Phihong Technology : The board of directors resolved to spin-off and transfer its Electric Vehicle Power business to a wholly-owned subsidiary, Phehicle Co., Ltd.

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Provided by: PHIHONG TECHNOLOGY CO., LTD.
SEQ_NO	3	Date of announcement	2022/03/10	Time of announcement	18:44:17
Subject	The board of directors resolved to spin-off and transfer its Electric Vehicle Power business to a wholly-owned subsidiary, Phehicle Co., Ltd.
Date of events	2022/03/10	To which item it meets	paragraph 11
Statement	1.Type of merger and acquisition (e.g.merger, spin-off, acquisition, or share transfer):spin-off 2.Date of occurrence of the event:2022/03/10 3.Names of companies participating in the merger and acquisition (e.g., name of the other company participating in the merger, newly established company in a spin-off, acquired company, or company whose shares are transferred): (1)Spin-off transferor company: Phihong Technology, Co., Ltd. (2)Spin-off transferee company: Phehicle Co., Ltd. ("Phehicle") 4.Trading counterparty (e.g., name of the other company participating in the merger, company spinning off, or trading counterparty to the acquisition or share transfer): Phehicle, which is a wholly-owned subsidiary of the Company. 5.Whether the counterparty of the current transaction is a related party: Yes 6.Relationship between the trading counterparty and the Company (investee company in which the Company has re-invested and has shareholding of XX%), explanation of the reasons for the decision to acquire from or transfer shares to an affiliated enterprise or related party, and whether it will affect shareholders' equity: As Phehicle is a wholly-owned subsidiary of the Company, and the value of Phehicle's shares to be issued to the Company is equal to the value of the business to be spin-off and transferred to Phehicle, this spin-off will not affect the existing shareholders equity of the Company. 7.Purpose of the merger and acquisition: Spin-off Electric Vehicle Power business to an independent entity is in order to facilitate group strategic goal to enhance competiveness of Electric Vehicle Power business. 8.Anticipated benefits of the merger and acquisition: It is expected to strengthen competitiveness and operation performance by independent operations. 9.Effect of the merger and acquisition on net worth per share and earnings per share: Since the business will be spun off and transferred to the wholly-owned subsidiary, there will be no impact on book value per share and EPS in the consolidated financial statements of the Company. 10.Follow-up procedures for mergers and acquisitions, including the time and method of payment of the consideration for mergers and acquisitions, etc.: (1)Payment schedule: The record date of the spin-off is tentatively set for September 1, 2022. (2)Payment method: The business value of the Electric Vehicle Power business spun off from the Company is NTD599,000,000. Each business value may exchange for one new common share issued by Phehicle, with a par value of NT$10, and the Company will acquire 59,900,000 common shares issued by Phehicle. Where any fractional business value is insufficient to exchange for one share, Phehicle shall, within 30 days after completion of the registration amendment, pay the Company in cash on a lump-sum basis against such business value. 11.Types of consideration for mergers and acquisitions and sources of funds: (1)Types of consideration for mergers and acquisitions: new common shares issued by Phehicle. (2)Sources of funds: Not applicable. 12.Share exchange ratio and calculation assumptions: (1)Share exchange ratio: The business value of the Electronic Vehicle Power business spun off from the Company is NTD599,000,000. Each business value may exchange for one new common share issued by Phehicle, with a par value of NTD10, and the Company will acquire 59,900,000 common shares issued by Phehicle. Where any fractional business value is insufficient to exchange for one share, Phehicle shall, within 30 days after completion of the registration amendment, pay the Company in cash on a lump-sum basis against such business value. (2)Basis of the calculation: The aforementioned share exchange ratio is determined with reference to the book value of the assets and liabilities of the Electronic Vehicle Power business, the book value per share of the Company, and the fairness opinion issued by the independent expert for the exchange ratio of this spin-off. 13.Whether the CPA, lawyer or securities underwriter issued an unreasonable opinion regarding the transaction:No 14.Name of accounting, law or securities firm:YAPRO, CPAs 15.Name of CPA or lawyer:Min-Tse Tang 16.Practice certificate number of the CPA:Jin-Guan-Hui-Zheng-Zi-8022 17.The content of the independent expert opinion on the reasonableness of the share exchange ratio, cash or other assets allotted to shareholders in this merger and acquisition: The fairness opinion issued by the independent expert indicates that the calculation of the business value of the Electronic Vehicle Power business and the exchange ratio is based on the book value of the assets and liabilities of the Electronic Vehicle Power business as of December 31, 2021, and the relevant QAs and explanations published by Accounting Research and Development Foundation. It is fair that Phehicle issues 59,900,000 common shares, with a par value of NTD10 each, to the Company to acquire the Electronic Vehicle Power business; considering Phehicle will continue to be a wholly-owned subsidiary of the Company after the spin-off, this spin-off will not affect the existing shareholders equity of the Company. 18.Estimated date of completion: The record date of the spin-off is tentatively set for September 1, 2022. The Chairman of the Board of both the Company and Phehicle are authorized to change the record date, if required. 19.Matters related to the assumption of corporate rights and obligations of the dissolving company (or spin-off) by the existing or newly-established company: (1)All assets and liabilities transferred to Phehicle under the spin-off and all relevant rights and obligations as of the record date shall be assumed by Phehicle pursuant to relevant laws, unless otherwise agreed in the spin-off plan. The Company shall cooperate with Phehicle in carrying out required transfer procedures, if any. (2)Unless the liabilities to be transferred under the spin-off are separable from the debts of Phihong prior to the spin-off, Phehicle shall be jointly and severally liable for the liabilities incurred by the Company prior to the spin-off within the scope of the Company's capital contribution for the transferred business, pursuant to Paragraph 7, Article 35 of the Business Mergers and Acquisitions Act. However, the creditors' rights to claim for the performance of such joint and several liabilities shall be expired if the creditors fail to exercise such rights within two years of the record date. 20.Basic information of companies participating in the merger: Not applicable. 21.Matters related to the spin-off (including estimated value of the business and assets planned to be transferred to the existing company or new company.The total number of shares to be acquired by the spun-off company or its shareholders, and their respective types and no.Matters related to the reduction, if any, in capital of the spun-off company)(note: not applicable for announcements unrelated to spin-offs): (1)Business value of the transfer:The estimated value is NTD599,000,000. (2)Assets to be transferred: The estimated value is NTD812,002,000. (3)Liabilities to be transferred: The estimated value is NTD213,002,000. (4)The business value and the amount of the assets and liabilities as mentioned above are tentatively calculated with reference to the book value of the audited financial statement of the Company prepared on December 31, 2021, and considering the depreciation, capital expenditure plans, and expected changes on the value of the items relating to the spin-off as of the record date. The actual amount shall be subject to the book value of the record date. (5)Any adjustment to the aforementioned assets or liabilities, business value, shares issued by Phehicle, exchange ratio or issue price, may be mutually agreed by the Boards of the Company and Phehicle. The same process shall apply in the event that any adjustment to the business value, the exchange ratio of the number of shares issued by Phihong, or the issue price, if required. (6)The business value transferred to Phehicle is NTD599,000,000, and Phehicle shall issue 59,900,000 common shares to the Company. (7)Phehicle should complete the relevant registration amendment and issue new common shares to the Company after the spin-off. Thereafter, the Company will continue to directly own 100% shares of Phehicle. 22.Conditions and restrictions for future transfer of shares resulting from the merger and acquisition:None 23.The plan after the merger and acquisition is completed: Before and after the spin-off, Phehicle continues to be a wholly-owned subsidiary of the Company. 24.Other important terms and conditions: The record date of the spin-off is tentatively set for September 1, 2022. The Chairman of the Board of both the Company and Phehicle are authorized to change the record date, if required. 25.Other major matters related to the mergers and acquisitions:None 26.Any objections from directors to the transaction:None 27.Information on interested directors involved in the mergers and acquisitions: (1)Name of interested director: Fei-Hung Lin. (2)Explanations of interest: Fei-Hung Lin is a director of the Company and appointed by the Company acting as the representative and the Chairman of the Board of Phehicle. (3)Reasons for recusal or not: This spin-off is for the group reorganization purpose. Fei-Hung Lin is a director of the Company and appointed by the Company acting as the representative of Phehicle, who shall have self-interest in this spin-off, and therefore, he is refrained from discussion and voting on this spin-off. (4)Recusal event: Fei-Hung Lin is refrained from discussion and voting on this spin-off. (5)Reasons for concurring with the merger and acquisition resolution: To facilitate the implementation of the group's specialization, the Company intends to spin-off and transfer its Electric Vehicle Power business to Phehicle so as to diversify its operations and enhance its overall operational performance and market competitiveness under independent operation. Considering this spin-off is beneficial to the Company, Fei-Hung Lin concurs with the spin-off. 28.Whether the transaction involved in change of business model:No 29.Details on change of business model:Not applicable. 30.Details on transactions with the counterparty for the past year and the expected coming year:None 31.Source of funds:Not applicable. 32.Any other matters that need to be specified:None