AWEA - Annual Report 2023 | FinancialReports.eu

Stock Code: 1530

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AWEA Mechantronic Co., Ltd.

2023 ANNUAL REPORT

Publication date: May 28, 2024

Website for checking this Annual Report: http://mops.twse.com.tw/

I. Names, Job Titles, Contact Numbers, and Emails of Spokesperson and Deputy Spokesperson:

Spokesperson: Ting-Shuang Lin

Job title: Assistant manager of the Finance Department

Tel.: (04)24629698 Ext. 62720

E-Mail: [email protected]

Deputy Spokesperson: Mei-Fang Liang Job title: Manager of the Finance Department

Tel.: (03)5885191 Ext. 61708

E-Mail: [email protected]

II. Address and Telephone of Headquarters, Branches and Factories

Headquarter: No. 629, Sec. Shuichetou, Guanpu Rd., Xinpu Township, Hsinchu County 305

Tel: (03)5885191

Taichung Branch: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407 (AWEA Taichung Branch)

Tel: (04)24629698

Hsinchu Plant: No. 629, Sec. Shuichetou, Guanpu Rd., Xinpu Township, Hsinchu County 305

Tel: (03)5885191

Central Taiwan Science Park Plant: No. 15, Keyuan 2nd Rd., Xitun Dist., Taichung City 407

Tel: (04)24629698

Chiayi Branch: No. 21, Dapumeiyuanqu 5th Rd., 19th Neighborhood, Dalin Township, Chiayi County 622

Tel: (05)2953699

III. Institution for Stock Transfer

Name: Stock Transfer Agency Department of Taishin Securities Co., Limited Tel: (02)25048125

Address: B1F, No. 96, Sec. 1, Jianguo N. Rd., Zhongshan Dist., Taipei City Website: https://www.tssco.com.tw

IV. Contact Information of Financial Statement Auditors in the Latest Year

Name of CPA: Guei-Duan Chen, Chang-Yun Yi

Name of CPA firm: EnWise CPAs & Co.

Address: 9F-1, No. 130, Taiyuan N. Rd., North Dist., Taichung City Tel: (04)22966234

Website: http://www.enwise.com.tw

V. Overseas Listings and Access to the Listing Information: Not applicable
VI. Company Website: http://www.awea.com

Chapter I.	Report to Shareholders .......................................................................................................... 1	Report to Shareholders .......................................................................................................... 1
Chapter II.	Company Profile .................................................................................................................... 6
	I.	Establishment date ......................................................................................................... 6
	II.	Address and telephone of headquarters, branches and factories ................................... 6
	III.	History and organization ............................................................................................... 6
Chapter III.	Corporate Governance ......................................................................................................... 12
	I.	Organizational structure .............................................................................................. 12
	II.	Background information of Directors, Supervisor, President, Vice President, Assistant
		Manager, and heads of various departments and branches ......................................... 14
	III.	Corporate governance .................................................................................................. 29
	IV.	Information in public fees of the Certified Public Accountant Association ............... 57
	V.	Changes in CPA .......................................................................................................... 57
	VI.	Where the company’s chairman, president, or any managerial officer in charge of
		finance or accounting matters has in the latest year held a position at the accounting
		firm of its certified public accountant or at an affiliated enterprise of such accounting
		firm, the name and position of the person, and the period during which the position was
		held .............................................................................................................................. 57
	VII.	In the latest year and up to the publication date of the annual report, the fact regarding
		transfer or pledge stock equity by the Company’s directors, supervisors and managerial
		officers and key shareholders holding over 10% in shareholding ............................... 58
	VIII.	Data of relationship among the company’s 10 largest shareholders ........................... 59
	IX.	Investments jointly held by the Company, the Company’s directors, supervisors,
		managerial officers, and enterprises directly or indirectly controlled by the Company.
		Calculate shareholding in aggregate of the above parties ........................................... 60
Chapter IV.	Funding Status ..................................................................................................................... 61
	I.	Share capital and shares ............................................................................................... 61
	II.	Insurance of corporate bonds (including overseas corporate bonds) .......................... 68
	III.	Status of preferred shares ............................................................................................ 68
	IV.	Issuance of overseas depository receipts ..................................................................... 68
	V.	Employee stock options ............................................................................................... 68
	VI.	Status of new shares issuance in connection with mergers and acquisitions .............. 68

	VII.	Progress on the use of funds ........................................................................................ 68
Chapter V.	Business Performance .......................................................................................................... 69
	I.	Content of business ...................................................................................................... 69
	II.	Markets, production and marketing in summary ......................................................... 85
	III.	The number of employees employed, average years of service, average age, and ratio
		of academic qualification in the last two years ........................................................... 93
	IV.	Environmental spending .............................................................................................. 93
	V.	Employee-employer relationship ................................................................................. 95
	VI.	Cyber security management ........................................................................................ 98
	VII.	Important contract ..................................................................................................... 101
Chapter VI.	Financial Status .................................................................................................................. 102
	I.	Condensed balance sheet and statement of comprehensive income for the last five years
		................................................................................................................................... 102
	II.	Financial analysis for the last five years .................................................................... 106
	III.	Audit Report of Audit Committee on Financial Statements of the Latest Year ........ 110
	IV.	Financial Reports for the latest year .......................................................................... 111
	V.	The consolidated financial statements of the parent company and its subsidiaries
		reviewed and certified by CPAs in the latest year ..................................................... 197
	VI.	If the Company and its affiliated enterprises, in the latest year and up to the publication
		date of the annual report developed an insolvency and the impact upon the Company’s
		financial conditions ................................................................................................... 298
Chapter VII.	Review Analysis and Risk Management of Financial Status and Operation Results ...... 298
	I.	Financial status .......................................................................................................... 298
	II.	Financial performance ............................................................................................... 299
	III.	Cash flow ................................................................................................................... 300
	IV.	The impact of the significant capital expenditure in the latest year upon the financial
		performance ............................................................................................................... 300
	V.	The outward investment policies in the latest year. The key reasons leading to the profit
		or loss, the corrective plans and the investment plan in one year ahead ................... 301
	VI.	Risk issues that occurred in the latest year and up to the publication date of the Annual
		Report shall be analyzed and evaluated as follows ................................................... 301
	VII.	Other important disclosures ....................................................................................... 305

Chapter VIII.	Special Disclosure ............................................................................................................. 306	Special Disclosure ............................................................................................................. 306
	I.	Relevant information of affiliated enterprises ........................................................... 306
	II.	The basis for the date, amount and price approved by the shareholders’ meeting or the
		Board of Directors and its reasonableness, the method for selection of the specific
		person, and the necessary reasons for private placement shall be disclosed for the
		private placement of securities in the latest year and up to the publication date of the
		Annual Report ........................................................................................................... 310
	III.	Holding or disposal of the company’s shares by its subsidiaries in the latest year and
		up to the publication date of the annual report .......................................................... 310
	IV.	Other necessary supplemental information ............................................................... 310
Chapter IX.	Any situation Specified in Article 36, Paragraph 2, Subparagraph 2 of the Securities and
	Exchange Act, which has Significant Impacts on shareholders’ Equity or the Price of the
	Company’s Securities, and Occurred in the Latest Year and up to the Publication Date of
	the Annual Report, shall also be Specified One by One ................................................... 310

Chapter I. Report to Shareholders

I. Report on Results of the Company’s business performance in the 2023:
(I) Operating revenue: Net operating revenue of the Company in 2023 was NT$1,572,321 thousand, with a decrease of NT$711,337 thousand and a decrease rate of 31.15%, compared with the NT$2,283,658 thousand in 2022.
(II) Profit and loss: Net profit before tax of the Company in 2023 was NT$240,987 thousand, with a decrease of NT$198,870 thousand and a decrease rate of 45.21%, compared with the NT$439,857 thousand in 2022; net profit after tax of the Company in 2023 was NT$210,811 thousand (NT$2.18 per share), with a decrease of NT$143,332 thousand and a decrease rate of 40.47%, compared with the NT$354,143 thousand (NT$3.67 per share) in 2022.
(III) Comparison of earnings in 2023 and 2022 was as follows:
- (Parent Company Only)

(Parent Company Only)
	Unit: NT$thousand
Items	2023	2022	Amount in increase/decrease	Increase (decrease)%
Net operatingrevenues	1,572,321	2,283,658	(711,337)	(31.15%)
Operatingcosts	(1,331,564)	(1,825,556)	(493,992)	(27.06%)
Grossprofit	240,757	458,102	(217,345)	(47.44%)
Realized (Unealized) gain amongassociated companies	3,553	(4,904)	8,457	172.45%
Net operating profit	22,476	212,519	(190,046)	(89.43%)
Netprofit before tax	240,987	439,857	(198,870)	(45.21%)
Netprofit after tax	210,811	354,143	(143,332)	(40.47%)

(Consolidated)

(Consolidated)
Items	2023	2022	Amount in increase/decrease	Increase (decrease)%
Net operatingrevenues	2,361,917	3,100,517	(738,600)	(23.82%)
Operatingcosts	(2,002,794)	(2,432,617)	(429,823)	(17.67%)
Grossprofit	359,123	667,900	(308,777)	(46.23%)
Realized (Unealized) gain amongassociated companies	(210)	(4,900)	4,690	95.71%
Net operating profit	33,000	298,225	(265,225)	(88.93%)
Netprofit before tax	235,099	459,788	(224,689)	(48.87%)
Netprofit after tax	190,306	349,287	(158,981)	(45.52%)
Attributable to parent company	210,811	354,143	(143,332)	(40.47%)

(IV) The budget execution status and the financial revenues in 2023 are as follows: In accordance with stipulations in “Regulations Governing the Publication of Financial Forecasts of Public Companies”, the Company did not need to disclose its financial forecast information for 2023, therefore, there was no data on its budget execution status in 2023.

(V) Breakthrough in operation management:
Breakthrough in product development AWEA products developed with optimized functions in the direction of large-scale, composite, five-axis, high-speed and intelligence, etc.
- (1) Gantry type high-speed five-axes machining center AG (linear motor drive) and RG (linear screw drive) series, which met the five-axis and high-speed machining needs for mold and aerospace industry.
- (2) Various horizontal/ horizontal five-axis machining centers, which provided machining needs for mass-production line.
- (3) The full range of bridge milling models can be matched with AWEA’s inhouse made high-speed spindle, to meet the needs of the customers’ mold processing industry.
- (4) MEGA5 series of high-performance large-scale five-axis machining center, which met the high-speed, and high-precision machining needs of the aerospace industry.
- (5) FCV800S milling machine 5 axes machining center series, which met the customers’ needs for compounding machining.
- (6) The full range of bridge milling models with the new generation of milling head series, which could comprehensively improve the performance and function, and provide the customers with more choices.
- (7) Large bridge type milling machine with AWEA homemade automatic universal head, which could meet the customers’ processing needs at different angles.
- (8) Large moving cross rail machining center MVP series and super traveling column machining center MCP series and new moving cross rail moving column MVCP models, which could provide the customers with large processing range, large processing stroke and meet their needs for processing convenience.
- (9) Brand-new long-stroke high-speed aluminum cutting machining center, which could provide ultra-high-speed cutting feed to meet the customers’ need for high-speed aluminum cutting.
- (10) Intelligent information control system AiLINC new product was published, which enabled the machine matched with AiLINC to be upgraded to intelligent machine, to docking with intelligent manufacturing.
Breakthrough in production and sales layout
- (1) Its sales volume of niche market products increased, and its export proportion of bridge machines increased.
- (2) Breakthrough in sales volume in mature markets - Italy, Germany, North America, Turkey, etc.
- (3) Development of new markets - Eastern Europe, Northern Europe, ASEAN and India, etc.
- (4) Development and marketing of new products - new large-scale gantry machine, European-standard attachment head integration application, etc.
- (5) It provided diversified controllers for selection, with rapid supply.

  3. Breakthrough in improvement of corporate management

     - (1) It established corporate culture, to improve the corporate competitiveness.

     - (2) It made effective control of accounts receivable and ending balance of inventory.

     - (3) It promoted precision production, made effective control of cost, and enhanced the product competitiveness.

     - (4) It made reasonable use of general and administrative expenses, and reduced unnecessary expenditures.

II. Summary of the business plan for 2024
(I) 2024 Trading strategy
1. Market strategy: To make full use of the information platform, establish complete marketing documents and sales system, coordinate agents in different regions to support each other in machine sales, reduce stock volume and improve delivery speed; cooperate with exhibitions using the group image both at home and abroad, make market promotion, and reduce sales resistance.
2. Sales strategy: Enhance brand recognition between the agents and the customers.
3. Management strategy: Reduce the error rate, and improve the working quality.
(II) Business objective for 2024
- Estimated sales volume in 2024: 96 bridge machines, and 405 C-type machines.
III. Production and marketing policies

Important long-term direction:

(I) Continue to make diversion of market: Making diversification of the market is conducive to avoiding the risk of market concentration, which is a long-term policy of the Company, and is conducive to the stable development of the Company.
(II) Improve customer satisfaction by service: After service is an important link for maintaining customers, and the Company could obtain repeat orders only with a good after-sales service, therefore, in the future, the Company will struggle toward the objective of rapid service and inexpensive but excellent support.
(III) Develop products as required by the market: To strengthen the interaction and understanding of the market, develop products according to market demand, and improve the market share of products.
IV. Impact from external competition environment, regulatory environment and overall operation environment
The Company’s development in the future is subject to impact from the following adverse factors:
(I) The NTD exchange rate fluctuates greatly, which has an impact on order-receiving and production costs, as well as adverse impact on operation.
(II) The domestic labor laws and regulations are rigid, which is easy to cause employee-employer conflicts, increase the operating costs, and have adverse impact on development of the industry.

V. Future development strategies
(I) Marketing strategies:
1. To adjust the sales market proportion and strategy in response to COVID-19 epidemic, China-United States trade war and inflation impact.
2. To demonstrate advantages of the Company’s products in aerospace and wind power green energy, and expand the market supply and share.
3. To invest more resources for development since the trend of intelligent products with industry 4.0 is becoming increasingly obvious.
4. To integrate and develop all kinds of five-axis application technologies, and expand sales of five-axis machine.
5. To actively improve all kinds of high-end five-axis products in active markets of five-axis machines.
6. To actively expand the international market, and integrate the demonstration, sales, service and repair sites.
7. To actively introduce talents, make industry-university cooperation, and deeply improve the Company’s long-term development competitiveness.
8. To make use of the information tool and platform, and integrate exhibitions, advertising and publicity, to enhance marketing channels.
(II) Procurement strategy
1. To strengthen supply chain links to shorten lead times of raw materials and reduce stock inventory, and improve the delivery speed and mobility.
2. To make group procurement and price negotiation, make regular assessment of the suppliers, and implement ISO assessment of the suppliers’ quality, delivery and price, and coach the suppliers to enhance their competitiveness, thus enhancing the competitiveness of the Company.
(III) Development orientation of product
1. To cooperate with the domestic green energy, wind power, shipbuilding and other industrial policies to develop new-generation products, so as to make a preparation for competitive advantages in the future.
2. To construct a complete product line, and coordinate with the Goodway Parent Company, to make respective development in the field of professional milling machine machining and turning machining technologies.
3. To make research and development of high value-added new products, such as gantry-type\ floor-type moving column gantry machine, floor-type moving column moving cross rail gantry machine, high-efficiency mass production machine, high-speed five-axis machine, and horizontal boring machine, etc.
4. To deepen the development of intelligent and automated new products at the high-tech level.
5. To actively promote and expand products in aerospace machining markets in cooperation with the development trend of aerospace industry in the world.

To develop new-generation products in compliance with the global trend of energy-saving, carbon-reduction and green manufacturing.
(IV) Production strategies
To improve the self-production rate, and strengthen the precision machining equipment and self-assembly capacity, so as to improve the product quality.
To commence construction of Dapumei Phase II plant, the completion of which can improve production capacity of small vertical machines, achieving rapid supply.
To put Phase II plants of Wujiang Plant into mass production, with key precision components supported by the parent factory, so as to improve production capacity in Mainland China.

In the post-epidemic era in 2023, confronted with global high inflation, the FED continued to maintain a high interest rate to suppress inflation, and the global capital expenditure was comprehensively depressed under such environment, having an indirect impact on recovery of the tool industry. Fortunately, as of November 2023, the capital market expected that the U.S. Federal Reserve has completed this cycle of raising interest rate. At present, the world is waiting with bated breath, and it’s expected that the fall of the inflation data and the return of expansion of manufacturing capital expenditure demand could bring the opportunity of the next industrial recovery for the tool machine industry.

The management team of AWEA has always been following a dedicated attitude and making all-round preparation, and we believe that this year, with the continuous support of all you shareholders, we have the confidence to overcome all kinds of adverse internal and external factors, so as to make the Company continue to grow steadily in the sluggish environment, to repay you shareholders’ trust in the management team of AWEA. Thanks again to all shareholders for your support and recognition. At last, I wish all of you:

A good health, and all the best wishes for you!

AWEA Mechantronic Co., Ltd.

President: Shang-Ru Yang

Chairman:

President:

Accounting Supervisor:

Chapter II. Company Profile

I. Establishment date

Headquarter: The registration of its establishment was approved on July 16, 1986 Taichung Branch: The registration of its establishment was approved on May 16, 2007.

Chiayi Branch: The registration of its establishment was approved on December 25, 2017.

II. Address and telephone of headquarters, branches and factories

Headquarter: No. 629, Sec. Shuichetou, Guanpu Rd., Xinpu Township, Tel.: (03) 588-5191 Hsinchu County Taichung Branch: No. 15, Keyuan 2nd Rd., 2nd Neighborhood, Lincuo Vil., Tel.: (04) 2462-9698 Xitun Dist., Taichung City Hsinchu Plant: No. 629, Sec. Shuichetou, Guanpu Rd., Xinpu Township, Tel.: (03) 588-5191 Hsinchu County Central Taiwan No. 15, Keyuan 2nd Rd., 2nd Neighborhood, Lincuo Vil., Tel.: (04) 2462-9698 Science Park Plant: Xitun Dist., Taichung City Chiayi Branch: No. 21, Dapumeiyuanqu 5th Rd., 19th Neighborhood, Dalin Tel.: (05) 295-3699 Township, Chiayi County

III. History and organization

1986 ‧ Established in Yangxiwo, Hukou Township, Hsinchu County, Taiwan Province on July 1, with a capital of NT$4.4 million.
1987 ‧ A capital of NT$14.21 million was increased.
‧ The VMC won the Taiwan Excellence Award issued by the Taiwan External Trade Development Council.
1988 ‧ Products began to be exported.
‧ The development of the P-type gantry vertical machining center was completed in November.
1989 ‧ A capital of NT$112.3 million was increased. In September, the plant moved to the present site of Xinpu Township, Hsinchu County.
‧ It won the Taiwan Excellence Award issued by the Taiwan External Trade Development Council.
‧ The FMV won the Taiwan Excellence Award issued by the Taiwan External Trade Development Council.
1990 ‧ A capital of NT$179.94 million was increased.
‧ The development of the PM-type moving column gantry vertical machining center was completed in June.
‧ The LS-type moving column CO2 laser cutter was completed in October.
‧ The P-type gantry vertical machining center won the Eminence Award of Research and Development Innovative Product Competition issued by the Taiwan Association of Machinery Industry.

‧ The LS-type moving column CO2 laser cutter won the Excellent Award of Research and Development Innovative Product Competition issued by the Taiwan Association of Machinery Industry.
1991 ‧ Phase I plant construction was completed on February 2.
‧ The PL-type fixed column gantry CO2 laser cutter was completed.
1992 ‧ Cooperated with the Japanese TRE company in the development of the MMA-type gantry vertical machining center, which won the Eminence Award of Research and Development Innovative Product Competition issued by the Taiwan Association of Machinery Industry.
‧ PL-type fixed column CO2 laser cutter.
1993 ‧ The development of the SP-type gantry vertical machining center was completed in April.
‧ The PMT-type moving column gantry vertical machining center was developed in May.
1994 ‧ The SP-type gantry vertical machining center won the Taiwan Excellence Award.
‧ The development of the VP1050 small gantry vertical machining center was completed in September.
‧ Funded by the Industrial Development Bureau (development plan of new leading products) for the development of the HVC-type large gantry five-face machining center.
1995 ‧ The VP-1050 gantry vertical machining center won the Eminence Award of Research and Development Innovative Product Competition issued by the Taiwan Association of Machinery Industry in March.
‧ The development of the LP-type gantry vertical machining center was completed in September.
‧ VP and SP gantry vertical machining centers were certified by AMTRI (CE) of the UK in September.
‧ The expansion of the plant covering an area of 1000 square meters (D plant) was completed in December.
1996 ‧ The VP1050 gantry vertical machining center won the Taiwan Excellence Award.
‧ “Integrity, mutual benefit, enhancement and harmony” were established as the Company’s management ideas.
‧ The quality assurance system was certified by TUV RHEINLAND ISO 9001 of the Germany in October.
‧ The development of the VP1509/VP2012 small gantry vertical machining center was completed in December.
1997 ‧ The LP-type machining center won the ITaiwan SMEs Innovation Award issued by the Ministry of Economic Affairs in February.
‧ The VP-type machining center won the Outstanding Award of the 5th Machine Tool Research and Development Innovative Product Competition issued by the Taiwan Association of Machinery Industry in March.
‧ The public offiering of shares was approved by the Securities and Futures Bureau, FSC in June.
‧ A capital of NT$302.02 million was increased in August.

1998 ‧ The VP2012 machining center won the Taiwan Excellence Awards in April.
‧ A capital of NT$381.70 million was increased in June.
‧ It won the National Award of Outstanding SMEs on September 19.
‧ The construction of A1/A2 plant was completed in September.
‧ It was certified by ISO14001 in November.
‧ It obtained the product trademark of “Gantry Family” in December.
‧ It was officially listed in Taiwan Stock Exchange with a offering price of NT$36 on December 29.
1999 ‧ In February, an investment was made to establish Baiwei Development Co., Ltd., holding shares of 99.99%.
‧ In March, the Company was funded by the development plan of new leading products of the Industrial Development Bureau for the development of the RV-type high-speed cutting and machining center.
‧ A capital of NT$423.11 million was increased in July.
‧ VB and LP gantry vertical machining centers were certified by AMTRI (CE) of the UK in August.
‧ The LP gantry vertical machining center won the Taiwan Excellence Award in December.
2000 ‧ A capital of NT$466.68 million was increased in July.
‧ Over-the-Counter shares were listed on September 11.
‧ It won the Industrial Technology Advancement Award issued by the Ministry of Economic Affairs in September.
‧ The additional head positioning device won the patents of China and Taiwan.
‧ The development of the gantry vertical high-speed machining center, the new leading product of the Industrial Development Bureau, was completed.
2001 ‧ To develop small vertical machining center series products, a new plant was rented in Taichung and the products were officially put into production in November.
‧ The large (6M×5M) crown block moving column machining center was completed.
‧ In March, Puwei Technology Co., Ltd. was established to develop production equipment for the electronics industry by international cooperation, and ODM completed the first two PCB drilling prototypes.
‧ In March, Shanghai Zhuwai Mechanical and Electrical Co., Ltd. was established in the third place and rented the plant in Shanghai Qingpu Industrial Zone, and began operation in November to greatly service and business capacity of Taiwanese companies in Mainland China.
2002 ‧ The development of 16,701 square meters of adjacent agricultural land in Xinpu to industrial land was completed in August.
‧ In August, Dawei Mechantronic (Suzhou) Co., Ltd. was established in the third place Suzhou Xiangcheng Economic Development Zone.
‧ Horizontal model planning and prototype development were completed.
‧ The large crown block moving column machining center was listed successfully, in which one crown block was listed as Taiwan’s first 14M×5M crown block.

2003 ‧ The bridge type five-axis machining center won the Outstanding Award of Research and Development Innovative Product Competition in March.
‧ It was approved to apply to set up a branch in the Central Taiwan Science Park in August.
2005 ‧ In March, the BL floor-type boring CNC horizontal machining center was successfully listed, and won the Eminence Award of Research and Development Innovative Product Competition.
‧ On June 30, the affiliated enterprise Puwei Technology Co., Ltd. applied for suspension of business for lack of investment benefits.
‧ In September, the Company was funded by the development plan of new leading products of the Industrial Development Bureau for the development of the CNC horizontal integrated machining center.
2006 ‧ On January 25, the Company issued the first domestic unsecured convertible corporate bonds over the counter.
‧ In February, the Company negotiated with Japan’s Toyoda Machine to cooperate in production and marketing, and product development.
‧ On April 25, the groundbreaking ceremony was held for the plant in the Taichung Science Park. The plant covered a rented area of 25,000 square meters, and a building area of 23,837 square meters.
2007 ‧ In March, the newly developed five-axis machine F99U won the Eminence Award of Research and Development Innovative Product Competition.
‧ In April, the Company’s first domestic unsecured convertible corporate bonds were all converted into ordinary shares, which were divided into 5,756,926 shares.
‧ In May, the Company was approved to apply to set up a branch in the Central Taiwan Science Park.
‧ In October, the Central Taiwan Science Park Plant was officially put into operation.
2008 ‧ On March 8, people in the industry, government and academia and agents and supplies at home and abroad were invited to celebrate the opening of the Company’s Central Taiwan Science Park Plant.
‧ In July, the transferred capital increase was NT$45,447 thousand, and the paid-in capital reached NT$829,011 thousand.
‧ In November, a subsidiary of AWEA (USA) was established as the sales market and service base for the development of gantry machines in the American region.
‧ In November, the subsidiary of Baiwei Development holding 100%, and the AWEA shares of NT$5,303,090 held by Baiwei Development were canceled, and the pain-in capital was NT$823,709 thousand.
‧ The development of new adjacent land of Hsinchu Plant was completed in December, and changed to industrial land.
2009 ‧ In March, the five-axis machine FMV-45 won the Excellent Award of Research and Development Innovative Product Competition.
‧ In July, the capital transferred from surplus reserve reached NT$82,371 thousand, and the paid-in capital reached NT$906,080 thousand.
‧ In October, the expansion of Hsinchu Plant was commenced, which made preparations

for the future medium-term development of AWEA.

‧ In November, the gantry moving beam MVP-5032 was launched to participate in the Taichung Automation Machinery Exhibition, opening a new milestone for the development of AWEA’s gantry machines.
2010 ‧ In November, Building A of Hsinchu Plant was officially rebuilt and put into use.
‧ In November, an investment was made to establish Jiawei Mechantronic Co., Ltd., holding shares of 100%.
‧ In November, the gantry crown block five-axis machining center LV6030 was launched to participate in the Taichung Automation Machinery Exhibition, opening a new milestone for the development of AWEA’s gantry machines.
‧ The Company applied for conducting the Solid Foundation and Enhancement Research Plan of the Science Park with the Department of Mechanical Engineering of National Chung Hsing University.
‧ The Company applied for conducting the Development of High-precision Optical Installation Calibration System for Large Machines and Tools, an industry-university plan of the National Science and Technology Council with National Formosa University.
2011 ‧ In January, the Company invested YAMA SEIKI USA INC., holding shares of 28.58%. ‧ In February, the office of Hsinchu Plant was officially put into use.
‧ In March, the Company invested in the establishment of AWEA Korea, holding shares of 100%.
2012 ‧ In October, the results of the gantry-type friction stirring welder were published. ‧ In November, the gantry type five-axis machine was released and participated in exhibition.
2013 ‧ In March, the high-precision horizontal boring and milling machine MB1512+APC won the Eminence Award of Research and Development Innovative Product Competition.
2014 ‧ In January, Yih Chuan Machinery Industry Co., Ltd. joined AWEA Group, holding shares of 60%.
‧ In April, the first echelon of the AWEA Happy Life One Day Camp activity was organized in Taichung Plant.
2015 ‧ In May, AWEA’s second convertible corporate bonds were released, with a credit of NT$400 million.
‧ In November, the 2015 Happy Life One Day Camp activity was organized.
‧ The mass production of the five-axis machine FCV 620 begun, becoming a new force for the production and marketing of five-axis machines.
‧ MEGA5 large five-axis machines were expanded, and the preparation of series products was completed.
2016 ‧ In September, the capital increase transferred from surplus reserve reached NT$45,997,220.
‧ In October, the construction of Dapumei New Plant was commenced.
2017 ‧ In March, the vertical five-axis machine FCV620 won the Eminence Award of Research and Development Innovative Product Competition.
‧ In December, Dapumei Plant was completed, and Chiayi Branch was established.

2018 ‧ Development of the AHM-800 horizontal integrated machine.
‧ Development of the EH5-500 horizontal five-axis machine.
2019 ‧ Development of the FCV-8000II new-generation five-axis machine. 2020 ‧ Development of the moving column moving beam machining center.
‧ Development and release of the intelligent information control system product.
‧ Development of production management function of the intelligent information control system.
‧ Development of the AD-550/500 two-spindle C-type machine.
2021 ‧ Optimization and development of the one-index AC full-automatic universal joint. ‧ Optimization and development of the 4,500RPM horizontal joint.
‧ Integration of the LB/EP fixed column gantry machine.
‧ Development of the diagnostic function of the machine.
2022 ‧ Development of VP-type 12KB internal spindle.
‧ Electrical design of the self-made tool changer.
‧ Development of the AU-680 high-rigidity moving column five-axis machine.
‧ Development of the intelligent spindle thermal displacement deep learning compensation technique.
‧ Development of the intelligent tapping deep learning automatic dispatch technique.
2023 ‧ Intelligent digital communication box.
‧ Intelligent information APP.
‧ Development of the Z800 linear guide vertical junction spindle box.
‧ Development of the tray storage system of the five-axis machine.
‧ The construction of Dapumei Phase II plant was commenced.

Chapter III. Corporate Governance

I. Organizational structure

(I) Organization chart

==> picture [464 x 301] intentionally omitted <==

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

Shareholders’
Meetings
Audit Committee
The Remuneration
Board of Directors
Committee
Internal Audit
Chairman
Employee Welfare
Committee
President
Labor Safety and Health President’s Office
Committee
Department Chiayi Plant Park Plant Department
Hsinchu Plant
R&D Department Marketing Service
Finance Department
Central Taiwan Science General Administration
----- End of picture text -----

(II) Major corporate functions:

Department name	Business
Internal Audit	Responsible for internal audit related business.
President’s Office	Responsible for corporate culture, strategy/policy formulation, long-term development planning, workforce development, enterprise cooperation, business performance, information and project management, and other related businesses.
R&D Department	Coordinate the establishment of product technology, new product development/improvement, technical documentation management, intellectual property management, technical cooperation, R&D resource integration and other matters to maintain the market competitiveness of products.
Marketing Service Department	Responsible for the development of domestic and mainland markets and foreign sales markets, access establishment/management, customer services and complaints, after-sales services of products, product sales/collection, import and export and other matters, to achieve the annual goals of the Company.

Department name	Business
Chiayi Plant	Responsible for management and production, product quality/cost/delivery time, formulation of quality plans and targets, establishment and implementation of quality inspection/assurance systems, establishment of production technologies, capacity expansion, and product assembly, to achieve the annual production goals of the Company.
Central Taiwan Science Park Plant	Responsible for management and production, product quality/cost/delivery time, formulation of quality plans and targets, establishment and implementation of quality inspection/assurance systems, establishment of production technologies, capacity expansion, and product assembly, to achieve the annualproductiongoals of the Company.
Hsinchu Plant	Responsible for management and production, product quality/cost/delivery time, formulation of quality plans and targets, establishment and implementation of quality inspection/assurance systems, establishment of production technologies, capacity expansion, and product assembly, to achieve the annualproductiongoals of the Company.
General Administration Department	Responsible for administration, personnel management, stock affairs, and general affairs.
Finance Department	Comprehensively deal with the management, finance, accounting, accounts, investment and financial management, and other affairs of subsidiaries.

II. Background information of Directors, Supervisor, President, Vice President, Assistant Manager, and heads of various departments and branches

(I) Profile of directors

1. Basic information

(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information	(I) Profile of directors 1. Basic information
									April 20,2024;Unit: shares
Title	Nationality and registry	Name	Gender / Age	Date elected	Term	Date first elected	Shares at election		Current number of shares held		Shareholdings of spouse and minor children		Shares held in the names of others		Major career (academic) achievements	Current duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor
							Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding			Title	Name	Relationship
Chairman	Taiwan	De-Hua Yang	Male 78 years old	June 7, 2023	3 years	May 29, 2002	9,031,403	9.35%	9,031,403	9.35%	`－`	`－`	`－`	`－`	Education Recognitions: Department of Mechanical Engineering, National Chung Hsing University EMBA, National Chung Hsing University Work experience: Chairman and CEO of Goodway Machine Corp. Chairman of Hung Jiu Machine Co., Ltd. Chairman of JiaJin Investment Co., Ltd. Chairman of Hong Hua Investment Co., Ltd. Chairman of Huahan Leasing Co., Ltd. Person in charge of B- way,Billion- way (Cayman) Person in charge of YAMA SEIKI USA INC. Director of Turvo International Co., Ltd. Chairman of Yang Wenxu Charity Foundation	Chairman of the Company Other companies: Chairman and CEO of Goodway Machine Corp. Chairman of Hung Jiu Machine Co., Ltd. Chairman of JiaJin Investment Co., Ltd. Chairman of Hong Hua Investment Co., Ltd. Chairman of Huahan Leasing Co., Ltd. Person in charge of B- way,Billion- way (Cayman) Person in charge of YAMA SEIKI USA INC. Managing Director of Precision Machinery Research Development Center Managing Director of Taiwan Machine Tool Foundation Chariman of Academia-Industry Consortium for Science Park in Central Taiwan Director of Turvo International Co., Ltd. Chairman of Yang Wenxu Charity Foundation	President Director	Shang- Ru Yang Qing- Feng Yang	Father and son Brother-in- law

Title	Nationality and registry	Name	Gender / Age	Date elected	Term	Date first elected	Shares at election	Shares at election	Current number of shares held	Current number of shares held	Shareholdings of spouse and minor children	Shareholdings of spouse and minor children	Shares held in the names of others	Shares held in the names of others	Major career (academic) achievements	Current duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor
							Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding			Title	Name	Relationship
Director	Taiwan	Goodway Machine Corp.		June 7, 2023	3 years	May 29, 2002	47,941,311	49.63%	47,962,311	49.65%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`
	Taiwan	Goodway Machine Corp. Representative : Cheng-Xuan Wang	Male 50 years old	June 7, 2023	2 years	April 2, 2021	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Education Recognitions: Bachelor’s degree of Information Engineering and Computer Science, Feng Chia University Work experience: Assistant manager of Marketing Planning Department of Goodway Machine Corp. Awea Mechantronic (Suzhou) Ltd. Representative of juristic person Representative of juristic person of Shanghai Zhuwai Mechanical and Electrical Co., Ltd. Person in charge of Hung Jiu Investment Co., Ltd. Person in charge of Hong Li Investment Co., Ltd.	Special Assistant to Chairman of the Company Other companies: Assistant manager of Joint Marketing Planning Department of Goodway Machine Corp. Representative of juristic person of Awea Mechantronic (Suzhou) Ltd. Representative of juristic person of Shanghai Zhuwai Mechanical and Electrical Co., Ltd. Person in charge of Hung Jiu Investment Co., Ltd. Person in charge of Hong Li Investment Co.,Ltd.	`－`	`－`	`－`
Director	Taiwan	Cheng-Jun Yang	Male 50 years old	June 7, 2023	3 years	August 18, 2021	`－`	`－`	`－`	`－`	1,000	0.00%	`－`	`－`	Education Recognitions: Executive Master of Business Administration, National Chung Hsing University Work experience: Person in charge of Axtron Investment Ltd. Chairman of Yih Chuan Machinery Industry Co., Ltd.	The Company: None Other companies: Person in charge of Axtron Investment Ltd. Chairman of Yih Chuan Machinery Industry Co., Ltd.	Chairman	De-Hua Yang	Father and son
Director	Taiwan	Qing-Feng Yang	Male 73 years old	June 7, 2023	3 years	August 18, 2021	130,000	0.13%	130,000	0.13%	`－`	`－`	`－`	`－`	Education Recognitions: Bachelor’s degree of Accounting, National Chung Hsing University Work experience: Vice President of	The Company: None Other companies: None.	Chairman	De-Hua Yang	Wife’s uncle

Title	Nationality and registry	Name	Gender / Age	Date elected	Term	Date first elected	Shares at election	Shares at election	Current number of shares held	Current number of shares held	Shareholdings of spouse and minor children	Shareholdings of spouse and minor children	Shares held in the names of others	Shares held in the names of others	Major career (academic) achievements	Current duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor
							Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding			Title	Name	Relationship
															GoodwayMachine Corp.
Director	Taiwan	Goodway Machine Corp. Representative : Kun-Nan Zhuang	Male 74 years old	June 7, 2023	3 years	June 7, 2023	10,580	`－`	10,580	0.01%	16,510	0.02%	`－`	`－`	Education Recognitions: Wun Shan Elementary School Work experience: Director of Fittech Co., Ltd. Chairman of Yo Hao Enterprise Co., Ltd.	The Company: None Other companies: Director of Fittech Co., Ltd. Chairman of Yo Hao Enterprise Co., Ltd.	`－`	`－`	`－`
Independent Director	Taiwan	Zheng-Yong Huang	Male 74 years old	June 7, 2023	3 years	June 7, 2023	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Education Recognitions: Department of Architecture, National Taipei University of Technolog Bachelor’s degree of Civil and Construction Engineering, National Taiwan University of Science and Technology Work experience: Chairman of Te Chang Construction Co., Ltd. Chairman of Wang Xin Development and Construction Co., Ltd. Chairman of DG Rubber Co., Ltd. Chairman of Classic Railway International CO., Ltd.	The Company: None Other companies: Chairman of Te Chang Construction Co., Ltd. Chairman of Wang Xin Development and Construction Co., Ltd. Chairman of DG Rubber Co., Ltd. Chairman of Classic Railway International CO., Ltd.	`－`	`－`	`－`
Independent Director	Taiwan	Li-Ying Luo	Female 45 years old	June 7, 2023	3 years	June 7, 2023	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Education Recognitions: Bachelor’s degree of National Kaohsiung First University of Science and Technology Work experience: Manage of Fittech Co., Ltd. Assistant manager of Da Fon Environmental Technology Co., Ltd.	The Company: None Other companies: None	`－`	`－`	`－`

Title	Nationality and registry	Name	Gender / Age	Date elected	Term	Date first elected	Shares at election	Shares at election	Current number of shares held	Current number of shares held	Shareholdings of spouse and minor children	Shareholdings of spouse and minor children	Shares held in the names of others	Shares held in the names of others	Major career (academic) achievements	Current duties in the Company and in other companies	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor	Spouse or relatives of second degree or closer acting as department heads, directors or supervisor
							Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding			Title	Name	Relationship
Independent Director	Taiwan	Yu-Ren Su	Male 45 years old	June 7, 2023	3 years	June 7, 2023	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Education Recognitions: Associate degree of Grossmont College Work experience: Management Information System Engineer of Dayungs Development Co., Ltd	The Company: None Other companies: Management Information System Engineer of Dayungs Development Co., Ltd	`－`	`－`	`－`
Independent Director	Taiwan	Xi-Peng Hong	Male 77 years old	June 7, 2023	3 years	June 10, 2020	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	Education Recognitions: Master of Bio-Industrial Mechatronics Engineering, National Chung Hsing University Work experience: Lecturer of Department of Mechanical Engineering, Hsiuping University of Science and Technology	The Company: None Other companies: None.	`－`	`－`	`－`

Major shareholders of juristic person shareholders

April 30, 2024

Name of juristic person shareholder Major shareholders of juristic person shareholders De-Hua Yang (41.21%) Hong Li Investment Co., Ltd. (7.16%) JiaJin Investment Co., Ltd. (7.39%) Yu En Investment Co., Ltd. (6.43%) Zhi Yuan Investment Co., Ltd. (6.52%) Goodway Machine Corp. Zong Han Investment Ltd. (6.32%) Axtron Investment Co., Ltd. (5.79%) Fubon Life Insurance Co., Ltd. (3.29%) Hong Hua Investment Co., Ltd. (2.61%) Hung Jiu Investment Co., Ltd. (2.63%)

The above table shows the major shareholders (top ten in the ratio of shareholding) of

juristic person shareholders and their ratios of shareholding

Name of juristic person	Major shareholders of juristic person
Hong Li Investment Co., Ltd.	De-Hua Yang (27.40%), Cheng-Jun Yang (24.20%), Shang-Ru Yang (24.20%), Shu-Han Yang (24.20%)
JiaJin Investment Co., Ltd.	De-Hua Yang (33.31%), Cheng-Jun Yang (22.50%), Shang-Ru Yang (22.47%), Shu-Han Yang (21.67%), De-Sheng Yang (0.02%), Chun-Mu Zhang (0.02%), Qing-FengYang (0.02%)
Yu En Investment Co.,Ltd.	Shu-Han Yang (100.00%)
Zhi Yuan Investment Co., Ltd.	De-Hua Yang (46.60%), Cheng-Jun Yang (17.25%), Shang-Ru Yang (17.75%), Shu-Han Yang (17.75%), Qi-Guan Zeng (0.50%), De-Sheng Yang (0.05%), Chun-Mu Zhang (0.05%), Qing-Feng Yang (0.05%)
ZongHan Investment Co., Ltd.	Shang-Ru Yang (100.00%)
Axtron Investment Co., Ltd.	Cheng-Jun Yang (100.00%)
Fubon Life Insurance Co.,Ltd.	Fubon Financial HoldingCo.,Ltd.(100.00%)
Hong Hua Investment Co., Ltd.	De-Hua Yang (27.40%), Cheng-Jun Yang (24.20%), Shang-Ru Yang (24.20%), Shu-Han Yang (24.20%)
Hung Jiu Investment Co., Ltd.	De-Hua Yang (31.33%), Shu-Han Yang(12.50%), Shang-Ru Yang (12.50%), Jiang-Bin Jiang(8.33%), Su-Wan Xiao (8.33%), Shang-Hua Jiang(5.00%) Qing-Zhang Wu (5.00%), Yu En Investment Co., Ltd. (4.17%), Zong Han Investment Ltd. (4.17%), Zhi-Chang Cai (3.33%), Zhen-Zhong Zheng (1.67%),Zhen-Chuan You(0.33%)

Disclosure of professional qualification of the directors and independence of directors:

Qualification Name	Professional qualification and experience	Compliance of independence (Note)	Number of positions as an Independent Director in other public listed companies
De-Hua Yang	Education Recognitions: Bachelor’s degree of Mechanical Engineering, National Chung Hsing University EMBA, National Chung Hsing University Work experience: Chairman and CEO of Goodway Machine Corp. Chairman of Hung Jiu Machine Co., Ltd. Chairman of JiaJin Investment Co., Ltd. Chairman of Hong Hua Investment Co., Ltd. Chairman of Huahan Leasing Co., Ltd. Person in charge of B-way,Billion-way (Cayman) Person in charge of YAMA SEIKI USA INC. Managing Director of Precision Machinery Research Development Center Managing Director of Taiwan Machine Tool Foundation Chariman of Academia-Industry Consortium for Science Park in Central Taiwan Director of Turvo International Co., Ltd. Chairman of Yang Wenxu Charity Foundation	(8)(9)(11)(12)	None
Goodway Machine Corp. Representative: Cheng-Xuan Wang	Education Recognitions: Bachelor’s degree of Information Engineering and Computer Science, Feng Chia University Work experience: Chairman of Hung Jiu Investment Co., Ltd. Assistant manager of Joint Marketing Planning Department of Goodway Machine Corp. Special Assistant to Chairman of AWEA Mechantronic Co., Ltd.	(3)(4)(5)(6)(7)(8) (9)(10)(11)(12)	None
Goodway Machine Corp. Representative: Kun-Nan Zhuang	Education Recognitions: Wun Shan Elementary School Work experience: Director of Fittech Co., Ltd. Chairman of Yo Hao Enterprise Co., Ltd.	(1)(2)(3)(4)(5)(6)(7) (8)(9)(10)(11)(12)	None
Cheng-Jun Yang	Education Recognitions: Master of Business Administration, National Chung Hsing University Work experience: Person in charge of Axtron Investment Ltd. Chairman of Yih Chuan Machinery Industry Co., Ltd.	(5)(8)(9)(11)(12)	None

Qualification Name	Professional qualification and experience	Compliance of independence (Note)	Number of positions as an Independent Director in other public listed companies
Qing-Feng Yang	Education Recognitions: Bachelor’s degree of Accounting, National Chung Hsing University Work experience: Vice President of Goodway Machine Corp.	(1)(2)(3)(5)(6)(7) (8)(9)(11)(12)	None
Zheng-Yong Huang (Independent Director)	Education Recognitions: Department of Architecture, National Taipei University of Technolog Bachelor’s degree of Civil and Construction Engineering, National Taiwan University of Science and Technology Work experience: Chairman of Te Chang Construction Co., Ltd. Chairman of Wang Xin Development and Construction Co., Ltd. Chairman of DG Rubber Co., Ltd. Chairman of Classic Railway International CO., Ltd.	(1)(2)(3)(4)(5)(6)(7) (8)(9)(10)(11)(12)	None
Li-Ying Luo (Independent Director)	Education Recognitions: Bachelor’s degree of National Kaohsiung First University of Science and Technology Work experience: Manage of Fittech Co., Ltd. Assistant manager of Da Fon Environmental Technology Co., Ltd.	(1)(2)(3)(4)(5)(6)(7) (8)(9)(10)(11)(12)	None
Yu-Ren Su (Independent Director)	Education Recognitions: Associate degree of Grossmont College Work experience: Management Information System Engineer of Dayungs Development Co., Ltd	(1)(2)(3)(4)(5)(6)(7) (8)(9)(10)(11)(12)	None
Xi-Peng Hong (Independent Director)	Education Recognitions: Master of Bio-Industrial Mechatronics Engineering, National Chung Hsing University Work experience: Lecturer of Department of Mechanical Engineering, Hsiuping University of Science and Technology	(1)(2)(3)(4)(5)(6)(7) (8)(9)(10)(11)(12)	None

Note: The directors and supervisors who meet the following conditions in the two years before the election and during the term of his/her office, please fill in the code.
(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in case where the person is an independent director of the company, its parent company or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the company or ranks as one of its top ten shareholders.
(4) Not a manager of (1) or spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of (2) or (3).
(5) Not a director, supervisor or employee of an institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company or ranks as one of its top five shareholders or was appointed pursuant to Article 27, paragraph 1 or 2 of the Company Act. (The same does not apply, however, in case where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)
(6) Not a director, supervisor, or employee of another company where a majority of the Company’s directorships or voting shares and those of another company are controlled by the same person (except for an independent director engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with the Act or local laws and regulations).
(7) Not the same person as the Company’s Chairman, President or person with equivalent position or the director (managing director), supervisor or employee of company or institution of the spouse thereof. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)
(8) Not a director (managing director), supervisor, manager, or shareholder holding 5% or more of the shares of a specific company or institution which has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% and no more than 50% of the total issued shares of the Company and for an independent director engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with the Act or local laws and regulations).
(9) Not a professional individual who or an owner, partner, director (managing director), supervisor or officer of a sole proprietorship, partnership, company or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company in the last two years with an accumulated service compensation of less than NT$500 thousand or a spouse thereof. This restriction does not apply to any member of the Remuneration Committee, public tender offers Audit Committee or mergers and acquisition special committee, who exercises powers pursuant to relative regulations of the Securities and Exchange Act and Business Mergers and Acquisitions Act.
(10) Not a spouse or a relative within the second degree of kinship of any other director of the Company.
(11) Not meet any descriptions stated in Article 30 of the Company Act.
(12) Not a governmental, juridic person or its representative as defined in Article 27 of the Company Act.

(II) Background information of President, Vice Presidents, Assistant Managers, and the heads of various departments and branches

													April 20,2024;Unit: shares	April 20,2024;Unit: shares	April 20,2024;Unit: shares	April 20,2024;Unit: shares
Title	Nationality	Name	Gender	Date elected	Shares held		Shareholdings of spouse and minor children		Shares held in the names of others		Major career (academic) achievements	Current positions in the company and other companies	Spouse or relatives of second degree or closer acting as managerial officers			Remark
					Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding			Title	Name	Relationship
President	Taiwan	Shang- Ru Yang	Male	October 1, 2023	`－`	`－`	661	0.00%	`－`	`－`	Master of Business Administration, National Chung Hsing University	President of AWEA Mechantronic Co., Ltd. Person in charge of Zonghan Investment Co., Ltd. Director of Fittech Co., Ltd. Director of Universal Microelectronics Co., Ltd.	`－`	`－`	`－`	Note 1
Vice Presidents	Taiwan	Chang- Chi Yang	Male	April 2, 2021	`－`	`－`	`－`	`－`	`－`	`－`	EMBA, Feng Chia University	President of Shanghai Zhuwai Mechanical and Electrical Co., Ltd. Director and President of Awea Mechantronic (Suzhou) Ltd.	`－`	`－`	`－`
Vice Presidents	Taiwan	Rui- Ming Ye	Male	September 1, 2016	`－`	`－`	`－`	`－`	`－`	`－`	Bachelor’s degree of Mechanical Engineering at Tamkang University	Direcotr of Awea Mechantronic (Suzhou) Ltd.	`－`	`－`	`－`

Note 1: Based on the need of business philosophy inheritance, the chairman of the Company is a relative of first degree of the president. Methods to respond include: more than half of the directors are not the employees or managerial officers.

(III) Remuneration payment to directors, supervisor, president, and vice president in the latest year
Director’s remuneration

																December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%
Title	Name	Director’s remuneration								The sum of A, B, C and D as a percentage of after-tax net profit		Remuneration				as an employee				The sum of A, B, C, D, E, F and G as a percentage of after-tax net profit		Remuneration received from the invested companies other than the subsidiaries and the parent company
		Remuneration (A)		Pension (B)		Remuneration to directors (C)		Fees for services rendered (D)				Salaries, bonuses, special allowances etc.(E)		Pension (F)		Compensation to employees. (G)
		The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company		All companies shown in the financial report		The Company	All companies shown in the financial report
																Cash amount	Stock amount	Cash amount	Stock amount
Chairman	De-Hua Yang	-	-	-	-	550	550	35	35	585 0.28%	585 0.28%	-	-	-	-	-	-	-	-	585 0.28%	585 0.28%	None
Director	Goodway Machine Corp.	-	-	-	-	550	550	-	-	550 0.26%	550 0.26%	-	-	-	-	-	-	-	-	550 0.26%	550 0.26%	None
Director	Goodway Machine Corp. Representative: Cheng-Xuan Wang	-	-	-	-	-	-	35	35	35 0.02%	35 0.02%	240	652	-	-	100	-	100	-	375 0.18%	787 0.37%	None
Director	Goodway Machine Corp. Representative: Kun-Nan Zhuang	-	-	-	-	-	-	20	20	20 0.01%	20 0.01%	-	-	-	-	-	-	-	-	20 0.01%	20 0.01%	None
Director	Cheng-Jun Yang	-	-	-	-	275	275	30	30	305 0.14%	305 0.14%	-	-	-	-	-	-	-	-	305 0.14%	305 0.14%	None
Director	Qing-Feng Yang	-	-	-	-	275	275	35	35	310 0.15%	310 0.15%	-	-	-	-	-	-	-	-	310 0.15%	310 0.15%	None
Independent Director	Yi-Min Lin	-	-	-	-	-	-	15	15	15 0.01%	15 0.01%	-	-	-	-	-	-	-	-	15 0.01%	15 0.01%	None
Independent Director	Lian-Fa Yang	-	-	-	-	-	-	10	10	10 0.00%	10 0.00%	-	-	-	-	-	-	-	-	10 0.00%	10 0.00%	None

Title	Name	Director’s remuneration	Director’s remuneration	Director’s remuneration	Director’s remuneration	Director’s remuneration	Director’s remuneration	Director’s remuneration	Director’s remuneration	The sum of A, B, C and D as a percentage of after-tax net profit	The sum of A, B, C and D as a percentage of after-tax net profit	Remuneration	Remuneration	Remuneration	Remuneration	as an employee	as an employee	as an employee	as an employee	The sum of A, B, C, D, E, F and G as a percentage of after-tax net profit	The sum of A, B, C, D, E, F and G as a percentage of after-tax net profit	Remuneration received from the invested companies other than the subsidiaries and the parent company
		Remuneration (A)		Pension (B)		Remuneration to directors (C)		Fees for services rendered (D)				Salaries, bonuses, special allowances etc.(E)		Pension (F)		Compensation to employees. (G)
		The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company		All companies shown in the financial report		The Company	All companies shown in the financial report
																Cash amount	Stock amount	Cash amount	Stock amount
Independent Director	Li-Ying Luo	-	-	-	-	275	275	20	20	295 0.14%	295 0.14%	-	-	-	-	-	-	-	-	295 0.14%	295 0.14%	None
Independent Director	Yu-Ren Su	-	-	-	-	275	275	20	20	295 0.14%	295 0.14%	-	-	-	-	-	-	-	-	295 0.14%	295 0.14%	None
Independent Director	Zheng-Yong Huang	-	-	-	-	275	275	15	15	290 0.14%	290 0.14%	-	-	-	-	-	-	-	-	290 0.14%	290 0.14%	None
Independent Director	Xi-Peng Hong	-	-	-	-	275	275	35	35	310 0.15%	310 0.15%	-	-	-	-	-	-	-	-	310 0.15%	310 0.15%	None

Note: 1. Director Cheng-Jun Yang was provided with a car, at the cost of NT$3,675 thousand, and book value at NT$1,888 thousand. (It was not included in the salary, bonus and special expenditures for 2023)

2. President’s and managerial officers’ remuneration

								December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%
Title	Name	Salary (A)		Pension (B)		Bonuses, special allowances etc. (C) (Note)		Compensation to employees. (D)				The sum of A, B, C and D as a percentage of after- tax netprofit(%)		Remuneration received from the invested companies other than the subsidiaries and the parent company
		The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company		All companies shown in the financial report		The Company	All companies shown in the financial report
								Cash amount	Stock amount	Cash amount	Stock amount
President	Shang-Ru Yang	450	450	27	27	144	144	1,000	-	1,000	-	1,621 0.77%	1,621 0.77%	None
Vice Presidents	Rui-Ming Ye	1,352	1,352	104	104	270	270	390	-	390	-	2,116 1.00%	2,116 1.00%	None
Vice Presidents	Chang-Chi Yang	987	2,731	85	85	950	1,348	250	-	250	-	2,272 1.08%	4,414 2.09%	None
Assistant Manager	Hong-Bin Syu	973	973	64	64	190	190	280	-	280	-	1,507 0.71%	1,507 0.71%	None

Note: 1. All pensions in 2023 were set aside, and 2% was set aside according to the old system and 6% was set aside according to the new system.

3. Remuneration of the top five highest-paid supervisors

								December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%	December 31, 2023 Unit: NT$thousand;%
Title	Name	Salary (A)		Pension (B)		Bonuses, special allowances etc. (C) (Note)		Compensation to employees. (D)				The sum of A, B, C and D as a percentage of after-tax net profit (%)		Remuneration received from the invested companies other than the subsidiaries and the parent company
		The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company	All companies shown in the financial report	The Company		All companies shown in the financial report		The Company	All companies shown in the financial report
								Cash amount	Stock amount	Cash amount	Stock amount
President	Shang-Ru Yang	450	450	27	27	144	144	1,000	-	1,000	-	1,621 0.77%	1,621 0.77%	None
Vice Presidents	Rui-Ming Ye	1,352	1,352	104	104	270	270	390	-	390	-	2,116 1.00%	2,116 1.00%	None
Vice Presidents	Chang-Chi Yang	987	2,731	85	85	950	1,348	250	-	250	-	2,272 1.08%	4,414 2.09%	None
Assistant Manager	Hong-Bin Syu	973	973	64	64	190	190	280	-	280	-	1,507 0.71%	1,507 0.71%	None

Names of the managerial officers received employee’s remuneration and the distribution status

	status
					December 31, 2023 Unit: NT$ thousand; %
	Title	Name	Stock amount	Cash amount	Total	As a percentage of after-tax net profit(%)
Managerial officers	President	Shang-Ru Yang	`－`	1,920	1,920	0.91%
	Vice Presidents	Chang-Chi Yang
	Vice Presidents	Rui-Ming Ye
	Assistant Manager of Finance Department	Hong-Bin Syu

Note 1: The amount of compensation distributed to employees is resolved by the shareholders’ meeting, and the proposed amount for the current year is estimated on the basis of the actual distribution proportion of the previous year.
Compare and state the ratio of total remuneration paid to the Company’s Directors, Supervisors, President, and Vice President. by the Company and the companies in the consolidated financial statements to net income in the last two years; also, describe the policy, standard, and combination of remuneration paid; moreover, the procedure of defining remuneration and its relation to business performance and future risks

Title	The Company	The Company	Consolidated financial statements	Consolidated financial statements
	2022	2023	2022	2023
Director	1.87%	1.59%	2.04%	1.79%
Supervisor	-	-	-	-
President and managerial officers	2.99%	3.57%	3.72%	4.58%

Note: The information for 2023 includes the earnings distribution proposal. The earnings distribution proposal has been resolved by the shareholders’ meeting, of which the proposed amount of employees’ compensation for the current year is estimated on the basis of the actual distribution proportion of the previous year.

Description:

(1) In accordance with Article 20 of the Articles of Incorporation of the Company, the Company shall pay remunerations to the directors for their execution of positions in the Company, and the remunerations to the Chairman and directors shall be authorized to be determined by the Board of Directors according to the degree of their participation in the operation of the Company and the value of their contributions, taking into account both the domestic and foreign industry standards. In addition to the above remunerations, the directors may receive traffic allowance for participating in board meetings.
(2) As stipulated in Article 27 of the Articles of Incorporation of the Company, “If the Company has profit in the year (the so-called profit refers to the profit before tax, and before deduction of employee compensation and directors’ remuneration), it shall set aside 3%-8% of the profit as employees’ compensation, and set aside no more than 2% as directors’ remuneration…”.
(3) In general, a director who is also an employee shall be paid a reasonable salary according to the salary standard of the Company, taking into account the salary level of such employee in the peer market, his/her scope of authority and responsibility within the Company, his/her contribution to the business objectives of the Company and the decision risk borne by the position.
(4) As for the directors’ remuneration, in addition to considering the overall operating performance of the Company, reasonable directors’ remuneration shall be given with reference to the results of the profit margin, operating efficiency and performance evaluation of the year, and the directors’ remuneration system shall be reviewed at any time in accordance with the actual operating conditions and relevant laws and regulations. The directors’ remuneration shall be reviewed by the Remuneration Committee and resolved by the by the Board of Directors.
(5) Analysis on change in the last two years: None
(6) No remuneration was paid to supervisors due to the establishment of the Audit Committee in 2022 and 2023.

III. Corporate governance

(I) Information on the operation of the Board of Directors
The Board of Directors held 9 meetings (A) in the latest year and the participation of the directors are shown below:


Title	Name	Actual attendance (B)	Proxy Attendance	Actual attendance rate (%) [B/A]	Remark
Chairman	De-Hua Yang	9	`－`	100.00%	Re-elected on June 7,2023
Director	Goodway Machine Corp. Representative: Cheng-Xuan Wang	9	`－`	100.00%	Re-elected on June 7, 2023
Director	Goodway Machine Corp. Representative: Kun-Nan Zhuang	6	`－`	100.00%	Newly elected on June 7, 2023
Director	Cheng-Jun Yang	8	1	80.00%	Re-elected on June 7,2023
Director	Qing-Feng Yang	9	`－`	100.00%	Re-elected on June 7,2023
Independent Director	Lian-Fa Yang	2	`－`	66.67%	Discharged on June 7,2023
Independent Director	Yi-Min Lin	3	`－`	100.00%	Discharged on June 7,2023
Independent Director	Li-Ying Luo	6	`－`	100.00%	Newly elected on June 7,2023
Independent Director	Zheng-Yong Huang	5	1	83.33%	Newly elected on June 7,2023
Independent Director	Yu-Ren Su	6	`－`	100.00%	Newly elected on June 7,2023
Independent Director	Xi-Peng Hong	9	`－`	100.00%	Re-elected on June 7,2023
Other remarks: I. Issues required under Article 14-3 of Securities and Exchange Act are other resolutions of the Board of Directors to which independent directors have objection or reserve opinions and which are recorded or declared in writing, and shall specify the date, term, the contents of the proposals, the opinions of all independent directors, and the processing of the opinions proposed by the independent directors: None.

II.	With respect to the avoidance of conflicting interest agendas, describe the names of directors,
	details of the relevant agendas, reasons for avoiding conflicting interest, and the voting decisions:
	(1) The first meeting of the 13th Board of Director on June 7, 2023
	Proposal for election of the chairman of the Company.
	Since director De-Hua Yang who was interested in the proposal has avoided from the
	discussion and voting in the proposal, independent director Zheng-Yong Huang acted as the
	chairperson at voting.
	Resolution: The proposal was approved without objection by other directors after the
	independent director Zheng-Yong Huang has consulted the directors present at the meeting,
	other than director De-Hua Yang who has avoided from the meeting according to law.
	(2) The fourth meeting of the 13th Board of Director on September 28, 2023
	Proposal for appointment of De-Hua Yang, the Chairman of the Company, as the CEO.
	Since the Chairman De-Hua Yang who had individual interest in the proposal has avoided
	from the discussion and voting in the proposal, independent director Li-Ying Luo acted as the
	chairperson at voting.
	Resolution: The proposal was approved without objection by other directors after the
	independent director Li-Ying Luo has consulted the directors present at the meeting, other than
	director De-Hua Yang who has avoided from the meeting according to law.
	(3) The fourth meeting of the 13th Board of Director on September 28, 2023
	Proposal for appointment of special assistant of the Company’s Chairman.
	Director Cheng-Xuan Wang who had individual interest in the proposal has avoided from the
	discussion and voting in the proposal.
	Resolution: The proposal was approved without objection by other directors after the
	chairperson has consulted the directors present at the meeting, other than director Cheng-Xuan
	Wang who has avoided from the meeting according to law.
	(4) The fourth meeting of the 13th Board of Director on September 28, 2023
	Proposal for non-competition exclusion on special assistant of the Company’s Chairman.
	Director Cheng-Xuan Wang who had individual interest in the proposal has avoided from the
	discussion and voting in the proposal.
	Resolution: The proposal was approved without objection by other directors after the
	chairperson has consulted the directors present at the meeting, other than director Cheng-Xuan
	Wang who has avoided from the meeting according to law.
III.	Targets for strengthening the functions of the Board of Directors during the current and the latest
	years (e.g., set up an Audit Committee, and enhance information transparency) and the evaluation
	of the implementation status: enhance information transparency, and strengthen corporate
	governance.

The implementation of the Board of Directors evaluation:

Evaluation cycle	Evaluation period	Evaluation scope	Evaluation method	Evaluation content
Evaluation performed once a year	June 7, 2023 - December 31, 2023 (Re-election of directors)	Board of Directors	Internal self- evaluation of the Board of Directors	1. Level of participation in the Company’s operations 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 5. Internal Control
Evaluation performed once a year	June 7, 2023 - December 31, 2023 (Re-election of directors)	Board members	Self- evaluation of the board members	1. Director’s awareness toward the Company’s goals and missions 2. Director’s awareness to duties 3. Level of participation in the Company’s operations 4. Management and communication of internal relations 5. Professionalism and continuing education of directors 6. Internal Control
Evaluation performed once a year	June 15, 2023 - December 31, 2023 (Re-election of directors)	Remuneration Committee	Internal self- evaluation of the Remuneration Committee	1. Level of participation in the Company’s operations 2. Awareness of the duties of Remuneration Committee. 3. Improvement of the quality of the Remuneration Committee’s decision making 4. Remuneration Committee’s composition and election of its members 5. Internal Control
Evaluation performed once a year	June 7, 2023 - December 31, 2023 (Re-election of directors)	Audit Committee	Internal self- evaluation of the Audit Committee	1. Level of participation in the Company’s operations 2. Awareness of the duties of Audit Committee. 3. Improvement of the quality of the Audit Committee’s decision making 4. Audit Committee’s composition and election of its members 5. Internal Control

(II) Information on the operation of the Audit Committee
The Audit Committee held 5 meetings(A) in the latest year and the participation of the independent director are shown below:

December 31, 2023

Title	Name	Actual attendance (B)	Proxy Attendance	Actual attendance rate (%) (B/A)	Remark
Independent Director	Lian-Fa Yang	1	0	50.00%	Discharged on June 7,2023
Independent Director	Yi-Min Lin	2	0	100.00%	Discharged on June 7,2023
Independent Director	Li-Ying Luo	3	0	100.00%	Newly elected on June 7,2023
Independent Director	Zheng-Yong Huang	2	1	67.00%	Newly elected on June 7,2023
Independent Director	Yu-Ren Su	3	0	100.00%	Newly elected on June 7,2023
Independent Director	Xi-Peng Hong	5	0	100.00%	Re-elected on June 7,2023
Other remarks: I. Where any one among those enumerated below exists as the performance by the Audit Committee, the convention date, term, contents of agenda, outcome of the decision resolved in the Audit Committee as well as the Company’s opinions toward the Audit Committee’s opinions should be expressly remarked: 1. Issues required under Article 14-5 of the Securities and Exchange Act: None. 2. Except the aforementioned issue, other issue not yet resolved in the Audit Committee but has been duly resolved by two-thirds majority of the total number of director seats: None II. With respect to the avoidance of conflicting interest agendas, describe the names of independent directors, details of the relevant agendas, reasons for avoiding conflicting interest, and the voting decisions: None. III. Facts of communications by and between independent directors and internal audit supervisors as well as CPA(s) (should include issues regarding the Company’s financial conditions, facts in business operation and such key issues, the method of communications and the outcome thereof). 1. They submit the audit and tracking reports to the convenor for inspection at least once a quarter, and report the audit results, improvement of audit deficiencies and the Company’s financial conditions and facts in business operation of the month, and the convenor gives the review comments on the audit report.

The internal audit supervisors and CPAs attend the Audit Committee, to which they report the audit work and the audit methods and scope of CPAs, and major audit adjustments and descriptions. CPAs communicate and discuss with directors and the Audit Committee at irregular intervals. In addition to communications at the meeting, the audit supervisors, CPAs, and independent directors may directly contact and communicate with independent directors as needed to maintain good interaction.

(III) Implementation status of corporate governance, any deviation from the Corporate Governance Best Practice Principles for TWSE/ TPEx Listed Companies, and the reason

Assessment items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
I. Will the Company based on the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies set up and disclose the Company’s corporate governance best-practice principles?			The Company’s Board of Directors has set up the Corporate Governance Best Practice Principles, and all operations are handled based on the principles. So far, there have been no major deviations.	It complies with the Corporate Governance Best Practice Principles.
II. Shareholding structure and shareholders’ equity (I) Will the Company have the internal procedures regulated to handle shareholders’ proposals, doubts, disputes, and litigation matters; also, have the procedures implemented accordingly? (II) Will the Company possess the list of the Company’s major shareholders and the list of the ultimate controllers of the major shareholders? (III) Will the Company establish and implement the risk control and firewall mechanisms with the related parties? (IV) Will the Company set up internal norms to prohibit insiders from utilizing the undisclosed information to trade securities?	   		(I) The Company has spokesperson and deputy spokesperson as a channel to express its opinions, and instructs the Stock Affairs Department to deal with disputes. (II) This is handled by the stock affairs department and the stock service agent of the securities company. (III) They have been formulated in the Company’s internal control system. (IV) The Company has established the Procedures for Preventing Insider Trading, which prohibits insiders from utilizing the undisclosed information to trade securities.	It complies with the Corporate Governance Best Practice Principles.

Assessment items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
III. The constitution and obligations of the board of directors
(I) Does the Board formulate a diversity policy, specific management objectives and implemented them?			(I) To strengthen the corporate governance and promote the sound development of the constitution and structure of the Board of Directors, the Board shall	It complies with the Corporate Governance Best Practice Principles.
			consider diversity, and propose an
			appropriate diversity policy for its own
			operation, business type and development needs for the constitution of board members, including but not limited to the following two aspects: 1. Basic conditions and values, such as gender, age, nationality and culture, and female directors shall account for one- third of all directors. 2. Professional knowledge and skills, such as professional background (e.g., law, accounting, industry, finance, marketing or science and technology), professional skills, and industrial experience. In accordance with Article 20 of the Company’s Corporate Governance Best- Practice Principles, board members shall have general knowledge, skills and qualities required for the performance of duties. To achieve the ideal goal of corporate governance, board members shall have general knowledge, skills and qualities required for the performance of duties. Specific management objectives are as follows: 1. Operation judgment ability. 2. Accounting and financial analysis ability. 3. Business management ability. 4. Risk handling ability. 5. Knowledge of the industry. 6. International market perspective. 7. Leadership. 8. Decision-making ability. Specific management objectives: Directors who concurrently serve as managerial officers shall not exceed one- third of all directors. There shall be no spouse or relative within the second degree of kinship with more than half of directors. The chairman and president shall not be the same person. At least one-third of the directors shall have the knowledge,skills andqualities required

Assessment items	Implementation status	Implementation status	Implementation status
	Yes	No	Summary description
(II) Will the Company, in addition to setting the Remuneration Committee and Audit Committee lawfully, have other functional committee set up voluntarily?			for the industry. There shall be at least one female director. The number of independent directors shall not be less than one-third of all directors. The term of office of an independent director shall not exceed three consecutive terms. At least one-third of independent directors shall have legal, financial, accounting or technology expertise. All the above have been implemented. (II) The Company has set the Remuneration Committee and Audit Committee lawfully, and other functional committees are being evaluated.
(III) Does the company establish a method to evaluate board performance and evaluate board performance every year? Are the performance evaluation results reported to the board and used as a reference for the remuneration and nomination for re-election of directors?			(III) The Company formulated the method for evaluation of the Board of Directors’ performance at the Board of Directors in the first quarter of 2010, and performs the evaluation annually. The evaluation shall cover at least five aspects: 1. Degree of its participation in the Company’s operating; 2. Improvement of the Board of Directors’ decision- making quality; 3. Constitution and structure of the Board of Directors; 4. Election of and continuing education for directors; 5. Internal control. The
			evaluation method is that the performance is self-evaluated by directors in accordance with Board of Directors’ Performance Evaluation Form, and the relevant units summarize and report the performance evaluation results to the Board of Directors and use them as a reference for the remuneration and nomination for re-election of directors. The results of the latest evaluation were reported to the Board on April 11, 2023. The method was modified in 2023, specifying that the evaluation on the Board of Directors’ performance shall be carried out at least once every three years by an external professional independent agency or an external team of experts and scholars. The latest evaluation was commissioned to the Taiwan Investor Relations Institute

Assessment items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
			(TIRI) on October 11, 2023, covering five aspects: 1. Constitution and professional development of the Board of Directors; 2. Decision-making quality of the Board of Directors; 3. Operating effectiveness of the Board of Directors; 4. Internal control and risk management; 5. Degree of the participation of the Board of Directors in corporate social responsibility. The evaluation method is that the Board of Directors’ performance from January 1 to December 31, 2023 was evaluated based on the Board minutes, current internal policy, other auxiliary documents and public information provided by the Company, and directors’ self-evaluation questionnaire and on-site and on-line interview results, and the evaluation results were reported to the Board of Directors on March 5, 2024.
(IV) Will the Company have the independence of the public accountant evaluated regularly?			(IV) The Company’s Audit Committee evaluates the independence and competence of the CPAs annually, and reports the evaluation results to the Board of Directors. The latest evaluation was resolved and approved by the Audit Committee on May 8, 2023 and reported to the Board of Directors for resolution and approval on May 8, 2023. Evaluation items: 1. Not an employee of the Company or any of its affiliated enterprises; 2. Not a director or supervisor of the Company or any of its affiliated enterprises (except for an	The Company’s CPAs can review the Company’s financial operations in a transcendent independent way.
			independent director of the Company, or its parent company, and a subsidiary in which the Company directly or, indirectly holds more than 50% of the shares with voting rights); 3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children or held by the person under others’ names, in an aggregated amount of 1% or more of the total number of issued shares of the Company or ranks as one of its top ten shareholders. 4. Not a spouse, relative

Assessment items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
			within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three items. 5. Not a director, supervisor or employee of a juristic person shareholder that directly holds 5% or more of the total number of issued shares of the Company or ranks as one of its top five juristic person shareholders. 6. Not a director (managing director), supervisor, managerial officer, or shareholder holding 5% or more of the shares of a specific company or institution which has a financial or business relationship with the Company. 7. Not a spouse or a relative within the second degree of kinship of any other director of the Company. 8. Not meet any descriptions stated in Article 30 of the Company Act. 9. Not a governmental, juridic person or its representative as defined in Article 27 of the Company Act. 10. Whether the Declaration of Transcendent Independence issued by the appointed CPAs and the audit team is adopted. Evaluation results: The appointed CPAs do not have the conditions described in the above independence evaluation items, which confirms that the CPAs are independent.
IV. Has the TWSE/ TPEx listed company appointed an appropriate number of competent corporate governance persons and designated a corporate governance officer to be responsible for corporate governance-related affairs (including but not limited to providing the data required for directors and supervisors to perform duties, assisting directors and supervisors in compliance with laws and regulations, dealing with the matters related to the Board of Directors’ meeting and Shareholders’ Meeting, and preparing minutes of the Board of Directors’ meeting and Shareholders’ Meeting)?			The Company appointed the Financial Department and General Administration Department to be responsible for corporate governance-related affairs (including but not limited to providing the data required for directors and supervisors to perform duties, dealing with the matters related to the Board of Directors’ meeting and Shareholders’ Meeting, handling the registration of the Company and its changes, and preparing minutes of the Board of Directors’ meeting and Shareholders’ Meeting).	It complies with the Corporate Governance Best Practice Principles.

Assessment items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
V. Has the Company established a channel for communication with stakeholders (including but not limited to shareholders, employees, customers, suppliers, etc.), and set up a stakeholder section on the Company’s website, and does it properly respond to the important issues about corporate social responsibilities that stakeholders concerns?			The Company has spokesperson and deputy spokesperson as a channel for external communication, and has set up a special area for stakeholders on its website.	It complies with the Corporate Governance Best Practice Principles.
VI. Has the Company commissioned a professional stock service agent to handle shareholders affairs?			The Company has commissioned the Stock Transfer Agency Department of Taishin International Bank to handle shareholders affairs.	It complies with the Corporate Governance Best Practice Principles.
VII. Disclosure of information (I) Does the Company have a website setup and the financial business and corporate governance information disclosed? (II) Has the Company adopted other information disclosure methods (such as, establishing an English website, designating a responsible person for collecting and disclosing information of the Company, substantiating the spokesman system, placing the juristic person seminar program on the Company’s website, etc.)? (III) Does the company announce and report its financial statements within two months after the end of a fiscal year, and publish and declare in advance the financial statements of Q1, Q2 and Q3 as well as status of monthly operations?	 		(I) The Company has a website setup and the relevant financial, business and corporate governance information of the Company can be inquired on the website. (II) The Company has established a special person for collecting and disclosing information of the Company, to implement the spokesperson system. (III) Annual and semi-annual financial statements, financial statements of Q1 and Q3, and the status of monthly operations are announced and declared within the prescribed period.	It complies with the Corporate Governance Best Practice Principles.
VIII. Are there any other important information (including but not limited to the interests of employees, employee care, investor relations, supplier relations, the rights of stakeholders, the advanced study of directors and supervisors, the implementation of risk management policies and risk measurement standards, the execution of customer policy, the purchase of liability insurance for the Company’s directors and supervisors)that			(I) The Company performs its operations based on the principle of good faith and social responsibility, expecting to create the best interests for shareholders and employees. (II) The Company fully discloses information on the MOPS, so that investors can understand the operations of the Company. (III) The directors of the Company are all equipped with relevant professional	It complies with the Corporate Governance Best Practice Principles.

Assessment items	Implementation status	Implementation status	Implementation status
	Yes	No	Summary description
are helpful in understanding the corporate governance operation of the Company?			knowledge, and receive further study as stipulated. The Company would from time to time inform the directors in writing to participate in further study on professional knowledge held by relevant units. (IV) The directors show a good attendance at the board meeting, and the board meeting minutes are submitted to the directors after the meeting. (V) The directors of the Company are all highly self-disciplined, and avoid the proposals in which they are a stakeholder, expecting to move toward corporategovernance.
IX. Please describe the improvement made based on the corporate governance evaluation results issued by the Corporate Governance Center of Taiwan Stock Exchange in the latest year, and propose the matters to be improved with priority and the measures for such matters. (Companies not listed for evaluation do not need to fill in this): The Company reviews the results of the latest corporate governance evaluation, aiming to improve information transparency and strengthen the Board of Directors’ operations, and improve the information disclosure on the annual report and website. In addition, the Company’s directors are invited to complete the hours of continuing education in accordance with Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies. Indicators unscored in self-evaluation are improved according to the difficulty to meet the corporate governance requirements.

(IV) The Company shall disclose the composition, responsibilities and operation of the Remuneration Committee if established:
Information on the members of the Remuneration Committee

Committee if established: 1. Information on the members of the Remuneration Committee	Committee if established: 1. Information on the members of the Remuneration Committee	Committee if established: 1. Information on the members of the Remuneration Committee	Committee if established: 1. Information on the members of the Remuneration Committee	Committee if established: 1. Information on the members of the Remuneration Committee
December31,2023
Qualification Identity Name		Professional qualification and experience	Compliance of independence (Note)	Number of other public companies where the members are also the members of the remuneration committee ofthese companies.
Independent Director	Li-Ying Luo	Education Recognitions: Bachelor’s degree of National Kaohsiung First University of Science and Technology Work experience: Manage of Fittech Co., Ltd. Assistant manager of Da Fon Environmental Technology Co., Ltd.	(1)(2)(3)(4)(5)(6) (7)(8)(9)(10)	None
Independent Director	Zheng- Yong Huang	Education Recognitions: Department of Architecture, National Taipei University of Technolog Bachelor’s degree of Civil and Construction Engineering, National Taiwan University of Science and Technology Work experience: Chairman of Te Chang Construction Co., Ltd. Chairman of Wang Xin Development and Construction Co., Ltd. Chairman of DG Rubber Co., Ltd. Chairman of Classic Railway International CO., Ltd.	(1)(2)(3)(4)(5)(6) (7)(8)(9)(10)	None
Independent Director	Yu-Ren Su	Education Recognitions: Associate degree of Grossmont College Work experience: Management Information System Engineer of Dayungs Development Co., Ltd	(1)(2)(3)(4)(5)(6) (7)(8)(9)(10)	None
Independent Director	Xi-Peng Hong	Education Recognitions: Master of Bio-Industrial Mechatronics Engineering, National Chung Hsing University Work experience: Lecturer of Department of Mechanical Engineering, Hsiuping University of Science and Technology	(1)(2)(3)(4)(5)(6) (7)(8)(9)(10)	None

Note: The members who meet the following conditions in the two years before the election and during the term of his/her office, please fill in the code.

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of the company or any of its affiliates. The same does not apply, however, in case where the person is an independent director of the company, its parent company or any subsidiary, as appointed in

accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of issued shares of the company or ranks as one of its top ten shareholders.
(4) Not a manager of (1) or spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of (2) or (3).
(5) Not a director, supervisor or employee of an institutional shareholder that directly holds 5% or more of the total number of issued shares of the Company or ranks as one of its top five shareholders or was appointed pursuant to Article 27, paragraph 1 or 2 of the Company Act. (The same does not apply, however, in case where the person is an independent director of the company, its parent company, or any subsidiary, as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)
(6) Not a director, supervisor, or employee of another company where a majority of the Company’s directorships or voting shares and those of another company are controlled by the same person (except for an independent director engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with the Act or local laws and regulations).
(7) Not the same person as the Company’s Chairman, President or person with equivalent position or the director (managing director), supervisor or employee of company or institution of the spouse thereof. (The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary as appointed in accordance with the laws of Taiwan or with the laws of the country of the parent company or subsidiary.)
(8) Not a director (managing director), supervisor, manager, or shareholder holding 5% or more of the shares of a specific company or institution which has a financial or business relationship with the Company (except for a specific company or institution holding more than 20% and no more than 50% of the total issued shares of the Company and for an independent director engaged concurrently by the Company, its parent company, and its subsidiary or a subsidiary under the same parent company in accordance with the Act or local laws and regulations).
(9) Not a professional individual who or an owner, partner, director (managing director), supervisor or officer of a sole proprietorship, partnership, company or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company in the last two years with an accumulated service compensation of less than NT$500 thousand or a spouse thereof. This restriction does not apply to any member of the Remuneration Committee, public tender offers Audit Committee or mergers and acquisition special committee, who exercises powers pursuant to relative regulations of the Securities and Exchange Act and Business Mergers and Acquisitions Act.
(10) Not meet any descriptions stated in Article 30 of the Company Act.

Information on the operation of the Remuneration Committee
(1) The Company’s Remuneration Committee has four Committee members in total.
(2) The term of office of the current committee members: from June 7, 2023 to June 6, 2026. The Remuneration Committee conducted 2 meetings (A) in the latest year and

the qualifications and attendance are as follows:

Title	Name	Actual attendance (B)	Proxy Attendance	Actual attendance rate (%) (B/A) (Note 1)	Remark
Convener	Lian-Fa Yang	1	`－`	100%	Discharged on June 7,2023
Committee	Yi-Min Lin	1	`－`	100%	Discharged on June 7,2023
Committee	Li-Ying Luo	1	`－`	100%	Newly elected on June 7,2023
Committee	Zheng-Yong Huang	1	`－`	100%	Newly elected on June 7,2023
Committee	Yu-Ren Su	1	`－`	100%	Newly elected on June 7,2023
Committee	Xi-Peng Hong	2	`－`	100%	Re-elected on June 7,2023
Other remarks: I. Where the board of directors does not adopt or amend the proposal(s) posed by the Remuneration Committee: The Company shall expressly elaborate on the date, term while the board of directors meeting was convened, contents of the issues, outcome of decisions resolved in the board of directors and the Company’s response to the opinions posed by the Remuneration Committee(For instance, if the salary pay resolved by the board of directors is higher than that proposed by the Remuneration Committee, the Company should elaborate on the fact of differential gap and the cause thereof): None. II. Where a decision resolved in the Remuneration Committee is found in contravention of rules or in qualified opinion as verified with records or documented declaration, the Company shall expressly elaborate on the date, terms of the meeting convened by the Remuneration Committee, contents of agenda,opinions of all members and acts taken in response to such opinions: None.

Note 1: The attendance (%) of members of the Remuneration Committee is calculated based on the number of the Remuneration Committee’s meetings held, and the number of his/her actual attendance at the meetings, during the period when he/she was assuming the office.

(V) Implementation of promotion of sustainable development:

Promotion items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
I. Does the Company have a specific (or part-time) unit set up to promote the sustainable development governance framework, and the Board of Directors authorizing the management to handle matters and report the supervision results to the Board of Directors?			The Company has established a Sustainable Development Promotion Committee, which consists of the top supervisors of each relevant unit and has the following functions: (1) Formulate an effective corporate governance framework and relevant ethical standards to improve corporate governance. (2) Integrate and promote the action plan related to climate changes in environmental management to achieve sustainable environmental goals. (3) Provide customers with the most competitive innovative products and services, and maintain customer relations. (4) Responsible for labors’ human rights/safety and health, character education, building of the company image, social benefits and other related affairs. Report to the Board of Directors at least once a year, with the first report expected to be made in 2023.	It complies with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
II. Does the company assess the risk of environmental, social, and governance (ESG) issues in relation to corporate operations based on the materiality principles and establish policies or strategies in relation to risk management?			The Company assesses the risk of environmental, social, and governance (ESG) issues in relation to corporate operations based on the materiality principles and establish policies or strategies in relation to risk management. (ISO9001 and 14001)	It complies with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
III. Environmental issues (I) Does the company have an appropriate environmental management system established in accordance with its industrial characteristics? (II) Is the company committed to enhancing the power efficiency and using renewable materials that are with low impact on the environmental impacts? (III) Does the Company assess the present and future potential risks and opportunities of climate change on the Company and take actions to related?	  		The Company has been concerned about environmental, resource utilization and other issues, and has established and implemented relevant environmental policies and waste reduction measures in ISO14001.	It complies with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies

Promotion items			Implementation status	Implementation status	Deviation and causes of deviation from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
(IV) Has the Company calculated the GHG emission, water consumption, and total weight of wastes in the past two years and formulated GHG reduction, water consumption reduction or other waste management policies?	
IV. Social issues (I) Does the Company have the relevant management policies and procedures stipulated in accordance with the relevant laws and regulations and international conventions on human rights? (II) Has the company established and implemented reasonable employee welfare measures (including remuneration, leave, and other benefits) and appropriately reflected business performance and achievements in the remuneration for employees?	 		In accordance with Labor Standards Act and relevant laws and regulations, the Company has set an employee mailbox, in addition to holding monthly employee representative meeting, and the legitimate rights and interests of employees can be reasonably protected, and their opinions can be directly reflected to the management.		It complies with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
(III) Does the Company provide employees with a safe and healthy work environment, and provide safety and health education to employees regularly?			Occupational Safety and Health Management Plan To prevent occupational accidents and ensure the safety of labors, and implement the Company’s safety and health management, the Company implements annual occupational safety and health plan management in business units, and facilities and personnel regulated by
			the Labor Occupational Safety and Health Act, and performs inspections and audits to prevent and eliminate accidents to ensure employees’ safety and health. Labor Safety Supervision and Audit Work Plan The Company has a labor safety supervision and audit work plan, which is implemented by the supervisor of the safety and health business. The Department of Safety and Health summarizes review data and reports, confirms the effectiveness of the improvement issues, and finally submits them to the Labor Safety and Health Committee to review the deficiencies. Labor SafetyReview Work Labor Safety Inspection Team,Department of Inspected twice a day
			Labor SafetyReview Work
			Labor Safety Inspection Team,Department of	Inspected twice a day

		Implementation status	Implementation status
Yes	No	Summary description
		Labor Safetyand Health
		Joint Inspection Team, Deartment of Labor	Twice a week
		p Safety and Management

		Labor Safety Inspection of Workplace	Subject to employee and contractor regulations
		Labor Safety Review Team, Department of Labor Safety and Health	Reviewed irregularly more than four times a month
		o . Respiratory Protection Plan
		The Company has a respiratory protection plan, based on which labors must use protective equipment when working in a harmful environment, and appropriate protective measures shall be taken according to the characteristics of harmful substances in the air of their working environment, so as to ensure the physical health of labors and realize health management. The specific implementation content is as follows: 1. Investigate whether workers can use protective equipment according to their health status. 2. Environmental harm identification and exposure evaluation, which shall identify the respiratory harm to which workers may be exposed. 3. Choose appropriate respiratory protective equipment. 4. Use of respiratory protective equipment. 5. Maintenance and management of respiratory protective equipment. 6. Education and training of respiratory protective equipment. 7. Performance evaluation and improvement. This plan is reviewed, revised and implemented by the Labor Safety and Health Committee year by year. Safety and health implementation performance in 2023

		Implementation status	Implementation status	Implementation status
Yes	No	Summary		description
				Implementation Data Statistics 3 sections: 304 people (304 hours) a_General knowledge of chemical hazards, 137 persons (137 hours) b_Abuse in the workplace, 42 persons (42 hours) c_Stacking machine, 125 persons (125 hours) Maternal protection employee, 1 person (1 hour) One section of human factor health education, 7 persons (7 hours) Overload care & tracking, 54 persons (54 hours) There was 0 unlawful attack incident in this year 7 persons (7 hours) New employees, 2 persons (2 hours) Metabolic syndrome, 79 persons (79 hours) Hypertension, hyperlipidemia and hyperglycemia, 82 persons (82 hours) Abnormal physical examination, 60 persons(60 hours) A total of 268,920 incident-free workinghours are
		Items		Implementation Data Statistics
		Labor Safety and Health Education		3 sections: 304 people (304 hours) a_General knowledge of chemical hazards, 137 persons (137 hours) b_Abuse in the workplace, 42 persons (42 hours) c_Stacking machine, 125 persons (125 hours)
		Five plans for occupational care	Maternal health protection plan	Maternal protection employee, 1 person (1 hour)
			Human factor hazard prevention plan	One section of human factor health education, 7 persons (7 hours)
			Abnormal workload- induced disease prevention plan	Overload care & tracking, 54 persons (54 hours)
			Prevention plan for unlawful attack in duty performance	There was 0 unlawful attack incident in this year
			Middle-aged and elderly plan	7 persons (7 hours)
		Occupational Medical Health service		New employees, 2 persons (2 hours) Metabolic syndrome, 79 persons (79 hours) Hypertension, hyperlipidemia and hyperglycemia, 82 persons (82 hours) Abnormal physical examination, 60 persons(60 hours)
		Zero Incident Campaign		A total of 268,920 incident-free workinghours are

		Implementation status	Implementation status
Yes	No	Summary	description
			reported monthly in this factory, with 12 times ayear
		Disablin freuenc
		g qy rate (FR) = (number of persons in disabling injuries × 1,000,000)`÷`total workinghours	0
		Disabling severity rate (SR) = (total number of lost working days × 1,000,000)`÷`total workinghours	0
			New employee education: 4 persons (12 hours) Service employees: 75 persons (231 hours)
		Occupational Safety related Education and Training	Crown block: 59 persons (177 hours) Stacking machine: 11 persons (33 hours) Emergency education: 3 persons (9 hours) Level A of occupational safety and health affair: 1 person (6 hours) Organic solvent supervisor: 1 person (6 hours)
		Occupational Safety Supervision and Audit	Administrator audit: twice a day, for a total of 447 times (447 hours) Business supervisor audit: twice a week, for a total of 104 times (208 hours)
		Contractor hazard notification/ protocol organization meeting	213 times/year
		Employees Health Care	2 persons a week, 92 times a year (184 hours)
		External official tutoring	North Occupational Safety and Health Administration _Middle-aged and

Promotion items			Implementation status	Implementation status
	Yes	No	Summary	description
(IV) Does the Company have an effective career capacity development training program established for the employees? (V) Does the company comply with the related laws and regulations and international standards regarding the customer health and safety, customer privacy, marking communication, and labeling of its products and services and establish policies toprotect the rights and	 			Elderly, visit once (4 hours)
			Respiratory Protection Plan	Airtight testing of protective equipment, twice a year, for a total of 6 persons(3 hours)
			Special operation administration	Employees for special health examination (dust), 3 persons
			Labors’ working environment monitoring	Cycle: once every six months, twice a year. At each time, organic solvent × 4, carbon dioxide × 1, dust × 1, noise × 1, 2 points are monitored for labor noise, and 1 point is monitored for ambient noise
			Hazardous and harmful substance management	One list of chemicals, 10 types of SDS
			Labor Safety and Health Committee	Once a quarter, four times ayear
			Emergency measures	1 section for chemical leakage, 7 persons, 7 hours; 1 section for water pollution, 6 persons, 6 hours
			Major project contractor safety commitment	7
			Safety and Health Management Plan	1

Promotion items	Implementation status	Implementation status	Implementation status	Deviation and causes of deviation from the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies
	Yes	No	Summary description
interests of customers and procedures for grievances? (VI) Has the company established policies for management to request suppliers to comply with the relevant laws and regulations of environmental protection, occupational safety and health, and labor human rights? Does the company keep track on the implementation of such policies?			the formulation and implementation of the system are certified by ISO9001. The Company has a close cooperation relationship with suppliers, and sets up an industrial association to enhance its implementation of social responsibility. The Company’s suppliers have been appropriately evaluated. The Company has signed contracts with major suppliers. In case of violation of corporate social responsibility policies in suppliers, the Company may consider suspending or terminating business dealings with them.
V. Has the Company referred to the internationally accepted reporting preparation rules or guidelines to prepare reports, such as ESG reports that disclose the Company’s non-financial information? Did the Company apply for assurance or guarantee of such reports to a third-party certification body?			At present, the Company actively develops related compilation rules or guidelines.	It does not comply with the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, and is under active planning.
VI. If the Company has established the sustainable development principles based on the Sustainable Development Best Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the principles and their implementation: The Company’s Sustainable Development Best Practice Principles have been continuously promoted, and the management methods have yet to be formulated.
VII. Other important information for the implementation of sustainable development: (I) Environmental protection: Practice energy saving, resource recycling and other actions to reduce environmental impact, and advocate employees to participate in beach cleaning activities organized by the Ministry of Environment from time to time. (II) Social contribution: Participate in the mask national team and contribute to epidemic prevention. Sponsor regional public welfare groups and environmental protection activities from time to time. (III) Social welfare: Hire physically and mentally disabled employees. (IV) Consumers’ rights and interests: Appoint a special person to communicate with customers in real time, and hold regular customer complaint meetings for review.

(VI) The Company’s performance of ethical corporate management and measures taken:

Assessment items	Implementation status	Implementation status	Implementation status	Variation from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons
	Yes	No	Summary description
I. Establishment of policies for ethical corporate management and plans (I) Has the Company established policies for ethical corporate management approved by the board of directors and stated such policies and practices in its regulations and external documents and in the commitment made by the board of directors and senior management to actively implement such policies? (II) Has the Company established an assessment mechanism of risk from unethical behavior to regularly analyze and assess business activities with higher risk of involvement in unethical behavior and preventive programs for unethical behaviors containing at least the preventive measures stated in Paragraph 2, Article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/TPEx-Listed Companies”? (III) Has the Company established in the preventive programs the operating procedures for unethical behavior prevention, penalties and grievance systems of breaching the guidelines for conduct, and implemented and periodically review them?	  		The Company has established the Ethical Corporate Management Best Practice Principles, stating such policies and practices and the commitment made by the Board of Directors and management to actively implement such policies. Before establishing a business relationship with another person, the Company shall first evaluate the legality of the trade counterparty, the policy for ethical corporate management, and whether it has a record of dishonest conduct, to ensure that the business practice is fair and transparent and no bribes are requested, offered or accepted. At present, the Company requires that its employees shall abide by the Ethical Corporate Management Best Practice Principles, and audited by the internal audit unit from time to time. No violation is found in employees, trade customers or suppliers.	It complies with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies
II. Proper enforcement of business integrity (I) Does the Company have the integrity of the trade counterparty assessed and with the code of integrity expressed in the contract signed? (II) Has the Company established a dedicated unit under the Board of Directors to promote ethical corporate management and regularly report (at least once a year) to the Board of Directors its ethical management policies and unethical behavior preventive programs and supervise their implementation status? (III) Does the Company have developed policies to prevent conflicts of interest, provided adequate channel for communication, and substantiated the policies?	  		In accordance with the Company’s relevant management procedures, employees must perform the Company’s business impartially and in accordance with relevant laws and regulations. Board members and the management shall also adhere to integrity as the Company’s operating principle. The Company appoints the General Administration Department as an unit to promote the ethical corporate management, and reports the implementation status to the Board of Directors from time to time. If directors, supervisors and managerial officers may have any conflict of interest with any decision or transaction, they shall not participate in decision-making or voting.	It complies with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies

Assessment items	Implementation status	Implementation status	Implementation status	Variation from the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies and the reasons
	Yes	No	Summary description
(IV) Has the Company established an effective accounting system and an internal control system for the internal audit unit to establish related audit programs based on the results of risk assessment of involvement in unethical behavior to audit and prevent the compliance with the preventive programs of unethical behavior or hire a CPA to perform the audit? (V) Has the Company organized corporate management internal and external education and training programs on a regular basis?	 		The regulations and system for implementing ethical corporate management are formulated in the Ethical Corporate Management Best Practice Principles and effective accounting system and internal control system are established. In addition, the internal audit unit reviews irregularly. The Company advocates and makes employees clearly understand the ideal and regulations of ethical corporate management through cadre meetings and monthly meetings.
III. The operations of the Company’s Whistle- blowing System (I) Does the Company have a specific report and reward system stipulated, a convenient report channel established and a responsible staff designated to handle the individual being reported? (II) Has the Company established standard operating procedures for investigating reported events, follow-up measures to be taken after the investigation was completed, and related confidentiality mechanisms? (III) Has the Company taken proper measures to protect the whistle-blowers from suffering any consequence of reporting an incident?	  		The operation of the Company has been fair, impartial and public, and any problem, if any, can be reported to the supervisor by email, telephone or directly. The Company regards report-related documents and data as confidential documents, and all participants are responsible for the perfect secrecy of the process in which they participate. After investigation, the documents are sent to the Company’s personnel evaluation meeting, and subsequent measures are taken according to the relevant regulations. The Company has a duty of confidentiality to the whistle- blowers, and ensures that they will not be improperly treated due to whistle-blowing.	It complies with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies
IV. Enhanced information disclosure Does the Company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?			The Company indeed discloses relevant information according to laws, and achieve transparency of the financial situation.	It roughly complies with the Ethical Corporate Management Best Practice Principles for TWSE/TPEx Listed Companies.
V. If the Company has established its own ethical corporate management best-practice principles in accordance with the “Ethical Corporate Management Best Practice Principles for TWSE/ TPEx Listed Companies”, please specify any deviation of their implementation from the corporate social responsibilitybest-practiceprinciples: None.
VI. Other vital information that helps to understand the practice of business integrity of the Company (e.g., the review and revision of the best-practiceprinciples of the Companyin business integrity): None.

(VII) If the Company has formulated the Corporate Governance Best Practice Principles and related rules, it shall disclose the method for checking them: if the Company has the Corporate Governance Principles, please check it on the Company’s website http://www.awea.com.
(VIII) For the inquiry method of other important information that can promote the understanding of corporate governance operation, the Company reports it on the MOPS for investors to understand the Company’s latest status.

(IX) Hands-on performance in the Internal Control System shall disclosed the following matters:
Declaration of Internal Control System

AWEA Mechantronic Co., Ltd. Declaration of Internal Control System

Date: March 5, 2024

The following declaration is based on the 2023 self-audit over the Company’s internal control system:
I. The Company knows that it is the responsibility of its Board of Directors and managerial officers to establish, implement and maintain an internal control system, and the Company has established such system. The purpose is to provide reasonable guarantee for the effectiveness and efficiency of operating (including profit, performance, and asset security protection, etc.), the reliability, timeliness, transparency and compliance of report with relevant norms, laws and regulations, and achievement of other goals.
II. There are inherent limitations on internal control system, and an effective internal control system may only provide reasonable guarantee for the achievement of the said three goals, no matter how perfect its design is; Besides, the effectiveness of an internal control system may change due to changes in the environment and circumstances. However, the Company has established a selfmonitoring mechanism for its internal control system that it will take corrective actions immediately once any defect is identified.
III. The Company has judged the effectiveness of the design and implementation of the internal control system based on the items for judging the effectiveness of an internal control system specified in the “Regulations Governing Establishment of Internal Control Systems by Public Companies” (hereinafter referred to as the “Regulations”). The items for judgment on an internal control system specified in these Regulations are composed of five factors depending on management control process: 1. control environment, 2. risk evaluation, 3. control, 4. information and communication, and 5. monitoring. And each factor includes several items. Please refer to these Regulations for the said items.
IV. The Company has adopted the above-mentioned judgment items for internal control system to evaluate the effectiveness of the design and implementation of the internal control system.
V. On the grounds of the outcome of evaluation mentioned in the preceding Paragraph, the Company firmly holds that the Company’s internal control system as of December 31, 2023 (including supervisory control and management over subsidiaries), notably the effect of the business operation, extent of accomplishment of the target where the report proves trustworthy, transparent in real time, the design and implementation of the Company’s internal control system proves effective, capable of assuring accomplishment of the aforementioned targets.
VI. This declaration forms part of the main contents of the Company’s annual report and prospectus, and shall be disclosed to the public. In case of any false, concealed or other illegal said contents

to be disclosed, legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act shall be assumed.

VII. The present Declaration of Internal Control System was granted a pass in the board of directors meeting convened on March 5, 2024. That board of directors meeting was attended by 9 directors among whom 0 director objected. All present directors unanimously responded with consent to the contents of the Declaration. This is the another point duly clarified herewith.

AWEA Mechantronic Co., Ltd.

Chairman: Signature President: Signature

Audit of the internal control system by CPA shall disclose the accountant’s review report: None.
(X) Any legal penalty suffered by the Company and its internal persons, or any disciplinary penalty by the Company against its internal persons for violation of the internal control system, in the latest year and up to the publication date of the Annual Report, the main deficiencies, and improvement made: None.
(XI) Major resolution of the Shareholders’ Meeting and Board Meetings in the latest year and up to the publication date of the annual report:

Shareholders’ Meeting/ Board of Directors	Date	Significant decisions resolved
Shareholders’ Meetings	June 7, 2023	1. 2022 Business Report and Financial Statements. 2. Proposal forthe2022earnings distribution.
Board of Directors	June 7, 2023	1. Proposal for the election of the chairman.
Board of Directors	June 15, 2023	1. Amend the Charter of the Company’s Remuneration Committee. 2. Proposal for employment of members of Remuneration Committee. 3. Proposal for appointment of the corporate governance officer.
Board of Directors	August 4, 2023	1. Proposal for consolidated statement for the first half of 2023. 2. Proposal for loan of Shanghai Zhuwei Mechantronic to AWEA (Suzhou). 3. Proposal for loan to Yih Chuan Machinery. 4. Proposal for the credit line from bank.
Board of Directors	September 28, 2023	1. Proposal for appointment of the chairman as CEO. 2. Proposal for appointment of the president. 3. Non-competition exclusion on the president. 4. Proposal for appointment of the vice president. 5. Proposal for appointment of the special assistant of the chairman. 6. Proposal for non-competition exclusion on special assistant of the chairman.
Board of Directors	November 6, 2023	1. Proposal for approval on the consolidated statement for the third quarter of 2023. 2. Formulate the Company’s Method for Management of Insider Trading Prevention. 3. Amend the Company’s Method for Evaluation of the Board of Directors’ Performance. 4. Amend the Company’s Method for Management of Employee Stock Ownership Trust. 5. Proposal for loan of Shanghai Zhuwei Mechantronic to Yih Chuan (Jiaxing). 6. Proposal forthe creditlinefrombank.
Board of Directors	December 27, 2023	1. Discussion of matters resolved by the Remuneration Committee. 2. Proposal for the 2024 internal audit plan. 3. Proposal for the 2024 budget.

Shareholders’ Meeting/ Board of Directors	Date	Significant decisions resolved
		4. Proposal for loan of Shanghai Zhuwei Mechantronic to AWEA (Suzhou). 5. Proposal for the credit line from bank. 6. Proposal for appointment of the acting accounting supervisor.
Board of Directors	March 5, 2024	1. Proposal for the distribution of the 2023 employees’ remuneration and directors’ remuneration. 2. Proposal for the 2023 financial business report and self-summarized financial information. 3. Discussion of matters resolved by the Remuneration Committee. 4. Proposal for the 2023 earnings distribution 5. Proposal for election of one additional director. 6. Proposal for cancellation of the non-competition restriction on new directors. 7. Time and place for convening the 2024 annual shareholders’ meeting and the contents of the meeting. 8. Matters related to the acceptance of the shareholders’ written proposal at the Company’s 2024 annual shareholders’ meeting. 9. Proposal for the Company’s 2023 Internal Control Statement. 10. Proposal for formulation of the Company’s Operating Procedures for Whistle-blowing System. 11. Proposal for the credit line from bank. 12. Proposal for appointment of the corporate governance officer and deputy spokesperson. 13. Proposal for increasing the shareholding of Huahan Investment.
Board of Directors	May 7, 2024	1. Proposal for appointment of the spokesperson, accounting supervisor and financial supervisor. 2. Proposal for the approval on the consolidated financial statement for the first quarter of 2024 3. Proposal for formulation of the Company’s Rules Governing Financial and Business Matters Between this Corporation and its Related Parties. 4. Proposal for loan to Yih Chuan Machinery. 5. Proposal for the credit line from bank.

(XII) In the latest year and up to the publication date of the annual report, where the directors or supervisor passed significant decisions with different opinions as backed with records or declarations, the major contents: None.

(XIII) In the latest year and up to the publication date of the annual report, the information of discharge or resignation by the Company for the Company’s Chairman, President, accounting supervisor, financial supervisor, internal audit supervisor, corporate governance officer and research & development officer:

Summary of resignation and discharge status of relevant personnel of the Company

		April 30,2024	April 30,2024	April 30,2024
Title	Name	Date of appointment	Date of discharge	Reason for resignation or discharge
President	Cheng-Jun Yang	November 30, 2020	October 1, 2023	Resigned
Accounting Supervisor	Hong-Bin Syu	August 16, 2004	March 6, 2024	Retirement
Financial supervisor	Hong-Bin Syu	August 16, 2004	March 6, 2024	Retirement
Corporate governance officer	Hong-Bin Syu	August 16, 2004	March 6, 2024	Retirement

IV. Information in public fees of the Certified Public Accountant Association

Amount unit: NT$ thousand

Name of CPA firm	Name of CPA	CPA auditing period	Audit remuneration	Non-audit remuneration	Total	Remark
EnWise CPAs & Co.	Guei-Duan Chen	January 1, 2023 - December 31, 2023	1,930	11	1,941	Non-audit remuneration service content: change registration service fee
	Chang-Yun Yi	January 1, 2023 - December 31, 2023

V. Changes in CPA

None.

VI. Where the company’s chairman, president, or any managerial officer in charge of finance or accounting matters has in the latest year held a position at the accounting firm of its certified public accountant or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held

None.

VII. In the latest year and up to the publication date of the annual report, the fact regarding transfer or pledge stock equity by the Company’s directors, supervisors and managerial officers and key shareholders holding over 10% in shareholding
(I) The fact regarding change or pledge of stock equity by the Company’s directors, supervisors and managerial officers and key shareholders holding over 10% in shareholding:

Unit: shares

						Unit: shares	Unit: shares
Title	Name	2022		2023		From January 1, 2024 to April 20,2024
		Increase (decrease) in shares held	Increase (decrease) in shares collateralized	Increase (decrease) in shares held	Increase (decrease) in shares collateralized	Increase (decrease) in shares held	Increase (decrease) in shares collateralized
Chairman	De-Hua Yang (Note 2)	`－`	`－`	`－`	`－`	`－`	`－`
Director	Goodway Machine Corp. Representative: Cheng- Xuan Wang (Note 3)	`－`	`－`	50,000	`－`	`－`	`－`
Director	Goodway Machine Corp. Representative: Kun-Nan Zhuang (Note 2)	`－`	`－`	50,000	`－`	`－`	`－`
Independent Director	Lian-Fa Yang (Note 1)	`－`	`－`	`－`	`－`	Not applicable	Not applicable
Independent Director	Yi-Min Lin (Note 1)	`－`	`－`	`－`	`－`	Not applicable	Not applicable
Independent Director	Zheng-Yong Huang	`－`	`－`	`－`	`－`	`－`	`－`
Independent Director	Li-Ying Luo	`－`	`－`	`－`	`－`	`－`	`－`
Independent Director	Yu-Ren Su	`－`	`－`	`－`	`－`	`－`	`－`
Independent Director	Xi-Peng Hong (Note 3)	(1,000)	`－`	`－`	`－`	`－`	`－`
Director	Cheng-Jun Yang (Note 3)	`－`	`－`	`－`	`－`	`－`	`－`
Director	Qing-Feng Yang (Note 3)	`－`	`－`	`－`	`－`	`－`	`－`
Major shareholders	Goodway Machine Corp.	145,000	`－`	50,000	`－`	`－`	`－`
President	Cheng-Jun Yang (Note 4)	`－`	`－`	`－`	`－`	Not applicable	Not applicable
President	Shang-Ru Yang (Note 5)	`－`	`－`	`－`	`－`	`－`	`－`
Vice Presidents	Chang-Chi Yang	`－`	`－`	`－`	`－`	`－`	`－`
Vice Presidents	Rui-Ming Ye	`－`	`－`	`－`	`－`	`－`	`－`
Supervisor of Financial Department	Hong-Bin Syu (Note 6)	`－`	`－`	`－`	`－`	Not applicable	Not applicable
Accounting Supervisor	Hong-Bin Syu (Note 6)	`－`	`－`	`－`	`－`	Not applicable	Not applicable

Note 1: Discharge on June 7, 2023. Note 2: Took office on June 7, 2023. Note 3: Re-elected on June 7, 2023. Note 4: Discharged on October 1, 2023.

Note 5: Took office on October 1, 2023. Note 6: Discharged on March 6, 2024.

(II) Information of directors, supervisors and managerial officers and key shareholders with the counterpart of stock equity transfer as the related party: None.
(III) Information of directors, supervisors and managerial officers and key shareholders with the counterpart of stock equity pledge as the related party: None.

VIII. Data of relationship among the company’s 10 largest shareholders

			April 20,2024	April 20,2024	April 20,2024	April 20,2024	April 20,2024	April 20,2024	April 20,2024
Name	Shares held in own name		Shareholdings of spouse and minor children		Shares held in the names of others		Name and relationship between the Company’s top ten shareholders, or spouses or relatives within the second degree of kinship		Remark
	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Number of shares	Ratio of Shareholding	Name	Relationship
Goodway Machine Corp.	47,962,311	49.65%	`－`	`－`	`－`	`－`	De-HuaYang	Chairman of the Company
De-Hua Yang	9,031,403	9.35%	`－`	`－`	`－`	`－`	Goodway Machine Corp. Hong Hua Investment Co., Ltd. JiaJin Investment Co., Ltd. Hung Jiu Machine Co., Ltd.	Chairman of the Company
JiaJin Investment Co.,Ltd.	6,256,388	6.48%	`－`	`－`	`－`	`－`	De-Hua Yang	Chairman of the Company
Fubon Life Insurance Co., Ltd.	3,753,500	3.89%	`－`	`－`	`－`	`－`	None	None
Hung Jiu Investment Co., Ltd.	1,482,818	1.54%	`－`	`－`	`－`	`－`	None	None
Zhi Yuan Investment Co., Ltd.	1,481,316	1.53%	`－`	`－`	`－`	`－`	None	None
Axtron Investment Ltd.	1,090,000	1.13%	`－`	`－`	`－`	`－`	De-Hua Yang	The person in charge is the relative within the second degree of kinship
Hong Hua Investment Co., Ltd.	828,250	0.86%	`－`	`－`	`－`	`－`	De-Hua Yang	Chairman of the Company
Yu En Investment Co., Ltd.	786,728	0.81%	`－`	`－`	`－`	`－`	De-Hua Yang	The person in charge is the relative within the second degree of kinship
Hung Jiu Machine Co., Ltd.	751,312	0.78%	`－`	`－`	`－`	`－`	De-Hua Yang	Chairman of the Company

IX. Investments jointly held by the Company, the Company’s directors, supervisors, managerial officers, and enterprises directly or indirectly controlled by the Company. Calculate shareholding in aggregate of the above parties

of the above parties
	April 30,2024;Unit: shares;%
Investees	Invested by the Company		Investment held by directors, supervisors, managerial officers, and directly or indirectly controlled enterprises		Aggregate investment
	Number of shares	Ownership (%)	Number of shares	Ownership (%)	Number of shares	Ownership (%)
B-WAY(CAYMAN)CO, LTD (Note 1)	10,665,029	100%	`－`	`－`	10,665,029	100%
BILLION- WAY(CAYMAN) CO, LTD (Note 1)	`－`	`－`	12,829,840	100%	12,829,840	100%
Shanghai Zhuwai Mechanical and Electrical Co., Ltd. (Note 3)	`－`	`－`	`－`	100%	`－`	100%
Awea Mechantronic (Suzhou) Ltd. (Note 3)	`－`	`－`	`－`	100%	`－`	100%
AUTECH EUROPE	50	5%	`－`	`－`	50	5%
Yih Chuan Machinery Industry Co., Ltd.	5,914,800	60%	3,943,200	40%	9,858,000	100%
YAMA SEIKI,USA,INC.	584,192	28.58%	1,460,000	71.42%	2,044,192	100%
AXTRON INT'L INVESTMENT CO., LTD. (Note 1)	`－`	`－`	50,000	100%	50,000	100%
AXTRON INT'L INVESTMENT LIMITED (Note 2)	`－`	`－`	10,000	100%	10,000	100%
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd. (Note 3)	`－`	`－`	`－`	100%	`－`	100%
Huahan Leasing Co., Ltd.	666,667	13.33%	2,666,666	53.34%	3,333,333	66.67%

Note 1: Overseas company, with the price per share of US$1.

Note 2: Overseas company, with the price per share of HK$1.

Note 3: The number of shares is not counted for mainland companies.

Chapter IV. Funding Status

I. Share capital and shares

(I) Sources of share capital

Unit: shares/ NT$

						Unit: shares/ NT$	Unit: shares/ NT$	Unit: shares/ NT$
Month/ Year	Price of issue	Authorized capital		Paid-up capital		Remark
		Number of shares	Amount	Number of shares	Amount	Sources of share capital	Paid in properties other than cash	Others
July 2008	10	100,000,000	1,000,000,000	82,901,175	829,011,750	NT$39,178,250 of capital increase transferred from surplus reserve NT$6,268,500 of capital increase transferred from employees bonus	None	Note 1
December 2008	10	100,000,000	1,000,000,000	82,370,866	823,708,660	Consolidate Baiwei shares, and reduce a capital of NT$5,303,090 for treasury shares	None	Note 2
July 2009	10	100,000,000	1,000,000,000	90,607,952	906,079,520	NT$82,370,860 of capital increase transferred from surplus reserve	None	Note 3
August 2011	10	100,000,000	1,000,000,000	94,952,449	949,524,490	NT$43,444,970 of capital increase transferred from surplus reserve	None	Note 4
November 2012	10	100,000,000	1,000,000,000	94,952,449	949,524,490	Consolidate Jinwei shares	None	Note 5
November 2013	10	100,000,000	1,000,000,000	91,994,449	919,944,490	Cancel a capital of NT$29,580,000 for treasury shares	None	Note 6
September 2016	10	100,000,000	1,000,000,000	96,594,171	965,941,710	NT$45,997,220 of capital increase transferred from surplus reserve	None	Note 7

Note 1: The Financial Supervisory Commission, Executive Yuan approved a capital increase through Jin-Guan-Zheng-Yi-Zi Letter No. 0970033790 on July 7, 2008.
Note 2: The Ministry of Economic Affairs approved a capital decrease through Jing-Shou-Shang-Zi Letter No. 09701323420 on December 23, 2008.
Note 3: The Financial Supervisory Commission, Executive Yuan approved a capital increase through Jin-Guan-Zheng-Fa-Zi Letter No. 0980033595 on July 7, 2009.
Note 4: The Financial Supervisory Commission, Executive Yuan approved a capital increase through Jin-Guan-Zheng-Fa-Zi Letter No. 1000030026 on June 29, 2011.
Note 5: Registration was changed through Jing-Shou-Shang-Zi No. 10101223870.
Note 6: Registration was changed through Jing-Shou-Shang-Zi No. 10201241980.
Note 7: Registration was changed through Jing-Shou-Shang-Zi No. 10501224890.

Authorized capital	Authorized capital	Authorized capital	Authorized capital	Authorized capital	Remark
Outstandingshares			Unissued shares	Total
Listed	Unlisted	Total
96,594,171	-	96,594,171	3,405,829	100,000,000	Belong to listed stocks

(II) Shareholders structure:

(II) Shareholders structure:	(II) Shareholders structure:
		April 20,2024;Unit: shares
Shareholders structure Quantity	Government institutions	Financial institutions	Other juristic persons	Individuals	Foreign institutions and foreigners	Total
Number of people	0	5	27	10,441	30	10,503
Number of shares held	0	4,000,277	61,833,496	29,917,750	842,648	96,594,171
Ownership (%)	0.00%	4.14%	64.02%	30.97%	0.87%	100.00%

(III) Dispersion of equity: ordinary shares (par value per share: NT$10)

(III) Dispersion of equity: ordinary shares (par value per share: NT$10)	(III) Dispersion of equity: ordinary shares (par value per share: NT$10)	(III) Dispersion of equity: ordinary shares (par value per share: NT$10)	(III) Dispersion of equity: ordinary shares (par value per share: NT$10)
April 20,2024
Class of Shareholding	Number of Shareholders	Number of shares held	Ownership (%)
1 to 999	6,788	1,047,095	1.08%
1,000 to 5,000	2,922	5,500,502	5.70%
5,001 to 10,000	386	2,859,981	2.96%
10,001 to 15,000	155	1,886,131	1.95%
15,001 to 20,000	63	1,126,145	1.17%
20,001 to 30,000	76	1,896,937	1.96%
30,001 to 40,000	38	1,328,113	1.38%
40,001 to 50,000	8	361,647	0.37%
50,001 to 100,000	30	2,039,756	2.11%
100,001 to 200,000	18	2,391,280	2.48%
200,001 to 400,000	8	2,180,558	2.26%
400,001 to 600,000	1	552,000	0.57%
600,001 to 800,000	2	1,538,040	1.59%
800,001 to 1,000,000	1	828,250	0.86%
More than 1,000,001	7	71,057,736	73.56%
Total	10,503	96,594,171	100.00%

Special shares: The Company has not issued any special shares, so it is not applicable.

(IV) List of major shareholders: Names of shareholders holding over 5% in shareholding or top ten shareholders in shareholding, number of shares and proportion.

Shares Name of major shareholders	Number of shares held	Ownership (%)
1. GoodwayMachine Corp.	47,962,311	49.65%
2. De-Hua Yang	9,031,403	9.35%
3. JiaJin Investment Co.,Ltd.	6,256,388	6.48%
4. Fubon Life Insurance Co.,Ltd.	3,753,500	3.89%
5. HungJiu Investment Co.,Ltd.	1,482,818	1.54%
6. Zhi Yuan Investment Co.,Ltd.	1,481,316	1.53%
7. Axtron Investment Ltd.	1,090,000	1.13%
8. HongHua Investment Co.,Ltd.	828,250	0.86%
9. Yu En Investment Co.,Ltd.	786,728	0.81%
10. HungJiu Machine Co.,Ltd.	751,312	0.78%

(V) Market price per share, net worth, dividend and relevant data in the last two years

Year	Year	2022	2023	From January 1, 2024 to March 31, 2024
Highest		33.90	35.50	33.95
Lowest		29.00	29.50	31.10
Average		31.08	31.69	32.08
Before dividend distribution		34.87	35.07	35.40
After dividend distribution		33.27	Not applicable	`－`
Weighted average outstanding shares		96,594,171	96,594,171	96,594,171
Earnings per share (Note 2)	Before adjustment	3.67	2.18	0.18
	After adjustment	3.65	2.17	`－`
Cash dividends		1.60	1.50	`－`
Stock dividends	Dividends from Retained Earnings	`－`	`－`	`－`
	Dividends from Capital Surplus	`－`	`－`	`－`
Accumulated undistributed dividends		`－`	`－`	`－`
Price to earningratio(Note 3)		8.47	14.54	`－`
Price to dividends ratio (Note 4)		19.43	21.13	`－`
Cash dividendyield(Note 5)		5.15%	4.73%	`－`

Note 1: This is filled in based on the number of shares issued at the end of the year and allocated in accordance with the resolution of the shareholders’ meeting of the next year.
Note 2: This is tracked and adjusted due to stock grants, capital increase transferred from employees’ compensation, and conversion of convertible corporate bonds into ordinary shares.

Note 3: Price to earning ratio = Average closing price per share for the year / earnings per share. Note 4: Price to dividend ratio = Average closing price per share for the year / cash dividends per share. Note 5: Cash dividend yield = Cash dividend per share / average closing price per share for the current year.

(VI) The Company’s dividend policy and fact of implementation thereof (to be approved by the 2024 shareholders’ meeting)
Dividend policy:

The Company’s annual net income after final settlement shall be used to pay taxes and cover the deficits of prior years according to law, 10% of the remaining income shall be set aside as legal reserve and special reserve in accordance with the law, and the remaining balance shall be added to the undistributed earnings of prior years and a part of which retained as the capital required for the business growth, and then the Board of Directors shall prepare the earnings distribution proposal and submit it to the Shareholders’ Meeting for resolution. The Company is in an industry with changing environment, and in the growth stage of life cycle, and in order to consider long-term financial planning and meet the cash inflow needs of shareholders, the annual cash dividend shall not be less than 10% of the total cash and stock dividends.

Fact of implementation:

Status of dividend distribution proposed at the shareholders’ meeting

(1) The distribution of earnings in 2023 resolved by the Company’s Board of Directors is as follows:
A. Set aside a legal reserve of NT$20,149,210.
B. Distribute a stockholder dividend of NT$144,891,257, with the cash allotment of NT$1.5 per share.
C. Reserve the unappropriated earnings of NT$1,441,706,626.
D. Thereafter, if the distribution rate per share of outstanding shares changes due to conversion of convertible corporate bonds, repurchase of the Company’s shares, or conversion, transfer and cancellation of treasury shares, the chairman is authorized to make adjustments.

The above distribution proposal complies with the dividend policy in the Articles of Incorporation specifying that the annual cash dividend shall not be less than 10% of the total cash and stock dividends.

AWEA Mechantronic Co., Ltd.

Statement of Earnings Distribution 2023

Unit: NT$

			Unit: NT$
Items	Amount		Remark
	Subtotal	Total
Opening balance Adjustments: Add: Net profit tax for 2023 Less: Unrealised gains (losses) on valuation of financial assets measured through other comprehensive income Less: Other comprehensive income after tax for 2023 - gains/losses from actuary of defined benefit Less: Legal reserve Earnings allocable Items of distribution: Shareholders’ dividend - Cash (NT$1.5/share) Unappropriated retained earnings at the end of the term	210,810,719 (9,038,008) (280,609) (20,149,210) (144,891,257)	$1,405,254,991 1,586,597,883 $1,441,706,626	Note 1
Chairman: Managerial officer:	Accounting Supervisor:

Note 1: As stipulated by the Articles of Incorporation, 10% of the net profit after tax shall be set aside as legal reserve.
$ 201,492,102 * 10% = $ 20,149,210

Note 2:

(1) Dividends of shareholders: cash dividend per share was NT$1.5; After being approved at the annual shareholders’ meeting, the Chairman is authorized to set another base date of exdividend payment for distribution.
(2) The cash dividend shall be calculated according to the distribution ratio until the total amount of the cash dividend is integral NT$, the decimals shall be omitted, and the total amount of odd dividends less than NT$1 shall be adjusted from the decimal point from big to small and the account number from front to back, until meeting the total distribution amount of cash dividend.
(3) In the event of a subsequent change in the share capital of the Company, affecting the number of outstanding shares and resulting in a change in the dividend rate to shareholders, it is proposed that the annual shareholders’ meeting should authorize the Chairman to deal with the matter at his sole discretion.

(VII) The impact of issuance of bonus shares proposed in the present shareholders’ meeting upon the Company’s business performance and earning per share:

Unit: NT$ thousand

Year Items	Year Items	Year Items	2024 (estimated)
Paid-in capital at the beginning of the period			965,942
Allotment of shares and interests of the currentyear	Cash dividend per share (NT$) - Note 1		1.5
	Number of allotment per share in the capital increase transferred from capital reserve		`－`
Change in operating performance	Operating profit		Not applicable (Note 2)
	Ratio of increase (decrease) in operating profit over the sameperiod lastyear
	After-tax net profit
	Ratio of increase (decrease) in after-tax net profit over the sameperiod lastyear
	Earnings per share (NT$)
	Ratio of increase (decrease) in earnings per share over the sameperiod lastyear
	Annual average rate of return on investment (reciprocal of annual averageprice to earnings ratio)
Proposed earnings per share and price to earnings ratio	If the capital increase transferred from surplus reserve is changed to the distribution of cash dividends	Proposed earnings per share	Not applicable (Note 2)
		Proposed annual average rate of return on investment
	If the capital increase transferred from capital reserve is not handled	Proposed earnings per share
		Proposed annual average rate of return on investment
	If the capital reserve is not handled, and the capital increase transferred from surplus reserve is hanged to be distributed in cash dividends.	Proposed earnings per share
		Proposed annual average rate of return on investment

Note 1: Subject to the resolution by the annual shareholders’ meeting in 2024. Note 2: In accordance with stipulations in Regulations Governing the Publication of Financial Forecasts of Public Companies, the Company did not need to disclose its financial forecast information for 2024.

(VIII) Remuneration to the employees, directors and supervisors

If the Company has profit in the year (the so-called profit refers to the profit before tax, and before deduction of employees’ compensation and directors’ and supervisors’ remuneration), it shall set aside 3%-8% of the profit as employees’ compensation, and set aside no more than 2% as directors’ and supervisors’ compensation. The Company may distribute the above stock bonus to employees of its subsidiaries who meet certain criteria, and the terms and methods of distribution shall be determined by the Board of Directors. However, if the Company has accumulated deficit, an amount to cover such deficit shall be reserved in advance.
- As stipulated by the Company Act and the Articles of Incorporation, the employees’ compensation and directors’ and supervisors’ remuneration that the Company shall allocate shall first be estimated in the preparation of the interim and annual financial statements in accordance with the (2007) Ji-Mi-Zi No. 052 explanation letter of Accounting Research and Development Foundation, and shall be listed as the appropriate accounting subject under the operating cost or operating expense according to the nature of employees’ bonuses and directors’ and supervisors’ remuneration. If there is any difference between the distributed amount as resolved by the Board of Directors and the estimated amount in the financial statement, it shall be regarded as a change in estimates and listed as the profit or loss of the current distribution year.
Remuneration to be distributed as resolved in the board of directors:
- (1) Employees’ remuneration to be distributed in 2023 is NT$16,000 thousand, and directors’ remuneration is NT$2,750 thousand, which will be paid in cash.
- (2) The number of shares to be distributed as employees’ compensation and its proportion in the capital increase transferred from earnings: employees’ compensation will be paid in cash in 2023.
- (3) Calculation of earnings per share after the proposed distribution of employees’ compensation and directors’ remuneration: Not applicable.
Distribution of earnings of the previous year as employees’ compensation and directors’ and supervisors’ remuneration: in 2022, the earnings were distributed according to the resolution approved by the Board of Directors, of which the employees’ cash compensation was NT$16,000 thousand, and the directors’ and supervisors’ remuneration was NT$1,800 thousand, which were paid in cash and showed no difference in distribution.
(IX) Repurchase of the Company’s stock: None.

II. Insurance of corporate bonds (including overseas corporate bonds)
None.
III. Status of preferred shares

None.

IV. Issuance of overseas depository receipts

None.

V. Employee stock options

None.

VI. Status of new shares issuance in connection with mergers and acquisitions

None.

VII. Progress on the use of funds
(I) Planned content: None.
(II) Implementation status: None.
(III) Use of unexpended capital: None.

Chapter V. Business Performance

I. Content of business

(I) Scope of business operation
Major contents of businesses
- The Company’s main business activities include the development and design, production, manufacturing and sales of Computer Numerical Control (CNC) machine tools, and the business activities listed in the Company’s change registration form are as follows:
- ‧ CB01010 Mechanical Equipment Manufacturing.
- ‧ CC01110 Computer and Peripheral Equipment Manufacturing.
- ‧ I501010 Product Designing.
- ‧ F113010 Wholesale of Machinery.
- ‧ F213080 Retail Sale of Other Machinery and Equipment.
- ‧ ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Ratio of operating revenue in the major contents of businesses

The ratio of the Company’s operating revenue from its major products is as follows:

	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Major products	2023		2022
	Amount	%	Amount	%
Gantry vertical integrated machining center	1,152,294	48.79	1,497,127	48.29
C-type vertical integrated machining center	1,088,905	46.10	1,460,438	47.10
Other (Note)	120,718	5.11	142,952	4.61
Total	2,361,917	100.00	3,100,517	100.00

Note: Others include machine maintenance, and purchase and sales of components and purchased products.

Focusing on the development and design, production, manufacturing and sales of Computer Numerical Control (CNC) machine tools, the ratio of operating revenue is above 95%.

The current products of the Company

The Company’s main product is Computer Numerical Control (CNC) machine tools, which belong to the metal cutting machine building industry in the industrial machinery and are indispensable mechanical equipment for basic machining and precision machining. The products are applied in the aerospace industry, national defense industry, automobile industry, general machinery, metal processing industry, electronic industry and other industries. The Company’s machine tools can be divided into the gantry vertical integrated machining centers and the C-type vertical integrated machining centers, or, by machines, into:

‧ Vertical Machining Center
‧ Gantry Vertical Machining Centers.

‧ Bridge Type 5-Face Machining Center
‧ High Speed Machining Center
‧ Horizontal Machining Centers
‧ Horizontal High-speed Machining Centers.
‧ Horizontal Boring Mills
‧ 5-Axis Machining Center
‧ Automation
New products under development

Computer Numerical Control (CNC) machine tools are one of the new industries actively promoted by the government in recent years, of which precision CNC lathes and machining centers with higher added value are key development projects; in the early days of the Company, medium and large precision machining centers were developed as the core to meet the needs of large machine part and mold processors. In recent years, small and medium CNC vertical machining center series products have also been developed to meet the market needs of small and medium object machining and molds. In the future, the Company not only continues to improve the competitiveness of the original medium and large gantry machining center series products and small and medium CNC vertical machining center series products, but also strives to develop different models of CNC horizontal boring mills and CNC five-axis machining centers, and plans to develop the following new products:

‧ Gantry type high speed 5 axes machining center.
‧ Horizontal full moving column high-speed five-axis machining center.
‧ Milling machine machine 5 axes machining center.
‧ Development of horizontal and diagonal full-automatic universal joint.
‧ VP6 high-speed gantry machining center for aerospace structures.
‧ Development of EH5 high-speed horizontal five-axis machining center.
‧ A+/AF series modular design and development.
‧ Design and development of AE new integrated machining center series.
‧ Development of AHM800 horizontal machining center.
‧ Development of Z800 gear spindle head.
‧ Development of AC full-automatic universal joint.
‧ Development of SP4 high-speed gantry aluminium machining center.
‧ Development of BS-Φ130 boring axis.
‧ Development of 16K internal spindle.
‧ Development of the moving column moving beam machining center.
‧ Design and development of AU-680 high-rigidity moving column five-axis machine.
‧ Development of VP-xx16 gantry integrated machine (lockable).
‧ Design and development of X-A2 biaxial head.
‧ Development of machine tool intelligent energy-saving chip removal system.

‧ Development of intelligent information APP extranet function.
‧ Development of intelligent information diagnosis function.
‧ Development of AF-1600Ⅱ vertical integrated machine.
‧ Development of AF-1000Ⅱ vertical integrated machine.
‧ Design and development of FCV-620Ⅱ economic moving column five-axis machine.
‧ Design and development of five-axis standard table and miller table.
‧ Design and development of C-type #40 and small #50 gear spindle speed improvement.
‧ Development of the tray storage system of the five-axis machine.

(II) Industrial profiles:

The status quo and development of the machine tool industry:
(1) Industry status

According to customs export statistics, the total export value of Taiwan machine tools from January to December 2023 reached US$2,599,440 thousand, a decrease of 14% over the same period last year, of which the export value of cutting machine tools was US$2,204,120 thousand, a decrease of 13.3% over the same period last year. The export value of forming machine tools was US$395,320 thousand, a decrease of 17.7% over the same period last year.

Ranked by export countries, China (including Hong Kong) ranked first from January to December 2023, with an export value of US$711,930 thousand, accounting for 27.4% of the total export value, a decrease of 11.9% over the same period last year. The US ranked second, with an export value of US$377,820 thousand, accounting for 14.5% of the total export value, a decrease of 15.1% over the same period last year. Turkey ranked third, with an export value of US$289,790 thousand, accounting for 11.1%, an increase of 13.9% over the same period last year. India ranked fourth, with an export value of US$120,690 thousand, accounting for 4.6%, an increase of 29.1% over the same period last year. Netherlands ranked fifth, with an export value of US$84,340 thousand, accounting for 3.2% of the total export value, a decrease of 22.4% over the same period last year.

Other countries are as follows: Germany accounted for 3.0%, a decrease of 1.2%. Italy accounted for 2.8%, a decrease of 29.8%. Vietnam accounted for 2.7%, a decrease of 39.0%. Thailand accounted for 2.6%, a decrease of 23.2%. Japan accounted for 2.6%, a decrease of 15.4%. The ranking of export countries from January to December 2023 is as follows:

Statistical analysis table of main export countries of Taiwan machine tools in 2023

		Unit: US$thousand;%	Unit: US$thousand;%	Unit: US$thousand;%	Unit: US$thousand;%	Unit: US$thousand;%
Rank	Export country	2022years		2023years		Rate of change %
		Export value	%	Export value	%
1	China (including HongKong)	808,392	26.7	711,934	27.4	-11.9
2	USA	445,172	14.7	377,817	14.5	-15.1
3	Turkey	254,359	8.4	289,793	11.1	13.9
4	India	93,494	3.1	120,688	4.6	29.1
5	Netherlands	108,716	3.6	84,343	3.2	-22.4
6	Germany	79,144	2.6	78,218	3.0	-1.2
7	Italy	104,609	3.5	73,450	2.8	-29.8
8	Vietnam	116,909	3.9	71,366	2.7	-39.0
9	Thailand	87,869	2.9	67,474	2.6	-23.2
10	Japan	78,649	2.6	66,555	2.6	-15.4
Others		845,947	28.0	657,801	25.5	-22.2
Total		3,023,260	100.0	2,599,439	100.0	-14.0

Data sources: Monthly customs import and export statistics report, Taiwan Machine Tool Foundation

Analyzed by the type of cutting machine tools, electric discharge machining, laser beam machining and other non-traditional machine tools decreased by 8.3%, integrated machines decreased by 16.5%, lathes decreased by 4.9%, drilling and boring machines, milling machines, and tapping machines decreased by 22.0%, and grinding machines decreased by 21.8%. Planning, sawing, drawing and gear machines decreased by 8.1%. In forming machine tools, forging and stamping machines decreased by 16.5% and other forming machine tools decreased by 21.9% compared to the last year. The statistical analysis of export from January to December 2023 is shown as follows:

Statistical analysis table of export of Taiwan machine tools in 2023

Unit: US$ thousand; %

Product	2022years	2022years	2023years	2023years	Rate of change %
	Export value	%	Export value	%
Electric discharge machining, laser beam machining and other non- traditional machine tools	182,508	6.0	167,396	6.4	-8.3
Integrated machines	1,044,079	34.5	871,641	33.5	-16.5
Lathes	685,345	22.7	651,519	25.1	-4.9
Drilling, boring, milling, and tappingmachines	205,623	6.8	160,444	6.2	-22.0
Grindingmachines	277,786	9.2	217,272	8.4	-21.8
Planning, sawing, drawing and gear machines	147,743	4.9	135,844	5.2	-8.1
Subtotal of cuttingmachine tools	2,543,084	84.1	2,204,116	84.8	-13.3
Forgingand stampingmachines	376,638	12.5	314,411	12.1	-16.5
Other formingmachine tools	103,538	3.4	80,912	3.1	-21.9
Subtotal of formingmachine tools	480,176	15.9	395,323	15.2	-17.7
Subtotal of machine tools	3,023,260	100.0	2,599,439	100.0	-14.0

Data sources: Monthly customs import and export statistics report, Taiwan Machine Tool Foundation

Correlation between the midstream and downstream industries:

The relationship between the upstream, midstream and downstream machine tool industries is extremely close. Raw materials required for production include numerical controllers, ball screws, casts, hardware parts and other components, which are generally manufactured by the subcontractor and part processer. Then these components are integrated by specialized division of labor and assembled into the machine tool. The machine tool is a machine for making machinery, and also an indispensable machine and equipment for basic machining and precision machining. The machine tool industry, which plays a key role in industrial development, has a close relationship with the national defense industry, automobile industry, and aerospace industry.

Since the machining process is complex, and a large number of components are required in the machine tool industry, there are several developments (for example, key components are purchased from foreign countries, general parts are processed by the subcontractor, the central plant is responsible for assembly, testing and other work) in Taiwan machine tool industry, and machining is integrated by specialized division of labor. The correlation between the upstream, midstream and downstream machine tool industries is shown as follows:

==> picture [360 x 276] intentionally omitted <==

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

Upstream Midstream Downstream
Raw materials Design, machining Mechanical
and manufacturing manufacturing
Steel casting iron National defense
components industry
Aerospace
Driving elements
industry
Integrated
machines
Automobile
Hardware parts
industry
Semiconductor
Precision bearing
Computer industry
numerically
controlled lathes
Oil and air pressure Metal machining
components industry
Electrical control
Rail vehicle industry
components
----- End of picture text -----

3. Product development trends:

(1) Technological development trends

The technology of machine tools in Taiwan continues to be high-speed, high-precision and high-composite, mainly in improving the manufacturing process of components, enhancing productivity and reducing costs. Therefore, high-precision, high-speed and open controllers and composite and systemic trends have become a common goal for machine tool manufacturers. In terms of high speed and precision, high-speed feeding systems and high-speed spindles are developed to enhance the machining speed, which is conducive to the improvement of production efficiency; as the production efficiency is improved, the roughness of the machining surface should also be improved, so the high-speed capability should also be considered; in terms of open controllers, with the rapid development of computers and information processing, controllers will make the function of machine tools more intelligent, so as to improve the performance of the machine and reduce the needs and costs of production manpower; in terms of composite trend, to save space, reduce costs and deal with the need for a small number of diverse and complex workpieces, multifunctional composite machines will be developed to

reduce the space for the machine, thus reducing workpiece moves and improving machining precision; in terms of systemic trend, flexible machining, automated process, intelligent monitoring and standardized interfaces will be developed.

(2) Product development trends

At present, there are two development trends in the Computer Numerical Control (CNC) machine tool market. First, machine tools of standard specifications occupy the lowprice markets with mass production and low costs; second, high-precision and highquality machine tools are produced by the technological level, and occupy the high value added markets with the price-performance ratio; high value added machine tools will be of high speed, multiple functions, environmental safety, quality stability and product stability in the future, and machine tool manufacturers are actively improving the production process, and develop high-speed spindles, high-speed cutting and highprecision products to improve competitiveness.

Product competition

The Company’s current products include gantry machine products and small C-type machines, and the competition of the products is described as follows:

In the gantry machine products, the processing of such products is complex, and these products cannot be mass-produced since the specifications vary with customer requirements and thus are diverse and in a small quantity. At present, companies producing similar products worldwide include WALDRICH SIEGEN in Germany, and SNK, OKUMA, TOSHIBA and MITSUBISHI in Japan, which occupy market segments with different prices from domestic machine tool manufacturers due to their high unit prices.

In the C-type machine products, with large market demands, there are a number of manufacturers for the same type of products at home and abroad, and such products vary in functions and properties and capture different market segments. The products mainly include special machines and multifunctional machines. At present, the Company’s C-type machines are mid-range multifunctional machines, with its main competitors from the same industry in South Korea, Italy and other countries. Since the labor cost in Taiwan is lower than that in South Korea, Italy and other countries, Taiwan is more competitive in such products than manufacturers of the same grade in other countries. However, influenced by exchange rate fluctuations, the competition will increase or decrease as there is a large change in the exchange rate of the New Taiwan dollar or the competitor.

In the five-axis machines, with the growth in market demands and large investment of domestic and foreign competitors in research and development, the Company also invests in the development of small, medium and large five-axis machines. At present, companies producing similar small and medium products worldwide include Hermle, and DMG&MORI in Germany, and those producing large products include SNK, OKUMA, TOSHIBA, and MITSUBISHI in Japan. These companies capture market segments with different prices from domestic companies due to their high unit prices, while the domestic

competitors’ products are not mature, and thus may have considerable opportunities in market competition.

(III) Research and development:

Technical level of the business affairs Since its inception, the Company has focused on the R&D, production and manufacturing of machine tools, with its main technology from long-term cultivation of talents, technology establishment, experience inheritance, and self-development of products, and main R&D cadres have the ability to develop products and maintain close cooperation with upstream component suppliers. As the design and manufacturing of machine tools require long-term experience accumulation and planning ability, the Company technologically works with the Industrial Technology Research Institute (ITRI), a specialized machinery research institute in Taiwan, and the Precision Machinery Research & Development Center for product development and improvement.

By means of years of experience in product R&D, the Company has built a complete R&D system and can develop the product process capability for customer application demands to meet customers’ demands for product quality and maintain market competitiveness in production technology that is superior to the same industry.

Research and development status
In recent years, the Company has focused on the improvement of production efficiency and process capability, and thus the development of high-range products. In the future, the Company’s R&D interest will include continuously reducing production cost, and actively developing in the fields of aerospace, 3C industry, light metal machining industry and precision mold machining industry. The products for development in the near future are as follows:
(1) Small and medium horizontal boring mills
- Small and medium CNC horizontal three-axis machines, as the main body, are equipped with rotary high payload index tables and self-made boring spindles to cope with the precision machining applications; in addition, a table exchange mechanism is developed to reduce downtime and improve work efficiency.
(2) Large horizontal boring mills
- The main market is large turbine parts machining industry, large mechanical precision parts, large pipe valve parts and wind power parts manufacturing industry. The product features include ultra-high payload table, ultra-large work stroke, ultra-large spindle output torque and three-axis travel module design that can be matched according to customer needs.
(3) Large gantry type five-axis machining center In response to the trend of large product development in the market, the Company will modify super-large crown block gantry machines, and improve the machining

efficiency and quality; it will add two rotary spindle heads to the large crown block gantry to improve products’ machining performance, and minimize the number of turns of large workpieces.

(4) Small high-speed CNC vertical machining center

Small CNC vertical three-axis machines, as the main body, are optimized in structure and performance to meet the parts machining needs of the 3C industry and ensure high efficiency, high precision and low cost.

(5) Intelligent software development

In response to customers requirements for strict machining, including size, shape, surface brightness and reduced processing time, the Company will continue to develop the most appropriate machining parameters, compensation function, anti-collision simulation software and machine status monitoring function to meet the needs of different industrial groups, improve customers’ satisfaction with products, and enhance product competitiveness.

(6) Development of high-precision optical mounting and correction system of large machine tool

To meet the product needs of the large object processing market, the Company will develop ultra-large stroke machines. To satisfy the needs, and improve product precision and value, the Company advances precision assembly technology, and participates in “Development of High-precision Optical Installation Calibration System for Large Machines and Tools”, an industry-university cooperation plan led by National Formosa University.

(7) Development of large moving column moving cross rail gantry five-face machining center

To meet the product needs of the large object processing market, the Company will develop ultra-large moving column moving cross rail gantry five-face machines to meet the processing needs of large, high-torque and high-rigidity products.

(8) Development of gantry friction stirring welder
Based on the “friction stirring welding technology”, a new technology transfer by the Company and TWI (The Welding Institute), UK, and the current gantry machine framework, the Company can enter the welding market of shipbuilding, aerospace and automobile industries. At present, no manufacturer in Taiwan develop this type of functional machines, and the Company first enters the market to capture the blue ocean market, increase product lines and improve its competitiveness.

The Company, which pays particular attention to the R&D of products, forms the product R&D team from time to time, in which the R&D personnel are responsible for the development of new products, improvement of production process and technical guidance.

R&D expenditure in the latest year

The ratio of the Company’s R&D expenditure in the latest year in the operating revenue is as follows:

&D expenditure in the latest year he ratio of the Company’s R&D expenditure in the latest year in the operat s follows:	&D expenditure in the latest year he ratio of the Company’s R&D expenditure in the latest year in the operat s follows:	&D expenditure in the latest year he ratio of the Company’s R&D expenditure in the latest year in the operat s follows:	&D expenditure in the latest year he ratio of the Company’s R&D expenditure in the latest year in the operat s follows:
Unit: NT$ thousand
Year Items	2022	2023	2024 Q1
Research and development expenses	61,671	53,729	21,210
Operatingrevenue	3,100,517	2,361,917	362,524
Ratio in operatingrevenue	1.99%	2.27%	5.85%

Note: The data for the First Quarter of 2024 has been reviewed by CPAs

To meet the market demand and improve product competitiveness, the Company especially attaches importance to the R&D of products, investing in NT$61,671 thousand and NT$53,729 thousand in 2022 and 2023, which accounted for 1.99% and 2.27% of the operating revenue. The investments are mainly used to develop new products, modify the functions of the original products, test new products and develop components. The Company continues to attract R&D talents, and add R&D equipment and relevant application software. In the future, the R&D funds are expected to stably increase with the revenue scale.

Successfully developed technology or product

The Company’s R&D results are developed based on more than 20 years of production technology and constantly modified according to customers’ actual needs, so as to improve product performance and gain the competitive advantage in the market. The R&D results of the Company in the latest years are listed as follows:

Year	Successfully developed technology or product
2008	1. Complete the development of the optimal cutting parameter “I Console”, and facilitate the control interface. 2. Development of BL2018-S/14. 3. Development of new five-face spindle head. 4. Development of AF-1250 5. Development of A+1800/2100/2500 6. Development of FMV-45U
2009	1. Development of MVP-5032 moving cross rail machining. 2. Development of ultra-large crown block gantry machines: LG-10070, LG- 20070. 3. Development of a full range of AF linear guide vertical machines. 4. Development of BL high payload rotary tables, Z-axis 1.4m gear spindles, LP five-face machines, Y-axis screw vibration proof mechanisms, and APC units.

Year	Successfully developed technology or product
2010	1. Development of LV-6030 gantry type composite five-axis machine. 2. Development of small and medium gantry five-face machine series: LP- 2515/3016/4016/5016. 3. Development of a full range of large bridge type five-axis machine MEGA 5P. 4. Development of 8000rpm high-torque oil mist internal spindle.
2011	1. AF510 small high-sped CNC vertical machining center. 2. MB1512 medium horizontal boring mills. 3. Development of a full range of large gantry type five-axis machines MEGA 5G.
2012	1. HTP high-rigidity gantry machining center. 2. Gantry friction stirring welder. 3. Medium LP gantry type integrated machining center.
2013	1. Development of new AC automatic universal joint. 2. New fixed column gantry machining center. 3. HD bridge type machining center. 4. FCV-620 5-axis vertical machine. 5. AH630 ultra performance horizontal machining centers.
2014	1. Development of horizontal head center effluent function. 2. Development of gantry X-axis nut swivel feeding system. 3. Development of MVP-8040 moving cross rail machining. 4. Development of EMENA head-changing spindle system. 5. AH500 ultra performance horizontal machining centers. 6. Development of MEGA5 P2520 high-speed bridge type five-axis machine. 7. FMV99 improvement and optimization. 8. Appearance aesthetics metal plate of C-type machine. 9. High-speed gear spindle of C-type machine. 10. MB2012 medium horizontal boring mills. 11. Development of FV960 vertical five-axis machine.
2015	1. Proposal for modification of the MEGA5G feeding system. 2. Development of AF510#30 meantime tool charging system. 3. Development of machines for CAM (special machines for automation system components). 4. Optimization and development of FCV800 gantry type spindle machining center. 5. Development of MEGAxx20 series bridge type five-axis machines. 6. The development of SP machine side-mounted tools is more in line with the economic market demands. 7. Development of 760 long-nose gear spindle. 8. Increase air curtain function to thegear spindle.

Year	Successfully developed technology or product
	9. Low cistern improvement for SP machine. 10. Optimization and development of the metal plate appearance and aesthetics of HD high-rigidity gantry machines. 11. Comprehensive optimization and development of new VP bridge type machine (including the optimization and development of appearance and aesthetics). 12. Optimization and development of AH series chip removal system. 13. Optimization and development of FCV620 moving column five-axis machining center.
2016	1. Gantry type high speed 5 axes machining center. 2. Horizontal full moving column high-speed five-axis machining center. 3. AC full-automatic universal joint. 4. Five-axis joint. 5. Large moving column moving cross rail gantry five-face machining center. 6. Milling machine machine 5 axes machining center.
2017	1. Development of super traveling column machine. 2. Development of high-speed internal spindle. 3. Development of long-nose internal spindle. 4. Development of the high-rigidity 90-degree horizontal head. 5. Development of high-speed central effluent extension head. 6. Improvement of the number of tools for AT510 small high-speed CNC vertical machining center. 7. Development of automobile molds for FCV620-H moving column five-axis machine. 8. Development of self-made five-axis head (A5+M specification). 9. Development of large C-type machine equipped with special automation system for track machining.
2018	1. Development of vertical and universal joint automatic universal joint. 2. Development of European 12,000RPM internal spindle. 3. Development of the RG gantry type five-axis machining center. 4. Development of the new-generation manual horizontal joint and universal joint. 5. Development of face grinding additional head. 6. Development of new-generation A+/AF vertical integrated machine. 7. AHM-800 horizontal integrated machine. 8. Development of AE-1000 vertical part machine. 9. Development of VP6012 gantry high-speed aluminium structural parts machining center. 10. Development of the EH5-500 horizontal five-axis machine.

Year	Successfully developed technology or product
2019	1. Development of the FCV-800II new-generation five-axis machine. 2. Development of φ110 boring spindle head module (MB). 3. Development of quick mold change (efficiency enhancement) module of the machining department. 4. Development of AC full-automatic universal joint. 5. Development of SP4 high-speed gantry aluminium machine. 6. Development of BS-Φ130 boring axis. 7. Development of 16K internal spindle.
2020	1. Development of the moving column moving beam machining center. 2. Development and release of the intelligent information control system product. 3. Development of production management function of the intelligent information control system. 4. Development of the AD-550/500 two-spindle C-type machine. 5. Development of φ110 boring spindle head module (AHM specification). 6. Development of CF-1060 efficient/rigid vertical machine. 7. Proposal for optimization of NA+ gear spindle (small) (#50-6K is enhanced to 8K). 8. Development of LH-119 gear spindle (assist in Yiquan). 9. Development of adaptive cutting function. 10. Development of wireless handle function. 11. Development of MEGA5P and RG5 five-axis machine.
2021	1. Optimization and development of the one-index AC full-automatic universal joint. 2. Optimization and development of the 4,500RPM horizontal joint. 3. Integration of the LB/EP fixed column gantry machine. 4. Development of tool management function. 5. Development of tool monitoring function. 6. Development of the diagnostic function of the machine.
2022	1. Development of VP-type 12KB internal spindle. 2. Electrical design of the self-made tool changer. 3. Development of Z800 hard track short gear spindle. 4. Development of the AU-680 high-rigidity moving column five-axis machine. 5. Development of VP-xx16 gantry machine (lockable). 6. Development of AHM-800-APC horizontal pallet changer. 7. Design and development of X-A2 biaxial head. 8. Development of the intelligent spindle thermal displacement deep learning compensation technique. 9. Development of the intelligent tapping deep learning automatic dispatch technique.

Year	Successfully developed technology or product
	10. Development of intelligent information control system platform (FANUC controller).
2023	1. Intelligent digital communication box. 2. Intelligent information APP. 3. Development of the Z800 linear guide vertical junction spindle box. 4. Improvement of vertical and horizontal tool arms in tool storage. 5. Development of the traystorage system of the five-axis machine.

(IV) Long- and short-term business development programs:

Since its inception, the Company has actively expanded high-precision and automated production equipment to improve production efficiency, production capacity and technical level, develop high value added products, and create operating benefits. The short-term and long-term development programs of the Company are described as follows:

Short-term business programs
(1) Marketing strategies:
- Strengthen the customer service quality system The Company establishes two-way communication channels between the Company and customers, strengthens the training of marketing and customer complaints personnel, promotes good customer service quality, and provides aftersales services for products, and prioritizes information reflected by customers, striving to meet customers’ satisfaction and enhance the long-term relationship with customers.
- Obtain orders of high value added products to enhance competitive advantages In addition to customers in long-term cooperation, the Company strengthens the development of domestic potential customers to expand business space, and actively obtains orders of high value added products, so as to increase the proportion of medium- and high-priced machine tools, obtain market segments with other companies in the same industry and enhance competitive advantages.
- Disperse customer sources and adjust product structure and channel The Company consolidates and expands customer sources, while maintaining good cooperation with existing customers. In addition, the Company, in response to market demands and industrial development trends, also adjusts the product structure and actively develops diversified sales channels, and wins orders from domestic and foreign customers with its production flexibility and product quality and disperses order sources to reduce the operating risk of changes in industrial prosperity.

(2) Production strategies
- Mass-production and modularization of machine tools In response to the need for shorter market delivery, the Company strengthens the mass production and modularization of machine tools to meet customers’ need for multifunctional applications and improve production flexibility, while sharing of components can reduce the inventory risk of stocks.
- Upgrade the assembly level of the mainland plants The Company upgrades the assembly level of its mainland plants, cultivates local mechantronic talents, and develops its own-brand products to strengthen product cost competitiveness and meet mainland customers’ need for local delivery.
(3) Development orientation of product
- Supply ability of complete product lines In addition to the development of large precision machine tools, the Company also develops small and medium CNC vertical machining centers and has the supply ability of complete product lines in response to customer demands and all-round market needs, so as to meet customers’ need for one-stop shop.
- Enhance the integration of high-speed machine tools and application software To comply with the trend of high-speed development in the market, the Company will develop and modify small and medium high-speed machines, improve product machining efficiency, including size, shape and surface brightness, and shortens machining time; it will also develop the most appropriate parameter software, and meet the needs of different industrial groups and upgrade the competitiveness of small size machines by optimizing parameters.
(4) Operating scales and financial cooperation
- Implement the management system, and improve administrative efficiency The Company will effectively plan its management system, and implement the computerization of enterprise information to perfect the information integration, analysis and customer services; the Company will also promote the performance management system to improve the administrative efficiency.
- Strengthen financial management, and properly use funds
Long-term business programs
(1) Marketing strategies:
- Expand overseas markets and enhance international reputation The Company will actively expand the international market, and attract orders from foreign customers with good reputation; it will also set up plants in the mainland to develop emerging markets and increase the sales percentage of overseas markets to establish a global marketing network and realize market diversification.
- Integrate resources across departments to ensure competitive advantages

By improving the customer service mechanism and integrating resources across departments, the Company improves the flexibility and mobility of the production process, and enhances its professional image to get customers’ trust, and then it expands its performance and profits to ensure the competitive advantages.

(2) Production strategies
Enhance production efficiency and improve product quality Based on the product demands of domestic and foreign customers, the Company proposes the production plan, plans the development progress of new products, and accelerates the commercialization of products, ensuring that it can achieve the operating revenue target; the Company also effectively utilizes the production capacity to improve its overall production efficiency.
Adjust production structure in response to market supply and demand In the future, the Company will adjust the production structure according to the changes in market supply and demand and business cycle to optimize the production flexibility; the Company will also form a strategic alliance with upstream and downstream manufacturers, and strengthen the division of labor system to improve the profitability.
(3) Development orientation of product
Improve the ability to self-make the key parts The Company will continue to train electronic control system talents, and develop key components of machine tools, such as precision bearings, with domestic technical research institutions, to reduce its dependence on foreign suppliers.
(4) Operating scales and financial cooperation
Uphold the concept of sustainable development, and expand the operating scale Adhering to the concept of sustainable operation, the Company actively cultivates R&D talents, and builds talents needed for the long-term development of the Company and accumulate R&D strength based on industry-university, dual system of vocational training, so as to improve the global competitiveness. In addition, combined with the long-term marketing strategy and production policy, the Company improves the production automation and product quality, and expands the operating scale and business items to increase market shares.

II. Markets, production and marketing in summary
(I) Market analyses
1. Sales regions of key products

Unit: NT$ thousand

			Unit: NT$thousand	Unit: NT$thousand
Year Region	2023		2022
	Amount	%	Amount	%
Taiwan	279,683	11.84	806,651	26.02
Mainland China	1,045,941	44.28	1,097,559	35.40
Asia	172,662	7.31	179,114	5.78
USA	300,399	12.72	270,455	8.72
Turkey	217,565	9.21	195,875	6.32
Italy	174,453	7.39	97,816	3.15
Other countries	171,214	7.25	453,047	14.61
Total	2,361,917	100.00	3,100,517	100.00

Market share

Due to the wide variety of machine tool products and great differences in functions, specifications and applications, it is hard to objectively count and analyze identical products. The Group’s main products belong to the metal cutting machine tool manufacturing and repairing industry of the industrial machinery, with a sales value of NT$2,361,917 thousand in 2023.

The future market supply and demand and growth potential
(1) Future market supply

Machine tools are used in all walks of life. In addition to traditional automobile and motorcycle industry and household appliance industry, machine tools are also mainly used to manufacture and produce components in high-tech industries, such as information industry and aerospace industry, so the range of application is extremely wide. With the development of global intelligent and unmanned factories, the machine tool industry will develop to be high-range and complex in the future. In addition to continuously capture the existing market with cost advantages, the Company also plans to gradually integrate the surrounding automated components through domestic information electronic technology support and cooperation with academic units, so as to meet the intelligent and plant output of machine tool products.

(2) Future market demand

The terminal application industries of machine tools are all-inclusive. In addition to automobiles, motorcycles, and precision mechanical part processing, it also includes the electronic industry such as semiconductors and flat panel displays, and wind power generation, solar photovoltaic and LED markets in the green energy industry. It was pointed by TMBA that, as for the estimated main export markets of Taiwan’s machine tools in 2024, the inflation and rise in interest rate in 2023 led to consumption

shrink in the USA, and its investment in equipment assets tended to be conservative, and plus the president election to be held in the USA this way, there would be more variables. Although the European market has inflation slow-down and prosperity recovery, the energy crisis has not been lifted, and the EU Carbon Border Adjustment Mechanism (CBAM) has begun to impose carbon tariffs, etc., showing a slow and recovering status of the consumption demand for machine tools and equipment.

As for the Mainland China market, subject to the bubble of the real estate market and the lack of consumer confidence, etc., there is a weak private investment demand, which also affects the people’s willingness to purchase equipment. In addition, India, Vietnam and Thailand in Southeast Asia benefited from the supply chain restructuring after the COVID-19, the transfer of production bases and the rise in domestic manufacturing demand, having a great increase in consumer demand for machine tools.

(3) Future market growth

According to analysis by TMBA, the prosperity of global machine tool industry in 2024 was the same as that in 2023, where, the export value of machine tools in 2023 was US$2.6 billion, with an annual decrease of 14%, the output value of the global machine tool industry in 2024 will increase from US$74.32 billion to US$78.04 billion, and the output value of Taiwan’s machine tools will increase from US$3.31 billion in 2023 to US$3.37 billion.

The topic for 2050 carbon neutrality continues to develop, and new equipment needs to be invested in this industry in response to today’s topic for carbon neutrality; we believe that the machine tool market will have the opportunity to usher in a new wave of growth in the future.

4. Competitive niche

(1) The Company focuses on business operation, and its image is well recognized For more than 30 years since its inception, the Company has an excellent reputation and image in its private brand “AWEA”. The Company has adhered to the high-quality policy and strived to improve customer satisfaction over the years, being certified by the international quality management system ISO 9001 and the environmental management system ISO 14001 in 1996 and 1998, respectively. The products comply with the EU CE safety regulations. With strict requirements on product quality and technical level, the Company has constantly developed new products, and established complete product lines, which enables itself a considerable competitive advantage in the machine tool market.
(2) The operation team has abundant professional experience Members of the Company’s current operating team has focused on the machine tool industry for years. The main cadres have rich experience in the industrial environment changes, product development trends, manufacturing, marketing business, and other

aspects. In recent years, the Company’s operating revenue and profits have been growing year by year, and the operating team has excellent professional quality and operating performance.

(3) The R&D ability is strong, and the technical level of products is high The Company, which is actively engaged in the research and development of process technology, also cooperates with the Mechanical and Mechatronics Systems Lab., ITRI and the Precision Machinery Research & Development Center to obtain technology transfer and the latest product information, so that the Company has competitive advantages in the development of production technology. The Company makes creative efforts on an established basis. It has published a number of R&D results over the years, which has been affirmed by all levels of government agencies and professional associations, and won several certifications, awards and patents, which shows that the product quality and technical capacity have reached the international level.
(4) Products are produced flexibly, and the positioning and segmentation strategy is proper

To meet the needs for customized products and shorter delivery, the Company continues to improve the added value of products, and establishes the outsourcing system and modularized production technology to reduce the production cost and delivery time. In addition, the Company positions its products in the medium-and highrange machine tool markets with high added value with complete product combination and strong product development capacity, and gains a foothold in the medium-and high-range machine tool markets controlled by Japan and Germany for a long term with its price advantages, while avoiding price competition within the industry.

(5) Sales bases are expanded at home and abroad, and perfect after-sales service is provided

The Company works with distributors with sales and maintenance ability to provide logistics and technical support for distributors and improve their marketing and service ability, so that they can better expand overseas sales markets, provide real-time aftersales services and establish a good brand image.

Advantages and disadvantages of development and countermeasures
(1) Advantages
- The industrial prospect continues to develop and the Taiwan industry remains competitive
  - The mechanical industry is one of ten emerging industries with high added value and high technology planned by the government, and electronic information and automobile and motorcycle industries thriving in such regions as the Mainland China and Southeast Asia provide excellent mechantronic integrated resources and stamping equipment markets for the mechanical industry. After the ChinaUnited States trade war, Taiwan companies replace some American companies for

purchasing goods from China, and Taiwanese companies return to Taiwan to expand factories, which increases the machine tool demands of the Taiwan market.

There are multiple channels for the sales of private brands, ensuring extensive sales bases

The Company’s products of the private brand “AWEA” are sold worldwide, mainly in America, Asia and Europe. In the future, the economy in European and American regions continues to grow, and the Company should perform more well. Meanwhile, Asian emerging markets Mainland China and India drive the demands for machine tools, which are also the future niche market and growth driver of the Company. In addition, the Company disperses its markets through direct selling, distribution, agency and other channels to promote business, which also contributes to the steady growth of sales performance.

Excellent product quality is deeply recognized by the market

Since its inception, the Company has spared no effort in quality inspection and technology improvement, based on which it not only is certified by the international quality management system ISO 9001 and the environmental management system ISO 14001, but also complies with EU CE regulations, with its production process and product quality at the international level. In addition, the Company has also won several awards, such as Taiwan Excellence Award, Good Design Award, Taiwan SMEs Innovation Award, National Award of Outstanding SMEs, and Industrial Technology Advancement Award, which have positive effect on the image and international competitiveness of the Company’s products of the private brand “AWEA”. Therefore, the Company is highly trusted by customers.

Unique process innovation capability

The Company has focused on the development of new products, and customized, diversified and small-scale production. It has appointed excellent senior engineers to constantly improve the process and manufacturing capacity, such as simple and rapid process change, flexible process management, and real-time production support, and immediately and rapidly used process innovation technology to modify the production lines, ensuring rapid delivery and stable quality.

 Highly vertical division of labor between the central factory and the subcontractor The Taiwan machine tool industry has a complete satellite system. In addition to a few key components supplied by foreign manufacturers, most of other components can be self-produced. The Company’s mechanical parts are supplied by the subcontractor engaged in casting machining and component production, which cooperates with the Company for a long term, and the production process is efficient and flexible.

(2) Disadvantages and countermeasures
Shipping port congestion and rising energy price make the ocean freight several times higher than that in the normal period.
- Countermeasures:

In response to this trend, the Company actively modifies the design of machines, and designs lockable machines to reduce the transportation cost and improve the competitiveness of products.

Domestic labor wages and production cost increase It is hard to cultivate domestic technical talents and there is a shortage of experienced workers. In addition, the government has gradually adjusted benefit policies, adopted national health insurance, and raised basic pay in recent years, which results in a gradual increase in operating costs. Countermeasures:

The Company actively strengthens the training of educational technology in employees, and improves the whole working environment to reduce the employee turnover rate. In addition, the Company also enhances production efficiency, increases investment in automated equipment and outsourcing work, reduces direct demands for human resources, improves employee efficiency and reduces production costs.

Some raw materials rely on foreign plants

At present, the technology of key components of machine tools in Taiwan, such as numerical controllers and precision bearings, remains in the hands of manufacturers in Japan, Germany and other countries. The high proportion of these components in the cost will be unfavorable to the future development and international competitiveness of the industry.

Countermeasures:

The Company reduces the production cost of key components by expanding production capacity and adopting bulk purchase, and maintains cooperation with several suppliers by dispersing supply sources, so as to reduce the risks of excessive concentration of supply sources and price fluctuations.

The domestic sales market is small, and the product competition is fierce Compared to European and American countries, Taiwan features a relatively small domestic market in the machine tool industry, and fierce competition due to highly homogeneous products in the same industry, thus forming a special phenomenon of installment sales, which has an adverse effect on the operation of the Company. Countermeasures:

In order to avoid fiercely competitive domestic trading conditions, the Company has, in recent years, implemented the product segmentation policy to avoid the price war in low-priced products in the same industry; it has also actively

expanded overseas markets, widely set sales service bases, enhanced the marketing and maintenance ability of agents, and established close cooperation with other countries to expand the operating scale of overseas markets and disperse the risk of excessive concentration of sales in Taiwan. In addition, by developing or participating in technical cooperation programs of research institutions, the Company has developed high-precision, automated, highperformance products to improve the added value of products and create market segments.

(II) Manufacturing process and key purposes of our principal products
Key purpose

The Company is mainly engaged in the development, design, production, manufacturing, purchase and sales, and other businesses of Computer Numerical Control (CNC) machine tools, and belongs to the metal cutting machine building industry in industrial machinery. The machine tool industry is technology-intensive, high value added, and highly interconnected to other industries, especially the mechanical industry, national defense industry, automobile industry, and aerospace industry. The products are widely used for precision component machining, automobile metal plate stamping molds, plastic molds, and aerospace part machining. The key purposes of the Company’s main products are as follows:

Main products	Key purpose
Gantry Vertical Machining Center	Part and mold machining of machine tools and industrial machinery, automobile and motorcycle molds, plastic molds, petrochemical industry, power plant boiler parts and aerospace military parts, and household appliance industry
Gantry Five-Face Machining Center	Multifaceted machining of large precision parts in the above industries
Gantry Fixed Column Machining Center	Part and mold machining of machine tools and industrial machinery, automobile and motorcycle molds, plastic molds, petrochemical industry, power plant boiler parts and aerospace military parts, and household appliance industry
Gantry Moving Column Machining Center	Large automobile and motorcycle molds, petrochemical industry
Bridge Type 5-Axis Machining Center	Aerospace parts, complex curved surface parts machining
Moving Column Horizontal Boring and Mills	Medium and large precision axis hold machining, medium and large parts machining
C-type Vertical Machining Center	Applicable to light metal machining industry, small and medium mold industry, and automobile parts and 3C industry

2. Product manufacturing process

Production plan	Components Cast/Raw materials	Machining Procurement of purchased parts	Incoming quality inspection
Painting	Mechanical assembly	Electronic-controlled assembly	Mechantronic adjustments
Finished product quality Inspection	Packing/ Shipping	Installation and acceptance at the customer site	After-sales services

(III) Supply status of major raw materials

The main raw materials of the Company’s products are controllers, castings and linear tracks. In recent years, most of the controllers have been purchased from domestic manufacturers, which will have price differences due to different brands and software functions. However, the Company and the suppliers are in good cooperation, although the price has increased this year, the suppliers are still willing to offer special price to us, without too much fluctuation. The suppliers of castings and linear tracks are all our long-term cooperative partners, and although the purchase prices will be subject to slight fluctuation due to change in international price of raw materials and difference in specifications, on the whole, the Company’s can obtain sufficient main raw materials from a number of domestic and foreign suppliers that are in long-term cooperation with the Company, so the Company can maintain both the price and the quality in a reasonable and stable way. It is expected that the overall supply of raw materials in 2024 will be stable.

(IV) The names of any customers that have purchased 10% or more of the Company’s gross purchases (sales) in either of the last two years, and the amount and proportion, and set forth the reasons for changes in increase or decrease.
The major customers that have purchased 10% or more of the Company’s gross sales in the last two years:

Unit: NT$ thousand

	the last two years:	the last two years:	the last two years:	the last two years:					Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
	2022				2023				2024Q1
Items	Name	Amount	Ratio to net sale in the whole year (%)	Relationship to the issuer	Name	Amount	Ratio to net sale in the whole year (%)	Relationship to the issuer	Name	Amount	Ratio to net sales as of the last quarter of 2024 (%)	Relationship to the issuer
1	Customer G	277,768	8.96	None	Customer G	421,868	17.86	None	Customer G	59,227	16.34	None
2	Customer A	240,190	7.75	Associates	Customer A	299,505	12.68	Associates	Customer A	41,051	11.32	Associates
	Others	2,582,559	83.29		Others	1,640,544	69.46		Others	262,246	72.34
	Net sales	3,100,517	100.00		Net sales	2,361,917	100.00		Net sales	362,524	100.00

Explanation on the change in increase or decrease:

Benefiting from the increase in demand from the IT semiconductor industry and the energy industry, and the transfer effect of international manufacturing bases, Customer G and A made concentrated shipments in 2023. However, due to the tightening of monetary policy and weak trade in the USA, and the global geopolitical policy tensions, the Company’s sales were not so ideal on the whole, which also increased proportion of such customers.

The major manufacturers that have purchased 10% or more of the Company’s net purchases in the last two years:

Unit: NT$ thousand

	in the last two years:	in the last two years:	in the last two years:	in the last two years:					Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
	2022				2023				2024 Q1
Items	Name	Amount	Ratio to net purchases in the whole year (%)	Relationship to the issuer	Name	Amount	Ratio to net purchases in the whole year (%)	Relationship to the issuer	Name	Amount	Ratio to net purchase as of the last quarter of 2024 (%)	Relationship to the issuer
1	FANUC	211,894	10.51	None	FANUC	79,507	5.38	None	FANUC	12,690	3.07	None
	Others	1,803,998	89.49		Others	1,398,964	94.62		Others	400,119	96.93
	Net purchase	2,015,892	100.00		Net purchase	1,478,471	100.00		Net purchase	412,809	100.00

Explanation on the change in increase or decrease:

Controllers, the main raw material purchased by the Company, is one of the components necessary for the machine tool to achieve various precision and complex machining functions, so the function and reliable and stable quality have been valued by customers. Fanuc is a world-renowned manufacturer, which provides products with stable quality, and has a perfect marketing and after-sales service system in the world, and its maintenance and operation training is quite quick and easy. Therefore, Fanuc controllers are often specified by the Company’s sales customers.

(V) Production volume and value for the last two years

Unit: set/NT$ thousand

				Unit: set/NT$ thousand	Unit: set/NT$ thousand	Unit: set/NT$ thousand
Year Production volume and value Key Products	2022			2023
	Capacity	Output	Output value	Capacity	Output	Output value
Gantrymachine	385	208	1,171,550	363	150	958,933
C-type machine	1,234	683	1,146,793	1,266	495	909,604
Maintenance and others	15	15	92,039	7	7	83,051
Total	1,634	906	2,410,382	1,636	652	1,951,588

(VI) Sales volume and value in the last two years

Unit: set/NT$ thousand

					Unit: set/NT$ thousand	Unit: set/NT$ thousand	Unit: set/NT$ thousand	Unit: set/NT$ thousand
Year Sales volume and value Key Products	2022				2023
	Domestic sales		Export		Domestic sales		Export
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Gantry machine	38	299,449	171	1,197,678	15	123,360	135	1,028,934
C-type machine	212	446,843	485	1,013,595	54	117,410	450	971,495
Maintenance and others	16	60,359	0	82,593	7	38,913	0	81,805
Total	266	806,651	656	2,293,866	76	279,683	585	2,082,234

III. The number of employees employed, average years of service, average age, and ratio of academic qualification in the last two years

Information of employees employed in the last two years

	Year	2022	2023	As of March 31, 2024
Number of employees	Direct labour	207	185	175
	Indirect labour	387	341	333
	Total	594	526	508
Average age		38.1	38.5	39.5
Average	years of service	8 years and 4 months	8 years and 9 months	10 years and 1 month
Ratio of academic qualification	Doctoral degree	0.00%	0.00%	0.20%
	Master’s degree	7.24%	6.84%	7.48%
	Bachelor’s degree	59.76%	61.22%	60.63%
	High school	28.12%	26.62%	26.57%
	Below high school	4.88%	5.32%	5.12%

IV. Environmental spending

(I) By statute, if there is a need to apply for the pollution facility installation permit or pollution discharge permit or pay pollution prevention fees or set up dedicated environmental protection unit personnel, the application, payment or setting up conditions are described as follows: No pollution will be caused in the Company’s product manufacturing process, and there is no need to apply for the pollution facility installation permit or pollution discharge permit, pay pollution prevention fees or set up dedicated environmental protection unit personnel. In addition,

general household waste is cleared and transported by qualified cleaners; before machine delivery, the cutting oil from operation test, which cannot be recycled, is recovered by the recycler. The Company has not suffered any loss due to environmental pollution in the last two years.

(II) Investment in main equipment for the prevention and control of environmental pollution, and its use and potential benefits:

elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:	elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:	elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:	elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:	elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:	elivery, the cutting oil from operation test, which cannot be recycled, is recovered by the ecycler. The Company has not suffered any loss due to environmental pollution in the last two ears. nvestment in main equipment for the prevention and control of environmental pollution, and its se and potential benefits:
Unit: NT$thousand
Equipment name	Quantity	Date of acquisition	Investment cost	Undiscounted balance	Use and expected benefits
Coating water curtain-type spray room equipment	1 set	November 25, 2004	3,980	0	Maintain the air quality in the working environment and reduce airpollution

(III) Pollution disputes involving the process of the Company’s improvement of environmental pollution in the last two years and up to the publication date of the Prospectus, and the process of improvement: None.
(IV) Any losses suffered by the Company due to environmental pollution in the last two years and up to the publication date of the Prospectus, and total penalties, future countermeasures and possible expenditures:

No pollution will be caused in the Company’s product manufacturing process. In addition, the Company has attached importance to pollution prevention and control, invested funds to set up pollution prevention and control equipment, and strengthened employees’ environmental protection education and training. There has been no heavy losses or compensation due to environmental pollution in the last two years and up to the publication date of the Prospectus.

(V) Current pollution situation and the effect of pollution improvement on the Company’s earnings, competitive position and capital expenditure, and significant environmental capital expenditure expected over the next two years:

The Company’s production activities are mainly design and assembly, and the processing process is mainly outsourced, so there have been no significant environmental pollution issues affecting the Company’s earnings, competitive position and capital expenditure since its inception. With the development of the social environmental awareness in recent years, the government is also making stricter pollution discharge standards. While attaching importance to and making efforts in environmental protection, the Company inputs manpower and funds to expand and maintain pollution prevention and control equipment, and also entrusts a professional waste disposal plant to deal with general domestic waste. It is expected that the Company has no significant environmental capital expenditures over the next two years.

V. Employee-employer relationship
(I) The Company’s employee benefits, continuing education, training, retirement systems, and the status of their implementation, as well as the status of agreements between labor and management, and all measures aimed at preserving the rights and interests of employees
1. Employee benefits:
  - The Company attaches great importance to human-based management. To provide employees with a comfortable working space, the Company continues to actively improve the working environment and promote various benefits to properly ensure employees’ health and safety in work and life; in addition, through the Employee Welfare Committee organized by employees, actively participate in these activities to employees can adjust their physical and mental health.
  - (1) All employees participate in labor insurance, health insurance and group insurance, and health insurance is bought for employees’ dependents according to government decrees.
  - (2) The Company holds regular domestic and overseas travels, birthday parties and various group recreational activities for employees, which are participated by all employees and their dependents, so as to gather the cohesion of the Company’s employees.
  - (3) Subsidies are provided for employees on matters such as weddings and funerals, so that they can feel the Company’s care.
  - (4) Assistance is offered to employees in obtaining some loans in case of an emergency accident.
  - (5) Educational scholarship is provided for employees’ children.

Through various benefits and activities organized by the Welfare Committee, the Company allows its employees to balance work and leisure and live a happy life. The benefits provided by the Company are as follows:

	Provided by the	Provided by the
Employee benefits
	Company	Welfare Committee

Year-end bonus	V	-
Performance bonus	V	-
Employee bonus	V	-
Retention bonus	V	-
Free lunch/overtime meal	V	-
Model worker	V	-
Groupaccident insurance	V	-
Employee stock ownershiptrust	V	-
Annual health examination	V	-
Full-time plant carers and occupational doctors are resident in the plant to provide professional consultation	V	-
Employee uniform	V	-
SpringFestivalgift	-	V

		Provided by the	Provided by the
Employee benefits
		Company	Welfare Committee

Dragon Boat Festivalgift		-	V
Mid-Autumn Festivalgift		-	V
Labor Day gift		-	V
Wedding gift		-	V
Childbirthgift		-	V
Employee birthday gift		-	V
Retirementgift		-	V
Domestic and foreign tourism		-	V
Scholarshipandgrants for children’s education		-	V
Associationgrant		-	V
Medical sympathy		-	V
Memorial ceremony wreath	Employees themselves	V	V
	Spouse	V	V
	Children	V	V
	(Foster) parents	V	V
	Grandparents	V	V
Year-end dinner for	employees	V	V
Emergencyloan		-	V
Appointed store discount		-	V

Employee continuous education and training:
To help new employees enter the working state as soon as possible, courses are arranged for orientation training to help new employees understand the Company’s industrial positioning and future development. In addition, professional courses are provided at irregular intervals, so that employees can receive new information about professional skills at any time and enhance their capabilities.

To provide on-the-job training for employees, departments arrange appropriate education and training courses in the Company according to actual needs, or employees participate in the courses offered by the training institutions as required by the professional courses of each function, so as to improve employees’ professional quality.

Retirement system and implementation:
In accordance with the Labor Standards Act, the Company sets up a Labor Pension Supervisory Committee, which sets aside 2% of the gross salary monthly as the reserve for employee retirement into the Central Trust Bureau special account. The pension payment system is governed by the Labor Standards Act.

The Labor Pension Act, which came into force on July 1, 2005, adopts the defined contribution. After its implementation, employees shall choose to apply the pension provisions in the Labor Standards Act or apply the pension system in this act and retain the

years of service prior to application. For an employee to whom the act applies, the Company contributes 6% of the employee’s salary monthly as employee pensions into the employee’s individual retirement account.

The Company’s applicable provisions in accordance with the Labor Pension Act and the Company’s preferential retirement management methods are as follows:

(1) Voluntary retirement:

A labor may retire voluntarily under any of the following circumstances: (for labors who choose to apply the Labor Pension Act, the retirement may be handled in accordance with the same act)

A. Those who have worked for more than 15 years and are at least 55 years old.
B. Those who have worked for more than 25 years.
C. Those who have worked for more than 10 years and are at least 60 years old.
D. Those who have served the Company for more than 24 years.
(2) Compulsory retirement:

Compulsory retirement is not allowed to employees who are not under any of the following circumstances:

A. Those who are at least 65 years old.
B. Those who are mentally or physically disabled and incapable of working.

For those under the age specified in the first subparagraph of the preceding paragraph, who are engaged in dangerous, physical or other special work, the Company shall submit the cases to the central competent authority for approval and adjustment. But these employees shall not be under 55 years old.

(3) Pension payment standards:
A. For employees with years of service before and after the application of the Labor Standards Act, and those who choose to continue to apply the pension regulations in the Labor Standards Act or retain the years of service before the application of the Labor Pension Act, the pensions shall be paid accordance with Article 84-2 and Article 55 of Labor Standards Act.
B. For employees with years of service specified in the preceding subparagraph and subject to compulsory retirement in accordance with Subparagraph 2, Paragraph 1, Article 35, who are mentally or physically disabled due to the performance of their duties, additional 10% of pensions shall be paid in accordance with Subparagraph 2, Paragraph 1, Article 55 of Labor Standards Act.
C. For an employee to whom the pension provisions of the Labor Pension Act applies, the Company contributes 6% of the employee’s salary monthly as employee pensions into the employee’s individual retirement account.
(4) Pension payment:

The pensions payable by the Company to employees shall be paid within 30 days from the date of retirement of the employees.

Status of labor-management agreements:
- The Company’s labor-management relationship is harmonious, all regulations and measures are handled according to law and well implemented. The Employee Welfare Committee meeting is held on a monthly basis and the labor-management meeting is held on a quarterly basis, during which no disputes have occurred.
(II) Any losses suffered by the Company arising from labor dispute in the latest year and up to the publication date of the Annual Report, and any estimated amounts at present and that may occur in the future and measures in response thereto:
The Company has paid attention to the benefits of its employees, and complied with relevant labor-management laws. There have been no losses arising from labor-management disputes in the latest year and up to the publication date of the Annual Report. There is no possibility of losses arising from labor-management disputes in the foreseeable future.

VI. Cyber security management

(I) The cyber security risk management framework, the cyber security policy, specific management plan and the resources invested in the cyber security management:
Cyber security management framework
- The Company has established a cyber security center in the General Administration Office, and set up a cyber security supervisor and a cyber security responsible person to plan and formulate the cyber security management policy, implement the promotion policy, and implement and track review, and immediately improve deficiencies regularly, so as to ensure that the policy is effectively implemented. The relevant implementation results are regularly submitted to the Company’s senior management meeting, to reduce the operating risk. The information center reviews the results of cyber security risk analysis and the corresponding preventive measures and policies adopted by the Company through the annual management review meeting, to ensure the applicability, suitability and effectiveness of the information security management system for continuous operation. The cyber security management performance and cyber security strategy direction are reported to the Board of Directors regularly for regular review and amendment. The results of the latest evaluation were reported to the Board of Directors on November 6, 2023.

==> picture [101 x 107] intentionally omitted <==

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AWEA Mechantronic
Co., Ltd.
President
Cyber Security Center
Cyber Security
Supervisor
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Hsinchu Taichung
Cyber Security Cyber Security
Personnel Personnel
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Cyber Security Policy:
(1) The cyber security management methods are formulated and implemented.
(2) Account management is decentralized to avoid the leakage of privileged accounts.
(3) Internal/external network policies are distinguished and the access is limited.
(4) Employees’ computer behaviors are recorded faithfully to prevent the occurrence of illegal matters.
(5) Information room and personal computer data are backed up regularly to prevent data loss.
(6) Regular education and training are provided to improve employees’ awareness of cyber security.
(7) An employee signs a cyber security guarantee to ensure their compliance of the regulations.
(8) The Company joins the Science Park Information Sharing and. Analysis Center (SPISAC), and masters the possible cyber security threats and weakness to facilitate early management and response.
Specific management programs and resources:
To achieve the cyber security policies and goals, the Company establishes comprehensive cyber security protection. The management issues and specific management program are as follows:
(1) The Company adopts a new-generation firewall, and an internal/external network classification system, and employees can only access general services, while permission shall be applied for special services and the records shall be retained.
(2) The mail server shall be equipped with a spam mail gateway, and social engineering protection, anti-fraud and anti-virus modules shall be purchased selectively to filter harmful emails.
(3) An endpoint security protection system shall be imported, external equipment shall be controlled, users’ Internet and file access behaviors shall be recorded, and information equipment asset inventory shall be made

  - (4) The computer room shall be equipped with general anti-virus and advanced MDR antihacking software, and shall be entrusted to a manufacturer for 24-h monitoring and protection.

  - (5) The independent backup area is provided with backup software/hardware, with which information room and personal computer data are backed up regularly. This area can only be accessed by backup services, reducing the risk of hackers.

  - (6) With account decentralized management, ordinary persons only have the minimum privilege. Special permission must be subject to application for approval. The password of the privileged account shall be changed regularly, and the password strength shall be the highest to reduce the risk.

  - (7) Regular education and training are provided to improve employees’ awareness of cyber security.

  - (8) Joining the cyber security information sharing organization, the Company can obtain the information about cyber security warning, threats and weakness.

Resources invested in cyber security management
- Information security has become an important issue for the Company’s operations. The corresponding cyber security management issues and resource input plan are as follows:
- (1) Special manpower: A full-time enterprise organization “cyber security center”, one cyber security supervisor, and two cyber security personnel are set up to be responsible for the Company’s information security planning, technology sourcing and related audit matters, so as to maintain and continue to enhance information security. The application for special manpower of cyber security in TWSE/TPEx Listed Companies is completed.
- (2) Customer satisfaction: No major cyber security incidents, and no complaints for violation of customer data loss regulations.
- (3) Signature of cyber security guarantee: All employees and new employees have signed the cyber security guarantee.
- (4) Cyber security announcement: Five Cyber Security Center announcements were issued this year to deliver the relevant provisions and precautions of cyber security protection.
- (5) The “instructions for potential hazard of browsing the web and cyber security test” was carried out, and announcements were issued to explain, teach, advocate and test related knowledge to enhance employees’ awareness of cyber security. There were a total of 590 readers and 163 effective tests, with an average score of 98.
(II) List the losses, possible impacts, and countermeasures from major cyber security incidents in the latest year and up to the publication date of the annual report. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

100

VII. Important contract

Contract nature	Participants	Contract start and end dates	Main contents	Restrictive clauses
Land lease contract	Central Taiwan Science Park Bureau	January 1, 2024 - December 31, 2043	Lease the land of AWEA Central Taiwan Science Park branch	None
Project undertaking	San Min Construction Development Co., Ltd.	August 1, 2023 - Completion of construction	Establishment of Dapumei Plant of AWEA	None

101

Chapter VI. Financial Status

I. Condensed balance sheet and statement of comprehensive income for the last five years
(I) Condensed Balance Sheet
1. IFRS - Parent Company Only

			Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Items		2019	2020	2021	2022	2023	2024 Q1
Current assets		2,678,945	2,504,911	2,974,201	3,750,594	3,065,538	3,117,075
Property, plant and equipment		1,530,354	1,496,232	1,439,750	1,395,401	1,378,679	1,365,505
Intangible assets		6,289	4,954	7,909	6,794	5,813	5,998
Other assets		1,448,957	1,233,057	1,219,084	1,095,293	1,062,378	1,249,845
Total assets		5,664,545	5,239,154	5,640,944	6,248,082	5,512,408	5,738,423
Current liabilities	Before dividend distribution	2,619,034	1,987,014	2,465,953	2,885,554	2,102,698	2,127,300
	After dividend distribution	2,686,650	2,180,202	2,581,866	3,040,105	Not applicable	`－`
Non-current liabilities		185,384	128,893	137,765	109,852	115,858	284,421
Total liabilities	Before dividend distribution	2,804,418	2,115,907	2,603,718	2,995,406	2,218,556	2,411,721
	After dividend distribution	2,872,034	2,309,095	2,719,631	3,149,957	Not applicable	`－`
Equity attributable to owners of theparent		2,860,127	3,123,247	3,037,226	3,252,676	3,293,852	3,326,701
Share capital		965,942	965,942	965,942	965,942	965,942	965,942
Capital surplus		250,067	172,792	124,495	95,516	95,516	95,516
Retained earnings	Before dividend distribution	1,724,431	2,039,270	1,978,858	2,220,850	2,267,791	2,284,832
	After dividend distribution	1,656,815	1,846,082	1,862,945	2,066,299	Not applicable	`－`
Other equity		(80,313)	(54,757)	(32,069)	(29,632)	(35,397)	(19,589)
Treasury stock		`－`	`－`	`－`	`－`	`－`	`－`
Non-controlling interests		`－`	`－`	`－`	`－`	`－`	`－`
Total equity	Before dividend distribution	2,860,127	3,123,247	3,037,226	3,252,676	3,293,852	3,326,701
	After dividend distribution	2,792,511	2,930,059	2,921,313	3,098,125	Not applicable	`－`

Note: (1) The above information has been audited and certified or reviewed by CPAs.

(2) The Company’s 2023 earnings distribution proposal has not yet been resolved by the shareholders’ meeting.

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2. IFRS - Consolidated

Unit: NT$ thousand

Year Items	Year Items	2019	2020	2021	2022	2023	2024 Q1
Current assets		3,885,376	3,616,189	3,859,310	4,604,226	3,802,854	3,816,116
Property, plant and equipment		2,376,540	1,923,220	1,872,994	1,797,473	1,741,772	1,727,180
Intangible assets		11,964	9,883	12,043	10,368	12,656	12,672
Other assets		462,803	474,678	462,933	379,731	404,609	576,943
Total assets		6,736,683	6,023,970	6,207,280	6,791,798	5,961,891	6,132,911
Current liabilities	Before dividend distribution	3,367,142	2,604,765	2,825,233	3,288,494	2,438,770	2,410,988
	After dividend distribution	3,434,758	2,797,953	2,941,146	3,443,045	Not applicable	`－`
Non-current liabilities		357,185	167,333	225,560	135,109	135,528	302,456
Total liabilities	Before dividend distribution	3,724,327	2,772,098	3,050,793	3,423,603	2,574,298	2,713,444
	After dividend distribution	3,791,943	2,965,286	3,166,706	3,578,154	Not applicable	`－`
Equity attributable to owners of theparent		2,860,127	3,123,247	3,037,226	3,252,676	3,293,852	3,326,701
Share capital		965,942	965,942	965,942	965,942	965,942	965,942
Capital surplus		250,067	172,792	124,495	95,516	95,516	95,516
Retained earnings	Before dividend distribution	1,724,431	2,039,270	1,978,858	2,220,850	2,267,791	2,284,832
	After dividend distribution	1,656,815	1,846,082	1,862,945	2,066,299	Not applicable	`－`
Other equity		(80,313)	(54,757)	(32,069)	(29,632)	(35,397)	(19,589)
Treasury stock		`－`	`－`	`－`	`－`	`－`	`－`
Non-controlling interests		152,229	128,625	119,261	115,519	93,741	92,766
Total equity	Before dividend distribution	3,012,356	3,251,872	3,156,487	3,368,195	3,387,593	3,419,467
	After dividend distribution	2,944,740	3,058,684	3,040,574	3,213,644	Not applicable	`－`

Note: (1) The above information has been audited and certified or reviewed by CPAs.

(2) The Company’s 2023 earnings distribution proposal has not yet been resolved by the shareholders’ meeting.

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(II) Condensed and statement of comprehensive income:
IFRS - Parent Company Only

		Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Year Items	2019	2020	2021	2022	2023	2024 Q1
Operating revenue	2,442,611	2,068,417	2,492,430	2,283,658	1,572,321	230,731
Gross profit	411,625	230,399	417,948	453,198	244,310	46,783
Operating income (loss)	101,851	(63,054)	139,903	212,519	22,476	(190)
Non-operating income and expenses	49,600	408,923	41,826	227,338	218,511	17,492
Net profit before tax	151,451	345,869	181,729	439,857	240,987	17,302
Current net profit from continued operating	118,773	378,605	130,860	354,143	210,811	17,042
Gain (loss) from discontinued operations	`－`	`－`	`－`	`－`	`－`	`－`
Current period net profit (loss)	118,773	378,605	130,860	354,143	210,811	17,042
Current period other comprehensive income (after-tax net amount)	(31,713)	29,406	24,604	6,199	(15,084)	15,809
Total comprehensive income in currentperiod	87,060	408,011	155,464	360,342	195,727	32,850
Net income attributable to owners of the parent company	118,773	378,605	130,860	354,143	210,811	17,042
Net income attributable to non-controllinginterests	`－`	`－`	`－`	`－`	`－`	`－`
Total comprehensive income attributable to owners of the parent company	87,060	408,011	155,464	360,342	195,727	32,850
Total comprehensive income attributable to non-controllinginterests	`－`	`－`	`－`	`－`	`－`	`－`
Earnings per share	1.23	3.92	1.35	3.67	2.18	0.18

Note: (1) The above financial information has been audited and certified by CPAs.

(2) The Consolidated Financial Report for the First Quarter of 2024 has been reviewed by CPAs.

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2. IFRS - Consolidated

Unit: NT$ thousand

Year Items	2019	2020	2021	2022	2023	2024 Q1
Operatingrevenue	3,417,949	3,093,583	3,630,956	3,100,517	2,361,917	362,524
Grossprofit	663,667	482,591	681,860	663,000	358,913	67,580
Operatingincome(loss)	195,610	37,924	266,199	298,225	33,000	(8,877)
Non-operating income and expenses	(11,992)	517,496	(28,399)	161,563	202,099	23,427
Netprofit before tax	183,618	555,420	237,800	459,788	235,099	14,550
Current net profit from continued operating	107,708	594,202	122,033	349,287	190,306	14,842
Gain(loss) from discontinued operations	`－`	`－`	`－`	`－`	`－`	`－`
Current period net profit (loss)	107,708	594,202	122,033	349,287	190,306	14,842
Current period other comprehensive income (after-tax net amount)	(35,655)	30,740	24,067	7,313	(16,357)	17,032
Total comprehensive income in currentperiod	72,053	624,942	146,100	356,600	173,949	31,874
Net income attributable to owners of the parent company	118,773	378,605	130,860	354,143	210,811	17,041
Net income attributable to non-controllinginterests	(11,065)	215,597	(8,827)	(4,856)	(20,505)	(2,199)
Total comprehensive income attributable to owners of the parent company	87,060	408,011	155,464	360,342	195,727	32,849
Total comprehensive income attributable to non-controllinginterests	(15,007)	216,931	(9,364)	(3,742)	(21,778)	(975)
Earningsper share	1.23	3.92	1.35	3.67	2.18	0.18

Note: (1) The above information has been audited and certified or reviewed by CPAs.

(III) Names and audit opinions of the CPAs for the last five years

Year of audit	CPA Firm	CPA’s name	Audit opinion
2019	EnWise CPAs & Co.	Chang-Yun Yi, Yu-SongChen	Unqualified opinion
2020	EnWise CPAs & Co.	Guei-Duan Chen, Chang-Yun Yi	Unqualified opinion
2021	EnWise CPAs & Co.	Guei-Duan Chen, Chang-Yun Yi	Unqualified opinion
2022	EnWise CPAs & Co.	Guei-Duan Chen, Chang-Yun Yi	Unqualified opinion
2023	EnWise CPAs & Co.	Guei-Duan Chen, Chang-Yun Yi	Unqualified opinion

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II. Financial analysis for the last five years

(I) IFRS - Parent Company Only

(I) IFRS - Parent CompanyOnly	(I) IFRS - Parent CompanyOnly	(I) IFRS - Parent CompanyOnly
Year (Note 1) Analysis item(Note 2)			2019	2020	2021	2022	2023
Financial structure (%)	Debt to assets ratio		49.51	40.39	46.16	47.20	40.25
	Ratio of long-term capital to property, plant and equipment		199.01	217.36	220.52	240.97	247.32
Solvency (%)	Current ratio		102.29	126.06	120.61	132.10	145.79
	Liquid ratio		58.63	81.33	80.57	95.89	97.45
	Interest coverage ratio		7.52	22.39	19.85	23.11	9.40
Operating ability	Turnover rate of accounts receivable (times)		2.38	2.72	3.17	2.97	2.57
	Average days to collect receivables		153.36	134.19	115.14	122.90	142.02
	Inventoryturnover rate(times)		1.58	1.87	2.27	1.83	1.31
	Rate ofpayable turnover(times)		3.34	4.44	3.78	3.19	3.21
	Average number of days in sales.		231.01	195.19	160.79	199.45	278.63
	Turnover rate of real estate, plants and equipment(times)		1.58	1.37	1.70	1.61	1.13
	Turnover rate of total assets(times)		0.40	0.38	0.46	0.38	0.27
Profitability	Return on assets(%)		2.23	7.18	2.55	6.23	3.98
	Return on equity (%)		4.08	12.66	4.25	11.26	6.44
	Ratio in paid- in capital (%)	Operating profit	10.54	(6.53)	14.48	22.00	2.33
		Netprofit before tax	15.68	35.81	18.81	45.54	24.95
	Netprofit rate(%)		4.86	18.30	5.25	15.51	13.41
	Earningsper share(NT$)		1.23	3.92	1.35	3.67	2.18
Cash flow	Cash flow ratio(%)		24.56	46.03	14.68	7.36	11.30
	Cash flow adequacyratio(%)		100.66	159.23	74.49	104.50	142.18
	Cash re-investment ratio(%)		12.65	20.08	3.16	1.56	2.00
Leverage	Operatingleverage		1.78	(0.29)	1.55	1.63	4.09
	Financial leverage		1.30	0.80	1.07	1.10	(3.61)
Please describe the reasons for the changes in the financial ratios in the last two years. (Changes in increase or decrease below 20% may not be analyzed) 1. The decrease in interest coverage ratio and return on equity was due to fluctuations in the raw material costs and exchange rate, and reduced before-tax profit. 2. The changes in inventory turnover rate, average number of days in sales, turnover rate of property, plant and equipment and turnover rate of total assets were all due to poor prosperity and decreased operating revenue. 3. The decrease in operating profit was due to the poor prosperity, decreased operating revenue and increased raw materials costs. 4. The decrease in net profit before tax and earnings per share was due to fluctuation in exchange rate in 2023, resulting in decreased non-operating profit. 5. The increase in cash flow rate, cash flow adequacy ratio and cash re-investment ratio was due to increased net cash inflow from operating activities in 2023. 6. The decrease in the operating leverage and the financial leverage was due to poor prosperity, change in raw material costs and decreased operating profit.

The decrease in interest coverage ratio and return on equity was due to fluctuations in the raw material costs and exchange rate, and reduced before-tax profit.
The changes in inventory turnover rate, average number of days in sales, turnover rate of property, plant and equipment and turnover rate of total assets were all due to poor prosperity and decreased operating revenue.
The decrease in operating profit was due to the poor prosperity, decreased operating revenue and increased raw materials costs.
The decrease in net profit before tax and earnings per share was due to fluctuation in exchange rate in 2023, resulting in decreased non-operating profit.
The increase in cash flow rate, cash flow adequacy ratio and cash re-investment ratio was due to increased net cash inflow from operating activities in 2023.

Note 1: The above financial information has been audited and certified by CPAs.

Note 2: The financial analysis formula is described in Note 2 of the table below.

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(II) IFRS - Consolidated

(II) IFRS - Consolidated	(II) IFRS - Consolidated
Year (Note 1) Analysis item(Note 2)		2019	2020	2021	2022	2023	2024 Q1
Financial structure (%)	Debt to assets ratio	55.28	46.02	49.15	50.41	43.18	44.24
	Ratio of long-term capital to property,plant and equipment	135.38	171.10	174.20	188.47	196.89	210.12
Solvency (%)	Current ratio	115.39	138.83	136.60	140.01	155.93	158.28
	Liquid ratio	62.38	83.41	79.06	89.38	94.79	86.57
	Interest coverage ratio	6.53	25.54	17.47	18.68	8.18	2.86
Operating ability	Turnover rate of accounts receivable (times)	2.88	3.38	4.16	3.72	3.30	2.32
	Average days to collect receivables	126.74	107.99	87.74	98.12	110.61	157.33
	Inventoryturnover rate(times)	1.40	1.72	2.04	1.54	1.31	0.72
	Rate ofpayable turnover(times)	3.72	5.01	4.28	3.45	3.91	2.35
	Average number of days in sales.	260.71	212.21	178.92	237.01	278.63	506.94
	Turnover rate of real estate, plants and equipment(times)	1.45	1.44	1.91	1.69	1.33	0.83
	Turnover rate of total assets(times)	0.47	0.48	0.59	0.48	0.37	0.23
Profitability	Return on assets(%)	1.85	9.60	2.18	5.69	3.40	1.03
	Return on equity (%)	3.70	19.86	3.96	11.11	5.81	1.80
	Percentage of net profit before tax to thepaid-in capital(%)	19.01	57.50	24.62	47.60	24.34	1.51
	Netprofit rate(%)	3.15	19.21	3.36	11.27	8.06	4.09
	Earningsper share(NT$)	1.23	3.92	1.35	3.67	2.18	0.18
Cash flow	Cash flow ratio(%)	24.10	15.50	16.94	6.75	16.38	(4.99)
	Cash flow adequacyratio(%)	90.34	111.48	75.48	99.27	150.81	150.95
	Cash re-investment ratio(%)	14.88	6.14	5.56	1.72	5.37	(5.53)
Leverage	Operatingleverage	1.66	4.23	1.44	1.41	4.48	(2.15)
	Financial leverage	1.20	2.48	1.06	1.10	137.50	0.53
Please describe the reasons for the changes in the financial ratios in the last two years. (Changes in increase or decrease below 20% may not be analyzed) 1. The decrease in interest coverage ratio and return on equity was due to the increased raw material costs, exchange rate factors, and reduced before-tax profit. 2. The decrease in turnover rate of property, plant and equipment, turnover rate of total assets and return on assets were all due to poor prosperity and decreased operating revenue. 3. The decrease in the proportion of net profit before tax to the paid-in capital, net profit rate and earnings per share was due to fluctuation in exchange rate in 2023, resulting in decreased non-operating profit. 4. The increase in cash flow rate, cash flow adequacy ratio and cash re-investment ratio was due to increased net cash inflow from operating activities in 2023. 5. The fluctuation in the operating leverage and the financial leverage was due to poor prosperity, change in raw material costs and decreased operating profit.

Note 1: The above information has been audited and certified or reviewed by CPAs.

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Note 2: The financial analysis formula in this table is as follows:

Financial structure
(1) The ratio of total liabilities to total assets = Total liabilities / Total assets
(2) Ratio of long-term capital to property, plant and equipment = (Total equities + Non-current liabilities) / Property, plant and equipment.
Solvency
(1) Current ratio = Current assets / Current liabilities.
(2) Quick ratio = (Current assets - Inventories - Prepaid expense) / Current liabilities.
(3) Interest coverage ratio = Net profit before interest and tax / Interest expenses for the current period.
Operating ability ÷
(1) Turnover rate of the account receivable (including account receivable and notes receivable incurred as a result of business operation) = The balance of the net sales amount / Account receivable averaged in various term (Including account receivable and notes receivable incurred as a result of business operation).
(2) Average days to collect receivables = 365 / Turnover rate of account receivable.
(3) Inventory turnover rate = Sales cost / Averaged inventory amount.
(4) Turnover rate of the payables (Including accounts payable and the notes payable incurred by business operation) = Sales cost / Balance of the payables averaged in various term (Including accounts payable and the notes payable incurred by business operation).
(5) Average number of days in sales = 365 / Inventory turnover rate.
(6) Turnover rate of real estate, plants and equipment = Net amount of sales / Averaged net amount for the real estate, plants and equipment.
(7) Turnover rate of total assets = Net amount of sales / Total of average assets.
Profitability
(1) Return on total assets = (Net Income + Interest x Expenses * (1 - Effective tax rate)) / Average total assets.
(2) Return on shareholders’ equity = After tax net profit / Total average equity.
(3) Net profit rate = Profit or loss after tax / Net sales.
(4) Earnings per share = (Profits or loss attributable to owners of the parent company - Preferred stock dividend) / Weighted average stock shares issued.
Cash flow
(1) Cash flow ratio = Net cash flow from operating activities / Current liabilities.
(2) Net cash flow adequacy ratio= Net cash flow from operating activities within five years / (Capital expenditure + Inventory increase + Cash dividend) within five years.
(3) Cash re-investment ratio= (Net cash flow from operating activity - Cash dividend) / Gross property, plant, and equipment + Long-term investment + Other non-current assets + Working capital).
Leverage
(1) Operating leverage = (Net amount of operating revenues - Variable operating costs and expenses) / Operating profit.
(2) Financial leverage = Operating profit / (Operating profit - Interest expenses).

Note 3: The net cash flow from operating activities is negative and thus is not applicable.

108

Note 4: As for the above-mentioned formula for calculating earnings per share, special attention shall be paid to the following items upon calculation:
It shall be calculated based on the number of weighted average ordinary shares, instead of the number of ending outstanding shares.
If there is any cash increase in capital or trading of treasury shares, the number of weighted average shares shall be calculated by considering their circulation period.
If there is any capital transferred from surplus reserve or capital transferred from capital reserve, adjustment shall be made based on the ratio of the increase upon calculation of the earnings per share of previous year and half a year, without considering the issuance period for the capital increase.
Where preferred stocks are non-convertible cumulative preferred stocks, current dividends (no matter whether they are paid or not) shall be deducted from after-tax net profit or added to after-tax net loss. Where preferred stocks are of non-cumulative nature, dividends from the preferred stocks shall be deducted from after-tax net profit if there is after-tax net profit; in case of losses, no adjustment is required.
Note 5: As for analysis on cash flows, special attention shall be paid to the following items upon calculation:
Net cash flow from operating activities refers to net cash inflow from operating activities specified in Cash Flow Statement.
Capital expenditure refers to the cash outflow from capital investment in each year.
Inventory increase shall be included and calculated only if ending balance is more than opening balance and, in case of any decrease in ending inventories, it shall be calculated as zero.
Cash dividends include the cash dividends from ordinary shares and preferred shares.
Gross property, plant and equipment refer to the total amount of property, plant and equipment before accumulated depreciation has been deducted.
Note 6: Issuers shall classify various operating costs and expenses into fixed and variable based on their nature. If estimates or subjective judgments are involved, attention shall be paid to their reasonableness and consistency shall be maintained.
Note 7: If the Company’s shares are of no-par value or the value per share is not NT$10, and they are calculated based on the ratio of paid-in capital, then the balance sheet is calculated based on the ratio of equity attributable to owners of the parent company.

109

III. Audit Report of Audit Committee on Financial Statements of the Latest Year

AWEA Mechantronic Co., Ltd. Audit Committee’s Audit Report

The Business Report, Financial Statements, Proposal for Earnings Distribution and such papers for Year 2023 of the Company have been duly worked out by the Board of Directors. Among the papers, the Financial Statements has been duly audited and verified by Certified Public Accountants Guei-Duan Chen and Chang-Yun Yi of EnWise CPAs & Co. as appointed by the Board of Directors, and the CPA firm has also duly issued the Audit Report. Upon audit by the Audit Committee, it was deemed that the above Business Report, Financial Statements, Proposal for Earnings Distribution were in compliance with relevant laws and regulations of the Company Act, the report above was made in accordance with the provisions of Article 219 of the Company Act.

It is hereby submitted for examination and approval.

AWEA Mechantronic Co., Ltd. Audit Committee Convener

Li-Ying Luo

March 6, 2024

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IV. Financial Reports for the latest year
(I) 2023 Parent Company Only Financial Statements

Independent Auditors’ Report

To AWEA Mechantronic Co., Ltd.:

Audit Opinion

We have audited the accompanying parent company only balance sheets of AWEA Mechantronic Co., Ltd., as at December 31, 2023 and 2022, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of AWEA Mechantronic Co., Ltd. as of December 31, 2023 and 2022 and for the years then ended, and its individual financial performance and its individual cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers based on our audit results and the audit reports of other certified public accountants (CPAs) (refer to the section of “Other matters”).

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Parent Company Only 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 Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We are convinced that we have acquired enough and appropriate audit evidence to serve as the basis of audit opinion.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2023 of AWEA Mechantronic Co., Ltd. These matters were addressed in the context of our audit of the individual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s individual financial statements for the year ended December 31, 2023 are stated as follows:

Revenue recognition

The main source of revenue for AWEA Mechantronic Co., Ltd. is the sales of machining centers. In 2023, the recognized revenue was NT$1,301,851 thousand, which accounted for about 83% of the total operating revenue. Since the sales locations include Taiwan, Mainland China, Italy and the United States, the sales terms vary by customers, the risks of ownership and the time of compensation transfer shall be determined in accordance with the terms of the customer’s orders or contracts, and the time and amount of revenue recognition can have a significant impact on the financial statements. Therefore, we have identified revenue recognition as one of the key audit matters.

For the accounting policies related to revenue recognition, please refer to Note IV to the parent company only financial statements.

We evaluated the reasonableness of the sales revenue recognition, performed the cut-off point test, and performed internal control tests to understand the design and implementation of the sales revenue recognition process and the related control system of AWEA Mechantronic Co., Ltd. In addition, we conducted related control tests on the sales and collection cycles, sampled and checked the sales contracts to confirm the correctness of the information in the accounting system, performed reconciliations between the general ledger system and the sales system, and assessed whether the time of revenue recognition was in accordance with the relevant reporting regulations.

Evaluation of inventories

AWEA Mechantronic Co., Ltd. mainly engages in the design, manufacture and sales of special machines, automation equipment and computer-controlled tool machines. As of December 31, 2023, the total inventories, allowance for market value decline and loss on obsolete and slowmoving inventories were NT$1,365,995 thousand and NT$356,980 thousand, respectively.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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Inventories of AWEA Mechantronic Co., Ltd. are measured at cost and net realizable value. Allowance for market value decline and loss on obsolete and slow-moving inventories are allocated for inventories aged over a certain period of time or individually identified as obsolete. Due to the intense competition in the spare parts market and the varying speeds of obsolescence of different products, the risks of loss on decline in the market value or obsolete inventories are relatively high. The net realizable values used for obsolete inventories and their evaluation usually involve subjective judgment and are therefore highly uncertain. Considering the significant impact of inventories and their allowance for market value decline and loss on obsolete and slow-moving inventories on financial statements, we have identified allowance for market value decline and loss on obsolete and slow-moving inventories as one of the key audit matters. For the accounting policies related to inventories, please refer to Note IV to the parent company only financial statements; for significant accounting estimates and assumptions used in the evaluation of inventories, please refer to Note V to the parent company only financial statements. We understood, evaluated, and tested the design and implementation of the internal control system related to inventory management, obtained the evaluation data on the lower of cost or net realizable value of inventories compiled by management authority, sampled and estimated the selling price information to the most recent sales records, and assessed the basis of management authority’s estimate of net realizable value and its reasonableness; obtained an inventory aging statement, and assessed the appropriateness of the policy on provision for allowance for market value decline and loss on obsolete and slow-moving inventories.

Other Matters - References to the Audits of Other CPAs

In the above parent company only financial statements, the financial statements of YAMA SEIKI USA, INC. and Huahan Leasing Co., Ltd., which are investments accounted for using equity method, were not audited by us, but were audited by other CPAs entrusted by the Company. For the years ended December 31, 2023 and 2022, the balances of investments accounted for using equity method were NT$116,713 thousand and NT$109,850 thousand, respectively, which both accounted for 2% of the Company’s total assets. For the years ended December 31, 2023 and 2022, the share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method were NT$7,178 thousand and NT$7,782 thousand, respectively, which accounted for 3% and 2% of the Company's net profit before tax, respectively.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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

Management is responsible for the preparation and fair presentation of the parent company only 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 parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing AWEA Mechantronic Co., Ltd.’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 AWEA Mechantronic Co., Ltd. or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the AWEA Mechantronic Co., Ltd.’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatement may arise from fraud or error. Misstatements 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 parent company only financial statements.

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

I. Identify and assess the risks of material misstatement of the parent company only 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. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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material misstatement resulting from fraud is higher than the one resulting from error.

II. Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the AWEA Mechantronic Co., Ltd.’s internal control.
III. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management level.
IV. 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 AWEA Mechantronic Co., Ltd.’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause AWEA Mechantronic Co., Ltd. to cease to continue as a going concern.
V. Evaluate the overall presentation, structure and content of the parent company only financial statements, including relevant notes, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
VI. Obtain sufficient appropriate audit evidence regarding the financial information of the investee company accounted for using equity method to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit of such investee company. We remain solely responsible for our audit opinion on the parent company only financial statements.

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.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of AWEA Mechantronic Co., Ltd. for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

EnWise CPAs & Co.

CPA Guei-Duan Chen

CPA Chang-Yun Yi

Approval number of the Securities and Approval number of the Securities and Futures Management Committee, Futures Management Committee, Ministry of Finance Ministry of Finance (1990) Tai-Cai-Zheng (I) No. 27495 (2003) Tai-Cai-Zheng (VI) No. 121986

March 5, 2024

Notice to Readers

The accompanying parent company only financial statements are intended only to present the parent company only financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such company only financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors' report and the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese- language independent auditors' report and parent company only financial statements shall prevail.

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AWEA Mechantronic Co., Ltd.

Parent Company Only Balance Sheets

December 31, 2023 and 2022

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

Unit: NT$ thousand
December 31, 2023 December 31, 2022
Code Items Notes Amount % Amount %
Current assets
1100 Cash and cash equivalents IV and VI $ 618,201 11 $ 979,024 16
1110 Financial assets at FVTPL - current IV and VI 536,929 10 377,002 6
1150 Notes receivable, net IV and VI 51,118 1 254,096 4
1160 Notes receivable due from related parties, net IV and VII 858 - 1,060 -
1170 Accounts receivable, net IV and VI 304,590 6 419,852 7
1180 Account receivables due from related parties, net IV and VII 121,722 2 68,917 1
1200 Other receivables 9,660 - 10,629 -
1210 Other receivables - related parties VII 61,626 1 70,042 1
1220 Current tax assets IV - - - -
130X Inventories IV and VI 1,009,015 19 1,021,279 17
1410 Prepayments VII 7,398 - 6,734 -
1470 Other current assets VIII 344,421 6 541,959 9
11XX Total current assets 3,065,538 56 3,750,594 61
Non-current assets
1517 Financial assets at FVOCI - non-current IV and VI 1,991 - 10,458 -
Financial assets measured at amortized cost -
1535 IV, VI and VIII 10,137 - - -
non-current
1550 Investments accounted for using equity method IV and VI 952,269 17 1,002,016 16
IV, VI, VII and
1600 Property, plant and equipment 1,378,679 25 1,395,401 22
VIII
1755 Right-of-use assets IV and VI 910 - 12,276 -
1780 Intangible assets IV and VI 5,813 - 6,794 -
1840 Deferred tax assets IV and VI 84,620 2 54,214 1
1915 Prepayments for equipment 3,200 - 300 -
1920 Guarantee deposits paid 1,838 - 3,914 -
1931 Long-term notes receivable, net IV 7,413 - 12,115 -
1937 Overdue receivables IV and VI - - - -
15XX Total non-current assets 2,446,870 44 2,497,488 39
1XXX Total assets $ 5,512,408 100 $ 6,248,082 100
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Please refer to the accompanying notes to the financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd.

Parent Company Only Balance Sheets

December 31, 2023 and 2022

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Unit: NT$ thousand
December 31, 2023 December 31, 2022
Code Items Notes Amount % Amount %
Current liabilities
2100 Short-term borrowings VI and VIII $ 1,465,000 27 $ 1,880,000 30
2110 Short-term notes and bills payable VI 79,987 1 289,641 5
2130 Current contract liabilities IV and VI 57,348 1 73,324 1
2150 Notes payable 261,961 5 393,505 6
2160 Notes payable - related parties VII 2,387 - 11,770 -
2170 Accounts payable 83,494 2 72,828 1
2180 Accounts payable - related parties VII 1,559 - 1,489 -
2200 Other payables VI 86,952 2 89,106 1
2220 Other payables - related parties VII 1,209 - 1,677 -
2230 Current tax liabilities IV 49,866 1 47,627 1
2250 Current provisions IV and VI 11,032 - 11,055 -
2280 Current lease liabilities IV, VI and VII 638 - 11,420 -
2310 Advance receipts VII 190 - 42 -
2399 Other current liabilities 1,075 - 2,070 -
21XX Total current liabilities 2,102,698 39 2,885,554 45
Non-current liabilities
2570 Deferred income tax liabilities IV and VI 108,177 2 99,315 2
2580 Non-current lease liabilities IV, VI and VII 280 - 918 -
2640 Net defined benefit liability - non-current IV and VI 6,973 - 8,991 -
2645 Guarantee deposits received 428 - 628 -
25XX Total non-current liabilities 115,858 2 109,852 2
2XXX Total Liabilities 2,218,556 41 2,995,406 47
Equity attributable to owners of the parent
3100 Share capital VI
3110 Common stock 965,942 18 965,942 15
3200 Capital surplus VI
3211 Capital surplus - additional paid-in capital arising 6,124 - 6,124 -
from ordinary share
Capital surplus - Conversion premium of convertible
3213 57,468 1 57,468 1
bonds
3240 Capital surplus - Gains from disposal of assets 4 - 4 -
3280 Capital surplus - others 31,920 1 31,920 1
3300 Retained earnings VI
3310 Legal reserve 562,966 10 527,176 8
3320 Special reserve 98,077 2 98,077 2
3350 Unappropriated earnings 1,606,748 28 1,595,597 26
3400 Other equity VI
3410 Exchange difference on translation of financial (32,016) (1) (18,699) -
statements of foreign operations
Unrealised gains (losses) on valuation of financial
3420 assets measured at fair value through other (3,381) - (10,933) -
comprehensive income
3XXX Total equity 3,293,852 59 3,252,676 53
Total liability and equity $ 5,512,408 100 $ 6,248,082 100
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Please refer to the accompanying notes to the financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd.

Parent Company Only Statements of Comprehensive Income

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand, except earnings per share

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2023 2022
Code Items Notes Amount % Amount %
4000 Operating revenue VI and VII $ 1,572,321 100 $ 2,283,658 100
5000 Operating costs VI and VII (1,331,564) (85) (1,825,556) (80)
5900 Gross profit 240,757 15 458,102 20
5920 Realized (Unealized) gain from sale 3,553 - (4,904) -
5950 Gross profit, net 244,310 15 453,198 20
Operating expenses VII
6100 Selling and marketing expenses (125,086) (8) (145,146) (6)
6200 General and administrative expenses (50,884) (3) (49,140) (2)
6300 Research and development expenses (53,729) (3) (61,294) (3)
6450 Expected credit impairment gains (losses) 7,865 1 14,901 1
6000 Total operating expenses (221,834) (13) (240,679) (10)
6900 Operating profit (loss) 22,476 2 212,519 10
Non-operating income and expenses
7100 Interest income 30,000 2 16,006 1
7010 Other income VI and VII 50,951 3 31,373 1
7020 Other gains and losses VI and VII 132,191 8 104,081 5
7050 Finance costs VI (28,704) (2) (19,897) (1)
Share of profit or loss of subsidiaries, associates and
7070 34,073 2 95,775 4
joint ventures accounted for using equity method
7000 Total non-operating income and expenses 218,511 13 227,338 10
7900 Net profit before tax 240,987 15 439,857 20
7950 Income tax income (expense) IV and VI (30,176) (2) (85,714) (4)
8200 Profit for the year 210,811 13 354,143 16
Other comprehensive income
Items that will not be reclassified subsequently to
8310
profit or loss
8311 Remeasurement of defined benefit plan (351) - 3,296 -
Unrealized gains (losses) from investment in equity
8316 instrument measured at fair value through other (1,486) - (13,848) (1)
comprehensive income
8349 Income taxes related to the items not reclassified 70 - (659) -
Items that may be reclassified subsequently to profit
8360
or loss
Exchange difference on translation of financial
8361 (16,647) (1) 21,763 1
statements of foreign operations
8399 Income tax related to items that may be reclassified 3,330 - (4,353) -
8300 Other comprehensive (loss) income for the year (15,084) (1) 6,199 -
8500 Total comprehensive income $ 195,727 12 $ 360,342 16
Earnings per share
9750 Basic earnings per share $ 2.18 $ 3.67
9850 Diluted earnings per share $ 2.17 $ 3.65
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Please refer to the accompanying notes to the financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd.

Parent Company Only Statement of Changes in Equity

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand

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Share capital Retained earnings Other equity items
Unrealised gains (losses)
Exchange difference on
on valuation of financial
Unappropriated translation of financial
Items Common stock Capital surplus Legal reserve Special reserve assets measured at fair Total equity
earnings statements of foreign
value through other
operations
comprehensive income
Balance at January 1, 2022 $ 965,942 $ 124,495 $ 513,898 $ 98,077 $ 1,366,883 $ (36,109) $ 4,040 $ 3,037,226
Appropriation and distribution of retained earnings:
Legal reserve - - 13,278 - (13,278) - - -
Special reserve - - - - - - - -
Cash dividends of common stock - - - - (115,913) - - (115,913)
Cash dividends of shares from capital surplus - (28,979) - - - - - (28,979)
2022 Net profit - - - - 354,143 - - 354,143
Other comprehensive income for 2022 - - - - 2,637 17,410 (13,848) 6,199
Total comprehensive income of 2022 - - - - 356,780 17,410 (13,848) 360,342
Disposal of investments in equity instruments at fair - - - - 1,125 - (1,125) -
value through other comprehensive income
Balance at December 31, 2022 965,942 95,516 527,176 98,077 1,595,597 (18,699) (10,933) 3,252,676
Appropriation and distribution of retained earnings:
Legal reserve - - 35,790 - (35,790) - - -
Special reserve - - - - - - - -
Cash dividends of common stock - - - - (154,551) - - (154,551)
Cash dividends of shares from capital surplus - - - - - - - -
2023 Net profit - - - - 210,811 - - 210,811
Other comprehensive income for 2023 - - - - (281) (13,317) (1,486) (15,084)
Total comprehensive income of 2023 - - - - 210,530 (13,317) (1,486) 195,727
Disposal of investments in equity instruments at fair - - - - (9,038) - 9,038 -
value through other comprehensive income
Balance at December 31, 2023 $ 965,942 $ 95,516 $ 562,966 $ 98,077 $ 1,606,748 $ (32,016) $ (3,381) $ 3,293,852
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Please refer to the accompanying notes to the financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd.

Parent Company Only Statements of Cash Flows

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand

Cash flows from operating activities Net profit before tax Adjustments Depreciation Amortisation Expected credit impairment gains Interest expense Interest income Dividend revenue Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method (Gains) losses from evaluation of financial assets Gain (loss) on disposal or retirement of property, plant and equipment Lease modification benefit Gains on disposals of investments Unrealized (Realized) gain from sale Changes in operating assets and liabilities Notes receivable Notes receivable - related parties Account receivables Account receivables - related parties Other receivables Other receivables - related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Current contract liabilities Notes payable Notes payable - related parties Accounts payable Accounts payable - related parties Other payables Other payables - related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash generated from operations Interest received Income tax paid Net cash generated by operating activities (Continued)	2023 240,987 $ 71,296 1,741 (7,865) 28,704 (30,000) (23,308) (34,073) (123,694) (343) - (2,841) (3,553) 200,603 202 116,040 (52,805) 236 (1,584) 12,264 (664) 182 8,784 5,380 (15,975) (131,544) (9,383) 10,666 70 (2,419) (468) (23) 148 (995) (2,369) 253,397 30,733 (46,558) 237,572	2022 439,857 $ 72,373 1,915 (14,901) 19,897 (16,006) (18,114) (95,775) 11,149 241 (283) (2,095) 4,904 (84,082) 14,137 87,423 50,580 2,707 236 (43,522) 2,948 (254) (6,784) 19,191 (24,428) (108,528) (1,509) (70,680) (4,261) (19,636) (173) (185) 31 846 (507) 216,712 12,091 (19,885) 208,918

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AWEA Mechantronic Co., Ltd.

Parent Company Only Statements of Cash Flows

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand

		Unit: NT$ thousand
(Continued from previous page) Cash flows from investing activities Acquisitions of financial assets at fair value through profit or loss Disposal price of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Disposal price of financial assets at fair value through other comprehensive income Acquisition of financial assets measured at amortized cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in guarantee deposits paid Decrease (Increase) in other receivables - related parties Acquisitions of intangible assets Decrease (Increase) in other financial assets Decrease (Increase) in prepayments for equipment Dividends received Net cash inflow (outflow) from investing activities Cash flows from financing activities Increase (decrease) in short-term borrowings Increase (Decrease) in short-term notes and bills payable Decrease in long-term borrowings Decrease in guarantee deposits received Repayment of principal of lease liabilities Cash dividends paid Interest paid Net cash inflow (outflow) from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year	2023 (49,014) 15,622 - 6,981 (10,137) (44,082) 343 2,076 10,000 (760) 197,356 (2,900) 94,511 219,996 (415,000) (209,654) - (200) (11,420) (154,551) (27,566) (818,391) (360,823) 979,024 618,201 $	2022
		(236,175) 22,536 (11,268) 3,790 - (20,297) 2,272 223 (5,000) (800) (223,962) 3,664 165,665 (299,352) 590,000 29,734 (2,206) (2,013) (11,410) (144,890) (19,727) 439,488 349,054 629,970 979,024 $

Please refer to the accompanying notes to the financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd.

Notes to Parent Company Only Financial Statements

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand (unless stated otherwise)

I. History and Organization

AWEA Mechantronic Co., Ltd. (hereinafter referred to as the Company) was established on July 16, 1986. The design, manufacture and sales of special machines, automation equipment and computer-controlled tool machines are its main business.

The shares of the Company was approved of listing by Document Tai-Zheng-(2000)-Shang-Zi No. 025773 on September 6, 2000, and began to be listed for trading on TWSE Stock Exchange Market since September 11, 2000.

II. Approval Date and Procedures of the Financial Statements

The parent company only financial statements were approved by the board of directors and authorized for issue on March 5, 2024.

III. Application of Newly Issued and Amended Standards and Interpretations

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

Except as stated below, the application of the amendments to the IFRS endorsed and issued into effect by the FSC does not have a significant effect on the Company’s accounting policies:

Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules”

The amendment introduces an exception to IAS 12 that specifies that the Company shall not recognize deferred income tax assets and liabilities for Pillar Two income taxes and shall not disclose information about such deferred income taxes, but shall disclose that it has applied this exception and shall disclose current income tax expense (income) related to Pillar Two income taxes separately. In addition, if the Pillar Two Act has been enacted or substantively enacted but has not yet come into force, the Company shall disclose its qualitative and quantitative information known or reasonably estimated to

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be exposed to the Pillar Two income tax for the users to know the situation. After the issuance of this amendment, the Company shall immediately and retroactively apply this exception and disclose the fact that it has been applied; the other disclosure requirements apply to annual reporting periods after January 1, 2023, and do not apply to interim financial statements with the end date of interim period before December 31, 2023.

(II) IFRSs issued by the International Accounting Standards Board (IASB) that have been endorsed by the FSC and will come into effect in 2024:

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendment to IFRS 16 “Lease Liabilities in Sale and January 1, 2024 (Note 2) Leasebacks” Amendments to IAS 1 “Classification of Liabilities as January 1, 2024 Current or Non-current” Amendments to IAS 1 “Non-current Liabilities with January 1, 2024 Covenants” Amendments to IAS 7 and IFRS 7 “Supplier Financing January 1, 2024 (Note 3) Arrangements”

Note 1: Unless stated otherwise, the above new/revised/amended standards or interpretations are effective for annual reporting periods beginning on their respective effective dates.

Note 2: A seller-lessee applies the amendments retrospectively to IFRS 16 to sale and leaseback transactions entered into after the date of initial application.

Note 3: When the amendments apply for the first time, some requirements for disclosure are exempted.

As of the date the financial statements were authorized, the Company is making continuous assessment and concludes that the amendments of other standards and interpretations will have no significant impact on the financial position and financial performance.

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(III) IFRS issued by the International Accounting Standards Board (IASB) but not yet endorsed and issued into effect by the FSC

Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution To be determined by of Assets between an Investor and its Associate or Joint IASB Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial application of IFRS 17 and January 1, 2023 IFRS 9 - Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

Note 1: Unless stated otherwise, the above new/revised/amended standards or interpretations are effective for annual reporting periods beginning on their respective effective dates.
Note 2: This amendment applies for annual reporting periods beginning after January 1, 2025. At the initial application of the amendment, the number of influences is recognized in the retained reserve at the date of initial application. When the Company adopts a non-functional currency as the presentation currency, the effects will be reclassified as the exchange differences arising from the translation of the financial statements of foreign operations under equity on the initial application date.

As of the date the financial statements were authorized, the Company is continuously assessing the possible impact that the application of other standards and interpretations will have on the financial position and financial performance and will disclose the relevant impact when the assessment is completed.

IV. Summary of Significant Accounting Polices

The summary of significant accounting policies applied in the preparation of the parent company only financial statements are set out below. The following accounting policies have been consistently applied to all periods presented in the parent company only financial statements, except as described in Notes III and IV regarding accounting changes.

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(I) Statement of compliance

The parent company only financial statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC.

(II) Basis of preparation

Except for the following significant items of balance sheet, this parent company only financial statement has been prepared at historical cost:

Financial assets measured at fair value through profit or loss;
Financial assets measured at fair value through other comprehensive income;
The net defined benefit liability is the fair value of pension fund assets less the present value of defined benefit obligations.

In preparing the parent company only financial statements, the equity method is adopted to the investments in subsidiaries and associates. For the purpose of making the current profit and loss, other comprehensive income and equity in this parent company only financial statement identical to those in the Company’s owner in the consolidated financial statements, several accounting treatment differences under individual and consolidated basis are adjusted into “Investments Accounted for Using Equity Method”, “Share of the Profit or Loss of Subsidiaries and Associates Accounted for Using the Equity Method”, and “Share of Other Comprehensive Income of Subsidiaries and Associates Accounted for Using Equity Method”.

(III) Functional currency and presentation currency

The Company uses the currency of the primary economic environment in which the entity operates as the functional currency. The parent company only financial statements are presented in New Taiwan dollars, the Company’s functional currency. All financial information presented in New Taiwan dollars are in thousands of New Taiwan dollars.

(IV) Classification of current and non-current assets and liabilities

Assets that meet one of the following criteria are classified as current assets. All assets that are not classified as current assets are classified as non-current assets:
(1) Assets that are expected to be realized, or are intended to be sold or consumed within the normal business cycle;

126

  - (2) Assets held mainly for trading purposes;

  - (3) Assets that are expected to be realized within twelve months after the reporting period; or

  - (4) The asset is cash and cash equivalents, excluding restricted assets and those that are to be exchanged or used to settle liabilities more than twelve months after the reporting period.

Liabilities that meet one of the following criteria are classified as current liabilities. All liabilities that are not classified as current liabilities are classified as non-current liabilities:
- (1) Liabilities that are expected to be settled within the normal business cycle;
- (2) Liabilities held mainly for trading activities.
- (3) Liabilities that are expected to be due for settlement within twelve months after the reporting period; or
- (4) Liabilities for which the repayment date cannot be extended unconditionally to more than 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 affect its classification.
(V) Foreign currency transactions
When preparing the parent company only financial statements, traders in currencies other than the Company’s functional currency (foreign currency) are recognized by translation to the functional currency based on the exchange rate of the transaction day. At the end of the reporting period, monetary items denominated in foreign currencies are translated into the functional currency based on the exchange rate of the transaction day; non-monetary items denominated in foreign currencies and measured at fair value are translated into the functional currency based on the exchange rate on the day of the fair value measurement; non-monetary items denominated in foreign currencies and measured at historical cost are translated into the functional currency based on the exchange rate of the transaction day. The exchange differences arising from translation are recognized in profit or loss in the period in which they arise.

For purpose of preparing the parent company only financial statements, the assets and liabilities of foreign operations of the Company shall be translated to NTD by the

127

exchange rate on ending date of the reporting period; the income and expense items shall be translated to NTD at the average exchange rate of the current period, and the resulting exchange difference shall be recognized as other comprehensive profit or loss and accumulated as the translation difference in the financial statements of foreign operations under equity.

(VI) Cash and cash equivalents

Cash includes cash on hand and current deposits. Cash equivalents refer to 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. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are classified as cash equivalents.

(VII) Financial instruments

Accounts receivable are initially recognized when they are incurred. All other financial assets and liabilities shall be recognized initially when the Company becomes a party to the contractual provisions of the financial instruments. Financial assets (other than accounts receivable that do not contain significant financial components) or financial liabilities not measured at fair value through profit or loss shall be initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance. Accounts receivable that do not contain significant financial components shall be initially measured at transaction price.

Financial assets

At initial recognition, financial assets shall be classified as financial assets at amortized cost, financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. The Company reclassifies all affected financial assets from the first day of the next reporting period only when there is a change in the business model for financial assets management.

(1) Financial assets measured at amortized cost

Financial assets are measured at amortized cost when they meet all of the following criteria and are not designated as at fair value through profit or loss:

A. The financial assets are held under the business model with the purpose of collecting contractual cash flows.

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B. The contract terms of the financial assets generate cash flow on a specific date, and such cash flow is solely for the payment of the principle and the interest on outstanding principle amount.

Such assets are subsequently measured at amortized cost based on the initially recognized amount plus or minus accumulated amortization calculated using the effective interest method, adjusted for any loss allowance. Interest income, foreign currency exchange gains and losses, and impairment losses are recognized in profit or loss. Gains or losses are recognized in profit or loss at derecognition.

(2) Financial assets at FVTPL

Financial assets not classified as financial assets at amortized cost or at fair value through other comprehensive income are measured at fair value through profit or loss, including derivative financial assets. The Company may irrevocably designate financial assets that qualify as financial assets at amortized cost or at fair value through other comprehensive income as financial assets at fair value through profit or loss at the time of initial recognition in order to eliminate or materially reduce accounting mismatch. Such assets shall be measured at fair value subsequently, and their net gains or losses shall be recognized in profit or loss.

(3) Financial assets at FVTOCI

At initial recognition, the Company has made an irrevocable election to recognize subsequent changes in the fair value of equity instruments not held for trading in other comprehensive income. The above election is made on an instrument-by-instrument basis.

Investments in debt instruments are subsequently measured at fair value. Interest income, foreign currency exchange gains and losses, and impairment losses calculated using the effective interest method are recognized in profit or loss, and the remaining net gains or losses are recognized in other comprehensive income. Upon derecognition, the cumulative amount in other comprehensive income shall be reclassified to profit or loss.

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Investments in equity instruments are subsequently measured at fair value. Dividend income (unless it obviously represents the recovery of a portion of cost of investment) is recognized in profit or loss. The remaining net gains or losses are recognized in other comprehensive income and are not reclassified to profit or loss.

Dividend income from equity investments is recognized on the date when the Company has the right to receive the dividend (usually the ex-dividend date).

(4) Impairment of financial assets

The Company recognizes loss allowance for expected credit losses on the financial assets measured at amortized cost (including cash and cash equivalents, financial assets at amortized cost, notes and accounts receivable, other receivables, refundable deposits and other financial assets).

The loss allowance is measured at 12-month expected credit losses for the following financial assets, and at the lifetime expected credit losses of the other financial assets:

A. The credit risk of debt securities is determined to be low at the reporting date; and
B. The credit risks of other debt securities and bank deposits (i.e., the risk of default on financial instruments over the expected life) have not increased significantly since the initial recognition.

The loss allowances for accounts receivable and contract assets are measured at the amount of lifetime expected credit losses.

When determining whether the credit risk has increased significantly since the initial recognition, the Company has considered reasonable and provable information (which can be obtained without undue costs or inputs), including qualitative and quantitative information, and analyses based on the Company’s historical experience, credit assessment and forward-looking information.

Lifetime expected credit losses result from all possible default events over the expected life of the financial instruments.

The 12-month expected credit losses are expected credit losses that result from possible default events within 12 months after the reporting date (or for shorter

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periods, if the expected life of the financial instrument is less than 12 months). The maximum period for which expected credit losses are measured is the maximum contract period over which the Company is exposed to credit risk. Expected credit losses are weighted estimates of the probability of credit losses over the expected life of the financial instruments. Credit losses are measured at the present value of all cash shortfalls, which is the difference between the cash flows that the Company could receive under the contract and the cash flows that the Company expects to receive. Expected credit losses are discounted at the effective interest rate of the financial asset.

On each reporting date, the Company evaluates whether credit impairment occurs to the financial assets measured at amortized cost and debt securities measured at fair value through other comprehensive income. Credit impairment occurs to a financial asset when one or more events that have an adverse effect on the estimated future cash flows of the financial asset. Evidence proving that credit impairment occurs to a financial asset includes observable information about the following events:

A. Significant financial difficulty of the borrower or issuer;
B. Defaults, such as delay or overdue for more than 90 days;
C. The Company has made concessions to the borrower that the Company would not consider otherwise for economic or contractual reasons related to the borrower’s financial difficulties;
D. The borrower is very likely to apply for bankruptcy or carry out other financial reorganization; or
E. The active market for the financial assets has disappeared due to financial difficulties.

The loss allowance for financial assets at amortized cost is deducted from the carrying amount of the assets. The loss allowance for investments in debt instruments at fair value through other comprehensive income are recognized in other comprehensive income (without reducing the carrying amount of the asset), and the provision or reversal amount of loss allowance is recognized in profit or loss.

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When the Company does not have a reasonable expectation of recovering all or part of a financial asset, the total carrying amount of the financial asset is reduced directly. The Company analyzes the timing and amount of offset on a case-by-case basis to determine whether there is a reasonable expectation of recovery. The Company expects that the offset amount will not be reversed significantly. However, the offset financial assets are still enforceable in order to comply with the Company’s procedures for recovering overdue amounts.

(5) Derecognition of financial assets

A financial assets will be derecognized only when the Company’s contractual rights to the cash flows from that asset are terminated, or when the financial asset is transferred and substantially all the risks and returns of ownership to that asset have been transferred to another entity, or when substantially all the risks and returns of ownership are neither transferred nor retained, and the Company does not retain control over that financial asset.

If the Company enters into a transaction to transfer a financial asset and retains all or substantially all of the risks and returns of ownership to the transferred asset, the financial asset will continue to be recognized on the balance sheet.

(VIII) Financial liabilities and equity instruments

Classification of liabilities and equity
Debt and equity instruments issued by the Company are classified as either financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments.
Equity instruments
Equity instrument refers to any contract that recognizes the remaining interest of the Company after reducing all its liabilities from its assets. Equity instruments issued by the Company are recognized at the proceeds received, net of the cost of direct issue.
Financial liabilities

Financial liabilities that are not held for trading and are not designated as at fair value through profit or loss (including notes payable, accounts payable and other payables) are measured at fair value plus directly attributable transaction costs at

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initial recognition; subsequently, they are measured at amortized cost using the effective interest rate method, and interest expenses not capitalized in the asset cost are included in non-operating income and expenses.

Derecognition of financial liabilities

A financial liability is derecognized by the Consolidated Company when the contractual obligation is either discharged or canceled or expires.

The difference between the carrying amount of the financial liability derecognized and the total consideration paid and payable (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss, and included in non-operating income and expenses.

Mutual offset of financial assets and liabilities

Financial assets and financial liabilities are offset and recognized in the balance sheet on a net basis only when the Consolidated Company has the legal right to do so and has the intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

(IX) Inventories

Inventories are stated at the lower of cost or net realizable value. Inventories are stated at standard cost at ordinary times, and are adjusted to approximate weighted average cost at the end of the reporting period. Net realizable value is calculated as the estimated selling price less the costs to be incurred until completion and the selling expenses.

(X) Investments accounted for using equity method

Investments accounted for using equity method include subsidiaries, associates and joint ventures.

Associates are companies over which the Company exercises significant influence, but not subsidiaries or joint ventures. Significant influence refers to the power to participate in the investee’s financial and operating policy decisions, but not the power to control or jointly control such policy decisions.

In joint ventures, the Company and another entity engage in economic activities under joint control through a contractual agreement, meaning that strategic financial and operating decisions related to the joint venture must be made with the consensus of those sharing control. If another entity is created under a joint venture agreement in

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which each of the joint venture controllers has an interest, that entity is a jointly controlled entity.

The excess of the acquisition cost over the Company’s share of the net fair value of the identifiable assets and liabilities of the associate and the joint venture at the date of acquisition is recognized as goodwill and is included in the carrying amount of the investment. The excess of the Company’s share of the net fair value of the identifiable assets and liabilities of its associates and joint ventures over the acquisition cost at the date of acquisition is recognized as a gain immediately upon reassessment.

In assessing impairment, the Company considers the entire carrying amount of the investment (including goodwill) as a single asset and compares the recoverable amount (higher of value in use or fair value less selling cost) with the carrying amount to test for impairment, and the impairment loss recognized is included in the carrying amount of the investment. Any reversal of the impairment loss is recognized to the extent of the subsequent increase in the recoverable amount of the investment.

If the Company fails to subscribe for new shares issued by an associate or a joint venture in proportion to its shareholding ratio, resulting in a change in shareholding ratio and a consequent increase or decrease in the net equity value of an investment, the increase or decrease is adjusted to capital surplus and investments accounted for using the equity method. However, if the ownership interest in an associate decreases because the Company does not subscribe for or acquire new shares in proportion to its shareholding ratio, the amount recognized in other comprehensive income related to the associate is reclassified on a pro rata basis to reflect the decrease in ownership interest,

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which is accounted for on the same basis as that used for the disposal of assets or liabilities by the associate directly.

(XI) Property, plant and equipment

Property, plant and equipment are recognized at acquisition cost and presented at cost less accumulated depreciation and accumulated impairment. The cost of property, plant and equipment consists of expenditures that are directly attributable to the acquisition or construction of the assets, any other directly attributable costs that are necessary to bring the asset to a useable condition for its intended purpose, and dismantling, relocation and site restoration costs. The foregoing costs include the cost for replacing part of the plant and equipment and the necessary interest expense incurred on construction contracts.

Real estate under construction is presented at cost less all recognized impairment losses. (Cost includes professional service expenses). Such real estate is classified to the appropriate category of property, plant and equipment when completed and reaching the expected use state. Such assets are depreciated on the same basis as other real estate assets, which commences when the assets reach the expected use state. Self-owned land is not depreciated.

When a major item of property, plant and equipment is required to be replaced on a regular basis, the Company considers that item as an individual asset and recognizes depreciation according to specified useful life and depreciation method. Major maintenance costs are considered as replacement costs and recognized as part of the carrying amount of property, plant and equipment if the conditions for recognition are met. Other maintenance expenses are recognized in profit or loss. The present value of the expected decommissioning cost of an asset after use is included in the cost of the related asset if it meets the recognition criteria for liability reserve.

Each part of property, plant and equipment is depreciated separately and considered as a separate item (significant component) of property, plant and equipment if its cost is material in relation to the total cost of that item.

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components of property, plant and equipment on a straight-line basis because it best reflects the expected consumption pattern of future economic effects of the assets.

Depreciation is calculated according to the following estimated useful lives:

Property and building	5 - 51 years
Machinery equipment	2 - 16 years
Molding equipment	2 - 3 years
Transportation equipment	2 - 6 years
Computer and telecommunication equipment	4 years
Business equipment	2 - 7 years
Leasehold improvements	5 years
Other equipment	2 - 11 years

Depreciation is calculated using the straight-line method to write off the cost of assets less their residual values over their useful lives. Estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, and the impact of any changes in estimates is recognized on a deferred basis.

Items of property, plant and equipment are derecognized when they are disposed of or when no future economic benefits are expected from the continued use of the asset. Gains or losses arising from the disposal or scrapping of property, plant and equipment are recognized in profit or loss as the difference between the disposal price and the carrying amount of the asset.

(XII) Leases

Lease judgment

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

The Company as lessee

The Company recognizes right-of-use assets and lease liabilities at the inception date of the lease. Right-of-use assets are measured initially at cost, which consists of the initially measured amount of the lease liability, adjusted for any lease payments made on or before the inception date of the lease, plus original direct costs incurred and the estimated costs to dismantle or remove the underlying asset and reinstate the underlying asset or its original location, less any lease incentives received.

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The right-of-use assets are subsequently depreciated on a straight-line basis from the lease commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. In addition, the Company periodically evaluates right-of-use assets for impairment and handles any incurred impairment losses, and adjusts right-of-use assets in case of remeasurement of lease liabilities.

Lease liabilities are measured initially at the present value of outstanding lease payments at the inception date of the lease. The implicit interest rate of the lease is easy to determine, the discount rate is that interest rate, otherwise the Company’s incremental borrowing rate is used. Generally, the Company uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of lease liabilities consist of:

(1) Fixed payments, including substantial fixed payments;
(2) Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the inception date of the lease.

Subsequently, the interests on lease liabilities are calculated using the effective interest method, and the lease liabilities are remeasured when the following circumstances occur:

(1) A change in the index or rate used to determine lease payments results in a change in future lease payments;
(2) A change in the estimate of whether to exercise the option to extend or terminate the lease, which changes the assessment of the lease term;
(3) Changes in the amount of residual value guarantee expected to be paid;
(4) Changes in the evaluation of purchase options for the underlying assets;
(5) Changes in the subject matter, scope or other terms of the lease.

When a lease liability is remeasured as a result of changes in the index or rate used to determine the lease payments, changes in the amount of residual value guarantee, and changes in the evaluation of purchase, extension or termination options, the carrying amount of the right-of-use asset is adjusted accordingly, and the remaining amount of the remeasurement is recognized in profit or loss when the carrying amount of the right-of-use asset is reduced to zero.

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For lease modifications that reduce the scope of the lease, the carrying amount of the right-of-use asset is reduced to reflect the partial or full termination of the lease, and its difference from the remeasurement amount of the lease liability is recognized in profit or loss.

The Company presents right-of-use assets and lease liabilities that do not meet the definition of investment property as separate line items on the balance sheet.

For short-term leases of business equipment and other equipment and leases of low-value assets, the Company chooses not to recognize right-of-use assets and lease liabilities, and but recognizes the related lease payments as expenses on a straight-line basis over the lease term.

For sale and leaseback transactions, whether the transfer of an asset to a buyer-lessor satisfies the requirements for sale is evaluated in accordance with IFRS 15. If it is determined that the asset is sold, such asset is derecognized and the portion of the right transferred to the buyer-lessor is recognized in profit or loss. Leaseback transactions are accounted for as lessee transactions, and the right-of-use asset is measured at the original amount of the portion of the asset leased back. If the requirements for sale are not met, the transferred asset is further recognized and the consideration received is recognized as a financial liability.

The Company as lessor

Lease agreements in which the Company is the lessor are classified as a finance lease if substantially all the risks and returns of ownership to the underlying asset have been transferred or an operating lease otherwise at the inception date of the lease. In the evaluation, the Company considers relevant specific indicators, including whether the lease term covers a significant portion of the economic life of the underlying asset.

If the Company is a sub-lessor, the Company shall handle the transactions of primary lease and sublease separately and evaluate the classification of the sublease transaction based on the right of use derived from the primary lease. If the primary lease is a short-term lease and a recognition exemption is applied, the sublease transaction shall be classified as an operating lease.

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(XIII) Intangible assets

The Company acquired intangible assets with finite useful lives are shown at cost less accumulated amortization and accumulated impairment losses.

Amortization amount is calculated on a straight-line basis over the following useful lives:

Computer software Economic benefits or contract term Estimated useful life and amortization method are reviewed at the end of the reporting period, and the impact of any changes in estimates is deferred.

(XIV) Impairment of non-financial assets

The Company evaluates at each reporting date whether there is any indication showing that the carrying amount of non-financial assets (other than inventories, contract assets, and deferred tax assets) may be impaired. If any indication exists, the recoverable amount of the asset shall be estimated.

For the purpose of impairment test, a group of assets of which a significant portion of the cash inflows are independent of other individual assets or the cash inflow of an asset group is identified as the smallest identifiable asset group. Goodwill acquired from business merger is allocated to each cash generating unit or group of cash generating units that is expected to benefit from the merger synergies.

The recoverable amount is the higher of the fair value of an asset or cash generating unit less the disposal cost and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or cash generating unit.

An impairment loss is recognized if the recoverable amount of an asset or cash generating unit is less than its carrying amount.

An impairment loss is recognized immediately in profit or loss. The carrying amount of amortized goodwill of a cash generating unit is reduced first, and then the carrying amount of that asset is reduced in proportion to the carrying amount of other assets in the unit.

Impairment losses on goodwill are not reversed. Non-financial asset other than goodwill is reversed only to the extent that the carrying amount (net of depreciation or

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amortization) of the asset does not exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset in previous years.

(XV) Provisions

The provision for liabilities is recognized when there is a present obligation arising from past events, it is likely that an outflow of economic resources will be required to settle the obligation, and the amount of the obligation can be reliably estimated.

The amount recognized as a provision for liabilities is the best estimate of the expenses that will be required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties of the obligation. If the provision for liabilities is measured at the estimated cash flows to settle the present obligation, the carrying amount is the present value of such cash flows.

(XVI) Revenue recognition

Revenue is measured at the consideration expected to be received for the goods or services transferred. The Company recognizes the revenue when control over goods or services is transferred to the customer to satisfy performance obligations.

Sales of goods

The Company recognizes the revenue when control of the product is transferred to the customer. The control over a product is transferred when the product is delivered to the customer, the customer has complete control over the product’s distribution channels and price, and there are no outstanding obligations that would affect the customer’s acceptance of the product. Delivery occurs when the product is shipped to a specific location and the risks of obsolescence and loss are transferred to the customer. The customer has accepted the product under a sales contract, the terms of acceptance have expired, or the Company has objective evidence showing that all conditions of acceptance have been met.

The Company recognizes accounts receivable upon delivery of goods because the Company has an unconditional right to receive consideration at that time.
Financial components

The Company does not adjust the time value of money of the transaction price because it expects the time interval between the transfer of goods or services to the customer and the time the customer pays for those goods or services to be less than

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one year for all customer contracts.

(XVII)Government grants

Government grants are recognized only when the conditions attached to the grant are met and the grant is expected to be received.

(XVIII) Employee benefits

Defined contribution plans
Contribution obligations to defined contribution pension plans are recognized as expenses over the employees’ service provision period. Prepaid contributions are recognized as an asset to the extent that they result in a cash refund or a reduction in the future payments.
Defined benefit plan

The Company’s net obligation for defined benefit plans is calculated by discounting the present value of future benefit amounts earned by employees for current or prior periods of service, less the fair value of plan assets.

The defined benefit obligation is actuarially calculated annually by a qualified actuary using the projected unit benefit method. When the calculation results are probable to be favorable to the Company, the assets are recognized to the extent of the present value of any economic benefits that may be obtained in the form of refunds of contributions from the plan or reductions in future contributions to the plan. The present value of economic benefits is calculated taking into account any minimum contribution requirements.

The remeasurement of the net defined benefit liabilities, including actuarial gains and losses, the return on plan assets (excluding interest), and any changes in the impact of the asset ceiling (excluding interest) are recognized immediately in other comprehensive income and accumulated in retained earnings. The Company determines that net interest expense (income) on the net defined benefit liability (asset) uses the net defined benefit liability (asset) and discount rate determined at the beginning of the annual reporting period. Net interest expense and other expenses of the defined benefit plan are recognized in profit or loss.

Changes in benefits related to prior service costs or reduced benefits or losses resulting from plan revisions or reductions are recognized immediately in profit or

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loss. The Company recognizes gains or losses on settlement of a defined benefit plan when the settlement occurs.

Short-term employee benefits

Short-term employee benefit obligations are recognized as expenses when services are rendered. If the Company has a present legal or constructive obligation to pay as a result of past service rendered by employees, and the obligation can be estimated reliably, the amount is recognized as a liability.

(XIX) Borrowing costs

Borrowing costs directly attributable to the acquisition of an asset are included as part of the cost of that asset until substantially all activities necessary to bring the asset to its intended use or sale state have been completed.

Except for the above, all other borrowing costs are recognized as profit or loss in the year in which they are incurred.

(XX) Income tax

The income tax for the period comprises current and deferred tax.

Current income taxes include income taxes payable or tax refunds receivable based on the taxable income (loss) in current year, and any adjustments to income taxes payable or tax refunds receivable in previous years. The amount is the best estimate of the amount expected to be paid or received, as measured by the statutory tax rate or the tax rate under substantive legislation at the reporting date.

Deferred income taxes are measured and recognized for temporary differences between the carrying amounts of assets and liabilities at the date of financial reporting and their tax bases. Unused tax losses and unused tax credits in later periods of transfer, and deductible temporary differences are recognized as deferred tax assets to the extent that it is very likely that future taxable income will be available. They shall also be reassessed at each reporting date and reduced to the extent that the relevant income tax benefit is not within the scope very likely to be realized; or the originally reduced amount shall be reversed to the extent that it is very likely to generate sufficient taxable income.

Deferred tax assets and deferred tax liabilities are offset only if the following conditions are met simultaneously:

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There is a legally enforceable right to offset current tax assets against current tax liabilities; and
The deferred tax assets and liabilities are relate to one of the following taxpayers that are subject to the income tax levied by the same taxation authority:
(1) The same taxpayer; or
(2) Different taxpayers, provided that each taxpayer intends to settle current income tax liabilities and assets on a net basis, or to realize assets and settle liabilities simultaneously in each future period in which significant amounts of deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled.

(XXI) Earnings per share

The Company presents basic and diluted earnings per share attributable to equity holders of the Company’s common shares. Basic earnings per share is calculated by dividing the profit or loss attributable to the equity holders of the Company’s common shares by the weighted average number of outstanding common shares in current period. Diluted earnings per share is calculated by dividing the profit or loss attributable to the equity holders of the Company’s common shares by the weighted average number of outstanding common shares, adjusted for the impact of all potential diluted common shares.

(XXII)Segment information

Information on segments has been disclosed by the Company in the consolidated financial statements, thus will not be disclosed in the parent company only financial statements.
V. Significant Accounting Judgment, Estimates, and Assumptions and the Main Sources of Assumption Uncertainty

When the Comapny adopts accounting policies, the management must make relevant judgments, estimates and assumptions based on experience and other relevant factors for the information that is not easily obtained from other sources. Actual results may differ from estimates.

The Company includes the economic impacts of COVID-19, Ukraine-Russia conflict and inflation into considerations for significant accounting estimates. The Management will

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continuously review estimates and underlying assumptions, and recognize changes in accounting estimates in the period when the changes occur and in the future periods affected. Management is required to make judgments, estimates and assumptions when preparing the parent company only financial statements. They will affect the adoption of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from estimates.

Information about uncertainties in assumptions and estimates that have a significant risk of causing a material adjustment in the next year is summarized below. The uncertainties in the following assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities in the next financial year and have reflected the impact of the COVID-19 pandemic. The relevant information is summarized below:

(I) Lose allowance for accounts receivable
The loss allowance for accounts receivable is estimated based on the assumptions of default risk and expected loss rate. The Company considers historical experience, current market conditions and forward-looking estimates at each reporting date to determine the assumptions and inputs to be used in the impairment calculation. For details of the relevant assumptions and inputs, please refer to Note VI(IV).
(II) Evaluation of inventories
Since inventories are measured at the lower of cost or net realizable value, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on reporting date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes due to rapid changes in the industry.
(III) Impairment evaluation of investments accounted for using equity method When there is an indication that an investment by equity method has impaired and the carrying amount may not be recovered, the Company will evaluate such impairment immediately. The Company evaluates the impairment loss based on the investee’s future cash flow projections, including the sales growth rate and capacity utilization rate estimated by the investee’s internal management, and analyzes the reasonableness of the related assumptions.

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(IV) Impairment evaluation of tangible assets and intangible assets (excluding goodwill) During the asset impairment evaluation process, the Company relies on its subjective judgment, use mode of assets and characteristics of the industry, to determine the independent cash flows of a particular asset group, useful life of the assets and the likely future income and loss, and any change in estimates due to changes in economic conditions or the Company’s strategy may cause significant impairment or reversal of a recognized impairment loss in the future.
(V) Recognition and measurement of provision for liabilities
Provisions for product warranty liabilities are estimated at the time of revenue recognition and are based on the number of products under warranty, the history of the products, the expected maintenance rate and the expected unit maintenance cost. The Company continuously reviews the basis of these estimates and revises them when appropriate. Any change in the above estimate basis could materially affect the estimation of the provision for product warranty liabilities.
(VI) Realizability of deferred tax assets
Deferred tax assets are recognized only when it is probable that there will be sufficient taxable income for deductible temporary differences to be used in the future. Assessing the realizability of deferred tax assets must involve significant accounting judgments and estimates by the management, including assumptions about expected future sales revenue growth and profit margins, tax holiday periods, available income tax credits, and tax planning, etc. Any changes in the global economic environment, industrial environment and laws may cause significant adjustments to deferred tax assets.
(VII) Measurement of defined benefit obligation
The defined benefit cost and net defined benefit liabilities (assets) to be recognized for the defined benefit pension plan are actuarially valued using the projected unit benefit method. The actuarial assumptions adopted include discount rate, employee turnover rate, and increment rate of future salary. Such assumptions could materially affect the amounts of expenses and liabilities recognized if they change as a result of changes in market and economic conditions. For the significant actuarial assumptions used in the actuarial calculations and the sensitivity analysis, please refer to Note VI(XVII).

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VI. Summary of Significant Accounting Titles

(I) Cash and cash equivalents

(I)	Cash and cash equivalents
(II)	Cash Bank deposits Financial assets at FVTPL Current items: Mandatorilymeasured at FVTPL Domestic listed (OTC) stocks Adjustments Non-current items: Mandatorilymeasured at FVTPL Overseas non-listed (non-OTC) stocks Adjustments	December 31,2023 $ 2,537 615,664 $ 618,201 December 31,2023 $ 417,099 119,830 $ 536,929 December 31,2023 $ 27 (27) $ -	December 31,2022
			$ 2,574 976,450 $ 979,024
			December 31,2022
			$ 380,865 (3,863)
			$ 377,002
			December 31,2022
			$ 27 (27) -

Profits (losses) recognized in relation to the financial assets at fair value through profit or loss are listed below:

profit or loss are listed below:
Mandatorily measured at FVTPL Profits (losses) on valuation Gain on disposal Dividend revenue	2023 $ 123,694 $ 2,841 $ 23,144	2022
		$ (11,149)
		$ 2,095 $ 16,926

The Company has no financial assets at fair value through profit or loss pledged to others.
The above equity instruments of the Company are held for trading and are therefore measured at fair value through profit or loss.
The Company invested in AUTECH EUROPE, a French agency, at an amount of FRF 5,000 (equaling to NT$27 thousand) in 1990, and the total capital amount of AUTECH EUROPE was FRF 100,000. In 1996, due to value impairment and little hope of recovery of the investee companies, all were recognized as losses.

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(III) Financial assets at FVOCI - non-current

Financial assets at FVOCI - non-current
Measured at FVTOCI Domestic listed (OTC) stocks Adjustments	December 31,2023 $ 5,372 (3,381) $ 1,991	December 31,2022
		$ 21,391 (10,933) $ 10,458

The Company holds the above equity instruments as long-term strategic investments and therefore designates these investments as at fair value through other comprehensive income.
The Company disposed of equity investments at fair values of NT$7,012 thousand and NT$3,808 thousand in 2023 and 2022, respectively, and the accumulated losses and gains on disposal were NT$(9,038) thousand and NT$1,125 thousand, respectively. The above accumulated disposal losses and gains have been transfered to the retained earnings from other equities.
Amounts recognized in profit or loss in relation to the financial assets at fair value through other comprehensive income are listed below:

through other comprehensive income	are listed below:
Measured at FVTOCI Dividend income recognized in profit or loss Held at the end of the period Derecognized during the period Changes in fair value recognized in other comprehensive income Accumulated gains (losses) transferred to retained earnings due to derecognition	2023 $ 164 - $ 164 $ (1,486) $ (9,038)	2022
		$ 1,188 -
		$ 1,188
		$ (13,848) $ 1,125

The Company has no financial assets at fair value through other comprehensive income pledged to others.
(IV) Financial assets measured at amortized cost

Pledged time deposits Non-current	December 31,2023 $ 10,137	December 31,2022
		$ -
	$ 10,137	$ -

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For information on pledged financial assets at amortized cost, please refer to Note VIII.

(V) Notes and accounts receivable

Notes and accounts receivable
Notes receivable Less: Loss allowance Net Account receivables Less: Loss allowance Net	December 31,2023 $ 58,176 (7,058) $ 51,118 December 31,2023 $ 305,555 (965) $ 304,590	December 31,2022
		$ 258,779 (4,683)
		$ 254,096
		December 31,2022
		$ 421,595 (1,743) $ 419,852

The average credit period for merchandise sales ranges from 30 to 90 days for monthly statement, and accounts receivable are non-interest-bearing.

The loss allowance for accounts receivable of the Company is recognized by simplified method under IFRS 9 according to lifetime expected credit losses. The lifetime expected credit loss is calculated using provision matrix and takes past breach records of the customer, the current financial condition and industrial economic trend. Since the Company’s historical experience of credit losses shows that there is no significant difference in the pattern of losses among different customer groups, therefore, the reserve matrix does not further distinguish between the customer groups, but only determines the expected credit loss rate based on the number of days overdue on accounts receivable.

If any evidence shows the counterparty faces significant financial difficulty and the collectible amount cannot be reasonably expected, the Company will directly offset the relevant accounts receivable but keep track of the receivables. The recovered amount is recognized in profit or loss.

The Company measures the loss allowance of note and accounts receivable according to the provision matrix as follows:

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	December 31,2023
Total carrying amount $ 345,791 5,677 4,033 8,145 85 $ 363,731	Loss allowance (lifetime expected credit losses) $ (7,537) (61) (121) (249) (55) $ (8,023) December 31,2022	Amortized cost
		$ 338,254 5,616 3,912 7,896 30
		$ 355,708

Total carrying amount $ 659,895 12,226 7,863 116 274 $ 680,374	Loss allowance (lifetime expected credit losses) $ (5,863) (245) (194) (34) (90) $ (6,426)	Amortized cost
		$ 654,032 11,981 7,669 82 184 $ 673,948

The expected credit loss ratios of the Company for each of the above sections (excluding unusual items for which 100% of the total amount has been presented) were 1% or less for not past due and 90 days or less past due; 5% or less for 365 days or less past due; and 5% - 80% for more than 365 days past due.

The changes in the Company’s loss allowance of notes and accounts receivable are as follows:

follows:
Opening balance Presentation (reversal) in the current period Write-offs in the current period Ending balance	2023 $ 6,426 1,686 (89) $ 8,023	2022
		$ 26,338 891 (20,803) $ 6,426

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(VI) Inventories

Inventories
December 31,2023 Products $ 4,655 Raw materials 197,963 Work in process 747,642 Finished goods 58,755 $ 1,009,015 1. Inventory-related expenses recognized in the current period 2023 Cost of goods sold $ 1,248,114 Loss on market value decline and obsolete and slow-moving inventories 41,018 Inventory obsolescence 3,382 Inventory loss 3,346 Income from sale of scraps (396) Idle capacity related costs 36,100 $ 1,331,564	December 31,2022
	$ 6,264 289,213 661,340 64,462 $ 1,021,279
	2022
	$ 1,770,139 26,215 2,352 2,554 (1,205) 25,501 $ 1,825,556

As of December 31, 2023 and 2022, there were no guarantees or pledges on inventories.

(VII) Investments accounted for using equity method

Subsidiaries Associates	December 31,2023 $ 835,556 116,713 $ 952,269	December 31,2022
		$ 892,166 109,850 $ 1,002 016

Invested subsidiaries

The Company’s subsidiaries are listed below:

Investee company	Main business Foreign investment and international trade Manufacture and sale of machinery, equipment and tools	Place of establishment and operation Cayman Islands Taiwan	Carrying December 31,2023 $ 694,302 141,254 $ 835,556	amount December 31, 2022 $ 718,246 173,920 $ 892,166	Percentage of ownership interest and voting rights held bythe Company	Percentage of ownership interest and voting rights held bythe Company
					December 31, 2023	December 31,2022
B-Way (Cayman) Co., Ltd. Yih Chuan Machinery Industry Co., Ltd.					100.00% 60.00%	100.00% 60.00%

150

(1) On August 8, 2002, the Board of Directors resolved to invest US$1,700 thousand in B-Way (Cayman) Co., Ltd. and indirectly invested in Dawei Mechantronic (Suzhou) Co., Ltd. and Shanghai Zhuwai Mechanical and Electrical Co., Ltd. through B-Way (Cayman) Co., Ltd. to engage in the sales and installation of parts and accessories of tool machines, mechanical instruments and international trade business.
(2) On May 4, 2007, the Board of Directors resolved to invest US$8,000 thousand in B-Way (Cayman) Co., Ltd. and indirectly invested in Awea Mechantronic (Suzhou) Ltd. through B-Way (Cayman) Co., Ltd. to engage in the sales and installation of parts and accessories of tool machines, mechanical instruments and international trade business.
(3) On September 23, 2013, the Board of Directors resolved to invest NT$192,570 thousand in Yih Chuan Machinery Industry Co., Ltd., and further invested NT$72,022 thousand on September 8, 2015. As of December 31, 2021, the Company held 60% of its stock options. It is engaged in the manufacture, processing and trading of various kinds of machine tools, the manufacture, processing and trading of various kinds of machine parts, and the casting of various kinds of machine parts.
(4) On August 2, 2018, the Board of Directors resolved to merge Dawei Mechantronic (Suzhou) Co., Ltd. into Awea Mechantronic (Suzhou) Ltd., and the merger was completed on September 8, 2020.
(5) The Company’s share of profit or loss and other comprehensive income in its subsidiaries using equity method in 2023 and 2022 are recognized in accordance with the subsidiaries’ financial statements audited by CPAs over the same period.

151

Invested associates

The Company’s associates are listed below:

Main business	Carrying amount December 31,2023 December 31, 2022 $ 108,435 $ 101,849 8,278 8,001 $ 116,713 $ 109,850	Percentage of ownership interest and voting rights held bythe Company	Percentage of ownership interest and voting rights held bythe Company
	December 31,2023	December 31, 2023	December 31,2022
Design and production of CNC machine tools, CNC systems, servo devices and related components with more than three axes linkage, and maintenance and sales of precision CNC machine tools Rental of machinery and equipment	$ 108,435 8,278	28.58% 13.33%	28.58% 13.33%
	$ 116,713

(1) On December 23, 2010, the Company’s Board of Directors resolved to invest US$1,700 thousand in YAMA SEIKI USA, INC. to engage in the sales and installation of parts and accessories of tool machines, mechanical instruments and international trade business.
(2) In August 2021, the Company resolved to invest NT$7,333 thousand in Huahan Leasing Co., Ltd. to engage in the machinery and equipment leasing business.
(3) The Company’s share of profit or loss and other comprehensive income in its associates using equity method in 2023 and 2022 are recognized in accordance with the associates’ financial statements audited by CPAs over the same period.

152

(VIII) Property, plant and equipment

Property, plant and equipment
Self-owned land Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Business equipment Leasehold improvements Other equipment Unfinished construction and equipments pending acceptance	December 31,2023 $ 536,761 708,016 68,815 6,130 8,395 4,776 4,050 - 1,871 39,865 $ 1,378,679	December 31,2022
		$ 536,761 741,443 74,600 5,398 12,269 6,527 5,988 - 4,009 8,406 $ 1,395,401

153

Cost Self-owned land Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Business equipment Leasehold improvements Other equipment Unfinished construction and equipments pending acceptance Accumulated depreciation Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Business equipment Leasehold improvements Other equipment Net	January 1, 2023 $ 536,761 1,162,434 221,368 50,371 56,637 11,322 18,812 749 24,057 8,406 $ 2,090,917 January 1, 2023 $ 420,991 146,768 44,973 44,368 4,795 12,824 749 20,048 $ 695,516 $ 1,395,401	Additions $ - 87 6,413 3,605 233 - 1,411 - - 31,459 $ 43,208 Depreciation $ 33,514 12,198 2,873 4,107 1,751 3,349 - 2,138 $ 59,930	Disposals $ - - - - (1,943) (24) - - - - $ (1,967) Disposals $ - - - (1,943) (24) - - - $ (1,967)	Reclassification $ - - - - - - - - - - $ - Reclassification $ - - - - - - - - $ -	December 31, 2023
					$ 536,761 1,162,521 227,781 53,976 54,927 11,298 20,223 749 24,057 39,865
					$ 2,132,158
					December 31, 2023
					$ 454,505 158,966 47,846 46,532 6,522 16,173 749 22,186
					$ 753,479 $ 1,378,679

154

Cost Self-owned land Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Business equipment Leasehold improvements Other equipment Unfinished construction and equipments pending acceptance Accumulated depreciation Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Business equipment Leasehold improvements Other equipment Net	January 1, 2022 $ 536,761 1,162,434 229,623 47,223 51,886 4,435 17,802 749 24,660 8,346 $ 2,083,919 January 1, 2022 $ 386,233 142,212 42,556 40,413 4,080 9,521 728 18,426 $ 644,169 $ 1,439,750	Additions $ - - 1,844 3,560 5,363 6,961 1,010 - 273 60 $ 19,071 Depreciation $ 34,758 12,439 2,829 4,512 789 3,303 21 2,256 $ 60,907	Disposals $ - - (10,099) (412) (612) (74) - - (876) - $ (12,073) Disposals $ - (7,883) (412) (557) (74) - - (634) $ (9,560)	Reclassification $ - - - - - - - - - - $ - Reclassification $ - - - - - - - - $ -	December 31, 2022
					$ 536,761 1,162,434 221,368 50,371 56,637 11,322 18,812 749 24,057 8,406
					$ 2,090,917
					December 31, 2022
					$ 420,991 146,768 44,973 44,368 4,795 12,824 749 20,048
					$ 695,516 $ 1,395,401

For properties, plants and equipment provided by the Company as the guarantee for borrowings, please refer to Note VIII for details.

155

The land accounted for by the Company as at December 31, 2023 and 2022 was partly agricultural land with title temporarily registered in the name of another person for an amount of NT$88,529 thousand, in respect of which the Company has obtained a certificate of creation of other rights.
(IX) Lease arrangements
Right-of-use assets

1. Right-of-use assets
Land-use right Property and building January1,2023 Additions Cost Land-use right $ 49,451 $ - Property and building 4,393 - $ 53,844 $ - January1,2023 Depreciation Accumulated depreciation Land-use right $ 39,407 $ 10,044 Property and building 2,161 1,322 $ 41,568 $ 11,366 Net $ 12,276 January1,2022 Additions Cost Land-use right $ 48,848 $ 603 Property and building 5,334 694 $ 54,182 $ 1,297	December 31,2023 December 31,2022 $ - $ 10,044 910 2,232 $ 910 $ 12,276 Disposals Others December 31,2023 $ - $ - $ 49,451 (149) - 4,244 $ (149) $ - $ 53,695 Disposals Others December 31,2023 $ - $ - $ 49,451 (149) - 3,334 $ (149) $ - $ 52,785 $ 910 Disposals Others December 31,2022 $ - $ - $ 49,451 (1,635) - 4,393 $ (1,635) $ - $ 53,844
	$
	$
	Disposals $ - (149) $ (149) Disposals $ - (149) $ (149) Disposals $ - (1,635) $ (1,635)
		$ 49,451 4,244
		$ 53,695
		December 31,2023
		$ 49,451 3,334
		$ 52,785 $ 910
		December 31,2022
		$ 49,451 4,393
		$ 53,844

156

Accumulated depreciation Land-use right Property and building Net	January1,2022 $ 29,363 739 $ 30,102 $ 24,080	Depreciation $ 10,044 1,422 $ 11,466	Disposals $ - - $ -	Others $ - - $ -	December 31,2022
					$ 39,407 2,161
					$ 41,568 $ 12,276

2. Lease liabilities

Lease liabilities
Current Non-current	December 31,2023 $ 638 280 $ 918	December 31,2022
		$ 11,420 918 $ 12,338

3. Important renting activities and terms

The Company leases some assets for periods ranging from 3 to 10 years. Upon termination of the leases, the Company does not have a preemptive right to acquire the leased assets.

4. Other lease information

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

2023 2022
Short-term lease and lease expenses
of low-value assets $ 3,210 $ 681
Total cash outflow from leases $ 11,420 $ 11,410
(X) Intangible assets
December 31, 2023 December 31, 2022
Computer software $ 5,813 $ 6,794
January 1, December 31,
Cost Additions Disposals Reclassification
2023 2023
Computer
software $ 16,556 $ 760 $ (364) $ - $ 16,952
Accumulated Amortization in December 31,
January 1, 2023 Disposals Reclassification
depreciation current period 2023
Computer
software $ 9,762 $ 1,741 $ (364) $ - $ 11,139
Net $ 6,794 $ 5,813
----- End of picture text -----

157

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

January 1, December 31,
Cost Additions Disposals Reclassification
2022 2022
Computer
software $ 15,756 $ 800 $ - $ - $ 16,556
Accumulated Amortization in December 31,
January 1, 2022 Disposals Reclassification
depreciation current period 2022
Computer
software $ 7,847 $ 1,915 $ - $ - $ 9,762
Net $ 7,909 $ 6,794
(XI) Net overdue receivables
December 31, 2023 December 31, 2022
Overdue receivables $ 860 $ 9,732
Less: allowance for uncollectible
accounts (860) (9,732)
- -
$ $
(XII) Other financial assets - current
December 31, 2023 December 31, 2022
Special funds for repatriation of
overseas funds $ 343,987 $ 353,397
-
Restricted assets - bank deposits 187,946
$ 343,987 $ 541,343
----- End of picture text -----

Regarding the special funds to be repatriated upon approval of the National Taxation Bureau, Ministry of Finance in accordance with the “Regulations of Repatriated Offshore Funds”, the Group intends to submit an investment plan to the Ministry of Economic Affairs within one year from the date on which the funds are deposited in a special account for foreign exchange deposits in accordance with Article 8 of the Regulations. Pursuant to the Regulations, the said plan was approved by the Ministry of Economic Affairs through the approval document No. 11020433960 on September 23, 2021.

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(XIII) Short-term borrowings

Short-term borrowings
December 31,2023 Secured loans $ 265,000 Credit loans 1,200,000 $ 1,465,000 Interest rate 1.6800%~1.7500% Please refer to Note VIII for the guarantees provided.	December 31,2022
	$ 435,000 1,445,000
	$ 1,880,000 1.3123%~1.9500%

(XIV) Short-term notes and bills payable

Short-term notes and bills payable
Short-term notes and bills payable Less: Discount on short-term notes and bills payable Interest rate	December 31,2023 $ 80,000 (13) $ 79,987 1.4500%	December 31,2022
		$ 290,000 (359)
		$ 289,641 1.3000%~1.7800%

(XV) Other payables

(XV) Other payables
Other expenses payable Employee compensation payable Remuneration payable to directors and supervisors Dividends payable Construction and equipment payable (XVI) Current provisions Warranty Employee benefits	December 31,2023 $ 67,499 16,000 2,750 491 212 $ 86,952 December 31,2023 $ 3,836 7,196 $ 11,032	December 31,2022
		$ 69,729 16,000 1,800 491 1,086 $ 89,106
		December 31,2022
		$ 5,272 5,783 $ 11,055

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January 1, 2023 $ 5,272 5,783 $ 11,055	New in current period $ - 1,413 $ 1,413	Reversal in currentperiod $ (1,436) - $ (1,436)	December 31, 2023
			$ 3,836 7,196
			$ 11,032
January 1, 2022 $ 4,355 6,885 $ 11,240	New in current period $ 917 - $ 917	Reversal in currentperiod $ - (1,102) $ (1,102)	December 31, 2022
			$ 5,272 5,783 $ 11,055

Warranty provision for liabilities refers to that as agreed in the sales contract of products, the management of the Company makes optimal estimate based on historical experience of the products.
Provisions for employee benefit liabilities are recognized as a liability if the Company has a present legal or constructive obligation to pay as a result of past service rendered by employees, and the obligation can be estimated reliably.

(XVII)Employee benefits

Defined benefit plan
The Company’s employee retirement plan under the “Labor Standards Act” is a defined benefit plan. Under the plan, the employee’s pension is calculated based on the number of years of service and the average salary of the six months before retirement. The Company contributes monthly an amount equal to 2% of the employees’ gross salaries to the Labor Pension Fund Supervisory Committee and deposits the funds in the name of the Committee in a special account at the Bank of Taiwan. The Funds are operated and managed by the government’s designated authorities. Accordingly, the Company does not have any right to intervene in the investments of the Funds.

The actuarial valuations of the present value of the defined benefit obligation of the Company are carried out by qualified actuaries. The major assumptions used in the actuarial valuation on the measurement date are listed below:

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(1) Actuarial assumptions on the reporting date:

Discount rate Expected salary adjustment rate	December 31,2023 1.300% 2.500%	December 31,2022
		1.400% 2.500%

(2) The amounts of pension expenses recognized in the parent company only statements of comprehensive income in respect of defined benefit plan are shown below:

shown below:
Current service cost Interest cost on defined benefit obligation Interest income on plan assets Recognized in profit or loss Remeasurement Actuarial gains (losses) - Experience adjustments Actuarial gains (losses) - Adjustments to demographic assumptions Actuarial gains (losses) - Adjustments to financial assumptions Return on plan assets Recognized in other comprehensive income Total	2023 $ 161 403 (283) 281 269 - 259 (177) 351 $ 632	2022
		$ 235 273 (180)
		328
		743 - (1,858) (2,181)
		(3,296) $ (2,968)

Pension expenses recognized in profit or loss for the above defined benefit plan are included in the following items:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses Others	2023 $ 2,274 61 230 78 (2,362) $ 281	2022
		$ 654 71 62 70 (499) $ 328

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(3) The Company’s obligation amount from defined benefit plans recognized in

the parent company only balance sheets is as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability	December 31,2023 $ 27,587 (20,614) $ 6,973	December 31,2022
		$ 28,824 (19,833) $ 8,991

(4) Changes in the present value of the Company’s defined benefit obligations are presented below:

presented below:
Opening balance Current service cost Net interest expense Remeasurement Actuarial gains (losses) - Experience adjustments Actuarial gains (losses) - Adjustments to demographic assumptions Actuarial gains (losses) - Adjustments to financial assumptions Benefits paid for plan assets Ending balance	2023 $ 28,824 161 403 269 `-` 259 (2,329) $ 27,587	2022
		$ 36,351 235 273 743 - (1,858) (6,920) $ 28,824

(5) Changes in the fair value of the Company’s plan assets are presented below:

Opening balance Interest income Remeasurement Return on plan assets Contributions from employer Benefits paid for plan assets Ending balance	2023 $ 19,833 283 177 2,650 (2,329) $ 20,614	2022
		$ 23,557 180 2,181 835 (6,920) $ 19,833

The Company expects to contribute NT$761 thousand to the defined benefit plan within one year after December 31, 2023.

162

Defined contribution benefit plan

The Company’s employee retirement plan under the “Labor Pension Act” is a defined contribution plan. The Company contributes an amount equal to 6% of the employees’ monthly wages to the special accounts at the Bureau of Labor Insurance. In accordance with the above regulations, the pension costs recognized by the Company for the years ended December 31, 2023 and 2022 were NT$12,692 thousand and NT$12,495 thousand, respectively.

(XVIII) Share capital

As of December 31, 2023, the Company’s authorized common stock amounted to NT$1,000,000 thousand, with paid-in capital of NT$965,942 thousand, par value of NT$10 per share, divided into 96,594,171 shares.

(XIX) Capital surplus

Pursuant to the Company Act, capital surplus may not be used except to cover a deficit or to increase capital. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.
Pursuant to the Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. However, the capital increase is limited to a certain percentage of the paid-in capital each year. In addition, changes in ownership interest in subsidiaries recognized can be used to cover a deficit.

(XX) Retained earnings

Legal reserve should be appropriated until it reaches the total amount of paid-in capital. Legal reserve can be used to cover a deficit of the Company, and if there is no deficit, the excess of legal reserve over 25% of paid-in capital may be used to distributed new shares or cash to shareholders in proportion to their original shares.

The Company allocates and reverse the special reserve in accordance with Jin-Guan-Zheng-Fa-Zi No. 1090150022 and the “FAQ on the Allocation of Special Reserve after Adoption of International Financial Reporting Standards (IFRSs)”. If the

163

remaining balance of other shareholders’ equity is reversed, the reversed portion may be used to distribute earnings to the shareholders.

In accordance with the Company’s Articles of Incorporation, the Company’s annual net income after final settlement shall be used to pay taxes and cover the deficits of prior years, 10% of the remaining income shall be set aside as legal reserve and special reserve in accordance with the law, and the remaining balance shall be added to the undistributed earnings of prior years and a part of which retained as the capital required for the business growth, and then the Board of Directors shall prepare the earnings distribution proposal and submit it to the shareholders’ meeting for resolution.

At the shareholders’ meetings of the Company held on June 7, 2023 and June 15, 2022, respectively, the Company resolved to approve the earning distribution plan and the dividends per share for the years 2022 and 2021, respectively, as follows:

Legal reserve The distribution items are as follows: Capital surplus Cash dividends	Earningdistributionplan 2022 2021 $ 35,790 $ 13,278 - 28,979 154,551 115,913	Dividendsper share(NT$)	Dividendsper share(NT$)
	2022 $ 35,790 - 154,551	2022 $ - 1.6	2021
			$ 0.3 1.2

The above distribution of earnings did not differ from the resolutions made by the Board of Directors on March 13, 2023 and March 15, 2022, respectively.

Information on the earning distribution condition proposed by the Board of Directors and resolved by the Shareholders’ Meeting, is available on the “Market Observation Post System” website of the Taiwan Stock Exchange.

The distribution of earnings for 2023 had been approved by the Board of Directors on March 5, 2024 as follows:

March 5, 2024 as follows:
Legal reserve The distribution items are as follows: Cash dividends	Earning distribution plan 2023 $ 20,149 144,891	Dividends per share (NT$)
		2023
		$ 1.5

164

The distribution of earnings for 2023 is to be resolved by the shareholders’ meeting to be held on June 18, 2024.

(XXI) Other equity items

Exchange differences arising from the translation adjustments of the financial statements of foreign operations are the relevant exchange differences generated from the translation of the functional currency of the net assets of foreign operations into the Company’s presentation currency (i.e., New Taiwan dollars), and are recognized directly in other comprehensive income. The losses and gains recognized in other comprehensive income for the years ended December 31, 2023 and 2022 were NT$(13,317) thousand and NT$17,410 thousand, respectively.

(XXII)Operating revenue

Operating revenue
Total operating revenue Less: Sales returns and discounts Revenue from sales of goods Maintenance and other income	2023 $ 1,580,643 (8,322) $ 1,572,321 2023 $ 1,301,851 270,470 $ 1,572,321	2022
		$ 2,292,233 (8,575)
		$ 2,283,658
		2022
		$ 1,953,731 329,927 $ 2,283,658

1. Revenue segmentation

(1) The Company’s contract revenues are derived from the provision of goods and services transferred at a specific time.
(2) Major sales market by geography:

Domestic sales Export Asia America Europe Other countries	2023 $ 279,810 654,406 327,990 275,380 34,735 $ 1,572,321	2022
		$ 805,834 677,126 375,904 419,212 5,582 $ 2,283,658

165

2. Contract balance

(1) Changes in contract liabilities result from the difference between the fulfillment of contractual obligations and the payment from customers.

Contract liabilities	December 31,2023 $ 57,348	December 31, 2022 $ 73,324

(2) Amount of opening contract liabilities recognized as revenue in current period is:

is:
Sales revenue (XXIII) Other income Rental income Dividend revenue Other income	2023 $ 38,510 2023 $ 3,240 23,308 24,403 $ 50,951	2022 $ 94,597
		2022 $ 3,121 18,114 10,138 $ 31,373

(XXIV) Other gains and losses

Other gains and losses
Foreign currency exchange gain Net gain (loss) on disposals of property, plant and equipment Gains from disposal of financial assets Gain (loss) on financial valuation at fair value through profit or loss Others Finance costs Interest on bank loans Interest on lease liabilities	2023 $ 5,782 343 2,841 123,694 (469) $ 132,191 2023 $ 28,647 57 $ 28,704	2022
		$ 113,941 (241) 2,095 (11,149) (565) $ 104,081
		2022
		$ 19,729 168 $ 19,897

(XXV) Finance costs

166

(XXVI) Employee benefits, depreciation and amortisation expense

	2023
Classified as operating costs $ 162,715 17,392 7,613 - 4,940 58,969 301	Classified as operating expenses $ 98,912 10,724 5,360 3,360 2,707 12,327 1,440 2022	Total
		$ 261,627 28,116 12,973 3,360 7,647 71,296 1,741
Classified as operating costs $ 179,735 18,202 8,305 - 7,317 59,728 297	Classified as operating expenses $ 114,647 11,352 5,018 2,440 3,297 12,645 1,618	Total
		$ 294,382 29,554 13,323 2,440 10,614 72,373 1,915

As of December 31, 2023 and 2022, the Company had 368 and 423 employees, respectively, including 7 and 5 directors who were not employees concurrently.

167

subsidiaries who meet certain criteria, and the terms and methods of distribution shall be determined by the Board of Directors. However, if the Company has accumulated deficit, an amount to cover such deficit shall be reserved in advance.

In 2023, the Company estimated employees’ compensation of NT$16,000 thousand and directors’ and supervisors’ remuneration of NT$2,750 thousand, respectively. The estimation is based on the past experience of actual distribution, the net income of the current period, and the percentage specified in the Articles of Incorporation, and the estimates are recognized as operating costs or expenses in the current year. If the actual distributed amounts in the following year are different from the estimates, they shall be handled as changes in accounting estimates, and the difference will be recognized as the profit or loss of the following year, with the related information disclosed on the Market Observation Post System (MOPS).

In 2022, the Company’s compensation to employees and remuneration to directors and supervisors amounted to NT$16,000 thousand and NT$1,800 thousand, respectively, and the related information is available on the MOPS. There was no difference between the actual distributed amounts and the estimated amounts.

The average employee benefit expenses of the Company were NT$860 thousand and NT$832 thousand in 2023 and 2022, respectively.

The average employee salary expenses of the Company were NT$725 thousand and NT$704 thousand in 2023 and 2022, respectively.

In 2023, the change in the Company’s average employee salary expenses was 3.0%. The information on the Company’s salary and remuneration policy (including directors, supervisors, managerial officers and employees) is as follows:

Remuneration to directors

The Company’s general directors and independent directors’ remuneration policy is determined according to their responsibilities, risks, invested time and other factors. In accordance with the Articles of Association of the Company, the remunerations to the Chairman, Vice-Chairman and directors of the Company shall be authorized to be determined by the Board of Directors according to the degree of their participation in the operation of the Company and the value of their contributions, taking into account both the domestic and foreign industry standards.

168

The Articles of Association also separately provide for a remuneration of the directors to be not more than 2% of the annual profit of the Company.

Remuneration to supervisor

Since June, 2020, the Company established an Audit Committee to replace the supervisor system.

Remuneration to the managerial officers

The remuneration of the managerial officers of the Company shall be considered by the Remuneration Committee and submitted to the Board of Directors for resolution based on their positions, contributions, the Company’s operating performance for the year and taking into account the Company’s future risks.

Compensation to the employees

Compensation to the employees includes monthly payment and unscheduled performance bonus, year-end bonus, and employee compensation based on the Company’s profitability. As stipulated in the Articles of Association, not less than 3% - 8% of the annual profit of the Company shall be used as the compensation to the employees.

In addition to setting competitive salary levels based on local labor market conditions, the Company’s (overseas) subsidiaries also provide annual bonuses to employees with reference to local laws and regulations, industry practices, and the overall operating performance of each subsidiary, in order to encourage employees to make long-term contributions and grow with the Company.

(XXVII)Income tax

Income tax expense

Income tax expenses for the years ended December 31, 2023 and 2022 are as follows:

ollows:
Current income tax: Income tax generated in current year Adjustment on income tax of prior years Deferred income tax Deferred tax expense related to the generation and reversal of temporary differences Income tax expense	2023 $ 52,870 (4,073) (18,621) $ 30,176	2022
		$ 48,783 735 36,196 $ 85,714

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(1) The components of income tax expense recognized in profit or loss for the years ended December 31, 2023 and 2022 are as follows:

			2023		2022
	Net profit before tax	$	240,987	$	439,856
	Tax amount calculated by applying
	statutory rate to net profit before
	tax	$	48,197	$	87,971
	Influenced tax amount of adjusted
	items:
	Impacts of items not included for
	calculation of taxable income		11,491		(22,441)
	Income tax reduction		(14,662)		(16,747)
	Tax levied on undistributed
	earnings		7,844		-
	Adjustment on income tax of prior
	years		(4,073)		735
	Net change in deferred income tax
	Temporary differences		(18,621)		36,196
	Income tax expense recognized in profit or loss	$	30,176	$	85,714
(2)	Income tax expenses recognized under other comprehensive				income for the
	years ended December 31, 2023 and 2022		are as follows:
			2023		2022
	Items that will not be reclassified
	subsequently to profit or loss:
	Remeasurement of defined
	benefit plan	$	(70)	$	659
	Items that may be reclassified
	subsequently to profit or loss
	Exchange difference on
	translation of financial
	statements of foreign
	operations	$	(3,330)	$	4,353

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Deferred tax assets and liabilities are classified as follows:

Exceeding amount of allowance for uncollectible accounts Unrealized exchange losses Unrealized loss on market value decline and obsolete and slow-moving inventories Unrealized sales profit Unrealized attendance bonus Unrealized warranty expense Exceeding amount of pension and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment tax credit - Resource-poor areas Others	Deferred tax assets	Deferred tax assets
	December 31, 2023 $ 936 - 71,396 5,055 1,439 767 1,382 3,586 - 59 $ 84,620	December 31, 2022
		$ 1,952 (21,495) 63,192 5,765 1,157 1,054 1,785 734 - 70
		$ 54,214

Unrealized exchange income or loss Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method	Deferred income tax liabilities	Deferred income tax liabilities
	December 31, 2023 $ 3,907 104,270 $ 108,177	December 31, 2022
		$ - 99,315 $ 99,315

171

2023 Temporary differences Exceeding amount of allowance for uncollectible accounts Unrealized exchange losses Unrealized loss on market value decline and obsolete and slow-moving inventories Unrealized sales profit Unrealized attendance bonus Unrealized warranty expense Exceeding amount of pension and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment tax credit - Resource-poor areas Others Total deferred tax assets Unrealized exchange income or loss Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method Total deferred income tax liabilities	Opening balance $ 1,952 (21,495) 63,192 5,765 1,157 1,054 1,785 734 - 70 $ 54,214 $ - 99,315 $ 99,315	Recognized in profit or loss $ (1,016) 21,495 8,204 (710) 282 (287) (473) - - (11) $ 27,484 $ 3,907 4,955 $ 8,862	Recognized in other comprehensive income $ - - - - - - 70 2,852 - - $ 2,922 $ - - $ -	Ending balance
				$ 936 - 71,396 5,055 1,439 767 1,382 3,586 - 59
				$ 84,620
				$ 3,907 104,270 $ 108,177

172

2022 Temporary differences Exceeding amount of allowance for uncollectible accounts Unrealized exchange losses Unrealized loss on market value decline and obsolete and slow-moving inventories Unrealized sales profit Unrealized attendance bonus Unrealized warranty expense Exceeding amount of pension and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment tax credit - Resource-poor areas Others Total deferred tax assets Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method Total deferred income tax liabilities	Opening balance $ 7,989 8,536 57,949 4,784 1,377 871 2,544 4,669 14,250 80 $ 103,049 $ 107,360 $ 107,360	Recognized in profit or loss $ (6,037) (30,031) 5,243 981 (220) 183 (100) - (14,250) (10) $ (44,241) $ (8,045) $ (8,045)	Recognized in other comprehensive income $ - - - - - - (659) (3,935) - - $ (4,594) $ - $ -	Ending balance
				$ 1,952 (21,495) 63,192 5,765 1,157 1,054 1,785 734 - 70
				$ 54,214
				$ 99,315 $ 99,315

Information on investment tax credit:

The Company chose to apply the investment tax credit to the research and development expenditures under Article 10, paragraph 1, subparagraph 1 of the Statute for Industrial Innovation, and offset the amount of income tax payable for the current year up to a limit of 15% of the amount of research and development expenditures declared in accordance with the relevant regulations.

The Company chose to apply the tax credit method to investment in intelligent machinery, fifth-generation mobile communication systems and information security products or services by corporations or limited partnerships, and offset the amount of income tax payable for the current year up to a limit of 5% of the amount of expenditures for information security products declared in accordance

173

with the relevant regulations.

As of December 31, 2022, all of the estimated income tax credits under the Rules of the Statute for Upgrading Industries have been offset by the Company in the current year.
The Company’s business income tax returns for the year 2021 have been approved by the tax authority.

(XXVIII) Earnings per share

	2023
Amount Before tax After tax $ 240,987 $ 210,811 $ 240,987 $ 210,811	Weighted average number of ordinary shares outstanding (shares in thousands) 96,594 492 97,086 2022	Earnings per share (NT$)
Before tax $ 240,987 $ 240,987		Before tax $ 2.49 $ 2.48	After tax
			$ 2.18
			$ 2.17

Amount Before tax After tax $ 439,857 $ 354,143 $ 439,857 $ 354,143	Weighted average number of ordinary shares outstanding (shares in thousands) 96,594 516 97,110	Earnings per share (NT$)
Before tax $ 439,857 $ 439,857		Before tax $ 4.55 $ 4.53	After tax
			$ 3.67
			$ 3.65

174

If the Company chooses to issue stock or cash as compensation to employees, for compensation to be paid by issuance of shares, the potential common shares shall be included in the weighted average number of outstanding shares when such shares have a dilutive effect for the purpose of calculating diluted earnings per share. In calculating the diluted earnings per share, the number of shares to be issued is based on the net value of the potential common share on the balance sheet date. The dilutive effect of such potential common shares shall continue to be taken into account in calculating the diluted earnings per share until the number of shares to be issued as employees’ compensation is resolved at the shareholders’ meeting in the following year.

(XXIX) Capital management

Based on the current industry characteristics of the business and the future development of the Company, as well as changes in the external environment and other factors, the Company plans for its working capital and dividend expense requirements in the future, so as to ensure that the Company can continue its operations, reward its shareholders and take into account the interests of other stakeholders, and maintain an optimal capital structure to enhance shareholders’ value in the long term.

The Company’s management reviews its capital structure on a regular basis and considers the costs and risks that may be associated with the above capital structure. In general, the Company adopts a prudent risk management strategy.

(XXX)Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the year	2023 $ 43,208 1,086 (212) $ 44,082	2022
		$ 19,071 2,312 (1,086) $ 20,297

175

VII. Related Party Transactions

(I) Names of related parties and relationship

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

Related party name Relationship with the Company
----- End of picture text -----

Related party name	Relationship with the Company
Goodway Machine Corp.	Parent company
Awea Mechantronic (Suzhou) Ltd.	Subsidiaries
Shanghai Zhuwai Mechanical and	Subsidiaries
Electrical Co., Ltd.
Yih Chuan Machinery Industry Co.,	Subsidiaries
Ltd.
Yih Chuan Machinery (Jiaxing)	Subsidiaries
Industry Co., Ltd.
Yama Seiki USA, Inc.	Associates
Huahan Leasing Co., Ltd.	Associates
Allrich Cnc, Ltd.	Substantive related party
Hung Jiu Machine Co., Ltd.	Substantive related party
Turvo International Co., Ltd.	Other related parties
Boldwin Bio Co., Ltd.	Other related parties

(II) Significant transactions with the related parties

1. Sales Parent company Subsidiaries Awea Mechantronic (Suzhou) Others Associates Yama Seiki Others Other related parties	2023 $ 8,705 255,365 158 299,505 - 93 $ 563,826	2022
		$ 1,396 287,814 7,910 240,190 31,160 1 $ 568,471

The Company sells products of different specifications to related parties, and has no other customers to compare with. The collection terms for the Company’s sales to related parties and general customers are based on the contracts.

176

2. Purchases Parent company Subsidiaries Associates Substantive related party Other related parties	2023 $ 1,167 12,074 6,566 4,204 35 $ 24,046	2022
		$ 159 22,468 - 3,573 - $ 26,200

The transaction prices of the Company’s purchases from related parties are similar to those of general transactions.

3. Notes receivable, net Parent company Subsidiaries Other related parties 4. Accounts receivable, net Parent company Subsidiaries Awea Mechantronic (Suzhou) Others Associates - Yama Seiki Other related parties 5. Other receivables Subsidiary - Yih Chuan	December 31,2023 $ 852 - 6 $ 858 December 31,2023 $ 10 78,173 30 43,474 35 $ 121,722 December 31,2023 $ 61,626	December 31,2022 $ 1,030 30 - $ 1,060
		December 31,2022
		$ 170 35,351 - 33,396 - $ 68,917
		December 31, 2022 $ 70,042
	$

177

6. Notes payable December 31,2023 Parent company $ 267 Subsidiaries 1,821 Substantive related party 263 Other related parties 36 $ 2,387 7. Accounts payable December 31,2023 Parent company $ 129 Subsidiaries 1,209 Substantive related party 221 $ 1,559 8. Other payables December 31,2023 Parent company $ 1,042 Subsidiaries 151 Other related parties 16 $ 1,209 9. Prepayments December 31,2023 Parent company $ 26 Other related parties - $ 26 10. Advance receipts December 31,2023 Parent company $ 190 11. Current lease liabilities December 31,2023 Parent company $ 499 12. Non-current lease liabilities December 31,2023 Parent company $ -	December 31,2022
	$ 146 11,256 368 $ 11,770
	December 31,2022
	$ 21 709 759 $ 1,489
	December 31,2022
	$ 1,177 489 11 $ 1,677
	December 31,2022
	$ 29 48 $ 77
	December 31,2022
	$ 1,045
	December 31, 2022 $ 1,190
	December 31, 2022 $ 499

178

13. Leases Rental income Parent company Other related parties 14. Others Other income Parent company Subsidiaries Associates - Yama Seiki Operating costs - warranty expense Subsidiaries Manufacturing expenses Parent company Subsidiaries Associates Substantive related party Other related parties Selling and marketing expenses Parent company Subsidiaries Associates Other related parties		2023 1,146 43 1,189 2023 369 1,514 16,970 18,853 2023 201 2023 714 234 461 2,610 39 4,058 2023 2,430 85 7 70 2,592	2022
	$		$ 1,110 - $ 1,110
	$
			2022
	$		$ 461 - 84 $ 545
	$
			2022 $ 659
	$
			2022
	$		$ 770 229 - - 66 $ 1,065
	$
			2022
	$		$ 2,392 483 10 77 $ 2,962
	$

179

General and administrative expenses Parent company Interest income Subsidiaries	2023 $ 3 2023 $ 1,423	2022 $ 44
		2022 $ 1,004

15. Loans to related parties (recorded as other receivables)

The actual expenditures of the Company’s loans to related parties are as follows:

Subsidiary - Yih Chuan	2023 $ 60,000	2022 $ 70,000

The Company’s loans to related parties bear interest at the rates agreed between the Company and the related parties, and no impairment loss needs to be recognized through valuation.

16. Information on main management rewards

Short-term employee benefits Post-employment benefits	2023 $ 7,237 279 $ 7,516	2022
		$ 16,763 456 $ 17,219

Compensation for key management personnel is determined by the Remuneration

Committee based on individual performance and the Company’s operating results.

VIII.Pledged Assets

The Company’s assets pledged as collaterals are summarized as follows:

Name of asset Property, plant and equipment - land Property, plant and equipment - property and building Other current assets - restricted bank deposit Financial assets measured at amortized cost - pledged time deposits	December 31,2023 $ 377,341 705,019 - 10,137 $ 1,092,497	December 31,2022
		$ 377,341 738,391 187,946 - $ 1,303,678

180

The financial assets measured at amortized cost are performance security guarantees in the deposit pledge provided by the Company to rent the land of Central Taiwan Science Park.

IX. Significant Contingent Liabilities and Unrecognized Contract Commitments

The Company’s commitments and contingencies as of December 31, 2023 include:

(I) The amount of guaranteed bills issued by the Company was NT$2,786 thousand.
(II) The amount of guaranteed bills collected by the Company from the customers was NT$69,866 thousand.
(III) The amount of guaranteed bills collected by the Company from the manufacturers due to solar photovoltaic lease was NT$ 21,180 thousand.
(IV) The amount of guaranteed bills received by the Company for the construction of Dapumei Plant Phase II was NT$21,780 thousand.
(V) The amount of the loan guarantee notes collected by Company from the subsidiary - Yih Chuan Company were NT$ 70,000 thousand.
(VI) In order to guarantee the release of imported goods before paying tax to the Customs Administration, the Company has entrusted the First Bank to issue a guarantee letter at the amount of NT$2,000 thousand.
X. Significant Disaster Loss: None.

XI. Significant Events after the Balance Sheet Date: None.

XII. Others:

Financial instruments

(I) Information on fair value of financial instruments
The carrying amounts of the Company’s financial instruments not measured at fair value, including cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, other payables, bonds payable, long-term borrowings, and guarantee deposits received, are the reasonable approximates of their fair values. The interest rates of bonds payable (including those due within one year or under repurchase rights) and long-term loans (including those due within one year) approximate market interest rates; therefore, the carrying amounts should be a reasonable basis for approximation of fair values. For information on the fair value of financial instruments measured at fair value, please refer to Note XII(VI).

181

(II) Financial risk management objectives

The objectives of the Company’s financial risk management are to manage the exchange rate risk, interest rate risk, credit risk and liquidity risk associated with its operating activities. In order to reduce relevant financial risks, the Company is committed to identifying, evaluating and avoiding market uncertainties, so as to reduce the potential adverse impact of market changes on the Company’s financial performance.

Significant financial activities of the Company are reviewed by the Board of Directors in accordance with relevant norms and internal control systems. During the execution period of the financial plan, the Company must comply with the relevant financial operating procedures regarding the overall financial risk management and the division of rights and responsibilities.

(III) Market risks

The Company is primarily exposed to market risks arising from changes in foreign currency exchange rates and interest rates, and uses certain derivative financial instruments to manage the related risks.

Foreign currency exchange rate risk
Some of the Company’s cash inflows and outflows are in foreign currencies, which has a partially natural hedging effect; the Company’s exchange rate risk management is for hedging purpose, other than for profit purpose.

The exchange rate risk management strategy is to periodically review net parts of the assets and liabilities in various currencies, and make risk management of such parts.

182

The carrying amounts of the Company’s foreign-currency-denominated monetary assets and monetary liabilities at the end of the reporting period are summarized below:

Unit: Foreign currency/ NT$ thousand

December 31, 2023

			Unit: Foreign currency/ NT$ thousand December 31,2023	Unit: Foreign currency/ NT$ thousand 31,2023	Unit: Foreign currency/ NT$ thousand 31,2023	Unit: Foreign currency/ NT$ thousand 31,2023	Unit: Foreign currency/ NT$ thousand 31,2023
Financial assets Monetary items USD EUR CNY Non-monetary items USD Financial liabilities Monetary items USD JPY CNY Non-monetary items USD EUR Financial assets Monetary items USD EUR CNY Non-monetary items USD Financial liabilities Monetary items USD JPY CNY Non-monetary items USD	Foreign currencies 27,002 5,352 29,033 - 46 6,602 35 832 1	Exchange rate (Note) 30.655 33.78 4.302 - 30.655 0.2152 4.302 30.655 33.78	Sensitivityanalysis NTD Rate of change Profit and loss impact Equity impact 827,746 5% 41,387 - 180,791 5% 9,040 - 124,900 5% 6,245 - - - - - 1,410 5% 71 - 1,421 5% 71 - 151 5% 8 - 25,505 - - - 34 - - - Unit: Foreign currency/ NT$ thousand December 31,2022	Sensitivityanalysis
						Equity impact
	Foreign currencies 56,209 3,012 8,631 - 148 2,869 90 1,551	Exchange rate (Note) 30.66 32.52 4.383 - 30.66 0.2304 4.383 30.66	NTD 1,723,368 97,950 37,830 - 4,538 661 394 47,554	Sensitivityanalysis
				Rate of change 5% 5% 5% - 5% 5% 5% -	Profit and loss impact 86,168 4,898 1,892 - 227 33 20 -		Equity impact
							- - - - - - - -

(Note) Based on the exchange rate on the balance sheet date.

183

Interest rate risk

Interest rate risk is the risk of changes in fair value of financial instruments due to changes in market interest rates. The Company’s interest rate risk arises mainly from borrowings at variable interest rates.

If the borrowings at floating rate at the end of the reporting period are held for the entire reporting period, a 1% increase in interest rates would result in a decrease in net income of NT$15,450 thousand.

3. Other price risk

The price risk of the Company’s equity instrument investments arises mainly from the financial assets classified as measured at fair value through profit or loss, and the financial assets classified as measured at fair value through other comprehensive income.

If the price of equity instruments at the end of the reporting period decreases by 10%, the Company’s income would decrease by NT$53,892 thousand and NT$38,746 thousand in 2023 and 2022, respectively.

(IV) Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial losses to the Company. The Company’s credit risk mainly comes from receivables arising from operating activities and bank deposits arising from investment activities. The operation-related credit risks and the financial credit risks are under separate management.

Operation-related credit risks

In order to maintain quality of accounts receivable, the Company has established the procedure for management of operation-related credit risks. According to the Company’s credit policy, the Company is responsible for managing and analyzing the credit risk for each new customer. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

The risk assessment of individual customers takes into account many factors that may affect the customers’ ability to pay, including the customers’ financial position, ratings of credit rating agency, the Company’s internal credit rating, historical

184

transaction records and current economic conditions, etc. The Company also utilizes certain credit enhancement tools, such as credit insurance, when appropriate, to minimize the credit risk of specific customers.

As of December 31, 2023 and 2022, the balance of accounts receivable of the top ten customers accounted for 84% and 80% of the Company’s balance of accounted receivable respectively, and the credit concentration risk of the remaining accounts receivable was relatively insignificant.

2. Financial credit risk

The credit risk of bank deposits is measured and monitored by the financial departments of the Company. As the Company’s trading partners and performing parties are banks with good credit and financial institutions, corporate organizations and government agencies with investment grade or above, without significant concern about performance of the contract, therefore, there is no significant credit risk.

(V) Liquidity risk

The Company’s objective in managing liquidity risk is to maintain cash and cash equivalents and sufficient bank facilities required for maintaining operations, so as to ensure sufficient financial resilience of the Company.

The following table summarizes the financial liabilities of the Company during the agreed repayment period by maturity date and undiscounted maturity amount:

185

	December 31,2023	December 31,2023
1 to 3 months $ 1,165,000 79,987 206,408 84,637 88,161 11,032 334 428 $ 1,635,987	4 to 6 months 7 to 12 months $ 185,000 $ 115,000 - - 57,940 - 40 137 - - - - 235 69 - - $ 243,215 $ 115,206 December 31,2022		Over 1years $ - - - 239 - - 280 - $ 519	Total
				$ 1,465,000 79,987 264,348 85,053 88,161 11,032 918 428 $ 1,994,927

1 to 3 months $ 1,530,000 289,641 326,284 72,981 90,783 11,055 2,845 628 $ 2,324,217	4 to 6 months $ 235,000 - 78,991 282 - - 2,851 - $ 317,124	7 to 12 months $ 115,000 - - 234 - - 5,724 - $ 120,958	Over 1years $ - - - 820 - - 918 - $ 1,738	Total
				$ 1,880,000 289,641 405,275 74,317 90,783 11,055 12,338 628 $ 2,764,037

186

(VI) Fair value

For information on the fair value of the Company’s financial instruments not measured at fair value, please refer to Note XII (I).
The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
(1) Level 1: The inputs to this level are publicly quoted prices (unadjusted) in active markets for identical assets or liabilities. Active market means a market that meets all of the following conditions: the products traded in the market are homogeneous; willing buyers and sellers are readily available in the market, and the price information is readily available to the public.
(2) Level 2: the input values of this level are observable prices other than publicly quoted prices in Level 1, including direct (such as prices) or indirect (such as derived from prices) observable input values obtained from the active market.
(3) Level 3: the input values of this level are not inputs for assets or liabilities that are based on observable market data.
- For the years ended December 31, 2023 and 2022, the Company had no transfer between Level 1 and Level 2.
- For the years ended December 31, 2023 and 2022, the Company had no transfer into or out from Level 3.
The methods and assumptions the Company used to measure fair value are as follows:
(1) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined by reference to quoted market prices.
(2) The fair values of other financial liabilities are determined using generally accepted valuation models based on discounted cash flow analysis.
Fair value hierarchy:

The fair value hierarchy of the Company’s financial assets measured at fair value is as follows:

187

	December 31,2023	December 31,2023
Level 1 $ 536,929 1,991 $ 538,920	Level 2 Level 3 $ - $ - - - $ - $ - December 31,2022		Total
			$ 536,929 1,991
			$ 538,920

Level 1 $ 377,002 10,458 $ 387,460	Level 2 $ - - $ -	Level 3 $ - - $ -	Total
			$ 377,002 10,458 $ 387,460

XIII.Additional Disclosures

(I) Significant transactions information:
Loaning funds to others: Refer to Table 1.
Provision of endorsements and guarantees to others: None.
Holding of marketable securities at the end of the period (not including investment in subsidiaries, associates and joint ventures)
Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: None.
Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Refer to Table 3.
Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
Derivative transactions: Please refer to Note XII for details.
(II) Information on investees: Refer to Table 4.
(III) Information on Investment in Mainland China: Refer to Table 5.

188

(IV) Information on major shareholders: names, numbers of shares held, and shareholding percentages of shareholders who hold 5% or more of the equity: Refer to Table 6.

XIV. Segment Information

The Company has disclosed segment information in the consolidated financial statements in accordance with IFRS 8 “Operating Segments”.

189

Table 1: Loaning Funds to Others

December 31, 2023

Unit: NT$ thousand (unless stated otherwise)

No. (Note 1)	Companies loaning fund	Companies that fund is loaned to	Transaction items	Related party	Maximum amount of the current period (Note 3)	Ending balance (Note 4)	Amount drawn	Interest rate	Type of loans	Amount of transaction Cause for necessity of short-term financing	Amount of transaction Cause for necessity of short-term financing	Amount of allowance for uncollectible accounts Collateral Name Value	Collateral	Collateral	Loaning limit to individual objects (Note 2)	Total loaning limit to others (Note 2)
														Value
0	AWEA Mechantronic Co., Ltd.	Yih Chuan Machinery Industry Co., Ltd.	Other receivables - related parties	Yes	150,000	70,000	60,000	2.05%	With necessity of short-term financing	140	Operating turnover	-	Promissory note	70,000	329,385	1,317,541
1	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables - related parties	Yes	107,930 (CNY 25,000)	107,930 (CNY 25,000)	43,020	3.45% ~ 3.55%	With necessity of short-term financing	-	Operating turnover	-	-	-	150,752	150,752
1	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables - related parties	Yes	29,216 (CNY 6,700)	21,765 (CNY 5,000)	-	3.45%	With necessity of short-term financing	-	Operating turnover	-	-	-	150,752	150,752

Note 1: The explanation for the numbering column is as follows:

(1) Fill in 0 for issuer.

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

Note 2: The loaning limit to individual objects shall not exceed 10% of their net value of the current period, and the total loaning limit shall not exceed 40% of their net value of the current period.

Note 3: The maximum balance of loaning funds to others of the current year.

Note 4: It is the loaning limit approved by the Board of Directors.

190

Table 2: Holding of Marketable Securities at the End of the Period (Not Including Investment in Subsidiaries, Associates and Joint Ventures)

==> picture [797 x 262] intentionally omitted <==

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

December 31, 2023 Unit: NT$ thousand (unless stated otherwise)
Marketable securities type Relationship with the December 31, 2023
Held company name Financial statement account Number of Carrying Ownership Fair value Remark
and name company
shares amount (%) (Note 1)
AWEA Mechantronic Financial assets at FVTPL -
Stock- AUTECH EUROPE - 50 - (Note 2) 5.00% -
Co., Ltd. non-current
AWEA Mechantronic Stock- P-Duke Technology - Financial assets at FVTPL - current 1,063,852 102,555 1.29% 102,555
Co., Ltd. Co., Ltd.
AWEA Mechantronic Stock- Turvo International
Other related parties Financial assets at FVTPL - current 2,873,000 399,347 4.77% 399,347
Co., Ltd. Co., Ltd.
AWEA Mechantronic Stock- Eagle Cold Storage - Financial assets at FVTPL - current 968,000 29,040 0.81% 29,040
Co., Ltd. Enterprise Co., Ltd.
Stock- Taiwan
AWEA Mechantronic Semiconductor
- Financial assets at FVTPL - current 10,000 5,930 - 5,930
Co., Ltd. Manufacturing Company
Limited
AWEA Mechantronic Stock- Zeng Hsing Industrial - Financial assets at FVTPL - current 534 57 - 57
Co., Ltd. Co., Ltd.
AWEA Mechantronic Financial assets at FVOCI -
Stock- Fittech Co., Ltd. - 29,846 1,991 0.04% 1,991
Co., Ltd. non-current
----- End of picture text -----

Note 1: If the investee company does not have a quoted market price, the net equity value shall be presented.

Note 2: In 1996, due to value impairment and little hope of recovery of the investee companies, all were recognized as losses.

191

Table 3: Purchases or Sales of Goods from or to Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More

December 31, 2023	December 31, 2023						Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)
Company name	Counterparty	Relationship		Transaction details			Abnormal transaction (Note 1)		Notes/ accounts payable or receivable		Remark
			Purchases/ sales	Amount	% to Total	Payment terms	Unit price	Payment terms	Ending balance	% to total notes and accounts receivable (payable)
AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	Subsidiaries under sub- subsidiaries	Sales	$ 255,365	16.24%	3 months after shipped	-	-	$ 78,173	16.07%	-
AWEA Mechantronic Co.,Ltd.	Yama Seiki USA, Inc.	Subsidiaries	Sales	$ 299,505	19.05%	3 months after shipped	-	-	$ 43,474	8.94%	-

Note 1: Since the products sold by the Company to its related parties AWEA Suzhou and Yama Seiki have different features, there are no other customers available for comparison; in addition, its collection terms and the collection terms for general customers are determined by contract.

192

Table 4: Names, Locations and Other Information of Investee Companies (Not Including Investees in Mainland China)

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December 31, 2023 Unit: NT$/ Foreign currency thousand (unless stated otherwise)
Recognized
Initial investment amount Held at the end of period Current profit investment
(loss) of the gains (losses)
Investor company Investee company Location Main business activities Remark
December 31, December 31, Number of Ownership Carrying invested in the current
2023 2022 shares (%) amount company period
(Note 1)
AWEA
B-Way (Cayman) Cayman International investment
Mechantronic Co., $ 332,212 $ 332,212 10,665,029 100.00% $ 694,302 $ 57,841 $ 57,652 (Note 1)
Co., Ltd. Islands and international trade
Ltd.
AWEA Machinery sales and
Yama Seiki USA,
Mechantronic Co., USA installation, 53,968 53,968 584,192 28.58% 108,435 24,042 6,901 -
Inc.
Ltd. international trade
Manufacturing of
machinery and
AWEA Yih Chuan
equipment, design of
Mechantronic Co., Machinery Industry Taiwan 264,592 264,592 5,914,800 60.00% 141,254 (51,263) (30,757) (Note 1)
products, wholesale of
Ltd. Co., Ltd.
machinery, and retail of
mechanical appliances
AWEA
Huahan Leasing Co., Rental of machinery and
Mechantronic Co., Taiwan 7,333 7,333 666,667 13.33% 8,278 2,080 277 -
Ltd. equipment
Ltd.
B-Way (Cayman) Billion-Way Cayman International investment USD 12,830 USD 12,830
12,829,840 100.00% 706,493 58,052 58,052 (Note 1)
Co., Ltd. (Cayman) Co., Ltd. Islands and international trade (NTD 393,304) (NTD 393,304)
Yih Chuan USA -
Axtron Int’l International investment
Machinery Industry Marshall 200,000 200,000 50,000 100.00% 205,164 (21,254) (21,254) (Note 1)
Investment Co., Ltd. and international trade
Co., Ltd. Islands
Axtron Int’l
Axtron Int’l International investment HKD 10 HKD 10
Investment Co., Hong Kong 10,000 100.00% 205,163 (21,254) (21,254) (Note 1)
Investment Limited and international trade (NTD 39) (NTD 39)
Ltd.
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Note 1: It has been written off.

193

Unit: NT$ thousand (unless stated otherwise)

Table 5: Information on Investments in Mainland China

December 31, 2023

Name of the investee company in Mainland China, main business items, paid-in capital, method of investment, inward/outward remittance of funds,

percentage of ownership, carrying value of investment, and gain or loss on repatriated investment:

Name of investee	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the period	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for currentperiod	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for currentperiod	Accumulated investment amount remitted from Taiwan at the end of the period	Current profit and loss of the invested company	Ownership percentage of director indirect investment	Recognized investment gains and losses in the current period (Note 2)	Carrying amount of investment as of December 31, 2023	Accumulated inward remittance of earnings as of December 31, 2023
					Outflow	Inflow
Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Machinery sales and installation, business management consultation, and international trade	USD 2,500 (NTD 76,638) (Note 3)	2	USD 2,494 (NTD 76,454) (Note 3)	-	-	USD 2,494 (NTD 76,454) (Note 3)	$ 7,597	100%	$ 8,116	$148,859	USD 15,438 (NTD 479,279) (Note 3)
Awea Mechantronic (Suzhou) Ltd.	Machinery sales, manufacturing and installation, and international trade	USD 11,400 (NTD 349,467) (Note 3)	2	USD 10,400 (NTD 318,812) (Note 3)	-	-	USD 10,400 (NTD 318,812) (Note 3)	58,604	100%	58,604	544,304	USD 4,706 CNY 49,580 (NTD 362,259)
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Machinery sales, manufacturing and installation, and international trade	USD 2,510 (NTD 76,944) (Note 3)	2	USD 2,510 (NTD 76,944) (Note 3)	-	-	USD 2,510 (NTD 76,944) (Note 3)	(21,254)	100%	(21,254)	205,163	-

194

2. Limit on investments in Mainland China:

Name of investor	Accumulated investment amount remitted from Taiwan to Mainland China at the end of theperiod	Investment amounts authorized by Investment Review Committee, MOEA	Limit on investments in Mainland China imposed by the Investment Review Committee,MOEA
The Company	$ 395,266 (Note 3) (USD 12,894)	$ 426,105 (Note 3) (USD 13,900)	$ 1,976,311 (Note 5)
Yih Chuan Machinery IndustryCo.,Ltd.	$ 76,944 (Note 3) (USD 2,510)	$ 76,944 (Note 3) (USD 2,510)	$ 140,612 (Note 5)

Note 1: Investment methods are divided into the following three types, just enter the code:

(1) Direct investment in Mainland China.
(2) Indirect investment in Mainland China through third-region companies.
(3) Other methods.
Note 2: The basis for recognition of investment gains and losses is the financial statements audited by CPAs for the same period.

Note 3: The NT$ amount is translated by the exchange rate on the balance sheet date.

Note 4: Dawei Mechantronic (Suzhou) Co., Ltd. was merged with AWEA Mechantronic (Suzhou) Ltd. in September, 2020, and AWEA Mechantronic (Suzhou) Ltd. is the surviving company. The merger was approved by the Investment Review Committee, MOEA under the letter No. 11000165350 in July 2021.
Note 5: The cumulative amount of the investor’s investment in Mainland China shall not exceed 60% of the net value.
Significant direct or indirect transactions through a third region business with the investee in the Mainland China: please refer to Table 4 for details.

195

Table 6: Information on Major Shareholders

December 31, 2023

Table 6: Information on Major Shareholders December 31, 2023	Table 6: Information on Major Shareholders December 31, 2023	Table 6: Information on Major Shareholders December 31, 2023
Name of major shareholders Number of shares held Ownership (%)
Goodway Machine Corp. 47,962,311 49.65 %
De-Hua Yang 9,031,403 9.34 %
JiaJin Investment Co., Ltd.	6,256,388	6.47 %

196

V. The consolidated financial statements of the parent company and its subsidiaries reviewed and certified by CPAs in the latest year

Independent Auditors’ Report

To AWEA Mechantronic Co., Ltd.:

Audit Opinion

We have audited the accompanying consolidated balance sheets of AWEA Mechantronic Co., Ltd. and its Subsidiaries as at December 31, 2023 and 2022, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of AWEA Mechantronic Co., Ltd. and its subsidiaries as of December 31, 2023 and 2022 and for the years then ended, and its consolidated financial performance and its consolidated cash flows for the years then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China, based on our audit results and the audit reports of other certified public accountants (CPAs).

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the Norm of Professional Ethics for Certified Public Accountant of Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We are convinced that we have acquired enough and appropriate audit evidence to serve as the basis of audit opinion.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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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 for the year ended December 31, 2023 of AWEA Mechantronic Co., Ltd. and its subsidiaries. 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.

Key audit matters for the consolidated financial statements for the year ended December 31, 2023 of AWEA Mechantronic Co., Ltd. and its subsidiaries are stated as follows:

Revenue recognition

The main source of revenue for AWEA Mechantronic Co., Ltd. and its subsidiaries is the sales of machining centers. In 2023, the recognized revenue was NT$2,241,199 thousand, which accounted for about 95% of the total operating revenue. Since the sales locations include Taiwan, Mainland China, Italy and the United States, the sales terms vary by customers, the risks of ownership and the time of compensation transfer shall be determined in accordance with the terms of the customer's orders or contracts, and the time and amount of revenue recognition can have a significant impact on the financial statements. Therefore, we have identified revenue recognition as one of the key audit matters.

For the accounting policies related to revenue recognition, please refer to Note IV to the consolidated financial statements.

We evaluated the reasonableness of the sales revenue recognition, performed the cut-off point test, and performed internal control tests to understand the design and implementation of the sales revenue recognition process and the related control system of AWEA Mechantronic Co., Ltd. and its subsidiaries. In addition, we conducted related control tests on the sales and collection cycles, sampled and checked the sales contracts to confirm the correctness of the information in the accounting system, performed reconciliations between the general ledger system and the sales system, and assessed whether the time of revenue recognition was in accordance with the relevant reporting regulations.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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Evaluation of inventories

AWEA Mechantronic Co., Ltd. and its subsidiaries mainly engage in the design, manufacture and sales of special machines, automation equipment and computer-controlled tool machines. As of December 31, 2023, the total inventories, allowance for market value decline and loss on obsolete and slow-moving inventories were NT$1,950,844 thousand and NT$502,070 thousand, respectively. Inventories of AWEA Mechantronic Co., Ltd. and its subsidiaries are measured at cost and net realizable value. Allowance for market value decline and loss on obsolete and slow-moving inventories are allocated for inventories aged over a certain period of time or individually identified as obsolete. Due to the intense competition in the spare parts market and the varying speeds of obsolescence of different products, the risks of loss on decline in the market value or obsolete inventories are relatively high. The net realizable values used for obsolete inventories and their evaluation usually involve subjective judgment and are therefore highly uncertain. Considering the significant impact of inventories and their allowance for market value decline and loss on obsolete and slow-moving inventories on financial statements, we have identified allowance for market value decline and loss on obsolete and slow-moving inventories as one of the key audit matters.

For the accounting policies related to inventories, please refer to Note IV to the consolidated financial statements; for significant accounting estimates and assumptions used in the evaluation of inventories, please refer to Note V to the consolidated financial statements. We understood, evaluated, and tested the design and implementation of the internal control system related to inventory management, obtained the evaluation data on the lower of cost or net realizable value of inventories compiled by management authority, sampled and estimated the selling price information to the most recent sales records, and assessed the basis of management authority’s estimate of net realizable value and its reasonableness; obtained an inventory aging statement, and assessed the appropriateness of the policy on provision for allowance for market value decline and loss on obsolete and slow-moving inventories.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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Other Matters

In the above consolidated financial statements, the financial statements of YAMA SEIKI USA, INC. and Huahan Leasing Co., Ltd., which are investments accounted for using equity method, were not audited by us, but were audited by other CPAs entrusted by the Company. For the years ended December 31, 2023 and 2022, the balances of investments accounted for using equity method were NT$116,713 thousand and NT$109,850 thousand, respectively, which both accounted for 2% of the Company's total assets. For the years ended December 31, 2023 and 2022, the share of profit or loss of associates and joint ventures accounted for using equity method were NT$7,178 thousand and NT$7,782 thousand, respectively, which accounted for 3% and 2% of the Company's net profit before tax, respectively.

The Company has prepared the parent company only financial statements for 2023 and 2022, and we have issued an audit report containing our unqualified opinion plus the audit report issued by other CPAs as in the section of “Other matters” for reference.

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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, 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 AWEA Mechantronic Co., Ltd.’s and its subsidiaries’ 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 AWEA Mechantronic Co., Ltd. and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit Committee) are responsible for overseeing the AWEA Mechantronic Co., Ltd.’s and its subsidiaries’ financial reporting process.

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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

I. 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. Fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Therefore, the risk of not detecting a material misstatement resulting from fraud is higher than the one resulting from error.
II. Obtain an understanding of internal control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the AWEA Mechantronic Co., Ltd.’s and its subsidiaries’ internal control.
III. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the management level.
IV. 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 AWEA Mechantronic Co., Ltd.’s and its subsidiaries’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if

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such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause AWEA Mechantronic Co., Ltd. and its subsidiaries to cease to continue as a going concern.

V. Evaluate the overall presentation, structure and content of the consolidated financial statements, including relevant notes, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
VI. 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 audit of such the Group. We remain solely responsible for our audit opinion on the consolidated financial statements.

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 AWEA Mechantronic Co., Ltd. and its subsidiaries for the year ended December 31, 2023 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

202

EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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EnWise CPAs & Co.

CPA Guei-Duan Chen

CPA Chang-Yun Yi

March 5, 2024

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China. For the convenience of readers, the independent auditors' report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese- language independent auditors' report and consolidated financial statements shall prevail.

203

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Balance Sheets

December 31, 2023 and 2022

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Unit: NT$ thousand
December 31, 2023 December 31, 2022
Code Items Notes Amount % Amount %
Current assets
1100 Cash and cash equivalents IV and VI $ 866,173 15 $ 1,132,171 17
1110 Financial assets at FVTPL - current IV and VI 536,929 9 377,002 5
1150 Notes receivable, net IV and VI 157,100 3 381,640 6
1160 Notes receivable due from related parties, net IV and VII 858 - 4,274 -
1170 Accounts receivable, net IV and VI 350,642 6 457,612 7
1180 Account receivables due from related parties, IV and VII 43,741 1 33,566 -
net
1200 Other receivables 11,698 - 10,766 -
1210 Other receivables - related parties VII - - - -
1220 Current tax assets IV 26 - 143 -
130x Inventories IV and VI 1,448,774 24 1,607,007 24
1410 Prepayments VII 42,490 1 57,859 1
1470 Other current assets VIII 344,423 6 542,186 8
11xx Total current assets 3,802,854 65 4,604,226 68
Non-current assets
1517 Financial assets at FVOCI - non-current IV and VI 1,991 - 10,458 -
Financial assets measured at amortized cost -
1535 IV, VI and VIII 10,137 - - -
non-current
1550 Investments accounted for using equity method IV and VI 116,713 2 109,850 2
1600 Property, plant and equipment IV, VI, VII and VIII 1,741,772 29 1,797,473 26
1755 Right-of-use assets IV, VI and VIII 114,477 2 132,035 2
1780 Intangible assets IV and VI 12,656 - 10,368 -
1840 Deferred tax assets IV and VI 140,108 2 101,283 1
1915 Prepayments for equipment 3,200 - 300 -
1920 Guarantee deposits paid 3,965 - 7,146 -
1931 Long-term notes receivable, net IV 7,413 - 12,115 1
1937 Overdue receivables IV and VI - - - -
1990 Other non-current assets - others 6,605 - 6,544 -
15xx Total non-current assets 2,159,037 35 2,187,572 32
1xxx Total assets $ 5,961,891 100 $ 6,791,798 100
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Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

204

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Balance Sheets

December 31, 2023 and 2022

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Unit: NT$ thousand
December 31, 2023 December 31, 2022
Code Items Notes Amount % Amount %
Current liabilities
2100 Short-term borrowings VI and VIII $ 1,576,852 26 $ 1,954,949 29
2110 Short-term notes and bills payable VI 79,987 1 289,641 4
2130 Contract liabilities IV and VI 172,215 3 225,013 3
2150 Notes payable 262,181 4 393,849 6
2160 Notes payable - related parties VII 566 - 514 -
2170 Accounts payable 165,270 3 201,312 3
2180 Accounts payable - related parties VII 350 - 799 -
2200 Other payables VI 112,178 2 128,889 2
2220 Other payables - related parties VII 1,339 - 2,007 -
2230 Current tax liabilities IV 52,116 1 64,623 1
2250 Current provisions IV and VI 12,935 - 12,445 -
2280 Current lease liabilities IV, VI and VII 638 - 11,420 -
2310 Advance receipts VII 1,066 - 934 -
2399 Other current liabilities - others 1,077 - 2,099 -
21xx Total current liabilities 2,438,770 40 3,288,494 48
Non-current liabilities
2570 Deferred income tax liabilities IV and VI 116,831 2 112,224 2
2580 Non-current lease liabilities IV, VI and VII 280 - 918 -
2630 Long-term deferred revenue 9,533 - 10,793 -
2640 Net defined benefit liability - non-current IV and VI 6,973 - 8,991 -
2645 Guarantee deposits received 1,911 - 2,183 -
25xx Total non-current liabilities 135,528 2 135,109 2
2xxx Total Liabilities 2,574,298 42 3,423,603 50
Equity attributable to owners of the parent
3100 Share capital VI
3110 Common stock 965,942 16 965,942 14
3200 Capital surplus VI
3211 Capital surplus - additional paid-in capital 6,124 - 6,124 -
arising from ordinary share
Capital surplus - Conversion premium of
3213 57,468 1 57,468 1
convertible bonds
3240 Capital surplus - Gains from disposal of 4 - 4 -
assets
3280 Capital surplus - others 31,920 1 31,920 -
3300 Retained earnings VI
3310 Legal reserve 562,966 9 527,176 8
3320 Special reserve 98,077 2 98,077 1
3350 Unappropriated earnings 1,606,748 28 1,595,597 24
3400 Other equity VI
3410 Exchange difference on translation of (32,016) (1) (18,699) -
financial statements of foreign operations
Unrealised gains (losses) on valuation of
3420 financial assets measured at fair value (3,381) - (10,933) -
through other comprehensive income
Total equity attributable to owners of the
31xx 3,293,852 56 3,252,676 48
parent
36xx Non-controlling interests VI 93,741 2 115,519 2
3xxx Total equity 3,387,593 58 3,368,195 50
Total liability and equity $ 5,961,891 100 $ 6,791,798 100
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Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu�

205

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand, except earnings per share

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2023 2022
Code Items Notes Amount % Amount %
4000 Operating revenue VI and VII $ 2,361,917 100 $ 3,100,517 100
5000 Operating costs VI and VII (2,002,794) (85) (2,432,617) (78)
5900 Gross profit 359,123 15 667,900 22
5920 Realized (Unealized) gain from sale (210) - (4,900) -
5950 Gross profit, net 358,913 15 663,000 22
Operating expenses
6100 Selling and marketing expenses (149,424) (6) (188,205) (6)
6200 General and administrative expenses (129,974) (6) (128,520) (4)
6300 Research and development expenses (53,729) (2) (61,671) (2)
6450 Expected credit impairment gains (losses) 7,214 - 13,621 -
6000 Total operating expenses (325,913) (14) (364,775) (12)
6900 Operating profit 33,000 1 298,225 10
Non-operating income and expenses
7100 Interest income 30,129 1 15,972 1
7010 Other income VI 65,466 4 46,011 2
7020 Other gains and losses IV and VI 132,086 6 117,800 4
7050 Finance costs VI (32,760) (1) (26,002) (1)
7060 Share of profit or loss of associates and joint ventures 7,178 - 7,782 -
accounted for using equity method
7000 Total non-operating income and expenses 202,099 10 161,563 5
7900 Net profit before tax 235,099 11 459,788 15
7950 Income tax income (expense) IV and VI (44,793) (2) (110,501) (4)
8200 Profit for the year 190,306 9 349,287 11
Other comprehensive income
8310 Items that will not be reclassified subsequently to profit or
loss
8311 Remeasurement of defined benefit plan (351) - 3,296 -
Unrealized gains (losses) from investment in equity
8316 instrument measured at fair value through other (1,486) - (13,848) -
comprehensive income
8349 Income taxes related to the items not reclassified 70 - (659) -
Items that may be reclassified subsequently to profit or
8360
loss
8361 Exchange difference on translation of financial (18,238) (2) 23,155 -
statements of foreign operations
8399 Income tax related to items that may be reclassified 3,648 (1) (4,631) -
8300 Other comprehensive (loss) income for the year (16,357) (3) 7,313 -
8500 Total comprehensive income $ 173,949 6 $ 356,600 11
8600 Net profit (loss) attributable to:
8610 Owners of the parent company (net profit/ loss) $ 210,811 9 $ 354,143 11
8620 Non-controlling interests (net profit/ loss) (20,505) - (4,856) -
$ 190,306 9 $ 349,287 11
8700 Total comprehensive income attributable to:
8710 Owners of the parent company (comprehensive income) $ 195,727 7 $ 360,342 11
8720 Non-controlling interests (comprehensive income) (21,778) - (3,742) -
$ 173,949 7 $ 356,600 11
Earnings per share
9750 Basic earnings per share $ 2.18 $ 3.67
9850 Diluted earnings per share $ 2.17 $ 3.65
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Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

206

AWEA Mechantronic Co., Ltd. and its Subsidiaries Consolidated Statement of Changes in Equity

Unit: NT$ thousand

For the Years Ended December 31, 2023 and 2022

Equity attributable to owners of the parent

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Share capital Retained earnings Other equity items
Exchange
Unrealised gains
difference on
(losses) on valuation Total equity
translation of
Unappropriated of financial assets attributable to Non-controlling
Items Common stock Capital surplus Legal reserve Special reserve financial Total equity
earnings measured at fair value owners of the interests
statements of
through other parent
foreign
comprehensive income
operations
Balance at January 1, 2022 $ 965,942 $ 124,495 $ 513,898 $ 98,077 $ 1,366,883 $ (36,109) $ 4,040 $ 3,037,226 $ 119,261 $ 3,156,487
Appropriation and distribution of retained
earnings:
Legal reserve - - 13,278 - (13,278) - - - - -
- - - - - - -
Cash dividends paid (115,913) (115,913) (115,913)
Cash dividends to shareholders from capital - - - - - - -
(28,979) (28,979) (28,979)
surplus
2022 Net profit - - - - 354,143 - - 354,143 (4,856) 349,287
Other comprehensive income for 2022 - - - - 2,637 17,410 (13,848) 6,199 1,114 7,313
Total comprehensive income of 2022 - - - - 356,780 17,410 (13,848) 360,342 (3,742) 356,600
Disposal of investments in equity instruments
at fair value through other comprehensive - - - - 1,125 - (1,125) - - -
income
Balance at December 31, 2022 965,942 95,516 527,176 98,077 1,595,597 (18,699) (10,933) 3,252,676 115,519 3,368,195
Appropriation and distribution of retained
earnings:
Legal reserve - - 35,790 - (35,790) - - - - -
- - - - - - -
Cash dividends paid (154,551) (154,551) (154,551)
surplus Cash dividends to shareholders from capital - - - - - - - - - -
2023 Net profit - - - - 210,811 - - 210,811 (20,505) 190,306
- - - -
Other comprehensive income for 2023 (281) (13,317) (1,486) (15,084) (1,273) (16,357)
Total comprehensive income of 2023 - - - - 210,530 (13,317) (1,486) 195,727 (21,778) 173,949
Disposal of investments in equity instruments
at fair value through other comprehensive - - - - (9,038) - 9,038 - - -
income
Balance at December 31, 2023 $ 965,942 $ 95,516 $ 562,966 $ 98,077 $ 1,606,748 $ (32,016) $ (3,381) $ 3,293,852 $ 93,741 $ 3,387,593
----- End of picture text -----

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand

Cash flows from operating activities Net profit before tax Adjustments Depreciation Amortisation Expected credit impairment (gains) losses Interest expense Interest income Dividend revenue Share of profit or loss of associates and joint ventures accounted for using equity method Gains on disposal and discard of property, plant and equipment Unrealized (Realized) gain from sale Other income Lease modification benefit Gains on disposals of investments (Gains) losses from evaluation of financial assets Changes in operating assets and liabilities Notes receivable Notes receivable - related parties Account receivables Account receivables - related parties Other receivables Other receivables - related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Contract liabilities Notes payable Notes payable - related parties Accounts payable Accounts payable - related parties Other payables Other payables - related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash generated from operations Interest received Income tax paid Net cash generated by operating activities (Continued)	2023 235,099 $ 111,786 2,752 (7,214) 32,760 (30,129) (23,308) (7,178) (61) 210 (1,075) - (2,841) (123,694) 222,165 3,416 107,200 (10,175) (1,665) - 158,233 15,369 407 8,784 5,380 (52,798) (131,668) 52 (36,042) (449) (15,683) (668) 522 132 (1,022) (2,088) 456,509 30,862 (87,932) 399,439	2022 459,788 $ 115,080 2,965 (13,621) 26,002 (15,972) (18,114) (7,782) (211) 4,900 (1,081) (283) (2,095) 11,149 (134,978) (509) 88,299 (19,617) 2,777 174 (57,361) 18,114 (255) (6,784) 19,191 4,062 (124,385) (16,520) (77,204) 208 (9,489) 531 (513) 922 857 (507) 247,738 12,058 (37,909) 221,887

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AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2023 and 2022

(Continued from previous page) Cash flows from investing activities Acquisitions of financial assets at fair value through profit or loss Disposal price of financial assets at fair value through profit or loss Acquisitions of financial assets at fair value through other comprehensive income Disposal price of financial assets at fair value through other comprehensive income Acquisition of financial assets measured at amortized cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisitions of intangible assets Decrease (Increase) in prepayments for equipment Decrease in guarantee deposits paid Decrease (Increase) in other non-current assets Dividends received Decrease (Increase) in other financial assets Net cash inflow (outflow) from investing activities Cash flows from financing activities Increase (decrease) in short-term borrowings Increase (Decrease) in short-term notes and bills payable Decrease in long-term borrowings Repayment of principal of lease liabilities Decrease in guarantee deposits received Interest paid Dividends paid Net cash inflow (outflow) from financing activities Effect of changes in foreign exchange rates on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of year Cash and cash equivalents at the end of year	2023 (49,014) 15,622 - 6,981 (10,137) (51,642) 1,779 (5,079) (2,900) 3,181 (61) 23,308 197,356 129,394 (378,097) (209,654) - (11,420) (272) (31,622) (154,551) (785,616) (9,215) (265,998) 1,132,171 866,173 $	Unit: NT$ thousand 2022
		(236,175) 22,536 (11,268) 3,791 - (22,340) 3,740 (1,246) 3,664 5,785 2,094 18,114 (220,429) (431,734) 619,168 29,734 (62,672) (11,410) (1,990) (25,793) (144,890) 402,147 2,219 194,519 937,652 1,132,171 $

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Hong-Bin Syu

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AWEA Mechantronic Co., Ltd. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2023 and 2022

Unit: NT$ thousand (unless stated otherwise)

I. History and Organization

AWEA Mechantronic Co., Ltd. was established on July 16, 1986. The design, manufacture and sales of special machines, automation equipment and computer-controlled tool machines are its main business.

The shares of AWEA was approved of listing by Document Tai-Zheng-(2000)-Shang-Zi No. 025773 on September 6, 2000, and began to be listed for trading on TWSE Stock Exchange Market since September 11, 2000.

II. Approval Date and Procedures of the Financial Statements

The consolidated financial statements were approved by the board of directors and authorized for issue on March 5, 2024.

III. Application of Newly Issued and Amended Standards and Interpretations

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

Except as stated below, the application of the amendments to the IFRS endorsed and issued into effect by the FSC does not have a significant effect on the Company’s accounting policies:

Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules”

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(II) IFRSs issued by the International Accounting Standards Board (IASB) that have been endorsed by the FSC and will come into effect in 2024:

endorsed by the FSC and will come into effect in 2024:
New, Revised or Amended Standards and Interpretations Amendment to IFRS 16 “Lease Liabilities in Sale and Leasebacks” 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 Financing Arrangements”	Effective Date Announced by IASB (Note 1)
	January 1, 2024 (Note 2) January 1, 2024 January 1, 2024 January 1, 2024 (Note 3)

Note 1: Unless stated otherwise, the above new/revised/amended standards or interpretations are effective for annual reporting periods beginning on their respective effective dates.
Note 2: A seller-lessee applies the amendments retrospectively to IFRS 16 to sale and leaseback transactions entered into after the date of initial application.
Note 3: When the amendments apply for the first time, some requirements for disclosure are exempted.
As of the date the financial statements were authorized, the Company is making continuous assessment and concludes that the amendments of other standards and interpretations will have no significant impact on the financial position and financial performance.
(III) IFRS issued by the International Accounting Standards Board (IASB) but not yet endorsed and issued into effect by the FSC

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Effective Date New, Revised or Amended Standards and Interpretations Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of To be determined by Assets between an Investor and its Associate or Joint IASB Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “Initial application of IFRS 17 and January 1, 2023 IFRS 9 - Comparative Information” Amendments to IAS 21 “Lack of Exchangeability” January 1, 2025 (Note 2)

Note 1: Unless stated otherwise, the above new/revised/amended standards or interpretations are effective for annual reporting periods beginning on their respective effective dates.
Note 2: This amendment applies for annual reporting periods beginning after January 1, 2025. At the initial application of the amendment, the number of influences is recognized in the retained reserve at the date of initial application. When the Company adopts a non-functional currency as the presentation currency, the effects will be reclassified as the exchange differences arising from the translation of the financial statements of foreign operations under equity on the initial application date.

IV. Summary of Significant Accounting Polices

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The following accounting policies have been consistently applied to all periods presented in the consolidated financial statements, unless otherwise specified.

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(I) Statement of compliance

The consolidated financial statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC.

(II) Basis of preparation

Except for the following significant items of balance sheet, these consolidated financial statements have been prepared at historical cost:

Financial assets measured at fair value through profit or loss;
Financial assets measured at fair value through other comprehensive income;
The net defined benefit liability is the fair value of pension fund assets less the present value of defined benefit obligations.

(III) Functional currency and presentation currency

Each entity of the Consolidated Company uses the currency of the primary economic environment in which the entity operates as the functional currency. The consolidated financial statements are presented in New Taiwan dollars, the Company’s functional currency. All financial information presented in New Taiwan dollars are in thousands of New Taiwan dollars.

(IV) Basis of consolidation

The consolidated financial statements include the financial statements of AWEA and the entities it controls (i.e., subsidiaries).

The financial statements of the subsidiaries are included in the consolidated financial statements from the date on which control of the subsidiaries is obtained until the date on which such control ceases. The gains and losses attributable to the non-controlling interest in the subsidiaries are attributed to the non-controlling interest even if the non-controlling interest becomes a deficit balance as a result.

The financial statements of the subsidiaries have been appropriately adjusted so that the accounting policies are consistent with those of AWEA.

Significant transactions among consolidated companies, balances and unrealized gains and expenses have been eliminated when preparing the consolidated financial statements.

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Subsidiaries included in the consolidated financial statements:

Name of investor AWEA Mechantronic Co., Ltd. AWEA Mechantronic Co., Ltd. B-Way (Cayman) Co., Ltd. Billion-Way (Cayman)Co., Ltd. Billion-Way (Cayman)Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED	Name of subsidiaries B-Way (Cayman) Co., Ltd. Yih Chuan Machinery Industry Co., Ltd. Billion-Way (Cayman) Co., Ltd. Shanghai Zhuwai Mechanical and Electrical Co., Ltd. Awea Mechantronic (Suzhou) Ltd. AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Main business activities International investment and international trade Industrial machinery manufacture and trade International investment and international trade Machinery sales, installation and international trade Machinery manufacturing, sales and installation and international trade International investment and international trade International investment and international trade Machinery manufacturing, sales and installation and international trade	Ownership (%)	Ownership (%)
			December 31, 2023 100% 60% 100% 100% 100% 100% 100% 100%	December 31, 2022 100% 60% 100% 100% 100% 100% 100% 100%

(V) Classification of current and non-current assets and liabilities
Assets that meet one of the following criteria are classified as current assets. All assets that are not classified as current assets are classified as non-current assets:
- (1) Assets that are expected to be realized, or are intended to be sold or consumed within the normal business cycle;
- (2) Assets held mainly for trading purposes;
- (3) Assets that are expected to be realized within twelve months after the reporting period; or
- (4) The asset is cash and cash equivalents, excluding restricted assets and those

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that are to be exchanged or used to settle liabilities more than twelve months after the reporting period.

Liabilities that meet one of the following criteria are classified as current liabilities. All liabilities that are not classified as current liabilities are classified as non-current liabilities:
- (1) Liabilities that are expected to be settled within the normal business cycle;
- (2) Liabilities held mainly for trading activities.
- (3) Liabilities that are expected to be due for settlement within twelve months after the reporting period; or
- (4) Liabilities for which the repayment date cannot be extended unconditionally to more than 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 affect its classification.
(VI) Foreign currency transactions

When preparing the financial statements of each consolidated entity, transactions in currencies other than the entity’s functional currency (foreign currency) are translated to the functional currency based on the exchange rate on the transaction day. Monetary items denominated in foreign currencies at the end of the reporting period are translated into the functional currency based on the exchange rate on that day.

Foreign currency non-monetary items measured at fair value are translated into the functional currency at the exchange rate on that day; however, if the change in fair value is recognized in other comprehensive income, the resulting exchange differences are included in other comprehensive income.

Non-monetary items measured at historical cost that are denominated in foreign currencies are translated at the exchange rates on the transaction date. The exchange differences arising from translation are recognized in profit or loss in the period in which they arise.

For purpose of preparing the consolidated financial statements, the assets and liabilities of foreign operations of the Company shall be translated to NTD by the exchange rate on ending date of the reporting period; the income and expense items shall be translated to NTD at the average exchange rate of the current period, and the resulting exchange

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difference shall be recognized as other comprehensive profit or loss and accumulated as the translation difference in the financial statements of foreign operations under equity.

(VII) Cash and cash equivalents

Cash includes cash on hand and current deposits. Cash equivalents refer to 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. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes are classified as cash equivalents.

(VIII) Financial instruments

Financial assets At initial recognition, financial assets shall be classified as financial assets at amortized cost, financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income. The Company reclassifies all affected financial assets from the first day of the next reporting period only when there is a change in the business model for financial assets management.
(1) Financial assets measured at amortized cost Financial assets are measured at amortized cost when they meet all of the following criteria and are not designated as at fair value through profit or loss:
- A. The financial assets are held under the business model with the purpose of collecting contractual cash flows.
- B. The contract terms of the financial assets generate cash flow on a specific date, and such cash flow is solely for the payment of the principle and the interest on outstanding principle amount.

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(2) Financial assets at FVTPL

(3)

Financial assets at FVTOCI

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to profit or loss.

Dividend income from equity investments is recognized on the date when the Company has the right to receive the dividend (usually the ex-dividend date).

(4) Impairment of financial assets

The loss allowance is measured at 12-month expected credit losses for the following financial assets, and at the lifetime expected credit losses of the other financial assets:

A. The credit risk of debt securities is determined to be low at the reporting date; and
B. The credit risks of other debt securities and bank deposits (i.e., the risk of default on financial instruments over the expected life) have not increased significantly since the initial recognition.

The loss allowances for accounts receivable and contract assets are measured at the amount of lifetime expected credit losses.

Lifetime expected credit losses result from all possible default events over the expected life of the financial instruments.

The 12-month expected credit losses are expected credit losses that result from possible default events within 12 months after the reporting date (or for shorter periods, if the expected life of the financial instrument is less than 12 months).

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The maximum period for which expected credit losses are measured is the maximum contract period over which the Company is exposed to credit risk. Expected credit losses are weighted estimates of the probability of credit losses over the expected life of the financial instruments. Credit losses are measured at the present value of all cash shortfalls, which is the difference between the cash flows that the Company could receive under the contract and the cash flows that the Company expects to receive. Expected credit losses are discounted at the effective interest rate of the financial asset.

A. Significant financial difficulty of the borrower or issuer;
B. Defaults, such as delay or overdue for more than 90 days;
C. The Company has made concessions to the borrower that the Company would not consider otherwise for economic or contractual reasons related to the borrower’s financial difficulties;
D. The borrower is very likely to apply for bankruptcy or carry out other financial reorganization; or
E. The active market for the financial assets has disappeared due to financial difficulties.

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(5) Derecognition of financial assets
A financial assets will be derecognized only when the Company’s contractual rights to the cash flows from that asset are terminated, or when the financial asset is transferred and substantially all the risks and returns of ownership to that asset have been transferred to another entity, or when substantially all the risks and returns of ownership are neither transferred nor retained, and the Company does not retain control over that financial asset.

(IX) Financial liabilities and equity instruments

Classification of liabilities and equity Debt and equity instruments issued by the Company are classified as either financial liabilities or equity in accordance with the substance of the contractual arrangements and the definitions of financial liabilities and equity instruments.
Equity instruments
Equity instrument refers to any contract that recognizes the remaining interest of the Company after reducing all its liabilities from its assets. Equity instruments issued by the Company are recognized at the proceeds received, net of the cost of direct issue.
Financial liabilities

Financial liabilities that are not held for trading and are not designated as at fair value through profit or loss (including notes payable, accounts payable and other

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payables) are measured at fair value plus directly attributable transaction costs at initial recognition; subsequently, they are measured at amortized cost using the effective interest rate method, and interest expenses not capitalized in the asset cost are included in non-operating income and expenses.

Derecognition of financial liabilities

A financial liability is derecognized by the consolidated company when the contractual obligation is either discharged or canceled or expires.

Mutual offset of financial assets and liabilities Financial assets and financial liabilities are offset and recognized in the balance sheet on a net basis only when the Consolidated Company has the legal right to do so and has the intention to settle on a net basis or to realize the assets and settle the liabilities simultaneously.

(X) Inventories

(XI) Investments accounted for using equity method

Investments accounted for using equity method include associates and joint ventures. Associates are companies over which the Company exercises significant influence, but not subsidiaries or joint ventures. Significant influence refers to the power to participate in the investee’s financial and operating policy decisions, but not the power to control or jointly control such policy decisions.

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those sharing control. If another entity is created under a joint venture agreement in which each of the joint venture controllers has an interest, that entity is a jointly controlled entity.

The business results and assets and liabilities of associates and joint ventures are included in the financial statements under the equity method, except for the assets classified as held for sale. Under the equity method, investments in associates and joint ventures are initially recognized at cost on the balance sheet and subsequently adjusted for changes in the Company’s share of the investee’s net assets. When the Company’s share of losses in an associate or joint venture exceeds its interest in that associate, an additional loss is recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate. The excess of the acquisition cost over the Company’s share of the net fair value of the identifiable assets and liabilities of the associate and the joint venture at the date of acquisition is recognized as goodwill and is included in the carrying amount of the investment. The excess of the Company’s share of the net fair value of the identifiable assets and liabilities of its associates and joint ventures over the acquisition cost at the date of acquisition is recognized as a gain immediately upon reassessment.

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interest, which is accounted for on the same basis as that used for the disposal of assets or liabilities by the associate directly.

When a consolidated entity enters into transactions with associates and joint ventures, unrealized gains and losses are eliminated in proportion to its share on consolidation.

(XII) Property, plant and equipment

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After initial recognition, an item or a significant component of property, plant and equipment is derecognized and recognized in profit or loss if it is disposed of or if no future economic benefits are expected to flow from its use or disposal. Depreciation is calculated recognized in profit or loss over the estimated useful lives of individual components of property, plant and equipment on a straight-line basis because it best reflects the expected consumption pattern of future economic effects of the assets.

Depreciation is calculated according to the following estimated useful lives:

Property and building	5 - 51 years
Machinery equipment	2 - 16 years
Molding equipment	2 - 3 years
Transportation equipment	2 - 6 years
Computer and telecommunication equipment	4 years
Office equipment	3 - 5 years
Business equipment	2 - 7 years
Leasehold improvements	5 years
Other equipment	2 - 11 years

(XIII) Leases

Lease judgment

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

The Company as lessee

The Company recognizes right-of-use assets and lease liabilities at the inception date of the lease. Right-of-use assets are measured initially at cost, which consists

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of the initially measured amount of the lease liability, adjusted for any lease payments made on or before the inception date of the lease, plus original direct costs incurred and the estimated costs to dismantle or remove the underlying asset and reinstate the underlying asset or its original location, less any lease incentives received.

Lease payments included in the measurement of lease liabilities consist of:

(1) Fixed payments, including substantial fixed payments;
(2) Variable lease payments that depend on an index or a rate are initially measured using the index or rate at the inception date of the lease.

Subsequently, the interests on lease liabilities are calculated using the effective interest method, and their amounts are remeasured when the following circumstances occur:

(1) A change in the index or rate used to determine lease payments results in a change in future lease payments;
(2) A change in the estimate of whether to exercise the option to extend or terminate the lease, which changes the assessment of the lease term;
(3) Changes in the amount of residual value guarantee expected to be paid;
(4) Changes in the evaluation of purchase options for the underlying assets;
(5) Changes in the subject matter, scope or other terms of the lease.

When a lease liability is remeasured as a result of changes in the index or rate used to determine the lease payments, changes in the amount of residual value

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guarantee, and changes in the evaluation of purchase, extension or termination options, the carrying amount of the right-of-use asset is adjusted accordingly, and the remaining amount of the remeasurement is recognized in profit or loss when the carrying amount of the right-of-use asset is reduced to zero.

The Company presents right-of-use assets and lease liabilities that do not meet the definition of investment property as separate line items on the balance sheet.

3. The Company as lessor

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(XIV) Intangible assets

Goodwill

Goodwill on acquisitions of subsidiaries is measured at cost less accumulated impairment losses.

Other intangible assets

The Company acquired intangible assets with finite useful lives are shown at cost less accumulated amortization and accumulated impairment losses.

Amortization amount is calculated on a straight-line basis over the following useful lives:

Computer software Economic benefits or contract term

Estimated useful life and amortization method are reviewed at the end of the reporting period, and the impact of any changes in estimates is deferred.

(XV) Impairment of non-financial assets

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specific to the asset or cash generating unit.

An impairment loss is recognized if the recoverable amount of an asset or cash generating unit is less than its carrying amount.

Impairment losses on goodwill are not reversed. Non-financial asset other than goodwill is reversed only to the extent that the carrying amount (net of depreciation or amortization) of the asset does not exceed the carrying amount that would have been determined if no impairment loss had been recognized for the asset in previous years.

(XVI) Provisions

(XVII) Revenue recognition

Sales of goods

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transferred to the customer. The customer has accepted the product under a sales contract, the terms of acceptance have expired, or the Company has objective evidence showing that all conditions of acceptance have been met.

The Company recognizes accounts receivable upon delivery of goods because the Company has an unconditional right to receive consideration at that time.

Financial components

(XVIII) Government grants

Government grants are recognized only when the conditions attached to the grant are met and the grant is expected to be received.

(XIX) Employee benefits

Defined contribution plans

Contribution obligations to defined contribution pension plans are recognized as expenses over the employees’ service provision period. Prepaid contributions are recognized as an asset to the extent that they result in a cash refund or a reduction in the future payments.

Defined benefit plan

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Changes in benefits related to prior service costs or reduced benefits or losses resulting from plan revisions or reductions are recognized immediately in profit or loss. The Company recognizes gains or losses on settlement of a defined benefit plan when the settlement occurs.

Short-term employee benefits

(XX) Borrowing costs

Except for the above, all other borrowing costs are recognized as profit or loss in the year in which they are incurred.

(XXI) Income tax

The income tax for the period comprises current and deferred tax.

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Deferred tax assets and deferred tax liabilities are offset only if the following conditions are met simultaneously:

There is a legally enforceable right to offset current tax assets against current tax liabilities; and
The deferred tax assets and liabilities are relate to one of the following taxpayers that are subject to the income tax levied by the same taxation authority: (1) The same taxpayer; or
(2) Different taxpayers, provided that each taxpayer intends to settle current income tax liabilities and assets on a net basis, or to realize assets and settle liabilities simultaneously in each future period in which significant amounts of deferred income tax assets are expected to be recovered and deferred income tax liabilities are expected to be settled.

(XXII) Earnings per share

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(XXIII) Segment information

Operating segments are components of the Consolidated Company that engage in operating activities that may generate revenues and incur expenses (including revenues and expenses related to transactions with other components of the Consolidated Company). The operating results of all operating segments are reviewed periodically by the key operating decision maker of the Consolidated Company in order to make decisions on the allocation of assets to such segments and evaluate the performance. Each operating segment has its separate financial information.

V. Significant Accounting Judgment, Estimates, and Assumptions and the Main Sources of Assumption Uncertainty

The Company and its subsidiaries take into account the economic impact of the COVID-19 epidemic in significant accounting estimates, and the management will continue to review estimates and underlying assumptions. Amendments to accounting estimates are recognized in the period when the estimates are revised if the amendments affect only that period. If revisions affect both current and future periods, the accounting estimates are recognized in the current and future periods.

Management is required to make judgments, estimates and assumptions when preparing the parent company only financial statements. They will affect the adoption of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from estimates.

The management will continue to review estimates and underlying assumptions. Changes in accounting estimates are recognized in the period when the changes occur and in the future periods affected.

(I) Lose allowance for accounts receivable

The loss allowance for accounts receivable is estimated based on the assumptions of default risk and expected loss rate. The Company considers historical experience,

232

current market conditions and forward-looking estimates at each reporting date to determine the assumptions and inputs to be used in the impairment calculation. For details of the relevant assumptions and inputs, please refer to Note VI (V).

(II) Evaluation of inventories
Since inventories are measured at the lower of cost or net realizable value, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on reporting date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes due to rapid changes in the industry.
(III) Impairment evaluation of investments accounted for using equity method When there is an indication that an investment by equity method has impaired and the carrying amount may not be recovered, the Company will evaluate such impairment immediately. The Company evaluates the impairment loss based on the investee’s future cash flow projections, including the sales growth rate and capacity utilization rate estimated by the investee’s internal management, and analyzes the reasonableness of the related assumptions.
(IV) Impairment evaluation of tangible assets and intangible assets (excluding goodwill) During the asset impairment evaluation process, the Company relies on its subjective judgment, use mode of assets and characteristics of the industry, to determine the independent cash flows of a particular asset group, useful life of the assets and the likely future income and loss, and any change in estimates due to changes in economic conditions or the Company’s strategy may cause significant impairment or reversal of a recognized impairment loss in the future.
(V) Recognition and measurement of provision for liabilities
Provisions for product warranty liabilities are estimated at the time of revenue recognition and are based on the number of products under warranty, the history of the products, the expected maintenance rate and the expected unit maintenance cost. The Company continuously reviews the basis of these estimates and revises them when appropriate. Any change in the above estimate basis could materially affect the estimation of the provision for product warranty liabilities.

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(VI) Realizability of deferred tax assets

Deferred tax assets are recognized only when it is probable that there will be sufficient taxable income for deductible temporary differences to be used in the future. Assessing the realizability of deferred tax assets must involve significant accounting judgments and estimates by the management, including assumptions about expected future sales revenue growth and profit margins, tax holiday periods, available income tax credits, and tax planning, etc. Any changes in the global economic environment, industrial environment and laws may cause significant adjustments to deferred tax assets.

(VII) Measurement of defined benefit obligation

The defined benefit cost and net defined benefit liabilities (assets) to be recognized for the defined benefit pension plan are actuarially valued using the projected unit benefit method. The actuarial assumptions adopted include discount rate, employee turnover rate, and increment rate of future salary. Such assumptions could materially affect the amounts of expenses and liabilities recognized if they change as a result of changes in market and economic conditions. For the significant actuarial assumptions used in the actuarial calculations and the sensitivity analysis, please refer to Note VI (XVII).

VI. Summary of Significant Accounting Titles

(I) Cash and cash equivalents

(I)	Cash and cash equivalents
(II)	Cash Bank deposits Financial assets at FVTPL Current items: Mandatorilymeasured at FVTPL	December 31,2023 $ 2,661 863,512 $ 866,173 December 31,2023 $ 417,099 119,830 $ 536,929 December 31,2023 $ 27 (27) $ -	December 31,2022
			$ 2,873 1,129,298
			$ 1,132,171
			December 31,2022
	Domestic listed (OTC) stocks Adjustments Non-current items: Mandatorilymeasured at FVTPL		$ 380,865 (3,863)
			$ 377,002
			December 31,2022
	Overseas non-listed (non-OTC) stocks Adjustments		$ 27 (27)
			-

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Profits (losses) recognized in relation to the financial assets at fair value through profit or loss are listed below:

profit or loss are listed below:
Mandatorily measured at FVTPL Profits (losses) on valuation Gain on disposal Dividend revenue	2023 $ 123,694 $ 2,841 $ 23,144	2022
		$ (11,149)
		$ 2,095
		$ 16,926

The Company has no financial assets at fair value through profit or loss pledged to others.
The above equity instruments of the Company are held for trading and are therefore measured at fair value through profit or loss.
The Company invested in AUTECH EUROPE, a French agency, at an amount of FRF 5,000 (equaling to NT$27 thousand) in 1990, and the total capital amount of AUTECH EUROPE was FRF 100,000. In 1996, due to value impairment and little hope of recovery of the investee companies, all were recognized as losses.

(III) Financial assets at FVTOCI

Financial assets at FVTOCI
Measured at FVTOCI Domestic listed (OTC) stocks Adjustments	December 31,2023 $ 5,372 (3,381) $ 1,991	December 31,2022
		$ 21,391 (10,933)
		$ 10,458

The Company holds the above equity instruments as long-term strategic investments and therefore designates these investments as at fair value through other comprehensive income.
The Company disposed of equity investments at fair values of NT$7,012 thousand and NT$3,808 thousand in 2023 and 2022, respectively, and the accumulated losses and gains on disposal were NT$(9,038) thousand and NT$1,125 thousand, respectively. The above accumulated disposal losses and gains have been transfered to the retained earnings from other equities.

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Amounts recognized in profit or loss in relation to the financial assets at fair value through other comprehensive income are listed below:

through other comprehensive income	are listed below:
Measured at FVTOCI Dividend income recognized in profit or loss Held at the end of the period Derecognized during the period Changes in fair value recognized in other comprehensive income Accumulated gains (losses) transferred to retained earnings due to derecognition	2023 $ 164 - $ 164 $ (1,486) $ (9,038)	2022
		$ 1,188 -
		$ 1,188
		$ (13,848)
		$ 1,125

The Company has no financial assets at fair value through other comprehensive income pledged to others.
(IV) Financial assets measured at amortized cost

Pledged time deposits Non-current	December 31,2023 $ 10,137 $ 10,137	December 31,2022
		$ -

		$ -

For information on pledged financial assets at amortized cost, please refer to Note VIII.
(V) Notes and accounts receivable

VIII. Notes and accounts receivable
Notes receivable Less: Loss allowance Net Account receivables Less: Loss allowance Net	December 31,2023 $ 164,157 (7,057) $ 157,100 December 31,2023 $ 361,606 (10,964) $ 350,642	December 31,2022
		$ 386,323 (4,683)
		$ 381,640
		December 31,2022
		$ 468,846 (11,234)
		$ 457,612

The average credit period for merchandise sales ranges from 30 to 90 days for monthly

statement, and accounts receivable are non-interest-bearing.

The loss allowance for accounts receivable of the Company is recognized by simplified method under IFRS 9 according to lifetime expected credit losses. The

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lifetime expected credit loss is calculated using provision matrix and takes past breach records of the customer, the current financial condition and industrial economic trend. Since the Company’s historical experience of credit losses shows that there is no significant difference in the pattern of losses among different customer groups, therefore, the reserve matrix does not further distinguish between the customer groups, but only determines the expected credit loss rate based on the number of days overdue on accounts receivable.

The Company measures the loss allowance of note and accounts receivable according to the provision matrix as follows:

	December 31,2023
Total carrying amount $ 475,225 6,931 21,479 10,761 11,367 $ 525,763	Loss allowance (lifetime expected credit losses) $ (7,787) (86) (619) (1,495) (8,034) $ (18,021) December 31,2022	Amortized cost
		$ 467,438 6,845 20,860 9,266 3,333 $ 507,742

Total carrying amount $ 811,590 12,382 15,109 5,603 10,485 $ 855,169	Loss allowance (lifetime expected credit losses) $ (6,104) (248) (388) (1,352) (7,825) $ (15,917)	Amortized cost
		$ 805,486 12,134 14,721 4,251 2,660
		$ 839,252

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The changes in the Company’s loss allowance of notes and accounts receivable are as follows:

follows:
Opening balance Presentation (reversal) in the current period Write-offs in the current period Impacts of exchange rate Ending balance	2023 $ 15,917 2,337 (131) (102) $ 18,021	2022
		$ 34,478 2,172 (20,803) 70
		$ 15,917

(VI) Inventories

Inventories
December 31,2023 Products $ 4,655 Raw materials 416,910 Work in process 924,154 Finished goods 103,055 $ 1,448,774 1. Inventory-related expenses recognized in the current period 2023 Cost of goods sold $ 1,878,841 Loss on market value decline and obsolete and slow-moving inventories 81,529 Inventory obsolescence 3,382 Inventory loss (profit) 3,339 Income from sale of scraps (397) Idle capacity related costs 36,100 $ 2,002,794	December 31,2022
	$ 5,242 579,565 916,835 105,365
	$ 1,607,007
	2022
	$ 2,362,128 41,547 2,352 2,294 (1,205) 25,501
	$ 2,432,617

As of December 31, 2023 and 2022, there were no guarantees or pledges on

inventories.

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(VII) Investments accounted for using equity method

December 31, 2023 December 31, 2022 Associates $ 116,713 $ 109,850

The Company’s associates are listed below:

Carrying amount December 31,2023 December 31,2022 $ 108,435 $ 101,849 8,278 8,001 $ 116,713 $ 109,850	Percentage of ownership interest and voting rights held bythe Company	Percentage of ownership interest and voting rights held bythe Company
December 31,2023	December 31,2023	December 31,2022
$ 108,435 8,278	28.58% 13.33%	28.58% 13.33%
$ 116,713

On December 23, 2010, the Company’s Board of Directors resolved to invest US$1,700 thousand in YAMA SEIKI USA, INC. to engage in the sales and installation of parts and accessories of tool machines, mechanical instruments and international trade business.
In August 2021, the Company resolved to invest NT$7,333 thousand in Huahan Leasing Co., Ltd. to engage in the machinery and equipment leasing business.
The Company’s share of profit or loss and other comprehensive income in its associates using equity method in 2023 and 2022 are recognized in accordance with the associates’ financial statements audited by CPAs over the same period.

239

(VIII) Property, plant and equipment

(VIII) Property, plant and equipment
December 31,2023 Self-owned land $ 536,761 Property and building 987,076 Machinery equipment 130,597 Molding equipment 9,435 Transportation equipment 12,267 Computer and telecommunication equipment 7,726 Office equipment 270 Business equipment 4,050 Leasehold improvements - Other equipment 13,725 Unfinished construction and equipments pending acceptance 39,865 $ 1,741,772 January 1, 2023 Additions Disposals Reclassification Cost Self-owned land $ 536,761 $ - $ -$ - Property and building 1,598,745 87 (516) - Machinery equipment 388,424 6,786 (54) (30) Molding equipment 54,368 6,223 (202) 658 Transportation equipment 71,006 2,289 (4,015) - Computer and telecommunication equipment 19,703 275 (581) 2,014 Office equipment 5,990 74 (1,961) (1,326) Business equipment 18,812 1,411 - - Leasehold improvements 749 - - - Other equipment 60,920 872 (619) (1,316) Unfinished construction and equipments pending acceptance 9,536 31,459 (1,109) - $ 2,765,014 $ 49,476 $ (9,057) $ -	December 31,2023		December 31,2022 $ 536,761 1,045,193 149,012 6,304 15,187 8,833 1,463 5,989 - 19,195 9,536 $ 1,797,473 Impacts of exchange rate December 31, 2023 $ - $ 536,761 (8,056) 1,590,260 (3,492) 391,634 (74) 60,973 (238) 69,042 (148) 21,263 (77) 2,700 - 20,223 - 749 (664) 59,193 (21) 39,865 $ (12,770) $ 2,792,663
	$	536,761 987,076 130,597 9,435 12,267 7,726 270 4,050 - 13,725 39,865
	$	1,741,772
		Reclassification $ - - (30) 658 - 2,014 (1,326) - - (1,316) - $ -
				$ 536,761 1,590,260 391,634 60,973 69,042 21,263 2,700 20,223 749 59,193 39,865
				$ 2,792,663

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Accumulated depreciation Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Office equipment Business equipment Leasehold improvements Other equipment Net Cost Self-owned land Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Office equipment Business equipment Leasehold improvements Other equipment Unfinished construction and equipments pending acceptance	January 1, 2023 $ 553,552 239,412 48,064 55,819 10,870 4,527 12,823 749 41,725 $ 967,541 $ 1,797,473 January 1, 2022 $ 536,761 1,592,374 413,581 51,161 67,279 12,578 8,357 17,802 749 50,376 9,459 $ 2,760,477	Depreciation $ 52,614 23,794 3,494 4,961 2,416 514 3,350 - 5,245 $ 96,388 Additions $ - - 1,892 3,560 5,362 7,313 707 1,010 - 1,045 60 $ 20,949	Disposals $ (283) (34) (182) (3,807) (523) (1,952) - - (558) $ (7,339) Disposals $ - - (19,896) (412) (1,846) (309) (3,124) - - (1,083) - $ (26,670)	Reclassification $ - 2 227 - 889 (602) - - (516) $ - Reclassification $ - - (10,210) - - - - - - 10,210 - $ -	Impacts of exchange rate	December 31, 2023 $ 603,184 261,037 51,538 56,775 13,537 2,430 16,173 749 45,468 $ 1,050,891 $ 1,741,772 December 31, 2022
					$ (2,699) (2,137) (65) (198) (115) (57) - - (428)
					$ (5,699)
					Impacts of exchange rate $ - 6,371 3,057 59 211 121 50 - - 372 17 $ 10,258
						$ 536,761 1,598,745 388,424 54,368 71,006 19,703 5,990 18,812 749 60,920 9,536
						$ 2,765,014

241

Accumulated depreciation Property and building Machinery equipment Molding equipment Transportation equipment Computer and telecommunication equipment Office equipment Business equipment Leasehold improvements Other equipment Net	January 1, 2022 $ 497,566 234,701 45,276 52,058 9,610 7,036 9,520 728 30,988 $ 887,483 $ 1,872,994	Depreciation $ 54,359 25,761 3,159 5,386 1,464 574 3,303 21 5,529 $ 99,556	Disposals $ - (16,714) (412) (1,780) (285) (3,123) - - (828) $ (23,142)	Reclassification $ - (5,858) - - - - - - 5,858 $ -	Impacts of exchange rate	December 31, 2022
					$ 1,627 1,522 41 155 81 40 - - 178	$ 553,552 239,412 48,064 55,819 10,870 4,527 12,823 749 41,725
					$ 3,644	$ 967,541
						$ 1,797,473

For properties, plants and equipment provided by the Company as the guarantee for borrowings, please refer to Note VIII for details.
The land accounted for by the Company as at December 31, 2023 and 2022 was partly agricultural land with title temporarily registered in the name of another person for an amount of NT$88,529 thousand, in respect of which the Company has obtained a certificate of creation of other rights.
(IX) Lease arrangements
Right-of-use assets

Right-of-use assets
Land-use right Property and building	December 31,2023 $ 113,567 910 $ 114,477	December 31,2022
		$ 129,803 2,232
		$ 132,035

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Cost Land-use right Property and building Accumulated depreciation Land-use right Property and building Net Cost Land-use right Property and building Accumulated depreciation Land-use right Property and building Net	January 1, 2023	Additions $ - - $ - Depreciation $ 14,076 1,322 $ 15,398 Additions $ 603 694 $ 1,297 Depreciation $ 14,102 1,422 $ 15,524	Disposals $ - (150) $ (150) Disposals $ - (150) $ (150) Disposals $ - (1,634) $ (1,634) Disposals $ - - $ -	Reclassification $ - - $ - Reclassification $ - - $ - Others $ 25,080 - $ 25,080 Others $ 25,080 - $ 25,080	Impacts of exchange rate $ (2,983) - $ (2,983) Impacts of exchange rate $ (823) - $ (823) Impacts of exchange rate $ 2,357 - $ 2,357 Impacts of exchange rate $ 545 - $ 545	December 31, 2023
	$ 210,875 4,394					$ 207,892 4,244
	$ 215,269					$ 212,136
	January 1, 2023					December 31, 2023
	$ 81,072 2,162					$ 94,325 3,334
	$ 83,234					$ 97,659
	$ 132,035					$ 114,477
	January 1, 2022					December 31, 2022
	$ 182,835 5,334					$ 210,875 4,394
	$ 188,169					$ 215,269
	January 1, 2022					December 31, 2022
	$ 41,345 740					$ 81,072 2,162
	$ 42,085					$ 83,234
	$ 146,084					$ 132,035

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2. Lease liabilities

Lease liabilities
Current Non-current	December 31,2023 $ 638 280 $ 918	December 31,2022
		$ 11,420 918
		$ 12,338

3. Important renting activities and terms

The Company leases some lands, plants, offices and transportation equipment for periods ranging from 3 to 10 years. Upon termination of the leases, the Company does not have a preemptive right to acquire the leased assets.

The Company rents land in the People’s Republic of China for the manufacturing of its products, with a lease period of 50 years. The lease payment is made in lump sum at the time of signing contract, and the Company does not have a purchase right on the land at the end of the term of land-use right.

Other lease information

4. Other lease information
2023 Short-term lease and lease expenses of low-value assets $ 3,835 Total cash outflow from leases $ 11,420 (X) Intangible assets December 31,2023 Goodwill $ 642 Computer software 12,014 $ 12,656	2023		2022
	$ 3,835		$ 1,199
	$ 11,420		$ 11,410
			December 31,2022
		$	642 9,726
		$	10,368

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Disposals Reclassification $ - $ - (365) - $ (365) $ - Disposals Reclassification $ (365) $ - $ (365) $ - Disposals Reclassification $ - $ - - - $ - $ - Disposals Reclassification $ - $ - $ - $ - December 31,2023 $ 860 (860) $ -	Disposals Reclassification $ - $ - (365) - $ (365) $ - Disposals Reclassification $ (365) $ - $ (365) $ - Disposals Reclassification $ - $ - - - $ - $ - Disposals Reclassification $ - $ - $ - $ - December 31,2023 $ 860 (860) $ -	Impacts of exchange rate December 31, 2023 $ - $ 642 (110) 29,425 $ (110) $ 30,067 Impacts of exchange rate December 31, 2023 $ (71) $ 17,411 $ (71) $ 17,411 $ 12,656 Impacts of exchange rate December 31, 2022 $ - $ 642 81 24,821 $ 81 $ 25,463 Impacts of exchange rate December 31, 2022 $ 37 $ 15,095 $ 37 $ 15,095 $ 10,368 December 31,2022 $ 9,732 (9,732) $ -	Impacts of exchange rate December 31, 2023 $ - $ 642 (110) 29,425 $ (110) $ 30,067 Impacts of exchange rate December 31, 2023 $ (71) $ 17,411 $ (71) $ 17,411 $ 12,656 Impacts of exchange rate December 31, 2022 $ - $ 642 81 24,821 $ 81 $ 25,463 Impacts of exchange rate December 31, 2022 $ 37 $ 15,095 $ 37 $ 15,095 $ 10,368 December 31,2022 $ 9,732 (9,732) $ -	December 31, 2023
				$ 642 29,425
				$ 30,067
				December 31, 2023
				$ 17,411
				$ 17,411
				$ 12,656
				December 31, 2022
				$ 642 24,821
				$ 25,463
				December 31, 2022
$		$		$ 15,095
$		$		$ 15,095
				$ 10,368
	$ 860 (860)		$ 9,732 (9,732)
	$ -		$ -

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(XII) Other financial assets - current

Other financial assets - current
Special funds for repatriation of overseas funds Restricted assets - bank deposits	December 31,2023 $ 343,987 - $ 343,987	December 31,2022
		$ 353,397 188,170
		$ 541,567

(XIII) Short-term borrowings

Short-term borrowings
Secured loans Credit loans Interest rate	December 31,2023 $ 376,852 1,200,000 $ 1,576,852 1.6800% -3.6000%	December 31,2022
		$ 509,949 1,445,000
		$ 1,954,949
		1.3123%-4.9000%

Please refer to Note VIII for the guarantees provided.

(XIV) Short-term notes and bills payable

Short-term notes and bills payable
Short-term notes and bills payable Less: Discount on short-term notes and bills payable Interest rate	December 31,2023 $ 80,000 (13) $ 79,987 1.4500%	December 31,2022
		$ 290,000 (359)
		$ 289,641
		1.3000%-1.7800%

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(XV) Other payables

(XV) Other payables
Other expenses payable Employee compensation payable Remuneration payable to directors and supervisors Dividends payable Construction and equipment payable Others (XVI) Current provisions Warranty Employee benefits January 1, 2023 Warranty $ 5,272 Employee benefits 7,173 $ 12,445 January 1, 2022 Warranty $ 4,355 Employee benefits 8,579 $ 12,934	December 31,2023 December 31,2022 $ 89,437 $ 101,697 16,000 16,000 2,750 1,800 491 491 212 2,379 3,288 6,522 $ 112,178 $ 128,889 December 31,2023 December 31,2022 $ 3,836 $ 5,272 9,099 7,173 $ 12,935 $ 12,445 New in currentperiod Reversal in currentperiod Impacts of exchange rate December 31, 2023 $ - $ (1,436) $ - $ 3,836 1,966 (8) (32) 9,099 $ 1,966 $ (1,444) $ (32) $ 12,935 New in currentperiod Reversal in currentperiod Impacts of exchange rate December 31, 2022 $ 917 $ - $ - $ 5,272 18 (1,448) 24 7,173 $ 935 $ (1,448) $ 24 $ 12,445	December 31,2022
		$ 101,697 16,000 1,800 491 2,379 6,522
		$ 128,889
		December 31,2022
		$	5,272 7,173
		$	12,445
			December 31, 2023
			$ 3,836 9,099
			$ 12,935
			December 31, 2022
			$ 5,272 7,173
			$ 12,445

Warranty provision for liabilities refers to that as agreed in the sales contract of products, the management of the Company makes optimal estimate based on historical experience of the products.
Provisions for employee benefit liabilities are recognized as a liability if the Company has a present legal or constructive obligation to pay as a result of past service rendered by employees, and the obligation can be estimated reliably.

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(XVII) Employee benefits

1. Defined benefit plan

The Company’s employee retirement plan under the “Labor Standards Act” is a defined benefit plan. Under the plan, the employee’s pension is calculated based on the number of years of service and the average salary of the six months before retirement. The Company contributes monthly an amount equal to 2% of the employees’ gross salaries to the Labor Pension Fund Supervisory Committee and deposits the funds in the name of the Committee in a special account at the Bank of Taiwan. The Funds are operated and managed by the government’s designated authorities. Accordingly, the Company does not have any right to intervene in the investments of the Funds.

(1) Actuarial assumptions on the reporting date: December 31,2023 Discount rate 1.300% Expected salary adjustment rate 2.500%	December 31,2022
	1.400% 2.500%

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(2) The amounts of pension expenses recognized in the consolidated statements of comprehensive income in respect of defined benefit plan are shown below:

below:
2023 Current service cost $ 161 Interest cost on defined benefit obligation 403 Interest income on plan assets (283) Recognized in profit or loss 281 Remeasurement Actuarial gains (losses) - Experience adjustments 269 Actuarial gains (losses) - Adjustments to demographic assumptions - Actuarial gains (losses) - Adjustments to financial assumptions 259 Return on plan assets (177) Recognized in other comprehensive income 351 Total $ 632	2022
	$ 235 273 (180)
	328
	743 - (1,858) (2,181)
	(3,296)
	$ (2,968)

Pension expenses recognized in profit or loss for the above defined benefit plan are included in the following items:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses Others	2023 $ 2,274 61 230 78 (2,362) $ 281	2022
		$ 624 71 62 70 (499)
		$ 328

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(3) The Company’s obligation amount from defined benefit plans recognized in the consolidated balance sheets is as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liability	December 31,2023 $ 27,587 (20,614) $ 6,973	December 31,2022
		$ 28,824 (19,833)
		$ 8,991

(4) Changes in the present value of the Company’s defined benefit obligations are presented below:

are presented below:
Opening balance Current service cost Net interest expense Remeasurement Actuarial gains - Experience adjustments Actuarial losses - Adjustments to demographic assumptions Actuarial gains - Adjustments to financial assumptions Benefits paid for plan assets Ending balance	2023 $ 28,824 161 403 269 - 259 (2,329) $ 27,587	2022
		$ 36,351 235 273 743 - (1,858) (6,920)
		$ 28,824

(5) Changes in the fair value of the Company’s plan assets are presented below:

Opening balance Interest income Remeasurement Return on plan assets Contributions from employer Benefits paid for plan assets Ending balance	2023 $ 19,833 283 177 2,650 (2,329) $ 20,614	2022
		$ 23,557 180 2,181 835 (6,920)
		$ 19,833

The Company expects to contribute NT$761 thousand to the defined benefit plan within one year after December 31, 2023.

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Defined contribution benefit plan

The employee retirement plans of AWEA and its domestic subsidiaries under the “Labor Pension Act” are defined contribution plan. The above companies contribute an amount equal to 6% of the employees’ monthly wages to the special accounts at the Bureau of Labor Insurance.

The pension payment of Shanghai Zhuwai Mechanical and Electrical Co., Ltd., AWEA Mechantronic (Suzhou) Ltd., and Yih Chuan Machinery (Jiaxing) Industry Co., Ltd. adopts defined contribution system. The pension benefits are contributed monthly by the company and deposited into the employees’ individual pension accounts, which are completely separated from the company and are transferred when employees leave the company. The contribution amount is recognized as current expense. B-Way (Cayman) Co., Ltd., Billion-Way (Cayman) Co., Ltd., Axtron Int’l Investment Co., Ltd. and Axtron Int’l Investment Limited have no regular employees and have no agreement on pension payment.

In accordance with the above regulations, the pension costs recognized by the Company for the years ended December 31, 2023 and 2022 were NT$20,760 thousand and NT$20,276 thousand, respectively.

(XVIII) Share capital

(XIX) Capital surplus

Pursuant to the Company Act, capital surplus may not be used except to cover a deficit or to increase capital. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.
Pursuant to the Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. However, the capital increase is limited to a certain percentage of the paid-in capital each year. In addition, changes in ownership

251

interest in subsidiaries recognized can be used to cover a deficit.

(XX) Retained earnings

The Company allocates and reverse the special reserve in accordance with Jin-Guan-Zheng-Fa-Zi No. 109050022 and the “FAQ on the Allocation of Special Reserve after Adoption of International Financial Reporting Standards (IFRSs)”. If the remaining balance of other shareholders’ equity is reversed, the reversed portion may be used to distribute earnings to the shareholders.

In accordance with the Company’s Articles of Incorporation, the annual net income after final settlement shall be used to pay taxes and cover the deficits of prior years, 10% of the remaining income shall be set aside as legal reserve and special reserve in accordance with the law, and the remaining balance shall be added to the undistributed earnings of prior years and a part of which retained as the capital required for the business growth, and then the Board of Directors shall prepare the earnings distribution proposal and submit it to the shareholders’ meeting for resolution.

At the shareholders’ meetings of AWEA held on June 7, 2023 and June 15, 2022, respectively, the Company resolved to approve the earning distribution plan and the dividends per share for the years 2022 and 2021, respectively, as follows:

Legal reserve The distribution items are as follows: Capital surplus Cash dividends	Earningdistributionplan 2022 2021 $ 35,790 $ 13,278 - 28,979 154,551 115,913	Dividendsper	share(NT$)
	2022 $ 35,790 - 154,551	2022 $ - 1.6	2021
			$ 0.3 1.2

The above distribution of earnings did not differ from the resolutions made by the Board of Directors of AWEA on March 13, 2023 and March 15, 2022, respectively. Information on the earning distribution condition proposed by the Board of Directors

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and resolved by the Shareholders’ Meeting, is available on the “Market Observation Post System” website of the Taiwan Stock Exchange.

The distribution of earnings for 2023 had been approved by the Board of Directors of AWEA on March 5, 2024 as follows:

Legal reserve The distribution items are as follows: Cash dividends	Earning distribution plan 2023 $ 20,149 144,891	Dividends per share (NT$)
		2023

		$ 1.5

The distribution of earnings for 2023 is to be resolved by the shareholders’ meeting to be held on June 18, 2024.

(XXI) Other equity items

Exchange differences arising from the translation adjustments of the financial statements of foreign operations are the relevant exchange differences generated from the translation of the functional currency of the net assets of foreign operations into AWEA’s presentation currency (i.e., New Taiwan dollars), and are recognized directly in other comprehensive income. The losses and gains recognized in other comprehensive income for the years ended December 31, 2023 and 2022 were NT$(14,590) thousand and NT$18,524 thousand, respectively.

(XXII) Non-controlling interests

Non-controlling interests
Opening balance Shares attributable to non-controlling interests Net profit (loss) Other comprehensive income Ending balance	2023 $ 115,519 (20,505) (1,273) $ 93,741	2022
		$ 119,261 (4,856) 1,114
		$ 115,519

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(XXIII) Operating revenue

			2023		2022
Total operating revenue		$	2,370,121	$	3,108,963
Less: Sales returns and discounts			(8,204)		(8,446)
		$	2,361,917	$	3,100,517
			2023		2022
Sales revenue		$	2,241,199	$	2,957,565
Maintenance and other income			120,718		142,952
		$	2,361,917	$	3,100,517
1.	Revenue segmentation
	Major sales market by geography:
			2023		2022
	Domestic sales	$	279,683	$	806,651
	Export
	Asia		1,444,129		1,483,083
	America		327,990		377,286
	Europe		275,380		427,914
	Other countries		34,735		5,583
		$	2,361,917	$	3,100,517
2.	Contract balance:
	(1) Changes in contract liabilities result from the difference between the
	fulfillment of contractual obligations and the payment from customers.
			2023		2022
	Contract liabilities	$	172,215	$	225,013
	(2) Amount of opening contract	liabilities recognized as revenue in current
	period is:
			2023		2022
	Sales revenue	$	168,298	$	201,348
(XXIV) Other income
			2023		2022
Rental income		$	12,964	$	11,570
Dividend revenue			23,308		18,114
Other income			29,194		16,327
		$	65,466	$	46,011

254

(XXV) Other gains and losses

Other gains and losses
Foreign currency exchange gain (loss) Net gain on disposal of property, plant and equipment Gains from disposal of financial assets Gain (loss) on financial valuation at fair value through profit or loss Others	2023 $ 5,961 61 2,841 123,694 (471) $ 132,086	2022
		$ 127,208 211 2,095 (11,149) (565)
		$ 117,800

(XXVI) Finance costs

Finance costs	Finance costs	Finance costs
2023 Interest on bank loans $ 32,703 Interest on lease liabilities 57 $ 32,760 Employee benefits, depreciation and amortisation expense 2023 Classified as operating costs Classified as operating expenses Employee benefits expense Salary expense $ 203,634 $ 132,536 Labor and health insurance expense 20,027 12,488 Pension expense 12,438 8,603 Director’s remuneration - 3,773 Other employee benefit expenses 4,981 5,503 Depreciation 84,708 27,078 Amortisation 488 2,264				2022
			$	25,834 168
			$	26,002

	Classified as operating costs $ 203,634 20,027 12,438 - 4,981 84,708 488	Classified as operating expenses		Total
		$ 132,536 12,488 8,603 3,773 5,503 27,078 2,264		$ 336,170 32,515 21,041 3,773 10,484 111,786 2,752

(XXVII) Employee benefits, depreciation and amortisation expense

255

Employee benefits expense Salary expense Labor and health insurance expense Pension expense Director’s remuneration Other employee benefit expenses Depreciation Amortisation		2022
	Classified as operating costs $ 221,718 20,787 13,174 - 7,324 87,623 517	Classified as operating expenses $ 149,619 12,855 7,929 2,440 6,471 27,457 2,448	Total
			$ 371,337 33,642 21,103 2,440 13,795 115,080 2,965

As of December 31, 2023 and 2022, the Company had 532 and 594 employees, respectively, including 7 and 5 directors who were not employees concurrently.

In accordance with the Company’s Articles of Incorporation, if the Company makes a profit during the year, the Company shall set aside not less than 3% to 8% as compensation to employees and not more than 2% as remuneration to directors and supervisors. The Company may distribute the above compensation to employees of its subsidiaries who meet certain criteria, and the terms and methods of distribution shall be determined by the Board of Directors. However, if the Company has accumulated deficit, an amount to cover such deficit shall be reserved in advance.

256

disclosed on the Market Observation Post System (MOPS).

The information on the Company’s salary and remuneration policy (including directors, supervisors, managerial officers and employees) is as follows:

Remuneration to directors

Remuneration to supervisor

Since June, 2020, the Company established an Audit Committee to replace the supervisor system.

Remuneration to the managerial officers

Compensation to the employees

257

(XXVIII) Income tax

Income tax expense (benefit)

Income tax expenses for the years ended December 31, 2023 and 2022 are as follows:

follows:
Current income tax: Income tax generated in current year Adjustment on income tax of prior years Deferred income tax Deferred tax expense (benefit) related to the generation and reversal of temporary differences Income tax expense (benefit)	2023 $ 79,616 (4,073) (30,750) $ 44,793	2022
		$ 75,692 735 34,074
		$ 110,501

(1) The components of income tax expense recognized in profit or loss for the years ended December 31, 2023 and 2022 are as follows:

Net profit before tax Tax amount calculated by applying statutory rate to net profit before tax Influenced tax amount of adjusted items: Impacts of items not included for calculation of taxable income Impact of different tax rates applied to parent-subsidiary companies Income tax reduction Tax on undistributed earnings Adjustment on income tax of prior years Net change in deferred income tax Temporary differences Income tax expense (benefit) recognized in profit or loss	2023 $ 235,099 $ 47,020 23,197 16,217 (14,662) 7,844 (4,073) (30,750) $ 44,793	2022
		$ 459,788
		$ 91,957 28,042 (27,560) (16,747) - 735 34,074
		$ 110,501

258

(2) Income tax expenses (benefits) recognized under other comprehensive income are as follows:

income are as follows:
Items that will not be reclassified subsequently to profit or loss Remeasurement of defined benefit plan Items that may be reclassified subsequently to profit or loss Exchange difference on translation of financial statements of foreign operations	2023 $ (70) $ (3,648)	2022
		$ 659
		$ 4,631

Deferred tax assets and liabilities are classified as follows:

Deferred tax assets and liabilities are	classified as follows:	classified as follows:
Exceeding amount of allowance for uncollectible accounts Unrealized exchange losses Unrealized loss on market value decline and obsolete and slow-moving inventories Unrealized sales profit Unrealized attendance bonus Unrealized warranty expense Loss deduction Exceeding amount of pension and actuarial loss Exchange difference on translation of financial statements of foreign operations Investment tax credit - Resource-poor areas Others	Deferred tax assets
	December 31,2023 $ 2,423 - 97,724 5,867 1,587 767 19,349 1,382 10,950 - 59 $ 140,108	December 31,2022
		$ 3,285 (21,495) 82,583 6,765 1,309 1,054 18,625 1,785 7,302 - 70
		$ 101,283

259

Deferred income tax liabilities December 31,2023 December 31,2022 Unrealized exchange income or loss $ 4,165 $ 262 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 112,666 111,962 $ 116,831 $ 112,224 2023 Opening balance Recognized in profit or loss Recognized in other comprehensive income Impacts of exchange rate Ending balance Temporary differences Exceeding amount of allowance for uncollectible accounts $ 3,285 $ (851) $ - $ (11) $ 2,423 Unrealized exchange losses (21,495) 21,495 - - - Unrealized loss on market value decline and obsolete and slow-moving inventories 82,583 15,376 - (235) 97,724 Unrealized sales profit 6,765 (898) - - 5,867 Unrealized attendance bonus 1,309 281 - (3) 1,587 Unrealized warranty expense 1,054 (287) - - 767 Loss deduction 18,625 724 - - 19,349 Exceeding amount of pension and actuarial loss 1,785 (473) 70 - 1,382 Exchange difference on translation of financial statements of foreign operations 7,302 - 3,648 - 10,950 Investment tax credit - Resource-poor areas - - - - - Others 70 (11) - - 59 Total deferred tax assets $ 101,283 $ 35,356 $ 3,718 $ (249)$ 140,108 Unrealized exchange income or loss $ 262 $ 3,903 $ - $ - $ 4,165 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 111,962 704 - - 112,666 Total deferred income tax liabilities $ 112,224 $ 4,607 $ - $ - $ 116,831	Deferred income tax liabilities December 31,2023 December 31,2022 Unrealized exchange income or loss $ 4,165 $ 262 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 112,666 111,962 $ 116,831 $ 112,224 2023 Opening balance Recognized in profit or loss Recognized in other comprehensive income Impacts of exchange rate Ending balance Temporary differences Exceeding amount of allowance for uncollectible accounts $ 3,285 $ (851) $ - $ (11) $ 2,423 Unrealized exchange losses (21,495) 21,495 - - - Unrealized loss on market value decline and obsolete and slow-moving inventories 82,583 15,376 - (235) 97,724 Unrealized sales profit 6,765 (898) - - 5,867 Unrealized attendance bonus 1,309 281 - (3) 1,587 Unrealized warranty expense 1,054 (287) - - 767 Loss deduction 18,625 724 - - 19,349 Exceeding amount of pension and actuarial loss 1,785 (473) 70 - 1,382 Exchange difference on translation of financial statements of foreign operations 7,302 - 3,648 - 10,950 Investment tax credit - Resource-poor areas - - - - - Others 70 (11) - - 59 Total deferred tax assets $ 101,283 $ 35,356 $ 3,718 $ (249)$ 140,108 Unrealized exchange income or loss $ 262 $ 3,903 $ - $ - $ 4,165 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 111,962 704 - - 112,666 Total deferred income tax liabilities $ 112,224 $ 4,607 $ - $ - $ 116,831	Deferred income tax liabilities December 31,2023 December 31,2022 Unrealized exchange income or loss $ 4,165 $ 262 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 112,666 111,962 $ 116,831 $ 112,224 2023 Opening balance Recognized in profit or loss Recognized in other comprehensive income Impacts of exchange rate Ending balance Temporary differences Exceeding amount of allowance for uncollectible accounts $ 3,285 $ (851) $ - $ (11) $ 2,423 Unrealized exchange losses (21,495) 21,495 - - - Unrealized loss on market value decline and obsolete and slow-moving inventories 82,583 15,376 - (235) 97,724 Unrealized sales profit 6,765 (898) - - 5,867 Unrealized attendance bonus 1,309 281 - (3) 1,587 Unrealized warranty expense 1,054 (287) - - 767 Loss deduction 18,625 724 - - 19,349 Exceeding amount of pension and actuarial loss 1,785 (473) 70 - 1,382 Exchange difference on translation of financial statements of foreign operations 7,302 - 3,648 - 10,950 Investment tax credit - Resource-poor areas - - - - - Others 70 (11) - - 59 Total deferred tax assets $ 101,283 $ 35,356 $ 3,718 $ (249)$ 140,108 Unrealized exchange income or loss $ 262 $ 3,903 $ - $ - $ 4,165 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 111,962 704 - - 112,666 Total deferred income tax liabilities $ 112,224 $ 4,607 $ - $ - $ 116,831	Deferred income tax liabilities December 31,2023 December 31,2022 Unrealized exchange income or loss $ 4,165 $ 262 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 112,666 111,962 $ 116,831 $ 112,224 2023 Opening balance Recognized in profit or loss Recognized in other comprehensive income Impacts of exchange rate Ending balance Temporary differences Exceeding amount of allowance for uncollectible accounts $ 3,285 $ (851) $ - $ (11) $ 2,423 Unrealized exchange losses (21,495) 21,495 - - - Unrealized loss on market value decline and obsolete and slow-moving inventories 82,583 15,376 - (235) 97,724 Unrealized sales profit 6,765 (898) - - 5,867 Unrealized attendance bonus 1,309 281 - (3) 1,587 Unrealized warranty expense 1,054 (287) - - 767 Loss deduction 18,625 724 - - 19,349 Exceeding amount of pension and actuarial loss 1,785 (473) 70 - 1,382 Exchange difference on translation of financial statements of foreign operations 7,302 - 3,648 - 10,950 Investment tax credit - Resource-poor areas - - - - - Others 70 (11) - - 59 Total deferred tax assets $ 101,283 $ 35,356 $ 3,718 $ (249)$ 140,108 Unrealized exchange income or loss $ 262 $ 3,903 $ - $ - $ 4,165 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 111,962 704 - - 112,666 Total deferred income tax liabilities $ 112,224 $ 4,607 $ - $ - $ 116,831	Deferred income tax liabilities December 31,2023 December 31,2022 Unrealized exchange income or loss $ 4,165 $ 262 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 112,666 111,962 $ 116,831 $ 112,224 2023 Opening balance Recognized in profit or loss Recognized in other comprehensive income Impacts of exchange rate Ending balance Temporary differences Exceeding amount of allowance for uncollectible accounts $ 3,285 $ (851) $ - $ (11) $ 2,423 Unrealized exchange losses (21,495) 21,495 - - - Unrealized loss on market value decline and obsolete and slow-moving inventories 82,583 15,376 - (235) 97,724 Unrealized sales profit 6,765 (898) - - 5,867 Unrealized attendance bonus 1,309 281 - (3) 1,587 Unrealized warranty expense 1,054 (287) - - 767 Loss deduction 18,625 724 - - 19,349 Exceeding amount of pension and actuarial loss 1,785 (473) 70 - 1,382 Exchange difference on translation of financial statements of foreign operations 7,302 - 3,648 - 10,950 Investment tax credit - Resource-poor areas - - - - - Others 70 (11) - - 59 Total deferred tax assets $ 101,283 $ 35,356 $ 3,718 $ (249)$ 140,108 Unrealized exchange income or loss $ 262 $ 3,903 $ - $ - $ 4,165 Share of profit or loss of subsidiaries, associates and joint ventures accounted for using equity method 111,962 704 - - 112,666 Total deferred income tax liabilities $ 112,224 $ 4,607 $ - $ - $ 116,831
	$	4,165 112,666
	$	116,831
		Recognized in other comprehensive income
$ (851) 21,495 15,376 (898) 281 (287) 724 (473) - - (11)		$ - - - - - - - 70 3,648 - -	$ (11) - (235) - (3) - - - - - -	$ 2,423 - 97,724 5,867 1,587 767 19,349 1,382 10,950 - 59
$ 35,356		$ 3,718	$ (249)	$ 140,108
$ 3,903 704		$ - -	$ - -	$ 4,165 112,666
$ 4,607		$ -	$ -	$ 116,831

260

Opening balance	Recognized in profit or loss	Recognized in other comprehensive income	Impacts of exchange rate	Ending balance
$ 8,734 8,580 74,935 5,784 1,522 871 18,977 2,544 11,933 14,250 80	$ (5,885) (30,075) 6,418 981 (219) 183 (352) (100) - (14,250) (10)	$ - - - - - - - (659) (4,631) - -	$ 436 - 1,230 - 6 - - - - - -	$ 3,285 (21,495) 82,583 6,765 1,309 1,054 18,625 1,785 7,302 - 70
$ 148,210	$ (43,309)	$ (5,290)	$ 1,672	$ 101,283
$ - 121,459	$ 262 (9,497)	$ - -	$ - -	$ 262 111,962
$ 121,459	$ (9,235)	$ -	$ -	$ 112,224

3. Information on investment tax credit:

261

As of December 31, 2023, all of the estimated income tax credits under the Rules of the Statute for Upgrading Industries have been offset by the Company in the current year.
The Company’s business income tax returns for the year 2021 have been approved by the tax authority.
(XXIX) Earnings per share

(XXIX) Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent company Diluted earnings per share Profit attributable to ordinary shareholders of the parent company Effect of potential dilutive common shares - Employees’ compensation Profit attributable to ordinary shareholders of the parent company plus effect of potential ordinary shares		2023
	Amount $ 210,811 $ 210,811 - $ 210,811	Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share (NT$) 96,594 $ 2.18 96,594 492 97,086 $ 2.17

262

Basic earnings per share Profit attributable to ordinary shareholders of the parent company Diluted earnings per share Profit attributable to ordinary shareholders of the parent company Effect of potential dilutive common shares - Employees’ compensation Profit attributable to ordinary shareholders of the parent company plus effect of potential ordinary shares		2022
	Amount $ 354,143 $ 354,143 - $ 354,143	Weighted average number of ordinary shares outstanding (shares in thousands) Earnings per share (NT$) 96,594 $ 3.67 96,594 516 97,110 $ 3.65

(XXX) Capital management

263

stakeholders, and maintain an optimal capital structure to enhance shareholders’ value in the long term.

(XXXI) Supplemental cash flow information

Investing activities with partial cash payments:

Purchase of property, plant and equipment Add: Opening payables on equipment and construction Interest capitalization Less: Ending payables on equipment and construction Cash paid during the year	2023 $ 49,476 2,378 - (212) $ 51,642	2022
		$ 20,949 3,769 - (2,378)
		$ 22,340

VII. Related Party Transactions

(I) Parent Company and the ultimate controlling party

Goodway Machine Corp. is the ultimate controlling party of the Group to which the Company belongs.

(II) Names of related parties and relationship

Names of related parties and relationship
Relatedpartyname Goodway Machine Corp. YAMA SEIKI USA,INC. Goodway Machine Corp. (Wujiang) Huahan Leasing Co., Ltd. Allrich Cnc, Ltd. Hung Jiu Machine Co., Ltd. Turvo International Co., Ltd. Boldwin Bio Co., Ltd.	Relationshipwith the Company
	Ultimate parent company Associates Associates Associates Substantive related party Substantive related party Other related parties Other related parties

(III) Significant transactions with the related parties

The transactions between AWEA and its subsidiaries, account balances, revenues and expenses have been eliminated upon consolidation and are therefore not disclosed in this note. The details of the transactions between AWEA and other related parties are summarized as follows:

264

1. Sales

Sales
Parent company Associates Yama Seiki Others Other related parties	2023 $ 8,705 299,505 75,585 93 $ 383,888	2022
		$ 1,396 240,190 56,017 1
		$ 297,604

The Company sells products of different specifications to related parties, and has no

other customers to compare with. The collection terms for the Company’s sales to related parties and general customers are based on the contracts.

Purchases

Purchases
Parent company Associates Substantive related party Other related parties	2023 $ 1,221 6,633 4,204 34 $ 12,092	2022
		$ 396 247 3,573 -
		$ 4,216

The transaction prices of the Company’s purchases from related parties are similar to those of general transactions.

Notes receivable, net

3. Notes receivable, net
Parent company Associates Other related parties 4. Accounts receivable, net Parent company Associates Yama Seiki Others Other related parties	December 31,2023 $ 852 - 6 $ 858 December 31,2023 $ 10 43,474 222 35 $ 43,741	December 31,2022
		$ 1,030 3,244 -
		$ 4,274
		December 31,2022
		$ 170 33,396 - -
		$ 33,566

265

5. Notes payable Parent company Substantive related party Other related parties 6. Accounts payable Parent company Substantive related party 7. Other payables Parent company Associates Other related parties 8. Prepayments Parent company Other related parties 9. Advance receipts Parent company Associates 10. Current lease liabilities Parent company 11. Non-current lease liabilities Parent company	December 31,2023 $ 267 263 36 $ 566 December 31,2023 $ 129 221 $ 350 December 31,2023 $ 1,042 281 16 $ 1,339 December 31,2023 $ 26 - $ 26 December 31,2023 $ 190 - $ 190 December 31,2023 $ 499 December 31,2023 $ -	December 31,2022
		$ 146 368 -
		$ 514
		December 31,2022
		$ 40 759
		$ 799
		December 31,2022
		$ 1,178 819 10
		$ 2,007
		December 31,2022
		$ 29 48
		$ 77
		December 31,2022
		$ 1,045 9,550
		$ 10,595
		December 31,2022
		$ 1,190
		December 31,2022
		$ 499

266

12. Property transaction

Disposal of property, plant and equipment

Disposal of property,	plant and equipment	plant and equipment	plant and equipment
Parent company Parent company 13. Leases Rental income Parent company Other related parties Rent expense Parent company 14. Others Other income Parent company Associates - Yama Seiki Manufacturing expenses Parent company Associates Substantive related party Other related parties	2023 Items Proceeds Gain on disposal - $ - $ - 2022 Items Proceeds Gain on disposal Machinery equipment $ 23 $ 8 2023 2022 $ 1,146 $ 1,110 43 - 1,189 1,110 2023 2022 $ 120 $ 120 2023 2022 $ 369 $ 461 16,970 84 $ 17,339 $ 545 2023 2022 $ 715 $ 770 475 7 2,610 - 38 66 $ 3,838 $ 843
		$	1,110 -
			1,110
			2022
		$	120
			2022
		$	461 84
		$	545
			2022
		$	770 7 - 66
		$	843

267

Selling and marketing

Selling and marketing
expenses Parent company Associates Other related parties General and administrative expenses Parent company Associates	2023 $ 2,430 7 70 $ 2,507 2023 $ 3 4,059 $ 4,062	2022
		$ 2,392 10 77
		$ 2,479
		2022
		$ 44 5,691
		$ 5,735

Information on main management rewards

Short-term employee benefits Post-employment benefits	2023 $ 9,379 279 $ 9,658	2022
		$ 15,382 400
		$ 15,782

Compensation for key management personnel is determined by the Remuneration Committee based on individual performance and the Company’s operating results.

VIII. Pledged Assets

The Company’s assets pledged as collaterals are summarized as follows:

The Company’s assets pledged as collaterals are	summarized as follows:
Name of asset Property, plant and equipment - land Property, plant and equipment - property and building Other current assets - restricted bank deposit Right-of -use asset - land-use right Financial assets measured at amortized cost - pledged time deposits	December 31,2023 $ 377,341 718,383 - 89,038 10,137 $ 1,194,899	December 31,2022
		$ 377,341 754,425 188,170 94,032 -
		$ 1,413,968

The financial assets measured at amortized cost are performance security guarantees in the deposit pledge provided by Awea Company to rent the land of Central Taiwan Science Park.

268

IX. Significant Contingent Liabilities and Unrecognized Contract Commitments The Company’s commitments and contingencies as of December 31, 2023 include:

(I) The amount of guaranteed bills issued by the Company was NT$2,786 thousand.
(II) The amount of guaranteed bills collected by the Company from the customers was NT$69,866 thousand.
(III) The amount of guaranteed bills collected by the Company from the manufacturers due to solar photovoltaic lease was NT$ 21,180 thousand.
(IV) The amount of guaranteed bills received by the Company for the construction of Dapumei Plant Phase II was NT$21,780 thousand.
(V) The amount of the loan guarantee notes collected by Company from the subsidiary - Yih Chuan Company were NT$ 70,000 thousand.
(VI) In order to guarantee the release of imported goods before paying tax to the Customs Administration, the Company has entrusted the First Bank to issue a guarantee letter at the amount of NT$2,000 thousand.
X. Significant Disaster Loss: None.
XI. Significant Events after the Balance Sheet Date: None.

XII. Others

Financial instruments

(I) Information on fair value of financial instruments

The carrying amounts of the Company’s financial instruments not measured at fair value, including cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits, short-term borrowings, short-term notes and bills payable, notes payable, accounts payable, other payables, bonds payable, long-term borrowings, and guarantee deposits received, are the reasonable approximates of their fair values. The interest rates of bonds payable (including those due within one year or under repurchase rights) and long-term loans (including those due within one year) approximate market interest rates; therefore, the carrying amounts should be a reasonable basis for approximation of fair values. For information on the fair value of financial instruments measured at fair value, please refer to Note XII (VI).

269

(II) Financial risk management objectives

The objectives of the Company’s financial risk management are to manage the market risk (foreign currency exchange rate risk and interest rate risk), credit risk and liquidity risk associated with its operating activities. In order to reduce relevant financial risks, the Company is committed to identifying, evaluating and avoiding market uncertainties, so as to reduce the potential adverse impact of market changes on the Company’s financial performance.

(III) Market risks

Foreign currency exchange rate risk
Some of the Company’s cash inflows and outflows are in foreign currencies, which has a partially natural hedging effect; the Company’s exchange rate risk management is for hedging purpose, other than for profit purpose.

The exchange rate risk management strategy is to periodically review net parts of the assets and liabilities in various currencies, and make risk management of such parts.

270

The carrying amounts of the Company’s foreign-currency-denominated monetary assets and monetary liabilities at the end of the reporting period are summarized below:

Unit: Foreign currency/ NT$ thousand

			Unit: Foreign currency/ NT$ thousand	Unit: Foreign currency/ NT$ thousand	Unit: Foreign currency/ NT$ thousand	Unit: Foreign currency/ NT$ thousand
Financial assets Monetary items USD EUR CNY AUD Non-monetary items USD Financial liabilities Monetary items USD JPY CNY Non-monetary items USD EUR Financial assets Monetary items USD EUR CNY AUD Non-monetary items USD Financial liabilities Monetary items USD JPY CNY Non-monetary items USD			December31,2023
	Foreign currencies 28,189 5,354 29,309 1 - 338 6,602 35 835 1	Exchange rate (Note) 30.655 33.78 4.302 20.88 - 30.655 0.2152 4.302 30.655 33.78	Sensitivityanalysis NTD Rate of change Profit and loss impact Equity impact 864,134 5% 43,207 - 180,858 5% 9,043 - 126,087 5% 6,304 - 21 5% 1 - - - - - 10,361 5% 518 - 1,421 5% 71 - 151 5% 8 - 25,597 - - - 34 - - - Unit: Foreign currency/ NT$ thousand December 31,2022	Sensitivityanalysis
						Equity impact
	Foreign currencies 57,809 3,014 8,906 1 - 150 2,869 90 1,551	Exchange rate (Note) 30.66 32.52 4.383 20.73 - 30.66 0.2304 4.383 30.66	NTD 1,772,424 98,015 39,035 21 - 4,599 661 394 47,554	Sensitivityanalysis
				Rate of change 5% 5% 5% 5% - 5% 5% 5% -	Profit and loss impact 88,621 4,901 1,952 1 - 230 33 20 -	Equity impact
						- - - - - - - - -

(Note) Based on the exchange rate at the end of the reporting period.

271

Interest rate risk

Other price risk

The price risk of the Company’s equity instrument investments arises mainly from the financial asset investments classified as measured at fair value through profit or loss.

(IV) Credit risk management

Operation-related credit risks

272

utilizes certain credit enhancement tools, such as credit insurance, when appropriate, to minimize the credit risk of specific customers.

As of December 31, 2023 and 2022, the balance of accounts receivable of the top ten customers accounted for 69% and 60% of the Company’s balance of accounted receivable respectively, and the credit concentration risk of the remaining accounts receivable was relatively insignificant.

Financial credit risk

(V) Liquidity risk

The following table summarizes the financial liabilities of the Company during the agreed repayment period by maturity date and undiscounted maturity amount:

	December 31,2023	December 31,2023	December 31,2023
1 to 3 months $ 1,229,530 79,987 204,818 165,202 113,517 12,935 334 1,911 $ 1,808,234	4 to 6 months $ 185,000 - 57,929 42 - - 235 - $ 243,206	7 to 12 months $ 162,322 - - 137 - - 69 - $ 162,528	Over 1years $ - - - 239 - - 280 - $ 519	Total
				$ 1,576,852 79,987 262,747 165,620 113,517 12,935 918 1,911

				$ 2,214,487

273

	December 31,2022	December 31,2022	December 31,2022
1 to 3 months $ 1,556,298 289,641 315,393 200,289 130,896 12,445 2,845 2,183 $ 2,509,990	4 to 6 months $ 256,038 - 78,970 282 - - 2,851 - $ 338,141	7 to 12 months $ 142,613 - - 234 - - 5,724 - $ 148,571	Over 1years $ - - - 1,306 - - 918 - $ 2,224	Total
				$ 1,954,949 289,641 394,363 202,111 130,896 12,445 12,338 2,183

				$ 2,998,926

(VI) Fair value
For information on the fair value of the Company’s financial instruments not measured at fair value, please refer to Note 12, (1).
The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
- (1) Level 1: The inputs to this level are publicly quoted prices (unadjusted) in active markets for identical assets or liabilities. Active market means a market that meets all of the following conditions: the products traded in the market are homogeneous; willing buyers and sellers are readily available in the market, and the price information is readily available to the public.
- (2) Level 2: the input values of this level are observable prices other than publicly quoted prices in Level 1, including direct (such as prices) or indirect (such as derived from prices) observable input values obtained from the active market.
- (3) Level 3: the input values of this level are not inputs for assets or liabilities that are based on observable market data.
  - For the years ended December 31, 2023 and 2022, the Company had no transfer between Level 1 and Level 2.
  - For the years ended December 31, 2023 and 2022, the Company had no transfer into or out from Level 3.

274

The methods and assumptions the Company used to measure fair value are as follows:
(1) The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined by reference to quoted market prices.
(2) The fair values of other financial liabilities are determined using generally accepted valuation models based on discounted cash flow analysis.
Fair value hierarchy

The fair value hierarchy of the Company’s financial assets measured at fair value is as follows:

	December 31, 2023
Level 1 $ 536,929 1,991 $ 538,920	Level 2 Level 3 $ - $ - - - $ - $ - December 31, 2022	Total
		$ 536,929 1,991
		$ 538,920

		Total
		$ 377,002 10,458

XIII. Additional Disclosures

(I) Significant transactions information
Loaning funds to others: Refer to Table 1.
Provision of endorsements and guarantees to others: None.
Holding of marketable securities at the end of the period (not including investment in subsidiaries, associates and joint ventures): Refer to Table 2.
Acquisition or sale of the same security with the accumulated cost exceeding

275

NT$300 million or 20% of the Company’s paid-in capital: None.

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more: Refer to Table 3.
Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None;
Derivative transactions: Please refer to Note 12 for details.
The business relationship between the parent and the subsidiaries and significant transactions between them: Refer to Table 4.
(II) Information on investees: Refer to Table 5.
(III) Information on Investment in Mainland China: Refer to Table 6.
(IV) Information on major shareholders: Refer to Table 7.

276

Table 1: Loaning Funds to Others

December 31, 2023

Unit: NT$ thousand (unless stated otherwise)

No. (Note 1)	Companies loaning fund	Companies that fund is loaned to	Transaction items	Related party	Maximum amount of the current period (Note 3)	Ending balance (Note 4)	Amount drawn	Interest rate	Type of loans	Amount of transaction	Cause for necessity of short-term financing	Amount of allowance for uncollectible accounts	Collateral	Collateral	Loaning limit to individual objects (Note 2)	Total loaning limit to others (Note 2)
													Name	Value
0	AWEA Mechantronic Co., Ltd.	Yih Chuan Machinery Industry Co., Ltd.	Other receivables - related parties	Yes	150,000	70,000	60,000	2.05%	With necessity of short-term financing	140	Operating turnover	-	Promissory note	70,000	329,385	1,317,541
1	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables - related parties	Yes	107,930 (CNY 25,000)	107,930 (CNY 25,000)	43,020	3.45% ~ 3.55%	With necessity of short-term financing	-	Operating turnover	-	-	-	150,752	150,752
1	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables - related parties	Yes	29,216 (CNY 6,700)	21,765 (CNY 5,000)	-	3.45%	With necessity of short-term financing	-	Operating turnover	-	-	-	150,752	150,752

Note 1: The explanation for the numbering column is as follows:

(1) Fill in 0 for issuer.

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

Note 4: It is the loaning limit approved by the Board of Directors.

277

Table 2: Holding of Marketable Securities at the End of the Period (Not Including Investment in Subsidiaries, Associates and Joint Ventures)

December 31, 2023					Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)
Held company name	Marketable securities type and name	Relationship with the company	Financial statement account		December31,2023			Remark
				Number of shares	Carrying amount	Ownership (%)	Fair value (Note 1)
AWEA Mechantronic Co.,Ltd.	Stock- AUTECH EUROPE	-	Financial assets at FVTPL - non-current	50	- (Note 2)	5.00%	-
AWEA Mechantronic Co.,Ltd.	Stock- P-Duke Technology Co.,Ltd.	-	Financial assets at FVTPL - current	1,063,852	102,555	1.29%	102,555
AWEA Mechantronic Co.,Ltd.	Stock- Turvo International Co.,Ltd.	Other related parties	Financial assets at FVTPL - current	2,873,000	399,347	4.77%	399,347
AWEA Mechantronic Co.,Ltd.	Stock- Eagle Cold Storage EnterpriseCo.,Ltd.	-	Financial assets at FVTPL - current	968,000	29,040	0.81%	29,040
AWEA Mechantronic Co., Ltd.	Stock- Taiwan Semiconductor Manufacturing Company Limited	-	Financial assets at FVTPL - current	10,000	5,930	-	5,930
AWEA Mechantronic Co.,Ltd.	Stock- Zeng Hsing IndustrialCo.,Ltd.	-	Financial assets at FVTPL - current	534	57	-	57
AWEA Mechantronic Co.,Ltd.	Stock- Fittech Co., Ltd.	-	Financial assets at FVOCI - non-current	29,846	1,991	0.04%	1,991

Note 1: If the investee company does not have a quoted market price, the net equity value shall be presented.

Note 2: In 1996, due to value impairment and little hope of recovery of the investee companies, all were recognized as losses.

278

Table 3: Purchases or Sales of Goods from or to Related Parties Reaching NT$100 Million or 20% of Paid-in Capital or More

December 31, 2023	December 31, 2023								Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)	Unit: NT$ thousand (unless stated otherwise)
Company name	Counterparty	Relationship		Transaction details			Abnormal transaction (Note 1)		Notes/ accounts payable or receivable		Remark
			Purchases / sales	Amount	% to Total	Payment terms	Unit price	Payment terms	Ending balance	% to total notes and accounts receivable (payable)
AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	Subsidiaries under sub- subsidiaries	Sales	$ 255,365	16.24%	3 months after shipped	-	-	$ 78,173	16.07%	-
AWEA Mechantronic Co.,Ltd.	Yama Seiki USA, Inc.	Subsidiaries	Sales	$ 299,505	19.05%	3 months after shipped	-	-	$ 43,474	8.94%	-

Note 1: Since the products sold by the Company to its related parties AWEA Suzhou and Yama Seiki have different features, there are no other customers available for

comparison; in addition, its collection terms and the collection terms for general customers are determined by contract.

279

Table 4: The Business Relationship Between the Parent and the Subsidiaries and Significant Transactions Between Them

December 31, 2023 Unit: NT$ thousand (unless stated otherwise)

No. (Note 1)	Company name	Counterparty	Relationship to the counterparty (Note 2)		Terms	Terms
				Account	Amount	Terms	% to total consolidated revenue or assets(Note 4)
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Sales revenue	140	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Incoming goods (materials)	11,872	(Note 3)	0.5%
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Account receivables	30	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Other receivables	61,626	(Note 3)	1.0%
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Notes payable	1,821	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Accounts payable	1,209	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Interest income	1,423	(Note 3)	0.1%
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Operating cost - after-sales service expenses	85	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Yih Chuan Machinery IndustryCo.,Ltd.	1	Other non-operating income	1,514	(Note 3)	0.1%
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Sales revenue	255,365	(Note 3)	10.8%
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Purchases	202	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Account receivables	78,173	(Note 3)	1.3%
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Other payables	151	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Manufacturing - repairs and maintenance expense	234	(Note 3)	-
0	AWEA Mechantronic Co.,Ltd.	Awea Mechantronic (Suzhou)Ltd.	1	Sales - warranty expenses	201	(Note 3)	-
0	AWEA Mechantronic Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co.,Ltd.	1	Sales revenue	19	(Note 3)	-

280

No. (Note 1)	Company name	Counterparty	Relationship to the counterparty (Note 2)		Terms	Terms
				Account	Amount	Terms	% to total consolidated revenue or assets(Note 4)
1	Awea Mechantronic (Suzhou) Ltd.	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	3	Other payables	43,020	(Note 3)	0.7%
1	Awea Mechantronic (Suzhou) Ltd.	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	3	Finance costs - interest expense	2,383	(Note 3)	0.1%
1	Awea Mechantronic (Suzhou) Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co.,Ltd.	3	Sales revenue	1	(Note 3)	-
2	Yih Chuan Machinery Industry Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co.,Ltd.	3	Account receivables	1,256	(Note 3)	-
2	Yih Chuan Machinery Industry Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co.,Ltd.	3	Sales revenue	1,282	(Note 3)	0.1%
3	Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co.,Ltd.	3	Interest income	308	(Note 3)	-

Note 1: The business transactions between the parent company and the subsidiaries shall be indicated in the numbering column respectively, and the number shall be filled in as follows: 1. Parent company is No. 0.

Subsidiaries are listed in order from No.1.

Note 2: In case of any of the following three relationships with the traders, it only needs to indicate the relationship type:

Parent to subsidiary.
Subsidiary to parent.
Subsidiary to subsidiary.

Note 3: It is subject to stipulations in contract.

Note 4: The Company will decide on the presentation of the significant transactions in this table in accordance with the principle of materiality.

281

Table 5: Names, Locations and Other Information of Investee Companies (Not Including Investees in Mainland China)

December 31, 2023 Unit: NT$/ Foreign currency thousand (unless stated otherwise)

Investor company	Investee company	Location	Main business activities	Initial investment amount	Initial investment amount	Held at the end ofperiod	Held at the end ofperiod	Held at the end ofperiod	Current profit (loss) of the invested company	Recognized investment gains (losses) in the current period (Note 1)	Remark
				December 31, 2023	December 31, 2022	Number of shares	Ownership (%)	Carrying amount
AWEA Mechantronic Co., Ltd. AWEA Mechantronic Co., Ltd. AWEA Mechantronic Co., Ltd. AWEA Mechantronic Co., Ltd. B-Way (Cayman) Co., Ltd.	B-Way (Cayman) Co., Ltd. Yama Seiki USA, Inc. Yih Chuan Machinery Industry Co., Ltd. Huahan Leasing Co., Ltd. Billion-Way (Cayman) Co., Ltd.	Cayman Islands USA Taiwan Taiwan Cayman Islands	International investment and international trade Machinery sales and installation, international trade Manufacturing of machinery and equipment, design of products, wholesale of machinery, and retail of mechanical appliances Rental of machinery and equipment International investment and international trade	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,304)	$ 332,212 53,968 264,592 7,333 USD 12,830 (NTD 393,304)	10,665,029 584,192 5,914,800 666,667 12,829,840	100.00% 28.58% 60.00% 13.33% 100.00%	$ 694,302 108,435 141,254 8,278 706,493	$ 57,841 24,042 (51,263) 2,080 58,052	$ 57,652 6,901 (30,757) 277 58,052	(Note 1) - (Note 1) - (Note 1)

282

Investor company				Initial investment amount	Initial investment amount	Held at the end ofperiod	Held at the end ofperiod	Held at the end ofperiod		Recognized	Remark
	Investee company	Location	Main business activities	December 31, 2023	December 31, 2022	Number of shares	Ownership (%)	Carrying amount	Current profit (loss) of the invested company	investment gains (losses) in the current period (Note 1)
Yih Chuan Machinery Industry Co., Ltd. AXTRON INT’L INVESTMENT CO.,LTD	AXTRON INT’L INVESTMENT CO., LTD AXTRON INT’L INVESTMENT LIMITED	USA - Marshall Islands Hong Kong	International investment and international trade International investment and international trade	200,000 HKD 10 (NTD 39)	200,000 HKD 10 (NTD 39)	50,000 10,000	100.00% 100.00%	205,164 205,163	(21,254) (21,254)	(21,254) (21,254)	(Note 1) (Note 1)

Note 1: It has been written off.

283

Table 6: Information on Investments in Mainland China

December 31, 2023

Unit: NT$ thousand (unless stated otherwise)

Name of the investee company in Mainland China, main business items, paid-in capital, method of investment, inward/outward remittance of funds, percentage of ownership, carrying value of investment, and gain or loss on repatriated investment:

Name of investee	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated investment amount remitted from Taiwan at the beginning of the period	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for currentperiod	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for currentperiod	Accumulated investment amount remitted from Taiwan at the end of the period	Current profit and loss of the invested company	Ownership percentage of direct or indirect investment	Recognized investment gains and losses in the current period (Note 2)	Carrying amount of investment as of December 31, 2023	Accumulated inward remittance of earnings as of December 31, 2023
					Outflow	Inflow
Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Machinery sales and installation, business management consultation, and international trade	USD 2,500 (NTD 76,638) (Note 3)	2	USD 2,494 (NTD 76,454) (Note 3)	-	-	USD 2,494 (NTD 76,454) (Note 3)	$ 7,597	100%	$ 8,116	$148,859	USD 15,438 (NTD 479,279) (Note 3)
Awea Mechantronic (Suzhou) Ltd.	Machinery sales, manufacturing and installation, and international trade	USD 11,400 (NTD 349,467) (Note 3)	2	USD 10,400 (NTD 318,812) (Note 3)	-	-	USD 10,400 (NTD 318,812) (Note 3)	58,604	100%	58,604	544,304	USD 4,706 CNY 49,580 (NTD 362,259)
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Machinery sales, manufacturing and installation, and international trade	USD 2,510 (NTD 76,944) (Note 3)	2	USD 2,510 (NTD 76,944) (Note 3)	-	-	USD 2,510 (NTD 76,944) (Note 3)	(21,254)	100%	(21,254)	205,163	-

284

2. Limit on investments in Mainland China:	2. Limit on investments in Mainland China:
Name of investor	Accumulated investment amount remitted from Taiwan to Mainland China at the end of theperiod	Investment amounts authorized by Investment Review Committee, MOEA	Limit on investments in Mainland China imposed by the Investment Review Committee,MOEA
The Company	$ 395,266 (Note 3) (USD 12,894)	$ 426,105 (Note 3) (USD 13,900)	$ 1,976,311 (Note 5)
Yih Chuan Machinery IndustryCo.,Ltd.	$ 76,944 (Note 3) (USD 2,510)	$ 76,944 (Note 3) (USD 2,510)	$ 140,612 (Note 5)

Note 1: Investment methods are divided into the following three types, just enter the code:

(1) Direct investment in Mainland China.
(2) Indirect investment in Mainland China through third-region companies.
(3) Other methods.
Note 2: The basis for recognition of investment gains and losses is the financial statements audited by CPAs for the same period.
Note 3: The NT$ amount is translated by the exchange rate on the balance sheet date.
Note 4: Dawei Mechantronic (Suzhou) Co., Ltd. was merged with AWEA Mechantronic (Suzhou) Ltd. in September, 2020, and AWEA Mechantronic (Suzhou) Ltd. is the surviving company. The merger was approved by the Investment Review Committee, MOEA under the letter No. 11000165350 in July 2021.
Note 5: The cumulative amount of the investor’s investment in Mainland China shall not exceed 60% of the net value.
Significant direct or indirect transactions through a third region business with the investee in the Mainland China: please refer to Table 4 for details.

285

Table 7: Information on Major Shareholders

December 31, 2023

Table 7: Information on Major Shareholders December 31, 2023
Name of major shareholders	Number of shares held	Ownership (%)
Goodway Machine Corp.	47,962,311	49.65 %
De-Hua Yang	9,031,403	9.34 %
JiaJin Investment Co., Ltd.	6,256,388	6.47 %

286

XIV. Segment Information

(I) Relevant segment information of the Company for the years ended December 31, 2023 and 2022 is as follows:

		2023
Taiwan Awea $ 1,316,798 255,523 30,000 34,073 28,704 73,037 240,987	Awea (Suzhou) $ 872,286 404 599 - 4,300 31,488 76,488	Other segments $ 172,833 13,239 3,643 - 3,869 12,222 (55,999) 2022	Adjustment and elimination $ - (269,166) (4,113) (26,895) (4,113) (2,209) (26,377)	Total
				$ 2,361,917 - 30,129 7,178 32,760 114,538 235,099
Taiwan Awea $ 1,987,934 295,724 16,006 95,775 19,897 74,288 439,857	Awea (Suzhou) $ 942,995 1,159 809 - 4,717 32,516 108,716	Other segments $ 169,588 22,847 1,550 - 3,781 13,450 (791)	Adjustment and elimination $ - (319,730) (2,393) (87,993) (2,393) (2,209) (87,994)	Total
				$ 3,100,517 - 15,972 7,782 26,002 118,045 459,788

The total reportable inter-segment revenue excluding inter-segment revenue to be eliminated was NT$269,166 thousand and NT$319,730 thousand in 2023 and 2022, respectively.

287

The total reportable segment income excluding income tax expense was NT$44,793 thousand and NT$110,501 thousand in 2023 and 2022, respectively.

The Company has two reportable segments: Taiwan Awea and Awea (Suzhou). The main business of Taiwan Awea is design, manufacture and sales of special machines, automation equipment and computer-controlled tool machines. Awea (Suzhou) is engaged in the manufacture, sales and installation of machinery.

The Company does not allocate income tax expense to reportable segments. The amounts reported are consistent with the reports used by the operating decision maker, and the accounting policies of the operating segments are the same as those described in Note IV Summary of Significant Accounting Polices. The profit or loss of the Company’s operating segments is based on net profit before tax. The Company recognizes inter-segment sales and transfers as transactions with third parties and measures them at current market prices.

288

EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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Independent Auditors’ Review Report

To AWEA Mechantronic Co., Ltd.:

Foreword

We have reviewed the accompanying consolidated balance sheets of AWEA Mechantronic Co., Ltd. and its Subsidiaries as of March 31, 2024 and 2023, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the period then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. In accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and FSC recognized and published IAS 34 “Interim Financial Reporting”, it is the management’s responsibility to prepare a fair representation of the consolidated financial statements, and the CPA’s responsibility to draw a conclusion on the consolidated financial statements based on the review results.

Scope

Except as stated in the basis for Qualified Conclusion, we carry out the review in accordance with Standard on Review Engagements No. 2410 “Review of Financial Information Performed by the Independent Auditor of the Entity”. The procedures performed in reviewing the consolidated financial statements include inquiries (primarily with those responsible for financial and accounting matters), analytical procedures and other review procedures. The scope of the review is significantly smaller than that of the audit work, so the CPA may not be able to detect all the matters that can be identified through the audit work, and therefore cannot express an audit opinion.

Basis for Qualified Conclusion

As described in Notes VI (VII) to Consolidated Financial Statements, the financial statements for investment using the equity method-Huahan Leasing Co., Ltd. for the same period have not been reviewed by CPAs. The amount of the above long-term equity investment as of March 31, 2024 and 2023 were NT$8,099 thousand and NT$8,178 thousand, respectively, both of which accounted for 0% of the total consolidated assets. The profit and loss amount of such associates recognized by equity method for the period ended March 31, 2024 and 2023 were NT$(179) thousand and NT$177 thousand, respectively, either of which accounted for (1%) and 1% of consolidated net

289

EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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profit before tax.

Qualified Conclusion

Except for the effect that the consolidated financial statements may be adjusted if the financial statements of the investee company using the equity method as stated in the basis for Qualified Conclusion are reviewed by CPAs, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of AWEA Mechantronic Co., Ltd. and its subsidiaries as of March 31, 2024 and 2023, and its consolidated financial performance and its consolidated cash flows for the period then ended in conformity with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Accounting Standards (IAS) 34 “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China, based on our review results and the review reports of other CPAs (please refer to Other Matters).

Other Matters

As described in Notes VI (VII) to Consolidated Financial Statements, the financial statements for investment using the equity method-YAMA SEIKI USA, INC. for the same period have not been reviewed by us, but by other CPAs. Therefore, in our opinions on the review results of the above consolidated financial statements, the amounts set out in the financial statements of such investee companies were based on the review reports by other CPAs. The amount of the above long-term equity investment as of March 31, 2024 and 2023 were NT$112,421 thousand and NT$101,522 thousand, respectively, both of which accounted for 2% of the total consolidated assets. The profit and loss amount of such associates recognized by equity method for the period ended March 31, 2024 and 2023 were NT$(920) thousand and NT$340 thousand, respectively, either of which accounted for (6%) and 2% of consolidated net profit before tax.

290

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EnWise CPAs & Co. 9F-1, No. 130, Taiyuan North Road, Taichung City TEL:(04)2296-6234 Fax:(04)2296-0607/2297-6918

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EnWise CPAs & Co.

CPA Guei-Duan Chen

CPA Chang-Yun Yi

Approval number of the Securities and Futures Approval number of the Securities and Futures Management Committee, Management Committee, Ministry of Finance Ministry of Finance (1990) Tai-Cai-Zheng (I) No. 27495 (2003) Tai-Cai-Zheng (VI) No. 121986

May 7, 2024

Notice to Readers

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

291

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Balance Sheets

March 31, 2024 and December 31, 2023 and March 31, 2023

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Unit: NT$ thousand
March 31, 2024 December 31, 2023 March 31, 2023
(Reviewed) (Audited) (Reviewed)
Code Items Notes Amount % Amount % Amount %
Current assets
1100 Cash and cash equivalents IV and VI $ 646,193 11 $ 866,173 15 $ 1,037,833 16
1110 Financial assets at FVTPL - current IV and VI 518,501 9 536,929 9 425,373 7
1150 Notes receivable, net IV and VI 144,053 2 157,100 3 258,290 4
1160 Notes receivable due from related parties, net IV and VII 1,528 - 858 - 1,638 -
1170 Accounts receivable, net IV and VI 377,635 6 350,642 6 416,057 6
1180 Account receivables due from related parties, net IV and VII 33,970 1 43,741 1 16,014 -
1200 Other receivables 9,194 - 11,698 - 4,896 -
1210 Other receivables - related parties VII 42 - - - 640 -
1220 Current tax assets 739 - 26 - 144 -
130x Inventories IV and VI 1,660,459 27 1,448,774 24 1,602,322 24
1410 Prepayments VII 68,376 1 42,490 1 57,377 1
1470 Other current assets VIII 355,426 6 344,423 6 573,091 9
11xx Total current assets 3,816,116 63 3,802,854 65 4,393,675 67
Non-current assets
1517 Financial assets at FVOCI - non-current IV and VI 1,552 - 1,991 - 11,376 -
1535 Financial assets measured at amortized cost - 10,137 - 10,137 - - -
non-current
1550 Investments accounted for using equity IV and VI 120,520 2 116,713 2 109,700 2
method
IV, VI, VII and
1600 Property, plant and equipment VIII 1,727,180 28 1,741,772 29 1,777,920 27
1755 Right-of-use assets IV, VI and VIII 286,153 5 114,477 2 128,804 2
1780 Intangible assets IV and VI 12,672 - 12,656 - 10,753 -
1840 Deferred tax assets IV and V 140,992 2 140,108 2 132,124 2
1915 Prepayments for equipment 4,788 - 3,200 - 300 -
1920 Guarantee deposits paid 1,932 - 3,965 - 5,855 -
1931 Long-term notes receivable, net IV 4,616 - 7,413 - 7,786 -
1937 Overdue receivables IV and VI - - - - - -
1990 Other non-current assets - others 6,253 - 6,605 - 6,179 -
15xx Total non-current assets 2,316,795 37 2,159,037 35 2,190,797 33
1xxx Total assets $ 6,132,911 100 $ 5,961,891 100 $ 6,584,472 100
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Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Ting-Shuang Lin

292

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Balance Sheets

March 31, 2024 and December 31, 2023 and March 31, 2023

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Unit: NT$ thousand
March 31, 2024 December 31, 2023 March 31, 2023
(Reviewed) (Audited) (Reviewed)
Code Items Notes Amount % Amount % Amount %
Current liabilities
2100 Short-term borrowings VI and VIII $ 1,573,213 25 $ 1,576,852 26 $ 1,832,709 28
2110 Short-term notes and bills payable VI - - 79,987 1 314,615 5
2130 Contract liabilities IV, VI and VII 186,601 3 172,215 3 201,726 3
2150 Notes payable 294,880 5 262,181 4 243,066 4
2160 Notes payable - related parties VII 1,056 - 566 - 1,923 -
2170 Accounts payable 192,410 3 165,270 3 261,195 4
2180 Accounts payable - related parties VII 9,218 - 350 - 424 -
2200 Other payables VI 81,443 1 112,178 2 114,236 2
2220 Other payables - related parties VII 785 - 1,339 - 366 -
2230 Current tax liabilities IV 50,710 1 52,116 1 87,147 1
2250 Current provisions IV and VI 10,613 - 12,935 - 12,271 -
2280 Current lease liabilities IV, VI and VII 7,712 - 638 - 8,909 -
2310 Advance receipts VII 1,330 - 1,066 - 1,195 -
2399 Other current liabilities 1,017 - 1,077 - 1,401 -
21xx Total current liabilities 2,410,988 38 2,438,770 40 3,081,183 47
Non-current liabilities
2570 Deferred income tax liabilities IV and VI 120,706 2 116,831 2 106,932 2
2580 Non-current lease liabilities IV, VI and VII 164,092 3 280 - 584 -
2630 Long-term deferred revenue 9,443 - 9,533 - 10,578 -
2640 Net defined benefit liability - non-current IV and VI 6,977 - 6,973 - 8,989 -
2645 Guarantee deposits received 1,238 - 1,911 - 1,442 -
25xx Total non-current liabilities 302,456 5 135,528 2 128,525 2
2xxx Total Liabilities 2,713,444 43 2,574,298 42 3,209,708 49
Equity attributable to owners of the parent
3100 Share capital VI
3110 Common stock 965,942 16 965,942 16 965,942 15
3200 Capital surplus VI
3211 Capital surplus - additional paid-in capital 6,124 - 6,124 - 6,124 -
arising from ordinary share
3213 Capital surplus - Conversion premium of 57,468 1 57,468 1 57,468 1
convertible bonds
3240 Capital surplus - Gains from disposal of 4 - 4 - 4 -
assets
3280 Capital surplus - others 31,920 1 31,920 1 31,920 -
3300 Retained earnings VI
3310 Legal reserve 562,966 9 562,966 9 527,176 8
3320 Special reserve 98,077 2 98,077 2 98,077 1
3350 Unappropriated earnings 1,623,789 26 1,606,748 28 1,610,315 24
3400 Other equity VI
3410 Exchange difference on translation of (15,769) - (32,016) (1) (17,260) -
financial statements of foreign operations
Unrealised gains (losses) on valuation of
3420 financial assets measured at fair value (3,820) - (3,381) - (9,475) -
through other comprehensive income
31xx Total equity attributable to owners of the 3,326,701 55 3,293,852 56 3,270,291 49
parent
36xx Non-controlling interests VI 92,766 2 93,741 2 104,473 2
3xxx Total equity 3,419,467 57 3,387,593 58 3,374,764 51
Total liability and equity $ 6,132,911 100 $ 5,961,891 100 $ 6,584,472 100
----- End of picture text -----

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Ting-Shuang Lin

293

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Comprehensive Income

From January 1 to March 31, 2024 and 2023

(Reviewed only, not audited in accordance with the auditing standards)

Unit: NT$ thousand, except earnings per share

==> picture [513 x 641] intentionally omitted <==

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

January 1 to March 31, 2024 January 1 to March 31, 2023
Code Items Notes Amount % Amount %
4000 Operating revenue VI and VII $ 362,524 100 $ 538,803 100
5000 Operating costs VI and VII (294,958) (81) (486,840) (90)
5900 Gross profit 67,566 19 51,963 10
5920 Realized (Unealized) gain from sale 14 - 261 -
5950 Gross profit, net 67,580 19 52,224 10
Operating expenses
6100 Selling and marketing expenses (23,952) (7) (37,016) (7)
6200 General and administrative expenses (30,617) (8) (31,794) (6)
6300 Research and development expenses (21,210) (6) (14,459) (3)
6450 Expected credit impairment gains (losses) (678) - 3,030 1
6000 Total operating expenses (76,457) (21) (80,239) (15)
6900 Operating profit (loss) (8,877) (2) (28,015) (5)
Non-operating income and expenses
7100 Interest income 3,854 1 9,218 2
7010 Other income VI 7,763 2 8,546 2
7020 Other gains and losses IV and VI 20,728 6 36,100 6
7050 Finance costs VI (7,819) (2) (9,472) (2)
7060 Share of profit or loss of associates and joint (1,099) - 517 -
ventures accounted for using equity method
7000 Total non-operating income and expenses 23,427 7 44,909 8
7900 Net profit before tax 14,550 5 16,894 3
7950 Income tax expense IV and VI 292 - (13,363) (2)
8200 Current period net profit 14,842 5 3,531 1
Other comprehensive income
Items that will not be reclassified subsequently to
8310
profit or loss
Unrealized gains (losses) from investment in
8316 equity instrument measured at fair value through (439) - 1,218 -
other comprehensive income
Items that may be reclassified subsequently to
8360
profit or loss
8361 Exchange difference on translation of financial 21,839 6 2,274 -
statements of foreign operations
8399 Income tax related to items that may be (4,368) (1) (454) -
reclassified
8300 Other comprehensive (loss) income for the year 17,032 5 3,038 -
8500 Total comprehensive income 31,874 10 6,569 1
8600 Net profit (loss) attributable to:
8610 Owners of the parent company $ 17,041 5 $ 14,958 3
8620 Non-controlling interests (2,199) - (11,427) (2)
$ 14,842 5 $ 3,531 1
8700 Total comprehensive income attributable to:
Owners of the parent company
8710 32,849 10 17,615 3
(comprehensive income)
8720 Non-controlling interests (comprehensive income) (975) - (11,046) (2)
$ 31,874 10 $ 6,569 1
Earnings per share
9750 Basic earnings per share IV and VI $ 0.18 $ 0.15
9850 Diluted earnings per share IV and VI $ 0.18 $ 0.15
----- End of picture text -----

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Ting-Shuang Lin

294

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statement of Changes in Equity

From January 1 to March 31, 2024 and 2023

(Reviewed only, not audited in accordance with the auditing standards)

Unit: NT$ thousand

Equity attributable to owners of the parent

==> picture [789 x 252] intentionally omitted <==

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

Share capital Retained earnings Other equity items
Unrealised gains (losses) on
Items Common stock Capital surplus Legal reserve Special reserve Unappropriatedearnings financial statements ofExchange differenceon translation of valuation of financial assetsmeasured at fair value attributable toTotal equity Non-controllinginterests Total equity
through other owners of the parent
foreign operations
comprehensive income
Balance at January 1, 2023 $ 965,942 $ 95,516 $ 527,176 $ 98,077 $ 1,595,597 $ (18,699) $ (10,933) $ 3,252,676 $ 115,519 $ 3,368,195
Net profit as of March 31, 2023 - - - - 14,958 - - 14,958 (11,427) 3,531
Other comprehensive income as of March 31, 2023 - - - - - 1,439 # 1,218 2,657 381 3,038
Total comprehensive income as of March 31, 2023 - - - - 14,958 1,439 1,218 17,615 (11,046) 6,569
Disposal of investments in equity instruments at fair value - - - - (240) - 240 - - -
through other comprehensive income
Balance at March 31, 2023 $ 965,942 $ 95,516 $ 527,176 $ 98,077 $ 1,610,315 $ (17,260) $ (9,475) $ 3,270,291 $ 104,473 $ 3,374,764
Balance at January 1, 2024 $ 965,942 $ 95,516 $ 562,966 $ 98,077 $ 1,606,748 $ (32,016) $ (3,381) $ 3,293,852 $ 93,741 $ 3,387,593
Net profit as of March 31, 2024 - - - - 17,041 - - 17,041 (2,199) 14,842
Other comprehensive income as of March 31, 2024 - - - - - 16,247 # (439) 15,808 1,224 17,032
Total comprehensive income as of March 31, 2024 - - - - 17,041 16,247 (439) 32,849 (975) 31,874
Disposal of investments in equity instruments at fair value through other comprehensive income - - - - - - - - - -
Balance at March 31, 2024 $ 965,942 $ 95,516 $ 562,966 $ 98,077 $ 1,623,789 $ (15,769) $ (3,820) $ 3,326,701 $ 92,766 $ 3,419,467
----- End of picture text -----

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Ting-Shuang Lin

295

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

From January 1 to March 31, 2024 and 2023

(Reviewed only, not audited in accordance with the auditing standards)

Unit: NT$ thousand

Cash flows from operating activities Net profit before tax Adjustments Depreciation Amortisation Expected credit impairment losses (gains) Interest expense Interest income Dividend revenue Share of profit or loss of associates and joint ventures accounted for using equity method Losses (gains) on disposal and discard of property, plant and equipment Losses on disposals of investments Realized (Unealized) gain from sale among associated companies Other income Losses (Gains) from evaluation of financial assets Changes in operating assets and liabilities Notes receivable Notes receivable - related parties Account receivables Account receivables - related parties Other receivables Other receivables - related parties Inventories Prepayments Other current assets Overdue receivables Long-term notes receivable Contract liabilities Notes payable Notes payable - related parties Accounts payable Accounts payable - related parties Other payables Other payables - related parties Provisions Advance receipts Other current liabilities Net defined benefit liability Cash inflow (outflow) from operations Interest received Income tax paid Net cash inflow (outflow) from operating activities (Continued)	January 1 to March 31, 2024 14,550 $ 27,218 747 678 7,819 (3,854) (30) 1,099 7 - (14) (267) 18,428 19,403 (670) (34,643) 9,771 (678) (42) (211,685) (25,886) (111) 221 3,052 14,386 32,696 490 27,140 8,868 (30,079) (554) (2,353) 264 (60) (212) (124,301) 7,036 (2,956) (120,221)	January 1 to March 31, 2023 16,894 $ 28,446 633 (3,030) 9,472 (9,218) (28) (517) (178) 86 (261) (270) (45,414) 125,785 2,636 41,791 17,552 1,954 (640) 4,685 482 (605) (3) 4,664 (23,287) (150,783) 1,409 59,883 (375) (13,750) (1,641) (181) 261 (698) (2) 65,752 13,133 (27,356) 51,529

296

AWEA Mechantronic Co., Ltd. and its Subsidiaries

Consolidated Statements of Cash Flows

From January 1 to March 31, 2024 and 2023

(Reviewed only, not audited in accordance with the auditing standards)

Unit: NT$ thousand

January 1 to March 31, 2024 January 1 to March 31, 2023

(Continued from previous page) Cash flows from investing activities Disposal price of financial assets at fair value through other comprehensive income Acquisitions of financial assets at fair value through profit or loss Disposal price of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in guarantee deposits paid Acquisitions of intangible assets Increase in prepayments for equipment Increase in other financial assets Decrease in other non-current assets Dividends received Net cash outflow from investing activities Cash flows from financing activities Decrease in short-term borrowings Increase (Decrease) in short-term notes and bills payable Decrease in guarantee deposits received Repayment of principal of lease liabilities Interest paid Net cash outflow from financing activities Effect of changes in foreign exchange rates on cash and cash equivalents Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period	- - - (2,379) - 2,033 (650) (1,588) (10,892) 352 30 (13,094) (3,639) (79,987) (673) (2,158) (8,358) (94,815) 8,150 (219,980) 866,173 646,193 $	300 (4,396) 1,353 (4,326) 190 1,290 (1,003) - (30,300) 365 28 (36,499) (122,240) 24,974 (741) (2,845) (8,973) (109,825) 457 (94,338) 1,132,171 1,037,833 $

Please refer to the accompanying notes to the consolidated financial statements.

Chairman: De-Hua Yang Managerial officer: Shang-Ru Yang Accounting Supervisor: Ting-Shuang Lin

297

VI. If the Company and its affiliated enterprises, in the latest year and up to the publication date of the annual report developed an insolvency and the impact upon the Company’s financial conditions:

None.

Chapter VII. Review Analysis and Risk Management of Financial Status and Operation Results

I. Financial status

Unit: NT$ thousand

Year Items	2023	2022	Difference	Difference	Description
			Amount	%
Current assets	3,802,854	4,604,226	(801,372)	-17.41%
Investments accounted for using equitymethod	116,713	109,850	6,863	6.25%
Property, plant and equipment	1,741,772	1,797,473	(55,701)	-3.10%
Intangible assets	12,656	10,368	2,288	22.07%	Note 1
Other assets	287,896	269,881	18,015	6.68%
Total assets	5,961,891	6,791,798	(829,907)	-12.22%
Current liabilities	2,438,770	3,288,494	(849,724)	-25.84%	Note 2
Non-current liabilities	135,528	135,109	419	0.31%
Total liabilities	2,574,298	3,423,603	(849,305)	-24.81%	Note 3
Equity attributable to owners of theparent	3,293,852	3,252,676	41,176	1.27%
Share capital	965,942	965,942	0	0.00%
Capital surplus	95,516	95,516	0	0.00%
Retained earnings	2,267,791	2,220,850	46,941	2.11%
Other equity	(35,397)	(29,632)	(5,765)	19.46%
Non-controlling interests	93,741	115,519	(21,778)	-18.85%
Total equity	3,387,593	3,368,195	19,398	0.58%

Note 1: The increase in intangible assets was due to the subsidiary’s additional purchase of CAD software, ERP server software, ERP database software.

Note 2: The decrease in current liabilities was due to repayment of liabilities, resulting in decreased short-term borrowings and short-term notes and bills payable; and decreased notes payable and income tax liabilities.

Note 3: The decrease in total liabilities was due to decreased current liabilities.

298

II. Financial performance

(I) Table of comparative analysis of operation results

Unit: NT$ thousand

Year Items	2023	2022	Amount in increase/ decrease	Change percentage (%)	Description
Operatingrevenue	2,361,917	3,100,517	(738,600)	-23.82%	Note 1
Operatingcosts	(2,002,794)	(2,432,617)	429,823	-17.67%
Grossprofit	359,123	667,900	(308,777)	-46.23%	Note 1
Realized (Unealized) gain among associated companies	(210)	(4,900)	4,690	-95.71%	Note 1
Realizedgrossprofit	358,913	663,000	(304,087)	-45.87%	Note 1
Operatingexpenses	(325,913)	(364,775)	38,862	-10.65%
Operating profit	33,000	298,225	(265,225)	-88.93%	Note 1
Non-operating income and expenses	202,099	161,563	40,536	25.09%	Note 2
Netprofit before tax	235,099	459,788	(224,689)	-48.87%	Note 1
Income tax expense	(44,793)	(110,501)	65,708	-59.46%	Note 1
Currentperiod netprofit	190,306	349,287	(158,981)	-45.52%	Note 1
Other comprehensive income	(16,357)	7,313	(23,670)	-323.67%	Note 2
Total comprehensive income in currentperiod	173,949	356,600	(182,651)	-51.22%	Note 2

Analysis explanation on the change in the ratio of increase or decrease:

Note 1: The decrease in the operating revenue, gross profit, operating profit, net profit before tax, income tax expense and net profit for the year was due to the tightening of monetary policy and weak trade in the USA, and the global geopolitical policy tensions, which led to decreased operating revenue.
Note 2: The increase in total non-operating income and expenses and decreased other comprehensive income and total comprehensive income in the current period, were due to fluctuation in exchange rate.
(II) Expected sales volume and its basis: The construction of Dapumei Phase II plant and the mass production of Wujiang Phase II plant are expected to usher in an expectable growth in sales volume.
(III) (Possible impact on future financial business of the Company and the response plan: Wait with bated breath, and it’s expected that the fall of the inflation data and the return of expansion of manufacturing capital expenditure demand could bring the opportunity of the industrial recovery for the machine tool industry. It’s expected that there will be expectable growth in both finance and business this year, therefore, it’s not necessary to formulate any response plan.

299

III. Cash flow

(I) Analysis on cash flow change in the latest year (2023)

Cash balance at the beginning of the year	Net cash flow from operating activities in the year	Net cash flow from investing activities in the year	Net cash flow from financing activities in the year	Effect of changes in foreign exchange rates on cash and cash equivalents	Amount of cash balance and deficits	Countermeasure for mount of cash balance and deficits	Countermeasure for mount of cash balance and deficits
						Investment plans	Wealth management plans
1,132,171	399,439	129,394	(785,616)	(9,215)	866,173	`－`	`－`

(II) Improvement plan for insufficient liquidity: Not applicable.
(III) Analyses on the cash liquidity for next year:

Unit: NT$ thousand

				Unit: NT$ thousand	Unit: NT$ thousand
Cash balance at the beginning of the year	Net cash inflow from operating activities in the year	Year-round cash outflow	Remaining (insufficient) cash	Countermeasure for mount of cash balance and deficits
				Investment plans	Wealth management plans
866,173	402,280	648,000	620,453	`－`	`－`

Analysis on the cash flow change for next year:
(1) Operating activities: It is expected that the Company’s operations are stable, and the number of days to collect accounts remains unchanged.
(2) Investment activities: It is expected to pay for Phase II construction project of Chiayi Dapumei Branch, etc.
(3) Fundraising and financing activities: These activities are mainly for maintaining the normal operation of the Company, which have no major changes except for load repayment and estimated cash dividend payment.
Remedial measures and liquidity analysis for anticipated cash shortfalls: None.

IV. The impact of the significant capital expenditure in the latest year upon the financial performance:

(I) Use of significant capital expenditure and sources of funds:

Unit: NT$ thousand

				Unit: NT$ thousand	Unit: NT$ thousand
Planned items	Actual or expected sources of funds	Actual or expected completion date	Total funds required for 2023 and 2024	Actual use of funds in 2023 and expected use of funds in 2024
				2023	2024
Dapumei Plant Phase II project(AWEA)	Own funds	2024	379,563	31,563	348,000

300

V. The outward investment policies in the latest year. The key reasons leading to the profit or loss, the corrective plans and the investment plan in one year ahead

None.

VI. Risk issues that occurred in the latest year and up to the publication date of the Annual Report shall be analyzed and evaluated as follows
(I) The impact incurred by change in interest rate, exchange rate, inflation upon the Company’s profit and/or loss and the future countermeasures
1. Interest rates: The Company regularly evaluates the differences between the interest rate on bank borrowings and that in the market, and keeps close contact with the bank at any time to obtain a favorable interest rate. Therefore, the change in the interest rate has no significant impact on the Company.
2. Exchange rate:
  - The Company will collect information on the change in the exchange rate at any time, keep track of the exchange rate trend, and judge the change in the exchange rate, so as to take hedging operations in time or flexibly adjust the foreign exchange deposits. In addition, it also maintains good interactions with the bank, and takes appropriate measures in response to the change in the exchange rate to avoid the foreign currency risk.
3. Inflation: The Company will continue to pay attention to inflation, so as to properly adjust the selling price of products and the stock of raw materials.
(II) The major causes for engaging in high-risk, high-leverage investment, lending of funds to others, endorsements/guarantees and derivative financial instruments, the profits or loss and the future countermeasures.
1. The Company adopts a prudent and conservative financial policy, and does not engaged in high-risk, high-leverage investment.

301

The Company’s loaning of funds to others in the latest year and up to the publication date of the Annual Report is as follows:

	December 31,2023	December 31,2023	December 31,2023							Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)	Unit: NT$ thousand(unless stated otherwise)
No. (Note 1)	Companies loaning fund	Companies that fund is loaned to	Transaction subject	Related party	Maximum balance of the current period (Note 3)	Ending balance (Note 4)	Amount drawn	Interest rate	Type of loans	Amount of transaction	Cause for necessity of short- term financing	Amount of allowance for uncollectible accounts	Collateral		Loaning limit to individual objects (Note 2)	Total loaning limit to others (Note 2)
													Name	Value
0	AWEA Mechantronic Co., Ltd.	Yih Chuan Machinery Industry Co., Ltd.	Other receivables - related parties	Yes	150,000	70,000	60,000	2.05%	With necessity of short- term financing	140	Operating turnover	-	Promissory note	70,000	329,385	1,317,541
1	Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables - related parties	Yes	107,930 (CNY25,000)	107,930 (CNY25,000)	43,020	3.45% ~ 3.55%	With necessity of short- term financing	-	Operating turnover	-	-	-	150,752	150,752
1	Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables - related parties	Yes	29,216 (CNY6,700)	21,765 (CNY5,000)	-	3.45%	With necessity of short- term financing	-	Operating turnover	-	-	-	150,752	150,752

302

March 31, 2024

Unit: NT$ thousand (unless stated otherwise)

No. (Note 1)	Companies loaning fund	Companies that fund is loaned to	Transaction subject	Related party	Maximum balance of the current period (Note 3)	Ending balance (Note 4)	Amount drawn	Interest rate	Type of loans	Amount of transaction	Cause for necessity of short- term financing	Amount of allowance for uncollectible accounts	Collateral	Collateral	Loaning limit to individual objects (Note 2)	Total loaning limit to others (Note 2)
													Name	Value
0	AWEA Mechantronic Co., Ltd.	Yih Chuan Machinery Industry Co., Ltd.	Other receivables - related parties	Yes	70,000	70,000	60,000	2.05% ~ 2.175%	With necessity of short- term financing	664	Operating turnover	-	Promissory note	70,000	332,670	1,330,680
1	Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Awea Mechantronic (Suzhou) Ltd.	Other receivables - related parties	Yes	107,930 (CNY25,000)	107,930 (CNY25,000)	109,575	3.45%	With necessity of short- term financing	-	Operating turnover	-	-	-	155,097	155,097
1	Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Other receivables - related parties	Yes	21,765 (CNY5,000)	21,765 (CNY5,000)	-	3.45%	With necessity of short- term financing	-	Operating turnover	-	-	-	155,097	155,097

Note 1: The explanation for the numbering column is as follows:

(1) Fill in 0 for issuer.
(2) The investees are coded sequentially beginning from “1” by each individual company.
Note 2: The loaning limit to individual objects shall not exceed 10% of their net value of the current period, and the total loaning limit shall not exceed 40% of their net value of the current period.
Note 3: The maximum balance of funds lent to others in the current year is converted based on the exchange rate declared by the Company to Securities and Futures Bureau as of March 31, 2024.
Note 4: The loaning limit resolved by the Board of Directors is converted based on the exchange rate declared by the Company to Securities and Futures Bureau as of March 31, 2024.
1. The Company’s endorsements/guarantees in the latest year and up to the publication date of the Annual Report are as follows: Endorsements/guarantees for others on December 31, 2023: None.
  - Endorsements/guarantees for others on March 31, 2024: None.
2. The derivative financial instruments engaged by the Company are mainly currency hedging, so the market risk is not significant.

303

(III) The future research & development plans and the expenses anticipated to be invested into research & development
The Company’s R&D directions planned for the near future are as follows:
- (1) Find and develop products for the blue ocean market.
- (2) Develop high value-added performance and technology.
- (3) Develop low-cost/well-manufactured mass-produced products to maintain the existing market competitiveness.
- (4) Make modularized/stackable design to increase production efficiency and reduce production cost.
Expenses anticipated to be invested into R&D:
- In 2023, the Company invested NT$53,729 thousand in R&D, accounting for 2.27% of operating revenue. In the future, the Company will develop new products and technologies with a considerable proportion of the R&D expenses to expand the market competitive advantage.
(IV) The possible impacts by government policies and laws at home and abroad upon the Company’s financial conditions and the Company’s countermeasures
So far, as the competent authority has actively modified the relevant regulations and promoted the corporate governance system and complied with the regulations and system, and the changes in important policies and laws at home and abroad have no significant impact on the Company’s financial performance, the Company’s management will obtain relevant information at any time, and propose necessary countermeasures in real time to meet the Company’s operating needs.
(V) The impact of technological changes and industrial changes on the Company’s financial performance and countermeasures
Since the Company keeps abreast of the progress of technology and industry to meet customers’ needs in real time, it, in the face of market competition and threats in Mainland China, Eastern Europe and other third world countries, constantly improves production technologies and quality and develops new machines to avoid price war, and also actively develops high value-added composite machines. So far, technological and industrial changes have not caused significant impact on the Company’s financial performance.
(VI) The impacts created by a change in corporate image upon the management over crisis, and the Company’s countermeasures
The Company’s operation principle is being honest, prompt and thorough. So far, there has been no significant impact on the Company due to the change in corporate image.
(VII) Expected benefits, potential risks, and countermeasures of mergers and acquisitions: None.
(VIII) The risks anticipated from the expansion of the plant buildings, and the Company’s countermeasures: Not applicable.
(IX) Risks of and countermeasures for concentrated goods purchases or salesr: the Company’s purchasing factories and sales customers adopt the discrete policy, so there is no risk of concentration of purchases or sales.
(X) The impacts and risks anticipated from the massive transfer of shareholding by directors, supervisors or key shareholders who hold more than 10% in shareholding and the Company’s

304

countermeasures: None.

(XI) The impacts and risks anticipated from the change in the managerial powers and the Company’s countermeasures: None.
(XII) For contentious or non-contentious matters, the following contents should be listed: major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the president, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment, or are still under litigation. Where such a dispute could materially affect shareholders’ equity or the prices of the company’s securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute up to the publication date of the annual report: None.
(XIII) Other critical risks and response measures: None.

VII. Other important disclosures

None.

305

Chapter VIII. Special Disclosure

I. Relevant information of affiliated enterprises
(I) Consolidated business reports teaming up with affiliated enterprises
1. Organization structure of affiliated enterprises (as of April 30, 2024)

==> picture [489 x 252] intentionally omitted <==

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

Holding 100% Holding 100% Holding 100%
in shareholding in shareholding in shareholding
Shanghai
Zhuwai
B-Way Billion-Way Mechanical
Cayman) (Cayman) and Electrical
Co., Ltd. Co., Ltd. Co., Ltd.
Awea
Mechantronic
AWEA (Suzhou) Ltd.
Mechantronic Holding 100%
in shareholding
Co., Ltd.
Yih Chuan
Yih Chuan AXTRON INT’L AXTRON INT’L
Machinery
Machinery INVESTMENT INVESTMENT
(Jiaxing)
Industry Co., Co., Ltd LIMITED
Industry Co.,
Ltd.
Ltd.
Holding 60% Holding 100% Holding 100% Holding 100%
in shareholding in shareholding in shareholding in shareholding
----- End of picture text -----

Basic information of affiliated enterprises

Date: March 31, 2024 Unit: NT$ thousand; US$ thousand

==> picture [489 x 326] intentionally omitted <==

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

Establishment
Name of enterprise Address Paid-in capital Main business activities
date
B-WAY(Cayman) Co., January 11, Cayman Islands NT$332,212 [International investment and ]
Ltd. 2001 international trade
Billion-way(Cayman) January 11, Cayman Islands NT$409,919 [International investment and ]
Co., Ltd. 2001 international trade
No.7801, Songze Machinery sales and
Shanghai Zhuwai
February 14, Avenue, Qingpu installation, business
Mechanical and US$2,500
2001 Industrial Zone, management consultation,
Electrical Co., Ltd.
Shanghai and international trade
No.4888, East Taihu
Machinery sales,
Avenue, Economic &
Awea Mechantronic September 4, manufacturing and
Technological US$11,400
(Suzhou) Ltd. 2007 installation, and international
Development Zone,
trade
Wujiang
Manufacturing of machinery
2F, No. 13-1,
and equipment, design of
Yih Chuan Machinery November 3, Gongyequ 5th Rd.,
NT$98,580 products, wholesale of
Industry Co., Ltd. 1972 Xitun Dist.,
machinery, and retail of
Taichung City
mechanical appliances
----- End of picture text -----

306

Name of enterprise	Establishment date	Address	Paid-in capital	Main business activities
AXTRON INT'L INVESTMENT CO.,LTD.	November 22, 2012	Trust Company Complex,Ajeltake Road,Ajeltake The registered address is Island,Majuro,Marsh all Islands MH96960	NT$1,580	International investment and international trade
AXTRON INT'L INVESTMENT LIMITED	March 25, 2013	7/F.,Chuang's Enterprises Building, 382 Lockhart Road, Wanchai,Hong Kong	NT$41	International investment and international trade
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	November 27, 2000	No.3198, Xiuzhou Industrial Park, Zhongshan West Road, Jiaxing City, ZhejiangProvince	US$2,510	Machinery sales, manufacturing and installation, and international trade
Huahan Leasing Co., Ltd.	October 13, 2015	1F, No. 13, Gongyequ 5th Rd., Xitun Dist., TaichungCity	NT$50,000	Leasing industry

Information on the shareholders presumed to have a relationship of control and subordination: None.
Industries covered by the overall businesses of affiliated enterprises
(1) Machine tool industry.
(2) Machinery and equipment in the electronics industry.
(3) International trade.

307

Information of directors, supervisors, and presidents of each affiliated enterprise

			March 31, 2024 Unit: shares;%	March 31, 2024 Unit: shares;%
Name of enterprise	Title	Name or the representative person	Shares held
			Number of shares	Ownership (%)
B-WAY(Cayman) Co., Ltd.	Person in charge	De-Hua Yang	10,665,029	100`﹪`
Billion-way(Cayman) Co., Ltd.	Person in charge	De-Hua Yang	12,829,840	100`﹪`
Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Representative of juristic person and director	Cheng-Xuan Wang	`－`	100`﹪`
Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	President	Chang-Chi Yang	`－`	100`﹪`
Shanghai Zhuwai Mechanical and Electrical Co., Ltd.	Supervisor	Hong-Bin Syu	`－`	100`﹪`
Awea Mechantronic (Suzhou) Ltd.	Representative of juristic person and director	Cheng-Xuan Wang	`－`	100`﹪`
Awea Mechantronic (Suzhou) Ltd.	Director and President	Chang-Chi Yang	`－`	100`﹪`
Awea Mechantronic (Suzhou) Ltd.	Director	Qi-Guan Zeng	`－`	100`﹪`
Awea Mechantronic (Suzhou) Ltd.	Director	Rui-Ming Ye	`－`	100`﹪`
Awea Mechantronic (Suzhou) Ltd.	Supervisor	Hong-Bin Syu	`－`	100`﹪`
Yih Chuan Machinery Industry Co., Ltd.	Person in charge	Goodway Machine Corp. Representative: Cheng-Jun Yang	3,943,200	40`﹪`
Yih Chuan Machinery Industry Co., Ltd.	Director	Goodway Machine Corp. Representative: De-Hua Yang
Yih Chuan Machinery Industry Co., Ltd.	Director	Goodway Machine Corp. Representative: Bi-Lian Chen
Yih Chuan Machinery Industry Co., Ltd.	Supervisor	AWEA Mechantronic Co., Ltd. Representative: Hong-Bin Syu	5,914,800	60%
AXTRON INT'L INVESTMENT CO., LTD	Person in charge	Bi-Lian Chen	`－`	100`﹪`

308

Name of enterprise	Title	Name or the representative person	Shares held	Shares held
			Number of shares	Ownership (%)
AXTRON INT'L INVESTMENT LIMITED	Person in charge	Bi-Lian Chen	`－`	100`﹪`
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Representative of juristic person	Bi-Lian Chen	`－`	100`﹪`
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Director	Qi-Guan Zeng	`－`	100`﹪`
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Director	Shang-Ru Yang	`－`	100`﹪`
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Director	Jian-Wen Kang	`－`	100`﹪`
Yih Chuan Machinery (Jiaxing) Industry Co., Ltd.	Supervisor	Chang-Chi Yang	`－`	100`﹪`
Huahan Leasing Co., Ltd.	Person in charge	De-Hua Yang	666,667	13.33%

6. Business performances of affiliated enterprises

December 31, 2023 Unit: NT$ thousand

							Unit: NT$	thousand
Name of enterprise	Capital	Total assets	Total liabilities	Net value	Operating revenue	Operating income (loss)	Profit and/or loss for the period (after tax)	Earnings per share (NT$) (after tax)
B-WAY (Cayman)Co.,Ltd.	334,213	709,731	0	709,731	0	(235)	57,841	0.17
Billion-way (Cayman)Co.,Ltd.	406,355	706,493	0	706,493	0	(241)	58,052	0.14
Shanghai Zhuwai Mechanical and Electrical Co.,Ltd.	83,058	154,004	3,252	150,752	0	(2,904)	7,597	Note
Awea Mechantronic (Suzhou)Ltd.	354,478	931,856	387,552	544,304	872,690	78,002	58,604	Note
Yih Chuan Machinery Industry Co.,Ltd.	98,580	307,491	73,138	234,353	13,252	(41,627)	(51,263)	(5.20)
AXTRON INT'L INVESTMENT CO., LTD.	1,580	205,164	0	205,164	0	0	(21,254)	(13.45)
AXTRON INT'L INVESTMENT LIMITED	41	205,163	0	205,163	0	0	(21,254)	Note

309

Name of enterprise	Capital	Total assets	Total liabilities	Net value	Operating revenue	Operating income (loss)	Profit and/or loss for the period (after tax)	Earnings per share (NT$) (after tax)
Yih Chuan Machinery (Jiaxing) IndustryCo.,Ltd.	82,781	284,249	79,086	205,163	172,820	(24,503)	(21,254)	Note
Huahan Leasing Co., Ltd.	50,000	74,925	12,823	62,102	9,844	3,270	2,080	0.40

Note: The currency unit of Shanghai Zhuwei Mechantronic/ AWEA Mechantronic (Suzhou) is RMB thousand. Conversion of exchange rate of earnings per share is not calculated for mainland companies: CNY (RMB) 1 = NT$ (NTD) 4.302.
II. The basis for the date, amount and price approved by the shareholders’ meeting or the Board of Directors and its reasonableness, the method for selection of the specific person, and the necessary reasons for private placement shall be disclosed for the private placement of securities in the latest year and up to the publication date of the Annual Report. None.
III. Holding or disposal of the company’s shares by its subsidiaries in the latest year and up to the publication date of the annual report:

None.

IV. Other necessary supplemental information None.
Chapter IX. Any situation Specified in Article 36, Paragraph 2, Subparagraph 2 of the Securities and Exchange Act, which has Significant Impacts on shareholders’ Equity or the Price of the Company’s Securities, and Occurred in the Latest Year and up to the Publication Date of the Annual Report, shall also be Specified One by One

None.

310

AI assistant

AWEA — Annual Report 2023

51853_rns_2024-06-27_0428fc41-a552-49d3-839f-99a9542b61a0.pdf

AWEA Mechantronic Co., Ltd.

2023 ANNUAL REPORT

Publication date: May 28, 2024

II. Address and Telephone of Headquarters, Branches and Factories

III. Institution for Stock Transfer

IV. Contact Information of Financial Statement Auditors in the Latest Year

Table of Contents

Chapter I. Report to Shareholders

(Consolidated)

Chapter II. Company Profile

II. Address and telephone of headquarters, branches and factories

III. History and organization

Chapter III. Corporate Governance

I. Organizational structure

(II) Major corporate functions:

II. Background information of Directors, Supervisor, President, Vice President, Assistant Manager, and heads of various departments and branches

1. Basic information

(II) Background information of President, Vice Presidents, Assistant Managers, and the heads of various departments and branches

2. President’s and managerial officers’ remuneration

3. Remuneration of the top five highest-paid supervisors

AWEA Mechantronic Co., Ltd. Declaration of Internal Control System

Summary of resignation and discharge status of relevant personnel of the Company

IV. Information in public fees of the Certified Public Accountant Association

V. Changes in CPA

Chapter IV. Funding Status

I. Share capital and shares

(I) Sources of share capital

(II) Shareholders structure:

AWEA Mechantronic Co., Ltd.

Statement of Earnings Distribution 2023

Chapter V. Business Performance

I. Content of business

(II) Industrial profiles:

3. Product development trends:

4. Competitive niche

2. Product manufacturing process

(V) Production volume and value for the last two years

IV. Environmental spending

VI. Cyber security management

VII. Important contract

Chapter VI. Financial Status

2. IFRS - Consolidated

2. IFRS - Consolidated

(III) Names and audit opinions of the CPAs for the last five years

II. Financial analysis for the last five years

(II) IFRS - Consolidated

AWEA Mechantronic Co., Ltd. Audit Committee’s Audit Report

Independent Auditors’ Report

Audit Opinion

Basis for Opinion

Key Audit Matters

Revenue recognition

Evaluation of inventories

Other Matters - References to the Audits of Other CPAs

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

Auditors’ Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

AWEA Mechantronic Co., Ltd.

Parent Company Only Balance Sheets

Parent Company Only Balance Sheets

AWEA Mechantronic Co., Ltd.

AWEA Mechantronic Co., Ltd.

AWEA Mechantronic Co., Ltd.

Parent Company Only Statements of Cash Flows

Parent Company Only Statements of Cash Flows

I. History and Organization

II. Approval Date and Procedures of the Financial Statements

Amendments to IAS 12 “International Tax Reform - Pillar Two Model Rules”

IV. Summary of Significant Accounting Polices

(I) Statement of compliance

(II) Basis of preparation

(III) Functional currency and presentation currency

(VI) Cash and cash equivalents

(VII) Financial instruments

(IX) Inventories

(XI) Property, plant and equipment

(XII) Leases

AWEA Annual Report 2023