CSBC — Audit Report / Information 2022

Nov 11, 2022

CSBC CORPORATION, TAIWAN

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND INDEPENDENT AUDITORS’

REPORT DECEMBER 31, 2022 AND 2021

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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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INDEPENDENT AUDITORS’ REPORT TRANSLATED FROM CHINESE

PWCR22000519

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

Opinion

We have audited the accompanying parent company only balance sheets of CSBC CORPORATION, TAIWAN (the “Company”) as at December 31, 2022 and 2021, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the parent company only financial position of the Company as at December 31, 2022 and 2021, and its parent company only financial performance and its parent company only cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the parent company only financial statements section of our report. We are independent of the Company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, 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 Company’s 2022 parent company only financial statements. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

Key audit matters for the Company’s 2022 parent company only financial statements are stated as follows:

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Accounting estimates and assumptions for total cost of construction contracts

Description

Please refer to Note 4(30) for a description of the accounting policy on construction contracts. Please refer to Note 5 for critical accounting estimates and assumptions for total cost of construction contracts.

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

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 Company’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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Responsibilities of management and those charged with governance for the parent company only financial statements

Management of the Company is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

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

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

Auditors’ responsibilities for the audit of the parent company only financial statements

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

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

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

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

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

3. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

4. Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

5. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

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

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

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Wang, Kuo-Hua

[Wu, Chien-Chih ]

For and on behalf of PricewaterhouseCoopers, Taiwan March 10, 2023

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

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 PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(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) 6(4)(22) and 7 7 6(5)(22) 6(6) and 7 6(7) and 7 6(8) and 7 6(9) 6(10)(11) 6(12) 6(32) 6(20)	December 31, 2022 AMOUNT % $ 2,252,256 5 - - 15,441 - 4,226,237 9 1,219,543 3 83,873 - 8,159 - 130,042 - 5,508,042 12 12,690,526 28 18,044 - 26,152,163 57 1,668,442 4 12,983,367 28 3,150,472 7 211,559 - 34,774 - 1,493,482 3 238,691 1 131,397 - 19,912,184 43 $ 46,064,347 100	December 31, 2021	December 31, 2021
		AMOUNT $ 2,252,256 - 15,441 4,226,237 1,219,543 83,873 8,159 130,042 5,508,042 12,690,526 18,044 26,152,163 1,668,442 12,983,367 3,150,472 211,559 34,774 1,493,482 238,691 131,397 19,912,184 $ 46,064,347	AMOUNT $ 2,597,123 21,044 16,841 2,780,143 1,972,696 46,250 10,063 158 2,827,237 13,248,776 922 23,521,253 1,685,071 12,815,078 3,399,266 212,239 36,473 1,522,513 162,918 11,403 19,844,961 $ 43,366,214	%
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 1180 Accounts receivable - related parties 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				6 - - 6 5 - - - 6 31 -
				54
				4 30 8 - - 4 - -
				46
				100

(Continued)

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CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY BALANCE SHEETS DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December 31, 2022 December 31, 2021 Notes AMOUNT % AMOUNT % 6(13) $ 7,004,580 15 $ 2,795,834 6 6(14) 3,598,654 8 3,599,104 8 6(22)(26) and 7 7,687,010 17 10,359,590 24 6(22) - - 32,400 - 6(22) 1,171,291 3 881,832 2 6(22) and 7 11,200 - 6,151 - 6(15) 1,126,343 2 1,179,657 3 6(16)(22) 1,144,469 2 1,011,981 2 6(9) 269,504 1 273,379 1 91,022 - 14,590 - 22,104,073 48 20,154,518 46 6(2)(17) 15,896 - 7,045 - 6(17) 1,775,013 4 1,760,726 4 6(18) 6,995,805 15 2,548,831 6 6(32) 1,324,697 3 1,324,697 3 6(9) 2,947,811 6 3,180,811 7 6(19) 717,121 2 705,134 2 6(19) 125,238 - 181,604 - 247,340 1 257,669 1 1,405 - 7,957 - 14,150,326 31 9,974,474 23 36,254,399 79 30,128,992 69 6(21)(23) and 7 9,317,873 20 9,317,873 22 6(17)(24) 752,878 1 3,692,913 9 6(25) 3,166,471 7 3,166,471 7 ( 3,427,274) ( 7) ( 2,940,035) ( 7 ) 9,809,948 21 13,237,222 31 7 and 9 11 $ 46,064,347 100 $ 43,366,214 100

Current liabilities 2100 Short-term borrowings 2110 Short-term notes and bills payable 2130 Current contract liabilities 2150 Notes payable 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2250 Provisions for liabilities - current 2280 Current lease liabilities 2310 Advance receipts 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 2645 Guarantee deposits received 2670 Other non-current liabilities, others 25XX Non-current liabilities 2XXX Total Liabilities Equity Share capital 3110 Share capital - common stock Capital surplus 3200 Capital surplus Retained earnings 3320 Special reserve 3350 Accumulated deficit 3XXX Total equity Significant contingent liabilities and unrecognised contract commitments Significant events after the balance sheet date 3X2X Total liabilities and equity

The accompanying notes are an integral part of these parent company only financial statements.

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CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2022 AND 2021

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

Items

Year ended December 31 2022 2021 Notes AMOUNT % AMOUNT % 6(26) and 7 $ 21,751,274 100 $ 18,851,761 100 6(5)(12)(30)(31) and 7 ( 24,907,511) ( 115) ( 18,309,359) ( 97) ( 3,156,237) ( 15) 542,402 3 6(30)(31) ( 60,752) - ( 62,572) - ( 337,492) ( 2) ( 345,941) ( 2) ( 109,870) - ( 116,810) ( 1) 12(2) ( 21,444) - ( 7,008) - ( 529,558) ( 2) ( 532,331) ( 3) ( 3,685,795) ( 17) 10,071 - 7 19,712 - 1,196 - 6(10)(19)(27) 111,442 1 209,296 1 6(28) 205,846 1 ( 63,183) - 6(8)(9)(19)(29)( 160,425) ( 1) ( 100,382) ( 1) 6(7) ( 17,548) - ( 43,800) - 159,027 1 3,127 - ( 3,526,768) ( 16) 13,198 - 6(32) - - 37 - ($ 3,526,768) ( 16) $ 13,235 - 6(20) $ 145,156 - $ 40,933 - 6(32) ( 29,031) - ( 8,187) - $ 116,125 - $ 32,746 - ($ 3,410,643) ( 16) $ 45,981 - 6(33) ($ 3.78) $ 0.02

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) profit Non-operating income and expenses 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of loss of associates and joint ventures accounted for using equity method, net 7000 Total non-operating income and expenses 7900 Profit (loss) before income tax 7950 Income tax (expense) benefit 8200 Profit (loss) for the year Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8311 Other comprehensive income, before tax, actuarial gains (losses) on defined benefit plans 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8300 Other comprehensive income for the year 8500 Total comprehensive (loss) income for the year Basic earnings (losses) per share 9750 Total basic earnings (losses) per share

The accompanying notes are an integral part of these parent company only financial statements.

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CSBC CORPORATION, TAIWAN PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

2021 Balance at January 2021 Profit Other comprehensive income Total comprehensive income Cash capital increase Share-based payments Conversion of convertible bonds Balance at December 31, 2021 2022 Balance at January 2022 Loss Other comprehensive income Total comprehensive loss Capital surplus used to offset accumulated deficit Difference between consideration and carrying amount of subsidiaries acquired or disposed Balance at December 31, 2022	Notes		Share capital - common stock		Capital surplus		Retained Earnings	Retained Earnings		Total equity
							Special reserve	Accumulated deficit
	6(23)(24) and 7 6(21)(24) and 7 6(17)(23)(24) 6(24)(25) 6(7)		$ 4,730,555 - - - 4,500,000 - 87,318 $ 9,317,873 $ 9,317,873 - - - - - $ 9,317,873	$ 97,071 - - - 3,367,059 128,818 99,965 $ 3,692,913 $ 3,692,913 - - - ( 2,940,035 ) - $ 752,878			$ 3,166,471 - - - - - - $ 3,166,471 $ 3,166,471 - - - - - $ 3,166,471	($ 2,986,016) 13,235 32,746 45,981 - - - ($ 2,940,035) ($ 2,940,035) ( 3,526,768) 116,125 ( 3,410,643) 2,940,035 ( 16,631) ($ 3,427,274)	$ 5,008,081 13,235 32,746 45,981 7,867,059 128,818 187,283 $ 13,237,222 $ 13,237,222 ( 3,526,768 ) 116,125 ( 3,410,643 ) - ( 16,631 ) $ 9,809,948

The accompanying notes are an integral part of these parent company only financial statements.

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CSBC CORPORATION, TAIWAN

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

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

Year ended December 31 Notes 2022 2021 ( $ 3,526,768 ) $ 13,198 12(2) 21,444 7,008 6(8)(30) 650,897 650,135 6(9)(30) 246,262 246,496 6(11) 680 679 6(12)(30) 20,148 12,125 6(7) 17,548 43,800 ( 19,712 ) ( 1,196 ) 6(27)(29)(34) ( 11,987 ) ( 11,787 ) 6(28) 18,245 ( 19,055 ) 6(28) 522 5,633 6(29) 160,425 100,382 6(21) - 128,818 11,649 - ( 1,459,788 ) 1,744,178 750,294 ( 810,651 ) ( 38,006 ) ( 25,939 ) 2,756 16,081 116 15,287 ( 2,680,805 ) ( 477,875 ) 558,250 ( 3,352,072 ) ( 17,122 ) 54 25,162 ( 11,403 ) ( 2,672,580 ) 3,660,800 ( 32,400 ) 24,300 - ( 111,592 ) 289,459 ( 608,735 ) 5,049 ( 2,211 ) ( 42,947 ) ( 109,292 ) 132,488 ( 276,697 ) 32,053 ( 5,870 ) - 37,532 ( 7,558,668 ) 882,131 18,860 1,179 ( 129,178 ) ( 74,122 ) - 572 ( 7,668,986 ) 809,760

(Continued)

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CSBC CORPORATION, TAIWAN

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2022 AND 2021

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in other receivables - related parties (fund loan) Decrease (increase) in current financial assets at amortised cost Acquisition of investments accounted for using equity method Cash payments for the purchase of property, plant and equipment Acquisition of intangible assets Increase in refundable deposits Decrease in refundable deposits Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term loans Increase in short-term notes and bills payable Proceeds from long-term debt Repayments of long-term debt Repayments of principal portion of lease liabilities Increase in guarantee deposit received Decrease in guarantee deposit received Decrease in other non-current liabilities Cash capital increase Net cash flows from financing activities Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Year ended December 31 Notes 2022 2021 ( $ 130,000 ) $ - 1,400 ( 16,841 ) 6(7) ( 17,550 ) ( 495,000 ) 6(34) ( 843,031 ) ( 2,186,888 ) 6(12) ( 18,449 ) ( 27,253 ) ( 143,959 ) ( 113,068 ) 68,186 3,233 ( 1,083,403 ) ( 2,835,817 ) 6(35) 4,208,746 ( 2,403,312 ) 6(35) - 900,000 6(35) 4,450,000 - 6(35) - ( 2,650,000 ) 6(35) ( 234,343 ) ( 231,920 ) 6(35) 127,060 136,269 6(35) ( 137,389 ) ( 140,409 ) 6(35) ( 6,552 ) ( 12,171 ) 6(23) - 7,867,059 8,407,522 3,465,516 ( 344,867 ) 1,439,459 6(1) 2,597,123 1,157,664 6(1) $ 2,252,256 $ 2,597,123

The accompanying notes are an integral part of these parent company only financial statements.

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CSBC CORPORATION, TAIWAN NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS DECEMBER 31, 2022 AND 2021

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

1. HISTORY AND ORGANIZATION

• (1) On May 1, 1946, Taiwan Machinery and Shipbuilding Company was established by the government, and then was divided into two companies ‘Taiwan Machinery Corporation’ and ‘Taiwan Shipbuilding Corporation (TSBC)’ to split the machinery and shipbuilding business for the purpose of management. In the late 1960s, the government built large shipyards in Xiaogang Kaohsiung which is the current place of business for CSBC CORPORATION, TAIWAN (the “Company”).

• (2) In July 1973, China Shipbuilding Corporation was established by the government. In the early days, most of its labour and techniques were supported by TSBC and they were both reverted to become state - owned companies under the Ministry of Economic Affairs. In January 1978, China Shipbuilding Corporation merged with TSBC and China Shipbuilding Corporation became the surviving company. The Company is primarily engaged in the business of building, manufacturing and repairing of various ships and onshore equipment.

• (3) On March 1, 2007, China Shipbuilding Corporation changed its name to CSBC Corporation, Taiwan.

• (4) The Company became a listed company in December 22, 2008.

• THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

• These parent company only financial statements were authorized for issuance by the Board of Directors on March 10, 2023.

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”) that came into effect as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC and became effective from 2022 are as follows:

are as follows:
New Standards,Interpretations andAmendments	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

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

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

New standards, interpretations and amendments endorsed by the FSC effective from 2023 are as follows:

follows:
New Standards,Interpretations andAmendments	Effective date by International Accounting StandardsBoard
Amendments to IAS 1, ‘Disclosure of accounting policies’ Amendments to IAS 8, ‘Definition of accounting estimates’ Amendments to IAS 12, ‘Deferred tax related to assets and liabilities arising from a single transaction’	January 1, 2023 January 1, 2023 January 1, 2023

The above standards and interpretations have no significant impact to the Company’s financial condition and financial performance based on the Company’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:

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’ Amendments to IFRS 16, ‘Lease liability in a sale and leaseback’ IFRS 17, ‘Insurance contracts’ Amendments to IFRS 17, ‘Insurance contracts’ Amendment to IFRS 17, ‘Initial application of IFRS 17 and IFRS 9 – comparative information’ Amendments to IAS 1, ‘Classification of liabilities as current or non-current’ Amendments to IAS 1, ‘Non-current liabilities with covenants’	To be determined by International Accounting Standards Board January 1, 2024 January 1, 2023 January 1, 2023 January 1, 2023 January 1, 2024 January 1, 2024

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

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The parent company only financial statements of the Company have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

(2) Basis of preparation

• A. Except for the following items, these parent company only financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

• (b) Defined benefit liabilities recognised based on the net amount of pension fund assets less present value of defined benefit obligation.

• B. The preparation of financial statements in compliance with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations that came into effect as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the parent company only financial statements are disclosed in Note 5.

(3) Foreign currency translation

The parent company only financial statements are presented in New Taiwan Dollar, which is the Company’s functional currency.

• A. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• B. Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon retranslation at the balance sheet date are recognised in profit or loss.

• C. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are retranslated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

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

(4) Classification of current and non-current items

The Company is engaged in the business of shipbuilding, vessel building, major machinery building and ship repairing such that the contractual periods of these projects are usually over one year. Therefore, the assets and liabilities of these projects are classified as current assets or liabilities if the period of the project is shorter than the operating cycle; otherwise they are classified as non-current assets or liabilities. The classification criteria of assets and liabilities that are not project related are as follows ： Current assets include cash, the assets held for trading or the assets arising from operating activities that are expected to be consumed or to be realized within twelve months from the balance sheet date; property, plant and equipment and other assets that are not classified as current assets are non-current assets. Current liabilities include the liabilities arising mainly from trading activities and are expected to be settled within twelve months from the balance sheet date. The liabilities that are not classified as current liabilities are non-current liabilities.

(5) 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.

(6) 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.

(7) 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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(8) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Company a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

(9) Impairment of financial assets

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

(10) Derecognition of financial assets

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

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Company has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Company has not retained control of the financial asset.

- (11) 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.

(12) 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.

(13) Investments accounted for under the equity method - subsidiaries and associates

• A. Subsidiaries are all entities (including special purpose entities) over which the Company has the power to govern the financials and operating policies. In general, it is presumed that the parent has the power to govern the financials and operating policies, if a parent holds, directly or indirectly, more than half of the voting power of an entity. Investments in subsidiaries are accounted for using equity method in these parent company only financial statements.

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• B. Inter-company transactions, balances and unrealised gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognise the losses in proportion to the ownership.

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

• E. The Company’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

• F. When changes in an associate’s equity are not recognised in profit or loss or other comprehensive income of the associate and such changes do not affect the Company’s ownership percentage of the associate, the Company recognises the Company’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.

• G. Unrealised gains on transactions between the Company and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Company.

• H. When the Company disposes its investment in an associate, if it loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it still retains significant influence over this associate, then the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• I. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities Issuers,” profit (loss) of the current period and other comprehensive income in the parent company only financial statements shall equal to the amount attributable to owners of the parent in the consolidated financial statements. Owners’ equity in the parent company only financial statements shall equal to equity attributable to owners of the parent in the consolidated financial statements.

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

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

(15) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalised.

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

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each balance sheet date. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

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

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

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Company. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

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• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

• (a) Fixed payments, less any lease incentives receivable;

• (b) Variable lease payments that depend on an index or a rate;

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

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

• (e) Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

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

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

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

• (b) Any lease payments made at or before the commencement date;

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

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

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.

(17) 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.

(18) 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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(19) Impairment of non-financial assets

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

(20) 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.

(21) 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.

(22) Convertible bonds

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

• A. The embedded call options and put options are recognised initially at net fair value as ‘financial assets or financial liabilities at fair value through profit or loss’. They are subsequently remeasured and stated at fair value on each balance sheet date; the gain or loss is recognised as ‘gain or loss on valuation of financial assets or financial liabilities at fair value through profit or loss’.

• B. The host contracts of bonds are initially recognised at fair value. Any difference between the initial recognition and the redemption value is accounted for as the premium or discount on bonds payable and subsequently is amortised in profit or loss as an adjustment to ‘finance costs’ over the period of circulation using the effective interest method.

• 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.

~21~

• 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’.

(23) 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.

(24) 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.

(25) Provisions

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

(26) Employee benefits

A. Short-term employee benefits

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

B. Pensions

• (a) Defined contribution plans

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

~22~

(b) Defined benefit plans

• i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The defined benefit net obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

• ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

• iii. Past service costs are recognised immediately in profit or loss.

• C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Company recognises expense as it can no longer withdraw an offer of termination benefits or it recognises relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

• D. Employees’ compensation and directors’ and supervisors’ remuneration

• Employees’ remuneration and directors’ and supervisors’ remuneration are recognised as expenses and liabilities, provided that such recognition is required under legal obligation or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.

- (27) 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.

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(28) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

• C. Deferred income tax is recognised, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the parent company only balance sheet. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

• D. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

• F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting from acquisitions of equipment or technology, research and development expenditures, employees’ training costs and equity investments to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilised.

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(29) 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.

(30) 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 Company may find it difficult to estimate the result of obligation performance, it estimates the actual cost incurred for performing obligations which could be recovered. The contract revenue should be recognised only to the extent of actual costs incurred until the result of obligation performance could by measured reasonably.

• C. The Company’s estimate about revenue, costs and percentage-of-completion is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.

• D. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, according to the agreements, the Company does not adjust the transaction price to reflect the time value of money.

• E. The Company classifies its ship leasing business as an operating lease. Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

(31) Government grants

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

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5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

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

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

None.

(2) Critical accounting estimates and assumptions

Construction contracts

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

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, 2022 would have decreased by $546,928 or increased by $591,661 (the construction profit for the year ended December 31, 2021 would have decreased by $437,747 or increased by $357,961).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits	December31,2022 410 $ 560,971 1,690,875 2,252,256 $	December 31, 2021
		510 $ 1,941,760 654,853
		2,597,123 $

• A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. On December 31, 2022 and 2021, due to issuance of letters of credit and letters of guarantee, pledges and collateral, the Company had restricted cash and cash equivalents in the amounts of $15,441 and $16,841, respectively, which were classified as financial assets at amortised cost. Refer to Note 6(3) for further information.

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

Items		December31,2022		December31,2021
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)	($	16,805)
convertible bonds
Valuation adjustment		909		9,760
	($	15,896)	($	7,045)

• 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 Company 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:

ollows:
Contract amount Interest rate (inthousands) Expiry date of amount paid EUR 17,611 2022.11.25 - December31,2021	Interest rate ofamount collected
	0.433%

There was no such transaction as of December 31, 2022.

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

(3) Financial assets at amortised cost

==> picture [473 x 48] intentionally omitted <==

• A. As of December 31, 2022 and 2021, 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 Company was $15,441 and $16,841, respectively.

• B. Details of the Company’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).

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(4) Accounts receivable, net

Accounts receivable, net
			December31,2022			December31,2021
Construction receivables		$	1,296,416		$	2,178,306
Repair receivables			250,336			118,741
Lease payments receivable			1,099			1,099
			1,547,851			2,298,146
Less: Allowance for doubtful accounts	(		328,308)	(		325,450)
			1,219,543			1,972,696
Accounts receivable - related parties			84,256			46,250
Less: Allowance for doubtful accounts	(		383)			-
			83,873			46,250
		$	1,303,416		$	2,018,946

• A. As of December 31, 2022 and 2021, accounts receivable (including related parties) was all from contracts with customers. And as of January 1, 2021, the balance of receivables from contracts with customers amounted to $1,464,932.

• B. As of December 31, 2022 and 2021, with taking into account collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Company’ accounts receivable (including related parties) was $1,303,416 and $2,018,946, respectively.

• C. The Company had no past due accounts receivable.

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

(5) Inventories

Inventories
Raw materials Work in process and repair of goods Raw materials Work in process and repair of goods		December31,2022
	Allowance for Cost valuation loss 5,262,770 $ 37,271) ($ 282,543 - 5,545,313 $ 37,271) ($ December31,2021		Bookvalue
			5,225,499 $ 282,543
			5,508,042 $
	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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The amount of inventories recognised as expense for the years ended December 31, 2022 and 2021 is as follows:

is as follows:
			Years ended	December	31,
			2022		2021
Raw materials costs		$	12,714,423	$	7,723,418
Gain from reversal of obsolete inventories	(		1,406)	(	3,496)
		$	12,713,017	$	7,719,922

The Company reversed a previous inventory write-down and accounted for this transaction as a reduction of expenses because the related inventory items were scrapped or sold in 2022 and 2021.

(6) Prepayments

Prepayments
Prepayments of suppliers Excess VAT paid Other prepayments	December31,2022 12,502,189 $ 102,930 85,407 12,690,526 $	December31,2021 13,213,795 $ 5,735 29,246
		13,248,776 $

(7) Investments accounted for under equity method

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

			2022			2021
At January 1		$	1,685,071		$	1,233,871
Additional investments accounted for			919			495,000
using the equity method
Share of profit or loss of investments
accounted for using the equity method	(		17,548)	(		43,800)
At December 31		$	1,668,442		$	1,685,071
		December31,2022			December31,2021
Subsidiary:
CSBC Coating Solutions Co., Ltd.		$	207,141		$	178,715
CSBC Power Technology Co., Ltd. (Note 1)			23,906			39,476
Associates:
Taiwan International Windpower			12,284			11,463
Training Corporation Ltd. (Note 2)
Taiwan Offshore Wind Farm Services			-			-
Corporation (Note 3)
Fuhai Wind Farm Corporation (Note 4)			-			-
Joint Ventures:
CSBC - DEME Wind Engineering Co.,
Ltd. (Note 5)			1,425,111			1,455,417
		$	1,668,442		$	1,685,071

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• Note 1: As approved by the Board of Directors on March 18, 2021, the Company, AND International Co., Ltd., AnEnergy Co., Ltd. and Amita Technologies Inc. jointly established CSBC Power Technology Co., Ltd. The Company originally held 30.67% of voting power from participating in the establishment and capital increase of CSBC Power Technology Co., Ltd. in an accumulated investment amount of $23,000, and acquired an additional 29.33% of issued shares for a cash consideration of $22,000 in the same year on August 12. Thus, the Company accumulatively held a total of 60% equity interest and obtained control over the investee. On October 12, 2022, the Company acquired the company’s additional issued shares for a cash consideration of $17,550 with an accumulative shareholding ratio of 86.67%. Please refer to Notes 6(34) and (35) in the Company’s consolidated financial statements for the year ended December 31, 2022 for details.

• Note 2: As approved by the Board of Directors on May 11, 2018, the Company, Taiwan International Ports Corporation, Ltd. and other companies jointly established Taiwan International Windpower Training Corporation Ltd. for investment purposes. The Company owns 12% of the investee’s share capital and one seat in the Board of Directors of the investee.

• Note 3: On March 21, 2014, the Board of Directors has resolved that the Company and Taiwan Generations Corporation would jointly establish Taiwan Offshore Wind Farm Services Corporation. The Company has acquired 40% of share capital in September 2014. The Company has ceased recognising its share of losses in this company since the fourth quarter of 2018 and the unrecognised share of losses in associate for the year ended December 31, 2022 and accumulated share of losses in associate amounted to $342 and $10,771, respectively. On December 13, 2022, the shareholders of Taiwan Offshore Wind Farm Services Corporation resolved to process a reduction in paid-in capital of $9,000, and the resolution had violated the Company Act and the Articles of Incorporation. On January 17, 2023, the Company lodged a complaint to Taipei City Government, and was waiting for the reply of the executive authority.

• Note 4: On August 9, 2016, the Board of Directors resolved to invest in Fuhai Wind Farm Corporation and obtained 37.97% of ownership shares. The Company has ceased recognising its share of losses in this company since the third quarter of 2017 and the unrecognised share of losses in associate for the year ended December 31, 2022 and accumulated share of losses in associate amounted to $12,632 and $105,768, 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. On December 23, 2021, the Company filed a litigation to the Taiwan Taipei District Court for a declaratory judgment confirming the invalidity of the resolution of the Board of Directors. On August 12, 2022, the Taiwan Taipei District Court dismissed the Company’s case. The Company’s ownership interest changed to 31.44%.

~30~

• Note 5: 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 of approximately $3 billion (approximately EUR 83.24 million). The Company subscribed to 15,151,514 shares, equivalent to $1,500,000, according to its shareholding ratio.

• B. Details of the Company’s subsidiaries are provided in Note 4(3) of the Company’s consolidated financial statements as of and for the year ended December 31, 2022.

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

summarized below:
Profit for the year from continuing operations Other comprehensive income - net of tax Total comprehensive income	Years ended December 31,
	2022 821 $ - 821 $	2021
		552 $ -
		552 $

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

summarised below:
		Years ended	December31,
		2022		2021
Loss for the year from continuing operations	($	30,306)	($	43,105)
Other comprehensive income - net of tax		-		-
Total comprehensive loss	($	30,306)	($	43,105)

• E. The Company had impairment loss in investments accounted for using equity method as the carrying amount exceeds recoverable amount. As of December 31, 2022 and 2021, the accumulated impairment loss amounted to $124,807 and $124,915, respectively.

~31~

(8) Property, plant and equipment

					Land			Buildings			Machinery		Transportation	Transportation			Leasehold			Other		Construction	Construction
	Land		improvements			and structures				and equipment				equipment		improvements			equipment				inprogress		Total
At January 1, 2022
Cost	6,093,941 $			$	1,156,680		$	7,865,426		$	12,140,815		$	1,588,674		$	1,072,631		$	155,888		$	584,434		30,658,489 $
Accumulated depreciation
and impairment		-	(		823,555)	(		6,776,663)	(		8,485,789)	(		758,541)	(		876,924)	(		121,939)			-	(	17,843,411)
	6,093,941 $			$	333,125		$	1,088,763		$	3,655,026		$	830,133		$	195,707		$	33,949		$	584,434		12,815,078 $
2022
Opening net book amount	6,093,941 $			$	333,125		$	1,088,763		$	3,655,026		$	830,133		$	195,707		$	33,949		$	584,434		12,815,078 $
as at January 1
Additions		-			-			-			-			-			-			-			1,698,754		1,698,754
Reclassifications - costs (Note)		-			34,855			88,436			475,844			14,414			-			52,185	(		1,544,780)	(	879,046)
Disposals - costs		-			-	(		897)	(		64,036)	(		10,221)			-	(		5,191)			-	(	80,345)
Depreciation charge		-	(		29,854)	(		60,540)	(		432,917)	(		72,099)	(		42,292)	(		13,195)			-	(	650,897)
Disposals - accumulated
depreciation		-			-			897			63,666			10,074			-			5,186			-		79,823
Closing net book amount
as at December 31	6,093,941 $			$	338,126		$	1,116,659		$	3,697,583		$	772,301		$	153,415		$	72,934		$	738,408		12,983,367 $
At December 31, 2022
Cost	6,093,941 $			$	1,191,535		$	7,952,965		$	12,552,623		$	1,592,867		$	1,072,631		$	202,882		$	738,408		31,397,852 $
Accumulated depreciation
and impairment		-	(		853,409)	(		6,836,306)	(		8,855,040)	(		820,566)	(		919,216)	(		129,948)			-	(	18,414,485)
	6,093,941 $			$	338,126		$	1,116,659		$	3,697,583		$	772,301		$	153,415		$	72,934		$	738,408		12,983,367 $
Note:The Company previously built a container ship								for leasing	to		others, however, the Board				of		Directors approved to transfer them							for selling. The
Company signed a ship sale		contract with an				owner of ships,					and thus the	related cost was				reclassified as			inventory		and revenue is				recognised in
accordance with the	construction contract.

~32~

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 $ 10,269,948 $ 1,584,140 $ 1,072,631 $ 148,511 $ 646,483 $ 28,664,990 $ 6,685,290) ( 8,250,076) ( 688,202) ( 828,302) ( 115,254) ( - 17,358,988) ( 1,016,357 $ 2,019,872 $ 895,938 $ 244,329 $ 33,257 $ 646,483 $ 11,306,002 $ 1,016,357 $ 2,019,872 $ 895,938 $ 244,329 $ 33,257 $ 646,483 $ 11,306,002 $ - - - - - 2,164,844 2,164,844 166,905 2,035,498 5,886 - 9,613 2,226,893) ( - 3,126) ( 164,631) ( 1,352) ( - 2,236) ( - 171,345) ( 94,431) ( 394,789) ( 71,691) ( 48,622) ( 8,911) ( - 650,135) ( 3,058 159,076 1,352 - 2,226 - 165,712 1,088,763 $ 3,655,026 $ 830,133 $ 195,707 $ 33,949 $ 584,434 $ 12,815,078 $ 7,865,426 $ 12,140,815 $ 1,588,674 $ 1,072,631 $ 155,888 $ 584,434 $ 30,658,489 $ 6,776,663) ( 8,485,789) ( 758,541) ( 876,924) ( 121,939) ( - 17,843,411) ( 1,088,763 $ 3,655,026 $ 830,133 $ 195,707 $ 33,949 $ 584,434 $ 12,815,078 $
		1,147,689 $ 791,864) ( 355,825 $ 355,825 $ - 8,991 - 31,691) ( - 333,125 $ 1,156,680 $ 823,555) ( 333,125 $

~33~

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

	Years ended	December31,
	2022	2021
Amount capitalised	- $	361 $
Interest rate	-	0.03%~0.97%

• B. Significant components and the useful lives of land improvements, buildings, and machinery equipment of the Company are as follows:

• (a) The significant components of land improvements include construction expenses for wharf, which are depreciated over 45 years.

• (b) The significant components of buildings include shipyard, plants and warehouse, and office buildings, which are depreciated over 40, 45 and 60 years, respectively.

• (c) The significant components of machinery equipment include hoisting machine, crane and substation as well as carriers, welding machine and working platform, which are depreciated over 25, 20 and 10 years, respectively.

• C. The Company’s property, plant and equipment all was mainly acquired for self-use and was not pledged to others as collateral.

－ (9) Lease transactions lessee

• A. The Company 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 Transportation equipment (terminal equipment) Land Buildings Transportation equipment (terminal equipment)	December31,2022 December31,2021 Bookvalue Bookvalue $ 2,834,626 $ 3,010,401 69,888 80,145 245,958 308,720 3,150,472 $ 3,399,266 $ Years endedDecember31,	December31,2021
		Bookvalue
		$ 3,010,401 80,145 308,720
		3,399,266 $
	2022 Depreciation expense $ 161,860 13,978 70,424 246,262 $	2021
		Depreciation expense
		$ 164,179 13,358 68,959
		246,496 $

~34~

• C. For the years ended December 31, 2022 and 2021, the additions to right-of-use assets were $0 and $144,818, respectively. In addition, the Company had a decrease in lease liabilities of $2,532 and $0 for the years ended December 31, 2022 and 2021, respectively, due to the impact of variable lease payments in lease liabilities, and made a corresponding adjustment to the right-of use assets.

• 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	2022 2021 $ 40,391 $ 41,458 248,753 13,672 1,172 645 290,316 $ 55,775 $ Years endedDecember31,

• E. For the years ended December 31, 2022 and 2021, the Company’s total cash outflow for leases were $524,659 and $287,695, respectively.

(10) Leasing arrangements – lessor

• A. The Company leases various assets including land and buildings. Rental contracts are typically made for periods of 2 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. To secure the use of the leased assets, the leased assets may not be used to sublease, sublet, lend, donate, sell or grant to others under any method. In addition, the Company leases rooftop of its plants for lessees to install solar photovoltaic power generation equipment. Rental contracts are typically made for periods of 20 years. Lease payments consist of fixed base rent and variable operating rent.

• B. For the years ended December 31, 2022 and 2021, the Company recognised rent income in the amounts of $124,795 and $204,038 respectively, based on the operating lease agreement, in which the amounts of variable lease payments were not material.

• C. The maturity analysis of the lease payments under the operating leases is as follows:

Less than 1 year Later than 1 year but not later than 5 years Later than 5 years	December31,2022 $ 25,197 83,330 212,630 321,157 $	December31,2021
		$ 27,507 90,142 230,349
		347,998 $

~35~

(11) Investment property, net

Buildings

At January 1, 2022 Cost Accumulated depreciation and impairment 2022 Opening net book amount as at January 1 Depreciation charge Closing net book amount as at December 31 At December 31, 2022 Cost Accumulated depreciation and impairment 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

Land and structures Total $ 202,578 $ 29,745 $ 232,323 - 20,084) ( 20,084) ( 202,578 $ 9,661 $ 212,239 $ $ 202,578 $ 9,661 $ 212,239 - 680) ( 680) ( 202,578 $ 8,981 $ 211,559 $ $ 202,578 $ 29,745 $ 232,323 - 20,764) ( 20,764) ( 202,578 $ 8,981 $ 211,559 $ 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) ( 202,578 $ 9,661 $ 212,239 $ $ 202,578 $ 29,745 $ 232,323 - 20,084) ( 20,084) ( 202,578 $ 9,661 $ 212,239 $

• 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 year	Years endedDecember31,	Years endedDecember31,
	2022 27,058 $ 1,446 $	2021
		27,351 $
		982 $

~36~

• B. The fair value of the investment property held by the Company as at December 31, 2022 and 2021 were $705,345 and $692,194, 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

==> picture [472 x 286] intentionally omitted <==

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

Software: Years ended December 31,
2022 2021
At January 1
Cost $ 48,650 $ 33,516
Accumulated amortisation and impairment ( 12,177) ( 12,171)
$ 36,473 $ 21,345
Opening net book amount as at January 1 $ 36,473 $ 21,345
Additions - acquired separately 18,449 27,253
Disposals - costs ( 11,918) ( 12,119)
Amortisation charge ( 20,148) ( 12,125)
Disposals - accumulated amortisation 11,918 12,119
Closing net book amount as at December 31 $ 34,774 $ 36,473
At December 31
Cost $ 55,181 $ 48,650
Accumulated amortisation and impairment ( 20,407) ( 12,177)
$ 34,774 $ 36,473
----- End of picture text -----

Details of amortisation on intangible assets are as follows:

(13)	Short-term loans Operating costs Type of loans Bank loans Unsecured loans Procurement unsecured loans Type of loans Bank loans Unsecured loans Procurement unsecured loans	December	Years ended December 31,	Years ended December 31,	Years ended December 31,
			2022 2021 20,148 $ 12,125 $ 31,2022 Interestraterange Collateral 6,951,000 1.68%～2.30% None 53,580 0.67%～5.99% None 7,004,580 31,2021 Interestraterange Collateral 2,588,000 0.85%～1.80% None 207,834 0.40%～1.35% None 2,795,834	2021
			$	$	12,125
			31,2022 6,951,000 53,580 7,004,580 31,2021 2,588,000 207,834 2,795,834		Collateral
		$			None None Collateral
		$
		December
		$			None None
		$

~37~

(14) Short-term notes and bills payable

Short-term notes and bills payable
		December31,2022		December31,2021
Commercial papers payable	$	3,600,000	$	3,600,000
Less: Unamortized discount	(	1,346)	(	896)
	$	3,598,654	$	3,599,104
Annual interest rates		1.50%～2.09%		0.42%～0.72%

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

(15) Other payables

Other payables
December 31, 2022 Accrued expenses 1,077,164 $ Payable for equipment 22,896 Others 26,283 1,126,343 $	December 31, 2021
	1,111,514 $ 41,711 26,432
	1,179,657 $

(16) Provisions

Provisions
			Warranty		Onerous	contracts			Total
At January 1, 2022		$	588,510		$	423,471		$	1,011,981
Additional provisions			116,218			1,382,466			1,498,684
Used during the year	(		122,926)	(		1,228,200)	(		1,351,126)
Unused amounts reversed	(		1,227)	(		13,843)	(		15,070)
At December 31, 2022		$	580,575		$	563,894		$	1,144,469
The analysis of provisions is as			follows:
		December31,2022			December31,2021				January1,2021
Realised in one year		$	461,147		$	213,682		$	447,278
Realised after one year			683,322			798,299			841,400
		$	1,144,469		$	1,011,981		$	1,288,678

A. Provision for warranty

The Company gives warranties on contracts revenue in relation to shipbuilding, vessel construction. Provision for warranty is estimated based on historical warranty data of products.

B. Provision for onerous contract

Under the irrevocable contracts of shipbuilding, vessel construction, the Company’s estimated provision for onerous contract is the difference between the inevitable cost of existing obligations to be performed in the future and the expected economic benefits from the contracts. The estimated provision may change with the actual construction situation.

~38~

(17) Bonds payable

Bonds payable
		December	31,2022		December	31,2021
The first domestic secured convertible bonds		$	1,806,300		$	1,806,300
Less: Discount on bonds payable	(		31,287)	(		45,574)
			1,775,013			1,760,726
Less: Expiring within one year
(shown as ‘long-term liabilities,
current portion' )			-			-
		$	1,775,013		$	1,760,726

• A. The issuance of domestic convertible bonds by the Company

• (a) The terms of the first domestic secured convertible bonds issued by the Company are as follows:

  • i. The Company issued $2 billion, 0% first domestic secured convertible bonds, as approved by the regulatory authority. The bonds mature 5 years from the issue date (February 24, 2020 ~ February 24, 2025).

The bonds will be redeemed in cash at face value at the maturity date. The bonds were listed on the Taipei Exchange on February 24, 2020.

• ii. The bondholders have the right to ask for conversion of the bonds into common shares of the Company during the period from the date after three month of the bonds issue (May 25, 2020) to the maturity date, except for the stop transfer period as specified in the terms of the bonds or the laws/regulations. The rights and obligations of the new shares converted from the bonds are the same as the issued and outstanding common shares.

• iii. The conversion price of the bonds is set up based on the pricing model in the terms of the bonds. The conversion price is $25.1 (in dollars) per share, and is subject to adjustments if the condition of the anti-dilution provisions occurs subsequently. The conversion price will be recalculated based on the pricing model in the terms of the bonds on each effective date regulated by the terms. If the recalculated conversion price is lower than the conversion price before the recalculation, the conversion price will be adjusted; however, it will not be adjusted if it is higher.

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, 2022, 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).

~39~

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, 2022, 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 IAS 39. ‘Financial Instruments: Recognition and Measurement’ 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%.

~40~

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

Borrowing period and repayment term Long-term bank borrowings Unsecured borrowings Syndicated loan of several banks consisting of Bank of Taiwan Refer to note 1 for details. Commercial papers payable Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 24, 2021 to Dec. 15, 2024. Refer to note 2 for details. Taishin International Bank Borrowing period is from Jun. 21, 2021 to Dec. 20, 2024. Refer to note 2 for details. China Bills Finance Corporation Borrowing period is from Sep. 26, 2021 to Oct. 25, 2024. Refer to note 2 for details. International Bills Finance Corporation Borrowing period is from Jun. 22, 2021 to Jun. 21, 2024. Refer to note 2 for details. Borrowing period and repayment term Commercial papers payable Taishin International Bank Borrowing period is from Jun. 21, 2021 to Dec. 20, 2024. Refer to note 2 for details. Mega Bills Finance Co., Ltd. Borrowing period is from Sep. 24, 2021 to Dec. 15, 2024. Refer to note 2 for details. China Bills Finance Corporation Borrowing period is from Sep. 26, 2021 to Oct. 25, 2024. Refer to note 2 for details. International Bills Finance Corporation Borrowing period is from Jun. 22, 2021 to Jun. 21, 2024. Refer to note 2 for details. Less: Discount on commercial papers payable Less: Long-term borrowings, current portion	Borrowing period and repayment term	Interest rate range 1.80%~ 1.95% 1.44%~ 1.46% 1.27% 1.27% 1.37% Interest rate range 0.40% 0.59% 0.55% 0.50%	Collateral December31,2022 None 4,000,000 $ None 1,000,000 $ None 800,000 None 700,000 None 500,000 4,195) ( 2,995,805 6,995,805 $ Collateral December31,2021 None 800,000 $ None 700,000 None 700,000 None 350,000 1,169) ( 2,548,831 $

~41~

• Note 1: For the year ended December 31, 2022, the Company and a bank consortium signed a 5- year syndicated credit contract, and the final maturity date is in September 2027 (except for guarantee for bond issuance which matures 5 years and 3 months after proceeds from issuance of bonds are collected). The credit facilities are divided into Tranche A and Tranche B. For Tranche A long-term bank borrowings, the first installment is 30 months from the date of the first drawn and every six months is an instalments after that, in a total of 6 installment. 10% of the principal is repayable from the first to the fifth instalments, and the remaining principal is repayable in the sixth installment. Tranche B credit facilities are further divided into Tranche B1 - long-term bank borrowings, Tranche B2 - long-term commercial papers payable and Tranche B3 - guarantee for bond issuance. The Company can withdraw the facility at its discretion. For Tranches B1 and B2, when each drawdown expires, the Company can directly repay the loan principal that is originally expired with the new drawn loan, without actually remitting funds.

The syndicated credit contract stipulates several financial restrictions, and the Company did not violate those restrictions.

• Note 2: The Company entered into an agreement for recurring issuance (maturity of 60~180 days) of certificates and dealership of commercial papers with the bill finance companies. During the contract term of 2 ~ 3 years, the Company is only liable for the service fees and interest and thus the commercial papers payable is included in long-term borrowings. Both parties shall renegotiate the agreement when the agreement matures.

(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 Company was required to repay the loan to the Privatization Fund in a period of ten years, under the condition that the Company is profitable. As approved by the Executive Yuan in November 2022, the Company can make a yearly repayment starting from 2017. If the earnings after tax in the prior year is below $500 million, the repayment amount is 15% of earnings after tax. If the earnings after tax in the prior year is above $500 million, the repayment amount is the aforementioned ratio plus 20% of earnings after tax exceeding $500 million until the loan is fully repaid. The Company uses the average long-term loan interest rate on the loan for discounting. The discounted values are recorded under “long-term notes payable and payables”. The difference between the discounted value and the amount received is listed in “deferred revenue”. The amounts that are payable within one year are listed in “other financial liabilities-current”. The unamortised amounts are shown below:

Long-term notes and accounts receivable Long-term deferred revenue	December31,2022 717,121 $ 24,379 741,500 $	December31,2021
		705,134 $ 36,366
		741,500 $

~42~

• 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, 2022 and 2021. 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 about 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.

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

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. The amounts recognised in the balance sheet are as follows:	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. The amounts recognised in the balance sheet are as follows:	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. The amounts recognised in the balance sheet are as follows:	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. The amounts recognised in the balance sheet are as follows:
Movements in net defined benefit liabilities are as follows: December 31, 2022 December31,2021 Present value of funded obligations 1,913,322) ($ 1,813,037) ($ Fair value of plan assets 2,044,719 1,824,440 Net defined benefit asset 131,397 $ 11,403 $ Present value of defined benefit obligations Fair value of plan assets Net defined benefitliability Year ended December 31, 2022 Balance at January 1 1,813,037) ($ 1,824,440 $ 11,403 $ Current service cost 146,232) ( - 146,232) ( Interest (expense) income 26,875) ( 27,945 1,070 1,986,144) ( 1,852,385 133,759) ( Remeasurements: Return on plan assets - 125,160 125,160 Change in financial assumptions - - - Experience adjustments 19,996 - 19,996 19,996 125,160 145,156 Pension fund contribution - 120,000 120,000 Paid pension 52,826 52,826) ( - Balance at December 31 1,913,322) ($ 2,044,719 $ 131,397 $
	1,813,037) ($ 146,232) ( 26,875) ( 1,986,144) ( - - 19,996 19,996 - 52,826 1,913,322) ($	1,824,440 $ - 27,945 1,852,385 125,160 - - 125,160 120,000 52,826) ( 2,044,719 $	11,403 $ 146,232) ( 1,070 133,759) ( 125,160 - 19,996 145,156 120,000 - 131,397 $

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

~43~

	Present value of	Present value of
	defined benefit		Fair	value of plan			Net defined
		obligations		assets		benefitliability
Year ended December 31, 2021
Balance at January 1	($	1,751,981)	$	1,748,580	($		3,401)
Current service cost	(	147,030)		-	(		147,030)
Interest (expense) income	(	25,753)		26,654			901
	(	1,924,764)		1,775,234	(		149,530)
Remeasurements:
Return on plan assets		-		4,184			4,184
Change in financial assumptions		-		-			-
Experience adjustments		36,749		-			36,749
		36,749		4,184			40,933
Pension fund contribution		-		120,000			120,000
Paid pension		74,978	(	74,978)			-
Balance at December 31	($	1,813,037)	$	1,824,440		$	11,403

• (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, 2022 and 2021 is given in the Annual Labor Retirement Fund Utilisation Report announced by the government.

• (e) The principal actuarial assumptions used were as follows:

The principal actuarial assumptions	used were as follows:	used were as follows:
Discount rate Future salary increases	Years endedDecember31,
	2022 1.50% 3.25%	2021
		1.50%
		3.25%

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.

~44~

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

	Discount rate	Discount rate	Future salary increases	Future salary increases	Future salary increases
	Increase 0.25%	Decrease 0.25%	Increase 0.25%	Decrease 0.25%
Effect on present value
of defined benefit
obligation
December 31, 2022	34,954) ($	35,912 $	30,588 $	($	29,976)
December 31, 2021	36,466) ($	37,547 $	32,464 $	($	31,750)

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.

• (f) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2023 amount to $120,000.

• (g) As of December 31, 2022, the weighted average duration of the defined benefit obligations is 6 years. The distribution of the present value of expected defined benefit obligations (within 10 years) is as follows:

10 years) is as follows:
For the year ended December	31,	2023	$	1,789,199
For the year ended December	31,	2024		1,783,922
For the year ended December	31,	2025		1,798,128
For the year ended December	31,	2026		1,765,933
For the year ended December	31,	2027		1,754,186
For the year ended December	31,	2028		1,615,433
For the year ended December	31,	2029		1,255,152
For the year ended December	31,	2030		819,662
For the year ended December	31,	2031		554,323
For the year ended December	31,	2032		478,114

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.

~45~

• B. Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment. The pension costs under the defined contribution pension plans of the Company for the years ended December 31, 2022 and 2021 were $95,050 and $95,935, respectively.

(21) Share-based payment

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

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

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

• 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 Company’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, 2022.

~46~

(22) Analysis of assets and liabilities

Assets and liabilities of the Company related to the business of shipbuilding, vessel building, major machinery and ship repair, are classified as current or non-current based on the operating cycle. However, such assets and liabilities were analyzed on "one year" basis as follows:

December 31, 2022 Assets Contract assets (including related parties) Accounts receivable, net (including related parties) Inventories, net Liabilities Contract liabilities (including related parties) Accounts payable (including related parties) Provision for liabilities 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 (including related parties) Provision for liabilities	Less than 12 months 4,078,244 $ 1,303,416 5,508,042 10,889,702 $ 304,066 $ 1,182,491 461,147 1,947,704 $ Less than 12 months 2,522,428 $ 1,347,965 2,827,237 6,697,630 $ 51,838 $ 32,400 887,983 213,682 1,185,903 $	More than 12 months 147,993 $ - - 147,993 $ 7,382,944 $ - 683,322 8,066,266 $ More than 12 months 257,715 $ 670,981 - 928,696 $ 10,307,752 $ - - 798,299 11,106,051 $	Total
			4,226,237 $ 1,303,416 5,508,042
			11,037,695 $
			7,687,010 $ 1,182,491 1,144,469
			10,013,970 $
			Total
			2,780,143 $ 2,018,946 2,827,237
			7,626,326 $
			10,359,590 $ 32,400 887,983 1,011,981
			12,291,954 $

(23) Common stock

A. As of December 31, 2022, 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.

~47~

Movements in the number of the Company’s ordinary shares outstanding are as follows:

		Shares in thousands
	2022	2021
At January 1	931,787	473,056
Cash capital increase	-	450,000
Conversion of corporate bonds	-	8,731
At December 31	931,787	931,787

• 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.

• 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 Yue-Li 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 a 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 to 30 million shares amounting 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.

~48~

(24) Capital surplus

• A. Pursuant to the R.O.C. Company Law, capital surplus 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 surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

			2022
	Share		Share
	premium		options		Total
At January 1	3,606,072 $	$	86,841	$	3,692,913
Capital surplus used to offset
accumulated deficits	2,940,035) (		-	(	2,940,035)
At December 31	666,037 $	$	86,841	$	752,878
			2021
	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

• B. Please refer to Note 6(17) for the information of capital surplus—share options.

(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.

• B. 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.

~49~

• 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, 2020 was resolved by the stockholders at the regular stockholders’ meeting on August 25, 2021. Dividends will not be distributed to stockholders as some accumulated deficits remain uncovered.

• The proposal for deficit compensation for the year ended December 31, 2021 was resolved by the stockholders at the regular stockholders’ meeting on June 22, 2022. The proposal for deficit compensation for the year ended December 31, 2021 was resolved by the stockholders at the regular stockholders’ meeting on June 22, 2022. After the deficit compensation with capital surplus, the accumulated deficits to be covered was $0, and thus dividends will not be distributed. Additionally, the proposal for deficit compensation using the capital surplus, additional paid-in capital, of $2,940,035 was approved.

On March 10, 2023, the Board of Directors has proposed the deficit compensation for year 2022.

(26) Operating revenue

Operating revenue
Revenue from contracts with customers Others - ship rental revenue	Years ended December31,
	2022 21,673,709 $ 77,565 21,751,274 $	2021
		18,675,074 $ 176,687
		18,851,761 $

~50~

• A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services over time in the following major product types:

major product types:
			Years ended	December	31,
			2022		2021
Construction of ships and vessels
Shipbuilding		$	5,167,993	$	5,976,755
Vessel construction			15,330,882		11,363,002
			20,498,875		17,339,757
All other segments
Ship/vessel repair			1,163,687		822,077
Machinery building	(		38,361)		473,390
Others			49,508		39,850
			1,174,834		1,335,317
		$	21,673,709	$	18,675,074

• B. Contract assets and liabilities

The Company has recognised the following revenue-related contract assets and liabilities:

		December31,2022		December31,2021		January1,2021
Contract assets	$	2,602,432	$	2,093,086	$	4,375,960
Contract assets - related parties		1,833,313		878,362		339,666
		4,435,745		2,971,448		4,715,626
Less: Loss allowance	(	209,508)	(	191,305)	(	192,121)
	$	4,226,237	$	2,780,143	$	4,523,505
Contract liabilities	$	7,425,105	$	10,325,969	$	5,209,593
Contract liabilities - related parties		261,905		33,621		1,489,197
	$	7,687,010	$	10,359,590	$	6,698,790

Please refer to Note 7 for related party transactions.

Revenue recognised that was included in the contract liability balance at the beginning of the period

The Company had a contract liability balance at the beginning of the period, of which $9,926,967 and $5,711,072 was recognised as revenue for the years ended December 31, 2022 and 2021, respectively.

• C. As of December 31, 2022, the total transaction price allocated to unfulfilled contract obligations was $38,574,497 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 February 2023 to October 2027.

~51~

(27) Other income

Other income
		Years ended	December	31,
		2022		2021
Government grant revenue (Note)	$	22,763	$	137,054
Rental revenue		47,230		27,351
Indemnity revenue		16,138		19,642
Others		25,311		25,249
	$	111,442	$	209,296

Note: The Company recognised income of $107,716, as a result of the application for the Salary and Working Capital Subsidies for Manufacturing Industry and its Technical Services Industry Suffered by Severe Pneumonia with Novel Pathogens (COVID-19) Handled by Industrial Development Bureau the Ministry of Economic Affairs during the year ended December 31, 2021. There was no such transaction for the year ended December 31, 2022.

(28) Other gains and losses

Other gains and losses
			Years endedDecember		31,
			2022		2021
Foreign exchange gains (losses)		$	271,482	($	36,301)
(Losses) gains on financial assets and	(		18,245)		19,055
liabilities at fair value through profit
or loss
Losses on disposal of property, plant	(		522)	(	5,633)
and equipment
Other losses	(		46,869)	(	40,304)
		$	205,846	($	63,183)

(29) Finance costs

Finance costs
				Years endedDecember		31,
			2022			2021
Interest expense:
Bank loans		$		173,365	$		106,317
Amortisation on lease liabilities				40,391			41,458
Amortisation on convertible bonds				14,287			14,769
Expenses amortised from government				11,987			11,787
grants payable
Less: Capitalisation of qualifying assets	(			79,605)	(		73,949)
		$		160,425	$		100,382

~52~

(30) Expenses by nature

Employee benefit expense Change in inventory of finished goods and work in process Direct materials Employee benefit expense Depreciation and amortisation charges Outsourcing fees Professional service fees Other expenses Operating costs and expenses Wages and salaries Labor and health insurance fees Pension cost Directors’ remuneration Employee stock options Other personnel expenses	2022 2021 3,163,013 $ 70,394) ($ 12,714,423 7,723,418 3,444,701 3,630,615 917,307 908,756 2,628,353 3,670,874 790,008 1,767,741 1,779,264 1,210,680 25,437,069 $ 18,841,690 $ Years endedDecember31, 2022 2021 2,876,827 $ 2,921,627 $ 265,362 272,651 240,212 242,064 3,051 3,166 - 128,818 59,249 62,289 3,444,701 $ 3,630,615 $ Years ended December 31,

(31) Employee benefit expense

• 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, 2022 and 2021.

The Board of Directors resolved not to appropriate employees’ compensation and directors’ renumeration as a result of the operating deficit for the years ended December 31, 2022 and 2021. 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.

~53~

(32) Income tax expense

A. Income tax benefit

• (a) Components of income tax benefit:

Current tax: Current tax on profits for the year Over provision of income tax in prior year Income tax benefit	2022 2021 - $ - $ - 37) ( - $ 37) ($ Years endedDecember31,

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

follows:
		Years endedDecember31,
		2022			2021
Remeasurement of defined
benefit obligations	$		29,031	$	8,187
Reconciliation between income tax benefits	and	accounting	profit:
		Years ended December 31,
		2022			2021
Tax calculated based on loss before	($		705,354)	$	2,639
tax and statutory tax rate
Tax exempt income by tax regulation			-	(	21,543)
Effects from items disallowed by tax			6,367		5,806
regulation
Taxable loss not recognised as			698,987		13,098
deferred tax assets
Over provision of income tax in
prior year			-	(	37)
Income tax benefit	$		-	($	37)

• B. Reconciliation between income tax benefits and accounting profit:

~54~

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

as follows:
						2022
								Recognised
			Recognised						in other
			in		profit or	comprehensive
	January1				loss				income	December31
Deferred tax assets:
Temporary differences:
Estimation of construction loss	$	84,694		$	28,085			$	-	$	112,779
Unrealised warranty liability		117,702	(		1,587)				-		116,115
Unused compensated absences		62,649	(		2,452)				-		60,197
payable
Allowance for doubtful accounts		63,318	(		1,402)				-		61,916
Others		26,595	(		6,779)	(			29,031)	(	9,215)
Tax losses		1,167,555	(		15,865)				-		1,151,690
		1,522,513			-	(			29,031)		1,493,482
Deferred tax liabilities:
Unrealised land value
incremental reserve	(	1,324,697)			-				-	(	1,324,697)
Total	$	197,816		$	-	($			29,031)	$	168,785
						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
Unrealised warranty liability		101,650			16,052				-		117,702
Unused compensated absences		64,501	(		1,852)				-		62,649
payable
Allowance for doubtful accounts		61,916			1,402				-		63,318
Others		13,729			21,053	(			8,187)		26,595
Tax losses		1,132,818			34,737				-		1,167,555
		1,530,700			-	(			8,187)		1,522,513
Deferred tax liabilities:
Unrealised land value
incremental reserve	(	1,324,697)			-				-	(	1,324,697)
Total	$	206,003		$	-	($			8,187)	$	197,816

~55~

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

December 31, 2022

December31,2022
Year incurred Amount filed/assessed Unused amount 2015 Assessed 671,021 $ 2016 Assessed 1,190,142 2017 Assessed 6,700,185 2018 Assessed 2,577,518 2019 Assessed 2,657,346 2020 Assessed 2,305,136 2021 Amount filed 282,377 2022 Estimated filing amount 3,409,213 December31,2021	Unrecognised deferred tax assets - $ - 2,802,895 2,577,518 2,657,346 2,305,136 282,377 3,409,213	Expiry year
		2025 2026 2027 2028 2029 2030 2031 2032

Year incurred Amount filed/assessed 2015 Assessed 2016 Assessed 2017 Assessed 2018 Assessed 2019 Assessed 2020 Amount filed 2021 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 2,577,518 2,657,346 2,305,136 236,855	Expiry year
			2025 2026 2027 2028 2029 2030 2031

E. The Company’s income tax returns through 2020 have been assessed and approved by the Tax Authority. As of March 10, 2022, there was no administrative remedies.

(33) (Losses) earnings per share

(Losses) earnings per share
		YearendedDecember31,		2022
			Weigthted average
			number of ordinary		Losses per
		Amount	shares outstanding		share
		aftertax	(sharesinthousands)		(indollars)
Basic losses per share
Loss attributable to ordinary shareholders	($	3,526,768)	931,787	($	3.78)
		Year ended December31,		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

~56~

The Company’s convertible corporate bonds had anti-dilution effect for the years ended December 31, 2022 and 2021; thus, they were not included in the calculation of diluted losses per share.

(34) Supplemental cash flow information

• A. Investing activities with partial cash payments:

pplemental cash flow information Investing activities with partial cash payments:
			Years ended	December31,
			2022			2021
Purchase of property, plant and equipment		$	1,698,754		$	2,164,844
Add：Beginning balance of payable on equipment			41,711			63,755
Less：Ending balance of payable on equipment	(		22,896)	(		41,711)
Less：Reclassified to inventory	(		874,538)			-
Cash paid on purchase of property, plant and
equipment during the year		$	843,031		$	2,186,888

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

			Years ended	December 31,	December 31,	December 31,
			2022			2021
Interest expense amortised from government grants		$	11,987		$	11,787
Increase in right-of-use assets		$	-		$	144,818
Less: Increase in lease liabilities			-	(		144,818)
		$	-		$	-
Decrease in lease labilities due to remeasurement		$	2,532		$	-
Less: Decrease in right-of-use assets	(		2,532)			-
		$	-		$	-

(35) Changes in liabilities from financing activities

Short-term borrowings Short-term notes and bills payable Corporate bonds payable Long-term borrowings Lease liability Long-term notes and accounts payable Long-term deferred revenue Guarantee deposits received Other non-current liabilities, others		2022
	Changes in Changes cash flow from in other financing non-cash January1 activities items 2,795,834 $ 4,208,746 $ - $ 3,599,104 - 450) ( 1,760,726 - 14,287 2,548,831 4,450,000 3,026) ( 3,454,190 234,343) ( 2,532) ( 705,134 - 11,987 181,604 - 56,366) ( 257,669 10,329) ( - 7,957 6,552) ( - 15,311,049 $ 8,407,522 $ 36,100) ($		December31
			7,004,580 $ 3,598,654 1,775,013 6,995,805 3,217,315 717,121 125,238 247,340 1,405
			23,682,471 $

~57~

				2021	2021
				Changes in		Changes
			cash flow from			in other
				financing		non-cash
	January1			activities		items	December31
Short-term borrowings	5,199,146 $	($		2,403,312)	$	-	2,795,834 $
Short-term notes and bills payable	2,699,405			900,000	(	301)	3,599,104
Corporate bonds payable	1,932,301			-	(	171,575)	1,760,726
Long-term borrowings	5,198,570	(		2,650,000)		261	2,548,831
Lease liability	3,541,292	(		231,920)		144,818	3,454,190
Long-term notes and accounts payable	693,347			-		11,787	705,134
Long-term deferred revenue	193,391			-	(	11,787)	181,604
Guarantee deposits received	261,809	(		4,140)		-	257,669
Other non-current liabilities, others	20,128	(		12,171)		-	7,957
	19,739,389 $	($		4,401,543)	($	26,797)	15,311,049 $

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

CSBC Coating Solutions Co., Ltd Blue Ocean Wind Power Engineering (Hong Kong) Limited

BLUE ACE CORPORATION CSBC Construction Co., Ltd. CSBC Power Technology Co., Ltd. CPC Corporation, Taiwan Yue-Li Investment Corporation

China Steel Corporation

China Steel Express Corporation

China Steel Machinery Corporation

Sing Da Marine Structure Corporation

Relationship with the Company

The Company’s subsidiary The Company’s subsidiary

The Company’s subsidiary

The Company’s subsidiary (Note 1) The Company’s subsidiary (Note 2)

The Company’s legal entity director

The Company’s legal entity director, that was dismissed due to the expiry of term of office on June 22, 2022.

The Company’s legal entity director, that was dismissed due to the expiry of term of office on June 22, 2022.

Subsidiary of the Company’s legal entity director. However, the corporate director was dismissed due to the expiry of term of office on June 22, 2022.

Subsidiary of the Company’s legal entity director. However, the corporate director was dismissed due to the expiry of term of office on June 22, 2022. Subsidiary of the Company’s legal entity director. However, the corporate director was dismissed due to the expiry of term of office on June 22, 2022.

~58~

Names of related parties Relationship with the Company Steel Castle Technology Corp. Subsidiary of the Company’s legal entity director. However, the corporate director was dismissed due to the expiry of term of office on June 22, 2022. Taiwan International windpower Associate Training Corporation Ltd. Taiwan Offshore Wind Farm Services Associate Corporation Fuhai Wind Farm Corporation Associate CSBC-DEME Wind Engineering Co., Ltd. Joint venture CDWE Green Jade Shipowner Co., Ltd. Subsidiary of joint venture Financing Investment Venture Capital Government related entity Yao Hua Glass Co.,Ltd. Management Government related entity Committee National Defense Industrial Development Government related entity Foundation

Note 1: On April 18, 2022, the Company’s subsidiary acquired 100% of ownership interest in this company to acquire control over this company.

Note 2: The Company obtained control over the entity on August 12, 2021.

(2) Significant related party transactions and balances

A. Operating revenue

Operating revenue
		Years ended	December31,
		2022		2021
Other related parties:
Joint ventures
CSBC-DEME Wind Engineering Co., Ltd.	$	1,768,669	$	4,324,686
Key management:
Subsidiary of the Company’s legal entity director
China Steel Express Corporation		204,000		-
Sing Da Marine Structure Corporation	(	91,865)		31,890
China Steel Machinery Corporation		-		9,354
Legal entity director
CPC Corporation, Taiwan		94,555		108,427
Subsidiary:
CSBC Coating Solutions Co., Ltd		28,723		1,920
	$	2,004,082	$	4,476,277

(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.

~59~

• (b) On June 30, 2020, the Company entered into an agreement with CSBC-DEME Wind Engineering Co., Ltd. to build a heavy lift and installation vessel for its offshore wind power engineering. Please refer to item C for further information.

B. Purchases of goods

Purchases of goods
Purchases of goods: Key management: Legal entity director China Steel Corporation CPC Corporation, Taiwan Purchases of services: Subsidiary: CSBC Coating Solutions Co., Ltd BLUE ACE CORPORATION Key management: Subsidiary of the Company’s legal entity director Steel Castle Technology Corp.	Years ended December31,
	2022 448,291 $ 59,369 507,660 166,297 121,582 - 287,879 795,539 $	2021
		650,261 $ 70,015 720,276 3,757 70,649 26,241
		100,647
		820,923 $

The price was based on the contract signed by both parties, and the collection terms were approximately the same as those to third parties.

C. Contract assets and contract liabilities

Contract assets and contract liabilities
Contract assets:
	December31,2022		December	31,2021
Other related parties:
Joint ventures
CSBC-DEME Wind Engineering Co., Ltd.	$	1,643,123	$	511,591
Associates :
Fuhai Wind Farm Corporation (Note)		190,190		190,190
Key management:
Subsidiary of the Company’s legal entity director
Sing Da Marine Structure Corporation		-		176,581
		1,833,313		878,362
Less: Loss allowance	(	197,666)	(	190,468)
	$	1,635,647	$	687,894

~60~

• Note: In March 2014, the Company was commissioned by Fuhai Wind Farm Corporation (hereafter referred to as “Fuhai”) for the construction of a meteorological observation tower, offshore windfarm off the coast of Changhua County included in Changhua Offshore Pilot Project and Fuhai offshore windfarm for a total contract price of NT$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 Company has recognised impairment loss amounting to $190,190 since the contract assets may not be recovered as assessed.

Contract liabilities:

	Contract liabilities:
D.	Receivables from related parties December31,2022 Key management: Legal entity director CPC Corporation, Taiwan 261,905 $ December31,2022 Accounts receivable : Key management: Legal entity director CPC Corporation, Taiwan 84,256 $ Subsidiary CSBC Coating Solutions Co., Ltd - 84,256 Less: Loss allowance 383) ( 83,873 Other receivables - Loans to others Subsidiary CSBC Power Technology Co., Ltd. 130,000 $ Other receivables - others : Subsidiary BLUE ACE CORPORATION 42 Key management: Legal entity director CPC Corporation, Taiwan - 130,042 213,915 $	December 31, 2021 33,621 $ December31,2021
		46,127 $ 123
		46,250 -
		46,250
		- $ 41 117
		158
		46,408 $

Please refer to I. Loans to /from related parties for details.

~61~

E. Prepaid accounts

E.	Prepaid accounts
F. G.	Payables to related parties Acquisition of property, plant and equipment Subsidiary: CSBC Coating Solutions Co., Ltd Key management: Legal entity director CPC Corporation, Taiwan China Steel Corporation Accounts payable: Subsidiary: CSBC Coating Solutions Co., Ltd BLUE ACE CORPORATION Legal entity director CPC Corporation, Taiwan Subsidiary: CSBC Coating Solutions Co., Ltd	December31,2022 53,982 $ 5,352 - 59,334 $ December 31, 2022 6,430 $ 2,105 2,665 11,200 $ December31,2022 90,587 $	December31,2021 - $ 2,990 8,966
			11,956 $
			December 31, 2021
			3,757 $ 1,922 472
			6,151 $
			December31,2021
			61,841 $

As of December 31, 2022 and 2021, the price for the construction contract that the Company signed with CSBC Coating Solutions Co., Ltd. and has not yet been fulfilled was $263,745 and $166,970, respectively. The Company has made a payment of $152,428 and $61,841, respectively, and the outstanding payment was $111,137 and $105,129, respectively.

H. Acquisition of financial assets

Information of the Company participating in the cash capital increase of the subsidiary, CSBC Power Technology Co., Ltd., and the joint venture, CSBC-DEME Wind Engineering Co., Ltd., is provided in Note 6(7).

I. Loans to related parties

Loans to related parties
Loans to related parties: Ending balance: Subsidiary CSBC Power Technology Co., Ltd.	December31,2022
	130,000 $

~62~

Year ended December 31, 2022

	31,	2022
Interest income:
Subsidiary
CSBC Power Technology Co., Ltd.	$	676

The terms and conditions of loans to subsidiary are that the facility of first drawn is repayable in 1 year and the interest was calculated at floating rate. On December 31, 2022, the interest rate was 2.44%. There was no such transaction for the year ended December 31, 2021.

• J. Endorsement and guarantees provided to related parties

Endorsement and guarantees provided to related parties
Other related parties: Joint venture CSBC-DEME Wind Engineering Co., Ltd. Endorsement / guarantee amount (Note) Subsidiary CSBC Technology Co., Ltd. Endorsement / guarantee amount (Note)	December31,2022
	28,908,120 $ 530,000 29,438,120 $

• Note: The total amount of endorsement/guarantee provided to CSBC-DEME Wind Engineering Co., Ltd. by the Company amounted to EUR 883.5 million. The exchange rate of translation into New Taiwan dollars at the financial reporting date was 32.72.

• (a) As of December 31, 2022, the actual drawn amount endorsed/guaranteed by the Company for related parties amounted to $500,000.

• (b) As of December 31, 2021: None.

• (c) Information on significant events after the balance sheet date is provided in Note 11.

K. 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 11,802 thousand for contracting the construction according to their shareholding ratios. The Company issued bank guarantee amounting to $194 million (EUR 5,901 thousand) based on its shareholding ratio of 50.0001%.

• (c) Information on significant contingent liabilities and unrecognised contract commitments is provided in Note 9.

~63~

(3) Key management compensation

Key management compensation
		Years ended	December	31,
		2022		2021
Salaries and other short-term	$	24,149	$	22,249
employee benefits
Post-employment benefits		2,706		2,245
Share-based payments		-		1,216
	$	26,855	$	25,710

8. PLEDGED ASSETS

The Company’s assets pledged as collateral are as follows:

9.

SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS (1)The balance of the Company’s unused letters of credit for import of materials is as follows: (2)The amounts of unfulfilled contract obligations of the Company’s contracts are as follows: (3)The guaranteed credit by banks for the Company’s construction projects is as follows: Refer to Note 7(2) K(b) for further information. (4)The amount of the Company’s purchase contracts and outsourcing construction contracts to be paid is as follows: Pledged asset December31,2022 December31,2021 Purpose Restricted bank deposits (shown as ‘current financial assets at amortised cost’) 15,441 $ 16,841 $ Guarantee for issuance of letters of credit and letters of guarantee Book value December31,2022 December 31, 2021 Balance of unused letters of credit 1,946,475 $ 1,578,923 $ December31,2022 December 31, 2021 Unfulfilled customer contract obligations 38,574,497 $ 44,065,411 $ December31,2022 December31,2021 Guaranteed credit by banks 10,897,982 $ 12,392,205 $ December31,2022 December31,2021 Purchase contracts to be paid 910,913 $ 11,001,205 $ Outsourcing construction contracts to be paid 883,269 1,432,175 1,794,182 $ 12,433,380 $

(5) As of December 31, 2022 and 2021, the guarantee notes issued by the Company for bank borrowings amounted to $56.34 billion and $49.45 billion, respectively.

~64~

• (6) The Company, Century Iron and Steel Industrial Co., Ltd. and Taiwan Generations Corp. are the jointoriginators for Fuhai Wind Farm Corporation (Fuhai Corporation). The joint-originators entered into the “Incentive Program of Offshore Wind Power Demonstration System” (“the Government Grant Scheme”) on August 19, 2013, which was granted by the Ministry of Economic Affairs, and committed to be jointly responsible for Fuhai Corporation. The total amount of endorsement/ guarantee provided by the Company amounted to $886 million. On November 9, 2018, the Board of Directors of the Company during their meeting resolved to cease the endorsement/ guarantee amount to Fuhai Corporation.

Because Fuhai Wind Farm Corporation failed to comply with the regulation of the “Incentive Program of Offshore Wind Power Demonstration System”, the Bureau of Energy exercised the right of performance bond and took back the entire government grant. Accordingly, the Company recognised losses amounting to $75,000 for the year ended December 31, 2018.

In addition, the Ministry of Economic Affairs claimed past due liquidated damages amounting to $ 88.6 million from Fuhai Corporation, as a joint-originator of the Incentive Program, the Company was committed to be jointly responsible for Fuhai Corporation. Currently, the case is still ongoing. According to the Company’s designated lawyer, the Ministry of Economic Affairs has not indicated its intention of claiming the liquidated damages from the Company and the Company has not reached the payment stage, therefore, the Company did not estimate the possible losses on liquidated damages.

Fuhai Corporation alleged that the Company did not issue an incentive guarantee of offshore wind power demonstration system based on the Article 1 of Memorandum of Understanding which was signed under mutual agreement, whereby Fuhai Corporation could not apply a government grant of $0.1 billion from Bureau of Energy. Fuhai Corporation filed a lawsuit to claim an equal compensation for the $0.1 billion government grant. After the Taiwan Taipei District Court and Taiwan High Court ruled in favour of the Company on March 24, 2020 and August 17, 2021, respectively, Fuhai Corporation filed a third instance appeal. The Supreme Court denied the appeal of Fuhai Corporation on March 3, 2022, and the appeal is affirmed. On May 25, 2022, the Supreme Court sent a notice letter that Fuhai Corporation filed an administrative appeal to Bureau of Energy, Ministry of Economic Affairs, which had been approved, and filed for a retrial. On June 15, 2022, the Supreme Court denied the retrial of the third instance of Fuhai Corporation by the judgement of Tai-Sheng-Zi No. 1724 of 2022 and transferred the case to the Taiwan High Court. According to the judgement of Zhong-Zai-Zi No.20 of 2022, because Fuhai Corporation did not pay the court costs before the due date, the Taiwan High Court ruled the retrial was illegal and denied the retrial on August 1, 2022.

• (7) 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 Company. Tokio Marine Newa Insurance Co., Ltd. and Uniwagon 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 Company. The Company filed a second instance appeal. On August 25, 2021, the High Court dismissed the appeal. According to the Company’s designated lawyer, the Company had strict liability on the damage of the hull which resulted from the ship colliding with the dock after the rope disconnected. The Company has filed a third instance appeal for remedy. Thus, the original ruling has not yet been determined and the amount of loss to the Company cannot be ascertained.

~65~

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.

• (8) Refer to Note 7 for the endorsements/guarantees provided by the Company to others.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

On February 16, 2023, the Board of Directors of the Company approved to provide endorsements/ guarantees in the amounts of NT$110 million and EUR 96.42 million, totalling NT$ 3.23 billion, to CSBC-DEME Wind Engineering Co., Ltd. for the business requirement.

12. OTHERS

(1) Capital management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. Following the industry practices, the Company uses gearing ratio to control capital.

The Company’s policy is to maintain a stable gearing ratio. Ratios are as follows:

(2)	Financial instruments A.Financial instruments by category Gearing ratio 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	December31,2022 79% December31,2022 - $ 2,252,256 $ 15,441 1,303,416 138,201 238,691 3,948,005 $	December 31, 2021 69% December31,2021
	A.
			21,044 $
			2,597,123 $ 16,841 2,018,946 10,221 162,918
			4,806,049 $

~66~

December 31, 2022

December 31, 2021

Financial liabilities

Financial liabilities	December31,2022	December31,2021
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 Accounts payable (including related parties) Other payables Corporate bonds payable Long-term borrowings Long-term notes and accounts payable Guarantee deposits received Lease liability	15,896 $ 7,004,580 $ 3,598,654 - 1,182,491 1,126,343 1,775,013 6,995,805 717,121 247,340 22,647,347 $ 3,217,315 $	7,045 $
		2,795,834 $ 3,599,104 32,400 887,983 1,179,657 1,760,726 2,548,831 705,134 257,669
		13,767,338 $
		3,454,190 $

B. Financial risk management policies

The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest rate risk), credit risk and liquidity risk. To minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as 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 and EUR revenues and expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting forecast foreign currency income and cost of inventory purchases.

~67~

• ii.The Company’s businesses involve some non-functional currency operations. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

Financial assets		December31,2022	December31,2022
		Foreign Currency (in thousands) Exchange Rate 86,749 $ 30.66 1,019 30.76 587 32.92 December31,2021		BookValue(NTD)
				2,659,724 $ 31,344 19,324
Monetaryitems
USD:NTD Financial liabilities
Monetaryitems
USD:NTD EUR:NTD Financial assets
		Foreign Currency (in thousands) 94,470 $ 208 5,870	Exchange Rate 27.63 27.73 31.52	BookValue(NTD)
				2,610,206 $ 5,768 185,022
Monetaryitems
USD:NTD Financial liabilities
Monetaryitems
USD:NTD EUR:NTD

iii.If NTD had appreciated/ depreciated by 1% against USD and EUR with all other variables held constant, effect to post-tax profit (loss) is as follows:

If NTD had appreciated/ depreciated by1% against tax Increase (decrease) in net profit (loss) after tax	Years ended December31,	Years ended December31,
	2022 20,872 $	2021
		19,355 $

iv.The net exchange gain (loss) arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2022 and 2021, amounted to $271,482 and ($36,301), respectively.

Price risk

The Company is not exposed to significant commodity price risk.

~68~

Interest rate risk

• i. The convertible bonds issued by the Company are zero-interest bonds with conversion options, and its fair value is affected by the stock price volatility. Based on the assessment, there is no material change in interest rate that would expose the Company to cash flow risk.

• ii.The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. If the interest rate had increased/decreased by 0.25% with all other variables held constant, cash flows for the years ended December 31, 2022 and 2021 would have increased/decreased by $17,500 and $6,375, respectively.

(b)Credit risk

Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable and other receivables based on the agreed terms. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

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

The Company only trades with counterparties with good credit, in accordance with the Company’s transaction policies. There is no recent violation of significant cash and cash equivalents, financial assets at fair value through profit or loss and financial assets at amortised cost.

Contract assets, accounts receivable and other receivables

• i. The Company appointed external agency to perform proper credit investigations for customers before signing the contracts of shipbuilding, vessel construction and machinery manufacturing. The results of the credit investigations were low risk, therefore, the credit risks of relevant receivables (primarily under accounts receivable or contract assets) were low risk.

• ii. The Company’s contract assets and accounts receivable were due from government (including state-owned enterprises) and general business. To maintain the quality of the accounts receivable and contract assets, the Company has established credit risk management procedures for operating. The Company considered customers’ financial status, historical trading record and future economic condition in accordance with types of customer, and took into account factors that may influence customers’ ability to pay to assess the credit quality of customers. The Company estimated expected credit loss by individual assessment.

• iii. In line with credit risk management procedure, when the counterparty failed to fulfil the mutual agreements nor to conduct negotiation, the default has occurred.

~69~

• iv. As of December 31, 2022 and 2021, the expected loss rates of not past due accounts receivable and contract assets were 1% and 0.455% , 1% and 0.04%, respectively.

• 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, 2022 and 2021.

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

At January 1 Provision for impairment loss At December 31 At January 1 Provision for (reversal of) impairment loss At December 31		Accounts receivable 325,450 $ 3,241 328,691 $	Contract assets 2022		Total
			191,305 $ 18,203 209,508 $ 2021		516,755 $ 21,444 538,199 $ Total
		Accounts receivable Contract assets 317,626 $ 192,121 $ 7,824 816) ( 325,450 $ 191,305 $	Contract assets
					509,747 $ 7,008 516,755 $

For the years ended December 31, 2022 and 2021, the expected credit gains (losses) arising from accounts receivable and contract assets generated from customers’ contracts amounted to ($21,444) and ($7,008), respectively.

vi. As of December 31, 2022 and 2021, the balances of receivables and contract assets from the top three counterparties amounted to $4,534,022 and $3,942,596, respectively. The credit risk concentration occurs when the ability of counterparties to meet its contractual obligations is affected by changes in economic or other conditions.

(c)Liquidity risk

The table below analyses the Company’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

~70~

December 31, 2022:

December 31, 2022:
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, 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		Less than 1year		Between 1 and 2years		Between 2 and5 years		Over5Years
		7,009,480 $ 3,600,000 2,575,355 269,504 - 74,966 13,529,305 $ - $ Less than 1year		- $ - 676,444 272,504 - 3,074,966 4,023,914 $ - $ Between 1 and 2years		- $ - 443,420 707,274 1,806,300 4,206,157 7,163,151 $ 15,896 $ Between 2 and5 years		- $ - 155,155 2,367,279 - - 2,522,434 $ - $ Over5Years
		2,796,211 $ 3,600,000 2,373,167 273,379 - - 9,042,757 $ - $		- $ - 704,507 273,379 - - 977,886 $ - $		- $ - 463,325 759,760 1,806,300 2,550,000 5,579,385 $ 7,045 $		- $ - 154,300 2,586,887 - - 2,741,187 $ - $

The Company and many public and private financial institutions entered into comprehensive credit facility contracts whereby the undrawn borrowings facilities are sufficient for its future operating activities and to fulfill its capital commitments.

(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.

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• Level 2 ： Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company’s investment in derivative instruments is included in Level 2.

• Level 3 ： Unobservable inputs for the asset or liability. Call and put options embedded in convertible bonds are included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(11).

• C. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, financial assets at amortised cost, accounts receivable (including related parties), other receivables (including related parties), guarantee deposits paid, short-term borrowings, short-term notes payable, notes payable, accounts payable (including related parties), other payables, bonds payable, long-term borrowings, long-term notes and accounts payable, guarantee deposits received and lease liability 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, 2022 and 2021 is as follows:

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

December 31, 2022:

December 31, 2022:
December 31, 2021: Assets: None. Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Options embedded in convertible bonds 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
			- $			- $			15,896 $		15,896 $ Total 21,044 $ 7,045 $
			Level 1			Level 2			Level3
		- $ - $			21,044 $ - $			- $ 7,045 $

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• (b) The methods and assumptions the Company 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 Company’s debt instruments with embedded derivatives in are not observable at market, and the Company must make reasonable estimates based on its assumptions. The effect of unobservable inputs to the valuation of financial instruments is provided in Note 12(3)I.

• E. For the years ended December 31, 2022 and 2021, 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, 2022 and 2021:

At January 1 Losses recognised in profit or loss Recorded as non-operating income and expenses Converted in the year At December 31 Movement of unrealised loss in profit or loss of liabilities held as at December 31, 2022 and 2021 (Note)	2022 2021 Derivative instrument Derivative instrument 7,045 $ 5,995 $ 8,851 1,989 - 939) ( 15,896 $ 7,045 $ 8,851 $ 1,989 $

Note: Recorded as non-operating income and expense.

• G. For the years ended December 31, 2022 and 2021, there were no transfer into or out from Level 3.

• H. Treasury segment is in charge of valuation procedures for fair value measurements being categorised within Level 3, which is to verify independent fair value of financial instruments using the actuarial reports issued by external experts. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the resource of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

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• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair value measurement:

Hybrid instrument: Options embedded in convertible Hybrid instrument: Options embedded in convertible	Fair value at Valuation Range December31,2022 technique Input (weighted average) 15,896 $ Binary tree convertible Stock price 19.50 bond valuation model Volatility 30.23% Risk discount rate 1.4908% Fair value at Valuation Range December 31, 2021 technique Input (weighted average) 7,045 $ Binary tree convertible Stock price 21.95 bond valuation model Volatility 43.88% Risk discount rate 0.5526%

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).

• J. The Company has carefully assessed the valuation models and assumptions used to measure fair value. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss from financial assets and liabilities categorised within Level 3 if the inputs used to valuation models have changed:

Input Financial liabilities Hybrid instrument Stock price volatility Input Financial liabilities Hybrid instrument Stock price volatility		Favourable change Unfavourable change 1,626 $ 2,168) ($ Favourable change Unfavourable change 181 $ 1,626) ($ December31,2022 Recognised inprofit or loss December31,2021 Recognised inprofit or loss
	Change ±5%
	Change ±5%

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(4) Other information

Due to the COVID-19 pandemic and various epidemic prevention measures imposed by the government, the Company reduced 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: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• 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: None.

• 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 3.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 4.

• 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 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 6.

(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 7.

14. SEGMENT INFORMATION

None.

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Expressed in thousands of NTD

CSBC CORPORATION TAIWAN

Loans to others

Year ended December 31, 2022

Table 1

Number	Creditor	Borrower	General ledger account	Is a related party	Maximum outstanding balance during year ended December 31, 2022	Balance at December 31, 2022	Actual amount drawn down	Interest rate	Nature of loan	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a singleparty	Ceiling on total loans granted	Footnote
													Item	Value
0	CSBC Corporation, Taiwan	CSBC Technology Co., Ltd	Other receivabes- related parties	Y	210,000 $	210,000 $	130,000 $	2.44%	For short-term financing	-	Operating turnover	-	Promissory note	210,000 $	980,994 $	3,923,979 $	Note 2

Note 1:The code represents the nature of loans as follows:

• (1) The Company is "0".

• (2) The subsidaries are numberes in order starting from "1".

Note 2:The Company’s “Procedures for Provision of Loans” are as follows:

• (1) For borrowers, the Company should not loan to any shareholders or others, except for subsidiaries or investees that require short-term financing for business requirement.

• (2) Ceiling on total loans granted is 40% of the Company’s net assets.

(3) Limit on loans granted to a single party is 10% of the Company’s net assets. However, loans to directly or indirectly wholly-owned subsidiaries of the Company are not limited.

Table 1, Page 1

Table 2

CSBC CORPORATION TAIWAN

Provision of endorsements and guarantees to others Year ended December 31, 2022

Expressed in thousands of NTD (Except as otherwise indicated)

Number	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party （Note2） $ 68,669,636 68,669,636	Maximum outstanding endorsement/ guarantee amount as of December31,2022 $ 530,000 28,908,120	Outstanding endorsement/ guarantee amount at December31,2022	Actual amount drawndown	Amount of endorsements/ guarantees secured with collateral $ - -	Ratio of accumulated endorsement/guarantee amount to net asset value of asset value of the endorser/guarantor guarantorcompany 5% 295%	Ceiling on total amount of endorsements/ guarantees provided $ 78,479,584 78,479,584	Provision of endorsements/ guarantees by parent company to subsidiary Y N	Provision of endorsements/ guarantees by subsidiary to parent company N N	Provision of endorsements/ guarantees to the party in Mainland China N N	Footnote
		Companyname CSBC Technology Co., Ltd CSBC-DEME Wind Engineering Co., Ltd.	Relationship with the endorser/ guarantor 2 2
0 0	CSBC Corporation, Taiwan CSBC Corporation, Taiwan					$ 530,000 28,908,120	$ 500,000 -							Note 3 Note 3, 4

Note 1: The explanation for colum "Number" is as follow:

• (1) Fill "0" for the Issuer.

(2)The investee company is numbered sequentially starting with Arabic numberal 1 for each entity.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following categories:

• (1) Having business relationship.

(2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.

(4) The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.

(5) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.

(6) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

(7) The performance guarantees for the sale of pre-sales contracts under the Consumer Protection Law are jointly guaranteed.

Note 3: The regulations on the endorsement/guarantees provided by the Company to others are as follows:

• (1) Ceiling on total amount of endorsements/guarantees provided by the Company: No higher than 800% of the Company’s net assets.

• (2) Limit on endorsements/guarantees provided by the Company for a single party: No higher than 700% of the Company’s net assets.

For companies having business relationship with the Company, limit on the amount of endorsements/guarantees is the amount of business transactions occurred between the creditor and borrower. The amount of the transactions is the higher value of purchasing and selling during current year on the year of financing. Note 4: The guarantee which was denominated in foreign currency was EUR 883.5 million. The exchange rate of translation into New Taiwan dollars at the financial reporting date was 32.72.

Table 2, 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, 2022

Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	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	Notes/accounts receivable (payable)	Notes/accounts receivable (payable)	Footnote
			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 Corporation, Taiwan CSBC Corporation, Taiwan	CSBC-DEME Wind Engineering Co., Ltd. China Steel Express Corporation China Steel Corporation CSBC Coating Solution Co., Ltd. Blue Ace Corporation	Other related parties Other related parties Corporate Director Subsidiary Subsidiary	Sale Purchases Sale Purchases Purchases	(1,768,669) (204,000) 448,291 166,297 121,582	(8.13%) (0.94%) 4.59% 1.70% 1.24%	Note 1 Note 1 Note 1 Note 1 Note 1	Note 1 Note 1 Note 1 Note 1 Note 1	Note 1 Note 1 Note 1 Note 1 Note 1	- - - 6,430) ( 2,105) (	- - - (0.54%) (0.18%)	Note 2 Note 3 Note 3 - -

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 $1,643,123. Note 3: It was dismissed due to the expiry of term of office on June 22, 2022. Please refer to Note 7 for details.

Table 3, Page 1

CSBC CORPORATION TAIWAN

• Receivables from related parties reaching NT$100 million or 20% of paid in capital or more December 31, 2022

Table 4 Creditor	Counterparty	Relationship with the counterparty	Balance as at December31,2022	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts Expressed in thousands of NTD
					Amount	Action taken
CSBC Corporation, Taiwan	CSBC Technology Co., Ltd	Parent company	130,000 $	-	- $	-	- $	- $

Table 4, Page 1

Table 5

CSBC CORPORATION TAIWAN

- Significant inter company transactions during the reporting periods

Year ended December 31, 2022

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(Note 3)
0 0 0 0 0 0 0 0 1 1	CSBC Corporation, Taiwan CSBC Corporation, Taiwan 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 Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd CSBC Coating Solutions Co., Ltd BLUE ACE CORPORATION BLUE ACE CORPORATION CSBC Technology Co., Ltd BLUE ACE CORPORATION BLUE ACE CORPORATION	Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary Parent company to subsidiary	Outsourcing expenses Property, plant and equipment Prepayments of suppliers Sales revenue Accounts payable Outsourcing expenses Accounts payable Other receivable (Loans to others) Outsourcing expenses Accounts payable	166,297 $ 90,587 53,982 28,723 6,430 121,582 2,105 130,000 44,394 22,093	Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 5 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. Note 5: The terms and conditions of loans to subsidiary are that the facility of first drawn is repayable in 1 year and the interest was calculated at floating rate (2.44%). For the year ended December 31, 2022, the interest received was $676.

Table 5, Page 1

CSBC CORPORATION TAIWAN

Information on investees

Year ended December 31, 2022

Table 6

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	31,2022	Net profit (loss) of the investee for the year ended December 31, 2022	Investment income(loss) recognised by the Company for the year ended December 31,2022	Footnote
				Balance as at December 31,2022	Balance as at December 31,2021	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 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 CSBC Construction Co., Ltd. Blue Ocean Wind Power Engineering (Hong Kong) Limited	Taiwan 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. Building construction Marine works services	1,549,500 $ 125,000 62,550 12,000 4,000 178,156 25,000 20,149 304	1,549,500 $ 125,000 45,000 12,000 4,000 178,156 25,000 - 304	15,651,515 15,471,504 6,500,000 1,200,000 400,000 15,000,000 - - 100	50.00 100.00 86.67 12.00 40.00 31.44 100.00 100.00 100.00	1,425,111 $ 207,141 23,906 12,284 - - 29,656 20,208 142) (	60,612) ($ 28,426 38,209) ( 6,845 854) ( 40,017) ( 3,971 59 169) (	30,306) ($ 28,426 16,489) ( 821 - - - - -	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2 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 6, Page 1

Table 7

CSBC CORPORATION TAIWAN

Major shareholders information

December 31, 2022

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	14.59% 11.27% 6.93% 5.74%

• 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 7, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2022

Statement 1 Item Description Cash on hand and revolving funds Cash in banks Demand deposits denominated in NTD Demand deposits denominated in USD (USD 10 thousand with exchange rate at 30.66) Time deposits denominated in USD (USD 55,149 thousand with exchange rate at 30.66, interest rate: 4.20%~4.27%, maturity date: 2023.01) Expressed in	Amount 410 $ 560,674 297 1,690,875 2,252,256 $ thousands of NTD

Statement 1, Page 1

CSBC CORPORATION, TAIWAN

CONTRACT ASSETS STATEMENTS

DECEMBER 31, 2022

Statement 2 Client Name Non-related parties: Customer D Customer 3 Others Less: Loss allowance Related parties: CSBC - DEME Wind Engineering Co., Ltd. Fuhai Wind Farm Corporation Less: Loss allowance	Description Amount Note Income from warships manufacturing 1,704,483 $ Income from ships manufacturing 720,720 177,229 2,602,432 11,842) ( 2,590,590 Income from ships manufacturing 1,643,123 $ Income from machine manufacturing 190,190 1,833,313 197,666) ( 1,635,647 4,226,237 $ Balance of individual accounts has not exceeded 5% of total account balance Expressed in thousands of NTD

Statement 2, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF ACCOUNTS RECEIVABLE, NET

DECEMBER 31, 2022

Statement 3 Client Name Non-related parties: Customer 7 Customer D Customer I Others Less: Loss allowance Related parties: CPC Corporation, Taiwan Less: Loss allowance	Description Amount Note Income from ships manufacturing 919,800 $ Income from warships manufacturing 266,616 Income from warships manufacturing 110,000 251,435 1,547,851 328,308) ( 1,219,543 Income from ships repairing 84,256 $ 383) ( 83,873 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 3, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF INVENTORIES

DECEMBER 31, 2022

Expressed in thousands of NTD

Statement 4 Net Item Cost Realizable Value Raw materials 5,262,770 $ 5,225,499 $ Work in progress and under repair 282,543 282,543 5,545,313 5,508,042 $ Less: Allowance of valuation loss 37,271) ( 5,508,042 $ Amount Expr	Note essed in thousands of NTD
	Measured by lower of cost and net realizable value

Statement 4, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

FOR THE YEAR ENDED DECEMBER 31, 2022

Statement 5 Name	No. of Shares Amount 15,651,515 1,455,417 $ 14,832,076 178,715 4,500,000 39,476 1,200,000 11,463 400,000 - 15,000,000 - 1,685,071 $ BeginningBalance	No. of Shares Amount - - $ 639,428 28,426 2,000,000 919 - 821 - - - - 30,166 $ Addition	No. of Shares Amount - (30,306) $ - - - 16,489) ( - - - - - - (46,795) $ Decrease	No. of Ownership Shares % Amount 15,651,515 50.00% 1,425,111 $ 15,471,504 100.00% 207,141 6,500,000 86.67% 23,906 1,200,000 12.00% 12,284 400,000 40.00% - 15,000,000 31.44% - 1,668,442 $ EndingBalance	No. of Ownership Shares % Amount 15,651,515 50.00% 1,425,111 $ 15,471,504 100.00% 207,141 6,500,000 86.67% 23,906 1,200,000 12.00% 12,284 400,000 40.00% - 15,000,000 31.44% - 1,668,442 $ EndingBalance	Unit Price Valuation (NT$) Total Amount Basis Collateral 91.05 $ 1,425,111 $ Equity method None 13.39 207,141 Equity method None 3.68 23,906 Equity method None 10.24 12,284 Equity method None - - Equity method None - - Equity method None 1,668,442 $ Market Value or Expressed in thousands of NTD NetAssets Value	Unit Price Valuation (NT$) Total Amount Basis Collateral 91.05 $ 1,425,111 $ Equity method None 13.39 207,141 Equity method None 3.68 23,906 Equity method None 10.24 12,284 Equity method None - - Equity method None - - Equity method None 1,668,442 $ Market Value or Expressed in thousands of NTD NetAssets Value
	No. of Shares 15,651,515 14,832,076 4,500,000 1,200,000 400,000 15,000,000	No. of Shares - 639,428 2,000,000 - - -	No. of Shares - - - - - -	No. of Shares 15,651,515 15,471,504 6,500,000 1,200,000 400,000 15,000,000	Ownership % 50.00% 100.00% 86.67% 12.00% 40.00% 31.44%	Unit Price (NT$) 91.05 $ 13.39 3.68 10.24 - -
CSBC - DEME Wind Engineering Co., Ltd. CSBS 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 Total							None None None None None None

For increase and decrease during the year, please refer to Note 6(7) investments accounted for using equity method for details.

Statement 5, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN COST OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2022

Statement 6 Items Land Building and structures Transportation equipment Total	BeginningBalance 3,507,137 $ 119,439 502,891 4,129,467 $	Addition Decrease - $ 13,915) ($ 3,721 - 7,662 - 11,383 $ 13,915) ($	EndingBalance Note 3,493,222 $ 123,160 510,553 4,126,935 $ Expressed in thousands of NTD

For increase and decrease during the year, please refer to Note 6(9) lease transaction- lessee for details.

Statement 6, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION OF RIGHT-OF-USE ASSETS

FOR THE YEAR ENDED DECEMBER 31, 2022

Statement 7 Item Land Building and structures Transportation equipment	BeginningBalance 496,736 $ 39,294 194,171 730,201 $	Addition 161,860 $ 13,978 70,424 246,262 $	Decrease - $ - - - $	EndingBalance Note 658,596 $ 53,272 264,595 976,463 $ Expressed in thousands of NTD

Statement 7, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF SHORT-TERM BORROWINGS DECEMBER 31, 2022

Statement 8 Nature Description Bank’s unsecured borrowings Taiwan Cooperative Bank Taiwan Cooperative Bank and other syndicate banks Bank of Taiwan First Commercial Bank Co., Ltd. Taiwan Business Bank CTBC Bank E.SUN Commercial Bank Land Bank Letter of credit for purchasing material from banks Cathay United Bank Bank of Taiwan Mega International Commercial Bank First Commercial Bank Co., Ltd. Taiwan Cooperative Bank Chang Hwa Commercial Bank E.SUN Commercial Bank

Range of EndingBalance ContractPeriod InterestRate CreditLine Collateral 2,500,000 $ 2022/12/14～2023/01/13 2.00% Note 1 None 1,326,000 2022/12/23～2023/12/21 2.13% Note 2 None 1,000,000 2022/11/08～2023/02/06 1.68% Note 3 None 700,000 2022/10/28～2023/01/18 1.75% Note 4 None 700,000 2022/10/26～2023/01/19 1.78% Note 5 None 500,000 2022/12/07～2023/03/07 1.75% Note 6 None 130,000 2022/10/11～2023/01/11 2.30% Note 7 None 95,000 2022/10/28～2023/01/19 1.72% Note 8 None 6,951,000 24,778 2022/12/14～2023/12/14 2.31%～4.82% Note 9 None 11,050 2022/04/08～2023/04/08 5.99% Note 3 None 4,153 2022/01/15～2023/01/14 5.15% Note 10 None 4,063 2022/04/28～2023/04/28 5.60% Note 4 None 3,909 2022/11/21～2023/11/21 0.67%～2.55% Note 1 None 3,807 2022/09/30～2023/09/30 5.68% Note 11 None 1,820 2022/03/17～2023/03/17 5.44% Note 7 None 53,580 7,004,580 $ Expressed in thousands of NTD

Note 1: Finance facility from banks including letter of credit and short-term loans amounted to $4,000,000. Note 2: Finance facility from banks including letter of credit and short-term loans amounted to $3,750,000. Note 3: Finance facility from banks including letter of credit, short-term loans and guarantee deposits amounted to $5,300,000. Note 4: Finance facility from banks including letter of credit and guarantee deposits amounted to $3,500,000. Note 5: Finance facility from banks including short-term loans amounted to $700,000. Note 6: Finance facility from banks including letter of credit, short-term loans and bills of exchange amounted to $600,000. Note 7: Finance facility from banks including letter of credit, short-term loans and bills of exchange amounted to $1,000,000. Note 8: Finance facility from banks including letter of credit and short-term loans amounted to $100,000. Note 9: Finance facility from banks including letter of credit and short-term loans amounted to USD 60 thousand. Note 10: Finance facility from banks including letter of credit, guarantee deposits and overdrafts amounted to $3,500,000. Note 11: Finance facility from banks including letter of credit, short-term loans and bills of exchange amounted to $2.000,000.

Statement 8, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF SHORT-TERM BILLS PAYABLE

DECEMBER 31, 2022

Statement 9 Item Guarantor or AcceptingInstitution Commercial paper payable International Bill Finance Corporation China Bills Finance Corporation " MEGA Bills Finance Co., Ltd. " Grand Bills Finance Corporation Ta Ching Bills Finance Corporation "	Contract Period 2022/11/22-2023/01/05 2022/11/25-2023/01/16 2022/12/07-2023/01/17 2022/12/08-2023/01/06 2022/12/07-2023/01/04 2022/11/18-2023/01/16 2022/11/04-2023/01/03 2022/11/18-2023/01/16	Range of Interest Rate 1.56% 1.50% 1.50% 2.09% 2.09% 1.65% 2.00% 1.80%
			Issuance Unamortized Amount Discounts 800,000 $ 137) ($ 700,000 432) ( 300,000 197) ( 600,000 172) ( 600,000 103) ( 300,000 203) ( 200,000 20) ( 100,000 82) ( 3,600,000 $ 1,346) ($

Statement 9, Page 1

CSBC CORPORATION, TAIWAN CONTRACT LIABILITIES STATEMENTS

DECEMBER 31, 2022

Statement 10 Client Name Non-related parties: Customer 5 Customer D Others Related parties: CPC Corporation, Taiwan	Description Income from warships manufacturing Income from warships manufacturing Income from ships repairing	Amount Note 6,625,516 $ 401,463 398,126 7,425,105 261,905 7,687,010 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 10, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF TRADE PAYABLES

DECEMBER 31, 2022

Statement 11 Client Name Non-related parties: Far Lan Machinery Corporation Tzong Wan Engineering Co., Ltd. Jin Ching Machinery Co., Ltd. Others Related parties: CSBS Coating Solutions Co., Ltd. CPC Corporation, Taiwan BLUE ACE CORPORATION	Description	Amount Note 40,427 $ 28,331 23,908 1,078,625 1,171,291 $ 6,430 $ 2,665 2,105 11,200 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 3% of total account balance

Statement 11, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF OTHER PAYABLES

DECEMBER 31, 2022

Statement 12 Client Name Salary and bonus payable Commission payable Other accrued expenses Others	Description	Amount Note 684,334 $ 74,835 317,995 49,179 1,126,343 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 12, Page 1

Expressed in thousands of NTD

Statement 13

CSBC CORPORATION, TAIWAN STATEMENT OF BONDS PAYABLE

DECEMBER 31, 2022

Amount

Bonds Name	Trustee	Issuance Date	Interest Payment Date	Coupon Rate	Total Issuance Amount	Repayment Paid or Transferred	Outstanding Balance	Unamortized Premiums (Discounts)	Carrying Amount	Repayment Term	Collateral	Note
Domestic first secured convertible corporate bond	TAIPEI FUBON COMMERCIAL BANK CO., LTD	2020.2.24	-	Note 1	2,000,000 $	193,700) ($	1,806,300 $ Less: Maturity	31,287) ($ within one year	1,775,013 $ -	Note 1	Note 2
									1,775,013 $

Note 1: Please refer to Note 6(17) for details.

Note 2: CHANG HWA COMMERCIAL BANK, LTD. was commissioned to guarantee the corporate bond.

Statement 13, Page 1

Expressed in thousands of NTD

CSBC CORPORATION, TAIWAN

STATEMENT OF LONG-TERM BORROWINGS

DECEMBER 31, 2022

Statement 14

(A) Long-term bank borrowings

Creditor	Description		Amount (in thousands)	Contract Period	Interest Rate	Collateral	Note
Unsecured borrowings Syndicated loan of several banks consisting of Bank of Taiwan	Note		4,000,000 $	2022/5/16～ 2027/9/27	1.80%~1.95%	None

Note: The revolving credit line for bank borrowings amounted to $4 billion. The credit term is 5 years from the first drawing date with 180 days at the most for each drawing. The principal of the borrowing is repayable in a lump sum amount at maturity. The borrower can directly repay the loan principal that is originally expired with the new drawn loan, without actually remitting funds.

(B) Commercial paper payables

Item	Guarantor or Accepting Institution	Contract Period	Range of Interest Rate			Amount			Note
					Issuance Amount	Unamortized Discounts		Book Value
Commercial paper payable	MEGA Bills Finance Co., Ltd. Taishin International Bank Co. Ltd. China Bills Finance Corporation International Bill Finance Corporation	2021/09/24～ 2024/12/15 2021/06/21～ 2024/12/20 2021/09/26～ 2024/10/25 2021/06/22～ 2024/06/21	1.44%~1.46% 1.27% 1.27% 1.37%		1,000,000 $ 800,000 700,000 500,000 3,000,000 $	1,930) ($ 446) ( 806) ( 1,013) ( 4,195) ($		998,070 $ 799,554 699,194 498,987 2,995,805 $	None None None None

Note: Revolving issuance of commercial paper which has contract periods of 2~3 years and shown as long-term borrowings. Please refer to Note 6(18) for details.

Statement 14, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF LEASE LIABILITIES

		DECEMBER 31, 2022
Statement 15					Expressed in thousands	of NTD
Item	Description	Lease Period	Discount Rate		EndingBalance	Note
Land		2006.01.01~2045.12.31	1.21%	$	2,888,439
Buildings and structures		2011.10.01~2027.12.31	1.21%		72,768
Transportation equipment	Terminal facilities	2011.10.01~2027.12.31	1.21%		256,108
					3,217,315
		Less: Maturity within one year		(	269,504)
				$	2,947,811

Statement 15, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF OPERATING REVENUE YEAR ENDED DECEMBER 31, 2022

Statement 16 Item Construction contract revenue Income from warships manufacturing Income from ships manufacturing Income from ships repairing Others	Volume	Amount Note 15,330,882 $ 5,167,993 1,163,687 88,712 21,751,274 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 3% of total account balance

Statement 16, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF OPERATING COSTS

YEAR ENDED DECEMBER 31, 2022

Statement 17 Item Direct raw materials Direct labor Manufacturing expense Input cost in manufacture and repair in the year Add: Beginning work in progress and under repair Others Less: Ending work in progress and under repair	Description Amount Note 12,714,423 $ 1,354,694 7,804,321 21,873,438 106,593 3,210,023 282,543) ( 24,907,511 $ Expressed in thousands of NTD

Statement 17, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF MANUFACTURING EXPENSE

YEAR ENDED DECEMBER 31, 2022

Statement 18 Item Subcontractors’ fees Salary Depreciation Professional service expense Others	Description	Amount Note 2,621,546 $ 1,494,012 877,964 696,880 2,113,919 7,804,321 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 18, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF SELLING EXPENSES YEAR ENDED DECEMBER 31, 2022

Statement 19 Item Salary Professional service expense Subcontractors’ fees Others	Description	Amount Note 38,177 $ 6,299 3,487 12,789 60,752 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 19, Page 1

CSBC CORPORATION, TAIWAN STATEMENT OF ADMINISTRATIVE EXPENSES YEAR ENDED DECEMBER 31, 2022

Statement 20 Item Salary Professional service expense Employee training expense Others	Description	Amount Note 139,863 $ 43,579 40,357 113,693 337,492 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 20, Page 1

CSBC CORPORATION, TAIWAN

STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES YEAR ENDED DECEMBER 31, 2022

Statement 21 Item Salary Professional service expense Material Others	Description	Amount Note 47,772 $ 43,250 9,212 9,636 109,870 $ Expressed in thousands of NTD Balance of individual accounts has not exceeded 5% of total account balance

Statement 21, Page 1

CSBC CORPORATION, TAIWAN SUMMARY STATEMENT OF CURRENT PERIOD EMPLOYEE BENEFITS, DEPRECIATION AND AMORTIZATION EXPENSES BY FUNCTION

YEAR ENDED DECEMBER 31, 2022

Statement 22

Expressed in thousands of NTD

Classification	Year ended December 31, 2022	Year ended December 31, 2022	Year ended December 31, 2022	Year ended December 31, 2022
	Classified as cost of sales	Classified as operating expenses	Non-operating expenses	Total
Employee benefit expenses	$ 3,165,780	$ 278,920	$ -	$ 3,444,700
Wages and salaries	2,651,015	225,812	-	2,876,827
Labor and health insurance fees	240,274	25,088	-	265,362
Pension costs	219,471	20,740	-	240,211
Board compensation	-	3,051	-	3,051
Others	55,020	4,229	-	59,249
Depreciation expense	877,964	19,195	680	897,839
Amortization expense	20,148	-	-	20,148
Classification	Year ended December 31, 2021
	Classified as cost of sales	Classified as operating expenses	Non-operating expenses	Total
Employee benefit expenses	$ 3,331,273	$ 299,342	$ -	$ 3,630,615
Wages and salaries	2,689,754	231,873	-	2,921,627
Labor and health insurance fees	246,160	26,491	-	272,651
Pension costs	219,912	22,152	-	242,064
Board compensation	-	3,166	-	3,166
Employee stock options	120,145	8,673	-	128,818
Others	55,302	6,987	-	62,289
Depreciation expense	878,306	18,325	679	897,310
Amortization expense	12,125	-	-	12,125

Note:

A.As of December 31, 2022 and 2021, the Company had 3,046 and 3,088 employees respectively, including 10 non-employee directors for both years.

B.(a) For the years ended December 31, 2022 and 2021, average employee benefit expense was $1,131 and $1,187, respectively.

(b) For the years ended December 31, 2022 and 2021, average employee salary was $945 and $956, respectively.

(c) Changes of adjustments of average employees’ salary was (1.17%).

(d) For the years ended December 31, 2022 and 2021, supervisors’ remuneration was both $0(Note).

(e) The Company has a salary and remuneration committee which sets and periodically reviews directors’ and managers’ performance assessment standards, annual and long-term performance target and policies, mechanics, standards and structures of salary and remuneration, periodically assesses the achievement of directors’ and managers’ performance targets and set the content and amount of salary and remuneration based on the assessment results from the performance assessment standards.

In accordance with the Articles of Incorporation, the remuneration of the Company’s directors and supervisors, a ratio of distributable profit of the current year, if any, shall be appropriated as employees' compensation and directors' and supervisors' remuneration. The ratio shall be 1~5% for employees’ compensation which can be in the form of shares or in cash and shall not be higher than 1% for directors' remuneration.

If the Company has an accumulated deficit, earnings should be reserved to cover deficit.

The employees’ salaries include base salaries, rewards for hard working employees and full attendance bonuses. Base salaries are determined according to a point-based salary scale. Base salaries paid to employees below the deputy general manager level may differ because of their responsibilities, nature of job, promotions or job transfers. To meet the Company’s administrative needs, the point-based salary scale is set out using the position classification and the position evaluation procedures to determine the rank/value of the position and its corresponding salary range. Jobs related to engineering and management are evaluated based on the position classification. Jobs related to providing techniques and services are evaluated based on the position evaluation. The conversion ratio of salary points to salaries is determined by reference to the salary situation in the market and adjusted based on the Company’s operational situation.

Note: The Company has an audit committee, thus, there was no remuneration of supervisors.

Statement 22, Page 1