale of fossil fuels Category 12: End-of-life treatment of sold products Category 13: Downstream leased assets Category 14: Franchises Category 15: Investments Emissions (tCO2e) 28,088,201.07 202,402.55 49,734.85 29,107.44 14,008.31 3,116.87 20,400.00 - 69,565.12 - 15,667,620.00 15,667,620.00 - 142,166.32 - - 17,797.07 ■Greenhouse Gas Reduction Strategy To achieve the vision of carbon neutrality, Compal is implementing low-carbon manufacturing, promoting low-carbon product design, and strengthening the management processes of sustainable supply chains. Additionally, Compal refers to key ESG performance indicators to construct corporate carbon management systems. ■Actions and Activities: 1. Promote Low-Carbon Manufacturing: ‧ Implement energy-saving measures in our facilities. ‧ Utilize renewable energy sources and purchase certificates. ‧ Join the RE100 initiative. 2. Promote Low-Carbon Product Design: ‧ Increase the number of products that meet voluntary eco- label (Ecolabel) requirements and EnergyStar standards. 3. Enhance Sustainable Supply Chain Management Processes: ‧ Implement the 1+N Electronic Supply Chain Net Zero Acceleration Plan to drive substantial carbon reduction among suppliers. ‧ Invite suppliers to participate in the CDP Supply Chain Disclosure initiative by 2024. 97 ▓ Composition, Responsibilities, and Operations of the Sustainability Committee To fulfill the company's commitment to sustainable development and improve the company's overall capacity in ESG risk management, Compal Electronics established a Sustainability Committee (the "Committee") with the approval of the board of directors in March 2022. Composed of three members appointed by the board of directors, more than half (two) of the members of the Committee are independent directors, and the Convenor Chairman Chung-Pin Wong is elected by all Committee members as the chairperson. Holding at least one meeting a year, the Committee is responsible for taking point in explaining company policies and positions externally, defining goals and directions internally, integrating resources, reviewing action plans, monitoring execution progress, and reporting results to the board of directors. Based on the four major aspects of Economy, environment, society, and governance ("EESG"), the Committee is composed of eight task forces, including "Innovation", "Customer Relationship", "Supply Chain", "Environment", "Responsible manufacturing", "Human Resources", "Social Participation", "corporate governance", "information security", and "risk management". Composed of the heads of departments from business sectors across different regions, task forces are responsible for stipulating the operating guidelines, development tools, and workflow of each project, making annual plans through regular meetings, checking operational directions and execution progress, and reporting results to the Committee. Committed to promoting sustainable development strategies, Compal Electronics will continue to contribute to environmental protection and the transition to a low carbon economy. 1. Professional Qualifications and Experience of Sustainability Committee Members Identity Name Director Chung-Pin Wong Independent Director Duei Tsai Independent Director Wen-Chung Shen Professional Qualifications and Experience Master of Management Science, National Chiao Tung University Chairman of Compal Broadband Networks, Inc. and Poindus Systems Corp., and President of Compal The individual has rich knowledge and adequate experience in the computer industry, business operations, performance evaluation, and risk management, which is extremely helpful to the company's development. The Director possesses more than 30 years of work experience required for the business of the Company and of corporate governance. PhD, Graduate Institute of Electrical Engineering, National Taiwan University Independent Director of Taiwan High Speed Rail Corporation, TTY Biopharm Company Ltd. and Independent Director for Public Welfare of Starlux Airlines Co., Ltd. Part-time professor-level professional and technical personnel in the Department of Electrical Engineering, National Taipei University of Technology and the Department of Digital Multimedia Design, Kainan University; Adjunct professor at the Department of Electronics, National Taiwan University of Science and Technology and the Department of Electronics, Yuanzhi University. Government positions such as Minister of Transportation and Director of the Civil Aviation Bureau of the Ministry of Transportation. The individual has professional capability in the communications network field, and rich knowledge as well as adequate experience in company management and information security protection, which will help the company strengthen relevant management measures. The Independent Director possesses more than 30 years of work experience required for the Company's business. Department of Electrical Engineering, National Taiwan University 98 Chairman of Her Tuo Co., Ltd., and Director and Executive Vice President of Compal The individual has rich knowledge and adequate experience in the electronics industry, business operations, and risk management, which is extremely helpful to the company's development. The Independent Director possesses more than 30 years of work experience required for the business of the Company and professional innovation capability in R&D. 2. Operations The term of the 1st committee is from March 15, 2022 to August 26, 2024. In 2023, the Sustainability Committee held two meetings (A) and the qualifications and attendance of Committee members are as follows: Title Name Attendance in Person(B) By Proxy Attendance Rate (%)[B/A] Remarks Convenor Chairman Committee member Committee member Wen-Chung Shen Chung-Pin Wong Duei Tsai 2 2 2 0 0 0 100 100 100 Topics of discussion in the Sustainability Committee's meeting: Meeting Date Topics of Discussion Resolution and Follow-up 1. To approve the Sustainability Report Material With the consent of all attending Topics of 2022 members present, it was passed without 3th Meeting (1st Term) 2023.3.15 2. To approve the targets and plans of Sustainability for the year 2023 1. The implementation result of Sustainability for the 2022. 4th Meeting (1st Term) 2023.5.08 2. To approve the amendment to the “Sustainable Development Best Practice Principles”. objection, all of which have been submitted to the Board of Directors for resolution. With the consent of all attending members present, it was passed without objection, all of which have been submitted to the Board of Directors for resolution. With the consent of all attending members present, it was passed without objection and reported to the Board of Directors. With the consent of all attending members present, it was passed without objection, all of which have been submitted to the Board of Directors for resolution. ▓ Board of Directors' Supervision of the Sustainability Committee In March 2022, the Board of Directors appointed three directors as members of the Sustainability Committee to manage sustainability issues, and the Sustainability Committee is required to report to the Board of Directors on a regular basis on the implementation of sustainability initiatives. In 2023, the Sustainability Committee held two meetings to report to the Board of Directors. The topics include (1) the sustainability report material topics of 2022, (2) the targets and plans of sustainability for the year 2023, (3) the implementation result of sustainability for the 2022, and (4) the amendment to the “Sustainable Development Best Practice Principles”. The Board of Directors must evaluate the success of the strategies proposed by the Sustainability Committee, review their progress from time to time, and urge the Sustainability Committee to make adjustments as needed. 99 ▓ The implementation results of 2023 Sustainable Development Item Results Environmental Sustainability Responsible Manufacture 1. Based on SBT (Science Based Targets): ‧ ‧ Finalize carbon emission for 2021 and identify significant emission sources as Scope 3 ˙Scope 1 and Scope 2 baseline year is 2019 and scope 3 baseline year is 2021. Cat. 1 & 11 and provide SBTi submission form. 2. In 2023, greenhouse gas emissions in Scope 1 and 2 decreased by 28% compared to the previous year. (Note) 3. Greenhouse gas inventory of Compal and consolidated subsidiaries (Scope 1 and 2) counted as 319K tCO2e for 2021. Note: For detailed explanations and verified data, please refer to the Sustainability Report. ‧ The short-term goal is to reduce electricity, water and waste intensity by 1% per year. Items 2022 2023 Reduction percentage Electricity intensity (KWh/million revenue) Water intensity (Tons/million revenue) Waste intensity (kg/million revenue) Note: Scope includes operating bases in Taiwan, China, Vietnam, and Brazil. 2.3 8.7 2.2 6.1 350.3 353.0 0.77% 6.21% 29.59% 1. Increase the number of products that comply with the voluntary Ecolabel requirements. Achievement rate: 69%. 2. All 30 commercial products meet over 5% recycled material usage. 3. Increase project USB PD (Power Delivery) adoption. Achievement rate: 79%. 4. The energy efficiency of all products is better than the latest requirement of Energy Star 8.0. Innovation 5. Increase introduction of Carton FSC (Forest Stewardship Council) by 36.9%. 6. 100% compliance on worldwide and customer-specified environmental /EMC(Electromagnetic Compatibility)/RF(Radio frequency)/safety regulations. Human Resources Social Participation 7. Reduce use of auxiliary materials. Achievement rate: 5.8%. 8. Increase proportion of packaging with reduced plastics by 16.7%. 9. Patent application with ESG-related patents. Achievement rate: 12%. Total 142 patents and 17 are related to ESG concept. 1. Global turnover rate of IDL (Indirect Labor) employees 10.25 %. 2. Taiwanese IDL (Indirect Labor) key talent: 8.12%. 3. The penalty exceeded NTD 1 million in any sites of Compal: 0. 4. Global occupational incident rate was 0.39%. 5. Health promotion management achievement rate in Taiwan is 95.4%. 1. In 2023, 2,714 employees participated in various public welfare activities of the COMPAL and HCI Foundation, and donations exceeded NT$ 6.2 million, with a total social welfare investment of more than NTD$ 20 million. 2. Compal received the "Social Education Contribution Award/Group Award" from the Ministry of Education, the "Social Service Award" from the Library Association of the Republic of China, and the "Social Service Award" from the Kaohsiung Board of Education. In the fourth year, we cooperated with Kaohsiung City Library. In 2023, the first "Compal Happy Reading" area was set up in the Maitou Branch Library; Compal's "ESG bias" was recognized by the Kaohsiung Board of Education. Compal's "ESG Reading Program" served 16,960 people in Liugui, Jiacian, Tianliao, and Meituo communities. 100 Item Results 3. In order to support cultural development and the cultivation of local talents, Compal sponsored the second Matsu Art Island project. We also cooperated with the W3 Troupe for the public good. The "Flourishing Star Project" offered two performances to provide schoolchildren in remote areas with the opportunity to see physical theater performances. This is a fun and educational program that builds personal risk response skills in the face of climate change. 4. The third year of the "Mooncake Donation Project": 868 colleagues donated Mid-Autumn Mooncake sets to 3,448 disadvantaged students in New Taipei, Taoyuan, Taichung, Miaoli, Changhua, Pingtung, Hualien, Hsinchu, and Kaohsiung. We continue to cooperate with social enterprises and social welfare organizations to care for disadvantaged children. 5. Compal held the fourth "Healthy Charity" series activities. A total of 60 colleagues attended Compal’s 10K team for the Neihu Charity Running Activity. Purchasing products from social enterprises to encourage 87 employees to participate in health promotion activities and meeting the health standards. 6. Compal co-organized the third “Taipei Science and Technology Cup Love Earth Charity Road Run” in Taipei Neihu Technology Park. To advocate national sports, improve the physical and mental health of employees in Neihu Tech Park, take care of social vulnerable people and build a beautiful, good and healthy society. 7. Sponsored the "Kangaroo Project" from the Rural Center of Fu Jen University for the 5th year, for the after-school tutoring center and community teacher training program at New Taipei, Taoyuan, Taichung and Miaoli Schools. 8. Promoted SDGs4 (Sustainable Development Goals) Goal.4 Quality Education of UN, held in the "Compal Reading Volunteer Project" to promote reading education in rural villages for the 16th year, to serve 2,984 school children and residents. In 2023, a total of 235 smart wireless lamps were sent to children of disadvantaged families in New Taipei, Pingtung, Taoyuan and Kaohsiung areas so that their learning was not limited by the environment and they were able to study. 9. We regularly hold volunteer service activities. In 2023, we had 15 volunteer service activities with 315 participants. We also held blood donation activities. (330 employees donated 503 units of blood, a total of 125,750cc). 1. ESG Performance: Sustainalytics ESG risk, ISS ESG rating, and S&P ESG scores were improved YoY ; The 9th TWSE corporate governance evaluation kept at the 21~35% range. 2. Corporate Governance Enhancement: Corporate Governance (1) The board has passed the amendment of the “Corporate Governance Best-Practice Principles”, adding the policy for board diversification. (2) Appointed an external professional independent org. to conduct the board performance evaluation. 3. The major penalty event by government: 0. 4. The major violation event or anti-corruption by employees in any country: 0 Risk Management 1. Risk Management Committee has been established and started operation this year in accordance with statutory requirements. 2. Sharing at the Group's exchange meetings in risk management. 3. Enhanced Risk Management System: Increase Risk Appetite in System Risk Management Questionnaire for evaluation by each site. 4. Promoting Digital Management: Enhance electronic management and expand the usage of the two systems. 101 Item Results Customer Relationship Information Security Supply Chain Management 5. Enhancement of professional skills: Departmental staff have obtained 13 types of international licenses. Weekly professional exchange training. Customer satisfaction rating was 89.1% in 2023. 1. Information Security Committee holds management review meetings to ensure the continued applicability, appropriateness and effectiveness of ISMS (Information Security Management System) in 2023. 2. Privacy and Information security: Availability of critical systems: 99.91%. 1. Finalize the content of sustainable supply chain for the Compal website ; ESG-Go online (Total 3 course). 2. Defined key suppliers and provided support to complete 12 suppliers' on-site audits at the end of December. 3. Support suppliers to apply carbon reduction program: Invited suppliers to attend IDA (The Industrial Development Administration) net zero project and assist to execute 9 suppliers factory visit plan. 4. Investigate 838 suppliers’ smelter list at end of Nov. and complement conflict mineral management process. 5. All projects comply with latest regulations and customer specifications. 6. Increase the number of halogen-free parts and production process projects to 75%. 7. Increase the number of Full Material Disclosure (FMD) projects to 55%. 8. Increase the proportion of hazardous substance e-reports to 44%. Target to reach 60% goal, by adding digitalization of CTI (Centre Testing International Group Co., Ltd.) (2nd test lab.) 102 ▓ The targets and plans of 2024 Sustainable Development NO. 1 Targets Focus on responsible manufacturing and the innovative design of low carbon in green products to reach the goals of circular economy and net zero emissions. 2 Implementing DEI policy and workplace gender equality, strengthening talent development and retention to create a positive work environment and an employee-friendly workplace. Plans 1. Renewable electricity utilization 44%. 2. Scope 1+2 Carbon Emissions Reduction ratio 21% vs 2019 (base year). 3. Certified Items in Scope 3. 4. Become a member of RE100 (Renewable Energy) and make a commitment to use renewable energy. 5. Commit to net-zero by signing the SBTi (Science Based Targets initiative) Commitment Letter. 6. The IDA (Industrial Development Administration) ONE+N Net Zero Program. 7. Water-saving device & equipment. 8. Add ESS (Energy Storage System) energy storage project, continue applying digital energy management system and build a renewable energy system. 9. Waste classification, and increase resource recovery. 10. Recycling and reuse rate of plastic roll/packaging is increased by 15%. 11. Adoption of the product carbon footprint management system and going live in 2024/Q4. 12. Ready for PCF/EPD inventory and complete at least one environmental product declarations. *PCF = Product Carbon Footprint *EPD = Environmental Product Declaration 13. Product energy efficiency performance exceeds the energy consumption regulation or the previous generation by 15%. 14. Adopt recycled plastic material with a recycling rate >30% in green products. 15. 100% compliance with worldwide and customer-specified environmental/ EMC (Electromagnetic Compatibility)/RF(Radio frequency)/safety regulations. 16. More than 5% of all patent applications with ESG-related patents. 17. Develop low-carbon products or investment tax credit projects with more than 5 cases. 18. Cost reduction generated by the process innovation is increased by 50% compared to 2023. 19. Complete the substantial carbon emission reduction of 2,000 metric tons at the product level. 20. 100% compliance with hazardous substance regulations for products and customer specifications. 21. Increase the number of halogen-free parts and production process projects to 80%. 22. Increase the number of full material disclosure projects to 60%. 1. Retention rate of key positions: 90%. 2. The average training hours per manager is 16 hours. 3. By 2025, global proportion of female employees: 40%, female management: 32%. 4. Global employee satisfaction survey coverage rate reaches 60%. 5. By 2030, social investment amount will be increased by 10% compared to the year 2020. 103 NO. 3 Targets Continuously strengthening corporate governance quality and risk management. Enhance the sustainable supply chain to improve sustainability evaluation and performance in the long run. Plans 1. To improve company’s ESG rating and aim for the Top 20% ranking in the TWSE CG Evaluation. 2. The major penalty event by the government: 0 3. Violation against honest operation or anti-corruption by employees in any country: 0 4. Information Disclosure Implementation of the financial calculation of climate change. (1) Climate risk factors → Impact and impact on Compal → Quantitative analysis of financial impact. (2) Communicate with the factory and prepare to fill in the impact and financial impact that major risks may have on the factory. (3) Communicate with each function: relevant calculation formulas and data integration. 5. Strengthen the understanding and management of new types of risks and improve DJSI’s score in risk management assessment. Risks to consider in 2024: (1) Energy transition risks – Taiwan’s green energy is insufficient and it will be difficult to resolve difficulties in the short term. (2) Demographic changes lead to a low birth rate – talent recruitment and attracting talents may be problematic. 6. Customer satisfaction rating> 90% or top 2 in customer QBR (Quarterly Business Review). 7. Comply with the information security requirements of the government and Compal. Conduct information security management review meetings regularly. 8. Meet the expectations and requirements of internal customers. Continuously introduce incident identification, protection, detection, response, and recovery control mechanisms. 9. Suppliers (1) Combined sustainable supply chain management process. (2) Assist customers to execute supplier ESG due diligence. (3) Combine SASB (Sustainability Accounting Standards Board) & SAQ (Self-Assessment Questionnaire) questionnaires, and analyze supplier region-specific risk. (4) Annual audit results will be disclosed in the ESG report. (5) Setup Compal's Supplier E-training website. (6) Guide suppliers to execute Carbon footprint assessment. (7) Disclosure suppliers’ smelter list. (8) Announce conflict mineral report on the Compal website. 104 6. If the Company has established the corporate Sustainable Development principles based on “Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies," please describe any discrepancy between the Principles and their implementation: ■ The Company has revised the “Compal Corporate Sustainable Development Best Practice Principles” based on “Corporate Sustainable Development Best Practice Principles for TWSE/TPEX Listed Companies." An “ESG Office” has also been introduced specifically for the purpose of promoting Corporate Governance, environmental sustainability, public welfare, and information disclosure. The Company has adopted the principles of RBA by including corporate sustainability in its overall business plan, thereby making sure that everything it does is confirmed by RBA. The Sustainability Committee reports its progress regularly to the Board of Directors, and ESG Office publishes annual Sustainability reports to ensure proper disclosure of CSR information. ■ In order to implement the development of a sustainable environment, maintain an environmental management system, the Company regularly organizes environmental education courses for management and employees. Green management has been introduced from the product design stage and the supply chain. We reduce the energy consumption of products and services, effectively manage harmful substances, reduce the generation of wastewater and waste, and properly handle and adopt the best feasible pollution prevention and control technology measures. ■ We improve product life and reliability, and maximize the sustainable use of renewable resources with the concept of easy disassembly and recycling. The Company sets energy conservation and carbon reduction targets, carries out greenhouse gas reduction operations, and does its utmost to reduce the adverse impact of the Company's operations on human health and the natural environment. 7. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices: ■ External initiatives and participation In order to help the company manage carbon emissions in the long term, meet the global greenhouse gas reduction requirements, keep the global average temperature rise within 1.5°C by the end of this century, and set the Science Based carbon Target, Compal has committed to SBT (Science Based Targets) in April 2022, and it is expected to pass the review before April 2024 As a significant member of the Earth, the Company actively participates in global and local environmental initiatives and actions. Since 2009, Compal has been participating in CDP's questionnaires on climate change, water, and supply chain carbon management. In 2015, Compal was selected as part of CDP's Climate Disclosure Leadership Index (“CDLI”) for the first time. In 2023, Compal received an overall CDP Management score of B. ■ Energy management system In view of the most fundamental way to save energy, reduce greenhouse gas emissions, and improve energy productivity, after detailed evaluation, gradual practice, and continuous maintenance, in 2023, there were Taoyuan (PCP), Kunshan (KS3 and CDT), Chengdu (CD) and Chongqing (CQ and CQA), a total of 6 factories have obtained ISO 50001 energy management system certification, and relevant experience has been extended to other factories. ■ Supply chain carbon management As one of the world’s key IT producers, Compal uses “information platforms” and “workshops” to keep suppliers informed of the latest energy/carbon reduction technologies and green living, and inspires them to 105 commit to active care for the local environment. The Company requires all its suppliers to be certified for ISO 9001 (quality management system) and ISO 14001 (environmental management system), and follow EICC guidelines by signing a Letter of Commitment to the RBA Code of Conduct. Under this commitment, upstream suppliers are bound to comply with international, national, and local regulations with respect to all their activities. In order to invite the supply chain to participate in net-zero carbon reduction, 34 key suppliers will be invited to join Compal’s ONE+N electronics industry supply chain net-zero acceleration plan in 2023, and external energy-saving and carbon reduction experts will be combined to establish a Compal industrial low-carbon coaching team. Actively assist manufacturers in formulating carbon reduction plans and provide carbon footprint monitoring guidance, encourage manufacturers to invest in the introduction of high-efficiency technologies and processes, and implement system performance optimization to reduce energy consumption and carbon emissions. It is expected to jointly achieve the goal of substantive carbon reduction of 10,000 tons within two years to improve the industry's low-carbon competitive resilience. ■ Formulate human rights protection policies and specific management plans, as well as related policies and implementation. The Company respects the human rights of all employees. In addition to prohibiting the use of child labor and overtime work, the Company treats all employees of different ethnicities, religious beliefs, skin color, gender, nationality, age, and physical features with equal respect and fairness. The Human Resource Management Policy explicitly states that “the Company shall recruit employees based on knowledge, morality, skills, experience and suitability for the position/job in question. Under no circumstances may the Company reject recruitment for reasons such as gender, ethnicity, religion, political association, nationality, sexual preference, or age." The Company also refrains from using involuntary workers and child labor. A human rights policy has been established, as well as a process for conducting due diligence on human rights. Regular reviews and improvements are conducted to ensure the implementation of human rights protection work is more comprehensive. The above relevant regulations are disclosed on the official website: “Compal ESG- Inclusive Growth- Human Rights Protection and Health Care” and Sustainability reports. ■ Policies for workplace diversity and promotion of gender equity are established, and relevant implementation status is reviewed. ˙Compal is committed to promoting gender equality and DEI culture. In addition to ensuring that colleagues are treated differently regardless of gender or sexual orientation, Compal is also committed to creating a working environment that respects human rights and is dignified. The headquarters and each factory have formulated management procedure documents for the "Non-Discrimination and Anti-Harassment Policy" and " Human Rights Policy ". Compal Non-Discrimination and Anti-Harassment Policy: https://www.compal.com/CSR/Upload/ArticleImages/2023/07/07/2023070715045475.pdf Compal's Human Rights Policy: https://www.compal.com/CSR/Upload/ArticleImages/2023/07/07/2023070715042022.pdf ˙With the promotion of equality in the workplace and the promotion of DEI culture, the proportion of male employees and female employees at Compal in 2023 are 61.44% and 38.56%. Compared to last year, the proportion of females has increased by 0.43%. 106 ˙Compal is committed to creating a diversified workplace, cultivating global talents, and strengthening the human capital of each factory location. The proportion of local supervisors in our factories in China, Brazil and the United States is as high as 93.58%, 93.75% and 85.71%. In the Vietnam factory, the proportion of local supervisors has also increased by 1.03% compared to 2022. ■ Risks and opportunities on the community are assessed and corresponding measures are adopted. In addition, specific measures and implementation outcome are reviewed. Compal has long been concerned about the lives of disadvantaged groups and residents in rural communities, so that they can live a healthy life free from hunger; it promotes digital learning and quality education to improve the educational gap between urban and rural areas, narrow inequality, and eliminate poverty. Compal's headquarters is in Taipei Neihu Science Park. It sponsors and forms the Compal 10K team every year to respond to the Neihu Science Park Charity Road Run, gather the development power of the internal medicine community, promote health promotion and help social groups promote public welfare services. Compal has a R&D center in Kaohsiung. It has cooperated with the Kaohsiung Municipal Library on the "ESG Rural Reading Charity Cooperation Project" for four consecutive years in 2023, and has sponsored TWD500,000 to help Kaohsiung Panxiang District Library provide community residents with diverse reading learning methods and serve community students and residents according to age. In 2023, the "Compal Xiyue.com" section will be set up for the first time in the Amituo branch, and will also assist the Liugui, Jiaxian and Tianliao branches to include: mobile libraries, story theater groups, on-site reading, and AR environmental education games. Use different learning methods to assist students in various communities in their academic learning and build awareness of the initiative to sustainably protect the community environment and the community's cultural heritage. In 2023, Compal's "ESG Rural Reading Charity" served 16,960 people in Liugui, Jiaxian, Tianliao and Mituo areas. Compal has set up a factory in Taoyuan for many years, and emphasizes local development and talent cultivation. Compal has long been concerned about the weaknesses of remote villages and the Taoyuan area. Compal's Taipei headquarters in Neihu District also sponsors TWD 200,000 annually to respond to the Neihu Science Park Charity Road Race, to consolidate the development power of the Neihu community, to promote health promotion and to help social organizations to promote public welfare services. Compal has long-term cooperation with public welfare groups and employs disadvantaged groups in need. Since 2019, we have cooperated with Duobao Academy to hire Duobao artistic youths in Taipei. In 2023, we hired five Duobao artistic youths with Asperger syndrome from Duobao Academy to help them learn and encourage them to develop their talents and gradually make a living on their own. ■ Local manpower at the place where the Company’s business operation is located is hired, and the manpower ratio is reviewed. In 2023, the number of employees whose registered address in Taipei was 4,624, accounting for 71.71% of the total employees in Taipei operating area; the number of employees whose registered address in Taoyuan was 1,392, accounting for 88.95% of the total employees in Taoyuan operating area; the number of employees whose registered address Kaohsiung was 28, accounting for 77.78% of the total employees in Kaohsiung operating area. Compal has established multiple manufacturing bases worldwide as production hubs, and the proportion of local employees was over 90% in 2023. In addition to creating local employment opportunities, the influx of migrant workers brings consumption to the local area, promoting local economic development. ■ Corporate environmental education The company continues to introduce corporate environmental education into employee training and green experience activities, and continues to respond to the "Taiwan Marine Waste Management Action Plan", 107 starting from source reduction, starting from caring for rivers, organizing ecological tours of the Tamsui River Basin, inviting company employees, Supply chain partners and cooperating social welfare groups participated in environmental education and beach cleanup activities, a total of 2 sessions. Over the past few years, more than 5,000 people have shared the life stories of every corner of the land of Taiwan. The company fully supports the "experiential" environmental education action from top to bottom, and colleagues and family members enthusiastically participate in it from bottom to top; calls on colleagues to trickle down into a river, use the power of consumers to choose safe food, and give customers gifts as New Year's gifts to let demand come Change the supply and support sustainable agriculture, forestry, fishery and animal husbandry. And introduce relevant concepts into the company's product design, specially set up courses related to circular economy, invite professional lecturers to explain the actions and requirements of international and customers in the ESG field, so that colleagues can reduce the impact of products on the environment from R&D and manufacturing shock. ■ Supporting green and social enterprises In recent years, many social enterprises have emerged with goals to protect the environment and improve public interest. In support of their efforts, the Company encourages employees to purchase products and services offered by social enterprises in hopes that by redirecting purchasing power, we may be able to muster positive energy to solve society's issues. We invited 7 social enterprises and public welfare groups, including Taiwan DB Art Collective, Yuan care, Doghome Org., A good day, TriBake, Yu-Cheng Social Welfare Foundation, and Kanner Village Social Enterprise to join the Compal Social &Green Market Event. We encourage employees to know more about social enterprises and give them more support through the event. In 2023, Compal collaborated with the Society of Wilderness, Yu-Cheng Social Welfare Foundation/Jixian Sheltered Workshop, I Can Sheltered Workshop, Hanner Family, Taiwan DB Art Collective, Yuan care, Doghome Org., A good day, TriBake, and employees have donated more than TWD 700,000. ■ Community engagement ‧ The Company has long been sponsoring the maintenance and management of Zhouzi Park No. 2 in Neihu in order to provide community residents and industrial park workers with a nice place for leisure and recreation activities. ‧ Compal co-organized the third “Taipei Science and Technology Cup Love Earth Charity Road Run” in Taipei Neihu Technology Park. ‧ Compal has teamed up with the "Kangaroo Project" from the Center of Care Services for Rural Area Education of Fu Jen Catholic University for the 5th year, and for the after-school tutoring center and community teacher training program at New Taipei, Taoyuan, Taichung and Miaoli. ‧ Compal Neihu employees support the “2023 Blood donation activity”: 330 people participated in and donated 503 bags of blood, totaling 125,750 cc. ■ Social services ‧ Compal's employees have run the “Compal Volunteer Club” since 2004. Members of this club visit disadvantaged children on the weekends and guide them in reading good books. The goal of this program is to help them develop the habit of reading and the ability to think independently, and hence prepare them for the future. The volunteers have also been working with Hsu Chauing Social Welfare and Charity Foundation to provide extracurricular education for immigrant children. Since 2009, they have been visiting Dingshe Elementary School, Shoushan Elementary School, Jong Jen Elementary School, Wuhan Elementary School, Nan- 108 Shi Primary School, Chung Ping Elementary School, Shuang Long Elementary School, Neihai Elementary School, Nan Sing Elementary School, Hsiang An Elementary School, Tien Hsin Elementary School, Hua Hsun Elementary School, Wu Cyuan Elementary School, San He Elementary School, Chung-Shing Elementary School, Sin-Jie Elementary School, Xin Lu Elementary School, Fu An Elementary School, Dacheng Elementary School, Long-Sing Primary School, San Keng Primary School, Shanghu Primary School, Yisheng Elementary School, Shi-Hai Primary School, Te-Long Elementary School, Sha Keng Elementary School, Da Po Elementary School, Haibin Elementary School in Taoyuan and Guoling Elementary School in Yilan during public holidays to accompany children in their reading activities. As of the end of 2023, the volunteers had assisted 7,969 immigrant children and children from disadvantaged families. ‧ Compal has been encouraging college volunteer clubs to join the Company's “reading volunteers” initiative and provide study aids to children from low-income families in the neighborhood. By sharing good reading materials and environmental awareness, the Company hopes to contribute to the learning progress of disadvantaged children. ‧ To promote sustainable environmental action, Compal cooperated with the Wilderness Society, and 197 Compal volunteers carried out the "Pterospermum fern restoration operation" to protect native wetland species on Shezi Island in 2023. ■ Social welfare (1) Budget sponsorship ‧ Compal sponsored the "Second Matsu International Art Island" large-scale art curation event with TWD 1 million to promote local culture and economy, and support the cultural and artistic development and international art exchanges in Taiwan's outlying island of Matsu. ‧ ‧ For the 4th year, Compal sponsored & cooperated with Kaohsiung City Library. The first "Compal Happy Reading" area was set up in the Maitou Branch Library; Compal's "ESG Reading Program" served 16,960 people in Liugui, Jiacian, Tianliao, and Meituo communities. Initiated by the Hsu Chauing Social Welfare & Charity Foundation, the Dream Realization Project”, joined by colleagues from Compal and New Kinpo Group, has already been for 12 consecutive years. In 2023, 268 Compal colleagues took part in activities to help disadvantaged children continue their studies and develop their natural talents. ‧ Sponsoring of budgets for college volunteer clubs In an attempt to encourage college students to participate in volunteer service, the Company has been contributing TWD 600,000 every year since 2004 to sponsor college clubs in reading promotion directed at children, after-school classes, and environmental education in locations that lack resources and for low- income households. In 2023, 11 college clubs applied for sponsorship, 216 student volunteers participated in sponsored volunteer activities, for which the company contributed a sum of TWD 600,000 that benefited 2,984 school children and community residents. ‧ For the second year, Compal sponsored the “ Care and Health Day activities” of Fuzhou University Hospital to take care of vulnerable residents in the community and encourage community elders to develop the habit of regular health check-ups. ‧ Sponsoring of budgets for the Compal Sunshine Scholarship The "Compal x Sunshine Scholarships" has entered its 25th year, which provides "Outstanding Computer Talent Scholarships" and "Computer Excellence Scholarships" for students with burns and facial impairments yet with excellent computer skills. In addition to charity involvement, the Company also provides strong support to academic and industrial organizations including: Taipei City Friends of the Police Association Neihu Office, Taoyuan City Volunteer ‧ 109 Fire Brigade Pingzhen Squad, Taiwan District of Kiwanis International, Taiwan Institute for Sustainable Energy, National Taiwan University System Cultural Foundation, Former Dancer Culture and Arts Foundation, Taiwan Semiconductor Circuit Design Association, Spinal Cord Injury Social Welfare Foundation, Golf Gap of Learning & Field, Taiwan Society of Minimally Invasive Interventional Biotechnology. A sum of TWD 4,076,000 was donated to the above mentioned entities in 2023. (2) Donation of supplies ‧ In 2023, a total of 235 smart wireless lamps were sent to children of disadvantaged families in New Taipei, Pingtung, Taoyuan and Kaohsiung, so that their learning was not limited by the environment. In-Kind Donations for A Heartwarming New Year: 126 employees donated 1,039 items of living materials to help 200 poor families in the Sanchong District. ‧ ‧ ‧ Sharing Care with Mooncake Charity Activity: 868 colleagues donated Mid-autumn moon cake sets to 3,448 disadvantaged school children in New Taipei, Taoyuan, Taichung, Miaoli, Changhua, Pingtung, Hualien, Hsinchu and Kaohsiung. Initiated by the Hsu Chauing Social Welfare & Charity Foundation, the Children’s Day Wish Gift Collection, joined by colleagues from Compal and New Kinpo Group, has already stepped into its fifth year. In 2023, 68 Compal colleagues took part in activities to help disadvantaged children from 3 to 13 years old and prepare exclusive gifts for Children's Day. (3) COMPAL’s Christmas Big Brothers and Santa sisters deliver blessings to Yongfu Elementary School. COMPAL Volunteers visited the Taoyuan City Luzhu Dist. Yongfu Elementary School with the Hsu Chauing Social Welfare Charity Foundation to share the festive atmosphere with teachers and students, and distributed Christmas gifts to 76 students to express their blessings. ■ Resources are invested to support domestic cultural development, and the support method and outcome are reviewed. Compal sponsors the "Second Matsu International Art Island" large-scale art curation event with TWD 1 million. In addition to promoting the cultural development of rural areas, it supports the cultural and artistic development of Matsu, an outlying island in Taiwan. It also invites international artists to participate in exhibitions and exchanges, and encourages the innovative development of local artistic talents. , and artists are stationed on campus to share creative techniques and techniques with students, rooting out art education in rural areas, and opening up new creative horizons for local youth. It also shares the characteristics of Matsu’s outlying islands and local delicacies made with local materials internationally, and invites people from all over the world to come to Matsu for island hopping and experience the cultural charm of Matsu’s four towns and five islands. There are 70 works on display this time. Artists from seven countries were invited to participate in the creation, bringing 70 works, 10 of which will become permanent works and be preserved on Matsu Island. Compal also sponsors the Original Dancers Culture and Art Foundation and Duobao Academy, allowing talented artists to develop their talents and promote the development of art and culture. The Number of Beneficiaries exceeds 20 thousand every year. Compal is committed to improving the learning quality and sustainable environmental education of students in rural areas. From 2016 to 2019, it sponsored the large-scale children's drama "Recovering Lost Courage" for charity performances across Taiwan, inviting more than 9,000 disadvantaged school children and it was viewed by poor families. After the epidemic was lifted in 2023, we will cooperate with Taiwan's Shuiyuan Village Theater Company on the charity "Guardian of the Stars Project" and sponsor Taiwan's Shuiyuan Village Theater Company to perform the children's play "Pandora's Hope" to encourage children to maintain their 110 confidence and ability to face the life risks of global climate change. Let school children in remote communities have the opportunity to watch theater performances in person. There will be two live performances in 2023. One will invite 117 students from Luzhu Elementary School in Taoyuan to Compal to watch, and the other will be performed at Touzhou Elementary School in Taoyuan for more than 300 students from the whole school. In 2024, Compal will continue to promote the "Guardian Stars Project" to increase the exposure of schoolchildren in rural communities to cultural and artistic performances. In January 2023, Compal will resume its annual year-end party, during which Taiwan's world-class professional performing arts group "Diabolo Dance Theatre" will be invited to perform as the opening performance, as well as the local orchestra "Mayday", the golden song Taiwanese singer – Henry Hsu, and the new generation of singers Julia Wu and Boon Hui Lu will come to sing. In order to continue to support traditional folk skills and pop music culture, the performance cost exceeded NTD15,000,000, and the number of participants was nearly 9,000. Compal regularly holds a series of Art activities from October to December every year. The first event of the 2023 "Autumn with Art" series is based on the curatorial theme of paper-cutting artist Wuba Yang and Compal's promotion of the protection of Taiwan's native species, "Acrostichum aureum". A paper art exhibition was exhibited at the Taipei headquarters as a prelude to the event. The exhibition is presented in three forms: a large hanging paper curtain, a large paper fern installation and a paper fern frame painting, bringing pieces of stretched green leaves into the urban jungle, so that colleagues who are in the quagmire of science and technology every day can not only witness the innovative power of traditional paper-cutting art, but also feel the beauty of Taiwan when they turn around. Series 2 is a crosstalk performance - "Taiwan Manzai Comedy Show". Invite the new generation of comedy troupe "Comedy Times" to perform a three-person short play & two-person Manzai, bringing improvisational comedy performances. In the third series, colleagues and their families are invited to enjoy and listen to the solo recital and lecture of violinist Hu Nai-Yuan at the Taiwan Connection Music Salon. Through in-depth interaction, it is easy to decipher classical music and integrate classical music art into life. ■ Safety and health At a time when financial performance is as important as environmental protection, the Company considers “occupational safety and health” to be an important issue that no business shall neglect. Only by creating a safe work environment are employees able to unleash their full potential, which is a driving force behind the Company's progress. For this reason, the Company not only ensures that every operation is compliant with environmental, safety, and health rules, but also commits to eliminate or reduce safety and health risks to employees, suppliers, contractors and stakeholders that are caused by production procedures, facilities, and activities. At Compal, we see financial performance, environmental protection, and occupational safety and health as three co-existing and complementing factors of business. The Company created its official environmental safety and quality policies to guide employees toward protection in the workplace and social responsibilities. Furthermore, these policies also provide employees and external stakeholders (such as suppliers, contractors, customers, environmental organizations, government agencies and community residents) with a better understanding of the Company's environmental safety efforts and its resolve to protect and minimize risks to the environment. Ultimately, we hope to direct the attention of our partnered vendors 111 to environmental protection, safety and health, and work together towards accomplishing our goals. (1) Environment safety and health policy: ‧ Comply with environmental, safety and health laws, and related requirements. ‧ Conduct environment safety and health training to raise employees' awareness towards individual responsibilities as well as safety and health concerns of the surrounding environment, while at the same time encouraging their participation in relevant causes. ‧ Continually improve environmental, safety and health performance through programs such as pollution prevention, accident prevention, energy/resource conservation, waste reduction, and responsible care. ‧ Pay attention to the control of pollution sources and reducing waste from production. Enhance safety and health facilities to prevent pollution and minimize risks. ‧ Establish proper communication channels to convey the Company's environmental safety policy, requirements, and goals to employees, suppliers, contractors, nearby residents and concerned organizations. (2) Environmental safety and health systems/measures: In an attempt to minimize losses on occupational hazards and rectify hidden dangers and recurring safety incidents for more harmonic labor-management relations, the Company subsequently assembled an Environment Safety Promotion Committee that specializes in the development of environment safety plans. Any environment safety-related policies and goals proposed are subject to review during the Environmental Safety Management Review Meeting. Once reviewed, the Committee becomes responsible for supervising work safety units in the implementation of safety and health-related measures, auto inspections, maintenance, and training to eliminate hazardous factors in the environment. In addition, the Committee also supervises relevant departments in completing hazard prevention and loss control systems. (3) Execution ‧ Fire safety equipment/facilities plans and execution: Appropriateness and adequacy of fire safety equipment/facilities are reviewed whenever there is a change to the layout of the business premises. Locations of fire safety equipment/facilities and evacuation routes are clearly labeled on each floor. The Company also engages professional and qualified fire safety inspectors to conduct annual fire safety inspections and reports according to law. ‧ Water/power plans and execution: The Company promotes proper awareness and implements appropriate control on all uses of water and power equipment for more effective conservation of energy and resources. The administrative department is responsible for the day-to-day inspection of power usage, power systems, and water equipment. All inspection findings are detailed in the “Safety and Health Equipment Inspection Log” and any issues discovered are rectified immediately. ‧ Cleaning, monitoring, and control of industrial waste: Handled by the Factory Affairs Division of various factories and the General Affairs Department of the headquarters. Waste generated by factories can be classified into the following categories: a. Hazardous waste: Sorted according to “Standards for Defining Hazardous Industrial Waste” stipulated by the Environmental Protection Administration (EPA), Executive Yuan, and collected by certified contractors for subsequent treatment. Industrial waste: Industrial waste other than hazardous industrial waste is collected and treated by certified contractors. b. 112 ‧Emergency response procedures: These procedures have been established to guide the Company through disruption of production, information, and raw material supply in the occurrence of natural or man-made disasters. Incident resolution procedures: Hazard alert occurs Incident reporting Confirmation of Hazard YES Activate emergency response NO Update records Confirmation of damage control NO Request external support m e a s u r e s i n r i s k m a n a g e m e n t s y s t e m I n c l u s i o n o f i n c i d e n t i n v e s t i g a t i o n r e p o r t a n d i m p r o v e m e n t / p r e v e n t i v e YES Level 1 hazard: Post-disaster recovery Any death or 3 major injuries or SP: Occurrence of Level 1 of preventive measures Incident investigation and proposal hazard must be escalated to the Senior Risk Management Committee higher Loss of work hour exceeding 1 day Loss of property above USD 1 million (4) Quality Policy (pursuing continuous improvement to meet customer needs): We commit to . Implement customer-oriented performance management. . Create competitive advantages in products and services. 113 3.3.6 Ethical Corporate Management Assessment criteria Yes No I. Establishment of integrity policies and solutions 1. Does the Company have an Yes ethical corporate management policy approved by the Board of Directors and clearly state the ethical corporate management policy and practice in its internal regulations and external documents, as well as the commitment of the Board of Directors and senior management to actively implement the corporate management policy? 2. Has the Company established an evaluation mechanism for the risk of unethical behavior, regularly analyzed and evaluated the business activities with high unethical behavior risk within the business scope and formulated a plan to prevent unethical behavior accordingly which at least covers the preventive measures for the behavior in paragraph 2, Article 7 of the “Ethical Corporate Actual governance Summary description The Company has established the “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” and, in addition, clearly outlined the procedures for ethical management and guidelines to conduct in its HR policies, social responsibility policies, the integrity principles and code of conduct for Directors, supervisors, managers, and the general code of conduct. The Company’s “Rules and Procedures for Board of Directors Meetings” contain a conflicting interest clause that requires Directors to disassociate from all discussion and voting on any agenda that poses a conflict of interest between the Company and themselves or the legal entities they represent. The Board of Directors has resolved to adopt the relevant integrity management policies, and the Directors and high-level management have issued a statement of compliance with the integrity management policies, committing to actively implementing integrity management. Deviation and causes of deviation No deviations were found Yes When the Company’s internal audit prepares the next year’s audit plan, unethical behavior was included in the scope of risk assessment. The relevant audits are performed accordingly, and the “Procedures for Ethical Management and Guidelines for Conduct” were adopted to govern the following items: ‧Prohibition against offering and accepting of improper benefits ‧Prohibition against lobbying ‧Prohibition against illegal political donations ‧Prohibition against improper donations or sponsorships ‧Prohibition against inappropriate gifts, treatments and illegitimate benefits ‧Prohibition against unfair competition ‧Prohibition against leakage of commercial secrets and infringement of intellectual property rights ‧Prohibition against insider trading and rules of confidentiality Furthermore, the “Information Security Policy” has introduced measures to prevent violation of commercial secrets. No deviations were found 114 Yes No Yes Assessment criteria Management Best Practice Principles for TWSE/GTSM Listed Companies”? 3. Does the Company stipulate the operating procedures, behavior guidelines, and disciplinary and grievance systems in its unethical behavior prevention plan and implement them and regularly review and revise the plan? II. Integrity actions 1. Does the Company evaluate Yes the integrity of all counterparties it has business relationships with? Are there any integrity clauses in the agreements it signs with business partners? 2. Has the Company set up a dedicated unit under the Board of Directors to promote ethical corporate management and regularly (at least once a year) report to the Board of Directors its ethical corporate management policy and plan to prevent unethical behavior as well as its supervision of Yes Actual governance Summary description The Company has established the “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” (hereinafter, “Procedures and Behaviors”) as an incentive to insiders and outsiders to report unethical conduct or misconduct. Any insider who makes a false report or a malicious accusation shall be subject to disciplinary action and be removed from office if the circumstance has substance. This Company has appointed a contact person, and has established a hotline and mailbox that can be used either through the Intranet of the Company website or the official Company website. Any person involved in unethical conduct will be referred to an authorized department and processed according to the “Procedures for Ethical Management and Guidelines for Conduct." The Company carries out regular reviews and revises for relevant measures every year. Also, we arrange related training on Ethical Corporate Management and announce the request to follow Ethical Corporate Management Best Practice Principles. Deviation and causes of deviation No deviations were found The Company requests each of its suppliers to sign the "Letter of Undertaking for Compliance with the RBA Code of Conduct by Vendors” (hereinafter referred to as “RBA Code of Conduct”), according to which suppliers are requested to abide by local laws and regulations on workers, environment, safety, health, management, and moral conduct, and prevents them against corruption and unethical behavior. No deviations were found The Company has appointed its human resources & administrative management department and the legal affairs office as the competent units in charge of the Company’s ethical matters. These units jointly set the guidelines and policies, which are monitored by the auditor’s office and report to the Board of Directors on a yearly basis. To prevent potential conflicts of interest, the Company has established the “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct." In addition, the Company has also designed relevant online teaching courses on the e-Learning platform, including legal affairs related training on information security, the Personal Information Protection Act, relevant company policies and employees’ code of conduct so as to familiarize all employees with the aforementioned guidelines and thereby facilitate the promotion of honest management. No deviations were found 115 Assessment criteria the implementation? Yes No 3. Does the Company have any policy that prevents conflict of interest, and channels that facilitate the report of conflicting interests? Yes Actual governance Summary description Deviation and causes of deviation Status of Operation and Implementation in 2023: The Company requires suppliers to follow the RBA Code of Conduct, sign the RBA Code of Conduct commitment or complete the RBA Code of Conduct questionnaire. Among 937 suppliers with transaction records, 924 have signed the RBA Code of Conduct commitment or completed the RBA Code of Conduct questionnaire, making for a signing rate of 99%. In addition, 8,840 employees completed 9,567 hours of integrity management related training, including: Courses New Employee Orientation On-job Training for New Employees New Employee Orientation Compal CSR Training Attendances 442 521 245 7,631 Hours 804 2,866 1,470 4,426 The Company has established the “Ethical Corporate Management Best Practice Principles” and “Procedures for Ethical Management and Guidelines for Conduct” (hereinafter, “Procedures and Behaviors”). A Director, managerial officer or other interested party of the Company attending, or present at a Board of Directors’ meeting shall explain the important contents of his/her/its interest at the Board of Directors' meeting if he/she or the legal entity he/she represents has an interest in the proposals listed in such meeting. In addition, if it is likely to prejudice the Company’s interest, he/she shall not participate in the discussion and voting, and shall recuse himself/herself from the discussion and voting, and shall not exercise voting rights as a proxy on behalf of other Directors. The Directors shall exercise discipline among themselves, and may not support each other in any inappropriate manner. If, in the course of conducting company business, an employee of the Company discovers that a potential conflict of interest exists involving themselves or the legal entity that they represent, or that they or their spouse, parents, children, or a person with whom they have a relationship of interest are likely to obtain improper benefit, the matter shall be reported to their immediate supervisor and the responsible unit, and the supervisor shall provide the employee with the proper instructions. No employee of the Company may use company resources for commercial activities other than those of this Company, nor may his or her job performance be affected by involvement in commercial activities other than those of this Company. The Company’s Personnel Management Rules and “Employee’s Statement of Ethics and 116 No deviations were found Assessment criteria Yes No 4. Has the Company established Yes an effective accounting system and internal control system for the implementation of ethical corporate management and has the internal audit unit, according to the assessment results of the risk of unethical behavior, drawn up relevant audit plans to check the status of unethical behavior prevention accordingly, or entrusted an independent auditor to carry out the audit? 5. Does the Company organize internal or external training on a regular basis to maintain business integrity? Yes III. Implementation of whistleblowing system 1. Does the Company provide incentives and means for employees to report Yes Actual governance Summary description Compliance” have introduced rules to identify, supervise, and manage conflicts of interest for business activities that are more highly prone to dishonest behavior. There are channels in place for Directors, supervisors, managerial officers, stakeholders, and board meeting participants to state their conflicting interests with the Company. To prevent leakage of material inside information, the Company has established “CO10 Insider Trading Prevention Management” as part of its internal control and demanded strict compliance from Directors, supervisors, managers, employees, and any party that gains knowledge of the Company’s material non-public information whether because of their identity, job responsibility, or controlling relationships. The Company has set “Ethical Corporate Management Best Practice Principles” and focuses on creating an effective accounting system and internal control system to avoid high-risk or unethical business activities and the use of external or secret accounts. Self-evaluation is performed on a regular basis to make sure the design and execution of the system is effective. Since 2019, when the Company internal audit prepared the next year’s audit plan, unethical behavior was included in the scope of risk assessment, and relevant audits are performed accordingly. Deviation and causes of deviation No deviations were found The Company organizes training courses in accordance with “Regulations Governing the Establishment of Internal Control Systems by Public Companies” and the board-approved “Insider Trading Prevention Principles." Insider training prevention courses are organized for vice president- grade employees and above, while general employees take training on ethical behavior on a yearly basis. No deviations were found The Company has mailboxes in place to receive malpractice reports from within or outside the Company. Once a report has been sent to the mailbox, it will be referred to the appropriate department and personnel, depending on the nature of the underlying issue to handle or conduct No deviations were found 117 Assessment criteria malpractice? Does the Company assign dedicated personnel to investigate the reported malpractice? Yes No related checks. Actual governance Summary description Deviation and causes of deviation 2. Has the Company established Yes standard operating procedures for the investigation of malpractice reports, follow-up measures after investigation, and the relevant confidentiality mechanism? 3. Does the Company assure malpractice reporters that they will not be mistreated for making such reports? Enhanced information disclosure IV 1. Has the Company disclosed its integrity principles and progress on its website and MOPS? Yes Yes The Company has established procedures to report matters for filing, assigning, verifying, etc., and requires the responsible person to take relevant actions depending on the results of the investigation. The case content and whistleblower information shall be processed confidentially. No deviations were found The Company's relevant regulations and Employee Code of Conduct are clearly regulated, requiring the responsible unit or person not to disclose the content of the case and the identity of the whistleblower, and to take necessary protective actions to ensure that the whistleblower is not treated inappropriately or retaliated. No deviations were found The Company has disclosed corporate governance and business integrity matters and updated the progress of such efforts in its annual reports, Sustainability reports and “Investor Relations- Corporate governance-Major internal policies” and the “Compal ESG- Sustainable Management- Compal's code of Conduct” section of its website. No deviations were found V If the Company has established business integrity policies in accordance with “Ethical Corporate Management Best Practice Principles for TWSE/TPEX-Listed Companies" please describe its current practices and any deviations from the Best Practice Principles: The Company’s “Business Integrity Principles” and “Business Integrity Procedures and Behaviors” have been passed by the Board of Directors and disclosed on the Company’s website and MOPS. A specialized unit will be empowered to enforce these policies and ensure employees’ compliance. VI. Other information relevant to understanding the Company’s business integrity (e.g. reviews of business integrity principles): Courses have been introduced to the e-Learning system so that employees are made aware of the Company’s “Business Integrity Principles” and “Business Integrity Procedures and Behaviors." 118 3.3.7 Corporate Governance Guidelines and Regulations Please refer to the Company’s website→ Investor Relations → Corporate Governance → Major Internal Policies https://www.compal.com/investor-relations/corporate-governance/#major-internal ‧ Framework of Corporate Governance ‧ Articles of Association ‧ Rules of Procedure for Shareholders’ Meetings ‧ Rules for Elections of Directors ‧ Procedures for Acquisition or Disposal of Assets ‧ Procedures for Financial Derivatives Transactions ‧ Procedures for Lending Funds to Other Parties ‧ Procedures for Endorsements and Guarantees ‧ Board of Directors Meeting Guidelines ‧ The Responsibilities and Rules for Independent Directors ‧ Audit Committee Procedures ‧ Remuneration Committee Procedures ‧ Sustainability Committee Charter ‧ Risk Management Committee Charter ‧ Corporate Governance Best Practice Procedures ‧ Sustainable Development Best Practice Principles ‧ Risk Management Best Practice Principles ‧ Code of Conduct for Directors and Managers ‧ Code of Conduct for Employees ‧ Ethical Corporate Management Best Practice Principles ‧ Business Integrity Procedures and Behaviors ‧ Regulations on Prevention of Insider Trading ‧ Procedures of Application to Suspend and Resume Trading ‧ Rules of Self-Evaluation of the Board of Directors and Functional Committees Performance ‧ Company's Risk Management Policies and Procedures ‧ Compal Group's Business Continuity Management Policy ‧ Procedures for Handling Material Inside Information ‧ Rules Governing Financial and Business Matters Between this Company and its Affiliated Enterprises ‧ Tax Policy and Management Guidlines 119 3.3.8 Other Important Information Regarding Corporate Governance Please refer to the Company’s website→Compal ESG https://www.compal.com/csr/zh/default.aspx ‧ Sustainable Management ‧ Stakeholders ‧ Supply Chain Management ‧ Environment ‧ Inclusive Growth ‧ Charity ‧ Download Report Please refer to the Company’s website→ Stakeholder Communication https: /www.compal.com/stakeholder-communication-area/ ‧ Employee Overview ‧ Customer Relations ‧ Supplier Relations ‧ Investor Relations 120 3.3.9 Internal Control Systems 1. Statement of the Internal Control System Compal Electronics, Inc. Statement of the Internal Control System Date: March 12, 2024 The Company states the following with regard to its internal control system during the fiscal year 2023, based on the findings of a self-assessment: 1. The Company is fully aware that establishing, operating, and maintaining an internal control system is the responsibility of its Board of Directors and management. The Company has established such a system aimed at providing reasonable assurance of the achievement of objectives in the effectiveness and efficiency of operations (including profits, performance, and safeguard of asset security), reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws. 2 An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing the three goals mentioned above. Furthermore, the effectiveness of an internal control system may change along with changes in environment or circumstances. The internal control system of the Company contains self-monitoring mechanisms, though, and the Company takes corrective actions as soon as a deficiency is identified. 3 The Company judges the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (“Regulations”). The internal control system judgment criteria adopted by the Regulations divide internal control into five elements based on the process of management control: 1. control environment 2. risk assessment 3. control activities 4. information and communications 5. monitoring activities. Each element further contains several items. Please refer to the Regulations for details. 4 The Company has assessed the design and operating effectiveness of its internal control system according to the aforesaid criteria. 5 Based on the findings of the assessment mentioned in the preceding paragraph, the Company believes that as of Dec 31, 2023 its internal control system (including its supervision and management of subsidiaries), encompassing internal controls for knowledge of the degree of achievement of operational effectiveness and efficiency objectives, reliability, timeliness, transparency, and regulatory compliance of reporting, and compliance with applicable laws, regulations, and bylaws, is effectively designed and operating, and reasonably assures the achievement of the above-stated objectives. 6 This Statement will become a major part of the content 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. 7 This Statement has been passed by the Board of Directors Meeting of the Company held on March 12, 2024, where 0 of the 15 attending Directors expressed dissenting opinions, and the remainder all affirmed the content of this Statement. Compal Electronics, Inc. Chairman: Sheng-Hsiung Hsu (Rock Hsu) President: Chung-Pin Wong (Martin Wong) 121 2. If an independent auditor is entrusted with reviewing the internal control system, the independent auditor’s report: None. 3.3.10 Penalties imposed against the Company and its staff, or penalties imposed by the Company against its staff for violations of internal control or regulations; state any corrective actions taken in the most recent years up till the date of the annual report: None. 3.3.11 Major Resolutions Made in Shareholders’ and Board Meetings 1. Shareholders’ meeting ■ Time: 9: 00 am, June 21, 2023 ■ Place: No. 581, Ruiguang Rd., Neihu District, Taipei City 11492, Taiwan ■ Major Resolutions: (1) Ratified the Business Report and Financial Statements for 2022. (2) Ratified the Distribution of Earnings for 2022. (3) Approved the release of non-competition restrictions for Directors ■ Post-meeting Execution: N/A 2. Major Resolutions of Board Meetings Date 8th Meeting (14th Term) 2023.02.07 Material resolutions 1. Approved for senior level management change 2. Approved the issuance of a Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 3. Approved authorizing the Company to obtain credit facilities from financial institutions 1. Approved the Internal Control System Statement for the year 2022 2. Approved the proposal of the distribution of compensation to employees and directors for 9th Meeting (14th Term) 2023.03.15 the year 2022 3. Approved the Audited Consolidated Financial Report and Parent Company Only Financial Report for the year 2022 4. Approved the Business Report for the year 2022 5. Approved the Business Plan for the year 2023 6. Approved the proposal for Distribution of Earnings for the year 2022 7. Approved the proposal for cash dividends from Earnings for the year 2022 8. Approved the proposal of cash distribution from Capital Surplus 9. Approved the relevant matters regarding the distribution of the year 2022 cash dividends and cash distribution from capital surplus to shareholders 10. Approved the convention of 2023 Annual General Shareholders’ Meeting 11. Approved the Sustainability Report Material Topics for the year 2022 12. Approved the targets and plans of Sustainability for the year 2023 13. Approved fund loan to 100% owned subsidiary Compalead Eletrônica do Brasil Indústria e Comércio Ltda. 14. Approved fund loan to 100% owned subsidiary Compal Eletrônica Da Amazônia Ltda. 15. Approved fund loan to 70% owned subsidiary Kinpo&Compal Group Assets Development Corporation 16. Approved the “Non-Assurance Service Pre-Approval Policy - General Policy“ 17. Approved evaluation of CPAs’ independence and competence in performing financial 122 report audits. 18. Approved the first mid-year employees’ bonus of the year 2023 19. Approved authorizing the Company to obtain credit facilities from financial institutions 1. Approved the amendment to the “Corporate Governance Best-Practice Principles” 2. Approved the amendment to the “Management Rules for Preventing Insider Trading” 3. Approved the amendment to the “Risk management policy of Compal Group” 4. Approved the enactment to the “Risk Management Best Practice Principles” 5. Approved the enactment to the “Risk Management Committee Charter” 6. Approved the appointment of the term 1st Risk Management Committee members 7. Approved the amendment to the “Sustainable Development Best Practice Principles” 8. Approved the enactment to the “Human Rights Policy” 9. Approved the 1Q 2023 Consolidated Financial Review Report 10. Approved the release of non-competition restrictions for the managers 11. Approved the release of non-competition restrictions for Directors 12. Approved employees’ salary adjustment for the year 2023 13. Approved the proposal for the appropriated percentage for the remuneration of employees and Directors of the year 2023 14. Approved obtaining newly issued shares of ARCE Therapeutics, Inc. by participating in the capital injection by cash. 15. Approved the proposal for providing a Corporate Guaranty Letter to Quanta Computer Inc. 16. Approved the issuance of a Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 17. Approved authorize the Company to obtain credit facilities from financial institutions 1. Approved to obtain newly issued shares of AcBel Polytech Inc. by participating in the capital injection by cash. 2. Approved the issuance of a Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 3. Approved authorization for the Company to obtain credit facilities from financial institutions 1. Approved the Directors’ Remuneration for the year 2022 2. Approved 2nd mid-year employees’ bonus for the year 2023 3. Approved the 1H 2023 Consolidated Financial Review Report 4. Approved the enactment of the “Tax Policy and Management Guidelines” 5. Approved for a loan to Henghao Technology Co. Ltd. 6. Approved for a loan to Unicom Global, Inc. 7. Approved the issuance of a Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 8. Approved authorization for the Company to obtain credit facilities from financial institutions 1. Approved to obtain newly issued shares of Cal-Comp Electronics (Thailand) Public Company Limited. by participating in the capital injection by cash. 1. Approved for approval of annual audit plan for year 2024 2. Approved the amendment to the“Corporate Governance Best-Practice Principles” 3. Approved the compensation of Employees’ bonuses in cash for 2022 4. Approved the proposal for 2023 year-end employees’ bonus 5. Approved the 3Q 2023 Consolidated Financial Report 6. Approved the amendment to the “Rules for Performance Evaluation of the Board of Directors and Functional Committees” 7. Approved to obtain newly issued shares of Kinpo&Compal Group Assets Development Corporation. by participating in the capital injection by cash. 123 10th Meeting (14th Term) 2023.05.08 11th Meeting (14th Term) 2023.07.18 12th Meeting (14th Term) 2023.08.11 13th Meeting (14th Term) 2023.09.07 14th Meeting (14th Term) 2023.11.10 8. Approved fund loan to 100% owned subsidiary COMPAL EUROPE (POLAND) Sp. z o.o 9. Approved the issuance of a Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 10. Approved authorize the Company to obtain credit facilities from financial institutions 1. Approved for senior level management change 2. Approved the proposal of the distribution of compensation to employees and directors for the year 2023 3. Approved the Audited Consolidated Financial Report and Parent Company Only Financial Report for the year 2023 4. Approved the proposal for Distribution of Earnings for the year 2023 5. Approved the proposal for cash dividends from Earnings for the year 2023 6 Approved the proposal of cash distribution from Capital Surplus 7. Approved the relevant matters regarding the distribution of the year 2023 cash dividends and cash distribution from capital surplus to shareholders 8. Approved fund loan to 100% owned subsidiary Compal Smart Device India Private Limited 9. Approved fund loan to 100% owned subsidiary Compalead Eletrônica do Brasil Indústria e Comércio Ltda. 10. Approved providing providing a Corporate Guarantee Letter for Compal Tecnologia Do Brasil Ltda., a 100% owned -subsidiary of the Company, to Quanta Computer Inc., to be resolved. 11. Approved providing providing a Corporate Guarantee Letter for Compalead Eletrônica do Brasil Indústria e Comércio Ltda., a 100% owned -subsidiary of the Company, to Quanta Computer Inc., to be resolved. 12. Approved the issuance of Letter of Support by the Company to facilitate its subsidiary in obtaining credit facilities from financial institutions 13. Approved authorize the Company to obtain credit facilities from financial institutions 1. Approved the Internal Control System Statement for the year 2023 2. Approved the Risk Management Targets for the year 2024 3. Approved for senior level management change 4. Approved the Business Report for the year 2023 5. Approved the Business Plan for the year 2024 6. Approved the proposal on election of the 15th term of Directors 7. Approved the convention of 2024 Annual General Shareholders’ Meeting 8. Approved the Sustainability Report Material Topics for the year 2023. 9. Approved the targets and plans of Sustainability for the year 2024 10. Approved the investment in CGS Technology (Poland) sp. z o.o. (a Polish subsidiary) by participating in the capital injection by cash. 11. Approved fund loan to 100% owned subsidiary Compal Tecnologia Do Brasil Ltda. 12. Approved the first mid-year employees’ bonus of the year 2024 15th Meeting (14th Term) 2024.02.29 16th Meeting (14th Term) 2024.0312 3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None. 3.3.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit, Corporate Governance and R&D: April 2, 2024 Title Name Date of appointment Date of dismissal Reasons for dismissal Internal Audit Officer Chenyi Li 2021.8.27 2024.3.12 Internal position adjustment 124 3.4 Certified Public Accountant (CPA) Fee Information Unit: TWD Thousands Accounting Firm Name of CPA Period Covered by CPA’s Audit Audit Fee Non-audit Fee Total Remarks KPMG Kuo, Kuan Ying Chien, Szu Chuan 2023.01.01~ 2023.12.31 9,500 3,838 13,338 Note Note: Other non-audit fees: Tax consultation, transfer pricing report, business registration and others. (1) Changes in the accounting firm that result in lesser audit fees paid in comparison to the previous year, which should disclose the amount, percentage, and the reasons: None (2) Reduction of audit fees by more than 10% compared to the previous year, which should disclose the amount, percentage, and the reasons: Not Applicable. 125 3.5 Replacement of CPA: 1. About the former CPA Date of replacement Approved by the Board of Directors on March 26, 2021 Reason and explanation for replacement State whether the commissioner or the CPA terminated the service or declined the commission Other audit report opinions and causes issued within the last two years other than unqualified opinion Due to adjustments in work and duties at KPMG, the CPAs were changed from Chien, Szu Chuan and Au, Yiu-Kwan to Kuo, Kuan-Ying and Chien, Szu Chuan starting from 1Q 2021. Situation Party involved Voluntarily terminated the CPA Not commission applicable Will no longer accept/continue Not the commission applicable Commissioner Not applicable Not applicable N.A. Accounting principles or practices Disclosure of financial report Did he/she have opinions that differed from that of the publisher? Yes Scope or step of auditing Other N.A. Description Other items of disclosure (Contents that should be disclosed as covered in Clauses 1.4-1.7, Section 6, Article 10 of this guideline) 2. About the succeeding CPA Name of accounting firm KPMG V N.A. Name of CPA Date commissioned Kuo, Kuan-Ying and Chien, Szu Chuan Approved by the Board of Directors on March 26, 2021 Items of consultation and results on the accounting methods for specific transactions, accounting principles and potential opinions for financial reports prior to commissioning Written opinion from succeeding CPA on items of disagreement with the former CPA N.A. N.A. 126 3.6 If the Chairman, president, and financial or accounting manager of the Company had worked for the accounting firm or related parties thereof in the most recent year, the name, title, and the term of service with the accounting firm or the related party must be disclosed: None. 3.7 For the most recent year and as of the date of publication of the annual report, changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders Title Name Chairman Sheng-Hsiung Hsu Vice-Chairman And CSO Jui-Tsung Chen Binpal Investment Co., Ltd. Representative: Wen-Being Hsu Kinpo Electronics, Inc. Representative: Chieh-Li Hsu Charng-Chyi Ko Sheng-Chieh Hsu Yen-Chia Chou Chung-Pin Wong Chiung-Chi Hsu Ming-Chih Chang Anthony Peter Bonadero Sheng-Hua Peng Min-Chih Hsuan Duei Tsai Wen-Chung Shen Chen Chang Hsu Chun-Te Shen Kuo-Chuan Chen Chyou-Jui Wei Wen-Da Hsu Shi-Kuan Chen Director Director Director Director Director Director and President Director Director and Executive Vice-President Director Director and Executive Vice-President Independent Director Independent Director Independent Director Executive Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President 2023 Up till April 2, 2024 Shares held Increase (Decrease) Shares pledged Increase (Decrease) Shares held Increase (Decrease) Shares pledged Increase (Decrease) Unit: shares 0 0 0 0 0 0 0 (650,000) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 127 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Title Name 2023 Up till April 2, 2024 Shares held Increase (Decrease) Shares pledged Increase (Decrease) Shares held Increase (Decrease) Shares pledged Increase (Decrease) Chi-Wai Wan Min-Tung Weng Lo-Chun Lee 0 0 0 Sheng-Hung Li (100,000) Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Senior Vice- President Bor-Heng Chen Chung-Hsing Tan Ta-Chun Wang Vice-President Chih-Chuan Cheng Vice-President Ching-Hsiung Lu CISO & VP Po-Tang Wang Jyh-Shyan Liang Vice-President Tzong -Ming Wang Vice-President Yong-Ho Su Vice-President Vice-President Yi-Yun Chang Vice-President Hsin-Kung Mao Vice-President Shih-Hong Huang Vice-President Yi-Chiang Chiu Jui-Chun Shyur Vice-President Peng-Hong Chan CLO & VP CGO & AO & VP Cheng-Chiang Wang Vice-President Cheng-Hui Su Vice-President Chuan-Fan Tu Guo-Dung Yu FO & VP Vice-President Peng Kuee Lau Vice-President Wu-Ching Chi Vice-President Hsin-Chung Chen Vice-President Jue-Teng Chang Vice-President Choo-Tain Chiu Vice-President Wei-Chia Wang Hui Chun Yu IAO Vice-President Jen-Liang Lin Vice-President Hou-Chun Liu Vice-President Chang-Chieh Tien Vice-President Fu-Chuan Chang IAO Chenyi Li 0 0 0 0 0 (49,000) (20,000) 0 (22,000) (5,000) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - 0 0 0 20,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (50,000) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (3,000) 0 - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - 0 0 0 Note: 1. Vice Presidents Jen-Liang Lin transferred and Hou-Chun Liu resigned in 2023. Vice Presidents Chang-Chieh Tien and Fu- Chuan Chang retired, Internal Audit Officer Chenyi Li transferred in 2024. 128 3.7.1 Shares Trading with Related Parties: Name Reason for transfer Transaction date Counterparty Sheng-Hung Li Gift 2023.02.21 Yi-Je Li Counterparty's relationship with the Company, Directors, Supervisors, Managers, and shareholders with more than 10% ownership interest Father and Son Shares Transaction price 100,000 23.5 3.7.2 Shares Pledged with Related Parties: None 129 3.8 Relationship among the Top Ten Shareholders April 2, 2024 Unit: Shares Name Self Shares held Shareholdings of spouse and minors Total shares held in the names of others Shares held Shares Shareholding Percentage Shares Shareholding Percentage Spouse, relative of second degree or closer, and relationships among top 10 shareholders Name Relationship - - - 0.39% - - - 0 0 0 0 0 0 0 0% None None 0% None None 0% None None 0% 0% None None 0% None None 0% None None - 0 0% None None - - - 0 0 0 0% None None 0% None None 0% None None Shares 307,299,000 Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF。 Yuanta/P-shares Taiwan Dividend Plus ETF Kinpo Electronics, Inc. 151,628,692 188,121,998 Shareholding Percentage 6.97% 4.27% 3.44% - - - Sheng-Hsiung Hsu 8,975,401 105,452,108 0.20% 17,107,025 - 2.39% New Labor Pension Fund Yuanta Taiwan High Dividend Low Volatility ETF JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds JP Morgan Chase Bank Custody ABP Retirement Fund Investment Account Citibank (Taiwan) Ltd. in custody for Norges Bank Labor Insurance Fund 70,191,000 1.59% 56,405,652 1.28% 54,891,900 1.25% 54,223,699 1.23% 48,344,697 1.10% 38,471,531 0.87% - - - - - - 130 3.9 Ownership of Shares in Affiliated Enterprises December 31, 2023 Unit: Shares; % Investees (Note) Invested by the Company Held by directors, supervisors, managers, and directly/indirectly controlled entities Aggregate investment Shares Shareholding percentage Shares Shareholding percentage Shares Shareholding percentage Panpal Technology Corp. Gempal Technology Corp. Hong Ji Capital Co., Ltd. Hong Jin Investment Co., Ltd. HippoScreen Neurotech Corp. SHENNONA CO., Ltd. Aco Healthcare Co., Ltd. ARCE Therapeutics, Inc. Raypal Biomedical Co., Ltd. Rayonnant Technology Co., Ltd. RiPAL Optotronics Co., Ltd. Unicom Global Inc. Palcom International Corporation Henghao Technology Co., Ltd. Compal Broadband Networks Inc., Crownpo Technology Co., Ltd. Kinpo Group Management Consultant Company Mactech Co., Ltd. General Life Biotechnology Co., Ltd. Lead-honor Optoelectronic Co., Ltd. Infinno Technology Corporation Allied Circuit Co., Ltd. Arcadyan Technology Corp. Avalue Technology Inc. Core Profit Holdings Ltd. Flight Global Holding Inc. Just International Ltd. High Shine Industrial Corp. Compal International Holding Co., Ltd. Big Chance International Co., Ltd. Compal Rayonnant Holdings Limited 500,000,000 90,000,000 100,000,000 29,500,000 9,100,000 2,000,000 330,276,403 44,540,079 4,646,143 29,500,000 6,000,000 20,000,000 100.00 100.00 100.00 100.00 91.00 100.00 - - - - - - 71.46 2,250,000 22.71 38,197,115 30.00 5,064,999 100.00 100.00 100.00 - - - - 500,000,000 - 90,000,000 - 100,000,000 - 29,500,000 - 9,100,000 - 2,000,000 0.49 332,526,403 19.48 32.70 82,737,194 13,157,285 - 29,500,000 - 6,000,000 - 20,000,000 10,000,000 100.00 - - 10,000,000 20,014,952 100.00 - - 20,014,952 29,060,176 42.96 13,139,637 19.32 42,199,813 3,738,668 33.23 6,230,544 55.38 9,969,212 300,000 37.50 300,000 37.50 600,000 21,756,192 52.88 274,954 0.67 22,031,146 15,035,000 50.12 - - 15,035,000 2,772,000 42.00 - - 2,772,000 4,648,322 10,157,730 41,304,504 14,924,070 147,000,000 89,755,495 48,010,000 42,700,000 27.72 656,396 19.84 7,032,133 18.74 34,447,153 20.66 100.00 100.00 100.00 430,000 - - - 53.58 37,000,000 3.91 13.73 15.60 5,304,718 17,189,863 75,751,657 0.59 15,354,070 - 147,000,000 - 89,755,495 - 48,010,000 46.42 79,700,000 53,001,000 100.00 - - 53,001,000 100.00 100.00 100.00 100.00 91.00 100.00 71.95 42.19 62.70 100.00 100.00 100.00 100.00 100.00 62.28 88.61 75.00 53.55 50.12 42.00 31.63 33.57 34.34 21.25 100.00 100.00 100.00 100.00 100.00 90,820,000 100.00 - - 90,820,000 100.00 12,500,000 100.00 - - 12,500,000 100.00 131 Investees (Note) Invested by the Company Held by directors, supervisors, managers, and directly/indirectly controlled entities Aggregate investment Shares Shareholding percentage Shares Shareholding percentage Shares Shareholding percentage Auscom Engineering Inc. Compal Europe (Poland) Sp. z o.o. CGS Technology(Poland) Sp. z o.o. Bizcom Electronics, Inc. Compal Electronics (Holding) Ltd. 3,000,000 100.00 136,080 100.00 245,911 100.00 100,000 100.00 1,000 100.00 Compalead Electronics B.V. 6,426,516 100.00 - - - - - - - 3,000,000 - 136,080 - 245,911 - 100,000 - 1,000 - 6,424,516 Etrade Management Co., Ltd. 46,900,000 65.23 25,000,000 34.77 71,900,000 Webtek Technology Co., Ltd. 100,000 100.00 Forever Young Technology Inc. 50,000 100.00 - - - 100,000 - 50,000 Lipo Holding Co., Ltd. 98,000 49.00 102,000 51.00 200,000 Ascendant Private Equity Investment Ltd. 31,253,125 34.72 44,750,000 49.72 76,003,125 UniCore BioMedical Co., Ltd. 20,000,000 100.00 Shennona Corporation - 100.00 - - - 20,000,000 - - Starmems Semiconductor Corp. 3,500,000 35.00 1,000,000 10.00 4,500,000 Kinpo&Compal Group Assets Development Corporation Compal Ruifang Health Assets Development Corporation 402,500,000 70.00 - - 402,500,000 30,000,000 100.00 30,000,000 POINDUS SYSTEMS CORP. 11,768,199 56.04 44,000 0.21 11,812,199 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 84.44 100.00 100.00 45.00 70.00 100.00 56.25 100.00 Compal Healthcare & Technology Ltd. Compal Mexico Electromex, S.A. de C.V. 4,000,000 100.00 - - 4,000,000 - 99.9 - 0.1 - 100.00 Note: Investments made by the Company using the Equity Method. 132 IV. Capital Overview 4.1 Capital and Shares 4.1.1 Source of Capital Year Month Issuance Price Authorized capital Paid-up capital Shares Amount (TWD ) Shares Amount (TWD ) Source of capital Remarks Paid in properties other than cash Others April 2, 2024 2018 2018 3 5 Share Type Ordinary shares 10 6,000,000,000 60,000,000,000 4,419,191,625 44,191,916,250 Cancellation of Restricted Employee N.A. Change of capital approved by the Ministry of Shares of $10,890,000 Economic Affairs on March 21, 2018 10 6,000,000,000 60,000,000,000 4,407,146,625 44,071,466,250 Cancellation of Restricted Employee N.A. Change of capital approved by the Ministry of Shares of $120,450,000 Economic Affairs on May 29, 2018 Outstanding shares (public listed) Unissued shares Total Authorized capital Remarks 4,407,146,625 1,592,853,375 6,000,000,000 Approved to include 100,000,000 shares of employees shares and corporate bonds with warrant in capital. ■ Shelf registration system information: None 133 4.1.2 Status of Shareholders Analysis Government Agencies Financial Institutions Other Institutions Foreign Institutions and Natural Persons Domestic Natural Persons Treasury stocks Total Number of Shareholders Shareholding (shares) Percentage 4 36 353 1,304 217,732 0 219,429 3,539 478,369,333 725,763,807 1,936,254,617 1,266,755,329 0 4,407,146,625 0.00% 10.85% 16.47% 43.94% 28.74% 0.00% 100.00% April 2, 2024 4.1.3 Share Ownership Distribution Range of Shareholding (Unit: Shares) 1 ~ 999 1,000 ~ 5,000 5,001 ~ 10,000 10,001 ~ 15,000 15,001 ~ 20,000 20,001 ~ 30,000 30,001 ~ 40,000 40,001 ~ 50,000 50,001 ~ 100,000 100,001 ~ 200,000 200,001 ~ 400,000 400,001 ~ 600,000 600,001 ~ 800,000 800,001 ~ 1,000,000 1,000,001 and over Total Number of Shareholders Shareholding (Shares) Percentage April 2, 2024 46,052 131,279 22,895 7,041 3,796 3,118 1,342 824 1,422 608 349 143 83 60 417 219,429 9,330,263 278,121,483 175,234,020 87,381,060 69,396,692 79,130,313 47,668,309 38,263,426 101,138,086 84,719,552 97,662,303 70,010,158 57,082,055 54,022,319 3,157,986,586 4,407,146,625 0.21% 6.31% 3.98% 1.98% 1.57% 1.80% 1.08% 0.87% 2.29% 1.92% 2.22% 1.59% 1.30% 1.23% 71.65% 100.00% 4.1.4 List of Major Shareholders Shareholder’s name Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF Yuanta/P-shares Taiwan Dividend Plus ETF Kinpo Electronics, Inc. New Labor Pension Fund Yuanta Taiwan High Dividend Low Volatility ETF JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International 134 Shares held 307,299,000 188,121,998 151,628,692 105,452,108 70,191,000 56,405,652 April 2, 2024 Percentage (%) 6.97% 4.27% 3.44% 2.39% 1.59% 1.28% 54,891,900 1.25% Equity Index Funds JP Morgan Chase Bank Custody ABP Retirement Fund Investment Account Citibank (Taiwan) Ltd. in custody for Norges Bank Labor Insurance Fund 54,223,699 48,344,697 38,471,531 1.23% 1.10% 0.87% 4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share Measurement Per-share market price High Low Average Per-share net worth Before dividend After dividend Year 2022 27.20 20.55 23.24 26.69 25.48 2023 40.85 22.60 28.58 27.45 26.24 (Note) Earnings per share Before adjustment After adjustment Cash dividends Weighted average outstanding shares Earnings per share Weighted average outstanding shares Earnings per share Per-share dividend Stock dividends From earnings From capital reserves Cumulative unpaid dividends Analysis of investment returns P/E ratio Price to dividends ratio Cash dividend yield 4,357,129,194 4,357,129,194 1.67 1.76 4,357,129,194 4,357,129,194 1.67 1.20 - - - 13.92 19.37 5.16% 1.76 1.20 (Note ) - - - 16.24 23.82 (Note) 4.20% (Note) Note: The 2023 distribution of earnings was resolved at the February 29, 2024 Board of Directors’ Meeting. 4.1.6 Dividend Policy and Implementation Status 1. Dividend Policy When the Company makes a profit during the year, 10% of the annual net income after appropriating income tax expense, offsetting any prior deficit, is to be set aside as legal reserve and a special reserve is set aside or reserved in accordance with the pertinent laws and regulations. The balance of earnings available for distribution is composed of the remainder of the said profit and the retained earnings from previous years. The earnings appropriation, distribution of dividends, and bonuses shall be proposed by the Board of Directors and approved at a Shareholder’s Meeting. The rest of the unappropriated earning shall be reserved. The Company is in a growth period of its life cycle. And as such, for the consideration of future capital needs and to meet cash flow needs of its shareholders, the Company’s distribution of cash dividends, after closing 135 and distribution of earnings, shall be no less than 10% of the total cash and stock dividends. Although a dividend ratio has not been specified in the Company’s articles of incorporation, the Company shall not appropriate less than 30% of its income after tax for dividends, after taking into account factors such as the Company’s capital needs, the capital budget, long term financial plans, domestic and international competition, and the interests of the shareholders. The board of directors shall propose the distribution of earnings and submit them to the shareholders’ meeting for approval. 2. The Board of Directors' resolution on dividend distribution ‧ The 2023 distribution of earnings of shareholders’ dividends in the amount of TWD 4,407,146,625 was approved by the Board of Directors Meeting on February 29, 2024. The aforementioned amount is set to be distributed as an all-cash dividend of TWD 1.0 per share and incurred capital surplus generated from the excess of the issuance price over the par value of the capital stock in the amount of TWD 881,429,325, or TWD 0.2 per share. The total cash distribution amounts to TWD 5,288,575,950. ‧ The Board of Directors has approved to set an ex-dividend record date for distribution and record date of cash distribution from capital surplus on April 6, 2024, and cash distribution has been paid out on April 26, 2024 3. When there is a significant change in the expected dividend policy, it should be stated: None. 4.1.7 Impact on 2023 Business Performance and EPS resulting from Stock Dividend Distribution: Not Applicable (The Company did not disclose 2024 annual financial forecast) 4.1.8 Employees’ and Directors’ Compensation 1. Employees’ and directors’ compensation policies as stated in the Articles of Incorporation When the Company makes a profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to the deduction of compensation to employees and directors, shall be distributed to employees as compensation in the amount of no less than two percent (2%) thereof and to directors as compensation in an amount of no more than two percent (2%) of such profits. In the event that the Company has accumulated losses, the Company shall reserve an amount to offset the accumulated losses. The compensation to employees as mentioned above may be distributed in the form of stock or cash and employees entitled to receive said stock/cash may include the employees of the Company’s subordinate companies pursuant to the Company Act. 2. Basis for estimating employees’ and directors’ compensation and stock dividends, and accounting treatments for any discrepancies between the amounts estimated and the amounts paid. ‧ Compensation to directors and employees, as denoted in the Articles of Incorporations, shall be estimated based on income before tax prior to the subtraction of directors and employees compensation during the current year and multiplied by the ratio as denoted in the Article of Incorporation (shall not be more than 136 2% or less than 2% of the remainder, respectively.) ‧ ‧ If the compensation approved for distribution to employees is to be in the form of common shares, the number of shares is determined by dividing the amount of the compensation by the closing price of the shares on the day preceding the Board of Directors’ meeting. If the actual amounts differ from the amounts estimated, the differences are recorded as gains/losses in the subsequent year as a change in accounting estimate. 3. 2023 employee compensation proposal passed by the Board of Directors ‧ Accrued employee compensation is TWD 814,142,600 and Directors compensation is TWD 43,051,019. ‧ If the estimated distribution amount differs from the amounts estimated in accrued expenses, the variance, reason, and resolution should be disclosed: No variance. ‧ The proposed distribution of employee stock compensation, and the size of such an amount as a percentage of the sum of the after-tax net income stated in the individual financial reports for the current period and total employee compensation: Not applicable (no employee stock compensation). 4. Actual distribution of 2022 employee and Directors compensation: ‧ Accrued employee compensation is TWD 750,945,090 and Directors compensation is TWD 39,709,200. ‧ The 2022 actual distribution of employee and Directors compensation remained as proposed by the Board of Directors. 4.1.9 Company Buyback of Own Shares: None 4.2 Bonds: None 4.3 Preferred shares: None 137 4.4 Global Depository Receipts 1. Issuance Details Date of issue: November 9, 1999 May 21, 2001 Issuance and trading location Total sum issued Issuance price per unit Number of units issued Luxembourg USD 122,160,000 USD 15.27 8,000,000 units Source of represented securities Participating shareholder(s): Kinpo Electronics, Inc. Quantity of represented securities 40,000,000 ordinary shares of Compal Electronics 1. Voting rights: Luxembourg USD 174,816,000 USD 6.07 28,800,000 units 1. Participating shareholder(s): 44,000,000 shares contributed by (1) Kinpo Electronics, Inc. (2) Panpal Technology Corporation (3) Gempal Technology Corporation 2. New cash issue of Compal shares: 1,000,000,000 shares 144,000,000 ordinary shares of Compal Electronics GDR holders’ rights and obligations Trustee Depository bank Custodian Unredeemed balance Allocation of expenses incurred at issuance and over the duration Key terms of the depository and custody agreements Per Unit Market Price 2023 Year-to-date April 2, 2024 High Low Average High Low Average According to the terms of the depository agreement and the laws of the Republic of China, the GDR holder is entitled to the voting rights of shares represented under the Global Depositary Receipts. 2. Rights to dividend distribution, share subscription, and other rights: Unless otherwise specified in the agreement, the GDR holder carries identical rights as do ordinary share holders N.A. JPMorgan Chase Bank, N.A. JPMorgan Chase Bank, N.A., Taipei Branch 1,702,586 units (April 2, 2024) Borne by participating shareholder(s) JPMorgan Chase Bank, N.A. N.A. JPMorgan Chase Bank, N.A., Taipei Branch Allocated proportionally between the Company and participating shareholders See descriptions below USD $ 6.50 USD $ 3.74 USD $ 4.56 USD $ 6.40 USD $ 5.45 USD $ 5.85 2. Key terms of the depository and custodian agreement (1) Key terms of the depository agreement ■ Depository receipts Each depository receipt represents 5 ordinary shares of Compal Electroinc Inc.. ■ Transferability /Settlement Application will be made to the Depositary Trust Company ("DTC"), Euroclear and Clearstream for acceptance of the GDRs for their respective settlement in their book-entry settlement systems. Transfers of the GDRs will be permitted only within DTC, Euroclear and Clearstream in accordance with their usual rules and operating procedures. ■ Deposit and Cancellation of Compal’s Shares 138 After the initial offerings and deposit of the GDRs and subject to the applicable laws and regulations, the Deposit Agreement and the Custody Agreement, and payment of relevant fees, GDR Holders will be entitled to withdraw and take delivery of the underlying shares represented by such GDRs. GDR Holders may also request the Depositary to sell the underlying shares on their behalf. Upon receipt of any proceeds from any such sale, the Depositary shall convert or cause to be converted any such proceeds into US dollar and distribute any such proceeds after deduction or payment of any fees, expenses, and taxes incurred in connection with such sale, as provided in the Deposit Agreement to the GDR Holders. Investors may deposit the underlying shares for issuance of additional GDRs in respect of such shares in accordance with the relevant R.O.C laws and regulations as well as the relevant provisions of the Deposit Agreement and Custody Agreement. The GDRs are listed on the Luxembourg Stock Exchange. ■ Dividends and other Distribution The Depositary shall convert all cash dividends received by it in connection with the underlying shares into US dollars in accordance with relevant R.O.C laws and regulations and distribute the resulting US dollars to the GDR Holders in proportion to the number of GDRs representing the underlying shares held by each of them, after deduction or upon payment of the fees and expenses of the Depositary and relevant taxes. The Deposit Agreement will contain arrangements for dealing with the amount required to be withheld according to the applicable R.O.C laws and regulations on account taxes or other governmental charges payable in respect of dividends and distributions, whether in cash or stock. If a distribution is made by the Company in the form of stock dividends (including stock dividends distributed from retained earnings or capital reserves), to the extent permitted by R.O.C laws, the Depositary will, subject to the terms of the Deposit Agreement, adjust the number of shares represented by the Master GDRs and cause DTC, Euroclear and Clearstream to distribute to the GDR Holders, in proportion to their holdings, additional GDRs. If such a distribution cannot be made in accordance with the provisions of the Deposit Agreement, the Depositary will sell the shares so received and distribute the proceeds, after deduction or upon payment of the fees and expenses of the Depositary and relevant taxes, to the GDR Holders. Sales of the stock dividends, if any, should be handled in accordance with the Deposit Agreement and R.O.C laws. ■ Taxes ‧ The dividends (cash or stock) distributed by the Company will be subject to the prevailing rate of withholding tax. ‧ GDR Holders wishing to cancel GDRs and who instruct the Depositary to sell the underlying shares in the Taiwan Stock Exchange will be subject to the Securities Transaction Tax at the prevailing rate. ‧ Currently there is no capital gains tax on the sale of shares. The rates and reimposition of the capital gains tax on the sale of the shares are subject to changes to the applicable R.O.C laws (2) Key terms of the custody agreement ■ Deposit of the Underlying shares for the Issuance of GDR(s): The underlying shares issued by Compal when presented to the Custodian for deposit as the basis for issuance 139 of GDR(s), must be accompanied by the documents requested by the Custodian. ■ Notification of Depositary to Issue GDR(s): The Custodian, upon receipt of the Compal’s issued underlying shares, shall notify the Depositary immediately of the deposit of the underlying shares for issuance of GDR(s). Upon receipt of such notification, the Depositary shall issue and deliver the GDR(s) representing the underlying shares to the beneficial owners, to the extent permitted by applicable laws. ■ Release of Underlying Shares Upon Cancellation of GDR(s): The Depositary shall immediately notify the Custodian of the surrender of GDR for cancellation against release and delivery of the underlying shares to the person designated by the Depositary, or, at the request of GDR Holders, dispose of the shares in the market and cause the proceeds to be made available to the Depositary to be distributed to the GDR Holders. The Custodian may require and collect payment from the person designated by the Depositary a sum sufficient to reimburse it for any taxes or other charges levied. ■ Share Reconciliation as of the Record Date The Custodian shall advise the Depositary as of the close of business on each Record Date of the total number of the Company's underlying shares deposited with the Custodian. 4.5 Employee Warrants: None 4.6 Subscription of New Shares by Employees and Restricted Shares: None 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None 4.8 Financing Plans and Implementation: 1. Execution of the previous issue or private placement of securities that have not been completed: None 2. The latest three-year issuance or private placement of securities has been completed and the project benefits have not yet been revealed: None 140 V. Operational Highlights 5.1 Business Activities 5.1.1 Business Scope 1. Main areas of business and revenue contribution ■ Main areas of business operations The development, design, manufacture, and sales of Notebooks, Ultraslim notebooks, Gaming, notebooks, 2- in-1 Notebooks, AIO, 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN, Private Network solution, Tablets, Smartphones, Smart Wearable Devices, Smart Hearable Devices, Smart Display Products, AR/VR Smart Devices, Smart Home Devices, IoT Vertical Solutions, Smart Medical and Healthcare, Automotive Electronics, and Servers. ■ 2023 Revenue contribution Major Divisions (%) of Total Sales 5C electronics Other products Total 99.6% 0.4% 100% 2. Current and future product development ■ Notebooks In 2023, Compal demonstrated unprecedented R&D efficiency by introducing notebooks equipped with the latest processors from Intel and AMD. Leveraging our expertise in system integration and manufacturing, we quickly enabled our clients to deploy products with the newest technical specifications, targeting the market needs for AI computation, personalization, and data privacy. We launched high-end notebooks designed specifically for the commercial and professional markets, highlighting their superior performance and professional orientation. As the demand for AI surged with the rise of various applications, the market need for notebooks also evolved. Despite economic headwinds, such as inflation and geopolitical challenges, causing a decrease in demand for general consumer models, the demand for commercial models has been growing. This is due to Microsoft's impending end of support for Windows 10, prompting brands to increase their investments in the commercial and high-end notebook market. Compal seized this opportunity by integrating innovative techniques and advanced technology into product design, aiding our clients in achieving remarkable success in the competitive notebook market and pioneering the development of AI notebooks in collaboration with industry-leading technology partners. Looking forward to 2024, we will continue to align with market trends, introducing advanced technical specifications in new notebooks, assisting our clients in securing higher market shares across various product categories, and creating a win-win situation for both Compal and our clients. 141 ■ Ultraslim Notebooks Compal, leveraging innovative technology and extensive R&D capabilities, continues to lead in the ultraslim notebook market. By incorporating the latest processors from Intel and AMD along with cutting-edge advancements, we have crafted products that are slim, lightweight, stylish, and durable. These products expertly balance performance and efficiency, ensuring optimal productivity for users. In response to the AI era, Compal is poised to introduce cutting-edge ultraslim notebooks integrated with AI computational capabilities in 2024. These notebooks not only adhere to industry standards for AI PCs but also provide always-connected capabilities and advanced 5G technology, revolutionizing the PC experience for users. In this new era of AI PCs, Compal is committed to developing notebooks that boast high performance, portability, human-centric design, extended battery life, privacy security, and high-speed 5G connectivity. Through deep integration of AI technology, our aim is to significantly enhance the user experience. ■ Gaming Notebooks The gaming market continues to expand, and Compal is actively engaged in the development of gaming notebooks, collaborating with clients to bring them to market. With the continuous evolution of gaming, consumers' demand for high-performance, immersive gaming experiences in gaming notebooks is increasing, expecting outstanding performance in various scenarios. Our products feature diverse designs and cutting-edge technology, including the latest processors, graphics chips, patented innovations, and advanced cooling solutions, ensuring the best gaming experience. ■ 2-in-1 Notebooks The 2-in-1 Notebook is a novel product that borrows the concept of “Transformers” – in addition to having a standard notebook keyboard for the usual functional operations, the product also features Tablet PC touch versatility. The touch-sensing display module, coupled with the latest Microsoft Windows 11 OS, attracts both the consumer base for standard notebooks and tablet PCs. We have utilized our rich R&D experience to present several innovative concepts that incorporate exclusive technology as well as materials. The fan-less design of the 2-in-1 notebook with its distinctive designs and form factors, has allowed the Company to create new market demand and earn unanimous praise from clients and consumers alike. With the increasing popularity of 5G networks, 2-in-1 notebooks featuring portability and mobility, equipped with 5G to surf the Internet at any time, have become the focus ■ All-in-one (AIO) The AIO has been on the market for years. It is an elegant design that combines a screen and computer with a truly special thin shape. The product has replaced the desktop in many households and corporations. Compal, in its design, not only utilizes a unique rotating hinge that allows for adjustable screen angles but also incorporates smart applications, wireless charging for smartphones, and uses sustainable, environmentally friendly materials to provide the best writing experience. Because Compal has the fundamental technical 142 capabilities required for notebook PCs as featured in the AIOs, it can also commence production in a very short time. Our AIO product lines have been very well received by clients. ■ NTN (Non-Terrestrial Network) and satellite communication NTN (Non-Terrestrial Network) is a new technology introduced in 3GPP Release 17 (B5G) that leverages satellite communication technology to expand the coverage of 5G networks. This enables the creation of a globally covered wireless communication network and builds new markets for communication products and services. With NTN technology developments, diversification and high reliability will become crucial in the communication field, and will need to be integrated with Ka/Ku high-frequency band and B5G communication protocol. NTN communication achieves global wireless communication through satellite-linked ground stations (User Terminals) or directly connected user devices (Mobile Devices, such as iPhone 14 had launched the Satellite communication), and provides many new application scenarios, such as remote areas, deserts, mountains and oceans. NTN technology enables the fulfillment of various communication demands, both for broadband networks and IoT use cases. It is also widely applicable to communication needs in fields such as military, aviation, smart transportation and cars. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN and Private Network solution 5G communication and 5G applications are global development trends. The three major use scenarios provided by 5G communication are mobile broadband service (eMBB), multi-machine type communication (mMTC), ultra-high reliability and ultra-low-latency communication (URLCC). In the coming years, 5G communication will be widely deployed in various industries and various domain applications. Compal adheres to its long-term technical advantages in the communication field, provides 5G communication devices and networking equipment, and offers a highly end-to-end integrated 5G networking infrastructure solution (the so-called non-public network or private network). The 5G universal integrated module complies with 3GPP Release R15/R16/R17 specification, is backward compatible with 4G LTE / 3G WCDMA, supports high-speed LTE Cat20, and supports both 5G NSA & SA networking modes. Modules with multi-band support include WCDMA/ TDD-LTE/ FDD-LTE, 5G FR1 (Sub-6GHz) & 5G FR2 millimeter waves etc. Modules also built with GPS / GNSS global positioning system, eSim and other functions, all need foundational technology of coming 5G user equipment and AIOT applications & devices. Based on long-term experience in consumer electronics design, research & development, and product manufacturing, Compal provides various kinds of reference designs of 5G user equipment products, collaborates with customers to provide 5G products such as 5G Mifi, 5G CPE routers, 5G notebook, 5G AR/VR, 5G drone, 5G robots, 5G real-time Camera, 5G Industrial PC & router, and 5G USB Dongle, etc. Rooted in the technology competence of telecommunication and the collaboration competency of joint development, Compal has effectively engaged with strategic partners to develop and manufacture the 5G networking equipment and solutions, such as 5G ISC (Integrated Small Cells), ORU, ODU, OCU, 5G Network Management and 5G RIC (RAN Intelligent Controller), as well as the as integrated and optimized 5G private network and the vertical applications on top of the 5G infrastructure network. 143 The 5G devices, networking equipment, and 5G Private Network solution - will be widely used in various industries such as entertainment, culture, tourism, finance, health, transportation, education, industry, agriculture, government, power utilities, etc. ■ Tablets Compal has deeply cultivated the consumer tablet and e-Reader market for years, earning recognition from leading global brand customers through its abundant manufacturing achievements, professional technical experience, and reliable product quality. Facing the slow down trend of global tablet and e-Reader market in recent years, Compal is also investing in creating breakthroughs in technologies, product features and cost management, aiming to commercial and industrial tablet market to engage more business opportunities and raise profits. ■ Smartphones Compal continuously implements automation solutions to optimize assembling and testing processes at factories, improve quality, and improve operation efficiency. In addition to stabilizing OEM of 5G smartphone business, Compal explores more business opportunities from entry premium segment to premium or ultra segments. ■ Smart Wearable Devices Compal began to ship wearable devices starting in 2016. Based on the design engineering capabilities and manufacturing experience with smart devices, we have achieved good market share for Google Wear OS-based smartwatches. In addition to the development of more compact and energy efficient smartwatches, we are also devoted to expanding our wearable product lines to satisfy various requirements from our customers. ■ Smart Hearable Devices Compal has been consistently developing wireless Bluetooth technology. These advancements encompass broadcasting, extended usage time, improved wearing comfort, as well as software development for noise reduction and transparency modes. Simultaneously, through the integration system of LE Audio, Compal is committed to developing peripheral applications for Bluetooth headphones, and will continue to apply these technologies to products such as wireless Bluetooth headphones, wireless Bluetooth hearing aids, and wireless Bluetooth PSAPs. ■ Smart Display Products The global smart TV penetration rate has exceeded 92%, and consumers are accustomed to using smart TVs to consume streaming media. As consumer demand changes, Compal has contributed its accumulated technology, cooperated with customer needs and strategic partners, and successfully developed new smart platforms and models. Mass production and launched them in 2023. In the future, we will continue to optimize image quality 144 design, adopt artificial intelligence (AI) image processing and sound processing, integrate large-size touch, ultra- high-brightness backlight, transparent OLED panels and state-of-art technologies. In addition to the consumer market, we will also target new business opportunities in the commercial and specific-purpose markets. ■ AR/VR Smart Devices Compal is based on computing, display and wearable design experiences, and communication capabilities, and it is applied to AR/VR devices and cooperates deeply with Qualcomm. In the future, for vertical customers, Compal will combine hardware, software solutions, and 5G communication into a standard 5G AR/VR solution to meet customer needs. ■ Smart Home Devices The rise of the Internet of Things (IoT) and AI technologies has facilitated smart home devices with smart voice assistants to become a potential product in the industry. Compal has already been recognized by our global customers for our engineering capability in Smart Speaker, Smart Display, and Smart Camera products. In the future, Compal will also use our core engineering capabilities to expand our product coverage in different smart home devices and applications. ■ AR Vertical Solutions In the development of the metaverse, vertical application solutions are one of the main market demands, enhancing real-world perception by adding virtual elements. These virtual elements can take the form of images, sounds, animations, or other perceptual information, integrating with the real world to provide users with a richer interactive experience. The extensive applications of AR include: Retail and e-commerce: AR can be used for virtual try-ons of clothing, glasses, accessories, etc., allowing customers to intuitively understand the style and size of products when shopping online. It can also be used for virtual placement of furniture and home products, helping customers preview their effects in actual spaces before purchase. Education and training: AR can provide interactive learning experiences, such as presenting 3D models, animations, or other learning content through augmented reality books or applications, helping students better understand and memorize knowledge. Tourism and cultural heritage: AR applications can provide guided tours, explanations, and interactive experiences at tourist destinations, allowing visitors to gain a deeper understanding of the local history, culture, and attractions. Industry and manufacturing: AR technology can be used to provide real-time information and guidance in real- world work environments, such as displaying operating steps, marking components, or providing real-time troubleshooting guidance during assembly processes. Healthcare: AR can be used for training healthcare professionals, surgical planning and guidance, patient education, visualization of medical records, etc. Additionally, AR technology can also be used for virtual reality therapy, pain management, and physical function rehabilitation. 145 Advertising and marketing: AR can provide unique interactive advertising and marketing experiences, such as AR filters for brand promotion, virtual product displays, and trials. Architecture and real estate: AR technology can be used to showcase virtual building models, interior designs, and renovation effects in construction projects, helping clients better understand and preview architectural projects. These are just some of the applications of AR technology, and as technology continues to develop and innovate, AR will continue to play a role in more fields. ■ Smart Medical and Healthcare The aging population, China’s new two-child policy, the flourishing healthcare industry, and the rise of sports fashion, especially the popular and convenient smart devices, have all contributed to smart healthcare becoming a focus of attention. It has also become a major matter of cross industry cooperation. Compal has responded to market demand and the rapid advent of the IoT era through active engagement in the healthcare market. The Company has reached out to major hospitals and point of care (POC) centers, such as those engaged in long-term care, using our strengths in integration and extensive experience in product development. The designs, which include science, technology, and humanity, help caregivers to provide higher quality services and also give hope of a better quality of life and personal dignity to those who need healthcare. ■ Smart Medical Imaging System Seeing the increasing demand for AI-based image information infrastructure in the market, in the international medical market sector, small hospitals, clinics, or telemedicine stations have a growing need to replace traditional film reading systems. Inventec is actively entering the smart medical image system field, including PACS (Picture archiving and communication system) or Smart Operating Room imaging systems, hoping to enhance AI infrastructure for hospitals or medical-related diagnostic fields. ■ Auto electronics (AE) The Company’s Auto Electronics Parts (AEP) Business Unit is currently engaged in providing such products as Telematics, in-Vehicle-Infotainment and Advanced Driver Assistance Systems (ADAS), and deals with customers which are primarily international Tier-1 car suppliers and leading car manufacturers. ■ Servers The Cloud application market is growing, and a significant portion of data storage and computing analytics have shifted to cloud servers in the back end. To meet the demand from both Enterprises and Data Centers, Compal has mastered the R&D of high-density computing power and precision performance management and has developed the capacity to design and manufacture servers with high cost-performance value. Also, more AI products are necessary for a significant increase; we also increase this kind of server in our production line. 146 5.1.2 Industry Overview 1. Current and future industry prospects ■ Notebooks During the peak of the COVID-19 pandemic, global notebook shipments surged due to the increased demand for remote work and distance learning. However, since 2022, demand has begun to slow down, compounded by unresolved global inflation and ongoing geopolitical unrest, leading to a total shipment of 185 million units in 2023, a 12.9% decrease compared to 2022. Despite this, shipments remained above pre-pandemic averages. Looking forward to 2024, as the global economy gradually stabilizes and recovers, anticipated demand for upgrades driven by operating system updates and AI applications is expected to lead to moderate growth in shipments. Economic challenges and cautious IT spending due to inflation resulted in the postponement of many commercial PC procurement plans for this year. These positive factors provide an optimistic outlook for the notebook market, with brands responding to market needs for AI applications and commercial PC replacement demands by launching more targeted products to seize opportunities. In this transition, forward- looking technology, precise market segmentation, product positioning, and innovative design become crucial. Compal, with its extensive experience, advanced technology, and a wealth of exclusive patents, is well- positioned to collaborate with partners and clients to develop innovative and high-quality products that meet market demands. ■ Ultraslim Notebooks The trend towards ultraslim notebooks continues to thrive in the NB market. With the widespread adoption of SSD and diversifying use cases, ultraslim notebooks are no longer confined to the premium market, with brands launching more affordable ultraslim models. According to IDC data, shipments of ultraslim notebooks (less than 18mm thickness) reached 61.9 million units in 2023, and it is estimated that ultraslim notebooks will account for 35% of global notebook shipments in 2024. Compal is constantly innovating in lightweight materials, power- saving, and cooling technologies, developing industry-leading products that have been well received by the market. ■ Gaming Notebooks In 2023, the gaming industry continued to show robust growth despite economic uncertainties and inflationary pressures on consumer spending. As the world gradually recovered from the pandemic, the demand for home entertainment and gaming remained strong, indicating an ongoing transformation in consumer behavior and needs. Faced with economic constraints, consumers became more cautious in their purchasing decisions, yet the interest in mid to high-end gaming products persisted, underscoring the value of gaming products to consumers. Gaming notebook shipments reached 24 million units in 2023, outperforming the overall notebook market. Looking forward to 2024, as inflation cools down and with the advancement of AI applications, key component technologies, and product innovation, the attraction of gaming products is expected to rise further, driving continuous growth in the gaming notebook market. 147 ■ 2-in-1 Notebooks Owing to efforts across the entire supply chain, the cost and selling prices of 2-in-1s have dropped considerably, which has made them more available and acceptable to a wider group of consumers. There are two types of 2- in-1: flip-screen and detachable. Flip-screen notebooks can be physically converted for use under different scenarios, such as video sharing, multi-user sharing, and tablet mode. In recent years, manufacturers have introduced notebooks with flip screens that are both lightweight and thin, making them even more appealing. Detachable notebooks are characterized by smaller screen sizes. This is a feature that appeals to both tablet and notebook users. The compact form factor combined with a detachable keyboard can better satisfy users who have a higher need for portability. According to IDC, the global shipment of 2-in-1 notebooks in 2023 was approximately 85 million units. It is estimated that brand manufacturers will launch more diversified 2-in-1 products integrating 5G networks and AI-related applications in 2024, so the penetration rate in global notebook shipments is expected to continue to rise. ■ All-in-one (AIO) The AIO market is currently dominated by HP, Lenovo, Apple, and Dell. Those top brands account for more than 80% of market share. Brand manufacturers have successively launched large-size screen designs to enhance visual comfort. In addition, to meet the differences in usage requirements derived from different scenarios, brand manufacturers are also striving to innovate in product specifications and designs. IDC predicts that AIO shipments will be more resilient than traditional desktop computers. AIO shipments will exceed 9 million units in 2024. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN and Private Network solution According to the GSA, to the end of 2023, there are 585 operators officially providing 5G network communication products and services in more than 176 countries. The Cisco Annual Internet Report states that by 2023, about 70% of the world's population (5.7 billion) will have mobile network communication, at least 10.6% of which is provided by 5G communication. There are more than 1700 5G consumer products available in the global market, across various product categories such as mobile phones, tablets, network sharing devices (CPE/MiFi), routers, dongles, notebooks, TVs, robots, vending machines, etc. Many products have adopted Compal 5G solutions already. Compal will continue to expand partners in different 5G domains to develop more 5G application services and consumer products. According to the latest market research, the global 5G small cell market size will reach USD 17.9 billion in 2028. According to SNS estimates, the global private network market will grow to USD 3.4 billion in 2025 with a CAGR of 34%. Ericsson also pointed out the huge potential of digital transformation, and the 5G vertical application market will reach USD 1.32 trillion in 2026. Compal's new products 5G small cells and 5G O-RAN private networks and vertical solutions not only enhance network speeds, but also bring breakthroughs in enterprise private networks, smart city and smart factory applications. It is expected that small cells and private network 148 solution will improve 5G coverage and vertical applications. ■ Tablets The demand for tablets experienced a significant decline in 2023 due to the premature consumption caused by the pandemic, slowing global economic growth, and the ongoing market erosion by large-screen smartphones. According to IDC data, global tablet shipments in 2023 were approximately 128 million units, down 20.5% from 2022, marking the lowest shipment volume since 2011. The main reasons for this decline include consumer concerns about future economic prospects, leading to reduced spending on consumer electronics or reallocating budgets to other products, with particularly noticeable declines in shipments in the North American and European markets. Leading brand Apple did not introduce any updates to its iPad products, which also had a certain impact on replacement demand in the tablet market. Competition in the tablet market is becoming even fiercer in the future with the entry of smartphone manufacturers such as Huawei, Xiaomi, Honor, vivo, OPPO. By leveraging existing technology and experience in the smartphone domain, these manufacturers will bring more innovation and competition to the tablet market, driving technological advancements and price competition. However, there is still demand for mid/high-end tablets aimed at education purposes; serving as cheaper alternatives to PCs. Additionally, due to economic downturns, there is a trend towards using consumer tablets in industrial or vertical industry applications to save IT expenditures for business. In the future, Compal will continue to monitor and respond to market changes, providing customers with competitive and diverse tablet products. ■ Smartphones According to IDC, the global smartphone sales volume in 2023 was about 1.17 billion units, with a YoY decrease of 3.2%. The main reason for the decline in sales volume was general economic changes and high inventory at the beginning of the year, but the growth in the second half of the year underpins an expected recovery in 2024. In general, the global smartphone market still faces challenges, but recovery momentum is developing rapidly. Compal continues to flexibly adjust production bases in line with customers’ strategies, aiming to expand their market share with low cost advantage and advanced specifications. ■ Smart Wearable Devices According to IDC, in 2023, the smartwatch market is expected to grow at an annual growth rate of 11.2%. Apple is still the top vendor by market share. However, the market growth mainly comes from low-end products, especially driven by the Indian market. Affected by China's economic downturn and EU & US market saturation, Apple's WatchOS has declined, while Google's WearOS has maintained flat or only single-digit growth. In 2024, Compal continues to provide best-in-class manufacturing and ODM services with the latest technical developments for brand customers. By integrating the latest smartwatch platform and technologies, Compal provides a variety of product design solutions hand-in-hand with brand customers to meet the demand of 149 different target market segments, and end-user attributes. ■ Smart Hearable Devices According to the latest report from Counterpoint Research, despite the overall unfavorable economic conditions and weakened consumer demand leading to a decline in the demand for consumer electronic devices, the global sales of wireless Bluetooth headphones in the first half of the year 2023 only decreased by 2% compared to the same period last year. It is speculated that true wireless Bluetooth headphones are relatively less affected by inflation to some extent. In addition to continuously enhancing hearing services in Bluetooth headphones, Compal also aims to use the next-generation Bluetooth technology, LE Audio. This technology not only offers better sound quality, energy efficiency, longer usage time, and extended effective range but also features broadcasting functionality that allows simultaneous connections to multiple devices. Compal will gradually introduce related integrated technologies, hoping to collaborate with customers to explore new markets in entertainment, healthcare, public services, and more. ■ Smart Display Products According to market research companies, the global LCD TV industry saw a decline in overall shipments in 2023, with approximately 201 million units shipped worldwide, a 1% decrease from the previous year. This was due to various factors including the Ukraine-Russia conflict, and rising inflation. The North American market was continuously impacted by inflation, which led to decreased demand. As a result, all TV major brands resorting to focusing on low price models and causing market price competition and challenges. Looking ahead to 2024, challenges still remain such as conservative demand and micro-magement of panel production capacity. In response to these challenges, our company will optimize operations and maintain flexibility, deepen strategic partnerships, and adapt to the changing market conditions not only in consumer markets but also in commercial and specific-purpose markets. ■ AR/VR Smart Devices The Metaverse business opportunities have not bloomed as expected, and leading international customers have turned to more practical development. We will deepen the application of AR/VR smart head-mounted displays in vertical market segments such as smart factories, smart healthcare, and remote collaboration. With the launch of Apple's Vision Pro, AR/VR will further deepen the development of spatial computing in the future, and combine with generative artificial intelligence (Generative AI) functions to become an assistant for the acceptance and transmission of work knowledge in the commercial industry. Therefore, we will focus on providing AR/VR solutions for the commercial and industrial markets. ■ Smart Home Devices The application of wireless network technology in smart home appliances is getting mature, bringing convenience and real-time connectivity to consumers, pushing the growth of the smart home market. Today, the smart home market is no longer just attracting early adopters of technology enthusiasts but is 150 gradually entering the mainstream consumer market. With the adoption of the Matter standard, more manufacturers have the opportunity to expand smart home applications, providing compatibility, security, and ease of use to new consumer groups. Furthermore, with the evolution of generative AI, the future integration of large-scale language models (LLMs) into smart homes will bring more advanced and mature artificial intelligence, which will be reflected in voice interaction, image recognition, and home automation, providing consumers with smarter and more convenient user experiences. ■ AR Vertical Solutions The development of the augmented reality (AR) industry has been in a progressive stage over the past few years, and it has been widely applied across various sectors, with expectations for further expansion in the future. This is primarily influenced by technological advancements, increasing consumer demands, and increased investment in AR applications by businesses. Industries benefiting from AR include retail, education, healthcare, industrial manufacturing, and entertainment, among others. As technology matures, the applications of AR are expected to become increasingly diversified. Simultaneously, the technological capabilities of hardware devices such as AR glasses and head-mounted displays continue to improve, with costs gradually decreasing. This will facilitate broader adoption of AR technology and spur major tech companies as well as emerging enterprises to develop and enhance AR software platforms, providing developers with more robust tools and resources to create various AR applications and offering users richer content and immersive experiences. With the proliferation of AR applications, it can be anticipated that consumer acceptance of AR technology will continue to rise. More people are beginning to incorporate AR technology into their daily lives, which will contribute to the sustained growth of the AR market and establish it as a technology and industry of significant influence in the future. ■ Smart Medical and Healthcare Increasing shortages of medical staff over recent years have imposed a heavy burden on medical personnel. The result is that medical institutions are desperately searching for more efficient ways to manage personnel and resources. In the United States, hospitals have responded to this crisis with the full implementation of digital charts and modern hospital management systems. Compal is actively introducing promising solutions from abroad to help Taiwanese medical institutions provide better service for patients. Furthermore, the aging population and shifting focus of medical technology towards convenience have resulted in a change in healthcare practices from always being hospital-based to some home-based and personalized solutions. In light of this, Compal has invested significant resources in the development of integrated products that make it possible for many healthcare services to be carried out at home or at other fixed locations. Compal also develops smart sports solutions and smart assistive tools and collaborates with athlete training centers, both at home and abroad, to develop exclusive high-end products for professional athletes. ■ Auto electronics (AE) In recent years, governments all over the world have been tightening the exhaust emissions standards and 151 safety standards of vehicles and have set a timeframe for implementation. Electrification, connectivity, and ADAS/AD become the megatrends that trigger disruptive changes in the automotive industry. Disruptive innovation in technologies, along with IT companies (e.g. Google), startups (e.g. AI and sensor startups), and service platform providers (e.g. Uber) entering the market one by one have changed the traditional supply chain and competitive environment in automotive. Driven by new entrants into the market, new technology introduction and the Covid pandemic since 2019, legacy carmakers have adapted their sourcing and operation models to the changes and challenges. To cope with those changes and challenges in the auto industry, we have equipped ourselves with ITAF 16949 and ISO 26262 certified and deployed 5G networking access and ADAS technologies. Since 2021, we have built a plant in North America to supply customer demand locally. ■ Servers Server shipments have double-digit recession compared with last year, mainly due to traditional cloud services necessary decrease impact, overall economic deterioration, corporate reduced investment and the rise of AI demand that has squeezed corporate budgets for purchasing traditional servers. According to IDC, shipment of x86 servers totaled 14.80 million units in 2023. This is expected to rise to nearly 15.53 million units in 2024. X86 servers accounted for 92.65% of total server shipments. Rack-mounted servers represent a higher market share because they are both energy efficient and scalable. And AI Sever demand has significantly increased. 2. Association between upstream, midstream, and downstream industry participants ■ Notebooks The notebook industry is now mature and Taiwanese manufacturers have developed comprehensive partnerships with upstream, mid-stream, and downstream suppliers. This fully-fledged supply system gives manufacturers the advantage of being able to adjust to market changes quickly and flexibly. It also enables Compal to keep up to date and deal with the latest technology and pricing of key components such as semiconductors, CPUs, LCD panels, and solid-state drives (SSD). However, we still suffer from geopolitical issues, regional conflicts, and climate issues, which have caused difficulty in global production and logistics since 2018. Compal and other Taiwanese ODMs/OEMs possess distinctive know-how in system integration, from design to manufacturing, as well as operational management. Taiwan now accounts for more than 80% of the world's notebook ODM/OEM production. As geopolitics and chip wars intensify, Taiwanese ODM/ OEM will become more competitive in the global notebook industry. The downstream customers, including brand manufacturers such as Dell, Lenovo, HP, Acer, Asus, and Apple, all have strong marketing strategies and comprehensive sales support systems to ensure success. Global warming and climate change have become critical issues in recent years. The technology industry changes people's lives so that companies will not be absent. Under the trend of energy conservation, carbon reduction, and recycling, Compal helps clients launch notebooks that are eco-friendly and sustainable. The design concept is based on energy conservation, recycling, and reuse to do our part to save the planet. 152 ■ Ultraslim Notebooks As an ultraslim notebook supplier, access to metal for casings and lightweight carbon fiber materials is especially important. Compal has developed a robust upstream, mid-stream, and downstream supply system, and acquired the equipment and technology to produce the needed metal products. Compal will now shift its focus gradually towards products in the mainstream price range, such as ultraslim notebooks made with plastic materials. This will ensure the quick launch of new customer products and growth in this market. ■ Gaming Notebooks In the design of gaming notebooks, the biggest difference from traditional notebooks is the requirement for powerful performance. As a result, thermal design is important for the performance of gaming notebooks. Compal continues to cooperate with suppliers to develop a variety of advanced cooling modules and use them in new products. It can help customers to continue to expand their market share in the gaming notebook market. ■ 2-in-1 Notebooks The supply chain and manufacturers of 2-in-1s are identical to those of conventional notebooks, with the addition of some tablet parts suppliers and manufacturers. Support of the existing supply system and its advantage of integration across suppliers allows Compal to maintain full control of the development of key components. This speeds up research and innovation of new features because brand manufacturers and users of 2-in-1s continue to add new requirements. Despite the increasing complexity and challenges ahead, Compal remains confident and continues to make improvements and bring new products and concepts to the market. ■ All-in-one (AIO) The supply chain and manufacturers of AIOs are generally identical to those of conventional notebooks. The upstream supply structure is similar to that for general PCs, with the addition of suppliers of large touchscreen panels. HP, Lenovo, and Dell focus not only on commercial users but also on home multimedia users. Apple’s emphasis is on professional applications and usage. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN and Private Network solution Compal 5G module and the reference device design has combined upstream and downstream and dozens of well-known customers and operators to establish a complete 5G product ecosystem, providing flexible and diversified 5G related products to fulfill 5G domain services and requirements. ■ Tablets Due to weak demand, the supply chain remained at a relatively high inventory level in 2023. Compal also adjusted its product strategy by maximizing the adoption of the same components or shared designs for different products to lower the risk of fluctuations in customer demand. Additionally, in order to enhance cost 153 advantages in overseas production bases outside of China, Compal actively developed local suppliers to ensure more flexible production and supply, meeting customer and market expectations for product pricing, delivery times, and quality. ■ Smartphones Compal actively explores competitive suppliers to ensure the quality of sourced material meets both customer and market needs. Furthermore, Compal is building up a 5G components supply chain, as well as new technology, to assist customers in remaining competitive. ■ Smart Wearable Devices Compal works closely with suppliers for chipsets, sensors, wearable displays, and touchscreen modules to secure parts for wearable devices. In addition to coordinating with upstream suppliers and developing new technologies for new customers, Compal also reaches out to suppliers with advanced technologies. Thanks to the technical collaboration between Compal and its technology partners, Compal can quickly adjust the supply chain and product development strategies to accommodate the fast-changing market. ■ Smart Hearable Devices Compal collaborates closely with Bluetooth chipset suppliers and audio component manufacturers, engaging in deep cooperation. Additionally, Compal stays closely informed about next-generation Bluetooth LE Audio technology. Through ongoing communication with key customers, Compal adjusts its product development strategies, concurrently expanding into new markets such as entertainment, healthcare, and public services. ■ Smart Display Products In 2023, the global supply chain was continuously impacted by the ongoing US-China trade tariffs. To mitigate risks, we have been actively diversifying our operations outside China and expanding to other regions. We have integrated resources across different regions and levels of the supply chain to optimize production, control operational costs, and provide flexible supply to meet customer demand. Our goal is to ensure that our operations are agile and adaptable to changing market conditions while maintaining high levels of service and quality. ■ AR/VR Smart Devices Compal has partnered up with main chipset supplier Qualcomm and continued to cooperate in depth to jointly build a highly cost-effective reference design, integrate midstream and downstream partners, such as optical engine development and production, and provide a complete set of software and hardware solutions for AR/VR vertical application fields to meet the needs of the commercial market. 154 ■ Smart Home Devices Compal provides a wide range of smart home products, including smart speakers, smart displays, and smart cameras for the development of intelligent home applications. In collaboration with upstream, mid-stream, and downstream partners, we can offer various customized hardware devices, software support, and platform integration solutions tailored to the needs of different system integrators and industrial customers. ■ AR Vertical Solutions The augmented reality (AR) industry exhibits a close interdependence among its upstream, midstream, and downstream sectors, mutually supporting and driving the development of the entire industry. The upstream sector mainly comprises hardware manufacturers and technology providers. Hardware manufacturers are responsible for the development and production of AR glasses, head-mounted displays, and other devices, while technology providers focus on researching and developing AR technologies such as perception technology, virtual image processing, tracking technology, etc. They directly influence the hardware and software technology levels of the AR industry, as well as the overall performance and functionality of products. The midstream sector primarily consists of software developers and solution providers. Software developers create AR applications, platforms, and tools, while solution providers offer AR-based solutions for various fields such as education, retail, industrial applications, etc. They directly impact the diversity and quality of AR applications, as well as their scope and effectiveness in different industries. The downstream sector mainly includes end-users and consumers. End-users can be businesses, educational institutions, medical facilities, etc., or individual consumers who are the ultimate users of AR products and applications. Consumer demand and feedback directly influence the market demand and direction of the entire AR industry, driving continuous innovation and improvement of products and services by upstream and midstream sectors. Compal's continuous development of integrated system service products in collaboration with manufacturers and close cooperation with the industry chain is crucial for the sustained development of the AR industry. Collaboration and coordination among various sectors of the industry chain, coupled with ongoing technological and product innovation, will facilitate the advancement of the entire industry, meet market demands, and bring forth more innovative application scenarios. ■ Smart Medical and Healthcare (1) Instruments, equipment, and accessories: • Smart sports Compal has invested substantial resources into the development and integration of smart sports vital sign monitors. These monitors can gather measurable data and are useful for designing training programs. This information can be exchanged over the cloud to facilitate remote training and communication between athletes and trainers, helping athletes to follow the most effective physical and technical training methods and avoid sports injuries. 155 • Smart assistance devices and healthcare-related products Compal is actively investing in the digital transformation of medical equipment. Through Internet connectivity, data from medical equipment can be exchanged and calculations can be made in real-time over the cloud. This can make various user services available, such as automatic record-keeping, reminders, behavior prediction, and so on. These devices can even be connected to advance and back-end medical service providers for professional medical consultation, to accomplish the Compal vision of a mobile and real-time medical service. • Innovative medical devices Compal has been working with partners in both the industry and the medical segment for several years and has invested in the development of some rather innovative medical devices. These include: Continuous Glucose Monitoring (CGM), 24-hour blood pressure monitoring (24-hour BPM), handheld smart ultrasound, and others. We expect to provide users and physicians with many more options to help develop a smart medical industry and improve the quality of healthcare (2) Medical AI • Cardiovascular disease prediction To reduce the issue of a lack of medical manpower, Compal has been working with the Chi-Mei Hospital and medical center on the development of AI in medicine. Using the existing abundant medical resources of the hospital, Compal is helping to build up a cardiovascular disease prediction AI system which can be used in hospitals and medical centers. The product will include long-term tracking and users may be able to predict the timing and probability of cardiovascular complications. This will allow preventative action to be taken and reduce the risk of such events as stroke, myocardial infarction, etc. Compal also expects to help with the medical technology upgrade after the integration of the products in professional medical establishments in Taiwan. (3) Management system: • Digital charts and smart ward solutions Compal has introduced digital charts through an alliance with foreign partners. This product category offers the potential to aid physicians in diagnosis and reduce the workload on nurses, unlike the conventional management system used by existing medical institutions. Additionally, it can be integrated with many different data management systems currently used in hospitals. Digital transformation is already happening within the healthcare system, and Compal is currently working with several hospitals to develop digital charts and smart ward solutions. Healthcare organizations will no longer operate in isolation, but will be able to coordinate their activities towards the establishment of a uniform standard and reduce the wastage of medical resources. • Point-of-care solutions Compal aims to address the recent increase in demand, as well as the shortage of manpower, at nursing centers. This is being done by the introduction of human-operated healthcare solutions, such as proprietary bedside systems that are compatible with the instruments and specifications of other manufacturers. However, flexibility and the ability to customize products to customer needs will still be 156 maintained. The most important feature of this product is that it works with different types of Smart Home devices and medical instruments, and it supports multiple services. It is intended to provide at home comfort in nursing and postpartum centers, while also allowing professional care facilities to be set up at home. ■ Automotive electronics (AE) The mid-stream players in the supply of automotive electronics are represented by tier-1 AE integrated system providers. This integrated system handles in-car information, communications and entertainment, and is also linked to other auto parts. These products are sold to downstream automobile makers, which places the Company between the midstream and upstream of the AE supply chain. ■ Servers Server technology is a highly mature industry, and Taiwanese manufacturers have developed a comprehensive supply system for upstream, mid-stream, and downstream partners. Main parts such as CPUs, memory, and storage drives are easily secured and downstream customers such as HPE, DELL, and Lenovo all have long-term notebook manufacturing relationships with Compal. Compal now has extensive experience and a reputation for designing and manufacturing server products. 3. Product trends and competition ■ Notebooks • As AI technology rapidly advances, the notebook market is undergoing an unprecedented transformation. Microsoft's integration of Copilot into its operating system marks a milestone in software innovation, signaling significant updates in hardware specifications such as keyboards, memory, processors, and other sensory components. Neural Processing Units (NPU) related to AI are becoming standard in the next generation of notebooks, promising users a smoother and more intelligent experience. Furthermore, with chip manufacturers vying for market share in AI computation, the notebook market is swiftly transitioning into an era of intelligence. • With the widespread application of AI technology across various industries, its rapid development has become a key driver for the growth of the global notebook computer market. In response to this trend, semiconductor industry leaders, including Intel, AMD, and ARM-based Qualcomm, are actively developing and launching processors equipped with AI computational capabilities, aiming to secure a leading position in the market. The introduction of these processors not only signifies intensified competition between the x86 and ARM platforms but also heralds a new wave of technological innovation in the notebook industry. This will provide consumers with a broader range of product choices and enhanced user experiences. 157 • To cater to diverse application needs, the industry plans to launch a variety of notebooks, including gaming, creator, and high-end ultraslim models, targeting different customer segments. Equipped with AI processors and advanced sensing technologies, these are expected to hit the market soon, significantly enhancing performance and user experiences, thereby boosting creativity and productivity. • As the integration of AI technology with mobile devices and cloud computing progresses, the demand for security features has significantly increased. The adoption of AI not only enhances device performance and user experience but also introduces new challenges in information security, especially in data processing and storage. In response, the development and adoption of advanced security technologies, such as fingerprint recognition, facial recognition, voice recognition, and camera privacy shutter, have become crucial. These measures not only ensure the security of user data but also enhance usability. ■ Ultraslim Notebooks • Slim design, high screen-to-body ratio, enhanced sensor components, and cybersecurity protections are key factors for consumer choice. • New generation processors, combined with a Neural Processing Unit (NPU) for AI capabilities, significantly improve multitasking efficiency. • AI-optimized power management extends battery life for longer usage. • Metal chassis not only enhances the product's aesthetic appeal but also its structural integrity. ■ Gaming Notebooks • High-performance processors with AI technology ensure real-time optimization of gaming performance for an enhanced experience. • Slim design with advanced cooling solutions maintains stability and portability. • Personalized audio and lighting effects boost game immersion. • Distinctive exterior design highlights brand and player identity. ■ 2-in-1 Notebooks • Beyond slim designs and portability, consumers now expect multitasking processors, extended battery life, and stylus support • The integration of AI and 5G technology broadens the application scope for 2-in-1 notebooks. 158 ■ All-in-one (AIO) • High-end home entertainment AIOs and new flat, portable AIOs present new opportunities. • There is room for improvement in touch-based applications and graphical user interfaces. • The product exterior can be designed to match interior decoration and furniture. • Portable products can be designed with screens that can move in several directions. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN, Private Network solution 5G communication and applications have expected explosive growth in the coming years. 5G user terminals and products will come out with different product categories such as network devices (5G CPE/ 5G USB Dongle/5G Mifi), notebook computers, routers, televisions, and robots… etc. By 2026, 26% of 5G revenue will come from enterprise private networks, reaching an amount of 600 billion US dollars according to Ericsson's report. The new demand for "Enterprise private network" will be an important opportunity for 5G small cells, 5G O-RAN, Private networks and vertical application solutions. Compal provides the leading communication technology, product manufacturing and technical know-how. Our integrated 5G module, 5G devices, 5G Small Cell, 5G O-RAN, Private network solutions provide complete technical support and development tools to help our customers develop their 5G products and services. ■ Tablets • Extend R&D technology to large displays and designs for automation. • Focus on more eco-friendly product designs such as recycled material and reparable design. • Explore collaborative opportunities with content providers or telecommunications operators. • Adopt AI technology to explore opportunities in education, for kids, industrial, and medical applications. • Develop a foldable tablet to maintain screen size while reducing the overall size. Tablets have become mature products. The focus now lies in developing new usage scenarios and optimizing the overall user experience through AI functionality. This includes catering to various applications such as the education market, children's market, smart home control centers, or utilization in various industrial IoT applications, all of which are actively being developed by Compal. ■ Smartphones • Communication technology enters the 5G communications generation. To provide mobile broadband service (eMBB) will increase consumer demand for entertainment, applications, and services. • Integrates multi-core architecture and strengthens 4G and 5G carrier aggregation mobile broadband communication to provide faster transmission speed and data throughput. • Support AI image processing and applications, drive video streaming services to meet the needs of 159 consumers in daily work and life entertainment. • Higher screen ratios, high picture quality, narrower border touch products. • Integrating under-screen fingerprint recognition technology and under-screen camera technology to create full screen experience for consumers. ■ Smart Wearable Devices • More and more smart, fashionable, and compact watches for sports and health are following Apple to the market. • Customers who use smart wearable devices for sports also want high-accuracy GPS, steps counter, heart rate monitoring, and other bio-measurements. However, power efficiency remains a key requirement common to all users. • Customers who use smart wearable devices for health reasons need accurate algorithms and convenient user operation. This will be one of the key success factors of the products. To satisfy customer needs, Compal not only continues to make more power-efficient and compact designs, but also enhances the flexibility of its production processes. ■ Smart Hearable Devices Evolving due to keen competition, smart hearable devices will not only be used for music streaming, but also include more advanced features such as active noise cancellation, smart assistant, bio-detection, etc. Besides the functionality enhancements, the design will also aim to improve user experiences like water resistance, ergonomics for comfortable wearing, and applications with AI technologies to make it smarter. Compal has specialized in related hardware and software development for a long time. We have also had input from hearing experts to help develop professional acoustic products to create product differentiation and make us more competitive in the market. ■ Smart Display Products Our company has been working closely with strategic partners to drive innovation in the development of the latest smart TV platform, and technologies such as artificial intelligence (AI) image and sound processing, integrated large-size touch, ultra-high brightness backlight and transparent OLED panel technologies. By combining these technologies, we aim to create a diverse range of applications and opportunities. This approach will enable us to stay ahead of the competition and maintain long-term competitiveness by accumulating leading-edge technology capabilities. ■ AR/VR Smart Devices As we learned about the launch of Meta's Quest 3 and Apple's Vision Pro, the commonalities of technology 160 development can be summarized as follows: ultra-high-resolution near-eye display, eye tracking, spatial perception and computing, and human-computer interface. These technologies are the development trends of future AR/VR head-mounted displays. ■ Smart Home Devices • Smart speakers, smart displays and smart cameras with AI technologies that enable multiple modes of interaction such as voice input, touch, gesture and computer vision. • Support for the Matter protocol allows connections to a wider range of smart home products from different ecosystems. • Services integrated with cloud and edge computing and data analysis for user behavior learning will be the key competitiveness of Smart Home products. ■ AR Vertical Solution The development trends and competitive landscape of augmented reality (AR) products are influenced by various factors, including continuous improvements in hardware technology such as AR glasses, head-mounted displays, and sensing devices. These improvements primarily manifest in enhanced computing power, display effects, sensing accuracy, and comfort, providing users with a better overall experience. Additionally, the software functionalities of AR products are continually upgrading, including image processing, sensing technology, real-time rendering, etc. Software developers are competing to introduce more feature-rich and realistic AR applications to meet users' demands for higher quality and greater diversity of applications. The diversified application demands also drive the development and competition of AR products, with enterprises striving to develop products with differentiation advantages to meet the needs of different industries. The popularity of smart wearable devices also propels the development of AR products, providing users with more convenient and intuitive AR experiences while expanding the scope of AR applications. Due to the immense market potential of the AR industry, it has attracted numerous companies and startups to enter the competition. Currently, several major tech companies are investing significant resources in research, development, and promotion in the AR field, while many emerging enterprises challenge traditional markets through innovative technologies and applications, leading to increasingly fierce competition. Compal, holding the principles of continuous innovation, enhancing product performance and functionality, as well as deeply understanding market demands and industry applications, can gain advantages in the fiercely competitive AR market. ■ Smart Medical and Healthcare (1) Instruments, equipment, and accessories: ‧ Smart sports There is already a strong and growing demand from professional athletes for assistive technologies and devices. Compal has invested significant R&D efforts in collaboration with top sports experts worldwide 161 for the development of products that are more suitable for professional athletes. Compal is also working with fitness centers on the creation of customized, exclusive packages that deliver the most effective sports solutions and communications to both users and businesses. ‧ Medical equipment and healthcare-related products As new biosensors and related hardware such as MCU/firmware/biomaterials and software have matured over recent years, the development of the innovative medical devices industry has also moved to another stage. Continuous investment and development by Compal have led to more and more customers gaining trust in our design and development capacity, and the market trend is now moving towards an alternative device generation. (2) Management system: ‧ Digital charts and smart ward solutions The United States currently has the most popular (Level 7) digital chart and hospital management system, and other countries around the world are following closely behind. The purpose of this product is to deliver functions that will be of assistance to physicians and nurses while still being easy to operate. Alliances with world industry leaders have made it possible for Compal to introduce the solutions to medicine in Taiwan, where its success will be replicated in our medical systems and it will also be moved to other countries in Asia. ‧ Point-of-care solutions An aged society, combined with a need for differentiated medical services, makes nursing centers and postpartum care centers especially popular in Taiwan. This management system provides them with a comprehensive solution and makes it possible for communications to be established between several different medical devices while patient privacy remains protected. Compal has invested in the development of related hardware and software and is working with existing medical instrument suppliers on the growth in this market. ■ Automotive electronics (AE) Telematics, in-vehicle-infotainment, and Advanced Driver Assistance Systems (ADAS). ■ Servers The rack-mounted server is still the mainstream product today because it can be easily maintained and scaled up as business grows. Tower servers are still favored among SMEs for their low cost, but their market share has been steadily declining. Blade servers are relatively expensive to set up and may gradually be replaced by more simplified High Density servers. The number of servers required for Data Centers has increased continuously year after year. Although the demand for conventional enterprise-grade servers has gone down a little, demand for both types of servers will ultimately reach equilibrium. In addition to cost performance, design flexibility and quick response to customer needs are the two most decisive factors for a product’s success. 162 The rapid growth of AI and high-performance computing demand has caused the thermal power consumption of CPUs and GPUs to continue to increase significantly. The issue of effective heat dissipation and energy conservation of servers will become a prominent issue, which will also increase the costs of related industries. 5.1.3 Research and Development 1. Research and Development Expenses over the past year Year R&D expenses Operating revenue Unit: TWD Thousands; % R&D expenses as a percentage of operating revenue 2023 19,080,135 946,714,800 2.0 2. New products developed ■ Notebooks • High-end products: Launching high-performance models designed for professionals, gamers, and creative workers. These models are equipped with the latest generation processors featuring built-in AI performance optimization, ultra-high-resolution panels, high refresh rate screens, and high- performance graphics cards, fully meeting the stringent demands for high performance. • Mainstream products: 16-inch and 14-inch products are thin, low voltage, slim bezel and 16: 10 aspect ratio design that are powered by the latest CPU from Intel or AMD, and are distinguished by integrated or discrete GPU models. • Business products: Business notebooks designed specifically for corporate users. These products feature enhanced structural design and security, and are offered to large corporations, SME, and the education sector. Security mechanisms such as fingerprint recognition, camera shutter, facial recognition, and voice recognition are incorporated to satisfy the user’s need for security and data confidentiality. • Special products: Compal is actively developing notebooks, setting industry benchmarks through technological innovation. Beyond launching innovative foldable notebooks, there is also a commitment to employing eco-friendly materials and smart manufacturing techniques to develop next-generation notebooks aligned with sustainability concepts, which are expected to become a new highlight in the market. ■ Ultraslim Notebooks • Compal has successfully mass-produced and launched many Ultraslim notebooks, and its designs have been recognized by several international awards. • No compromise on performance. • Not only thinner and lighter but also lower power consumption are key requirements for a good user experience. • New ultraslim notebooks will feature thin frame displays for a more fashionable and cleaner appearance; 163 the display quality will also be improved. ■ 2-in-1 Notebooks • Compal has successfully designed, mass-produced devices, and launched a new 2-in-1. • An innovative hinge design is being developed to provide more secure and precise connections while allowing easier detachment. This allows better user convenience when 2-in-1s are used in different scenarios. ■ All-in-one (AIO) • Compal has successfully designed, mass-produced, and launched AIOs for mainstream users. • Compal has successfully designed, mass-produced, and launched a new flat type of AIO. • Compal has developed, mass-produced, and launched AIOs that are targeted at e-sports. • Compal plans to acquire touch control technologies with pen support and introduce AIOs in sizes ranging from 19" to 27." • Compal has successfully designed AIOs with a wireless charging dock. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN, Private Network solution • 5G O-RAN Solutions was unveiled in 2023 MWC Barcelona and will obtain certification and mass production in 2023. These include ORU, ODU, DU inline accelerator, and OCU equipment and solutions. • Qualcomm X35 5G RedCap R17 M.2 / LGA module will be developed in 2024. • Mediatek T300 5G RedCap R17 M.2 / LGA module will be developed in 2024. • Mediatek T700 5G R15 M.2 module will be developed and mass production for 5G NB customers in 2024. • Qualcomm X72/75 5G R17 M.2 / LGA module will be developed in 2023. • MTK based T830 5G R16 LGA module will be developed in 2023. • Qualcomm X62/65 5G R16 M.2 / LGA module will be mass-produced in 2022. • 5G integrated small cell, include Sub-6 and mmWave, developed in 2021 and obtained product certification. • MTK T750 5G M.2 / LGA module has been mass-produced in 2021. • Qualcomm x55 5G M.2 / LGA module obtained product certification, including GCF, CE, CCC, TELEC, FCC, PTCRB, etc., which have been mass-produced in 2020. • 5G indoor/outdoor CPE, and MiFi have been in development and mass-produced in 2020. To extend 5G module to various types of devices. ■ Tablets • Developed and manufactured cost-effective WiFi tablets with good performance for entertainment and enterprise applications. • New tablets with in-cell display and wireless charging function. • Developed and mass-produced a new generation of waterproof e-Reader with a wireless charging function. 164 ■ Smart Wearable Devices • Compal supports a variety of product types, such as luxurious material and design, wireless charging, offline maps, high-accuracy GPS, and high-level water resistance for sports watches. Customized product design and more power efficiency to support 3C and fashion brand requests. A new generation of lighter, smaller, narrow border, multi-purpose smartwatches with diversified designs have been introduced. • Mass-produced eSIM enabled LTE smartwatch. ■ Smart Hearable Devices • Bluetooth headsets with smart assistants have been developed and are in mass production. • Long-term investing in high-end AI technology to develop Bluetooth headsets and Bluetooth hearing aids with more intelligent noise cancellation features. • Bluetooth hearing aids with TAIWAN FDA have been developed and are in mass production. ■ Smart Display Products • Developed, mass production and launched new TV models with the latest smart TV platform. ■ AR/VR Smart Devices • Successfully developed a waveguide lens with an optical engine combined with an ergonomic design structure for AR glass product which was used in a customer’s project. ■ Smart Home Devices • Smart speakers: successfully mass-produced and launched on the market, assisting European clients in establishing a more complete ecosystem for smart home appliances. • Non-contact sleep monitoring device: successfully mass-produced, incorporating low-power millimeter-wave RF technology and environmental sensors to measure users' breathing and heart rate, assess sleep quality, and provide recommendations. • Smart cameras: Continuous development of new features to further enhance user experiences through the application of additional AI technologies. ■ AR Vertical Solution • AR (Augmented Reality) and VR (Virtual Reality) glasses have been developed and are being mass- produced and shipped. • Achieving the core technology of AR – perception technology, which includes perception and understanding of the real world, as well as positioning and tracking of virtual information. It’s used to identify and understand objects, surfaces, and environments in the real world, and determine the position and posture of virtual information. • Achieving key AR technology - display technology, which involves displaying virtual information to users 165 in an appropriate manner. This may involve real-time visualization of the real world, achieved through improvements in hardware devices such as head-mounted displays, as well as optimization of display algorithms and technologies. • Achieving AR interaction technology, enabling users to interact with virtual information. This includes the integration and optimization of gesture recognition, voice control, and eye tracking, to provide a more natural and intuitive user experience. • In addition to the development of AR basic technologies, application software development is also one of the research focuses. ■ Smart Medical and Healthcare • Smart sports Compal's smart exercise mat, Stampede, won the 2023 Taiwan Excellence Award and was selected as a representative sports product for 2022. It will be extended to national sports centers and expanded to the hotel and construction industries to promote smart exercise solutions. • Digital charts and a smart ward solution Compal is promoting business opportunities in this respect. Several hospitals have begun adopting and exploring our smart ward solution this year. • Point-of-care solutions More than ten point-of-care centers in Taiwan have begun trials and official use of this solution. In addition to this, several prominent nursing centers in China have also shown interest and commenced collaborating in the use of this solution. • Innovative medical devices Many innovative medical device cases have been executed and plans for the achievement of FDA/NMPA/CE certification have been established. ■ Auto Electronics (AE) • Compal has mass-produced various systems and modularized several products that it has designed and developed. ■ Servers • General Purpose Rack-mounted Servers According to the Intel and AMD product roadmap, the launch of 1U and 2U general purpose rack- mounted servers is done through modular design, and the product specifications required by customers can be quickly assembled. • AI Servers Cooperate with GPU manufacturers to design a high-density AI server so that the server can greatly improve its image computing capabilities, and seek opportunities to cooperate with existing customers. 166 1.1.4 Long-term and Short-term Development 1. Short-term Development • Aligning with AI application trends and cross-sector user needs, actively allocating resources to R&D while integrating AI technology to enhance innovative designs. Dedicated to product differentiation, aiming to launch innovative products that precede market demand. • We will enhance operational efficiency to increase our product competitiveness further and push the sales growth rate higher than the market average. • We will improve logistics management and flexibility to shorten delivery times. • We will consolidate material supply to fulfill OEMs’ demands. • We will elaborate on different market strategies for different product markets. Mainstream products will be bundled with new technology and modular features to boost the added value and diversity of products. For featured products, we will adopt a prospective standpoint in our design concept for new products to become the focal point of the product market. User functionality should be taken into consideration as well as competitive pricing for lower priced products. • Diversified production sites to mitigate geopolitical risk and strengthen cost competitiveness. • We will pay close attention to market trends and evolution in smart devices and develop product concepts suitable for OEM customers and the market. We will help customers create differentiated products with feasible designs. • Product development times will be further shortened to optimize supply chain management, maintain persistent high quality, and provide customers with more competitive products. • More effort will be made to maintain existing customer relations. Apart from maintaining a high degree of customer satisfaction, we will work towards increasing the volume of product cooperation. We will also seek other opportunities to cooperate with new customers to achieve a growth rate that is better than the market average for smart device products. • We will improve product profitability to achieve the maximum utilization of capacity and enhance overall operational efficiency and profitability. • We will tap our accumulated communications industry R&D energy resources to quickly and efficiently cut into the high growth 5G networking market. • Several cross-industry alliance strategies will be used for the rapid development of a diversified product line that will strengthen customer relationships in the shortest possible time. • Actively advancing smart manufacturing and smart factory initiatives, not only innovating in processes but also incorporating eco-friendly materials in design and across product categories, demonstrating a commitment to sustainable development. • Compal continues to invest in technological innovation and research and development to continuously enhance the performance, functionality, and user experience of AR technology. This includes research and development in areas such as perception technology, display technology, and interaction technology. • Compal will continuously optimize existing products and develop new AR products to meet the needs of different industries and users. This may involve hardware products such as AR glasses, head-mounted displays, 167 as well as software applications such as gaming, education, and medical applications. • Compal engages in cross-industry collaborations to apply AR technology to different industries, creating more application scenarios and commercial value. At the same time, different products and services can be integrated to provide more comprehensive solutions. • Compal will actively expand into the global market, seeking more business opportunities and cooperation opportunities. This includes establishing global partnerships, conducting market promotion, and building good relationships with brands. 2. Long-term Development • Integrating smart manufacturing and smart factories into the company's culture and operations, emphasizing continuous process innovation, design optimization, and the extensive use of eco-friendly materials across product lines to achieve a sustainable development strategy. Aiming to establish an eco-friendly product ecosystem, propelling the industry towards a greener, smarter future. • A spirit of innovation will strengthen value-added Company products and improve long-term core competitiveness. • Cooperation with our customers will be improved to allow better product planning, development and manufacture as well as comprehensive after-sales service. • Horizontal and vertical integration of all parts and products of the Group’s affiliates will be strengthened strategically and aligned with customer needs, to give them more convenient and complete services. • Optimization of the quality of sophisticated products will be enhanced by new development and cost structures and strategic alliances with main parts providers to give customers better and more competitive products and services. • Closer horizontal and vertical cooperation will be made with affiliates in the Group to create and strengthen the loyalty of long-term customers. • Our ability to innovate will be further cultivated, aimed at more accurate prediction of market trends, before clients do, and provide them with products and services and high value-added solutions to improve long-term core competitiveness. • The Company has established a service-oriented business model and new revenue sources through careful long- term upstream and downstream integration and cooperation. • We are strengthening the breadth of learning of our team in preparation for future new business and product development through cross-industry alliances. • We are cultivating the ability to control key technology, strategize high-end product lines, and gain cooperation opportunities with big manufacturers around the world. • We will continue to strengthen our core R&D technology and communication capability and capacity for integrated services for smart devices. • Compal not only actively promotes existing product design concepts but also provides practical results to increase market exposure and brand awareness. This includes utilizing online and offline channels for product promotion, participating in industry exhibitions and events, demonstrations, etc. • Compal actively develops potential customers, seeks suitable partners, establishes long-term stable cooperative 168 relationships, and builds relationships with optical manufacturers, application developers, and other partners. • Compal will promptly improve products based on customer feedback and market demands to enhance product competitiveness and user satisfaction. This may include targeted product improvements, optimization of service processes, and providing more timely technical support. 169 5.2 Market and Sales Overview 5.2.1 Market Analysis 1. 2023 Sales (Service) by Regions Sales Regions Americas Europe Asia (Including Taiwan) Other Area Total 2. Market Share ■ Notebooks Percentage 45.2% 22.2% 29.9% 2.7% 100.0% According to IDC statistics, global notebook shipments reached 185 million units in 2023. Compal accounts for about 20% of the global notebook market and is still the world's leading product manufacturer. As the market for notebook PCs is entering the era of vertical integration, Compal will continue to improve upon its technological capabilities, broaden the scope of its influence, and expand the market scale while challenging the limits and striving for continual improvement to maintain its lead over the competition. ■ 5G Module and 5G User Equipment Compal 5G UE Modules shipped from 2020, which is applied to various product categories such as 5G Mifi, 5G CPE routers, 5G notebooks, 5G AR/VR, 5G drones, 5G robots, 5G real-time cameras, 5G Industrial PC and industrial routers, and 5G USB Dongle, etc. The 5G standard is the major worldwide communication standard and trend that will bring rich product possibilities and high growth. ■ 5G Small Cell, 5G O-RAN, Private Network solution Compal has launched a variety of 5G integrated small cells for both Sub-6 and mmWave, 5G O-RAN solutions, and a variety of wireless end devices, to meet outdoor and indoor application scenarios, accelerate the speed of 5G network deployment, and reduce the cost of each field. Compal's customized 5G O-RAN, private network and application solutions can meet the deployment needs of different industrial fields. At present, it has been deployed in several domestic fields to assist the digital transformation and strengthen the development of the industry. ■ Smart Wearable Devices Compal is the biggest ODM supplier of Google Wear OS Smartwatch. The smartwatch market is expected to maintain its high growth for the next three years. Compal will endeavor to win more worldwide brand customers while studying market demand and adjusting the direction of product development to meet market trends. 170 ■ Smart Hearable Devices Compal already shipped several models of smart hearable products, including Bluetooth headsets and TWS earbuds. Because smart hearable products require high accuracy and miniature manufacturing, Compal is also investing in optimizing the product design and manufacturing processes to enhance production efficiency. ■ Smart Display Products Our company has successfully mass-produced and launched the latest smart TV platform in 2023. We have also received high-quality reviews from consumers, averaging over 4.5 stars, and have successfully secured cooperation plans with existing customers for next year. We plan to continue our momentum in shipping products and actively expand our product lines to commercial and specific-purpose markets in order to maintain stable growth in the future. 3. Future Supply and Demand Situation and Growth of the Market ■ Notebooks According to IDC, global notebook shipments declined by 12.9% in 2023 due to slowing demand and economic instability. Looking ahead to 2024, as the economy stabilizes and channel inventories return to healthy levels, coupled with the upcoming end of support for Windows 10 driving the need for commercial computer upgrades and the aging of devices purchased during the pandemic, there is an expected boost in computer replacement demand. Furthermore, the expansion of AI applications and the introduction of processors with AI capabilities by chip manufacturers will contribute to the increase in shipments quarter by quarter. ■ Ultraslim Notebooks According to IDC statistics, global shipments of ultraslim notebooks (less than 18mm thickness) reached 61.9 million units in 2023, accounting for 33% of the global notebook market. In 2024, it is estimated that more ultraslim notebooks will be launched under the competition between x86 and ARM architecture processors. ■ Gaming Notebooks Entering 2024, as the economy gradually moves towards stability and inflation issues are alleviated, continuous advancements in technical specifications and the integration of AI technology are making the use scenarios of gaming notebooks more user-friendly, expected to boost demand growth. Despite the economic downturn previously, gaming notebook shipments still reached 24 million units in 2023, indicating that gamers' passion for esports maintains a strong demand for gaming notebooks. According to IDC statistics, gaming notebooks accounted for about 13% of the global notebook market in 2023. ■ 2-in-1 Notebooks 171 With continuous improvements in the supply chain, the cost and price of 2-in-1 notebooks have significantly decreased. Coupled with the digital transformation trend, 2-in-1 notebooks with versatile use scenarios are gradually gaining widespread acceptance among consumers. According to IDC data, global shipments of 2-in-1 notebooks reached 85 million units in 2023. It is anticipated that in 2024, as brands continue to launch more diversified products and integrate new technologies such as 5G and AI, the application scope of 2-in-1 notebooks will broaden, which is expected to generate more business opportunities. ■ All-in-one (AIO) As the economy gradually recovers and technological trends evolve, the global AIO market is experiencing steady growth. According to IDC statistics, AIO shipments reached 8.7 million units in 2023, and are expected to exceed 9 million units in 2024, outpacing the growth of traditional desktops. Compal will continue to cultivate this market, committed to meeting consumers' demands for high performance and integrated design. ■ 5G Module, 5G User Equipment, 5G Small Cell, 5G O-RAN, Private Network solution Cisco’s internet report points out that by 2023, 70% of the world population (5.7 billion people) will have mobile networks, and at least 10.6% (600 million people) of mobile networks will be enabled by 5G networks. 5G products will have rapid growth, and it’s estimated more than 2 billion 5G devices of various types (average 2 to 3.6 connected devices per person) will be purchased. Compal will continue to develop 5G products with customers and various 5G domain partners. According to the latest market research report, the global 5G small cell market size will reach USD 17.9 billion in 2028. SNS estimates that the global mobile private network will grow to USD 3.4 billion in 2025. Ericsson's report also pointed out that the 5G vertical application market will reach USD 1.32 trillion in 2026. In view of the huge 5G small cell, 5G O-RAN, and private network application market, Compal actively invests in the development of 5G small cell, 5G O-RAN, and private network solutions. Compal deeply integrates and cooperates with various operators and industry partners, and has officially become 5G small cell equipment, 5G O-RAN, and private network solution provider. ■ Tablets In 2023, global shipment volumes significantly declined due to global inflation and slowing consumer spending. Looking ahead, with the gradual economic recovery, the tablet market is expected to experience a rebound in 2024, characterized by three trends: enlarged screen sizes, increased prices and performance, and integration of AI generated content. Compal will also focus on larger screen sizes and the integration of AI technology, combined with 4G/5G communication technology, to enter the mid/high-end tablet market. ■ Smartphones According to IDC's, as the final market demand is still weak, the increase in shipments due to competition from major manufacturers has pushed up channel inventories. In addition, as government subsidies have reduced and suppliers have reduced production capacity to reduce losses, component costs have gradually increased. In the 172 first half of 2024, the shipments of the global smartphone industry will tend to be conservative. From the perspective of industrial structure, as high-end market demand gradually returns to rationality, the growth of 5G mobile phones is lower than expected and manufacturers focus on the development of low-end products. In the future, the proportion of design outsourcing is likely to remain fourth among global smartphones in the fourth quarter of 2023. The proportion of success. Compal maintains a stable mobile phone sales forecast and actively explores more opportunities. ■ Smart Wearable Devices IDC predicts that smartwatches will continue to grow in the following years. To be well-prepared for the potential momentum, Compal is developing more advanced features such as sensors for activity detection, 4G LTE for always connection, Voice control and AI integration. Compal will continue to accumulate relevant technologies to extend its reach into more diversified wearable device product lines. ■ Smart Hearable Devices According to research from IDC, the global hearable market will remain strong for several years in the future, driven by different marketing strategies: independent products or accessories of smartphones and smartwatches. More vendors join the market and it becomes more competitive. To create more value, Compal is focusing on new technologies for longer battery life, better sound quality, more efficient connection, and smarter user interaction. ■ Smart Display Products According to market research companies, the global consumer LCD TV market in 2024 is still digesting the over- sales during the epidemic, which has led to weak demand in the past two years, and panel manufacturers have made production adjustments and control. The market is expected to remain flat or slightly decline. In addition to continuing to operate the consumer market for the development of smart display products, Compal will focus more on developing and operating commercial and specific-purpose market demand in the future. ■ Smart Home Devices The smart home market size has rapidly expanded in recent years, reaching $107.5 billion in 2023 and is expected to grow to $129.5 billion in 2024. Advances in voice assistant technology, increasing demand for security monitoring, and home automation to improve energy efficiency are all driving factors behind the growth of the smart home market. Additionally, the exacerbation of aging populations has led to the maturity of technologies such as fall detection systems, remote health monitoring, voice control, and automatic safety features, which are expected to further propel the development of the smart home market. With the continuous development of smart home technology, the market has the potential to expand further. AI, touchless, ambient sensing, and smart health technologies will all become major market drivers. With the implementation of Matter, Compal will also actively seize future demand with our AI, gesture control, ambient sensing, and smart health technologies. 173 ■ AR Vertical Solutions According to IDC's forecast for the fourth quarter of 2023, AR device shipments are expected to reach 800,000 units in 2024, representing a 60% growth compared to 2023. By 2025, AR device shipments are projected to reach 1.6 million units, indicating robust market demand. In the future, the augmented reality (AR) market is expected to demonstrate strong supply-demand dynamics and continued growth. Increased acceptance of AR technology by consumers and businesses is driving demand growth for AR gaming, social media applications, virtual try-on experiences, and shopping experiences. Additionally, widespread applications of AR technology in education, training, healthcare, and industrial sectors further propel the increase in market demand. The diverse application needs across different industries will bring more potential customers and business opportunities to the AR market. Continuous advancements and innovations in AR technology drive market supply. As technologies such as perception, display, and interaction mature, AR products will become more advanced, feature-rich, and offer superior user experiences, enhancing market attractiveness and competitiveness. The proliferation of smart wearable devices such as smart glasses will provide more consumers with opportunities to experience and use AR technology, expanding the user base and driving market growth. The future AR market is expected to achieve a balance between supply and demand, with ample supply and sustained growth. As technology continues to develop and the market matures further, the AR market will bring more innovative applications and value to consumers and businesses, becoming a promising high-growth market. ■ Smart Medical and Healthcare (1) Instruments, Equipment, and Accessories: • Smart sports products: Estimates of Market Reports Hub show that the value of smart sports goods have increased to USD 15 billion in 2021, with professional athletes, professional teams, amateur athletes, and highly self-demanding trainers as the major consumer groups. • According to a report by Mordor Intelligence, the global medical equipment market was valued at approximately $456 billion in 2021 and is projected to reach $614 billion by 2026, with a CAGR of 6.1%. • Innovative medical devices: The sales of innovative medical devices, such as continuous blood sugar monitoring systems, reached USD 1.8 million in 2018 and will hit USD 2.5 billion in 2026, with a CAGR of 33%. • Severe cardiovascular diseases monitoring AI: Estimates of Global Markets Insights show that the scale of the global medical AI market will reach USD 13 billion in 2025, with a CAGR of 40%. (2) Management Systems: • Electronic Medical Records (EMR) and Smart Ward Solutions: According to estimates by FMI, the global market for Electronic Medical Records (EMR) and management systems are expected to grow from USD 11.4 billion in 2015 to USD 19.7 billion by 2025, with a CAGR of 5.6%. ■ Automotive electronics (AE) IHS estimates global light vehicle production in 2024 will reach 88.3 million units, up 2.8% YoY from 86 million in 174 2023. ■ Server IDC statistics show that the demand for x86 servers was 14.80 million pieces in 2023 and will reach 15.53 million pieces in 2024. The server demand will continue to rise in the next few years as boosted by the cloud computing demand, which is the major source of x86 server demand, accounting for nearly 92.65% of the shipping volume. As the frame-type server has a higher market share, we have actively engaged in the server market. In addition, AI Sever demand has significantly increased, and Compal has actively participated in more diversified server market. 4. Competitive advantage: Compal has a long-time investment in the Information and Communication Technology (ICT) industry and has committed to its role as an ODM. The following is a description of our competitive advantages in terms of R&D and mass production capacity: ■ Notebooks The Company has been manufacturing notebooks since 1989 and is one of the most experienced notebook manufacturers in Taiwan. Products designed by the Company have won many Editor's Choice awards from renowned magazines worldwide as well as awards from the Taiwan External Trade Development Council. Furthermore, our design team has great sensitivity and responds to market changes with new commercialized products. To enhance product competitiveness, Compal has assembled an R&D team that specializes in the research of new materials and technologies and is good at adding more value to products. The Company also has an intellectual property rights system in place to protect new technologies developed by the R&D team. The demand for notebooks by general consumers has dwindled consistently due to the rise of handheld devices. This has forced manufacturers to switch competitive strategies towards faster response and more ergonomic design. The Company has always been sensitive to changes in the market and product trends. The next generation of products is planned well in advance to capture market opportunities and generate revenue. ■ Ultraslim Notebooks Compal continues to stay ahead of its competitors in terms of technology advancement and R&D and strives to bring innovation to its designs. In 2024, Compal will maintain this advantage and actively assist customers in the development of more competitive ultraslim notebooks with x86 and ARM platform. ■ Gaming Notebooks Compal is consistently dedicated to the gaming notebook market with the best hardware and software design. We will focus on integrating AI and various sensing technologies to enhance user experience and personalization, concentrating on developing the next generation of gaming notebooks designed to meet the needs of various gamers in 2024. 175 ■ 2-in-1 Notebooks Compal has extensive experience in the development and manufacture of both notebooks and tablets. By adding a bit of innovation, Compal is confident of its ability to create new demand for these products. ■ All-in-one (AIO) Compal possesses the advantage and ability to commercialize products quickly in this respect. To further emphasize product differentiation, a resolute software development team has been assembled to carry out software development and human-machine interface integration, to make the products more suitable for consumer needs. ■ 5G Module, 5G User Equipment Compal has had long-term communication technology development for more than 20 years and has involved itself in the evolution of global communications standards (2/3/4/5G/B5G). With complete technical capabilities and manufacturing advantages, Compal can provide customers and partners with the most competitive and flexible solutions. • One-stop capability and services include communication and whole machine design and manufacturing. • Obtained carrier Interoperability test (IoT) and certification. • Obtained product certifications, including GCF, CE, CCC, TELEC, FCC, and PTCRB, as well as the carrier certification by request. ■ 5G Small Cell, 5G O-RAN, Private Network solution Compal 5G small cell series has comprehensive antenna solutions, greatly increased the data transmission rate and accuracy, and effectively enhanced the network signal, strengthening the indoor coverage and the ability of outdoor long-distance transmission, creating the industry's fastest 5G small cells. 5G ISC(Integrated small cells), O- RU and DU inline accelerator have been equipped with the ARM processor to address low energy consumption, and lower the total cost of ownership (TCO) by delivering high-performance and energy-efficient 5G solution. Compal's 5G RAN solution and application technology can help our customers to create greater flexibility to meet the needs of deployment in different industrial fields, and can also enhance the possibility of extended development and strengthen industrial development. ■ Tablets Compal will continue to integrate new technologies, including AI and environmentally friendly design, to optimize product specifications, performance, and user experience, offering products for various applications such as gaming, entertainment, business, and education. Additionally, Compal will actively apply 4G/LTE/5G communication technologies, commonly used in smartphones, to tablets to meet users' needs for Internet connectivity from anywhere. 176 ■ Smart Wearable Devices Compal has developed many different types of wearable devices ahead of its international peers. We have long- term strategic partnerships with technology leading companies such as Google and Qualcomm for the development of innovative technology. Compal currently offers an extensive range of products, and leads the industry in many advanced technologies, including video, audio, wireless, and wearable materials. ■ Smart Hearable Devices Compal has years of experience in acoustic, wireless communication, and mechanical structure design for smart mobile devices. We have experienced engineering teams, systematic development processes, and complete test processes and facilities. We can also provide supply chain management services and excellent cost and quality control. All these can be beneficial to our brand customers or distributors. ■ Smart Display Products We will continuously adjust the resource allocation between production bases and supply chains, deepen the strategic partnership with customers and manufacturers, develop the latest smart TV platform, integrate large- size touch, ultra high brightness backlight, transparent OLED and state-of-art technologies, improve the competition threshold, and strive to meet the needs of consumer, commercial and specific-purpose markets at the same time. ■ AR/VR Smart Devices Compal has joint technology development cooperation with strategic partners, and provides the latest XR hardware platform, eye tracking, spatial perception, and reference design based on ergonomic engineering considerations. It provides highly customized product design services to meet the needs of commercial customers. ■ Smart Home Devices A smart home encompasses a variety of interconnected and intelligently automated household electronic devices, including appliances, entertainment, communication, health care, and security products. Leveraging its existing engineering expertise in the computer and communication industries, as well as firmware design capabilities, Compal can assist customers in building a smart appliances ecosystem in addition to smart speaker products. Through communication modules and optical modules, Compal provides customers with comprehensive hardware and software solutions and customized applications to better meet market expectations. ■ AR Vertical Solutions Compal will continue to leverage its past research and design capabilities in notebook computers and wearable devices, employing a modular concept to design products with different specifications for various fields, providing 177 customers with comprehensive solutions. Furthermore, in specialized industrial solutions, Compal will develop dedicated AR solutions tailored to specific industries or application scenarios; by integrating AR technology with other related technologies or services, Compal can offer more comprehensive and valuable solutions. Simultaneously, Compal will focus on delivering high-quality user experiences and designs, making products easy to use, intuitive, and attractive. The success of AR technology often depends on user experience, so focusing on user experience and design can become Compal's competitive advantage. Additionally, considering the development of AR applications that can run on different platforms and devices, providing cross-platform and cross-device support can expand the user base, increasing product accessibility and usability. By collaborating with other industries to seek innovative application scenarios and business models, Compal can help attract more users and customers for enterprises, expand business models, etc., establishing its own competitive advantage in AR and achieving success in the market. ■ Smart medical and healthcare Compal will leverage its existing ITC capabilities and cloud platform to explore cross-industry alliances and opportunities to satisfy customer needs with diverse products and services. ■ Automotive electronics (AE) Under megatrends in automotive: Electrification, connectivity, ADAS/AD, we strive to prosper our existing business by concurrent engineering with customers to achieve cost competitiveness and 0 ppm quality in IVI systems and ICT solutions, and leverage core technologies and experiences to new products to explore new business opportunities. ■ Servers Compal has many years of experience in the design and manufacturing of computers, and this has helped us enter the server industry. Compal's existing business relationships with world leading server manufacturers also work in our favor. Also, we need to invest more in designing more AI servers to enrich our server product line. 5. Future opportunities, threats, and responsive strategies ■ Opportunities • In response to the needs of geopolitics and regional markets, coupled with the rising awareness of environmental protection and sustainability, the notebook industry has also begun to move towards a regionalized supply chain. Compal has successively established manufacturing and maintenance service bases in Taiwan, China, the United States, Vietnam, Brazil, Poland, etc., which can quickly respond to customer needs and changes in geopolitics. • As Microsoft is expected to end support for the Windows 10 operating system by 2025, the demand for computer replacements is anticipated to gradually increase over time. 178 • Innovate new products and work with worldwide leading companies to lead the new product development and market directions. • The expansion of software development, aesthetic design, and human-machine interface talent has improved the ergonomics of Compal products, which adds value and appeal to customers. • Compal's strong R&D, manufacturing and operational management experience has earned the trust of world- renowned brands. • Compal has rigorous processes in place to monitor cost from initial R&D to manufacturing and is therefore able to maintain a competitive edge with our products. • A rational pricing strategy supported by an alliance with parts suppliers helps secure market growth. • Connectivity not only brings convenience, but also adds value and competitiveness to the products offered. • Compal actively forms alliances with participants across industries. This helps the Company to increase product and customer diversity. • Compal remains active in developing innovative technologies and exploring new product concepts. The Company collaborates with customers in developing new product lines, and in so doing secures access to new products and technologies. • Compal has the technical capabilities to make smartphones and tablets in ways that support new IoT applications such as smart speakers, smart voice assistance, etc. as well as the ability to explore new opportunities across different industries. • Driven by the growing demand for wearable devices, Compal continues to mass-produce products and develop new proposals and innovations with major customers, continuing to maintain its position as the leading producer of wearable devices. • Actively invest in 5G development, continue to develop 5G small cells, 5G O-RAN, private network and application solutions, 5G modules, 5G dongles/hubs and other 5G vertical product portfolios that can be supported in all fields, and gradually promote the development of 5G leadership in applications. • The US-China trade war is expected to enhance Compal’s design opportunities and slow down the price competition among Chinese manufacturers. • With the flourishing growth of global 5G communication, Compal collaborates and integrates 5G communication capabilities with internal and external corporate partners, and launches a variety of 5G applications. • Integration of holographic 3D streaming media, 5G communication technology, and artificial intelligence (AI) empowers AR/VR products. • Actively apply for audio and voice analysis patents to enhance global patent deployment. 179 • Enhance artificial intelligence (AI) technology as the foundation of the next generation of smart devices. • With the continuous improvement of sensing technology, display technology, and computing power, as well as the reduction in hardware costs, the proliferation of AR technology will benefit. Response Strategy: Enterprises should closely monitor technology development trends and actively invest in research and innovation to maintain product competitiveness. ■ Threats • Amidst unresolved inflation, persistently high interest rates, and ongoing geopolitical conflicts, global economic growth faces significant challenges, warranting caution against potential crises. • With the United States intensifying restrictions on the expansion of China's supply chain, operators in Taiwan's notebook industry must proactively adjust their strategies. The competitive advantage is shifting from specialization to vertical integration, which not only raises investment costs and expands market scope but also adds complexity to business operations. Faced with the rise of the Chinese supply chain, Taiwanese notebook manufacturers must promptly enhance their capabilities in design, development, and assembly to maintain their competitive edge in the global market. • The notebook is a highly mature product and requires more diverse, value-adding, and innovative features to differentiate it from other market participants. • Intense competition in the IoT market can give rise to inconsistent quality and make competition in the industry more difficult. • Ongoing price competition among smartphones has a significant impact on large-brand customers. • Overall demand for tablets has declined, which adds to the competitive pressure. • Wearable devices are still in the early stages of development and require sustained periods of expansion to reach an economy of scale. • 5G is distributed in various domains, many industries are in the POC stage, and 5G innovative new business model is still under development. • The conditions of the US-China trade war, globalization, rapid technological development and fast-changing industries, increased investments in Taiwan from abroad as well as the demands of human resources and, make talent recruiting more difficult. • The widespread adoption of AR technology may be hindered by insufficient user education and acceptance. Users may lack understanding and trust in AR technology. • Compal closely monitors the favorable and unfavorable factors affecting the development of AR technology and takes corresponding measures to address challenges, seize opportunities, and promote the healthy 180 development of AR technology. ■ Strategies • The Company will adopt strategies that focus primarily on innovation, product added value, and service. • Increase research and development investment, actively seek technological innovation points, and improve product performance and functionality. • The use of land and human resources in emerging countries throughout the world will be optimized to reduce the cost of production and basic R&D. • We will enhance the product design review process and develop a comprehensive database of documents to improve design efficiency and quality while reducing costs. • Deeply understand market demands, develop diversified products and services to meet the needs of different customers. • Strengthen cooperation with various industries, develop industry-specific solutions, and provide customized products and services. • Provide cross-platform and cross-device support, develop AR applications that can run on different smart wearable devices. • New customers and new product lines will be explored in emerging markets. • We will launch ultraslim notebooks that integrate high performance and portability in response to the machine renewal demand in the commercial market to seize the commercial market together with customers. • The gaming market has grown in diversity, with new technologies constantly being introduced to entice consumers to replace old products. Compal is in the position to offer gaming notebooks at various price levels to meet consumer demand. • We will offer complete solutions and form alliances across industries to quickly tap into market demand while retaining the flexibility to satisfy customer needs. • We will nurture innovative talent within the organization, enhance the development capacity for high-end medical equipment and engage world-renowned medical equipment suppliers in strategic, long-term, and mutually beneficial cooperation. • We will continue to strengthen working relationships with platform operators by providing hardware and software solutions. • We will continue to extend our 5G communication capabilities to various 5G domains and types of products, build up leadership in 5G, and provide complete total solutions. • We will develop more AR/VR solutions and collaborate with domain partners, to create market penetration, 181 and increase customer satisfaction. • We will continue to develop high-end acoustic technologies for smart hearable products and collaborate with audio professors and top acoustic research centers in Taiwan. • We will cultivate internal R&D talents in AI technologies, hold AI seminars, and training courses. • We will improve employee benefits, salaries, and other conditions to retain talent, disperse R&D location bases to increase the source of outstanding talents and attract outstanding talents to join the international recruitment 5.2.2 Major Products and Their Main Uses 1. Main product applications ■ Notebooks An analog-digital application hardware platform combined with dedicated software to enable a variety of applications such as data editing/processing, word processing, layout, graphics applications, web browsing, communications, digital multimedia entertainment, gaming, content creation and others. ■ Ultraslim Notebooks A notebook that emphasizes thinness and is lightweight and takes into account computing as well as battery performance to meet the consumer need for both portability and productivity. ■ Gaming Notebooks The high-performance hardware and gaming-inspired designs allow gamers to fully immerse themselves in the gaming world. ■ 2-in-1 Notebooks These devices use the Microsoft Windows 11 operating system, have an optional stylus, and satisfy the growing consumer demand for mobile computing. In addition to multiple operating modes, the device has a touch screen that enables it to be used as a tablet. ■ All-in-one (AIO) Beautiful aesthetics suited for home, commercial, and design use, with emphasis on a touchscreen input interface, a range of software applications and high computing power. ■ Smart Home Devices 182 Smart appliances, controls and sensors provide users with diversified services for a smart lifestyle. ■ Tablets Portable touch screen multimedia, mobile viewing, and online information applications. ■ Smartphones and Modules Personal communication and internet access. ■ AR Vertical Solutions AR technology can combine the virtual world with the real world, providing users with a richer experience. ‧ ‧ It can be used in the education and training fields, presenting interactive maps, virtual laboratories, etc., in AR format, which can enhance learners' interest and engagement, promoting learning and understanding. It can realize functions such as virtual try-on and virtual home decoration, helping consumers understand the styles and layout effects of products more intuitively, thereby enhancing the enjoyment and satisfaction of purchases. ‧ It can achieve functions such as real-time navigation and augmented reality navigation, helping users find destinations more accurately, obtain surrounding information, etc., thereby improving travel efficiency and convenience. Compal, through the demand analysis phase, needs to clearly understand the product's purpose, target users, functional requirements, etc., and design the product's functional framework and user interface according to the requirements; during the development phase, software coding is carried out based on the requirements to realize the product's functionality and interface design, and the most suitable solution is feedback and suggested based on past product experience. A series of tests are conducted to prevent potential issues and optimize to ensure product stability and user experience. Compal continues to communicate and coordinate with customers to ensure that the product meets their needs and expectations, ultimately providing a good user experience. ■ Smart Medicine and Healthcare Penetration into households and point-of-care areas using technology, including that of the IoT, and gradual integration with our own peripheral software products allows the provision of comprehensive solutions. These can provide convenient and instant smart health care that will enhance dependence on the products and engender user brand loyalty. ■ Automotive electronics (AE) ‧ In-Vehicle Infotainment systems ‧ Vehicle communication (4G/5G) systems 183 ‧ ADAS warning systems ■ Servers Designed for high power computing, capable of storing massive amounts of data and compatible with different processing programs for data analysis. Built to accommodate different applications required by enterprises, data centers, and cloud platforms. Also, we need to invest more in designing more AI servers to enrich our server product line. 184 2. Production Process of the Main Products ■ Notebooks 185 Casing of logic board Preparation of LCD display Assembly Preparation of main board Preparation of keyboard Fasten LED board Inspect LCD panel Input inspection Input inspection Prepare plunger + frame Fasten power switch board Fasten interface board to lower casing Fasten motherboard to frame Parts processing Install frame onto metal board Produce LED frame Fix LCD panel to lower casing Prepare battery spring SMT (surface mount technology) Apply double-sided tape Apply hook to casing Prepare battery wire Insert add-ons Insert keys Combine upper & lower casing Prepare disk drives Visual inspection Press keys and check Assemble LCD casing & logic board upper casing Fasten disk drives+motherboard to bottom casing Soldering furnace Production process inspection Fasten power board to motherboard Remove board Install PCB to lower casing Production process inspection Trip conductor Install wires to lower casing & fasten Fasten LCD casing & bottom casing Machine wash Assemble upper casing Battery assembly Apply heat sink Prepare name plate Keyboard installation Secondary soldering Process quality inspection Function test Brush clean Accelerated aging test Visual observation Function test Repair Prepare name plate & paste onto unit Process quality inspection Wipe down unit Automated machine testing Exterior inspection Accelerated aging test Unit packaging Automated machine testing QA testing IMEI OK Packaging OK Shipment ■ Smartphones and Tablets Design/analyze OK Input material OK SQE test OK Install PCB SMD OK Welding of parts OK Base band TEST OK Assembly OK Vibration and appearance OK Function test OK FINAL TEST OK CALL TEST OK Current IDEL OK Exterior NO NO NO NO NO NO NO NO Repair Repair Repair Repair Repair Repair Repair Repair OK OK OK OK OK OK OK OK 186 5.2.3 Supply Status of Main Materials ■ CPU/Chipset ● Notebook The overall demand of notebooks has slowed down in 2023 due to the major laptop brands’ inventory level remain high, coupled with the impact of inflation, which result consumer spending show a sign of weakening. As the inventory level has gradually became healthier and the inflationary pressures are expected to slow down, coupled with the rise of AI PC trend, it is expected the overall notebook demand might recover in 2024 H2. The majority of the NB CPU market is still controlled by Intel and AMD X86 solution, which accounting for 65.5% and 22.9% respectively. Apple CPU has shown resilience in the weak NB market with the penetration takes 10.3% in 2023. In addition, both Qualcomm and MediaTek has released ARM based NB solution and it is estimated that ARM will account for around 15% of NB market in 2026. In term of new products, Intel has launched 7nm Meteor Lake in 2023 Q4, which emphasis on equipped with NPU (Neural Processing Unit) as AI accelerator. Arrow Lake is estimated to be released in 2024 Q4, as well as Lunar Lake, which emphasizes thinness, lightness, power saving and integrates the memory LPDDR5X into the package. AMD 4nm high-end Phoenix and Hawk Point have released in 2023 Q1 and 2024 Q1 respectively. The Strix Point is expected to launch in 2024 Q3. As major CPU manufacturers have proposed new solution for AI computing power in 2024 H2, it is expected the notebook market will be boosted. ● Smartphone and Module The Smartphone Market size is estimated at 1.51 Billion units in 2024, with a CAGR of 4% during the period of 2023 to 2029. Driven major by emerging market economies and renewed consumer spending. AI smartphones to be shipped in 2024, representing almost 15% of total smartphone shipments and a sizeable jump from the roughly 51 million shipped in 2023. This share is expected to climb rapidly beyond 2024 as the industry players push aggressively towards new silicon and use cases evolve further. Some of the latest flagship devices with on-device with AI capabilities that are creating increased interest and excitement in the industry. A Global 5G Wireless Module market is projected to reach USD 794.6 million in 2029, with the CAGR of 5.6% during the period of 2023 to 2029. 5G RedCap standard with reduced performance and cost will accelerate 5G adoption in industrial and wearable, which does not require broadband connectivity or lower power consumption. The challenges of 5G RedCap are the module cost and network infrastructure. Mobile operators need to invest their 5G network to support 5G RedCap, therefore it will take a few years for mobile operators to extend 5G RedCap network in wide area. ■ Memory ● DRAM Regarding the outlook for market demand throughout 2024, the DRAM major manufacturers (Samsung, 187 SK Hynix, and Micron) remain cautious, currently focusing on controlling production capacity as their primary strategy and gradually digesting inventory quarter by quarter. With the destocking trend in notebooks and the continuous increase in average per-device DRAM capacity across various product categories, DRAM demand is expected to improve gradually. Overall, the market shows signs of recovery in demand, and with manufacturers keep controlling production plan, it is anticipated that DRAM prices will continue to raise. For DRAM application, calculated in units of 2Gbs, the actual shipment in 2023 is 100.1 Billion units, and it is estimated to be 118.2 Billion units in 2024, with a compound annual growth rate of approximately 18.2%. The overall capacity allocation still focuses on Server and Mobile. It is estimated that Server will decrease from 37% to 36%, Mobile will slightly decrease from 36% to 35.3%, PC will account for about 12%, Consumer will account for about 7.9%, and Graphics will account for about 8.8%. In terms of DRAM processes, the major manufacturers continue to advance toward 12nm process technology. Their capital expenditures for 2024 are estimated to increase by 3% compared to 2023. Due to the surge in demand driven by AI server, there is increased demand for High Bandwidth Memory (HBM). Additionally, with the market shifting toward DDR5 as the mainstream, it is estimated that the major manufacturers will allocate some capacity from DDR4 to HBM. The supply of PC DRAM for 2024 H2 is estimated to be tight. ■ NAND flash In 2023 H1, on the supply side, major storage manufacturers implemented aggressive production cuts to address losses in their NAND Flash product lines. The demand side is not strong due to the global inflation and resulted in an oversupply situation for NAND Flash. In 2023 H2, the significant impact of production cuts by manufacturers led to a rebound in NAND Flash prices starting from 2023 Q4. The price of NAND Flash is expected to increase or remain stable by the market situation. In terms of NAND Flash process nodes, suppliers continue to progress towards higher stack layers. In 2023 H2, SK Hynix announced the development of 321-layer NAND Flash and expected to produce in 2025 H1, while Micron announced the production of NAND Flash with over 250 layers in 2024 H1 after previously achieving 232 layers. However, the pace of transitioning to higher layer may slow down due to suppliers reducing capital expenditures. ■ Battery In 2022, the uptrend of laptop battery prices caused by cobalt, and persisted until 2022 Q4. The demand for electric vehicles slowed down in 2023 and electric vehicle manufacturers began shifting away from ternary batteries (nickel-cobalt-manganese or nickel-cobalt-aluminum) to the cheaper LFP batteries. As a result of the transformation in the electric vehicle market, laptop battery prices began to decline in 2023 and continued to the flattened curve in 2023 Q4. The laptop battery shipments from packers are decreasing, and more and more battery cell manufacturers 188 choose to assemble packs by themselves. The proportion of packers decreased from 72% in 2022 Q1 to 69% in 2023 Q4, and it is estimated to further decrease to 66% by 2024. As more mainland China battery cell manufacturers begin to assemble packs themselves, and Japanese and Korean battery manufacturers gradually shift to power and energy storage applications, the proportion of mainland China manufacturers in the laptop battery pack market is expected to keep increasing. ■ LCD Affected by inflation, the demand of laptops remains weak, and PC brands are actively clearing inventory. Interestingly, the proportion of affordable traditional non-silicon-crystal panels is increasing rather than decreasing. However, it is expected that this trend will continue to decline year by year due to the replacement of other high-end display technologies. OLED panels, which were previously optimistic, have not been widely adopted due to cost and yield issues. The shipment penetration rate in 2024 is estimated to be 3.1%. The mainstream sizes of laptop panels still remain at 14 inches and 15.6 inches. However, laptops have started transitioning from the 16:9 aspect ratio to 16:10, and it is anticipated that the market share will reach 46.0% in 2024 and 53.2% in 2025. Windows 10 is going to be phased out soon, and with AI PC topic are expected to be new drivers for commercial laptop panels. Additionally, there is a growing demand for high-end panels with high refresh rates in gaming laptops. Those reasons could anticipated to help the panel industry recover from the downturn, and support the notebook panel price stable. 189 5.2.4 Major Suppliers and Clients 1. Major Suppliers in the Last Two Calendar Years 2022 2023 Unit: TWD Thousands Party Name Amount Percentage of 2022 net purchases (%) Relationship with the issuer Name Amount Percentage of 2023 net purchases (%) Relationship with the issuer 1 2 Company E Company J Others Net Purchase 330,815,052 75,916,569 561,263,037 967,994,658 34.18 7.84 57.98 100.00 N.A. N.A. Company E Company J Others Net Purchase • Causes of changes: No significant change to the major suppliers reported in the last two years. 281,375,768 93,528,302 499,129,820 874,033,890 32.19 10.70 57.11 100.00 N.A. N.A. 2. Major Clients in the Last Two Calendar Years 2022 2023 Unit: TWD Thousands Party 1 2 3 4 Name Amount Percentage of 2022 net sales (%) Company a Company d Company e Company f Others Net sales 96,621,806 460,236,878 102,969,721 170,398,727 243,018,783 9.00 42.88 9.59 15.88 22.65 1,073,245,915 100.00 Relationship with the issuer N.A. N.A. N.A. N.A. Name Amount Percentage of 2023 net sales (%) Relationship with the issuer Company a Company d Company e Company f Others Net sales 95,644,980 379,263,553 125,647,532 121,450,902 224,707,833 10.10 40.06 13.27 12.83 23.74 946,714,800 100.00 N.A. N.A. N.A. N.A. • Causes of changes: The decrease in sales to Customer a, d, and f in the year of 2023 is mainly due to the decrease in shipments of the corresponding products which was caused by the impact of customer demand. 190 5.2.5 Production in the Last Two Years Year Production volume/ value Main products 2022 2023 Unit: 000 Units; TWD Thousands Production capacity Production volume Production value Production capacity Production volume Production value 5C electronics 152,068 112,581 1,039,628,777 132,142 95,974 895,277,898 5.2.6 Shipments and Sales in the Last Two Years Year Sales volume Main products 2022 2023 Domestic sales Value Volume Export sales Volume Value Domestic sales Value Volume Export sales Volume Value 5C electronics 1,100 3,047,804 110,122 1,070,198,111 966 2,955,467 95,852 943,759,333 Unit: 000 Units; TWD Thousands 5.3 Human Resources Year December 31, 2022 December 31, 2023 April 2, 2024 Number of employees 73,120 Average age Average years of service Academic qualifications Doctoral Degree Master’s degree University High school/Below/others 29.12 2.85 0.07% 5.05% 23.93% 70.95% 58,249 29.85 3.45 0.09% 6.52% 28.93% 64.46% 56,671 30.40 3.40 0.07% 6.30% 26.85% 66.78% 191 5.4 Environmental Protection Expenditure 1. Compal is an assembler of electronic products and produces no significant pollution The company is an information electronic product assembly plant with non-high energy consumption, high water consumption, and a high pollution industry. In order to protect the environment, it fulfills its social responsibilities, saves energy and reduces carbon, and reduces the impact of global warming. The Taiwan and Mainland China plants together incurred expenses of TWD 42,209 thousand (excluding regular maintenance and green R&D) in 2023. We are keeping the promises we made as earth citizens and hope to make substantial contributions to the protection of the global environment. We will continue our commitment to efforts in this respect. In 2023, Compal had no violation of environmental laws, and will keep abreast of relevant regulatory updates and respond immediately to reduce the risk of violations. 2. Compliance with EU RoHS directives ‧ All our company's products comply with the limits required by the RoHS directive, and there are no returns due to exceeding the limits. ‧ To manufacture environmentally friendly green products and meet the requirements of both international environmental laws and client demand, the Company has implemented “Management Standards for the Control of Environment-Related Substances in Parts and Materials” that cover all hazardous substances currently prohibited by law and banned by customers. We have implemented efficient and effective methods of inspection for hazardous substances using recognized component classification and risk control to establish a plant monitoring mechanism for oversight and verification. 3. Responsive strategies and possible expenses In the future, the Company will continue to implement its environmental responsibilities, including the boosting of staff knowledge of environmental matters, and spreading updated green living knowledge, the Company’s response to government policy with respect to green consumption, and the regular priority assessment of green product content in procurement, as well as continuous improvement in the energy efficiency of our plants. This includes scrutiny for all kinds of possible violations of environmental regulations in the operations management system, and the mandate to have a timely response to all environmental laws. 5.5 Labor Relations 1. Availability and execution of employee welfare, education, training, and retirement policies. Elaboration of the agreements between employers and employees, and protection of employee rights. ■ Employee welfare In addition to all employees’ statutory labor rights and to help them find a balance between work and personal life, both physical and mental, and to improve their vitality in the workplace, the Company has an Employee Benefits Committee, a Life Committee, and other groups responsible for promoting worker welfare. The employee health benefits and activities include a fitness center, a medical facility, periodic health checks, recreational team competitions, family activities, travel, the arts, and leisure and all kinds. Group Life Insurance 192 is covered by the Company and includes accident, medical, and cancer. Employee dependents may also join the scheme at a discounted rate, but at their own expense. We also have benefits such as scholarships for employees and their children. The Company actively supports the government in resolving the low birth rate crisis and childcare policy in Taiwan. Since 2011, we have provided generous maternity grants for employees and their spouses and children. By the end of 2023, the Company had provided TWD 226.31 million in maternity allowances and bonuses. There were 35 counts of employees who took parenting leave, with the right to return to work, in 2023. ■ Education and training The Company set training credits and outlined the credit system according to the needs of each level. The Company also integrated all training records into an online learning platform to further assist the competent staff in keeping abreast of learning progress. In 2023, 721 training sessions (both internal and external) were organized; these courses delivered 208,483 hours of training and 115,751 persons enrolled. The total training expenses were TWD 24,856,000. The training courses included: ‧ Orientation: New hire seminars and corporate culture experience camps were organized to help new hires better understand company culture, the current status of the industry, and Company strategy and vision. ‧ Language training: Basic to advanced English and Japanese courses that train employees to respond to customers and give them a global vision through workspace situational training. ‧ Managerial skills Training: To establish a comprehensive blueprint of development level, strengthen core competency at all levels in such aspects as teamwork, issue analysis, innovative thinking, and soon conduct planning for company talent training at various stages. ‧ Professional training: Categorized new professional knowledge lectures, courses, and experience heritage job training to enhance employee expertise and technology and to enhance the Company's core competitiveness through systematic management. ‧ E-learning: Offers related courses in new hire requisites, IT, Six Sigma, language, management, CSR, and occupational safety. The Company uses internet learning and resource sharing to offer real-time learning. The effect is maximized with a complete learning and training mechanism that utilizes a comprehensive knowledge management system. ■ Retirement system To arrange retirement for employees, the Company has issued labor retirement rules, which stipulate the conditions and standards for retirement, application, as well as operation of the labor Pension Preparation Fund based on law. A supervisory committee for the workers’ retirement preparation fund has also been established. According to the Regulations for the Allocation and Management of the Pension Preparation Fund, we contribute and deposit labor pension preparation funds into a dedicated account at the Bank of Taiwan per month to protect employees’ rights. In accordance with the Labor Pension Act, we have contributed a 6% 193 pension into personal accounts for befitted employees. Also, for those who volunteered to contribute pension, the voluntary withholding rate was deducted from the employees’ monthly wage to the individual retirement account of the Labor Insurance Bureau since 1st July 2005. ■ Employer-employee communications and the enforcement of worker rights The Company has always valued employer-employee relations and has communication channels available to facilitate two-way communication that allows the Company to respond to the thoughts and opinions of employees in a prompt manner. The Company not only has policies in place to protect employee rights, but also makes decisions in the best interests of its employees. 2. Personnel management The Company has clear policies in place to manage human resources and to guide employee behavior. There are specific levels of approval authority and detailed rules to guide decisions concerning employee recruitment, promotion, appraisal, assignment, leave of absence, resignation, confidentiality agreements, reward and discipline. These policies and rules exist to eliminate subjective judgment and to create a fair, open, and systematic corporate culture. 3. Work environment ‧ Buildings are subjected to annual fire safety inspections and reports. ‧ Buildings, plants and equipment are inspected daily and maintained on a regular basis. ‧ The Company hires regular cleaning services to ensure the cleanliness of its work environment. 4. Employee safety ‧ Personnel entry and exit are controlled by a security system. ‧ Security personnel are stationed 24 hours a day to patrol plant premises and monitor the surveillance system. ‧ Lectures and rehearsals are organized annually to demonstrate proper responses to cases of emergency. 5. Actual or estimated losses arising as a result of employment disputes in the recent year up to the publication date of this annual report, and any responsive measures taken ‧ In 2023 and as of the date of the report published, Company did not suffer any losses due to employment disputes: None ‧ Future plans and potential expenses: None 194 5.6 Information Security Management 1. Information security risk management framework The Information Security Committee coordinates and executes Compal's information security related operations and various activities. It has one chairman and one deputy chairman. According to management needs, several members may form the committee, with the head of the department and above as ex-officio members. An executive secretary is responsible for administrative affairs. The Information Security Committee has an Information Security Implementation Team, which is composed of staff from the Information Security Team of the Information Headquarters, which handles the establishment, promotion, maintenance, audit and training of information security related matters. One person is appointed as the head of the Information Security Implementation Team and reports to the Board of Directors once a year. When necessary, the Capital Committee may invite external information security consultants to serve as advisors. Compal's Information Security Committee coordinates and discusses information security policies, objectives, resource scheduling and other issues, and holds management review meetings every six months to ensure the continuous applicability, relevance and effectiveness of the ISMS, and maintain operational information security and compliance with national laws and regulatory requirements for information security control. It defines the scope of the ISMS, implements risk assessment and risk management tasks, determines acceptable risk levels, discusses the duties and responsibilities in information security related operations, and coordinates information security control measures and processing procedures. It advocates for information security policies and other information security management matters, and promotes information security awareness. Regular information security strategy meetings have been held to discuss and implement 17 information security strategy topics in 2023 in response to the ever-changing information security issues. 2. Information security policy Compal established the “Information Security Policy” to be the highest guiding principle, as declared in the information security statement, "to ensure business continuity and to improve customer satisfaction." ‧ Performing information asset risk assessment; ‧ Maintaining the confidentiality, integrity and availability of critical information assets; ‧ Continuously improving ISMS by implementing Plan-Do-Check-Act (PDCA) management cycle; ‧ Fulfilling the contractual agreements with clients and protecting clients’ information security; ‧ Complying with relevant laws and regulatory requirements; and ‧ Ensuring the participation of all personnel and suppliers. 3. Information security specific management plan ‧ The six major information security goals are measured monthly to monitor the control measures of ‧ information security management. Identify internal and external issues of the information security management system every six months, and confirm the needs of the stakeholder groups for the information security management system (including the customer's requirements for information security). ‧ Backup & restore drills are executed every six months and BCP restoration drills are executed every year to ensure the validity of the Business Continuity Plan and that it meets the system recovery goals. ‧ Annual information security incident response drills are conducted to quickly isolate and eliminate 195 threats to information security incidents, and reduce the scope and extent of impact. ‧ To boost employees’ awareness of information security, our employees are required to receive quarterly social engineering exercises and a briefing on information security and annual training. ‧ Network and system vulnerability detection, regularly perform vulnerability scanning, and entrust a third-party professional unit to conduct network and system penetration testing every year to verify the information security protection and effectiveness. ‧ Regular internal and external audits and continuous improvement. ‧ Risk assessment is executed regularly every six months. Risk evaluation is performed through asset values and business processes, and risk processing measures are performed for the high-level risks evaluated. 4. Information security management resources ■ ISO27001 Information security management and audit mechanism In 2005, Compal passed the ISO 27001 information security verification, and obtained the Information Security Management System ISO 27001 certificate issued by the verification body. It gradually expanded its scope of verification, which is tracked twice a year for internal self-audit and external impartial third-party audit, and re-audited by external third-party every three years. Internal audit includes NIST CSF, ISO/IEC 27001:2022 and TISAX standards; The external third-party audit is conducted in accordance with the ISO/IEC 27001:2022 standard and the customer's information security requirements. The scope of verification covers R&D activities of Portable Computer, All-in-One PC, Automotive Electronic Product, Enterprise Product, Mobile Device Product, IT Group, Smart Device Business Group-IT Division, and IT division in four plant compounds at Kunshan. Five members of the information security team have obtained an ISO27001 lead auditor license, and one member has a CISSP license. In addition to facing customers and impartial third-party audits, they also conduct internal audits to ensure the implementation of information security management mechanisms. ■ Strengthened network security Compal continues to strengthen control requirements for information security, reinforces company password policy, and adjusts the original password setting of the previous 3 generations that cannot be reused repeatedly to 10 generations. Also, it has strengthened the identity authentication mechanism for company account, and introduced two-factor authentication to enhance the security of remote login for internal resources to prevent illegal users from accessing company resources or customer information. Deploy MDR threat detection, anomaly analysis, and incident response to prevent information security threats. Access to critical information is controlled by account permissions, and the login password is changed regularly in accordance with the company's password policy. From time to time, it will, through announcements and quarterly advocacy to enhance employee awareness of information security, persistently review the network security planning of the company, and implement all equipment connected to the company network in compliance with regulations and protocols. Compal started the third-party cybersecurity network assessment in 2020, and the average score of the 2023 assessment results is 94 points, which is higher than the average score of global manufacturing companies. ■ Strengthened employees' awareness of information security Compal provides eLearning courses and quarterly social engineering drills to simulate hackers' phishing emails, and detect employees' information security risk awareness, supplemented by daily boot up with 196 pop-out information security announcements and quarterly Information security guidance by email and also education training to enhance colleagues' information security awareness. In order to implement the concept of information security, new employees complete the information security training program, and all employees are required to complete information security retraining courses every year. The information security education and training shall include Compal’s information security management regulations. Upon completion of the training, the validity of the training will be evaluated, and the evaluation will be logged. Information security members participate in the information security intelligence and technology seminar to learn about the latest information security trends and intelligence. 5. Losses, possible impacts and responses of major information security incidents The widespread use of computers and rapid development of the Internet have greatly changed the way users store and share information. With the efforts of all colleagues, Compal did not receive any complaints about a violation of customer privacy or the loss of customer information in 2023. In response to the government's "Cyber Security Guidelines for TWSE/TPEx-Listed Companies", Compal applied to become a member of the Taiwan Computer Emergency Response Team / Coordination Center (TWCERT/CC) in 2022 to improve the notification and response of cyber security incident. 5.7 Important Contracts Agreement Counterparty Patent Phoenix licensing Technologies agreement Ltd. Period Since 2010.1.1 Auto-renewed upon expiry Since Major Contents 1. Tool Licenses 2. Source Code licenses 3. Maintenance Under this agreement, the buyer will procure computer products developed and manufactured by the seller, while the seller will grant the buyer proper licenses to use the products and provide after-sales technical services. Trading and manufacturing agreement Dell Products 1997.06.26 L.P. Auto-renewed upon expiry Trading and manufacturing Acer Inc. agreement Since 2001.10.01 Under this agreement, the buyer will procure computer Yearly products developed and manufactured by the seller, Auto-renewed along with after-sales technical services provided by the upon expiry seller. 197 VI. Financial Information 6.1 Five-Year Financial Summary 1. Condensed Balance Sheet and Statement of Comprehensive Income ▓ Consolidated Condensed Balance Sheet Year Financial Summary for The Last Five Years (Note 1) Unit: TWD Thousands Analysis Current assets 2019 2020 2021 2022 2023 343,154,813 424,460,635 487,115,390 390,706,503 368,924,297 Property, plant, and equipment 19,972,347 22,085,340 26,990,364 28,808,211 1,553,342 1,506,101 1,548,508 1,722,165 17,967,917 18,873,622 21,441,078 32,247,554 382,648,419 466,925,698 537,095,340 453,484,433 436,770,974 255,820,033 335,524,716 402,242,095 302,384,911 277,252,062 Non-current assets 12,069,042 15,411,332 13,313,442 23,689,679 261,048,588 342,496,124 410,956,354 307,613,466 267,889,075 415,555,537 412,506,626 326,074,590 303,998,121 273,117,630 357,907,456 424,269,796 331,303,145 309,286,697 (Note 2) 105,972,633 106,832,505 111,360,265 116,294,754 119,621,995 44,071,466 44,071,466 44,071,466 44,071,466 9,159,259 8,342,813 6,724,856 5,078,580 44,071,466 4,270,915 57,726,604 62,566,181 69,651,940 69,969,059 72,548,155 Other equity interests (4,103,449) (7,266,708) (8,206,750) (1,943,104) 53,319,457 57,277,605 62,600,505 65,561,912 (881,247) 8,786,711 (881,247) 9,157,145 (881,247) (881,247) 10,179,538 11,115,089 13,150,858 114,759,344 115,989,650 121,539,803 127,409,843 132,772,853 109,530,789 109,018,242 112,825,544 122,181,288 127,544,298 (Note 2) Note: 1. The financial information is audited and certified by the CPA every year. 2. The amounts are approved by the Board of Directors meeting on February 29, 2024. 198 Intangible assets Other assets Total assets Prior to Current liabilities distribution After distribution Total liabilities Prior to distribution After distribution Equity attributable to parent company shareholders Ordinary shares Capital reserves Retained earnings Prior to distribution After distribution Treasury stock Non-controlling interests Total equity Prior to distribution After distribution 29,040,525 1,462,162 37,343,990 282,540,638 (Note 2) 26,746,059 68,141,008 (Note 2) (387,294) (881,247) ▓ Consolidated Condensed Statement of Comprehensive Income Year Financial Summary for The Last Five Years (Note) Unit: TWD Thousands Analysis Net sales revenue Gross profit 2019 2020 2021 2022 2023 980,442,346 1,048,929,251 1,235,682,015 1,073,245,915 946,714,800 33,908,828 35,458,522 41,491,574 40,364,179 42,396,894 Net operating income 10,586,368 11,492,545 13,348,593 Non-operating income and expense (578,492) 1,630,171 4,119,242 9,218,997 1,505,133 12,047,711 (157,286) Net income before taxes 10,007,876 13,122,716 17,467,835 10,724,130 11,890,425 Net income from continuing operations Net loss from discounting operations Net income (loss) Income (Loss) from Other 7,895,719 10,409,512 13,740,488 8,541,527 9,130,678 - - - - - 7,895,719 10,409,512 13,740,488 8,541,527 9,130,678 comprehensive income (loss) (1,534,980) (3,341,346) (1,237,908) 6,535,651 898,965 (net after tax) Comprehensive income Net income attributes to shareholders of the Parent Net income attributes to non- controlling interests Comprehensive income attributed to owners of parent Comprehensive income attributed to non-controlling interests Earnings per share (unit: dollar) 6,360,739 7,068,166 12,502,580 15,077,178 10,029,643 6,955,899 9,361,893 12,632,667 7,288,292 7,667,627 939,820 1,047,619 1,107,821 1,253,235 1,463,051 5,456,508 6,083,542 11,445,530 13,636,212 8,558,794 904,231 984,624 1,057,050 1,440,966 1,470,849 1.60 2,15 2.90 1.67 1.76 Note: The financial information is audited and certified by the CPA every year. 199 Other assets Total assets Current liabilities Prior to distribution After distribution Total liabilities Ordinary shares Capital reserves Retained earnings Prior to distribution After distribution Prior to distribution After distribution ▓ Parent-Company-Only Condensed Balance Sheet Year Analysis Financial Summary for The Last Five Years (Note 1) Unit: TWD Thousands 2019 2020 2021 2022 2023 Current assets 245,522,829 296,383,073 348,914,103 271,829,340 Property, plant, and equipment 2,620,638 2,604,893 2,484,963 2,417,309 259,853,419 2,234,288 Intangible assets 438,334 436,548 431,936 529,906 349,922 89,201,687 89,526,637 95,517,212 104,756,856 115,856,133 337,783,488 388,951,151 447,348,214 379,533,411 378,293,762 220,871,943 268,466,052 324,236,031 248,511,419 242,274,702 Non-current assets 10,938,912 13,652,594 11,751,918 14,727,238 226,160,519 275,517,487 333,050,325 253,799,995 247,563,278 (Note 2) 16,397,065 231,810,855 282,118,646 335,987,949 263,238,657 258,671,767 237,099,431 289,170,081 344,802,243 268,527,233 44,071,466 44,071,466 44,071,466 44,071,466 9,159,259 8,342,813 6,724,856 5,078,580 263,960,343 (Note 2) 44,071,466 4,270,915 57,726,604 62,566,181 69,651,940 69,969,059 72,548,155 53,319,457 57,277,605 62,600,505 65,561,912 68,141,008 (Note 2) (387,294) (881,247) Other equity interests (4,103,449) (7,266,708) (8,206,750) (1,943,104) Treasury stock (881,247) (881,247) (881,247) (881,247) Total equity Prior to distribution After distribution 105,972,633 106,832,505 111,360,265 116,294,754 119,621,995 100,744,078 99,861,097 102,646,006 111,066,199 114,393,440 (Note 2) Note: 1.The financial information is audited and certified by the CPA every year. 2. The amount approved by Board of Directors on February 29, 2024. 200 ▓ Parent-Company-Only Condensed Statement of Comprehensive Income Year Financial Summary for The Last Five Years (Note) Unit: TWD Thousands Analysis Net sales revenue Gross profit Net operating income Non-operating income and expense 2019 2020 2021 2022 2023 916,280,028 991,279,270 1,171,613,858 1,003,642,791 874,914,215 24,849,149 8,536,952 23,218,044 6,079,726 27,904,355 7,578,392 28,567,835 7,262,023 28,050,066 7,327,971 (713,273) 4,347,551 6,864,576 771,589 1,381,729 Net income before taxes 7,823,679 10,427,277 14,442,968 8,033,612 8,709,700 Net income from continuing operations Net loss from discounting operations 6,955,899 9,361,893 12,632,667 7,288,292 7,667,627 - - - - - Net income (loss) 6,955,899 9,361,893 12,632,667 7,288,292 7,667,627 Income (loss) from other comprehensive income (1,499,391) (3,278,351) (1,187,137) 6,347,920 891,167 (net after tax) Comprehensive income 5,456,508 6,083,542 11,445,530 13,636,212 8,558,794 Earnings per share (unit: dollar) 1.60 2.15 2.90 1.67 1.76 Note: The financial information is audited and certified by the CPA every year. ▓ Auditors’ Opinions Year 2019 2020 2021 2022 2023 Accounting Firm CPA KPMG KPMG KPMG KPMG KPMG Chien, Szu Chuan; Au, Yiu Kwan Chien, Szu Chuan; Au, Yiu Kwan Kuo, Kuan Ying ; Chien, Szu Chuan Kuo, Kuan Ying ; Chien, Szu Chuan Kuo, Kuan Ying ; Chien, Szu Chuan Audit Opinion Unqualified opinion Unqualified opinion Unqualified opinion Unqualified opinion Unqualified opinion 201 6.2 Five-Year Financial Analysis ▓ Consolidated Financial Analysis Year Financial Analysis for the Last Five Years Analysis 2019 2020 2021 2022 2023 Debt ratio 70.01 75.16 77.37 71.90 69.60 Capital Structure (%) Long term fund to property, plants, and equipment ratio Current ratio (%) Liquidity analysis Quick ratio (%) Operating Performance Analysis Profitability Analysis Interest coverage Accounts receivable turnover (times) Average collection turnover Inventory turnover (times) Accounts payable turnover (times) Average inventory turnover days Property, plants, and equipment turnover (times) Total assets turnover(times) Return on total assets (%) Return on equity (%) Operating income to paid-in capital ratio (%) Net margin (%) Earnings per share (dollar) Cash flow ratio (%) Cash flow Cash flow adequacy ratio (%) Cash reinvestment ratio (%) Leverage Operating leverage Financial leverage Note: 1. The ratio is negative. 635.02 594.97 499.63 524.50 549.30 134.14 102.94 4.67 4.96 73.58 12.01 6.34 30.39 126.51 121.10 129.21 133.06 97.39 12.42 4.95 73.73 11.61 5.89 31.43 92.13 17.65 4.73 77.16 11.31 5.64 32.27 91.61 98.18 4.30 4.46 3.35 4.92 81.83 74.18 9.12 5.35 8.75 5.64 40.02 41.71 48.55 49.88 50.36 38.47 32.73 2.51 2.57 6.93 2.47 2.67 9.02 2.46 2.90 11.57 2.17 2.25 6.86 2.13 2.92 7.02 22.71 29.78 39.64 24.33 26.98 0.81 1.60 8.18 37.92 9.89 1.61 1.35 0.99 2.15 4.25 35.94 5.48 1.54 1.11 1.11 2.90 (Note1) 27.41 (Note1) 1.52 1.09 0.80 0.96 1.67 19.39 81.74 27.65 1.82 1.54 1.76 10.70 115.31 12.84 1.65 1.72 Cash flow ratio: Mainly due to the decrease in net cash inflow from operating activities compared to the earlier period. Interest coverage ratio: Mainly due to the increase in interest expenses for the current period. Return on assets and net profit margin: Mainly due to the increase in current period earnings. 2. The financial ratio has changed by up to 20% in the past two years: ‧ ‧ ‧ ‧ ‧ ‧ 3. The financial information is audited and certified by the CPA every year. Financial leverage: primarily due to an increase in long-term investments. Cash Flow Adequacy Ratio: Mainly due to the decrease in net cash flow from operating activities in the current period. Cash reinvestment ratio: Mainly due to the increase in net cash flow from operating activities in the past five years. 202 ▓ Formula Financial Structure 1. (1) Debt Ratio = Total liabilities/Total assets (2) Ratio of long-term capital to property, plants, and equipment = (Net shareholders’ equity + Long-term liability)/Net property, plants, and equipment Solvency 2. (1) Current ratio = Current Assets/Current liability (2) Quick ratio = (Current assets - Inventory - Prepaid expenses)/Current liability (3) Interest coverage ratio = Net income before income tax and interest expense/Interest expense 3. Operating Efficiency (1) Accounts receivable (including accounts receivable and notes receivable from business activities) turnover = Net sales/Average accounts receivable balance (including accounts receivable and notes receivable from business activities) Inventory turnover = Cost of Goods Sold/Average inventory balance (2) A/R turnover days = 365/accounts receivable turnover (3) (4) Accounts payable (including accounts payable and notes payable from business activities) turnover = Cost of goods sold/Average accounts payable balance (including accounts payable and notes payable from business activities) Inventory turnover days = 365/Inventory turnover (5) (6) Property, plants, and equipment turnover = Net sales/Average Net Property, plants, and equipment (7) Total assets turnover = Net sales/Average Total assets 4. Profitability (1) Return on assets = [PAT + Interest expense × (1 - interest rate)]/average asset balance (2) Return on equity = PAT/average net equity (3) Pre-tax income to paid-in capital = Net income before taxes/Issued capital stock (4) Net profit ratio = PAT/Net sates (5) EPS = (PAT - preferred stock dividends)/weighted average outstanding shares 5. Cash Flow (1) Cash flow ratio = Cash flow from operating activities/Current liability (2) Cash flow adequacy ratio = Most recent 5-year Cash flow from operating activities/Most recent 5-year (Capital expenditure + increases in inventory + cash dividend) (3) Cash reinvestment ratio = (Cash flow from operating activities - cash dividend)/(Gross fixed assets + long-term investment + other assets + working capital) Leverage 6. (1) Operating leverage = (Nest revenue - variable cost of goods sold and operating expense)/operating income (2) Financial leverage = Operating income/(Operating income - interest expenses) ▓ The preceding formula for calculating the earnings per share must pay attention to the following: 1. Based on the weighted average number of ordinary shares rather than on the number of shares that have been issued at the end of the year. 203 2. Those who have cash replenishment or treasury shares must consider the circulation period and calculate the weighted average number of shares. 3. Where there is a surplus to increase capital or capital surplus to increase capital, the proportion of capital increase must be retrospectively adjusted when calculating the earnings per share for the previous annual and semi-annual periods, and there is no need to consider the capital increase issuance period. 4. If the preferred stock is a non-convertible accumulative preferred stock, its annual dividends (whether issued or not) must be subtracted from the net profit after tax, or the net loss after tax must be added. If the preferred stock is non-cumulative and in the case of net profit after tax, the preferred stock dividends must be deducted from the net profit after tax. If it is a loss, no adjustment is required. ▓ When measuring cash flow, special attention should be paid to the following items: 1. The net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement. 2. Capital expenditure refers to the number of cash outflows of capital investment per year. 3. The increase in inventories is only included when the ending balance is greater than the opening balance. If the inventory at the end of the year decreases, it is calculated as zero. 4. The cash dividends include cash dividends from ordinary stocks and preferred stocks. 5. The gross value of property, plant, and equipment refers to the total amount of real property, plant, and equipment before depreciation. ▓ According to their nature, the issuer shall classify the various operating costs and operating expenses into fixed and variable terms. If there is any estimation or subjective judgment, the issuer must pay attention to rationality and maintain consistency. ▓ If the Company’s shares are those without par value or at par value of NT$10 per share, the former calculation for the ratio of paid-in capital shall be calculated based on the equity ratio attributable to the owner of the parent company in the balance sheet. 204 ▓ Parent-Company-Only Financial Analysis Year Financial Analysis for the Last Five Years Analysis Capital Structure (%) Debt ratio Long term fund to property, plants, and equipment ratio Current ratio (%) Liquidity analysis Quick ratio (%) Operating Performance Analysis Interest coverage Accounts receivable turnover (times) Average collection turnover Inventory turnover (times) Accounts payable turnover (times) Average inventory turnover days Property, plants, and equipment turnover (times) Total assets turnover(times) Return on total assets (%) Return on equity (%) Profitability Operating income to paid-in capital Analysis ratio (%) Net margin (%) Earnings per share (dollar) Cash flow ratio (%) 2019 2020 2021 2022 2023 68.63 72.53 75.11 69.36 68.38 4,461.19 4,625.34 4,954.29 5,420.16 6,087.80 111.16 110.40 107.61 109.38 88.45 4.97 4.97 73.46 17.55 5.86 20.79 89.44 15.81 4.87 75.01 18.29 5.73 19.95 88.77 21.84 4.64 78.73 19.59 5.72 18.62 87.83 4.15 4.37 83.48 17.10 5.34 21.34 107.26 85.78 3.15 4.78 76.36 16.27 5.33 22.43 385.90 379.40 460.37 409.46 376.18 2.64 2.46 6.57 2.73 2.73 8.80 2.80 3.15 11.58 2.43 2.26 6.40 2.31 2.88 6.50 17.75 23.66 32.77 18.23 19.76 0.76 1.60 6.80 0.94 2.15 1.08 2.90 (Note1) (Note1) 0.73 1.67 22.15 0.88 1.76 6.36 Cash flow Cash flow adequacy ratio (%) (Note1) (Note1) (Note1) 55.25 130.80 Cash reinvestment ratio (%) Leverage Operating leverage Financial leverage Note: 1. The ratio is negative. 8.29 2.43 1.30 (Note1) (Note1) 3.17 1.13 2.94 1.10 35.06 3.11 1.54 7.42 3.19 2.24 2. The financial ratio has changed by up to 20% in the past two years: ˙Interest coverage: Mainly due to the increase in interest expense compared to the earlier period. ˙Return on assets: Mainly due to the increase in interest expense compared to the earlier period. ˙Net margin: Mainly due to the increase in net income compared to the earlier period. ˙Cash flow ratio: Mainly due to the decrease in net cash inflow from operating activities compared to the earlier period. ˙Cash flow adequacy ratio: Mainly due to the increase in most recent 5-year Cash flow from operating activities compared to the earlier period. ˙Cash reinvestment ratio: Mainly due to the decrease in net cash inflow from operating activities compared to the earlier period. ˙Financial leverage: Mainly due to the increase in interest expense compared to the earlier period. 3. The financial information is audited and certified by the CPA every year. 205 ▓ Formula Financial Structure 1. (1) Debt Ratio = Total liabilities/Total assets (2) Ratio of long-term capital to property, plants, and equipment = (Net shareholders’ equity + Long-term liability)/Net property, plants, and equipment Solvency 2. (1) Current ratio = Current Assets/Current liability (2) Quick ratio = (Current assets - Inventory - Prepaid expenses)/Current liability (3) Interest coverage ratio = Net income before income tax and interest expense/Interest expense 3. Operating Efficiency (1) Accounts receivable (including accounts receivable and notes receivable from business activities) turnover = Net sales/Average accounts receivable balance (including accounts receivable and notes receivable from business activities) Inventory turnover = Cost of Goods Sold/Average inventory balance (2) A/R turnover days = 365/accounts receivable turnover (3) (4) Accounts payable (including accounts payable and notes payable from business activities) turnover = Cost of goods sold/Average accounts payable balance (including accounts payable and notes payable from business activities) Inventory turnover days = 365/Inventory turnover (5) (6) Property, plants, and equipment turnover = Net sales/Average Net Property, plants, and equipment (7) Total assets turnover = Net sales/Average Total assets 4. Profitability (1) Return on assets = [PAT + Interest expense × (1 - interest rate)]/average asset balance (2) Return on equity = PAT/average net equity (3) Pre-tax income to paid-in capital = Net income before taxes/Issued capital stock (4) Net profit ratio = PAT/Net sates (5) EPS = (PAT - preferred stock dividends)/weighted average outstanding shares 5. Cash Flow (1) Cash flow ratio = Cash flow from operating activities/Current liability (2) Cash flow adequacy ratio = Most recent 5-year Cash flow from operating activities/Most recent 5-year (Capital expenditure + increases in inventory + cash dividend) (3) Cash reinvestment ratio = (Cash flow from operating activities - cash dividend)/(Gross fixed assets + long-term investment + other assets + working capital) Leverage 6. (1) Operating leverage = (Nest revenue - variable cost of goods sold and operating expense)/operating income (2) Financial leverage = Operating income/(Operating income - interest expenses) ▓ The preceding formula for calculating the earnings per share must pay attention to the following: 1. Based on the weighted average number of ordinary shares rather than on the number of shares that have been issued at the end of the year. 206 2. Those who have cash replenishment or treasury shares must consider the circulation period and calculate the weighted average number of shares. 3. Where there is a surplus to increase capital or capital surplus to increase capital, the proportion of capital increase must be retrospectively adjusted when calculating the earnings per share for the previous annual and semi-annual periods. There is no need to consider the capital increase issuance period. 4. If the preferred stock is a non-convertible accumulative preferred stock, its annual dividends (whether issued or not) must be subtracted from the net profit after tax, or the net loss after tax must be added. If the preferred stock is non-cumulative and in the case of net profit after tax, the preferred stock dividends must be deducted from the net profit after tax. If it is a loss, no adjustment is required. ▓ When measuring cash flow, special attention should be paid to the following items: 1. The net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement. 2. Capital expenditure refers to the number of cash outflows of capital investment per year. 3. The increase in inventories is only included when the ending balance is greater than the opening balance. If the inventory at the end of the year decreases, it is calculated as zero. 4. The cash dividends include cash dividends from ordinary stocks and preferred stocks. 5. The gross value of property, plant, and equipment refers to the total amount of real property, plant, and equipment before depreciation. ▓ The issuer shall classify the various operating costs and operating expenses into fixed and variable terms according to their nature. If there is any estimation or subjective judgment, the issuer must pay attention to rationality and maintain consistency. ▓ If the Company’s shares are those without par value or at par value of NT$10 per share, the former calculation for the ratio of paid-in capital shall be calculated based on the equity ratio attributable to the owner of the parent company in the balance sheet. 207 6.3 Audit Committee’s Report for the Most Recent Year Audit Committee’s Review Report The Company’s 2023 financial statements, business report and proposal for distribution of earnings have been approved by the Audit Committee and by the Board of Directors. Kuan-Ying Kuo and Szu-Chuan Chien, certified public accountants of KPMG, have completed the audit of the 2023 financial statements and issued an audit report relating thereto. According to Article 14-4 of the Securities and Exchange Act and Article 219 of Company Law, we hereby submit this report. To Compal Electronics, Inc. 2024 Annual General Shareholders’ Meeting Chairman of the Audit Committee: Min Chih Hsuan March 20, 2024 208 6.4 Consolidated Financial Statements and Independent Auditors’ Report Please refer to Attachment I. 6.5 Parent-Company-Only Financial Statements and Independent Auditors’ Report Please refer to Attachment II. Status of Financial Difficulties for the Company and its Subsidiaries 6.6 Incidence of financial difficulties for the Company and subsidiaries between the periods of 2023 to the publication date of this annual report: None. 209 VII. Review of Financial Conditions, Financial Performance, and Risk Management 7.1 Analysis of Financial Status Year Analysis Current Assets Investments accounted for using the equity method Property, plant and equipment Other Assets Total Assets Current Liabilities Other Liabilities Total Liabilities Ordinary Share Capital surplus Retained Earnings Other Equity Interests Treasury stock Non-controlling Equity Total Equity 2023 2022 Unit: TWD Thousands Difference Amount % 368,924,297 390,706,503 (21,782,206) 7,448,351 8,047,569 (599,218) 29,040,525 31,357,801 436,770,974 277,252,062 26,746,059 28,808,211 232,314 25,922,150 5,435,651 453,484,433 (16,713,459) 302,384,911 (25,132,849) 23,689,679 3,056,380 303,998,121 326,074,590 (22,076,469) 44,071,466 - 5,078,580 (807,665) 69,969,059 (1,943,104) (881,247) 2,579,096 1,555,810 - 2,035,769 5,363,010 13,150,858 11,115,089 132,772,853 127,409,843 44,071,466 4,270,915 72,548,155 (387,294) (881,247) (5.58) (7.45) 0.81 20.97 (3.69) (8.31) 12.90 (6.77) - (15.90) 3.69 (80.07) - 18.32 4.21 Note: Analysis of variations exceeding 20% and amounting to more than NTD10 million: Increase in other assets: Mainly due to the increase in the financial assets measured at fair value through profit or loss - non-current and deferred income tax assets. Increase in other equity interests: Mainly due to the increase in unrealized gains or losses on financial assets measured at fair value through other comprehensive income. ■ Effect of changes on the Company’s financial position and Future response actions: Judging from the aforementioned causes, the effect of changes on the Company’s financial position in the last two years are normal outcomes from standard operating activities. 210 7.2 Analysis of Financial Performance Analysis Net Sales Cost of Sales Gross Profit Operating Expenses Operating Income Year 2023 2022 Unit: TWD Thousands Difference Amount % 946,714,800 1,073,245,915 (126,531,115) 904,317,906 1,032,881,736 (128,563,830) 42,396,894 40,364,179 2,032,715 30,349,183 31,145,182 (795,999) 12,047,711 9,218,997 2,828,714 (11.79) (12.45) 5.04 (2.56) 30.68 Non-operating Income and Expenses (157,286) 1,505,133 (1,662,419) (110.45) Profit Before Tax Less: Income Tax Expense Net Profit (loss) 11,890,425 10,724,130 1,166,295 2,759,747 9,130,678 2,182,603 8,541,527 577,144 589,151 Other Comprehensive Income (after tax) 898,965 6,535,651 (5,636,686) Total Comprehensive Income 10,029,643 15,077,178 (5,047,535) 10.88 26.44 6.90 (86.25) (33.48) Note: Analysis of variations exceeding 20%: Increase in net profit: Mainly due to the increase in gross profit from operating activities in the current period. Decrease in no-operation income & expenses: Mainly due to the increase in interest expenses. Increase in income tax expense: Mainly due to an increase in operating income.. Other comprehensive income and total comprehensive income for the period decreased: mainly due to changes in the translation differences of financial statements of foreign operating entities. ■ Forecast for sales for next year and basis for the forecast. Potential impact on the Company’s finances and sales in the future and response plan: Forecast for sales for next year and basis for the forecast The global inflation pressure and geopolitical issues continue to develop in 2024. Although market research institutions are looking forward to a recovery of the industry in 2024, their estimates are relatively conservative. The expectation of an economic soft landing indicates that there are still significant challenges and uncertainties in the market development this year. Our company faces a rapidly changing environment and will continue to invest in innovation, talent, and execution to establish long-term competitive advantages. Artificial Intelligence (AI), Cloud Servers, Auto Electronics, Communication, and MedTech are the five important emerging businesses for Compal. We will continue to strategically position ourselves and steadily move forward, serving as the pillars of growth in the mid- to long-term. For further market analysis, please refer to page 147~152 for“Industry Overview–current and future industry prospects”. Potential impact on the Company’s finances and sales in the future and response plan: In light of the growth in operations and future investments, the Company has established relevant financial strategies. 211 7.3 Analysis of Cash Flow 7.3.1 Cash Flow Analysis for the Current Year Cash and Cash Equivalents, Beginning of Year (1) Net Cash Flow from Operating Activities (2) Other Cash Inflow (Outflow) (3) Cash Surplus (Deficit) (1)+(2)+(3) Unit: TWD Thousands Financing of Cash Deficit Investment Plans Financing Plans 79,665,302 29,677,204 (36,863,026) 72,479,480 - - Note: 1. Other Cash Inflow (Outflow) includes the Cashflow in investing activities, financing activities, and foreign exchange impacts. 2. Analysis of the change in 2023 cash flows: •Net cash inflow in operating activities: Mainly due to the net changes of accounts receivable, inventory, and accounts payables from operating activities. •Net cash outflow in investing activities: Mainly due to the financial assets measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income in the current period. •Net outflow of financing activities: Mainly due to repayment of the loan and distribution of cash dividends. 3. Financing of cash deficits and liquidity analysis: There is no cash deficit situation. 7.3.2 Cash Flow Analysis for the Coming Year The Company takes prudent planning and aims to maintain stable cash liquidity, as the cash balance at the beginning of the year plus the net cash inflows from operating activities are adequate in meeting the Company’s investing and financing needs. 7.4 Major Capital Expenditures 7.4.1 Major Capital Expenditures and Sources of Capital Project Actual or Planned Source of Capital Actual or Planned Date of Completion Total Capital Actual or Expected Capital Expenditure 2023 Unit: TWD Thousands Property, plant and equipment Cash flow generated from operations and loans 7.4.2 Expected Benefits 2023 7,169,728 7,169,728 The Company’s major capital expenditure is invested to meet the needs of business growth and capacity expansion. Meanwhile, the Company aims to increase automation equipment to enhance production efficiency and achieve the goal of smart manufacturing, to build the Company’s long-term competitiveness. 212 7.5 Investment Policy in the Last Year, Main Causes for Profits or Losses, Improvement Plans and Investment Plans for the Coming Year 1. Investment policy (1) Competition in the industry has accelerated and Compal is in full thrust integration mode. “Enlightened Living and Computing with a Green Connection” is the Compal vision. Our long-term investment strategies are to focus on products that relate to our core business, to provide the best quality in computing, communications, consumer, cloud and connection, to provide full solutions in cost and technology, and to put emphasis on our partner’s compliance with labor regulations, and the avoidance of human trafficking and slavery. We also want to strengthen the core resources through vertical integration, diversification, strategic investments or acquisitions, and integration and horizontal competition. (2) Improve post investment performance, strengthen the integration of Group resources and strategic partnerships with investment businesses, facilitate the cooperation between the Company and invested businesses, and require their full compliance with labor regulations and those against human trafficking and slavery. Connect related customers to an information network, and form strategic alliances with other industries. Sustain the performance of operating output in social, economic, and environmental aspects using a high standard of specification. This includes increasing efficiency and productivity, improving the rights of the workers, proper economic development, and environmentally friendly production in a clean operating base. The Company fully supports investment companies with good performance to plan for IPO to accelerate the realization of good returns on investments. 2. Main causes of profits or losses incurred on investments, and any corrective actions planned The 2023 consolidated loss from investment using the equity method came to approximately TWD 467 million. The reason for the loss was mainly because of the negative impact of the sluggish market or lagging economies of scale. 3. 2024 investment plans The long-term investment plan for next year will be based on the Company’s operating policy to position ourselves as the pioneer provider of mobile device solutions and provide products, through the integration of R&D resources and clients, of an all-in-one computer, TV, AE and enterprise servers. The Company follows the principle of steady operation and always focuses on our core businesses. We will expand on the foundation of our existing businesses, make some vertical integration where appropriate, and expand horizontally into related activities, while continuing to grow our core business. In the vertical integration of upstream and downstream businesses that are not involved in hardware production, we will also expand the number of our developers and the proportion of software and firmware, to increase the value of their tangible assets and bring in value from additional sales. We expect horizontal mergers and expansions to help develop full IoT solutions for our clients which include applications in cross-industry automation, industrial computers, security control, the healthcare industry, cars, smart medical, smart cities, smart buildings, restaurants and retail outlets, with the primary aim of providing new investment opportunities and challenges. In practice, apart from achieving internal growth under the existing business framework, we also accept the possibility of mergers, acquisitions, joint ventures, technical calibrations, and investment activities through bilateral or multi-lateral collaboration between business entities. The Company and affiliates will proceed with the aforementioned expansion based on the consideration of whether the expansion can strengthen the Group’s advantage and assessment of reasonable risks. In terms of reinvestments, we follow the above mentioned principles and set basic principles in the following three directions: 213 (1) The vertical integration of upstream and downstream businesses to increase the proportion of self- made parts and improve overall competitiveness. (2) Horizontal mergers and expansion of related products and services, as well as other industries that provide prominent synergy or growth. (3) Develop technology which is beneficial to the Company or its affiliates, or invest in assets that provide synergy or growth. 7.6 Analysis of Risk Management 7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates, and Inflation on Corporate Finance, and Future Response Measures Items Net interest revenue and expense Net gain on foreign currency exchange transaction (including valuation of financial instruments) Unit: TWD Thousands; % 2023 (345,445) 216,167 Regarding interest rates and inflation, the company will monitor interest rate changes closely and strive for the most favorable loan rate, using idle funds in low-risk bank deposits and money market funds to reduce the impact of interest rate and inflation changes on the company. The Company is export-oriented. Sales and purchases of the Company are mainly accounted for in USD. The change and movement of exchange rate have a considerable impact on annual profit and loss. To minimize the impact on the Company’s operating profit/loss, the Company mainly utilizes hedging such as forward foreign exchange contracts and swaps to minimize the risks of exchange rate movements. In the future, the quotation strategy will be adjusted in a timely manner depending on the fluctuation of the exchange rate. The financial department collects and evaluates the relevant information and trends of the foreign currency market, and accommodates the needs of funds and makes foreign currency exchange transactions in time to reduce risk. 7.6.2 Policies, Main Causes of Profits or Losses, and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions 1. The Company does not make high-risk, high-leveraged investments. 2. The Company only offers financing to its related parties, mainly providing short-term financing for their operating needs. 3. The Company is engaged in endorsement and guarantee activities which are only negotiated between subsidiaries and the parent company. The arrangements are covered by proper Endorsement and Guarantee Procedures. 4. The Company uses a hedging strategy for assets and liabilities valued in foreign currencies. Such hedging, done through forward foreign exchange contracts and swap trading, covers the amount of net assets and liabilities to achieve the objective of risk aversion. 5. In addition to prudent evaluation and control of the execution of related policies, the Company also relies on regulations such as “Guidelines for Handling Acquisition and Disposal of Assets”, “Endorsement and Guarantee Procedures”, “Third Party Lending Procedures”, and “Procedures for the Handling of Derivatives Trading”. 214 7.6.3 Future Research and Development Projects and Corresponding Budget In addition to being committed to product innovation and improvement of computers and smart device products, the Company regards innovative research and development as the niche for the Company’s sustainable growth. Various R&D programs are developed and proposed by the R&D team based on their forecast of new technologies, understanding of market trends, and integration of add-on functions. They also team with clients to meet their market planning and detail product developments. In general, the Company usually has less than a one-year product development cycle and aims to shorten the R&D cycle year after year. The IT industry is highly competitive, and the timing of product development is of vital importance. The rapid growth of sales has made the quality, experience, and capacity of R&D a decisive factor that will become the key to whether the Company can achieve its business target and whether the existing customers continue their cooperation with the Company. The 2024 R&D expenses are expected to be TWD 18.1 billion. 7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales The Company’s management team is paying close attention to any policies or regulations that may impact the Company’s operations. In 2023, the Company made all the necessary responses to significant changes in international and domestic policies and regulations, without a significant impact on Company operations. 7.6.5 Effects of and Response to Changes in Technology (including information security risks) and the Industry Relating to Corporate Finance and Sales The constant arrival of new technology products to replace dated ones has changed the habits of users. This has consequently led to the emergence of different demands, and the development of ARM and Android has also impacted Wintel, which used to monopolize the market. Not only that, the emergence of cloud applications has also resulted in significant changes in the traditional PC market. The rising technology trend of IoT, Artificial Intelligence (AI), and 5G communication will also bring significant developments in the industry as well as market opportunities. To cope with these changes, the Company has expanded new businesses to its existing product lines to embrace the latest industrial trends. As such, the Company has established its Innovation Center which is responsible for following and studying the latest developments in market trends. Not only that, the Innovation Center is also involved in the development of innovative products, technologies, and designs to strengthen the Company’s research on consumer behavior and thereby provide more accurate market segregation and product positioning to satisfy user needs. At the same time, we will also focus on boosting our innovative technology capabilities and plans for future product and market opportunities. Besides, in response to the changing trend of external information security and the ever-changing hacking techniques, we continue to pay attention to the latest information and technology, keep up with the times in our defense and management, effectively block information security threats, and reduce operational impact. Regarding internal and external information security issues, appropriate resources should be invested, and 215 control measures should be improved to reduce risks. There were no major information security events in 2023, nor did the leakage of confidential information affect our customers and business, and cause significant impact to the financials. 7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures Compal has concentrated on the IT and Communications industry for many years and has firmly adhered to a business philosophy of transcendence, sincerity, and harmony in a culture of ethics and honesty. We aim to be the best in world-class professional design, manufacturing, and services. As we pursue business growth, we always remember our obligations as a corporate citizen. We have strengthened corporate governance, fulfilled corporate social responsibility, and established a good corporate image. As the Company scale and business complexity have expanded, the number of employees has increased, and our global production branches have increased in number, we have become acutely aware of the need for periodic checks of the external environment, a self-management system, and operational strategies for strengthening the risk management and early detecting of potential corporate crises and the need for concrete and positive response plans and corrective measures. For many years, Compal has been placed among the Top 500, Top 2000 businesses, and Top 2000 manufacturers in Taiwan by Fortune, Forbes Magazine, and CommonWealth Magazine respectively, and has placed the distinction of the Award in the “Taiwan Corporate Sustainability Awards” organized by the Taiwan Institute of Sustainable Energy. These prestigious awards once again reaffirmed the Company’s corporate image. There was no company crisis in 2023 nor was there any significant event that affected the Company's image in any way. 7.6.7 Expected Benefits from, Risks Relating to, and Response to Merger and Acquisition Plans In addition to continued cultivation of the existing information and communication technology (ICT) operations and enhancement of the core profit base, we are actively seeking out upcoming industries for merger, acquisition, joint venture, or technical collaboration, with the aim being to move into industrial computing, medical networking, IoT networking, vehicle networking and the medical equipment market. We will maintain the stable development of existing businesses and move ahead of the curve in other areas with high growth momentum. The Company will integrate resources to increase R&D capacity, improve operational efficiency, and increase competitiveness. We expect to benefit from synergy, have a positive impact on future shareholder equity, and maintain adequate control of organizational integration matters and financial risks. 7.6.8 Expected Benefits from, Risks Relating to, and Response to Factory Expansion Plans: None 7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration: None 7.6.10 Effects of, Risks Relating to, and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%: None 216 7.6.11 Effects of, Risks Relating to, and Response to the Changes in Management: None 7.6.12 Litigation or Non-litigation Matters (1) Inventec Corporation (“Inventec”), because of its former employees who joined Compal Group, submitted a complaint to the Taiwan Taipei District Prosecutors Office asserting the Company has committed trade secret/copyright infringement. In August 2019, the Taiwan Taipei District Prosecutors Office brought criminal charges against the Company. In order to protect the Company’s rights and interests, the Company has retained outside counsel to defend such litigation. Considering the fact that whether the Company has committed the trade secret/copyright infringement depends on whether Inventec’s former employees are convicted, the Taipei District Court judge therefore issued a ruling and according to which the Court made a stay of the criminal proceedings pending the determination of related criminal proceedings against those employees. Currently, the criminal proceedings against those employees are still in progress before the court. The Company cannot make any reasonable estimation regarding the possible impact on its business operation. (2) Huawei Technologies Co., Ltd. filed an infringement litigation against the Group on October 28, 2022. The Group will carefully evaluate the litigation, discuss with related clients the following strategies and actions, and engage professional attorneys, to protect the rights and reputation of the Company from any damage. 7.6.13 Other Major Risks International conglomerates face many risks such as regulatory compliance, business competition, localization, and globalization. It is the responsibility of each Company employee to turn such challenges into future opportunities. Ex ante risk identification, weekly risk assessment and prevention, and post-crisis management, have all been added to the Company target management cycle (PDCA), key performance indicators (KPI), and control system for internal use. Such processes allow the dedicated units responsible for these specific risks to establish rigorous and rapid means for response and a problem-solving culture. By working through regular and unscheduled reviews and combining education, training and a performance risk appraisal system, they can cope with significantly different kinds of risk management based on local conditions. The Company did not face any significant risk in 2022. 7.7 Other Material Issues: None 217 VIII. Special Disclosure 8.1 Summary of Affiliated Companies (As of Dec 31, 2023) 8.1.1 Affiliated enterprises report 1. Chart 218 4 1 Mithera Capital Io LP 99.00% 46.42% Compal Broadband Networks Netherlands B.V. 100% 100% 18.52% Compal Electronica da Amazonia Ltda. 51.7% 48.3% CGS Technology (Poland) sp.z o.o. Compal Wise Electronic (Vietnam) Co. Ltd 100% 100% Compal USA (Indiana), Inc. 100% Kinpo&Compal Group Assets Development Corporation Shennona Corporation 70% 10% 100% 59.10% Compal Ruifang Health Assets Development Corporation Poindus Systems Corp. △ 100% 56.04% 100% Compal Mexico Electromex S.A DEC. V. 0.1% 99.9% Compal Healthcare & Technology Ltd. 100% PT GLB Biotechnology Indonesia 99% 1% Compal Electronics (Vietnam), Co., Inc. 100% Compal Electronics N. A. Inc. 100% FIPOLL Electronics (Chongqing) Co.,Ltd. 60% 219 4 Arcadyan Technology Affiliated Business Organization Chart Henghao Technology Co., Ltd. Affiliated Organization Chart Allied Power Affiliated Business Organization Chart Poindus Systems Affiliated Business Organization Chart Arcadyan India Private Limited. 100% Great Arch Group Ltd. 99.8% Leading Images Limited Astoria Networks Inc. Astoria Networks GmbH 31.6% 0.2% Arcadyan Technology (Vietnam) Co., Ltd. 100% Arcadyan Technology Corp. (Russia),LLC 100% 100% 100% 100% 100% Billion Sea Holding Ltd. Lucom Display Technology (Kunshan) Ltd. 16.11% 2. Backgrounds of affiliated enterprises (December 31, 2023) Company name Compal Electronics, Inc. Date of establishment 1984.06.01 Compal International Holding Co., Ltd. Compal International Holding (HK) Limited Compal Electronics Technology (Kunshan) Co., Ltd. Compal Information (Kunshan) Co., Ltd. Compal Information Technology (Kunshan) Co., Ltd. Compal Digital Technology (Kunshan) Co., Ltd. 2000.01.12 2008.08.11 2000.05.19 2003.01.07 2003.06.20 2010.03.05 Kunshan Botai Electronics Co., Ltd. 2001.08.20 Compower Global Service Co., Ltd. 2012.04.23 Prospect Fortune Group Ltd. 2000.01.18 Jenpal International Ltd. 2010.12.27 Fortune Way Technology Corp. 2015.12.18 Just International Ltd. 1992.08.25 Compal Display Holding (HK) Limited 2008.08.11 Address Paid-up capital Main business activities or products Unit: Thousand dollars TWD 44,071,466 Manufacturing, processing and trading of notebooks, computer monitors, LCD TVs, cellphones, and electronic parts General investments USD 53,001 USD 74,803 General investments USD 12,000 Production of notebooks, cellphones and electronics USD 12,000 Production of notebooks, tablets and electronics USD 24,000 Production of notebooks and electronics USD 20,000 Production and sale of notebooks, cellphones and digital products USD 1,000 Production and after-sale service of notebooks and cellphones RMB 2,000 Maintenance and after-sale service of notebooks and cellphones USD 1 General investments USD 7,350 General investments USD 14,900 General investments USD 48,010 General investments USD 62,298 General investments No. 581 and 581-1, Ruiguang Road, Neihu District, Taipei City Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Unit 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong No. 25, Third Avenue, A Zone, Kunshan Comprehensive Free Trade Zone, Kunshan, Jiangsu, China No. 15, Third Avenue, A Zone, Kunshan Comprehensive Free Trade Zone, Kunshan, Jiangsu, China No. 58, First Avenue, A Zone, Kunshan Comprehensive Free Trade Zone, Kunshan, Jiangsu, China No.59, First Avenue, Kunshan Economic and Technological Development Zone, Kunshan, Jiangsu, China No. 189, Qianjin Dong Lu, Kunshan Development Zone, Jiangsu Province, China Building 3, No.9, Second Avenue, A Zone, Kunshan Comprehensive Free Trade Zone, Kunshan, Jiangsu, China Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Unit 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong 220 Date of establishment 1995.12.25 2018.04.13 Company name Compal Electronics (China) Co., Ltd. Compal Smart Device (Chongqing) Co.,LTD. FIPOLL Electronics (Chongqing) Co.,Ltd. 2023.10.18 Compal Optoelectronics (Kunshan) Co., Ltd. Compal System Trading (Kunshan) Co., Ltd. Compal Investment (Jiangsu) Co., Ltd. 2003.02.28 2007.10.24 2011.02.17 Compal Display Electronics (Kunshan) Co., Ltd. Compal International Ltd. 2011.03.30 1997.04.15 Compal Electronics International Ltd. 1997.04.22 Compal Americas (US) Inc. Compal Electronics N.A. Inc. 2024.02.13 2024.02.14 Smart International Trading Ltd. 1998.09.03 Mexcom Technologies, LLC Mexcom Electronics, LLC Big Chance International Co., Ltd. Center Mind International Co., Ltd. 2011.07.22 2011.07.22 2010.01.05 2011.04.01 Address Paid-up capital Main business activities or products USD 37,000 Manufacturing and sale of displays RMB 60,000 Development, production and sale of communication equipment, cellphones, computers and smart watches, and provision of relevant technical services RMB 70,000 Manufacturing of auto parts and accessories. USD 12,100 Production and sale of LCD TVs USD 1,400 International trade and distribution of computers and electronic components USD 15,600 General investments USD 15,000 Production and sale of LCD TVs USD 500 General investments USD 12,745 General investments USD 2,500 USD 2,500 Sales of automotive electronic products Sales of automotive electronic product USD 1 General investments USD 1 General investments USD 8,234 General investments USD 90,820 General investments USD 80,820 General investments No. 189, Qian Jin East Road, Development Zone, Kunshan, Jiangsu, P.R. China No.18-5,Baohong Avenue,Liangjiang New District,Chongqing,China(No.D0 5,Zone D, Airport Section of Lianglu Cuntan Free Trade Port Area) No.5,FengCai Road,ZoneP,WangJia Subdistrict, LiangJiang New District, Chongqing, China (AirPort Secti on of LiangLu CunTan Free Trad e Port Area) No. 189, Qian Jin East Road, Development Zone, Kunshan, Jiangsu, P.R. China Room 435,No. 8 Weiye Road, Kunshan City Development Area, Jiangsu, China No. 189, Qian Jin East Road, Development Zone, Kunshan, Jiangsu, P.R. China No. 189, Qian Jin East Road, Development Zone, Kunshan, Jiangsu, P.R. China Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands 2140 South Dupont Highway, Camden, DE 19934 USA 2140 South Dupont Highway, Camden, DE 19934 USA Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands 318 N. Carson Street, #208, Carson City, NV 89701, USA 318 N. Carson Street, #208, Carson City, NV 89701, USA Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands 221 Address Paid-up capital Main business activities or products Company name Compal Investment (Sichuan) Co., Ltd. Compal Electronics (Chengdu) Co., Ltd. Date of establishment 2011.04.01 2011.04.02 Compal Management (Chengdu) Co., Ltd. 2011.05.25 Prisco International Co., Ltd. 2011.06.02 Compal Electronics (Chongqing) Co., Ltd. 2011.05.26 Core Profit Holdings Ltd. 2011.06.03 Billion Sea Holdings Ltd. 2012.04.02 Mithera Capital Io LP 2019.06.01 Compal Electronics (Vietnam) Co., Ltd 2023.05.26 No. 6, Shenglong Street, Wuhou District, Chengdu, Sichuan No. 88, Sec.1, ZongBao Avenue Chengdu Hi-tech Comprehensive Bonded Zone (Shuangliu),Shuangliu County, Chengdu, China (Sichuan) Pilot Free Trade Zone No. 6, Shenglong Street, Wuhou District, Chengdu, Sichuan Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands No.10-3, BaoHong Avenue, YuBei District, ChongQing, China (No.A03, ZoneA, Airport Section of LiangLu CunTan Free Trade Port Area) Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands PO Box 472, 2F, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands B1-2 Lot (belong to Lot B1), Lien Ha Thai (Green iP-1) Industrial Park, Diem Dien town, Thai Thuy District, Thai Binh Province, Vietnam USD 80,820 USD 80,000 USD 800 USD 10,000 USD 10,000 External investment and consultation service Development and production of notebooks, tablets, digital products, networking switches, wireless APs, and auto electronics Management consultation, training, business information, tax advisory, investment consultation, and investment management General investments Development, production and sale of notebooks and related components, and provision of maintenance and after-sale services USD 147,000 General investments USD 147,000 General investments USD 5,050 General investments USD 54,000 R&D, manufacturing, sales and maintenance of notebook PCs, computer monitors, LCD TVs, mobile phones, tablet PCs, smart watches, communication devices and other electronic devices OEM of automotive electronic products Compal USA (Indiana), Inc. 2010.12.16 1 Technology Way Logansport, Indiana 46947, USA US$8,130 High Shine Industrial Corp. 2007.07.04 Intelligent Universal Enterprise Ltd. 2007.08.02 Compal (Vietnam) Co., Ltd. 2007.10.04 Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Ba Thien Industrial Zone, Ba Hien Town, Binh Xuyen District, Vinh Phuc Province, Vietnam USD 79,700 General investments USD 67,000 General investments VND 1,398,683,500 Production, development, sale and repair of notebooks, computer monitors, LCD TVs and electronic components 222 Company name Goal Reach Enterprises Ltd. Date of establishment 2007.07.03 2007.07.03 Compal Development and Management (Vietnam) Co., Ltd. Panpal Technology, Inc. Gempal Technology, Inc. Hong Ji Capital, Inc. 2004.06.28 1997.10.29 1997.08.20 Hong Jin Investment, Inc. Compalead Eletrônica do Brasil Indústria e Comércio Ltda. Compal Electronics India Private Limited Compal Electronica da Amazonia Ltda COMPAL MEXICO ELECTROMEX, S.A DE C.V. 2004.07.02 2008.07.15 1996.05.21 2020.09.14 2024.04.27 Arcadyan Technology Corporation Arcadyan Technology N.A. Corp. Arcadyan Germany Technology GmbH Arcadyan Technology Corporation Korea Arcadyan do Brasil Ltda. 2003.05.09 2003.07.30 2007.04.11 2014.10.16 2015.04.24 Arcadyan India Private Limited 2021.03.25 Arcadyan Technology Limited 2016.08.16 Address Paid-up capital Main business activities or products USD 12,700 General investments VND 216,428,500 Construction and investment of infrastructures at Ba-Thien Industrial Zone, Vietnam TWD 5,000,000 General investments TWD 900,000 General investments TWD 1,000,000 General investments TWD 295,000 General investments BRL 20,109 Production and after-sale service of notebooks, cellphones and electronics INR 386,000 Production and after-sale service of cellphones BRL 23,500 Production of notebooks and electronics USD 2,500 Production of automotive electronic products TWD 2,203,543 USD 669 EUR 25 KRW 100,000 Research, development, production and sale of WLAN, integrated digital home and mobile office products Sales and technical support of wireless network products Sale and technical support of wireless networking products Sale of wireless networking products BRL 9,682 Sale of wireless networking products INR 198,000 Sale of wireless networking products GBP 50 Technical support for wireless networking products Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Ba Thien Industrial Zone, Binh Xuyen District, Vinh Phuc Province, Vietnam No. 581, Ruiguang Road, Neihu District, Taipei City No. 581, Ruiguang Road, Neihu District, Taipei City No. 581, Ruiguang Road, Neihu District, Taipei City No. 581, Ruiguang Road, Neihu District, Taipei City Rua Kanebo 175, Galpões C4 a C6, e C12 Distrito Industrial, Jundiaí, São Paulo, CEP:13213- 090, Brazil Flat No. 412A, Building No.43, Chiranjiv Tower, Nehru Place, New Delhi, 110019, India Rua Javari nº 1055, LOT 2.47, ECV, Distrito Industrial I, Manaus AM, CEP 69.075-110, Brazil Avenida de los Encinos, No. 1080-A, Parque Industrial Villa Florida, Reynosa, Tamaulipas, C.P. 88710, México 8F, No. 8, Section 2, Guangfu Road, East District, Hsinchu City 5450 Thornwood Dr, Unit J Floor 2 San Jose CA 95123- 1222, USA Koelner Strasse 10b D-65760 Eschborn, Germany 103-1109RM SK Ventium 166, Gosan-ro, Gunpo-si, Gyeonggi- do, Republic of Korea 15850 Travessa Francisca Rios n° 48, Centro, Pouso Alegre, Minas Gerais Fifth Floor, Unit-F516, The Sapphire, Sector 49, Gurgaon,Gurgaon, Haryana, 122018 Charlotte House 500 Charlotte Road Sheffield South Yorkshire S2 4ER, United Kingdom 223 Address Paid-up capital Main business activities or products Company name Arcadyan Technology Australia Pty Ltd Arcadyan Technology Corporation (Russia), LLC. Arcadyan Holding (BVI) Corp. Date of establishment 2017.03.28 2020.06.02 2007.03.07 Sinoprime Global Inc. 2004.12.29 Arcadyan Technology (Shanghai) Corp. Arcadyan Technology (Vietnam) Co., Ltd. 2002.04.17 2019.03.26 Arch Holding (BVI) Corp. 2007.05.24 Compal Networking (Kunshan) Co., Ltd. 2006.06.26 Zhi-Bao Technology Inc. Tatung Technology Inc. Tatung Technology of Japan Co., Ltd. Quest International Group Co., Ltd. Exquisite Electronic Co., Ltd. Tatung Home Appliances (Wu Jiang) Co., Ltd. Compal Broadband Networks Inc. 2009.08.10 2008.01.21 2018.11.22 2012.12.11 2012.02.03 2001.02.13 2009.08.19 Tower Three International Towers, Sydney ' Level 38, 300 Barangaroo Avenue, Sydney NSW 2000 17/2, Skakovaya street, floor 7, room 2, Moscow, Russia, 125040 Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands Room 1503, Block 20, No. 487 Tianlin Road, Xuhui District,Shanghai, China Lot D4-5-6, Thang Long Vinh Phuc Industrial Zone, Thien Ke Commune, Binh Xuyen District, Vinh Phuc Province, Vietnam Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, British Virgin Islands Building 005,No. 526 Nanbang Road,Economic & Technical Development Zone, Kunshan, JiangSu, China 8F., No. 8, Sec. 2, Guangfu Rd., East Dist., Hsinchu City 4F., No. 70, Ruiguang Rd., Neihu Dist., Taipei City 1 Chome-2-18, Mita, Minato-ku, Tokyo-to, Japan Unit 25,2nd Floor,Nia Mall, Saleufi Street, Apia, Samoa Unit 25,2nd Floor,Nia Mall, Saleufi Street, Apia, Samoa No. 508 Youming Road, Songling Town, Wujiang District, Suzhou, Jiangsu, China 13F-1, No. 1, Taiyuan 1st Street, Zhubei City, Hsinchu County AUD 50 Sale of wireless networking products RUB 20,000 Sale of wireless networking products USD 47,780 General investments USD 29,050 General investments USD 8,100 Research and sale of wireless networking products USD 29,000 Manufacturing of wireless network products USD 10,550 General investments USD 12,450 Manufacturing of wireless network products TWD 349,800 General investments TWD 410,000 JPY 35,000 Development and sale of digital home electronics Sale of digital home electronics USD 1,200 General investments USD 1,170 General investments USD 12,105 Manufacturing of wireless network products TWD 679,381 Compal Broadband Networks Belgium BVBA Compal Broadband Networks Netherlands B.V. 2017.01.01 Bekersveld 192630 Aartselaar Belgium EUR 200 2019.11.25 Het Poortgebouw Beech Avenue 54-62 Schiphol 1119 PW the Netherlands EUR 200 224 Development and sale of cable modems, set-top boxes and communication products Import and export of broadband networking products and related components, and provision of technical support and consultation services Import and export of broadband networking products and related components, and provision of technical support and consultation services Address 2010.12.10 Date of establishment 2010.12.10 No. 2-1, Wenhua Rd., Hsin-chu Industrial Park, Hukou Shiang, Hsin-chu County 30352, Taiwan R.O.C. Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands No.520, Nanbang Rd., Kunshan City, Jiangsu Province, China 2010.12.14 2010.05.07 Paid-up capital Main business activities or products TWD 200,150 Manufacturing of electronic components, computers and peripherals USD 46,882 General investments USD 55,882 General investments USD 40,000 Production touch panels and related components 2010.11.01 No.520, Nanbang Rd., Kunshan City, Jiangsu Province, China USD 15,000 Production touch panels and LCD displays 2023.03.27 No. 555, Xinjia Avenue, Jiashan County, Jiaxing City, Zhejiang Province USD 9,000 Production of touch panels and related components Company name Henghao Technology Co., Ltd. HengHao Holdings A Co., Ltd. HengHao Holdings B Co., Ltd. HengHao Optoelectronics Technology (Kunshan) Co., Ltd. Lucom Display Technology (Kunshan) Ltd. HengHao Optoelectronics Technology (Zhejiang) Co., Ltd. Mactech Inc. 2000.05.23 Ripal Optotronics Co, Ltd. 2013.8.26 Rayonnant Technology Co., Ltd Compal Rayonnant Holdings Ltd. 2010.03.23 2011.08.05 Allied Power Holding Corp. 2005.04.07 Primetek Enterprises Ltd. 2005.01.28 2010.03.31 Rayonnant Technology Holdings (HK) Co., Ltd. Rayonnant Technology (Taicang) Co., Ltd. Bizcom Electronics, Inc. Compal Europe (Poland) Sp. z o.o. No. 89, Land 36, Section 2, Tanxing Road, Tanyang Village, Tanzi District, Taichung City 2F, No. 256, Section 3, Zhongzheng Road, Rende District, Tainan City No. 581, Ruiguang Road, Neihu District, Taipei City Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Unit 06, G/F, The Lodge, 535 Canton Road, Kowloon, Hong Kong TWD 411,458 Manufacturing of machinery and lighting equipment, retail sale of machinery, and international trade Manufacturing of home appliances and audiovisual electronics TWD 60,000 TWD 295,000 Manufacturing and sale of computers USD 12,500 and peripherals General investments USD 21,151 General investments USD 3,151 General investments USD 18,000 General investments 2010.06.04 178 Baihua South Road, Shaxi Town, Taicang, Jiangsu, China USD 18,000 1992.04.13 2008.03.05 1361 EL Camino Real, Santa Clara, CA 95050, USA Jędrzejowska 85 93-636, Łódź, Poland USD 100 PLN 6,804 Development and production of aluminum and magnesium alloy-based products Marketing and after-sale of computer monitors and notebooks Maintenance and after-sale service of notebooks and cellphones 225 Company name CGS Technology (Poland) Sp. z o.o. Auscom Engineering Inc. Flight Global Holding Inc. Date of establishment 2020.09.15 2008.10.27 2007.08.09 Compalead Electronics B.V. General Life Biotechnology Co., Ltd. PT GLB Biotechnology Indonesia 2014.02.19 1999.01.16 2023.09.12 Etrade Management Co., Ltd. Compal Communications (Nanjing) Co., Ltd. Compal Digital Communications (Nanjing) Co., Ltd. 2000.07.05 2003.09.23 2004.03.26 Compal Wireless Communications (Nanjing) Co., Ltd. Webtek Technology Co., Ltd. 2006.02.13 2000.07.07 Forever Young Technology Inc. 2004.11.25 Giant Rank Trading Limited 2004.11.25 HANHELT Communications (Nanjing) Co., Ltd. Compal Wise Electronic (Vietnam) Co., Ltd. 2009.03.11 2020.07.15 Address Paid-up capital Main business activities or products Jędrzejowska 85 93-636, Łódź, Poland PLN 12,296 Maintenance and after-sale service of notebooks and cellphones One Dell Way, MSC PS2-88, Round Rock, Texas 78682, USA Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Basisweg 10, 1043 AP Amsterdam, The Netherlands No.581-1, Ruiguang Rd., Neihu Dist., Taipei City Jalan Denpasar Raya Blok C4 nomor 24, Desa/Kelurahan Kuningan Timur, Kec. Setiabudi, Kota Adm. Jakarta Selatan, Provinsi DKI Jakarta, Kode Pos: 12950 Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands No.68-2, Suyuan Road, Export Processing Zone (South Area). Jiangning Nanjing China No.77 Gaohu Street, Jiangning Economic and Technological Development Zone, Nanjing, China No.68-2, Suyuan Road, Export Processing Zone (South Area). Jiangning, Nanjing, China Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands Room 301 3rd floor 43#, Headquarters Park,N0.70# Phoenix Road Jiangning District, Nanjing, China Binh Xuyen Industrial Zone, Dao Duc Town, Binh Xuyen District, Vinh Phuc Province, Vietnam 226 USD 3,000 USD 89,755 Development of notebooks and related components, hardware and software General investments USD 6,427 General investments TWD 300,000 Production and wholesaling of medical equipment USD 2,850 Production and wholesaling of medical equipment USD 71,900 General investments USD 27,000 Production of cellphones and tablets USD 5,800 Production of cellphones and tablets USD 49,000 Production of cellphones and tablets USD 100 General investments USD 50 General investments USD - Sale of cellphones USD 2,000 Development of electronic communication equipment VND 46,180,000 Production and sale of cellphones, tablets, smart watches, communication equipments and electronics, and provision of relevant technical services Address Paid-up capital Main business activities or products TWD 200,000 TWD 100,000 Manufacturing and retail of computers and electronic components Sale of cellphones USD 1 General investments Company name Date of establishment Unicom Global. Inc. 2006.03.21 Palcom International Corporation Compal Electronics (Holding) Ltd. 2006.03.22 1997.04.22 UniCore Biomedical Co., Ltd. Shennona Corporation HippoScreen Neurotech Corp. 2018.01.25 2018.01.10 2019.01.28 No. 581, Ruiguang Road, Neihu District, Taipei City 8F, No. 385, Yangguang St., Neihu District, Taipei City Coastal Building, Wickham’s Cay II, P.O. Box 2221, Road Town, Tortola, VG 1110, British Virgin Islands 1F, No. 50, Section 1, Jiuzong Road, Neihu District, Taipei city 1361 EL Camino Real, Santa Clara, CA 95050, USA No. 581-1, Ruiguang Road, Neihu District, Taipei City TWD 200,000 USD 1,605 TWD 100,000 SHENNONA CO., LTD. 2019.03.21 No. 581-1, Ruiguang Road, Neihu District, Taipei City TWD 20,000 Aco Healthcare Co.,Ltd. 2019.02.20 No. 581-1, Ruiguang Road, Neihu District, Taipei City TWD 73,948 Management consultation, leasing, and wholesale/retail of medical equipment Medical care IoT business Management consultation, leasing, wholesale/retail of Precision Instruments and International Trade Management consultation, leasing, wholesale/retail of Precision Instruments and International Trade Wholesale/retail of Computer Software, Software Design Services, Data Processing Services, Electrical Machinery, Supplies Manufacturing, wholesale/retail of Electronic Materials, wholesale/retail of Precision Instruments, Product Designing, Biotechnology Services and International Trade Research and development and sales of MEMS microphone technology products Real estate development leasing and related management business 2021.04.21 6, No. 10, Taiyuan 1st Street, Zhubei City, Hsinchu County TWD 100,000 2021.12.21 No. 581 &581-1, Ruiguang Road, Neihu District, Taipei City TWD 5,750,000 Starmems Semiconductor Corp. Kinpo&Compal Group Assets Development Corporation Compal Ruifang Health Assets Development Corporation Compal Healthcare & Technology Ltd. 2022.06.24 7F., No. 669, Zhongzheng Rd., Xinzhuang Dist., New Taipei City TWD 300,000 Investment and development of public construction and specific areas, etc. 2023.12.11 No. 581-1, Ruiguang Road, Neihu District, Taipei City TWD 20,000 Information software service industry, capital Material handling services, electronics Information supply service industry Sales of computers and peripherals TWD 210,000 TWD 41,000 Investment and holding GPB 300 Sales of computers and peripherals POINDUS SYSTEMS CORP. Poindus Investment Corp. Poindus Systems UK Limited 2009.06.15 2009.07.21 2015.11.1 5F., No. 59, Ln. 77, Xing'ai Rd., Neihu Dist., Taipei City 6F., No. 1, Ln. 28, Xingzhong Rd., Neihu Dist., Taipei City 3 Devonshire Business Park Knights Park Road Basingstoke RG21 6XN United Kingdom 227 Company name Adasys GmbH Elektronische Komponenten QIJIE ELECTRONICS(SHEN ZHEN)CO.,LTD Poindus Systems GmbH Date of establishment 1994.03.29 Address Paid-up capital Main business activities or products Max-Planck-Strasse 10 70806 Kornwestheim EUR 100 Sales of computers and peripherals 2019.01.25 2009.09.23 10G, Jindacheng Building, Zhongxin Road, Xinqiao Street, Bao'an District, Shenzhen City. Max-Planck-Strasse 10 70806 Kornwestheim USD 1000 Sales of computers and peripherals EUR 25 Sales of computers and peripherals 3. Business activities and relationships of affiliated enterprises (December 31, 2023) Industry category Investment holding company Name of affiliated enterprise Business relationship with other affiliated enterprises Compal International Holding Co., Ltd. Compal International Holding (HK) Limited Jenpal International Ltd. Fortune Way Technology Corp. Just International Ltd. Compal Display Holding (HK) Limited Compal Investment (Jiangsu) Co., Ltd. Compal Electronics International Ltd. Mexcom Technologies, LLC Mexcom Electronics, LLC Big Chance International Co., Ltd. Center Mind International Co., Ltd. Compal Investment (Sichuan) Co., Ltd. Prisco International Co., Ltd. Core Profit Holdings Ltd. Billion Sea Holdings Ltd. Mithera Capital Io LP High Shine Industrial Corp. Intelligent Universal Enterprise Ltd. Goal Reach Enterprises Ltd. Panpal Technology Corporation Gempal Technology Co., Ltd. Hong Ji Capital Co., Ltd. Hong Jin Investment Co., Ltd. Compal Rayonnant Holdings Ltd. Holds investment interest in Compal International Holding (HK) Limited, Prospect Fortune Group Ltd., Jenpal International Ltd., and Fortune Way Technology Corp. Holds investment interest in Compal Electronics Technology (Kunshan) Co., Ltd., Compal Information (Kunshan) Co., Ltd., Compal Information Technology (Kunshan) Co., Ltd.,Compal Digital Technology (Kunshan) Co., Ltd., Kunshan Botai Electronics Co., Ltd., and Compal Investment (Jiangsu, China) Co., Ltd. General investments General investments Holds investment interest in Compal Display Holding (HK) Limited, Compal International Ltd., and Compal Electronics International Ltd. Holds investment interest in Compal Electronics (China) Co., Ltd., Compal Optoelectronics (Kunshan) Co., Ltd., Compal System Trading (Kunshan) Co., Ltd., Compal Investment (Jiangsu, China) Co., Ltd., and Compal Communications (Nanjing) Co., Ltd. Holds investment interest in Compal Display Electronics (Kunshan) Co., Ltd. Holds investment interest in Smart International Trading Ltd., Mexcom Technologies, LLC, and Mexcom Electronics, LLC General investments General investments Holds investment interest in Center Mind International Co., Ltd. and Prisco International Co., Ltd. Holds investment interest in Compal Investment (Sichuan) Co., Ltd. Holds investment interest in Compal Electronics (Chengdu) Co., Ltd. and Compal Management (Chengdu) Co., Ltd. Holds investment interest in Compal Electronics (Chongqing) Co., Ltd. Holds investment interest in Billion Sea Holdings Ltd. Holds investment interest in High Shine Industrial Corp., Mithera Capital Io LP., and Compal USA (Indiana), Inc. General investments Holds investment interest in Intelligent Universal Enterprise Ltd. and Goal Reach Enterprises Ltd. Holds investment interest in Compal (Vietnam) Co., Ltd. Holds investment interest in Compal Development and Management (Vietnam) Co., Ltd. General investments General investments General investments General investments General investments 228 Industry category Name of affiliated enterprise Business relationship with other affiliated enterprises Electronic products wholesaling Allied Power Holding Corp. Flight Global Holding Inc. Compalead Electronics B.V. Etrade Management Co., Ltd. Compal Electronics (Holding) Ltd. Arcadyan Holding (BVI) Corp. Arch Holding (BVI) Corp. Zhi-Bao Technology Inc. Quest International Group Co., Ltd. Exquisite Electronic Co., Ltd. General investments General investments General investments General investments General investments Holds investment interest in Sinoprime Global Inc., Arch Holding (BVI) Corp., and Arcadyan Technology (Shanghai) Corp. Holds investment interest in Compal Networking (Kunshan) Co., Ltd. Holds investment interest in Compal Broadband Networks Inc. , Arcadyan do Brasil Ltda. and Arcadyan India Private Limited Holds investment interest in Exquisite Electronic Co., Ltd. Holds investment interest in Tatung Home Appliances (Wu Jiang) Co., Ltd. General investments Rayonnant Technology Holdings (HK) Co., Ltd. General investments HengHao Holdings A Co., Ltd. General investments HengHao Holdings B Co., Ltd. General investments Primetek Enterprises Ltd. Holds investment interest in Arcadyan Technology (Vietnam) Co., Ltd. Sinoprime Global Inc. General investments Prospect Fortune Group Ltd. General investments Compal International Ltd. General investments Webtek Technology Co., Ltd. General investments Forever Young Technology Inc. General investments Smart International Trading Ltd. Holds investment interest in Poindus Systems GmbH. Poindus Investment Corp. International trade and distribution of computers and electronic Compal System Trading (Kunshan) Co., components Ltd. Sale of cellphones Giant Rank Trading Limited Sale of cellphones Palcom International Corporation Arcadyan Technology N.A. Corp. Sale of wireless networking products Arcadyan Technology Corporation Korea Sale of wireless networking products Sale of wireless networking products Arcadyan do Brasil Ltda. Sale of wireless networking products Arcadyan Technology Australia Pty Ltd. Development and sale of digital home electronics Tatung Technology Inc. Sale of digital home electronics Tatung Technology of Japan Co., Ltd. Sale and technical support of wireless networking products Arcadyan Germany Technology GmbH Sale of wireless networking products Arcadyan Technology Corporation (Russia), LLC. Arcadyan India Private Limited Compal Broadband Networks Belgium BVBA Compal Broadband Networks Netherlands B.V. Aco Healthcare Co.,Ltd. Starmems Semiconductor Corp. Compal Americas (US) Inc. Compal Electronics N.A. Inc. Sale of wireless networking products Import and export of broadband networking products and related components, and provision of technical support and consultation services Import and export of broadband networking products and related components, and provision of technical support and consultation services wholesale/retail of Computer Software, Software Design Services, Data Processing Services, Electrical Machinery, Supplies Manufacturing, wholesale/retail of Electronic Materials, Wholesale/retail of Precision Instruments, Product Designing, Biotechnology Services, International Trade Research and development and sales of MEMS microphone technology products Sales of automotive electronic products Sales of automotive electronic products 229 Industry category Electronic products manufacturing Name of affiliated enterprise Business relationship with other affiliated enterprises Compal Electronics, Inc. Manufacturing, processing and trading of notebooks, computer monitors, LCD TVs, cellphones, and electronic parts Production of notebooks, cellphones and electronics Compal Electronics Technology (Kunshan) Co., Ltd. Compal Information (Kunshan) Co., Ltd. Production of notebooks, tablets and electronics Compal Information Technology (Kunshan) Co., Ltd. Compal Digital Technology (Kunshan) Co., Ltd. Kunshan Botai Electronics Co., Ltd. Compal Electronics (China) Co., Ltd. Compal Smart Device (Chongqing) Co., Ltd. Production of notebooks and electronics Production and after-sale service of notebooks and cellphones Manufacturing and sale of displays Development, production and sale of communication equipment, cellphones, computers and smart watches, and provision of relevant technical services Production and sale of notebooks, cellphones and digital products FIPOLL Electronics (Chongqing) Co.,Ltd. Manufacturing of auto parts and accessories. Compal Optoelectronics (Kunshan) Co., Ltd. Compal Display Electronics (Kunshan) Co., Ltd. Compal Electronics (Chengdu) Co., Ltd. Production and sale of LCD TVs Production and sale of LCD TVs Development and production of notebooks, tablets, digital products, networking switches, wireless APs, and auto electronics Compal Electronics (Chongqing) Co., Ltd. Development, production and sale of notebooks and related Compal (Vietnam) Co., Ltd. Compalead Eletrônica do Brasil Indústria e Comércio Ltda. Compal Electronica da Amazonia Ltda Unicom Global. Inc Arcadyan Technology Corp. Compal Broadband Networks Inc. Henghao Technology Co., Ltd. Mactech Co., Ltd. components, and provision of maintenance and after-sale services Production, development, sale and repair of notebooks, computer monitors, LCD TVs and electronic components Production and after-sale service of notebooks, cellphones and electronics Production of notebooks and electronics Manufacturing and retail of computers and electronic components Research, development, production and sale of WLAN, integrated digital home and mobile office products Development and sale of cable modems, set-top boxes and communication products Manufacturing of electronic components, computers and peripherals Manufacturing of machinery and lighting equipment, retail sale of machinery, and international trade Manufacturing and sale of computers and peripherals Production of cellphones and tablets Production of cellphones and tablets Production of cellphones and tablets Rayonnant Technology Co., Ltd. Compal Communications (Nanjing) Co., Ltd. Compal Digital Communications (Nanjing) Co., Ltd. Compal Wireless Communications (Nanjing) Co., Ltd. RiPAL Optotronics Co., Ltd. Compal Electronics India Private Limited Production and after-sale service of cellphones Compal Networking (Kunshan) Co., Ltd. Production and sale of wireless products Arcadyan Technology (Vietnam) Co., Ltd. Production and sale of wireless products Tatung Home Appliances (Wu Jiang) Co., Ltd. HengHao Optoelectronics Technology (Kunshan) CO., LTD Rayonnant Technology (Taicang) Co., Ltd. Development and production of aluminum and magnesium alloy- Manufacturing of home appliances and audiovisual electronics Production touch panels and related components Production and sale of digital home electronics based products 230 Industry category Name of affiliated enterprise Business relationship with other affiliated enterprises Lucom Display Technology (Kunshan) Ltd. Productio7 panels and LCD displays HengHao Optoelectronics Technology (Zhejiang) Co., Ltd. Compower Global Service Co., Ltd. Compal Management (Chengdu) Co., Ltd. Management consultation, training, business information, tax Production of touch panels and related components Maintenance and after-sale service of notebooks and cellphones HANHELT Communications (Nanjing) Co., Ltd. Bizcom Electronics, Inc. Compal Europe (Poland) Sp. z o.o. CGS Technology (Poland) Sp. z o.o. Auscom Engineering Inc. Compal Wise Electronic (Vietnam) Co., Ltd. Compal Electronics (Vietnam) Co., Ltd Compal USA (Indiana), Inc. POINDUS SYSTEMS CORP. COMPAL MEXICO ELECTROMEX, S.A DE C.V. QIJIE ELECTRONICS(SHENZHEN)CO.,LTD Poindus Systems UKLimited Adasys GmbH Elektronische Komponenten Poindus Systems GmbH. Compal Development and Management (Vietnam) Co., Ltd. Kinpo&Compal Group Assets Development Corporation Compal Ruifang Health Assets Development Corporation UniCore Biomedical Co., Ltd. HippoScreen Neurotech Corp. advisory, investment consultation, and investment management Development of electronic communication equipment Marketing and after-sale of computer monitors and notebooks Maintenance and after-sale service of notebooks and cellphones Maintenance and after-sale service of notebooks and cellphones Development of notebooks and related components, hardware and software Production and sale of cellphones, tablets, smart watches, communication equipments and electronics, and provision of relevant technical services R&D, manufacturing, sales and maintenance of notebook PCs, computer monitors, LCD TVs, mobile phones, tablet PCs, smart watches, communication devices and other electronic devices OEM of automotive electronic products Sales of computers and peripherals Production of automotive electronic products Sales of computers and peripherals Sales of computers and peripherals Sales of computers and peripherals Sales of computers and peripherals Construction and investment of infrastructures at Ba-Thien Industrial Zone, Vietnam Real estate development leasing and related management business Investment and development of public construction and specific areas, etc. Management consultation, leasing, and wholesale/retail of medical equipment Management consultation, leasing, wholesale/retail of Precision Instruments and International Trade SHENNONA CO., LTD. Management consultation, leasing, wholesale/retail of Precision General Life Biotechnology Co., Ltd. Manufacturing and sale of medical equipment PT GLB Biotechnology Indonesia Manufacturing and sale of medical equipment Instruments and International Trade Shennona Corporation Medical care IoT business Arcadyan Technology (Shanghai) Corp. Research and sale of wireless networking products Arcadyan Technology Limited Technical support for wireless networking products Compal Healthcare & Technology Ltd. Information software service industry, capital Material handling services, electronics Information supply service industry 231 Construction and development Leasing and management consulting Manufacturing and sale of medical equipment Medical care Technical service 4. Directors, Supervisors, and President of affiliated enterprises December 31, 2023 Unit: TWD Thousands; shares; % Company name Title Name or name of representative Compal Electronics, Inc. Chairman Director and President Director Director Sheng-Hsiung Hsu Jui-Tsung Chen Binpal Investment Co., Ltd. (Representative: Wen-Being Hsu ) Kinpo Electronics, Inc. (Representative: Chieh-Li Hsu) Charng-Chyi Ko Sheng-Chieh Hsu Yen-Chia Chou Chung-Pin Wong Director Director Director President and Director Chiung-Chi Hsu Director Ming-Chih Chang Director Anthony Peter Bonadero Director Director Sheng-Hua Peng Independent Director Min-Chih Hsuan Independent Director Duei Tsai Independent Director Wen-Chung Shen Representative Representative Director Compal International Holding Co., Ltd. Compal International Holding (HK) Limited Compal Electronics Technology (Kunshan) Co., Ltd. Compal Information (Kunshan) Co., Ltd. Director Director Director Chairman Director Director Supervisor President Chairman Director Director Supervisor Wen-Being Hsu Chieh-Li Hsu Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal International Holding Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal International Holding Co., Ltd. (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Chung-Pin Wong) Compal International Holding (HK) Limited (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal International Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Chung-Pin Wong) Compal International Holding (HK) 232 Shares held Shares (Note) 8,975,401 Shareholding percentage 0.20% 35,352,587 5,000,000 151,628,692 7,896,867 9,204,201 8,022,874 6.618,618 2,117,731 1,919,489 0 835,000 0 0 2,836,000 5,001,000 4,117,569 0.80% 0.11% 3.44% 0.18% 0.21% 0.18% 0.15% 0.05% 0.04% 0% 0.02% 0.00% 0.00% 0.06% 0.11% 0.09% 53,001,000 100.00% 53,001,000 100.00% 74,802,500 100.00% 74,802,500 100.00% TWD 368,460 100.00% TWD 368,460 100.00% TWD 368,460 100.00% TWD 368,460 100.00% 0 0.00% TWD 368,460 100.00% TWD 368,460 100.00% TWD 368,460 100.00% TWD 368,460 100.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage 0 0 0.00% 0.00% Director Director Director Director 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Supervisor Supervisor TWD 614,100 TWD 736,920 TWD 736,920 TWD 736,920 TWD 736,920 TWD 614,100 President Chairman President Chairman Compal Digital Technology (Kunshan) Co., Ltd. Compal Information Technology (Kunshan) Co., Ltd. Limited (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal International Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Chung-Pin Wong) Compal International Holding (HK) Limited (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal International Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Chung-Pin Wong) Compal International Holding (HK) Limited (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal International Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited (Representative: Ming-Chih Chang) Compal International Holding (HK) Limited (Representative: Ching-Hsiung Lu) Ming-Chih Chang Kunshan Botai Electronics Co., Ltd. (Representative: Chung-Pin Wong) Kunshan Botai Electronics Co., Ltd. (Representative: Cheng-Chiang Wang) Ming-Chih Chang Compal International Holding Co., Ltd. Prospect Fortune (Representative: Sheng-Hsiung Hsu ) Group Ltd. Compal International Holding Co., Ltd. (Representative: Jui-Tsung Chen ) Compal International Holding Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal International Holding Co., Ltd. (Representative: Jui-Tsung Chen ) Jenpal International Ltd. Kunshan Botai Electronics Co., Ltd. President Managing Director Compower Global Service Co., Ltd. President Chairman President Director TWD 614,100 TWD 614,100 TWD 30,705 TWD 30,705 TWD 30,705 TWD 30,705 TWD 8,655 TWD 8,655 Supervisor Supervisor 7,350,000 7,350,000 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Director Director Director Director Director 0.00% 0.00% 0.00% 1,000 1,000 0 0 0 233 Company name Title Name or name of representative Fortune Way Technology Corp. Just International Ltd. Compal Display Holding (HK) Limited Director Director Director Director Director Director Compal Electronics (China) Co., Ltd. Chairman Director Director Supervisor President Chairman Director Director Supervisor President Chairman Director Supervisor President Chairman Director Director Supervisor President Chairman Director Director Compal Smart Device (Chongqing) Co., Ltd. FIPOLL Electronics (Chongqing) Co.,Ltd. Compal Optoelectronics (Kunshan) Co., Ltd. Compal System Trading (Kunshan) Co., Ltd. Compal International Holding Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal International Holding Co., Ltd. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Just International Ltd. (Representative: Sheng-Hsiung Hsu ) Just International Ltd. (Representative: Jui-Tsung Chen ) Compal Display Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal Display Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal Display Holding (HK) Limited (Representative: Sheng-Hua Peng) Compal Display Holding (HK) Limited (Representative: Ching-Hsiung Lu) Fu-Chuan Chang Compal Electronics (China) Co., Ltd. (Representative: Jui-Tsung Chen ) Compal Electronics (China) Co., Ltd. (Representative: Chung-Pin Wong ) Compal Electronics (China) Co., Ltd. (Representative: Sheng-Hua Peng) Compal Electronics (China) Co., Ltd. (Representative: Cheng-Chiang Wang) Sheng-Hua Peng Compal Smart Device (Chongqing) Co., Ltd. (Representative: Ming-Chih Chang ) Compal Smart Device (Chongqing) Co., Ltd. (Representative: Pao-Jui Cheng) Compal Smart Device (Chongqing) Co., Ltd. (Representative: Cheng-Chiang Wang ) Ming-Chih Chang Compal Display Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal Display Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal Display Holding (HK) Limited (Representative: Sheng-Hua Peng) Compal Display Holding (HK) Limited (Representative: Ching-Hsiung Lu) Fu-Chuan Chang Compal Display Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal Display Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal Display Holding (HK) Limited (Representative: Chung-Pin Wong) 234 Shares held Shares (Note) Shareholding percentage 14,900,000 100.00% 14,900,000 100.00% 48,010,000 100.00% 48,010,000 100.00% 62,297,500 100.00% 62,297,500 100.00% TWD 1,136,085 100.00% TWD 1,136,085 100.00% TWD 1,136,085 100.00% TWD 1,136,085 100.00% 0 TWD 259,652 0.00% 100.00% TWD 259,652 100.00% TWD 259,652 100.00% TWD 259,652 0 100.00% 0.00% TWD 259,652 60.00% TWD 259,652 60.00% TWD 259,652 60.00% 0 TWD 371,531 0.00% 100.00% TWD 371,531 100.00% TWD 371,531 100.00% TWD 371,531 0 TWD 42,987 100.00% 0.00% 100.00% TWD 42,987 100.00% TWD 42,987 100.00% Company name Title Name or name of representative Compal Investment (Jiangsu) Co., Ltd. Compal Display Electronics (Kunshan) Co., Ltd. Compal International Ltd. Compal Electronics International Ltd. Supervisor President Chairman Director Director Supervisor President Chairman Director Director Supervisor President Director Director Director Director Smart International Trading Ltd. Director Director Director Director Mexcom Technologies, LLC Mexcom Electronics, LLC Big Chance International Co., Ltd. Director Director Center Mind Director Compal Display Holding (HK) Limited (Representative: Cheng-Chiang Wang) Ming-Chih Chang Compal International Holding (HK) Limited and Compal Display Holding (HK) Limited (Representative: Sheng-Hsiung Hsu ) Compal International Holding (HK) Limited and Compal Display Holding (HK) Limited (Representative: Jui-Tsung Chen ) Compal International Holding (HK) Limited and Compal Display Holding (HK) Limited (Representative: Sheng-Hua Peng) Compal International Holding (HK) Limited and Compal Display Holding (HK) Limited (Representative: Ching-Hsiung Lu) Sheng-Hua Peng Compal Investment (Jiangsu, China) Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal Investment (Jiangsu, China) Co., Ltd. (Representative: Jui-Tsung Chen ) Compal Investment (Jiangsu, China) Co., Ltd. (Representative: Sheng-Hua Peng) Compal Investment (Jiangsu, China) Co., Ltd. (Representative: Ching-Hsiung Lu) Sheng-Hua Peng Just International Ltd. (Representative: Sheng-Hsiung Hsu ) Just International Ltd. (Representative: Jui-Tsung Chen ) Just International Ltd. (Representative: Sheng-Hsiung Hsu ) Just International Ltd. (Representative: Jui-Tsung Chen ) Compal Electronics International Ltd. (Representative: Sheng-Hsiung Hsu ) Compal Electronics International Ltd. (Representative: Jui-Tsung Chen ) Compal Electronics International Ltd. (Representative: Hsin-Kung Mao ) Compal Electronics International Ltd. (Representative: Hsin-Kung Mao ) Shares held Shares (Note) Shareholding percentage TWD 42,987 0 100.00% 0.00% TWD 478,998 100.00% TWD 478,998 100.00% TWD 478,998 100.00% TWD 478,998 100.00% 0 0.00% TWD 460,575 100.00% TWD 460,575 100.00% TWD 460,575 100.00% TWD 460,575 100.00% 0 500,000 500,000 0.00% 100.00% 100.00% 12,745,000 100.00% 12,745,000 100.00% 1,000 1,000 TWD 31 100.00% 100.00% 100.00% TWD 252,825 100.00% Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Big chance International Co., Ltd. 90,820,000 100.00% 90,820,000 80,820,000 100.00% 100.00% 235 Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage International Co., Ltd. Director Compal Investment (Sichuan) Co., Ltd. Chairman Director Director Supervisor President Chairman Director Director Supervisor President Chairman Director Director Supervisor President Director Director Chairman Director Director Supervisor President Director Director Compal Electronics (Chengdu) Co., Ltd. Compal Management (Chengdu) Co., Ltd. Prisco International Co., Ltd. Compal Electronics (Chongqing) Co., Ltd. Core Profit Holdings Ltd. Billion Sea Holdings Ltd. Director Director Director Mithera Capital Lo LP (Representative: Sheng-Hsiung Hsu ) Big chance International Co., Ltd. (Representative: Jui-Tsung Chen ) Center Mind International Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Center Mind International Co., Ltd. (Representative: Jui-Tsung Chen ) Center Mind International Co., Ltd. (Representative: Chung-Pin Wong) Center Mind International Co., Ltd. (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal Investment (Sichuan) Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal Investment (Sichuan) Co., Ltd. (Representative: Jui-Tsung Chen ) Compal Investment (Sichuan) Co., Ltd. (Representative: Chung-Pin Wong) Compal Investment (Sichuan) Co., Ltd. (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal Investment (Sichuan) Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Compal Investment (Sichuan) Co., Ltd. (Representative: Jui-Tsung Chen ) Compal Investment (Sichuan) Co., Ltd. (Representative: Chung-Pin Wong) Compal Investment (Sichuan) Co., Ltd. (Representative: Ching-Hsiung Lu) Ming-Chih Chang Big chance International Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Big chance International Co., Ltd. (Representative: Jui-Tsung Chen ) Prisco International Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Prisco International Co., Ltd. (Representative: Jui-Tsung Chen ) Prisco International Co., Ltd. (Representative: Chung-Pin Wong) Prisco International Co., Ltd. (Representative: Ching-Hsiung Lu) Ming-Chih Chang Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Core Profit Holdings Ltd. (Representative: Sheng-Hsiung Hsu ) Core Profit Holdings Ltd. (Representative: Jui-Tsung Chen ) Billion Sea Holdings Ltd. (Representative: David Liao ) 80,820,000 100.00% TWD 2,481,578 100.00% TWD 2,481,578 100.00% TWD 2,481,578 100.00% TWD 2,481,578 100.00% 0 0.00% TWD 2,456,400 100.00% TWD 2,456,400 100.00% TWD 2,456,400 100.00% TWD 2,456,400 100.00% 0 TWD 24,564 0.00% 100.00% TWD 24,564 100.00% TWD 24,564 100.00% TWD 24,564 0 10,000,000 100.00% 0.00% 100.00% 10,000,000 100.00% TWD 307,050 100.00% TWD 307,050 100.00% TWD 307,050 100.00% TWD 307,050 0 147,000,000 100.00% 0.00% 100.00% 147,000,000 100.00% 147,000,000 100.00% 147,000,000 100.00% TWD 153,525 99.00% Compal USA Chairman Billion Sea Holdings Ltd. 1,000 100.00% 236 Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage (Indiana), Inc. High Shine Industrial Corp. Director Director Director Director Intelligent Universal Enterprise Ltd. Director Compal (Vietnam) Co., Ltd. Goal Reach Enterprises Ltd. Compal Development and Management (Vietnam) Co., Ltd. Panpal Technology Co., Ltd. Director Director Director Director Director Chairman Director Director and President Supervisor Gempal Technology Co., Ltd. Chairman Hong Ji Capital Co., Ltd. Director and President Director Supervisor Chairman Director and President Director Supervisor Hong Jin Investment Co., Ltd. Chairman Director and President Director (Representative: Chung-Pin Wong ) Billion Sea Holdings Ltd. (Representative: Jui-Tsung Chen ) Billion Sea Holdings Ltd. (Representative: Ta-Chun Wang) Compal Electronics, Inc. and Billion Sea Holdings Ltd. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. and Billion Sea Holdings Ltd. (Representative: Jui-Tsung Chen ) High Shine Industrial Corp. (Representative: Sheng-Hsiung Hsu ) High Shine Industrial Corp. (Representative: Jui-Tsung Chen ) Intelligent Universal Enterprise Ltd. (Representative: Jui-Tsung Chen ) High Shine Industrial Corp. (Representative: Sheng-Hsiung Hsu ) High Shine Industrial Corp. (Representative: Jui-Tsung Chen ) Goal Reach Enterprises Ltd. (Representative: Jui-Tsung Chen ) 1,000 1,000 100.00% 100.00% 79,700,000 100.00% 79,700,000 100.00% 67,000,000 100.00% 67,000,000 100.00% TWD 2,057,235 100.00% 12,700,000 100.00% 12,700,000 100.00% TWD 389,954 100.00% Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Ming-Chih Chang ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Sheng-Chieh Hsu) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Chung-Pin Wong ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Sheng-Chieh Hsu) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Chung-Pin Wong ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Sheng-Chieh Hsu) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Chung-Pin Wong ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) 237 500,000,000 100.00% 500,000,000 100.00% 500,000,000 100.00% 500,000,000 100.00% 90,000,000 100.00% 90,000,000 100.00% 90,000,000 100.00% 90,000,000 100.00% 100,000,000 100.00% 100,000,000 100.00% 100,000,000 100.00% 100,000,000 100.00% 29,500,000 100.00% 29,500,000 100.00% 29,500,000 100.00% Company name Title Name or name of representative Compalead Eletrônica do Brasil Indústria e Comércio Ltda. Compal Electronica da Amazonia Ltda Compal Electronics India Private Limited Arcadyan Technology Corp. Supervisor President Compal Electronics, Inc. (Representative: Sheng-Chieh Hsu) Ricardo F Battaglia President Ricardo F Battaglia President Director Director Chairman Director Director Director Guo-Dung Yu UJJAWAL SINGH KATIYAR Cheng-Chiang Wang Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Chung-Pao Liu) Cheng-Hua Sun Chao-Peng Tseng Director Director and President Independent Director Ying-Jen Li Independent Director Ching-Jang Wen Independent Director Wen-An Yang Director Arcadyan Technology N.A. Corp. Arcadyan Germany Technology GmbH Arcadyan Technology Corporation Korea Arcadyan do Brasil Ltda. Arcadyan Technology Limited Arcadyan Technology Australia Pty Ltd. Arcadyan Technology Corporation (Russia), LLC. Arcadyan Holding (BVI) Corp. President Managers Director Managers Director Director Director Director Director Director Chairman Director Arcadyan Technology Corp. (Representative: Yen-Ju Lin) Yen-Ju Lin Arcadyan Technology Corp. (Representative: Chao-Peng Tseng) Arcadyan Technology Corp. (Representative: Chao-Peng Tseng) Arcadyan Technology Corp. (Representative: Nien-Che, Hsiung) Arcadyan Technology Corp. (Representative: Chao-Peng Tseng) Arcadyan Technology Corp. (Representative: Keng-Tien Lin) Arcadyan Technology Corp. (Representative: Chao-Peng Tseng) Arcadyan Technology Corp. (Representative: Fong-Yu, Lu) ) Arcadyan Technology Corp. (Representative: Paul Christopher Devlin) Arcadyan Technology Corp. (Representative: Management Company ABU accounting services Limited Liability Company) Arcadyan Technology Corp. (Representative: Jui-Tsung Chen ) Arcadyan Technology Corp. 238 Shares held Shares (Note) Shareholding percentage 29,500,000 100.00% 0 0 0 0 0 41,304,504 41,304,504 41,304,504 0.00% 0.00% 0.00% 0.00% 0.00% 18.74% 18.74% 18.74% 41,304,504 18.74% 0 162,669 0 0 0 1,000 0 500 0.00% 0.07% 0.00% 0.00% 0.00% 100.00% 0.00% 100.00% 20,000 100.00% 964,510 99.00% 50,000 50,000 50,000 50,000 100.00% 100.00% 100.00% 100.00% 50,000 100.00% 0 100.00% 47,780,148 47,780,148 100.00% 100.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Sinoprime Global Inc. Arcadyan Technology (Vietnam)Co., Ltd Arch Holding (BVI) Corp. Arcadyan Technology (Shanghai) Corp. Compal Network Information Technology (Kunshan) Co., Ltd. Zhi-Bao Technology Inc Tatung Technology Inc. Chairman Director Chairman Director Chairman Director Chairman Director Director Director Director Supervisor President Chairman Director Director Supervisor President Chairman Director Director Director Supervisor President Chairman Director Director Director Director (Representative: Chao-Peng Tseng) Arcadyan Holding (BVI) Corp. (Representative: Jui-Tsung Chen ) Arcadyan Holding (BVI) Corp. (Representative: Chao-Peng Tseng) Sinoprime Global Inc. (Representative: Chao-Peng Tseng) Arcadyan Holding (BVI) Corp. (Representative: Jui-Tsung Chen ) Arcadyan Holding (BVI) Corp. (Representative: Chao-Peng Tseng) Arcadyan Holding (BVI) Corp. (Representative: Chao-Peng Tseng) Arcadyan Holding (BVI) Corp. (Representative: Ching-Hsiung Lu) Arcadyan Holding (BVI) Corp. (Representative: Fong-Yu, Lu) ) Arcadyan Holding (BVI) Corp. (Representative: Chung-Pao, Liu) Arcadyan Holding (BVI) Corp. (Representative: Chih-Fang Lee) Arcadyan Holding (BVI) Corp. (Representative: Shih-Wei Huang) Chung-Pao, Liu Arch Holding (BVI) Corp. (Representative: Fong-Yu, Lu) ) Arch Holding (BVI) Corp. (Representative: Jui-Tsung Chen ) Arch Holding (BVI) Corp. (Representative: Chao-Peng Tseng) Arch Holding (BVI) Corp. (Representative: Ching-Hsiung Lu) Chung-Pao, Liu Arcadyan Technology Corp. (Representative: Chao-Peng Tseng) Arcadyan Technology Corp. (Representative: Cheng-Chiang Wang) Arcadyan Technology Corp. (Representative: Ching-Hsiung Lu) Arcadyan Technology Corp. (Representative: Fong-Yu, Lu ) Arcadyan Technology Corp. (Representative: Shih-Wei Huang) Chao-Peng Tseng Arcadyan Technology Corp. (Representative: Shih-Wei Huang) Arcadyan Technology Corp. (Representative: Chao-Peng Tseng ) Arcadyan Technology Corp. (Representative: Shih-Wei Huang) Arcadyan Technology Corp. (Representative: Fong-Yu, Lu) Arcadyan Technology Corp. (Representative: Chih-Fang Lee) 239 29,050,000 100.00% 29,050,000 100.00% 0 100.00% 34,900 34,900 100.00% 100.00% TWD 224,208 100.00% TWD 224,208 100.00% TWD 224,208 100.00% TWD 224,208 100.00% TWD 224,208 100.00% TWD 224,208 0 TWD 382,277 100.00% 0.00% 100.00% TWD 382,277 100.00% TWD 382,277 100.00% TWD 382,277 0 34,980,000 100.00% 0.00% 100.00% 34,980,000 100.00% 34,980,000 100.00% 34,980,000 100.00% 34,980,000 0 25,027,910 25,027,910 25,027,910 25,027,910 25,027,910 100.00% 0.00% 61.04% 61.04% 61.04% 61.04% 61.04% Company name Title Name or name of representative Director Director Supervisor Supervisor Supervisor President Director Director Tatung Technology of Japan Co., Ltd. Quest International Group Co., Ltd. Director Director Exquisite Electronic Co., Ltd. Director Tatung Home Appliances (Wu Jiang) Co., Ltd. Arcadyan India Private Limited Director Chairman Director Director Supervisor President Director Director Director Compal Broadband Networks Inc. Chairman Director Director Director Shang Chi Investment Co., Ltd. (Representative: Chia-Tien Lin ) Chunghwa Investment Holding Company (Representative: Chih-Cheng Lo) Ya-Ling Chiang Yu-Fang Lin Chi Sheng Investment Co., Ltd. (Representative: Chang-Chuan Lin) Shih-Wei Huang Tatung Technology Inc. (Representative: Fong-Yu, Lu) Tatung Technology Inc. (Representative: Chao-Peng Tseng) Tatung Technology Inc. (Representative: Chao-Peng Tseng) Tatung Technology Inc. (Representative: Fong-Yu, Lu) Quest International Group Co., Ltd. (Representative: Chao-Peng Tseng) Quest International Group Co., Ltd. (Representative: Fong-Yu, Lu) Exquisite Electronic Co., Ltd. (Representative: Fong-Yu, Lu) ) Exquisite Electronic Co., Ltd. (Representative: Chao-Peng Tseng) Exquisite Electronic Co., Ltd. (Representative: Chung-Pao Liu) Exquisite Electronic Co., Ltd. (Representative: Shih-Wei Huang) Chung-Pao Liu Arcadyan Technology Corp. (Representative: Nien-Che, Hsiung) Zhi-Bao Technology Inc. (Representative: Chen-Lung Fan ) Arcadyan Technology Corp. (Representative: RAJ KUMAR BHOLA) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Realsun Investment Co., Ltd (Representative: Tsai , Jon-Jinn ) Compal Electronics, Inc. (Representative: Yu- Ho Wang) Independent Director Wong, Jen-Zen Independent Director Mao, Yin-Wen Independent Director Chen, Miao- Ling President Director Yu- Ho Wang Compal Broadband Networks Inc. (Representative: Yu- Ho Wang) Compal Broadband Networks Belgium BVBA Compal Broadband Networks Shares held Shares (Note) Shareholding percentage 1,027,056 2.51% 4,570,830 11.15% 0 0 2,727,272 0 700 700 0.00% 0.00% 6.65% 2.59% 100.00% 100.00% 1,200,000 100.00% 1,200,000 100.00% 1,170,000 100.00% 1,170,000 100.00% TWD 92,728 100.00% TWD 92,728 100.00% TWD 92,728 100.00% TWD 92,728 0 19,765,000 35,000 19,765,000 29,060,176 29,060,176 3,575,000 29,060,176 0 0 0 1,160,010 100.00% 0.00% 99.80% 0.20% 99.80% 42.96% 42.96% 5.28% 42.96% 0.00% 0.00% 0.00% 1.71% 20,300 100.00% Director Compal Broadband Networks Inc. (Representative: Yu- Ho Wang) 20,300 100.00% 240 Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Netherlands B.V. Henghao Technology Co.,Ltd. Chairman Vice Chairman and President Director Director Supervisor HengHao Holdings A Co., Ltd. HengHao Holdings B Co., Ltd. HengHao Optoelectronics Technology (Kunshan) CO., LTD Lucom Display Technology (Kunshan) Ltd. Henghao Optoelectronics Technology (ZheJiang) Co., LTD. Director Director Director Director Chairman Director Director Supervisor President Chairman Director Director Supervisor President Chairman Director Director Supervisor President Mactech Inc. Chairman Director Director Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Chen-Chang Hsu) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Chyou-Jui Wei) Henghao Technology Co., Ltd. (Representative: Sheng-Hsiung Hsu ) Henghao Technology Co., Ltd. (Representative: Chung-Pin Wong) HengHao Holdings A Co., Ltd. & Billion Sea Holdings Ltd. (Representative: Sheng-Hsiung Hsu ) HengHao Holdings A Co., Ltd. & Billion Sea Holdings Ltd. (Representative: Chung-Pin Wong) HengHao Holdings B Co., Ltd. (Representative: Chen-Chang Hsu) HengHao Holdings B Co., Ltd. (Representative: Ming-Yung Chang) HengHao Holdings B Co., Ltd. (Representative: Jui-Hsiang Yang) HengHao Holdings B Co., Ltd. (Representative: Cheng-Chiang Wang) Chen-Chang Hsu HengHao Holdings B Co., Ltd. (Representative: Chen-Chang Hsu) HengHao Holdings B Co., Ltd. (Representative: Ming-Yung Chang) HengHao Holdings B Co., Ltd. (Representative: Jui-Hsiang Yang ) HengHao Holdings B Co., Ltd. (Representative: Hsiu-Chuan Hsu) Chen-Chang Hsu HengHao Holdings B Co., Ltd. (Representative: Chen-Chang Hsu) HengHao Holdings B Co., Ltd. (Representative: Ming-Yung Chang) HengHao Holdings B Co., Ltd. (Representative: Jui-Hsiang Yang ) HengHao Holdings B Co., Ltd. (Representative: Cheng-Chiang Wang ) HengHao Holdings B Co., Ltd. (Representative: Chen-Chang Hsu) Compal Electronics, Inc. (Representative: Yung-Ching Chang) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) 241 20,014,952 100.00% 20,014,952 100.00% 20,014,952 100.00% 20,014,952 100.00% 20,014,952 100.00% 46,882,000 100.00% 46,882,000 100.00% 52,882,000 100.00% 52,882,000 100.00% TWD 1,228,400 100.00% TWD 1,228,400 100.00% TWD 1,228,400 100.00% TWD 1,228,400 100.00% 0 TWD 460,575 0.00% 100.00% TWD 460,575 100.00% TWD 460,575 100.00% TWD 460,575 0 62,649 62,649 62,649 62,649 62,649 21,756,192 21,756,192 21,756,192 100.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 52.88% 52.88% 52.88% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Director Director Director Director Supervisor Chairman Director and President Director Supervisor Director Director Director Director Director Director Director Director Chairman Director Director Supervisor President Director Director Director Director Director Director Rayonnant Technology Co., Ltd. Compal Rayonnant Holdings Ltd. Allied Power Holding Corp. Primetek Enterprises Ltd. Rayonnant Technology Holdings (HK) Co., Ltd. Rayonnant Technology (Taicang) Co., Ltd. Bizcom Electronics, Inc. Compal Europe (Poland) Sp. z o.o. Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Ming-Chih Chang) Wen-Pin Kuo Chuan-Kuei Lin Chyou-Jui Wei Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Pao-Jui Cheng) Compal Electronics, Inc. (Representative: Hsi-Kuan Chen) Compal Electronics, Inc. (Representative: Chyou-Jui Wei) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Rayonnant Holdings Ltd. (Representative: Chung-Pin Wong) Rayonnant Technology Co., Ltd. (Representative: Pao-Jui Cheng) Allied Power Holding Corp. (Representative: Chung-Pin Wong) Allied Power Holding Corp. (Representative: Pao-Jui Cheng) Allied Power Holding Corp. (Representative: Chyou-Jui Wei) Allied Power Holding Corp. (Representative: Pao-Jui Cheng) Rayonnant Technology Holdings (HK) Co., Ltd. (Representative: Pao-Jui Cheng) Rayonnant Technology Holdings (HK) Co., Ltd (Representative: Cheng-Chiang Wang). Rayonnant Technology Holdings (HK) Co., Ltd. (Representative: Hsi-Kuan Chen) Rayonnant Technology Holdings (HK) Co., Ltd. (Representative: Chyou-Jui Wei) Pao-Jui Cheng Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Po-Tang Wang ) Compal Electronics, Inc. (Representative: Po-Tang Wang ) Compal Electronics, Inc. 242 21,756,192 21,756,192 1,301,505 1,720,172 0 52.88% 52.88% 3.16% 4.18% 0.00% 29,500,000 100.00% 29,500,000 100.00% 29,500,000 100.00% 29,500,000 100.00% 12,500,000 100.00% 12,500,000 100.00% 12,500,000 8,651,000 59.10% 40.90% 3,151,000 100.00% 3,151,000 100.00% 18,000,000 100.00% 18,000,000 100.00% TWD 552,690 100.00% TWD 552,690 100.00% TWD 552,690 100.00% TWD 552,690 100.00% 0 100,000 100,000 100,000 100,000 136,080 136,080 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage CGS Technology (Poland) Sp. z o.o. Director Director Auscom Engineering Inc. Flight Global Holding Inc. Chairman Director and President Director Director Director RiPAL Optotronics Co., Ltd. Chairman Director Director Supervisor Director Director Director Chairman Director Director Supervisor President Chairman Director Director Supervisor President Chairman Compal Electronics (Holding) Ltd. Etrade Management Co., Ltd. Compal Communications (Nanjing) Co., Ltd. Compal Digital Communications (Nanjing) Co., Ltd. Compal Wireless (Representative: Ming-Chih Chang) Compal Electronics, Inc. (Representative: Ming-Chih Chang) Compal Electronics, Inc. (Representative: Po-Tang Wang ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Min-Tung Weng) Compal Electronics, Inc. (Representative: Chun-Te Shen) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Chyou-Jui Wei) Compal Electronics, Inc. (Representative: Sheng-Hsiung Hsu ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. & Webtek Technology Co., Ltd (Representative: Jui-Tsung Chen ) Etrade Management Co., Ltd. and Compal Display Holding (HK) Limited (Representative: Sheng-Hua Peng) Etrade Management Co., Ltd. and Compal Display Holding (HK) Limited (Representative: Cheng-Chiang Wang) Etrade Management Co., Ltd. and Compal Display Holding (HK) Limited (Representative: Chung-Shing Tan) Etrade Management Co., Ltd. and Compal Display Holding (HK) Limited (Representative: Guo-Dung Yu) Ming-Chih Chang Etrade Management Co., Ltd. (Representative: Sheng-Hua Peng) Etrade Management Co., Ltd. (Representative: Cheng-Chiang Wang) Etrade Management Co., Ltd. (Representative: Chung-Shing Tan) Etrade Management Co., Ltd. (Representative: Guo-Dung Yu) Ming-Chih Chang Etrade Management Co., Ltd. 243 245,911 245,911 100.00% 100.00% 3,000,000 100.00% 3,000,000 100.00% 3,000,000 100.00% 89,755,495 100.00% 89,755,495 100.00% 6,000,000 100.00% 6,000,000 100.00% 6,000,000 100.00% 6,000,000 100.00% 1,000 1,000 100.00% 100.00% 71,900,000 100.00% TWD 829,035 100.00% TWD 829,035 100.00% TWD 829,035 100.00% TWD 829,035 100.00% 0 TWD 178,089 0.00% 100.00% TWD 178,089 100.00% TWD 178,089 100.00% TWD 178,089 0 TWD 1,504,545 100.00% 0.00% 100.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Communications (Nanjing) Co., Ltd. Webtek Technology Co., Ltd Forever Young Technology Inc. HANHELT Communications (Nanjing) Co., Ltd. Compal Wise Electronic (Vietnam) Co., Ltd. Director Director Supervisor President Director Director Chairman and President Director Director Supervisor Director Unicom Global. Inc. Chairman Palcom International Corporation Compalead Electronics B.V. General Life Biotechnology Co., Ltd. Director Director Supervisor Chairman Director Director Supervisor Director Director Chairman Director Director Director Director Supervisor (Representative: Sheng-Hua Peng) Etrade Management Co., Ltd. (Representative: Cheng-Chiang Wang) Etrade Management Co., Ltd. (Representative: Chung-Shing Tan) Etrade Management Co., Ltd. (Representative: Guo-Dung Yu) Ming-Chih Chang Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative:Jui-Tsung Chen ) Forever Young Technology Inc. (Representative: Sheng-Hua Peng) Forever Young Technology Inc. (Representative: Chung-Shing Tan) Forever Young Technology Inc. (Representative: Wen-Da Hsu) Forever Young Technology Inc. (Representative: Jyh-Shyan Liang) Forever Young Technology Inc. (Representative：Jui-Tsung Chen) Compal Electronics, Inc. (Representative: Chung-Pin Wong ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen) Compal Electronics, Inc. (Representative: Hsin-Kung Mao) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Sheng-Hua Peng) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Guo-Dung Yu) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Hsin-Kung Mao) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Chyou-Jui Wei) Alltek Technology Corp. (Representative: Yu-Wen Wu) WK Technology Fund IV (Representative: Tien-Hao Wang) China Development Industrial Bank 244 TWD 1,504,545 100.00% TWD 1,504,545 100.00% TWD 1,504,545 100.00% 0 100,000 50,000 0.00% 100.00% 100.00% TWD 61,410 100.00% TWD 61,410 100.00% TWD 61,410 100.00% TWD 61,410 100.00% TWD 61,410 100.00% 20,000,000 100.00% 20,000,000 100.00% 20,000,000 100.00% 20,000,000 100.00% 10,000,000 100.00% 10,000,000 100.00% 10,000,000 100.00% 10,000,000 100.00% 6,426,516 100.00% 6,426,516 100.00% 15,030,000 15,030,000 15,030,000 6,922,940 992,000 2,520,000 50.12% 50.12% 50.12% 23.08% 3.31% 8.40% Company name Title Name or name of representative PT GLB Biotechnology Indonesia Giant Rank Trading Limited UniCore Biomedical Co., Ltd. Shennona Corporation HippoScreen Neurotech Corp. SHENNONA CO., LTD. Aco Healthcare Co.,Ltd. Starmems Semiconductor Corp. Kinpo&Compal Group Assets Development Supervisor Chairman Director Director Director Director Supervisor Director Chairman Director Director Supervisor Director Director Director Chairman Director Director Director Supervisor Chairman Chairman Director Director Director Director Supervisor Chairman Vice Chairman Director Supervisor Chairman Director Sheng-Hua Peng Chyou-Jui Wei Cheng-Ta Chen Cheng-Chiang Wang Handi Putranto Wilamarta Shih-Yu Lin Guo-Dung Yu Forever Young Technology Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Jui-Tsung Chen ) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Chyou-Jui Wei) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Wei Chang Chen) Compal Electronics, Inc. (Representative: Chun-Te Shen) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Wei Chang Chen) Compal Electronics, Inc. (Representative Chun-Te Shen) Long-Song Lin Cheng-Chiang Wang Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative:Jui-Tsung Chen) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Hsuan-Bin Chen) Jian-Hung Liu Shu-Chin Su Chyou-Jui Wei Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Yu- Ho Wang) Realsun Investments Co., Ltd. (Representative: Hou-Wei Lin) Shiu-Hung Lu Compal Electronics, Inc. (Representative:Jui-Tsung Chen) Compal Electronics, Inc. 245 Shares held Shares (Note) 0 NT$84,150 NT$84,150 NT$84,150 NT$84,150 NT$84,150 NT$84,150 Shareholding percentage 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% - 100.00% 20,000,000 100.00% 20,000,000 100.00% 20,000,000 100.00% 20,000,000 100.00% TWD 48,210 100.00% TWD 48,210 100.00% TWD 48,210 100.00% 9,100,000 9,100,000 9,100,000 90,000 0 91.00% 91.00% 91.00% 0.9% 0.00% 2,000,000 100.00% 330,276,403 330,276,403 330,276,403 25,561,111 25,561,111 2,250,000 3,500,000 3,500,000 2,300,000 0 402,500,000 402,500,000 71.46% 71.46% 71.46% 5.53% 5.53% 0.49% 35.00% 35.00% 23.00% 0.00% 70.00% 70.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Corporation Poindus Systems Corp,Ltd. Director Director Supervisor Chairman Vice Chairman Director (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Sheng-Chieh Hsu) AcBel Polytech Inc. (Representative: Chieh-Li Hsu) Ching-Hsiung Lu Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Hsin-Kung Mao) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Mu-Cheng Hu Director Independent Director Bing-Xian Wang Independent Director Sen-Tien Wu Independent Director Hui-Zhu Yang Chairman Poindus Systems Corp,Ltd. (Representative：Mu-Cheng Hu) President Shuo-Chien Ma Poindus Investment Co.,Ltd. Adasys GmbH Elektronische Komponenten QiJie Electronics (ShenZhen) Co.,Ltd. Chairman and President Supervisor Poindus Systems UK Limited Director Poindus Systems GmbH Compal Ruifang Health Assets Development Corporation Director Director Chairman Director Director Supervisor Compal Healthcare & Technology LTD. Chairman Director Director Supervisor Director Director Compal Americas (US) Inc. Wei-Ho Wang Muh-Perng Hu Poindus Systems Corp,Ltd. (Representative: Mu-Cheng Hu) Poindus Systems Corp,Ltd. (Representative: Tai-Shan Wu) Poindus Investment Co.,Ltd. (Representative: Mu-Cheng Hu) Compal Electronics, Inc. (Representative:Jui-Tsung Chen) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Chieh-Li Hsu) Compal Electronics, Inc. (Representative: Cheng-Chiang Wang) Compal Electronics, Inc. (Representative: Chung-Pin Wong) Compal Electronics, Inc. (Representative: Jui-Chun Shyur) Compal Electronics, Inc. (Representative: Kun-Sung, Chen) Compal Electronics, Inc. (Representative: Shih-Chang, Chia) Compal Electronics International Ltd. (Representative:Jui-Tsung Chen) Compal Electronics International Ltd. (Representative: Chyou-Jui Wei) 246 402,500,000 70.00% 172,500,000 0 11,768,199 30.00% 0.00% 56.04% 11,768,199 56.04% 11,768,199 56.04% 358,000 0 0 0 1.70% 0.00% 0.00% 0.00% NT$4,100 100.00% - 0 0 300 300 100.00% 100.00% 100.00% 100.00% 100.00% NT$1,721 100.00% 30,000,000 100.00% 30,000,000 100.00% 30,000,000 100.00% 30,000,000 100.00% 4,000,000 100.00% 4,000,000 100.00% 4,000,000 100.00% 4,000,000 100.00% NT 76,763 100.00% NT 76,763 100.00% Company name Title Name or name of representative Shares held Shares (Note) Shareholding percentage Compal Electronics N.A. Inc. Director President Director Director Director President Compal Electronics International Ltd. (Representative: Ta-Chun Wang) Compal Electronics International Ltd. (Representative: Ta-Chun Wang) Compal Electronics International Ltd. (Representative:Jui-Tsung Chen) Compal Electronics International Ltd. (Representative: Chyou-Jui Wei) Compal Electronics International Ltd. (Representative: Ta-Chun Wang) Compal Electronics International Ltd. (Representative: Ta-Chun Wang) NT 76,763 100.00% NT 76,763 100.00% NT 76,763 100.00% NT 76,763 100.00% NT 76,763 100.00% NT 76,763 100.00% responsible person Compal Electronics (Vietnam) Co., Ltd. Compal Mexico Electromex, S.A. de C.V. Note: Limited liability companies are shown in terms of amount and percentage of capital contribution. (Exchange rates for amount Compal Electronics, Inc. & Panpal Technology Co., Ltd. (Representative: Sheng-Hsiung Hsu) Jui-Tsung Chen NT 1,658,070 NT 77,997 100.00% 100.00% Director of capital contribution: USD 1: TWD 30.705, CNY 1: TWD 4.3275, and VND 1: TWD 0.001276.) 247 5. Overview of Operating Status for Affiliated Companies in 2023 Company Name Capital Total Asset Total liabilities Net worth Operating Operating Net loss/profit for the EPS (in TWD ) revenue income period (after tax) (After tax) Unit: TWD Thousands 1,787,680 94,627,030 49,566,102 45,060,928 144,368,593 1,029,632 2,551,767 48.15 1,460,443 29,382,195 18,796,419 10,585,776 117,107,160 (292,999) 286,164 Compal International Holding Co., Ltd. and subsidiaries Just International Ltd. and subsidiaries Big Chance International Co., Ltd. and subsidiaries High Shine Industrial Corp. and subsidiaries Panpal Technology Corporation and subsidiaries Gempal Technology Co., Ltd. Hong Ji Capital Co., Ltd. Hong Jin Investment Co., Ltd. UniCore Biomedical Co., Ltd. and subsidiaries 2,636,051 23,124,658 13,996,411 9,128,247 37,146,475 228,382 Core Profit Holdings Ltd. 4,318,860 8,744,035 664,195 8,079,840 956,481 29,668 2,482,899 48,343,273 47,893,993 449,280 70,072,892 503,340 572,422 417,529 413,513 5,000,000 15,174,656 9,234,093 5,940,563 10,737,440 220,082 (107,077) 900,000 1,000,000 295,000 2,462,434 1,193,703 387,120 50,239 783 70 200,000 80,035 12,796 2,412,195 1,192,920 387,050 67,239 16,232 - - - (302) (233) (223) 148,827 111,601 51,046 22,670 (9,307) (17,243) - (472) (430) Shennona Corporation 48,209 16,232 - Arcadyan Technology Corp. and subsidiaries Compal Broadband Networks Inc. and subsidiaries Henghao Technology Co., Ltd. and subsidiaries Mactech Co., Ltd. 2,203,543 38,458,659 23,648,592 14,810,067 51,158,122 3,164,367 2,389,606 676,381 1,671,122 520,463 1,150,659 1,164,054 (318,329) (326,109) 200,150 5,961,230 6,729,193 (767,963) 8,825,599 175,732 411,458 699,341 117,416 581,925 304,097 37,145 15,876 41,491 248 5.96 6.30 2.84 5.19 (0.21) 1.65 1.12 1.73 (0.86) - 10.98 (4.84) 0.79 1.01 General life Biotechnology Co., Ltd. and subsidiaries Rayonnant Technology Holdings Ltd., Compal Rayonnant Holdings Ltd. and subsidiaries Bizcom Electronics, Inc. Compal Europe (Poland) Sp.z o.o. CGS Technology (Poland) Sp.z o.o. Auscom Engineering Inc. Etrade Management Co., Ltd.& subsidiaries Webtek Technology Co., Ltd. Forever Young Technology Inc. & subsidiaries Unicom Global Inc. Palcom International Corporation Company Name Capital Total Asset Total liabilities Net worth Ripal Optotronics CO, LTD. 60,000 189,398 74,938 114,460 revenue 134,558 income (1,077) Operating Operating Net loss/profit for the EPS (in TWD ) period (after tax) (After tax) 300,000 787,879 250,394 537,485 440,590 48,349 295,000 456,458 240,560 215,898 1,524,255 (2,338) 18,969 377,328 1,305,563 998,902 306,661 1,591,257 37,922 36,369 90,156 89,669 101,747 502,994 205,918 93,337 210,412 39,461 230,025 584 56,226 82,737 10,343 463,533 (24,107) 92,753 154,186 4,161,690 898,170 146,814 205,565 - 197,366 - - 5,684 27,603 (1,286) 12,912 (183) (962) Flight Global Holding Inc. 2,754,741 4,244,427 Compalead Electronics B.V. 197,463 908,513 2,299,654 2,011,917 2,271,724 (259,807) 3,193,242 (358,495) (463,604) 3,340 1,575 200,000 100,000 765,547 154,553 610,994 - 2,157,601 611,794 1,545,807 334,467 (136) 1,069 452,150 116,153 369,683 18,001 82,467 98,152 442,373 110,513 (77,412) (11,955) (151,389) (1,513.89) Compal Electronics (Holding) Ltd. 34 3,616,638 - 3,616,638 - - HippoScreen Neurotech Corp. 100,000 23,761 SHENNONA CO., LTD. Aco Healthcare Co.,Ltd. 20,000 73,948 35,554 72,488 25,851 17,695 20,214 (2,090) 17,859 52,274 249 2,012 (26,630) (26,827) 43,560 (15) 63 18,995 (60,495) (60,467) (1,751) 50,433 19,254 11,411 14,324 (1,399) 4,718 (246,117) 34,757 17,232 (81,407) (11,342) - (0.29) 1.68 0.64 1.54 114.11 105.26 (5.69) 1.57 (2.74) 5.41 (6.45) 344.64 (4.07) (1.13) - (2.68) 0.03 (0.13) Company Name Capital Total Asset Total liabilities Net worth Starmems Semiconductor Corp. 100,000 44,535 9,508 35,027 5,750,000 18,039,705 12,344,846 5,694,859 Operating Operating Net loss/profit for the EPS (in TWD ) revenue income period (after tax) (After tax) 79 - (36,899) (36,374) (20,099) (27,399) Kinpo&Compal Group Assets Development Corporation POINDUS SYSTEMS CORP. Compal Ruifang Health Assets Development Corporation Compal Healthcare & Technology Ltd. Compal Mexico Electromex, S.A. de C.V. 210,000 740,148 203,298 536,850 693,223 9,133 18,886 300,000 300,768 290 300,478 20,000 20,003 - 20,003 - - (506) - 538 3 78,075 127,033 34,298 92,735 38,641 16,449 15,033 (3.64) (0.05) 0.90 0.02 0.00 - 6. Common shareholders in controlling and controlled companies: None 250 8.1.2 Consolidated financial statements of affiliated enterprises Representation Letter The entities that are required to be included in the combined financial statements of COMPAL ELECTRONICS, INC. as of and for the year ended December 31, 2023 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, "Consolidated and Separate Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, COMPAL ELECTRONICS, INC. and its subsidiaries do not prepare a separate set of combined financial statements. Company name: COMPAL ELECTRONICS, INC. Chairman: Sheng-Hsiung Hsu (Rock Hsu) Date: Feburary 29, 2024 8.1.3 Affiliation reports: None 251 8.2 Private Placement of Securities in the Most Recent Year: None 8.3 Company Shares Held or Disposed by Subsidiaries in the Most Recent Year: Unit: TWD thousands; Shares; % Percentage Date of Name of Share Capital Funding of Shares Acquisition Subsidiary Acquired Source Held by the or Company Disposition Shares and Shares and Amount Amount Acquired Disposed Investment Gain (Loss) Shareholdings and Amount as of Collateralized March 31, 2024 Amount of Endorsements Made for the Subsidiary Amount Loaned to the Subsidiary Panpal Technology Corporation Gempal Technology Co., Ltd. TWD Proprietary 5,000,000,000 capital TWD Proprietary 900,000,000 capital 100% 100% - - - - - - - - 31,648,082 shares TWD 559,812,000 18,369,349 shares TWD 321,435,000 N.A. N.A. - - - - Note: Impacts on the Company’s financial performance and position: none of the subsidiaries had acquired or disposed the Company’s shares in the current year up till the publication date of this annual report, hence there were no impacts. 8.4 Other supplementary notes, where applicable: None 8.5 Any Events in 2022 and as of the Date of this Annual Report that had Significant Impacts on Shareholders’ Interests or Security Prices as Stated in Item 2 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None 252 Compal Electronics, Inc. Chairman: Sheng-Hsiung Hsu (Rock Hsu) Chief Executive Officer (CEO): Chung-Pin Wong (Martin Wong) Attachment I 1 Stock Code:2324 COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Financial Statements With Independent Auditors’ Report For the Years Ended December 31, 2023 and 2022 Address: Telephone: No.581 & 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan (02)8797-8588 Table of contents 2 Contents Page 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’ Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to the Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of material accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent events (12) Other (13) Other disclosures 1 2 3 4 5 6 7 8 9 9 9～10 10～40 40 41～89 89～92 92 92～93 93 93 93 (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 93～94, 98～110 94, 111～114 94, 115～116 94 95～97 Representation Letter 3 The entities that are required to be included in the combined financial statements of COMPAL ELECTRONICS, INC. as of and for the year ended December 31, 2023 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 endorsed by the Financial Supervisory Commission, “Consolidated and Separate Financial Statements.” In addition, the information required to be disclosed in the combined financial statements and is included in the consolidated financial statements. Consequently, COMPAL ELECTRONICS, INC. and Subsidiaries do not prepare a separate set of combined financial statements. Company name: COMPAL ELECTRONICS, INC. Chairman: Sheng-Hsiung Hsu (Rock Hsu) Date: February 29, 2024 4 Independent Auditor’s Report To COMPAL ELECTRONICS, INC.: Opinion We have audited the consolidated financial statements of COMPAL ELECTRONICS, INC. and its subsidiaries (“ the Group” ), which comprise the consolidated balance sheet as of December 31, 2023 and 2022, the consolidated statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of material policies. 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, 2023 and 2022, and its consolidated financial performance and its consolidated cash flows for the years then ended December 31, 2023 and 2022, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“ IFRSs” ), International Accounting Standards (“ IASs” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 4-1 1. Inventory valuation Please refer to Note (4)(h) and Note (5) for the accounting policy of inventory valuation, as well as the estimation and assumption uncertainty of the valuation of inventory, respectively. Information of estimation of the valuation of inventory are disclosed in Note (6)(f) of the consolidated financial statements. Description of key audit matters: The inventory is measured at the lower of cost or net realizable value. The short life cycle of electronic products may cause significant changes in customers’ demand and sales of related products. Consequently, the book value of inventory may be lower than the net realizable value of inventory. Therefore, the valuation of inventory is one of the key audit matters. Our key audit procedures performed in respect of the above area included the following: In order to verify the rationality of assessment of inventory valuation estimated by the Group, our key audit procedures included reviewing the consistency of prior year and accounting policy, inspecting the Group's inventory aging reports, analyzing the change of inventory aging, judgement of specific identification, as well as verifying the inventory aging reports and the calculation of lower of cost or net realizable value. Other Matter Compal Electronics Inc, has prepared its parent-company-only financial statements as of and for the years ended December 31, 2023 and 2022, on which we have issued an unqualified opinion. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRSs, IASs, IFRC, SIC, endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance (including the Audit committee) are responsible for overseeing the Group’ s financial reporting process. 4-2 Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. 5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditors’ report are Kuan-Ying Kuo and Szu- Chuan Chien. 4-3 KPMG Taipei, Taiwan (Republic of China) February 29, 2024 The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China. Notes to Readers COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Assets Current assets: December 31, 2023 December 31, 2022 Amount % Amount % Cash and cash equivalents (Note (6)(a)) $ 72,479,480 16.6 79,665,302 17.6 Current financial assets at fair value through profit or loss (Note (6)(b)) 52,062 - 187 - Notes and accounts receivable, net (Note (6)(e)) Notes and accounts receivable due from related parties, net (Notes (6)(e) and (7)) Other receivables, net (Notes (6)(e) and (7)) Inventories (Notes (6)(f) and (8)) Other current assets (Note (8)) Non-current assets: Investments accounted for using equity method (Note (6)(g)) Non-current financial assets at fair value through profit or loss (Note (6)(b)) Non-current financial assets at fair value through other comprehensive income (Note (6)(c)) Property, plant and equipment (Notes (6)(k), (6)(l) and (8)) Right-of-use assets (Note (6)(l)) Intangible assets (Note (6)(h)) Deferred tax assets (Note (6)(s)) Other non-current assets (Note (8)) 187,280,320 42.9 186,804,648 41.2 6,434,296 2,372,980 1.5 0.5 4,416,073 2,369,411 1.0 0.5 95,102,692 21.8 111,593,984 24.6 5,202,467 1.1 5,856,898 1.3 368,924,297 84.4 390,706,503 86.2 7,448,351 1,217,512 9,116,008 29,040,525 13,793,968 1,462,162 3,615,912 2,152,239 1.7 0.3 2.1 6.7 3.2 0.3 0.8 0.5 8,047,569 558,909 5,425,908 28,808,211 13,705,316 1,722,165 2,393,778 2,116,074 1.7 0.1 1.2 6.4 3.0 0.4 0.5 0.5 67,846,677 15.6 62,777,930 13.8 1100 1110 1170 1180 1200 1310 1470 1550 1510 1517 1600 1755 1780 1840 1990 Liabilities and Equity Current liabilities: Short-term borrowings (Note (6)(m)) Current financial liabilities at fair value through profit or loss (Note (6)(b)) Current financial liabilities for hedging (Note (6)(d)) Current contract liabilities (Note (6)(w)) Notes and accounts payable Notes and accounts payable to related parties (Note (7)) Other payables (Note (7)) Current tax liabilities Current provisions (Note (6)(q)) Current lease liabilities (Note (6)(p)) Other current liabilities (Note (7)) Current refund liabilities Long-term borrowings, current portion (Note (6)(n)) Non-Current liabilities: Long-term borrowings (Note (6)(n)) Deferred tax liabilities (Note (6)(s)) Non-current lease liabilities (Note (6)(p)) Non-current net defined benefit liability (Note (6)(r)) Non-current liabilities, others (Note (6)(g)) Total liabilities Equity: Equity attributable to owners of parent (Note (6)(t)): Ordinary share Capital surplus Retained earnings Other equity interest Treasury shares 2100 2120 2125 2130 2170 2180 2200 2230 2250 2280 2300 2365 2322 2540 2570 2580 2640 2670 3110 3200 3300 3400 3500 36XX Non-controlling interests Total equity 5 December 31, 2023 December 31, 2022 Amount % Amount % $ 58,974,271 13.5 74,832,426 16.5 164,535 14,246 - - 62,527 47,809 - - 767,327 0.2 784,238 0.2 148,398,334 34.0 152,137,066 33.6 10,597,650 30,464,866 7,594,694 787,396 2,001,766 2,528,809 3,573,141 11,385,027 2.4 7.0 1.7 0.2 0.5 0.6 0.8 2.6 9,701,032 29,622,760 7,202,033 734,061 1,813,555 3,352,565 2,632,039 19,462,800 2.1 6.5 1.6 0.2 0.4 0.7 0.6 4.3 277,252,062 63.5 302,384,911 66.7 15,285,590 1,985,324 8,329,451 651,272 494,422 26,746,059 3.5 0.5 1.9 0.1 0.1 6.1 11,674,322 1,247,342 9,533,209 660,019 574,787 23,689,679 2.6 0.3 2.1 0.1 0.1 5.2 303,998,121 69.6 326,074,590 71.9 44,071,466 10.1 4,270,915 1.0 44,071,466 5,078,580 9.7 1.1 72,548,155 16.6 69,969,059 15.4 (387,294) (0.1) (1,943,104) (0.4) (881,247) (0.2) (881,247) (0.2) 119,621,995 27.4 116,294,754 25.6 13,150,858 3.0 11,115,089 2.5 132,772,853 30.4 127,409,843 28.1 Total assets $ 436,770,974 100.0 453,484,433 100.0 Total liabilities and equity $ 436,770,974 100.0 453,484,433 100.0 See accompanying notes to consolidated financial statements. COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Share) Net sales revenue (Notes (6)(w) and (7)) Cost of sales (Notes (6)(f), (6)(r), (7) and (12)) Gross profit Operating expenses: (Notes (6)(r) and (12)) Selling expenses Administrative expenses Research and development expenses Net operating income Non-operating income and expenses: Interest income (Note (6)(y)) Other gains and losses, net (Notes (6)(d), (6)(y) and (6)(aa)) Finance costs (Notes (6)(o) and (6)(p)) Other income (Note (6)(y)) Miscellaneous disbursements Impairment loss Share of profit (loss) of associates and joint ventures accounted for using equity method (Note (6)(g)) Total non-operating income and expenses Profit from continuing operations before tax Less: Income tax expenses (Note (6)(s)) Profit Other comprehensive income: Components of other comprehensive income that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss Income tax related to components of other comprehensive income that will not be reclassified to profit or loss (Note (6)(s)) 6 2023 2022 Amount % Amount % $ 946,714,800 100.0 1,073,245,915 100.0 904,317,906 95.5 1,032,881,736 96.2 42,396,894 4.5 40,364,179 3.8 6,372,101 4,896,947 19,080,135 30,349,183 12,047,711 4,706,927 260,934 0.7 0.5 2.0 3.2 1.3 0.5 - 8,232,253 4,983,404 17,929,525 31,145,182 9,218,997 3,089,926 1,363,841 0.8 0.4 1.7 2.9 0.9 0.3 0.1 (5,052,372) (0.5) (3,245,701) (0.3) 456,861 (62,559) - (467,077) (157,286) 11,890,425 2,759,747 9,130,678 2,602 1,221,169 105,613 170,975 - - - - - 1.3 0.3 1.0 - 0.1 - - 652,426 (73,104) (9,431) (272,824) 1,505,133 10,724,130 2,182,603 8,541,527 - - - - 0.1 1.0 0.2 0.8 161,558 - (1,074,884) (0.1) (21,325) (49,117) - - Components of other comprehensive income that will not be reclassified to profit or loss 1,158,409 0.1 (885,534) (0.1) Components of other comprehensive income (loss) that will be reclassified to profit or loss Exchange differences on translation of foreign financial statements Gains (losses) on hedging instrument (Note (6)(z)) Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss Income tax related to components of other comprehensive income that will be reclassified to profit or loss (Note (6)(s)) Components of other comprehensive income that will be reclassified to profit or loss Other comprehensive income (after tax) Total comprehensive income Profit, attributable to: Profit, attributable to owners of parent Profit, attributable to non-controlling interests Comprehensive income attributable to: Comprehensive income (loss), attributable to owners of parent Comprehensive income (loss), attributable to non-controlling interests Earnings per share (Note (6)(v)) Basic earnings per share Diluted earnings per share (184,799) 33,563 (103,664) 4,544 (259,444) 898,965 10,029,643 7,667,627 1,463,051 9,130,678 8,558,794 1,470,849 10,029,643 - - - - - 0.1 1.1 0.8 0.2 1.0 0.9 0.2 1.1 1.76 1.75 $ $ $ $ $ $ $ 7,375,388 0.7 (47,809) 81,580 (12,026) 7,421,185 6,535,651 15,077,178 7,288,292 1,253,235 8,541,527 13,636,212 1,440,966 15,077,178 - - - 0.7 0.6 1.4 0.7 0.1 0.8 1.3 0.1 1.4 1.67 1.66 4000 5000 6100 6200 6300 7100 7210 7050 7190 7590 7670 7770 7900 7950 8300 8310 8311 8316 8320 8349 8360 8361 8368 8370 8399 8300 8500 8610 8620 8710 8720 9750 9850 See accompanying notes to consolidated financial statements. COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Equity For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Equity attributable to owners of parent 7 Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others Exchange differences on translation of foreign financial statements Total other equity interest Treasury shares Total equity attributable to owners of parent (8,744,705) - 7,274,994 7,274,994 537,830 - (1,032,694) (1,032,694) 125 (8,206,750) - (12,415) (12,415) - 6,229,885 6,229,885 (881,247) 111,360,265 7,288,292 6,347,920 13,636,212 - - - - - - - - - - - - - (1,469,711) - (277,619) (277,619) - - - - - - - - - - (1,747,330) - - - - - - - 36,599 (2,838) - (461,103) - 1,162,170 1,162,170 - - - - - - 3,469 13,433 645,503 - 1,363,472 - - - - - - - - - - (12,290) - 8,854 8,854 - - - - - - - - - - - - - - - - - - 36,599 (2,838) - - - - - - - - - - - - (7,051,435) (1,762,859) 31,137 (19,818) 100,035 1,217 - - (1,943,104) - 893,405 893,405 (881,247) 116,294,754 7,667,627 891,167 8,558,794 - - - - - - - - - 3,469 13,433 645,503 - - - - - - - - - - - - - (4,407,147) (881,429) (10,970) 6,932 60,021 1,040 - - (3,436) (387,294) (881,247) 119,621,995 Non- controlling interests Total equity 121,539,803 10,179,538 8,541,527 1,253,235 6,535,651 187,731 15,077,178 1,440,966 - - - - - - - - - - - (7,051,435) (1,762,859) 31,137 (19,818) 100,035 1,217 - (505,415) 11,115,089 1,463,051 7,798 1,470,849 (505,415) 127,409,843 9,130,678 898,965 10,029,643 - - - - - - - - - - - (4,407,147) (881,429) (10,970) 6,932 60,021 1,040 - 564,920 13,150,858 564,920 132,772,853 Retained earnings Unappropriated retained earnings 41,045,820 7,288,292 118,035 7,406,327 (1,237,434) (940,042) (7,051,435) (2,260) Total retained earnings 69,651,940 7,288,292 118,035 7,406,327 - - (7,051,435) - (2,260) (38,351) (38,351) - - 2,838 2,838 - - - - - - - 39,185,463 7,667,627 (2,238) 7,665,389 (736,855) 6,263,646 (4,407,147) (16,652) - 69,969,059 7,667,627 (2,238) 7,665,389 - - (4,407,147) - (16,652) - - (645,503) - 72,548,155 (16,991) (16,991) Special reserve 7,266,708 - - - - 940,042 - - - - - - - - 8,206,750 - - - - (6,263,646) - - - - - - - - (645,503) - 1,943,104 47,291,350 Balance at January 1, 2022 Profit for the year ended December 31, 2022 Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Cash dividends from capital surplus Changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted for using equity method Adjustments of capital surplus for cash dividends received by subsidiaries Disposal of investments in equity instruments measured at fair value through other comprehensive income Others Changes in non-controlling interests Balance at December 31, 2022 Profit for the year ended December 31, 2023 Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal of special reserve Cash dividends of ordinary share Cash dividends from capital surplus Changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted for using equity method Adjustments of capital surplus for cash dividends received by subsidiaries Others Disposal of investments in equity instruments measured at fair value through other comprehensive income Changes in non-controlling interests Balance at December 31, 2023 Ordinary shares $ 44,071,466 - - - - - - - - - - - - - 44,071,466 - - - - - - - - - - - - - $ 44,071,466 Capital surplus 6,724,856 - - - - - - (1,762,859) 33,397 (18,066) 100,035 1,217 - - 5,078,580 - - - - - - (881,429) 2,213 10,490 60,021 1,040 - - 4,270,915 Legal reserve 21,339,412 - - - 1,237,434 - - - - - - - - - 22,576,846 - - - 736,855 - - - - - - - - - 23,313,701 See accompanying notes to consolidated financial statements. COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization Expected credit loss Net (gain) loss on financial assets or liabilities at fair value through profit or loss Finance cost Interest income Dividend income Compensation cost of share-based payments Share of loss of associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment, and intangible assets Impairment loss on financial assets Others Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: (Increase) decrease in financial assets at fair value through profit or loss (Increase) decrease in notes and accounts receivable Decrease in other receivable Decrease in inventories Increase in other current assets (Increase) decrease in other non-current assets Total changes in operating assets Changes in operating liabilities: Increase in financial liabilities at fair value through profit or loss Decrease in notes and accounts payable Increase in other payables Increase in refund liabilities Increase (decrease) in provisions Decrease in contract liabilities (Decrease) increase in other current liabilities Others Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss and through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Net cash flow from acquisition of subsidiaries Proceeds from capital reduction and liquidation of investments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Decrease (increase) in restricted assets Others Net cash flows used in investing activities Cash flows from (used in) financing activities: Decrease in short-term borrowings Repayments of bonds payable Proceeds from long-term borrowings Repayments of long-term borrowings Payment of lease liabilities Cash dividends paid Change in non-controlling interests Others Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period See accompanying notes to consolidated financial statements. 8 2023 2022 $ 11,890,425 10,724,130 7,873,526 70,161 (44,367) 5,052,372 (4,706,927) (148,092) (2,972) 467,077 (43,977) - (790) 8,516,011 (51,875) (2,547,159) 55,383 16,491,292 (614,508) (431,265) 7,544,408 30,177 23,672 3,245,701 (3,089,926) (128,597) 22,025 272,824 (7,086) 9,431 (158) 7,922,471 400,567 99,026,904 357,505 3,761,054 (1,523,444) 438,312 12,901,868 102,460,898 102,008 (2,842,114) 2,190,306 941,102 53,335 (16,911) (823,756) (6,193) (402,223) 12,499,645 21,015,656 32,906,081 4,636,183 347,078 (5,183,213) (3,028,925) 29,677,204 (3,148,973) 47,921 (98,160) - 3,992 (7,169,728) 326,557 (373,363) 697,049 194,245 (9,520,460) (15,858,155) - 47,192,669 (51,659,174) (2,114,467) (5,228,555) 553,966 (35,568) (27,149,284) (193,282) (7,185,822) 79,665,302 72,479,480 $ 60,938 (62,369,969) 976,433 596,602 (472,840) (281,716) 1,309,581 (18,337) (60,199,308) 42,261,590 50,184,061 60,908,191 2,813,791 270,042 (2,697,025) (2,656,389) 58,638,610 (587,240) 10,028 (54,000) (135,971) 2,010 (7,727,184) 185,814 (659,132) (795,029) (154,230) (9,914,934) (43,590,249) (7,400) 79,108,377 (72,931,768) (2,422,290) (8,714,259) (1,062,788) 207,983 (49,412,394) 5,191,917 4,503,199 75,162,103 79,665,302 COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified) 9 (1) Company history Compal Electronics, Inc. (“the Company”) was incorporated in June 1984 as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company’s registered office is No.581 and No.581-1 Ruiguang Rd., Neihu Dist., Taipei City, Taiwan. In accordance with Article 19 of the Business Mergers and Acquisitions Act, the Company merged its subsidiary, Compal Communications, Inc. (“ CCI” ) (the “ Merger” ), pursuant to the resolutions of the Board of Directors in November 2013. The Company was the surviving company and CCI was the dissolved company. The effective date of the Merger was February 27, 2014. The Company and its subsidiaries (together referred to as the “Group” and individually as the “Group entities”) primarily are involved in the manufacture and sale of notebook personal computers (“notebook PCs”), monitors, LCD TVs, mobile phones and various components and peripherals. (2) Approval date and procedures of the consolidated financial statements: These consolidated financial statements were authorized for issuance by the Board of Directors and issued on February 29, 2024. (3) New standards, amendments and interpretations adopted: (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted. The Group has initially adopted the following new amendments, which do not have a significant impact on its consolidated financial statements, from January 1, 2023: ● Amendments to IAS 1 “Disclosure of Accounting Policies” ● Amendments to IAS 8 “Definition of Accounting Estimates” ● Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction” In addition, the Group has adopted Amendments to IAS 12“International Tax Reform – Pillar Two Model Rules” on May 23, 2023. The amendments provide a temporary mandatory exception from deferred tax accounting for the top-up tax, which applies retrospectively, and require new disclosures about the Pillar Two exposure for annual reporting periods beginning on or after January 1, 2023. However, because on December 31, 2023, no new legislation to implement the top-up tax was enacted or substantively enacted in any jurisdiction in which the Group operates and no related deferred taxes were recognised at that date, the retrospective application has no impact on the Group’ s condensed financial statements. The Group is closely monitoring developments related to the implementation of the international tax reforms introducing a global minimum top-up tax. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 10 (b) The impact of IFRS issued by the FSC but not yet effective The Group assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its consolidated financial statements: ● Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” ● Amendments to IAS 1 “Non-current Liabilities with Covenants” ● Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” ● Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback” (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC The Group does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its consolidated financial statements: ● Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture” ● IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts” ● Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information” ● Amendments to IAS21 “Lack of Exchangeability” (4) Summary of material accounting policies: The material accounting policies presented in the consolidated financial statements are summarized as follows. The following accounting policies were applied consistently throughout the periods presented in the financial statements. (a) Statement of compliance These consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”), the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to as the IFRS endorsed by the FSC). (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 11 (b) Basis of preparation (i) Basis of measurement Except for the following significant accounts in the statement of financial position, the consolidated financial statements have been prepared on the historical cost basis: 1) 2) 3) 4) Financial instruments (including derivative financial instruments) at fair value through profit or loss are measured at fair value; Financial assets measured at fair value through other comprehensive income are measured at fair value; Hedging financial instruments are measured at fair value; The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note (4)(r). (ii) Functional and presentation currency The functional currency of each Group entities is determined based on the primary economic environment in which the entities operates. The consolidated financial statements are presented in New Taiwan Dollar, which is the Company's functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand. (c) Basis of consolidation (i) Principles of preparation of the consolidated financial statements The consolidated financial statements comprise the Company and its subsidiaries. The Group controls an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its control over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Intragroup balances and transactions, and any unrealized income and expenses arising from intragroup transactions are eliminated in preparing the consolidated financial statements. The Group attributes the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. Accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group. Changes in the Group’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any differences between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received will be recognized directly in equity, and the Group will attribute it to the owners of the parent. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 12 When the Group loses control over a subsidiary, it derecognizes the assets (including any goodwill) and liabilities of the subsidiary, and any related non-controlling interests and other components of equity. Any interest retained in the former subsidiary is measured at fair value when control is lost, with the resulting gain or loss being recognized in profit or loss. The Group recognizes as gain or loss in profit or loss the difference between (i) the fair value of the consideration received as well as any investment retained in the former subsidiary at its fair value at the date when control is lost ;and (ii) the assets (including any goodwill), liabilities of the subsidiary as well as any related non-controlling interests at their carrying amounts at the date when control is lost, as gain or loss in profit or loss. When the Group loses control of its subsidiary, it accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if it had directly disposed of the related assets or liabilities. (ii) List of subsidiaries in the consolidated financial statements Name of investor The Company Name of Subsidiary Panpal Technology Corp. (“Panpal”) Nature of Operation Investment 〃 Gempal Technology Corp. (“Gempal”) 〃 〃 The Company, Panpal, et al. The Company and Panpal Hong Ji Capital Co., Ltd. (“Hong Ji”) Hong Jin Investment Co., Ltd. (“Hong Jin”) Arcadyan Technology Corp. (“Arcadyan”) Compal Mexico Electromex S.A de C.V. (“CMX”) The Company Rayonnant Technology Co., Ltd. (“Rayonnant Technology”) HengHao Technology Co., Ltd. (“HengHao”) Ripal Optoelectronics Co., Ltd. (“Ripal”) Mactech Co., Ltd (“Mactech”) General Life Biotechnology Co., Ltd. (“GLB”) 〃 〃 〃 〃 〃 〃 〃 R&D, manufacturing and sales of wireless network, integrated household electronics, and mobile office products Production of automotive electronic products Manufacturing and sales of PCs, computer periphery devices, and electronic components Manufacturing of PCs, computer periphery devices, and electronic components Manufacturing of electric appliance and audiovisual electric products Manufacturing of equipment and lighting, retailing of equipment and international trading Manufacturing and sales of medical equipment Percentage of ownership December 31, 2023 100% December 31, 2022 Description 100% Panpal held 31,648 100% thousand shares of the Company as of December 31, 2023, which represented 0.7% of the Company’s outstanding shares. 100% Gempal held 18,369 thousand shares of the Company as of December 31, 2023, which represented 0.4% of the Company’s outstanding shares. 100% 100% 100% 100% 33% 33% The Group had the ability to control Arcadyan. (Note 1) 100 % - CMX was established in April 2023. 100% 100% 100% 100% 100% 100% 53% 53% 50% 50% (Continued) Name of investor Name of Subsidiary The Company Unicore BioMedical Co., Ltd. (“Unicore”) Hippo Screen Neurotech Co., Ltd. (“Hippo Screen”) Shennona Taiwan Co., Ltd. (“Shennona TW”) Aco Smartcare Co., Ltd. (“Aco Smartcare”) Kinpo&Compal Group Assets Development Corporation (“Kinpo& Compal Group”) Compal Ruifang Health Assets Development Corporation (“Compal Ruifang ”) Compal Healthcare & Technology Ltd. (“Compal Healthcare”) Shennona Corporation (“Shennona”) 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 13 Nature of Operation Management consulting services, rental and leasing business, wholesale and retail sale of medical equipment Management consulting services, rental and leasing business, wholesale and retail sale of precision instruments and international trading Management consulting services, rental and leasing business, wholesale and retail sale of precision instruments and international trading Wholesale and retail sale of computer software, software design services, data processing services, wholesale and retail sale of electronic materials, wholesale and retail sale of precision instruments, and biotechnology services Real estate development, leasing and related management business Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description 91% 91% 100% 100% 71% 52% 70% 70% Investing and developing businesses, such as public construction and specific zones 100% 100% Information software service, data processing services, and electronic information supply service Medical care IOT business Auscom Engineering Inc. (“Auscom”) Just International Ltd. R&D of notebook PC related products and components Investment (“Just”) Compal International Holding Co., Ltd. (“CIH”) Compal Electronics (Holding) Ltd. (“CEH”) 〃 〃 Bizcom Electronics, Inc. (“Bizcom”) Flight Global Holding Inc. Warranty services and marketing of monitors and notebook PCs Investment (“FGH”) 100% - Compal Healthcare was established in December 2023. 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% The Company and BSH The Company 〃 〃 〃 High Shine Industrial Corp. 〃 100% 100% (“HSI”) Compal Europe (Poland) Sp. z o.o. (“CEP”) Big Chance International Co., Ltd. (“BCI”) Compal Rayonnant Holdings Limited (“CRH”) Core Profit Holdings Limited (“CORE”) Maintenance and warranty services of notebook PCs Investment 〃 〃 100% 100% 100% 100% 100% 100% 100% 100% (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 14 Name of investor The Company 〃 Panpal and Gempal Name of Subsidiary Compalead Electronics B.V. (“CPE”) CGS Technology (Poland) Sp. z o.o. (“CGSP”) Compalead Eletronica do Brasil Industria e Comercio Ltda. (“CEB”) Nature of Operation 〃 Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description Maintenance and warranty services of notebook PCs Manufacturing of notebook PCs 100% 100% 100% 100% 〃 Compal Electronics India Private Limited (“CEIN”) Manufacturing and warranty service of mobile phones 100% 100% Panpal and CEB Compal Electronica DA Manufacturing of notebook PCs 100% 100% Amazonia Ltda. (“CEA”) Just Compal Display Holding Investment 100% 100% 〃 〃 CDH (HK) 〃 〃 (HK) Limited (“CDH (HK)”) Compal Electronics International Ltd. (“CII”) Compal International Ltd. (“CPI”) Compal Electronics (China) Co., Ltd. (“CPC”) Compal Optoelectronics (Kunshan) Co., Ltd. (“CPO”) Compal System Trading (Kunshan) Co., Ltd. (“CST”) 〃 〃 100% 100% 100% 100% Manufacturing and sales of monitors 100% 100% Manufacturing and sales of LCD TVs 100% 100% International trade and distribution of computers and electronic components 100% 100% CPC Compal Smart Device (Chongqing) Co., Ltd. (“CSD”) CSD FIPOLL Electronics (Chongqing) Co., Ltd. (“FIP”) Research, manufacturing and sales of communication devices, mobile phones, electronic computer, smart watch, and providing related technical service Manufacturing of automotive parts and accessories 100% 100% 60% - FIP was established in December 2023. CII 〃 〃 〃 〃 〃 Smart International Investment 100% 100% Trading Ltd. (“Smart”) Amexcom Electronics Inc. (“AEI”) Sales and maintenance of LCD TVs - 100% The liquidation of the company had been completed on February 15, 2023. Mexcom Electronics, LLC Investment 100% 100% (“MEL”) Mexcom Technologies, LLC (“MTL”) Compal Americas (US) Inc. (“CUS”) Compal Electronics N.A. Inc. (“CNA”) 〃 100% 100% Sales of automotive electronic products 〃 100% 100% - - CUS was established in April 2023. CNA was established in April 2023. (Continued) Name of investor CIH 〃 〃 〃 CIH (HK) 〃 〃 〃 〃 BT (“Jenpal”) Prospect Fortune Group Ltd. (“PFG”) Fortune Way Technology Corp. (“FWT”) Compal Electronics Technology (Kunshan) Co., Ltd. (“CET”) Compal Information (Kunshan) Co., Ltd. (“CIC”) Compal Information Technology (Kunshan) Co., Ltd. (“CIT”) Kunshan Botai Electronics Co., Ltd. (“BT”) Compal Digital Technology (Kunshan) Co., Ltd. (“CDT”) Compower Global Service Co., Ltd. (“CGS”) CDH (HK) and CIH (HK) CIJ Compal Investment (Jiangsu) Co., Ltd. (“CIJ”) Compal Display Electronics (Kunshan) Co., Ltd. (“CDE”) Etrade Management Co., The Company and Webtek The Company Webtek Technology Co., Ltd. (“Etrade”) 〃 〃 〃 〃 Ltd. (“Webtek”) Forever Young Technology Inc. (“Forever”) UniCom Global, Inc. (“UCGI”) Palcom International Corporation (“Palcom”) Poindus Systems Corp, Ltd. (“Poindus Systems”) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 15 Name of Subsidiary Nature of Operation Compal International Investment Holding (HK) Limited (“CIH (HK)”) Jenpal International Ltd. Investment 〃 〃 Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description 100% 100% 100% 100% 100% 100% Manufacturing of notebook PCs 100% 100% 〃 〃 〃 Manufacturing and sales of notebook PCs, mobile phones, and digital products 100% 100% 100% 100% 100% 100% 100% 100% Maintenance and warranty service of notebook PCs Investment 100% 100% 100% 100% Manufacturing and sales of LCD TVs 100% 100% Investment 〃 〃 Manufacturing and sales of computers and electronic components Sales of mobile phones 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Sales of PCs and computer periphery devices 56% 56% The Group acquired 56% of its shares in March 2022. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 16 Name of investor Name of Subsidiary Poindus Systems Poindus Investment Co., Nature of Operation Investment holding December 31, 2023 100% December 31, 2022 Description 100% The Group indirectly Percentage of ownership Ltd. (“Poindus Investment”) 〃 QiJie Electronics (ShenZhen) Co., Ltd. (“QiJie”) Sales of PCs and computer periphery devices acquired 100% of its shares after acquiring 56% of Poindus Systems’ shares in March 2022. The Company had resolved its dissolution and liquidation on December 22, 2022. 100% 100% The Group indirectly acquired 100% of its shares after acquiring 56% of Poindus Systems’ shares in March 2022. Sales of PCs and computer periphery devices 100% 100% 100% 100% 〃 〃 〃 〃 Poindus Systems UK Limited (“Poindus UK”) Adasys GmbH Elektronische Komponenten (“Adasys”) Poindus Investment Poindus Systems GmbH GroBhandel mit EDV. Oberursel (“Poindus GmbH”) 〃 〃 100% 100% The Group indirectly GLB and Panpal PT GLB Biotechnology Wholesale of medical devices 100% - Indonesia CDH (HK) and Etrade Compal Communication (Nanjing) Co., Ltd. (“CCI Nanjing”) Etrade Compal Digital Communication (Nanjing) Co., Ltd. (“CDCN”) Compal Wireless Communication (Nanjing) Co., Ltd. (“CWCN”) Hanhelt Communication (Nanjing) Co., Ltd. (“Hanhelt”) 〃 Forever 〃 〃 Manufacturing and processing of mobile phones and tablet PCs 100% 100% 〃 〃 100% 100% 100% 100% R&D and manufacturing of electronic communication equipment 100% 100% Giant Rank Trading Ltd. Sales of mobile phones 100% 100% (“GIA”) Compal Wise Electronic (Vietnam) Co., Ltd. (“CWV”) Manufacturing and sales of mobile phones, tablet PCs, smart watches, communication devices, other electronic devices and providing related technical service. 100% 100% acquired 100% of its shares after acquiring 56% of Poindus Systems’ shares in March 2022. The Company had resolved its dissolution and liquidation on December 22, 2022. PT GLB Biotechnology Indonesia was established in December 2023. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 17 Name of investor Arcadyan 〃 〃 〃 〃 〃 〃 〃 〃 〃 Name of Subsidiary Arcadyan Technology N.A. Corp. (“Arcadyan USA”) Arcadyan Germany Technology GmbH (“Arcadyan Germany”) Arcadyan Technology Corporation Korea (“Arcadyan Korea”) Arcadyan Holding (BVI) Corp. (“Arcadyan Holding”) Arcadyan Technology Limited (“Arcadyan UK”) Arcadyan Technology Australia Pty Ltd. (“Arcadyan AU”) Arcadyan Technology Corporation (Russia), LLC. (“Arcadyan RU”) Zhi-Bao Technology Inc. (“Zhi-Bao”) Tatung Technology Inc. (“TTI”) AcBel Telecom Inc. (“AcBel Telecom”) Nature of Operation Technical support and sales of wireless network products Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description Technical support and sales of wireless network products 100% 100% Sales of wireless network products 100% 100% Investment 100% 100% Technical support of wireless network products 100% 100% Sales of wireless network products 100% 100% Sales of wireless network products 100% 100% Investment R&D and sales of household digital electronic products Investment 100% 100% 61% 61% - - The liquidation of the company had been completed on August 19, 2022. Arcadyan and Zhi-Bao 〃 The Company, Arcadyan and its subsidiaries CBN Arcadyan do Brasil Ltda. (“Arcadyan Brasil”) Arcadyan India Private Limited (“Arcadyan India”) Compal Broadband Network Inc. (“CBN”) Compal Broadband Networks Belgium BVBA (“CBNB”) Sales of wireless network products 100% 100% Sales of wireless network products 100% 100% R&D and sales of cable modem, digital set-up box, and other communication products Import and export business, technical support and consulting service of broadband networks 63% 63% 100% 100% 〃 Compal Broadband 〃 100% 100% Networks Netherlands B.V. (“CBNN”) The Company and CBN Starmems Semiconductor Corp. (“Starmems”) Arcadyan Holding Sinoprime Global Inc. (“Sinoprime”) R&D of MEMS technology of manufacturing process of semiconductor and manufacturing of electronic components Investment 〃 〃 Arcadyan Technology (Shanghai) Corp. (“SVA Arcadyan”) R&D and sales of wireless network products Arch Holding (BVI) Corp. Investment (“Arch Holding”) 45% 45% The Group had the ability to control Starmems. (Note 1) 100% 100% 100% 100% 100% 100% (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 18 Name of investor Name of Subsidiary Nature of Operation Manufacturing of wireless network products Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description Arch Holding Compal Networking Sinoprime TTI 〃 Quest Exquisite (Kunshan) Co., Ltd. (“CNC”) Arcadyan Technology (Vietnam) Co., Ltd. (“Arcadyan Vietnam”) Quest International Group Co., Ltd. (“Quest”) Tatung Technology of Japan Co., Ltd. (“TTJC”) Exquisite Electronic Co., Ltd. (“Exquisite”) Tatung Home Appliances (Wujiang) Co., Ltd. (“THAC”) Manufacturing of wireless network products 100% 100% Investment Sales of household digital electronic products Investment Manufacturing of household digital electronic products 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% HSI Intelligent Universal Investment Enterprise Ltd. (“IUE”) 〃 Goal Reach Enterprises 〃 100% 100% Ltd. (“Goal”) IUE Compal (Vietnam) Co., Ltd. (“CVC”) Goal Rayonnant Technology and CRH APH 〃 Rayonnant Technology (HK) Compal Development & Management (Vietnam) Co., Ltd. (“CDM”) Allied Power Holding Corp. (“APH”) Primetek Enterprises Limited (“PEL”) Rayonnant Technology (HK) Co., Ltd. (“Rayonnant Technology (HK)”) Rayonnant Technology (Taicang) Co., Ltd. (“Rayonnant Technology (Taicang)”) R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs and electronic components Construction of and investment in infrastructure in Ba-Thien industrial district of Vietnam Investment 〃 〃 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Manufacturing and sales of aluminum alloy and magnesium alloy products 100% 100% HengHao HengHao Holdings A Co., Investment 100% 100% Ltd. (“HHA”) HHA and BSH HengHao Holdings B Co., 〃 100% 100% HHB 〃 〃 Ltd. (“HHB”) HengHao Optoelectronics Technology (Kunshan) Co., Ltd. (“HengHao Kunshan”) Lucom Display Technology (Kunshan) Limited (“Lucom”) HengHao Optoelectronics Technology (Zhejiang) Co., Ltd. (“HengHao Zhejiang”) Production of touch panels and related components 100% 100% Manufacturing of touch panels and LCD TVs 100% 100% Production of touch panels and related components 100% - HengHao Zhejiang was established in March 2023. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 19 Name of investor BCI 〃 CMI Name of Subsidiary Center Mind International Co., Ltd. (“CMI”) Prisco International Co., Ltd. (“PRI”) Compal Investment (Sichuan) Co., Ltd. (“CIS”) PRI Compal Electronics (Chongqing) Co., Ltd. (“CEQ”) CIS Compal Electronics (Chengdu) Co., Ltd. (“CEC”) 〃 Compal Management (Chengdu) Co., Ltd. (“CMC”) CORE BSH 〃 〃 Billion Sea Holdings Limited (“BSH”) Mithera Capital Io LP (“Mithera”) Compal USA (Indiana), Inc. (“CIN”) Compal Electronics (Vietnam) Co., Ltd. (“CEV”) Unicore Raycore Biotech Co., Ltd. (“Raycore”) Nature of Operation Investment Percentage of ownership December 31, 2023 December 31, 2022 100% 100% Description 〃 100% 100% Outward investment and consulting services 100% 100% R&D, manufacturing and sales of notebook PCs, related components, related maintenance and warranty services R&D and manufacturing of notebook PCs, tablet PCs, digital products, network switches, wireless AP, and automobile electronic products Corporate management consulting, training and education, business information consulting, financial and tax consulting, investment consulting, and investment management services Investment 100% 100% 100% 100% 100% 100% 100% 100% 〃 99% 99% Foundry of automotive electronic products R&D, manufacturing, sales and maintenance of notebook PCs, computer monitors, LCD TVs, mobile phones, tablet PCs, smart watches, communication devices and other electronic devices Animal medication retail and wholesale 100% 100% 100% - - - CEV was established in May 2023. Raycore was merged with Unicore in February 2022. Unicore was the surviving company and Raycore was the dissolved company. Note 1:The Group holds less than half of the voting rights of the company, but the Group considers that the rest of the company’ s shareholding is extremely dispersed. The previous procedures for the participation of other shareholders in the shareholders’ meeting show that the Group has the actual ability to unilaterally dominate the relevant activities, and there is no indications that there is an agreement among the other shareholders to make collective decisions, so the Group treats the company as a subsidiary. (d) Foreign currency (i) Foreign currency transaction Transactions in foreign currencies are translated into the respective functional currencies of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the reporting date. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 20 Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currencies at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation. Exchange differences are generally recognized in profit or loss, except for those differences relating to the following, which are recognized in other comprehensive income: 1) 2) a financial asset designated as at fair value through other comprehensive income; a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or 3) qualifying cash flow hedges to the extent the hedges are effective (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Group entities’ functional currency at exchange rates of the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Group entities’ functional currency at average rate. Exchange differences are recognized in other comprehensive income. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interest. When the Group disposes of only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, exchange differences arising from such a monetary item that are considered to form part of the net investment in the foreign operation are recognized in other comprehensive income. (e) Classification of current and non-current assets and liabilities An asset is classified as current under one of the following criteria, and all other assets are classified as non-current. (i) It is expected to be realized, or intended to be sold or consumed, in the normal operating cycle; (ii) It holds the asset primarily for the purpose of trading; (iii) It is expected to be realized within twelve months after the reporting period; or (iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 21 A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current. (i) It is expected to be settled in the normal operating cycle; (ii) It is held primarily for the purpose of trading; (iii) It is due to be settled within twelve months after the reporting period; or (iv) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not impact its classification. (f) Cash and cash equivalents Cash comprise cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. The time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes should be recognized as cash equivalents. (g) Financial instruments (i) Financial assets Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL). The Group shall reclassify all affected financial assets only when it changes its business model for managing its financial assets. 1) Financial assets measured at amortized cost A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is to hold assets to collect contractual cash flows; and •its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 22 A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. 2) Fair value through other comprehensive income (FVOCI ) A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and •its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Some accounts receivables are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Group, therefore, those receivables are measured at FVOCI and presented as accounts receivable. On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis. A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses, and impairment losses, deriving from debt investments are recognized in profit or loss; whereas dividends deriving from equity investments are recognized as income in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses of financial assets measured at FVOCI are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt investments are reclassified to profit or loss. However, gains and losses accumulated in OCI of equity investments are reclassified to retain earnings instead of profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. Dividend income derived from equity investments is recognized on the date that the Group’s right to receive payment is established, which in the case of quoted securities is normally on the date the shareholders’ meeting approved the earning distribation. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 23 3) Fair value through profit or loss (FVTPL) All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account any dividend and interest income, are recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. 4) Impairment of financial assets The Group recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized costs, notes and accounts receivable, other receivable, guarantee deposit and other financial assets), debt investments measured at FVOCI, and accounts receivable measured at FVOCI. The Group measures loss allowances at an amount equal to lifetime expected credit loss (ECL), except for the following which are measured as 12-month ECL: •debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 24 When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Group’s historical experience and informed credit assessment as well as forward-looking information. The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of ‘investment grade which is considered to be BBB- or higher per Standard & Poor’ s, Baa3 or higher per Moody’ s or twA or higher per Taiwan Ratings’. The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Group considers a financial asset to be in default when the financial asset is more than 90 days past due or the borrower is unlikely to pay its credit obligations to the Group in full. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset. At each reporting date, the Group assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit- impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. An evidence that a financial assets is credit-impaired includes the following observable data: •significant financial difficulty of the borrower or issuer; •a breach of contract such as a default or being more than 90 days past due; •the lender of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider; •it is probable that the borrower will enter bankruptcy or other financial reorganization; or •the disappearance of an active market for a security because of financial difficulties. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Group recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 25 The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Group determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due. 5) Derecognition of financial assets Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Group transfers substantially all the risks and rewards of ownership of the financial assets. On derecognition of a debt instrument in its entirety, the Group recognizes the difference between its carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in “ other equity – unrealized gains or losses on fair value through other comprehensive income” , in profit or loss, and presented it in the line item of non- operating income. On derecognition of a financial asset other than in its entirety, the Group allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss, and presented in the line item of non-operating income and expenses. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts. (ii) Financial liabilities and equity instruments 1) Classification of debt or equity Debt or equity instruments issued by the Group are classified as financial liabilities or equity in accordance with the substance of the contractual agreement. Equity instruments refer to surplus equities of the assets after the deduction of all the debts for any contracts. Equity instruments issued are recognized as the amount of consideration received, less, the direct cost of issuing. Interest and loss or gain related to financial liabilities are recognized as profit or loss and are reported under non-operating income and expenses. Financial liabilities are reclassified as equity when converted, and conversions do not generate profit or loss. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 26 2) Financial liabilities at fair value through profit or loss A financial liability is classified in this category if acquired principally for the purpose of selling in the short term. This type of financial liability is measured at fair value at the time of initial recognition, and attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value, and changes therein, which take into account any interest expense, are recognized in profit or loss, and are included in non-operating income or expenses. 3) Other financial liabilities Financial liabilities not classified as held-for-trading or designated as at fair value through profit or loss, which comprise loans and borrowings, and trade and other payable, are measured at fair value, plus, any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method other than significant interest on short-term loans and payables. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in non-operating income or expenses. 4) Derecognition of financial liabilities The Group derecognizes a financial liability when its contractual obligation has been discharged, cancelled or expired. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in non- operating income or expenses. 5) Offsetting of financial assets and liabilities The Group presents financial assets and liabilities on a net basis when the Group has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously. (iii) Derivative financial instruments and hedge accounting The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are initially measured at fair value. Any attributable transaction costs thereof are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss and are included in the line item of non-operating income. When a derivative is designated as, and effective for, a hedging instrument, its timing of recognition in profit or loss is determined based on the nature of the hedging relationship. When the fair value of a derivative instrument is positive, it is classified as a financial asset, whereas when the fair value is negative, it is classified as a financial liability. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the non-financial asset’ s host contract are not closely related to the embedded derivatives and the host contract is not measured at FVTPL. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 27 The Group designates its hedging instruments, including derivatives, embedded derivatives, and nonderivative instruments for a hedge of a foreign currency risk, as a fair value hedge, cash flow hedge, or hedge of a net investment in a foreign operation. Foreign exchange risks of firm commitments are treated as fair value hedges. At initial designated hedging relationships, the Group documents the risk management objectives and strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged items and hedging instrument are expected to offset each other. The Group shall discontinue hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria (after taking into account any rebalancing of the hedging relationship, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. Cash flow hedges When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in “other equity－gains (losses) on hedging instruments”. The effective portion of changes in the fair value of the derivative that is recognized in other comprehensive income is limited to the cumulative change in fair value of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss, and is presented in the line item of non-operating income and expenses in the statement of comprehensive income. The Group designates only the change in fair value of the spot element of the forward exchange contract as the hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of the forward exchange contracts is separately accounted for as a cost of hedging and accumulated in a separate component within equity. When the hedged item is recognized in profit or loss, the amount accumulated in equity and retained in other comprehensive income is reclassified to profit or loss in the same period or in the periods during which the hedged item affects the profit or loss, and is presented in the same accounting item with the hedged item recognized in the consolidated statement of comprehensive income. However, for a cash flow hedge of a forecast transaction recognized as a nonfinancial asset or liability, the amount accumulated in “other equity－gains (losses) on hedging instruments in cash flow hedging securities” and retained in other comprehensive income is reclassified as the initial cost of the nonfinancial asset or liability. In addition, if that amount is a loss and the Group expects that all or a portion of that loss will not be recovered in future periods, it shall immediately reclassify the amount in profit or loss. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 28 When hedge accounting for cash flow hedges is discontinued, the amount that has been accumulated in the cash flow hedge reserve (and costs of hedging) remains in equity until the hedged future cash flows are no longer expected to occur. Otherwise, that amount would be adjusted within the carrying amount of the non-financial item. For other cash flow hedges, the amount is reclassified to profit or loss in the same period or in the periods as the hedged expected future cash flows affect the profit or loss. However, if the hedged future cash flows are no longer expected to occur, the amount shall immediately be reclassified from cash flow reserve (and the cost of hedging reserve) to profit or loss. (h) Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average-cost principle and includes expenditure incurred in acquiring the inventories, production or transition costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses. (i) Investment in associates Associates are those entities in which the Group has significant influence, but not control or join control, over the financial and operating policies. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less, any accumulated impairment losses. The consolidated financial statements include the Group’ s share of the profit or loss and other comprehensive income of equity-accounted investees after adjustments to align the accounting policies with those of the Group from the date that significant influence commences until the date that significant influence ceases. When changes in an associate’s equity are not recognized in 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 changes in ownership interests of its associate in capital surplus in proportion to its ownership. Unrealized profits resulting from the transactions between the Group and an associate are eliminated to the extent of the Group’ s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired. When the Group’ s share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 29 The Group shall discontinue the use of the equity method from the date when its investment ceases to be an associate or a joint venture. The Group shall measure the retained interest at fair value. The difference between the fair value of retained interest and proceeds from disposal, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Group shall account for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss on the disposal of the related assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss when the equity method is discontinued. If an entity’s ownership interest in an associate or a joint venture is reduced while the entity continues to apply the equity method, the entity shall reclassify the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Group shall continue to apply the equity method without remeasuring the retained interest. When the Group subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’ s proportionate interest in the net assets of the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus, however, when the balance of the capital surplus arising from the investment was insufficient, the difference charged or credited to retained earnings. If the Group’ s ownership interest is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities. (j) Joint venture A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (ie joint ventures) have rights to the net assets of the arrangement. A joint venture shall recognize its interest in a joint venture as an investment and shall account for that investment using the equity method in accordance with IAS 28 “Investments in Associates and Joint Ventures”, unless, the entity is exempted from applying the equity method as specified in that Standard. When assessing the classification of a joint arrangement, the Group shall consider the structure and legal form of the arrangement, the terms in the contractual arrangement and other facts and circumstances. The Group had previously reviewed the contractual structure of the joint arrangement, and has now decided to reclassify the investments in “Jointly Controlled Entities” to “Joint Ventures”. Although the investments have been reclassified, they are still recorded under the equity method. Thus, there is no effect in the recognized assets, liabilities and other comprehensive income. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 30 (k) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset. The cost of the software is capitalized as part of the property, plant and equipment if the purchase of the software is necessary for the property, plant and equipment to be capable of operating. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method of a significant part of an item of property, plant and equipment are the same as the useful life and depreciation method of another significant part of that same item. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as other gains and losses. (ii) Subsequent cost Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Group. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred. (iii) Depreciation The depreciable amount of an asset is determined after deducting its residual amount, and it shall be allocated on a systematic basis over its useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss. Land has an unlimited useful life and therefore is not depreciated. The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows: 1) 2) Buildings: 9~50 years Building improvement: 2~30 years 3) Machinery and equipment: 2~14 years 4) Research equipment: 3~10 years 5) Modeling equipment: 0.5~5 years 6) Other equipment: 0.25~10 years (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 31 Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate. (l) Leases At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. (i) As a lessee The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the following: － fixed payments; － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; － amounts expected to be payable under a residual value guarantee; and － payments for purchase or termination options that are reasonably certain to be exercised. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when: － there is a change in future lease payments arising from the change in an index or rate; or － there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying asset, or (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 32 － there is a change of its assessment on whether it will exercise a purchase, extension or termination option; or － there is any lease modifications When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero. When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease. The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position. The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery and office equipment that have a lease term of 12 months or less and leases of low-value assets. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. (ii) As a lessor When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset. (m) Intangible assets (i) Goodwill 1) Initial recognition Goodwill arising from acquisition of subsidiaries is included in intangible assets. The measurement of initial recognition of goodwill, please refer to note (4)(u). 2) Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. Goodwill related to an investment accounted for using equity method is included in the carrying amount of the investment, and not allocated to any asset, including goodwill, forms part of the carrying amount of the investment accounted for using the equity method. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 33 (ii) Research & Development During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred. Expenditures arising from the development phase shall be recognized as an intangible asset if all the conditions described below can be demonstrated; otherwise, they will be recognized in profit or loss as incurred. 1) 2) 3) 4) 5) 6) The technical feasibility of completing the intangible asset so that it will be available for use or sale. Its intention to complete the intangible asset and use or sell it. Its ability to use or sell the intangible asset. How the intangible asset will generate probable future economic benefits. The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. Its ability to measure reliably the expenditure attributable to the intangible asset during its development. Capitalized expenditure arising from the development phase is measured at cost less accumulated amortization and accumulated impairment losses. (iii) Other intangible assets Other intangible assets that are acquired by the Group are measured at cost, less accumulated amortization and any accumulated impairment losses. (iv) Subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred. (v) Amortization The amortizable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and intangible assets with all indefinite useful life, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows: (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 34 1) 2) 3) 4) Patents: the shorter of contract period and estimated useful lives Royalty: amortized by contract period Computer software: 1~7 years Copyright: 10 years The residual value, the amortization period, and the amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any change shall be accounted for as changes in accounting estimates. (n) Impairment of non-derivative financial assets Non-derivative financial assets except for inventories, deferred tax assets, assets arising from employee benefits and non-current assets classified as held for sale are assessed at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Group shall estimate the recoverable amount of the asset. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Group will have to determine the recoverable amount for the asset's cash-generating unit. The Group assesses goodwill and intangible assets, which have indefinite useful lives and are not available for use, on an annual basis and recognizes an impairment loss on excess of carrying value over the recoverable amount. The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value, less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirer’ s cash-generating units, or groups of cash- generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units or group of units. If the carrying amount of the cash-generating units exceeds the recoverable amount of the unit, the entity shall recognize the impairment loss and the impairment loss shall be allocated to reduce the carrying amount of each asset in the unit. Reversal of an impairment loss for goodwill is prohibited. The Group assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’ s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 35 (o) Provisions A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. A provision for warranties is recognized when the underlying products or services are sold. The provision is based on historical warranty data and a weighting of all possible outcomes against their associated probabilities. (p) Treasury stock Repurchased shares are recognized under treasury shares (a contra-equity account) based on its repurchase price (including all directly accountable costs), and net of tax. Gains on disposal of treasury shares should be recognized under Capital Reserve – Treasury Shares Transactions; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted average different types of repurchase. During the cancellation of treasury shares, Capital Reserve – Share Premiums and Share Capital should be debited proportionately. Gains on cancellation of treasury shares should be recognized under existing capital reserves arising from similar types of treasury shares; losses on cancellation of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings. (q) Recognition of Revenue (i) Revenue from contracts with customers Revenue is measured based on the consideration to which the Group expects to be entitled in exchange for transferring goods or services to a customer. The Group recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Group’s main types of revenue are explained below. 1) Sale of goods The Group manufactures and sells electronic products to electronic products brand vendor. The Group recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’ s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 36 The Group assesses sales discounts based on historical experience, management’ s judgment and other known reasons. Such allowances are recognized as a deduction of sales revenue in the same period in which sales are made. The aforementioned provisions are expected to settle over the next year. A refund liability is recognized for expected discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales of electronic products are made with a credit term which is consistent with the market practice. A receivable is recognized when the goods are delivered as this is the point in time that the Group has a right to an amount of consideration that is unconditional. 2) Financing components The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. (r) Employee benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. (ii) Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’ s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Group’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Group. An economic benefit is available to the Group if it is realizable during the life of the plan, or on settlement of the plan liabilities. If the benefits of a plan are improved, the pension cost incurred from the portion of the increased benefit relating to past service by employees, is recognized immediately in profit or loss. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 37 Re-measurement of net defined benefit liability (asset) (including actuarial gains, losses and the return on plan asset and changes in the effect of the asset ceiling, excluding any amounts included in net interest) is recognized in other comprehensive income (loss). The effect of re- measurement of the defined benefit plan is charged to retained earnings. The Group recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets and change in the present value of defined benefit obligation. (iii)Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. (s) Share-based payment The grant-date fair value of share-based payment awards granted to employee is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of award that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share- based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes. (t) Income taxes Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss. The Group has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income tax in the scope of IAS 12. The Group has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred. Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 38 Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the following exceptions: (i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and at the time of the transaction (1) affects neither accounting nor taxable profits (losses) and (2) does not give rise to equal taxable and deductible temporary differences; (ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse. (iii) Initial recognition of goodwill. Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities may be offset against each other if the following criteria are met: (i) The entity has the legal right to settle tax assets and liabilities on a net basis; and (ii) the taxing of deferred tax assets and liabilities fulfill one of the below scenarios: 1) 2) levied by the same taxing authority; or levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched. A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and they shall be adjusted based on the probability that future taxable profit that will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. The surtax on unappropriated earnings is recoded as current tax expense in the following year after the resolution to appropriate retained earnings is approved in a stockholders’ meeting. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 39 (u) Business combination Goodwill is measured as an aggregation of the consideration transferred (which generally is measured at fair value at the acquisition date) and as an amount of any non-controlling interest in the acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Group shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed, and recognize a gain on the bargain purchase thereafter. All the transaction costs incurred for the business combination are recognized immediately as the Group’s expenses when incurred, except for the issuance of debt or equity instruments. If the business combination is achieved in stages, the Group shall measure any non-controlling equity interest in the acquire, either at fair value or at the non-controlling interest’ s proportionate share of the acquiree’s identifiable net assets. Other non-controlling interest is measured (1) at fair value at the acquisition date or (2) by using other valuation techniques acceptable under the IFRS as endorsed by the FSC. In a business combination achieved in stages, the Group shall re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss. In prior reporting periods, the Group may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be recognized on the same basis as would be required if the Group had disposed directly of the previously held equity interest. If the disposal of the equity interest required a reclassification to profit or loss, such an amount shall be reclassified to profit or loss. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Group shall retrospectively adjust the provisional amounts recognized at the acquisition date, or recognize additional assets or liabilities to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date. (v) Earnings per share The Group discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Group. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholder of the Group divided by weighted average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Group divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise employee compensation not yet approved by the Board of Directors. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 40 (w) Operating segments An operating segment is a component of the Group that engages in business activities from which it may incur revenues and incur expenses (including revenues and expenses relating to transactions with other components of the Group). Operating results of the operating segment are regularly reviewed by the Group’ s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. Each operating segment consists of standalone financial information. (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty: In preparing these consolidated financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates. The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period. There are no critical judgments in applying the accounting policies that have significant effect on the amounts recognized in the consolidated financial statements. In addition, information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year is as follows: (a) Recognition and measurement of refund liabilities Because of the sales returns and allowances, the Group records a refund liabilities (sales returns and allowance provisions) for estimated returns and other allowances in the same period the related revenue is recorded. The estimate is made based on historical experience, market and economic conditions, and any other known factors using the expected value or the most likely amount and it could be different from actual sales returns and allowances, therefore, the management periodically reviews the adequacy of the estimation used. (b) Valuation of inventories As inventories are stated at the lower of cost or net realizable value, the net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial changes, there may be significant differences in the net realizable value of inventories. Refer to note (6)(f) for further description of the valuation of inventories. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 41 (6) Explanation of significant accounts: (a) Cash and cash equivalents Cash on hand Checking accounts and demand deposits Time deposits Cash equivalents December 31, 2023 December 31, 2022 $ 17,687 17,835 32,426,802 39,976,385 37,820,891 35,233,038 2,214,100 4,438,044 $ 72,479,480 79,665,302 Please refer to note (6)(aa) for the disclosure of the exchange rate risk, the interest rate risk and the fair value sensitivity analysis of the financial assets and liabilities of the Group. (b) Financial assets and liabilities at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss: Non-derivative financial assets Stock unlisted in domestic markets Fund in domestic or foreign markets Derivative instruments not used for hedging Foreign exchange contracts Swap contracts Total Current Non-current December 31, 2023 December 31, 2022 $ 158,680 1,058,832 117,150 441,759 4,519 47,543 187 - 1,269,574 559,096 52,062 1,217,512 1,269,574 187 558,909 559,096 $ $ $ December 31, 2023 December 31, 2022 Financial liabilities held-for-trading: Derivative instruments not used for hedging Foreign exchange contracts $ 164,535 62,527 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 42 The Group uses derivative instruments to hedge foreign currency risk the Group is exposed to arising from its operating activities. The following derivative instruments not applied hedge accounting were classified as mandatorily measured at fair value through profit or loss and held-for- trading financial liabilities: December 31, 2023 Contract amount (in thousands) Currency Maturity date Derivative financial assets: Foreign exchange contracts: Forward exchange sold USD 7,087 USD to TWD January 5 ~ March 25, 2024 Forward exchange purchased USD 3,609 USD to INR January 30, 2024 Swap contracts: Currency Swap Derivative financial liabilities: Foreign exchange contracts: USD 70,000 USD to TWD January 26 ~ March 28, 2024 Forward exchange purchased USD 124,500 USD to BRL January 11 ~ May 31, 2024 Forward exchange purchased USD 3,595 USD to INR January 12, 2024 Forward exchange sold EUR 17,000 EUR to USD January 12 ~ April 12, 2024 December 31, 2022 Contract amount (in thousands) Currency Maturity date EUR USD 8,000 512 EUR to USD May 12 ~ June 14, 2023 USD to INR January 31, 2023 Derivative financial assets: Foreign exchange contracts: Forward exchange sold Forward exchange purchased Derivative financial liabilities: Foreign exchange contracts: Forward exchange sold EUR 25,000 EUR to USD January 31 ~ April 20, 2023 Forward exchange sold EUR 2,000 EUR to TWD January 31, 2023 Forward exchange purchased USD 172,800 USD to BRL January 04 ~ June 15, 2023 The market risk related to the financial instruments please refer to note (6)(aa). As of December 31, 2023 and 2022, the Group did not provide any aforementioned financial assets as collaterals for its loans. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 43 (c) Financial assets at fair value through other comprehensive income Equity investments at fair value through other comprehensive income: Stock listed in domestic markets Stock listed in foreign markets Stock unlisted in domestic markets Stock unlisted in foreign markets Total December 31, 2023 December 31, 2022 $ $ 4,349,429 2,906,241 1,454,947 405,391 9,116,008 2,797,667 579,341 1,822,164 226,736 5,425,908 The purpose that the Group invests in the above-mentioned equity securities is for long-term strategies, but rather for trading purpose. Therefore, these equity securities are designated as at FVOCI. For the year ended December 31, 2022, the Group has sold all of its shareholdings, measured at fair value through other comprehensive income, in GENKI SANGA HOLDINGS CO., LTD. The fair value of the shares upon disposal amounted to $10,028, resulting in a cumulative gain of $2,838, which was reclassified from other comprehensive income to retained earnings. For the year ended December 31, 2023, the Group has sold all of its shareholdings, measured at fair value through other comprehensive income, in Genovior Biotech Corp. The fair value of the shares upon disposal amounted to $47,921, resulting in a cumulative gain of $17,790, which was reclassified from other comprehensive income to retained earnings. The Group held the shareholdings, measured at fair value through other comprehensive income, in Taiwan Star Telecom Corporation Limited (“ Taiwan Star” ), which was absorbed and merged by Taiwan Mobile Co., Ltd. (“Taiwan Mobile”) on December 1, 2023, as the date of the merger. In this stock swap case, the shareholdings of Taiwan Star were exchanged for the exchange consideration of $318,830 on the date of the merger, resulting in a cumulative loss on disposal of $666,762, which was reclassified from other equity to retained earnings. If there is an increase (decrease) in the market price by 5% on the reporting date of the equity securities hold by the Group, the increase (decrease) in other comprehensive income (pre-tax) for the years ended December 31, 2023 and 2022, will be $455,800 and $271,295, respectively. These analyses are performed on the same basis for the period and assume that all other variables remain the same. The Group’s information of market risk please refer to note (6)(aa). As of December 31, 2023 and 2022, the Group did not provide any financial assets at fair value through other comprehensive income as collaterals for its loans. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 44 (d) Financial instruments used for hedging (i) Financial instruments used for hedging were as follows: Cash flow hedge: Financial liabilities used for hedging: Forward exchange contracts (ii) Cash flow hedge December 31, 2023 December 31, 2022 $ 14,246 47,809 The Group’ s strategy is to use forward exchange contracts to hedge its foreign currency exposure in respect of forecasted future sales. As of December 31, 2023 and 2022 the details related to the items designated as hedge instruments were as follows: Contract amount (in thousands) Currency Maturity period Average strike price December 31, 2023 Derivative financial liabilities used for hedging Foreign exchange contracts: Forward exchange sold Derivative financial liabilities used for hedging Foreign exchange contracts: EUR 32,000 EUR to USD January 30 ~ June 27, 2024 1.0960 Contract amount (in thousands) Currency Maturity period Average strike price December 31, 2022 Forward exchange EUR 65,000 EUR to USD sold January 30 ~ December 28, 2023 1.0472 (iii) For the year ended December 31, 2023 and 2022, the ineffective portions of cash flow hedge recognized in profits (losses) amounted of $944 and $44,071, respectively, recorded as “other gains and losses, net”. (iv) For the year ended December 31, 2023 and 2022, the profits (losses) of changes in fair value of derivative financial instruments used for hedging reclassified from other equity to profit or loss are recognized as revenue in the statement of comprehensive income. Please refer to note (6)(z). (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 45 (e) Notes and accounts receivable Notes receivables from operating activities Accounts receivables – measured at amortized cost Accounts receivables – fair value through other comprehensive income Less: allowance for uncollectible accounts Notes and accounts receivable, net Notes and accounts receivable – related parties, net December 31, 2023 December 31, 2022 $ 44,525 167,289,327 10,645 179,043,536 30,358,572 197,692,424 (3,977,808) $ 193,714,616 $ 187,280,320 6,434,296 $ 16,091,084 195,145,265 (3,924,544) 191,220,721 186,804,648 4,416,073 The Group has assessed a portion of its trade receivables that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such trade receivables were measured at fair value through other comprehensive income. The Group applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. (i) The loss allowance provision of IT product segment of the Group was determined as follows: December 31, 2023 Carrying amount of notes and accounts receivable $ $ 171,224,931 12,850,108 3,790,493 187,865,532 Weighted- average ECL rate 0% 1.14% 100% December 31, 2022 Carrying amount of notes and accounts receivable $ $ 168,144,302 12,364,116 3,795,534 184,303,952 Weighted- average ECL rate 0% 0.68% 100% Credit rating Level A Level B Level C Credit rating Level A Level B Level C Lifetime ECLs - 146,162 3,790,493 3,936,655 Lifetime ECLs - 84,412 3,795,534 3,879,946 Credit- impaired No No Yes Credit- impaired No No Yes (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 46 (ii) The loss allowance provision of strategically integrated product segment of the Group was determined as follows: December 31, 2023 Carrying amount of notes and accounts receivable $ $ 3,377,894 4,778,380 1,650,599 - 20,019 9,826,892 Weighted- average ECL rate 0% 0.10% 1.00% - 100% December 31, 2022 Carrying amount of notes and accounts receivable $ $ 2,524,744 6,876,702 1,419,845 - 20,022 10,841,313 Weighted- average ECL rate 0% 0.10% 1.00% - 100% Credit rating Level A Level B Level C Level D Level E Credit rating Level A Level B Level C Level D Level E Lifetime ECLs - - 4,832 16,302 20,019 41,153 Lifetime ECLs - - 6,923 17,653 20,022 44,598 Credit- impaired No No No - Yes Credit- impaired No No No - Yes The aging analysis of notes and accounts receivable were determined as follows: Overdue 1 to 180 days Overdue 181 to 365 days Overdue 365 days December 31, 2023 3,094,481 $ December 31, 2022 3,119,372 135 89,230 - 8,552 $ 3,183,846 3,127,924 The movement in the allowance for notes and accounts receivable were as follows: Balance at January 1 Acquisition through business combination Impairment losses recognized (reversed) Effect of changes in exchange rates 2023 3,924,544 $ 2022 3,891,948 - 58,369 (5,105) 59 30,394 2,143 Balance at December 31 $ 3,977,808 3,924,544 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 47 Allowance for uncollectible account is the balance of accounts receivable which are uncollectable. Except for evaluating the situation of the customers’ payment records and widely analyzing the credit rating of customers, the Group also takes all the necessary procedures for collection. The Group believes that there is no doubt for the recovery of the due but unimpaired accounts receivable, therefore, no allowance recognized. The Group entered into accounts receivable factoring agreements with banks. As of December 31, 2023 and 2022, except for the amount used under the actual sales amount in accordance with certain agreements, the factoring amount granted by the banks was USD 2,215,000 thousand and EUR 1,000 thousand, USD 1,600,000 thousand and EUR 1,000 thousand, respectively. Based on the agreements, the Group is not responsible for guaranteeing the ability of the accounts receivable obligor to make payment when it is affected by credit risk. Thus, this is a non-recourse accounts receivable factoring. The Group derecognized the above accounts receivable because it has transferred substantially all of the risks and rewards of their ownership and it does not have any continuing in involvement in them. After the transfer of the accounts receivable, the Group can request partial advanced amount, while the interest calculated at an agreed rate is paid to the bank in the period during the time of receiving advance and the accounts receivable is collected. The remaining amounts with no advance are received when the accounts receivable are settled by the customers. As of December 31, 2023 and 2022, the factored accounts receivable with no advance amounting to $200 and $447, respectively, were accounted for as other receivables. The Group, customers and banks signed the three-party contracts in which the banks purchase accounts receivable from the Group. The total amount of the accounts receivable should not exceed the facility limit provided by the banks to the Group’s customers. Based on the contracts, the banks have no right to request the Group to repurchase the accounts receivable. Thus, this is a non-recourse accounts receivable transfer. As of December 31, 2023 and 2022, accounts receivable factored were recovered and derecognized since the conditions of derecognition were met. As of December 31, 2023 and 2022, the details of the factored accounts receivable but unsettled were as follows: Accounts receivable factored (gross) Purchaser Financial Institution $ 13,188,220 Accounts receivable factored (gross) Purchaser Financial Institution $ 30,114,458 December 31, 2023 Amount advanced Paid Unpaid Amount recognized in other receivable Amount Collateral derecognized Interest rate - 13,188,020 200 - 13,188,220 2.75%~6.20% December 31, 2022 Amount advanced Paid Unpaid Amount recognized in other receivable Amount Collateral derecognized Interest rate - 30,114,011 447 - 30,114,458 2.75%~5.61% As of December 31, 2023 and 2022, the Group did not provide any aforementioned notes and accounts receivable as collaterals. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 48 (f) Inventories Finished goods Work in progress Raw materials Raw materials in transit December 31, 2023 28,283,848 $ December 31, 2022 42,519,903 10,441,483 11,680,487 56,020,648 56,764,510 356,713 629,084 $ 95,102,692 111,593,984 (i) For the years ended December 31, 2023 and 2022, inventory cost recognized as cost of sales amounted to $904,317,906 and $1,032,881,736, respectively. (ii) Due to the sale and scrap of slow-moving inventories, the net realizable value of inventory recovered, and the reversal of inventory write-downs and slow-moving losses amounted to $1,333,316 for the year ended December 31, 2023. The loss due to the write-down of inventories to net realizable value amounted to $1,992,685 for the yearended December 31, 2022. (iii) As of December 31, 2023 and 2022, the Group provided part of its inventories as collaterals for its short-term borrowings. Please refer to note (8). (g) Investments accounted for using equity method A summary of the Group’s financial information for equity-accounted investees at the reporting date is as follows: Associates Joint venture Plus: credit balance of investment in equity method (recorded as other non-current liability) Less: unrealized profits or losses (i) Associates December 31, 2023 7,563,017 $ December 31, 2022 8,142,707 6,144 (18,066) 7,569,161 8,124,641 - 43,757 (120,810) (120,829) $ 7,448,351 8,047,569 1) The fair value of the shares of listed company based on the closing price was as follows: Allied Circuit Co., Ltd. (“Allied Circuit”) Avalue Technology Inc. (“Avalue”) December 31, 2023 2,659,099 $ December 31, 2022 1,741,281 1,783,426 $ 4,442,525 1,214,819 2,956,100 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 49 2) The Group’s share of the net gain (loss) of associates was as follows: The Group’s share of the loss of associates 2023 (491,225) $ 2022 (270,373) 3) The Group’s financial information for investments accounted for using the equity method that are individually immaterial was as follows: Carrying amount of individually immaterial associates The Group’s share of the net income (loss) of associates: Loss from continuing operations Other comprehensive income Total comprehensive income December 31, 2023 7,563,017 $ December 31, 2022 8,142,707 2023 2022 $ $ (491,225) 1,949 (489,276) (270,373) 60,255 (210,118) (ii) Joint venture In April 2010, the Group and another company established a jointly controlled entity, Compal Connector Manufacture Ltd. (“ CCM” ), and obtained an ownership interest of 51%. CCM’ s actual paid-in capital amounted to USD10,000 thousands. Moreover, in May 2014, the Group and another company established a jointly controlled entity, Zheng Ying Electronics (Chongqing) Co., Ltd., (“ Zheng Ying” ), and obtained an ownership interest of 51%. Zheng Ying’ s actual paid-in capital amounted to USD 2,500 thousands. The liquidation of Zheng Ying had been completed in February 2023. The Group’s financial information for investment accounted for using the equity method that are individually insignificant was as follows: The carrying amount of the Group’s interests in all individually insignificant joint ventures The Group’s share of the net income (loss) of joint ventures: Net income (losses) from continuing operations (also the total comprehensive income (losses)) December 31, 2023 December 31, 2022 $ $ 6,144 (18,066) 2023 2022 24,148 (2,451) (iii) Although the Group is the single largest shareholder of some associates, after a comprehensive assessment that the remaining shares of these associates are not concentrated in specific shareholders, the Group is still not able to obtain more than half of the board seats, and it has not obtained more than half of the voting rights of shareholders attending the shareholders’ meeting. The Group judges that it does not have absolute power and leading ability over the relevant activities and variable remuneration of these associates, so it assesses that the Group has no control over these associates. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 50 (iv) As of December 31, 2023 and 2022, the Group did not provide any investments accounted for using equity method as collaterals for its loans. (h) Acquisition of the subsidiary In order to accelerate the deployment in the industrial PCs market, the Group made a tender offer for 56% ownership of Poindus Systems Corp, Ltd. (“Poindus Systems”) at a total price of $353,046. The aforementioned price was paid, and the settlement had been completed. Since the acquisition of 56% ownership in Poindus Systems on March 7, 2022, the revenue and net profit contributed by Poindus Systems were $618,366 and loss $2,134, respectively. If the transaction took place on January 1, 2022, the management estimates that the Group’ s revenue in 2022 would increase by $147,469, while net profit will increase by $6,550. In determining these amounts, management has assumed that the transaction occurred on January 1, 2022, and that the provisional fair value adjustments resulting from the acquisition date are the same. The main categories of consideration transfer, assets acquired and liabilities assumed on the acquisition date and the amount of goodwill recognized are as follows: (i) Consideration transferred Cash $ 353,046 (ii) The identifiable assets acquired and the liabilities assumed The fair value of the identifiable assets acquired and the liabilities assumed on the acquisition date are as follows: Cash and cash equivalents Notes and accounts receivable, net Other receivables Inventories, net Prepayments and other current assets Property, plant and equipment Right-of-use assets Intangible assets Deferred tax assets Other non-current assets Short-term borrowings Notes and accounts payable Other payables Current tax liabilities Provisions Other current liabilities Current and non-current lease liabilities Deferred tax liabilities Net defined benefit liabilities $ $ 217,075 114,308 4,874 342,673 35,077 21,591 37,258 19,160 18,495 2,099 (268) (141,704) (31,099) (10,642) (2,786) (5,162) (37,542) (1,658) (17,881) 563,868 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (iii) Goodwill arising from the acquisition of 56% ownership is as follows: Consideration transferred Non-controlling interests Less: fair value of identifiable net assets 51 $ $ 353,046 247,882 (563,868) 37,060 Goodwill is mainly derived from the business value of Poindus Systems in the industrial PCs market. It is expected that the business of Poindus System and the Group business will be integrated to generate synergy. (i) Changes in subsidiaries’ equity 1) Cancellation of subsidiaries’ restricted shares and conversion of convertible bonds Arcadyan canceled 30 restricted shares in the year ended December 31, 2022. Whereas, Arcadyan issued $3,892 new shares due to the conversion of convertible bonds during 2022, resulted in a decrease of 0.59% the ownership of the Group in Arcadyan in the year ended December 31, 2022. CBN canceled $364 and $469 restricted shares in the years ended December 31, 2023 and 2022, resulted in an increase of 0.32% and 0.43% the ownership of the Group in CBN in the years ended December 31, 2023 and 2022. 2) Issuance of new shares for cash of subsidiaries The Group purchased newly issued shares of Aco Smartcare amounting to $69,083 at a percentage different from its existing ownership percentage in July, 2023, resulting an increase in the ownership of the Group in Aco Smartcare from 52.04% to 71.46%. 3) Acquire additional equity in a subsidiary In June 2022, the Group purchased a 0.12% stake in GLB from minority shareholders with cash of $700, resulting an increase of the equity from 50.00% to 50.12%. 4) The following summarizes the effect of changes in equity of the parent due to changes in the ownership interest of subsidiaries: Capital surplus – changes in ownership interest in subsidiaries Retained earnings 2023 2022 $ $ 2,213 (16,652) (14,439) 33,397 (2,260) 31,137 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 52 (j) Material non-controlling interests of subsidiaries The material non-controlling interests of subsidiaries were as follows: Subsidiaries Arcadyan Main operation place Taiwan Percentage of non-controlling interests December December 31, 2022 31, 2023 %67 %67 The following information of the aforementioned subsidiaries have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Included in these information are the fair value adjustment made during the acquisition and relevant difference in accounting principles between the Group as at the acquisition date. Intra-group transactions were not eliminated in this information. Arcadyan’s collective financial information Current assets Non-current assets Current liabilities Non-current liabilities Net assets Non-controlling interests Sales revenue Net income Other comprehensive income Comprehensive income Profit, attributable to non-controlling interests Comprehensive income, attributable to non-controlling interests Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities December 31, 2023 31,358,657 $ December 31, 2022 33,543,752 7,190,002 6,476,775 (23,477,920) (25,841,325) (170,672) (239,941) 14,900,067 13,939,261 10,137,657 9,503,906 2023 2022 51,158,122 47,167,749 2,389,606 1,915,053 2,543 283,981 2,392,149 2,199,034 1,591,414 1,248,748 1,593,103 1,435,919 5,589,936 2,529,050 (1,267,263) (1,415,888) (4,048,832) (1,577,423) $ $ $ $ $ $ $ $ Effect of exchange rate changes on cash and cash equivalents 3,579 73,033 Net increase (decrease) in cash and cash equivalents $ 277,420 (391,228) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 53 (k) Property, plant and equipment The cost, depreciation, and impairment of the property, plant and equipment of the Group for the years ended December 31, 2023 and 2022, were as follows: Buildings and building improvement Machinery Other equipment Land Under construction and prepayment for purchase of equipment Total Cost: Balance on January 1, 2023 $ 2,485,718 21,658,458 36,234,090 13,405,317 2,295,702 76,079,285 Additions Disposals and derecognitions Reclassifications - - - 1,052,882 350,442 1,411,529 4,151,768 6,966,621 (241,168) (1,353,218) (1,366,997) - (2,961,383) 1,509,753 1,371,671 176,912 (3,058,336) - Effect of movements in exchange rates (15) (32,968) (781,106) (401,822) (61,431) (1,277,342) Balance on December 31, 2023 Balance on January 1, 2022 Acquisition through business combination Additions Disposals and derecognitions Reclassifications Effect of movements in exchange rates Balance on December 31, 2022 Depreciation and impairments loss: Balance on January 1, 2023 Depreciation for the period Disposals and derecognitions Effect of movements in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Acquisition through business combination Depreciation for the period Disposals and derecognitions Effect of movements in exchange rates Balance on December 31, 2022 Carrying amounts: Balance on December 31, 2023 Balance on January 1, 2022 Balance on December 31, 2022 $ $ $ $ $ $ $ $ $ $ 2,485,703 23,946,957 35,821,879 13,224,939 3,327,703 78,807,181 2,476,919 17,383,799 32,006,068 11,743,420 4,593,482 68,203,688 - - - - 356 94,356 274 94,986 340 49,023 1,940,684 2,047,295 2,057,259 6,094,601 (89,464) (386,369) (1,186,876) - (1,662,709) 3,025,276 1,491,632 8,459 1,289,824 1,181,719 152,137 554,985 (4,669,045) - 313,732 3,348,719 2,485,718 21,658,458 36,234,090 13,405,317 2,295,702 76,079,285 - - - - - - - - - - - 12,555,957 24,546,694 10,168,423 1,215,405 3,609,728 1,661,074 (201,001) (1,132,219) (1,345,635) (42,765) (1,087,622) (181,383) 13,527,596 25,936,581 10,302,479 10,989,522 21,254,150 8,969,652 - 356 73,039 942,521 3,411,902 1,776,422 (89,237) (269,897) (1,124,847) 713,151 150,183 474,157 12,555,957 24,546,694 10,168,423 - - - - - - - - - - - 47,271,074 6,486,207 (2,678,855) (1,311,770) 49,766,656 41,213,324 73,395 6,130,845 (1,483,981) 1,337,491 47,271,074 2,485,703 10,419,361 9,885,298 2,922,460 3,327,703 29,040,525 2,476,919 6,394,277 10,751,918 2,773,768 4,593,482 26,990,364 2,485,718 9,102,501 11,687,396 3,236,894 2,295,702 28,808,211 As of December 31, 2023 and 2022, part of the Group’ s property, plant and equipment were provided as collateral for long-term borrowings. Please refer to note (8). (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 54 (l) Right-of-use assets The Group leases many assets including land and buildings, machinery and vehicles. Information about leases for which the Group as a lessee is presented as below: Cost: Balance on January 1, 2023 Additions Deductions Effect of movements in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Acquisition through business combination Additions Deductions Effect of movements in exchange rates Balance on December 31, 2022 Depreciation: Balance on January 1, 2023 Depreciation for the period Deductions Effect of movements in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Acquisition through business combination Depreciation for the period Deductions Effect of movements in exchange rates Balance on December 31, 2022 Carrying amount: Balance on December 31, 2023 Balance on January 1, 2022 Balance on December 31, 2022 Land Buildings Machinery Vehicles and other Total $ 12,180,851 - - (3,394) $ 12,177,457 859,993 $ - 11,216,024 - 3,320,227 1,142,577 (525,026) 70,321 4,008,099 3,664,030 39,959 299,827 (630,668) 104,834 $ 12,180,851 (52,921) 3,320,227 $ $ $ $ 241,063 245,676 - (324) 486,415 69,655 - 151,927 - 1,613,228 744,612 (475,682) 65,975 1,948,133 1,458,825 3,823 799,367 (523,734) 19,481 241,063 (125,053) 1,613,228 $ 11,691,042 $ 790,338 $ 11,939,788 2,059,966 2,205,205 1,706,999 51,104 - - 447 51,551 76,602 - 33,423 (57,348) (1,573) 51,104 18,093 5,006 - 464 23,563 36,900 - 10,019 (27,382) (1,444) 18,093 27,988 39,702 33,011 72,553 6,911 (39,714) 15,624,735 1,149,488 (564,740) (20) 39,730 68,622 1,332 14,525 (9,818) (2,108) 72,553 47,035 17,089 (39,280) (86) 24,758 37,649 210 21,042 (9,635) (2,231) 47,035 67,354 16,276,837 4,669,247 41,291 11,563,799 (697,834) 48,232 15,624,735 1,919,419 1,012,383 (514,962) 66,029 2,482,869 1,603,029 4,033 982,355 (560,751) (109,247) 1,919,419 14,972 30,973 25,518 13,793,968 3,066,218 13,705,316 In January 2022, the Group signed a contract with the Taipei City Government to obtain the superficies of No.91, Ruan Qiao Section, Beitou District, Taipei City, which has a term of 50 years and may be extended for additional 20 years. The registration procedures had been completed in May 2022, and the right-of-use assets and lease liabilities were recognized on the commencement date of the lease. The related depreciation expenses of right-of-use assets amounting to $224,321 and $130,854 and the interest expenses of lease liabilities amounting to $44,010 and $26,049, which met the conditions for capitalization under property, plant and equipment at the rate of 1.5%, had been recognized as the cost of assets for the years ended December 31, 2023 and 2022, respectively. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 55 (m) Short-term borrowings The details of short-term borrowings were as follows: Unsecured bank loans Secured bank loans Total Unused credit line for short-term borrowings Range of interest rates December 31, 2023 58,965,354 December 31, 2022 74,823,426 8,917 9,000 58,974,271 74,832,426 $ $ $ 241,131,000 212,701,000 1.62%~8.78% 0.05%~8.37% For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(aa). For the collaterals for part of the Group’s borrowings, please refer to note (8). (n) Long-term borrowings The details of long-term borrowings were as follows: December 31, 2023 Annual range of interest rate 1.64%~2.25% Maturity year 2024~2029 Amount $ 24,380,301 6.10% 2024 1.635%~2.25% 2025~2026 Currency TWD USD TWD Unsecured bank loans Unsecured bank loans Secured bank loans Less: current portion Total Unused credit lines for long-term borrowings Unsecured bank loans December 31, 2022 Currency TWD Annual range of interest rate 1.48%~2.06% Maturity year 2023~2026 Secured bank loans TWD 1.25%~2.00% 2025~2026 Less: current portion Total Unused credit lines for long-term borrowings For information on the Group’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(aa). (Continued) 1,842,300 448,016 (11,385,027) 15,285,590 21,773,000 Amount 30,525,000 612,122 (19,462,800) 11,674,322 13,018,000 $ $ $ $ $ COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 56 The Group pledged property, plant and equipment as collateral for its partial long-term borrowings. Please refer to note (8). (o) Unsecured convertible corporate bonds (i) The Company’ s subsidiary, Arcadyan, issued the first domestic unsecured convertible corporate bonds on June 6, 2019. The details were as follows: Total convertible corporate bonds issued Accumulated converted amount Repayments of bonds payable Balance of corporate bonds payable as of the reporting date Expired conversion options included in equity components (classified as capital surplus and non-controlling interests) Interest expenses December 31, 2023 - - - - December 31, 2022 1,000,000 (992,600) (7,400) - 361 2023 - 2022 361 763 $ $ $ $ The effective interest rate of the first issued convertible corporate bonds was 1.3284%. (ii) The main terms of issuing the above-mentioned convertible corporate bonds was as follows: 1) 2) 3) Coupon rate: 0% Duration: three years (June 6, 2019~June 6, 2022) Repayment Put option and call option are excluded from the issuance of convertible corporate bonds. Except that the bondholders convert the bonds to Arcadyan’ s common shares or the bonds are repurchased and cancelled by Arcadyan from the securities firm’ s business office, the bonds will be repaid in cash at par value when the bonds expired. 4) Terms of conversion a) The bondholder may opt to have its bonds converted into the Arcadyan’s common shares, with the approval of Taiwan Depository & Clearing Corporation through securities firms, at any time between three months after the issuance date (September 7, 2019) and the day before the maturity day (June 6, 2022), except for the following: - The closing period in accordance with the applicable law; - The period starting from the first day of the first fifteen working days prior to the date of record for determination wherein the shareholders are entitled to receive the distributions or rights to subscribe for new shares in a capital increase for cash, and ends on the date of record for the distribution of the rights/benefits; (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 57 - The period starts from the date of record of the capital decrease and ends on the date prior to the trading of the reissuance shares after the capital decrease. b) Conversion price is determined as NT$98.3 per share upon issuing. Arcadyan paid cash dividends and issued new shares for cash in 2019; therefore, the conversion price has been adjusted to $93 per share. Arcadyan distributed cash dividends to common stocks shareholders with retained earnings in 2021 and 2020, thereafter, the conversion price has been adjusted to NT82.5 and $87.7 per share, respectively. (iii) The above-mentioned convertible corporate bonds were due on June 6, 2022, and the remaining unconverted corporate bonds were fully repaid by the Group in cash at the par value of $7,400 on maturity in accordance with the conversion terms. (iv) As of June 6, 2022, the convertible corporate bonds were converted into ordinary shares of Arcadyan for $321,100 with a par value of $38,920, and the capital surplus were recognized for $296,640 (including the stock option conversion premium of $15,626 and the unamortized discounts on corporate bonds payable of $1,166). (p) Lease liabilities The details of leases liabilities were as follows: Current Non-current For the maturity analysis, please refer to note (6)(aa). The amounts recognized in profit or loss were as follows: December 31, 2023 $ $ 2,001,766 8,329,451 December 31, 2022 1,813,555 9,533,209 Interest on lease liabilities Variable lease payments not included in the measurement of lease liabilities Expenses relating to leases of low-value assets or short-term leases 2023 2022 55,711 44,563 - 2,528 100,106 186,825 $ $ $ The amounts recognized in the consolidated statement of cash flows for the Group were as follows: Total cash outflow for leases (i) Real estate leases 2023 2,270,284 $ 2022 2,656,206 The Group leases land leasehold rights and buildings for its office and plant space. The leases of office space typically run for a period of 1~19 years, and of land leasehold rights for 45~50 years. The Group obtained the superficies of Beitou District, Taipei City in May 2022, please refer to note (6)(l). (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 58 (ii) Other leases The Group leases vehicles and equipment with lease terms of 1~5 years. The Group also leases some office space, equipment and vehicles with contract terms of 1~5 years. These leases are short-term or leases of low-value items. The Group has elected not to recognize right-of-use assets and lease liabilities for these leases. (q) Provisions Balance on January 1, 2023 Provisions made during the period Provisions used during the period Provisions reversed during the period Effect of movements in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 Business combination Provisions made during the period Provisions used during the period Provisions reversed during the period Effect of movements in exchange rates Balance on December 31, 2022 Warranties 734,061 $ 420,336 (322,193) (44,813) 5 $ $ 787,396 1,204,115 2,786 365,410 (349,378) (488,899) 27 $ 734,061 Provisions relate to sales of products are assessed based on historical experience, management’ s judgment and other known reasons. Such allowances are recognized as a deduction of sales revenue in the same period in which sales are made. The aforementioned provisions are expected to settle over the next year. (r) Employee benefits (i) Defined benefit plans Reconciliation of defined benefit obligations at present value and plan assets at fair value were as follows: Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities December 31, 2023 (1,414,113) $ December 31, 2022 (1,433,878) 762,841 773,859 $ (651,272) (660,019) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 59 The Group makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement. 1) Composition of plan assets The Group allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks. The balance of the Group’ s labor pension reserve account in the Bank of Taiwan amounted to $727,635 (excluding the ending balance of interest rectivable) as of December 31, 2023. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor. 2) Movements in the present value of the defined benefit obligations The movements in the present value of defined benefit obligations for the Group were as follows: Defined benefit obligations on January 1 $ (1,433,878) 2023 Benefit paid by the plan Current service costs and interest Remeasurements of net benefit liabilities 57,335 (26,943) (11,833) Amount increased through business - combination 2022 (1,554,902) 64,567 (16,068) 106,275 (32,306) Effect of movements in exchange rates 1,206 (1,444) Defined benefit obligations on December 31 $ (1,414,113) (1,433,878) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 60 3) Movements of the fair value of defined benefit plan assets The movements in the fair value of the defined benefit plan assets for the Group were as follows: 2023 2022 Fair value of plan assets on January 1 $ 773,859 Expected return on plan assets Remeasurements of net benefit plan assets Contributions paid by the employer Benefits paid by the plan Amount increased through business combination Effect of movements in exchange rates Fair value of plan assets on December 31 $ 4) Expenses recognized in profit or loss The expenses recognized in profit or loss were as follows: 12,035 5,950 28,030 (57,335) - 302 762,841 732,869 5,073 56,929 28,460 (64,567) 14,425 670 773,859 2023 2022 Current service cost Net interest on the net defined benefit liability (asset) Cost of sales Selling expenses Administrative expenses Research and development expenses $ $ $ $ 4,210 10,698 14,908 608 846 3,605 9,849 14,908 4,720 6,275 10,995 516 627 2,714 7,138 10,995 5) Actuarial assumptions The following were the Group’s principal actuarial assumptions at the reporting date: Discount rate December 31, 2023 1.40%~1.625% December 31, 2022 1.70%~1.75% Future salary increasing rate 3.00% 3.00% The expected allocation payment made by the Group to the defined benefit plans for the one year period after the reporting date is $28,658. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 61 The weighted-average lifetime of the defined benefit plan is 7.6~12.3 years. 6) Sensitivity analysis If the main actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows: December 31, 2023 Discount rate Future salary increasing rate December 31, 2022 Discount rate Future salary increasing rate Effects to the defined benefit obligation Increased 0.25% Decreased 0.25% (25,220) 26,959 (27,794) 28,198 27,518 (24,817) 28,712 (27,427) Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation on the net defined benefit liabilities in the balance sheets. The method and assumption used in the sensitivity analysis is consistent with prior period. (ii) Defined contribution plans The Group allocates 6% of each employee’ s monthly wages to the labor pension personal account at the Bureau of the Labor Insurance in accordance with the provisions of the Labor Pension Act. Under this defined contribution plan, the Group allocates the labor pension at a specific percentage to the Bureau of the Labor Insurance without additional legal or constructive obligations. The Company and all subsidiaries in domestic recognized the pension costs under the defined contribution method amounting to $569,176 and $486,231 for the years ended December 31, 2023 and 2022, respectively. Payment was made to the Bureau of Labor Insurance. Other subsidiaries recognized the pension expenses, basic endowment insurance expenses, and social welfare expenses amounting to $939,545 and $1,321,190 for the years ended December 31, 2023 and 2022, respectively. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 62 (s) Income taxes (i) Income tax expenses 1) The amount of income tax for the years ended December 31, 2023 and 2022, was as follows: 2023 2022 Current tax expense Recognized during the period $ 3,457,832 Undistributed earnings additional tax Tax credit of investment Deferred tax expense Recognition and reversal of temporary differences Income tax expense 468,887 (507,301) 3,419,418 3,388,485 171,404 (728,549) 2,831,340 (659,671) $ 2,759,747 (648,737) 2,182,603 2) The amount of income tax recognized in other comprehensive income for the years ended December 31, 2023 and 2022, was as follows: Items that will not be reclassified subsequently to profit or loss: Remeasurement of the defined benefit obligation Unrealized gains (losses) on equity instruments at fair value through other comprehensive income Items that will be reclassified subsequently to profit or loss: Foreign currency translation differences of foreign operations Gains (losses) on hedging instrument $ $ $ $ 2023 2022 521 32,313 170,454 170,975 (81,430) (49,117) (2,168) 6,712 4,544 (2,464) (9,562) (12,026) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 63 3) The income tax expense that was reconciled between the actual income tax expense and profit before tax for the years ended December 31, 2023 and 2022, was as follows: Profit before tax Income tax calculated based on tax rate Estimated tax effect of tax exemption on investment income, net Realized investment loss Investment tax credit Changes in temporary differences Adjustment of estimated difference and others Undistributed earnings additional tax 2023 11,890,425 3,610,034 $ $ 2022 10,724,130 3,142,341 (153,740) (132,659) (507,301) (803,544) 278,070 468,887 (442,560) (98,000) (728,549) 503,909 (365,942) 171,404 Income tax expense $ 2,759,747 2,182,603 (ii) Deferred tax assets and liabilities Changes in the amount of deferred tax assets and liabilities for 2023 and 2022 were as follows: Allowance for obselescence loss and inventory valuation Defined benefit plans Foreign currency translation differences of foreign operations and others Total Unrealized exchange losses, net Refund liabilities $ 999,285 762,616 286,548 150,248 422,588 204,140 3,456 (27,633) 481,217 2,393,778 338,512 1,227,199 Deferred tax assets: Balance on January 1, 2023 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, - $ 1,761,901 - 436,796 - (521) 394,955 207,075 (4,544) (5,065) 815,185 3,615,912 2023 Balance on January 1, 2022 Recognized in profit or loss Recognized in other comprehensive income Acquisition of subsidiaries Balance on December 31, 2022 477,006 522,279 195,296 91,252 202,499 234,791 (3,140) 220,089 536,932 1,646,524 749,046 (81,434) - - $ 999,285 - - 286,548 - - (32,313) 4,802 422,588 204,140 12,026 13,693 (20,287) 18,495 481,217 2,393,778 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 64 Deferred tax liabilities: Balance on January 1, 2023 Recognized in profit or loss Recognized in other comprehensive income Balance on December 31, 2023 Balance on January 1, 2022 Recognized in profit or loss Recognized in other comprehensive income Acquisition of subsidiaries Balance on December 31, 2022 (iii)Unrecognized deferred tax assets Unrealized exchange gains, net Gain on valuation of financial assets and others Total $ $ $ (755,031) (486,802) - (492,311) (1,247,342) (80,726) (170,454) (567,528) (170,454) (1,241,833) (743,491) (1,985,324) (504,663) (250,368) (722,142) (1,226,805) 150,059 (100,309) - - 81,430 (1,658) 81,430 (1,658) $ (755,031) (492,311) (1,247,342) Deferred tax assets have not been recognized in respect of the following items: Tax effect of deductible temporary differences Tax effect of loss carryforward December 31, 2023 $ 1,605,419 $ 1,011,018 December 31, 2022 1,674,595 996,446 The Group assesses and considers that some of the income tax reduction items may be unrealized, hence they are not recognized as deferred tax assets. In addition, according to Income Tax Act, the loss carryforward are the losses incurred in past 10 years assessed by ROC tax authoritie which can be deducted from the net profit of current year before levied. The items are not recognized as deferred income tax assets due to the fact that the Group may not have sufficient taxable income in the future for the losses. As of December 31, 2023, the tax effects on loss carryforward that have not been used were as follows: Year of loss 2014 (Assessed) 2015 (Assessed) 2016 (Assessed) 2017 (Assessed) 2018 (Assessed) 2019 (Assessed) 2020 (Assessed) 2020 (Filed) 2021 (Filed/Assessed) 2021 (Filed) 2022 (Filed) 2022 (Filed) 2023 (Estimated) 2023 (Estimated) Total Expiry year 2024 2025 2026 2027 2028 2029 2030 2025 2031 2026 2032 2027 2033 2028 $ $ Deductible amount 24,986 420,310 1,373,877 918,086 554,750 349,024 130,501 20,484 51,571 126,335 317,761 277,800 384,855 8,327 4,958,667 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 65 (iv) Unrecognized deferred tax assets and liabilities related to investments in subsidiaries The temporary differences associated with investment in subsidiaries were not recognized as deferred income tax assets and liabilities as the Company has the ability to control the reversal of these temporary differences which are not expected to reverse in the foreseeable future. As of December 31, 2023 and 2022, the aggregate deductible temporary differences relating to investments in subsidiaries not recognized as deferred tax assets amounted to $3,070,351 and $2,618,241, respectively. As of December 31, 2023 and 2022, the aggregate taxable temporary differences relating to investments in subsidiaries not recognized as deferred tax liabilities amounted to $71,287,552 and $68,023,499, respectively. (v) Examination and approval The Company’s tax returns for the year through 2020 were assessed by the tax authorities. The income tax returns through 2021 and the liquidation period of Acbel Telecom have been examined by the tax authorities. The ROC tax authorities have assessed the income tax return of Shennona TW, Gempal, Hong Jinn, and Hippo Screen through 2022, of UCGI, Arcadyan, HengHao, Palcom, Panpal, Hong Ji, Unicore, Raycore, Ripal, CBN, Zhi-Bao, TTI, Mactech, Aco Healthcare, Starmems, GLB, Poindus Systems and Poindus Investment through 2021, of Rayonnant Technology through 2020. (vi) Global minimum top-up tax Some countries that the Group operates in have enacted new legislation to implement the global minimum top-up tax. However, the newly enacted tax legislation has not yet been effective, the Group is closely monitoring developments related to the implementation of the international tax reforms introducing a global minimum top-up tax in the countries which it operates in. As of December 31, 2023, the application of this new tax law was assessed to have no material impact on the Group. The Group recognizes the supplemental tax as current income tax when it is actually incurred, and the Group applies the temporary mandatory relief from deferred tax related to the supplemental tax; please refer to Note (4). (t) Capital and other equities (i) Ordinary shares As of December 31, 2023 and 2022, the Company’ s authorized common stock consisting of 6,000,000 thousand shares with a par value of 10 New Taiwan dollar per share amounted to 60,000,000 of which 4,407,147 thousand shares were issued. All issued shares were paid up upon issuance. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 66 (ii) Capital surplus The balances of capital surplus were as follows: Additional paid-in capital Treasury share transactions December 31, 2023 December 31, 2022 $ 1,018,088 1,898,477 2,781,989 2,721,968 Difference between consideration and carrying amount arising from acquisition or disposal of subsidiaries Recognition of changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted 36,766 158,285 36,766 156,072 for using equity method 275,787 265,297 $ 4,270,915 5,078,580 In accordance with the ROC Company Act, realized capital reserves can only be used to increase the common stock or distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10% of the actual share capital amount. The Company’s Board of Directors meeting respectively held on March 15, 2023 and March 15, 2022, approved to distribute the cash of $881,429 and $1,762,859 (representing 0.2 and 0.4 New Taiwan Dollars per share), by using capital surplus. The Company’ s Board of Directors meeting held on February 29, 2024, approved to distribute the cash of $881,429 (representing 0.2 New Taiwan Dollars per share), by using the additional paid-in capital. The related information can be accessed through the Market Observation Post System website. (iii) Retained earnings If there is any profit after closing of books in a given year, the Company shall first defray tax due, cover accumulated losses and set aside ten percent of it as legal reserve and then set aside or reverse a special reserve in accordance with laws and regulations. The balance of earnings available for distribution is composed of the remainder of the said profit and the unappropriated retained earnings of previous years. The Board of Directors may set aside a certain amount to cope with the business operation conditions, and shall prepare the proposal for distribution of the balance amount thereof after a resolution has been adopted and then allocated by the Board of Directors. The Company authorizes the Board of Directors to distribute all or part of the dividends and bonuses, capital surplus or legal reserve in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the General shareholders’ meeting. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 67 The lifecycle of the industry of the Company is in the growing stage. To consider the need of the Company for the future capital, capital budget, long-term financial planning, domestic and foreign competition, the need of shareholders for cash flow and other factors, if there is any profit after close of books, the dividend and bonus to be distributed to shareholders shall not be less than thirty percent of profit after tax for such year and the cash dividend allocated by the Company each year shall not be lower than ten percent of the total dividend (including cash and share dividend) for such year. According to the law, when there is a deduction from stockholders’ equity (excluding treasury stock and unearned employee benefit) during the year, an amount equal to the deduction item is set aside as a special reserve before the earnings are appropriated. A special reserve is made available for earning distribution only after the deduction of the related shareholders’ equity has been reversed. 1) Legal reverse When a company incurs no loss, it may, in pursuant to a resolution to be adopted by the shareholders’ meeting as required, distribute its legal reserve by issuing new shares and distributing stock dividends or distributing cash to shareholders. Only the portion of the legal reserve which exceeds 25% of the paid-in capital may be distributed. 2) Special reverse During earnings distribution, if the Company has already reclassified a portion of earnings to special reserve, it shall make supplemental allocation of special reserve for any difference between the amount of the current-period total net reduction of other shareholders’ equity and the amount it has already allocated. An equivalent amount of special reserve shall be allocated from the after-tax net profit in the period, plus items other than after-tax net profit in the period, that are included in the undistributed current- period earnings and the undistributed prior-period earnings. A portion of undistributed prior-period earnings shall be reclassified to special earnings reserve to account for cumulative changes to the net reduction of other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. 3) Earnings distribution Distribution for the earnings of 2022 and 2021 were approved in the meeting of the Board of Directors held on March 15, 2023 and March 15, 2022, respectively. The relevant information was as follows: 2022 2021 Amount per share Total amount Amount per share Total amount Cash dividends distributed to common shareholders $ 1.0 4,407,147 1.6 7,051,435 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 68 Distribution for the earnings of 2023 was approved in the meeting of the Board of Directors held on February 29, 2024. The relevant information was as follows: 2023 Amount per share Total amount Cash dividends distributed to common shareholders from the unappropriated earnings $ 1.0 4,407,147 (iv) Treasury stock The subsidiaries of the Company did not sell the ordinary shares of the Company in the years ended December 31, 2023 and 2022. As of December 31, 2023, Panpal and Gempal, subsidiaries of the Company, held 50,017 thousand shares of ordinary shares of the Company, recorded as the Company’s treasury stock, with a book value of 17.6 New Taiwan dollars per share. The total cost was $881,247. The fair value of the ordinary shares of the Company was 39.85 and 23.05 New Taiwan dollars per share as of December 31, 2023 and 2022, respectively. Pursuant to the Securities and Exchange Act, the number of treasury shares purchased cannot exceed 10% of the number of shares issued. The total purchase cost cannot exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus. The shares purchased for the purpose of transferring to employees shall be transferred within three years from the date of share repurchase. Those not transferred within the said limit shall be deemed as not issued by the Company and it should be cancelled. Furthermore, treasury stock cannot be pledged for debts, and treasury stock does not carry any shareholder rights until it is transferred. (v) Other equity interests (net-of-taxes) Exchange differences on transaction of foreign operation financial statements Unrealized gain (loss) from financial assets at fair value through other comprehensive income $ $ $ $ (1,469,711) (376,004) 202,049 (103,664) (1,747,330) (8,744,705) 7,183,714 9,700 81,580 (1,469,711) (461,103) 1,352,493 354,102 117,980 1,363,472 537,830 (590,539) (420,019) 11,625 (461,103) Balance on January 1, 2023 The Company Subsidiaries Associates Balance on December 31, 2023 Balance on January 1, 2022 The Company Subsidiaries Associates Balance on December 31, 2022 Others Total - - - - (12,290) 8,854 (3,436) 125 (12,415) (12,290) (1,943,104) 976,489 565,005 14,316 (387,294) (8,206,750) 6,593,175 (422,734) 93,205 (1,943,104) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 69 (u) Share-based payment (i) Arcadyan – restricted shares At the meeting held on June 21, 2018, the Arcadyan’ s Board of Directors decided to issue 4,500 thousand shares of restricted shares to Arcadyan full-time employees who meet certain requirements. The restricted shares have been registered, with and approved by, the Securities and Futures Bureau of FSC. The Board of Directors decided to issue all the restricted shares on November 6, 2018, which is also the effective date of the share issuance. 3,500 thousand shares of the aforementioned restricted shares are issued without consideration. 30%, 30% and 40% of the 3,500 thousand restricted shares are vested when the employees continue to provide service for at least 2 years, 3 years and 4 years, respectively, from the registration and the effective date, and at the same time, meet the performance requirement. In addition, when earnings per share in two consecutive and complete fiscal years from the registration and effective date are no less than NT$4, and at the same time, the employees with the restricted shares meet the performance requirement, the other 1,000 thousand shares of the restricted shares are vested 100% at the date the shareholders approved the financial statements for the second fiscal year. If the earnings per share in two consecutive and complete fiscal years from the registration and effective date are between NT$3 to NT$4, and at the same time, the employees with the restricted shares meet the performance requirement, the restricted shares are vested 75% at the date the shareholders approved the financial statements for the second fiscal year. If the earnings per share in two consecutive and complete fiscal years from the registration and effective date are less than NT$3, the employees with restricted shares, whether or not they meet the performance requirement, no restricted shares are vested at the date the shareholders approved the financial statements for the second fiscal year. The earnings per share mentioned above are calculated based on the profit approved by the shareholders and the weighted average number of ordinary shares outstanding at the date of the restricted shares have been approved by the authority. After the issuance, the restricted shares are kept by a trust, which is appointed by Arcadyan, before they are vested. These restricted shares shall not be sold, transferred, pledged, gifted, disposed by any other means, to third parties during the custody period. The voting rights of these shares are executed by the custodian, and the custodian shall act based on the law and regulations. If the shares remain unvested after the vesting period, Arcadyan will redeem all the unvested shares without consideration and cancel the shares thereafter. Restricted shares could be received in cash and stock dividends, or could be used to participate in cash injection. The aforementioned new shares are not considered as restricted shares. The information of Arcadyan’s restricted shares is as follows: Outstanding shares on January 1 Canceled during the period The number vested in this period Outstanding shares on December 31 Unit: in thousands of shares 2022 1,283 (30) (1,253) - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 70 The compensation cost related to the restricted shares amounted to $2,396 for the year ended December 31, 2022. (ii) CBN – restricted shares On June 24, 2020, CBN issued 1,500 thousand new restricted shares through shareholders’ meeting. This is a gratuitous issuance, and the recipients are full-time employees of CBN who have been employed on grant day and meet specific terms. It have been approved by the Financial Supervisory Commission. In addition, the base date for capital increase has been decided by the chairman of the board of directors to be December 20, 2021, and the change registration will be completed on January 7, 2022. If the employees who have been on the job for one year, two years and three years, since the new restricted shares have been given, achieved the performance required by CBN, the proportion of shares with acquired conditions can be 40%, 30% and 30%, respectively. After the issuance of new shares, employees must hand over all of them to the trust agency designated by the company for safekeeping before they meet the terms. Except for inheritance, they shall not be sold, mortgaged, transferred, gifted, pledged or disposed of in other ways. Before the employees meet the terms, all matters concerning shareholders’ rights and interests are entrusted to the trust agency designated by CBN to exercise on their behalf. If any of the assigned employees does not meet the acquired terms, CBN will take back their shares from the employees for free and cancel them. The information of CBN’s restricted shares is as follows: Outstanding shares on January 1 Share vested in this period Shares canceled in this period Outstanding shares on December 31 Unit: in thousands of shares 2023 2022 - 666 (364) 302 1,500 (365) (469) 666 The above-mentioned new restricted shares of CBN takes the closing price of $30.70 on the grant day, December 20, 2021, as the fair value, that generated capital surplus – restricted shares $31,050. Until December 31, 2023 and 2022, the balance of unearned remuneration for employees was $3,010 and $11,213, respectively. The compensation cost related to the restricted shares amounted to $(2,972) and $19,629 for the year ended December 31, 2023 and 2022, respectively. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 71 (v) Earnings per share The Group’s basic and diluted earnings per share are calculated as follows: 2023 2022 Basic earnings per share: Profit attributable to ordinary shareholders of the Company $ 7,667,627 7,288,292 Weighted-average number of outstanding ordinary shares (in thousands) Diluted earnings per share: 4,357,130 4,357,130 Profit attributable to ordinary shareholders of the Company (after adjustment of potential diluted ordinary shares) $ 7,667,627 7,288,292 Weighted-average number of outstanding ordinary shares of potential diluted ordinary shares Weighted-average number of outstanding ordinary shares (in thousands) Effect of potential diluted common stock Employee compensation (in thousands) 4,357,130 4,357,130 26,813 43,369 Weighted-average number of ordinary shares (after adjustment of potential diluted ordinary shares) (in thousands) 4,383,943 4,400,499 (w) Revenue from contracts with customers (i) Disaggregation of revenue Primary geographical markets: United States China Netherlands Others Major products: 5C related electronics products Others 2023 Strategically Integrated Product Segment IT Product Segment Total $ 353,353,336 20,843,279 374,196,615 137,476,920 59,882,231 344,844,191 895,556,678 183,945 648,542 137,660,865 60,530,773 29,482,356 374,326,547 51,158,122 946,714,800 892,818,068 49,702,649 942,520,717 2,738,610 1,455,473 4,194,083 895,556,678 51,158,122 946,714,800 $ $ $ (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 72 2022 Strategically Integrated Product Segment IT Product Segment Total $ 427,079,787 17,611,390 444,691,177 133,117,810 67,705,775 334,869 133,452,679 1,003,330 68,709,105 398,174,794 28,218,160 426,392,954 $ 1,026,078,166 47,167,749 1,073,245,915 Primary geographical markets: United States China Netherlands Others Major products: 5C related electronics products $ 1,021,266,892 45,809,328 1,067,076,220 Others (ii) Contract balances 4,811,274 1,358,421 6,169,695 $ 1,026,078,166 47,167,749 1,073,245,915 Notes and accounts receivable (including related parties) December 31, 2023 $ 197,692,424 December 31, 2022 195,145,265 January 1, 2022 294,057,802 Less: allowance for impairment (3,977,808) (3,924,544) (3,891,948) Total Contract liabilities $ 193,714,616 191,220,721 290,165,854 $ 767,327 784,238 1,065,954 For the details on accounts receivable and allowance for impairment, please refer to note (6)(e). The amount of revenue recognized for the years ended December 31, 2023 and 2022 that were included in the balance of contract liability at the beginning of the period was $784,238 and $1,065,954, respectively. The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 73 (x) Employees’ and directors’ compensations Based on the Company’ s articles of incorporation, if there is any profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees and directors, shall be distributed to employees as compensations in an amount of not less than two percent thereof and to directors as compensations in an amount of not more than two percent of such profits. In the event that the Company has accumulated losses, the Company shall reserve an amount to offset accumulated losses. The compensations to employees as mentioned above may be distributed in the form of stock or cash. Employees entitled to receive the said stock or cash may include the employees of the Company’s subordinate companies pursuant to the Company Act. The Company accrued and recognized its employee compensation of $814,143 and $750,945, and directors’ compensation of $43,051 and $39,790 for the years ended December 31, 2023 and 2022, respectively. The estimated amounts mentioned above are based on the net profit before tax without the compensations to employees and directors of each respective ending period, multiplied by the percentage of the compensation to employees and directors, which was approved by the management. The estimations are recorded under operating expenses and cost. The differences between the amounts estimated and recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the distribution year. If the Board of Directors approve to distribute employee compensation in the form of stock, the number of the shares of the employee compensation is based on the closing price of the day before the Board of Directors’ meeting, the related information can be accessed through the Market Observation Post System website. There is no differences between the amount approved in the Board of Directors’ meeting and those recognized in the financial statements in 2023 and 2022. There is no differences between the amount estimated and recognized in the financial statements in 2022. The related information can be accessed through the Market observation Post System website. (y) Non-operating income and expenses (i) Interest income The details of interest income for the years ended December 31, 2023 and 2022, were as follows: Interest income from bank deposits Other interest income (ii) Other income 2023 4,668,156 38,771 2022 3,077,815 12,111 4,706,927 3,089,926 $ $ The other incomes for the years ended December 31, 2023 and 2022, were as follows: Dividend revenue Other revenue 2023 2022 $ $ 148,092 308,769 456,861 128,597 523,829 652,426 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 74 (iii) Other gains and losses The other gains and losses for the years ended December 31, 2023 and 2022, were as follows: Losses on financial assets and liabilities at fair value through $ profit or loss, net Foreign currency exchange gains, net Gains on disposal of property, plant, and equipment, and 2023 (477,703) 2022 (765,115) 693,870 43,977 2,121,647 7,086 intangible assets Gains on disposal of investments, net Others - 790 2,568 (2,345) $ 260,934 1,363,841 (z) Reclassification of the components of other comprehensive income The details of reclassification of the components of other comprehensive income for the years ended December 31, 2023 and 2022, were as follows: Cash flow hedge: (Losses) gains from current period Less: reclassification of (losses) gains included in profit or loss Profit (loss) recognized in other comprehensive income $ $ (8,754) (42,317) 33,563 82,853 130,662 (47,809) 2023 2022 (aa) Financial instruments (i) Credit risk 1) The carrying amount of financial assets represents the maximum amount exposed to credit risk. The Group’ s customers are mainly from the high-tech industry. The Group does not concentrate on a specific customer and the sales regions are widely spread, thus there should be no concern on the significant concentrations of accounts receivable credit risk. And in order to mitigate accounts receivable credit risk, the Group constantly assesses the financial status of the customers. 2) Receivables and debt securities Information of exposure to credit risk of notes and accounts receivable please refer to note (6)(e). (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 75 Other financial assets at amortized cost include other receivables and time deposits. These financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses. (Regarding how the financial instruments are considered to have low credit risk, please refer to note (4)(g) of the consolidated financial statements for the year ended December 31, 2023.) Due to the counter parties and the performing parties of the Group’ s time deposits are financial institutions with investment grade and above, these time deposits are considered to have low credit risk. The movements in the allowance for the years ended December 31, 2023 and 2022 were as follows: Balance on January 1, 2023 Impairment losses recognized (reversed) Balance on December 31, 2023 Balance on January 1, 2022 Impairment losses recognized (reversed) Balance on December 31, 2022 (ii) Liquidity risk Other receivables 2,756 11,792 14,548 2,973 (217) 2,756 $ $ $ $ The following are the contractual maturities of financial liabilities. Except for lease liabilities, the amounts exclude estimated interest payments. Carrying Amount Contractual cash flows Within 1 year 1 ~ 2 years Over 2 years December 31, 2023 Non-derivative financial liabilities Secured borrowings Unsecured borrowings Lease liabilities－current and non-current Notes and accounts payable Other payables Derivative financial liabilities $ 456,933 83,345,655 (456,933) (85,187,955) (175,584) (70,183,714) (207,616) (3,500,000) (73,733) (11,504,241) 10,331,217 158,995,984 30,464,866 11,643,155 (158,995,984) (30,464,866) 2,092,118 (158,995,984) (30,464,866) Forward exchange contracts: 164,535 Outflow Inflow Forward exchange contracts used (4,660,904) 4,497,428 (4,660,904) 4,497,428 for hedging: Outflow Inflow 14,246 (1,087,360) 1,076,861 (263,636,558) (1,087,360) 1,076,861 (257,902,005) $ 283,773,436 5,657,702 3,893,335 - - - - - - - - - - - - 1,950,086 (7,684,639) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 76 December 31, 2022 Non-derivative financial liabilities Secured borrowings Unsecured borrowings Lease liabilities－current and non-current Notes and accounts payable Other payables Derivative financial liabilities Outflow Inflow Forward exchange contracts for hedging: Outflow Inflow Carrying Amount Contractual cash flows Within 1 year 1 ~ 2 years Over 2 years $ 621,122 105,348,426 (621,122) (105,348,426) (171,800) (94,123,426) (207,617) (5,400,000) (241,705) (5,825,000) 11,346,764 161,838,098 29,622,760 (12,637,278) (161,838,098) (29,622,760) (1,888,347) (161,838,098) (29,622,760) (6,386,190) 6,176,658 (6,386,190) 6,176,658 (6,783,542) (3,965,389) - - - - - - - - 47,809 (2,126,800) 2,090,285 (310,313,731) (2,126,800) 2,090,285 (287,890,478) - - (12,391,159) - - (10,032,094) $ 308,887,506 Forward exchange contracts: 62,527 The Group is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. (iii) Currency risk 1) Exposure to foreign currency risk The Group’s significant exposure to foreign currency risk was as follows: Unit: thousands of foreign currency / thousands of New Taiwan Dollars Foreign currency December 31, 2023 Exchange rate TWD Foreign currency December 31, 2022 Exchange rate TWD Financial assets Monetary items USD to TWD USD to CNY EUR to TWD CNY to USD Non-monetary items THB to TWD Financial liabilities Monetary items USD to TWD USD to CNY USD to BRL EUR to TWD CNY to USD $ 7,686,610 9,030 26,099 3,283,442 30.705 7.0953 33.98 0.1409 236,017,360 11,446,943 277,266 886,844 12,508 65,974 14,205,268 3,598,880 30.71 6.9571 32.72 0.1437 351,535,620 384,121 2,158,669 15,881,955 3,237,791 0.8976 2,906,241 652,264 0.8882 579,341 7,606,810 1,719 177,908 2,953 3,763,607 30.705 7.0953 4.8413 33.98 0.1409 233,567,101 10,358,052 52,782 5,462,665 100,343 1,087 194,543 21,492 16,282,623 3,522,857 30.71 6.9571 5.2177 32.72 0.1437 318,095,777 33,382 5,974,416 703,218 15,546,463 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 77 2) Sensitivity analysis The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable, and other payables that are denominated in foreign currency. Assuming all other variable factors remain constant, a strengthening (weakening) 5% of appreciation (depreciation) of the each major foreign currency against Group entities’ functional currency as of December 31, 2023 and 2022, would have increased (decreased) the net profit before tax as follows. The analysis is performed on the same basis for both periods. USD (against the TWD) Strengthening 5% Weakening 5% USD (against the CNY) Strengthening 5% Weakening 5% USD (against the BRL) Strengthening 5% Weakening 5% EUR (against the TWD) Strengthening 5% Weakening 5% CNY (against the USD) Strengthening 5% Weakening 5% December 31, 2023 December 31, 2022 $ 122,513 (122,513) 1,671,992 (1,671,992) 11,224 (11,224) (273,133) 273,133 39,325 (39,325) (103,868) 103,868 17,537 (17,537) (298,721) 298,721 72,773 (72,773) 16,775 (16,775) 3) Exchange gains and losses of monetary items As the Group deals with diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2023 and 2022, the foreign exchange gains, including both realized and unrealized, amounted to $693,870 and $2,121,647, respectively. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 78 (iv) Interest rate analysis The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management. The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the assets and liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of assets and liabilities outstanding at the reporting date were outstanding throughout the year. The rate of change is expressed as the interest rate increase or decrease by 0.25%, when reporting to management internally, which also represents the assessment of the Group’s management for the reasonably possible interval of interest rate change. Assuming all other variable factors remaining constant, if the interest rate had increased or decreased by 0.25%, the impact to the net profit before tax would be as follows for the years ended December 31, 2023 and 2022, which would be mainly resulted from the bank savings and borrowings with variable interest rates. Interest increased by 0.25% Interest decreased by 0.25% (v) Fair value information 2023 $ 52,030 2022 58,941 (52,030) (58,941) 1) The categories and fair value of financial instruments The Group’ s financial assets at fair value through profit or loss, financial instruments used for hedging and financial assets at fair value through other comprehensive income were measured at fair value on a recurring basis. The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It shall not include fair value information of the financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value and investments in equity instruments which do not have any quoted price in an active market in which the fair value cannot be reasonably measured. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 79 December 31, 2023 Fair Value Book value Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss–current and non-current Derivative financial assets for non-hedging $ Non-derivative financial assets mandatorily measured at fair value through profit or loss Subtotal Financial assets at fair value through other comprehensive income Stocks listed in domestic markets Stocks listed in foreign markets Stocks unlisted in domestic markets Stocks unlisted in foreign markets Accounts receivable Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable due from related parties, net Other receivables Other current assets (restricted assets) Refundable deposits Other non-current assets (restricted assets) Subtotal Total Financial liabilities at fair value through profit or loss Derivative financial liabilities for non- hedging Financial liabilities used for hedging Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Notes and accounts payable to related parties Other payables and dividends payable Lease liabilities－current and non-current Long-term borrowings current portion Long-term borrowings Deposits received Subtotal Total 52,062 1,217,512 1,269,574 4,349,429 2,906,241 1,454,947 405,391 30,358,572 39,474,580 72,479,480 156,921,748 6,434,296 2,372,980 717,036 636,632 359,031 239,921,203 $ 280,665,357 $ 164,535 14,246 58,974,271 148,398,334 10,597,650 30,464,866 10,331,217 11,385,027 15,285,590 482,708 285,919,663 $ 286,098,444 - - 4,349,429 2,906,241 - - - - - - - - - - - - - - - - - - - - 52,062 - 52,062 - 1,217,512 1,217,512 - - - - 30,358,572 - - - - - - - 164,535 14,246 - - - - - - - - - - 1,454,947 405,391 - - - - - - - - - - - - - - - - - - 4,349,429 2,906,241 1,454,947 405,391 30,358,572 - - - - - - - 164,535 14,246 - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 80 December 31, 2022 Fair Value Book value Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss–current and non-current Derivative financial assets for non-hedging $ Non-derivative financial assets mandatorily measured at fair value through profit or loss Subtotal Financial assets at fair value through other comprehensive income Stocks listed in domestic markets Stocks listed in foreign markets Stocks unlisted in domestic markets Stocks unlisted in foreign markets Accounts receivable Subtotal Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable due from related parties, net Other receivables Other current assets (restricted assets) Refundable deposits Other non-current assets (restricted assets) Subtotal Total Financial liabilities at fair value through profit or loss Derivative financial liabilities for non- hedging Derivative financial liabilities for hedging Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Notes and accounts payable to related parties Other payables and dividends payable Lease liabilities－current and non-current Long-term borrowings current portion Long-term borrowings Deposits received Subtotal Total 187 558,909 559,096 2,797,667 579,341 1,822,164 226,736 16,091,084 21,516,992 79,665,302 170,713,564 4,416,073 2,369,411 803,156 828,367 969,960 259,765,833 $ 281,841,921 $ 62,527 47,809 74,832,426 152,137,066 9,701,032 29,622,760 11,346,764 19,462,800 11,674,322 519,308 309,296,478 $ 309,406,814 - - 2,797,667 579,341 - - - - - - - - - - - - - - - - - - - - 187 - 187 - 558,909 558,909 - - - - 16,091,084 - - - - - - - 62,527 47,809 - - - - - - - - - - 1,822,164 226,736 - - - - - - - - - - - - - - - - - - 2,797,667 579,341 1,822,164 226,736 16,091,084 - - - - - - - 62,527 47,809 - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 81 2) Fair value valuation technique of financial instruments not measured at fair value The Group estimates financial instruments that not measured at fair value by methods and assumption as follows: a) Financial assets and liabilities measured at amortized cost If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values. 3) Fair value valuation technique of financial instruments measured at fair value a) Non-derivative financial instruments Financial instruments trade in active markets is based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-the- run bonds from Taipei Exchange can be used as a base to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market. If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active market. The fair value of the listed company is determined by reference to the market quotation. The measurements on fair value of the financial instruments without an active market are determined using the valuation technique or the quoted market price of its competitors. Fair value measured using the valuation technique can be extrapolated from similar financial instruments, discounted cash flow method, or other valuation techniques which include the model used in calculating the observable market data at the consolidated balance sheet date. The measurement of fair value of a non-active market financial instruments held by the Group which do not have quoted market prices are based on the comparable market approach, with the use of key assumptions of price-book ratio multiple or earnings multiple of comparable listed companies as its basic measurement. These assumptions have been adjusted for the effect of discount without the marketability of the equity securities. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 82 b) Derivative financial instruments Measurement of the fair value of derivative instruments is based on the valuation techniques that are generally accepted by the market participants. For instance, discount method or option pricing models. Fair value of forward currency exchange is usually determined by using the forward currency rate. 4) Transfer from one level to another There was no transfer from one level to another in the year ended December 31, 2022. The Group held an investment in equity of Airoha Technology Corp., which was classified as fair value through other comprehensive income, with a fair value of $124,054 and $114,137, as of December 31, 2023 and 2022, respectively. The fair value of the investment was previously categorized as Level 3 at December 31, 2022. This was because the shares were not listed on the exchange market and was measured by significant unobservable inputs. In October 2023, Airoha Technology Corp. listed its equity shares on an exchange and they are currently actively traded in the market. Because the equity shares now have a published price quotation in an active market, the fair value measurement was transferred from Level 3 to Level 1 as of December 31, 2023. The Group held an investment in equity of Taiwan Star with a fair value of $420,847, which was classified as a financial asset at fair value through other comprehensive income as of December 31, 2022. The investment was categorized as level 3 as of December 31, 2022, because the shares were not listed on the exchange market and were measured by significant unobservable inputs. On December 1, 2023, Taiwan Star was absorbed and merged by Taiwan Mobile, and Taiwan Star’s shares were exchanged for Taiwan Mobile’ s shares, wherein they were actively traded, thus their fair value measurement was transferred from Level 3 to Level 1 as of December 31, 2023. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 83 5) Changes in Level 3 The change in Level 3 at fair value in the years ended December 31, 2023 and 2022, were as follows: Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Total Balance on January 1, 2023 $ 558,909 2,048,900 2,607,809 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Disposal Proceeds from capital reduction of investments Transferred out from Level 3 Effect of changes in exchange rates Balance on December 31, 2023 Balance on January 1, 2022 $ $ Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Disposal Proceeds from liquidation of investments 44,367 - 628,018 - - - - (13,782) 1,217,512 259,778 (17,543) 323,888 (47,921) (3,992) (442,884) (110) 1,860,338 2,189,125 (23,672) - 323,183 - - - (405,953) 264,057 (10,028) (2,010) 13,709 44,367 (17,543) 951,906 (47,921) (3,992) (442,884) (13,892) 3,077,850 2,448,903 (23,672) (405,953) 587,240 (10,028) (2,010) 13,329 Effect of changes in exchange rates Balance on December 31, 2022 $ (380) 558,909 2,048,900 2,607,809 For the years ended December 31, 2023 and 2022, total gains and losses that were included in “ other gains and losses, net” and “unrealized gains and losses from equity instruments at fair value through other comprehensive income” were as follows: Total gains and losses recognized: In profit or loss before tax (as “other gains and losses”) In other comprehensive income (as “unrealized gains and losses from equity instruments at fair value through other comprehensive income”) $ $ 2023 2022 44,367 (23,672) 35,635 (409,229) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 84 6) The quantified information for significant unobservable inputs (Level 3) used in fair value measurement The Group’s financial instruments that use Level 3 input to measure fair values include financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss, financial assets at fair value through profit or loss. Most of fair value measurements of the Group which are categorized as equity investment into Level 3 have several significant unobservable inputs. Significant unobservable inputs of equity investments without quoted price are independent of each other. The quantified information for significant unobservable inputs was as follows: Item Financial assets at fair value through other comprehensive income－equity investment without an active market Valuation technique Comparable market approach (Price-Book ratio method and Earnings multiplier method) Significant unobservable inputs Price-Book ratio multiples (0.75~2.09 and 1.54~2.89, respectively, on December 31, 2023 and 2022) Multiples of earnings (14.33 and 14.33~17.25, respectively, on December 31, 2023 and 2022) Lack-of-Marketability discount rate (Both are 40%~65% on December 31, 2023 and 2022) Net asset value method Net asset value Inter-relationships between significant unobservable inputs and fair value The higher the multiple is, the higher the fair value will be. The higher the multiple is, the higher the fair value will be. The higher the Lack- of-Marketability discount rate is, the lower the fair value will be. Inapplicable Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Net asset value method Net asset value Inapplicable (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 85 7) Sensitivity analysis for fair value of financial instruments using Level 3 inputs The Group’ s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using Level 3 inputs, if the valuation parameters changed, the impacts on other comprehensive income or loss are as follows: Input Price-Book ratio multiples December 31, 2023 Financial assets at fair value through other comprehensive income Move up or down Other comprehensive income Unfavorable change Favorable change 5% $ 14,588 15,144 December 31, 2022 Financial assets at fair value through other comprehensive income Multiples of earnings Lack-of-Marketability discount rate Price-Book ratio multiples Multiples of earnings Lack-of-Marketability discount rate 5% 5% 5% 5% 5% $ $ $ $ $ 1,486 8,633 1,500 8,063 8,394 11,549 5,808 9,432 5,820 6,266 The favorable and unfavorable changes reflect the movement of the fair value, in which the fair value is calculated by using the different unobservable inputs in the valuation technique. The table above shows the effects of one unobservable input, without considering the inter-relationships with another unobservable input for financial instrument if there are one or more unobservable inputs. 8) Offsetting financial assets and financial liabilities The Group has financial instruments transactions applicable to the International Financial Reporting Standards NO. 32 Sections 42 endorsed by the FSC which requested for offsetting. Financial assets and liabilities relating to those transactions are recognized in the net amount of the balance sheets. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 86 The following tables present the aforesaid offsetting financial assets and financial liabilities. Unit: thousands of New Taiwan Dollars / thousands of US Dollars December 31, 2023 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized financial assets (a) Gross amounts of financial liabilities offset in the balance sheet (b) Cash/ Short-term borrowings $ 378,545,272 378,545,272 (USD 12,328,457 ) (USD 12,328,457 ) Net amount of financial assets presented in the balance sheet (c)=(a)-(b) - December 31, 2022 Financial assets that are offset which have an exercisable master netting arrangement or similar agreement Gross amounts of recognized financial assets (a) Gross amounts of financial liabilities offset in the balance sheet (b) Cash/ Short-term borrowings $ 351,096,620 351,096,620 (USD 11,432,648 ) (USD 11,432,648 ) Net amount of financial assets presented in the balance sheet (c)=(a)-(b) - (ab) Financial risk management (i) Overview The Group is exposed to the following risks arising from financial instruments: 1) Credit risk 2) Liquidity risk 3) Market risk In this note expressed the information on risk exposure and objectives, policies and procedures of risk measurement and management of the Group. For detailed information, please refer to the related notes of each risk. (ii) Structure of risk management The Group’ s finance management department provides business services for the overall internal department. It sets the objectives, policies and processes for managing the risk and the methods used to measure the risk arising from both the domestic and international financial market operations. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 87 The Group minimizes the risk exposure through derivative financial instruments. The Board of Directors regulated the use of derivative financial instruments in accordance with the Group’s policy about risks arising from financial instruments such as currency risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investments of excess liquidity. The internal auditors of the Group continue with the review of the amount of the risk exposure in accordance with the Group’s policies and the risk management policies and procedures. The Group has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation. (iii) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group’ s receivables from customers and investment securities. 1) Accounts receivable and other receivables The Group has established a credit policy under which each new customer is analysed individually for creditworthiness before the Group’ s standard payment and delivery terms and conditions are offered. The Group’ s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, and these limits are reviewed periodically. 2) Investments The credit risks exposure in the bank deposits, investments with fixed income and other financial instruments are measured and monitored by the Group’ s finance department. Since the contractually obligated counterparties are banks, financial institutes and corporate organizations with good credits, there are no compliance issues, and therefore, no significant credit risk. transaction counterparties and the Group’ s 3) Guarantees Pursuant to the Group’s policies, it is only permissible to provide financial guarantees to subsidiaries and companies that the Group has business with. As of December 31, 2023 and 2022, the Group did not provide any guarantees to other companies besides its subsidiaries. (iv) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities which be settled by delivering cash or another financial asset. The Group manages and maintains sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Group’ s management supervises the banking facilities and ensures in compliance with the terms of the loan agreements. Please refer to notes (6)(m) and (6)(n) for unused credit lines of short-term and long-term borrowings as of December 31, 2023 and 2022. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 88 (v) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices which will affect the Group’ s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. 1) Currency risk The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currencies of the Group. The currencies used in these transactions are primarily denominated in TWD, USD, EUR and CNY. As for other monetary assets and liabilities denominated in other foreign currencies, when short-term imbalance takes place, the Group buys or sells foreign currencies at spot rate to ensure that the net exposure is kept on an acceptable level. 2) Interest rate risk The Group borrows funds on fixed and variable interest rates, which has a risk exposure to changes in fair value and cash flow. Therefore, the Group manages the interest rates risk by maintaining an adequate combination of fixed and variable interest rates. 3) Other price risk The Group is exposed to equity price risk arising from investments in listed equity securities. (ac) Capital management The policy of capital management made by the Board of Directors is to maintain a strong capital base so as to stabilize the confidence of the investors, creditors and the public market and to sustain future development of the business. Capital consists of ordinary shares, capital surplus, retained earnings and non-controlling interests. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. The Group monitors the capital structure by way of periodical review the debt ratio. As of December 31, 2023 and 2022, the debt ratio was as follows: Total liabilities Total assets Debt ratio December 31, 2023 $ 303,998,121 December 31, 2022 326,074,590 $ 436,770,974 453,484,433 70% 72% The Group could purchase its own shares in the public market in accordance with the corresponding rules and regulations. The timing of the purchases depends on market prices. As of December 31, 2023, there were no changes in the Group’s approach of capital management. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 89 (ad) Investing and financing activities not affecting current cash flow The Group’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2023 and 2022 were acquisition of right-of-use assets by leasing, please refer to note (6)(l). Reconciliation of liabilities arising from financing activities was as follows: Short-term borrowings Long-term borrowings Lease liabilities January 1, 2023 $ 74,832,426 Cash flow (15,858,155) Other non-cash changes - 31,137,122 (4,466,505) - December 31, 2023 58,974,271 26,670,617 11,346,764 (2,114,467) 1,098,920 10,331,217 Deposits received and others 574,787 (35,568) (44,797) 494,422 Total liabilities from financing activities $ 117,891,099 (22,474,695) 1,054,123 96,470,527 Short-term borrowings Bonds payable Long-term borrowings Lease liabilities January 1, 2022 $ 118,422,407 Cash flow (43,590,249) Other non-cash changes 268 December 31, 2022 74,832,426 326,571 (7,400) (319,171) - 24,960,513 6,176,609 - 31,137,122 2,304,796 (2,422,290) 11,464,258 11,346,764 Deposits received and others 366,068 207,983 736 574,787 Total liabilities from financing activities $ 146,380,355 (39,635,347) 11,146,091 117,891,099 (7) Related-party transactions: (a) Name and relationship with related parties The followings are the entities that have had transactions with the Group during the periods covered in the financial statement. Name of related party Relationship with the Group Compal Precision Module (Jiangsu) Co., Ltd. (“CPM”) An associate An associate Changbao Electronic Technology (Chongqing) Co., Ltd. (“Changbao”) Avalue Crownpo Technology Inc. (“Crownpo”) Allied Circuit LIZ Electronics (Kunshan) Co., Ltd. LIZ Electronics (Nantong) Co., Ltd. An associate An associate An associate An associate An associate (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 90 Name of related party Relationship with the Group Therapeutics Co., Ltd. (“ARCE”) Raypal Biomedical Co., Ltd. (“Raypal”) Hong Ya Technology Co., Ltd. (“Hong Ya”) Kinpo Group Management Service Company (“Kinpo An associate An associate An associate An associate Group Management Service”) Acbel Polytech Inc. and its subsidiaries (“Acbel”) The Chairman of the Board is the first degree of kinship of the Chairman of the Company Cal-Comp Electronics (Thailand) Public Company The same Chairman of the Board with the Limited and its subsidiaries (“Cal-Comp”) Company Kinpo The same Chairman of the Board with the Company (b) Transactions with key management personnel Key management personnel remunerations comprised: Short-term employee benefits Post-employment benefits Share-based payments 2023 800,053 2022 699,852 7,405 1,524 7,534 11,328 808,982 718,714 $ $ There are no termination benefits and other long-term benefits. Please refer to note (6)(u) for explanations related to share-based payments. (c) Significant related-party transactions (i) Sale of goods to related parties The amounts of significant sales transactions between the Group and related parties were as follows: Associates Other related parties 2023 2022 $ $ 113,147 15,124 128,271 208,846 9,744 218,590 Sales prices for related parties were similar to those of the third-party customers. The collection period was 60~120 days for related parties. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 91 (ii) Purchase of goods from related parties The amounts of significant purchase transactions between the Group and related parties were as follows: Associates Other related parties 2023 2,933,852 $ 2022 4,038,193 46,879,824 32,748,290 $ 49,813,676 36,786,483 Purchase prices and payment period from related parties were similar to those from third-party suppliers. The payment period was 60~165 days for related parties. (iii) Receivables due from relate parties The receivables arising from the transactions mentioned above and others on behalf of related parties were as follows: Account Notes and accounts receivable Notes and accounts receivable Other receivables Other receivables (iv) Payables to related parties Related party categories December 31, 2023 December 31, 2022 Associates Other related parties Associates Other related parties $ $ 26,613 6,407,683 1,514 64 6,435,874 44,795 4,371,278 1,321 - 4,417,394 The payables arising from the transactions mentioned above and other on behalf rendering of services of other related parties were as follows: Account Related party categories December 31, 2023 December 31, 2022 Notes and accounts payable Associates $ 609,875 774,001 Notes and accounts payable Other related parties 9,987,775 8,927,031 Other payables Other payables Associates Other related parties 137 21,788 96 20,327 $ 10,619,575 9,721,455 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 92 (v) Property transactions - Acquisitions of financial assets The acquisitions of financial assets from related parties are summarized as follows: Relationship Other related party– Acbel Other related party– Cal-Comp Item Acquisition of financial assets at fair value through other comprehensive income Acquisition of financial assets at fair value through other comprehensive income For the years ended December 31, 2023 Number of shares 12,340 thousand shares 1,249,470 thousand shares Object Common stocks of Acbel issued through cash capital increase Common stocks of Cal-Comp issued through cash capital increase Acquisition price 478,800 1,718,266 (8) Pledged assets: The carrying values of pledged assets were as follows: Pledged Assets Subject Inventories Other current assets Other current assets Bank loans Customs deposit Pledged deposit Property, plant, and equipment Bank loans Other non-current assets Customs deposit Other non-current assets Pledged deposit (9) Commitments and contingencies: The details of commitments and contingencies were as follows: December 31, 2023 $ 43,949 - 717,036 463,806 800 December 31, 2022 59,707 534,153 269,003 485,364 800 358,231 $ 1,583,822 969,160 2,318,187 (a) Huawei Technologies Co., Ltd. filed an infringement litigation against the Group on October 28, 2022. The Group will carefully evaluate the litigation, discuss with related client for the following strategies and actions, and engage professional attorneys, to protect the rights and reputation of the Company from any damage. (b) In August 2019, Inventec Corporation filed a lawsuit to the Taiwan Taipei District Prosecutor Office against the Group concerning its former employees who joined the Group. This is deemed as an act of violation according to the Trade Secret Law and Copyright Law. The Group engaged lawyers to defend its right on this matter. Currently, the case is still in progress in Taipei District Court; therefore, the Group cannot make any reasonable estimation regarding the possible impact on its business operation. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 93 (c) The Group entered into various patent license agreements with third parties, and was required to make royalty payments of a predetermined amount periodically. (d) As of December 31, 2023 and 2022, the Group’ s signed commitments to purchase property, plant and equipment amounted to $3,346,545 and $967,396, respectively. (10) Losses due to major disasters: None (11) Subsequent events: None (12) Other: (a) The employee benefits, depreciation and amortization expenses by categorized function are summarized as follows: By function By item Employee benefits Operating costs 2023 Operating expenses Total Operating costs Salary Labor and health insurance Pension Others Depreciation Amortization 12,195,343 954,729 843,056 3,090,596 6,206,119 51,379 16,227,473 1,157,263 680,573 768,330 1,068,150 547,878 28,422,816 2,111,992 1,523,629 3,858,926 7,274,269 599,257 16,187,550 1,162,379 1,173,680 3,359,696 5,794,829 71,405 2022 Operating expenses 15,215,703 1,022,635 644,736 718,760 1,187,517 490,657 Total 31,403,253 2,185,014 1,818,416 4,078,456 6,982,346 562,062 (13) Other disclosures: (a) Information on significant transactions The following were the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group for the year ended December 31, 2023: (i) Loans to other parties: Please refer to Table 1 (ii) Guarantees and endorsements for other parties: Please refer to Table 2 (iii) Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): Please refer to Table 3 (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: Please refer to Table 4 (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: Please refer to Table 5 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 94 (vi) Disposals of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 6 (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 7 (ix) Trading in derivative instruments: Please refer to notes (6)(b) and (6)(d) (x) Business relationships and significant intercompany transactions: Please refer to Table 8 (b) Information on investees: Please refer to Table 9 (c) Information on investment in mainland China: Please refer to Table 10 (d) Major shareholders: Shareholder’s Name Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF Shareholding Shares Percentage 297,470,000 %6.74 Note 1: The information on major shareholders, which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of total non-physical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered non-physical stocks may be different from the capital stocks disclosed in the financial statement due to different calculation basis. Note 2: If shares are entrusted, the above information regarding such shares will be revealed by each trustors of individual trust account. The shareholders holding more than 10% of the total shares of the company should declare insider’ s equity according to Securities and Exchange Act. The numbers of the shares declared by the insider include the shares of the trust assets which the insider has discretion over use. For details of the insider’ s equity announcement please refer to the TWSE website. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 95 (14) Segment information: (a) General information The Group’ s information technology product segment is primarily engaged in the development, manufacture and sale of information technology products and mobile communication products. The strategy integrate product segment is primarily engaged in the research, development, manufacture and sale of networking products. (b) Reportable segments and operating segment information Accounting policies for the operating segments correspond to those stated in note 4. The profit and loss of the operating segment of the Group is measured by earnings before taxes and as the basis for performance measurement. The amount of the Group's reportable segments consistent with the report that the operating decision maker uesd, and the Group does not allocate assets and liabilities to the reportable segments for the purpose of operating decisions to measure assets and liabilities of segments. The operating segment information was as follows: For the year ended December 31, 2023 Information technology product segment Strategy integrated product segment Adjustment and elimination Total Revenue Revenue from external $ 895,556,678 51,158,122 customers Interest revenue Total revenue Interest expense $ $ Deprectation and amortization Investment gain (loss) Other significant non-cash items: 4,547,937 158,990 900,104,615 51,317,112 4,917,905 7,031,024 (467,077) 134,467 842,502 - - Impairment of assets - Reportable segment profit $ 8,623,476 3,266,949 Reportable segment assets Reportable segment liabilities - - - - - - - - 946,714,800 4,706,927 951,421,727 5,052,372 7,873,526 (467,077) - 11,890,425 436,770,974 303,998,121 $ $ (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 96 For the year ended December 31, 2022 Information technology product segment Strategy integrated product segment Adjustment and elimination Total Revenue Revenue from external customers Interest revenue Total revenue Interest expense Deprectation and amortization Investment gain (loss) Other significant non-cash items: $ $ $ 1,026,078,166 47,167,749 2,998,570 91,356 1,029,076,736 47,259,105 3,131,824 6,810,232 (272,824) 113,877 734,176 - - Impairment of assets 9,431 Reportable segment profit $ 8,246,412 2,477,718 Reportable segment assets Reportable segment liabilities (c) Products information The infromation of revenue from external customers: Products and services 5C related electronic products Others - - - - - - - - 1,073,245,915 3,089,926 1,076,335,841 3,245,701 7,544,408 (272,824) 9,431 10,724,130 453,484,433 326,074,590 $ $ 2023 942,520,717 2022 1,067,076,220 4,194,083 6,169,695 946,714,800 1,073,245,915 $ $ (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 97 (d) Geographic information Stated below are the geographic information on the Group’s sales presented by destination of sales and non-current assets presented by location. (i) Revenue from external customers: Country United States China Netherlands Others (ii) Non-current assets: Country Taiwan Vietnam China Others 2023 374,196,615 $ 2022 444,691,177 137,660,865 133,452,679 60,530,773 68,709,105 374,326,547 426,392,954 $ 946,714,800 1,073,245,915 $ 2023 21,318,777 12,135,554 11,710,811 1,283,752 2022 20,877,772 10,671,422 13,812,658 989,914 $ 46,448,894 46,351,766 Non current assets include plant, property, and equipment, intangible assets, and other assets, excluding deferred tax assets. (e) The details of sales revenue from external customers more than 10% of the amount of consolidated statement of comprehensive income are as follows: D Company E Company F Company A Company 2023 2022 $ 379,263,553 460,236,878 125,647,532 102,969,721 121,450,902 170,398,727 95,644,980 96,621,806 $ 722,006,967 830,227,132 COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 98 Table 1 Loans to other parties: (December 31, 2023) Name of lender No. 0 The Company Name of borrower UCGI 0 The HengHao Company 0 The CEB Company 0 The Company Kinpo & Compal Group Assets Development Corporation 0 The CEA Company 0 The CEP Company 1 CIH CEP 2 CPC CIC 3 CIT CCI Nanjing 3 CIT 3 CIT Rayonnant (Taicang) HengHao Kunshan 3 CIT CEA 4 CPO CIT 4 CPO CEA 5 CET BT 6 Panpal Kinpo & Compal Group Assets Development Corporation 6 Panpal HengHao 7 CIC HengHao Kunshan 7 CIC CEB Account name Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables 8 BSH Compal USA (Indiana), Inc Other receivables 9 Gempal Kinpo & Compal Group Assets Development Corporation Other receivables 9 Gempal Ray-Kwong Medical Management Consulting 10 CGSP CEP 11 Hong Ji Kinpo & Compal Group Assets Development Corporation Other receivables Other receivables Other receivables 12 Hong Jin Hippo Screen Other receivables 13 Arcadyan Acradyan Brasil Other receivables 13 Arcadyan Acradyan Brasil Other 13 Arcadyan Arcadyan Vietnam receivables Other receivables 13 Arcadyan Arcadyan Vietnam Other receivables Highest balance of financing to other parties during the period Ending balance Actual usage amount during the period 460,000 230,000 230,000 Range of interest rates during the period 2.19%~2.29% Related party Y Transaction amount for business between two parties - Purposes of fund financing for the borrower Short-term financing Reasons for short-term financing Operating demand Allowan ce for bad debt - Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 400,000 200,000 200,000 2.19%~2.29% 1,751,250 921,150 921,150 5.00%~6.19% 1,150,000 550,000 - 2.16%~2.29% 3,508,925 1,995,825 1,995,825 5.00%~6.19% 62,510 61,410 61,410 6.09% 64,850 - - 6.61% 886,700 432,700 432,700 2.10%~2.20% 2,269,750 2,149,350 1,780,890 6.61% 81,063 - - 6.61% 1,887,150 921,150 921,150 5.75%~6.61% 324,250 307,050 307,050 6.09% 1,330,050 649,050 649,050 2.10%~2.20% 972,750 921,150 921,150 6.09% 532,680 259,620 173,080 2.00%~2.20% 1,600,000 1,000,000 1,000,000 2.16%~2.29% 1,200,000 600,000 600,000 2.19%~2.29% 1,783,375 1,688,775 1,688,775 6.61% 324,250 307,050 307,050 6.09% 583,650 506,633 337,756 6.61% 600,000 - - 2.29% 15,000 5,000 5,000 2.19%~2.29% 64,850 61,410 - 6.61% 450,000 450,000 430,000 2.29% 35,000 35,000 20,000 2.19% 63,720 - - 5.00% 64,870 61,410 42,987 5.50% Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing - - - - - - - - - - - - - - - - - - - - - - - - - - Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating financing Operating financing 304,800 - 324,350 307,050 - - 1.00% 5.50% Transaction for business between two parties Transaction for business between two parties 14,676,990 19,589,790 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (In Thousands of New Taiwan Dollars) Individual funding loan limits 23,924,399 Maximum limit of fund financing 47,848,798 Note (Note 1) 23,924,399 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 4,555,887 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 45,060,928 45,060,928 (Note 2) 2,832,493 2,832,493 (Note 3) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 3,111,110 3,111,110 (Note 5) 3,111,110 3,111,110 (Note 5) 5,045,678 5,045,678 (Note 6) 2,376,225 2,376,225 (Note 7) 2,376,225 2,376,225 (Note 7) 10,930,282 10,930,282 (Note 8) 10,930,282 10,930,282 (Note 8) 8,255,369 8,255,369 (Note 9) 964,878 964,878 (Note 10) 13,749 964,878 (Note 10) 92,753 92,753 (Note 11) 477,167 477,167 (Note 12) 154,819 154,819 (Note 13) 2,960,444 5,920,889 (Note 14) 2,960,444 5,920,889 (Note 14) 2,960,444 5,920,889 (Note 14) 2,960,444 5,920,889 (Note 14) Collateral Item Value - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 99 Table 1 Loans to other parties: (December 31, 2023) Name of lender No. 14 Arcadyan Holding Name of borrower CNC 15 Poindus Systems Adasys GmbH Elektronische Komponenten Account name Other receivables Long-term receivables 15 Poindus Systems Poindus Systems UK Limited Long-term receivables Highest balance of financing to other parties during the period 1,946,100 Related party Y Actual usage amount during the period - Range of interest rates during the period 5.50% Ending balance 1,842,300 Y Y 43,843 22,087 22,087 2.00%~4.57% 26,169 25,448 25,448 1.00% Transaction amount for business between two parties - 67,310 Purposes of fund financing for the borrower Short-term financing Transaction for business between two parties Transaction for business between two parties 37,638 Reasons for short-term financing Operating financing Allowan ce for bad debt - - - Collateral Item Value - - - - - - (In Thousands of New Taiwan Dollars) Individual funding loan limits 2,245,049 Maximum limit of fund financing 2,245,049 Note (Note 15) 51,844 207,377 (Note 16) 51,844 207,377 (Note 16) Note 1(cid:28873) Note 2(cid:28873) According to the Company’ s “Procedures of Lending Funds to Other Parties”, the total amount of loans lent to others shall not exceed 40% of the net worth of the Company. When a short-term financing facility with the Company is necessary, the total amount for lending to any company shall not exceed 80% of the borrower’s net worth, nor shall it be more than 50% of the Company’s lendable amount limit, and shall be calculated together with the amount of guarantee endorsed by the Company for the company. In addition, the Company shall not limit the total amount of loans to subsidiaries in which the Company directly or indirectly holds 100% of the voting shares to 80% of the aforementioned amount, but the maximum amount shall not exceed 50% of the Company's total funds lending limit, and shall be calculated together with the amount of guarantees endorsed by the Company for such companies. According to CIH’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CIH. When a short-term financing facility with CIH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CIH’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’ s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the Note 3(cid:28873) maximum amount shall not exceed the net worth of CIH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CPC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPC. When a short-term financing facility with CPC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CPC’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum Note 4(cid:28873) amount shall not exceed the net worth of CPC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CIT’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIT. When a short-term financing facility with CIT is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CIT’s total amount of capital lent, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum Note 5(cid:28873) amount shall not exceed the net worth of CIT, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CPO’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPO. When a short-term financing facility with CPO is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CPO’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’ s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the Note 6(cid:28873) maximum amount shall not exceed the net worth of CPO, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CET’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CET. When a short-term financing facility with CET is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CET’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’ s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the Note 7(cid:28873) Note 8(cid:28873) maximum amount shall not exceed the net worth of CET, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Panpal’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Panpal. When a short-term financing facility with Panpal is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of Panpal ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the total amount lendable to 50% directly or indirectly owned subsidiaries by Panpal, or the ultimate parent company’s 50% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions of 80%, but the maximum amount shall not exceed Panpal’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CIC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIC. When a short-term financing facility with CIC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of CIC’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’ s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the Note 9(cid:28873) maximum amount shall not exceed the net worth of CIC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to BSH’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of BSH. When a short-term financing facility with BSH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of BSH’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’ s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the Note 10(cid:28873) maximum amount shall not exceed the net worth of BSH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Gempal’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Gempal. When a short-term financing facility with Gempal is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of Gempal ’ s total amount of lendable capital, and shall be combined with the Gempal ’ s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’ s 100% directly, the total amount of loans is not limited by 80% of two Note 11(cid:28873) aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Gempal, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CGSP’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CGSP. When a short-term financing facility with CGSP is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CGSP ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid Note 12(cid:28873) restrictions, but the maximum amount shall not exceed the net worth of CGSP, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Hong Ji’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Hong Ji. When a short-term financing facility with Hong Ji is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of Hong Ji ’ s total amount of lendable capital, and shall be combined with the Hong Ji ’ s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’ s 100% directly, the total amount of loans is not limited by 80% of two Note 13(cid:28873) aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Hong Ji, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Hong Jin’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Hong Jin. When a short-term financing facility with Hong Jin is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of Hong Jin’s total amount of lendable capital, and shall be combined with the Hong Jin’s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’ s 100% directly, the total amount of loans is not limited by 80% of two Note 14(cid:28873) Note 15(cid:28873) Note 16(cid:28873) Note 17(cid:28873) aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Hong Jin, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Arcadyan’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Arcadyan. To borrowers having business relationship with Arcadyan, the total amount for lending the borrower shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount for the current year, nor shall it exceed 20% of the net worth of Arcadyan. Also, the amount shall be combined with the Arcadyan’ s endorsements/guarantees for the borrower when calculating. When a short-term financing facility is necessary, the borrower should be Arcadyan’ s investee. The total amount for lending the borrower shall not exceed 80% of the net worth of the borrower, nor shall it exceed 20% of the net worth of Arcadyan, and shall be combined with the Arcadyan’s endorsements/guarantees for the borrower when calculating. According to Arcadyan Holding’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed the net worth of Arcadyan Holding. When a short-term financing facility is necessary, the borrower should be Arcadyan Holding’s investee. The total amount for lending the borrower shall not exceed the net worth of Arcadyan Holding, and shall be combined with the Arcadyan Holding’s endorsements/ guarantees for the borrower when calculating. According to Poindus Systems’ Procedures for Lending Funds to Other parties, the total amount of loans for individual is the lower of the amount of transaction for business between the two parties during the previous twelve months and 10% of the net worth of the company's latest financial statements, with the total limit of 40% of the net worth of the company's latest financial statements. The transactions had been eliminated in the consolidated financial statements. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 100 Table 2 Guarantees and endorsements for other parties: (December 31, 2023) Counter-party of guarantee and endorsement Name of guarantor The Company CEP No. 0 Name Limitation on amount of guarantees and endorsements for a specific enterprise 28,876,015 Relationship with the Company (Note 4) Highest balance for guarantees and endorsements during the period 57,285 Balance of guarantees and endorsements as of reporting date 18,676 Actual usage amount during the period 18,676 Property pledged for guarantees and endorsements (Amount) - (In Thousands of New Taiwan Dollars) Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements 0.02% Maximum amount for guarantees and endorsements (Note 1(cid:501)(cid:501)2 and 3) 57,752,031 Parent company endorsements/ guarantees to third parties on behalf of subsidiary Y Subsidiary endorsements/ guarantees to third parties on behalf of parent company - Endorsements/ guarantees to third parties on behalf of companies in Mainland China - 0 The Company CEB (Note 5) 28,876,015 376,130 356,178 356,178 0 The Company HengHao Kunshan (Note 5) 28,876,015 26,670 25,962 25,962 1 Arcadyan Arcadyan AU (Note 5) 1,973,629 243,263 230,288 - 2 Poindus Systems Qijie (Note 5) 103,688 30,710 - - - - - - 0.31% 57,752,031 0.02% 57,752,031 1.56% 5,920,889 0.00% 259,221 Y Y Y Y - - - - - Y - Y Note 1(cid:28873) Note 2(cid:28873) Note 3(cid:28873) According to the Company’ s Procedures for Endorsement and Guarantee, the total amount of endorsements/ guarantees the Company or the Group is permitted to make shall not exceed 50% of the Company ’ s net worth. Endorsements/ guarantees the Company and the Group are permitted to make for a single company shall not exceed 25% of the Company’s net worth. For entities having business relationship with the Company, the amount of endorsements/ guarantees for a single company shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount of the current year, and shall be combined with the amount lend to others when calculating. The amount of endorsements/ guarantees permitted to make between subsidiaries whose over 90% of its voting shares are owned, directly or indirectly, by the Company shall be no more than 10% of the net worth of the Company. The amount of endorsements/ guarantees permitted to make between directly or indirectly wholly owned subsidiaries is not limited by the aforementioned restriction, only the maximum amount shall be no more than 25% of the net worth of the Company. According to Arcadyan ’ s Procedures for Endorsement and Guarantee, the total amount of endorsements/guarantees Arcadyan and its subsidiaries are permitted to make shall not exceed 40% of the Arcadyan's net worth. Endorsements/guarantees Arcadyan and its subsidiaries are permitted to make for a single company shall not exceed 1/3 of the aforementioned total amount. According to Poindus Systems’ Procedures for Endorsement and Guarantee, Poindus Systems only endorses and guarantees to subsidiaries wherein it holds 100% of their voting shares. Poindus Systems’ endorsement and guarantee for a subsidiary shall not exceed 20% of its net worth; and the total amount of endorsements/guarantees shall not exceed 50% of its net worth. Note 4(cid:28873) Subsidiary whose over 50% common stock is directly owned. Note 5(cid:28873) Subsidiary whose over 50% common stock is indirectly owned. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 101 Table 3 Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): (December 31, 2023) Name of holder Category and name of security The Company Taiwan Mobile Relationship with security issuer (cid:4137) The same chairman of the Company The same chairman of the Company (cid:4137) (cid:4137) (cid:4137) The Chairman of the Board is the first degree of kinship of the Chairman of the Company (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) Kinpo Cal-Comp HWA VI Venture Capital Corp. HWA Chi Venture Capital Corp. mProbe Ltd. AcBel Chen Feng Optoelectronics PrimeSensor Technology Inc. Ganzin Technology, Inc. Airoha Technology Corp. ITH Corporation Clean Energy Fund IIH Biomedical Venture Fund Phoenix Innovation Investment Corporation. Others Total Panpal Compal Electronics, Inc. The parent company Kinpo The same chairman of the Company CDIB Partners Investment Holding Corp. (cid:4137) Account name Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss and other comprehensive income Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Ending balance Shares/Units (thousands) 3,197 Carrying value 315,254 Holding percentage (%) - Fair value 315,254 (In Thousands of shares/ units) The highest holdings in the period Shares/Units (thousands) 3,197 Holding percentage (%) - Note 124,044 2,015,711 8% 2,015,711 124,044 8% 1,554,139 2,906,241 15% 2,906,241 1,554,139 15% 48 53 13,553 10% 13,553 290 10% 13,515 11% 13,515 53 11% 4,000 10,800 3% 10,800 4,000 3% 6,685 274,754 1% 274,754 6,685 1% 6,685 101,676 7% 101,676 6,685 7% 868 13,361 1% 13,361 868 1% 2,000 36,000 7% 36,000 2,000 7% 215 124,055 - 124,055 215 - 8,000 225,989 2% 225,989 8,000 2% - 179,175 2% 179,175 - 2% 5,000 91,000 8% 91,000 5,000 8% 6,000 67,680 19% 67,680 6,000 19% 146,801 146,801 _____________ 6,535,565 1,261,176 31,648 1% 1,261,176 31,648 1% (Note 1) 69,370 1,127,257 5% 1,127,257 69,370 5% 54,000 822,420 5% 822,420 54,000 5% The Chairman of the Board is the first degree of kinship of the Chairman of the Company Financial assets at fair value through other comprehensive income-non-current 11,332 465,740 2% 465,740 11 2% AcBel Lian Hong Art. Co., Ltd. Taiwan Biotech Co., Ltd. Others Total (cid:4137) (cid:4137) (cid:4137) Gempal Compal Electronics, Inc. The parent company Lian Hong Art. Co., Ltd. Others Total (cid:4137) (cid:4137) Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current 2,291 71,387 6% 71,387 11,332 6% 8,680 160,061 3% 160,061 7,845 3% 9,384 9,384 _____________ 3,917,425 18,369 732,019 - 732,019 18,369 - (Note 1) 2,291 71,365 6% 71,365 2,225 6% 952 952 _____________ 804,336 (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 102 Table 3 Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): (December 31, 2023) Name of holder Hong Ji Category and name of security SUYIN Optronics Co., Ltd. (“SUYIN Optronics”) Relationship with security issuer (cid:4137) Hong Jin SUYIN Optronics Arcadyan GeoThings Inc. AirHop Communication Inc. Adant Technologies Inc. IOT EYE, Inc. TIEF FUND L.P. Chimei Motor Electronics Co., LTD Golden Smarthome Technology Corp. Total Mactech Taichung International Golf Country Club HHB HWALLAR OPTRONICS (Fuzhou) CO., LTD. Mithera Beyond Limits, Inc. BT CIT Suzhou Genki Fuhong Health Management Co., Ltd. Kunqiao Phase II (Suzhou) Emerging Industry Venture Capital Partnership Fund BSH Achi Capital Partners Fund LP ABG Capital PartnersV, LP Total (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) Account name Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Financial assets at fair value through profit or loss-non-current Ending balance Shares/Units (thousands) 380 Carrying value 332 200 1,152 349 60 Holding percentage (%) 1% Fair value - 1% 4% 5% 5% 14% - - - - - - - - - - - (In Thousands of shares/ units) The highest holdings in the period Shares/Units (thousands) 380 Holding percentage (%) 1% Note (Note 2) 332 1% (Note 2) 200 4% (Note 2) 1,152 5% (Note 2) 349 5% (Note 2) 60 14% (Note 2) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) 48,112 7% 48,112 (cid:4137) 7% 1,650 35,442 6% 35,442 1,650 6% 1,229 (cid:4137) 2% (cid:4137) 1,229 6% _____________ 83,554 11,790 (cid:4137) 11,790 - 19% - (cid:4137) (cid:4137) (cid:4137) 19% (Note 2) 873 138,172 (cid:4137) 138,172 873 (cid:4137) 4,328 17% 4,328 502,738 62,733 266,074 - - - 502,738 62,733 266,074 (cid:4137) (cid:4137) (cid:4137) (cid:4137) 17% - - - _____________ 328,807 Note 1(cid:28873)The transaction had been eliminated in the consolidated financial statements. Note 2(cid:28873)The carrying value is the remaining amount after deducting accumulated impairment. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 103 Table 4 Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: (December 31, 2023) Security Name of company The Company The Company Category Stock Account name Investments accounted for using equity method Name of counter-party (Note 1) Name Kinpo & Compal Group Assets Development Corporation Cal-Comp Stock Relationship with the company (Note 5) Beginning Balance Purchases Sales Others Ending Balance Shares/ Units Amount Shares/ Units Amount Shares/ Units Price Cost Gain (loss) on disposal Shares/ Units Amount Shares/ Units Amount 52,500 505,547 350,000 3,500,000 - - - - - (19,145) 402,500 3,986,402 (In Thousands of New Taiwan Dollars/ shares) (Note 2) BSH CEV Arcadyan Arcadyan Holding Stock Stock Financial assets at fair value through other comprehensive income- non-current Investments accounted for using equity method Investments accounted for using equity method (Note 1) (Note 7) 281,233 579,341 1,249,470 1,718,266 - - - - 23,436 608,634 1,554,139 2,906,241 (Note 1) (Note 6) - - - 1,658,070 - - - - (Note 1) (Note 6) 47,780 1,804,421 60,000 1,843,500 60,000 - 1,843,500 - (Note 3) (Note 4) - - 36,262 (Note 2) 262,540 (Note 2) - 1,694,332 47,780 2,066,961 Note 1: Cash capital. Note 2: Others refer to investment income using equity method and foreign currency translation differences of foreign operations. Note 3: Stock dividends. Note 4: Others refer to unrealized gain and loss on financial asstes and its deferred taxes. Note 5: Subsidiary whose over 50% common stock is directly owned. Note 6: Subsidiary whose over 50% common stock is indirectly owned. Note 7: The same chairman of the Company. Table 5 Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: (For the year ended December 31, 2023) Name of company Arcadyan Transaction date (Note 1) September 28, 2023 Transaction amount 738,000 Status of payment - Counter-party Chien Ming Construction Co. Ltd. If the counter-party is a related party, disclose the previous transfer information Relationship with the Company None Relationship with the Company not applicable Date of transfer not applicable Amount not applicable Owner not applicable (In Thousands of New Taiwan Dollars) References for determining price price comparison and negotiation Purpose of acquisition and current condition operational use Others None (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) 104 Transaction details Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Company Name The Company CBN Counter party Arcadyan Nature of relationship The Company's subsidiaries The Company's subsidiaries Purchase/ (Sale) Sale Amount (170,327) Sale (1,418,650) Percentage of total purchases/ (sales) Payment terms (0.0)% Net 90 days from delivery (0.2)% Net 60 days from the end of the month of delivery Unit price Similar to non- related parties Similar to non- related parties CEP CEP Subsidiaries wholly owned by the Company Sale (114,975) (0.0)% 120 days Subsidiaries wholly owned by the Company Purchase 189,437 0.0% 120 days CIH and its subsidiaries Subsidiaries wholly owned by the Company Purchase 105,753,627 11.2% 120 days Just and its subsidiaries Subsidiaries wholly owned by the Company Purchase 71,030,857 7.5% 120 days HSI and its subsidiaries Subsidiaries wholly owned by the Company Purchase 66,824,371 7.1% 120 days BCI and its subsidiaries Subsidiaries wholly owned by the Company Purchase 29,504,779 3.1% 120 days Etrade and its subsidiaries Subsidiaries wholly owned by the Company Purchase 2,973,830 0.3% Net 60 days from delivery Kinpo Just and its subsidiaries Compal Electronic, Inc. The same chairman of the Company Parent company Purchase 45,822,993 4.9% Net 35 days from the Sale (71,030,857) (99.6)% end of the month 120 days UCGI With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company Sale (211,853) (0.3)% 60 days Purchase 1,148,812 2.1% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Markup based on BCI and its subsidiaries' cost Markup based on Etrade and its subsidiaries' cost Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Etrade and its subsidiaries With the same ultimate parent company Purchase 148,167 (0.3)% Net 60 days from delivery According Etrade and its subsidiaries to markup pricing CIH and its subsidiaries Compal Electronic, Inc. Parent company Sale (105,753,627) (92.8)% 120 days BCI and its subsidiaries With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company CEB With the same ultimate parent company Sale (505,696) (0.3)% 120 days Sale (8,058,473) (5.6)% 120 days Sale (245,966) (0.2)% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Payment Terms There is no significant difference. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. Percentage of total notes/accounts receivable (payable) Note Ending Balance 137,791 0.1% (Note 2) 685,277 0.4% (Note 2) 97,737 0.1% (Note 2) - 0.0% (Note 2) (49,778,450) (30.5)% (Note 2) (2,070,603) (1.3)% (Note 2) (7,960,864) (4.9)% (Note 2) (9,497,819) (5.8)% (Note 2) (995,739) (0.6)% (Note 2) (9,565,439) (5.9)% 2,070,603 99.1% (Note 2) 37,844 0.5% (Note 2) - - (0.0)% (Note 2) (0.0)% (Note 2) 49,778,450 91.4% (Note 2) 9,236 0.0% (Note 2) 7,590,654 7.6% (Note 2) 11,918 0.0% (Note 2) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) 105 Company Name CIH and its subsidiaries Counter party CEA Nature of relationship With the same ultimate parent company Purchase/ (Sale) Sale Transaction details Percentage of total purchases/ (sales) Amount (311,899) (0.2)% Payment terms 120 days Unit price Similar to non- related parties BCI and its subsidiaries With the same ultimate parent company Rayonnant Technology and its subsidiaries With the same ultimate parent company HSI and its subsidiaries CPM With the same ultimate parent company An associate Purchase 346,858 0.3% 120 days Purchase 1,403,349 1.1% 120 days Purchase 694,749 0.5% 120 days Purchase 2,444,514 1.9% 120 days Changbao An associate Purchase 203,638 0.2% 120 days Acbel and its subsidiaries The Chairman of the Board is the first degree of kinship of the Chairman of the Company Purchase 721,560 0.5% 120 days BCI and its subsidiaries Compal Electronic, Inc. Parent company Sale (29,504,779) (92.2)% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Percentage of total notes/accounts receivable (payable) Note Ending Balance 68,223 0.1% (Note 2) (16,460) (0.0)% (Note 2) (263,964) (0.2)% (Note 2) (89,676) (0.1)% (Note 2) (541,864) (0.7)% (6,375) (0.0)% (276,555) (0.4)% Payment Terms There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. Adjustments will be made based on demand for funding. There is no significant difference. There is no significant difference. There is no significant difference. (346,858) (0.9)% 120 days (424,337) (4.1)% 120 days (688,172) (1.9)% 120 days Markup based on BCI and its subsidiaries' cost According to markup pricing According to markup pricing According to markup pricing Adjustments will be made based on demand for funding. Adjustments will be made based on demand for funding. Adjustments will be made based on demand for funding. There is no significant difference. 9,497,819 93.0% (Note 2) 16,460 0.0% (Note 2) 1,276,398 3.3% (Note 2) 193,709 0.5% (Note 2) (315,316) (0.8)% 120 days According to markup pricing There is no significant difference. 402,431 3.1% (Note 2) 505,696 1.6% 120 days According to markup pricing 120,513 0.5% 120 days Adjustments will be made based on demand for funding. There is no significant difference. There is no significant difference. There is no significant difference. (9,236) (0.0)% (Note 2) (25,132) (0.1)% (Note 2) (12,690) (102,674) (0.0)% (0.3)% Similar to non- related parties Similar to non- related parties Similar to non- related parties Sale Sale Sale Sale Sale Sale CIH and its subsidiaries HSI and its subsidiaries CEA CEB CIH and its subsidiaries Rayonnant Technology and its subsidiaries CPM Acbel and its subsidiaries With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company An associate The Chairman of the Board is the first degree of kinship of the Chairman of the Company CEA CEB CEB BCI and its subsidiaries CIH and its subsidiaries BCI and its subsidiaries CEA CIH and its subsidiaries CEP Compal Electronic, Inc. With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Parent company Purchase 172,286 0.5% 120 days Purchase 230,457 0.7% 120 days Sale (1,562,819) (21.3)% 45 days Purchase 688,172 11.3% 120 days Purchase 311,899 5.1% 120 days Purchase 315,316 8.0% 120 days Purchase 1,562,819 38.9% 45 days Purchase 245,966 6.1% 120 days Sale (189,437) (91.3)% 120 days Compal Electronic, Inc. Parent company Purchase 114,975 100.0% 120 days Similar to non- related parties There is no significant difference. According to markup pricing There is no significant difference. Similar to non- related parties There is no significant difference. According to markup pricing There is no significant difference. Similar to non- related parties There is no significant difference. Similar to non- related parties There is no significant difference. Similar to non- related parties Similar to non- related parties There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. 943,962 36.6% (Note 2) (193,709) (25.8)% (Note 2) (68,223) (9.1)% (Note 2) (402,431) (28.8)% (Note 2) (943,962) (67.6)% (Note 2) (11,918) (0.9)% (Note 2) - 0.0% (Note 2) (97,737) 89.2% (Note 2) (Continued) Sale (212,507) (100.0)% Net 60 days from delivery Similar to non- related parties There is no significant difference. 128,048 100.0% (Note 2) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) 106 Transaction details Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Company Name Etrade and its subsidiaries Counter party Compal Electronic, Inc. Nature of relationship Parent company Purchase/ (Sale) Sale Amount (2,973,830) Percentage of total purchases/ (sales) Payment terms (88.9)% Net 60 days from delivery Unit price According to markup pricing Just and its subsidiaries With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company Forever and its subsidiaries HSI and its subsidiaries UCGI JUST and its subsidiaries With the same ultimate parent company With the same ultimate parent company Rayonnant Technology and its subsidiaries CIH and its subsidiaries With the same ultimate parent company BCI and its subsidiaries With the same ultimate parent company Sale (148,167) (4.5)% Net 60 days from delivery According to markup pricing Purchase 196,028 19.2% Net 60 days from delivery Similar to non- related parties Purchase 211,853 53.3% 60 days Sale (1,403,349) (92.1)% 120 days Sale (120,513) (7.9)% 120 days HSI and its subsidiaries Compal Electronic, Inc. Parent company Sale (66,824,371) (97.1)% 120 days CIH and its subsidiaries With the same ultimate parent company Just and its subsidiaries With the same ultimate parent company Etrade and its subsidiaries With the same ultimate parent company CIH and its subsidiaries With the same ultimate parent company Sale (694,749) (1.0)% 120 days Sale (1,148,812) (1.6)% 120 days Sale (196,028) (0.3)% Net 60 days from delivery Purchase 8,058,473 11.6% 120 days With the same ultimate parent company With the same ultimate parent company Parent company CBN Arcadyan Forever and its subsidiaries BCI and its subsidiaries Compal Electronic, Inc. Acradyan Germany Acradyan USA Acradyan AU Compal Electronic, Inc. Purchase 160,983 17.0% Net 90 days from delivery (1,028,804) (2.0)% Net 150 days from delivery (19,847,179) (42.0)% Net 120 days from Arcadyan's subsidiary Arcadyan's subsidiary Arcadyan's subsidiary Sale Sale Sale (1,075,651) Parent company Purchase 1,497,276 delivery (2.0)% Net 60 days from the end of the month of delivery 2.0% Net 60 days from the end of the month of delivery - - - - - CNC Arcadyan's subsidiary Purchase 8,605,578 12.0% Net 120 days from delivery According to markup pricing Arcadyan Vietnam Arcadyan's subsidiary Purchase 3,346,396 5.0% Net 180 days from the end of the month of delivery According to markup pricing CNC Arcadyan Arcadyan Vietnam Acradyan Germany Arcadyan Arcadyan With the same ultimate parent With the same ultimate parent company With the same ultimate parent Sale Sale (8,605,578) (100.0)% Net 120 days from (3,346,396) delivery (100.0)% Net 180 days from the end of the month of delivery According to markup pricing According to markup pricing Purchase 1,028,804 100.0% Net 150 days from - delivery Percentage of total notes/accounts receivable (payable) Note Ending Balance 995,739 92.7% (Note 2) - - 0.0% (Note 2) (0.0)% (Note 2) Payment Terms There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. (37,844) (12.3)% (Note 2) 263,964 91.3% (Note 2) 25,132 8.7% (Note 2) 7,960,864 99.6% (Note 2) 89,676 0.4% (Note 2) - - 0.0% (Note 2) 0.0% (Note 2) (7,590,654) (17.1)% (Note 2) There is no significant difference. - - - - - - - - - (130,494) (69.0)% (Note 2) 208,003 2.0% (Note 2) 3,444,196 39.0% (Note 2) 135,262 2.0% (Note 2) (685,277) (6.0)% (Note 2) (2,871,117) (26.0)% (Note 1&2) (Note 3) 2,871,117 (Note 3) - % (Note 1&2) (100.0)% (Note 1&2) - % (Note 1&2) (208,003) (100.0)% (Note 2) (Continued) Purchase 212,507 0.5% Net 60 days from delivery Purchase 424,337 1.0% 120 days Similar to non- related parties There is no significant difference. Similar to non- related parties There is no significant difference. (128,048) (0.3)% (Note 2) (1,276,398) 2.9% (Note 2) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) 107 Company Name Acradyan USA Acradyan AU Counter party Nature of relationship Arcadyan Arcadyan With the same ultimate parent With the same ultimate parent company Transaction details Percentage of total purchases/ (sales) Amount Payment terms 19,847,179 100.0% Net 120 days from Purchase/ (Sale) Purchase Purchase 1,075,651 delivery 100.0% Net 60 days from the end of the month of delivery Note 1: The remaining balance is the net value of commissioned processing and sales of raw material. Note 2: The transactions had been eliminated in the consolidated financial statements. Note 3: The amount of other receivables on December 31, 2023 is 1,439,730 thousand dollars. Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Unit price - Payment Terms - Percentage of total notes/accounts receivable (payable) Note (100.0)% (Note 2) Ending Balance (3,444,196) - - (135,262) (100.0)% (Note 2) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 108 Table 7 Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (December 31, 2023) Name of Company Counter-party The Company Arcadyan Nature of relationship The Company's subsidiary The Company CBN The Company's subsidiary The Company Just and its subsidiaries The Company's subsidiary The Company Cal-Comp The same chairman of the Company Just and its subsidiaries Compal Electronic, Inc. Parent company Ending Balance 685,277 137,791 Turnover rate 1.33 0.86 4,050,926 (Note 2) 6,407,361 (Note 2) 2,070,603 (Note 2) (Note 2) 37.47 CIH and its subsidiaries Compal Electronic, Inc. Parent company 49,778,450 CIH and its subsidiaries HSI and its subsidiaries With the same ultimate parent company BCI and its subsidiaries Compal Electronic, Inc. Parent company BCI and its subsidiaries HSI and its subsidiaries With the same ultimate BCI and its subsidiaries CEB BCI and its subsidiaries CEA CEA CEB parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Rayonnant Technology and its subsidiaries CIH and its subsidiaries With the same ultimate parent company 7,590,654 9,497,819 1,276,398 1,193,411 193,709 943,962 263,964 2.17 1.37 3.22 0.83 0.38 3.68 2.30 6.13 Etrade and its subsidiaries Forever and its subsidiaries Compal Electronic, Inc. Parent company 995,739 1.84 HSI and its subsidiaries With the same ultimate 128,048 1.23 parent company HSI and its subsidiaries Compal Electronic, Inc. Parent company 7,960,864 10.38 Arcadyan AU Arcadyan's subsidiary 135,262 5.16 Arcadyan Arcadyan Arcadyan Arcadyan USA Arcadyan's subsidiary Arcadyan Vietnam Arcadyan's subsidiary 3,444,196 1,439,730 (Note 2) 208,003 2,871,117 (Note 3) 5.26 (Note 2) 2.56 2.93 Arcadyan Arcadyan Germany Arcadyan's subsidiary CNC Arcadyan With the same ultimate parent company Note 1: Balance as of February 16, 2024. Note 2: Receivables due to purchasing on behalf of related parties. Note 3: Accounts receivables due to processing raw material. (In Thousands of New Taiwan Dollars) Overdue Amount - Action taken - Amounts received in subsequent period - (Note 1) Allowance for bad debts - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 95,958 (Note 1) 4,050,926 (Note 1) 6,406,905 (Note 1) 1,450,425 (Note 1) 47,287,744 (Note 1) - (Note 1) 9,497,819 (Note 1) - (Note 1) 630 (Note 1) 26,671 (Note 1) 146,874 (Note 1) - (Note 1) 307,188 (Note 1) - (Note 1) 7,667,057 (Note 1) 118,749 (Note 1) 3,212,352 (Note 1) - (Note 1) 15,897 (Note 1) 747,311 (Note 1) - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 109 Table 8 Business relationships and significant intercompany transactions: (For the year ended December 31, 2023) Intercompany transactions (In Thousands of New Taiwan Dollars) No. (Note 1) 0 Company name Counter party The Company CBN Relationship (Note 2) 1 Accounts name Sales Revenue Amount 170,327 0 The Company Arcadyan 0 The Company CEP 1 JUST and its subsidiaries The Company 1 JUST and its subsidiaries UCGI 2 CIH and its subsidiaries The Company 2 CIH and its subsidiaries BCI and its subsidiaries 2 CIH and its subsidiaries HSI and its subsidiaries 2 CIH and its subsidiaries CEA 2 CIH and its subsidiaries CEB 3 BCI and its subsidiaries The Company 3 BCI and its subsidiaries CIH and its subsidiaries 3 BCI and its subsidiaries HSI and its subsidiaries 3 3 4 5 6 BCI and its subsidiaries CEB BCI and its subsidiaries CEA CEA CEP CEB The Company Etrade and its subsidiaries The Company 6 Etrade and its subsidiaries JUST and its subsidiaries Accounts Receivable Sales Revenue 137,791 1,418,650 Accounts Receivable Sales Revenue 685,277 114,975 Accounts Receivable Sales Revenue 97,737 71,030,857 Accounts Receivable Sales Revenue 2,070,603 211,853 Accounts Receivable Sales Revenue 37,844 105,753,627 Accounts Receivable Sales Revenue 49,778,450 505,696 Accounts Receivable Sales Revenue 9,236 8,058,473 Accounts Receivable Sales Revenue 7,590,654 311,899 Accounts Receivable Sales Revenue 68,223 245,966 Accounts Receivable Sales Revenue 11,918 29,504,779 Accounts Receivable Sales Revenue 9,497,819 346,858 Accounts Receivable Sales Revenue 16,460 424,337 Accounts Receivable Sales Revenue Accounts Receivable Sales Revenue Accounts Receivable Sales Revenue Accounts Receivable Sales Revenue Accounts Receivable Sales Revenue 1,276,398 315,316 402,431 688,172 193,709 1,562,819 943,962 189,437 - 2,973,830 Accounts Receivable Sales Revenue 995,739 148,167 1 1 2 2 2 3 3 3 3 2 3 3 3 3 3 2 2 3 Terms There is no significant difference of price to non- related parties. The credit period is net 90 days from the delivery. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 60 days from the end of the month of delivery. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 60 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) The price is based on BCI and its subsidiaries's operating cost. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) The price is based on the operating cost. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) The price is based on the operating cost. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) The price is based on the operating cost. The credit period is net 120 days. (cid:579) The price is based on the operating cost. The credit period is net 120 days. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 45 days. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days. (cid:579) The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. (cid:579) The price is based on the operating cost. The credit period is net 60 days from delivery, and will be adjusted if necessary. Accounts Receivable - (cid:579) Percentage of the consolidated net revenue or total assets - - 0.1% 0.2% - - 7.5% 0.5% - - 11.2% 11.4% 0.1% - 0.9% 1.7% - - - - 3.1% 2.2% - - - 0.3% - 0.1% 0.1% - 0.2% 0.2% - - 0.3% 0.2% - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 110 Table 8 Business relationships and significant intercompany transactions: (For the year ended December 31, 2023) Intercompany transactions (In Thousands of New Taiwan Dollars) No. (Note 1) 7 Company name Counter party Forever and its subsidiaries HSI and its subsidiaries Relationship (Note 2) 3 Accounts name Sales Revenue Amount 212,507 8 8 Rayonnant and its subsidiaries Rayonnant and its subsidiaries CIH and its subsidiaries BCI and its subsidiaries 9 HSI and its subsidiaries The Company 9 HSI and its subsidiaries Etrade and its subsidiaries 9 HSI and its subsidiaries CIH and its subsidiaries 9 HSI and its subsidiaries JUST and its subsidiaries 10 Arcadyan Arcadyan Germany 10 Arcadyan Arcadyan USA 10 Arcadyan Arcadyan AU 10 Arcadyan Arcadyan Vietnam 11 CNC Arcadyan 12 Arcadyan Vietnam Arcadyan 3 3 2 3 3 3 3 3 3 3 3 3 Accounts Receivable Sales Revenue 128,048 1,403,349 Accounts Receivable Sales Revenue 263,964 120,513 Accounts Receivable Sales Revenue 25,132 66,824,371 Accounts Receivable Sales Revenue 7,960,864 196,028 Accounts Receivable Sales Revenue - 694,749 Accounts Receivable Sales Revenue 89,676 1,148,812 Accounts Receivable Sales Revenue - 1,028,804 Accounts Receivable Sales Revenue 208,003 19,847,179 Accounts Receivable Sales Revenue 3,444,196 1,075,651 Accounts Receivable Other Receivable 135,262 1,439,730 Processing Revenue 8,605,578 Accounts Receivable Processing Revenue 2,871,117 3,346,396 Terms There is no significant difference of price to non- related parties. The credit period is net 60 days from delivery. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days, and will be adjusted if necessary. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 150 days from delivery. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 120 days from delivery. (cid:579) There is no significant difference of price to non- related parties. The credit period is net 60 days from the end of the month of delivery. (cid:579) The credit period is net 180 days from the end of the month of delivery and depended on funding demand. The price is based on the operating cost. The credit period is net 120 days from the end of the month of delivery and depended on funding demand. (cid:579) The credit period is net 180 days from the end of the month of delivery and depended on funding demand. Note 1: The numbers filled in as follows: 1. 0 represents the Company. 2. Subsidiaries are sorted in a numerical order starting from 1. Note 2: Transactions labeled as follows: 1. represents transactions between the parent company and its subsidiaries. 2. represents transactions between the subsidiaries and the parent company. 3. represents transactions between subsidiaries. Percentage of the consolidated net revenue or total assets - - 0.3% 0.1% - - 7.1% 1.8% - - 0.1% - 0.1% - 0.1% - 2.1% 0.8% 0.1% - 0.3% 0.9% 0.7% 0.4% (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 111 Table 9 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company The Company Investee Company Kinpo & Compal Group Assets Development Corporation Location Taipei City Main Businesses and Products Real estate development leasing and related management business Depcmber 31, 2023 4,025,000 December 31, 2022 525,000 Shares 402,500 Original Investment Amount Ending Balance Percentage of Ownership 70% Carrying Value 3,986,402 The highest holdings in the period (In Thousands of New Taiwan Dollars/ shares) Percentage of Ownership Net income (losses) of investee Share of profits/losses of investee 70% (27,399) (19,145) Note (Note 2) Shares 402,500 Bizcom Milpitas, USA Warranty services and marketing of LCD TVs 36,369 36,369 100 100% 463,533 100 100% 11,411 11,411 (Note 2) Just CIH Panpal Gempal and notebook PCs British Virgin Islands British Virgin Islands Investment Investment Taipei City Investment 1,480,509 1,480,509 48,010 100% 10,585,776 48,010 100% 286,164 286,164 (Note 2) 1,787,680 1,787,680 53,001 100% 45,073,776 53,001 100% 2,551,767 2,551,767 (Note 2) 5,171,837 5,171,837 500,000 100% 4,763,551 500,000 100% 44,704 6,725 (Note 2) (Note 1) - Taipei City Investment 900,036 900,036 90,000 100% 1,729,447 90,000 100% 148,827 126,784 (Note 2) Kinpo Group Management Taipei City Consultation, training services, etc. Ripal Unicore Tainan City Manufacturing of electric appliance and audiovisual electric products Taipei City Management & Consultant, rental and leasing business and wholesale and retail of medical equipments Manufacturing of electric appliance and audiovisual electric products Lead-Honor Taoyuan City CEH British Virgin Islands Investment Shennona Taiwan Taipei City Management & Consultant, rental and leasing business, wholesale and retail sale of precision instruments and international trade Allied Circuit Taoyuan City Production and sales of PCB boards Poindus Systems Taipei City Design and manufacture of PCs and peripheral equipment Aco Smartcare Hsinchu City Wholesale and retail sale of computer software, software design services, data processing services, wholesale and retail sale of electronic materials, wholesale and retail sale of precision instruments, and biotechnology services Investment Cayman Islands The Netherlands Investment Hsinchu County R&D of MEMS microphone related products LIPO CPE Starmems Crownpo Taipei City Manufacturing, processing, and selling resistor chips, networking chips, diodes, multilayer ceramic capacitors, semiconductor devices, and selling electronic products Hong Ji Hong Jin Mactech Taipei City Investment Taipei City Investment Taichung City Manufacturing of equipment and lighting, retailing of equipment and international trading 3,000 60,000 3,000 300 60,000 6,000 38% 100% (Note 1) 5,044 114,460 - 300 6,000 38% 100% 434 (1,751) 162 (7,998) (Note 2) 200,000 200,000 20,000 100% 67,239 20,000 100% (17,243) (17,243) (Note 2) 42,000 42,000 2,772 42% - 2,772 42% 34 34 1 100% 3,618,638 1 100% - - - - (Note 2) 20,000 6,000 2,000 100% 17,859 2,000 100% 63 163 (Note 2) 395,388 353,046 395,388 10,158 353,046 11,768 20% 56% 405,002 337,905 10,158 11,768 20% 56% 204,120 18,886 40,477 11,194 (Note 2) 159,083 90,000 330,276 71% 65,171 330,276 71% (60,467) (36,581) (Note 2) 489,450 197,463 35,000 489,450 197,463 35,000 98 6,427 3,500 49% 100% 35% 43,115 898,170 12,259 98 6,427 3,500 49% (726,686) (356,076) 100% 34,757 34,757 (Note 2) 35% (36,374) (12,731) (Note 2) 149,547 149,547 3,739 33% 621 3,739 33% (117,415) (39,020) 1,000,000 1,000,000 100,000 295,000 219,601 295,000 29,500 219,601 21,756 100% 100% 53% 1,192,920 100,000 387,050 272,981 29,500 21,756 100% 100% 53% 111,601 51,046 41,491 111,601 (Note 2) 51,046 (Note 2) 20,848 (Note 2) Auscom Austin, TX USA R&D of notebook PC related products and 101,747 101,747 3,000 100% 154,186 3,000 100% 4,718 4,718 (Note 2) Arcadyan Hsinchu City components R&D, manufacturing and sales of wireless network, integrated household electronics, and mobile office products FGH British Virgin Islands Investment 1,325,132 1,325,132 41,305 19% 2,854,945 41,305 19% 2,420,569 453,726 (Note 2) 2,754,741 2,754,741 89,755 100% 4,161,690 89,755 100% (246,117) (246,117) (Note 2) Shennona Delaware, USA Medical care IOT business 48,210 48,210 - 100% 16,232 - 100% (430) (430) (Note 2) HSI CEP CGSP Raypal ARCE British Virgin Islands Investment Poland Poland Maintenance and warranty services of notebook PCs Maintenance and warranty services of notebook PCs Taipei City Cancerous immunocyte therapy and regenerative medicine Taipei City Biotechnology services, research & development services, intellectual property rights, wholesale of animal medication, retail sale and management advisory 1,346,814 1,346,814 42,700 54% 449,280 42,700 54% 413,513 221,560 (Note 2) 90,156 90,156 136 100% (24,107) 136 100% 14,323 3,540 (Note 2) 89,669 89,669 - 100% 92,753 - 100% (1,399) 344 (Note 2) 209,076 209,076 4,646 30% 167,893 4,646 30% (66,765) (19,029) 158,160 60,000 44,540 23% 104,286 44,540 23% (103,713) (26,180) Hippo Screen Taipei City Management & Consultant, rental and leasing business, wholesale and retail sale of precision instruments and international trade 112,000 112,000 9,100 91% 10,571 9,100 91% (26,827) (24,404) (Note 2) Infinno Hsinchu County Manufacturing of electronic components, 127,026 127,026 4,648 28% 24,850 4,648 28% (26,017) (7,212) wholesale and retail sale of precision instruments and electronic materials HengHao Taipei City Manufacturing of PCs, computer periphery devices, and electronic components 5,729,757 5,729,757 20,015 100% (767,963) 20,015 100% 15,876 25,773 (Note 2) BCI CBN British Virgin Islands Investment 2,636,051 2,636,051 90,820 100% 9,128,247 90,820 100% 572,422 572,422 (Note 2) Hsinchu County R&D and sales of cable modem, digital setup 284,827 284,827 29,060 43% 469,329 29,060 43% (326,109) (142,346) (Note 2) Rayonnant Technology Taipei City Manufacturing and sales of PCs, computer periphery devices, and electronic components box, and other communication products CRH British Virgin Islands Investment 295,000 295,000 29,500 100% 215,898 29,500 100% 18,969 15,649 (Note 2) 377,328 377,328 12,500 100% 306,661 12,500 100% 19,254 19,254 (Note 2) (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 112 Table 9 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company The Company Investee Company Acendant Private Equity Investment Ltd. Etrade Webtek Forever UCGI Palcom Avalue CORE Original Investment Amount Main Businesses and Products Depcmber 31, 2023 943,922 December 31, 2022 943,922 Shares 31,253 Ending Balance Percentage of Ownership 35% Carrying Value 1,521,614 The highest holdings in the period (In Thousands of New Taiwan Dollars/ shares) Percentage of Ownership Net income (losses) of investee Share of profits/losses of investee Note 35% 34,228 11,885 Shares 31,253 1,532,029 1,532,029 46,900 65% (259,807) 46,900 65% (463,604) 105,576 (Note 2) 3,340 3,340 100 100% 610,994 1,575 1,575 50 100% 1,545,807 100 50 100% (151,389) (151,389) (Note 2) 100% 17,232 17,232 (Note 2) Investment Investment Investment Investment Manufacturing and retail sale of computers and electronic components 689,997 689,997 20,000 100% 82,467 20,000 100% (81,407) (80,146) (Note 2) Location British Virgin Islands British Virgin Islands British Virgin Islands British Virgin Islands Taipei City Taipei City Selling of mobile phones New Taipei City Manufacturing, processing, and import and export business of industrial motherboards British Virgin Islands Investment 100,000 547,595 100,000 10,000 547,595 14,924 100% 21% 98,152 779,482 10,000 14,924 100% (11,342) (11,339) (Note 2) 21% 602,154 125,916 4,318,860 4,318,860 147,000 100% 8,079,840 147,000 100% 417,529 417,529 (Note 2) Compal Ruifang New Taipei City Investing and developing businesses, such as 300,000 100,000 30,000 100% 300,478 30,000 100% 538 538 (Note 2) public construction and specific zones GLB New Taipei City Manufacturing and wholesale of medical 247,560 247,560 15,035 50% 379,334 15,035 50% 50,433 21,862 (Note 2) equipment Compal Healthcare Taipei City Information software services, data processing services, and electronic information supply services 20,000 CMX Mexcio Production of automotive electronic products 77,997 - - 2,000 100% 20,003 2,000 100% 3 3 (Note 2) - 100% 92,642 - 100% 15,018 15,018 (Note 2) Panpal Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 279,202 279,202 8,192 4% 610,998 8,192 4% 2,420,569 __________ 104,656,676 Allied Circuit Taoyuan City Production and selling of PCB boards 148,263 148,263 2,927 6% 116,705 2,927 6% 204,120 Gempal Others Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 306,655 306,655 9,279 4% 717,079 9,279 4% 2,420,569 (720,869) Allied Circuit Taoyuan City Production and selling of PCB boards 53,645 53,645 3,220 6% 128,375 3,220 6% 204,120 Hong Ji Others Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 306,655 306,655 9,279 4% 717,079 9,279 4% 2,420,569 (975) Allied Circuit Taoyuan City Production and selling of PCB boards 10,389 10,389 851 2% 29,057 1,041 2% 204,120 Hong Jin Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 131,942 131,942 4,609 2% 341,189 4,609 2% 2,420,569 Just CDH (HK) Hong Kong Investment 1,912,845 1,912,845 62,298 100% 8,037,301 62,298 100% 258,934 __________ 4,088,258 Investment gain (losses) recognized by Panpal (Note 2) Investment gain (losses) recognized by Panpal Investment gain (losses) recognized by Gempal (Note 2) Investment gain (losses) recognized by Gempal Investment gain (losses) recognized by Hong Ji (Note 2) (Note 2) Investment gain (losses) recognized by Hong Ji Investment gain (losses) recognized by Hong Jin (Note 2) Investment gain (losses) recognized by Just (Note 2) CII CPI CII Smart British Virgin Islands British Virgin Islands British Virgin Islands Investment Investment Investment 391,335 283,868 12,745 100% 270,052 12,745 100% (96,811) Investment gain (losses) (Note 2) 15,353 15,353 500 100% 15,009 500 100% 1,363 recognized by Just Investment gain (losses) recognized by Just (Note 2) 31 31 1 100% 377 1 100% AEI MEL MTL CNA CUS U.S.A Sales and maintenance of LCD TVs - 30,705 1,000 0% - 1,000 0% U.S.A Investment 252,825 252,825 U.S.A Investment 31 31 U.S.A Sales of automotive electronic products 76,763 U.S.A Sales of automotive electronic products 76,763 - - - - 100% 209,575 100% 31 - - 100% 100% 2,500 100% 76,763 2,500 100% 2,500 100% (19,631) 2,500 100% (97,813) Investment gain (losses) (Note 2) CIH CIH (HK) Hong Kong Investment 2,296,811 2,296,811 74,803 100% 44,212,065 74,803 100% 2,495,365 (4) Investment gain (losses) recognized by CII (Note 2) - Investment gain (losses) recognized by CII (Note 2) 21 Investment gain (losses) recognized by CII (Note 2) - - Investment gain (losses) recognized by CII (Note 2) Investment gain (losses) recognized by CII (Note 2) recognized by CII Investment gain (losses) recognized by CIH (Note 2) Investment gain (losses) recognized by CIH (Note 2) Investment gain (losses) recognized by CIH (Note 2) Jenpal PFG FWT CCM British Virgin Islands British Virgin Islands British Virgin Islands British Virgin Islands Investment Investment Investment Investment 225,682 225,682 7,350 100% 117,441 7,350 100% 6,055 31 31 1 100% 85,596 1 100% 81,321 457,505 457,505 14,900 100% 457,504 14,900 100% - Investment gain (losses) recognized by CIH (Note 2) 156,596 156,596 5,100 51% 6,144 5,100 51% (38,884) Investment gain (losses) recognized by CIH (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 113 Table 9 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company HSI IUE Investee Company Goal CVC CDM CMI PRI BSH IUE Goal BCI CORE Original Investment Amount Main Businesses and Products Depcmber 31, 2023 2,057,235 December 31, 2022 2,057,235 Shares 67,000 Ending Balance Percentage of Ownership 100% Carrying Value 1,075,861 The highest holdings in the period Percentage of Ownership Net income (losses) of investee 100% 417,702 Shares 67,000 Share of profits/losses of investee Investment gain (losses) recognized by HSI Note (Note 2) (In Thousands of New Taiwan Dollars/ shares) 389,954 389,954 12,700 100% 333,976 12,700 100% (4,189) Investment gain (losses) (Note 2) Investment Investment R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs and electronic components Construction of and investment in infrastructure in Ba-Thien industrial district of Vietnam Investment Investment Investment 2,057,235 2,057,235 67,000 100% 1,075,861 67,000 100% 417,702 recognized by HSI Investment gain (losses) recognized by IUE (Note 2) 389,954 389,954 12,700 100% 292,617 12,700 100% (4,189) Investment gain (losses) (Note 2) 2,481,578 2,481,578 80,820 100% 5,724,519 80,820 100% 329,358 307,050 307,050 10,000 100% 3,403,728 10,000 100% 243,065 4,513,635 4,513,635 147,000 100% 8,079,840 147,000 100% 417,529 recognized by Goal Investment gain (losses) recognized by BCI (Note 2) Investment gain (losses) recognized by BCI (Note 2) Investment gain (losses) recognized by CORE (Note 2) Location British Virgin Islands British Virgin Islands Vietnam Vietnam British Virgin Islands British Virgin Islands British Virgin Islands BSH Mithera Cayman Islands Investment 155,060 155,060 CIN HSI HHB CEV Forever GIA CWV U.S.A Manufaturing 249,632 249,632 Investment Investment R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs, mobile phones, tablet PCs, smart watches, communication equipment, and other electronic products 184,230 1,658,070 Selling of mobile phones - British Virgin Islands British Virgin Islands Vietnam British Virgin Islands Vietnam R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs and electronic components 61,410 61,410 - 1 99% 136,929 100% 226,337 - 1 99% (3,437) Investment gain (losses) (Note 2) recognized by BSH 100% 11,208 Investment gain (losses) recognized by BSH (Note 2) 1,136,085 1,136,085 37,000 46% 960,555 37,000 46% 413,513 Investment gain (losses) recognized by BSH (Note 2) - - - 6,000 11% 276,345 6,000 11% (249,738) Investment gain (losses) (Note 2) - 100% 1,694,332 - - 100% - 100% 101,047 - - - recognized by BSH 100% 36,796 Investment gain (losses) recognized by BSH (Note 2) 100% - Investment gain (losses) recognized by Forever (Note 2) 100% 2,518 Investment gain (losses) recognized by Forever (Note 2) Webtek Etrade British Virgin Islands Investment 767,625 767,625 25,000 35% (154,553) 25,000 35% (463,604) Investment gain (losses) (Note 2) Unicore Raycore Taipei City Animal medication retail and wholesale - - - 0% - 1,275 100% Arcadyan Arcadyan Holding British Virgin Islands Investment 1,071,027 1,071,027 47,780 100% 2,066,961 107,780 100% 186,347 recognized by Webtek - Investment gain (losses) recognized by Unicore (Note 2) Investment gain (losses) recognized by Arcadyan (Note 2) Investment gain (losses) recognized by Arcadyan (Note 2) Arcadyan USA U.S.A Arcadyan Germany Germany Technology support and sales of wireless network products Technology support and sales of wireless network products 23,055 23,055 1 100% 92,028 1 100% 19,720 1,125 1,125 0.5 100% 99,059 Arcadyan Korea Korea Sales of wireless network products 2,879 2,879 20 100% 35,156 0.5 20 100% 7,798 Investment gain (losses) recognized by Arcadyan (Note 2) 100% 11,668 Investment gain (losses) recognized by Arcadyan (Note 2) Zhi-Bao Hsinchu City Investment 48,000 48,000 34,980 100% 343,292 34,980 100% TTI Taipei City R&D and sales of household digital products 308,726 308,726 25,028 61% 153,318 25,028 61% (63,223) Investment gain (losses) recognized by Arcadyan (Note 2) (79,482) Investment gain (losses) recognized by Arcadyan (Note 2) Arcadyan UK UK Technical support of wireless network products 1,988 1,988 50 100% 5,590 Arcadyan AU Australia Sales of wireless network products 1,161 1,161 50 100% 69,715 Arcadyan RU Russia Sales of wireless network products 7,672 7,672 - 100% 3,212 50 50 - CBN Hsinchu County Sales of communication and electronic 11,925 11,925 533 1% 9,061 533 components 100% 561 Investment gain (losses) recognized by Arcadyan (Note 2) 100% 8,257 Investment gain (losses) recognized by Arcadyan (Note 2) 100% (1,005) Investment gain (losses) recognized by Arcadyan (Note 2) 1% (331,620) Investment gain (losses) recognized by Arcadyan (Note 2) Arcadyan and Zhi-Bao Arcadyan Brasil Brazil Sales of wireless network products 81,593 81,593 968 100% (45,570) 968 100% Arcadyan India India Sales of wireless network products 76,952 29,110 19,800 100% 49,894 19,800 100% Arcadyan Holding Sinoprime TTI Arch Holding Quest TTJC British Virgin Islands British Virgin Islands Investment Investment 891,980 891,980 29,050 100% 1,580,601 29,050 100% 338,093 338,093 35 100% 622,790 35 100% Samoa Investment 36,846 36,846 1,200 100% 10,294 1,200 100% (2,952) Investment gain (losses) (Note 2) Japan Sales of household digital electronic products 9,626 9,626 0.7 100% 2,693 0.7 100% recognized by TTI (397) Investment gain (losses) recognized by TTI (Note 2) Quest Exquisite Samoa Investment 35,925 35,925 1,170 100% 9,457 1,170 100% (2,960) Investment gain (losses) (Note 2) Sinoprime Arcadyan Vietnam Vietnam Manufacturing of wireless network products 890,445 890,445 - 100% 1,575,996 - 100% 362,769 recognized by Quest Investment gain (losses) recognized by Sinoprime (Note 2) Zhi-Bao CBN Rayonnant TechnologAPH Hsinchu County Produces and sales of communication and electronic components British Virgin Islands Investment 36,272 36,272 13,140 19% 223,285 13,140 19% (331,620) Investment gain (losses) (Note 2) 257,454 257,454 8,651 41% 206,209 8,651 41% 41,217 Forming Co., Ltd. Taoyuan City R&D and manufacturing of electronic materials 27,300 27,300 1,820 21% - 1,820 21% - recognized by Zhi-Bao Investment gain (losses) recognized by Rayonnant Technology Investment gain (losses) recognized by Rayonnant Technology (Note 2) (Note 2) (Continued) (1,032) Investment gain (losses) recognized by Arcadyan and Zhi-Bao (18,275) Investment gain (losses) recognized by Arcadyan and Zhi-Bao Investment gain (losses) recognized by Arcadyan Holding 362,862 (270,710) Investment gain (losses) recognized by Arcadyan Holding (Note 2) (Note 2) (Note 2) (Note 2) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 114 Table 9 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company CRH APH Investee Company APH PEL Location British Virgin Islands British Virgin Islands Investment Investment Original Investment Amount Main Businesses and Products Depcmber 31, 2023 383,813 December 31, 2022 383,813 Shares 12,500 Ending Balance Percentage of Ownership 59% The highest holdings in the period Carrying Value Shares Percentage of Ownership Net income (losses) of investee 306,661 12,500 59% 41,217 96,751 96,751 3,151 100% 45,559 3,151 100% 1,595 Rayonnant (HK) Hong Kong Investment 552,690 552,690 18,000 100% 459,161 18,000 100% 39,622 Share of profits/losses of investee Investment gain (losses) recognized by CRH Note (Note 2) Investment gain (losses) recognized by APH (Note 2) Investment gain (losses) recognized by APH (Note 2) (In Thousands of New Taiwan Dollars/ shares) HHT HHA CBN HHA HHB CBNB British Virgin Islands British Virgin Islands Belgium CBNN Netherlands Investment Investment The import and export business of broad band network products and related components, as well as technical support and advisory services The import and export business of broad band network products and related components, as well as technical support and advisory services 1,429,235 1,429,235 46,882 100% (1,322,489) 46,882 100% (234,458) Investment gain (losses) (Note 2) recognized by HHT 1,439,513 1,439,513 46,882 89% (1,584,042) 46,882 89% (249,738) Investment gain (losses) (Note 2) recognized by HHA 6,842 6,842 20 100% 5,266 20 100% (344) Investment gain (losses) (Note 2) recognized by CBN 7,016 7,016 20 100% 6,267 20 100% (164) Investment gain (losses) (Note 2) recognized by CBN Starmems Taiwan R&D of MEMS microphone related products 10,000 10,000 1,000 10% 3,502 1,000 10% (36,374) Investment gain (losses) (Note 2) recognized by CBN Wah Yuen Technology Holding Ltd. and its subsidiaries Mauritius Investment 2,755,942 2,755,942 95,862 37% 4,231,691 95,862 37% (677,928) Investment gain (losses) PT GLB Biotechnology Indonesia Indonesia Manufacturing and wholesale of medical equipment 88,506 - 42 99% 83,655 42 Taiwan Intelligent Robotics Company, Ltd. Taipei City Manufacturing of equipment and lighting 43,200 43,200 2,160 15% 5,238 2,160 recognized by FGH 99% 20% 351 Investment gain (losses) recognized by GLB (Note 2) (3,360) Investment gain (losses) recognized by Mactech (Note 2) FGH GLB Mactech Poindus Systems Poindus Investment Taipei City Investment holding 4,100 4,100 ((cid:3727)3) 100% 496 ((cid:3727)3) 100% (67) Investment gain (losses) (Note 2) Poindus UK UK Sales of PCs and peripherals 14,297 14,297 300 100% (11,342) 300 100% (7,165) Investment gain (losses) (Note 2) recognized by Poindus Systems Adasys Germany Sales of PCs and peripherals 57,712 57,712 0.002 100% 3,314 0.002 100% (7,306) Investment gain (losses) (Note 2) recognized by Poindus Systems Poindus Investment Poindus GmbH Germany Sales of PCs and peripherals 1,721 1,721 ((cid:3727)3) 100% 70 ((cid:3727)3) 100% - recognized by Poindus Systems Investment gain (losses) recognized by Poindus Investment (Note 2) Note 1: The carrying value had been deducted $559,812 and $321,435 of the Company’s stock held by Panpal and Gempal, respectively. Note 2: The transactions had been eliminated in the consolidated financial statements. Note 3: A limited company, therefore no number of shares. (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 115 Table 10 Information on investment in Mainland China: (December 31, 2023) (i) The names of investees in Mainland China, the main businesses and products, and other information: Main businesses and products Manufacturing and sales of monitors Total amount of paid-in capital 1,136,085 Method of investment (Note 1) Accumulated outflow of investment from Taiwan as of January 1, 2023 1,136,085 Accumulated outflow of investment from Taiwan as of December 31, 2023 1,136,085 Net income (losses) of the investee 204,302 Percentage of ownership 100% Investment income (losses) (Note 4) 204,302 Accumulated remittance of earnings in current period - Book value 2,798,518 Investment flows Outflow Inflow - - (In Thousands of New Taiwan Dollars / shares) Name of investee CPC CDT Manufacturing and sales of notebook PCs, mobile phones, and Digital products 614,100 (Note 2) 614,100 CET Manufacturing of notebook PCs 368,460 (Note 2) 368,460 CSD Research, manufacture and sales of communication devices, mobile phones, electronic computer, smart watch, and provide related technology service FIP Manufacturing of auto parts and accessories 259,651 (Note 2) (Note 3) 302,926 (Note 2) (Note 3) BT Manufacturing of notebook PCs 30,705 (Note 2) 30,705 CGS Maintenance and warranty service of notebook PCs 8,655 (Note 2) (Note 3) 982,560 (Note 1) 409,298 - - - - - - - - - - - - - - 614,100 15,442 100% 15,442 138,610 368,460 87,694 100% 87,694 5,053,795 - 125,012 100% 125,012 404,180 - (1,443) 60% (866) 258,799 30,705 17,294 100% 17,294 (98,654) - 23,859 100% 23,859 (14,311) 409,298 (626,184) 43% (270,386) 28,494 614,100 (Note 1) 45,136 - - 45,136 (543,490) 48% (258,701) 47,562 LIZ Electronics (Kunshan) Co., Ltd. LIZ Electronics (Nantong) Co., Ltd. Production and processing chip resistors, ceramic capacitors, diodes, and other latest electronic components and related precision electronic equipment; selling self-produced products Research & development, and manufacturing chip components (chip resistors, ceramic chip diode; selling self-produced products and providing after-sales service. Performing wholesale and trading business of electronic components, semiconductors, special materials for electronic components, and spare parts CIC Manufacturing of notebook PCs 368,460 (Note 2) 368,460 CPO Manufacturing and sales of LCD TVs 371,531 (Note 1) 371,531 CIT Manufacturing of notebook PCs 736,920 (Note 2) 736,920 CST International trade and distribution of computers and electronic components 42,987 (Note 2) 42,987 Sheng Bao Precision Electronics (Taicang) Co., Ltd. Research & development, and manufacturing latest electronic components, precision cavity mold, design and manufacturing for standard parts for molds, and selling self- produced products 307,050 (Note 2) 156,596 CIJ Investment and consulting services 478,998 (Note 2) 478,998 CDE Manufacturing and sales of LCD TVs 460,575 (Note 2) (Note 3) CIS CEC CMC CEQ Outward investment and consulting services 2,481,578 (Note 1) 2,481,578 R&D and manufacturing of notebook PCs, tablet PCs, digital products, network switches, wireless AP, and automobile electronic products Corporate management consulting, financial and tax consulting, investment consulting, and investment management consulting services R&D, manufacturing and sales of notebook PCs and related components. Also provides related maintenance and warranty services 2,456,400 (Note 2) (Note 3) 24,564 (Note 2) (Note 3) 307,050 (Note 1) 307,050 Compal Precision Module (Jiangsu) Co., Ltd. Changbao Electronic Technology (Chongqing) Co., Ltd. Manufacturing and selling of magnesium alloy injection molding 12,896,100 (Note 2) 2,537,062 Production and marketing of magnesium alloy molding 1,842,300 (Note 2) 351,756 - - - - - - - - - - - - - - - - - - - - - - - - - - 368,460 551,963 100% 551,963 10,930,283 371,531 125,216 100% 125,216 3,111,095 736,920 1,845,493 100% 1,845,493 27,565,297 42,987 (691) 100% (691) 44,382 156,596 (47,084) 51% (24,013) 12,056 478,998 (92,422) 100% (92,422) 2,551,776 - (92,361) 100% (92,361) 2,516,825 2,481,578 329,358 100% 329,358 5,724,519 - 328,816 100% 328,816 5,692,814 - 572 100% 572 25,360 307,050 243,065 100% 243,065 3,403,728 2,537,062 (538,847) 37% (197,326) 5,233,177 351,756 (69,403) 37% (25,416) 630,376 - - - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements 116 Table 10 Information on investment in Mainland China: (December 31, 2023) (i) The names of investees in Mainland China, the main businesses and products, and other information: Name of investee Rayonnant (Taicang) Main businesses and products Manufacturing and sales of aluminum alloy and magnesium alloy products Total amount of paid-in capital 552,690 Method of investment (Note 2) (In Thousands of New Taiwan Dollars / shares) Accumulated outflow of investment from Taiwan as of January 1, 2023 383,813 Accumulated outflow of investment from Taiwan as of December 31, 2023 383,813 Net income (losses) of the investee 39,622 Percentage of ownership 100% Investment income (losses) (Note 4) 39,622 Accumulated remittance of earnings in current period - Book value 459,761 Investment flows Outflow Inflow - - CCI Nanjing Manufacturing and processing of mobile phones and tablet PCs 829,035 (Note 1) 675,510 CDCN Manufacturing and processing of mobile phones and tablet PCs 178,089 (Note 1) 178,089 CWCN Manufacturing and processing of mobile phones and tablet PCs 1,504,545 (Note 1) 583,395 Hanhelt R&D and manufacturing of electronic communication equipment 61,410 (Note 1) 61,410 Arcadyan SVA Arcadyan R&D and sales of wireless network products 248,711 (Note 1) 412,061 (Note 7) CNC Manufacturing and wireless network products 382,277 (Note 1) 338,093 THAC Manufacturing of household electronics products 371,684 (Note 1(cid:501) 9(cid:501)10) (Note 8) 35,311 HengHao HengHao Kunshan Production of touch panels and related components 1,228,200 (Note 1) 1,222,151 HengHao Zhejiang Production of touch panels and related 276,345 (Note 2) (Note 3) components Lucom Manufacturing of notebook PCs and related modules 460,575 (Note 2) 199,552 (Note 12) Poindus Systems Qijie Sales of PCs and peripherals 30,705 (Note 1) 30,705 - - - - - - - - - - - - - - - - - - - - - - 675,510 (119,549) 100% (119,549) (1,301,309) 178,089 (4,985) 100% (4,985) 84,009 583,395 (331,697) 100% (331,697) 738,240 61,410 2,929 100% 2,929 2,456 412,061 6,885 100% 6,885 41,114 338,093 (207,710) 100% (207,710) 622,790 35,311 (4,331) 100% (4,331) 27,020 1,222,151 (249,493) 100% (249,493) (1,477,911) - (1,333) 100% (1,333) 275,032 199,552 1,039 100% 1,039 141,779 - - - - - - - - - 30,705 (2,051) 100% (2,051) 9,589 - (ii) Limitation on investment in Mainland China: Names of Company The Company Arcadyan HengHao Poindus Systems Accumulated Investment in Mainland China as of December 31, 2023 16,658,599 (Note 5) 785,465 1,439,205 30,705 (US$542,537) (US$25,581) (US$46,872) (US$1,000) Investment Amounts Authorized by Investment Commission of Ministry of Economic Affairs 24,221,609 (US$788,849) Limitation on investment in Mainland China by Investment Commission of Ministry of Economic Affairs (Note 6) (In Thousands of USD) 1,054,287 (US$34,336) 1,439,205 (US$46,872) 30,705 (US$1,000) 8,881,334 (Note 13) 322,110 Note 1(cid:28873) Indirectly investment in Mainland China through companies registered in the third region. Note 2(cid:28873) Indirectly investment in Mainland China through an existing company registered in the third region. Note 3(cid:28873) Note 4(cid:28873) Note 5(cid:28873) Note 6(cid:28873) Note 7(cid:28873) Investees held by Kunshan Botai Electronics Co., Ltd. (“BT”), Compal Investment (Jiansu) Co., Ltd. (“CIJ”), Compal Electronic (Sichuan) Co., Ltd. (“CIS”), Compal Electronics (China) Co., Ltd. (“CPC”) and Compal Smart Device (Chongqing) Co., Ltd. (“CSD;”) through their own funds. The basis for recognition of investment profit and loss is based on the financial statements that verified by CPA. Including the investment amount of sold or dissolved companies, including Beijing Compower Xuntong Electronic Technology Co., Ltd., VAP Optoelectronics (NanJing) Corp., Flextronics Technology (Shanghai) Ltd., Lucom, LCFC (HeFei) Electronics Technology Co., Ltd. and the increased investment amount form merging with Compal Communication Co., Ltd. As the Company has obtained the certificate of being qualified for operating headquarters, issued by Industrial Development Bureau, MOEA, the upper limit on investment in mainland China is not applicable. Arcadyan paid US$18,420 thousand and acquired 100% shares of SVA Arcadyan from Accton Asia through Arcadyan Holding in 2010. Note 8(cid:28873) Arcadyan paid US$8,561 thousand and acquired 100% shares of CNC from Just through Arcadyan Holding in 2007. Note 9(cid:28873) Arcadyan’s subsidiary, TTI, obtained the control over THAC with US$1,150 thousand on February 28, 2013 (the date of stock transferring). Note 10(cid:28873) Arcadyan’s subsidiary, TTI, increase the capital of TCH by accounts receivable of TTI amounting to US$8,755 thousands on August 16, 2023. Note 11(cid:28873) The amounts in New Taiwan Dollars were translated at the exchange rates at the balance sheet date or the average exchange rate. Note 12(cid:28873) Note 13(cid:28873) The Company had an accumulated investment amounting to US$7,350 thousand in the previous years. In the first half of 2014, HengHao paid the Company and LG US$3,184 thousand and US$3,315 thousand, respectively, for organization restructure, to obtain 100% ownership of Lucom. The net equity of HengHao is negative at December 31, 2023. (iii) Significant transactions: For the year ended December 31, 2023, the significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”. Attachment II 1 Stock Code:2324 COMPAL ELECTRONICS, INC. Parent Company Only Financial Statements With Independent Auditors’ Report For the Years Ended December 31, 2023 and 2022 Address: Telephone: No.581 & 581-1, Ruiguang Rd., Neihu District, Taipei, Taiwan (02)8797-8588 Table of contents 2 Contents Page 1. Cover Page 2. Table of Contents 3. Independent Auditors’ Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to the Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of material accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses due to major disasters (11) Subsequent Events (12) Other (13) Other disclosures 1 2 3 4 5 6 7 8 8 8～9 9～28 28～29 29～63 64～72 72 72 72 72 72～73 (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major accounting items 74、87～97 74、98～103 74、104～105 74 74～75 76～86 3 Independent Auditor’s Report To COMPAL ELECTRONICS, INC.: Opinion We have audited the financial statements of COMPAL ELECTRONICS, INC.(“the Company”), which comprise the balance sheet as of December 31, 2023 and 2022, the statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of material policies. In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended December 31, 2023 and 2022, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Basis for Opinion We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Inventory valuation Please refer to Note (4)(g) and Note (5) for the accounting policy of inventory valuation, as well as the estimation and assumption uncertainty of the valuation of inventory, respectively. Information of estimation of the valuation of inventory are disclosed in Note (6)(f) of the financial statements. Description of key audit matters: The inventory is measured at the lower of cost or net realizable value. The short life cycle of electronic products may cause significant changes in customers’ demand and sales of related products. Consequently, the book value of inventory may be lower than the net realizable value of inventory. Therefore, the valuation of inventory is one of the key audit matters. 3-1 Our key audit procedures performed in respect of the above area included the following: In order to verify the rationality of assessment of inventory valuation estimated by the Company, our key audit procedures included reviewing the consistency of prior year and accounting policy, inspecting the Company’s inventory aging reports, analyzing the change of inventory aging, judgement of specific items, as well as verifying the inventory aging reports and the calculation of lower of cost or net realizable value. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Company’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance (including the Audit Committee) are responsible for overseeing the Company’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’ s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also: 1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. 3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. 4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. 3-2 5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 6. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The engagement partners on the audit resulting in this independent auditors’ report are Kuan-Ying Kuo and Szu- Chuan Chien. KPMG Taipei, Taiwan (Republic of China) February 29, 2024 The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China. Notes to Readers COMPAL ELECTRONICS, INC. Balance Sheets December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Assets Current assets: Cash and cash equivalents (note (6)(a)) Notes and accounts receivable, net (note (6)(d)) Notes and accounts receivable due from related parties, net (notes (6)(d) and (7)) Other receivables, net (notes (6)(e) and (7)) Inventories (note (6)(f)) Other current assets Non-current assets: December 31, 2023 Amount % December 31, 2022 Amount % $ 20,511,690 5.4 30,965,694 8.2 171,591,962 45.4 169,758,431 44.7 11,475,862 3,951,773 3.0 1.1 13,277,948 3,862,484 3.5 1.0 51,043,492 13.5 53,064,157 14.0 1,278,640 0.3 900,626 0.2 259,853,419 68.7 271,829,340 71.6 Investments accounted for using equity method (note (6)(g)) 105,496,882 27.9 98,259,876 25.9 Non-current financial assets at fair value through profit or loss (note (6)(b)) Non-current financial assets at fair value through other comprehensive income (note (6)(c)) Property, plant and equipment (note (6)(j)) Right-of-use assets (note (6)(k)) Intangible assets Deferred tax assets (note (6)(p)) Other non-current assets 337,855 6,197,710 2,234,288 1,033,301 349,922 2,568,652 0.1 1.6 0.6 0.3 0.1 0.7 221,733 - 249,567 3,133,840 2,417,309 1,033,366 529,906 1,743,609 336,598 0.1 0.8 0.6 0.3 0.1 0.5 0.1 118,440,343 31.3 107,704,071 28.4 1100 1170 1180 1200 1310 1470 1550 1510 1517 1600 1755 1780 1840 1990 2100 2130 2170 2180 2200 2230 2280 2300 2365 2322 2540 2570 2580 2640 2670 3110 3200 3300 3400 3500 Liabilities and Equity Current liabilities: Short-term borrowings (note (6)(l)) Current contract liabilities (note (6)(s)) Notes and accounts payable Notes and accounts payable to related parties (note (7)) Other payables (note (7)) Current tax liabilities Current lease liabilities (note (6)(n)) Other current liabilities Current refund liabilities Long-term borrowings, current portion (note (6)(m)) Non-Current liabilities: Long-term borrowings (note (6)(m)) Deferred tax liabilities (note (6)(p)) Non-current lease liabilities (note (6)(n)) Non-current net defined benefit liability (note (6)(o)) Non-current liabilities, others (note (6)(g)) Total liabilities Equity (note (6)(q)): Ordinary share Capital surplus Retained earnings Other equity interest Treasury shares Total equity 4 December 31, 2023 Amount % December 31, 2022 Amount % $ 46,917,800 12.4 53,068,579 14.0 697,526 80,947,046 82,364,436 12,332,111 3,781,754 352,900 1,375,360 2,763,469 10,742,300 0.2 21.4 21.8 3.3 1.0 0.1 0.4 0.7 2.8 700,046 78,000,744 76,181,679 13,119,799 3,872,974 249,553 2,005,816 2,012,229 19,300,000 0.2 20.6 20.1 3.4 1.0 0.1 0.5 0.5 5.1 242,274,702 64.1 248,511,419 65.5 12,525,000 1,785,947 688,466 568,883 828,769 16,397,065 3.3 0.5 0.2 0.1 0.2 4.3 11,225,000 1,177,418 791,427 566,941 966,452 14,727,238 3.0 0.3 0.2 0.1 0.3 3.9 258,671,767 68.4 263,238,657 69.4 44,071,466 11.7 44,071,466 11.6 4,270,915 1.0 5,078,580 1.3 72,548,155 19.2 69,969,059 18.4 (387,294) (0.1) (1,943,104) (0.5) (881,247) (0.2) (881,247) (0.2) 119,621,995 31.6 116,294,754 30.6 Total assets $ 378,293,762 100.0 379,533,411 100.0 Total liabilities and equity $ 378,293,762 100.0 379,533,411 100.0 See accompanying notes to financial statements. COMPAL ELECTRONICS, INC. Statements of Comprehensive Income For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Share) 5 Net sales revenue (notes (6)(s) and (7)) Cost of sales (notes (6)(f), (6)(o), (7) and (12)) Gross profit Operating expenses: (notes (6)(o) and (12)) Selling expenses Administrative expenses Research and development expenses Net operating income Non-operating income and expenses: Interest income (note (6)(u)) Other gains and losses, net (note (6)(u)) Finance costs (note (6)(n)) Other income (note (6)(u)) Share of profit of associates and joint ventures accounted for using equity method (note (6)(g)) Total non-operating income and expenses Profit from continuing operations before tax Less: Income tax expenses (note (6)(p)) Profit Other comprehensive income: 2023 2022 Amount % Amount % $ 874,914,215 100.0 1,003,642,791 100.0 846,864,149 96.8 975,074,956 97.2 28,050,066 3.2 28,567,835 2.8 4,668,460 2,966,700 13,086,935 20,722,095 7,327,971 1,001,520 46,734 0.5 0.4 1.5 2.4 0.8 0.1 - 6,211,342 2,831,405 12,263,065 21,305,812 7,262,023 367,313 790,769 0.6 0.3 1.2 2.1 0.7 - 0.1 (4,059,174) (0.5) (2,546,827) (0.3) 304,391 4,088,258 1,381,729 8,709,700 1,042,073 7,667,627 0.1 0.5 0.2 1.0 0.1 0.9 334,311 1,826,023 771,589 8,033,612 745,320 7,288,292 - 0.2 - 0.7 0.1 0.6 Components of other comprehensive income (loss) that will not be reclassified to profit or loss Gains (losses) on remeasurements of defined benefit plans (12,857) - 134,331 - Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 828,717 0.1 (610,977) (0.1) 4000 5000 6100 6200 6300 7100 7020 7050 7190 7370 7900 7950 8300 8310 8311 8316 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 463,228 119,156 - - (434,424) 3,589 - - Components of other comprehensive income that will not be reclassified to profit or loss (note (6)(p)) 1,159,932 0.1 (914,659) (0.1) Components of other comprehensive income (loss) that will be reclassified to profit or loss Exchange differences on translation of foreign financial statements (376,004) Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 107,239 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss Other comprehensive income Total comprehensive income Earnings per share (note (6)(r)) Basic earnings per share Diluted earnings per share - (268,765) 891,167 8,558,794 $ $ $ - - - - 0.1 1.0 1.76 1.75 7,183,714 0.7 78,865 - 7,262,579 6,347,920 13,636,212 - - 0.7 0.6 1.2 1.67 1.66 8360 8361 8380 8399 8300 8500 9750 9850 See accompanying notes to financial statements. COMPAL ELECTRONICS, INC. Statements of Changes in Equity For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Retained earnings Balance at January 1, 2022 Profit for the year ended December 31, 2022 Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Special reserve appropriated Cash dividends of ordinary share Cash dividends from capital surplus Changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted for using equity method Adjustments of capital surplus for cash dividends received by subsidiaries Others Disposal of investments in equity instruments measured at fair value through other comprehensive income Balance at December 31, 2022 Profit for the year ended December 31, 2023 Other comprehensive income Total comprehensive income Appropriation and distribution of retained earnings: Legal reserve appropriated Reversal of special reserve Cash dividends of ordinary share Cash dividends from capital surplus Changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted for using equity method Adjustments of capital surplus for cash dividends received by subsidiaries Others Disposal of investments in equity instruments measured at fair value through other Ordinary shares $ 44,071,466 - - - - - - - - - - - - 44,071,466 - - - - - - - - - - - Capital surplus 6,724,856 - - - - - - (1,762,859) 33,397 (18,066) 100,035 1,217 - 5,078,580 - - - - - - (881,429) 2,213 10,490 60,021 1,040 Legal reserve 21,339,412 - - - 1,237,434 - - - - - - - - 22,576,846 - - - 736,855 - - - - - - - comprehensive income Balance at December 31, 2023 - $ 44,071,466 - 4,270,915 - 23,313,701 Special reserve 7,266,708 - - - - 940,042 - - - - - - - 8,206,750 - - - - (6,263,646) - - - - - - - 1,943,104 Unappropriated retained earnings 41,045,820 7,288,292 118,035 7,406,327 (1,237,434) (940,042) (7,051,435) (2,260) (38,351) - - - Total retained earnings 69,651,940 7,288,292 118,035 7,406,327 - - (7,051,435) - (2,260) (38,351) - - 2,838 39,185,463 7,667,627 (2,238) 7,665,389 2,838 69,969,059 7,667,627 (2,238) 7,665,389 (736,855) 6,263,646 (4,407,147) (16,652) (16,991) - - - - - (4,407,147) - (16,652) (16,991) - - (645,503) 47,291,350 (645,503) 72,548,155 See accompanying notes to financial statements. 6 Total other equity interest Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income Others Exchange differences on translation of foreign financial statements Total other equity interest (8,744,705) - 7,274,994 7,274,994 537,830 - (1,032,694) (1,032,694) 125 (8,206,750) - (12,415) (12,415) - 6,229,885 6,229,885 Treasury shares Total equity (881,247) 111,360,265 7,288,292 6,347,920 13,636,212 - - - - - - - - - - - - (1,469,711) - (277,619) (277,619) - - - - - - - - - (1,747,330) - - - - - - - 36,599 - - - - - - - - - - - - - - - 36,599 (2,838) (461,103) - 1,162,170 1,162,170 - (12,290) - 8,854 8,854 (2,838) (1,943,104) - 893,405 893,405 - - - - - - 3,469 13,433 645,503 1,363,472 - - - - - - - - - - - - - - - 3,469 13,433 (3,436) 645,503 (387,294) - - - - - - - - - - - (7,051,435) (1,762,859) 31,137 (19,818) 100,035 1,217 - (881,247) 116,294,754 7,667,627 891,167 8,558,794 - - - - - - - - - - - - - - (4,407,147) (881,429) (10,970) 6,932 60,021 1,040 - (881,247) 119,621,995 COMPAL ELECTRONICS, INC. Statements of Cash Flows For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars) Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation and amortization Expected credit loss Net (gain) loss on financial assets or liabilities at fair value through profit or loss Finance cost Interest income Dividend income Share of profit of subsidiaries, associates and joint ventures accounted for using equity method Others Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: (Increase) decrease in notes and accounts receivable Decrease in other receivables Decrease in inventories Increase in other current assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in notes and accounts payable (Decrease) increase in other payables Increase in refund liabilities Decrease in contract liabilities (Decrease) increase in other current liabilities Others Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through profit or loss and through other comprehensive income Proceeds from disposal of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from capital reduction and liquidation of investments Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in other receivables due from related parties Acquisition of intangible assets Others Net cash flows used in investing activities Cash flows from (used in) financing activities: Decrease in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Payment of lease liabilities Cash dividends paid Others Net cash flows used in financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period See accompanying notes to financial statements. 7 2023 2022 $ 8,709,700 8,033,612 1,343,643 49,027 (47,871) 4,059,174 (1,001,520) (90,278) (4,088,258) 340 224,257 (76,980) 255,955 2,020,665 (432,044) 1,767,596 9,129,059 (600,839) 751,240 (2,520) (630,456) (10,915) 8,635,569 10,403,165 10,627,422 19,337,122 945,368 832,126 (4,246,023) (1,468,963) 15,399,630 (2,326,911) 47,921 (3,979,240) 3,420 (256,391) 65,706 (101,447) (337,007) 168,895 (6,715,054) (6,150,779) 44,267,025 (51,524,725) (438,966) (5,288,576) (2,559) (19,138,580) (10,454,004) 30,965,694 20,511,690 1,292,481 10,092 17,430 2,546,827 (367,313) (60,493) (1,826,023) 7,903 1,620,904 92,993,745 861,286 7,894,260 (440,998) 101,308,293 (56,853,309) 2,252,516 456,262 (332,145) 936,481 (14,859) (53,555,054) 47,753,239 49,374,143 57,407,755 363,622 762,393 (2,149,093) (1,345,557) 55,039,120 (293,452) 10,028 (723,290) 2,010 (332,902) - (1,417,334) (558,111) (116,556) (3,429,607) (25,899,341) 79,109,500 (72,884,500) (439,591) (8,814,294) 4,428 (28,923,798) 22,685,715 8,279,979 30,965,694 $ COMPAL ELECTRONICS, INC. Notes to the Financial Statements For the years ended December 31, 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars, Unless Otherwise Specified) 8 (1) Company history Compal Electronics, Inc. (the “Company”) was incorporated in June 1984 as a company limited by shares and registered under the Ministry of Economic Affairs, R.O.C. The address of the Company's registered office is No.581 and No.581-1 Ruiguang Rd., Neihu Dist., Taipei City, Taiwan. In accordance with Article 19 of the Business Mergers and Acquisitions Act, the Company merged its subsidiary, Compal Communications, Inc. (“ CCI” ) (the “ Merger” ), pursuant to the resolutions of the Board of Directors in November, 2013. The Company was the surviving company and CCI was the dissolved company. The effective date of the Merger was February 27, 2014. The Company is primarily involved in the manufacture and sale of notebook personal computers (“ notebook PCs” ), monitors, LCD TVs, mobile phones and various components and peripherals. (2) Approval date and procedures of the financial statements: The accompanying parent-company-only financial statements were authorized for issuance by the Board of Directors and issued on February 29, 2024. (3) New standards, amendments and interpretations adopted: (a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. which have already been adopted. The Company has initially adopted the following new amendments, which do not have a significant impact on its financial statements, from January 1, 2023: ● Amendments to IAS 1 “Disclosure of Accounting Policies” ● Amendments to IAS 8 “Definition of Accounting Estimates” ● Amendments to IAS 12 “ Deferred Tax related to Assets and Liabilities arising from a Single Transaction” In addition, the Company has adopted Amendments to IAS 12 “International Tax Reform – Pillar Two Model Rules” on May 23, 2023. The amendments provide a temporary mandatory exception from deferred tax accounting for the top-up tax, which applies retrospectively, and require new disclosures about the Pillar Two exposure for annual reporting periods beginning on or after January 1, 2023. However, because on December 31, 2023, no new legislation to implement the top-up tax was enacted or substantively enacted in any jurisdiction in which the Company operates and no related deferred taxes were recognized at that date, the retrospective application has no impact on the parent-company-only financial statements. The Company is closely monitoring developments related to the implementation of the international tax reforms introducing a global minimum top-up tax. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 9 (b) The impact of IFRS issued by the FSC but not yet effective The Company assesses that the adoption of the following new amendments, effective for annual period beginning on January 1, 2024, would not have a significant impact on its financial statements: ● Amendments to IAS 1 “Classification of Liabilities as Current or Non-current” ● Amendments to IAS 1 “Non-current Liabilities with Covenants” ● Amendments to IAS 7 and IFRS 7 “Supplier Finance Arrangements” ● Amendments to IFRS 16 “Lease Liability in a Sale and Leaseback” (c) The impact of IFRS issued by IASB but not yet endorsed by the FSC The Company does not expect the following new and amended standards, which have yet to be endorsed by the FSC, to have a significant impact on its financial statements: ● Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between an Investor and Its Associate or Joint Venture” ● IFRS 17 “ Insurance Contracts” and amendments to IFRS 17 “ Insurance Contracts” ● Amendments to IFRS 17 “Initial Application of IFRS 17 and IFRS 9 – Comparative Information” ● Amendments to IAS21 “Lack of Exchangeability” (4) Summary of material accounting policies: The material accounting policies presented in the parent-company-only financial statements are summarized as follows. The following accounting policies were applied consistently throughout the periods presented in the parent-company-only financial statements. (a) Statement of compliance These parent-company-only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (b) Basis of preparation (i) Basis of measurement Except for the following significant accounts in the statement of financial position, the parent- company-only financial statements have been prepared on the historical cost basis: 1) 2) Financial instruments measured at fair value through profit or loss are measured at fair value; Financial assets at fair value through other comprehensive income are measured at fair value; (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 10 3) The defined benefit liabilities (assets) are measured at fair value of the plan assets less the present value of the defined benefit obligation, limited as explained in note (4)(q). (ii) Functional and presentation currency The functional currency of the Company is determined based on the primary economic environment in which the Company operates. The parent-company-only financial statements are presented in New Taiwan Dollar, which is the Company’ s functional currency. All financial information presented in New Taiwan Dollar has been rounded to the nearest thousand. (c) Foreign currency (i) Foreign currency transaction Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between the amortized cost in the functional currency at the beginning of the year adjusted for the effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of translation. Foreign currency differences arising on retranslation are recognized in profit or loss, except for the following differences which are recognized in other comprehensive income arising on the retranslation: 1) 2) fair value through other comprehensive income financial assets; a financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or 3) qualifying cash flow hedges to the extent the hedge is effective (ii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the Company’s functional currency at exchange rates of the reporting date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to the Company’ s functional currency at average rate. Foreign currency differences are recognized in other comprehensive income, and presented in the foreign currency translation differences in equity. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 11 When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Company disposes of any part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non- controlling interest. When the Company disposes of only part of investment in an associate of joint venture that includes a foreign operation while retaining significant or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign currency gains and losses arising from such items are considered to form part of a net investment in the foreign operation and are recognized in other comprehensive income, and presented in the translation reserve in equity. (d) Classification of current and non-current assets and liabilities An asset is classified as current under one of the following criteria, and all other assets are classified as non-current. (i) It expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; (ii) It holds the asset primarily for the purpose of trading; (iii) It expects to realize the asset within twelve months after the reporting period; or (iv) The asset is cash and cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. A liability is classified as current under one of the following criteria, and all other liabilities are classified as non-current. (i) It expects to settle the liability in its normal operating cycle; (ii) It holds the liability primarily for the purpose of trading; (iii) The liability is due to be settled within twelve months after the reporting period; or (iv) The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not impact its classification. (e) Cash and cash equivalents Cash comprise cash on hand and demand deposits. Cash equivalents are subject to an insignificant risk of changes in their fair value, and are used by the Company in the management of its short-term commitments. Time deposits which meet the above definition and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are reclassified as cash equivalents. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 12 (f) Financial instruments (i) Financial assets Financial assets are classified into the following categories: measured at amortized cost, fair value through other comprehensive income (“ FVOCI” ) and fair value through profit or loss (“FVTPL”). The Company shall reclassify all affected financial assets only when it changes its business model for managing its financial assets. 1) Financial assets measured at amortized cost A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is to hold assets to collect contractual cash flows; and •its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. A financial asset measured at amortized cost is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment loss, are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. 2) Fair value through other comprehensive income (“FVOCI”) A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL: • it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and •its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Some accounts receivables are held within a business model whose objective is achieved by both collecting contractual cash flows and selling by the Company, therefore, those receivables are measured at FVOCI and presented as accounts receivable. On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’ s fair value in other comprehensive income. This election is made on an instrument-by-instrument basis. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 13 A financial asset measured at FVOCI is initially recognized at fair value, plus any directly attributable transaction costs. These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses, and impairment losses, deriving from debt investments are recognized in profit or loss; whereas dividends deriving from equity investments are recognized as income in profit or loss, unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses of financial assets measured at FVOCI are recognized in OCI. On derecognition, gains and losses accumulated in OCI of debt investments are reclassified to profit or loss. However, gains and losses accumulated in OCI of equity investments are reclassified to retain earnings instead of profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. Dividend income derived from equity investments is recognized on the date that the Company’s right to receive payment is established, which in the case of quoted securities is normally the date the shareholders' meeting approved the earning distribution. 3) Fair value through profit or loss (“FVTPL”) All financial assets not classified as amortized cost or FVOCI described as above are measured at FVTPL, including derivative financial assets. On initial recognition, the Company may irrevocably designate a financial asset, which meets the requirements to be measured at amortized cost or at FVOCI, as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise. Financial assets in this category are measured at fair value at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Subsequent changes that are measured at fair value, which take into account any dividend and interest income, are recognized in profit or loss. A regular way purchase or sale of financial assets is recognized and derecognized, as applicable, using trade date accounting. 4) Impairment of financial assets The Company recognizes loss allowances for expected credit losses on financial assets measured at amortized cost (including cash and cash equivalents, financial assets measured at amortized costs, notes and accounts receivable, other receivable, guarantee deposit and other financial assets), debt investments measured at FVOCI, and accounts receivable measured at FVOCI. The Company measures loss allowances at an amount equal to lifetime expected credit loss (“ECL”), except for the following which are measured as 12-month ECL: •debt securities that are determined to have low credit risk at the reporting date; and • other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 14 Loss allowance for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 month after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months). The maximum period considered when estimating ECLs is the maximum contractual period over which the Company is exposed to credit risk. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’ s historical experience and informed credit assessment as well as forward- looking information. The Company considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood definition of “ investment grade which is considered to be BBB- or higher per Standard & Poor’s, Baa3 or higher per Moody’s or twA or higher per Taiwan Ratings”. The Company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due. The Company considers a financial asset to be in default when the financial asset is more than 90 days past due or the borrower is unlikely to pay its credit obligations to the Company in full. ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Company in accordance with the contract and the cash flows that the Company expects to receive). ECLs are discounted at the effective interest rate of the financial asset. At each reporting date, the Company assesses whether financial assets carried at amortized cost and debt securities at FVOCI are credit-impaired. A financial asset is ‘ credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. An evidence that a financial asset is credit-impaired includes the following observable data: • significant financial difficulty of the borrower or issuer; • a breach of contract such as a default or being more than 90 days past due; (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 15 • the lender of the borrower, for economic or contractual reasons relating to the borrower's financial difficulty, having granted to the borrower a concession that the lender would not otherwise consider; • it is probable that the borrower will enter bankruptcy or other financial reorganization; or • the disappearance of an active market for a security because of financial difficulties. Loss allowances for financial assets measured at amortized cost are deducted from the gross carrying amount of the assets. For debt securities at FVOCI, the loss allowance is recognized in other comprehensive income instead of reducing the carrying amount of the asset. The Company recognizes the amount of expected credit losses (or reversal) in profit or loss, as an impairment gain or loss. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company’ s procedures for recovery of amounts due. 5) Derecognition of financial assets Financial assets are derecognized when the contractual rights to the cash flows from the assets expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets. On derecognition of a debt instrument in its entirety, the Company recognizes the difference between its carrying amount and the sum of the consideration received or receivable and any cumulative gain or loss that had been recognized in other comprehensive income and presented in “other equity – unrealized gains or losses on fair value through other comprehensive income”, in profit or loss, and presented it in the line item of non-operating income. On derecognition of a financial asset other than in its entirety, the Company allocates the previous carrying amount of the financial asset between the part it continues to recognize under continuing involvement, and the part it no longer recognizes on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognized and the sum of the consideration received for the part no longer recognized and any cumulative gain or loss allocated to it that had been recognized in other comprehensive income is recognized in profit or loss, and presented in the line item of non-operating income and expenses. A cumulative gain or loss that had been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized on the basis of the relative fair values of those parts. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 16 (ii) Financial liabilities and equity instruments 1) Classification of debt or equity Debt or equity instruments issued by the Company are classified as financial liabilities or equity in accordance with the substance of the contractual agreement. Equity instruments refer to surplus equities of the assets after the deduction of all the debts for any contracts. Equity instruments issued are recognized as the amount of consideration received, less, the direct cost of issuing. Interest and loss or gain related to financial liabilities are recognized as profit or loss and are reported under non-operating income and expenses. Financial liabilities are reclassified as equity when converted, and conversions do not generate profit or loss. 2) Financial liabilities at fair value through profit or loss A financial liability is classified in this category if acquired principally for the purpose of selling in the short term. This type of financial liability is measured at fair value at the time of initial recognition, and attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value, and changes therein, which take into account any interest expense, are recognized in profit or loss, and are included in non-operating income or expenses. 3) Other financial liabilities Financial liabilities not classified as held-for-trading or designated as at fair value through profit or loss, which comprise loans and borrowings, notes and accounts payable and other payable, are measured at fair value, plus, any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method other than significant interest on short-term loans and payables. Interest expense not capitalized as capital cost is recognized in profit or loss, and is included in non-operating income or expenses. 4) Derecognition of financial liabilities The Company derecognizes a financial liability when its contractual obligation has been discharged, cancelled or expired. The difference between the carrying amount of a financial liability removed and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and is included in non- operating income or expenses. 5) Offsetting of financial assets and liabilities The Company presents financial assets and liabilities on a net basis when the Company has the legally enforceable right to offset and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 17 (iii) Derivative financial instruments The Company holds derivative financial instruments to hedge its foreign currency and interest rate exposures. Derivatives are initially measured at fair value. Any attributable transaction costs thereof are recognized in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are recognized in profit or loss and are included in the line item of non-operating income. When a derivative is designated as, and effective for, a hedging instrument, its timing of recognition in profit or loss is determined based on the nature of the hedging relationship. When the fair value of a derivative instrument is positive, it is classified as a financial asset, whereas when the fair value is negative, it is classified as a financial liability. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the non-financial asset’ s host contract are not closely related to the embedded derivatives and the host contract is not measured at FVTPL. (g) Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted-average-cost principle and includes expenditure incurred in acquiring the inventories, production or transition costs, and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less, the estimated costs of completion and selling expenses. (h) Investment in associates Associates are those entities in which the Company has significant influence, but not control or join control, over their financial and operating policies. Investments in associates are accounted for using the equity method and are recognized initially at cost. The cost of the investment includes transaction costs. The carrying amount of the investment in associates includes goodwill arising from the acquisition, less, any accumulated impairment losses. The parent-company-only financial statements include the Company’s share of the profit or loss and other comprehensive income of equity-accounted investees after adjustments to align the accounting policies with those of the Company from the date that significant influence commences until the date that significant influence ceases. When changes in an associate’s equity are not recognized in 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 changes in ownership interests of its associate in capital surplus in proportion to its ownership. Unrealized profits resulting from the transactions between the Company and an associate are eliminated to the extent of the Company’s interest in the associate. Unrealized losses on transactions with associates are eliminated in the same way, except to the extent that the underlying asset is impaired. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 18 When the Company’ s share of losses exceeds its interest in associates, the carrying amount of the investment, including any long-term interests that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has an obligation or has made payments on behalf of the investee. The Company shall discontinue the use of the equity method from the date when its investment ceases to be an associate or a joint venture. The Company shall measure the retained interest at fair value. The difference between the fair value of retained interest and proceeds from disposal, and the carrying amount of the investment at the date the equity method was discontinued is recognized in profit or loss. The Company shall account for all the amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would have been required if the associates had directly disposed of the related assets or liabilities. If a gain or loss previously recognized in other comprehensive income would be reclassified to profit or loss on the disposal of the related assets or liabilities, the entity shall reclassify the gain or loss from equity to profit or loss (as a reclassification adjustment) when the equity method is discontinued. If an entity’s ownership interest in an associate or a joint venture is reduced while the entity continues to apply the equity method, the entity shall reclassify the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest to profit or loss. If an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the Company shall continue to apply the equity method without remeasuring the retained interest. When the Company subscribes to additional shares in an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’ s proportionate interest in the net assets of the associate. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus, however, when the balance of the capital surplus arising from the investment was insufficient, the difference charged or credited to retained earnings. If the Company’s ownership interest is reduced due to the additional subscription to the shares of associate by other investors, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as would be required if the associate had directly disposed of the related assets or liabilities. (i) Investment in subsidiaries When preparing the parent-company-only financial statements, investment in subsidiaries which are controlled by the Company is accounted for using the equity method. Under the equity method, the amounts of net income, other comprehensive income and equity attributable to shareholders of the Company in the parent-company-only financial statement are equal to those in the consolidated financial statements. Changes in the Company’s ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 19 (j) Property, plant and equipment (i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset. The cost of the software is capitalized as part of the property, plant and equipment if the purchase of the software is necessary for the property, plant and equipment to be capable of operating. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately, unless the useful life and the depreciation method of a significant part of an item of property, plant and equipment are the same as the useful life and depreciation method of another significant part of that same item. The gain or loss arising from the derecognition of an item of property, plant and equipment shall be determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and it shall be recognized as other gains and losses. (ii) Subsequent cost Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company. The carrying amount of those parts that are replaced is derecognized. Ongoing repairs and maintenance are expensed as incurred. (iii) Depreciation The depreciable amount of an asset is determined after deducting its residual amount, and it shall be allocated on a systematic basis over its useful life. Items of property, plant and equipment with the same useful life may be grouped in determining the depreciation charge. The remainder of the items may be depreciated separately. The depreciation charge for each period shall be recognized in profit or loss. Land has an unlimited useful life and therefore is not depreciated. The estimated useful lives for the current and comparative years of significant items of property, plant and equipment are as follows: 1) 2) 3) 4) Buildings: 35~50 years Building improvement: 2~12 years Research equipment: 3~5 years Other equipment: 0.5~5 years Depreciation methods, useful lives, and residual values are reviewed at each reporting date. If expectations differ from the previous estimates, the change is accounted for as a change in an accounting estimate. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 20 (k) Leases At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. (i) As a lessee The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. Lease payments included in the measurement of the lease liability comprise the following: － fixed payments, including in-substance fixed payments; － variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; － amounts expected to be payable under a residual value guarantee; and － payments for purchase or termination options that are reasonably certain to be exercised. The lease liability is measured at amortized cost using the effective interest method. It is remeasured when: － there is a change in future lease payments arising from the change in an index or rate; or － there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee; or － there is a change in the lease term resulting from a change of its assessment on whether it will exercise an option to purchase the underlying assets, or － there is a change of its assessment on whether it will exercise an extension or termination option; or － there is any lease modifications (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 21 When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero. When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease. The Company presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the statement of financial position. The Company has elected not to recognize right-of-use assets and lease liabilities for short- term leases of machinery and office equipment that have a lease term of 12 months or less and leases of low-value assets. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term. (ii) As a lessor When the Company acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Company makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset. (l) Intangible assets (i) Goodwill 1) Initial recognition Goodwill arising from acquisition of subsidiaries is included in intangible assets. The measurement of initial recognition of goodwill, please refer to note (4)(t). 2) Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. Goodwill related to an investment accounted for using equity method is included in the carrying amount of the investment, and not allocated to any asset, including goodwill, forms part of the carrying amount of the investment accounted for using the equity method. (ii) Research & Development During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 22 Expenditures arising from the development phase shall be recognized as an intangible asset if all the conditions described below can be demonstrated; otherwise, they will be recognized in profit or loss as incurred. 1) 2) 3) 4) 5) 6) The technical feasibility of completing the intangible asset so that it will be available for use or sale. Its intention to complete the intangible asset and use or sell it. Its ability to use or sell the intangible asset. How the intangible asset will generate probable future economic benefits. The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset. Its ability to measure reliably the expenditure attributable to the intangible asset during its development. Capitalized expenditure arising from the development phase is measured at cost less accumulated amortization and accumulated impairment losses. (iii) Other intangible assets Other intangible assets that are acquired by the Company are measured at cost, less accumulated amortization and any accumulated impairment losses. (iv) Subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred. (v) Amortization The amortizable amount is the cost of an asset, or other amount substituted for cost, less its residual value. Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill and intangible assets with all indefinite useful life, from the date that they are available for use. The estimated useful lives for the current and comparative periods are as follows: 1) 2) Patents: the shorter of contract period and estimated useful lives Computer software: 1~6 years The residual value, the amortization period, and the amortization method for an intangible asset with a finite useful life shall be reviewed at least annually at each fiscal year-end. Any change shall be accounted for as changes in accounting estimates. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 23 (m) Impairment of non-derivative financial assets Non-derivative financial assets except for inventories, deferred tax assets, and assets arising from employee benefits are assessed at the end of each reporting period whether there is any indication that an asset may be impaired. If any such indication exists, the Company shall estimate the recoverable amount of the asset. If it is not possible to determine the recoverable amount (fair value less cost to sell and value in use) for the individual asset, then the Company will have to determine the recoverable amount for the asset's cash-generating unit. The Company assesses goodwill and intangible assets, which have indefinite useful lives and are not available for use, on an annual basis and recognizes an impairment loss on excess of carrying value over the recoverable amount. The recoverable amount for an individual asset or a cash-generating unit is the higher of its fair value, less costs to sell and its value in use. If, and only if, the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is an impairment loss. An impairment loss shall be recognized immediately in profit or loss. For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be allocated to each of the acquirer’ s cash-generating units, or groups of cash- generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquire are assigned to those units or group of units. If the carrying amount of the cash-generating units exceeds the recoverable amount of the unit, the entity shall recognize the impairment loss and the impairment loss shall be allocated to reduce the carrying amount of each asset in the unit. Reversal of an impairment loss for goodwill is prohibited. The Company assesses at the end of each reporting period whether there is any indication that an impairment loss recognized in prior periods for an asset other than goodwill may no longer exist or may have decreased. An impairment loss recognized in prior periods for an asset other than goodwill shall be reversed if, and only if, there has been a change in the estimates used to determine the asset’ s recoverable amount since the last impairment loss was recognized. If this is the case, the carrying amount of the asset shall be increased to its recoverable amount. That increase is a reversal of an impairment loss. (n) Provisions A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probably that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 24 (o) Treasury stock Repurchased shares are recognized under treasury shares (a contra-equity account) based on its repurchase price (including all directly accountable costs), and net of tax. Gains on disposal of treasury shares should be recognized under Capital Reserve – Treasury Shares Transactions; losses on disposal of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings. The carrying amount of treasury shares should be calculated using the weighted average different types of repurchase. During the cancellation of treasury shares, Capital Reserve – Share Premiums and Share Capital should be debited proportionately. Gains on cancellation of treasury shares should be recognized under existing capital reserves arising from similar types of treasury shares; losses on cancellation of treasury shares should be offset against existing capital reserves arising from similar types of treasury shares. If there are insufficient capital reserves to be offset against, then such losses should be accounted for under retained earnings. (p) Revenue from contracts with customers Revenue is measured based on the consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control of a good or a service to a customer. The accounting policies for the Company’s main types of revenue are explained below. (i) Sale of goods The Company manufactures and sells electronic products to electronic products brand vendor. The Company recognizes revenue when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. The Company assesses sales discounts based on historical experience, management’s judgment and other known reasons. Such allowances are recognized as a deduction of sales revenue in the same period in which sales are made. The aforementioned provisions are expected to settle over the next year. A refund liability is recognized for expected discounts payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales of electronic products are made with a credit term which is consistent with the market practice. A receivable is recognized when the goods are delivered as this is the point in time that the Company has a right to an amount of consideration that is unconditional. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 25 (ii) Financing components The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any of the transaction prices for the time value of money. (q) Employee benefits (i) Defined contribution plans Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. (ii) Defined benefit plans A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’ s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. The fair value of any plan assets is deducted. The discount rate is the yield at the reporting date on government bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same currency in which the benefits are expected to be paid. The calculation of defined benefit obligation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Company, the recognized asset is limited to the total of the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. In order to calculate the present value of economic benefits, consideration is given to any minimum funding requirements that apply to any plan in the Company. An economic benefit is available to the Company if it is realizable during the life of the plan, or on settlement of the plan liabilities. If the benefits of a plan are improved, the pension cost incurred from the portion of the increased benefit relating to past service by employees, is recognized immediately in profit or loss. Re-measurement of net defined benefit liability (asset) (including actuarial gains, losses and the return on plan asset and changes in the effect of the asset ceiling, excluding any amounts included in net interest) is recognized in other comprehensive income (loss). The effect of re- measurement of the defined benefit plan is charged to retained earnings. The Company recognizes gains or losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment comprises any resulting change in the fair value of plan assets and change in the present value of defined benefit obligation. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 26 (iii) Short-term employee benefits Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably. (r) Share-based payment The grant-date fair value of share-based payment awards granted to employee is recognized as employee expenses, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense is adjusted to reflect the number of awards which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of award that meet the related service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of the share- based payment is measured to reflect such conditions, and there is no true-up for differences between expected and actual outcomes. (s) Income taxes Income tax expenses include both current taxes and deferred taxes. Except for expenses related to business combinations or recognized directly in equity or other comprehensive income, all current and deferred taxes shall be recognized in profit or loss. The Company has determined that the global minimum top-up tax – which it is required to pay under Pillar Two legislation – is an income tax in the scope of IAS 12. The Company has applied a temporary mandatory relief from deferred tax accounting for the impacts of the top-up tax and accounts for it as a current tax when it is incurred. Current taxes include tax payables and tax deduction receivables on taxable gains (losses) for the year calculated using the statutory tax rate on the reporting date or the actual legislative tax rate, as well as tax adjustments related to prior years. Deferred taxes arise due to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases. Deferred taxes shall not be recognized for the following exceptions: (i) Temporary differences on the initial recognition of assets and liabilities in a transaction that is not a business combination and at the time of the transaction (i) affects neither accounting nor taxable profits (losses) and (ii) does not give rise to equal taxable and deductible temporary differences. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 27 (ii) Temporary differences arising from equity investments in subsidiaries or joint ventures where there is a high probability that such temporary differences will not reverse. (iii) Initial recognition of goodwill. Deferred tax assets and liabilities shall be measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled based on tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities may be offset against each other if the following criteria are met: (i) The entity has the legal right to settle tax assets and liabilities on a net basis; and (ii) the taxing of deferred tax assets and liabilities fulfill one of the below scenarios: 1) 2) levied by the same taxing authority; or levied by different taxing authorities, but where each such authority intends to settle tax assets and liabilities (where such amounts are significant) on a net basis every year of the period of expected asset realization or debt liquidation, or where the timing of asset realization and debt liquidation is matched. A deferred tax asset should be recognized for the carry-forward of unused tax losses, unused tax credits, and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. Such unused tax losses, unused tax credits, and deductible temporary differences shall also be re-evaluated every year on the financial reporting date, and they shall be adjusted based on the probability that future taxable profit that will be available against which the unused tax losses, unused tax credits, and deductible temporary differences can be utilized. The surtax on unappropriated earnings is recoded as current tax expense in the following year after the resolution to appropriate retained earnings is approved in a stockholders’ meeting. (t) Business combination Goodwill is measured as an aggregation of the consideration transferred (which generally is measured at fair value at the acquisition date) and as an amount of any non-controlling interest in the acquiree, net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed (generally at fair value). If the residual balance is negative, the Company shall re-assess whether it has correctly identified all of the assets acquired and liabilities assumed, and recognize a gain on the bargain purchase thereafter. All the transaction costs incurred for the business combination are recognized immediately as the Company’s expenses when incurred, except for the issuance of debt or equity instruments. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 28 If the business combination is achieved in stages, the Company shall measure any non-controlling equity interest in the acquiree either at fair value or at the non-controlling interest’ s proportionate share of the acquiree’s identifiable net assets. Other non-controlling interest is measured (1) at fair value at the acquisition date or (2) by using other valuation techniques acceptable under the IFRS as endorsed by the FSC. In a business combination achieved in stages, the Company shall re-measure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss. In prior reporting periods, the Company may have recognized changes in the value of its equity interest in the acquiree in other comprehensive income. If so, the amount that was recognized in other comprehensive income shall be recognized on the same basis as would be required if the Company had disposed directly of the previously held equity interest. If the disposal of the equity interest required a reclassification to profit or loss, such an amount shall be reclassified to profit or loss. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Company shall retrospectively adjust the provisional amounts recognized at the acquisition date, or recognize additional assets or liabilities to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date. (u) Earnings per share The Company discloses the basic and diluted earnings per share attributable to ordinary equity holders of the Company. The calculation of basic earnings per share is based on the profit attributable to the ordinary shareholder of the Company divided by weighted average number of ordinary shares outstanding. The calculation of diluted earnings per share is based on the profit attributable to ordinary shareholders of the Company divided by weighted average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise employee compensation not yet approved by the Board of Directors. (v) Operating segments The operating segment information is disclosed within the consolidated financial statements but not disclosed in the parent-company-only financial statements. (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty: In preparing these financial statements, management has made judgments, estimates, and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income, and expenses. Actual results may differ from these estimates. The management continues to monitor the accounting estimates and assumptions. The management recognizes any changes in accounting estimates during the period and the impact of those changes in accounting estimates in the next period. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 29 There are no critical judgments in applying the accounting policies that have significant effect on the amounts recognized in the financial statements. Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year is as follows. (a) Recognition and measurement of refund liabilities Because of the sales returns and allowances, the Company records refund liabilities (sales returns and allowances provisions) for estimated returns and other allowances in the same period the related revenue is recorded. The estimate is made based on historical experience, market and economic conditions, and any other known factors using the expected value or the most likely amount, and it could be different from actual sales returns and allowances, therefore, the management periodically reviews the adequacy of the estimation used. (b) Valuation of inventories As inventories are stated at the lower of cost or net realizable value, the net realizable value of the inventory is mainly determined based on assumptions as to future demand within a specific time horizon. Due to the rapid industrial changes, there may be significant differences in the net realizable value of inventories. Refer to note (6)(f) for further description of the valuation of inventories. (6) Explanation of significant accounts: (a) Cash and cash equivalents Cash on hand Checking accounts and demand deposits Time deposits Cash equivalents December 31, 2023 December 31, 2022 $ $ 2,399 17,422,781 2,472,410 614,100 20,511,690 3,504 27,183,895 652,991 3,125,304 30,965,694 Please refer to note (6)(v) for the disclosure of the exchange rate risk, the interest rate risk and the fair value sensitivity analysis of the financial assets and liabilities of the Company. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 30 (b) Financial assets at fair value through profit or loss Non-current financial assets mandatorily measured at fair value through profit or loss: Non-derivative financial assets Stock unlisted in domestic markets Fund in foreign market Total December 31, 2023 December 31, 2022 $ $ 158,680 179,175 337,855 117,150 132,417 249,567 For the market risk related to the financial instruments, please refer to note (6)(v). As of December 31, 2023 and 2022, the Company did not provide any aforementioned financial assets as collaterals for its loans. (c) Financial assets at fair value through other comprehensive income Equity investments at fair value through other comprehensive income: Stock listed in domestic markets Stock listed in foreign markets Stock unlisted in domestic markets Stock unlisted in foreign markets Total December 31, 2023 December 31, 2022 $ 2,752,235 1,688,060 2,906,241 276,342 262,892 579,341 782,312 84,127 $ 6,197,710 3,133,840 The purpose that the Company invests in the abovementioned equity securities is for long-term strategies, but rather for trading purpose. Therefore, these equity securities are designated as at FVOCI. For the year ended December 31, 2022, the Company has sold all of its shareholdings, measured at fair value through other comprehensive income, in GENKI SANGA HOLDINGS CO., LTD. The fair value of the shares upon disposal amounted to $10,028, resulting in a cumulative gain of $2,838, which was reclassified from other comprehensive income to retained earnings. For the year ended December 31, 2023, the Company has sold all of its shareholdings, measured at fair value through other comprehensive income, in Genovior Biotech Corp. The fair value of the shares upon disposal amounted to $47,921, resulting in a cumulative gain of $17,790, which was reclassified from other comprehensive income to retained earnings. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 31 The Company held the shareholdings, measured at fair value through other comprehensive income, in Taiwan Star Telecom Corporation Limited (“Taiwan Star”), which was absorbed and merged by Taiwan Mobile Co., Ltd. (“Taiwan Mobile”) on December 1, 2023, as the date of the merger. In this stock swap case, the shareholdings of Taiwan Star were exchanged for the exchange consideration of $317,172 on the date of the merger, resulting in a cumulative loss on disposal of $663,293, which was reclassified from other equity to retained earnings. If there is an increase (decrease) in the market price by 5% on the reporting date of the equity securities hold by the Company, the increase (decrease) in other comprehensive income (pre-tax) for the years ended December 31, 2023 and 2022, will be $309,886 and $156,692, respectively. These analyses are performed on the same basis for the period and assume that all other variables remain the same. For the Company’s information of market risk, please refer to note (6)(v). As of December 31, 2023 and 2022, the Company did not provide any financial assets at fair value through other comprehensive income as collaterals for its loans. (d) Notes and accounts receivable Accounts receivable – measured at amortized cost Accounts receivable – fair value through other comprehensive income Less: allowance for uncollectible accounts December 31, 2023 $ 158,625,335 December 31, 2022 170,615,775 28,158,504 16,091,084 186,783,839 186,706,859 (3,691,908) (3,642,881) recorded as credit balance of investments in equity method (24,107) (27,599) Notes and accounts receivable, net $ 183,067,824 183,036,379 $ 171,591,962 169,758,431 Notes and accounts receivable – related parties, net $ 11,475,862 13,277,948 The Company has assessed a portion of its trade receivables that was held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; therefore, such trade receivables were measured at fair value through other comprehensive income. The Company applies the simplified approach to provide for its expected credit losses, i.e. the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due, as well as incorporated forward looking information. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 32 The loss allowance provision of notes and accounts receivable were determined as follows: Carrying amount of notes and accounts receivable 176,317,572 6,847,571 3,618,696 186,783,839 Carrying amount of notes and accounts receivable 176,980,832 6,102,290 3,623,737 186,706,859 $ $ $ $ December 31, 2023 Weighted- average ECL rate 0% 1.069% 100% Lifetime ECLs - 73,212 3,618,696 3,691,908 Credit- impaired No No Yes December 31, 2022 Weighted- average ECL rate 0% 0.314% 100% Lifetime ECLs - 19,144 3,623,737 3,642,881 Credit- impaired No No Yes Credit rating Level A Level B Level C Credit rating Level A Level B Level C The aging analysis of notes and accounts receivable, were determined as follows: Overdue 1 to 180 days December 31, 2023 December 31, 2022 $ 1,419,193 1,306,052 The movements in the allowance for notes and accounts receivable were as follow: Balance at January 1 Impairment losses recognized Balance at December 31 2023 2022 3,642,881 3,632,789 49,027 10,092 3,691,908 3,642,881 $ $ Allowance for uncollectible account is the balance of accounts receivables which are uncollectable. Except for evaluating the situation of the customers’ payment records and widely analyzing the credit rating of customers, the Company also takes all the necessary procedures for collection. The Company believes that there is no doubt for the recovery of the due but unimpaired account receivable, therefore, no allowance recognized. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 33 The Company entered into accounts receivable factoring agreements with banks. As of December 31, 2023 and 2022, except for the amount used under the actual sales amount in accordance with certain agreements, the factoring amount granted by the banks were USD 2,100,000 thousands and USD 1,600,000 thousands, respectively. Based on the agreements, the Company is not responsible for guaranteeing the ability of the accounts receivable obligor to make payment when it is affected by credit risk. Thus, this is a non-recourse accounts receivable factoring. The Company derecognized the above account receivables because it has transferred substantially all of the risks and rewards of their ownership and it does not have any continuing involvement in them. After the transfer of the accounts receivable, the Company can request partial advanced amount, while the interest calculated at an agreed rate is paid to the bank in the period during the time of receiving advance and the accounts receivable is collected. The remaining amounts with no advance are received when the accounts receivable are settled by the customers. As of December 31, 2023 and 2022, accounts receivable factored were recovered. The Company, customers, and banks signed the three-party contracts in which the banks purchase accounts receivable from the Company. The total amount of the accounts receivable should not exceed the facility limit provided by the banks to the Company’s customers. Based on the contracts, the banks have no right to request the Company to repurchase the accounts receivable. Thus, this is a non-recourse accounts receivable transfer. As of December 31, 2023 and 2022, accounts receivable factored were recovered. The details of the factored accounts receivable at the reporting date were as follows: Accounts receivable factored (gross) Purchaser Financial Institution $ 13,185,468 Accounts receivable factored (gross) Purchaser Financial Institution $ 30,110,005 December 31, 2023 Amount advanced Paid Unpaid Amount recognized in other receivables Amount Collateral derecognized Interest rate - 13,185,468 - - 13,185,468 6.01%~6.20% December 31, 2022 Amount advanced Paid Unpaid Amount recognized in other receivables Amount Collateral derecognized Interest rate - 30,110,005 - - 30,110,005 4.74%~5.61% As of December 31, 2023 and 2022, the Company did not provide any aforementioned notes and accounts receivable as collaterals. (e) Other receivables Other receivables - loans to subsidiaries Other receivables - related parties Others December 31, 2023 December 31, 2022 $ $ 3,208,385 281,621 461,767 3,951,773 2,979,700 221,214 661,570 3,862,484 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 34 As of December 31, 2023 and 2022, none of other receivables were past due. (f) Inventories Finished goods Work in progress Raw materials December 31, 2023 10,291,518 1,414,789 39,337,185 51,043,492 $ $ December 31, 2022 15,471,653 1,276,477 36,316,027 53,064,157 (i) During the years ended December 31, 2023 and 2022, inventory cost recognized as cost of sales amounted to $846,864,149 and $975,074,956, respectively. (ii) Due to sale and scrap of slow-moving inventories, the net realizable value of inventory recovered, and the reversal of inventory write-down and slow-moving losses amounted to $1,775,969 for the year ended December 31, 2023. The loss due to the write-down of inventories to net realizable value amounted $937,684 for the year ended December 31, 2022. (iii) As of December 31, 2023 and 2022, the Company did not provide any inventories as collaterals for its loans. (g) Investments accounted for using equity method A summary of the Company’s financial information for equity-accounted investees at the reporting date is as follows: Subsidiaries Associates Plus: Recorded as accounts receivable and other receivables-related parties Credit balance of investments in equity method (recorded as other non-current liability) Less: unrealized profits or losses December 31, 2023 $ 101,604,769 December 31, 2022 93,821,244 3,051,907 3,259,336 104,656,676 97,080,580 224,107 227,599 827,770 (211,671) 961,854 (10,157) $ 105,496,882 98,259,876 (i) Subsidiaries Please refer to the consolidated financial statement for the year ended December 31, 2023. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 35 (ii) Associates 1) The fair value of the shares of listed company based on the closing price was as follow: Allied Circuit Co., Ltd. (“Allied Circuit”) Avalue Technology Inc. (“Avalue”) December 31, 2023 December 31, 2022 $ $ 1,574,448 1,783,426 3,357,874 1,031,010 1,214,819 2,245,829 2) The Company’s share of the net gain (loss) of associates was as follows: The Company’s share of the loss of associates 2023 (269,077) $ 2022 (179,262) 3) The Company’ s financial information for investments accounted for using the equity method that are individually immaterial was as follows: Carrying amount of individually immaterial associates $ 3,051,907 3,259,336 December 31, 2023 December 31, 2022 The Company’s share of the net income (loss) of associates: 2023 2022 Loss from continuing operations Other comprehensive income (loss) Total comprehensive income (loss) $ $ (269,077) (179,262) 2,077 (267,000) 149,704 (29,558) (iii) As of December 31, 2023 and 2022, the Company did not provide any investments accounted for using equity method as collaterals for its loans. (h) Corporate combination In order to accelerate the deployment in the industrial PCs market, the Company made a tender offer for 56% ownership of Poindus Systems Corp, Ltd. (“Poindus Systems”) at a total price of $353,046 on March 7, 2022. The aforementioned price was paid, and the settlement had been completed. Goodwill arising from the acquisition of 56% ownership is as follows: Consideration transferred Non-controlling interests Less: fair value of identifiable net assets $ $ 353,046 247,882 (563,868) 37,060 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 36 Goodwill is mainly derived from the business value of Poindus Systems in the industrial PCs market. It is expected that the business of Poindus System and the Company business will be integrated to generate synergy. (i) Changes in subsidiaries’ equity (i) Changes in subsidiaries’ equity did not result in the Company’s loss of control 1) Cancellation of subsidiaries’ restricted shares and conversion of convertible bonds Arcadyan Technology Corp. (“Arcadyan”) canceled 30 thousand restricted shares in the year ended December 31, 2022. Whereas, Arcadyan issued 3,892 thousand new shares due to the conversion of convertible bonds during 2022. This event resulted in a decrease of 0.59% the ownership of the Company and its subsidiaries in Arcadyan in the year ended December 31, 2022. Compal Broadband Network Inc. (“ CBN” ) canceled 364 thousand and 469 thousand restricted shares in the years ended December 31, 2023 and 2022. These two events, respectively, resulted in an increase of 0.32% and 0.43% the ownership of the Company and its subsidiaries in CBN in the years ended December 31, 2023and 2022. 2) Issuance of new shares for cash of subsidiaries The Company purchased newly issued shares of Aco Smartcare Co., Ltd. (“ Aco Smartcare”) amounting to $69,083 at a percentage different from its existing ownership percentage in July, 2023, resulting in an increase in the ownership of the Company in Aco Smartcare from 52.04% to 71.46%. 3) The acquisition of additional equity in the subsidiary In June 2022, the Company acquired 0.12% of equity interest in General Life Biotechnology Co., Ltd. (“ GLB” ) from minority shareholders with $700 in cash, increasing equity from 50.00% to 50.12%. 4) The following summarizes the effect of changes in equity of the Company due to changes in the ownership interest of subsidiaries: Capital surplus – changes in ownership interest in subsidiaries Retained earnings 2023 2022 $ $ 2,213 (16,652) (14,439) 33,397 (2,260) 31,137 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 37 (j) Property, plant and equipment The cost, depreciation, and impairment of the property, plant and equipment of the Company for the years ended December 31, 2023 and 2022, were as follows: Cost: Balance on January 1, 2023 Additions Disposals and derecognitions Reclassifications Balance on December 31, 2023 Balance on January 1, 2022 Additions Disposals and derecognitions Reclassifications Balance on December 31, 2022 Depreciation and impairments loss: Balance on January 1, 2023 Depreciation for the period Disposals and derecognitions Balance on December 31, 2023 Balance on January 1, 2022 Depreciation for the period Disposals and derecognitions Reclassifications Balance on December 31, 2022 Carrying amounts: Balance on December 31, 2023 Balance on January 1, 2022 Balance on December 31, 2022 Buildings and building improvement Other equipment Land Under construction and prepayment for purchase of equipment Total $ 1,047,797 2,449,934 3,042,254 23,257 6,563,242 - - - 3,384 178,319 74,688 256,391 (16,139) (362,323) - (378,462) 10,719 59,170 (69,889) - $ $ 1,047,797 2,447,898 2,917,420 28,056 6,441,171 1,047,797 2,556,398 2,790,052 27,476 6,421,723 - - - 36,218 198,484 98,200 332,902 (100,195) (91,188) - (191,383) (42,487) 144,906 (102,419) - $ 1,047,797 2,449,934 3,042,254 23,257 6,563,242 $ $ $ $ $ $ $ - - - - - - - - - 1,650,666 2,495,267 90,763 295,867 (16,139) (309,541) 1,725,290 2,481,593 1,682,354 2,254,406 110,767 275,322 (99,968) (76,948) (42,487) 42,487 1,650,666 2,495,267 - - - - - - - - - 4,145,933 386,630 (325,680) 4,206,883 3,936,760 386,089 (176,916) - 4,145,933 1,047,797 1,047,797 1,047,797 722,608 874,044 799,268 435,827 535,646 546,987 28,056 2,234,288 27,476 2,484,963 23,257 2,417,309 As of December 31, 2023 and 2022, the Company did not provide property, plant and equipment as collateral for its borrowing. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 38 (k) Right-of-use assets The Company leases many assets including buildings and vehicles. Information about leases for which the Company as a lessee is presented below: Buildings Vehicles Total Cost: Balance on January 1, 2023 Additions Deductions Balance on December 31, 2023 Balance on January 1, 2022 Additional Deductions Balance on December 31, 2022 Depreciation: Balance on January 1, 2023 Depreciation for the period Deductions Balance on December 31, 2023 Balance on January 1, 2022 Depreciation for the period Deductions Balance on December 31, 2022 Carrying amount: Balance on December 31, 2023 Balance on January 1, 2022 Balance on December 31, 2022 $ $ $ $ $ $ $ $ $ $ $ 2,068,450 478,563 (462,408) 2,084,605 2,263,891 151,796 (347,237) 2,068,450 1,040,187 435,903 (423,802) 1,052,288 927,542 440,095 (327,450) 1,040,187 1,032,317 1,336,349 1,028,263 28,723 - (26,659) 2,064 28,374 532 (183) 28,723 23,620 4,119 (26,659) 1,080 17,464 6,156 - 23,620 984 10,910 5,103 2,097,173 478,563 (489,067) 2,086,669 2,292,265 152,328 (347,420) 2,097,173 1,063,807 440,022 (450,461) 1,053,368 945,006 446,251 (327,450) 1,063,807 1,033,301 1,347,259 1,033,366 (l) Short-term borrowings The details of short-term borrowings were as following: Unsecured bank loans Unused credit line for short-term borrowings Range of interest rates December 31, 2023 46,917,800 $ December 31, 2022 53,068,579 $ 106,729,000 94,657,000 1.62%~6.15% 1.45%~5.38% For information on the Company’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(v). (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 39 (m) Long-term borrowings The details of long-term borrowings were as follows: Unsecured bank loans December 31, 2023 Currency TWD Range of annual interest rates 1.64%~2.10% Maturity year 2024~2027 Unsecured bank loans USD 6.10% 2024 Less: current portion Total Unused credit line for long-term borrowings Unsecured bank loans Less: current portion Total Unused credit line for long-term borrowings December 31, 2022 Currency TWD Range of annual interest rates 1.48%~2.06% Maturity year 2023~2026 Amount 21,425,000 1,842,300 (10,742,300) 12,525,000 21,725,000 Amount 30,525,000 (19,300,000) 11,225,000 12,969,000 $ $ $ $ $ $ For information on the Company’s interest risk, foreign currency risk and liquidity risk, please refer to note (6)(v). (n) Lease liabilities The details of lease liabilities were as follows: Current Non-current For the maturity analysis, please refer to note (6)(v). The amounts recognized in profit or loss was as follows: December 31, 2023 December 31, 2022 $ $ 352,900 688,466 249,553 791,427 Interest on lease liabilities Expenses relating to leases of low-value assets or short-term leases 2023 2022 $ $ 14,735 21,770 15,115 9,113 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 40 The amounts recognized in the statement of cash flows for the Company was as follows: Total cash outflow for leases (i) Building leases 2023 2022 $ 475,471 463,819 The Company leases buildings for its office and factory space, typically run for a period of 1~10 years. (ii) Other leases The Company leases vehicles with lease terms of 3~5 years. The Company also leases some machinery and office equipment with contract terms of 1~5 years. These leases are short-term or leases of low-value items. The Company has elected not to recognize right-of-use assets and lease liabilities for these leases. (o) Employee benefits (i) Defined benefit plans Reconciliation of defined benefit obligations at present value and plan assets at fair value were as follows: Present value of defined benefit obligations Fair value of plan assets Net defined benefit liabilities December 31, 2023 (1,173,609) December 31, 2022 (1,185,366) 604,726 618,425 (568,883) (566,941) $ $ The Company makes defined benefit plan contributions to the pension fund account with Bank of Taiwan that provides pensions for employees upon retirement. The plans (covered by the Labor Standards Law) entitle a retired employee to receive retirement benefits based on years of service and average salary for the six months prior to retirement. 1) Composition of plan assets The Company allocates pension funds in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, and such funds are managed by the Labor Pension Fund Supervisory Committee. With regard to the utilization of the funds, minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with interest rates offered by local banks. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 41 The balance of the Company’ s labor pension reserve account in the Bank of Taiwan amounted to $581,007 (excluding the ending balance of interest receivable) as of December 31, 2023. For information on the utilization of the labor pension fund assets including the asset allocation and yield of the fund, please refer to the website of the Bureau of Labor Funds, Ministry of Labor. 2) Movements in the present value of the defined benefit obligations The movements in the present value of defined benefit obligations for the Company were as follows: Defined benefit obligations on January 1 $ (1,185,366) 2023 Current service costs and interest Remeasurements of net benefit liabilities Benefit paid by the plan (22,953) (16,367) 51,077 2022 (1,318,160) (13,894) 87,865 58,823 Defined benefit obligations on December 31 $ (1,173,609) (1,185,366) 3) Movements of the fair value of defined benefit plan assets The movements in the fair value of the defined benefit plan assets for the Company were as follows: 2023 2022 Fair value of plan assets on January 1 Expected return on plan assets Remeasurements of net benefit plan assets Contributions paid by the employer Benefits paid by the plan Fair value of plan assets on December 31 $ $ 618,425 9,811 3,510 24,057 (51,077) 604,726 602,029 4,317 46,466 24,436 (58,823) 618,425 4) Expenses recognized in profit or loss The expenses recognized in profit or loss for the Company were as follows: 2023 2022 Current service cost Net interest on the net defined benefit liability (asset) Cost of sales Selling expenses Administrative expenses Research and development expenses $ $ $ $ 3,711 9,431 13,142 427 612 3,270 8,833 13,142 3,952 5,625 9,577 351 456 2,394 6,376 9,577 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 42 5) Actuarial assumptions The following were the Company’s principal actuarial assumptions at the reporting date: Discount rate Future salary increase rate December 31, 2023 1.40% December 31, 2022 1.70% 3.00% 3.00% The expected allocation payment made by the Company to the defined benefit plans for the one year period after the reporting date is $24,691. The weighted-average lifetime of the defined benefit plan is 7.6 years. 6) Sensitivity analysis If the main actuarial assumptions had changed, the impact on the present value of the defined benefit obligation shall be as follows: December 31, 2023 Discount rate Future salary increasing rate December 31, 2022 Discount rate Future salary increasing rate Effects to the defined benefit obligation Increased 0.25% Decreased 0.25% (21,684) 21,987 (23,229) 23,643 22,385 (21,412) 23,998 (23,005) Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown above. The method used in the sensitivity analysis is consistent with the calculation on the net defined benefit liabilities in the balance sheets. The method and assumption used in the sensitivity analysis is consistent with prior period. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 43 (ii) Defined contribution plans The Company allocates 6% of each employee’s monthly wages to the labor pension personal account at the Bureau of Labor Insurance in accordance with the provisions of the Labor Pension Act. Under these defined contribution plans, the Company allocates the labor pension at a specific percentage to the Bureau of the Labor Insurance without additional legal or constructive obligations. The Company recognized the pension costs under the defined contribution method amounting to $433,882 and $421,223 for the years ended December 31, 2023 and 2022, respectively. Payment was made to the Bureau of Labor Insurance. (p) Income taxes (i) Income tax expenses 1) The amount of income tax for the years ended December 31, 2023 and 2022, was as follows: Current tax expense Recognized during the period $ 1,365,434 1,627,923 2023 2022 Undistributed earnings additional tax Tax credit of investment Deferred tax expense Recognition and reversal of temporary differences Income tax expense 424,610 157,833 (412,301) (638,549) 1,377,743 1,147,207 (335,670) (335,670) $ 1,042,073 (401,887) (401,887) 745,320 2) The amount of income tax recognized in other comprehensive income for the years ended December 31, 2023 and 2022, was as follows: Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Unrealized gains (losses) on equity instruments at fair value through other comprehensive income 2023 2022 $ $ (2,571) 26,866 121,727 119,156 (23,277) 3,589 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 44 3) The income tax expense that was reconciled between the actual income tax expense and profit before tax for the years ended December 31, 2023 and 2022, was as follows: Profit before tax Income tax calculated based on tax rate Undistributed earnings additional tax Estimated tax effect of tax exemption on investment income, net Realized investment loss Investment tax credit Changes in temporary differences Adjustment of estimated difference and other Income tax expense 2023 8,709,700 1,741,940 424,610 (134,725) (132,659) (412,301) (865,073) 420,281 1,042,073 $ $ $ 2022 8,033,612 1,606,722 157,833 (372,094) (98,000) (638,549) 362,434 (273,026) 745,320 (ii) Deferred tax assets and liabilities Changes in the amount of deferred tax assets and liabilities for 2023 and 2022 were as follows: Unrealized exchange losses, net Refund liabilities Allowance for obsolescence loss and inventory valuation Defined benefit plans Others Total Deferred tax assets: Balance on January 1, 2023 $ 975,482 286,548 212,236 161,770 107,573 1,743,609 Recognized in profit or loss 758,888 150,248 (89,297) (2,182) 4,815 822,472 Recognized in other comprehensive income - - Balance on December 31, 2023 $ 1,734,370 436,796 Balance on January 1, 2022 $ 394,836 195,296 Recognized in profit or loss 580,646 91,252 - 122,939 164,573 47,663 2,571 - 162,159 112,388 191,608 171,907 (2,972) (64,334) 2,571 2,568,652 1,118,220 652,255 Recognized in other comprehensive income - - - (26,866) - (26,866) Balance on December 31, 2022 $ 975,482 286,548 212,236 161,770 107,573 1,743,609 Unrealized exchange gains, net Others Total Deferred tax liabilities: Balance on January 1, 2023 $ (755,031) (422,387) (1,177,418) Amount increased through business combination - Recognized in profit or loss (486,802) - - - (486,802) Recognized in other comprehensive income - (121,727) (121,727) Balance on December 31, 2023 $ (1,241,833) (544,114) (1,785,947) (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 45 Balance on January 1, 2022 Amount increased through business Unrealized exchange gains, net $ (504,663) Others (445,664) Total (950,327) combination - Recognized in profit or loss (250,368) - - - (250,368) Recognized in other comprehensive income - 23,277 23,277 Balance on December 31, 2022 $ (755,031) (422,387) (1,177,418) (iii) Unrecognized deferred tax assets Deferred tax assets have not been recognized in respect of the following items: Tax effect of deductible temporary differences December 31, 2023 December 31, 2022 $ 472,981 738,878 The Company assesses and considers that some of the income tax reduction items may be unrealized, hence they are not recognized as deferred tax assets. (iv) Unrecognized deferred tax assets and liabilities related to investments in subsidiaries The temporary differences associated with investment in subsidiaries were not recognized as deferred income tax assets and liabilities as the Company has the ability to control the reversal of these temporary differences which are not expected to reverse in the foreseeable future. As of December 31, 2023 and 2022, the aggregate deductible temporary differences relating to investments in subsidiaries not recognized as deferred tax assets amounted to $3,070,351 and $2,618,241, respectively. As of December 31, 2023 and 2022, the aggregate taxable temporary differences relating to investments in subsidiaries not recognized as deferred tax liabilities amounted to $71,217,500 and $68,285,943, respectively. (v) Examination and approval The Company’s tax returns for the year through 2020 were assessed by the tax authorities. (q) Capital and other equities (i) Ordinary shares As of December 31, 2023 and 2022, the Company’ s authorized common stock consisting of 6,000,000 thousand shares with a par value of 10 New Taiwan dollar per share amounted to $60,000,000 of which 4,407,147 thousand shares were issued. All issued shares were paid up upon issuance. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 46 (ii) Capital surplus The balances of capital surplus were as follows: Additional paid-in capital Treasury share transactions December 31, 2023 December 31, 2022 $ 1,018,088 2,781,989 1,898,477 2,721,968 Difference between consideration and carrying amount arising from acquisition or disposal of subsidiaries Recognition of changes in ownership interests in subsidiaries Changes in equity of associates and joint ventures accounted 36,766 158,285 36,766 156,072 for using equity method 275,787 265,297 $ 4,270,915 5,078,580 In accordance with the ROC Company Act, realized capital reserves can only be used to increase the common stock or distributed as cash dividends after offsetting losses. The aforementioned capital reserves include share premiums and donation gains. In accordance with the Securities Offering and Issuance Guidelines, the amount of capital reserves to be reclassified under share capital shall not exceed 10% of the actual share capital amount. The Company’s Board of Directors’ meeting respectively held on March 15, 2023 and March 15, 2022, approved to distribute cash of $881,429 and $1,762,859 (representing 0.2 and 0.4 New Taiwan dollars per share), by using capital surplus. The Company’s Board of Directors’ meeting held on February 29, 2024, approved to distribute cash of $881,429 (representing 0.2 New Taiwan dollars per share), by using capital surplus. The related information can be accessed through the Market Observation Post System website. (iii) Retained earnings If there is any profit after closing of books in a given year, the Company shall first defray tax due, cover accumulated losses and set aside ten percent of it as legal reserve and then set aside or reverse a special reserve in accordance with laws and regulations. The balance of earnings available for distribution is composed of the remainder of the said profit and the unappropriated retained earnings of previous years. The Board of Directors may set aside a certain amount to cope with the business operation conditions, and shall prepare the proposal for distribution of the balance amount thereof after a resolution has been adopted and then allocated by the Board of Directors. The Company authorizes the Board of Directors to distribute all or part of the dividends and bonuses, capital surplus or legal reserve in cash after a resolution has been adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors; and in addition thereto a report of such distribution shall be submitted to the General shareholders’ meeting. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 47 The lifecycle of the industry of the Company is in the growing stage. To consider the need of the Company for the future capital, capital budget, long-term financial planning, domestic and foreign competition, the need of shareholders for cash flow and other factors, if there is any profit after close of books, the dividend and bonus to be distributed to shareholders shall not be less than thirty percent of profit after tax for such year and the cash dividend allocated by the Company each year shall not be lower than ten percent of the total dividend (including cash and share dividend) for such year. According to the law, when there is a deduction from stockholders’ equity (excluding treasury stock and unearned employee benefit) during the year, an amount equal to the deduction item is set aside as a special reserve before the earnings are appropriated. A special reserve is made available for earning distribution only after the deduction of the related shareholders’ equity has been reversed. 1) Legal reverse When a company incurs no loss, it may, in pursuant to a resolution to be adopted by the shareholders’ meeting as required, distribute its legal reserve by issuing new shares and distributing stock dividends or distributing cash to shareholders. Only the portion of the legal reserve which exceeds 25% of the paid-in capital may be distributed. 2) Special reverse During earnings distribution, if the Company has already reclassified a portion of earnings to special reserve, it shall make supplemental allocation of special reserve for any difference between the amount of the current-period total net reduction of other shareholders’ equity and the amount it has already allocated. An equivalent amount of special reserve shall be allocated from the after-tax net profit in the period, plus items other than after-tax net profit in the period, that are included in the undistributed current- period earnings and the undistributed prior-period earnings. A portion of undistributed prior-period earnings shall be reclassified to special earnings reserve to account for cumulative changes to the net reduction of other shareholders’ equity pertaining to prior periods. Amounts of subsequent reversals pertaining to the net reduction of other shareholders’ equity shall qualify for additional distributions. 3) Earnings distribution Distribution for the earnings of 2022 and 2021 were approved in the meeting of the Board of Directors held on March 15, 2023 and March 15, 2022, respectively. The relevant information was as follows: 2022 2021 Amount per share Total amount Amount per share Total amount Cash dividends distributed to common shareholders $ 1.0 4,407,147 1.6 7,051,435 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 48 Distribution for the earnings of 2023 was approved in the meeting of the Board of Directors held on February 29, 2024. The relevant information was as follows: 2023 Amount per share Total amount Cash dividends distributed to common shareholders from the unappropriated earnings $ 1.0 4,407,147 The related information of the earnings distribution for the year ended December 31, 2023, can be accessed through the Market Observation Post System website after the related meeting. (iv) Treasury stock The subsidiaries of the Company did not sell the ordinary shares of the Company in the years ended December 31, 2023 and 2022. As of December 31, 2023, Panpal and Gempal, subsidiaries of the Company, held 50,017 thousand shares of ordinary shares of the Company, recorded as the Company’s treasury stock, with a book value of 17.6 New Taiwan dollars per share. The total cost was $881,247. The fair value of the ordinary shares of the Company was 39.85 and 23.05 New Taiwan dollars per share as of December 31, 2023 and 2022, respectively. Pursuant to the Securities and Exchange Act, the number of treasury shares purchased cannot exceed 10% of the number of shares issued. The total purchase cost cannot exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus. The shares purchased for the purpose of transferring to employees shall be transferred within three years from the date of share repurchase. Those not transferred within the said limit shall be deemed as not issued by the Company and it should be cancelled. Furthermore, treasury stock cannot be pledged for debts, and treasury stock does not carry any shareholder rights until it is transferred. (v) Other equity interests (net-of-taxes) Exchange differences on transaction of foreign operation financial statements Unrealized gain (loss) from financial assets at fair value through other comprehensive income Unearned compensation for restricted employee shares and others Total Balance on January 1, 2023 The Company Subsidiaries Associates Balance on December 31, 2023 Balance on January 1, 2022 $ $ $ The Company Subsidiaries Associates (1,469,711) (376,004) 202,049 (103,664) (1,747,330) (8,744,705) 7,183,714 9,700 81,580 Balance on December 31, 2022 $ (1,469,711) (461,103) 1,352,493 354,102 117,980 1,363,472 537,830 (590,539) (420,019) 11,625 (461,103) - - - - (12,290) (1,943,104) 8,854 976,489 565,005 14,316 (3,436) (387,294) 125 (12,415) (8,206,750) 6,593,175 (422,734) 93,205 (12,290) (1,943,104) (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 49 (r) Earnings per share The Company’s basic and diluted earnings per share are calculated as follows: Basic earnings per share: Profit attributable to ordinary shareholders of the Company $ 7,667,627 7,288,292 2023 2022 Weighted-average number of outstanding ordinary shares (in thousands) Diluted earnings per share: 4,357,130 4,357,130 Profit attributable to ordinary shareholders of the Company (after adjustment of potential diluted ordinary shares) $ 7,667,627 7,288,292 Weighted-average number of outstanding ordinary shares of potential diluted ordinary shares Weighted-average number of outstanding ordinary shares (in thousands) Effect of potential diluted common stock Employee compensation (in thousands) 4,357,130 4,357,130 26,813 43,369 Weighted-average number of ordinary shares (after adjustment of potential diluted ordinary shares) (in thousands) 4,383,943 4,400,499 (s) Revenue from contracts with customers (i) Disaggregation of revenue Primary geographical markets: United States China Netherlands United Kingdom Others Major products： 5C related electronic products Others 2023 IT Product Segment 347,866,867 $ 2022 IT Product Segment 422,138,779 134,279,955 128,937,847 59,845,035 67,399,114 31,850,768 40,249,464 301,071,590 344,917,587 $ 874,914,215 1,003,642,791 $ 873,568,649 1,002,242,692 1,345,566 1,400,099 $ 874,914,215 1,003,642,791 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 50 (ii) Contract balance Notes and accounts receivable (including related parties) Less: allowance for impairment Less: credit balances of investments in equity method Total Contract liabilities December 31, 2023 December 31, 2022 January 1, 2022 $ 186,783,839 (3,691,908) 186,706,859 (3,642,881) 279,700,604 (3,632,789) (24,107) $ 183,067,824 697,526 $ (27,599) 183,036,379 700,046 (3,097) 276,064,718 1,032,191 For the details on accounts receivable and allowance for impairment, please refer to note (6)(d). The amounts of revenue recognized for the years ended December 31, 2023 and 2022 that was included in the balances of contract liability at the beginning of the period were $700,046 and $1,032,191, respectively. The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied and the payment to be received. (t) Employees’ and directors’ compensations Based on the Company’ s articles of incorporation, if there is any profit in a fiscal year, the Company’s pre-tax profits in such fiscal year, prior to deduction of compensations to employees and directors, shall be distributed to employees as compensations in an amount of not less than two percent thereof and to directors as compensations in an amount of not more than two percent of such profits. In the event that the Company has accumulated losses, the Company shall reserve an amount to offset accumulated losses. The compensations to employees as mentioned above may be distributed in the form of stock or cash. Employees entitled to receive the said stock or cash may include the employees of the Company’s subordinate companies pursuant to the Company Act. The Company accrued and recognized its employee compensation of $814,143 and $750,945, respectively, and directors’ compensation of $43,051 and $39,709 for the years ended December 31, 2023 and 2022, respectively. The estimated amounts mentioned above are based on the net profit before tax without the compensations to employees and directors of each respective ending period, multiplied by the percentage of the compensation to employees and directors, which was approved by the management. The estimations are recorded under operating expenses and cost. The differences between the amounts estimated and recognized in the financial statements, if any, are accounted for as changes in accounting estimates and recognized as profit or loss in the distribution year. If the Board of Directors approve to distribute employee compensation in the form of stock, the number of the shares of the employee compensation is based on the closing price of the day before the Board of Directors’ meeting, the related information can be accessed through the Market Observation Post System website. There is no difference between the amount approved in the Board of Directors’ meeting and those recognized in the financial statements in 2023 and 2022. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 51 There is no differences between the amount estimated and recognized in the financial statements in 2022. The related information can be accessed through the Market observation Post System website. (u) Non-operating income and expenses (i) Interest income The interest income for the years ended December 31, 2023 and 2022, were as follows: Interest income from bank deposits Other interest income (ii) Other income 2023 789,016 212,504 1,001,520 $ $ 2022 283,350 83,963 367,313 The other income for the years ended December 31, 2023 and 2022, were as follows: Dividend revenue Government grants Rental revenue Other revenue (iii) Other gains and losses 2023 2022 $ $ 90,278 84,444 26,602 103,067 304,391 60,493 107,861 16,993 148,964 334,311 The other gains and losses for the years ended December 31, 2023 and 2022, were as follows: Gains (losses) on financial assets and liabilities at fair value through profit or loss, net Foreign currency exchange (losses) gains, net Others 2023 2022 $ $ 47,871 (799) (338) 46,734 (17,430) 818,212 (10,013) 790,769 (v) Financial instruments (i) Credit risk 1) The carrying amount of financial assets represents the maximum amount exposed to credit risk. The Company’ s customers are mainly from the high-tech industry. The Company does not concentrate on a specific customer and the sales regions are widely spread, thus there should be no concern on the significant concentrations of accounts receivable credit risk. And in order to mitigate accounts receivable credit risk, the Company constantly assesses the financial status of the customers. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 52 2) Receivables and debt securities For information of exposure to credit risk of notes and accounts receivable, please refer to note (6)(d). Other financial assets at amortized cost includes other receivables and time deposits. These financial assets are considered to have low risk, and thus, the impairment provision recognized during the period was limited to 12 months expected losses (Regarding how the financial instruments are considered to have low credit risk, please refer to note (4)(f)). Due to the counter parties and the performing parties of the Company’ s time deposits are financial institutions with investment grade and above, these time deposits are considered to have low credit risk. (ii) Liquidity risk The following table shows the contractual maturities of financial liabilities. Except for lease liabilities, the amounts exclude estimated interest payments. Carrying Amount Contractual cash flows Within 1 year 1 ~ 2 years Over 2 years December 31, 2023 Non-derivative financial liabilities Unsecured borrowings Notes and accounts payable Other payables Lease liabilities–current and non-current December 31, 2022 Non-derivative financial liabilities Unsecured borrowings Notes and accounts payable Other payables Lease liabilities–current and non-current $ 70,185,100 163,311,482 12,332,111 (70,185,100) (163,311,482) (12,332,111) (57,660,100) (163,311,482) (12,332,111) (3,500,000) (9,025,000) - - - - 1,041,366 $ 246,870,059 (1,066,268) (246,894,961) (364,918) (233,668,611) (316,947) (3,816,947) (384,403) (9,409,403) $ 83,593,579 154,182,423 13,119,799 (83,593,579) (154,182,423) (13,119,799) (72,368,579) (154,182,423) (13,119,799) (5,400,000) (5,825,000) - - - - 1,040,980 $ 251,936,781 (1,072,067) (251,967,868) (262,093) (239,932,894) (297,430) (5,697,430) (512,544) (6,337,544) The Company is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 53 (iii) Currency risk 1) Exposure to foreign currency risk The Company’s significant exposure to foreign currency risk was as follows: December 31, 2023 Exchange rate Foreign currency TWD December 31, 2022 Exchange rate Foreign currency TWD $ 6,898,443 30.705 211,816,692 7,083,219 30.71 217,525,655 3,237,791 0.8976 2,906,241 652,264 0.8882 579,341 6,832,196 30.705 209,782,578 6,429,305 30.71 197,443,957 Financial assets Monetary items USD to TWD THB to TWD Financial liabilities Monetary items USD to TWD 2) Sensitivity analysis The Company’ s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, loans and borrowings, accounts payable, and other payables that are denominated in foreign currency. Assuming all other variable factors remain constant, a strengthening (weakening) 5% of appreciation (depreciation) of the each major foreign currency against the Company’ s functional currency as of December 31, 2023 and 2022, would have increased (decreased) the net profit before tax as follows. The analysis is performed on the same basis for both periods. USD (against the TWD) Strengthening 5% Weakening 5% 3) Exchange gains and losses of monetary items December 31, 2023 December 31, 2022 $ 101,706 1,004,085 (101,706) (1,004,085) As the Company deals with diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the years ended December 31, 2023 and 2022, the foreign exchange (loss) gains, including both realized and unrealized, amounted to loss $799 and gain $818,212, respectively. (iv) Interest rate analysis The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 54 The following sensitivity analysis is based on the risk exposure to interest rate on the derivative and non-derivative financial instruments on the reporting date. Regarding the assets and liabilities with variable interest rates, the analysis is on the basis of the assumption that the amount of assets and liabilities outstanding at the reporting date were outstanding throughout the year. The rate of change is expressed as the interest rate increase or decrease by 0.25%, when reporting to management internally, which also represents the assessment of the Company’s management for the reasonably possible interval of interest rate change. Assuming all other variable factors remaining constant, if the interest rate had increased or decreased by 0.25%, the impact to the net profit before tax would be as follows for the years ended December 31, 2023 and 2022, which would be mainly resulted from the bank savings and borrowings with variable interest rates. Interest increased by 0.25% Interest decreased by 0.25% (v) Fair value information 2023 2022 $ 14,727 28,128 (14,727) (28,128) 1) The categories and fair value of financial instruments The Company’ s financial assets and liabilities at fair value through profit or loss and financial assets at fair value through other comprehensive income were measured at fair value on a recurring basis. The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It shall not include fair value information of the financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value and investments in equity instruments which do not have any quoted price in an active market in which the fair value cannot be reasonably measured. December 31, 2023 Fair Value Book value Level 1 Level 2 Level 3 Total Financial assets at fair value through profit or loss–non-current Non-derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks listed on foreign markets Stocks unlisted on domestic markets Stocks unlisted on foreign markets Accounts receivable Subtotal $ 337,855 - 2,752,235 2,752,235 2,906,241 2,906,241 276,342 262,892 28,158,504 34,356,214 - - - - - - - - 337,855 337,855 - - 276,342 262,892 2,752,235 2,906,241 276,342 262,892 28,158,504 - 28,158,504 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 55 December 31, 2023 Fair Value Book value Level 1 Level 2 Level 3 Total Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable due from related parties, net Other receivables Refundable deposits -current and non- current Subtotal Total Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Notes and accounts payable to related parties Other payables Lease liabilities–current and non-current Long-term borrowings current portion Long-term borrowings Deposits received Total 20,511,690 143,433,458 11,475,862 3,951,773 337,145 179,709,928 $ 214,403,997 $ 46,917,800 80,947,046 82,364,436 12,332,111 1,041,366 10,742,300 12,525,000 999 $ 246,871,058 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets at fair value through profit or loss–non-current Non-derivative financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Stocks listed on domestic markets Stocks listed on foreign markets Stocks unlisted on domestic markets Stocks unlisted on foreign markets Accounts receivable Subtotal December 31, 2022 Fair Value Book value Level 1 Level 2 Level 3 Total $ 249,567 - 1,688,060 1,688,060 579,341 782,312 84,127 16,091,084 19,224,924 579,341 - - - - - - - - 249,567 249,567 - - 782,312 84,127 1,688,060 579,341 782,312 84,127 16,091,084 - 16,091,084 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 56 December 31, 2022 Fair Value Book value Level 1 Level 2 Level 3 Total Financial assets measured at amortized cost Cash and cash equivalents Notes and accounts receivable, net Notes and accounts receivable due from related parties, net Other receivables Refundable deposits－current and non- current Subtotal Total Financial liabilities measured at amortized cost Short-term borrowings Notes and accounts payable Notes and accounts payable to related parties Other payables Lease liabilities–current and non-current Long-term borrowings current portion Long-term borrowings Deposits received Total 30,965,694 153,667,347 13,277,948 3,862,484 506,040 202,279,513 $ 221,754,004 $ 53,068,579 78,000,744 76,181,679 13,119,799 1,040,980 19,300,000 11,225,000 4,598 $ 251,941,379 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2) Fair value valuation technique of financial instruments not measured at fair value The Company estimates financial instruments that not measured at fair value by methods and assumption as follows: a) Financial assets measured at amortized cost and financial liabilities measured at amortized cost If there is quoted price generated by transactions, the recent transaction price and quoted price data is used as the basis for fair value measurement. However, if no quoted prices are available, the discounted cash flows are used to estimate fair values. 3) Fair value valuation technique of financial instruments measured at fair value a) Non-derivative financial instruments Financial instruments trade in active markets is based on quoted market prices. The quoted price of a financial instrument obtained from main exchanges and on-the- run bonds from Taipei Exchange can be used as a base to determine the fair value of the listed companies’ equity instrument and debt instrument of the quoted price in an active market. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 57 If a quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument is not in accord with the definition mentioned above, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of a non-active market. The fair value of the listed company is determined by reference to the market quotation. The measurements on fair value of the financial instruments without an active market are determined using the valuation technique or the quoted market price of its competitors. Fair value measured using the valuation technique can be extrapolated from similar financial instruments, discounted cash flow method, or other valuation techniques which include the model used in calculating the observable market data at the balance sheet date. The measurement of fair value of a non-active market financial instruments held by the Company which do not have quoted market prices are based on the comparable market approach, with the use of key assumptions of price-book ratio multiple or earnings multiple of comparable listed companies as its basic measurement. These assumptions have been adjusted for the effect of discount without the marketability of the equity securities. b) Derivative financial instruments Measurement of the fair value of derivative instruments is based on the valuation techniques that are generally accepted by the market participants. For instance, discount method or option pricing models. Fair value of forward currency exchange is usually determined by using the forward currency rate. 4) Transfer from one level to another There was no transfer form one level to another in the year ended December 31, 2022. The Company held an investment in equity of Airoha Technology Corp., which is classified as fair value through other comprehensive income, with the fair value of $124,054 and $114,137 at December 31, 2023 and 2022, respectively. The fair value of the investment was previously categorized as Level 3 at December 31, 2022. This was because the shares were not listed on the exchange market and was measured by significant unobservable inputs. In October 2023, Airoha Technology Corp. listed its equity shares on an exchange and they are currently actively traded in the market. Because the equity shares now have a published price quotation in an active market, the fair value measurement was transferred from Level 3 to Level 1 as of December 31, 2023. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 58 The Company held an investment in equity of Taiwan Star with a fair value of $418,658, which was classified as a financial asset at fair value through other comprehensive income as of December 31, 2022. The investment was categorized as Level 3 as of December 31, 2022, because the shares were not listed on the exchange market and were measured by significant unobservable inputs. On December 1, 2023, Taiwan Star was absorbed and merged by Taiwan Mobile, and Taiwan Star’s shares were exchanged for Taiwan Mobile’ s shares, wherein they were actively traded, thus their fair value measurement was transferred from Level 3 to Level 1 as of December 31, 2023. 5) Changes in Level 3 The change in Level 3 at fair value in the years ended December 31, 2023 and 2022, were as follow: Balance on January 1, 2023 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Disposal Proceeds of capital reduction of investment Transferred out form Level 3 Balance on December 31, 2023 Balance on January 1, 2022 Total gains and losses recognized: In profit or loss In other comprehensive income Purchased Disposal Proceeds of capital reduction of investment Balance on December 31, 2022 $ $ $ $ Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Total 249,567 866,439 1,116,006 - - - - - - - 47,871 40,417 337,855 222,303 (17,430) 44,694 249,567 - - (143,488) 308,850 (47,921) (3,420) (441,226) 539,234 795,967 (166,248) 248,758 (10,028) (2,010) 866,439 47,871 (143,488) 349,267 (47,921) (3,420) (441,226) 877,089 1,018,270 (17,430) (166,248) 293,452 (10,028) (2,010) 1,116,006 For the years ended December 31, 2023 and 2022, total gains and losses that were included in “ other gains and losses, net” and “unrealized gains and losses from equity instruments at fair value through other comprehensive income” , respectively were as follows: Total gains and losses recognized: In profit or loss (as “other gains and losses, net”) In other comprehensive income (as “unrealized gains and losses from equity instruments at fair value through other comprehensive income”) $ $ 2023 2022 47,871 (17,430) (90,840) (169,524) (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 59 6) The quantified information for significant unobservable inputs (Level 3) used in fair value measurement The Company’ s financial instruments that use Level 3 input to measure fair values include financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss. Most of fair value measurements of the Company which are categorized as equity investment into Level 3 have several significant unobservable inputs. Significant unobservable inputs of equity investments without quoted price are independent of each other. The quantified information for significant unobservable inputs was as follows: Item Financial assets at fair value through other comprehensive income － equity investment without an active market Valuation technique Comparable market approach (Price-Book ratio method and Earnings multiplier method) Significant unobservable inputs Price-Book ratio multiples (0.75~2.09 and 2.04~2.89, respectively, on December 31, 2023 and 2022) Multiples of earnings (17.25 on December 31, 2022) Lack-of-Marketability discount rate ( 40%~65% on December 31, 2023 and 2022) Net asset value method Net asset value Inter-relationships between significant unobservable inputs and fair value The higher the multiple is, the higher the fair value will be. The higher the multiple is, the higher the fair value will be. The higher the Lack- of-Marketability discount rate is, the lower the fair value will be. Inapplicable Financial assets at fair value through other comprehensive income Financial assets at fair value through profit or loss Net asset value method Net asset value Inapplicable (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 60 7) Sensitivity analysis for fair value of financial instruments using Level 3 inputs The Company’s fair value measurement on financial instruments is reasonable. However, the measurement would be different if different valuation models or valuation parameters are used. For financial instruments using Level 3 inputs, if the valuation parameters changed, the impact on other comprehensive income or loss are as follows: December 31, 2023 Financial assets at fair value through other comprehensive income December 31, 2022 Financial assets at fair value through other comprehensive income Input Price-Book ratio multiples Lack-of-Marketability discount rate Price-Book ratio multiples Multiples of earnings Lack-of-Marketability discount rate Move up or down Other comprehensive income Unfavorable change Favorable change 5% 5% 5% 5% 5% $ $ $ $ $ 8,434 8,311 2,962 3,085 6,617 6,433 2,787 3,428 2,771 3,628 The favorable and unfavorable changes reflect the movement of the fair value, in which the fair value is calculated by using the different unobservable inputs in the valuation technique. The table above shows the effects of one unobservable input, without considering the inter-relationships with another unobservable input for financial instrument, if there are one or more unobservable inputs. (w) Financial risk management (i) Overview The Company is exposed to the following risks arising from financial instruments: 1) Credit risk 2) Liquidity risk 3) Market risk In this note expressed the information on risk exposure and objectives, policies and procedures of risk measurement and management of the Company. For detailed information, please refer to the related notes of each risk. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 61 (ii) Structure of risk management The Company’ s finance management department provides business services for the overall internal department. It sets the objectives, policies and processes for managing the risk and the methods used to measure the risk arising from both the domestic and international financial market operations. The Company minimizes the risk exposure through derivative financial instruments. The Board of Directors regulated the use of derivative financial instruments in accordance with the Company’s policy about risks arising from financial instruments such as currency risk, interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investments of excess liquidity. The internal auditors of the Company continue with the review of the amount of the risk exposure in accordance with the Company’ s policies and the risk management policies and procedures. The Company has no transactions in financial instruments (including derivative financial instruments) for the purpose of speculation. (iii) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities. 1) Accounts receivable and other receivables The Company has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’ s standard payment and delivery terms and conditions are offered. The Company’s review includes external ratings, when available, and in some cases bank references. Purchase limits are established for each customer, and these limits are reviewed periodically. 2) Investments The credit risks exposure in the bank deposits, investments with fixed income and other financial instruments are measured and monitored by the Company’s finance department. Since the Company’ s transaction counterparties and the contractually obligated counterparties are banks, financial institutes and corporate organizations with good credits, there are no compliance issues, and therefore, no significant credit risk. 3) Guarantees Pursuant to the Company’s policies, it is only permissible to provide financial guarantees to subsidiaries and companies that the Company has business with. As of December 31, 2023 and 2022, the guarantees provide to the subsidiaries amounted to $400,816 and $149,014, respectively. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 62 (iv) Liquidity risk Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities which be settled by delivering cash or another financial asset. The Company manages and maintains sufficient cash and cash equivalents so as to cope with its operations and mitigate the effects of fluctuations in cash flows. The Company’ s management supervises the banking facilities and ensures in compliance with the terms of the loan agreements. Please refer to notes (6)(l) and (6)(m) for unused credit lines of short-term and long-term borrowings as of December 31, 2023 and 2022. (v) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices which will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. 1) Currency risk The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the functional currency of the Company, primarily USD. As for other monetary assets and liabilities denominated in other foreign currencies, when short-term imbalance takes place, the Company buys or sells foreign currencies at spot rate to ensure that the net exposure is kept on an acceptable level. 2) Interest rate risk The Company borrows funds on fixed and variable interest rates, which has a risk exposure to changes in fair value and cash flow. Therefore, the Company manages the interest rates risk by maintaining an adequate combination of fixed and variable interest rates. 3) Other price risk The Company is exposed to equity price risk arising from investments in listed equity securities. (x) Capital management The policy of capital management made by the Board of Directors is to maintain a strong capital base so as to stabilize the confidence of the investors, creditors and the public market and to sustain future development of the business. Capital consists of ordinary shares, capital surplus and retained earnings. The Board of Directors monitors the return on capital as well as the level of dividends to ordinary shareholders. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 63 The Company monitors the capital structure by way of periodical review the debt ratio. As of December 31, 2023 and 2022, the debt ratio was as follows: Total liabilities Total assets Debt ratio December 31, 2023 $ 258,671,767 December 31, 2022 263,238,657 $ 378,293,762 379,533,411 68% 69% The Company could purchase its own shares in the public market in accordance with the corresponding rules and regulations. The timing of the purchases depends on market prices. As of December 31, 2023, there were no changes in the Company’ s approach of capital management. (y) Investing and financing activities not affecting current cash flow The Company’s investing and financing activities which did not affect the current cash flow in the years ended December 31, 2023 and 2022 were acquisition of right-of-use assets by leasing, please refer to note (6)(k). Reconciliation of liabilities arising from financial activities was as follows: Short-term borrowings Long-term borrowings Lease liabilities Deposits received Total liabilities from financing activities Short-term borrowings Long-term borrowings Lease liabilities Deposits received Total liabilities from financing activities $ January 1, 2023 53,068,579 30,525,000 1,040,980 4,598 Cash flow (6,150,779) (7,257,700) (438,966) (3,599) Other non- cash changes - - 439,352 - December 31, 2023 46,917,800 23,267,300 1,041,366 999 $ 84,639,157 (13,851,044) 439,352 71,227,465 $ January 1, 2022 78,967,920 24,300,000 1,349,136 170 Cash flow (25,899,341) 6,225,000 (439,591) 4,428 Other non- cash changes - - 131,435 - December 31, 2022 53,068,579 30,525,000 1,040,980 4,598 $ 104,617,226 (20,109,504) 131,435 84,639,157 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 64 (7) Related-party transactions: (a) Name and relationship with related parties The following are the Company’ s subsidiaries and entities that had transactions with related party during the periods covered in the parent-company-only financial statements. Name of related party Panpal Technology Corp. (“Panpal”) Gempal Technology Corp. (“Gempal”) Hong Ji Capital Co., Ltd. (“Hong Ji”) Hong Jin Investment Co., Ltd. (“Hong Jin”) Arcadyan Rayonnant Technology Co., Ltd. (“Rayonnant Technology”) HengHao Technology Co., Ltd. (“HengHao”) Ripal Optortronics Co., Ltd. (“Ripal”) Auscom Engineering Inc. (“Auscom”) Just International Ltd. (“Just”) Compal International Holding Co., Ltd. (“CIH”) Compal Electronics (Holding) Ltd. (“CEH”) Bizcom Electronics, Inc. (“Bizcom”) Flight Global Holding Inc. (“FGH”) High Shine Industrial Corp. (“HSI”) Compal Europe (Poland) Sp. z o.o. (“CEP”) Big Chance International Co., Ltd. (“BCI”) Compal Rayonnant Holdings Limited (“CRH”) Core Profit Holdings Limited (“CORE”) Compalead Electronics B.V. (“CPE”) Relationship with the Company The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Compalead Eletronica do Brasil Industria e Comercio Ltda. (“CEB”) The Company’s subsidiary Compal Display Holding (HK) Limited (“CDH (HK)”) Compal Electronics International Ltd. (“CII”) Compal International Ltd. (“CPI”) Compal Electronics (China) Co., Ltd. (“CPC”) Compal Optoelectronics (Kunshan) Co., Ltd. (“CPO”) Compal System Trading (Kunshan) Co., Ltd. (“CST”) Smart International Trading Ltd. (“Smart”) Amexcom Electronics Inc. (“AEI”) (Note) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 65 Name of related party Mexcom Electronics, LLC (“MEL”) Mexcom Technologies, LLC (“MTL”) Compal Mexico Electromex S.A de C.V. (“CMX”) Compal Americas (US) Inc. (“CUS”) Compal Electronics N.A. Inc. (“CNA”) Compal International Holding (HK) Limited (“CIH (HK)”) Jenpal International Ltd. (“Jenpal”) Prospect Fortune Group Ltd. (“PFG”) Relationship with the Company The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Compal Electronics Technology (Kunshan) Co., Ltd. (“CET”) The Company’s subsidiary Compal Information (Kunshan) Co., Ltd. (“CIC”) The Company’s subsidiary Compal Information Technology (Kunshan) Co., Ltd. (“CIT”) The Company’s subsidiary Kunshan Botai Electronics Co., Ltd. (“BT”) Compal Digital Technology (Kunshan) Co., Ltd. (“CDT”) Compower Global Service Co., Ltd. (“CGS”) Compal Investment (Jiansu) Co., Ltd. (“CIJ”) Compal Display Electronics (Kunshan) Co., Ltd. (“CDE”) Etrade Management Co., Ltd. (“Etrade”) Webtek Technology Co., Ltd. (“Webtek”) Forever Young Technology Inc. (“Forever”) Unicom Global, Inc. (“UCGI”) Palcom International Corporation (“Palcom”) Compal Communication (Nanjing) Co., ltd. (“CCI Nanjing”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Compal Digital Communication (Nanjing) Co., Ltd. (“CDCN”) The Company’s subsidiary Compal Wireless Communication (Nanjing) Co., Ltd. (“CWCN”) The Company’s subsidiary Hanhelt Communication (Nanjing) Co., Ltd. (“Hanhelt”) Giant Rank Trading Ltd. (“GIA”) Arcadyan Technology N.A. Corp. (“Arcadyan USA”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Arcadyan Germany Technology GmbH (“Arcadyan Germany”) The Company’s subsidiary Arcadyan Technology Corporation Korea (“Arcadyan Korea”) The Company’s subsidiary Arcadyan India Private Limited (“Arcadyan India”) Arcadyan Holding (BVI) Corp. (“Arcadyan Holding”) Arcadyan do Brasil Ltda. (“Arcadyan Brasil”) Arcadyan Technology Limited (“Arcadyan UK”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 66 Arcadyan Technology Australia Pty Ltd. (“Arcadyan AU”) Name of related party Relationship with the Company The Company’s subsidiary Arcadyan Technology Corporation (Russia), LLC.(“Arcadyan RU”) The Company’s subsidiary Zhi-Bao Technology Inc. (“Zhi-Bao”) Tatung Technology Inc. (“TTI”) CBN Compal Broadband Networks Belgium BVBA (“CBNB”) Compal Broadband Networks Netherlands B.V. (“CBNN”) Sinoprime Global Inc. (“Sinoprime”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Arcadyan Technology (Vietnam) Co., Ltd. (“Arcadyan Vietnam”) The Company’s subsidiary Arcadyan Technology (Shanghai) corp. (“SVA Arcadyan”) Arch Holding (BVI) Corp. (“Arch Holding”) Compal Networking (Kunshan) Co., Ltd. (“CNC”) Quest International Group Co., Ltd. (“Quest”) Exquisite Electronic Co., Ltd. (“Exquisite”) Tatung Home Appliances (Wujiang) Co., Ltd. (“THAC”) Tatung Technology of Japan Co., Ltd. (“TTJC”) Intelligent Universal Enterprise Ltd. (“IUE”) Goal Reach Enterprises Ltd. (“Goal”) Compal (Vietnam) Co., Ltd. (“CVC”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Compal Development &Management (Vietnam) Co., Ltd. (“CDM”) The Company’s subsidiary Allied Power Holding Corp. (“APH”) Primetek Enterprises Limited (“PEL”) The Company’s subsidiary The Company’s subsidiary Rayonnant Technology (HK) Co., Ltd. (“Rayonnant Technology (HK)”) The Company’s subsidiary Royonnant Technology (Taicang) Co., Ltd. (“Rayonnant Technology The Company’s subsidiary (Taicang)”) HengHao Holdings A Co., Ltd. (“HHA”) HengHao Holdings B Co., Ltd. (“HHB”) The Company’s subsidiary The Company’s subsidiary HengHao Optoelectronics Technology (Kunshan) Co., Ltd. (“HengHao The Company’s subsidiary Kunshan”) LUCOM Display Technology (Kunshan) Limited (“Lucom”) The Company’s subsidiary HengHao Optoelectronics Technology (Zhejiang) Co., Ltd. (“HengHao The Company’s subsidiary Zhejiang”) Center Mind International Co., Ltd. (“CMI”) Prisco International Co., Ltd. (“PRI”) Compal Electronic (Sichuan) Co., Ltd. (“CIS”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 67 Name of related party Compal Electronic (Chongqing) Co., Ltd. (“CEQ”) Compal Electronic (Chengdu) Co., Ltd. (“CEC”) Compal Management (Chengdu) Co., Ltd. (“CMC”) Compal Smart Device (Chongqing) Co., Ltd. (“CSD”) FIPOLL Electronics (Chongqing) Co., Ltd. (“FIP”) Billion Sea Holdings Limited (“BSH”) Mithera Capital Io LP (“Mithera”) Compal USA (Indiana), Inc. (“CIN”) Compal Electronics (Vietnam) Co., Ltd. (“CEV”) Fortune Way Technology Corp. (“FWT”) General Life Biotechnology Co., Ltd. (“GLB”) PT GLB BIOTECHNOLOGY INDONESIA Mactech Co., Ltd. (“Mactech”) Compal Electronics India Private Limited (“CEIN”) Shennona Corporation (“Shennona”) Unicore BioMedical Co., Ltd. (“Unicore”) Raycore Biotech Co., Ltd. (“Raycore”) Hippo Screen Neurotech Co., Ltd. (“Hippo Screen”) Shennona Co., Ltd. (“Shennona TW”) Aco Smartcare Starmems Semiconductor Corp. (“Starmems Semiconductor”) Relationship with the Company The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Kinpo&Compal Group Assets Development Corporation (“Kinpo&Compal The Company’s subsidiary Assets Development”) Compal Electronica DA Amazonia LTDA (“CEA”) Compal Wise Electronic (Vietnam) Co., Ltd. (“CWV”) CGS Technology (Poland) Sp. z o.o. (“CGSP”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Compal Ruifang Health Assets Development Corporation (“Compal The Company’s subsidiary Ruifang”) Compal Healthcare & Technology Ltd. (“Compal Healthcare”) Poindus Systems Corp, Ltd. (“Poindus Systems”) Poindus Investment Co., Ltd. (“Poindus Investment”) QiJie Electronics (ShenZhen) Co., Ltd. (“QiJie”) Poindus Systems UK Limited (“Poindus UK”) Adasys GmbH Elektronische Komponenten (“Adasys”) The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary The Company’s subsidiary Poindus Systems GmbH GroBhandel mit EDV. Oberursel (“Poindus GmbH”) The Company’s subsidiary Compal Connector Manufacture Ltd. (“CCM”) A joint venture company (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 68 Compal Precision Module (Jiangsu) Co., Ltd. (“CPM”) Name of related party Changbao Electronic Technology (Chongqing) Co., Ltd. (“Changbao”) Avalue Crownpo Technology Inc. (“Crownpo”) Allied Circuit LIZ Electronics (Kunshan) Co., Ltd. (“LIZK”) LIZ Electronics (Nantong) Co., Ltd. (“LIZN”) ARCE Therapeutics Co., Ltd. (“ARCE”) Raypal Biomedical Co., Ltd. (“Raypal”) Hong Ya Technology Corporation (“Hong Ya Technology”) Kinpo Group Management Consultant Company (“Kinpo Group Management”) AcBel Polytech Inc. (AcBel) and its subsidiaries (“AcBel”) Relationship with the Company An associate An associate An associate An associate An associate An associate An associate An associate An associate An associate An associate The Chairman of the Board is the first degree of kinship of the Chairman of the Company Cal-Comp Electronics (Thailand) Public Company Limited (“Cal-Comp”) The same Chairman of the Board Kinpo Electronics, Inc. (“Kinpo”) with the Company The same Chairman of the Board with the Company Note: Since the liquidation of AEI was completed in February 2023, AEI was no longer being the Company’s subsidiary. (b) Transactions with key management personnel Key management personnel remunerations comprised: Short-term employee benefits Post-employment benefits There are no termination benefits and other long-term benefits. 2023 533,774 5,711 539,485 $ $ 2022 478,681 5,925 484,606 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 69 (c) Significant related-party transactions (i) Sale of goods to related parties The amounts of significant sales transactions between the Company and related parties were as follows: Subsidiaries Associates Other related parties 2023 1,924,106 $ 168 15,710 2022 6,778,358 171 - $ 1,939,984 6,778,529 Sales prices for related parties were similar to those of the third-party customers. The collection period was 45~180 days for related parties. (ii) Purchase of goods from related parties The amounts of significant purchase transactions between the Company and related parties were as follows: Subsidiaries CSD Others Associates Other related parties 2023 2022 $ 64,959,343 129,409,933 211,169,833 249,433,436 276,129,176 378,843,369 1,431 633 45,844,067 31,370,385 $ 321,974,674 410,214,387 Purchase prices and payment period from related parties were similar to those from third-party suppliers. The payment period was 60~120 days for related parties. (iii) Product warranty service expenses The product warranty service expenses paid to subsidiaries for the years ended December 31, 2023 and 2022, amounted to $361,120 and $316,155, respectively. As of December 31, 2023 and 2022, the unpaid warranty service expenses were record as other payables. (iv) Technical service expense The Company engaged its subsidiaries to research and develop of notebooks, and the related technical service expenses for the years ended December 31, 2023 and 2022, amounted to $197,057 and $203,283, respectively. As of December 31, 2023 and 2022, the unpaid technical service expenses were recorded as other payables. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 70 (v) Receivables due from relate parties The receivables arising from the transactions mentioned above, the sale of machinery and equipment to related parties, and the purchasing of equipment, mold and others on behalf of the related parties as of December 31, 2023 and 2022, were as follows: Account Related party categories December 31, 2023 December 31, 2022 Notes and accounts receivable Subsidiaries $ 5,092,643 Notes and accounts receivable Other related parties 6,407,326 Other receivables Other receivables Other receivables Other receivables Subsidiaries - UCGI Subsidiaries - Others Associates Other related parties 74,672 205,371 1,514 64 8,934,638 4,370,909 195,183 24,710 1,321 - Less: Credit balance of investments accounted for using the equity method 11,781,590 13,526,761 (24,107) (27,599) $ 11,757,483 13,499,162 As of December 31, 2023 and 2022, the Company’s investment accounted for using the equity method in subsidiaries was a credit balance, recorded as a deduction from account receivables and other receivables (other receivables) – related party. Please refer to note (6)(g). (vi) Payables to related parties The payables to related parties as of December 31, 2023 and 2022, were as follows: Account Notes and accounts payable Related party categories Subsidiaries - CIT December 31, 2023 36,056,165 $ December 31, 2022 32,506,355 Notes and accounts payable Subsidiaries - Others 36,734,285 35,192,564 Notes and accounts payable Associates 628 493 Notes and accounts payable Other related parties 9,573,358 8,482,267 Other payables Other payables Subsidiaries Other related parties 233,282 21,788 206,212 20,327 $ 82,619,506 76,408,218 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 71 (vii) Property transactions–Acquisitions of financial assets The acquisitions of financial assets from related parties are summarized as follows: Relationship Other related party – Item Number of shares Acquisition of financial 6,685 2023 Object Common stocks of Acquisition price 259,378 Acbel assets at fair value through thousand Acbel issued other comprehensive shares through cash capital income increase Other related party– 〃 1,249,470 Common stocks of 1,718,266 Cal- Comp thousand Cal-Comp issued shares through cash capital increase (viii) Property transactions–Disposal of property, plant and equipment In 2023, the Company sold machinery to the Company’ s subsidiary, CVC. The disposal proceeds in this transaction were $245,656, and the outstanding amount was $187,645, which was recorded as other receivables. Because it was an inter-group transaction, the disposal gain, $201,514, was unrealized and it was recorded as a deduction from investments accounted for using the equity method. (ix) Loans to related parties The interest rate of unsecured loans to subsidiaries was 2.19%~6.19%, and the Company had assessed that no bad debt expenses should be recognized. As of December 31, 2023 and 2022, the loans due to related parties were recorded as other receivables. Account Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Less: Credit balance of investments in equity method Related party categories Subsidiaries - CEB Subsidiaries - CEA December 31, 2023 December 31, 2022 $ 921,150 767,750 1,995,825 1,381,950 Subsidiaries - HengHao Subsidiaries - UCGI Subsidiaries - CEP Subsidiaries - Kinpo & Compal Assets Development 200,000 230,000 61,410 200,000 230,000 - - 600,000 (200,000) (200,000) $ 3,208,385 2,979,700 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 72 As of December 31, 2023 and 2022, the Company’s investment accounted for using the equity method in some subsidiaries was a credit balance, recorded as a deduction from other receivables – related parties (classified as other receivables). Please refer to note (6)(g). (x) Guarantees As of December 31, 2023 and 2022, the guarantees provided to subsidiaries were $400,816 and $149,014, respectively. (8) Pledged assets: None. (9) Commitments and contingencies: The details of commitments and contingencies were as follows: (a) Huawei Technologies Co., Ltd. filed an infringement litigation against the Group on October 28, 2022. The Group will carefully evaluate the litigation, discuss with related client for the following strategies and actions, and engage professional attorneys, to protect the rights and reputation of the Company from any damage. (b) In August 2019, Inventec Corporation filed a lawsuit to the Taiwan Taipei District Prosecutors Office against the Company concerning its former employees who joined the Company. This is deemed as an act of violation according to the Trade Secret Law and Copyright Law. The Company engaged lawyers to defend its right on this matter. Currently, the case is still in progress in Taipei District Court; therefore, the Company cannot make any reasonable estimation regarding the possible impact on its business operation. (c) The Company entered into various patent license agreements with third parties, and was required to make royalty payments of a predetermined amount periodically. (10) Losses due to major disasters: None (11) Subsequent events: None (12) Other: The employee benefits, depreciation and amortization expenses by categorized function are summarized as follows: By function By item Employee benefits Salary Labor and health insurance Pension Remuneration of directors Others Depreciation Amortization Operating costs 1,087,584 79,553 29,177 - 133,880 145,727 9,067 2023 Operating expenses 11,160,350 757,930 417,847 53,010 438,592 680,925 507,924 Total Operating costs 12,247,934 837,483 447,024 53,010 572,472 826,652 516,991 1,171,256 87,235 32,961 - 145,492 158,378 10,331 2022 Operating expenses 10,508,656 705,361 397,839 49,668 456,164 673,962 449,810 Total 11,679,912 792,596 430,800 49,668 601,656 832,340 460,141 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 73 For the years ended December 31, 2023 and 2022, the information on the number of employees and employee benefit expense of the Company is as follows: Number of employees (Average salaries) Number of directors (non-employees) Average benefit expense of employees Average salary expense of employees Percentage of change in average salary expense of employees Remuneration received by supervisors $ $ $ 8,720 11 1,620 1,406 %8.99 - 9,066 11 1,491 1,290 %6.26 - 2023 2022 Information about salary and compensation policies (including directors, managers and employees) of the Company is as follows: Directors’ remuneration is allocated according to the terms of the Articles of the Incorporation, and no more than 2% of the Company’ s pre-tax profit in the fiscal year, excluding employees’ and directors’ compensations, shall be paid to directors as remuneration along with reasonable compensation based on other factors to be taken into consideration, such as the Company’ s operational performance and the individual directors’ contribution to the Company’s performance. Remuneration of the independent directors’ of the Company is allocated according to the terms of the Articles of the Incorporation, as well as the involvement level in the corporate operation, contribution value, responsibility that is taken, risk that is borne by the independent directors and reference of competitors from the same industry. The remuneration is proposed by the Remuneration Committee and resolved by the Board of Directors. The Company’s remuneration policy for managers has been established based on various factors including the Company’s wage policy, the average wage offered by competitors for the same position, the duties and responsibilities for the position in question, and the manager’ s actual contribution to the Company’ s operational objectives. The Company’ s procedure for determining remuneration takes into account the Company’ s overall operational performance as well as includes employee’s personal performance and their contribution to the Company’ s performance in order to determine a reasonable compensation. Relevant salaries and compensations are reviewed by the Remuneration Committee and resolved by the Board of Directors. The Company will frequently examine the latest developments in the global economy, international financial environment, and change of the industry condition in order to predict its operational development, profit status, operational risks and changes in pertinent regulations in the near future in order to review the compensation system, thereby reach a balance between the Company’s sustainable operation and relevant risk control. (Continued) COMPAL ELECTRONICS, INC. Notes to Consolidated Financial Statements 74 (13) Other disclosures: (a) Information on significant transactions The following were the information on significant transactions required by the “ Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Company for the year ended December 31, 2023: (i) Loans to other parties: Please refer to Table 1 (ii) Guarantees and endorsements for other parties: Please refer to Table 2 (iii) Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): Please refer to Table 3 (iv) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: Please refer to Table 4 (v) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: Please refer to Table 5 (vi) Disposals of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: None. (vii) Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 6 (viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: Please refer to Table 7 (ix) Trading in derivative instruments: None. (b) Information on investees: Please refer to Table 8 (c) Information on investment in mainland China: Please refer to Table 9 (d) Major shareholders: Shareholder’s Name Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF Shareholding Shares Percentage 269,519,000 %6.74 Note 1: The information on major shareholders, which is provided by the Taiwan Depository & Clearing Corporation, summarized the shareholders who held over 5% of total non-physical common stocks and preferred stocks (including treasury stocks) on the last business date of each quarter. The registered non-physical stocks may be different from the capital stocks disclosed in the financial statement due to different calculation basis. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 75 Note 2: If shares are entrusted, the above information regarding such shares will be revealed by each trustors of individual trust account. The shareholders holding more than 10% of the total shares of the company should declare insider’ s equity according to Securities and Exchange Act. The numbers of the shares declared by the insider include the shares of the trust assets which the insider has discretion over use. For details of the insider’ s equity announcement please refer to the TWSE website. (14) Segment information: Please refer to the consolidated financial report of 2023. COMPAL ELECTRONICS, INC. Statement of cash and cash equivalents December 31, 2023 (Expressed in thousands of New Taiwan Dollars; in thousands of Foreign Currency) Item Cash on hand Checking account and demand deposits TWD Description Foreign currency (USD$561,580 and others) Time deposits Foreign currency (USD$80,000, Maturity date: 2024.1.5~ 2024.1.25, Rate: 5.65%~5.85%) Foreign currency (CNY$3,700, Maturity date: 2024.1.8~2024.2.6, Rate: 2.50%~2.75%) Cash equivalents: Bonds purchased under resale agreements Total Foreign currency (USD$20,000, Maturity date: 2024.1.5, Rate: 5.65%~5.68%) 76 $ Amount 2,399 165,374 17,257,407 17,422,781 2,456,400 16,010 2,472,410 614,100 614,100 $ 20,511,690 Note: The exchange rate is 30.705 New Taiwan dollars for 1 US Dollar; 4.327 New Taiwan Dollars for 1 CNY. (Continued) COMPAL ELECTRONICS, INC. Statement of notes and accounts receivable December 31, 2023 (Expressed in thousands of New Taiwan Dollars) 77 Item Description Sales of non-related parties Amount 101,627,280 $ D Company E Company A Company B Company Others (Note) Less: allowance for uncollectible accounts Notes and accounts receivable, net 〃 〃 〃 〃 24,205,094 21,891,893 9,960,534 17,599,069 175,283,870 (3,691,908) $ 171,591,962 Note: The amount of individual client included in others does not exceed 5% of the account balance. Statement of inventories Item Finished goods Work in progress Raw materials Total $ Cost 10,291,518 1,414,789 39,337,185 $ 51,043,492 Net Realizable Value 10,584,200 1,414,789 39,337,185 51,336,174 (Continued) COMPAL ELECTRONICS, INC. Statement of changes in accumulated impairment of investments accounted for using the equity method For the year ended December 31, 2023 (Expressed in thousands of New Taiwan Dollars; thousands of shares) Beginning Balance Increase (Note 1) Decrease (Note 2) Ending Balance (including impairment loss) Amount (not including exchange differences on transaction of foreign financial statements Number of shares 3,000 $ 500,000 48,010 53,001 1 90,000 100,000 29,500 10,000 11,768 10,158 100 98 3,739 41,305 89,755 42,700 2,772 29,060 300 29,500 12,500 20,015 4,648 136 90,820 31,253 147,000 20,000 6,000 6,427 14,924 46,900 100 50 20,000 10,000 21,756 15,035 9,100 600 100,000 20,000 3,500 52,500 4,646 - - - - $ 158,398 5,688,229 10,461,265 42,681,945 3,906,656 2,063,087 1,168,785 374,329 99,940 - 324,783 438,890 467,514 425,647 42,912 2,662,827 4,958,349 313,063 (3) 627,803 4,882 197,685 277,615 (718,080) 32,062 (17,031) 8,257,996 1,381,132 7,434,250 84,482 122,458 875,954 730,872 (261,818) 850,799 1,612,866 162,613 112,687 262,227 371,580 15,999 - 34,975 3,696 44,330 23,708 84,075 24,990 505,547 186,922 99,563,892 (1,602,065) (881,247) (10,157) 97,070,423 227,599 961,854 98,259,876 Number of shares - - - - - - - - 20,000 2,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1,400 230,276 24,540 350,000 Number of shares - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Amount - 392,905 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 25,839 1,141 582 200,000 20,000 3,770 274 5,213 118,000 1,392 5,788 77,997 14,000 69,083 108,684 - - 3,500,000 - 4,544,668 - - - 4,544,668 Amount - 3,675 149,337 88,897 38,845 2,354 74,526 1,426 270,701 316 16,050 13,433 73,748 3,196 15,882 13,231 11,661 1,926 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 779,204 277,626 - - 1,056,830 Share of profit recognized Number of shares Amount (not including exchange differences on transaction of foreign financial statements Exchange differences on transaction of foreign financial statements Ending Balance (including exchange differences on transaction of foreign statements 3,000 500,000 48,010 53,001 1 90,000 100,000 29,500 30,000 2,000 11,768 10,158 100 98 3,739 41,305 89,755 42,700 2,772 29,060 300 29,500 12,500 20,015 4,648 136 90,820 31,253 147,000 20,000 6,000 6,427 14,924 46,900 100 50 20,000 10,000 21,756 15,035 9,100 2,000 330,276 44,540 3,500 402,500 4,646 - - - 4,718 6,725 286,164 2,551,767 - 126,784 111,601 51,046 538 3 11,194 40,477 11,411 (356,076) (39,020) 453,726 (246,117) 221,560 - (142,346) 162 15,649 19,254 25,773 (7,212) 3,540 572,422 11,885 417,529 (17,243) (7,998) 34,757 125,916 105,576 (151,389) 17,232 (80,146) (11,339) 20,848 21,862 (430) 15,018 (24,404) 163 (36,581) (26,180) 344 (12,731) (19,145) (19,029) 4,088,258 - - - 4,088,258 163,116 6,084,184 10,747,429 45,233,712 3,906,656 2,066,373 1,192,630 387,112 300,478 20,003 337,393 405,115 478,925 69,571 2,466 2,851,065 4,711,916 534,623 (3) 469,407 5,044 213,334 296,869 (692,307) 24,850 (13,491) 8,830,418 1,497,584 7,851,779 67,239 114,460 910,711 784,432 (156,242) 699,410 1,630,098 82,467 98,152 272,981 380,211 15,569 93,015 10,571 17,859 65,171 104,286 84,419 12,259 3,986,402 167,893 107,417,614 (1,879,691) (881,247) (10,157) 104,646,519 (8,930) (760,821) (161,653) (159,936) (288,018) (15,491) 290 (62) 512 (113) (15,392) (26,456) (1,845) 3,880 (550,226) (85,343) 3 (78) 2,564 9,792 (75,656) (10,616) 297,829 24,030 228,061 (12,541) (4,950) (103,565) (88,416) (84,291) (877) 663 (373) - - - - - - - - - - - - - 8,334 - - - (1,879,691) 154,186 5,323,363 10,585,776 45,073,776 3,618,638 2,050,882 1,192,920 387,050 300,478 20,003 337,905 405,002 463,533 43,115 621 2,854,945 4,161,690 449,280 469,329 5,044 215,898 306,661 (767,963) 24,850 (24,107) 9,128,247 1,521,614 8,079,840 67,239 114,460 898,170 779,482 (259,807) 610,994 1,545,807 82,467 98,152 272,981 379,334 16,232 92,642 10,571 17,859 65,171 104,286 92,753 12,259 3,986,402 167,893 105,537,923 (881,247) (211,671) 104,445,005 224,107 827,770 105,496,882 - - Investee Company Auscom Panpal Just CIH CEH Gempal Hong Ji Hong Jin Compal Ruifang Compal Healthcare Poindus Systems Allied Circuit Bizcom Lipo Holding Co., Ltd. (“LIPO”) Crownpo Arcadyan FGH HSI Lead-Honor Optronics Co., Ltd.(“Lead-Honor”) CBN Kinpo Group Management Rayonnant Technology CRH HengHao Infinno Technology Corp. (“Infinno”) CEP BCI APE CORE Unicore Ripal CPE Avalue Etrade Webtek Forever UCGI Palcom Mactech GLB Shennona CMX Hippo Screen Shennona TW Aco Smartcare ARCE CGSP Starmems Semiconductor Kinpo & Compal Assets Development Raypal Subtotal Exchange differences on transaction of foreign financial statements Less: Treasury shares held by subsidiaries Unrealized profits or losses Subtotal Plus: Deduction of accounts receivable and other receivable Plus: Credit balance of investment in equity method Total 78 Market Price / Net Value 154,186 5,940,563 10,585,776 45,060,928 3,618,638 2,412,195 1,192,920 387,050 300,478 20,003 300,845 1,574,448 (Note 4) 463,533 43,115 621 7,042,418 (Note 3) 4,161,690 449,280 - 796,249 (Note 3) 6,204 215,898 306,661 (767,963) 24,850 (24,107) 9,128,247 1,521,614 8,079,840 67,239 114,460 898,170 1,783,426 (Note 4) (259,807) 610,994 1,545,807 82,467 98,152 272,981 268,946 16,232 92,642 (1,903) 17,859 37,358 95,414 92,753 12,259 3,986,402 52,314 Note 1：Increase in current period included purchasing long-term investments, adjusting by using equity method of capital surplus, unrealized gains from financial assets measured at fair value through other comprehensive income, and subsidiaries received cash dividends from the parent company. Note 2：Decrease in current period included cash dividends distributed from long-term investments for using the equity method, adjustment by equity method of capital surplus and retained earnings, unrealized gain on disposal of fixed assets, remeasurement of defined benefit plans, and unrealized loss from financial assets measured at fair value through other comprehensive income. Note 3：The unit price is calculated by the closing price of the Taiwan Stock Exchange as of December 31, 2023. Note 4：The unit price is calculated by the closing price of Taipei Exchange as of December 31, 2023. (Continued) COMPAL ELECTRONICS, INC. Statement of financial assets measured at fair value through other comprehensive income - non-current For the year ended December 31, 2023 (Expressed in thousands of New Taiwan Dollars) Beginning Balance Increase (Note 1) Decrease (Note 2) Ending Balance Investee Company Number of Shares Amount 124,044 $ 1,674,591 Number of Shares - Amount 341,120 Number of Shares - Amount - Number of Shares 124,044 Amount 2,015,711 281,233 579,341 1,272,906 2,326,900 - - 1,554,139 2,906,241 98,046 418,658 - - 98,046 418,658 - - - - - 3,197 317,172 461,250 - $ 3,133,840 649,068 3,634,260 - - 1,918 3,197 315,254 149,814 570,390 - 960,504 6,197,710 Kinpo Cal-Comp Taiwan Star Taiwan Mobile Others Total 79 Collaterals or Pledged Assets None None None None None Note 1: Increase included transfer of the invested company's surplus to capital, acquiring financial assets at fair value through other comprehensive income through stock exchange due to merger and absorption, purchasing financial assets at fair value through other comprehensive income, unrealized gains on financial instruments at fair value, and deferred tax for unrealized gains. Note 2: Decrease included disposal of financial assets at fair value through other comprehensive income, the adjustment of the unrealized loss of financial assets according to fair value, eliminating financial assets at fair value through other comprehensive income through stock exchange due to merger and absorption, the reduction of capital, and the return from liquidation. (Continued) COMPAL ELECTRONICS, INC. Statement of property, plant and equipment For the year ended December 31, 2023 (Expressed in thousands of New Taiwan Dollars) 80 Please refer to Note (6)(j). Statement of short-term borrowings December 31, 2023 Creditor China Construction Bank Description Credit Loans Corporation DBS Bank Limited Bank of Communications Co., Ltd. E.SUN Commercial Bank United Overseas Bank Taipei Fubon Commercial Bank Co., Ltd. Cathay United Bank Bank Sinopac Company Limited Mega International Commercial Bank Co., Ltd. Oversea-Chinese Banking Corporation Limited HSBC Bank (Taiwan) Limited The Hongkong and Shanghai Banking Corporation Limited Banco Bilbao Vizcaya Argentaria Bank 〃 〃 〃 〃 〃 〃 ″ 〃 〃 〃 〃 〃 Contract Period 2023.11~2024.03 2023.12~2024.01 2023.11~2024.03 2023.10~2024.01 2023.11~2024.01 2023.10~2024.01 2023.12~2024.01 2023.12~2024.02 2023.11~2024.02 2023.11~2024.02 2023.12~2024.03 2023.12~2024.03 2023.12~2024.01 Interest Rate Note Loan Commitments 6,141,000 $ Collaterals or Pledged Assets None Ending balance 5,977,550 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 6,141,000 6,141,000 4,000,000 4,605,750 4,145,175 5,526,900 2,000,000 None None None None None None None 4,605,750 3,000,000 3,684,600 3,070,500 4,074,675 5,526,900 1,200,000 2,000,000 None 1,688,775 3,070,500 None 1,500,000 1,842,300 None 1,842,300 4,759,275 None 4,298,700 6,448,050 None 6,448,050 $ 56,820,950 46,917,800 Note: The range of interest rates of aforementioned loans were 1.62%~6.15%. (Continued) COMPAL ELECTRONICS, INC. Statement of notes and accounts payable December 31, 2023 (Expressed in thousands of New Taiwan Dollars) 81 Amount $ 22,370,967 8,721,574 8,469,099 8,177,892 4,688,693 4,387,295 24,131,526 $ 80,947,046 Suppliers E Company C Company J Company A Company B Company D Company Others (Note) Total Note: The amount of individual vendor included in others does not exceed 5% of the account balance. (Continued) COMPAL ELECTRONICS, INC. Statement of long-term borrowings December 31, 2023 (Expressed in thousands of New Taiwan Dollars) 82 Creditor Bank of Taiwan Loan Commitments 5,000,000 $ Loan within 1 year 1,000,000 Loan more than 1 year 3,500,000 Contract Period 2023.12~2026.12 Interest Rate Note Amount Yuan Ta Commercial Bank 3,000,000 3,000,000 Taipei Fubon Commercial Bank Co., Ltd. 3,000,000 2,842,300 E.SUN Commercial Bank 2,000,000 1,900,000 Shanghai Commercial and 2,300,000 Savings Bank Far Eastern International 1,000,000 Bank Co., Ltd. CTBC Bank Co., Ltd. Taiwan Corporative Bank Chang Hwa Bank 3,500,000 1,000,000 3,000,000 - - - - - - - - 2023.12~2024.03 2023.11~2024.02 2021.11~2024.11 2,300,000 2023.06~2027.06 1,000,000 2022.11~2025.09 900,000 2023.11~2026.11 1,000,000 2022.05~2025.05 3,000,000 2022.05~2026.05 Bank of America 5,066,325 2,000,000 - 2023.09~2024.09 Bank SinoPac Co., Ltd. 3,300,000 - 825,000 2022.12~2026.12 $ 32,166,325 10,742,300 12,525,000 Note: The range of interest rates of aforementioned loans were 1.64%~6.10%. 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 Amount 4,500,000 3,000,000 2,842,300 1,900,000 2,300,000 Collaterals or Pledged Assets None None None None None 1,000,000 None 900,000 1,000,000 3,000,000 2,000,000 825,000 23,267,300 None None None None None (Continued) COMPAL ELECTRONICS, INC. Statement of lease liabilities December 31, 2023 Item Buildings Vehicles Description For office and factory space For operating activities Lease term 1~10 years 3~5 years Discount rate 1.60% 1.60% Less：Current portion Lease liabilities–Non- Current 83 Ending balance 1,040,368 $ 998 1,041,366 (352,900) $ 688,466 Statement of other payables Item Payroll payables and year-end Description Payroll for December 2023, estimated year-end bonuses Amount $ 4,752,076 bonuses payable for 2023, and employees and directors’ compensations Import and export fee payables Technical service fee payables Others (Note) Total Note: The amount of each item in others does not exceed 5% of the account balance. 882,650 1,070,188 5,627,197 $ 12,332,111 (Continued) COMPAL ELECTRONICS, INC. Statement of operating revenue For the year ended December 31, 2023 Quantity Note Item Sales revenue: 5C electronic products Others Less: Sales return Sales allowance Net sales Other operating revenue: Service and processing revenue Net sales revenue Note: Due to multi-categories, it’s hard to be classified in categories. 84 Amount $ 875,425,008 680,475 (779,184) (1,757,650) 873,568,649 1,345,566 $ 874,914,215 (Continued) COMPAL ELECTRONICS, INC. Statement of operating costs For the year ended December 31, 2023 (Expressed in thousands of New Taiwan Dollars) Item Raw materials Raw materials, beginning of the year Add: Purchases Less: Raw materials, end of the year Transferred to operating expense Cost of material sold Scraps Raw materials used Direct labor Manufacturing expenses Total Manufacturing costs Add: Work-in-process, beginning of the year Others Less: Work-in-process, end of the year Scraps Cost of finished goods Add: Finished goods, beginning of the year Purchases Others Less: Finished goods, end of the year Transferred to operating expense (entertainment expense, sample expense, and others) Costs of sales of finished goods and processing costs Maintenance costs Cost of material sold Allowance for obsolescence loss and inventory valuation Scrap loss of inventory Cost of sales 85 Amount $ 40,296,164 530,395,314 (41,514,319) (18,215) 26,156,601 (1,680,095) 553,635,450 553,586 1,219,070 555,408,106 1,276,477 3 (1,414,789) (15,352) 555,254,445 15,479,353 308,536,527 1,707,327 (10,326,252) (980,466) 869,670,934 3,430,338 (26,156,601) (1,775,969) 1,695,447 $ 846,864,149 (Continued) COMPAL ELECTRONICS, INC. Statement of operating expenses For the year ended December 31, 2023 (Expressed in thousands of New Taiwan Dollars) 86 Item Payroll expenses Export expenses Royalty expenses Research expenses Shipping expenses Sample expenses Others (Note) Total Selling expenses Administrative expenses Research and development expenses $ 365,677 271,649 290,665 - 3,025,462 474,904 240,103 $ 4,668,460 1,804,081 8,990,592 - - - 7,859 9 1,154,751 2,966,700 - - 1,520,277 2,764 1,536 2,571,766 13,086,935 Note: The amount of each item in others does not exceed 5% of the account balance. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 87 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Table 1 Loans to other parties: (December 31, 2023) Name of lender No. 0 The Company Name of borrower UCGI 0 The HengHao Company 0 The CEB Company 0 The Company Kinpo & Compal Group Assets Development Corporation 0 The CEA Company 0 The CEP Company 1 CIH CEP 2 CPC CIC Account name Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables 3 CIT CCI Nanjing Other 3 CIT Rayonnant Technology (Taicang) receivables Other receivables 3 CIT HengHao Kunshan Other receivables 3 CIT CEA 4 CPO CIT 4 CPO CEA 5 CET BT 6 Panpal Kinpo & Compal Group Assets Development Corporation Other receivables Other receivables Other receivables Other receivables Other receivables 6 Panpal HengHao Other receivables 7 CIC HengHao Kunshan Other receivables 7 CIC CEB 8 BSH CIN 9 Gempal 9 Gempal Kinpo & Compal Group Assets Development Corporation Ray-Kwong Medical Management Consulting Co., Ltd. 10 CGSP CEP 11 Hong Ji Kinpo & Compal Group Assets Development Corporation Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables 12 Hong Jin Hippo Screen Other 13 Arcadyan Acradyan Brasil 13 Arcadyan Acradyan Brasil receivables Other receivables Other receivables Highest balance of financing to other parties during the period 460,000 Related party Y Actual usage amount during the period 230,000 Ending balance 230,000 400,000 200,000 200,000 1,751,250 921,150 921,150 Range of interest rates during the period Purposes of fund financing for the borrower 2.19%~2.29% Short-term financing 2.19%~2.29% Short-term financing 5.00%~6.19% Short-term financing 1,150,000 550,000 - 2.16%~2.29% Short-term financing 3,508,925 1,995,825 1,995,825 5.00%~6.19% Short-term financing 62,510 61,410 61,410 6.09% 64,850 - - 6.61% Short-term financing Short-term financing 886,700 432,700 432,700 2.10%~2.20% Short-term financing 2,269,750 2,149,350 1,780,890 6.61% 81,063 - - 6.61% Short-term financing Short-term financing 1,887,150 921,150 921,150 5.75%~6.61% Short-term financing 324,250 307,050 307,050 6.09% Short-term financing 1,330,050 649,050 649,050 2.10%~2.20% Short-term financing 972,750 921,150 921,150 6.09% Short-term financing 532,680 259,620 173,080 1,600,000 1,000,000 1,000,000 2.00%~2.20% Short-term financing 2.16%~2.29% Short-term financing 1,200,000 600,000 600,000 2.19%~2.29% Short-term financing 1,783,375 1,688,775 1,688,775 6.61% 324,250 307,050 307,050 6.09% 583,650 506,633 337,756 6.61% 600,000 - - 2.29% Short-term financing Short-term financing Short-term financing Short-term financing Y 15,000 5,000 5,000 2.19%~2.29% Short-term financing Y Y Y Y Y 64,850 61,410 - 6.61% 450,000 450,000 430,000 2.29% 35,000 35,000 20,000 2.19% 63,720 - - 5.00% 64,870 61,410 42,987 5.50% Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing Transaction amount for business between two parties - Reasons for short-term financing Operating demand Allowance for bad debt - - - - - - - - - - - - - - - - - - - - - - - - - - - Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating demand Operating financing Operating financing - - - - - - - - - - - - - - - - - - - - - - - - - - (In Thousands of New Taiwan Dollars) Individual funding loan limits 23,924,399 Maximum limit of fund financing 47,848,798 Note (Note 1) 23,924,399 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 4,555,887 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 23,924,399 47,848,798 (Note 1) 45,060,928 45,060,928 (Note 2) 2,832,493 2,832,493 (Note 3) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 27,565,296 27,565,296 (Note 4) 3,111,110 3,111,110 (Note 5) 3,111,110 3,111,110 (Note 5) 5,045,678 5,045,678 (Note 6) 2,376,225 2,376,225 (Note 7) 2,376,225 2,376,225 (Note 7) 10,930,282 10,930,282 (Note 8) 10,930,282 10,930,282 (Note 8) 8,255,369 8,255,369 (Note 9) 964,878 964,878 (Note 10) 13,749 964,878 (Note 10) 92,753 92,753 (Note 11) 477,167 477,167 (Note 12) 154,819 154,819 (Note 13) 2,960,444 5,920,889 (Note 14) 2,960,444 5,920,889 (Note 14) Collateral Item Value - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 88 Table 1 Loans to other parties: (December 31, 2023) Highest balance of financing to other parties during the period 304,800 Actual usage amount during the period - Range of interest rates during the period 1.00% Ending balance - Account name Other receivables Related party Y Name of lender Name of borrower No. 13 Arcadyan Arcadyan Vietnam 13 Arcadyan Arcadyan Vietnam Other receivables 14 Arcadyan CNC Holding 15 Poindus Systems Adasys Other receivables Long-term receivables 15 Poindus Systems Poindus UK Long-term receivables Y Y Y Y 324,350 307,050 1,946,100 1,842,300 - - 5.50% 5.50% 43,843 22,087 22,087 2.00%~4.57% Transaction for business between two parties 26,169 25,448 25,448 1.00% Transaction for business between two parties Purposes of fund financing for the borrower Transaction for business between two parties Transaction for business between two parties Short-term financing Transaction amount for business between two parties 14,676,990 Reasons for short-term financing - Allowance for bad debt - 19,589,790 - Operating financing - 67,310 37,638 - - - - (In Thousands of New Taiwan Dollars) Individual funding loan limits 2,960,444 Maximum limit of fund financing 5,920,889 Note (Note 14) 2,960,444 5,920,889 (Note 14) 2,245,049 2,245,049 (Note 15) 51,844 207,377 (Note 16) 51,844 207,377 (Note 16) Collateral Item Value - - - - - - - - - - Note 1: Note 2: According to the Company’ s “Procedures of Lending Funds to Other Parties”, the total amount of loans lent to others shall not exceed 40% of the net worth of the Company. When a short-term financing facility with the Company is necessary, the total amount for lending to any company shall not exceed 80% of the borrower’s net worth, nor shall it be more than 50% of the Company’s lendable amount limit, and shall be calculated together with the amount of guarantee endorsed by the Company for the company. In addition, the Company shall not limit the total amount of loans to subsidiaries in which the Company directly or indirectly holds 100% of the voting shares to 80% of the aforementioned amount, but the maximum amount shall not exceed 50% of the Company's total funds lending limit, and shall be calculated together with the amount of guarantees endorsed by the Company for such companies. According to CIH’s Procedures for Lending Funds to Other Parties, the total amount of loans to others shall not exceed 40% of the net worth of CIH. When a short-term financing facility with CIH is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CIH ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CIH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CPC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPC. When a short-term financing facility with CPC is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CPC ’ s total amount of capital lent, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CPC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CIT’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIT. When a short-term financing facility with CIT is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CIT ’ s total amount of capital lent, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CIT, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CPO’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CPO. When a short-term financing facility with CPO is necessary, the Note 3: Note 4: Note 5: total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CPO ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CPO, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CET’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CET. When a short-term financing facility with CET is necessary, the Note 6: total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CET ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CET, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Panpal’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Panpal. When a short-term financing facility with Panpal is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of Panpal’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the total amount lendable to 50% directly or indirectly owned subsidiaries by Panpal, or the ultimate parent company’s 50% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions of 80%, but the maximum amount shall not exceed Panpal’s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to CIC’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CIC. When a short-term financing facility with CIC is necessary, the Note 7: Note 8: total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CIC ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CIC, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to BSH’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of BSH. When a short-term financing facility with BSH is necessary, the Note 9: total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of BSH ’ s total amount of lendable capital, and shall be combined with the company ’ s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of BSH, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Gempal’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Gempal. When a short-term financing facility with Gempal is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of Gempal’s total amount of lendable capital, and shall be combined with the Gempal’s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’s 100% directly, the total amount of loans is not limited by 80% of two aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Gempal, and shall be combined with the company’ s endorsements/guarantees for the borrower when calculating. According to CGSP’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of CGSP. When a short-term financing facility with CGSP is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower ’ s net worth, nor shall it exceed 50% of CGSP ’ s total amount of lendable capital, and shall be combined with the company’s endorsements/guarantees for calculation. In addition, when lending to the ultimate parent company’s 100% directly or indirectly owned overseas subsidiaries, the total amount of loans is not limited by the two aforesaid restrictions, but the maximum amount shall not exceed the net worth of CGSP, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Hong Ji’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Hong Ji. When a short-term financing facility with Hong Ji is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of Hong Ji’s total amount of lendable capital, and shall be combined with the Hong Ji’s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’s 100% directly, the total amount of loans is not limited by 80% of two aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Hong Ji, and shall be combined with the company’ s endorsements/guarantees for the borrower when calculating. According to Hong Jin’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Hong Jin. When a short-term financing facility with Hong Jin is necessary, the total amount for lending the borrower shall not exceed 80% of the borrower’s net worth, nor shall it exceed 50% of Hong Jin’s total amount of lendable capital, and shall be combined with the Hong Jin’s endorsements/guarantees for calculation. In addition, when lending to indirectly owned overseas subsidiaries or the ultimate parent company’s 100% directly, the total amount of loans is not limited by 80% of two aforesaid restrictions, but the maximum amount shall not exceed the total amount of lendable capital of Hong Jin, and shall be combined with the company’s endorsements/guarantees for the borrower when calculating. According to Arcadyan’s Procedures for Lending Funds to Other parties, the total amount of loans to others shall not exceed 40% of the net worth of Arcadyan. To borrowers having business relationship with Arcadyan, the total amount for lending the borrower shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount for the current year, nor shall it exceed 20% of the net worth of Arcadyan. Also, the amount shall be combined with the Arcadyan’ s endorsements/guarantees for the borrower when calculating. When a short-term financing facility is necessary, the borrower should be Arcadyan’s investee. The total amount for lending the borrower shall not exceed 80% of the net worth of the borrower, nor shall it exceed 20% of the net worth of Arcadyan, and shall be combined with the Arcadyan ’s endorsements/guarantees for the borrower when calculating. According to Arcadyan Holding’s Procedures of Lending Funds to Other Parties, the total amount of loans to others shall not exceed the net worth of Arcadyan Holding. When a short-term financing facility is necessary, the borrower should be Arcadyan Holding’s investee. The total amount for lending the borrower shall not exceed the net worth of Arcadyan Holding, and shall be combined with the Arcadyan Holding’s endorsements/ guarantees for the borrower when calculating. According to Poindus Systems’ Procedures for Lending Funds to Other parties, the total amount of loans for individual is the lower of the amount of transaction for business between the two parties during the previous twelve months and 10% of the net worth of the company's latest financial statements, with the total limit of 40% of the net worth of the company's latest financial statements. Note 10: Note 11: Note 12: Note 13: Note 14: Note 15: Note 16: (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements Table 2 Guarantees and endorsements for other parties: (December 31, 2023) 89 (In Thousands of New Taiwan Dollars) Counter-party of guarantee and endorsement Name of guarantor Name The Company CEP No. 0 Relationship with the Company (Note 4) Limitation on amount of guarantees and endorsements for a specific enterprise 28,876,015 Highest balance for guarantees and endorsements during the period 57,285 Balance of guarantees and endorsements as of reporting date 18,676 Actual usage amount during the period 18,676 Property pledged for guarantees and endorsements (Amount) - Ratio of accumulated amounts of guarantees and endorsements to net worth of the latest financial statements Maximum amount for guarantees and endorsements (Note 1(cid:501)(cid:501)2 and 3) 0.02% 57,752,031 Parent company endorsements/ guarantees to third parties on behalf of subsidiary Y Subsidiary endorsements/ guarantees to third parties on behalf of parent company - Endorsements/ guarantees to third parties on behalf of companies in Mainland China - 0 The Company CEB (Note 5) 28,876,015 376,130 356,178 356,178 0 The Company HengHao Kunshan (Note 5) 28,876,015 26,670 25,962 25,962 1 Arcadyan Arcadyan AU (Note 5) 1,973,629 243,263 230,288 - 2 Poindus Systems Qijie (Note 5) 103,688 30,710 - - - - - - 0.31% 57,752,031 0.02% 57,752,031 1.56% 5,920,889 0.00% 259,221 Y Y Y Y - - - - - Y - Y Note 1(cid:28873) According to the Company’s Procedures for Endorsement and Guarantee, the total amount of endorsements/ guarantees the Company or the Group is permitted to make shall not exceed 50% of the Company’s net worth. Endorsements/ guarantees the Company and the Group are permitted to make for a single company shall not exceed 25% of the Company’s net worth. For entities having business relationship with the Company, the amount of endorsements/ guarantees for a single company shall not exceed 80% of the transaction amount in the last fiscal year or the expecting amount of the current year, and shall be combined with the amount lend to others when calculating. The amount of endorsements/ guarantees permitted to make between subsidiaries whose over 90% of its voting shares are owned, directly or indirectly, by the Company shall be no more than 10% of the net worth of the Company. The amount of endorsements/ guarantees permitted to make between directly or indirectly Note 2(cid:28873) Note 3(cid:28873) wholly owned subsidiaries is not limited by the aforementioned restriction, only the maximum amount shall be no more than 25% of the net worth of the Company. According to Arcadyan’s Procedures for Endorsement and Guarantee, the total amount of endorsements/guarantees Arcadyan and its subsidiaries are permitted to make shall not exceed 40% of the Arcadyan's net worth. Endorsements/guarantees Arcadyan and its subsidiaries are permitted to make for a single company shall not exceed 1/3 of the aforementioned total amount. According to Poindus Systems’ Procedures for Endorsement and Guarantee, Poindus Systems only endorses and guarantees to subsidiaries wherein it holds 100% of their voting shares. Poindus Systems’ endorsement and guarantee for a subsidiary shall not exceed 20% of its net worth; and the total amount of endorsements/guarantees shall not exceed 50% of its net worth. Note 4(cid:28873) Subsidiary whose over 50% common stock is directly owned. Note 5(cid:28873) Subsidiary whose over 50% common stock is indirectly owned. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 90 Table 3 Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): (December 31, 2023) Name of holder Category and name of security The Company Taiwan Mobile Relationship with security issuer (cid:4137) Kinpo Cal-Comp The same chairman of the Company The same chairman of the Company (cid:4137) (cid:4137) (cid:4137) The Chairman of the Board is the first degree of kinship of the Chairman of the Company (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) HWA VI Venture Capital Corp. HWA Chi Venture Capital Corp. mProbe Ltd. AcBel Chen Feng Optoelectronics PrimeSensor Technology Inc. Ganzin Technology, Inc. Airoha Technology Corp. ITH Corporation Clean Energy Fund IIH Biomedical Venture Fund Phoenix Innovation Investment Corporation. Others Total Panpal Compal Electronics, Inc. The parent company Kinpo The same chairman of the Company CDIB Partners Investment Holding Corp. (cid:4137) AcBel Lian Hong Art. Co., Ltd. Taiwan Biotech Co., Ltd. The Chairman of the Board is the first degree of kinship of the Chairman of the Company (cid:4137) (cid:4137) Account name Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss and other comprehensive income Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current (In Thousands of shares/ units) Ending balance Shares/Units (thousands) 3,197 Carrying value 315,254 Holding percentage (%) - Fair value Note 315,254 124,044 2,015,711 8% 2,015,711 1,554,139 2,906,241 15% 2,906,241 48 53 13,553 10% 13,553 13,515 11% 13,515 4,000 10,800 3% 10,800 6,685 274,754 1% 274,754 6,685 101,676 7% 101,676 868 13,361 1% 13,361 2,000 36,000 7% 36,000 215 124,055 - 124,055 8,000 225,989 2% 225,989 - 179,175 2% 179,175 5,000 91,000 8% 91,000 6,000 67,680 19% 67,680 146,801 146,801 _____________ 6,535,565 31,648 1,261,176 1% 1,261,176 69,370 1,127,257 5% 1,127,257 54,000 822,420 5% 822,420 11,332 465,740 2% 465,740 2,291 71,387 6% 71,387 8,680 160,061 3% 160,061 (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 91 Table 3 Securities held as of December 31, 2023 (excluding investment in subsidiaries, associates and joint ventures): (December 31, 2023) Name of holder Category and name of security Panpal Others Relationship with security issuer (cid:4137) Total Gempal Compal Electronics, Inc. The parent company Lian Hong Art. Co., Ltd. Others Total Hong Ji SUYIN Optronics Co., Ltd. (“SUYIN Optronics”) Hong Jin SUYIN Optronics Arcadyan GeoThings Inc. AirHop Communication Inc. Adant Technologies Inc. IOT EYE, Inc. TIEF FUND L.P. Chimei Motor Electronics Co., LTD Golden Smarthome Technology Corp. Total Mactech Taichung International Golf Country Club HHB HWALLAR OPTRONICS (Fuzhou) CO., LTD. Mithera Beyond Limits, Inc. BT CIT Suzhou Genki Fuhong Health Management Co., Ltd. Kunqiao Phase II (Suzhou) Emerging Industry Venture Capital Partnership Fund BSH Achi Capital Partners Fund LP ABG Capital PartnersV, LP Total (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) Account name Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through other comprehensive income-non-current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current Financial assets at fair value through profit or loss-non- current (In Thousands of shares/ units) Ending balance Shares/Units (thousands) Carrying value 9,384 Holding percentage (%) Fair value Note 9,384 _____________ 3,917,425 18,369 732,019 - 732,019 2,291 71,365 6% 71,365 952 952 _____________ 804,336 380 332 200 1,152 349 60 - - - - - - 1% 1% 4% 5% 5% 14% - - - - - - (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) (Note 1) 48,112 7% 48,112 1,650 35,442 6% 35,442 1,229 (cid:4137) 2% (cid:4137) _____________ 83,554 11,790 (cid:4137) 11,790 - 19% - (Note 1) 873 138,172 - 138,172 4,328 17% 4,328 502,738 62,733 266,074 - - - 502,738 62,733 266,074 _____________ 328,807 (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) (cid:4137) Note 1(cid:28873)The carrying value is the remaining amount after deducting accumulated impairment. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 92 Table 4 Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20% of the capital stock: (For the year ended December 31, 2023) Name of company The Company Security Name Category Stock Kinpo & Compal Group Assets Development Corporation The Company Cal-Comp Stock BSH CEV Stock Arcadyan Arcadyan Holding Stock Account name Investments accounted for using equity method Financial assets at fair value through other comprehensive income-non- current Investments accounted for using equity method Investments accounted for using equity method Name of counter-party (Note 1) Relationship with the company (Note 5) Beginning Balance Purchases Sales Others Ending Balance Shares/ Units Amount Shares/ Units Amount Shares/ Units Price Cost Gain (loss) on disposal Shares/ Units Amount Shares/ Units Amount 52,500 505,547 350,000 3,500,000 - - - - - (19,145) 402,500 3,986,402 (In Thousands of New Taiwan Dollars/ shares) (Note 1) (Note 7) 281,233 579,341 1,249,470 1,718,266 - - - - 23,436 608,634 1,554,139 2,906,241 (Note 2) (Note 1) (Note 6) - - - 1,658,070 - - - - (Note 1) (Note 6) 47,780 1,804,421 60,000 1,843,500 60,000 - 1,843,500 - (Note 3) (Note 4) - - 36,262 - 1,694,332 (Note 2) 262,540 47,780 2,066,961 (Note 2) Note 1: Cash capital. Note 2: Others refer to investment income using equity method and foreign currency translation differences of foreign operations. Note 3: Stock dividends. Note 4: Others refer to unrealized gain and loss on financial asstes and its deferred taxes. Note 5: Subsidiary whose over 50% common stock is directly owned. Note 6: Subsidiary whose over 50% common stock is indirectly owned. Note 7: The same chairman of the Company. Table 5 Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20% of the capital stock: (For the year ended December 31, 2023) Name of company Arcadyan Transaction date (Note 1) September 28, 2023 Transaction amount 738,000 Status of payment - Counter-party Chien Ming Construction Co. Ltd. If the counter-party is a related party, disclose the previous transfer information Relationship with the Company None Owner not applicable Relationship with the Company not applicable Date of transfer not applicable Amount not applicable (In Thousands of New Taiwan Dollars) Purpose of acquisition and current condition operational use Others None References for determining price price comparison and negotiation (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 93 Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) Transaction details Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Company Name Counter party The Company CBN Arcadyan Nature of relationship The Company's subsidiaries The Company's subsidiaries Purchase/ (Sale) Sale Amount (170,327) Sale (1,418,650) Percentage of total purchases/ (sales) Payment terms (0.0)% Net 90 days from delivery (0.2)% Net 60 days from the end of the month of delivery Unit price Similar to non- related parties Similar to non- related parties CEP CEP Subsidiaries wholly owned by the Company Sale (114,975) (0.0)% 120 days Subsidiaries wholly owned by the Company Purchase 189,437 0.0% 120 days CIH and its subsidiaries Subsidiaries wholly owned by the Company Purchase 105,753,627 11.2% 120 days Just and its subsidiaries Subsidiaries wholly owned by the Company Purchase 71,030,857 7.5% 120 days HSI and its subsidiaries Subsidiaries wholly owned by the Company Purchase 66,824,371 7.1% 120 days BCI and its subsidiaries Subsidiaries wholly owned by the Company Purchase 29,504,779 3.1% 120 days Etrade and its subsidiaries Subsidiaries wholly owned by the Company Purchase 2,973,830 0.3% Net 60 days from delivery Kinpo The same chairman of the Company Purchase 45,822,993 4.9% Net 35 days from the end of the month Just and its subsidiaries Compal Electronic, Inc. Parent company Sale (71,030,857) (99.6)% 120 days UCGI With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company Sale (211,853) (0.3)% 60 days Purchase 1,148,812 2.1% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Markup based on BCI and its subsidiaries' cost Markup based on Etrade and its subsidiaries' cost Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Etrade and its subsidiaries With the same ultimate parent company Purchase 148,167 (0.3)% Net 60 days from delivery According Etrade and its subsidiaries to markup pricing CIH and its subsidiaries Compal Electronic, Inc. Parent company Sale (105,753,627) (92.8)% 120 days BCI and its subsidiaries With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company CEB CEA With the same ultimate parent company With the same ultimate parent company Sale (505,696) (0.3)% 120 days Sale (8,058,473) (5.6)% 120 days Sale (245,966) (0.2)% 120 days Sale (311,899) (0.2)% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Percentage of total notes/accounts receivable (payable) 0.1% 0.4% Ending Balance 137,791 685,277 Note 97,737 0.1% - 0.0% (49,778,450) (30.5)% (2,070,603) (1.3)% (7,960,864) (4.9)% (9,497,819) (5.8)% (995,739) (0.6)% (9,565,439) (5.9)% 2,070,603 99.1% 37,844 0.5% - - (0.0)% (0.0)% 49,778,450 91.4% 9,236 0.0% 7,590,654 7.6% 11,918 0.0% 68,223 0.1% Payment Terms There is no significant difference. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 94 Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Company Name CIH and its subsidiaries Counter party BCI and its subsidiaries Nature of relationship With the same ultimate parent company Purchase/ (Sale) Purchase Transaction details Percentage of total purchases/ (sales) Amount 346,858 0.3% Payment terms 120 days Unit price Similar to non- related parties Payment Terms There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. Adjustments will be made based on demand for funding. There is no significant difference. There is no significant difference. There is no significant difference. Percentage of total notes/accounts receivable (payable) Note Ending Balance (16,460) (0.0)% (263,964) (0.2)% (89,676) (0.1)% (541,864) (0.7)% (6,375) (0.0)% (276,555) (0.4)% 9,497,819 93.0% 16,460 0.0% 1,276,398 3.3% 193,709 0.5% Rayonnant Technology and its subsidiaries With the same ultimate parent company HSI and its subsidiaries CPM With the same ultimate parent company An associate Purchase 1,403,349 1.1% 120 days Purchase 694,749 0.5% 120 days Purchase 2,444,514 1.9% 120 days Changbao An associate Purchase 203,638 0.2% 120 days Acbel and its subsidiaries The Chairman of the Board is the first degree of kinship of the Chairman of the Company Purchase 721,560 0.5% 120 days Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties CIH and its subsidiaries HSI and its subsidiaries CEA CEB CIH and its subsidiaries With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Rayonnant Technology and its subsidiaries With the same ultimate parent company BCI and its subsidiaries Compal Electronic, Inc. Parent company Sale (29,504,779) (92.2)% 120 days Sale (346,858) (0.9)% 120 days Sale (424,337) (4.1)% 120 days Sale (688,172) (1.9)% 120 days Markup based on BCI and its subsidiaries' cost Adjustments will be made based on demand for funding. According to markup pricing According to markup pricing Adjustments will be made based on demand for funding. Adjustments will be made based on demand for funding. According to markup pricing There is no significant difference. Sale (315,316) (0.8)% 120 days According to markup pricing There is no significant difference. 402,431 3.1% Sale Sale 505,696 1.6% 120 days 120,513 0.5% 120 days According to markup pricing Adjustments will be made based on demand for funding. Similar to non- related parties There is no significant difference. Similar to non- related parties Similar to non- related parties There is no significant difference. There is no significant difference. (9,236) (0.0)% (25,132) (0.1)% (12,690) (0.0)% (102,674) (0.3)% CPM An associate Purchase 172,286 0.5% 120 days Acbel and its subsidiaries The Chairman of the Board is the first degree of kinship of the Chairman of the Company Purchase 230,457 0.7% 120 days CEA CEB CEB BCI and its subsidiaries CIH and its subsidiaries BCI and its subsidiaries CEA CIH and its subsidiaries With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Sale (1,562,819) (21.3)% 45 days Similar to non- related parties There is no significant difference. 943,962 36.6% Purchase 688,172 11.3% 120 days According to markup pricing There is no significant difference. (193,709) (25.8)% Purchase 311,899 5.1% 120 days Similar to non- related parties There is no significant difference. (68,223) (9.1)% Purchase 315,316 8.0% 120 days According to markup pricing There is no significant difference. (402,431) (28.8)% Purchase 1,562,819 38.9% 45 days Similar to non- related parties There is no significant difference. (943,962) (67.6)% Purchase 245,966 6.1% 120 days Similar to non- related parties There is no significant difference. (11,918) (0.9)% CEP Compal Electronic, Inc. Parent company Sale (189,437) (91.3)% 120 days Compal Electronic, Inc. Parent company Purchase 114,975 100.0% 120 days Similar to non- related parties Similar to non- related parties There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. - 0.0% (97,737) 89.2% (Continued) Sale (212,507) (100.0)% Net 60 days from delivery Similar to non- related parties There is no significant difference. 128,048 100.0% COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 95 Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) Transaction details Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Company Name Etrade and its subsidiaries Counter party Compal Electronic, Inc. Nature of relationship Parent company Purchase/ (Sale) Sale Amount (2,973,830) Percentage of total purchases/ (sales) Payment terms (88.9)% Net 60 days from delivery Unit price According to markup pricing Percentage of total notes/accounts receivable (payable) Note Ending Balance 995,739 92.7% - - 0.0% (0.0)% Payment Terms There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties Similar to non- related parties There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. There is no significant difference, and adjustments will be made based on demand for funding if necessary. (37,844) (12.3)% 263,964 91.3% 25,132 8.7% 7,960,864 99.6% 89,676 0.4% - - 0.0% 0.0% (7,590,654) (17.1)% Just and its subsidiaries With the same ultimate parent company HSI and its subsidiaries With the same ultimate parent company Forever and its subsidiaries HSI and its subsidiaries UCGI JUST and its subsidiaries With the same ultimate parent company With the same ultimate parent company Rayonnant Technology and its subsidiaries CIH and its subsidiaries With the same ultimate parent company Sale (148,167) (4.5)% Net 60 days from delivery According to markup pricing Purchase 196,028 19.2% Net 60 days from delivery Similar to non- related parties Purchase 211,853 53.3% 60 days Sale (1,403,349) (92.1)% 120 days BCI and its subsidiaries With the same ultimate parent company Sale (120,513) (7.9)% 120 days HSI and its subsidiaries Compal Electronic, Inc. Parent company Sale (66,824,371) (97.1)% 120 days Sale (694,749) (1.0)% 120 days Sale (1,148,812) (1.6)% 120 days Sale (196,028) (0.3)% Net 60 days from delivery Purchase 8,058,473 11.6% 120 days CIH and its subsidiaries With the same ultimate parent company Just and its subsidiaries With the same ultimate parent company Etrade and its subsidiaries With the same ultimate parent company CIH and its subsidiaries With the same ultimate parent company Forever and its subsidiaries BCI and its subsidiaries With the same ultimate parent company With the same ultimate parent company Purchase 212,507 0.5% Net 60 days from delivery Similar to non- related parties There is no significant difference. (128,048) (0.3)% Purchase 424,337 1.0% 120 days Similar to non- related parties There is no significant difference. (1,276,398) 2.9% CBN Compal Electronic, Inc. Parent company Purchase 160,983 17.0% Net 90 days from delivery Arcadyan Acradyan Germany Acradyan USA Acradyan AU Arcadyan's subsidiary Arcadyan's subsidiary Arcadyan's subsidiary Sale Sale Sale (1,028,804) (2.0)% Net 150 days from delivery (19,847,179) (42.0)% Net 120 days from (1,075,651) delivery (2.0)% Net 60 days from the end of the month of delivery 2.0% Net 60 days from the end of the month of delivery Compal Electronic, Inc. Parent company Purchase 1,497,276 CNC Arcadyan's subsidiary Purchase 8,605,578 12.0% Net 120 days from Arcadyan Vietnam Arcadyan's subsidiary Purchase 3,346,396 delivery 5.0% Net 180 days from the end of the month of delivery CNC Arcadyan With the same ultimate parent company Sale (8,605,578) (100.0)% Net 120 days from delivery - - - - - According to markup pricing According to markup pricing According to markup pricing There is no significant difference. (130,494) (69.0)% - - - - - - - 208,003 2.0% 3,444,196 39.0% 135,262 2.0% (685,277) (6.0)% (2,871,117) (26.0)% (Note 1) (Note 2) - % (Note 1) 2,871,117 (100.0)% (Note 1) (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 96 Table 6 Related-party transactions for purchases and sales with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (For the year ended December 31, 2023) Company Name Arcadyan Vietnam Acradyan Germany Acradyan USA Acradyan AU Counter party Arcadyan Arcadyan Arcadyan Arcadyan Nature of relationship With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Transaction details Transactions with terms different from others Notes/Accounts receivable (payable) (In Thousands of New Taiwan Dollars) Purchase/ (Sale) Sale Amount (3,346,396) Percentage of total purchases/ (sales) Payment terms (100.0)% Net 180 days from the end of the month of delivery Unit price According to markup pricing Payment Terms - Percentage of total notes/accounts receivable (payable) - % Note (Note 1) Ending Balance (Note 2) Purchase 1,028,804 100.0% Net 150 days from delivery Purchase 19,847,179 100.0% Net 120 days from delivery Purchase 1,075,651 100.0% Net 60 days from the end of the month of delivery - - - - - - (208,003) (100.0)% (3,444,196) (100.0)% (135,262) (100.0)% Note 1: The remaining balance is the net value of commissioned processing and sales of raw material. Note 2: The amount of other receivables on December 31, 2023 is 1,439,730 thousand dollars. (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 97 Table 7 Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the capital stock: (December 31, 2023) Name of Company Counter-party The Company Arcadyan Nature of relationship The Company's subsidiary The Company CBN The Company's subsidiary The Company Just and its subsidiaries The Company's subsidiary The Company Cal-Comp The same chairman of the Company Just and its subsidiaries Compal Electronic, Inc. Parent company Ending Balance 685,277 137,791 Turnover rate 1.33 0.86 4,050,926 (Note 2) 6,407,361 (Note 2) 2,070,603 (Note 2) (Note 2) 37.47 CIH and its subsidiaries Compal Electronic, Inc. Parent company 49,778,450 CIH and its subsidiaries HSI and its subsidiaries With the same ultimate parent company BCI and its subsidiaries Compal Electronic, Inc. Parent company BCI and its subsidiaries HSI and its subsidiaries With the same ultimate BCI and its subsidiaries CEB BCI and its subsidiaries CEA CEA CEB parent company With the same ultimate parent company With the same ultimate parent company With the same ultimate parent company Rayonnant Technology and its subsidiaries CIH and its subsidiaries With the same ultimate parent company 7,590,654 9,497,819 1,276,398 1,193,411 193,709 943,962 263,964 2.17 1.37 3.22 0.83 0.38 3.68 2.30 6.13 Etrade and its subsidiaries Forever and its subsidiaries Compal Electronic, Inc. Parent company 995,739 1.84 HSI and its subsidiaries With the same ultimate 128,048 1.23 parent company HSI and its subsidiaries Compal Electronic, Inc. Parent company 7,960,864 10.38 Arcadyan AU Arcadyan's subsidiary 135,262 5.16 Arcadyan Arcadyan Arcadyan Arcadyan USA Arcadyan's subsidiary Arcadyan Vietnam Arcadyan's subsidiary 3,444,196 1,439,730 (Note 2) 208,003 2,871,117 (Note 3) 5.26 (Note 2) 2.56 2.93 Arcadyan Arcadyan Germany Arcadyan's subsidiary CNC Arcadyan With the same ultimate parent company Note 1: Balance as of February 16, 2024. Note 2: Receivables due to purchasing on behalf of related parties. Note 3: Accounts receivables due to processing raw material. (In Thousands of New Taiwan Dollars) Overdue Amount - Action taken - Amounts received in subsequent period - (Note 1) Allowance for bad debts - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 95,958 (Note 1) 4,050,926 (Note 1) 6,406,905 (Note 1) 1,450,425 (Note 1) 47,287,744 (Note 1) - (Note 1) 9,497,819 (Note 1) - (Note 1) 630 (Note 1) 26,671 (Note 1) 146,874 (Note 1) - (Note 1) 307,188 (Note 1) - (Note 1) 7,667,057 (Note 1) 118,749 (Note 1) 3,212,352 (Note 1) - (Note 1) 15,897 (Note 1) 747,311 (Note 1) - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 98 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company The Company Investee Company Kinpo & Compal Group Assets Development Corporation Location Taipei City Bizcom Milpitas, USA Main Businesses and Products Real estate development leasing and related management business Warranty services and marketing of LCD TVs and notebook PCs Original Investment Amount Ending Balance Depcmber 31, 2023 4,025,000 December 31, 2022 525,000 Shares 402,500 Percentage of Ownership 70% Carrying Value 3,986,402 Net income (losses) of investee (27,399) Share of profits/losses of investee (19,145) Note (In Thousands of New Taiwan Dollars/ 36,369 36,369 100 100% 463,533 11,411 11,411 Just CIH Panpal Gempal British Virgin Islands Investment 1,480,509 1,480,509 48,010 100% 10,585,776 286,164 286,164 British Virgin Islands Investment 1,787,680 1,787,680 53,001 100% 45,073,776 2,551,767 2,551,767 Taipei City Investment 5,171,837 5,171,837 500,000 100% 4,763,551 44,704 6,725 Taipei City Investment 900,036 900,036 90,000 100% 1,729,447 148,827 126,784 (Note 1) (Note 1) Kinpo Group Management Taipei City Consultation, training services, etc. 3,000 3,000 300 38% 5,044 434 162 Ripal Unicore Tainan City Taipei City Lead-Honor Taoyuan City Manufacturing of electric appliance and audiovisual electric products Management & Consultant, rental and leasing business and wholesale and retail of medical equipments Manufacturing of electric appliance and audiovisual electric products 60,000 60,000 6,000 100% 114,460 (1,751) (7,998) 200,000 200,000 20,000 100% 67,239 (17,243) (17,243) CEH British Virgin Islands Investment 34 34 1 100% 3,618,638 42,000 42,000 2,772 42% - - - - - Shennona Taiwan Taipei City Management & Consultant, rental and leasing business, wholesale and retail sale of precision instruments and international trade 20,000 6,000 2,000 100% 17,859 63 163 Allied Circuit Taoyuan City Production and sales of PCB boards 395,388 395,388 10,158 20% 405,002 204,120 40,477 Poindus Systems Taipei City Aco Smartcare Hsinchu City Design and manufacture of PCs and peripheral equipment Wholesale and retail sale of computer software, software design services, data processing services, wholesale and retail sale of electronic materials, wholesale and retail sale of precision instruments, and biotechnology services 353,046 353,046 11,768 56% 337,905 18,886 11,194 159,083 90,000 330,276 71% 65,171 (60,467) (36,581) LIPO CPE Cayman Islands Investment 489,450 489,450 98 49% 43,115 (726,686) (356,076) The Netherlands Investment 197,463 197,463 6,427 100% 898,170 34,757 34,757 Starmems Hsinchu County Crownpo Taipei City R&D of MEMS microphone related products Manufacturing, processing, and selling resistor chips, networking chips, diodes, multilayer ceramic capacitors, semiconductor devices, and selling electronic products 35,000 35,000 3,500 35% 12,259 (36,374) (12,731) 149,547 149,547 3,739 33% 621 (117,415) (39,020) Taipei City Investment 1,000,000 1,000,000 100,000 100% 1,192,920 111,601 111,601 Taipei City Investment 295,000 295,000 29,500 100% 387,050 51,046 51,046 Taichung City Auscom Austin, TX USA Arcadyan Hsinchu City Manufacturing of equipment and lighting, retailing of equipment and international trading R&D of notebook PC related products and components R&D, manufacturing and sales of wireless network, integrated household electronics, and mobile office products 219,601 219,601 21,756 53% 272,981 41,491 20,848 101,747 101,747 3,000 100% 154,186 4,718 4,718 1,325,132 1,325,132 41,305 19% 2,854,945 2,420,569 453,726 Hong Ji Hong Jin Mactech FGH British Virgin Islands Investment 2,754,741 2,754,741 89,755 100% 4,161,690 (246,117) (246,117) Shennona Delaware, USA Medical care IOT business 48,210 48,210 - 100% 16,232 (430) (430) HSI CEP CGSP Raypal British Virgin Islands Investment 1,346,814 1,346,814 42,700 54% 449,280 413,513 221,560 Poland Poland Maintenance and warranty services of notebook PCs Maintenance and warranty services of notebook PCs Taipei City Cancerous immunocyte therapy and regenerative medicine 90,156 90,156 136 100% (24,107) 14,323 3,540 89,669 89,669 - 100% 92,753 (1,399) 344 209,076 209,076 4,646 30% 167,893 (66,765) (19,029) (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 99 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company The Company ARCE Investee Company Location Taipei City Hippo Screen Taipei City Infinno Hsinchu County HengHao Taipei City Main Businesses and Products Biotechnology services, research & development services, intellectual property rights, wholesale of animal medication, retail sale and management advisory Management & Consultant, rental and leasing business, wholesale and retail sale of precision instruments and international trade Manufacturing of electronic components, wholesale and retail sale of precision instruments and electronic materials Manufacturing of PCs, computer periphery devices, and electronic components Original Investment Amount Ending Balance Depcmber 31, 2023 158,160 December 31, 2022 Shares 60,000 44,540 Percentage of Ownership 23% Carrying Value 104,286 Net income (losses) of investee (103,713) Share of profits/losses of investee (26,180) Note (In Thousands of New Taiwan Dollars/ 112,000 112,000 9,100 91% 10,571 (26,827) (24,404) 127,026 127,026 4,648 28% 24,850 (26,017) (7,212) 5,729,757 5,729,757 20,015 100% (767,963) 15,876 25,773 BCI CBN British Virgin Islands Investment 2,636,051 2,636,051 90,820 100% 9,128,247 572,422 572,422 Hsinchu County R&D and sales of cable modem, digital setup box, and other communication products 284,827 284,827 29,060 43% 469,329 (326,109) (142,346) Rayonnant Technology Taipei City Manufacturing and sales of PCs, computer periphery devices, and electronic components 295,000 295,000 29,500 100% 215,898 18,969 15,649 CRH British Virgin Islands Investment 377,328 377,328 12,500 100% 306,661 19,254 19,254 Acendant Private Equity Investment Ltd. British Virgin Islands Investment 943,922 943,922 31,253 35% 1,521,614 34,228 11,885 Etrade Webtek Forever UCGI Palcom Avalue British Virgin Islands Investment 1,532,029 1,532,029 46,900 65% (259,807) (463,604) 105,576 British Virgin Islands Investment 3,340 3,340 100 100% 610,994 (151,389) (151,389) British Virgin Islands Investment 1,575 1,575 50 100% 1,545,807 17,232 17,232 Taipei City Manufacturing and retail sale of computers and electronic components 689,997 689,997 20,000 100% 82,467 (81,407) (80,146) Taipei City Selling of mobile phones 100,000 100,000 10,000 100% 98,152 (11,342) (11,339) New Taipei City Manufacturing, processing, and import and export business of industrial motherboards 547,595 547,595 14,924 21% 779,482 602,154 125,916 CORE British Virgin Islands Investment 4,318,860 4,318,860 147,000 100% 8,079,840 417,529 417,529 Compal Ruifang New Taipei City GLB New Taipei City Compal Healthcare Taipei City CMX Mexcio Investing and developing businesses, such as public construction and specific zones Manufacturing and wholesale of medical equipment Information software services, data processing services, and electronic information supply services Production of automotive electronic products 300,000 100,000 30,000 100% 300,478 538 538 247,560 247,560 15,035 50% 379,334 50,433 21,862 20,000 77,997 - - 2,000 100% 20,003 3 3 - 100% 92,642 15,018 15,018 Panpal Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 279,202 279,202 8,192 4% 610,998 2,420,569 __________ 104,656,676 Allied Circuit Taoyuan City Production and selling of PCB boards 148,263 148,263 2,927 6% 116,705 204,120 Others Gempal Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 306,655 306,655 9,279 4% 717,079 2,420,569 (720,869) Allied Circuit Taoyuan City Production and selling of PCB boards 53,645 53,645 3,220 6% 128,375 204,120 Others (975) __________ 4,088,258 Investment gain (losses) recognized by Panpal Investment gain (losses) recognized by Panpal Investment gain (losses) recognized by Gempal Investment gain (losses) recognized by Gempal (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 100 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company Hong Ji Arcadyan Investee Company Location Hsinchu City Main Businesses and Products Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing (In Thousands of New Taiwan Dollars/ Original Investment Amount Ending Balance Depcmber 31, 2023 306,655 December 31, 2022 306,655 Shares 9,279 Percentage of Ownership 4% Carrying Value 717,079 Net income (losses) of investee 2,420,569 Share of profits/losses of investee Investment gain (losses) recognized by Hong Ji Note Allied Circuit Taoyuan City Production and selling of PCB boards 10,389 10,389 851 2% 29,057 204,120 Hong Jin Arcadyan Hsinchu City Telecommunication equipment and apparatus manufacturing, electronic parts and components manufacturing, restrained telecom radio frequency equipment and materials import and manufacturing 131,942 131,942 4,609 2% 341,189 2,420,569 Just CDH (HK) Hong Kong Investment 1,912,845 1,912,845 62,298 100% 8,037,301 258,934 CII CPI British Virgin Islands Investment 391,335 283,868 12,745 100% 270,052 (96,811) British Virgin Islands Investment 15,353 15,353 500 100% 15,009 1,363 CII Smart British Virgin Islands Investment 31 31 1 100% 377 (4) Investment gain (losses) recognized by Hong Ji Investment gain (losses) recognized by Hong Jin Investment gain (losses) recognized by Just Investment gain (losses) recognized by Just Investment gain (losses) recognized by Just Investment gain (losses) recognized by CII AEI MEL MTL CNA CUS U.S.A Sales and maintenance of LCD TVs - 30,705 1,000 0% - - Investment gain (losses) recognized by CII U.S.A Investment 252,825 252,825 U.S.A Investment 31 31 - - 100% 209,575 21 Investment gain (losses) recognized by CII 100% 31 U.S.A Sales of automotive electronic products 76,763 U.S.A Sales of automotive electronic products 76,763 - - 2,500 100% 76,763 2,500 100% (19,631) (97,813) CIH CIH (HK) Hong Kong Investment 2,296,811 2,296,811 74,803 100% 44,212,065 2,495,365 Jenpal British Virgin Islands Investment 225,682 225,682 7,350 100% 117,441 6,055 PFG FWT CCM IUE Goal HSI British Virgin Islands Investment 31 31 1 100% 85,596 81,321 British Virgin Islands Investment 457,505 457,505 14,900 100% 457,504 - Investment gain (losses) recognized by CIH British Virgin Islands Investment 156,596 156,596 5,100 51% 6,144 (38,884) British Virgin Islands Investment 2,057,235 2,057,235 67,000 100% 1,075,861 417,702 British Virgin Islands Investment 389,954 389,954 12,700 100% 333,976 (4,189) IUE CVC Vietnam Goal CDM Vietnam R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs and electronic components Construction of and investment in infrastructure in Ba-Thien industrial district of Vietnam 2,057,235 2,057,235 67,000 100% 1,075,861 417,702 389,954 389,954 12,700 100% 292,617 (4,189) BCI CMI PRI British Virgin Islands Investment 2,481,578 2,481,578 80,820 100% 5,724,519 329,358 British Virgin Islands Investment 307,050 307,050 10,000 100% 3,403,728 243,065 CORE BSH British Virgin Islands Investment 4,513,635 4,513,635 147,000 100% 8,079,840 417,529 BSH Mithera Cayman Islands Investment 155,060 155,060 - 99% 136,929 (3,437) - - Investment gain (losses) recognized by CII Investment gain (losses) recognized by CII Investment gain (losses) recognized by CII Investment gain (losses) recognized by CIH Investment gain (losses) recognized by CIH Investment gain (losses) recognized by CIH Investment gain (losses) recognized by CIH Investment gain (losses) recognized by HSI Investment gain (losses) recognized by HSI Investment gain (losses) recognized by IUE Investment gain (losses) recognized by Goal Investment gain (losses) recognized by BCI Investment gain (losses) recognized by BCI Investment gain (losses) recognized by CORE Investment gain (losses) recognized by BSH (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 101 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company BSH CIN Investee Company Location Main Businesses and Products U.S.A Manufaturing Depcmber 31, 2023 249,632 December 31, 2022 249,632 Shares 1 Percentage of Ownership 100% Original Investment Amount Ending Balance (In Thousands of New Taiwan Dollars/ Carrying Value Net income (losses) of investee Share of profits/losses of investee Note 226,337 11,208 HSI HHB CEV British Virgin Islands Investment 1,136,085 1,136,085 37,000 46% 960,555 413,513 British Virgin Islands Investment 184,230 Vietnam 1,658,070 R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs, mobile phones, tablet PCs, smart watches, communication equipment, and other electronic products - - - 6,000 11% 276,345 (249,738) - 100% 1,694,332 36,796 Forever GIA British Virgin Islands Selling of mobile phones - CWV Vietnam R&D, manufacturing, sales, and maintenance of notebook PCs, computer monitors, LCD TVs and electronic components 61,410 61,410 Webtek Etrade British Virgin Islands Investment 767,625 767,625 25,000 35% (154,553) (463,604) - - 100% - - Investment gain (losses) recognized by Forever 100% 101,047 2,518 Investment gain (losses) recognized by BSH Investment gain (losses) recognized by BSH Investment gain (losses) recognized by BSH Investment gain (losses) recognized by BSH Investment gain (losses) recognized by Forever Investment gain (losses) recognized by Webtek Unicore Raycore Taipei City Animal medication retail and wholesale - - - 0% - - Investment gain (losses) recognized by Unicore Arcadyan Arcadyan Holding British Virgin Islands Investment 1,071,027 1,071,027 47,780 100% 2,066,961 186,347 Arcadyan USA U.S.A Technology support and sales of wireless network products 23,055 23,055 1 100% 92,028 19,720 Arcadyan Germany Germany Technology support and sales of wireless network products 1,125 1,125 0.5 100% 99,059 7,798 Arcadyan Korea Korea Sales of wireless network products 2,879 2,879 20 100% 35,156 11,668 Zhi-Bao Hsinchu City Investment 48,000 48,000 34,980 100% 343,292 (63,223) TTI Taipei City R&D and sales of household digital products 308,726 308,726 25,028 61% 153,318 (79,482) Arcadyan UK UK Technical support of wireless network products 1,988 1,988 50 100% 5,590 561 Arcadyan AU Australia Sales of wireless network products 1,161 1,161 50 100% 69,715 8,257 Arcadyan RU Russia Sales of wireless network products 7,672 7,672 - 100% 3,212 (1,005) CBN Hsinchu County Sales of communication and electronic components 11,925 11,925 533 1% 9,061 (331,620) Arcadyan and Zhi-Bao Arcadyan Brasil Brazil Sales of wireless network products 81,593 81,593 968 100% (45,570) (1,032) Arcadyan India India Sales of wireless network products 76,952 29,110 19,800 100% 49,894 (18,275) Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan Investment gain (losses) recognized by Arcadyan and Zhi-Bao Investment gain (losses) recognized by Arcadyan and Zhi-Bao (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 102 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Original Investment Amount Ending Balance (In Thousands of New Taiwan Dollars/ Investor Company Arcadyan Holding Sinoprime Investee Company Location British Virgin Islands Investment Main Businesses and Products Depcmber 31, 2023 891,980 December 31, 2022 891,980 Shares 29,050 Percentage of Ownership 100% Carrying Value 1,580,601 Net income (losses) of investee 362,862 Arch Holding British Virgin Islands Investment 338,093 338,093 35 100% 622,790 (270,710) TTI Quest Samoa Investment 36,846 36,846 1,200 100% 10,294 (2,952) TTJC Japan Sales of household digital electronic products 9,626 9,626 0.7 100% 2,693 (397) Quest Exquisite Samoa Investment 35,925 35,925 1,170 100% 9,457 (2,960) Sinoprime Arcadyan Vietnam Vietnam Manufacturing of wireless network products 890,445 890,445 - 100% 1,575,996 362,769 Zhi-Bao CBN Hsinchu County Produces and sales of communication and electronic components 36,272 36,272 13,140 19% 223,285 (331,620) Rayonnant Technology APH British Virgin Islands Investment 257,454 257,454 8,651 41% 206,209 41,217 Forming Co., Ltd. Taoyuan City R&D and manufacturing of electronic materials 27,300 27,300 1,820 21% - - CRH APH British Virgin Islands Investment 383,813 383,813 12,500 59% 306,661 41,217 APH PEL British Virgin Islands Investment 96,751 96,751 3,151 100% 45,559 1,595 Rayonnant (HK) Hong Kong Investment 552,690 552,690 18,000 100% 459,161 39,622 HHT HHA British Virgin Islands Investment 1,429,235 1,429,235 46,882 100% (1,322,489) (234,458) HHA HHB British Virgin Islands Investment 1,439,513 1,439,513 46,882 89% (1,584,042) (249,738) CBN CBNB Belgium CBNN Netherlands Starmems Taiwan The import and export business of broad band network products and related components, as well as technical support and advisory services The import and export business of broad band network products and related components, as well as technical support and advisory services R&D of MEMS microphone related products 6,842 6,842 20 100% 5,266 (344) 7,016 7,016 20 100% 6,267 (164) 10,000 10,000 1,000 10% 3,502 (36,374) FGH Wah Yuen Technology Holding Ltd. and its subsidiaries Mauritius Investment 2,755,942 2,755,942 95,862 37% 4,231,691 (677,928) GLB PT GLB Biotechnology Indonesia Indonesia Manufacturing and wholesale of medical equipment 88,506 - 42 99% 83,655 351 Mactech Taiwan Intelligent Robotics Company, Ltd. Taipei City Manufacturing of equipment and lighting 43,200 43,200 2,160 15% 5,238 (3,360) Poindus Systems Poindus Investment Taipei City Investment holding 4,100 4,100 (Note 2) 100% 496 (67) Poindus UK UK Sales of PCs and peripherals 14,297 14,297 300 100% (11,342) (7,165) Note Share of profits/losses of investee Investment gain (losses) recognized by Arcadyan Holding Investment gain (losses) recognized by Arcadyan Holding Investment gain (losses) recognized by TTI Investment gain (losses) recognized by TTI Investment gain (losses) recognized by Quest Investment gain (losses) recognized by Sinoprime Investment gain (losses) recognized by Zhi-Bao Investment gain (losses) recognized by Rayonnant Technology Investment gain (losses) recognized by Rayonnant Technology Investment gain (losses) recognized by CRH Investment gain (losses) recognized by APH Investment gain (losses) recognized by APH Investment gain (losses) recognized by HHT Investment gain (losses) recognized by HHA Investment gain (losses) recognized by CBN Investment gain (losses) recognized by CBN Investment gain (losses) recognized by CBN Investment gain (losses) recognized by FGH Investment gain (losses) recognized by GLB Investment gain (losses) recognized by Mactech Investment gain (losses) recognized by Poindus Systems Investment gain (losses) recognized by Poindus Systems (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 103 Table 8 The information on investees for the year ended December 31, 2023 (excluding information on investees in Mainland China): (December 31, 2023) Investor Company Poindus Systems Adasys Investee Company Location Germany Main Businesses and Products Sales of PCs and peripherals Depcmber 31, 2023 December 31, 2022 Shares 57,712 57,712 0.002 Percentage of Ownership 100% Original Investment Amount Ending Balance (In Thousands of New Taiwan Dollars/ Carrying Value Net income (losses) of investee Share of profits/losses of investee Note 3,314 (7,306) Poindus Investment Poindus GmbH Germany Sales of PCs and peripherals 1,721 1,721 (Note 2) 100% 70 - Note 1: The carrying value had been deducted $559,812 and $321,435 of the Company’s stock held by Panpal and Gempal, respectively. Note 2: A limited company, therefore no number of shares. Investment gain (losses) recognized by Poindus Systems Investment gain (losses) recognized by Poindus Investment (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 104 Table 9 Information on investment in Mainland China: (December 31, 2023) (i) The names of investees in Mainland China, the main businesses and products, and other information: Main businesses and products Manufacturing and sales of monitors Total amount of paid-in capital 1,136,085 Method of investment (Note 1) Accumulated outflow of investment from Taiwan as of January 1, 2023 1,136,085 Accumulated outflow of investment from Taiwan as of December 31, 2023 1,136,085 Net income (losses) of the investee 204,302 Percentage of ownership 100% Investment income (losses) (Note 4) 204,302 Accumulated remittance of earnings in current period - Book value 2,798,518 Investment flows Outflow Inflow - - (In Thousands of New Taiwan Dollars / shares) Name of investee CPC CDT Manufacturing and sales of notebook PCs, mobile phones, and Digital products 614,100 (Note 2) 614,100 CET Manufacturing of notebook PCs 368,460 (Note 2) 368,460 CSD Research, manufacture and sales of communication devices, mobile phones, electronic computer, smart watch, and provide related technology service FIP Manufacturing of auto parts and accessories 259,651 (Note 2) (Note 3) 302,926 (Note 2) (Note 3) BT Manufacturing of notebook PCs 30,705 (Note 2) 30,705 CGS Maintenance and warranty service of notebook PCs 8,655 (Note 2) (Note 3) 982,560 (Note 1) 409,298 - - - - - - - - - - - - - - 614,100 15,442 100% 15,442 138,610 368,460 87,694 100% 87,694 5,053,795 - 125,012 100% 125,012 404,180 - (1,443) 60% (866) 258,799 30,705 17,294 100% 17,294 (98,654) - 23,859 100% 23,859 (14,311) 409,298 (626,184) 43% (270,386) 28,494 614,100 (Note 1) 45,136 - - 45,136 (543,490) 48% (258,701) 47,562 LIZ Electronics (Kunshan) Co., Ltd. LIZ Electronics (Nantong) Co., Ltd. Production and processing chip resistors, ceramic capacitors, diodes, and other latest electronic components and related precision electronic equipment; selling self-produced products Research & development, and manufacturing chip components (chip resistors, ceramic chip diode; selling self-produced products and providing after-sales service. Performing wholesale and trading business of electronic components, semiconductors, special materials for electronic components, and spare parts CIC Manufacturing of notebook PCs 368,460 (Note 2) 368,460 CPO Manufacturing and sales of LCD TVs 371,531 (Note 1) 371,531 CIT Manufacturing of notebook PCs 736,920 (Note 2) 736,920 CST International trade and distribution of computers and electronic components 42,987 (Note 2) 42,987 Sheng Bao Precision Electronics (Taicang) Co., Ltd. Research & development, and manufacturing latest electronic components, precision cavity mold, design and manufacturing for standard parts for molds, and selling self- produced products 307,050 (Note 2) 156,596 CIJ Investment and consulting services 478,998 (Note 2) 478,998 CDE Manufacturing and sales of LCD TVs 460,575 (Note 2) (Note 3) CIS CEC CMC CEQ Outward investment and consulting services 2,481,578 (Note 1) 2,481,578 R&D and manufacturing of notebook PCs, tablet PCs, digital products, network switches, wireless AP, and automobile electronic products Corporate management consulting, financial and tax consulting, investment consulting, and investment management consulting services R&D, manufacturing and sales of notebook PCs and related components. Also provides related maintenance and warranty services 2,456,400 (Note 2) (Note 3) 24,564 (Note 2) (Note 3) 307,050 (Note 1) 307,050 Compal Precision Module (Jiangsu) Co., Ltd. Changbao Electronic Technology (Chongqing) Co., Ltd. Manufacturing and selling of magnesium alloy injection molding 12,896,100 (Note 2) 2,537,062 Production and marketing of magnesium alloy molding 1,842,300 (Note 2) 351,756 - - - - - - - - - - - - - - - - - - - - - - - - - - 368,460 551,963 100% 551,963 10,930,283 371,531 125,216 100% 125,216 3,111,095 736,920 1,845,493 100% 1,845,493 27,565,297 42,987 (691) 100% (691) 44,382 156,596 (47,084) 51% (24,013) 12,056 478,998 (92,422) 100% (92,422) 2,551,776 - (92,361) 100% (92,361) 2,516,825 2,481,578 329,358 100% 329,358 5,724,519 - 328,816 100% 328,816 5,692,814 - 572 100% 572 25,360 307,050 243,065 100% 243,065 3,403,728 2,537,062 (538,847) 37% (197,326) 5,233,177 351,756 (69,403) 37% (25,416) 630,376 - - - - - - - - - - - - - - - - - - - - - (Continued) COMPAL ELECTRONICS, INC. Notes to Parent-Company-Only Financial Statements 105 Table 9 Information on investment in Mainland China: (December 31, 2023) (i) The names of investees in Mainland China, the main businesses and products, and other information: Name of investee Rayonnant (Taicang) Main businesses and products Manufacturing and sales of aluminum alloy and magnesium alloy products Total amount of paid-in capital 552,690 Method of investment (Note 2) (In Thousands of New Taiwan Dollars / shares) Accumulated outflow of investment from Taiwan as of January 1, 2023 383,813 Accumulated outflow of investment from Taiwan as of December 31, 2023 383,813 Net income (losses) of the investee 39,622 Percentage of ownership 100% Investment income (losses) (Note 4) 39,622 Accumulated remittance of earnings in current period - Book value 459,761 Investment flows Outflow Inflow - - CCI Nanjing Manufacturing and processing of mobile phones and tablet PCs 829,035 (Note 1) 675,510 CDCN Manufacturing and processing of mobile phones and tablet PCs 178,089 (Note 1) 178,089 CWCN Manufacturing and processing of mobile phones and tablet PCs 1,504,545 (Note 1) 583,395 Hanhelt R&D and manufacturing of electronic communication equipment 61,410 (Note 1) 61,410 Arcadyan SVA Arcadyan R&D and sales of wireless network products 248,711 (Note 1) 412,061 (Note 7) CNC Manufacturing and wireless network products 382,277 (Note 1) 338,093 THAC Manufacturing of household electronics products 371,684 (Note 1(cid:501) 9(cid:501)10) (Note 8) 35,311 HengHao HengHao Kunshan Production of touch panels and related components 1,228,200 (Note 1) 1,222,151 HengHao Zhejiang Production of touch panels and related 276,345 (Note 2) (Note 3) components Lucom Manufacturing of notebook PCs and related modules 460,575 (Note 2) 199,552 (Note 12) Poindus Systems Qijie Sales of PCs and peripherals 30,705 (Note 1) 30,705 - - - - - - - - - - - - - - - - - - - - - - 675,510 (119,549) 100% (119,549) (1,301,309) 178,089 (4,985) 100% (4,985) 84,009 583,395 (331,697) 100% (331,697) 738,240 61,410 2,929 100% 2,929 2,456 412,061 6,885 100% 6,885 41,114 338,093 (207,710) 100% (207,710) 622,790 35,311 (4,331) 100% (4,331) 27,020 1,222,151 (249,493) 100% (249,493) (1,477,911) - (1,333) 100% (1,333) 275,032 199,552 1,039 100% 1,039 141,779 - - - - - - - - - 30,705 (2,051) 100% (2,051) 9,589 - (ii) Limitation on investment in Mainland China: Names of Company The Company Arcadyan HengHao Poindus Systems Accumulated Investment in Mainland China as of December 31, 2023 16,658,599 (Note 5) 785,465 1,439,205 30,705 (US$542,537) (US$25,581) (US$46,872) (US$1,000) Investment Amounts Authorized by Investment Commission of Ministry of Economic Affairs 24,221,609 (US$788,849) Limitation on investment in Mainland China by Investment Commission of Ministry of Economic Affairs (Note 6) (In Thousands of USD) 1,054,287 (US$34,336) 1,439,205 (US$46,872) 30,705 (US$1,000) 8,881,334 (Note 13) 322,110 Note 1(cid:28873) Indirectly investment in Mainland China through companies registered in the third region. Note 2(cid:28873) Indirectly investment in Mainland China through an existing company registered in the third region. Note 3(cid:28873) Note 4(cid:28873) Note 5(cid:28873) Note 6(cid:28873) Note 7(cid:28873) Investees held by Kunshan Botai Electronics Co., Ltd. (“BT”), Compal Investment (Jiansu) Co., Ltd. (“CIJ”), Compal Electronic (Sichuan) Co., Ltd. (“CIS”), Compal Electronics (China) Co., Ltd. (“CPC”) and Compal Smart Device (Chongqing) Co., Ltd. (“CSD;”) through their own funds. The basis for recognition of investment profit and loss is based on the financial statements that verified by CPA. Including the investment amount of sold or dissolved companies, including Beijing Compower Xuntong Electronic Technology Co., Ltd., VAP Optoelectronics (NanJing) Corp., Flextronics Technology (Shanghai) Ltd., Lucom, LCFC (HeFei) Electronics Technology Co., Ltd. and the increased investment amount form merging with Compal Communication Co., Ltd. As the Company has obtained the certificate of being qualified for operating headquarters, issued by Industrial Development Bureau, MOEA, the upper limit on investment in mainland China is not applicable. Arcadyan paid US$18,420 thousand and acquired 100% shares of SVA Arcadyan from Accton Asia through Arcadyan Holding in 2010. Note 8(cid:28873) Arcadyan paid US$8,561 thousand and acquired 100% shares of CNC from Just through Arcadyan Holding in 2007. Note 9(cid:28873) Arcadyan’s subsidiary, TTI, obtained the control over THAC with US$1,150 thousand on February 28, 2013 (the date of stock transferring). Note 10(cid:28873) Arcadyan’s subsidiary, TTI, increase the capital of TCH by accounts receivable of TTI amounting to US$8,755 thousands on August 16, 2023. Note 11(cid:28873) The amounts in New Taiwan Dollars were translated at the exchange rates at the balance sheet date or the average exchange rate. Note 12(cid:28873) Note 13(cid:28873) The Company had an accumulated investment amounting to US$7,350 thousand in the previous years. In the first half of 2014, HengHao paid the Company and LG US$3,184 thousand and US$3,315 thousand, respectively, for organization restructure, to obtain 100% ownership of Lucom. The net equity of HengHao is negative at December 31, 2023. (iii) Significant transactions: For the year ended December 31, 2023, the significant inter-company transactions with the subsidiary in Mainland China, which were eliminated in the preparation of consolidated financial statements, are disclosed in “Information on significant transactions”.
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