CSBC — Annual Report 2021

Nov 11, 2021

CSBC CORPORATION, TAIWAN AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

INDEPENDENT AUDITORS’ REPORT DECEMBER 31, 2021 AND 2020

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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.

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CSBC CORPORATION, TAIWAN AND SUBSIDIARIES

Declaration of Consolidated Financial Statements of Affiliated Enterprises

Year ended December 31, 2021, 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 4, 2022

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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR21000439

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, 2021 and 2020, 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, 2021 and 2020, 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 2021 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.

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Key audit matters for the Group’s 2021 consolidated financial statements are stated as follows:

Accounting estimates and assumptions for total cost of construction contracts

Description

Please refer to Note 4(31) 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:

1. Assessing the effectiveness of CSBC Group’s internal control regarding the estimation process of total cost of construction contract. This includes:

2. (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.

4. (3) Whether the segregation of duties is appropriate.

5. 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.

6. Comparing cost at completion for the same or similar ships and then assessing the reasonableness of the Estimate at Completion Report.

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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, 2021 and 2020.

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

Management of the Group 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:

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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.

5. 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.

6. 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.

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

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

WANG, KUO-HUA WU, CHIEN-CHIH

For and on behalf of PricewaterhouseCoopers, Taiwan March 4, 2022

------------------------------------------------------------------------------------------------------------------------------------------------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.

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) and 8 6(22)(26) and 7 6(4)(22) and 7 7 6(5)(22) 6(6) and 7 6(7)(34) and 7 6(8) 6(9) 6(10)(11) 6(12) 6(32) 6(20)	December 31, 2021 AMOUNT % $ 2,731,884 6 21,044 - 16,841 - 3,105,843 7 2,047,312 5 10,628 - 117 - 2,827,237 7 13,272,237 30 19,399 - 24,052,542 55 1,466,880 3 12,848,497 29 3,399,477 8 212,239 1 39,426 - 1,523,988 4 167,059 - 11,403 - 19,668,969 45 $ 43,721,511 100	December 31, 2020	December 31, 2020
		AMOUNT $ 2,731,884 21,044 16,841 3,105,843 2,047,312 10,628 117 2,827,237 13,272,237 19,399 24,052,542 1,466,880 12,848,497 3,399,477 212,239 39,426 1,523,988 167,059 11,403 19,668,969 $ 43,721,511	AMOUNT $ 1,237,845 - - 4,793,876 1,194,927 26,464 21,945 2,349,362 9,902,802 5,163 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	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1136 Current financial assets at amortised cost 1140 Current contract assets 1170 Accounts receivable, net 1200 Other receivables 1210 Other receivables - related parties 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 1975 Net defined benefit asset, non-current 15XX Non-current assets 1XXX Total assets				3 - - 13 3 - - 6 27 -
				52
				3 31 9 1 - 4 - -
				48
				100

(Continued)

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2021 December 31, 2020 Notes AMOUNT % AMOUNT % 6(13) $ 2,875,834 7 $ 5,279,146 14 6(14) 3,599,104 8 2,699,405 7 6(22)(26) and 7 10,387,846 24 6,698,791 18 6(22) 32,424 - 8,116 - 6(22) and 7 - - 111,592 - 6(22) 1,050,437 2 1,600,887 4 6(15) 1,200,085 3 1,328,903 4 801 - 2,909 - 6(16)(22) 1,018,386 2 1,292,762 4 6(9) 273,379 1 272,881 1 14,590 - 20,460 - 6(18) - - 1,280,000 4 20,452,886 47 20,595,852 56 6(2)(17) 7,045 - 5,995 - 6(17) 1,760,726 4 1,932,301 5 6(18) 2,548,831 6 3,918,570 10 6(32) 1,325,335 3 1,324,697 4 6(9) 3,181,022 7 3,268,411 9 6(19) 705,134 2 693,347 2 6(19) 181,604 - 193,391 - 6(20) - - 3,401 - 287,431 1 283,392 1 7,957 - 20,128 - 10,005,085 23 11,643,633 31 30,457,971 70 32,239,485 87 6(21)(23) and 7 9,317,873 22 4,730,555 13 6(17)(24) 3,692,913 8 97,071 - 6(25) 3,166,471 7 3,166,471 8 ( 2,940,035) ( 7) ( 2,986,016) ( 8 ) 13,237,222 30 5,008,081 13 26,318 - - - 13,263,540 30 5,008,081 13 7 and 9 $ 43,721,511 100 $ 37,247,566 100

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 36XX Non-controlling interests 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments 3X2X Total liabilities and equity

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

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars, except for earnings (losses) per share amount)

Items

Year ended December 31 2021 2020 Notes AMOUNT % AMOUNT % 6(26) and 7 $ 19,113,429 100 $ 25,296,629 100 6(5)(12)(30)(31) and 7 ( 18,558,210) ( 97) ( 26,706,103) ( 105) 555,219 3 ( 1,409,474) ( 5) 6(12)(30)(31) ( 66,478) - ( 67,767) - ( 360,333) ( 2) ( 339,995) ( 1) ( 124,101) ( 1) ( 94,017) ( 1) 12(2) ( 7,221) - 3,858 - ( 558,133) ( 3) ( 497,921) ( 2) ( 2,914) - ( 1,907,395) ( 7) 1,249 - 6,699 - 6(10)(19)(27) 219,867 1 431,928 2 6(28) ( 64,134) - ( 9,096) - 6(8)(9)(19)(29) ( 101,200) ( 1) ( 100,911) ( 1) 6(7) ( 42,553) - ( 19,975) - 13,229 - 308,645 1 10,315 - ( 1,598,750) ( 6) 6(32) ( 762) - ( 1,337) - $ 9,553 - ($ 1,600,087) ( 6) 6(20) $ 40,933 - $ 66,502 - 6(32) ( 8,187) - ( 13,300) - $ 32,746 - $ 53,202 - $ 42,299 - ($ 1,546,885) ( 6) $ 13,235 - ($ 1,600,087) ( 6) ( 3,682) - - - $ 9,553 - ($ 1,600,087) ( 6) $ 45,981 - ($ 1,546,885) ( 6) ( 3,682) - - - $ 42,299 - ($ 1,546,885) ( 6) 6(33) $ 0.02 ($ 3.38)

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 Profit (loss) before income tax 7950 Income tax expense 8200 Profit (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 income (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 (losses) per share 9750 Total basic earnings (losses) per share

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

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

2020 Balance at January 1, 2020 Loss 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 2021 Balance at January 1, 2021 Profit (loss) Other comprehensive income Total comprehensive income(loss) Cash capital increase Share-based payments Conversion of convertible bonds Acquisition of non-controlling interest of a subsidiary Balance at December 31, 2021	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			Non-controlling interest		Total equity
			Share capital - common stock		Capital surplus		Retained	earnings		Total
							Special reserve	Accumulated deficit
	6(24)(25) 6(17)(24) 6(17)(23)(24) 6(23) and 7 6(21)(24) and 7 6(17)(23)(24) 6(34)		$ 4,729,918 - - - - - 637 $ 4,730,555 $ 4,730,555 - - - 4,500,000 - 87,318 - $ 9,317,873	$ 1,338,798 - - - ( 1,338,798) 96,153 918 $ 97,071 $ 97,071 - - - 3,367,059 128,818 99,965 - $ 3,692,913			$ 3,166,471 - - - - - - $ 3,166,471 $ 3,166,471 - - - - - - - $ 3,166,471	($ 2,777,929) ( 1,600,087) 53,202 ( 1,546,885) 1,338,798 - - ($ 2,986,016) ($ 2,986,016) 13,235 32,746 45,981 - - - - ($ 2,940,035)	$ 6,457,258 ( 1,600,087 ) 53,202 ( 1,546,885 ) - 96,153 1,555 $ 5,008,081 $ 5,008,081 13,235 32,746 45,981 7,867,059 128,818 187,283 - $ 13,237,222		$ - - - - - - - $ - $ - ( 3,682) - ( 3,682) - - - 30,000 $ 26,318	$ 6,457,258 ( 1,600,087 ) 53,202 ( 1,546,885 ) - 96,153 1,555 $ 5,008,081 $ 5,008,081 9,553 32,746 42,299 7,867,059 128,818 187,283 30,000 $ 13,263,540

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

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit (loss) before tax Adjustments Adjustments to reconcile profit (loss) Expected credit loss (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 on valuation of financial assets and liabilities at fair value through profit or loss Loss on disposal of property, plant and equipment Interest expense Share-based payments Changes in operating assets and liabilities Changes in operating assets Decrease in current contract assets (Increase) decrease in accounts receivable Decrease in other receivables Decrease (increase) in other receivables - related parties Increase in inventories Increase in prepayments (Increase) decrease in other current assets Increase in net defined benefit asset-non-current Changes in operating liabilities Increase (decrease) in current contract liabilities Increase in notes payable Decrease in notes payable - related parties (Decrease) increase in accounts payable (Decrease) increase in other payables Decrease in provisions for liabilities - current (Decrease) increase in receipts in advance Increase in net defined benefit liability - non-current Cash inflow (outflow) generated from operations Interest received Payment of interest Income tax paid Net cash flows from (used in) operating activities

Year ended December 31, Notes 2021 2020 $ 10,315 ( $ 1,598,750 ) 12(2) 7,221 ( 3,858 ) 6(8)(30) 654,269 585,453 6(9)(30) 246,569 245,961 6(11) 679 680 6(12)(30) 12,461 15,710 6(7) 42,553 19,975 ( 1,249 ) ( 6,699 ) 6(27)(29)(35) ( 11,787 ) ( 11,590 ) 6(28) ( 19,055 ) ( 11,749 ) 6(28) 5,715 2,197 6(29) 101,200 100,911 6(21) 128,818 - 1,688,881 1,007,494 ( 860,454 ) 108,177 15,853 74,237 21,828 ( 5,312 ) ( 477,875 ) ( 524,770 ) ( 3,369,435 ) ( 4,633,197 ) ( 14,662 ) 11,863 ( 11,403 ) - 3,689,055 ( 2,009,018 ) 24,308 8,116 ( 111,592 ) ( 173,812 ) ( 550,450 ) 506,584 ( 106,518 ) 119,296 ( 274,376 ) ( 324,822 ) ( 5,870 ) 5,371 37,532 27,473 872,531 ( 6,464,079 ) 1,232 6,793 ( 74,940 ) ( 77,572 ) ( 813 ) ( 4,871 ) 798,010 ( 6,539,729 )

(Continued)

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CSBC CORPORATION , TAIWAN AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2021 AND 2020

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in current financial assets at amortised cost Acquisition of investments accounted for using equity method Net cash flow from acquisition of subsidiaries 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 (Decrease) increase in short-term borrowings Increase in short-term notes and bills payable Proceeds from issuance of bonds Repayments of long-term debt Repayments of principal portion of lease liabilities Increase in guarantee deposit received Decrease in guarantee deposit received (Decrease) increase in other non-current liabilities Cash capital increase Net cash flows from financing activities Net increase (decrease) 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 2021 2020 ( $ 16,841 ) $ - 6(7) ( 473,000 ) ( 1,050,000 ) 6(34) 53,000 - 6(35) ( 2,199,457 ) ( 947,448 ) 6(12) ( 30,411 ) ( 27,065 ) ( 116,920 ) ( 21,458 ) 6,036 32,890 ( 2,777,593 ) ( 2,013,081 ) 6(36) ( 2,403,312 ) 3,456,785 6(36) 900,000 999,842 6(36) - 2,034,775 6(36) ( 2,650,000 ) ( 649,202 ) 6(36) ( 231,993 ) ( 228,663 ) 6(36) 145,342 202,062 6(36) ( 141,303 ) ( 166,611 ) 6(36) ( 12,171 ) 19,304 6(23) 7,867,059 - 3,473,622 5,668,292 1,494,039 ( 2,884,518 ) 6(1) 1,237,845 4,122,363 6(1) $ 2,731,884 $ 1,237,845

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, 2021 AND 2020

(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.

2. 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 4, 2022.

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 2021 are as follows:

New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
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

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	Effective date by
	International Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendment to IFRS 16, ‘Covid-19-related rent concessions beyond	April 1, 2021(Note)
June 30, 2021’

Note ： Earlier application from January 1, 2021 is allowed by FSC.

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

(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 2022 are as follows:

New Standards, Interpretations and Amendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 3, ‘Reference to the conceptual framework’ Amendments to IAS 16, ‘Property, plant and equipment:proceeds before intended use’ Amendments to IAS 37, ‘Onerous contracts－cost of fulfilling a contract’ Annual improvements to IFRS Standards 2018–2020	January 1, 2022 January 1, 2022 January 1, 2022 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.

(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:

New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, ‘Insurance contracts’ Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9- comparative information’	To be determined by International Accounting Standards Board January 1, 2023 January 1, 2023 January 1, 2023

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	Effective date by
	International Accounting
New Standards,Interpretations andAmendments	StandardsBoard
Amendments to IAS 1, ‘Classification of liabilities as current or non-	January 1, 2023
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 12, ‘Deferred tax related to assets and liabilities	January 1, 2023
arising from a single transaction’

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.

• (b) Financial assets at fair value through other comprehensive income.

• (c)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.

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(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 2021 2020 Description
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Name of investor	Name of subsidiary	Main business activities	2021	2020	Description
CSBC	CSBC Coating	Marine coating,	100	100
CORPORATION,	Solutions Co., Ltd.	steel structure painting works,
TAIWAN		surface treatment, and high-
		tech anti-corrosion
	CSBC Power	Manufacturing of ships and	60	-	Note
	Technology Co., Ltd.	its components etc.
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 Group cumulatively held a 60% equity interest and obtained control over the investee, please refer to Note 6(34) 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: None.

(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.

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• 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’.

(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.

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• (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.

• (7) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

(8) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

• (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

• (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

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(9) 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.

(10) 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.

(11) 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.

- (12) 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.

(13) 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.

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(14) 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.

• 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.

• (15) 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.

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(16) 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.

• 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

(17) 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;

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• (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.

• 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.

(18) 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.

(19) Intangible assets

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

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(20) 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.

(21) 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.

(22) 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.

(23) 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.

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• 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’.

(24) 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.

(25) 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.

(26) 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.

(27) 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.

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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.

• 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.

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- (28) Employee share based payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and nonvesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised is based on the number of equity instruments that eventually vest.

(29) 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.

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• 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.

(30) 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.

(31) 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.

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• 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.

(32) 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.

(33) Business combinations

• A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

• B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.

(34) 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.

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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, 2021 would have decreased by $445,900 or increased by $365,873 (the construction profit for the year ended December 31, 2020 would have decreased by $433,294 or increased by $367,795).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash on hand and revolving funds Checking accounts and demand deposits Time deposits	December31,2021 696 $ 2,073,781 657,407 2,731,884 $	December 31, 2020
		580 $ 923,051 314,214
		1,237,845 $

• 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.

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(2) Financial assets (liabilities) at fair value through profit or loss

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Items December 31, 2021 December 31, 2020
Non-current items:
Financial assets mandatorily measured
at fair value through profit or loss
Cross currency swap $ 21,044 $ -
Non-current items:
Financial liabilities designated as at
air value through profit or loss
Call and put options embedded in ($ 16,805) ($ 17,744)
convertible bonds
Valuation adjustment 9,760 11,749
($ 7,045) ($ 5,995)
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• A. Information about the amounts recognised in profit or loss in relation to financial assets (liabilities) at fair value through profit or loss is provided in Note 6(28).

• B. The Group entered into cross currency swap contracts to hedge risks arising from exchange rate fluctuations on forecast transactions. The information on cross currency swap contracts that are not accounted for under hedge accounting on the balance sheet date and are not expired is as follows:

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December 31, 2021
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	December	31,2021
Contract amount (inthousands) EUR 17,611	Expiry date 2022.11.25	Interest rate ofamount paid -	Interest rate ofamount collected
			0.433%

There was no such transaction as of December 31, 2020.

• C. Information about the terms of the first domestic secured convertible bonds issued by the Group is provided in Note 6(17).

(3) Financial assets at amortised cost

Items Current items: Restricted bank deposits	December31,2021 16,841 $	December31,2020
		- $

• A. As at December 31, 2021 and 2020, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $16,841 and $0, respectively.

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• B. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.

• C. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

(4) Accounts receivable, net

			December31,2021			December31,2020
Construction receivables		$	2,180,583		$	1,238,032
Repair receivables			118,741			207,841
Lease payments receivable			1,099			42,874
			2,300,423			1,488,747
Less: Allowance for doubtful accounts	(		325,722)	(		317,653)
			1,974,701			1,171,094
Accounts receivable - related parties			72,611			23,833
		$	2,047,312		$	1,194,927

• A. As of December 31, 2021 and 2020, accounts receivable was mainly from contracts with customers. And as of January 1, 2020, the balance of receivables from contracts with customers (including related parties) amounted to $1,620,757.

• B. As at December 31, 2021 and 2020, 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 $2,047,312 and $1,194,927, respectively.

• C. As of December 31, 2020, the Group’s past due construction receivables amounted to $796,040, because the counterparty failed to fulfil the mutual agreements, and the payments were still under negotiation. As of December 31, 2021, both parties agreed to modify the payment schedule of the payment.

• D. Information relating to credit risk is provided in Note 12(2).

(5) Inventories

Raw materials Work in process and repair of goods		December31,2021
	Allowance for Cost valuation loss 2,759,321 $ 38,677) ($ 106,593 - 2,865,914 $ 38,677) ($		Bookvalue
			2,720,644 $ 106,593
			2,827,237 $

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December 31, 2020

			D	ecember31,2020
				Allowance for
		Cost		valuation loss		Book value
Raw materials	$	2,321,658	($	42,173)	$	2,279,485
Work in process and repair of goods		69,877		-		69,877
	$	2,391,535	($	42,173)	$	2,349,362

The amount of inventories recognised as expense for the years ended December 31, 2021 and 2020 is as follows:

is as follows:
		Years ended	December	31,
		2021		2020
Raw materials costs		7,752,754 $	$	12,440,589
Gain from reversal of obsolete inventories	(	3,496)	(	3,115)
	7,749,258 $		$	12,437,474

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 2021 and 2020.

(6) Prepayments

Prepayments
Prepayments of suppliers Excess VAT paid Other prepayments	December31,2021 13,231,771 $ 10,506 29,960 13,272,237 $	December 31, 2020
		9,836,976 $ 5,811 60,015
		9,902,802 $

(7) Investments accounted for under equity method

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

			2021			2020
At January 1		$	1,059,433		$	29,408
Additional investments accounted for			473,000			1,050,000
using the equity method
Disposal investments accounted for using	(		23,000)			-
the equity method (Note)
Share of profit or loss of investments
accounted for using the equity method	(		42,553)	(		19,975)
At December 31		$	1,466,880		$	1,059,433

Note: Refer to Note 6(34) for information on business combinations.

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Associates: Taiwan International Windpower 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)	December31,2021 11,463 $ - - 1,455,417 1,466,880 $	December31,2020 10,911 $ - - 1,048,522
		1,059,433 $

• 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, 2021 and accumulated share of losses in associate amounted to $3,573 and $10,429, 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, 2021 and accumulated share of losses in associate amounted to $18,183 and $93,136, respectively.

• On November 12, 2021, the Board of Directors resolved to increase its paid-in capital by issuing 8,500 thousand new shares with a par value of $10 (in dollars) per share. The resolution has violated the Group’s Articles of Incorporation, and the Taiwan Taipei District Court ruled on January 7, 2022 that Fuhai Wind Farm Corporation is not allowed to issue new shares and register a change in capital with the Ministry of Economic Affairs. Fuhai Wind Farm Corporation applied for the capital change registration on January 11, 2022, and the matter is currently handled by a lawyer appointed by the Group.

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• 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.). Although the Company held a 50.0001% equity interest in CSBCDEME Wind Engineering Co., Ltd., the resolutions presented to the Board of Directors of CSBC-DEME Wind Engineering Co., Ltd. require a unanimous approval by both the Company and DEME Offshore Holding N.V. as required by the Articles of Incorporation of CSBC-DEME Wind Engineering Co., Ltd.

  • On January 15, 2020 and March 18, 2021, 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 $3 billion (approximately EUR 83.24 million). The Company subscribed 15,151,514 shares, equivalent to $1,500,000, according to its shareholding ratio.

• B. The Group’s share of the operating results in all individually immaterial associates are summarized below:

below:
Gain for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	2021 2020 552 $ 341 $ - - 552 $ 341 $ Years endedDecember31,
		341 $ -
		341 $

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

		Years ended	December	31,
		2021		2020
Loss for the year from continuing	($	43,105)	($		20,316)
operations
Other comprehensive income - net
of tax		-			-
Total comprehensive loss	($	43,105)	($		20,316)

• D. The Group had impairment loss in investments accounted for using equity method as the carrying amount exceeds recoverable amount. As of December 31, 2021 and 2020, the accumulated impairment loss amounted to $124,915 for both years.

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(8) Property, plant and equipment

At January 1, 2021 Cost Accumulated depreciation and impairment 2021 Opening net book amount as at January 1 Additions Reclassifications - costs Disposals - costs Depreciation charge Disposals - accumulated depreciation Closing net book amount as at December 31 At December 31, 2021 Cost Accumulated depreciation and impairment	Land 6,093,941 $ - 6,093,941 $ 6,093,941 $ - - - - - 6,093,941 $ 6,093,941 $ - 6,093,941 $	Land improvements	Buildings Machinery Transportation Leasehold Other Construction and structures and equipment equipment improvements equipment inprogress Total 7,701,647 $ 10,297,052 $ 1,585,768 $ 1,073,756 $ 150,706 $ 646,483 $ 28,697,042 $ 6,685,290) ( 8,254,867) ( 689,443) ( 828,611) ( 115,899) ( - 17,365,974) ( 1,016,357 $ 2,042,185 $ 896,325 $ 245,145 $ 34,807 $ 646,483 $ 11,331,068 $ 1,016,357 $ 2,042,185 $ 896,325 $ 245,145 $ 34,807 $ 646,483 $ 11,331,068 $ - 37 281 - 752 2,176,343 2,177,413 166,905 2,035,498 5,886 - 9,613 2,226,893) ( - 3,126) ( 164,677) ( 1,352) ( - 2,398) ( - 171,553) ( 94,431) ( 398,295) ( 71,775) ( 48,745) ( 9,332) ( - 654,269) ( 3,058 159,121 1,352 - 2,307 - 165,838 1,088,763 $ 3,673,869 $ 830,717 $ 196,400 $ 35,749 $ 595,933 $ 12,848,497 $ 7,865,426 $ 12,167,910 $ 1,590,583 $ 1,073,756 $ 158,673 $ 595,933 $ 30,702,902 $ 6,776,663) ( 8,494,041) ( 759,866) ( 877,356) ( 122,924) ( - 17,854,405) ( 1,088,763 $ 3,673,869 $ 830,717 $ 196,400 $ 35,749 $ 595,933 $ 12,848,497 $
		1,147,689 $ 791,864) ( 355,825 $ 355,825 $ - 8,991 - 31,691) ( - 333,125 $ 1,156,680 $ 823,555) ( 333,125 $

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At January 1, 2020 Cost Accumulated depreciation and impairment 2020 Opening net book amount as at January 1 Additions Reclassifications - costs (Note) Disposals - costs 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 - 371 178,439 322,195 34,446 - 2,907 4,595) ( 125,706) ( 5,604) ( - 5,096) ( 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 $ 960,622 965,298 566,973) ( 2,092) ( - 141,001) ( - 585,453) ( - 138,804 646,483 $ 11,331,068 $ 646,483 $ 28,697,042 $ - 17,365,974) ( 646,483 $ 11,331,068 $
		1,118,703 $ 749,143) ( 369,560 $ 369,560 $ - 28,986 - 42,721) ( - 355,825 $ 1,147,689 $ 791,864) ( 355,825 $

Note: The reclassifications to investment property and related information is provided in Note 6(11).

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

	Years ended	December31,
	2021	2020
Amount capitalised	361 $	1,302 $
Interest rate	0.03%~0.97%	0.10%~2.00%

• 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 was acquired for self-use and was not pledged to others as collateral.

－ (9) Lease transactions lessee

• A. The Group leases various assets including land, buildings and terminal equipment. Rental contracts are typically made for periods of 4 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)	December31,2021 December31,2020 Bookvalue Bookvalue $ 3,010,401 $ 3,174,580 80,356 92,004 308,720 234,360 3,399,477 $ 3,500,944 $ Years ended December31,	December31,2020
		Bookvalue
		$ 3,174,580 92,004 234,360
		3,500,944 $
	2021 Depreciationexpense $ 164,179 13,431 68,959 246,569 $	2020
		Depreciationexpense
		$ 164,179 13,144 68,638
		245,961 $

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• C. For the years ended December 31, 2021 and 2020, the additions to right-of-use assets were $145,102 and $57,645, 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	Years endedDecember31,	Years endedDecember31,
	2021 $ 41,458 13,672 645 55,775 $	2020
		$ 44,218 18,523 630
		63,371 $

• E. For the years ended December 31, 2021 and 2020, the Group’s total cash outflow for leases were $287,768 and $292,034, respectively.

• F. Variable lease payments

Some of the Group’s lease contracts contain variable lease payment terms that are linked to construction cost index. The Group remeasured and decreased lease liabilities by $116,203, and made a corresponding adjustment to the right-of-use assets. There was no such transaction for the year ended December 31, 2021.

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. There was no such transaction for the year ended December 31, 2021.

(10) 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, 2021 and 2020, the Group recognised rent income in the amounts of $27,351 and $20,677, 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:

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	December31,2021 $ 27,507 90,142 230,349 347,998 $	December31,2020
		$ 26,759 126,002 340,841
		493,602 $

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(11) Investment property, net

At January 1, 2021 Cost Accumulated depreciation and impairment 2021 Opening net book amount as at January 1 Depreciation charge Closing net book amount as at December 31 At December 31, 2021 Cost Accumulated depreciation and impairment 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

Buildings Land and structures Total $ 202,578 $ 29,745 $ 232,323 - 19,405) ( 19,405) ( 202,578 $ 10,340 $ 212,918 $ $ 202,578 $ 10,340 $ 212,918 - 679) ( 679) ( 200,486 $ 9,661 $ 212,239 $ $ 202,578 $ 29,745 $ 232,323 - 20,084) ( 20,084) ( 202,578 $ 9,661 $ 212,239 $ 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 $

Note: The reclassifications from property, plant and equipment and related information is provided in Note 6(8).

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• 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	2021 2020 27,351 $ 20,677 $ 982 $ 1,300 $ Years endedDecember31,

• B. The fair value of the investment property held by the Group as at December 31, 2021 and 2020 were $692,194 and $672,686, respectively, which was revalued by independent valuers. Valuations were made using the comparison method, cost method for land development analysis and the income approach.

(12) Intangible assets

Intangible assets
Software:			Years ended	December	31,
			2021		2020
At January 1
Cost		$	34,869	$		24,697
Accumulated amortisation and impairment	(		13,393)	(		14,576)
		$	21,476	$		10,121
Opening net book amount as at January 1		$	21,476	$		10,121
Additions - acquired separately			30,411			27,065
Disposals - costs	(		12,119)	(		16,893)
Amortisation charge	(		12,461)	(		15,710)
Disposals - accumulated amortisation			12,119			16,893
Closing net book amount as at December 31		$	39,426	$		21,476
At December 31
Cost		$	53,161	$		34,869
Accumulated amortisation and impairment	(		13,735)	(		13,393)
		$	39,426	$		21,476

Details of amortisation on intangible assets are as follows:

Operating costs Administrative expenses	Years ended December31,	Years ended December31,
	2021 12,158 $ 303 12,461 $	2020
		15,700 $ 10
		15,710 $

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(13) Short-term loans

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Type of loans December 31, 2021 Interest rate range Collateral
Bank loans
Unsecured loans $ 2,668,000 0.85% ～ 1.80% None
Procurement unsecured loans 207,834 0.40% ～ 1.35% None
$ 2,875,834
Type of loans December 31, 2020 Interest rate range Collateral
Bank loans
Unsecured loans $ 5,267,100 0.85% ～ 1.40% None
Procurement unsecured loans 12,046 0.42% ～ 1.40% None
$ 5,279,146
Short-term notes and bills payable-term notes and bills payableterm notes and bills payable
December 31, 2021 December 31, 2020
Commercial papers payable $ 3,600,000 $ 2,700,000
Less: Unamortized discount ( 896) ( 595)
$ 3,599,104 $ 2,699,405
Annual interest rates 0.42%～0.72% 0.33%～0.82%
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(14) Short-term notes and bills payable-term notes and bills payableterm notes and bills payable

The above commercial paper payables are guaranteed and issued by domestic bills financial institutions.

(15) Other payables

Other payables
Accrued expenses Construction payment refund Others	December31,2021 1,121,026 $ 41,711 37,348 1,200,085 $	December 31, 2020
		1,235,342 $ 63,755 29,806
		1,328,903 $

(16) Provisions

Provisions
			Warranty		Onerous	contracts			Total
At January 1, 2021		$	512,333		$	780,429		$	1,292,762
Additional provisions			171,842			567,216			739,058
Used during the year	(		68,523)	(		853,939)	(		922,462)
Unused amounts reversed	(		20,737)	(		70,235)	(		90,972)
At December 31, 2021		$	594,915		$	423,471		$	1,018,386

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The analysis of provisions is as follows:

	December31,2021	December31,2021	December31,2020	December31,2020		January1,2020
Realised in one year	$	214,307	$	447,495	$	732,693
Realised after one year		804,079		845,267		884,891
	$	1,018,386	$	1,292,762	$	1,617,584

• 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.

(17) Bonds payable

Bonds payable
		December31,2021			December 31, 2020
The first domestic secured convertible bonds		$	1,806,300		$	1,998,400
Less: Discount on bonds payable	(		45,574)	(		66,099)
			1,760,726			1,932,301
Less: Expiring within one year
(shown as ‘long-term liabilities,
current portion' )			-			-
		$	1,760,726		$	1,932,301

• 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.

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• 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.

Where there is an increase in the number of the Company’s issued shares after the issuance of the bonds, the Company shall adjust the conversion price based on the formula stipulated in the terms of the bonds. As of December 31, 2021, the conversion price was $22 (in dollars).

• 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, 2021, the bonds with a face value of $193,700 have been converted into 8,795 thousand common shares. Refer to Note 6(23) for details.

• 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%.

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- - (18) Long term borrowings and long term liabilities current portion

Borrowing period and repayment term Commercial papers payable Taishin International Bank Borrowing period is from Jun. 21, 2021 to Dec. 20, 2024. Details are set out below. Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 24, 2021 to Dec. 15, 2024. Details are set out below. China Bills Finance Corporation Borrowing period is from Sep. 26, 2021 to Oct. 25, 2024. Details are set out below. International Bills Finance Corporation Borrowing period is from Jun. 22, 2021 to Jun. 21, 2024. Details are set out below. Less: Discount on commercial papers payable 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.	Borrowing period and repayment term	Interest raterange 0.40% 0.59% 0.55% 0.50% Interest raterange 1.18% 1.05%	Collateral December31,2021 None 800,000 $ None 700,000 None 700,000 None 350,000 1,169) ( 2,548,831 $ Collateral December31,2020 None 1,500,000 $ None 700,000 2,200,000
	Borrowing period is from Jun. 22, 2017 to Jun. 22, 2022; principal is repayable in 4 installments beginning in the 4th year. Borrowing period is from Mar. 12, 2018 to Mar. 12, 2023; principal is repayable in 5 installments after 2.5 years.

~46~

Borrowing period and repayment term Interest raterange Commercial papers payable Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 26, 2020 to Dec. 15, 2022. Details are set out below. 0.60% China Bills Finance Corporation Borrowing period is from Jun. 26, 2020 to Oct. 26, 2022. Details are set out below. 0.56% Taishin International Bank Borrowing period is from Jun. 21, 2020 to Dec. 20, 2022. Details are set out below. 0.43% International Bills Finance Corporation Borrowing period is from Jun. 22, 2020 to Jun. 21, 2022. Details are set out below. 0.51% Less: Discount on commercial papers payable	Collateral None None None None	December31,2020
		1,000,000 850,000 800,000 350,000
		1,430) (
		2,998,570
		5,198,570 1,280,000) (
		3,918,570 $

(		1,430)
		2,998,570
		5,198,570
(		1,280,000)
	$	3,918,570

Less: Long-term borrowings, current portion

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 ~ 3 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.

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(19) 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:

December 31, 2021 Long-term notes and accounts receivable 705,134 $ Long-term deferred revenue 36,366 741,500 $	December 31, 2020
	693,347 $ 48,153
	741,500 $

• B. Government grants and interest expenses that should be amortised are recognised under ‘other revenue’ and ‘finance costs’, respectively, for the years ended December 31, 2021 and 2020. For more information, please refer to Notes 6(27) and (29).

(20) 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 13% 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.

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(b)The amounts recognised in the balance sheet are as follows:

		December31,2021		December31,2020
Present value of funded obligations	($	1,813,037)	($	1,751,981)
Fair value of plan assets		1,824,440		1,748,580
Net defined benefit liability	$	11,403	($	3,401)

(c) Movements in net defined benefit liabilities are as follows:

Year ended December 31, 2021 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, 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	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefitliability
	1,751,981) ($ 147,030) ( 25,753) ( 1,924,764) ( - - 36,749 36,749 - 74,978 1,813,037) ($ Present value of defined benefit obligations	1,748,580 $ - 26,654 1,775,234 4,184 - - 4,184 120,000 74,978) ( 1,824,440 $ Fair value of plan assets		3,401) ($ 147,030) ( 901 149,530) ( 4,184 - 36,749 40,933 120,000 - 11,403 $ Net defined benefitliability
	1,666,395) ($ 151,960) ( 24,575) ( 1,842,930) ( - - 30,960 30,960 - 59,989 1,751,981) ($	1,623,965 $ - 29,062 1,653,027 35,542 - - 35,542 120,000 59,989) ( 1,748,580 $		42,430) ($ 151,960) ( 4,487 189,903) ( 35,542 - 30,960 66,502 120,000 - 3,401) ($

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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, 2021 and 2020 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	2021 2020 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:

Because the main actuarial assumption changed, the obligation is affected. The analysis was as follows:	present value of defined bene
Increase 0.25% Decrease 0.25% December 31, 2021 36,466) ($ 37,547 $ December 31, 2020 37,367) ($ 38,514 $ Discountrate Effect on present value of defined benefit obligation	Future salaryincreases
	Increase 0.25% Decrease 0.25% 32,464 $ 31,750) ($ 33,584 $ 32,814) ($

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.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

~50~

• (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2022 amount to $120,000.

• (g) As of December 31, 2021, the weighted average duration of the defined benefit obligations is 9 years. The distribution of the present value of expected defined benefit obligations (within 10 years) is as follows:

For the year ended December 31, 2022 $ 130,811 For the year ended December 31, 2023 1,743,070 For the year ended December 31, 2024 1,765,527 For the year ended December 31, 2025 1,777,490 For the year ended December 31, 2026 1,734,881 For the year ended December 31, 2027 1,716,078 For the year ended December 31, 2028 1,583,099 For the year ended December 31, 2029 1,231,363 For the year ended December 31, 2030 803,472 For the year ended December 31, 2031 542,363

  - 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, 2021 and 2020 were $101,224 and $102,858, respectively.

• (21) Share-based payment

• A. The Group’s share-based payment arrangements were as follows:

Type ofarrangement Cash capital increase reserved for employee preemption	Grant date 2021.02.19	Quantity granted 33,989 thousand shares	Contract Vesting period conditions NA Vested immediately

The share-based payment arrangements above are settled by equity.

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B. The fair value of stock options granted on grant date is measured using the Black-Scholes optionpricing model. Relevant information is as follows:

Type of arrangement Cash capital increase reserved for employee preemption	Grant date 2021.02.19	Stock price 21.29 dollars	Exercise price 17.5 dollars	Expected price volatility 26.61% Note 1	Expected option life 27 days	Expected dividends -	Risk-free interest rate Note 2	Fair value per unit
								3.79 dollars

• Note 1: Expected price volatility rate was estimated by using the stock prices of the most recent period with length of this period approximate to the length of the stock options’ expected life, and the standard deviation of return on the stock during this period.

• Note 2: It was calculated based on the closing price on the valuation date and interest rate of government bonds in the secondary market announced on the website of Taipei Exchange.

• C. The Group’s expenses arising from equity-settled share-based payment transactions recognised during the year ended December 31, 2021 was $128,818. There was no such transaction for the year ended December 31, 2020.

(22) 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, 2021 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 2,522,428 $ 2,018,556 2,827,237 7,368,221 $ 51,838 $ 32,400 859,084 213,682 1,157,004 $	More than 12 months 257,715 $ - - 257,715 $ 10,307,752 $ - - 798,299 11,106,051 $	Total
			2,780,143 $ 2,018,556 2,827,237
			7,625,936 $
			10,359,590 $ 32,400 859,084 1,011,981
			12,263,055 $

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==> picture [463 x 263] intentionally omitted <==

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

Less than More than
12 months 12 months Total
December 31, 2020
Assets
Contract assets (including related parties) $ 4,519,978 $ 3,527 $ 4,523,505
-
Accounts receivable, net 1,189,947 1,189,947
(including related parties)
Inventories, net 2,349,362 - 2,349,362
$ 8,059,287 $ 3,527 $ 8,062,814
Liabilities
Contract liabilities (including related parties) $ 456,751 $ 6,242,039 $ 6,698,790
-
Notes payable (including related parties) 119,692 119,692
-
Accounts payable 1,478,280 1,478,280
Provision for liabilities 447,278 841,400 1,288,678
$ 2,502,001 $ 7,083,439 $ 9,585,440
----- End of picture text -----

(23) Common stock

• A. As of December 31, 2021, 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 $9,317,873, consisting of 931,787 thousand shares of ordinary stock (including private placement of 60 million shares), 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	2021 473,056 450,000 8,731 931,787	Shares in thousands 2020
		472,992 - 64
		473,056

• B. For the year ended December 31, 2021, the Company’s bonds were converted into 8,731 thousand ordinary shares, of which 8,586 thousand shares and 145 thousand shares were conducted by issuing new shares with effective dates on August 11, 2021 and November 10, 2021, respectively, as approved by the Board of Directors. The registrations have been completed. For the year ended December 31, 2020, the Company’s bonds were converted into 64 thousand ordinary shares by issuing new shares with effective date on February 22, 2021, as approved by the Board of Directors. The registration has been completed.

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• 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. The total amount raised was $7.875 billion. The effective date of capital increase was on March 26, 2021 and the registration has been completed.

• The abovementioned capital increase was subscribed by the Company’s legal entity director, YueLi Investment Corporation, in the amount of $35,324, equivalent to 2,019 thousand shares. In addition, the government related parties, Financing Investment Venture Capital, National Defense Industrial Development Foundation, and the management committee of Yao Hua Glass Co., Ltd. participated in the capital increase in the amounts of $1,750,000, $500,000 and $500,000, equivalent to 100,000 thousand shares, 28,571 thousand shares, and 28,571 thousand shares, respectively.

• 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 Yao Hua 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.

(24) 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.

~54~

Share Share premium options Total At January 1 995 $ 96,076 $ 97,071 $ Cash capital increase 3,495,877 128,818) ( 3,367,059 Share-based payment transactions - 128,818 128,818 Conversion of convertible bonds 109,200 9,235) ( 99,965 At December 31 3,606,072 $ 86,841 $ 3,692,913 $ 2021 Difference between consideration and carrying Share Share amount of subsidiaries premium options acquired ordisposed Total At January 1 1,329,550 $ - $ 9,248 $ 1,338,798 $ Capital surplus used to offset accumulated deficits 1,329,550) ( - 9,248) ( 1,338,798) ( Due to recognition of equity component of convertible bonds issued - 96,153 - 96,153 Conversion of convertible bonds 995 77) ( - 918 At December 31 995 $ 96,076 $ - $ 97,071 $ 2020		Total

• B. Please refer to Note 6(17) 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 used ‘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(25) for the information of retained earnings.

(25) 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.

~55~

• 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 issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the balance of the reserve exceeds 25% of the Company’s paid-in capital.

• 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, 2019 was resolved by the stockholders at the regular stockholders’ meeting on June 17, 2020. Dividends will not be distributed to stockholders as there were still accumulated deficits to be covered after offsetting accumulated deficits with capital surplus. Additionally, the deficit will be covered by using the ‘capital surplus, additional paid-in capital and difference between consideration and carrying amount of subsidiaries acquired or disposed’ totalling $1,338,798.

Also, refer to Note 6(24) for information on capital surplus.

The proposal for deficit compensation for the year ended December 31, 2020 was resolved by the stockholders at the regular stockholders’ meeting on August 25, 2021. Dividends will not be distributed to stockholders as there were still accumulated deficits to be covered.

On March 4, 2022, the Board of Directors has proposed the deficit compensation for year 2021.

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(26) Operating revenue

Operating revenue
		Years ended	December	31,
		2021		2020
Revenue from contracts with customers	$	18,931,386	$	25,191,199
Others - ship rental revenue		182,043		105,430
	$	19,113,429	$	25,296,629

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:
			Years ended December				31,
		2021					2020
Construction of ships and vessels
Shipbuilding		$			5,976,755 $		7,374,458
Vessel construction				11,363,002			15,327,666
				17,339,757			22,702,124
All other segments
Ship/vessel repair					822,077		1,142,126
Machinery building					473,390		993,002
Anti-corrosion coating					256,299		264,877
Others					39,863		89,070
					1,591,629		2,489,075
		$		18,931,386 $			25,191,199
Contract assets and liabilities
The Group has recognised the following revenue-related contract assets and							liabilities:
	December31,2021			December31,2020			January1,2020
Contract assets	$	2,392,962	$		4,622,917	$	4,910,129
Contract assets - related parties		904,323			363,249		1,083,531
		3,297,285			4,986,166		5,993,660
Less: Loss allowance	(	191,442)	(		192,290)	(	194,713)
	$	3,105,843	$		4,793,876	$	5,798,947
Contract liabilities	$	10,354,225	$		5,209,594	$	8,670,827
Contract liabilities - related parties		33,621			1,489,197		36,982
	$	10,387,846	$		6,698,791	$	8,707,809

• B. Contract assets and liabilities

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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 $5,711,073 and $7,651,056 was recognised as revenue for the years ended December 31, 2021 and 2020, respectively.

• C. As of December 31, 2021, the total transaction price allocated to unfulfilled contract obligations was $44,584,837 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 March 2022 to October 2027.

(27) Other income

Other income
Government grant revenue (Note) Rental revenue Indemnity revenue Others	2021 2020 146,757 $ 381,680 $ 27,351 20,677 19,642 13,012 26,117 16,559 219,867 $ 431,928 $ Years endedDecember31,
		381,680 $ 20,677 13,012 16,559
		431,928 $

Note: The Group recognised income of $115,739 and $354,066, respectively, 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 (COVID19) Handled by Industrial Development Bureau the Ministry of Economic Affairs.

(28) Other gains and losses

Other gains and losses
		Years ended		December	31,
		2021			2020
Foreign exchange (losses) gains	($	37,162)		$		14,372
Gain on financial assets and liabilities		19,055				12,751
at fair value through profit or loss
Losses on disposal of property, plant	(	5,715)	(			2,197)
and equipment
Other losses	(	40,312)	(			34,022)
	($	64,134)	($			9,096)

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(29) Finance costs

(30) (31)

Expenses by nature Employee benefit expense 2021 2020 Interest expense: Bank loans 107,135 $ 100,145 $ Amortisation on lease liabilities 41,458 44,218 Amortisation on convertible bonds 14,769 12,979 Expenses amortised from government grants payable 11,787 11,590 Less: Capitalisation of qualifying assets 73,949) ( 68,021) ( 101,200 $ 100,911 $ Years endedDecember31, 2021 2020 Change in inventory of finished goods and work in process 70,394) ($ 2,361,305 $ Direct materials 7,752,754 12,440,589 Employee benefit expense 3,757,749 3,582,929 Depreciation and amortisation charges 913,299 847,124 Outsourcing fees 3,802,637 4,625,812 Professional service fees 1,767,741 1,820,399 Other expenses 1,192,557 1,525,866 Operating costs and expenses 19,116,343 $ 27,204,024 $ Years endedDecember31, 2021 2020 Wages and salaries 3,029,725 $ 3,006,317 $ Labor and health insurance fees 283,850 258,825 Pension cost 247,353 250,331 Directors’ remuneration 3,550 3,470 Employee stock option 128,818 - Other personnel expenses 64,453 63,986 3,757,749 $ 3,582,929 $ Years endedDecember31,

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• 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, 2021 and 2020.

The Board of Directors resolved not to appropriate employees’ compensation and directors’ renumeration as a result of the operating accumulated deficit for the years ended December 31, 2021 and 2020.

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.

(32) Income tax expense

• A. Income tax expense

• (a) Components of income tax expense:

Components of income tax expense:
			Years ended		December31,
			2021		2020
Current tax:
Current tax on profits for the year	($		816)		$	3,145
Tax on undistributed surplus earnings			-			6
Over provision of income tax
in prior year	(		54)	(		212)
Total current tax	(		870)			2,939
Deferred tax:
Origination and reversal of
temporary differences			1,632	(		1,602)
Income tax expense		$	762		$	1,337

• (b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

follows:
Remeasurement of defined benefit obligations	Years endedDecember31,
	2021 8,187 $	2020
		13,300 $

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B. Reconciliation between income tax expense and accounting profit:

			Years ended	Years ended	December31,	December31,
			2021			2020
Tax calculated based on loss before		$	1,910	($		319,750)
tax and statutory tax rate
Tax exempt income by tax regulation	(		24,986)	(		72,747)
Effects from items disallowed by tax			10,794			4,841
regulation
Taxable loss not recognised as			13,098			389,199
deferred tax assets
Tax on undistributed surplus earnings			-			6
Over provision of income tax
in prior year	(		54)	(		212)
Income tax expense		$	762		$	1,337

C. Amounts of deferred tax assets or liabilities as a result of temporary difference and tax losses are as follows:

as follows:
						2021
							Recognised
				Recognised				in other
				in	profit or	comprehensive
		January1			loss			income		December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss		$	156,086	($	71,392)		$	-		$	84,694
Unrealized warranty liability			102,467		16,516			-			118,983
Unused compensated absences			64,664	(	1,837)			-			62,827
payable
Allowance for doubtful accounts			61,916		1,402			-			63,318
Others			15,218		19,580	(		8,187)			26,611
Tax losses			1,132,818		34,737			-			1,167,555
			1,533,169	(	994)	(		8,187)			1,523,988
Deferred tax liabilities:
Unrealised land value	(		1,324,697)		-			-	(		1,324,697)
incremental reserve
Others			-	(	638)			-	(		638)
	(		1,324,697)	(	638)			-	(		1,325,335)
Total		$	208,472	($	1,632)	($		8,187)		$	198,653

~61~

2020

								Recognised	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

D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as follows:

December 31, 2021

Year incurred 2015 2016 2017 2018 2019 2020 2021	Amount filed/assessed Assessed Assessed Assessed Assessed Assessed Amount filed Estimated filing amount	Unused amount 671,021 $ 1,190,142 6,700,185 2,577,518 2,657,346 2,305,136 236,855	Unrecognised deferred tax assets - $ 2,723,570 2,897,256 2,577,518 2,657,346 2,305,136 236,855	Expiry year
				2025 2026 2027 2028 2029 2030 2031

~62~

December 31, 2020

Year incurred 2015 2016 2017 2018 2019 2020	Amountfiled/ assessed Assessed Assessed Assessed Assessed Amount filed Estimated filing amount	Unused amount 671,021 $ 1,190,142 6,700,185 2,577,518 2,657,346 2,296,459	Unrecognised deferred taxassets - $ - 2,897,256 2,577,518 2,657,346 2,296,459	Expiry year
				2025 2026 2027 2028 2029 2030

E. The Company’s income tax returns through 2019 have been assessed and approved by the Tax Authority. As of March 4, 2022, there was no administrative remedies.

(33) Earnings (losses) per share

Year ended December 31, 2021

			Weigthted average
			number of ordinary	Earnings per
		Amount	shares outstanding		share
		aftertax	(sharesinthousands)		(indollars)
Basic earnings per share
Profit attributable to ordinary shareholders	$	13,235	824,157	$	0.02
		YearendedDecember31,		2020
			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	($	1,600,087)	472,993	($	3.38)

The Group’s convertible corporate bonds had anti-dilution effect for the years ended December 31, 2021 and 2020; thus, they were not included in the calculation of diluted losses per share.

~63~

(34) Business combinations

• A. On March 18, 2021, with reporting to the Board of Directors for future reference, the Group, AND International Co., Ltd., AnEnergy Co., Ltd. and Amita Technologies Inc. jointly established CSBC Power Technology Co., Ltd.. The Group is the single largest shareholder with 30.67% of voting power from participating in the establishment and capital increase of the investee in an accumulated investment amount of $23,000. Given that the number and distribution of voting shares held by other shareholders are not widely dispersed, and the Group has less than half of board seats, which indicates that the Group has no current ability to direct the relevant activities, the Group’s management considers that it has no control, but only has significant influence, over the investee, and included the investee as an associate.

• B. On August 12, 2021, the Group acquired an additional 29.33% equity interest in CSBC Power Technology Co., Ltd. for a cash consideration of $22,000. Thus, the Group cumulatively held a 60% equity interest and obtained control over CSBC Power Technology Co., Ltd., which gave the Group the ability to direct the investee’s operations and to strive for more policy-driven business opportunities.

• C. The following table summarises the consideration paid for CSBC Power Technology Co., Ltd. and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the information on non-controlling interest at the acquisition date:

as the information on non-controlling interest at the acquisition date:
Purchase consideration Cash paid Fair value of equity interest in CSBC Power Technology Co., Ltd. held before the business combination Non-controlling interests Fair value of the identifiable assets acquired and liabilities assumed Cash Total identifiable net assets	August 12, 2021
	22,000 $ 23,000 30,000
	75,000 $
	75,000
	75,000 $

• D. CSBC Power Technology Co., Ltd. is a start-up business incorporated on March 15, 2021, and thus has not yet generated any significant operating profit or incurred loss.

~64~

(35) Supplemental cash flow information

A. Investing activities with partial cash payments:

			Years ended	December	December	31,
			2021			2020
Purchase of property, plant and		$	2,177,413		$	965,298
equipment
Add：Beginning balance of payable			63,755			45,905
on equipment
Less：Ending balance of payable
on equipment	(		41,711)	(		63,755)
Cash paid on purchase of
property, plant and
equipment during the year		$	2,199,457		$	947,448

B. Investment and financing activities with no cash flow effects:

			Years ended	December	December	31,
			2021			2020
Interest expense amortised from
government grants		$	11,787		$	11,590
Increase in right-of-use assets		$	145,102		$	57,645
Less: Decrease in lease liabilities	(		145,102)	(		57,645)
		$	-		$	-
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

~65~

(36) Changes in liabilities from financing activities

Short-term borrowings Short-term notes and bills payable Corporate bonds payable Long-term borrowings (Note) 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 Corporate bonds payable Long-term borrowings (Note) Lease liability Long-term notes and accounts payable Long-term deferred revenue Guarantee deposits received Other non-current liabilities, others	Changes in cash flow from Changes in January1 financingactivities non-cash items 5,279,146 $ 2,403,312) ($ - $ 2,699,405 900,000 301) ( 1,932,301 - 171,575) ( 5,198,570 2,650,000) ( 261 3,541,292 231,993) ( 145,102 693,347 - 11,787 193,391 - 11,787) ( 283,392 4,039 - 20,128 12,171) ( - 19,840,972 $ 4,393,437) ($ 26,513) ($ 2021 2020	December31 2,875,834 $ 3,599,104 1,760,726 2,548,831 3,454,401 705,134 181,604 287,431 7,957
		15,421,022 $
	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 $

Note: Including current portion.

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

CPC Corporation, Taiwan China Steel Corporation China Steel Express Corporation China Steel Machinery Corporation China Steel Structure Co., Ltd. Sing Da Marine Structure Corporation Steel Castle Technology Corp. Taiwan International Windpower Training Corporation Ltd. CSBC Power Technology Co., Ltd.

Taiwan Offshore Wind Farm Services Corporation Fuhai Wind Farm Corporation CSBC-DEME Wind Engineering Co., Ltd. Financing Investment Venture Capital Yao Hua Glass Co.,Ltd. Management Committee National Defense Industrial Development Foundation

Relationship with the Group

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 Subsidiary of the Company’s legal entity director Associate

Associate. However, it has been included as a consolidated entity since obtaining control over the investee on August 12, 2021

Associate Associate Joint venture Government related entity Government related entity Government related entity

(2) Significant related party transactions and balances

A. Operating revenue

nificant related party transactions and balances Operating revenue
Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd. 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 China Steel Express Corporation China Steel Structure Co., Ltd.	Years endedDecember31,
	2021 4,324,686 $ 108,427 100,415 9,354 - - 4,542,882 $	2020
		302,453 $ 34,436 123,236 11,491 214,075 279
		685,970 $

~67~

• (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) 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 expected delivery of the vessel is in October 2022. Please refer to item C and E for further information.

• (c) 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.

B. Purchases of goods

C.

The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties. Contract assets 2021 2020 Purchases of goods: Key management: Legal entity director China Steel Corporation 650,261 $ 883,684 $ CPC Corporation, Taiwan 70,015 99,785 Purchases of services: Key management: Subsidiary of the Company’s legal entity director Steel Castle Technology Corp. 26,241 - 746,517 $ 983,469 $ Years ended December 31, December31,2021 December31,2020 Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd. 511,591 $ - $ Key management: Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation 202,542 173,059 Associates : Fuhai Wind Farm Corporation (Note) 190,190 190,190 904,323 363,249 Less: Loss allowance 190,468) ( 190,250) ( 713,855 $ 172,999 $

~68~

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$3.2 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

E.	Prepaid accounts December31,2021 December31,2020 Accounts receivable : Key management: Legal entity director CPC Corporation, Taiwan 46,127 $ 20,295 $ Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation 26,484 3,360 China Steel Machinery Corporation - 178 72,611 23,833 Other receivables : Key management: Legal entity director China Steel Corporation 117 15,404 Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation - 6,541 117 21,945 72,728 $ 45,778 $ December31,2021 December31,2020 Key management: Legal entity director China Steel Corporation 8,966 $ 299,399 $ CPC Corporation, Taiwan 2,990 15,280 11,956 $ 314,679 $	Prepaid accounts December31,2021 December31,2020 Accounts receivable : Key management: Legal entity director CPC Corporation, Taiwan 46,127 $ 20,295 $ Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation 26,484 3,360 China Steel Machinery Corporation - 178 72,611 23,833 Other receivables : Key management: Legal entity director China Steel Corporation 117 15,404 Subsidiary of the Company’s legal entity director Sing Da Marine Structure Corporation - 6,541 117 21,945 72,728 $ 45,778 $ December31,2021 December31,2020 Key management: Legal entity director China Steel Corporation 8,966 $ 299,399 $ CPC Corporation, Taiwan 2,990 15,280 11,956 $ 314,679 $
		299,399 $ 15,280
		314,679 $

~69~

F. Contract liabilities

Contract liabilities
Payables to related parties Key management: Legal entity director CPC Corporation, Taiwan Other related parties: Joint ventures CSBC-DEME Wind Engineering Co., Ltd. Notes payable: Key management: Legal entity director China Steel Corporation Accounts payable: Key management: Legal entity director CPC Corporation, Taiwan	December31,2021 33,621 $ - 33,621 $ December31,2021 - $ 472 $	December31,2020 - $ 1,489,197 1,489,197 $
		December31,2020 111,592 $
		- $

G. Payables to related parties

• H. Acquisition of financial assets

• (a) Information on the Company’s joint investment in, and cash capital increase of, CSBC-DEME Wind Engineering Co., Ltd. is provided in Note 6(7).

• (b) Information on the Company’s acquisition of shares in CSBC Power Technology Co., Ltd. is provided in Note 6(34).

I. Others

• (a) Details on capital increase from the related parties are provided in Note 6(23).

• (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.

~70~

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.

• (c) Information on Significant Contingent Liabilities and Unrecognised Contract Commitments is provided in Note 9.

(3) Key management compensation

			Years ended	December31,	December31,
			2021		2020
Salaries and other short-term		$	22,633	$	24,451
employee benefits
Post-employment benefits			2,245		2,622
Share-based payments			1,216		-
		$	26,094	$	27,073
PLEDGED ASSETS
The Group’s assets pledged as collateral are as follows:
		Bookvalue
Pledged asset	December31,2021		December31,2020		Purpose
Restricted bank deposits					Guaranteed by issuance
(shown as ‘‘Current financial					of letter of credit
assets at amortised cost’’)	$	16,841	$	-

8. PLEDGED ASSETS

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:	of credit for import of materials is as follows:	of credit for import of materials is as follows:	of credit for import of materials is as follows:
		December 31, 2021	December	31,2020
Balance of unused letters of credit	$	1,578,923	$	2,359,193
(2)The amounts of unfulfilled contract obligations of the Group’s contracts are as follows:
		December31,2021	December	31,2020
Unfulfilled customer contract obligations	$	44,584,837	$	58,912,772
(3)The guaranteed credit by banks for the Group’s construction projects is			as follows:
		December31,2021	December	31,2020
Guaranteed credit by banks	$	12,455,404	$	13,368,939
Refer to Note 7(2) I(b) for further information.

~71~

(4) The amount of the Group’s purchase contracts and outsourcing construction contracts to be paid is as

follows:
		December 31, 2021		December 31, 2020
Purchase contracts to be paid	$	11,002,939	$	12,339,833
Outsourcing construction contracts
to be paid		2,182,244		3,431,104
	$	13,185,183	$	15,770,937

• (5) As of December 31, 2021 and 2020, the amounts of guarantee notes issued by the Group for the bank borrowings were $49.9 billion and $47.81 billion, 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.

After the Taiwan Taipei District Court and Taiwan High Court ruled in favour of the Group on March 24, 2020 and August 17, 2021, respectively, Fuhai Corporation filed a third instance appeal. The case is currently pending with the Supreme Court.

~72~

• (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 Group reached a settlement with the third party in October 2021 where the insurance company is liable for all compensation payments and the Group has no further obligations.

• (8) Uni-wagon marine Co., Ltd. purchased a marine hull insurance for its vessel -Natchan Rera from Tokio Marine Newa Insurance Co., Ltd.. In January 2016, the hull was damaged because of unknown reasons during a repair made by the Group. Tokio Marine Newa Insurance Co., Ltd. and Uni-wagon marine Co., Ltd. requested compensation payments of NT$25 million and NT$15 million, respectively. On May 22, 2019, the Taiwan Keelung District Court rendered a decision against the Group. The Group filed a second instance appeal. On August 25, 2021, the High Court dismissed the appeal. According to the Group’s designated lawyer, the reasons of the second instance ruling contains several major flaws and is in contravention of the laws and regulations. The Group has filed a third instance appeal for remedy. Thus, the original ruling has not yet been determined and the amount of loss to the Group cannot be ascertained.

Since the aforementioned compensation claim is covered by the Company’s ship repairer liability insurance, the second instance ruling, which ruled against the Company and held the Company liable for compensation, had no material impact on the Company’s operations.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

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	December31,2021 70%	December31,2020
		87%

~73~

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at amortised cost Cash and cash equivalents Financial assets at amortised cost 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	December31,2021 21,044 $ 2,731,884 $ 16,841 2,047,312 10,745 167,059 4,973,841 $ December31,2021 7,045 $ 2,875,834 $ 3,599,104 32,424 1,050,437 1,200,085 1,760,726 2,548,831 705,134 287,431 14,060,006 $ 3,454,401 $	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 $

~74~

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 cross currency swap 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. Cross currency swap 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		December31,2021	December31,2021
		Foreign Currency (inthousands) 95,580 $ 208 5,870	ExchangeRate 27.63 27.73 31.52	BookValue (NTD)
				2,640,875 $ 5,768 185,022
Monetaryitems
USD:NTD Financial liabilities
Monetaryitems
USD:NTD EUR:NTD

~75~

		December31,2020	December31,2020
		Foreign Currency
		(inthousands) ExchangeRate		Book	Value (NTD)
Financialassets
Monetary items
USD:NTD	$	59,838	28.43	$	1,701,194
EUR:NTD		9,238	34.82		321,667
Financial liabilities
Monetary items
USD:NTD		93	28.53		2,653
EUR:NTD		253	35.22		8,911

• 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:

==> picture [420 x 83] intentionally omitted <==

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

Years ended December 31,
If NTD had appreciated/
depreciated by 1% against tax 2021 2020
Increase (decrease) in net
profit (loss) after tax $ 19,601 $ 16,090
----- End of picture text -----

iv.The net exchange (loss) gain arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2021 and 2020, amounted to ($37,162) and $14,372, 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, 2021 and 2020 would have increased/decreased by $6,375 and $13,000, respectively.

~76~

(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.

Cash and cash equivalents, financial assets at fair value through profit or loss and financial assets at amortised cost

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, financial assets at fair value through profit or loss and financial assets at amortised cost.

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, 2021 and 2020, the expected loss rates of not past due accounts receivable and contract assets were both 1% and 0.04%.

As of December 31, 2020, the Group’s receivables collected upon the delivery of ships amounted to $440,523, which arose from a negotiation conducted with the counterparties to amend the terms of some installment receivables. The Group assesses that there was no material loss incurred from the amendment of the terms. The receivables have been collected before the delivery of ships in October 2021.

As of December 31, 2020, the Group’s past due construction receivables amounted to $796,040, because the counterparty failed to fulfil the mutual agreements and the payments were still under negotiation. As of December 31, 2021, both parties agreed to modify the payment schedule of the payment.

~77~

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, 2021 and 2020.

• v. Movements in relation to the Group applying the simplified approach to provide loss allowance for accounts receivable and contract assets are as follows:

					2021
			Accounts		Contract
			receivable		assets			Total
At January 1		$	317,653	$	192,290		$	509,943
Provision for (reversal of) impairment loss			8,069	(	848)			7,221
At December 31		$	325,722	$	191,442		$	517,164
					2020
			Accounts		Contract
			receivable		assets			Total
At January 1		$	319,088	$	194,713		$	513,801
Reversal of impairment loss	(		1,435)	(	2,423)	(		3,858)
At December 31		$	317,653	$	192,290		$	509,943

For the years ended December 31, 2021 and 2020, the expected credit (losses) gains arising from accounts receivable and contract assets generated from customers’ contracts amounted to ($7,221) and $3,858, respectively.

• vi.The Company’s receivables and contract assets are significantly concentrated on a counterparty. As of December 31, 2021 and 2020, the balances of receivables and contract assets from the counterparty amounted to $1,602,540 and $3,065,326, respectively. The credit risk concentration occurs when the ability of the counterparty to meet its contractual obligations is affected by changes in economic or other conditions.

(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.

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December 31, 2021:

December 31, 2021:
Non-derivative financial liabilities: Short-term borrowings Short-term notes payable Payables Lease liability Corporate bonds payable Long-term borrowings Derivative financial liabilities: Options embedded in convertible bonds December 31, 2020: Non-derivative financial liabilities: Short-term borrowings Short-term notes payable Payables Lease liability Corporate bonds payable Long-term borrowings (Note)		Less than 1year		Between 1 and 2years - $ - 710,287 273,590 - - 983,877 $ - $ Between 1 and 2years		Between 2 and5 years		Over5 years
		2,876,211 $ 3,600,000 2,586,462 273,379 - - 9,336,052 $ - $ Less than 1year				- $ - 463,325 759,760 1,806,300 2,550,000 5,579,385 $ 7,045 $ Between 2 and5 years		- $ - 154,300 2,586,887 - - 2,741,187 $ - $ Over5 years
		5,280,120 $ 2,700,000 3,355,231 272,881 - 1,305,646 12,913,878 $		- $ - 617,629 236,772 - 3,787,313 4,641,714 $		- $ - 475,749 697,980 1,998,400 140,455 3,312,584 $		- $ - 156,672 2,810,811 - - 2,967,483 $

Note: Including long-term borrowings, current portion.

==> picture [427 x 45] intentionally omitted <==

As of December 31, 2020, the principal and total interest of long-term borrowings expiring ‘less than 1 year’, ‘between 1 and 2 year(s)’ and ‘between 2 and 5 years’ amounted to $1,560,000 and $18,300, respectively. The Group has made an early repayment of principal and interest amounting to $1,561,512 in April 2021. Additionally, the Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis to be significantly earlier, nor expect the actual cash flow amount to be significantly different.

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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(11).

• C. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, Financial assets at amortised cost, 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(including related parties), 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, 2021 and 2020 is as follows:

• (a) The related information of natures of the assets and liabilities is as follows:

  • December 31, 2021:

December 31, 2021:
Assets Recurring fair value measurements Financial assets at fair value through profit or loss Cross currency swap 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
		- $ - $		21,044 $ - $		- $ 7,045 $	21,044 $ 7,045 $

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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

• (b) The methods and assumptions the Group used to measure fair value are as follows:

  • i. Derivative financial instruments - cross currency swap contracts are valued by adopting the valuation information provided by the counterparty bank. The counterparty uses the discounted cash flow method to estimate the future cash flows based on observable exchange rates at the end of the year and contract exchange/interest rates and discount separately at discount rates that reflect the credit risk of each counterparty.

  • ii. 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, 2021 and 2020, there was no transfer between Level 1 and Level 2.

• F. The following chart is the movement of Level 3 for the years ended December 31, 2021 and 2020:

			2021			2020
		Derivative instrument			Derivative instrument
At January 1	$		5,995	$		-
Losses recognised in profit or loss
Recorded as non-operating income and expenses			1,989	(		11,749)
Issued in the year			-			17,754
Converted in the year	(		939)	(		10)
At December 31	$		7,045	$		5,995
Movement of unrealised loss in profit or loss of
liabilities held as at December 31, 2021 and 2020
(Note)	$		1,989	($		11,749)

Note: Recorded as non-operating income and expense.

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• G. For the years ended December 31, 2021 and 2020, 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:

value measurement:
Hybrid instrument: Hybrid instrument: Options embedded in convertible bonds Options embedded in convertible bonds	Fair value at December 31, 2021 $7,045 Fair value at December31,2020 $5,995	Valuation technique Valuation technique Binary tree convertible bond valuation model Binary tree convertible bond valuation model	Input Stock price Volatility Risk discount rate Input Stock price Volatility Risk discount rate	Range (weighted average)
				21.95 dollars 43.88% 0.5526% Range (weighted average)
				28.45 dollars 39.14% 0.5471%

The lower the stock price, the lower the redemption value; the higher the volatility, the higher the redemption value; the higher the risk discount rate, the lower the redemption value. Thus, the redemption value for the year decreased (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 lower the stock price, the higher the put option value; the higher the volatility, the lower the put option value; the higher the risk discount rate, the higher the put option value. Thus, the put option value for the year increased (put options are financial liabilities of the issue company).

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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, 2021 Recognised in profit or loss Input Change Favourable change Unfavourable change Financial liabilities Hybrid instrument Stock price volatility ±5% $ 181 ($ 1,626) 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)

(4) Other information

Due to the COVID-19 pandemic and various epidemic prevention measures imposed by the government, the Group has conducted entry and exit registration control and other measures to reduce contact between employees and risk of cross infection in compliance with the relevant measures announced by the Central Epidemic Command Centre and the relevant epidemic prevention regulations of the Communicable Disease Control Act. The pandemic had no significant impact on the Group’s overall operations and financial position.

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.

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• 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(2) 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.

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 and repairing of ships and vessels. As other businesses, mainly including machinery engineering, leases 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, 2021 and 2020 is as follows:

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Year ended December 31, 2021

Revenue from external customers Inter-segment revenue Total segment revenue Segment profit Undistributed amount: Operating expenses Depreciation and amortization Interest income Interest expense Income tax expense 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)		Construction of ships andvessels		Ship / vessel repairs		All other segments	Adjustments and eliminations (Note 1)		Total
		17,339,757 $ - 17,339,757 $ 271,292 $		822,077 $ - 822,077 $ 223,249 $		951,595 $ 148,000 1,099,595 $ 60,678 $	- $ 148,000) ( 148,000) ($ - $	19,113,429 $ - 19,113,429 $ 555,219 $ 539,317) ($ 18,816) ( 1,249 101,200) ( 762) ( 42,553) ( 701,399) ($ 43,721,511 $ 1,466,880 $ 1,433,233 $ 30,457,971 $

~85~

Year ended December 31, 2020

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 expense 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)		Construction of ships andvessels		Ship / vessel repairs		All other segments	Adjustments and eliminations (Note 1)		Total
	22,702,124 $ - 22,702,124 $ 1,513,807) ($			1,142,127 $ - 1,142,127 $ 200,703 $	1,452,378 $ 79,246 1,531,624 $ 96,370) ($		- $ 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 $

• 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,
			2021		2020
Segment profit (loss)		$	494,541	($	1,313,104)
Other segment profit			60,678	(	96,370)
Total segments			555,219	(	1,409,474)
Operating expenses	(		558,133)	(	497,921)
Non-operating income and expenses			13,229		308,645
Profit (loss) before tax and discontinued
operations		$	10,315	($	1,598,750)

(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	2021 2020 17,339,757 $ 22,702,124 $ 822,077 1,142,126 473,390 993,002 256,299 264,877 221,906 194,500 19,113,429 $ 25,296,629 $ Years endedDecember31,	2021 2020 17,339,757 $ 22,702,124 $ 822,077 1,142,126 473,390 993,002 256,299 264,877 221,906 194,500 19,113,429 $ 25,296,629 $ Years endedDecember31,
		22,702,124 $ 1,142,126 993,002 264,877 194,500
		25,296,629 $

(5) Geographical information

Revenue information by geographic area:

Taiwan Liberia Others Total	Revenue Non-current assets Revenue Non-current assets 17,346,116 $ 16,499,639 $ 17,843,368 $ 15,066,406 $ 1,419,012 - 7,468,862 - 348,301 - 15,601) ( - 19,113,429 $ 16,499,639 $ 25,296,629 $ 15,066,406 $ Year ended and as of Year ended and as of December31,2021 December31,2020	Year ended and as of December31,2020	Year ended and as of December31,2020
	Revenue 17,346,116 $ 1,419,012 348,301 19,113,429 $		Non-current assets
			15,066,406 $ - -
			15,066,406 $

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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, 2021

Clients Client 5 Client H Client D Clients Client 5 Client 4 Client D	Sales amount Department 7,410,960 $ Construction of ships and vessels 4,324,686 Construction of ships and vessels 3,738,150 Construction of ships and vessels 15,473,796 $ 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 $ YearendedDecember31,2020

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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, 2021

Investor	Marketable securities	General ledger account	Counterparty	Relationship with the investor	Balance as at January1,2021	Balance as at January1,2021	Addition	Addition		Disposal	Disposal		Balance as at December 31,2021	Balance as at December 31,2021
					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	11,106,061	$ 1,048,522	4,545,454	$ 406,895	-	$ -	$ -	$ -	15,651,515	$ 1,455,417

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, 2021

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 Corporation CPC Corporation, Taiwan	Other related parties Corporate Director Corporate Director	Sale Purchases Sale	4,324,686) ($ 650,261 (108,427)	22.9% 9.9% 0.6%	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	Note 1 Note 1 Note 1	- $ - 46,127	- - 5.0%	Note 2 Note 3 Note 4

Note 1: Based on the contract, the payment terms is the same as in general transactions.

Note 2: The contract assets from CSBC-DEME Wind Engineering Co., Ltd. amounted to $511,591.

Note 3: The prepayments to China Steel Corporation amounted to $8,966 and other receivables amounted to $117. Note 4: The prepayments to CPC Corporation, Taiwan amounted to $2,990 and contract liabilities amounted to $33,621.

Table 2, Page 1

Table 3

CSBC CORPORATION TAIWAN

- Significant inter company transactions during the reporting periods

Year ended December 31, 2021

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets (Note3)
0 0 0 0 0	CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan CSBC Corporation, Taiwan	BLUE ACE CORPORATION BLUE ACE CORPORATION CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd	Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary	Outsourcing expenses Accounts payable Outsourcing expenses Construction in progress Accounts payable	70,649 $ 1,922 50,549 61,841 3,757	Note 4 Note 4 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, 2021

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	31,2021	Net profit (loss) of the investee for the year ended December 31, 2021	Investment income(loss) recognised by the Company for the year ended December 31,2021	Footnote
				Balance as at December 31,2021	Balance as at December 31,2020	Number of shares	Ownership (%)	Book value
CSBC Corporation, Taiwan 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. CSBC Power Technology 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 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. Manufacturing of ships and its components 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	1,549,500 $ 125,000 45,000 12,000 4,000 178,156 25,000 304	1,099,500 $ 125,000 - 12,000 4,000 178,156 25,000 304	15,651,515 14,832,076 4,500,000 1,200,000 400,000 15,000,000 - 100	50.00 100.00 60.00 12.00 40.00 37.97 100.00 100.00	1,455,417 $ 178,715 39,476 11,463 - - 30,062 27	86,211) ($ 4,277 9,206) ( 4,602 8,932) ( 47,888) ( 9,334 80) (	43,105) ($ 4,277 5,524) ( 552 - - - -	Note 1 Note 1 Note 1 Note 1 Note 2 Note 2

Note 1 ： Please refer to Note 6(7) 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, 2021

Name of major shareholders	Number of shares held	Shares
		Ownership (%)
Financing Investment Venture Capital National Defense Industrial Development Foundation Ministry of Economic Affairs, R.O.C. Yao Hua Glass Co., Ltd. Management Committee	136,032,305 105,070,366 64,603,733 53,571,428	14.60% 11.27% 6.93% 5.75%

• 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 931,787,296 shares= 931,787,296 common shares+0 preference shares.

Table 5, Page 1