Chung Hung Steel Corporation

Standalone Financial Statements for the Years Ended December 31, 2021 and 2020 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the shareholders Chung Hung Steel Corporation

Opinion

We have audited the accompanying standalone financial statements of Chung Hung Steel Corporation (the “Corporation”), which comprise the standalone balance sheets as of December 31, 2021 and 2020, and the standalone statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the standalone financial statements, including a summary of significant accounting policies (collectively referred to as the “standalone financial statements”).

In our opinion, the accompanying standalone financial statements present fairly, in all material respects, the standalone financial position of the Corporation as of December 31, 2021 and 2020, and its standalone financial performance and its standalone cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Standalone Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 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 the standalone financial statements for the year ended December 31, 2021. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters of the Corporation’s standalone financial statements for the year ended December 31, 2021 are stated as follows:

The Existence of Revenue from Sale of Goods on Specific Customers

The domestic sales revenue among the Corporation’s top ten customers for the year ended December 31, 2021 was NT$19,952,276 thousand, which represented 38% of the sales revenue. Because the sales revenue from the above-mentioned specific customers has grown significantly compared to the sales revenue from the previous year, we considered the existence of sales revenue from the above-mentioned specific customers as a key audit matter. Refer to Notes 4 and 24 to standalone financial statements for the related accounting policies and disclosures on sales revenue.

The audit procedures we performed included the following:

We obtained an understanding of the design and implementation of the internal controls and tested the operating effectiveness of controls related to the existence of sales revenue.
We tested the sales details of specific customers by selecting samples, including sales orders, shipping documents and cash collections, and we confirmed that the collections of counterparties were consistent with the record of transactions and the accuracy of revenue recognized.
We obtained subsequent details of sales returns and allowances of the specific customers and tested whether there is any unusual sales returns and allowances by selecting samples and confirmed that sales revenue existed before the balance sheet date.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

Management is responsible for the preparation and fair presentation of the standalone financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the FSC of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of standalone financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including the audit committee, are responsible for overseeing the Corporation’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Standalone Financial Statements

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

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

Identify and assess the risks of material misstatement of the standalone 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 Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on
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the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Corporation to express an opinion on the standalone financial statements. We are responsible for the direction, supervision, and performance of the corporation audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements for the year ended December 31, 2021 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.

The engagement partners on the audits resulting in this independent auditors’ report are Yu-Hsiang Liu and Jia-Ling, Jiang.

Deloitte & Touche Taipei, Taiwan Republic of China

February 24, 2022

Notice to Readers

The accompanying standalone financial statements are intended only to present the standalone financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such standalone financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying standalone financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and standalone financial statements shall prevail.

CHUNG HUNG STEEL CORPORATION

STANDALONE BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - current (Notes 4 and 8) Accounts receivable (Notes 4, 9 and 24) Accounts receivable from related parties (Notes 4, 9, 24 and 30) Other receivables (Note 9) Other receivables from related parties (Notes 9 and 30) Current tax assets (Note 26) Inventories (Notes 4, 5 and 10) Prepayments (Note 11) Other financial assets - current (Notes 12 and 31) Other current assets Total current assets NONCURRENT ASSETS Financial assets at fair value through other comprehensive income - noncurrent (Notes 4 and 8) Investments accounted for using equity method (Notes 4 and 13) Property, plant and equipment (Notes 4, 14, 30 and 32) Right-of-use assets (Notes 4 and 15) Investment properties (Notes 4 and 16) Prepayments for equipment (Note 32) Refundable deposits Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 17 and 31) Short-term bills payable (Note 17) Contract liabilities - current (Note 24) Accounts payable (Note 19) Accounts payable to related parties (Notes 19 and 30) Other payables (Notes 20 and 30) Current tax liabilities (Notes 4 and 26) Provisions – current (Notes 4 and 21) Lease liabilities - current (Notes 4 and 15) Refund liabilities Other current liabilities Total current liabilities NONCURRENT LIABILITIES Bonds payable (Note 18) Long-term bank borrowings (Note 17) Long-term bills payable (Note 17) Deferred tax liabilities (Notes 4 and 26) Lease liabilities - noncurrent (Notes 4 and 15) Net defined benefit liabilities (Notes 4 , 5, and 22) Guarantee deposits received (Note 16) Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 23) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2021 Amount % $ 507,465 1 - - 1,170,412 3 930,578 2 47,355 - 9,051 - 211,007 1 - - 12,717,439 34 443,116 1 1,000,000 3 2,597 - 17,039,020 45 62,040 - 4,089,098 11 10,164,924 28 62,920 - 5,982,297 16 70,290 - 5,651 - 20,437,220 55 $ 37,476,240 100 $ 4,562,252 12 999,641 3 95,155 - 1,360,732 4 469,577 1 1,174,438 3 652,941 2 206,850 1 15,408 - 265,047 1 23,317 - 9,825,358 27 2,996,174 8 1,200,000 3 239,792 1 182,222 - 48,519 - 387,777 1 35,000 - 5,089,484 13 14,914,842 40 14,355,444 38 903 - 144,632 - 425,839 1 6,503,369 18 7,073,840 19 1,131,211 3 22,561,398 60 $ 37,476,240 100		December 31, 2020	December 31, 2020
		Amount $ 507,465 - 1,170,412 930,578 47,355 9,051 211,007 - 12,717,439 443,116 1,000,000 2,597 17,039,020 62,040 4,089,098 10,164,924 62,920 5,982,297 70,290 5,651 20,437,220 $ 37,476,240 $ 4,562,252 999,641 95,155 1,360,732 469,577 1,174,438 652,941 206,850 15,408 265,047 23,317 9,825,358 2,996,174 1,200,000 239,792 182,222 48,519 387,777 35,000 5,089,484 14,914,842 14,355,444 903 144,632 425,839 6,503,369 7,073,840 1,131,211 22,561,398 $ 37,476,240		Amount $ 285,899 242,410 819,454 830,087 117,238 19,321 26,523 202 4,236,420 150,961 300,000 3,961 7,032,476 43,345 2,698,045 11,162,643 78,330 5,983,185 95,659 6,220 20,067,427 $ 27,099,903 $ 404,630 3,599,577 57,283 27,500 313,224 580,115 - - 15,230 153,756 15,764 5,167,079 2,995,039 2,000,000 1,109,674 182,222 63,898 313,717 35,000 6,699,550 11,866,629 14,355,444 903 90,568 549,578 662,620 1,302,766 (425,839) 15,233,274 $ 27,099,903	% 1 1 3 3 - - - - 16 1 1 - 26 - 10 41 - 22 1 - 74 100 2 13 - - 1 2 - - - 1 - 19 11 8 4 1 - 1 - 25 44 53 - - 2 3 5 (2) 56 100

The accompanying notes are an integral part of the standalone financial statements.

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 24 and 30) Sales Service revenue Other operating revenue Total operating revenue OPERATING COSTS (Notes 10, 14, 25 and 30) GROSS PROFIT OPERATING EXPENSES (Note 25) Selling and marketing expenses General and administrative expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 13, 16, 25 and 30) Interest income Other income Other gains and losses Finance costs Share of the profit of associates Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX (Notes 4, 5 and 26) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Notes 22 and 23) Items that will not be reclassified subsequently to profit or loss:		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 Amount % $ 53,019,056 99 624,450 1 89,708 - 53,733,214 100 46,197,610 86 7,535,604 14 577,505 1 443,925 1 1,021,430 2 6,514,174 12 803 - 131,463 - 370,938 1 (45,715) - 39,589 - 497,078 1 7,011,252 13 660,841 1 6,350,411 12		2020
				Amount % $ 36,406,042 99 324,620 1 58,856 - 36,789,518 100 35,335,654 96 1,453,864 4 794,236 2 321,827 1 1,116,063 3 337,801 1 950 - 224,750 1 1,488 - (86,219) - 49,490 - 190,459 1 528,260 2 - - 528,260 2 (Continued)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2021 Amount % (157,217) - 369,653 1 1,196,082 2 (142) - 1,408,376 3 7,758,787 15 $ 4.42 $ 4.40		2020
$		$	Amount % 12,378 - 28,579 - 95,160 - - - 136,117 - 664,377 2 $ 0.37 $ 0.37

$		$

The accompanying notes are an integral part of the standalone financial statements.

(Concluded)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

Issued and Outstanding Ordinary Shares Capital Surplus BALANCE AT JANUARY 1, 2020 $ 14,355,444 $ 903 Appropriation of 2019 earnings (Note 23) Legal reserve - - Special reserve - - Net profit for the year ended December 31, 2020 - - Other comprehensive income for the year ended December 31, 2020, net of income tax - - Total comprehensive income for the year ended December 31, 2020 - - BALANCE AT DECEMBER 31, 2020 $ 14,355,444 $ 903 Appropriation of 2020 earnings (Note 23) Legal reserve - - Cash dividends - - Reversal of special reserve - - Net profit for the year ended December 31, 2021 - - Other comprehensive income (loss) for the year ended December 31, 2021, net of income tax - - Total comprehensive income (loss) for the year ended December 31, 2021 - - Disposal of investments in equity instruments at fair value through other comprehensive income - - BALANCE AT DECEMBER 31, 2021 $ 14,355,444 $ 903		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 90,450 $ 497,607 $ 174,071 118 - ( 118) - 51,971 ( 51,971) - - 528,260 - - 12,378 - - 540,638 $ 90,568 $ 549,578 $ 662,620 54,064 - ( 54,064) - - ( 430,663) - ( 123,739) 123,739 - - 6,350,411 - - ( 157,217) - - 6,193,194 - - 8,543 $ 144,632 $ 425,839 $ 6,503,369	Other Equity Exchange Unrealized Gain (Loss) on Financial Differences on Assets at Fair Value Translating Through Other Foreign Comprehensive Operations Income $ - ($ 549,578) - - - - - - - 123,739 - 123,739 $ - ($ 425,839) - - - - - - - - ( 142) 1,565,735 ( 142) 1,565,735 - (8,543) ($ 142) $ 1,131,353	Total Equity $ 14,568,897 - - 528,260 136,117 664,377 $ 15,233,274 - ( 430,663) - 6,350,411 1,408,376 7,758,787 - $ 22,561,398

The accompanying notes are an integral part of the standalone financial statements.

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before income tax Adjustments for: Depreciation expense Net gain on financial assets at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates Loss on disposal of property, plant and equipment Write-downs (reversal) of inventories Recognition of impairment loss Recognition of provisions Others Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Accounts receivable Accounts receivable from related parties Other receivables Other receivables from related parities Inventories Prepayments Other current assets Contract liabilities Accounts payable Accounts payable to related parties Other payables Other current liabilities Net defined benefit liabilities Refund liabilities Cash generated from operations Income taxes refund (paid) Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the capital reduction on financial assets at fair value through other comprehensive income Acquisition of investments accounted for using the equity method Acquisition of property, plant and equipment Decrease (Increase) in refundable deposits Increase in other financial assets	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 7,011,252 753,729 (318,331) 45,715 (803) (10,383) (39,589) - 4,859 646,025 206,850 1,097 560,741 (100,491) 69,883 10,297 (184,484) (8,485,878) (295,155) 1,364 37,872 1,333,232 156,353 588,691 7,553 (83,157) 111,291 2,031,533 (7,698) 2,023,835 - (200,000) (353,847) 569 (700,000)	2020 $ 528,260 1,162,246 (78,903) 86,219 (950) (31,821) (49,490) 9,371 (304,435) 576,317 - 692 17,844 (364,070) (71,505) (13,290) 513,416 2,645,652 77,570 (2,271) (227,769) (2,172) 247,627 71,195 (670) (47,765) 144 4,741,442 147 4,741,589 1,934 - (397,582) (588) - (Continued)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Interest received Dividends received from others Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Increase in short-term bills payable Decrease in short-term bills payable Proceeds from issuance of bonds Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from long-term bills payable Repayments of long-term bills payable Repayments of principal of lease liabilities Dividends paid to owner of the corporation Interest paid Net cash used in financing activities NET INCREASE IN CASH CASH AT THE BEGINNING OF THE YEAR CASH AT THE END OF THE YEAR	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 776 54,859 (1,197,643) 117,158,161 (113,000,539) 8,200,064 (10,800,000) - 300,000 (1,100,000) 240,118 (1,110,000) (15,232) (430,663) (46,535) (604,626) 221,566 285,899 $ 507,465	2020 $ 950 31,821 (363,465) 99,915,564 (104,665,801) 10,900,027 (9,100,000) 2,994,328 3,150,000 (5,760,000) 200,536 (1,700,000) (15,074) - (77,942) (4,158,362) 219,762 66,137 $ 285,899

The accompanying notes are an integral part of the standalone financial statements.

(Concluded)

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CHUNG HUNG STEEL CORPORATION

NOTES TO STANDALONE FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

Chung Hung Steel Corporation (the Corporation) was incorporated in September 1983 and started operations in September 1985. It mainly manufactures and sells steel products, such as cold and hot rolled coils.

The Corporation’s shares have been listed on the Taiwan Stock Exchange since February 1992.

As of December 31, 2021, and 2020, China Steel Corporation (CSC), the Corporation’s parent and major shareholder (40.58%), controls the Corporation’s management and operations.

The standalone financial statements are presented in the Corporation’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The standalone financial statements were approved by the Corporation’s board of directors and authorized for issue on February 24, 2022.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

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

The initial application of the IFRSs endorsed and issued into effect by the FSC did not have material impact on the Corporation accounting policies:

b. The IFRSs endorsed by FSC for application starting from 2022

New IFRSs “Annual Improvements to IFRS Standards 2018-2020” Amendments to IFRS 3 “Reference to the Conceptual Framework” Amendments to IAS 16 “Property, Plant and Equipment - Proceeds before Intended Use” Amendments to IAS 37 “Onerous Contracts - Cost of Fulfilling a Contract”	Effective Date Announced by IASB
	January 1, 2022 (Note 1) January 1, 2022 (Note 2) January 1, 2022 (Note 3) January 1, 2022 (Note 4)

Note 1: The amendments to IFRS 9 will be applied prospectively to modifications and exchanges of financial liabilities that occur on or after the annual reporting periods beginning on or after January 1, 2022. The amendments to IFRS 1 “First-time Adoptions of IFRSs” will be applied retrospectively for annual reporting periods beginning on or after January 1, 2022.
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Note 2: The amendments are applicable to business combinations for which the acquisition date is on or after the beginning of the annual reporting period beginning on or after January 1, 2022.
Note 3: The amendments are applicable to property, plant and equipment that are brought to the location and condition necessary for them to be capable of operating in the manner intended by management on or after January 1, 2021.
Note 4: The amendments are applicable to contracts for which the entity has not yet fulfilled all its obligations on January 1, 2022.

As of the date the standalone financial statements were authorized for issue, the Corporation has assessed that the application of other standards and interpretations will not have a material impact on the Corporation’s financial position and financial performance.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between an Investor and its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “ Initial Application of IFRS17 and IFRS January 1, 2023 19 – Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2023 Non-current” Amendments to IAS 1 “Disclosure of Accounting Policies” January 1, 2023 (Note 2) Amendments to IAS 8 “Definition of Accounting Estimates” January 1, 2023 (Note 3) Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities January 1, 2023 (Note 4) arising from a Single Transaction”

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual reporting periods beginning on or after their respective effective dates.
Note 2: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 3: The amendments are applicable to changes in accounting estimates and changes in accounting policies that occur on or after the beginning of the annual reporting period beginning on or after January 1, 2023.
Note 4: Except for deferred taxes that will be recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments will be applied prospectively to transactions that occur on or after January 1, 2022.

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

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

Statement of Compliance

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

Basis of Preparation

The standalone financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined liabilities which are measured at present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and the significance of the inputs to the fair value measurement in its entirety, are described as follows:

a. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
b. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c. Level 3 inputs are unobservable inputs for the asset or liability.

The subsidiaries and associates are incorporated in the standalone financial statements under the equity method. To make net profit for the year, other comprehensive income and equity in the standalone financial statements equal to those attributed to owners of the Corporation on consolidated financial statements, the effect of the differences between basis of standalone and basis of consolidation are adjusted in the investments accounted for using equity method, the related share of the profit or loss, the related share of other comprehensive income of subsidiaries, associates and joint ventures and related equity.

Classification of Current and Non-current Assets and Liabilities

Current assets include:

a. Assets held primarily for the purpose of trading;
b. Assets expected to be realized within twelve months after the balance sheet date; and
c. Cash unless the asset is restricted from being used for an exchange or used to settle a liability for more than least 12 months after the reporting period.

Current liabilities include:

a. Liabilities held primarily for the purpose of trading;
b. Liabilities expected to be settled within 12 months after the reporting period; and
c. Liabilities without an unconditional right to defer settlement for at least twelve months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

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Foreign Currencies

In preparing the financial statements of the Corporation, transactions in currencies other than the Corporation’s functional currency (i.e., foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the closing rates. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period in which they arise.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

Inventories

Inventories consist of raw materials, supplies, finished goods, work-in-process, materials and supplies in transit, etc. Inventories are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost.

Investment in Associates

The Corporation uses the equity method to account for its investments in subsidiaries.

A subsidiary is an entity that is controlled by the Corporation.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the subsidiary. The Corporation also recognizes the changes in the share of other equity of subsidiaries.

Changes in the Corporation’s ownership interests in subsidiaries that do not result in the Corporation losing control of the subsidiary are accounted for as equity transactions. The Corporation recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Corporation’s share of loss of a subsidiary exceeds its interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the subsidiary), the Corporation continues recognizing its share of further loss, if any.

Unrealized profits or losses on downstream transactions with subsidiaries are eliminated in the standalone financial statements. Profits and losses on transactions with subsidiaries other than downstream are recognized in standalone financial statements only to the extent of interests in the subsidiary that are not related to the Corporation.

Investment in Associates

An associate is an entity over which the Corporation has significant influence and that is neither a subsidiary nor an interest in a joint venture.

The operating results and assets and liabilities of associates are incorporated in these standalone financial statements using the equity method of accounting. Under the equity method, an investment in an associate is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of the profit or loss and other comprehensive income of the associate. The Corporation also recognizes the changes in the share of equity of associates.

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When the Corporation subscribes for additional new shares of the associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Corporation’s proportionate interest in the associate. The Corporation records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Corporation’s share of equity of associates. If the Corporation ownership interest is reduced due to non-subscription of the new shares of associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using equity method is insufficient, the shortage is debited to retained earnings.

When the Corporation’s share of losses of an associate equal or exceed its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Corporation’s net investment in the associate), the Corporation discontinues recognizing their share of further losses. Additional losses and liabilities are recognized only to the extent that the Corporation has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

When impairment loss is evaluated, the entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from investment and the carrying amount of investment is net of impairment loss. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment has subsequently increased.

When the Corporation transacts with their associates, profits and losses on these transactions are recognized in the standalone financial statements only to the extent of interests in the associate that are not related to the Corporation.

Property, Plant, and Equipment

Property, plant and equipment are stated at cost, less recognized accumulated depreciation.

Properties in the course of construction for production, supply or administrative purposes are carried at cost. Cost includes professional fees and borrowing costs eligible for capitalization. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use and depreciated accordingly.

Freehold land is not depreciated.

Except for depreciation of the rollers (spare parts) that belong to the cold rolling department, the depreciation of the rollers (spare parts) that belong to the hot rolling department and pickling & galvanizing mill department is calculated based on their level of wear, and other depreciation is recognized so as to write off the cost of assets less their residual value over their estimated useful lives, using the straight-line method; each major part is depreciated separately. The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

Investment Properties

Investment properties are properties held to earn rentals and/or for capital appreciation. Investment properties also include land held for a currently undetermined future use.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial

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recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

For a transfer from property, plant and equipment classification to investment properties, the deemed cost of property for subsequent accounting is its carrying amount at the end of owner-occupation. On derecognition of the property, the difference between the net disposal proceeds and the carrying amount of the asset and is included in profit or loss.

Impairment of Property, Plant and Equipment, Right-of-use Asset and Investment Properties

At each balance sheet date, the Corporation reviews the carrying amounts of it property, plant and equipment, right-of-use asset and Investment properties to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Corporation estimate the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss subsequently is reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately in profit or loss.

Financial Instruments

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

Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

a. Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

1) Measurement category

Financial assets are classified into the following categories: Financial assets at FVTPL, investments in equity instruments at FVTOCI, and financial assets at amortized cost.

a) Financial asset at FVTPL

Financial asset is classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL.

Financial assets mandatorily classified as at FVTPL were investments in equity instruments which are not designed as at FVTPL. Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. Fair value is determined in the manner described in Note 29.

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b) Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

i The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii 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.

Financial assets at amortized cost, including cash, accounts receivable at amortized cost, other receivables, other financial assets and refundable deposits, are measured at amortized cost, which equals to gross carrying amount determined by the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and
ii Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets in subsequent reporting periods.
c) Investments in equity instruments at FVTOCI

On initial recognition, the Corporation may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Corporation’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2) Impairment of financial assets

The Corporation recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Corporation always recognizes lifetime Expected Credit Loss (i.e. ECL) for accounts receivable. For other financial assets, the Corporation recognizes lifetime ECL when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on the financial instrument has not increased significantly since initial recognition, the Corporation measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. A 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date. In contrast, lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument.

The Corporation recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

3) Derecognition of financial assets

The Corporation derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in an equity instrument at FVTOCI in its entirety, the cumulative gain or loss is transferred directly to retained earnings, without recycling through profit or loss.

b. Equity instruments

Equity instruments issued by the Corporation are recognized at the proceeds received, net of direct issue costs.

c. Financial liabilities
1) Subsequent measurement

All financial liabilities are measured at amortized cost using the effective interest method.

2) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

Provisions

Provisions are measured at the best estimate including risks and uncertainties of the expenditure required to settle the obligation on the balance sheet date.

When the Corporation expects that the unavoidable costs of the performance of contractual obligations to exceed the expected economic benefits that may be gained from the contract, the Corporation recognizes provisions for the performance of its obligations in the onerous contract.

Revenue Recognition

The Corporation identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

For contracts where the period between the date on which the Corporation transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Corporation does not adjust the promised amount of consideration for the effects of a significant financing component.

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a. Sale of goods

Revenue is recognized when the control of products is transferred to customers. The customer has full discretion over the manner of distribution and price to sell the goods and bears the risks of obsolescence. Domestic sales are recognized when products are delivered to and accepted by the customers, and export sales are recognized when products are loaded onto shipping vessels in accordance with the sales terms. Transaction price received is recognized as a contract liability until performance obligations are satisfied.

The Corporation does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

b. Providing of services

Service revenue is recognized when services are provided by reference to the stage of completion of services provided.

Leases

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

a. The Corporation as lessor

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and amortized on a straight-line basis over the lease term.

b. The Corporation as lessee

The Corporation recognizes right-of-use assets and lease liabilities for all leases at the commencement date of a lease, except for short-term leases and low-value asset leases accounted for by applying a recognition exemption where lease payments are recognized as expenses on a straight-line basis over the lease terms.

Right-of-use assets are initially measured at cost, which comprises the initial measurement of lease liabilities adjusted for lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs needed to restore the underlying assets, and less any lease incentives received. Right-of-use assets are subsequently measured at cost less accumulated depreciation and impairment losses and adjusted for any remeasurement of the lease liabilities. Right-of-use assets are presented on a separate line in the standalone balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. However, if leases transfer ownership of the underlying assets to the Corporation by the end of the lease terms or if the costs of right-of-use assets reflect that the Corporation will exercise a purchase option, the Corporation depreciates the right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

Lease liabilities are initially measured at the present value of the lease payments, which comprise fixed payments, variable lease payments which depend on an index or a rate. The lease payments are discounted using the interest rate implicit in a lease, if that rate can be readily determined. If that rate cannot be readily determined, the lessee’s incremental borrowing rate will be used.

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Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with interest expense recognized over the lease terms. When there is a change in a lease term the Corporation remeasures the lease liabilities with a corresponding adjustment to the right-of-use-assets. However, if the carrying amount of the right-of-use assets is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss. Lease liabilities are presented on a separate line in the standalone balance sheets.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Corporation will comply with the conditions attached to them and that the grants will be received.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Corporation with no future related costs are recognized in profit or loss in the period in which they are received.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

All borrowing costs other than those stated above are recognized in profit or loss in the period in which they are incurred.

Employee Benefits

a. Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

b. Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost and net interest on the net defined benefit liability are recognized as employee benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses, and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability represents the actual deficit in the Corporation’s defined benefit plan.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

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Current tax

Current tax is the amount of tax at statutory rate calculated on the taxable profit at the balance sheet date. According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the standalone financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences and unused loss carryforwards to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Corporation is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at each balance sheet date and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Corporation expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred taxes are also recognized in other comprehensive income or directly in equity respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Corporation’s accounting policies, management is required to make judgments, estimations and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The Corporation considers the possible impact of the recent development of the COVID-19 in Taiwan and its economic environment implications when making its critical accounting estimates on cash flow projections, growth rate, discount rate, profitability, etc. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

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Measurement of Inventories

Inventories are stated at the lower of cost or net realizable value, and the Corporation uses judgment and estimate to determine the net realizable value of inventory at the balance sheet date. Since the net realizable value of inventory is mainly determined on the basis of future selling price, it might be adjusted significantly.

Realizability of Deferred Tax Assets

The realizability of deferred tax assets mainly depends on whether sufficient future profits or taxable temporary differences will be available in the future. Considering climate change in the steel industry and unpredictability of future profit, deferred tax assets were not recognized.

Recognition and measurement of defined benefit plans

Net defined benefit liabilities and the pension cost of defined benefit plan under defined benefit pension plans are calculated using the projected unit credit method. Actuarial assumptions comprise the discount rate, rate of employee turnover, future salary increase, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of expenses and liabilities.

6. CASH

Cash on hand Checking accounts and demand deposits		December 31	December 31
		2021 $ 640 506,825 $ 507,465	2020 $ 640 285,259 $ 285,899

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS- CURRENT

Financial assets mandatorily at FVTPL Emerging market shares		December 31	December 31
		2021 $ -	2020 $ 242,410

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

Current Domestic listed shares Non-current Domestic unlisted shares		December 31	December 31
		2021 $1,170,412 $ 62,040	2020 $ 819,454 $ 43,345

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Riselink Venture Capital Corp. conducted capital reduction and refunded NT$1,934 thousand in September 2020 .

9. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accounts receivable Accounts receivable - non-related parties Accounts receivable - related parties Other receivables (including related parties) Receivables from price settlement Receivables from disposal of scrap Others		December 31	December 31
		2021 $ 930,578 $ 47,355 $ 170,204 49,662 192 $ 220,058	2020 $ 830,087 $ 117,238 $ 886 32,961 11,997 $ 45,844

a. Accounts receivable

The Corporation allows an average credit period of 30 days (the aging of receivables from sales of goods is based upon the date of examination and acceptance of the goods settlement is monthly or 60 days after shipment date). Refer to Note 29 (d) for credit risk management policies.

The expected credit losses on accounts receivable are estimated using a provision matrix approach considering the past default experience of the debtor and an analysis of the debtor’s current financial position. As the Corporation’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status rather than distinguishing each different customer group.

The following table details the loss allowance of accounts receivable based on the Corporation’s provision matrix.

2021

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost 2020 Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Not Past Due - $ 977,933 - $ 977,933 Not Past Due - $ 947,325 - $ 947,325	1 to 30 Days - $ - - $ - 1 to 30 Days - $ - - $ -	31 to 60 Days 6 - $ - - $ - 31 to 60 Days 6 - $ - - $ -	1 to 180 Days 1 - $ - - $ - 1 to 180 Days 1 - $ - - $ -	81 to 365 Days O - $ - - $ - 81 to 365 Days O - $ - - $ -	ver 365 Days 100 $ - - $ - ver 365 Days 100 $ - - $ -	Total $ 977,933 -
							$ 977,933
							Total $ 947,325 -
							$ 947,325

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The amounts of accounts receivable from single customer that exceed 10% of total accounts receivable were as follows:

A company B company C company D company E company F company		December 31	December 31
		2021 $ 244,817 169,772 121,226 108,898 44,206 - $ 688,919	2020 $ - 88,499 8,707 95,493 186,520 147,430 $ 526,649

The Corporation entered into accounts receivable factoring contract (without recourse). Under the contract, the Corporation is authorized to sell accounts receivable to Bank upon the delivery of products to customers and is required to complete related formalities on the next banking day. Under this contract, the Corporation does not bear the risk of the uncollectability of the accounts receivable.

Receivables sold for the years ended December 31, 2021 and 2020 were as follows:

Buyer of Accounts Receivable For the year ended December 31, 2021 Mega Bank Bank of Taiwan Bank of Taiwan For the year ended December31,2020 Mega Bank Bank of Taiwan Bank of Taiwan	Advances Received at Year - Beginning $ 601,245 67,274 14,577 $ 683,096 $ 926,731 - 124,214 $ 1,050,945	Receivables Sold $ 1,614,825 183,448 60,977 $ 1,859,250 $ 2,243,387 193,763 195,829 $ 2,632,979	Amounts Collected $ 1,762,534 204,706 53,075 $ 2,020,315 $ 2,568,873 126,489 305,466 $ 3,000,828	Advances Received at Year-End Interest Rates on Advances Received (%) Credit Line $ 453,536 1.03 NT$841.2 million 46,016 1.03 NT$200 million 22,479 1.44 USD$20 million $ 522,031 $ 601,245 1.09 NT$855 million 67,274 1.09 NT$200 million 14,577 2.06 USD$20 million $ 683,096

The above credit lines are revolving.

b. Other receivables

The expected losses on other receivables are estimated using expected credit loss rate based on the other receivables overdue days. As of December 31, 2021 and 2020, there was no allowance for doubtful accounts.

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10. INVENTORIES

Raw materials Supplies Work in progress Finished goods Others Raw materials and supplies in transit		December 31	December 31
		2021 $ 6,207,596 309,073 730,616 4,262,064 6,418 1,201,672 $ 12,717,439	2020 $ 1,608,738 368,565 488,875 1,764,310 3,872 2,060 $ 4,236,420

The cost of inventories recognized as operating costs for the years ended December 31, 2021 and 2020 was NT$45,058,843 thousand and NT$34,475,079 thousand, respectively, including write-down of inventory of NT$4,859 thousand and reversal of inventory write-down of NT$304,435 thousand, respectively.

11. PREPAYMENTS

Input tax Tax overpaid retained for offsetting future tax payable Prepayments for purchases Others		December 31	December 31
		2021 $ 312,282 102,533 24,036 4,265 $ 443,116	2020 $ 104,098 - 41,340 5,523 $ 150,961

12. OTHER FINANCIAL ASSETS

Current Pledged time deposits (Note 31) Pledged demand deposits (Note 31)		December 31	December 31
		2021 $ 700,000 300,000 $1,000,000	2020 $ 300,000 - $ 300,000

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in subsidiaries Investments in associates		December 31	December 31	December 31
		2021 $ 46,320 4,042,778 $ 4,089,098		2020 $ 28,329 2,669,716 $ 2,698,045

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a. Investments in subsidiaries

December 31, 2021 December 31, 2020 Amount Amount $ 46,320 $ 28,329 Percentage of Ownership Interests and Voting Rights (%) December 31, 2021 December 31, 2020 100 100	December 31, 2020	December 31, 2020
		Amount

December 31, 2021 100	December 31, 2020
	100

The investments accounted for by the equity method and the share of profit or loss and other comprehensive loss of those investments for the years ended December 31, 2021 and 2020 was based on the audited financial statements for the same years.

b. Investments in associates

Material associates Transglory Investment Corp. (TIC) Associates that are not individually material		December 31	December 31
		2021 $ 3,829,875 212,903 $ 4,042,778	2020 $ 2,669,716 - $ 2,669,716

1) Material associates

Principal Place Name of Associate Nature of Activities of Business TIC General investment Taiwan		Proportion of Ownership and Voting Rights (%)
		December 31
		2021 2020 40.91 40.91

The summarized financial information below represents amounts shown in the associates’ standalone financial statements prepared in accordance with IFRSs adjusted by the Corporation for equity accounting purposes.

TIC

Current assets Non-current assets Current liabilities Equity Proportion of the Corporation’s ownership (%)		December 31	December 31
		2021 $ 1,052 9,470,285 (110,059) $ 9,361,278 40.91	2020 $ 2,470 6,598,420 (75,063) $ 6,525,827 40.91 (Continued)

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December 31 2021 2020 Equity attributable to the Corporation $ 3,829,875 $ 2,669,716 Carrying amount $ 3,829,875 $ 2,669,716 (Concluded) For the Year Ended December 31 2021 2020 Operating revenue $ 79,856 $ 134,062 Net profit for the year 69,510 120,233 Other comprehensive income 2,874,151 230,522 Total comprehensive income for the year $ 2,943,661 $ 350,755 Comprehensive income attributable to the Corporation $ 1,204,430 $ 143,494 2) Information about associates that are not individually material was as follows: For the Year Ended December 31 2021 2020 The Corporation’s subsidiaries’ share of Net profit for the year $ 3,448 $ - Other comprehensive income 9,455 - Total comprehensive income $ 12,903 $ -		December 31	December 31
	2021 2020 $ 3,829,875 $ 2,669,716 $ 3,829,875 $ 2,669,716 (Concluded) For the Year Ended December 31
		2021 $ 3,448 9,455 $ 12,903	2020 $ - - $ -

The Corporation held more than 20% of the shares with its parent company CSC and fellow subsidiaries and accounted for using the equity method.

Refer to Table 5 “Information on Investees” for the nature of main business, principal place of business and countries of incorporation of associates that are not individually material.

14. PROPERTY, PLANT AND EQUIPMENT

For the year ended December 31, 2021

Cost Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation and impairment Balance at January 1, 2021 Depreciation expense Disposals Impairment loss Balance at December 31, 2021 Carrying amount at December 31, 2021	Land $ 3,988,983 - - $ 3,988,983 $ - - - - $ - $ 3,988,983	Buildings Machinery and Equipment $ 5,001,703 $ 22,862,804 10,378 210,281 - (6,257) $ 5,012,081 $ 23,066,828 $ 2,008,941 $ 19,637,206 132,758 346,556 - (6,257) - 646,025 $ 2,141,699 $ 20,623,530 $ 2,870,382 $ 2,443,298	Other Equipment $ 4,483,434 57,033 (9,908) $ 4,530,559 $ 4,050,064 98,414 (9,908) - $ 4,138,570 $ 391,989	Spare Parts $ 1,291,199 166,262 (126,691) $ 1,330,770 $ 894,626 159,634 (126,691) - $ 927,569 $ 403,201	Construction in Progress and Equipment to be Inspected $ 125,357 (58,286) - $ 67,071 $ - - - - $ - $ 67,071	Total $ 37,753,480 385,668 (142,856)
						$ 37,996,292
						$ 26,590,837 737,362 (142,856) 646,025
						$ 27,831,368
						$ 10,164,924

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For the year ended December 31, 2020

Cost Balance at January 1, 2020 Additions Disposals Balance at December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Disposals Impairment loss Balance at December 31, 2020 Carrying amount at December 31, 2020	Land $ 3,988,983 - - $ 3,988,983 $ - - - - $ - $ 3,988,983	Buildings Machinery and Equipment $ 4,993,389 $ 22,734,037 8,314 139,625 - (10,858) $ 5,001,703 $ 22,862,804 $ 1,877,331 $ 18,539,349 131,610 676,183 - (1,487 ) - 423,161 $ 2,008,941 $ 19,637,206 $ 2,992,762 $ 3,225,598	Other Equipment $ 4,419,879 76,676 (13,121) $ 4,483,434 $ 3,938,749 124,436 (13,121 ) - $ 4,050,064 $ 433,370	Spare Parts $ 1,428,295 108,284 (245,380) $ 1,291,199 $ 773,196 213,654 (245,380 ) 153,156 $ 894,626 $ 396,573	Construction in Progress and Equipment to be Inspected $ 116,329 9,028 - $ 125,357 $ - - - - $ - $ 125,357	Total $ 37,680,912 341,927 (269,359) $ 37,753,480 $ 25,128,625 1,145,883 (259,988 ) 576,317 $ 26,590,837 $ 11,162,643

Depreciation of the rollers is calculated based on their level of wear; depreciation of other assets is recognized based on the following useful lives:

Buildings Facility 5-50 years Main structure 31-60 years Machinery and equipment Power equipment 3-30 years High-temperature equipment 5-18 years Other equipment Computer equipment 3-10 years Office, air condition and extinguishment equipment 3-20 years Transportation equipment 5-16 years Others 3-18 years Tank 10 years

The Corporation bought farmlands for warehouse at the Jia Xing Section and Quing Shui Section of the Gangshan District in Kaohsiung City. However, certain regulations prohibit the Corporation from registering the title of these farmlands in the Corporation’s name; thus, the registration was made in the name of an individual person. The individual person consented to fully cooperate with the Corporation in changing the land title in the future and pledged the land to the Corporation as collateral. As of December 31, 2020 and 2019, the carrying amount of those remaining farmlands recognized as land were both NT$55,433 thousand.

The continuous cold rolling line, continuous pickling galvanizing line, quenching and tempering rolling line and rolling work roll of the Corporation’s acid plating plant are evaluated to have no future recoverable amount by the management. An impairment loss of NT$576,317 thousand was recognized under operating costs.

Based on the market conditions and the evaluated capacity, the Corporation assessed that the recoverable amount of a portion of the plant and equipment in the steel pipe plant was estimated to be less than its carrying amount; therefore, recognized an impairment loss of NT$646,025 thousand was recognized under operating costs for the year ended December 31, 2021. The Corporation performs evaluation of impairment by reviewing the recoverable amounts based on value in use. In assessing value in use, the estimated future cash flow is discounted to its present value using annual discount rate at 7.19%.

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15. LEASE ARRANGEMENTS

a. Right-of-use assets

Carrying amount Land Transportation equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Transportation equipment		December	31
	2021 2020 $ 55,852 $ 68,233 7,068 10,097 $ 62,920 $ 78,330 For the Year Ended December 31
		2021 $ 69 $ 12,450 3,029 $ 15,479	2020 $ 22,143 $ 12,446 3,029 $ 15,475

Except for the addition and recognition of depreciation expenses listed above, the Corporation's right-of-use assets did not undergo significant sub-lease and impairment for the year ended December 31, 2021 and 2020.

b. Lease liabilities

Carrying amount Current Non-current		December	31
		2021 $ 15,408 $ 48,519	2020 $ 15,230 $ 63,898

Range of discount rates for lease liabilities was as follows:

Land (%) Transportation equipment (%)	December 31
	2021 2020 0.65-1.31 0.85-1.31 0.76 0.76

c. Material lease activities and terms

The Corporation leases several pieces of land to store steel products, with the lease terms of 3 to 10 years. The Corporation does not have bargain purchase options to acquire the leasehold land at the end of the lease terms.

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d. Other lease information

Lease arrangements under operating leases for the leasing out of investment properties are set out in Note 16.

Note 16.
Expenses relating to short-term leases Expenses relating to low-value asset leases Total cash outflow for leases	For the Year Ended December 31
		2021 $ 12,728 $ 1,353 ($ 30,167)	2020 $ 21,525 $ 1,890 ($ 39,533)

For transportation equipment which qualified as short-term leases and several other equipment which qualified as low-value asset leases, the Corporation has elected to apply the recognition exemption and, thus, did not recognize right-of-use assets and lease liabilities for these leases.

16. INVESTMENT PROPERTIES

For the year ended December 31, 2021

Cost Balance at January 1, 2021 and December 31, 2021 Accumulated depreciation Balance at January 1, 2021 Depreciation expense Balance at December 31, 2021 Carrying amount at December 31, 2021 For the year ended December 31, 2020 Cost Balance at January 1, 2020 and December 31, 2020 Accumulated depreciation Balance at January 1, 2020 Depreciation expense Balance at December 31, 2020 Carrying amount at December 31, 2021	Land $ 5,959,074 $ - - $ - $ 5,959,074 Land $ 5,959,074 $ - - $ - $ 5,959,074	Buildings $ 41,067 $ 16,956 888 $ 17,844 $ 23,223 Buildings $ 41,067 $ 16,068 888 $ 16,956 $ 24,111	Total $ 6,000,141 $ 16,956 888 $ 17,844 $ 5,982,297 Total $ 6,000,141 $ 16,068 888 $ 16,956 $ 5,983,185

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The Corporation as lessor leased land in Longdong section in Kaohsiung on June 30, 2010 for 20 years under an operating lease agreement; the Corporation collects rental monthly. The amounts of rental revenue for the years ended December 31, 2021 and 2020 were NT$83,446 thousand and NT$81,889 thousand, respectively, and were included in other income. As of December 31, 2021 and 2020, the Corporation received the same margin of NT$35,000 thousand based on the lease contract.

As of December 31, 2021 and 2020, notes receivable and advance rental were as follows:

Notes receivable Less: Advance rental		December	31
		2021 $ 51,598 51,598 $ -	2020 $ 50,587 50,587 $ -

The future rentals to be received under operating leases for the leasing out of investment properties are as follows:

1st year 2nd year 3rd year 4th year 5th year Later than 5 years		December 31
		2021 2020 $ 94,793 $ 87,569 86,618 84,956 88,232 86,618 89,996 88,232 91,796 89,996 453,028 544,824 $ 904,463 $ 982,195

The above buildings of investment properties are depreciated on a straight-line basis over 31-55 years useful lives.

The fair value of the investment properties was arrived at on the basis of valuations carried out in November 2019 and December 2021 by real estate appraiser and on the basis of information at the Ministry of the Interior’s real estate transaction database website. Appraised lands and buildings were evaluated using Level 3 inputs under market approach, cost approach, income approach, and land development analysis approach. The important assumptions and fair value were as follows:

Fair value Expense rate (%) Depreciation rate (%)		December 31	December 31
		2021 $ 13,667,266 27.52 1.90-2.57	2020 $ 9,996,358 25.14 1.90-2.57

All investment properties are owned by the Corporation and had not been pledged to secure borrowings.

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17. BORROWINGS

a. Short-term borrowings and bank overdrafts

Unsecured loans Bank overdrafts (Note 31) Letters of credit Interest rate (%) Short-term bills payable Short-term bills payable Less: Unamortized discounts Interest rate (%)		December 31	December 31
		2021 2020 $ 2,700,000 $ 200,000 666,391 154,630 1,195,861 50,000 $ 4,562,252 $ 404,630 0.21-0.75 0.32-0.75 December 31
		2021 $ 1,000,000 359 $ 999,641 0.56	2020 $ 3,600,000 423 $ 3,599,577 0.35-0.36

b. Short-term bills payable

As of December 31, 2021 and 2020, all short-term bills payable were non-guarantee commercial paper.

c. Long-term borrowings

Credit bank loans Due on various dates through December 2024 Interest rate (%)		December 31	December 31
		2021 $ 1,200,000 0.79	2020 $ 2,000,000 0.75-0.92

d. Long-term bills payable

Long-term bills payable Less: Unamortized discount Interest rate (%)		December 31	December 31
		2021 $ 240,000 208 $ 239,792 0.62	2020 $ 1,110,000 326 $ 1,109,674 0.73-0.91

Long-term bills payable have revolving credit lines within the payment terms according to the contracts, and need to be utilized to some extent. As of December 31, 2021 and 2020, all long-term bills payable were non-guarantee commercial paper.

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18. BONDS PAYABLE

Unsecured domestic bonds Less: Issuance cost of bonds payable		December 31	December 31
		2021 $ 3,000,000 3,826 $ 2,996,174	2020 $ 3,000,000 4,961 $ 2,995,039

The major terms of unsecured domestic bonds are as follow:

				Coupon	Repayment and
Issuer		Issuance Period	Total Amount	Rate (%)	Interest Payment
The Corporation	5	years; expired in	$ 2,000,000	0.78	Repayable in March 2025;
		March 2025			interest payable annually.
The Corporation	5	years; expired in	1,000,000	0.65	Repayable in September
		September 2025			2025; interest payable
					annually.

19. ACCOUNTS PAYABLE

Accounts payable Operating – non-related parties Operating - related parties		December 31	December 31
		2021 $1,360,732 $ 469,577	2020 $ 27,500 $ 313,224

The Corporation has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

20. OTHER PAYABLES

Salaries and incentive bonus Compensation of employees and remuneration and transportation allowances of directors Export fees Utilities Outsourced repair and construction Freight Processing fee Others		December 31	December 31
		2021 $ 487,058 371,146 57,829 55,505 32,317 31,401 8,935 130,247 $ 1,174,438	2020 $ 289,532 36,320 26,007 59,229 34,572 27,497 23,367 83,591 $ 580,115

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21. PROVISIONS-CURRENT

Onerous contracts Balance at beginning of the year Recognized Balance at end of the year		December 31	December 31
		2021 2020 $ 206,850 $ - December 31
		2021 $ - 206,850 $ 206,850	2020 $ - - $ -

The provision for onerous contracts represents the present value of the future payments that the Corporation was presently obligated to make under non-cancellable onerous purchase contracts, less revenue expected to be earned on the contracts

22. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Corporation adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Based on the LPA, the Corporation makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The Corporation adopted the defined benefit plan under the Labor Standards Act, under which pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Corporation makes contributions, equal to a portion of total monthly salaries, to a pension fund, which is deposited in the Bank of Taiwan in the name of and administered by the pension fund monitoring committee. Before the end of each year, the Corporation assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Corporation is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Corporation has no right to influence the investment policy and strategy.

The amounts included in the standalone balance sheets in respect of the Corporation’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2021 $ 1,601,663 (1,213,886) $ 387,777	2020 $ 1,475,529 (1,161,812) $ 313,717

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Movements of net defined benefit liabilities were as follows:

Present Value of
the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Balance at January 1, 2021
$ 1,475,529
$ (1,161,812)

Service cost
Current service cost
18,626
-
Interest expense (income)

7,372

(6,001)

Recognized in profit or loss

25,998

(6,001)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
(14,600)
Actuarial loss - changes in demographic
assumptions
33,010
-
Actuarial loss - changes in financial
assumptions
52,523
-
Actuarial loss - experience adjustments

86,284

-

Recognized in other comprehensive income

171,817

(14,600)

Contributions from the employer

-

(95,550)

Benefits paid

(71,681)

64,077

Balance at December 31, 2021
$ 1,601,663
$ (1,213,886)

Balance at January 1, 2020
$ 1,475,725
$ (1,101,865)

Service cost
Current service cost
20,114
-
Interest expense (income)

10,971

(8,473)

Recognized in profit or loss

31,085

(8,473)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
(35,652)
Actuarial loss - changes in demographic
assumptions
2,834
-
Actuarial loss - changes in financial
assumptions
34,948
-
Actuarial gain - experience adjustments

(14,508)

-

Recognized in other comprehensive income

23,274

(35,652)

Contributions from the employer
$ -
$ (67,584)

Benefits paid

(54,555)

51,762

Balance at December 31, 2020
$ 1,475,529
$ (1,161,812)

Net Defined
Benefit
Liabilities
$ 313,717
18,626

1,371

19,997

(14,600)
33,010
52,523

86,284

157,217

(95,550)

(7,604)
$ 387,777
$ 373,860
20,114

2,498

22,612

(35,652)
2,834
34,948

(14,508)

(12,378)
$ (67,584)

(2,793)
$ 313,717

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

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Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 16,845 3,152 $ 19,997	2020 $ 19,066 3,546 $ 22,612

Through the defined benefit plans under the Labor Standards Act, the Corporation is exposed to the following risks:

1) Investment risk

The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau of Labor Funds, Ministry of Labor or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

2) Interest risk

A decrease in the government and the corporate bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

3) Salary risk

The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate (%) Expected rate of salary increase (%) Turnover rate (%)	December 31
	2021 2020 0.5 0.5 2.5 2.125 0-4.5 0-4.5

If possible reasonable change in each of the significant actuarial assumptions occur and all other assumptions remain constant, the present value of the defined benefit obligation will increase (decrease) as follows:

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2021 $ (36,735) $ 37,995 $ 36,597 $ (35,578)	2020 $ (34,960) $ 36,197 $ 34,984 $ (33,972)

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The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
		2021 $ 139,466 9.4 years	2020 $ 79,110 9.7 years

23. EQUITY

a. Ordinary shares

Numbers of shares authorized (in thousands) Shares authorized Numbers of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2021 2,043,160 $ 20,431,600 1,435,544 $ 14,355,444	2020 2,043,160 $ 20,431,600 1,435,544 $ 14,355,444

In June 2009, the Corporation revised the number of its authorized shares to 3,000,000 thousand shares upon obtaining the approval in the shareholders’ meeting. The number of authorized shares approved by the Department of Commerce, Ministry of Economic Affairs is 2,043,160 thousand shares.

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and the right to dividends.

b. Capital surplus

Additional paid-in capital		December 31	December 31
		2021 $ 903	2020 $ 903

In 2009, CSC had transferred its treasury shares to its employees and subsidiaries. The Corporation recognized a compensation cost and capital surplus of NT$743 thousand. In July 2011, CSC issued ordinary shares for cash capital. Under the Company Law, CSC should reserve 10% of the shares for its employees and subsidiaries. The Corporation recognized NT$160 thousand of compensation cost and capital surplus.

Such capital surplus may be used only to offset deficit.

c. Retained earnings and dividend policy

The Corporation’s Articles of Incorporation provide that 10% of the annual net income less any deficit should be appropriated as a legal reserve; a certain percentage should be appropriated as special reserve; the remainder may be declared as dividends or retained as proposed by the Corporation’s board of directors and approved in the shareholders’ meetings.

In June 2020, the shareholders in the shareholders’ meeting resolved and approved to allocate no less than 30% of the distributable surplus every year to distribute dividends. However, if the cumulative

37 -

distributable surplus is less than 3% of the paid-in capital, it may not be distributed.

The Corporation is in a mature steel industry. Thus, dividends will be appropriated in cash or in shares at an appropriate ratio, with cash dividends to be at least 50% of total dividends.

Under the Company Law, legal reserve should be appropriated from retained earnings until its balance equals the Corporation’s paid-in capital. Legal reserve may be used to offset a deficit. If the Corporation has no deficit and the legal reserve has exceeded 25% of the Corporation’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of earnings for 2020 and 2019 were approved by the shareholders in the shareholders’ meeting in August 2021 and June 2020, respectively. The appropriations and dividends per share were as follows:

Legal reserve Special reserve (reversal) Cash dividends	Appropriation of Earnings 2020 2019 $ 54,064 $ 118 (123,739) 51,971 430,663 -	Dividend Per Share (NT$)
		2020 2019 $ 0.3 $ -

The appropriations of earnings for 2021 had been proposed by the Corporation’s board of directors on February 2022 as follows:

	Appropriations	Dividend Per	Dividend Per
	of Earnings	Share	(NT$)
Legal reserve	$ 620,174
Reversal of special reserve	(425,839)
Cash dividends	4,019,524	$	2.8

The appropriations of earnings for 2021 are subject to the resolution of the shareholders’ meeting to be held in June 2022.

Information about the appropriation of earnings and offsetting deficit, proposed by the shareholders’ meetings and the Corporation’s board of directors, is available at the Market Observation Post System website of the Taiwan Stock Exchange.

d. Exchange differences on translating foreign operations

Balance at beginning of the year Recognized during the year Share from associates accounted for using the equity method Balance at end of the year	For the Year Ended	For the Year Ended	December 31
		2021 $ - (142) $ (142)	2020 $ - - $ -

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e. Unrealized gains and losses on financial assets at fair value through other comprehensive income

Balance at beginning of the year Recognized during the period Unrealized gains and losses - equity instruments Share from associates accounted for using the equity method Other comprehensive income recognized in the year Cumulative unrealized gain or loss of equity instruments transferred to retained earnings due to disposal Balance at end of the year	For the Year Ended	For the Year Ended	December 31
		2021 $ (425,839) 369,653 1,196,082 1,565,735 (8,543) $1,131,353	2020 $ (549,578) 28,579 95,160 123,739 - $ (425,839)

24. OPERATING REVENUE

a. Contract balances

December 31, 2021 December 31, 2020 Accounts receivable $ 977,933 $ 947,325 Contract liabilities - current Sale of goods $ 95,155 $ 57,283	January 1, 2020 $ 511,750 $ 285,052

b. Disaggregation of revenue Refer to Statement 16.

25. PROFIT BEFORE INCOME TAX

Profit before income tax consisted of following items:

a. Other income

Rental income Grant income Dividend income Indemnity income Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 86,876 24,207 10,383 - 9,997 $ 131,463	2020 $ 85,229 94,705 31,821 4,108 8,887 $ 224,750

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b. Other gains and losses

Gain on financial assets at fair value through profit or loss Loss on disposal of property, plant and equipment Service charge Net foreign exchange gain (loss) Other losses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 318,331 - (7,554) 64,415 (4,254) $ 370,938	2020 $ 78,903 (9,371) (11,796) (51,578) (4,670) $ 1,488

The components of net foreign exchange gain (loss) were as follows:

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2021 $ 128,405 (63,990) $ 64,415 For the Year Ended			2020 $ 42,675 (94,253) $ (51,578) December 31
2021 $ 45,534 - 854 46,388 673 $ 45,715 For the Year Ended			2020 $ 73,637 12,990 1,044 87,671 1,452 $ 86,219 December 31
2021 $ 673 0.56-0.72 For the Year Ended			2020 $ 1,452 0.62-0.83 December 31
	2021 $ 737,362 888 15,479 $ 753,729	2020 $ 1,145,883 888 15,475 $ 1,162,246 (Continued)

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For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
2021 2020 $ 745,529 $ 1,089,347 7,312 72,011 888 888 $ 753,729 $ 1,162,246 (Concluded) For the Year Ended December 31
2021 2020 $ 11,401 $ 11,387 7,265 7,265 $ 18,666 $ 18,652 For the Year Ended December 31
	2021 $ 1,850,603 98,075 214,994 2,163,672 26,275 19,997 46,272 $ 2,209,944 $ 1,785,946 423,998 $ 2,209,944	2020 $ 1,065,802 86,243 123,232 1,275,277 25,930 22,612 48,542 $ 1,323,819 $ 1,093,410 230,409 $ 1,323,819

g. Compensation of employees and remuneration of directors

In accordance with the Corporation’s Articles of Incorporation, the Corporation distributes compensation of employees and remuneration of directors at rates of no less than 1‰ and no higher than 1%, respectively, of net profit before income tax less any deficit, compensation of employees, and remuneration of directors.

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The compensation of employees and remuneration of directors for the years ended December 31, 2021 and 2020, which were approved by the Corporation’s board of directors in February 2022 and February 2021, respectively, were as follows:

Amount

Compensation of employees Remuneration of directors Accrual rate Compensation of employees (%) Remuneration of directors (%)	For the Year Ended December 31
	2021 2020 $ 307,804 $ 29,897 61,561 5,638 For the Year Ended December 31
	2021 2020 4.17 5.30 0.83 1.00

If there is a change in the proposed amounts after the annual standalone financial statements are authorized for issue, the difference is recorded as a change in accounting estimate and recognized in the next year.

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the standalone financial statements for the year ended December 31, 2020 and 2019.

Information on compensation of employees and remuneration of directors resolved by the Corporation’s board of directors are available on the Market Observation Post System website of the Taiwan Stock Exchange.

26. INCOME TAX

a. Income tax recognized in profit or loss

The major components of income tax expense were as follows:

Current tax In respect of the current year In respect of prior years	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $656,304 4,537 $660,841	2020 $ - - $ -

The reconciliation of accounting profit and income tax expense was as follows:

Profit before income tax Income tax expense at the statutory rate	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 7,011,252 $ 1,402,250	2020 $ 528,260 $ 105,652 (Continued)

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Permanent differences Profit on investments under equity method Others Unrecognized deductible temporary differences Loss carryforwards Investment deduction In respect of the prior years	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 (7,918) (64,523) 121,919 (795,424) - 4,537 $ 660,841	2020 (9,898) (34,379) 31,128 (92,380) (123) - $ - (Concluded)

b. No income tax was recognized in equity or other comprehensive loss. c. Current tax assets and liabilities

d.	Current tax assets Tax refund receivable Current tax liabilities Income tax payable Deferred tax liabilities The movements of deferred tax liabilities were as follows: For the year ended December 31, 2021 Balance at Beginning of the Year Deferred Tax Liabilities Temporary differences Land value increment tax $ (182,222) For the year ended December 31, 2020 Balance at Beginning of the Year Deferred Tax Liabilities Temporary differences Land value increment tax $ (182,222)		December	31
		2021 2020 $ - $ 202 $ 652,941 $ - Recognized in Profit or Loss Balance at End of the Year $ - $ (182,222) Recognized in Profit or Loss Balance at End of the Year $ - $ (182,222)

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e. Items for which no deferred tax assets have been recognized

Loss carryforwards 2022 maturity 2023 maturity 2025 maturity 2029 maturity Investment credits (tax) Investment cost Deductible temporary differences Impairment loss on assets Net defined benefit liabilities Amortization of deferred credits Purchase contract loss Sales discount payable Provision for inventory loss Others		December 31	December 31
		2021 $ - - - - $ - $ - $ 1,024,967 387,777 344,401 206,850 200,042 128,663 122,891 $ 2,415,591	2020 $ 995,450 187,880 2,655,245 106,994 $ 3,945,569 $ 93 $ 563,483 313,717 399,479 - 144,862 123,804 103,533 $ 1,648,878

f. Income tax assessments

The Corporation’s income tax returns through 2019 have been assessed by the tax authorities.

27. EARNINGS PER SHARE

Basic earnings per share Diluted earnings per share	For	the Year Ended December 31	the Year Ended December 31
		2021 $ 4.42 $ 4.40	2020 $ 0.37 $ 0.37

The net profit and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net profit for the year

Attributable to owners of the Corporation	For the Year Ended	For the Year Ended	December 31
		2021 $6,350,411	2020 $ 528,260

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Weighted average number of ordinary shares outstanding (in thousand shares)

Weighted average number of ordinary shares in computation of basic earnings per share Effect of dilutive potential ordinary shares: Compensation of Employees’ Weighted average number of ordinary shares used in computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 1,435,544 7,737 1,443,281	2020 1,435,544 1,898 1,437,442

The Corporation may settle the compensation paid to employees in cash or shares; therefore, the Corporation assumes that the entire amount of the compensation will be settled in shares and the resulting potential shares will be included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

28. CAPITAL MANAGEMENT

The Corporation manages its capital to ensure that entities in the Corporation will be able to continue their operations while maximizing the return to shareholders through the optimization of the debt and equity balance.

29. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not carried at fair value

Management of the Corporation considers the carrying amount of financial assets and liabilities not carried at fair value approximates fair value.

b. Fair value of financial instruments that are measured at fair value on a recurring basis.
1) Fair value hierarchy

December31,2021 Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares	Level 1 $1,170,412 - $1,170,412	Level 2 $ - - $ -	Level 3 $ - 62,040 $ 62,040	Total $1,170,412 62,040 $1,232,452 (Continued)

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December31,2020 Financial assets at FVTPL Emerging market shares Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares	Level 1 $ - $ 819,454 - $ 819,454	Level 2 $ - $ - - $ -	Level 3 $ 242,410 $ - 43,345 $ 43,345	Total $ 242,410 $ 819,454 43,345 $ 862,799 (Concluded)

There was no transfer between Level 1 and Level 2 for the years ended December 31, 2021 and 2020.

2) Reconciliation of Level 3 fair value measurements of financial assets

Financial Assets
at FVTPL -
Equity
Instruments
Financial Assets
at FVTOCI -
Equity
Instruments
Forthe yearendedDecember31,2021
Balance at beginning of the year
$ 242,410
$ 43,345

Total profit or loss
Recognized in profit or loss
318,331
-
Recognized in other comprehensive
income
-
18,695
Disposal
(560,741)

-

Balance at end of the year
$ -
$ 62,040

Forthe yearendedDecember31,2020
Balance at beginning of the year
$ 181,351
$ 44,843

Total profit or loss
Recognized in profit or loss
78,903
-
Recognized in other comprehensive
income
-
436
Disposal
(17,844)
-
Capital reduction refunded

-

(1,934)

Balance at end of the year
$ 242,410
$ 43,345

Unrealized gains and losses recognized in
other profit or loss
$ 75,482
$ -

Total
$ 285,755
318,331
18,695
(560,741)
$ 62,040
$ 226,194
78,903
436
(17,844)
(1,934)
$ 285,755
$ 75,482

3) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement

a) The fair value of emerging shares was based on the closing price adjusted for liquidity risk premium.

46 -
b) The fair value of unlisted shares was based on the current net value.
c. Categories of financial instruments

Financial assets Fair value through profit or loss Mandatorily at fair value through profit or loss Measured at amortized cost (see 1 below) Financial assets at fair value through other comprehensive income Equity instruments Financial liabilities Measured at amortized cost (see 2 below)	December 31
	2021 2020 $ - $ 242,410 2,711,107 1,585,288 1,232,452 862,799 13,302,653 11,218,515

1) The balances included financial assets measured at amortized cost, which comprise cash, accounts receivable (including related parties), other receivables (including related parties and excluding tax refund receivable), other financial assets and refundable deposits.
2) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, short-term bills payable, accounts payable (including related parties), other payables, refund liabilities, bonds payable, long-term borrowings, long-term bills payable, and guarantee deposits received.
d. Financial risk management objectives and policies

The Corporation’s major financial instruments include accounts receivable, investments accounted for using equity method, other financial assets, accounts payable, short-term borrowings, short-term bills payable, long-term borrowings (including current portion of long-term bank borrowings), long-term bills payable and lease liabilities. The Corporation’s financial department coordinates domestic and international financial operations, prepares and analyzes internal risk reports to monitor and manage financial risks related to the operation of the Corporation. These risks include market risk (including exchange rate risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Corporation sought to minimize the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives was governed by the Corporation’s policies approved by the board of directors, which provided written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits was reviewed by the internal auditors on a continuous basis. The Corporation did not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

1) Market risk

The main financial risks arising from operating activities are to the risk of change in foreign exchange rates (see (a) below), the risk of changes in interest rates (see (b) below) and the risk of other price (see (c) below).

There had been no change to the Corporation’s exposure to market risks or the manner in which these risks were managed and measured.

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a) Foreign currency risk

The Corporation was exposed to foreign currency risk due to sales and purchases, denominated in foreign currencies. Exchange rate exposures were managed within approved policy parameters utilizing the same currency for accounts receivable and payable to alleviate foreign currency risk and risk to manage futures.

The carrying amounts of the Corporation’s foreign currency denominated monetary assets and monetary liabilities and of the derivatives exposed foreign currency risk at the end of the reporting period are set out in Note 33.

Sensitivity analysis

The Corporation was mainly exposed to the fluctuation of USD. The following table details the Corporation’s sensitivity to a 1% increase and decrease in the New Taiwan dollars (the functional currency) against the relevant foreign currencies. The sensitivity rate of 1% is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates.

The sensitivity analysis included only the outstanding foreign currency denominated monetary items, refer to Note 33. The following table shows the impact on profit of 1% decrease in NTD against USD.

Profit before income tax	USD Impact (Note)
	For the Year Ended December 31
	2021 2020 ($11,834) $ 5,290

Note: This was mainly attributable to the exposure of outstanding USD cash, accounts receivable, short-term borrowings, accounts payable and other payables, which were not hedged at the balance sheet date.

b) Interest rate risk

The Corporation was exposed to interest rate risk because the Corporation borrowed funds at both fixed and floating interest rates.

The carrying amounts of the Corporation’s financial assets and liabilities with exposure to interest rates at the balance sheet date were as follows:

Fair value interest rate risk Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2021 2020 $ 3,060,101 $ 3,074,167 $ 1,430,632 $ 565,544 1,439,792 3,109,674

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Corporation’s pre-tax profit for the years ended December 31, 2021 and 2020 would have been lower/higher by NT$23 thousand and NT$6,360 thousand, respectively.

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c) Other price risk

The Corporation was exposed to equity price risk through their investments in domestic listed shares.

The equity price of the Corporation was evaluated by the closing price of the equity securities on a monthly basis.

Sensitivity analysis

If equity price of fair value through other comprehensive income financial assets had been lower by one dollar, the pre-tax-other comprehensive income, for the years ended December 31, 2021 and 2020 would both have been lower by NT$33,109 thousand.

2) Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Corporation. As at the balance sheet date, the Corporation’s maximum exposure to credit risk is the carrying amount of the financial assets on the standalone balance sheets and the amount of contingent liabilities in relation to financial guarantee issued by the Corporation.

The Corporation made transactions only with the parties with good credit. The goods were delivered after the cash or L/C was received, and the Corporation did not provide financial guarantee to any company. Accounts receivable were due to time differences of L/C negotiation and there were no bad debt in the recent years; therefore, the credit risk is very low.

3) Liquidity risk

The Corporation manages liquidity risk by monitoring and maintaining a level of cash deemed adequate to finance the Corporation’s operations and mitigate the effects of fluctuations in cash flows. The Corporation relies on bank borrowings as a significant source of liquidity. The management monitors the utilization of bank borrowings and ensures compliance with loan covenants. As of December 31, 2021, the unutilized credit facility of the Corporation was NT$44.5 billion; therefore, there is no liquidity risk or incapacity of financing capital to meet contractual obligations.

The table below summarizes the maturity profile of the Corporation’s financial liabilities based on contractual undiscounted payments:

Less Than 1 Year December 31, 2021 Short-term borrowings $ 4,584,062 Short-term bills payable 1,000,000 Accounts payable (including related parties) 1,830,309 Other payables 1,174,438 Refund liabilities 265,047 Lease liabilities 16,086 Bonds payable 22,100 Long-term bank borrowings 9,480 Long-term bills payable - Guarantee deposits received - $ 8,901,522	1-5 Years $ - - - - - 35,783 3,066,300 1,215,258 240,000 - $ 4,557,341	Over 5 Years $ - - - - - 14,364 - - - 35,000 $ 49,364	Total $ 4,584,062 1,000,000 1,830,309 1,174,438 265,047 66,233 3,088,400 1,224,738 240,000 35,000 $ 13,508,227

(Continued)

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Less Than 1 Year December 31, 2020 Short-term borrowings $ 406,794 Short-term bills payable 3,600,000 Accounts payable (including related parties) 340,724 Other payables 580,115 Refund liabilities 153,756 Lease liabilities 16,086 Bonds payable 22,100 Long-term bank borrowings 16,500 Long-term bills payable - Guarantee deposits received - $ 5,136,075	1-5 Years $ - - - - - 45,564 3,088,400 2,034,430 1,110,000 - $ 6,278,394	Over 5 Years $ - - - - - 20,646 - - - 35,000 $ 55,646	Total $ 406,794 3,600,000 340,724 580,115 153,756 82,296 3,110,500 2,050,930 1,110,000 35,000 $ 11,470,115 (Concluded)

30. TRANSACTIONS WITH RELATED PARTIES

Details of transactions between the Corporation and other related parties are disclosed below.

a. The name of the company and its relationship with the Corporation

Company Relationship China Steel Corporation Parent entity Dragon Steel Corporation (DSC) Fellow subsidiary CHC Resources Corporation (CHC) Fellow subsidiary Info Champ Systems Corporation (ICSC) Fellow subsidiary CSC Steel Sdn. Bhd. (CSSB) Fellow subsidiary China Steel Global Trading Corporation (CSGT) Fellow subsidiary Himag Magnetic Corporation (HMC) Fellow subsidiary China Steel Machinery Corporation Fellow subsidiary China Ecotek Corporation Fellow subsidiary China Steel Security Corporation Fellow subsidiary Steel Castle Technology Corporation Fellow subsidiary China Steel Express Corporation Fellow subsidiary China Steel Structure Co., Ltd Fellow subsidiary Universal Exchange Inc. Fellow subsidiary China Steel Management Consulting Corp. Fellow subsidiary China Steel Chemical Corporation Fellow subsidiary Yu Cheng Lime Corporation Fellow subsidiary Wabo Global Trading Corporation Fellow subsidiary CSC Solar Corporation. Fellow subsidiary Kaohsiung Rapid Transit Corporation Fellow subsidiary Sing Da Marine Structure Fellow subsidiary CSGT Japan Co., Ltd. Fellow subsidiary China Steel Precision Metals Kunshan Co., Ltd. Fellow subsidiary CSE Transport Corporation Fellow subsidiary CSGT Metals Vietnam Joint Stock Company Fellow subsidiary Pacific Harbour Stevedoring Corporation Other related party

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b. Sale of goods

Related Party Types Account Items /Name Sales Fellow subsidiaries related to others Parent entity Service Revenue Parent entity Fellow subsidiaries related to others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 2,289,212 1,399 $ 2,290,611 $ 564,537 38,137 $ 602,674	2020 $ 1,392,519 7,918 $ 1,400,437 $ 319,010 18 $ 319,028

The payment terms and prices of other related parties were no different from those of unrelated parties.

The abovementioned service revenue is from the agreements that the Corporation entered into with parent entity and fellow subsidiaries related to others in which the Corporation has to do certain processing work and charged based on the formula stated in the agreements. The Corporation bills the parent entity within one month after approval of delivery.

The Corporation entered into an agreement with fellow subsidiaries related to others under which the Corporation sells waste acid and the price is charged based on the formula stated in the agreement. The Corporation bills the fellow subsidiaries related to others within a month after acceptance by T/T based on the monthly amount of processing.

Related Party Types Account Items /Name Other operating revenue Fellow subsidiaries related to others DSC HMC Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 62,930 14,448 103 $ 77,481	2020 $ 44,103 9,179 - $ 53,282

There is no significant profit or loss from the sale of the materials and oxidized iron powder of the Corporation to fellow subsidiaries.

c. Purchase of goods

Related Party Types/Name Parent entity Fellow subsidiaries related to others DSC CSGT Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 8,085,884 16,347,526 6,402,704 70,111 22,820,341 $ 30,906,225	2020 $ 17,341,242 9,479,326 510,299 69,056 10,058,681 $ 27,399,923

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The purchases were mainly slabs and hot rolling coils. Purchase from related parties were made under normal term in 2021. The purchase price and payment terms were incomparable in 2020 because the Corporation were not purchased from non-related parties

d. Accounts receivable from related parties

Related Party Types Account Items /Name Accounts receivable from related parties Parent entity Fellow subsidiaries related to others CSSB Others Other receivable from related parties Parent entity Fellow subsidiaries related to others CHC Others		December 31	December 31
		2021 $ 33,745 - 13,610 13,610 $ 47,355 $ 170,204 40,803 - 40,803 $ 211,007	2020 $ 52,905 53,331 11,002 64,333 $ 117,238 $ 886 25,389 248 25,637 $ 26,523

No guarantees have been received for accounts receivable and other receivable from related parties. No expenses have been recognized for the years ended December 31, 2021 and 2020 for allowance for impairment of accounts receivable in respect of the amounts owed by related parties.

e. Accounts payable to related parties (excluding loans from related parties)

Related Party Types Account Items /Name Accounts payable to related parties Parent entity Fellow subsidiaries related to others Other related parties Other payable to related parties Parent entity Fellow subsidiaries related to others Other related parties		December 31	December 31
		2021 $ 463,370 1,554 4,653 $ 469,577 $ 64,317 16,737 3,807 $ 84,861	2020 $ 267,429 41,816 3,979 $ 313,224 $ 7,459 9,187 3,023 $ 19,669

The outstanding accounts payable to related parties and other payable to related parties were unsecured.

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f. Loans from related parties

The Corporation borrowed money from the parent entity because of the need for short-term fund. The interest rate of the loan was based on average daily short-term interest the parent entity financed for the same currency from financial institutions in the last 30 days and adjusted monthly. The amount has been fully paid as of December 31, 2020.

The loans from the parent entity were unsecured loans with interest expense of NT$12,990 thousand for 2020.

g. Other transactions with related parties
1) Authorization fees

In May 2003, the parent company, Sumitomo Metal Industries, Ltd. (renamed as Nippon Steel Corporation in April 2019) and Sumitomo Corporation entered into a joint venture agreement and established the joint venture company East Asia United Steel Corporation (EAUS) in July 2003. The parent company thus has a stable supply of high-quality slab through this joint venture. The parent company then signed a contract with the Corporation, transferring to the Corporation the right to buy slab from EAUS. The Corporation should pay authorization fees to the parent company under the contract. These fees (included in the purchase cost of materials) were NT$67,640 thousand and NT$86,665 thousand in 2021 and 2020, respectively. As of December 31, 2021 and 2020, authorization fees payable (included in payables to related parties) were NT$13,104 thousand and NT$15,697 thousand, respectively. The calculation of slab purchase prices was based on the formula stated in the agreement.

2) Leases

a) The Corporation entered into a contract with fellow subsidiaries related to others on the lease of the Corporation’s part of the land, roof and warehouse. The rental revenue for the years ended December 31, 2021 and 2020 were NT$3,995 thousand and NT$4,011 thousand, respectively.
b) The Corporation entered into a contract with parent entity on the lease of the Corporation’s part of the land and warehouse. The rental revenue for the years ended December 31, 2021 and 2020 were both NT$5,310 thousand.

3) Construction in progress and other expenditures

Other expenditures include import and export transportation fees, export agency fees, rent expenses, remuneration and transportation allowances of directors.

a) Other expenditures Parent entity Fellow subsidiaries related to others Other related parties	For the Year Ended	For the Year Ended	December 31
		2021 $ 190,683 162,401 136,611 $ 489,695	2020 $ 77,236 78,467 133,514 $ 289,217 (Continued)

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b) Capital expenditure Parent entity Fellow subsidiaries related to others ICSC Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ - 38,021 - 38,021 $ 38,021	2020 $ 7,600 103,487 1,383 104,870 $ 112,470 (Concluded)

4) Income from selling supplies and scrap (included in deductions of cost of goods sold)

Fellow subsidiaries related to others CHC Others	For the Year Ended	For the Year Ended	December 31
		2021 $ 479,895 3,018 $ 482,913	2020 $ 269,902 16,094 $ 285,996

h. Compensation of key management personnel

The remuneration to directors and other members of key management personnel were as follows:

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2021 $ 108,073 1,410 $ 109,483	2020 $ 43,149 2,179 $ 45,328

31. ASSETS PLEDGED AS COLLATERAL OR SECURITY

The Corporation’s assets mortgaged or pledged as collateral for Bank overdrafts were as follows (listed based on their carrying amounts):

Time deposits (included in other financial assets - current) Demand deposits (included in other financial assets - current)		December 31	December 31
		2021 $ 700,000 300,000 $1,000,000	2020 $ 300,000 - $ 300,000

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32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Corporation as of December 31, 2021 were as follows:

a. Unused letters of credit for purchases of raw materials and machinery and equipment amounted to about NT$5,147,158 thousand.
b. The Corporation had signed agreements to buy equipment for NT$320,067 thousand, of which NT$133,850 thousand had been paid (included in construction-in-progress and prepayments for equipment).
c. The Corporation provided letters of credits for NT$144,129 thousand guaranteed by financial institutions for several constructions, purchase agreements and import and export goods. Guarantee notes for NT$33,074,575 thousand were provided to bank for credit line and purchases of raw material from CSC.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Corporation and the exchange rates between foreign currencies and respective functional currencies were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

				Carrying
		Foreign		Amount
	Currency			(In Thousands
		(In		of New Taiwan
	Thousands)		Exchange Rate	Dollars)
December 31, 2021
Monetary financial assets
USD	$	27,573	27.68 (USD:NTD)	$ 763,213
Monetary financial liabilities
USD		70,327	27.68 (USD:NTD)	1,946,640
December 31, 2020
Monetary financial assets
USD	$	19,476	28.48 (USD:NTD)	$ 554,666
Monetary financial liabilities
USD		901	28.48 (USD:NTD)	25,659

For the years ended December 31, 2021 and 2020, realized and unrealized net foreign exchange gain or loss were gain of NT$64,415 thousand and loss of NT$51,578 thousand, respectively. It is impractical to disclose net foreign exchange gains and losses by each significant foreign currency due to the variety of the foreign currency transactions.

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34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. investees:
1) Financing provided to others (None)
2) Endorsements/guarantees provided (None)
3) Marketable securities held (excluding investments in subsidiaries and associates) (Table 1)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (Table 2)
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital (None)
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital (None)
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 3)
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital (Table 4)
9) Trading in derivative instruments (None)
10) Information on investees (Table 5)
c. Information on investments in mainland China (None)
d. Major shareholders information (Table 6)

34. SEGMENT INFORMATION

Disclosure of the segment information in standalone financial statements is waived.

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TABLE 1

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Held Company Name	Type and Name of Marketable Securities	Relationship with The Company	Financial Statement Account		DECEMBER	DECEMBER	31, 2021			Note
				Shares/Units	Carrying Value		Percentage of Ownership (%)		Fair Value
Chung Hung Steel Corporation Hung Kao Investment Corporation	Ordinary Shares Shouh Hwang Enterprise Co., Ltd. Ordinary Shares China Steel Corporation Ordinary Shares Taiwan Ves-Power Co., Ltd. Riselink Venture Capital Corp. Pacific Harbour Stevedoring Corp. Ordinary Shares China Steel Corporation	- Parent company - - The company as its supervisor The ultimate parent of the Company	Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - current Financial assets at fair value through other comprehensive income – non-current Financial assets at fair value through other comprehensive income – non-current Financial assets at fair value through other comprehensive income – non-current Financial assets at fair value through other comprehensive income – non-current	730,000 33,109,239 958,333 3,948 250,000 1,003,980		$ - $ 1,170,412 $ 55,114 391 6,535 $ 62,040 $ 35,490	15 - 2 3 5 -		$ - $ 1,170,412 $ 55,114 391 6,535 $ 62,040 $ 35,490	Note 1 2021.11.30 net value 2021.11.30 net value 2021.10.31 net value

Note 1: The impairment loss has been recognized that resulted in zero carrying amount, and the entity was dissolved on January 3, 2022.

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TABLE 2

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company	Type of Marketable Securities	Name of Marketable Securities	Financial Statement Account	Counter-party	Nature of Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance
						Shares/Units	Amount	Shares/Units	Amount	Shares/Units	Amount	Carrying Value	Gain/Loss on Disposal	Shares/Units	Amount
Chung Hung Steel Corporation	Ordinary shares	Yieh United Steel Corp.	Financial assets at fair value through profit or loss - current	-	-	36,728,800	$ 242,410	-	$ -	36,728,800	$ 560,741	$ 242,410	$ 318,331	-	$ -

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TABLE 3

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship	Relationship	Relationship	Relationship	Relationship	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/Sale	Amount	% of Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% of Total
Chung Hung Steel Corporation	China Steel Corporation Dragon Steel Corporation China Steel Global Trading Corporation CSC Steel Sdn. Bhd. China Steel Corporation	Parent company Fellow subsidiary Fellow subsidiary Fellow subsidiary Parent company	Purchase of goods Purchase of goods Purchase of goods Revenue from sale of goods Service revenue	$ 8,085,884 16,347,526 6,402,704 (2,211,117 ) (567,537 )	17 34 13 (4 ) (1 )	Letter of credit at sight/Payment after final acceptance Letter of credit at sight Letter of credit at sight/ T/T within 7 business days after lading date (not included) T/T within 7 business days after lading date (not included) T/T as the end of the month of when invoice is issued after final acceptance	$ - - - - -	NOT SIGNIFICANT DIFFERENCE NOT SIGNIFICANT DIFFERENCE NOT SIGNIFICANT DIFFERENCE NOT SIGNIFICANT DIFFERENCE NO THIRD-PARTY COULD BE COMPARED	$ (463,370 ) - - - 33,745	(25 ) - - - 3

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TABLE 4

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note2)	Allowance for Impairment Loss
					Amount	Actions Taken
Chung Hung Steel Corporation	China Steel Corporation	Parent company	$ 170,204	(Note 1)	$ -	-	$ -	$ -

Note 1: Receivables from price settlement (included in other receivables to related parties) which is not applicable to turnover rate.

Note 2: At the report date, amounts were received.

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TABLE 5

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	Number of Shares	%	Carrying Amount	Net Income (Loss) of the Investee	Share of Profit (Loss)	Note
				December 31, 2021	December 31, 2020
Chung Hung Steel Corporation Chung Hung Steel Corporation Chung Hung Steel Corporation	Hung Kao Investment Corporation Transglory Investment Corporation Pro-Ascentek Investment Corporation	Taiwan Taiwan Taiwan	General investment General investment General investment	$ 26,000 2,001,152 200,000	$ 26,000 2,001,152 -	2,600,000 306,824,279 20,000,000	100.00 40.91 16.67	$ 46,320 3,829,875 212,903	$ 7,554 69,510 20,687	$ 7,554 28,587 3,448	Subsidiaries Associates Associates

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TABLE 6

CHUNG HUNG STEEL CORPORATION

MAJOR SHAREHOLDER INFORMATION DECEMBER 31, 2021

Major shareholders	Shares	Shares
	Number of shares held	Shareholding (%)
China Steel Corporation	582,673,153	40.58

Note 1: The main shareholder information in this table is based on the last business day at the end of the quarter, and the shareholders hold more than 5% of the Corporation’s ordinary shares that have completed unregistered delivery. The share capital recorded in the Corporation’s standalone financial report and the actual number of shares delivered without physical registration may be different due to different calculation bases.
Note 2: In the case of the above information, if the shareholder delivers the shares to the trust, it is disclosed in the individual accounts of the trustee who opened the trust account by the trustee. As for the shareholder's declaration of insider's equity holding more than 10% of the shares in accordance with the Securities and Exchange Act, his shareholding includes his own shareholding and the shares delivered to the trust which has the decision rights over trust property, etc. Please refer to the public information for information on Market Observation Post System website of the Taiwan Stock Exchange.
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THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

ITEMS

ITEM
MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND
EQUITY
STATEMENT OF CASH
STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME- CURRENT
STATEMENT OF ACCOUNTS RECEIVABLE
STATEMENT OF OTHER RECEIVABLES
STATEMENT OF INVENTORIES
STATEMENT OF PREPAYMENTS
STATEMENT OF OTHER FINANCIAL ASSETS
STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR
VALUE THROUGH OTHER COMPREHENSIVE INCOME -
NONCURRENT
STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED
FOR USING EQUITY METHOD
STATEMENT OF CHANGES IN PROPERTY, PLANT AND
EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED
DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
STATEMENT OF CHANGES IN ACCUMULATED
IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT
STATEMANT OF CHANGES IN RIGHT-OF-USE ASSETS
STATEMENT OF CHANGES IN ACCUMULATED
DEPRECIATION OF RIGHT-OF-USE ASSETS
STATEMENT OF CHANGES IN INVESTMENT PROPERTIES
STATEMENT OF CHANGES IN ACCUMULATED DPRECIATION
OF INVESTMENT PROPERTIES
STATEMENT OF CHANGES IN ACCUMULATED OF
IMPAIRMENT OF INVESTMENT PROPERTIES
STATEMENT OF SHORT-TERM BORROWINGS
STATEMENT OF SHORT-TERM BILLS PAYABLE
STATEMENT OF ACCOUNTS PAYABLE
STATEMENT OF OTHER PAYABLES
STATEMENT OF PROVISIONS - CURRENT
STATEMENT OF BONDS PAYABLE
STATEMENT OF LONG-TERM BANK BORROWINGS
STATEMENT OF LEASE LIABILITIES
STATEMENT OF LONG-TERM BILLS PAYABLE
STATEMENT OF DEFERRED TAX LIABILITIES
MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS
STATEMENT OF OPERATING REVENUES
STATEMENT OF OPERATING COSTS
STATEMENT OF OPERATING EXPENSES
STATEMENT OF OTHER GAINS AND LOSSES
STATEMENT OF FINANCE COSTS
STATEMENT OF EMPLOYEE BENEFITS AND DEPRECIATION

STATEMENT INDEX

1
2
3
Note 9
4
Note 11
5
6
7
Note 14
Note 14
Note 14
8
8
Note 16
Note 16
Note 16
9
10
11
Note 20
Note 21
12
13
14
15
Note 26
16
17
18
Note 25 (a) & (b)
Note 25 (c)
19

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STATEMENT 1

CHUNG HUNG STEEL CORPORATION

STATEMENT OF CASH DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Cash on hand Cash in banks Demand deposits Checking accounts Foreign currency deposits USD $ 15,556,687.55	Amount $ 640
	23 76,193 430,609
	506,825
	$ 507,465

Note: US$1=NT$27.68.

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STATEMENT 2

CHUNG HUNG STEEL CORPORATION

STATEMENT OF FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - CURRENT DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Shares Acquisition Cost Domestic Listed Shares China Steel Corporation 33,109,239 $ 635,641 Plus: Evaluation adjustment 534,771 $ 1,170,412	Fair Value (Note) Unit Price (NT$) Amount $35.35 $ 1,170,412 Note
	Unit Price (NT$) $35.35

Note: Fair value is measured on the basis of the closing price at the balance sheet date.

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STATEMENT 3

CHUNG HUNG STEEL CORPORATION

STATEMENT OF ACCOUNTS RECEIVABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Customer Name Amount (Note 2) Related Parties A company $ 33,745 B company 7,426 C company 4,275 Others (Note 1) 1,909 $ 47,355 Non-Related Parties D company $ 244,817 E company 169,772 F company 121,226 G company 108,898 H company 74,017 Others (Note 1) 211,848 $ 930,578	Customer Name Amount (Note 2) Related Parties A company $ 33,745 B company 7,426 C company 4,275 Others (Note 1) 1,909 $ 47,355 Non-Related Parties D company $ 244,817 E company 169,772 F company 121,226 G company 108,898 H company 74,017 Others (Note 1) 211,848 $ 930,578	Customer Name Amount (Note 2) Related Parties A company $ 33,745 B company 7,426 C company 4,275 Others (Note 1) 1,909 $ 47,355 Non-Related Parties D company $ 244,817 E company 169,772 F company 121,226 G company 108,898 H company 74,017 Others (Note 1) 211,848 $ 930,578
		$ 47,355
		$ 244,817 169,772 121,226 108,898 74,017 211,848
		$ 930,578

Note 1: The amount of individual customer included in others does not exceed 5% of the account balance. Note 2: There are no accounts receivable that are past due over 1 year.

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STATEMENT 4

CHUNG HUNG STEEL CORPORATION

STATEMENT OF INVENTORIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Raw materials Supplies Work in progress Finished goods Others Raw materials and supplies in transit Allowance for loss on inventory value		Amount
		Net Realizable Cost Value (Note) $ 6,229,585 $ 6,778,128 387,020 418,083 735,249 789,331 4,285,975 4,410,402 6,418 6,418 1,201,855 1,139,457 ( 128,663) - $ 12,717,439 $ 13,541,819

Note: Refer to Note 4 for details.

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STATEMENT 5

CHUNG HUNG STEEL CORPORATION

STATEMENT OF OTHER FINANCIAL ASSETS DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Bank Name Interest Rates (%) Period Other Financial Assets - Current Time deposits Taiwan Business Bank 0.04 2021.11.29-2022.01.29 Mega Bank 0.07 2021.12.10-2022.01.10 Demand deposits Bank of Taiwan 0.04	$	Amount Note $ 300,000 Note 400,000 Note 700,000 300,000 Note 1,000,000

Note: As a collateral for bank borrowings.

68 -

STATEMENT 6

CHUNG HUNG STEEL CORPORATION

STATEMENT OF CHANGES IN FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - NONCURRENT FOR THE YEAR ENDED DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Name Domestic unlisted shares Riselink Venture Capital Corp. Taiwan Ves-Power Co., Ltd. Pacific Harbour Stevedoring Corp.	Balance, January 1, 2021 Shares Fair Value 3,948 $ 866 958,333 36,599 250,000 5,880 $ 43,345	Additions (Note 1) Shares Amount - $ - - 18,515 - 655 $ 19,170	Decrease (Note 2) Shares Amount - $ 475 - - - - $ 475	Balance, December 31, 2021 Fair Value Shares (Note 3) Collateral 3,948 $ 391 None 958,333 55,114 None 250,000 6,535 None $ 62,040

Note 1: The unrealized gain on valuation of NT$ 19,170 thousand was recognized as additions. Note 2: The unrealized loss on valuation of NT$ 475 thousand were recognized as decreases. Note 3: Fair value is estimated pursuant to the evaluation method in Note 29.

69 -

STATEMENT 7

CHINA STEEL CORPORATION

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investees Unlisted companies Transglory Investment Corporation Hong Kao Investment Corporation Pro-Ascentek Investment Corporation	Balance, January 1, 2021	Balance, January 1, 2021	Additions (Note 1)	Additions (Note 1)	Decrease(Note 2)	Decrease(Note 2)	Balance, December 31, 2021	Balance, December 31, 2021	Market Value or Net Assets Value Unit Price (NT$) Total Amount Collateral $ 12.48 $ 3,829,875 None 17.82 46,320 None 10.65 212,903 None $ 4,089,098
	Shares 306,824,279 2,600,000 -	Amount $ 2,669,716 28,329 - $ 2,698,045	Shares - - 20,000,000	Amount $ 1,204,429 18,197 213,045 $ 1,435,671	Shares - - -	Amount $ 44,270 206 142 $ 44,618	Shares % of Ownership 306,824,279 40.91 2,600,000 100 20,000,000 16.67	Amount $ 3,829,875 46,320 212,903 $ 4,089,098	Unit Price (NT$) $ 12.48 17.82 10.65

Note 1: The increase came from long-term equity investment of NT$200,000 thousand, investment income recognized under equity method of NT$ 39,589 thousand and unrealized gain of financial assets at fair value through other comprehensive income of NT$ 1,196,082 thousand.

Note 2: The decrease came from cash dividends NT$ 44,476 thousand and exchange differences on translation of foreign financial statements under equity method of NT$ 142 thousand.

70 -

STATEMENT 8

CHUNG HUNG STEEL CORPORATION

STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

				Transportation	Transportation
Item			Land	Equipment				Total
Cost
Balance, January 1,2021		$	90,792	$	15,238		$	106,030
Additions			69		-			69
Disposals		(	702)		-	(		702)
Balance, December 31,2021			90,159		15,238			105,397
Accumulated depreciation
Balance, January 1,2021	(		22,559 )	(	5,141 )	(		27,700 )
Disposals			702		-			702
Depreciation expense	(		12,450)	(	3,029)	(		15,479)
Balance, December 31,2021	(		34,307)	(	8,170)	(		42,477)
		$	55,852	$	7,068		$	62,920

71 -

STATEMENT 9

CHUNG HUNG STEEL CORPORATION

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Type
Contract Period
Range of
Interest Rates (%)
Revolving loans
Mizuho Bank, Ltd., Kaohsiung (Note 1)
2021.12.30-2022.01.28
0.33

Mitsubishi UFJ, Taipei
2021.12.30-2022.06.28
0.39

LC borrowing in NTD
Bank of Taiwan, GangShan
2021.12.21-2022.03.21
0.75
Bank of Taiwan, GangShan
2021.12.28-2022.03.28
0.75
Taipei Fubon Bank, Kaohsiung
2021.12.28-2022.01.27
0.68
Cathay United Bank, Kaohsiung
2021.12.28-2022.01.04
0.72
Yuanta Commercial Bank, Kaohsiung
2021.12.28-2022.01.04
0.74

LC borrowing in USD
Mizuho Bank, Ltd., Kaohsiung (Note 1)
2021.12.24-2022.01.03
0.64

Bank overdraft
Taiwan Business Bank, LingYa Branch
0.32
Mega Bank, Kaohsiung Metropolitan
0.21

Balance,
End of Year
Credit Amount
Collateral or
Pledge
$ 800,000
$ 2,502,600
None
1,900,000
2,000,000
None
2,700,000
282,659
5,500,000
None
24,764
5,500,000
None
230,482
600,000
None
10,507
560,000
None
8,012
500,000
None
556,424
639,437
2,502,600
None
278,807
-
Certificate of time
deposit (Note 2)
387,584
-
Certificate of time
deposit (Note 2)
666,391
$ 4,562,252

Note 1: Revolving loans and LC borrowing in USD shared credit amount. Note 2: Refer to Note 31 for details.

72 -

STATEMENT 10

CHUNG HUNG STEEL CORPORATION

STATEMENT OF SHORT-TERM BILLS PAYABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Financial Institution Period Interest Rates (%) Bank SinoPac 20210701-20220630 0.56	Amount
	Issuance amount Unamortized Amount Carrying Amount $ 1,000,000 $ 359 $ 999,641

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STATEMENT 11

CHUNG HUNG STEEL CORPORATION

STATEMENT OF ACCOUNTS PAYABLE DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Vendor Name Related Parties A company Others (Note) Non-related Parties B company Others (Note)	Amount $ 463,370 6,207
	$ 469,577
	$ 1,276,177 84,555
	$ 1,360,732

Note: The amount of individual vendor in others does not exceed 5% of the account balance.

74 -

STATEMENT 12

CHUNG HUNG STEEL CORPORATION

STATEMENT OF BONDS PAYABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Bonds Name Trustee Issuance Date Interest Payment Date And Repayment Method Coupon Rate (%) 5-year unsecured bonds Taipei Fubon Commercial Bank Co., Ltd 2020.03-2025.03 Repayable in March 2025; interest payable annually 0.78 Taipei Fubon Commercial Bank Co., Ltd 2020.09-2025.09 Repayable in September 2025; interest payable annually 0.65		Amount Balance, End of Year Issuance Costs Carrying Value Collateral $ 2,000,000 ( $ 2,128 ) $ 1,997,872 None 1,000,000 ( 1,698) 998,302 None $ 3,000,000 ($ 3,826 ) $ 2,996,174
	Total Amount Repayment Paid $ 2,000,000 $ - 1,000,000 - $ 3,000,000 $ -

75 -

STATEMENT 13

CHUNG HUNG STEEL CORPORATION

STATEMENT OF LONG-TERM BANK BORROWINGS DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Contract Period Bank Name and Repayment Method Interest Rates (%) Long-term bank borrowings Bank of Taiwan, GangShan Due in December 2024, amortization from June 2023 0.79		Balance, December 31,2021	Balance, December 31,2021	Total Collateral $ 1,200,000 None
		Current $ -	Over 1 Year $ 1,200,000

76 -

STATEMENT 14

CHUNG HUNG STEEL CORPORATION

STATEMENT OF LEASE LIABILITIES DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Period Discount Rates (%) Land 2015.03.01-2029.12.31 0.65-1.31 Transportation equipment 2019.05.01-2024.04.30 0.76	Amount $ 56,787 7,140 $ 63,927

Note 1: Refer to Note 15 for details.

Note 2: Current portion of lease liabilities has been classified as current liabilities.

77 -

STATEMENT 15

CHUNG HUNG STEEL CORPORATION

STATEMENT OF LONG-TERM BILLS PAYABLE DECEMBER 31, 2021

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Financial Institution Guarantee Institution Credit Line Period Interest Rates (%) Commercial papers payable China Bills Finance Corporation Non-guarantee $ 300,000 2021.03.31-2023.03.30 0.62	Amount Issuance Amount Uuamortized Amount Carrying Amount Collateral $ 240,000 $ 208 $ 239,792 None

78 -

STATEMENT 16

CHUNG HUNG STEEL CORPORATION

STATEMENT OF OPERATING REVENUES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Item Quantities (Metric Tons) Sale of Goods Hot rolled coiled steel 1,726,341 Cold rolled coiled steel 260,718 Steel pipe 41,447 Galvanized coiled steel 91,049 Service revenue Other operating revenue	Amount $ 41,674,879 7,405,276 1,305,262 2,633,639 53,019,056 624,450 89,708 $ 53,733,214

79 -

STATEMENT 17

CHUNG HUNG STEEL CORPORATION

STATEMENT OF OPERATING COSTS FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item
Cost of goods sold for in-house products
Raw materials used
Raw materials, beginning of year

Raw material purchased
Raw materials, end of year

Direct labor
Manufacturing expenses

Manufacturing cost
Work in progress, beginning of year
Work in progress, end of year

Finished goods, beginning of year
Finished goods, end of year
Income from off-grades
Others

Total costs of goods sold
Service costs
Impairment loss
Purchase contract loss
Other operating costs

Total operating costs

Amount
$ 1,627,421
48,275,371
(6,229,585)
43,673,207
597,857
4,045,650
48,316,714
495,791
(735,249)
48,077,256
1,799,848
(4,285,975)
(1,037,574)
223,833
44,777,388
492,742
646,025
206,850
74,605
$ 46,197,610

80 -

STATEMENT 18

CHUNG HUNG STEEL CORPORATION

STATEMENT OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2021 (In Thousands of New Taiwan Dollars)

Item Export expense Salaries and awards Depreciation expense Commission Insurance Employee benefits Tax Service fee Travelling expense Pension Entertainment expense Stockholder service fee Repair and maintenance expense Rent expense Postage Utility Donation expense Security expense Freight expense Others Total	Selling Expenses $ 447,182 84,308 171 20,279 5,754 8,777 31 94 291 2,116 419 - 2 201 661 - 10 - 3,975 3,234 $ 577,505	General and Administrative Expenses $ - 288,714 7,141 - 15,839 19,735 9,635 15,085 2,294 4,933 4,268 5,153 9,036 2,397 3,368 2,538 14,103 2,823 27 36,836 $ 443,925	Total $ 447,182 373,022 7,312 20,279 21,593 28,512 9,666 15,179 2,585 7,049 4,687 5,153 9,038 2,598 4,029 2,538 14,113 2,823 4,002 40,070 $ 1,021,430

81 -

STATEMENT 19

CHUNG HUNG STEEL CORPORATION

STATEMENT OF EMPLOYEE BENEFITS AND DEPRECIATION FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020 (In Thousands of New Taiwan Dollars)

Employee benefits Salaries Labor and health insurance Pension Employment benefits Remuneration of directors Others Depreciation	Year Ended December 31,2021	Total $ 1,780,643 98,075 46,272 211,414 69,960 3,580 $ 2,209,944 $ 753,729	Year Ended December 31,2020
	Classified as Operating Costs Classified as Operating Expenses Classified asOthers $ 1,477,581 $ 303,062 $ - 83,415 14,660 - 39,223 7,049 - 182,902 28,512 - - 69,960 - 2,825 755 - $ 1,785,946 $ 423,998 $ - $ 745,529 $ 7,312 $ 888		Classified as Operating Costs Classified as Operating Expenses Classified asOthers $ 873,417 $ 180,092 $ - 73,716 12,527 - 41,163 7,379 - 102,572 15,847 - - 12,293 - 2,542 2,271 - $ 1,093,410 $ 230,409 $ - $ 1,089,347 $ 72,011 $ 888	Total $ 1,053,509 86,243 48,542 118,419 12,293 4,813 $ 1,323,819 $ 1,162,246

Note 1: As of December 31, 2021 and 2020, the Corporation had 1,183 and 1,214 employees, respectively. Among them 6 directors did not serve concurrently as employees in 2021 and 2020, respectively.

Note 2: Additional disclosures are as follows:
1) Average employee benefits for the year ended December 31, 2021 and 2020 were NT$ 1,818 thousand and NT$ 1,086 thousand, respectively.
2) Average salaries for the year ended December 31, 2021 and 2020 were NT$ 1,513 thousand and NT$ 872 thousand, respectively.
3) Changes of adjustments of average salaries was 73.51 %.
4) The Corporation did not have supervisors for the years ended December 31, 2021 and 2020.
5) The Corporation's remuneration policies are as follows:

a) Remuneration policy for directors

i The Corporation pays a fixed compensation, NT$50 thousand per month, to the independent directors, who shall not receive the remuneration for directors according to Article 28 of the Corporation's Articles of Incorporation.
ii The independent directors shall attend the Board of Directors which the Corporation will pay travel allowance.

iii The Corporation pays an attendance fee to independent directors for attending meetings held by the functional committees under the Corporation's Board of Directors.

b) Remuneration policy for the managements

The pay level and salary adjustment for the Corporation's Chairman or managements shall be submitted to the Board of Directors for approval after the Remuneration Committee discussion.

c) Compensation policy for employees

The Corporation pays employee compensation by referring to the benchmark salary of the industry, and the supply and demand of market manpower, considering the financial situation of operation, formulating the Salary Management Measures, developing the salary standard for new employees, and providing the basic salary higher than the statutory basic salary standard, regardless of gender. The salaries of male and female employees of the same position and grade shall be the same, i.e. the ratio shall be 1:1.

82 -

AI assistant

CHUNG HUNG — Audit Report / Information 2021

51945_rns_2021-12-30_ed1b4625-4250-47e1-9828-8c15933d4ec4.pdf

Chung Hung Steel Corporation

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

The Existence of Revenue from Sale of Goods on Specific Customers

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

Auditors’ Responsibilities for the Audit of the Standalone Financial Statements

Notice to Readers

CHUNG HUNG STEEL CORPORATION

STANDALONE BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION

STANDALONE STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

Statement of Compliance

Basis of Preparation

Classification of Current and Non-current Assets and Liabilities

Foreign Currencies

Inventories

Investment in Associates

Investment in Associates

Property, Plant, and Equipment

Investment Properties

Impairment of Property, Plant and Equipment, Right-of-use Asset and Investment Properties

Financial Instruments

a. Financial assets

a) Financial asset at FVTPL

Provisions

Revenue Recognition

Leases

Government Grants

Borrowing Costs

Employee Benefits

Taxation

Current tax

Deferred tax

Current and deferred taxes for the year

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Measurement of Inventories

Realizability of Deferred Tax Assets

Recognition and measurement of defined benefit plans

6. CASH

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS- CURRENT

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

9. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

2021

b. Other receivables

10. INVENTORIES

11. PREPAYMENTS

12. OTHER FINANCIAL ASSETS

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

b. Investments in associates

1) Material associates

TIC

14. PROPERTY, PLANT AND EQUIPMENT

For the year ended December 31, 2020

15. LEASE ARRANGEMENTS

a. Right-of-use assets

b. Lease liabilities

c. Material lease activities and terms

d. Other lease information

CHUNG HUNG Audit Report / Information 2021