CHUNG HUNG - Audit Report / Information 2022

Chung Hung Steel Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2022 and 2021 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the combined financial statements of Chung Hung Steel Corporation as of and for the year ended December 31, 2022, under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standard 10, “Consolidated Financial Statements.” In addition, the information required to be disclosed in the combined financial statements of affiliates is included in the consolidated financial statements of parent and subsidiary companies. Consequently, Chung Hung Steel Corporation and its subsidiaries do not prepare a separate set of combined financial statements of affiliates.

Very truly yours,

Chung Hung Steel Corporation

Kuei-Sung Tseng Chairman

February 23, 2023

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Chung Hung Steel Corporation

Opinion

We have audited the accompanying consolidated financial statements of Chung Hung Steel Corporation (the “Corporation”) and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission (FSC) of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 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 consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The key audit matters of the Group’s consolidated financial statements for the year ended December 31, 2022 are stated as follows:

The Existence of Revenue from Export Sales

The export sales revenue for the year ended December 31, 2022 was NT$19,503,169 thousand, which represented 45% of the sales revenue. Because the sales revenue from export sales has grown significantly compared to the sales revenue from the previous year, we considered the existence of sales revenue from export sales as a key audit matter. Refer to Notes 4, 24 and 35 to consolidated 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 export sales details 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 export sales and tested whether there is any unusual sales returns and allowances and confirmed that sales revenue existed before the balance sheet date.

Other Matter

We have also audited the standalone financial statements of the Corporation as of and for the years ended December 31, 2022 and 2021 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
2 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022 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 23, 2023

Notice to Readers

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

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

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through other comprehensive income - current (Notes 4 and 7) Financial assets for hedging - 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 (Notes 4 and 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 7) 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) Deferred tax assets (Notes 4, 5 and 26) Prepayments for equipment (Note 32) Refundable deposits Net defined benefit assets (Notes 4, 5 and 22) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 17 and 31) Short-term bills payable (Note 17) Financial liabilities for hedging - current (Notes 4 and 8) 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) Current portion of long-term borrowings (Note 17) 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 (Notes 4 and 23) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		December 31, 2022 Amount % $ 3,268,386 9 986,655 2 700,188 2 231,840 1 57,510 - 11,156 - 344,478 1 657 - 9,761,983 26 255,767 1 1,101,100 3 45 - 16,719,765 45 71,082 - 3,701,899 10 9,801,656 27 48,092 - 5,981,409 17 373,292 1 56,285 - 9,337 - 2,060 - 20,045,112 55 $ 36,764,877 100 $ 7,561,516 21 - - 2,166 - 102,146 - 534,403 2 289,098 1 542,590 2 89,378 - 133,700 - 12,877 - 2,340,000 6 57,815 - 16,244 - 11,681,933 32 2,997,309 8 2,260,000 6 2,498,441 7 193,481 1 36,276 - - - 35,000 - 8,020,507 22 19,702,440 54 14,355,444 39 903 - 764,806 2 - - 1,651,062 5 2,415,868 7 290,222 - 17,062,437 46 $ 36,764,877 100		December 31, 2021	December 31, 2021
		Amount $ 3,268,386 986,655 700,188 231,840 57,510 11,156 344,478 657 9,761,983 255,767 1,101,100 45 16,719,765 71,082 3,701,899 9,801,656 48,092 5,981,409 373,292 56,285 9,337 2,060 20,045,112 $ 36,764,877 $ 7,561,516 - 2,166 102,146 534,403 289,098 542,590 89,378 133,700 12,877 2,340,000 57,815 16,244 11,681,933 2,997,309 2,260,000 2,498,441 193,481 36,276 - 35,000 8,020,507 19,702,440 14,355,444 903 764,806 - 1,651,062 2,415,868 290,222 17,062,437 $ 36,764,877		Amount $ 508,123 1,170,412 - 930,578 47,355 9,051 221,461 - 12,717,439 443,128 1,002,800 2,597 17,052,944 97,530 4,042,778 10,164,924 62,920 5,982,297 - 70,290 5,651 - 20,426,390 $ 37,479,334 $ 4,562,252 999,641 - 95,155 1,360,732 469,577 1,175,704 654,769 206,850 15,408 - 265,047 23,317 9,828,452 2,996,174 1,200,000 239,792 182,222 48,519 387,777 35,000 5,089,484 14,917,936 14,355,444 903 144,632 425,839 6,503,369 7,073,840 1,131,211 22,561,398 $ 37,479,334	% 1 3 - 2 - - 1 - 34 1 3 - 45 - 11 28 - 16 - - - - 55 100 12 3 - - 3 1 3 2 1 - - 1 - 26 8 3 1 1 - 1 - 14 40 38 - - 1 18 19 3 60 100

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

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

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

OPERATING REVENUE (Notes 4, 24 and 30) Sales Investment revenue Service revenue Other operating revenue Total operating revenue OPERATING COSTS (Notes 10, 14, 25 and 30) GROSS PROFIT (LOSS) OPERATING EXPENSES (Notes 25 and 30) Selling and marketing expenses General and administrative expenses Total operating expenses PROFIT (LOSS) 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 profit of associates Total non-operating income and expenses PROFIT (LOSS) BEFORE INCOME TAX INCOME TAX EXPENSE (BENEFIT) (Notes 4, 5 and 26) NET PROFIT (LOSS) FOR THE YEAR		For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 Amount % $ 43,675,748 98 3,112 - 744,377 2 80,257 - 44,503,494 100 45,629,434 103 (1,125,940) (3) 376,864 1 257,893 - 634,757 1 (1,760,697) (4) 47,626 - 283,258 - 29,000 - (130,575) - 346,865 1 576,174 1 (1,184,523) (3) (194,594) - (989,929) (3)		2021
				Amount % $ 53,019,056 99 301 - 634,947 1 89,708 - 53,744,012 100 46,197,610 86 7,546,402 14 577,505 1 445,247 1 1,022,752 2 6,523,650 12 825 - 131,343 - 370,938 1 (45,715) - 32,035 - 489,426 1 7,013,076 13 662,665 1 6,350,411 12 (Continued)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

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

	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 Amount % 294,407 1 (201,638) - (11,068) - (631,251) (1) 80,176 - 528 - (468,846) - (1,458,775) (3) (989,929) (3) (1,458,775) (3) $ (0.69) $ (0.69)		2021
$		$	Amount % (157,217) - 380,295 1 - - 1,185,440 2 - - (142) - 1,408,376 3 7,758,787 15 6,350,411 12 7,758,787 15 $ 4.42 $ 4.40

$		$
$		$
$		$

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

(Concluded)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2021 Appropriation of 2020 earning (Note 23) Legal reserve Cash dividends Reversal of special reserve Net profit for the year ended December 31, 2021 Other comprehensive income for the year ended December 31, 2021, net of income tax Total comprehensive income 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 Appropriation of 2021 earning (Note 23) Legal reserve Cash dividends Reversal of special reserve Net loss for the year ended December 31, 2022 Other comprehensive loss for the year ended December 31, 2022, net of income tax Total comprehensive loss for the year ended December 31, 2022 Disposal of investments in equity instruments at fair value through other comprehensive income Adjustment from changes in equity of associates BALANCE AT DECEMBER 31, 2022	Issued and Outstanding Ordinary Shares Capital Surplus $ 14,355,444 $ 903 - - - - - - - - - - - - - - 14,355,444 903 - - - - - - - - - - - - - - - - $ 14,355,444 $ 903		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 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 6,503,369 620,174 - (620,174) - - (4,019,524) - (425,839) 425,839 - - (989,929) - - 372,362 - - (617,567) - - (219) - - (20,662) $ 764,806 $ - $ 1,651,062	Other Equity	Gains and Losses on Hedging Instruments $ - - - - - - - - - - - - - (8,854) (8,854) - - $ (8,854)	Total Equity $ 15,233,274 - (430,663) - 6,350,411 1,408,376 7,758,787 - 22,561,398 - (4,019,524) - (989,929) (468,846) (1,458,775) - (20,662) $ 17,062,437
				Unrealized Valuation Gain (Loss) on Exchange Financial Assets Differences on at Fair Value Translating Through Other Foreign Comprehensive Operations Income $ - $ (425,839) - - - - - - - - (142) 1,565,735 (142) 1,565,735 - (8,543) (142) 1,131,353 - - - - - - - - 528 (832,882) 528 (832,882) - 219 - - $ 386 $ 298,690

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

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) 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 Write-downs of inventories Recognition of impairment loss Recognition (reversal) of provisions Others Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Financial assets for hedging 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 paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from the capital reduction on financial assets at fair value through other comprehensive income Purchase of Financial assets for hedging Purchase of investments accounted for using the equity method	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (1,184,523) 717,892 (2,774) 130,575 (47,626) (108,042) (346,865) 1,466,930 - (73,150) 1,135 2,774 (462,011) 698,738 (10,155) 1,777 176,983 1,488,526 187,361 2,552 6,991 (826,329) (180,479) (649,706) (7,073) (95,429) (207,232) 680,840 (653,311) 27,529 325 8,242 (247,079) -	2021 $ 7,013,076 753,729 (318,331) 45,715 (825) (10,684) (32,035) 4,859 646,025 206,850 1,097 560,741 - (100,491) 69,883 10,297 (194,789) (8,485,878) (292,167) 1,364 37,872 1,333,232 156,353 589,808 7,553 (83,157) 111,291 2,031,388 (7,387) 2,024,001 - - - (200,000) (Continued)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

Acquisition of property, plant and equipment Decrease (increase) in refundable deposits Increase in other receivables from related parities Increase in other financial assets 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 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 generated from (used in) financing activities NET INCREASE IN CASH AND CASH EQOUIVALENTS CASH AND CASH EQOUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQOUIVALENTS AT THE END OF THE YEAR	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (322,740) (3,686) (300,000) (98,300) 43,744 144,402 (775,092) 120,525,034 (117,525,770) 4,900,359 (5,900,000) 3,900,000 (500,000) 2,498,649 (240,000) (15,489) (4,019,524) (115,433) 3,507,826 2,760,263 508,123 $ 3,268,386	2021 $ (353,847) 569 - (701,100) 798 54,955 (1,198,625) 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) 220,750 287,373 $ 508,123

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

(Concluded)

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CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (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, 2022, and 2021, China Steel Corporation (CSC), the Corporation’s parent and major shareholder (40.58%), controls the Corporation’s management and operations.

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

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Corporation’s board of directors and authorized for issue on February 23, 2023.

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 Group’s accounting policies.

b. The IFRSs endorsed by the FSC for application starting from 2023

New IFRSs Amendments to IAS 1 “Disclosure of Accounting Policies” Amendments to IAS 8 “Definition of Accounting Estimates” Amendments to IAS 12 “Deferred Tax related to Assets and Liabilities arising from a Single Transaction”	Effective Date Announced by IASB
	January 1, 2023 (Note 1) January 1, 2023 (Note 2) January 1, 2023 (Note 3)

Note 1: The amendments will be applied prospectively for annual reporting periods beginning on or after January 1, 2023.
Note 2: The amendments will be 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.
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Note 3: Except for deferred taxes that were recognized on January 1, 2022 for temporary differences associated with leases and decommissioning obligations, the amendments were applied prospectively to transactions that occurred on or after January 1, 2022.

As of the date the consolidated financial statements were authorized for issue, the Group has assessed that the application of other standards and interpretations will not have a material impact on the Group’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” Amendments to IFRS 16 “Leases Liability in a Sale and Leaseback” January 1, 2024 (Note 2) IFRS 17 “Insurance Contracts” January 1, 2023 Amendments to IFRS 17 January 1, 2023 Amendments to IFRS 17 “ Initial Application of IFRS17 and IFRS 9 - January 1, 2023 Comparative Information” Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2024 Non-current” Amendments to IAS 1 “Non-current Liabilities with Covenants” January 1, 2024

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: A seller-lessee shall apply the Amendments to IFRS 16 retrospectively to sale and leaseback transactions entered into after the date of initial application of IFRS 16.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICY

Statement of Compliance

The consolidated 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 consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined liabilities (assets) 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;
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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.

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 and cash equivalents 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.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the Corporation and the entities controlled by the Corporation (i.e. its subsidiaries).

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation.

The consolidated entities were as follows:

Investor Investee Main Businesses Chung Hung Steel Corporation Ltd. Hung Kao Investment Corporation General investment	Percentage of Ownership (%)
	December 31, 2022 December 31, 2021 100 100

Foreign Currencies

In preparing the financial statements of each individual consolidated entity, transactions in currencies other than the entity’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. Except for exchange differences arising from hedging transactions to hedge part of the exchange rate risk, 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.

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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

An associate is an entity over which the Group 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 consolidated 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 Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the share of equity of associates.

When the Group 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 Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in the Group’s share of equity of associates. If the Group 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 Group’s share of losses of an associate equals or exceeds 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 Group’s net investment in the associate), the Group discontinues recognizing their share of further losses. Additional losses and liabilities are recognized only to the extent that the Group 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 Group transacts with their associates, profits and losses on these transactions are recognized in the consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

Property, Plant, and Equipment

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

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. Samples produced when testing whether an item of property, plant and equipment is functioning properly before that asset reaches

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its intended use are measured at the lower of cost or net realizable value, and any proceeds from selling those samples and the cost of those samples are recognized in profit or loss. Such assets 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 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 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 Group reviews the carrying amounts of its 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 Group 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 Group becomes a party to the contractual provisions of the instruments.

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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, financial assets at amortized cost, and investments in equity instruments at FVTOCI.

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.

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 and cash equivalents, 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.
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Cash equivalents include time deposits and commercial papers with repurchase agreements with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

c) Investments in equity instruments at FVTOCI

On initial recognition, the Group 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 Group’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 Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including accounts receivable).

The Group always recognizes lifetime Expected Credit Loss (i.e. ECL) for accounts receivable. For other financial assets, the Group 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 Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

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 Group 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 Group 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.

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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.

d. Derivative financial instruments

The Group enters into derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

Derivatives are initially recognized at fair value at the date on which the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately unless the derivative is designated and effective as a hedging instrument; in which event, the timing of the recognition in profit or loss depends on the nature of the hedging relationship. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Hedge accounting

The Group designates certain hedging instruments, which include derivatives and non-derivatives in respect of foreign currency risk, as either cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

The effective portion of gains or losses on derivatives that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gains or losses relating to the ineffective portion are recognized immediately in profit or loss.

The associated gains or losses that were recognized in other comprehensive income are reclassified from equity to profit or loss as reclassification adjustments in the line items relating to the hedged item in the same period in which the hedged item affects profit or loss. If a hedge of a forecasted transaction subsequently results in the recognition of a non-financial asset or a non-financial liability, the associated gains and losses that were recognized in other comprehensive income are removed from equity and included in the initial cost of the non-financial asset or non-financial liability.

The Group discontinues hedge accounting only when the hedging relationship ceases to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated or exercised. The cumulative gain or loss on the hedging instrument that was previously recognized in other comprehensive income (from the period in which the hedge was effective) remains separately in equity until the forecasted transaction occurs. When a forecasted transaction is no longer expected to occur, the gains or losses accumulated in equity are recognized immediately in profit or loss.

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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 Group 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 Group recognizes provisions for the performance of its obligations in the onerous contract. In assessing whether a contract is onerous, the cost of fulfilling a contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that are related directly to fulfilling contracts.

Revenue Recognition

The Group 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 Group 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 Group does not adjust the promised amount of consideration for the effects of a significant financing component.

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 Group 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 Group assesses whether the contract is, or contains, a lease.

a. The Group 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 Group as lessee

The Group 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.

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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 consolidated 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 Group by the end of the lease terms or if the costs of right-of-use assets reflect that the Group will exercise a purchase option, the Group 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.

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 Group 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 consolidated balance sheets.

Government Grants

Government grants are not recognized until there is reasonable assurance that the Group 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 Group 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.

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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 (asset) 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 liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

Taxation

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

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 Act, 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 consolidated 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 Group 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 Group expects, at the balance

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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 Group’s accounting policies, management is required to make judgments, estimations and assumptions on 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 Group 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 flows 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.

Measurement of Inventories

Inventories are stated at the lower of cost or net realizable value, and the Group 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. In cases where the actual future profit generated is less (greater) than expected, a material reversal (recognition) of deferred tax assets may arise, which would be recognized in the period in which such a reversal (recognition) takes place.

Recognition and measurement of defined benefit plans

Net defined benefit liabilities (assets) 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 AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits	December 31
	2022 2021 $ 640 $ 640 224,231 507,483 (Continued)

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Cash equivalents (investments with original maturities within three months) Time deposits Commercial papers with repurchase agreements Bonds with repurchase agreements		December 31	December 31
		2022 $ 994,133 1,839,382 210,000 $ 3,268,386	2021 $ - - - $ 508,123 (Concluded)

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

December 31	December 31	December 31
2022 2021 $ 986,655 $ 1,170,412 $ 29,919 $ 35,490 41,163 62,040 $ 71,082 $ 97,530 December 31

	2022 $ 700,188 $ 2,166	2021 $ - $ -

8. FINANCIAL INSTRUMENTS FOR HEDGING

For the purpose of managing cash flow risk from exchange rate fluctuations due to the purchase of imported raw materials and equipment, the Group purchased foreign-currency deposits and entered into foreign exchange forward contracts. Refer to Note 29 for information relating to financial instruments for hedging.

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9. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

Accountsreceivable Accounts receivable - non-related parties At amortized cost Accounts receivable - related parties At amortized cost Other receivables(includingrelatedparties) Other receivables - related parties’ loans Receivables from disposal of scrap Receivables from price settlement Others		December 31	December 31
		2022 $ 231,840 $ 57,510 $ 300,000 31,720 16,039 7,875 $ 355,634	2021 $ 930,578 $ 47,355 $ - 49,662 170,204 10,646 $ 230,512

a. Accounts receivable at amortized cost

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 Group’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 Group’s provision matrix.

December 31, 2022

Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost December 31, 2021 Expected credit loss rate (%) Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Not Past Due - $ 289,350 - $ 289,350 Not Past Due - $ 977,933 - $ 977,933	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 $ 289,350 -
							$ 289,350
							Total $ 977,933 -
							$ 977,933

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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
		2022 $ 89,771 41,915 10,944 1,502 - - $ 144,132	2021 $ - 33,745 169,772 108,898 121,226 244,817 $ 678,458

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, 2022 and 2021 were as follows:

Buyer of Accounts Receivable For the year ended December 31,2022 Mega Bank Bank of Taiwan Bank of Taiwan For the year ended December31,2021 Mega Bank Bank of Taiwan Bank of Taiwan	Advances Received at Year - Beginning $ 453,536 46,016 22,479 $ 522,031 $ 601,245 67,274 14,577 $ 683,096	Receivables Sold $ 1,051,545 141,425 40,239 $ 1,233,209 $ 1,614,825 183,448 60,977 $ 1,859,250	Amounts Collected $ 1,280,699 177,148 53,610 $ 1,511,457 $ 1,762,534 204,706 53,075 $ 2,020,315	Advances Received at Year-end Interest Rates on Advances Received (%) Credit Line $ 224,382 1.38 NT$533.3 million 10,293 1.37 NT$200 million 9,108 3.50 USD$20 million $ 243,783 $ 453,536 1.03 NT$841.2 million 46,016 1.03 NT$200 million 22,479 1.44 USD$20 million $ 522,031

The above credit lines are revolving.

b. Other receivables

The expected credit losses on other receivables are estimated using expected credit loss rate based on the other receivables overdue days. As of December 31, 2022 and 2021, 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
		2022 $ 5,774,808 375,065 619,397 2,580,831 6,148 405,734 $ 9,761,983	2021 $ 6,207,596 309,073 730,616 4,262,064 6,418 1,201,672 $ 12,717,439

The cost of inventories recognized as operating costs for the years ended December 31, 2022 and 2021 was NT$45,099,826 thousand and NT$45,058,843 thousand, respectively, including write-down of inventory of NT$1,466,930 thousand and NT$4,859 thousand, respectively.

11. PREPAYMENTS

Input tax Tax overpaid retained for offsetting future tax payable Prepayments for purchases Others		December 31	December 31
		2022 $ 183,016 31,948 27,207 13,596 $ 255,767	2021 $ 312,282 102,533 24,036 4,277 $ 443,128

12. OTHER FINANCIAL ASSETS

Current Pledged time deposits (Note 31) Pledged demand deposits (Note 31) One-year time deposits		December 31	December 31
		2022 $ 800,000 300,000 1,100 $ 1,101,100	2021 $ 700,000 300,000 2,800 $ 1,002,800

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Material associate Transglory Investment Corp. (TIC) Associates that are not individually material		December 31	December 31
		2022 $ 3,508,558 193,341 $ 3,701,899	2021 $ 3,829,875 212,903 $ 4,042,778

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a. Material associate

Principal Place Name of Associate Nature of Activities of Business TIC General investment Taiwan	Proportion of Ownership and Voting Rights (%)
	December 31
	2022 2021 40.91 40.91

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, 2022 and 2021 was based on the audited financial statements for the same years.

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

TIC

Current assets Non-current assets Current liabilities Equity Proportion of the Group’s ownership (%) Equity attributable to the Group Carrying amount Operating revenue Net profit for the year Other comprehensive income (loss) Total comprehensive income (loss) for the year Comprehensive income (loss) attributable to the Group		December 31	December 31
	2022 2021 $ 533,139 $ 1,052 8,049,395 9,470,285 (6,645) (110,059) $ 8,575,889 $ 9,361,278 40.91 40.91 $ 3,508,558 $ 3,829,875 $ 3,508,558 $ 3,829,875 For the Year Ended December 31
		2022 $ 841,415 $ 832,427 (1,504,690) $ (672,263) $ (275,035)	2021 $ 79,856 $ 69,510 2,874,151 $ 2,943,661 $ 1,204,430

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b. Information about associates that are not individually material was as follows:

The Group’s share of Net profit for the year Other comprehensive income (loss) Total comprehensive income (loss)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 6,304 (15,126) $ (8,822)	2021 $ 3,448 9,455 $ 12,903

The Group 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, 2022

Cost Balance at January 1, 2022 Additions Disposals Balance at December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Disposals Balance at December 31, 2022 Accumulated impairment Balance at January 1 and December 31, 2022 Carrying amount at December 31, 2022	Land $ 3,988,983 19,298 - $ 4,008,281 $ - - - $ - $ - $ 4,008,281	Buildings Machinery and Equipment $ 5,012,081 $ 23,066,828 2,429 157,987 - - $ 5,014,510 $ 23,224,815 $ 2,141,699 $ 19,554,344 133,518 337,229 - - $ 2,275,217 $ 19,891,573 $ - $ 1,069,186 $ 2,739,293 $ 2,264,056	Other Equipment $ 4,530,559 57,939 (8,145) $ 4,580,353 4,138,570 100,203 (8,145) $ 4,230,628 $ - $ 349,725	Spare Parts $ 1,330,770 119,828 (220,180) $ 1,230,418 $ 774,413 130,511 (220,180) $ 684,744 $ 153,156 $ 392,518	Construction in Progress and Equipment to be Inspected $ 67,071 (19,288 ) - $ 47,783 $ - - - $ - $ - $ 47,783	Total $ 37,996,292 338,193 (228,325) $ 38,106,160 $ 26,609,026 701,461 (228,325) $ 27,082,162 $ 1,222,342 $ 9,801,656

For the year ended December 31, 2021

Cost Balance at January 1, 2021 Additions Disposals Balance at December 31, 2021 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Disposals Balance at December 31, 2021 Accumulated impairment Balance at January 1, 2021 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 $ 19,214,045 132,758 346,556 - (6,257) $ 2,141,699 $ 19,554,344 $ - $ 423,161 - 646,025 $ - $ 1,069,186 $ 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 $ 741,470 159,634 (126,691) $ 774,413 $ 153,156 - $ 153,156 $ 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 $ 26,014,520 737,362 (142,856) $ 26,609,026 $ 576,317 646,025 $ 1,222,342 $ 10,164,924

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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 3-20 years Tank 10 years

The Corporation bought farmlands for warehousing at the Gangshan District in Kaohsiung City. However, certain regulations prohibit the Corporation from registering the title of these farmlands in the Corporation’s name; therefore, the registration was made in the name of an individual person. The individual person consented to fully cooperate with the Corporation in freely changing the land title to the Corporation or to other name under the Corporation’s instructions. Meanwhile, the land has been pledged to the Corporation as collateral. In May 2022, a portion of the land was classified under land category and registered under the Corporation’s sole ownership. As of December 31, 2022 and 2021, the carrying amount of the farmlands recognized as land was NT$19,354 thousand and NT$55,433 thousand, respectively.

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 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%.

15. LEASE ARRANGEMENTS

a. Right-of-use assets

Carryingamount Land Transportation equipment Additions to right-of-use assets		December	31
	2022 2021 $ 43,521 $ 55,852 4,571 7,068 $ 48,092 $ 62,920 For the Year Ended December 31
		2022 $ 1,076	2021 $ 69

(Continued)

29 -

Depreciation charge for right-of-use assets Land Transportation equipment	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 12,443 3,100 $ 15,543	2021 $ 12,450 3,029 $ 15,479 (Concluded)

Except for the addition and recognition of depreciation expenses listed above, the Group's right-of-use assets did not undergo significant sub-lease and impairment for the years ended December 31, 2022 and 2021.

b. Lease liabilities

Carryingamount Current Non-current		December	31
		2022 $ 12,877 $ 36,276	2021 $ 15,408 $ 48,519

Range of discount rates for lease liabilities was as follows:

Land (%) Transportation equipment (%)	December 31
	2022 2021 0.65-1.31 0.65-1.31 0.75-0.76 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.

d. Other lease information

Lease arrangements under operating leases for the leasing out of investment properties are set out in 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	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 16,395 $ 1,296 $ (33,860)	2021 $ 12,728 $ 1,353 $ (30,167)

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

30 -

16. INVESTMENT PROPERTIES

For the year ended December 31, 2022

Cost Balance at January 1, 2022 and December 31, 2022 Accumulated depreciation Balance at January 1, 2022 Depreciation expense Balance at December 31, 2022 Carrying amount at December 31, 2022 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	Land $ 5,959,074 $ - - $ - $ 5,959,074 Land $ 5,959,074 $ - - $ - $ 5,959,074	Buildings $ 41,067 $ 17,844 888 $ 18,732 $ 22,335 Buildings $ 41,067 $ 16,956 888 $ 17,844 $ 23,223	Total $ 6,000,141 $ 17,844 888 $ 18,732 $ 5,981,409 Total $ 6,000,141 $ 16,956 888 $ 17,844 $ 5,982,297

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, 2022 and 2021 were NT$85,109 thousand and NT$83,446 thousand, respectively, and were included in other income. As of December 31, 2022 and 2021, the Corporation received the same margin of NT$35,000 thousand based on the lease contract.

As of December 31, 2022 and 2021, notes receivable and advance rental were as follows:

Notes receivable Less: Advance rental		December	31
		2022 $ 52,630 52,630 $ -	2021 $ 51,598 51,598 $ -

31 -

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	December 31
		2022 $ 98,074 88,232 89,996 91,796 93,632 359,396 $ 821,126	2021 $ 94,793 86,618 88,232 89,996 91,796 453,028 $ 904,463

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 December 2021 by real estate appraiser. 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
		2022 $ 13,667,266 27.52 1.90-2.57	2021 $ 13,667,266 27.52 1.90-2.57

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

17. BORROWINGS

a. Short-term borrowings and bank overdrafts

Unsecured loans Bank overdrafts (Note 31) Letters of credit Interest rate (%)		December 31	December 31
		2022 $ 4,780,000 980,171 1,801,345 $ 7,561,516 0.67-1.84	2021 $ 2,700,000 666,391 1,195,861 $ 4,562,252 0.21-0.75

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b. Short-term bills payable

Short-term bills payable Less: Unamortized discounts Interest rate (%)		December 31	December 31
		2022 $ - - $ - -	2021 $ 1,000,000 359 $ 999,641 0.56

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

c. Long-term borrowings

Credit bank loans Due on various dates through October 2025 Less`：`Current potion Interest rate (%)		December 31	December 31
		2022 $ 4,600,000 2,340,000 $ 2,260,000 1.35-1.71	2021 $ 1,200,000 - $ 1,200,000 0.79

d. Long-term bills payable

Long-term bills payable Less: Unamortized discount Interest rate (%)		December 31	December 31
		2022 $ 2,500,000 1,559 $ 2,498,441 0.64-1.54	2021 $ 240,000 208 $ 239,792 0.62

Long-term bills payables have revolving credit lines within the payment terms according to the contracts, and need to be utilized to some extent. As of December 31, 2022 and 2021, all long-term bills payables were non-guarantee commercial paper.

18. BONDS PAYABLE

Unsecured domestic bonds Less: Issuance cost of bonds payable		December 31	December 31
		2022 $ 3,000,000 2,691 $ 2,997,309	2021 $ 3,000,000 3,826 $ 2,996,174

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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
		2022 $ 534,403 $ 289,098	2021 $ 1,360,732 $ 469,577

The Group 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 Utilities Export fees Outsourced repair and construction Interest payable Compensation of employees and remuneration of directors Others		December 31	December 31
		2022 $ 213,075 56,846 51,516 42,176 30,739 1,569 146,669 $ 542,590	2021 $ 487,058 55,505 57,829 32,317 14,528 371,560 156,907 $ 1,175,704

21. PROVISIONS - CURRENT

Onerous contracts		December 31	December 31
		2022 $ 133,700	2021 $ 206,850

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Balance at beginning of the year Recognized (Reversal) Balance at end of the year	For the Year Ended	For the Year Ended	December 31
		2022 $ 206,850 (73,150) $ 133,700	2021 $ - 206,850 $ 206,850

The provision for onerous contracts comes from the non-cancellable purchase contracts with suppliers, and the provision amounts are measured using the difference of the unavoidable costs of meeting the contractual obligations less the economic benefits expected to be received from 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 Group 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 consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities (assets)		December 31	December 31
		2022 $ 1,381,697 (1,383,757) $ (2,060)	2021 $ 1,601,663 (1,213,886) $ 387,777

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Movements of net defined benefit liabilities (assets) were as follows:

Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Balance at January 1, 2022
$ 1,601,663
$ (1,213,886)

Service cost
Current service cost
18,640
-
Interest expense (income)

7,969

(6,379)

Recognized in profit or loss

26,609

(6,379)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
(94,776)
Actuarial gain - changes in financial
assumptions
(123,541)
-
Actuarial gain - experience adjustments

(76,090)

-

Recognized in other comprehensive income

(199,631)

(94,776)

Contributions from the employer

-

(111,556)

Benefits paid

(46,944)

42,840

Balance at December 31, 2022
$ 1,381,697
$ (1,383,757)

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)

Net Defined
Benefit
Liabilities
(Assets)
$ 387,777
18,640

1,590

20,230

(94,776)
(123,541)

(76,090)

(294,407)

(111,556)

(4,104)
$ (2,060)
$ 313,717
18,626

1,371

19,997

(14,600)
33,010
52,523

86,284

157,217

(95,550)

(7,604)
$ 387,777

36 -

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

Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 16,957 3,273 $ 20,230	2021 $ 16,845 3,152 $ 19,997

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
	2022 2021 1.5 0.5 2.5 2.5 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		December	31
		2022 $ (28,527) $ 29,434	2021 $ (36,735) $ 37,995 (Continued)

37 -

Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2022 $ 28,617 $ (27,878)	2021 $ 36,597 $ (35,578) (Concluded)

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	December 31
		2022 $ 82,850 8.5 years	2021 $ 139,466 9.4 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
		2022 2,043,160 $ 20,431,600 1,435,544 $ 14,355,444	2021 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 NT$10, carry one vote per share and the right to dividends.

b. Capital surplus

Additional paid-in capital		December 31	December 31
		2022 $ 903	2021 $ 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.

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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. The allocation of no less than 30% of the distributable surplus every year to distribute dividends was resolved and approved. However, if the cumulative 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 2021 and 2020 were approved by shareholders’ meeting in June 2022 and August 2021, respectively. The appropriations and dividends per share were as follows:

Legal reserve Reversal of special reserve Cash dividends	Appropriation of Earnings 2021 2020 $ 620,174 $ 54,064 (425,839) (123,739) 4,019,524 430,663	Dividend Per Share (NT$)
		2021 2020 $ 2.8 $ 0.3

The appropriations of earnings for 2022 were proposed by the Corporation’s board of directors on February, 2023 as follows:

	Appropriation	Appropriation	Dividend Per
	of	Earnings	Share (NT$)
Cash dividends	$	502,441	$ 0.35

The appropriations of earnings for 2022 are subject to the resolution of the shareholders’ meeting to be held in June 2023.

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 for the year Share from associates accounted for using the equity method Balance at end of the year	For	the Year Ended December 31	the Year Ended December 31
		2022 $ (142) 528 $ 386	2021 $ - (142) $ (142)

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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 for the year Unrealized gains and losses - equity instruments Share from associates accounted for using the equity method Other comprehensive income recognized for the year Cumulative unrealized gain or loss of equity instruments transferred to retained earnings due to disposal Balance at end of the year f. Gains and losses on hedging instruments- Cash flow hedges Balance at beginning of the year Recognized for the year Foreign currency risk-foreign currency deposits Foreign currency risk-foreign exchange forward contracts Income tax effect Other comprehensive income recognized for the year Balance at end of the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ 1,131,353 $ (425,839) (201,638) 380,295 (631,244) 1,185,440 (832,882) 1,565,735 219 (8,543) $ 298,690 $ 1,131,353 For the Year Ended December 31
		2022 $ - (8,902) (2,166) 2,214 (8,854) $ (8,854)	2021 $ - - - - - $ -

24. OPERATING REVENUE

a. Contract balances

December 31, 2022 December 31, 2021 Accounts receivable $ 289,350 $ 977,933 Contract liabilities Sale of goods $ 102,146 $ 95,155	January 1, 2021 $ 947,325 $ 57,283

40 -

b. Disaggregation of revenue

For the year ended December 31, 2022

Type ofgoods orservices Sale of goods Rendering of services Others		Reportable Segments	Reportable Segments
		Chung Hung $ 43,675,748 741,273 80,257 $ 44,497,278	Others $ - 3,104 3,112 $ 6,216	Total $ 43,675,748 744,377 83,369 $ 44,503,494

For the year ended December 31, 2021

Type ofgoods or services Sale of goods Rendering of services Others		Reportable Segments	Reportable Segments
		Chung Hung $ 53,019,056 624,450 89,708 $ 53,733,214	Others $ - 10,497 301 $ 10,798	Total $ 53,019,056 634,947 90,009 $ 53,744,012

25. NET PROFIT (LOSS) FOR THE YEAR

Net profit (loss) for the year consisted of following items:

a. Other income

Rental income Grant income Dividend income Others Other gains and losses Gain on financial assets at fair value through profit or loss Net foreign exchange gain Service charge Others	For the Year Ended	For the Year Ended	December 31
	2022 $ 89,331 8 104,930 88,989 $ 283,258 For the Year Ended		2021 $ 86,876 24,207 10,383 9,877 $ 131,343 December 31
		2022 $ 2,774 38,682 (5,452) (7,004) $ 29,000	2021 $ 318,331 64,415 (7,554) (4,254) $ 370,938

b. Other gains and losses

41 -

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

Foreign exchange gain Foreign exchange loss Net exchange gain (loss)	For the Year Ended	For the Year Ended	December 31
		2022 $ 366,780 (328,098) $ 38,682	2021 $ 128,405 (63,990) $ 64,415

c. Finance costs

For the Year Ended	For the Year Ended	December 31
2022 $ 130,964 680 131,644 1,069 $ 130,575 For the Year Ended		2021 $ 45,534 854 46,388 673 $ 45,715 December 31
2022 $ 1,069 0.59-1.32 For the Year Ended		2021 $ 673 0.56-0.72 December 31
	2022 $ 701,461 888 15,543 $ 717,892 $ 707,678 9,326 888 $ 717,892	2021 $ 737,362 888 15,479 $ 753,729 $ 745,529 7,312 888 $ 753,729

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e. Operating expenses directly related to investment properties

Direct operating expenses of investment properties that generated rental income Direct operating expenses of investment properties that did not generate rental income f. Employee benefits Short-term employee benefits Salaries Labor and health insurance Others Post-employment benefits Defined contribution plans Defined benefit plans (Note 22) Analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
	2022 2021 $ 11,296 $ 11,401 9,934 7,265 $ 21,230 $ 18,666 For the Year Ended December 31
		2022 $ 967,833 104,127 185,302 1,257,262 27,201 20,230 47,431 $ 1,304,693 $ 1,082,941 221,752 $ 1,304,693	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

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. The Company did not accrue compensation of employees and remuneration of directors for the year ended December 31, 2022 due to losses incurred.

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

43 -

	For the Year
	Ended
	December 31,
	2021
Amount
Compensation of employees	$ 307,804
Remuneration of directors	61,561
	For the Year
	Ended
	December 31,
	2021
Accrual rate
Compensation of employees (%)	4.17
Remuneration of directors (%)	0.83

If there is a change in the proposed amounts after the annual consolidated 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 compensation of employees and remuneration of directors paid for the years ended December 31, 2021 and 2020.

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 (benefit) were as follows:

Current tax In respect of the current year Income tax on unappropriated earnings In respect of the prior years Deferred tax In respect of the current year	For the Year Ended	For the Year Ended	December 31
		2022 $ 255 93,750 (6,742) (281,857) $ (194,594)	2021 $ 658,128 - 4,537 - $ 662,665

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

Profit (Loss) before income tax Income tax expense (benefit) at the statutory rate Permanent differences Profit on investments under equity method Others Unrecognized deductible temporary differences Income tax on unappropriated earnings Loss carryforwards Unrecognized loss carryforwards In respect of the prior years	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ (1,184,523) $ (236,905) (69,373) (20,305) (125,637) 93,750 - 170,618 (6,742) $ (194,594)	2021 $ 7,013,076 $ 1,402,615 (6,407) (64,575) 121,919 - (795,424) - 4,537 $ 662,665

b. No income tax was recognized directly in equity.

c. Income tax benefit recognized in other comprehensive income

Deferred tax Remeasurement on defined benefit plans Gains and losses on hedging instruments	For the Year Ended	For the Year Ended	December 31
		2022 $ 77,962 2,214 $ 80,176	2021 $ - - $ -

d. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2022 $ 657 $ 89,378	2021 $ - $ 654,769

45 -
e. Deferred tax assets and liabilities

For the year ended December 31, 2022

f.	Balance at Beginning of the Year Recognized in Profit or Loss Deferred Tax Assets Temporary differences Unrealized write-down of inventories $ - $ 319,119 Provisions - 26,740 Others - 25,219 $ - $ 371,078 Deferred Tax Liabilities Temporary differences Land value increment tax $ (182,222) $ - Unrealized loss on sales - (10,847) Defined benefit plans - (78,374) $ (182,222) $ (89,221) For the year ended December 31, 2021 Balance at Beginning of the Year Recognized in Profit or Loss DeferredTax Liabilities Temporary differences Land value increment tax $ (182,222) $ - Items for which no deferred tax assets have been recognized Loss carryforwards Expired in 2032 Deductible temporary differences Impairment loss on assets Amortization of deferred credits Net defined benefit liabilities	Balance at Beginning of the Year Recognized in Profit or Loss Deferred Tax Assets Temporary differences Unrealized write-down of inventories $ - $ 319,119 Provisions - 26,740 Others - 25,219 $ - $ 371,078 Deferred Tax Liabilities Temporary differences Land value increment tax $ (182,222) $ - Unrealized loss on sales - (10,847) Defined benefit plans - (78,374) $ (182,222) $ (89,221) For the year ended December 31, 2021 Balance at Beginning of the Year Recognized in Profit or Loss DeferredTax Liabilities Temporary differences Land value increment tax $ (182,222) $ - Items for which no deferred tax assets have been recognized Loss carryforwards Expired in 2032 Deductible temporary differences Impairment loss on assets Amortization of deferred credits Net defined benefit liabilities	Recognized other comprehensive income Balance at End of the Year $ - $ 319,119 - 26,740 2,214 27,433 $ 2,214 $ 373,292 $ - $ (182,222) - (10,847) 77,962 (412) $ 77,962 $ (193,481) Recognized other comprehensive income Balance at End of the Year $ - $ (182,222) December 31	Recognized other comprehensive income Balance at End of the Year $ - $ 319,119 - 26,740 2,214 27,433 $ 2,214 $ 373,292 $ - $ (182,222) - (10,847) 77,962 (412) $ 77,962 $ (193,481) Recognized other comprehensive income Balance at End of the Year $ - $ (182,222) December 31	Recognized other comprehensive income Balance at End of the Year $ - $ 319,119 - 26,740 2,214 27,433 $ 2,214 $ 373,292 $ - $ (182,222) - (10,847) 77,962 (412) $ 77,962 $ (193,481) Recognized other comprehensive income Balance at End of the Year $ - $ (182,222) December 31
			$	2022 705,000 818,339 289,375 -	2021 $ - $ 1,024,967 344,401 387,777 (Continued)
			$

46 -

Purchase contract loss Sales discount payable Provision for inventory loss Others		December 31	December 31
		2022 $ - - - - $ 1,107,714	2021 $ 206,850 200,042 128,663 122,891 $ 2,415,591 (Concluded)

g. Income tax assessments

The Group’s income tax returns through 2020 have been assessed by the tax authorities.

27. EARNINGS (LOSSES) PER SHARE

Basic earnings (losses) per share Diluted earnings (losses) per share	For	the Year Ended December 31	the Year Ended December 31
		2022 $ (0.69) $ (0.69)	2021 $ 4.42 $ 4.40

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

Net profit or loss for the year

Attributable to owners of the Corporation Weighted average number of ordinary shares outstanding (in thousand	For the Year Ended December 31	For the Year Ended December 31
	2022 $ (989,929) shares)	2021 $ 6,350,411

Weighted average number of ordinary shares in computation of basic earnings (losses) per share Effect of dilutive potential ordinary shares: Compensation of employees Weighted average number of ordinary shares used in computation of diluted earnings (losses) per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 1,435,544 - 1,435,544	2021 1,435,544 7,737 1,443,281

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. In consideration of the net loss for the year ended December 31, 2022, due to the dilutive effect, the potential shares attributed to the compensation of employees were excluded from the computation of diluted losses per share.

47 -

28. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group 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 Group 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

December31,2022 Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares Financial liabilities for hedging Foreign exchange forward contracts December31,2021 Financial assets at FVTOCI Domestic listed shares Domestic unlisted shares	Level 1 $ 1,016,574 - $ 1,016,574 $ - $ 1,205,902 - $ 1,205,902	Level 2 $ - - $ - $ 2,166 $ - - $ -	Level 3 $ - 41,163 $ 41,163 $ - $ - 62,040 $ 62,040	Total $ 1,016,574 41,163 $ 1,057,737 $ 2,166 $ 1,205,902 62,040 $ 1,267,942

There was no transfer between Level 1 and Level 2 for the years ended December 31, 2022 and 2021.

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

	Financial Assets	Financial Assets	Financial Assets
	at	FVTPL -	at FVTOCI -
		Equity	Equity
	Instruments		Instruments		Total
For theyear ended December31,2022
Balance at beginning of the year	$	-	$ 62,420	$	62,420
					(Continued)

48 -

Financial Assets
at FVTPL -
Equity
Instruments
Financial Assets
at FVTOCI -
Equity
Instruments
Total profit or loss
Recognized in profit or loss
$ 2,774
$ -

Recognized in other comprehensive
income
-
(12,310)
Capital reduction refunded
(2,774)
(8,242)
Disposal

-

(325)

Balance at end of the year
$ -
$ 41,163

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

Total
$ 2,774
(12,310)
(11,016)
(325)
$ 41,163
$ 285,755
318,331
18,695
(560,741)
$ 62,040

(Concluded)

3) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instrument Valuation Technique and Inputs

Derivative instruments

Derivatives with quoted prices in active markets were measured at fair values based on their market prices. If market prices are not available, derivatives are measured at estimated value using valuation techniques. The estimates and assumptions used in the Corporation’s valuation techniques are consistent with the information used by market participants in pricing financial instruments, which are available to the Corporation. The fair value of each foreign exchange forward contract was determined separately under forward exchange rates indicated by the bank quotation system.

4) 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.
b) The fair value of unlisted shares was based on the current net value.
49 -

c. Categories of financial instruments

Financialassets Financial assets for hedging Measured at amortized cost (see 1 below) Financial assets at fair value through other comprehensive income Equity instruments Financial liabilities Financial liabilities for hedging Measured at amortized cost (see 2 below)	December 31
	2022 2021 $ 700,188 $ - 5,023,807 2,725,019 1,057,737 1,267,942 2,166 - 19,116,172 13,303,919

1) The balances included financial assets measured at amortized cost, which comprise cash and cash equivalents, 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 (including current portion), long-term bills payable, and guarantee deposits received.
d. Financial risk management objectives and policies

The Group’s major financial instruments include financial assets for hedging, accounts receivable, investments accounted for using equity method, other financial assets, accounts payable, short-term borrowings, short-term bills payable, bonds payable, long-term borrowings (including current portion), long-term bills payable and lease liabilities. The Group’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 Group. These risks include market risk (including exchange rate risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Group 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 Group’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 Group 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 Group’s exposure to market risks or the manner in which these risks were managed and measured.

50 -

a) Foreign currency risk

The Group was exposed to foreign currency risk due to sales and purchases, denominated in foreign currencies. The Group manages exposure to foreign exchange risk using foreign currency deposits and engages in foreign exchange forward contracts with firm commitment opposite to exchange rate fluctuations within the scope permitted by the policy.

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

Sensitivity analysis

The Group was mainly exposed to the fluctuation of USD. The following table details the Group’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 or equity of 1% decrease in NTD against USD.

Profit (loss) before income tax (Note 1) Equity (Note 2)	USD Impact
	For the Year Ended December 31
	2022 2021 $ 7,900 $ (11,834) 7,002 -

Note 1: This was mainly attributable to the exposure of outstanding USD cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable and other payables, which were not hedged at the balance sheet date.

Note 2: These were attributable to financial assets for hedging that were designated as hedging instruments in cash flow hedges.

b) Interest rate risk

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

The carrying amounts of the Group’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
	2022 2021 $ 3,046,462 $ 4,059,742 1,319,232 1,431,290 14,659,957 6,002,044

51 -

Sensitivity analysis

If interest rates had been 0.25% higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2022 and 2021 would have been lower/higher by NT$33,352 thousand and NT$11,427 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through their investments in domestic listed shares. The equity price of the Group 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, 2022 and 2021 would both have been lower by NT$34,113 thousand.

2) Credit risk

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

The Group made transactions only with the parties with good credit. The goods were delivered after the cash or L/C was received, and the Group 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 Group manages liquidity risk by monitoring and maintaining a level of cash deemed adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The Group 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, 2022, the unutilized credit facility of the Group was NT$39.7 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 Group’s non-derivative financial liabilities based on contractual undiscounted payments:

	Less Than 1	Less Than 1
		Year		1-5 Years	Over 5 Years			Total
December31,2022
Short-term borrowings	$	7,656,261	$	-	$	-	$	7,656,261
Accounts payable (including
related parties)		823,501		-		-		823,501
Other payables		511,850		-		-		511,850
Refund liabilities		57,815		-		-		57,815
Lease liabilities		13,400		29,260		8,129		50,789
Bonds payable		22,100		3,044,200		-		3,066,300
Long-term bank borrowings		2,373,999		2,276,006		-		4,650,005
Long-term bills payable		-		2,500,000		-		2,500,000
								(Continued)

52 -

Guarantee deposits received December31,2021 Short-term borrowings Short-term bills payable Accounts payable (including related parties) Other payables Refund liabilities Lease liabilities Bonds payable Long-term bank borrowings Long-term bills payable Guarantee deposits received	Less Than 1 Year $ - $ 11,458,926 $ 4,584,062 1,000,000 1,830,309 1,161,176 265,047 16,086 22,100 9,480 - - $ 8,888,260	1-5 Years $ - $ 7,849,466 $ - - - - - 35,783 3,066,300 1,215,258 240,000 - $ 4,557,341	Over 5 Years $ 35,000 $ 43,129 $ - - - - - 14,364 - - - 35,000 $ 49,364	Total $ 35,000 $ 19,351,521 $ 4,584,062 1,000,000 1,830,309 1,161,176 265,047 66,233 3,088,400 1,224,738 240,000 35,000 $ 13,494,965

(Concluded)

4) Cash flow hedging

December 31, 2022

Contract Hedging Amount Forward Line Item in Instruments Currency (in thousands) Maturity Price Balance Sheet Cash flow hedging Foreign currency deposit USD $ 22,800 NA NA Financial assets for hedging Foreign exchange forward contract NTD/USD USD 7,000/ TWD 217,116 112.01 30.9933- 31.0555 Financial liabilities for hedging	Change in Fair Value of Hedging Instrument Used for Calculating Carrying Amount Hedge Asset Liability Ineffectiveness $ 700,188 $ - $ (8,902 ) - 2,166 (2,166 )

Balance in Other Equity Change in Fair Value of Hedged Items Used for Calculating Hedge Continuing Discontinuing Hedging Instruments/Hedged Items Ineffectiveness Hedges Hedges Cash flow hedging Foreign currency deposit/Forecast purchases of raw materials and equipment $ 8,902 $ (8,902) $ - Foreign exchange forward contracts/Forecast purchases of raw materials 2,166 (2,166) - - $ 11,068 $ (11,068) $

53 -

For the year ended December 31, 2022

Effect on Comprehensive Income Hedging Gains (Losses) Recognized in OCI Amount of Hedge Ineffectiveness Recognized in Profit or Loss Line Item in Which Hedge Ineffectiveness is Included Cash flow hedging $ (11,068) $ - -	Amount Reclassified to P/L and the Adjusted Line Item
	Due to Hedged Item Affecting P/L Due to Hedged Future Cash Flows No Longer Expected to Occur $ - $ -

30. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

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

Company
China Steel Corporation
Dragon Steel Corporation (DSC)
CHC Resources Corporation (CHC)
Info Champ Systems Corporation (ICSC)
CSC Steel Sdn. Bhd. (CSSB)
China Steel Global Trading Corporation (CSGT)
Himag Magnetic Corporation (HMC)
China Steel Machinery Corporation (CSMC)
China Ecotek Corporation
China Steel Security Corporation
Steel Castle Technology Corporation
China Steel Express Corporation
China Steel Structure Co., Ltd
Universal Exchange Inc.
China Steel Chemical Corporation
Yu Cheng Lime Corporation
Wabo Global Trading Corporation
CSC Solar Corporation
Kaohsiung Rapid Transit Corporation
Sing Da Marine Structure
United Steel Engineering & Construction Corp
China Steel Precision Metals Kunshan Co., Ltd.
CSE Transport Corporation
CSGT Metals Vietnam Joint Stock Company
Transglory Investment Corporation
Pro-Ascentek Investment Corporation
Pacific Harbour Stevedoring Corporation

Relationship

Parent entity
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Associate
Associate
Other related party

54 -

b. Sale of goods

Related Party Type Account Items /Name Sales Parent entity Fellow subsidiaries related to others CSSB Others 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
		2022 $ 310 $ 1,751,268 89,335 1,840,603 $ 1,840,913 $ 725,151 7 $ 725,158	2021 $ 1,399 $ 2,211,117 78,095 2,289,212 $ 2,290,611 $ 575,034 38,137 $ 613,171

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 and fellow subsidiaries related to others within one month after acceptance by T/T.

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 Type Account Items /Name Other operating revenue Parent entity 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
		2022 $ 3,460 53,834 14,597 - 68,431 $ 71,891	2021 $ - 62,930 14,448 103 77,481 $ 77,481

There is no significant profit or loss from the sale of supplies and oxidized iron powder of parent entity and the fellow subsidiaries related to others.

55 -
c. Purchase of goods

Related Party Type/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
		2022 $ 7,402,133 15,307,063 3,262,928 73,707 18,643,698 $ 26,045,831	2021 $ 8,085,884 16,347,526 6,402,704 70,111 22,820,341 $ 30,906,225

The purchases were mainly slabs and hot rolled coils. The payment terms and prices of other related parties were no different from those of unrelated parties for the years ended December 31, 2022 and 2021.

d. Accounts receivable from related parties (excluding loans to related parties)

Related Party Type Account Items /Name Accounts receivable from related Parent entity parties Fellow subsidiaries related to others Other receivable from related parties Parent entity Fellow subsidiaries related to others CHC		December 31	December 31
		2022 $ 41,915 15,595 $ 57,510 $ 19,190 25,288 $ 44,478	2021 $ 33,745 13,610 $ 47,355 $ 180,658 40,803 $ 221,461

No guarantees have been received for accounts receivable and other receivable from related parties. For the years ended December 31, 2022 and 2021, no impairment losses were recognized for accounts receivable from related parties.

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

Related Party Type Account Items /Name Accounts payable to related parties Parent entity Fellow subsidiaries related to others Other related parties		December 31	December 31
		2022 $ 285,669 1,100 2,329 $ 289,098	2021 $ 463,370 1,554 4,653 $ 469,577

(Continued)

56 -

Related Party Type Account Items /Name Other payable Parent entity Fellow subsidiaries related to others Other related parties		December 31	December 31
		2022 $ 1,353 10,290 3,487 $ 15,130	2021 $ 64,317 16,737 3,807 $ 84,861 (Concluded)

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

f. Loans to related parties (recognized under other receivables - related parties)

Related Party Types Parent entity Interest income Related Party Types Parent entity		December 31	December 31
	2022 $ 300,000 For the Year Ended		2021 $ - December 31
		2022 $ 1,111	2021 $ -

The Corporation provided unsecured loans to the parent entity, and the interest rate is similar to the market interest rate. These loans are expected to be repaid within one year, and there is no expected credit loss after assessment.

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$52,832 thousand and NT$67,640 thousand for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022 and 2021, authorization fees payable (included in payables to related parties) were NT$7,150 thousand and NT$13,104 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, 2022 and 2021 were NT$4,304 thousand and NT$3,995 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, 2022 and 2021 were both NT$5,310 thousand.
57 -
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 b) Capital expenditure Fellow subsidiaries related to others CSMC ICSC Others	For the Year Ended	For the Year Ended	December 31
		2022 $ 147,957 121,420 118,350 $ 387,727 $ 20,600 13,940 3,040 $ 37,580	2021 $ 190,696 162,401 136,611 $ 489,708 $ - 38,021 - $ 38,021

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
		2022 $ 469,215 385 $ 469,600	2021 $ 479,895 3,018 $ 482,913

h. Compensation of key management personnel

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

Short-term employee benefits Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2022 $ 30,919 1,475 $ 32,394	2021 $ 108,073 1,410 $ 109,483

58 -

31. ASSETS PLEDGED AS COLLATERAL OR SECURITY

The Group’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
		2022 $ 800,000 300,000 $ 1,100,000	2021 $ 700,000 300,000 $ 1,000,000

32. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of December 31, 2022 were as follows:

a. Unused letters of credit for purchases of raw materials and machinery and equipment amounted to about NT$2,728,044 thousand.
b. The Group had signed agreements to buy equipment for NT$517,702 thousand, of which NT$94,665 thousand had been paid (included in construction-in-progress and prepayments for equipment).
c. The Group provided letters of credits for NT$400 thousand guaranteed by financial institutions for purchase agreements. Guarantee notes for NT$174,500 thousand were provided for purchases of raw material.

33. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currencies of the Group 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 31,2022
Monetary financial assets
USD	$	65,492	30.71 (USD:NTD)	$ 2,011,260
Monetary financial liabilities
USD		16,967	30.71 (USD:NTD)	521,043
December 31,2021
Monetary financial assets
USD		27,573	27.68 (USD:NTD)	763,213
				(Continued)

59 -

				Carrying
		Foreign		Amount
	Currency			(In Thousands
		(In		of New Taiwan
	Thousands)		Exchange Rate	Dollars)
Monetary financial liabilities
USD	$	70,327	27.68 (USD:NTD)	$ 1,946,640
				(Concluded)

For the years ended December 31, 2022 and 2021, realized and unrealized net foreign exchange gain were NT$38,682 thousand and NT$64,415 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.

34. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and b. investees:
1) Financing provided to others (Table 1)
2) Endorsements/guarantees provided (None)
3) Marketable securities held (excluding investments in subsidiaries and associates) (Table 2)
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital (None)
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 (Note 29)
10) Intercompany relationships and significant intercompany transactions (None)
11) Information on investees (Table 5)
c. Information on investments in mainland China (None)
d. Major shareholders’ information (Table 6)
60 -

35. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Reportable segments of the Group were as follows:

The Corporation - manufacture, process and sell steel products.
Other corporations - Hung Kao Investment Corporation engaged in general investment.
a. Segment revenue and operating results

The following is an analysis of the Group’s revenue and results of operations by reportable segment.

For the year ended December31,2022 Revenue from external customers Segment profit (loss) Interest income Other income Other gains and losses Finance costs Share of profit of subsidiaries and associates Profit (loss) before income tax Income tax expense (benefit) Net profit (loss) for the year Identifiable assets Investments accounted for using equity method Total assets Total liabilities For the year ended December31,2021 Revenue from external customers Segment profit Interest income Other income Other gains and losses	The Corporation $ 44,497,278 $ (1,763,346) 47,609 283,378 29,000 (130,575) 349,161 (1,184,773) (194,844) $ (989,929) $ 33,025,480 3,738,144 $ 36,763,624 $ 19,701,187 $ 53,733,214 $ 6,514,174 803 131,463 370,938	Others $ 6,216 $ 2,529 17 - - - - 2,546 250 $ 2,296 $ 37,498 - $ 37,498 $ 1,253 $ 10,798 $ 9,356 22 - -	Adjustment and Elimination $ - $ 120 - (120) - - (2,296) (2,296) - $ (2,296) $ - (36,245) $ (36,245) $ - $ - $ 120 - (120) -	Total $ 44,503,494 $ (1,760,697) 47,626 283,258 29,000 (130,575) 346,865 (1,184,523) (194,594) $ (989,929) $ 33,062,978 3,701,899 $ 36,764,877 $ 19,702,440 $ 53,744,012 $ 6,523,650 825 131,343 370,938 (Continued)

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Finance costs Share of profit of subsidiaries and associates Profit before income tax Income tax expense Net profit for the year Identifiable assets Investments accounted for using equity method Total assets Total liabilities	The Corporation $ (45,715) 39,589 7,011,252 660,841 $ 6,350,411 $ 33,387,142 4,089,098 $ 37,476,240 $ 14,914,842	Others $ - - 9,378 1,824 $ 7,554 $ 49,414 - $ 49,414 $ 3,094	Adjustment and Elimination $ - (7,554) (7,554) - $ (7,554) $ - (46,320) $ (46,320) $ -	Total $ (45,715) 32,035 7,013,076 662,665 $ 6,350,411 $ 33,436,556 4,042,778 $ 37,479,334 $ 14,917,936 (Concluded)

Segment profit represented the profit before tax earned by each segment without allocation of central administration costs and directors’ salaries, rental revenue, interest income, gain or loss on disposal of property, plant and equipment, exchange gain or loss, finance costs and income tax expense (benefit). This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance.

b. Revenue from major products and services

Revenue from major products and services of the Group were as follows:

Sales Hot Rolled Steel Cold Rolled Steel Steel Pipe Galvanized Steel Service revenue Investment revenue Other operating revenue	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 33,058,790 5,766,825 3,276,453 1,573,680 744,377 3,112 80,257 $ 44,503,494	2021 $ 41,674,879 7,405,276 1,305,262 2,633,639 634,947 301 89,708 $ 53,744,012

c. Geographical information

The Group operates in Taiwan.

The Group’s revenue from external customers and information about its non-current assets by geographical location were detailed below.

62 -

Taiwan Asia America Europe Others	Revenue from External Customers	Revenue from External Customers	Revenue from External Customers		Non-current Assets	Non-current Assets
	For the Year Ended December 31				December 31
		2022 $ 25,064,087 13,650,576 3,203,494 1,970,932 614,405 $ 44,503,494	2021 $ 40,014,883 9,217,278 901,657 2,684,624 925,570 $ 53,744,012		2022 $ 15,887,442 - - - - $ 15,887,442	2021 $ 16,280,431 - - - - $ 16,280,431

Non-current assets excluded those classified as financial instruments, investments accounted for using equity method , deferred tax assets, refundable deposits and defined benefit asset.

d. Information about major customers

Sales revenue A Company B Company C Company	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2022 $ 5,387,210 4,884,798 3,902,054 $ 14,174,062	2021 $ 7,752,757 6,807,648 6,635,545 $ 21,195,950

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TABLE 1

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2022 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Endorsement/ Guarantee Provider	Endorsee/ Guarantee	Financial Statement Account	Related Party	Maximum Balance for the Period	Ending Balance	Amount Actually Drawn	Interest Rate (%)	Nature for Financing (Note 1)	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company	Financing Company’s Total Financing Amount Limits	Note
													Item	Value
0	Chung Hung Steel Corporation	China Steel Corporation	Other receivables	Yes	$ 300,000	$ 300,000	$ 300,000	1.04-1.53	2	$ -	Operating capital	$ -	None	$ -	$ 1,706,243	$ 6,824,974	Note 2

Note 1: The nature for financing is as follows:

Business relationship.
The need for short-term financing.

Note 2: According to “The Process of Financing Others” established by the Corporation, the total available amount for lending to others and the total amount for lending to a company shall not exceed 40% and 10% of the net worth of the Corporation, respectively.

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TABLE 2

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2022

(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 31, 2022	December 31, 2022	December 31, 2022			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. 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	730,000 33,109,239 134,167 250,000 1,003,980		$ - $ 986,655 $ 34,733 6,430 $ 41,163 $ 29,919	15 - 2 5 -		$ - $ 986,655 $ 34,733 6,430 $ 41,163 $ 29,919	Note 2022.11.30 net value 2022.08.31 net value

Note : As of December 31, 2022, 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 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, 2022

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

Buyer (Seller)	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	$ 7,402,133 15,307,063 3,262,928 (1,751,268 ) (722,048 )	18 38 8 (4 ) (2 )	Letter of credit at sight/Payment after final acceptance 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 after final acceptance	$ - - - - -	NO THIRD-PARTY COULD BE COMPARED	$ (285,669 ) - - - 41,915	(35 ) - - - 14

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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, 2022

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

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amount Received in Subsequent Period (Note 2)	Allowance for Impairment Loss
					Amount	Actions Taken
Chung Hung Steel Corporation	China Steel Corporation	Parent company	$ 316,240	(Note 1)	$ -	-	$ 13,716	$ -

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

Note 2: The amount has received at the report date.

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TABLE 5

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2022 (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, 2022	December 31, 2021
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 2,001,152 200,000	2,600,000 306,824,279 20,000,000	100.00 40.91 16.67	$ 36,245 3,508,558 193,341	$ 2,296 832,427 37,820	$ 2,296 340,561 6,304	Subsidiaries (Note) Associates Associates

Note: Amount was eliminated in the consolidated financial statements.

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TABLE 6

CHUNG HUNG STEEL CORPORATION

MAJOR SHAREHOLDERS’ INFORMATION DECEMBER 31, 2022

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

Note 1: Major shareholders in the Table above are shareholders owning 5% or more of the Corporation’s ordinary shares (only ones that have completed dematerialized registration and delivery, and round down to two decimal places) based on calculations performed by the Taiwan Depository & Clearing Corporation using data as of the last business date at the end of each quarter. The share capital recorded in the company's consolidated 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.
69 -

Related Party Types Parent entity Interest income Related Party Types Parent entity		December 31	December 31
	2022 $ 300,000 For the Year Ended		2021 $ - December 31
		2022 $ 1,111	2021 $ -

AI assistant

CHUNG HUNG — Audit Report / Information 2022

51945_rns_2022-11-04_233e8a3f-26c3-45d0-8849-7b5df04d4407.pdf

Chung Hung Steel Corporation and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

The Existence of Revenue from Export Sales

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

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

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

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

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands of New Taiwan Dollars)

CHUNG HUNG STEEL CORPORATION AND SUBSIDIARIES

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

Basis of Consolidation

Foreign Currencies

Inventories

Investment in Associates

Property, Plant, and Equipment

Freehold land is not depreciated.

Investment Properties

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

Financial Instruments

1) Measurement category

b. Equity instruments

Hedge accounting

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 AND CASH EQUIVALENTS

7. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

8. FINANCIAL INSTRUMENTS FOR HEDGING

9. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES

December 31, 2022

b. Other receivables

10. INVENTORIES

11. PREPAYMENTS

12. OTHER FINANCIAL ASSETS

13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

a. Material associate

TIC

14. PROPERTY, PLANT AND EQUIPMENT

15. LEASE ARRANGEMENTS

b. Lease liabilities

c. Material lease activities and terms

CHUNG HUNG Audit Report / Information 2022