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Chang Type Annual Report 2023

Jun 26, 2024

51863_rns_2024-06-26_8045d637-2400-4ced-a4b9-c358fc6989b3.pdf

Annual Report

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Stock Code:1541

Annual report available at: http://mops.twse.com.tw/

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==> picture [397 x 77] intentionally omitted <==

Annual Report 2023

Printed on 17 May 2024

I. The spokesperson and deputy spokesperson of the Company:

Spokesperson: Deputy Spokesperson:
Name CHANG, CHIN-HUA Name LIN, MEI-JYUN
Title Finance manager Title Audit supervisor
Tel 04-25580669 ext. 310 Tel 04-25580669 ext. 312
E-mail [email protected] E-mail [email protected]
  1. Address and contact number of the headquarters, branches and plant: No. 41, Nancun Rd., Houli Dist., Taichung City

Tel: (04)25580669 Fax: (04)25574960

3. Stock transfer agent

Name: Transfer agency department, Taishin Securities Co., Ltd. Stock

Address: B1F., No. 96, Sec. 1, Jianguo N. Rd., Zhongshan Dist., Taipei City Tel: (02) 2504-8125

Website: https://www.tssco.com.tw/

4. CPAs:

CPAs: LO, WEN-CHEN, HUANG, YU-TING

Name of the Accounting Firm: EY Taiwan

Address: 26F., No. 186, Shizheng N. 7th Rd., Xitun Dist., Taichung City

Tel: (04) 2259-8999

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

5. Overseas Securities Exchange: None.

6. Corporate Website:

http://www.toty.com.tw

Contents

Contents
Page
I. Letter to shareholders．．．．．．．．．．．．．．．．．．．．．．．．．．． 1
II. Company Profile．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 6
III. Corporate Governance Report
I. Organization system．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 7
II. Directors, Presidents, Vice Presidents, Assistant Managers and Management Teams 10
III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period 16
IV. Implementation of Corporate Governance．．．．．．．．．．．．．．．．．．．．．． 22
V. Information on Replacement of CPAs．．．．．．．．．．．．．．．．．．．．．．．． 62
VI. In case the Chairman, President, Chief Financial Officer or Chief Accounting Officer of the
Company who has been employed by the CPA firm retained for services or its affiliate, disclose
the name, title, and the duration of employment by the CPA firm or its affiliate．．．．．．． 62
VII. In the previous period to the date this report was printed, the transfer of shares or changes in the
pledge of shares under lien by the Directors, Managers, and shareholders holding more than 10%
of the shares issued by the Company．．．．．．．．．．．．．．．．．．．．．．．． 62
VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred within
the 2nd tier to one another		 63
IX. The quantity of shares issued by particular investee company held jointly by the Directors,
Managers, and direct or indirect controlled entity of the Company, and the proportion of shares
under joint holding．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 64
IV. Status of fundraising
I. Capital stock and shares of the Company．．．．．．．．．．．．．．．．．．．．．．． 65
II. Corporate bonds．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 71
III. Preferred shares．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 71
IV. Overseas depository receipts．．．．．．．．．．．．．．．．．．．．．．．．．．．． 71
V. Employee Stock Option．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 71
VI. RSU/RSA．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 71
VII. Merger and Acquisition (including merger, acquisition and spinoff)．．．．．．．．．．．． 71
VIII. Information on the implementation of the capital utilization plan．．．．．．．．．．．．． 71
V. Operation Overview
I. Business Content．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 72
II. Market, Production and Sales Overview．．．．．．．．．．．．．．．．．．．．．．． 76
III. Overview of Employees．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 83
IV. Information on Expenditures on Environmental Protection．．．．．．．．．．．．．．．． 83
V. Labor-Management Relationship．．．．．．．．．．．．．．．．．．．．．．．．．． 84
VI. Information Security Management(Added Additional Information)．．．．．．．．．．． 85
VII.The Structure of Task Force on Climate-related Financial Disclosures．．．．．．．．．．． 87
VIII. Important Contracts 88
VI. Financial Information
I. Condensed Balance Sheet and Comprehensive Income Statement for the Recent Five Years. Names
of the CPAs and Audit Opinions．．．．．．．．．．．．．．．．．．．．．．．．．．．．		 89
II. Financial Analysis for the Recent Five Years．．．．．．．．．．．．．．．．．．．．．． 92
III. Audit Committee Review Report on the Financial Statements of the Most Recent Period．．．． 96
IV. The Financial Report of The Most Recent Period．．．．．．．．．．．．．．．．．．． 98
V. The Parent Company Only Financial Report that has been Audited and Certified by the CPAs in the
Most Recent Year．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．		 98
VI. If the Company and its Affiliated Enterprises have Financial Turnover Difficulties in Recent Years
and as of the Date of Publication of the Annual Report, Impact on the Company's Financial
Status Should be Stated．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 98
VII. Review and Analysis of Financial Position and Performance, and Risk Assessments
I. Financial Position．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 99
II. Financial Performance．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 99
III. Cash Flow．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 100
IV. The Impact of Material Capital Expenditure on Financial Position in the Most Recent Year．．． 102
V. The Direct Investment Policy, the Major Cause of Profit or Loss, Improvement Plan for the Most 102
Recent Year, and the Investment Plan in the Next Year．．．．．．．．．．．．．．．．．．．
VI. Risk Analysis Assessment in the Most Recent Year to the Date of this Report was Printed．．． 102
VII. Other Significant Matters．．．．．．．．．．．．．．．．．．．．．．．．．．．． 102
VIII. Additional Information
I. Profiles of the Affiliates．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 103
II. Issuance of Securities Through Private Placement in the Most Recent Year as of the Date of this
Report was Printed．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．		 104
III. The Holding or Disposal of the Shares Issued by the Company by Subsidiaries in the Most Recent
Year as of the Date of this Report was Printed．．．．．．．．．．．．．．．．．．．．		 104
IV. Supplementary Information．．．．．．．．．．．．．．．．．．．．．．．．．．．． 104
IX. In the most recent year and as of the date of this report was printed, any event which has a material
impact on shareholders' rights and interests or securities prices specified in 2nd subparagraph, 3rd
Paragraph, Article 36 of the Securities and Exchange Act．．．．．．．．．．．．．．．．．． 104
Attachment A. Financial Statements Attested and Audited by CPAs in the Most Recent Year．．．．．． 105
Attachment B. Parent Company Only Financial Statements Attested and Audited by CPAs in the Most
Recent Year．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．		 185

I. Letter to Shareholders

2023 Business Report

The consolidated revenue for 2023 was NT$3,378 million, representing a decline of 16.7%; the profit was NTD115 million and the EPS was NTD1.46, representing a decline of 57.7%. Under the influence of various adverse factors such as high inventory levels among distributors persisting from last year, global challenges including global pandemic, war, inflation, energy and food supply shortages, consumer demand has sharply declined, and heavy industry compensations, resulting in a significant decrease in revenue and profits in 2023.

The following is a report on the Company's consolidated results of operations for 2023 and business plan for 2024.

  • I. Consolidated Results of Operations for 2023

(I) The Outcome of Business Plan Implementation

Since the beginning of this year, despite the easing of the pandemic, the global economy has been adversely affected by persistent high inflation from last year, the Russia-Ukraine conflict, interest rate hikes, and the strengthening of the US dollar. These factors have eroded consumer confidence and purchasing power, dampening demand and leading to a continuation of last year's sharp decline in demand. Facing crises of excess customer inventory and increased US sanctions on China, the pressure of global economic recession has intensified. Several industries have weakened, impacting manufacturers. Customer orders have significantly decreased since the second half of the previous year. In addition to cost-cutting measures in operations and encouraging staff to take leave, these circumstances have led to a decline in sales performance. Consolidated revenue has decreased by 16.7% to NT$3,378 million compared to last year

In this period, our product performance continued to be significantly affected by a substantial decrease in sales orders. In the United States, the results of inflation control measures were notable, leading to a cessation of interest rate hikes. Starting from the fourth quarter, the US dollar weakened, with the New Taiwan Dollar depreciating by an average of 5.95% against the US dollar. This led to an increase in product gross profit margins, resulting in a 12% increase in product gross profit compared to the previous period. Operating expenses decreased, primarily due to reduced export, shipping, and sales warranty expenses corresponding to the decrease in sales. Additionally, subsidiary companies reduced expenses related to warehouse rental, personnel hiring, and equipment maintenance. Furthermore, there were no expenses related to product patent disputes from last year. As a result, consolidated operating profit increased by 67% to NT$285 million.

1

Non-operating expenses amounted to NTD139 million, primarily attributed to the depreciation of the exchange rate in the fourth quarter, resulting in a significant decrease in exchange gains by NTD285 million to NTD5.43 million. Additionally, there were mold service revenues of NTD12 million, financing and leasing interest expenses of NTD19 million, and provision for heavy indemnity expenses related to outsourced production and sales of parts amounting to NTD145 million. Compared to the previous period, net non-operating income decreased by NTD324 million, totaling NTD185 million. This was mainly due to decreased exchange gains of NTD290 million, financing and leasing interest expenses of NTD22 million, mold income of NTD21 million, and patent dispute indemnity expenses of NTD107 million. Consequently, the net profit before tax for the period is NTD146 million, representing a decrease of NTD210 million or 58.9% from NT$356 million in the previous period.

2

3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability		 3
(II) Analysis of Receipts, Expenditures and Profitability
1. Analysis of Receipts and Expenditures
Consolidated
Financial
Statements
Unit: NTD (in thousands)
Item
2023
2022
Increase (Decrease)
Amount
%
Operating
revenue
3,378,030
4,057,447
(679,417)
(16.7)
Gross profit
667,188
594,471
72,717
12.2
Operating
Income
285,183
170,758
114,425
67.0
Net profit before
tax
146,179
355,966
(209,787)
(58.9)
Net profit after
tax
115,190
272,059
(156,869)
(57.7)
Earnings per
Share (NTD)
1.46
3.45
(1.99)
(57.7)
2. Profitability
Consolidated Financial Statements
Item
2023
2022
Profitability
Return on Assets (%)
3.42
6.59
Return on Equity (%)
6.08
14.93
Capital
Adequacy
Rate (%)
Operating Income
36.19
21.67
Net Profit Before Tax
18.55
45.17
Net Profit Margin(%)
3.41
6.71
Earnings per Share(NTD)
1.46
3.45
Parent Company
only Financial
Statements
Item
Operating
revenue
Gross profit
Operating
Income
Net profit before
tax
Net profit after
tax
Earnings per
Share (NTD)
Parent
Profitability
Consolidated
Financial
Statements		 Unit: NTD (in thousands) Parent Company
only Financial
Statements		 Unit: NT D (in thousands)
Item 2023 2022 Increase (Decrease) Item 2023 2022 Increa se (Decrease)
Amount % Amount %
Operating
revenue		 3,378,030 4,057,447 (679,417) (16.7) Operating
revenue		 3,015,023 4,058,588 (1,043,565) (25.7)
Gross profit 667,188 594,471 72,717 12.2 Gross profit 450,484 373,981 76,503 20.5
Operating
Income		 302,398 172,423 129,975 75.4
Operating
Income		 285,183 170,758 114,425 67.0
Net profit before
tax		 146,179 355,966 (209,787) (58.9)
Ne t profit before
tax		 157,561 335,732 (178,171) (53.1)
Net profit after
tax		 115,190 272,059 (156,869) (57.7)
N et profit after
tax		 115,190 272,059 (156,869) (57.7)
Earnings per
Share (NTD)		 1.46 3.45 (1.99) (57.7)

S		 Earnings per
hare (NTD)		 1.46 3.45 (1.99) (57.7)
2. Profitability
Consolidated Fi nancial Statements
Parent Company Only Financial Statement s
It em 2023 2022
Item 2023 2022
Profitability Retur n on Assets (%) 3.42 6.59
Profitability Return on Assets (%) 3.52 6.85
Retur n on Equity (%) 6.08 14.93
Return on Equity (%) 6.08 14.93
Capital
Adequacy
Rate (%)		 Operating Income 36.19 21.67
Capital
Adequacy
Rate (%)		 Operating Inco me 38.3 8 21.88
Net Profit Before Ta x 18.55 45.17
Net Profit Before Tax 20.0 0 42.61
Net P rofit Margin(%) 3.41 6.71
Net Pr ofit Margin(%) 3.82 6.70
Earnings per Share(NTD) 1.46 3.45
Earnings per Share(NTD) 1.46 3.45
3

3. Budget Implementation in 2023:

The Company has not prepared a financial forecast for 2023 and has kept its expense budget within the 10% level or below.

(III) Research and Development Condition

In 2023, the company has invested NT$17.51 million in new product development, representing 1.0% of net revenue, and will continue to launch multiple updated models for sale in 2024.

II. Business Plan Summary for 2024

  1. Business Policy

With the business philosophy of "Innovation, Efficiency, Quality, and Service", we aim to provide products and services to our customers at the lowest possible cost, while creating advantages through attractive pricing, high quality, convenience, and other desirable features.

2. Business Plan

  • (1) Strengthening vertical integration of production to enhance competitiveness.

  • (2) Establishing core values to strengthen and enhance business performance.

3. Business objectives

  • It is expected that the revenue in 2024 will continue to grow steadily, with the main sources of revenue coming from various types of circular saws, table saws, and other major products. In addition to cooperating with top international brands for OEM services, the company will continue to expand our own brand business. With the introduction of new product models and the strengthening of vertical integration of production, it is expected that both revenue and profits will continue to grow steadily.

  • Research and development plan

We will expand our product portfolio by venturing into new areas of OEM, brand product line development, brushless motor and control research and development, and the development of diversified tools. Despite the challenges posed by the difficult business environment, the company will continue to pursue steady and sustainable growth through a series of strategic measures and initiatives.

  1. Expected Sales Volume: 550,000 units of electric tools and 595,000 units of components (parent company only information).

4

III. The Effect of External Competition, the Legal Environment, and the Overall Business Environment

  1. External Competition Environment: Industry competition is inevitable and remains in a benign interaction. The company continues to strengthen the competitive advantage, enhance core R&D technologies to meet consumer demand with stable product quality.

  2. Legal Environment: All of the company's products are designed and developed while considering the regulations of each country and complying with their standards. The company will continue to monitor, update, and comply with possible changes in legal regulations in the future to ensure the maximum interests of the shareholders.

  3. Overall Business Environment: Given the complex overall business environment, the company will consider the industry overview and observe the general economic trend when evaluating investments and business policies. With regards to the impact of the US consumer market, which is experiencing reduced demand due to pressures from destocking and the slowdown caused by the COVID-19 pandemic, as well as the impact of high inflation and recession, the company will adopt strategies such as curtailing operating expenses to cope with the situation.

Wishing all of our esteemed shareholders all the best.

CHANG TYPE INDUSTRIAL CO., LTD

Chairman: CHANG, CHIN-CHIN

President: CHANG, CHIN-CHIN

Accounting supervisor: CHANG, CHIN-HUA

5

Company Profile

II. Date of establishment: 21 April 1989

  • III. Company and Factory Address and Contact Number:

Address: No. 41, Nancun Rd., Houli Dist., Taichung City

Contact Number: (04)2558-0669 Fax: (04)2557-4960

Factory Address: No. 41, Nancun Rd., Houli Dist., Taichung City

No. 31, 33, 35, 37, 356, Ln. 352 ,Sec. 4, Sanfeng Rd., Houli Dist., Taichung City

  • No. 262, Ln. 549, Sec. 2, Sanfeng Rd., Fengyuan Dist., Taichung City

IV. Milestone ：

1989 Co-founded by LIOU, LAI-JIN and CHANG, CHIN-CHIN in April, with a capital of
NT$20,000,000. It specializes in the manufacture of DC motors, continuously variable
controllers and IC boards. The Company signed a sales cooperation contract with
Emerson.
1991 Started producing scroll saw, band saw and vacuum cleaner.
1995 Signed a contract with RYOBI, a famous electric tool manufacturer, to manufacture
"RYOBI" and "CRAFTSMAN" bench top power tools.
1997 Expanded 2nd plant in Fengyuan and obtained ISO9002 certificate.
1999 Won the International Trade Awards of the Ministry of Economic Affairs, setting an
excellent example to the woodworking machinery industry; conducting public offering
of stocks.
Signed a contract with Black & Decker (B&D), the world's largest manufacturer of
electric tools, to manufacture "Black & Decker" bench top power tool.
2000 Received the 3rd Rising Star Award from the Small and Medium Enterprise
Administration, Ministry of Economic Affairs.
Passed B＆D certificate and produced top class “DEWALT” miter saw。
2003 In March, the company's stocks were publicly traded on the Taiwan Stock Exchange. The
headquarter moved to Houli.
In August, through the Hong Kong-based company, Techtronic Industries (TTI), the
Company, as an OEM, produced the miter saw for the brand “Ridgid” under the well-
known distributor Home Depot. The table saw was launched for the first time.
Issued the first domestic unsecured convertible bonds in the amount of NT$5,000,000 in
December.
2004 In March, passed the ISO9000 certificate.
In September, signed a contract with Taiwan Sugar Corp. to lease 9,300 ping (equals
approximately 3.3 square meters per ping) of industrial land in Houli Rd., Houli Dist.,
Taichung City, Taiwan (R.O.C.) for a 20-year lease term to build a parts processing
factory. Launched “DEWALT” tile saw.
2005 In December, the 2nd plant in Houli launched mass production through vertical
integration.
2007 In December 2003, the first domestic unsecured convertible bonds were all repurchased
and canceled by the company, and the over-the-counter trading was terminated on
December 21, 2007.
2011 In January, obtained DELTA, the American brand of electric tools.
In November, the Remuneration Committee was established.
2013 The product was introduced at LOWE'S, a terminal distributor in the United States.

6

==> picture [802 x 548] intentionally omitted <==

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

Corporate Governance Report
I. Organization system
(I) Organizational Structure of the Company
Shareholders’ Meeting
Board of Directors
Audit Office
Stock Affairs
Chairman
Audit Committee
Executive Assistant to CEO
President Remuneration Committee
Information Center
President’s Office
Document Management Center
Administrative Product Research and Quality Assurance
Production Department Processing Division
Management Department Development Department
Finance Management Business Fengyuan Houli Houli Material Research and
Department Department Department Plant Plant 2 Plant 1 Department development department
7
Certification
Costing Office Quality Control
Accounting Office Administrative Office Personnel Department Import-Export Office Biotechnology Office Materials Department Materials Department 1 Materials Department 2 Die Casting Department Coating Department Precision Engineering Molding Department Purchasing Department Regulatory Compliance
International Business Office roduction Management Office Manufacturing Department 1 Manufacturing Department 1-5 Manufacturing Department 1 Manufacturing Department 2 Inventory Control Department Project Engineering Department Electrical Design Department Quality Assurance Department 1 Quality Assurance Department
----- End of picture text -----

(II) The functions of major departments are specified below :

Major departments and
function heads		 Major departments and
function heads		 The function of major departments
Audit office Assist with the formulation of the company's audit system and the
implementation ofvarious auditwork.
President’s
Office		 Special Assistant
Information Center		 1.Execution of project matters.
2.Preparation and announcements for shareholders and board
meetings.
3.Delivery and filing of minutes of shareholders and board meetings.
4.The establishment and maintenance of the register of shareholders,
the processing of stock issuance and dividend distribution.
The development and maintenance of information system, and the
maintenance andpurchase of software and hardware.
Finance
Department		 Accounting Office
CostingOffice		 1.Fund Management and cashier matters.
2.Accounting, budgeting and tax filing matters.
Cost settlement andgrossprofit analysis.
Management
Department		 Administrative
Office
Personnel
Department		 1.General affairs management, property management.
2.Public relations, labor relations, and factory environmental safety.
3.Inquiry, price comparison, negotiation, ordering, contract signing,
etc. for equipment procurement.
1.Personnel information filing, performance assessment, and salary
arrangement.
2.Labor insurance,employeewelfare,etc.
Business
Department		 Import-Export
Office
International
BusinessOffice		 1.Product sales, market development, and market intelligence
collection.
2.Customer due diligence, payment collection and processing.
3.Shipment coordination andproduction schedules.
Production
Department		 Every plant
－Manufacturing
Department
－Plant
Maintenance
Department
－Production
Management
Department
－Biotechnoloy
Department
－Materials
Department		 1.Manufacture, control and processing of various products.
2.Planning and execution of maintenance of machinery, tools,
measuring tools and
other equipment in the factory.
Administrative affairs such as personnel, general affairs,
warehouse management and accounting of each factory.
1.Factory output, production capacity planning and management,
production budget preparation and control.
2.Execution of production planning and control.
3.Production process planning and improvement planning.
4.Storage management and delivery of finished products.
5.Shipping schedule arrangement.
1.Production technology and equipment maintenance.
2.Industrial engineering management, planning, execution and
supervision.
1.Raw materials and materials storage management and delivery
matters.
2.Raw material safety stock control.
3.After-sales service parts and sample parts export packaging.
4.Warehouse inventoryand storage status audit.
Material
Department		 1.Due diligence of suppliers.
2.The supply and demand survey of raw materials and materials,
price trend analysis.
3.Preparation and implementation of annual procurement plan.
4.Purchasing, ordering, and signing contracts, etc. of raw materials,
materials, etc.
5.Responsible for the requests of raw material requisition and the
control of deliverytime.

8

Major departments and
function heads		 Major departments and
function heads		 The function of major departments
Research &
Development
Department		 1.Research and development of new products and mold design.
2.Product
BOM
construction
and
product
technical
data
management.
3.Technology development and management of standard product
design
4.Various computer graphics.
5.The improvement of research, production, technology, quality and
the reduction of cost.
Quality
Assurance
Department		 －Quality Control
Department		 1.ISO management and supervision.
2.Implementation and testing of safety requirements and reliability.
3.Judgment and handling of customer complaints.
4.Instrument testing, calibration and maintenance.
5.Publishing, revision and control of various documents.
6.Revision of Quality Recording Procedures.
1.Quality inspection of incoming materials, outsourced products,
purchase items and finished products.
2.Drafting and implementation of inspection standards and product
standards.
3.Planning and implementation of quality control education and
training.
4.Handling and tracking of abnormal responses to manufacturing
quality,analysis and reportingof the cause ofpoorquality.

9

II. Directors, Supervisors, Presidents, Vice Presidents, Assistant Managers and Management Teams

(I)Directors and Supervisors

1.Profile of directors

23 April 2024 23 April 2024 23 April 2024 23 April 2024
Title Natio
y or p
of
registr
n		 n
l

Name		 Gender
Age		 Date
of
offic
e		 Tenur
e		 Date of
the first
term of
office		 Quantity of shares
held at the time of
elected to office		 Quantity of shares
currently held		 Shares held by
spouse and underage
children		 Shares held
in the name
of a third
party		 Major work
experience
(education)		 Concurrent
positions with
the Company
and other
companies		 Concurrent positions with the
Company and other companies		 Remark
Quantity of
shares		 Propo
rtion
of
shareh
olding		 Quantity of
shares		 Propo
rtion
of
shareh
olding		 Quantity of
shares		 Propo
rtion
of
shareh
olding		 Quan
tity
of
share
s		 Propo
rtion
of
shareh
olding		 Title Name Relation
Chairm
an		 R.O.
C		 CHAN
G,
CHIN-
CHIN		 M
68		 27
June
2022		 3
years		 April
1989		 18,080,201 22.94 18,080,201 22.94 11,549,766 14.66 - - Master's degree,
International Business,
National Taiwan
University.
Chung Yuan Christian
University		 President of the
Company		 Director CHANG,
HSIANG-I		 Father &
daughter		 The reason
why the
Chairman
and the
President
are the
same
person:
Efficiency
and
decision-
making
Director R.O.
C		 CHAN
G,
HSIAN
G-I		 F
43		 27
June
2022		 3
years		 27 June
2022		 7,172,569 9.10 7,090,569 9.00 - - - - Marketing, Indiana
University, USA		 Business
president of the
Company		 Chairman CHANG,
CHIN-
CHIN		 Father &
daughter
Director R.O.
C		 LUO,S
HU-
DUAN		 F
60		 27
June
2022		 3
years		 15 June
2007		 22,400 0.03 22,400 0.03 - - - - National Taichung
University of Science
and Technology
Supervisor, Chang
Type Industrial CO.,
Ltd.		 - - - -
Indepen
dent
Director		 R.O.
C		 CHEN,
YONG
-YAO		 M64 27
June
2022		 3
years		 28 June
2019		 - - - - - - - - Ph.D., University of
California, Berkeley,
Computer and
Electrical Engineering
Department.		 Professor of
Electrical
Engineering
Department,
National Taiwan		 - - -

10

Electrical Engineering
Department, Associate
Professor, Professor
and Vice Dean of
Electrical Engineering
Department, National
Taiwan University.		 University.
Indepen
dent
Director		 R.O.
C		 LIN,
HSIU-
MEI		 F
71		 27
June
2022		 3
years		 15 June
2001		 1,225 0.00 1,225 0.00 - - - - Taichung Home
Economics and
Commercial High
School
ELECTRO
SCIENTIFIC
INDUSTRIES, INC.
TAIWAN BRANCH
(U.S.A.)		 President,
Fubon Life		 - - -
Indepen
dent
Director		 R.O.
C		 KO,
CHEN-
EN		 M
72		 27
June
2022		 3
years		 27 June
2022		 - - - - - - - - Ph.D., Accounting,
University of
Minnesota		 Professor
Emeritus,
National Taiwan
University
Chairman,
Taiwan
Corporate
Governance
Association		 - - -
Indepen
dent
Director		 R.O.
C		 WANG
,
MING-
JHIH		 M
56		 27
June
2022		 3
years		 27 June
2022		 - - - - - - - - Master, EMBA,
Department of Finance,
National Chung Hsing
University
Director, China
Investment Securities
(Hong Kong)
Vice president, Yuanta
Asset Management
Sales Manager, Yuanta
Securities		 - - - -

11

23 April 2024

  1. Dominant shareholders of institutional shareholders
23 April 2024
Name of institutional shareholder Dominant shareholders of institutional shareholders
None None

  • 3.The diversity, independence, and objectives of the Board:

  • (1) The composition of the Company’s board of directors is formulated not only based on the operational and developmental needs of the company but also in accordance with corporate governance best practices. The Company has established a policy for board member diversity, considering factors such as gender, age, professional background, and industry experience. The current board consists of seven members, each equipped with expertise and professional experience from various fields including finance, accounting, electrical and mechanical engineering, and business management. They possess industry knowledge, international market insights, and the capability to execute their duties as directors effectively. Among the board members, there is one director aged between 45 and 55, three directors aged between 56 and 65, and three directors aged 66 or above, ensuring a diverse representation across different age groups and providing constructive input to the management team.

  • (2) The current board composition includes at least one female director, with no more than one-third of the board seats held by directors who also serve as company executives. Additionally, there are no more than two directors who have a spouse or a second-degree relative relationship within the board. At least two directors serve as independent directors, with each serving for a maximum of three consecutive terms. In this term, there is one female director and four independent directors, exceeding half of the board seats. Only two directors hold executive positions, and there is one pair of directors with a spouse or seconddegree relative relationship. Furthermore, all three independent directors have served for fewer than three consecutive terms. These arrangements fulfill the objectives of board diversity and ensure the implementation of independence and diversity principles .

12

  1. Professional qualifications and independence of the Directors

23 April 2024

Condition
Name		 Whether one equipped with more than five
years of work experience and the following
professionalqualifications		 Whether one equipped with more than five
years of work experience and the following
professionalqualifications		 Whether one equipped with more than five
years of work experience and the following
professionalqualifications		 Independent Status（Note） Independent Status（Note） Independent Status（Note） Independent Status（Note） Independent Status（Note） Independent Status（Note） Number of
independent
directors of
other public
companies
Public and
private colleges
and universities
lecturers and
above of
business, legal
affairs, finance,
accounting or
corporate
business		 Judges,
prosecutors,
lawyers,
accountants or
other professional
and technical
personnel who
have passed the
national
examinations
required for the
company's
business and have
obtained
certificates.		 Work
experienc
e required
for
business,
legal,
finance,
accountin
g or
corporate
business		 1 2 3 4 5 6 7 8 9 10 11 12
CHANG,
CHIN-
CHIN		 --- --- Yes - - - - - - - N/A
CHANG,
HSIANG-
I		 --- --- Yes - - - - N/A
LUO,
SHU-
DUAN		 --- --- Yes N/A
LIN,
HSIU-ME		 --- --- Yes N/A
CHEN,
YONG-
YAO		 Yes --- Yes N/A
KO,
CHEN-
EN		 Yes --- Yes 2
WANG,
MING-
JHIH		 --- --- Yes N/A

Note ： The Directors who meet the following conditions two years before their election and during their term of office, please fill in "" in the space below each condition code

  • (1) Not an employee of the company or its affiliates.

  • (2) Not a director or supervisor of the Company or its affiliated companies (except if the company and its parent company, subsidiaries or subsidiaries of the same parent company have the same independent directors established in accordance with this Act or the laws of the local country, where the restriction does not apply).

  • (3) Individual shareholders who themselves and their spouses, minor children or on behalf of other natural person shareholders do not hold more than 1% of the company's total issued shares or hold the top ten number of shares.

  • (4) Not the spouses, relatives within the second degree of kinship or lineal blood relatives within the third degree of kinship of the managers listed in (1) or the people listed in (2) and (3).

  • (5) Directors, supervisors, or employees of corporate shareholders who do not directly hold more than 5% of the Company's total issued shares, whose ownership are not among the top five shareholdings, or who are not designate a representative to serve as a director or supervisor of the company in accordance with paragraph 1 or 2, Article 27 of the Company Act. (except for independent directors of the company and its parent company, subsidiary or subsidiary of the same parent company who serve concurrently as independent directors of the other in accordance with the Act or the laws of the local country, the restriction does not apply).

13

  • (6) Directors, supervisors or employees of other companies whose seats are not the same as the company's directors or more than half of the shares with voting rights are controlled by the same person (except for independent directors of the company and its parent company, subsidiary or subsidiary of the same parent company who serve concurrently as independent directors of the other in accordance with the Act or the laws of the local country, the restriction does not apply).

  • (7) Director (council), supervisor (supervisor) or employee of another company or institution is not the same person or spouse as the chairman, president or equivalent position of the company (However, if the independent directors of the company and its parent company, subsidiaries or subsidiaries of the same parent company are established in accordance with this Act or the laws of the local country, the restriction does not apply).

  • (8) Not a director (council), supervisor, manager or shareholder holding more than 5% of the shares of a specific company or organization with which the company has financial or business dealings. (The restriction does not apply if a specific company or institution holds more than 20% of the total issued shares of the company, but not more than 50% and its parent company, and the independent directors of the company and its parent company, subsidiary or subsidiaries of the same parent company who serve concurrently as independent directors of the other are established in accordance with the Act or the laws of the local country.)

  • (9) Not a professional, sole proprietorship, partnership, company or institution business owners who are not professionals who provide audits for companies or affiliated companies or whose accumulated remuneration in the last two years does not exceed NT$500,000 in business, legal, financial, accounting and other related services, partners, directors (council), supervisors (supervisors), managers and their spouses. However, this does not apply to the members of the Remuneration Committee, the Public Takeover Review Committee or the Special Committee on Mergers and Acquisitions who perform their functions in accordance with the Securities and Exchange Act or the Mergers and Acquisitions Act.

  • (10) Does not have a spouse or family relationship within the second degree of kinship with other directors.

  • (11) There are no circumstances of Article 30 of the Company Act.

  • (12) No circumstances under Article 27 of the Companies Act, for which the government, legal person or its representative is eleted.

(II) Information on the President, Vice President, Assistant Managers or division

23 April 2024 23 April 2024 23 April 2024 23 April 2024
Title Nationality Name Gender Date of Office Shareholding Shareholding ratio of
spouse and underage
children		 Shares
held in the
name of a
third party		 Major work
experience
(education)		 Concur
rent
positio
ns in
other
compan
ies.		 The spouse or
consanguineous within two
degrees		 Remark
Number of
shares		 Sharehol
ding
ratio		 Number of
shares		 Shareh
olding
ratio		 Nu
mbe
r of
shar
es		 Share
holdi
ng
ratio		 Title Name Relation
President R.O.C CHAN
G,
CHIN-
CHIN		 M April
1989		 18,080,201 22.94 11,549,766 14.66 - - Master’s degree,
International
Business,
National Taiwan
University.
Chung Yuan
Christian
University		 - Vice
President		 LIU,
HSIU-
YUEH		 Spouse Note1
Executive
Vice
President		 R.O.C LIU,
HSIU-
YUEH		 F April
1989		 11,549,766 14.66 18,080,201 22.94 - - Feng Yuan
Commercial High
School		 - Chairmen
and
President		 CHAN
G,
CHIN-
CHIN		 Spouse
Supervisor
of
Manufactur
ing		 R.O.C LI, YI-
ZE		 M April
2021		 - - - - - - Institute of
Industrial
Engineering,
National Chin-Yi		 - - - -

14

Title Nationality Name Gender Date of Office Shareholding Shareholding Shareholding ratio of
spouse and underage
children		 Shareholding ratio of
spouse and underage
children		 Shares
held in the
name of a
third party		 Shares
held in the
name of a
third party		 Major work
experience
(education)		 Concur
rent
positio
ns in
other
compan
ies.		 The spouse or
consanguineous within two
degrees		 The spouse or
consanguineous within two
degrees		 The spouse or
consanguineous within two
degrees		 Remark
Number of
shares		 Sharehol
ding
ratio		 Number of
shares		 Shareh
olding
ratio		 Nu
mbe
r of
shar
es		 Share
holdi
ng
ratio		 Title Name Relation
Department University of
Technology
Vice President,
Quality Assurance,
Chang Type
Industrial CO.,
Ltd.
President of
Business
Department		 R.O.C CHAN
G,
HSIAN
G-I		 F April
2010		 7,090,569 9.00 - - - - Marketing,
Indiana University		 - Chairman
and
President		 CHAN
G,
CHIN-
CHIN		 Father &
daughter
President of
Finance
department		 R.O.C CHAN
G,
CHIN-
HUA		 M Janua
ry
2002		 14,819 0.02 - - - - Chung Yuan
Christian
University
Deloitte
Accounting firms.		 - - - -
Vice
President of
Material
Department		 R.O.C LIN,
HAO-
LIANG		 M Septe
mber
2021		 - - - - - - Department of
Civil Engineering,
R.O.C. Military
Academy
Glory Wheel
Enterprise CO.,
Ltd.		 - - - -

Note 1: Reasons, necessity, rationality and countermeasures for the chairman and president to be the same person: It can improve the efficiency of decision-making; in addition, five (more than half) of the seven directors of the company are not concurrently managers or employees of the company.

15

III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
(I) Remuneration of directors (including independent directors)		 Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD
Title Name Remuneration to Directors The sum of A,
B, C and D in
proportion to net
income		 Related payment in performing the duties as employees The sum of A, B, C,
D, E, F and G in
proportion to net
income		 Any
payment
from
direct
investee
companie
s other
than the
subsidiari
es or the
parent
company
Remuneration
(A)		 Pension and
severance
payment (B)		 Remuneration to
Directors(C)		 Professional
allowances (D)		 Salaries, bonus and
special expense
account(E)		 Pension and
severance
payment(F)		 Remuneration to employees
(G)
The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
compani
es
included
in the
financial
statemen
ts		 The Company All
compa
nies
includ
ed in
the
financi
al
statem
ents		 The Company All
compa
nies
include
d in the
financi
al
stateme
nts		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companies
included in
the financial
statements		 The Company All
companie
s
included
in the
financial
statement
s
Amo
unt
of
cash		 Amo
unt
of
stock		 Amo
unt
of
cash		 Amo
unt
of
stock
Chairman CHANG,
CHIN-
CHIN		 - - - - 2,000 2,000 356 356 2.04% 2.04% 2,762 2,762 - - 400 - 400 - 4.79% 4.79% None
Director CHANG,
HSIANG-I		 - - - - 1,099 1,099 25 25 0.98% 0.98% 1,335 1,335 - - 200 - 200 - 2.31% 2.31% None
Director LUO,
SHU-
DUAN		 - - - - 200 200 25 25 0.20% 0.20% - - - - - - - - 0.20% 0.20% None
Independent
Director		 CHEN,
YONG-
YAO		 - 1,200 - - 60 60 1.09% 1.09% - - - - - - - - 1.09% 1.09% None
16

III. Remuneration to the Directors, Supervisors, Presidents and Vice Presidents in the previous period
Title Name Remuneration to Directors The sum of A,
B, C and D in
proportion to net
income		 Related payment in performing the duties as employees The sum of A, B, C,
D, E, F and G in
proportion to net
income		 Any
payment
from
direct
investee
companie
s other
than the
subsidiari
es or the
parent
company
Remuneration
(A)		 Pension and
severance
payment (B)		 Remuneration to
Directors(C)		 Professional
allowances (D)		 Salaries, bonus and
special expense
account(E)		 Pension and
severance
payment(F)		 Remuneration to employees
(G)
The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
compani
es
included
in the
financial
statemen
ts		 The Company All
compa
nies
includ
ed in
the
financi
al
statem
ents		 The Company All
compa
nies
include
d in the
financi
al
stateme
nts		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companie
s
included
in the
financial
statement
s		 The Company All
companies
included in
the financial
statements		 The Company All
companie
s
included
in the
financial
statement
s
Amo
unt
of
cash		 Amo
unt
of
stock		 Amo
unt
of
cash		 Amo
unt
of
stock
Independent
Director		 LIN, HSIU-
MEI		 - 20 - - 55 55 0.22% 0.22% - - - - - - - - 0.22% 0.22% None
Independent
Director		 KO,
CHEN-EN		 - 1,200 - - 30 30 1.06% 1.06% - - - - - - - - 1.06% 1.06% None
Independent
Director		 WANG,
MING-
JHIH		 - 20 - - 45 45 0.21% 0.21% 0.21% 0.21% None
1. Please specify the independent director remuneration policy, system, standard and structure, and the association between the duties performed, the risk, the commitment of time and related factors and the amount of remuneration payment: When
independent directors perform their duties in the Company, regardless of the company's operating profit or loss, the Company shall pay annual remuneration to the directors pursuant to the method specified in the appointment contract entered
into. The remuneration may be adjusted by the remuneration committee based on the degree of participation in the Company's operations and the value of their contribution.
2 Further to the disclosure in the above table,the remuneration to the directors from all companies included in the financial statements for the service rendered(such as consultant,which is not in the capacityas an employee): None.
17

(II) Remuneration to presidents and vice presidents:

Title Name Salaries (A) Salaries (A) Pension and severance
payment (B)		 Pension and severance
payment (B)		 Bonus and special
expense account (C)		 Bonus and special
expense account (C)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 The sum of A, B, C and D
in proportion to net income
（％）		 The sum of A, B, C and D
in proportion to net income
（％）		 Any Remuneration
from direct investee
companies other than
the subsidiaries or the
parent company.
The Company All
companies
included in
the financial
statements		 The Company All companies
included in the
financial
statements		 The Company All
companies
included in
the financial
statements		 The Company All companies included
in the financial
statements		 The
Company		 All companies
included in
the financial
statements
Amount
of Cash		 Amount
of stock		 Amount of
Cash		 Amount of
stock
President CHANG
, CHIN-
CHIN		 2,456 2,456 - - 235 235 400 - 400 - 2.68% 2.68% None
Vice
President		 LIU,
HSIU-
YUEH		 1,964 1,964 - - 188 188 200 - 200 - 2.00% 2.00% None

18

Unit: In thousands of NTD

(III) Individual disclosure of the compensation of the top five highest paid executives

Title Name Salaries (A) Salaries (A) Pension and severance
payments (B)		 Pension and severance
payments (B)		 Bonus and special
expense account
(C)		 Bonus and special
expense account
(C)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 Amount of remuneration to employees
(D)		 The sum of A, B, C and D
in proportion to net income
(%)		 The sum of A, B, C and D
in proportion to net income
(%)		 Any Remuneration
from direct investee
companies other than
the subsidiaries or the
parent company
The Company All
companies
included in
the
financial
statements		 The Company All
companies
included in
the financial
statements		 The Company All companies
included in the
financial
statements		 The Company All companies included
in the financial
statements		 The
Company		 All companies
included in the
financial
statements
Amount
of Cash		 Amount
of stock		 Amount of
Cash		 Amount
of stock
President CHANG,
CHIN-
CHIN		 2,456 2,456 - - 235 235 400 - 400 - 2.68% 2.68% None
Vice
President		 LIU, HSIU-
YUEH		 1,964 1,964 - - 188 188 200 - 200 - 2.00% 2.00% None
Finance
President		 CHANG,
CHIN-
HUA		 1,167 1,167 - - 121 121 200 - 200 - 1.29% 1.29% None
Business
President		 CHANG,
HSIANG-I		 1,200 1,200 - - 71 71 200 - 200 - 1.28% 1.28% None

19

(IV) Names of managerial officers who received employees’ bonuses in the preceding year and the distribution

23 April 2024 Unit: In thousands of NTD 23 April 2024 Unit: In thousands of NTD 23 April 2024 Unit: In thousands of NTD
Title Name Stock Cash Total Raito of total
amount to net
income(%)
Manager President CHANG,
CHIN-CHIN		 - 1,000 1,000 0.87%
Vice
President		 LIU, HSIU-
YUEH
Finance
Manager		 CHANG,
CHIN-HUA
Business
Manager		 CHANG,
HSIANG-I
  • (V) The analysis of the ratio of the remuneration to net income paid to directors, supervisors, president and vice presidents by the Company and all companies in the consolidated financial statements in the last two fiscal years, the policy and standard of paying remuneration, the procedure of combining and determining remuneration, and the relationship between business performance and future risk.
Year
Title		 2022 2023 Statement
The
Company		 Companies in the
financial report		 The
Company		 Companies in the
financial report
Director 6.18% 6.18% 9.88% 9.88% Note1
President and Vice
President		 2.48% 2.48% 4.68% 4.68% Note2

Note 1: Remuneration paid by the company to directors and supervisors for the last two years

  • (1) Remuneration policy, standard and combination

The company's decision to pay directors' remuneration is based on the company's Articles of Incorporation. The remuneration committee submits a report. After the resolution of the board of directors is passed, the proposal will be submitted to the general meeting of shareholders in accordance with the law.

  • (2) Procedure for deciding remuneration

The company's director's remuneration is based on the company's Articles of Incorporation. If the company makes profit during the year, the amount shall first make up for the accumulated loss, then no more than 5.0% may be allocated as the director's remuneration. The distribution method will be proposed by the Remuneration Committee. and submitted to the board meeting for approval and shall be reported to the shareholders' meeting.

  • (3) Correlation with operating performance and future risks

The directors' remuneration of the company is regulated by the company's Articles of Incorporation, and the non-fixed part is paid according to the company's annual profit, so it is related to the company's operating performance. In addition, the remuneration committee also regularly evaluates and reviews the remuneration of the board of directors, and reports the related results to the board of directors for discussion to confirm that it is in balance with the company's sustainable operating results.

~~20~~

Note2: Remuneration paid by the company to presidents and vice presidents for the last two years

  • (1) Remuneration policy, standard and combination

The remuneration paid by the company to managers is mainly divided into fixed salary and variable bonus. Fixed salary is the monthly salary agreed with the employee every year, and the variable bonus is the remuneration for achieving the target performance. Fixed salary refers to the salary and remuneration related to work performance determined by the company based on factors such as colleagues' job duties, the overall environment of the industry and market standards. The change of bonus is based on the performance and contribution of the current year. After being submitted by the Remuneration Committee and approved by the Board of Directors, it will be handled in accordance with the company's annual bonus payment announcement. The variable bonus is based on the performance and contribution of the current year, and is submitted by the Remuneration Committee to the Board of Directors for approval, and then handled in accordance with the company's annual bonus payment announcement.

  • (2) Procedure for deciding remuneration

  • Employee remuneration is handled in accordance with the company's articles of association. If the company has a profit in the year, after reserving the amount in advance to cover accumulated losses. In addition, no less than 1.0% shall be allocated as employee compensation. The actual amount of employee compensation will be reported by the Remuneration Committee and approved by the Board of Directors. The actual amount of employee compensation will be reported by the Remuneration Committee and approved by the Board of Directors, then handled in accordance with the announcement of the company's annual bonus distribution.

  • (3) Correlation between business performance and future risks

Employee remuneration is handled in accordance with laws and regulations and the operating results of the current year, and its payment standards, structure and system will also be reviewed and adjusted in a timely manner based on actual operating conditions and changes in relevant laws and regulations. The Company's Remuneration Committee also regularly evaluates the current status of managers' remuneration and provides recommendations for the Board's reference and discussion. To confirm the reasonableness of the overall compensation.

~~21~~

IV. Implementation of Corporate Governance

(1) Operations of the Board of Directors

  1. The Board of the Company convened for 8 times (A) in 2023 and 2024.The attendance of the Directors is specified below:
Title Name Actual frequency
attendance(B)		 Frequency of
attendance by proxy		 Actual attendance
rate(%) (B/A)		 Remark
Chairman CHANG,
CHIN-CHIN		 8 - 100 -
Director CHANG,
HSIANG-I		 7 1 87.5 -
Director LUO, SHU-
DUAN		 8 - 100 -
Independent
Director		 KO, CHEN-
EN		 8 - 100 -
Independent
Director		 CHEN,
YONG-
YAO		 8 - 100 -
Independent
Director		 LIN, HSIU-
MEI		 8 - 100 -
Independent
Director		 WANG,
MING-JHIH		 8 - 100 -
Additional information:
I.
If any of the following applies to the Board in session, specify the date, the session of the meeting, the
content of the motions, the opinions of all Independent Directors, and the response of the Company to the
opinions of the Independent Directors:
(I) Particulars inscribed in Article 14-3 of the Securities and Exchange Act: None.
(II) Further to the aforementioned issues, any other adverse opinions or qualified opinions from the
Independent Directors on record or in the written declaration on the resolutions of the Board: None.
II.
The recusal of the Directors from motions involving a conflict of interest. Specify the names of the
Directors, the content of the motions, the reasons for recusal and the participating in voting: None.
III.
Information on the cycle and duration for the Board of Directors in self-evaluation (peer evaluation), the
scope, means and content of assessment:
1. Evaluation cycle: Once annually
2. Duration of evaluation: 1 January 2023 - 31 December 2023
3. Means of evaluation: Self-Assessment of the members of the Board
Scope of
evaluation
Content of evaluation
Result of evaluation
Overall board
1. Level of participation in the
company's operations
2. Improve the decision-making
quality of the board of directors
3. Composition and structure of the
Board of Directors
4. Election of directors and
continuing education
5. Internal control
Overall grade of 4.4.
The assessment result is excellent.
The overall operation of the Board of
Directors is satisfactory and complies
with the spirit of corporate governance.
Individual
board
members
1. Mastery of company goals and
tasks
2. Awareness of the director’s duties
3. Level of participation in the
company's operations
4. Cultivation of internal relations
and communication,
5. Professional designation and
continuing education of Directors
Overall grade of 4.7.
The assessment result is excellent.
The directors give positive comments on
the efficiency and effectiveness of the
operation of each assessment indicator.

~~22~~

IV.
6. Internal control
Remuneration
Committee		 1. Level of participation in the
company's operations
2. Awareness of the duties of the
remuneration committee
3. Improve the decision-making
quality of the remuneration
committee
4.Composition and selection of
members of the remuneration
committee		 Overall grade of 4.6
The assessment result is excellent.
It shows that the Audit Committee has
positive comments on the efficiency and
effectiveness of the operation of each
assessment indicator.
Audit
Committee		 1. Level of participation in the
company's operations
2. Awareness of the duties of the
audit committee
3. Improve the decision-making
quality of the audit committee
4. Composition and selection of
members of the audit committee		 Overall grade of 4.5.
The assessment result is excellent
It shows that the Audit Committee has
positive comments on the efficiency and
effectiveness of the operation of each
assessment indicator.

(II) Information on the operation of the Audit Committee or the involvement of the Supervisors in the operation of the Board:

  1. Information on the operation of the Audit Committee:
(1) As of 2023 and as of the date of the publication of the Annual Report in 2024, the Audit Committee
convened for 8 times (A). The attendance of the Audit Committee is specified below:
Title
Name
Actual frequency of
attendance(B)
Actual attendance rate
(%) (B/A)
Remark
Convener
WANG,MING-JHIH
8
100%
Member
CHEN,YONG-YAO
8
100%
Member
LIN,HSIU-MEI
8
100%
Member
KO,CHEN-EN
8
100%		 As of 2023 and as of the date of the publication of the Annual Report in 2024, the Audit Committee
convened for 8 times (A). The attendance of the Audit Committee is specified below:
Title
Name
Actual frequency of
attendance(B)
Actual attendance rate
(%) (B/A)
Remark
Convener
WANG,MING-JHIH
8
100%
Member
CHEN,YONG-YAO
8
100%
Member
LIN,HSIU-MEI
8
100%
Member
KO,CHEN-EN
8
100%		 As of 2023 and as of the date of the publication of the Annual Report in 2024, the Audit Committee
convened for 8 times (A). The attendance of the Audit Committee is specified below:
Title
Name
Actual frequency of
attendance(B)
Actual attendance rate
(%) (B/A)
Remark
Convener
WANG,MING-JHIH
8
100%
Member
CHEN,YONG-YAO
8
100%
Member
LIN,HSIU-MEI
8
100%
Member
KO,CHEN-EN
8
100%		 As of 2023 and as of the date of the publication of the Annual Report in 2024, the Audit Committee
convened for 8 times (A). The attendance of the Audit Committee is specified below:
Title
Name
Actual frequency of
attendance(B)
Actual attendance rate
(%) (B/A)
Remark
Convener
WANG,MING-JHIH
8
100%
Member
CHEN,YONG-YAO
8
100%
Member
LIN,HSIU-MEI
8
100%
Member
KO,CHEN-EN
8
100%		 As of 2023 and as of the date of the publication of the Annual Report in 2024, the Audit Committee
convened for 8 times (A). The attendance of the Audit Committee is specified below:
Title
Name
Actual frequency of
attendance(B)
Actual attendance rate
(%) (B/A)
Remark
Convener
WANG,MING-JHIH
8
100%
Member
CHEN,YONG-YAO
8
100%
Member
LIN,HSIU-MEI
8
100%
Member
KO,CHEN-EN
8
100%
Name Actual frequency of
attendance(B)		 Actual attendance rate
(%) (B/A)		 Remark
WANG,MING-JHIH 8 100%
CHEN,YONG-YAO 8 100%
LIN,HSIU-MEI 8 100%
KO,CHEN-EN 8 100%
  • (2) Particulars inscribed in Article 14-5 of the Securities and Exchange Act:
Date Proposal Suggestions and results
17 January
2023		 1. Recognition of past due accounts receivables
from subsidiaries not being classified as loaning
of funds case.
2. Amendment to Part of the Articles of this
Company’s “Regulations Governing Operational
Procedure of Loaning of Funds to Others”		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.

~~23~~

Date Proposal Suggestions and results
13 March 2023 1. 2022 Business Report and Financial Statements
2. 2022 Earnings Distribution Case
3. Self-assessment report of internal control system
for 2022 and statement of internal control system
4. Evaluation of the independence and suitability of
the Company’s CPA for 2023
5. Appointment of the Corporate Governance
Supervisor of the Company		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.
8 May 2023 1. Financial Statements for the Q1 of 2023.
2. The Company intends to lease the land use rights
in Taichung's Tanzi district from Taiwan Sugar
Corporation, a non-related party
3.Recognition of past due accounts receivables from
subsidiaries not being classified as loaning of
funds case
4. Amendment to part of the Articles of this
Company’s “Regulations Governing the
Procedure of Acquisition and Disposal of Assets”		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.
3 August 2023 1. Financial Statements for the Q2 of 2023
2. Recognition of past due accounts receivables as
of June from subsidiaries not being classified as
loaning of funds case
3. Amendment to the evaluation criteria within the
Appendix “Significant Information Evaluation
Checklist “ of the Company’s “Procedures for
Handling Material Inside Information”		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.
2 November
2023		 1. Financial Statements for the first three quarters of
2023
2. Establishment of the audit plan for 2024.
3. Recognition of past due accounts receivables as
of September from subsidiaries not being
classified as loaning of funds case
4.Amendment to part of the Articles of the
Company’s “Corporate Social Responsibility
Best Practices Guidelines”
5. Amendments to the Company’s appointment and
related procedures of the information security
supervisor
6. Amendments to the Company’s “Rules of
Procedure for Board of Directors Meetings”		 Approved by all members of the
Audit Committee present, and
submitted
to
the
Board
of
Directors for resolution.
17 January
2024		 1. Recognition of past due accounts receivables as of
September from subsidiaries not being classified
as loaning of funds case		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.
11 March 2024 1.2023 Business Report and Financial Statements
2. 2023 Earnings Distribution Case
3. Self-assessment report of internal control system
for 2023 and statement of internal control system
4. Evaluation of the independence and suitability of
the Company’s CPA for 2024
5.Loaning of funds to the Company’s subsidiaries.
6. List of non-assurance services anticipated to be
provided by Ernst & Young Taiwan and its
affiliated entities in 2024		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.

~~24~~

Date Proposal Suggestions and results
3 May 2024 1. Financial Statements for the Q1 of 2024
2. Recognition of past due accounts receivables as of
March 2024 from subsidiaries not being classified
as loaning of funds case		 Approved by all members of the
Audit Committee present, and
submitted to the Board of
Directors for resolution.

  1. The recusal of an independent director from the conflict of interest, the name of the independent director, the content of the motion, the reason for the recusal and the participation in the vote should be specified: None.

  2. Communication between the independent directors and the head of the internal audit and the CPAs (which should include the material matters, manner and results of communication regarding the financial and business position of the company):

  3. (1) Communication with the head of the internal audit: The head of audit submits audit reports quarterly to report on audit results and business performance.

  4. (2) Communication with the CPAs:

The Company's CPAs regularly report to the independent directors in advance of the first and third quarterly board meetings each year on matters relating to the audit (or review) of the current year's financial statements and other communications required by the relevant laws and regulations, and in the event of special circumstances.

Date Communication Highlights Remark
14 March
2023		 1. Auditor's Responsibility for Financial
Reporting / Independence / Audit scope
and approach/Audit findings
2. Important updates on Accounting Standards
or Interpretation Letters, Securities Act and
Taxation Act		 Having been asked by the
Independent Directors about the
contents and relevant details of
the Report and having been
answered and explained by the
CPAs, the Independent Directors
have no other comments or
recommendations
1 November
2023		 1. Auditor's Responsibility for Financial
Reporting / Independence / Audit scope
and approach/Audit findings
2. Important updates on Accounting Standards
or Interpretation Letters, Securities Act and
Taxation Act		 Having been asked by the
Independent Directors about the
contents and relevant details of
the Report and having been
answered and explained by the
CPAs, the Independent Directors
have no other comments or
recommendations
  • (3) Summary of the communication between the Independent Directors and the Head of Internal Audit is as follows:
is as follows:
Date Communication Highlights Suggestions and Findings
13 March
2023		 1. 2022 Q4 Audit Plan Implementation
2. Discussion on assessment of effectiveness
of the 2022 Annual Internal Control System
and theStatement of InternalControl		 Noted with no objection
8 May
2023		 2023 Q1 Audit Plan Implementation Report Noted with no objection

~~25~~

Date Communication Highlights Suggestions and Findings
3 August
2023		 2023 Q2 Audit Plan Implementation Report Noted with no objection
2 November
2023		 2023 Q3 Audit Plan Implementation Report Noted with no objection
11 March
2024		 1. 2023 Q4 Audit Plan Implementation
Report
2. Discussion on assessment of effectiveness
of the 2023 Internal Control System and
Statement of InternalControl		 Noted with no objection

(III) Pursuit of corporate governance varied with the Corporate Governance Best Practice Principles for TWSE Listed and TPEx Listed Companies, and the reason for the variation

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
I. Has the Company established
and disclosed its Corporate
Governance Best Practice
Principles in accordance with
the “Corporate Governance
Best Practice Principles for
TWSE Listed and TPEx
Listed Companies”?		 The Company has established its Corporate
Governance Best Practice Principles in accordance
with the “Corporate Governance Best Practice
Principles for TWSE Listed and TPEx Listed
Companies” and disclosed at MPOS		 Consistent.
II. Equity structure and
shareholder equity of the
Company
(I) Has the Company
established the internal
operation procedures for
responding to the suggestion,
queries, disputes and
lawsuits of the shareholders,
and implemented based the
procedures?		 (I) The Company has established a system of
spokesperson and an acting spokesperson to deal
with relevant matters as required.		 (I)Consistent
.

~~26~~

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
(II) Has the Company kept a list
of the dominant
shareholders actually
controlling the Company
and the list of ultimate
controlling parties of these
dominant shareholders?
(III) Is there any control and
firewall mechanisms
established between the
Company and its affiliates
with proper execution?
(IV) Has the Company
instituted related internal
rules and regulations for
prohibiting the use of
undisclosed information in
the market by insiders for
trading securities?

(II) The Company has maintained a good relationship
with its major shareholders and discloses the
ultimate control list of its major shareholders and
substantial shareholders on a regular basis in
accordance with the law.
(III) The Company has established controls in the
Company's internal control system and related
management practices in accordance with the law.
(IV) The Company has established "Procedures for
Handling Material Internal Information" to
prohibit insiders from obtaining wrongful benefits
from their positions in the Company.		 (II)
Consistent.
(III)
Consistent.
(IV)
Consistent.
III. The organization and function
of the Board
(I) Has the Board established
the policy of diversity, the
substantive management
objective, and the
attainment?		 (I) The 12th Board of Directors of the Company consists
of 7 Directors, comprising 2 Executive Directors, 4
Independent Directors and 1 Non-Executive
Director. The members have extensive experience
and expertise in the fields of finance, business and
management, with diverse backgrounds. The
Company also places emphasis on gender equality
in the composition of the Board which currently
consists of seven directors, including three female
directors.		 (I)Consistent
.

~~27~~

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
(II)The Company has
established the
Remuneration Committee
and Auditing Committee as
required by law. Will the
Company establish other
functional committees on a
voluntary basis?
(III)Has the Company
established the regulations
governing the evaluation of
Board performance and the
method of evaluation, and
conduct annual evaluation at
regular intervals, report the
result of evaluation to the
Board, and taken as the
reference for the
remuneration to individual
Directors and the nomination
for another term of office?
(II) The Company have established the Remuneration
Committee and Audit Committee. Other types of
functional committee will be assessed whether it is
necessary in the future.
(III) The method of assessing the performance of the
Board and how it is assessed:
1. On 7 May 2020, the Company's Board of Directors
approved the "Board Performance Evaluation
Method", which requires the implementation of an
internal board performance evaluation at least once
a year.
2. The evaluation was conducted by means of an internal
questionnaire, and was based on two components:
"Board Operations" and "Directors' Participation",
with the directors assessing the Board's operations and
the directors assessing their own participation. The
results of the above performance evaluation will be
used as a reference in the selection or nomination of
directors. Once all the questionnaires are collected
each year, the Company analyses them in accordance
with the previous method and presents the results to
the Board of Directors along with suggestions for
subsequent improvements.
The Board's performance evaluation items include:
(1) Level of participation in the company’s operation
(2)Improve the quality of decision making of the
board (3) Organization and structure of the Board (4)
Election of Directors and Continuing Education
(5)Internal control.
The evaluation of the performance of the members of the
Board should cover at least the following matters: (1)
Awareness of the company and responsibilities (2) Level
of participation in the company’s operation (3)
Directors' Professional and Continuing Education
(4)Internal control.
3. The Company completed a performance evaluation of
the Board and Board members in January 2024 and
 (II) No
material
difference.
(III)Consistent
.

~~28~~

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
(IV) Has the Company assessed
the independence of the
CPAs at regular intervals?
(V) Has the company had a
succession plan for board
members and key
management personnel and
the operation conditions?
the results of the evaluation for 2023 indicated that
the Board was generally functioning well. The results
of the assessment were presented to the Board on 14
March 2024. Please refer to (I) Functions of the
Board of IV Pursuits of Corporate Governance for
the results of the assessment.
(IV) The Company assesses once a year. The Board of
Directors approved the assessment at the meeting
on 14 March 2024, in accordance with the
assessment procedures, that the independence of
the CPAs for 2023 meets the requirements. The
assessment of independence of the CPAs is
described as follows:
1. Obtain a statement of independence from the
accounting firm and background information of the
CPAs to develop an assessment form for the
assessment.
2. The evaluation was conducted with reference to
Article 47 of the Certified Public Accountants Act
and The Bulletin of Norm of Professional Ethics
for Certified Public Accountant of the Republic of
China
No.10
“Integrity,
Objectivity
and
Independence”, and included checking whether the
CPA has an interest, dual identity in the Company,
or is a director, a shareholder or is paid by the
Company. The Company has confirmed that the
CPA has no financial interest or business
relationship with the Company other than the
professional fees for assurance service and tax
audit service, and the rotation of the accountant has
been conducted in accordance with the relevant
regulations.
(V) Succession planning and its operation:
1.Succession planning and operation of Board members
(1) Currently, there are seven directors (including four
independent
directors),
each
with
diverse
backgrounds in
business, law,
finance and
accounting, or management expertise required for
company operations. In the future, the Company will
continue to strengthen the board structure.
(2) For the succession planning for the Board of
Directors,theCompanyconducts succession		 (IV)
Consistent.
(V) No
material
difference.

~~29~~

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
planning for Directors by considering, 1 suitable
candidate recommended by the existing directors, 2
directors recommended by shareholders, 3 The
results of the Board's performance evaluation used
as a reference for the nomination of Directors for
reappointment. In addition, there are currently a
number of senior managers within the Group who
have the necessary management and professional
skills to serve as Directors, and the Company will
also seek external expertise to prepare for the
succession planning of Directors; Independent
directors are required by law to have working
experience in business, law, finance, accounting or
the business of the Company, and the Company will
appoint independent directors as required by law to
further the function of corporate governance.
2. Succession planning and operation of key
management personnel
(1) In planning for the succession of key management
personnel, it is important that they possess a high
degree of executive ability, correct values, integrity
and honesty, and are committed to achieving the
three key objectives of employee satisfaction,
customer satisfaction and shareholder satisfaction.
(2) The Company organizes internal and external
training courses from time to time to nurture key
management and their agents. The training covers
not only professional training, but also the
development of judgment, management skills and
problem-solving abilities to enhance the quality of
management decisions and to prepare the Company's
high-quality manpower for long-term development.
IV.
Has the Company appointed
competent
and
appropriate
number of personnel to perform
the
function
of
corporate
governance, and a designated
Corporate Governance Officer
charged
with
corporate
governance and related affairs
(including but not limited to		 The Company has set up corporate governance
supervisor to corporate with president's office to
dedicated to corporate governance related matters.		 No material
difference.

~~30~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
supplying the Directors with
information required for their
performance
of
duties,
assistance to the Directors in law
and compliance, administrative
affairs
pertinent
to
the
convention of the Board and the
Shareholders Meeting, keeping
minutes of meeting on record for
the convention of the Board and
the Shareholders Meeting)?
V. Has the Company established
channels for communications
with stakeholders (including
but
not
limited
to
shareholders,
employees,
customers and suppliers), and
set
up
a
section
for
stakeholders on its official
website with proper response
to stakeholders on issues of
corporate social responsibility
for their concern?		 No material
difference.
Stakeholder
s		 Issues of
Concern		 Contact Details Corresponden
ce
Employee Employees’
welfare
Employees’
performance
Evaluation
and
promotion
mechanism
Labor-
management
relationship
Occupational
safety and
health		 Announce
through internal
website or e-
mail
Welfare
committee
Convene a
meeting
regularly or
irregularly
Management
department –
Supervisor Liao
e-mail:
leemjkwnlonr@
mail.toty.com.tw		 Formulate
related
management
regulations
Regular fire
drill
Regular
employees
health check
and consult
with doctors
Annual trip
and
employees
gathering
meal
Shareholder Corporate
governance
Sustainable
development
strategy
Shareholders’
participation
Operational		 Disclose
important
information
timely through
media,
Company’s
website or
Market		 Announce
material
information
and
announcemen
t by laws
Convene
shareholders’

~~31~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
performance Observation Post
System
Establish an
investor
relations contact
for bilateral
communication
Convene the
shareholders’
meeting Stock
department/Man
ager Chang
e-mail:
[email protected]
w		 meeting
annually and
regularly and
publish
annual report
Hold
institutional
investor
conference
annually and
irregularly
Customer Corporate
governance
Service
quality
Customers’
satisfaction		 Publishment of
press release
irregularly
through media
or Company’s
website
Establish
customers’
complaint
hotline and e-
mail
Convene a
meeting
regularly or
irregularly
Business
department -
Manager Chang
e-mail:
weber.chang@to
ty.com.tw		 Announce
every
business
information
on the
Company’s
website
The products
passed
several
certification
(such as ISO
9001:86) to
ensure
technology
and quality
Formulate
related
management
regulations

~~32~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
Supplier Suppliers’
evaluation
and
management
Green
procurement
Information
transparency
Anti-
corruption		 Establish
suppliers’
complaint
hotline and e-
mail
Convene a
meeting
regularly or
irregularly
Procurement
office – Vice
manager Lin
e-mail:
[email protected]
m.tw		 Formulate
suppliers
management
regulations
Conduct an
annual
supplier
evaluation
Supplier
contract
Government Economic
performance
Product and
service
labeling
Compliance
with product,
environment,
and social
regulations
Labor
relationship
Emission		 Company’s
website or
Market
Observation Post
System
Official
document
communication
Convene a
meeting
regularly or
irregularly
External
communication
box
Finance
department –
Manager Chang
[email protected]
m.tw
Business
department –
Manager Chang		 Formulate
related
management
regulations
and comply
with laws

~~33~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
weber.chang
@toty.com.t
w
Management
department –
Supervisor Liao
leemjkwnlonr@
mail.toty.com.tw
Community Greenhouse
gas emission
Wastewater
and wastes		 Company’s
website or
Market
Observation Post
System
Convene a
meeting
regularly or
irregularly
Management
department –
Supervisor Liao
leemjkwnlonr@
mail.toty.com.tw		 Implement
waste water
and waste
reduction
management
through
design and
manufacturin
g process
changes
Bank Economic
performance		 Company’s
website or
Market
Observation Post
System
Convene a
meeting
regularly or
irregularly
External
communication
box
Finance
department –
Manager Chang
[email protected]		 Announce
every
business
information
on the
Company’s
website

~~34~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
w
VI. Has the Company
commissioned a professional
investor service agent to
handle matters pertinent to
the Shareholders’Meeting?		 The Company has appointed the agency department of
Taishin Securities Co., Ltd. to act on its behalf in all
matters relating to the Company's shareholding.		 Consistent.
VII. Transparency of information
(I) Has the Company established
a website for the disclosure of
information on the financial
position and business of the
Company?
(II) Has the Company adopted
other means of information
disclosure (such as the
installation of website in the
English language,
appointment of designated
person to collect and
disclose information for the
Company, proper pursuit of
the system of spokesman,
and the upload the record on
the entire process of
institutional investors
conferences to the Company
website)?
(I) The Company discloses information on financial
position, business and corporate governance at regular
intervals as required and from time to time where
necessary at the official website of the Company
(http://www.toty.com.tw); Investors can also make
inquiries via the Market Observation Post System.
(II) A spokesperson system is in place for the collection
and disclosure of corporate information. The
company is regularly invited by securities firms to
hold a institutional investors’ conference every
year.		 (I)No
material
difference.
(II) No
material
differenc
e.

~~35~~

Item of evaluation Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
(III) Has the Company disclosed
and declared its annual
financial reports within 2
months after the end of the
fiscal year, and declares its
financial reports in Q1, Q2,
and Q3, and the monthly
business reports before
respective deadlines at
regular intervals?		 (III)The Company announces and reports on its financial
statements and operations for each month within the
deadlines set out in the List of Matters Required to
Be Handled by Issuers of Listed Securities.		 (III)No
material
differenc
e.
VIII.Is
there
any
important
information that helps to
understand the pursuit of
corporate governance of the
Company (including but not
limited to employee rights,
employee
care,
investor
relation,
supplier
relation,
stakeholder right, continuing
education of the Directors, risk
management policy and risk
assessment standard in action,
customer policy in action,
taking professional liability
insurance for the protection of
the Directors)?		 (I) In addition to complying with the Labor Standards
Act and related laws, the Company has established
an employee welfare committee to provide various
subsidies and activities for employees' rights and
benefits. The company maintains good interaction
with our suppliers, customers, financial institutions
and shareholders, and we follow the internal control
and management system established by the
Company and fulfill our corporate responsibility to
society in accordance with the relevant laws and
regulations.
(II)Under the consensus of all staff, the company
operates on the principle of honesty and integrity,
with a firm approach and pragmatic requirements,
and aims to continuously improve quality and
customer satisfaction in order to pursue excellence in
quality and service.
(III)The Company and its directors are committed to the
spirit of “Take from society give back to society.”. In
addition to donating money to the community from
time to time, the Company also actively participates
in various community activities.
(IV) The Company has taken out liability insurance for
all directors and supervisors in the total amount of
US$1,000,000 underwritten by The First Insurance
Co., Ltd., as reported to the Board of Directors at their
meeting on 6 May 2024, and as disclosed on the
MOPS.		 No material
difference.

~~36~~

Item of evaluation Thepursuit Thepursuit Variation
from
Corporate
Governance
Best Practice
Principles
for TWSE
Listed and
TPEx Listed
Companies,
and the
reason for
the variation
Yes No Summary Explanation
IX.Explain the corrective action
taken
in
response
to
the
evaluation result released by the
Corporate Governance Center of
Taiwan
Stock
Exchange
Corporation in the previous
period, and special attention and
additional effort on issues that
needed to be addressed to at top
priority.
(Not
required
for
companies not included in the
assessment)		 1. There were eight completed improvements in 2022
and scored after an evaluation.
2. Six improvements were made in relation to matters
such as the establishment of an audit committee
following the 2022 Board re-election.
3. The score of the Company's corporate governance
evaluation for 2022 has improved from 29 to 54,
indicating significant progress in the Company's
corporate governance.
4. Improvements to the company's website. The
company has currently contracted for
implementation and will improve 14 related
disclosures and announcements upon completion.
5. In line with the authorities' Corporate Governance
3.0 timeline, there will be five things to be executed
which are annual reports, financial reports, material
information and shareholders' meeting manuals and
notices of meetings in English in 2023 and 2024.		 No material
difference.

(IV) Where a company has a remuneration committee, it should disclose its organization and operation:

The purpose of the Remuneration Committee is to assist the Board in the implementation and evaluation of the Company's overall remuneration and welfare policies and the remuneration of managers. On 29 November 2011, the Company established a Remuneration Committee and appointed four members, all four of whom are members with voting rights.

~~37~~

1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee 1.Information on members of Remuneration Committee
Identity
(Note 1)		 Condition
Name		 Work experience of at least five years and the following
professional qualifications		 Conformity with independence (Note 2) Number of
members of
remuneratio
n
committees
of other
public
companies		 Rematk
Lecturer or above
in business, law,
finance,
accounting or
related disciplines
required for
corporate business
in public or
private tertiary
institutions		 Judges, prosecutors,
lawyers, accountants
or other professional
and technical
personnel who have
passed national
examinations
necessary for the
business of the
company		 Experience in
commercial, legal,
financial,
accounting or
relevant
experience
required for
corporate business		 1 2 3 4 5 6 7 8 9 10
Independent
Director		 CHEN,
YONG-YAO		 Yes --- Yes None ---
Independent
Director		 LIN, HSIU-
MEI		 --- --- Yes None ---
Independent
Director		 KO, CHEN-
EN		 --- --- Yes None ---
Independent
Director		 WANG,
MING-JHIH		 Yes --- Yes None ---
~~38~~
Note 1: Please state whether the identity is a director, independent director or other
Note 2: For each member who has fulfilled each of the following criteria during the two years prior to and during the term of office, please tick
"" in the box below each criteria code
(1) Persons not employed by the Company or its affiliates.
(2) A director or supervisor who is not a director or supervisor of the company or its affiliates (except where the company and its parent
company, subsidiary or subsidiary of the same parent company are serving concurrently as independent directors in accordance with
this Act or the laws of the country in which they are established).
(3) A natural person shareholder who does not hold more than 1% of the total number of issued shares or the top 10 shareholdings in the
name of himself/herself, his/her spouse, minor children or in the name of another person.
(4) A spouse, a relative within the second degree of consanguinity or a relative within the third degree of consanguinity of a person other
than a manager listed in (1) or a person listed in (2) or (3).
(5) A director, supervisor or employee of a corporate shareholder who does not directly hold more than 5% of the total number of issued
shares of the company, or who is one of the top five holders of shares or who has appointed a representative to act as a director or
supervisor of the company in accordance with Article 27 (1) or (2) of the Companies Act (except where the company and its parent
company, subsidiary or subsidiary of the same parent company are serving concurrently as independent directors in accordance with
this Act or the laws of the country in which they are established)
(6) A director, supervisor or employee of another company who is not controlled by the same person as more than half of the directorships
or voting shares of the company. (except where the company and its parent company, subsidiary or subsidiary of the same parent
company are serving concurrently as independent directors in accordance with this Act or the laws of the country in which they are
established)
(7) A director (council member), supervisor (supervisor) or employee of another company or organization who is not the same person as
or the spouse of the chairman, president or equivalent of the company. (except where the company and its parent company, subsidiary
or subsidiary of the same parent company are serving concurrently as independent directors in accordance with this Act or the laws of
the country in which they are established)
(8) A director (council member), supervisor (supervisor), manager or shareholder holding more than 5% of the shares of a particular
company or organization that does not have financial or business dealings with the Company（except where a particular company or
institution holds more than 20% but not more than 50% of the total number of issued shares of the company, and where the company

~~38~~

and its parent company, subsidiary or subsidiary of the same parent company serve concurrently as independent directors in accordance with this Law or the laws of the country in which they are established ）

(9) Professionals, sole proprietors, partners, directors (council members), supervisors (supervisors), managers, and their spouses who do not provide audit or remuneration for the company or its affiliates for business, legal, financial, accounting, or other related services that have not exceeded NT$500,000 in the last two years. Except for members of the Remuneration Committee, the Public Takeover Review Committee or the Special Committee on Mergers and Acquisitions, who perform their duties and responsibilities in accordance with the Securities and Exchange Act or the relevant laws and regulations of the Business Mergers and Acquisitions Act.

(10) In the absence of any of the circumstances set out in Article 30 of the Company Act

  1. Information on the operation of the Remuneration Committee

  2. (1) The Remuneration Committee of the Company consists of 4 members.

  3. (2) Term of office of current members: From 27 June 2022 to 26 June 2025, the committee convened for 7 times (A) in 2023. The eligibility of the members and attendance to committee sessions of the members are specified below:

Title Name Actual
frequency of
attendance
(B)		 Frequency of
attendance by
proxy		 Actual attendance
rate (%) (B/A)
(Note)		 Remark
Convener CHEN,
YONG-
YAO		 7 - 100
Member LIN, HSIU-
MEI		 7 - 100
Member KO, CHEN-
EN		 7 - 100
Member WANG,
MING-
JHIH		 7 - 100
Additional information:
I.
If the Board turned down or revised the recommendation of the Remuneration Committee, specify the date,
session of the Board, the content of the motion, the resolution of the Board and the response of the
Company to the opinions of the Remuneration Committee (if the resolution on remuneration passed by the
Board is senior to the recommendation of the Remuneration Committee, explain the difference and the
reason): None.
II.
If there is any adverse opinion or qualified opinion on record or in written declaration on the resolutions of
the Remuneration Committee, specify the date, session of the committee meeting, content of the motion,
opinions of all members and response to the opinions of the members: None.

  • Note: (1) If specific member elected to resign within the fiscal year, put down the date of relief from office in the remark column. The actual attendance (as observer) rate (%) will be calculated on the basis the actual frequency of attendance (as observer) to the session of the Remuneration Committee and the frequency of the convention of the Remuneration Committee while the Director is still in office.

  • (2) If an election of Directors has been held to fill the vacancy before the end of the fiscal year, put down the names of the newly elected members and the members of the previous term, and noted as new to office or reelected to office, and the date of the election. The actual attendance (as observer) rate (%) will be calculated basis the actual frequency of attendance (as observer) to the session of the Remuneration Committee and the frequency of the convention of the Remuneration Committee while the member is still in office.

  • (3) Terms of Reference of the Remuneration Committee:

    • A. Regularly review and propose amendments to the Remuneration Committee's constitution and procedures.

    • B. To establish and regularly review policies, systems, standards and structures for the evaluation of the performance and remuneration of directors and managers.

    • C. Regularly assess and determine the remuneration of directors and managers

~~39~~

(4) Date of the sessions, content of the motions, resolutions and the response of the Company to the opinions of the Remuneration Committee:

Date of the session Content of the motions and
follow-up action		 Response of the Company
to the opinions of the
RemunerationCommittee
17 January 2023
The 5th Remuneration Committee
The 3rd Session		 Approved the payment of
the Company's year-end
bonus for 2022		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directorspresent.
13 March 2023
The 5th Remuneration Committee
The 4th Session		 Approved the 2022
remuneration distribution
for employees and directors
and supervisors		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directorspresent.
30 May 2023
The 5th Remuneration Committee
The 5th Session		 Approve the proposed
allocation of directors' and
supervisors' remuneration
and employees'
remuneration to managers
for 2021		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directors present.
3 August 2023
The 5th Remuneration Committee
The 6th Session		 Approve the proposed
allocation of directors' and
supervisors' remuneration
and employees'
remuneration to managers
for 2021		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directors present.
2 November 2023
The 5th Remuneration Committee
The 7th Session		 Approved the review on the
establishment of the
Company's “Regulations of
Reward and Punishment
Management”		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directors present.
17 January 2024
The 5th Remuneration Committee
The 8th Session		 Approved the payment of
the Company's year-end
bonus for 2023		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directorspresent.
11 March 2024
The 5th Remuneration Committee
The 9th Session		 Approved the 2023
remuneration distribution
for employees and directors
and supervisors		 Submitted to the Board of
Directors for discussion of
the matter and approved by
all Directorspresent.

(V) Differences between Company policy and Corporate Social Responsibility Best Practice Principles for TWSE/ GTSM Listed Companies and reasons for differences

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
I. Does the company
conduct risk assessments
on environmental, social
and corporate
governance issues
related to company
operations in accordance
with the principle of
materiality, and		 The Company has conducted risk assessments on environmental,
social and corporate governance issues related to company
operations in accordance with the principle of materiality, and the
company's "Risk Management Measures", and formulated
countermeasures and plans for the implementation of the
identified risks. On 22 January 2023, the Company reported to
the Board of Directors on the operation of corporate social
responsibility matters such as sustainable environment and risk
management.
The risks identified by our company and countermeasures are as
follows:		 (I) Consistent

~~40~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
formulate relevant risk
management policies or
strategies?		 I. Environmental issues:
1. Climate change:
Continue to implement energy conservation and carbon
reduction actions and strictly comply with local regulations.
Improve energy efficiency and recycling rate through
equipment replacement and rigorous production environment
management to reduce a negative impact on the environment.
In response to the gradual development of laws and regulations
towards greening, energy saving and carbon reduction, the
difficulty of legal compliance has increased.
2. Water resource management:
(1) Promote energy-saving and water-saving improvement
projects to reduce energy consumption and water costs.
(2) The production line is processed by the recycling of
wastewater, to achieve the best use of water resources. If
the situation of water leakage occurs in the office, ask the
public works unit to deal with it right away.
(3) Set up wastewater treatment equipment, monitor and
analyze the discharge water to comply with environmental
regulations and standards
3. Carbon emission management:
(1) Conduct carbon footprint inventory on time. Set up energy
consumption reduction targets and develop effective carbon
reduction improvement plans.
(2) Prioritize the production of new machines and schedule the
production of machines with higher efficiency before using
the older ones to reduce the consumption of electricity.
Newly purchased machines are given priority to have
energy-saving frequency conversion modules installed and
the old ones will also be installed gradually.
(3) The heavy oil fuel produced by die-casting is fully
converted into natural gas. The product assembly plant
transports the finished product to the shipping warehouse.
Replacing the transportation of stackers with automatic
conveyor belts, and replacing electric stackers with diesel
stackers to reduce air pollution.
4. Air pollution management:
(1) Purchase of wet scrubber and active carbon adsorption
equipment to filtrate particulate matter and absorb volatile
gases, further improving the stability of waste treatment
efficiency.
(2) Implement inspection and maintenance work to make all
equipment performs at its best.
(3) Entrust an external unit to inspect the working environment
every year, including noise and chemical substances to
maintain the safety and health of employees' working
environment.
5. Waste management:
(1) Committed to reducing waste at source, process waste
reduction and recycling.
(2) Enforcement of waste removal and dealing with the
qualification review and management of manufacturers in
accordance with the law to reduce environmental impact by
ensuring waste is properly handled.

~~41~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
II. Social issues:
1. Human rights protection:
(1) Comply with international human rights norms and labor
laws in locations where global operations are located in
accordance with human rights policy. Dedicate to creating
an equal employment work environment without
discrimination and harassment.
(2) Respect personal privacy, set up diverse labor-management
communication channels and complaint mechanisms to
guarantee the rights of employees.
2. Workplace Safety and Health:
(1) Perform audits and corrective actions in accordance with
safety and health standards policy. Consistently reduce the
negative impact on the environment. Dedicated to preventing
pollution, reducing VOCs on site, minimizing noise
disturbance, monitoring other indicators and strive to achieve
the indicators.
(2) Employee workplace management of hazard identification
and risk assessment and carry out relevant measures and
emergency response drills to lower the occupational risk of
employees.
(3) Take care of employee’s diet, nutrition and health. Holding
related courses and activities.
3. Epidemic and infectious diseases:
(1) Improve various epidemic prevention measures, including the
control of entering and leaving the factory, disinfection of
the factory, handling abnormalities, employee health check,
self-monitoring, epidemic notification, medical transport to
hospital mechanism, and storage of epidemic prevention
materials.
(2) Establish and implement agent mechanisms and continuous
training of personnel at all levels to ensure backup
manpower.
(3) Keep abreast of the epidemic situation of suppliers, third-party
factories and investment companies
4. Product responsibility:
(1) Introduced ISO9001 quality management system and
environmental management system certification. After that,
the company continued to obtain ISO9001 quality
management system certification through the evaluation of
external audit units every year.
(2) The company conducts pre-planning. evaluation,
implementation, operation, post-event audits and corrective
actions through the management system to consistently
improve the quality of products. To share the risk, contact
insurance companies to apply for product liability insurance
every year.
5. Information security:
(1) Formulate "Information Security Management Measures"
to provide appropriate protection measures for information
assets to ensure their confidentiality.

~~42~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
(2) Assess and review information security strategies regularly
to ensure that the company's business can continue to
operate.
(3) Through irregular information security publicity to enhance
the company personnel's awareness of information security.
(4) Ask company personnel not to use unauthorized software.
III. Corporate governance:
1. Professional ethics:
Facilitate various ethical behavior regulations to establish
good corporate governance and risk management mechanism,
which refers to assessing the risk of dishonest conduct, and
facilitate relevant preventive measures to implement policies
to promote integrity management.
2. Legal compliance:
(1) Facilitate various internal rules and regulations to clarify
the operating specifications. Implement internal control and
establish whistleblower mechanisms to ensure business
operations and employees comply with laws and
regulations.
(2) Stay up to date with the changes in regulations. Irregularly
send staff to participate in publicity meetings, courses, etc.
organized by government agencies. Provide education
training and regulatory identification to ensure meet the
requirement of the decree.
3. Strategic operation:
Aim for continuous operation, consistently develop high-value
products and maintain amiable supply-demand relationships
with customers and suppliers. Continue to work on quality
improvement and enhance competitiveness to reduce operation
risk.
II. Has the Company built
up a governance
framework for the
advocacy of
sustainable
development, and
established a full-time
(part-time) body for the
advocacy of
sustainable
development led by a
senior officer at the
authorization of the
Board and under the
supervision of the
Board?		 The Company's "Corporate Social Responsibility Practice Code "
was approved by the board of directors on 4 November 2021. The
management department is the part-time unit to promote
corporate social responsibility and it is still committed to the
implementation of corporate social responsibility.		 Consistent
III. Environmental Issues
(I) Has the Company
established appropriate
environmental
management system by
nature of its industry?		 (I) Through the "Safety and Hygiene Code of Practice"
formulatedby the company, the company conducts pre-
planning andevaluation, implementation and operation, and
implements auditand corrective measures afterward to
continuously improve theimpact on the environment. At the
same time, formulateenvironmental policies such as
compliance with environmentalprotection regulations,		 (I) Consistent

~~43~~

Items Evaluated Status Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
(II) Has the Company
made efforts to upgrade
energy efficiency and
use regenerated
materials for mitigating
the impact on the
environment?
(III) Has the Company
assessed the potential
risk and opportunity
to the enterprise
brought about by
climate change, and
taken appropriate
measures in
responding to climate
change issues?
commitment to pollution prevention andcontinuous
improvement, and promote environmental
managementimprovement plans. And establish indicators that
are in compliancewith environmental protection regulations,
such as reduction of onsite oil fumes, noise reduction, etc. to
be monitored at any time andstrive to achieve these
indicators.
(II) The company is committed to reducing the source of waste,
reducing waste during the manufacturing process and
recycling. Execute the qualification review and management
of waste removal and disposal manufacturers in accordance
with the law. Ensure that waste is properly disposed of and
reduce the impact on the environment. Making the best use of
water resources through wastewater treatment and recycling
in the production line. To achieve the goal of garbage
reduction, we encourage our staff to participate in recycling,
including plastic, waste paper, glasses, etc.
(III) 1. In accordance with the framework provided by the Task
Force on Climate-related Financial Disclosures (TCFD) issued
by the Financial Stability Board (FSB), the Company has
identified the risks, opportunities, and potential financial
impacts of climate change as follows:


(II) Consistent
(III) Consistent
Level Execution Explanation
Governa
nce		 The board of directors is the highest supervisory
authority for matters concerning climate change
risks
and
opportunities.
It
holds
the
responsibility of approving, reviewing, and
overseeing
risk
strategies
and
policies.
Furthermore, it guides the company in
exploring new business opportunities related to
climate change. The board of directors has
established the “Sustainable Development
Management Committee”, chaired by the
president,
to
comprehensively
promote
corporate
sustainability.
The
committee
convenes meetings at least once a year and
reports progress to the board of directors. Its
responsibilities
encompass
corporate
governance, environmental sustainability, green
partnerships, customer relations, employee
relations, and social care. Department heads
identify sustainability issues of concern,
including risks involving operations, finance,
environment, hazardous events, and climate
change. They formulate action plans and
establish continuous improvementplans.

~~44~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
Strategy Department heads assess the risks and
opportunities that climate change may bring,
such as regulatory policy risks related to
greenhouse
gas
reduction and
emission
reporting obligations, or policies such as carbon
taxes and fees. They evaluate the impact on the
company's operations and finances based on the
time of occurrence and the degree of impact.
Additionally,
they
actively
monitor
opportunities arising from greenhouse gas
emissions for products. When designing
products, they consider the environmental
impacts and aim to reduce carbon emissions at
each stage. Furthermore, they continuously
improve
energy
efficiency
in
company
operations and consider building solar power
stations in available factory spaces to enhance
renewable energyutilization.
Risk
Manage
ment		 Chang Type’s board of directors has approved
the “Risk Management Measures”, whereby
each business unit with responsibilities should
identify changes in risks related to operations,
finance, environment, hazardous events, and
climate change. They should also formulate risk
management policies and execute board risk
decisions. Adopting the framework provided by
the Task Force on Climate-related Financial
Disclosures (TCFD), the company analyzes the
potential risks and opportunities of climate
change to its operations and their impact on
finances. Furthermore, they prioritize and
review countermeasure plans based on the time
of occurrence and the intensity of impact.
The risk management department reports to the
board of directors annually, presenting updates
on the company's transformation and changes in
physical risks, along with evaluation results,
enabling the Board to stay informed. This
allows board members to enhance their
international
awareness
of
trends
in
international climate change governance and
grasp key opportunities for the development of
a low-carbon economy.
Indicator
and
Target		 Establishing
goals
for
greenhouse
gas
management, water resource management,
energy management, and product development
to build sustainable business capabilities for the
enterprise.
2.Climate change has caused a serious impact on the global

~~45~~

Items Evaluated Status Status Status Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
environment and social economic system. In recent
years, there have been wildfires, floods and storms all
over the world, causing many casualties, displacement
and huge economic losses.
Under the trend of global climate change, rising
temperatures will expose many people to the threat of
infectious diseases such as malaria and dengue fever.
Extreme heat and air pollution are putting people in the
cities at risk.
In response to the impact of climate change on business
operations and the disclosure of information that
specifically presents climate change. Each department of
the company conducts business inventory and risk
identification for climate change, including direct or
indirect impacts due to extreme weather. Analyze the
risks and opportunities of the company's operating
activities due to the transformational impact of
regulations, technologies or market demands, as well as
other human and social aspects. Make a risk
management strategy plan based on the analysis results
as the core of climate change action to estimate
management costs and financial impact. Through the
data collected above, strengthen the company's climate
change governance and systematically assess financial
linkages to reduce risks and seize opportunities.
Risk
Category
Identificatio
n of
climatechan
ge risk
Identification
on climate
change
opportunity
Possible business
development for
the company's
operation
Power
Source
Reward and
punishment
policy
Replace the
old and high-
energy-
consuming
equipment.
The company's
production process
needs to consume
a lot of electricity;
therefore we are
planning to
promote solar
power in recent
years. At that time,
the company will
use solar power to
reduce carbon
emissions.
Products
and
Services
Low-carbon
products
and services
Evaluate the
electricity of
introducing
green power
generation by
Both the company
and European and
American
customers take the
harm to the
Risk
Category		 Identificatio
n of
climatechan
ge risk		 Identification
on climate
change
opportunity		 Possible business
development for
the company's
operation
Power
Source		 Reward and
punishment
policy		 Replace the
old and high-
energy-
consuming
equipment.		 The company's
production process
needs to consume
a lot of electricity;
therefore we are
planning to
promote solar
power in recent
years. At that time,
the company will
use solar power to
reduce carbon
emissions.
Products
and
Services		 Low-carbon
products
and services		 Evaluate the
electricity of
introducing
green power
generation by		 Both the company
and European and
American
customers take the
harm to the

~~46~~

Items Evaluated Status Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
(IV) Has the Company
kept statistical data on
the greenhouse gas
emission volume,
water consumption
capacity and weight
of solid wastes in the
past two years, and
made policies of
energy saving and
carbon reduction,
greenhouse gas
reduction, efficient
use of water or the
management of solid
waste?		 installing
solar panels
on the
factory’s roof.
Reduce the
negative
impact of
energy
consumption
on the
environment.		 environment
during the
production and
sales process
seriously. Using
solar energy to
protect the earth.		 (IV) Consistent

~~47~~

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Status Variation from
the Corporate
Social
Responsibility
Best Practice
Items Evaluated
Yes No Brief Explanation Principles for
TSE/ GTSM
Listed
Companies, and
the reason
I. Energy and environmental policy:
Achieve the goal of continuous operation by reducing
emissions, green purchasing, green production and eco
friendly. Reducing waste generation during the production
process, prioritizing the purchase of raw materials with the
least harm to the environment, managing energy-consuming
equipment and increasing low energy-consuming production,
and strictly disposing of the waste generated in the production
process according to the operation permit are the
implementation principle.
II. The important performance of energy, water resource and
greenhouse gas in 2023 is as follows:
Performance
Goal 2022 2023
item
The The total
energy electricity
conservat consumption 7,276,380 6,848,345
ion rate
of annual
Energy Annual
electricity
management - electricity
intensity 1,793 2,271
Electricity > 5% intensity
consumption
The energy
conservation
26.7%
rate
The gas The total LNG
conservat consumption
ion rate 628,467 688,930
of annual
natural
Annual gas
Energy gas
intensity
management - intensity 155 229
LNG > 5 %
The gas
conservation
47.6%
rate
The water The total water
conservat consumption
ion rate 34,950 47,289
of annual
water Annual water
Water intensity
intensity
resource > 5% 8.6 15.7
management
The water
conservation
82.2%
rate
The The total carbon
Greenhouse
carbon emission (in
gas reduction tons) 62,979 66,417
management rate of
----- End of picture text -----

~~48~~

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

Status Variation from
the Corporate
Social
Responsibility
Best Practice
Items Evaluated
Yes No Brief Explanation Principles for
TSE/ GTSM
Listed
Companies, and
the reason
annual Annual carbon
carbon intensity
15.52 22.03
intensity
> 5%
The carbon
reduction rate
42.0%
Note: Annual electricity intensity=The total electricity
consumption of the annual average revenue per million
Annual gas intensity=The total LNG consumption of the
annual average revenue per million
Annual water intensity=The total water consumption of the
annual average revenue per million
Annual carbon intensity=The total carbon emission (in
tons) of the annual average revenue per million
III. Quantitative management of energy saving and carbon
reduction
(I) Energy conservation policy
The main energy consumption of the company is mainly
electricity and liquefied natural gas. In terms of energy
saving, the electricity consumption of production unit is
reduced gradually by means of continuous monitoring
system and independent management of production units
to achieve the goal of efficient use of energy. Aim for a 5%
decrease in the annual overall electricity consumption
intensity (total electricity consumption/million NTD
revenue) and annual overall carbon intensity (total carbon
emissions/million NTD revenue) is targeted to decrease by
5%. Specific actions are as follows:
1. Update production machines and adopt the principle of
campaign production.
(1)Prioritize the production of new machines. For newly
purchased machines, the priority is to install energy-saving
frequency conversion modules. And old machines will be
updated and installed one after another. To reduce electricity
consumption, prioritize the production schedule of machines
with higher efficiency, then the older machines.
(2) To reduce air pollution, the boiler for die-casting has been
changed from fuel to gas. The production department
establishes a factory to transport the finished products to the
shipping warehouse. Replacing stacker handling with
automatic conveyor belt to reduce air pollution.Starting
from 2018, the plastic injection molding machines and air
compressors used in the factory production have been
replaced from fixed frequency to variable frequency,
resulting in energy savings.
(3) The operation of machines is mainly based on the estimated
production amount to improve utilization. Focus on high-
efficiency machine production, and reduce low-efficiency
production to reduce greenhouse gas emissions.
2. Office energy conservation policy
(1) The temperature of Indoor air conditioning is 26~28°C.
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~~49~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
(2) Lights off after finishing lunch during lunch break. After
getting off work, turns off the power of each department.
(II) Using green energy in the future to reduce carbon emissions.
The company deeply recognizes the importance of energy
conservation and carbon reduction to the environment.
Assessing the installation of solar panels to generate electricity
with the existing factory roof rental. And will use solar power
at that time.
IV. Water resources management
In response to global climate change, water supply stabilization
has become a problem faced by each country. Aim for a 5%
reduction in annual overall water intensity (total water
use/million USD) and expect to take action to face the
challenge of climate change together with companies all over
the globe. Specific practices are as follows:
1. To make the best use of water resources, the production line is
treated by wastewater recycling.
2. Office: If water leakage occurs, please contact the public work
unit to deal with the problem.
V. Environmental management
The
company
conducts
pre-planning
and
evaluation,
implementation and operation through methods such as the
“Safety and Hygiene Practice Code”. And implement post-event
audits and corrective actions to continuously improve the
impact on the environment afterward to consistently improve
the impact on the environment. Meanwhile, committed to
environmental policies such as pollution prevention and
continuous improvement, and promoting environmental
management improvement policies. Establish indicators that are
in accordance with environmental law for monitoring the
reduction of all kinds of on-site process waste, such as on-site
oily smoke, and noise.
Committed to waste source reduction, process waste reduction
and recycling. To reduce the impact on the environment,
execute the qualification review and management of waste
removal and disposal manufacturers according to law to ensure
that waste is properly disposed of. The wastes produced by
operations are mainly process wastes and general business
wastes. The recycling, clearing and disposal of wastes in each
plant area are entrusted to the licensed operators. For non-
recycling general business waste, the final disposal site is
incinerators. For process waste, after being legitimately handled
by the trustee and the final disposal site will be a landfill.
Manage contractors through a contractual mechanism to
monitor compliance with relevant waste regulations. No default
occurred and also no leakage of oil,fuel,chemicals,orwaste.

~~50~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
The key project of the costs of wastewater and waste treatment
includes sewage treatment plant equipment maintenance and
update, coagulation-sedimentation disinfectant, water quality
testing, sludge removal and treatment, outsourced waste
removal, etc. Specific actions are as follows:
1.Encourage employees to participate in resource recycling,
including the recycling of plastics, waste paper, glass bottles and
cans, to reduce waste.
2.Purchase of wet scrubber and active carbon adsorption
equipment to filtrate particulate matter and absorb volatile gases,
further improving the stability of waste treatment efficiency.
3.Entrust an external unit to inspect the working environment,
including noise and chemical substances every year to maintain
the safety and health of the working environment of employees.
VI. Implementation of the policy
1. Occupational Safety and Health Management
The company protects the occupational safety and health of all
employees, including holding regular labor safety and health
seminars, etc. Improve employees’ safety and health at work and
through the "Safety and health work code" and other measures
to find out the safety and health risks, further reduce the
possibility of accidents by protecting the security of employees
and complying with government regulation.
2. Education training
The company values the functions and on-the-job training of all
employees. The company provides various training courses for
new employees, full-time staff, managers, etc. Consistently
improve the core functions of all colleagues through internal and
external training resources.
3. Health check consultation
The company cares about every employee’s mental and physical
health. In addition to holding a health check every two years,
also provide health consultation and follow-up management
after the health check to ensure the health of all employees. At
the same time, advocates health promotion that provides all
employees with information on activities to enhance physical
and mental development and relieve stress. Holding weight loss
and other activities from time to time to encourage employees to
pay attention to weight management.
4. The company's products are all exported, and domestic invoices
are not provided. To reduce the consumption of paper, the
delivery documents to customers are sent in electronic form.
5.The company's human resources system(leave of absence,

~~51~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
attendance, etc.) and procurement system will promote
verification in electronic forms to reduce paper consumption.
6. Encourage employees to engage in garbage sorting and recycling
to reduce the amount of garbage.
7.Encourage employees to use reusable containers instead of
single-use plastic packaging.
IV. Social issue
(I) Does the company
formulate relevant
management policies
and procedures in
accordance with
relevant regulations and
international human
rights conventions?
(II) Does the company
formulate and
implements reasonable
employee benefit
measures (including
remuneration, vacation
and other benefits,
etc.), and appropriately
reflects the operating
(I) The company supports and follows internationally recognized
human rights norms and principles. Abide by local labor laws
and regulations and oppose human rights violations behaviors
Implementation policy:
• Prohibit child labor.
• Prohibit compulsory labor.
• Prohibit mandatory measures, such as sexual harassment,
corporal punishment, bullying, etc.
• Oppose discrimination and ensure equal job opportunities.
• Provide a safe and healthy work environment.
• Assist employees in staying a healthy mental and physical
status and strike a balance between work and life.
Relevant actions:
• Provide different security training to different employees,
such as fire training, emergency response training, safety
and health education and training, etc.
• Recruitment does not discriminate in any form.
• Child labor under the age of 15 has been excluded from the
selection of candidates and there is no employed child
labor.
• No identification documents will be withheld for personnel
reporting. There is no need to pay any fees in advance.
• Hold labor-management meetings and production meetings
regularly to fully implement labor consultation.
• Implement workplace bullying prevention campaigns to
help employees understand and prevent workplace
bullying, creating a friendly working environment.
• Establish sexual harassment prevention measures, and
grievance procedures and will be publicly disclosed
• Hold recreational activities that extend to family members,
such as dinner activities, colleagues' travel, etc.
• Promote colleagues to assist in proposals to prevent or solve
the related
reasons that affect one’s personal job
performance, such as adaptation to work, relationships,
health concerns, etc.
(II) Employee remuneration and benefits are in accordance with
the company's management regulations for ensuring
employees’ basic rights and recruitment policy are no
differences, including basic salaries, and festival bonuses for at
least one month. And will be rewarded according to the
company's operating performance and personal performance
appraisal bonus and employee travel subsidies, etc. Hold group
activities, such as staff travel, barbecue or hiking every year.		 (I) Consistent
(II) Consistent

~~52~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
performance or
achievements on
employee
remuneration?
(III) Does the company
provide employees
with a safe and
healthy working
environment and
conduct regular safety
and health education
for employees?
(IV) Does the company
establish an effective
career development
training program for
employees?
(V) For customer health
and safety, customer
privacy, marketing and
labelling of products
and services, does the
company follow
relevant regulations
and international
standards, and
formulate relevant
consumer protection
policies and grievance
procedures?

(III) The company provides necessary health and first aid
facilities for employees. Implement safety and health
education from time to time, and provide warning labels to
the environment of safety concerns. Committed to reducing
elements that might harm employees’ safety and health to
prevent work accidents.
(IV) The company regularly organizes education and training
programs, including pre-employment training, and on-the-
job training and assigns appropriate employees to
participate in the knowledge and skills courses required for
the job.
(V) 1. Products and services:
The company values the health and safety of customers,
and strictly and carefully checks every stage of products,
such as design and manufacturing. It also provides product
after-sales service warranty that meets local regulated
years. Continue to develop safe and user-friendly products
and improve the manufacturing process in accordance with
environmental trends and protect the health of customers.
2. Customer privacy:
(1) The company establishes an information security policy,
continuously strengthens the concept of information
security protection, updates computer information
management methods from time to time and invites
information security companies for inspection and make
sure weaknesses of websites and systems are being
found in a timely manner to maintain the information
security and customer privacy. Introduced FortiClient
and ESET respectively as firewall and anti-virus
information security protection, strengthen the endpoint
security of personal computer and protect personal
computers from being attacked by hackers. Please keep
the mail intact to ensure that all internal and external
mails are kept intact. Enhance the information security
project and introduce the secure email system to
strengthen email protection and security.
(2) The intellectual property and business secrets of brand
OEM customers are protected through the establishment
of a document management center to encrypt and protect
the data with file encryption software according to the
level of confidentiality. Data management and authority		 (III) Consistent
(IV) Consistent
(V)Consistent

~~53~~

Items Evaluated Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
(VI) Does the company
establish a supplier
management policy
that requires suppliers
to follow relevant
norms on issues such
as environmental
protection,
occupational safety
and health, or labor
rights,andwhat is the		 controlled by specific personnel and minimize the risk
of information leakage. Regulate USB to avoid the risk
of employee personal privacy or company secrets being
leaked.
3. Marketing and Labeling:
(1)
In addition to providing customer brand OEM
manufacturing, the company has its own brands Delta,
SHOPMASTER, HOMECRAFT. According to the
characteristics of each brand, promote it to various
markets with an overall marketing strategy. You can
have a basic understanding of the product if you can
recognize the labels and through these labels understand
the company's product characteristics.
(2)
All the products acquired the certification from the
safety testing and identification agency specifications of
the customer or sales area, such as Underwriter
Laboratories Inc., Canadian Standards Association and
Conformity European and attach warning labels, model
nameplates,
ON-OFF
labels,
UL/CSA
or
CE
certification labels on the products. The outer packaging
box is marked in compliance with the relevant
regulations of environment, society and safety use and
provide detailed instruction in local languages inside the
packaging box.
4. Customer complaint handling mechanism
(1) Headquarters’ customer service phone number and
EMAIL is provided on the company's official website -
customer support area; The website of the US subsidiary
provides customer service and the EMAIL and telephone
number of the outsourced maintenance station. In the
United States, the company’s principal market, the
subsidiaries set up customer service personnel to provide
consultation and assistance to solve common product
questions and rights consultation channels.
(2) Follow local customer protection policies and accept
customer dissatisfaction returns for any reason.
(3) The company takes customer feedback seriously. The
analytical format of the report is written in 8D steps.
Fully communicate the report content with customers
and horizontally expand effective countermeasures to
other varieties with similar structures. "Avoiding the
recurrence of similar defects" is the important goal of
handling customer complaints.
(VI) Under the premise of ensuring product quality. Acquire raw
materials by means of using non-toxic and harmless raw
materials, localized procurement, no child labor, no violation
of
basic
human
rights,
environmental
protection,
occupational safety and health act. Prioritize the procurement
of raw materials with low impact on the environment to
achieve the purpose of protecting the environment and
product safety.
The Company stipulates in the "procurement procedure",
supplier evaluation and supplier contract that the material
shall notviolategreen environmental regulations,such as
(VI)Consistent

~~54~~

Items Evaluated Status Status Status Variation from
the Corporate
Social
Responsibility
Best Practice
Principles for
TSE/ GTSM
Listed
Companies, and
the reason
Yes No Brief Explanation
implement status? containing ROHS、REACH、WEEE. Require third-party
manufacturers to declare and agree to ensure that all materials
and material supply chains have been reasonably checked for
violations of basic human rights, environmental protection,
occupational safety and health act and Included in the "third-
party production contract".
The Company also regularly implements supplier evaluation
and regularly and irregularly holds meetings with suppliers
for evaluation. Concerned about whether suppliers have a
record of affecting the environment and social responsibility
and
work
together
to implement
corporate
social
responsibility,and found no abnormal situation.
V. Does the company refer
to the internationally
accepted reporting
standards or guidelines
to prepare corporate
social responsibility
reports and other reports
that disclose the
company's non-financial
information?
Does the previous
disclosure report has
obtained the conviction
or assurance opinion of
the third-party
verification unit?		 The Company discloses the systems and measures adopted for
social responsibility and the fulfillment of social responsibility in
the annual report. The information will be announced on the public
information observatory in a timely manner. The company's
website has not disclosed corporate social responsibility related
information.		 The Company
will discuss
and handle it
according to
actual needs.
VI. If the Company has established its corporate social responsibility code in accordance with the "Corporate Social
Responsibility Best Practice Principles for TSE/ GTSM Listed Companies", please clarify the difference between its
operation and the established code. The company's corporate social responsibility practice code and related regulations
are still under development.
VII. Other important information that can help understand the operation of Corporate Social Responsibility:
(I) Eco-friendly, security and health: Environmental protection equipment that conforms to government regulation has
been installed and advocates labor safety education and training.
(II) Consumer rights: Already purchased product liability insurance.
(III) Community Participation, Social Contribution, Social Service, Social Welfare, Human Rights: The company always
spared no effort in providing social care and emergency assistance. Donate to the Taiwan Fund for Children and
Families (TFCF) on a monthly basis, and also provide financial support from time to time for promoting community
development and social responsibility.
  • (VI) Practice of ethical corporate government and the variation with the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, and the reason
Items of evaluation Thepursuit Variation from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/GTSM Listed
Companies
Yes No Summary Explanation
I. Establishment of the ethical corporate
managementpolicyand actionplans

~~55~~

Items of evaluation Thepursuit Variation from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/GTSM Listed
Companies
Yes No Summary Explanation
(I) Has the Company made policies of
ethical corporate management passed
by the Board, and explicitly stated the
ethical corporate management policy
and related action plans, and the
commitment of the Board and the
senior management in the proper
pursuit of the ethical corporate
management policy?
(II) Has the Company developed the
mechanisms for the assessment of the
risk of unethical practices, and
conducted analysis and assessed the
kind of business activities vulnerable
to the risk of unethical practices
within the scope of operation at
regular intervals, and mapped out the
solution for preventing such practices
covering at least the preventive
measures as stated in Paragraph 2
under Article 7 of the “Ethical
Corporate Management Best Practice
Principles for TWSE/GTSM Listed
Companies”?
(III) Has the Company mapped out the
solution for preventing unethical
practices, and specified the
operation procedures, code of
conduct, penalty on violation and
the system for complaints in the
solutions, and properly
implemented the plans with routine
review and revision of the
aforementioned solutions?

(I) The Company has established the
"Operating Procedures and
Behavioral Guidelines for Integrity"
as a commitment to the
implementation of its operating
policy and has published its operating
philosophy on its official website to
make clear its policy of operating
with integrity.
(II) The Company has established the
"Code of Conduct and Integrity
Practices" which prohibits directors,
managers and all employees of the
Company from engaging in business
activities that pose a higher risk of
dishonest conduct than those
described in paragraph 2 of Article 7
of the " Ethical Corporate
Management Best Practice
Principles for TWSE /GTSM Listed
Companies " or other business
activities within the scope of the
Company's business.
(III) The Company has established the "
Code of Conduct and Integrity
Practices " as a standardized
approach to prevent dishonest
behavior for its employees to follow
and implement.		 (I) Consistent.
(II) Consistent.
(III) Consistent.
II. Practice of ethical corporate management
(I) Has the Company assessed the record of
integrity on the counterparties of trade,
and explicitly stated the integrity clause
in the contracts binding the
counterparties and the Company?
(II) Has the Company established a
designated body charged with the
advocacy of business integrity under
ethical corporate management on a full-
time (part-time) basis under the direct
supervision of the Board, and report to
the Board of the ethical corporate
management policy and the plans for
prevention of unethical practices with
monitoring on the enforcement of the
plans at regular intervals (at least once a
year)?
(I) After confirming the cooperation with
the supplier, the company will require
the other party to sign a contract as a
sign of compliance with the relevant
integrity requirements set by the
Company.
(II) The Company's Corporate Integrity
Unit is the head of corporate
governance under the Board of
Directors and is responsible for
promoting the fulfilment of social
responsibility in the area of
corporate integrity in accordance
with the scope of its duties. The
Board of Directors reports annually
on 17 January 2024 on its program
and oversees its implementation and
no anomalies were noted.		 (I) Consistent.
(II) Consistent.

~~56~~

Items of evaluation Thepursuit Variation from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/GTSM Listed
Companies
Yes No Summary Explanation
(III) Has the Company established the
policies for the avoidance of the
conflict of interest and appropriate
channels for expression, and properly
pursued these policies?
(IV) For the proper pursuit of ethical
corporate management, has the
Company established an effective
accounting system and internal control
system, with related audit plans
designed by the internal audit function
on the basis of the findings of the
assessment on the risk of unethical
practices basing on which audit on
prevention of unethical practice will be
conducted, or CPAs will be delegated
for conducting the audit?
(V) Has the Company organized internal
and external training on ethical
corporate management at regular
intervals?
(III) The Company sets a customer
complaint handling standard and
customer feedback processing
procedures to prevent conflicts of
interest.
(IV) The Company has formulated an
internal control system in
accordance with the regulations,
and the implementation of relevant
operating specifications should be
checked by Auditors through spot
checks on compliance with the
audit plan.
(V) The Company currently promotes
integrity to its employees, but no
regular training is provided.		 (III) Consistent.
(IV) Consistent.
(V) The Company
will consider the
matter depending
on the need of the
Company.
III. The functioning of the informing and
complaint system of the Company
(I) Has the Company established the
informing and complaint system and
channels for facilitating informing
and complaint, and appointed
designated personnel to
appropriately handle the personnel
accused of unethical practice?
(II) Has the Company established the
standard operation procedure for
processing reports and complaints,
the actions to be taken after the
investigation, and the mechanisms
of confidentiality?
(III) Has the Company taken
appropriate measures for the
protection of the informants from
undue treatment due to reporting
on illegal or unethical practice?

(I) The head of the management
department of the company is the unit
that accepts complaints. If the
complaint has been verified to be
true, will be punished or rewarded
according to the company's "Reward
and Punishment Management
Measures".
(II) According to the "Guidelines for
Integrity Operation Procedures and
Behaviors" established by the
company, the identity and content of
the whistleblower will be kept
confidential.
(III) According to the "Guidelines for
Integrity Operation Procedures and
Behaviors" established by the
company, the company has taken
measures to protect whistleblowers
from being mistreated due to
whistleblowing.		 (I) Consistent.
(II) Consistent.
(III) Consistent
IV. Enhanced Information Disclosure
Has the Company disclosed the content
of its Ethical Corporate Management
Best Practice Principles and the result of
implementation at its official website
and MOPS?		 The Company has set up a website and
disclosed the information relating to its
integrity in its annual report as required.		 Consistent.

~~57~~

Items of evaluation Thepursuit Thepursuit Thepursuit Variation from the
Ethical Corporate
Management Best
Practice Principles for
TWSE/GTSM Listed
Companies
Yes No Summary Explanation
V. If the Company has established its Ethical Corporate Management Best Practice Principles in accordance with the
“Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies”, specify the practice and
variation from the principles:
The Company is committed to integrity and requires all staff to comply with relevant laws and regulations in the
conduct of its business. Any deviations from the Code of Conduct will be progressively considered as necessary.
VI. Other important information helpful for understanding the integrity of the company's operations (e.g., review of the
revision of its Code of Conduct on Integrity,etc.): None.

  • (VII) Corporate Governance Code of Practice for Disclosure Enquiries: Please refer to (III) for a description of the operation of corporate governance in point 7.

  • (VIII) Other important information that would enhance understanding of the operation of corporate governance may be disclosed together with: The Company has a code of ethical conduct which serves as a guideline for directors, supervisors, managers and employees of the Company in the conduct of their business on behalf of the Company.

  • (IX) Required disclosure of the status of implementation of the internal control system:

  • Statement of Internal Control: Please refer to the next page.

  • Where a company is required by the Securities and Futures Bureau (SFB) to appoint an accountant to conduct a project to review the internal control system, the CPA's review report should be disclosed: Not applicable.

~~58~~

CHANG TYPE INDUSTRIAL CO., LTD.

Declaration of Internal Control

Date: 14 March 2024

Based on the findings of a self-assessment, the Company states the following with regard to its internal control system during 2023:

  • I. The Company’s Board of Directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Internal control system is designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency and regulatory compliance of our reporting, and compliance with applicable rulings, laws and regulations.

  • II. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and the Company takes immediate remedial actions in response to any identified deficiencies.

  • III. The Company evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the “Regulations Governing the Establishment of Internal Control Systems by Public Companies” (hereinafter “the Regulations”). The criteria adopted by the Regulations identify five key components of managerial internal control: (1) control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each component also includes several items which can be found in the Regulations.

  • IV. The Company has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.

  • V. Based on the findings of such evaluation, the Company believes that, on December 31, 2023, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency and regulatory compliance of reporting, and compliance with applicable rulings, laws and regulations.

  • VI. This Declaration is an integral part of the Company’s annual report and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Act.

  • VII. This Declaration was passed by the Board of Directors in their meeting held on 14 March 2024, with none of the 7 attending directors expressing dissenting opinions, and the remainder all affirming the content of this Declaration.

CHANG TYPE INDUSTRIAL CO., LTD.

Chairman: CHANG, CHIN-CHIN

President: CHANG, CHIN-CHIN

==> picture [38 x 75] intentionally omitted <==

~~59~~

  • (X) From the most recent fiscal year up until the date of publication of the Annual Report, explain any legal penalty against the company or its internal personnel, or any disciplinary actions by the company against its personnel for violation of the internal control system, where the result of such penalty could have a material effect on shareholder equity or securities prices, the penalty, material deficiencies, and condition of improvement shall be disclosed: None.

  • (XI) Material resolutions at the Board Meeting and Shareholders’ Meeting in the most recent year and up to the date of publication of the annual report:

  • 19 June 2023 Regular shareholders’ meeting

    • (1) Approved the proposal of 2022 annual business report and financial statement.

    • (2) Approved the proposal of 2022 profit distribution. Implementation Status: The Earnings of 2022 have been resolved to distribute a cash dividend of $1.0 per share.

    • (3) Approved amendments to part of the articles of the Company's “Procedures for loaning funds to others” Implementation Status: Implemented after the resolution of the shareholders’ meeting was passed.

    • (4) Approved amendments to part of the articles of the Company's “Regulations Governing the Acquisition and Disposal of Assets”.

      • Implementation Status: Implemented after the resolution of the shareholders’ meeting was passed.

  • 17 January 2023 Board meeting

    • (1) Approved the proposal of the company's 2022 year-end bonus payment.

    • (2) Approved recognition of past due accounts receivables from subsidiaries not being classified as loaning of funds case as of December 2022 .

    • (3) Approved amendment to part of the articles of this Company’s “Regulations Governing Operational Procedure of Loaning of Funds to Others”.

  • 13 March 2023 Board meeting

    • (1) Reported on board performance evaluation report.

    • (2) Approved the 2022 Annual Remuneration Distribution Proposal for employees, directors and Supervisors.

    • (3) Approved the 2022 business report and Financial Statements.

    • (4) Approved the Company's 2023 annual operating plan.

    • (5) Approved the 2022 annual surplus distribution plan.

    • (6) Approved the 2022 Annual Internal Control Statement.

    • (7) Approved evaluation of the independence and suitability of the Company’s CPA for 2023.

    • (8) Approved Matters related to the convening of the 2023 annual general meeting of shareholders of the company.

    • (9) Approved operation process for accepting shareholder proposals at the 2023 annual general meeting of shareholders.

    • (10) Approved appointment of the Corporate Governance Supervisor of the Company.

  • 8 May 2023 Board meeting

    • (1) Report on the Company’s consolidated financial statement of Q1 2023.

    • (2) Approved the Company’s lease agreement for the land use rights of Plot No. 11 in the Juxing Industrial Park, Tanzi District of Taichung City, from Taiwan Sugar Corporation, a non-related party.

    • (3) Approved recognition of past due accounts receivables from subsidiaries not being classified as loaning of funds case as of March 2023.

    • (4) Approved extension of the short-term financing loan limit through financial institutions.

    • (5) Approved amendments to some of the provisions of the Company's “Regulations Governing the Acquisition and Disposal of Assets” .

    • (6) Approved the matters related to convening the regular shareholders’ meeting for 2023 of the Company and the addition of amendments to part of the articles of the Company's “Regulations Governing the Acquisition and Disposal of Assets” .

  • 7 August 2023 Board meeting

~~60~~

  • (1) Approved financial report for the first half of 2023.

  • (2) Approved review of the allocation details for the remuneration of employees(managerial officers) and directors.

  • (3) Approved recognition of past due accounts receivables from subsidiaries not being classified as loaning of funds case as of June 2023.

  • 6 November 2023 Board meeting

  • (1) Approved financial report for the first three-quarters of 2023.

  • (2) Approved establishment of the audit plan for 2024.

  • (3) Approved recognition of past due accounts receivables from subsidiaries not being classified as loaning of funds case as of September 2023.

  • (4) Approved amendments to part of the articles of the Company's “Corporate Social Responsibility Best Practice Principles”.

  • (5) Approved the appointment of the Company’s information security supervisor.

  • (6) Approved amendments to part of the articles of the Company's “Rules of Procedure for Board of Directors Meetings”.

  • 22 January 2024 Board meeting

  • (1) Report on the intellectual property management plan for 2023 and the implementation status .

  • (2) Report on the implementation status of the risk management for 2023.

  • (3) Report on the implementation status of ethical corporate management for 2023.

  • (4) Report on the execution status of greenhouse gas inventory for 2023.

  • (5) Approved distribution of year-end bonuses for 2023.

  • (6) Approved recognition of past due accounts receivables from subsidiaries not being classified as loaning of funds case as of December 2023.

  • (7) Approved amendments to part of the articles of the Company's “Articles of Incorporation”.

  • 14 March 2024 Board meeting

  • (1) Report on the board performance evaluation.

  • (2) Approved 2023 employees, directors and supervisors compensation distribution.

  • (3) Approved 2023 business report and financial statements.

  • (4) Approved the company's 2023 annual operating plan.

  • (5) Approved 2023 earnings distribution case.

  • (6) Approved 2023 statement of internal control.

  • (7) Approved evaluation of the independence and suitability of the Company’s CPA for 2024.

  • (8) Approved the addition of providing loans to the Company’s subsidiaries.

  • (9) Approved matters related to the convening of the 2024 annual general meeting of shareholders of the company.

  • (10) Approved operation process for accepting shareholder proposals at the 2024 annual general meeting of shareholders.

  • 6 May 2024 Board meeting

  • (1) Report on the execution status of directors, supervisors, and managers' liability insurance coverage.

  • (2) Report on the Company’s consolidated financial statement of Q1 2024.

  • (3) Approved extension of the short-term financing loan limit through financial institutions.

  • (XII) Major contents of any dissenting opinions on record or stated in a written statement made by Directors or Supervisors regarding material resolutions of the Board Meeting in the most recent year up to the publication date of this Annual Report: None.

  • (XIII) Resignation or dismissal of the company’s key individuals, including the chairman, President, and heads of accounting, finance, internal audit and R&D in the most recent fiscal year up to the publication date of this Annual Report: None.

~~61~~

  • V. Information on Replacement of CPAs: None.

  • VI. In case the Chairman, President, Chief Financial Officer or Chief Accounting Officer of the Company who has been employed by the CPA firm retained for services or its affiliate, disclose the name, title, and the duration of employment by the CPA firm or its affiliate: None.

  • VII.In the previous period to the date this report was printed, the transfer of shares or changes in the pledge of shares under lien by the Directors, Managers, and shareholders holding more than 10% of the shares issued by the Company

(I) Status of changes in equity:

Title Name 2023 2023 As of 23April 2024 As of 23April 2024
Holding Increase
(decrease)		 Pledged Holding
Increase
(decrease)		 Holding Increase
(decrease)		 Pledged Holding
Increase
(decrease)
Chairman CHANG, CHIN-CHIN - - - -
Director CHANG, HSIANG-I - - - -
Director LUO, SHU-DUAN - - - -
Independent
Director		 LIN, HSIU-MEI - - - -
Independent
Director		 CHEN, YONG-YAO - - - -
Independent
Director		 KO, CHEN-EN - - - -
Independent
Director		 WANG, MING-JHIH - - - -
President of
Finance
Department		 CHANG, CHIN-HUA - - - -

(II) Information on the counterparty of the equity transfer who is a related party: None.

(III) Information on the counterparty of the equity pledge as a related person: None.

~~62~~

VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023		 VIII. The top 10 shareholders by proportion of shareholding are related parties, spouse, kindred
within the 2nd tier to one another
23 April 2023
Name Shares Held Shares Held by Spouse &
minors		 Shares Held
in the Name
of Others		 If the top 10 shareholders by proportion of
shareholding are related parties, spouse,
kindred within the 2nd tier to one another,
specifythe names and relation.		 Re
ma
rk
Shares % Shares % Shares % Title
(or name)		 Relationship
CHANG, CHIN-CHIN 18,080,201 22.94% 11,549,766 14.66% - - LIU, HSIU-
YUEH
CHANG,
HSIANG-I
CHANG, QUN-
YU
CHANG, YA-
LING
CHANG, YA-
HUI
Kun Dun
Company
Yan Shih
Company
Hong Guan
Investment
Co., LTD
Dong Li
Investment
Co.,LTD		 Spouse
Father & daughter
Father & son
Brother & sister
Brother & sister
Person in charge itself
The person in charge is the
spouse
The person in charge is within
third-tier relatives
The person in charge is within
second-tier relatives		 -
LIU, HSIU-YUEH 11,549,766 14.66% 18,080,201 22.94% - - Same asCHANG, CHIN-CHIN's
description above		 -
CHANG, HSIANG-I 7,090,569 9.00% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
CHANG, QUN-YU 6,937,444 8.80% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
E-SUN Bank is
entrusted to custody
the investment
account of Kun Dun
International Limited
Representative:
CHANG, CHIN-CHIN		 4,752,351 6.03% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
18,080,201 22.94% 11,549,766 14.66 - - Same asCHANG, CHIN-CHIN's
description above		 -
Dong Li Investment
Co., LTD
Representative:
CHANG, JING-LUN		 4,281,400 5.43% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
578,627 0.73% 219,002 0.28% - - Same asCHANG, CHIN-CHIN's
description above		 -
Hong Guan
Investment Co., LTD
Representative:
WANG YU-TING		 3,257,400 4.13% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
259,951 0.33% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
CHANG, YA-LING 3,046,555 3.87% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
E-SUN Bank is
entrusted to custody
the investment
account of Yan Shih
International
Investment Limited
Representative:LIU,
HSIU-YUEH		 2,690,271 3.41% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
11,549,766 14.66 18,080,201 22.94% - - Same asCHANG, CHIN-CHIN's
description above		 -
LIANG, FANG-YU 970,000 1.23% - - - - Same asCHANG, CHIN-CHIN's
description above		 -
~~3~~

~~63~~

IX. The quantity of shares issued by particular investee company held jointly by the Directors, Managers, and direct or indirect controlled entity of the Company, and the proportion of shares under joint holding

under joint holding
Unit: share; %
Reinvestment Business Investment of the
Company		 Investment of the Directors,
Managers or direct or indirect
controlled business		 Overall investment
Shares % Shares % Shares %
Delta Power Equipment Corporation 10,010 100% - - 10,010 100%

~~64~~

Status of fundraising

I. Capital stock and shares of the Company

(I) Sources of capital

23 April 2024

Year
/month		 Offering
price
($)		 Authorized capital Authorized capital Capital Stock Capital Stock Remark Remark
Number of
shares
(1,000
shares)		 Amount
(NT$1,000)		 Number of
shares
(1,000
shares)		 Amount
(NT$1,000
)		 Sources of capital Non-cash
investment
in kind		 Others
1989/4 10,000 2 20,000 2 20,000 Established in cash None None
1997/8 10,000 6 60,000 6 60,000 Raising capital by cash to
NTD40,000 thousand		 None None
1998/11 10 12,800 128,000 12,800 128,000 Raising capital by cash to
NTD51,800 thousand
Capitalization of retained
earnings into new shares
amounting to NTD16,200
thousand		 None None
1999/6 10 19,800 198,000 19,800 198,000 Raising capital by cash to
NTD70,000 thousand		 None None
1999/12 10 30,270 302,700 30,270 302,700 Raising capital by cash to
NTD75,000 thousand
Capitalization of retained
earnings into new shares
amounting to NTD29,700
thousand		 None None
2001/1 10 36,824 368,240 36,824 368,240 Capitalization of retained
earnings into new shares
amounting to NTD60,540
thousand
Capitalization of employee
bonus into new shares
amounting to NTD5,000
thousand		 None None
2001/9 10 48,003 480,030 48,003 480,030 Capitalization of retained
earnings into new shares
amounting to
NTD106,790 thousand
Capitalization of employee
bonus into new shares
amounting to
NTD5,000 thousand		 None None
2002/6 10 98,000 980,000 60,504 605,037 Capitalization of retained
earnings into new shares
amounting to
NTD120,007 thousand
Capitalization of employee
bonus into new shares
amounting to
NTD 5,000 thousand		 None None

~~65~~

Year
/month		 Offering
price
($)		 Authorized capital Authorized capital Capital Stock Capital Stock Remark Remark
Number of
shares
(1,000
shares)		 Amount
(NT$1,000)		 Number of
shares
(1,000
shares)		 Amount
(NT$1,000
)		 Sources of capital Non-cash
investment
in kind		 Others
2003/6 10 118,000 1,180,000 67,217 672,166 Capitalization of retained
earnings into new shares
amounting to
NTD63,529 thousand
Capitalization of employee
bonus into new shares
amounting to
NTD3,600 thousand		 None None
2004/6 10 118,000 1,180,000 68,239 682,388 Capitalization of retained
earnings into new shares
amounting to
NTD6,722 thousand
Capitalization of employee
bonus into new shares
amounting to
NTD3,500 thousand		 None None
2004/9 10 118,000 1,180,000 68,278 682,778 Conversion of convertible
bonds amounting to
NTD390 thousand		 None None
2007/4 10 118,000 1,180,000 68,365 683,646 Conversion of convertible
bonds amounting to
NTD868 thousand		 None None
2008/10 10 118,000 1,180,000 71,783 717,828 Capitalization of retained
earnings into new shares
amounting to
NTD34,182 thousand		 None None
2010/9 10 118,000 1,180,000 78,800 788,000 Capitalization of retained
earnings into new shares
amounting to
NTD70,172 thousand		 None None

  • Note:1. Retroactive handling of public issuance procedures was approved and became effective upon receiving an approval letter from the Securities and Futures Bureau, Ministry of Finance with Letter Tai-Tsai-Cheng (Yi) No.94536 on 4 November 1999.

  • Approved under the Securities and Futures Commission, Ministry of Finance Letter Tai Tsai Cheng (Yi) No.58908 dated 10 July 2000.

  • Approved under the Securities and Futures Commission, Ministry of Finance Letter Tai Tsai Cheng (Yi) No.148759 dated 24 July 2001.

  • Approved under the Securities and Futures Commission, Ministry of Finance Letter Tai Tsai Cheng (Yi) No.127118 dated 7 May 2002.

  • Approved under the Securities and Futures Commission, Ministry of Finance Letter Tai Tsai Cheng (Yi) No.0920128946 dated 30 June 2003.

  • Approved under the Financial Supervisory Commission, Executive Yuan, Letter Jin-Guan-Cheng (Yi) Zi No.0930133367 dated 26 July 2004.

  • Approved under the Ministry of Economic Affairs Letter Jing-Shou-Shang-Zi No.09301196990 dated 20 October 2004.

  • Approved under the Ministry of Economic Affairs Letter Jing-Shou-Shang-Zi No.09601218740 dated 7 September 2007.

  • Approved under the Ministry of Economic Affairs Letter Jing-Shou-Shang-Zi No.09701254240 dated 6 October 2008.

  • Approved under the Ministry of Economic Affairs Letter Jing-Shou-Shang-Zi No.09901216440 dated 27 September 2010.

~~66~~

Unit: share Unit: share Unit: share
Type of share Stated capital Remark
Outstanding
shares		 Unissued
shares		 Total
Common shares
(Registered)		 78,800,000 39,200,000 118,000,000 The outstanding shares are those listed on the
Taiwan Stock Exchange
Information on thegeneral reportingsystem
Type of
negotiable
security		 Amount to be issued Amount issued Issuance purpose and
expected benefits of
the issuedportion		 Unissued portion
scheduled issuance
period		 Remark
Total number
of shares		 Approved
amount		 Number
of shares		 Price
None None None None None None None None
~~6~~

~~67~~

(II) Shareholder Structure

(II) Shareholder Structure (II) Shareholder Structure (II) Shareholder Structure (II) Shareholder Structure (II) Shareholder Structure (II) Shareholder Structure (II) Shareholder Structure
23 April 2024
Structure
Amount		 Government
institutions		 Financial
institutions		 Other
institutions		 Individuals Foreign institutions
and nationals		 Total
Number of
persons		 0 4 13 2,611 13 2,641
Quantity of
shareholding		 0 67,000 8,251,993 62,788,616 7,692,391 78,800,000
Proportion of
shareholding		 0.00% 0.09% 10.47% 79.68% 9.76% 100.00%
Shareholdingratio byinvestors from China：0.00%

(III) Distribution of Shareholding

istribution of Shareholding
23 April 2024
Shareholding Range Number of
Shareholders		 Shareholding Shareholding
Percentage
1 to 999 822 88,225 0.11%
1,000 to 5,000 1,444 2,832,298 3.59%
5,001 to 10,000 184 1,482,352 1.88%
10,001 to 15,000 45 589,964 0.75%
15,001 to 20,000 28 528,431 0.67%
20,001 to 30,000 39 1,012,449 1.28%
30,001 to 40,000 14 505,877 0.64%
40,001 to 50,000 12 563,000 0.71%
50,001 to 100,000 21 1,441,639 1.83%
100,001 to 200,000 4 557,000 0.71%
200,001 to 400,000 13 3,398,166 4.31%
400,001 to 600,000 3 1,544,627 1.96%
600,001 to 800,000 1 713,148 0.91%
800,001 to 1,000,000 2 1,856,867 2.36%
1,000,001 and above 9 61,685,957 78.28%
Total 2,641 78,800,000 100.00%

(IV) Major Shareholders

The names of the dominant shareholders with a shareholding ratio of more than 5% or the shareholding ratio accounting for the top ten, the shareholding amount and ratio are as follows:

accounting for the top ten, the shareholding amount and ratio are as follows: accounting for the top ten, the shareholding amount and ratio are as follows:
23 April 2024
Shares
Names of Major Shareholders		 Shareholding
Shareholding
Percentage
CHANG, CHIN-CHIN 18,080,201 22.94
LIU, HSIU-YUEH 11,549,766 14.65
CHANG, HSIANG-I 7,090,569 8.99
CHANG, QUN-YU 6,937,444 8.80
E-SUN Bank is entrusted to custody the investment
account of Kun Dun International Limited		 4,752,351 6.03
Dong Li Investment Co., LTD 4,281,400 5.43

~~68~~

(V) Market Price, Net Worth, Earnings, and Dividend Per Share in the Last 2 Years and Related Information

Item Year Year 2022 2023 As of 31 March 2024
(Note 8)
Market Price
Per Share
(Note 1)		 Highest Market Price 60.40 41.10 33.45
Lowest Market Price 29.40 29.15 30.50
Average Market Price 41.09 33.98 31.98
Net Worth Per
Share (Note 2)		 Before Distribution 23.81 24.25 24.80
After Distribution 22.81 23.75 24.30
Earnings Per
Share		 Weighted Average Shares 78,800,000 78,800,000 78,800,000
Earnings
per share
(Note 3)		 Before adjustment 3.45 1.46 0.76
After adjustment 3.45 1.46 0.76
Dividend Per
Share		 Cash Dividends 2.50 0.50 0.00
Stock
grants		 Distribution of
retained earnings as
dividend		 0 0 0
Stock dividend
from capitalization
of additional paid-
in capital		 0 0 0
Accumulated Undistributed
Dividend (Note 4)		 0 0 0
Analysis of
return on
investment
(ROI)		 Price/Earnings Ratio(Note 5) 11.91 23.25 42.08
Price/Dividend Ratio(Note 6) 41.09 67.96 0.00
Cash Dividend Yield (Note 7) 2.43 1.47 0.00

Note 1: List the highest and lowest market price of the year, calculate the average market price on the basis of the transaction value and volume of the year.

Note 2: Fill in the information as per the resolution of the shareholder’s meeting of the following based on the number of outstanding shares as of the end of the year.

Note 3: If retroactive adjustment is required due to the gratuitous payout of stock dividend, list the earnings per share before and after adjustment.

Note 4: If the requirement of the offering of equity securities allows for the accumulation of the unpaid dividend of the year to the year the Company has surplus, disclose the unpaid dividend accumulated to current period.

Note 5: Price earnings ratio = the average closing price per share of the year/ earnings per share.

Note 6: Price to cash dividend ratio = the average closing price per share of the year/ cash dividend per share. Note 7: Cash dividend yield = cash dividend per share/ average closing price per share of the year.

Note 8: Information on book value per share and earnings per share should be the most recent quarter information audited (reviewed) as of the date this report was printed. Fill in the information of the year in the relevant fields to the date this report was printed.

(VI) Dividend policy of the Company and the distribution:

  1. After the financial statement, the current year’s earnings of the Company, if any, shall be distributed in the following order:

  2. a. Payment of all taxes and dues;

  3. b. Offset prior years’ operation losses;

  4. c. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve;

  5. d. Set aside or reverse special reserve in accordance with law and regulations; and

  6. e. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

When the statutory surplus reserve in Paragraph 1 has reached the company's paid-in capital, the statutory surplus reserve may not be set aside.

The policy of dividend distribution is determined by the board of directors based on the factors such as operating planning, the investment plan, capital budgets and change of domestic and international environment. The Company operates in a capital-intensive industry and is currently in the stage of operational growth. It is necessary to reserve surplus funds to meet operational growth and investment needs. At this stage, a residual dividend policy is adopted. When the Company distributes the dividends in the preceding paragraph, the annual cash dividends to shareholders shall not be less than 5% of the total amount of cash and stock dividends distributed in the current year.

When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by cash in compliance of Company Act. The board of directors is authorized to report to the shareholders’ meeting with the attendance of more than two-thirds of the directors and the resolution of more than half of the directors present.

~~69~~

  1. The proposed dividend distribution of this year (not yet approved by the shareholders’ meeting): The board of directors of the Company passed a resolution on 13 March 2023 to set aside $ 27,982,634 as a statutory surplus reserve for the undistributed surplus as of the end of 2022 and a cash dividend of $78,800,000 for shareholders (a cash dividend of $1 per share).

  2. (VII) The influence of the stock dividend proposed to this session of the Shareholder Meeting for release on the operation performance and earnings per share of the Company: Not applicable.

  3. (VIII) Remunerations to employees, directors and supervisors

  4. The percentage and scope of remunerations to the employees, Directors and Supervisors of the Company as stated in the Articles of Incorporation. The percentage and scope of remuneration for employees, directors and supervisors set out in Article 30 of the Articles of Association of the Company are as follows:

  5. (1) Employee remuneration: If the Company has earnings after the annual account settlement, not less than 1% should be allocated

  6. (2) Director and supervisor remuneration: If the Company has earnings after the annual account settlement, not more than 5% should be allocated

  7. The basis for the estimation of the amount of remuneration to the employees, directors and supervisors in current period, the basis for the calculation of the quantity of shares for release to employees as stock dividend, and the accounting procedure if there is a difference between the actual amount of payment and the estimated amount: The remuneration of employees and directors and supervisors to be distributed by the Company in accordance with the Company Act and the Articles of Incorporation of the Company shall be estimated in advance when preparing the interim and annual financial statements in accordance with the Accounting Research and Development Foundation (96) Ji-Mi-Zi Interpretation Letter No. 052. The nature of the remuneration of employees and directors and supervisors is included as an appropriate accounting item under operating costs or operating expenses. If there is any discrepancy between the distribution amount determined by the shareholders' meeting and the estimated amount in the financial statements subsequently, it will be regarded as a change in the estimate and listed as the current profit and loss of the distribution. If part of the shareholders' meeting to assign employee remuneration is to distribute by shares, the basis for calculating the number of shares is based on the closing price on the day before the resolution of the shareholders' meeting and the impact of ex-rights and ex-dividends.

  8. The remuneration passed by the Board:

  9. (1) Remuneration of employees and directors and supervisors distributed in cash or stock. If there is a discrepancy with the estimated amount in the year of recognition of expenses, the number of discrepancies, reasons and handling shall be disclosed: On 13 March 2023, the board of directors of the company approved the proposed distribution of cash dividends of NT$8,788,779 to employees and remuneration of directors and supervisors of NT$7,031,023. In addition, there is no material difference between the total amount of NT$15,819,802 proposed to be allotted and the amount of NT$15,819,802 recognized as expenses in 2022.

  10. (2) The amount of employee remuneration distributed in stock and its proportion to the total amount of after-tax net profit and total employee remuneration in the current period's parent only or individual financial report: Not applicable.

  11. The actual amount of remuneration to the employees, directors and supervisors in the previous period (including the quantity of shares released, the amount and stock price), and specify the difference, the cause and response if there is significant variation from the estimated remuneration to the employees, directors and shareholders:

shareholders:
2022 Actual amount
distributed		 Book Amount Difference
Remuneration to employees 8,788,779 8,788,779 -
Remuneration to Directors
and Supervisors		 7,031,023 7,031,023 -
Total 15,819,802 15,819,802 -

  • (1) Remuneration to employees: Employees are paid according to the results of the current year's performance evaluation and taking the distribution situation of the past years into account.

  • (2) Remuneration to directors and supervisors: Independent directors and supervisors are paid according to the agreed remuneration in accordance with the "Regulations on the Management of Salary and Remuneration of Directors, Supervisors and Managers", and do not participate in the distribution of remuneration.

~~70~~

  • (IX) The buy-back of shares by the Company: None.

  • II. Corporate bonds: None.

  • III. Preferred shares: None.

  • IV. Overseas depository receipts: None.

  • V. Employee Stock Option: None.

  • VI. RSU/RSA: None.

  • VII. Merger and Acquisition (including merger, acquisition and spinoff): None.

  • VIII. Information on the implementation of the capital utilization plan: As of the quarter prior to the publication date of the annual report, the Company had no capital utilization plan that has not been completed or that the plan has been completed but the benefits have not yet appeared.

~~71~~

V. Operation Overview

I. Business Content

  • (I) Business Scope

  • Major Business Content:

Mainly engaged in the manufacturing, processing, and trading of hand tools, computer machinery, motors, electric tools, automatic control systems, computer machinery, electric testing instruments, woodworking machinery and hardware parts.

  • 2.2023 Major Business Revenue Distribution:
Product Amount
(in thousands)		 Proportion %
Electric
tools		 3,378,030 100
Total 3,378,030 100
  1. Current Product or Service of the Company

The Company's current main products are various types and sizes of miter saw, wire saw machine band saw, radial arm saw, table saw, tile saw, tripod, etc. woodworking tools, which belongs to electric tools, is developed, and manufactured according to customer needs, and its related services is also provided by the Company.

  1. New Product Development Planning: In addition to meeting market development and customer needs, the Company is also actively planning to develop machine tool, such as chop saw, tile saw, etc., to make the product portfolio more complete.

  2. (II) Industry Outlook

  3. Industry Outlook and Prospect

The domestic DIY electrical machine tool manufacturers have undergone changes in the production environment due to rapid changes in social and economic patterns, increased awareness of environmental protection, shortage of human resources, and material changes in cost structures caused by the appreciation of NT$. However, the industry combines related technologies and the introduction of automated production equipment, as well as the existing supply system and overall industrial capability, to improve its own strength and structure, and to actively promote products to various market. Therefore, the quality of Taiwan’s DIY electric tools become increasingly improved.

Taiwan's DIY electrical machine tool are mainly marketed in Europe and America, especially in the United States and Canada. Currently, the domestic DIY electrical machine tool have played a decisive role in the world, and their global competitiveness is relatively high. The DIY electrical machine tool products take safety as the most important quality assurance. The Company does not follow the traditional OEM standards but cooperates via ODM with internationally well-known industry players. The Company has made great progress in R&D technology, and has been highly valued by international competitors, giving the Company high international competitiveness.

2. The association between the upstream, midstream, and downstream industries:

The main raw materials of table electrical machine tool include aluminum materials, plastics, steel, cast iron, steel plate, rotor/stator, commutator, blade, powder metallurgy, hardware parts, commutator, etc. Because the domestic manufacturing technology is mature and stable, and the product quality meets the requirements, most of the material are supplied by domestic professional manufacturers. Certain plastics, blade, etc. are mainly supplied by professional suppliers in the United States and Japan due to the precision and stability require for the finished product.

~~72~~

Due to the industry characteristics of woodworking machines, the production of electrical machine tool involves professional technologies such as forging, metal processing, heat treatment and surface treatment, and the processing level is high. Therefore, most of the manufacturing processes are produced by a complete processing cooperative system. The plant mainly focuses on product development, motor manufacturing, finished product assembly and testing, packaging, and the division of labor, which is a precise manufacturing process. The Company is located in the Taichung and Changhua areas where Taiwan's machinery industry suppliers and outsourcing factories are gathered. Due to the complete satellite system support, the operation is fast and flexible, and the production cost is reduced. A corporate synergy system has been constructed with the Company as the main body and third-party manufacturers as the supporting unit enhanced the Company's competitiveness.

The United States is the main market for Taiwan’s electrical machine tool, and the market in the United States is mainly represented by retail department stores such as Home Depot, Lowe’s, and Sears.

3. Various Product Development Trends

  • (1) The R&D of light, durable and strong new materials, the application of continuously variable function, the creation of unique patented design, and widely acceptable price.

  • (2) Incorporating the increased awareness of environmental protection into products design, recycling, and consumer protection that are valued by the world. The product parts and packaging materials uses recyclable or renewable materials. With the enhanced consumer protection awareness, the product design must ensure that users are safe and protected without the fear of being harmed.

4. Product Competitiveness

The main domestic manufacturers of electrical sawtable top power tool are Rexon Industrial Corp., Ltd.., P&F Brother Industrial Corporation, Chiu Ting Machinery Co., Ltd., San-Chien Industry Co., Ltd., OAV Equipment and Tools, Inc., and other companies. Only a few have the ability to independently develop products and complete the finished product manufacturing. Except for Rexon Industrial Corp., Ltd.., which has its own sales under its private label, after the Company merged with Delta, a century-old electric tool brand in the United States, the market share of its private label business has increased year by year, and the production method of other companies is mainly OEM/ODM for big international brands. The Company's current main product, miter saw, occupies a decisive position in the American and Canadian markets. If the relevant domestic machinery industry wants to enter this industry, in addition to the need for high-quality and sophisticated technology, the independence of product development and marketing channels are the weakest among domestic industry players. Without a complete R&D team and sophisticated manufacturing technology, it is difficult to enter this industry.

Big electric tool manufacturers are mainly distributed in the United States, Japan, Germany, and other places, which are Black & Decker, Ryobi (TTI), DELTA, SKILL, PRO-TECH, JET, MAKITA, Bosch, Emerson, etc. Currently, Black & Decker and TTI are the brand cooperative manufacturers of OEM and ODM of the Company, and Delta is the Company's private label. The Company’s product is highly valued and appreciated in the North American market due to the stable and good quality and successful strategy.

(III) Technology and R&D Overview

  1. Technological Level of the Operation of the Company

  2. (1) Since the establishment of the Company in 1989, it has played the role of OEM and manufacturer through OEM or ODM technical cooperation with Emerson, Ryobi, Black & Decker, and TTI.

~~73~~

  • (2) The Company has been qualified by the ISO 9001-2015 version of quality certification to ensure the standard of product quality. In 2000, the Company took the lead in the industry to obtain the production certification of Black & Decker, the world's largest electric tool manufacturer. Since 2001, the Company has started to produce bench top power miter saw for its top brand "DeWalt", and its production technology capabilities have been recognized by international major manufacturers.

  • Development Direction of Future R&D Work

Item Development
Direction		 Explanation
1 Diverse
Product		 Finish the development of the full series of sawing products-tile saw,
steel tube, aluminum tube, angle iron, to make the product portfolio more
complete and to create different market segment compared to the
originalproduct.
2 Lightened
Product		 Lighten the weight of the product, value the trending appearance and
reduce burden of use.
3 Shared Parts To reduce the cost of production and increase productivity, the Company
integrate various single technology to simplify machinery parts
processing process and shorten the manufacturing process to increase the
sharedparts between machines and reduce unnecessary partsprocessing.
4 Modular
design		 Advantages are to reduce costs and shorten R&D schedule.
  1. R&D Personnel Education and Experience

The R&D personnel all have a college degree or above, are specialized in the fields of electrical engineering and machinery, and have rich professional experience in the woodworking machine industry. They continue to improve manufacturing process technology and develop forward-looking products.

  1. R&D Expenses in the most recent year to the date of this report was printed

Unit: In thousands of NTD

Unit: In thousands of NTD
Item 2023 First Quarter of 2024 2024 (Projected)
R&D Expense 17,508 5,152 40,000
Net Revenue 3,452,706 733,488
Proportion (%) 0.5 0.7

Note: Information of the first quarter in 2024 has been reviewed by CPAs.

5. R&D Objectives

  • (1) Establish its own technology, form barriers of entry, and enhance the Company's competitiveness; increase the market share of its private-label products and increase profits. The smart management plan and implementation status linked to the operational goals are as follows:

  • a. Number of patent applications and approvals in the past two years

Year
 The number of
applications
could be
reviewed		 Number
of
approval		 Country Type Explanation The
accumulated
number of
approval
2023 3 0 U.S.A. New Approval: None 26
Application:Table Saw Guard,
Wheeled Stand for Table Saw, Riving
Knife Assembly
2022 0 1 U.S.A. New Approval: Patent of Bevel lock 26

~~74~~

b. Patents purchased externally: 18 patents (18 from the United States)

Items: Drill Press, Table Saw, Planer Apparatus, Band Saw, Dust Collector, Drum Sander, Lathe, etc.

c.Trademarks of DELTA, SHOPMASTER, HOMECRAFT, BIESEMEYER, etc. : 42 trademarks.

Country Australia
(AU)		 Brazil
(BR)		 Canada
(CA)		 China
(CN)		 European
Union
(EM)		 Korea
(KR)		 Mexico
(MX)		 Taiwan
(TW)		 America
(US)		 Total
Number 1 6 1 2 1 3 1 5 22 42

  • (2) Quickly respond to customer needs and propose effective solutions.

  • (3) Look for potential R&D projects and commercialize efficiently.

  • (IV) Long and Short-Term Business Development Plan

  • Direction for Short-Term Business Development Plan

  • (1) Marketing Strategy

    • A. Expand product sales portfolio to increase the source of profits for the Company.

    • B. Strengthen market development to expand sales network.

  • (2) Management Policy

    • A. Continue to improve and strengthen the promotion of internal control, and enhance the Company’s management performance.

    • B. Introduce computerization to the office to enhance the management effectiveness and communication efficiency.

  • (3) Production Policy

    • A. Increase the proportion of outsourced production in the plant to make manufacturing more flexible and to help control production costs.

    • B. Vertical integration of process planning strengthens product competitiveness and improves product quality and profitability. Actively coach third-party manufacturers to make their quality and delivery more stable.

  • (4) Direction of Product Development

    • A. Recruit excellent R&D talents and purchase additional R&D equipment to improve R&D efficiency.

    • B. Carry out the development of diversified products and expand the product portfolio.

  • (5) Scale of Operation and Financial Cooperation

    • A. Carry out financial planning for various plans based on the principle of safety and stability.

    • B. Establish a close cooperative relationship with financial institutions and understand the financial market.

  • Direction for long-term business development plan

  • (1) Marketing Strategy

    • A. Continue to develop new products to win new customers and expand the scale of operation.

    • B. Construct marketing tunnels and increase sales tunnels.

    • C. Expand private label business market.

  • (2) Production Policy

    • A. Cultivate and integrate third-party manufacturers to create a competitive corporate synergy system.

    • B. Develop and enter into the production of woodworking machine components.

  • (3) Direction of Product Development

    • A.Develop environmentally friendly, humanized and numerically controlled woodworking machines to increase the added value of products.

    • B. Develop gardening and household maintenance products to expand the diversity of product portfolio.

~~75~~

(4) Scale of Operation

  • Through the R&D of new products, improve production technology and reduce production costs to expand the scale of operation and increase market share.

  • (5) Financial Strategy

Use the capital market to raise funds for the Company's long-term development.

II. Market, Production and Sales Overview

  • (I) Market Analysis:

  • Region of Sales of Major Products

Unit: In thousands of NTD Unit: In thousands of NTD
Year
Region		 2022 2023
Amount % Amount %
America 3,867,775 95.3 3,189,261 94.4
Other Regions 189,672 4.7 188,769 5.6
Total 4,057,447 100.0 3,378,030 100

2. Market Share

The market demand for DIY electrical machine tool covers the decoration industry, furniture industry, construction industry, etc., as well as general home improvement. It has become an indispensable tool for daily life. The electrical machine tool produced by the Company are continuing to improve or add functions, and improve quality, and have repeatedly achieved sales success. Among them, the main product, miter saw, occupies an important position in the North American market.

3. Future Market Supply and Demand, and Growth:

According to Dun & Bradstreet and IBIS World survey reports, the global DIY market has reached saturation, with global annual sales amounting to USD560 billion. The market concentration is high, mainly in North America and Europe, accounting for 85% of the global DIY market, followed by Japan and Australia.

The global DIY woodworking machine market is mainly concentrated in the United States. According to the marketing system observation of the American market, most of the hand tools, electric tools, components and hardware are sold through Hardware Stores, Home Centers, and DIY equipment stores. According to the report of the American DIY professional magazine, based on the data of the National Hardware Retailer Association, the market size of the American hardware DIY market reached USD398.2 billion in 2018, which has an increase of 6.3% over the previous year. Currently, there are approximately 22,000 Home Improvement and Hardware stores in the United States. Home Depot, Lowe’s Companies, Menards, Tractor Supply, and other businesses have dominated the hardware channel. The compound growth rate in the next five years (2019-2023) will reach 4.5%.

~~76~~

Taiwan’s woodworking machines are almost supplied to the export market, mainly in the United States. Due to the characteristics of the industrial structure and the advantages of the satellite system , the quality, delivery schedule and the price can all meet the market demand, and the new products will be launched in a timely manner, which is favored by the main manufacturing agents and distributors in the United States. There is still considerable room for growth in the production of woodworking machines in Taiwan.

~~77~~

4. Favorable and Unfavorable Factors of Competitive Niche and Development Prospect, and the Countermeasures

Item Completive Niche and Favorable Factors Unfavorable
Factors		 Countermeasures
(1)Major
Business
Content and
Development
Prospect		 In developed countries such as Europe, the United States,
and Canada, DIY woodworking machines are essential
tools for households, and do not belong to capital
expenditure of durable goods. Therefore, their demand is
less likely to decline significantly due to economic
changes.		 Price wars
with
competitors		 (1) Develop full series of
sawing products, to
complete the product
portfolio and to create a
different market segment
form the original product.
(2) Strengthen the
functionality of the
product and the innovative
design of the appearance
to stimulate the exchange
and purchasing desire
from the customers.
(3) Enhance various
operations from R&D to
the production of the
product to increase profits.
(2)Position in
the Industry		 (1) 10-inch miter saw produced and manufactured by the
Company has a significant position in the market
share of the North American market.
(2) In 2001, the Company took the lead in the industry
and obtained the production certification of Black &
Decker, the world's largest electric tool manufacturer.
The Company produced top-level "DeWalt" miter
saw was an OEM, and its process production
technology capabilities have been recognized by
international major manufacturers.
(3) In 2003, the Company received a production contract
from TTI to manufacture "Ridgid" miter saw for
Home Depot, the world's largest home improvement
chain channel.		 Price wars in
the same
industry and
China has
gradually
shortened
product cycles
and competed
on low prices.		 Develop high-end new
products, and develop new
materials for existing products
to reduce costs. In addition,
low-margin products are
transferred to regions with
lower costs for production to
increase profits.
(3)Supply of
Major Raw
Materials		 (1) The Company is located in the central region where
suppliers and outsourcing manufacturers of Taiwan's
machinery industry are gathered. The division of
labor of the satellite system and the support is
complete, and the operation is fast and flexible,
which enhances competitiveness.
(2) The production process includes forging, metal
processing, heat treatment and other professional
technologies, and the main processing is appointed to
third-party manufacturers. The Company focuses on
product development, motor assembly, finished
goods assembly and testing, which has a complete
system to control the production progress and
process quality of third-party manufacturers.		 The cost of
raw materials
such as
copper,
aluminum,
steel, iron, and
resin is easily
influenced by
fluctuations in
international
market prices
and exchange
rates.		 (1) Develop competitive
suppliers domestically and
abroad.
(2) Develop high-end new
products to meet market
demand, update materials
and reduce costs.
Production is vertically
integrated to reduce costs.
Low-margin products are
moved to low-cost regions.
(4)Sales of
Major		 The 10-inch miter saw produced by the Company
occupies a significant position in the North American		 The
proportion of		 Strengthen R&D, quality
assurance, quality control and

~~78~~

Item Completive Niche and Favorable Factors Unfavorable
Factors		 Countermeasures
Product woodworking machine market. The excellent and stable
quality standard increases opportunities for cooperative
development
and
sales
with
big
international
manufacturers.		 OEM is high,
and sales rely
on
manufacturing
agents.		 other professionals to reach
direct sales channels and
increase product profit
margins.
(5)Financial
Status		 (1) The profits in operation are stable and the operating
condition is good.
(2) The proportion of self-owned capital is high, and the
financial ratio is good.		 None. Raise funds in the capital
market, obtain long-term and
stable funds, and strengthen
the financial structure.
(6)Human
Resources of
Major
Production		 (1) Adopt advanced 3D computer assist design system
and three-dimensional coordinate measurement
equipment to improve development and design
capabilities, and accuracy and shorten development
schedule. The Company has accumulated extensive
experience in R&D, design, and production
technology.
(2)The main processing production equipment is highly
automated.		 Due to the
increase in
national
income, the
change in
economic
structure, and
the shortage
of entry-level
labor.		 (1) Introduce foreign labor
and increase equipment
automation.
(2) Low-value and low-
technology products are
transferred to low-cost
regions.

~~79~~

(II) Important Use, Production and Manufacturing Process of Major Product:

  1. Use:

==> picture [449 x 697] intentionally omitted <==

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

Product Type Important Use
Table DIY electrical cutting, planning, sawing, grooving, and other functions of metal, woodworking
woodworking tools
materials, plastic, and acrylic materials.
2. Production and Manufacturing Process:
Upstream Midstream Downstream
Raw Material Processing from third- Chang Clients
party system Type
Industrial
Co., Ltd.
Aluminum Die-casting Assembly ODM/OEM
Material
Clients
Deburr
Testing
Depainting Importers
CNC Packaging
Processing
Hardware and
building materials
Plastic Injection chain store
Steel Material Turning
Consumers
Gear milling
Heat treatment
Grinding
Oiling
Cast Iron Ingot milling
Casting
Machining
Depainting
Steel plate Blanking die
Stamping
Depainting
Powder
metallurgy
Hardware Parts
----- End of picture text -----

~~80~~

(III) Supply of Major Raw Materials

The major raw material suppliers in the upstream and downstream of the Company have long-term cooperation, mutual trust, and good and close cooperative relations, as a result, the Company can obtain production materials with reasonable price, high quality, and stable delivery schedule.

  • (IV) Major Purchase and Sales Customers

Names of customers, the amount and proportion, accounting for more than 10% of the total purchase (sales) in either of the last 2 years and explanation for the increase and decrease.

  1. Information on Major Suppliers in the Last Two Years
Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD
2022 2023 2024 as of the first quarter (Note 2)
Item Name Amount Ratio of
Net
Purchase
s in the
Whole
Year (%)		 Relatio
nship
with the
Issuer		 Name Amount Ratio
of Net
Purcha
ses in
the
Whole
Year
(%)		 Relati
onship
with
the
Issuer		 Name Amount Ratio of
Net
Purchases
in the
Current
Year as of
the
Previous
Quarter
(%)		 Relatio
nship
with the
Issuer
1 A 278,508 12.95 None A 230,761 13.46 None A 39,902 11.84 None
Other 1,870,597 87.05 Other 1,483,986 86.54 Other 297,061 88.16
Net
Purchases		 2,149,105 100 Net
Purchases		 1,714,747 100 Net
Purchases		 336,963 100

Note 1: The increase and decrease of major purchases in the last two year were due to the Company's consideration of supply quality and price factors.

Note 2: For companies listed at TWSE or TPEx for the trading of stock have CPA audited or reviewed financial information to the date this report was printed, disclose such information.

2. Information on Major Customers in the Last Two Years

Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD
2022 2023 2024 as of the firstquarter(Note 2)
Ite
m		 Name Amount Ratio of
Net
Purchase
s in the
Whole
Year (%)		 Relatio
nship
with the
Issuer		 Name Amount Ratio
of Net
Purcha
ses in
the
Whole
Year
(%)		 Relati
onship
with
the
Issuer		 Name Amount Ratio of
Net
Purchases
in the
Current
Year as of
the
Previous
Quarter
(%)		 Relatio
nship
with
the
Issuer
1 A 3,373,444 83.14 None A 2,814,832 83.33 None A 579,739 80.35 None
2 B 321,665 7.93 None B 233,934 6.93 None B 29,473 4.09 None
Other 362,338 8.93 Other 329,264 9.74 Other 112,265 15.56
Net Sales 4,057,447 100 Net Sales 3,378,030 100 Net Sales 721,477 100

  • Note 1: List out the names of the customers accounting for more than 10% of the total sales over the last 2 years, and the amount and proportion of sales. Use customer code if it is specified in the contract that the names of the customers or counterparties of trade are individuals and not related parties that cannot be disclosed.

  • Note 2: For companies listed at TWSE or TPEx for the trading of stock have CPA audited or reviewed financial information to the date this report was printed, disclose such information.

~~81~~

(V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value		 (V) Production Volume and Value of the Last Two Years Unit: Set / In thousands of NTD
Year
Major Products
2022
2023
Production
Capacity
Production
Volume
Production
Value
Production
Capacity
Production
Volume
Production
Value
Electrical saw
950,000
659,023
3,294,509
950,000
488,101
2,935,384
Total
-
659,023
3,294,509
-
488,101
2,935,384
Production
Volume and Value
Year
Major Products
Production
Volume and Value		 2022 2023
Production
Capacity		 Production
Volume		 Production
Value		 Production
Capacity		 Production
Volume		 Production
Value
Electrical saw 950,000 659,023 3,294,509 950,000 488,101 2,935,384
Total - 659,023 3,294,509 - 488,101 2,935,384
  • (VI) Sales Volume and Value of the Last Two Years

Unit: Set / In thousands of NTD

a les Volume and Value of the Last Two Years of the Last Two Years of the Last Two Years of the Last Two Years Unit: Set / In thousands of NTD Unit: Set / In thousands of NTD Unit: Set / In thousands of NTD Unit: Set / In thousands of NTD
Year
Major Product
Production
Volume and Value		 2022 2023
Domestic Sales Export Sales Domestic Sales Export Sales
Volume Value Volume Value Volume Value Volume Value
Electrical saw - - 703,427 3,900,792 - - 487,398 2,935,016
Other(Note) - 1,178 - 155,477 - 1,100 - 441,916
Total - 1,178 703,427 4,056,269 - 1,100 487,398 3,376,932

Note: Includes motors, workbench assembly, workbench assembly, purchased parts and commodity sales.

~~82~~

III. Overview of Employees

Year 2022 2023 As of 15 May 2024,
the publication date
of the annual report
Number of
Employees		 Technical staff 14 13 12
Management and business
marketingstaff		 244 231 230
Operator 147 121 122
Total 405 365 364
Average Age 41 42 43
Average Years of Seniority in Service 8.59 9.48 9.89
Education
Distribution
Proportion		 PhD - - -
Master 20 19 17
College/University 117 96 98
Senior High School 96 85 83
Below Senior High
School		 30 28 28
Foreign Labor 142 137 138

Note: The calculation of the average years of seniority in service and age does not include foreign workers and contract workers.

IV. Information on Expenditures on Environmental Protection:

(In the most recent year to the date of third report was printed, the total amount of penalty and loss (including damages) due to environmental pollution, future countermeasures (including improvement measures) and possible expenditure (including the estimated amount of loss, penalty, and damages due to not taking actions of the countermeasure policy. If the amount couldn’t be reasonably estimated, the fact of it should be explained.))

  • (I) Loss or penalty due to environmental protection in the last two years:

The Company's environmental violations in 2023 and 2022, for which belonged to procedural violations, and there is no actual pollution. The summary is as follows:

Unit: In ten thousands of NTD
Violation of
Regulations		 2023 2022 Status of Improvement
Water Pollution
Control Act		 6.3 - The problem has been improved. (The discharge outlet for
domestic wastewater in Houli Plant 2 has not been labeled.)
Air Pollution
Control Act		 52.0 - The problem has been improved. (Entrance temperature of
exhaust gas in die-casting plant is below standard and
establishment of exhaust gas emission from rotor has not been
applied for.)
Water Pollution
Control Act		 31.2 - The problem has been improved. (The wastewater discharge
from both the die-casting plant and the paint shop does not meet
the standards.)
Fire Services Act - 6.6 Fengyuanplant 1 has completed the improvement.
Total 89.5 6.6

~~83~~

  • (II) Expected environmental capital expenditure in the future: In addition to purchasing new environmental protection equipment, the Company will strengthen staff training and strictly implement internal environmental protection operation standards to ensure compliance with environmental protection emission standards.

  • (III) The Company is still committed to the improvement of the working environment and the implementation of internal and external cleaning of the plant sites to improve the quality of the working environment. The related costs are as follows:

The cumulative total environmental management costs in 2023 and 2022 are NTD5,624,000 and NTD6,366,000 respectively. Environmental protection expenditure items include operational maintenance, consumption costs, and equipment additions, details are shown below:

Unit: In ten thousands of NTD Unit: In ten thousands of NTD Unit: In ten thousands of NTD
Type Explanation 2023 2022
Water Pollution Prevention Waste (polluted) water treatment operation maintenance,
consumption,electricity,andpersonnel costs,etc.		 74.3 31.3
Waste Processing Outsourced waste treatment and recycling 212.6 279.3
Air Pollution Prevention
(Operation)		 Operating costs such as raw materials, air pollution fees, and
inspection fees used forprevention equipment		 83.3 194.8
Air Pollution Prevention
(consumables, maintenance)		 Melting furnace polluted air collection and maintenance,
activated carbon furnace layer and activated carbon renewal,
cuttingfluidpurification machine maintenance,etc.		 192.2 131.2
Total 562.4 636.6

V. Labor-Management Relationship

(List the Company's employee welfare measures, advanced education, training, and retirement systems and their implementation, as well as labor-management agreements and various employee rights protection measures. In the most recent year to the date of this report was printed, the loss due to labor-management disputes, the estimated amount and countermeasures of current and future possible incidents should be disclosed.)

  • (I) Employee Welfare Measures To enhance employee welfare measures and improve employee benefits, the Company has established the Employee Welfare Committee on 26 January 2000 to regularly host incentive trips and dinner parties, and distributes wedding and funerals subsidies, injuries and illness subsidies, and holiday gifts, etc. In addition to labor insurance and health insurance for all employees, the Company organizes regular health checks and various education and training for all employees, so that they can work in a safe and growth environment.

  • (II) Advanced Education and Training for Employees To enhance employee welfare measures and improve employee benefits, the Company has established the Employee Welfare Committee on 26 January 2000 to regularly host incentive trips and dinner parties, and distributes wedding and funerals subsidies, injuries and illness subsidies, and holiday gifts, etc. In addition to labor insurance and health insurance for all employees, the Company organizes regular health checks and various education and training for all employees, so that they can work in a safe and growth environment.

  • (III)Retirement Systems and the Implementation

  • When the Company's employees retire, in addition to applying for old-age benefits in accordance with the labor insurance regulations, the retirement regulation is established in accordance with the Labor Standards Act. According to the Ministry of the Interior, Regulations for the Allocation and Management of the Workers' Retirement Reserve Funds, the Company allocates a certain proportion of retirement reserves according to the total payment every month according to the regulation, and the special funds are exclusively deposited in the Central Trust of China. The employee retirement old-age benefits regulation shall be handled in accordance with the provisions of Chapter VI of the Labor Standards Act and the details of Chapter VI of the same act.

~~84~~

After the "Labor Pension Act" came into effect on 1 July 2005, all employees of the Company chose to apply the relevant retirement provisions of the act and the years of seniority in service prior to applying the new act were retained. The Company allocates 6% of the employee's monthly salary to the employee's individual retirement fund account of the “Bureau of Labor Insurance, Ministry of Labor of the Executive Yuan”. For employees who have retained their years of seniority in service prior to the application of the "Labor Pension Act", when the labor contract is terminated, the average salary at the time of contract termination shall be used to add up to the pension for the retained seniority.

  • (IV) Labor-Management Agreements

The Company has a harmonious labor-management relationship, and all prescribed measures are handled in accordance with relevant laws and regulations. The implementation is good, and there are no disputes, or any incidents happened.

  • (V) In the most recent year and as of the date of this report was printed, the loss due to labor-management disputes, and the estimated amount and countermeasures of current and future possible incidents should be disclosed: None.

VI. Information Security Management (Added Additional Information)

  • (I) Information Security Risk Management Structure

The competent authority for the information security of the Company is the information center in the president's office, which is responsible for the planning and implementation of the establishment and management of the information computer room, computer information file security, network security, email security management, information system access control, and the promotion of information security awareness; comply with the Company's audit unit to conduct information security audits, including internal audits and external audits, regularly assess information security risks and report the implementation status to the board of directors.

(II) Information Security Policy

To protect the information assets from external threats or internal inappropriate management and the risks of information leakage, damage or loss, the Company has established the policy as follows, for all colleagues to follow:

  1. Established the "Information Security Management Regulations" to provide appropriate protection measures for information assets to secure their confidentiality.

  2. Regularly assess and review the information security strategy to ensure the continuous operation of the Company's business.

  3. Through information security publicity from time to time to enhance the information security awareness of the Company’s staff.

  4. Require the staff of the Company not to use unauthorized software.

(III) Specific Information Security Management Plan

The Company's current main measures and implementation of information security risk management are as follows, which can effectively protect information security; after evaluating the insurance coverage of information security insurance, its applicable industries and other items, the Company will not participate in information security insurance for the time being. Reduce the risk of data and network errors or omissions through regular security checks of firewalls and anti-virus software, regular backups, disaster recovery, and information security promotion, and report to the board of directors on 25 January 2022:

No Item Specific Management Plan
1 Firewall
Protection		 In the firewall set-up connection rules, by default, only basic Internet and email
connections are opened.
Firewall settings establish connection rules, defaulting to closing all external connections
and only allowing connections to the internal LAN.
If special connection is needed, should be approved by senior executives before opening.
Monitor and analyze the number of firewall attacks every week.

~~85~~

No Item Specific Management Plan
2 User Internet
Control
Mechanism		 Use an automatic website protection system to monitor users' online behavior.
Automatically filters websites which may link to Trojan horse viruses, ransomware
viruses or malicious programs for users when surfing the Internet.
Unauthorized use of instant messaging software, Web Mail, network hard drive, file
transfer and other network services isprohibited.
3 Wireless
Network
Control
Mechanism		 Wireless network is only open to mobile devices such as business laptops, mobile
phones, and tablets, and can only be opened after approval by senior executives.
Wireless network needs to be locked with the MAC address of the device to ensure that
only approved devices can be used.
For items 4, 5, 6, 7, according to the user's device and needs, set different SSID
connections to control the authority of the connected host.
4 Information
Data Center
Security
Management		 There is an access control of the data center, and no entry is allowed without permission.
Data center has an UPS uninterruptible power supply, which can shut down the server in
case of an abnormal power outage, so as to protect the server system from failure due to
power outage.
5 Antivirus
Software		 Use a variety of antivirus software to diversify the risk of new virus infection.
Utilize antivirus software to mitigate the risk of infection from new viruses.egularly
update the virus code of the antivirus software to reduce the risk of infection.
Regularly update antivirus software virus definitions to minimize the risk of infection.
6 USB Flash
Drive Access
Control		 The use of USB devices is prohibited by default on the user's computer. The use of USB
devices due to official needs must be approved by the head of the department before
opening.
USB devices must be certified by the information department before they can be used.
Uncertified USB devices cannot be used even if the computer is opened for USB
devices.
7 Operating
System Update		 The major and security updates of the operating system are uniformly controlled by the
automatic update system, and are automatically dispatched and installed on the
Company's computers.
The information department monitors those that have not been updated for some reason
and assists in updating.
8 Email Security
Control		 Threat protection with automatic email scanning prevents unsafe attachment files,
phishing emails, and spam before users receive emails, and expands the scope of
protection against malicious links.
After the PC receives the email, the antivirus software will also scan for unsafe
attachment files.
9 User Email
SecurityControl		 It can count the number of external emails sent and received by users, monitor abnormal
sendingand receivingconditions,andprevent confidential information from leaking.
10 Website
Protection
Mechanism		 The website has a firewall device to block external network attacks.
11 High
Availability
Backup
Mechanism		 All material information systems have established high-availability mechanisms. It can
restore system operation in the shortest time in case of system failure.
12 Information
System and
Database
Backup		 Material information system databases are set for daily complete backup, noon, and
evening differential backup.
Information system programs are fully backed up once a day.
13 Offsite Storage The backup files of the server and various information systems are stored separately in
the information data centers of differentplants.
14 Material File
Upload Server		 The material files of each department in the Company are uploaded to the server for
storage, and are backed up and stored by the information department.
15 Information
Center
Inspection
Record Form		 The information center inspection record form is used to record the temperature and
humidity of the data centers, data backup, antivirus software update and other records.

~~86~~

VII. The Framework of Task Force on Climate-related Financial Disclosures

Level Execution Explanation
Governance The board of directors is the highest supervisory authority for matters
concerning climate change risks and opportunities. It holds the
responsibility of approving, reviewing, and overseeing risk strategies and
policies. Furthermore, it guides the company in exploring new business
opportunities related to climate change. The board of directors has
established the “Sustainable Development Management Committee”,
chaired by the president, to comprehensively promote corporate
sustainability. The committee convenes meetings at least once a year and
reports progress to the board of directors. Its responsibilities encompass
corporate governance, environmental sustainability, green partnerships,
customer relations, employee relations, and social care. Department heads
identify sustainability issues of concern, including risks involving
operations, finance, environment, hazardous events, and climate change.
Theyformulate actionplans and establish continuous improvementplans.
Strategy Department heads assess the risks and opportunities that climate change
may bring, such as regulatory policy risks related to greenhouse gas
reduction and emission reporting obligations, or policies such as carbon
taxes and fees. They evaluate the impact on the company's operations and
finances based on the time of occurrence and the degree of impact.
Additionally, they actively monitor opportunities arising from greenhouse
gas emissions for products. When designing products, they consider the
environmental impacts and aim to reduce carbon emissions at each stage.
Furthermore, they continuously improve energy efficiency in company
operations and consider building solar power stations in available factory
spaces to enhance renewable energyutilization.
Risk
Mana
gement		 Chang Type’s board of directors has approved the “Risk Management
Measures”, whereby each business unit with responsibilities should
identify changes in risks related to operations, finance, environment,
hazardous events, and climate change. They should also formulate risk
management policies and execute board risk decisions. Adopting the
framework provided by the Task Force on Climate-related Financial
Disclosures (TCFD), the company analyzes the potential risks and
opportunities of climate change to its operations and their impact on
finances. Furthermore, they prioritize and review countermeasure plans
based on the time of occurrence and the intensity of impact.
The risk management department reports to the board of directors annually,
presenting updates on the company's transformation and changes in
physical risks, along with evaluation results, enabling the Board to stay
informed. This allows board members to enhance their international
awareness of trends in international climate change governance and grasp
keyopportunities for the development of a low-carbon economy.
Indicator
and Target		 Establishing goals for greenhouse gas management, water resource
management, energy management, and product development to build
sustainable business capabilities for the enterprise.

~~87~~

VIII. Important Contracts:

(The parties, main contents, restrictive clauses, and contract start and end dates of supply and sales contracts, technical cooperation contracts, construction contracts, long-term loan contracts, and other important contracts that can affect shareholders' rights and interests, which are still valid or expired in the most recent year and as of the date of this report was printed)

Nature of
Contract		 Party of Contract Contract Start and
End Dates		 Main Content Restrictive
Clause
Loan
Contract		 First Commercial
Bank		 November 2022-
November 2023		 A comprehensive loan with a
NTD200,000thousand limit		 None
Loan
Contract		 Mega International
Commercial Bank		 July 2023-
July2024		 A comprehensive loan with a
NTD600,000thousand limit		 None
Loan
Contract		 CTBC Bank August 2023-
August 2024		 A comprehensive loan with a
NT$200,000thousand limit		 None
Loan
Contract		 Taipei Fubon Bank September 2023-
September 2024		 A comprehensive loan with a
NTD220,000thousand limit		 None
Loan
Contract		 Bank SinoPac February 2023-
February2024		 A comprehensive loan with a
NTD200,000thousand limit		 None
Loan
Contract		 Cathay United Bank December 2023-
December 2024		 A comprehensive loan with a
NTD200,000thousand limit		 None
Loan
Contract		 China Bills Finance
Corporation		 March 2023-
March 2024		 A comprehensive loan with a
NTD150,000thousand limit		 None
Loan
Contract		 Citibank June 2023-
June 2024		 A comprehensive loan with a
USD7 million (NTD210,000
thousand)limit		 None
Loan
Contract		 Far Eastern
International Bank		 December 2022~
December 2023		 A comprehensive loan with a
NTD150,000thousand limit
Loan
Contract		 Taishin International
Bank		 November 2023~
November 2024		 A comprehensive loan with a
NTD200,000thousand limit		 None
Loan
Contract		 Shanghai
Commercial and
Savings Bank		 August 2023~
August 2024		 A comprehensive loan with a
NTD150,000 thousand		 None
Loan
Contract		 E.SUN Commercial
Bank		 October 2023~
October 2024		 A comprehensive loan with a
NTD200,000thousand		 None
Loan
Contract		 Yuanta Bank August 2023~
August 2024		 A comprehensive loan with a
NTD150,000thousand		 None
Loan
Contract		 DBS Bank April 2022~
April 2023		 A comprehensive loan with a
NTD200,000thousand		 None
Loan
Contract		 Dah Chung Bills
FinanceCorporation		 June 2023~
June 2024		 A comprehensive loan with a
NTD150,000thousand		 None
Setting
Encumbrance
of
Superficies
Contract		 Taiwan Sugar
Corporation		 October 2004~
October 2024		 Provided 30,803.35122 m2 of
land in Type B industrial zone
at land No. 51, Houli District (),
Taichung City, for plant
construction		 Non-
transferable
January 2006~
October 2024		 Provided 3,877.69167 m2 of
reserved land for water works
at land No. 50-2, Houli District
(), Taichung City, as the land
for the use of greening for plant
construction
Land
Leasehold
Rights
Setting
Contract		 Exeter Victor Hill
Land LLC.		 December 2021~
November 2026		 Subsidiary DPEC needs to
increase warehousing and
distribution centers in response
to new business needs. Lease a
new warehouse, with an area of
285,240 ft2 (approximately
26,495.987 m2), at 497 Robin
Lake Road (Building B)
Duncan, SC from a non-related
person Exeter Victor Hill Land
LLC.		 None

~~88~~

Financial Information

  • I. Condensed Balance Sheet and Comprehensive Income Statement for the Recent Five Years. Names of the CPAs and Audit Opinions

(I) Condensed Balance Sheet (Consolidated under IFRS):

Unit: In thousands of NTD

Year
Item		 Year
Item		 Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial
information as of
31 March 2024
(Note 3)
2019 2020 2021 2022 2023
Current Assets 2,115,799 2,891,557 4,054,097 2,477,225 2,596,512 2,315,474
Property, Plant, and
Equipment(Note 2)		 650,507 633,269 636,471 645,831 617,149 611,368
Right-of-Use Assets 207,384 194,384 370,690 344,336 613,545 614,388
Intangible Assets 54,854 46,246 39,681 31,882 22,051 19,643
Other Assets (Note 2) 72,625 74,268 95,056 111,842 129,000 130,697
Total Assets 3,101,169 3,839,724 5,195,985 3,611,116 3,978,257 3,691,570
Current
Liabilities		 Before
Distribution		 1,546,510 1,845,215 2,981,838 1,282,112 1,483,518 1,211,357
After
Distribution		 1,546,510 2,081,615 3,178,838 1,360,912 1,522,918 1,250,757
Non-current Liabilities 277,176 280,055 445,818 453,078 583,557 526,173
Total
Liabilities		 Before
Distribution		 1,823,686 2,125,270 3,427,656 1,735,190 2,067,075 1,737,530
After
Distribution		 1,823,686 2,361,670 3,621,656 1,813,990 2,106,475 1,776,930
Equity Attributable to
Shareholders of the Parent		 1,277,483 1,714,454 1,768,329 1,875,926 1,911,182 1,954,040
Capital Stock 788,000 788,000 788,000 788,000 788,000 788,000
Capital Reserve 1,364 1,364 1,364 1,364 1,364 1,364
Retained
Earnings		 Before
Distribution		 494,555 949,137 1,013,653 1,096,480 1,131,349 1,112,359
After
Distribution		 494,555 712,737 816,653 1,017,680 1,091,949 1,112,359
Other Equities (6,436) (24,047) (34,688) (9,918) (9,531) 12,917
TreasuryShares 0 0 0 0 0 0
Non-controllingInterests 0 0 0 0 0 0
Total Equity Before
Distribution		 1,277,483 1,714,454 1,768,329 1,875,926 1,911,182 1,954,040
After
Distribution		 1,277,483 1,478,054 1,571,329 1,797,126 1,871,782 1,914,640

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs.

Note 2: Disclose the date of the revaluation and the revaluation value-added amount: None.

Note 3: Consolidated financial figures as of 31 March 2024 have been reviewed by the CPAs.

Note 4: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year.

Note 5: The financial data that is notified by the authority to be corrected or restated by the company should be compiled with the corrected or restated figures. The circumstances and reasons should be indicated.

~~89~~

(II) Condensed Balance Sheet (Consolidated under IFRS):

Unit: In thousands of NTD, except earnings per share amounts

Unit: In thousands of NTD,except earnings Unit: In thousands of NTD,except earnings Unit: In thousands of NTD,except earnings Unit: In thousands of NTD,except earnings Unit: In thousands of NTD,except earnings per share amounts
Year
Item		 Financial Information for the recent five years (Note 1) Financial
information as
of 31 March
2024(Note 2)
2019 2020 2021 2022 2023
Operating Revenue 4,200,061 5,271,945
6,202,947		 4,057,447 3,378,030 721,477
Gross Profit 770,491
1,066,775		 781,131 594,471 662,828 126,143
Income (Loss) from
Operation		 415,626 685,407 394,935 170,758 285,183 (4,069)
Non-operating Income
and Expenses		 (80,312) (94,673) (23,728) 185,208 (139,004) 67,299
Income (Loss) before
Income Tax		 335,314
590,734		 371,207 355,966 146,179 63,230
Net Income (Loss) from
ContinuingOperations		 251,476 456,555 299,261 272,059 115,190 59,810
Income (Loss) from
Discontinued Operations		 0 0 0 0 0 0
Net Income (Loss) 251,476 456,555 299,261 272,059 115,190 59,810
Other Comprehensive
Income (Loss)
(Net of Tax)		 (4,836) (19,584) (8,986) 32,538 (1,134) 22,448
Total Comprehensive
Income(Loss)		 246,640 436,971 290,272 304,597 114,056 82,258
Net ncome attributable to
shareholders of theparent		 251,476 456,555 299,261 272,059 115,190 59,810
Net income attributable
to non-controllinginterest		 0 0 0 0 0 0
Comprehensive income
attributable to
Shareholders of theparent		 246,640
436,971		 290,272 304,597 114,056 82,258
Comprehensive income
attributable to non-
controllinginterest		 0 0 0 0 0 0
Earnings Per Share 3.19 5.79 3.80 3.45 1.46 0.76

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs. Note 2: The consolidated financial information as of 31 March 2024 has been reviewed by the CPAs.

Note 3: Losses from discontinued operations are presented net of income tax.

Note 4: The financial data that is notified by the authority to be corrected or restated by the company should be compiled with the corrected or restated figures. The circumstances and reasons should be indicated.

~~90~~

(III) Condensed Balance Sheet (Separate under IFRS):

(III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS): (III) Condensed Balance Sheet (Separate under IFRS):
Unit: In thousands of NTD
Year
Item
Financial Information for the recent five years (Note 1)
2019
2020
2021
2022
2023
Current Assets
1,908,785
2,651,462
3,834,642
1,936,981
2,104,531
Investment at EquityMethod
324,083
322,975
313,913
616,135
584,499
Property, Plant and Equipment
504,865
501,136
510,132
506,449
482,339
Right-of-Use Assets
205,921
193,546
188,926
191,069
500,801
Intangible Assets
54,854
46,246
39,681
31,882
22,051
Other Assets
62,100
68,174
71,585
87,299
93,120
Total Assets
3,060,608
3,783,539
4,958,879
3,369,815
3,787,341
Current
Liabilities
Before Distribution
1,516,688
1,799,874
2,907,653
1,195,554
1,402,282
After Distribution
1,516,688
2,036,274
3,104,653
1,274,354
1,441,682
Non-current Liabilities
266,437
269,211
282,897
298,335
473,877
Total
Liabilities
Before Distribution
1,783,125
2,069,085
3,190,550
1,493,889
1,876,159
After Distribution
1,783,125
2,305,485
3,387,550
1,572,689
1,915,559
Equity Attributable to
Shareholders of the Parent
1,277,483
1,714,454
1,768,329
1,875,926
1,911,182
Capital Stock
788,000
788,000
788,000
788,000
788,000
Capital Reserve
1,364
1,364
1,364
1,364
1,364
Retained
Earnings
Before Distribution
494,555
949,137
1,013,653
1,096,480
1,131,349
After Distribution
494,555
712,737
816,653
1,017,680
1,091,949
Other Equities
(6,436)
(24,047)
(34,688)
(9,918)
(9,531)
TreasuryShares
0
0
0
0
0
Non-controllingInterests
0
0
0
0
0
Total Equity Before Distribution
1,277,483
1,714,454
1,768,329
1,875,926
1,911,182
After Distribution
1,277,483
1,748,054
1,571,329
1,797,126
1,871,782
Financial Information for the recent five years (Note 1)
2019 2020 2021 2022 2023
1,908,785 2,651,462 3,834,642 1,936,981 2,104,531
324,083 322,975 313,913 616,135 584,499
504,865 501,136 510,132 506,449 482,339
205,921 193,546 188,926 191,069 500,801
54,854 46,246 39,681 31,882 22,051
62,100 68,174 71,585 87,299 93,120
3,060,608 3,783,539 4,958,879 3,369,815 3,787,341
Before Distribution 1,516,688 1,799,874 2,907,653 1,195,554 1,402,282
After Distribution 1,516,688 2,036,274 3,104,653 1,274,354 1,441,682
266,437 269,211 282,897 298,335 473,877
Before Distribution 1,783,125 2,069,085 3,190,550 1,493,889 1,876,159
After Distribution 1,783,125 2,305,485 3,387,550 1,572,689 1,915,559
1,277,483 1,714,454 1,768,329 1,875,926 1,911,182
788,000 788,000 788,000 788,000 788,000
1,364 1,364 1,364 1,364 1,364
Before Distribution 494,555 949,137 1,013,653 1,096,480 1,131,349
After Distribution 494,555 712,737 816,653 1,017,680 1,091,949
(6,436) (24,047) (34,688) (9,918) (9,531)
0 0 0 0 0
0 0 0 0 0
Before Distribution 1,277,483 1,714,454 1,768,329 1,875,926 1,911,182

After Distribution		 1,277,483 1,748,054 1,571,329 1,797,126 1,871,782

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs. Note 2: The amount after distribution shall refer to the amount determined after the resolution in the shareholders’ meeting in the following fiscal year.

(IV) Condensed Comprehensive Income Statement (Separate under IFRS):

Unit: In thousands of NTD, except earnings per share amounts

Year
Item		 Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1) Financial Information for the recent five years (Note 1)
2019 2020 2021 2022 2023
OperatingRevenue 3,983,450 5,042,485 6,171,317 4,058,588 3,015,023
Gross Profit 585,391 893,526 639,962 373,981 450,484
Income(Loss)from Operating 365,591 657,299 419,977 172,422 302,398
Non-operatingIncomes and Expenses (42,788) (71,755) (47,984) 163,309 (144,837)
Income(Loss)before Income Tax 322,803 585,544 371,993 335,731 157,561
Net Income(Loss)from ContinuingOperations 251,476 456,555 299,261 272,059 115,190
Income(Loss)from Discontinued Operations 0 0 0 0 0
Net Income (Loss) 251,476 456,555 299,261 272,059 115,190
Other comprehensive income(income after tax) (4,836) (19,584) (8,986) 32,538 (1,134)
Total comprehensive income 246,640 436,971 290,275 304,597 114,056
Net income attributable to shareholders of theparent 251,476 456,555 299,261 272,059 115,190
Net income attributable to non-controllinginterest 0 0 0 0 0
Comprehensive income attributable to Shareholders
of the parent		 246,640 436,971 290,275 304,597 114,056
Comprehensive income attributable to non-
controlling interest		 0 0 0 0 0
Earnings PerShare 3.19 5.79 3.80 3.45 1.46

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs.

~~91~~

(V) Names of the CPAs for the recent five years, and audit opinions:

Year CPA Firm Name Audit Opinion Remark
2019 EY Taiwan Chin Yuan Tu,Wen Pi Yen Unqualified opinion -
2020 EY Taiwan Chin Yuan Tu,Yu TingHuang Unqualified opinion -
2021 EY Taiwan Chin Yuan Tu,Yu TingHuang Unqualified opinion -
2022 EY Taiwan Wen Chen Lo,Yu TingHuang Unqualified opinion -
2023 EY Taiwan Wen Chen Lo,Yu TingHuang Unqualified opinion
Q1 2024 EY Taiwan Wen Chen Lo,Yu TingHuang Unqualified opinion -

II. Financial Analysis for the Recent Five Years

(I) Consolidated Financial Analysis - Under IFRS:

(I)Consolidated Financial Analysis - Under IFRS: (I)Consolidated Financial Analysis - Under IFRS:
Year
Item of Analysis		 Financial Analysis for the Most Recent Five
Years (Note 1)		 Financial
Information
as of 31
March 2024
2019 2020 2021 2022 2023
Financial
Structure		 Debts Ratio (%) 58.81 55.34 65.96 48.05 51.95 47.06
Long-Term Fund to Property, Plant
and Equipment Ratio(%)		 196.38 270.73 277.83 290.46 309.67 319.61
Liquidity Current Ratio (%) 136.81 156.70 135.81 193.21 175.02 191.14
Quick Ratio (%) 90.45 114.62 85.37 85.62 97.48 102.64
Interest Coverage Ratio 35.43 77.77 35.55 16.84 8.74 8.00
Operating
Performance		 Accounts Receivable Turnover (times) 3.34 3.42 2.90 2.46 3.01 2.31
Average Collection Days 109.28 106.72 125.86 148.37 121.26 158.00
Inventory Turnover (times) 5.43 5.77 4.87 2.44 2.18 2.18
Accounts Payable Turnover (times) 4.92 4.83 4.44 3.91 167.43 167.43
Average Inventory Turnover Days 67.21 63.25 74.94 149.59 5.51 4.50
Property, Plant and Equipment
Turnover (times)		 6.40 8.21 9.77 6.32 5.34 4.69
Total Assets Turnover (times) 1.42 1.51 1.37 0.92 0.89 0.75
Profitability ROA (%) 8.78 13.33 6.81 6.58 3.43 1.74
ROE (%) 21.07 30.51 17.18 14.93 6.08 3.09
Pre-tax income to Paid-in Capital
Ratio(%)		 42.55 74.96 47.1 45.17 18.55 8.02
Net Margin (%) 5.99 8.66 4.82 6.70 3.40 8.28
Earnings Per Share (NT$) 3.19 5.79 3.76 3.45 1.46 0.76
Cash Flow Cash Flow Ratio (%) 26.97 10.04 (21.29) 89.30 12.09 14.92
Cash Flow Adequacy(%) 88.23 89.27 9.5 74.35 85.37 65.44
Cash Flow Reinvestment Ratio (%) 28.94 8.31 (17.14) 52.06 10.02 6.96
Leverage Operating Leverage 1.87 1.54 1.99 3.88 2.51 (33.32)
Financial Leverage 1.02 1.01 1.02 1.15 1.07 0.31

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs. Note 2: The consolidated financial information as of 31 March 2024 has been reviewed by the CPAs.

~~92~~

The reasons for changes in financial ratios above 20% over the past two years. (The increase or decrease less than 20% is exempted):

  1. Since the beginning of this year, the global economy has faced ongoing challenges due to persistent high inflation from last year, the Russia-Ukraine conflict, interest rate hikes, and the strength of the US dollar, all amid the easing of the pandemic. These factors have collectively eroded consumer confidence and purchasing power, leading to suppressed demand and a continuation of the sharp decline seen last year. Additionally, manufacturers are grappling with challenges such as excess customer inventories and the heightened risk of increased US sanctions against China. These factors have exacerbated the pressure of global economic recession, resulting in widespread sluggishness across multiple industries, impacting manufacturers significantly. To cope with this situation, the Company has reduced its expenses and encouraged its employees to take leave. As a result, the consolidated revenue has declined by 16.7% to NTD33.78 billion compared to last year.

  2. 2.In this period, the continuous impact of significantly reduced sales orders has affected the Company’s product line. The United States, due to effective inflation control measures, halted interest rate hikes, resulting in a weakening of the US dollar starting from Q4. The average depreciation of the New Taiwan dollar against the US dollar was 5.95%, increasing the gross profit margin of the Company’s products. Consequently, the gross profit of the Company’s products increased by 12% compared to the previous period. Operating expenses decreased due to corresponding reductions in export, shipping, and sales warranty expenses, besides the decrease in sales. Subsidiaries also reduced expenditures on warehouse lease personnel and related equipment maintenance. Additionally, there were no expenses related to handling last year's product patent disputes. As a result, consolidated operating profit increased by 67% to NTD285 million.

  3. The non-operating net expenses increased by NTD324 million. The United States saw significant results from its inflation control measures, leading to the cessation of interest rate hikes. Starting from Q4, the US dollar weakened, while the New Taiwan dollar appreciated. Consequently, exchange gains decreased substantially by NTD285 million. Secondly, a provision of NTD145 million was allocated for heavy-duty compensation for parts manufactured and sold by subcontractors. This provision exceeded the prior-period expense of NTD107.5 million related to product patent dispute settlements, resulting in an increase of NTD37.5 million.

  4. Due to a significant increase in accounts receivable two years ago, which were collected last year, there was a substantial increase in net cash inflows from operating activities and repayment of short-term borrowings. As a result of the aforementioned reasons, both sales and profits have declined significantly this year and last year, leading to a substantial decrease in net cash inflows from operating activities and repayment of short-term borrowings this year. This has also affected the turnover rates of accounts receivable turnover and accounts payable turnover.

  5. Due to the aforementioned factors, several indicators such as liquidity, operating performance, and profitability have declined compared to last year.

The calculation Formula of the Analysis Items is as Follows:

  1. Financial Structure

  2. (1) Debts Ratio = Total liabilities/Total assets.

  3. (2) Long-Term Fund to Property, Plant and Equipment Ratio = (Total equity+Non current liabilities)/Property, Plant and Equipment (net).

  4. Liquidity

  5. (1) Current Ratio = Current assets/Current liabilities.

  6. (2) Quick Ratio = (Current assets-Inventories-Prepaid expenses)/Current liabilities.

  7. (3) Interest Coverage Ratio = Net income before income tax and interest expense/Interest expense for the current period.

~~93~~

  1. Operating Performance

    • (1) Accounts Receivable (including accounts receivable and bills receivable arising from business operations) Turnover = Net sales/Average balance of receivables for each period (including accounts receivable and bills receivable arising from business operations).

    • (2) Average Collection Days = 365/Accounts receivable turnover.

    • (3) Inventory Turnover = Cost of sales/Average inventory amount.

    • (4) Accounts Payable (including accounts payable and bills payable arising from business operations) Turnover = Cost of sales/Average balance of payables for each period (including accounts payable and bills payable arising from business operations).

    • (5) Average Inventory Turnover Days = 365/Inventory turnover.

    • (6) Property, Plant and Equipment Turnover = Net sales/Average property, plant and equipment (net).

    • (7) Total Assets Turnover = Net sales/Average total assets.

  2. Profitability

    • (1) ROA = [Profit and loss after tax ＋ Interest expense × (1-tax rate)]/Average total assets.

    • (2) ROE = Profit and loss after tax/Average total equity.

    • (3) Net Margin Ratio = Profit and loss after tax/Net sales.

    • (4) Earnings Per Share = (Profit and loss attributable to the owner of the parent company-special dividend)/Weighted average number of shares issued. (Note 1)

  3. 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 in the last five years/(Capital expenditures ＋ Increase in inventory + Cash dividend) of the last five years.

  4. (3) Cash Flow Reinvestment Ratio = (Net cash flow from operating activities-Cash dividend)/(Gross property, plant and equipment + Long-term investment + Other non-current assets + Operating capital). (Note 2)

    1. Leverage

    2. －

    3. (1) Operating Leverage = (Net operating income Variable operating costs and expenses)/Operating profit. (Note 3)

    4. (2) Financial Leverage = Operating profit/(Operating profit-Interest expense).

  6. Note 1: When calculating the earnings per share, special attention should be paid to the following matters: (1) Based on the weighted average number of shares of common stock, not the number of shares outstanding at the end of the year.

    • (2) Where there is a cash capital increase or treasury stock trading, the weighted average number of shares shall be calculated in consideration of its circulation period.

    • (3) Where there is a capital increase from surplus or capital reserve, when calculating the earnings per share for previous years and half-years, retrospective adjustments should be made according to the capital increase ratio, regardless of the issuance period of the capital increase.

    • (4) If the preferred shares are non-convertible cumulative preferred shares, the dividends for the year (whether paid or not) shall be deducted from the net profit after tax or added to the net loss after tax. If the preferred stock is of a non-cumulative nature, if there is a net profit after tax, the preferred stock dividend shall be deducted from the net profit after tax; if it is a loss, there is no need to adjust it.

  7. Note 2: When measuring cash flow analysis, special attention should be paid to the following matters:

    • (1) Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

    • (2) Capital expenditure refers to the annual cash outflow for capital investment.

    • (3) The increase in inventory is only included when the closing balance is greater than the opening balance. If the inventory decreases at the end of the year, it is calculated as nil.

    • (4) Cash dividends include cash dividends on ordinary shares and preferred shares.

    • (5) The gross amount of property, plant and equipment is the total amount of property, plant and equipment before accumulated depreciation.

  8. Note 3: The issuer should classify various operating costs and operating expenses into fixed and variable according to their nature. If there is an estimate or subjective judgment involved, they should pay attention to their rationality and maintain consistency.

Note 4: If the shares of the company have no par value or the denomination per share is not NT$10, the ratio of the paidin capital previously stated shall be calculated as the ratio of equity attributable to the owners of the parent company on the balance sheet.

~~94~~

(II) Financial Analysis – Separate under IFRS

(II)Financial Analysis – Separate under IFRS (II)Financial Analysis – Separate under IFRS
Year
Item of Analysis		 Financial Analysis for the Most Recent Five Years(Note 1)
2019 2020 2021 2022 2023
Financial
Structure		 Debts Ratio (%) 58.26 54.68 64.34 44.33 49.53
Long-Term Fund to Property, Plant and
Equipment Ratio (%)		 253.03 342.11 346.64 370.40 396.23
Liquidity Current Ratio (%) 125.85 147.31 131.88 162.01 150.07
Quick Ratio (%) 88.13 111.80 92.00 117.61 118.08
Interest Coverage Ratio 34.25 77.68 37.54 21.56 12.26
Operating
Performance		 Accounts Receivable Turnover (times) 3.12 3.18 2.74 2.20 2.43
Average Collection Days 117.02 114.77 133.21 165.9 150.20
Inventory Turnover (times) 6.91 7.06 6.37 4.56 5.39
Accounts Payable Turnover (times) 4.85 4.72 4.58 80.04 67.71
Average Inventory Turnover Days 52.83 51.69 57.29 4.23 5.16
Property, Plant and Equipment Turnover
(times)		 7.86 10.02 12.2 7.98 6.09
Total Assets Turnover (times) 1.37 1.47 1.41 0.97 0.84
Profitability ROA (%) 8.88 13.51 7.03 6.84 3.53
ROE (%) 21.07 30.51 17.18 14.93 6.08
Pre-tax income to Paid-in Capital Ratio (%) 40.96 74.30 47.2 42.60 19.99
Net Margin (%) 6.31 9.05 4.84 6.70 3.82
Earnings Per Share (NTD) 3.19 5.79 3.8 3.45 3.45
Cash Flow Cash Flow Ratio (%) 23.04 6.71 -19.78 104.23 15.74
Cash Flow Adequacy (%) 84.58 82.56 9.41 137.65 147.67
Cash Flow Reinvestment Ratio (%) 25.34 5.49 -14.56 57.61 12.15
Leverage OperatingLeverage 1.85 7.54 14.49 23.22 1.84
Financial Leverage 1.03 1.01 1.02 1.10 1.04

Note 1: The financial information as of 2019-2023 have been audited and certified by the CPAs.

The reasons for changes in financial ratios above 20% over the past two years. (The increase or decrease less than 20% is exempted):

For the analysis, please refer to the description under (II) (I) Consolidated Financial Analysis - Under IFRS.

The calculation Formula of the Analysis Items:

  1. Financial Structure

  2. (1) Debts Ratio = Total liabilities/Total assets.

  3. (2) Long-Term Fund to Property, Plant and Equipment Ratio = (Total equity+Non current liabilities)/Property, Plant and Equipment (net).

  4. Liquidity

  5. (1) Current Ratio = Current assets/Current liabilities.

  6. (2) Quick Ratio = (Current assets-Inventories-Prepaid expenses)/Current liabilities.

  7. (3) Interest Coverage Ratio = Net income before income tax and interest expense/Interest expense for the current period.

  8. Operating Performance

  9. (1) Accounts Receivable (including accounts receivable and bills receivable arising from business operations) Turnover = Net sales/Average balance of receivables for each period (including accounts receivable and bills receivable arising from business operations).

  10. (2) Average Collection Days = 365/Accounts receivable turnover.

~~95~~ 

  - (3) Inventory Turnover = Cost of sales/Average inventory amount.

  - (4) Accounts Payable (including accounts payable and bills payable arising from business operations) Turnover = Cost of sales/Average balance of payables for each period (including accounts payable and bills payable arising from business operations).

  - (5) Average Inventory Turnover Days = 365/Inventory turnover.

  - (6) Property, Plant and Equipment Turnover = Net sales/Average property, plant and equipment (net).

  - (7) Total Assets Turnover = Net sales/Average total assets.

  1. Profitability

    • (1) ROA = [Profit and loss after tax ＋ Interest expense × (1-tax rate)]/Average total assets.

    • (2) ROE = Profit and loss after tax/Average total equity.

    • (3) Net Margin Ratio= Profit and loss after tax/Net sales.

    • (4) Earnings Per Share = (Profit and loss attributable to the owner of the parent company-special dividend)/Weighted average number of shares issued. (Note 1)

  2. 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 in the last five years/(Capital expenditures ＋ Increase in inventory + Cash dividend) of the last five years.

    • (3) Cash Flow Reinvestment Ratio = (Net cash flow from operating activities-Cash dividend)/(Gross property, plant and equipment + Long - term investment + Other non-current assets + Operating capital). (Note 2)

  3. Leverage

    • －

    • (1) Operating Leverage = (Net operating income Variable operating costs and expenses)/Operating profit. (Note 3)

    • (2) Financial Leverage = Operating profit/(Operating profit-Interest expense).

  4. Note 1: When calculating the earnings per share, special attention should be paid to the following matters:

    • (1) Based on the weighted average number of shares of common stock, not the number of shares outstanding at the end of the year.

    • (2) Where there is a cash capital increase or treasury stock trading, the weighted average number of shares shall be calculated in consideration of its circulation period.

    • (3) Where there is a capital increase from surplus or capital reserve, when calculating the earnings per share for previous years and half-years, retrospective adjustments should be made according to the capital increase ratio, regardless of the issuance period of the capital increase.

    • (4) If the preferred shares are non-convertible cumulative preferred shares, the dividends for the year (whether paid or not) shall be deducted from the net profit after tax or added to the net loss after tax. If the preferred stock is of a non-cumulative nature, if there is a net profit after tax, the preferred stock dividend shall be deducted from the net profit after tax; if it is a loss, there is no need to adjust it.

  5. Note 2: When measuring cash flow analysis, special attention should be paid to the following matters:

    • (1) Net cash flow from operating activities refers to the net cash inflow from operating activities in the cash flow statement.

    • (2) Capital expenditure refers to the annual cash outflow for capital investment.

    • (3) The increase in inventory is only included when the closing balance is greater than the opening balance. If the inventory decreases at the end of the year, it is calculated as nil.

    • (4) Cash dividends include cash dividends on ordinary shares and preferred shares.

    • (5) The gross amount of property, plant and equipment is the total amount of property, plant and equipment before accumulated depreciation.

  6. Note 3: The issuer should classify various operating costs and operating expenses into fixed and variable according to their nature. If there is an estimate or subjective judgment involved, they should pay attention to their rationality and maintain consistency.

  7. Note 4: If the shares of the company have no par value or the denomination per share is not NT$10, the ratio of the paidin capital previously stated shall be calculated as the ratio of equity attributable to the owners of the parent company on the balance sheet.

III. Audit Committee Review Report on the Financial Statements of the Most Recent Period (Refer to the Next Page)

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CHANG TYPE INDUSTRIAL CO., LTD.

Audit Committee's Review Report

The Board of Directors has prepared the Company's 2023 Consolidated Financial Statements and Parent Company Only Financial Statements, which have been audited by CPAs Wen Chen Lo and Yu Ting Huang of Ernst & Young Taiwan with an unqualified report. The Financial Statements together with the Business Report and Proposal for Distribution of Earnings have been reviewed and determined to be correct and accurate by the Audit Committee. According to Article 14-4 of the Securities and Exchange Act andrelevant requirements of Article 219 of the Company Act, we hereby submit this report for your review.

Sincerely yours,

For the 2023 Annual Shareholder meeting

CHANG TYPE INDUSTRIAL CO., LTD. Convener of Audit Committee: WANG, MING-JHIH

==> picture [88 x 35] intentionally omitted <==

14 March 2024

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  • IV.The Financial Report of the Most Recent Period: Please refer to Attachment 1 of this annual report.

  • V. The Parent Company Only Financial Report that has been Audited and Certified by the CPAs in the Most Recent Year: Please refer to Attachment 2 of this annual report.

  • VI. If the Company and its Affiliated Enterprises have Financial Turnover Difficulties in Recent Years and as of the Date of Publication of the Annual Report, Impact on the Company's Financial Status Should be Stated: None.

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VII. Review and Analysis of Financial Position and Performance, and Risk Assessments

I. Financial Position

ancial Position ancial Position ancial Position
Unit: In thousands of NTD
Year
Item		 2023 2022 Difference
Amount %
Current Assets 2,596,512 2,477,225 119,287 4.82
Property, Plant and Equipment 617,149 645,831 (28,682) (4.44)
Right-of-Use Assets 641,642 344,336 297,306 86.34
Intangible Assets 22,051 31,882 (9,831) (30.84)
Other Assets 130,900 111,842 19,058 17.04
Total Assets 4,008,254 3,611,116 397,138 11.00
Current Liabilities 1,483,519 1,282,112 201,407 15.71
Noncurrent Liabilities 612,034 453,078 158,956 35.08
Total Liabilities 2,095,553 1,735,190 360,363 20.77
Capital 788,000 788,000 0 0.00
Additional Paid-in Capital 1,364 1,364 0 0.00
Retained Earnings 1,132,870 1,096,480 36,390 3.32
Other Equities (9,531) (9,918) 387 (3.90)
Total Shareholders’ Equity 1,912,703 1,875,926 36,777 1.96
The material difference in assets, liabilities, and shareholders’ equity in the last two years, for the difference
of more than 20% compared to the previous period as well as the difference amounted to NT$10 million,
the main reasons and impacts and future countermeasures are as follows:
(I) Analysis and explanation for those with a difference of more than 20% as well as the difference
amounted to NT$10 million are as follows:
1. Current assets, current liabilities: The sales significantly decreased by 16.7% (please refer to VI. (II)
Financial Analysis for the Recent Five Years) in the current period, due to the effectiveness of customer
inventory reduction, increased orders since Q4, resulting in corresponding increases in accounts
receivable and accounts payable.
2. Right-of-use assets/noncurrent liabilities/total liabilities:lease agreement for the land use rights of Plot
No. 11 in the Juxing Industrial Park, Tanzi District of Taichung City, from Taiwan Sugar Corporation
The new lease agreement with Taiwan Sugar Corporation for 21,454.642 square meters of land in the
Juxing Industrial Park, Taichung, has resulted in an increase in land use rights assets and lease liabilities.
3. Retained earnings: Part of the retained earnings were undistributed and net profit increased in the current
period.
4. Other equities: Due to the depreciation of the exchange rate, the increase in the cumulative translation
adjustment for the conversion of the foreign currency in the financial statements of subsidiaries was
recognized.
(II) Impact: No material impact.
(III)Future countermeasures: Not applicable.

II. Financial Performance

  • (I) Financial Performance Analysis in the Last Two Years

  • Financial Performance Analysis

1. Financial Performance Analysis
Unit: In thousands of NTD
Year
Item		 2023 2022 Increase
(Decrease)
Amount		 Proportion of
Difference %
OperatingRevenue
Sales Revenue 3,452,706 4,135,707 (683,001) (16.51)
Less: Sales Allowances and Returns (74,676) (78,260) 3,584 (4.58)
Net OperatingRevenue 3,378,030 4,057,447 (679,417) (16.74)
Cost of Goods Sold (2,710,842) (3,462,976) 752,134 (21.72)
Gross Margin 667,188 594,471 72,717 12.23
OperatingExpense (382,005) (423,713) 41,708 (9.84)
Net OperatingIncome 285,183 170,758 114,425 67.01
Non-operatingIncome and Expense (139,004) 185,208 (324,212) (175.05)

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Pre-tax Net Income (Loss) from
Continued Operations		 146,179 355,966 (209,787) (58.93)
Tax Benefits(Expense) (30,989) (83,907) 52,918 (63.07)
Net Income (Loss) from Continued
Operations(Net of Tax)		 115,190 272,059 (156,869) (57.66)
EPS 1.46 3.45
Proportion of increase and decrease explanation:
1. Sales revenue, gross profit, operating net income, non-operating income and expense: For details, please
refer to “VII, II, Financial Analysis on Chang Type Industrial Co., Ltd. and its subsidiaries” and the
explanation of “2. Gross Margin Difference Analysis” as shown below.
2. Sales Allowances and Returns: Provide customers with sales discounts according to the contract.
Additionally, the sales discounts increased due to the deductions for defects, missing parts, or
incomplete documentation.
3. Non-operating Income and Expense: Please refer to VI. (II) Financial Analysis for the Recent Five
Years.
  1. Gross Margin Difference Analysis
2. Gross Margin Difference Analysis 2. Gross Margin Difference Analysis 2. Gross Margin Difference Analysis 2. Gross Margin Difference Analysis 2. Gross Margin Difference Analysis
Unit: In thousands of NTD
Year
Item		 2023 2022 Difference Difference(%)
Gross Margin 667,188 594,471 72,717 12.23
Gross Margin Percentage 19.75% 14.65% 5.10 34.81
Difference Analysis:
Major Product Type
Electric Tools-Self-
made
Electric Tools-
Commodity
Parts
Others
Total		 Price
Difference
(Unfavorable)
113,323
8,200
39
-
121,562		 Quantity
Difference
(Unfavorable)
(164,671)
13,479
2,770
-
(148,422)		 Cost
Difference
(Unfavorable)
(557,643)
1,668
339
-
(555,636)		 Combining
Difference
(Unfavorable)
722,798
(17,603)
(6,289)
-
698,906		 Other
(72,810)
-
-
29,117
(43,693)		 Subtotal
40,997
5,744
(3,141)
29,117
72,717
Major reason for the increase in gross margin and gross margin percentage:
For details, please refer to “VI, II, Financial Analysis on Chang Type Industrial Co., Ltd. and its
subsidiaries”

  • (II) Expected sales volume and its basis: With the introduction of new product models and the strengthening of vertical integration in production, it is anticipated that both revenue and profitability will maintain steady growth.

  • (III) Possible impact on the Company's future financial position and countermeasures: The Company continues to develop new products and new customers and conducts various financial and business plans to meet customer marketing needs.

III. Cash Flow

  • (I) Cash Flow Difference Analysis in the Most Recent Year
2023 2022 Proportion of Increase
(Decrease) (%)
2.17 89.30 (97.57)
84.59 74.35 13.77
(1.80) 52.06 (103.46)

~~100~~

Difference Analysis Explanation:

  1. Please refer to VI. (II) Financial Analysis for the Recent Five Years.

  2. The sales sharp decreased, resulting in the sharp decrease in accounts and inventory. A significant increase in net cash flow from operating activities in the current period, which caused the current cash flow ratio, the net cash flow adequacy ratio, cash reinvestment ratio increased significantly compared to the previous period.

  3. (II) Illiquidity Improvement Plan: None.

  4. (III) Cash Flow Analysis in the Next Year

I) Cash Flow Analysis in the Next Year I) Cash Flow Analysis in the Next Year I) Cash Flow Analysis in the Next Year I) Cash Flow Analysis in the Next Year
Unit: In thousands of NTD
Cash
Balance in
the
Beginning
of the
Period(1)		 Projected Net Cash
Flow from Operating
Activities (2)		 Projected Net
Cash Outflow
(3)		 Projected Amount
of Cash Balance
(Deficit) (1)+(2)-(3)		 Remedy for Projected Cash
Deficit
Investment
Plan		 Wealth
Management
Plan
82,560 200,000 150,000 132,560 Not
Applicable		 Bank Financing
1. Cash Flow Difference Analysis in the Next Year:
(1) Increase in net cash inflow from operating activities: Same as the above explanation 1 to 4 of
"Financial Analysis for the Recent Five Years"
(2) Decrease in investing activities: No significant difference.
(3) Increase in net cash outflow from financing activities: The repayment of short-term loans with the
increased cash inflow from operating activities is the same as the explanation of the above operating
activities.
2. Remedy for projected amount of cash deficit and liquidity analysis: None.

  • (IV) Cash Flow Difference Analysis of the Current Year:

  • Increase in net cash inflow from operating activities: Same as the above explanation 1 to 4 of "Financial Analysis for the Recent Five Years"

  • Decrease in investing activities: No significant difference.

  • Increase in net cash outflow from financing activities: The repayment of short-term loans with the increased cash inflow from operating activities is the same as the explanation of the above operating activities.

~~101~~

  • IV. The Impact of Material Capital Expenditure on Financial Position in the Most Recent Year: No material capital expenditure plan.

  • V. The Direct Investment Policy, the Major Cause of Profit or Loss, Improvement Plan for the Most Recent Year, and the Investment Plan in the Next Year: None.

  • VI. Risk Analysis Assessment in the Most Recent Year to the Date of this Report was Printed

  • (I) The influence of interest rate and exchange rate fluctuation, and inflation on the profit and loss of the Company, and the countermeasures in the future:

  • Interest rate and inflation has no material impact on the profit and loss of the Company. For large fluctuations in exchange rates, the Company adopts a net foreign exchange position hedging method and partially pre-sells foreign exchange forward to reduce the impact of exchange rate changes on profit and loss.

  • (II)Policies for engaging in high-risk, high-leverage investments, loaning of funds to others, endorsement guarantees, and derivatives transactions, the main reasons for profit or loss, and future countermeasures: The Company has not engaged in various transactions of high-risk, high-leverage investment and derivative products. Loaning of funds to others and endorsement guarantees are fully 100% direct investment in subsidiaries to assist their business development.

  • (III) Future R&D Plan and Expected Expense on Reinvestment: The Company will continue to introduce new products of the sawing series of electric tools to meet the market demand.

  • (IV) The impact of major domestic and foreign policy and regulatory changes on the Company's financial position and operation, and the countermeasures: No significant impact.

  • (V) The impact of technological changes on the Company’s financial position, and the countermeasures: None.

  • (VI) The impact of corporate image changes on the corporate crisis management, and the countermeasures: No significant changes on corporate image.

  • (VII) Expected profits and potential risks of mergers and acquisitions: No mergers or acquisitions.

  • (VIII) Expected profits and potential risks of plant expansions: No plant expansions.

  • (IX) Risk of purchase and sales in bulk, and the countermeasures:

  • Purchase: The Company's main raw materials are supplied by several large manufacturers. In addition, for metal casting and processing, due to the collaborative system of Taiwan's woodworking machine industry is quite mature, there are many competitors, and there is no risk of bulk purchase.

  • Sales: The Company's sales are concentrated in two companies, A and B, since the market demand for electrical machine tool is focused in the United States, which is concentrated in a small number of large-scale sales channels, and its supply is mostly monopolized by international major manufacturers. The possible risk is that the customer transfers the order or cannot place an order to the Company due to their operational difficulties. However, the Company has a close cooperative relationship with its customers, and the customers belong to one of the small numbers of large-scale international manufacturers with good operating conditions, therefore, the above-mentioned risks will not likely occur at present.

  • (X) For Directors, Supervisors or major shareholders holding more than 10% of the shares, the impact and risks and of a large number of equity transfers or replacements on the Company, and the countermeasures: No large number of equity transfers or replacements.

  • (XI) The impact and risks of management rights changes on the Company, and the countermeasures: No management rights changes.

  • (XII) Litigations or non-contentious cases: None.

  • (XIII) Other major risks and the countermeasures:

VII. Other Significant Matters: None.

~~102~~

VIII. Additional Information

I. Profiles of the Affiliates:

  • (I) Consolidated Business Report on the Affiliates

  • Organizational Chart on the Affiliates (31 December 2023)

Chang Type Industrial Co., Ltd. 100% Delta Power Equipment Corporation Registered Address: U.S.

  1. Profile of Each Affiliate

Basic Information:

2. Profile of Each Affiliate
Basic Information:		 2. Profile of Each Affiliate
Basic Information:
31 December 2023 Unit: In thousands of NTD
Name of
Enterprise		 Date of
Establishment		 Address Paid-in
Capital		 Major Scope of
Business		 Division of labor between business
operators who are related to each
other
Delta Power
Equipment
Corporation		 16 December
2010		 99 Roush Street,
Anderson, SC
 314,095 Production, import
and export trade of
electric and
pneumatic tools		 Engaged in the marketing of its
private label, the Company assists
its procurement business in Asia.

  • 3.Information on the existence of the controlling and subordinate relation of the same shareholders: None.

  • Information on directors, supervisors and presidents of the affiliates

31 December 2023 31 December 2023 Unit: Share;% Unit: Share;% Unit: Share;%
Name of
Enterprise		 Title Name or Representative Shares Held
Shares Shares
Delta Power
Equipment
Corporation		 Director ChangType Industrial Co.,Ltd. 10,010 100
Representative: CHANG,CHIN-CHIN － －
CHANG,HSIANG-I － －
CHANG, QUN-YU － －
President CHANG, QUN-YU － －

(II) Operation Overview of the Affiliates

31 December 2023 31 December 2023 Unit: In thousands of NTD Unit: In thousands of NTD Unit: In thousands of NTD
Name of Enterprise Paid-in
Capital		 Total
Assets		 Total
Liabilities		 Net
Worth		 Revenue Operating
Income (Loss)		 Profit and Loss
of the Period
(Net of Tax)		 EPS
(Net of
Tax)
Delta Power Equipment
Corporation
314,095		 1,125,356 576,637 548,719 539,974 (17,215) (15,116) (1.5)

103

(III) Consolidated Financial Statements of the Affiliates: Please refer to Financial Statements Attested and Audited by CPAs in the Most Recent Year in Attachment 1. (IV) Affiliation Report: Not Applicable.

  • II. Issuance of Securities Through Private Placement in the Most Recent Year as of the Date of this Report was Printed: None.

  • III.The Holding or Disposal of the Shares Issued by the Company by Subsidiaries in the Most Recent Year as of the Date of this Report was Printed: None.

  • IV. Supplementary Information: None.

  • IX. In the most recent year and as of the date of this report was printed, any event which has a material impact on shareholders' rights and interests or securities prices specified in 2[nd] subparagraph, 3[rd] Paragraph, Article 36 of the Securities and Exchange Act: None.

104

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

Address: No. 41, Nan-tsuen Road, Ho-Li, Taichung City, Taiwan, R.O.C Telephone: 886-4-25580669

Notice to readers:

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

105

Statement

For the year ended 31 December 2023 (from 1 January 2023 to 31 December 2023), pursuant to “Criteria Governing Preparation of Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises and Affiliation Reports,” the entities that are required to be included in the consolidated financial statements of affiliates, are the same as the entities required to be included in the consolidated financial statements under International Financial Reporting Standards 10. In addition, information required to be disclosed in the consolidated financial statements of affiliates is included in the aforementioned consolidated financial statements. Accordingly, it is not required to prepare a separate set of consolidated financial statements of affiliates.

Hereby declare,

Change Type Industrial Co., Ltd.

CEO: CHANG, CHING-CHIN

14 March 2024

106

Independent Auditor’s Report

To Chang Type Industrial Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of Chang Type Industrial Co., Ltd. (the “Company”) and its subsidiary as of 31 December 2023 and 2022, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2023 and 2022, and notes to the consolidated financial statements, including the summary of material accounting policies.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company and its subsidiary (the “Group”) as of 31 December 2023 and 2022, and their consolidated financial performance and cash flows for the years ended 31 December 2023 and 2022, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiary in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

107

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2023 consolidated financial statements. 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.

Inventory valuation

As of 31 December 2023, the net inventories amounted to NT$1,127,187 thousand, accounting for 28% of the consolidated total assets. Because the amount was material to the Group’s financial statements, the sales were affected by the uncertainty due to market demand, and the valuation policy of the inventories involved a high level of management judgment, we determined this to be a key audit matter. Our audit procedures included, but were not limited to: performing simple test to assess the effectiveness of inventory internal control established by management; understanding the accounting policy around obsolete and slow-moving inventories; selecting important storage locations to observe inventory counts; sampling and testing the accuracy of inventory aging intervals to verify whether the aging reports were reasonable; in addition, in order to evaluate the reasonableness of inventories valuation, we also obtained inventory movement report, sampled and tested related certificates of purchases and sales, and verified the unit cost of inventories to access the net realizable value of inventories. We also assessed the adequacy of the disclosures related to inventories in Notes 5 and 6.

Provision for warranties

As of 31 December 2023, the provision for warranties amounted to NT$50,007 thousand. The management determined the estimate of the provision for warranties by the past experience of repairing consumers’ defective products. Because the estimates involved significant management judgment, we determined this to be a key audit matter. Our audit procedures included, but were not limited to: understanding the internal control of provision for warranties established by management; evaluating the reasonableness of accounting policy around provision for warranties and the accuracy of recalculating provision for warranties according to the accounting policy; analyzing the reasonableness of provision for warranties by comparing the amounts year over year. In addition, we obtained details of provision for warranties of the subsequent period to check the actual amounts or reversal of the provision for warranties of the subsequent period. We also assessed the adequacy of disclosures related to provision for warranties in Notes 5 and 6.

108

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company and its subsidiary.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

109

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

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

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

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

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

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

110

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2023 consolidated financial statements 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.

Other

We have audited and expressed an unqualified opinion on the parent company only financial statements of the Company as of and for the years ended 31 December 2023 and 2022.

Lo,Wen-Chen Huang,Yu-Ting

Ernst & Young, Taiwan 14 March 2024

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, results of operations 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying parent company only financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation

111

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

31 December 2023 and 31 December 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets
Cash and cash equivalents
Accounts receivable - net
Other receivables
Current tax assets
Inventories, net
Prepayment
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets		 Notes As at
31 Dec 2023
$82,560
1,342,435
18,201
3,071
1,127,187
19,689
3,369
2,596,512
617,149
613,545
22,051
57,391
71,609
1,381,745
$3,978,257		 31 Dec 2022
4, 6(1)
4, 6(2), 6(11)
4
4, 6(3)
4
4, 6(4), 8
4, 6(12)
4
4, 6(16)
6(7),8		 $172,827
896,111
28,318
613
1,363,756
15,128
472
2,477,225
645,831
344,336
31,882
50,357
61,485
1,133,891
$3,611,116

(The accompanying notes are an integral part of the consolidated financial statements)

(continued)

112

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

31 December 2023 and 31 December 2022

(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity
Current liabilities
Short-term loans
Contract liabilities, current
Notes payable
Accounts payable
Other payables
Current tax liabilities
Provisions, current
Other current liabilities
Total current liabilities
Non-current liabilities
Provision, non-current
Deferred tax liabilities
Lease liabilities, non-current
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity attributable to the parent company
Capital
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Retained earnings
Total retained earnings
Other components of equity
Exchange differences on translation of foreign operations
Total equity
Total liabilities and equity		 Notes As at
31 Dec 2023
$569,700
323
278,012
333,507
174,393
48,016
16,648
62,919
1,483,518
50,522
92,374
440,631
30
583,557
2,067,075
788,000
1,364
324,128
9,918
797,303
1,131,349
(9,531)
1,911,182
$3,978,257		 31 Dec 2022
4, 6(5)
6(10)
6(6)
4, 6(8)
6(12)
4, 6(8)
4, 6(16)
6(12)
4, 6(9)		 $544,000
239
220,399
168,669
232,718
41,970
17,794
56,323
1,282,112
62,850
101,988
288,210
30
453,078
1,735,190
788,000
1,364
296,146
34,688
765,646
1,096,480
(9,918)
1,875,926
$3,611,116

(The accompanying notes are an integral part of the consolidated financial statements)

113

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Net sales
Cost of sales
Gross profit
Operating expenses
Sales and marketing
General and administrative
Research and development
Expected credit losses
Total operating expenses
Operating income
Non-operating income and expenses
Other revenue
Other gains and losses
Financial costs
Total non-operating income and expenses
Income from continuing operations before income tax
Income tax expense
Income from continuing operations, net of tax
Other comprehensive income (loss)
Items that may not to be reclassified subsequently to profit or loss
Remeasurements of defined benefit plans
Income tax related to items that may not to be reclassified subsequently
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operation
Income tax related to items that may be reclassified subsequently loss
Total other comprehensive income (loss), net of tax
Total comprehensive income
Net income attributable to:
Shareholders of the parent
Non-controlling interests
Comprehensive income attributable to:
Shareholders of the parent
Non-controlling interest
Earnings per share (NTD)
Earnings per share-basic
Earnings per share-diluted		 Notes For the Years Ended 31 December For the Years Ended 31 December For the Years Ended 31 December
2023 2022
4, 6(10)
6(3),6(13), 7
6(13), 7
6(11)
6(14)
4, 6(16)
6(15)
4, 6(17)		 $3,378,030
(2,715,202)		 $4,057,447
(3,462,976)
662,828
(230,273)
(120,417)
(17,508)
(9,447)		 594,471
(222,893)
(178,369)
(22,451)
-
(377,645) (423,713)
285,183 170,758
19,249
(139,374)
(18,879)		 24,641
183,037
(22,470)
(139,004) 185,208
146,179
(30,989)		 355,966
(83,907)
115,190 272,059
(1,901)
380
387
-		 9,710
(1,942)
24,770
-
(1,134) 32,538
$114,056 $304,597
$115,190
-		 $272,059
-
$115,190 $272,059
$114,056
-		 $304,597
-
$114,056 $304,597
$1.46 $3.45
$1.46 $3.45

(The accompanying notes are an integral part of the consolidated financial statements)

114

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Notes Capital Capital Retained Earnings Other components
of equity		 Total equity
Common Stock Additional
Paid-in Capital		 Legal Reserve Special Reserve Unappropriated
Earnings		 Exchange
Differences on
Translation of
Foreign
Operations
Balance as of 1 January 2022
Appropriations of earnings, 2021:
Legal reserve
Special reserve
Cash dividend
Net income in 2022
Other comprehensive income (loss), net of tax in 2022
Total comprehensive income (loss)
Balance as of 31 December 2022
Balance as of 1 January 2023
Appropriations of earnings, 2022:
Legal reserve
Special reserve
Cash dividends
Net income in 2023
Other comprehensive income, net of tax in 2023
Total comprehensive income
Balance as of 31 December 2023		 6(9)
6(15)
6(9)
6(9)
6(15)
6(9)		 $788,000
$788,000
$788,000
$788,000		 $1,364
$1,364
$1,364
$1,364		 $266,054
30,092
$296,146
$296,146
27,982
$324,128		 $24,047
10,641
$34,688
$34,688
(24,770)
$9,918		 $723,552
(30,092)
(10,641)
(197,000)
272,059
7,768
279,827
$765,646
$765,646
(27,982)
24,770
(78,800)
115,190
(1,521)
279,827
$797,303		 $(34,688)
24,770
24,770
$(9,918)
$(9,918)
387
387
$(9,531)		 $1,768,329
-
-
-
(197,000)
272,059
32,538
304,597
$1,875,926
$1,875,926
-
-
(78,800)
115,190
(1,134)
114,056
$1,911,182

(The accompanying notes are an integral part of the parent company only financial statements)

115

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Net income before tax
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation
Amortization
Expected credit losses
Interest expense
Interest income
Loss (gain) on disposal of property, plant and equipment
Loss on decline in value and obsolescence of inventories
Gain from lease modification
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
Decrease in other receivables
Decrease in inventories, net
(Increase) decrease in prepayments
(Increase) decrease in other current assets
Increase other non-current assets
Increase (decrease) in contract liabilities
Increase (decrease) in notes payable
Increase (decrease) in accounts payable
(Decrease) increase in other payables
(Decrease) increase in provisions
Increase (decrease) in other current liabilities
Cash generated from from operations
Interest received
Interest paid
Income tax paid
Net cash generated from operating activities		 For the Years Ended 31 December For the Years Ended 31 December
2023
$146,179
103,873
13,628
9,447
18,879
(287)
1
23,630
-
(455,669)
10,131
213,153
(6,462)
(2,897)
(4,473)
84
69,351
164,838
(59,913)
(13,474)
2,841
232,860
273
(9,925)
(43,762)
179,446		 2022
$355,966
103,526
13,962
-
22,470
(502)
(135)
9,206
(120)
1,499,357
17,937
94,081
24,254
7,685
(11,792)
(50)
(529,254)
(489,185)
75,004
8,864
(217)
1,201,057
493
(13,627)
(42,984)
1,144,939

(The accompanying notes are an integral part of the consolidated financial statements)

(Continued)

116

CHANG TYPE INDUSTRIAL CO., LTD. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

For the Years Ended 31 December 2023 and 2022
(Expressed in Thousands of New Taiwan Dollars)
(Continued)
Cash flows from investing activities:
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Increase refundable deposits
Acquisition of intangible assets
Acquisition of right-of-use assets
Increase inprepayment for equipment
Net cash used in investing activities
Cash flows from financing activities:
Increase in short-term loans
Decrease in short-term loans
Increase in short-term bills payable
Decrease in short-term bills payable
Decrease in lease liabilities
Decrease in other non-current liabilities
Cash dividend
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 For the Years Ended 31 December
2023
(23,718)
124
(12,505)
(259)
(125,183)
(4,208)
(165,749)
4,228,800
(4,203,100)
460,000
(460,000)
(50,838)
-
(78,800)
(103,938)
(26)
(90,267)
172,827
$82,560		 2022
(37,536)
135
(2,354)
(1,997)
-
(4,598)
(46,350)
9,513,800
(10,116,600)
-
(190,000)
(51,412)
(82)
(197,000)
(1,041,294)
11,700
68,995
103,832
$172,827

(The accompanying notes are an integral part of the consolidated financial statements)

117

Chang Type Industrial Co., Ltd. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. HISTORY AND ORGANIZATION

Chang Type Industrial Co., Ltd. (“the Company”) was incorporated on 21 April 1989 to manufacture, process and sell hand tools, electric machines, motors, power tools, automatic control system, computer machinery, electric test instruments, woodworking machines and metal parts. The Company is also the agent to import and export raw materials for all related products mentioned above and to design various molds and fixtures.

The Company's stocks were approved by the authority to be listed on the OTC on 14 January 2003 by the Securities and Futures Bureau, Ministry of Finance. The Company’s registered office and, main business location, is at No. 41, Nancun Road, Houli District, Taichung, Taiwan (R.O.C.).

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The consolidated financial statements of the Company and its subsidiaries (“the Group”) for the years ended 31 December 2023 and 2022 were authorized for issue by the Company’s board of directors on 14 March 2024.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

  • (1) Changes in accounting policies resulting from applying certain standards and amendments for the first time

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are recognized by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2023. The adoption of these new standards and amendments had no material impact on the Group.

  • (2) Standards or interpretations issued, revised, or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below.

118

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Items Newly released, Revised or Amended Standards and
Interpretations		 Effective Date
issued by IASB
a Classification of Liabilities as Current or Non-current –
Amendments to IAS 1		 1 January 2024
b Lease Liability in a Sale and Leaseback – Amendments to
IFRS 16		 1 January 2024
c Non-current Liabilities with Covenants – Amendments to
IAS 1		 1 January 2024
d Supplier Finance Arrangements – Amendments to IAS 7 and
IFRS 7		 1 January 2024
  • (a) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

  • (b) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

The amendments add seller-lessees additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

  • (c) Non-current Liabilities with Covenants – Amendments to IAS 1

The amendments improved the information companies provide about long-term debt with covenants. The amendments specify that covenants to be complied within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

  • (d) Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The amendments introduced additional information of supplier finance arrangements and added disclosure requirements for such arrangements.

119

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2024. Apart from item explained below, the remaining standards and interpretations have no material impact on the Group.

  • (3) Standards or interpretations issued, revised, or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Group as at the end of the reporting period are listed below.
Items Newly released, Revised or Amended Standards and
Interpretations		 Effective Date issued by
IASB
a IFRS 10 “Consolidated Financial Statements” and IAS 28
“Investments in Associates and Joint Ventures” — Sale or
Contribution of Assets between an Investor and its Associate
or Joint Ventures		 To be determined by IASB
b IFRS 17 “Insurance Contracts” 1 January 2023
c Lack of Exchangeability – Amendments to IAS 21 1 January 2025
  • (a) IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

120

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the interests of unrelated investors in the associate or joint venture.

(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation, and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017, and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

(c) Lack of Exchangeability – Amendments to IAS 21

These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide. The amendments apply for annual reporting periods beginning on or after 1 January 2025.

121

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The remaining new or amended standards and interpretations have no material impact on the Group.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The consolidated financial statements of the Group for the years ended 31 December 2023 and 2022 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”), IFRSs, IASs, IFRIC and SIC, which are endorsed by the FSC (collectively referred to as “TIFRSs”).

(2) Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“$”) unless otherwise stated.

(3) Basis of consolidation

(a) Preparation principle of consolidated financial statements

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group starts to control an investee if and only if the Group has:

122

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • A. power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee);

  • B. exposure or rights comes from involvement and return variations with the investee; and

  • C. the ability to use its power over the investee to affect its returns

When the Group directly or indirectly holds less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

  • A. the contractual arrangement with the other vote holders of the investee

  • B. rights arising from other contractual arrangements

  • C. the Group’s voting rights and potential voting rights

The Group re-assesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Company obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All internal group account balances, income and expenses, unrealized gains (losses), and dividends resulting from internal group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent company and to the non-controlling interests even if this results in the non-controlling interests that have a deficit balance.

If the Company loses control of a subsidiary, it:

123

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • A. derecognizes the assets (including goodwill) and liabilities of the subsidiary

  • B. derecognizes the carrying amount of any non-controlling interest

  • C. recognizes the fair value of the consideration received

  • D. recognizes the fair value of any investment retained

  • E. reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss, or transfer directly to retained earnings if required by other IFRSs; and

  • F. recognizes any resulting difference in profit or loss.

(b) The consolidated entities are as follows:

Investor
Chang Type Industrial Co.,
Ltd.		 Subsidiary
Delta Power Equipment
Corporation		 Main Business Percentage of ownership (%) Percentage of ownership (%)
31 December
2023
100.00%		 31 December
2022
100.00%
Import and export trade of
Power tool manufacturing

(4) Foreign Currency Transactions

The Group’s consolidated financial statements are presented in NT$, which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rate of exchange ruling at the reporting date. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

124

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs, are included in the borrowing costs that are eligible for capitalization as the costs of that asset.

  • (b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.

  • (c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

  • (5) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date, and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

  • (6) Current and non-current distinction

An asset is classified as current when:

  • (a) The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.

  • (b) The Group holds the asset primarily for the purpose of trading.

  • (c) The Group expects to realize the asset within twelve months after the reporting period.

  • (d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

  • (a) The Group expects to settle the liability in its normal operating cycle.

  • (b) The Group holds the liability primarily for the purpose of trading.

  • (c) The liability is due to be settled within twelve months after the reporting period.

  • (d) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (7) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

  • (8) Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value and directly attribute to financial assets and financial liabilities (except for financial assets and liabilities classified through fair value measurement). The transaction costs that are acquired or distributed are added or deducted from the fair value of financial assets and financial liabilities.

(1) Financial instruments: Recognition and Measurement

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

  • A. the Group’s business model for managing the financial assets and

  • B. the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as notes receivables, accounts receivables, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • A. the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

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

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

  • A. purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition

  • B. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods

(2) Impairment of financial assets

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group measures expected credit losses of a financial instrument in a way that reflects:

  • (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

  • (b) the time value of money;

  • (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.

The loss allowance is measured as follows:

  • A. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

  • B. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

  • C. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (3) Derecognition of financial assets

A financial asset is derecognized when:

  • i. The rights to receive cash flows from the asset have expired.

  • ii. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred.

  • iii. The Group has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

  • (4) Financial liabilities and equity instruments

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition, fees, and transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(5) Offsetting of financial instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to liquidate on a net basis, or to realize the assets and liquidate the liabilities simultaneously.

(9) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the assumption that the transaction to sell the asset or transfer the liability takes place on either:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (a) In the principal market for the asset or liability, or

  • (b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants based on their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(10) Inventories

Inventories are evaluated at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials - Purchase cost under weighted average method. Finished goods and work in progress – include cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs under weighted average method.

Net realizable value is the balance of estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(11) Property, plant, and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items
Buildings
Machinery and equipment
Transportation equipment
Office equipment
Other equipment		 Useful Lives
10 – 50 years
5 – 12 years
5 – 7 years
3 – 8 years
2 – 10 years

An item of property, plant, and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(12) Leases

On the date that contracts are established, the Group assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Group assesses whether throughout the period of use, has both of the following:

  • (a) the right to obtain substantially all the economic benefits from use of the identified asset; and

  • (b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative stand-alone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Group for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Group estimates the stand-alone price, maximizing the use of observable information.

Group as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Group recognizes right-of-use asset and lease liability for all leases which the Group is the lessee of those lease contracts.

At the commencement date, the Group measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (a) fixed payments (including in-substance fixed payments), less any lease incentives receivable;

  • (b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

  • (c) amounts expected to be payable by the lessee under residual value guarantees;

  • (d) the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and

  • (e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Group measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Group measures the right-of-use asset at cost.

The cost of the right-of-use asset comprises:

  • (a) the amount of the initial measurement of the lease liability;

  • (b) any lease payments made at or before the commencement date, less any lease incentives received;

  • (c) any initial direct costs incurred by the lessee; and

  • (d) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Group measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Group measures the right-of-use asset by applying a cost model.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

If the lease transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

The Group applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Group accounted for as short-term leases or leases of low-value assets, the Group presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the comprehensive income statements.

For short-term leases or leases of low-value assets, the Group elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Group as a lessor

At inception of a contract, the Group classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Group recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Group apportions the disclosure in the contract applying IFRS 15.

The Group recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index, or a rate are recognized as rental income when incurred.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(13) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. The amortization period or method is adjusted for changes in expected useful life or the expected pattern of consumption from future economic benefits of the assets and recognized as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Group’s intangible assets is as follows:

follows:
Trademark rights
Useful lives
Limited 15 years
Amortization method used
Amortized on a
straight-line basis
over the term of the
trademark rights
Internally generated or acquired
Acquired		 Computer software

Limited 3-5 years
Amortized on a
straight-line basis
over the estimated
useful life
Acquired

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(14) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is recognized as impaired loss and is written down to its recoverable amount. Recoverable amount is the higher of net fair value or useful life.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Provision for decommissioning, restoration and rehabilitation costs

The provision for decommissioning, restoration and rehabilitation costs arose on construction of a property, plant and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset, accordingly.

Provision for warranties

A provision is recognized for expected warranty claims on products sold, based on past experience, management’s judgement, and the optimal estimated number of future economic benefits caused by warranty obligation.

(16) Revenue recognition

The Group’s revenue arising from contracts with customers are primarily related to sale of goods. The accounting policies are explained as follows:

Sale of goods

The Group manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main products of the Company are hand tools and power tools, and revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. So the Company estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group provides its customer with a warranty with the purchase of the products. The warranty provides assurance that the product will operate as expected by the customers. And the warranty is accounted in accordance with IAS 37.

The credit period of the Group’s sale of goods is from 97 to 150 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as accounts receivables. The Group usually collects the payments shortly after transfer of goods to customers, therefore, there is no significant financing component to the contract. For some of the contracts, the Group has transferred the goods to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Group measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

(17) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in accordance with the borrowing of funds.

(18) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received, and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grants.

(19) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Group. Therefore, fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Remeasurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (a) the date of the plan amendment or curtailment, and

  • (b) the date that the Group recognizes restructuring-related costs or termination welfare

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(20) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the resolution of Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.

  • ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates, and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

  • i. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination; at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and at the time of the transaction, does not give rise to equal taxable and deductible temporary differences.

  • ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

According to the temporary exception in the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12), information about deferred tax assets and liabilities related to Pillar Two income tax will neither be recognized nor be disclosed.

5. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s consolidated financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

(1) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Provisions for liability

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Provision for decommissioning, restoration, and rehabilitation costs

The provision for decommissioning, restoration, and rehabilitation costs arose on construction of a property, plant, and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Provision for warranties

A provision is recognized as a liability, based on the contracts with consumers and the optimal estimate management judges with past experience to determine an outflow of resources embodying economic benefits to settle the obligation in the future. Please refer to Note 4 for more details on the policy of the provision for warranties.

(b) Evaluation of inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

6. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand
Bank deposits
Total		 As of 31 December
2023
$90
82,470
$82,560		 2022
$90
172,737
$172,827

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Accounts receivables

(a) Details as follows:

Details as follows:
Accounts receivables
Less: loss allowance
Total		 As of 31 December
2023
$1,361,555
(19,120)
$1,342,435		 2022
$907,550
(11,439)
$896,111

  • (b) Accounts receivables are generally on 97~150 day terms. The total carrying amount as of 31 December 2023 and 2022 were $1,361,554 and $907,550, respectively. Please refer to Note 6(11) for more details on loss allowance of accounts receivables for the years ended 31 December 2023 and 2022. Please refer to Note 12 for more details on credit risk management.

  • (c) Trade receivables were not pledged.

(3) Inventories

(a) Details as follows:

Details as follows:
Raw materials
Work in progress
Manufacturing goods
Finished goods
Inventories
Total		 As of 31 December
2023
2022
$324,135
$423,266
73,628
54,477
33,341
39,151
556,384
694,925
139,699
151,937
$1,127,187
$1,363,756
2022
$423,266
54,477
39,151
694,925
151,937
$1,363,756

  • (b) The inventory cost recognized as operating costs for the years ended 31 December 2023 and 2022 were $2,715,202 and $3,462,976, respectively. The loss on decline in value and obsolescence of inventories or gain from price recovery of inventories included in the amounts were $23,630 and $9,206, respectively.

  • (c) No inventories were pledged.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(4) Property, plant, and equipment

Property, plant, and equipment
Owner occupied property, plant, and
equipment		 As of31 December
2023 2022
$645,831
$617,149

(a) Owner occupied property, plant, and equipment

Cost:
As at 1 Jan. 2023
Additions
Disposals
Transfers
Exchange
differences
As at 31 Dec. 2023
Depreciation and
impairment:
As at 1 Jan. 2023
Depreciation
Disposals
Exchange
differences
As at 31 Dec. 2023
Cost:
As at 1 Jan. 2022
Additions
Disposals
Transfers
Exchange
differences
As at 31 Dec. 2022		 Land and land
Improvements		 Buildings Machinery
and
equipment		 Transportatio
n equipment		 Office
equipment		 Other
equipment		 Total
$148,768
-
-
-
4		 $570,924
-
-
-
49		 $290,545
8,482
(436)
7,524
-		 $10,561
-
(1,353)
-
1		 $10,299
-
-
-
-		 $124,145
5,125
(401)
-
-		 $1,155,242
13,607
(2,190)
7,524
54
$148,772 $570,973 $306,115 $9,209 $10,299 $128,869 $1,174,237
$-
-
-
-		 $224,254
12,900
-
(42)		 $163,392
26,537
(436)
-		 $6,465
1,445
(1,287)
(13)		 $8,921
513
-
-		 $106,379
8,402
(342)
-		 $509,411
49,797
(2,065)
(55)
$- $237,112 $189,493 $6,610 $9,434 $114,439 $557,088
Land and land
Improvements		 Buildings Machinery
and
equipment		 Transportatio
n equipment		 Office
equipment		 Other
equipment		 Total
$147,397
-
-
-
1,371		 $556,405
-
-
-
14,519		 $252,739
23,345
-
14,461
-		 $10,461
3,385
(3,580)
-
295		 $10,299
-
-
-
-		 $119,071
4,724
-
350
-		 $1,096,372
31,454
(3,580)
14,811
16,185
$148,768 $570,924 $290,545 $10,561 $10,299 $124,145 $1,155,242

147

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Depreciation and
impairment:
As at 1 Jan. 2022
Depreciation
Disposals
Exchange
differences
As at 31 Dec. 2022
Net carrying
amount as at:
31 Dec. 2023
31 Dec. 2022		 Land and land
Improvements		 Buildings Machinery
and
equipment		 Transportatio
n equipment		 Office
equipment		 Other
equipment		 Total
$-
-
-
-		 $209,309
12,744
-
2,201		 $137,369
26,023
-
-		 $8,485
1,379
(3,580)
181		 $8,407
514
-
-		 $96,331
10,048
-
-		 $459,901
50,708
(3,580)
2,382
$- $224,254 $163,392 $6,465 $8,921 $106,379 $509,411
$148,772 $333,861 $116,622 $2,599 $865 $14,430 $617,149
$148,768 $346,670 $127,153 $4,096 $1,378 $17,766 $645,831

  • (b) The land located in Dunnan section, Houli district and amounting to NT$440 thousand is agriculture land, so its owner is temporarily registered as natural person.

  • (c) There is no occurrence of capitalization of interest due to purchasing property, plant and equipment.

  • (d) Please refer to Note 8 for more details on property, plant, and equipment under pledge.

  • (5) Short-term loans

Short-term loans
Unsecured bank loans
Secured bank loans
Total
Unused short-term lines of credits
Interest Rates (%)		 As of 31 December
2023
$450,700
119,000
$569,700
$2,107,300		 2022
$437,500
106,500
$544,000
$2,343,000
1.68%~1.70% 1.54%~1.93%

Please refer to Note 8 for more details on financial assets at Land, Buildings pledged as security for short-term borrowings.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(6) Other payables

Other payables
Accrued salary and bonus
Accrued employees’ compensation, and
directors’ and supervisors’ remuneration
Accrued compensation
Others
Total		 As of 31 December
2023
$25,097
16,650
60,334
(Note 1)
72,312
$174,393		 2022
$26,852
26,025
107,485
(Note 2)
72,356
$232,718

Note 1: The Group has reached a consensus with Stanley Black & Decker, Inc. (“SBD”) on 10 July 2023, based on commercial considerations, to compensate for product design modification rework by paying US$4,650,000. As of 31 December 2023, the unpaid amount totaled US$1,940,000.

Note 2: The patent infringement suit between the Company and Robert Bosch Tool Corporation. (“Bosch”) had been settled because of commercial consideration. They signed the conciliation agreement on 20 January 2023, for which the Company shall pay US$3,500,000 and Bosch withdrew the action and the damages claim against the Company.

(7) Post-employment benefit

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to their individual pension accounts. The Company has made monthly contributions of 6% of each employee’s salary or wage to their individual pension accounts from Bureau of Labor Insurance.

Expenses under the defined contribution plan:

Expenses under the defined contribution plan:
Defined contribution plan For the years ended
31 December
2023
$13,399		 2022
$14,031

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Defined benefits plan

The Group adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Group expects to contribute $256 to its defined benefit plan during the 12 months beginning after 31 December 2023.

As of 31 December 2023, the Group's defined benefit plan is expected to expire in 2033.

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Pension costs recognized in profit or loss are as follows:

Pension costs recognized in profit or loss are as follows:
Expected return on planned assets
Net interest on the net defined benefit
liabilities
Total		 For the years ended
31 December
2023 2022
$(341)
141		 $(177)
134
$(200) $(43)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

plan assets at fair value are as follows:
Defined benefit obligation
Planned assets at fair value
Contribution
Other non-current liabilities - defined benefit
obligation		 As of31 December
2023 2022
$11,450
(27,720)
(16,270)
$(16,270)
$13,619
(28,445)
(14,826)
$(14,826)

Reconciliation of liability (asset) of the defined benefit plan is as follows:

As of 1 January 2022
Interest expense (income)
Subtotal
Remeasurements of the defined benefit
liabilities /assets:
Actuarial gains and losses arising from
changes in demographic assumptions
Actuarial gains and losses arising from
changes in financial assumptions
Experience adjustments
Subtotal
Contributions by employer
As of 31 December 2022
Interest expense (income)
Subtotal		 Defined
benefit
obligation		 Fair value of
planassets		 Defined benefit
liability (asset)
$19,076
134		 $(25,321)
(177)		 $(6,245)
(43)
19,210 (25,498) (6,288)
14
(460)
(7,314)		 -
(1,950)
-		 14
(2,410)
(7,314)
(7,760) (1,950) (9,710)
- (272) (272)
11,450
141		 (27,720)
(341)		 (16,270)
(200)
11,591 (28,061) (16,470)

151

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Remeasurements of the defined benefit
liabilities /assets:
Actuarial gains and losses arising from
changes in demographic assumptions
Actuarial gains and losses arising from
changes in financial assumptions
Experience adjustments
Subtotal
Contributions by employer
As of 31 December 2023		 Defined
benefit
obligation		 Fair value of
planassets		 Defined benefit
liability (asset)
119
1,220
689		 -
(127)
-		 119
1,093
689
2,028 (127) 1,901
- (257) (257)
$13,619 $(28,445) $(14,826)

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate
Expected rate of salary increases
Rate of expected return on planned assets		 As of31 December As of31 December
2023 2022
1.26%
2.00%
1.26%		 1.23%
0.20%
1.23%

Sensitivity analysis for significant assumption are shown below:

Discount rate increase by
0.50%
Discount rates decrease
by 0.50%
Expected salary increase
by 0.50%
Expected salary decrease
by 0.50%		 Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December
2023 2022
Defined
benefit
obligation
increase		 Defined
benefit
obligation
decrease		 Defined
benefit
obligation
increase		 Defined
benefit
obligation
decrease
$-
971
959
-		 $722
-
-
721		 $-
434
436
-		 $394
-
-
83

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or expected salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There were no changes in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(8) Provisions

1 Jan, 2023
Arising during the
period
Utilized
Reversed
Exchange differences
31 Dec, 2023
Current－31 Dec, 2023
Non-current－31 Dec,
2023
31 Dec, 2023
1 Jan, 2022
Arising during the
period
Utilized
Exchange differences
31 Dec, 2022
Current－31 Dec, 2022
Non-current－
31 Dec, 2022
31 Dec, 2022		 Warranty
$63,655
14,270
(20,693)
(7,322)
97
$50,007
$16,648
33,359
$50,007
$54,940
17,372
(11,161)
2,504
$63,655
$17,794
45,861
$63,655		 Decommissioning,
restoration and
rehabilitation costs
$16,989
174
-
-
-
$17,163
$-
17,163
$17,163
$16,840
149
-
-
$16,989
$-
16,989
$16,989		 Total
$80,644
14,444
(20,693)
(7,322)
97
$67,170
$16,648
50,522
$67,170
$71,780
17,521
(11,161)
2,504
$80,644
$17,794
62,850
$80,644

153

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Warranty

A provision is used to estimate the possibility of repairing the defective products in the future, based on historical experience, management’s judgement and other known factors. Please refer to Note 4 (15) for more details on the policy of the provision for warranties.

Decommissioning, restoration and rehabilitation costs

Decommissioning costs associated with owned factories are recognized as the provision. After the plants are decommissioned, the Company will restore the locations.

(9) Equity

  • (a) Common stock

The Company’s authorized capital was $1,180,000 as of 31 December 2023 and 2022 divided into 118,000,000 shares issued with par value of NT$10 each. The paid-in capital amounted to $788,000 divided into 78,800,000 shares.

  • (b) Capital surplus
apital surplus
Additional paid-in capital 2023.12.31
$1,364		 2022.12.31
$1,364

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

  • (c) Retained earnings and dividend policies

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

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CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • A. Payment of all taxes and dues.

  • B. Offset operation losses in prior years.

  • C. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve.

  • D. Set aside or reverse special reserve in accordance with law and regulations.

  • E. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

The Company's policy on dividend distribution must be based on the factors, such as the Company's current and future investment environment, needs of capital, domestic and foreign competitive conditions, and capital budget, taking into account the interests of shareholders, and balancing dividends and the Company's long-term financial planning, etc. The board of directors shall plan the distribution each year according to law and report to the shareholders resolution meeting. When the Company distributes the dividends in the preceding paragraph, the annual cash dividends to shareholders shall not be less than 5% of the total amount of cash and stock dividends distributed in the current year.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paid-in capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Details of the 2023 and 2022 earnings distribution and dividends per share as approved and resolved by the shareholders’ meeting on 14 March 2024 and 27 June 2023, respectively, are as follows:

Legal reserve
Special reserve
Common stock - cash dividend		 Appropriation of earnings
2023
2022
$11,367
$27,982
(387)
(24,770)
39,400
78,800		 Dividendper share(NT$) Dividendper share(NT$)
2023
$11,367
(387)
39,400		 2023
$0.50		 2022
$1.00

Please refer to Note 6 (13) for more details on employees’ compensation and remuneration to directors.

155

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Net sales

Revenue
from
contracts
with customers
Sale of goods		 For theyears ended 31 December For theyears ended 31 December
2023 2022
$3,378,030 $4,057,447

Analysis of the Group’s revenue from contracts with customers for the years ended 31 December 2023 and 2022 are as follows:

(1) Disaggregation of revenue

2023
Sale of goods
2022
Sale of goods		 Taiwan
Segment
$2,838,057
Taiwan
Segment		 America
Segment		 Total
$539,973 $3,378,030
America
Segment
$667,644		 Total
$3,389,803 $4,057,447

The Group recognizes revenue when transferring the goods to customers, so the contract performance obligation is satisfied at a point in time.

(2) Contract balances

Contract liabilities – current

Sale of goods 2023.12.31
$323		 2022.12.31 2022.1.1
$289
$239

156

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The significant changes in the Group’s balances of contract liabilities for the years ended 31 December 2023 and 2022 are as follows:

The opening balance transferred to
revenue
Increase in receipts in advance
during the period (excluding the
amount incurred and transferred
to revenue during the period)		 Forthe years ended 31 December Forthe years ended 31 December
2023
$(239)
323		 2022
$(289)
239
  • (3) Transaction price allocated to unsatisfied performance obligations: None.

(4) Assets recognized from costs to fulfil a contract: None.

  1. Expected credit losses
Operating expense- Expected credit losses
Accounts receivable		 2023 2022
$(9,447) $-

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its accounts receivables (including notes receivable and accounts receivable) at an amount equal to lifetime expected credit losses. The assessment of the Group’s loss allowance as of 31 December 2023 and 2022 is as follows:

The Group considers the grouping of accounts receivable by industry sector and its loss allowance is measured by using a provision matrix, details are as follows:

157

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of 31 December 2023 Group 1

Gross carrying
amount
Loss ratio
Lifetime expected
credit losses
Carrying amount		 Not yet
due
$68,438
-
$68,438		 Overdue >=2years
$1,192
100%
(1,192)
$-		 Total
<=30
days
$27,310
0%-1%
(273)
$27,037		 31-60days
$7,985
1%-10%
(399)
$7,586		 61-90days
$13,454
10%-15%
(2,018)
$11,436		 91-120days
$2,001
15%-20%
(400)
$1,601		 121-365
days
366days
-2years
$3,188
$6,269
20%-95%
100%
(2,996)
(6,269)
$192
$-
$129,837
(13,547)
$116,290

Group2

Group2
Gross carrying amount
Lifetime expected credit
losses
Carrying amount		 Notyet due
$1,164,986
-
$1,164,986		 Overdue 61-90days
$-
-
$-		 Total
<=30 days
$64,144
(2,985)
$61,159		 31-60days
$2,588
(2,588)
$-
$1,231,718
(5,573)
$1,226,145

As of 31 December 2022

Group 1

Gross carrying
amount
Loss ratio
Lifetime expected
credit losses
Carrying amount		 Not yet
due
$174,342
$174,342		 Overdue >=2years
$1,135
100%
(1,135)
$-		 Total
<=30
days
$42,869
0%-1%
(429)
$42,440		 31-60days
$5,079
1%-10%
(254)
$4,825		 61-90days
$3,339
10%-15%
(501)
$2,838		 91-120days
$989
15%-20%
(198)
$791		 121-365
days
366days
-2years
$7,736
$1,415
20%-25% 25%-100%
(1,934)
(1,415)
$5,802
$-
$236,904
(5,866)
$231,038

Group2

Overdue

Group2 Overdue
Gross carrying amount
Lifetime expected credit
losses
Carrying amount		 Notyet due
$665,073
-
$665,073		 <=30 days
$5,573
(5,573)
$-		 31-60days
$-
-
$-		 61-90days
$-
-
$-		 Total
$670,646
(5,573)
$665,073

158

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The movement in the provision for impairment of notes receivable and accounts receivable during the years ended 31 December 2023 and 2022 is as follows:

Beginning balance at 2023.1.1
Addition for the current period
Current write-off
Exchange differences
Ending balance at 2023.12.31
Beginning balance at 2022.1.1
Addition for the current period
Current write-off
Exchange differences
Ending balance at 2022.12.31		 Accounts receivable
$11,439
9,447
(1,665)
(101)
$19,120
$12,428
-
(1,683)
694
$11,439

12. Leases

  • (a) Group as a lessee

The Group leases various properties, including real estate such as land and buildings, machinery, transportation, and office equipment. The lease terms range from 2 to 20 years.

The Group’s leases effect on the financial position, financial performance and cash flows are as follow:

A. Amounts recognized in the balance sheet

  • (a) Right-of-use asset

The carrying amount of right-of-use assets

Land
Buildings
Transportation equipment
Total		 2023.12.31
$499,822
112,744
979		 2022.12.31
$188,256
153,267
2,813
$613,545 $344,336

159

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

During the years ended 31 December 2023 and 2022, the Group’s additions to right-of-use assets amounted to $324,999 and $16,477, respectively.

(b) Lease liabilities

Lease liabilities
Current
Non-Current		 2023.12.31
$497,078
$56,447
$440,631		 2022.12.31
$340,902
$52,692
$288,210

Please refer to Note 6(14)(3) for the interest on lease liabilities recognized during the years ended 31 December 2023 and 2022. Refer to Note 12 (5) liquidity risk management for the maturity analysis for lease liabilities as of 31 December 2023 and 2022.

B. Amounts recognized in the statement of profit or loss

Depreciation charge for right-of-use assets

Land
Buildings
Transportation
equipment
Total		 2023
$13,433
38,809
1,834
$54,076		 2022
$11,459
39,443
1,916
$52,818
  • C. Income and costs relating to leasing activities
The expenses relating
to short-term leases		 2023
$637		 2022
$841
  • D. Cash outflow related to lessee and lease activities

During the years ended 31 December 2023 and 2022, the Group’s total cash outflows for leases amounted to $51,475 and $52,253, respectively.

160

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  1. Summary statement of employee benefits, depreciation, and amortization expenses by function for the years ended 31 December 2023 and 2022:
Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December
2023 2022
Operating
costs		 Operating
expenses		 Total Operating
costs		 Operating
expenses		 Total
Employee benefits expense
Salaries $137,026 $127,282 $264,308 $156,808 $130,396 $287,204
Laborandhealth insurance 14,661 7,466 22,127 16,193 8,303 24,496
Pension 4,322 8,877 13,199 4,796 9,192 13,988
Other employee benefits
expense		 8,339 2,248 10,587 10,445 2,150 12,595
Depreciation 44,377 59,496 103,873 48,354 55,172 103,526
Amortization 1,005 12,623 13,628 1,923 12,039 13,962

According to the Articles of Incorporation, no less than 1% of profit of the current year is distributable as employees’ compensation and no higher than 5% of profit of the current year is distributable as remuneration to directors and supervisors. However, the company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition, thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the resolution of Board of Directors’ regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on profit of 31 December 2023 and 2022, the Group estimated the amounts of the employees’ compensation and remuneration to directors and supervisors for the year ended of 31 December 2023 and 2022 to be 2.5% and 2% of profit, respectively, recognized as employee benefits expense.

Employee compensation
Compensation of directors
and supervisors		 2023 2022
$4,125
3,300		 $8,789
7,031

161

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

A resolution was passed at the board meeting held on 14 March 2024 to distribute $4,125 thousand and $3,300 thousand in cash as the compensation and remuneration to employees and directors in 2023, respectively. No material differences existed between the estimated amount and the actual distribution of the employee compensation and remuneration to directors for the year ended 31 December 2023.

A resolution was passed at a board meeting held on 23 March 2023 to distribute $8,789 thousand and $7,031 thousand in cash as compensation and remuneration to employees and directors in 2022, respectively. No material differences existed between the estimated amount and the actual distribution of the employee compensation and remuneration to directors for the year ended 31 December 2022.

14. Non-operating income and expenses

  • (a) Other income
Other income
Rental income
Interest income
Financial assets measured at
amortized cost
Others
Total		 For theyears ended 31 December
2023 2022
$492
287
18,470		 $456
502
23,683
$19,249 $24,641

(b) Other gains and losses

Other gains and losses
Foreign exchange gains(losses), net
Gain on disposal of property, plant,
and equipment
Compensation of gain on reversal
Others
Total		 For theyears ended 31 December
2023
$5,428
(1)
-
(144,801)
$(139,374)		 2022
$290,267
135
120
(107,485)
$183,037

162

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) Finance costs

Finance costs
Interest on loans from bank
Interest on decommissioning labilities
Interest on lease liabilities
Total		 For theyears ended 31 December
2023
$9,723
8,983
173
$18,879		 2022
$13,547
8,774
149
$22,470

15. Components of other comprehensive income

For the year ended 31 December 2023:

For the year ended 31 December 2023:
Arising
during the
period
Reclassification
adjustments
during the
period
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans
$-
$-
To be reclassified to profit or loss
in subsequent periods:
Exchange differences resulting
from translating the financial
statements of a foreign
operation
387
-
Total
$387
$-
For the year ended 31 December 2022:
Arising
during the
period
Reclassification
adjustments
during the
period
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans
$-
$-
To be reclassified to profit or loss
in subsequent periods:
Exchange differences resulting
from translating the financial
statements of foreign
operations
24,770
-
Total
$24,770
$-		 Other
comprehensive
income, before
tax
$(1,901)
-
$(1,901)
Other
comprehensive
income, before
tax
$9,710
-
$9,710		 Income
tax effect
$380
-
$380
Income
tax effect
$(1,942)
-
$(1,942)		 Other
comprehens
ive income,
net of tax
$(1,521)
387
$(1,134)
Other
comprehens
ive income,
net of tax
$7,768
24,770
$32,538

163

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

16. Income tax expense

The major components of income tax expense are as follows:

A. Income tax expense recognized in profit or loss

Current income tax expense:
Current income tax payable
Adjustments in respect of current income
tax in prior periods
Deferred tax expense:
Deferred tax expense relating to origination
and reversal of temporary differences
Total income tax expense		 For the years ended 31
December		 For the years ended 31
December
2023
$40,104
(760)
8,006
(16,361)
$30,989		 2022
$73,055
(372)
1,198
10,026
$83,907

B. Income tax relating to components of other comprehensive income

Deferred tax expense (income):
Exchange differences on translation of
foreign operations
Remeasurements of defined benefit plans
Income tax relating to the components of
other comprehensive income		 For the years ended 31
December		 For the years ended 31
December
2023
$-
(380)
$(380)		 2022
$-
1,942
$1,942

C. Reconciliation between income tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:

164

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Accounting profit before tax from continuing operations
Tax amount at the domestic tax rates applicable to
country incomes
Adjustments in respect of current income tax in prior
periods
Tax effect of not deductible expense for tax purposes
Tax effect of deferred tax assets/liabilities
Additional income tax on undistributed retained earnings
Tax effect of other adjustments according to the tax law
Total income tax expense recognized in profit or loss		 For the years ended
31 December		 For the years ended
31 December
2023
$146,179
$22,397
(760)
-
1,346
8,006
-
$30,989		 2022
$355,966
$75,007
(372)
164
5,876
1,198
2,034
$83,907

D. Deferred tax assets (liabilities) relate to the following:

For the year ended 31 December 2023:

Temporary differences
Unrealized intragroup profits and losses
Unrealized foreign exchange gains or
losses-Parent company
Unrealized foreign exchange gains or losses
-Subsidiaries
Allowance for Prepayments to suppliers
Allowance to reduce inventories to market value
Cost of decommissioning liability
Investments accounted for using the equity
method
No-vacation bonus
Actuarial profit and loss of defined benefits plan
Compensation loss
Unrealized sales gain
Unrealized after-sales service and warranty
preparation		 Balance as
of 1 January
$(14,005)
(1,024)
(9,360)
463
7,919
1,387
(74,981)
-
(1,994)
23,458
2,874
12,592		 Recognized
in profit or
loss
$4,494
10,495
(23)
-
4,888
98
3,636
702
(39)
(9,937)
(244)
(2,685)		 Recognized
in other
comprehensi
ve income
$-
-
-
-
-
-
-
-
380
-
-
-		 Exchange
differences
$-
-
(3)
-
(46)
-
-
-
-
-
-
21		 Balance as
of 31
December
$(9,511)
9,471
(9,386)
463
12,761
1,485
(71,345)
702
(1,653)
13,521
2,630
9,928

165

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Unused loss on taxes
Prepaid insurance expense
Loss allowance – accounts receivable
Depreciation expense
Apportion of upfront cost
Deferred tax expense/ (income)
Net deferred tax assets/ (liabilities)
Reflected in balance sheet as follows:
Deferred tax assets
Deferred tax liabilities		 Balance as
of 1 January
-
(92)
1,232
(532)
432
$(51,631)
$50,357
$(101,988)		 Recognized
in profit or
loss
2,894
(394)
1,634
952
(110)
$16,361		 Recognized
in other
comprehensi
ve income
-
-
-
-
-
$380		 Exchange
differences
(39)
7
(21)
(14)
2
$(93)		 Balance as
of 31
December
2,855
(479)
2,845
406
324
$(34,983)
$57,391
$(92,374)

For the year ended 31 December 2022

Temporary differences
Unrealized intragroup profits and losses
Unrealized foreign exchange gains or
losses-Parent company
Unrealized foreign exchange gains or losses -
Subsidiaries
Allowance for Prepayments to suppliers
Allowance to reduce inventories to market value
Cost of decommissioning liability
Investments accounted for using the equity
method
No-vacation bonus
Actuarial profit and loss of defined benefits plan
Compensation loss
Unrealized sales gain
Unrealized after-sales service and warranty		 Balance as
of 1 January
$(3,209)
1,147
420
463
5,928
1,294
(68,743)
986
(42)
2,563
5,778
11,502		 Recognized
in profit or
loss
$(10,796)
(2,171)
(9,500)
-
1,835
93
(6,238)
(986)
(9)
20,895
(2,904)
565		 Recognized
in other
comprehensi
ve income
$-
-
-
-
-
-
-
-
(1,942)
-
-
-		 Exchange
differences
$-
-
(280)
-
156
-
-
-
-
-
-
525		 Balance as
of 31
December
$(14,005)
(1,024)
(9,360)
463
7,919
1,387
(74,981)
-
(1,994)
23,458
2,874
12,592

166

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

preparation
Unused loss on taxes
Prepaid insurance expense
Loss allowance – accounts receivable
Depreciation expense
Apportion of upfront cost
Deferred tax expense/ (income)
Net deferred tax assets/ (liabilities)
Reflected in balance sheet as follows:
Deferred tax assets
Deferred tax liabilities		 Balance as
of 1 January
1,331
(84)
1,439
(1,482)
487
$(40,222)
$33,338
$(73,560)		 Recognized
in profit or
loss
(1,428)
-
(353)
1,076
105
$(10,026)		 Recognized
in other
comprehensi
ve income
-
-
-
-
-
$(1,942)		 Exchange
differences
97
(8)
146
(126)
50
$560		 Balance as
of 31
December
-
(92)
1,232
(532)
432
$(51,631)
$50,357
$(101,988)

E. Summary of loss on single unused taxes of the Group are as follows:

None.

  • F. Unrecognized deferred tax assets

None.

  • G. The assessment of income tax returns

The Company Subsidiary - Delta Power Equipment Corporation

The assessment of income tax returns Approved as of the year ended 2021 Declared as of the year ended 2022

17. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

167

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) Basic earnings per share
Profit attributable to ordinary equity holders of
the Company (in thousands of NT$)
Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands of shares)
Basic earnings per share (NT$)
(2) Diluted earnings per share
Profit attributable to ordinary equity holders of
the Parent Company (in thousands of NT$)
Profit attributable to ordinary equity holders of
the Parent Company after dilution (in thousand
NT$)
Weighted average share amount of basic
earning per share (in thousands of NT$)
Dilution effect:
Weighed average share amount after dilution
effect adjustment (in thousands of shares)
Diluted earning per share (NT$ dollar)		 For theyears ended 31 December For theyears ended 31 December
2023
$115,190
78,800
$1.46
$115,190
$115,190
78,800
78,800		 2022
$272,059
78,800
$3.45
$272,059
$272,059
78,800
78,800
$1.46 $3.45

There is no difference between the calculation outcome of dilution earning per share and basic earnings per share of the Company.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

7. RELATED PARTY TRANSACTIONS

  1. The transactions between single and consolidation of the Group had been eliminated during the formation of the consolidated financial statement, no significant transactions of related parties except for single and consolidation of the Group remained.

  2. Compensation of key management personnel compensation

168

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Short-term employee benefits For the years ended 31
December		 For the years ended 31
December
2023
$17,616		 2022
$18,662

8. ASSETS PLEDGED AS SECURITY

The following assets of the Group have banks provided as the warranties for borrowings or the application of financing limit and set up deposits for land rental from Taiwan Sugar Corporation.

from Taiwan Sugar Corporation.
Land
Buildings
Other non-current asset – Time deposit
Total		 Carrying amount as at
31 December
2023
2022
$131,694
$131,694
61,707
63,764
8,342
8,342
$201,743
$203,800		 Secured liabilities
2023
$131,694
61,707
8,342
$201,743
Short-term borrowings
Short-term borrowings
Deposit for the rental
of land

9. SIGNIFICANT CONTINGENCIES AND UNRECOGNIZED CONTRACT COMMITMENTS

  1. As of 2023 and 2022, the Company has issued an unused letter of credit by US$0 and US$609, respectively.

  2. The significant lease contracts signed by the Company are as follows:

Contractparty
Taiwan Sugar Co.
Taiwan Sugar Co.
Taiwan Sugar Co.
Exeter Victor Hill
Land LLC.		 Item
Land
Land
Land
Land and
buildings		 Duration
October 2004 ~
October 2024
January 2006 ~
October 2024
October 2023 ~
October 2043
December 2021
~ November
2026		 Amortization
expense of
annual lease
payment
$2,032
632
2,146
USD1,414,000
(3% annual
increase)		 Deposit
$8,342
-
12,500
USD500,000

10. SIGNIFICANT DISASTER LOSS

None.

169

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

  1. Categories of financial instruments

Financial assets

Financial assets
As of 31 December
2023
2022
Financial assets measured at amortize
cost
Cash and cash equivalents (not include
cash on hand)
$82,470
$172,737
Accounts receivable
1,342,135
896,111
Other receivables
18,201
28,318
Financial liabilities
As of 31 December
2023
2022
Financial liabilities at amortized cost:
Short-term loans
$569,700
$544,000
Short-term notes and bills payable
-
-
Notes payable
278,012
220,399
Accounts payable
333,507
168,669
Lease liability
497,078
340,902
Other payables
174,393
232,718		 As of 31 December
2023 2022
2023 2022
$569,700
-
278,012
333,507
497,078
174,393		 $544,000
-
220,399
168,669
340,902
232,718
  1. Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk, and liquidity risk related to its operating activities.

170

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group identifies measures and manages the aforementioned risks based on the Group’s policy and risk appetite.

The Group has established appropriate policies, procedures, and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

3. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk and interest rate risk, and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates primarily relates to the Group’s operating activities (when revenue or expense is denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore, natural hedge is received. The Group also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purpose, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies at the end of the reporting period, and the related effect of appreciation or depreciation of foreign currency on profit and loss of the Group.

171

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD. The information of the sensitivity analyses as follows:

When NTD appreciates or depreciates against USD by 1%, the Group’s profit and loss increase by $10,310 thousand and decrease by $2,038 thousand as of 2023 and 2022, respectively. Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profits for the years ended 31 December 2023 and 2022 to decrease by $570 thousand and increase by $544 thousand, respectively.

4. Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts receivable) and from its financing activities, including bank deposits and other financial instruments.

172

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial positions, ratings from credit rating agencies, historical experiences, prevailing economic condition, and the Group’s internal rating criteria, etc. Certain customer’s credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of 31 December 2023 and 2022, accounts receivable from top ten customers represented 99% of the total accounts receivable of the Group. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities, and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies, and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

5. Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank loans. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve at the end of the reporting period.

173

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Non-derivative financial liabilities

As of 31 December 2023
Short-term
borrowings
Notes payable
Accounts payable
Lease liability(Note)
As of 31 December 2022
Short-term borrowings
Short-term notes and
bills payable
Notes payable
Accounts payable
Lease liability		 Less than 1year
$570,030
278,012
333,507
56,447
$544,369
-
220,399
168,669
52,705		 2 to 3years
-
-
-
169,536
$-
-
-
-
160,005		 4 to 5years
-
-
-
8,625
$-
-
-
-
57,029		 > 5years
-
-
-
474,983
$-
-
-
-
126,350		 Total
$570,030
278,012
333,507
709,591
$544,369
-
220,399
168,669
396,089

Note: the following table provides further information about the expire analysis of leasing liability.

Lease liability Expiry period Expiry period
Less than 1
year		 1to 5 years 6 to10 years 10 to15 years > 15 years Total
$56,447 $178,161 $21,562 $21,562 $431,859 $709,591
  1. Reconciliation of liabilities arising from financing activities

Reconciliation of liabilities for the year ended 31 December 2023

As of 1 January 2023
Cash flows
As of 31 December 2023		 Short-term
borrowings
$544,000
25,700
$569,700		 Short-term notes
and billspayable
$-
-
$-		 Other non-current
liabilities
$-
-
$-

174

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Reconciliation of liabilities for the year ended 31 December 2022:

As of 1 January 2022
Cash flows
As of 31 December 2022		 Short-term
borrowings
$1,146,80
(602,800)
$544,000		 Short-term notes
and billspayable
$190,000
(190,000)
$-		 Other non-current
liabilities
$82
(82)
$-

  1. Fair values of financial instruments

  2. (1) The methods and assumptions applied in determining the fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities:

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate their fair value due to their short maturities.

  • (2) Fair value of financial instruments measured at amortized cost

The carrying amounts of the Group’s financial assets and liabilities measured at amortized cost approximate their fair value.

  • (3) No transactions applied the fair value measurement on balance sheet as of the year ended 2023 and 2022, due to no financial instruments measured at fair value are held by the Group.

  • No derivative financial instruments hold by the Group as of the year ended 2023 and 2022.

175

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  1. Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets
Monetary items:
USD
Financial liabilities
Monetary items:
USD		 As of 31 December 2023
Foreign
currencies
Foreign
exchange
rate
NTD
$47,173
30.72
$1,449,155
$13,612
30.72
$418,161		 As of 31 December 2023
Foreign
currencies
Foreign
exchange
rate
NTD
$47,173
30.72
$1,449,155
$13,612
30.72
$418,161		 As of 31 December 2022 As of 31 December 2022 As of 31 December 2022
Foreign
currencies
$47,173
$13,612		 Foreign
exchange
rate
30.72
30.72		 Foreign
currencies
$36,167
$29,531		 Foreign
exchange
rate
30.71
30.71		 NTD
$1,110,689
$906,897

  • (1) Due to the Group’s major functional currency is USD, information on the exchange gains and losses of monetary financial assets and liabilities has been disclosed according to the currency of each material impact. The profit and loss on foreign currency of the Group as of the year ended 2023 and 2022 are $5,428 thousand and $290,267 thousand, respectively.

  • (2) The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

10. Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

176

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

13. Other disclosure

Related information of significant transaction item, re-invest business and investment on China as of the year ended 2023 and 2022 of the Company and subsidiaries are as follows:

  1. Information at significant transactions

  2. (a) Financing provided to others for the year ended 31 December 2023: All transactions below were between consolidated entities and have been eliminated in consolidation.

No Lender Counterparty Financial
statement
account		 Related
Party		 Maximum
balance for
the
period		 Ending
balance		 Amount
drawn		 Interest
rate		 Nature of
financing
(Note 3)		 Number
of sales to
(purchases
from)
counterpar
ty		 Reason for
financing		 Allowance
for
doubtful
accounts		 Collateral Collateral Limit of
financing
amount
for individual
counterparty
(note 1)		 Limit of total
financing
amount (note
2)
Item Value
０ CHANG
TYPE
INDUSTRI
AL CO.,
LTD.		 Delta Power
Equipment
Corporation		 Other
receivables		 Yes $258,218 $258,218 $258,218 - 1 $668,785 - $- - $- $668,785 $668,785
０ CHANG
TYPE
INDUSTRI
AL CO.,
LTD.		 Delta Power
Equipment
Corporation		 Other
receivables		 Yes $200,000 - $- - 2 $- For
operating		 $- - $- $764,473 $764,473

Note 1: The limit amount of financing provided to individual counterparty:

  • (1) The amount of funds loaned to the company or bank with which the Company has business dealings shall not exceed the business transaction amount between the two parties, and shall not exceed 100% of net equity of the Company.

  • (2) The financing amount to the individual counterparty due to necessary short-term financing shall not exceed 40% of net equity of the Company.

  • Note 2: The total amount of funds loaned by the Company to others shall not exceed 100% of net equity of the Company.

  • (1) The total amount of funds loaned to the company or bank with which the Company has business dealings shall not exceed 100% of net equity of the Company.

  • (2) The total financing amount to the individual counterparty due to necessary short-term financing shall not exceed 40% of net equity of the Company.

177

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Note 3: The method of filling in the loan and nature of funds is as follows:

  • (1) code 1 represents an intercompany transaction call for a loan arrangement.

  • (2) code 2 represents short-term financing.

(2) Endorsement guarantee to others:

No Endorser/
Guarantor		 Counterparty Counterparty Guarantee Limited
Amount for each
Counterparty
(Note1)		 Maximum
balance for the
period		 Guarantee
Amount
for the year
ended 31
December 2023
(Note3)		 Amount
drawn		 Value of
Collateral
Properties
secured by the
endorsement		 Ratio of
Accumulated
Amount of
Guarantee
Provided to Net
Equity of the
Latest Financial
Statements		 Guarantee
Limited Amount
(Note2)		 Guarantee
from the
parent to
subsidiary		 Guarantee
from the
subsidiary
to parent		 Guarantee
from the
Mainland
China
Company
Name		 Relationship
0 CHANG
TYPE
INDUSTRIA
L CO.,LTD.		 Delta Power
Equipment
Corporation		 Subsidiaries $1,911,182 $919,480 $589,120 $- N 30.80% $3,822,364 Y N N

Note 1: 100% of the financial statement net number of guarantees/endorsements.

Note 2: 200% of the net amount of financial statement of guarantees/endorsements.

Note 3: Should list the amount that approved by the board of directors. However, the board of directors shall, in

  • accordance with Paragraph 8, Article 12 of the “Public Issuance Company's Fund Loan and

Endorsement Guarantee Handling Guidelines”, to authorize the chairman to make decisions, this refers to the amount finalized by the board of director.

  • (c) Securities held as of 31 December 2023 (excluding subsidiaries, associates, and joint venture): None.

  • (d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

178

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (e) Acquisition of individual real estate with amount exceeding NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

  • (f) Disposal of individual real estate with amount exceeding NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

  • (g) Related party transactions for purchases and sales exceeding NT$100 million or 20 percent of the paid-in capital for the year ended 31 December 2023:

Company Name Counterparty Relationship Transactions Transactions Details of non-arm's
length transaction		 Details of non-arm's
length transaction		 Notes and accounts receivable
(payable)		 Notes and accounts receivable
(payable)		 Note
Transactions Details of non-arm's
length transaction		 Notes and
accounts
receivable
(payable)		 Note Unit price Credit period Balance Percentage of
total accounts
receivable item
CHANG TYPE
INDUSTRIAL
CO.,LTD.		 Delta Power
Equipment
Corporation		 Subsidiary Sales $(176,966) 5.87% 120
days		 Regular
trading		 Regular
trading		 $137,014 10.05% -
Delta Power
Equipment
Corporation		 CHANG TYPE
INDUSTRIAL
CO.,LTD.		 Parent
company		 Purchase $176,966 57.69% 120
days		 Regular
trading		 Regular
trading		 $(137,014) 22.41% -
  • (h) Receivables from related parties with amounts exceeding the lower of

NT$100 million or 20 percent of capital stock as of 31 December 2023:

Accounted for
account payable
Company		 Counterparty Relationship Receivable parties Turnover
rate		 Overdue receivables for related
parties
Amount
Dealing method		 Overdue receivables for related
parties
Amount
Dealing method		 Recovered
receivable
amount for the
related parties
after theperiod		 Allowance for
doubtful
accounts
Account balance Dealing method
Change Type
Industrial Co.,
Ltd.		 Delta Power Equipment
Corporation		 Parent and
subsidaries		 Accounts receivable
$137,014		 0.61 times $77,604 Note $14,090 $-

Note: The accounts overdue for more than 90 days amounted to $77,604 thousand, which the Company

deemed to be of non-financing nature through the resolution of the board meeting held on 22 January 2024.

179

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (i) Financial instruments and derivative transactions: None.

(j) Significant transaction conditions and amount of the parent and subsidiary Company: the transactions of single and consolidated that should be eliminated has been eliminated.

No
(Note1)		 Company Name Counter Party Nature of
Relationship
(Note 2)		 IntercompanyTransactions IntercompanyTransactions
Financial Statements
Item		 Amount Percentage of
Consolidated Total
Gross Sales or Total
Assets(%) (Note 3)		 Transaction
condition
(Note 4)
0 Change Type Industrial
Co.,Ltd.		 Delta Power Equipment
Corporation		 1 Sales revenue $176,966 5.24% Note 4
0 Change Type Industrial
Co., Ltd.		 Delta Power Equipment
Corporation		 1 Accounts
receivable		 $137,014 3.42% Note 4
0 Change Type Industrial
Co.,Ltd.		 Delta Power Equipment
Corporation		 1 Other receivables
(include financing)		 $258,218 6.45% Note 4
1 Delta Power Equipment
Corporation		 Change Type Industrial
Co., Ltd.		 2 Purchase $176,966 5.24% Note 4
1 Delta Power Equipment
Corporation		 Change Type Industrial
Co.,Ltd.		 2 Accounts
receivable		 $137,014 3.42% Note 4
1 Delta Power Equipment
Corporation		 Change Type Industrial
Co., Ltd.		 2 Other receivables
(include financing)		 $258,218 6.45% Note 4

Note 1: 0 represents parent company, others are different subsidiaries.

Note 2: 1 represents the transaction from parent company to subsidiary.

2 represents the transaction from subsidiary to parent company.

Note 3:For the calculation of percentage on the transaction amount accounts to the consolidated total revenue or total asset, if subject to assets or liabilities, is calculate as the percentage of ending balance accounts to consolidated total assets; if subject to profits and losses, is calculate as the percentage of gross amount during the period accounts to consolidated total assets.

Note 4: The credit period is based on consideration of subsidiary’s demand, no significant difference with regular customers.

180

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (2) Information on investees:

  • (a) Names, locations, main businesses and products, original investment amount, investment as of 31 December 2023, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2023:

Investor
Company		 Investee
Company		 Address Main operating item Initial Investment Amount Initial Investment Amount Investment as of 31 December 2023 as of 31 December 2023 Net loss of
investee company
i		 Current
nvestment loss
recognized		 Note
The ending of this
period		 The end of last year Number of
shares		 Ratio Note
CHANG
TYPE
INDUSTRI
AL CO.,
LTD		 Delta Power
Equipment
Corporation		 America Manufacturing
and trading of
hand tools,
electrical
machinery...etc		 $314,095
(USD 10,010,000)		 $314,095
(USD 10,010,000)		 10,010 100% $584,499 $15,116
(USD 485,451)		 $10,622 Note

Note ： Current investment income from investees recognized by the Company included investment gain/loss recognized by these investees from upstream/downstream transactions.

  • (3) Information on investments in the Mainland China: None.

  • (4) Information on major shareholders:

31 December 2023

31 December 2023
Shares
Name		 Shareholding Shareholding ratio
CHANG, CHIN-CHIN 18,080,201 22.94%
LIU,XIU-YUE 11,549,766 14.65%
CHANG,HSIANG-I 7,090,569 8.99%
CHANG, QUN-YU 6,937,444 8.80%
Special investment
account of E. Sun Bank
Safe Deposit Box
Quinton International
Ltd.		 4,752,351 6.03%
HUNG GRAND
INTERNATIONAL
INVESTMENTCORP.		 4,281,400 5.43%

181

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

14. DEPARTMENT INFORMATION

For the purpose of operation, the Company operates in a single industry segment by different strategic segments, and they are classified into two segments as follows:

Taiwan operating department is in charge of the production and sales of electronic (pneumatic) tools.

The America operating department is in charge of selling electronic (pneumatic) tools.

No operating segments have been aggregated to form the above reportable operating segments

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the consolidated financial statements. However, the financial costs, financial income and income taxes are managed on a group basis and are not allocated to operating segments.

Transfer prices between operating segment are on a regular transaction basis, similar to transactions with the external third parties.

  • (1) Information on profit or loss of the reportable segment:

  • (a) For the year ended 31 December 2023

Revenue
External customers
Interdepartmental
Total revenue
Interest expenses
Depreciation and amortization
Investment profit		 Taiwan
department		 America
department		 Adjustment
and
elimination		 Consolidated
Total
$2,838,057
176,966		 $539,973
-		 -
$(176,966)		 $3,378,030
-
$3,015,023 $539,973 $(176,966) $3,378,030
$(13,984)
(74,011)
(10,622)		 $(4,895)
(43,490)
-		 $-
-
10,622		 $(18,879)
(117,501)
-

182

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Department profit and loss
Assets
Investments accounted for
using the equity method
Capital expenditure
Department assets
Department liabilities		 $157,561 $(22,004) $10,622 $146,179
$584,499 $- $(584,499) $-
$153,368 $- $- $153,368
$3,787,341 $1,125,356 $(934,440) $3,978,257
$1,876,159 $576,637 $(385,721) $2,067,075

(b) For the year ended 31 December 2022

Revenue
External customers
Interdepartmental
Total revenue
Interest expenses
Depreciation and amortization
Investment profit
Department profit and loss
Assets
Investments
accounted
for
using the equity method
Capital expenditure
Department assets
Department liabilities		 Taiwan
department		 America
department		 Adjustment
and
elimination		 Consolidated
Total
$3,389,803
668,785		 $667,644
-		 $-
(668,785)		 $4,057,447
-
$4,058,588 $667,644 $(668,785) $4,057,447
$(16,325)
(73,575)
17,197
$335,731		 $(6,145)
(43,913)
-
$37,432		 $-
-
(17,197)
$(17,197)		 $(22,470)
(117,488)
-
$355,966
$616,135 $- $(616,135) $-
$44,131 $- $- $44,131
$3,369,815 $1,496,784 $(1,255,483) $3,611,116
$1,493,889 $933,335 $(692,034) $1,735,190

(2) Geographic information:

(a) Revenue from external customers:

America
Others
Total		 As of 31 December As of 31 December
2023
$3,189,261
188,769
$3,378,030		 2022
$3,867,775
189,672
$4,057,447

183

CHANG TYPE INDUSTRIAL CO., LTD., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Non-current assets:

Asia
America
Total		 As of 31 December As of 31 December
2023
$1,098,311
283,434
$1,381,745		 2022
$816,699
317,192
$1,133,891

(4) Information about major customers

A customer to those the Company’s sales exceeded 10% of its net consolidated sales in 2023 and 2022 is as follows:

2023 %
83%		 2022 2022
Client name
Customer A		 Sales amount
$2,814,832		 Sales amount
$3,373,444		 %
83%

184

CHANG TYPE INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY FINANCIAL STATEMENTS WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022

Address: No. 41, Nan-tsuen Road, Ho-Li, Taichung City, Taiwan, R.O.C Telephone: 886-4-25580669

Notice to readers:

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

185

Independent Auditor’s Report

To Chang Type Industrial Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of Chang Type Industrial Co., Ltd. (the “Company”) as of 31 December 2023 and 2022, and the parent company only statements of comprehensive income, changes in equity and cash flows for the years ended 31 December 2023 and 2022, and notes to the parent company only financial statements, including the summary of material accounting policies.

In our opinion, the accompanying parent company only financial statements referred to above present fairly, in all material respects, the parent company only financial position of the Company as of 31 December 2023 and 2022, and its parent company only financial performance and cash flows for the years ended 31 December 2023 and 2022, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the 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 the Republic of China (the “Norm”), and we have fulfilled our other ethical responsibilities in accordance with the Norm. Best on the audits, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

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

186

Inventory valuation

As of 31 December 2023, the net inventories amounted to NT$427,867 thousand, accounting for 11% of the total assets. Because the amount was material to the Company’s financial statements, the sales were affected by the uncertainty due to market demand, and the valuation policy of the inventories involved a high level of management judgment, we determined this to be a key audit matter. Our audit procedures included, but were not limited to: performing simple test to assess the effectiveness of inventory internal control established by management; understanding the accounting policy around obsolete and slow-moving inventories; selecting important storage locations to observe inventory counts; sampling and testing the accuracy of inventory aging intervals to verify whether the aging reports were reasonable; in addition, in order to evaluate the reasonableness of inventories valuation, we also obtained inventory movement report, sampled and tested related certificates of purchases and sales, and verified the unit cost of inventories to access the net realizable value of inventories. We also assessed the adequacy of the disclosures related to inventories in Notes 5 and 6.

Provision for warranties

As of December 31, 2023, the provision for warranties amounted to NT$27,743 thousand. The management determined the estimate of the provision for warranties by the past experience of repairing consumers’ defective products. Because the estimates involved significant management judgment, we determined this to be a key audit matter. Our audit procedures included, but were not limited to: understanding the internal control of provision for warranties established by management; evaluating the reasonableness of accounting policy around provision for warranties and the accuracy of recalculating provision for warranties according to the accounting policy; analyzing the reasonableness of provision for warranties by comparing the amounts year over year. In addition, we obtained details of provision for warranties of the subsequent period to check the actual amounts or reversal of the provision for warranties of the subsequent period. We also assessed the adequacy of disclosures related to provision for warranties in Notes 5 and 6.

187

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 requirements of 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 the 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 the ability to continue as a going concern of the Company, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease 。 operations or has no realistic alternative but to do so.

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Company.

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

188

As part of an audit in accordance with the Standards Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:

  1. Identify and assess the risks of material misstatement of the 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. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

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

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

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

189

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 the internal control that we identify during our audit.

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

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

Lo,Wen-Chen Huang,Yu-Ting

Ernst & Young, Taiwan 14 March 2024

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, results of operations 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying parent company only financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, Ernst & Young cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation

190

CHANG TYPE INDUSTRIAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS 31 December 2023 and 31 December 2022

(Expressed in Thousands of New Taiwan Dollars)

Assets
Current assets
Cash and cash equivalents
Accounts receivable - net
Accounts receivable - related parties, net
Other receviables
Inventories, net
Prepayment
Other current assets
Total current assets
Non-current assets
Investments accounted for under the equity method
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets		 Notes As of
31 Dec 2023
$16,312
1,226,145
137,014
276,420
427,867
17,404
3,369
2,104,531
584,499
482,339
500,801
22,051
41,444
51,676
1,682,810
$3,787,341		 31 Dec 2022
4, 6(1)
4, 6(2), 6(12)
4, 6(12), 7
4, 7
4, 6(3)
4
4, 6(4)
4, 6(5), 8
4, 6(13)
4
4, 6(17)
6(8),8		 $8,712
665,073
447,821
284,488
515,726
14,689
472
1,936,981
616,135
506,449
191,069
31,882
41,169
46,130
1,432,834
$3,369,815

(The accompanying notes are an integral part of the parent company only financial statements)

(continued)

191

CHANG TYPE INDUSTRIAL CO., LTD. PARENT COMPANY ONLY BALANCE SHEETS

31 December 2023and 31 December 2022

(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity
Current liabilities
Short-term loans
Contract liabilities, current
Notes payable
Accounts payable
Other payables
Current tax liabilities
Provisions, current
Other current liabilities
Total current liabilities
Non-current liabilities
Provision, non-current
Deferred tax liabilities
Lease liabilities, non-current
Other non-current liabilities
Total non-current liabilities
Total liabilities
Equity attributable to the parent company
Capital
Common stock
Capital surplus
Retained earnings
Legal reserve
Special reserve
Retained earnings
Total retained earnings
Other components of equity
Exchange differences on translation of foreign operations
Total equity
Total liabilities and equity		 Notes As of
31 Dec 2023
$569,700
238
278,012
333,507
145,396
48,016
9,227
18,186
1,402,282
35,679
72,998
365,170
30
473,877
1,876,159
788,000
1,364
324,128
9,918
797,303
1,131,349
(9,531)
1,911,182
$3,787,341		 31 Dec 2022
4, 6(6)
4, 6(11)
6(7)
4
4, 6(9)
4, 6(13)
4, 5, 6(9)
4, 6(17)
4, 6(13)
4, 6(10)		 $544,000
154
220,399
168,669
199,226
41,970
8,229
12,907
1,195,554
43,721
77,999
176,585
30
298,335
1,493,889
788,000
1,364
296,146
34,688
765,646
1,096,480
(9,918)
1,875,926
$3,369,815

(The accompanying notes are an integral part of the parent company only financial statements)

192

CHANG TYPE INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

Net sales
Cost of sales
Gross profit
Realized intercompany profit
Net gross profit
Operating expenses
Sales and marketing
General and administrative
Research and development
Total operating expenses
Operating income
Non-operating income and expenses
Other revenue
Other gains and losses
Financial costs
Share of profit or loss of associates and joint ventures
Total non-operating income and expenses
Income from continuing operations before income tax
Income tax expense
Income from continuing operations, net of tax
Other comprehensive income (loss)
Items that may not to be reclassified subsequently to profit or loss
Remeasurements of defined benefit plans
Income tax related to items that may not to be reclassified subsequently
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operation
Income tax related to items that may be reclassified subsequently loss
Total other comprehensive income (loss) , net of tax
Total comprehensive income
Earnings per share (NTD)
Earnings per share-basic
Earnings per share-diluted		 Notes
4, 6(11), 7
6(3), 6(14)
6(14)
6(15)
6(15)
6(15)
6(4)
4, 6(17)
6(16)
4, 6(18)		 For the Years Ended 31 December For the Years Ended 31 December For the Years Ended 31 December
2023 2022
$3,015,023
(2,543,138)		 $4,058,588
(3,736,016)
471,885
(21,401)		 322,572
51,409
450,484 373,981
(55,291)
(75,287)
(17,508)		 (70,474)
(108,634)
(22,451)
(148,086) (201,559)
302,398 172,422
19,249
(139,480)
(13,984)
(10,622)		 24,638
137,799
(16,325)
17,197
(144,837) 163,309
157,561
(42,371)		 335,731
(63,672)
115,190 272,059
(1,901)
380
387
-		 9,710
(1,942)
24,770
-
(1,134) 32,538
$114,056 $304,597
$1.46 $3.45
$1.46 $3.45

(The accompanying notes are an integral part of the parent company only financial statements)

193

CHANG TYPE INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Item Notes Capital Capital Retained Earnings Other components
of equity		 Total equity
Common Stock Additional
Paid-in Capital		 Legal Reserve Special Reserve Unappropriated
Earnings		 Exchange
Differences on
Translation of
Foreign
Operations
Balance as of 1 January 2022
Appropriations of earnings, 2021:
Legal reserve
Special reserve
Cash dividend
Net income in 2022
Other comprehensive income (loss), net of tax in 2022
Total comprehensive income (loss)
Balance as of 31 December 2022
Balance as of 1 January 2023
Appropriations of earnings, 2022:
Legal reserve
Special reserve
Cash dividends
Net income in 2023
Other comprehensive income, net of tax in 2023
Total comprehensive income
Balance as of 31 December 2023		 6(10)
6(16)
6(10)
6(10)
6(16)
6(10)		 $788,000
$788,000
$788,000
$788,000		 $1,364
$1,364
$1,364
$1,364		 $266,054
30,092
$296,146
$296,146
27,982
$324,128		 $24,047
10,641
$34,688
$34,688
(24,770)
$9,918		 $723,552
(30,092)
(10,641)
(197,000)
272,059
7,768
279,827
$765,646
$765,646
(27,982)
24,770
(78,800)
115,190
(1,521)
113,669
$797,303		 $(34,688)
24,770
24,770
$(9,918)
$(9,918)
387
387
$(9,531)		 $1,768,329
-
-
(197,000)
272,059
32,538
304,597
$1,875,926
$1,875,926
-
-
(78,800)
115,190
(1,134)
114,056
$1,911,182

(The accompanying notes are an integral part of the parent company only financial statements)

194

CHANG TYPE INDUSTRIAL CO., LTD.

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Net income before tax
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation
Amortization
Interest expense
Interest income
Share of loss (profit) of subsidiary
Loss (gain) on disposal of property, plant and equipment
Loss on decline in value and obsolescence of inventories
Realized intercompany loss (profit)
Gain from lease modification
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
Decrease in accounts receivable - related parties
Decrease (increase) in other receivables
Decrease in inventories, net
(Increase) decrease in prepayments
(Increase) decrease in other current assets
Increase other non-current assets
Increase (decrease) in contract liabilities
Increase (decrease) in notes payable
Increase (decrease) in accounts payable
(Decrease) increase in other payables
(Decrease) increase in provisions
Increase (decrease) in other current liabilities
Cash generated from operating
Interest received
Interest paid
Income tax paid
Net cash generated from operating activities		 For the Years Ended 31 December For the Years Ended 31 December
2023 2022
$157,561
60,383
13,628
13,984
(287)
10,622
1
7,500
21,401
-
(561,072)
310,807
8,082
80,359
(4,616)
(2,897)
(18,457)
84
69,351
164,838
(55,417)
(7,044)
2,840		 $335,731
59,612
13,962
16,325
(502)
(17,197)
(135)
9,800
(51,409)
(120)
1,441,924
11,981
(188,865)
596,503
24,207
7,685
(11,792)
(58)
(529,254)
(484,616)
68,785
1,533
(218)
271,651 1,303,882
273
(9,930)
(41,221)		 493
(13,627)
(44,595)
220,773 1,246,153

(The accompanying notes are an integral part of the parent company only financial statements)

(Continued)

195

CHANG TYPE INDUSTRIAL CO., LTD. PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars)

For the Years Ended 31 December 2023 and 2022
(Expressed in Thousands of New Taiwan Dollars)
(Continued)
Cash flows from investing activities:
Acquistion of investments accounted for under the equity method
Acquisition of property, plant and equipment
Disposal of property, plant and equipment
Increase refundable deposits
Acquisition of intangible assets
Acquisition of right-of-use assets
Decrease (increase) inprepayment for equipment
Net cash used in investing activities
Cash flows from financing activities:
Increase in short-term loans
Decrease in short-term loans
Increase in short-term bills payable
Decrease in short-term bills payable
Decrease in lease liabilities
Decrease in other non-current liabilities
Cash dividend
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 For the Years Ended 31 December
2023 2022
-
(23,718)
124
(840)
(259)
(125,183)
2,689		 (208,846)
(34,151)
135
(840)
(1,997)
-
(4,598)
(147,187) (250,297)
4,228,800
(4,203,100)
460,000
(460,000)
(12,886)
-
(78,800)		 9,513,800
(10,116,600)
-
(190,000)
(10,119)
(82)
(197,000)
(65,986) (1,000,001)
7,600
8,712		 (4,145)
12,857
$16,312 $8,712

(The accompanying notes are an integral part of the parent company only financial statements)

196

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. HISTORY AND ORGANIZATION

Chang Type Industrial Co., Ltd. (“the Company”) was incorporated on 21 April 1989 to manufacture, process and sell hand tools, electric machines, motors, power tools, automatic control system, computer machinery, electric test instruments, woodworking machines and metal parts. The Company is also the agent to import and export raw materials for all related products mentioned above and to design various molds and fixtures.

The Company's stocks were approved by the authority to be listed on the OTC on 14 January 2003 by the Securities and Futures Bureau, Ministry of Finance. The Company’s registered office and, main business location, is at No. 41, Nancun Road, Houli District, Taichung, Taiwan (R.O.C.).

2. DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

The parent company only financial statements of the Company for the years ended 31 December 2023 and 2022 were authorized for issue by the Company’s board of directors on 14 March 2024.

3. NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

  • (1) Changes in accounting policies resulting from applying certain standards and amendments for the first time

The Company applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are endorsed by the Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2023. Each new standards and amendments had no material impact on the Company.

197

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (2) Standards or interpretations issued, revised, or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Company as at the end of the reporting period are listed below.
Items New, Revised or Amended Standards and Interpretations Effective Date
issued by IASB
a Classification of Liabilities as Current or Non-current –
Amendments to IAS 1		 1 January 2024
b Lease Liability in a Sale and Leaseback – Amendments to
IFRS 16		 1 January 2024
c Non-current Liabilities with Covenants – Amendments to
IAS 1		 1 January 2024
d Supplier Finance Arrangements – Amendments to IAS 7 and
IFRS 7		 1 January 2024
  • (a) Classification of Liabilities as Current or Non-current – Amendments to IAS 1

These are the amendments to paragraphs 69-76 of IAS 1 Presentation of Financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

  • (b) Lease Liability in a Sale and Leaseback – Amendments to IFRS 16

The amendments add seller-lessees additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

  • (c) Non-current Liabilities with Covenants – Amendments to IAS 1

The amendments improved the information companies provide about long-term debt with covenants. The amendments specify that covenants to be complied within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

198

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (d) Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The amendments introduced additional information of supplier finance arrangements and added disclosure requirements for such arrangements.

The abovementioned standards and interpretations were issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after 1 January 2024. The new or amended standards and interpretations have no material impact on the Company.

  • (3) Standards or interpretations issued, revised, or amended, by IASB which are not endorsed by FSC, and not yet adopted by the Company as at the end of the reporting period are listed below.
Items Newly released, Revised or Amended Standards and
Interpretations		 Effective Date issued by
IASB
a IFRS 10 “Consolidated Financial Statements” and IAS 28
“Investments in Associates and Joint Ventures” — Sale or
Contribution of Assets between an Investor and its Associate
or Joint Ventures		 To be determined by IASB
b IFRS 17“Insurance Contracts” 1 January 2023
c Lack of Exchangeability– Amendments to IAS21 1January2025
  • (a) IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

199

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the interests of unrelated investors in the associate or joint venture.

(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation, and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

IFRS 17 was issued in May 2017, and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard – IFRS 4 Insurance Contracts – from annual reporting periods beginning on or after 1 January 2023.

(c) Lack of Exchangeability – Amendments to IAS 21

These amendments specify whether a currency is exchangeable into another currency and, when it is not, to determining the exchange rate to use and the disclosures to provide. The amendments apply for annual reporting periods beginning on or after 1 January 2025.

200

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Company’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. The remaining new or amended standards and interpretations have no material impact on the Company.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Statement of Compliance

The parent company only financial statements of the Company for the years ended 31 December 2023 and 2022 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”), which is endorsed by the FSC.

(2) Basis of Preparation

The Company prepared parent company only financial statements in accordance with Article 21 of the Regulations, which provided that the profit or loss and other comprehensive income for the period presented in the parent company only financial statements shall be the same as the profit or loss and other comprehensive income attributable to stockholders of the parent presented in the consolidated financial statements for the period, and the total equity presented in the parent company only financial statements shall be the same as the equity attributable to the parent company presented in the consolidated financial statements. Therefore, the Company accounted for its investments in subsidiaries using equity method and, accordingly, made necessary adjustments.

The parent company only financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The parent company only financial statements are expressed in thousands of New Taiwan Dollars (“$”) unless otherwise stated.

201

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (3) Foreign Currency Transactions

The parent company only financial statements of the Company are presented in NT$, which is also the Company’s functional currency.

Transactions in foreign currencies are initially recorded by the Company at functional currency rates prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Nonmonetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Nonmonetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

  • (a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

  • (b) Foreign currency items within the scope of IFRS 9 Financial Instruments are accounted for based on the accounting policy for financial instruments.

  • (c) Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a nonmonetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

202

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(4) Translation of financial statements in foreign currency

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. When the partial disposal involves the loss of control of a subsidiary that includes a foreign operation and when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation, the partial disposals are accounted for as disposals.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

203

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (5) Current and non-current distinction

An asset is classified as current when:

  • (a) The Company expects to realize the asset, or intends to sell or consume it, in its normal operating cycle.

  • (b) The Company holds the asset primarily for the purpose of trading.

  • (c) The Company expects to realize the asset within twelve months after the reporting period.

  • (d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to liquidate a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

  • (a) The Company expects to liquidate the liability in its normal operating cycle.

  • (b) The Company holds the liability primarily for the purpose of trading.

  • (c) The liability is due to be liquidated within twelve months after the reporting period.

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

All other liabilities are classified as non-current.

  • (6) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

204

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Financial Instruments

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

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

(a) Financial instruments: Recognition and Measurement

The Company accounts for regular way purchase or sales of financial assets on the trade date.

The Company classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

A.the Company’s business model for managing the financial assets and B.the contractual cash flow characteristics of the financial asset.

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as notes receivables, accounts receivable, financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

  • A.the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

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

205

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

  • A. purchased or originated credit-impaired financial assets. For those financial assets, the Company applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

  • B. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Company applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

(2) Impairment of financial assets

The Company recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the balance sheet.

206

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company measures expected credit losses of a financial instrument in a way that reflects:

  • (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes;

  • (b) the time value of money; and

  • (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions, and forecasts of future economic conditions.

The loss allowance is measured as follows:

  • A. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Company measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

  • B. At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

  • C. For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Company measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Company needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

207

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (3) Derecognition of financial assets

A financial asset is derecognized when:

  • i. The rights to receive cash flows from the asset have expired.

  • ii. The Company has transferred the asset and substantially all the risks and rewards of the asset have been transferred.

  • iii. The Company has neither transferred nor retained substantially all the risks and rewards of the asset but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

  • (d) Financial liabilities and equity instruments

Classification between liabilities or equity

The Company classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

208

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial liabilities measured at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

(e) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

209

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(8) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

(a) In the principal market for the asset or liability, or

(b)In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(9) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

210

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Raw materials - Purchase cost under weighted average method. Finished goods and work in progress – Including cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs under weighted average method.

Net realizable value is the balance of estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(10) Investments accounted for under the equity method

According to Article 21 of the Regulation, the Company’s investment in subsidiaries was presented as “Investments accounted for using equity method” and made necessary adjustments. The profit or loss during the period and other comprehensive income presented in the parent company only financial statements shall be the same as the allocations of profit or loss during the period and of other comprehensive income attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis, and the shareholders’ equity presented in the parent company only financial statements shall be the same as the equity attributable to shareholders of the parent presented in the financial statements prepared on a consolidated basis. The adjustment was considered the difference between investment in subsidiaries in consolidated financial statements according to IFRS 10 “Consolidated financial statements” and application of IFRS to different reporting entities, debit/credit “Investment accounted for using equity method”, “Share of profit or loss of subsidiaries, associates and joint ventures” or “Share of other comprehensive profit or loss of subsidiaries, associates and joint ventures” etc.

The Company’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Company has significant influence. Joint venture means the Company has rights to the net assets of the joint agreement (with joint controller).

211

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Company’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Company and the associate or joint venture are eliminated to the extent of the Company’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affect the Company’s percentage of ownership interests in the associate or joint venture, the Company recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

When the associate or joint venture issues new stock, and the Company’s interest in an associate or a joint venture is reduced or increased as the Company fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in additional paidin capital and investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Company disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Company.

212

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures. If this is the case the Company calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets. In determining the value in use of the investment, the Company estimates:

  • (a) Its share of the present value of the estimated future cash flows expected to be generated by the associate, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or

  • (b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

Because goodwill that forms part of the carrying amount of an investment in an associate is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or joint venture, the Company measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

213

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(11)Property, plant, and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment . When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items
Buildings
Machinery and equipment
Transportation equipment
Office equipment
Other equipment		 Useful Lives
10 – 50 years
5 – 12 years
5 – 7 years
3 – 8 years
2 – 10 years

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

214

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(12) Leases

The Company assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of time, the Company assesses whether, throughout the period of use, has both of the following:

  • (a) the right to obtain substantially all the economic benefits from use of the identified asset; and

(b) the right to direct the use of the identified asset.

For a contract that is, or contains, a lease, the Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components. The relative standalone price of lease and non-lease components shall be determined on the basis of the price the lessor, or a similar supplier, would charge the Company for that component, or a similar component, separately. If an observable stand-alone price is not readily available, the Company estimates the standalone price, maximizing the use of observable information.

Company as a lessee

Except for leases that meet and elect short-term leases or leases of low-value assets, the Company recognizes right-of-use asset and lease liability for all leases which the Company is the lessee of those lease contracts.

At the commencement date, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses its incremental borrowing rate. At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date:

215

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (a)f ixed payments (including in-substance fixed payments), less any lease incentives receivable;

  • (b)variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

  • (c) amounts expected to be payable by the lessee under residual value guarantees;

  • (d) the exercise price of a purchase option if the Company is reasonably certain to exercise that option; and

  • (e) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

After the commencement date, the Company measures the lease liability on an amortized cost basis, which increases the carrying amount to reflect interest on the lease liability by using an effective interest method; and reduces the carrying amount to reflect the lease payments made.

At the commencement date, the Company measures the right-of-use asset at cost. The cost of the right-of-use asset comprises:

  • (a)the amount of the initial measurement of the lease liability;

  • (b)any lease payments made at or before the commencement date, less any lease incentives received;

  • (c)any initial direct costs incurred by the lessee; and

  • (d)an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

For subsequent measurement of the right-of-use asset, the Company measures the right-of-use asset at cost less any accumulated depreciation and any accumulated impairment losses. That is, the Company measures the right-of-use applying a cost model.

If the lease transfers ownership of the underlying asset to the Company by the end of the lease term or if the cost of the right-of-use asset reflects that the Company will exercise a purchase option, the Company depreciates the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the Company depreciates the right-ofuse asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

216

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company applies IAS 36 “Impairment of Assets” to determine whether the right-of-use asset is impaired and to account for any impairment loss identified.

Except for those leases that the Company accounted for as short-term leases or leases of low-value assets, the Company presents right-of-use assets and lease liabilities in the balance sheet and separately presents lease-related interest expense and depreciation charge in the statements of comprehensive income.

For short-term leases or leases of low-value assets, the Company elects to recognize the lease payments associated with those leases as an expense on either a straight-line basis over the lease term or another systematic basis.

Company as a lessor

At inception of a contract, the Company classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset. At the commencement date, the Company recognizes assets held under a finance lease in its balance sheet and present them as a receivable at an amount equal to the net investment in the lease.

For a contract that contains lease components and non-lease components, the Company allocates the consideration in the contract applying IFRS 15.

The Company recognizes lease payments from operating leases as rental income on either a straight-line basis or another systematic basis. Variable lease payments for operating leases that do not depend on an index or a rate are recognized as rental income when incurred.

217

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(13) Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Company’s intangible assets is as follows:

218

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Trademark rights Computer software
Useful lives Limited 15 years Limited 5 years
Amortization Amortized on a Amortized on a straight-
method used straight-line basis over line basis over the
the term of the estimated useful life
trademark rights
Internally Acquired Acquired
generated or
acquired

(14) Impairment of non-financial assets

The Company assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cashgenerating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

219

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(15) Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Provision for decommissioning, restoration and rehabilitation costs

The provision for decommissioning, restoration and rehabilitation costs arose on construction of a property, plant and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Provision for warranties

A provision is recognized for expected warranty claims on products sold, based on past experience, management’s judgement and other known factors.

220

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(16) Revenue recognition

The Company’s revenue arising from contracts with customers are primarily related to sale of good. The accounting policies are explained as follows:

Sales of goods

The Company manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main products of the Company are hand tools and power tools, and revenue is recognized based on the consideration stated in the contract. For certain sales of goods transactions, they are usually accompanied by volume discounts (based on the accumulated total sales amount for a specified period). Therefore, revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts. So the Company estimates the discounts using the expected value method based on historical experiences. Revenue is only recognized to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. During the period specified in the contract, refund liability is recognized for the expected volume discounts. Please refer to Note 6 for more details.

The Company provides its customer with a warranty with the purchase of the products. The warranty provides assurance that the product will operate as expected by the customers. And the warranty is accounted in accordance with IAS 37.

The credit period of the Company’s sale of goods is from 97 to 150 days. For most of the contracts, when the Company transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as account receivables. The Company usually collects the payments shortly after transfer of goods to customers, therefore, there is no significant financing component to the contract. For some of the contracts, the Company has transferred the goods to customers but does not have a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Company measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

221

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(17) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(18) Government grants

The company recognizes government grant income only when it is reasonably confident that it will meet the conditions set by the government grant and can receive the inflow of economic benefits from the government grant. When the subsidy is related to assets, the government grant is recognized as deferred income and recognized as income by installments over the expected useful life of the relevant assets; when the subsidy is related to expense items, government grants are recognized as income in a reasonable and systematic manner in line with the expected period in which the related costs are incurred.

Where the Company receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(19) Post-employment benefits

All regular employees of the Company are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company. Therefore fund assets are not included in the Company’s consolidated financial statements.

222

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the defined contribution plan, the Company will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

(a)the date of the plan amendment or curtailment, and

  • (b) the date that the Company recognizes restructuring-related costs or severance pay

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(20) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

223

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The income tax for undistributed earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the resolution of Shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

  • i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

  • ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

  • i. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

224

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

According to the temporary exception in the International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12), information about deferred tax assets and liabilities related to Pillar Two income tax will neither be recognized nor be disclosed.

5. Significant accounting judgments, estimates and assumptions

The preparation of the Company’s parent company only financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

225

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1) Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Provisions for liability

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Provision for decommissioning, restoration and rehabilitation costs

The provision for decommissioning, restoration, and rehabilitation costs arose on construction of a property, plant, and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Provision for warranties

A provision is recognized as a liability, based on the contracts with consumers and the optimal estimate management judges with past experience to determine an outflow of resources embodying economic benefits to settle the obligation in the future. Please refer to Note 4 for more details on the policy of the provision for warranties.

226

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Evaluation of inventories

Estimates of net realizable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

6.Contents of significant accounts

  • (1) Cash and cash equivalents
Cash on hand
Bank deposits and checking accounts
Total		 As of 31
2023
$90
16,222
$16,312		 December
2022
$90
8,622
$8,712

  • (2) Accounts receivables - net

  • (a) Details as follows:

Details as follows:
Accounts receivables
Less: loss allowance
Total		 As of 31 December
2023
$1,231,718
(5,573)
$1,226,145		 2022
$670,646
(5,573)
$665,073

  • (b) Trade receivables were not pledged.

  • (c) Accounts receivables are generally on 97-150 day terms. The total carrying amount for the years ended 31 December 2023 and 2022 were $1,368,732 and $1,118,467, respectively. Please refer to Note 6(12) for more details on loss allowance of accounts receivables for the years ended 31 December 2023 and 2022. Please refer to Note 12 for more details on credit risk management.

227

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (3) Inventories

  • (a) Details as follows:

Details as follows:
Raw materials
Work in progress
Manufacturing goods
Finished goods
Inventories
Total		 As of 31 December
2023 2022
$242,210
73,628
33,341
78,682
6
$427,867		 $338,183
54,477
39,151
83,914
1
$515,726

The inventory cost recognized as operating costs for the years ended 31 December 2023 and 2022 were $2,543,138 and $3,736,016, respectively. The loss on decline in value and obsolescence of inventories included in the amounts were $7,500 and $9,800, respectively.

No inventories were pledged.

  • (4) Investments accounted for under the equity method

  • (a) Details for investments accounted for using the equity method are as follows:

Name of the investee company
Delta Power Equipment
Corporation		 2023.12.31
Amount
Proportion
of holding
shares
$584,499
100%		 2023.12.31
Amount
Proportion
of holding
shares
$584,499
100%		 2022.12.31 2022.12.31
Amount
$584,499		 Amount
$616,135		 Proportion
of holding
shares
100% 100%

(b) Investing subsidiaries is represented as “Investments accounted for using equity method” in the parent company only financial statements, and adjusts the evaluation if necessary.

228

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (c) Exchange difference on profits and losses of shares from subsidiaries, associates, and joint adventure and international operating institution’s financial statements are recognized under investments accounted for using the equity method as of the year ended 2023 and 2022, and recognized the same period of statements audited by accountants. Details are as follows:
Investee
company
or
investment item
Delta Power Equipment
Corporation		 2023
Investment loss
Exchange difference
on the financial
statements of foreign
operatinginstitutions
$(10,622)
$387		 2022 2022
Investmentprofit
$17,197		 Exchange difference
on the financial
statements of foreign
operatinginstitutions
$24,770

The investment in related companies mentioned above did not have contingent liabilities or capital commitments as of 31 December 2023 and 2022, and no pledge was provided.

(5) Property, plant, and equipment

(5) Property, plant, and equipment
Property, plant and equipment for
own use		 As of 31 December
2023 2022
$482,339 $506,449

(a)Property, plant and equipment for own use

Cost:
As of 1 Jan. 2023
Additions
Disposals
Transfers
As of 31 Dec. 2023
Depreciation and
impairment:
As of 1 Jan. 2023
Depreciation
Disposals
As of 31 Dec. 2023		 Land and land
Improvements		 Buildings Machinery
and
equipment		 Transportatio
n equipment		 Office
equipment		 Other
equipment
$124,146
5,125
(401)
-
$128,870
$106,381
8,401
(342)
114,440		 Construction
inprocess
$-
-
-
-
$-
$-
-
-
$-		 Total
$134,881
-
-
-		 $423,766
-
-
-		 $290,545
8,482
(436)
7,524		 $7,060
-
(1,353)
-		 $10,299
-
-
-		 $990,697
13,607
(2,190)
7,524
$134,881 $423,766 $306,115 $5,707 $10,299 $1,009,638
$-
-
-		 $199,506
9,158
-
$208,664		 $163,392
26,537
(436)		 $6,048
507
(1,287)		 $8,921
513
-		 $484,248
45,116
(2,065)
$- $189,493 $5,268 $9,434 $527,299

229

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Cost:
As of 1 Jan. 2022
Additions
Disposals
Transfers
As of 31 Dec. 2022
Depreciation and
impairment:
As of 1 Jan. 2022
Depreciation
Disposals
As of 31 Dec. 2022
Net carrying
amount as of:
31 Dec. 2023
31 Dec. 2022		 Land and land
Improvements		 Buildings Machinery
and
equipment		 Transportatio
n equipment		 Office
equipment		 Other
equipment		 Construction
inprocess		 Total
$134,881
-
-
-		 $423,766
-
-
-		 $252,739
23,345
-
14,461		 $8,000
-
(940)
-		 $10,299
-
-
-		 $119,072
4,724
-
350		 $-
-
-
-		 $948,757
28,069
(940)
14,811
$134,881 $423,766 $290,545 $7,060 $10,299 $124,146 $- $990,697
$-
-
-		 $190,329
9,177
-		 $137,369
26,023
-		 $6,188
800
(940)		 $8,407
514
-		 $96,332
10,049
-		 $-
-
-		 $438,625
46,563
(940)
$- $199,506 $169,392 $6,048 $8,921 $106,381 $- $484,248
$134,881 $215,102 $116,622 $439 $865 $14,430 $- $482,339
$134,881 $224,260 $127,153 $1,012 $1,378 $17,765 $- $506,449

  • (b) The land located in Dunnan section, Houli District in the amount of NT$440 thousand was agriculture land, so its owner was temporarily registered as natural person.

  • (c) Please refer to Note 8 for more details on property, plant, and equipment under pledge.

  • (d) There is no occurrence of capitalization of interest due to purchasing property, plant, and equipment.

  • (6) Short-term loans

Short-term loans
Unsecured bank loans
Secured bank loans
Total
unused short-term lines of credits
Interest Rates (%)		 As of 31 December
2023
$450,700
119,000
$569,700
$2,107,300
2023
1.68%~1.70%		 2022
$437,500
106,500
$544,000
$2,343,000
2022
1.54%~1.93%

Please refer to Note 8 for more details on property, plant, and equipment pledged as security for bank borrowings.

230

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(7) Other payables

ther payables
Accrued salary and bonus
Accrued employees’ compensation, and
directors’ remuneration
Accrued Compensation
Others
Total		 As of 31 December
2023
$22,025
16,650
60,334
(Note 1)
46,387
$145,396		 2022
$23,780
26,025
107,485
(Note 2)
41,936
$199,226

Note 1: The Group has reached a consensus with Stanley Black & Decker, Inc. (“SBD”) on 10 July 2023, based on commercial considerations, to compensate for product design modification rework by paying US$4,650,000. As of 31 December 2023, the unpaid amount totaled US$1,940,000.

Note 2: The patent infringement suit between the Company and Robert Bosch Tool Corporation. (“Bosch”) had been settled because of commercial consideration. They signed the conciliation agreement on 20 January 2023, for which the Company shall pay US$3,500,000 and Bosch withdrew the action and the damages claim against the Company.

(8) Post-employment benefit

Defined contribution plan

The Company adopts a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company has made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts:

Defined contribution plan For the years ended
31 December		 For the years ended
31 December
2023
$6,185		 2022
$6,461

231

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Defined benefits plan

The Company adopts a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company will make up the difference in one appropriation before the end of March in the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19. The Company expects to contribute $256 to its defined benefit plan during the 12 months beginning after 31 December 2023.

As of 31 December 2023, the Company's defined benefit plan is expected to expire in 2033.

232

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Pension costs recognized in profit or loss are as follows:

Expected return on planned assets
Net interest on the net defined benefit
liabilities
Total		 For the years ended
31 December		 For the years ended
31 December
2023 2022
$(177)
134
$(43)
$(341)
141
$(200)

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

plan assets at fair value are as follows:
Defined benefit obligation
Plan assets at fair value
Contribution status
Other non-current (assests) liabilities - defined benefit
obligation		 As of
31 Dec2023
$13,619
(28,445)
(14,826)
$(14,826)		 31 Dec2022
$11,450
(27,720)
(16,270)
$(16,270)

Reconciliation of liability (asset) of the defined benefit plan is as follows:

As of 1 January 2022
Interest expense (income)
Subtotal
Remeasurements of the defined benefit
liabilities /assets:
Actuarial gains and losses arising from
changes in demographic assumptions
Actuarial gains and losses arising from
changes in financial assumptions
Experience adjustments
Subtotal
Payments from the plan
Contributions by employer
As of 31 December 2022
Interest expense (income)
Subtotal		 Defined
benefit
obligation		 Fair value of
planassets		 Benefit liability
(asset)
$19,076
134		 $(25,321)
(177)		 $(6,245)
(43)
19,210 (25,498) (6,288)
14
(460)
(7,314)		 -
(1,950)
-		 14
(2,410)
(7,314)
(7,760) (1,950) (9,710)
- (272) (272)
11,450
141		 (27,720)
(341)		 (16,270)
(200)
11,591 (28,061) (16,470)

233

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Remeasurements of the defined benefit
liabilities /assets:
Actuarial gains and losses arising from
changes in demographic assumptions
Actuarial gains and losses arising from
changes in financial assumptions
Experience adjustments
Subtotal
Contributions by employer
As of 31 December 2023		 Defined
benefit
obligation		 Fair value of
planassets		 Benefit liability
(asset)
119
1,220
(689)		 -
(127)
-		 119
1,093
(689)
2,028 (127) 1,901
- (257) (257)
$13,619 $(28,445) $(14,826)

The following significant actuarial assumptions are used to determine the present value of the defined benefit obligation:

Discount rate
Expected rate of salary increases
Rate of expected return on planned assets		 As of31 December As of31 December
2023 2022
1.26%
2.00%
1.26%		 1.23%
0.20%
1.23%

Sensitivity analysis for significant assumption are shown below:

Discount rate increase by 0.5%
Discount rate decrease by 0.5%
Future salary increase by 0.5%
Future salary decrease by 0.5%		 For theyears ended 31 December For theyears ended 31 December For theyears ended 31 December For theyears ended 31 December
2023 2022
Increase
defined
benefit
obligation		 Decrease
defined
benefit
obligation		 Increase
defined
benefit
obligation		 Decrease
defined
benefit
obligation
$-
971
959
-		 $722
-
-
721		 $-
434
436
-		 $394
-
-
83

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

234

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(9) Provisions for liability

(9) Provisions for liability
1 Jan. 2023
Arising during the period
Utilized
31 Dec. 2023
Current－31 Dec. 2023
Non-current－31 Dec. 2023
31 Dec. 2023
1 Jan. 2022
Arising during the period
Utilized
31 Dec. 2022
Current－31 Dec. 2022
Non-current－31 Dec. 2022
Current－31 Dec. 2022		 Warranty
$34,961
4,156
(11,374)		 Decommissioning,
restoration and
rehabilitation
costs
$16,989
174
-
$17,163
$-
17,163
$17,163
$16,840
149
-
$16,989
$-
16,989
$16,989		 Total
$51,950
4,330
(11,374)
$27,743
$9,227
18,516
$27,743
$33,577
12,021
(10,637)
$34,961
$8,229
26,732
$34,961		 $44,906
$9,227
35,679
$44,906
$50,417
12,170
(10,637)
$51,950
$8,229
43,721
$51,950

Warranty

A provision is used to estimate the possibility of repairing the defective products in the future, based on historical experience, management’s judgement and other known factors. Please refer to Note 4 (15) for more details on the policy of the provision for warranties.

Decommissioning, restoration and rehabilitation costs

Decommissioning costs associated with owned factories are recognized as provision. After the plants are decommissioned, the Company will restore the locations.

235

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Equity

(a) Common stock

The Company’s authorized capital was $1,180,000 as of 31 December 2023 and 2022 divided into 118,000,000 shares issued with par value of NT$10 each. The paid-in capital amounted to $788,000 divided into 78,800,000 shares.

  • (2) Capital surplus
apital surplus
Additional paid-in capital 2023.12.31
$1,364		 2022.12.31
$1,364

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

(3) Retained earnings and dividend policies

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

  • A. Payment of all taxes and dues.

  • B. Offset operation losses in prior years.

  • C. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve.

  • D. Set aside or reverse special reserve in accordance with law and regulations.

  • E. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

236

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company's policy on dividend distribution must be based on the factors, such as the Company's current and future investment environment, needs of capital, domestic and foreign competitive conditions, and capital budget, taking into account the interests of shareholders, and balancing dividends and the Company's long-term financial planning, etc. The board of directors shall plan the distribution each year according to law and report to the shareholders resolution meeting. When the Company distributes the dividends in the preceding paragraph, the annual cash dividends to shareholders shall not be less than 5% of the total amount of cash and stock dividends distributed in the current year.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total paidin capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Details of the 2023 and 2022 earnings distribution and dividends per share as approved and resolved by the shareholders’ meeting on 14 March 2024 and 27 June 2023, respectively, are as follows:

Legal reserve
Special reserve
Common stock - cash dividend		 Appropriation of earnings
2023
2022
$11,367
$27,982
(387)
(24,770)
39,400
78,800		 Appropriation of earnings
2023
2022
$11,367
$27,982
(387)
(24,770)
39,400
78,800		 Dividendper share(NT$)
2023
$11,367
(387)
39,400		 2023
$0.50		 2022
$27,982
(24,770)
78,800		 $1.00

Please refer to Note 6(14) for more details on employees’ compensation and remuneration to directors and supervisors.

  • (11) Net sales
Net sales
Revenue from contracts with
customers
Sale of goods		 For theyears ended 31 December
2023 2022
$4,058,588
$3,015,023

237

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Analysis of revenue from contracts with customers during the three-month periods ended 31 March 2023 and 2022 are as follows:

  • (a) Disaggregation of revenue
Disaggregation of revenue
Sale of goods 2023 2022
$3,015,023 $4,058,588

The Company recognizes revenue when transferring the goods to customers, so the contract performance obligation is satisfied at a point in time.

  • (b) Contract balances

Contract liabilities - current

Sale of goods 2023.12.31 2022.12.31 2022.1.1
$238 $154 $212

The significant changes in the Company’s balances of contract liabilities for the years ended 31 December 2023 and 2022 are as follows:

The opening balance transferred to
revenue
Increase in receipts in advance
during the period (excluding the
amount incurred and transferred
to revenue during the period)		 Forthe years ended 31 December Forthe years ended 31 December
2023
$(154)
238		 2022
$(212)
154

  • (c) Transaction price allocated to unsatisfied performance obligations ： None.

  • (d) Assets recognized from costs to fulfil a contract ： None.

  • (12) Expected credit losses

No expected credit impairment losses of the Company as of the year ended 2023 and 2022.

Please refer to Note 12 for more details on credit risk.

238

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company measures the loss allowance of its accounts receivable (including notes receivable and accounts receivable) at an amount equal to lifetime expected credit losses. The assessment of the Company’s loss allowance as of 31 December 2023 and 2022 is as follows:

2023.12.31
Gross carrying amount
Lifetime expected credit
losses
Carrying amount
2022.12.31
Gross carrying amount
Lifetime expected credit
losses
Carrying amount		 Notyet due
$1,302,000
-
$1,302,000
Notyet due
$1,112,894
-		 Overdue 61-90days
$-
-
$-
61-90days
$-
-
$-		 Total
<30days
$64,144
(2,985)
$61,159		 31-60days
$2,588
(2,588)
$-
Overdue
$1,368,732
(5,573)
$1,363,159
Total
<30days
$5,573
(5,573)
$-		 31-60days
$-
-
$-
$1,118,467
(5,573)
$1,112,894 $1,112,894

The movement in the provision for impairment of notes receivable and accounts receivable during the years ended 31 December 2023 and 2022 is as follows:

follows:
Beginning balance at 01 January 2023
Addition for the current period
Ending balance at 31 December 2023
Beginning balance at 01 January 2022
Addition for the current period
Ending balance at 31 December 2022		 Accounts
receivable
$5,573
-
$5,573
$5,573
-
$5,573

  • (13) Leases

  • (a) Company as a lessee

The Company leases various properties, including real estate such as land and buildings, machinery and equipment, transportation equipment, office equipment and other equipment. The lease terms range from 2 to 20 years. Some of these contracts without obtaining the consent from the lessors.

239

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company’s leases effect on the financial position, financial performance and cash flows are as follow:

A. Amounts recognized in the balance sheet

  • (a) Right-of-use asset

The carrying amount of right-of-use assets

Land
Transportation equipment
Total		 2023.12.31
$499,822
979
$500,801		 2022.12.31
$188,256
2,813
$191,069

During the years ended 31 December 2023 and 2022, the Company’s additions to right-of-use assets amounted to $324,999 and $16,477, respectively.

(b) Lease liabilities

Lease liabilities
Current
Non-Current		 2023.12.31
$376,884
$11,714
$365,170		 2022.12.31
$185,860
$9,275
$176,585

Please refer to Note 6(15)(3) for the interest on lease liabilities recognized during the years ended 31 December 2023 and 2022. Refer to Note 12(5) liquidity risk management for the maturity analysis for lease liabilities as of 31 December 2023 and 2022.

  • B. Amounts recognized in the statement of profit or loss Depreciation charge for right-of-use assets
Land
Transportation equipment
Total		 2023
$13,433
1,834
$15,267		 2022
$11,459
1,590
$13,049

240

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

C.Income and costs relating to leasing activities

The expenses relating to
short-term leases		 2023
$637		 2022
$841
  • D. Cash outflows related to lessee and lease activity

During the years ended 31 December 2023 and 2022, the Company’s total cash outflows for leases amounted to $13,523 and $10,960, respectively.

  • (14) Summary statement of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2023 and 2022 are as follows:
Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December Forthe years ended 31 December
2023 2022
Operating
costs		 Operating
expenses		 Total Operating
costs		 Operating
expenses		 Total
Employee benefits expense
Salaries $137,026 $42,405 $179,431 $156,808 $48,859 $205,667
Laborandhealth insurance 14,661 4,392 19,053 16,193 5,065 21,258
Pension 4,322 1,663 5,985 4,796 1,622 6,418
Renumerationofdirectors - 6,695 6,695 - 9,281 9,281
Other employee benefits
expense		 8,340 2,247 10,587 10,445 2,150 12,595
Depreciation 44,377 16,006 60,383 48,354 11,258 59,612
Amortization 1,005 12,623 13,628 1,923 12,039 13,962
  • (a) The employees number of this year and last year are 382 and 441 people,

respectively; the number of directors who were not concurrent employees were 5 respectively.

  • (b) The average employee benefit expense as of the years ended 2023 and 2022 of the Company are $570 thousand and $564 thousand, respectively.

241

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (c) The average employee salary expense as of the year ended 2023 and 2022 of the Company are $476 and $472, respectively, with an increase of 0.84% on average employee salary expense in 2023 as compared to the previous year.

  • (d) The compensation for the supervisors accounted for $180 from 1 January to 30 June,2022.

  • (e) The Company’s policy for compensation of directors, managers and employees is as follows:

For directors, according to the Articles of Incorporation – Article 30, if the company has made a profit in the year, no more than 5% of profit of the current year is distributable as directors’ compensation. The remuneration is paid according to the level in the same industry. The relevant matters regarding the reasonability of salaries are reported to the Remuneration Committee and the Board of Directors for approval. The remuneration system is reviewed at any time according to the actual operating conditions and relevant laws and regulations to seek a balance between the company's sustainable operation and risk control.

For managers and employees, according to the Articles of Incorporation - Rule 30, if the company has made a profit in the year, at least 1% of profit of the current year shall be distributed as employees’ compensation. In addition to consider the normal level of payment in the industry, personal performance and contribution, and the rationality of the company's performance, remuneration is also distributed based on the results of the annual performance evaluation.

According to the Articles of Incorporation, if the company has made a profit in the year, no more than 1% and no more than 5% shall be distributed as employees and directors’ remuneration.

242

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022 (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

However, if there are accumulated losses, the company shall reserve a certain amount in advance. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by twothirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; besides, thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on the profit of 31 December 2023 and 2022 the Company estimated the amounts of the employees’ compensation and remuneration to directors for the year ended of 31 December 2023 and 2022 to be 2.5% and 2% of profit, respectively, recognized as employee benefits expense.

For the years ended 31 December

Employee compensation
Director Remuneration		 2023 2022
$4,125
3,300		 $8,789
7,031

A resolution was passed at the board meeting held on 14 March 2024 to distribute $4,125 and $3,300 in cash as 2023 employees’ compensation and remuneration to directors, respectively. There was the same as the estimated amount recognized in the 2023 financial statements.

As of 13 March 2023, the actual distribution of the employee's compensation and remuneration of the directors and supervisors were $8,789 and $7,031, respectively. There was the same as the estimated amount recognized in the 2022 financial statements.

243

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (15) Non-operating income and expenses

  • (a) Other income

Interest income
Financial assets measured at
amortized cost
Rental income
Others
Total		 For theyears ended 31 December For theyears ended 31 December
2023
$287
492
18,470
$19,249		 2022
$502
456
23,680
$24,638

(b) Other gains and losses

Foreign exchange gains, net
Gain on disposal of property,
plant and equipment
Gain (loss) on revision of rental
Others
Total		 For theyears ended 31 December For theyears ended 31 December
2023
$5,322
(1)
-
(144,801)
$(139,480)		 2022
$245,029
135
120
(107,485)
$137,799

(c) Finance costs

Interest on loans from bank
Interest on leasing labilities
Interest on derecognized liabilities
Total		 For theyears ended 31 December
2023
2022
$9,723
$13,547
4,088
2,629
173
149
$13,984
$16,325		 For theyears ended 31 December
2023
2022
$9,723
$13,547
4,088
2,629
173
149
$13,984
$16,325
2022
$13,547
2,629
149
$16,325

244

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(16) Components of other comprehensive income

For the year ended 31 December 2023:

Arising
during the
period
Reclassifica
tion
adjustments
during the
period
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans
$-
$-
To be reclassified to profit or loss in
subsequent periods:
Exchange differences resulting
from translating the financial
statements of a foreign operation
387
-
Total
$387
$-
For the year ended 31 December 2022:
Arising
during the
period
Reclassifica
tion
adjustments
during the
period
Not to be reclassified to profit or
loss in subsequent periods:
Remeasurements of defined
benefit plans
$-
$-
To be reclassified to profit or loss in
subsequent periods:
Exchange differences resulting
from translating the financial
statements of a foreign operation
24,770
-
Total
$24,770
$-		 Other
comprehens
ive income,
before tax
$(1,901)
-
$(1,901)
Other
comprehens
ive income,
before tax
$9,710
-
$9,710		 Income tax
relating to
components
of other
comprehensi
ve income
$380
-
$380
Income tax
relating to
components
of other
comprehensi
ve income
$(1,942)
-
$(1,942)		 Other
comprehen
sive
income,
net of tax
$(1,521)
387
$(1,134)
Other
comprehen
sive
income,
net of tax
$7,768
24,770
$32,538

245

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (17) Income tax expense

The major components of income tax expense as of the year ended 2023 and 2022 are as follows:

A. Income tax expense recognized in profit or loss

A. Income tax expense recognized in profit or loss loss
Current income tax expense:
Current income tax charge
Adjustments in respect of current income
tax of prior periods
Undistributed surplus for 5%
Current income tax income:
Deferred tax income relating to
origination and reversal of temporary
differences
Total income tax expense		 For the years ended 31
December
2023
$40,021
(760)
8,006
(4,896)
$42,371		 2022
$73,037
(374)
1,198
(10,189)
$63,672

B. Income tax relating to components of other comprehensive income

B. Income tax relating to components of other comprehensive income comprehensive income
Deferred tax (income) expense:
Remeasurements of defined benefit plans
Exchange differences on translation of
foreign operations
Income tax relating to components of other
comprehensive income		 For the years ended 31
December
2023
$(380)
-
$(380)		 2022
$1,942
-
$1,942

C. A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows:


profit multiplied by applicable tax rates is as
follows:
follows:
Accounting profit before tax from continuing operations
Tax at the domestic tax rates applicable to country
incomes
Adjustments in respect of current income tax of prior
periods
Tax effect of expenses not deductible for tax purposes
Tax effect of deferred tax assets/liabilities
Tax effect of other adjustments according to the tax law
Undistributed surplus for income tax
Total income tax expense recognized in profit or loss		 For the years ended
31 December
2023
2022
$157,561
$335,731
$31,512
$67,146
(760)
(374)
-
164
3,613
(6,496)
-
2,034
8,006
1,198
$42,371
$63,672
2022
$335,731
$67,146
(374)
164
(6,496)
2,034
1,198
$63,672

D. Deferred tax assets (liabilities) relate to the following:

246

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended 31 December 2023:

Temporary differences
Unrealized provision on after - sale services and
warranties
Unrealized foreign exchange gains or losses
Allowance to reduce inventories to market value
Allowance for Prepayments to suppliers
Decommissioning costs
Gains on investments accounted for using the
equity method
Compensation for unused leave
Compensation loss
Unrealized sales revenue
Actuarial gains and losses of defined benefit plans
Deferred tax expense/ (income)
Net deferred tax assets/ (liabilities)
Reflected in balance sheet as follows:
Deferred tax assets
Deferred tax liabilities		 Balance as
of 1 January
$6,566
(1,024)
6,420
464
1,387
(74,981)
-
23,458
2,874
(1,994)
$(36,830)
$41,169
$(77,999)		 Deferred tax
income
(expense)
recognized
in profit or
loss
$(1,315)
10,495
1,500
-
98
3,636
702
(9,937)
(244)
(39)
$4,896		 Deferred tax
income
(expense)
recognized in
other
comprehensi
ve income
$-
-
-
-
-
-
-
-
-
380
$380		 Balance as
of 31
December
$5,251
9,471
7,920
464
1,485
(71,345)
702
13,521
2,630
(1,653)
$(31,554)
$41,444
$(72,998)

For the year ended 31 December 2022

Temporary differences
Unrealized provision on after - sale services and
warranties
Unrealized foreign exchange gains or losses
Allowance to reduce inventories to market value
Allowance for Prepayments to suppliers
Decommissioning costs
Gains on investments accounted for using the
equity method
Compensation for unused leave
Compensation loss
Unrealized sales revenue
Actuarial gains and losses of defined benefit plans
Deferred tax expense/ (income)
Net deferred tax assets/ (liabilities)
Reflected in balance sheet as follows:
Deferred tax assets
Deferred tax liabilities		 Balance as
of 1 January
$7,016
1,147
4,460
464
1,294
(68,743)
986
2,563
5,778
(42)
$(45,077)
$23,708
$(68,785)		 Deferred tax
income
(expense)
recognized
in profit or
loss
$(450)
(2,171)
1,960
-
93
(6,238)
(986)
20,895
(2,904)
(10)
$10,189		 Deferred tax
income
(expense)
recognized
in other
comprehensi
ve income
$-
-
-
-
-
-
-
-
-
(1,942)
$(1,942)		 Balance
as of 31
December
$6,566
(1,024)
6,420
464
1,387
(74,981)
-
23,458
2,874
(1,994)
$(36,830)
$41,169
$(77,999)

247

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

E. Unrecognized deferred tax assets

None.

F. The assessment of income tax returns

As of 31 December 2023, the Company’s income tax returns through 2021 have been assessed and approved by the tax authority.

(18) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

(a) Basic earnings per share
Profit attributable to ordinary equity holders of
the Company (in thousand NT$)
Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands)
Basic earnings per share (NT$)
(b) Diluted earnings per share
Profit attributable to ordinary equity holders of
the Company (in thousands of NT$)
Weighted average number of ordinary shares
outstanding for basic earnings per share (in
thousands)
Effect of dilution:
Employee stock options (in thousands)
Weighted average number of ordinary shares
outstanding after dilution (in thousands)
Diluted earnings per share (NT$)		 For the years ended
31 December		 For the years ended
31 December
2023 2022
$115,190 $272,059
78,800 78,800
$1.46 $3.45
$115,190 $272,059
$115,190 $272,059
78,800 78,800
78,800 78,800
$1.46 $3.45

248

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company’s diluted earnings per share is as same as basic earnings per share.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date the financial statements were authorized for issue.

7. RELATED PARTY TRANSACTIONS

Information of the related parties that had transactions with the Company during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name oftherelated parties Nature of relationship of
therelated parties
DELTA POWER EQUIPMENT
CORPORATION (“Delta”)		 Direct holding subsidiary

Significant transactions with related parties

(1) Sales

Parties
Delta		 Types
Sale of goods		 2023 2022
$176,966 $668,785

The sales price of the Company sold to related parties varies depending on product differences and market acceptance.

  • (2) Accounts receivable, net – related parties
Delta 2023.12.31
$137,014		 2022.12.31
$447,821

The Company's sales to subsidiaries are subject to a 120 day monthly liquidation, similar to the regular payment terms of customers.

249

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Other receivables – related parties

Other receivables – related parties
Delta 2023.12.31
$258,218		 2022.12.31
$258,218

The funds of the Company are lent to related parties. Please refer to Note 13 for details.

(4) Key management personnel compensation

Short-term employee benefits For the years ended 31
December		 For the years ended 31
December
2023
$12,479		 2022
$13,762

8. ASSETS PLEDGED AS SECURITY

The following assets of the Company have been provided to banks as collateral for borrowing or financing line application, and the leased land in Taiwan Sugar Land has been set up as security deposit: ：

Land
Buildings
Other non-current assets - term deposits
Total		 Carrying amount as of
31 December
2023
2022
$131,694
$131,694
61,707
63,764
8,342
8,342
$201,743
$203,800		 Secured liabilities
2023
$131,694
61,707
8,342
$201,743
Short-term borrowings
Short-term borrowings
Lease land deposit

9. Significant contingencies and unrecognized contractual commitments

(1)As of 2023 and 2022, the Company has issued an unused letter of credit by US$ 0 and US$ 609, respectively.

250

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (2)The major lease contracts that the Company has signed are as follows:
Contract
Taiwan Sugar Co.
Taiwan Sugar Co.
Taiwan Sugar Co.		 Items
Land
Land
Land		 Term
October 2004 ~
October 2024
January 2006 ~
October 2024
October 2023~
October 2043		 annual rent
payment/
Amortization
fee
$2,032
632
2,146		 Margin
$8,342
-
12,500

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT SUBSEQUENT EVENTS

None.

12. OTHERS

  • (1) Categories of financial instruments

Financial assets

Financial assets measured at
amortized cost
Cash and cash equivalents (exclude
cash on hand)
Trade and accounts receivables
Other receivables		 As of 31 December As of 31 December
2023 2022
$16,222
1,363,159
276,420		 $8,622
1,112,894
284,488

251

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial liabilities
Financial liabilities at amortized cost:
Short-term loans
Short-term notes and bills payable
Notes payable
Accounts payable
Lease liability
Other payables		 As of 31 December As of 31 December
2023 2022
$569,700
-
278,012
333,507
376,884
145,396		 $544,000
-
220,399
168,669
185,860
199,226

(2) Financial risk management objectives and policies

The Company’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Company identifies measures and manages the aforementioned risks based on the Company’s policy and risk appetite.

The Company has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Company complies with its financial risk management policies at all times.

(3) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk and interest rate risk, and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change interdependencies between risk variables. However, the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

252

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Foreign currency risk

The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities (when revenue or expense are denominated in a different currency from the Company’s functional currency) and the Company’s net investments in foreign subsidiaries.

The Company has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. The Company also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Company.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Company’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period.

When NTD strengthens/weaken against USD by 1%:

Foreign
currencyitem
USD		 Appreciate/
depreciate
percentage
1%		 2023
Profit and
loss
Equity
effect
$13,082
$-		 2022 2022
Profit and
loss
$13,082		 Profit and
loss
$9,295		 Equity
effect
$-

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s bank borrowings with fixed interest rates and variable interest rates.

253

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit for the years ended 31 December 2023 and 2022 to decrease/increase by $570 and $544, respectively.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Company is exposed to credit risk from operating activities (primarily for accounts receivables) and from its financing activities, including bank deposits and other financial instruments.

Credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, ratings from credit rating agencies, historical experiences, prevailing economic condition and the Company’s internal rating criteria, etc. Certain customer’s credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment.

As of 31 December 2023 and 2022, accounts receivable from top ten customers represented 100% and 99% of the total accounts receivable of the Company, respectively.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Company’s treasury in accordance with the Company’s policy. The Company only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

254

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(5) Liquidity risk management

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments and bank loans. The table below summarizes the maturity profile of the Company’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as at the end of the reporting period.

Non-derivative financial liabilities

As of 31 December 2023
Short-term borrowings
Notes payable
Accounts payable
Lease liability(Note)
As of 31 December 2022
Short-term borrowings
Notes payable
Accounts payable
Lease liability (Note)		 Less than
1year
$570,030
278,012
333,507
11,714
$544,369
220,399
168,669
9,289		 2 to 3
years
$-
-
-
80,067
$-
-
-
69,225		 4 to 5years
$-
-
-
8,625
$-
-
-
13,649		 > 5years
$-
-
-
474,983
$-
-
-
126,350		 Total
$570,030
278,012
333,507
575,389
$544,369
220,399
168,669
218,513

Note: The table below provides further information on the lease liability maturity analysis:

Lease liability Over Due Over Due
Less than
1year		 1 to 5 years 6 to 10 years 10 to 15 years >15 years Total
$11,714 $88,692 $21,562 $21,562 $431,859 $575,389

255

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (6) Reconciliation of liabilities arising from financing activities:

Reconciliation of liabilities for the year ended 31 December 2023

As of 1 January 2023
Cash flows
As of 31 December 2023		 Short-term
borrowings		 Short-term notes
and billspayable		 Other non-current
liabilities
$544,000
25,700		 $-
-		 $-
-
$-
$569,700 $-

Reconciliation of liabilities for the year ended 31 December 2022:

As of 1 January 2022
Cash flows
As of 31 December 2022		 Short-term
borrowings		 Short-term notes
and billspayable		 Other non-current
liabilities
$1,146,800
(602,800)		 $190,000
(190,000)		 $82
(82)
$-
$544,000 $-

  • (7) Fair values of financial instruments

  • (a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Company to measure or disclose the fair values of financial assets and financial liabilities:

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and other current liabilities approximate their fair value due to their short maturities.

256

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (b) Fair value of financial instruments measured at amortized cost

The carrying amounts of the Company’s financial assets and liabilities measured at amortized cost approximate their fair value.

  • (c) The Company does not hold the financial instruments measured at fair value after initial recognition, so the balance sheets of the Republic of China as of 31 December 2023 and 2022 did not have transactions measured at fair value.

  • (8) The Company does not hold any derivative financial instruments as of the year ended 2023 and 2022.

  • (9) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets
Monetary items:
USD
Financial
liabilities
Monetary items:
USD		 As of 31 December 2023
Foreign
currencies
Foreign
exchange
rate
NTD
$45,831
30.72
$1,407,928
$3,246
30.72
$99,717		 As of 31 December 2023
Foreign
currencies
Foreign
exchange
rate
NTD
$45,831
30.72
$1,407,928
$3,246
30.72
$99,717		 As of 31 December 2022 As of 31 December 2022 As of 31 December 2022
Foreign
currencies
$45,831
$3,246		 Foreign
exchange
rate
30.72
30.72		 Foreign
currencies
$37,815
$7,547		 Foreign
exchange
rate
30.71
30.71		 NTD
$1,161,299
$231,768

  • (a) Since the major functional currency of the Company is the US dollar, the information on the exchange profits and losses of monetary financial assets and financial liabilities has been disclosed according to the foreign currency of each significant influence. The foreign currency exchange gains of the Company in 2023 and 2022 were $5,322 and $245,029, respectively.

  • (b) The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

257

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Capital management

The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Company manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

13. Other disclosure

Related information of significant transaction item, re-invest business and investment on China as of the year ended 2023 and 2022 of the Company and subsidiaries are as follows:

  • (1) Information at significant transactions

  • (a) Financing provided to others for the year ended 31 December 2023: All transactions below were between parent company only entities and have been eliminated in consolidation. ：

No Lender Counterparty Transaction
item		 Related
Party		 Maximum
balance for
the
period		 Ending
balance		 Amount
drawn		 Interest
rate		 Nature of
financing
(Note 3)		 Number
of sales to
(purchases
from)
counterpar
ty		 Reason for
financing		 Allowance
for
doubtful
accounts		 Collateral Collateral Limit of
financing
amount
for individual
counterparty
(note 1)		 Limit of total
financing
amount
(note 2)
Item Value
０ CHANG
TYPE
INDUSTRI
AL CO.,
LTD.		 Delta Power
Equipment
Corporation		 Other
receivables-
related
parties		 Yes $258,218 $258,218 $258,218 - 1 $668,785 - $- - $- $668,785 $668,785
０ CHANG
TYPE
INDUSTRI
AL CO.,
LTD.		 Delta Power
Equipment
Corporation		 Other
receivables-
related
parties		 Yes $200,000 $- $- - 2 $- For
operating		 $- - $- $764,473 $764,473

258

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Note1 ： The limit amount of financing to individual counterparty:

  • (1) The amount of funds loaned to the company or bank with which the Company has business dealings shall not exceed the business transaction amount between the two parties, and shall not exceed 100% of net equity of the Company.

  • (2) The financing amount to the individual counterparty due to necessary short-term financing shall not exceed 40% of net equity of the Company.

  • Note2 ： The total amount of funds loaned by the Company to others shall not exceed 100% of net equity of the Company.

  • (1) The total amount of funds loaned to the company or bank with which the Company has business dealings shall not exceed 100% of net equity of the Company.

  • (2) The total financing amount to the individual counterparty due to necessary short-term financing shall not exceed 40% of net equity of the Company.

  • Note3 ： The method of filling in the loan and nature of funds is as follows:

  • (1) code 1 represents an intercompany transaction call for a loan arrangement.

  • (2) code 2 represents short-term financing.

(b) Endorsement to others:

No Endorser/
Guarantor		 Counterparty Counterparty Guarantee Limited
Amount for each
Counterparty
(Note1)		 Maximum
balance for the
period		 Guarantee
Amount
for the year
ended 31
December 2022		 Amount
drawn		 Value of
Collateral
Properties
secured by the
endorsement		 Ratio of
Accumulated
Amount of
Guarantee
Provided to Net
Equity of the
Latest Financial
Statements		 Guarantee
Limited Amount
(Note2)		 Guarantee
from the
parent to
subsidiary		 Guarantee
from the
subsidiary
to parent		 Guarantee
from the
Mainland
China
Company
Name		 Relationship
0 CHANG
TYPE
INDUSTRIA
L CO.,LTD.		 Delta Power
Equipment
Corporation		 Subsidiaries $1,911,182 $919,480 $589,120 $- N 30.80% $3,822,364 Y N N

Note 1: 100% of the financial statement net amount of guarantees/endorsements.

  • Note 2: 200% of the net amount of financial statement of guarantees/endorsements.

  • Note 3: Should list the amount that approved by the board of directors. However, the board of directors shall, in

  • accordance with Article 12 - Paragraph 8 of the “Public Issuance Company's Fund Loan and

  • Endorsement Guarantee Handling Guidelines”, to authorize the chairman to make decisions, this refers to the amount finalized by the board of director.

259

Chang Type Industrial Co., Ltd.

Notes to Parent Company Only Financial Statements

For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (c) Securities held as of 31 December 2023 (excluding subsidiaries, associates, and joint venture): None.

  • (d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

  • (e) Acquisition of individual real estate with amount exceeding NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

  • (f) Disposal of individual real estate with amount exceeding NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2023: None.

  • (g) Related party transactions for purchases and sales exceeding NT$100 million or 20 percent of the paid-in capital for the year ended 31 December 2023:

Company Name Counterparty Relations
hip
Relations
hip		 Transactions Transactions Transactions Details of non-arm's
length transaction		 Details of non-arm's
length transaction		 Notes and accounts receivable
(payable)		 Notes and accounts receivable
(payable)		 Note
Transactions Details of non-
arm's
length transaction		 Notes and
accounts
receivable
(payable)		 Note Unit price Credit
period		 Balance Percentage of
total accounts
receivable item
CHANG TYPE
INDUSTRIAL
CO., LTD.		 Delta Power Equipment
Corporation		 subsidi
ary		 Sales $(176,966) 5.87% 120
days		 same as
general
transact
ion		 same as
general
transact
ion		 $137,014 10.05% -
Delta Power
Equipment
Corporation		 CHANG TYPE INDUSTRIAL CO.,
LTD.		 parent
compa
ny		 Purchase $176,966 57.69% 120
days		 same as
general
transact
ion		 same as
general
transact
ion		 $(137,014) 22.41% -

(h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of 31 December 2023:

Company name Counterparty Relationship Receivable – related parties Turnover
rate		 Overdue receivables - related
parties		 Overdue receivables - related
parties		 Amount
received in
subsequentperiod		 Allowance for
bad debts
Account balance Amount Collection status
Change Type
Industrial Co.,
Ltd.		 Delta Power Equipment
Corporation		 Parent and
subsidiaries		 Accounts receivable
$137,014		 0.61 times $77,604 Note $14,090 $-

Note: The accounts overdue for more than 90 days amounted to $77,604 thousand, which the Company deemed to be of non-financing nature through the resolution of the board meeting held on 22 January 2024.

(i) Financial instruments and derivative transactions: None.

260

Chang Type Industrial Co., Ltd. Notes to Parent Company Only Financial Statements For the Years Ended 31 December 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

  • (2) Information on investees:

  • (a) Names, locations, main businesses and products, original investment amount, investment as of 31 December 2023, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2023:

Investor
Company		 Investee
Company		 Address Main operating item Initial Investment Amount Initial Investment Amount Investment a s of 31 December 2022 s of 31 December 2022 Net income (loss) of
investee company		 Current
investment loss
recognized		 Note
The ending of this
period		 The end of last year Number of
shares		 Ratio Note
CHANG
TYPE
INDUSTRI
AL CO.,
LTD		 Delta Power
Equipment
Corporation		 America Manufacturing
and trading of
hand tools,
electrical
machinery...etc.		 $314,095
(USD
10,010,000)		 $314,095
(USD 10,010,000)		 10,010 100% $584,499 $15,116
USD 485,451		 $10,622 Note

Note ： Current investment income from investees recognized by the Company included investment

gain/loss recognized by these investees from upstream/downstream transactions.

  • (3) Information on investments in the Mainland China: None.

  • (4) Information on major shareholders:

31 December 2023

Shares
Name		 Shareholding Shareholding ratio
CHANG, CHIN-CHIN 18,080,201 22.94%
LIU,XIU-YUE 11,549,766 14.65%
CHANG,HSIANG-I 7,090,569 8.99%
CHANG, QUN-YU 6,937,444 8.80%
Special investment
account of E. Sun Bank
Safe Deposit Box
Quinton International Ltd.		 4,752,351 6.03%
HUNG GRAND
INTERNATIONAL
INVESTMENTCORP.		 4,281,400 5.43%

261

Chang Type Industrial Co., Ltd

Details of significant accounting items

At the year ended 31 December 2023

Details of Items Number/ note
Statement of cash and cash equivalents 1
Statement of accounts receivable 2
Statement of other receivables 3
Statement of inventories 4
Statement of changes in investment accounted for using equity
method		 5
Statement of changes in property, plant, and equipment Note(6)、5
Statement of changes in accumulated depreciation of property,
plant and equipment		 Note (6)、5
Statement of changes in right-of-use assets 6
Statement of changes in accumulated depreciation of right-of-use
assets		 7
Statement of short-term loans 8
Statement of notes payable 9
Statement of accounts payable 10
Statement of lease liabilities 11
Statement of net operating income 12
Statement of operating costs 13
Statement of manufacturing overheads 14
Statement of operating expenses 15
Statement of non-operatingincome and expenses Note 6、15
Summary statement of employee benefits, depreciation and
amortization expenses byfunction		 Note 6、14

262

Chang Type Industrial Co., Ltd

1 、 Statement of Cash and cash equivalents (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands Unit: NT$ thousands
Item Abstract Amount Note
Cash on hand
Bank savings
Demand deposits－New Taiwan dollars
Demand deposits－foreign currency
Total		 Main foreign
currency:
USD 459		 $90
2,125
14,097
$16,312

Chang Type Industrial Co., Ltd

2 、 Statement of accounts receivable (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Clientname Abstract Amount Note
Company A
Others (Note)
Subtotal
Less: loss to allowance
Accounts receivable - net		 1,227,977
3,741
$1,231,718
(5,573)
$1,226,145

Note: Customer balance below 5% of the subject is listed as a consolidation.

263

Chang Type Industrial Co., Ltd

3 、 Statement of other receivables (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands Unit: NT$ thousands
Item Abstract Amount Note
Other receivables - related party
Other (Note)
Total		 $258,218
18,202
$276,420

Note: Amount below 5% of subject amount is listed as consolidation.

Chang Type Industrial Co., Ltd

4 、 Statement of inventories (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Unit: NT$ thousands
Item Costs Marketprice Note
Raw materials
Work in Process
Manufacturing goods
Finished goods
Commodity inventories
Total
Less: loss of allowance
Net amount		 $273,674
37,391
77,366
79,033
6
467,470
(39,603)
$427,867		 $242,936
33,440
73,834		 Please refer to Note 4(9)
for more information on
market price.
78,892
6
$429,108

264

Chang Type Industrial Co., Ltd

5 、 Statement of changes in investment accounted for

using equity method (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Name
of
invested
company
and
target		 Balance of the
beginning period		 Balance of the
beginning period		 Current period Current period Decreases in the
currentperiod		 Decreases in the
currentperiod		 Investment
losses
recognized
in the
current
period		 Cumulative
translation
adjustment		 Realized
gross profit
between
affiliates		 Balance of the ending period Balance of the ending period Balance of the ending period Share
rights
(net)		 Founda
tion of
evaluat
ion		 Guaran
teed or
pledge
conditi
ons
Shares Amount Shares Amount Shares Amount Shares Proporti
on of
share
holdings		 Amount
Delta Power
Equipment
Corporation		 10,010 $616,135 - $- - $- $(10,622) $387 $(21,401) 10,010 100% $584,499 $584,499 Equity
method		 None

Chang Type Industrial Co., Ltd

6 、 Statement of changes on right-of-use assets (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands Unit: NT$ thousands
Item Beginning
balance		 Increase in the
current period		 Decrease in the
current period		 Ending
balance		 Note
Land
Transportation equipment
Total		 $220,220
8,323
$228,543		 $324,999
-

$324,999		 $-
-		 $545,219
8,323		 None
None
$- $553,542

265

Chang Type Industrial Co., Ltd

7 、 Statement of changes in accumulated depreciation of right-of-use assets (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Item Beginning
balance		 Increase in the
current period		 Decrease in
the current
period		 Ending balance Note
Land
Transportation equipment
Total		 $31,964
5,510		 $13,433

1,834

$15,267		 $- $45,397
7,344
$52,741		 None
None
$37,474 $-

Chang Type Industrial Co., Ltd

8 、 Statement of short-term loans (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Unit: NT$thousands
Rights holder Borrowing
types		 Interest
rate		 Amount Borrowing
limit		 Pledge
Mega International commercial
bank
China CITIC bank International
Yuanta Commercial bank
Shanghai Commercial bank
Citibank Taiwan Limited
First Commercial bank
Mega International commercial
bank
Fuban Commercial bank Co.,
Ltd.
Cathay United Bank
Bank SinoPac Co., Ltd
E.Sun Commercial bank, Ltd.
DBS Bank Limited
Far eastern Commercial bank
Taishin Commercial bank
Total		 Pledge
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan
Credit loan		 Note $119,000
100,000
80,000
-
-
-
270,700
-
-
-
-
-
-
-
$569,700		 $250,000
200,000
150,000
150,000
107,000
200,000
350,000
220,000
200,000
200,000
200,000
200,000
150,000
100,000
$2,677,000		 Land and
construction
from Houli
None
None
None
None
None
None
None
None
None
None
None
None
None

Note: Interest rate of short-term borrowings ranges from 1.66% to 2.21%.

266

Chang Type Industrial Co., Ltd

9 、 Statement of notes payable (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Client name Abstract Amount Note
Company A
Company B
Company C
Company D
Company E
Company F
Others (Note)
Total		 $17,664
16,314
15,727
14,735
14,669
14,552
184,351
$278,012

Note: Supplier balance below 5% of the subject amount is listed as a consolidation.

Chang Type Industrial Co., Ltd.

10 、 Statement of accounts payable (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Client name Abstract Amount Note
Company A
Company B
Company C
Others (Note)
Total		 $31,017
22,280
18,103
262,107
$333,507

Note: Balance of suppliers below 5% of the subject amount is listed as a consolidation.

267

Chang Type Industrial Co., Ltd.

11 、 Statement of lease liabilities (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Item Abstract Leasing period Discoun
trate		 Ending
balance		 Note
Land
Land
Land
Land
Transportation equipment
Total		 Houli factory No.2
Fengyuan factory No.1
Houli parking lot No.1
Taiwan Sugar
Corporation
BMW		 06/10/2004~
06/10/2053
01/01/2022~
31/12/2024
01/05/2023~
17/10/2043
18/10/2023~
17/10/2043
01/05/2022~
01/04/2024		 1.40%
0.12%
0.40%
2.65%
0.12%		 $176,270
4,769
5,125
189,729
991
$376,884

Chang Type Industrial Co., Ltd.

12 、 Statement of net operating income (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Item Numbers Amount Note
Electronic machine tools
Others
Total		 487,398 machines $2,935,016
80,007		 Rotor set, motor, and
components
$3,015,023

268

Chang Type Industrial Co., Ltd.

13 、 Statement of operating costs (NTD)

As of the year ended 31 December 2023

Unit: NT$thousands
Item Amount
A. Cost of goods sold - homemade
Direct materials：
Beginning Inventory
Add：Material purchase (current period)
Returns of WIP
Inventory gain(loss)
Materials borrowed
Less：Ending inventory
Material sold
Transition expense
Loss on material restore
Reclassifed as miscellaneous expenses
Current materials consumption
Work in Process (WIP)：
WIP in the beginning
Add：Material purchase (current period)
Returns of WIP
Less: Ending inventory
WIP sold
Inventory gain(loss)
Transition expense
Loss on material restore
Current Work in Process consumption
Direct labor
Manufacturing expense (Details 14)
Production cost
Manufacturing goods：
Beginning Manufacturing goods
Less：Ending manufacturing goods
Current production cost
Materials transition
Transition of manufacturing goods
Costs of finished goods
Finished goods：
Add：Beginning finished goods
Less：Ending finished goods
Transition expense
Cost ofgoods sold - homemade		 $354,523
1,608,165
1,062,410
(2,473)
502
(273,674)
(10,732)
(13,183)
(1,352)
(669)
2,723,517
42,658
45,422
2,171,269
(37,391)
(13,320)
14
(2,258)
19
2,206,413
112,037
641,049
5,683,016
60,437
(77,366)
5,666,087
(1,062,410)
(2,171,269)
2,432,408
90,209
(79,033)
(924)
2,442,660

269

Chang Type Industrial Co., Ltd.

13 、 Statement of operating costs (continued)

As of the year ended 31 December 2023

Unit: NT$ thousands
Item Amount
B. Cost of goods sold – purchased goods
Beginning goods
Add：Current inventory
Less: Ending inventory
Transition expense
Cost of goods sold
Sales of parts available-for-sale
Sales of Work-in-Process available-for-sale
Costs of selling materials, Work in Process, Cost
of goods sold available-for-sale
C. Other operating costs
Loss on inventory price drop
Revenue from sales of scraps
Inventory gain(loss)
Others
Subtotal
Operating costs		 1
61,160
(6)
(14)
61,141
10,732
13,320
85,193
7,500
(6,664)
2,459
11,990
15,285
$2,543,138

270

Chang Type Industrial Co., Ltd.

14 、 Statement of manufacturing overheads (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Unit: NT$thousands
Item Amount Note
Manufacturing cost
Indirect labor
Expendable cost
Other expenses (Note)
Total		 $434,395
54,471
44,377
107,806		 (Including pensions)
$641,049

Note: Amount below 5% of subject amount is listed as consolidation.

Chang Type Industrial Co., Ltd.

15 、 Statement of operating expenses (NTD)

As of the year ended 31 December 2023

Unit: NT$ thousands

Item Marketing
expense		 Management
and
administration
expenses		 Research
and
development
expense		 Total Note
Wage expense
Import/ export expense
Depreciation expense
Amortizations
Labor expense
Insurance
Sample fee
Other expense
(Note)		 $8,700
29,670
205
8,724
1,578
4,599
-
1,815		 $30,761
-
14,917
3,707
12,170
2,823
-
10,909		 $10,815
-
884
192
898
903
2,320
1,496		 $50,276
29,670
16,006
12,623
14,646
8,325
2,320
14,220		 Including
pensions
Total $55,291 $75,287 $17,508 $148,086

Note: Amount below 5% of subject amount is listed as consolidation.

271

CHANG TYPE INDUSTRIAL CO., LTD.

Chairman: CHANG, CHIN-CHIN

272

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