Stock Code: 2208

CSBC CORPORATION, TAIWAN .

2020 Annual Report

Notice to readers

This English-version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English and Chinese versions, the Chinese version shall prevail.

Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw

CSBC Annual Report is available at : http://www.csbcnet.com.tw/Service/Investor Printed on 06 02, 2021

Spokesperson and Deputy Spokesperson

Spokesperson: Chou, Chih-Ming

Title: Executive Vice President Tel: （ 07 ） 805-9888 Ext.2131

Email address: [email protected]

Deputy Spokesperson: Chen, Hui-Shan

Title: Executive Vice President

Tel: （ 07 ） 805-9888 Ext.2131

Email address: [email protected]

Address and Phone of the company and Shipyard
Add of Headquarter: No.3,Jhonggang Rd., Siaogang District, Kaohsiung 81234, Taiwan (R.O.C.)

Tel: （ 07 ） 805-9888

Add of Kaohsiung Yard: No.3, Jhonggang Road., Siaogang District, Kaohsiung 81234, Taiwan (R.O.C.)

Tel: （ 07 ） 805-9888

Add of Keelung Yard: No.224, Heyi Road, Heping Island, Keelung Taiwan (R.O.C.) Tel: （ 02 ） 2463-1021

Name: Stock Affairs Agency Department of Fubon Securities Co., Ltd.
Tel: (02)2361-1300

Add: 2nd Floor, No.17, Xuchang Street, Taipei Taiwan (R.O.C.)

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

CPA for the most recent financial report:

Name of CPA: Tien, Chung-Yu, Wang, Kuo-Hua

Accounting Firm: PWC Taiwan

Add: 22F., No.95, Minzu 2nd Road., 800 Xinxing Dist., Kaohsiung Taiwan (R.O.C.) Website: http://www.pwc.com

Tel: （ 07 ） 237-3116

The name of the trading place where overseas securities are listed for trading and the way to inquire about the information: None.
Company website: http://www.csbcnet.com.tw

CSBC CORPORATION, TAIWAN 2020Annual Report

	CSBC CORPORATION, TAIWAN 2020Annual Report Contents
I.	Letter to Shareholders ....................................................................................................... 1
II.	Company Profile ............................................................................................................... 7
III.	Corporate Governance Report ......................................................................................... 14
	3.1 Organization ............................................................................................................ 14
	3.2 Directors, Supervisors and Management Team……………..……….…………….26
	3.3 Implementation of Corporate Governance ............................................................ 38
	3.4 Information of Fees to CPA ..................................................................................... 75
	3.5 Information of Changing CPAs ............................................................................... 75
	3.6 The Chairman, President and Financial or Accounting Manager of the
	Company who had Worked for the Independent Auditor or the Related Party in
	the Past Year, shall Indicate the Name, the Title and Term of Contract .................. 75
	3.7 Transfer of equity interests and/or pledge of or change in equity interests by
	directors, supervisors, managers, or shareholders with a stake of more than 10%
	during the most recent fiscal year or during the current fiscal year up to the date
	of publication of the annual report .......................................................................... 75
	3.8 Information Disclosing the Spouse, Kinship Within the Second Degree and
	Relationship between and any of the Top Ten Shareholders ................................... 78
	3.9 The Shareholding of the Company, Director, Supervisor, Management and the
	Business that is Controlled by the Company Directly or Indirectly on the
	Invested Company and the consolidated shareholding ratio is calculated .............. 79
IV.	Capital Overview ............................................................................................................. 80
	4.1 Capital and Shares ................................................................................................... 80
	4.2 Corporate Bonds handling situation ........................................................................ 86
	4.3 Preferred Shares handling situation ......................................................................... 90
	4.4 Global Depository Receipts .................................................................................... 90
	4.5 Employee Stock Options ......................................................................................... 90
	4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions ...... 90
	4.7 Financing Plans and Implementation ...................................................................... 90
V.	Operation Overview ........................................................................................................ 91
	5.1 Business Activities .................................................................................................. 91
	5.2 Market and Sales Overview .................................................................................. 114
	5.3 The number of employees, average length of service, average age and
	educational background in the last two years and up to the publication date of
	the annual report .................................................................................................... 122
	5.4 Expenditure on Environmental Protection ............................................................ 122
	5.5 Labor Relations ..................................................................................................... 129
	5.6 Important Contracts ............................................................................................... 131

VI. Financial Information .................................................................................................... 135 6.1 Five-Year Financial Summary ............................................................................... 135 6.2 Five-Year Financial Analysis ................................................................................ 139 6.3 Audit Committee’s Report in the Most Recent Year ............................................. 144 6.4 The consolidated financial report of the most recent year that has been verified by CPA .................................................................................................................. 145 6.5 The non-consolidated financial report of the most recent year that has been verified by CPA .................................................................................................................. 145 6.6 The company and its affiliated companies have experienced financial difficulties in the most recent year and as of the printing date of the annual report ..................................................................................................................... 145 VII. Review and analyses of Financial Position, and Financial Performance, and Assessment of Risk Items ............................................................................................. 146 7.1 Financial Condition ............................................................................................... 146 7.2 Financial Performance ........................................................................................... 147 7.3 Cash Flows ............................................................................................................ 148 7.4 The Impact of any Material Capital Expenditure over the Most Recent Fiscal Year........................................................................................................................ 149 7.5 The FCM’s Financial Policy for the Most Recent Year on Investment in other Companies, the Main Reasons for Profit/ Losses Resulting therefrom, Plans for Improvement, and Investment Plans for the Coming Fiscal Year. .................. 150 7.6 The Matters that shall be Analyzed and Assessed in the Section on Risks ........ 152 7.7 Other Important Matters ........................................................................................ 152 VIII. Special Items ............................................................................................................... 166 8.1 Information Related to the Company’s Affiliates ................................................. 166 8.2 In the most recent year and as of the publication date of the annual report, the status of private equity securities .................................................................................... 168 8.3 Holding or disposal of shares in the company by the company's subsidiaries during the most recent fiscal year and during the current fiscal year up to the date of publication of the annual report ................................................................ 168 8.4 Other Matters that Require Additional Description .............................................. 168 IX. Situations Which Might Materially Affect Shareholders’ Equity or the Price of the Company’s Securities, has Occurred during the Most Recent Fiscal Year or during the Current Fiscal Year up to the Date of Publication of the Annual Report .............. 168 Appendix 1 ： Consolidated Financial Statements for 2019 and 2020 ................ ……1~80 Appendix 2 ： Parent Company Only Financial Statements for 2019 and 2020 ......... 1~73

I. Letter to Shareholders

Dear Shareholders,

Thank you for attending the year's regular shareholders meeting of the company during the busy schedule. I would like to report to you about the company's business results for 2020 and a summary of the business plan for 2021.

1. The status of the global shipbuilding industry in 2020

After the trade war between the United States and China in 2018 and the commercial trade dispute between Japan and South Korea in 2019, the international business situation has been turbulent. In addition to the unprecedented "new coronavirus" (COVID-19) epidemic hitting globally in 2020, border control and lock-in policies implemented by various countries have seriously affected the global flow of goods and trade. The World Bank report pointed out that after the new crown pneumonia caused a large number of infections and even deaths in 2020, economic activity and income growth will be reduced in the future. However, after the launch of the vaccine and the successive launches of various countries, the epidemic is expected to be controlled. The World Bank estimates that although the global economic growth rate is expected to return to 4% this year (2021), it warns that the global economic recovery will slow down in the future and may face "The lost Ten years".

According to Clarksons research, global newbuilding orders fell 29% in 2020, about 53.9 million deadweight tons, while there are still 76 million deadweight tons in 2019. Among them, the drop in orders for bulk carriers is the most obvious. In 2020, it is about 13.5 million dwt. Compared with the 32 million dwt in 2019, the decline is more than 58%. Oil tanker is a relatively small commercial ship type, with an estimated 23.8 million dwt in 2020 and a decrease of 8% compared to 25.9 million dwt in 2019. At the same time, due to the decrease in the number of new ship orders in 2020 but the continued delivery of orders on hand, global hand-held orders have decreased by about 19%. Hand-held orders

accounted for only 7% of the current shipping company’s fleet capacity, setting the lowest record in 31 years.

Since the fourth quarter, with the continuous development and mass production of the new crown pneumonia vaccine, the world has gradually entered the post-epidemic era, and the demand for container transportation has been the first to rebound. The global rush for containers has caused shipping prices to rise sharply. Taking the three domestic shipping companies (Evergreen, Yangming, Wanhai) as examples, they have achieved good single season operations in the fourth quarter. At the same time, shipping companies have begun to invest in the construction of new ships. According to Clarksons Research Institute, although the number of new ship orders for the whole year of 2020 has fallen sharply, the number of orders in the fourth quarter has increased significantly compared with the previous three quarters, setting a single season record since 2018. The global shipbuilding market has shown a trend of recovery, and the government continues to promote national defense independence and green energy policies such as "National Shipbuilding" and "Offshore Wind Power", which will help the company's business, and future operations can be expected.

2. Operating Performance in 2020

(1) Consolidated financial results.

Unit: Thousand NT$

Item	2020	2019	Compared with 2019(%`）`
Operatingincome	25,296,629	16,540,899	52.93%
Gross Profit(loss)	-1,409,474	-1,190,381	-18.41%
Operating profit	-1,907,395	-1,706,140	-11.80%
Pre-Tax Income	-1,598,750	-1,808,910	11.62%
Netprofit(loss)	-1,600,087	-1,815,518	11.87%

The operating income of the company in 2020 was NT$25.297 billion, and the gross operating loss was 1.409 billion. The net loss for the current

period was 1.6 billion, which was a decrease of 215 million in loss compared to 2019; At the same time, due to the company's continuous increase in revenue and expenditure reduction and upgrading and transformation plans in 2020, and the continuous start of multiple types of official ships, operating income has increased significantly by 52.93% compared with the previous year, and once again back to 25 billion. It is only due to factors such as the low price of the ships currently holding orders, the impact of the new crown pneumonia epidemic on the progress of the project, and the appreciation of the New Taiwan dollar exchange rate, resulting in a loss for the whole year.

`(2)` Orders in hand

a. New ships and marine engineering orders

As of the end of December 2020, there are 6 merchant ships (6 in Kaohsiung) and 28 warships and official ships (10 in Kaohsiung + 18 in Keelung) in hand. The delivery date is scheduled for the Kaohsiung shipyard until November 2025, and the Keelung shipyard until October 2027. The marine engineering order in hand includes 60 underwater foundation pin pile for offshore wind turbines and 2+20 underwater foundation Transition Piece for offshore wind turbines, which are expected to be delivered in 2021.

b. Completion and delivery

In 2020, 7 merchant ships were completed and delivered at the Kaohsiung shipyard (1 ship of 208,000-ton bulk carrier, 6 ships of 2,800TEU container vessel), Keelung shipyard completed and delivered 3 ships (2 ships of 800-ton marine research ships and 1 ship of 2,100-ton marine research ship). And for official ship, three 100-ton patrol rescue boats were completed and delivered at the Keelung shipyard.

`(3)` Research and development status

Expenditures of R&D in 2020 are about NT$94 million, which is about

NT$6 million less than the NT$100 million in 2019. Research and development results include the basic design and development of new ships, advanced research on the effectiveness of ship model tank tests, the strength analysis of the entire ship structure under dynamic wave loads, the design of the size of the ship structure and the study of finite element analysis, S460 European standard steel plate welding process application research, Taiwan offshore wind farm operation and maintenance big data network platform construction research, installation ship section hoisting sequence and dock shaft row research, independent development and verification of end plate propeller program, the analysis of the knocking dynamic characteristics of non-vibration isolation systems, the analysis and improvement of ship power harmonics, and the integration technology and application of smart factories, etc. The total is 17 research and development projects.

The new research and development direction in 2021 mainly includes the independent development and verification of the end plate propeller program, research on ship power harmonic analysis and improvement, research on array waveguide glass and electromagnetic pulse interruption frequency of the whole ship, self-made ship monitoring system technology and integration research, ship stabilizer system integration intelligent development plan, marine branch pipe cutting and method feasibility study of blue welding automated production line, development of high-efficiency methods for assessing the fuel consumption of ships in real seas, and smart factory integration technology and application research, etc. Actively move towards improving the technical capabilities of smart ships, defense ships and marine engineering as the main development direction.

`(4)` Major investment

The projects in the implementation of the 2020 fixed assets project investment plan include the "Kaohsiung shipyard Multi-purpose Steel

Structure Production Line Project Investment Plan", the "Transition Piece (TP) Production Line Project Investment Plan", and the "Investment Plan for the Important Equipment Factory of the National Ship"; Projects under planning include the "Investment Plan for the Kaohsiung Plant's 350-ton GOC Crane Replacement Project", with a total investment of approximately NT$3.67 billion.

3. Business Plan for 2021

In 2020, the world is affected by the COVID-19 epidemic. In order to control the epidemic, various countries have adopted large-scale country lockouts and embargoes, which caused an instantaneous freezing of global freight and human transportation demand, which severely affected the global economy. The company also inevitably be affected by the COVID-19. In addition, important foreign equipment, original factory service engineers, and technical assistance personnel cannot arrive at the factory as scheduled, and the production schedule has been severely disrupted, resulting in a loss in 2020.

Based on this, the company is actively transforming and moving towards diversified operations, striving to get rid of operational difficulties. In 2021, the sprint goal will be "turn over operation and stable profitability” and cooperate with the company's various improvement plans and the implementation of the Keelung shipyard transformation plan. In addition to achieving the goal of diversified business layout, it can also optimize the operating status of the Keelung shipyard and the entire company. At the same time, with the promotion of the national policies of "National Shipbuilding" and "Offshore Wind Power", the company's business strategy in recent years has focused on the development of three major businesses. Under the active transformation and strategic adjustments. The proportion of merchant shipping business revenue has dropped from over 90% for a long time to 52% in 2019, and to 30% in 2020. At the same time, the shipbuilding business increased significantly from 10% in the early years

to 61%, and the ship repair and offshore engineering business increased to 8%. After a large number of operations of the company have started a number of businesses and gradually recognized revenue, revenue in 2020 will reach NT$25.297 billion. Since 2014, the revenue has exceeded NT$25 billion again, and the results of business transformation have gradually taken effect.

As of the end of 2020, the company's pending business has reached NT$59.8 billion. Looking forward to 2021, the company is able to escape the impact of the merchant shipping market, which is caught in the Red Sea competition, by undertaking value-added businesses and adjusting the proportion of the merchant shipping business. In addition, the company will actively improve the overall financial structure through cash capital increase plans. At the same time, in accordance with national policies, the company will adjust the direction of operations and move towards the fields of official ships and offshore wind power steel structures and coatings. As multi-type ships have entered a large number of construction phases, it is expected that the company will be able to turn losses into stabilize profits, adhere to the vision of "Building an excellent marine business group", to allow the company to operate continuously and create maximum value for shareholders.

Best wishes for everyone.

Good health and good luck!

CSBC Corporation, Taiwan Chairman CHENG, WEN-LON

II. Company Profile

1. Company Profile

2.1.1 Date of establishment: November 7, 1973

2.1.2 Addresses and Phone numbers of the Headquarter, Branch office and Shipyards.

Headquarter: 3. Jhonggang Rd., Siaogang District, Kaohsiung, Taiwan, R.O.C.

Tel: (07) 805-9888

Kaohsiung Shipyard: 3. Jhonggang Rd., Siaogang District, Kaohsiung, Taiwan, R.O.C.

Tel: (07) 805-9888

Keelung Shipyard: 224. Ho-1 Road, Keelung, Taiwan, R.O.C. Tel: （ 02 ） 2463-1021

2.1.3 Company History

1973: "China Ship Building Corporation " was established in July and obtained approval for establishment registration in November.
1974: "China Ship Building Corporation "started construction of a shipyard in Kaohsiung in January and completed the construction on May 31, 1976.
1977: The "China Ship Building Corporation" was changed to "stateowned" in July and the construction of Taiwan's first 445 thousand dwt super tanker, the "BURMAH ENDEAVOR", was completed in December.
1978: The "China Ship Building Corporation" and the "Taiwan Ship Building Corporation" were merged and reorganized to operate as the "China Ship Building Corporation", with the Taipei office, the Kaohsiung General shipyard and the Keelung

General shipyard in January. The construction of Taiwan’s second 445 thousand dwt super tanker, the " BURMAH ENTERPRISE", was completed in July.

1990: In December, the groundbreaking ceremony of the first missile frigate (PFG-2) in the Navy's Guanghua-1 project was held at the Kaohsiung General Shipyard in January. The second missile frigate (PFG-2) was held.
1991: In October, the naming and launching ceremony of the first missile frigate (PFG-2) in the Navy's Guanghua-1 project was held at the Kaohsiung General shipyard.
1992: In October, the naming and launching ceremony of the second missile frigate (PFG-2) in the Navy's Guanghua-1 project was held at the Kaohsiung General shipyard.
1993: In May, the first Perry-class missile frigate (PFG-2) in the Navy's Guanghua-1 plan was delivered at the Kaohsiung General shipyard. In October, the construction of the ship repair dock of the Kaohsiung General shipyard was completed.
1995: In January, the Kaohsiung General shipyard was awarded the ISO 9001 registration certificate for the Merchant Ship Design and Construction by the world-renowned verification organization " Lloyd's Register Quality Assurance”. In December, Keelung General shipyard was awarded the ISO 9001 registration certificate for the Merchant Ship Design and Construction by the world-renowned verification organization "DET NORSKE VERITAS”.
1996: In January, the Taipei company officially moved south to Kaohsiung, cooperating with the Kaohsiung General shipyard. In September, the Kaohsiung Headquarters General shipyard was awarded the ISO 9002 registration certificate of Machinery Business by the world-renowned verification organization "DET NORSKE VERITAS".

1997: In July, the Ship Repair Works of the Kaohsiung General shipyard was awarded the ISO 9002 registration certificate for the ship repair business by the world-renowned verification organization "DET NORSKE VERITAS".
1999: Since September, it has successively passed the approval of the American Society of Mechanical Engineers (ASME), and obtained N (Authorization Certificate 1999/2002), NA (Approval Certificate 1999/2002), NA (Construction Authorization Certificate 2000/2003), NPT (Authorization Certificate 1999/ 2002), NPT (Approved certificate 1999/2002) and NPT (Construction Authorization Certificate 2000/2003) nuclear energy level certificate qualifications, with internationally recognized nuclear energy level high-quality design, installation, and manufacturing capabilities.
2000: In order to cope with business development and to meet the needs of privatization, the company and the Kaohsiung headquarters organized personnel and businesses to merge at the same time from May 1 of the year.
2001: On December 31, the company implemented the "regeneration plan" to streamline a total of 2,280 people, and the "Keelung General shipyard" was reduced to a first-level unit of the "Keelung shipyard".
2002: Since September, it has successively passed the American Society of Mechanical Engineers (ASME) certification again, obtained N/NA/NPT and the newly added NS (Accredited Certificate 2003) nuclear energy level certification qualification, and has internationally recognized nuclear energy level high-quality design, installation, manufacturing capacity.
2003: In March, the company reduced its capital by NT$2 billion and increased its capital by NT$2 billion. In October, the company reduced its capital by NT$2 billion and increased its capital by

NT$2 billion. In December, the company reduced its capital by NT$1 billion and increased its capital by NT$1 billion.

2006: Integrate the ISO 9001 of Kaohsiung Merchant Shipping Business, Keelung Merchant Shipping Business ISO 9001, Kaohsiung Machinery Business ISO 9001, and Kaohsiung Ship Repairing Business ISO 9001 into a single quality management system, and it has been verified by DET NORSKE VERITAS.
2007: In January, the company obtained the certificate of quality management system after business integration (ISO 9001:2000) In March, the company changed its name to “CSBC Corporation, Taiwan”. In December, the company handled a capital reduction of NT$4.478 billion, and the capital was reduced to 6.661 billion yuan.
2008: On April 1, the Securities and Futures Bureau approved the company's initial public offering of shares.
2008: On April 3, the Ministry of Economic Affairs confirmed that the company is a major undertaking of national economic construction.
2008: On July 30, the application to the stock exchange for stock listing was completed.
2008: On September 16th, the board of directors of the Stock Exchange passed a resolution of the company's application for the listing of publicly issued ordinary shares. On October 13, the Financial Supervisory Commission approved the company’s application for the listing of issued ordinary shares for the record.
2008: On December 3, the company was awarded the OHSAS 18001 Occupational Safety and Health Management System

Registration Certificate by the world-renowned verification organization "DET NORSKE VERITAS".

2008: December 18 is the company's privatization base date.
2008: On December 22, the company went public and completed privatization.
2009: On November 3, the company was awarded the Outstanding Innovative Enterprise Award for Industrial Technology Development by the Ministry of Economic Affairs.
2009: On December 16, the company was awarded the TOSHMS: 2007 Taiwan Occupational Safety and Health Management System Kaohsiung and Keelung shipyard registration certificate by the world-renowned verification organization "DET NORSKE VERITAS".
2010: On January 14, the company won the Golden Torch Award of the Top Ten Enterprises of the R.O.C.
2010: On September 13, CSBC Coating Solutions Co., Ltd. was established and registered.
2010: On December 22, the company was awarded the ISO 14001 environmental management system registration certificate by the world-renowned verification organization "DET NORSKE VERITAS".
2011: On November 4, the company obtained the "Certificate of Corporate Governance System -CG6006 General Edition".
2013: On November 29, the company was awarded the "2013 Taiwan Enterprise Sustainability Award"-"Taiwan Top 50 Enterprise Sustainability Report Award" for manufacturing excellence.

2014: On October 31, the company was awarded the "103 Excellent Merchant Golden Merchant Award".
2014: On November 25, the company was awarded the "2014 Taiwan Enterprise Sustainability Award"-"Taiwan Top 50 Enterprise Sustainability Report Award", a large-scale enterprise traditional manufacturing silver award and an "Innovative Growth Award".
2014: On December 8, the company was awarded the "2014 Taiwan M&A Award"-"Best Corporate Social Responsibility Award".
2014: Passed TIPS basic verification login certificate.
2015: On November 24, the company was awarded the "Taiwan Enterprise Sustainability Report Award" traditional manufacturing silver award; on December 23, the company was awarded the "Sustainable Governance Practice Award".
2015: On October 30, the company was awarded the "12th National Brand Yushan Award"-"Outstanding Enterprise" national first prize; on December 21, the company was awarded the "24th Taiwan Excellence Award".
2015: Passed TIPS basic verification login certificate.
2016: On November 23, the company was awarded the "Taiwan Enterprise Sustainability Report Award" traditional manufacturing silver award; on December 23, the company was awarded the "Sustainable Governance Practice Award".
2016: Passed TIPS basic verification login certificate.
2017: Won the 18th Outstanding Enterprise Golden Peak Award: Top

Ten Outstanding Innovation R&D.

2017: Passed TIPS A-level verification login certificate.
2018: Won the 27th Taiwan Excellence Award and Taiwan Excellence Gold Award.
2018: Passed TIPS A-level verification login certificate.
2019: On February 26, CSBC-DEME Wind Engineering Co., Ltd. was established and registered.
2019: On August 27, the company obtained the business license for ship cargo handling contract industry.
2019: On September 20, the company was the only award-winning company of Kaohsiung City’s Good People and Good Things Award.
2019: Passed TIPS A-level verification login certificate.
2020: On September 16, the company was awarded the Kaohsiung Environmental Protection Bureau's 2019 Green Procurement Outstanding Enterprise.
2020: On November 27, the company was awarded the first prize of the 2019 Port Facility Security Assessment
2020: On October 15, the company passed the TIPS A-level verification sampling review.
2020: On October 26, the company passed the CMMI Level 2 and ISO 27001 (verification of Capability Maturity Model Integration and information security management system) and awarded the certificate on December 23.

III.Corporate Governance Report

3.1 Organization

3.1.1 Company Organization

(1) Organizational Chart

==> picture [455 x 400] intentionally omitted <==

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

Shareholder's Meeting
Board of Director
Remuneration Audit Committee
Committee
Chairman
Audit Office President Secretariat Office
of the Board
Executive Vice President Chief Executive
Offshore Substation Project Department of Department of Department of Finance Hull Works
Management Office Material Design and Accounting
Offshore Steel Structure Manufacturing PMO Outfitting Works Department of Department of Quality Department of
Information Assurance Planning
MIV Project Management Office Occupational Safety and Department of Health Legal Affairs Office Ship Management Department of Ship Repair Works
Advanced Vessel Department of Human IDS Works Department of
Development Center Resources and Environmental
Administration Protection and Public
Naval Shipbuilding Keelung Yard Dock Control
PMO Office
Department
of Sales
----- End of picture text -----

May 26, 2020 CSBC-Management-No. 1096650589

3.1.2 Major Corporate Functions

`（` 1 `）` Secretariat Office of the Board

In charge of board affairs, confidentiality, documents, seals; the compilation of the agenda of the board of directors and the shareholders meeting and the record of the proceedings and other matters.

`（` 2 `）` Audit Office

In charge of the audit business, responsible for the establishment and maintenance of the audit system, the planning, promotion, execution, tracking, assessment, and comprehensive management and supervision of the graded audit of the audit business.

（ 3 ） Department of Planning
A. Company business strategy and future research and development strategy, investment plan formulation, multi-field market information collection and analysis, new business promotion and strategic alliance, new product cooperation or introduction evaluation, new business model, business field and related technology development Research and promote cooperative research between industry, government, university, and research.
B. The company’s annual operating plan, management of engineering technology and research and development, planning and implementation of business projects, recommendations for the reform of management systems, assessment of responsibility centers, and corporate governance, etc.
C. Production business planning and control, process improvement suggestions, cost statistical analysis and estimation, completion review, and labor procurement bid opening operations.
（ 4 ） Department of Information Technology

Short, medium and long-term information development plans, network and hardware and software equipment, information system integration, information budget, planning, analysis, design, and maintenance of information application systems and office automation, information operation systems, standards and procedures, development of information security strategies and disaster recovery operations, compliance with laws and regulations related to information services, risk management and crisis management, planning, coordination and implementation of smart plant development, etc.

（ 5 ） Department of Sales
A. Newbuilding of merchant ships, retrofitting and overhauling, contracting, promotion, cooperation and customer credit investigation, bidding, contact, establishment and management of agents, collection and research of market information, etc.
B. Offshore wind power and onshore steel structures and large-scale steel structures business negotiation, contracting, cooperation, customer credit investigation, bidding, contact, market information collection, research and judgment, etc.
C. Related businesses such as tendering, contacting, and collecting and researching market information for warships and maritime patrol agencies
（ 6 ） Department of Material

A. Purchase material inquiry, market survey, collection, vendor evaluation, development and management, preparation, purchase, audit, insurance, customs declaration and transportation, claims, control and related material procurement, management system establishment and work standards development and other matters.
B. Material warehousing, receiving and dispatching, material accounting, inventory operations and review and treatment of excess stock and waste materials, and other matters.
（ 7 ） Department of Human Resources and Administration
A. Human resource planning, management policy determination, salary research and formulation, and human resource management regulations.
B. Employer appointment and dismissal, transfer, assessment, rewards and punishments, insurance, retirement, repatriation, pension matters and handling of employee share trusts, contractor management and evaluation, and handling of human labor procurement
C. Personnel talent development, personnel acquisition, education and training, organizational adjustment plans, labor-management relations coordination, employee services, appeals, and recreational activities, etc.
D. Company public relations, administrative affairs management, logistics support, company entity security protection and matters not handled by other units, etc.
E. The preparation, execution and supervision of the annual fire protection business work plan and budget, and the drafting of relevant laws and regulations, etc.
（ 8 ） Department of Finance and Accounting
A. Utilization, planning, scheduling, loan acquisition and repayment of Fund, cashier business, fixed asset management, financial system, fund lending and endorsement guarantee, short-term investment, online declaration, stock operations, and the drafting and implementation of various amount letters from the court seized manufacturers, etc.
B. Compilation, control, coordination, review, compilation, execution and control of budget and operation audit, cost calculation and analysis, accounting, taxation, accounting treatment, and handling of final accounts and the formulation of related accounting systems, etc.
（ 9 ） Department of Design
A. Design development plan and overall design of new ships (warships) and large steel structures (Including production technical specifications, basic design, functional design, and construction design), etc.
B. New ship (warship) engineering cost estimation and technical specification agreement.
C. Preparation of delivery blueprints and certificate documents, as well as collection, 。
management and application of technical data, etc.
D. Research and development work related to the overall logistics operation execution and design technology and capability enhancement of new ships (warships).

E. Blueprint design, source visits, construction specification management, technical association search and communication, etc.
F. Design drawings, construction drawings, simulation analysis, development of overall logistics documents, and hull lofting related to national shipbuilding.
（ 10 ） Naval Shipbuilding PMO
A. Surface ship business marketing, government commentary, media communication, bid preparation hosting, contract management, etc.
B. Surface ship construction work planning, project management, ceremonial planning and execution, shipowner services, etc.
C. National shipbuilding business marketing, government commentary, media 。
communication, bidding hosting, contract management, etc.
D. National shipbuilding work planning, project management, ritual planning and execution, shipowner services, etc.
E. Inquiry of purchase materials of China National Shipbuilding Corporation, investigation and collection of market conditions, manufacturer evaluation, development and management. Preparation, purchase, auditing, insurance, customs declaration and transportation, claims, control and related material procurement, management system establishment, and operating standards development for various construction materials.
F. The warehousing, receiving and dispatching, material accounting, inventory operations and review and treatment of idle and waste materials of the National Shipbuilding Corporation, etc.
G. The quality control and inspection of the national shipbuilding project, the inspection of materials and products, the inspection of the ship class, the coordination of the engineering warranty, and suggestions for improvement of related materials, etc.
H. The main co-organizers for the planning, establishment, maintenance and development of the quality management system of the national shipbuilding industry, responsible for system document configuration management, system performance management and system integration, etc.
（ 11 ） Department of Quality Assurance
A. Handle engineering quality control and inspection, material product inspection, ship classification inspection, coordination of engineering warranty, and suggestions for improvement of related materials, etc.
B. The company's quality management system planning, establishment, maintenance and development of the main co-organized matters, responsible for system document configuration management, internal and external audits, system performance management and system integration, etc.
C. The planning, establishment and execution of company laboratories, including physical and chemical testing, instrument calibration and non-destructive testing.
（ 12 ） Department of Environmental Protection and Public Utilities
A. The preparation of annual public constructions, public facilities, environmental protection and other work plans in the plant area, the preparation, execution and

supervision of budgets, the reduction of public hazards and the preparation of relevant laws and regulations.

B. The construction, maintenance and management of public works and public facilities in the factory, the maintenance, repair and allocation of various machines, equipment, and instruments, and the overall adjustment and utilization.
（ 13 ） Department of Occupational Safety and Health
Annual industrial safety and health work plan, execution and supervision, execution of medical and health care services, accident prevention and drafting of relevant laws and regulations.
（ 14 ） Legal Affairs Office
A. Assist the business of each unit in the legal handling of litigation, arbitration and administrative remedies. And assist in handling legal cases arising from labormanagement issues and environmental protection, and formulating business management regulations, as well as consultation on foreign contracts and government-issued regulations.
B. Promote and integrate the implementation and operation of risk management.
（ 15 ） Hull Works
A. Hull feeding, processing, small assembly, assembly, welding, painting, installation engineering construction and general management.
B. Construction, manufacturing, installation and repair of large steel structures.
C. Self-made and commissioned work for new and repaired ships, such as hatch covers, rudder frames, and stern shaft mounts.
（ 16 ） Outfitting Works
A. New ship (warship) equipment manufacturing, installation engineering, sea trial 。
and general management, etc.
B. Construction, manufacturing, installation and repair of large-scale steel structures.
（ 17 ） Ship Repair Works
A. Merchant ship and warship maintenance business contracting, quotation, bidding, negotiation, construction and collection.
B. Ship retrofitting and modification of Executive ship, ship repair and part of the new ship warranty engineering construction and evaluation.
（ 18 ） IDS Works
A. The materials, processing, small assembly, assembly, welding, painting, installation construction and general management of the hull of China National Shipbuilding Corporation.
B. Construction and maintenance of the hull of the State Shipbuilding Corporation.
C. Self-manufacturing and maintenance of large-scale outfitting work racks made by the national shipbuilding corporation.
D. The manufacturing, installation, sea trial and general management of the national 。
shipbuilding products
E. The contracting, manufacturing, installation and other matters of the shipbuilding and maintenance of the national shipbuilding.
（ 19 ） Department of Ship Management

A. Operation and use of docks and piers and management of tugboats and workboats.
B. Relevant work related to the design of the ship's loading and securing system.
（ 20 ） Dock Control Office
Responsible for ships entering and leaving docks, piloting, mooring safety and related berthing controls (Including Keelung Yard).
（ 21 ） Keelung Yard
A.The coordination of production, execution, control, completion review, shipowner, ship class inspection, engineering warranty and relevant engineering improvement suggestions after the contract is signed for the new ship.
B.Ship and warship repair and retrofit engineering business contracting, construction and assessment, management of docks, wharves, tugs, etc., and ship entering and leaving, leaving docks, piloting, mooring safety, and related berthing control matters.
C.Construction, manufacturing, installation and repair of large-scale steel structures and outfits, etc.
D.The formulation, execution, supervision and execution of the work plan of the entire plant for industrial safety, environmental protection, public works, public facilities, and fire protection, as well as the execution of medical and health care services, accident prevention and the formulation of relevant laws and regulations, etc.
E. Construction, maintenance and management of public works and public facilities in the factory, maintenance, repair and allocation of various machinery, equipment, and instruments, as well as overall adjustment and utilization, and outsourcing of bid opening, etc.
F. Under the supervision of the company's business management unit, responsible for the implementation of the factory's personnel administration, public relations, accounting, material purchase, delivery, insurance, claims and control, etc.

Remarks:

There are 4 units in the organization of related tasks, and the related tasks are explained as follows:

（ 1 ） Offshore Substation Project Management Office: In response to the development of marine engineering business, the unit is responsible for the bid preparation of offshore substations.
（ 2 ） Offshore Steel Structure Manufacturing PMO: In response to the development of the offshore industry, the company is currently mainly responsible for the manufacturing of pin piles and transition pieces for offshore wind farms.
（ 3 ） MIV Project Management Office: In response to the development of the offshore industry, the company is mainly responsible for the control of the design, production schedule and engineering quality of the full cruiser floating crane.
（ 4 ） Advanced Vessel Development Center: In order to strengthen the capabilities of business contracting, planning and design, and business source acquisition in the field of national shipbuilding.

3.2 Directors, Supervisors and Management Team

3.2.1 Board of Director

(1) Information of the 17th Board of Directors March 10,2021

Title	Nationality/ Place of Incorporation	Name	Gender	Date of election	Term (Year)	Date of 1st election	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other position in the company or other company	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remarks
							Share	%	Share	%	Share	%	Share	%			Title	Name	Relation
Chairman/ Representative of Ministry of Economic Affairs	R.O.C	CHENG, WEN-LON	M	June 26, 2019	3	Novem ber 30, 2007	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. Ph.D. in Civil Engineering, University of Washington, USA . Vice Chairman of Public Construction Commission, Executive Yuan . Deputy Mayor of Kaohsiung City Government . Chairman of CSBC Corporation, Taiwan	Chairman of CSBC Corporation, Taiwan	`－`	`－`	`－`
Chairman/ Representative of Ministry of Economic Affairs	R.O.C Note (2)	WEI, CHENG-TZU	M	May 5, 2021 Note2	3	May 5, 2021	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. Department of Mechanical Engineering, NUU . Executive vice President of CSBC Corporation, Taiwan . Director and Chairman of CSBC Coating Solutions Co.,Ltd.	President of CSBC Corporation, Taiwan	`－`	`－`	`－`
Director/ Representative of Ministry of Economic Affairs	R.O.C	TSENG, KUO- CHENG Note (2)	M	June 26, 2019 Note2	3	August 1, 2017	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. Master Degree, Institute of Naval Architecture, National Taiwan University . Executive Vice President, CSBC CORPORATION, TAIWAN	`－`	`－`	`－`	`－`	Resigned
Director /Representative of Ministry of Economic Affairs	R.O.C	HU, WEN- ZHONG Note (2)	M	March 9, 2021 Note2	3	March 9, 2021	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. PhD, Institute of Social Sciences, Syracuse University, New York, USA . Leader of the Fourth Group of the State- owned Enterprise Commission, Ministry of Economic Affairs	Leader of the First Group of the State- owned Enterprise Commission, Ministry of Economic Affairs	`－`	`－`	`－`
Director /Representative of Ministry of Economic Affairs	R.O.C	HUANG, JIH-CHIN	M	June 26, 2019	3	June 23, 2010	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. Graduated from Dept. of Sheet Metalworking of National Tainan Industrial Hign School . Director of the Employee Welfare Committee of CSBC Corporation, housand	Director of Enterprise Union of Kaohsiung CSBC Corporation Taiwan	`－`	`－`	`－`
Director /Representative of Ministry of Economic Affairs	R.O.C	LAN, SYU- CING	M	June 26, 2019	3	Novem ber 11, 2005	105,070,366	22.21%	105,070,366	11.37%	`－`	`－`	`－`	`－`	. Equivalent academic ability graduated from the mechanical engineering department. . Senior Technician of Keelung Yard CSBC Corporation Taiwan	Director of Enterprise Union of Keelung Yard CSBC Corporation Taiwan	`－`	`－`	`－`
Representative of Ministry of National Development Fund	R.O.C	WU, WEN- KUEI	M	June 26, 2019	3	Novemb er 26, 2018	36,032,305	7.62%	136,032,305	14.72%	`－`	`－`	`－`	`－`	. Master of Earth Sciences, National Cheng Kung University . Central Region Branch, National Property Administration Director	Counselor and Director of The Office of the Zhongxing New Village Revitalization Project of National Development Council	`－`	`－`	`－`
Representative of Yaohua Glass Co., Ltd. Management Committee	R.O.C	LU, WEN- TSAN Note3	M	July 31, 2020 Note3	3	Novemb er 26, 2018	36,032,305	7.62%	64,603,733	6.99%	`－`	`－`	`－`	`－`	. Master of International Economics, University of Wyoming, USA . Section Chief, Industrial Bureau, Ministry of Economic Affairs	Deputy Head of the Industrial Bureau of the Ministry of Economic Affairs	`－`	`－`	`－`

Representative of Yaohua Glass Co., Ltd. Management Committee	R.O.C	CHEN, YUNG- TSUNG	M	June 26, 2020 Note3	3	July 29, 2013	36,032,305	7.62%	64,603,733	6.99%	`－`	`－`	`－`	`－`	. Master of Chemical Engineering of National Central University . Director of the Preparation and Promotion Group of the Radioactive Waste Management Center of the Ministry of Economic Affairs	Leader of the Fourth Group of the State- owned Enterprise Commission, Ministry of Economic Affairs	`－`	`－`	`－`	Resigned
Representative of Ministry of National Defense Industrial Development Foundation	R.O.C	Chen, Hsiao- Ming Note4	M	April 1, 2020 Note4	3	2020.4. 1	25,000,000	5.29%	53,571,428	5.80%					. Graduated from War College, National Defense University . Deputy Chief of Staff Headquater Office	Deputy Chief of Mnistry of Defense	`－`	`－`	`－`	Resigned
Representative of Ministry of National Defense Industrial Development Foundation	R.O.C	Mo, You- Ming Note4	M	March 10, 2021 Note4	3	March 10, 2021	25,000,000	5.29%	53,571,428	5.80%					. Graduated from Military Academy . Deputy commander of Army Command Hedquarter	Deputy Chief of Mnistry of Defense	`－`	`－`	`－`
Director	R.O.C	CPC Corporation, Taiwan	`－`	June 26, 2019	3	June 23, 2016	23,777,487	5.03%	23,777,487	2.57%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Director / Representative of China Steel	R.O.C	HWANG, CHIEN-CHIH	M	June 26, 2019	3	107.7.1	7,751,346	1.64%	7,751,346	0.84%	`－`	`－`	`－`	`－`	. Graduated from Department of Economics, Tunghai University . Senior Vice President of China Steel	VP of China Steel	`－`	`－`	`－`
Director	R.O.C	Yue-Li Investment Corporation	`－`	June 26, 2019	3	98.02.1 3	2,652,411	0.56%	4,670,922	0.51%	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`	`－`
Director / Kaohsiung City Representative of Industrial Labor Union of CSBC	R.O.C	HOU, DE- LONG	M	June 26, 2019	3	96.06.0 4	428,000	0.09%	801,259	0.09%	`－`	`－`	`－`	`－`	. Electrical Engineering Department of Kaohsiung Municipal Kaohsiung Industrial High School . Director of the Industrial Union and Employee Welfare Committee of CSBC Corporation, Taiwan; Chairman of the KaohsiungFederation of Industries	Senior Technician of CSBC Corporation Taiwan and representative of Enterprise Union	`－`	`－`	`－`
Director / Kaohsiung City Representative of Industrial Labor Union of CSBC	R.O.C	HSIEH, KUO-JUNG	M	June 26, 2019	3	103.7.1	428,000	0.09%	801,259	0.09%	`－`	`－`	`－`	`－`	. Graduated from Kaohsiung Marine Engineering Department . Director and Supervisor of Employee Welfare Committee of CSBC Corporation, Taiwan	Senior Technician of CSBC Corporation Taiwan and representative of Enterprise Union	`－`	`－`	`－`
Independent Director	R.O.C	LIN, HUI- JENG	M	June 26, 2019	3	June 23, 2016	0	0.00%	0	0.00%	`－`	`－`	`－`	`－`	. PhD, Institute of Naval Architecture, National Taiwan University . President of National Penghu University of Science and Technology . Professor, Department of Engineering Science and Ocean Engineering, National Taiwan University	Chairman of Chunyu Factory Co., Ltd.	`－`	`－`	`－`
Independent Director	R.O.C	LIEU, DER- MING	M	June 26, 2019	3	June 23, 2016	0	0.00%	0	0.00%	`－`	`－`	`－`	`－`	. PhD in Economics, Ohio State University . Advisor of Securities and Futures Commission, Ministry of Finance	Professor, Department of Financial Management, National Sun Yat-sen University	`－`	`－`	`－`
Independent Director	R.O.C	CHEN, CHIH-YANG	M	June 26, 2019	3	June 26, 2019	0	0.00%	0	0.00%	`－`	`－`	`－`	`－`	. Master of Laws, National Chung Hsing University . Judge of Banqiao District Court	Presiding lawyer of CHEN, CHIH-YAN law firm	`－`	`－`	`－`

Note: (1) The term of the 17th directors starts on June 26, 2019 and ends on June 25, 2022.

(2) March 9, 2021 Representative of Ministry of Economic Affairs, TSENG, KUO-CHENG resigned, Hu, Wen-Zhong was reassigned to take over; May 5, 2021 WEI, CHENG-TZU took over as president and Hu, Wen-Zhong was removed from the post.

(3) July 31, 2020 Representative of Yaohua Glass Co., Ltd. Management Committee, Chen, Yong-Cong resigned, Lu, Wen-Tsan was reassigned to take over.

(4) Marcj 10, 2021 Representative of Ministry of National Defense Industrial Development Foundation, Chen, Hsiao-Ming resigned, Mo, You-Ming was reassigned to take over.

(2) Major shareholders of the institutional shareholders

Name of Institutional Shareholders (Note1)	Major Shareholders of the Institutional Shareholders (Note 2)	Major Shareholders of the Institutional Shareholders (Note 2)
CPC Corporation,Taiwan	Ministryof Economic Affairs	100%
China Steel Corporation (Note3)	Ministryof Economic Affairs(MOEA)	20.00%
	Employee’s Stock Ownership Trust of China Steel Corporation under the custody of Mega International Commercial BankCo.,Ltd.	4.22%
	TransgloryInvestment Corporation	1.63%
	Vanguard Total International Stock Index Fund under the custody of JP Morgan Chase Bank N.A. Taipei Branch	1.33%
	Vanguard Emerging Markets Stock Index Fund under the custody of JP Morgan Chase Bank N.A. Taipei Branch	1.06%
	Norges Bank Investment Management under the custodyofCitibank(Taiwan)Limited	1.04%
	WinningInvestment Corporation	1.02%
	New Labor Pension Fund	0.96%
	Public Service Pension Fund Management Board	0.91%
	Labor Insurance Fund	0.81%
Yue-Li Investment Corporation	U-Ming Marine Transport Corporation	68.18%
	U-MingMarine Transport(Singapore)Private Limited	31.82%

Note1: If the director or supervisor is a representative of an Institutional Shareholder, the name of the Institutional Shareholder shall be filled in.

Note2: Fill in the name of the main shareholder of the Institutional Shareholder (its shareholding ratio accounts for the top 10) and its shareholding ratio. If its major shareholders are an Institutional Shareholder, the description of point 3 should be filled in.

Note3: The establishment date of the major shareholders of China Steel is December 31, 2020.

Note4: The establishment date of the major shareholders of Yue-Li Investment Corporation is December 31, 2020.

(3) Major shareholders of the Company’s major institutional shareholders

Name of Institutional Shareholders (Note 1)	Major Shareholders of the Institutional Shareholders (Note 2)	Major Shareholders of the Institutional Shareholders (Note 2)
Transglory Investment Corporation (Note3)	U-MingMarine TransportCorporation	49.89%
	U-Ming Marine Transport (Singapore) Private Limited	40.91%
	U-MingMarine TransportCorporation	9.20%
Winning Investment Corporation (Note3)	GAINSInvestmentCorp.	49.00%
	MARUICHISTEEL TUBE LTD.	42.00%
	TransgloryInvestmentCorporation	9.00%
U-Ming Marine Transport Corporation(Note4)	Asia Cement Corporation	39.25%
	Management Board of the Public Service Pension Fund	2.04%
	cathaylife insurance co. ltd	1.61%
	Yuan DingInvestment Corp.	1.05%

	Fubon Life Insurance Co.,Ltd	1.04%
	Yu-yuan Investment Corp.	0.94%
	Asia Investment Corp.	0.92%
	JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund,a series of Vanguard Star Funds	0.92%
	Ya Li Transportation Corportion	0.75%
	Dingshen Investment Corp.	0.75%
U-Ming Marine Transport (Singapore) Private Limited	U-Ming Marine Transport Corporation	99.99%

Note 1: If the main shareholder of the above table 1 is an Institutional Shareholder, the name of the Institutional Shareholder should be filled in.
Note2: Fill in the name of the main shareholder of the Institutional Shareholder (its shareholding ratio accounts for the top 10) and its shareholding ratio.

Note3: The establishment date of the major shareholders of China Steel is December 31, 2020.

Note4: The establishment date of the major shareholders of Yue Ming Transportation Co. is July 7, 2020.

(4) Professional qualification and independence of directors and supervisors May 13, 2021

Criteria Name `（`Note1`）`	Meet one of the following professional qualification requirements, together with at least 5 years work experience	Meet one of the following professional qualification requirements, together with at least 5 years work experience	Meet one of the following professional qualification requirements, together with at least 5 years work experience	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Independence Criteria (Note3)	Number of other public companies in which the individual is concurrently serving as an independent director
	An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college or university	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company	Have work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the company	1	2	3	4	5	6	7	8	9	10	11	12
Ministry of Economic Affairs Representative: CHENG,WEN-LON	V	V	V	-	-	V	V	V	V	V	V	V	V	V	V	-
Ministry of Economic Affairs Representative: WEI,CHENG-TZU	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-
Ministry of Economic Affairs Representative: TSENG, KUO-CHENG (Note2)	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-
Ministry of Economic Affairs Representative: Hu,Wen-Zhong (Note2)	-	-	-	V	-	V	V	V	V	V	V	V	V	V	-	-
Ministry of Economic Affairs Representative: HUANG,JIH-CHIN	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-
Ministry of Economic Affairs Representative: LAN,SYU-CING	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-
National Development Fund Representative: WU,WEN-KUEI	-	-	-	V	-	V	V	V	V	V	V	V	V	V	V	-
Yaohua Glass Co., Ltd. Management Committee Representative: Lu,Wen-Tsan(Note3)	-	V	-	V	-	V	V	V	V	V	V	V	V	V		-
National Defense Industrial Development Foundation Representative: Chen, Hsiao-Ming (Note4)	-	-	-	V	-	V	V	V	V	V	V	V	V	V	V	-
National Defense Industrial Development Foundation Representative: Mo,You-Ming (Note4)	-	-	-	V	-	V	V	V	V	V	V	V	V	V	-	-
CPC Corporation,Taiwan	-	-	-	-	-	-	-	-	-	-	-	-	V	V	V	-
China Steel Corporation Representative: HWANG, CHIEN- CHIH	-	-	V	V	-	V	V	-	-	V	V	V	V	V	V	-
Yue-Li Investment Corporation	-	-	-	-	-	-	-	-	-	-	-	-	V	V	V	-
Industrial Labor Union of CSBC Kaohsiung Representative: HOU, DE- LONG	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-

Industrial Labor Union of CSBC Kaohsiung Representative: HSIEH, KUO-JUNG	-	-	-	-	-	V	V	V	V	V	V	V	V	V	V	-
Independent Director: LIN,HUI-JENG	V	V	V	V	V	V	V	V	V	V	V	V	V	V	V	-
Independent Director: LIEU, DER- MING	V	-	V	V	V	V	V	V	V	V	V	V	V	V	V	2
Independent Director: CHEN, CHIH-YANG	-	V	V	V	V	V	V	V	V	V	V	V	V	V	V	-

Note1: The number of fields is adjusted according to the actual number 。

Note2: March 9, 2021 Representative of Ministry of Economic Affairs, TSENG, KUO-CHENG resigned, Hu, Wen-Zhong was reassigned to take over; May 5,2021 Wei, Zheng-Ci took over as president and Hu, Wen-Zhong was removed from the post.

Note3: July 31, 2020 Yaohua Glass Co., Ltd. Management CommitteeRepresentative, Chen, Yong-Cong resigned, Lu, Wen-Tsan was reassigned to take over. Note4: March 10, 2021 National Defense Industrial Development FoundationRepresentativeChen, Hsiao-Ming resigned, Mo, You-Ming was reassigned to take over. Note5: Please tick "ˇ" the corresponding boxes that apply to the directors or supervisors during the two years prior to being elected or during the term of office. (1) Not an employee of the Company or any of its affiliates.

(2) Not a director or supervisor of the Company or any of its affiliates. (Not applicable in cases where the person is an independent director who directly or indirectly holds more than 50% of the shares with voting right of the Company, its parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.)
(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship of the managers listed in (1) or the listed people in (2), (3).
(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company or who holds shares ranking in the top five holdings.
(6) Not a majority of the company's director seats or voting shares and those of any other company are controlled by the same person: a director, supervisor, or employee of that other company. (Do not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(7) Not the chairperson, general manager, or person holding an equivalent position of the company and a person in any of those positions at another company or institution are the same person or are spouses: a director (or governor), supervisor, or employee of that other company or institution. (Do not apply to independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or institution that has a financial or business relationship with the company. (Do not apply to the public company or institution which holds 20 percent or more and no more than 50 percent of the total number of issued shares of the public company and independent directors appointed in accordance with the Act or the laws and regulations of the local country by, and concurrently serving as such at, a public company and its parent or subsidiary or a subsidiary of the same parent.)
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
(11) Not any person specified in any subparagraph of Article 30 of the Company Act.
(12) Not any government agency or institutional shareholder or its representative under Article 27 of the Company Act is elected.

3.2 Directors, Supervisors and Management Team

(1) Information of the President, Executive Vice President and department Heads

							December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share	December 15,2020;Unit: share
Title	Name	Gender	Nationality/ Place of Incorporation	Date of election	Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience (Education)	Other position in the company or other company	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship			Remarks
					Share	%	Share	%	Share	%			Title	Name	Relation
President	TSENG, KUO- CHENG	M	R.O.C	August 1, 2017	63,962	0.01352%	0	0	0	0	1. Master of Naval Engineering, National Taiwan University 2. Basic Design Section Manager of Section, Department of Design 3. Deputy Director of Department of Design 4. Director of Department of Design 5. Senior Vice President, Executive Vice President	Managing Director of Ship and Ocean Industries R&D Center Chairman of CSBC-DEME Wind Engineering Co. Ltd. Director of Metal Industries Research & Development Centre	No ne	None	None	Note4
President	Wei, Zheng-Ci	M	R.O.C	March 23, 2017	7,662	0.00162%	0	0	0	0	1. Department of Mechanical Engineering, NUU 2. Shop Master of Machinery Fitting Shop, Outfitting Works 3. Section Manager of Production Control Section, Outfitting Works 4. General Manager and Deputy General Manager of Outfitting Works 5. Executive Vice President	Chairman of CSBC Coating Solutions Co., Ltd.	No ne	None	None	Note7
Executive Vice President	Wei, Zheng-Ci	M	R.O.C	March 23, 2017	7,662	0.00162%	0	0	0	0	1. Department of Mechanical Engineering, NUU 2. Shop Master of Machinery Fitting Shop, Outfitting Works 3. Section Manager of Production Control Section, Outfitting Works 4. General Manager and Deputy General Manager of OutfittingWorks	Chairman of CSBC Coating Solutions Co., Ltd.	No ne	None	None
Executive Vice President	Gao, Jian- Yi	M	R.O.C	August 12, 2019	0	0	0	0	0	0	1. Department of Marine Engineering, National Taiwan Ocean University 2. Senior Engineer of Outfitting Works 3. Shop Master ofOutfitting Works 4. Deputy General Manager of Outfitting Works 5. General Manager of Outfitting Works 6. General Manager of Hull Works	None	No ne	None	None
Executive Vice President	Zhou, Zhi- Ming	M	R.O.C	August 2, 2017	86,291	0.01824%	10,2021	0.00214%	0	0	1. Master of Shipbuilding Engineering, University of Michigan 2. Section Manager of Hull Design Section, Department of Design 3. Deputy Director of Department of Design 4.Director of Department of Sales 5. Director of Department of Design	Director of CR CLASSIFICATION SOCIETY	No ne	None	None
Executive Vice President	Chen, Hui- Shan	M	R.O.C	March 18, 2019	7,773	0.00164%	10	0	0	0	1. Department of Mechanical Engineering, National Kaohsiumg Universityof Science and Technology 2. Section Manager of Operation and performance, Business Section, Ship Repair Works 3. Deputy General Manager of Ship Repair Works 4. General Manager of Ship Repair Works 5.Director of Department ofQualityAssurance	None	No ne	None	None
Executive Vice President	Cai, Kun- Zong	M	R.O.C	May 6, 2021	0	0	0	0	0	0	1. Master of Naval Engineering, National Taiwan University 2. Senior Engineer and Manager of Basic Design Section of Section, Department of Design 3. Deputy Director of Department of Material 4. Director of Department of Sales 5. Director of Department of Design	None	No ne	None	None	Note7

Title	Name	Gender	Nationality/ Place of Incorporation	Date of election	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other position in the company or other company	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remarks
					Share	%	Share	%	Share	%			Title	Name	Relation
											6. Director of President officeproject,Chief Executive
Secretary General of Secretariat Office of the Board	Wang, Fu- Ying	M	R.O.C	August 1, 2020	17,178	0.00363%	0	0	0	0	1. Department of Computer Science, Tamkang University 2. Section Manager of Information Section, Department of Information Technology 3. Section Manager of Department of Planning and Department of Information Technology 4. Deputy Director of Department of Planning 5.Director of Department of Information Technology	None	No ne	None	None	Note5
Auditor General of Audit Office	Shen, Feng- Ru	M	R.O.C	December 1, 2019	0	0	0	0	0	0	1.Public Affairs, NCHU 2. Senior Officer and Section Manager of Department of Civil Service 3.Auditor of Audit Office	None	No ne	None	None
Director of Department of Sales	Yuan, Guo- Long	M	R.O.C	March 18, 2019	0	0	0	0	0	0	1. National Taiwan Ocean University Systems Engineering & Naval Architecture 2. Senior Engineer and Section Manager of Merchant Shipping Section, Department of Sales 3. DeputyDirector of Department of Sales	None	No ne	None	None
Director of Department of Design	Yan, Chun-Mu	M	R.O.C	March 18, 2019	16,000	0.00338%	12,000	0.00254%	0	0	1. Master of National Kaohsiung University of Science and Technology of Industrial Engineering 2. Senior Engineer and Section Manager of Outfitting Design Section, Department of Design 3. DeputyDirector of Department of Design	None	No ne	None	None
Director of Department of Material	Wang, Shu- Jing	F	R.O.C	May 7, 2020	6,349	0.00134%	0	0	0	0	1.Deparment of International Business, Tunghai University 2. Senior Officer and Section Manager of Procurement Section, Department of Material 3. Section Manager of Coordination Section of Department of Material 4. Deputy Director of Department of Human Resources and Administration 5. DeputyDirector of Department of Material	None	No ne	None	None
Director of Department of Planning	Yu, Mao- Hua	M	R.O.C	August 13, 2020	15,000	0.00317%	0	0	0	0	1. Master of Industrial Engineering and Innovation Management, Kaohsiung University of Applied Sciences 2. Shop Master of Erecting Shop of Hull Works 3. Deputy General Manager of Hull Works 4. Director and Deputy Director of Department of Planning 5. General Manager of Hull Works 6. General Manager of Outfitting Works 7.Director of Department of Human Resources and Administration	Director of TAIWAN OFFSHORE WIND FARM SERVICES CORPORATION	No ne	None	None
General Manager of Outfitting Works	Yan, Cong-Hui	M	R.O.C	August 12, 2019	28,080	0.00594%	0	0	0	0	1. Master of Marine Engineering, National Kaohsiung Marine University 2. Senior Engineer of Qinye Factory 3. Senior Engineer and Section Manager of Department of Quality Assurance 4. DeputyGeneral Manager of OutfittingWorks	None	No ne	None	None
General Manager of Hull Works	Hou, Ya-Wen	M	R.O.C	August 12, 2019	14,679	0.00310%	0	0	0	0	1. Department of Mechanical Engineering, National Taiwan University of Science and Technology 2. Section Manager of Production Control Section, Department of Planning 3. Shop Master of Accommodation Shop of Hull Works 4. Deputy General Manager of Hull Works 5. Director of Department of Environmental Protection and Public Utilities	None	No ne	None	None
General	Zhan, Yi-	M	R.O.C	May 7,	8,980	0.00189%	0	0	0	0	1.Department of Marine Engineering, National Taiwan Ocean University	None	No	None	None

Title	Name	Gender	Nationality/ Place of Incorporation	Date of election	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other position in the company or other company	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remarks
					Share	%	Share	%	Share	%			Title	Name	Relation
Manager of Ship Repair Works	Gui			2020							2.Master of Department of Business Management, National Sun Yat-sen University 3. Senior Engineer of Ship Repair Works 4. Section Manager of Business Section, Ship Repair Works 5. Deputy General Manager of Ship Repair Works		ne
General Manager of IDS Works	Liu, Si-Wei	M	R.O.C	Novembe r 12, 2020	14,000	0.00296%	2,000	0.00042 %	0	0	1. Department of Voyage, R.O.C. Naval Academy 2. Master of Strategy of U.S. Naval War College	None	No ne	None	None
Director of Department of Information Technology	Huang, Fu- Hsiang	M	R.O.C	March 18, 2019	6,000	0.00127%	0	0	0	0	1. Master of Department of Electrical Engineering, Kaohsiung University of Science and Technology 2. Senior Engineer of Network Section, Department of Information Technology 3. Section Manager of Network Section, Department of Information Technology	None	No ne	None	None
Director of Department of Quality Assurance	Wang, Jian- Sheng	M	R.O.C	March 18, 2019	7,144	0.00151%	0	0	0	0	1. Department of Shipbuilding Engineering, National Taiwan Ocean University 2. Senior Engineer of Ship Repair Works 3. Shop Master of Hull Repair Shop of Ship Repair Works 4.Section Manager of Department of Quality Assurance, Department of Material 5. DeputyDirector of Department of Material	Director of the Society for Nondestructive Testing & Certification of Taiwan	No ne	None	None
Director of Department of Human Resources and Administration	Li, Yan- Qiang	M	R.O.C	August 13, 2020	30,345	0.00642%	0	0	0	0	1. Master of Naval Engineering, National Taiwan University 2. Master of Department of Business Management, National Sun Yat-sen University 3. Senior Engineer of Department of Design 4. Section Manager of Enterprise Research Section, Department of Planning 5.Director and Deputy Director of Department of Planning 6. Deputy Director of Department of Human Resources and Administration 7. Director of Department of Environmental Protection and Public Utilities 8. Concurrently serves as the Secretary General of Secretariat Office of the Board	Director of Taiwan International Windpower Training Center	No ne	None	None	Note5
Director of Department of Finance and Accounting	Xu, You- Zhen	M	R.O.C	October 1, 2019	0	0	0	0	0	0	1. Department of Accounting, Chung Yuan Christian University 2. Director of Audit Departmentof PwC Taiwan 3. Project Manager of Underwriting Department of SinoPac Securities 4. Business Associate of Underwriting Department of KGI Securities 5. Financial Head of AMPLE ELECTRONIC TECHNOLOGY CO.,LTD	None	No ne	None	None
Director of Department of Occupational Safety and Health	Chen, Zai- Qu	M	R.O.C	August 13, 2020	61,850	0.0131%	0	0	0	0	1. Department of Business Administration, Cheng Shiu University 2. Senior Officer of Department 3. of Production Control and Material 4. Senior Officer of Environmental Protection Section, Department of Environmental Protection and Public Utilities 5. Section Manager of Management Section, Department of Environmental Protection and Public Utilities	None	No ne	None	None

Title	Name	Gender	Nationality/ Place of Incorporation	Date of election	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience (Education)	Other position in the company or other company	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Executives, Directors or Supervisors Who are Spouses or within Two Degrees of Kinship	Remarks
					Share	%	Share	%	Share	%			Title	Name	Relation
											6. Deputy Director of Department of Occupational Safety and Health
Director of Department of Environmenta l Protection and Public Utilities	Ou, Zhong-Zhi	M	R.O.C	August 13, 2020	100,826	0.02132%	0	0	0		1. Department of Mechanical Engineering, Kaohsiung University of Applied Sciences 2. Senior Engineer of Maintenance Section, Department of Environmental Protection and Public Utilities 3. Section Manager of Maintenance Section, Department of Environmental Protection and Public Utilities 4. Deputy Director of Department of Environmental Protection and Public Utilities	None	No ne	None	None
Director of Department of Ship Management	Shen, Kang- Sheng	M	R.O.C	May 7, 2020	0	0	0	0	0	0	1. Bachelor and Master of Shipbuilding Engineering, National Cheng Kung University 2. Senior Engineer of Department of Design 3. Senior Engineer of Department of Sales 4. Section Manager of Business, Investment Section of Department of Planning 5. Section Manager of Machinery Plant Business Section 6. Deputy General Manager of Machinery Plant 7. Deputy Director of Department of Human Resources and Administration	Director of Fuhai Wind Power Company	No ne	None	None
General Manager of Keelung Yard	Zhu, You- Liang	M	R.O.C	February 20, 2021	33,799	0.00714%	0	0	0	0	1. Department of Mechanical Engineering, National Taipei University of Technology 2. Section Manager of Occupational Safety and Health Section, Keelung Yard	None	No ne	None	None	Note6
General Manager of Keelung Yard	Tang, Rong-Gui	M	R.O.C	August 10, 2016	1,357	0.00029%	0	0	0	0	1. Department of Shipbuilding Engineering, National Taiwan Ocean University 2. Section Manager of Business Section, Ship Repair Shop of Keelung Yard 3. Section Manager of Quality Assurance Section of Keelung Yard 4. Director of President officeproject	Director of BLUE ACE CORPORATION	No ne	None	None	Note6

Note1: Information about the President, Executive Vice President, heads of departments and branches should be included, and any position equivalent to President, Executive Vice President or Associate Manager, regardless of job title, should also be disclosed.

Note2: The experience relates to the current position. If someone has worked in a certification audit firm or affiliated company during the previous disclosure period, he/she should state the job title and the responsible position.

Note3: When the general manager or a person with equivalent positions (the top manager) and the chairman of the board are the same person, each other’s spouse or relatives, the related information such as the reason,

rationality, necessity and corresponding measures shall be disclosed (such as increasing the number of independent directors and should have more than half of the directors are not part-time employees or managers, etc.). Note4: The President, TSENG, KUO-CHENG resigned on February 5, 2021 and is currently replaced by the chairman, Cheng, Wen-Lon. The president, Wei, Zheng-Ci was promoted on May 5, 2021, Cheng, Wen-Lon, Chairman exempted interim president.

Note5: The Secretary General, Wang, Fu-Ying resigned on March 31, 2021. April 1, 2021, Li, Yan-Qiang, manager of the Department of Human Resources and Administration, concurrently assumes the role of the Secretary General of Secretariat Office of the Board. May 5, 2021, the meeting of Board of director approved the proposal of Li, Yan-Qiang, the director of Department of Human Resources and Administrationto and Secretary General of Secretariat Office to concurrently serve as the director of corporate governance.

Note6: Previous General Manager Tang, Rong-Gui transfered to Chief Supervisor on February 20, 2021. Zhu, You-Liang, General Manager of Keelung Yard was transferred to the position and it was effective from February 20, 2021.

Note7 ： was promoted to president on May 5, 2021, and the vacancy was appointed by Cai, Kun-Zong, Chief Executive.

3.2.1 Remuneration paid to General Directors and Independent Director in 2020 (Individual disclosure of Name and remuneration method)

December 31, 2020; Unit: NT$ thousands

Title	Name			Remuneration	Remuneration	Remuneration	Remuneration			Ratio of Total Remuneration (A+B+C+D) to Net Income (Note 10)	Ratio of Total Remuneration (A+B+C+D) to Net Income (Note 10)	Relevant Remuner	Relevant Remuner	ation Received by Directors	ation Received by Directors	Who are Also Employees	Who are Also Employees	Who are Also Employees	Who are Also Employees	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (Note 10)	Ratio of Total Compensation (A+B+C+D+E+F+G) to Net Income (Note 10)	Compensation Paid to Directors from an Invested Company Other than the Company’s Subsidiary. (Note 11)
		Base Compensation (A) (Note 2)		Retirement pension (B)		Directors Compensation (C) (Note 3)		Business execution costs (D) (Note 4)				Salaries, bonuses and special expenses, etc. (E) (Note 5)		Retirement pension (F)		Employee compensation (G) (Note 6) (Accual Amount in 2019)
		The company	All companie s in the consolidat ed financial statement s(Note 7)	The company	All companie s in the consolidat ed financial statement s(Note 7)	The company	All companie s in the consolidat ed financial statement s(Note 7)	The compa ny	All companie s in the consolidat ed financial statement s(Note 7)	The company	All companies in the consolidated financial statements (Note 7)	The company	All companie s in the consolidat ed financial statement s(Note 7)	The company	All companie s in the consolidat ed financial statement s(Note 7)	T com	he pany	All companies in the consolidated financial statements (Note 7)		The company	All companies in the consolidated financial statements (Note 7)
																Cash	Stock	Cash	Stock
Chairm an	Ministry of Economic Affairs Representative CHENG, WEN-LON	2,858	2,954	0	0	0	0	0	0	-0.179%	-0.185%	0	0	0	0	0	0	0	0	0.179%	-0.185%	None
Director	Yaohua Glass Co., Ltd. Management Committee Representative Chen, Yong- Cong (July 29, 2020 DismissalReass ign.)	73	73	0	0	0	0	0	0	-0.005%	-0.005%	0	0	0	0	0	0	0	0	0.005%	-0.005%	None
Director	Yaohua Glass Co., Ltd. Management Committee Representative Lu, Wen-Tsan (July 29, 2020 Reassign.)	52	52	0	0	0	0	0	0	-0.003%	-0.003%	0	0	0	0	0	0	0	0	0.003%	-0.003%	None
Director	Ministry of Economic Affairs Representative: TSENG, KUO- CHENG	0	0	0	0	0	0	0	0	0.000%	0.000%	2,721	2,721	0	0	0	0	0	0	0.170%	-0.170%	None
Director	National Development Fund, Executive Yuan Representative: WU, WEN- KUEI	125	125	0	0	0	0	0	0	-0.008%	-0.008%	0	0	0	0	0	0	0	0	0.008%	-0.008%	None
Director	Foundation National Defense Industrial Development Foundation Representative: Chen, Hsiao- Ming (April 1, 2020 reassigned)	77	77	0	0	0	0	0	0	-0.005%	-0.005%	0	0	0	0	0	0	0	0	0.005%	-0.005%	None

Director	Ministry of Economic Affairs Representative: HUANG, JIH- CHIN	0	0	0	0	1,140	1,140	0.071%	-0.071%	None
Director	Ministry of Economic Affairs Representative: LAN, SYU- CING	0	0	0	0	1,134	1,134	0.071%	-0.071%	None
Director	CPC Corporation, Taiwan (Representative Director)	125	125	-0.008%	-0.008%	0	0	0.008%	-0.008%	None
Director	Yue-Li Investment Corporation (Representative Director)	125	125	-0.008%	-0.008%	0	0	0.008%	-0.008%	None
Director	China Steel Corporation Representative: HWANG, CHIEN-CHIH	125	125	-0.008%	-0.008%	0	0	0.008%	-0.008%	None
Director	Industrial Labor Union of CSBC Kaohsiung Representative: HOU, DE- LONG	125	125	-0.008%	-0.008%	1,066	1,066	0.074%	-0.074%	None
Director	Industrial Labor Union of CSBC Kaohsiung Representative: HSIEH, KUO- JUNG	125	125	-0.008%	-0.008%	1,119	1,119	0.078%	-0.078%	None
Indepen dent Director	LIEU, DER- MING	720	720	-0.045%	-0.045%	0	0	0.045%	-0.045%	None

Indepen dent Director	LIN, HUI- JENG	720	720	0	0	0	0	0	0	-0.045%	-0.045%	0	0	0	0	0	0	0	0	0.045%	-0.045%	None
Indepen dent Director	CHEN, CHIH- YANG	720	720	0	0	0	0	0	0	-0.045%	-0.045%	0	0	0	0	0	0	0	0	0.045%	-0.045%	None
Remarks		1. Please state the policy, system, standard and structure of the Independent Director's remuneration payment, and state the correlation with the amount of remuneration based on the responsibilities, risks, investment time and other factors.: The company has set "Key points of remuneration of Director and Independent Director of CSBC Corporation Taiwan", expressly stipulating that the Independent Director shall have a monthly remuneration of NT$60,000, and shall not receive additional director remuneration. The Independent Director also serves as a member of the Audit Committee and the Remuneration Committee. Director's payment policy is related to factors such as responsibilities, risks, and investment time. 2. Except as disclosed in the above table, the remuneration received by the directors of the company for providing services (such as serving as a consultant to non-employees, etc.) for all companies in the financial report in the most recentyear: None

Note1: The names of directors should be listed separately (institutional shareholders should list the names and representatives of legal person shareholders separately), and general directors and independent

directors should be listed separately, and the payment amounts should be disclosed in a summary manner. If the director is also the president or VP, please fill in this form and the second section. Note2: Refers to the remuneration of directors in the most recent year (including directors’ salaries, position bonuses, severance pay, various bonuses, incentives, etc.). Note3: Fill in the amount of directors' remuneration approved by the board of directors in the most recent year.

Note4: Refers to directors' relevant business execution expenses in the most recent year (including carriage fees, special expenses, various allowances, dormitories, car allocation, etc.). When providing housing, cars and other means of transportation or exclusive personal expenses, the nature and cost of the assets provided, the actual or fair market price rent, gas and other payments should be disclosed. In addition, if there is a driver, please note that the company pays the relevant remuneration to the driver, but it will not be included in the remuneration.
Note5: Refers to the recent years that directors and concurrently employees (including concurrently serving as President, Executive Vice President, other managers and employees) received including salary, job bonus, severance payment, various bonuses, incentives, carriage fees, special expenses, various allowances, dormitories, Provision of physical goods such as car distribution, etc. When providing housing, cars and other means of transportation or exclusive personal expenses, the nature and cost of the assets provided, the actual or fair market price rent, gas and other payments should be disclosed. In addition, if there is a driver, please note the relevant remuneration paid by the company to the driver, but it will not be included in the remuneration. In addition, salary expenses recognized in accordance with IFRS 2 "Share Based Payment", including obtaining employee stock options, restricting employee rights, new shares, and participating in cash capital increase subscription for shares, should also be included in remuneration.
Note6: Refers to those who have received employee remuneration (including stocks and cash) for concurrent directors and employees (including concurrent President, Executive Vice President, other managers and employees) in the most recent year, and the amount of employee compensation approved by the board of directors in the most recent year shall be disclosed. If it is not possible to estimate, the proposed distribution amount for this year shall be calculated based on the actual distribution amount last year, and the section 4 shall be filled in.

Note7: The total amount of remuneration paid to the directors of the company by all companies (including the company) in the consolidated report shall be disclosed.

Note8: The company pays each director the total amount of remuneration and reveals the name of the director in the attribution level.

Note9: The total amount of remuneration paid to each director of the company by all companies (including the company) in the consolidated report shall be disclosed, and the names of the directors shall be disclosed in the attribution level.

Note10: Net profit after tax refers to the net profit after tax of the individual or individual financial report in the most recent year.

Note11: a. This column should clearly state the amount of relevant remuneration received by the directors of the company from the non-subsidiary investment business or the parent company (if none, please fill in "none").
b. If the directors of the company receive remuneration from the non-subsidiary reinvestment business or the parent company, the remuneration received by the company directors from the nonsubsidiary reinvestment business, or the parent company shall be included in column I of the remuneration scale table The field name was changed to "Parent Company and All Reinvested Businesses".
c. Remuneration refers to the remuneration, remuneration (including the remuneration of employees, directors and supervisors) and business execution expenses received by the directors of the company as directors, supervisors or managers of non-subsidiary investment enterprises or parent companies.
＊ The content of the remuneration disclosed in this table is different from the income concept of the income tax law, so the purpose of this table is for information disclosure and not for taxation.

3.2.2 Remuneration paid to President and Executive Vice President in 2020 (Individual disclosure of Name and remuneration method)

MAY 21, 2021; Unit: NT$ thousands

Title `（`Note1`）`	Name	Base Compensation (A) (Note2)	Base Compensation (A) (Note2)	Retirement pension (B)	Retirement pension (B)	Bonuses and Allowances (C) (Note3)	Bonuses and Allowances (C) (Note3)	Employee Compensation (D) (Note4) (Actual amount in 2019)	Employee Compensation (D) (Note4) (Actual amount in 2019)	Employee Compensation (D) (Note4) (Actual amount in 2019)	Employee Compensation (D) (Note4) (Actual amount in 2019)	Ratio of total compensation (A+B+C+D) to net income (%) (Note8)	Ratio of total compensation (A+B+C+D) to net income (%) (Note8)	Compensation Paid to the GM and DEPUTY GENERAL MANAGERs from an Invested Company Other than the Company’s Subsidiary (Note9)
		The company	All companies in the consolidated financial statements (Note5)	The company	All companies in the consolidated financial statements (Note5)	The company	All companies in the consolidated financial statements (Note5)	The company		All companies in the consolidated financial statements (Note5)		The company	All companies in the consolidate d financial statements (Note5)
								Cash	Stock	Cash	Stock
President	TSENG, KUO-CHENG	2,371	2,371	0	0	350	350	0	0	0	0	-0.17%	-0.17%	None
Executive Vice President	Wei, Zheng- Ci	1,710	1,782	0	0	262	262	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Chen, Hui- Shan	1,699	1,699	0	0	248	248	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Gao, Jian-Yi	1,670	1,670	0	0	248	248	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Zhou, Zhi- Ming	1,730	1,730	0	0	269	269	0	0	0	0	-0.12%	-0.12%	None
Remarks		`＊`Regardless of job title, anyone whose position is equivalent to general manager or deputy general manager (for example: president, chief executive, director... etc.) should be disclosed. 1.Wei,Zheng-Ci: Executive Vice President as well as Chairman of CSBC CoatingSolutions Co.,Ltd.

Note1: The names of President and VP should be listed separately, and the payment amounts should be disclosed in a summary manner. If the director is also the president or VP, please fill in this form and the first section. Note2: Fill in the most recent annual president and VP's salaries, position bonuses, and severance pay.

Note3: Fill in the recent annual president and VP's various bonuses, incentives, carriage fees, special expenses, various allowances, dormitories, car distribution, etc., and other remuneration amounts. When providing housing, cars and other means of transportation or exclusive personal expenses, the nature and cost of the assets provided, the actual or fair market price rent, gas and other payments should be disclosed. If there is a driver, please indicate the relevant remuneration paid by the company to the driver, but it will not be included in the remuneration. In addition, salary expenses recognized in accordance with IFRS 2 "Share Based Payment", including obtaining employee stock options, restricting employee rights, new shares, and participating in cash capital increase subscription for shares, should also be included in remuneration.

Note4: Fill in the amount of employee compensation (including stocks and cash) approved by the board of directors for the distribution of the president and VP in the most recent year. If it is not possible to estimate, calculate the proposed distribution of this year based on the proportion of the actual distribution of last year, and fill the info in the section four.

Note5: The total amount of remuneration paid to the president and VP of the company by all companies (including the company) in the consolidated report shall be disclosed.

Note6: The company pays the total amount of remuneration to each president and VP and reveals the names of the president and VP in the hierarchy to which they belong.

Note7: The total amount of remuneration paid to each president and VP of the company by all companies (including the company) in the consolidated report shall be disclosed, and the names of the president and VP shall be disclosed in the attribution level.

Note8: Net profit after tax refers to the net profit after tax in the most recent year; if IFRS has been adopted, net profit after tax refers to the net profit after tax of the individual or individual financial report in the most recent year. Note9: a. This column should clearly indicate the amount of remuneration related to the reinvestment business received by the president and VP of the company from non-subsidiaries. (If none, please fill in "None")

b. If the president and VP of the company receive remuneration related to the reinvestment business outside of the subsidiary, the remuneration received by the president and VP of the reinvestment business outside the subsidiary shall be incorporated into the remuneration scale E Column and change the name of the column to "all reinvested businesses".
c. Remuneration refers to the remuneration, remuneration (including remuneration for employees, directors and supervisors) and business execution expenses received by the president and VP of the company as directors, supervisors or managers of non-subsidiary investment businesses remuneration.
＊ The content of the remuneration disclosed in this table is different from the income concept of the income tax law, so the purpose of this table is for information disclosure and not for taxation.

3.2.3 The remuneration of the top 5 managers of the company (individual disclosure of names and remuneration methods) `（` Note1 `）`

								MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands	MAY 21, 2021; Unit: NT$ thousands
Title	Name	Base Compensation (A) (Note2)		Retirement pension (B)		Bonuses and Allowances (C) (Note3)		Employee Compensation (D) (Note4)				Ratio of total compensation (A+B+C+D) to net income (%) (Note`６`)		Compensation Paid to the management from an Invested Company Other than the Company’s Subsidiary (Note7)
		The Company	All companies in the consolidated financial statements (Note5)	The Company	All companies in the consolidated financial statements (Note5)	The Company	All companies in the consolidated financial statements (Note5)	The Company		All companies in the consolidated financial statements (Note5)		The Company	All companies in the consolidated financial statements
								Cash	Stock	Cash	Stock
President	TSENG, KUO- CHENG	2,371	2,371	0	0	350	350	0	0	0	0	-0.17%	-0.17%	None
Executive Vice President	Zhou, Zhi- Ming	1,730	1,730	0	0	269	269	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Wei, Zheng- Ci	1,710	1,782	0	0	262	262	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Chen, Hui- Shan	1,699	1,699	0	0	248	248	0	0	0	0	-0.12%	-0.12%	None
Executive Vice President	Gao, Jian-Yi	1,670	1,670	0	0	248	248	0	0	0	0	-0.12%	-0.12%	None

Note1: The so-called "Top Five Remuneration Managers" refer to the managers of the company and the standards for the identification of relevant managers, based on the former 27 March 2003 No. Taiwan-Finance-Securities-III-0920001301 to stipulate the scope of application of the "manager". As for the calculation and determination principle of the "Top Five Remuneration Managers", it is based on the sum of the salaries, retirement pensions, bonuses and special expenses received by the company managers from all companies in the consolidated financial report, as well as the total amount of employee remuneration (i.e., total of (A+B+C+D)), and it is determined by the top five highest remuneration after ranking. If the director concurrently serves as the former chief executive, this table and the 2nd section should be filled in.
Note2: Fill in the salary, job bonus, and severance pay of the top five top compensation managers in the most recent year.
Note3: Fill in the various bonuses, incentives, carriage fees, special expenses, various allowances, dormitories, car allocation and other remuneration amounts for the top five top managers in the most recent year. When providing housing, cars and other means of transportation or exclusive personal expenses, the nature and cost of the assets provided, the actual or fair market price rent, gas and other payments should be disclosed. In addition, if there is a driver, please note that the company pays the relevant remuneration to the driver, but it will not be included in the remuneration. In addition, salary expenses recognized in accordance with IFRS2 "share-based payment", including obtaining employee stock option certificates, restricting employee rights, new shares, meals and cash capital increase subscription for shares, etc., should also be included in the remuneration.
Note4: The amount of compensation (including stocks and cash) of the top five management employees approved by the board of directors for the most recent year is filled in. If it is not possible to estimate, the proposed distribution amount for this year will be calculated based on the actual distribution amount last year.
Note5: The total amount of remuneration paid to the top five top managers of the company by all companies (including the company) in the consolidated report shall be disclosed. Note6: Net profit after tax refers to the net profit after tax of the individual or individual financial report in the most recent year.
Note7: a. This column should clearly indicate the amount of the top five remuneration executives of the company that received the relevant remuneration from the subsidiary company or the parent company (if none, fill in "none").
b. Remuneration refers to the remuneration, remuneration (including remuneration for employees, directors and supervisors) and business execution expenses received by the top five top managers of the company as directors, supervisors or managers of non-subsidiary investment businesses remuneration.
＊ The content of the remuneration disclosed in this table is different from the income concept of the income tax law, so the purpose of this table is for information disclosure and not for taxation.

3.2.3 The manager who distributes the employee compensation and the distribution situation in 2020: The manager who did not distribute the employee compensation in 2020:

		December	31, 2020	31, 2020	(Unit: NT$ thousands)	(Unit: NT$ thousands)
	Cash			Total		The ratio of the total to the net profit after tax(`％`)

				employee compensation in 2020:	employee compensation in 2020:	employee compensation in 2020:
				December 31, 2020 (Unit: NT$ thousands)
	Title `（`Note1`）`	Name `（`Note1`）`	Stock	Cash	Total	The ratio of the total to the net profit after tax(`％`)
M a n a g e m e n t	President	TSENG, KUO- CHENG	0	0	0	0%
	Executive Vice President	Chen, Hui-Shan
	Executive Vice President	Wei, Zheng-Ci
	Executive Vice President	Zhou, Zhi-Ming
	Executive Vice President	Gao, Jian-Yi
	Director of Department of Finance and Accounting	Xu, You-Zhen

Note1: Individual names and titles should be disclosed, but the profit distribution can be disclosed in summary.

Note2: Fill in the amount of employee compensation (including stocks and cash) approved by the board of directors for the distribution of managers in the most recent year. If it is impossible to estimate, calculate the proposed distribution amount this year based on the actual distribution amount last year. Net profit after tax refers to the net profit after tax in the most recent year. For those who have adopted the International Financial Reporting Standards, the net profit after tax refers to the net profit after tax of the individual or individual financial report in the most recent year.
Note3: According to 27 March 2003 No. Taiwan-Finance-Securities-III-0920001301, the scope of application of managers is as follows:
(1) President and equivalent
(2) Executive Vice President and equivalent
(3) Associate and equivalent
(4) Head of Finance Department
(5) Head of Accounting Department
(6) Others who have the right to manage affairs and sign for the company
Note4: If the director, president and VP receive employee compensation (including stocks and cash), in addition to filling in the above-mentioned section 2, this form should be filled.
3.2.9 The total remuneration, as a percentage of net income stated in the parent company only financial reports or individual financial reports, as paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice prsident, and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure.
The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:

, , , and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure. 1. The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:	, , , and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure. 1. The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:	, , , and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure. 1. The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:	, , , and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure. 1. The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:	, , , and analyze and describe remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure. 1. The total remuneration paid by this company and by each other company included in the consolidated financial statements during the past 2 fiscal years to directors, president, and executive vice president:
Unit: %
Year	2019 (The company)	2019 (Including subsidiaries)	2020 (The company)	2020 (Including subsidiaries)
Remuneration of Director, President, Executive Vice President Total/Netprofit`（`%`）`	-1.43%	-1.44%	-1.40%	-1.41%

Remuneration policies, standards, and packages, the procedure for determining remuneration, and its linkage to operating performance and future risk exposure:
(1) The policies of the directors’ remuneration: The Article 35 of the Articles of Association of the Company as amended in accordance with Article 2351 of the Company Act: “If the company makes a profit during the year, it shall allocate no less than 1%, and no more than 5% as employee compensation, and employee compensation can be stocks or cash; No more than 1% is the director’s remuneration. But if the company still has accumulated losses, it shall reserve the compensation amount in advance. The profit status of the current year as mentioned in the first paragraph refers to the profit before taxation of the current year before the distribution of employee remuneration and directors’ remuneration.” Directors’ remuneration and employee remuneration are calculated based on the current year’s pre-tax benefits minus the distribution of employee’s remuneration and director’s remuneration. In 2020, due to annual losses, directors’ remuneration (variation remuneration) will not be paid in accordance with the regulations of the articles of association. Directors’ remuneration (variation remuneration) and director performance evaluation (operating profit and loss) are related to each other, and future risks can be adjusted.
(2) The company's remuneration to directors is also based on the "Key points of remuneration of Director and Independent Director of CSBC Corporation Taiwan". Directors' monthly remuneration (fixed remuneration) is as follows:

Difference	Monthlyremuneration
Director	NT$10,400
Independent Director	NT$60,000

  - (3) The remuneration of the chairman and president refers to the salary level of the privatized public equity business, and considers the company's operating performance or pre-tax earnings, and formulates "the remuneration of the chairman and president of the company and the president 's performance evaluation points". In 2020, due to annual losses, there is no performance bonus for the chairman and president. The remuneration of the chairman and president is related to operating performance or surplus (loss).

3.2.10 Performance evaluation of directors and managers:
The performance evaluation of the directors of the company, the formulation of "The company’s board of directors’ performance evaluation method" and the directors’ performance evaluation standards.
The company’s managers (including President, Executive Vice President and Financial Accounting Manager), including Executive Vice President and Financial Accounting Manager’s performance evaluation standards and evaluation procedures, are handled in accordance with the "Key Points for the Implementation of the Annual Evaluation and Bonus of the Company’s Practitioners".
President performance appraisal, adding and revising "The remuneration of the chairman and president of the company and president performance appraisal points", proposed to the board of directors on March 15, 2019 for approval, stipulating president performance appraisal standards, evaluation procedures and performance appraisal bonuses. President’s performance evaluation standards include short-term financial performance indicators and long-term performance indicators. Short-term financial performance indicators include three items: operating income achievement rate, gross profit achievement rate, and after-tax profit and loss achievement rate. Long-term performance indicators include performance of business and system reforms, R&D innovation performance, future business growth performance and corporate social responsibility execution performance.

  4. Based on the manager’s performance evaluation results, bonuses (variable salary) are issued, so the manager’s performance evaluation is linked to the bonus.

3.3 Implementation of Corporate Governance
3.3.1 Implementation of the Board of Director
A total of 6 (A) meetings of the Board of Directors were held in 2020. The

attendance of director was as follows:

Title	Name (Note1)	Attendance in Person (B)	By Proxy	Attendance Rate (%)`【Ｂ`/`Ａ】` (Note 2)	Remarks
Chairman	Representative of Ministry of Economic Affairs CHENG, WEN- LON	5	1	83.33	None
Director	Representative of Ministry of Economic AffairsTSENG, KUO- CHENG	6	0	100.00	None
Director	Representative of Ministry of Economic AffairsHUANG, JIH- CHIN	6	0	100.00	None
Director	Representative of Ministry of Economic AffairsLAN,SYU-CING	5	1	83.33	None
Director	National Development Fund Representative: WU, WEN-KUEI	4	2	66.67	None
Director	National Defense Industrial Development Foundation Representative: Liu, Zhi- Bin	1	1	17.00	Liu, Zhi-Bin resigned on March 31, 2020.
	National Defense Industrial Development FoundationRepresentativ eChen,Hsiao-Ming	0	4	0.00	Chen, Hsiao-Ming took office on April 1, 2020.
Director	Yaohua Glass Co., Ltd. Management Committee Representative: Chen, Yong-Cong	3	0	50.00	Chen, Yong-Cong resigned on July 30, 2020.
	Yaohua Glass Co., Ltd. Management Committee Representative: Lu, Wen-Tsan	3	0	50.00	Lu, Wen-Tsan took office on July 31, 2020.
Director	CPC Corporation, Taiwan	5	0	83.33	None
Director	China Steel Corporation Representative: HWANG, CHIEN-CHIH	6	0	100.00	None
Director	Yue-Li Investment Corporation	6	0	100.00	None
Director	Industrial Labor Union of CSBC Kaohsiung Representative: HOU, DE-LONG	6	0	100.00	None

Director	Industrial Labor Union of CSBC Kaohsiung Representative: HSIEH,KUO-JUNG	6	0	100.00	None
Independent Director	LIN, HUI-JENG	6	0	100.00	None
Independent Director	CHEN, CHIH-YANG	4	2	66.67	None
Independent Director	LIEU, DER-MING	6	0	100.00	None
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: Details of other matters to be recorded on page 35 of this annual report on the implementation of the audit committee 1. (1). (2) Besides the previous issues, other records or written statements of board meeting decisions that have been opposed or reserved by independent directors: None 2. The implementation of directors' avoidance of interest proposals: None. 3. The listed company should disclose the info such as evaluation cycles, evaluation periods, scope, method and content of self-evaluation (or by peer). Evaluation cycle: One per year. Evaluation perioud: From January 1, 2020 to December 31, 2020. Evaluation scope: Performance evaluation of the board of directors and individual directors. Evaluation method: Internal evaluation of the board, self-evaluation by individual board members. Evaluation content:: (1)Performance evaluation of the Board of Directors: Comply with relevant laws and regulations, and participate in company operations. (2)Performance evaluation of the individual board members: The company’s tasks and objectives, the company’s internal control and risks, the management of internal relationships, the management of external relationships, the composition and capabilities of the board of directors, the culture of the board, and the operations of the board of directors 4. The goal of strengthening the functions of the board of directors in the current and recent years (For example, setting up an audit committee, enhancing information transparency, etc.) and implementation assessment: (1) The company has an audit committee and a remuneration committee composed of three independent directors. Please refer to the third point of "Corporate Governance Operation and Its Differences from and Reasons for the Corporate Governance Best Practice Principles for TWSE/TPEx " on page 37 for implementation details. In addition, major resolutions of the board of directors are revealed on the company website: the Investor Area/Corporate Governance (Website: http://www.csbcnet.com.tw/csbc/07/01_new.aspx). (2) In order to diversify the risks of directors’ legal liabilities, the company may obtain directors liability insurance with respect to liabilities resulting from exercising their duties during their terms of directorship and reviews the contents of the insurance policy every year to ensure complete renewal conditions. (3) In order to provide relevant information and other necessary assistance required by directors and independent directors to perform their duties, and to enhance the effectiveness of the board of directors, the company established a "Standard operating procedure for handling directors'requests"on March 15, 2019, specifying a unified processing window and a standardized processing period.

Note1: If the director is a representative of an Institutional Shareholder, the name of the Institutional Shareholder shall be disclosed.
Note2: (1) If a director or supervisor resigns before the end of the year, the date of resignation shall be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of board meetings during the term of office and the actual number of attendance.
(2) Before the end of the year, if any director is re-elected, the new and previous directors shall be listed, and the remarks column shall indicate whether the director is the previous, new or re-elected and the date of re-election. The actual attendance rate (%) is calculated based on the number of meetings of the board of directors and the actual number of attendances during the term of office.

2. The attendance of Independent Director in 2020 was as follows:

 : Attend in person;  : Delegated to attend;  :Not attend

Board Meeting/Name of independent director	1st Time	2nd Time	3rd Time	4th Time	5th Time	6th Time
LIEU, DER- MING						
LIN, HUI- JENG						
CHEN, CHIH- YANG						

3.3.2 Implementation of the Audit Committee: A total of 5 (A) Audit Committee meetings were held in 2020. The attendance of the independent directors was as follows:

Title	Name	Attendance in Person`（`B`）`	By Proxy	Attendance Rate (%) `【Ｂ`/`Ａ】`(Note)
Independent Director	LIEU, DER- MING	5	0	100.00
Independent Director	LIN, HUI- JENG	5	0	100.00
Independent Director	CHEN, CHIH-YANG	5	0	100.00
Other items to be recorded: 1. If the operation of the audit committee is in one of the following situations, the date, period, resolution of the proposal, Audit Committee Resolution Results, and the company's handling of the audit committee’s opinions shall be stated. (1) The matters listed in Article 14-5 of the Securities Exchange Act are as follows: Date (Session) Content of motion Audit Committee Resolution Results Follow-up processing by the company Board of Director Resolution Results Janurary 15, 2020 ( (The 5th of the 17th) (temporary )) Discussion Matters Case 2: Capital increase proposal of CSBC-DEME Wind Engineering Co. Ltd. January 15, 2020 (The 3rd (special) Audit Committee of the 3rd Session) All present members agreed to pass theproposal. Submitted to The 5th of the 17th (special) board of directors for approval on January 15,2020. All the attending directors passed the proposal March 20, 2020 (The 6th of the 17th) Discussion Matters Case 1: The company's 2019 individual financial report and consolidated financial report. March 11, 2020(The 4th Audit Committee of the 3rd Session) All present members agreed to pass the proposal. Submitted to the 6th of the 17th Board of Directors on March 20, 2020 for approval. All the attending directors passed the proposal Discussion Matters Case 12: Submit the company's 2019 “Internal Control System Statement”. March 11, 2020(The 4th Audit Committee of the 3rd Session) All present members agreed to pass the proposal. Submitted to the 6th of the 17th Board of Directors on March 20, 2020 for approval. All the attending directors passed the proposal Discussion Matters Case 2: The company's 2020 financial statements (including consolidated statements) and tax declaration visa case plans to hire PwC for visas. March 11, 2020 (The 4th Audit Committee of the 3rd Session) All present members agreed to pass the proposal. Submitted to the 6th of the 17th Board of Directors on March 20, 2020 for approval. All the attending directors passed the proposal August 12, 2020 (The 8th of the 17th) Report Matters Case 8: Consolidated financial report for 2020 Q2`。` July 31, 2020 (The 6th Audit Committee of the 3rd Session) All present members agreed to pass the proposal. Submit the report of the 8th of the 17th Board of Directors held on August 12, 2020. All the attending directors already know the proposal November 11, 2020 (The 10th of the 17th) Discussion Matters Case 1: Handle the company's 2020 cash capital increase and issuance of new shares. October 30, 2020 (The 7th Audit Committee of the 3rd Session) All present members agreed to pass the proposal. Submitted to the 10th of the 17th Board of Directors on November 11, 2020 for approval. All the attending directors passed the proposal

		Discussion Matters Case 5: In conjunction with the revision of the submarine construction (IDS) project, it is proposed to reduce the loan limit to NT$7~12.5 billion for the case “Taiwan Cooperative Bank acted as the lead bank to handle the mid-term and long-term loan of NT$14.5 billion in the bank syndicated loan case, which was increased or decreased within 30%” that was approved by the company’s board of directors on November 8, 2019.	Discussion Matters Case 5: In conjunction with the revision of the submarine construction (IDS) project, it is proposed to reduce the loan limit to NT$7~12.5 billion for the case “Taiwan Cooperative Bank acted as the lead bank to handle the mid-term and long-term loan of NT$14.5 billion in the bank syndicated loan case, which was increased or decreased within 30%” that was approved by the company’s board of directors on November 8, 2019.	October 30, 2020 (The 7th Audit Committee of the 3rd Session) All present members agreed to pass the proposal.
Date	Method	Communication with	Communication matters	Communication results
March 11, 2020	Audit Committee	Auditor General	1.2019 Internal Control System Statement. 2.Internal audit business report.	1. Agreed to issue the 2019 Internal Control System Statement. 2. After discussion and communication, the audit committee learned about the report on the results of the audit business.
		CPA	2019 individual financial report and consolidated financial report.	The audit committee approved the 2019 financial report and submitted it to the board of directors for approval, and announced and reported to the competent authorityas scheduled.
May 6, 2020	Audit Committee	Auditor General	Internal audit business report.	After discussion and communication, the audit committee learned about the report on the results of the audit business.
		CPA	Review the consolidated financial statements for 2020 Q1.	The audit committee approved the 2020 Q1 financial report and submitted it to the board of directors for approval and announced and reported to the competent authorityas scheduled.
July 31, 2020	Audit Committee	Auditor General	Internal audit business report.	After discussion and communication, the audit committee learned about the report on the results of the audit business.
		CPA	Review the consolidated financial statements for 2020 Q2.	The audit committee approved the 2020 Q2 financial report and submitted it to the board of directors for approval and announced and reported to the competent authority as scheduled.
Octobe r 31, 2020	Audit Committee	Auditor General	Internal audit business report.	1. A new member with an information background is added to the Audit Office, and the audit of information security is expected to be strengthened in the future. 2. This year, Audit Office has implemented social engineering exercises and implemented enhanced measures. Supervisors and smart people who clicked on test emails should complete the online information security counseling course within a limited time before they can be deemed to have improved. 3. The audit committee is aware of the report on the execution result of the audit business.
		CPA	Review the consolidated financial statements for 2020 Q3.	The audit committee approved the 2020 Q3 financial report and submitted it to the board of directors for approval and announced and reported to the competent authority as scheduled.

Note:

＊ If an independent director resigns before the end of the year, the date of resignation should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of meetings of the audit committee during the term of office and the actual number of attendances.
＊ Before the end of the year, if the independent director is re-elected, the new and previous independent directors should be listed, and the independent director should be marked as previous, new or re-elected and the date of reelection in the remarks column. The actual attendance rate (%) is calculated on the basis of the number of meetings of the audit committee during his tenure and the actual number of attendances.

3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

TWSE/TPEx Listed Companies”
Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Ye s	No	Abstract Illustration
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”?	√		CSBC has Codex on Corporate Governance and has been disclosed on the CSBC website and the MOPs. Company website: http: // www. Csbcnet.com.tw investor and investor relations area.	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics.
2. Shareholding structure & shareholders’ rights (1) Does the company establish an internal operating procedure to deal with shareholders. suggestions, doubts, disputes and litigations, and implement based on the procedure? (2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares? (3) Does the company establish and execute the risk management and firewall system within its conglomerate structure? (4) Does the company establish internal rules against insiders trading with undisclosed information?	√ √ √ √		(1)On CSBC website, there is “Investor Area” (http://www.csbcnet.com.tw/ Service/Investor). It discloses the contact information for shareholders to respond to and give suggestions. (2) CSBC collects the updates information of major shareholders and the list of ultimate owners of those shares. (3) CSBC has set up specific management points and operating procedures for the financial and business-related operating methods of the related enterprise companies and implemented them. In addition, in order to implement a comprehensive risk control of subsidiaries, set the "subsidiary supervision and management points" of the internal control mechanism standards. (4) CSBC has established “Directions Governing the Processing of Material Information and Prevention of Insider Trading” to regulate the directors, managers and employees of the company when they actually know that the company has a major impact on the stock price of the company, after the news is clear, before the disclosure or within 18 hours after the disclosure, shall not be listed or business in a securities firm The premises buy or sell the company’s stocks or other securities of the nature of equity, buying or selling by themselves or in the name of others. The main points can be inquired on the company's website: `（`http://www.csbcnet.com.tw/Service/Investor/CorporateGovernance/Intern alRegulations.htm`）`	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics.

3. Composition and Responsibilities of the Board of Directors `（`1`）`Does the Board develop and implement a diversified policy for the composition of its members? `（`2`）`Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee? `（`3`）`Does the company establish a standard to measure the performance of the Board, and implement it annually? Does the company report the results of the performance evaluation to the board of directors, and use them as a reference for individual directors’ remuneration and nomination for renewal? `（`4`）`Does the company regularly evaluate the independence of CPAs?	√ √ √ √		(1) The company has a multi-pronged policy for directors in the Corporate Governance Code. The nominated directors and independent directors have included a wide range of backgrounds such as economics, management, technology, finance and society, and announced the implementation of multiple policies for directors on the company’s external website. (http://www.csbcnet.com.tw/uploads/ Implementation of CSBC Taiwan Director Diversification Policy.pdf) (2) The company has established a remuneration committee and an audit committee in accordance with the law, and currently has not established other functional committees. (3) CSBC established the "Board Performance Evaluation Method". In accordance with this evaluation method, regular performance evaluation is carried out. In addition to providing management information and resources for the management department, it also serves as a reference for the directors to manage the company and their own discussions. The evaluation results will be announced on the company’s external website (http://www.csbcnet.com.tw/Uploads/Board Performance Evaluation_1090416.pdf). (4) Company’s managment departments assess the independence of CAP annually. The results were reported to the March 11, 2020 Audit Committee and March 20, 2020 Board of Directors for review and approval. CPA Tian, Zhong- Yu and CPA Wang, Guo-Hua from PwC have been evaluated by the company’s management departments, and they all meet the company’s independence evaluation standard (Note1), and are sufficient to serve as the company’s visa accountant, and the accounting firm has issued a statement of independence.	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics.

Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Ye s	No	Abstract Illustration
4. Whether the company has allocated a suitable and appropriate number of corporate governance personnel, and designate a corporate governance director to be responsible for corporate governance related matters (including but not limited to providing directors and supervisors with necessary information for performing business, assisting directors and supervisors in complying with laws and regulations, handling the board of directors in accordance with the law, and matters related to the meeting of shareholders, preparation of minutes of the board of directors and shareholders meetings, etc.)?	√		(1) The director of corporate governance is Li, Yan-Qiang (Department of Human Resources and Administration also serves as Secretary General of Secretariat Office of the Board,) to be responsible for handling affairs as detailed in the company’s "Corporate Governance Code" (http://www. csbcnet.com.tw/Uploads/Corporate Governance Code _1080408.pdf) and will be announced at the MOPs of the Stock Exchange on May 5, 2021. (2) The relevant units to cooperate in handling corporate governance affairs are as follows: 1. The Department of Planning is the unit responsible for corporate governance and designates a person to be responsible for the coordination of corporate governance, such as the registration of changes to the articles of association and the coordination and improvement of corporate governance evaluations. 2. The Secretariat Office of the Board handles the agenda of the board of directors, the shareholders meeting, the functional committee, the audit committee's proceedings and records and legal compliance matters. 3. The Department of Human Resources and Administration handles the proceedings and records of the remuneration committee, the training of directors and the head of corporate governance and legal compliance matters. 4. Other managerial departments cooperate in handling matters related to corporategovernance.	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics.
5. Whether the company has established a channel of communication with interested parties (Including but not limited to shareholders, employees, customers and suppliers, etc.) and set up stakeholder areas on the company's website and properly respond to important corporate social responsibility issues that are of interest to stakeholders?	√		On CSBC website, there is “Stakeholder Area” (Website:http://www.csbc- net .com.tw/Service/InterestedArea.htm) and CSR Area (Website: http://www2.csbcnet.com.tw/csr/)`，`As a channel of communication with stakeholders, this section organizes the information disclosed on the company’s website and categorizes them according to the issues that may be of concern to each stakeholder, making it easier for stakeholders to find the information they need. This section also provides contact mailboxes to provide feedback from stakeholders.	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics.
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?	√		CSBC designates Fubon Securities Co., Ltd. to deal with shareholder affairs.	Established with reference to the Corporate Governance Best Practice Principles

Evaluation Item			Implementation Status	Deviations from “the Corporate Governance Best- Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Ye s	No	Abstract Illustration
				for TWSE/TPEx Listed Companies and the companycharacteristics.
7. Information Disclosure (1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance? (2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)? (3) Does the company announce and report annual financial reports within two months after the end of the fiscal year, and announce and report the financial reports for the first, second and third quarters and the operating conditions of each month before the prescribed deadline?	√ √	√	(1) The company declares various financial and business information in MOPs in accordance with regulations and sets up an investor service page on the company's website to disclose financial, stock affairs, products and corporate governance related information (the company's website is: http://www.csbcnet. com.tw). (2) The company’s website also has an English version of the webpage (http://www.csbcnet. com.tw/English/) and has set up "Key points for setting up a spokesperson" and establish a spokesperson system in accordance with regulations to handle related matters; On December 1, the investor conference was held at the invitation of KGI Securities. Relevant information can be found on the company's website (http://www.csbcnet.com.tw/Service/Investor/StockInforma-tion.htm). (3) The company submits the financial report to the audit committee and the board of directors for review and approval according to a scheduled schedule and announces and declares the financial report and monthly operating conditions within the time limit specified by the Securities and Exchange Act.	Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the company characteristics. Established with reference to the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies and the companycharacteristics.

Note1: Criteria for CPA Independence Evaluation

Evaluation Items		Factors affecting accountants’ independence	Evaluation Results	Does it violate independence?	Does it violate independence?
				Yes	No
1. Assessment of the interest relationship between CPA and company	(1)	Have a direct or significant indirect financial interest relationship with the company (holding the company’s equity securities or other securities, corporate bonds, loans or other debt instruments, including its rights and derivative interests)	None		ˇ
	(2)	There are financing or guarantees with the company or the company’s directors and independent directors	None		ˇ
	(3)	Have a close business relationship with the company or its directors, independent directors, and managers	None		ˇ
	(4)	Members of the audit team have a potential employment relationship with the company (determined to serve as a director, independent director, manager of the company in the future, or a position that has a significant impact on the audit case)	None		ˇ
	(5)	Entering into a contingent fee arrangement relating to an audit engagement.	None		ˇ
2. Assessment of whether the CPA have dual identity	(1)	A member of the audit team of an accounting firm has served as a director, independent director, manager of the company or a position that has a significant influence on the audit case in the last two years	None		ˇ
	(2)	Non-audit services provided by accounting firms to the company	None		ˇ
3. Assessment of whether the CPA have a position to defend the company	(1)	Members of the audit team of an accounting firm publicize or mediate the stocks or other securities issued by the company	None		ˇ
	(2)	Members of the audit team of an accounting firm act as defenders of the company or coordinate conflicts with other third parties on behalf of the company.	None		ˇ
4. Assessment of the familiarity between CPA and company personnel	(1)	Members of the audit team of the accounting firm have relatives with the company’s directors, independent directors, managers, or personnel who have a significant influence on the audit case	None		ˇ
	(2)	A CPA within one year of resignation from an accounting firm serves as the director, independent director, manager of the company or a position that has a significant influence on the audit case.	None		ˇ
	(3)	Members of the audit team receive valuable gifts or gifts from the company or its directors, independent directors, and managers.	None		ˇ
5. Assessment of whether the CPA has been coerced by the company	(1)	The company requires members of the audit team to accept improper choices made by management in accounting policies or improper disclosures in financial statements.	None		ˇ
	(2)	In order to reduce public expenses, pressure is placed on the members of the audit service team to improperly reduce the inspection work that should be performed.	None		ˇ
6. Assessment of the practice period of a CPA	(1)	Whether the same CPA has performed visa business for more than seven years	None		ˇ

Other important information that helps to understand the operation of corporate governance (Including but not limited to employee rights, employee care, investor relations, supplier relations, the rights of interested parties, directors and supervisors, the implementation of risk management policies and risk measurement standards, the implementation of customer policies, the situation where the company purchases liability insurance for directors and supervisors, etc.):
(1) Status of employee rights and employee wellness:
- a. In order to protect the rights and interests of employees, the company renewed its group agreement with Industrial Labor Union on September 24, 2019, including labor union activities, working hours, vacations, wages, bonuses, benefits, safety and health, labor relations, human development, retirement pensions, etc. Conditions, and in accordance with labor-related laws and regulations, formulate work rules and various management regulations, which clearly specify the rights and obligations of employees and welfare items, and review them regularly to protect the rights and interests of employees.
- b. The company provides considerable welfare measures, in addition to labor insurance, health insurance, and for staff mutual assistance insurance, the other for employees to insure 5 million group accident insurance, foreign travel safety insurance, employee health checks, and cultural and recreational, Activities and other subsidies, the current labor relations are quite harmonious.
(2) Employee Concern: CSBC express its concern for the sincere condolences of the practitioners who has hospitalized due to illness or injury. CSBC has set “Practitioner’s injury and illness condolence clause " and sent Consolation money to the hospital practitioner colleagues at the Spring Festival, Dragon Boat Festival, the Mid-Autumn Festival.
(3) Investor Relations: CSBC has set up a spokesperson to communicate with investors. CSBC website has also set up the Investors area service website to expose corporate governance, financial information, shareholder information, contacts and product-related information to provide investors with timely service information. (Company website: http://www. csbcnet.com.tw).
(4) Supplier Relationships: CSBC suppliers has managed by the Supplier management activity benchmark and the Material Supplier selection benchmark. There are long-term supply contracts for good suppliers, and suppliers can match the needs of the company's production and marketing, and to maintain long-term relationship, and the quality of good supply, as the supplier of environmental protection, safety and health issues have been in the "supplier management benchmark" and "material supplier selection benchmark" norms.
(5) Stakeholders rights: CSBC has set up a Spokesman system. There is also a “Stakeholder Area” on the website

(http://www.csbcnet.com.tw/Service/InterestedArea.htm). It sorts the topics for each stakeholder to collect the information they want. It also provides the email address for various interested parties to send the feedback from stakeholders.

(6) Directors and managers and staff training records:

a. Director about corporate governance training

	Title	Name of Institutional Shareholders	Institutional Shareholders’ Representative Name	Sponsoring Organization	Name of Course	Date of Training	Hours	Total time
1	Chairman	Ministry of Economic Affairs	CHENG, WEN- LON	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	October 21, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
2	Director	Ministry of Economic Affairs	TSENG, KUO- CHENG	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	September 3, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
3	Director	National Development Fund, Executive Yuan	WU, WEN-KUEI	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	September 4, 2020	3	3
4	Director	National Defense Industrial Development Foundation	Chen, Hsiao-Ming	Taiwan Stock Exchange Corporation	Summit Forum “Corporate Governance 3.0 - Sustainable Development Roadmap”	September 21, 2020	3	3
5	Director	Yaohua Glass Co., Ltd. Management Committee	Lu, Wen-Tsan	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	October 21, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
6	Director	Ministry of Economic Affairs	HUANG, JIH- CHIN	Ministry of Labor	2020 Labor Directors’ Professional Knowledge Training Activities	September 3-4, 2020	8	11
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
7	Director	Ministry of Economic Affairs	LAN, SYU-CING	Ministry of Labor	2020 Labor Directors’ Professional Knowledge Training Activities	September 3-4, 2020	8	11

	Title	Name of Institutional Shareholders	Institutional Shareholders’ Representative Name	Sponsoring Organization	Name of Course	Date of Training	Hours	Total time
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
8	Director (Institutional Shareholder)	CPC Corporation, Taiwan	Yin, Ling-Ying	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	October 22, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
9	Director (Institutional Shareholder)	Yue-Li Investment Corporation	Wang, Shu-Ji	Taiwan Academy of Banking and Finance	Board Operation Practice and Corporate Governance Seminar	July 22, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
10	Director	China Steel Corporation	HWANG, CHIEN- CHIH	Taiwan Corporate Governance Association	Climate Change and TCFD	August 3, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
11	Director	Industrial Labor Union of CSBC	HOU, DE-LONG	Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	September 3, 2020	3	6
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
12	Director	Industrial Labor Union of CSBC	HSIEH, KUO- JUNG	Ministry of Labor	2020 Labor Directors’ Professional Knowledge Training Activities	September 3-4, 2020	8	11
				Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
13	Independent Director		LIN, HUI-JENG	Taiwan Corporate Governance Association	Insider trading prevention and countermeasures	August 7, 2020	3	6

	Title	Institutional Shareholders’ Representative Name	Sponsoring Organization	Name of Course	Date of Training	Hours t	Total ime
			Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020	3
14	Independent Director	CHEN, CHIH- YANG	Taiwan Corporate Governance Association	Responsibilities of directors and supervisors for false financial reports	August 25, 2020	3 3	6
			Securities & Futures Institute R.O.C	2020 Annual Prevention of Insider Trading and Insider Equity Trading Publicity Seminar	October 14, 2020
15	Independent Director	LIEU, DER-MING	Taiwan Corporate Governance Association	Enterprises face the risks and crises caused by the digital wave	June 22, 2020	3 3 3	9
			Taiwan Corporate Governance Association	Competition for management rights and case analysis	August 13, 2020
			Taiwan Corporate Governance Association	How the directors and supervisors supervise the company to do a good job in corporate risk management and crisis management	August 12, 2020

b. Managers about corporate governance training

Title	Name	Sponsoring Organization	Name of Course	Date of Training	Hours	Total time
Auditor General	Shen, Feng-Ru	Accounting Research and Development Foundation	Legal responsibilities and legal compliance audit practices for companies’ "inaccurate financial reports"	July 6, 2020	6	12
		Securities & Futures Institute R.O.C	Enterprise Intellectual Property Management Trends and Audit Practices	November 20, 2020	6
Director ofDepartment of Finance and Accounting	Xu, You-Zhen	Accounting Research and Development Foundation	Continuing Training Course for Accounting Supervisors of Issuer Securities Firms and Stock Exchanges	July 9-10, 2020	12	12
Deputy Director of Department of Finance and Accounting	Yang, Jing-An	Accounting Research and Development Foundation	Continuing Training Course for Accounting Supervisors of Issuer Securities Firms and Stock Exchanges	September 17-18, 2020	12	12

     - c. Personnel related to financial information transparency obtain relevant licenses specified by the competent authority:

     - (1) One person from the Audit Office of our company obtained the Institute of Internal Auditors-Chinese Taiwan internal auditor

     - license.

     - (2) Two people from the Department of Finance and Accounting of our company have passed the Certificate of Advanced

     - Examination for Professional Accountants and Technical Staff of the Examination Institute.

  - `（` 7 `）` Implementation of risk management policies and risk measurement standards `（` Note: If it is a securities firm, a securities investment trust business, a securities investment consulting business, and a futures business, the implementation of the risk management policy, risk measurement standards, and consumer or customer protection policy `）` :

     - The company has formulated and issued the "Risk Management Code" and disclosed the "Risk Management Policy" and established a risk management committee to promote risk management operations. The company follows the "Risk and Opportunity Management Procedures" as the highest guidance document and continues to use the "Risk and opportunity management" and "Stakeholder" thinking to identify, evaluate and control risks and opportunities. The risk and opportunity management operations performed by each verification management system (the four major management systems of quality, environment, occupational safety and health, and intellectual property) follow the characteristics of the management system, and carry out risk and opportunity identification, analysis, evaluation, and processing procedures. According to the identified risk and opportunity levels, formulate risk and opportunity countermeasures/strategies, or follow daily management to effectively grasp operational opportunities or reduce operational risks. The company's risk management policies/strategies, organization, management/operation procedures are simultaneously included in the "Corporate Social Responsibility Report" and the "Corporate Social Responsibility Area" (Website: http://www2.csbcnet.com.tw/csr/) They are disclosed on the corporate governance risk management webpage.

  - `（` 8 `）` Implementation of customer policy: The company is a qualified company with a quality management system (ISO 9001). The quality policy is "Customer Satisfaction. Quality First.", and with the core values of "Team, Commitment, Safety, and Service", we provide customers with satisfactory products and services.

  - `（` 9 `）` The company buys liability insurance for directors: In 2020, the company has purchased liability insurance for directors, insured for USD 3 million, and reported to the 6th of the 17th Board of Directors on March 20, 2020.

Please explain the improved situation regarding the corporate governance evaluation results released by the TWSE "Corporate Governance Center" in the most recent year and propose priority enhancements and measures for those who have not improved.
The company’s 2020 (7th) industry is in accordance with TWSE regulations to apply for the self-evaluation of corporate governance evaluation work on the self-evaluation platform of the Securities & Future Institution’s corporate governance, re-evaluation results are ranked in the top 21% to 35%. The 2019 (6th) appraisal range was ranked among the top 36%~50% companies, and the first 5 appraisal ranges were all ranked among the top 6%~20% companies.
Every year, the company reviews the consolidation and handling of matters that have not scored in the corporate governance evaluation indicators, and invites all powers and responsible units to make improvements accordingly, hoping to meet the requirements of the evaluation indicators, and strengthen the corporate governance system and corporate governance transparency.

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee:

CSBC has established the Remuneration Committee's Organizational Rules in accordance with the provisions of Article 14 of the Securities Exchange Act and the “Measures for the Listing of the Stock Exchange or the Administration of the Salary and Remuneration of the Companies in the Securities and Futures Businesses promulgated by the Executive Yuan” After approved by the 6th meeting of the 14th Board of Directors, a remuneration committee was established according to the letter of July 6, 2011 CSBC-Management-No. 1000001518. The remuneration committee is composed of three independent directors, whose powers are to determine and regularly review the performance of directors and managers Evaluation and remuneration policies, systems, standards and structures, and setting the remuneration of directors and managers.

On August 9, 2019, the board of directors approved three independent directors:Llieu, Der-Ming, Lin, Hui-Jeng, Chen, Chih-Yang, etc., as the company's 4th remuneration committee, and the term of office is from August 9, 2019 to June 25, 2022. The 2020 Remuneration Committee held two meetings on March 11, 2020 and October 30, 2020.

1. Information of Remuneration Committee Members

Title `（`Note1`）`	Criteria Name	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Independence Criteria (Note2)	Number of Other Public Companies in Which the Individual is concurrentl y serving as a remunerati on committee member	Remarks
		An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university	A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company	Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company	1	2	3	4	5	6	7	8	9	10
Independent Director	LIEU, DER- MING	ˇ	-	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	1	4th remuneration committee convener
Independent Director	LIN, HUI- JENG	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	None	4th remuneration committee member
Independent Director	CHEN, CHIH- YANG	-	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	ˇ	None	4th remuneration committee member

Note1: Please fill in as Director, Independent Director or others in the “Title” column.

Note 2: Please tick “ ” the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

(1) Not an employee of the Company or any of its affiliates.
(2) Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.

(3) Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.

(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three subparagraphs (1)(2)(3).

(5) Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings, or appointed as a representative to act as a company director or supervisor in accordance with Article 27, Item 1 or Item 2 of the Company Act. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(6) Not a director, supervisor, or employee of other companies controlled by the same person with more than half of the company’s director seats or voting shares. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(7) Directors, supervisors or employees of other companies or institutions who are not the same person or spouse as the chairman, general manager or equivalent positions of the company. Not applicable in cases where the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(8) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company. Not applicable in cases where a specific company or institution holds more than 20% of the total issued shares of the company, but not more than 50%, or the person is an independent director of the parent company, or any subsidiary as appointed in accordance with the Act or with the laws of the country of the parent or subsidiary.
(9) Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides auditing services to the company or any affiliate of the company, or that provides commercial, legal, financial, accounting or related services to the company or any affiliate of the company for which the provider in the past 2 years has received cumulative compensation exceeding NT$500,000, or a spouse thereof; provided, this restriction does not apply to a member of the remuneration committee, public tender offer review committee, or special committee for merger/consolidation and acquisition, who exercises powers pursuant to the Act or to the Business Mergers and Acquisitions Act or related laws or regulations.
(10) Not a person of any conditions defined in Article 30 of the Company Act.

2. Attendance of Members at Remuneration Committee Meetings

(1) There are 3 members in the Remuneration Committee.
(2) The term of the 4[th] session members: The term of the members: August 9, 2019 to June 25, 2022. A total of 2 (A) Remuneration Committee meetings were held in the previous period. The attendance record of the Remuneration Committee members was as follows:

Title	Name	Attendance in Person(B)	By Proxy	Attendance Rate (%)`【Ｂ`/`Ａ】` (Note)	Remarks
Convener	LIEU,DER-MING	2	0	100%	4th remuneration committee convener
Member	LIN,HUI-JENG	2	0	100%	4th remuneration committee member
Member	CHEN,CHIH-YANG	2	0	100%	4th remuneration committee member
Other mentionable items: 1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it should specify the date of the meeting, session, content of the motion, resolution by the board of directors, and the Company’s response to the remuneration committee’s opinion (eg., the remuneration passed by the Board of Directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None. 2. Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session,content of the motion,all members’ opinions and the response to members’ opinion should be specified: None.

Resolutions of the remuneration committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None.

Note:

(1) If a member of the Remuneration Committee resigns before the end of the year, the date of resignation should be indicated in the remarks column. The actual attendance rate (%) is calculated based on the number of meetings of the Remuneration Committee during the term of service and the actual number of attendances.
(2) Before the end of the year, if the salary committee is re-elected, the new and previous Remuneration Committee members should be listed, and the remarks column should indicate whether the member is previous, new or re-elected and the date of reelection. The actual attendance rate (%) is calculated based on the number of meetings of the Remuneration Committee during their employment and their actual attendance.

3. The 2020 Remuneration Committee discussed proposals and resolutions:

	Date of Meeting	~~Discussed Proposals~~	Resolutions
The 2~~nd~~remuneration committee meeting of the 4thsession	March 11, 2020	1. Since the company has no pre-tax benefits in 2019, directors' remuneration will not be paid in 2019 and is submitted for deliberation.	All the members present agreed to pass the proposal and submitted it to the March 20, 2020 , the 6th of the 17th Board of Directors for approval before submitting the report of the June 2020 General shareholders meeting.
		2. Revised "The Organizational Rules of the Company's Remuneration Committee Committee"	All the members present agreed to pass the proposal and submitted it to the March 20, 2020, the 6th of the 17th Board of Directors for approval before submitting the report of the June 2020 General shareholders meeting.
The 3rdremuneration committee meeting of the 4thsession	October 30, 2020	No proposal for discussion. (2 reports)

3.3.5 Deviations and Reasons from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.”:

3.3.5Deviations and Reasons from “the ListedCompanies.”:	Corporate Social Responsibility Best-Practice Princi	Corporate Social Responsibility Best-Practice Princi	Corporate Social Responsibility Best-Practice Princi	ples for TWSE/TPEx
Evaluation Item	ImplementationStatus(Note1)			Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
1. Does the company follow the principle of materiality to conduct risk assessments on environmental, social and corporate governance issues related to the company's operations, and formulate relevant risk management policies or strategies? (Note3)	√		1. The company compiles a "Corporate Social Responsibility Report" every year. Use the questionnaire on issues of concern to stakeholders to determine major issues of concern to stakeholders. 2. The stakeholders concerned about major issues are divided into three aspects: corporate governance, environmental, and social aspects, and they formulate management policies, explain their significance, formulate strategy implementation, and disclose the effectiveness of implementation. 3. Significant issues, risk assessment of environmental, social and corporate governance issues related to company operations, detailed “Corporate Social Responsibility Report” and company website for related risk management policies or strategies.	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
2. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?	√		1. The Department of Planning of the company is a full-time (part-time) unit to promote corporate social responsibility and has established a "Corporate Social Responsibility Committee", with the chairman as the chairman, the general manager as the deputy chairman, and the heads of each first- level unit as the committee members. 2. The committee has four promotion groups that formulate strategic action plans related to corporate governance, environment, labor safety, and society each year. The committee convenes twice a year to report on the promotion and implementation of the four promotion groups’ strategic action plans, and review the "Annual Corporate Social Responsibility Report". 3. Cooperate with the annual meeting of the board of directors and shareholders, report the promotion and implementation of the previous year's strategic action plan and the current year's strategic action plan to the board of directors and the general shareholders' meeting.	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.

Evaluation Item	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
3. Environmental issues (1) Does the company establish an appropriate environmental management system based on its industrial characteristics? (2) Is the company committed to improving the utilization efficiency of various resources and using recycled materials that have a low impact on the environment? (3) Does the company assess the potential risks and opportunities of climate change to the company now and in the future, and take measures to respond to climate-related issues? (4) Does the company make statistics on greenhouse gas emissions, water consumption, and total waste weight in the past two years, and formulate policies for energy conservation and carbon reduction, greenhouse gas reduction, water reduction, or other waste management?	√ √ √ √			Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
			(1) The company has passed the ISO/CNS 14001
			environmental management system, and the special
			unit is the Department of Environmental Protection
			and Public Utilities, which comprehensively
			manages the environmental quality and maintenance
			management of waste, air pollution and waste,
			sewage, etc.
			(2) The company is committed to improving the
			utilization efficiency of various resources, investing
			in energy-saving and high-efficiency equipment, and
			is more committed to the management and control of
			the use of oil, water, air kinetic energy, and
			electricity, and for waste classification and waste
			(sewage) water recycling and reuse. In 2020, the
			waste (sewage) water treatment plant recovered
			water for use in ship ballast water, totaling 12,376
			tons.
			(3) The company has formulated the "Extreme Climate
			Response Standard Operating Standard" to respond
			to the impact of extreme weather caused by climate
			change. In order to improve the emission of VOCs
			pollutants in the coating plant in 2019, NT$18
			million has been invested in the closed negative
			pressure gas collection test project for spray booths
			P1~P2; NT$146.4 million has been invested in
			2020-2021 for the installation of the VOCs
			pollutants control equipment for spray booths P1~P2
			and the airtight enclosure of the spray booths P3~P6,
			which are expected to be completed by the end of
			2021. The installation of the VOCs pollutants
			control equipment for spray booths P3~P6 is
			expected to be completed by the end of 2023. Spray
			booths P1~P6 will be expected to reduce VOCs
			pollutants by about270 tons eachyear.

		ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
Yes	No	Abstract Illustration (Note2)
								1. Quantitative management goals for energy conservation, carbon reduction, greenhouse gas reduction, water reduction, or other waste management policies, and measures and conditions for achieving the goals, and measures to assess and expose potential risks and opportunities for the company now and in the future due to climate change Refer to CSR Report 2.1 Climate Change and Response. 2. The company is an ISO 14000 environmental management system certified manufacturer. The management manual has been exposed and has been continuously improved to fulfill corporate social responsibility. In principle, it complies with Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies.
		(4) Annual water consumption statistics of the
		company:
			water consumption
		Year Item			2020
			2019

			Kaohsiung Yard	Keelung Yard	Kaohsiung Yard		Keelung Yard
		Cubic Meter	601,551	95,175	506,197		75,509
		~~Total waste weight:~~

		Amount of domestic waste`－`Kaohsiung Yard
				Yard
		Year Item		2019		2020
		Total Amount of domestic waste(kg)		2,418,690		2,440,320
		Workload (person-day)		1,095,155		1,063,143
		Domestic waste generation index (Kg/person-day)		2.21		2.295


		Amount of domestic waste`－`Keelung Yard

		Year Item		2019		2020
		Total Amount of domestic waste(kg)		303,170		268,940
		Workload (person-day)		163,308		111,132
		Domestic waste generation index (Kg/person-day)		1.86		2.42

Evaluation Item			ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
			Voluntary greenhouse gas inventory:					The company adopts voluntary reporting of greenhouse gas emissions, and the results of the inventory are reported on the EPA website in accordance with regulations. The results of the greenhouse gas inventory are reported and disclosed at the TWSE Public Information Observatory for interested parties to review.
					nhouse Gas Inventory
				Gree

			Year Item	2	019	2020
							Keelung Yard
				Kaohsiung	Keelung	Kaohsiung
				Yard	Yard	Yard
			Category 1 (Tons)	10,947	2,075	Once the company's inventory is completed, its carbon emissions will be disclosed on the "National Greenhouse Gas Registration Platform of the Environmental Protection Agency of the Executive Yuan" and the TWSE Information Observatory.
			Category 2 (Tons)	23,599
					5911
					,
			Total emissions (Tons)
				34,546	7,986


4. Social Issue (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights? (2) Does the company formulate and implement reasonable employee welfare measures (including salary, vacation and other benefits, etc.), and appropriately reflect operating performance or results in employee compensation?	√ √		(1) The company has formulated appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights (2) The company has established a group agreement with the enterprise labor union, and in accordance with labor- related laws and regulations, sets working rules and various management regulations, which clearly specify the rights and obligations of employees and welfare items, and establishes enterprise labor unions and holds labor- management meetings in accordance with the law to fully protect legal rights of employees; Recruitment and selection, promotion, salary, leave, retirement and various welfare measures for employees of both sexes not only meet the legal requirements and are equal, but even exceed the legal standards. Women’s and men’s basic salary and remuneration are the same, regardless of gender, position and work area. Women also have menstrual leave, 30- minute feeding/gathering time per day, and childcare leave without pay. The company has formulated the "Key Points for Issuing Performance Bonuses", which will issue performance bonuses and employee compensation based on pre-tax earnings, and appropriately reflect operating performance or results in employee compensation.					Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the comp- any characteristics. Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.

Evaluation Item	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
(3) Does the company provide employees with a safe and healthy working environment, and provide employees with regular safety and health education? (4) Does the company establish an effective career development training program for employees?	√ √		(3) The company’s group agreement regulates safety and health related matters as follows, and is handled in accordance with the relevant provisions of the labor law to provide employees with a healthy and safe working environment: a. Regularly general health check for employees and annual health check for workers in special environments. b. Set up medical clinics and hire qualified medical personnel to facilitate medical treatment of practitioners and their spouses’ immediate family members and provide medical consultation. c. Professional training and safety and hygiene training for employees. d. Provide safety protective gear and equipment, and regularly check to protect the safety of employees at work. e. Set up Occupational safety and health committee and labor safety and health department to implement employee safety, health and health management. f. When workplaces and production equipment affect the health and safety of employees, improvements are proposed through Occupational safety and health committee meetings or Labor- management meetings. (4) The company has planned training courses for “common knowledge”, “management skills”, and “professional skills” according to employee categories, including new recruits, industrial management, technology, and various levels of supervisors. Common knowledge includes pre-employment training for newcomers, project management courses, information security training, supervisors' annual outlook meeting, etc. Management skills include reserve training for foremen and monitors, reserve training for mid-level supervisors, management seminars, etc. Professional skills include professional skills related courses in line with each business development direction. In addition, in order to encourage employees to learn and develop independently, it also provides remedial assistance fees for spare time.	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.

Evaluation Item	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
(5) Regarding customer health and safety, customer privacy, marketing and labeling of products and services, does the company follow relevant laws and international standards, and formulate relevant policies and appeal procedures for protecting customer rights? (6) Does the company formulate supplier management policies that require suppliers to comply with relevant regulations on issues such as environmental protection, Occupational safety and health or labor rights, and their implementation?	√ √		(5) a. To provide products that meet customer needs and safety, the company conducts strict control from product development, design, production and sales stages. In addition, CSBC Taiwan lists the performance, specifications and precautions of each product in the manual in detail and provides customer service hotline numbers and product warranty certificates to ensure that customers' rights and interests are protected to the greatest extent. b. The products and services provided by the company completely follow or exceed the International Maritime Organization (IMO) specifications. In all stages of the product cycle, all processes and functions that may affect health and safety are improved after evaluation. CSBC Taiwan did not violate any laws and regulations related to products and services in 2020. (6) Supplier management policy requires suppliers to follow relevant regulations on issues such as environmental protection, Occupational safety and health or labor human rights, and detailed implementation status "Corporate Social Responsibility Report" and company website	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
5. Does the company refer to the internationally accepted standards or guidelines for preparing reports to prepare reports that disclose the company's non-financial information, such as the Corporate Social Responsibility Report? Has the disclosure report obtained the assurance or assurance opinion of the third- party verification unit?		√	The company’s Corporate Social Responsibility Report is compiled voluntarily, and without compulsory verification by a third party, the company adopts the core options to declare that it complies with the GRI standards.	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
6. If a company has its own corporate social responsibility code based on the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", please state the difference between its operation and the established code.	√		According to the "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies", the company has established a "Corporate Social Responsibility Code" and announced it on the company website (URL http://www2.csbcnet.com.tw/csr/), according to promote the implementation,there is no difference with the stipulated code.	Established with reference to the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.

Evaluation Item	ImplementationStatus (Note1)	ImplementationStatus (Note1)	ImplementationStatus (Note1)	Deviations from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration (Note2)
7. Other important information that helps to understand	the operation of corporate social responsibility: ▲The details are as follows.

Note1: If you check "Yes" for the Implementation Status, please describe the important policies, strategies, measures and implementation conditions adopted; If you check "No" for the Implementation Status, please explain the reason and explain the plan for adopting relevant policies, strategies and measures in the future.

Note2: If the company has compiled a Corporate Social Responsibility Report, the Implementation Status must indicate the method of accessing the Corporate Social Responsibility Report and the index page to replace it.
Note3: The materiality principle refers to those who have a significant impact on the company’s investors and other interested parties regarding environmental, social and corporate governance issues.
Description: The company is committed to promoting (1) Environmental protection, energy saving and carbon reduction (2) Social and

community services (3) Safety and health and other activities and (4) Handling industry-university cooperation and talent cultivation, in

addition to considering the internal interests of the company’s operations, At the same time, it also takes into account the external benefits

to the society, so as to take the society and use it in the business philosophy of the society, and fulfill the corporate responsibility to the

， society. The following is an explanation of the systems and measures adopted and the implementation status of the above three main activity respectively as follows:

（1） Environmental protection, energy saving and carbon reduction: As shown in Table 3 above, Environmental Issues.
（2） Social and community services: The company has always been enthusiastic about participating in social and community activities and has issued good-neighborly budget use and assessment points. It prepares budgets for good-neighborly activities every year. In 2020, it sponsors neighborly funds for Kaohsiung City’s Siaogang District and Keelung Yard and Hoping Island. (Including government and school sports and recreation, village, community self-improvement activities, Zhongyuan Purdue, volunteer networking, energy conservation and environmental protection, club activities) and other activities total NT$2,004,000. (The company Kaohsiung Yard partially sponsored NT$1,604,000, and the Keelung Yard partially sponsored NT$400,000). The main activities to promote humanities and social care in 2020 are listed as follows:
Blood donation

During the year, there were 4 blood donation activities initiated by companies and societies, with 440 person-times.

Good-neighborly activities

During the year, companies and societies initiated 48 good-neighborly activities.

Community care and social welfare activities

During the year, companies and societies initiated 32 community care and social welfare activities.

Public participation activities

During the year, companies and societies initiated 26 public participation activities.

Coastal Clean-Up activities

During the year, the company promoted and cooperated with the government and public welfare organizations to handle 5 Coastal Clean-Up activities. (Remarks: For details of the event, please contact our company Senior Officer Lin, Shi-Fa; ext. 2309)

(3) Occupational safety and health aspect:

All levels of the company have a strong determination to maintain occupational safety and health. The Occupational Safety and Health Department is set up as a dedicated unit to supervise the safety and health work of the entire company, and sufficient safety and health Senior Engineers and safety team personnel are deployed in each factory to perform on-site safety and health work. On the internal website, set up "Occupational Disaster Bulletin", "Safety Bulletin", "Industrial Safety Publicity Information" and other web pages for employees to read and use, so as to enhance employees' awareness, experience and ability to respond to industrial safety information.

In order to prevent the occurrence of industrial safety accidents, provide a friendly working environment, and ensure the safety of employees and contractors, the company has introduced an occupational safety and health management system since 2007. For the current occupational safety and health management system (ISO 45001), the detailed "CSR Report" and "CSR Zone" of qualified manufacturers are verified on the company website (URL http://www2.csbcnet.com.tw/csr/).

`（` 4 `）` Industry-academia collaboration and talent training:

Training for talent in engineering and management

Through the industry-academia collaboration and industrial internship with the schools, CSBC Taiwan attracts and encourages the investment of talents early to create CSBC Taiwan's continuous innovation and progress.

Through the industry-academia collaboration and industrial internship with the schools, the company can attract and encourage the investment of talents as early as possible to create the company's continuous innovation and progress. In order to cultivate shipbuilding-related talents and recruit outstanding students who are interested in the shipbuilding industry, the company provides scholarships to students in the third-year (inclusive), master's and doctoral programs of the National (Technology) Universities of science and technology departments. In order to encourage the enterprising and research development of the students, a total of 17 students in science and engineering-related departments will be issued in 2020, with a total of NT$1.59 million, and the recipients can work in the company after graduation.

Since 2019, the company has cooperated with the Department Mechanical Engineering of National Cheng Kung University to handle the "Mechanical Industry Master Class", providing each student with a training fee of NT$300,000 during the school period; In addition, for the long-term cultivation of national defense technology R&D talents, Chung Cheng Institutie of Technology, NDU is specially entrusted to train self-financed students, provide students with tuition and miscellaneous fees during the four-year study period, and provide a monthly living allowance of NT$15,000 per person. A total of NT$2.46 million was spent on the training program, and 12 professionals have been trained. The students' future research topics will be combined with the company's development direction.

2. Training for talent in technology

In order to deepen and improve the technology and cultivate the exquisite skills of personnel, the cooperation situation of the industry-university cooperation special class so far this year is as follows:

(1) Continue to work with Kaohsiung City Zhongzheng Senior Vocational Industrial School and National Kaohsiung University of Science and Technology to handle the "Industry-University Cooperation Program-CSBC Taiwan Shipbuilding Class". This year, 40 students from the special class will enter the factory for internship. The internship period will expire in 2024 and the best candidates will be employed. The special class of this cooperation model is already the 4[th] session. A total of 144 students have entered the company for internships. 21 students have performed well and have been employed before graduation. The current number of interns is 101 people.
(2) Cooperate with Fooyin University in the "Occupational safety and health department special class". This cooperation model has been used for 2 special classes so far. A total of 39 students have entered the company for internships. 4 students have performed well and were admitted before graduation. The current number of interns is 28 people.
(3) Continued the "Industrial College Project- Ship Electrical and Mechanical Engineering and Wind Power Industry Course" with National Kaohsiung University of Science and Technology. The special class of this cooperation model is already the 4[th] session, and 33 students have achieved outstanding performance and have been admitted.
(4) Continue to handle "Industry-University-Training Cooperation Training-Metal Material Practice Special Class" with Fortune Institute of Technology and Kaohsiung Pingtung Penghu Taitung Regional Branch of Workforce Development Agency, Ministry of Labor. This year, 8 students in the special class will enter the factory for internship, and they will be selected and hired at the end of the internship in 2023. The special class of this cooperation model is already the 11[th] session, 63 students have been recruited for outstanding

performance, and the current number of interns is 22 people.

(5) Continue to handle the "Industry-University Cooperation Program-Precision Machining Special Class" with China University of Science and Technology. The special class of this cooperation model is already the 3[rd] session, and the current number of interns is 1 person.
(6) Continue to handle the "CSBC Taiwan Special Class" with St. John’s University. This year, two students from the special class will enter the factory for practical internships, and they will be selected and hired at the end of the internship period in 2024. The special class of this cooperation model is already the 2[nd] session, and the current number of interns is 7 people.
Training for talent in marine technology

In order to cultivate shipbuilding talents, the company cooperates with six schools including National Taiwan University, National Taiwan Ocean University, National Cheng Kung University, National Kaohsiung University of Science and Technology, National Sun Yat-sen University and Chung Cheng Institutie of Technology, NDU, and accepts Shipbuilding and marine engineering students come to the factory during the cold and summer vacations to participate in the 4-week "Marine Upstart" practical training course. In 2020, a total of 13 people will come to the factory for internships.

3.3.6 Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

3.3.6 Deviations from “the Ethical Corporate and Reasons	Management Best-Practice Principles for TWSE/TPEx	Management Best-Practice Principles for TWSE/TPEx	Management Best-Practice Principles for TWSE/TPEx	Listed Companies”
Evaluation Item	ImplementationStatus(Note)			Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
1. Establishment of ethical corporate management policies and programs (1) Does the company declare its ethical corporate management policies and procedures in its guidelines and external documents, as well as the commitment from its board to implement the policies? (2) Does the company establish appropriate precautions against high-potential unethical conducts or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies? `（`3`）`Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies?	√ √ √		(1) The company issued the "Code of Ethics", clearly established the integrity management policy, and established "Procedures for Ethical Management and Guidelines for Conduct", "Conduct for Directors and First- Level or Higher Management" and "Code of Ethics for Employees of CSBC" (he query website is available at: http://www.csbcnet.com.tw Investor Area.), sent to the board of directors for approval, "Code of Ethics" and "Procedures for Ethical Management and Guidelines for Conduct", and submit the report of the shareholders meeting, requiring directors, managers and practitioners to not directly or indirectly provide, promise, request or accept any improper benefits, or commit other dishonest acts that violate integrity, lawlessness, or breach of fiduciary duty in order to obtain or maintain benefits. (2) The company’s "Code of Ethics" point 7 and "Procedures for Ethical Management and Guidelines for Conduct" specify the risk assessment mechanism for dishonest conduct, and regularly analyze and evaluate business activities within the business scope that have a higher risk of dishonest conduct. Based on this, the prevention plan is formulated, and the appropriateness and effectiveness of the prevention plan are regularly reviewed. `（`3`）`The company’s "Code of Ethics" and "Procedures for Ethical Management and Guidelines for Conduct" clearly set out the principles and operating procedures of the plan to prevent dishonest behavior, and clearly specify the disciplinary and appeal system for violations of the integrity management regulations, and in the company The website exposes information such as the job title, name, date of violation,violation content,and handlingof the	Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM

Evaluation Item	ImplementationStatus (Note)	ImplementationStatus (Note)	ImplementationStatus (Note)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
			violating personnel, and regularly reviews and corrects them. (The query URL is: http://www.csbcnet.com.tw Investor Area)	Listed Companies and the company characteristics.
2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ethical records and include ethics-related clauses in business contracts? (2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity and submits quarterly (at least once a year) reports the integrity management policy and prevention of dishonest behavior plan and supervision of implementation to the Board of Directors? (3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it? (4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs, to formulate	√ √ √ √ √		(1) The 9th point of the company’s Code of Ethics clearly stipulates that before commercial dealings, it considers the legality of its agents, suppliers, customers or other business dealings and whether there is a record of dishonest behavior, so as to avoid dealing with people with records of dishonest behavior. Signing a contract with others, if the trader is involved in dishonest behavior, the company has provisions that can terminate or rescind the contract at any time. (2) The Company’s Department of Human Resources and Administration is a dedicated unit for promoting corporate integrity management. It has issued the "Code of Ethics" standard and related cooperation promotion units and their rights and responsibilities (Website: http://www.csbc- net.com.tw Investor Area). The implementation of the integrity management policy and the prevention of dishonest behavior plan and supervision will be presented in the 7th report of the 17th board of directors on May 6, 2020. (3) The directors of the company uphold a high degree of self- discipline. If they have an interest in board meeting proposals, themselves or the legal person they represent, and may be harmful to the interests of the company, they may state their opinions and answer inquiries, and shall not participate in discussions and voting and shall not act for other directors to exercise their voting rights. (4) The company has established an internal control and accounting system, and the company's financial report is verified by CPA. In addition, the audit unit formulates an audit plan every year, conducts internal control system audits, and regularly submits audit reports to the	Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the

Evaluation Item	ImplementationStatus (Note)	ImplementationStatus (Note)	ImplementationStatus (Note)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
relevant audit plans and check compliance with the plan to prevent dishonest behaviors based on the results of the risk assessment of dishonest behaviors? (5) Does the company regularly hold internal and external educational trainings on operational integrity?			board of directors and various improvement follow-ups. At the end of the year, an Internal Control System Statement will be issued based on the self-inspection results and sent to the board of directors for approval to ensure the effectiveness of the internal control system. (5) 2020 Internal and external educational trainings on operational integrity: a. When the "Code of Ethics of our company" is revised and announced on May 28, 2020, supervisors at all levels are requested to promote honest operation and anti-bribery to their colleagues. b. Advocate "Code of Ethics (anti-bribery)" to 258 new recruits (including engineers, technicians, and managers). In the future, new recruits will still be given the promotion of Code of Ethics (anti- bribery). c. In order to train future second-level executives, CSBC Taiwan organized a second-level executive training course, which was organized on November 27, 2020 to December 15, 2020 to promote and train online courses on integrity management (anti-corruption and anti-bribery). A total of 23peopleparticipated.	company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
3. The operation of the company whistleblowing system (1) Does the company establish both a reward/punishment system and an integrity hotline for whistleblowing? Does the company assign an appropriate person responsible for the report to the object? (2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases?	√ √ √		(1) The company’s "Code of Ethics" point 23 and "Procedures for Ethical Management and Guidelines for Conduct" point 21 specify that the company's reporting unit is the Audit Office, and reporting matters involving directors or senior executives should be reported to the Independent Director and set up reporting channels and systems. (2) The company’s "Code of Ethics" point 23 and "Procedures for Ethical Management and Guidelines for Conduct" point 21, set out the standard operating procedures for the investigation of the reported matter and the confidentiality of the identity of the reporter and the content of the report shall be kept confidential, and after the investigation is	Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics. Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.

Evaluation Item	ImplementationStatus (Note)	ImplementationStatus (Note)	ImplementationStatus (Note)	Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons
	Yes	No	Abstract Illustration
(3) Does the company provide proper whistleblower protection?			completed follow-up measures should be taken. (3) The company’s "Code of Ethics" 23 points and "Procedures for Ethical Management and Guidelines for Conduct" 21 point 3, clearly stipulate that the relevant personnel handling reports shall make a written statement that the identity of the reporter and the content of the report shall be kept confidential. The company also promises to protect whistleblowers from being improperly dealt with due to reports.	Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
4. Strengthen information disclosure Does the company disclose the content of its Code of Ethics and promote its effectiveness on its website and public information observatory?	√		The company has set up an Investor Area on MOPs and external web pages (http://www.csbcnet.com.tw Investor Area) to expose the company's Code of Ethics, ethical code of conduct and related information.	Established with reference to the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and the company characteristics.
5. If a company has its own Code of Ethics of CSBC based on "Code of Ethics for TWSE/TPEx Listed Companies", please state the difference between its operation and the established code: Based on the "Code of Ethics for TWSE/TPEx Listed Companies", the company has ordered and issued "Code of Ethics of CSBC" and "Procedures for Ethical Management and Guidelines for Conduct". There is no difference between "Listed Companies" (URL http://www.csbcnet.com.tw Investor Area).
6. Other important information that helps to understand the company’s integrity management operations (such as the company’s review and revision of its Code of Ethics, etc.): The company abides by the Company Law, Securities Exchange Law, Commercial Accounting Law, Government Procurement Law, Political Contribution Law, Conflict of Interest Law and relevant regulations of listed companies or other business conduct laws as the basic prerequisite for the implementation of integrity management "Code of Ethics of CSBC" and "Procedures for Ethical Management and Guidelines for Conduct" are revised in line with "Code of Ethics for TWSE/TPEx Listed Companies".

Note: Regardless of whether you answer is "Yes" or "No", the operating conditions should be described in the summary description field.

3.3.7 If the company has formulated corporate governance codes and related regulations, it should disclose its inquiry methods:
A. The company aims to enable directors, managers and employees to follow their ethical behaviors when engaging in business activities based on their powers, so as to prevent unethical behaviors and behaviors that harm the interests of the company and shareholders, and to make stakeholders understand the company's ethical behaviors Standards and ethical management, which have been enacted "Conduct for Directors and First-Level or Higher Management", "Code of Ethics for Employees of CSBC", "Code of Ethics" and "Procedures for Ethical Management and Guidelines for Conduct".
B. In accordance with the "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies" on April 1, 2011, the company issued the "Company Corporate Governance Code" and disclosed the "Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies" to improve corporate governance Effectiveness.
C. In order to implement corporate governance, the company issued the "Measures for the Performance Evaluation of the Board of Directors of the Company" on December 14, 2011 to improve the function and efficiency of the board of directors. Currently, the possibility of evaluation by a third party is evaluated.
D. The query website is: http://www.csbcnet.com.tw Investor Area.

3.3.8 Other important information that is sufficient to enhance the understanding of corporate governance and operation conditions must be disclosed together:

For details, please refer to the seventh and description of "Deviations from "the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies" and Reasons".

3.3.9 The implementation status of the internal control system shall disclose the following matters:

Internal Control System Statement

CSBC Corporation, Taiwan Internal Control System Statement

Date: March 18, 2021

The company's internal control system for 2020, based on the results of self-assessment, hereby declared as follows:

The company is sure that the establishment, implementation and maintenance of the internal control system is the responsibility of the company's board of directors and managers, and the company has established this system. Its purpose is to achieve the objectives of operation effectiveness and efficiency (including profit, performance, and asset safety protection, etc.), reporting reliability, timeliness, transparency, and compliance with relevant regulations and compliance with relevant laws and regulations, and provide reasonable ensurance.
The internal control system has its inherent limitations. No matter how perfect the design is, an effective internal control system can only provide reasonable assurance for the achievement of the above three objectives. Moreover, due to changes in the environment and circumstances, the effectiveness of the internal control system may change accordingly. However, the company’s internal control system has a self-monitoring mechanism. Once the defect is identified, the company will take corrective action.
The company judges whether the design and implementation of the internal control system are effective in accordance with the "Regulations Governing Establishment of Internal Control Systems by Public Companies" (hereinafter referred to as the " Governing Regulations ") to determine the effectiveness of the internal control system. The internal control system judgment item adopted by the "Governing Regulations" is based on the process of management control, which divides the internal control system into five components: a. Environment Control, b. Risk Assessment, c. Operations Control, d. Information and Communication, and e. Supervision Operations. Each component includes several items. For the aforementioned items, please refer to the "Governing Regulations".
The company has adopted the above-mentioned internal control system judgment items to evaluate the effectiveness of the design and implementation of the internal control system.
Based on the evaluation results of the preceding paragraph, the company believes that the company’s internal control system (including supervision and management of subsidiaries) as of December 31, 2020, including understanding the effectiveness of operations and the extent to which efficiency goals are achieved, and reporting systems are reliable and timely , he design and implementation of the internal control system, etc., that are transparent and comply with relevant regulations and relevant laws and regulations are effective, which can reasonably ensure the achievement of the above objectives.
This statement will become the main content of the company's annual report and public brochure, and will be made public. If there is any falsehood or concealment in the abovementioned public content, it will involve legal liabilities under Article 20, Article 32, Article 171 and Article 174 of the Securities Exchange Law.
This statement was approved by the board of directors of the company on March 18, 2021. All 15 directors present agreed with the content of this statement and made this statement.

CSBC Corporation, Taiwan

Chairman: CHENG, WEN-LON

President: CHENG, WEN-LON

When entrusting an accountant to review the internal control system, the accountant's review report should be disclosed: None.
3.3.10 The company and its internal personnel have been punished in accordance with the law in the most recent year and as of the publication date of the annual report. The company's penalties for violations of the internal control system by the company's internal personnel, major deficiencies and improvements: None
3.3.11 Important Resolutions of the Shareholders’ Meeting and the Board of Directors in the most recent year and as of the printing date of the annual report:
Important resolutions and Implementation status of the 2020 shareholders meeting:
(1) Meeting Minutes, III. Matters for Ratification, 1.
Proposal: The 2019 business report and financial report, please acknowledge. Resolution: The voting result of the proposal was 276,153,951 for 276,153,951 rights (including 163,500,225 for electronically exercised voting rights), 255,151 for against (including 255,151 for electronically exercised voting rights), 0 invalid votes, and 2,431,151 rights for abstentions/non-voting (including electronically exercised voting rights). Way to exercise 1,594,915 voting rights). The approval rights accounted for 99.03% of the voting rights of the shareholders present, and the case was passed as per the case.

Implementation status:

The company's 2019 financial report was announced in MOPs on March 20, 2020, and the declaration was completed on March 25, 2020. (1) Meeting Minutes, III. Matters for Ratification, 1. (2) Meeting Minutes, III. Matters for Ratification, 2.

Proposal: The 2019 loss allocation proposal, please acknowledge it. Resolution: The voting result of this proposal is that 276,126,818 rights are in favor of (163,474,092 rights are exercised electronically), 297,341 rights are opposed (296,341 rights are exercised electronically), invalid votes are 0, abstentions/non-voting 2,416,094 rights (of which (1,579,858 voting rights are exercised electronically). The approval rights accounted for 99.02% of the voting rights of the shareholders present. Implementation status:

The company did not pay dividends in 2019, and has completed the declaration and announcement on March 20, 2020.3. Meeting Minutes, IV. Matters for Discussion, 1.

Proposal: Amendments to the articles of association of the company are subject to resolution.

Resolution: The voting results of this proposal were 276,157,249 rights in favor (of which 163,504,523 voting rights were exercised electronically), 249,946 rights against (including 249,946 voting rights electronically exercised), 0 invalid votes, and 2,433,058 rights to abstain/non-vote (including electronic

voting rights). Way to exercise 1,595,822 voting rights). The approval rights accounted for 99.03% of the voting rights of the shareholders present, and the case was passed as per the case. Implementation status:

The company has completed the change registration with the Department of Commerce, Ministry of Economic Affairs on July 9, 2020. The Department of Commerce, Ministry of Economic Affairs July 16, 2020 letter is as requested, and it has been uploaded to the company's investor area for management and use on July 17, 2020.

Meeting Minutes s, IV. Matters for Discussion, 2.

The proposal to amend the "Rules of Procedure of Shareholders' Meetings" of the company is requested for resolution.

Resolution: The voting result of this proposal was 276,147,358 rights in favor (including 163,494,632 voting rights electronically), 261,678 rights against (261,678 voting rights electronically exercised), 0 invalid votes, and 2,431,217 rights abstaining/non-voting (including electronic voting rights). Way to exercise 1,593,981 voting rights). Approval rights accounted for 99.06% of the voting rights of the shareholders present, and the case was passed as per the case.

Implementation status:

The company issued and implemented it on July 19, 2020 the letter of CSBC-Board-No. 1091150026.

3. Major Resolutions of Board Meetings

Item	Date	Major resolutions	Remarks
Board Meeting (special)	January 15, 2020	1. Approved "2020 Operating Plan". 2. Approved CSBC-DEME Wind Engineering Co. Ltd. capital increase case.	The 5th of the 17th
Board Meeting	March 20, 2019	1. Approved2019 Individual financial report and consolidated financial report. 2. Approved 2019 annual business report. 3. Approved Since there are no pre-tax benefits, directors' remuneration and employee remuneration will not be issued in 2019. 4. Approved loss amounts to one-half of the paid-in capital. 5. Approved Shareholders' Meeting Reported "Implementation of the Sound Operational Plan in 2019 and the achievement of major capital expenditures and long-term equity investment project benefits". 6. Approved the company's 2019 loss appropriation case. 7. Approved the amendments to the company's articles of association. 8. Approved the company's 2019 and 2020 corporate social responsibility strategic action plan implementation plan. 9. Approved amended the "Rules of Procedure for Shareholders' Meetings". 10. Approved The 2020 shareholders meeting will be held on June 17, 2020. 11. 11. Approved announces acceptance of written proposals from shareholders. 12. Approved 2019 “Internal Control System Statement” 13. Approvedthe proposal of the hiring of PwC for the company's 2020 financial statements (including consolidated statements) and tax declaration visa case. 14. Approved revised "Key Points of Management of Financial Statement Preparation Process". 15. Approved Submarine important equipment manufacturing plant project investment plan. 16. Approved revised "Corporate Governance Code". 17. Approved revised the "Corporate Social Responsibility Code". 18. Approved revised the company's risk management policies and procedures. 19. Approved revised the "Regulations of the Remuneration Committee". 20. Approved amended the "Code of Practice for Board Meetings". 21. Approved revised the "Organizational Rules of the Audit Committee". 22. Approved revised "Organization Essentials". 23. Approved CSBC Coating Solutions Co., Ltd. 24. Approved Wei, Zheng-Ciand other 8 job transfer cases.	The 6th of the 17th
Board Meeting	May 6, 2020	1. Approved revised "Procedures for Ethical Management and Guidelines for Conduct". 2. Approved updates the content of the 2020 shareholders meeting.	The 7th of the 17th

		3. Approved organization adjustment plan. 4.Approved Chen,Hui-Shan and other 13job transfer cases.
Board Meeting	August 12, 2020	1.Approved authorized the chairman of the board to propose a transformation plan for the Keelung yard. 2. Approved management department reviewed and discussed major reforms with a loss of more than tens of billions. 3. Approved revised "Organization Essentials". 4. Approved Yu,Mao-Hua and other6 job transfer cases.	The 8th of the 17th
Board Meeting (Special)	September 1, 2020	"CNPC Kwun Tong Case Port Service Ship Project Investment Plan" report was supported by all directors’ present	The 9th of the 17th
Board Meeting	November 11, 2020	1. Approved the proposal of handling the company's 2020 cash capital increase and issuance of new shares. 2. Approved "Keelung Yard Reconstruction Plan" of the company. 3. Approved "2021 Operating Plan". 4. Approved "2021 Audit Plan". 5. Approved the proposal of reducing the loan limit to NT$7~12.5 billion for the case “Taiwan Cooperative Bank acted as the lead bank to handle the mid-term and long-term loan of NT$14.5 billion in the bank syndicated loan case, which was increased or decreased within 30%” that was approved by the board of directors on November 8, 2019. 6. Adopted into the personnel case of General Manager of IDS Works.	The 10th of the 17th

3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors: None.
3.3.13 A summary of the resignation or dismissal of the company’s key individuals, including the Chairman, President, and Heads of Accounting, Finance, Internal Audit and R&D in the most recent year and as of the printing date of the annual report:

Summary table of the resignation and dismissal of relevant persons in the company

				MAY 21,2021
Title	Name	Date of Appointment	Date of Termination	Reasons for Resignation or Dismissal
Heads of R&D	Wang, Fu- Ying	March 18, 2019	May 7, 2020	Job adjustment (transferred to supervisor)
Heads of R&D	Zhang, Qing-He	May 7, 2020	August 13, 2020	Job adjustment (Exempt the concurrent post)
President	TSENG, KUO- CHENG	August 01, 2017	Februar 05, 2021	Resignation
Executive Vice President	Wei, Zheng- Ci	March 23, 2017	May 04, 2021	Job adjustment(2021.05.05Promoted to President)

Note: The relevant persons in the company mean the Chairman, President, and Heads of Accounting, Finance, Internal Audit and R&D

3.4 Information of Fees to CPA

3.4.1 Accountant Public Expenditure Information Level Table:

Accounting Firm	Name of CPA	Name of CPA	Period Covered by CPA’sAudit	Remarks

PricewaterhouseCoopers	Tian, Zhong-Yu	Wang, Guo-Hua	January 1, 2020- December31,2020	-

Note: If the Company has changed CPA or Accounting Firm during the current fiscal year, the company shall report the information regarding the audit period covered by each CPA and the replacement reason.

Unit: NT$ thousands

Accounting Firm	Name of CPA	Audit Fee		Non-audit Fee	Non-audit Fee	Non-audit Fee		Period Covered by CPA’s Audit	Remarks
			System of Design	Company Registratio n	HR	Others `（`Note`）`	Subtotal
Pricewaterhous eCoopers	Tian, Zhong-Yu Wang, Guo-Hua	1,800,000	-		-	55,000	55,000	2020.01.01~De cember 31, 2020

Note: Please list the non-audit public expenses separately according to the service items. If the "others" of the non-audit public expenses reaches 25% of the total amount of the non-audit public expenses, the service content should be listed in the remarks column.

3.4.2 When non-audit fees paid to the CPA, to the accounting firm of the CPA, and to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid to them, the amounts of both audit and non-audit fees and the details of the non-audit services shall be disclosed: As detailed in the table above.
3.4.3 When the securities firm changes its accounting firm and the audit fees paid for the financial year in which the change took place are lower than those paid for the financial year immediately preceding the change, the amount of the audit fees before and after the change and the reason shall be disclosed: None.
3.4.4 When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 10 percent or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed: None.
3.5 Information of Changing CPAs: None.
3.6 The Chairman, President and Financial or Accounting Manager of the Company who had Worked for the Independent Auditor or the Related Party in the Past Year, shall Indicate the Name, the Title and Term of Contract: None.
3.7 Transfer of equity interests and/or pledge of or change in equity interests by directors, supervisors, managers, or shareholders with a stake of more than 10% during the most recent fiscal year or during the current fiscal year up to the date of publication of the annual report:

3.7.1 Changes in equity of directors, supervisors, managers, or major shareholders

Title	Name	2020	2020	As of March 31, 2021 (Note4)	As of March 31, 2021 (Note4)
		Shareholding Increase (decrease)	Pledged share Increase (decrease)	Shareholding Increase (decrease)	Pledged share Increase (decrease)
Director	Ministryof Economic Affairs	0	0	0	0
Representative	CHENG,WEN-LON	0	0	38,830	0
Director	Ministryof Economic Affairs	0	0	0	0
Representative	TSENG,KUO-CHENG(Note5)	0	0	0	0
Representative	Hu,Wen-Zhong(Note5)	-	-	0	0
Director	Ministryof Economic Affairs	0	0	0	0
Representative	HUANG,JIH-CHIN	0	0	64,493	0
Director	Ministryof Economic Affairs	0	0	0	0
Representative	LAN, SYU-CING	0	0	19,713	0
Director	Yaohua Glass Co., Ltd. Management Committee	0	0	28,571,428	0
Representative	Chen,Yong-Cong (Note1)	0	0	-	0
Representative	Lu,Wen-Tsan(Note1)	0	0	0	0
Director	National Development Fund, Executive Yuan	0	0	100,000,000	0
Representative	WU,WEN-KUEI	0	0	0	0
Director	National Defense Industrial Development Foundation	0	0	28,571,428	0
Representative	Liu,Zhi-Bin(Note2)	0	0	-	0
Representative	Chen, Hsiao-Ming (Note2) (Note6)	0	0	0	0
Representative	Mo,You-Ming (Note6)	-	-	0	0
Director	CPC Corporation,Taiwan	0	0	0	0
Representative	Yin,Ling-Ying	0	0	0	0
Director	China Steel Corporation	0	0	0	0
Representative	HWANG,CHIEN-CHIH	0	0	0	0
Director	Yue-Li Investment Corporation	0	0	2,018,511	0
Director	Industrial Labor Union of CSBC Kaohsiung	0	0	346,259	0
Representative	HOU,DE-LONG	0	0	0	0
Director	Industrial Labor Union of CSBC Kaohsiung	0	0	346,259	0
Representative	HSIEH,KUO-JUNG	0	0	135,237	0
Independent Director	LIN, HUI-JENG	0	0	0	0

Title	Name	2020	2020	As of March 31, 2021 (Note4)	As of March 31, 2021 (Note4)
		Shareholding Increase (decrease)	Pledged share Increase (decrease)	Shareholding Increase (decrease)	Pledged share Increase (decrease)
Independent Director	LIEU, DER-MING	0	0	0	0
Independent Director	CHEN, CHIH-YANG	0	0	0	0
Director	CHENG,WEN-LON	0	0	38,830	0
Manager	TSENG, KUO-CHENG (Note3)	0	0	0	0
Manager	Gao,Jian-Yi	0	0	10,000	0
Manager	Chen,Hui-Shan	0	0	29,569	0
Manager	Wei,Zheng-Ci	0	0	30,218	0
Manager	Zhou,Zhi-Ming	0	0	77,770	0
Manager	Xu,You-Zhen	0	0	0	0
Major shareholder	Ministry of Economic Affairs	0	0	0	0

Note1: On July 31, 2020, the director, Yaohua Glass Co., Ltd. Management Committee, reassigned its representative.
Note2: On April 1, 2020, the director, National Defense Industrial Development Foundation, reassigned its Representative.

Note3: On February 6, 2021, the manager resigned.

Note4: Capital increase in cash in 2021.

Note5: On March 9, 2021, the director, Ministry of Economic Affairs, reassigned its Representative.

Note6: On March 10, 2021, the director, National Defense Industrial Development Foundation, reassigned its Representative.
3.7.2 Equity transfer information: There is no situation where the counterparty of the equity transfer is a related party.
3.7.3 Equity pledge information: The situation where the counterparty without equity pledge is a related party.

3.8 Information Disclosing the Spouse, Kinship Within the Second Degree and Relationship between and any of the Top Ten Shareholders

Name`（`Note1`）`	Current Shareholding	Current Shareholding	Spouse’s/minor’ s Shareholding	Spouse’s/minor’ s Shareholding	Shareholding by Nominee Arrangement`（` Note2`）`	Shareholding by Nominee Arrangement`（` Note2`）`	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees`（`Note3`）`	Name and Relationship Between the Company’s Top Ten Shareholders, or Spouses or Relatives Within Two Degrees`（`Note3`）`
	Shares	%	Share s	%	Shar es	%	Name	Relationship
National Development Fund, Executive Yuan	136,032,305	14.74%	0	0	0	0	None	None
Representative:Kung, Ming- Hsin		The Shareholder did not provide the shareholder info
Ministry of Economic Affairs	105,070,366	11.38%	0	0	0	0	1. CPC Corporation, Taiwan 2. China Steel Corporation 3. Yaohua Glass Co., Ltd. Management Committee	1. 100% CPC Corporation, Taiwan 2. Major shareholder of China Steel Corporation 3. The major shareholder of Yaohua Glass Co., Ltd. Management Committee
Yaohua Glass Co., Ltd. Management Committee	64,603,733	7.00%	0	0	0	0	Ministry of Economic Affairs	Ministry of Economic Affairs is a major shareholder
Representative:Chuan-Neng Lin			The Shareholder did not provide
National Defense Industrial Development Foundation	53,571,428	5.80%	0	0	0	0	None	None
Representative: Ciou,Guo-Jheng			The Shareholder did not provide
Yuanta Commercial Bank Trust Account	40,242,835	4.36%	0	0	0	0	None	None
CPC Corporation, Taiwan	23,777,487	2.58%	0	0	0	0	Ministry of Economic Affairs	Ministry of Economic Affairs is the sole shareholder
Person in charge: Lee, Shun-Chin			The Shareholder did not provide
China Steel Corporation	7,751,346	0.84%	0	0	0	0	Ministry of Economic Affairs	Ministry of Economic Affairs is the major shareholder
Person in charge: Weng,Chao-Dong			The Shareholder did not provide
Bank SinoPac as Custodian for Triorient Investments Limited Investment Account	7,169,818	0.78%	0	0	0	0	None	None
KGI Securities Co.,Ltd	5,807,384	0.63%	0	0	0	0	None	None
Person in charge: Hsu,Daw-Yi			The Shareholder did not provide
Vanguard emerging markets stock index fund, a series of vanguard international equity index funds	5,386,119	0.58%	0	0	0	0	None	None

Note1: All the top ten shareholders should be listed, and those who are institutional shareholders should list the names of

institutional shareholders and Representative names separately.

Note2: The calculation of the shareholding ratio refers to the calculation of the shareholding ratio in their own name, spouse, minor children, or in the name of others.

Note3: The shareholders listed in the previous disclosure, including institutional shareholders and natural persons, shall

disclose their relationship in accordance with the issuer's financial report preparation standards.

3.9 The Shareholding of the Company, Director, Supervisor, Management and the Business that is Controlled by the Company Directly or Indirectly on the Invested Company and the consolidated shareholding ratio is calculated:

(Base date: December 31, 2020, the amount of the original currency held by the company in another country is expressed); Unit: Share,%

Invested Company	The company’s	investment	The business investment which directly or indirectly control by the Directors, supervisors andmanagers	The business investment which directly or indirectly control by the Directors, supervisors andmanagers	Comprehensive	investment
	Shares	%	Shares	%	Shares	%
CSBC Coating Solutions Co.,Ltd.	14,600,165	100%	0	0%	14,600,165	100%
Blue Ocean Wind Power Engineering (Hong Kong) Limited	USD10,000	100%	0	0%	USD10,000	100%
BLUE ACE CORPORATION	(Non- shareholding)	100%	0	0%	(Non- shareholding)	100%
TAIWAN OFFSHORE WIND FARM SERVICES CORPORATION(Note)	400,000	40%	0	0%	400,000	40%
Fuhai Wind Power Company (Note)	15,000,000	37.97%	0	0%	15,000,000	37.97%
Taiwan International Windpower Training Center	1,200,000	12%	0	0	1,200,000	12%
CSBC-DEME Wind Engineering Co.Ltd.	11,106,061	50.0001%	0	0	11,106,061	50.0001%

Note: Long-term investment by the company using the equity method.

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital


Year	~~Issua~~ nce price (NT$ )	~~Authorized Capital~~		~~Paid-in Capital~~		~~Remarks~~
		Share (thousand shares)	~~Amount~~ (NT$ thousands )	Share (thousand shares)	~~Amount~~ (NT$ thousands )	Sources of Capital (NT$ thousands)	Capital Increased by Assets Other than Cash	Other
1976	10	220,000	2,200,000	220,000	2,200,000	Cash establishment equity2,200,000	None	-
1977	10	320,003	3,200,032	320,003	3,200,032	cash capital increase 1,000,032	None	-
1978	10	428,510	4,285,108	428,510	4,285,108	cash capital increase 1,085,076	None	-
1979	10	561,507	5,615,075	561,507	5,615,075	cash capital increase 1,329,967	None	-
1980	10	679,174	6,791,740	679,174	6,791,740	cash capital increase 1,176,665	None	-
1981	10	809,174	8,091,740	809,174	8,091,740	cash capital increase 1,300,000	None	-
1982	10	826,174	8,261,740	826,174	8,261,740	cash capital increase 170,000	None	-
1983	10	866,174	8,661,740	866,174	8,661,740	cash capital increase 400,000	None	-
1984	10	929,174	9,291,740	929,174	9,291,740	cash capital increase 630,000	None	-
1985	10	979,174	9,791,740	979,174	9,791,740	cash capital increase 500,000	None	-
1986	10	1,029,174	10,291,740	1,029,174	10,291,740	cash capital increase 500,000	None	-
1987	10	1,055,174	10,551,740	1,055,174	10,551,740	cash capital increase 260,000	None	-
1988	10	1,105,174	11,051,740	1,105,174	11,051,740	cash capital increase 500,000	None	-
1989	10	1,280,174	12,801,740	1,280,174	12,801,740	cash capital increase 1,750,000	None	-
1990	10	1,695,233	16,952,335	1,695,233	16,952,335	cash capital increase 4,150,595	None	-
1998	10	1,113,900	11,138,997	1,113,900	11,138,997	Capital Reduction to Cover Losses 5,813,338	None	-
2003	10	1,113,900	11,138,997	1,113,900	11,138,997	cash capital increase 5,000,000 Capital Reduction to Cover Losses 5,000,000	None	Note1 Note2 Note3
2007	10	1,113,900	11,138,997	666,133	6,661,326	Capital Reduction to Cover Losses 4,477,671	None	Note4
2009	10	1,113,900	11,138,997	672,793	6,727,939	capitalization of retained earnings66,613	None	Note5
2010	10	1,113,900	11,138,997	721,908	7,219,079	capitalization of retained earnings 491,140	None	Note6
2012	10	1,113,900	11,138,997	743,565	7,435,652	capitalization of retained earnings 216,572	None	Note7
2018	10	1,113,900	11,138,997	372,991	3,729,917	Capital Reduction to Cover Losses 4,305,734 Private placement cash capital increase 600,000	None	Note8
2019	10	1,113,900	11,138,997	472,991	4,729,917	Public offering cash capital increase 1,000,000	None	Note9
2021	10	1,113,900	11,138,997	923,055	9,230,554	~~Convertible~~ bonds to stocks 637 Public offering cash capital increase 4,500,000	None	Note10 Note11

Note1: 2003.03.26 JSSZ No. 09201082180(Increase and decrease capital by 2 billion). Note2: 2003.11.04 JSZZ No. 09201304180(Increase and decrease capital by 1 billion). Note3: 2004.01.06 JSZZ No. 09301000870(Increase and decrease capital by 2 billion). Note4: 2008.01.21 JSZZ No. 09701007010(Decrease capital by 4.47767 billion). Note5: 2009.10.07 JSSZ No. 09801229240(Increased capital by 666.1 million). Note6: 2010.08.19 JSSZ No. 09901187350 (Increased capital by 491.13 million). Note7: 2012.08.13 JSSZ No. 10101163380 (Increased capital by 216.57 million). Note8: 2017.06.25 JSSZ No. 10701062580

(Decrease capital by 4.305734 billion and increased capital by 600 million). Note9: 2019.03.04JSSZ No. 10801018700 (Increased capital by 1 billion). Note10: 2021.3.19JSSZ No. 11001041060 (Increased capital by 0.637 million). Note11: 2021.5.13 JSSZ No.11001064250 (Increased capital by 4.5 billion).

Share Type		Authorized Capital	Authorized Capital	Remarks
	Issued Shares (Note)	Un-issued Shares (share)	Total(share)
Common Stock	923,055,493	190,844,224	1,113,899,717	`－`

Note1: The company went public on December 22, 2008.

4.1.2 Status of Shareholders

.1.2 Status of Shareholders	.1.2 Status of Shareholders	.1.2 Status of Shareholders	.1.2 Status of Shareholders	.1.2 Status of Shareholders	.1.2 Status of Shareholders	.1.2 Status of Shareholders
March 26,2021
Structure of shareho lders Amount	Government Agencies	Financial Institutions	Other Juridical Persons	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number	2	4	92	65,512	102	65,712
Shareholding (shares)	241,102,671	1,901,625	220,495,615	423,990,036	35,565,546	923,055,493
Shareholding ratio (%)	26.12%	0.21%	23.89%	45.93%	3.85%	100.00%

Note: First listed (counter) companies and emerging companies should disclose the proportion of their mainland-owned shares; Mainland-owned investment refers to the mainland people, legal persons, organizations, other institutions or companies that invest in third regions as stipulated in Article 3 of the Mainland Area People’s Investment Permit Measures in Taiwan.

4.1.3 Shareholding Distribution Status (NT$ per share)

A. Common Shares:

A. Common Shares:
	March 26,2021
Class of Shareholding	Number of Shareholders	Shareholding (Shares)	Shareholding ratio (%)
1 to 999	19,638	5,891,766	0.64%
1,000 to 5,000	34,604	73,923,312	8.01%
5,001 to 10,000	4,326	32,293,921	3.50%
10,001 to 15,000	1,940	23,640,751	2.56%
15,001 to 20,000	1,587	28,386,028	3.08%
20,001 to 30,000	1,187	28,432,654	3.08%

30,001 to 40,000	806	29,208,108	3.16%
40,001 to 50,000	319	14,288,574	1.55%
50,001 to 100,000	784	53,735,394	5.82%
100,001 to 200,000	265	36,669,591	3.97%
200,001 to 400,000	126	35,614,632	3.86%
400,001 to 600,000	58	28,373,296	3.07%
600,001 to 800,000	15	10,675,185	1.16%
800,001 to 1,000,000	13	12,394,051	1.34%
1,000,001 or over	44	509,528,230	55.20%
Total	65,712	923,055,493	100.00%

2. Preferred Shares: None

4.1.4 List of Major Shareholders

The names, number of shares and proportions of shareholders with a shareholding ratio of more than 5% or the shareholding ratio of the top 10 shareholders.

List of Major Shareholders e names, number of shares and proportions of shareholders with a holding ratio of more than 5% or the shareholding ratio of the top 10 holders.	List of Major Shareholders e names, number of shares and proportions of shareholders with a holding ratio of more than 5% or the shareholding ratio of the top 10 holders.	List of Major Shareholders e names, number of shares and proportions of shareholders with a holding ratio of more than 5% or the shareholding ratio of the top 10 holders.
May21,2021 Share Name of Major Shareholders Shareholding (Shares) Shareholding ratio(%) National Development Fund, Executive Yuan 136,032,305 14.73% Ministryof Economic Affairs 105,070,366 11.38% Yao-Hwa Glass Co.,Ltd Management Commission 64,603,733 6.99% National Defense Industrial Development Foundation 53,571,428 5.80% Yuanta Commercial Bank Trust Account 40,242,835 4.35% CPC Corporation, Taiwan 23,777,487 2.58% China Steel Corporation 7,751,346 0.84% Bank SinoPac as Custodian for Triorient Investments Limited Investment Account 7,169,818 0.78% KGI Securities Co.,Ltd. 5,807,384 0.63% Vanguard emerging markets stock index fund, a series of vanguard international equityindex funds 5,386,119 0.58%
Share Name of Major Shareholders	Shareholding (Shares)	Shareholding ratio(%)
National Development Fund, Executive Yuan	136,032,305	14.73%
Ministryof Economic Affairs	105,070,366	11.38%
Yao-Hwa Glass Co.,Ltd Management Commission	64,603,733	6.99%
National Defense Industrial Development Foundation	53,571,428	5.80%
Yuanta Commercial Bank Trust Account	40,242,835	4.35%
CPC Corporation, Taiwan	23,777,487	2.58%
China Steel Corporation	7,751,346	0.84%
Bank SinoPac as Custodian for Triorient Investments Limited Investment Account	7,169,818	0.78%
KGI Securities Co.,Ltd.	5,807,384	0.63%
Vanguard emerging markets stock index fund, a series of vanguard international equityindex funds	5,386,119	0.58%

4.1.5 Prices, net worth, surplus, dividends and related information of each stock market in the most recent two years:

Unit: NT$ / thousand shares

Item	Year	Year	2019	2020	The current year ends on March 31, 2021 (Note8)
Market Price per Share (Note1)	Highest		30.60	32.85	28.80
	Lowest		23.40	15.30	21.20
	Average		27.04	25.66	24.20
Net Worth per Share `（`Note2`）`	Before Distribution		13.65	10.59	14.13
	After Distribution		13.65	10.59	14.13
Earnings per Share	Weighted Average Shares		464,772	472,993	503,070
	Diluted Earnings Per Share (Note10)		(3.91)	(3.38)	0.07
Dividends per Share	Cash Dividends		0.00	Note9	-
	Stock Dividends	Dividends from Retained Earnings	0.00	Note9	-
		y Dividends from Capital Surplus	0.00	Note9	-
	Accumulated Undistributed Dividends`（`Note4`）`		0.00	0.00	0.00
Return on Investment analysis	Price / Earnings Ratio (Note5)		(6.79)	(7.06)	345.71
	Price / Dividend Ratio `（`Note6`）`		-	Note9	-
	Cash Dividend Yield Rate `（`Note7`）`		0.00	Note9	-

＊ If surplus or capital reserve is used to increase capital, the market price and cash dividend information shall be disclosed retrospectively adjusted according to the number of shares issued.

Note1: List the highest and lowest market prices of common stocks in each year and calculate the average market prices for each year based on the transaction value and volume of each year.

Note2: Please fill in the list based on the number of issued shares at the end of the year and the distribution based on the resolution of the shareholders meeting in the following year. Note3: If retrospective adjustment is required due to circumstances such as gratuitous allotment, the earnings per share before and after adjustment shall be shown.

Note4: If the equity securities issuance conditions stipulate that the dividends not paid in the

current year are accumulated to the year of surplus, the dividends accumulated and not paid up to the current year shall be disclosed separately.

Note5: Price / Earnings Ratio = Average Market Price / Earnings per Share.

Note6: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share.

Note7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price.

Note8: The net value per share and earnings per share should be filled in with the data checked (reviewed) by the CPA in the most recent quarter as of the publication date of the annual report, and the remaining fields should be filled in with the data of the current year as of the publication date of the annual report.
Note9: The loss offsetting proposal of 2020 hasn’t been resolved by Annual General Shareholders’ Meeting.
Note10: The weighted average number of shares outstanding in 2019, 2020 and 2021, based on the cash capital increase in 2019 (the capital increase base date- January 31, 2019), convertible bonds to stocks in 2020 (conversion date- December 24, 2020 and December 25, 2020) and Cash capital increase in 2021 (capital increase base date- March 26, 2021) retrospective adjustment.

4.1.6 Dividend Policy and Implementation Status:

A. Dividend policy

According to Article 35 of the Articles of Association of the Company: “If the Company has earnings in the current fiscal year after annual audit, it shall first pay the profit-seeking enterprise income tax and cover its accumulated losses in previous years. If there is a balance, the Company shall set aside 10% as legal reserves. However, the provision does not apply when the legal reserves have reached the total amount of capital. Moreover, a special reserve shall be set aside in accordance with Article 41 of the Securities and Exchange Act. If there is still a balance, the Board of Directors shall propose an allocation plan in the shareholders’ meeting for resolution before allocation.

The board of directors of the company can present at least two-thirds of the directors, and at the resolutions of more than half of the directors, will distribute all or part of the dividends and bonuses, capital reserve or statutory surplus reserve, in the form of cash distribution and reporting to the shareholders meeting does not apply to the provisions of the preceding paragraph that shall be resolved by the shareholders meeting.

Considering the business environment and growth of the Company, the Company may allocate 10% or more of the distributable earnings

referred to in the preceding Paragraph as dividends and bonuses depending on the Company’s future demand for funds and its long-term financial planning and satisfying shareholders’ demand for cash. Cash dividends shall not be less than 10% of the total dividends.”

B. Implementation status

It is proposed that no dividends were distributed in 2020, and the

(2021) annual general meeting of shareholders has passed a resolution.

4.1.7 The impact of the free allotment proposed by the shareholders meeting on 。
the company's operating performance and earnings per share: Not applicable
4.1.8 Employee and Directors' Remuneration:
A. The percentage or scope of remuneration for employees and directors as stated in the articles of association:
- a. 1% ~ 5% for employees’ remuneration.
- b. Not exceeding 1% as remuneration for directors.
B. The calculation basis of the estimated amount of remuneration for employees and directors in the current period, the calculation basis for the number of shares of employee remuneration distributed by stocks, and the actual distribution amount, if there is a difference with the estimated amount, the accounting treatment.
- a. The estimated basis for employee and director remuneration in 2020 is pre-tax benefits. There was no pre-tax benefits in 2020. The estimated number of employee remuneration and director remuneration is NT$0, and the actual amount of employee remuneration and director remuneration is NT$0. The board of directors passed a resolution on March 18, 2021, and there is no difference between the estimated number and the actual number.
- b. In 2020, there was no employee remuneration for distribution of stocks.
- C. Remuneration distribution approved by the board of directors:
- a. The amount of employee remuneration and directors' remuneration paid in cash or stocks. If there is a discrepancy from the annual estimated amount of recognized expenses, the number of discrepancies, reasons and handling circumstances should be disclosed:
- In 2020, due to no pre-tax benefits, there was no distribution of

employee remuneration and director remuneration (including cash and stocks). As approved by the board of directors on March 18, 2021, there is no difference with the estimated director remuneration and employee remuneration.

     - b. The amount of employee remuneration distributed by stocks and the proportion of the total amount of individual or individual financial report after-tax net income and total employee remuneration for the current period: In 2020, there was no employee remuneration for distribution of stocks.

  - D. The actual distribution of the remuneration of employees and directors in the previous year (including the number of shares distributed, amount and stock price), and the differences between the remuneration of recognized employees and directors, and the number of differences, reasons and handling circumstances should be stated:

     - a. In 2019, due to no pre-tax benefits, the recognized amount of employee remuneration and directors' remuneration is NT$0, and the actual distribution of employee remuneration and directors' remuneration is NT$0, which is no difference from the recognized amount.

     - b. In 2019, there was no employee remuneration for distribution of stocks.

4.1.9 Buyback of Treasury Stock ： None.
4.2 Corporate bonds handling situation:

4.2.1 Corporate bonds handling situation

Types of corporate bonds	The first domesticguaranteed conversion of corporate bonds
Issuance(handling)date	February24,2020
Denomination	NT$100 thousands
Issuance and tradinglocation	R.O.C
Issueprice	Issued at 102% of the denomination
Total amount	NT$2,000,000 thousand
Interest rate	The rate is 0%
Term	5-year term,due on February24,2025
Guarantee agency	ChangHwa Commercial Bank,Ltd.
Consignee	Taipei Fubon Commercial Bank Co.,Ltd.
Underwritinginstitution	KGI Securities

Certified lawyer	Handsome Attorneys-at-Law,Attorney:Qiu,Ya-Wen
CPA	PwC Taiwan,CPA: Wang,Guo-Hua and Tian,Zhong-Yu
Repayment method	In addition to the holders of the converted corporate bonds in accordance with Article 10 of the Issuance and Conversion Measures (hereinafter referred to as the Measures), they shall be converted into common stocks of the company, or they may exercise the right of put back in accordance with Article 19, or the company shall exercise their rights to sell back in accordance with Article 18 of the Measures. In case of early redemption, or the company's purchase and cancellation by the business premises of a securities firm, the company will repay the bond in cash based on the face value of the bond upon maturity.
Outstanding principal	NT$1,998,400 thousand
Terms of redemption or advance repayment	1. Agreement of the sell-back clause: The bond is issued for four years (February 24, 2024) as the benchmark date for the bondholder to sell back the bond in advance. The company shall send a "Notice of Exercise of the Right of Selling" to the bondholders (with the "Notice of Exercise of the Right of Selling" by registered post) 30 days before the base date of the sale (January 25, 2024). " On the 15thbusiness day before the date of dispatch, the bondholders’ register shall prevail. For bondholders who acquire the bond later due to trading or other reasons, it shall be announced by way of announcement), and shall be sent to the counter by letter The Buying Center announces the exercise of the bondholder’s right to sell back. The bondholder may notify the company’s stock agency in writing within 30 days prior to the date of selling back (it will be effective upon delivery, and the postmark will be used by mail for proof), the company is required to redeem the bonds held by it in cash at 100%~102.0151% of the face value of the bond (with an annual return rate of 0%~0.5%). The company accepts the sale back request and shall redeem the bond in cash on the sell-back base day plus 7 business days before. In the event of the aforementioned date when the Taipei Central Securities Exchange Market ceases to operate, it will be postponed to the next business day. 2. The agreement of the redemption clause: (1) The bond is issued from the day following the issuance of three months (May 25, 2020) to 40 days before the expiration of the issuance period (January 15, 2025), if the closing price of the company's common stock at the OTC buying center exceeds the current bond conversion price by more than 30% (inclusive) for 30 consecutive business days, the company may send to the bondholders a "Bond Callback Notice" with the expiry date of 30 days by registered mail within 30 business days thereafter(Five business daysprior to the

		issuance of the "Bond Callback Notice" are listed on the creditor list, and for investors who subsequently acquire the bond due to trading or other reasons, it will be made by public announcement) (The aforesaid period shall be calculated from the date of dispatch by the company, and the expiry date of the period shall be the reference date for the bond recovery, and the foregoing period shall not be the period of suspension of conversion in Article 9), and the company should ask the OTC to make an announcement, and at the expiration of the period, all the bonds in circulation will be recovered in cash based on the face value of the bonds. (2) The bond is issued from the day following the issuance of three months (May 25, 2020) to 40 days before the expiration of the issuance period (January 15, 2025), if the outstanding balance of the bond is less than 10% of the original issuance total, the company can send it to the bondholder by registered mail (the one listed in the creditor list five business days before the issuance of the "Bond Recovery Notice" shall prevail , For investors who subsequently acquire the bonds due to trading or other reasons, it shall be made by way of announcement) a "Bond Recovery Notice" expired on the 30th day (the aforementioned period shall be counted from the date of dispatch by the company, and The expiry date of the period shall be the bond recovery base date), and the OTC shall be requested to announce the exercise of the bondholder’s redemption rights, and upon the expiration of the period, the bonds out of circulation shall be recovered in cash at the bond denomination. (3) If the bondholder fails to reply in writing to the company’s stock agency before the bond collection date set forth in the "Bond Call Notice" (it will be effective when it is delivered, the postmark date shall be used for the postmark). Within five business days after the bond recovery benchmark date, the convertible corporate bond held by it shall be recovered in cash based on the bond denomination.
Restrictive clause		Not applicable
Name of credit rating agency, rating date, rating of corporate bonds		Not applicable
Ot her rig hts att ac	As of the printing date of this annual report, converted amount of (exchanged or subscribed) ordinary shares, GDRs or other securities	None

he d	Issuance and conversion (exchange or subscription) method	1. Conversion subject: Ordinary shares of the company 2. During conversion: Bondholders can start from the day after three months after the issuance date of this converted corporate bond (May 25, 2020) and end on the maturity date (February 24, 2025). Except for (1) The period during which the transfer of ordinary shares is suspended according to law, (2) The company's free allotment suspension date, the cash dividend suspension date or the cash capital increase subscription suspension date 15 business days before the transfer date, and until the base date for the distribution of rights period, (3) From the base date of capital reduction for capital reduction to the day before the trading day before the start of the capital reduction and redemption of stocks; (4) From the start date of the suspension of conversion (subscription) for the conversion of the denomination of stocks to the day before the trading day before the start of the trading of new shares for the exchange of shares outer, may at any time inform the Taiwan Centralized Depository & Clearing Corporation (hereinafter referred to as the “D&G Corp.”) through the trading broker to request the company’s stock affairs agency to convert the converted corporate bonds held by the company into the company in accordance with the provisions of these Measures Common stocks shall be handled in accordance with Article 10, Article 11, Article 13, and Article 15 of these Measures. 3. Conversion procedure request: The bondholder fills in the "Application for Conversion/Redemption/Sell-back of Corporate Bond Book Transfer" (specify conversion) to the original trading brokerage firm, and the brokerage company submits an application to D&G Corp. After D&G Corp accepts the application, it electronically The way to notify the company’s stock affairs agency, the conversion will take effect upon delivery, and no application for revocation is allowed and complete the conversion procedures within five business days after delivery, and directly transfer the company's common stock to the bondholder's collective securityaccount.
Issuance and conversion, exchange or subscription method, issuing condition dilution, and impact on existingshareholders’ equity		Based on the current conversion price of NT$25.1, if all of the shares are converted into the company’s common stock, the maximum dilution ratio will be 14.42%, which will have limited impact on existing shareholders’ equity.
Transfer agent		Not applicable

4.2.2 Conversion of corporate bond information

Types of corporate bonds `（`Note1`）`	Types of corporate bonds `（`Note1`）`	The first domestic guaranteed conversion of corporate bonds	The first domestic guaranteed conversion of corporate bonds
Year Item		2020	Current year as of March 31, 2021`（`Note4`）`
Market price of conversion corporate bond (Note 2)	Highest	128	120.2
	Lowest	101	112
	Average	107.83	116.36
Conversion price		NT$25.1	NT$22
Issuance (transaction) date and conversion price at the time of issuance		February 24, 2020; NT$25.1	February 24, 2020; NT$25.1
Method of fulfilling the conversion obligation `（`Note3`）`		Issue new shares	Issue new shares

Note 1: The number of fields will be adjusted according to the actual number of transactions.

Note 2: If there are multiple trading locations for overseas corporate bonds, they shall be

listed separately according to the trading locations.

Note 3: Deliver issued shares or issue new shares.

Note 4: The data for the current year as of the publication date of the annual report should be filled in.
4.3 Preferred Shares handling situation: None.
4.4 Global Depository Receipts ： None.
4.5 Employee Stock Options ： None.
4.6 Status of New Shares Issuance in Connection with Mergers and Acquisitions: None.
4.7 Financing Plans and Implementation:

With respect to each uncompleted public issue or private placement of securities, and to such issues and placements that were completed in the most recent 3 years but have not yet fully yielded the planned benefits: None.

【 Note: The Board of Director of November 11, 2020 resolved the capital increase. The price collection completed on March 26, 2021. It was offering 450,000 thousand shares and NT$7.875 billion. The entire amount was used to enrich working capital and repay bank borrowings, and is expected to be used up in the second quarter of 2021. 】

V.Operation Overview

5.1 Business Activities

5.1.1 Business Scope
A. The main content of the company's business

The business content of the company is as follows:

（ 1 ） CA01030 Iron and Steel Casting.
（ 2 ） CA02010 Manufacture of Metal Structure and Architectural Components.
（ 3 ） CB01010 Machinery and Equipment Manufacturing.
（ 4 ） CB01030 Pollution Controlling Equipment Manufacturing.
（ 5 ） CD01010 Ships and Parts Manufacturing.
（ 6 ） CD01030 Motor Vehicles and Parts Manufacturing.
（ 7 ） E599010 Pipe Lines Construction.
（ 8 ） E601010 Electric Appliance Construction.
（ 9 ） E603120 Sand Blasting Engineering.
（ 10 ） E604010 Machinery Installation.
（ 11 ） E901010 Painting Engineering.
（ 12 ） EZ15010 Warming and Cooling Maintenance Construction.
（ 13 ） EZ99990 Other Engineering.
（ 14 ） F401021 Restrained Telecom Radio Frequency Equipment and Materials Import.
（ 15 ） I599990 Other Designing.
（ 16 ） J101040 Waste Treatment.
（ 17 ） CD01070 Commercial Port Area Ship-repair.
（ 18 ） G302010 Boat Operators.
（ 19 ） G403010 Vessel Rental.
（ 20 ） G406040 Commercial Port Zone Tugboat And Barge.
（ 21 ） G407010 Salvaging.
（ 22 ） G408010 Shipwreck Emergency Medical.
（ 23 ） G301011 Vessel Carriers.
（ 24 ） G402011 Ocean Freight Forwarders.
（ 25 ） G406061 Harbor Cargoes Forwarding Services.
（ 26 ） ZZ99999 All business items that are not prohibited or restricted
by law, except those that are subject to special approval.

B. Operating proportion of main products

Unit ： NT$ thousands

			Unit`：`NT$ thousands	Unit`：`NT$ thousands
Year Product item	2019		2020
	Total Sales	(%) of Total Sales	Total Sales	(%) of Total Sales
Commercial ships	8,561,544	51.76	7,374,458	29.15
Military ships	6,741,681	40.76	15,327,666	60.59
Commercial and military ship maintenance	829,595	5.02	1,142,126	4.51
Machinery manufacturing	98,155	0.59	993,002	3.93
Other business projects	309,924	1.87	459,377	1.82
Total	16,540,899	100.00	25,296,629	100.00

C. The company's current products and services

(a) Merchant shipbuilding

The global greenhouse effect produces climatic abnormalities that have led to severe natural disasters in various places. The counterattack of nature has caused incalculable losses to all mankind. The incidence of extreme weather has increased, mainly due to the increase in greenhouse gas concentrations. Although natural disasters have not directly affected the company’s operations, the impacts on the supply chain of other industries also brought indirect losses. Therefore, the company also pays great attention to the importance of risks of climate disaster, and strives to reduce the risk of climate change through energy saving and carbon reduction, which is the most basic environmental responsibility of CSBC.

The awareness of environmental protection has gradually increased currently, and investors have gradually regarded whether companies can properly deal with climate change issues or not as one of the key factors for investment. Therefore, identifying the risks and opportunities related to climate change and making thorough preparations has become an unshrinkable task for enterprise.

With the increasingly serious global warming, the shipping industry is actively establishing a comprehensive energy-saving and carbon-reduction mechanism. It will be opportunities and challenges for the ship-owners and shipyards to face of how to balance the operational benefits of ships and meet the requirements of energy saving and carbon reduction.

There are more and more regulations or agreements on greenhouse gas emission control in various countries, and they are becoming stricter. In addition to requiring companies to regularly disclose greenhouse gas-related information, they also limit the emissions. All kinds of factors and the carbon tax will increase the production cost of the enterprices. CSBC Corporation Taiwan continues to pay attention to changes in domestic and foreign laws and regulations, understands the trend of laws and regulations, and prepares for early response.

To this end, CSBC Corporation Taiwan specially plans a new strategy for energy saving and carbon reduction. In addition to complying with relevant laws and regulations, actively improving energy efficiency, energy saving and recycling, and cooperating with relevant government measures, it also integrates the academic and industry to develop design and operation optimization of real

sea areas (SODO, Seaway Optimum Design & Operation) and other environmentally friendly technologies respond to the impact of global climate change. The company actively grasps global development trends and the results of research and development of ship design and operation technology projects, continues to promote greenhouse gas inventories, and gradually expands these measures from the company to the supply chain, gathers consensus on the corporate synergy system, and inspires innovative thinking. Through close cooperation to jointly build the competitiveness of Taiwan's shipping and shipbuilding, CSBC Corporation Taiwan will do its duty as the leader of the shipbuilding industry.

(b) Construction of Naval and Official Vessels construction

It is mainly built ships for the Navy and Coast Guard Administration Branch of Ocean Affairs Council, the project is for FAB and the new generation of guided missile boat, transport, Fast Combat Support Ship, landing craft, PFG-II missile frigate, attack craft guided missile, revenue cutter, patrol rescue boat etc. In the future, it can also meet the needs of navy and coast guard shipbuilding, and participate in the design and construction of various types of combat and logistics ships. The company has the equipment and capabilities to build various types of ships, which can meet the needs of the navy and maritime cruisers for the replacement of various types of ships. It can also cooperate with various "Indigenous National defense" shipbuilding plans, develop and adopt domestic and foreign strategic alliance methods, and actively strive for naval and coast guard construction projects. In addition to the "Indigenous Defense Submarine", the Navy’s "Indigenous Defense Submarine Planning and Design" project was won by the company on December 22, 2016 and has entered the detailed design phase. After undertook the "Indigenous Defense Submarine Prototype Ship Acquisition Project" business on May 3, 2019, the company integrated production and manufacturing together to start the construction of the submarine. The fabrication ceremony was held on November 24, 2020, and the construction was controlled according to the schedule. On December 5, 2020, the company obtained new type salvage and rescue vessel tender of the Ministry of National Defense, R.O.C.

(c) Maintenance of commercial and military ship

The main business items are the maintenance, annual inspection, special inspection, retrofitting, sea damage repair, and commercial maintenance of the entire ship of various types of ships and naval vessels. In terms of Merchant ship repairs, in recent years, repair projects that focus on providing labor services have gradually changed to providing technical services, using automatic or semiautomated operations. In addition, CSBC has signed long-term ship repair contracts with large shipping companies to maintain a fixed source of business. In terms of warship maintenance, we can cooperate with the national army’s fine case and the government’s established policy of "commercial maintenance of warships" to strive for the Navy to release large-scale combat and logistics warship maintenance services. The company has undertaken docking maintenance contracts for the Navy’s Keelung class ship, Suao ship, Ziyi ship, Panshi Fast Combat Support Ship, etc. On December 28, 2018, the company completed the inspection and acceptance of 12 commissioned replacement and repair projects including the partial inspection and replacement of the pressure hull of the Sea Lion ship. The future ship construction plan will be handed over to the shipyard to perform the full-life cycle maintenance task to achieve the "construction and maintenance in one yard". The "construction and maintenance unified" policy continues to extend to other types of ships in service. On January 24, 2019, the company has obtained a 5-year contract for strategic commercial maintenance of Panshi Fast Combat Support Ship. On April 17, 2020, the company and Jong Shyn Shipbuilding jointly contracted a 5-year open-ended contract for ship access and docking operations in the Southern District for Navy. On February 19, 2021 the company undertook an open-ended contract for the in and out of docking operations of ships in the North District.

(d) Maritime Engineering and Machinery Manufacturing The main business is divided into three categories: marine equipment, land engineering and maritime engineering. In marine equipment such as ship blocks, hatch covers, marine outfitting and deck machinery, etc. Land machinery engineering such as heavy steel structures, large pressure vessels, port transportation machinery, industrial machinery, industrial piping, environmental protection engineering, power plants (including nuclear power plants) and cogeneration plants, self-made LLC slewing jib crane, ship unloader manufacturing and installation and car. Maritime engineering includes: the transportation and installation of offshore wind generator units, the manufacturing and installation of floating wind turbine foundations, and the manufacturing, transportation and installation of wave power generation devices. The marine equipment is mainly self-made and self-sufficient for use in the construction of new ships to ensure quality and delivery time and reduce the risk of obtaining squad products. In order to implement diversified business goals, the Department of Land Engineering and Maritime Engineering uses accumulated engineering technology and experience in shipbuilding to develop new business for the company, focusing on contracting the manufacturing or installation of machinery and equipment for domestic and foreign enterprises. In terms of maritime engineering, the company has completed the development of offshore wind power business and set six major areas to proceed: (1) Manufacturing of underwater foundations and transition sections; (2) Manufacturing of offshore substations; (3) Marine engineering turnkey business; (4) Construction fleet preparation; (5) Offshore corrosion prevention; (6) Wind farm operation maintain. In addition, the company will continue to review new business items to meet business development needs.

D. New products development

Regarding the design of CSBC Corporation Taiwan’s innovative research and development, the design and development summary is as follows: ■R/V New Ocean Researcher 2 (Hno.1090) underwater noise measurement In view of the rising awareness of international environmental protection, and to protect the affected global marine resources. It is the duty of mankind to avoid the underwater noise generated by the ship when it is moving to affect the marine ecology. Therefore, the noise generated by the construction has also proved to have an impact on the marine life. Therefore, international organizations related to shipping have begun to develop underwater noise measurement methods and control standards. This project is based on the DNV GL-Silent specification as the standard for measuring the underwater noise of marine research shipHno.1090. According to the specification marine research ship Hno.1090, the underwater radiated noise intensity value shall be at 1, 3, 5, 7, 8, 9 and 11 knots respectively. The measurement area is selected to be located in the southeastern sea area of Xiao Liuqiu, as shown in the figure below. The bottom quality environment survey of the measurement area complies with the DNV GL-Silent (Research, R) solid bottom bed condition, and the water depth is greater than 30 meters below the keel of the measured ship or 0.64 times the square of the ship’s speed.

==> picture [204 x 188] intentionally omitted <==

==> picture [206 x 188] intentionally omitted <==

According to the regulations of DNV GL-Silent, the sea conditions during the

measurement shall not exceed Beaufort 4 or Sea State 3, and the sea conditions on the day meet the above conditions.

This measurement uses the GPS data of DGPS and S point on Hno.1090 to get the time point of the closest distance between the two, and uses this time point as the center to acquire acoustic data at speeds of 1, 3, 5, 7, 8, 9 and 11 knots for calculation and analysis. Through Fast Fourier transform (FFT), and using a Hamming window of 1 second, 90% overlap rate (Overlap), and deducting the influence of environmental noise, the spectrum map of 1 Hz Band is calculated, then integrate the energy of every 1 Hz into 1/3 octave bandwidth noise intensity. Use the GPS data of Hno.1090 and S point to obtain the relative distance between Hno.1090 and S point at each time point to calculate the transmission loss (TL) to correct the measured noise intensity to the distance of 1 meter from the sound source.

■Evaluation of resistance characteristics of Main Installation Vessel (MIV)

There is no scheduled model test for the main installation vessel at the initial stage of design, but in order to effectively grasp its resistance characteristics and even further estimate the propulsion performance, the numerical tank simulation can be carried out by the Computational Fluid Dynamics (CFD) method. Similar evaluation methods have been applied to the Container vessel and bulk carrier developed by the company in the past. However, due to the special ship shape, this case first simulates the resistance characteristics of the similar ship Hno.1057s semi-submersible Heavy Lift Ship, and compares the resistance test results of the German HSVA tank to ensure that the CFD method, physical model and mesh resolution used are being evaluated the reliability of this type of ship.

The CFD resistance calculation result is almost the same as the HSVA tank model test result, and the difference between the calculated resistance value and the experiment at each speed point is less than 1%.

■Roll Damping analysis and research

Analyzing the characteristics of the roll motion of the hull is very important in the initial stage of the design. The roll motion of the hull can be regarded as a dynamic behavior, which can be described by the roll angle φ, the roll speed φ ̇, and the roll acceleration φ ̈. The ship’s roll characteristics are mainly determined by the ship’s geometry and the position of the ship’s center of gravity. When external environmental conditions provide additional energy to the ship, such as wind, waves and ocean currents, the hull roll angle will increase, conversely, will consume the hull inertia and further reduce the roll angle of the hull is the transmission of radiation waves, viscous friction effects and turbulence produced by the hull. These physical mechanisms that consume the inertial energy of the hull are collectively referred to as Roll Damping. The roll decay test can be used to study the roll characteristics of the hull, which can be used to release the hull from a certain heel position, and observe the change of its roll angle over time, or use theoretical and empirical formulas to predict. Among them, the establishment of the empirical formula still requires many assumptions. In recent years, with the evolution of computers, analyzing the roll damping characteristics of ship hulls through numerical simulation has become a hot research topic.

■China Steel Machinery Corporation offshore wind power Transition Piece(TP) components marine transportation

In this case, Sing Da Marine Structure commissioned CSBC Corporation Taiwan to produce offshore wind power Transition Piece (TP), which was delivered in batches, totaling 26 units, and transported by the company’s CSBC No. 5 barge. This case has changed due to the negotiation and delivery time, and it is necessary to update the final weight and other information according to the actual situation, including the single barge that has been completed last year to load two complete TPs. This year, the new single-seater complete TP transportation and bulk component transportation (Can, LID plate, Leg) are assisted in calculation by the Department of Design, which mainly assists in the calculation of cargo loading stability calculation, motion analysis and

structural strength analysis.

Since CSBC No. 5 barge has been in service for many years, the structure needs to be strengthened and carefully considered. However, the full load can carry more than 2,000 tons, and the stability is safe. Also, because the TP of the cargo loaded in this case is not too high, it can pass the stricter DNV-GL maritime transport regulations.

Motion analysis is mainly to calculate the amount of motion in six directions through the determined ship posture, and use empirical formulas to analyze how the securing equipment is designed.

The cargo in this case has sufficient stability for CSBC No. 5 barge, and the center of gravity of the flat cargo is low, and the stability is greater than the legal requirements. The current plans have been accepted, and the delivery of the cargo has begun.

■CSBC No.15 Underwater Basic Transportation Evaluation

CSBC-DEME Wind Engineering Co., Ltd. (CDWE) invited the company to bid for the Hai Long Offshore Wind Farm underwater foundation (JACKET) transportation business to confirm the number of JACKETs that can be loaded on a single voyage of our company's 140m barge (CSBC No. 15).

DNV-GL is especially applicable to marine engineering transportation regulations, which is a new standard for marine transportation and more stringent restrictions. It is calculated that only two of the JACKETs can pass the calculation conditions of the regulations, and the reason why the three JACKETs cannot meet the regulations is related to the wind area of the goods.

■Ship seakeeping evaluation program and new ship type development and improvement

For the evaluation of ship seakeeping tools, develop a user interface, add realtime post-processing charts, and add several linear parameter index calculations (such as: Sec. Area Curve, Water Plane Curve... etc.) , and increase seakeeping reaction calculation items (such as: speed, acceleration, absolute exercise volume... etc.) and short-term irregular wave response to facilitate analysis of the impact of various indicators on seakeeping, invest in early development evaluation and meet more needs and minimize the calculation error rate.

5.1.2 Industry Overview

A. Industry status and development
（ a ） Global handling orders and delivery outlook

==> picture [403 x 143] intentionally omitted <==

Source: Summer 2019 ABS World Shipping & Shipbuilding Outlook

（ b ） Container Vessel handling orders and delivery outlook

==> picture [404 x 161] intentionally omitted <==

Source: Summer 2019 ABS World Shipping & Shipbuilding Outlook

（ c ） Bulk carrier handling orders and delivery outlook

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Source: Summer 2019 ABS World Shipping & Shipbuilding Outlook

（ d ） ABS survey analysis of shipbuilding demand gradually rose from 2020

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Source: Summer 2019 ABS World Shipping & Shipbuilding Outlook

（ e ） The company's core products and core business of Merchant ship In 2020, due to i) the release of IMO emission reduction targets
and sulfur limit orders, it is urgent to switch to clean fuels, but ship owners have not yet decided which fuel to choose. New ship orders are affected by this uncertainty, and new ship orders tend to be conservative, ii) the global economic situation will experience greater turbulence in ，
2020, which also had a certain impact on the newbuilding market iii) the COVID-19 epidemic, countries are severely blocked, and the shipping industry has suffered a lot from other areas except container transportation. The above reasons make ship-owners believe that the risk of investing in new shipbuilding is too high. Based on the above factors, global new shipbuilding orders fall by 50% in 2020.

The container vessel built by the company ranges from 1,000 TEU to 14,000 TEU; the bulk carrier ranges from 35,000 DWT to 208,000 DWT. The quality, performance, and reputation are all higher than other shipyards. In addition, for special ships, such as Semi-submersible heavy lift ship (DCC), the company's products are well-known all over the world.

In addition, the company actively develops unique energy-saving technologies and brands, such as the development technology of big data of ES, SODO, and smart ship and 4IntShip, which are well received and praised by ship owners.

From the perspective of container vessel demand, in the future, it will focus on large-scale container ships above 10,000 TEU and branchline container vessels below 2,999 TEU, showing a polarized development. These two types of ship types are CSBC's expertise,

especially the feeder container vessel. Due to the rapid growth of the Asia-Pacific market in the future and strong demand for replacement, ship prices have the potential to rise. The company has a reputation for building the above types of ships, so we will do our best strive for such orders.

B. The relevance of the industry's upstream, midstream and downstream The shipbuilding industry has a large number of upstream, midstream
and downstream cooperative suppliers. The establishment and efficiency of the shipbuilding supply chain are related to the competitiveness of the shipbuilding industry. For example, the supply of steel plates for upstream shipbuilding, the midstream of main equipment (main engine, auxiliaries, etc.) and paint for the ship, and the end users of downstream ship-owners. The company has independent design, installation, and manufacturing capabilities for various types of ships, as well as professional ship research and development and design talents. It maintains a good supply and marketing relationship with upstream, midstream, and downstream suppliers and shipowners to ensure product quality and delivery.

As for the supply chain establishment of suppliers in the upper and midstream cooperatives, the company has a strict evaluation, management and examination system for suppliers, and develops supply sources with diversification in order to establish a complete supply chain system. For services to downstream ship-owners, in addition to timely delivery to meet the needs of ship-owners, more attention is paid to after-sales service and satisfaction of the products used by ship-owners.

In order to ensure product quality and delivery time, the shipbuilding industry is closely related to the upstream, midstream and downstream. Any problems in any link will affect the service to downstream ship-owners.

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C. Product development trend Currently, the world shipbuilding market has formed a trend of development of various ship types such as oil tanker, bulk carrier, container vessel, special ship and offshore engineering equipment ship. The proportions of oil tanker, bulk carrier, container vessel and offshore structure in 2020 are 28.13%, 45.31%, 18.75% and 3.13% respectively. Compared with the shipbuilding market in 2019, oil tanker declined 15.63%, Bulk carrier declined 35.56%, container vessel grew 5.88%, and offshore engineering declined 25.00%.

D. Competitive situation

Analyze the strategic development of major shipbuilding countries with competitive strategies. South Korea has achieved low-cost competitive advantages of various ship types through economic scale, technology, management, and related peripheral industry support, and has developed a differentiated strategy to gradually increase the proportion of LNG, Offshore and other products. In the past, Japan has gained advantages in differentiation

strategies. In order to maintain its competitive advantage, through industrial structure changes (strategic alliances, mergers or industrial division of labor) and specialization (each shipyard focuses on a certain type of ship), it also moves closer to cost leadership and professional differentiation. The mainland shipyard is currently gaining a competitive advantage with low labor costs. In the future, it will develop toward a cost-leading strategy through capacity expansion, equipment upgrades, technological improvements, and efficiency improvements. Western European countries continue to take the lead in passenger ships and special ships with professional differentiation strategies. CSBC mainly focuses on specialized container shipyards, and matches the business of Bulk Carrier or oil tanker according to market demand in a timely manner.

Considering the key success factors of container ships, comparing them with shipyards in Japan, South Korea and mainland China, CSBC Corporation Taiwan has advantages in quality, design, and specifications. The material cost is mainly imported due to the main equipment, and the industry is small in scale, and the bargaining power is weak, which is at a disadvantage.

Country Item	CSBC Corporatio n Taiwan	Japan Shipyard	South Korea Shipyard	Mainland China Shipyard
(i). Salary level	B	D	C	A
(ii). Material costs	C	B	A	D
(iii). Punctual delivery	B	`Ａ`	A	C
(iv). Length of cons- truction period	B	A	B	D
(v). Construction qua- lity	A	A	B	C
(vi). Design and spec- ification	A	A	B	C
(vii). Achievement	B	A	B	D
(viii). Dock and energy	B	C	A	D

Note: A, B, C, and D represent relatively strong, second strong, second weak, and weak respectively. Source: CSBC Corporation Taiwan

Regardless of the number of new ships or deadweight tonnage, the center of the global shipbuilding industry is still in Asia. At present, the world shipbuilding market presents a situation where China, Japan, and South Korea are in a state of dominance. As of the end of 2020, the three countries’ ship handling orders (Order book) accounted for 96% of the world’s total in terms of revised gross tonnage (CGT) and holds most of the orders in the world shipbuilding market. In 2020, China's shipbuilding completion volume, handling orders and new ship contracts both surpass South Korea, becoming the world's largest shipbuilding country.

In order to seize the small shipbuilding market, Japan and South Korea, the major shipbuilding countries, have used their technological advantages and foreign expansion strategies to compete with China for the market, especially in green ship technology to increase research and development efforts. The following is an analysis of the development of the major shipbuilding countries in Asia, South Korea, Japan, Mainland China and Taiwan, as follows:

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(1)South Korea

South Korea’s shipbuilding industry cycle is at a mature stage, with resource advantages, technological advantages and financial advantages, and strong competitiveness. The completion and delivery of ships in 2020 reached 8.9 million modified gross tonnage (MCGT), slightly lower than China's 10.7 million modified gross tonnage (MCGT) and the second largest percentage in the world.

However, South Korea's shipbuilding industry also encountered bottlenecks in the development process, mainly due to insufficient domestic production line resources, relative shortage of technical personnel and production workers, and rapid increase in workers’ wages, which have brought greater development pressure to the enterprise. At present, the labor cost in South Korea accounts for an average of about 30% of the cost of a new ship, compared to 10% to 15% in China, which is not conducive to competition. Therefore, due to the high cost of domestic shipbuilding and the decline in competitiveness, South Korea has begun to shift the focus of orders to ships with higher added value, especially transferred to VLCC Large crude oil carrier, Large Container Vessel, chemical tanker, Large LPG tanker and LNG tanker and marine engineering projects and other high value-added ships.

(2) Japan

The Japanese shipbuilding industry cycle is in a post-mature period. In recent years, the status of ships’ exports in Japan has declined, and exports accounted for only about 2% of Japan’s total exports. It currently ranks third in the world’s shipbuilding industry, with 6.3 million revised gross tonnage (MCGT) for completed delivery.

Just like the development of South Korea’s shipbuilding industry, Japan’s shipbuilding industry itself has encountered many problems in recent years, mainly due to the lack of successor strength of shipbuilders and high wages. Like South Korea, Japan’s labor costs account for an average of about 30% of the cost of a new ship, and it has been plagued by the further development of the Japanese shipbuilding industry. Many companies have adopted mergers and acquisitions or reorganizations to reduce costs by increasing their scale.

In recent years, the global economic growth has driven shipbuilding demand. In response to shipbuilding demand, Japan resumed its suspension of production capacity, expanded and updated shipbuilding equipment to ensure its market share in shipbuilding, and established a strategic position ， in the shipbuilding industry. In order to enhance comprehensive competitiveness, strengthen technological innovation and cultivate talents, the shipbuilding industry must continue to maintain a 100% foothold in Japan’s domestic production to delay the shift of global shipbuilding centers to China.

(3) Mainland China

The shipbuilding industry cycle in mainland China is in the pre-growth period, and the shipbuilding industry has shown strong vitality. Due to the comparative advantage in cost, the shipbuilding industry in mainland China has achieved considerable development. Since 2003, the three major indicators of shipbuilding completion, new orders and handling orders in mainland China have surpassed the total of European shipbuilding countries, and it has also widened the gap with Japan and South Korea.

In addition, according to the revised gross tonnage statistics of the British Clarkson Research Company in 2020, the total tonnage of shipbuilding completed in mainland China accounts for about 37% of the world market; New orders account for 41% of the world market; Handling orders accounted for 37% of the world market, these three indicators are better than South Korea, making China the world's largest shipbuilding

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country.

In addition, British Clarkson Research Company revised the gross tonnage statistics of world shipbuilding in 2019, showing that the completed shipbuilding volume of mainland China accounted for 33.84% of the world market ratio; the volume of new orders accounted for 33.60% of the world market ratio; the volume of handling orders accounted for the world market. With a ratio of 35%, the three major indicators are slightly inferior to South Korea, making it the second largest shipbuilding country in the world.

From the perspective of the development goals of China's shipbuilding industry, mainland China now has the ability to independently design hightech ships and marine engineering equipment, breaking through the bottleneck of insufficient production capacity of marine main engines and other supporting products and weak independent development capabilities, and the shipment rate of mainstream localized supporting equipment has increased to more than 50%.

Mainland China now has the ability to develop and build high-tech ships and marine engineering equipment, and has reached the international advanced level. The shipment rate of mainstream localized ancillary equipment has increased to more than 80%.

(4) Taiwan
Taiwan ranks 20th in the world in container vessel handling orders and 4th in national rankings. CSBC Corporation Taiwan is Taiwan’s only largescale shipyard with a megaton-class shipyard. In 2020, part of the Merchant ship in Kaohsiung plant was completed and delivered 7 ships (1 208,000-ton bulk carrier, 6 2,800TEU container vessels), and 3 ships in Keelung Yard (2 800-ton marine research ships, 1 2,100-ton marine research ship) marine research ship). In addition, the Keelung Yard part of the official ship was completed and delivered 3 100 tonnage class patrol and rescue boats. The annual completion and delivery was about 180,035 CGT, accounting for about 1.0% of the world. CSBC Corporation Taiwan has continuously improved the quality of construction, increased the size of ship sections, and strengthened the control of material and labor costs, and improved shipbuilding processes and shortened shipbuilding timelines to respond to the global shipbuilding market competition. Facing the competition in the global shipbuilding market, CSBC’s new
challenges in the future include: (1) reduce costs, strengthen management, (2) optimize manpower, technology inheritance, (3) adjust product structure, develop new businesses, (4) accelerate product development and innovation (5) ) Innovate business models and expand business. In response to these new challenges, in 2020, the company promotes the transformation of business strategies such as merchant ship business, Indigenous National defense, offshore wind power and other businesses with the goal of sustainable operation. It also formulated plans for revenue and expenditure reduction and EP-10, disperse the company’s operational risks, comprehensively and continuously improve overall competitiveness, and coordinate with organizational transformation and corporate culture optimization, and develop related work priorities and performance management and assessment mechanisms, with a view to achieving the goal of turning losses into profits in 2021.
(5) Summary

Looking forward to the global economic prosperity, there are no signs and trends of recovery, and the shipbuilding industry is not optimistic. However, in the future, the company will continue to actively pursue the diversified operation of 1) Construction and maintenance of Merchant ship, 2) Construction and maintenance of naval vessels, and 3) offshore wind power marine engineering under the guidance of EP10 to reduce the risk of

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product concentration in the shipbuilding industry, and move toward the goal of accounting for 1/3 of the total revenue in the three major areas, and move forward with the vision of building an excellent marine business group. In the past, the company has laid a good foundation. In the future, the company hopes to strengthen the core corporate culture of "discipline, efficiency, honor, mission" and "diligence, thrift, pragmatism, and execution" in the business philosophy of "integrity, innovation, and growth" in the future. The company believes that under the success of the transformation of its operating strategy and the synergistic effect of the corporate culture, it will turn losses into profits and sustainable growth just around the corner.

5.1.3 Technology and R&D Overview

A. Technical level of the business

(a) Shipbuilding

The shipbuilding industry is a technology, capital, and labor-intensive industry, and in the face of international competition, innovative R&D is an important key to industry competition. The company attaches great importance to innovative research and development, continues to invest in energy conservation, environmental protection, safety, and in line with the ship class and the International Maritime Organization's new ship type research and development, and the research and development results are implemented in the commercialization of products, in order to create and enhance the added value of customers' products. The key shipbuilding technology research and development results include ES-30 energy saving plan, ES Bow modification technology, Sea Sword Bow, ES Rudder (Twisted Leading Edge & Rudder Bulb), Rudder-fin, high-efficiency propeller, ship propulsion diversion device, ship Pre- Swirl Vortex Generator, ship's Asymmetric Y-shaped & T-shaped fin device, Container Vessel widening and modification technology, etc., all have actual ship application results, and the shipbuilding technology is highly recognized by customers.

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ES WED ES BOW Sea Sword Bow(SSB) ES Rudder
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Pre-Swirl Vortex Asymmetric Y-shaped fin Asymmetric T-shaped fin
udder-fin
Generator device device
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(b) Naval and Official Vessels construction
The company has accumulated many years of technology and
experience in building and repairing ships, and has the ability to design independently. In order to meet and meet the contract and basic design requirements of the navy and maritime cruisers, in the future, it will adopt domestic and foreign strategic alliances to introduce the latest shipbuilding technology, and establish new equipment integration and testing capabilities. In the future, the company will continue to build the Naval and Official Vessels construction project management capabilities that integrate design and construction.

B. Research Development

Since its establishment in 1973, the company has accumulated many years of engineering experience, and has cooperated with production, learning, and research to cultivate independent design capabilities, and related engineering management and technology for shipbuilding and repair. It has reached the level of world-renowned shipyards and had a certain competitive advantage in the international shipbuilding market. (a) Shipbuilding

In response to future development, the "green ship" planned by the company and the design concept are explained as follows: Main Installation Vessel `（` MIV `）`

~~The vessel was commissioned by the subsidiary CSBC-DEME Wind Engineering~~ Co., Ltd. (CDWE) to implement the Hai Long Offshore Wind Farm installation project. It is expected that offshore transportation and installation operations will begin in the second quarter of 2023, and the Hai Long Offshore Wind Farm will be built in a localized onestop mode. DEME, an important partner of the company, decided to become a citizen of the Republic of China in order to obtain the priority of the wind farm business in Taiwan. Based on its existing experience, the company started the current round of design and planning with the company.

The vessel is the company's first contract of this type of special ship:  The length of the ship (including the helicopter deck to be installed in the future) is 216.57 meters, the width of the ship is 49 meters, the depth of the ship is 16.8 meters, the full-load draft is 11 meters and the design draft is 8.5 meters, DP3.
The maximum ship speed is not less than 14 knots at the designed draught.
160 people (52 single rooms + 54 double rooms). The applicable laws and regulations of the vessel:
The vessel is built as Double Class, which must meet the requirements of CR CLASSIFICATION SOCIETY (called CR) and American Bureau of Shipping (ABS) at the same time.
Nationality is R.O.C.
The main equipment is as follows:
The vessel is propelled by four pillars, and the main propeller is Azimuth Thruster.
There are three auxiliary crane bases on the deck, two at the bow and one at the buttock.
Reserve space in the Moon pool.
LNG storage tanks may be installed in the future.
Reserve the layout of the eight points mooring system in the future.
Reserve space for installation on the helicopter deck.
Equipped with a main crane of 4,000 tons and an auxiliary crane of 65 tons, one each.
The bow has two sets of elevating thrusters and two bow thrusters.
The vessel is equipped with a multi-chamber automatic balancing system (AutoHeeling system) to ensure the smooth operation of the crane.
The vessel is electric propulsion. The engine room runs through the cargo deck and the bow. There are four main generators and two generators at the port.
No bunker oil is used, and light diesel (MGO) is used throughout the ship.
SCR system installed.
Use ORC waste heat recovery system.

100KDWT Bulk carrier

~~In order to meet the owner's requirement of 100,000 deadweight tons, the width of~~ the existing reference mother ship was increased to 40 meters and the Sea Sword Bow was

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~~developed. The cabin capacity can meet the owner's requirement SF (Stowage Factor) =~~ 42.5.

The carrier has a maximum draught capacity of about 99,500 tons, and a cruising range of approximately 21,500 nautical miles at a speed of 13.8 knots. The carrier plans to use MAN 6G60ME-C10.5 (Tier II) for the main engine. ~~Customs 100DWT Patrol boat The announcement materials of this case seem to have doubts. In order to meet the~~ requirements of the specification for load capacity, stability and ship speed, the stern line type and tank layout were modified and designed. ~~Basic design and development of island hopping on and off passenger~~ - ships (New Taiwan Penghu Ferry)

~~In order to replace the Taihua steamship, which is more than 30 years old, and with~~ the "Indigenous National defense" policy, this case is designed and developed for the luxury passenger ship sailing between the main island of Taiwan (Kaohsiung) and Magong. The total length is not less than 110 meters, the gross tonnage is not less than 8,300, the deadweight is not less than 1,250 t, the fastest ship speed is 22 knots, the number of passengers is not less than 600 people, and it can carry 10 TEU containers, 80 small passenger cars and 4 large tour buses. .

(b) Naval and Official Vessels construction

The Kaohsiung and Keelung yards have so far completed more than 116 various types of ships, such as: FAB and the new generation of guided missile boat, landing ship, Fast Combat support ship, missile frigate, and missile patrol ship, etc. Among them, the PFG-2 missile frigate built by the Navy Commission has been completely self-built from the third one, established the capabilities of ship construction, design and overall logistics of CSBC; the construction project of 30 Navy’s Guang Hua Sixth Project for a new generation of fast attack craft guided missile and 1 new Fast Combat Support Ship , and undertook the Navy’s new amphibious landing platform dock , coast guard 4,000 Tonnage Class Frigate, coast guard 100 Tonnage Class Patrol rescue boat and other services in 2018; the company undertook the Navy Indigenous Defense Submarine prototype vessel, coast guard 1,000 Tonnage Class Frigate and other services in 2019, undertook the 100-ton revenue cutter of the Customs Administration and the Navy’s New type salvage and rescue vessel in 2020 to make the relevant capacity more comprehensive.

(c) Ship repair and vessel repair

Since the company has a shipyard in both the north and south of Taiwan and has a ship repair dock, it can provide various types of ships and ships with annual repairs, special inspections and modifications, sea damage repair, construction and maintenance in one, and entire ship commercial maintenance naval ship with long-term contracts. In addition to having the capabilities of a professional ship repairing yard and the geographical advantage of being a hub of major international waterways, it also has close relationships with public agencies and Chinese shipping companies. Over the years, the company has undertaken ship repair business such as the Navy’s GUPPY-class submarine maintenance project, strategic commercial maintenance of Panshi Fast Combat Support Ship 5- year ship repair business, the Navy’s southern area of the 5-year ship in and out of the docking operation open-ended contract, the north area Open-ended contracts for naval entry and out operations, etc., prove that the company has established submarine maintenance capabilities. In addition, the Kaohsiung plant and Keelung yard area have established naval construction and maintenance in one capability to provide integrated solution services.

(d) Marine engineering and machinery

In addition to manufacturing some marine equipment, the company has extensive experience in mechanical manufacturing engineering,

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including building steel frame manufacturing and installation, petrochemical plant mechanical parts and pipeline installation, thermal power plant construction and pipeline manufacturing and installation, nuclear power plant nuclear island area electromechanical, instrument control and pipeline manufacturing and installation, terminal container crane, container straddle carrier, the manufacturing and installation of coal unloaders, and the cooperation of the Industrial Technology Research Institute in the research and development of wave power generation, Kuroshio power generation projects, and offshore wind power generation engineering technology research and development projects.

Through the accumulated rich experience and technology of shipbuilding and heavy industry, combined with ultra-high heavy-duty lifting equipment and a wide and flat plant area, it has a competitive advantage in fighting for environmental protection, air pollution control projects, power plants, rail vehicles and other large-scale related mechanical engineering.

C. Research and development personnel and their academic experience CSBC Corporation Taiwan has more than 400 employees with a bachelor's degree or above with research and development capabilities, and about 150 researchers participate in research and development every year. The department responsible for the promotion and management of R&D plans is the "Department of Planning". The department responsible for the development and research of the technology application of ships and vessels (water-bearing ships) is the "Department of Design". The department responsible for the development and application research of key technologies for intelligent shipbuilding is "Department of Information Technology". Another department responsible for the development of marine engineering technology is "CSBC-DEME Wind Engineering Co., Ltd.". The educational background of the company's personnel involved in research and development is as follows:

Item	Year	2017	2018	2019	2020
Education distribution	Doctor	8	8	6	6
	Master	77	79	61	70
	Bachelor	34	58	32	41
	Others	12	13	7	8
Total		131	158	106	125
Average working years (year)		14.63	13.18	14.06	13.86-

D. R&D expenditures invested in each of the last three years and successfully developed technologies or products.

(a) R&D expenses invested: Unit: NT$ thousands

~~Year~~ Item	2018	2019	2020	As of Mar. 31, 2021
~~R&D expenses(A)~~	117,013	99,847	94,017	20,269
~~Turnover(B)~~	13,012,326	16,540,899	25,296,629	4,528,155
~~(A)~~~~`／`(B)% ~~	0.90%	0.60%	0.37%	0.45%

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(b) Successfully developed products:

CSBC Corporation Taiwan relies on its excellent R&D technical team and business development strategy to meet the application needs of market customers, and constantly innovate designs and improvements. The ship type ， developed in recent years has excellent performance Since 1998, the Royal Institute of Naval Architecture (RINA) has organized the global "Significant Ships". By 2020, a total of 26 new ship designs have been developed, and 232 ships have been selected with actual construction results. The results are very fruitful. And from 2014 to 2020, the company has won the cover of "Significant Ships" published by RINA for seven consecutive years. Here is a list of the actual performance results of the company's selected ships in recent years:

List of selected ships of Royal Institute of Naval Architecture `「` Significant Ships `」`

~~Year~~	~~Type of ship~~	~~Representative ship~~ number	~~Total number of ships~~ built (ship)
~~1998~~	~~2,200 TEU C/V~~	~~HNO.665~~	~~38~~
1999	57,000 DWT DCC	HNO.725	2
~~2000~~	~~5,714 TEU C/V~~	~~HNO.788~~	~~2~~
~~2001~~	~~176,000 DWT B/C~~	~~HNO.769~~	~~8~~
2002	3,200 TEU C/V	HNO.791	5
~~2002~~	~~17,726M3 REEFER~~	~~HNO.730~~	~~2~~
~~2003~~	~~77,000 DWT B/C~~	~~HNO.815~~	~~9~~
2004	12,600 DWT Cement Carrier	HNO.800	1
~~2004~~	~~175,100 DWT B/C~~	~~HNO.821~~	~~3~~
~~2004~~	~~5,500 TEU C/V~~	~~HNO.823~~	~~6~~
2005	4,250 TEU C/V	HNO.835	20
~~2006~~	~~4,050 TEU C/V~~	~~HNO.833~~	~~6~~
~~2006~~	~~1,800 TEU C/V~~	~~HNO.849~~	~~22~~
2007	202,500 DWT B/C	HNO.867	5
~~2007~~	~~6,000 TEU C/V~~	~~HNO.870~~	~~4~~
~~2008~~	~~8,240 TEU C/V~~	~~HNO.875~~	~~10~~
2009	1,700 TEU C/V	HNO.940	13
~~2010~~	~~6,600 TEU C/V~~	~~HNO.896~~	~~6~~
~~2011~~	~~40,000 DWT O/T~~	~~HNO.981~~	~~4~~
2011	93,300 DWT B/C	HNO.983	4
~~2012~~	~~4,500 TEU C/V~~	~~HNO.950~~	~~11~~
~~2014~~	~~1,800 TEU C/V~~	~~HNO.1030~~	~~22~~
2016	14,000 TEU C/V	HNO.1036	5
~~2017~~	~~2,800 TEU C/V~~	~~HNO.1065~~	~~10~~
~~2019~~	~~208,000DWT B/C~~	~~HNO.1099~~	~~4~~
2020	2,800 TEU C/V	HNO.1113	10
~~Total~~		~~26 types~~	~~232~~

In addition, since 2005, the "SHIP OF THE YEAR in Taiwan" organized by Taiwan Society Naval Architects and Marine Engineers has had a total of 14 new ship designs, and 110 ships have won awards. The results have been recognized by domestic scholars and experts. Here is a list of the actual achievements of the company's award-winning ships in recent years:

List of selected ships of Taiwan Society Naval Architects and Marine Engineers 「 SHIP OF THE YEAR in Taiwan 」

Year	Type of ship	Representative ship number	Total number of ships built
2005	12,600 DWT Cement Carrier	HNO.800	1
~~2007~~	~~1,800 TEU C/V~~	~~HNO.849~~	~~22~~
~~2008~~	~~202,500 DWT B/C~~	~~HNO.867~~	~~5~~

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2009	8,240 TEU C/V	HNO.875	10
~~2010~~	~~1,700 TEU C/V~~	~~HNO.938~~	~~13~~
~~2012~~	~~40,000 DWT Roundabout tanker~~	~~HNO.981~~	~~4~~
2014	8,500 TEU C/V	HNO.1007	10
~~2015~~	~~1,800 TEU C/V~~	~~HNO.1030~~	~~22~~
~~2016~~	~~AOE Oil bomb supply ship~~	~~HNO.1025~~	~~1~~
2017	14,000 TEU C/V	HNO.1036	5
~~2018~~	~~65,000DWT Semi-submersible Deck~~ Cargo/Heavy Lift Carrier	~~HNO.1057~~	~~4~~
~~2019~~	~~2,800 TEU C/V~~	~~HNO.1073~~	~~10~~
~~2020~~	~~500gross tonnage marine research ship~~	~~HNO.1088~~	~~2~~
2021	1,000 gross tonnage marine research ship	HNO.1090	1
~~Total~~		~~14 types~~	~~110~~

In addition, the company has won the "Taiwan Excellence Awards" organized by the Bureau of Foreign Trade from 2016 to 2020. At present, there are a total of 3 new ship designs and 31 shipbuilding achievements. In 2019, the company even won the "Gold Award of Taiwan Excellence Awards" honor and affirmation.

List of ships of CSBC Corporation Taiwan that have won the "Taiwan Excellence Awards."

Year	Type of ship	Representative ship number	Representative ship number	Total number of ships built
2016	1,800 TEU C/V	HNO.1030		22
~~2017~~	~~14,000 TEU C/V~~	~~HNO.1036~~		~~5~~
~~2019~~	~~65,000DWTSemi-submersible Deck Cargo~~ /Heavy Lift Carrier	~~HNO.1057~~		~~4~~
~~Total~~		~~3 types~~	~~31~~

Since 2005, the company has started the Energy Saving Plan (ES) for short, and then focused on the hull shape, the improvement of the propeller, the improvement of propulsion efficiency, and the reduction of weight. It is divided into three stages: ES10, ES20, and ES30. In the future, it will cooperate with the promotion of the 4IntShip project and use the application of smart staff to implement the company's marine products.

ES10──Improve ship emissions and save energy by 10%	ES10──Improve ship emissions and save energy by 10%
Hull lines design	Energy saving buttock
Propulsion device andperformance	High-efficiency new propeller, reaction rudder,rudder wing, pre-swirl flowgenerator
ES20──Going to the next level, further reducing energy consumption by 10%
Energy-saving propeller	Establish new procedures and methods for propeller design
Resistance- Reducing by Microbubbles technology	Reduce the frictional resistance of the hull surface
Sea Sword Bow	Reduce the influence of ship attitude and sea conditions

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ES30──Advanced technology, energy saving 10%	ES30──Advanced technology, energy saving 10%
Renewable energy utilization	Solar, wind, waves
Reduce Weight	Large castings, outfits
Energy recovery	Diesel engine waste heat
System improvement	Power system, hydraulic system, cooling water system
Operational requirements	Best voyage analysis
	4IntShip
Infrastructure	1. Ship dedicated router (ShipWAP) 2. Suggestions on ship accommodation network and information security policy
Integrated application	1. Ship big data collection system 2. Recommendations for energy-saving ship conditions (ECOShipCond) 3. Automatic water transfer (IntAShipCond) 4. Intelligent/Smart ship engine room monitoring system (IntAMoni)

(d) Progress of ongoing research and development projects: `（` As of January 31, 2021 `）`

R&D project name	Current progress `％`	The more cost that needs to be invested (NT$ Thousands)	Estimated finish time	The main factors affecting the success of research and development in the future
			Time to complete mass production
1.Independent development and verification of the end version of the propeller program (2/2)	8	420	December 31, 2021	Create a lifting surface design program
			`－`
2. Harmonic analysis and improvement research of ship electric power (2/2)	4	1,400	December 31, 2021	The integrity of the actual ship's power system and harmonic source equipment data will affect the effectiveness of the computer model and the execution efficiency of the research and improvement plan.
			`－`
3. Calculation and analysis of the electromagnetic pulse interruption frequency and radar reflection cross- sectional area of the array waveguide, porthole glass and the whole ship (2/3)	8	900	December 31, 2021	1. Whether the electromagnetic calculation software is successfully obtained and the model is established. 2. The completeness of the content of the reference materials (international related research).
			`－`
4. Research on the technology and integration of self-made ship monitoring system (2/3)	9	20,100	December 31,2021	1. Master the signal interface of main engine, propulsion system and related equipment. 2. Familiar with ship classification regulations and system development capabilities. 3. Close cooperation and contact with SOIC, CR and ship owners
			`－`
5. Smart plant integration technology and application research (2/3)	8.5	22,500	December 31, 2021	With intelligence as the core, the company promotes the visualized management of automated processes, and realizes a new model of smart plant manufacturing through the integration of production line man-machine operation interfaces and process production management systems.
			`－`

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6. Shipbuilding Market Research Analysis (110)	8	1,200	December 31,2021	1. Accurate information of market conditions. 2. Close cooperation and contact with ship brokers and ship owners. 3. The completeness of the content of the reference materials.
			`－`
7. Basic design and development of new ships (110)	8	31,550	December 31, 2021	1. The ability to grasp the pulse of future market demand. 2. The company designs the overall energyand business load.
			`－`
8. Integrated Smart Development Plan for Ship Stabilizing Wing System	8	7,050	December 31, 2021	1. Integration and optimization of stabilizer wing system 2. Intelligent stabilizer wing equipment 3. Obtain third-party certification
			`－`
9. Feasibility study of plumber shop branch pipe cutting and flange welding automated production line	8	840	December 31, 2021	1. Automated production line process planning 2. Process equipment and capacity evaluation
			`－`
10. Initial study of SYSWELD weld bead simulation	8	6,140	December 31,2021	1. Data collection and study 2. SYSWELD welding simulation software learning 3. Planning the actual ship segment research method
			`－`
11. Develop an efficient method for assessing the fuel consumption of ships in real seas (1/2)	8	1,300	December 31, 2021	1. Apply different calculation tools to calculate the resistance in still water 2. Apply the self-propulsion simulation method developed to calculate fuel consumption
			`－`

Note: "-" means not applicable (because the company is an order-based production).

5.1.4 Long-term and short-term business development plans
A. EP-10 project and a task force of increase-revenue and cost-down. In order to achieve the goal of sustainable operation, and to ensure the successful execution of Merchant ship’s business, Indigenous National defense and offshore wind power, CSBC focuses on improving and strengthening productivity and kick-off the EP-10 improvement project (Enhance Productivity, Profit, Performance 10%) in 2020. Under the

==> picture [483 x 253] intentionally omitted <==

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premise of increasing productivity, profitability and performance by 10%, turning losses into profits, profit from new businesses, and reorganization, a total of 76 specific tasks have been set, executed and followed up. In addition, set an increase-revenue target of NT$180 million and a costdown target of NT$170 million, and the total benefit target of EP10 project in 2020 is NT$350 million. All the EP10 tasks are followed up by monthly meeting chaired by top managers. The achievement rate of EP10 tasks throughout the year was 93.24%, and the cumulative amount of benefit targets reached the target at the same time. Looking forward to 2021, the EP-10 project and the task of increase-revenue and cost-down will continue to be promoted.

The company will continue to promote and strengthen the EP-10 (Enhance Productivity, Profit, Performance 10%) campaign in order to ensure the smooth implementation of the business of merchant shipping, Indigenous National defense and offshore wind power. With the spirit of "implementing execution and sprinting to make profits", the company continue to promote three major work policies and nine major work priorities. Total 82 specific quantitative projects have been set for tracking and management examination， an open-source target of NT$260 million and a reduction target of NT$190 million have been set at the same time. The annual revenue and reduction target amount is NT$450 million. The monthly management test is combined with the performance appraisal of each first-level unit, and it is expected to achieve the goal of turning losses into profits and profitable growth in 2021.

B. Short-term business development plan

(a) Actively strive for new business orders, turn losses into profits, and create profits

Merchant ship's industry will actively strive for domestic and foreign Merchant ship, Official Vessels construction and other businesses. At the same time, Indigenous National defense and offshore wind power will be new businesses that the company will actively strive for. The company has adjusted its organization and established Naval Shipbuilding PMO, CSBCDEME Wind Engineering Co., Ltd., Department of Ship Management and CSBC ACADEMY to coordinate the limited resources of the company and make organizational adjustments, put the newly established R&D center under the Department of Planning. Cooperate with the adjustment of the company's operating strategy, dynamically adjust and integrate R&D strategies, develop and research core technologies in line with new business development, and achieve successful transformation, which will help sustain the growth of operations and create profits.

(b) Strengthen production capacity control and reduce costs in an all-round way The boom in international shipping is still sluggish, which has
seriously affected the shipbuilding market. The low ship prices, coupled with the large fluctuations in the exchange rate and raw material prices, and the backward construction progress, have caused operating losses to expand. Except for external uncontrollable factors, control measures have been

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taken to ensure that the subsequent construction of new ships can be delivered on time within the contract delivery date. In order to increase productivity, the company is currently investing in an 800-ton crane and has completed the enhancement of the carrying capacity of Pier 2 in the Kaohsiung plant. For related project investment plans, please refer to Chapter 7 of the Explanation of Significant Capital Expenditure. At the same time, the company will continue to promote the throttling plan, reduce indirect costs, and strictly control the project schedule and budget. It is expected that with the improvement of production efficiency and equipment updates, and in the absence of accidents, the company will improve production efficiency on schedule, quality and budget to reduce operating costs to create profit and sustainable operation.

According to the upgrade and transformation plan, the company has set 1) Merchant ship's main business, 2) Indigenous National defense, and 3) offshore wind power as the mainstay of diversified operation. ， The company’s internal organization was adjusted at the same time and actively ， promoted the upgrade and transformation plan. The management system is reviewed and revised at the same time to strengthen the staff's usual assessment, combined with the annual assessment, to reward the superior and eliminate the inferior with performance orientation, and to create a corporate culture that emphasizes both discipline and efficiency. In addition, in order to ensure the success of the operation transformation, the training center was upgraded to CSBC ACADEMY, and manpower cultivation, development and inheritance were listed as key items and tasks. At the same time, it combines industry-academic cooperation to effectively enhance the company's research and development capabilities and the establishment of core competitiveness, making the company a competitive marine business group.

(d) Improve design energy and accelerate the development of new ship types In response to the development trend of global energy saving and
carbon reduction, the company develops energy-saving ships based on the principles of environmental protection, economy, energy saving, and safety. And in response to the needs of the shipbuilding market, develop new ship types to meet customer needs and create customer value. The company has started the Energy Saving Plan (ES; Energy Saving Plan) since 2005, and achieved the energy saving target of 30%. Energy-saving design results include energy-saving ship bow (with high sea-condition adaptability), energy saving bow (saving fuel consumption by 12%), energy-saving rudder (energy-saving 2~4% horsepower), vortex generator (a patented design, reducing propeller excitation force, noise and vibration, save 1% horsepower). At present, it has also launched the service policy of SODO (the most suitable ship design and operation technology in the real sea) innovative design brand and the smart ship development of the 4IntShip whole ship network construction plan brand. In order to enhance the design capacity, the company conducts industry-university cooperation at the same time, and actively recruits design talents from various universities and departments to invest in the design and development of new ship types, in order to strengthen the company's competitive advantage and

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competitiveness in the highly competitive international shipbuilding market.

C. Long-term development plan

(a) Strengthen the corporate governance system and fulfill corporate social

responsibilities

In order to enhance the company’s performance in the capital market and the transparency of company operations, the company’s corporate governance aspects include safeguarding the rights and interests of shareholders and treating shareholders equally, strengthening the structure and operation of the board of directors, enhancing information transparency, and implementing corporate social responsibilities, etc. Accept the "Corporate Governance Evaluation" every year to continuously improve the transparency of corporate governance. In addition, in order to expose the company’s management and achievements in promoting corporate social responsibility, the company compiles "Principles of Corporate Social Responsibility" in accordance with GRI standards every year and establishes "Area of Principles of Corporate Social Responsibility" on the company website, and uploads the report to MOPs to provide interested parties with access and understanding. In response to the concerns of stakeholders, the company will continue to optimize its corporate governance system and fulfill its corporate social responsibilities in the future.

(b) Implement the transformation plan and diversify operations

The company has set 1) Construction and maintenance of Merchant ship, 2) Construction and maintenance of ships, 3) Offshore wind power and marine engineering as the diversified business main axis and business transformation strategy to reduce the concentration of products and the operational risk of being affected by the global economic cycle. The company's diversified upgrade and transformation has started in 2017, and the internal organization, manpower and management system will be continuously reviewed and established. In the future, the three major areas of operation will account for 1/3 of the company’s revenue, and the three major areas of operation will all be related to the company’s shipbuilding industry’s core technologies. In the future, the company will work hard on these three major areas of operation and move towards the goal of building a competitive advantage in the marine business group.

(c) Inheritance of knowledge and technology, build human resources Manpower aging, technology inheritance and talent cultivation for the
development of new businesses are challenges and issues that the company cannot avoid and urgently need to face. In response to challenges and issues, the company established "CSBC ACADEMY" in October 2017 to pass on training internally and recruit talents from abroad. It is also necessary to actively cultivate various professional talents for the company's business development, inherit the core technologies of shipbuilding, Indigenous National defense and offshore industry, and develop a high-performance digital and real-field learning environment. The long-term goal will not only provide a consulting platform for talent cultivation, development and technical exchanges in the company's diversified business chain, but also play a key role in the implementation of the government's industrial development localization policy.

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5.2.Market and Sales Overview

5.2.1 Market Analysis

A. Sales area of main products

Unit ： NT$ thousands

Sales area	2019	2019	2020	2020
	~~Amount~~	~~%~~	~~Amount~~	~~%~~
~~Domestic~~ sales	11,336,769	68.54	17,843,368	70.54
~~Export~~ sales	5,204,130	31.46	7,453,261	29.46
~~Total~~	16,540,899	100.00	25,296,629	100.00

B. Market Share

The company's market positioning is a professional container shipyard. If the ship type is not divided, and the delivery volume of a single shipyard is analyzed, the company accounts for about 1.0% of the total global delivery volume (calculated by CGT).

CSBC Corporation Taiwan's market share in the past 5 years

Year	2016	2017	2018	2019	2020
MCGT	13.00	25.20	34.70	25.3	19.2
CSBCCGT	238,834.00	282,638.00	200,278.00	180,035	143,867
Market Share	1.84%	1.12%	0.58%	0.71%	0.75%

According to the statistics of Container Vessel, the company's Container Vessel handling orders will rank 20th in the world in 2020, with a market share of about 1%.

C. The future supply and demand situation and growth of the market

National trade protectionism has emerged in recent years. Since the world’s top two economies, the United States and China, launched a trade war in the second half of 2018, there has been no obvious reconciliation so far. In 2019, there was also a trade dispute between Japan and South Korea, coupled with the disorder of social activities in Hong Kong, the Brexit event, the regional turbulence in the Middle East and South America and other factors, which together affected the global trade volume. ， This has made the already sluggish shipping market even more difficult, causing the overall shipbuilding market to continue to slump and face severe challenges.

In 2020, the unprecedented "new coronavirus" (COVID-19) epidemic hit all parts of the world. The implementation of border control and lock-in policies by various countries has severely affected the global flow of goods and trade. The World Bank report stated that, in 2020, due to the impact of the new crown pneumonia epidemic, economic activity and income growth will inevitably be reduced. However, after vaccine research and development and other countries begin to fight, the epidemic is expected to be controlled, but still warns that the global economic recovery will slow down in the future.

According to Clarksons research, global newbuilding orders fell by

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about 29% in 2020, reaching NT$53.9 million Deadweight, while there are still NT$76 million Deadweight in 2019. Among them, Bulk Carrier orders dropped the most. In 2020, it was about NT$13.5 million Deadweight. Compared with the 32 million Deadweight in 2019, the decline was more than 58%. Oil tanker is a relatively small commercial ship type. Its deadweight of approximately NT$23.8 million in 2020 is 8% lower than that of NT$25.9 million in 2019. At the same time, due to the decrease in the number of new ship orders in 2020 but the continued delivery of orders in hand, the global volume of handling orders has decreased by about 19%. Handling orders accounted for only 7% of the existing shipping company’s fleet capacity, set the lowest record in 31 years.

However, with the continuous development and mass production of COVID-19 vaccines, the world has gradually entered the post-epidemic era. Since Q4, the demand for container transportation has been the first to show a rebound, and the global rush for containers has caused a rapid increase in transportation prices. At the same time, shipping companies began to invest in the construction of new ships. According to Clarksons Research Institute, although the number of new ship orders for the whole year of 2020 has fallen sharply, the number of orders for Q4 has risen sharply compared with the previous three quarters, setting a singleseason record since 2018. The global shipbuilding market seemed to be recovering.

In general, the growth rate of shipping market capacity supply in 2020 is still greater than the growth rate of demand. Clarksons Research Institute said that in 2021, the world economic operation may show a recovery trend after the middle of the year, and container shipping will return to the growth track, with an expected growth rate of about 5%. The growth rate of transportation capacity is about 4%, and the supplydemand relationship in the shipping market will be significantly improved. It is expected that some ship owners will restart orders for new ships that have been shelved before, especially the ultra-large container ship ordering plan. It is expected that the global container shipbuilding market will receive plenty of orders.

According to shipping analysts, the future development characteristics of container ship technology will mainly focus on largescale, greening and intelligence. Large-scale will affect the choice of hub port. Greening, from environmental protection and energy saving equipment and technology application, main engine energy saving, promotion of efficiency improvement, ballast water treatment, environmental protection coating, waste energy utilization, etc., technologies have been gradually applied to new ships. Intelligence is mainly focused on products and technologies related to smart navigation, smart cabin, smart energy efficiency management, and smart integrated platform.

Looking forward to the future, the company will continue to steadily move towards the three major undertakings of Merchant ship, Indigenous National defense and maritime engineering. Under the ， implementation force, the company will fully sprint and create profits. It is hoped to make stable profits from 2021, and adhere to the company's belief of "inheriting shipbuilding and protecting the ocean" to shape the vision of "building an excellent marine business group" so that the company can operate continuously and create maximum value for shareholders.

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D. Competitive niche

(a) R & D design ability

In the Merchant ship business, after the company developed and designed the first Bulk carrier in 1992, of the 26 ship types developed 「 by 2020, 232 ships were listed as Significant Ships 」 of the Royal Institution of Naval Architects. As of 2020, there are 14 ship types developed, and 110 ships have been selected as "SHIP OF THE YEAR in Taiwan" of Taiwan Society Naval Architects and Marine Engineers. Since 2016, there are 3 models and 31 ships have won the "Taiwan Excellence Awards" for their performance. Among them, 65,000DWT Semi-submersible deck cargo / Heavy lift was selected as the 2019 "Gold Award of Taiwan Excellence Awards". In response to the development trend of smart ship technology, the company independently researched and developed the 4IntShip brand through cross-field alliances to develop the 4IntShip brand, actively marketing, creating added value for customers' products, and the benefits of real ship applications have been trusted and affirmed by ship owners and customers.

(b) Manufacturing capacity

Based on years of accumulated experience in shipbuilding engineering, world-class production equipment, and self-cultivation of design and development capabilities, since the establishment of CSBC, the company has successfully built more than 600 various types of cape-type Bulk Carriers in the world. Its technology and quality have been confirmed by the international shipping industry and ship owners.

(c) Marketing ability

On the domestic front, the company actively visits customers, maintains good customer relationships, proactively provides comprehensive solutions to meet customer needs, and provides customers with ship-related information in a timely manner, customizing to create customer value. Based on the homogeneity of national conditions, CSBC Corporation Taiwan has an absolute advantage in its domestic marketing capabilities. In foreign countries, CSBC Corporation Taiwan has adopted an agent system to successfully open overseas markets and build brand loyalty for domestic and foreign customers with customization, high quality, innovation, and high added value.

(d) Human Resource

Since the establishment of CSBC in 1973, the company has been more than 48 years old and has abundant technical, engineering and management manpower. The company attaches great importance to human capital and has established a sound talent cultivation system and study subsidy. Since the establishment of CSBC ACADEMY, it has actively promoted industry, government, academic, and research cooperation, cultivate professional talents in the marine industry such as shipbuilding, Indigenous National defense and offshore wind power, and plan to promote the pipeline for the use of diversified talents, carry out human resource inheritance, and ensure the company's sustainable operation. At present, the company’s operating strategy has been planned and positioned as 1) shipbuilding industry, 2) Indigenous National defense and 3) offshore wind power and other offshore engineering businesses to transform in order to meet the national

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defense independence and energy policy and provide the company's core key technologies, build a talent development platform, and fulfill corporate social responsibility for cultivating the development of localized industries. Besides, in the shipbuilding industry and Indigenous National defense operations, it is currently gradually building "construction and maintenance in one" capacity to provide and satisfy ship owners and customers with all-round service quality.

(e) Management system verification and greenhouse gas inventory system i. 2020 Management system verification
- ▲The ISO-9001 certificate was obtained on December 22, 2018, and is valid until December 21, 2021.
- ▲The ISO-14001 certificate was obtained on December 23, 2019, and is valid until December 22, 2022.
- ▲The ISO-45001/CNS 45001 certificate was obtained on November 20, 2020, and it is valid until December 3, 2023.
- ▲The ISO-3834-2 certificate was obtained on March 27, 2018 and is valid until March 26, 2020.
- ▲The EN-1090-1 certificate will be obtained on June 19, 2020, and will be valid until March 26, 2020.
- ▲The TIPS/2016 A-level login certificate is obtained, and it is valid until December 31, 2021.

ii. Greenhouse Gas Inventory

 - The company cooperates with the NCKU Research and Development Foundation Industrial Sustainability Development Center. The Kaohsiung Plant and the Keelung Plant have introduced a greenhouse gas inventory system in 2012 and 2013 respectively to ensure compliance with ISO/CNS 14064-1 and the EPA's greenhouse gas verification guidelines and obtain the DNV external verification statement, establish colleagues' impact and awareness of greenhouse gases, and truly grasp the greenhouse gas emissions, as a basis for greenhouse gas reduction, committed to slowing the trend of global warming, and fulfilling the responsibility of maintaining the earth's ecology .

The company conducts voluntary inspections of greenhouse gases every year, and the results of the inspections cooperate with the stock exchange MOPs reporting operations and provide interested parties for reference.

(f) Located in an important geographical location in the center Taiwan is located in the shipping hub of the South Pacific, with
developed shipping and many international-class shipping companies. Our company is the largest shipbuilding and repairing factory in Taiwan, and it is convenient for domestic and foreign shipping companies to repair ships.
E. Advantages and disadvantages of development prospects and countermeasures
(a) Advantages
- i. Ensure the competitiveness of the company, dynamically organize adjustments, and develop various refinement and reform plans to improve efficiency and reduce costs, strictly control indirect costs and the main schedule of construction. Under the highest guiding principle of zero occupational accidents, the business plan goals

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are achieved on time, quality, and budget.

ii. Focus on customer relationship management, and cooperate with IMO to develop energy-saving, environmental protection, and safety standards and regulations, and grasp the development trend of new ship technology to meet ship owners and customers with large-scale, green and intelligent high-value-added ships.
iii. With independent design capabilities, providing customers with customized comprehensive solutions, design, quality, cost, delivery, and service improvements at all levels, the product is positioned as a professional container shipyard, contracting niche ships, taking into account profitability and market competitiveness.
(b) Disadvantages and countermeasures
i. The entry barrier for container ships is low, and mainland China’s shipyards have rapidly increased their capacity and energy to build container ships, resulting in market price competition and low operating profit and gross profit.
- Countermeasures: Strengthen customer-oriented design, create customer value, cultivate professional R&D talents, research and develop ship types that meet the needs of ship owners, ensure market competitive advantages and competitiveness, and conduct reviews through business development conferences and production and sales meetings, and conduct company operational strategy transformation to reduce operational risks and create profit for the company.
ii. Shipbuilding is affected by the global economic climate, with excessive concentration of products and high operational risks. Countermeasures: Transform and adjust the operating strategy, positioning 1) Merchant ship building and repairing, 2) Naval ship building and repairing, 3) diversified operation of offshore wind power and marine engineering, reducing operational risks and strengthening the company’s market competitiveness.
iii. Rising prices of raw materials, outsourcing of key equipment, and imperfect supply chain systems have resulted in the inability to effectively reduce production costs and make them uncompetitive. Countermeasures: The company counsels’ suppliers to improve production and process technology, strengthen production efficiency, and enhance competitiveness. Set up "stable quality", "shorten delivery time", and "reduce costs" as the supplier management strategy to ensure the quality and delivery of suppliers' materials and reduce procurement costs. In addition, the company will continue to promote the program of increasing income and reducing expenditure, encourage colleagues to propose improvements, and reduce unnecessary administrative expenses and management and marketing expenses.
iv The gap of basic technical manpower, the inheritance of engineering technology management needs to be strengthened, and the cost of outsourcing salary is high.
- Countermeasures: Promote industry-university cooperation and
- diversified channels of entry, introduce project management

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technology and information management, replace outsourcing with labor, reduce outsourcing costs, invest and update production equipment automation and information, improve efficiency and production volume, reduce unit labor costs and maintenance costs.

5.2.2 Important use and production process of main products

A. Important use of main products

~~Main product~~	~~Main product~~	~~Main product~~	~~Important use~~	~~Important use~~
~~Bulk Carrier~~			~~Transportation of grain, mine, and coal~~
~~Container Vessel~~			~~Transportation of containers~~
~~Oil tanker~~			~~Transportation of Crude Oil and Petroleum Products~~
~~Special ship~~			~~Semi-submersible heavy lift ship, cement, cold storage,~~ floating dock, offshore operation and maintenance, etc.
~~Official Vessels~~			~~Coast Guard patrol operations, logistics ships, and mission~~ ships of the Customs Department's public agencies
~~Navy ship~~			~~Mission ships of naval operations and logistics ships~~
~~Offshore~~ ~~wind~~ ~~power~~ underwater foundation and steel structure, etc.			~~Basic components for wind power generation~~
B. 2.3
	Main raw materials/equipment	Supplier		Supply status
	Main engine	HYUNDAI`、`MITSUI`、`HITACHI`、` STX`、`HSD`、`MAN`、`MTU`、` WARTSILA		Good
	Generator	YANMAR`、`STX`、`DAIHATSU`、` HYUNDAI `、` WARTSILA `、` CUMMINS`、`CATERPILLAR		Good
	Steel plate	CSC, POSCO		Good. Long-term supplier

B. Production process

Signing → Design → Lofting → Cutting → Bending → Initial Combination → Large Combination →Launching → Painting and Finishing → Delivery → Post-sale Service

5.2.3 Supply status of main raw materials/equipment

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5.2.4 Information on major suppliers and sales customers in the last two years

A. Information of major suppliers in the last two years

										Unit`：`NT$ thousands	Unit`：`NT$ thousands	Unit`：`NT$ thousands
		~~2019~~				~~2020~~			~~As~~	~~of March 31, 2021 (Note2)~~
Item	Company Name	Amount	~~Percenta~~ ge of total annual net purchas es (%)	~~Relation~~ with Issuer	Company Name	Amount	~~Percentag~~ e of total annual net purchases (%)	~~Relation~~ with Issuer	Company Name	Amount	~~Percentage~~ of total annual net purchases (%)	~~Relation~~ with Issuer
1	China Steel	1,767,880	23.49	Institutional Director	Others	10,248,074	100.00		MTU ASIA PTE. LTD.	399,018	23.61	-
2	Others	5,759,466	76.51	-					China Steel	174,186	10.31	Institutional director
3									Others	1,116,696	66.08	-
	Net purchases	7,527,346	100.00		Net purchases	10,248,074	100.00		Net purchases	1,689,900	100.00

Note1: A list of any suppliers and clients accounting for 10 percent or more of the company's total procurement amount in either of the 2 most recent fiscal years, the amounts bought from each, the percentage of total procurement accounted for by each, and an explanation of the reason for increases or decreases in the above figures. Where the company is prohibited by contract from revealing the name of a client, or where a trading counterpart is an individual person who is not a related party, it may use a code in place of the actual name.

Note2: The above amounts have been reviewed by an accountant.

B. Information of major sales customers in the last two years

Unit ： NT$ thousands

		2019	2019	2019	2020	2020	2020	2020	As of March 31, 2021 (Note2)	As of March 31, 2021 (Note2)	As of March 31, 2021 (Note2)	As of March 31, 2021 (Note2)
Item	Company Name	Amount	~~Percent~~ age of total annual net sales(% )	~~Relatio~~ n with Issuer	Company Name	Amount	~~Percentag~~ e of total annual net sales(%)	~~Relation~~ with Issuer	Company Name	Amount	Percentage of total annual net sales(%)	~~Relation~~ with Issuer
~~1~~	~~NSDC of~~ Ministry of National Defense, ROC	~~5,264,221~~	~~31.83~~	~~-~~	~~NSDC of~~ Ministry of National Defense, ROC	~~11,123,825~~	~~43.97~~	~~-~~	~~NSDC of~~ Ministry of National Defense, ROC	~~1,370,310~~	~~30.26~~	~~-~~
~~2~~	China Steel Express Corporation	~~3,578,917~~	~~21.64~~	~~Subsidi~~ ary of Institut ional Directo r	~~YangMing~~ Marine Transport Corp.	~~7,473,464~~	~~29.54~~	~~-~~	~~Coast Guard~~ of Executive Yuan	~~930,075~~	~~20.54~~	~~-~~
~~3~~	~~YangMing~~ Marine Transport Corp.	~~2,960,119~~	~~17.90~~	~~-~~	~~Coast Guard of~~ Executive Yuan	~~4,289,281~~	~~16.96~~	~~-~~	~~YangMing~~ Marine Transport Corp.	~~717,512~~	~~15.85~~	~~-~~
~~4~~	~~Others~~	~~4,737,642~~	~~28.63~~	~~-~~	~~Others~~	~~2,410,059~~	~~9.53~~	~~-~~	~~CSBC-~~ DEME Wind Engineering Co., Ltd.	~~650,087~~	~~14.36~~	~~A joint~~ venture where the company is a joint venture controller
~~5~~				~~-~~				~~-~~	~~Others~~	~~860,171~~	~~18.99~~	~~-~~
	~~Net Sales~~	~~16,540,899~~	~~100.00~~		~~Net Sales~~	~~25,296,629~~	~~100.00~~		~~Net Sales~~	~~4,528,155~~	~~100.00~~

Note1: A list of any suppliers and clients accounting for 10 percent or more of the company's total sales amount in either of the 2 most recent fiscal years, the amounts sold to each, the percentage of total sales accounted for by each, and an explanation of the reason for increases or decreases in the above figures. Where the company is prohibited by contract from revealing the name of a client, or where a trading counterpart is an individual person who is not a related party, it may use a code in place of the actual name.

Note2: The above amounts have been reviewed by an accountant.

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5.2.5 Production in the Last Two Years

Unit ： NT$ thousands

Product Name	Unit	2019	2019	2020	2020	Comparison(%)	Comparison(%)
		Quantity	Amount	Quantity	Amount	Quantity	Amount
Construction of ships and vessels	Equival ent ton	180,035	10,058,114	143,867	9,412,283	-20.09	-6.42
Construction of naval ships	Draina geton	3,782	6,625,159	11,764	14,803,648	211.05	123.45
Ship Repair Service	NT$ thousan ds		680,632		941,424		38.32
Mechanical products	metric ton	1,572	73,275	14,832	1,182,701	843.51	1514.06
Other business projects	NT$ thousan ds		294,100		366,047		24.46
Total			17,731,280		26,706,103		50.62

5.2.6 Sales in the Last Two Years

Unit ： NT$ thousands

Product Name	Unit	2019	2019	2020	2020	Comparison(%)	Comparison(%)
		Quantity	Amount	Quantity	Amount	Quantity	Amount
Construction of ships and vessels	Equival ent ton	180,035	8,561,544	143,867	7,374,458	-20.09	-13.87
Construction of naval ships	Drainag e ton	3,782	6,741,681	11,764	15,327,666	211.05	127.36
Ship Repair Service	NT$ thousan ds		829,595		1,142,126		37.67
Mechanical products	metric ton	1,572	98,155	14,832	993,002	843.51	911.67
Other business projects	NT$ thousan ds		309,924		459,377		48.22
Total			16,540,899		25,296,629		52.93

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5.3 The number of employees, average length of service, average age and educational background in the last two years and up to the publication date of the annual report:

	Year	2019	2020	As of March 31, 2021
Number of Employees	Managementpersonnel	159	163	179
	Technicalpersonnel	648	706	736
	Engineering personnel	2,085	2036	2023
	Servicepersonnel	4	4	4
	Contractpersonnel	0	0	0
	Special project contract personnel	0	0	0
	Total	2,896	2,909	2,942
Average Age		47.1	47.1	45.4
Average Years of Service		7.8Note	8.6Note	8.4Note
Education	Ph.D.	8	8	9
	Masters	322	351	366
	Bachelor’s Degree	851	944	985
	Senior High School	460	420	406
	Below Senior High School	1,255	1186	1176
	Total	2,896	2,909	2,942

Note: The working years of employees before privatization have been settled, and the working years of employees are re-calculated after privatization. The service years in this column are the average years of service of employees after privatization.

5.4 Expenditure on Environmental Protection

5.4.1 According to laws and regulations, those who should apply for a pollution setup permit or a pollution discharge permit, or should pay pollution prevention (control) fees, or should set up a special unit for environmental protection, explain their application, payment or establishment:

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Application, payment or establishment situation:

Item	Set up requirements	Permitted license name and content
1.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M01 Stationary pollution source operation permit for metal blasting (sandblasting) processing procedures.
2.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M02 Stationary pollution source operation permit for metal blasting (sandblasting) processing procedures.
3.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M03 Stationary pollution source operation permit for hull coating program.
4.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M06 Stationary pollution source operation permit for metal blasting (sandblasting) processing procedures.
5.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M07 Stationary pollution source operation permit for Stationary pollution source operation permit for metal surface cleaning procedures
6.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M08 Stationary pollution source operation permit for metal blasting (sandblasting) processing procedures.
7.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M09 Stationary pollution source operation permit for metal surface coating procedure
8.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M10 Stationary pollution source operation permit for metal blasting (sandblasting) processing procedures.
9.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M11 Stationary pollution source operation permit for metal surface coating procedure
10.	According to the regulations "Water pollution prevention and control measures plan and permit application review method"	Permit for the discharge of waste (sewage) water from the Kaohsiung Plant to surface water.
11.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M01*Stationary pollution source operation permit for “Metal processing procedures”
12.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M02~~*~~ Stationary pollution source operation permit for “Other metal products (steel structure ship section) processing procedures”
13.	According to the regulations “Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources”	M03* Stationary pollution source operation permit for “Metal products (steel hull) processing procedures”
14.	According to the regulations "Announcement that the first to eighth batch of public and private places should apply, set up, change and operate permits to stationary pollution sources"	M04* Stationary pollution source operation permit for “Metal products (steel pipe) processing procedures”
15.	According to the regulations "Water pollution prevention and control measures plan and permit application review method"	Permit for the discharge of waste (sewage) water from the Keelung Plant to surface water.

Note: * stands for Keelung Yard

VOCs air pollution prevention and control fee: 2In 2020, a total of more than NT$30.31 million was paid for air pollution prevention and control fees (the Kaohsiung plant paid about NT$29.74 million, and the Keelung plant paid about NT$570,000).

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Dedicated personnel and professional and technical personnel:
（ 1 ） Wastewater Treatment Plant: According to environmental protection laws and regulations, there are dedicated personnel responsible for wastewater treatment.
（ 2 ） Scrapyard: Set up waste removal (processing) technician positions in accordance with environmental protection laws and regulations.
5.4.2 Investment in the main equipment for preventing (controlling) environmental pollution and its use and possible benefits:
Stationary pollution sources:

Pollution source	Name of device	Quantity	Acquired date	Investment (NT$)	Depreciation deduction	Uses and expected benefits
M01	Baghouse	20	2000/08	19.20 million	Depreciation period 10 years	Control objects: particulate matter
	Cyclone separator	8	2000/08	1.60 million	Depreciation period 10 years	~~Control objects:~~ particulate matter
M02	Baghouse	6	2000/08	6.18 million	Depreciation period 10 years	~~Control objects:~~ particulate matter
	Cyclone separator	1	2000/08	0.50 million	Depreciation period 10 years	~~Control objects:~~ particulate matter
M06	Cyclone separator	4	2016/9	8.60 million	Depreciation period 10 years	~~Control objects:~~ particulate matter
	Baghouse	10	~~6 sets:~~ 2020/10 4 sets: 2016/9	1.60 million	Depreciation period 10 years	~~Control objects:~~ particulate matter
M07	Packed scrubber	2	2020/01	7.95 million	Depreciation period 15 years	Control objects: HCl
M08	Baghouse	6	2006/04	8.60 million	Depreciation period 15 years	Control objects: particulate matter
	Cyclone separator	4	2006/04	1.20 million	Depreciation period 15 years	Control objects: particulate matter
	Wet-type dust collector	4	2006/04	1.20 million	Depreciation period 15 years	Control objects: particulate matter
M10	Baghouse	1	2010/07	11.00 million	Depreciation period 20 years	Control objects: particulate matter
M11	Regeneration type burner-RTO	1	2010/07	26.00 million	Depreciation period 20 years	Control objects: VOCs
M01 `＊`	Baghouse	1	1996/06	3.50 million	Depreciation period 10 years	Control objects: particulate matter
	Burner	1	1996/06	3.00 million	Depreciation period 10 years	Control objects: VOCs
M02 `＊`	Baghouse	4	1999/11	14.00 million	Depreciation period 10 years	Control objects: particulate matter
	Room temperature catalyst adsorption	2	1999/11	7.00 million	Depreciation period 10 years	Control objects: VOCs
	~~Continuous suction~~ and desorption continuous condensing treatment equipment	2	2019/10	45.00 million	Depreciation period 10 years	Control objects: VOCs
M03 `＊`	Dust screen and Water spray facility	1	1991/06	3.44 million	Depreciation period 20 years	Control objects: particulate matter
	Dust screen and Water spray facility	1	1992/06	0.85 million	Depreciation period 20 years	Control objects: particulate matter
M04 `＊`	Wet absorber	2	1995/06	0.40 million	Depreciation period 10 years	Control objects: particulate matter
	Pumpless wet absorption tower	2	1993/02	0.70 million	Depreciation period 10 years	Control objects: VOCs

Note: * stands for Keelung Yard

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2. Wastewater Treatment Plant:

Pollution name	Quantity	Acquired date	Investment (NT$)	Depreciation deduction	Uses and expected benefits
Kaohsiung Domestic Sewage Tertiary treatment plant	1	December 1996	114.55 million	Depreciation period 15 years	Domestic sewage treatment capacity 1700 m3/day
Kaohsiung Industrial Wastewater Chemical coagulation treatmentplant	1	December 2003	8 million	Depreciation period 15 years	Acid cleaning wastewater treatment capacity 210 m3/day
Keelung Domestic Sewage Tertiary treatment plant	1	July 1995	38.49 million	Depreciation period 20 years	Domestic sewage treatment capacity150 m3/day
Keelung Industrial Wastewater Chemical coagulation treatmentplant	1	July 1991	6.96 million	Depreciation period 15 years	Acid cleaning wastewater treatment capacity 12 m3/day

5.4.3 As of the publication date of the public brochure in the last two years, the ompany's process of improving environmental pollution, if there is a pollution dispute, should explain its handling process:
The company effectively implements management operations through waste classification and on-site inspections. At the same time, it analyzes the company-wide waste output, controls various waste quality and abnormal situations, and is committed to reducing waste generation.
Continuously list (1) energy saving and carbon reduction (2) equipment improvement (3) pollution prevention and control (treatment) as the 2020 environmental management system target. The Department of Environmental Protection and Public Utilities assists all units in planning and supervising their implementation to improve the company's environmental performance and fulfill corporate social responsibility.
Carried out the company's greenhouse gas data inventory in 2020.

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5.4.4 Any losses suffered by the company in the most recent fiscal year and up to the annual report publication date due to environmental pollution incidents (including any compensation paid) and disclosing measures (including improvement measures) being or to be taken and an estimated expenses (including the amount of possible loss, disposition and compensation) that could be incurred currently and in the future. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

Penalty unit	Penalty date	Violated law	Sanction unit	Penalty situation	Improved situation	Financial impact onCSBC
PAN ASIA CORPORATION	Feb. 04 2020	Article 18 of Water Pollution Control Act	Environmental Protection Bureau Kaohsiung City Government	1. Fine NTD 32,500 2. Environmental retraining for 2 hours	1. Present a plan for the reduction of pollutants from runoff wastewater and proceed 2.Environmental retraining for staff	No significant impact
FORTUNE6446 CONSTRUCTION CO., LTD	Feb. 04 2020	Article 18 of Water Pollution Control Act	Environmental Protection Bureau Kaohsiung City Government	1. Fine NTD 45,000 2. Environmental retraining for 2 hours	1. Present a plan for the reduction of pollutants from runoff wastewater and proceed 2.Environmental retraining for staff	No significant impact
Ding Hao Construction	Feb. 14 2020	Article 18 of Water Pollution Control Act	Environmental Protection Bureau Kaohsiung City Government	1. Fine NTD 30,000 2. Environmental retraining for 2 hours	Environmental retraining for staff	No significant impact
Sinotech Construction Corporation, LTD.	Mar. 27 2020	Article 18 of Water Pollution Control Act	Environmental Protection Bureau Kaohsiung City Government	1. Fine NTD 40,000 2. Environmental retraining for 2 hours	Environmental retraining for staff	No significant impact
CSBC	Jun. 01 2020	Article 36 of Waste Disposal Act	Environmental Protection Bureau Kaohsiung City Government	1. Fine NTD 6,000 2. Environmental retraining for 2 hours	1. Implement measures such as breaking the bag, turning, stirring, and sprinkling water to avoid the accumulation of biogas 2.Environmental retrainingfor staff	No significant impact

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5.4.5 The current pollution situation and the impact of its improvement on the company's earnings, competitive position and capital expenditures and the major environmental protection capital expenditures expected in the next two years:
■The company has formulated the "Extreme Climate Response Standard Operating Standard" to respond to the impact of extreme weather caused by climate change. In order to improve the emission of VOCs pollutants in the coating plant in 2019, NT$18 million has been invested in the closed negative pressure gas collection test project for spray booths P1~P2; NT$146.4 million has been invested in 2020-2021 for the installation of the VOCs pollutants control equipment for spray booths P1~P2 and the airtight enclosure of the spray booths P3~P6, which are expected to be completed by the end of 2021.
■The installation of the VOCs pollutants control equipment for spray booths P3~P6 is expected to be completed by the end of 2023. Spray booths P1~P6 will be expected to reduce VOCs pollutants by about 270 tons each year.

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5.5 Labor Relations
Set all employee benefit measures, opportunities for professional development and training, and the pension system, and the status of their implementation. Also describe any negotiations/agreements between employer and employees and any measures to safeguard employee interests.:
5.5.1 Employee benefit measures and the status of the implementation
- The benefit measures provided by the company include labor
- insurance, health insurance, employee mutual aid fund insurance, and 5 million group accident insurance for employees, safety insurance for overseas business trips, employee health checks, and subsidies for cultural and recreational, club, and sports activities.
5.5.2 Professional development and training of employee
- A. csbc academy is set up under the Department of Human Resources and Administration of the company, which is responsible for planning talent cultivation, training systems, rules and regulations, training plans and the compilation and implementation of budgets. csbc academy has various technical training internship factories, equipment and lecturers. In addition to self-organized training, CSBC also handles contractor training and provides other corporate training services. CSBC provides the company's diversified training courses and good on-the-job education to cultivate talents with professional capabilities and challenges. The training budget in 2020 is NT$79,122 thousand, and the actual expenditure is NT$66,216. The list of trainings is as follows:

Item	Times	Times	Duration (hr)	Duration (hr)
	Male	Female	Male	Female
Senior supervisor training	84	3	509	84
Mid-level supervisor training	163	19	1,275	163
Engineering management personnel training	904	205	5,575	904
Technical personnel training	4,225	21	45,489	4,225
Total	5,376	248	52,848	1,468
Technical student training	83	0	24,080	0
Educational student training	100	2	25,937	52
Contractor training	5,215	685	17,179	2,169

B. Technical staff skill improvement: In order to meet the needs of new businesses such as marine engineering, surface craft and underwater craft, the company actively cultivates outstanding technical talents, assists current employees and contractors of the company to obtain qualified welder licenses that meet the needs of new businesses, and ensures the skill level of construction personnel and product quality.
C. Cultivate management functions to accelerate inheritance efficiency: Handle various functional training courses for managers, including foreman reserve training, mid-level supervisor reserve training, MTP management ability training, project management training, etc. Improve the knowledge and abilities required by different management levels to help their colleagues to improve their work performance, build a high-quality team, inherit enterprise-related knowledge and technology, and condense the consensus and corporate culture of all employees.

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D. Professional development of employee and talent training: Encourage employees to learn, develop their potential and improve their quality; Establish an organizational learning and sharing culture, attach importance to talent cultivation, and achieve sustainable development of the company. In addition, in order to encourage employees to selfeducate, there are key points for long-term and short-term remedial work in spare time to encourage employees to use spare time to study and improve the quality of manpower.
5.5.3 Retirement system and implementation status The company implements the provisions of the Labor Standards Act,
and regularly allocates labor retirement reserves, which are deposited in a special account in the Department of Trusts, Bank of Taiwan. At the end of each year, actuaries are appointed to determine the adequate pension liabilities. The new labor retirement system has been implemented since July 1, 2005. According to the Labor Pension Regulations, for those who choose the new system, the company shall allocate no less than 6% of the labor’s monthly salary to the labor retirement pension account and handle retirement-related matters in accordance with the provisions of the pension regulations.
5.5.4 Coordination between labor and management The company takes the Collective Agreement Act and the Labor
Standards Act as the labor-management compliance guidelines and regularly holds labor-management meetings. Up to now, the labormanagement relationship is harmonious.
5.5.5 Various employee rights protection measures In order to protect the rights and interests of employees, the company
has a Collective Agreement Act with the corporate union, and in accordance with the Collective Agreement Act and the Labor Standards Act, it has formulated work rules and various management methods. The content clearly specifies the rights and obligations of employees and welfare items, and regularly reviews various methods and benefits to protect the rights of employees.
5.5.6 List any losses suffered by the company in the most recent 2 fiscal years and up to the annual report publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided:

Disposition date	July 27, 2020
Disposition reference number	Kaohsiung City labor-condition-No. 10937418500 fine notification
Article of law violated	Article 38 of Labor Standards Act
Substance of the legal violation	Unpaid special leaves unpaid wages
Content of the disposition	Fine of NT$20,000
Estimate of possible expenses that could be incurred currently and, in the future, and measures being or to be taken	In accordance with relevant laws and regulations, pay unretired wages for special leaves

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5.6 Important Contracts

Contract Type	Counterparty	Period	Major Contents	Restrictions
Merchant shipbuilding contract	Yang Ming Marine Transport Corporation	2018.08.15~2021.05.15	2,800TEU Class Container Vessel (N6122)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2021.02.15	2,800TEU Class Container Vessel (N6121)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2021.01.15	2,800TEU Class Container Vessel (N6120)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.12.15	2,800TEU Class Container Vessel (N6119)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.11.15	2,800TEU Class Container Vessel (N6118)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.09.15	2,800TEU Class Container Vessel (N6117)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.08.15	2,800TEU Class Container Vessel (N6116)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.07.15	2,800TEU Class Container Vessel (N6115)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.06.15	2,800TEU Class Container Vessel (N6114)	None
	Yang Ming Marine Transport Corporation	2018.08.15~2020.05.15	2,800TEU Class Container Vessel (N6113)	None
	China Steel Express Corporation	2018.01.16~2020.01.31	208,000 DWT Bulk Carrier(N6108)	None
	China Steel Express Corporation	2018.01.16~2020.03.31	208,000 DWT Bulk Carrier(N6109)	None
	CSBC-DEME Wind Engineering Co. Ltd.	2020.06.30~2022.10.31	4000 Tonnage SWLwind turbine installation vessel (N6175)	None
Official vessels and naval construction contract	Ministry of National Defense, ROC	2016.12.22~2021.04.22	Indigenous Defense Sub- marine Planning and Design(N6098)	None
	Ministry of National Defense, ROC	2018.04.14~2022.04.13	New Type Amphibious Landing Platform Dock (N6103)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2020.04.30	100 Tonnage Class Patrol and Rescue Boat(N2139)	None

131

Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2020.07.31	100 Tonnage Class Patrol And Rescue Boat(N2140)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2020.10.31	100 Tonnage Class Patrol And Rescue Boat(N2141)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2021.01.31	100 Tonnage Class Patrol And Rescue Boat(N2142)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2021.04.30	100 Tonnage Class Patrol And Rescue Boat(N2143)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2021.07.31	100 Tonnage Class Patrol And Rescue Boat(N2144)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2021.10.31	100 Tonnage Class Patrol And Rescue Boat(N2145)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2022.01.31	100 Tonnage Class Patrol And Rescue Boat(N2146)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2022.04.30	100 Tonnage Class Patrol And Rescue Boat(N2147)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2022.07.31	100 Tonnage Class Patrol And Rescue Boat(N2148)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2022.10.31	100 Tonnage Class Patrol And Rescue Boat(N2149)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2023.01.31	100 Tonnage Class Patrol And Rescue Boat(N2150)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2023.04.30	100 Tonnage Class Patrol And Rescue Boat(N2151)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2023.07.31	100 Tonnage Class Patrol And Rescue Boat(N2152)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.14~2023.10.31	100 Tonnage Class Patrol And Rescue Boat(N2153)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.18~2021.03.09	4,000 Tonnage Class Frigate (N6154)	None
Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.18~2021.12.02	4,000 Tonnage Class Frigate (N6155)	None

132

	Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.18~2024.10.31	4,000 Tonnage Class Frigate (N6156)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2018.07.18~2026.09.30	4,000 Tonnage Class Frigate (N6157)	None
	Ministry of National Defense, ROC	2019.05.03~2025.11.02	Indigenous Defense Sub- marine prototype vessel(N6168)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2021.12.31	1,000 Tonnage Class Frigate (N2169)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2023.10.31	1,000 Tonnage Class Frigate (N2170)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2024.10.31	1,000 Tonnage Class Frigate (N2171)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2025.10.31	1,000 Tonnage Class Frigate (N2172)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2026.10.31	1,000 Tonnage Class Frigate (N2173)	None
	Branch, Coast Guard Administration, Ocean Affairs Council	2019.05.03~2027.10.31	1,000 Tonnage Class Frigate (N2174)	None
	Customs Administration, MOF	2020.05.25~2022.06.26	100Tonnage revenue cutter (N6177)	None
	Customs Administration, MOF	2020.05.25~2022.11.26	100Tonnage revenue cutter (N6178)	None
	Customs Administration, MOF	2020.05.25~2023.02.26	100Tonnage revenue cutter (N6179)	None
	Customs Administration, MOF	2020.05.25~2023.04.26	100Tonnage revenue cutter (N6180)	None
	Ministry of National Defense, ROC	2020.12.05~2023.08.04	New salvage and rescue vessel (N6181)	None
	National Kaohsiung University of Science and Technology	2021.01.26~2023.11.30	Training ship (N6182)	None
Engineering Contract	Orsted Taiwan Limited	2018.10.24~2021.03.01	Contract Agreement for the Manufacture and Supply of Foundations	None
	Sing Da Marine Structure	2020.08.07~2020.01.20	Ørsted Changhua Case─TP (Transition Piece) x 2	None
	Sing Da Marine Structure	2020.04.15~2021.05.31	Ørsted Changhua Case─TP (Transition Piece) x 20	None

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Long-term lease	Taiwan International Port Corporation, Ltd. KaohsiungBranch	2006.01.01~2025.12.31	Land leasing	None
	Taiwan International Port Corporation, Ltd. KaohsiungBranch	2017.01.01~2021.12.31	90/91 wharf leasing	None
	National Property Administration	2018.11.01~2027.12.31	Land lease×6/Keelung	None
	Taiwan International Port Corporation, Ltd. KeelungBranch	2008.01.01~2027.12.31	Land lease×5; building lease×23	None
	Taiwan International Port Corporation, Ltd. KaohsiungBranch	2020.01.01~2024.12.31	Part of the land in Area C of the rear line of Pier 75 of the Kaohsiung Plant /facilities rent and management fees	None
Long-term Loan	Taishin International Bank	2020.06.21~2022.06.20	FRCP NT$ 500 million.	None
	International Bills Finance Corp	2020.06.22~2022.06.21	FRCP NT$ 500 million.	(Note 1)
	China Bills Finance Corporation	2020.09.26~2022.09.26	FRCP NT$ 500 million.	(Note 2)
	Mega Bills Finance Co Ltd	2020.09.26~2022.09.26	FRCP NT$ 500 million.	(Note 3)
	China Bills Finance Corporation	2020.10.26~2022.10.26	FRCP NT$ 500 million.	(Note 4)
	Taishin International Bank	2020.12.20~2022.12.20	FRCP NT$ 500 million.	None
	Mega Bills Finance Co Ltd	2020.12.15~2022.12.15	FRCP NT$ 500 million.	(Note 5)
	Mega Bills Finance Co Ltd	2020.12.15~2022.12.15	FRCP NT$ 300 million.	(Note 6)

Note 1: The utilization rate in the first year must be more than 70%.

Note 2: The utilization rate in the first year must be more than 70%.

Note 3: Maintain a balance of at least 350 million yuan in the first year.

Note 4: The utilization rate in the first year must be more than 70%.

Note 5: Maintain a balance of at least 140 million yuan in the first year. Note 6: Maintain a balance of at least 210 million yuan in the first year.

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VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed balance sheet and comprehensive income statement

A. Condensed Consolidated Balance Sheet – Based on IFRS

Unit: NT$ thousands

Year Item	Year Item	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	As of March 31, 2021 (Note3)
		2016	2017	2018	2019	2020
Current Asset		15,557,809	10,088,688	10,416,166	18,451,704	19,532,384	28,675,561
Investments accounted for using equity method		166,616	1,645	10,992	29,408	1,059,433	1,071,441
Property, Plant and Equipment (Note2)		10,709,596	10,563,764	10,581,323	10,955,512	11,331,068	12,513,283
Intangible assets		28,847	23,010	14,611	10,121	21,476	21,999
Other	assets	1,208,074	1,606,286	1,803,339	5,629,442	5,303,205	5,243,911
Total	assets	27,670,942	22,283,393	22,826,431	35,076,187	37,247,566	47,526,195
Current liabilities	Before distribution	13,127,490	7,982,566	8,783,614	17,205,708	20,595,852	23,067,968
	After distribution	13,127,490	7,982,566	8,783,614	17,205,708	Note4	Note4
Non-current liabilities		2,313,794	7,921,743	8,057,263	11,413,221	11,643,633	11,412,474
Total liabilities	Before distribution	15,441,284	15,904,309	16,840,877	28,618,929	32,239,485	34,480,442
	After distribution	15,441,284	15,904,309	16,840,877	28,618,929	Note4	Note4
Equity attributable to shareholders of the parent		12,182,663	6,335,415	5,941,758	6,457,258	5,008,081	13,045,753
Capital stock		7,435,652	7,435,652	3,729,918	4,729,918	4,730,555	9,230,555
Capital	surplus	1,965	1,965	2,005,515	1,338,798	97,071	3,600,889
Retained earnings	Before distribution	4,745,046	-1,102,202	206,325	388,542	180,455	214,309
	After distribution	4,745,046	-1,102,202	206,325	388,542	Note4	Note4
Other equity interest		`－`	`－`	`－`	`－`	`－`	`－`
Non-controlling interest		46,995	43,669	43,796	`－`	`－`	`－`
Total equity	Before distribution	12,229,658	6,379,084	5,985,554	6,457,258	5,008,081	13,045,753
	After distribution	12,229,658	6,379,084	5,985,554	6,457,258	Note4	Note4

Note1: The financial statements listed above have all been verified by CPA.

Note2: The company conducted a land revaluation in December 2011, and the revaluation added up to NT$622,616,000.

Note3: The financial statements listed above have been reviewed by CPA.

Note4: As of the printing date of the annual report, the 2020 loss allocation proposal has not yet been resolved by the shareholders ’ meeting.

B. Condensed Non-consolidated Balance Sheet– Based on IFRS

Unit: NT$ thousands

Year Item	Year Item	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`	Financial Summary for The Last Five Years`（`Note1`）`
		2016	2017	2018	2019	2020
Current Asset		15,385,437	9,944,905	10,230,698	18,166,792	19,160,498
Investments accounted for using equity method		276,272	103,540	113,184	199,025	1,233,871
Property, Plant and Equipment (Note2)		10,707,945	10,562,578	10,578,045	10,931,031	11,306,002
Intangible assets		28,761	22,968	14,583	10,040	21,345
Other assets		1,203,651	1,601,626	1,800,294	5,625,005	5,297,645
Total assets		27,602,066	22,235,617	22,736,804	34,931,893	37,019,361
Current liabilities	Before distribu tion	13,116,484	7,982,400	8,742,822	17,071,816	20,389,230
	After distribu tion	13,116,484	7,982,400	8,742,822	17,071,816	Note3
Non-current liabilities		2,302,919	7,917,802	8,052,224	11,402,819	11,622,050
Total liabilities	Before distribu tion	15,419,403	15,900,202	16,795,046	28,474,635	32,011,280
	After distribu tion	15,419,403	15,900,202	16,795,046	28,474,635	Note3
Capital stock		7,435,652	7,435,652	3,729,918	4,729,918	4,730,555
Capital surplus		1,965	1,965	2,005,515	1,338,798	97,071
Retained earnings	Before distribu tion	4,745,046	-1,102,202	206,325	388,542	180,455
	After distribu tion	4,745,046	-1,102,202	206,325	388,542	Note3
Other equity interest		`－`	`－`	`－`	`－`	`－`
T r e a s u r y s t o c k		`－`	`－`	`－`	`－`	`－`
Total equity	Before distribu tion	12,182,663	6,335,415	5,941,758	6,457,258	5,008,081
	After distribu tion	12,182,663	6,335,415	5,941,758	6,457,258	Note3

Note1: The financial statements listed above have all been verified by CPA.

Note2: The company conducted a land revaluation in December 2011, and the revaluation added up to NT$622,616,000.

Note3: As of the printing date of the annual report, the loss allocation proposal of 2020 has not yet been resolved by the shareholders’ meeting.

C. Condensed Consolidated Statement of Comprehensive Income-Based on IFRS

Unit: NT$ thousands

Year Item	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	As of March 31, 2021 (Note2)
	2016	2017	2018	2019	2020
Operatingrevenue	15,747,699	16,404,344	13,012,326	16,540,899	25,296,629	4,528,155
Gross profit(loss)	-1,060,228	-5,721,888	-2,593,864	-1,190,381	-1,409,474	119,650
Income(loss) from operations	-1,565,030	-6,228,965	-3,417,597	-1,706,140	-1,907,395	-26,537
Non-operating income and expenses	29,628	-124,077	78,656	-102,770	308,645	60,236
Income(loss) before tax	-1,535,402	-6,353,042	-3,338,941	-1,808,910	-1,598,750	33,699
Net profit (loss) of Continuing business unit	-1,286,809	-5,883,199	-3,100,084	-1,815,518	-1,600,087	33,854
Loss of closed business units	`－`	`－`	`－`	`－`	`－`	`－`
Net Income (loss)	-1,286,809	-5,883,199	-3,100,084	-1,815,518	-1,600,087	33,854
Other comprehensive income (income after tax)	28,208	32,870	103,004	72,722	53,202	`－`
Total comprehensive income(loss)	-1,258,601	-5,850,329	-2,997,080	-1,742,796	-1,546,885	33,854
Net profit (loss) attributable to the owners of the parent company	-1,287,100	-5,880,118	-3,100,211	-1,818,470	-1,600,087	33,854
Net profit (loss) attributable to non-controllinginterests	291	-3,081	127	2,952	`－`	`－`
Comprehensive income, attributable to owners of parent	-1,258,892	-5,847,248	-2,997,207	-1,745,748	-1,600,087	33,854
Comprehensive income, attributable to non-controlling interests	291	-3,081	127	2,952	`－`	`－`
Earnings (loss) per share (NT$) (Note3)	-4.11	-18.79	-8.87	-3.91	-3.38	0.07

Note1: The financial statements listed above have been verified by CPA.

Note2: The financial statements listed above have been reviewed by CPA.

Note3: The weighted average number of shares outstanding in 2016-2017 has been adjusted retrospectively in accordance with the 2017 mid-term capital reduction (the capital reduction base date is May 10, 2018).

D. Condensed Non-consolidated Statement of Comprehensive Income – Based on IFRS

Unit: NT$ thousands

Year Item	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`	Financial Summary for The Last Five Years `（`Note1`）`
	2016	2017	2018	2019	2020
Operatingrevenue	15,739,331	16,381,651	12,891,628	16,248,932	25,025,522
Grossprofit(loss)	-1,071,215	-5,725,052	-2,607,221	-1,236,791	-1,429,764
Income(loss) from operations	-1,564,067	-6,219,268	-3,416,643	-1,737,658	-1,912,074
Non-operating income and expenses	27,943	-128,797	78,072	-80,814	311,985
Income(loss) before tax	-1,536,124	-6,348,065	-3,338,571	-1,818,472	-1,600,089
Net profit (loss) of Continuing business unit	-1,287,100	-5,880,118	-3,100,211	-1,818,470	-1,600,087
Loss of closed business units	`－`	`－`	`－`	`－`	`－`
Net Income(loss)	-1,287,100	-5,880,118	-3,100,211	-1,818,470	-1,600,087
Other comprehensive income (income after tax)	28,208	32,870	103,004	72,722	53,202
Total comprehensive income(loss)	-1,258,892	-5,847,248	-2,997,207	-1,745,748	-1,546,885
Earnings (loss) per share(NT$)Note2	-4.11	-18.79	-8.87	-3.91	-3.38

Note1: The financial statements listed above have been verified by CPA.

Note2: The weighted average number of shares outstanding in 2016 -2017 has been retroactively adjusted according to the proportion of capital reduction in 2017 (the base date of capital reduction is May 10, 2018).

6.1.2 The name and inspection opinion of the CPA who has been in the past five years

Year	Name of CPA	Audit Opinion
2016	Lin,Tzu-Shu,Liu,Tzu-Meng	Unqualified
2017	Wang,Kuo-Hua,Wu,Chien-Chih	Unqualified
2018	Wang,Kuo-Hua,Wu,Chien-Chih	Unqualified
2019	Tien, Chung-Yu, Wang, Kuo-Hua	Unqualified
2020	Tien,Chung-Yu,Wang,Kuo-Hua	Unqualified

6.2 Five-Year Financial Analysis

6.2.1 Consolidated Financial Analysis – Based on IFRS

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	As of March 31, 2021
		2016	2017	2018	2019	2020
Financial structure `（％）`	Debt Ratio	55.80	71.37	73.78	81.59	86.55	72.55
	Ratio of long-term capital to property, plant and equipment	135.80	135.38	132.71	163.12	146.96	195.46
Solvency `％`	Current ratio	118.51	126.38	118.59	107.24	94.84	124.31
	Quick Ratio	7.99	22.73	13.04	32.31	12.07	43.22
	Interest earned ratio	-22.20	-73.06	-39.81	-11.20	-8.46	1.73
Operating performanc e	Accounts receivable turnover(times)	29.24	15.14	9.89	11.65	16.15	11.43
	Average collection period	12.48	24.11	36.91	31.33	22.60	31.93
	Inventory turnover (times)	4.69	6.23	8.37	10.94	12.53	7.09
	Accounts payable turnover(times)	12.90	15.81	12.31	14.06	17.23	12.32
	Average days in sales	77.83	58.59	43.61	33.36	29.13	51.48
	Property, plant and equipment turnover (times)	1.45	1.54	1.23	1.54	2.27	1.52
	Total assets turnover (times)	0.61	0.66	0.58	0.57	0.70	0.43
Profitabilit y	Return on total assets `（％）`	-4.79	-23.27	-13.45	-5.86	-4.05	0.17
	Return on stockholders’ equity`（％）`	-9.86	-63.23	-50.14	-29.18	-27.91	0.38
	Pre-tax income to paid- in`（％）`	-20.65	-85.44	-89.52	-38.24	-33.80	0.37
	Profit ratio`（％）`	-8.17	-35.86	-23.82	-10.98	-6.33	0.75
	Earnings (loss) per share(NT$)Note4	-4.11	-18.79	-8.87	-3.91	-3.38	0.07
Cash flow	Cash flow ratio`（％）`	Note2	Note2	Note2	2.79	Note2	Note2
	Cash flow adequacy ratio`（％）`	138.25	80.01	89.19	103.09	7.91	8.86
	Cash flow reinvestment ratio`（％）`	-1.27	`－`	`－`	1.38	`－`	-

Degree of leverage	Degree of operating leverage	Note3	Note3	Note3	Note3	Note3	Note3
	Degree of Financial Leverage	0.96	0.99	0.98	0.92	0.92	0.36
Reasons for changes in budget financial ratios in the last two years: (Analysis is exempt if the increase or decrease does not reach 20%) `(1)` The decrease in Quick Ratio was mainly due to the decrease in cash and cash equivalents and the increase in short-term loans. `(2)` The decrease in the negative number of Interest earned ratio is mainly due to the decrease in losses. `(3)` The increase in Accounts receivable turnover was mainly due to the increase in operating revenue of the ship business due to the increase in business volume. `(4)` The reason for the decrease in Average collection period is the same as (3). `(5)` The increase in Accounts payable turnover was mainly due to the increase in operating costs due to the increase in Operating revenue. `(6)` The reason for the increase in fixed asset turnover ratio is the same as (3). `(7)` The reason for the increase in total assets turnover is the same as (3). `(8)` The reason for the decrease of negative return on total assets is the same as (2). `(9)` The decrease in the negative loss ratio was mainly due to the decrease in losses and the increase in operating revenue. `(10)` The decrease in cash flow ratio was mainly due to the outflow of net cash from operating activities this year. `(11)` The decrease in cash flow adequacy ratio was mainly due to the decrease in net cash inflow from operating activities in the last five years. `(12)` The reason for the decrease in Cash flow reinvestment ratio is the same as (10).

Note1: The Company has applied IFRS for the first time since 2013, so there is no data for previous years. Note2: The cash flow of business activities in the current year is the outflow, so it has not been calculated. Note3: The current year is an operating loss, so it has not been calculated. Note4: The weighted average number of shares outstanding in 2016-2017 has been reduced in accordance with the 2017 mid-term capital reduction, and the capital reduction ratio has been adjusted retrospectively. (The base date of capital reduction is May 10, 2018)

6.2.2 Non-consolidated Financial Analysis – Based on IFRS

Item	Year	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years	Financial Analysis for the Last Five Years
		2016	2017	2018	2019	2020
Financial structure`（％）`	Debt Ratio	55.86	71.51	73.87	81.51	86.47
	Ratio of long-term capital to property, plant and equipment	135.28	134.94	132.29	163.39	147.09
Solvency`％`	Current ratio	117.30	124.59	117.02	106.41	93.97
	Quick Ratio	6.70	20.96	11.72	32.18	11.73
	Interest earned ratio	-22.21	-73.01	-39.81	-11.26	-8.49
Operating performance	Accounts receivable turnover(times)	30.90	15.29	9.91	11.49	16.01
	Average collection period	11.81	23.87	36.83	31.77	22.80
	Inventory turnover (times)	4.69	6.22	8.32	10.79	12.42
	Accounts payable turnover (times)	13.16	15.80	12.37	14.65	18.27
	Average days in sales	77.83	58.68	43.87	33.83	29.39
	Property, plant and equipment turnover(times)	1.45	1.54	1.22	1.51	2.25
	Total assets turnover (times)	0.61	0.66	0.57	0.56	0.70
Profitability	Return on total assets`（％）`	-4.81	-23.31	-13.50	-5.90	-4.07
	Return on stockholders’ equity`（％）`	-9.90	-63.51	-50.50	-29.33	-27.91
	Pre-tax income to paid-in capital`（％）`	-20.66	-85.37	-89.51	-38.45	-33.82
	Profit ratio`（％）`	-8.18	-35.89	-24.05	-11.19	-6.39
	Earnings (loss) per share(NT$)Note4	-4.11	-18.79	-8.87	-3.91	-3.38
Cash flow	Cash flow ratio`（％）`	Note2	Note2	Note2	3.02	Note2
	Cash flow adequacy ratio `（％）`	137.29	78.61	87.73	102.52	8.56
	Cash flow reinvestment ratio`（％）`	-1.22	0.00	0.00	1.48	0.00
Degree of leverage	Degree of operating leverage	Note3	Note3	Note3	Note3	Note3
	Degree of Financial Leverage	0.96	0.99	0.98	0.92	0.92

Reasons for changes in various financial ratios in the last two years: (Analysis is exempted if the increase or decrease does not reach 20%)

(1)The decrease in Quick Ratio was mainly due to the decrease in cash and cash equivalents and the increase in short-term loans.
(2)The decrease in the negative number of Interest earned ratio is mainly due to the decrease in losses.

(3)The increase in Accounts receivable turnover was mainly due to the increase in operating revenue of the ship business due to the increase in business volume. (4)The reason for the decrease in Average collection period is the same as (3). (5)The increase in Accounts payable turnover was mainly due to the increase in operating costs due to the increase in Operating revenue. (6)The reason for the increase in fixed asset turnover ratio is the same as (3). (7)The reason for the increase in Total assets turnover is the same as (3). (8)The reason for the decrease of negative return on total assets is the same as (2). (9)The decrease in the negative loss ratio was mainly due to the decrease in losses and the increase in operating revenue. (10)The decrease in cash flow ratio was mainly due to the outflow of net cash from operating activities this year.

(11)The decrease in cash flow adequacy ratio was mainly due to the decrease in net cash inflow from operating activities in the last five years.
(12)The reason for the decrease in Cash flow reinvestment ratio is the same as (10).

Note1: The Company has applied IFRS for the first time since 2013, so there is no data for previous years.

Note2: The cash flow of business activities in the current year is the outflow, so it has not been calculated. Note3: The current year is an operating loss, so it has not been calculated.

Note4: The weighted average number of shares outstanding in 2016-2017 has been reduced in accordance with the 2017 midterm capital reduction, and the capital reduction ratio has been adjusted retrospectively. (The base date of capital reduction is May 10, 2018)Note5: Calculation formulas are as follow:

Financial structure

(1) Liabilities to assets ratio = total liabilities/total assets.

(2)Ratio of long-term capital to property, plant and equipment ＝（ Total equity ＋ Non-current liabilities ）／ Net real estate, plant and equipment.

Solvency

(1)Current ratio ＝ Current assets ／ Current Liabilities.

(2)Quick Ratio ＝（ Current assets － Inventory － Prepaid Expenses ）／ Current Liabilities.
(3)Interest earned ratio ＝ Net income before tax and interest expense ／ Interest expense.
Operating performance
(1) Account receivable turnover (including accounts receivable and notes receivable resulted from business operation) = net sales/average balance of account receivable (including accounts receivable and notes
(2) Average collection period ＝ 365 ／ Accounts receivable turnover.
(3)Inventory turnover ＝ cost of goods sold/average inventory (4) Account payable turnover (including accounts payable and notes payable resulted from business operation) = operating costs/average balance of account payable (including accounts payable and notes payable resulted from business operation)
(5) Average days in sales ＝ 365 ／ Inventory turnover.
(6) Property, plant and equipment turnover ＝ Net sales ／ Average Net real estate, plant and equipment.
(7) Total assets turnover=net sales/average total assets
Profitability
(1)Return on total assets [net income+interest expense*(1-tax rate)]/average total assets
(2)Return on stockholders’ equity ＝ net income/average total equity.
(3) Profit ratio ＝ net income/net sales.
(4) Earnings per share= (net income-preferred stock dividend)/weighted average stock shares issued. （ Note6 ）
5.Cash flow
(1)Cash flow ratio ＝ Cash Flows from Operating Activities ／ Current Liabilities.
(2)Cash flow adequacy ratio ＝ Cash Flows from Operating Activities in the last five years ／ (net cash flow from operating activities within five year/ (capital expenditure+inventory increase +cash dividend) within five year
(3)Cash flow reinvestment ratio ＝ (Cash Flows from Operating Activities － Cash dividend) ／ (total fixed assets+long-term investment+other assets+working capital).(Note7)
Degree of leverage
(1) Degree of operating leverage ＝ (Net operating income-operating variable cost and expense)/operating income (Note8).
(2)Degree of Financial Leverage ＝ Operating income/ (operating income-interest expense).
Note6: The formula for calculating earnings per share on the open, should pay special attention to the following matters when measuring:
It is based on the weighted average number of common shares, not based on the number of issued shares at the end of the year.
Those who have cash capital increase or treasury stock trading should consider their circulation period and calculate the weighted average number of shares.
Where there is a capital increase from surplus or a capital increase from capital reserves, when calculating the earnings per share for previous years and half-years, retrospective adjustments should be made according to the capital increase ratio, regardless of the period of the capital increase.
If the special shares are non-convertible cumulative special shares, the dividends for the current year (regardless of whether they are paid) should be deducted from the net profit after tax or increase the net loss after tax. If the special stock is noncumulative, in the case of net profit after tax, the dividend of the special stock shall be deducted from the net profit after tax; if it is a loss, no adjustment is necessary.
Note7: Special attention should be paid to the following items when measuring Cash flow analysis:
Cash Flows from Operating Activities refers to the net cash inflows from operating activities in the Cash flow table.
Capital expenditure refers to the annual cash outflow of capital investment.
The increase in Inventory is only counted when the ending balance is greater than the opening balance. If the inventory decreases at the end of the year, it will be calculated as zero.
Cash dividend includes cash dividend for ordinary shares and special shares.
Gross real property, plant and equipment refers to the total amount of real property, plant and equipment before deduction of accumulated depreciation.
Note8: The issuer shall classify the operating costs and operating expenses into fixed and variable ones according to their nature. If it involved estimation or subjective judgment, the rationality should be paid attention to and consistency should be maintained.
Note9: If the company’s stock has no denomination or the denomination per share is not NT$10, the calculation of the ratio of paidup capital in the previous statement will be calculated based on the equity ratio attributable to the owner of the parent company on the balance sheet.

6.3 Audit Committee’s Report in the Most Recent Year

Audit Committee's Review report

This proposal is the presentation by the Board of Directors of the Company's 2020 Business Report, Financial Statements, and the Deficit Compensation Proposal. Of these items, the Financial Statements have been audited by external auditors of PricewaterhouseCoopers (PwC) Taiwan, and an opinion and report have been issued on the Financial Statements. The aforementioned proposal regarding Business Report, Financial Statements, and the Deficit Compensation Proposal have been reviewed and determined to be correct and accurate by the Audit Committee. Per the regulations in Article 14-5 of Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

To:

2021 General Shareholders' Meeting of CSBC Corporation.

CSBC CORPORATION, TAIWAN

Audit Committee Convenor: LIEU, DER-MING

March 18, 2021

6.4 The consolidated financial report of the most recent year that has been verified by
CPA: Please refer to page APPENDIX 1.
6.5 The non-consolidated financial report of the most recent year that has been verified by CPA: Please refer to page APPENDIX 2.
6.6 The company and its affiliated companies have experienced financial difficulties in the most recent year and as of the printing date of the annual report: None.

VII. Review and analyses of Financial Position, and Financial Performance, and Assessment of Risk Items

7.1. Financial Condition

7.1.1 Financial situation comparative analysis table

			Unit: NT$ thousands	Unit: NT$ thousands	Unit: NT$ thousands
Year Item	2020	2019	Difference		Description
			A m o u n t	`％`
Current Assets	19,532,384	18,451,704	1,080,680	5.86	`－`
Funds & Long-term investments	1,059,433	29,408	1,030,025	3,502.53	Note1
Real estate, plant and equipment	11,331,068	10,955,512	375,556	3.43	`－`
Intangible assets	21,476	10,121	11,355	112.19	Note 2
Other assets	5,303,205	5,629,442	-326,237	-5.80	`－`
Total Assets	37,247,566	35,076,187	2,171,379	6.19	`－`
Current Liabilities	20,595,852	17,205,708	3,390,144	19.70	`－`
Long-term Liabilities	11,643,633	11,413,221	230,412	2.02	`－`
Total Liabilities	32,239,485	28,618,929	3,620,556	12.65	`－`
Capital stock	4,730,555	4,729,918	637	0.01	`－`
Capital surplus	97,071	1,338,798	-1,241,727	-92.75	Note 3
Retained Earnings	180,455	388,542	-208,087	-53.56	Note 4
Owners' equity attributable to the parent company	5,008,081	6,457,258	-1,449,177	-22.44	Note 5
Non-controlling interest	`－`	`－`	`－`	`－`	`－`
Total Stockholders' Equity	5,008,081	6,457,258	-1,449,177	-22.44	Note 6
Description of major changes (the change is 20% in the early and late period and the change amount is NT$10 million): Note 1: The increase in the use of Funds & Long-term investments was due to the increase in cash in the joint venture. Note 2: The increase in Intangible assets was due to the increase in computer software costs. Note 3: The decrease in Capital Surplus was due to the use of capital reserves to make up for accumulated losses. Note 4: The decrease in Retained Earnings was due to the capital reserve making up for losses and the decrease in losses for the year. Note 5: The reason for the decrease of Owners' equity attributable to the parent company is the same as Note (4). Note 6: The reason for the decrease in Total Stockholders' Equity is the same as Note (4).

Description of major changes (the change is 20% in the early and late period and the change amount is NT$10 million):

Note 1: The increase in the use of Funds & Long-term investments was due to the increase in cash in the joint venture.

Note 3: The decrease in Capital Surplus was due to the use of capital reserves to make up for accumulated losses.

Note 4: The decrease in Retained Earnings was due to the capital reserve making up for losses and the decrease in losses for the year.

Note 5: The reason for the decrease of Owners' equity attributable to the parent company is the same as Note (4). Note 6: The reason for the decrease in Total Stockholders' Equity is the same as Note (4).

146

7.2 Financial Performance

7.2.1 Financial Performance Analysis and Comparison Table

Unit: NT$ thousands

Year Item	2020	2019	Increase (decrease) amount	Change ratio `（％）`	Change analysis
Gross Sales Cost of Sales Gross Profit(loss) Operating Expenses Operating Income(loss) Non-operating Income and Expenses Income(loss) Before Tax Tax Expense (Benefit) Current net profit (loss) of Continuing business unit's Other comprehensive income (income after tax) Total comprehensive income(loss)	25,296,629 26,706,103 -1,409,474 497,921 -1,907,395 308,645 -1,598,750 1,337 -1,600,087 53,202 -1,546,885	16,540,899 17,731,280 -1,190,381 515,759 -1,706,140 -102,770 -1,808,910 6,608 -1,815,518 72,722 -1,742,796	8,755,730 8,974,823 -219,093 -17,838 -201,255 411,415 210,160 -5,271 215,431 -19,520 195,911	52.93 50.62 18.41 -3.46 11.80 -400.33 -11.62 -79.77 -11.87 -26.84 -11.24	Note 1 Note 2 `－` `－` `－` Note 3 `－` Note 4 `－` Note 5 `－`
Description of major changes (changes up to 20% in the early and late periods) Note 1: The increase in Gross Sales was mainly due to the increase in the volume of naval business and the increase in Gross Sales. Note 2: The increase in Cost of Sales is due to the increase in cost with the increase in Gross Sales. Note 3: The increase in Non-operating Income and Expenses was mainly due to the increase in government subsidy income. Note 4: The decrease in Tax Expense was due to the decrease in the company’s earnings. Note 5: The decrease in Other comprehensive income (income after tax) in the current period is due to the decrease in the number of remeasurements for determiningthe benefitplan.

Description of major changes (changes up to 20% in the early and late periods) Note 1: The increase in Gross Sales was mainly due to the increase in the volume of naval business and the increase in Gross Sales.

Note 2: The increase in Cost of Sales is due to the increase in cost with the increase in Gross Sales. Note 3: The increase in Non-operating Income and Expenses was mainly due to the increase in government subsidy income.

Note 4: The decrease in Tax Expense was due to the decrease in the company’s earnings. Note 5: The decrease in Other comprehensive income (income after tax) in the current period is due to the decrease in the number of remeasurements for determining the benefit plan.

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7.3 Cash Flow:

7.3.1 Analysis and explanation of cash flow changes in recent years

Year Item	2020	2019	Increase or decrease(-)ratio(%)
Cash flow ratio`（％）`	Note 1	2.79	`－`
Cash flow adequacyratio`（％）`	7.91	103.09	-92.33
Cash flow reinvestment ratio`（％）`	`－`	1.38	`－`
Analysis of changes in the increase and decrease ratio: (1)The decrease in cash flow ratio was mainly due to the outflow of net cash from operating activities this year. (2)The decrease in Cash flow adequacy ratio was mainly due to the decrease in net cash inflow from operating activities in the last five years. (3)The reason for the decrease in Cash flow reinvestment ratio is the same as (1).

Note 1: The net cash flow from operating activities in the current year is the outflow and is not calculated.

Unit: NT$ thousands

							Unit: NT$ thousands	Unit: NT$ thousands
Cash and Cash Equivalents, Beginning of Year		Expected annual net cash inflow from operating activities 		Estimated annual cash outflow	Estimated cash surplus (insufficient) amount+-		Remedial measures for expected cash shortage
							Investment Plans	Financing Plans
	1,237,845		1,199,014	9,415,754		(6,978,895)	0	0
Description: 1. Analysis of cash flow changes in the next year: (1) Business activities: Mainly activities related to operations. (2) Investment activities: Mainly for the improvement and expansion of fixed assets. (3) Fund-raising activities: mainly cash capital increase. 2.Remedial measures for expected cash shortage: Not applicable.

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7.4 The Impact of any Material Capital Expenditure over the Most Recent Fiscal Year:

The total budget of the real estate, plant and equipment investment plan for 2020 is NT$1,477,361 thousand, and the actual number of occurrences is NT$960,622 thousand, with an implementation rate of 65.02%.

`（` a `）` Real estate, plant and equipment investment project plan for 2020:

Project Name	Investment project of replacing two Goliath cranes in Kaohsiung Plant	Investment project of muti- purpose steel structure production line in KaohsiungPlant	Investment project of TP production line in Kaohsiung Plant
Property	New investment: Enhance Shipbuilding capability and Efficiency of KaohsiungPlant	New investment: Settling up the capability of Oceanographic engineering	New investment: Settling up the capability of Oceanographic engineering
Plan period	Expected to restart in 2021 (Note 1)	September 2018~March 2021(Note 2)	March 2019 to February 2021 (Note 3)
Investment	NT$2,500 million	NT$679 million	NT$328 million

Note 1: The original planned date was March 2017 to September 2020. In May 2019, the contract was terminated due to the original contract manufacturer’s failure to pay the performance bond as scheduled. Procurement will be restarted in 2021.
Note 2: The construction was originally scheduled to be completed in January 2020. Due to the modification of the production line configuration and the impact of COVID-19, the acceptance schedule of some equipment was delayed. It was postponed to March 2021 to complete the general acceptance, but its main plant and main production equipment have been put into operation.
Note 3: It was originally scheduled to be completed by the end of July 2020. In order to improve the operation of the production line, the surrounding road improvement projects were added. It is expected to be completed and approved by February 2021.
Note 4: In 2020, the "Project Investment Plan for the National Ship Equipment Factory" is newly added. As it involves national agility, it is not appropriate to disclose relevant information.
（ b ） In the general investment plan for real estate, plant and equipment in 2020, the major projects with an investment of NT$40 million or more are as follows:
1. The improvement project of the 7/8P fixed pollution source pollution

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prevention and control equipment in the coating workshop of the Keelung Yard (completed).

  2. Kaohsiung Plant ditch replacement project for public pipes from the ground cockpit to the pipe workshop

  3. New construction of power distribution room on the west side of Kaohsiung Plant self-provided substation (completed)

  4. Kaohsiung Plant P3-P6 painting workshop gate enclosure project

  5. Kaohsiung Plant spray painting plant VOCs prevention equipment and RTO treatment system construction

  6. Replacement of high voltage switchboard in Kaohsiung Plant selfprovided substation

（ c ） None of the above has a significant impact on the company's current year's finances.
7.5 The FCM’s Financial Policy for the Most Recent Year on Investment in other Companies, the Main Reasons for Profit/ Losses Resulting therefrom, Plans for Improvement, and Investment Plans for the Coming Fiscal Year:

CSBC Coating Solutions Co., Ltd. was approved for establishment on September 13, 2010, with a paid-in capital of NT$146,002 thousand. It is a joint venture between the company and Yung Chi Paint & Varnish Mfg. Co., Ltd., and the company holds 70% share, the main business is anti-corrosion coating business.

In order to fully grasp the financial business strategy of CSBC Coating Solutions Co., Ltd. in the future, focus on the development of shipbuilding (ship) and offshore wind power related marine coating engineering business. In September 2019, the company acquired 30% of its shares from Yung Chi Paint & Varnish Mfg. Co., Ltd. for NT$37,500 thousand. Now, the company has become a 100% holding of CSBC Coating Solutions Co., Ltd. parent company. In 2020, the subsidiary's annual net profit after tax is NT$2,577 thousand.

Taiwan Offshore Wind Farm Services Corporation was approved for establishment on September 10, 2014, with a paid-in capital of NT$10,000

150

thousand. The main business is to undertake the operation and maintenance of offshore wind farms. The company holds 40% of the shares and Taiwan Generations Corporation holds 60% of the shares. Since the fourth quarter of 2018, the company has ceased to recognize its loss share of affiliated companies.

Fuhai Wind Power Company was approved for establishment on June 30, 2015, with a paid-in capital of NT$395,001 thousand. The main business is power generation. The company holds 37.97% of the shares, and Taiwan Generations Corporation holds 62.03% of the shares. Since the third quarter of 2017, the company has ceased to recognize the loss share of its affiliates.

Taiwan International Windpower Training Corporation Ltd. was approved for establishment on May 17, 2018, with a paid-in capital of NT$100 million, and the company holds 12% of the shares. Taiwan International Windpower Training Corporation Ltd. has seven directors and one supervisor, two seats each for TIPC and TAIWAN POWER, and one each for CSBC, China Steel and CWind Taiwan. Taiwan International Windpower Training Corporation Ltd.'s business project is safety and professional training courses for offshore wind power personnel. In 2020, the company's annual net profit after tax is NT$5,726 thousand, and the company's annual investment benefit is NT$341,000.

In order to achieve the goal of diversified operations, the company formed an alliance with the Belgian DEME Group on February 26, 2019 and established a joint venture CSBC-DEME Wind Engineering Co. Ltd. (CDWE) to undertake wind farm business, with a paid-in capital of NT$2,198,996 thousand. The company holds 50.0001% of the shares, and DEME holds 49.9999% of the shares. In 2020, the company's annual after-tax loss was 25,979 thousand yuan, and CSBC recognized an investment loss of NT$20,316 thousand for the whole year.

In the coming year, CSBC will continue to strengthen the management of reinvestment, increase investment income, and deepen

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the shipbuilding industry. Based on the shipbuilding industry, it will expand related businesses outside the core and carry out reinvestment development.

7.6. The Matters that shall be Analyzed and Assessed in the Section on Risks:

7.7 : Other Important Matters

A. The impact of interest rate changes on the company's profit and loss and future measures

ture measures
	Unit: NT$ thousands
Item	2020 (93,446) 25,296,629 (1,409,474) (0.37%) 6.63%
Net interest income(loss)(A)
Net revenue(B)
OperatingIncome(loss) (C)
Net interest income(loss)(A)/Net revenue(B)
Net interest income (loss)(A)/Operating Income(loss) (C)

The company's interest rate risk comes from long-term and short-term loans with fixed interest rates. The company's operations are normal, so the interest rate risk has no significant impact on the company.

B. The impact of exchange rate changes on the company's profit and loss and future measures:

ture measures:
	Unit: NT$ thousands
Item Exchange benefit(loss)(A) Net revenue(B) OperatingIncome(loss) (C) Exchange benefit(loss)(A)/Net revenue(B) Exchange benefit (loss)(A)/Operating Income(loss) (C)	2020
	14,372
	25,296,629
	(1,409,474)
	0.06%
	(1.02%)

The company's business involves certain non-functional currencies, so it is affected by exchange rate fluctuations, foreign currency asset information that has significant exchange rate fluctuations, and the New Taiwan Dollar appreciates or depreciates in

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foreign currencies by 1%, and all other factors remain unchanged. The impact on net profit after tax and other information are as follows:

	December 31,2020	December 31,2020
Foreign currency (thousand) $59,838 9,238 93 253	exchange rate 28.43 34.82 28.53 35.22	carrying amount (NT$) $1,701,194 321,667 2,653 8,911

1% appreciation or depreciation of foreign

2020

currency against NT$

Increase or decrease in net profit and loss after tax $16,090

The company's shipbuilding sales revenue is mainly US Dollar. In order to cope with the impact of exchange rate fluctuations on Gross Sales, recently, when negotiating new ship orders with domestic and foreign carriers, some of the contract prices were changed to New Taiwan Dollars, and the prepayment ratio for new ships was increased. Since the company’s main income is US Dollar, it adopts a natural hedging method. About 40% of foreign currency income is used to offset foreign currency expenditures on imported goods, reducing exchange rate risk. In addition, for the net exposure of US Dollar revenue and expenditure, hedging foreign exchange operations are adopted to avoid Exchange rate risk, and carefully evaluate hedging strategies based on exchange rate trends to reduce the impact of exchange rate changes.

The company's handling of foreign exchange is based on the principle of avoiding risks, not for the purpose of trading. In addition to paying attention to financial information and changes in the foreign exchange market at any time, financial personnel can fully grasp exchange rate trends, and strengthen the establishment of relations

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with banks. The foreign exchange bank recommends making foreign exchange hedging operations more flexible.

7.6.2 Policies for engaging in high-risk, high-leverage investments, loaning funds to others, endorsements and derivatives trading, the main reasons for profit or loss and future measures:
A. The company has not engaged in high-risk, high-leverage investments or loans to others in the most recent year and as of the publication date of this annual report.
B. The company’s dealings in derivatives are handled in accordance with the company’s internal regulations on “Key Points for Asset Management Acquisition or Disposal”. As of the end of December 2020, the contract amount for non-transactional foreign exchange contracts is NT$0, and the unrealized benefits are NT$0 thousand.
C. The company's endorsement guarantee cases are handled in accordance with the company's "Procedures for endorsing or providing guarantees for others". As of the end of December 2020, the balance of endorsement guarantees is NT$0.

7.6.3 Future R&D plans and estimated R&D expenses:

The 2021 research and development plan are divided into selfresearch, cooperative research and commissioned research. Self-research includes 6 items including basic design and development of new ships. The cooperative research includes 5 items including the calculation and analysis of the array waveguide, bull's eye and the whole ship to electromagnetic pulse interception frequency and radar reflection crosssectional area, etc. There are a total of 11 R&D projects, with a total R&D cost of approximately NT$112 million.

7.6.4 The impact of important domestic and foreign policies and legal changes on the company's financial business and corresponding measures:

The company usually maintains a high degree of attention and ability to respond appropriately to domestic and foreign political and economic developments and legal changes. In the most recent year and as of the publication date of the annual report, important domestic and foreign

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policy and legal changes have not had a significant impact on the company's financial business.

7.6.5 The impact of technological changes and industrial changes on the company's financial business and corresponding measures:
A. In addition to participating in foreign shipbuilding technology seminars or annual conferences, shipbuilding and shipping exhibitions, the company also conducts seminars organized by domestic shipbuilding industry alliances, joint ship design centers, and related surveying associations, schools and research institutions to obtain industry information and grasp the latest market information and use innovative designs to cater to the needs of shipping companies. In addition to increasing the company's profit, it also improves the development of shipbuilding and management technology.
B. The company proposes the following countermeasures for various risks of information security as follows:
(a) Information Security Risk Management Framework
- The convener of the company’s information security processing team is the direct supervisor and deputy general manager of the Department of Information Technology; the general director is concurrently the director of the Department of Information Technology; the audit team is assumed by the Department of Information Technology; the executive team is organized by the audit team according to the needs of the task It.

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Organization Structure of CSBC Information Security Processing Team

convener 1. Supervise and supervise the effectiveness of the implementation of the information security operation benchmark
Approval of information security incident notification, handling, case closure and information security drill plan 3. Approval of the roster of the information communication security team Director General 1. Assist in handling projects that the convener is responsible for or instructs

==> picture [266 x 45] intentionally omitted <==

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

Audit Executive
team group
----- End of picture text -----

1. Understand the content and phenomenon of the reported incident and determine whether it is an information security incident

2. Confirm the scope of impact of the information security incident

3. Assess information security incident handling capabilities

4. Seek external support

1. Information security incident handling

Information security protection reinforcement
Request the notification unit to cooperate with the execution team to deal with matters related to information communication security incident

5. Develop an information security processing plan

6. Composing and supervising the executive team

7. Review and report on the status of information security protection

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Operational Flowchart of Emergency Notification and Strategies

for CSBC Information Security Incident

==> picture [483 x 651] intentionally omitted <==

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Flowchart of CSBC Information Security Incident Exercise

==> picture [483 x 663] intentionally omitted <==

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(b)Information Security Policy

In order to ensure the confidentiality, integrity and availability of the information and information assets required by the company’s operations, we provide an information environment for the continuous operation of the company’s information business on the basis of information security under the principles of safety, reasonableness, and system to establish operational innovation, strengthen service safety, improve team capabilities, achieve sustainable operations, and comply with the requirements of the owners and relevant laws and regulations.

(c)Information security specific management plan

In addition to establishing network security protection measures and self-protection measures, the company cooperates with audit units to schedule annual information security audit plans and social engineering exercises for the personal computer operating environment. At present, the Department of Information Technology is responsible for planning, coordinating and managing all the information security business of CSBC Group and its subsidiaries. It has established a CSBC information security monitoring center with information security third parties to provide alerts and analysis and processing of information security incidents, and also conduct regular funding. Security testing to ensure information security protection capacity, and related information security education and training and information security advocacy from time to time to enhance employees' awareness. In order to complete the company's information security management system, in addition to the existing internal management methods, the company will also plan to introduce the ISO 27001 information security management system and obtain third-party verification in 2020.

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(d) Management plan and specific measures

Management
plan

Specific measures

Cybersecurity
protection
measures

For the purpose of cybersecurity and to ensure that this
service can continue to serve all Internet users, this website
provides the following security protection measures:
(1) Use a network intrusion detection system to monitor
network traffic to identify unauthorized attempts to upload or
modify web information or deliberate sabotage.
(2) Install a firewall to prevent illegal intrusion, damage or
steal or destroy data to avoid illegal use of the website to
protect the rights of users.
(3) Install anti-virus software to scan for viruses regularly to
provide users with a safer web browsing environment.
Daily backup operations to back up all data to the backup
host.
(4) Automatically receive all security maintenance e-mail
notifications sent by relevant operating system vendors or
application vendors and install appropriate modification
programs (PATCH) in accordance with the recommendations
of the e-mail.

Self-protection
measures

Please take good care of your password and or any personal
information, and do not provide any personal information,
especially your password, to anyone. If you are sharing your
computer with others or using a public computer, remember
to close the browser window to prevent others from reading
your personal data, letters or entering the administrative area
ofyourown agency.

(e) Website of the information

`■` Information Security Risk Management Framework

http://www.csbcnet.com.tw/SiteInfo/InfoSecurityStruct.htm

■ Information Security Policy:

http://www.csbcnet.com.tw/SiteInfo/InfoSecurityPolicy.htm

■ Information security specific management plan:

http://www.csbcnet.com.tw/SiteInfo/InfoSecurityScheme.htm

7.6.6 The impact of corporate image change on corporate crisis management and corresponding measures:

The company’s image in the industry has always been good, and it was listed on December 22, 2008. The company cooperates with the stock exchange’s corporate governance system evaluation every year and improves corporate governance in accordance with the requirements of the

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indicators, which has a positive significance for the company’s corporate image and operational transparency.

7.6.7 Expected benefits, possible risks and countermeasures of M&A: None.
7.6.8 Expected benefits, possible risks and countermeasures of expanding the plant: None.
7.6.9 Risks faced by purchase or sales concentration and corresponding measures: The company's main steel plate purchase suppliers are concentrated in
CSC, mainly because CSC is the company's long-term supplier of marine steel plates, and the supply is good. CSC is close to the company, and the steel plate feeds directly through the company's steel plate storage yard. CSC is the only domestic company that can provide marine steel plates, which can cooperate with the company's research and development of marine steel plates, so the main steel plate suppliers are concentrated. As for the concentration of sales customers, it is mainly due to the company's market positioning in Container Vessel, and the orders are mainly Container Vessel. Because Container Vessel orders have the characteristics of operation in term with same series vessels, and in order to reduce production costs and increase profits, the company also adopts a single design. A large number of orders are the business direction, so customers tend to concentrate in a single year.

In the future, the purchase and sale of goods will continue to develop in the direction of diversification and customer oriented design to avoid potential operational risks.

7.6.10 Directors, supervisors or major shareholders holding more than 10% of the shares, the impact of a large number of transfers or replacement of equity on the company, risks and countermeasures: None.
7.6.11 The impact of changes in management rights on the company, risks and countermeasures:

The company completed the stock listing and privatization on December 22, 2008. As of February 1, 2019, government agencies held approximately 29.83% of the equity. The remaining equity is dispersed, there is no centralized consortium, and the listed company operates decently in accordance with laws and regulations and does not have a significant impact and risk on the company due to privatization.

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7.6.12 Litigious and non-litigious matters. List major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report.
(1) List major litigious, non-litigious or administrative disputes that have been concluded by means of a final and unappealable judgment or are still under litigation. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount of money at stake in the dispute, the date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of publication of the annual report: None.
(2) List major litigious, non-litigious or administrative disputes that involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder holding a stake of greater than 10 percent, and/or any company or companies controlled by the company. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities as of the date of publication of the annual report: None.

7.6.13 Other important risks and countermeasures: None.

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7.7.7. Other Important Matters:

Risk Management Organization:

Important risk assessment items	Risk Control Business Management Unit First mechanism	Risk review and control Second mechanism	Audit Office/Board of Director Third mechanism - Note
1. Interest rate, exchange rate and financial risk	Department of Finance and Accounting	Foreign Exchange Execution Team	Audit Office/Board of Director
2. High-risk and high- leverage investment, loans to others, derivative commodity trading, financial investment	Department of Finance and Accounting	Foreign Exchange Execution Team	Audit Office/Board of Director
3. R&D plan	Department of Planning, Department of Design and Each proposal control unit	Research and Development Committee	Audit Office/Board of Director
4. Changes of Policy and legal	Department of Finance and Accounting, Legal Affairs Office, Department of Planning	Business Development Conference	Audit Office/Board of Director
5. Changes of Technology and Industry	Department of Design, Plants, Department of Planning, Department of Information Technology	Work report/ Business Development Conference	Audit Office/Board of Director
6.Changes of Corporate image	Department of Sales, Department of Human Resources and Administration, Department of Planning, Department of Quality Assurance, Plants	Business Development Conference	Audit Office/Board of Director
7. Investment, reinvestment and M&A benefits	Department of Finance and Accounting,Legal	New Business Development Committee	Audit Office/Board of Director

163

	Affairs Office, Department of Planning
8. Expansion of plant or production	Plants, Department of Planning, Department of Environmental Protection and Public Utilities	Project Investment Review Meeting, Work report	Audit Office/Board of Director
9. Centralized purchase or sale	Department of Sales, Department of Material	Business Weekly Meeting	Audit Office/Board of Director
10. Transfer of shares of directors, supervisors and major shareholders	Department of Finance and Accounting, Department of Planning	Business Development Conference	Audit Office/Board of Director
11. Change in operating rights	Department of Finance and Accounting, Legal Affairs Office, Department of Planning	Business Development Conference	Audit Office/Board of Director
12. Litigation and non- litigation matters	Legal Affairs Office, Department of Finance and Accounting, Department of Human Resources and Administration, Department of Planning	Business Development Conference	Audit Office/Board of Director
13. Other operational matters	Department of Planning, Legal Affairs Office	Business Development Conference/ Risk Management Committee	Audit Office/Board of Director
14. Personnel behavior, ethics and conduct	Supervisors at all levels, Department of Human Resources and Administration	Personnel Review Committee/ Reward and Punishment Review Committee/ Complaint Handling Team Committee	Audit Office/Board of Director
15. Compliance with SOP	Supervisors at all	Risk Management	Audit Office

164

and regulations	levels, Department of Occupational Safety and Health, Department of Quality Assurance, Department of Planning Department of Environmental Protection and Public Utilities	Committee
16. Functional committee meeting management	Secretariat Office of the Board Department of Human Resources and Administration	Supervisor of Corporate Governance (Note)	Audit Office/Board of Director
17.Risk Management	Department of Quality Assurance, Department of Environmental Protection and Public Utilities, Department of Occupational Safety and Health, Department of Planning	Risk Management Committee	Audit Office/Board of Director

Note: The Board of Director mechanism is the decision-making and final control of risk assessment and control; The Audit Office mechanism is risk inspection, assessment, supervision, improvement tracking and reporting; The Supervisor of Corporate Governance is currently concurrently held by the Secretary General of Board of Director.

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VIII. Special Items

8.1 Information Related to the Company’s Affiliates

8.1.1 Business report on merger of related companies for the most recent year
Organization Chart of Affiliated Enterprises

==> picture [269 x 225] intentionally omitted <==

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

CSBC Corporation Taiwan
100%
CSBC Coating Solutions Co., Ltd.
100% 100%
Blue Ace
Blue Ocean Wind Power
Corporation
Engineering (H.K.) Ltd.
----- End of picture text -----

Basic Information of Affiliated Enterprises

Name of Affiliated Enterprises	Date of Incorporation	Address	Paid-In Capital	Main Business Area
CSBC Coating Solutions Co., Ltd.	September 13, 2010	No.3, Jhonggang Rd., Siaogang District, Kaohsiung City	NT$146,002 thousand	Anti-corrosion, anti-rust, paint, sandblasting works, etc.
Blue Ocean Wind Power Engineering (H.K.) Ltd.	July 11, 2014	RM 2401,24/F 101 King’s Rd. Fortress Hill Hong Kong	USD10,000 ( exchange rate 29.98)	Maritime Engineering Information and Services
BLUE ACE CORPORATION	July 28, 2016	No.224, He 1st Rd.,Zhongzheng Dist.,Keelung City	NT$25,000 thousand	Anti-corrosion, anti-rust, paint, sandblasting works, etc.

N Note1: All affiliated enterprises, regardless of their size, should be exposed.

Note2: If each affiliated enterprise has a factory, and the sales value of the factory’s products exceeds

10% of the operating income of the controlling company, the name of the factory, date of establishment, address and the main production items of the factory should be added.
Note3: If an Affiliated enterprise is a foreign company, the name and address of the company may be expressed in English, the date of establishment may also be expressed in AD dates, and the

166

amount of paid-in capital may be expressed in foreign currency (specify the exchange rate)

3. Presumed to be in control and subordination: None.

The industries covered by the business of the overall affiliated enterprise:

Name of Affiliated Enterprises	Main Business Area	Division of labor
CSBC Coating Solutions Co., Ltd.	Anti-corrosion, anti-rust, paint, sandblasting works, etc.	Yes
Blue Ocean Wind Power Engineering (H.K.) Ltd.	Maritime Engineering Information and Services	Yes
Blue Ace Corporation	Anti-corrosion, anti-rust, paint, sandblasting works, etc.	Yes

Note1: In September 2019, the company acquired 30% of its shares from Yongji Paint for NT$37,500 thousand. Now the company has become the parent company holding 100% of CSBC Coating Solutions Co., Ltd.

Note2: In order to develop offshore wind power and offshore engineering strategies, CSBC established Blue Ocean Wind Power Engineering (H.K.) Ltd., an overseas subsidiary in Hong Kong, through CSBC Coating Solutions Co., Ltd..

Note3: In order to consolidate the strength of Taiwanese vessels to contract merchants, CSBC introduced foreign workers in a timely manner based on business development, provided sufficient construction manpower for Taiwan vessels, and strengthened the labor structure. Through CSBC Coating Solutions Co., Ltd., BLUE ACE CORPORATION was established to meet the group's strategic development goals. .

5. Information on directors, supervisors and general managers of affiliated enterprises

(Base date: December 31, 2020, Foreign companies are expressed in terms of the amount held in the original currency)

Unit: Share, %

Name of enterprise	Title	Name or representative	Holding shares	Holding shares
			share	%
CSBC Coating Solutions Co., Ltd.	Chairm an	csbc corporation taiwan Representative: Wei, Cheng-Tzu	14,600,165	100%
	Supervi sor	Shen, Hua-Rong	0	100%
Blue Ace Corporation	Directo r	CSBC Coating Solutions Co., Ltd. Representative: Tang, Jung-Kuei	(Non-stock company)	100%
Blue Ocean Wind Power Engineering (H.K.) Ltd.	Directo r	CSBC Coating Solutions Co., Ltd. Representative: Guo, Kuen-Cherng	USD10,000	100%

Note1: If affiliated enterprises are foreign companies, they shall be listed as those with equivalent positions. Note2: If the invested company is a company limited by shares, please fill in the number of shares and shareholding ratio; otherwise, please fill in the amount of capital contribution and the ratio of capital contribution and indicate it.

Note3: When the directors and supervisors are institutional shareholders, they shall additionally disclose

167

relevant information of the representatives.

6. Operation overview of each affiliated enterprise

December 31, 2020 (Unit: NT$ thousand)

Name of Enterprise	Paid-in capital	Total Assets	Total Liabilities	Net Worth	Revenue	Operation Profit	Net income	EPS
CSBC Coating Solutions Co.,Ltd.	146,002	413,643	241,680	171,963	285,490	7,411	2 ,577	0.18
Blue Ocean Wind Power Engineering (H.K.)Ltd.	300	1,234	1,127	107	0	-87	-93	-0.93
Blue Ace Corporation	25,000	40,222	19,493	20,728	87,807	-6,175	-4,938	Limited company No shares

8.1.2 Consolidated Financial Statements of Affiliated Companies: Please refer to VI.

Financial Information 4.

8.1.3 Affiliation Reports: Not applicable.

8.2. Where the Company has Carried Out a Private Placement of Securities during the Most Recent Fiscal Year or during the Current Fiscal Year up to the Date of Publication of the Annual Report : None.
8.3. Holding or disposal of shares in the company by the company's subsidiaries during the most recent fiscal year and during the current fiscal year up to the date of publication of the annual report: None

8.4. Other Matters that Require Additional Description: None.

IX. Matters of Significant impact

The situations listed in Article 36, paragraph 3, subparagraph 2 of the Securities and Exchange Act, which might materially affect shareholders' equity or the price of the company's securities, has occurred during the most recent fiscal year and during the current fiscal year up to the date of publication of the annual report: None

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CSBC CORPORATION, TAIWAN AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2020 AND 2019

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

Year ended December 31, 2020, pursuant to “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises,” the entity that is required to be included in the consolidated financial statements of affiliates, is the same as the entity required to be included in the consolidated financial statements of parent and subsidiary companies under IFRS 10. Also, if relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies, it shall not be required to prepare separate consolidated financial statements of affiliates.

Hereby declare,

CSBC CORPORATION, TAIWAN

WEN-LON CHENG

March 18, 2021

~2~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR20000379

To the Board of Directors and Shareholders of CSBC CORPORATION, TAIWAN

Opinion

We have audited the accompanying consolidated balance sheets of CSBC CORPORATION, TAIWAN and its subsidiaries (the “Group”) as at December 31, 2020 and 2019, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, 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 the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the Norm of Professional Ethics for Certified Public Accountants 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 judgement, were of most significance in our audit of the Group’s 2020 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

~3~

Key audit matters for the Group’s 2020 consolidated financial statements are stated as follows:

Accounting estimates and assumptions for total cost of construction contracts

Description

Please refer to Note 4(28) for a description of the accounting policy on construction contracts. Please refer to Note 5 for critical accounting estimates and assumptions for total cost of construction contracts.

The Group is engaged in the business of designing and building of various ships and cruisers. Assumptions for estimated construction cost include cost for equipment, material, labor and etc. Data used for assumptions involves subjective judgement and accounting estimates and are highly uncertain. As a result, assumptions used are material to the total construction cost and further affects the calculation of construction profit.

As the data used for assumptions involves subjective judgement and accounting estimates are highly uncertain, this may affect the completeness and relevant assertions. Considering that the estimated total cost of construction contracts is material to the financial statements, therefore, we assessed that these accounting estimates and assumptions as one of the key audit matters for this year.

How our audit addressed the matter

The scope of our audit responded to the risk as follows:

Assessing the effectiveness of CSBC Group’s internal control regarding the estimation process of total cost of construction contract. This includes:
(1) Whether the data used by management for estimates and assumptions is complete, relevant and accurate.
(2) Whether accounting estimates and assumptions have been reviewed and approved by proper management level.
(3) Whether the segregation of duties is appropriate.
Obtaining the Estimate at Completion Reports, selecting sample reports and verifying the accuracy, completeness and relevance of the data that was used for assumptions and estimations. Checking whether the use of estimates and assumptions in the Estimate at Completion Reports are appropriate.
Comparing cost at completion for the same or similar ships and then assessing the reasonableness of the Estimate at Completion Report.

~4~

Assessment of construction loss

Description

Please refer to Note 4(28) for a description of the accounting policy on construction contracts.

There is a concern regarding the oversupply in the shipbuilding industry worldwide. Customers tend to behave conservatively which causes a decline in ship prices. Thus, there is a high possibility of total construction cost exceeding total construction revenue. In accordance with the Group’s accounting policy on construction contracts, when there is a high possibility of total construction cost exceeding total construction revenue, estimated loss shall be recognised immediately.

The aforementioned estimated loss shall include constructions that have not yet been initiated. As the estimated loss is material to the financial statements, therefore, we assessed estimated loss as one of the key audit matters for this year.

How our audit addressed the matter

The scope of our audit responded to the risk as follows:

Obtaining calculation table of construction in progress – construction income / loss. Checking whether it includes all the construction contracts including those contracts that have not yet been initiated.
Testing the accuracy of calculation table by selecting samples and performing the following audit procedures:
(1) Reviewing construction contracts and checking the contractual price and foreign exchange rates in order to verify the accuracy of calculation.
(2) Verifying estimated total construction cost to management’s calculation in order to check the consistency of estimates and assumptions used.

Other matter – Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of CSBC CORPORATION TAIWAN, as at and for the years ended December 31, 2020 and 2019.

~5~

Responsibilities of management and those charged with governance for the consolidated financial statements

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

In preparing the consolidated financial statements, management is responsible for assessing 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 generally accepted auditing standards in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the generally accepted auditing standards in the Republic of China, we exercise professional judgement 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.

~6~

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.
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 appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the 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.

~7~

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 of the current period 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.

TIEN, CHUNG-YU WANG, KUO-HUA

For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~8~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Assets	December 31, 2020 AMOUNT % `$` `1,237,845` `3` `4,793,876` `13` `1,194,927` `3` `26,464` `-` `21,945` `-` `1,395` `-` `2,349,362` `6` `9,902,802` `27` `3,768` `-` `19,532,384` `52` `1,059,433` `3` `11,331,068` `31` `3,500,944` `9` `212,918` `1` `21,476` `-` `1,533,169` `4` `56,174` `-` `17,715,182` `48` `$` `37,247,566` `100`	December 31, 2019	December 31, 2019
	AMOUNT `$` `1,237,845` `4,793,876` `1,194,927` `26,464` `21,945` `1,395` `2,349,362` `9,902,802` `3,768` `19,532,384` `1,059,433` `11,331,068` `3,500,944` `212,918` `21,476` `1,533,169` `56,174` `17,715,182` `$` `37,247,566`	AMOUNT `$` `4,122,363` `5,798,947` `1,301,669` `100,795` `16,633` `1,469` `1,824,592` `5,269,605` `15,631` `18,451,704` `29,408` `10,955,512` `3,805,463` `211,506` `10,121` `1,544,867` `67,606` `16,624,483` `$` `35,076,187`	%
Current assets 1100 Cash and cash equivalents 1140 Current contract assets 1170 Accounts receivable, net 1200 Other receivables 1210 Other receivables - related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 1479 Other current assets, others 11XX Current Assets Non-current assets 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1780 Intangible assets 1840 Deferred income tax assets 1920 Guarantee deposits paid 15XX Non-current assets 1XXX Total assets			`12` `17` `4` `-` `-` `-` `5` `15` `-`
			`53`
			`-` `31` `11` `1` `-` `4` `-`
			`47`
			`100`

(Continued)

~9~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Liabilities and Equity December 31, 2020
December 31, 2019
Notes
AMOUNT
%
AMOUNT
%
6(11)
$
5,279,146
14
$
1,822,361
5
6(12)
2,699,405
7
1,699,563
5
6(20)(24) and 7
6,698,791
18
8,707,809
25
6(20)
8,116
-
-
-
6(20) and 7
111,592
-
285,404
1
6(20)
1,600,887
4
1,094,303
3
6(14)
1,328,903
4
1,192,986
3
2,909
-
4,915
-
6(15)(20) and 7
1,292,762
4
1,617,584
5
6(7)
272,881
1
265,694
1
20,460
-
15,089
-
6(17)
1,280,000
4
500,000
1
20,595,852
56
17,205,708
49
6(13)(16)
5,995
-
-
-
6(16)
1,932,301
5
-
-
6(17)
3,918,570
10
5,347,772
15
6(30)
1,324,697
4
1,324,697
4
6(7)
3,268,411
9
3,562,819
10
6(18)
693,347
2
681,757
2
6(18)
193,391
-
204,981
1
6(19)
3,401
-
42,430
-
283,392
1
247,941
1
20,128
-
824
-
11,643,633
31
11,413,221
33
32,239,485
87
28,618,929
82
6(21)
4,730,555
13
4,729,918
13
6(16)(22)(32)
97,071
-
1,338,798
4
6(23)
3,166,471
8
3,166,471
9
(
2,986,016) (
8) (
2,777,929) (
8 )
5,008,081
13
6,457,258
18
5,008,081
13
6,457,258
18
7 and 9
11
$
37,247,566
100
$
35,076,187
100

Current liabilities
2100
Short-term borrowings
2110
Short-term notes and bills payable
2130
Current contract liabilities
2150
Notes payable
2160
Notes payable - related parties
2170
Accounts payable
2200
Other payables
2230
Current income tax liabilities
2250
Provisions for liabilities - current
2280
Current lease liabilities
2310
Advance receipts
2320
Long-term liabilities, current portion
21XX
Current Liabilities
Non-current liabilities
2500
Non-current financial liabilities at fair
value through profit or loss
2530
Bonds payable
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2610
Long-term notes and accounts
payable
2630
Long-term deferred revenue
2640
Accrued pension liabilities
2645
Guarantee deposits received
2670
Other non-current liabilities, others
25XX
Non-current liabilities
2XXX
Total Liabilities
Equity attributable to owners of
parent
Share capital
3110
Share capital - common stock
Capital surplus
3200
Capital surplus
Retained earnings
3320
Special reserve
3350
Accumulated deficit
31XX
Equity attributable to owners of
the parent
3XXX
Total equity
Significant contingent liabilities and
unrecognised contract commitments
Significant events after the balance
sheet date
3X2X
Total liabilities and equity

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

~10~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

Items Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(24) and 7
$
25,296,629
100
$
16,540,899
100
6(3)(10)(28)(29)
and 7
(
26,706,103) (
105) (
17,731,280) (
107)
(
1,409,474) (
5) (
1,190,381) (
7)
6(10)(28)(29)
(
67,767)
- (
77,936)
-
(
339,995) (
1) (
339,252) (
2)
(
94,017) (
1) (
99,847) (
1)
12(2)
3,858
-
1,276
-
(
497,921) (
2) (
515,759) (
3)
(
1,907,395) (
7) (
1,706,140) (
10)
6,699
-
18,907
-
6(8)(18)(25)
431,928
2
101,339
1
6(26)
(
9,096)
- (
125,507) (
1)
6(6)(7)(18)(27)
(
100,911) (
1) (
66,425) (
1)
6(5)
(
19,975)
- (
31,084)
-
308,645
1 (
102,770) (
1)
(
1,598,750) (
6) (
1,808,910) (
11)
6(30)
(
1,337)
- (
6,608)
-
($
1,600,087) (
6) ($
1,815,518) (
11)
6(19)
$
66,502
-
$
90,902
-
6(30)
(
13,300)
- (
18,180)
-
$
53,202
-
$
72,722
-
($
1,546,885) (
6) ($
1,742,796) (
11)
($
1,600,087) (
6) ($
1,818,470) (
11)
-
-
2,952
-
($
1,600,087) (
6) ($
1,815,518) (
11)
($
1,546,885) (
6) ($
1,745,748) (
11)
-
-
2,952
-
($
1,546,885) (
6) ($
1,742,796) (
11)
6(31)
($
3.38) ($
3.91)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative expenses
6300
Research and development expenses
6450
Impairment loss (impairment gain
and reversal of impairment loss)
determined in accordance with IFRS
9
6000
Total operating expenses
6900
Operating loss
Non-operating income and expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7060
Share of profit/(loss) of associates
and joint ventures accounted for
under equity method
7000
Total non-operating income and
expenses
7900
Loss before income tax
7950
Income tax expense
8200
Loss for the year
Other comprehensive income
Components of other comprehensive
income that will not be reclassified to
profit or loss
8311
Actuarial gain on defined benefit
plan
8349
Income tax related to components of
other comprehensive income that
will not be reclassified to profit or
loss
8300
Total other comprehensive income
for the year
8500
Total comprehensive loss for the year
Profit (loss), attributable to:
8610
Owners of the parent
8620
Non-controlling interest
Total
Comprehensive income (loss)
attributable to:
8710
Owners of the parent
8720
Non-controlling interest
Total
Basic earnings per share
9750
Total basic earnings per share

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

~11~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Notes			Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent	Equity attributable to owners of the parent			Non-controlling interest
	Share capital - common stock		Capital surplus			Retained earnings				Total
					Legal reserve		Special reserve	Accumulated deficit
6(21)(22) and 7 6(23) 6(22)(23) 6(22)(32) and 7 6(22)(23) 6(16)(22) 6(16)(21)(2 2)	`$ 3,729,918` `-` `-` `-` `1,000,000` `-` `-` `-` `$ 4,729,918` `$ 4,729,918` `-` `-` `-` `-` `-` `637` `$ 4,730,555`	`$ 2,005,515` `-` `-` `-` `1,252,000` `-` `(` `1,927,965` `)` `9,248` `$ 1,338,798` `$ 1,338,798` `-` `-` `-` `(` `1,338,798` `)` `96,153` `918` `$` `97,071`		`$ 1,065,297` `-` `-` `-` `-` `(` `1,065,297)` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `$` `-`			`$ 3,166,471` `-` `-` `-` `-` `-` `-` `-` `$ 3,166,471` `$ 3,166,471` `-` `-` `-` `-` `-` `-` `$ 3,166,471`	`($ 4,025,443)` `(` `1,818,470)` `72,722` `(` `1,745,748)` `-` `1,065,297` `1,927,965` `-` `($ 2,777,929)` `($ 2,777,929)` `(` `1,600,087)` `53,202` `(` `1,546,885)` `1,338,798` `-` `-` `($ 2,986,016)`	`$ 5,941,758` `(` `1,818,470` `)` `72,722` `(` `1,745,748` `)` `2,252,000` `-` `-` `9,248` `$ 6,457,258` `$ 6,457,258` `(` `1,600,087` `)` `53,202` `(` `1,546,885` `)` `-` `96,153` `1,555` `$ 5,008,081`		`$` `43,796` `2,952` `-` `2,952` `-` `-` `-` `(` `46,748)` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 5,985,554` `(` `1,815,518` `)` `72,722` `(` `1,742,796` `)` `2,252,000` `-` `-` `(` `37,500` `)` `$ 6,457,258` `$ 6,457,258` `(` `1,600,087` `)` `53,202` `(` `1,546,885` `)` `-` `96,153` `1,555` `$ 5,008,081`

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

~12~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit gain

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Depreciation of investment property

Amortization

Share of profit (loss) of investments accounted for using
equity method

Interest income
Government grant income

(Gain) loss on valuation of financial assets and liabilities at
fair value through profit or loss
Loss on disposal of property, plant and equipment

Interest expense

Changes in operating assets and liabilities
Changes in operating assets
Decrease in current contract assets
Decrease (increase) in accounts receivable
Decrease (increase) in other receivables
(Increase) decrease in other receivables - related parties
Increase in inventories
Increase in prepayments
Decrease (increase) in other current assets
Changes in operating liabilities
Decrease in financial liabilities at fair value through profit
or loss
(Decrease) increase in current contract liabilities
Increase in notes payable
Decrease in notes payable - related parties
Increase in accounts payable
Increase in other payables
Decrease in provisions for liabilities - current
Increase in receipts in advance
Increase in net defined benefit liability - non-current
Cash (outflow) inflow generated from operations
Interest received
Payment of interest
Income tax (paid) refund
Net cash flows (used in) from operating activities Year ended December 31,
Notes
2020
2019
( $
1,598,750 ) ( $
1,808,910 )
12(2)
(
3,858 ) (
1,276 )
6(6)(28)
585,453
552,089
6(7)(28)
245,961
237,744
6(9)
680
556
6(10)(28)
15,710
16,158
6(5)
19,975
31,084
(
6,699 ) (
18,907 )
6(25)(33)
(
11,590 ) (
11,396 )
(
11,749 )
108
6(26)
2,197
44,602
6(27)
100,911
66,425
1,007,494
856,247
108,177 (
400,968 )
74,237 (
81,649 )
(
5,312 )
67,127
(
524,770 ) (
486,778 )
(
4,633,197 ) (
3,991,275 )
11,863 (
13,562 )
- (
108 )
(
2,009,018 )
5,956,541
8,116
-
(
173,812 ) (
143,364 )
506,584
381,041
119,296
124,915
(
324,822 ) (
909,975 )
5,371
11,745
27,473
38,964
(
6,464,079 )
517,178
6,793
18,861
(
77,572 ) (
56,539 )
(
4,871 )
750
(
6,539,729 )
480,250

(Continued)

~13~

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using equity method

Acquisition of property, plant and equipment

Acquisition of intangible assets

Increase in refundable deposits
Decrease in refundable deposits
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Increase in short-term notes and bills payable

Proceeds from issuance of bonds

Proceeds from long-term debt

Repayments of long-term debt

Repayments of principal portion of lease liabilities

Increase in long-term deferred revenue

Increase in guarantee deposit received

Decrease in guarantee deposit received

Increase (decrease) in other non-current liabilities

Acquisition of ownership interests in subsidiaries

Cash capital increase

Net cash flows from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year Year ended December 31,
Notes
2020
2019
6(5)(32)
( $
1,050,000 ) ( $
49,500 )
6(33)
(
947,448 ) (
974,462 )
6(10)
(
27,065 ) (
11,668 )
(
21,458 ) (
73,203 )
32,890
36,347
(
2,013,081 ) (
1,072,486 )
6(34)
3,456,785
532,211
6(34)
999,842
1,699,563
6(34)
2,034,775
-
6(34)
-
300,000
6(34)
(
649,202 ) (
150,765 )
6(34)
(
228,663 ) (
214,694 )
6(34)
-
145,238
6(34)
202,062
236,469
6(34)
(
166,611 ) (
173,456 )
6(34)
19,304 (
12,409 )
6(32) and 7
- (
37,500 )
6(21)
-
2,252,000
5,668,292
4,576,657
(
2,884,518 )
3,984,421
6(1)
4,122,363
137,942
6(1)
$
1,237,845 $
4,122,363

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

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CSBC CORPORATION, TAIWAN AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

(1) On May 1, 1946, Taiwan Machinery and Shipbuilding Company was established by the government, and then was divided into two companies ‘Taiwan Machinery Corporation’ and ‘Taiwan Shipbuilding Corporation (TSBC)’ to split the machinery and shipbuilding business for the purpose of management. In the late 1960s, the government built large shipyards in Xiaogang Kaohsiung which is the current place of business for CSBC CORPORATION, TAIWAN (the “Company”).
(2) In July 1973, China Shipbuilding Corporation was established by the government. In the early days, most of its labour and techniques were supported by TSBC and they were both reverted to become state - owned companies under the Ministry of Economic Affairs. In January 1978, China Shipbuilding Corporation merged with TSBC and China Shipbuilding Corporation became the surviving company. The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the business of building, manufacturing and repairing of various ships and onshore equipment, ship coating, anti-corrosion coating on large steel structure, surface treatment and professional coating.
(3) On March 1, 2007, China Shipbuilding Corporation changed its name to CSBC Corporation, Taiwan.
(4) The Company became a listed company since December 22, 2008.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION
These consolidated financial statements were authorized for issuance by the Board of Directors on March 18, 2021.
APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS
(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)
- New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020 January 1, 2020

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	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate	January 1, 2020
benchmark reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’	June 1, 2020 (Note)

Note: Earlier application from January 1, 2020 is allowed by FSC.

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment:

Amendment to IFRS 16, ‘Covid-19-related rent concessions’

This amendment provides a practical expedient for lessees from assessing whether a rent concession related to COVID-19, and that meets all of the following conditions, is a lease modification:

A. Changes in lease payments result in the revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
B. Any reduction in lease payments affects only payments originally due on or before June 30, 2021; and
C. There is no substantive change to other terms and conditions of the lease.

The Group adopted this practical expedient. The relevant impact is provided in Note 6(7).

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’	January 1, 2021 January 1, 2021

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

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(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

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Effective date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 3, ‘Reference to the conceptual framework’	January 1, 2022
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of	To be determined by
assets between an investor and its associate or joint venture’	International Accounting
	Standards Board
IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IFRS 17, ‘Insurance contracts’	January 1, 2023
Amendments to IAS 1, ‘Classification of liabilities as current or	January 1, 2023
non-current’
Amendments to IAS 1, ‘Disclosure of accounting policies’	January 1, 2023
Amendments to IAS 8, ‘Definition of accounting estimates’	January 1, 2023
Amendments to IAS 16, ‘Property, plant and equipment:	January 1, 2022
proceeds before intended use’
Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling	January 1, 2022
a contract’
Annual improvements to IFRS Standards 2018–2020	January 1, 2022

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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(b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in compliance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:
(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
(b) Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
(c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
(d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.
(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognised in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

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B. Subsidiaries included in the consolidated financial statements:

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% of shares held as of
December 31,
Name of investor Name of subsidiary Main business activities 2020 2019 Description
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Name of investor	Name of subsidiary	Main business activities	2020	2019	Description
CSBC	CSBC Coating	Marine coating,	100	100	Note
CORPORATION,	Solutions Co., Ltd.	steel structure painting works,
TAIWAN		surface treatment, and high-
		tech anti-corrosion
CSBC Coating	BLUE ACE	Marine coating,	100	100
Solutions Co., Ltd.	CORPORATION	steel structure painting
		works, surface treatment, and
		high-tech anti-corrosion
CSBC Coating	Blue Ocean Wind	Marine works services	100	100
Solutions Co., Ltd.	Power Engineering
	(Hong Kong) Limited

Note: The Company acquired a 30% equity interest from non-controlling interests in September 2019, please refer to Notes 6(32) and 7(2)H for further information.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:

The non-controlling interests are not material to the Group.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollar, which is the Company’s functional and the Group’s presentation currency.

A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation at the balance sheet date are recognised in profit or loss.
C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

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D. All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

(5) Classification of current and non-current items

A. The Company is engaged in the business of shipbuilding, vessel building, major machinery building and ship repairing such that the contractual periods of these projects are usually over one year. Therefore, the assets and liabilities of these projects are classified as current assets or liabilities if the period of the project is shorter than the operating cycle; otherwise they are classified as non-current assets or liabilities. The classification criteria of assets and liabilities that are not project related are as follows ： Current assets include cash, the assets held for trading or the assets arising from operating activities that are expected to be consumed or to be realized within twelve months from the balance sheet date; fixed assets and other assets that are not classified as current assets are non-current assets. Current liabilities include the liabilities arising mainly from trading activities and are expected to be settled within twelve months from the balance sheet date. The liabilities that are not classified as current liabilities are non-current liabilities.
B. Classification of current and non-current items of the Company’s subsidiaries is as follows:
(a) Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
i. Assets arising from operating activities that are expected to be realised, or are intended to be sold or consumed within the normal operating cycle;
ii. Assets held mainly for trading purposes;
iii. Assets that are expected to be realised within twelve months from the balance sheet date;
iv. Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
(b) Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
i. Liabilities that are expected to be settled within the normal operating cycle;
ii. Liabilities arising mainly from trading activities;
iii. Liabilities that are to be settled within twelve months from the balance sheet date;
iv. Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.

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(7) Accounts and notes receivable

A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(8) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income and financial assets at amortised cost, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

(9) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

- (10) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(11) Inventories

The perpetual inventory system is adopted for inventory recognition. Inventories are stated at cost. The cost is determined using the weighted-average method. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value is based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

(12) Investments accounted for under the equity method - associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

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B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
C. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. When the Group disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

- (13) Investment accounted for using equity method joint ventures

Investment of joint arrangements are classified as joint ventures based on its contractual rights and obligations. Unrealised profits and losses arising from the transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the joint venture. However, when the transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, all such losses shall be recognised immediately. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture together with any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

(14) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

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C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Land improvements 5 ～ 50 years Buildings and structures 8 ～ 65 years Machinery and equipment 2 ～ 58 years Transportation equipment 3 ～ 40 years Leasehold improvements 3 ～ 14 years Other equipment 2 ～ 14 years

(15) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:
(a) Fixed payments, less any lease incentives receivable;
(b) Variable lease payments that depend on an index or a rate;
(c) Amounts expected to be payable by the lessee under residual value guarantees;
(d) The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option; and
(e) Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

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C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date;
(c) Any initial direct costs incurred by the lessee; and
(d) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(16) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 60 years.

(17) Intangible assets

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 5 years.

(18) Impairment of non-financial assets

The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(19) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

(20) Accounts and notes payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(21) Convertible bonds

Convertible bonds issued by the Group contain conversion options (that is, the bondholders have the right to convert the bonds into the Group’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Group classifies the bonds payable upon issuance as a financial asset, a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

A. The embedded call options and put options are recognised initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.
B. The host contracts of bonds are initially recognised at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortised in profit or loss as an adjustment to ‘finance costs’ over the period of circulation using the effective interest method.
C. The embedded conversion options which meet the definition of an equity instrument are initially recognised in ‘capital surplus—share options’ at the residual amount of total issue price less the amount of financial assets or financial liabilities at fair value through profit or loss and bonds payable as stated above. Conversion options are not subsequently remeasured.
D. Any transaction costs directly attributable to the issuance are allocated to each liability or equity component in proportion to the initial carrying amount of each abovementioned item.
E. When bondholders exercise conversion options, the liability component of the bonds (including bonds payable and ‘financial assets or financial liabilities at fair value through profit or loss’) shall be remeasured on the conversion date. The issuance cost of converted common shares is the total book value of the abovementioned liability component and ‘capital surplus - share options’.

(22) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(23) Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

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(24) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(25) Employee benefits
A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognised as expenses in that period when the employees render service.

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when they are due on an accrual basis. Prepaid contributions are recognised as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
- ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognised immediately in profit or loss.
C. Termination benefits
Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

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D. Employees’ compensation and directors’ and supervisors’ remuneration
- Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
(26) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures, employees’ training costs and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

~27~

(27) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(28) Revenue recognition

A. The revenues from construction contracts in relation to shipbuilding, vessel construction and machinery manufacturing are identified to be one performance obligation satisfied over time and are recognised by the percentage-of-completion as of the financial reporting date. The percentage-of-completion is measured based on the percentage of the workload completed to the total expected workload of the contracts. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.
B. The revenues from service contract in relation to ship/vessel repairs and anti-corrosion coating are identified to be one performance obligation satisfied over time and are recognised by the percentage-of-completion as of the financial reporting date. The percentage-of-completion is measured based on the percentage of the actual cost incurred to the total expected cost of the contracts. At the beginning of the contract period, as the Group may find it difficult to estimate the result of obligation performance, it estimates the actual cost incurred for performing obligations which could be recovered. The contract revenue should be recognised only to the extent of actual costs incurred until the result of obligation performance could by measured reasonably.
C. The Group’s estimate about revenue, costs and percentage-of-completion is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.
D. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, according to the agreements, the Group does not adjust the transaction price to reflect the time value of money.
E. The Company classifies its ship leasing business as an operating lease. Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(29) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate.

~28~

(30) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical judgements in applying the Group’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Group’s accounting policies

None.

(2) Critical accounting estimates and assumptions

Construction contracts

The Group recognises construction contract revenue and costs using the percentage-of-completion method, wherein the revenue to be recognised is equal to the percentage of completed work out of the total estimated work.

Assumptions for estimated construction cost include cost for equipment, material, labor and etc. Data used for assumptions involves subjective judgement and accounting estimates and are highly uncertain. As a result, assumptions used are material to the total construction cost and further affects the calculation of construction profit.

If the estimated total contract costs had increased/ decreased by 1% with all other variables held constant, construction profit for the year ended December 31, 2020 would have decreased by $433,294 or increased by $367,795 (the construction profit for the year ended December 31, 2019 would have decreased by $363,393 or increased by $474,150).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits	December31,2020 580 $ 923,051 314,214 1,237,845 $	December31,2019
		500 $ 2,043,630 2,078,233
		4,122,363 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.

~29~

(2) Accounts receivable, net

			December31,2020			December31,2019
Construction receivables		$	1,238,032		$	1,303,160
Repair receivables			250,715			309,585
			1,488,747			1,612,745
Less: Allowance for doubtful accounts	(		317,653)	(		319,088)
		$	1,171,094		$	1,293,657
Accounts receivable - related parties		$	23,833		$	8,012

A. As of December 31, 2020 and 2019, accounts receivable was all from contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $1,219,789.
B. As at December 31, 2020 and 2019, with taking into account collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’ accounts receivable (including related parties) was $1,194,927 and $1,301,669, respectively.
C. As of December 31, 2020 and 2019, the Company’s past due construction receivables amounted to $796,040 and $0, respectively, because the counterparty failed to fulfil the mutual agreements, and the payments were still under negotiation.
D. Information relating to credit risk is provided in Note 12(2).

(3) Inventories

Raw materials Work in process and repair of goods Raw materials Work in process and repair of goods		December31,2020
	Allowance for Cost valuation loss 2,321,658 $ 42,173) ($ 69,877 - 2,391,535 $ 42,173) ($ December31,2019		Bookvalue
			2,279,485 $ 69,877
			2,349,362 $

	Allowance for Cost valuation loss 1,817,690 $ 45,288) ($ 52,190 - 1,869,880 $ 45,288) ($		Bookvalue
			1,772,402 $ 52,190
			1,824,592 $

~30~

The amount of inventories recognised as expense for the years ended December 31, 2020 and 2019 is as follows:

is as follows:
		Years ended	December	31,
		2020		2019
Raw materials costs	$	12,440,589	$	6,885,350
(Gain) loss from reversal of obsolete inventories	(	3,115)		11,295
	$	12,437,474	$	6,896,645

The Group reversed a previous inventory write-down and accounted for this transaction as a reduction of expenses because the related inventory items were scrapped or sold in 2020.

(4) Prepayments

Prepayments
Prepayments of suppliers Excess VAT paid Other prepayments	December31,2020 9,836,976 $ 5,811 60,015 9,902,802 $	December31,2019
		5,224,592 $ 5,050 39,963
		5,269,605 $

(5) Investments accounted for under equity method

A. Details of investments accounted for under equity method are as follows:

			2020			2019
At January 1		$		29,408		$	10,992
Additional investments accounted for			1,050,000				49,500
using the equity method
Share of profit or loss of investments
accounted for using the equity method	(			19,975)	(		31,084)
At December 31		$	1,059,433			$	29,408
		December31,		2020		December31,	2019
Associates:
Taiwan International Windpower		$		10,911		$	10,570
Training Corporation Ltd. (Note 1)
Taiwan Offshore Wind Farm Services
Corporation (Note 2)				-			-
Fuhai Wind Farm Corporation (Note 3)				-			-
Joint Ventures:
CSBC - DEME Wind Engineering Co.,
Ltd. (Note 4)			1,048,522				18,838
		$	1,059,433			$	29,408

~31~

Note 1: On May 11, 2018, with reporting to the Board of Directors for future reference, the Group, Taiwan International Ports Corporation, Ltd. and other companies jointly established Taiwan International Windpower Training Corporation Ltd. for investment. The Group owns 12% of the investee’s share capital and one seat in the Board of Directors of the investee.
Note 2: On March 21, 2014, the Board of Directors has resolved that the Group and Taiwan Generations Corporation would jointly establish Taiwan Offshore Wind Farm Services Corporation. The Company has acquired 40% of share capital in September 2014. The Group has ceased recognising its share of losses in this company since the fourth quarter of 2018 and the unrecognised share of losses in associate for the year ended December 31, 2020 and accumulated share of losses in associate amounted to $2,952 and $6,856, respectively.
Note 3: On August 9, 2016, the Board of Directors resolved to invest in Fuhai Wind Farm Corporation and obtained 37.97% of ownership shares. The Group has ceased recognising its share of losses in this company since the third quarter of 2017 and the unrecognised share of losses in associate for the year ended December 31, 2020 and accumulated share of losses in associate amounted to $16,271 and $74,953, respectively.
Note 4: On September 12, 2018, the Company’s Board of Directors resolved to jointly invest in CSBC-DEME Wind Engineering Co., Ltd. with DEME Offshore Holding N.V. (formerly named GeoSea N.V.). The Group held 50.0001% equity interests in CSBC-DEME Wind Engineering Co., Ltd., and the Board of Directors adopts unanimity rule to make resolutions under the Company's Articles of Incorporation.
- On January 15, 2020, the Company’s Board of Directors resolved to jointly increase investments in CSBC-DEME Wind Engineering Co., Ltd. with DEME Offshore Holding N.V. for building a marine installation vessel in order to implement maritime engineering business. CSBC-DEME Wind Engineering Co., Ltd. completed the capital increase approximately to $2.1 billion (approximately EUR 62.5 million). The Company subscribed 10,606,060 shares, equivalent to $1,050,000, according to its shareholding ratio.
B. The Group’s share of the operating results in all individually immaterial associates are summarized below:

(Gain) loss for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income (loss)	2020 2019 341 $ 422) ($ - - 341 $ 422) ($ Years endedDecember31,

~32~

C. Share of the operating results of the Group’s individually immaterial joint ventures is summarised below:

		Years ended	December	31,
		2020		2019
Loss for the year from continuing	($	20,316)	($	30,662)
operations
Other comprehensive income - net
of tax		-		-
Total comprehensive loss	($	20,316)	($	30,662)

D. The Group had impairment loss in investments accounted for using equity method as the carrying amount exceeds recoverable amount. As of December 31, 2020 and 2019, the accumulated impairment loss amounted to $124,915 for both years.

~33~

(6) Property, plant and equipment

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 Opening net book amount as at January 1 Additions Disposals - costs Reclassifications - costs (Note) Depreciation charge Disposals - accumulated depreciation Closing net book amount as at December 31 At December 31, 2020 Cost Accumulated depreciation and impairment	Land 6,096,033 $ - 6,096,033 $ 6,096,033 $ - - 2,092) ( - - 6,093,941 $ 6,093,941 $ - 6,093,941 $	Land improvements	Buildings Machinery Transportation Leasehold Other and structures and equipment equipment improvements equipment 7,527,803 $ 10,096,508 $ 1,556,676 $ 1,073,756 $ 152,524 $ 6,581,473) ( 8,075,290) ( 623,860) ( 779,867) ( 109,692) ( 946,330 $ 2,021,218 $ 932,816 $ 293,889 $ 42,832 $ 946,330 $ 2,021,218 $ 932,816 $ 293,889 $ 42,832 $ - 4,055 250 - 371 4,595) ( 125,706) ( 5,604) ( - 5,096) ( 178,439 322,195 34,446 - 2,907 108,412) ( 303,092) ( 71,183) ( 48,744) ( 11,301) ( 4,595 123,515 5,600 - 5,094 1,016,357 $ 2,042,185 $ 896,325 $ 245,145 $ 34,807 $ 7,701,647 $ 10,297,052 $ 1,585,768 $ 1,073,756 $ 150,706 $ 6,685,290) ( 8,254,867) ( 689,443) ( 828,611) ( 115,899) ( 1,016,357 $ 2,042,185 $ 896,325 $ 245,145 $ 34,807 $	Construction inprogress Total 252,834 $ 27,874,837 $ - 16,919,325) ( 252,834 $ 10,955,512 $ 252,834 $ 10,955,512 $ 960,622 965,298 - 141,001) ( 566,973) ( 2,092) ( - 585,453) ( - 138,804 646,483 $ 11,331,068 $ 646,483 $ 28,697,042 $ - 17,365,974) ( 646,483 $ 11,331,068 $	Total
		1,118,703 $ 749,143) ( 369,560 $ 369,560 $ - - 28,986 42,721) ( - 355,825 $ 1,147,689 $ 791,864) ( 355,825 $
					11,331,068 $

~34~

At January 1, 2019 Cost Accumulated depreciation and impairment 2019 Opening net book amount as at January 1 Additions Disposals - costs Reclassifications - costs (Note) Depreciation charge Disposals - accumulated depreciation Closing net book amount as at December 31 At December 31, 2019 Cost Accumulated depreciation and impairment	Land 6,096,033 $ - 6,096,033 $ 6,096,033 $ - - - - - 6,096,033 $ 6,096,033 $ - 6,096,033 $	Land improvements	Buildings Machinery Transportation Leasehold Other Construction and structures and equipment equipment improvements equipment inprogress Total 7,643,527 $ 9,969,128 $ 942,466 $ 1,073,622 $ 147,429 $ 509,722 $ 27,381,499 $ 6,669,655) ( 8,013,082) ( 575,893) ( 731,133) ( 100,720) ( - 16,800,176) ( 973,872 $ 1,956,046 $ 366,573 $ 342,489 $ 46,709 $ 509,722 $ 10,581,323 $ 973,872 $ 1,956,046 $ 366,573 $ 342,489 $ 46,709 $ 509,722 $ 10,581,323 $ - 20,359 1,676 134 1,660 950,950 974,779 210,994) ( 251,593) ( 11,525) ( - 2,289) ( - 477,541) ( 95,270 358,614 624,059 - 5,724 1,207,838) ( 3,900) ( 104,544) ( 287,622) ( 59,491) ( 48,734) ( 11,223) ( - 552,089) ( 192,726 225,414 11,524 - 2,251 - 432,940 946,330 $ 2,021,218 $ 932,816 $ 293,889 $ 42,832 $ 252,834 $ 10,955,512 $ 7,527,803 $ 10,096,508 $ 1,556,676 $ 1,073,756 $ 152,524 $ 252,834 $ 27,874,837 $ 6,581,473) ( 8,075,290) ( 623,860) ( 779,867) ( 109,692) ( - 16,919,325) ( 946,330 $ 2,021,218 $ 932,816 $ 293,889 $ 42,832 $ 252,834 $ 10,955,512 $	Total
		999,572 $ 709,693) ( 289,879 $ 289,879 $ - 1,140) ( 120,271 40,475) ( 1,025 369,560 $ 1,118,703 $ 749,143) ( 369,560 $
				10,955,512 $

Note: The reclassifications to investment property and related information is provided in Note 6(9).

~35~

A. Amount of borrowing costs capitalised as part of property, plant and equipment are as follows:

	Years ended	December31,
	2020	2019
Amount capitalised	1,302 $	2,692 $
Interest rate	0.01%~2.00%	0.88%~2.30%

B. Significant components and the useful lives of land improvements, buildings, and machinery equipment of the Group are as follows:
- (a) The significant components of land improvements include construction expenses for wharf, which are depreciated over 45 years.
- (b) The significant components of buildings include shipyard, plants and warehouse, and office buildings, which are depreciated over 40, 45 and 60 years, respectively.
- (c) The significant components of machinery equipment include hoisting machine, crane and substation as well as welding machine and working platform, which are depreciated over 25, 20 and 10 years, respectively.
C. The Group’s property, plant and equipment all were acquired for self-use and were not pledged to others as collateral.
－
(7) Lease transactions lessee
A. The Group leases various assets including land, buildings and terminal equipment. Rental contracts are typically made for periods of 3 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes and may not affect the ownership of the lessor.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings and structures Transportation equipment (terminal equipment) Land Buildings and structures Transportation equipment (terminal equipment)	December31,2020 December31,2019 Bookvalue Bookvalue $ 3,174,580 $ 3,460,728 92,004 102,842 234,360 241,893 3,500,944 $ 3,805,463 $ Years endedDecember31,	December31,2019
		Bookvalue
		$ 3,460,728 102,842 241,893
		3,805,463 $
	2020 Depreciation expense $ 164,179 13,144 68,638 245,961 $	2019
		Depreciation expense
		$ 168,378 12,792 56,574
		237,744 $

~36~

C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $57,645 and $5,268, respectively.
D. Information on profit or loss in relation to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	2020 2019 $ 44,218 $ 47,572 18,523 14,348 630 738 63,371 $ 62,658 $ Years endedDecember31,

E. For the years ended December 31, 2020 and 2019, the Group’s total cash outflow for leases were $292,034 and $277,352, respectively.
F. Variable lease payments

Some of the Group’s lease contracts contain variable lease payment terms that are linked to construction cost index and announced land value. The Group remeasured and decreased lease liabilities by $116,203, and made a corresponding adjustment to the right-of-use assets.

G. The Group has applied the practical expedient to “Covid-19-related rent concessions”, and recognised the gain from changes in lease payments arising from the rent concessions amounting to $10,447 for the year 2020 as other income.

(8) Leasing arrangements – lessor

A. The Group leases various assets including land and buildings. Rental contracts are typically made for periods of 2 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. To secure the use of the leased assets, the leased assets may not be used to sublease, sublet, lend, donate, sell or grant to others under any method.
In addition, the Group leases rooftop of its plants for lessees to install solar photovoltaic power generation equipment. Rental contracts are typically made for periods of 20 years. Lease payments consist of fixed base rent and variable operating rent.
B. For the years ended December 31, 2020 and 2019, the Group recognised rent income in the amounts of $20,677 and $9,975, respectively, based on the operating lease agreement, in which the amounts of variable lease payments were not material.
C. The maturity analysis of the lease payments under the operating leases is as follows:

Less than 1 year Later than 1 year but not later than 5 years Later than 5 years	December31,2020 $ 26,759 126,002 340,841 493,602 $	December31,2019
		$ 6,222 4,301 -
		10,523 $

~37~

(9) Investment property, net

At January 1, 2020
Cost

Accumulated depreciation and impairment
2020
Opening net book amount as at January 1

Additions - from subsequent expenditures (Note)
Depreciation charge
Closing net book amount as at December 31
At December 31, 2020
Cost

Accumulated depreciation and impairment
At January 1, 2019
Cost

Accumulated depreciation and impairment
2019
Opening net book amount as at January 1

Additions - from subsequent expenditures (Note)
Depreciation charge
Closing net book amount as at December 31
At December 31, 2019
Cost

Accumulated depreciation and impairment

Buildings
Land
and structures
Total
$ 200,486 $ 29,745 $ 230,231
-
18,725)
(
18,725)
(
200,486
$ 11,020
$
211,506
$ $ 200,486 $ 11,020 $ 211,506
2,092
-
2,092
-
680)
(
680)
(
200,486
$ 10,340
$ 212,918
$ $ 200,578 $ 29,745 $ 230,323
-
19,405)
(
19,405)
(
200,578
$ 10,340
$ 210,918
$
Buildings
Land
and structures
Total
$ 200,486 $ 25,845 $ 226,331
-
18,169)
(
18,169)
(
200,486
$ 7,676
$ 208,162
$ $ 200,486 $ 7,676
$ 208,162
-
3,900
3,900
-
556)
(
556)
(
200,486
$ 11,020
$ 211,506
$ $ 200,486 $ 29,745 $ 230,231
-
18,725)
(
18,725)
(
200,486
$ 11,020
$ 211,506
$

Note: The reclassifications from property, plant and equipment and related information is provided in Note 6(6).

~38~

A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:

Rental income from the lease of the investment property Direct operating expenses arising from the investment property that generate rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	2020 2019 20,677 $ 9,975 $ 1,300 $ 1,372 $ - $ - $ Years endedDecember31,

B. The fair value of the investment property held by the Group as at December 31, 2020 and 2019 were $672,686 and $651,134, respectively, which was revalued by independent valuers. Valuations were made using the comparison method, cost method for land development analysis and the income approach.

(10) Intangible assets

Software:			Years ended	December	31,
			2020		2019
At January 1
Cost		$	24,697	$		49,854
Accumulated amortisation and impairment	(		14,576)	(		35,243)
		$	10,121	$		14,611
Opening net book amount as at January 1		$	10,121	$		14,611
Additions - acquired separately			27,065			11,668
Disposals - costs	(		16,893)	(		36,825)
Amortisation charge	(		15,710)	(		16,158)
Disposals - accumulated amortisation			16,893			36,825
Closing net book amount as at December 31		$	21,476	$		10,121
At December 31
Cost		$	34,869	$		24,697
Accumulated amortisation and impairment	(		13,393)	(		14,576)
		$	21,476	$		10,121

~39~

Details of amortisation on intangible assets are as follows:

Operating costs Administrative expenses	2020 2019 15,700 $ 16,148 $ 10 10 15,710 $ 16,158 $ Years ended December31,

(11) Short-term loans

Type of loans Bank loans Unsecured loans Procurement unsecured loans Type of loans Bank overdrafts Bank loans Unsecured loans Procurement unsecured loans	December31,2020 5,267,100 $ 12,046 5,279,146 $ December 31, 2019 1,954 $ 1,800,000 20,407 1,822,361 $	Interestraterange 0.85%`～`1.40% 0.42%`～`1.40% Interestraterange 1.57% 0.91%`～`1.06% 0.40%`～`2.53%	Collateral
			None None Collateral
			None None None

(12) Short-term notes and bills payable

		December31,2020	December 31, 2019
Commercial papers payable	$	2,700,000	1,700,000 $
Less: Unamortized discount	(	595)	437) (
	$	2,699,405	1,699,563 $
Annual interest rates		0.33%～0.82%	0.61%～0.84%

The above commercial paper payables are guaranteed and issued by MEGA Bills Finance Co., Ltd., Ta Ching Bills Finance Corporation, China Bills Finance Corporation, International Bill Finance Corporation, Taiwan Finance Corporation and First Commercial Bank Co., Ltd.

~40~

(13) Financial liabilities at fair value through profit or loss

Items		December31,2020		December31,2019
Non-current items:
Financial liabilities designated as at fair
value through profit or loss
Call and put options embedded in
convertible bonds	$	17,744	$	-
Valuation adjustment	(	11,749)		-
	$	5,995	$	-

A. Information about the amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss is provided in Note 6(26).
B. Information about the terms of the first domestic secured convertible bonds issued by the Company is provided in Note 6(16).

(14) Other payables

Accrued expenses Construction payment refund Others	December31,2020 December 31, 2019 1,235,342 $ 1,118,546 $ 63,755 45,905 29,806 28,535 1,328,903 $ 1,192,986 $

(15) Provisions

			Warranty		Onerous	contracts			Total
At January 1, 2020		$	499,487		$	1,118,097		$	1,617,584
Additional provisions			118,179			1,482,087			1,600,266
Used during the year	(		85,735)	(		1,812,824)	(		1,898,559)
Unused amounts reversed	(		19,598)	(		6,931)	(		26,529)
At December 31, 2020		$	512,333		$	780,429		$	1,292,762

The analysis of provisions is as follows:

Realised in one year Realised after one year	December31,2020 447,495 $ 845,267 1,292,762 $	December31,2019 732,693 $ 884,891 1,617,584 $	January1,2019
			547,519 $ 1,980,040
			2,527,559 $

~41~

A. Provision for warranty

The Group gives warranties on contracts revenue in relation to shipbuilding, vessel construction and anti-corrosion coating. Provision for warranty is estimated based on historical warranty data of products.

B. Provision for onerous contract

Under the irrevocable contracts of shipbuilding, vessel construction and anti-corrosion coating, the Group’s estimated provision for onerous contract is the difference between the inevitable cost of existing obligations to be performed in the future and the expected economic benefits from the contracts. The estimated provision may change with the actual construction situation.

(16) Bonds payable

Bonds payable
December 31, 2020 The first domestic secured convertible bonds 1,998,400 $ Less: Discount on bonds payable 66,099) ( 1,932,301 Less: Expiring within one year (shown as ‘long-term liabilities, current portion' ) - 1,932,301 $	December 31, 2019
	- $ -
	- -
	- $

A. The issuance of domestic convertible bonds by the Company
(a) The terms of the first domestic secured convertible bonds issued by the Company are as follows:
- i. The Company issued $2 billion, 0% first domestic secured convertible bonds, as approved by the regulatory authority. The bonds mature 5 years from the issue date (February 24, 2020 ~ February 24, 2025).

The bonds will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on February 24, 2020.

ii. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three month of the bonds issue (May 25, 2020) to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.
iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds. The conversion price is $25.1 (in dollars) per share, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be recalculated based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the recalculated conversion price is lower than the conversion price before the recalculation, the conversion price will be adjusted; however, it will not be adjusted if it is higher.

~42~

iv. The Company may notify to repurchase all the bonds outstanding in cash at the bonds’ face value within 30 trading days after the closing price of the Company’s common shares is above the then conversion price by at least 30% for 30 consecutive trading days during the period from the date after three months of the bonds issue (May 25, 2020) to 40 days before the maturity date (January 15, 2025).

Alternatively, the Company may repurchase the bonds outstanding in cash at the bonds’ face value at any time if the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after three months of the bonds issue (May 25, 2020) to 40 days before the maturity date (January 15, 2025).

  - v. The bonds set the date after four years from the issue date (February 24, 2024) as the put effective date for the bondholders to early put the bonds back to the Company. The bondholders have the right to require the Company to redeem the bonds in cash at 102.0151% of the bonds’ face value (a yield to put of 0.5%)

  - vi. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.

(b) As of December 31, 2020, the bonds with a face value of $1,600 have been converted into 64 thousand common shares, and the Company did not adjust the conversion price.
B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $96,153 were separated from the liability component and were recognised in ‘capital surplus - share options’ in accordance with IAS 32. The call options and put options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IFRS 39 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rates of the bonds payable after such separation was 0.8084%.

~43~

- (17) Long term borrowings, net of current portion

Borrowing period and repayment term Long-term bank borrowings Unsecured borrowings Bank of Taiwan Borrowing period is from Jun. 22, 2017 to Jun. 22, 2022; principal is repayable in 4 installments beginning in the 4th year. Taiwan Business Bank Borrowing period is from Mar. 12, 2018 to Mar. 12, 2023; principal is repayable in 5 installments after 2.5 years. Commercial papers payable Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 26, 2020 to Dec. 15, 2022. Details are set out below. China Bills Finance Corporation Borrowing period is from Jun. 26, 2020 to Oct. 26, 2022. Details are set out below. Taishin International Bank Borrowing period is from Jun. 21, 2020 to Dec. 20, 2022. Details are set out below. International Bills Finance Corporation Borrowing period is from Jun. 22, 2020 to Jun. 21, 2022. Details are set out below. Less: Discount on commercial papers payable Less: Long-term borrowings, current portion	Borrowing period and repayment term	Interest rate range 1.18% 1.05% 0.60% 0.56% 0.43% 0.51%	Collateral December31,2020 None 1,500,000 $ None 700,000 2,200,000 None 1,000,000 None 850,000 None 800,000 None 350,000 1,430) ( 2,998,570 5,198,570 1,280,000) ( 3,918,570 $

~44~

Borrowing period and repayment term Long-term bank borrowings Unsecured borrowings Bank of Taiwan Borrowing period is from Jun. 22, 2017 to Jun. 22, 2022; principal is repayable in 4 installments beginning in the 4th year. Taiwan Business Bank Borrowing period is from Mar. 12, 2018 to Mar. 12, 2023; principal is repayable in 5 installments after 2.5 years . Commercial papers payable China Bills Finance Corporation Borrowing period is from Sep. 26, 2017 to Oct. 27, 2021. Details are set out below. Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 26, 2017 to Oct. 15, 2021. Details are set out below. Taishin International Bank Borrowing period is from Jun. 22, 2017 to Dec. 20, 2021. Details are set out below. International Bills Finance Corporation Borrowing period is from Jun. 22, 2017 to Jun. 22, 2021. Details are set out below. Less: Discount on commercial papers payable Less: Long-term borrowings, current portion	Borrowing period and repayment term	Interest rate range 1.36% 1.30% 0.66% 0.72% 0.68% 0.63%	Collateral December31,2019 None 2,000,000 $ None 700,000 2,700,000 None 1,000,000 None 1,000,000 None 800,000 None 350,000 2,228) ( 3,147,772 5,847,772 500,000) ( 5,347,772 $

~45~

The Group entered into an agreement for recurring issuance (maturity of 60~180 days) of certificates and dealership of commercial papers with the bill finance companies. During the contract term of 2 ~ 4 years, the Group is only liable for the service fees and interest and thus the commercial papers payable is included in long-term borrowings. Both parties shall renegotiate the agreement when the agreement matures.

(18) Deferred revenue

A. The Republic of China Government started to promote privatization starting from 2008. The Privatization Fund, Executive Yuan, would provide a loan in the amount of $1,500,000 to cover a portion of the shortfall to settle the pension and severance obligation as a result of the privatization. The Group was required to repay the loan to the Privatization Fund in a period of ten years, under the condition that the Company is profitable. The Company extended the repayment period to 2026 as approved by the Executive Yuan. The Group uses the average longterm loan interest rate on the loan for discounting. The discounted values are recorded under “long-term notes payable and payables”. The difference between the discounted value and the amount received is listed in “deferred revenue”. The amounts that are payable within one year are listed in “other financial liabilities-current”. The unamortised amounts are shown below:

Long-term notes and accounts receivable Long-term deferred revenue	December 31, 2020 693,347 $ 48,153 741,500 $	December31,2019
		681,757 $ 59,743
		741,500 $

B. Government grants and interest expenses that should be amortised are recognised under ‘other revenue’ and ‘finance costs’, respectively, for the years December 31, 2020 and 2019. For more information, please refer to Notes 6(25) and (27).

(19) Pension

A. (a)The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. The Company has assessed that the balance is sufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year.

~46~

(b)The amounts recognised in the balance sheet are as follows:

		December 31, 2020		December 31, 2019
Present value of funded obligations	($	1,751,981)	($	1,666,395)
Fair value of plan assets		1,748,580		1,623,965
Net defined benefit liability	($	3,401)	($	42,430)

(c) Movements in net defined benefit liabilities are as follows:

Year ended December 31, 2020 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets Experience adjustments Pension fund contribution Paid pension Balance at December 31 Year ended December 31, 2019 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefitliability
	1,666,395) ($ 151,960) ( 24,575) ( 1,842,930) ( - 30,960 30,960 - 59,989 1,751,981) ($ Present value of defined benefit obligations	1,623,965 $ - 29,062 1,653,027 35,542 - 35,542 120,000 59,989) ( 1,748,580 $ Fair value of plan assets		42,430) ($ 151,960) ( 4,487 189,903) ( 35,542 30,960 66,502 120,000 - 3,401) ($ Net defined benefit liability
	1,576,173) ($ 158,480) ( 27,223) ( 1,761,876) ( - 4,509) ( 56,261 51,752 - 43,729 1,666,395) ($	1,481,805 $ - 26,739 1,508,544 39,150 - - 39,150 120,000 43,729) ( 1,623,965 $		94,368) ($ 158,480) ( 484) ( 253,332) ( 39,150 4,509) ( 56,261 90,902 120,000 - 42,430) ($

~47~

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	2020 2019 1.50% 1.50% 3.25% 3.25% Years endedDecember31,

Future mortality rate is estimated with 70% of the 3rd Taiwan Standard Ordinary Experience Mortality Table. The disability rate is set based on 10% of mortality rate.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

Increase 0.25% Decrease 0.25% December 31, 2020 37,367) ($ 38,514) ($ December 31, 2019 38,081) ($ 39,320 $ Discountrate Effect on present value of defined benefit obligation	Increase 0.25% Decrease 0.25% 33,584 $ 32,814) ($ 34,600 $ 33,750) ($ Future salaryincreases

The sensitivity analysis above is based on other conditions thate are unchanged but only one assumption is changed. In practice, more than one assumption may change all at once. The method of analysing sensitivity and the method of calculating net pension liability in the balance sheet are the same.

~48~

(f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2021 amount to $126,785.
(g) As of December 31, 2020, the weighted average duration of the defined benefit obligations is 8 years. The distribution of the present value of expected defined benefit obligations (within 10 years) is as follows:

For the year ended December 31, 2021 $ 95,172 For the year ended December 31, 2022 107,393 For the year ended December 31, 2023 1,750,686 For the year ended December 31, 2024 1,770,345 For the year ended December 31, 2025 1,777,262 For the year ended December 31, 2026 1,732,156 For the year ended December 31, 2027 1,714,853 For the year ended December 31, 2028 1,581,594 For the year ended December 31, 2029 1,230,401 For the year ended December 31, 2030 796,713

Note: The same person who meets the retirement conditions will calculate the present value of expected defined benefit obligations in each subsequent year until he/she meets the mandatory retirement age of 65.
B. Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2020 and 2019 were $102,958 and $104,491, respectively.

~49~

(20) Analysis of assets and liabilities

Assets and liabilities of the Group related to the business of shipbuilding, vessel building, major machinery and ship repair, are classified as current or non-current based on the operating cycle. However, such assets and liabilities were analyzed on "one year" basis as follows:

December 31, 2020 Assets Contract assets (including related parties) Accounts receivable, net (including related parties) Inventories, net Liabilities Contract liabilities (including related parties) Notes payable (including related parties) Accounts payable Provision for liabilities December 31, 2019 Assets Contract assets (including related parties) Accounts receivable, net (including related parties) Inventories, net Liabilities Contract liabilities (including related parties) Notes payable (including related parties) Accounts payable Provision for liabilities	Less than 12 months 4,519,978 $ 1,189,947 2,349,362 8,059,287 $ 456,751 $ 119,692 1,478,280 447,278 2,502,001 $ Less than 12 months 5,580,023 $ 1,298,696 1,824,592 8,703,311 $ 645,195 $ 285,404 984,564 731,482 2,646,645 $	More than 12 months 3,527 $ - - 3,527 $ 6,242,039 $ - - 841,400 7,083,439 $ More than 12 months 7,110 $ - - 7,110 $ 8,053,779 $ - - 884,015 8,937,794 $	Total
			4,523,505 $ 1,189,947 2,349,362
			8,062,814 $
			6,698,790 $ 119,692 1,478,280 1,288,678
			9,585,440 $
			Total
			5,587,133 $ 1,298,696 1,824,592
			8,710,421 $
			8,698,974 $ 285,404 984,564 1,615,497
			11,584,439 $

~50~

(21) Common stock

A. As of December 31, 2020, the Company’s authorised capital was $11,138,997, consisting of 1,113,899.7 thousand shares of ordinary stock and the paid-in capital was $4,730,555 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

2020 At January 1 472,992 Cash capital increase - Conversion of corporate bonds 64 At December 31 473,056	Shares in thousands 2019 372,992 100,000 -
	472,992

B. For the year ended December 31, 2020, the number of common stocks converted from convertible bonds was 64 thousand shares. As of the date of auditors’ report, the registrations have not yet been completed.
C. In order to fulfil its capital and repay the bank loans, as resolved by the Board of Directors on November 11, 2020, the Company conducted a public offering for cash capital increase by issuing common stock, which was approved by Financial Supervisory Commission pursuant to Jin-Guan-Zheng-Fa-Zi Letter No. 1090378803, dated January 15, 2021. The Company issued 450 million common stocks at an issue price of $17.5 (in dollars) per share. The rights and obligations of shares issued at this capital increase are the same as the original common stocks. As of the date of auditors’ report, the capital increase is still in process.
D. The Company’s special shareholders’ meeting has approved the proposal regarding the capital increase through private placement on December 21, 2017. The record date for capital increase resolved by the Board of Directors at their meeting on May 11, 2018 was May 25, 2018. The amount of capital raised through the private placement was $2,526,000 by issuing common stock amounting to 60 million shares at premium of $42.10 (in dollars) per share, of which the government related entity, Financing Investment Venture Capital, and the management committee of Yaohua Glass Corp., Ltd. each subscribed 30 million shares amounted to $1,263,000. The Company has completed the registration of the capital increase. The investors in this private placement is entitled to the same rights and obligations as those of outstanding shares except that they cannot freely transfer the shares within 3 years of settlement unless under certain circumstances pursuant to Article 43-8 of Securities and Exchange Act. Under the resolution, the Board of Directors are authorised to file for listing the ordinary shares in private placement with the competent authority after 3 years of settlement.

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E. In order to fulfil its capital and repay the bank loans, as resolved by the Board of Directors on August 10, 2018, the Company conducted a public offering for cash capital increase by issuing common stock, which was approved by Financial Supervisory Commission pursuant to JinGuan-Zheng-Fa-Zi Letter No. 1070339392 dated November 19, 2018. The amount of capital raised was $2.252 billion by issuing common stock amounting to 100 million shares at a par value of $22.52 (in dollars) per share. In addition, the public offering completion date and record date for capital increase was January 31, 2019 and relevant registration procedures are still in process. The rights and obligations of shares issued at this capital increase are the same as the outstanding common stocks.
The abovementioned capital increase was subscribed by the Company’s legal entity directors, CPC Corporation, Taiwan and China Steel Corporation’s subsidiary, China Steel Express Corporation, in the amount of $89,645 and $35,121, equivalent to 3,981 thousand shares and 1,560 thousand shares, respectively. In addition, the government related parties, National Defense Industrial Development Foundation, Yao Hua Glass Co., Ltd., Management Committee and Financing Investment Venture Capital participated in the capital increase in the amount of $563,000, $135,848 and $135,848, equivalent to 25,000 thousand shares, 6,032 thousand shares, and 6,032 thousand shares, respectively.

(22) Capital reserve

A. Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

							2020
							Difference between
						consideration and carrying
		Share		Share			amount of subsidiaries
		premium		options			acquired or disposed		Total
At January 1	$	1,329,550	$	-	$		9,248	$	1,338,798
Capital surplus used to offset	(	1,329,550)		-	(		9,248)	(	1,338,798)
accumulated deficits
Due to recognition of equity component		-		96,153			-		96,153
of convertible bonds issued
Conversion of convertible bonds		995	(	77)			-		918
At December 31	$	995	$	96,076	$		-	$	97,071

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2019

							2019
							Difference between
						consideration and carrying
		Share		Share			amount of subsidiaries
		premium		options			acquired or disposed		Total
At January 1	$	1,926,000	$	77,550	$		1,965	$	2,005,515
Cash capital increase		1,329,550	(	77,550)			-		1,252,000
Capital surplus used to offset	(	1,926,000)		-	(		1,965)	(	1,927,965)
accumulated deficits
Transactions with non-controlling
interest		-		-			9,248		9,248
At December 31	$	1,329,550	$	-	$		9,248	$	1,338,798

B. Please refer to Note 6(16) for the information of capital surplus—share options.
C. The proposal for deficit compensation for the year ended December 31, 2019 was resolved by the stockholders at the regular stockholders’ meeting on June 17, 2020. The Company planned to use ‘capital surplus, additional paid-in capital arising from ordinary share’ and ‘capital surplus, difference between consideration and carrying amount of subsidiaries acquired or disposed’ totalling $1,338,798 to cover the deficit. Also, please refer to Note 6(23) for the information of retained earnings.

(23) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the total capital stock balance. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.
B. The Company’s dividend policy is summarized below:

As the Company operates in a volatile business environment and is in the stable growth stage, the residual dividend policy is adopted taking into consideration the Company’s financial structure, operating results and future expansion plans. According to the dividend policy adopted by the Board of Directors, at least 10% of the Company’s distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 10% of the total dividends distributed.

C. Except for covering accumulated deficit or increasing capital, the legal reserve shall not be used for any other purpose. Capitalization of the legal reserve is permitted, provided that the balance of the reserve exceeds 50% of the Company’s paid-in capital and the amount capitalized does not exceed 25% of the balance of the reserve.
D. a)In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

~53~

b)The amounts previously set aside by the Company as special reserve amounting to $3,201,365 on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
c) The Company disposed land in 2013 and 2018. Therefore, the Company reversed special reserve of $34,894 to undistributed earnings.
E. The proposal for deficit compensation for the year ended December 31, 2018 was resolved by the stockholders at the regular stockholders’ meeting on June 26, 2019. Dividends will not be distributed to stockholders due to the deficit compensation. Additionally, the deficit will be covered by using the legal reserve, ‘capital surplus, additional paid-in capital arising from ordinary share’ and ‘capital surplus, other donated assets received’ totalling $2,993,262.

The proposal for deficit compensation for the year ended December 31, 2019 was resolved by the stockholders at the regular stockholders’ meeting on June 17, 2020. Dividends will not be distributed to stockholders due to the deficit compensation. Also, please refer to Note 6(22) for the information of capital surplus.

On March 18, 2021, the Board of Directors has proposed the deficit compensation for year 2020.

(24) Operating revenue

Operating revenue
Revenue from contracts with customers Others - ship rental revenue	Years ended December31,
	2020 25,191,199 $ 105,430 25,296,629 $	2019
		16,540,899 $ -
		16,540,899 $

The Group’s operating revenue is from contracts with customers.

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time in the following major product types:

major product types:
Construction of ships and vessels Shipbuilding Vessel construction All other segments Ship/vessel repair Machinery building Anti-corrosion coating Others	Years endedDecember31,
	2020 7,374,458 $ 15,327,666 22,702,124 1,142,126 993,002 264,877 89,070 2,489,075 25,191,199 $	2019
		8,561,544 $ 6,741,681
		15,303,225
		829,595 98,155 291,966 17,958
		1,237,674
		16,540,899 $

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B. Contract assets and liabilities

The Group has recognised the following revenue-related contract assets and liabilities:

		December31,2020		December31,2019		January1,2019
Contract assets	$	4,622,917	$	4,910,129	$	4,464,528
Contract assets - related parties		363,249		1,083,531		2,385,379
		4,986,166		5,993,660		6,849,907
Less: Loss allowance	(	192,290)	(	194,713)	(	195,478)
	$	4,793,876	$	5,798,947	$	6,654,429
Contract liabilities	$	5,209,594	$	8,670,827	$	2,751,268
Contract liabilities - related parties		1,489,197		36,982		-
	$	6,698,791	$	8,707,809	$	2,751,268

Please refer to Note 7 for related party transactions.

Revenue recognised that was included in the contract liability balance at the beginning of the period

The Group had a contract liability balance at the beginning of the period, of which $7,651,056 and $1,452,697 was recognised as revenue for the years ended December 31, 2020 and 2019, respectively.

C. As of December 31, 2020, the total transaction price allocated to unfulfilled contract obligations was $58,912,772 and this amount would be recognised as revenue gradually with the completion process of shipbuilding, vessel construction and anti-corrosion coating. The shipbuilding, vessel construction and anti-corrosion coating are expected to be completed during the period from January 2021 to October 2027.

(25) Other income

Other income
Government grant revenue (Note) Rental revenue Indemnity revenue Others	Years endedDecember31,
	2020 381,680 $ 20,677 13,012 16,559 431,928 $	2019
		11,396 $ 9,975 21,162 58,806
		101,339 $

Note: The Group recognised income of $354,066 as a result of the application for the Salary and Working Capital Subsidies for Manufacturing Industry and its Technical Services Industry Suffered by Severe Pneumonia with Novel Pathogens (COVID-19) Handled by Industrial Development Bureau the Ministry of Economic Affairs. There was no such transaction for the year ended December 31, 2019.

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(26) Other gains and losses

		Years endedDecember	Years endedDecember	31,
		2020		2019
Foreign exchange gains (losses)	$	14,372	($	47,377)
Gain (losses) on financial assets and		12,751	(	108)
liabilities at fair value through profit
or loss
Losses on disposal of property, plant	(	2,197)	(	44,602)
and equipment
Other losses	(	34,022)	(	33,420)
	($	9,096)	($	125,507)

(27) Finance costs

				Years endedDecember	Years endedDecember	31,
			2020			2019
Interest expense:
Bank loans		$		100,145	$	89,321
Amortisation on lease liabilities				44,218		47,572
Amortisation on convertible bonds				12,979		-
Expenses amortised from government				11,590		11,396
grants payable
Less: Capitalisation of qualifying assets	(			68,021)	(	81,864)
		$		100,911	$	66,425

(28) Expenses by nature

Change in inventory of finished goods and work in process Direct materials Employee benefit expense Depreciation and amortisation charges Professional service fees Outsourcing fees Other expenses Operating costs and expenses	2020 2019 2,361,305 $ 1,110,979 $ 12,440,589 6,885,350 3,582,929 3,653,707 847,124 805,991 1,820,399 2,561,748 4,625,812 1,793,976 1,525,866 1,435,288 27,204,024 $ 18,247,039 $ Years endedDecember31,
	2020 2,361,305 $ 12,440,589 3,582,929 847,124 1,820,399 4,625,812 1,525,866 27,204,024 $

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(29) Employee benefit expense

Wages and salaries Labor and health insurance fees Pension cost Directors’ remuneration Other personnel expenses	2020 2019 3,006,317 $ 3,062,588 $ 258,825 260,254 250,331 263,455 3,470 3,079 63,986 64,331 3,582,929 $ 3,653,707 $ Years endedDecember31,

A. According to the Articles of Incorporation of the Company, the Company shall distribute employees’ compensation, based on the distributable profit of the current year, in a ratio of profit. Employees’ compensation can be distributed in the form of shares or in cash. If a company has accumulated deficit, earnings should first be channeled to cover losses. Employees’ compensation shall account for 1% to 5%, directors’ remuneration shall account for less than 1%, of the amount of current year’s pre-tax profit but excluding the employees’ compensation and directors’ remuneration.
B. The Company did not recognise employees’ compensation and directors’ renumeration as a result of the operating deficit for the years ended December 31, 2020 and 2019.

The Board of Directors resolved not to appropriate employees’ compensation and directors’ renumeration as a result of the operating deficit for the years ended December 31, 2020 and 2019. Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(30) Income tax expense

A. Income tax expense
(a) Components of income tax expense:

			Years ended	December31,
			2020	2019
Current tax:
Current tax on profits for the year		$	3,145	$	4,829
Tax on undistributed surplus earnings			6		24
(Over) under provision of income
tax in prior year	(		212)		375
Total current tax			2,939		5,228
Deferred tax:
Origination and reversal of
temporary differences	(		1,602)		1,380
Income tax expense		$	1,337	$	6,608

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(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
						Years endedDecember31,
						2020					2019
Remeasurement of defined
benefit obligations			$			13,300			$			18,180
Reconciliation between income tax	expense and			accounting profit:
						Years	endedDecember31,
						2020				2019
Tax calculated based on loss before		($				319,750)			($			361,782)
tax and statutory tax rate
Tax exempt income by tax regulation		(				72,747)						-
Effects from items disallowed by tax						4,841						12,563
regulation
Taxable loss not recognised as						389,199						355,428
deferred tax assets
Tax on undistributed surplus earnings							6					24
(Over) under provision of income
tax in prior year		(					212)					375
Income tax expense			$			1,337			$			6,608
Amounts of deferred tax assets or liabilities as a result of temporary									difference	and tax losses ar
as follows:
							2020
							Recognised
				Recognised				in other
				in		profit or	comprehensive
	January1					loss			income		December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss	$	223,619		($		67,533)	$		-		$	156,086
Unrealized warranty liability		99,897				2,570			-			102,467
Unused compensated absences		66,582		(		1,918)			-			64,664
payable
Allowance for doubtful accounts		62,982		(		1,066)			-			61,916
Others		29,348		(		830)	(		13,300)			15,218
Tax losses		1,062,439				70,379			-			1,132,818
		1,544,867				1,602	(		13,300)			1,533,169
Deferred tax liabilities:
Unrealised land value
incremental reserve	(	1,324,697)				-			-		(	1,324,697)
Total	$	220,170			$	1,602	($		13,300)		$	208,472

B. Reconciliation between income tax expense and accounting profit:

C. Amounts of deferred tax assets or liabilities as a result of temporary difference and tax losses are as follows:

~58~

2019

							Recognised	Recognised
				Recognised				in other
				in	profit or	comprehensive
		January1			loss			income		December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss		$	462,353	($	238,734)		$	-		$	223,619
Unrealized warranty liability			42,934		56,963			-			99,897
Unused compensated absences			57,630		8,952			-			66,582
payable
Allowance for doubtful accounts			100,640	(	37,658)			-			62,982
Others			23,217		24,311	(		18,180)			29,348
Tax losses			877,653		184,786			-			1,062,439
			1,564,427	(	1,380)	(		18,180)			1,544,867
Deferred tax liabilities:
Unrealised land value
incremental reserve	(		1,324,697)		-			-	(		1,324,697)
Total		$	239,730	($	1,380)	($		18,180)		$	220,170

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2020

	December31,2020
Year incurred 2015 2016 2017 2018 2019 2020	Amountfiled/ assessed Unused amount Assessed 671,021 $ Assessed 1,190,142 Assessed 6,700,185 Assessed 2,577,518 Amount filed 2,657,346 Estimated filing amount 2,296,459 December31,2019	Unrecognised deferred taxassets - $ - 2,897,256 2,577,518 2,657,346 2,296,459	Expiry year
			2025 2026 2027 2028 2029 2030

Year incurred 2015 2016 2017 2018 2019	Amountfiled/ assessed Assessed Assessed Assessed Amount filed Estimated filing amount	Unused amount 671,021 $ 1,190,142 6,700,185 2,577,536 2,724,654	Unrecognised deferred taxassets - $ - 3,249,155 2,577,536 2,724,654	Expiry year
				2025 2026 2027 2028 2029

~59~

E. The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority. As of March 18, 2021, there was no administrative remedies.

(31) Losses per share

			YearendedDecember31,	YearendedDecember31,	2020	2020
				Weigthted average
				number of ordinary		Losses per
			Amount	shares outstanding		share
			aftertax	(sharesinthousands)		(indollars)
Basic	losses per share
Loss	attributable to ordinary shareholders	($	1,600,087)	472,993	($	3.38)
			YearendedDecember31,		2019
				Weigthted average
				number of ordinary		Losses per
			Amount	shares outstanding		share
			after tax	(shares in thousands)		(in dollars)
Basic	losses per share
Loss	attributable to ordinary shareholders	($	1,818,470)	464,772	($	3.91)

The Group’s convertible corporate bonds had anti-dilution effect for the year ended December 31, 2020; thus, they were not included in the calculation of diluted losses per share.

(32) Transactions with non-controlling interest

Acquisition of additional equity interest in a subsidiary

The Company acquired an additional 30% outstanding shares of CSBS Coating Solutions Co., Ltd. by cash on September 3, 2019. The carrying amount of non-controlling interest in CSBS Coating Solutions Co., Ltd. was $46,748 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest. The effect of changes in interests in CSBS Coating Solutions Co., Ltd. on the equity attributable to owners of the parent for the year ended December 31, 2019 is shown below:

		Year ended December31,2019	Year ended December31,2019
Carrying amount of non-controlling interest acquired		$	46,748
Consideration paid to non-controlling interest	(		37,500)
Capital surplus - difference between proceeds on actual
acquisition of or disposal of equity interest in a subsidiary
and its carrying amount		$	9,248

For the year ended December 31, 2020, acquisition of additional equity interest in a subsidiary: None.

~60~

(33) Supplemental cash flow information

A. Investing activities with partial cash payments:

			Years ended	December	December	31,
			2020			2019
Purchase of property, plant and		$	965,298		$	974,779
equipment
Add`：`Beginning balance of payable			45,905			45,588
on equipment
Less`：`Ending balance of payable
on equipment	(		63,755)	(		45,905)
Cash paid on purchase of
property, plant and
equipment during the year		$	947,448		$	974,462

B. Investment and financing activities with no cash flow effects:

			Years ended	December	December	31,
			2020			2019
Interest expense amortised from
government grants		$	11,590		$	11,396
Increase in right-of-use assets		$	57,645		$	5,268
Less: Increase in lease liabilities	(		57,645)	(		5,268)
		$	-		$	-
Decrease in lease labilities due		$	116,203		$	-
to remeasurement
Less: Decrease in right-of-use assets	(		116,203)			-
		$	-		$	-
Long-term liabilities, current portion		$	1,280,000		$	500,000

(34) Changes in liabilities from financing activities

Short-term borrowings Short-term notes and bills payable Corporate bonds payable Long-term borrowings (including current portion) Lease liability Long-term notes and accounts payable Long-term deferred revenue Guarantee deposits received Other non-current liabilities, others	2020
	Changes in cash flow from Changes in January1 financingactivities non-cash items 1,822,361 $ 3,456,785 $ - $ 1,699,563 999,842 - - 2,034,775 102,474) ( 5,847,772 649,202) ( - 3,828,513 228,663) ( 58,558) ( 681,757 - 11,590 204,981 - 11,590) ( 247,941 35,451 - 824 19,304 - 14,333,712 $ 5,668,292 $ 161,032) ($		December31
			5,279,146 $ 2,699,405 1,932,301 5,198,570 3,541,292 693,347 193,391 283,392 20,128
			19,840,972 $

~61~

Changes in
cash flow from
Changes in
January1
financingactivities
non-cash items
Short-term borrowings
1,290,150
$ 532,211
$ -
$ Short-term notes and bills payable
-

1,699,563
-
Long-term borrowings
5,698,537
149,235
-

(including current portion)
Lease liability
4,037,939
214,694)
(
5,268
Long-term notes and accounts payable
670,361
-
11,396
Long-term deferred revenue
71,139

145,238
11,396)
(
Guarantee deposits received
184,928

63,013
Other non-current liabilities, others
13,233
12,409)
(
-
11,966,287
$ 2,362,157
$ 5,268
$ 2019

December31
1,822,361
$ 1,699,563
5,847,772
3,828,513
681,757
204,981

247,941

824

14,333,712
$

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

Relationship with the Group

CPC Corporation, Taiwan China Steel Corporation China Steel Express Corporation China Steel Machinery Corporation China Steel Structure Co., Ltd.

The Company’s legal entity director

Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Associate

Sing Da Marine Structure Corporation Taiwan International windpower Training Corporation Ltd. Taiwan Generations Corporation Fuhai Wind Farm Corporation

Associate Associate

CSBC-DEME Wind Engineering Co., Ltd.

Joint venture Note

Yung Chi Paint & Varnish Mfg. Co., Ltd. Note Financing Investment Venture Capital Government related entity Yao Hua Glass Co.,Ltd. Management Government related entity Committee National Defense Industrial Development Government related entity Foundation

Note: The company formerly held 30% equity interests in CSBS Coating Solutions Co., Ltd. However, all the 30% equity interest held by the company was sold to the Company in September 2019, and the company lost its influence over the subsidiary.

~62~

(2) Significant related party transactions and balances

A. Operating revenue

nificant related party transactions and balances Operating revenue
Key management: Subsidiary of the Company’s legal entity director China Steel Express Corporation Sing Da Marine Structure Corporation China Steel Machinery Corporation China Steel Structure Co., Ltd. Legal entity director CPC Corporation, Taiwan Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd.	Years endedDecember31,
	2020 214,075 $ 123,236 11,491 279 34,436 302,453 685,970 $	2019
		3,578,917 $ 13,897 6,722 575 17,758 -
		3,617,869 $

(a) The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.
(b) In August and December 2017, the Group was commissioned by China Steel Express Corporation to build 4 208,000 DWT double hull bulk cargo steamers. The last cargo steamer was delivered on May 29, 2020. Please refer to items C and F for further information.
(c) On June 30, 2020, the Group entered into an agreement with CSBC-DEME Wind Engineering Co., Ltd. to build a heavy lift and installation vessel for its offshore wind power engineering. The Group has no unrealised gains or losses from undertaking this engineering. The expected delivery of the vessel is in October 2022. Please refer to item E for further information.

B. Purchases of goods

Purchases of goods
Purchases of goods: Key management: Legal entity director China Steel Corporation CPC Corporation, Taiwan Other related parties: Yung Chi Paint & Varnish Mfg. Co., Ltd.	Years endedDecember31,
	2020 883,684 $ 99,785 - 983,469 $	2019
		1,767,880 $ 99,768 3,067
		1,870,715 $

The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.

~63~

C. Contract assets

December 31, 2020 December 31, 2019

Key management:
Subsidiary of the Company’s legal entity director
Sing Da Marine Structure Corporation		$	173,059		$	20,124
China Steel Express Corporation			-			872,477
China Steel Structure Co., Ltd.			-			575
China Steel Machinery Corporation			-			165
Associates :
Fuhai Wind Farm Corporation (Note)			190,190			190,190
Less: Loss allowance			363,249			1,083,531
	(		190,250)	(		190,904)
		$	172,999		$	892,627

Note: In March 2014, the Group was commissioned by Fuhai Wind Farm Corporation (hereafter referred to as Fuhai) for the construction of a meteorological observation tower, offshore windfarm off the coast of Changhua County included in Changhua Offshore Pilot Project and Fuhai offshore windfarm for a total contract price of NT$32 billion. However, Bureau of Energy, MOEA decided to reject the development project in February 2018 because of the disapproved Environmental Impact Assessment. The Group has recognised impairment loss amounting to $190,190 since the contract assets may not be recovered as assessed.

D. Receivables from related parties

Receivables from related parties
Accounts receivable : Key management: Legal entity director CPC Corporation, Taiwan Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation China Steel Machinery Corporation Other receivables : Key management: Legal entity director China Steel Corporation Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation	December31,2020 20,295 $ 3,360 178 23,833 15,404 6,541 21,945 45,778 $	December31,2019
		6,286 $ - 1,726
		8,012
		16,633 -
		16,633
		24,645 $

~64~

E. Prepaid accounts

F. G.	Contract liabilities Payables to related parties Key management: Legal entity director China Steel Corporation CPC Corporation, Taiwan Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd. Key management: Subsidiary of the Company’s legal entity director China Steel Express Corporation Notes payable: Key management: Legal entity director China Steel Corporation	December 31, 2020 299,399 $ 15,280 314,679 $ December31,2020 1,489,197 $ - 1,489,197 $ December31,2020 111,592 $	December 31, 2019 485,906 $ 8,540 494,446 $ December 31, 2019
			- $ 36,982
			36,982 $
			December31,2019
			285,404 $

H. Acquisition of financial assets

(a) Information on the Group’s joint investment in, and establishment and cash capital increase of, CSBC-DEME Wind Engineering Co., Ltd. is provided in Note 6(5).
(b) The Group acquired an additional 30% outstanding shares of the subsidiary, CSBS Coating Solutions Co., Ltd., from other related party, Yung Chi Paint & Varnish Mfg. Co., Ltd. The transfer of shares was completed in September 2019. Please refer to 6(32) for further information.

~65~

I. Others

(a) Details on capital increase from the related parties are provided in Note 6(21).
(b) The Company’s joint venture, CSBC-DEME Wind Engineering Co., Ltd. signed a Zhang Fang and West Island Offshore Wind Farm Fan Transportation and Installation Plan on November 19, 2019. The Company and DEME Offshore are the joint contractors of the plan and issued performance letter of guarantee and advance payment guarantee with a total amount of EUR 13,237 thousand for contracting the construction according to their shareholding ratios. The Company issued bank guarantee amounting to $223 million (EUR 6,619 thousand) based on its shareholding ratio of 50.0001% in January 2020.

The total amount of aforementioned letters of guarantee was changed to EUR 12,945 thousand. In October 2020, the Company notified the bank to amend the bank guarantee amount to $219 million (EUR 6,472 thousand) based on its shareholding ratio.

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits	Years ended December 31,
	2020 2019 24,451 $ 27,683 $ 2,622 3,935 27,073 $ 31,618 $

8. PLEDGED ASSETS

None.

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) The balance of the Group’s unused letters of credit for import of materials is as follows:

Balance of unused letters of credit	December 31, 2020 2,359,193 $	December31,2019
		1,943,076 $

(2) The amounts of unfulfilled contract obligations of the Group’s contracts are as follows:

Unfulfilled customer contract obligations	December31,2020 58,912,772 $	December31,2019
		73,273,144 $

~66~

(3) The guaranteed credit by banks for the Group’s construction projects is as follows:

	December31,2020	December31,2019
Guaranteed credit by banks	13,368,939 $	10,273,605 $

Refer to Notes 7(2) I(b) for further information.

(4) The amount of the Group’s purchase contracts and outsourcing construction contracts to be paid is as follows:

Purchase contracts to be paid Outsourcing construction contracts to be paid	December 31, 2020 December 31, 2019 12,339,833 $ 17,839,179 $ 3,431,104 4,157,080 15,770,937 $ 21,996,259 $

(5) As of December 31, 2020 and 2019, the amounts of guarantee notes issued by the Group for the bank borrowings were $450 million and $350 million, respectively.
(6) The Group, Century Iron and Steel Industrial Co., Ltd. and Taiwan Generations Corp. are the jointoriginators for Fuhai Wind Farm Corporation (Fuhai Corporation). The joint-originators entered into the “Incentive Program of Offshore Wind Power Demonstration System” (“the Government Grant Scheme”) on August 19, 2013, which was granted by the Ministry of Economic Affairs, and committed to be jointly responsible for Fuhai Corporation. The total amount of endorsement/ guarantee provided by the Group amounted to $886 million. On November 9, 2018, the Board of Directors of the Group during their meeting resolved to cease the endorsement/ guarantee amount to Fuhai Corporation.

Because Fuhai Wind Farm Corporation failed to comply with the regulation of the “Incentive Program of Offshore Wind Power Demonstration System”, the Bureau of Energy exercised the right of performance bond and took back the entire government grant. Accordingly, the Group recognised losses amounting to $75,000 for the year ended December 31, 2018.

In addition, the Ministry of Economic Affairs claimed past due liquidated damages amounting to $ 88.6 million from Fuhai Corporation, as a joint-originator of the Incentive Program, the Group was committed to be jointly responsible for Fuhai Corporation. Currently, the case is still ongoing. According to the Group’s designated lawyer, the Ministry of Economic Affairs has not indicated its intention of claiming the liquidated damages from the Group and the Group has not reached the payment stage, therefore, the Group did not estimate the possible losses on liquidated damages.

Fuhai Corporation alleged that the Group did not issue an incentive guarantee of offshore wind power demonstration system based on the Article 1 of Memorandum of Understanding which was signed under mutual agreement, whereby Fuhai Corporation could not apply a government grant of $0.1 billion from Bureau of Energy. Fuhai Corporation filed a lawsuit to claim an equal compensation for the $0.1 billion government grant. On March 24, 2020, the Taiwan Taipei District Court ruled in favour of the Group. Subsequently, Fuhai Corporation filed an appeal. The Group’s designated lawyer believes that the claim is meritless. The case is currently pending with the Taiwan High Court.

~67~

(7) The ships under construction have all been insured with shipbuilding insurance. On September 14, 2016, Typhoon Meranti caused damages in a third party’s property and thus claimed for compensation of approximately NT$806 million. On May 29, 2020, the Taiwan Kaohsiung District Court rendered a decision against the Group, and the Group is liable to pay compensation approximately $895 million (interest is calculated up until September 30, 2020). On June 23, 2020, the Group appealed to the second instance court. The case is currently pending with the court. According to the Group’s designated lawyer, the aforementioned compensation is covered by the Group’s relevant comprehensive insurance for shipbuilding and the second instance appeal filed by the Group for remedy has not yet been decided. Thus, the compensation payable due to the first instance’s decision has no material impact to the Group’s operation.
(8) The Group was commissioned by Fuhai Wind Farm Corporation for offshore wind power maritime engineering (details are provided in Note 7(2) C) and Zhongwei Wind Farm Corporation (Zhongwei Corporation) undertook the construction of the meteorological observation tower, self-elevating lifting platform for demonstration unit and demonstration wind farm, fan lifting and other constructions of the aforementioned engineering. Zhongwei Corporation claimed that the Group did not notify them the performance date leading to their damages and informed the Group to pay US$ 2.5 million to compensate their losses. The Group disagreed with the claim since Zhongwei Corporation did not meet the requirements of payment terms in the contract and Zhongwei Corporation filed a lawsuit in Taiwan Kaohsiung District Court. On December 17, 2019, the Taiwan Kaohsiung District Court rendered a civil ruling to dismiss this case due to the claim made by Zhongwei Corporation was unjustified. On February 3, 2021, the Taiwan High Court Kaohsiung Branch Court has dismissed both the claim and the additional claim filed by the Zhongwei Corporation.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Please refer to Note 6(21) C for the information of share capital.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Following the industry practices, the Group uses gearing ratio to control capital.

The Group’s policy is to maintain a stable gearing ratio. Ratios are as follows:

Gearing ratio	December31,2020 87%	December31,2019
		82%

~68~

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at amortised cost Cash and cash equivalents Accounts receivable (including related parties) Other receivables (including related parties) Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities designated as at fair value through profit or loss Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable Other payables Corporate bonds payable Long-term borrowings (including current portion) Long-term notes and accounts payable Guarantee deposits received Lease liability	December31,2020 1,237,845 $ 1,194,927 48,409 56,174 2,537,355 $ December31,2020 5,995 $ 5,279,146 $ 2,699,405 119,708 1,600,887 1,328,903 1,932,301 5,198,570 693,347 283,392 19,135,659 $ 3,541,292 $	December31,2019
		4,122,363 $ 1,301,669 117,428 67,606
		5,609,066 $
		December31,2019
		- $
		1,822,361 $ 1,699,563 285,404 1,094,303 1,192,986 5,847,772 681,757 247,941
		12,872,087 $
		3,828,513 $

~69~

B. Financial risk management policies

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as forward foreign exchange contracts are used to hedge certain exchange rate risk. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

For supervising management, the Board of Directors has set related rules to authorize the management to perform daily operations within acceptable risk range and requires the internal audit to inspect the management and report on a regular basis. The internal audit must report to the Board of Directors if there is any unusual situation at any time, and respond to the situations adequately.

C. Significant financial risks and degrees of financial risks

(a) Market risk

Foreign exchange risk

i. The foreign exchange risk is mainly arising from USD and EUR. Management has set up a policy to companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the treasury. Exchange rate risk is measured through a forecast of highly probable USD revenues and JPY expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting forecast foreign currency income and cost of inventory purchases.
ii.The Group’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

Financialassets	December31,2020	December31,2020
	Foreign Currency (inthousands) 59,838 $ 9,238 93 253	ExchangeRate 28.43 34.82 28.53 35.22	BookValue (NTD)
			1,701,194 $ 321,667 2,653 8,911
Monetaryitems
USD:NTD EUR:NTD Financial liabilities
Monetaryitems
USD:NTD EUR:NTD

~70~

		December31,2019	December31,2019
		Foreign Currency
		(inthousands) ExchangeRate		Book	Value (NTD)
Financial assets
Monetary items
USD:NTD	$	123,239	29.93	$	3,688,535
Financial liabilities
Monetary items
USD:NTD		96	30.03		2,883
EUR:NTD		519	33.79		17,524

iii.If NTD had appreciated/ depreciated by 1% against USD with all other variables held constant, effect to post-tax profit (loss) is as follows:

	Years ended	December	31,
If NTD had appreciated/
depreciated by1% against tax	2020		2019
Increase (decrease) in net
profit (loss) after tax	16,090 $	$	29,345

iv.The net exchange gain (loss) arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2020 and 2019, amounted to $14,372 and ($47,377), respectively.

Price risk

The Group is not exposed to significant commodity price risk.

Interest rate risk

i. The convertible bonds issued by the Company are zero-interest bonds with conversion options, and its fair value is affected by the stock price volatility. Based on the assessment, there is no material change in interest rate that would expose the Group to cash flow risk.
ii.The Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. If the interest rate had increased/decreased by 0.25% with all other variables held constant, cash flows for the years ended December 31, 2020 and 2019 would have increased/decreased by $13,000 and $14,625, respectively.

(b)Credit risk

Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable and other receivables based on the agreed terms. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

~71~

Cash and cash equivalents and derivative financial instruments

The Group only trades with counterparties with good credit, in accordance with the Group’s transaction policies. There is no recent violation of significant cash and cash equivalents and derivative financial products.

Contract assets, accounts receivable and other receivables

i. The Group appointed external agency to perform proper credit investigations for customers before signing the contracts of shipbuilding, vessel construction and machinery manufacturing. The results of the credit investigations were low risk, therefore, the credit risks of relevant receivables (primarily under accounts receivable or contract assets) were low risk.
ii. The Group’s contract assets and accounts receivable were due from government (including state-owned enterprises) and general business. To maintain the quality of the accounts receivable and contract assets, the Group has established credit risk management procedures for operating. The Group considered customers’ financial status, historical trading record and future economic condition in accordance with types of customer, and took into account factors that may influence customers’ ability to pay to assess the credit quality of customers. The Group estimated expected credit loss by individual assessment.
iii. In line with credit risk management procedure, when the counterparty failed to fulfil the mutual agreements nor to conduct negotiation, the default has occurred.
iv. As of December 31, 2020 and 2019, the expected loss rates of not past due accounts receivable and contract assets were 1% and 0.04%; 1% and 0.08%, respectively. As of December 31, 2020 and 2019, the Company’s receivables collected upon the delivery of ships amounted to $440,523 and $463,765, respectively, which arose from a negotiation conducted with the counterparties to amend the terms of some installment receivables. The Company assesses that there was no material loss incurred from the amendment of the terms. As of December 31, 2020 and 2019, the Company’s past due construction receivables amounted to $796,040 and $0, respectively, because the counterparty failed to fulfil the mutual agreements and the payments were still under negotiation.
After considering the counterparties’ financial status, historical experience and other factors, the expected credit loss based on the individual assessment both amounted to $315,838 as of December 31, 2020 and 2019.
v. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable and contract assets are as follows:

			2020	2020	2020
		Accounts	receivable			Contract assets
At January 1		$	319,088		$	194,713
Reversal of impairment loss	(		1,435)	(		2,423)
At December 31		$	317,653		$	192,290
			2019
		Accounts	receivable			Contract assets
At January 1		$	319,599		$	195,478
Reversal of impairment loss	(		511)	(		765)
At December 31		$	319,088		$	194,713

~72~

For the years ended December 31, 2020 and 2019, the expected credit gains arising from accounts receivable and contract assets generated from customers’ contracts amounted to $3,858 and $1,276, respectively.

(c)Liquidity risk

The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2020:

December 31, 2020:
Less than 1year Non-derivative financial liabilities: Short-term borrowings 5,280,120 $ Short-term notes payable 2,700,000 Payables 3,355,231 Lease liability 272,881 Corporate bonds payable - Long-term borrowings (Note) 1,305,646 12,913,878 $ Derivative financial liabilities: Options embedded in convertible bonds $- December 31, 2019: Less than 1year Non-derivative financial liabilities: Short-term borrowings 1,824,565 $ Short-term notes payable 1,700,000 Payables 3,359,145 Lease liability 265,694 Long-term borrowings (Note) 538,486 7,687,890 $ Note: Including long-term borrowings, current portion.	Less than 1year	Between 1 and 2years	Between 2 and5 years	Over5Years
		- $ - 617,629 236,772 - 3,787,313 4,641,714 $ $- Between 1 and 2 years	- $ - 475,749 697,980 1,998,400 140,455 3,312,584 $ 5,995 $ Between 2 and5 years	- $ - 156,672 2,810,811 - - 2,967,483 $ $- Over5Years
		- $ - 412,010 264,989 4,455,646 5,132,645 $	- $ - 472,728 688,752 927,768 2,089,248 $	- $ - 315,920 3,147,677 - 3,463,597 $

Note: Including long-term borrowings, current portion. December 31, 2019:

Note: Including long-term borrowings, current portion.

Derivative financial liabilities: None.

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(3) Fair value estimation

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.
Level 3: Unobservable inputs for the asset or liability. Call and put options embedded in convertible bonds are included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, contract assets, accounts receivable (including related parties), other receivables (including related parties), corporate bonds payable, short-term borrowings, contract liabilities, notes payable (including related parties), accounts payable, other payables, guarantee deposits received, long-term borrowings (including current portion), and guarantee deposits received are approximate to their fair values.

D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2020 and 2019 is as follows:
(a) The related information of natures of the assets and liabilities is as follows:
- December 31, 2020:

Level 1 Level 2 Level 3 Total Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Options embedded in convertible - - bonds $ $ $ 5,995 $ 5,995 December 31, 2019: None.

(b) The methods and assumptions the Group used to measure fair value are as follows:
- Certain inputs used in the valuation model for measuring the fair value of the Group’s debt instruments with embedded derivatives in are not observable at market, and the Group must make reasonable estimates based on its assumptions. The effect of unobservable inputs to the valuation of financial instruments is provided in Note 12(3)I.
E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.

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F. The following chart is the movement of Level 3 for the year ended December 31, 2020:

			2020
		Derivativeinstrument
At January 1		$	-
Losses recognised in profit or loss
Recorded as non-operating income and expenses	(		11,749)
Issued in the year			17,754
Converted in the year	(		10)
At December 31		$	5,995
Movement of unrealised loss in profit or loss of
liabilities held as at December 31, 2020 (Note)	($		11,749)
Note: Recorded as non-operating income and expense.

For the year ended December 31, 2019: None.

G. For the years ended December 31, 2020 and 2019, there was no transfer into or out from Level 3.
H. Treasury segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments using the actuarial reports issued by external experts. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Hybrid instrument: Options embedded in convertible	Fair value at Valuation Range December31,2020 technique Input (weighted average) $5,995 Binary tree convertible bond valuation model Stock price 28.45 Volatility 39.14% Risk discount rate 0.5471%

The higher the stock price, the higher the redemption value; the higher the volatility, the higher the redemption value; the lower the risk discount rate, the higher the redemption value. Thus, the redemption value for the year increased (redemptions are financial assets of the issue company). Put options are also affected by the change in stock price, volatility and risk-free interest rate. The higher the stock price, the lower the put option value; the higher the volatility, the higher the put option value; the lower the risk discount rate, the lower the put option value. Thus, the put option value for the year decreased (put options are financial liabilities of the issue company) December 31, 2019: None.

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J. The Group has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

December 31, 2020 Recognised in profit or loss Input Change Favourable change Unfavourable change Financial liabilities Hybrid instrument Stock price volatility ±5% $ 999 ($ 1,199) December 31, 2019: None.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Loans to others: None.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 1.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 2.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(13) for the information.
J. Significant inter-company transactions during the reporting periods: Please refer to table 3.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

(3) Information on investments in Mainland China

A. Basic information: None.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

Major shareholders information: Please refer to table 5.

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14. SEGMENT INFORMATION

(1) General information

Management has determined the operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Chief Operating DecisionMaker considers the business from a product perspective. The reportable operating segments derive their revenue primarily from the construction of ships and vessels. As other businesses mainly including machinery engineering, ship/vessel repairs and coating do not meet the quantitative thresholds required by IFRS 8, the results of these operations are included in the ‘all other segments’ column.

(2) Measurement of segment information

The Chief Operating Decision-Maker assesses the performance of the operating segments based on the gross profit of each business category. This measurement basis excludes the effects of operating expenses, non-operating revenue and non-operating expenses from the operating segments.

Information about operating segments

The segment information provided to the Chief Operating Decision-Maker for the reportable segments for the years ended December 31, 2020 and 2019 is as follows:

Revenue from external customers Inter-segment revenue Total segment revenue Segment (loss) profit Undistributed amount: Operating expenses Depreciation and amortization Interest income Interest expense Income tax benefit Loss on investments accounted for using equity method Total undistributed amount Segment assets (Note 2) Investments accounted for under equity method Increase in non-current assets Segment liabilities (Note 2)				December31,2020	December31,2020		Total
		Construction of ships and vessels		All other segments	Adjustments and eliminations (Note1)
	22,702,124 $ - 22,702,124 $ 1,513,807) ($			2,594,505 $ 79,246 2,673,751 $ 104,333 $	- $ 79,246) ( 79,246) ($ - $	25,296,629 $ - 25,296,629 $ 1,409,474) ($ 486,394) ($ 11,527) ( 6,699 100,911) ( 1,337) ( 19,975) ( 613,445) ($ 37,247,566 $ 1,059,433 $ 72,372 $ 32,239,485 $

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December 31, 2019

						Adjustments
						and
		Construction of	All other			eliminations
	ships and vessels		segments			(Note1)			Total
Revenue from external	$	15,303,225	1,237,674 $		$	-		$	16,540,899
customers
Inter-segment revenue		-	74,329	(		74,329)			-
Total segment revenue	$	15,303,225	1,312,003 $	($		74,329)		$	16,540,899
Segment (loss) profit	($	1,380,050)	189,669 $		$	-	($		1,190,381)
Undistributed amount:
Operating expenses							($		504,071)
Depreciation and
amortization							(		11,688)
Interest income									18,907
Interest expense							(		66,425)
Income tax benefit							(		6,608)
Loss on investments
accounted for using
equity method							(		31,084)
Total undistributed amount							($		600,969)
Segment assets (Note 2)								$	35,076,187
Investments accounted for
under equity method								$	29,408
Increase in non-current assets								$	177,423
Segment liabilities (Note 2)								$	28,618,929

Note 1: Refers to the elimination of inter-segment revenue.

Note 2: Segment assets and liabilities are regularly provided to the Chief Operating Decision-Maker, but not distributed to each reportable segment.

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(3) Information about segment profit or loss, assets and liabilities

The revenue from external parties reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income. A reconciliation of segment profit to (loss) profit before tax and discontinued operations is provided as follows:

		Years ended	December	31,
		2020		2019
Segment loss	($	1,513,807)	($	1,380,050)
Other segment profit		104,333		189,669
Total segments	(	1,409,474)	(	1,190,381)
Operating expenses	(	497,921)	(	515,759)
Non-operating income and expenses		308,645	(	102,770)
Loss before tax and discontinued operations	($	1,598,750)	($	1,808,910)

(4) Information on products and services

Revenues from external customers are mainly derived from the construction of ships and vessels. Breakdown of the revenue from all sources is as follows:

Revenue from construction of ships and vessels Revenue from ship/vessel repair Revenue from machinery manufacturing Revenue from anti-corrosion coating Other revenue Total	Years ended December 31,	Years ended December 31,
	2020 22,702,124 $ 1,142,126 993,002 264,877 194,500 25,296,629 $	2019
		15,303,225 $ 829,595 98,155 291,966 17,958
		16,540,899 $

(5) Geographical information

Revenue information by geographic area:

Geographical information Revenue information by geographic area:
Revenue Non-current assets Taiwan 17,843,368 $ 15,066,406 $ Liberia 7,468,862 - Samoa - - Others 15,601) ( - Total 25,296,629 $ 15,066,406 $ December31,2020 Year ended and as of	December31,2019 Year ended and as of
	Revenue 11,336,769 $ 2,961,619 1,315,079 927,432 16,540,899 $	Non-current assets
		14,982,602 $ - - -
		14,982,602 $

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(6) Major customer information

The customers accounting for more than 10% of the Group’s operating revenues are as follows:

Year ended December 31, 2020

Clients Client E Client D Client D Clients Client E Client C Client D	Sales amount Department 11,032,772 $ Construction of ships and vessels 7,468,862 Construction of ships and vessels 4,278,139 Construction of ships and vessels 22,779,773 $ Sales amount Department 5,217,957 $ Construction of ships and vessels 3,576,531 Construction of ships and vessels 2,960,119 Construction of ships and vessels 11,754,607 $ YearendedDecember31,2019

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Table 1

Expressed in thousands of NTD

CSBC CORPORATION TAIWAN

' - Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company s paid in capital Year ended December 31, 2020

Investor	Marketable securities	General ledger account	Counterparty	Relationship with the investor	Balance as at January1,2020	Balance as at January1,2020	Addition	Addition		Disposal	Disposal		Balance as at December 31,2020	Balance as at December 31,2020
					Number of shares	Amount	Number of shares	Amount (Note 3)	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
CSBC Corporation, Taiwan	Stocks–CSBC-DEME Wind Engineering Co., Ltd.	Investments accounted for under equity method	Note 1	Note 2	500,001	$ 18,838	10,606,060	$ 1,029,684	-	$ -	$ -	$ -	11,106,061	$ 1,048,522

Note 1: It refers to the investment amount increased in the investee. Note 2: It is the Company’s joint venture. Note 3: The amount includes the increase in investment amount and investment loss accounted for using the equity method.

Table 1, Page 1

CSBC CORPORATION TAIWAN

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid in capital or more

Year ended December 31, 2020

Purchaser/seller Table 2	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Total notes/accounts receivable
CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan	CSBC-DEME Wind Engineering Co., Ltd. China Steel Express Corporation China Steel Corporation	Other related parties Subsidiary of the Company's legal entity director Corporate Director	Sale Sale Purchases	302,453) ($ (214,075) 883,684	(1.2%) (0.8%) 8.7%	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	- $ - 111,592) (	- - (7%)	Note 2 - Note 3

Note 1: Based on the contract, the payment terms is the same as in general transactions.

Note 2: The contract liabilities from CSBC-DEME Wind Engineering Co., Ltd. amounted to $1,1489,197.

Note 3: The prepayments to China Steel Corporation amounted to $299,399 and other receivables amounted to $15,404.

Table 2, Page 1

Table 3

CSBC CORPORATION TAIWAN

- Significant inter company transactions during the reporting periods

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note3)
0 0 0	CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan	BLUE ACE CORPORATION BLUE ACE CORPORATION CSBC Coating Solutions Co., Ltd	Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary	Outsourcing expenses Accounts payable Outsourcing expenses	68,500 $ 8,362 10,746	Note 4 Note 4 Note 4	- - -

Note 1 `：` The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2 ： If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice.

For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction; for transactions between two subsidiaries, if one of the subsidiaries has

disclosed the transaction, then the other is not required to disclose the transaction.

Note 3 ： Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts, based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4 ： Based on the contract, the payment terms is the same as in general transactions.

Table 3, Page 1

Table 4

CSBC CORPORATION TAIWAN

Information on investees

Year ended December 31, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December	Shares held as at December	31,2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income(loss) recognised by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31,2020	Balance as at December 31,2019	Number of shares	Ownership (%)	Book value
CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd	CSBC-DEME Wind Engineering Co., Ltd. CSBC Coating Solutions Co., Ltd. Taiwan International Windpower Training Corporation Ltd. Taiwan Offshore Wind Farm Services Corporation Fuhai Wind Farm Corporation BLUE ACE CORPORATION Blue Ocean Wind Power Engineering (Hong Kong) Limited	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong	Installation of cable, lease of ships, and contracting of ships services Marine coating, steel structure painting works, surface treatment, and high-tech anti-corrosion etc. Research and development, energy technology service Manufacturing of metal structure, building component, power generation and others Wind power industry Marine coating, steel structure painting works, surface treatment, and high-tech anti-corrosion etc. Marine works services	1,099,500 $ 125,000 12,000 4,000 178,156 25,000 304	49,500 $ 125,000 12,000 4,000 178,156 25,000 304	11,106,061 14,600,165 1,200,000 400,000 15,000,000 - 100	50.00 100.00 12.00 40.00 37.97 100.00 100.00	1,048,522 $ 174,438 10,911 - - 20,728 107	40,632) ($ 4,821 2,845 7,380) ( 42,852) ( 4,938) ( 93) (	20,316) ($ 4,821 341 - - - -	Note 1 Note 1 Note 1 Note 1 Note 2 Note 2

Note 1 ： Please refer to Note 6(5) for details about investments accounted for under equity method.

Note 2 ： The amount has been included in the profit (loss) of the Company’s investee accounted for using equity method and has been recognised as gain (loss) on investment.

Table 4, Page 1

Table 5

CSBC CORPORATION TAIWAN

Major shareholders information

December 31, 2020

Name of major shareholders	Number of shares held	Shares
		Ownership (%)
Yuanta Commercial Bank Trust Account Financing Investment Venture Capital CPC Corporation, Taiwan Yao Hua Glass Co., Ltd. Management Committee National Defense Industrial Development Foundation Ministry of Economic Affairs, R.O.C.	105,070,366 36,032,305 36,032,305 25,000,000 23,998,253 23,777,487	22.21% 7.61% 7.61% 5.28% 5.07% 5.02%

Description: (1) The major shareholders’ information was derived from the data using the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital which was recorded on the financial statements may differ from the actual number of shares in dematerialised form due to the difference of calculation basis.
(2) If the aforementioned data contains shares which were kept in the trust by the shareholders, the data was disclosed as a separate account of the client which was set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio was greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio included the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information on reported share equity of insiders, please refer to the Market Observation Post System.
(3) The preparation principle of this table uses the shareholders’ register as of the book closure date for the shareholders’ special meeting (no need buy-to-cover short sales) to calculate the distribution of the balance of each unsecured transaction.
(4) Ownership (%) = total shares held by the shareholder/total shares transferred in dematerialised form.
(5) Total shares transferred in dematerialised form (including treasury shares) amounted to 473,055,493 shares=473,055,493 common shares+0 preference shares.

Table 5, Page 1

CSBC CORPORATION, TAIWAN

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT DECEMBER 31, 2020 AND 2019

~1~

INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR20000481

To the Board of Directors and Shareholders of CSBC CORPORATION, TAIWAN

Opinion

We have audited the accompanying parent company only balance sheets of CSBC CORPORATION, TAIWAN (the “Company”) as at December 31, 2020 and 2019, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2020 and 2019, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and generally accepted auditing standards in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of 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.

~2~

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Company’s 2020 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s 2020 parent company only financial statements are stated as follows:

Accounting estimates and assumptions for total cost of construction contracts

Description

Please refer to Note 4(27) for a description of the accounting policy on construction contracts. Please refer to Note 5 for critical accounting estimates and assumptions for total cost of construction contracts.

The Company is engaged in the business of designing and building of various ships and cruisers. Assumptions for estimated construction cost include cost for equipment, material, labor and etc. Data used for assumptions involves subjective judgement and accounting estimates and are highly uncertain. As a result, assumptions used are material to the total construction cost and further affects the calculation of construction profit.

How our audit addressed the matter

The scope of our audit responded to the risk as follows:

Assessing the effectiveness of CSBC Company’s internal control regarding the estimation process of total cost of construction contract. This includes:
(1) Whether the data used by management for estimates and assumptions is complete, relevant and accurate.

~3~

(2)Whether accounting estimates and assumptions have been reviewed and approved by proper management level.
(3)Whether the segregation of duties is appropriate.
Obtaining the Estimate at Completion Reports, selecting sample reports and verifying the accuracy, completeness and relevance of the data that was used for assumptions and estimations. Checking whether the use of estimates and assumptions in the Estimate at Completion Reports are appropriate.
Comparing cost at completion for the same or similar ships and then assessing the reasonableness of the Estimate at Completion Report.

Assessment of construction loss

Description

Please refer to Note 4(27) for a description of the accounting policy on construction contracts.

There is a concern regarding the oversupply in the shipbuilding industry worldwide. Customers tend to behave conservatively which causes a decline in ship prices. Thus, there is a high possibility of total construction cost exceeding total construction revenue. In accordance with the Company’s accounting policy on construction contracts, when there is a high possibility of total construction cost exceeding total construction revenue, estimated loss shall be recognised immediately.

How our audit addressed the matter

The scope of our audit responded to the risk as follows:

Obtaining calculation table of construction in progress – construction income / loss. Checking whether it includes all the construction contracts including those contracts that have not yet been initiated.
Testing the accuracy of calculation table by selecting samples and performing the following audit procedures:
(1) Reviewing construction contracts and checking the contractual price and foreign exchange rates in order to verify the accuracy of calculation.
(2) Verifying estimated total construction cost to management’s calculation in order to check the consistency of estimates and assumptions used.

~4~

Responsibilities of management and those charged with governance for the parent company only financial statements

Management of the Company is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the Company’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 Company 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 Company’s financial reporting process.

Auditors’ responsibilities for the audit of the parent company only financial statements

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

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

~5~

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 Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

~6~

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period 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.

TIEN, CHUNG-YU WANG,KUO-HUA

For and on behalf of PricewaterhouseCoopers, Taiwan March 18, 2021

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying parent company only financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying parent company only financial statements and independent auditors’ report are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

~7~

CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Assets	December 31, 2020 AMOUNT % `$` `1,157,664` `3` `4,523,505` `12` `1,169,869` `3` `20,311` `-` `26,127` `-` `15,445` `-` `1,266` `-` `2,349,362` `7` `9,896,704` `27` `245` `-` `19,160,498` `52` `1,233,871` `3` `11,306,002` `31` `3,500,944` `9` `212,918` `1` `21,345` `-` `1,530,700` `4` `53,083` `-` `17,858,863` `48` `$` `37,019,361` `100`	December 31, 2019	December 31, 2019
	AMOUNT `$` `1,157,664` `4,523,505` `1,169,869` `20,311` `26,127` `15,445` `1,266` `2,349,362` `9,896,704` `245` `19,160,498` `1,233,871` `11,306,002` `3,500,944` `212,918` `21,345` `1,530,700` `53,083` `17,858,863` `$` `37,019,361`	AMOUNT `$` `4,066,638` `5,587,133` `1,292,410` `6,289` `100,636` `16,675` `1,329` `1,824,592` `5,261,850` `9,240` `18,166,792` `199,025` `10,931,031` `3,805,463` `211,506` `10,040` `1,544,000` `64,036` `16,765,101` `$` `34,931,893`	%
Current assets 1100 Cash and cash equivalents 1140 Current contract assets 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 1220 Current income tax assets 130X Inventories 1410 Prepayments 1479 Other current assets, others 11XX Current Assets Non-current assets 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1780 Intangible assets 1840 Deferred income tax assets 1920 Guarantee deposits paid 15XX Non-current assets 1XXX Total assets			`12` `16` `4` `-` `-` `-` `-` `5` `15` `-`
			`52`
			`1` `31` `11` `1` `-` `4` `-`
			`48`
			`100`

(Continued)

~8~

CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity December 31, 2020
December 31, 2019
Notes
AMOUNT
%
AMOUNT
%
6(11)
$
5,199,146
14
$
1,822,361
5
6(12)
2,699,405
7
1,699,563
5
6(20)(24) and 7
6,698,790
18
8,698,974
25
6(20)
8,100
-
-
-
6(20) and 7
111,592
-
285,404
1
6(20)
1,490,567
4
984,564
3
6(20) and 7
8,362
-
7,605
-
6(14)
1,311,249
4
1,177,065
3
6(15)(20) and 7
1,288,678
4
1,615,497
5
6(7)
272,881
1
265,694
1
20,460
-
15,089
-
6(17)
1,280,000
3
500,000
1
20,389,230
55
17,071,816
49
6(13)
5,995
-
-
-
6(16)
1,932,301
5
-
-
6(17)
3,918,570
11
5,347,772
15
6(30)
1,324,697
3
1,324,697
4
6(7)
3,268,411
9
3,562,819
10
6(18)
693,347
2
681,757
2
6(18)
193,391
-
204,981
1
6(19)
3,401
-
42,430
-
261,809
1
237,539
1
20,128
-
824
-
11,622,050
31
11,402,819
33
32,011,280
86
28,474,635
82
6(21)
4,730,555
13
4,729,918
13
6(16)(22)(32)
97,071
-
1,338,798
4
6(23)
3,166,471
9
3,166,471
9
(
2,986,016) (
8) (
2,777,929) (
8 )
5,008,081
14
6,457,258
18
7 and 9
11
$
37,019,361
100
$
34,931,893
100

Current liabilities
2100
Short-term borrowings
2110
Short-term notes and bills payable
2130
Current contract liabilities
2150
Notes payable
2160
Notes payable - related parties
2170
Accounts payable
2180
Accounts payable - related parties
2200
Other payables
2250
Provisions for liabilities - current
2280
Current lease liabilities
2310
Advance receipts
2320
Long-term liabilities, current portion
21XX
Current Liabilities
Non-current liabilities
2500
Non-current financial liabilities at fair
value through profit or loss
2530
Bonds payable
2540
Long-term borrowings
2570
Deferred income tax liabilities
2580
Non-current lease liabilities
2610
Long-term notes and accounts
payable
2630
Long-term deferred revenue
2640
Accrued pension liabilities
2645
Guarantee deposits received
2670
Other non-current liabilities, others
25XX
Non-current liabilities
2XXX
Total Liabilities
Equity
Share capital
3110
Share capital - common stock
Capital surplus
3200
Capital surplus
Retained earnings
3320
Special reserve
3350
Accumulated deficit
3XXX
Total equity
Significant contingent liabilities and
unrecognised contract commitments
Significant events after the balance
sheet date
3X2X
Total liabilities and equity

The accompanying notes are an integral part of these parent company only financial statements.

~9~

CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

Items Year ended December 31
2020
2019
Notes
AMOUNT
%
AMOUNT
%
6(24) and 7
$
25,025,522
100
$
16,248,932
100
6(3)(10)(28)(29)
and 7
(
26,455,286) (
105) (
17,485,723) (
108)
(
1,429,764) (
5) (
1,236,791) (
8)
6(28)(29)
(
64,177)
- (
73,469)
-
(
328,011) (
1) (
328,985) (
2)
(
94,018) (
1) (
99,847) (
1)
12(2)
3,896
-
1,434
-
(
482,310) (
2) (
500,867) (
3)
(
1,912,074) (
7) (
1,737,658) (
11)
6,623
-
18,376
-
6(8)(18)(25)
428,588
2
102,430
1
6(26)
(
7,563)
- (
124,788) (
1)
6(6)(7)(18)(27)(
100,509) (
1) (
66,425)
-
6(5)
(
15,154)
- (
10,407)
-
311,985
1 (
80,814)
-
(
1,600,089) (
6) (
1,818,472) (
11)
6(30)
2
-
2
-
($
1,600,087) (
6) ($
1,818,470) (
11)
6(19)
$
66,502
-
$
90,902
-
6(30)
(
13,300)
- (
18,180)
-
$
53,202
-
$
72,722
-
($
1,546,885) (
6) ($
1,745,748) (
11)
6(31)
($
3.38) ($
3.91)

4000
Sales revenue
5000
Operating costs
5900
Net operating margin
Operating expenses
6100
Selling expenses
6200
General and administrative
expenses
6300
Research and development
expenses
6450
Impairment loss (impairment
gain and reversal of impairment
loss) determined in accordance
with IFRS 9
6000
Total operating expenses
6900
Operating loss
Non-operating income and
expenses
7100
Interest income
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of loss of associates and
joint ventures accounted for
using equity method, net
7000
Total non-operating income
and expenses
7900
Loss before income tax
7950
Income tax benefit
8200
Loss for the year
Other comprehensive income
Components of other
comprehensive income that will
not be reclassified to profit or
loss
8311
Other comprehensive income,
before tax, actuarial gains on
defined benefit plans
8349
Income tax related to
components of other
comprehensive income that will
not be reclassified to profit or
loss
8300
Other comprehensive income for
the year
8500
Total comprehensive loss for the
year
Basic earnings per share
9750
Total basic earnings per share

The accompanying notes are an integral part of these parent company only financial statements.

~10~

CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

2019 Balance at January 1, 2019 Loss for the year, net of tax Other comprehensive income Total comprehensive loss Cash capital increase Legal reserve used to offset accumulated deficit Capital surplus used to offset accumulated deficit Acquisition of ownership interests in subsidiaries Balance at December 31, 2019 2020 Balance at January 1, 2020 Loss for the year, net of tax Other comprehensive income Total comprehensive loss Capital surplus used to offset accumulated deficit Due to recognition of equity component of convertible bonds issued Conversion of convertible bonds Balance at December 31, 2020	Notes		Share capital - common stock		Capital surplus		Retained Earnings	Retained Earnings	Retained Earnings	Retained Earnings		Total equity
							Legal reserve		Special reserve	Accumulated deficit
	6(21)(22) and 7 6(23) 6(22)(23) 6(22)(32) 6(22)(23) 6(16)(22) 6(16)(21)(2 2)		`$ 3,729,918` `-` `-` `-` `1,000,000` `-` `-` `-` `$ 4,729,918` `$ 4,729,918` `-` `-` `-` `-` `-` `637` `$ 4,730,555`	`$ 2,005,515` `-` `-` `-` `1,252,000` `-` `(` `1,927,965)` `9,248` `$ 1,338,798` `$ 1,338,798` `-` `-` `-` `(` `1,338,798)` `96,153` `918` `$` `97,071`		`$ 1,065,297` `-` `-` `-` `-` `(` `1,065,297)` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `$` `-`			`$ 3,166,471` `-` `-` `-` `-` `-` `-` `-` `$ 3,166,471` `$ 3,166,471` `-` `-` `-` `-` `-` `-` `$ 3,166,471`	`($ 4,025,443)` `(` `1,818,470)` `72,722` `(` `1,745,748)` `-` `1,065,297` `1,927,965` `-` `($ 2,777,929)` `($ 2,777,929)` `(` `1,600,087)` `53,202` `(` `1,546,885)` `1,338,798` `-` `-` `($ 2,986,016)`	`$ 5,941,758` `(` `1,818,470` `)` `72,722` `(` `1,745,748` `)` `2,252,000` `-` `-` `9,248` `$ 6,457,258` `$ 6,457,258` `(` `1,600,087` `)` `53,202` `(` `1,546,885` `)` `-` `96,153` `1,555` `$ 5,008,081`

The accompanying notes are an integral part of these parent company only financial statements.

~11~

CSBC CORPORATION, TAIWAN

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax
Adjustments
Adjustments to reconcile profit (loss)
Expected credit gain

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Depreciation of investment property

Amortization

Share of loss of investments accounted for using equity
method

Interest income
Government grant income

(Gain) loss on valuation of financial assets and liabilities at
fair value through profit or loss
Loss on disposal of property, plant and equipment

Interest expense

Changes in operating assets and liabilities
Changes in operating assets
Decrease in current contract assets
Decrease (increase) in accounts receivable
Increase in accounts receivable - related parties
Decrease (increase) in other receivables
Decrease in other receivables - related parties
Increase in inventories
Increase in prepayments
Decrease (increase) in other current assets
Changes in operating liabilities
Decrease in financial liabilities at fair value through profit
or loss
(Decrease) increase in current contract liabilities
Increase in notes payable
Decrease in notes payable - related parties
Increase in accounts payable
Increase in accounts payable - related parties
Increase in accounts payable
Decrease in provisions for liabilities - current
Increase in receipts in advance
Increase in net defined benefit liability - non-current
Cash (outflow) inflow generated from operations
Interest received
Payment of interest
Income tax refunded (paid)
Net cash flows (used in) from operating activities Year ended December 31
Notes
2020
2019
( $
1,600,089 ) ( $
1,818,472 )
12(2)
(
3,896 ) (
1,434 )
6(6)(28)
581,362
550,924
6(7)(28)
245,961
237,744
6(9)
680
556
6(10)(28)
15,674
16,137
6(5)
15,154
10,407
(
6,623 ) (
18,376 )
6(25)(33)
(
11,590 ) (
11,396 )
(
11,749 )
108
6(26)
2,197
44,600
6(27)
100,509
66,425
1,066,171
1,006,623
123,895 (
402,492 )
(
14,023 ) (
5,194 )
74,418 (
81,653 )
1,230
67,127
(
524,770 ) (
486,778 )
(
4,634,854 ) (
3,986,158 )
8,995 (
8,200 )
- (
108 )
(
2,000,184 )
5,948,100
8,100
-
(
173,812 ) (
143,364 )
506,003
307,476
757
4,233
115,065
117,129
(
326,819 ) (
910,101 )
5,371
11,745
27,473
38,964
(
6,409,394 )
554,572
6,714
18,322
(
77,171 ) (
56,539 )
65 (
456 )
(
6,479,786 )
515,899

(Continued)

~12~

CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of investments accounted for using equity method

Acquisition of property, plant and equipment

Acquisition of intangible assets

Increase in refundable deposits
Decrease in refundable deposits
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term borrowings

Increase in short-term notes and bills payable

Proceeds from issuance of bonds

Proceeds from long-term debt

Repayments of long-term debt

Repayments of principal portion of lease liabilities

Increase in long-term deferred revenue

Increase in guarantee deposit received

Decrease in guarantee deposit received

Increase (decrease) in other non-current liabilities

Cash capital increase

Net cash flows from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year Year ended December 31
Notes
2020
2019
6(5)(32)
( $
1,050,000 ) ( $
87,000 )
6(33)
(
940,273 ) (
954,592 )
6(10)
(
26,979 ) (
11,594 )
(
17,465 ) (
70,009 )
28,418
35,925
(
2,006,299 ) (
1,087,270 )
6(34)
3,376,785
532,211
6(34)
999,842
1,699,563
6(34)
2,034,775
-
6(34)
-
300,000
6(34)
(
649,202 ) (
150,765 )
6(34)
(
228,663 ) (
214,694 )
6(34)
-
145,238
6(34)
189,414
228,360
6(34)
(
165,144 ) (
170,710 )
6(34)
19,304 (
12,409 )
6(21)
-
2,252,000
5,577,111
4,608,794
(
2,908,974 )
4,037,423
6(1)
4,066,638
29,215
6(1)
$
1,157,664 $
4,066,638

The accompanying notes are an integral part of these parent company only financial statements.

~13~

CSBC CORPORATION, TAIWAN NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS DECEMBER 31, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

1. HISTORY AND ORGANIZATION

(1) On May 1, 1946, Taiwan Machinery and Shipbuilding Company was established by the government, and then was divided into two companies ‘Taiwan Machinery Corporation’ and ‘Taiwan Shipbuilding Corporation (TSBC)’ to split the machinery and shipbuilding business for the purpose of management. In the late 1960s, the government built large shipyards in Xiaogang Kaohsiung which is the current place of business for CSBC CORPORATION, TAIWAN (the “Company”).
(2) In July 1973, China Shipbuilding Corporation was established by the government. In the early days, most of its labour and techniques were supported by TSBC and they were both reverted to become state - owned companies under the Ministry of Economic Affairs. In January 1978, China Shipbuilding Corporation merged with TSBC and China Shipbuilding Corporation became the surviving company. The Company is primarily engaged in the business of building, manufacturing and repairing of various ships and onshore equipment.
(3) On March 1, 2007, China Shipbuilding Corporation changed its name to CSBC Corporation, Taiwan.
(4) The Company became a listed company in December 22, 2008.
THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized for issuance by the Board of Directors on March 18, 2021.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2020 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of material’ Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020 January 1, 2020

~14~

	Effective date by
	International Accounting
New Standards, Interpretations and Amendments	Standards Board
Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate	January 1, 2020
benchmark reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’	June 1, 2020 (Note)

Note: Earlier application from January 1, 2020 is allowed by FSC.

Except for the following, the above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment:

Amendment to IFRS 16, ‘Covid-19-related rent concessions’

This amendment provides a practical expedient for lessees from assessing whether a rent concession related to COVID-19, and that meets all of the following conditions, is a lease modification:

A. Changes in lease payments result in the revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
B. Any reduction in lease payments affects only payments originally due on or before June 30, 2021; and
C. There is no substantive change to other terms and conditions of the lease.

The Company adopted this practical expedient. The relevant impact is provided in Note 6(7).

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from applying IFRS 9’ Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, ‘Interest Rate Benchmark Reform— Phase 2’	January 1, 2021 January 1, 2021

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

~15~

(3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs as endorsed by the FSC are as follows:

Effective date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 3, ‘Reference to the conceptual framework’ January 1, 2022 Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of To be determined by assets between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2023 Amendments to IFRS 17, ‘Insurance contracts’ January 1, 2023 Amendments to IAS 1, ‘Classification of liabilities as current or January 1, 2023 non-current’ Amendments to IAS 1, ‘Disclosure of accounting policies’ January 1, 2023 Amendments to IAS 8, ‘Definition of accounting estimates’ January 1, 2023 Amendments to IAS 16, ‘Property, plant and equipment: January 1, 2022 proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts—cost of fulfilling January 1, 2022 a contract’ Annual improvements to IFRS Standards 2018–2020 January 1, 2022

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:
(a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
(b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

~16~

B. The preparation of financial statements in compliance with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

The parent company only financial statements are presented in New Taiwan Dollar, which is the Company’s functional and presentation currency.

A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.
B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation at the balance sheet date are recognised in profit or loss.
C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
D. All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

(4) Classification of current and non-current items

The Company is engaged in the business of shipbuilding, vessel building, major machinery building and ship repairing such that the contractual periods of these projects are usually over one year. Therefore, the assets and liabilities of these projects are classified as current assets or liabilities if the period of the project is shorter than the operating cycle; otherwise they are classified as non-current assets or liabilities. The classification criteria of assets and liabilities that are not project related are as follows ： Current assets include cash, the assets held for trading or the assets arising from operating activities that are expected to be consumed or to be realized within twelve months from the balance sheet date; property, plant and equipment and other assets that are not classified as current assets are non-current assets. Current liabilities include the liabilities arising mainly from trading activities and are expected to be settled within twelve months from the balance sheet date. The liabilities that are not classified as current liabilities are non-current liabilities.

~17~

(5) Cash equivalents

(6) Accounts and notes receivable

A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(7) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income and financial assets at amortised cost, at each reporting date, the Company recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Company recognises the impairment provision for lifetime ECLs.

(8) Derecognition of financial assets

The Company derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.
B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.
C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

- (9) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(10) Inventories

~18~

(11) Investments accounted for under the equity method - subsidiaries and associates

A. Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern the financials and operating policies. In general, it is presumed that the parent has the power to govern the financials and operating policies, if a parent holds, directly or indirectly, more than half of the voting power of an entity. Investments in subsidiaries are accounted for using equity method in these parent company only financial statements.
B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise the losses in proportion to the ownership.
D. Associates are all entities over which the Company has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.
E. The Company’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
F. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognises the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
G. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
H. When the Company disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

~19~

I. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

- (12) Investment accounted for using equity method joint ventures

Investment of joint arrangements are classified as joint ventures based on its contractual rights and obligations. Unrealised profits and losses arising from the transactions between the Company and its joint venture are eliminated to the extent of the Company’s interest in the joint venture. However, when the transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, all such losses shall be recognised immediately. When the Company’s share of losses in a joint venture equals or exceeds its interest in the joint venture together with any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

(13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.
D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Land improvements 5 ～ 50 years Buildings and structures 8 ～ 65 years Machinery and equipment 2 ～ 58 years Transportation equipment 3 ～ 40 years Leasehold improvements 14 years Other equipment 3 ～ 14 years

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(14) Leasing arrangements (lessee) － right-of-use assets/ lease liabilities

A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.
B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:
(a) Fixed payments, less any lease incentives receivable;
(b) Variable lease payments that depend on an index or a rate;
(c) Amounts expected to be payable by the lessee under residual value guarantees;
(d) The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option; and
(e) Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The Company subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

C. At the commencement date, the right-of-use asset is stated at cost comprising the following:
(a) The amount of the initial measurement of lease liability;
(b) Any lease payments made at or before the commencement date;
(c) Any initial direct costs incurred by the lessee; and
(d) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

(15) Investment property

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(16) Intangible assets

Computer software is stated at cost and amortised on a straight-line basis over its estimated useful life of 5 years.

(17) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortised historical cost would have been if the impairment had not been recognised.

(18) Borrowings

(19) Accounts and notes payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(20) Convertible bonds

Convertible bonds issued by the Company contain conversion options (that is, the bondholders have the right to convert the bonds into the Company’s common shares by exchanging a fixed amount of cash for a fixed number of common shares), call options and put options. The Company classifies the bonds payable upon issuance as a financial asset, a financial liability or an equity instrument in accordance with the contract terms. They are accounted for as follows:

A. The embedded call options and put options are recognised initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.
B. The host contracts of bonds are initially recognised at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortised in profit or loss as an adjustment to ‘finance costs’ over the period of circulation using the effective interest method.

~22~

C. The embedded conversion options which meet the definition of an equity instrument are initially recognised in ‘capital surplus—share options’ at the residual amount of total issue price less the amount of financial assets or financial liabilities at fair value through profit or loss and bonds payable as stated above. Conversion options are not subsequently remeasured.
D. Any transaction costs directly attributable to the issuance are allocated to each liability or equity component in proportion to the initial carrying amount of each abovementioned item.
E. When bondholders exercise conversion options, the liability component of the bonds (including bonds payable and ‘financial assets or financial liabilities at fair value through profit or loss’) shall be remeasured on the conversion date. The issuance cost of converted common shares is the total book value of the abovementioned liability component and ‘capital surplus - share options’.

(21) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(22) Non-hedging derivatives

(23) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognised as interest expense. Provisions are not recognised for future operating losses.

(24) Employee benefits

A. Short-term employee benefits

B. Pensions

(a) Defined contribution plans

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(b) Defined benefit plans
- i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
- ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.
- iii. Past service costs are recognised immediately in profit or loss.
C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

D. Employees’ compensation and directors’ and supervisors’ remuneration
Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

(25) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

~24~

C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures, employees’ training costs and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

(26) Dividends

(27) Revenue recognition

A. The revenues from construction contracts in relation to shipbuilding, vessel construction and machinery manufacturing are identified to be one performance obligation satisfied over time and are recognised by the percentage-of-completion as of the financial reporting date. The percentage-of-completion is measured based on the percentage of the workload completed to the total expected workload of the contracts. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

~25~

B. The revenues from service contract in relation to ship/vessel repairs and anti-corrosion coating are identified to be one performance obligation satisfied over time and are recognised by the percentage-of-completion as of the financial reporting date. The percentage-of-completion is measured based on the percentage of the actual cost incurred to the total expected cost of the contracts. At the beginning of the contract period, as the Company may find it difficult to estimate the result of obligation performance, it estimates the actual cost incurred for performing obligations which could be recovered. The contract revenue should be recognised only to the extent of actual costs incurred until the result of obligation performance could by measured reasonably.
C. The Company’s estimate about revenue, costs and percentage-of-completion is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.
D. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, according to the agreements, the Company does not adjust the transaction price to reflect the time value of money.
E. The Company classifies its ship leasing business as an operating lease. Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(28) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Company will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Company recognises expenses for the related costs for which the grants are intended to compensate.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical judgements in applying the Company’s accounting policies and make critical assumptions and estimates concerning future events. Assumptions and estimates may differ from the actual results and are continually evaluated and adjusted based on historical experience and other factors. Such assumptions and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year; and the related information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

None.

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(2) Critical accounting estimates and assumptions

Construction contracts

The Company recognises construction contract revenue and costs using the percentage-of-completion method, wherein the revenue to be recognised is equal to the percentage of completed work out of the total estimated work.

If the estimated total contract costs had increased / decreased by 1% with all other variables held constant, construction profit for the year ended December 31, 2020 would have decreased by $428,227 or increased by $362,711 (the construction profit for the year ended December 31, 2019 would have decreased by $363,393 or increased by $474,150).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
December 31, 2020 Cash on hand and revolving funds 410 $ Checking accounts and demand deposits 845,664 Time deposits 311,590 1,157,664 $	December31,2019
	330 $ 1,990,818 2,075,490
	4,066,638 $

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Company has no cash and cash equivalents pledged to others.

(2) Accounts receivable, net

Accounts receivable, net
			December31,2020			December31,2019
Construction receivables		$	1,236,780		$	1,301,805
Repair receivables			250,715			309,585
			1,487,495			1,611,390
Less: Allowance for doubtful accounts	(		317,626)	(		318,980)
		$	1,169,869		$	1,292,410
Accounts receivable - related parties		$	20,311		$	6,289

A. As of December 31, 2020 and 2019, accounts receivable (including related parties) was all from contracts with customers. And as of January 1, 2019, the balance of receivables from contracts with customers amounted to $1,209,993.

~27~

B. As at December 31, 2020 and 2019, with taking into account collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’ accounts receivable (including related parties) was $1,190,180 and $1,298,699, respectively.
C. As of December 31, 2020 and 2019, the Company’s past due construction receivables amounted to $796,040 and $0, respectively, because the counterparty failed to fulfil the mutual agreements, and the payments were still under negotiation.
D. Information relating to credit risk is provided in Note 12(2).
(3) Inventories

Inventories
Raw materials Work in process and repair of goods Raw materials Work in process and repair of goods		December31,2020
	Allowance for Cost valuation loss 2,321,658 $ 42,173) ($ 69,877 - 2,391,535 $ 42,173) ($ December31,2019		Bookvalue
			2,279,485 $ 69,877
			2,349,362 $

	Allowance for Cost valuation loss 1,817,690 $ 45,288) ($ 52,190 - 1,869,880 $ 45,288) ($		Bookvalue
			1,772,402 $ 52,190
			1,824,592 $

The amount of inventories recognised as expense for the years ended December 31, 2020 and 2019 is as follows:

is as follows:
		Years ended	December	31,
		2020		2019
Raw materials costs	$	12,409,045	$	6,852,552
(Gain) loss from reversal of obsolete inventories	(	3,115)		11,295
	$	12,405,930	$	6,863,847

The Company reversed a previous inventory write-down and accounted for this transaction as a reduction of expenses because the related inventory items were scrapped or sold in 2020.

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(4) Prepayments

(5)

Investments accounted for under equity method
A. Details of investments accounted for under equity method are as follows:
December31,2020
December31,2019
Prepayments of suppliers
9,836,976
$ 5,224,592
$ Excess VAT paid
1

1

Other prepayments
59,727
37,257
9,896,704
$ 5,261,850
$ 2020
2019
At January 1
199,025
$ 113,184
$ Additional investments accounted for
using the equity method
1,050,000

96,248
Share of profit or loss of investments
accounted for using the equity method
15,154)
(
10,407)
(
At December 31
1,233,871
$ 199,025
$ December31,2020
December31,2019
Subsidiary:
CSBC Coating Solutions Co., Ltd.
174,438
$ 169,617
$ Associates:
Taiwan International Windpower
Training Corporation Ltd. (Note 1)
10,911
10,570

Taiwan Offshore Wind Farm Services
Corporation (Note 2)
-

-
Fuhai Wind Farm Corporation (Note 3)
-
-
Joint Ventures:
CSBC - DEME Wind Engineering Co.,
Ltd. (Note 4)
1,048,522
18,838
1,233,871
$ 199,025
$

Note 1: On May 11, 2018, with reporting to the Board of Directors for future reference, the Company, Taiwan International Ports Corporation, Ltd. and other companies jointly established Taiwan International Windpower Training Corporation Ltd. for investment. The Company owns 12% of the investee’s share capital and one seat in the Board of Directors of the investee.
Note 2: On March 21, 2014, the Board of Directors has resolved that the Company and Taiwan Generations Corporation would jointly establish Taiwan Offshore Wind Farm Services Corporation. The Company has acquired 40% of share capital in September 2014. The Company has ceased recognising its share of losses in this company since the fourth quarter of 2018 and the unrecognised share of losses in associate for the year ended December 31, 2020 and accumulated share of losses in associate amounted to $2,952 and $6,856, respectively.

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Note 3: On August 9, 2016, the Board of Directors resolved to invest in Fuhai Wind Farm Corporation and obtained 37.97% of ownership shares. The Company has ceased recognising its share of losses in this company since the third quarter of 2017 and the unrecognised share of losses in associate for the year ended December 31, 2020 and accumulated share of losses in associate amounted to $16,271 and $74,953, respectively.
Note 4: On September 12, 2018, the Company’s Board of Directors resolved to jointly invest in CSBC-DEME Wind Engineering Co., Ltd. with DEME Offshore Holding N.V. (formerly named GeoSea N.V.). The Company held 50.0001% equity interests in CSBC-DEME Wind Engineering Co., Ltd., and the Board of Directors adopts unanimity rule to make resolutions under the Company's Articles of Incorporation.
- On January 15, 2020, the Company’s Board of Directors resolved to jointly increase investments in CSBC-DEME Wind Engineering Co., Ltd. with DEME Offshore Holding N.V. for building a marine installation vessel in order to implement maritime engineering business. CSBC-DEME Wind Engineering Co., Ltd. completed the capital increase approximately to $2.1 billion (approximately EUR 62.5 million). The Company subscribed 10,606,060 shares, equivalent to $1,050,000, according to its shareholding ratio.
B. Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2020.
C. The Company’s share of the operating results in all individually immaterial associates are summarized below:

summarized below:
		Years ended	December31,
		2020	2019
Gain (loss) for the year from	$	341	($	422)
continuing operations
Other comprehensive income -
net of tax		-		-
Total comprehensive income (loss)	$	341	($	422)
Share of the operating results of	the Company’s individually		immaterial joint	ventures
summarised below:
		Years ended	December31,
		2020	2019
Loss for the year from continuing	($	20,316)	($	30,662)
operations
Other comprehensive income - net
of tax		-		-
Total comprehensive loss	($	20,316)	($	30,662)

D. Share of the operating results of the Company’s individually immaterial joint ventures is summarised below:
E. The Company had impairment loss in investments accounted for using equity method as the carrying amount exceeds recoverable amount. As of December 31, 2020 and 2019, the accumulated impairment loss amounted to $124,915 for both years.

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(6) Property, plant and equipment

At January 1, 2020 Cost Accumulated depreciation and impairment 2020 Opening net book amount as at January 1 Additions Disposals - costs Reclassifications - costs (Note) Depreciation charge Disposals - accumulated depreciation Closing net book amount as at December 31 At December 31, 2020 Cost Accumulated depreciation and impairment	Land 6,096,033 $ - 6,096,033 $ 6,096,033 $ - - 2,092) ( - - 6,093,941 $ 6,093,941 $ - 6,093,941 $	Land improvements	Buildings Machinery Transportation Leasehold Other and structures and equipment equipment improvements equipment 7,527,803 $ 10,073,012 $ 1,555,261 $ 1,072,631 $ 150,702 $ 6,581,473) ( 8,073,406) ( 622,766) ( 779,680) ( 109,480) ( 946,330 $ 1,999,606 $ 932,495 $ 292,951 $ 41,222 $ 946,330 $ 1,999,606 $ 932,495 $ 292,951 $ 41,222 $ - - - - - 4,595) ( 125,259) ( 5,567) ( - 5,098) ( 178,439 322,195 34,446 - 2,907 108,412) ( 299,737) ( 71,003) ( 48,622) ( 10,867) ( 4,595 123,067 5,567 - 5,093 1,016,357 $ 2,019,872 $ 895,938 $ 244,329 $ 33,257 $ 7,701,647 $ 10,269,948 $ 1,584,140 $ 1,072,631 $ 148,511 $ 6,685,290) ( 8,250,076) ( 688,202) ( 828,302) ( 115,254) ( 1,016,357 $ 2,019,872 $ 895,938 $ 244,329 $ 33,257 $	Construction inprogress Total 252,834 $ 27,846,979 $ - 16,915,948) ( 252,834 $ 10,931,031 $ 252,834 $ 10,931,031 $ 960,622 960,622 - 140,519) ( 566,973) ( 2,092) ( - 581,362) ( - 138,322 646,483 $ 11,306,002 $ 646,483 $ 28,664,990 $ - 17,358,988) ( 646,483 $ 11,306,002 $
		1,118,703 $ 749,143) ( 369,560 $ 369,560 $ - - 28,986 42,721) ( - 355,825 $ 1,147,689 $ 791,864) ( 355,825 $

~31~

At January 1, 2019 Cost Accumulated depreciation and impairment 2019 Opening net book amount as at January 1 Additions Disposals - costs Reclassifications - costs (Note) Depreciation charge Disposals - accumulated depreciation Closing net book amount as at December 31 At December 31, 2019 Cost Accumulated depreciation and impairment	Land 6,096,033 $ - 6,096,033 $ 6,096,033 $ - - - - - 6,096,033 $ 6,096,033 $ - 6,096,033 $	Land improvements	Buildings Machinery Transportation Leasehold Other Construction and structures and equipment equipment improvements equipment inprogress Total 7,643,527 $ 9,965,890 $ 941,266 $ 1,072,631 $ 147,267 $ 509,722 $ 27,375,908 $ 6,669,655) ( 8,011,796) ( 574,988) ( 731,059) ( 100,672) ( - 16,797,863) ( 973,872 $ 1,954,094 $ 366,278 $ 341,572 $ 46,595 $ 509,722 $ 10,578,045 $ 973,872 $ 1,954,094 $ 366,278 $ 341,572 $ 46,595 $ 509,722 $ 10,578,045 $ - - 1,460 - - 950,950 952,410 210,994) ( 251,492) ( 11,524) ( - 2,289) ( - 477,439) ( 95,270 358,614 624,059 - 5,724 1,207,838) ( 3,900) ( 104,544) ( 286,924) ( 59,301) ( 48,621) ( 11,059) ( - 550,924) ( 192,726 225,314 11,523 - 2,251 - 432,839 946,330 $ 1,999,606 $ 932,495 $ 292,951 $ 41,222 $ 252,834 $ 10,931,031 $ 7,527,803 $ 10,073,012 $ 1,555,261 $ 1,072,631 $ 150,702 $ 252,834 $ 27,846,979 $ 6,581,473) ( 8,073,406) ( 622,766) ( 779,680) ( 109,480) ( - 16,915,948) ( 946,330 $ 1,999,606 $ 932,495 $ 292,951 $ 41,222 $ 252,834 $ 10,931,031 $
		999,572 $ 709,693) ( 289,879 $ 289,879 $ - 1,140) ( 120,271 40,475) ( 1,025 369,560 $ 1,118,703 $ 749,143) ( 369,560 $

Note: The reclassifications to investment property and related information is provided in Note 6(9).

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A. Amount of borrowing costs capitalised as part of property, plant and equipment are as follows:

	Years ended	December31,
	2020	2019
Amount capitalised	1,302 $	2,692 $
Interest rate	0.01%~2.00%	0.88%~2.30%

B. Significant components and the useful lives of land improvements, buildings, and machinery equipment of the Company are as follows:
(a) The significant components of land improvements include construction expenses for wharf, which are depreciated over 45 years.
(b) The significant components of buildings include shipyard, plants and warehouse, and office buildings, which are depreciated over 40, 45 and 60 years, respectively.
(c) The significant components of machinery equipment include hoisting machine, crane and substation as well as carriers, welding machine and working platform, which are depreciated over 25, 20 and 10 years, respectively.
C. The Company’s property, plant and equipment all were acquired for self-use and were not pledged to others as collateral.

－ (7) Lease transactions lessee

A. The Company leases various assets including land, buildings and terminal equipment. Rental contracts are typically made for periods of 3 to 20 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes and may not affect the ownership of the lessor.
B. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Transportation equipment (terminal equipment) Land Buildings Transportation equipment (terminal equipment)	December31,2020 December31,2019 Bookvalue Bookvalue $ 3,174,580 $ 3,460,728 92,004 102,842 234,360 241,893 3,500,944 $ 3,805,463 $ Years endedDecember31,	December31,2019
		Bookvalue
		$ 3,460,728 102,842 241,893
		3,805,463 $
	2020 Depreciationexpense $ 164,179 13,144 68,638 245,961 $	2019
		Depreciationexpense
		$ 168,378 12,792 56,574
		237,744 $

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C. For the years ended December 31, 2020 and 2019, the additions to right-of-use assets were $57,645 and $5,268, respectively.
D. Information on profit or loss in relation to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on short-term lease contracts Expense on leases of low-value assets	2020 2019 $ 44,218 $ 47,572 18,523 14,348 630 738 63,371 $ 62,658 $ Years endedDecember31,	2020 2019 $ 44,218 $ 47,572 18,523 14,348 630 738 63,371 $ 62,658 $ Years endedDecember31,
		62,658 $

E. For the years ended December 31, 2020 and 2019, the Company’s total cash outflow for leases were $292,034 and $277,352, respectively.
F. Variable lease payments

Some of the Company’s lease contracts contain variable lease payment terms that are linked to construction cost index and announced land value. The Company remeasured and decreased lease liabilities by $116,203, and made a corresponding adjustment to the right-of-use assets.

The Company has applied the practical expedient to “Covid-19-related rent concessions”, and recognised the gain from changes in lease payments arising from the rent concessions amounting to $10,447 for the year 2020 as other income.

(8) Leasing arrangements – lessor

A. The Company leases various assets including land and buildings. Rental contracts are typically made for periods of 2 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. To secure the use of the leased assets, the leased assets may not be used to sublease, sublet, lend, donate, sell or grant to others under any method.

In addition, the Company leases rooftop of its plants for lessees to install solar photovoltaic power generation equipment. Rental contracts are typically made for periods of 20 years. Lease payments consist of fixed base rent and variable operating rent.

B. For the years ended December 31, 2020 and 2019, the Company recognised rent income in the amounts of $20,677 and $9,975, respectively, based on the operating lease agreement, in which the amounts of variable lease payments were not material.
C. The maturity analysis of the lease payments under the operating leases is as follows:

Less than 1 year Later than 1 year but not later than 5 years Later than 5 years	December31,2020 $ 26,759 126,002 340,841 493,602 $	December31,2019
		$ 6,222 4,301 -
		10,523 $

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(9) Investment property, net

Buildings
Land
and structures
Total
$ 200,486 $ 29,745 $ 230,231
-
18,725)
(
18,725)
(
200,486
$ 11,020
$
211,506
$ $ 200,486 $ 11,020 $ 211,506
2,092
-
2,092
-
680)
(
680)
(
202,578
$ 10,340
$ 212,918
$ $ 202,578 $ 29,745 $ 232,323
-
19,405)
(
19,405)
(
202,578
$ 10,340
$ 212,918
$ Buildings
Land
and structures
Total
$ 200,486 $ 25,845 $ 226,331
-
18,169)
(
18,169)
(
200,486
$ 7,676
$ 208,162
$ $ 200,486 $ 7,676
$ 208,162
-
3,900
3,900
-
556)
(
556)
(
200,486
$ 11,020
$ 211,506
$ $ 200,486 $ 29,745 $ 230,231
-
18,725)
(
18,725)
(
200,486
$ 11,020
$ 211,506
$

Note: The reclassifications from property, plant and equipment and related information is provided in Note 6(6).

~35~

A. Rental income from the lease of the investment property and direct operating expenses arising from the investment property are shown below:

Rental income from the lease of the investment property Direct operating expenses arising from the investment property that generate rental income in the period	Years endedDecember31,	Years endedDecember31,
	2020 20,677 $ 1,300 $	2019
		9,975 $
		1,372 $

B. The fair value of the investment property held by the Company as at December 31, 2020 and 2019 were $672,686 and $651,134, respectively, which was revalued by independent valuers. Valuations were made using the comparison method, cost method for land development analysis and the income approach.

(10) Intangible assets

Intangible assets
Software:			Years ended	December	31,
			2020		2019
At January 1
Cost		$	23,430	$		48,661
Accumulated amortisation and impairment	(		13,390)	(		34,078)
		$	10,040	$		14,583
Opening net book amount as at January 1		$	10,040	$		14,583
Additions - acquired separately			26,979			11,594
Disposals - costs	(		16,893)	(		36,825)
Amortisation charge	(		15,674)	(		16,137)
Disposals - accumulated amortisation			16,893			36,825
Closing net book amount as at December 31		$	21,345	$		10,040
At December 31
Cost		$	33,516	$		23,430
Accumulated amortisation and impairment	(		12,171)	(		13,390)
		$	21,345	$		10,040

Details of amortisation on intangible assets are as follows:

Operating costs	Years endedDecember31,	Years endedDecember31,
	2020 15,674 $	2019
		16,137 $

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(11) Short-term loans

==> picture [466 x 179] intentionally omitted <==

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

Type of loans December 31, 2020 Interest rate range Collateral
Bank loans
Unsecured loans $ 5,187,100 0.85% ～ 1.40% None
Procurement unsecured loans 12,046 0.42% ～ 1.40% None
$ 5,199,146
Type of loans December 31, 2019 Interest rate range Collateral
Bank overdrafts $ 1,954 1.57% None
Bank loans
Unsecured loans 1,800,000 0.91% ～ 1.06% None
Procurement unsecured loans 20,407 0.40% ～ 2.35% None
$ 1,822,361
----- End of picture text -----

(12) Short-term notes and bills payable

Short-term notes and bills payable
		December31,2020		December31,2019
Commercial papers payable	$	2,700,000	$	1,700,000
Less: Unamortized discount	(	595)	(	437)
	$	2,699,405	$	1,699,563
Annual interest rates		0.33%～0.82%		0.61%～0.84%

(13) Financial liabilities at fair value through profit or loss

Items			December31,2020		December 31, 2019
Non-current items:
Financial liabilities designated as at fair
value through profit or loss
Call and put options embedded in
convertible bonds		$	17,744	$	-
Valuation adjustment	(		11,749)		-
		$	5,995	$	-

A. Information about the amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss is provided in Note 6(26).
B. Information about the terms of the first domestic secured convertible bonds issued by the Company is provided in Note 6(16).

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(14) Other payables

Other payables
		December31,2020		December31,2019
Accrued expenses	$	1,221,295	$	1,109,487
Construction payment refund		63,755		43,406
Others		26,199		24,172
	$	1,311,249	$	1,177,065

(15) Provisions

Provisions
			Warranty		Onerous	contracts			Total
At January 1, 2020		$	497,400		$	1,118,097		$	1,615,497
Additional provisions			116,182			1,482,087			1,598,269
Used during the year	(		85,735)	(		1,812,824)	(		1,898,559)
Unused amounts reversed	(		19,598)	(		6,931)	(		26,529)
At December 31, 2020		$	508,249		$	780,429		$	1,288,678
The analysis of provisions is as			follows:
		December31,2020			December31,2019				January1,2019
Realised in one year		$	447,278		$	731,482		$	545,558
Realised after one year			841,400			884,015			1,980,040
		$	1,288,678		$	1,615,497		$	2,525,598

A. Provision for warranty

The Company gives warranties on contracts revenue in relation to shipbuilding, vessel construction. Provision for warranty is estimated based on historical warranty data of products.

B. Provision for onerous contract

Under the irrevocable contracts of shipbuilding, vessel construction, the Company’s estimated provision for onerous contract is the difference between the inevitable cost of existing obligations to be performed in the future and the expected economic benefits from the contracts. The estimated provision may change with the actual construction situation.

(16) Bonds payable

Bonds payable
December31,2020 The first domestic secured convertible bonds 1,998,400 $ Less: Discount on bonds payable 66,099) ( 1,932,301 Less: Expiring within one year (shown as ‘long-term liabilities, current portion' ) - 1,932,301 $	December31,2019
	- $ -
	- -
	- $

A. The issuance of domestic convertible bonds by the Company

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(a) The terms of the first domestic secured convertible bonds issued by the Company are as follows:
i. The Company issued $2 billion, 0% first domestic secured convertible bonds, as approved by the regulatory authority. The bonds mature 5 years from the issue date (February 24, 2020 ~ February 24, 2025).
- The bonds will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on February 24, 2020.
ii. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three month of the bonds issue (May 25, 2020) to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.
iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds. The conversion price is $25.1 (in dollars) per share, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be recalculated based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the recalculated conversion price is lower than the conversion price before the recalculation, the conversion price will be adjusted; however, it will not be adjusted if it is higher.
iv. The Company may notify to repurchase all the bonds outstanding in cash at the bonds’ face value within 30 trading days after the closing price of the Company’s common shares is above the then conversion price by at least 30% for 30 consecutive trading days during the period from the date after three months of the bonds issue (May 25, 2020) to 40 days before the maturity date (January 15, 2025).
- Alternatively, the Company may repurchase the bonds outstanding in cash at the bonds’ face value at any time if the outstanding balance of the bonds is less than 10% of total initial issue amount during the period from the date after three months of the bonds issue (May 25, 2020) to 40 days before the maturity date (January 15, 2025).
v. The bonds set the date after four years from the issue date (February 24, 2024) as the put effective date for the bondholders to early put the bonds back to the Company. The bondholders have the right to require the Company to redeem the bonds in cash at 102.0151% of the bonds’ face value (a yield to put of 0.5%)
vi. Under the terms of the bonds, all bonds redeemed (including bonds repurchased from the Taipei Exchange), matured and converted are retired and not to be re-issued; all rights and obligations attached to the bonds are also extinguished.
(b) As of December 31, 2020, the bonds with a face value of $1,600 have been converted into 64 thousand common shares, and the Company did not adjust the conversion price.
B. Regarding the issuance of convertible bonds, the equity conversion options amounting to $96,153 were separated from the liability component and were recognised in ‘capital surplus - share options’ in accordance with IAS 32. The call options and put options embedded in bonds payable were separated from their host contracts and were recognised in ‘financial assets or liabilities at fair value through profit or loss’ in net amount in accordance with IFRS 9 because the economic characteristics and risks of the embedded derivatives were not closely related to those of the host contracts. The effective interest rates of the bonds payable after such separation was 0.8084%.

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- (17) Long term borrowings

Borrowing period and repayment term Long-term bank borrowings Unsecured borrowings Bank of Taiwan Borrowing period is from Jun. 22, 2017 to Jun. 22, 2022; principal is repayable in 4 installments beginning in the 4th year. Taiwan Business Bank Borrowing period is from Mar. 12, 2018 to Mar. 12, 2023; principal is repayable in 5 installments after 2.5 years. Commercial papers payable Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 26, 2020 to Dec. 15, 2022. Details are set out below. China Bills Finance Corporation Borrowing period is from Jun. 26, 2020 to Oct. 26, 2022. Details are set out below. Taishin International Bank Borrowing period is from Jun. 21, 2020 to Dec. 20, 2022. Details are set out below. International Bills Finance Corporation Borrowing period is from Jun. 22, 2020 to Jun. 21, 2022. Details are set out below. Less: Discount on commercial papers payable Less: Long-term borrowings, current portion	Borrowing period and repayment term	Interest rate range 1.18% 1.05% 0.60% 0.56% 0.43% 0.51%	Collateral December31,2020 None 1,500,000 $ None 700,000 2,200,000 None 1,000,000 None 850,000 None 800,000 None 350,000 1,430) ( 2,998,570 5,198,570 1,280,000) ( 3,918,570 $

~40~

Borrowing period and repayment term Long-term bank borrowings Unsecured borrowings Bank of Taiwan Borrowing period is from Jun. 22, 2017 to Jun. 22, 2022; principal is repayable in 4 installments beginning in the 4th year. Taiwan Business Bank Borrowing period is from Mar. 12, 2018 to Mar. 12, 2023; principal is repayable in 5 installments after 2.5 years . Commercial papers payable China Bills Finance Corporation Borrowing period is from Sep. 26, 2017 to Oct. 27, 2021. Details are set out below. Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 26, 2017 to Dec. 15, 2021. Details are set out below. Taishin International Bank Borrowing period is from Jun. 22, 2017 to Dec. 20, 2021. Details are set out below. International Bills Finance Corporation Borrowing period is from Jun. 22, 2017 to Jun. 22, 2021. Details are set out below. Less: Discount on commercial papers payable Less: Long-term borrowings, current portion	Borrowing period and repayment term	Interest rate range 1.36% 1.30% 0.66% 0.72% 0.68% 0.63%	Collateral December31,2019 None 2,000,000 $ None 700,000 2,700,000 None 1,000,000 None 1,000,000 None 800,000 None 350,000 2,228) ( 3,147,772 5,847,772 500,000) ( 5,347,772 $

~41~

The Company entered into an agreement for recurring issuance (maturity of 60~180 days) of certificates and dealership of commercial papers with the bill finance companies. During the contract term of 2 ~ 4 years, the Company is only liable for the service fees and interest and thus the commercial papers payable is included in long-term borrowings. Both parties shall renegotiate the agreement when the agreement matures.

(18) Deferred revenue

A. The Republic of China Government started to promote privatization starting from 2008. The Privatization Fund, Executive Yuan, would provide a loan in the amount of $1,500,000 to cover a portion of the shortfall to settle the pension and severance obligation as a result of the privatization. The Company was required to repay the loan to the Privatization Fund in a period of ten years, under the condition that the Company is profitable. The Company extended the repayment period to 2026 as approved by the Executive Yuan. The Company uses the average long-term loan interest rate on the loan for discounting. The discounted values are recorded under “long-term notes payable and payables”. The difference between the discounted value and the amount received is listed in “deferred revenue”. The amounts that are payable within one year are listed in “other financial liabilities-current”. The unamortised amounts are shown below:

December 31, 2020 Long-term notes and accounts receivable 693,347 $ Long-term deferred revenue 48,153 741,500 $	December31,2019
	681,757 $ 59,743
	741,500 $

Government grants and interest expenses that should be amortised are recognised under ‘other revenue’ and ‘finance costs’, respectively, for the years ended December 31, 2020 and 2019. For more information, please refer to Notes 6(25) and (27).

(19) Pension

A. (a)The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 15% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. The Company has assessed that the balance is sufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year.

~42~

(b)The amounts recognised in the balance sheet are as follows:

		December31,2020		December31,2019
Present value of funded obligations	($	1,751,981)	($	1,666,395)
Fair value of plan assets		1,748,580		1,623,965
Net defined benefit liability	($	3,401)	($	42,430)

Year ended December 31, 2020 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31 Year ended December 31, 2019 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan assets Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefitliability
	1,666,395) ($ 151,960) ( 24,575) ( 1,842,930) ( - - 30,960 30,960 - 59,989 1,751,981) ($ Present value of defined benefit obligations	1,623,965 $ - 29,062 1,653,027 35,542 - - 35,542 120,000 59,989) ( 1,748,580 $ Fair value of plan assets		42,430) ($ 151,960) ( 4,487 189,903) ( 35,542 - 30,960 66,502 120,000 - 3,401) ($ Net defined benefitliability
	1,576,173) ($ 158,480) ( 27,223) ( 1,761,876) ( - 4,509) ( 56,261 51,752 - 43,729 1,666,395) ($	1,481,805 $ - 26,739 1,508,544 39,150 - - 39,150 120,000 43,729) ( 1,623,965 $		94,368) ($ 158,480) ( 484) ( 253,332) ( 39,150 4,509) ( 56,261 90,902 120,000 - 42,430) ($

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilisation of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2020 and 2019 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.
(e) The principal actuarial assumptions used were as follows:

Discount rate Future salary increases	2020 2019 1.50% 1.50% 3.25% 3.25% Years endedDecember31,

Future mortality rate is estimated with 70% of the 3rd Taiwan Standard Ordinary Experience Mortality Table. The disability rate is set based on 10% of mortality rate.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

Increase 0.25% Decrease 0.25% December 31, 2020 37,367) ($ 38,514 $ December 31, 2019 38,081) ($ 39,320 $ Discountrate Effect on present value of defined benefit obligation	Increase 0.25% Decrease 0.25% 33,584 $ 32,814) ($ 34,600 $ 33,750) ($ Future salaryincreases

(f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2021 amount to $126,785.

~44~

(g) As of December 31, 2020, the weighted average duration of the defined benefit obligations is 8 years. The distribution of the present value of expected defined benefit obligations (within 10 years) is as follows:

Note: The same person who meets the retirement conditions will calculate the present value of expected defined benefit obligations in each subsequent year until he/she meets the mandatory retirement age of 65.
B. Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2020 and 2019 were $98,469 and $103,402, respectively.

(20) Analysis of assets and liabilities

Assets and liabilities of the Company related to the business of shipbuilding, vessel building, major machinery and ship repair, are classified as current or non-current based on the operating cycle. However, such assets and liabilities were analyzed on "one year" basis as follows:

December 31, 2020 Assets Contract assets (including related parties) Accounts receivable, net (including related parties) Inventories, net Liabilities Contract liabilities (including related parties) Notes payable (including related parties) Accounts payable (including related parties) Provision for liabilities	Less than 12 months 4,519,978 $ 1,190,180 2,349,362 8,059,520 $ 456,751 $ 119,692 1,498,929 447,278 2,522,650 $	More than 12 months 3,527 $ - - 3,527 $ 6,242,039 $ - - 841,400 7,083,439 $	Total
			4,523,505 $ 1,190,180 2,349,362
			8,063,047 $
			6,698,790 $ 119,692 1,498,929 1,288,678
			9,606,089 $

~45~

==> picture [464 x 231] intentionally omitted <==

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

Less than More than
12 months 12 months Total
December 31, 2019
Assets $ 5,580,023 $ 7,110 $ 5,587,133
-
Contract assets (including related parties) 1,298,699 1,298,699
Accounts receivable, net (including related parties) 1,824,592 - 1,824,592
Inventories, net $ 8,703,314 $ 7,110 $ 8,710,424
Liabilities
Contract liabilities (including related parties) $ 645,195 $ 8,053,779 $ 8,698,974
-
Notes payable (including related parties) 285,404 285,404
-
Accounts payable (including related parties) 992,169 992,169
Provision for liabilities 731,482 884,015 1,615,497
$ 2,654,250 $ 8,937,794 $ 11,592,044
----- End of picture text -----

(21) Common stock

A. As of December 31, 2020, the Company’s authorised capital was $11,138,997, consisting of 1,113,899.7 thousand shares of ordinary stock and the paid-in capital was $4,730,555 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

At January 1 Cash capital increase Conversion of corporate bonds At December 31	2020 472,992 - 64 473,056	Shares in thousands 2019
		372,992 100,000 -
		472,992

B. For the year ended December 31, 2020, the number of common stocks converted from convertible bonds was 64 thousand shares. As of the date of auditors’ report, the registrations have not yet been completed.
C. In order to fulfil its capital and repay the bank loans, as resolved by the Board of Directors on November 11, 2020, the Company conducted a public offering for cash capital increase by issuing common stock, which was approved by Financial Supervisory Commission pursuant to Jin-Guan-Zheng-Fa-Zi Letter No. 1090378803, dated January 15, 2021. The Company issued 450 million common stocks at an issue price of $17.5 (in dollars) per share. The rights and obligations of shares issued at this capital increase are the same as the original common stocks. As of the date of auditors’ report, the capital increase is still in process.

~46~

D. The Company’s special shareholders’ meeting has approved the proposal regarding the capital increase through private placement on December 21, 2017. The record date for capital increase resolved by the Board of Directors at their meeting on May 11, 2018 was May 25, 2018. The amount of capital raised through the private placement was $2,526,000 by issuing common stock amounting to 60 million shares at premium of $42.10 (in dollars) per share, of which the government related entity, Financing Investment Venture Capital, and the management committee of Yaohua Glass Corp., Ltd. each subscribed 30 million shares amounted to $1,263,000. The Company has completed the registration of the capital increase. The investors in this private placement is entitled to the same rights and obligations as those of outstanding shares except that they cannot freely transfer the shares within 3 years of settlement unless under certain circumstances pursuant to Article 43-8 of Securities and Exchange Act. Under the resolution, the Board of Directors are authorised to file for listing the ordinary shares in private placement with the competent authority after 3 years of settlement.
E. In order to fulfil its capital and repay the bank loans, as resolved by the Board of Directors on August 10, 2018, the Company conducted a public offering for cash capital increase by issuing common stock, which was approved by Financial Supervisory Commission pursuant to JinGuan-Zheng-Fa-Zi Letter No. 1070339392 dated November 19, 2018. The amount of capital raised was $2.252 billion by issuing common stock amounting to 100 million shares at a par value of $22.52 (in dollars) per share. In addition, the public offering completion date and record date for capital increase was January 31, 2019 and relevant registration procedures are still in process. The rights and obligations of shares issued at this capital increase are the same as the outstanding common stocks.
The abovementioned capital increase was subscribed by the Company’s legal entity directors, CPC Corporation, Taiwan and China Steel Corporation’s subsidiary, China Steel Express Corporation, in the amounts of $89,645 and $35,121, equivalent to 3,981 thousand shares and 1,560 thousand shares, respectively. In addition, the government related parties, National Defense Industrial Development Foundation, Yao Hua Glass Co., Ltd., Management Committee and Financing Investment Venture Capital participated in the capital increase in the amounts of $563,000, $135,848 and $135,848, equivalent to 25,000 thousand shares, 6,032 thousand shares, and 6,032 thousand shares, respectively.

(22) Capital reserve

A. Pursuant to the R.O.C. Company Law, capital reserve arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital reserve to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital reserve should not be used to cover accumulated deficit unless the legal reserve is insufficient.

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2020

									2020
									Difference between
								consideration and carrying
			Share			Share			amount of subsidiaries
			premium			options			acquired or disposed			Total
At January 1		$	1,329,550		$	-		$	9,248		$	1,338,798
Capital surplus used to offset	(		1,329,550)			-	(		9,248)	(		1,338,798)
accumulated deficits
Due to recognition of equity component			-			96,153			-			96,153
of convertible bonds issued
Conversion of convertible bonds			995	(		77)			-			918
At December 31		$	995		$	96,076		$	-		$	97,071
									2019
					Employee
			Share			share
			premium			options			Others			Total
At January 1		$	1,926,000		$	77,550		$	1,965		$	2,005,515
Cash capital increase			1,329,550	(		77,550)			-			1,252,000
Capital surplus used to offset	(		1,926,000)			-	(		1,965)	(		1,927,965)
accumulated deficits
Transactions with non-controlling
interest			-			-			9,248			9,248
At December 31		$	1,329,550		$	-		$	9,248		$	1,338,798

B. Please refer to Note 6(16) for the information of capital surplus—share options.
C. The proposal for deficit compensation for the year ended December 31, 2019 was resolved by the stockholders at the regular stockholders’ meeting on June 17, 2020. The Company planned to use ‘capital surplus, additional paid-in capital arising from ordinary share’ and ‘capital surplus, difference between consideration and carrying amount of subsidiaries acquired or disposed’ totalling $1,338,798 to cover the deficit. Also, please refer to Note 6(23) for the information of retained earnings.

(23) Retained earnings

A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve until the legal reserve equals the total capital stock balance. Appropriation of the remainder shall be proposed by the Board of Directors and resolved by the stockholders.

~48~

B. The Company’s dividend policy is summarized below:

C. Except for covering accumulated deficit or increasing capital, the legal reserve shall not be used for any other purpose. Capitalization of the legal reserve is permitted, provided that the balance of the reserve exceeds 50% of the Company’s paid-in capital and the amount capitalized does not exceed 25% of the balance of the reserve.
D. a)In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
b)The amounts previously set aside by the Company as special reserve amounting to $3,201,365 on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
c) The Company disposed land in 2013 and 2018. Therefore, the Company reversed special reserve of $34,894 to undistributed earnings.
E. The proposal for deficit compensation for the year ended December 31, 2018 was resolved by the stockholders at the regular stockholders’ meeting on June 26, 2019. Dividends will not be distributed to stockholders due to the deficit compensation. Additionally, the deficit will be covered by using the legal reserve, ‘capital surplus, additional paid-in capital arising from ordinary share’ and ‘capital surplus, other donated assets received’ totalling $2,993,262.
The proposal for deficit compensation for the year ended December 31, 2019 was resolved by the stockholders at the regular stockholders’ meeting on June 17, 2020. Dividends will not be distributed to stockholders due to the deficit compensation. Also, please refer to Note 6(22) for the information of capital surplus.

On March 18, 2021, the Board of Directors has proposed the deficit compensation for year 2020.

(24) Operating revenue

Operating revenue
Revenue from contracts with customers Others - ship rental revenue	Years ended December31,
	2020 24,926,322 $ 99,200 25,025,522 $	2019
		16,248,932 $ -
		16,248,932 $

~49~

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services over time in the following major product types:

major product types:
		Years ended	December	31,
		2020		2019
Construction of ships and vessels
Shipbuilding	$	7,374,458	$	8,561,544
Vessel construction		15,327,666		6,741,680
		22,702,124		15,303,224
All other segments
Ship/vessel repair		1,142,126		829,595
Machinery building		993,002		98,155
Others		89,070		17,958
		2,224,198		945,708
	$	24,926,322	$	16,248,932

B. Contract assets and liabilities

The Company has recognised the following revenue-related contract assets and liabilities:

		December31,2020		December31,2019		January1,2019
Contract assets	$	4,375,960	$	4,699,005	$	4,403,040
Contract assets - related parties		339,666		1,082,791		2,385,379
		4,715,626		5,781,796		6,788,419
Less: Loss allowance	(	192,121)	(	194,663)	(	195,478)
	$	4,523,505	$	5,587,133	$	6,592,941
Contract liabilities	$	5,209,593	$	8,661,992	$	2,750,874
Contract liabilities - related parties		1,489,197		36,982		-
	$	6,698,790	$	8,698,974	$	2,750,874

Please refer to Note 7 for related party transactions.

Revenue recognised that was included in the contract liability balance at the beginning of the period

The Company had a contract liability balance at the beginning of the period, of which $7,642,221 and $1,452,303 was recognised as revenue for the years ended December 31, 2020 and 2019, respectively.

C. As of December 31, 2020, the total transaction price allocated to unfulfilled contract obligations was $58,101,033 and this amount would be recognised as revenue gradually with the completion process of shipbuilding, vessel construction and anti-corrosion coating. The shipbuilding, vessel construction and anti-corrosion coating are expected to be completed during the period from January 2021 to October 2027.

~50~

(25) Other income

Other income
		Years ended	December	31,
		2020		2019
Government grant revenue (Note)	$	379,005	$	11,396
Rental revenue		20,677		9,975
Indemnity revenue		13,012		21,157
Others		15,894		59,902
	$	428,588	$	102,430

Note: The Company recognised income of $351,391 as a result of the application for the Salary and Working Capital Subsidies for Manufacturing Industry and its Technical Services Industry Suffered by Severe Pneumonia with Novel Pathogens (COVID-19) Handled by Industrial Development Bureau the Ministry of Economic Affairs. There was no such transaction for the year ended December 31, 2019.

(26) Other gains and losses

Other gains and losses
		Years ended December 31,
		2020			2019
Foreign exchange gains (losses)	$	15,895	($		46,663)
Gain (losses) on financial assets and		12,751	(		108)
liabilities at fair value through profit
or loss
Losses on disposal of property, plant	(	2,197)	(		44,600)
and equipment
Other losses	(	34,012)	(		33,417)
	($	7,563)	($		124,788)
Finance costs
		Years ended		December	31,
		2020			2019
Interest expense:
Bank loans	$	99,743		$	89,321
Amortisation on lease liabilities		44,218			47,572
Amortisation on convertible bonds		12,979			-
Expenses amortised from government		11,590			11,396
grants payable
Less: Capitalisation of qualifying assets	(	68,021)	(		81,864)
	$	100,509		$	66,425

(27) Finance costs

~51~

(28) Expenses by nature

Change in inventory of finished goods and work in process Direct materials Employee benefit expense Depreciation and amortisation charges Professional service fees Outsourcing fees Other expenses Operating costs and expenses	2020 2019 2,361,305 $ 1,110,979 $ 12,409,045 6,852,552 3,473,453 3,624,782 842,997 804,805 1,820,399 2,561,748 4,523,434 1,800,104 1,506,963 1,231,620 26,937,596 $ 17,986,590 $ Years endedDecember31,

(29) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension cost Directors’ remuneration Other personnel expenses	Years endedDecember31,
	2020 2019 2,912,648 $ 3,037,954 $ 250,116 258,154 245,942 262,366 3,110 2,744 61,637 63,564 3,473,453 $ 3,624,782 $

A. According to the Articles of Incorporation of the Company, the Company shall distribute employees’ compensation, based on the distributable profit of the current year, in a ratio of profit. Employees’ compensation can be distributed in the form of shares or in cash. If a company has accumulated deficit, earnings should first be channeled to cover losses. Employees’ compensation shall account for 1% to 5%, directors’ remuneration shall account for less than 1%, of the amount of current year’s pre-tax profit but excluding the employees’ compensation and directors’ remuneration.
B. The Company did not recognise employees’ compensation and directors’ renumeration as a result of the operating deficit for the years ended December 31, 2020 and 2019.

The Board of Directors resolved not to appropriate employees’ compensation and directors’ renumeration as a result of the operating deficit for the years ended December 31, 2020 and 2019.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the meeting of Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

~52~

(30) Income tax expense

A. Income tax benefits

(a) Components of income tax benefits:

Components of income tax benefits:
		Years endedDecember31,
		2020		2019
Current tax:
Current tax on profits for the year	$	-	$	-
Over provision of income tax in
prior year	(	2)	(	2)
Income tax benefits	($	2)	($	2)

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
Remeasurement of defined benefit obligations	2020 2019 13,300 $ 18,180 $ Years ended December 31,
		2019 18,180 $

B. Reconciliation between income tax benefits and accounting profit:

	Years ended December 31,	Years ended December 31,	Years ended December 31,	Years ended December 31,
	2020			2019
Tax calculated based on loss before	($	320,018)	($	363,694)
tax and statutory tax rate
Tax exempt income by tax regulation	(	72,212)		-
Effects from items disallowed by tax		3,031		8,266
regulation
Taxable loss not recognised as		389,199		355,428
deferred tax assets
Over provision of income tax in
prior year	(	2)	(	2)
Income tax benefits	($	2)	($	2)

~53~

C. Amounts of deferred tax assets or liabilities as a result of temporary difference and tax losses are as follows:

as follows:
							2020
								Recognised
				Recognised					in other
				in		profit or	comprehensive
		January1				loss			income	December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss		$	223,619	($		67,533)		$	-	$	156,086
Unrealized warranty liability			99,480			2,170			-		101,650
Unused compensated absences			66,479	(		1,978)			-		64,501
payable
Allowance for doubtful accounts			62,982	(		1,066)			-		61,916
Others			29,001	(		1,972)	(		13,300)		13,729
Tax losses			1,062,439			70,379			-		1,132,818
			1,544,000			-	(		13,300)		1,530,700
Deferred tax liabilities:
Unrealised land value
incremental reserve	(		1,324,697)			-			-	(	1,324,697)
Total		$	219,303		$	-	($		13,300)	$	206,003
							2019
								Recognised
				Recognised					in other
				in		profit or	comprehensive
		January1				loss			income	December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss		$	462,353	($		238,734)		$	-	$	223,619
Unrealized warranty liability			42,766			56,714			-		99,480
Unused compensated absences			57,557			8,922			-		66,479
payable
Allowance for doubtful accounts			100,640	(		37,658)			-		62,982
Others			22,762			24,419	(		18,180)		29,001
Tax losses			876,102			186,337			-		1,062,439
			1,562,180			-	(		18,180)		1,544,000
Deferred tax liabilities:
Unrealised land value
incremental reserve	(		1,324,697)			-			-	(	1,324,697)
Total		$	237,483		$	-	($		18,180)	$	219,303

~54~

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2020

December31,2020	December31,2020
Year incurred Amountfiled/ assessed Unused amount 2015 Assessed 671,021 $ 2016 Assessed 1,190,142 2017 Assessed 6,700,185 2018 Assessed 2,577,518 2019 Amount filed 2,657,346 2020 Estimated filing amount 2,296,459 December 31, 2019		Unrecognised deferred taxassets Expiry year - $ 2025 - 2026 2,897,256 2027 2,577,518 2028 2,657,346 2029 2,296,459 2030
Year incurred Amount filed/ assessed 2015 Assessed 2016 Assessed 2017 Assessed 2018 Amount filed 2019 Estimated filing amount	Unused amount 671,021 $ 1,190,142 6,700,185 2,577,536 2,724,654	Unrecognised deferred taxassets Expiry year - $ 2025 - 2026 3,249,155 2027 2,577,536 2028 2,724,654 2029

The Company’s income tax returns through 2018 have been assessed and approved by the Tax Authority. As of March 18, 2021, there was no administrative remedies.

(31) Losses per share

			Year ended December31,	Year ended December31,	2020	2020
				Weigthted average
				number of ordinary		Losses per
			Amount	shares outstanding		share
			aftertax	(sharesinthousands)		(indollars)
Basic	losses per share
Loss	attributable to ordinary shareholders	($	1,600,087)	472,993	($	3.38)
			YearendedDecember31,		2019
				Weigthted average
				number of ordinary		Losses per
			Amount	shares outstanding		share
			aftertax	(sharesinthousands)		(indollars)
Basic	losses per share
Loss	attributable to ordinary shareholders	($	1,818,470)	464,772	($	3.91)

The Company’s convertible corporate bonds had anti-dilution effect for the year ended December 31, 2020; thus, they were not included in the calculation of diluted losses per share.

~55~

(32) Transactions with non-controlling interest

Acquisition of additional equity interest in a subsidiary

		Year ended December 31, 2019	Year ended December 31, 2019
Carrying amount of non-controlling interest acquired		$	46,748
Consideration paid to non-controlling interest	(		37,500)
Capital surplus - difference between proceeds on actual
acquisition of or disposal of equity interest in a subsidiary
and its carrying amount		$	9,248

For the year ended December 31, 2020, acquisition of additional equity interest in a subsidiary: None.

(33) Supplemental cash flow information

A. Investing activities with partial cash payments:

Investing activities with partial cash payments:
		Years ended	December31,
		2020		2019
Purchase of property, plant and equipment	$	960,622	$	952,410
Add`：`Beginning balance of payable on equipment		43,406		45,588
Less`：`Ending balance of payable on equipment	(	63,755)	(	43,406)
Cash paid on purchase of property, plant and
equipment during the year	$	940,273	$	954,592
Investment and financing activities with no cash flow effects:
		Years ended	December31,
		2020		2019
Interest expense amortised from government grants	$	11,590	$	11,396
Increase in right-of-use assets	$	57,645	$	5,268
Less: Increase in lease liabilities	(	57,645)	(	5,268)
	$	-	$	-
Decrease in lease labilities due to remeasurement	$	116,203	$	-
Less: Decrease in right-of-use assets	(	116,203)		-
	$	-	$	-
Long-term liabilities, current portion	$	1,280,000	$	500,000

B. Investment and financing activities with no cash flow effects:

~56~

(34) Changes in liabilities from financing activities

Short-term borrowings Short-term notes and bills payable Corporate bonds payable Long-term borrowings (including current portion) Lease liability Long-term notes and accounts payable Long-term deferred revenue Guarantee deposits received Other non-current liabilities, others Short-term borrowings Short-term notes and bills payable Long-term borrowings (including current portion) Lease liability Long-term notes and accounts payable Long-term deferred revenue Guarantee deposits received Other non-current liabilities, others	Changes in Changes in January1 cash flow non-cash items 1,822,361 $ 3,376,785 $ - $ 1,699,563 999,842 - - 2,034,775 102,474) ( 5,847,772 649,202) ( - 3,828,513 228,663) ( 58,558) ( 681,757 - 11,590 204,981 - 11,590) ( 237,539 24,270 - 824 19,304 - 14,323,310 $ 5,577,111 $ 161,032) ($ 2020 2019	December31 5,199,146 $ 2,699,405 1,932,301 5,198,570 3,541,292 693,347 193,391 261,809 20,128
		19,739,389 $

	Changes in Changes in January1 cash flow non-cash items 1,290,150 $ 532,211 $ - $ - 1,699,563 - 5,698,537 149,235 - 4,037,939 214,694) ( 5,268 670,361 - 11,396 71,139 145,238 11,396) ( 179,889 57,650 - 13,233 12,409) ( - 11,961,248 $ 2,356,794 $ 5,268 $	December31
		1,822,361 $ 1,699,563 5,847,772 3,828,513 681,757 204,981 237,539 824
		14,323,310 $

~57~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

Relationship with the Company The Company’s subsidiary The Company’s subsidiary

CSBC Coating Solutions Co., Ltd The Company’s subsidiary Blue Ocean Wind Power Engineering The Company’s subsidiary (Hong Kong) Limited BLUE ACE CORPORATION The Company’s subsidiary CPC Corporation, Taiwan China Steel Corporation China Steel Express Corporation China Steel Machinery Corporation China Steel Structure Co., Ltd. Sing Da Marine Structure Corporation Taiwan International windpower Associate Training Corporation Ltd. Taiwan Generations Corporation Associate Fuhai Wind Farm Corporation Associate CSBC-DEME Wind Engineering Co., Ltd. Joint venture Financing Investment Venture Capital Government related entity Yao Hua Glass Co.,Ltd. Management Government related entity Committee National Defense Industrial Development Government related entity Foundation

The Company’s subsidiary The Company’s legal entity director The Company’s legal entity director Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Subsidiary of the Company’s legal entity director Associate

(2) Significant related party transactions and balances

A. Operating revenue

Operating revenue
Key management: Subsidiary of the Company’s legal entity director China Steel Express Corporation Sing Da Marine Structure Corporation China Steel Machinery Corporation Legal entity director CPC Corporation, Taiwan Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd.	Years endedDecember31,
	2020 214,075 $ 96,856 10,636 34,436 302,453 658,456 $	2019
		3,578,917 $ 13,897 - 17,758 -
		3,610,572 $

~58~

(a) The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.
(b) In August and December 2017, the Company was commissioned by China Steel Express Corporation to build 4 208,000 DWT double hull bulk cargo steamers. The last cargo steamer was delivered on May 29, 2020. Please refer to items C and F for further information.
(c) On June 30, 2020, the Company entered into an agreement with CSBC-DEME Wind Engineering Co., Ltd. to build a heavy lift and installation vessel for its offshore wind power engineering. The Company has no unrealised gains or losses from undertaking this engineering. The expected delivery of the vessel is in October 2022. Please refer to item E for further information.

B. Purchases of goods

Purchases of goods
Purchases of goods: Key management: Legal entity director China Steel Corporation CPC Corporation, Taiwan Purchases of services: Subsidiary: BLUE ACE CORPORATION CSBC Coating Solutions Co., Ltd	Years ended December 31,
	2020 883,684 $ 99,785 983,469 68,500 10,746 79,246 1,062,715 $	2019
		1,767,880 $ 99,768
		1,867,648
		62,109 4,795
		66,904
		1,934,552 $

The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.

C. Contract assets

Contract assets
	December	31,2020	December31,2019
Key management:
Subsidiary of the Company’s legal entity director
Sing Da Marine Structure Corporation	$	149,476	$	20,124
China Steel Express Corporation		-		872,477
Associates :
Fuhai Wind Farm Corporation (Note)		190,190		190,190
		339,666		1,082,791
Less: Loss allowance	(	190,250)	(	190,904)
	$	149,416	$	891,887

~59~

Note: In March 2014, the Company was commissioned by Fuhai Wind Farm Corporation (hereafter referred to as Fuhai) for the construction of a meteorological observation tower, offshore windfarm off the coast of Changhua County included in Changhua Offshore Pilot Project and Fuhai offshore windfarm for a total contract price of NT$32 billion. However, Bureau of Energy, MOEA decided to reject the development project in February 2018 because of the disapproved Environmental Impact Assessment. The Company has recognised impairment loss amounting to $190,190 since the contract assets may not be recovered as assessed.

D. Receivables from related parties

E.	Prepaid accounts Accounts receivable : Key management: Legal entity director CPC Corporation, Taiwan Subsidiary CSBC Coating Solutions Co., Ltd Other receivables : Key management: Legal entity director China Steel Corporation Subsidiary BLUE ACE CORPORATION Key management: Legal entity director China Steel Corporation CPC Corporation, Taiwan	December31,2020 December31,2019 20,295 $ 6,286 $ 16 3 20,311 6,289 15,404 16,633 41 42 15,445 16,675 35,756 $ 22,964 $ December31,2020 December31,2019 299,399 $ 485,906 $ 15,280 8,540 314,679 $ 494,446 $	December31,2020 December31,2019 20,295 $ 6,286 $ 16 3 20,311 6,289 15,404 16,633 41 42 15,445 16,675 35,756 $ 22,964 $ December31,2020 December31,2019 299,399 $ 485,906 $ 15,280 8,540 314,679 $ 494,446 $
			485,906 $ 8,540
			494,446 $

~60~

F. Contract liabilities

Contract liabilities
Payables to related parties Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd. Key management: Subsidiary of the Company’s legal entity director China Steel Express Corporation Notes payable: Key management: Legal entity director China Steel Corporation Accounts payable: Subsidiary: BLUE ACE CORPORATION	December31,2020 1,489,197 $ - 1,489,197 $ December31,2020 111,592 $ 8,362 119,954 $	December31,2019
		- $ 36,982
		36,982 $
		December 31, 2019
		285,404 $ 7,605
		293,009 $

G. Payables to related parties

H. Acquisition of financial assets

(a) Information on the Company’s joint investment in and establishment of CSBC-DEME Wind Engineering Co., Ltd. is provided in Note 6(5).
(b) The Company acquired an additional 30% of outstanding shares of the subsidiary, CSBS Coating Solutions Co., Ltd.. Please refer to Notes 6(5) and 6(32)for further information.

I. Others

(a) Details on capital increase from the related parties are provided in Note 6(21).
(b) The Company’s joint venture, CSBC-DEME Wind Engineering Co., Ltd. signed a Zhang Fang and West Island Offshore Wind Farm Fan Transportation and Installation Plan on November 19, 2019. The Company and DEME Offshore are the joint contractors of the plan and issued performance letter of guarantee and advance payment guarantee with a total amount of EUR 13,237 thousand for contracting the construction according to their shareholding ratios. The Company issued bank guarantee amounting to $223 million (EUR 6,619 thousand) based on its shareholding ratio of 50.0001% in January 2020.

~61~

(3) Key management compensation

Key management compensation
		Years ended	December	31,
		2020		2019
Salaries and other short-term	$	24,091	$	27,348
employee benefits
Post-employment benefits		2,622		3,935
	$	26,713	$	31,283

8. PLEDGED ASSETS

None.

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS
(1)The balance of the Company’s unused letters of credit for import of materials is as follows:
(2)The amounts of unfulfilled contract obligations of the Company’s contracts are as follows:
(3)The guaranteed credit by banks for the Company’s construction projects is as follows:
Refer to Note 7(2) I(b) for further information.
(4)The amount of the Company’s purchase contracts and outsourcing construction contracts to be paid
is as follows:
December 31, 2020
December31,2019
Balance of unused letters of credit
2,359,193
$ 1,943,076
$ December 31, 2020
December31,2019
Unfulfilled customer contract obligations
58,101,033
$ 72,426,964
$ December 31, 2020
December31,2019
Guaranteed credit by banks
13,316,294
$ 10,197,307
$ December31,2020
December31,2019
Purchase contracts to be paid
12,339,833
$ 17,839,179
$ Outsourcing construction contracts
to be paid
2,716,057
3,458,347
15,055,890
$ 21,297,526
$

~62~

(5) The Company, Century Iron and Steel Industrial Co., Ltd. and Taiwan Generations Corp. are the jointoriginators for Fuhai Wind Farm Corporation (Fuhai Corporation). The joint-originators entered into the “Incentive Program of Offshore Wind Power Demonstration System” (“the Government Grant Scheme”) on August 19, 2013, which was granted by the Ministry of Economic Affairs, and committed to be jointly responsible for Fuhai Corporation. The total amount of endorsement/ guarantee provided by the Company amounted to $886 million. On November 9, 2018, the Board of Directors of the Company during their meeting resolved to cease the endorsement/ guarantee amount to Fuhai Corporation.

Because Fuhai Wind Farm Corporation failed to comply with the regulation of the “Incentive Program of Offshore Wind Power Demonstration System”, the Bureau of Energy exercised the right of performance bond and took back the entire government grant. Accordingly, the Company recognised losses amounting to $75,000 for the year ended December 31, 2018.

In addition, the Ministry of Economic Affairs claimed past due liquidated damages amounting to $ 88.6 million from Fuhai Corporation, as a joint-originator of the Incentive Program, the Company was committed to be jointly responsible for Fuhai Corporation. Currently, the case is still ongoing. According to the Company’s designated lawyer, the Ministry of Economic Affairs has not indicated its intention of claiming the liquidated damages from the Company and the Company has not reached the payment stage, therefore, the Company did not estimate the possible losses on liquidated damages.

Fuhai Corporation alleged that the Company did not issue an incentive guarantee of offshore wind power demonstration system based on the Article 1 of Memorandum of Understanding which was signed under mutual agreement, whereby Fuhai Corporation could not apply a government grant of $0.1 billion from Bureau of Energy. Fuhai Corporation filed a lawsuit to claim an equal compensation for the $0.1 billion government grant. On March 24, 2020, the Taiwan Taipei District Court ruled in favour of the Company. Subsequently, Fuhai Corporation filed an appeal. The Company’s designated lawyer believes that the claim is meritless. The case is currently pending with the Taiwan High Court.

(6) The ships under construction have all been insured with shipbuilding insurance. On September 14, 2016, Typhoon Meranti caused damages in a third party’s property and thus claimed for compensation of approximately NT$806 million. On May 29, 2020, the Taiwan Kaohsiung District Court rendered a decision against the Company, and the Company is liable to pay compensation approximately $895 million (interest is calculated up until September 30, 2020). On June 23, 2020, the Company appealed to the second instance court. The case is currently pending with the court. According to the Company’s designated lawyer, the aforementioned compensation is covered by the Company’s relevant comprehensive insurance for shipbuilding and the second instance appeal filed by the Company for remedy has not yet been decided. Thus, the compensation payable due to the first instance’s decision has no material impact to the Company’s operation.

~63~

(7) The Company was commissioned by Fuhai Wind Farm Corporation for offshore wind power maritime engineering (details are provided in Note 7(2) C) and Zhongwei Wind Farm Corporation (Zhongwei Corporation) undertook the construction of the meteorological observation tower, selfelevating lifting platform for demonstration unit and demonstration wind farm, fan lifting and other constructions of the aforementioned engineering. Zhongwei Corporation claimed that the Company did not notify them the performance date leading to their damages and informed the Company to pay US$ 2.5 million to compensate their losses. The Company disagreed with the claim since Zhongwei Corporation did not meet the requirements of payment terms in the contract and Zhongwei Corporation filed a lawsuit in Taiwan Kaohsiung District Court. On December 17, 2019, the Taiwan Kaohsiung District Court rendered a civil ruling to dismiss this case due to the claim made by Zhongwei Corporation was unjustified. On February 3, 2021, the Taiwan High Court Kaohsiung Branch Court has dismissed both the claim and the additional claim filed by the Zhongwei Corporation.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

Please refer to Note 6(21) C for the information of share capital.

12. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Following the industry practices, the Company uses gearing ratio to control capital.

The Company’s policy is to maintain a stable gearing ratio. Ratios are as follows:

Gearing ratio	December 31, 2020 86%	December31,2019
		82%

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(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at amortised cost Cash and cash equivalents Accounts receivable (including related parties) Other receivables (including related parties) Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities designated as at fair value through profit or loss Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payable (including related parties) Accounts payable (including related parties) Other payables Corporate bonds payable Long-term borrowings (including current portion) Long-term notes and accounts payable Guarantee deposits received Lease liability	December31,2020 1,157,664 $ 1,190,180 41,572 53,083 2,442,499 $ December31,2020 5,995 $ 5,199,146 $ 2,699,405 119,692 1,498,929 1,311,249 1,932,301 5,198,570 693,347 261,809 18,914,448 $ 3,541,292 $	December31,2019
		4,066,638 $ 1,298,699 117,311 64,036
		5,546,684 $
		December31,2019
		- $
		1,822,361 $ 1,699,563 285,404 992,169 1,177,065 - 5,847,772 681,757 237,539
		12,743,630 $
		3,828,513 $

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B. Financial risk management policies

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as forward foreign exchange contracts are used to hedge certain exchange rate risk. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

C. Significant financial risks and degrees of financial risks

(a) Market risk

Foreign exchange risk

i. The foreign exchange risk is mainly arising from USD and EUR. Management has set up a policy to companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the treasury. Exchange rate risk is measured through a forecast of highly probable USD revenues and JPY expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting forecast foreign currency income and cost of inventory purchases.
ii.The Company’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

Financialassets	December31,2020	December31,2020
	Foreign Currency (inthousands) 58,811 $ 9,238 93 253	ExchangeRate 28.43 34.82 28.53 35.22	BookValue (NTD)
			1,671,907 $ 321,667 2,653 8,911
Monetaryitems
USD:NTD EUR:NTD Financial liabilities
Monetaryitems
USD:NTD EUR:NTD

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		December31,2019	December31,2019
		Foreign Currency
		(inthousands) ExchangeRate		Book	Value (NTD)
Financial assets
Monetary items
USD:NTD	$	122,243	29.93	$	3,658,740
Financial liabilities
Monetary items
USD:NTD		96	30.03		2,883
EUR:NTD		519	33.79		17,524

iii.If NTD had appreciated/ depreciated by 1% against USD with all other variables held constant, effect to post-tax profit (loss) is as follows:

	Years ended	December	31,
If NTD had appreciated/
depreciated by1% against tax	2020		2019
Increase (decrease) in net
profit (loss) after tax	15,857 $	$	29,107

iv.The net exchange gain (loss) arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2020 and 2019, amounted to $15,895 and ($46,663), respectively.

Price risk

The Company is not exposed to significant commodity price risk.

Interest rate risk

i. The convertible bonds issued by the Company are zero-interest bonds with conversion options, and its fair value is affected by the stock price volatility. Based on the assessment, there is no material change in interest rate that would expose the Company to cash flow risk.
ii.The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. If the interest rate had increased/decreased by 0.25% with all other variables held constant, cash flows for the years ended December 31, 2020 and 2019 would have increased/decreased by $13,000 and $14,625, respectively.

(b)Credit risk

Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable and other receivables based on the agreed terms. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

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Cash and cash equivalents and derivative financial instruments

The Company only trades with counterparties with good credit, in accordance with the Company’s transaction policies. There is no recent violation of significant cash and cash equivalents and derivative financial products.

Contract assets, accounts receivable and other receivables

i. The Company appointed external agency to perform proper credit investigations for customers before signing the contracts of shipbuilding, vessel construction and machinery manufacturing. The results of the credit investigations were low risk, therefore, the credit risks of relevant receivables (primarily under accounts receivable or contract assets) were low risk.
ii. The Company’s contract assets and accounts receivable were due from government (including state-owned enterprises) and general business. To maintain the quality of the accounts receivable and contract assets, the Company has established credit risk management procedures for operating. The Company considered customers’ financial status, historical trading record and future economic condition in accordance with types of customer, and took into account factors that may influence customers’ ability to pay to assess the credit quality of customers. The Company estimated expected credit loss by individual assessment.
iii. In line with credit risk management procedure, when the counterparty failed to fulfil the mutual agreements nor to conduct negotiation, the default has occurred.
iv. As of December 31, 2020 and 2019, the expected loss rates of not past due accounts receivable and contract assets were 1% and 0.04%; 1% and 0.08%, respectively.

As of December 31, 2020 and 2019, the Company’s receivables collected upon the delivery of ships amounted to $440,523 and $463,765, respectively, which arose from a negotiation conducted with the counterparties to amend the terms of some installment receivables. The Company assesses that there was no material loss incurred from the amendment of the terms.

As of December 31, 2020 and 2019, the Company’s past due construction receivables amounted to $796,040 and $0, respectively, because the counterparty failed to fulfil the mutual agreements and the payments were still under negotiation.

After considering the counterparties’ financial status, historical experience and other factors, the expected credit loss based on the individual assessment both amounted to $315,838 as of December 31, 2020 and 2019.

v. Movements in relation to the Company applying the simplified approach to provide loss allowance for accounts receivable and contract assets are as follows:

			2020	2020
		Accounts	receivable		Contract assets
At January 1		$	318,980	$	194,663
Reversal of impairment loss	(		1,354)	(	2,542)
At December 31		$	317,626	$	192,121

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			2019	2019	2019
		Accounts	receivable			Contract assets
At January 1		$	319,599		$	195,478
Reversal of impairment loss	(		619)	(		815)
At December 31		$	318,980		$	194,663

(c)Liquidity risk

The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

December 31, 2020:

December 31, 2020:
Less than 1year Non-derivative financial liabilities: Short-term borrowings 5,200,120 $ Short-term notes payable 2,700,000 Payables 3,213,804 Lease liability 272,881 Corporate bonds payable - Long-term borrowings (Note) 1,305,646 12,692,451 $ Derivative financial liabilities: Options embedded in convertible bonds - $ December 31, 2019: Less than 1year Non-derivative financial liabilities: Short-term borrowings 1,824,565 $ Short-term notes payable 1,700,000 Payables 3,229,479 Lease liability 265,694 Long-term borrowings (Note) 538,486 7,558,224 $ Note: Including long-term borrowings, current portion.	Less than 1year	Between 1 and 2years	Between 2 and5 years	Over5Years
		- $ - 613,762 236,772 - 3,787,313 4,637,847 $ - $ Between 1 and 2years	- $ - 475,749 697,980 1,998,400 140,455 3,312,584 $ 5,995 $ Between 2 and5 years	- $ - 156,672 2,810,811 - - 2,967,483 $ - $ Over5Years
	1,824,565 $ 1,700,000 3,229,479 265,694 538,486 7,558,224 $	- $ - 411,134 264,989 4,455,646 5,131,769 $	- $ - 472,728 688,752 927,768 2,089,248 $	- $ - 315,920 3,147,677 - 3,463,597 $

Note: Including long-term borrowings, current portion.

Derivative financial liabilities: None.

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(3) Fair value estimation

A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
Level 1 ： Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 ： Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivative instruments is included in Level 2.
Level 3 ： Unobservable inputs for the asset or liability. Call and put options embedded in convertible bonds are included in Level 3.
B. Fair value information of investment property at cost is provided in Note 6(9).
C. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, contract assets, accounts receivable (including related parties), other receivables (including related parties), guarantee deposits paid, short-term borrowings, contract liabilities, notes payable (including related parties), accounts payable (including related parties), other payables, guarantee deposits received and long-term borrowings (including current portion) are approximate to their fair values.

D. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities at December 31, 2020 and 2019 is as follows:
(a) The related information of natures of the assets and liabilities is as follows:

December 31, 2020:

December 31, 2020:
December 31, 2019: None. Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Options embedded in convertible bonds		Level 1		Level 2		Level3	Total
		- $		- $		5,995 $	5,995 $

(b) The methods and assumptions the Company used to measure fair value are as follows:

Certain inputs used in the valuation model for measuring the fair value of the Company’s debt instruments with embedded derivatives in are not observable at market, and the Company must make reasonable estimates based on its assumptions. The effect of unobservable inputs to the valuation of financial instruments is provided in Note 12(3)I.

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E. For the years ended December 31, 2020 and 2019, there was no transfer between Level 1 and Level 2.
F. The following chart is the movement of Level 3 for the year ended December 31, 2020:

			2020
			Derivativeinstrument
At January 1		$	-
Losses recognised in profit or loss			-
Recorded as non-operating income and expenses	(		11,749)
Issued in the year			17,754
Converted in the year	(		10)
At December 31		$	5,995
Movement of unrealised loss in profit or loss of
liabilities held as at December 31, 2020 (Note)	($		11,749)
Note: Recorded as non-operating income and expense.

For the year ended December 31, 2019: None.

G. For the years ended December 31, 2020 and 2019, there were no transfer into or out from Level 3.
H. Treasury segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments using the actuarial reports issued by external experts. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.
I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Hybrid instrument: Options embedded in convertible	Fair value at Valuation December31,2020 technique Input 5,995 $ Binary tree convertible Stock price bond valuation model Volatility Risk discount rate	Range (weighted average) 28.45 39.14% 0.5471%

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The higher the stock price, the lower the put option value; the higher the volatility, the higher the put option value; the lower the risk discount rate, the lower the put option value. Thus, the put option value for the year decreased (put options are financial liabilities of the issue company). December 31, 2019: None.

J. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Loans to others: None.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): None.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: Please refer to table 1.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 2.
H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Note 6(13) for the information.
J. Significant inter-company transactions during the reporting periods: Please refer to table 3.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 4.

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(3) Information on investments in Mainland China

A. Basic information: None.
B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: None.

(4) Major shareholders information

Major shareholders information: Please refer to table 5.

14. SEGMENT INFORMATION

None.

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Table 1

Expressed in thousands of NTD

CSBC CORPORATION TAIWAN

' - Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company s paid in capital Year ended December 31, 2020

Investor	Marketable securities	General ledger account	Counterparty	Relationship with the investor	Balance as at January1,2020	Balance as at January1,2020	Addition	Addition		Disposal	Disposal		Balance as at December 31,2020	Balance as at December 31,2020
					Number of shares	Amount	Number of shares	Amount (Note 3)	Number of shares	Selling price	Book value	Gain (loss) on disposal	Number of shares	Amount
CSBC Corporation, Taiwan	Stocks–CSBC-DEME Wind Engineering Co., Ltd.	Investments accounted for under equity method	Note 1	Note 2	500,001	$ 18,838	10,606,060	$ 1,029,684	-	$ -	$ -	$ -	11,106,061	$ 1,048,522

Note 1: It refers to the investment amount increased in the investee.

Note 2: It is the Company’s joint venture.

Note 3: The amount includes the increase in investment amount and investment loss accounted for using the equity method.

Table 1, Page 1

CSBC CORPORATION TAIWAN

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid in capital or more

Year ended December 31, 2020

Purchaser/seller Table 2	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third party transactions	Differences in transaction terms compared to third party transactions	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)	Balance Total notes/accounts receivable Footnote Notes/accounts receivable (payable) Expressed in thousands of NTD (Except as otherwise indicated)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Total notes/accounts receivable
CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan	CSBC-DEME Wind Engineering Co., Ltd. China Steel Express Corporation China Steel Corporation	Other related parties Subsidiary of the Company's legal entity director Corporate Director	Sale Sale Purchases	302,453) ($ (214,075) 883,684	(1.2%) (0.8%) 8.7%	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	- $ - 111,592) (	- - (7%)	Note 2 - Note 3

Note 1: Based on the contract, the payment terms is the same as in general transactions.

Note 2: The contract liabilities from CSBC-DEME Wind Engineering Co., Ltd. amounted to $1,1489,197.

Note 3: The prepayments to China Steel Corporation amounted to $299,399 and other receivables amounted to $15,404.

Table 2, Page 1

Table 3

CSBC CORPORATION TAIWAN

- Significant inter company transactions during the reporting periods

Year ended December 31, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note3)
0 0 0	CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan	BLUE ACE CORPORATION BLUE ACE CORPORATION CSBC Coating Solutions Co., Ltd	Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary	Outsourcing expenses Accounts payable Outsourcing expenses	68,500 $ 8,362 10,746	Note 4 Note 4 Note 4	- - -

Note 1 `：` The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.
(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2 ： If transactions between parent company and subsidiaries or between subsidiaries refer to the same transaction, it is not required to disclose twice.

disclosed the transaction, then the other is not required to disclose the transaction.

Note 4 ： Based on the contract, the payment terms is the same as in general transactions.

Table 3, Page 1

Table 4

CSBC CORPORATION TAIWAN

Information on investees

Year ended December 31, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December	Shares held as at December	31,2020	Net profit (loss) of the investee for the year ended December 31, 2020	Investment income(loss) recognised by the Company for the year ended December 31,2020	Footnote
				Balance as at December 31,2020	Balance as at December 31,2019	Number of shares	Ownership (%)	Book value
CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd	CSBC-DEME Wind Engineering Co., Ltd. CSBC Coating Solutions Co., Ltd. Taiwan International Windpower Training Corporation Ltd. Taiwan Offshore Wind Farm Services Corporation Fuhai Wind Farm Corporation BLUE ACE CORPORATION Blue Ocean Wind Power Engineering (Hong Kong) Limited	Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Hong Kong	Installation of cable, lease of ships, and contracting of ships services Marine coating, steel structure painting works, surface treatment, and high-tech anti-corrosion etc. Research and development, energy technology service Manufacturing of metal structure, building component, power generation and others Wind power industry Marine coating, steel structure painting works, surface treatment, and high-tech anti-corrosion etc. Marine works services	1,099,500 $ 125,000 12,000 4,000 178,156 25,000 304	49,500 $ 125,000 12,000 4,000 178,156 25,000 304	11,106,061 14,600,165 1,200,000 400,000 15,000,000 - 100	50.00 100.00 12.00 40.00 37.97 100.00 100.00	1,048,522 $ 174,438 10,911 - - 20,728 107	40,632) ($ 4,821 2,845 7,380) ( 42,852) ( 4,938) ( 93) (	20,316) ($ 4,821 341 - - - -	Note 1 Note 1 Note 1 Note 1 Note 2 Note 2

Note 1 ： Please refer to Note 6(5) for details about investments accounted for under equity method.

Note 2 ： The amount has been included in the profit (loss) of the Company’s investee accounted for using equity method and has been recognised as gain (loss) on investment.

Table 4, Page 1

Table 5

CSBC CORPORATION TAIWAN

Major shareholders information

December 31, 2020

Name of major shareholders	Number of shares held	Shares
		Ownership (%)
Ministry of Economic Affairs, R.O.C. Yuanta Commercial Bank Trust Account Financing Investment Venture Capital CPC Corporation, Taiwan Yao Hua Glass Co., Ltd. Management Committee National Defense Industrial Development Foundation	105,070,366 36,032,305 36,032,305 25,000,000 23,998,253 23,777,487	22.21% 7.61% 7.61% 5.28% 5.07% 5.02%

Description: (1) The major shareholders’ information was derived from the data using the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation. The share capital which was recorded on the financial statements may differ from the actual number of shares in dematerialised form due to the difference of calculation basis.
(2) If the aforementioned data contains shares which were kept in the trust by the shareholders, the data was disclosed as a separate account of the client which was set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio was greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio included the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information on reported share equity of insiders, please refer to the Market Observation Post System.
(3) The preparation principle of this table uses the shareholders’ register as of the book closure date for the shareholders’ special meeting (no need buy-to-cover short sales) to calculate the distribution of the balance of each unsecured transaction.
(4) Ownership (%) = total shares held by the shareholder/total shares transferred in dematerialised form.
(5) Total shares transferred in dematerialised form (including treasury shares) amounted to 473,055,493 shares=473,055,493 common shares+0 preference shares.

Table 5, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2020

Statement 1 Item Cash on hand and revolving funds Cash in banks	Description Demand deposits denominated in NTD Demand deposits denominated in EUR (EUR 9,238 thousand with exchange rate at 34.82) Demand deposits denominated in USD (USD 780 thousand with exchange rate at 28.43) Time deposits denominated in USD (USD 10,960 thousand with exchange rate at 28.43, interest rate: 0.12%, maturity date: 2021.01.06) Expressed in	Amount 410 $ 501,821 321,668 22,175 311,590 1,157,664 $ thousands of NTD

Statement 1, Page 1

CSBC CORPORATION, TAIWAN CONTRACT ASSETS STATEMENTS

DECEMBER 31, 2020

Statement 2 Client Name Non-related parties: Customer 7 Customer 4 Customer D Others Less: Loss allowance Related parties: Fuhai Wind Farm Corporation Sing Da Marine Structure Corporation Less: Loss allowance	Description Amount Note 1,828,764 $ 1,752,354 651,609 143,233 4,375,960 1,871) ( 4,374,089 190,190 $ 149,476 339,666 190,250) ( 149,416 4,523,505 $ Balance of individual accounts has not exceeded 5% of total account balance Expressed in thousands of NTD

Statement 2, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF ACCOUNTS RECEIVABLE, NET

DECEMBER 31, 2020

Statement 3 Client Name Non-related parties: Customer 7 Customer G Customer 5 Others Less: Loss allowance Related parties: CPC Corporation, Taiwan CSBS Coating Solutions Co., Ltd.	Description Amount Note Income from ships manufacturing 1,236,563 $ Income from ships repairing 61,942 Income from ships repairing 91,802 97,188 1,487,495 317,626) ( 1,169,869 20,295 $ 16 20,311 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 3, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF INVENTORIES

DECEMBER 31, 2020

Expressed in thousands of NTD


Statement 4 Net Item Cost Realizable Value Raw materials 2,321,658 $ 2,279,485 $ Work in progress and under repair 69,877 69,877 2,391,535 2,349,362 $ Less: Allowance of valuation loss 42,173) ( 2,349,362 $ Amount Expr	Note essed in thousands of NTD
	Measured by lower of cost and net realizable value

Statement 4, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2020

Statement 5 Name	No. of Shares Amount 500,001 18,838 $ 12,500,000 169,617 1,200,000 10,570 15,000,000 - 400,000 - 199,025 $ BeginningBalance	No. of Shares Amount 10,606,060 1,050,000 $ 2,100,165 4,821 - 341 - - - - 1,055,162 $ Addition	No. of Shares Amount - (20,316) $ - - - - - - - - (20,316) $ Decrease	No. of Shares % Amount 11,106,061 50.00% 1,048,522 $ 14,600,165 100.00% 174,438 1,200,000 12.00% 10,911 15,000,000 37.97% - 400,000 40.00% - 1,233,871 $ EndingBalance	No. of Shares % Amount 11,106,061 50.00% 1,048,522 $ 14,600,165 100.00% 174,438 1,200,000 12.00% 10,911 15,000,000 37.97% - 400,000 40.00% - 1,233,871 $ EndingBalance	Unit Price Valuation (NT$) Total Amount Basis Collateral 94.41 $ 1,048,522 $ Equity method None 11.95 174,438 Equity method None 9.09 10,911 Equity method None - - Equity method None - - Equity method None 1,233,871 $ Market Value or Expressed in thousands of NTD NetAssets Value	Unit Price Valuation (NT$) Total Amount Basis Collateral 94.41 $ 1,048,522 $ Equity method None 11.95 174,438 Equity method None 9.09 10,911 Equity method None - - Equity method None - - Equity method None 1,233,871 $ Market Value or Expressed in thousands of NTD NetAssets Value
	No. of Shares 500,001 12,500,000 1,200,000 15,000,000 400,000	No. of Shares 10,606,060 2,100,165 - - -	No. of Shares - - - - -	No. of Shares 11,106,061 14,600,165 1,200,000 15,000,000 400,000	% 50.00% 100.00% 12.00% 37.97% 40.00%	Unit Price (NT$) 94.41 $ 11.95 9.09 - -
CSBC - DEME Wind Engineering Co., Ltd. CSBS Coating Solutions Co., Ltd. Taiwan International Windpower Training Corporation Ltd. Fuhai Wind Farm Corporation Taiwan Offshore Wind Farm Services Corporation Total							None None None None None

For increase and decrease during the year, please refer to Note 6(5) investments accounted for using equity method for details.

Statement 5, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN COST OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2020

Statement 6 Items Land Building and structures Transportation equipment Total	BeginningBalance 3,629,106 $ 115,634 298,467 4,043,207 $	Addition Decrease - $ 121,969) ($ 2,306 - 61,105 - 63,411 $ 121,969) ($	EndingBalance Note 3,507,137 $ 117,940 359,572 3,984,649 $ Expressed in thousands of NTD

For increase and decrease during the year, please refer to Note 6(7) lease transaction- lessee for details.

Statement 6, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2020

Statement 7 Item Land Building and structures Transportation equipment	BeginningBalance 168,378 $ 12,792 56,574 237,744 $	Addition 164,179 $ 13,144 68,638 245,961 $	Decrease - $ - - - $	EndingBalance Note 332,557 $ 25,936 125,212 483,705 $ Expressed in thousands of NTD

Statement 7, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF SHORT-TERM BORROWINGS

DECEMBER 31, 2020

Statement 8
Nature
Description
Bank’s unsecured borrowings
Taiwan Cooperative Bank
Chang Hwa Commercial Bank, Ltd.
Cathay United Bank
HUA NAN COMMERCIAL BANK , LTD.
Land Bank
Letter of credit for purchasing material from banks
Mega International Commercial Bank Co., Ltd.
Taiwan Cooperative Bank
Taiwan Cooperative Bank

Range of
EndingBalance
Contract Period
Interest Rate
Credit Line
Collateral
3,387,100
$ 2020/12/07～2021/12/07
1.40%
Note 1
None
1,000,000
2020/09/30～2021/09/30
1.00%
Note 2
None
300,000
2020/12/14～2021/12/14
0.96%
Note 3
None
300,000
2020/10/28～2021/10/08
0.90%
Note 4
None
200,000
2020/03/10～2021/03/10
0.85%
Note 5
None
5,187,100
11,085
2020/04/19～2021/04/18
0.42%~0.70%
Note 6
None
607
2020/12/07～2021/12/06
0.54%
Note 7
None
354
2020/12/07～2021/12/07
1.40%
Note 1
None
12,046
5,199,146
$ Expressed in thousands of NTD

Note 1: Finance facility from banks including letter of credit and guarantee deposits amounted to $4,000,000.

Note 2: Finance facility from banks including letter of credit and short-term loans amounted to $1,550,000.

Note 3: Finance facility from banks including letter of credit and short-term loans amounted to USD 60,000 thousand.

Note 4: Finance facility from banks including letter of credit and short-term loans amounted to $600,000.

Note 5: Finance facility from banks including letter of credit and guarantee deposits amounted to $300,000.

Note 6: Finance facility from banks including letter of credit, guarantee deposits and overdrafts amounted to $3,500,000.

Note 7: Finance facility from banks including letter of credit amounted to USD 30,000 thousand.

Statement 8, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF SHORT-TERM BILLS PAYABLE

DECEMBER 31, 2020

Statement 9 Item Guarantor or AcceptingInstitution Commercial paper payable China Bills Finance Corporation MEGA Bills Finance Co., Ltd. " " International Bill Finance Corporation Taiwan Finance Corporation " Ta Ching Bills Finance Corporation First Commercial Bank Co., Ltd.	Contract Period 2020/12/14～2021/01/11 2020/12/09～2021/01/06 2020/12/23～2021/01/20 2020/12/11～2021/01/06 2020/12/26～2021/01/13 2020/12/11～2021/02/04 2020/11/20～2021/01/12 2020/11/11～2021/01/08 2020/11/27～2021/01/25	Range of Interest Rate 0.50% 0.82% 0.82% 0.82% 0.52% 0.61% 0.61% 0.72% 0.33%
			Issuance Unamortized Amount Discounts 500,000 $ 69) ($ 500,000 56) ( 400,000 170) ( 100,000 11) ( 500,000 86) ( 200,000 114) ( 100,000 18) ( 200,000 28) ( 200,000 43) ( 2,700,000 $ 595) ($

Statement 9, Page 1

CSBC CORPORATION, TAIWAN CONTRACT LIABILITIES STATEMENTS DECEMBER 31, 2020

Statement 10 Client Name Non-related parties: Customer 5 Customer D Others Related parties: CSBC - DEME Wind Engineering Co., Ltd.	Description	Amount Note 3,442,989 $ 1,356,016 410,588 5,209,593 1,489,197 6,698,790 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 10, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF TRADE PAYABLES

DECEMBER 31, 2020

Statement 11 Client Name Non-related parties: TROPHEX ENGINEERING CORPORATION Others Related parties: BLUE ACE CORPORATION	Description	Amount Note 47,411 $ 1,443,156 1,490,567 $ 8,362 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 3% of total account balance

Statement 11, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF OTHER PAYABLES DECEMBER 31, 2020

Statement 12 Client Name Salary and bonus payable Other accrued expenses Payables for machinery and equipment Others	Description	Amount Note 702,345 $ 518,950 63,755 26,199 1,311,249 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 12, Page 1

Expressed in thousands of NTD

CSBC CORPORATION, TAIWAN STATEMENT OF BONDS PAYABLE

DECEMBER 31, 2020

Statement 13

Bonds Name	Trustee	Issuance Date	Interest Payment Date	Coupon Rate			Amount			Repayment Term	Collateral	Note
					Total Issuance Amount	Repayment Paid or Transferred	Outstanding Balance	Unamortized Premiums (Discounts)	Carrying Amount
Domestic first seucured convertible corporate bond	TAIPEIFUBON COMMERCIAL BANK CO., LTD	2020.2.24	-	Note 1	2,000,000 $	1,600) ($	1,998,400 $ Less: Maturity	66,099) ($ within one year	1,932,301 $ - 1,932,301 $	Note 1	Note 2

Note 1: Information relating to lease payments receivable is provided in Note 6(16).

Note 2: CHANG HWA COMMERCIAL BANK, LTD. was commissioned to guarantee the corporate bond.

Statement 13, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF LONG-TERM BORROWINGS

DECEMBER 31, 2020

Statement 14 Creditor Description (A) Long-term bank borrowings	Statement 14 Creditor Description (A) Long-term bank borrowings	Statement 14 Creditor Description (A) Long-term bank borrowings	Amount (in thousands)	Contract Period	Interest Rate	Collateral Note Expressed in thousands of NTD	Collateral Note Expressed in thousands of NTD
Unsecured borrowings Bank of Taiwan TAIWAN BUSINESS BANK, LTD. Guarantor or Accepting Item Institution Contract Period Principal was repaid averagely in 4 installments starting from third year. Principal was repaid averagely in 5 installments starting from the 2.5th year. Less: Current portion (B) Commercial paper payables			1,500,000 $ 700,000 2,200,000 1,280,000) ( 920,000 $ Range of Interest Rate	2017/6/22～ 2022/6/22 2018/3/12～ 2023/3/12	1.18% 1.05% Amount	None None	Note
				Issuance Amount	Unamortized Discounts	Book Value
Commercial paper payable	MEGA Bills Finance Co., Ltd. China Bills Finance Corporation Taishin International Bank Co. Ltd. International Bill Finance Corporation	2020/09/26～ 2022/12/15 2020/09/26～ 2022/10/26 2020/06/21～ 2022/12/20 2020/06/22～ 2022/06/21	0.60% 0.56% 0.43% 0.51%	1,000,000 $ 850,000 800,000 350,000 3,000,000 $	467) ($ 446) ( 328) ( 189) ( 1,430) ($	999,533 $ 849,554 799,672 349,811 2,998,570 $	None None None None

Note: Revolving issuance of commercial paper which has contract periods of 2~4 years and shown as long-term borrowings. Please refer to Note 6(17) for details.

Statement 14, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF LEASE LIABILITIES

DECEMBER 31, 2020

Statement 15 Item Description Land Buildings and structures Transportation equipment Dock facilities	Lease Period 2006.01.01~2045.12.31 2011.10.01~2027.12.31 2011.10.01~2027.12.31 Less: Maturity within one year	Discount Rate EndingBalance Note 1.21% 3,208,503 $ 1.21% 94,338 1.21% 238,451 3,541,292 272,881) ( 3,268,411 $ Expressed in thousands of NTD

Statement 15, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF OPERATING REVENUE YEAR ENDED DECEMBER 31, 2020

Statement 16

Expressed in thousands of NTD

Item Construction contract revenue Income from of warships manufacturing Income from ships manufacturing Income from ships repairing Income from machine manufacturing Others	Volume	Amount 15,327,666 $ 7,374,458 1,142,126 993,002 188,270 25,025,522 $	Note
			Balance of individual accounts has not exceeded 3% of total account balance

Statement 16, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF OPERATING COSTS

YEAR ENDED DECEMBER 31, 2020

Statement 17 Item Direct raw materials Direct labor Manufacturing expense Input cost in manufacture and repair in the year Add: Beginning work in progress and under repair Others Less: Ending work in progress and under repair	Description Amount Note 12,409,045 $ 1,360,111 10,372,012 24,141,168 52,190 2,331,805 69,877) ( 26,455,286 $ Expressed in thousands of NTD

Statement 17, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF MANUFACTURING EXPENSE

YEAR ENDED DECEMBER 31, 2020

Statement 18 Item Subcontractors’ fees Professional service expense Salary Depreciation Others	Description	Amount Note 4,517,671 $ 1,766,186 1,516,772 816,025 1,755,358 10,372,012 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 18, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF SELLING EXPENSES YEAR ENDED DECEMBER 31, 2020

Statement 19 Item Salary Professional service expense Pensions Others	Description	Amount Note 39,808 $ 8,001 3,569 12,799 64,177 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 19, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF ADMINISTRATIVE EXPENSES

YEAR ENDED DECEMBER 31, 2020

Statement 20 Item Salary Employee training expense Repair expense Professional service expense Others	Description	Amount Note 137,074 $ 70,624 17,436 17,495 85,382 328,011 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 20, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES

YEAR ENDED DECEMBER 31, 2020

Statement 21

Expressed in thousands of NTD

Item Salary Professional service expense Material Pensions Others	Description	Amount 49,009 $ 28,717 4,957 4,671 6,664 94,018 $	Note
			Balance of individual accounts has not exceeded 5% of total account balance

Statement 21, Page 1

CSBC CORPORATION, TAIWAN

SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION YEAR ENDED DECEMBER 31, 2020

Statement 22

Expressed in thousands of NTD

		Year ended December 31, 2020	Year ended December 31, 2020	Year ended December 31, 2020
Classification	Classified as cost of sales	Classified as operating expenses	Non-operating expenses		Total
Employee benefit expenses	$ 3,198,284	$ 275,169	$	-	$ 3,473,453
Wages and salaries	2,686,757	225,891		-	2,912,648
Labor and health insurance fees	231,637	18,479		-	250,116
Pension costs	222,763	23,179		-	245,942
Board compensation	-	3,110		-	3,110
Others	57,127	4,510		-	61,637
Depreciation expenses	816,025	11,298		680	828,003
Amortization expenses	15,674	-		-	15,674

Pension costs Board compensation Others Depreciation expenses Amortization expenses	222,763 - 57,127 816,025 15,674	23,179 - 3,110 - 4,510 - 11,298 680 - -	23,179 - 3,110 - 4,510 - 11,298 680 - -	23,179 - 3,110 - 4,510 - 11,298 680 - -	245,942 3,110 61,637 828,003 15,674
		Year ended December 31, 2019
Classification	Classified as cost of sales	Classified as operating expenses	Non-operating expenses		Total
Employee benefit expenses	$ 3,330,817	$ 293,965	$	-	$ 3,624,782
Wages and salaries	2,794,567	243,387		-	3,037,954
Labor and health insurance fees	238,688	19,466		-	258,154
Pension costs	238,206	24,160		-	262,366
Board compensation	-	2,744		-	2,744
Others	59,356	4,208		-	63,564
Depreciation expenses	777,302	11,366		556	789,224
Amortization expenses	16,137	-		-	16,137

Note:

A.As of December 31, 2020 and 2019, the Company had 2,951 and 2,900 employees respectively, including 10 non-employee directors for both years.

B.(a) For the years ended December 31, 2020 and 2019, average employee benefit expense was $1,212 and $1,226, respectively.
(b) For the years ended December 31, 2020 and 2019, average employee salary was $1,017 and $1,028, respectively.
(c) Changes of adjustments of average employees’ salary was -1.07%.
(d) For the years ended December 31, 2020 and 2019, supervisors’ remuneration was both $0.

(e) The Company has a salary and remuneration committee which sets and periodically reviews directors’ and managers’ performance assessment standards, annual and long-term performance target and policies, mechanics, standards and structures of salary and remuneration, periodically assesses the achievement of directors’ and managers’ performance targets and set the content and amount of salary and remuneration based on the assessment results from the performance assessment standards.

In accordance with the Articles of Incorporation, the remuneration of the Company’s directors and supervisors, a ratio of distributable profit of the current year, if any, shall be appropriated as employees' compensation and directors' and supervisors' remuneration. The ratio shall be 1~5% for employees’ compensation which can be in the form of shares or in cash and shall not be higher than 1% for directors' remuneration.

If the Company has an accumulated deficit, earnings should be reserved to cover deficit.

The employees’ salaries include base salaries, rewards for hard working employees and full attendance bonuses. Base salaries are determined according to a point-based salary scale. Base salaries paid to employees below the deputy general manager level may differ because of their responsibilities, nature of job, promotions or job transfers. To meet the Company’s administrative needs, the point-based salary scale is set out using the position classification and the position evaluation procedures to determine the rank/value of the position and its corresponding salary range. Jobs related to engineering and management are evaluated based on the position classification. Jobs related to providing techniques and services are evaluated based on the position evaluation. The conversion ratio of salary points to salaries is determined by reference to the salary situation in the market and adjusted based on the Company’s operational situation.

Note: The Company has an audit committee, thus, there was no remuneration of supervisors.

Statement 22, Page 1

CSBC CORPORATION, TAIWAN http//WWW.CSBCNET.COM.TW

==> picture [172 x 173] intentionally omitted <==

Person in Charge：Cheng , Wen-Lon

Date of publication：2020.06.02

AI assistant

CSBC — Annual Report 2020

51982_rns_2021-12-23_caf53668-b604-4a39-9d36-136ca1f2a517.pdf

CSBC CORPORATION, TAIWAN .

2020 Annual Report

Notice to readers

CSBC CORPORATION, TAIWAN 2020Annual Report

Contents

Dear Shareholders,

1. The status of the global shipbuilding industry in 2020

2. Operating Performance in 2020

(2) Orders in hand

(3) Research and development status

(4) Major investment

3. Business Plan for 2021

II. Company Profile

1. Company Profile

2.1.1 Date of establishment: November 7, 1973

2.1.3 Company History

Ten Outstanding Innovation R&D.

III.Corporate Governance Report

3.1.1 Company Organization

3.1.2 Major Corporate Functions

（ 1 ） Secretariat Office of the Board

（ 2 ） Audit Office

Remarks:

3.2 Directors, Supervisors and Management Team

3.2.1 Board of Director

(3) Major shareholders of the Company’s major institutional shareholders

(4) Professional qualification and independence of directors and supervisors May 13, 2021

3.2 Directors, Supervisors and Management Team

(1) Information of the President, Executive Vice President and department Heads

3.2.1 Remuneration paid to General Directors and Independent Director in 2020 (Individual disclosure of Name and remuneration method)

3.2.2 Remuneration paid to President and Executive Vice President in 2020 (Individual disclosure of Name and remuneration method)

3.2.3 The remuneration of the top 5 managers of the company (individual disclosure of names and remuneration methods) （ Note1 ）

3.2.3 The manager who distributes the employee compensation and the distribution situation in 2020: The manager who did not distribute the employee compensation in 2020:

2. The attendance of Independent Director in 2020 was as follows:

3.3.2 Implementation of the Audit Committee: A total of 5 (A) Audit Committee meetings were held in 2020. The attendance of the independent directors was as follows:

3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”

(6) Directors and managers and staff training records:

a. Director about corporate governance training

b. Managers about corporate governance training

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee:

1. Information of Remuneration Committee Members

2. Attendance of Members at Remuneration Committee Meetings

3. The 2020 Remuneration Committee discussed proposals and resolutions:

3.3.5 Deviations and Reasons from “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies.”:

（ 4 ） Industry-academia collaboration and talent training:

2. Training for talent in technology

3.3.6 Deviations from “the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies” and Reasons

CSBC Corporation, Taiwan Internal Control System Statement

Date: March 18, 2021

3. Major Resolutions of Board Meetings

3.4 Information of Fees to CPA

3.7.1 Changes in equity of directors, supervisors, managers, or major shareholders

3.8 Information Disclosing the Spouse, Kinship Within the Second Degree and Relationship between and any of the Top Ten Shareholders

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

4.1.2 Status of Shareholders

4.1.3 Shareholding Distribution Status (NT$ per share)

A. Common Shares:

2. Preferred Shares: None

4.1.4 List of Major Shareholders

4.1.6 Dividend Policy and Implementation Status:

A. Dividend policy

4.2.1 Corporate bonds handling situation

4.2.2 Conversion of corporate bond information

V.Operation Overview

5.1 Business Activities

B. Operating proportion of main products

C. The company's current products and services

(a) Merchant shipbuilding

(b) Construction of Naval and Official Vessels construction

(c) Maintenance of commercial and military ship

D. New products development

■Evaluation of resistance characteristics of Main Installation Vessel (MIV)

■Roll Damping analysis and research

■China Steel Machinery Corporation offshore wind power Transition Piece(TP) components marine transportation

■CSBC No.15 Underwater Basic Transportation Evaluation

CSBC Annual Report 2020

`(2)` Orders in hand

`(3)` Research and development status

`(4)` Major investment

`（` 1 `）` Secretariat Office of the Board

`（` 2 `）` Audit Office

3.2.3 The remuneration of the top 5 managers of the company (individual disclosure of names and remuneration methods) `（` Note1 `）`

`（` 4 `）` Industry-academia collaboration and talent training:

In response to future development, the "green ship" planned by the company and the design concept are explained as follows: Main Installation Vessel `（` MIV `）`

List of selected ships of Royal Institute of Naval Architecture `「` Significant Ships `」`

(d) Progress of ongoing research and development projects: `（` As of January 31, 2021 `）`

`（` a `）` Real estate, plant and equipment investment project plan for 2020: